NCLAT (2025.02.28) in Deloitte Haskins & Sells LLP Vs. Union of India and Ors. [(2025) ibclaw.in 157 NCLAT, Company Appeal (AT) No. 255, 284 & 285 of 2024] held that;
When legislature specifically provides SFIO Report to take a proceeding against any director, key managerial personnel and other officers of the company, obviously the said report is to be relied for the said purpose and in event, the submission of the Appellant is accepted that the said report cannot be looked into it not being the legal evidence, the purpose and object of sub-section (14A) becomes meaningless and otiose.
When legislature specifically provided for taking action under sub-section (14A) against the director, key managerial personnel and other officers on the basis of SFIO Report, the said report cannot be said to be irrelevant and inadmissible for proceeding under sub-section (14A).
When legislature specifically provided that the SFIO Report can be looked into and relied for purpose of proceeding under sub-section (14A), the submission that said report is untouchable, irrelevant or inadmissible has to be rejected.
The question before a court is not whether there is some material on the basis of which some relief can be granted. The question is whether any relief can be granted, when the defendant had no opportunity to show that the relief proposed by the court could not be granted.
When there is no prayer for a particular relief and no pleadings to support such a relief, and when the defendant has no opportunity to resist or oppose such a relief, if the court considers and grants such a relief, it will lead to miscarriage of justice. Thus it is said that no amount of evidence, on a plea that is not put forward in the pleadings, can be looked into to grant any relief.”
Excerpts of the Order;
These Appeals challenges the same order dated 22.07.2024 passed by the National Company Law Tribunal, Mumbai Bench in CA No.65 of 2024, CA No.117 of 2024 and CA No.118 of 2024 respectively. By the impugned order, CA No.65 of 2024 filed by Deloitte Haskins & Sells LLP, CA No. 117 of 2024 filed by Kalpesh Mehta and CA No.118 of 2024 filed by Udayan Sen were rejected. Aggrieved by the said order, these appeals have been filed. These Appeals arises out of the similar facts and sequence of the events, it shall be sufficient to refer to facts and pleadings in Company Appeal (AT) No.255 of 2024 for deciding these Appeals.
# 2. Brief background facts giving rise to these Appeals need to be noticed:
2.1. Ministry of Corporate Affairs (MCA) in exercise of powers under Section 212 of the Companies Act, 2013 directed the Serious Fraud Investigation Office (SFIO) to investigate the affairs of the IL&FS and its subsidiaries. A Company Petition No.3638 of 2018 was filed by the MCA under Sections 241 and 242 of the Companies Act, 2013 against ILFS and its then existing Board of Directors before NCLT, Mumbai. On 01.10.2018, NCLT Mumbai passed an order superseding the existing director of the ILFS with new Board of Directors. On 30.11.2018, SFIO submitted its 1st Interim Report. On 28.05.2019, SFIO submitted its 2nd Investigation Report to the Central Government in respect of investigation into IFIN. On the basis of 2nd SFIO Report, direction was issued by MCA dated 29.05.2019 under Section 212(14) of the Companies Act. A Criminal Complaint was filed before the Session Court, Special Judge being Complaint CC No.20 of 2019. On the basis of 2nd SFIO Report, Respondent filed two applications in C.P. No.3638 of 2018 (i) seeking impleadment of the individual entities charged under Section 447 of the Companies Act, 2013 and Sections 417, 420 and 120B of the IPC namely MA No.2071 of 2019 and (ii) another MA No.2070 of 2019 (attachment application) was filed by the respondent seeking to restrain the Appellant from mortgaging, creating a charge or lien, creating third party rights and/or alienating its moveable and immovable properties. The impleadment application was allowed by the NCLT vide order dated 18.07.2019 impleading the Appellant as Respondent to the Company Petition. Appellant- Deloitte Haskins and Sells LLP was impleaded as Respondent No.326 to the Company Petition and several appeals were filed challenging the order dated 18.07.2019 including Company Appeal (AT) No.190 of 2019 filed by Deloitte Haskins and Sells LLP. This Tribunal vide its judgment and order dated 04.03.2020 dismissed the appeals and upheld the order of the NCLT. Appeals were also filed before the Hon’ble Supreme Court challenging the order dated 04.03.2020 which appeals were withdrawn on 28.02.2024. Union of India filed an amendment application being CA No.2696 of 2019 which was allowed by the NCLT vide order dated 25.11.2019. In MA No.2070 of 2019, additional affidavit, reply and rejoinder were filed. Pleadings having been completed in MA No.2070 of 2019, the application was listed for arguments on 07.02.2024. Union of India prepared a convenience compilation of the annexure/documents underlying the IFIN investigation report. Appellants objected to the convenience compilation on which objection, matter was adjourned. NCLT Mumbai on 20.02.2024 granted liberty to the respondent to amend CP No.3638 of 2018 in terms of the order dated 25.11.2019 and serve copy on the appellants.
2.2. Appellants filed CA Nos. 65 of 2024, 117 of 2024 and 118 of 2024 challenging (i) admissibility of IFIN investigation report (ii) convenience compilation tendered on 07.02.2024 consisting of documents underlying the IFIN investigation report and the amended prayer clause (e) of CP No.3638 of 2018. IAs filed by the Appellants were opposed by the respondent. NCLT heard both, the appellants and respondents on the above IAs and by impugned order dated 22.07.2024 has rejected the IAs filed by the Appellant holding that 2nd interim SFIO Report or compilation of documents consisting of extract from SFIO Report can be considered by the Tribunal for adjudication of interim relief as well as final declaration. Aggrieved by the above judgment, these Appeals have been filed.
# 3. We have heard Shri Neeraj Kishan Kaul, Learned Senior Counsel and Shri Arun Kathpalia, Learned Senior Counsel appearing for the Appellants and Shri Aditya Sikka, Learned Counsel appearing for the Union of India.
