Supreme Court of India
DIRECTORATE OF ENFORCEMENTversusNIRAJ TYAGI & ORS
- Citation
- 2024 INSC 106
- Decided
- 13 February 2024
- Bench
- BELA M TRIVEDI
Holding
The High Court's blanket stay of the investigations and restraining orders were ultra vires and must be set aside.
Summary
The Enforcement Directorate (ED) investigated money‑laundering offences arising from three FIRs and an ECIR filed against India Bulls Housing Finance Ltd (IHFL) and its officers after the financial institution recovered dues from defaulting borrowers under the SARFAESI Act. The borrowers challenged the FIRs and the ECIR by filing writ petitions in the Allahabad High Court, which stayed the investigations and barred any coercive action against the respondents. The ED appealed, arguing that the High Court’s interim orders contravened settled Supreme Court jurisprudence that courts should not stay investigations unless the FIR discloses no cognizable offence. The Supreme Court examined the scope of Section 482 of the CrPC and reiterated guidelines from Neeharika Infrastructure v. State of Maharashtra, emphasizing that staying investigations is permissible only in rare cases. It held that the High Court’s blanket stay was an overreach and not supported by law, and therefore set aside the interim orders. Consequently, the appeals were allowed and the High Court’s orders were vacated, without expressing any view on the merits of the pending writ petitions.
Issues considered
- The propriety of the High Court's interim orders staying investigations and restraining coercive action under Section 482 of the CrPC.
- Whether the FIRs disclose a cognizable offence warranting investigation.
- The extent of inherent powers of the High Court to quash criminal proceedings and to stay investigations.
- The applicability of Supreme Court guidelines on interim stays of investigations in quashing petitions.
Legislation cited
- Code of Criminal Procedure, 1973s. 173, s. 438, s. 482
- Prevention of Money Laundering Act, 2002
Subjects
Quashing of FIRStaying the investigationsPowers of the High CourtMalafide or malicious criminal proceedingsInvestigating agenciesEnforcement DirectorateInherent powersJudicial comityJudicial disciplineExtraordinary powersMoney laundering
Judgment
[2024] 2 S.C.R. 311 : 2024 INSC 106
Directorate of Enforcement
v.
Niraj Tyagi & Ors.
(Criminal Appeal No. 843 of 2024)
13 February 2024
[Bela M. Trivedi* And Prasanna B. Varale, JJ.]
Issue for Consideration
Interim orders passed by the High Court staying the investigations
of the FIRs and the Enforcement Directorate, if justified.
Headnotes
Code of Criminal Procedure, 1973 – s. 482 – Powers of the
High Court under – Banking financial institution sanctioned
loan facilities to the borrowers, however, the borrowers
defaulted – Banking institution auctioned the property
and sold the shares of the borrowers for the recovery of
its dues – Registration of FIR by the borrowers against
the Banking institution and its officers, and investigation
by the Enforcement Directorate – Writ petition before the
High Court by the officers seeking quashing of FIR and as
also consequential proceedings arising therefrom – Orders
passed by the High Court staying the investigations of the
FIRs and ECIR and restrained the investigating agencies
from investigating into the cognizable offences as alleged
in the FIRs and the ECIR – Propriety:
Held: Inherent powers u/s. 482 do not confer any arbitrary
jurisdiction on the High Court to act according to whims or caprice
– Statutory power has to be exercised sparingly with circumspection
and in the rarest of rare cases – Said order passed in utter
disregard of the settled legal position – Without undermining the
powers of the High Court u/s. 482 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., the High Court could not have
stayed the investigations and restrained the investigating agencies
* Author
312 [2024] 2 S.C.R.
