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TMI Blog2011 (8) TMI 1321X X X X Extracts X X X X X X X X Extracts X X X X ..... SEZs, irrigation contracts, relaxation/permission for real estate ventures, mines etc. besides payment of huge premium amounts paid in the shares and invested in the companies by such beneficiaries and the money so paid is nothing but corrupt money attracting Section 3 of the Prevention of Money Laundering Act, 2002. The investigation by the Income Tax authorities with respect to assessment orders of M/s. Jagathi Publications for the year 2008-09 shows huge unexplained cash credit. Similarly, huge escalated face value of shares to the extent of 35 times also was not accepted by the Income Tax authorities and respondent No.52 is directly or indirectly connected with some of the companies which are showing phenomenal growth and these facts make it necessary to ascertain the role of individuals/firms/public servants in the group companies of respondent No.52. keeping in view the scope of the public interest litigation as settled by the decisions of the Supreme Court referred to above, we have confined ourselves to the considerations of prima facie satisfaction and regard being had to the manner in which the investments in the group companies of respondent No.52 have been made vis- -vi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ailed to explain and substantiate the source and authenticity of the information relied upon. Even otherwise, the aspects sought to be contended in this writ petition are already under consideration in Takenup Writ Petition. We, therefore, decline to entertain Writ Petition No.6979 of 2011 and it is accordingly dismissed - HON'BLE NISAR AHMAD KAKRU, C.J. AND VILAS V. AFZULPURKAR, J. For the Appellant : Srinivas Dammalapati, Adv. in Writ Petition No. 6604 of 2011 and R.K.G. Bhatia, Adv. in Writ Petition No. 6979 of 2011 For the Respondent : G.P. for Industries and Commerce, B.P. Mohan Rao, Sr. Adv. for APIIC, G.P. for Revenue, Ponnam Ashok Goud, Adv. P. Keshava Rao, Adv., General, Challa Gunaranjan, Adv., Ch. Pushyam Kiran, Adv., Mahmood Ali, Adv., Challa Kondaram, Sr. Adv. for Challa Gunaranjan, Adv., S. Sri Ram, Adv., G.L.V. Ramana Murthy, Adv., Ghanta Rama Rao, Adv. C. Nageswar Rao, Adv. M. Rajesh, Adv., S. Maruthi Rao, Adv., Gaddam Srinivas, Adv., P.T.P. Sastry, Adv., Nagesh Bheemapaka, Adv., N. Naveen Kumar, Adv., K. Vivek Reddy, Adv., M.V. Durga Prasad, Adv. V. Pattabhi, Adv., P. Subhash, Adv. M.N. Narasimha Reddy, Adv. Bharadwaj Associates, in Writ Petition No. 794 of 2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... registered as Taken-up Writ Petition No.794 of 2011 . There are two more Writ Petitions No.6604 and 6979 of 2011 claiming similar relief almost on similar assertions, and we propose to dispose of all the three together by this common judgment. 4. Proceeding in that direction, we would like to begin with Taken-up Writ Petition No.794 of 2011 , wherein it is averred that Dr. Y.S. Rajasekhara Reddy extended huge benefits in the shape of allotment of lands, mineral rights, licences, SEZs rights to develop ports all along the Eastern coast forming part of Eastern Andhra Pradesh apart from permission for star hotels and complexes in and around Hyderabad and other major cities in Andhra Pradesh. It is also averred that the corporates and individuals, who benefited from these official favours were in turn made to invest kickback amounts into several individual and corporate businesses of the then Chief 52 nd Minister s son Sri Y. S. Jaganmohan Reddy, 52 Respondent herein. It is also alleged that on account of the aforesaid Quid Pro Quo arrangement, the income of respondent No.52 rose from ₹ 11 lakhs in 2004 to ₹ 43,000 Crores by the time of his father s demise. 5. In the letter ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... posing the maintainability of this Taken-up writ petition. Some of them have endeavoured to justify the investments in the companies of respondent No.52 as commercial business decisions and have denied the receipt of any benefit from the Government of Andhra Pradesh or from anybody else. Respondent No.52 had earlier filed a counter affidavit only to the extent of maintainability without touching upon the merits of the allegations and had denied any violation of the Reserve Bank of India Act, FEMA or the Prevention of Money Laundering Act, 2002, contending further that the Enforcement Directorate is seized of enquiries with reference to the alleged violation and, as such, seeking investigation by CBI is only to unleash a political battle and to gain political advantage. 7. The learned Senior Counsel appearing for the respondents and the learned Amicus Curiae were heard on 12.07.2011 on the question of maintainability of the Writ Petitions. Among other things, there being involvement of substantial public interest, preliminary objection could not prevail on us and petitions were held to be maintainable, accordingly admitted to hearing by a detailed order. 