Supreme Court Restores Cheating Case Against Fugitive Mehul Choksi & Wife; Says Gujarat HC Erred In Quashing FIR

The Supreme Court recently set aside a 2017 judgment of the Gujarat High Court which quashed an FIR registered by the Gujarat Police in 2015 against businessman Mehul Chinubhai Choksi, who turned fugitive and left India in 2017 following the PNB loan scam case.

The FIR in the present case was registered by Ahmedabad Police for the offences of criminal breach of trust, cheating, forgery and criminal conspiracy on a complaint filed by Digvijaysinh Himmatsinh Jadeja, who alleged that Choksi's company failed to return to him gold bars worth Rs. 30 crores (as on the date of the complaint) and misappropriated them violating the terms of the agreement. Choksi's wife Priti was also arraigned as an accused.

The Gujarat High Court quashed the FIR on the ground that the complaint was mostly a civil breach of contract and no criminal offence was made out. The Supreme Court reversed the High Court's judgment observing that it exceeded its jurisdiction under Section 482 of the Code of Criminal Procedure by delving deep into the factual controversies.

“Suffice it is to observe that the High Court should not have examined and recorded a conclusion on the disputed fact to quash the FIR.,” the bench comprising Justices Sanjiv Khanna and SVN Bhatti observed.

"A wrong may be civil wrong, or in a given case be a civil wrong and equally constitute a criminal offence," the Court added.

Choksi contended that the agreements were not binding on the company Geetanjali Jewellery Retail Limited (GJRL), a subsidiary of Gitanjali Gems Limited.  On the other hand, the appellant contended that these agreements are valid and binding.

After perusing the above-mentioned arguments, the Court observed that these are 'disputed factual questions'.

“We are not examining the said aspects in detail, as first, facts have to be ascertained, including the nature and character of the deposit.,” the Court added. 

Before parting, the Apex Court also expressed its reservation pertaining to para 49 of the impugned judgment. Therein, the High Court had observed that Priti Mehul Choksi, being the wife of another appellant, should not be held responsible through vicarious liability.

“So far as the applicant of the connected application is concerned, she is the wife of the Chairman and Managing Director of the company. Let me assume for the moment that a, prima facie, case is made out of criminal breach of trust against the company and the other accused. I am of the view that the wife should not be held responsible in any manner by fastening vicarious liability. Even otherwise, no vicarious liability can be fastened on any person for an offence under the Indian Penal Code.”

However, the Top Court clarified that these observations are only general ones, and only after the investigation can the specific role of the respondent (Priti Mehul Choksi) be ascertained.

“We believe that these observations are general observations to the effect that a wife/spouse could not be said to be involved vicariously. The appellant – Digvijaysinh Himmatsinh Jadeja submits to the contrary. We would not like to make any comments as it is only upon investigation, that a specific role attributable to respondent – Priti Mehul Choksi, if any, would be ascertained.”

Thus, the Court set aside the impugned order and directed the investigation to continue. Imperatively, the Court also made it clear that its observation in this current order shall not be treated as one on the case's merits. Apart from this, it was also recorded that the Investigation will continue uninfluenced by the impugned as well as the present order.

Case Title: DIGVIJAYSINH HIMMATSINH JADEJA vs. THE STATE OF GUJARAT., Diary No.- 31223 - 2017

Citation : 2023 LiveLaw (SC) 1039

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