Uday Umesh Lalit, J.

1. Leave granted.

2. These Appeals challenge the correctness of the common interim order dated 20.12.2018 passed by the High Court of Delhi at New Delhi in Writ Petition (Crl.) Nos.3842 and 3843 of 2018. CRIMINAL APPEAL NOS. 538-539 .OF 2019 (@ SLP(Crl)Nos.94-95 OF 2019) Serious Fraud Investigation Office v. Rahul Modi and Another Etc. 2

3. In exercise of powers conferred by Section 212(1)(c) of the Companies Act, 2013 (“2013 Act”, for short) and under Section 43(2) and (3)(c)(i) of the Limited Liability Partnership Act, 2008 (“2008 Act”, for short), the Central Government vide order No.07/115/2018/CL-II (NWR), directed investigation into the affairs of Adarsh Group of Companies and LLPs (‘The Group’, for short) by Officers of Serious Fraud Investigation (SFIO) as nominated by Director, SFIO. The relevant part of the Order dated 20.06.2018 was as under:-

J 7, MOTI FALL REAL 12 U45201RJ2013PTC DOONGR Rajastha AABCW382 5 042465 ESTATES I ROAD, n ACTV PRIVATE 6E JAIPUR LIMITED

4. Now, therefore, in exercise of powers conferred under Section 212 (1) (c) of the Companies Act, 2013 and under Section 43 (2) & (3) (c) (i) of the LLP Act, 2008 the Central Government hereby orders investigation into the affairs of the above named companies and LLPs to be carried out by officers of the Serios Fraud Investigation Office (SFIO) as nominated by Director, SFIO.

5. The SFIO shall investigate into following areas (above mentioned companies and LLPs) in addition to any other issues that it may come across during the investigation.

(i) To ascertain and unearth rotation of funds or identification of quantum of diversion of funds of siphoning including beneficiaries thereof:

6. That the Inspector(s) so appointed shall exercise all powers available to them under Section 217 of the Companies Act, 2013 and Chapter IX of LLP Act, 2008 . The inspector(s) shall complete their investigation and submit their report to the Central Government within a period of 03 (Three) months from the date of issue of this order.

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7. This order is issued for and on behalf of the Central Government.

(Santosh Kumar) Joint Director”

4. On the same date, i.e. on 20.06.2018 an Order was passed by the Director, SFIO. The relevant portion of said order was as under:-

Director is appointed as Investigating Officer to carry out the above noted investigation. The Investigating Officer shall have the powers of Inspector as enumerated under Section 217 of the Companies Act, 2013. As per the investigation order, following issues are specifically to be examined along with other issues which may come across during the investigation:

5. The Inspectors and the Investigating Officer shall complete the investigation and submit the report within three months hereof.”

5. The period mentioned in Clause 6 of the Order dated 20.06.2018 came to an end on 19.09.2018. Based on the material gathered during investigation, an approval was sought under Rule (2) of the Companies (Arrests in connection with Investigation by Serious Fraud Investigation Office) Rules, 2017 (“2017 Rules”, for short) from the Director, SFIO to arrest three accused persons namely Rahul Modi, Mukesh Modi and Vivek Harivyasi. The approval was granted by the Director, SFIO on 10.12.2018. The arrest order issued under Rules 4 and 5 of 2017 Rules made reference to the proceedings, “07/115/2018 CL-II (NWR) Dt. 20.06.2018” The accused were accordingly arrested on 10.12.2018. The compliance in terms of 2017 Rules was effected and they were produced before the Duty Magistrate, District Courts, Gurugram, Haryana on 11.12.2018.

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6. After hearing Counsel for the appellant as well as for the accused, the Judicial Magistrate First Class, Gurugram by order dated 11.12.2018 granted remand till 14.12.2018 and directed they be produced before the Special Court (Companies Act), Gurugram on 14.12.2018. The application seeking remand had sought to make out a case for custody of the accused. The matter was dealt with by the Judicial Magistrate as under:-

seeking SFIO remand. This court is to exercise the power of Magistrate in terms of Section 436(1)(B) . At this stage, remand has been sought. The offence alleged is definitely serious in nature and the arrest orders are placed on record. Consequential to these documents, accused were arrested and produced. Undoubtedly, they have been appearing on notices issued by the SFIO but still the investigation has not been completed because some part of investigation needs personal involvement. This case prima facie attracts Section 447 of Companies Act, which certainly makes this offence cognizable and no bailable. The main grounds for which the investigation is to be conducted in custody is ascertainment of further trail qua withdrawn money and to locate the beneficiaries. In addition to this, identification of properties and explanation about loans and advances mentioned in the books of accounts can only be given by accused but they have not come up with any such explanations till now. Even the persons who are in custody are not going to facilitate the investigation in proper CRIMINAL APPEAL NOS. 538-539 .OF 2019 (@ SLP(Crl)Nos.94-95 OF 2019) Serious Fraud Investigation Office v. Rahul Modi and Another Etc. 7 manner so that the real facts can be established. These grounds definitely require detained and comprehensive investigation so it would be proper to grant the custody of these accused to SFIO for three days. Accused be produced before the Special Court under Companies Act on 14.12.2018. Copy of this order be handed over to the IO and accused as they have requested. Custody of all three accused namely Mukesh Modi, Rahul Modi and Vivek Harivyasi is given to SFIO for three days. File be sent to the Special Court under the Companies Act .”

