Bombay High Court Upholds Special MPID Court's Power to Summon Un-Charge-Sheeted Accused

Mumbai: In a significant ruling concerning the sprawling National Spot Exchange Limited (NSEL) scam, the Bombay High Court has affirmed the power of a Special Court under the Maharashtra Protection of Interest of Depositors (MPID) Act to summon individuals and entities not initially named in police charge-sheets. The Division Bench of Justices Bharati Dangre and Manjusha Deshpande held that this power, rooted in Sections 190 and 193 of the Code of Criminal Procedure (CrPC), can be exercised at the pre-evidence stage and even when brought to the court's notice by an existing accused party.

The judgment came in response to a batch of appeals, including those filed by parties named as accused in supplementary applications before the MPID Special Court. The core challenge was against the Special Court's orders that allowed applications filed by NSEL (itself an accused) and an investor, seeking to add promoters and directors of various brokerage firms (already charge-sheeted as 'financial establishments' under the MPID Act) as additional accused.

Background of the Case

The NSEL scam dates back to a complaint filed on September 30, 2013, alleging criminal conspiracy, criminal breach of trust, forgery, and misappropriation related to trading in non-existent commodities on the NSEL platform. The case was transferred to the Economic Offences Wing (EOW) and provisions of the MPID Act were invoked. The matter is pending before the Special Court under the MPID Act.

Over the years, EOW has filed 11 charge-sheets, naming 220 individuals and entities, including NSEL and several brokerage firms. However, NSEL and some investors alleged that certain promoters and directors of these brokerage firms, despite being potentially liable under Section 3 of the MPID Act (which holds persons responsible for the management of a financial establishment liable for default), were not charge-sheeted by the EOW.

The Applications and Objections

NSEL filed an application (Exhibit 619) under Section 190 CrPC, urging the Special Court to take cognizance against specific directors and promoters of charge-sheeted broker companies (India Infoline Commodities Ltd., Anand Rathi Commodities Ltd., Geojit Comtrade Ltd.). Simultaneously, an investor, Arvind Kumar Bahl , filed a similar application (Miscellaneous Application No. 339/2023).

The EOW opposed NSEL's application, questioning its locus standi as an accused to seek the implication of others. Proposed accused parties, such as Roop Kishor Bhootra, also sought intervention to oppose their potential summoning, arguing that NSEL's application was baseless and a misuse of process.

The Special Judge initially passed orders rejecting the EOW's objection to NSEL's locus standi and dismissing the intervention applications. Subsequently, by a common order dated May 18, 2023, the Special Judge allowed both NSEL's and the investor's applications, issuing process against the named individuals and companies, directing their impleadment as additional accused. These preliminary orders and the summoning order were challenged before the High Court.

Arguments Before the High Court

Senior counsel for the appellants (proposed accused) argued that NSEL, being a principal accused, had no legal standing to seek the summoning of others. They contended that the power to summon persons not named in a charge-sheet after cognizance is taken lies exclusively under Section 319 CrPC, which requires 'evidence' to surface during inquiry or trial, not merely material collected during investigation. They cited precedents like A.R. Antulay emphasizing the prosecution's discretion in naming accused. They also argued that the stage of Section 190/193, as interpreted by Constitution Benches in Dharam Pal and Hardeep Singh , applies in a different scheme (committal to Sessions Court), unlike the direct cognizance route in MPID cases.

Conversely, counsel for NSEL and the investor argued that the Special Court, acting as a court of original jurisdiction under the MPID Act, has a duty under Section 190 CrPC to take cognizance of the 'offence' and then identify the 'offenders'. They submitted that this power to issue process against un-charge-sheeted persons exists from the stage of taking cognizance based on material on record and is not limited to the Section 319 stage. They heavily relied on Supreme Court judgments in Raghubans Dubey , Swil Ltd. , Kishun Singh , Dharam Pal , and Nahar Singh , which establish that courts can summon additional accused at the Section 190/193 stage based on available material, even if not charge-sheeted or named in Column 2. They contended that the source of information (even an accused like NSEL) does not restrict the court's duty to act if the material warrants it.

Court's Reasoning and Decision

The High Court, after a detailed analysis of the statutory provisions and relevant Supreme Court precedents, upheld the Special Judge's decision regarding the maintainability of NSEL's application and the timing of the summoning.

The bench reiterated the principle from Raghubans Dubey that under Section 190 CrPC, a Magistrate (or a Special Court acting as such) takes cognizance of the 'offence' and has a duty to find out who the 'offenders' are. This duty allows the court to issue process against persons not named in the charge-sheet if sufficient material on record indicates their involvement.

Citing Swil Ltd. , the Court emphasized that there is "no bar under section 190 Cr.P.C. that once the process is issued against some accused, on the next date, the Magistrate cannot issue process to some other person against whom there is some material on record, but his name is not included as accused in the charge-sheet."

The judgment extensively discussed Kishun Singh , Dharam Pal , and Nahar Singh , confirming that the power to summon un-charge-sheeted persons exists under Section 190/193, distinct from and prior to the Section 319 stage. It noted that the Special MPID Court functions as a court of original jurisdiction under Section 13 of the MPID Act, similar to a Sessions Court upon committal, thus possessing the power under Section 193 based on the material on record, even before evidence is led.

The Court rejected the argument that an accused cannot prompt the court to summon others. It reasoned that if the court has a duty to find the real offenders, regardless of how that information comes to its notice (unless it falls into specific exceptions like protecting approvers, which was not the case here), it must act if the material justifies it.

Consequently, the Bombay High Court dismissed the appeals that challenged the preliminary orders dated March 31, 2023, upholding the Special Judge's findings on locus standi, maintainability, and the rejection of intervention applications. The appeals challenging the summoning order dated May 18, 2023, on its merits were directed to be listed for future hearing, as the current judgment only addressed the legal permissibility of entertaining such applications and the stage of summoning.

This ruling clarifies the broad powers of Special Courts in complex financial cases to ensure all allegedly involved parties face trial, regardless of whether they were initially charge-sheeted by the investigating agency, reinforcing the principle that the court's duty to identify offenders is paramount.