Delhi High Court Verdict: Exclusive Jurisdiction of SFIO Under Section 212 of Companies Act Nullifies Parallel EOW FIR

The intersection of general criminal jurisprudence and specialized corporate law often creates jurisdictional friction between various investigating agencies. A landmark judicial pronouncement addressing this exact conundrum was recently delivered by the Delhi High Court in the matter of Ashish Bhalla Vs State & Anr.. The judgment, dated 15/09/2023, provides profound clarity on the statutory supremacy of the Serious Fraud Investigation Office (SFIO) when probing corporate frauds under the Companies Act 2013.

The core legal dispute revolved around whether a parallel police investigation by the Economic Offences Wing (EOW) could legally sustain itself when the Central Government had already mandated the SFIO to investigate the identical set of allegations under Section 212 of the Companies Act 2013. The High Court's decisive ruling establishes a vital precedent against forum shopping and the multiplicity of criminal proceedings.

Factual Matrix of the Dispute

To comprehend the depth of the legal principles established, it is essential to examine the chronological sequence of events that led to this judicial intervention.

  1. The Initial Complaint to the MCA: On June 14, 2021, the complainant approached the Ministry of Corporate Affairs (MCA) and the Director of the SFIO. The complaint alleged a massive financial irregularity, accusing the WTC Group and its key personnel of siphoning funds to the tune of Rs. 1500 crores through a complex web of shell entities.
  2. Activation of SFIO Jurisdiction: Acting upon this information, the MCA initiated preliminary steps under Section 206 of the Companies Act 2013. Subsequently, on 14.10.2021, the Central Government formally assigned the investigation into the affairs of the corporate entity to the SFIO under the rigorous provisions of Section 212 of the Companies Act 2013.
  3. The Parallel Complaint to EOW: In a surprising procedural maneuver, the very same complainant dispatched a nearly identical grievance to the Delhi Police and the EOW on August 15, 2021.
  4. Registration of the Impugned FIR: This secondary complaint culminated in the registration of FIR No. 06/2023 on 12.01.2023 by the EOW, invoking Section 406, Section 420, and Section 120-B of the Indian Penal Code 1860.
  5. The Legal Challenge: Aggrieved by the simultaneous probes, the petitioner approached the Delhi High Court under Section 482 of the Code of Criminal Procedure 1973, seeking the complete quashing of the EOW's FIR, arguing that the law prohibits dual investigations into the same corporate affairs once the SFIO is seized of the matter.

The Legislative Framework: Supremacy of the Companies Act 2013

The High Court meticulously analyzed the legislative intent behind the enactment of the Companies Act 2013, particularly contrasting it with its predecessor, the Companies Act 1956. The modern legislation was specifically designed to handle complex economic offenses through a specialized, multi-disciplinary body—the SFIO.