Supreme Court Sets Aside High Court Order Restraining Arrest in Forgery Case: Salimbhai Hamidbhai Memon vs. Niteshkumar Maganbhai Patel & Anr (2021) INSC 585

Date of the Judgment: August 31, 2021
Citation: (2021) INSC 585
Judges: Dr. Dhananjaya Y Chandrachud, J and M.R. Shah, J.

Can a High Court issue an oral order restraining the arrest of an accused in a criminal case? The Supreme Court of India recently addressed this critical question while hearing an appeal against an order of the High Court of Gujarat. The case involved allegations of forgery and cheating between partners of a firm. The Supreme Court, in this judgment, emphasized the importance of written orders and the need for High Courts to provide reasons when granting interim relief.

Case Background

The dispute arose between Salimbhai Hamidbhai Memon (the appellant) and Niteshkumar Maganbhai Patel (the first respondent), who were partners in a firm called Calla Associates. The appellant held a 45% share, while the first respondent held a 55% share. Over time, several disputes arose, leading to allegations of forgery and misappropriation.

The appellant claimed that the first respondent had forged documents, including a deed of relinquishment and a deed of dissolution of partnership. These alleged forgeries led to the appellant lodging a complaint with the police. The High Court of Gujarat, while hearing a petition to quash the FIR, issued an interim order restraining the arrest of the first respondent without providing sufficient reasons. This interim order was challenged in the Supreme Court.

Timeline

Course of Proceedings

The first respondent filed a petition under Section 482 of the Code of Criminal Procedure 1973 (CrPC) in the High Court of Gujarat to quash the FIR registered against him. Initially, the High Court adjourned the matter to explore settlement possibilities. Subsequently, an oral direction was issued by the High Court to restrain the arrest of the first respondent. The High Court, in its order dated March 31, 2021, directed that the first respondent should not be arrested until the next hearing. This order was challenged before the Supreme Court by the appellant.

Legal Framework

The case involves allegations of offences punishable under Sections 405, 420, 465, 467, 468 and 471 of the Indian Penal Code. These sections deal with criminal breach of trust, cheating, forgery, and using forged documents as genuine.

• Section 405 of the Indian Penal Code defines criminal breach of trust.
• Section 420 of the Indian Penal Code defines cheating and dishonestly inducing delivery of property.
• Section 465 of the Indian Penal Code defines forgery.
• Section 467 of the Indian Penal Code deals with forgery of valuable security, will, etc.
• Section 468 of the Indian Penal Code deals with forgery for the purpose of cheating.
• Section 471 of the Indian Penal Code deals with using a forged document as genuine.

The High Court’s power to quash an FIR is derived from Section 482 of the Code of Criminal Procedure 1973, which preserves the inherent powers of the High Court to prevent abuse of the process of any court or to secure the ends of justice.

Arguments

Appellant’s Submissions:

• The appellant argued that the FIR contained serious allegations of forgery and cheating against the first respondent.
• The deed of relinquishment was interpolated to include more properties than originally agreed.
• The deed of dissolution of partnership was fabricated on a day when the appellant was not in India.
• Despite multiple settlements, the first respondent did not pay the dues, and the lands transferred were not marketable.
• The High Court was not justified in issuing a direction restraining the arrest of the first respondent without giving reasons.

First Respondent’s Submissions:

• The first respondent claimed that several parcels of land were transferred to the appellant as part of the settlement.
• A payment of ₹50 lakhs was made, and the appellant received the benefit of the settlements.
• The earlier complaint by the appellant was closed due to the appellant not recording his statement.
• The order of the High Court was in operation due to the pandemic.

State of Gujarat’s Submissions:

• The State argued that the police report mentioned the forgery of the deed of relinquishment and the deed of dissolution of partnership.

Issues Framed by the Supreme Court

The Supreme Court did not explicitly frame specific issues in a numbered list. However, the core issue was whether the High Court was justified in issuing an interim order restraining the arrest of the first respondent without providing sufficient reasons, especially in light of the serious allegations of forgery and cheating.

