9911796707
TMI Blog2022 (10) TMI 635X X X X Extracts X X X X X X X X Extracts X X X X ..... record for the petitioner and Smt. Anjali Agarwal, learned Standing Counsel for the Central Government and the learned Special Public Prosecutor for Enforcement Directorate representing the 1st respondent. 3. The facts of the case leading to filing of the present case are: In the year 2010, M/s. Best & Crompton Engineering Projects Ltd. (BCEPL) had availed credit facilities from a consortium of Banks led by the Central Bank of India. The Central Bank of India sanctioned Rs.120.00 Crores for fund based and non-fund based working capital limit to BCEPL on 21.10.2010 secured by immovable property as well as corporate guarantee. The Andhra Bank had sanctioned credit limit to a tune of Rs.60 Crores and the Corporation Bank sanctioned credit limit to a tune of Rs.120.00 Crores to BCEPL meeting a total requirement of Rs.300 Crores. The Central Bureau of Investigation (CBI), Bangalore office registered an FIR on 01.02.2016 against BCEPL under Section 120-B read with Sections 420, 468 and 471 IPC. The petitioner, who was the Managing Director of BCEPL, was arrayed as an accused. Pursuant to the aforesaid FIR, the ECIR (in question) was registered on 27.04.2016 by the Enforcement Director ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd charge sheet were civil in nature and the same would not attract the ingredients of a criminal offence. The case of the bank with respect to the FIR dated 01.02.2016 would only relate to commercial dispute for recovery of debt and grant of credit facility. The case was civil in nature and no criminal offence was made out against the petitioner. The grant of credit facility was purely for business purposes and the recovery of the same could only be related to dispute of civil nature and not otherwise and non-payment of credit facility ipso facto was not an offence under IPC or the PML Act. The respondents malafidely given colour of a criminal offence to a civil dispute. The complaint under PML Act was an abuse of process of law. 3.2. He further contended that the proceedings initiated under ECIR under PML Act were per se unwarranted and illegal. The investigation was done against the petitioner on the ipse dixit of the officers of the respondent and in complete defiance of the statute. Even as per the impugned complaint, the receivable position of the A2 company would amount to Rs.348.00 Crores with the trade receivable alone amounting to Rs.313 Crores out of which a sum of Rs.4 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... diction of the High Court would be determined if cause of action, wholly or partly, arose within its territorial jurisdiction. The Hon'ble Apex Court in Navinchandra N. Majithia v. State of Maharashtra (2000) 7 SCC 640 held that mere fact that FIR was registered in a particular state would not be a sole criteria to decide whether any cause of action had arisen even partly within the territorial limits of jurisdiction of another State. The aforesaid view was subsequently reiterated by the Hon'ble Apex Court in Rajendra Ramachandra Kavalekar v. State of Maharashtra (2009) 11 SCC 286. In view of the law laid down by the Hon'ble Apex Court, this Court had got jurisdiction to entertain the writ petition and prayed to allow the same by quashing the cognizance taken by the Principal Sessions Judge, Chennai in CC No.1 of 2021 against the petitioner. 4. The learned Special Public Prosecutor for Directorate of Enforcement, on the other hand, raised a preliminary objection of maintainability of the writ petition on account of territorial jurisdiction. 4.1. He contended that the entire cause of action in the present case had arisen in the State of Tamil Nadu and within the jurisdiction of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that in the facts of that case jurisdiction rested with this court and prayed to treat the issue of jurisdiction as preliminary issue before proceeding with the merits of the matter. 4.2. Even on the merits, learned Special Public Prosecutor submitted that 3 criminal cases vide RC No.4(E)/2016/CBI/BS&FC/BLR, dated 01.02.2016; FIR vide RC No.4/2017 dated 03.02.2017 and RC No.14/2018 dated 16.07.2018 were registered by CBI, BS & FC, Bangalore against BCEPL and their key officials based on the complaints preferred by the consortium of banks for the offences punishable under Sections 420, 468 and 471 IPC and other substantive offences. The allegation in the complaints were that the officials of BCEPL along with other persons hatched a criminal conspiracy amongst themselves at Chennai and Hyderabad and other places during the period from 2010 to 2013 in order to defraud/cheat consortium of Banks led by the Central Bank of India and