The Supreme Court has stayed a Rajasthan High Court order that revived SEBI’s criminal complaint against ACE Laboratories Ltd. and its directors over violations of Sections 113(2) and 207 of the Companies Act, relating to non-transfer of shares and non-payment of declared dividends. The stay has been granted in a Special Leave Petition filed by petitioner that raises a substantial question of law: “Whether a petition seeking leave to appeal is maintainable as per Section 419(4) BNSS against an order of discharge”.
The Bench of Justice Aravind Kumar and Justice N.V. Anjaria issued notice and granted four weeks’ time for the respondents to file their counter-affidavit.
The case stemmed from a complaint filed by SEBI in 2003, in which it alleged that the company failed to return share transfer documents and withheld dividend payouts despite repeated investor complaints. The Trial Court had taken cognizance in 2005, and framed charges against the petitioner and other co-accused. The petitioner challenged this order framing charges in the revision application before the Sessions Court.
On 19 December 2024, the Judicial Magistrate, Alwar discharged all accused after finding that only photocopies had been filed and no evidence existed to even raise a prima facie case under Sections 113(2) or 207 of the Companies Act. The Court noted that the matter had been pending for so long and the complainant had remained absent despite opportunities.
SEBI challenged the discharge order by filing a Criminal Leave to Appeal under Section 419(4) BNSS. On July 31, 2025, the Rajasthan High Court granted leave and issued notice to the accused, observing that the Trial Court appeared to have adopted a hurried approach by disposing of the matter within 18 days of declaring one of the accused an absconder, and that no notice had been issued to SEBI for presenting pre-charge evidence. Holding that “justice hurried is justice buried”, the High Court also directed that the prosecution against the absconding accused continue and referred the matter to the Chief Justice for framing guidelines to presiding officers on handling targeted cases in a calm and peaceful manner.
Challenging this, the petitioner submitted that the High Court committed a manifest error in law by entertaining and granting leave to appeal against an order of discharge, despite the settled position that such leave is contemplated only against an order of acquittal and not discharge. It was submitted that Section 419(4) BNSS does not confer jurisdiction on the High Court to entertain an appeal against a discharge order, and the impugned order therefore raises a substantial question of law. The petitioner further contended that the High Court granted leave ex parte, without affording him any opportunity of hearing, and issued notice solely on the complainant’s submissions, in violation of the principles of natural justice.
The petitioner has approached the Supreme Court raising three substantial questions of law:
(i) Whether a petition seeking leave to appeal is maintainable as per Section 419(4) BNSS against an order of discharge;
(ii) Whether the remedy against an order of discharge in a complaint case is that u/s 482 CrPC [now 528 BNSS] and not u/s 419(4) BNSS; and
(iii) whether leave to appeal can be granted against a non-appealable order, considering that an appeal is a creation of a statute and not otherwise?
Issuing notice, the Bench of Justice Aravind Kumar and Justice N.V. Anjaria stayed the operation of the High Court’s order, effectively restoring the Trial Court’s discharge until further orders.
Appearances
Petitioner- Mr. Namit Saxena, AOR, Mr. Udit Arora, Adv.
Respondent- —