Digital Supreme Court Reports
from investigating into the cognizable offences as alleged in the
FIRs and the ECIR, particularly when the investigations were at a
very nascent stage – 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 u/s. 482, the High Court granted blanket orders restraining
the arrest without the accused applying for the anticipatory bail
– Thus, the impugned orders passed by the High Court being
not in consonance with the legal position, set aside – Impugned
interim orders passed by the High Court qua the accused stands
vacated. [Paras 20, 23-25]
Judicial discipline – Principle of:
Held: Judicial discipline and Judicial comity and demands that
higher courts should follow the law – Extraordinary and inherent
powers of the court do not confer any arbitrary jurisdiction on the
court to act according to its whims and caprice. [Paras 24, 25]
Case Law Cited
Neeharika Infrastructure Pvt. Ltd. vs. State of
Maharashtra and Others, [2021] 4 SCR 1044 : (2021)
SCC Online SC 315 – relied on.
K. Virupaksha and Another vs. State of Karnataka and
Another, [2020] 2 SCR 1020 : (2020) 4 SCC 440; A.P.
Mahesh Cooperative Urban Bank Shareholders Welfare
Association vs. Ramesh Kumar Bung and Others, [2021]
6 SCR 850 : (2021) 9 SCC 152; State of Telangana
vs. Habib Abdullah Jeelani and Others, [2017] 1 SCR
141 : 2017 (2) SCC 779 – referred to.
List of Acts
Code of Criminal Procedure, 1973; Prevention of Money Laundering
Act, 2002.
List of Keywords
Quashing of FIR; Staying the investigations; Powers of the High
Court; Malafide or malicious criminal proceedings; Investigating
agencies; Enforcement Directorate; Inherent powers; Judicial
comity; Judicial discipline; Extraordinary powers; Money
laundering.
[2024] 2 S.C.R. 313
Directorate of Enforcement v. Niraj Tyagi & Ors.
Case Arising From
CRIMINAL APPELLATE JURISDICTION : Criminal Appeal No.843
of 2024
From the Judgment and Order dated 13.07.2023 of the High Court of
Judicature at Allahabad in CRMWP No.10893 of 2023
With
Criminal Appeal Nos. 844 And 845 of 2024
Appearances for Parties
S.V. Raju, ASG, Siddhartha Dave, Sr. Adv., Udai Khanna, Rudra
Pratap, Talha Abdul Rahman, M Shaz Khan, Tushar Randhawa,
Rahul Sharma, Nandini Singh, Adnan Yousuf, Mukesh Kumar Maroria,
Advs. for the Appellant.
Ardhendumauli Kumar Prasad, Sr. Adv./A.A.G, Ranjit Kumar, Dhruv
Mehta, Sr. Advs., Mahesh Agarwal, Rishi Agrawala, Ankur Saigal, Mr.
Ankit Banati, Kajal Dalal, E. C. Agrawala, Ms. Fauzia Shakil, Rajat
Singh, Ms. Rukhmini S. Bobde, Vivek Narayan Sharma, Sarthak
Chandra, Akshay Kumar, Ms. Ananya Sahu, Deepesh Singh, Arun
Pratap Singh Rajawat, Tishampati Sen, Ms. Riddhi Sancheti, Anurag
Anand, Mukul Kulhari, Anubhav Ray, Advs. for the Respondents.
Judgment / Order of the Supreme Court
Judgment
Bela M. Trivedi, J.
1. Leave granted.
2. The appellants being aggrieved by the interim orders dated
13.07.2023, 08.08.2023 and 13.09.2023 passed by the High Court
of Judicature at Allahabad in Criminal Misc. Writ Petition Nos.
10893/2023, 11837/2023 and 14053/2023 respectively, have preferred
the instant appeals. Vide the impugned orders, the High Court has
stayed the proceedings of the FIRs registered against the concerned
respondents-accused as also stayed the proceedings of ECIR No.-
ECIR/HIU-I/06/2023 registered by the Directorate of Enforcement
against the concerned respondents, and further directed not to take
any coercive action against the said respondents pending the said
314 [2024] 2 S.C.R.
Digital Supreme Court Reports
writ petitions. All the appeals being interconnected with each other,
they were heard together and it would be appropriate to decide them
by this common judgment.