obtained loan to a tune of Rs.364 Crores from the said consortium of bankers i.e. Rs.133.00 Crores from the Central Bank of India, Rs.71.00 Crores from the Andhra Bank, Chennai and Rs.159.00 Crores from the Corporation Bank, Chennai. In furtherance to the cr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rrium Industries Pvt. Ltd.) 4.4. He further submitted that the petitioner who was the Managing Director of BCEPL was also a Director in M/s.Velugu Power Solutions Pvt. Ltd. as well as in M/s.Mahal Hotel Pvt. Ltd., and vide his statement given under Section 50 of the PML Act stated that the investments made by M/s. Velugu Power Solutions into BCEPL were out of funds that came from various Sujana Group of Companies and the said investment was done to clear and regularize the Bank accounts of BCEPL, that the amount invested in BCEPL was Rs.32.33 lakhs, that he was the Managing Director of Mahal Hotel Pvt. Ltd., and the company was started with the purpose of purchasing an under construction Marriot Hotel at Chennai belonging to Viceroy Hotels Pvt. Ltd., Hyderabad, that the entire investment into Mahal Hotel Pvt. Ltd., was through Sujana Group of Companies. The investment of purchase of Marriot Hotel, Chennai from Viceroy Hotels Pvt. Ltd., was approximately Rs.130 Crores as per his remembrance, the purchase of Marriot Hotel, Chennai by Mahal Hotel Pvt. Ltd., did not go through as the financial feasibility was not working out and the deal was cancelled by mutual agreement made between ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s the Managing Director of M/s. BCEPL from 2012 onwards. He was also the Managing Director of M/s. Mahal Hotels Pvt. Ltd., the company which was used as conduit to place part of the proceeds of crime after layering through various fictitious companies which was finally integrated with M/s. Viceroy Hotels Ltd., in order to project the same as untainted. The investigation conducted under PML Act revealed that the proceeds of crime that were routed to M/s. Viceroy Hotels Ltd., through Mahal Hotel Pvt. Ltd., was originated from the diversion of bank loans obtained by BCEPL by cheating the consortium of banks. The petitioner herein executed Business Transfer Agreement on behalf of M/s. Mahal Hotels in the capacity of Managing Director with M/s. Viceroy Hotels. The petitioner herein had directly indulged and knowingly was a party and actually involved in the process or activity connected with the proceeds of crime. Even though loans were sanctioned in the year 2010, the utilization, diversion and laundering of bank loans happened during crime period from 2010 to 2013. The evidence gathered in the course of investigation under PML Act pointed towards the petitioner in playing a major role ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (2) of Article 226 the High Court may exercise its power conferred by clause (1) if the cause of action, wholly or in part, had arisen within the territory over which it exercises Jurisdiction, notwithstanding that the seat of such Government or authority or the residence of such person is not within those territories. On a plain reading of the aforesaid two clauses of Article 226 of the Constitution it becomes clear that a High Court can exercise the power to issue directions, orders or writs for the enforcement of any of the fundamental rights conferred by Part III of the Constitution or for any other purpose if the cause of action, wholly or impart, had arisen within the territories in relation to which it exercises jurisdiction, notwithstanding that the seat of the Government or authority or the residence of the person against whom the direction, order or writ 'is issued is not within the said territories. 6. It is well settled that the expression "cause of action" means that bundle of facts which the petitioner must prove, if traversed, to entitle him to a judgment in his favour by the Court. In Chand Kour v. Partab Singh' Lord Watson said: "... the cause of act ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent was introduced to supersede the view taken by this Court in the aforesaid case. But as stated earlier, on a plain reading of clause (2) of Article 226, it is clear that the power conferred by clause (1) can be exercised by the High Court provided the cause of action, wholly or in part, had arisen within its territorial limits." 