Further Investigation, Re-investigation & Fresh Investigation under Criminal Procedure Code, 1973, India.

1.0 Investigation of cases by Police Officer
 When a complaint was lodged or referred to Police, and the First Information Report (FIR) was sent to Court, in the course of the Investigation and interrogation of the accused, if it was revealed commission of the several offences, on the basis of such information itself, the investigating officer shall proceed with the investigation and file charge-sheet with the jurisdictional Magistrate. 

 2.0 Final Report / Challan & Charge-Sheet
 The Criminal Procedure Code, 1973, Sec173 (2) refers to the Final Report ( Challan)  or Charge- Sheet of Police Officer on completion of InvestigationThe Report forwarded by the Investigation Officer is either a Final Report ( Challan), where no case has been made out or is a Charge-Sheet where a prima facie case has been made out. In Sec 173(2) (e), Criminal Procedural Code (Cr.P C) the only requirement is to furnish information to the Court concerned by the officer –in-charge of the Police station whether the accused had been arrested or not. It does not mean that it is necessary to arrest the accused before submission of charge-sheet in every case. Arrest of the accused is justified or necessary only if a prima facie case is made out, according to the Supreme Court in Lalji Yadav V. State of UP, 1998 Cri. L J 2366.

 3.0 Alternatives before Magistrate in a Final Report.
 Wherever a Final Report is forwarded by case investigating Police to a Magistrate u/s 173(2) (i) is placed before him, several situations may arise. The Report may conclude that an offence appears to have been committed by a particular person and persons, and in such a case Magistrate may either:-
1)    accept Report and take cognizance of offence and issue process,
2)    may disagree with the report and drop the proceeding  or to take cognizance on the basis of report / material submitted by the Investigation Officer,
3)    may direct further investigation under Sec 156(3) and require Police to make report as per Sec 173(8)-(AIR 1968 SC 117 ; AIR 1980 SC 1883 / AIR 1955 SC 196).
4)    may treat the Protest Complaint as a complaint , and proceed u/s 200 & 202 of Cr. P.C.
 On completion of Investigation, Statement of Final Report u/s 173 (2) (ii), is mandatorily to be given to the complainant, and the Magistrate must give notice to the informant and provide him an opportunity to be heard at the time of consideration of the report ( R. Rathinasabapathy V. State , 2004 Cri. L J 2735 (Mad).

 4.0 Further Investigation Order U/s 173(8) Cr. P.C
 Further investigation is not altogether ruled out merely because cognizance has been taken by the Court. When defective investigation comes into light during course of trial, it may be cured by further investigation if circumstances so permitted. It would be ordinarily be desirable that Police should inform the Court and seek formal permission to make further investigation when fresh facts come to light instead of being silent over the matter keeping in view only the need for an early trial. The right of Police , even after submission of a report u/s (173(2) Cr. P.C , is not exhausted , and the Police can exercise such right as often as necessary when fresh information comes into light( Ram Lal  Narang V. State of Delhi AIR 1979 SC 1791; Hasanbai Valibhai Quresi V. State of Gujarat , AIR 2004 SC 2078; Satish Tandurang Jagtap V. Statae of Maharastra 1995 Cr. LJ 1509 AT 1510 Bom).

 5.0 To proceed against a person who is not charge-sheeted.
 Sec. 319 of Criminal Procedural Code: - The discretion of the trail court to proceed against the person who is not an accused at the trail if it appears from the circumstances of the case, that such person, other than the accused, is involved in the crime is quintessence of Sec 319 Cr. P.C (Girish Yadav & Others, appellants, V. State of MP, respondent, AIR 1996 SC 3098). Thus, the trail court in India is vested with ample powers to proceed against an accused any time during the trail, if a person is not charge-sheeted by the investigating Police Officer.  In Ranjit Singh V. State of Punjab, 1998 (7) SCC 149, it was envisaged that the evidence tendered during trail of the case if the offence is to be tried by a Court of Session, and it was held :- Material placed before committal Court cannot be treated as evidence. Sessions Court, however, is competent to issue process against a person who is not charge-sheeted U/s 319 after the trail is begun and recorded some evidence of the prosecution (Tek Narayn Prasad Yadav V. State of Bihar 1999 SCC ( Cri) 356).

