1 IN THE HIGH COURT OF KARNATAKA AT BANGALORE DATED THIS THE 18 TH DAY OF JANUARY, 2014 BEFORE THE HON BLE MR. JUSTICE H.N. NAGAMOHAN DAS Crl.P.4731/2013 BETWEEN : -------------- Crl.P.No.4731/2013 C/W Crl.P.No.5086/2013 1.M/S COMPOSITE INVESTMENT PVT. LTD. No.30/1, S.J.TOWERS, 3 RD FLOOR, MISSION ROAD, BANGALORE-560027 REPRESENTED BY ITS MANAGING DIRECTOR, SRI.SATISH KUMAR DUTT. 2.Sri K.SRINIVASA RAO, S/O LATE K.R.K.S. KAMESHWAR RAO AGED ABOUT 36 YEARS, ACCOUNTANT-CUM-COMPLIANCE OFFICER, M/S. COMPOSITE INVESTMENT PVT LTD No.30/1, S.J.TOWERS, 3 RD FLOOR, MISSION ROAD, BANGALORE-560027.... PETITIONERS (By Sri SHASHI KIRAN SHETTY.K, ADV.)
2 AND : -------- 1.STATE OF KARNATAKA THROUGH STATION HOUSE OFFICER, CHICKPET POLICE STATION REPRESENTED BY: SPECIAL PUBLIC PROSECUTOR, HIGH COURT OF KARNATAKA, BANGALORE-560001. 2.SRI.VISHWANATH.M.PUJARI S/O LATE MALAYYA, AGED ABOUT 61 YEARS, No.35, 4 TH FLOOR, UTTANMATH LANE, OPPOSITE TO KAHLEEL BUILDING, CHIKKAPET,BANGALORE-560053.... RESPONDENTS (By Sri B.J.ESWARAPPA, LEARNED GOVERNMENT PLEADER FOR R1 Sri C.H.HANUMANTHARAYA, ADV., FOR R2) CRL.P FILED U/S.482 CR.P.C WITH A PRAYER TO QUASH THE COMPLAINT IN MATTER BEARING P.C.R.NO.16622/12, PENDING ON THE FILE OF THE C.M.M., BANGALORE (ANNEXURE-A) AND ETC. Crl.P.5086/2013 BETWEEN : -------------- 1.M/S IL & FS FINANCIAL CENTRE
3 3 RD FLOOR, PLOT-C, G-BLOCK BANDRA KURLA COMPLEX BANDRA EAST, MUMBAI 400 051. REPRESENTED BY ITS CHAIRMAN RAVI PARTHASARTHY (A1). 2.RAMESH CHANDRA BAWA (A2) ADULT, MANAGING DIRECTOR & CHIEF EXECUTIVE OFFICER 3.HARI SHANKARAN (A3) ADULT, DIRECTOR 4.ARUN KUMAR SAHA (A4) ADULT, DIRECTOR 5.VIBHAV RAMPRASAD KAPOOR (A5) ADULT, DIRECTOR 6.SHAHAZAAD SIRAJ DALAL (A6) ADULT, DIRECTOR 7.MANU KOCHHAR (A7) ADULT, DIRECTOR 8.MILIND NARENDRA PATEL (A8) ADULT, DEPUTY MANAGING DIRECTOR
4 9.RAJESH KRISHNAPPA KOTIAN (A9) ADULT, EXECUTIVE DIRECTOR 10.SURINDER SINGH KOHLI (A10) ADULT, DIRECTOR 11.NEELAM JAYESH DESAI (A11) ADULT COMPANY SECRETARY 12.KALPESH MEHTA (A13) ADULT ADULT & PARTNER DELOITTE HASKINS & SELLS, 13.T G KRISHNAMURTHY (A12) ADULT ASSISTANT VICE PRESIDENT IL & FS SECURITIES SERVICES LTD., 14.SAMEER LIMAYE (A14) ADULT ASSISTANT MANAGER IL & FS SECURITIES SERVICES LTD., 15.NISHITH MEHTA (A15) ADULT,MANAGER IL & FS SECURITIES SERVICES LTD., 16.M V SUBRAMANIYAN (A16) ADULT,CONSULTANT
5 IL & FS SECURITIES SERVICES LTD., 17.NITHIN MALOP (A17) ADULT, MANAGER IL & FS SECURITIES SERVICES LTD., ALL THE ABOVE HAVING THEIR ADDRESS AT IL & FS FINANCIAL CENTRE, 3 RD FLOOR, PLOT-C, G-BLOCK, BANDRA KURLA COMPLEX, BANDRA EAST, MUMBAI-400 051. 18.JAIRAM SRINIVAS (A18) ADULT, VICE PRESIDENT IL & FS SECURITIES SERVICES LTD., 19.SHESHADRI IYENGAR (A 19) ADULT, BRANCH MANAGER 20.H DHARMARAJ (A 20) ADULT ASST BRANCH MANAGER PETITIONERS 18 TO 20 HAVING THEIR OFFICE AT M/S ILFS FINANCIAL SERVICES LTD BANGALORE BRANCH 51, STOCK EXCHANGE TOWERS I CROSS, J C ROAD BANGALORE 27.... PETITIONERS (By Sri.RAVI B.NAIK, LEARNED SENIOR COUNSEL FOR Sri SRIDHAR.G, ADV.)
