Supreme Court On Quashing Powers of High Court and Section 156(3) CrPC

The Supreme Court of India dismissed the petitions while hearing a series of Special Leave Petitions filed by Anurag Bhatnagar & Anr. and others and upheld the Delhi High Court's refusal in quashing criminal proceedings and FIRs, particularly the FIR No. 380/2005. The matted is stemmed from a 1995 Memorandum of Understanding (MoU) between M/s Sunair Hotels Limited (SHL) and VLS Finance Limited (VLS), concerning a hotel project's financing and an alleged fraudulent promise by VLS to launch a public share issue at a premium despite SEBI guidelines. This led to arbitration and, subsequently, multiple FIRs lodged by both parties, with SHL's 2005 FIR (No. 380/2005) being central to these petitions after an earlier FIR (No. 326/2004) was stayed.

The Supreme Court heard the common matters and made several key observations relevant to the quashing of criminal proceedings and procedure under Section 154 CrPC and Section 156 CrPC (now Section 173 BNSS and Section 175 BNSS). The Apex Court while noting the legal technicalities that the informant should ideally first approach police authorities under Section 154 CrPC before moving a Magistrate under Section 156(3) CrPC.

On The Exhaustion of Remedies in Section 156(3) CrPC: The Apex Court emphasized that an informant should first approach the officer-in-charge of the police station under Section 154(1) CrPC for lodging an FIR. If that fails, the remedy is to approach the Superintendent of Police under Section 154(3) CrPC. It is only after availing and exhausting these opportunities that an aggrieved person may move the Magistrate under Section 156(3) CrPC.

Nevertheless, the Apex Court, on the direct approach to the magistrate by the informant, held that while the Magistrate "ought not to ordinarily entertain" an application directly under Section 156(3) CrPC without exhaustion of prior remedies. However the complainant directly apporaching the Magistrate is deemed a "mere procedural irregularity" and not illegal or without jurisdiction as the Magistrate is otherwise empowered in case of a cognizable offence is brought to its notice.

The Court also emphasized that a Magistrate's order under Section 156(3) CrPC must show "application of mind", which was found to be present in the case as the Magistrate "perused" the complaint and concluded it disclosed a cognizable offence.

The Apex Court also affirmed that the High Court was justified in refusing to quash the FIR once investigations were completed and chargesheets had been filed, given the discretionary nature of its powers under Section 482 CrPC and Articles 226/227 of the Constitution, especially when no miscarriage of justice was evident and a cognizable offence was disclosed.

Supreme Court further held that while a breach of contract might be civil, allegations incorporating elements of inducement, criminal conspiracy, and cheating could constitute a cognizable offence, moreover, the Apex Court reiterated that successive FIRs for the exact "same cognizable offence are not maintainable" if an earlier FIR led to conviction or acquittal, but since the earlier FIR (No. 326/2004) was stayed and did not result in a trial or conviction/acquittal, the second FIR (No. 380/2005) could not be deemed not maintainable, especially given that there was "some variance in the allegations and the parties".

Consequently, the Supreme Court chose not to interfere with the High Court's orders or the ongoing proceedings.

Coram:Justice Pankaj Mithal and Justice S. V. N Bhatti.