 6.0 Re-investigation of the Case.
 Re- investigation:-After the order for further investigation, then for the second time the Magistrate cannot compel the police to take a particular view in the matter and submit the challan in the case. if the Magistrate does not agree with the opinion formed by the Police and still suspects that an offence has been committed, he is entitled, notwithstanding the opinion of the Police, to take cognizance under Sec 190 (1) (c) of the Cr. P.C, but he cannot direct the Police to re-investigate the matter for the third time ( Harinder Pal Singh v. State of Punjab, 2004 Cri. L J 2648 P&H).
 The case for re-investigation is altogether a subject matter and discretion of the concerned High Court or Supreme Court under Article 226 and Article 32 of the constitution ,respectively or under 482 of Cr.P.C ; or may be considered  by the Supreme Court of India , the ultimate appellate forum. In Kashmiri Devi v. Delhi ( Admn) AIR 1988 SC 1323, the case for re-investigation was considered. In this case the Act of Police in shielding the guilty members of Delhi Police was apparent and with that design the investigating agency had committed a different story neglecting the eye-witness account. In Pannalal v. Veer Bhan 1992 Jab L J 327, the discretion for a re-investigation was denied, since the facts and stage of the case was entirely different, and held that for re-investigation of the case unless some fresh facts have come to light or an additional evidence has been discovered or there exit compelling fresh grounds, the Court would be slow in directing re-investigation.

     7.0 Inherent Powers of High Court U/s 482 of Cr. P. C
 The provision u/s 482 Criminal Procedure Code states that nothing in Cr. P.C shall be deemed to limit or affect the Inherent Powers of High Court to make such orders as necessary to effect of any order under Cr. P.C to prevent the abuse of the process of any of the Court or otherwise to secure the ends of justice.  Thus the High Court U/s 482 Cr. P.C is having ample powers to order for fresh investigation or re-investigation (State of Punjab V. Central Bureau of Investigation & Others (2011) 11 SCR 281).
 Limitation for further investigation u/s 173 (8) of Cr .P.C, for further investigation by Sub-Ordinate Courts , where charge sheet has filed will not apply to the powers u/s 482 Cr.P.C  by the High Court ( State of West Bengal & Others V. Committee for Protection of Democratic Rights, West Bengal & Others ( 2010) SC 2 SC 571).
 However, only in cases where the High Court finds that there has been failure of justice or misuse of Judicial mechanism or procedure, sentence or order was not correct, the High Court, in its discretion, prevent the abuse of the process or miscarriage of justice by exercise of jurisdiction under Sec 482 ( Rajinder Prasad V. Bashir & Ors., J T 2001 97) SC 652.

 8.0 Powers of High Courts and Supreme Court of India.
 Powers of Superior Courts:- Though there are fundamental differences as to “ further investigation’ and “re-investigation” , it may be noted that , in a given situation, a superior Court , High Court or Supreme Court, can exercise the constitutional powers under section 226 and 32 respectively of the Constitution of India , and could direct a “State” to get an offence investigated and / or further investigated by a different agency( Mithabhai Pashbahi Patel  V. State of Gujarat ( 2009 6  SCC 332). In Rameshchandra Nandlal Parikh V. Satae of Gujarat and Anr. ( AIR 2006 sc 915 / Cr. LJ 964), Supreme Court had considered the its extraordinary power under Article 136 of the Indian Constitution, wherein which, the Gujarat High Court declined to exercise its power under Sec 482 Cr.P.C . Considering the nature of allegations involved and the facts and circumstances of the case, Supreme Court was also of the view of the Gujarat High Court.

 A Bench consisting of Justices Markandey Katju and R.M. Lodha, quoting various judgments, pointed out that Article 136 was never meant to be an ordinary forum of appeal at all. “It has become a practice of filing SLPs against all kinds of orders of the High Court or other authorities without realising the scope of Article 136.”

 9.0 Investigation by Special Agency
 Investigation by CBI: - Subject to the fact and situation of each case the superior courts, at any time, can direct instigation by the superior agency of the country. In Uma Shankar Sitani v. Commissioner of Police, Delhi, 1995 Cri. L  J 3612 P. 3613 9 SC), the Supreme Court was of the opinion that the matter was to be investigated by an Independent Agency. Further, in Nirmal Singh Kahlon V. State of Pujab & Others ( 2009 1 SCC 441 ), the Supreme Court has sustained the order of High Court , directing investigation by the CBI even after the filing of charge –sheet by the State Police. In P&H High Court Bar Association v. State of Punjab, 1994 Cr. L.J 1368, A.I.R 1994 SC 1023 it was held that the facts and circumstances of the case on hand, and to do complete justice in the matter and further to instill confidence in the public mind it is necessary to have fresh investigation in the case through a specialized agency like the Central Bureau of Investigation (CBI).

