The Law Relating To SFIO (Serious Fraud Investigation Office) (Flow Chart)
Statutory Provisions
|
Provision |
About the SFIO |
Key take-aways |
|
Section 211 Companies Act 2013 |
Constitutes the Serious Fraud Investigation Office (SFIO) as a multidisciplinary agency under the Ministry of Corporate Affairs. |
SFIO is a statutory body; no separate Act exists. CA2013 |
|
Sec. 212 |
Central Govt. may assign an investigation to SFIO; confers search-and-seizure, summons and arrest powers (Sec. 212 (8)to (10)). |
Once a case is handed to SFIO, CrPC is overridden by the special regime in Sec. 212. CA2013 |
Nature of the offences
- Cognizable. Sec. 212 (6)(i) declares "every offence under this Act which is the subject-matter of SFIO investigation shall be cognizable."
- Presumptively non-bailable. Bail can be granted only if the court: (a) gives the Public Prosecutor an opportunity to oppose, and (b) records "reasonable grounds" to believe the accused is not guilty and will not re-offend (the so-called "twin conditions" in Sec. 212 (6)(ii)). The Supreme Court recently reaffirmed that these conditions are mandatory for Sec. 447 fraud cases.
Punishment matrix for the offences most commonly invoked in an SFIO prosecution
|
Section & offence |
Imprisonment |
Fine |
|
Sec. 447 – Fraud |
6 months to 10 years (≥ 3 yrs if "public interest") |
≥ amount involved, up to 3 × the amount. CA2013 |
|
Sec. 448 – False statement |
By deeming provision, punished under Sec. 447. CA2013 |
|
|
Sec. 449 – False evidence on oath |
Up to ₹10 lakh. CA2013 3–7 yrs (minimum 3) |
Up to ₹10 lakh. CA2013 |
|
Sec. 450, 452, etc. |
Default fines for continuing contraventions, or imprisonment up to 2 years, depending on the section. |
|
|
Because Sec. 448 channels punishment to Sec. 447, most serious SFIO cases ultimately invoke the robust penalties of Sec. 447. |
||
Jurisdiction of Courts
|
Stage |
Court/forum |
|
First production after arrest |
Within 24 h the accused must be taken either to (a) the Special Court notified for Companies-Act offences, or (b) if none sits locally that day, the nearest Judicial/Metropolitan Magistrate for transit remand. The Magistrate can authorise custody only until the accused is produced before the Special Court. CA2013 |
|
Trial |
Special Court constituted u/s 435 (a single judge who is a Sessions or Addl. Sessions Judge). If the charged offence carries < 2 yrs imprisonment, the case is triable by a Judicial Magistrate 1st Class/Metropolitan Magistrate, as expressly provided in the proviso to s 435(1). CA2013 |
Therefore, an SFIO charge under Sec. 447 (≥ 2 yrs) will be tried by the Sessions-level Special Court, not by a regular Magistrate.
Bail classification
|
Parameter |
Result |
|
Cognizable? |
Yes – police/SFIO can arrest without warrant. |
|
Bailable? |
No – court may grant bail only after complying with the twin conditions in Sec. 212 (6). |
|
Anticipatory bail? |
Effectively barred unless the Special Court itself is satisfied about twin conditions (same test applies). |
Practical sequence in an SFIO case
- Central Government order (s 212 (1)) → SFIO takes up investigation.
- Search/seizure & summons by SFIO officers.
- Arrest (only Director/Additional/Asst Director can sign the arrest order, s 212 (8)).
- First production before Special Court/Magistrate within 24 h (s 212 (10)).
- SFIO report filed = charge-sheet.
- Trial in Special Court; offences ≥ 2 yrs imprisonment tried by Sessions-level judge.
- Appeal lies to the jurisdictional High Court (s 439 CrPC read with s 436 Companies Act).
By
Vijay Pal Dalmia, Advocate
Supreme Court of India & Delhi High Court
Email id: vpdalmia@vaishlaw.com
Mobile No.: +91 9810081079
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