Supreme Court Bars Private Complaints in Company Fraud Cases: Only SFIO Can File Under Companies Act
Apex Court Clarifies Fraud Complaints Must Route Through SFIO
Individuals Can Seek NCLT Investigation Instead of Direct Criminal Complaints
By Our Legal Reporter
New Delhi: January 9, 2026:
The Supreme Court of India delivered a crucial judgment that reshapes how corporate fraud cases are prosecuted under the Companies Act, 2013. The Court held that private complaints alleging fraud are not maintainable, and cognizance can only be taken by a Special Court on a complaint filed by the Director of the Serious Fraud Investigation Office (SFIO) or an officer authorized by the Central Government under Section 212(6) of the Act.
This ruling provides clarity on the legal process for fraud-related offences under the Companies Act, ensuring that investigations are centralized and handled by specialized agencies rather than through fragmented private complaints.
Background of the Case
- The matter arose from disputes involving allegations of fraud under Sections 447 and 448 of the Companies Act, 2013.
- Private individuals had filed complaints before Special Courts, seeking criminal prosecution of company directors.
- The Supreme Court bench of Justice J.K. Maheshwari and Justice K. Vinod Chandran ruled that such complaints are barred under the second proviso of Section 212(6).
- The Court clarified that offences under Section 448 (false statements) are covered under Section 447 (fraud) and therefore fall within the statutory bar against private complaints.
Key Observations of the Supreme Court
- Exclusive jurisdiction of SFIO: Only SFIO or authorized officers can initiate fraud complaints under the Companies Act.
- Private complaints barred: Individuals cannot directly file criminal complaints alleging corporate fraud.
- Alternative remedy available: Aggrieved individuals can approach the NCLT under Section 213 to demand an SFIO investigation, provided they meet eligibility criteria.
- Separation of remedies: While Companies Act offences must go through SFIO, related IPC offences can still be pursued in appropriate criminal courts.
Wider Legal Context
This ruling aligns with the government’s intent to centralize corporate fraud investigations:
- SFIO’s role: Established under the Ministry of Corporate Affairs, SFIO is a specialized agency tasked with investigating complex corporate frauds.
- Recent SFIO actions: In January 2026, SFIO filed a prosecution complaint against fugitive businessman Mehul Choksi and others in a ₹13,000 crore bank fraud case.
- Judicial consistency: The Supreme Court’s ruling ensures that fraud cases are handled by experts, reducing frivolous or malicious private complaints.
Implications of the Ruling
- For companies: Directors and officers gain protection from arbitrary private complaints but remain accountable to SFIO investigations.
- For individuals: Shareholders and stakeholders must route fraud allegations through NCLT, ensuring proper scrutiny before escalation.
- For judiciary: Special Courts will only hear fraud cases initiated by SFIO, streamlining case management.
- For regulators: Strengthens SFIO’s role as the central authority for corporate fraud enforcement.
Also Read: Gifting Mutual Fund Units: How Parents Can Build Wealth and Inheritance for Children in India
Expert Opinions
Legal experts have welcomed the ruling as a step toward “corporate governance clarity.” According to practitioners, the judgment prevents misuse of criminal law in corporate disputes while ensuring genuine fraud cases are investigated by specialized agencies.
Conclusion
The Supreme Court’s ruling marks a turning point in corporate fraud litigation under the Companies Act. By barring private complaints and directing individuals to approach NCLT for SFIO-led investigations, the Court has reinforced the principle of centralized, expert-driven enforcement.
This judgment will likely reduce frivolous litigation, strengthen corporate governance, and ensure that fraud cases are handled with the seriousness they deserve.
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