Supreme Court Holds That Cognizance of Offences Under Sections 448 and 451 of the Companies Act Is Barred on a Private Complaint Where the Offence Attracts Punishment for Fraud Under Section 447 Without Compliance With Section 212(6)

Held: The Supreme Court held that an offence under Section 448 of the Companies Act, 2013, which makes a person liable for punishment under Section 447 for fraud, is an offence “covered under Section 447” within the meaning of Section 212(6), and therefore cognizance of such offence, as well as the ancillary offence under Section 451, cannot be taken on the basis of a private complaint without a complaint by the Director, SFIO or an authorised officer of the Central Government.

Summary: The appeals arose from dismissal of petitions under Section 482 CrPC by the Telangana High Court, which had refused to quash criminal proceedings initiated on a private complaint alleging falsification of company records, illegal appointment of directors, and forgery of statutory filings. The Special Court for Economic Offences had taken cognizance under Sections 448 and 451 of the Companies Act along with multiple IPC offences. The Supreme Court examined the statutory scheme of Sections 447, 448, 451 and 212(6) of the Companies Act, the legislative intent behind the 2015 amendment to Section 212, and consistent High Court jurisprudence, and held that Section 448 cannot be read in isolation from Section 447 as it merely defines the offence while punishment flows exclusively from Section 447. Since Section 212(6) creates a clear bar on cognizance of fraud-related offences without prior scrutiny by SFIO or authorised authorities, the Court found the cognizance taken by the Special Court on a private complaint to be legally unsustainable.

Decision: The appeals were partly allowed, the impugned judgment of the Telangana High Court was set aside, cognizance and all consequential proceedings in Complaint Case No. 58 of 2022 insofar as they related to Sections 448 and 451 of the Companies Act were quashed, and the Special Court was directed to transfer the remaining IPC offences to the appropriate court of territorial jurisdiction for trial in accordance with law, with all pending applications disposed of and no order as to costs.