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IN THE HIGH COURT AT CALCUTTA
MOUSHUMI BHATTACHARYA, J.
Kavita Jagatramka and Another – Petitioners
Versus
Union of India and Others – Respondents
WPA No. 3607 of 2021, CAN Nos. 1, 2 of 2023
Decided On : 21-06-2023
COMPANY LAW - INVESTIGATION - MAINTAINABILITY OF WRIT PETITION - RES JUDICATA - INVESTIGATION UNDER SECTION 212 OF THE COMPANIES ACT, 2013 - TIME FRAME FOR COMPLETION OF INVESTIGATION - SECTION 212(3), 212(11), 212(12), 212(13) - SERIOUS FRAUD INVESTIGATION OFFICE (SFIO) - PRINCIPLES OF EQUITY AND NATURAL JUSTICE - REASONABLE TIME FRAME FOR COMPLETION OF INVESTIGATION - COMPLIANCE WITH DIRECTIONS OF SUPREME COURT IN PARAMVIR SINGH SAINI VS. BALJIT SINGH - PRESERVATION OF EVIDENCE AND CCTV RECORDINGS.
Fact of the Case:
Petitioners, under investigation by the Serious Fraud Investigation Office (SFIO), filed a writ petition in the Calcutta High Court seeking a Mandamus against SFIO for compliance with sections 217 and 220 of the Companies Act, 2013. They also filed two applications (CAN 1 of 2022 and CAN 2 of 2023) for a direction to SFIO to file an investigation report and preserve CCTV recordings made during the interrogation.
Finding of the Court:
1. The writ petition is maintainable as it was filed prior to the writ petition filed in the Gujarat High Court and part of the cause of action arose within the territorial jurisdiction of the Calcutta High Court. 2. The principle of constructive res judicata is not applicable as the petitioner no. 2 has challenged the Gujarat High Court Division Bench order before the Supreme Court and the relief claimed in the present writ petition is not identical to the prayers of the Gujarat High Court petition. 3. The prayer for stay of investigation under section 212 of the Companies Act, 2013 and the prayer for completion of investigation within a certain period of time cannot be granted as section 212 does not provide for any time frame for completion of investigation. 4. The SFIO is under a statutory obligation to comply with the checks and safeguards enacted into section 212, including filing of a Report under section 212(3) and an interim report to the Central Government under section 212(11). 5. The SFIO shall ensure that the directions of the Supreme Court in Paramvir Singh Saini vs. Baljit Singh are complied with, including preservation of the evidence of the petitioners and the CCTV recordings.
Issues: 1. Maintainability of the writ petition in light of the doctrine of constructive res judicata. 2. Applicability of the principle of constructive res judicata to the present case. 3. Whether a time frame can be imposed for completion of investigation under section 212 of the Companies Act, 2013. 4. Whether the SFIO is under a statutory obligation to comply with the checks and safeguards enacted into section 212 of the Companies Act, 2013.
Ratio Decidendi: 1. The principle of constructive res judicata requires that the parties in both the proceedings are the same and the issue has conclusively been decided in one of the proceedings. In the present case, apart from the difference in the array of parties, the petitioner no. 2 (the sole petitioner before the Gujarat High Court) preferred a Special Leave Petition before the Supreme Court from the order of the Division Bench of the Gujarat High Court. Moreover, while the prayers before the Gujarat High Court related to quashing of the investigation, the prayers before this Court concern the investigation being conducted within the bounds of law. 2. Section 212 of The Companies Act, 2013 which deals with the investigation into the affairs of a Company by the SFIO under which the investigation against the petitioners are continuing, does not contemplate or provide for a time frame within which the investigation has to be completed. 3. The SFIO is under a statutory obligation to comply with the checks and safeguards enacted into section 212 including filing of a Report under section 212(3) and of an interim report to the Central Government under section 212(11).
Final Decision: 1. The writ petition is maintainable. 2. CAN 1 of 2022 and CAN 2 of 2023 are disposed of in terms of the judgment. 3. The SFIO is expected to act in terms of the petitioners' legitimate expectation for completion of the investigation within a reasonable time frame and the principles of equity and fair play.
JUDGMENT :
MOUSHUMI BHATTACHARYA, J.
1. The petitioners pray for a Mandamus against the respondent nos. 2 to 6 being the Serious Fraud Investigation Office (SFIO) and its Directors in relation to an ongoing investigation and seek compliance of sections 217 and 220 of The Companies Act, 2013. The petitioners have filed two applications being CAN 1 of 2022 and CAN 2 of 2023 for a direction on the respondents to file a Report of the investigation and for preservation of CCTV recordings made during the interrogation in the course of the investigation.
2. The order dated 17.5.2023 records that the judgment will decide on the maintainability of the writ petition and the two applications filed by the petitioners.
3. On the point of maintainability, learned counsel appearing for the respondent nos. 1 to 6 (SFIO) submits that the petitioners filed a writ petition before the Gujarat High Court for the same relief and that the Single Bench as well as by the Division Bench rejected the case made out by the petitioners. Counsel submits that the present writ petition is barred by the doctrine of constructive res-judicata. Counsel places the judgment of the Division Bench of the Gujarat High Court to urge that all the points urged by the petitioners in the present writ petition have attained finality and hence this Court ceases to have jurisdiction to hear the present writ petition on the same cause of action.
4. Learned counsel appearing for the petitioners opposes the contentions on behalf of the SFIO and submits that the writ petition before this Court was filed prior to that of the Gujarat High Court and that the relief claimed in both the proceedings are different. It is submitted that the petitioner no. 2 has preferred a Special Leave Petition (SLP) before the Supreme Court against the order of the Division Bench of the Gujarat High Court. Counsel points to other differences in the two proceedings including the array of parties.
5. Article 226(2) of the Constitution of India refers to the power conferred on a High Court under clause (1) of Article 226 and limits the power to the territories which are within the jurisdiction of the High Court and within which the cause of action arises either wholly or in part. The relevant pleadings in the writ petition show that part of the cause of action arose within the jurisdiction of this Court including a visit of a team from SFIO at the office premises of the petitioners at 22 Camac Street, Kolkata in January, 2021. There are documents annexed to the writ petition showing that correspondence was exchanged between the parties and the petitioners received some of the letters within the jurisdiction of this Court.
6. Hence, the fact that part of the cause of action arose within the territorial jurisdiction of this Court is established. It is also undisputed that the petitioners’ writ petition in the Calcutta High Court is prior to that filed in the Gujarat High Court. The proposition with regard to cause of action under Article 226(2) of the Constitution of India was decided in Navinchandra N. Majithia vs. State of Maharashtra, (2000) 7 SCC 640 and Nawal Kishore Sharma vs. Union of India, (2014) 9 SCC 329 and may be referred to in this context.
7. The only question which remains is whether the present writ petition is barred by the principle of constructive res judicata. The principle of res judicata/constructive res judicata pre-supposes that the parties in both the proceedings are the same and the issue has conclusively been decided in one of the proceedings. In the present case, apart from the difference in the array of parties, the petitioner no. 2 (the sole petitioner before the Gujarat High Court) preferred a Special Leave Petition before the Supreme Court from the order of the Division Bench of the Gujarat High Court. Moreover, while the prayers before the Gujarat High Court related to quashing of the investigation, the prayers before this Court concern the investigation being conducted within the
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