NDA Securities Ltd. v. State (NCT of Delhi) & Anr., [2025] 6 S.C.R. 360 : 2025 INSC 676

A) ABSTRACT / HEADNOTE

This case revolves around the exercise of inherent powers under Section 482 of the Code of Criminal Procedure, 1973 and the legal limits of such jurisdiction when a criminal investigation remains pending. The appellant, NDA Securities Ltd., alleged fraudulent trading activities caused by impersonation and manipulation in the stock market transaction that resulted in a loss of Rs. 15.90 lakhs. The Bombay Stock Exchange withheld the payout of the said funds, suspecting fraudulent activity. Respondent no. 2, alleged as the primary beneficiary of the fraudulent scheme, sought release of the amount. While both the Magistrate Court and the Revisional Court rejected his claim, the High Court of Delhi allowed his petition under Section 482 CrPC and directed release of funds against a guarantee.

The Supreme Court examined whether the High Court had transgressed its jurisdiction by intervening at an interim stage, especially when the primary accused remained absconding and the investigation incomplete. The Court emphasized that Section 482 CrPC cannot be invoked to conduct a “mini-trial” or to give a premature clean chit to an accused when investigation is pending. Stressing that respondent no. 2 was the direct beneficiary of the fraudulent transaction, the Court held that release of funds would frustrate investigation and prejudice the appellant. Consequently, the impugned High Court order was set aside, and the withheld funds were directed to remain with BSE until trial conclusion.

Keywords: Inherent powers under Section 482 CrPC; Fraudulent share transaction; Absconding accused; Beneficiary of fraud; Release of funds; Judicial restraint; Incomplete investigation.

B) CASE DETAILS

Particulars Details
i) Judgment Cause Title NDA Securities Ltd. v. State (NCT of Delhi) & Anr.
ii) Case Number Criminal Appeal No. 2582 of 2025
iii) Judgment Date 13 May 2025
iv) Court Supreme Court of India
v) Quorum Hon’ble Justice Sudhanshu Dhulia and Hon’ble Justice K. Vinod Chandran
vi) Author Justice Sudhanshu Dhulia
vii) Citation [2025] 6 S.C.R. 360 : 2025 INSC 676
viii) Legal Provisions Involved Section 482 CrPC; Sections 420, 120B IPC
ix) Judgments overruled None explicitly overruled
x) Related Law Subjects Criminal Law, Corporate/Commercial Law, Stock Exchange Regulations, Procedural Law

C) INTRODUCTION AND BACKGROUND OF JUDGEMENT

The judgment arises from a commercial fraud perpetrated within the securities market, intersecting the realms of criminal law and financial regulation. The appellant, a registered stockbroking company, was defrauded through a telephonic impersonation where a caller posed as its client and placed an order for purchase of one lakh shares of Ashutosh Paper Mills Ltd.. The alleged impersonator, Amit Jain, coordinated the fraudulent trade, while Respondent no. 2 emerged as the beneficiary by selling approximately 72,000 shares valued at Rs. 15.90 lakhs.

Following a complaint under Section 156(3 CrPC, an FIR under Sections 420 and 120B IPC was lodged. The BSE, on request of the appellant, withheld the sale proceeds pending investigation. Despite the main accused absconding, respondent no. 2 sought release of funds before the Magistrate, which was denied due to ongoing investigation. A subsequent revision petition also failed. However, the High Court, invoking its inherent jurisdiction under Section 482 CrPC, directed release of funds against a guarantee, holding that the role of respondent no. 2 was unproven.

The core issue before the Supreme Court was whether the High Court exceeded its jurisdiction under Section 482 CrPC by interfering with the trial court’s decision and releasing funds at an interim stage, especially when the investigation had not concluded.

D) FACTS OF THE CASE

On 1 April 2013, NDA Securities Ltd. received a call from an individual claiming to be its client Brij Mohan Gagrani, directing purchase of one lakh shares of Ashutosh Paper Mills Ltd.. Upon execution, the real client denied having placed such an order. Subsequent inquiry revealed collusion by an internal agent, Ashish Agarwal, with the seller of shares. On complaint by the appellant, BSE froze the payment to prevent wrongful enrichment.

An FIR under Sections 420 and 120B IPC was registered on 7 August 2015. Investigation identified Amit Jain as the impersonator and prime accused, but also revealed that Respondent no. 2 sold the impugned 72,000 shares worth Rs. 15.90 lakhs, making him the primary beneficiary. The charge sheet acknowledged that the respondent’s involvement could not be ruled out and required Amit Jain’s arrest for further clarity.

