Supreme Court
Inherent Powers U/S 482 CrPC Do Not Confer Any Arbitrary Jurisdiction On High Courts To Act According To Whims Or Caprice: Supreme Court
Supreme Court

Inherent Powers U/S 482 CrPC Do Not Confer Any Arbitrary Jurisdiction On High Courts To Act According To Whims Or Caprice: Supreme Court

Jayanti Pahwa
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14 Feb 2024 11:00 AM GMT

The Supreme Court held that the inherent powers of the High Court under section 482 of the Criminal Procedure Code, 1973 (CrPC) do not confer any arbitrary jurisdiction on High Courts to Act according to whims or caprice.

The Court allowed Appeals filed by the Directorate Of Enforcement (ED) challenging the orders of the High Court that stayed proceedings against the accused.

The Court noted that the High Court, by issuing orders to halt investigations and prevent investigative agencies from taking coercive actions, effectively granted broad injunctions against arrests without the accused first seeking anticipatory bail under Section 438 of the CrPC.

The Bench comprising Justice Bela M. Trivedi and Justice Prasanna B. Varale observed, “it hardly needs to be reiterated that the inherent powers under Section 482 of Cr.PC do not confer any arbitrary jurisdiction on the High Court to act according to whims or caprice. The statutory power has to be exercised sparingly with circumspection and in the rarest of rare cases”.

Additional Solicitor General S. V. Raju appeared for the Appellants and Senior Advocate Ranjit Kumar appeared for the Respondent.

The Appellants challenged interim orders from the High Court that halted proceedings regarding FIRs against respondents accused and directed a halt to coercive actions pending writ petitions. The appeals, interconnected and heard jointly, involved India Bulls Housing Finance Limited (IHFL), its officers Niraj Tyagi and Reena Bagga, and M/s Kadam Developers Pvt. Ltd. IHFL, a non-banking financial institution dealing with public funds, extended loans to the Shipra Group, secured by pledged shares and properties.

Due to defaults, IHFL recalled loans, leading to litigation and the eventual sale of pledged shares financed by IHFL itself, followed by the sale of mortgaged properties for recovery. Multiple FIRs alleging financial irregularities prompted legal challenges. IHFL filed a writ petition before this Court, while the Directorate of Enforcement initiated a money laundering investigation based on the FIRs. However, the Court disposed of the writ petition on July 4, 2023, without hearing the appellants. Respondents Niraj Tyagi and IHFL, among others, filed writ petitions in the High Court seeking relief, resulting in orders staying proceedings related to the FIRs and ECIR against them pending the writ petitions.

The Court noted that the action to stay investigations into FIRs and ECIRs disregarded the established legal precedents, which permit such stays only under exceptional circumstances like when the allegations lack prima facie evidence of an offence or when proceedings are evidently malicious.

Without undermining the powers of the High Court under Section 482 of Cr.PC to quash the proceedings if the allegations made in the FIR or complaint prima facie do not constitute any offence against the accused, or if the criminal proceedings are found to be manifestly malafide or malicious, instituted with ulterior motive etc., we are of the opinion that the High Court could not have stayed the investigations and restrained the investigating agencies from investigating into the cognizable offences as alleged in the FIRs and the ECIR, particularly when the investigations were at a very nascent stage”, the Bench noted. While recognizing the High Court's authority under Section 482 of CrPC to quash proceedings in such cases, it's noted that the Court's power should be exercised judiciously, sparingly, and only in exceptional circumstances. By staying investigations and restraining agencies from taking coercive measures against the accused, the High Court effectively issued blanket orders against arrest without the accused seeking anticipatory bail under Section 438 of CrPC.

The Court referred to the case of State of Telangana v Habib Abdullah Jeelani and Others [2017 (2) SCC 779] and noted that “the direction not to arrest the accused or not to take coercive action against the accused in the proceedings under Section 482 Cr.PC, would amount to an order under Section 438 Cr.PC, albeit without satisfaction of the conditions of the said provision, which is legally unacceptable”.

Furthermore, the Bench observed that the High Court's orders blatantly disregard the guidelines issued in the case of Neeharika Infrastructure Pvt. Ltd. v State of Maharashtra and Others [(2021) SCC Online SC 315].

In essence, the Bench held that higher courts must adhere to established legal principles and exercise their powers judiciously. The extraordinary powers of the court do not grant it arbitrary jurisdiction. Consequently, the impugned orders by the High Court were set aside. The interim orders concerning the respondents accused in the appeals were immediately revoked.

Accordingly, the Court allowed the Appeal.

Cause Title: Directorate Of Enforcement v Niraj Tyagi & Ors. (2024 INSC 106)

Appearance:

Appellant(s): Additional Solicitor General S.V. Raju, Senior Advocate Siddhartha Dave, Advocates Udai Khanna, Rudra Pratap, Talha Abdul Rahman, M Shaz Khan, Tushar Randhawa, Rahul Sharma, Nandini Singh, Adnan Yousuf and Mukesh Kumar Maroria.

Respondent(s): Additional Advocate General Ardhendumauli Kumar Prasad, Senior Advocates Ranjit Kumar, Dhruv Mehta, Advocates Mahesh Agarwal, Rishi Agrawala, Ankur Saigal, Ankit Banati, Kajal Dalal, E. C. Agrawala, Fauzia Shakil, Rajat Singh, Rukhmini S. Bobde, Vivek Narayan Sharma, Sarthak Chandra, Akshay Kumar, Ananya Sahu, Deepesh Singh, Arun Pratap Singh Rajawat, Tishampati Sen, Riddhi Sancheti, Anurag Anand, Mukul Kulhari, Anubhav Ray

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