2022 (5) TMI 1457 - HC - Indian Laws

Seeking grant of Interim stay - no-application of mind - Section 156(3) of Code of Criminal Procedure - HELD THAT - It seems that Magistrate was influenced by the lengthy complaint placed before him and arrived at a conclusion that there was a diversion of huge monetary funds to the tune of Rs. 300 crores and the money was transferred to other country i.e., Mauritius. Admittedly, it was only allegations in the complaint and except bare words of the complainant there was no other material before the Magistrate to form such an opinion as such, there is merit in the submissions of learned Senior Counsel Mr. Rohatgi that the Magistrate without applying his mind passed mechanical order under Section 156(3) of Code of Criminal Procedure. The complaint reveals that the Respondent No. 2 had purchased 800 shares in two lots by opening Demat account from Dadar and this was solitary transaction of the Petitioner. As such, the claim of the Respondent no. 2 that he was regularly trading in shares is falsified. It is also difficult to believe that the Respondent No. 2 complainant was in a position to study the balance sheet of the Petitioner for a past several years in a very limited span of purchasing the shares and lodging the report to the Magistrate so as to arrive at a conclusion that the Petitioner Company has siphoned the amount and played mischief. There is also merit in the submissions of learned Counsel appearing for Petitioners that though it was alleged in the complaint that one Mr. Harish Fabiani had obtained loan and misutilized the loan amount, the document placed on record and relied on by Mr. Rohatgi, learned Senior Counsel demonstrates that the said loan was repaid. The lodgment of the complaint against the Petitioners and continuity of the proceedings, is an abuse of process of law. Thus, these are the fit cases for exercising inherent powers of this Court under Section 482 of Code of Criminal Procedure, 1973 to secure the ends of justice - Petition allowed.

Issues Involved:
1. Quashment of the order dated 07th April 2021 by the Judicial Magistrate First Class, Wada.
2. Quashment of the FIR bearing Crime No. 0129 of 2021 dated 13th April 2021.
3. Allegations of malafide intent and lack of jurisdiction.
4. Non-compliance with procedural requirements, including the absence of an affidavit.
5. Allegations of financial misdeeds and fraud by the petitioner company.

Issue-wise Detailed Analysis:

1. Quashment of the Order Dated 07th April 2021 by the Judicial Magistrate First Class, Wada:
The petitions filed under Article 226 of the Constitution of India and Section 482 of the Code of Criminal Procedure, 1973, sought the quashment of the order dated 07th April 2021 passed by the Judicial Magistrate First Class, Wada. The petitioners argued that the Judicial Magistrate passed the order under Section 156(3) of the Code of Criminal Procedure without application of mind. The complaint was submitted by Respondent No. 2, who had invested in the shares of the petitioner company, alleging the company caused loss to its shareholders with an oblique object. The court observed that the Magistrate was influenced by the lengthy complaint and arrived at a conclusion without sufficient material, thus passing a mechanical order.

2. Quashment of the FIR Bearing Crime No. 0129 of 2021 Dated 13th April 2021:
The petitioners challenged the FIR registered against them, arguing that the complaint leading to the FIR was malafide and part of similar attempts made earlier to extract money from the petitioners. The court noted that the FIR was registered based on a complaint that appeared to be malafide and deficient, lacking a proper affidavit as required by law. The court found that the complaint did not satisfy the requirements laid down by the Supreme Court in Priyanka Srivastava Vs. State of U.P. and other judgments, leading to the conclusion that the FIR should be quashed.

3. Allegations of Malafide Intent and Lack of Jurisdiction:
The petitioners argued that Respondent No. 2, a resident of Dadar, Mumbai, shifted to Biloshi, Wada, with a designed motive to select the jurisdiction of the Wada Court. The court observed that the respondent's actions raised suspicion about the bonafide of the complaint, as the respondent purchased shares and immediately lodged a complaint within a short period. The court found that the respondent's actions were indicative of an attempt to foist jurisdiction on the Magistrate at Wada, and there was no part of the transaction undertaken within the jurisdiction of the Magistrate at Wada or District Palghar.

4. Non-compliance with Procedural Requirements, Including the Absence of an Affidavit:
The petitioners contended that the complaint was not supported by an affidavit, a prerequisite as per the provisions of law and judgments of the Supreme Court and the High Court. The court found merit in this submission, noting that the complaint lacked the necessary affidavit, making it defective. The court referred to the Supreme Court's observations in Priyanka Srivastava, emphasizing that complaints must be supported by an affidavit to ensure responsibility for allegations and to prevent pervert litigations.

5. Allegations of Financial Misdeeds and Fraud by the Petitioner Company:
The complaint alleged that the petitioner company siphoned funds and caused financial loss to its shareholders. The court observed that the allegations were primarily based on information in the public domain since 2018-2019, and the respondent purchased shares in 2021 despite being aware of these allegations. The court found that the complaint lacked specific material to support the allegations and that the respondent's actions appeared to be part of a designed motive to harass the petitioners. The court also noted that the complaint was a replica of material filed in a complaint before the Delhi High Court, raising further suspicion about the bonafide of the respondent.

Conclusion:
The court concluded that the complaint and the FIR were malafide, deficient, and an abuse of the process of law. The court exercised its inherent powers under Section 482 of the Code of Criminal Procedure to quash the complaint and the FIR, securing the ends of justice. The petitions were allowed, and the rule was made absolute.

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