2019 Supreme(SC) 366

SUPREME COURT OF INDIA
Abhay Manohar Sapre, Uday Umesh Lalit, JJ.
Serious Fraud Investigation Office – Appellant
Versus
Rahul Modi And Another Etc. – Respondent
Criminal Appeal Nos. 538-539 of 2019 (Arising out of Special Leave Petition (Criminal) Nos.94-95 of 2019)
with
(Serious Fraud Investigation Office & Another vs. Vivek Harivyasi and Ors.)
Transfer Petition (Crl.) No.35 of 2019
Decided on : 27-03-2019

IMPORTANT POINTS
(1) Sub-section (3) of Section 212 of Companies Act, 2013 is directory in nature.
(2) While laying down a particular procedure if no negative or adverse consequences are contemplated for non-adherence to such procedure, relevant provision is normally not taken to be mandatory and is considered to be purely directory.
(3) Act of directing remand of accused is a judicial function and challenge to order of remand is not to be entertained in a habeas corpus petition.

Headnote:Per Uday Umesh Lalit, J.

       (A) Constitution of India – Article 226 – Habeas Corpus Petition – Scope and ambit – In Habeas Corpus proceedings Court is to have regard to the legality or otherwise of detention at the time of return and not with reference to institution of proceedings – Act of directing remand of accused is a judicial function and challenge to order of remand is not to be entertained in a habeas corpus petition – Legality, validity and correctness of order or remand could have been challenged by original Writ Petitioners by filing appropriate proceedings – However, they did not raise such challenge before competent Appellate or Revisional Forum – Orders of remand passed by Judicial Magistrate and Special Court had dealt with merits of matter and whether continued detention of accused was justified or not – After going into relevant issues on merits, accused were remanded to further police custody – These orders were not put in challenge before High Court – It was not open to High Court to entertain challenge with regard to correctness of those orders. (Paras 17 and 19)

       (B) Companies Act, 2013 – Section 212(1)(c) – Limited Liability Partnership Act, 2008 – Section 43(2) and (3)(c)(i) – Grant of interim relief – Challenge as to – Statute has not prescribed any period for completion of investigation – While laying down a particular procedure if no negative or adverse consequences are contemplated for non-adherence to such procedure, relevant provision is normally not taken to be mandatory and is considered to be purely directory – Provision has to be seen in the context in which it occurs in Statute – Absolute transfer of investigation in terms of Section 212(2) of 2013 Act in favour of SFIO and upon such transfer all documents and records are required to be transferred to SFIO by every other Investigating Agency – For completion of investigation, sub-Section (12) of Section 212 does not contemplate any period – Under sub-Section (11) of Section 212 there could be interim reports as and when directed – In absence of any clear stipulation, an interpretation that with expiry of period, mandate in favour of SFIO must come to an end, will cause great violence to scheme of legislation – Prescription of period within which a report has to be submitted to Central Government under sub-Section (3) of Section 212 is purely directory – Even after expiry of such stipulated period, mandate in favour of SFIO and assignment of investigation under sub-Section (1) would not come to an end – Only logical end as contemplated is after completion of investigation when a final report or investigation report is submitted in terms of sub-Section (12) of Section 212 – In instant case, mandate came to an end on 19.09.2018 and arrest effected on 10.12.2018 under orders passed by Director, SFIO was in any way illegal or unauthorised by law – Order under appeal set aside. (Paras 29, 30 and 31)

       Per Abhay Manohar Sapre, J. (Assenting View)

       Companies Act, 2013 – Section 212(1)(c) – Limited Liability Partnership Act, 2008 – Section 43(2) and (3)(c)(i) – Grant of interim relief – Challenge as to – Sub-section (3) of Section 212 of Act is directory in nature – It serves legislative intent for which Chapter XXIX is enacted. (Para 6)

       Facts of Case:

       Original writ petitioners Rahul Modi and Mukesh Modi were released on bail. That order passed by High Court is presently under challenge. In backdrop of facts, High Court found that a case for interim relief was made out. Principal issues which arise in the matter are whether High Court was right and justified in entertaining petition and in passing Order under appeal.

       Findings of Court:

       It cannot be said that prescription of period within which a report is to be submitted by SFIO under sub-Section (3) of Section 212 is for completion of period of investigation and on the expiry of that period the mandate in favour of SFIO must come to an end. If it was to come to an end, legislation would have contemplated certain results including re-transfer of investigation back to original Investigating Agencies which were directed to transfer entire record under sub-Section (2) of Section 212. In absence of any clear stipulation, an interpretation that with expiry of period, mandate in favour of SFIO must come to an end, will cause great violence to scheme of legislation. If such interpretation is accepted, with transfer of investigation in terms of sub Section (2) of Section 212 original Investigating Agencies would be denuded of power to investigate and with expiry of mandate SFIO would also be powerless which would lead to an incongruous situation that serious frauds would remain beyond investigation. That could never have been the idea.

       Result : Appeals allowed.