8. When these matters were t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s ₹ 10/-, for a premium of ₹ 340/- each, in return for an official favour of allotment of Government land in an extent of Ac.598 at Nadargul Village, Ranga Reddy District. (d) M/s. Pioneer Infrastructure Holding Ltd., promoted by Sri Pratap Reddy of PENNA Group, is stated to have been allotted 5,55,555 shares, face value of which, is ₹ 10/-, for a premium of ₹ 340/- each, in return for an official favour of relaxation of Building Regulations for construction of a Star Hotel on Road No. 2, Banjara Hills. (e) M/s. Trident Life Sciences Pvt. Ltd., which belongs to the HETERO Group, is stated to have been allotted 13,889 shares, face value of which, is ₹ 10/-, for a premium of ₹ 340/- each, in return for an official favour of allotment of land in an extent of Ac.240 at Nakkapalli and Jadcherla Villages, Mahabubnager District, for establishment of SEZ. 10. Learned Amicus Curiae submitted that these investments are prima facie directly linked to the benefits received by the individuals/companies in the area of interest of their business through the official favours from the then Chief Minister. In other words, valuable State largesse was bestowed on in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2 or apprehends involvement of several members of the then Chief Minister s Cabinet. He referred to State Of Uttaranchal v. Balwant Singh Chaufal (AIR 2010 SC 2550) and placed reliance upon paragraphs 18, 163 and 164 and particularly, drew our attention to the ratio of Gurpal Singh v. State of Punjab [(2005) 5 SCC 136]. 14. We, however, feel that the decision in GURPAL SINGH s case dealt with locus standi of the petitioner in raising a dispute relating to service of an employee and sustainability of public interest litigation in a service matter. Para 163 relied upon refers to the decisions of the Supreme Court in Balco Employees Union (Regd.) v. Union Of India [AIR 2002 SC 350] as well as S.P. Gupta v. Union Of India [AIR 1982 SC 149] and particularly, the observations of the Supreme Court with respect to the public interest litigation, as mentioned, in the said decisions. 15. In fact, the decision in State Of Uttaranchal s case (3 supra) is the latest decision of the Supreme Court with respect to Public Interest Litigation jurisdiction and the manner and situations in which Public Interest Litigation can be entertained by the Courts. In our order dated 12.07.2011, we have already ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ures of assets of respondent No.52 for the year 2003-2004 and the latest figures, which are given in the letter shows very high growth of income and takes serious objection to the figures in the letter of the petitioner on the ground that these figures are irresponsibly given without verifying the returns filed by respondent No.52. He submits that when the allegation of phenomenal increase in the assets is made by the petitioner, who has written the letter, it has to be presumed that he is in knowledge of the figures reflected in the returns of respondent No.52. He, therefore, submits that in reality the returns of respondent No.52 for the year 2003-2004 show total assets to the tune of ₹ 20.67 Crores and not ₹ 11.02 lakhs, as alleged. He also submits that the book assets as per the year 2003-2004 have increased in the recent years only on account of disinvestments of shares by respondent No.52 in M/s. Bharathi Cements and thereby, the fixed assets of respondent No.52 by the time his father became the Chief Minister were ₹ 19.43 Crores with liabilities to the extent of ₹ 18.93 Crores and as such individual net worth was ₹ 1.73 Crores. For the subsequen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd also with regard to the benefits conferred on the individuals by the State, but the learned Senior Counsel pleads that he is not aware of the same. 22. So far as other contentions of the learned Senior Counsel explaining investments and businesses of respondent No.52 are concerned, though we had allowed the learned Senior Counsel to make submissions in detail, we are of the view that it would not be appropriate within the scope of the present writ petition to examine each and every allegation and to probe into the correctness, validity or genuineness of every investment and every business venture and to compare and verify as to whether the same is linked with any corresponding Quid Pro Quo benefit received by such investor from the State of Andhra Pradesh. We also feel that such investigation into every such investment could be impossible without reference to records, accounts, corresponding entries in the official records etc., and that would convert the scope of this writ petition into an investigative enquiry, which is not permissible. 23. Mr. L. Nageswara Rao, learned Senior Counsel appearing for respondent Nos.20 to 25, made primary submissions on behalf of one of the inves ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ough as per para 8 of their counter, they are not occupying any land. 29. Learned counsel for respondent No.49 also submits that the respondent is only an individual investor and has not received any benefits from the State of Andhra Pradesh. Writ Petition No. 6604 of 2011 30. Mr. D. Srinivas, learned counsel for the petitioners, made submissions in support of this writ petition by drawing attention of the Court to para 27 of the affidavit and particularly to the averment that the first petitioner has made a complaint to the Central Bureau of Investigation (CBI) in February, 2009, but no action was taken and thereafter, the first petitioner sent a complaint to the Anti Corruption Bureau (ACB) authorities of the State. The ACB authorities of the State are impleaded as fourth respondent, who have filed a counter affidavit and the learned counsel places reliance upon the following paragraph of the said counter affidavit: It is submitted that the allegations mentioned in the representation require a thorough probe/enquiry by different agencies of Central Agency, which has jurisdiction to investigate into all the offences and violations of various regulations of FEMA, SEBI and offences ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the conclusions in the order on some companies described as shell companies but had invested heavily through bank transfers in M/s. Jagathi Publications. He relies upon the conclusions of the assessment authority. We are, however, informed that an appeal against the said assessment is pending before the appellate authority and as such, the conclusions in the said order cannot be relied upon for any adjudication in this matter. 