Respondent no. 2 applied before the Magistrate for release of funds, which was dismissed in September 2016, citing incomplete investigation. His revision petition met the same fate in December 2016. Persisting, he approached the Delhi High Court under Section 482 CrPC, which in February 2025 directed release of funds upon furnishing a guarantee. Aggrieved, the appellant challenged the High Court’s order before the Supreme Court.

E) LEGAL ISSUES RAISED

i. Whether the High Court was justified in invoking Section 482 CrPC to direct release of withheld funds during the pendency of investigation.
ii. Whether releasing funds in favour of respondent no. 2, the alleged beneficiary of fraud, could prejudice the investigation and cause irreparable harm to the appellant.
iii. Whether inherent powers under Section 482 CrPC permit the High Court to assess the role of respondent no. 2 before completion of investigation.

F) PETITIONER / APPELLANT’S ARGUMENTS

i. The counsels for the appellant submitted that respondent no. 2 was the direct beneficiary of the fraudulent trade, and releasing funds at this stage would amount to granting undue advantage without trial. They argued that the High Court transgressed its jurisdiction under Section 482 CrPC by making findings on respondent no. 2’s innocence despite incomplete investigation. The appellant relied on precedents such as CBI v. Aryan Singh (2023) 18 SCC 399, where the Court cautioned against conducting a “mini-trial” under Section 482.

G) RESPONDENT’S ARGUMENTS

i. The counsels for respondent no. 2 contended that their client had genuinely placed his shares for sale and was entitled to proceeds irrespective of alleged fraud by third parties. They argued that withholding funds indefinitely violated property rights and inflicted undue hardship. They asserted that respondent no. 2 was not named as an accused in the FIR or charge sheet, and therefore, release of funds with guarantee was justified.

H) RELATED LEGAL PROVISIONS

i. Section 482, Code of Criminal Procedure, 1973 – Inherent powers of the High Court.
ii. Section 420, Indian Penal Code, 1860 – Cheating and dishonestly inducing delivery of property.
iii. Section 120B, IPC – Criminal conspiracy.
iv. Section 156(3, CrPC – Magistrate’s power to direct registration of FIR.

I) JUDGEMENT

The Supreme Court allowed the appeal and set aside the High Court’s order. It held that inherent jurisdiction under Section 482 CrPC cannot be exercised to interfere with ongoing investigation or to release disputed funds prematurely. Since respondent no. 2 was identified as the main beneficiary of the fraudulent transaction, releasing funds would jeopardize investigation and cause irreparable harm to the appellant. Both the Magistrate and Revisional Courts had rightly rejected his application.

The Court directed that the withheld funds remain with BSE until trial completion and clarified that no observation should prejudice the merits of the trial.

a. RATIO DECIDENDI

The ratio lies in reaffirming that Section 482 CrPC is not intended to permit the High Court to conduct a “mini-trial” or make conclusive determinations before completion of investigation. The inherent jurisdiction must be exercised sparingly, only to prevent abuse of process or secure ends of justice, not to prematurely adjudicate disputed factual issues.

b. OBITER DICTA

The Court observed that respondent no. 2 being the main beneficiary of the impugned fraudulent trade, his role must be thoroughly scrutinized in investigation. The Court cautioned that premature release of funds could vitiate investigation and diminish the possibility of recovering proceeds of crime if later established.

c. GUIDELINES

i. High Courts should exercise extreme restraint while using Section 482 CrPC during pendency of investigation.
ii. Funds connected with alleged fraudulent transactions should not be released until trial concludes, unless investigation exonerates the party.
iii. Courts must ensure that accused or beneficiaries do not gain an undue advantage from incomplete investigations.
iv. Observations about innocence or non-involvement of a party must be avoided before trial.

J) CONCLUSION & COMMENTS

The judgment underscores the judiciary’s consistent approach that inherent powers under Section 482 CrPC are extraordinary and must not be employed to interfere with pending investigations. It also reflects judicial sensitivity to economic fraud in securities markets, ensuring that proceeds of questionable transactions remain frozen to protect victims and preserve evidence. The ruling harmonises the principles of natural justice, due process, and investor protection, while reiterating that premature judicial intervention risks miscarriage of justice.

K) REFERENCES

a. Important Cases Referred

i. Central Bureau of Investigation v. Aryan Singh & Ors., (2023) 18 SCC 399.
ii. Dharambeer Kumar Singh v. State of Jharkhand & Anr., (2025) 1 SCC 392.

b. Important Statutes Referred

i. Code of Criminal Procedure, 1973 – Sections 156(3), 482.
ii. Indian Penal Code, 1860 – Sections 420, 120B.

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