3. The respondent India Bulls Housing Finance Limited (IHFL) is a non-
banking financial institution incorporated under the provisions of the
Companies Act. IHFL deals with the public money. The major source
of funds for the loans to be advanced by IHFL, is either the loans
from the other banks or from the public in the form of non-convertible
debentures. The respondents Niraj Tyagi is the President (Legal) and
Reena Bagga is the authorized officer of the IHFL.
4. M/s Kadam Developers Pvt. Ltd. (hereinafter referred to as M/s
Kadam) was one of the Shipra Group entities. M/s Kadam had
a sub-lease of a parcel of land admeasuring 73 acres in Sector
128, Noida, which was allotted to it by the predecessor of Yamuna
Expressway Industrial Development Authority (hereinafter referred to
as the YEIDA). The 100% equity shares of M/s Kadam were held by
Shipra Estate Limited (98%); Mohit Singh (1%) and Bindu Singh (1%).
5. Between 2017-2020, IHFL had sanctioned 16 loan facilities to the
tune of Rs. 2,801 crores to the Shipra Group/ Borrowers comprising
of Shipra Hotels Ltd., Shipra Estate Ltd. and Shipra Leasing Pvt.
Ltd. for the purposes of the construction and/or development of
Housing/Residential Projects. Against the said sanctioned loan, a
sum of approximately 1995.37 crores was disbursed. The financial
assistance was secured by the Shipra Group by executing 22
pledge agreements whereby the shares of various companies were
pledged in favour of IHFL. A pledge agreement was also entered
into by Shipra Groups and M/s Kadam with IHFL pledging 100%
equity shares (dematerialized) of M/s Kadam to secure the loan. The
mortgaged properties also included 73 acres of land at Noida that
had been sub-let to M/s Kadam by YEIDA, and the property called
‘Shipra Mall’ in Ghaziabad.
6. There being defaults in the repayment of loan amount, IHFL had
issued notices recalling all the loans advanced to the Shipra Group
amounting to Rs. 1763 crores (approx.). The said notices came to
be challenged by the Shipra Group before the Delhi High Court, by
filing FAO(OS) COMM 59/2021. The Delhi High Court vide order
dated 16.04.2021 recorded that IHFL could proceed further with the
recovery proceedings, however the sale of shares should be done
[2024] 2 S.C.R. 315
Directorate of Enforcement v. Niraj Tyagi & Ors.
at a fair market value and in a transparent manner. It appears that
a series of litigations under the SARFAESI Act before the DRT and
High Court had ensued between the parties.
7. IHFL on 01.07.2021 ultimately sold the shares of M/s Kadam pledged
with it to one Final Step Developers P. Ltd., a subsidiary of M3M India
P. Ltd. for Rs. 750 crores. Since Final Step Developers (earlier known
as M/s Creative Soul Technology P. Ltd) had no source of funds of its
own, the funds to purchase the shares of M/s Kadam were provided
to the Final Step Developers by the M3M India, which managed to
take loan from the IHFL on the same day i.e. 03.07.2021. Thus, the
purchase of shares of M/s Kadam by Final Step from the IHFL was
funded by the IHFL itself. The mortgaged properties-Shipra Mall at
Ghaziabad and the parcel of law admeasuring 73 acres at Noida
also eventually came to be sold by the IHFL towards the recovery
of its dues from the Shipra Group.
8. On 09.04.2023, an FIR being No. 427 of 2023 came to be filed by
one Amit Walia, a Director of Shipra Hotels, against IHFL and its
officers for the offences under Sections 420, 467, 468, 471, 120-B
IPC, 323, 504 & 506 at Police Station Indirapuram, alleging inter alia
that IHFL had illegally showed the Shipra group to be the defaulters,
so that they may misappropriate the properties owned by the Group
through illegal means. The FIR also alleged that IHFL had conspired
with M3M India, and by forging and fabricating the documents sold
73 acres of land of M/s Kadam to M3M India, for a sum of 300
crores when the market value of the same was about 4000 crores.
