Author: Revanth Roy Chelluboyina, ICFAI law school, Dehradun
Case Title, Citation & Bench
Case Title: Yerram Vijay Kumar v. The State of Telangana & Anr.
Citation: [2026] 1 S.C.R. 439; 2026 INSC 42
Bench: Hon’ble Mr. Justice J.K. Maheshwari and Hon’ble Mr. Justice K. Vinod Chandran
Date of Judgment: January 09, 2026
Facts
The parties in dispute are associated with the management and control of the Private Limited company known as M/s Shreemukh Namitha Homes Private Limited (the “Company”) established in 2015 by the Plaintiffs and his wife. The Appellants were appointed Directors of the Company pursuant to the Articles of Association (AoA) and were later removed from their position as Directors when amendments were made to the AoA that stipulated the Directors’ tenure period. The Appellants challenged the validity of their removal from the Board of Directors of the Company before the National Company Law Tribunal (NCLT). Following this, the Complainant filed a Private Complaint against the Appellants with the Special Court for economic offences (the Special Court) asserting that the Appellants (i) unlawfully convened an Extra-Ordinary General Meeting (EOGM) and purporting to appoint third parties as Directors of the company without any authority; (ii) uploaded forged and fabricated documents including Board and Shareholders’ resolutions to the Ministry of Corporate Affairs (MCA) website. The Special Court took cognizance of offences under section 448 and 451 of the Companies Act, 2013 along with other Indian Penal Code (IPC) offences to include Sections 420 (cheating), 468 (forgery). The Telangana High Court dismissed the Appellants quashing petition leading the Appellants to appeal to the Supreme Court.
Issues
Does the continuation of criminal proceedings constitute an abuse of process, entitling the courts to interfere pursuant to Section 482 of the CrPC?
If the Companies Act proceedings are quashed, should the IPC criminal proceedings also be quashed per section 436(2) of the Companies Act?
Whether it is possible to take cognizance of alleged Section 448 and 451 offences of the Companies Act, 2013, on the basis of a private complaint when the second proviso to section 212(6) of the Companies Act provides a statutory bar?
Arguments
Arguments for the Appellants:
Statutory Bar: Counsel argued for consideration the statutory bar under section 212(6) exists to prohibit taking cognizance against offences covered under section 447 unless there is a complaint made by SFIO or an officer of a government authorized by law. Section 448 states any person making a false statement shall be liable under section 447. Therefore, it is the argument of counsel for the Appellants that since both sections prohibit the ability of the Court to act on these offences unless a complaint is made, then the statutory bar under section 212(6) applies equally to section 448 as well.
Procedural Bypass: It was a contention of the Appellants that in addition to the statute barring a cognizance of an offence covered under the above-referenced sections, the failure to conduct an inquiry into the various allegations and or complaints as required under section 206 (inquiry by Registrar) constitutes a procedural bypass.
Civil Nature: The defence submitted at the hearing that the matter really involves a civil corporate dispute “disguised or cloaked” with criminality based on there being civil suits that are ongoing against the Appellants and a petition filed before the NCLT.
Arguments for the Respondents:
Amendment Interpretation: The Complainant submitted to the Court that since the 2015 Amendment Act deleted section 448 from section 212(6)’s express listing, the bar now only applies to section 447 itself.
Serious Allegations: Appellants contended that the Appellants held an EOGM in a surreptitious manner and without the quorum necessary for conducting a safe and sound proceeding in order to gain control of the company. This action constituted substantial and serious fraud and forgery that merited a full trial.
Judgment
The Supreme Court partly allowed the appeals.
Quashing of Companies Act Charges: The Court has quashed the proceedings in respect of sections 448 and 451 of the Companies Act, ruling that a private complaint cannot take cognizance of these sections.
Maintenance of IPC Charges: The Court has dismissed the request to quash the IPC offences (420, 406, 468 etc).
Transfer of Case: The Court has ordered that the balance of the IPC complaint must be transferred to the appropriate Court having jurisdiction where the case is located as the Special Court’s jurisdiction under section 436(2), is predicated on the trial of Companies Act there.
Legal Reasoning & Personal Commentary
Legal Reasoning: The Judicial Reasoning: In this case, the Court was concerned with whether there is an “inextricable link” between the two different provisions found in Sections 447 and 448 of the CCA. In other words, the Court determined that Section 448 (providing for false statement) exists alone without any punishment being provided in that section, and Section 448 specifically states that the person should be “liable under Section 447”.
Therefore, it was held by the Court that all offences contained in Section 448 are captured within the definition of “offence under Section 447” governed by Section 212(6) of the CCA. Furthermore, the Court affirmed the principle that if you cannot do something directly, then you cannot do it indirectly as well. If private complaints were permitted to be brought against individuals arising under Section 448, that would subvert the legislative intent of having SFIO or the Government review frivolous fraud litigation based upon their finding of having gone through the traditional process of “fraud” litigation.
The Court also ruled that the mere existence of a civil or NCLT action will not absolve the alleged criminality of the accused if the facts upon which the claim is based indicate that the plaintiff has made a prima facie case against this defendant for having committed an offence, i.e., forgery.
Personal Commentary: This judgement clarifies many of the issues arising out of Companies Amendment Act, 2015. By ruling that procedural protections of Section 212(6) apply to all sections of the CCA where liability is based upon the definitions of Sections 447 and 448, the Supreme Court has placed the corporate sector in a better position regarding the potential misuse of fraud allegations through private litigation. While complainants can continue to proceed under the IPC for committing forgery, the specialized, rigorous Sections of the CCA dealing with fraud continue to have prohibitions against fraud established through the rigorous scrutiny of a government or other agency.
FAQS
1.Can a private individual file a complaint for “fraud” under Section 448 of the Companies Act? No. The Supreme Court ruled that since Section 448 leads to penalties under Section 447, it is subject to the statutory bar in Section 212(6), meaning only the SFIO or an authorized government officer can initiate such proceedings.
2. Does the quashing of Companies Act charges automatically lead to the dismissal of IPC charges like forgery or cheating? No. The Court held that even if the specific Companies Act charges are quashed due to procedural bars, the accused can still be prosecuted under the Indian Penal Code (IPC) if the facts disclose a prima facie criminal offense.
3. What happens to the jurisdiction of a Special Court if the Companies Act charges are removed? If the Companies Act charges are quashed, the Special Court loses its primary jurisdiction under Section 436(2); consequently, any remaining IPC charges must be transferred to a regular Magistrate or the appropriate jurisdictional court.
