The Bombay High Court on Monday discharged industrialists Gautam Adani and Rajesh Adani from a Serious Fraud Investigation Office (SFIO) case involving Adani Enterprises. [Rajesh Adani and anr v State of Maharashtra].Justice RN Laddha set aside a 2019 sessions court order which had quashed a magistrate’s decision to discharge the company and the Adanis from the case of cheating and violations of market regulations.The High Court observed that the sessions judge exceeded its jurisdiction by setting aside the discharge order. “The Additional Sessions Judge erred by presuming the investigation report was the core basis of the case. Additionally, the learned Judge considered the complainant’s failure to place the investigation report on record as an error,” the High Court said. Additionally, it noted that the Additional Sessions Judge had not found or identified any errors, irregularities or legal improprieties in the findings of the trial Court to substantiate setting aside of the lower court order. "It is a well-settled principle of law that the scope of the revisional court’s powers under Section 397 of the CrPC is limited to examining the correctness, legality or propriety of the trial Court’s order. In the absence of any substantive findings, error, or legal infirmity in the discharge orders, the interference by the revisional Court was unwarranted and beyond its jurisdictional mandate," the Court said. .The case stemmed from a government-mandated investigation into Triumph Security Ltd and its management, led by the SFIO. The investigation alleged that Gautam and Rajesh Adani provided funds and shares to entities linked to Ketan Parekh, leading to stock price manipulation and illegal profits. The SFIO claimed Parekh’s entities made profits of ₹151.40 crore through transactions with Adani scrips, while the Adani Group's promoters allegedly amassed ₹388.11 crore unlawfully, resulting in an estimated ₹540 crore loss to the public and other investors.The SFIO filed a chargesheet in 2012 against Adani Enterprises Ltd and 12 individuals, including the Adani brothers, accusing them of cheating and conspiracy. .In 2014, a magistrate court discharged the Adanis, citing lack of sufficient evidence. However, the SFIO challenged this decision in 2015, leading to the 2019 sessions court ruling which reinstated the charges. The Adanis then filed a petition before the Bombay High Court..During the hearing, the Adanis, represented by Senior Advocates Amit Desai and Vikram Nankani, argued that the SFIO lacked the authority to file a complaint for IPC offences. Desai contended that the SFIO’s investigation did not reveal violations of the Companies Act, and instead alleged a stock market scam that should have been addressed by the police or the Securities and Exchange Board of India (SEBI). He further argued that the trial court had properly discharged the petitioners, as no prima facie case had been established against them..Justice Laddha emphasized that to substantiate charges under Section 420 (cheating) of the Indian Penal Code (IPC), there must be clear evidence of deception leading to a loss for the victim. “A fundamental requirement for an offence under Section 420 IPC is the presence of an element of deception, which leads to the victim suffering from loss while the accused gains wrongfully. However, in the present case, there is a conspicuous absence of any such allegations from an affected party. Merely by asserting that the accused has made a wrong gain without demonstrating the corresponding wrongful loss or deception suffered by a specific victim does not suffice to attract the offence of cheating under the IPC,” the single-judge stated..The High Court upheld the discharge order, clearing Gautam and Rajesh Adani and Adani Enterprises Ltd. of all charges. "In light of the above, the impugned orders dated 1 November 2019 passed by the Additional Sessions Judge, Mumbai, in Criminal Revision Applications No.248 of 2017 and 1496 of 2015 are hereby set aside, and the discharge orders passed by the learned Additional Chief Metropolitan Magistrate, 38th Court, Ballard Pier, Mumbai, on 9 May 2014 and 7 October 2015 are reinstated," the Court directed.After the pronouncement of the order, a request was made to suspend the operation of the order for two weeks to allow SFIO to appeal before the Supreme Court. The request was, however, rejected by the Court..Senior Advocates Amit Desai and Vikram Nankani appeared for the Adanis. They were assisted by advocates Ishwar Nankani, Prithwiraj Choudhari, Gopalkrishna Shenoy, Rhea Sinkar and Prajakta Sarwadekar from Nankani and Associates.Advocate Manisha R Tidke appeared for the State.Additional Solicitor General AC Singh and Advocates DP Singh, Adarsh Vyas, Pradeep Yadav, Divya Gontia and Ruchita Verma appeared for the Central government..[Read Order]