6.2 In Alchemist's case (4 supra), the Hon'ble Apex Court held that: "12. Before entering into the controversy in the present appeal, let the legal position be examined: Article 226 of the Constitution as it originally enacted had two-fold limitations on the jurisdiction of High Courts with regard to their territorial jurisdiction. Firstly, the power could be exercised by the High Court "throughout the territories in relation to which it exercises jurisdiction", i.e. the writs issued by the court cannot run beyond the territories subject to its jurisdiction. Secondly, the person or authority to whom the High Court is empowered to issue such writs must be "within those territories", which clearly implied that they must be amenable to its jurisdiction either by residence or location within those territories. 13. In Election Commission, India v. Saka V ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cannot apply to writs issuable under Article 226 which makes no reference to any cause of action or where it arises but insists on the presence of the person or authority 'within the territories' in relation to which the High Court exercises jurisdiction". Again, a question arose in Khajoor Singh v. Union of India [(1961) 2 SCR 528 : AIR 1961 SC 532]. A Bench of seven Judges was called upon to consider the correctness or otherwise of Saka Venkata Rao. The majority (Sinha, C.J., Kapoor, Gajendragadkar, Wanchoo, Das Gupta and Shah, JJ.) reaffirmed and approved the view taken by this Court earlier in Saka Venkata Rao and held that the High Court of Jammu & Kashmir was right in not entertaining the writ petition filed by the petitioner on the ground that it had no territorial jurisdiction. Speaking for the majority, Sinha, C.J., stated: "It seems to us therefore that it is not permissible to read in Article 226 the residence or location of the person affected by the order passed in order to determine the jurisdiction of the High Court. That jurisdiction depends on the person or authority passing the order being within those territories and the residence or location of the pe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of such person is outside the territorial jurisdiction of the High Court. The Committee feel that the High Court within whose jurisdiction the cause of action arises in part only should also be vested with such jurisdiction". 18. The legislative history of the constitutional provisions, therefore, make it clear that after 1963, cause of action is relevant and germane and a writ petition can be instituted in a High Court within the territorial jurisdiction of which cause of action in whole or in part arises. It may be stated that the expression 'cause of action' has neither been defined in the Constitution nor in the Code of Civil Procedure, 1908. It may, however, be described as a bundle of essential facts necessary for the plaintiff to prove before he can succeed. Failure to prove such facts would give the defendant a right to judgment in his favour. Cause of action thus gives occasion for and forms the foundation of the suit. The classic definition of the expression 'cause of action' is found in Cooke v. Gill, (1873) 8 CP 107:42 LJ PC 98, wherein Lord Brett observed: "'Cause of action' means every fact which it would be necessary for the plaintiff to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rm a part of cause of action. It is also well settled that in determining the question, the substance of the matter and not the form thereof has to be considered. 26. In Union of India & Ors. v. Oswal Woollen Mills Ltd. & Ors., (1984) 3 SCR 342 : AIR 1984 SC 1264, the registered office of the Company was situated at Ludhiana, but a petition was filed in the High Court of Calcutta on the ground that the Company had its branch office there. The order was challenged by the Union of India. And this Court held that since the registered office of the Company was at Ludhiana and the principal respondents against whom primary relief was sought were at New Delhi, one would have expected the writ petitioner to approach either the High Court of Punjab & Haryana or the High Court of Delhi. The forum chosen by the writ petitioners could not be said to be in accordance with law and the High Court of Calcutta could not have entertained the writ petition. In Kusum Ingots & Alloys Ltd. v. Union of India (UOI) & Anr., (2004) 6 SCC 254 : JT 2004 (Supp. 1) 475, the appellant was a Company registered under the Indian Companies Act having its Head Office at Mumbai. It obtained a loan from the Bhopal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y itself may not be considered to be a determinative factor compelling the High Court to decide the matter on merit. In appropriate cases, the Court may refuse to exercise its discretionary jurisdiction by invoking the doctrine of forum conveniens. (See Bhagat Singh Bugga Vs. Dewan Jagbir Sawhney (AIR 1941 Cal 670 : ILR (1941) 1 Cal 490), Madanlal Jalan Vs. Madanlal [(1945) 49 CWN 357 : AIR 1949 Cal 495], Bharat Coking Coal Ltd. Vs. Jharia Talkies & Cold Storage (P) Ltd. [(1997) CWN 122], S.S.Jain & Co. Vs. Union of India [(1994) 1 CHN 445] and New Horizons Ltd. