Pre-Cognizance Hearing Under BNSS Doesn't Apply In Companies Act Cases: Punjab & Haryana High Court

The Punjab and Haryana High Court has held that companies and individuals prosecuted by the Serious Fraud Investigation Office (SFIO) under the Companies Act, 2013 are not entitled to a pre-cognizance hearing under the first proviso to Section 223 of the Bharatiya Nagarik Suraksha Sanhita (BNSS).

It ruled that the Companies Act prescribes a separate procedure for taking cognizance in such prosecutions.

Justice Subhas Mehla, who heard a petition filed by Vivo India Private Limited challenging an order of the Special Court at Gurugram, observed that the Companies Act contains a self-contained procedural framework governing investigation, prosecution, and cognizance in SFIO cases.

The court held, “Reference in this regard can also be made to Section 4 read with Section 5 of the BNSS, which itself clarifies that the provisions of the BNSS shall not supersede the procedure prescribed by any special law for the time being in force. Accordingly, since the Act, 2013 lays down its own procedure for cognizance, the general provisions of the BNSS stand excluded to the extent of inconsistency.”

The petition arose from an SFIO prosecution alleging offences under Sections 447, 7(5), 7(6), and 449 of the Companies Act. Vivo India challenged the Special Court's refusal to grant it a pre-cognizance hearing before taking cognizance of the complaint.

The company argued that the prosecution had been instituted through a written complaint after the BNSS came into force. It contended that this entitled it to a pre-cognizance hearing under the first proviso to Section 223 of the BNSS.

The SFIO opposed the plea. It argued that the Companies Act is a special statute with its own procedural framework. It also submitted that, under Section 212(15) of the Companies Act, an SFIO investigation report is deemed to be a police report for the purposes contemplated by the Act.

After examining the statutory scheme, the court held that the Companies Act lays down a distinct procedure governing investigation, filing of complaints, cognizance and framing of charges.

It observed that the Special Court may take cognizance upon examining the police report or complaint. Under the statutory scheme, no hearing of the accused is contemplated before cognizance is taken.

The court also rejected Vivo India's argument that the prosecution should be treated as a complaint case merely because it had been instituted through a written complaint. It held that the expression "complaint" under the Companies Act cannot be read in isolation. Instead, it must be understood in the context of the Act's overall scheme.

The court observed, “…the Legislature has consciously designed this scheme of the Act, 2013 to avoid unnecessary procedural delays and to advance the overarching objective of expeditious trial of offences under the Act, which often involve complex financial transactions and demand swift adjudication in the public interest.”

The court further observed that requiring a pre-cognizance hearing would duplicate safeguards already built into the Companies Act. It noted that the concerned company and individuals participate during the SFIO investigation, where their statements are recorded on oath. The accused may also seek a hearing at the stage of framing of charges.

The court further held, “The statute thereby creates a clear hierarchy: wherever the Act, 2013 prescribes a distinct procedure, that procedure prevails, and the general criminal procedure i.e. the BNSS stands excluded to the extent of inconsistency. Thus, the legislative intent is unambiguous that the Special Courts are to follow the scheme of the Act, 2013, and not be governed by procedural requirements under the BNSS to the extent of the inconsistency therewith.”

Explaining why the Companies Act does not provide for a pre-cognizance hearing, the court observed, “The reason for not including the pre-cognizance hearing in the provisions of the Act, 2013 is that the hearing of the concerned company, person or the accused is already inbuilt in the special procedure prescribed for the investigation of the case, where the statements on oath of all these entities are recorded by the investigating officer who was already having and exercising power of a Civil Court in that regard.”

Finding no infirmity in the Special Court's order refusing Vivo India's request for a pre-cognizance hearing, the High Court dismissed the petition.

For Petitioner: Senior Advocate R.S Rai, Advocates V.P Singh, Priyank Ladoia, Rubma Virmani, Kshitiz Rao, Arjun Narang,Puneet Dhanoa and Ananya Singh

For Respondent: Senior Advocate Arvind Moudgil, Advocates Tajeshvar Singh Sullar, CGC, Anshuman Singh, Subhleen Dhariwal, Yan Dasi, Ahana Bali, Priya, Pradeep Yadav, Senior Prosecutor, Puneeta Sethi and Gautam Bhardwaj