Treatment of the Issue by the Court

The following table demonstrates how the Court dealt with the issue:

Authorities

The Supreme Court relied on the following authorities:

Judgment

How each submission made by the Parties was treated by the Court?

How each authority was viewed by the Court?

• The Supreme Court cited Zahira Habibulla H. Sheikh v State of Gujarat [(2004) 4 SCC 158]* to emphasize that criminal cases are public wrongs and the courts have an overriding duty to maintain public confidence in the administration of justice.
• The Supreme Court cited Neeharika Infrastructure Pvt Ltd. v. State of Maharashtra [2021 SCC OnLine SC 315]* to reiterate the principles that High Courts must consider while exercising powers under Section 482 of the CrPC to quash an FIR, including the need for circumspection and the application of the same parameters for interim relief as for quashing.
• The Supreme Court cited Parbatbhai Aahir alias Parbatbhai Bhimsinhbhai Karmur v. State of Gujarat [(2017) 9 SCC 641]* to outline the principles governing the exercise of powers under Section 482 of the CrPC, emphasizing the need to secure the ends of justice and prevent abuse of process.

What weighed in the mind of the Court?

The Supreme Court was primarily concerned with the procedural impropriety of the High Court’s order. The Court emphasized the need for written orders and the importance of providing reasons when granting interim relief, especially in cases involving serious allegations of forgery and cheating. The Court was also concerned about maintaining public confidence in the administration of justice.

Ratio of Fact:Law: The Supreme Court’s decision was more influenced by legal considerations (70%) than factual aspects of the case (30%). The court focused on the procedural impropriety and the legal principles concerning the grant of interim relief rather than the detailed facts of the dispute.

The Supreme Court found that the High Court’s procedure of issuing oral directions restraining arrest was irregular and liable to cause serious misgivings. The Court emphasized that judges must speak through their written judgments and orders, and the element of judicial accountability is lost where oral regimes prevail. The Court noted that the High Court failed to provide sufficient reasons for granting interim relief, and the reasons recorded by the Court must reflect an application of mind to relevant facts and circumstances.

The Supreme Court observed that the High Court’s order did not allude to the serious allegations made in the FIR. The Court reiterated that while determining whether to grant ad-interim relief in a case involving a stay of arrest, the High Court must bear in mind the parameters for the exercise of the jurisdiction for quashing, which has been invoked. The Court also noted that the interim order of a stay of arrest is in aid of the final relief sought in the petition, and hence the considerations germane to the exercise of the jurisdiction to quash an FIR must be present to the mind while deciding whether an interim stay of arrest is warranted.

The Supreme Court emphasized that it is in exceptional cases where the absence of interference would result in a miscarriage of justice that the Court may exercise its jurisdiction under Section 482 of the CrPC and Article 226 of the Constitution. The Court disapproved of interim orders of High Courts which grant a stay of arrest or which direct that no coercive steps must be taken against the accused, without assigning reasons. The Court held that the impugned order of the High Court could not be sustained on the touchstone of the principles laid down by the Supreme Court.

The Court quoted from the judgment:

“Oral observations in court are in the course of a judicial discourse. The text of a written order is what is binding and enforceable.”

“Judges speak through their judgments and orders. The written text is capable of being assailed. The element of judicial accountability is lost where oral regimes prevail.”

“While directing that the proceedings are to be listed on a future date, the High Court is undoubtedly not expected to deliver a detailed judgment elaborating upon reasons why a stay of arrest has been granted. But the reasons recorded by the Court must reflect an application of mind to relevant facts and circumstances.”

The Supreme Court did not have any minority or dissenting opinions. The judgment was delivered by a bench of two judges, both of whom concurred with the reasoning and the final decision.

