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2025 Supreme(Online)(MP) 10029
HIGH COURT OF MADHYA PRADESH
Vishal Mishra, J
Shweta Chouksey – Appellant
Versus
Economic Offence Wing – Respondent
WRIT PETITION No. 38286 of 2025
For the Appellants/Petitioners: Siddharth Radhe Lal Gupta, Aryan Urmaliya
For the Respondents: Madhur Shukla, Abhinav Malhotra
The High Court will not quash an FIR during the initial investigation stage of a cognizable White-collar crime, especially where audit reports indicate substantial financial misappropriation, as the police have the statutory right and duty to investigate such allegations without judicial interference.
Headnote:(A) Economic Offences - Investigation - Jurisdiction of Economic Offence Wing - Allegations of financial embezzlement in private society - The Court held that EOW possesses the authority to investigate White-collar crimes, including financial fraud involving large sums and misuse of public funds, particularly when the entity receives tax benefits or interacts with government fiscal policies. (Paras 13, 16)
(B) Criminal Procedure - Quashing of FIR - Principles regarding investigation - High Court should not thwart investigations into cognizable offences at the initial stage, especially when evidence suggests serious financial irregularities. Investigation is a statutory right of the police. (Paras 30, 32)
Facts of the case:
The petitioners, office bearers of a private society running educational institutions, challenged an FIR registered by the EOW for misappropriation of funds. They argued that the EOW lacked jurisdiction and that the audit reports forming the basis of the FIR were ex-parte and incomplete. They asserted that the matter of society management was already pending before the Supreme Court.
Findings of Court:
The Court observed that the audit reports, conducted at the instance of an Ad-hoc committee appointed under Supreme Court directions, revealed significant financial irregularities and non-compliance with statutory regulations. The Court affirmed that EOW has a mandate to investigate White-collar crimes. The Court held that the pending Supreme Court litigation regarding election issues did not bar the investigation into separate allegations of financial embezzlement.
Issues: Whether the EOW has the jurisdiction to register an FIR for financial irregularities in a private society, and whether the FIR warrants quashing at the investigation stage given the pending Supreme Court litigation.
Ratio Decidendi: The Court held that investigation into cognizable offences, especially involving substantial misappropriation of funds, cannot be scuttled by the High Court prematurely. The EOW’s authority to investigate extends to White-collar crimes where there is a substantial public interest or misuse of tax-exempt financial facilities.
Result: Petition dismissed.
| Table of Content |
|---|
| 1. overview of the petition for fir quashing and the background dispute of the society. (Para 1 , 2 , 3 , 4 , 5 , 6 , 7) |
| 2. petitioners' arguments regarding lack of jurisdiction and ex-parte audit reports. (Para 8 , 9 , 10 , 11) |
| 3. court's affirmation of eow's jurisdiction over white-collar financial crimes. (Para 12 , 13 , 14 , 15 , 16 , 17 , 18) |
| 4. discussion on prima facie financial discrepancies evidenced in the audit reports. (Para 19 , 20 , 21 , 22 , 23 , 24 , 25 , 26 , 27 , 28 , 29) |
| 5. judicial self-restraint in interfering with ongoing investigations into cognizable offences. (Para 30 , 31 , 32 , 33 , 34 , 35) |
ORDER
The present petition is preferred seeking quashment of an First Information Report registered at Crime No.131/2025 by the Economic Offence Wing (EOW) against the petitioners regarding misappropriation of funds by them.
2. It is the case of the petitioners that they are the office bearers and members of the governing body of private unaided self funding Society - Astha Society, Indore running a host of educational institutions, medical college and an appended hospital attached to it. Astha Society is a private Society registered under the provisions of MP Societies Registration Act, 1973 having its own bye-laws and governed by it. It does not receive any kind of government support, funding, grant nor any government interference in its day-to-day functioning and operations. Astha Society is currently running Nine Educational Institutions with more than 2500 students studying therein. Astha Society was constituted in the year 2007 and from time to time had undergone change of constitution and management.
3. Respondent no. 3 is one of the former members and contends that the elections to the Astha Society must be convened on the basis of the list of life members as on 30.01.2016. It is further pointed out that the election to the Astha Society had not been convened after 30.1.2016, therefore, the management and control should be handed over to the Registrar, Firms & Societies and prayed for staying operation of the bank account by the present members. It is pointed out that in the year 2020 Astha Society underwent a complete change of management when the petitioners were inducted as life members as per the applicable procedure and provisions of the Societies Registration Act, 1973. The current Governing body of 19 members was inducted in December, 2020 through the resolution dated 17.12.2020. The same was duly communicated to the Registrar, Firms & Societies as per the prescribed procedure and format. It is pointed out that the Chouksey Group which is currently the governing body and in control of the operation and management of Astha Society has three sister entities namely H. K. Kalchuri Education Trust, LNCT University, Bhopal which is being run by the H. K. Kalchuri Trust, LNCT Engineering College and Management, Raisen road, Bhopal which is being run by the H. K. Kalchuri Trust and M/s. Kalchuri Contractors Limited, which is providing contractors and caterers catering facilities and services to educational campuses of all the institutions run by the trust as well as the Astha Society.
4. The case is having a chequered history. Initially a dispute arose with respect to one list of life members as on 30.1.2016 which the private respondents no. 2 and 3 contend to be basis of the holding elections to the Astha Society. Accordingly, a writ petition being filed in the said regard for convening elections on the basis of the aforesaid list of 30.1.2016 being WP No.27769/2023 parties being Anil Sanghvi & Anr. v. Registrar Firms & Societies, MP & Ors.; which was decided vide order dated 23.4.2024 by the Division Bench of this Court (Indore Bench) directed for holding elections of the said society as per the list of members as on 30.1.2016. It was also directed that the accounts and finances of the society shall not be operated upon, till the elections of the said Astha Society. The said order passed by