7. On 13.12.2018 a proposal was made by SFIO seeking approval of the Central Government for extension of time for completing investigation and submission of investigation report in respect of 57 cases which were at various stages of completion and the period granted for completion of investigation had either expired or was near the expiry. One of the cases referred to was that of the Group at Sl. No.24 of the list. On 14.12.2018 the accused were produced before the Special Court with a fresh application for remand. The prayer for extension of custody was opposed by the accused inter alia on the grounds that the period of completion of investigation as stipulated in the order dated 20.06.2018 had expired and as such all further proceedings were illegal. During the course of proceedings, the proposal seeking extension in respect of said 57 cases, where investigation had not been completed, was placed before the Special Court. After going into the record, the Special Court found that the application seeking further remand was justified. It, therefore, CRIMINAL APPEAL NOS. 538-539 .OF 2019 (@ SLP(Crl)Nos.94-95 OF 2019) Serious Fraud Investigation Office v. Rahul Modi and Another Etc. 8 extended the police custody of the accused till 18.12.2018. Para 6 of the Order dated 14.12.2018 passed by the Special Court was:-

The High Court issued notice making it returnable on 31.01.2019. The High Court thereafter proceeded to consider whether immediate release of the respondents by way of ad interim relief was called for. Both the sides were heard and the issues which arose for consideration in the Writ Petitions were framed as under:

The arrest of the applicants on 10.12.2018 in the light of the circumstances antecedent and attendant was an absolute illegality and patently suffers from the vice of lack of legal sanction and jurisdiction.

28. This Court in a petition for habeas corpus cannot justify the continued illegal detention of the applicants; merely on account of the circumstance that the concerned Magistrate has rendered remand orders. The further custody of the applicants would, in our considered view, violate the principles of personal liberty, enshrined in Article 21 of the Constitution of India. The CRIMINAL APPEAL NOS. 538-539 .OF 2019 (@ SLP(Crl)Nos.94-95 OF 2019) Serious Fraud Investigation Office v. Rahul Modi and Another Etc. 14 continued detention of the applicants does not admit of lawful sanction.

29. Even otherwise, the remand order dated 14.12.2018, insofar as, it observes as follows:-

30. This is quite apart from the circumstance that, the applicants were arrested at the SFIO office at New Delhi on 10.12.2018, thereby rendering the remand orders passed by the concerned Magistrate in Gurugram, wholly without jurisdiction.”

13. The original writ petitioners Rahul Modi and Mukesh Modi were, therefore, released on bail. The aforesaid order dated 20.12.2018 passed by the High Court is presently under challenge. Mr. Tushar Mehta, learned Solicitor General appeared for the appellant – SFIO in both criminal appeals while the original writ petitioners were represented by Mr. Kapil Sibal, Mr. Mukul Rohatgi and Mr. Sidhharth Luthra, Senior Advocates. Both sides also filed their written submissions.

14. The learned Solicitor General submitted inter alia:

(b) The stipulation in Section 212(3) of 2013 Act regarding submission of the report to the Central Government “within such period as may be specified in the order” is purely directory.

(c) Power of arrest under Section 212(8) of 2013 Act conferred upon the Director, Additional Director and Assistant Director is not circumscribed by any time limit and so long as the conditions stipulated in said sub- section are satisfied, such power of arrest can be validly exercised.

(d) The Habeas Corpus Petition was not maintainable in the High Court of Delhi as after their arrest the original Writ Petitioners were produced before the Judicial Magistrate, Gurugram on 11.12.2018 and were remanded to custody under a judicial order. Thereafter they were produced before the Special Court, Gurugram on 14.12.2018 and were CRIMINAL APPEAL NOS. 538-539 .OF 2019 (@ SLP(Crl)Nos.94-95 OF 2019) Serious Fraud Investigation Office v. Rahul Modi and Another Etc. 16 again remanded to custody under judicial order passed by Special Court, Gurugram.

(e) Since the registered office of the Principal Company was in Gurugram, they were rightly produced before the Magistrate and Special Court in Gurugram. Thus, if at all the Habeas Corpus Petition ought to have been filed before the High Court of Punjab and Haryana and not in High Court of Delhi.

(f) The focal point of examination in a Habeas Corpus Petition is the date of return and not the initiation of proceedings. In the present case, on 18.12.2018 when the petitions were taken up for consideration, not only was there an order of extension dated 14.12.2018 passed by the Central Government but there were valid orders of remand passed by the Judicial Magistrate, Gurugram on 11.12.2018 and by the Special Court, Gurugram on 14.12.2018 and 18.12.2018.

15. Mr. Sibal, Mr. Rohatgi and Mr. Luthra, learned Senior Advocates appearing for the original writ petitioners submitted, inter alia:-

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f) In the absence of any extension for further investigation, the power of arrest could not have been exercised on 10.12.2018. Any further extension cannot validate the act of initial arrest. Such arrest being unsupported by any valid mandate, was an act of illegality which violated Article 21 calling for interference by the High Court.

16. The basic facts in the present matter can be summed up:-

d) After they were arrested on 10.12.2018, the accused were produced before the Judicial Magistrate, who by CRIMINAL APPEAL NOS. 538-539 .OF 2019 (@ SLP(Crl)Nos.94-95 OF 2019) Serious Fraud Investigation Office v. Rahul Modi and Another Etc. 19 his order dated 11.12.2018 remanded them to custody till 14.12.2018 and also directed that they be produced before the Special Court on 14.12.2018.

e) On 13.12.2018 a proposal seeking extension of time for completing investigation in respect of 57 cases including the present case was preferred by SFIO.

f) On 14.12.2018 the Special Court, Gurugram remanded the accused to custody till 18.12.2018.

g) On the same date i.e. on 14.12.2018 the proposal for extension was accepted by the Central Government in respect of the Group and extension was granted upto 30.06.2019.

h) On 17.12.2018 the present Writ Petitions were preferred which came up for the first time before the High Court on 18.12.2018.

i) On 18.12.2018 itself the accused were further remanded to police custody till 21.12.2018.

