Madras HC Sets Aside Order Sending Company-Funds Probe To ACP, Says Magistrate Cannot Choose Investigating Officer

The second respondent alleged that the petitioner had taken control of her company’s business and banking materials in connection with a proposed investment, misused company and personal accounts, and coerced a transfer of company property.

The police investigated the allegations under Sections 406, 420 and 120B IPC and filed a closure report classifying the case as “Mistake of Fact”.

The complainant filed a protest petition. The Magistrate declined to accept the closure report and directed further investigation by the Assistant Commissioner of Police, personally or through another investigating officer, within 60 days.

The petitioner challenged that order in revision.

Under Section 401(2) CrPC, corresponding to Section 442(2) BNSS, a person prejudicially affected by a revisional order must be given an opportunity to be heard; the absence of a general right to participate before the Magistrate does not, by itself, bar revision.

On receipt of a police final report, a Magistrate may accept it, disagree and take cognizance where grounds exist, or direct further investigation; that discretion must be exercised judicially with due consideration of the record.

Under Section 173(8) CrPC, corresponding to Section 193(8) BNSS, a court may direct further investigation, but a Magistrate may not specify a particular officer or rank to conduct it.

On receipt of a police final report, a Magistrate may accept it, disagree and take cognizance where grounds exist, or direct further investigation; that discretion must be exercised judicially with due consideration of the record.

The Court held the revision maintainable because the impugned order directly affected the petitioner, notwithstanding the absence of a right to be heard before the Magistrate at the protest-petition stage.

On the merits, it found that the Magistrate had not adequately considered material cited in the final report, including the acknowledgment recording the return of cheque leaves and banking materials, statements already recorded, and relevant banking and property-transaction documents.

The Court also considered the delay in the complaint and the surrounding Income Tax proceedings relevant circumstances, though delay alone could not determine the matter.

Separately, it held that directing the Assistant Commissioner of Police to investigate personally or appoint another officer impermissibly prescribed the investigator and rank, contrary to *Hemant Dhasmana*.

It concluded that the Magistrate’s order involved non-consideration of relevant material and an erroneous exercise of jurisdiction.

The Criminal Revision Case was allowed, and the Magistrate’s order dated 25 November 2025 was set aside; no order as to costs was made.