HC Delhi (2025.08.28) in Nita Puri Vs. Union of India [W.P.(C) 261/2025, CM APPLs. 1249/2025 & 5825/2025], held that;
“subsequent action/development cannot validate an action which was not lawful at its inception, for the reason that the illegality strikes at the root of the order. It would be beyond the competence of any authority to validate such an order. It would be ironical to permit a person to rely upon a law, in violation of which he has obtained the benefits.
An order under Section 212(1)(c) of the Act, 2013 directing investigation by the SFIO is not a routine administrative measure. It is in the nature of an extremely serious statutory action having grave consequences and repercussions for the subject entities and individuals. It is therefore, imperative that such an order must be issued only after due application of mind, after examining all relevant circumstances.
The existence of "relevant circumstances" is sine qua non as for the purpose of formation of opinion under Section 212(1)(c) of the Act, 2013.
The existence of the relevant circumstances has to be "demonstrable". Exercise of power under Section 212(1)(c) in a casual or perfunctory manner, seriously undermines the statutory provision itself and the safeguards implicit thereunder.
The use of boilerplate language and/or extrapolations from third party documents, without consideration of all the "relevant circumstances", reflects a disregard for procedural propriety. It can hardly be emphasized enough that the power under Section 212(1)(c) must be exercised with circumspection and deliberation.
Excerpts of the order;
# 65. The petitioner is right in contending that the validity of this impugned order has to be assessed on the basis of what is stated therein and not on the basis of the additional reasons/circumstances sought to be supplied in the counter-affidavit filed on behalf of the respondent. The same is mandated in terms of the judgment of the Supreme Court in Mohinder Singh Gill & Another v. The Chief Election Commissioner, New Delhi & Ors. (supra)6, Opto Circuit India Ltd. v. Axis Bank & Ors. (supra) and Ritesh Tiwari v. State of Uttar Pradesh (supra)8 . If anything, the additional reasons/justifications in the impugned order, serves to corroborate the point that the respondent was remiss in taking note of all 'relevant circumstances' prior to 'formation of opinion' for the purpose of Section 212(1)(c).
8. The second equally relevant matter is that when a statutory functionary makes an order based on certain grounds, its validity must be judged by the reasons so mentioned and cannot be supplemented by fresh reasons in the shape of affidavit or otherwise. Otherwise, an order bad in the beginning may, by the time it comes to court on account of a challenge, get validated by additional grounds later brought out. We may here draw attention to the observations of Bose, J. in Gordhandas Bhanji [Commr. of Police, Bombay v. Gordhandas Bhanji, 1951 SCC 1088 : AIR 1952 SC 16]:
"Public orders, publicly made, in exercise of a statutory authority cannot be construed in the light of explanations subsequently given by the officer making the order of what he meant, or of what was in his mind, or what he intended to do. Public orders made by public authorities are meant to have public effect and are intended to affect the actings and conduct of those to whom they are addressed and must be construed objectively with reference to the language used in the order itself."
Orders are not like old wine becoming better as they grow older.
12. The action sought to be sustained should be with reference to the contents of the impugned order/communication and the same cannot be justified by improving the same through the contention raised in the objection statement or affidavit filed before the Court. This has been succinctly laid down by this Court in Mohinder Singh Gill v. Chief Election Commr. [Mohinder Singh Gill v. Chief Election Commr., (1978) 1 SCC 405] as follows : (SCC p. 417, para
8) "8. The second equally relevant matter is that when a statutory functionary makes an order based on certain grounds, its validity must be judged by the reasons so mentioned and cannot be supplemented by fresh reasons in the shape of affidavit or otherwise. Otherwise, an order bad in the beginning may, by the time it comes to court on account of a challenge, gets validated by additional grounds later brought out. We may here draw attention to the observations of Bose, J. in Gordhandas Bhanji [Commr. of Police v. Gordhandas Bhanji, 1951 SCC 1088] : (SCC p. 1095, para 9)
'9. ... public orders, publicly made, in exercise of a statutory authority cannot be construed in the light of explanations subsequently given by the officer making the order of what he meant, or of what was in his mind, or what he intended to do. Public orders made by public authorities are meant to have public effect and are intended to affect the actings and conduct of those to whom they are addressed and must be construed objectively with reference to the language used in the order itself.' Orders are not like old wine becoming better as they grow older."