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j) On 20.12.2018 Writ Petitions were entertained and the order which is presently under appeal was passed.

k) Pursuant to said order, the original Writ Petitioners were released on bail.

In the backdrop of these facts, the High Court found that a case for interim relief was made out. The principal issues which arise in the matter are whether the High Court was right and justified in entertaining the petition and in passing the Order under appeal?

17. For considering whether the writ petitioners were entitled to any interim relief, two questions were framed by the High Court in paragraph 15 of its Order. Before considering the matter from the perspective of said two questions, an issue which was stressed by the learned Solicitor General may be addressed first. It was submitted by him that the date with reference to which the legality of detention can be challenged in a Habeas Corpus proceeding is the date on which the return is filed in such proceedings and not with reference to the initiation of the proceedings. He relied upon the CRIMINAL APPEAL NOS. 538-539 .OF 2019 (@ SLP(Crl)Nos.94-95 OF 2019) Serious Fraud Investigation Office v. Rahul Modi and Another Etc. 21 decision of the Federal Court in Basanta Chandra Ghose vs. King Emperor1 , which had concluded:

18. At this stage we may also deal with three recent cases decided by this Court:-

In the present case, admittedly, when the writ petition for issuance of a writ of habeas corpus was filed by the respondent on 18-3-2018/19-3-2018 and decided by the High Court on 21-3-2018 her husband Rizwan Alam Siddiquee was in police custody pursuant to an order passed by the Magistrate granting his police custody in connection with FIR No. I-31 vide order dated 17-3-2018 and which police remand was to enure till 23-3-2018. Further, without challenging the stated order of the Magistrate, a writ petition was filed limited to the relief of habeas corpus. In that view of the matter, it was not a case of continued illegal detention but the incumbent was in judicial custody by virtue of an order passed by the jurisdictional Magistrate, which was in force, granting police remand during investigation of a criminal case. Resultantly, no writ of habeas corpus could be issued.

11. Reverting to the prayer for expunging the scathing observations made in the impugned judgment, in particular paras 4-6, reproduced earlier, it is submitted that the said observations were wholly unwarranted as the Deputy Commissioner of Police concerned who was present in Court, could not have given concession to release Rizwan Alam Siddiquee in the teeth of a judicial order passed by the Magistrate directing police remand until 23-3-2018. Moreover, it is evident that the High Court proceeded to make observations without giving any opportunity, whatsoever, to the police officials concerned to explain the factual position on affidavit. The writ petition was filed on 18-3-2018/19-3-2018 and was moved on 20-3-20182 when the Court called upon the advocate for the appellants to produce the record on the next day i.e. 21-3-2018. The impugned order came to be passed on 21-3-20181, notwithstanding the judicial order of remand operating till 23-3-2018. The High Court, in our opinion, should not have taken umbrage to the submission made on behalf of the Deputy Commissioner of Police that the respondent’s CRIMINAL APPEAL NOS. 538-539 .OF 2019 (@ SLP(Crl)Nos.94-95 OF 2019) Serious Fraud Investigation Office v. Rahul Modi and Another Etc. 30 husband could be released if so directed by the Court. As aforesaid, the DCP has had no other option but to make such a submission. For, he could not have voluntarily released the accused who was in police custody pursuant to a judicial order in force. The High Court ought not to have made scathing observations even against the investigating officer without giving him an opportunity to offer his explanation on affidavit.

12. Suffice it to observe that since no writ of habeas corpus could be issued in the fact situation of the present case, the High Court should have been loath to enter upon the merits of the arrest in the absence of any challenge to the judicial order passed by the Magistrate granting police custody till 23-3-2018 and more particularly for reasons mentioned in that order of the Magistrate. In a somewhat similar situation, this Court in State represented by Inspector of Police and others v. N.M.T. Joy Immaculate 13 deprecated passing of disparaging and strong remarks by the High Court against the investigating officer and about the investigation done by them. Accordingly, we have no hesitation in expunging the observations made in paras 4 to 6 of the impugned judgment against the police officials concerned in the facts of the present case.”