6 AND : -------- 1.THE STATE BY CHICKPET POLICE STATION, BANGALORE 2.VISHWANATH M PUJARI AGED ABOUT 60 YEARS S/O LATE MALAYYA #35, 4 TH FLOOR, UTTARIMATH LANE (U M LANE), OPPOSITE TO KHALEEL BUILDING CHIKKAPET, BANGALORE 53....RESPONDENTS (By Sri.B.J.ESWARAPPA, LEARNED GOVERNMENT PLEADER FOR R1 Sri C.H.HANUMANTHARAYA, ADV., FOR R2 Sri B.SIDDESWARA, ADV., FOR R2) CRL.P FILED U/S.482 CR.P.C WITH A PRAYER TO QUASH THE PROCEEDINGS IN C.C.NO.10589/2013 PENDING BEFORE THE C.M.M., BANGALORE, IN SO FAR AS IT RELATES TO THEM AND ETC.. THESE PETITIONS HAVING BEEN HEARD AND RESERVED FOR ORDERS THIS DAY, NAGAMOHAN DAS, J PASSED THE FOLLOWING; O R D E R In these two petitions the petitioners are seeking to quash the proceedings in C.C. No. 10589/2013 pending on the file of Chief Metropolitan Magistrate at Bangalore.
7 2. Respondent No. 2 filed a private complaint under Section 200 Cr.P.C. before the trial Court inter alia contending that accused No.1 is a company engaged in the business of advancing the loans to individuals who are in the business of shares/equities, trading against securities held by such traders. In this connection the complainant availed loan facility from accused No.1 Company under agreements dated 10.03.2010, 03.11.2010 and 05.07.2011. The complainant contends that in terms of the agreements he maintained sufficient stock/margin relating to the extent of loan sanctioned by accused No. 1. It is contended that the complainant has paid the interest amount to accused No.1 without any single default. Without valid reasons accused No. 1 Company caused a notice on 11.05.2012 calling upon the complainant to pay the entire loan amount of Rs.1.95 Crores along with other charges failing which they would sell the shares/equities standing in the name of complainant. The complainant replied on 19.05.2012 inter alia contending that the total value of shares/securities standing in his name was much more than the outstanding loan amount payable to accused No.1 Company and
8 as such there was no need to sell the shares/equities. Further accused No.1 Company imposed a ban on trading by the complainant. Aggrieved by this the complainant filed a civil suit in O.S. No. 3885/2012 on the file of city Civil Court, Bangalore seeking an order of injunction restraining accused No. 1 from selling the shares/equities. Taking advantage of issuance of emergent notice by the civil Court accused No. 1 sold the shares/equities and caused huge loss to the complainant. It is contended that accused No. 1 company had misused the GPA executed by him, he was kept in dark and behind his back transactions were held by misusing the name of the complainant. The accused in collusion and with a malafide intention to cheat the complainant caused breach of trust resulting in heavy financial loss. Therefore he filed the private complaint for appropriate action against the accused. The jurisdictional Magistrate under the impugned order referred the complaint to the respondent police under Section 156(3) Cr.P.C. for investigation and report. Consequently respondent No.1 police registered the complaint against the petitioners in crime No.