# 4. Learned Senior Counsel appearing for the Appellant in support of the appeals contends that the 2nd SFIO Report having been equated as report prepared under Section 173 of the Code of Criminal Procedure (CrPC) 1973, as per Section 212(15) of the Companies Act, 2013, the 2nd SFIO Report is not admissible as legal evidence. A report under Section 173 of the CrPC has been expressly made inadmissible as legal evidence and has been considered only to be an opinion of the police officer who conducts the police investigation. By virtue of deeming fiction created under Section 212 (15) by which SFIO Report is akin to police report under Section 173 of the CrPC, the report being inadmissible cannot be relied in the company petition before the NCLT. The law is well settled that the legislature which has passed the law is well aware and has complete knowledge of all existing laws. The submission advanced by the Respondent No.1 that purpose of creating deeming fiction under Section 212(15) is only to equate the SFIO Report with the police report only for “the purpose of framing of charges by the Special Court” cannot be accepted. The expression “for framing charges” is only descriptive of the report and does not restrict the purpose for which the report is to be considered as a police report. NCLT committed error in accepting the above contention of the Respondent No.1. Interpretation put by the respondent to Section 212(15) shall make the provision otiose. The order of the NCLT is not in accord with the principle of statutory interpretation. Reliance on Section 212 (14A) is also misplaced while considering the admissibility of 2nd SFIO Report. Counsel for the Appellant has also referred to Section 223 of the Companies Act. It is submitted that under Section 223, a final or interim report made by an inspector if authenticated could be admissible in any legal proceeding as evidence and Section 223(5) specifically provide that nothing in the said Section would apply to the report under Section 212. The import is clear that Section 212 which make the inspector’s report as evidence is not applicable with regard to report under Section 212. The NCLT has erroneously concluded that report under Section 212 need not be authenticated in the manner provided under Section 223 to be admissible as evidence which reasoning is erroneous. Section 223(5) expressly excluded report under Section 212 from being admitted as evidence. Alternatively, it is submitted by the Learned Senior Counsel that compilation of document which has been sought to be placed by the respondent before the NCLT does not co-relate to any pleading made by the respondent in the Company Petition or any of the applications filed in the NCLT. Documents forming part of the compilation of the document have not even been annexed either to the petition or any application filed before the NCLT. There being no pleading with regard to documents which are sought to be placed before the NCLT, the said document cannot be looked into on this ground alone. The procedure before the NCLT being summary in nature, it is necessary that the appellant has notice of the case i.e. require to be met by it before NCLT. It is submitted that the admissibility of 2nd SFIO Report has not attained finality in the proceeding where impleadment application was allowed and order of impleading the appellant has been affirmed by this Tribunal in appeal. The issues which sought to be raised in this appeal have never been adjudicated nor any finality can be attached on the issue regarding admissibility of 2nd SFIO Report on the basis of order passed in the impleadment application. No finding having been rendered in earlier proceeding with regard to admissibility of 2nd SFIO Report, there is no question of applicability of even principle of constructive res judicata. NCLT has failed to consider that a combined reading of Sections 212 and 223(5) of the Companies Act would mean that such a report is not admissible in evidence. The judgment rendered by the NCLT is not in conformity with the principle of interpretation which has been laid down by the Hon’ble Supreme Court. The deeming fiction under Section 212(15) cannot be held to be only for the limited purpose of framing charges before the Special Court rather deeming fiction has to be given its fullest play which is making 2nd SFIO Report as a report under Section 173 of the CrPC, as inadmissible in evidence.
# 5. Counsel for the Union of India refuting the submissions of the Counsel for the Appellant submits that the 2nd SFIO Report can be relied on for the purpose of proceeding under the Companies Act, 2013. SFIO is a multi-disciplinary expert investigation body with exclusive domain to investigate into offence under the Act. Powers conferred on the investigation officer of the SFIO are wider with those of police officer under the CrPC. Unlike a police report, SFIO investigation report submitted to the Central Government under Section 214. SFIO Report serves various purposes including the purpose for framing charges as well as for purposes as contemplated in Section 212 (14A) and other purposes as determined by the Central Government. The basis of the application under Section 212(14A) is the SFIO Report. The scheme as delineated by Section 212(14A) itself indicate that act confer evidencing value on the SFIO Report and is not confined to the said report being treated as a police report under Section 173 of the CrPC. Section 212(15) of the Companies Act cannot be interpreted in a manner that object and purpose of the report is only as a police report under Section 173 of the CrPC. The interpretation put by the Appellant on Section 212(15) is clearly against the said statutory scheme of Section 212. Deeming fiction provided under Section 212(15) is limited to the context and cannot be extended beyond the language of the Section. It is well settled law that deeming fiction cannot be extended beyond the context and language used in relation to deeming fiction. Interpretation put by the Appellant on Section 212(15) shall make other part of Section 212 otiose and meaningless. It is well settled that all part of statutory provisions has to be given its meaning and purpose and principle of harmonious construction is to be adopted to give meaning and purpose of all provisions of law. In event, the submission of the appellant is accepted that SFIO investigation report is not admissible and cannot be relied in proceeding in view of Section 212(15), the same will be against the clear intendment of statutory scheme of Section 212. Coming to the provision of Section 223(5), it is contended that sub-section (5) of Section 223 only provides that nothing in Section 223 shall apply to Section 212 that the object was to not make SFIO Report; Under Section 212 subject to any authentication as contemplated under Section 223 for inspector’s report, sub-section (5) of Section 223 cannot mean any more. Apart from not confining the report under Section 212 with the procedure as contemplated under Section 223, Civil and Criminal proceeding can simultaneously proceed. Coming to the submission of the appellant that there are no pleadings with respect to compilation of documents which are sought to be introduced before the NCLT, it is submitted that MA No.2070 of 2019 is an application for interim relief only and there are sufficient pleadings with reference to document being relied on. The 2nd SFIO Report having been served on the appellant in the year 2019 itself, appellants cannot be heard to contend that they are not aware of the documents which was part of the report. It is thus submitted that the submission that the compilation of document cannot be accepted deserve rejection and the compilation of document filed by the Respondent are fully admissible and can be looked into and relied by the NCLT while deciding MA No.2070 of 2019.
# 6. Counsel for both the parties have placed reliance on various judgments of the Hon’ble Supreme Court in support of their respective submissions which we shall notice hereinafter while considering the submissions of the parties.
# 7. From the submissions of the parties, following issues arise for consideration in these appeals: –
(i) Whether Investigation Report submitted by the SFIO under Section 212(12) is not admissible in evidence in view of provisions of Section 223(5) read with Section 212(15) of the Companies Act, 2013?
(ii) Whether the 2nd SFIO Report and the Compilation of Documents filed by the Respondent on 07.02.2024 before the NCLT cannot be looked into by the NCLT for deciding MA No.2070 of 2019 by virtue of deeming fiction contained in Section 212(15) of the Companies Act, 2013?
(iii) Whether there was no sufficient pleadings in the Company Petition/ Miscellaneous Application filed by the Respondent with respect to the SFIO Report and documents and Compilation of the Documents dated 17.02.2024 sought to the relied by the Union of India?
(iv) Whether the impugned order passed by the NCLT is unsustainable in law?
# 8. The Issue Nos. (i), (ii) and (iii) being inter-connected and are being taken together.
# 9. MCA in pursuant to powers under Section 212 (1)(a) and (c) of the Companies Act, 2013 directed the SFIO to investigate the affairs of the IL&FS and its subsidiaries. Investigation was conducted by the SFIO and interim report was submitted by the SFIO on 01.11.2018 and 2nd SFIO Report was submitted on 28.05.2019 by the SFIO. MCA under Section 212(14) after receipt of the SFIO Report directed the SFIO to initiate prosecution against the company and its officers or employees on the basis of which Criminal Complaint was submitted on 30.05.2019 being Complaint CC No.20 of 2019. It was on the basis of SFIO Report, the IA was filed for impleadment of individual entities including the Appellant which was MA No.2071 of 2019 which was allowed by the NCLT on 18.07.2019. Another MA No.2070 of 2019 was filed by the Union of India on the basis of 2nd SFIO Report as Annexure 4 to the Appeal. The application gives the details of sequence of the events including the order issued by the MCA under Section 212(1)(a) & (c) of the Companies Act, 2013, details of 1st interim report dated 30.11.2018 as well as 2nd SFIO Report dated 28.05.2019. Paragraph 12 of the application gives brief the investigation report. Paragraph 12 is as follows:-
“12. That in brief the investigation report reveals as under, however, details of transactions are mentioned in the annexures to the report which are not reproduced here for the sake of brevity:
I. Infrastructure Leasing and Financial Services Limited (hereinafter referred to as “IL&FS”) is an infrastructure development and finance company. IL&FS have number of subsidiaries, associated and Joint Ventures in India and abroad. There were a series of media reports on the defaults made by IL&FS and its subsidiary companies in meeting their obligations to repay their Commercial Papers, short term borrowings and issues on the liquidity crunch, corporate governance, irregularities/complacency in risk assessment, etc. It was also reported that there had been a spate of resignations by nominee and key managerial personnel in recent past.