19. The act of directing remand of an accused is thus held to be a judicial function and the challenge to the order of remand is not to be entertained in a habeas corpus petition. The first question posed by the High Court, thus, stands answered. In the present case, as on the date when the matter was considered by the High Court and the Order was passed by it, not only were there orders of remand passed by the Judicial Magistrate 13 (2004) 5 SCC 729 CRIMINAL APPEAL NOS. 538-539 .OF 2019 (@ SLP(Crl)Nos.94-95 OF 2019) Serious Fraud Investigation Office v. Rahul Modi and Another Etc. 31 as well as the Special Court, Gurugram but there was also an order of extension passed by the Central Government on 14.12.2018. The legality, validity and correctness of the order or remand could have been challenged by the original Writ Petitioners by filing appropriate proceedings. However, they did not raise such challenge before the competent Appellate or Revisional Forum. The orders of remand passed by the Judicial Magistrate and the Special Court, Gurugram had dealt with merits of the matter and whether continued detention of the accused was justified or not. After going into the relevant issues on merits, the accused were remanded to further police custody. These orders were not put in challenge before the High Court. It was, therefore, not open to the High Court to entertain challenge with regard to correctness of those orders. The High Court, however, considered the matter from the standpoint whether the initial Order of arrest itself was valid or not and found that such legality could not be sanctified by subsequent Order of remand. Principally, the issue which was raised before the High Court was whether the arrest could be effected after period of investigation, as stipulated in said order dated 20.06.2018 had come to an end. The supplementary issue was the effect of extension of time as granted on 14.12.2018. It is true that the arrest was effected when the period had expired but by the time the High Court entertained the CRIMINAL APPEAL NOS. 538-539 .OF 2019 (@ SLP(Crl)Nos.94-95 OF 2019) Serious Fraud Investigation Office v. Rahul Modi and Another Etc. 32 petition, there was as order of extension passed by the Central Government on 14.12.2018. Additionally, there were judicial orders passed by the Judicial Magistrate as well as the Special Court, Gurugram, remanding the accused to custody. If we go purely by the law laid down by this Court with regard to exercise of jurisdiction in respect of Habeas Corpus petition, the High Court was not justified in entertaining the petition and passing the Order.

20. We must, however, deal with the submission advanced on behalf of the original Writ Petitioners that the relief as regards Habeas Corpus was a secondary prayer while the principal submissions were with regard to the first three prayers in the petition. It was submitted that with the expiry of period, the entire mandate came to an end and as such, there could be no arrest and that illegality in that behalf would continue regardless whether there was a subsequent order of extension. In the submission of the learned counsel for the Writ Petitioner such an extension could not cure the inherent defect and as such, the High Court was justified in entertaining the petition. We may deal with this issue after considering the second question posed by the High Court in said paragraph 15.

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21. The first Order dated 20.06.2018 itself indicated that the Registered Office of the Principal Company was in Gurugram, Haryana. Section 435 of 2013 Act contemplates establishment of Special Courts for the purpose of providing speedy trial of offences under said Act. Section 436 then provides that “offences specified under sub-section (1) of Section 435 shall be triable only by Special Court established or designated for the area in which the Registered Office of the Company, in relation to which the offence is committed ……”. Soon after the arrest, the accused were produced before the Judicial Magistrate, Gurugram on 11.12.2018, who remanded them to custody till 14.12.2018 and directed that they be produced before the Special Court, Gurugram on 14.12.2018. Accordingly the accused were produced before the Special Court, Gurugram, who thereafter remanded them to custody first till 18.12.2018 and later till 21.12.2018. The Special Court, Gurugram would be competent to deal with the matter in terms of Section

436. Learned counsel for the writ petitioners, however, contend that since the accused were arrested in Delhi, were kept in custody in Delhi, and the SFIO office being in Delhi, the High Court of Delhi was competent to entertain and consider the writ petitions so preferred by the writ petitioners. CRIMINAL APPEAL NOS. 538-539 .OF 2019 (@ SLP(Crl)Nos.94-95 OF 2019) Serious Fraud Investigation Office v. Rahul Modi and Another Etc. 34 Reliance was placed by them on the decision of this Court in Navinchandra N. Majithia v. State of Maharashtra and others 14

22. In Navinchandra Majithia14, all the transactions between the parties had occurred within the jurisdiction of the High Court of Bombay. However, a complaint was filed against the petitioner at Shillong pursuant to which investigation was taken up by Shillong Police. It was submitted that such investigation was wholly incorrect and unjustified and a writ petition was preferred in the High Court of Bombay seeking quashing of the complaint so filed at Shillong or in the alternative to transfer the investigation to an appropriate Investigating Agency of Mumbai Police. Paragraph 29 of the decision shows that in the peculiar fact situation of the case, this Court directed that further investigation in relation to the complaints filed at Shillong be conducted by Mumbai Police. Thomas, J. who agreed with the leading Judgment authored by D.P. Mohapatra, J. observed in his concurrent opinion as under:

23. In Dashrath Rupsingh Radhod vs. State of Maharashtra and another 15, a Bench of three learned Judges of this Court was called upon to consider the questions regarding territorial jurisdiction of Courts with regard to criminal complaints under the Negotiable Instruments Act, 1881 and para 13 of the decision noted the earlier decision in Navinchandra N. Majithia14 and observed as under:

Courts are enjoined to interpret the law so as to eradicate ambiguity or nebulousness, and to ensure that legal proceedings are not used as a device for harassment, even of an apparent transgressor of the law. Law’s endeavour is to bring the culprit to book and to provide succour for the aggrieved party but not to harass the former through vexatious proceedings. Therefore, precision and exactitude are necessary especially where the location of a litigation is concerned.” 15

24. It is true that the decision in Dashrath Rupsingh Radhod was in the context of a criminal complaint under Section 138 of the Negotiable Instruments Act and not while dealing with an issue of maintainability of a writ petition under Article 226 of the Constitution. It cannot, therefore, be said that in the present case, the High Court completely lacked jurisdiction to entertain the petition. However, since the challenge was with respect to the detention pursuant to valid remand orders passed by the Judicial Magistrate and the Special Court, Gurugram, in our considered view, the 16 (1999) 7 SCC 510 : 1999 SCC (Cri) 1284 CRIMINAL APPEAL NOS. 538-539 .OF 2019 (@ SLP(Crl)Nos.94-95 OF 2019) Serious Fraud Investigation Office v. Rahul Modi and Another Etc. 37 High Court should not have entertained the challenge. If the act of directing remand is fundamentally a judicial function, correctness or validity of such orders could, if at all, be tested in a properly instituted proceedings before the appellate or revisional forum. In the circumstances even if the arrests were effected within the jurisdiction of the High Court, since the accused were produced before a competent court in pursuance of Sections 435 , 436 of 2013 Act, the High Court ought not to have entertained the writ petition. However, since the High Court considered the matter from the standpoint whether the initial Order of arrest itself was valid or not and then found that such illegality could not be sanctified by subsequent Order of remand, we may deal with that question now.

