13 May 2025 Criminal Appeals & Suspension of Sentence >> Criminal Law  

In NDA Securities Ltd. v/s State (Nct Of Delhi) & Another., the Supreme Court of India has overturned a Delhi High Court order that directed the release of Rs. 15.90 lakhs to a company, Respondent No. 2, whose shares were involved in an alleged fraudulent transaction. This amount, representing the payout for the sale of shares, was being withheld by the Bombay Stock Exchange Ltd. (BSE).

The case originated from a complaint filed by the appellant company, engaged in share trading, alleging fraud in August 2015. The appellant claimed that a person impersonating their client, "Brij Mohan Gagrani," instructed the purchase of 1 lakh shares of Ashutosh Paper Mills Ltd. After the transaction, the actual client denied making the call, leading the appellant to suspect connivance between their agent and the share seller. An FIR was subsequently registered under Sections 420 and 120B of the Indian Penal Code.

Investigations revealed that approximately 72,000 shares worth Rs. 15.90 lakhs were sold by Respondent No. 2. While the charge sheet identified one Amit Jain as the main accused who made the fraudulent call, it also stated that Respondent No. 2 was the primary beneficiary. Crucially, the charge sheet indicated that Amit Jain was absconding and that his arrest and interrogation were necessary to ascertain Respondent No. 2's role.

Respondent No. 2 had sought the release of the withheld funds from the Magistrate Court, which was dismissed, and a subsequent revision petition was also denied. Both lower courts emphasized that Respondent No. 2's role was still under investigation and that releasing the funds could prejudice the appellant's rights.

However, the Delhi High Court, in an order dated February 25, 2025, allowed Respondent No. 2's petition under Section 482 of the Criminal Procedure Code, directing the release of the funds on superdari (interim custody) subject to a guarantee. The High Court observed that Respondent No. 2 genuinely put its shares on the market and should not be denied the sale value merely due to the fraud played on the appellant.

The Supreme Court, in its ruling, held that the High Court exceeded its inherent jurisdiction under Section 482 CrPC. The apex court noted that the High Court should not have made observations about Respondent No. 2's potential innocence when the investigation is still incomplete and the main accused remains at large.

The Supreme Court emphasized that releasing the funds at this premature stage, especially when Respondent No. 2 was the main beneficiary of the alleged fraud and its role is yet to be fully ascertained, could cause irreparable loss to the appellant and undermine the entire investigation.

Therefore, the Supreme Court set aside the Delhi High Court's order dated February 25, 2025. It directed that the Rs. 15.90 lakhs from the sale of shares by Respondent No. 2 shall remain with the BSE during the pendency of the trial. The Supreme Court clarified that its decision does not reflect on the merits of the case and directed the Trial Court to proceed with the trial expeditiously.

Section 482., Code of Criminal Procedure - 1973  

Code of Criminal Procedure, 1973  

Section 120B., Indian Penal Code - 1860  

Section 420., Indian Penal Code - 1860  

Indian Penal Code, 1860