II. Taking on the basis of the payment crisis in IL&FS Group, the role played by the company and its subsidiary companies, the quantum of investment of general public, complexity of the matter requiring investigation was assigned to the Serious Fraud Investigation Office (SFIO) to investigate “into the affairs of IL&FS and its subsidiary companies, who were responsible for the payment crisis”.
ISSUES UNDER INVESTIGATION
III. That in view of the above investigation into the affairs of IL&FS Financial Services Limited (hereinafter referred to as “IFIN”) following issues were identified:
i. Role played by the directors of company in running the operations of the company.
ii. Manner and Quantum of funds raised.
iii. Manner and Quantum of Loan and Advances made by IFIN to borrowers and group entities.
iv. Manner of violating the RBI Guidelines for credit monitoring, classification by repayment of outstanding loans and lending to group companies.
v. Recognition of income from group entities on accrual basis and consequent writing off.
vi. Impact of violations on the Financial Statements.
vii. Causing wrongful loss to the company and its creditors and wrongful gain to the directors of the company.
viii. Role of Auditors.
ix. Role of any other person/entity in the operations/borrowers.”
# 10. The application also deals with the role of auditors, including the Appellant- Deloitte Haskins & Sells LLP. In paragraph 16 of the application, following reliefs have been prayed for:-
“16. That due to the emergent grounds stated above, it is prayed that the Hon’ble Tribunal may be pleased to pass the following orders:
(a) To direct that the orders dated 03/12/2018, as modified by orders dated 16/01/2019 passed by this Hon’ble Tribunal, in company petition CP No. 3638/2018, be extended to additional Respondent Nos. 321 to 343 (except proforma respondent no. 337 to 341);
(b) To permit the applicant/ petitioner to examine any unusual transaction or transfer of funds by respondent no. 321 to 343 (except proforma respondent no. 337 to 341) to determine the diversion of siphoning of funds from 01.10.2018 (i.e. the date of filing of the petition);
(c) Pass any other order(s) as deemed fit and proper, under the circumstances, by this Hon’ble Tribunal.”
# 11. The above application dated 08.06.2019 remain pending due to various litigation and was listed on 07.02.2024 for arguments. Union of India tendered a compilation of documents after handing over the same to the Counsel appearing for the Appellant, CA Nos. 65 of 2024, 117 of 2024 and 118 of 2024 have been filed subsequent to the Union of India having filed the compilation of documents which compilation of documents were part of the 2nd SFIO Report submitted on 28.05.2019. Counsel for the Respondent submitted that the 2nd SFIO Report dated 28.05.2019 which was also served in soft copy to all the appellants after they were impleaded in the proceedings. Annexure 18 to the Appeal is copy of the compilation documents filed by Respondent No.1 on 07.02.2024 before the NCLT. When we look into the said compilation, it contains the note of investigation report and some documents which were part of the 2nd SFIO Report. CA No.65 of 2024 was filed by Deloitte Haskins and Sells LLP which was dated 16.02.2024. In C.A. No.65 of 2024, following prayers were made in paragraph 10 of the application:-
“10. PRAYERS:
In light of the aforesaid circumstances, the Applicant herein is approaching this Hon’ble Tribunal seeking the reliefs as set out hereunder:
a. That this Hon’ble Tribunal be pleased to declare that the Compilation of Documents dated 7th February 2024 (being annexures to the 2nd Interim SFIO Report) tendered by Respondent No. 1/the Original Petitioner is not admissible in the present proceedings.
b. That pending the hearing and final disposal of the present Application the proceedings in M.A. 2070 of 2019 be stayed.
C. For ad-interim and interim reliefs in terms of prayer clauses (a) and (b) above.
d. For such other orders and reliefs as this Hon’ble Tribunal may deem fit and proper in the nature and circumstances of the present case.
c. For costs of this Application.”
# 12. The statutory provisions which has arisen for consideration and interpretation are Sections 212 and 223 of the Companies Act, 2013. Section 212 is part of Chapter XIV of the Companies Act, 2013 (Inspection, Inquiry and Investigation). Companies Act, 1956 contains Sections 235, 237 and 239 with respect to investigation of the affairs of the companies. Section 211 of the Companies Act, 2013 empowers the Central Government by notification to establish an office to be called the Serious Fraud Investigation Office to investigate frauds relating to a company. Section 211 of the Companies Act, 2013 is as follows:-
“211. Establishment Investigation Office of Serious Fraud
(1) The Central Government shall, by notification, establish an office to be called the Serious Fraud Investigation Office to investigate frauds relating to a company:
Provided that until the Serious Fraud Investigation Office is established under subsection (1), the Serious Fraud Investigation Office set-up by the Central Government in terms of the Government of India Resolution No. 45011/16/2003-Adm-I, dated the 2nd July, 2003 shall be deemed to be the Serious Fraud Investigation Office for the purpose of this section.
(2) The Serious Fraud Investigation Office shall be headed by a director and consist of such number of experts from the following fields to be appointed by the Central Government from amongst persons of ability, integrity and experience in,—
(i) banking;
(ii) corporate affairs;
(iii) taxation;
(iv) forensic audit;
(v) capital market;
(vi) information technology;
(vii) law; or
(viii) such other fields as may be prescribed.
(3) The Central Government shall, by notification, appoint a director in the Serious Fraud Investigation Office, who shall be an officer not below the rank of a Joint Secretary to the Government of India having knowledge and experience in dealing with matters relating to corporate affairs.
(4) The Central Government may appoint such experts and other officers and employees in the Serious Fraud Investigation Office as it considers necessary for the efficient discharge of its functions under this Act.
(5) The terms and conditions of service of Director, experts, and other officers and employees of the Serious Fraud Investigation Office shall be such as may be prescribed.”
# 13. Section 212 provides for investigation into affairs of Company by Serious Fraud Investigation Office and contains detailed provisions pertaining to investigation to be carried out by the SFIO. Section 212(1) provides that 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 by order, assign the investigation into the affairs of the said company to the Serious Fraud Investigation Office. Section 212 (11) and (12) provides for interim report and investigation report which are as follows:-
“212. Investigation into Affairs of Company by Serious Fraud Investigation Office -(11) The Central Government if so directs, the Serious Fraud Investigation Office shall submit an interim report to the Central Government.
(12) On completion of the investigation, the Serious Fraud Investigation Office shall submit the investigation report to the Central Government.”
# 14. Sub-section (14) of Section 212 provides as follows:-
“212. Investigation into Affairs of Company by Serious Fraud Investigation Office – (14) On receipt of the investigation report, the Central Government may, after examination of the report (and after taking such legal advice, as it may think fit), direct the Serious Fraud Investigation Office to initiate prosecution against the company and its officers or employees, who are or have been in employment of the company or any other person directly or indirectly connected with the affairs of the company.”
# 15. Section 212(15) provides as follows:-
“212. Investigation into Affairs of Company by Serious Fraud Investigation Office – (15) Notwithstanding anything contained in this Act or in any other law for the time being in force, the investigation report filed with the Special Court for framing of charges shall be deemed to be a report filed by a police officer under section 173 of the Code of Criminal Procedure, 1973 (2 of 1974).”