25. At the outset, we may extract relevant statutory provisions. A) Sections 211 and 212 of 2013 Act are as under:-

212. Investigation into affairs of Company by Serious Fraud Investigation Office. – (1)Without prejudice to the provisions of section 210 , where the Central Government is of the opinion, that it is necessary to investigate into the affairs of a company by the Serious Fraud Investigation Office –

(a) on receipt of a report of the Registrar or inspector under section 208 ;

(b) on intimation of a special resolution passed by a company that its affairs are required to be investigated;

(c) in the public interest; or

(d) on request from any Department of the Central Government or a State Government, CRIMINAL APPEAL NOS. 538-539 .OF 2019 (@ SLP(Crl)Nos.94-95 OF 2019) Serious Fraud Investigation Office v. Rahul Modi and Another Etc. 39 The Central Government may, by order, assign the investigation into the affairs of the said company to the Serious Fraud Investigation Office and its Director, may designate such number of inspector, as he may consider necessary for the purpose of such investigation. (2) Where any case has been assigned by the Central Government to the Serious Fraud Investigation Office for investigation under this Act, no other investigating agency of Central Government or any State Government shall proceed with investigation in such case in respect of any offence under this Act and in case any such investigation has already been initiated, it shall not be proceeded further with and the concerned agency shall transfer the relevant documents and records in respect of such offences under this Act to serious Fraud Investigation Office.

(3) Where the investigation into the affairs of a company has been assigned by the Central Government to Serious Fraud Investigation Office, it shall conduct the investigation in the manner and follow the procedure provided in this Chapter; and submit its report to the Central Government within such period as may be specified in the order.

(4) The Director, Serious Fraud Investigation Office shall cause the affairs of the company to be investigated by an Investigating Officer who shall have the power of the inspector under section 217 .

(5) The company and its officers and employees, who are or have been in employment of the company shall be responsible to provide all information, explanation, documents and assistance to the Investigating Officer as he may require for conduct of the investigation.

(6) Notwithstanding anything contained in the Code of Criminal Procedure , 1973 (2 of 1974), 17[offence covered 17 Subs. by Act 21 of 2015, sec. 17 , for “the offences covered under sub- sections (5) and (6) of section 7 , section 34 , section 36 , sub-section (1) of section 38 , sub-sections (5) of section 46 , sub-section (7) of section 56 , sub-section (10) of section 66 , sub-section (5) of section 140 , sub-section (4) of section 206 , section CRIMINAL APPEAL NOS. 538-539 .OF 2019 (@ SLP(Crl)Nos.94-95 OF 2019) Serious Fraud Investigation Office v. Rahul Modi and Another Etc. 40 under section 447 ] of this Act shall be recognizable and no person accused of any offence under those sections shall be released on bail or on his own bond unless-

(i) the Public Prosecutor has been given an opportunity to oppose the application for such release; and

(ii) where the Public Prosecutor opposes the application, the court is satisfied that there are reasonable grounds for believing that he is not guilty of such offence and that he is not likely to commit any offence while on bail:

(ii) Any officer of the Central Government authorised, by a general or special order in writing in this behalf by that Government.

(7) The limitation on granting of bail specified in sub-section (5) is in addition to the limitations under the Code of Criminal Procedure , 1973 (2 of 1974) or any other law for the time being in force on granting of bail.

(8) If the Director, Additional Director or Assistant Director of Serious Fraud Investigation Office authorised in this behalf by the Central Government by general or special order, has on the basis of material in his possession reason to believe (the reason for such belief to be recorded in writing) that any person has been guilty of any offence punishable under sections referred to in sub-section (6), he may arrest such 213, section 229 , sub-section (1) of section 251 , sub-section (3) of section 339 and section 448 which attract the punishment for fraud provided in section 447 ”. CRIMINAL APPEAL NOS. 538-539 .OF 2019 (@ SLP(Crl)Nos.94-95 OF 2019) Serious Fraud Investigation Office v. Rahul Modi and Another Etc. 41 person and shall, as soon as may be, inform him of the grounds for such arrest.

(9) The Director, Additional Director or Assistant Director of Serious Fraud Investigation Office shall, immediately after arrest of such person under sub-section (8), forward a copy of the order, along with the material in his possession, referred to in that sub-section, to the Serious Fraud Investigation Office in a sealed envelope, in such manner as may be prescribed and the Serious Fraud Investigating Office shall keep such order and material for such period as may be prescribed. (10) Every person arrested under sub-section (8) shall within twenty-four hours, be taken to a Judicial Magistrate or a Metropolitan Magistrate, as the case may be, having jurisdiction:

(16) Notwithstanding anything contained in this Act, any investigation or other action taken or intimated by Serious Fraud Investigation Office under the provisions of the Companies Act, 1956 (1 of 1956) shall continue to be proceeded with under the Act as if this Act had not been passed.

