SC set aside the interim protection granted to India Bulls officers and says HC should not have granted blanket protection from arrest

While hearing the Directorate of Enforcement vs. Niraj Tyagi case on February 13, 2024, the Supreme Court (SC) of India set aside the interim protection granted to India Bulls Housing Finance Ltd. officers and criticized the Allahabad High Court for staying the investigation and protecting officers from arrest in utter disregard of the law. The bench comprising Justice Prasanna B Varale and Justice Bela M Trivedi observed, “It’s a matter of serious concern that despite the legal position settled by this Court in a catena of decisions, the High Court has passed the impugned orders staying the investigations of the FIRs and ECIR in question in utter disregard of the said settled legal position.”  

While pronouncing the judgment, the SC also opined 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. It hardly needs to be reiterated that the inherent powers under Section 482 of Cr.P.C do not confer any arbitrary jurisdiction on the High Court to act according to whims or caprice.” The SC also noted that the HC had granted blanket orders restraining the arrest without the accused applying for anticipatory bail under Section 438 of the Code of Criminal Procedure (CrPC). Moreover, the bench opined that the impugned orders passed by the High Court were in utter disregard and in the teeth of the guidelines issued by the Three-Judge Bench of SC in M/s Neeharika Infrastructure Pvt. Ltd. vs. State of Maharashtra.

In this case, the respondent India Bulls Housing Finance Limited (IHFL) is a non-banking financial institution incorporated under the provisions of the Companies Act and deals with public money. The respondent Niraj Tyagi is the President (Legal) and Reena Bagga is the authorized officer of the IHFL. The brief allegations are that the IHFL sanctioned 16 loan facilities between 2017 and 2020 to the Shipra Group (Rs. 2,801 crores). Shipra Group defaulted on the repayment of the loan amount, and IHFL issued notices recalling all the loans advanced to the Shipra Group. The mortgaged property, Shipra Mall, was auctioned by the IHFL which was purchased by Himri Estate. A representative of the Shipra Group, Mohit Singh, filed multiple FIRs against the Himri Estate and IHFL alleging that the sale of Shipra Mall was illegal. Based on these FIRs, the ED registered an ECIR to investigate the offences of money laundering whereas the concerned officers approached the HC and sought to quash the FIR and proceedings in the money laundering case. 

The High Court ruled that “...we are of the opinion that the petitioners have made out a case for grant of the interim as relief prayed for. Accordingly, in furtherance of the protection granted by the Apex Court to the petitioners by the order dated 4th July 2023, while disposing of the Contempt Petition…it is provided that further proceedings, including summoning of the officers, consequent to the F.I.R…under Sections 420, 467, 468, 471 and 120-B - IPC…registered by Respondent No.2 and consequent ECIR…registered by Respondent No. 4, shall remain stayed so far as it confines to the petitioners only and no coercive action shall be taken against them.” The matter was therefore mentioned before the SC. 

The SC judgment reads “It hardly needs to be reiterated that the inherent powers under Section 482 of Cr.P.C 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. In a way, bypassing such orders of staying the investigations and restraining the investigating agencies from taking any coercive measure against the accused pending the petitions under Section 482 Cr.P.C, the High Court has granted blanket orders restraining the arrest without the accused applying for the anticipatory bail under Section 438 of Cr.P.C.” The impugned order of the HC is set aside.