# 16. By Act 22 of 2019, sub-section (14A) has been inserted in Section 212 w.e.f. 15.08.2019. Act 22 of 2019 was passed on Bill No.189 of 2019 presented in The Companies (Amendment) Bill, 2019 presented in the Parliament. Clause 31 of the Bill proposed amendment in Section 212, sub-clause (14A) was proposed to be added in Clause 31 of the Bill. Insertion of sub-clause 14A in the Companies Act, 2013, it is useful to notice ‘notes on clauses’ of the Bill. Notes of clause on Clause 31 of the Bill reads as follows:-
“Clause 31 of the Bill seeks to amend section 212 of the Act to provide that any officer not below the rank of Assistant Director of Serious Fraud Investigation Office (SFIO), if so authorised, may arrest any person in accordance with the provisions of this section. It also seeks to provide that the person so arrested may be taken to a Special Court or Judicial Magistrate or Metropolitan Magistrate within twenty four hours of his arrest. Further, the clause also seeks to provide that where an investigation report submitted by SFIO states that a fraud has taken place and any director, key managerial personnel or officer has taken undue advantage or benefit, then the Central Government may file an application before Tribunal with regard to disgorgement and such director, key managerial personnel or officer may be held personally liable without any limitation of liability.”
# 17. The ‘notes on clauses’ throw considerable light on the proposed amendment in Section 212 by sub-clause (14A) was sought to be inserted. Sub-section (14A) of Section 212 which is founded on report under sub-sections (11) and (12) of Section 212, the Central Government is authorised to file an application before the Tribunal for appropriate orders with regard to disgorgement of the said property when a report under sub-sections (11) and (12) states that a fraud has taken place in a company and due to such fraud any director, key managerial personnel or officer of the company or any other person entity has taken undue advantage or benefit. The legislative scheme clearly indicate that it is the report under sub-sections (11) and (12) of Section 212 on the basis of which an application can be filed by the Central Government before the NCLT. MA No.2071 of 2019 as noted above was filed by the Central Government after 2nd SFIO Report was received on 28.05.2019.
# 18. Now we need to notice Section 223 which deals with ‘inspector’s report’. Section 223 provides as follows:-
“223. Inspector’s Report.
(1) An inspector appointed under this Chapter may, and if so directed by the Central Government shall, submit interim reports to that Government, and on the conclusion of the investigation, shall submit a final report to the Central Government.
(2) Every report made under sub-section (1) shall be in writing or printed as the Central Government may direct.
(3) A copy of the report made under sub-section (1) may be obtained 2[by members, creditors or any other person whose interest is likely to be affected] by making an application in this regard to the Central Government.
(4) The report of any inspector appointed under this Chapter shall be authenticated either—
(a) [by the seal, if any] of the company whose affairs have been investigated; or
(b) by a certificate of a public officer having the custody of the report, as provided under section 76 of the Indian Evidence Act, 1872, and such report shall be admissible in any legal proceeding as evidence in relation to any matter contained in the report.
(5) Nothing in this section shall apply to the report referred to in section 212.”
# 19. Both the parties are on their own interpretation of Section 223(5) as noticed above which need to be considered. Interpretation of Section 212(15) and sub-section (5) of Section 223 is a subject matter of consideration in these Appeals on which interpretation both the parties have advanced divergent submissions.
# 20. We need to first notice several judgments of the Hon’ble Supreme Court relied by the parties on the principle of statutory interpretation. Counsel for the Appellant in support of his submission that there is presumption that legislature has passed laws after deliberation with a complete knowledge of all existing laws has relied on judgment of the Hon’ble Supreme Court in “Union of India vs. Ranjit Kumar Saha and Anr.- (2019) 7 SCC 505” and judgment of the Hon’ble Supreme Court in “Department of Customs vs. Sharad Gandhi- (2020) 13 SCC 521”. Hon’ble Supreme Court in “Union of India vs. Ranjit Kumar Saha” (supra) had occasion to consider the provisions of the Corruption Act, 1988 and the Assam Rifles Act, 2006. The Hon’ble Supreme Court in the above case laid down that the legislature while enacting a law has complete knowledge of the existing laws on the same subject-matter. In paragraph 16, following was laid down:-
“16. There is a presumption against repeal by implication and the reason for this rule is based on the theory that the legislature while enacting a law has complete knowledge of the existing laws on the same subject-matter, and therefore, when it does not provide a repealing provision, the intention is clear not to repeal the existing legislation. [State of M.P. v. Kedia Leather & Liquor Ltd., (2003) 7 SCC 389, para 13 : 2003 SCC (Cri) 1642; See: Municipal Council, Palai v. T.J. Joseph, (1964) 2 SCR 87 : AIR 1963 SC 1561; Northern India Caterers (P) Ltd. v. State of Punjab, (1967) 3 SCR 399 : AIR 1967 SC 1581; MCD v. Shiv Shanker, (1971) 1 SCC 442 : 1971 SCC (Cri) 195; R.S. Raghunath v. State of Karnataka, (1992) 1 SCC 335 : 1992 SCC (L&S) 286; Ratan Lal Adukia v. Union of India, (1989) 3 SCC 537]”
# 21. In “Department of Customs” (supra), the Hon’ble Supreme Court had occasion to consider various provisions of the Customs Act, 1962. In paragraph 17, following was laid down:-
“17. …………… The legislature was fully conscious that the Customs Act, 1962 exists on the statute book. The legislature was conscious of its operation and it wanted to articulate the manner in which both laws were to co-exist. It is accordingly that in Section 4 it has expressly provided that the Customs Act shall apply in relation to all antiquities and art treasures, the export of which by any person other than the Central Government or authorised or agency is prohibited under Section 3 of the Act. The only area where it tabooed the application of the Customs Act is where the Act contains provisions which were irreconcilable being inconsistent with the Antiquities Act. Equally, it also expressly provided for the situation that any confiscation, notwithstanding Section 125 of the Customs Act thereof, shall be made in regard to antiquities and art treasure unless on an application made to the Central Government, it otherwise directs. Section 125 of the Customs Act is a provision which enables the officer adjudging the confiscation proceedings to give an option to pay a fine in lieu of confiscation. The obvious intention of the legislature is to provide that once an order for confiscation is passed under the Customs Act in respect of antiquities or art treasure the powers ordinarily available under Section 125 of the Customs Act will not be available.”
# 22. The other limb of submission which has been advanced by Counsel for both the parties is on the interpretation of deeming fiction as has been incorporated under Section 212(15). Counsel for the Appellant has relied on the judgment of the Hon’ble Supreme Court in “Bhavnagar University vs. Palitana Sugar Mill (P) Ltd. and Ors.- (2003) 2 SCC 111” where Hon’ble Supreme Court had occasion to consider the provisions of the Gujarat Town Planning and Urban Development Act, 1976. In the above case, the Hon’ble Supreme Court had occasion to consider the purpose and object of creating a legal fiction in the statute. In paragraph 33 of the judgment, following was laid down:-
“33. The purpose and object of creating a legal fiction in the statute is well known. When a legal fiction is created, it must be given its full effect. In East End Dwellings Co. Ltd. v. Finsbury Borough Council [(1951) 2 All ER 587 : 1952 AC 109 (HL)] Lord Asquith, J. stated the law in the following terms: (All ER p. 599 B-D)
If you are bidden to treat an imaginary state of affairs as real, you must surely, unless prohibited from doing so, also imagine as real the consequences and incidents which, if the putative state of affairs had in fact existed, must inevitably have flowed from or accompanied it. One of these in this case is emancipation from the 1939 level of rents. The statute says that you must imagine a certain state of affairs; it does not say that having done so, you must cause or permit your imagination to boggle when it comes to the inevitable corollaries of that state of affairs.
