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No more parallel investigations on a company’s ‘misadventures’? -  Delhi High Court affirms SFIO’s exclusive jurisdiction

In the matter of Ashish Bhalla vs. State and Another[1](“Judgment”), the Hon’ble High Court of Delhi (“Court”) has recently ruled that once an investigation by the SFIO under Section 212 of the Companies Act, 2013 (“2013 Act”) has been initiated, a parallel investigation by a separate investigating agency into the affairs of the company is not permissible, considering the bar under Section 212 of the 2013 Act (“Section 212”). While the Madras High Court in the matter of Ravi Parthasarathy and Others vs. State of Another[2] had made similar observations to sub-clause (2) of Section 212, its application had not been sufficiently visible.

Relevant provisions of the 2013 Act: scrutiny by the Court

The Judgment explains the genesis of Section 212 and sets out its legislative intent, specifically with respect to SFIO’s role and purpose. This Section empowers the Central Government to designate the SFIO to investigate into the affairs of a company. The Court examined the phraseology of Section 212 to infer that it is nothing less than a code in itself as its sub-clause (2) specifically sets out a bar such that once the case contemplated under Section 212(1) is assigned to the SFIO, “no other investigating agency” shall investigate qua any offences under the 2013 Act. Further, if the investigation so contemplated has been initiated by another agency, it shall not proceed further and “the relevant documents and records” in respect of such offences are required to be transferred to the SFIO.

Pertinently, the Court has observed that the scope of cases that are required to be assigned to the SFIO must be transferred in accordance with the wider mandate of sub-clause 2 of Section 212 and should either be directly related or must have some relation to the offences under the 2013 Act.

The Court also observed that the provisions under Section 212 are interdependent on each other and thus, must be harmoniously read together, particularly those of the sub-clauses (2), (17)(a) and (17)(b). Interestingly, sub-clause (17)(a) enumerates a situation where the SFIO is already seized of the matter and if thereafter, a case comes to any other investigating agency, then the latter in such a case would be required to provide all such documents available with it to the SFIO. Further, the Court has observed that in a converse situation under sub-clause (17)(b),  if certain information collected by the SFIO during the course of its investigation pertains to an offence under any other law, which is relevant for other investigating agency, the SFIO is required to share such information with the concerned agency.

The Court placed reliance on the case of Tahsildar Singh vs. State of Uttar Pradesh[3] to import the rule of interpretation to say that a Section or enactment must be construed as a whole, each portion throwing light, if need be, on the rest. Further, the Court relied on the principle of generalia specialibus non derogant (general things do not derogate from special things to affirm its finding) and observed that Section 212 is a special provision carved out in the scheme of the 2013 Act for investigation into the affairs of a company for offences under or in relation to the 2013 Act. The Court also observed that the legislature could not have intended to allow any parallel proceedings to be conducted by another agency because doing so would not only be counter-productive but also be confusing and troublesome, particularly if multiple proceedings yield different outcomes. The same in such a situation would amount to sheer abuse of the process of law.

Further, the Court laid emphasis on the usage of the word ‘assign’ in Section 212 and held that the term means a total assignment to the SFIO for looking into the ‘affairs of the Company’ considering such usage of the phrase would encompass everything connected with the company including all its past and present officials. Moreover, alongside the usage of the words ‘in respect of any offence under the Act’, sub-clause (3) of Section 212 receives a wider ambit since it would then encompass all acts of wrongdoings in relation to the offences under the 2013 Act.  Reliance in this regard was placed on the Apex Court judgment in the matter of Serious Fraud Investigation Office vs. Rahul Modi[4] (“Rahul Modi judgement”) wherein the Apex Court interpreted the word ‘assign’ used in Section 212 to mean complete transfer of investigation. The Apex Court in the aforesaid case analysed the relevant provisions of the 2013 Act and opined that the statute in no manner contemplates a scenario where an investigation undertaken by an investigating agency — which is subsequently transferred to the SFIO — must be re-transferred to the original investigating agency. Further reliance was placed on Sunair Hotels vs. Union of India,[5] wherein the Court opined that where a case has been assigned under Section 212 to the SFIO, no other investigating agency would investigate the affairs of the company and that all files concerning the affairs of the company would have to be transferred to the SFIO.


The Judgment is a welcome step in light of the spate of parallel investigations that arise out of a common transaction. An initiation of an investigation by one law enforcement agency generally leads to multitude of proceedings against an individual. The situation exacerbates in case the accused in question is a businessman, as most of the time then is channeled towards responding to a series of summons by different agencies usually asking the same set of questions. The Judgment thus gives teeth to the existent provision. The rationale behind the Judgment is to protect an individual under legal scrutiny from being vexed twice by two different agencies at the same time for the same offence, simultaneously taking into account the interests of the public at large and the resources involved.

Importantly, the Judgment indicates that Section 212(2) is not strictly limited to the investigation of offences under the 2013 Act but could also be invoked for investigation of offences which may have some relation to the 2013 Act. This observation may pave the way for a singular investigation being carried out for one particular transaction.  

[1] 2023 SCC OnLine Del 5818.

[2] 2021 SCC OnLine Mad 16597.

[3] 1959 Supp (2) SCR 875.

[4] (2019) 5 SCC 266.

[5] 2019 SCC OnLine 6465.