(17) (a) In case Serious Fraud Investigation Office has been investigating any offence under this Act, any other investigating agency, State Government, police authority, income-tax authorities having any information or documents in respect of such offence shall provide all such information or documents available with it to the Serious Fraud Investigation Office;

(b) The Serious Fraud Investigation Office shall share any information or documents available with it, with any investigating agency, State Government, police authority or income-tax authorities, which may be relevant or useful for such investigating agency, State Government, police authority or income-tax authorities in respect of any offence or matter being investigated or examined by it under any other law.

B) Section 43 of 2008 Act is as under:-

“43. Investigation of the affairs of limited liability partnership – (1) The Central Government shall appoint one or more competent persons as inspectors to investigate the affairs of a limited liability partnership and to report thereon in such manner as it may direct if–

(a) the Tribunal, either suo moto, or on an application received from not less than one-fifth of the total number of partners of limited liability partnership, by orders, declares that the affairs of the limited liability partnership ought to be investigated; or CRIMINAL APPEAL NOS. 538-539 .OF 2019 (@ SLP(Crl)Nos.94-95 OF 2019) Serious Fraud Investigation Office v. Rahul Modi and Another Etc. 43

(b) any Court, by order, declares that the affairs of a limited liability partnership ought to be investigated.

(2) The Central Government may appoint one ore more competent persons as inspectors to investigate the affairs of a limited partnership and to report on them in such manner as it may direct.

(3) The appointment of inspectors pursuant to sub-section (2) may be made, -

(a) if not less one-fifth of the total number of partners of the limited liability partnership make an application along with supporting evidence and security amount as may be prescribed; or

(b) if the limited liability partnership makes an application that the affairs of the limited liability partnership ought to be investigated; or

(c) if, in the opinion of the Central Government, there are circumstances suggesting –

(i) that the business of the limited partnership is being or has been conducted with an intent to defraud its creditor, partners or any other person, or otherwise for a fraudulent or unlawful purpose, or in a manner oppressive or unfairly prejudicial to some or any of its partners, or that the limited liability partnership was formed for any fraudulent or unlawful purpose; or

(ii) that the affairs of the limited liability partnership are not being conducted in accordance with the provisions of this Act, or

(iii) That, on receipt of a report of the Registrar or any other investigating or regulatory agency, there are sufficient reasons that the affairs of the limited liability partnership ought to be investigated.” CRIMINAL APPEAL NOS. 538-539 .OF 2019 (@ SLP(Crl)Nos.94-95 OF 2019) Serious Fraud Investigation Office v. Rahul Modi and Another Etc. 44

26. Reading of the provisions of 2013 Act shows that certain Sections in Chapter XXIX prescribe punishment for offences such as fraud, false statement, false evidence and withholding of property under Sections 447 , 448 , 449 and 452 respectively. The punishment for fraud involving an amount of at least Rs.10 lakhs or 1 per cent of the turnover of the Company, is imprisonment for a term which may extend to 10 years. The offence of fraud in relation to the affairs of a Company is considered to be a grave offence and the writ petitioners were allegedly guilty of such offence. Chapter XIV of 2013 Act deals with Inspection, Inquiry and Investigation. Under Section 210 , investigation into the affairs of a Company can be undertaken. Section 211 contemplates establishment of Serious Fraud Investigation Offence (SFIO) which is to be headed by a Director and is to consist of Experts with ability, integrity and experience in fields like Banking, Corporate Affairs, Taxation, Forensic Audit, Capital Market, Information Technology, Law or such other fields. SFIO headed by a Director is thus a compact and competent unit consisting of experts in various domains. Section 212 empowers the Central Government to assign the investigation into the affairs of a Company to SFIO. Upon such assignment the Director SFIO may designate such number of inspectors under sub-Section (1) and shall cause the affairs of the Company to be investigated by an Investigating Officer under CRIMINAL APPEAL NOS. 538-539 .OF 2019 (@ SLP(Crl)Nos.94-95 OF 2019) Serious Fraud Investigation Office v. Rahul Modi and Another Etc. 45 sub-Section (4). The expression used in sub-Section (1) is “assign the investigation”. Sub-Section (2) incorporates an important principle that upon such assignment by the Central Government to SFIO, no other investigating agency of the Central Government or any State Government can proceed with investigation in respect of any offence punishable under 2013 Act and is bound to transfer the documents and records in respect of such offence under 2013 Act to SFIO.

27. Under sub-Section (3) where the investigation is so assigned by the Central Government to SFIO, the investigation must be conducted in the manner and in accordance with the procedure provided in the Chapter and a report has to be submitted to the Central Government within such period as may be specified. This provision contemplates submission of a report within the period as may be specified. The subsequent provisions then contemplate various stages of investigation including arrest under sub-Section (8) and that SFIO is to submit an interim report to the Central Government, if it is so directed under sub Section (11). Further, according to sub-Section (12), on completion of the investigation, SFIO is to submit the “investigation report” to the Central Government. This report under sub-Section (12) may lead to further follow up actions. Under sub-Section (13) a copy of the “investigation CRIMINAL APPEAL NOS. 538-539 .OF 2019 (@ SLP(Crl)Nos.94-95 OF 2019) Serious Fraud Investigation Office v. Rahul Modi and Another Etc. 46 report” could be obtained by any concerned person by making an application in that behalf to the Court while under sub-Section (14) on receipt of said “investigation report” the Central Government may direct SFIO to initiate prosecution against the Company.

