New Delhi: The Bombay High Court has discharged Adani Group chairman Gautam Adani and his brother Rajesh in a case of cheating and forgery, initiated by the Serious Fraud Investigation Office (SFIO) against them.
In its 26-page ruling Monday, the court noted that the SFIO, which operates under the Ministry of Corporate Affairs and is responsible for investigating and prosecuting complex corporate frauds, failed to establish the essential ingredients of cheating, particularly the element of “deception”, in its case against the Adanis.
Rajesh Adani serves as the group’s managing director. The case originated in 2012 from alleged market regulation violations amounting to Rs 388 crore, prompting the SFIO to launch an investigation into the Adani Group and its promoters.
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What reasons did the court give?
The court ruled that the SFIO had failed to satisfy the essential elements required for an offence under Section 420 of the Indian Penal Code (IPC). It observed: “The learned Additional Sessions Judge has categorically acknowledged that the complaint lacks any assertion from any member of the public alleging that they were deceived or induced, whether fraudulently or dishonestly, to part with their money or shares as a result of alleged price manipulation.”
A fundamental requirement for an offence under Section 420 IPC is the presence of deception, resulting in loss to the victim while the accused gains wrongfully.
The court noted that, in this case, there was a conspicuous absence of such allegations from affected parties. “Merely asserting that the accused has made an undue gain without demonstrating a corresponding wrongful loss or deception suffered by a specific victim does not suffice to attract the offence of cheating under the IPC,” it stated, referring to the Supreme Court’s ruling in the 2024 Mariam Fasihuddin case.
Given that the foundational charge of cheating was not established, the ancillary charge of criminal conspiracy under Section 120B IPC also became unsustainable, the court concluded.
“In light of the above, the impugned orders dated 1 November 2019, passed by the Additional Sessions Judge, Mumbai, in Criminal Revision Applications No. 248 of 2017 and 1496 of 2015, are hereby set aside,” it ruled.
What was the case about?
The SFIO had filed a chargesheet accusing the Adani Group and its promoters of committing offences under Sections 420 (cheating) and 120B (criminal conspiracy) of the IPC.
However, in May 2014, a magistrate’s court in Mumbai discharged the Adanis from the case.
The SFIO subsequently challenged this 2014 order, leading to a sessions court decision in November 2019 that set aside the magistrate’s discharge order. The Adanis termed this ruling “arbitrary” and “illegal.” A month later, in December 2019, the Bombay High Court put this order on hold, a stay that was later extended on multiple occasions.
Seven years after the case was initiated, the Adanis approached the HC seeking to quash the sessions court order refusing to discharge them. In its ruling on 17 March, a bench led by Justice R.N. Laddha set aside the sessions court’s 2019 order, which nullified the magistrate’s decision to discharge the Adanis from the cheating and criminal conspiracy case.
The question of exceeding jurisdiction
In its order, the court observed that while a revisional court’s jurisdiction is confined to the records of the trial court and cannot extend beyond them, the additional sessions judge had exceeded these jurisdictional limits in this case.
“Even as per the revisional court’s orders, its jurisdiction is strictly confined to the record of the trial court and cannot extend beyond it. This position is firmly rooted in the statutory limits imposed by Section 397 of the CrPC, which authorises the revisional court solely to summon and review the trial court’s record to ascertain the correctness, legality, or propriety of its findings or decisions,” the court stated.
“Despite this understanding of the legal framework, the learned Additional Sessions Judge erred by independently presuming that the investigation report formed the core basis of the case.”
Pointing out that the judge had considered the complainant’s failure to place the investigation report on record as an “error,” the court remarked: “These interferences and conclusions exceeded the revisional court’s jurisdiction under Section 397 of the CrPC, and therefore, the impugned orders cannot be sustained.”
Section 397 of the Code of Criminal Procedure (CrPC) grants high courts and sessions judges the power to call for and examine records of lower criminal court proceedings to ensure the correctness, legality, and propriety of findings, sentences, or orders.
(Edited by Radifah Kabir)
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