 10. Power to take suo moto cases by Superior Courts. High Court can take suo motu cases: - In State of Punjab V. Central Bureau of Investigation & Others, SLP Criminal No. 792 / 2008, (2011) 11 SCR 281, the Supreme Court held, where charge sheet has been filed, and High Court held that the same cannot limit or affect the inherent power of High Court to pass an Order u/s 482 for fresh investigation or re-investigation is necessary to serve the ends of justice. This was a case where senior functionaries of the State Police and political leaders were involved, and justice would not be done if local police investigated, and thereby the High Court given direction u/s 482 Cr.P.C for fresh investigation by CBI.
 

LETTERS OF PATENT-HIGH COURTS OF INDIA

A Letter of PATENT is the charter under which the concerned High Court is established in India. The powers given to a High Court under the Letters of Patent are akin to constitutional power of a High Court. Thus, when a Letter of patent grants powers to the High Court a power of appeal, against a judgment of a single judge, the right to entertain the appeal would not get excluded unless the statutory enactment concerned excludes an APPEAL under the Letters Patent.

Letters of Patent lies before a division bench from a judgment of a single bench judge in a civil writ petition under ARTICLE 226 of Indian Constitution.

The decision of the Division Bench rendered in a Letter of Patent Appeal will then be subject to appeal to the Supreme Court.

When the SPECIAL ACT sets out self –contained code, the applicability of the General Law procedure would be impliedly excluded, and the relevant provisions are:- Sec 104 (2) of Civil Procedure Code, 1908 and Clause 15 of the Letters of Patent , of the concerned High Court. An applicable case law is: - Upadhaya Hargovind Devshanker V. Dhirendrasinh Virdhadrasinhji Solanki (1988) 2 SCC 1.

Non-Banking Finance Companies- India

1.0 Introduction

NBFCs are companies that are registered under the Indian Companies Act, 1956, and doing function akin to that of Banks, with a few differences. It is necessary that every NBFC should be registered under Sec 45-1A of Reserve Bank of India Act, 1934. The RBI Act, as amended in 1997, provided a comprehensive regulatory frame work for NBFCs, particularly Chapter 3-B, 3-C and 5 of the Act with primary objective of putting in place a comprehensive regulatory and supervisory frame work, aimed at protecting the interest of depositors as well as ensuring the sound functioning of NBFCs (Working Group on the issues & concerns in the NBFC sector ---Report & recommendations –RBI August 2011). The Regulatory Frame work includes:-

1) To issue directions to companies and its auditors.

2) Prohibit deposit acceptance and alienation of assets by companies.

3) Initiate action for Winding-Up of companies.

4) Compulsory registration with RBI for commencement of business.

5) Minimum entry point norms.

6) Maintenance of a portion of deposits in liquid assets.

7) Creation of reserve fund and transfer of 20% of profit after tax but before divided annually to the fund.

8)Directions as to:- a) acceptance of public deposits , b) Prudential norms like capital adequacy , income recognition, asset classification , provisioning for bad and doubtful assets, exposure norms and other measures, c) directions to statutory auditors / BODs/ Shareholders.

2.0 NBFC Definition & Classification

NBFC is defined u/s 45-I (f) r/w Sec 45-I (c) of the RBI Act, 1934. The classifications are based on activity, size and Liability.

Liability based classification: - A Category – NBFC s having public deposits (NBFCs-D) and B-Category NBFCs not having public deposits (NBFCs –ND).

Activity based classification: - Investment Company (IC); Loan Company (LC), Asset Finance Company (AFC), Infrastructure Finance Companies (IFC).

Size based classification:-Systematically Important Core Investment Companies (CIC-ND-SI)-with assets of Rs 100 Cr. and above.

The other categories of NBFC are:-Mutual Benefit Financial Company ( eg:- Nidi Company), Mutual Benefit Company ( MBC), Miscellaneous Non-Banking Co. ( MNBC)( eg:-Chit Fund Co. ), NBFC-Micro Finance Institution ( NBFC-MFI).

3.0 Source of Funds for NBFCs -2010-11

As per RBI Working Group Report August 2011, own funds constitute 25.9% of funds; Debentures constitute 22.2%, Bank borrowings 21%, Commercial papers 4%, Inter-corporate borrowings 3.1%, Public Deposits 0.5%, and Others 23.4%.

