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Inherent Powers in Check: Supreme Court’s Stance on Stay of Investigation & Coercive Steps


In this significant decision given in the case of Directorate of Enforcement v. Niraj Tyagi & Ors.[i], the Hon’ble Supreme Court (‘SC’) has expressed deep concern over the Allahabad High Court’s (‘HC’) departure from established legal principles, particularly in the context of staying investigations into first information reports (‘FIR’) and enforcement case information reports (‘ECIR’). Emphasising the need for sparing use of inherent powers under s. 482 of the Code of Criminal Procedure, 1973 (‘CrPC’), the SC has set aside the HC’s orders, critiquing the broad restrictions on coercive actions/arrests without anticipatory bail applications. This underscores the importance of upholding legal guidelines in criminal proceedings.


  • The appellants were aggrieved by a series of interim orders passed by the HC in pursuance of three writ petitions (‘WP’) filed before it by the respondents. The HC’s interim orders stayed the proceedings of FIRs against the respondents and the Directorate of Enforcement’s (‘ED’) ECIR, directing no coercive action till the pendency of the WPs.

  • The respondent, India Bulls Housing Finance Limited (‘IHFL’), is a non-banking financial institution dealing with public money. Niraj Tyagi and Reena Bagga are IHFL’s officers. M/s Kadam Developers Pvt. Ltd. (‘KDPL’) is a Shipra Group entity with a sublease of 73 acres of land in Noida. IHFL sanctioned loans to Shipra Group entities, securing them with pledged shares and mortgaged properties. Due to defaults, IHFL recalled loans, leading to litigation. IHFL sold KDPL’s shares to Final Step Developers, funded by IHFL itself. Furthermore, the mortgaged properties were also eventually sold for recovery.

  • FIRs were filed against IHFL and its officers’ alleging forgery, conspiracy, and undervaluation of assets by Shipra Hotels, YEIDA, and by Shipra Group’s representative Mohit Singh. WPs were filed by the respondents challenging these FIRs in the case of Gagan Banga & Anr. v. State of West Bengal & Ors.[ii] (‘Gagan Banga case’). Simultaneously, the ED registered ECIR for money laundering based on these FIRs. These WPs were dismissed by the SC with the liberty to challenge the FIRs and ECIR in the jurisdictional HC. Furthermore, the interim protection was granted until the final disposal of these petitions.

  • Subsequently, when the HC was approached as per the directions issued by the SC, it passed impugned orders under the umbrella of the SC’s order, creating an impression that it was in furtherance of that order. The present appeals arose from these impugned orders passed by the HC, wherein the orders of staying the proceedings of FIRs against respondents and ED’s ECIR, directing not to take any coercive action had been passed.

  • Referring to the precedent in Neeharika Infrastructure Pvt. Ltd. v. State of Maharashtra[iii], the appellants emphasized the SC’s disapproval of interim orders in cases which may obstruct investigations. Thus, the appellants urged for the immediate quashing of the HC’s orders based on this settled legal position.


  • The SC while setting aside the impugned orders, stated that they are not in line with the established legal principles. The SC expressed serious concern over the HC’s disregard of the settled legal positions by staying investigations into FIRs and ECIR and restraining investigating agencies.

  • The SC emphasized that s. 482 of CrPC does not grant arbitrary jurisdiction and should be sparingly exercised, especially in cases where investigations are at a nascent stage. The SC criticized the HC’s blanket interim orders of restraining the arrest without the anticipatory bail applications being filed by the respondents.

  • It was reiterated that the direction not to arrest or take coercive action against the accused person(s) in proceedings under s. 482 of CrPC would be equivalent to an order under s. 438 CrPC, without the satisfaction of conditions. Lastly, the SC also clarified that it had not expressed any opinions on the pending WPs and allowed the respondents to pursue legal remedies.


The SC’s decision notably highlights its grave concerns regarding the HC’s deviation from established legal precedents. By emphasizing the prudent application of s. 482 of the CrPC, the SC has robustly reaffirmed the principle that judicial stays on investigations and the restraint of detaining accused individuals without prior submissions for anticipatory bail are generally disfavoured. This judgment highlights the imperative of adhering to legal norms and principles consistently across criminal proceedings, thereby fostering judicial discipline and limiting the discretionary exercise of inherent powers. Further, this ruling accentuates the necessity for the uniform application of laws and the respect for established legal standards by superior courts, ensuring a coherent and predictable legal system. This case reiterates the judiciary’s role in maintaining the balance between individual rights and the interests of justice, thereby guiding future judicial discretion within the established legal framework.

End Notes

[i] 2024 SCC OnLine SC 134

[ii] 2023 SCC OnLine SC 1814.

[iii] (2021) 19 SCC 401.

Authored by Shivam Mishra, Advocate at Metalegal Advocates. The views expressed are personal and do not constitute legal opinion.


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