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TMI Blog2002 (10) TMI 810X X X X Extracts X X X X X X X X Extracts X X X X ..... their respective submissions alleging that a prima facie case under Sections 420/406/468/471/421/120B of the Indian Penal Code having been established, the extraordinary power under Section 482 of the Code should not be exercised at this initial stage of investigation. 2. Before entering into the details of the arguments, I deem it proper to point out how these cases were registered. 3. First case was started on the basis of a complaint lodged by one Gobindalal Bhattachrya of 180/1, Pasupati Bhattacharjee Road, P. S. Behala, Calcutta-700 041 with the Inspector-in-Charge of Behala P. S. alleging that his relative Soumen Bhattacharya along with Johnny Sadhukhan and Pradip Pal being the authorised agents of the Company of the present petitioner came to the residence of the complainant in the month of August, 2000 and showed prospectus of the Company and allured him to invest a sum of ₹ 5,000/- which was collected on the basis of A/c. Payee Cheque after issuing Kutcha receipt. Again on 9th March, 2001, those persons came to the complainant and allured him to invest a further sum of ₹ 1,00,000/-. All those amounts were invested for a period of four years. The certific ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ome of the depositors and the allegations made therein are almost the same as indicated in respect of Behala P. S. Case No. 222 dated 13-6-2001. 6. The fourth case was started in respect of Dhaniakhali P. S. Case No. 45 dated 30-6-2001 at the instance of some of the depositors having the same allegations of cheating and fraud, etc. The fifth case was started in respect of Airport P. S. Case No. 102, dated 23-7-2001 at the instance of selfsame allegations. 7. The sixth case was started at the instance of a few depositors, being Ghola P. S. Case No. 4 dated 7-1-02. In the said case, it has also been alleged that other depositors were practically cheated on the basis of manufactured documents containing false and misleading statement. 8. In course of investigation of the cases, a prayer was also made by the Investigating Agency for seizing of the Bank Accounts of the Company and by an order dated 21-6-2001 passed by the learned Sub-Divisional Judicial Magistrate, Alipore in Behala P. S. Case No. 222 dated 13-6-2001, all the Bank Accounts of the Company were seized. Subsequently, on the prayer of the Investigating Agency, the learned Sub-Divisional Judicial Magistrate, Hooghly ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the said descriptions and accordingly lodged the complaints alleging that they have been cheated, though, in fact, no such occasion has arisen as yet. 12. The learned counsel further pointed out that the said Company M/s. Tubro Infotech Ltd. is a Public Ltd. Company within the meaning of Companies Act, 1956 and its registered office is at village Dappar, District-Patiala, Punjab and its Head Office is at SCO -- 12-13, Sector-90, Chandigarh. It is also pointed out that the said Company is a manufacturing company and was promoted with the help of Small Scale Industries Development Bank of India. The learned counsel accordingly, contended that the said company never indulged in any financial activities or banking activities and its main activities are for manufacturing of steel, flori-culture, bio-technical products, food processing, publishing newspapers and general trading. The learned counsel pointing out the balance-sheet of the Company for the year 1998-2000 contended that there was a net profit of ₹ 3,26,00,000/- and there are reserves surplus of the Company at present. 13. The learned counsel for the present petitioner further contended that immediately after pro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sible to issue relevant certificate, etc. due to the seizure of the relevant documents and papers by the Police in course of Investigation of these cases. The freezing of the account and seizure of the documents and sealing of the offices of the Company created a fear psychosis amongst the general public and the investors resulting into filing of these false and frivolous cases. 18. The learned counsel for the petitioner also contended that due to freezing of the bank accounts it has not been possible on the part of the Company to fulfil its financial commitments as promised to the investors. Side by side, the media hype generated by a civil business house of West Bengal caused panic among the general public and created a false sense of insecurity about the possibility of non-payment by the Company. So, it is pointed out that non-payment by the Company is mainly due to freezing of the bank accounts and these cases are simply outcome of the fear psychosis generated on account of media hype. The learned counsel for the petitioner, accordingly, contended that there is no substance in the five complaints made by the complainants and there exists simply an indication that the petitio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... these cases on the basis of filing applications in different Courts of Chandigarh and Madras. All the Courts turned down the prayer of the present petitioner keeping in view the seriousness in the allegations. It is also pointed out that this Court also rejected the prayer of the present petitioner for anticipatory bail in connection with Behala P. S. Case No. 222, dated 13-6-01. So, it is argued that the seriousness of the offence and the fact that crores of rupees have been collected from the general public without any authority of law, justify starting of these cases, and, hence, for the protection of the investors, investigations are required to be continued. It is also contended that if no material is collected in course of investigation, there would not be any difficulty in filing the final report against the present petitioner absolving him from the allegations made in the complaints. 23. The learned counsel for the State placing reliance on the celebrated decision in the case of King Emperor v. Khwaja Nazir Ahmad, , contended that there is a statutory right on the part of the police to investigate the circumstances of an alleged cognizable crime without requiring any aut ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ble offence should not be quashed. 27. In the case of Rupan D. Bajaj v. Kanwar Pal S. Gill, (1995) 4 Crimes 171 : (1996 Cri LJ 381) (SC), the Apex Court held that at the stage of quashing an FIR or complaint, the High Court is not justified in embarking upon an enquiry as to the probability, reliability or genuineness of the allegations made therein. 28. It is also argued on behalf of the State that the power under Section 482 of the Code of Criminal Procedure, 1973, should be exercised very sparingly with circumspection and that too in the rarest of rare cases as held by the Supreme Court in the case of State of Kerala v. O. C. Kuttan, (1999) 1 Crimes 104 (1999 Cri LJ 1623) (SC). 29. So, after scanning the materials on record and the circumstances, it is argued that since the FIR discloses a cognizable offence and the investigation is in progress, quashing of the same should not be allowed. 30. It is also argued that for the violation of SEBI Act a case has already been started by the SEBI before the learned Chief Metropolitan Magistrate, Calcutta and is still in progress. Similarly, these complaints also indicate that the present petitioner and his Company committed a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... respect to the shares or debentures; or (b) in relation to shares or debentures which were not offered to the public. If any person acts in contravention of the provisions of this sub-section, he shall be punishable with fine which may extend to five thousand rupees. 34. So, if any person acts in contravention of the said provision, he shall be punished with fine which may be extended to five thousand rupees. Section 63 of the Act relates to criminal liability for mis-statements in prospectus and Section 68 of the Act is with regard to penalty for fraudulently inducing persons to invest money. The punishment imposed under Section 68 of the Act is imprisonment for a term which may extend to five years, or with fine which may extend to ten thousand rupees, or with both. 35. So, it appears that SEBI has already taken steps against the petitioner and his Company for non-compliance of certain provisions of the Companies Act. But it is to be noted that in most of the complaints in the present cases, the allegation of preparation of false documents, fraudulent transaction, cheating, etc. are based on the allegations of violation of the provisions of the Companies Act indicat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... circumvention is applicable in a case of this nature. This old doctrine based on the idea that what is not permitted to be done directly cannot be done in an indirect way. Any attempt to circumvent a law by an indirect process will yield an impression that it is not violated or contravened directly. The acts of commission of the alleged offence under the provisions of the Companies Act as discussed hereinabove are non-cognizable under the provisions of the Code of Criminal Procedure, and cannot be investigated into by merely changing the lexical character and describing the same as offences under Section 417 or 420 of the Indian Penal Code. If the investigation as proposed to be done in all the six cases is allowed to continue, it will undoubtedly lead to disastrous conclusion at the detriment of the petitioner. 