IHFL had also undervalued the shares and securities on the basis
of false and forged documents and had caused great loss to the
Shipra Estate Company and its Directors.
9. On 15.04.2023, another FIR being No. 197 of 2023 came to be filed
by YEIDA against IHFL, M3M India, M/s Kadam and M/s Beacon
Trusteeship Ltd. for the offences under Sections 420, 467, 468, 471
and 120-B at Police Station Beta-2, Greater Noida alleging inter
alia that the first charge of YEIDA was preserved in the permission
issued on 09.01.2018 for pledging the shares to IHFL however, the
IHFL neither informed nor sought any permission of YEIDA before
transferring the shares of M/s Kadam to M3M India. Thus, the terms
and conditions contained in the permission letter, indemnity certificate
and sub-lease document were violated by the financial institution and
316 [2024] 2 S.C.R.
Digital Supreme Court Reports
the sub-lessee, due to which the YEIDA had suffered a financial loss
of about Rs. 200 crores.
10. On 22.07.2023, yet another FIR being No. 611 of 2023 came to be
filed by one Mohit Singh, authorized representative of Shipra Group,
against Reena Bagga in her capacity as an authorized officer of IHFL
and others for the offences under Section 420, 120B IPC and 82 of
Registration Act at Police Station Kavi Nagar, Ghaziabad, alleging
therein that “Shipra Mall”, which formed a part of the properties
mortgaged with IHFL, had been sold in pursuance of recovery
proceedings on the basis of false and fabricated documents, for a
sum of Rs. 551 Crore to Himri Estate Pvt. Ltd. although the actual
value of the land was over 2000 crore. It has been alleged that
illegalities were committed by the said accused, by not showing the
actual value of Shipra Mall and thereby had caused huge loss to
the Shipra Group.
11. Since various FIRs came to be registered against the IHFL and its
officers, the same came to be challenged by them by filing the W.P.
(Crl) being no. 166 of 2023 before this Court (Gagan Banga and
Anr. vs. State of West Bengal and Ors.).
12. Pending the said W.P. No.166/2023, the Directorate of Enforcement
(ED) on the basis of the said FIR nos. 197/2023 and 427/2023
registered an ECIR bearing no. ECIR/HIU-I/06/2023 in Delhi on
09.06.2023, to investigate into the offences of money laundering
under the Prevention of Money Laundering Act, 2002.
13. According to the appellant-ED, this Court without giving the appellant
any opportunity of hearing, passed the following order on 04.07.2023
while disposing off the W.P. (Crl) No. 166/2023 and connected
Contempt Petition.
“1 to 3.……
4. Vide order dated 28.04.2023 passed in W.P. (Crl.)
No. 166/2023, criminal proceedings in three such FIRs
instituted by borrowers in different States, namely FIR No.
646/2022 dated 26.10.2022 registered at P.S. Titagarh,
FIR No. 427/2023 dated 09.04.2023 registered at P.S.
Indirapuram and FIR No. 25/2021 dated 27.01.2021
registered at P.S. EOW, Delhi were stayed.
[2024] 2 S.C.R. 317
Directorate of Enforcement v. Niraj Tyagi & Ors.
5. Further FIR No. 197/2023 dated 15.04.2023 was filed
by YEIDA at PS Beta-2, Greater Noida, UP, which also
refers to the aforesaid FIR No. 427/2023 dated 09.04.2023
registered at P.S. Indirapuram with some overlapping facts.
It is stated that on the basis of these two connected FIRs
namely FIR No. 427/2023 and 197/2023, now the ED
has registered ECIR bearing No. ECIR/HIU-I/06/2023 in
Delhi. The petitioners have now challenged the said FIRs
and ECIR.
6. In the circumstances, as it may also involve adjudication
on facts, we deem it appropriate to permit the petitioners
to approach the respective jurisdictional High Courts to
challenge all four FIRs and the ECIR within two weeks
from today, with a request to the respective High Courts
to consider and decide the petitions expeditiously, not later
than six months of their presentation.
