LexCENTRAL BUREAU OF INVESTIGATION versus SURENDRA PATWA & ORS
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[2025] 4 S.C.R. 1771 : 2025 INSC 572 Central Bureau of Investigation v. Surendra Patwa & Ors. (Criminal Appeal No. 2199 of 2025) 25 April 2025 [M.M. Sundresh* and Rajesh Bindal, JJ.] Issue for Consideration The issue pertains to the nature and scope of administrative actions initiated in pursuance of the Master Directions on Frauds issued by RBI vis-à-vis criminal proceedings initiated, against the respondents. Headnotes† Administrative actions vis-à-vis criminal proceedings – Nature and scope – RBI issued Master Directions on Frauds providing framework for early detection and reporting of fraud and consequently taking timely action – In view thereof, the appellant-Banks initiated administrative action against the respondents by declaring companies’ bank accounts as fraudulent – Criminal proceedings were also initiated against the respondents – Respondents challenged the Master Directions and the actions taken thereunder – High Courts quashed the administrative action on the ground of violation of the principles of natural justice and consequently, the FIRs and the criminal proceedings were also quashed – Interference with: Held: An administrative action and a criminal proceeding stand on different footings – An FIR, by taking cognizance of an offence, merely sets the law into motion which has nothing to do with a decision on the administrative side, made by a different authority – Merely because the facts are same or similar it cannot be said that in the absence of a valid administrative action, no offence which is otherwise cognizable, can be registered – At that stage, only the existence of a cognizable offence has to be seen, based on the FIR registered – Therefore, even assuming that there is no action forthcoming on the administrative side, an FIR can be held to be maintainable – The scope and role of both the actions * Author 1772 [2025] 4 S.C.R. Supreme Court Reports are totally different and distinct, more so when undertaken by different statutory/public authorities – Even in a case where an FIR is registered based on an administrative action, setting aside the latter on a technical or a legal premise would not ipso facto nullify the former – It is ultimately a matter for investigation by the appropriate authority – When an administrative order is set aside on the ground of non-compliance of a legal necessity or mandate, the facts mentioned thereunder could still be the basis for the registration of an FIR – High Courts exceeded their jurisdiction by quashing the FIRs and the subsequent criminal proceedings, despite not being challenged – FIRs and the subsequent criminal proceedings which have been quashed are restored, as directed. [Paras 6-8, 11, 13.1, 13.2] Administrative actions – Administrative actions initiated in pursuance of the RBI’s Master Directions were set aside only on the ground of non-adherence to the principle of Audi Altarem Partem, not on merits – Administrative authorities, if barred from proceeding afresh: Held: No – Setting aside of an administrative action on the grounds of violation of the principles of natural justice does not bar the administrative authorities from proceeding afresh – Thus, there is no bar on the RBI or the Complainant-Banks to proceed afresh, by adhering to the principles of natural justice. [Paras 12, 13] Criminal Law – Reporting of a criminal offence – Inapplicability of principles of natural justice – High Courts relying on Rajesh Agarwal’s case quashed the administrative action initiated in pursuance of the RBI’s Master Directions on the ground of violation of the principles of natural justice consequently, the FIRs and the criminal proceedings were also quashed: Held: High Courts quashed the FIRs and the subsequent criminal proceedings on an erroneous interpretation of Rajesh Agarwal’s case – It was held therein that the principles of natural justice are not applicable at the stage of reporting a criminal offence – It was further clarified that providing an opportunity of being heard prior to the commencement of a criminal action (i.e. registration of an FIR), would frustrate the very purpose of initiating a criminal proceeding, which is to meet the ends of justice – Rajesh Agarwal’s case explicitly stated that no opportunity of being heard is required before an FIR is lodged or registered. [Para 9] [2025] 4 S.C.R. 1773 Central Bureau of Investigation v. Surendra Patwa & Ors. Case Law Cited State
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