Debentures & Bonds:-In India, the terms ‘Corporate Bonds’ and ‘Debentures ‘are interchangeably used. Though different countries have different interpretations of both the terms, “Corporate Bonds’ and Debentures’ in Companies Act, 1956, Se. 2(12), identifies both as same. Secured Debentures are debt instruments and are regulated by SEBI, and do not come under the definition of ‘Public Deposit’ in terms of NBFC Acceptance of Public Deposits( Reserve Bank) Directions, 1988.

4.0 Types of NBFCs

Multiple NBFCs: - There are many Corporate which have multiple NBFCs within the group, for eg:- M/s Shriram Group. As such each of these NBFCs served different purposes; and the reason behind the same are operational efficiencies, dynastic reason, tax planning e.t.c. The Regulators are, however, of the opinion that, the multiple NBFCs should not be viewed on a stand-alone basis, but should be viewed in aggregate.

Captive NBFCs: - A captive NBFC is one where a major portion of its portfolio in receivables is generated by the sales of products and services of the parent or the group. It functions as an extension of a corporate marketing activity. In most cases, captives operate as a core but separate subsidiary of the parent and in some cases as distinct operating Division. Regulators are of the opinion that a higher cushion of capital than for normal NBFCs may be warranted for captives.

Government NBFCs: - There are a number of Governmental NBFCs, which fall within the ambit of RBI Regulations. The Government Department or the Ministry or the Bureau of Public Enterprises to which such companies are attached, are expected to prescribe the norm for their operation on healthy lines and monitor their financial health. Being government companies, they are of no supervisory concern to RBI.

5.0 Supervisory Framework under RBI

The supervisory framework for NBFC in India was created in 1997 with the object of protecting the interest of the depositors. The existing framework for supervision of NBFCs consists of:-

a)      Off-site supervision involving scrutiny of periodical returns and statements containing financial and prudentially important data submitted by the NBFCs.

b)      On –site supervision of the books of accounts and other records of the NBFCs. This is done on the basis of assessment and evaluation of CAMELS (Capital, Assets, Management, Earning, Liquidity, and System & Procedures).

6.0 NBFC Prudential Norms

The RBI has issued detailed direction as to prudential norms; vide NBFC Prudential Norms (Reserve Bank) Directions, 1988.

Asset Classification: - Standard Asset / Sub Standard Asset / Doubtful Asset / Loss Asset.

Provisioning Norms( Loans & Advances):- Standard Asset –No provision ; Sub-Standard Asset -10% of the outstanding balance Doubtful Asset –on unsecured portion 100% , and on secured portion 20 / 30 and 50% depending on the age of the doubtful assets. Los Asset – 100% of the outstanding.

Provisioning Norms (Equipment Lease & HP):- Non-Performing Asset (NPA) for 12 months -10% is provisioning; 24-36 months NPA – 40% provisioning; 36-48 months NPA 70% provisioning; and 48 months plus NPA- – 100% provisioning. 

In terms of Directions, the NBFCs accepting / holding public deposits have to ensure maintenance of minimum prescribed capital to risk-weighted assets ratio ( CRAR)at all times.

7.0 Liquidity Requirement for NBFCs

The RBI stipulates a statutory liquidity requirements ( SLR) at 15% of aggregate deposits on a daily basis to NBFC. Also, ALM – Asset Liability Management –guidelines have been made applicable to NBFC –Ds with deposits of Rs 20 crore and above. The ALM guidelines have been made applicable to NBFC-Ds with deposits of Rs 20 Cr. and above.

8.0 Acceptance of Deposits by NBFCs

NBFCs can accept deposits for a minimum period of 12 months and maximum up to 60 months, for RNBCs the maximum period is up to 84 months, and for MNBCs (Chit Funds), minimum period is 6 months and maximum period is 36 months.

Ceiling on Deposit Rate:-NBFC s / MNBCs / Nidhis -----------11% per annum; RNBCs –4 to 6 %.

9.0 Regulatory Convergence:-between Banks & NBFCs-D- the emerging scenario.

Regulation of NBFCs by RBI started from the year 1964, and as day passes, and to control Deposit accepting NBFCs, the regulators and supervisory framework of RBI is converging to that of Banks. Internationally regulations for deposit acceptance are similar for all entities accepting deposits, whether Banks or NBFCs. As such, the RBI working Group, 2011, is proposing the same.