22 August 2024 Criminal Appeals & Suspension of Sentence >> Criminal Law   |   Default or Fraud >> Debt Recovery  

The Supreme Court of India has recently remanded two significant writ petitions to the High Court of Judicature at Bombay, setting aside a previous judgment delivered on January 5, 2022. These petitions pertain to high-profile financial fraud cases involving the Central Bureau of Investigation (CBI) and accusations against prominent individuals linked to fraudulent activities during the Initial Public Offerings (IPOs) of Yes Bank Ltd. and Infrastructure Development Finance Company Ltd. (IDFC).

The Legal Proceedings:

On February 20, 2006, the CBI registered a case against 19 individuals following a complaint by R. Ravichandran from the Securities and Exchange Board of India (SEBI). The complaint centered on fraudulent activities associated with Yes Bank’s IPO, which took place from June 15 to June 21, 2005. Another case was registered on February 21, 2006, involving 26 individuals related to IDFC’s IPO, which ran from July 15 to July 22, 2005. The second FIR specifically named the respondent in this case.
Chargesheets were filed in both cases in 2007 and 2008, and the Special Court took cognizance of the cases in March 2008. The charges included serious offenses under the Indian Penal Code (IPC) and the Prevention of Corruption Act, 1988.

Settlement with SEBI: 

The respondent later sought a consent order from SEBI. On September 4, 2009, SEBI's Advisory Committee directed the respondent to pay a substantial amount as settlement charges and disgorgement of unjust profits. SEBI issued a consent order on December 7, 2009, resolving the regulatory proceedings.

Judicial Challenges and Orders: 

In 2018, the respondent challenged the charge-sheets in a writ petition (No. 406 of 2018) before the Bombay High Court, arguing against their validity. The Division Bench of the High Court dismissed the petition, leading the respondent to withdraw a subsequent Special Leave Petition (Crl.) No. 3495 of 2018 from the Supreme Court, with permission to challenge the SEBI consent order’s impact in a new writ petition. On January 29, 2020, the respondent filed Writ Petition Nos. 245 and 730 of 2020, seeking to quash the criminal proceedings and stay further proceedings in the respective cases. These petitions differed from the previous ones by focusing on challenging the cognizance orders rather than the FIRs and charge-sheets.

High Court’s Decision and Supreme Court’s Intervention:

The Single Judge of the High Court quashed the criminal proceedings, deeming their continuation an abuse of process. The CBI contested this decision, arguing that the matter should have been heard by a Division Bench as per High Court rules and that the respondent’s legal maneuvering aimed to exploit procedural loopholes.
The Supreme Court, after reviewing the submissions, concluded that the petitions should have indeed been heard by a Division Bench. Consequently, the Court set aside the Single Judge’s order and remanded the case to the High Court for a fresh hearing by a Division Bench. The Supreme Court emphasized that the Division Bench should independently evaluate the case without being influenced by previous judgments or observations.

Directions for Expedited Disposal:

Given the long-standing nature of the case, originating in 2006, the Supreme Court requested the High Court to expedite the proceedings and dispose of the petitions within three months. The Court also granted a temporary stay on further proceedings in the lower court cases, allowing parties to seek extensions or modifications from the Division Bench.

Conclusion:

The Supreme Court's intervention underscores the complexity and high stakes of financial fraud cases and the importance of procedural correctness in judicial reviews. The remand to the Division Bench ensures a thorough and fair consideration of the respondent's claims and the ongoing legal proceedings, reaffirming the principles of justice and due process. 

  Code of Criminal Procedure, 1973    COMPANIES ACT, 2013