9 170/2012 for the offences punishable under Section 34, 120-B, 418, 420, 477-A IPC. The police after investigation has now filed charge sheet. The jurisdictional Magistrate under the impugned order had taken cognizance of the offence and issued NBW. Hence, these petitions. 3. Heard arguments on both the side and perused the entire petition papers. 4. A perusal of the complaint and the charge sheet specifies that accused Nos. 21 and 22 are involved in the business of brokering of shares and stocks of all kinds. In the instant case the complainant is a business man trading in shares and equities. The complainant, by entering into several agreements with accused No.1 Company availed loan and authorized them to buy or sell the shares through accused Nos. 21 and 22. There are no allegations against accused Nos. 21 and 22 that they have committed any fraud on the complainant. It is not the case of complainant that accused Nos. 21 and 22 in collusion with other accused cheated the complainant. The
10 only allegation against accused Nos. 21 and 22 is that after receipt of suit summons and notice in O.S. No. 3885/2012 these accused have informed the same to the other accused. Even if this allegation is accepted as true then no case is made out against accused Nos. 21 and 22. Further it is brought to the notice of this Court that the complainant is having business with these accused even now. Therefore proceedings against accused Nos. 21 and 22 are liable to be quashed. 5. Accused No. 1 is a company represented by its Managing Director. Accused Nos. 3 to 7 are the Directors, accused Nos. 8 and 9 are the whole time Directors, accused No. 10 is the Additional Director, accused No. 11 is the Secretary, accused No. 12 is Product Head, accused No. 13 is the Auditor, accused Nos. 14 to 17 are the authorized signatories to the agreements on behalf of accused No.1 Company, accused Nos. 18 to 20 are the persons responsible for dayto-day affairs and transactions of accused No. 1 Company. A reading of the complaint specifies that the entire allegations are made against
11 accused No. 1 Company. What is the specific role played by each of the other accused in committing the offence is not specified in the complaint. Further there are no specific allegations against accused No. 3 to 20 constituting an offence. Except vague, general and bald allegations that accused Nos. 3 to 20 are actively involved in the affairs of accused No.1 Company no specific details are forthcoming and there is no evidence on record. In the absence of specific allegations against accused No.3 to 20 the proceedings against them is nothing but abuse of process of law. Unnecessarily these accused Nos. 3 to 20 are dragged into criminal proceedings without any basis. When accused No.1 company represented by its Chairman and accused No. 2 the Managing Director are made as parties to the proceedings then there is no need for the presence of accused Nos. 3 to 20. Therefore the proceedings against accused Nos. 3 to 20 are liable to be quashed. 6. Sri. Ravi B. Naik, learned senior counsel for the petitioners relying on a judgment of the Supreme Court in the case
12 of Thermax Limited and others Vs. K.M. Johny and others, (2011) 3 SCC 412 contends that if there is a flavor of civil nature, same cannot be agitated in form of criminal proceedings. In the instant case the nature of allegations made in the complaint and the investigating material discloses that there is criminal angle to the controversy between the parties. Merely because the complainant has already filed a civil suit is not a bar for initiation of criminal proceedings. The nature of allegations made in the complaint and in the charge sheet requires to be enquired into by the criminal Court. Therefore the judgment of the Supreme Court referred to above has no application to the facts on hand. 7. For the reasons stated above, the following; O R D E R i. Crl.P. No. 4731/2013 is hereby allowed. ii. Crl.P. No. 5086/2013 is partly allowed.
13 iii. Proceedings against accused Nos. 3 to 22 in C.C. No. 10589/2013 on the file of Chief Metropolitan Magistrate, Bangalore are hereby quashed. iv. The trial Court to proceed against the other accused in accordance with law. LRS. Sd/- JUDGE.