High Court Shouldn't Have Stayed Investigation & Granted Blanket Protection From Arrest : Supreme Court Sets Aside Relief To Indiabulls Officers

The Supreme Court (on February 13) set aside the interim protection granted to Indiabulls Housing Finance Ltd. officers in an FIR registered against on a complaint by the Director of Shipra Estate and the consequent investigation by the Enforcement Directorate. Last year, the Allahabad High Court stayed the criminal proceedings, thus protecting the officers from arrest.The Division Bench of Justices Bela M. Trivedi and Prasanna B. Varale heavily criticized the High Court for staying the investigation. The Bench opined that the impugned orders were 'in utter disregard' and 'in the teeth' of the guidelines issued in M/s Neeharika Infrastructure Pvt. Ltd. vs. State of Maharashtra. In Neeharika, the Supreme Court had cautioned the High Courts against passing orders not to arrest or "no coercive steps to be taken" pending the investigation. “Without elaborating any further, suffice it to say that judicial comity and judicial discipline demands that higher courts should follow the law. The extraordinary and inherent powers of the court do not confer any arbitrary jurisdiction on the court to act according to its whims and caprice.,” the Court added.The brief allegations are that, between 2017 and 2020, IHFL sanctioned 16 loan facilities to Rs. 2,801 crores to the Shipra Group/ Borrowers. However, Shipra Group defaulted on the loan payment to IHFL. Thus, the property of Shipra Group, specifically Shipra Mall, was auctioned by IHFL. Himri Estate emerged as a successful bidder and purchased the mall.One Mohit Singh, a representative of the Shipra Group, filed multiple FIRs against the officers of IHFL and Himri Estate Pvt. Ltd, alleging that the sale of Shipra Mall was illegal as it was sold at a lesser valuation. The sale had caused a great loss of revenue to the State. Further, it was alleged that IHFL had illegally shown the Shipra group to be the defaulters so that they may misappropriate the properties owned by the Group.Pertinently, the FIRs were registered against several provisions of the Indian Penal Code of 1860. Based on these FIRs, the Directorate of Enforcement (ED) registered an ECIR to investigate the offences of money laundering under the Prevention of Money Laundering Act, 2002.Aggrieved by this, the concerned officers approached the High Court seeking quashing of the FIR and consequential proceedings in the money laundering matter.The High Court observed that the case was related to financial transactions- The loan, its non-payment, and the subsequent auction of the defaulter's properties. Accordingly, it was held: “…looking to the nature of the incident being related to financial institutions of money lenders who were pursuing recovery proceedings of their enforceable debts and the proceedings thereof satisfy the same, it is a fit case for grant of interim protection to the petitioners."It is against this order that the ED preferred the present appeal. The Top Court, inter-alia, said that by passing the impugned order, the High Court had granted blanket orders against the arrest. The Court explained that the same could not have passed when the accused did not pray for the anticipatory bail."It hardly needs to be reiterated that the inherent powers under Section 482 of Cr.PC do not confer any arbitrary jurisdiction on the High Court to act according to whims or caprice. The statutory power has to be exercised sparingly with circumspection and in the rarest of rare cases In a way, by passing such orders of staying the investigations and restraining the investigating agencies from taking any coercive measure against the accused pending the petitions under Section 482 Cr.PC, the High Court has granted blanket orders restraining the arrest without the accused applying for the anticipatory bail under Section 438 of Cr.PC.” To support this, reliance was placed on the State of Telangana vs. Habib Abdullah Jeelani and Others. Therein, the Top Court noted that the direction not to arrest the accused or not to take coercive action against the accused would amount to an order of anticipatory bail. The Court also found the impugned order to be against the settled position of law. “Without undermining the powers of the High Court under Section 482 of Cr.PC to quash the proceedings if the allegations made in the FIR or complaint prima facie do not constitute any offence against the accused, or if the criminal proceedings are found to be manifestly malafide or malicious, instituted with ulterior motive etc., we are of the opinion that the High Court could not have stayed the investigations…,” the Court reasoned. On these counts, the Top Court set aside the challenged order. The judgment also clarified that the above observations are not on the merits of the impending case before the High Court. Case Title: DIRECTORATE OF ENFORCEMENT vs. NIRAJ TYAGI., Diary No.- 31911 - 2023Citation : 2024 LiveLaw (SC) 114Click here to read/ download the judgment

High Court Shouldn't Have Stayed Investigation & Granted Blanket Protection From Arrest : Supreme Court Sets Aside Relief To Indiabulls Officers

Gyanvi Khanna

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High Court Shouldn't Have Stayed Investigation & Granted Blanket Protection From Arrest : Supreme Court Sets Aside Relief To Indiabulls Officers

Gyanvi Khanna

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