Union of India Vs State of Telangana & Ors (Supreme Court of India)
SEO Description: Supreme Court dismissed Union of India’s review but preserved its power under Section 212(6) to authorise an officer to institute a fraud complaint.
Summary: The Supreme Court dismissed the Union of India’s review petition seeking reconsideration of its earlier judgment concerning the maintainability of private complaints for offences under Sections 448 and 451 of the Companies Act, 2013. The Court noted that the complaints in the case had been filed by private individuals and held that this furnished no ground for reconsideration of the judgment under review.
The Supreme Court, however, expressly preserved the Union of India’s statutory remedy under the second proviso to Section 212(6) of the Companies Act, 2013. It clarified that the Central Government remains at liberty to authorise, through a general or special written order, any officer of the Central Government to institute the complaint in addition to the Director of the Serious Fraud Investigation Office (SFIO).
The judgment under review had arisen from criminal proceedings initiated following a dispute concerning the management and control of Shreemukh Namitha Homes Private Limited. Private complainants alleged that the accused directors had illegally convened an extraordinary general meeting, appointed third parties as directors and uploaded fabricated resolutions and statutory filings with the Ministry of Corporate Affairs. The Special Court took cognizance of offences under Sections 448 and 451 of the Companies Act along with offences under the IPC.
In the judgment under review, the Supreme Court examined whether an offence under Section 448, which makes a person giving a materially false statement or knowingly omitting a material fact liable under Section 447, constitutes an “offence covered under Section 447” for purposes of Section 212(6). The Court held that Section 448 could not be read independently of Section 447 because Section 448 specifies the ingredients of the offence while Section 447 provides the punishment for fraud. Consequently, an offence under Section 448 falls within the expression “offence covered under Section 447” appearing in Section 212(6).
The Court had further held that the second proviso to Section 212(6) constitutes a statutory safeguard governing cognizance of such fraud offences. Cognizance can be taken only upon a written complaint by the Director, SFIO, or an officer of the Central Government duly authorised by a general or special written order. This statutory restriction cannot be circumvented by taking cognizance under Section 448 without expressly invoking Section 447.
Accordingly, the Supreme Court had quashed C.C. No. 58 of 2022, the cognizance order dated 10 October 2022 and consequential proceedings insofar as Sections 448 and 451 of the Companies Act were concerned. The IPC offences were not quashed merely because civil and company-law proceedings were pending between the parties. However, once the Companies Act offences were quashed, the Special Court could not retain jurisdiction over the IPC offences merely by invoking Section 436(2), and those proceedings were directed to be transferred to the competent court.
The review order leaves these conclusions undisturbed. Its significance lies in the Supreme Court’s express clarification that dismissal of the review does not prevent the Union of India from using the statutory authorisation mechanism contained in the second proviso to Section 212(6). Thus, while the private complaints involved in the case could not sustain cognizance of the covered Companies Act fraud offences, the Central Government remains free to authorise an appropriate officer in writing to institute the complaint in accordance with the Act.
Full Text of the Supreme Court Review Order
1. Since in the case in hand, complaints were filed by private individuals, we are of the view that the judgment under reference does not require any reconsideration.
2. The Review Petition is, accordingly, dismissed.
3. However, the Union of India shall be at liberty to invoke its powers under the second proviso of Section 212(6) of the Companies Act, 2013, and authorize any officer of the Central Government by a general or special order, in writing, to institute the complaint in addition to the Director, Serious Fraud Investigation Office (SFIO).
4. All pending applications, if any, also stand disposed of.
1. The Review Petition is dismissed in terms of the signed order.
2. Pending applications, if any, also stand disposed of.