7. We also direct DGPs of respective States to look into
the matter, examine the contentions of the petitioners in
respect of the contents of FIRs, and to take appropriate
measures in accordance with law within a period of one
month.
8. Till final disposal of the respective petitions, interim order
dated 28.04.2023 passed in W.P.(Crl.) No. 166/2023 would
continue in the three FIRs mentioned therein.
9. In so far as the further FIR No. 197/2023 dated
15.04.2023 filed by YEIDA and ECIR bearing No. ECIR/
HIU-I/06/2023 are concerned, no coercive steps would
be taken against the petitioner financial institution and its
officers, representatives and managers till final disposal of
such petitions by the High Court, and it would be open for
the petitioners to seek stay of proceedings which would be
considered by the High Court on its own merits. It is clarified
that this interim protection would only be applicable to the
petitioner financial institution and its officers, representatives
and managers, and not to any other person.”
14. The respondent-Niraj Tyagi and IHFL thereafter filed a writ petition
in the High Court being Criminal Misc. Writ Petition No. 10893/2023
318 [2024] 2 S.C.R.
Digital Supreme Court Reports
seeking issuance of appropriate writ, order and direction for declaring
Section 420 of IPC as arbitrary and ultra vires to the Constitution
of India and seeking quashing of the FIR No.197 of 2023 dated
15.04.2023 as also the consequential proceedings arising therefrom
as initiated by the ED in ECIR bearing No. ECIR/HIU-I/06/2023.
Similarly, the respondent Reena Bagga and IHFL filed another writ
petition being Criminal Miscellaneous Writ Petition No. 11837/2023
seeking quashing of the FIR being No.611/2023 registered against
them as also all the consequential actions taken by any authority/
agency in pursuance to the said FIR. The respondent M3M India
Pvt. Ltd. and Kadam Developers Pvt. Ltd. also filed a writ petition
being Criminal Misc. Writ Petition No.14053/2023 seeking the reliefs
similar to the reliefs prayed for in the Writ Petition No.10893/2023.
15. The High Court passed the following impugned Order on 13.07.2023
in Criminal Misc. Writ Petition No.10893 of 2023: -
“19. In view of the above, we are of the opinion that the
petitioners have made out a case for grant of the interim
as relief prayed for. Accordingly, in furtherance of the
protection granted by the Apex Court to the petitioners
by the order dated 4th July, 2023, while disposing of the
Contempt Petition (Civil) No. 774 of 2023, it is provided
that further proceedings, including summoning of the
officers, consequent to the F.I.R. No. 197 of 2023 dated
15.4.2023 under Sections 420, 467, 468, 471 and 120-B
- IPC, Police Station Beta-2, Greater Noida, Gautam Budh
Nagar, registered by Respondent No.2 and consequent
ECIR No. ECIR/HIU-I/06/2023 registered by Respondent
No. 4, shall remain stayed so far as it confines to the
petitioners only and no coercive action shall be taken
against them.”
16. The High Court passed the other impugned orders on 08.08.2023 in
Criminal Miscellaneous Writ Petition No.11837/2023 and on 13.09.2023
in Criminal Miscellaneous Writ Petition No.14053/2023, following the
order dated 13.07.2023 passed in Writ Petition No.10893/2023.
Consequently, the proceedings of the FIR No.197/2023, FIR
No.611/23 as also the ECIR No. ECIR/HIU-I/06/2023 have been
stayed qua the concerned respondents herein pending the said three
writ petitions before the High Court, and the concerned respondents
[2024] 2 S.C.R. 319
Directorate of Enforcement v. Niraj Tyagi & Ors.
who are the accused in the said FIRs have been protected from any
coercive action being taken against them. The present appeals stem
out of the aforesaid impugned orders passed by the High Court.