The “investigation report” under sub-Section (12) is to be submitted on completion of the investigation whereas report under sub-Section (11) is in the nature of an interim report and is to be submitted if the Central Government so directs. In the backdrop of these provisions we must now consider whether the period within which a report is contemplated to be submitted to the Central Government under sub-Section (3) is mandatory and what is the scope and extent of such stipulation. It must also be stated here that the provisions of Section 43(2) of 2008 Act do not postulate any such period and the assignment in the present case to SFIO was under the concerned provisions of 2013 Act as well as under 2008 Act.

28. Section 212(3) of 2013 Act by itself does not lay down any fixed period within which the report has to be submitted. Even under sub-Section (12) which is regarding “investigation report”, again there is no stipulation of any period. In fact such a report under sub-Section (12) is to be submitted “on completion of the investigation”. There is no stipulation of any fixed CRIMINAL APPEAL NOS. 538-539 .OF 2019 (@ SLP(Crl)Nos.94-95 OF 2019) Serious Fraud Investigation Office v. Rahul Modi and Another Etc. 47 period for completion of investigation which is consistent with normal principles under the general law. For instance, there is no fixed period within which the investigation under Criminal Procedure Code must be completed. If the investigation proceeds for a longer period, under Section 167 of the Code certain rights may flow in favour of the Accused. But it is certainly not the idea that in case the investigation is not over within any fixed period, the authority to investigate would come to an end.

Again, sub-Section (2) of Section 213 of 2013 Act does not speak of any period for which the other Investigating Agencies are to hold their hands, nor does the provision speak of any re-transfer of the relevant documents and records from SFIO back to said Investigating Agencies after any period or occurring of an event. For example, under Section 6 of the National Investigation Agency Act, 2008 (“ NIA Act ” for short) the Agency (NIA) can be directed by the Central Government to investigate the Scheduled Offence under the NIA Act and where such direction is given, the State Government is not to proceed with any pending investigation and must forthwith transmit the relevant documents and records to the Agency (NIA). But under Section 7 of NIA Act, the Agency may, with previous approval, transfer the case to the State Government for investigation and trial of the offence. CRIMINAL APPEAL NOS. 538-539 .OF 2019 (@ SLP(Crl)Nos.94-95 OF 2019) Serious Fraud Investigation Office v. Rahul Modi and Another Etc. 48

29. The very expression “assign” in Section 212(3) of 2013 Act contemplates transfer of investigation for all purposes whereafter the original Investigating Agencies of the Central Government or any State Government are completely denuded of any power to conduct and complete the investigation in respect of the offences contemplated therein. The idea under sub-Section (2) is complete transfer of investigation. The transfer under sub- Section (2) of Section 213 would not stand revoked or recalled in any contingency. If a time limit is construed and contemplated within which the investigation must be completed then logically, the provisions would have dealt with as to what must happen if the time limit is not adhered to. The Statute must also have contemplated a situation that a valid investigation undertaken by any Investigating Agency of Central Government or State Government which was transferred to SFIO, must then be re-transferred to said Investigating Agencies. But the Statute does not contemplate that. The transfer is irrevocable and cannot be recalled in any manner. Once assigned, SFIO continues to have the power to conduct and complete investigation 18. If that be so, can such power stand curtailed or diminished if the investigation is 18 The decision of this Court in Kazi Lhendup Dorji vs. State of Sikkim & Ors reported in (1994) Supp. 2 SCC 116 (para 16), though in a different situation, laid down that consent once given by State Government under which investigation was handed over to CBI, could not be recalled or rescinded by the State Government and it is the CBI which would be competent to complete investigation. CRIMINAL APPEAL NOS. 538-539 .OF 2019 (@ SLP(Crl)Nos.94-95 OF 2019) Serious Fraud Investigation Office v. Rahul Modi and Another Etc. 49 not completed within a particular period. The Statute has not prescribed any period for completion of investigation. The prescription in the instant case came in the order of 20.06.2018. Whether such prescription in the Order could be taken as curtailing the powers of SFIO is the issue.

30. It is well settled that while laying down a particular procedure if no negative or adverse consequences are contemplated for non-adherence to such procedure, the relevant provision is normally not taken to be mandatory and is considered to be purely directory. Furthermore, the provision has to be seen in the context in which it occurs in the Statute. There are three basic features which are present in this matter:-

CRIMINAL APPEAL NOS. 538-539 .OF 2019 (@ SLP(Crl)Nos.94-95 OF 2019) Serious Fraud Investigation Office v. Rahul Modi and Another Etc. 50 In the face of these three salient features it cannot be said that the prescription of period within which a report is to be submitted by SFIO under sub-Section (3) of Section 212 is for completion of period of investigation and on the expiry of that period the mandate in favour of SFIO must come to an end. If it was to come to an end, the legislation would have contemplated certain results including re-transfer of investigation back to the original Investigating Agencies which were directed to transfer the entire record under sub-Section (2) of Section 212 . In the absence of any clear stipulation, in our view, an interpretation that with the expiry of the period, the mandate in favour of SFIO must come to an end, will cause great violence to the scheme of legislation. If such interpretation is accepted, with the transfer of investigation in terms of sub Section (2) of Section 212 the original Investigating Agencies would be denuded of power to investigate and with the expiry of mandate SFIO would also be powerless which would lead to an incongruous situation that serious frauds would remain beyond investigation. That could never have been the idea. The only construction which is, possible therefore, is that the prescription of period within which a report has to be submitted to the Central Government under sub-Section (3) of Section 212 is purely directory. Even after the expiry of such stipulated period, the mandate in CRIMINAL APPEAL NOS. 538-539 .OF 2019 (@ SLP(Crl)Nos.94-95 OF 2019) Serious Fraud Investigation Office v. Rahul Modi and Another Etc. 51 favour of the SFIO and the assignment of investigation under sub-Section (1) would not come to an end. The only logical end as contemplated is after completion of investigation when a final report or “investigation report” is submitted in terms of sub-Section (12) of Section 212 . It cannot therefore be said that in the instant case the mandate came to an end on 19.09.2018 and the arrest effected on 10.12.2018 under the orders passed by Director, SFIO was in any way illegal or unauthorised by law. In any case, extension was granted in the present case by the Central Government on 14.12.2018. But that is completely besides the point since the original arrest itself was not in any way illegal. In our considered view, the High Court completely erred in proceeding on that premise and in passing the order under appeal.

