2019 (5) TMI 1712 - HC - Indian Laws

Illegal Mining - Territorial Jurisdiction - cause of action arose within various places of Uttar Pradesh - Basic imputation is that huge money was amassed by the applicants by indulging in illegal mining in and around places at district Saharanpur - HELD THAT - It is apparent that proceeding has been initiated against the applicants by moving complaint before the Special Court (Companies Act) Dwarka - Delhi - which inter-alia involves allegations of violation of various laws / rules of Companies Act, 1956. Exposure is made to various illegal omissions and commissions in the background of illegal land mining, creating false entity and entering into sham transactions in the complaint. Upon careful perusal of the summoning order, it is reflected that the same is based on material collected in investigation and the summoning order cannot be faulted with as a prima facie case for summoning is made out. Consequently, the prayer made for interference in the summoning order dated 24.01.2019 is refused. Under facts and circumstances of the case, it is provided that in case the applicants move an appropriate application before the trial court seeking discharge within three weeks from today, the same shall be considered and decided on its merit by speaking order after affording opportunity of hearing to both the sides - no coercive action shall be taken against the applicants till the period of three weeks from today or till presentation of the application, whichever is earlier - Application disposed off.

Summary

Issues:
Jurisdiction of the High Court under Section 482 Cr.P.C. to quash the proceeding in a complaint case involving allegations under various sections of the Companies Act, 1956 and 2013.

Analysis:
The application sought to quash the proceeding in Complaint Case No.720 of 2017, initiated by the Serious Fraud Investigation Office under multiple sections of the IPC and Companies Act, 1956 and 2013. The objection to the maintainability of the application was raised on the grounds of jurisdiction, contending that the High Court lacked jurisdiction. However, the counsel for the applicants argued that the cause of action for the case arose in various places in Uttar Pradesh, emphasizing that the alleged crimes were committed extensively in different districts of Uttar Pradesh. The counsel relied on Section 177 Cr.P.C. to support the claim that the place of the crime determines jurisdictional rights. The absence of an express bar in the Companies Act or Cr.P.C. for the High Court's jurisdiction under Section 482 Cr.P.C. was highlighted, asserting that the scattered cause of action across Uttar Pradesh justified the High Court's jurisdiction.

The judgment further delves into the specifics of the allegations, emphasizing that the applicants were accused of amassing money through illegal mining in district Saharanpur, channelizing it through non-existing entities to purchase sugar mills at lower prices in auctions held in Lucknow. The interconnected nature of the alleged crimes across various districts in Uttar Pradesh was highlighted, indicating that the auction purchase in Lucknow was just a part of the larger scheme involving money laundering and illegal activities in different locations. The judgment also addressed the objections raised regarding the investigation, with the applicants claiming shoddy investigation practices including recording statements of deceased individuals.

Regarding the merits of the case, the counsel for the applicants argued that they were innocent purchasers of the sugar mills and were being made scapegoats to cover up the misdeeds of high officials. The counsel also raised concerns about the complainant being the investigating officer and highlighted alleged flaws in the investigation process. However, the Additional Solicitor General countered these arguments, asserting that ample evidence existed against the applicants for various offenses related to illegal gains and money laundering. The judgment concluded that the summoning order was based on material collected during the investigation, indicating a prima facie case for summoning the accused.

Ultimately, the High Court refused to interfere with the summoning order but allowed the applicants to seek discharge by filing an appropriate application before the trial court. The court provided a timeline for the applicants to file the discharge application and specified that no coercive action would be taken against the applicants during this period. The judgment emphasized that the observations made in the order were specific to the application and would not impact the merits of the case beyond its scope.