The said principle has been reiterated by this Court in M. Venugopal v. Divisional Manager, LIC of India [(1994) 2 SCC 323 : 1994 SCC (L&S) 664 : (1994) 27 ATC 84] . See also Indian Oil Corpn. Ltd. v. Chief Inspector of Factories [(1998) 5 SCC 738 : 1998 SCC (L&S) 1433] , Voltas Ltd. v. Union of India [1995 Supp (2) SCC 498] , Harish Tandon v. ADM, Allahabad [(1995) 1 SCC 537] and G. Viswanathan v. Hon’ble Speaker, T.N. Legislative Assembly [(1996) 2 SCC 353] .”
# 23. Another judgment relied by the Counsel for the Appellant is “State of Karnataka vs. State of Tamil Nadu and Ors.- (2017) 3 SCC 362” where the Hon’ble Supreme Court noticed that in interpreting a provision creating a legal fiction, the court is to ascertain for what purpose the fiction is created and after ascertaining this, the court is to assume all those facts and consequences which are incidental or inevitable corollaries to the giving effect to the fiction. In paragraphs 75, 76 and 77, following was held:-
“75. In this context, we may usefully refer to the Principles of Statutory Interpretation, 14th Edn. by G.P. Singh. The learned author has expressed thus:
“In interpreting a provision creating a legal fiction, the court is to ascertain for what purpose the fiction is created [State of Travancore-Cochin v. Shanmugha Vilas Cashewnut Factory, (1953) 1 SCC 826 : AIR 1953 SC 333; State of Bombay v. Pandurang Vinayak, (1953) 1 SCC 425 : AIR 1953 SC 244 : 1953 Cri LJ 1094] , and after ascertaining this, the Court is to assume all those facts and consequences which are incidental or inevitable corollaries to the giving effect to the fiction. [East End Dwellings Co. Ltd. v. Finsbury Borough Council, 1952 AC 109 : (1951) 2 All ER 587 (HL); CIT v. S. Teja Singh, AIR 1959 SC 352] But in so construing the fiction it is not to be extended beyond the purpose for which it is created [Bengal Immunity Co. Ltd. v. State of Bihar, AIR 1955 SC 661; CIT v. Amarchand N. Shroff, AIR 1963 SC 1448] , or beyond the language of the section by which it is created. [CIT v. Shakuntala, AIR 1966 SC 719; Mancheri Puthusseri Ahmed v. Kuthiravattam Estate Receiver, (1996) 6 SCC 185 : AIR 1997 SC 208] It cannot also be extended by importing another fiction. [CIT v. Moon Mills Ltd., AIR 1966 SC 870] The principles stated above are ‘well-settled’. [State of W.B. v. Sadan K. Bormal, (2004) 6 SCC 59 : 2004 SCC (Cri) 1739 : AIR 2004 SC 3666] A legal fiction may also be interpreted narrowly to make the statute workable. [Nandkishore Ganesh Joshi v. Commr., Municipal Corpn. of Kalyan and Dombivali, (2004) 11 SCC 417 : AIR 2005 SC 34] ”
76. In Aneeta Hada v. Godfather Travels and Tours [Aneeta Hada v. Godfather Travels and Tours, (2012) 5 SCC 661 : (2012) 3 SCC (Civ) 350 : (2012) 3 SCC (Cri) 241] , a three-Judge Bench has ruled thus : (SCC p. 681, paras 37-38)
“37. In State of T.N. v. Arooran Sugars Ltd. [State of T.N. v. Arooran Sugars Ltd., (1997) 1 SCC 326] the Constitution Bench, while dealing with the deeming provision in a statute, ruled that the role of a provision in a statute creating legal fiction is well settled. Reference was made to Chief Inspector of Mines v. Karam Chand Thapar [Chief Inspector of Mines v. Karam Chand Thapar, AIR 1961 SC 838 : (1961) 2 Cri LJ 1] , J.K. Cotton Spg. and Wvg. Mills Ltd. v. Union of India [J.K. Cotton Spg. and Wvg. Mills Ltd. v. Union of India, 1987 Supp SCC 350 : 1988 SCC (Tax) 26] , M. Venugopal v. LIC [M. Venugopal v. LIC, (1994) 2 SCC 323 : 1994 SCC (L&S) 664] and Harish Tandon v. ADM, Allahabad [Harish Tandon v. ADM, Allahabad, (1995) 1 SCC 537] and eventually, it was held that when a statute creates a legal fiction saying that something shall be deemed to have been done which in fact and truth has not been done, the Court has to examine and ascertain as to for what purpose and between which persons such a statutory fiction is to be resorted to and thereafter, the courts have to give full effect to such a statutory fiction and it has to be carried to its logical conclusion.
38. From the aforesaid pronouncements, the principle that can be culled out is that it is the bounden duty of the court to ascertain for what purpose the legal fiction has been created. It is also the duty of the court to imagine the fiction with all real consequences and instances unless prohibited from doing so. That apart, the use of the term “deemed” has to be read in its context and further, the fullest logical purpose and import are to be understood. It is because in modern legislation, the term “deemed” has been used for manifold purposes. The object of the legislature has to be kept in mind.”
77. In Hari Ram [State of U.P. v. Hari Ram, (2013) 4 SCC 280 : (2013) 2 SCC (Civ) 583] , the Court has held that (SCC p. 293, para 18) in interpreting the provision creating a legal fiction, the court is to ascertain for what purpose the fiction is created and after ascertaining the same, the court is to assume all those facts and consequences which are incidental or inevitable corollaries for giving effect to the fiction.
