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Informist, Monday, Sept. 21, 2026

 

NEW DELHI – The Supreme Court on Monday rejected the government's review petition against its January order that special courts cannot take cognisance of private complaints in fraud cases under the Companies Act. However, the government will be at liberty to invoke its powers under the Companies Act and authorise any officer to institute a complaint, a bench led by Chief Justice of India Surya Kant said. 

 

In January, the apex court said that in cases of an allegation of fraud under Section 447 of the Companies Act, the complaint must be made by the director of the Serious Fraud Investigation Office or an officer authorised by the government. This adds a further level of scrutiny and investigation before taking cognisance in cases where allegations of fraud are made and ensures that the special court does not take cognisance on filing of a private complaint, the court had said.

 

The court was dealing with whether offences under Sections 448 and 451 of the Companies Act could be taken on a private complaint in view of the statutory scheme of the Companies Act. The court said that Section 448 itself does not prescribe any punishment for its contravention. It lays down the ingredients of the offence of making a false statement and provides that, if such a false statement is made, persons would be liable under Section 447 of the Companies Act relating to fraud. 

 

The case has its genesis in a special court for economic offences in Hyderabad taking cognisance of the offences under Sections 448 and 451 of the Companies Act, 2013 against former directors of Shreemukh Namitha Homes. The complainant had filed a private complaint before the special court alleging that one of the former directors had illegally convened an extraordinary general meeting of Shreemukh Namitha Homes in 2021 without authority, appointed third parties as directors in the company, fabricated the board and shareholders' resolutions, and uploaded statutory filings along with other forged and false documents on the website of the Ministry of Corporate Affairs.

 

The special court recorded the complainant's sworn statement, took cognisance of the alleged offences, and issued summons to the company's former directors. Challenging this, the former directors argued in the Telangana High Court that cognisance of offences involving alleged fraud under the Companies Act, particularly Section 447, was barred by Section 212(6) of the Act in the absence of a complaint by the Serious Fraud Investigation Office or other authorised agency; and that the mandatory statutory procedure as per the Companies Act preceding investigation was not followed. 

 

The Telangana High Court rejected the former directors' petition, against which they moved the apex court. In January, the apex court quashed the proceedings against the former directors to the extent of Section 448 and 451 of the Companies Act, as the special court was barred from taking cognisance under the second proviso to Section 212(6) of the Companies Act.  End

 

Reported by Surya Tripathi

Edited by Saji George Titus

 

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