The Supreme Court’s decision has significant implications for future cases, particularly concerning the issuance of interim orders by High Courts. The judgment emphasizes the need for High Courts to provide clear, reasoned orders, especially in cases involving serious allegations. The decision also underscores the importance of maintaining public confidence in the administration of justice and ensuring that judicial processes are transparent and accountable.

Key Takeaways

• High Courts must issue written orders, not oral directions, especially when restraining arrests.
• Interim orders must contain reasons reflecting an application of mind to the facts and circumstances of the case.
• The seriousness of the allegations and the need for a fair investigation must be considered when granting interim relief.
• Judicial accountability requires that judges’ decisions are transparent and can be reviewed.
• The principles governing the exercise of powers under Section 482 of the CrPC must be borne in mind while deciding on interim relief.

Directions

The Supreme Court set aside the impugned order of the High Court dated 31 March 2021. The High Court was given the liberty to proceed with the petition under Section 482 of the CrPC, which was pending consideration.

Development of Law

The ratio decidendi of this case is that High Courts must provide reasons when granting interim relief, especially in cases involving serious allegations. The Supreme Court emphasized the need for written orders and the importance of judicial accountability. This judgment reinforces the principles laid down in previous cases regarding the exercise of powers under Section 482 of the CrPC and the need for circumspection when interfering with investigations. There is no change in the previous position of law, but rather a reiteration of the existing principles.

Conclusion

The Supreme Court allowed the appeal, setting aside the High Court’s order. The Court emphasized that High Courts must provide reasons when granting interim relief, especially in cases involving serious allegations. The judgment underscores the importance of written orders and judicial accountability in the administration of justice. The matter was sent back to the High Court for further consideration.

Category

• Criminal Law
  • Code of Criminal Procedure, 1973
  • Section 482, Code of Criminal Procedure, 1973
  • Indian Penal Code
  • Section 405, Indian Penal Code
  • Section 420, Indian Penal Code
  • Section 465, Indian Penal Code
  • Section 467, Indian Penal Code
  • Section 468, Indian Penal Code
  • Section 471, Indian Penal Code
  • Forgery
  • Cheating
  • Criminal Breach of Trust
  • Interim Relief
  • Stay of Arrest

FAQ

Q: What was the main issue in the Salimbhai Hamidbhai Memon vs. Niteshkumar Maganbhai Patel case?

A: The main issue was whether the High Court was justified in issuing an interim order restraining the arrest of an accused without providing sufficient reasons, especially in a case involving serious allegations of forgery and cheating.

Q: What did the Supreme Court decide in this case?

A: The Supreme Court set aside the High Court’s order, emphasizing that High Courts must provide reasons when granting interim relief, particularly in cases involving serious allegations. The Court also stressed the importance of written orders and judicial accountability.

Q: Why did the Supreme Court find the High Court’s order problematic?

A: The Supreme Court found the High Court’s order problematic because it was an oral direction restraining arrest, which is irregular. The High Court also failed to provide sufficient reasons for granting the interim relief, and the reasons recorded by the Court must reflect an application of mind to relevant facts and circumstances.

Q: What are the key takeaways from this judgment?

A: Key takeaways include the necessity for High Courts to issue written orders, not oral directions, especially when restraining arrests; the requirement for interim orders to contain reasons reflecting an application of mind to the facts and circumstances of the case; and the need to consider the seriousness of the allegations and the need for a fair investigation when granting interim relief.

Q: What is Section 482 of the Code of Criminal Procedure, 1973?

A: Section 482 of the Code of Criminal Procedure, 1973, preserves the inherent powers of the High Court to prevent abuse of the process of any court or to secure the ends of justice. It allows the High Court to quash an FIR or criminal proceedings if necessary.

Q: What is the significance of this judgment for future cases?

A: This judgment emphasizes the need for High Courts to provide clear, reasoned orders, especially in cases involving serious allegations. It also underscores the importance of maintaining public confidence in the administration of justice and ensuring that judicial processes are transparent and accountable.