33. Learned counsel also submitted that one of the major investors, Mr. Nimmagadda Prasad, in the group companies of the sixth respondent was extended official favours by the State by allotment of 6,406.14 acres of land under G.O.Ms.No.1110, Revenue (ASSGN. VI) Department, dated 15.09.2008 for Vanpic Projects Private Limited, and under another G.O.Ms.No.1115 Revenue (ASSGN. VI) Department, dated 16.09.2008 another extent of Ac. 5451.06 cents was allotted and it is contended that on account of these huge allotments of thousands of acres of land all along the eastern coast to the said investor, he has Quid Pro Quo invested hundreds of crores of rupees in the group companies of the sixth respondent. 34. Learned counsel also placed reliance upon the annual repor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lowed this petition to survive in greater public interest and have appointed an Amicus Curiae, who ably assisted the Court throughout the hearing, and kept the petitioner Shri Shankar Rao, MLA, out of picture, so much so, we have neither sought any kind of assistance nor allowed him to participate in the proceedings of the Court. Regarding political rivalry, there is no denying that the movers of two writ petitions, out of three, are politicians, therefore, their bona fides are very seriously questioned by the respondents contending that these petitions owe their origin to the political vendetta. The contention needs to be appreciated in the light of the grievance urged in these petitions which suggests that a method was devised for a systematic swindling of the State exchequer by parting with government land through allotments, leases and licenses for various terms of duration, favouring a selected group of companies at throw-away prices and by financial misdeeds involving huge magnitude of Government largesse, corporate dealings including huge investments in lieu of disbursement and distribution of largesse, besides other benefits obtained by the investors from the State of Andhr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... record looked into or was it the status of the Chief Minister which worked as an impediment for the Director, expression of opinion is uncalled for in view of limited scope of the writ petition whether direction to register a crime is warranted or not. The contention that the petitioners could have approached CBI with a complaint is also not sustainable as CBI on its own cannot investigate any complaint except in accordance with Section 6 of the Delhi Special Police Establishment Act nor an FIR with the local police enabling them to investigate, especially when ACB authorities themselves in their counter affidavit have expressed inability to investigate, as quoted above. We, therefore, feel that the objections so raised by the learned Senior Counsel are not sustainable. 38. Referring to the prayer in this writ petition, wherein the petitioners are seeking consequential direction against the third respondent (CBI) to prosecute the sixth respondent under the provisions of the Prevention of Corruption Act, Prevention of Money laundering Act and other applicable penal laws, the learned Senior Counsel submitted that a reading of Sections 8, 9 and 13 of the Prevention of Corruption Act ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nter affidavits were filed by the State of Maharashtra and the Collector, and on the basis of the oral statements of the officers conveyed to the Assistant Government Pleader during the hearing, the writ petition came to be disposed of by the High Court directing to acquire the land and pay compensation to the first respondent/writ petitioner. The legality of that order was in question before the Supreme Court, when their Lordships laid down that in exercise of extraordinary jurisdiction the High Court is bound to take all relevant facts and circumstances into consideration, even in the absence of proper affidavit from the State and its instrumentalities and whether a case desires relief must be ascertained. It was further held that in a public law remedy, the relief could not be granted only on the ground that the State did not file counter affidavit opposing the writ petition. 40. Placing strong reliance on the above judgment, the learned Senior Counsel contended that the affidavit on behalf of the State together with production of relevant records is absolutely essential for this Court to consider the relief sought for in this writ petition, as in the absence of counter affidavi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hts (AIR 2010 SC 1476 = (2010) 3 SCC 571) as well as Secretary, Minor Irrigation And Rural Engineering v. Sahngo Ram Arya (AIR 2002 SC 2225 = (2002) 5 SCC 521) and submitted that the petitioners failed to prove the prima facie case and in view of the failure of the State to produce the records, this Court would not be in a position to adjudicate upon the writ sought for. 43. Learned counsel for the ninth respondent submitted that there is no specific allegation against his client and as such, there is no reason to include him in the array of parties. 