17. The ASG, Mr. Raju appearing for the appellant ED in all the three
appeals vehemently submitted that this Court had passed the order
dated 04.07.2023 in Gagan Banga’s case staying the proceedings
of ECIR and the FIRs registered against the concerned respondents
without hearing the ED, and therefore the ED has filed a Review
Petition, which is pending before this Court. He further submitted
that the High Court also without assigning any cogent reasons in
the impugned orders stayed the said proceedings of ECIR and FIRs
under the guise of following the said order dated 04.07.2023 passed
by this Court. Placing heavy reliance on the decision of the Three-
Judge Bench in Neeharika Infrastructure Pvt. Ltd. vs. State of
Maharashtra and Others1, he submitted that this Court has strongly
deprecated the practice of the courts granting interim orders staying
the investigation or directing the investigating agencies not to take
coercive actions against the accused. The impugned orders passed
by the High Court therefore being in the teeth of the said settled legal
position, the same deserve to be quashed and set aside forthwith.
18. However, the learned Senior counsels appearing for the respondents
in the respective appeals, taking the Court to the proceedings which
had taken place under the SARFAESI Act and before the High Court
and this Court, submitted that the respondent-complainant Shipra
Group having failed in all the said proceedings had taken recourse
to the criminal proceedings to create a fear amongst the financial
institution and its officers. They further submitted that the High Court
taking into consideration the order passed by this Court in Gagan
Banga’s case had rightly protected the financial institution and its
officers who had discharged their duties for the recovery of the dues
from the borrowers. Reliance is placed on the decision of this Court in
K. Virupaksha and Another vs. State of Karnataka and Another2
and in A.P. Mahesh Cooperative Urban Bank Shareholders Welfare
Association vs. Ramesh Kumar Bung and Others3, to submit that
1 [2021] 4 SCR 1044 : (2021) SCC Online SC 315
2 [2020] 2 SCR 1020 : (2020) 4 SCC 440
3 [2021] 6 SCR 850 : (2021) 9 SCC 152
320 [2024] 2 S.C.R.
Digital Supreme Court Reports
even in case of Neeharika Infrastructure (supra), the discretion
has been conferred on the High Court to pass the interim orders in
exceptional cases for not taking coercive steps against the accused
pending the proceedings, particularly when the proceedings under
the SARFAESI Act were initiated against the borrowers. According
to them, bypassing the statutory remedies available to the borrowers
or having failed in such proceedings, the borrowers should not be
permitted to prosecute the financial institution or its officers or the
purchasers just to instill a fear in their mind, which otherwise would
have the potentiality to affect the marrows of economic health of
the nation.
19. At the outset, it may be noted that the impugned interim orders have
been passed by the High Court under the umbrella of the order
dated 04.07.2023 passed by this Court in Gagan Banga’s case,
creating an impression that the impugned orders were passed in
furtherance of the said order, though this Court had passed the said
order leaving it open to the High Court to decide the writ petitions
on their own merits.
20. In our opinion, it’s a matter of serious concern that despite the legal
position settled by this Court in catena of decisions, the High Court
has passed the impugned orders staying the investigations of the
FIRs and ECIR in question in utter disregard of the said settled legal
position. 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 and restrained the investigating agencies from
investigating into the cognizable offences as alleged in the FIRs and
the ECIR, particularly when the investigations were at a very nascent
stage. 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
[2024] 2 S.C.R. 321
Directorate of Enforcement v. Niraj Tyagi & Ors.
restraining the arrest without the accused applying for the anticipatory
bail under Section 438 of Cr.PC.
21. This Court in State of Telangana vs. Habib Abdullah Jeelani and
Others4, while dealing with the contours of Section 482 and 438
Cr.PC had emphasized that the direction not to arrest the accused
or not to take coercive action against the accused in the proceedings
under Section 482 Cr.PC, would amount to an order under Section
438 Cr.PC, albeit without satisfaction of the conditions of the said
provision, which is legally unacceptable.
