In exercise of its powers, the Central Government directed investigation into the affairs of Xioman Ltd., by officers of Serious Fraud Investigation as nominated by Director, SFIO. Accused were accordingly arrested and J

In 'Serious Fraud Investigation Office and Ors. v. Rahul Modi and Ors.', the Supreme Court held that, it could not be said that the prescription of period within which a report was to be submitted by SFIO under sub-section (3) of Section 212 was for completion of period of investigation and on the expiry of that period the mandate in favour of SFIO must come to an end. If it were come to an end, the legislation would have contemplated certain results including re-transfer of investigation back to the original Investigating Agencies which were directed to transfer the entire record under sub-section (2) of Section 212. In the absence of any clear stipulation, an interpretation that with the expiry of the period, the mandate in favour of SFIO must come to an end, would cause great violence to the scheme of legislation. If such interpretation was accepted, with the transfer of investigation in terms of Sub-section (2) of Section 212, the original Investigating Agencies would be denuded of power to investigate and with the expiry of mandate SFIO would also be powerless which would lead to an incongruous situation that serious frauds would remain beyond investigation. That could never have been the idea. The only construction which was, possible therefore, was that the prescription of period within which a report had to be submitted to the Central Government under sub-section (3) of Section 212 was purely directory. It cannot therefore be said that in the instant case, the mandate comes to an end and the arrest effected under the orders passed by Director, SFIO is illegal or unauthorized by law. In view of the above case, it can be said that extension of custody is justified.