The Karnataka High Court has invalidated the Serious Fraud Investigation Office (SFIO) probe against Vijay Mallya, former owner of Kingfisher Airlines, and Captain Gopinath, founder of Air Deccan, regarding alleged procedural irregularities in the 2007 merger of Kingfisher Airlines Ltd and Deccan Aviation Ltd. The court’s decision followed petitions from various parties, including Kingfisher and Deccan Charters, contesting the merger process of the two aviation companies. Justice Hemant Chandan Gowdar, leading a single-member bench, presided over the case.
The court ruled that SFIO lacked grounds for criminal prosecution since none of the purported victims had filed a complaint about the matter. It emphasized that the merger had received court approval, implying that reopening the issue through criminal proceedings would constitute an abuse of the legal process. Furthermore, the bench highlighted the legal complexities, noting that the alleged incident occurred under the Companies Act 1956, rendering proceedings under the Companies Act 2013 unlawful.
Critically, the court denounced the SFIO Special Court’s issuance of abrupt arrest warrants without prior summoning of the accused. It deemed the initiation of proceedings under the 2013 Act for actions governed by the 1956 Act as invalid. The Karnataka High Court asserted that the SFIO’s decision lacked legal authority and emphasized that since the court had already sanctioned the scheme of arrangement, reopening the question of potential fraud in the merger process through criminal prosecution was impermissible. Consequently, the court quashed the complaint, deeming the continuation of criminal proceedings an abuse of legal process.
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