22. Recently, a Three-Judge Bench in Neeharika Infrastructure (supra)
while strongly deprecating the practice of the High Courts in staying
the investigations or directing not to take coercive action against the
accused pending petitions under Section 482 of Cr.PC, has issued
the guidelines, which may be reproduced hereinbelow for ready
reference:-
“Conclusions
33. In view of the above and for the reasons stated above,
our final conclusions on the principal/core issue, whether
the High Court would be justified in passing an interim
order of stay of investigation and/or “no coercive steps
to be adopted”, during the pendency of the quashing
petition under Section 482CrPC and/or under Article 226
of the Constitution of India and in what circumstances and
whether the High Court would be justified in passing the
order of not to arrest the accused or “no coercive steps
to be adopted” during the investigation or till the final
report/charge-sheet is filed under Section 173CrPC, while
dismissing/disposing of/not entertaining/not quashing the
criminal proceedings/complaint/FIR in exercise of powers
under Section 482CrPC and/or under Article 226 of the
Constitution of India, our final conclusions are as under:
33.1. Police has the statutory right and duty under the
relevant provisions of the Code of Criminal Procedure
contained in Chapter XIV of the Code to investigate into
a cognizable offence.
4 [2017] 1 SCR 141 : 2017 (2) SCC 779
322 [2024] 2 S.C.R.
Digital Supreme Court Reports
33.2. Courts would not thwart any investigation into the
cognizable offences.
33.3. It is only in cases where no cognizable offence or
offence of any kind is disclosed in the first information report
that the Court will not permit an investigation to go on.
33.4. The power of quashing should be exercised sparingly
with circumspection, as it has been observed, in the “rarest
of rare cases” (not to be confused with the formation in
the context of death penalty).
33.5. While examining an FIR/complaint, quashing of which
is sought, the court cannot embark upon an enquiry as to
the reliability or genuineness or otherwise of the allegations
made in the FIR/complaint.
33.6. Criminal proceedings ought not to be scuttled at the
initial stage.
33.7. Quashing of a complaint/FIR should be an exception
rather than an ordinary rule.
33.8. Ordinarily, the courts are barred from usurping the
jurisdiction of the police, since the two organs of the State
operate in two specific spheres of activities and one ought
not to tread over the other sphere.
33.9. The functions of the judiciary and the police are
complementary, not overlapping.
33.10. Save in exceptional cases where non-interference
would result in miscarriage of justice, the Court and
the judicial process should not interfere at the stage of
investigation of offences.
33.11. Extraordinary and inherent powers of the Court
do not confer an arbitrary jurisdiction on the Court to act
according to its whims or caprice.
33.12. The first information report is not an encyclopaedia
which must disclose all facts and details relating to the
offence reported. Therefore, when the investigation by the
police is in progress, the court should not go into the merits
of the allegations in the FIR. Police must be permitted
[2024] 2 S.C.R. 323
Directorate of Enforcement v. Niraj Tyagi & Ors.
to complete the investigation. It would be premature to
pronounce the conclusion based on hazy facts that the
complaint/FIR does not deserve to be investigated or that
it amounts to abuse of process of law. After investigation, if
the investigating officer finds that there is no substance in
the application made by the complainant, the investigating
officer may file an appropriate report/summary before the
learned Magistrate which may be considered by the learned
Magistrate in accordance with the known procedure.
33.13. The power under Section 482CrPC is very wide,
but conferment of wide power requires the court to be
more cautious. It casts an onerous and more diligent duty
on the court.
33.14. However, at the same time, the court, if it thinks
fit, regard being had to the parameters of quashing and
the self-restraint imposed by law, more particularly the
parameters laid down by this Court in R.P. Kapur [R.P.
Kapur v. State of Punjab, 1960 SCC OnLine SC 21 : AIR
1960 SC 866] and Bhajan Lal [State of Haryana v. Bhajan
Lal, 1992 Supp (1) SCC 335 : 1992 SCC (Cri) 426] , has
the jurisdiction to quash the FIR/complaint.
