Relief for Actis: Delhi HC stays investigation till further orders

Barely ten days after the Economic Offences Wing (EOW), Delhi Police booked Britain’s private equity firm “Actis” and 12 others on charges of cheating, the Delhi High Court on Monday stayed the “investigation arising from the FIR” till October 23.

The High Court has also stayed the “operation” of the order of a lower Court which had ordered registration of FIR in the case.

In its judgment, the High Court held “Prima-facie the impugned (lower Court) order appears to suffer from non-application of mind and lack of reasoning; and the registration of the FIR appears to be an act of misuse and abuse of the machinery of criminal law for ulterior motive and therefore informed by mala fidés”.

It further reads “in the circumstances, to permit investigation or proceedings to go on pursuant to the subject FIR does not appear to be justified”.

Elaborating, the judgment further says “there is no discussion, nor any reasoning, nor any inferences contained in the impugned order that would show application of judicial mind, on the basis of which the direction has been issued for registration of the subject FIR”.

The judgment goes on to say “without a shadow of doubt, the consequence of registration of the subject FIR is grave and serious inasmuch as it sets into motion a complex, and likely coercive, investigative process, which will lead almost inevitably to the arrest of the accused persons”.

It adds “in cases where corporate fraud is alleged, the promoters, directors and all members of the senior management of the implicated corporate entities get exposed to imminent threat of arrest. Such action would have an immediate domino effect in this case on all civil proceedings pending between various corporate entities; and would act as a sure-shot tool of bringing tremendous pressure upon the petitioners to capitulate and succumb to the demands that are subject matter of the dispute between the parties”.

Describing allegations levelled against them as “totally false, fictitious, baseless and without any legal substance”, the accused had petitioned the High Court last week alleging that the judgment passed by the lower Court is “perverse and erroneous”.

A co-accused- Supermax Personal Care Pvt Ltd. (SPCPL), an SM Group company- in its petition said that the order passed “reflects non application of judicial mind and has been mechanically passed by the Court”.

EOW had booked a total of 13 accused on August 19 which includes: Actis LLP (UK), Actis Consumer Grooming Products Ltd (Mauritius), Wesley International Ltd. (Dubai) and employees/associates of Actis including British nationals Ronald Edward Bell, Alan Greenough. Also, the list includes Anindo Mukherji, group CEO and Ketan Desai, group CFO of SM group of companies.

In its petition, SPCPL said that the allegations levelled against them “have no criminal flavour or element”.

ET earlier this month had reported that the judgment- ordering registration of FIR- was passed by a Patiala House court judge on a complaint by a former associate of Super-Max, the world’s second-largest manufacturer of shaving products after Gillette. London-based Actis, which has $10 billion of assets under management, invested in Super-Max in March 2011.

The complainant, Subhash Chaudhuri, had moved the court alleging that the Economic Offences Wing of the Delhi Police failed to act on his complaint in June last year. He had alleged that Actis conspired to gain control over the finances, ownership and management of the Super-Max Group.

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