SC stays Delhi HC interim order in Neeraj Singal matter, transfers case to itself

The Supreme Court today stayed the interim order passed by the Delhi High Court in the Neeraj Singal case, and transferred the matter to itself.

The interim bail granted to Singal, who was implicated in the Bhushan Steel case, will however continue to operate.

The order was passed by a Bench of Justices AM Khanwilkar and DY Chandrachud.

The  Court noted in its order that the observations made in the order of Delhi High Court may have far-reaching consequences and may deprive the Competent Authority or the Statutory Authority to proceed in the matter in accordance with the provisions of the Companies Act, 2013 in respect of investigations and including filing of complaint/police report concerning the offences involving serious financial frauds or economic misdemeanor.

It, therefore, stayed the order.

The interim relief granted to Neeraj Singal limited to his release on personal bond shall remain in force during the pendency of these proceedings, subject to the fulfillment of the conditions imposed by the High Court.

Additionally, the Supreme court also directed that Singal has to report to the concerned officer of SFIO on every Monday and Thursday between 10:30 AM to 12:30 PM and on such other day or time as directed by the officer concerned.

Interestingly, the Supreme Court was critical of the Delhi High Court passing interim directions despite being informed that the Supreme Court was seized of the matter. It did not refrain from expressing its disapproval to the same stating,

“We may only observe that urgent mentioning of the case was made before the Bench presided over by the learned Chief Justice of India and hearing thereon continued after court hours on 29.08.2018. The matter was directed to be listed on the next day on 30.08.2018. Propriety demanded that the High Court should have showed deference and awaited orders in the present proceedings. The haste with which the High Court was moved on the evening of 29.08.2018 at around 5:20 P.M. to implement its order, despite this Court being seized of the proceedings would indicate an attempt by Respondent No.1/Neeraj Singal to pre­empt the hearing before this Court by securing release. We express our disapproval.”

The case is an appeal against the order of the Delhi High Court passed by a Bench of Justices S Muralidhar and Vinod Goel. The High Court had granted interim bail to Singal in a Habeas Corpus writ petition filed by Singal’s mother against his arrest by the Serious Fraud Investigation Office (SFIO).

Singal, who was first person ever to be arrested by the SFIO after it was granted the power to arrest in August 2017, had been in judicial custody since August 8.

The High Court, while granting interim bail, had made some pertinent observations with respect to Section 212 of the Companies Act.

It was submitted on behalf of SFIO that Section 212 of the Companies Act is a code by itself as far as the procedure for arrest, investigation and prosecution of the offences under the Companies Act is concerned. It was submitted that there is no requirement for the registration of a case or the maintenance of case diaries as mandated by Section 172 Cr PC.

Further, as in the cases of the officers of Customs and Directorate of Enforcement (DoE), the officers of the SFIO are also not police officers. Moreover, it was also contended by SFIO that the investigation report under Section 212 (15) is not the final report as contemplated under Section 173 Cr PC and it is only “for the purpose of framing charges”.

The High Court had, however, viewed these submissions unfavourably and stated in its interim order that the attempt by the SFIO to exclude the applicability of the Code of Criminal Procedure (CrPC) at this stage was prima facie not convincing.

It noted that Section 438 of the Companies Act is clear that unless explicitly excluded by any provision of the Companies Act, the CrPC would apply to the investigation and prosecution of all offences.

“Section 212 (6) excludes the applicability of the Cr PC only for the limited purpose of treating the offence under Section 447 cognisable and not for the entire procedure to be associated with such deeming nature of the offence”, the High Court had observed.

The contention regarding SFIO officers not being police officers also met with a similar adverse observation:

“It is, therefore, not possible at this stage to conclude that for the purposes of the penal provisions under the Companies Act the senior officers of the SFIO including the IO are not police officers.”

The SFIO had wasted no time in challenging this order of the High Court in Supreme Court.

Additional Solicitor General Maninder Singh appearing for the SFIO had submitted before the Supreme Court that the provisions of the CrPC will not be attracted when a special law is in place.

Citing precedents pertaining to the Prevention of Money Laundering Act (PMLA), Singh said that a similar scheme has been incorporated in the Companies Act. He had, therefore, sought a stay on the High Court order.

However, Senior Advocate Kapil Sibal, appearing for Singal, had submitted that the statutory scheme, in this case, is “entirely different” from PMLA.

“Here the proceedings is on a police report which PMLA and other such statutes don’t talk about. And if it is a Police report, Section 164 of CrPC and other provisions have to apply.

Your Lordships have held in Mahajan’s case that if investigations result in a police report, CrPC has to apply”, Sibal had said.

The Court had then reserved its order.

Read the order below.