44. Learned Standing Counsel for the fifth respondent Income Tax Department, also filed a counter and pointed out that the assessment order on which reliance is placed relates to M/s. Jagathi Publications, which is separately impleaded as seventh respondent herein and the same was already taken note of by us. 45. Petitioners in Writ Petition No.6604 of 2011 make allegations in para 9 of the affidavit on the following lines. In the year 2007-2008, the sixth respondent created a fictitious transaction of selling 82 lakh shares in M/s. Sandur Power Company Limited at ₹ 675/- per share to host of companies viz. M/s. ZM Infotech; M/s. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed Amicus Curie and the learned counsel for the petitioner have vehemently contended that it is evident from the records that shares, with face value of ₹ 10/-, of several companies owned and managed by respondent No.52 were allotted to several companies and individuals, who were beneficiaries of several official favours from the then Chief Minister by getting allotment of lands, development rights for ports/coastal line of Andhra Pradesh, commercial ventures in and around Hyderabad and rest of the Andhra Pradesh etc. The shares of companies of respondent No.52 were subscribed by these beneficiaries at a premium rate of ₹ 340/- to about ₹ 1,500/- per share. 50. The learned Amicus Curie and the learned counsel for the petitioner have vehemently contended that instances given above from the counter affidavits of the respondents show that the allegations of the petitioners in paras 9 and 10 of the affidavit are correct in view of admission made therein by the sixth respondent. With regard to the contention of the learned Amicus Curiae, the learned counsel for the petitioners, the learned senior counsel and other counsel for the respondents, we are of the view that in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g huge investments as part of Quid Pro Quo arrangement for the largesse and benefit obtained by the investors from the State of Andhra Pradesh and all other aspects, and keeping in view the scope of the public interest litigation as settled by the decisions of the Supreme Court referred to above, we have confined ourselves to the considerations of prima facie satisfaction and regard being had to the manner in which the investments in the group companies of respondent No.52 have been made vis- -vis the benefits and official favours received by the investors from the Government of Andhra Pradesh, prima facie we are satisfied that there are violations of the provisions of the Indian Penal Code, Prevention of Corruption Act, Prevention of Money Laundering Act apart from criminal conspiracies and commission of other related offences involving huge magnitude of investment by local and foreign companies, some located in tax haven countries, for which registration of a crime and investigation to remedy the public interest which has suffered, is just and necessary by a well-equipped and specialized agency, having expertise to handle such situations and has the credibility. Analysing as such ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t Nos.7 to 10 and for a consequential direction for investigation into the irregularities and illegalities in investment of the companies of respondent No.7 by respondent Nos.2 to 6 and 11. In support of the relief sought, he submitted that G.O.Ms.No.318, dated 03.12.2008 has extended exemption from payment of seinorage fee in favour of VANPIC Projects and G.O.Ms.No.95, dated 27.03.2006 has granted limestone lease in favour of M/s. Raghu Ram Cements and submitted further that in his counter affidavit the seventh respondent accepts that he has taken over M/s. Raghu Ram Cements on 06.08.2008 and named it as M/s. Bharathi Cements. Learned counsel refers to the resolution of Board of M/s. Raghu Ram Cements dated 25.01.2007 to contend that the seventh respondent and his group have been allotted equity of 4,20,10,000 shares of M/s. Raghu Ram Cements and seeks to contend that even before the formal take over in 2008, the seventh respondent would control M/s. Raghu Ram Cements and on account thereof, G.O.Ms.No.95 was issued by the Government in favour of M/s. Raghu Ram Cements granting mining lease for limestone on an extent of 2,037.52 acres for a period of 30 years. 56. Learned counsel a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , the said counter affidavit explains every allegation made by the petitioner for which no rejoinder has been filed by the petitioner. Learned Senior Counsel, therefore, submitted that this writ petition ought to be dismissed on preliminary objections. 58. Learned counsel for the third respondent Securities Exchange Board of India (SEBI) has filed a counter affidavit stating that none of the companies named are listed companies and even otherwise there is no material before SEBI to take action under Section 11 of the SEBI Act. 59. Learned counsel for the eighth respondent adopted the submission of the learned Senior Counsel, referred to above and contended that no relief should be granted against the eighth respondent. 60. We have considered the submissions. So far as the deficiencies in the affidavit and verification of the affidavit and the bonafides required of a petitioner, who approaches the Court in public interest, are concerned, the objections raised by the learned senior counsel appear to be tenable. The petitioner himself states in para 10 of the affidavit that he is aware of Taken-up Writ Petition No.794 of 2011 and Writ Petition No.6604 of 2011 pending before this Court ..... X X X X Extracts X X X X X X X X Extracts X X X X
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