In fact, in the instant case such contention of having exercised power under Section 102 CrPC has not been put forth even in the counter-affidavit, either in this appeal or before the High Court and has only been the attempted ingenuity of the learned Additional Solicitor General. Such contention, therefore, cannot be accepted. In fact, in the objection statement filed before the High Court much emphasis has been laid on the power available under the PMLA and the same being exercised though without specifically referring to the power available under Section 17 of the PMLA.
32. It is settled legal proposition that if an order is bad in its inception, it does not get sanctified at a later stage.
# 66. The petitioner vehemently contends that even the additional grounds referred to in the counter-affidavit, are precluded by the BOB Judgment. In this regard, reliance is placed on the following chart, which has been handed over during the course of the arguments:
“subsequent action/development cannot validate an action which was not lawful at its inception, for the reason that the illegality strikes at the root of the order. It would be beyond the competence of any authority to validate such an order. It would be ironical to permit a person to rely upon a law, in violation of which he has obtained the benefits. (Vide Upen Chandra Gogoi v. State of Assam [(1998) 3 SCC 381 : 1998 SCC (L&S) 872] ; Satchidananda Misra v. State of Orissa [(2004) 8 SCC 599 : 2004 SCC (L&S) 1181] and SBI v. Rakesh Kumar Tewari [(2006) 1 SCC 530 : 2006 SCC (L&S) 143] .) 05:22:43 05:22:43”
# 67. It is contended that paragraphs 3, 4, 7 and 15 of the counter affidavit contain allegations of diversion, siphoning, investments/receivables with respect to the transactions with subsidiaries, including sales or service, receivables, loans, advances, investments, write off/provisioning etc. They are all broadly covered by allegation 1 of the show cause notice, which was subject matter of the BOB judgment, which also corresponds to para 2(a) to (g) of the impugned order. Notably, allegation 1 and the findings in that regard by the Review Committee have been set aside on merits by this Court in the BOB Judgment.
# 68. It is not necessary in these proceedings to conclusively pronounce upon the aforesaid contention of the petitioner. Suffice it to say, that prior to issuance of the impugned order, the scope, import and consequences flowing from the judgment dated 29.02.2024 in W.P.(C) 4181/2023 ought to have been taken into consideration.
# 69. For all the above reasons, the impugned order fails to withstand legal scrutiny.
# 70. An order under Section 212(1)(c) of the Act, 2013 directing investigation by the SFIO is not a routine administrative measure. It is in the nature of an extremely serious statutory action having grave consequences and repercussions for the subject entities and individuals. It is therefore, imperative that such an order must be issued only after due application of mind, after examining all relevant circumstances.
# 71. The existence of "relevant circumstances" is sine qua non as for the purpose of formation of opinion under Section 212(1)(c) of the Act, 2013. As held by the Supreme Court in Barium Chemicals Limited vs. Company Law Board (supra), Rohtas Industries vs. SD Aggarwal (supra) and Rampur Distillery vs. Company Law Board, (supra), and reiterated by the Bombay High Court in Parmeshwar Das Agarwal (supra), the existence of the relevant circumstances has to be "demonstrable". Exercise of power under Section 212(1)(c) in a casual or perfunctory manner, seriously undermines the statutory provision itself and the safeguards implicit thereunder. The use of boilerplate language and/or extrapolations from third party documents, without consideration of all the "relevant circumstances", reflects a disregard for procedural propriety. It can hardly be emphasized enough that the power under Section 212(1)(c) must be exercised with circumspection and deliberation. In the present case, the impugned order under Section 212(1)(c) appears to have been issued in a rather casual manner, unmindful of the statutory pre-requisites therefor.
# 72. In the circumstances, the impugned order dated 05.09.2024 (and all consequential proceedings pursuant thereto), is hereby quashed.
# 73. The petition is allowed in the above terms. All pending applications also stand disposed of.
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