Issuance of Summons Under Section 91 CrPC During Preliminary Verification is Without Jurisdiction: High Court of J&K and Ladakh

Section 91 CrPC Can Be Invoked Only During a Lawful Investigation, Inquiry, or Trial: High Court of J&K and Ladakh - On January 3, 2025, the High Court of Jammu & Kashmir and Ladakh at Jammu delivered a significant judgment in the case of Bharat Bhushan v. Anti-Corruption Bureau Jammu & Another. The court quashed the summons issued by the Anti-Corruption Bureau (ACB) under Section 91 of the Code of Criminal Procedure (CrPC) and also set aside the initiation of preliminary verification against the petitioner. Justice Javed Iqbal Wani emphasized that the issuance of summons under Section 91 CrPC requires the presence of an ongoing lawful investigation, inquiry, or trial. The court observed that a "preliminary verification" is not an "investigation" within the meaning of the CrPC and, as such, the invocation of Section 91 was without jurisdiction.

The case also addressed the impact of excessive delays in initiating verification proceedings, particularly when they involve transactions dating back over three decades. Justice Wani highlighted the violation of the principles of natural justice and the procedural unfairness caused by such delays, which rendered the petitioners unable to effectively defend themselves.

The petition was filed by Bharat Bhushan, the Managing Director of the J&K Cooperative Housing Corporation Ltd., who challenged the summons issued by the ACB under Section 91 CrPC on April 2, 2024, in connection with alleged financial irregularities involving the Jammu Ladies Cooperative House Building Society Limited. The ACB had initiated preliminary verification to investigate transactions dating back to 1990. The summons sought documents and records from the cooperative society.

The petitioner contended that the issuance of summons was illegal as there was no ongoing investigation, inquiry, or trial under the CrPC. He argued that Section 91 CrPC cannot be invoked during preliminary verification, which is a mere fact-finding process and not a formal investigation. Furthermore, it was submitted that the verification, initiated after a delay of over 30 years, inherently prejudiced the cooperative society, causing irreparable harm and depriving it of the ability to mount an effective defense.

The case also involved the Jammu Ladies Cooperative House Building Society Limited, which filed a separate petition challenging the preliminary verification itself. The society argued that the ACB had no jurisdiction to initiate verification as the financial transactions were governed by the Jammu & Kashmir Cooperative Societies Act, 1989, which provides an exclusive statutory mechanism for the regulation, audit, and inquiry into cooperative societies.

"Section 91 CrPC Cannot Be Invoked During Preliminary Verification" – Court's Observations

Justice Javed Iqbal Wani, while analyzing Section 91 CrPC, stated: "A plain reading of Section 91 reveals that the power to issue summons can only be exercised in connection with an ongoing investigation, inquiry, or trial under the CrPC. A preliminary verification does not qualify as an investigation within the meaning of the Code and, therefore, does not permit the use of investigative powers under Section 91."

Referring to the landmark Supreme Court judgment in Lalita Kumari v. Government of Uttar Pradesh, (2014) 2 SCC 1, the court explained that preliminary verification is a limited process conducted to assess whether a cognizable offense is disclosed. It is distinct from a formal investigation and does not authorize investigative actions such as issuing summons. Justice Wani noted:

"A preliminary verification is a limited fact-checking exercise aimed at determining whether there are sufficient grounds to register an FIR. It does not vest investigative authorities with the power to compel the production of documents or records under Section 91."

The court emphasized that the issuance of summons under Section 91 CrPC by the ACB was without jurisdiction and, therefore, legally unsustainable.

"Delay of Three Decades in Initiating Verification Violates Principles of Natural Justice"

The court was critical of the delay in initiating the preliminary verification, which related to transactions from 1990. Justice Wani remarked:

"The initiation of verification after a lapse of more than three decades is inherently prejudicial to the petitioner society. Such delay undermines the ability of the society and its members to effectively defend themselves, as critical records, documents, and the individuals involved in the transactions are no longer available."

The court further observed that the loss of records and the death of key individuals during the intervening years placed the petitioner society at an insurmountable disadvantage. Justice Wani stated:

"The delay not only deprives the petitioner society of its right to a fair defense but also raises serious concerns of procedural fairness and bias. The principles of natural justice are fundamentally compromised when proceedings are initiated under circumstances that prevent the affected party from defending itself."

The court concluded that the verification proceedings, initiated after such an unreasonable delay, were procedurally unfair and liable to be quashed.

Exclusive Jurisdiction of Registrar Under J&K Cooperative Societies Act, 1989

The court highlighted that the Jammu & Kashmir Cooperative Societies Act, 1989 provides a comprehensive statutory framework for the regulation, audit, and accountability of cooperative societies. Justice Wani observed that the Registrar of Cooperative Societies is vested with exclusive powers to address financial irregularities within cooperative societies, including conducting audits, inquiries, and inspections.

Referring to the provisions of the Act, the court stated:

"The Act of 1989 establishes a clear regulatory mechanism for ensuring transparency and accountability in the functioning of cooperative societies. The Registrar is empowered to conduct audits, initiate inquiries into financial irregularities, and take corrective actions under the Act."

The court noted that the ACB's actions to initiate verification and issue summons circumvented the statutory framework established under the Act. Justice Wani remarked:

"The Anti-Corruption Bureau's attempt to bypass the jurisdiction of the Registrar under the J&K Cooperative Societies Act amounts to an overreach of its authority. The statutory safeguards and procedures prescribed under the Act cannot be supplanted by the ACB's actions."

The court allowed both petitions and issued the following directions:

The summons issued by the ACB under Section 91 CrPC on April 2, 2024, was quashed.

The preliminary verification initiated by the ACB on December 20, 2023, was quashed.

The court clarified: "The quashing of the verification proceedings and summons is confined to the peculiar facts and circumstances of this case and shall not serve as a binding precedent for other matters."

Justice Wani emphasized the importance of adhering to statutory frameworks and procedural safeguards while initiating inquiries or investigations.

This judgment underscores the limited scope of Section 91 CrPC and the procedural safeguards that must be followed when initiating verification or investigation proceedings. It also highlights the detrimental impact of excessive delays in legal proceedings, particularly when they compromise the ability of the affected party to mount an effective defense. The court's ruling reaffirms the exclusive jurisdiction of the Registrar under the J&K Cooperative Societies Act, 1989, in matters involving cooperative societies.

Bharat Bhushan v. Anti-Corruption Bureau Jammu & Another (CRM(M) No. 317/2024)

Jammu Ladies Cooperative House Building Society Limited v. Anti-Corruption Bureau Jammu (CRM(M) No. 133/2024)

Date of Decision: January 3, 2025