31. These appeals therefore deserve to be allowed and the Order under appeal must be set aside. Since the writ petitioners were directed to be released on bail, by way of interim relief, we direct as under:-

32. Transfer Petition (Crl.) No.35 of 2019 was filed by Serious Fraud Investigation Office (SFIO) and Deputy Director, SFIO (Original Respondents seeking transfer of Writ Petition (Crl.) No.3960 of 2018. Said writ petition preferred on 21.12.2018 by Vivek Harivyasi claimed similar relief as was granted by the High Court in Writ Petition (Crl) Nos.3842 and 3843 of 2018 on 21.12.2018. However, before the writ petition could be taken up, the decision of the High Court dated 20.12.2018 was put in challenge before this Court and Transfer Petition (Crl.) No.35 of 2019 seeking transfer of Writ Petition (Crl.) No.3960 of 2018 was also preferred. CRIMINAL APPEAL NOS. 538-539 .OF 2019 (@ SLP(Crl)Nos.94-95 OF 2019) Serious Fraud Investigation Office v. Rahul Modi and Another Etc. 53

33. On 08.03.2019 learned counsel appearing for Vivek Harivyasi submitted that his client would prefer an application for bail before the concerned court and following direction was passed by this Court:

34. In view of our above decision in Criminal Appeals arising from Special Leave Petition (Crl.) Nos.94-95 of 2019, no separate orders are called for in the transfer petition. The transfer petition is, therefore, disposed of.

35. In the end, we must state that we have not and shall not be taken to have expressed any opinion on merits of the matter which shall be gone into independently by the concerned courts.

………..…..……..……J. (Abhay Manohar Sapre) ..………….……………J. (Uday Umesh Lalit) New Delhi, March 27, 2019.

REPORTABLE IN THE SUPREME COURT OF INDIA CRIMINAL APPELLATE JURISDICTION CRIMINAL APPEAL Nos.538-539 OF 2019 (Arising out of S.L.P.(Crl.) Nos.94-95 of 2019) Serious Fraud Investigation Office ….Appellant(s) VERSUS Rahul Modi and Anr. Etc. ….Respondent(s) WITH TRANSFER PETITION (CRL.) NO.35 OF 2019 (Serious Fraud Investigation Office & Anr. vs. Vivek Harivyasi & Ors.) JUDGMENT Abhay Manohar Sapre, J.

1. I have had the advantage of going through an elaborate, well considered and scholarly draft judgment proposed by my esteemed brother Justice Uday Umesh Lalit.

2. I entirely agree with the reasoning and the conclusion, which my erudite brother has drawn, which are based on remarkably articulate process of reasoning. However, having regard to the nature of the controversy, I wish to add a few words of mine.

3. One of the questions which fell for consideration in these appeals and was ably argued at length by the learned senior counsel for both the parties was in relation to the scope, extent and the purpose of Section 212 of the Companies Act, 2013 (hereinafter referred to as the “Act”) and, in particular, whether the compliance of sub-section (3) of Section 212 of the Act is mandatory or directory and, if so, why.

4. As rightly reasoned out by my learned brother Lalit, J., having regard to the scheme of the Act underlined in Chapter XIV ( Sections 206 to 229 of the Act) dealing with the matters relating to 2 inspection, inquiry and investigation of the companies in juxtaposition with Chapter XXIX which prescribes the punishment/penalties for commission of various offences specified under the Act, the compliance of sub-section (3) of Section 212 of the Act is essentially directory.

5. If the submission of the learned counsel for the respondents (writ petitioners) that the compliance of sub-section (3) of Section 212 of the Act in relation to the submission of the report be held mandatory is accepted (which I am afraid, I cannot accept) in our view, the very purpose of enacting Section 212 of the Act would get defeated and will become nugatory.

6. Indeed, when I apply the well-known principle of purposive interpretation while interpreting the relevant provisions in juxtaposition and hold that sub-section (3) of Section 212 of the Act is directory 3 in nature, it serves the legislative intent for which Chapter XXIX is enacted.

7. I, therefore, agree with the reasoning and the conclusion arrived at by brother Justice Lalit on the interpretation of sub-section (3) of Section 212 of the Act.

8. In the light of what is held above, the other arguments of learned counsel for the respondents do not survive for consideration.

9. So far as the other issues are concerned, brother Lalit, J. has dealt with them succinctly. I entirely agree with him.

………...................................J. [ABHAY MANOHAR SAPRE] New Delhi;

March 27, 2019.