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TMI Blog2003 (3) TMI 552X X X X Extracts X X X X X X X X Extracts X X X X ..... roducts. It was ranked one of the leading software companies in the country. Its earnings were in foreign exchange. It has valuable customers, many of whom are Fortune 500 companies. In the year 2000, when the software market was at its peak, with a view to expand its activities further, it embarked on the purchase of overseas software companies one of which was Fortunate Technologies in which New Vision Investment Private Limited held a substantial number of shares. It allotted shares to New Vision India Private Limited for which it had the requisite permission from the concerned authorities. However, due to technological flaw, the company M/s. DSQ Software Limited was directed by SEBI to cancel the allotment. Due to the default committed by some of the brokers operating in the Calcutta Stock Exchange, the said exchange appears to have suffered a loss. A complaint has been lodged by the Secretary of the Calcutta Stock Exchange Association Limited alleging that the stock exchange had been cheated to the tune of Rs. 120 crores by the accused named in the complaint. While so, certain articles were published in dailies including the Business Line issue of October 3, 2002, alleging tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... umar Ray, Secretary of the Calcutta Stock Exchange Association Limited on September 24, 2002, for the alleged offences under sections 120B, 420, 409, 467, 468, 471, 477-A of the Indian Penal Code. During the period between February, 2001 and March, 2001, the writ petitioner and other accused persons and others being bankers, share brokers and directors of the Calcutta Stock Exchange, had entered into a criminal conspiracy to cheat the Stock Exchange and its investors as well as the common members of the public and in pursuance thereof fraudulently withdrew a huge sum of Rs. 120 crores and criminally misappropriated the same for their wrongful gain causing wrongful loss to the Calcutta Stock Exchange and its investors by preparing and using forged and fabricated documents as genuine. The petitioner in conspiracy with the other accused by indulging in circular trading artificially inflated the price of the shares of the DSQ Software Limited, DSQ Industries Limited and the shares of some other companies cheated small time investors of their hard earned money. They also cheated the Calcutta Stock Exchange Association to the tune of Rs. 120 crores by deliberately making default in payme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y, both the writ petitions are maintainable and this Court can very well quash the FIRs, which do not disclose any case against the petitioner. On the other hand, Mr. R. Shanmughasundaram, learned senior counsel for the respondents, would contend that this Court lacks territorial jurisdiction to quash both the FIRs, filed by the Detective Department of Kolkata. According to him, the cause of action had wholly arisen within the city of Kolkata, where the Calcutta Stock Exchange office is situated. Even on the merits, in the light of the conspiracy by the petitioner and other accused by indulging in circular trading, they cheated the Calcutta Stock Exchange Association and its investors, etc., to the tune of Rs. 120 crores. He further contended that a Joint Parliamentary Committee which conducted a full enquiry, submitted a report which shows that the petitioner is criminally liable for his wrongful doings culminating in a nationwide security scam having serious impact on the economy of the country. Even otherwise, according to him, as the matter is still under thorough investigation, absolutely there is no ground for interference. 7. I have carefully considered the rival submiss ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... egarding misappropriation and the wrongful gain by the accused alleged therein and the wrongful loss to the Calcutta Stock Exchange. The documents/materials placed by the respondents show that the petitioner in conspiracy with the other accused, by indulging in circular trading, artificially inflated the price of the shares of the DSQ Software Limited, DSQ Industries and the shares of some other companies, cheated gullible small time investors of their hard earned money and also cheated the Calcutta Stock Exchange Association to the tune of Rs. 120 crores by deliberately making default in payment for the shares purchased by them in circular trading. Mr. R. Shanmughasundaram, learned senior counsel for the respondents, has also brought to my notice constitution of Joint Parliamentary Committee, its full enquiry report etc. He also took me through the relevant extracts from the report which show that the petitioner is criminally liable for his wrongful doings culminating in a national wide security scam affecting the economy of our country. The materials placed before me clearly show that the cause of action had wholly arisen within the city limits of Kolkata where the Calcutta Stock ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essed into service the following statement made in para 26 : "26. In the case of H.V. Jayaram v. Industrial Credit Investment Corpn. of India Ltd. [2000] 99 Comp. Cas. 341, this Court considered the question where the offence under section 113(2) of the Companies Act, 1956 is completed. Taking note of section 113 and section 207 of the said Act this Court held, inter alia , that the cause of action for default of not sending the share certificates within the stipulated time would arise at the place where the registered office of the company is situated as from that place the share certificates can be posted and are usually posted." (p. 892) 11. After analysing the various provisions of the Code of Criminal Proce-dure, the contents of the FIR therein, and after holding that the Division Bench of the Bombay High Court based its decision on the sole consider-ation that the complainant had filed the complaint at Shillong in the State of Meghalaya, that the High Court did not consider the alternative prayer made in the writ petition to transfer the investigation to Mumbai police, and that the High Court also did not take note of the averments in the writ petition that filin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r decisions referred to by the learned senior counsel for the petitioners, namely, (1) R.P. Kapur v. State of Punjab AIR 1960 SC 866; (2) Madhav Rao Jiwajirao Scindia v. Sambhajirao Chandrojirao Angre AIR 1988 SC 709; (3) Sunil Kumar v. Escorts Yamaha Motors Ltd. [2000] Crl. LJ 174 (SC); (4) Hridaya Ranjan Prasad Verma v. State of Bihar [2000] Crl. LJ 2983; (5) Pepsi Foods Ltd. v. Special Judicial Magistrate [1998] 5 SCC 749; (6) Ashok Chaturvedi v. Shitul H. Chanchani [1998] 94 Comp. Cas. 401 (SC) relate to inherent power of this Court under section 482 of the Criminal Procedure Code, articles 226 and 227 of the Constitution of India. In the light of my conclusion that this Court has no territorial jurisdiction to go into the merits of the claim made by the petitioner, I am of the view that it is unnecessary for this Court to consider the same. Mr. R. Shanmughasundaram, learned senior counsel for the respondents, by pointing out a decision of the Supreme Court in State of Bihar v. J.A.C. Saldanna AIR 1980 SC 326, would contend that this Court is not justified in issuing any direction before the investigation is complete. It is settled law that the High ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the Bombay High Court in Ketan Vinaychandra Parekh v. State of West Bengal [Crl. Writ Petition No. 1712 of 2002, dated 19-12-2002]. The petitioner in that case, namely, Ketan Vinaychandra Parekh, is the first accused in FIR No. 476 of 2002 on the file of the Sub-Inspector of Police, Detective Department Central Kolkata. The learned senior counsel very much relied on the following observation of the Division Bench : "Para. 2. Admittedly Calcutta police are investigating the crime. This petition filed under article 226 of the Constitution of India and under section 482 of the Code of Criminal Procedure to quash the said FIR and a declaration that the bail order dated December 3, 2002, passed by the Court of Additional Chief Metropolitan Magistrate, 3rd Court, Mumbai, in Miscellaneous Application No. 72/Misc. of 2002 is not an interim order and the same will continue to remain permanently unless the bail is cancelled by a competent Court. Para 3. So far as first prayer is concerned, even assuming, we have the jurisdiction to entertain this petition, in the facts of this case, we cannot consider the prayer of the petitioner as the complaint is lodged in Calcutta; the Calc ..... X X X X Extracts X X X X X X X X Extracts X X X X
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