The Delhi High Court recently clarified that once approval is granted under Section 212 of the Companies Act, 2013, for the investigation of a company, the same approval also pertains to its Managing Director, Manager, or Employee. The precondition of prior approval under Section 219 of the Act is applicable to related companies and their key personnel.

The bench of Justice Amit Sharma ruled that if, during the investigation under the Companies Act, the Investigating Officer uncovers offenses punishable under the IPC or any other relevant law, it should not lead to separate proceedings. Instead, such investigations can be conducted under Section 4(1) of the Criminal Procedure Code (CrPC).

The court opined that the Serious Fraud Investigation Office (SFIO) is not restricted from carrying out a "further investigation" within the bounds of the law. The writ petition was filed to quash the investigation report, sanction letter, and other documents related to the SFIO's investigation into the affairs of certain companies, but it was dismissed by the court.

During the case, arguments were presented, including the contention that SFIO's powers are limited to investigating offenses under the Companies Act and do not extend to the Indian Penal Code (IPC). It was also argued that prior approval under Section 219 of the Companies Act is not required for prosecuting individuals or entities under Section 212(14). The court clarified that Sections 212 and 219 operate in different spheres and that approval under Section 212(1) is mandatory for commencing an investigation into a company, while Section 219 enables the SFIO to investigate other entities linked to the company.

The court emphasized that if approval has been granted under Section 212 of the Companies Act for investigating a company, it also covers its Managing Director, Manager, or Employee. However, the requirement of prior approval under Section 219 does not extend to a company secretary who is a 'Key Managerial Personnel.'

Regarding the power to investigate offenses under the IPC, the court noted that Section 438 of the Companies Act, 2013, provides that the CrPC shall apply to proceedings before the Special Court. It further clarified that if offenses under the IPC or other laws are discovered during the investigation under the Companies Act, a separate proceeding is not warranted, and such investigation can be carried out under Section 4(1) of the CrPC.

In summary, the court dismissed the writ petition based on the findings outlined above.

Case: R.K. Gupta & Ors. V. Union Of India Through Ministry Of Corporate Affairs & Anr. 

W.P.(CRL) 1891/2023.