Case Note & Summary
The appellant, NDA Securities Ltd., filed a criminal appeal against the order of the High Court of Delhi dated 25.02.2025, which allowed a petition under Section 482 CrPC filed by respondent no. 2 (a company engaged in share trading) and directed the release of Rs. 15.90 lakhs withheld by the Bombay Stock Exchange (BSE) as payout for sale of shares. The dispute arose from an FIR registered on 07.08.2015 under Sections 420 and 120B IPC, based on a complaint by the appellant that on 01.04.2013, a person impersonating their client Brij Mohan Gagrani instructed them to purchase 1 lakh shares of Ashutosh Paper Mills Ltd. After purchase, the real Brij Mohan Gagrani denied making the call. The appellant alleged that their agent Ashish Agarwal connived with the seller. Investigation revealed that about 72,000 shares worth Rs. 15.90 lakhs were sold by respondent no. 2. Charge sheet was filed against Amit Jain, the alleged caller, who is absconding. The charge sheet noted that respondent no. 2 was the main beneficiary and its role could only be ascertained after arrest of Amit Jain. Respondent no. 2 filed an application before the Magistrate for release of the money, which was dismissed on 16.09.2016 holding that the role of respondent no. 2 was under investigation. A revision petition was also dismissed on 08.12.2016. The High Court, however, allowed the Section 482 petition, observing that respondent no. 2's role in the fraud could not be ascertained and that the sale value could not be denied merely because of fraud. The Supreme Court held that the High Court exceeded its inherent jurisdiction under Section 482 CrPC by conducting a mini trial and making observations on the merits when investigation was incomplete. The Court noted that releasing the funds would cause irreparable loss to the appellant and frustrate the investigation. The Supreme Court set aside the High Court's order, restored the orders of the Magistrate and Revisional Court, and directed that the sale value of Rs. 15.90 lakhs be kept with BSE during the pendency of the trial. The Court clarified that it made no observations on the merits and directed the trial court to proceed expeditiously.
Headnote
A) Criminal Procedure Code - Inherent Powers - Section 482 CrPC - Scope of High Court's jurisdiction - The High Court, while exercising inherent powers under Section 482 CrPC, cannot conduct a mini trial or make conclusive findings on the role of a party when investigation is incomplete - Held that the High Court exceeded its jurisdiction by directing release of funds and making observations on the merits of the case (Paras 10-12). B) Criminal Procedure Code - Investigation - Release of Property - Pending investigation, the release of sale proceeds of shares to the main beneficiary of an alleged fraudulent transaction is premature and may cause irreparable loss to the complainant and frustrate the investigation - Held that the Magistrate and Revisional Court correctly refused release of funds (Paras 11-12).
Issue of Consideration
Whether the High Court, in exercise of its inherent jurisdiction under Section 482 CrPC, could direct the release of sale proceeds of shares to the respondent when the investigation was still pending and the respondent's role was yet to be ascertained.
Final Decision
The Supreme Court allowed the appeal, set aside the High Court order dated 25.02.2025, and directed that the sale value of Rs. 15.90 lakhs be kept with BSE during the pendency of the trial. The Court made no observations on merits and directed expeditious trial.
Law Points
- Section 482 CrPC does not permit mini trial
- High Court cannot make findings on merits during investigation
- Release of funds may cause irreparable loss and vitiate investigation