# 24. Counsel for the Respondent on the interpretation of legal fiction has relied on “Mancheri Puthusseri Ahmed and Ors. vs. Kuthiravattam Estate Receiver- (1996) 6 SCC 185”. The Hon’ble Supreme Court in the above judgment had observed that in interpreting a provision creating a legal fiction the Court is to ascertain for what purpose the fiction is created, and after ascertaining this, the Court is to assume all those facts and consequences which are incidental or inevitable corollaries to the giving effect to the fiction. But in so construing the fiction it is not to be extended beyond the purpose for which it is created or beyond the language of the section by which it is created. In paragraph 8, following was held:-
“8. Having realised this difficulty in the way of the appellants the learned Senior Counsel for the appellants submitted that there is a non obstante clause for applicability of Section 4-A and consequently despite there being a judgment, decree or order against them which has become final they are entitled to get the benefit of this section. We fail to appreciate how the said non obstante clause can be of any assistance to the appellants on the facts of the present cases. All that the non obstante clause means to convey is to the effect that even though a mortgagee-in-possession might have suffered a judgment or decree against him which might have become final so long as his status as mortgagee-in-possession has survived even pending execution proceedings and by that time if on 1-1-1970 the section gets attracted then such a mortgagee-in-possession even though having an adverse judgment or decree against him can get the benefit of Section 4-A if the relevant conditions of the said section are fulfilled by him and in such an eventuality merely because such a mortgagee-in-possession is covered by the sweep of any final judgment or decree for redemption the same will not come in his way. On the facts of the present cases, however, as we have seen, not only the appellants were covered by a final decree for redemption but they had lost the status of mortgagees-in-possession almost 9 months prior to the coming into force of Section 4-A. Therefore, on the date on which the section operated they were no longer mortgagees-in-possession. Consequently the non obstante clause which would have otherwise helped them if they had continued as mortgagees-in-possession on 1-1-1970 does not avail the appellants on the facts of the present cases. The learned Senior Counsel for the appellants next contended that in any case the appellants had remained in possession as mortgagees by themselves and through their predecessors for more than fifty years, that the mortgage was of 1896 and even by the date the suit was filed, fifty years’ period was over. That may be so. However the requirement of the second condition, as we have shown earlier, is that such a mortgagee-in-possession who wants to avail of the benefit of Section 4-A must show that he continued in possession as mortgagee for fifty years or more continuously at least from 31-12-1919 up to 31-12-1969 which was immediately preceding the commencement of Section 4-A with effect from 1-1-1970. The learned Senior Counsel in this connection submitted that the words “immediately preceding the commencement” may be given a more expanded meaning as this is a beneficial provision. It is difficult to agree. In the first place the section creates a legal fiction. Therefore, the express words of the section have to be given their full meaning and play in order to find out whether the legal fiction contemplated by this express provision of the statute has arisen or not in the facts of the case. Rule of construction of provisions creating legal fictions is well settled. In interpreting a provision creating a legal fiction the court is to ascertain for what purpose the fiction is created, and after ascertaining this, the court is to assume all those facts and consequences which are incidental or inevitable corollaries to the giving effect to the fiction. But in so construing the fiction it is not to be extended beyond the purpose for which it is created, or beyond the language of the section by which it is created. It cannot also be extended by importing another fiction. In this connection we may profitably refer to two decisions of this Court. In the case of CIT v. Shakuntala [AIR 1966 SC 719 : (1961) 43 ITR 352] a three-Judge Bench of this Court speaking through S.K. Das, J., made the following pertinent observation in paragraph 8 of the Report:
“The question here is one of interpretation only and that interpretation must be based on the terms of the section. The fiction enacted by the legislature must be restricted by the plain terms of the statute. ”
In another case reported in the same volume at page 870, namely, CIT v. Moon Mills Ltd. [AIR 1966 SC 870 : (1966) 59 ITR 574] another three-Judge Bench of this Court speaking through Subba Rao, J., observed in paragraph 8 of the Report in connection with the provision creating such legal fictions as under:
“The fiction is an indivisible one. It cannot be enlarged by importing another fiction….”
In the present cases fiction created by Section 4-A is circumscribed by its express words. Before such a deemed tenancy can arise it must be shown by the beneficiary concerned of the said provision that he was a mortgagee-in-possession for a continuous period of not less than fifty years immediately preceding the commencement of the said section. The words “immediately preceding the commencement” must necessarily be given their ordinary and full meaning. They necessarily point out the legislative intent that the fiction is created only for covering such type of cases where the mortgagee-in-possession not only exists on the land as mortgagee on 1-1-1970 but also continuously existed as such for a period backward stretching up to at least 50 years in past from 31-12-1969 which was the day immediately preceding such commencement. Argument of the learned Senior Counsel was that if the words “50 years of continuous possession as mortgagee at any time prior to the coming into force of the amending Act” are read in the section by implication, he would qualify for the benefit of Section 4-A. Such a contention would have stood the test if the section would have been worded differently, namely, as follows:
“Such mortgagee was in continuous possession for a period of not less than 50 years prior to the coming into force of the amending Act.”
Such words are not found in the section. In fact the learned Senior Counsel for the appellants wants us to read the section after omitting the word ‘immediately’, advisedly prefixed by the legislature to the word ‘preceding’. Such an exercise is not permissible for the Court. We have to keep in view that as per the section the 50 years’ period is circumscribed by further requirement that such continuous period of occupation as mortgagee-in-possession must exist without break or any hiatus till the date of the coming into force of the Act and must consist of at least 50 years’ continuous occupation immediately prior to the coming into force of Section 4-A, as such mortgagee-in-possession. However beneficial may be the scope and ambit of the legal fiction created by the legislature while enacting Section 4-A such fiction can arise only when the express language of the section laying down the conditions precedent for raising of such a fiction is complied with by the mortgagee-in-possession concerned seeking the benefit of such a deeming fiction. Such a fiction cannot be extended by the court on analogy or by addition or deleting words not contemplated by the legislature.”
# 25. Another judgment relied by the Respondent is “Prakash H. Jain vs. Marie Fernandes (Ms)- (2003) 8 SCC 431” where Hon’ble Supreme Court held that though full effect must be given to the legal fiction, it should not be extended beyond the purpose for which the fiction was created. In paragraph 12, following was laid down:-
“12. The provisions of Chapter VIII stand apart, distinctly and divorced from the rest of the Act, except to the extent indicated therein itself and for that matter has been given an overriding effect over any other provisions in the very Act or any other law for the time being in force, though for enforcement of other remedies or even similar remedies under the provisions other than Chapter VIII, altogether different procedure has been provided for. It is unnecessary to once again refer to the special procedure provided for in Chapter VIII, but the various provisions under Chapter VIII unmistakably indicate that the competent authority constituted thereunder is not “court” and the mere fact that such authority is deemed to be court only for limited and specific purposes, cannot make it a court for all or any other purpose and at any rate for the purpose of either making the provisions of the Limitation Act, 1963 attracted to proceedings before such competent authority or clothe such authority with any power to be exercised under the Limitation Act. It is by now well settled by innumerable judgments of various courts including this Court, that when a statute enacts that anything shall be deemed to be some other thing the only meaning possible is that whereas the said thing is not in reality that something, the legislative enactment requires it to be treated as if it is so. Similarly, though full effect must be given to the legal fiction, it should not be extended beyond the purpose for which the fiction has been created and all the more, when the deeming clause itself confines, as in the present case, the creation of fiction for only a limited purpose as indicated therein. Consequently, under the very scheme of provisions enacted in Chapter VIII of the Act and the avowed legislative purpose obviously made known patently by those very provisions, the competent authority can by no means be said to be “court” for any and every purpose and that too for availing of or exercising powers under the Limitation Act, 1963.”
