The Supreme Court is slated to consider the issue of whether both the Central Bureau of Investigation (CBI) and the Serious Fraud Investigation Officer (SFIO) can conduct parallel investigations into offenses arising out of the same FIR.

The issue arose before the bank of CJI Sanjiv Khanna and Justice Sanjay Kumar which heard the CBI’s appeal against the order of the High Court of Karnataka which quashed two cases registered against Vijayraj Surana, promoter director of Surana Power Limited, registered under S. 13(2) read with 13(1)(d) of the Prevention of Corruption Act.

The CBI had registered the FIR based on the complaint filed by IDBI Bank alleging that the company’s account became a non-performing asset between March 2013 and November 2015 at various banks. Forensic audit was conducted for financial year 2009-10 to 2017-18 and it was reported that there were misuse of funds, sources of capital, manipulation in award of projects, accounting manipulation and misappropriation of funds. After which he filed the complaint.

The single bank a Justice Hemant Chandangoudar noted that the FIRs were filed in the Forensic Audit Report for the financial year 2009-10 to 2017-18.

The allegations, even if prima facie accepted, the Court said would amount to the petitioner having committed a fraud as defined in Explanation (i) to Section 447 of the Companies Act. He also pointed out that Section 212 of the Companies Act deals with the investigation of a company’s affairs by a Serious Fraud Investigation Officer (SFIO).

According to explanation (i) of S.447, fraud is defined as any act, omission, concealment of facts or abuse of position with intent to defraud, obtain an unfair advantage or cause injury to a company, its shareholders or the public in general.

Today, in the hearing, the CJI verbally remarked that the High Court judgment appeared incorrect and that it is legally possible for the Police or the CBI (if the law permits) to conduct a parallel investigation of the same incident under the IPC.

He also denied the suggestion that allowing two parallel investigations would amount to double jeopardy as it would apply only at the stage of prescribing punishment.

“Prima facie, the ruling does not appear to be correct because the law is very clear … double jeopardy normally applies when s. 26 of the General Clauses Act comes into play in the case of punishment. When we say that the offenses under the Companies Act can be investigated by the SFIO, it is in respect of the offenses mentioned in the Companies Act. But if the same act or when the requirements (of the crime) are slightly different – they constitute an offense under the IPC. investigation can certainly be done by both police and CBI where permitted.“, the CJI said.

In particular, S.26 of the General Clauses Act 1897 provides: Where an act or omission constitutes an offense under two or more enactments, then the offender shall be liable to prosecution and punishment under any of them laws, but will not be responsible. to be punished twice for the same crime.

Counsel appearing for Surana submitted that under Section 212 of the Companies Act, it is mandated that the inquiry be transferred to the SFIO as long as the matter is taken up with the SFIO.

“This is not a case of double jeopardy. 212 is a provision that gives primacy to one agency and says that only that agency will investigate and all central and state agencies will have to entrust the investigation”. he added

The CJI then intervened: “No, that will be wrong, because then so many crimes – the SFIO can’t deal with it”

However, the CBI counsel pointed out that the High Court order quashed the FIR completely instead of transferring the case to the SFIO. He pointed out that the ramifications of this would mean that there would be no legal action or investigation against Surana.

“Cancelling the FIR without going into substance, will result in double jeopardy even later. Although the order says that the CBI can present the complaint and documents before the SFIO, once the FIR is quashed, the offense will be impugned. a non-est violation reaches the SFIO, they cannot reopen the investigation”

The CJI added that while the SFIO may have powers to investigate in an FIR in respect of offenses under the Companies Act, when the offenses were under the Prevention of Corruption Act, it was imperative that the police investigate the matter.

The Tribunal asked counsel to prepare briefs addressing the following issues: (1) charges against the accused company under the IPC and PCA; (2) date of registration of FIR and status of investigation; (3) the date on which the investigation was transferred to the SFIO; (4) whether the SFIO has filed a charge sheet under the IPC and the Companies Act and (5) Provisions that would deal with the investigation by the SFIO and the CBI

The matter will now be heard in December.

The High Court, in its order, made the following observations:

“Though the CBI has invoked Section 13(2) read with Section 13(1)(d) of the Prevention of Corruption Act, there is no allegation in the first information report that the accused in connivance with the bank officials who are subject to the purview of public servants, so as defined in the Prevention of Corruption Act, misused funds, source of capital, manipulation in project award, accounting manipulation and misappropriation of funds. In the absence of the essential elements constituting the offenses under the PC Act, the contention of the learned counsel for the CBI that the SFIO cannot investigate the offenses under the PC Act is not acceptable, when there is no charge of investigation of the offense under the PC Act. .”

Case details : CENTRAL BUREAU OF INVESTIGATION Vs VIJAYRAJ SURANA| SLP(Crl) No. 9381/2024