Bombay High Court Clarifies Scope of Section 190 CrPC in MPID Act Cases – Accused Can Seek Impleadment of Other Accused at Pre-Trial Stage

The Bombay High Court upheld the Special Court’s order, holding that the application filed by NSEL under Section 190 CrPC was maintainable. The Court ruled that the Special Court has the power to summon additional accused at the pre-trial stage, even if they are not named in the charge-sheet. The Court also held that an accused can file an application to implead other accused, and the Special Court is duty-bound to consider such applications – (Para 82, 83.)

Section 190 CrPC – Cognizance of offences by Magistrate – Magistrate takes cognizance of the offence, not the offender – Power to summon additional accused at pre-trial stage – (Para 51, 52, 55, 58.)

Section 319 CrPC – Power to proceed against other persons appearing to be guilty of offence – Exercise of power during inquiry or trial – (Para 71, 72, 73, 74.)

Section 193 CrPC – Cognizance of offences by Courts of Session – Sessions Court’s power to summon accused upon committal – (Para 59, 60, 61.)

Section 3 MPID Act – Liability of promoters, directors, and managers of financial establishments in case of default – (Para 7, 15, 49.)

Section 13 MPID Act – Special provision for cognizance by designated Court – (Para 47, 48.)

Major Acts and Sections:

1. Indian Penal Code, 1860 (IPC) – Sections 120B, 409, 465, 468, 471, 474, 477A.

2. Code of Criminal Procedure, 1973 (CrPC) – Sections 154, 156(3), 161, 173, 190, 193, 204, 209, 227, 319.

3. Maharashtra Protection of Interest of Depositors (in Financial Establishments) Act, 1999 (MPID Act) – Sections 3, 4, 6, 13.

4. Forward Contracts (Regulation) Act, 1952 – Section 27.

Subjects:

• Cognizance of Offence – Magistrate takes cognizance of the offence, not the offender – Para 51, 52.

• Summoning Additional Accused – Power to summon persons not named in charge-sheet – Para 55, 58, 61.

• Locus Standi of Accused – Accused can file application to implead other accused – Para 61, 67.

• Pre-Trial Stage – Power under Section 190 CrPC can be exercised before trial commences – Para 58, 59.

• MPID Act – Liability of directors and promoters in financial fraud cases – Para 7, 15, 49.

Facts:

1. Nature of the Litigation:

   • The case arose from the NSEL Scam, where the National Spot Exchange Limited (NSEL) was accused of defrauding investors through fraudulent commodity trading. The Economic Offences Wing (EOW) registered a case under the MPID Act and IPC against NSEL, its directors, and brokers. Multiple charge sheets were filed, and the case was pending before the Special MPID Court. NSEL, as an accused, filed an application under Section 190 CrPC seeking to implead additional directors and promoters of broker companies as accused. The Special Court allowed the application, which was challenged in the Bombay High Court.

2. Who is Asking the Court and for What Remedy?

   • NSEL, as an accused, filed an application under Section 190 CrPC seeking to implead directors and promoters of broker companies (IICL, ARCL, GCL) as accused. The application was opposed by the EOW and the proposed accused, who argued that NSEL, being an accused, had no locus standi to file such an application. The Special Court allowed the application, and the order was challenged in the High Court.

3. Reason for Filing the Case:

   • NSEL alleged that the EOW had selectively charge-sheeted only some directors and promoters of broker companies, leaving out others despite their involvement in the scam. NSEL sought to implead these individuals under Section 3 of the MPID Act, which holds every promoter, director, and manager liable in case of default by a financial establishment.

4. What Has Already Been Decided Until Now?

   • The Special MPID Court had allowed NSEL’s application, rejecting objections raised by the EOW and the proposed accused. The High Court was tasked with determining whether the application was maintainable and whether the Special Court could summon additional accused at the pre-trial stage under Section 190 CrPC.

Issues:

1. Whether an accused (NSEL) can file an application under Section 190 CrPC to implead other persons as accused? – Para 41, 46, 67.

2. Whether the Special Court can summon additional accused at the pre-trial stage under Section 190 CrPC, or should it wait until the stage of Section 319 CrPC? – Para 58, 59, 69.

3. Whether the Special Court was justified in allowing NSEL’s application despite objections from the EOW and the proposed accused? – Para 82, 83.

Submissions/Arguments:

1. Appellants (Proposed Accused):

   • Argued that NSEL, being an accused, had no locus standi to file an application under Section 190 CrPC – Para 17, 18.

   • Contended that the application should have been filed under Section 319 CrPC after the trial commenced – Para 20, 21.

   • Submitted that the prosecution has the discretion to decide whom to charge-sheet, and the court should not interfere at the pre-trial stage – Para 19, 25.

2. Respondent (NSEL):

   • Argued that the Special Court has the power to summon additional accused under Section 190 CrPC even if they are not named in the charge-sheet – Para 30, 31.

   • Submitted that Section 3 of the MPID Act mandates that all directors and promoters of a financial establishment be held liable in case of default – Para 7, 15.

   • Relied on precedents like Raghubans Dubey, Swil Ltd, and Dharam Pal to support the maintainability of the application – Para 52, 53, 54.

Ratio:

1. Cognizance of Offence vs. Offender:

   • Under Section 190 CrPC, the Magistrate takes cognizance of the offence, not the offender. The Court has the duty to identify all persons involved in the offence, even if they are not named in the charge-sheet – Para 51, 52.

2. Power to Summon Additional Accused:

   • The Court can summon additional accused at the pre-trial stage under Section 190 CrPC, and it is not necessary to wait until the stage of Section 319 CrPC – Para 58, 59.

3. Locus Standi of Accused:

   • An accused can file an application to implead other accused, and the Court is duty-bound to consider such applications – Para 67.

4. MPID Act Liability:

   • Under Section 3 of the MPID Act, all promoters, directors, and managers of a financial establishment are liable in case of default, and the Court must ensure that all responsible persons are brought to trial – Para 7, 15.