33.15. When a prayer for quashing the FIR is made by the
alleged accused and the court when it exercises the power
under Section 482CrPC, only has to consider whether the
allegations in the FIR disclose commission of a cognizable
offence or not. The court is not required to consider on
merits whether or not the merits of the allegations make
out a cognizable offence and the court has to permit the
investigating agency/police to investigate the allegations
in the FIR.
33.16. The aforesaid parameters would be applicable and/
or the aforesaid aspects are required to be considered
by the High Court while passing an interim order in a
quashing petition in exercise of powers under Section 482
CrPC and/or under Article 226 of the Constitution of India.
However, an interim order of stay of investigation during
the pendency of the quashing petition can be passed with
circumspection. Such an interim order should not require
324 [2024] 2 S.C.R.
Digital Supreme Court Reports
to be passed routinely, casually and/or mechanically.
Normally, when the investigation is in progress and the
facts are hazy and the entire evidence/material is not
before the High Court, the High Court should restrain
itself from passing the interim order of not to arrest or “no
coercive steps to be adopted” and the accused should
be relegated to apply for anticipatory bail under Section
438CrPC before the competent court. The High Court
shall not and as such is not justified in passing the order
of not to arrest and/or “no coercive steps” either during
the investigation or till the investigation is completed and/
or till the final report/charge-sheet is filed under Section
173 CrPC, while dismissing/disposing of the quashing
petition under Section 482CrPC and/or under Article 226
of the Constitution of India.
33.17. Even in a case where the High Court is prima
facie of the opinion that an exceptional case is made
out for grant of interim stay of further investigation, after
considering the broad parameters while exercising the
powers under Section 482CrPC and/or under Article 226
of the Constitution of India referred to hereinabove, the
High Court has to give brief reasons why such an interim
order is warranted and/or is required to be passed so that
it can demonstrate the application of mind by the Court
and the higher forum can consider what was weighed
with the High Court while passing such an interim order.
33.18. Whenever an interim order is passed by the High
Court of “no coercive steps to be adopted” within the
aforesaid parameters, the High Court must clarify what
does it mean by “no coercive steps to be adopted” as the
term “no coercive steps to be adopted” can be said to be
too vague and/or broad which can be misunderstood and/
or misapplied.”
23. The impugned orders passed by the High Court are in utter disregard
and in the teeth of the said guidelines issued by the Three-Judge
Bench of this Court. It was sought to be submitted by the Learned
Counsels for the respondents-accused that the allegations made
in the FIRs are of civil nature, and have been given a colour of
[2024] 2 S.C.R. 325
Directorate of Enforcement v. Niraj Tyagi & Ors.
criminal nature. According to them, as discernible from the record,
number of proceedings had ensued between the parties pursuant to
the actions taken by the IHFL against the complainant-borrower for
the recovery of its dues under the SARFAESI Act, and the borrower
M/s Shipra after having failed in the said proceedings had filed the
complaints with ulterior motives. We do not propose to examine
the merits of the said submissions as the writ petitions filed by the
concerned respondents-accused seeking quashing of the FIRs on
such grounds are pending for consideration before the High Court.
It would be open for the High Court to examine the merits of the
petitions and decide the same in accordance with law.
24. 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.
25. The impugned orders passed by the High Court being not in
consonance with the settled legal position, the same deserve to be
set aside and are hereby set aside. The impugned interim orders
passed by the High Court qua the concerned respondents-accused
in the present appeals stand vacated forthwith.
26. We may clarify that we have not expressed any opinion on the merits
of the Writ Petitions which are pending before the High Court, and
that it would be open for the concerned respondents-accused to
take all legal contentions or take recourse to the legal remedies as
may be available to them in accordance with law.
27. The appeals stand allowed accordingly.
Headnotes prepared by: Nidhi Jain Result of the case:
Appeals allowed.
Search Indian case law
Ask in plain English, not just keywords. 25,000 AI words free, no card.
Try "Quashing of FIR"Sign in to search