In a significant judgment, the Jammu & Kashmir and Ladakh High Court has quashed the summons issued by the Anti-Corruption Bureau (ACB), Jammu, to Bharat Bhushan and the Jammu Ladies Cooperative House Building Society Limited, Samba, under Section 91 of the Code of Criminal Procedure (CrPC). Justice Javed Iqbal Wani ruled that “the power under Section 91 CrPC can be invoked only during an inquiry, investigation, or trial”, and the summons issued in the absence of any of these stages was without jurisdiction and legally unsustainable.
Background of the Case
The case arose from a preliminary verification initiated by the ACB regarding alleged financial irregularities involving the Jammu Ladies Cooperative House Building Society Limited, Samba. The ACB issued a summons on April 2, 2024 (No. SSP/MSA/Misc.16/2023/ACB/1712), directing Bharat Bhushan, who was holding the position of Managing Director at J&K Cooperative Housing Corporation Ltd., Jammu, to furnish records related to the Society.
The petitioner, Bharat Bhushan, contended that since no formal investigation, inquiry, or trial had been initiated under the CrPC, the ACB lacked jurisdiction to invoke Section 91 and demand records. A similar petition (CRM(M) No. 133/2024) was filed by the Jammu Ladies Cooperative House Building Society Limited, challenging the preliminary verification itself on the grounds of extreme delay, alleging that it pertained to transactions dating back over three decades (since 1990). The High Court had earlier, on March 2, 2024, granted an interim relief, preventing the ACB from registering an FIR without prior permission from the Court.
Legal Issues Considered
The court examined two key legal issues:
1. Whether summons under Section 91 CrPC can be issued during a preliminary verification.
2. Whether the initiation of preliminary verification after more than three decades was legally tenable and fair.
Section 91 CrPC, which empowers a court or officer in charge of a police station to summon documents necessary for an “investigation, inquiry, trial, or other proceeding”, was closely analyzed. The court ruled that since preliminary verification is neither an investigation nor an inquiry under the CrPC, ACB’s invocation of Section 91 was without legal basis.
Court’s Observations and Ruling
Justice Javed Iqbal Wani, while delivering the judgment, made several important observations:
1. On the Validity of the Summons:
– “A preliminary verification is merely a fact-finding exercise to ascertain whether a cognizable offense has been committed. It does not amount to an investigation under the CrPC, and therefore, Section 91 cannot be invoked at this stage.”
– The ACB had no jurisdiction to issue the summons demanding records when no formal case had been registered.
2. On Delay and Prejudice Against the Society:
– The court noted that the verification was based on transactions from over 30 years ago, making it unreasonable and prejudicial to the Society.
– “The petitioner-Society would be incapable of mounting an effective defense, as the relevant records may no longer exist. Such delayed proceedings violate the principles of natural justice.”
– The judgment relied on Lalita Kumari vs. Government of Uttar Pradesh (2014) 2 SCC 1, where the Supreme Court held that preliminary verification is only to ascertain whether the information reveals a cognizable offense, not to conduct a full-fledged inquiry.
3. On the Authority of the Registrar Under J&K Cooperative Societies Act, 1989:
– The court emphasized that financial and operational irregularities within a cooperative society should be handled under the mechanisms laid down in the J&K Cooperative Societies Act, 1989.
– The Act provides for audits, inquiries, and scrutiny by the Registrar, who has exclusive jurisdiction over cooperative societies.
Decision of the Court
1. CRM(M) No. 317/2024 (Bharat Bhushan’s Petition):
– The summons issued to Bharat Bhushan under Section 91 CrPC was quashed as illegal and without jurisdiction.
2. CRM(M) No. 133/2024 (Jammu Ladies Cooperative House Building Society’s Petition):
– The entire preliminary verification initiated by ACB was quashed on grounds of extreme delay, jurisdictional overreach, and prejudice against the Society.
However, the court clarified that this judgment was based solely on the peculiar facts of the case and does not set a general precedent for other matters.
