Cognizance Under Section 448 Requires Section 447 | SC

Case Details: Yerram Vijay Kumar vs. State of Telangana - [2026] 182 taxmann.com 218 (SC)

Judiciary and Counsel Details

• J.K. Maheshwari & K. Vinod Chandran, JJ.
• Shailesh Madiyal, Sr. Adv., Awanish Kumar, D Raghvendra Rao & Ms. Garima, Advs. for the Petitioner.
• Kumar Vaibhaw, Dhananjay Yadav, Yatharth Kansal, Advs., Ms. Devina Sehgal, Sadineni Ravi Kumar, AORs & Jayanth Muth Raj, Sr. Adv. for the Respondent.

Facts of the Case

In the instant case, the Special Court for Economic Offences at Hyderabad took cognisance of a private complaint of offences under sections 448 and 451 of the Companies Act, 2013 (arising out of alleged fabrication of corporate records, unauthorised EOGM, and uploading of false filings on the MCA portal) along with allied IPC offences.

The High Court, in proceedings under section 482 of the CrPC, refused to quash such cognizance. Thereafter, an appeal was made before the Supreme Court.

It was noted that where the Special Court under Companies Act is taking cognizance of an offence under a section in Companies Act which, if proved, would make person(s) ‘liable under section 447’ or ‘liable for action under section 447’, it must also invoke section 447 with corresponding section and in such a case, it must comply with bar against taking cognizance as specified in second proviso to section 212(6) of the Companies Act, 2013.

Further, the offence under section 448 of the Act is an offence ‘covered under section 447’ since the offence under section 448 is inextricably linked to the punishment for ‘fraud’ as mentioned in section 447, and as such, the second proviso to section 212(6) is attracted.

Supreme Court Held

The Supreme Court observed that, where the Special Court is taking cognisance of an offence under section 448, it must also invoke section 447 with the corresponding section and, in such a case, it must comply with the bar against taking cognisance as specified in the second proviso to section 212(6) of the Companies Act, 2013.

Further, the Supreme Court observed that, where the Special Court is taking cognisance of an offence under section 448, without invoking the punishment section, i.e. section 447, cognisance could not be countenanced. Therefore, cognisance cannot be taken merely by the filing of a private complaint by the complainant.

However, it is not to say that the complainant is left absolutely remediless, and the right recourse for a person who makes an allegation of fraud in the affairs of a company is to file an application under section 213 before the NCLT.
The Supreme Court held that where the Special Court has taken cognisance of an offence under sections 448 and 451 of the Companies Act, 2013, the complaint case and all consequential proceedings to the extent of sections 448 and 451 of the Act shall stand quashed. However, there was no reason or ground to quash offences under the IPC of which cognisance had been taken by the Special Court.

List of Cases Referred to

• Sumana Paruchuri v. Jakka Vinod Kumar Reddy [CRIMINAL PETITION No.3575 OF 2022, dated 21-10-2022] (para 36)
• Sivananda Rajaram v. New Shipping Kaisha Ship Management Pvt. Ltd. [Criminal Petition (OP) No. 19154 of 2021, dated 3-7-2023] (para 39)
• M. Gopal v. Ganga Reddy 2022: KHC:35824 (para 39)
• Yogesh Chander Goyal v. State 2024 SCC OnLine Del 3197 (para 40)
• S. Satyanarayana v. Energo Masch Power Engg. & Consulting (P) Ltd. (2015) 13 SCC 1 (para 51)
• Sunil Mandwani v. State of M.P. 2019 SCC OnLine MP 1248 (para 52).