# 26. Now we need to advert to Section 212(15). When we look into the scheme of Section 212, it is clear that after investigation report is received under sub-section (11) or sub-section (12) of Section 212, Central Government may direct the SFIO to initiate prosecution against the company and its officers or its employees. Sub-section (15) is in reference to the SFIO Report which provided that investigation report filed with the Special Court for framing of charges shall be deemed to be a report filed by the police officer under Section 173. Thus, investigation report submitted by the SFIO and filed in the Special Court has to be deemed to be a report filed by the police officer under Section 173 of the CrPC. It is on the basis of the report submitted by police officer under Section 173 of the CrPC charges are framed by Special Court in offences alleged in the charge-sheet. When SFIO Report is deemed to be a report filed by police officer (for framing of charges) sub-section (15) begins with notwithstanding clause and deeming fiction is created to treat the report as report submitted under Section 173 of the CrPC so that charges may be framed in the prosecution which has been directed by the Central Government under sub-section (14) after receipt of the investigation report. The submission which has been pressed by the Appellant is that when the report submitted by the SFIO is a police report under Section 173 it is deemed to be police report under CrPC. The said report is not an evidence and only an opinion of a police officer. Counsel for the Appellant has relied on judgment of the Hon’ble Supreme Court in “K. Veeraswami vs. Union of India and Ors.- (1991) 3 SCC 655” where the Hon’ble Supreme Court had occasion to consider Section 173(2) of the CrPC and it was observed that report under Section 173(2) is an opinion of the investigating officer and details of the offence are required to be proved to bring home the guilt to the accused at a later stage i.e. in the course of the trial of the case “adducing acceptable evidence. In paragraph 76, following was laid down:-
“76. The charge-sheet is nothing but a final report of police officer under Section 173(2) of the CrPC. The Section 173(2) provides that on completion of the investigation the police officer investigating into a cognizable offence shall submit a report. The report must be in the form prescribed by the State Government and stating therein (a) the names of the parties; (b) the nature of the information; (c) the names of the persons who appear to be acquainted with the circumstances of the case; (d) whether any offence appears to have been committed and, if so, by whom (e) whether the accused has been arrested; (f) whether he had been released on his bond and, if so, whether with or without sureties; and (g) whether he has been forwarded in custody under Section 170. As observed by this Court in Satya Narain Musadi v. State of Bihar [(1980) 3 SCC 152, 157 : 1980 SCC (Cri) 660] that the statutory requirement of the report under Section 173(2) would be complied with if the various details prescribed therein are included in the report. This report is an intimation to the magistrate that upon investigation into a cognizable offence the Investigating Officer has been able to procure sufficient evidence for the court to inquire into the offence and the necessary information is being sent to the court. In fact, the report under Section 173(2) purports to be an opinion of the Investigating Officer that as far as he is concerned he has been able to procure sufficient material for the trial of the accused by the court. The report is complete if it is accompanied with all the documents and statements of witnesses as required by Section 175(5). Nothing more need be stated in the report of the Investigating Officer. It is also not necessary that all the details of the offence must be stated. The details of the offence are required to be proved to bring home the guilt to the accused at a later stage i.e. in the course of the trial of the case by adducing acceptable evidence.”
# 27. Counsel for the Appellant similarly relied on judgment of the Hon’ble Supreme Court in “M.C. Mehta (Taj Corridor Scam) vs. Union of India and Ors.- (2007) 1 SCC 110” where Hon’ble Supreme Court in reference to Section 173 of the CrPC had held that opinion of police officer under Section 173(2) is not a legal evidence. In paragraphs 26 of the judgment, following was laid down:-
“26. Analysis of the above judgments shows that there is a clear-cut and well-demarcated sphere of activities in the field of crime detection and crime punishment. Investigation of an offence is the field reserved for the executive through the Police Department, the superintendence over which vests in the State Government. The executive is charged with a duty to keep vigilance over the law and order situation. It is obliged to prevent crime. If an offence is committed allegedly, it is the State’s duty to investigate into the offence and bring the offender to book. Once it investigates through the Police Department and finds an offence having been committed, it is its duty to collect evidence for the purposes of proving the offence. Once that is completed, the investigating officer submits report to the court requesting the court to take cognizance of the offence under Section 190 CrPC and his duty comes to an end. Therefore, there are well-defined and well-demarcated functions in the field of crime detection and their subsequent adjudication by the court. Lastly, the term “investigation” under Section 173(2) of the Criminal Procedure Code includes opinion of the officer in charge of the police station as to whether there is sufficient evidence or reasonable ground of suspicion to justify the forwarding of the case to the court concerned or not. This opinion is not legal evidence. At the stage of Section 173(2) the question of interpretation of legal evidence does not arise. In any event, that function is that of the courts.”
# 28. There can be no quarrel to the proposition that the police report is not legal evidence. The present is a case where we are required to examine the purpose and object of Section 212 and whether the statutory scheme indicate that the SFIO Report which is submitted after the investigation as directed by the Central Government is not to be looked into in any material or evidence for any purpose as contemplated under the Act apart from framing of charges and legal fiction under sub-section (15) of Section 212 was engrafted for the purpose that SFIO Report be not treated as legal evidence.
# 29. We have noticed the judgment of the Hon’ble Supreme Court in “Union of India vs. Ranjit Kumar Saha” (supra) that legislature when passes a law has complete knowledge of existing law. We need to put the said statutory interpretation on sub-section (14A) which is relevant for the present case. In the present case, application MA No.2070 of 2019 has been filed by the Central Government under Section 212 (14A) and the objection which has been raised by the Appellant are with reference to proceeding under Section 212(14A) regarding SFIO Report.
# 30. As noted above, the legislature is well aware about the provisions of law and when sub-section (14A) was added in Companies Act by Act 22 of 2019 legislature was well aware about existing provisions of Section 212(15). When legislature specifically provides SFIO Report to take a proceeding against any director, key managerial personnel and other officers of the company, obviously the said report is to be relied for the said purpose and in event, the submission of the Appellant is accepted that the said report cannot be looked into it not being the legal evidence, the purpose and object of sub-section (14A) becomes meaningless and otiose. When legislature specifically provided for taking action under sub-section (14A) against the director, key managerial personnel and other officers on the basis of SFIO Report, the said report cannot be said to be irrelevant and inadmissible for proceeding under sub-section (14A). When legislature specifically provided that the SFIO Report can be looked into and relied for purpose of proceeding under sub-section (14A), the submission that said report is untouchable, irrelevant or inadmissible has to be rejected. The statutory interpretation on legal fiction as noticed above has repeatedly laid down that deeming fiction should not be extended beyond language of the section and must be limited to the context it was introduced. Deeming fiction was introduced to make the SFIO Report as a Report of police officer under Section 173 of the CrPC for framing the charges. Thus, object of legal fiction was to make the SFIO Report as report within the meaning of Section 173. Legal fiction was not for the purpose that SFIO Report be treated as inadmissible for the purposes of Companies Act, 2013.
# 31. Now we come to Section 223 which is another section of the Companies Act, 2013 which need to be considered. Reliance has been placed on Section 223(5) for the submission that the inspector’s report which has been made a piece of evidence applicability of which section has been expressly excluded report under Section 212. Section 223 provides for inspector’s report and various sub-section(s) and sub-section (4) which are relevant are as follows:-
“223. Inspector’s Report.- (4) The report of any inspector appointed under this Chapter shall be authenticated either—
(a) 1[by the seal, if any] of the company whose affairs have been investigated; or
(b) by a certificate of a public officer having the custody of the report, as provided under section 76 of the Indian Evidence Act, 1872, and such report shall be admissible in any legal proceeding as evidence in relation to any matter contained in the report.”
# 32. The inspector’s report under sub-section (4) becomes admissible in legal proceeding subject to compliance of sub-section (4). When we look into sub-sections (1), (2) and (3), the said provisions are provisions which empower the inspector to submit interim report and the final report which is also statutory scheme of Section 212 (11) and (12). No exception can be taken to sub-section (2) of Section 223 that every report shall be in writing. Sub-section (3) of Section 223 provides that report may be obtained by members, creditor or any other persons by making an application. Sub-section (3) of Section 212 provides as follows:-
“212. Investigation into Affairs of Company by 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.”
