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2021 Supreme(Guj) 694
IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
ASHUTOSH J. SHASTRI, J.
SERIOUS FRAUD INVESTIGATION OFFICE (THRO ITS AUTHORIZED OFFICER) – APPELLANT
Versus
STATE OF GUJARAT – RESPONDENT
CRIMINAL REVISION APPLICATION NO. 378 of 2021
Decided on : 19-08-2021
For the Appellant : MR DEVANG VYAS
For the Respondent: MR JK SHAH, YUVRAJ G THAKORE
Point of law : Order of the Magistrate summoning the accused must reflect that he has applied his mind to the facts of the case and the law applicable thereto.
Headnote:
Criminal Procedure Code,1973 – Section 397 r/w 401 - Companies Act, 1956 – Section 437, 217, 628, 227, 233, 212(1)(c) and 212(14) – Fraud – Investigation – Power of Magistrate - Case of petitioner is that investigation order was originally passed by Central Government i.e. Ministry of Corporate Affairs whereby ‘in the public interest’ on basis of cogent material formed its opinion that affairs of ABC Private Limited are required to be investigated by present petitioner i.e. Serious Fraud Investigation Office and accordingly, passed an order in exercise of powers conferred under Section 212(1) (c) of Companies Act, 2013 - Whether the same is a non-speaking order or not and in that context.
Finding of the court :
Magistrate has to carefully scrutinize evidence brought on record and may even himself put questions to complainant and his witnesses to elicit answers to find out truthfulness of allegations or otherwise and then examine if any offence is prima facie committed by all or any of accused - This Court, thus, clearly emphasized that power to issue a summoning order is a matter of grave importance, and that Magistrate must only allow criminal law to take its course after satisfying himself that there is a real case to be made - While reconsidering the issue insofar as respondent nos. 2 to 5 are concerned, court below shall take into consideration relevant provisions of law and submissions which may be made before the court concerned and shall pass a fresh order strictly in accordance with law and it is made clear that that this Court has not expressed any opinion on merit with regard to the stand taken in present proceedings on merits in any form and it is independently left it open for court below to pass a fresh reasoned order in accordance with law.
Result : Criminal Revision application allowed
ORDER :
1. By way of present Criminal Revision Application under Section 397 read with Section 401 of the Code of Criminal Procedure as also read with Section 437 of the Companies Act, 1956 the original complainant i.e. Serious Fraud Investigation Office (authorized officer) has challenged the legality and validity of the order dated 17.03.2020 passed by the learned Principal District Judge and Designated Judge (Companies Act), Ahmedabad (Rural) in Special Case (Companies Act) No. 1 of 2020 insofar as it relates to non taking of cognizance against original accused nos. 21 to 24 who are respondent nos. 2 to 5.
2. The case of the petitioner is that the investigation order was originally passed by the Central Government i.e. Ministry of Corporate Affairs (hereinafter referred to as “MCA”), whereby ‘in the public interest’ on the basis of cogent material formed its opinion that the affairs of M/s. ABC Cotspin Private Limited are required to be investigated by the present petitioner i.e. Serious Fraud Investigation Office and accordingly, passed an order on 31.03.2016 in exercise of powers conferred under Section 212(1) (c) of the Companies Act, 2013.
2.1. Upon completion of the investigation, report was submitted to the Ministry of Corporate Affairs on 17.01.2019 in terms of Section 212(12) of the Companies Act, 2013 recommending the prosecution qua various offences alleged to have been committed under the Companies Act 2013 and the Companies Act, 1956 as also Indian Penal Code, 1860. It was revealed during the investigation that ABCCPL is a Private Company, owned and controlled by one Ashish Jobanputra, which Company was exporting cotton since the year 2009 and mainly exporting to China under the Letter of Credit. With a view to avail trade credit from the Banks, Ashish Jobanputra referred to as ‘AJ’ had arranged with Customs House Agents to get the Checklists (Shipping bills prior to customs formalities) and the House BLs/MTDs before completion of exports. It was revealed that AJ entered into conspiracy with the employees/Directors of freight forwarding Companies with the object to misrepresent before the Banks, in particular to avail the credit facilities and resultantly, ABCCPL and AJ availed of the opportunity created and defrauded the Banks to the tune of Rs.1826.99 crores by availing export trade credits on fabricated and falsified export documents.
2.2. It is the case of the petitioner that upon examining the aforesaid investigation report, the Ministry of Corporate Affairs in exercise of powers under Section 212 (14) of the Companies Act, 2013, vide order dated 02.04.2019, issued necessary directions to the SFIO to initiate criminal prosecution qua offences punishable under the Companies Act, 2013, and Companies Act, 1956 as also Indian Penal Code, 1860 before the jurisdictional court and it is the case of the petitioner that in view of such, on 29.02.2020, a criminal complaint bearing Case No. SPCS COMP/01/2020 came to be filed before the learned Principal District Judge and Sessions Judge, Special Judge (Companies Act) Ahmedabad (Rural). The Special Judge, vide order dated 17.03.2020 was pleased to take cognizance by issuing arrest warrant against all the accused, except the present respondent – accused who are original accused nos. 21 to 25. Without appreciating the provisions of Section 436(1)(a) of the Companies Act, 2013, erroneously, concluded that due to lack of territorial jurisdiction, the court cannot take cognizance of offence and after receipt of the said order, on 18.09.2020, the petitioner is constrained to approach this Court by way of present Criminal Revision Application, which was originally entertained by the co-ordinate Bench of this Court by passing the following order on 28.06.2021 :-
“1. Heard Mr. Devang Vyas, learned Additional Solicitor General of India appearing for the applicant Authority i.e. Serious Fraud Investigation Office and Ms. Krina Calla, learned APP for the Respondent State.
2. In a case