38. In this connection the argument made by the learned counsel for the petitioner as regards double jeopardy is also taken care of. It appears that the learned Chief Metropolitan Magistrate has already taken cognizance of the offences coming within the purview of Sections 56(3), 63 and 68 of the Companies Act on the basis of the complaint filed by SEBI. It is already i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as outside West Bengal. So it cannot be said that the payments were not made intentionally or with some fraudulent intention. It was an impossibility on the part of the petitioner to honour his commitments to the public at large and the common law principle of doctrine of impossibility of performance is applicable in the present case. 40. It is not impermissible in the realm of law to import the principle of civil law into a criminal case in exigencies of situation or if the fact situation so permits. So I do not find any reason to disapprove the argument as advanced by the learned counsel for the petitioner on the point of common law principle of the doctrine of impossibility of performance. 41. After careful scrutiny of the materials disclosed in the FIR and the discussions hereinabove made, I am of the view that excepting the apprehension of commission of the alleged offences under Section 417 or 420 or under Section 468/417 or 406 of the Indian Penal Code, there is no tangible material to indicate that actually commission of any offence has been disclosed. The principles adopted by the Apex Court in the decisions cited hereinabove as regards noninterference of investigati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ceeding was started despite the expressed bar provided under Section 624 of the Companies Act, 1956 clearly renders the impugned proceeding liable to be quashed. The heart and soul of the judgment of the Apex Court is best summarised in paragraph 62 which is quoted below : The sum and substance of the above deliberation results to a conclusion that the investigation of an offence is the field exclusively reserved for the police officers, whose powers in that field are unfettered so long as the power to investigate into the cognizable offence is legitimately exercised in strict compliance with the provisions falling under Chapter XII of the Code and the Courts are not justified in obliterating the track of investigation when the investigating agencies are well within the legal bounds as aforementioned. Indeed, a noticeable feature of the scheme under Chapter XIV of the Code is that a Magistrate is kept in the picture at all stages of the police investigation but he is not authorised to interfere with the actual investigation or to direct the police how that investigation is to be conducted. But if a police officer transgresses the circumscribed limits and improperly and illegall ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... way of criminal prosecution, resort cannot be had to the provisions of Indian Penal Code, as the criminal process has a very serious implication for the accused and, therefore, cannot be resorted to casually. In the present fact situation the de facto-complainants were not debarred from taking recourse to the provisions of the Companies Act, 1956. 46. Be that as it may, after a careful scrutiny of the materials on record, I come to a conclusion that no case was made out in the complaints, not to speak of any cognizable offence for the purpose of investigation, and as such, the FIRs and the subsequent investigations are liable to be quashed for the present. 47. It is to be kept in mind that sufficient amount was collected on the basis of the alleged private placement of debentures and many of the members of the public have not yet received their requisite certificates/receipts or relevant papers. Similarly on account of the freezing of the accounts no amount could be disbursed in their favour. It is mentioned that though none of the debentures have matured but in terms of the contract between the company and the subscribers, certain amounts are undoubtedly payable on account o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d by the Investigating Agency on the basis of the seizure list after making proper inventory thereof; (3) To take charge of all the equipments as well as records seized by the Investigating Agency on the basis of the seizure list after making proper inventory thereof; (4) To ensure that all the charges of the companies are suitably registered in the Office of the Registrar of Companies at Chandigarh and also to ensure that such charged assets are available for disposal in the event of the company committing any default in making payments to the subscribers/debenture holders; (5) To ensure regular payments of monthly returns are made to the debenture holders; (6) To ensure that payments against matured debentures are made to the holders thereof, unless such debenture holders agree otherwise with the company. (7) To take such other steps as may be deemed necessary for normal business transaction of the Company. (8) To take inspection of the assets of the company in West Bengal and other parts of India; (9) To take such other steps as may be deemed necessary to protect the interest of the debenture holders/subscribers. (9A) For the aforesaid purposes, the petit ..... X X X X Extracts X X X X X X X X Extracts X X X X
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