# 33. Thus, Section 212 also contain a provision where any person concerned by making an application may obtain a report. Thus, sub-sections (1), (2) and (3) are already reflected in provisions of Section 212. Thus, when we come to sub-section (5) which says that nothing in this section shall apply to the report referred to in Section 212, the said sub-section obviously is relating to sub-section (4) where authentication is required for inspector’s report to be admissible in a legal proceeding. What legislature intended by sub-section (5) is that such requirement of authentication may not apply to SFIO Report under Section 212. Provision of sub-section (5) of Section 223 cannot be read to mean anything more than the above. Sub-section (5) of Section 223 cannot be read to mean that SFIO report under Section 212 is not admissible in any legal procedure. Section 223 which provision dealt with the inspector’s report there was no occasion to include any provision which is contrary to the scheme of Section 212. We, thus, are of the view that sub-section (5) of Section 223 in no manner has effect on the admissibility of the SFIO Report in proceeding under sub-section (14A) and the interpretation which was put by the Appellant under Section 223(5) cannot be accepted.
# 34. As noted above, the compilation of documents has been filed in the proceedings which was initiated by the Central Government by filing an application under Section 212(14A) i.e. MA No.2070 of 2019. When the legislature specifically permits initiation of proceedings under sub-section (14A) on the basis of SFIO Report, submission cannot be accepted that the said report is irrelevant or inadmissible for the very proceeding for which the statutory scheme contemplates under sub-section (14A). Interpretation put by the Appellant shall make sub-section (14A) meaningless and otiose.
# 35. It is well settled principle of interpretation that provisions of statute have to be interpreted in a manner to give full effect to every provision of the statute. We may refer to the judgment of the Hon’ble Supreme Court in “Hardeep Singh vs. State of Punjab and Ors.- (2014) 3 SCC 92” wherein it was held that full effect is to be given to the language used therein, giving reference to the context and other provisions of the statute. In paragraph 44 of the judgment, following was held:-
“44. No word in a statute has to be construed as surplusage. No word can be rendered ineffective or purposeless. Courts are required to carry out the legislative intent fully and completely. While construing a provision, full effect is to be given to the language used therein, giving reference to the context and other provisions of the statute. By construction, a provision should not be reduced to a “dead letter” or “useless lumber”. An interpretation which renders a provision otiose should be avoided otherwise it would mean that in enacting such a provision, the legislature was involved in “an exercise in futility” and the product came as a “purposeless piece” of legislation and that the provision had been enacted without any purpose and the entire exercise to enact such a provision was “most unwarranted besides being uncharitable”. (Vide Patel Chunibhai Dajibha v. Narayanrao Khanderao Jambekar [AIR 1965 SC 1457] , Martin Burn Ltd. v. Corpn. of Calcutta [AIR 1966 SC 529] , M.V. Elisabeth v. Harwan Investment and Trading (P) Ltd. [1993 Supp (2) SCC 433 : AIR 1993 SC 1014] , Sultana Begum v. Prem Chand Jain [(1997) 1 SCC 373] , State of Bihar v. Bihar Distillery Ltd. [(1997) 2 SCC 453 : AIR 1997 SC 1511] , Institute of Chartered Accountants of India v. Price Waterhouse [(1997) 6 SCC 312] and South Central Railway Employees Coop. Credit Society Employees’ Union v. Registrar of Coop. Societies [(1998) 2 SCC 580 : 1998 SCC (L&S) 703 : AIR 1998 SC 703] .)”
# 36. We have to, thus, give harmonious construction to the provisions of all sub-sections of Section 212 and interpretation of one section cannot be taken to make other sub-sections otiose and meaningless. Accepting the submission of the Appellant on interpretation of Section 212 (15) shall make sub-section (14A) meaningless and redundant which cannot be accepted. We, thus, are of the view that the 2nd SFIO Report as well as the compilation of documents filed by the Union of India before the NCLT was fully admissible and can be looked into by the NCLT for proceeding under Section 212(14A) and no error has been committed by the Adjudicating Authority in rejecting IA No. 65 of 2024.
# 37. We may notice one more submission advanced by the Appellant is that there were no pleadings with regard to compilation of documents which have been filed on 07.02.2024. We have noticed certain paragraphs of MA No.2070 of 2019 where Union of India has made certain observations and pleadings with regard to report. We have noticed paragraph of the application which refers to the observations in the report with regard to Deloitte Haskins and Sells LLP- Appellant in Company Appeal (AT) No.255 of 2024. Counsel for the Appellant has relied on the judgment of the Hon’ble Supreme Court in “Bachhaj Nahar vs. Nilima Mandal and Anr.- (2008) 17 SCC 491” where Hon’ble Supreme Court held that no amount of evidence, on a plea that is not put forward in the pleadings, can be looked into to grant any relief. In the said judgment, in paragraphs 12 and 13, following has been laid down:-
“12. The object and purpose of pleadings and issues is to ensure that the litigants come to trial with all issues clearly defined and to prevent cases being expanded or grounds being shifted during trial. Its object is also to ensure that each side is fully alive to the questions that are likely to be raised or considered so that they may have an opportunity of placing the relevant evidence appropriate to the issues before the court for its consideration. This Court has repeatedly held that the pleadings are meant to give to each side intimation of the case of the other so that it may be met, to enable courts to determine what is really at issue between the parties, and to prevent any deviation from the course which litigation on particular causes must take.
13. The object of issues is to identify from the pleadings the questions or points required to be decided by the courts so as to enable parties to let in evidence thereon. When the facts necessary to make out a particular claim, or to seek a particular relief, are not found in the plaint, the court cannot focus the attention of the parties, or its own attention on that claim or relief, by framing an appropriate issue. As a result the defendant does not get an opportunity to place the facts and contentions necessary to repudiate or challenge such a claim or relief. Therefore, the court cannot, on finding that the plaintiff has not made out the case put forth by him, grant some other relief. The question before a court is not whether there is some material on the basis of which some relief can be granted. The question is whether any relief can be granted, when the defendant had no opportunity to show that the relief proposed by the court could not be granted. When there is no prayer for a particular relief and no pleadings to support such a relief, and when the defendant has no opportunity to resist or oppose such a relief, if the court considers and grants such a relief, it will lead to miscarriage of justice. Thus it is said that no amount of evidence, on a plea that is not put forward in the pleadings, can be looked into to grant any relief.”
# 38. The above judgment of the Hon’ble Supreme Court was dealing with the pleadings in context of a Civil Suit in reference to the Code of Civil Procedure, 1908. The above observations were made in the above context. The ground which was raised by the Appellant for rejecting the compilation of documents and SFIO Report submitted by the SFIO cannot be accepted at this stage to throw out the compilation of documents and the SFIO Report. The issue as to what has been pleaded in the application or the petition and what is the material or evidence on the record are issues which are to be examined when applications are decided on merits. Thus, on the submission that there are no pleadings with regard to compilation of documents cannot be a reason to accept the prayers made in CA No.65 of 2024.
# 39. In view of the foregoing discussions, we are of the view that no grounds have been made out to interfere with the impugned order. All the appeals are dismissed. The parties shall bear their own cost.
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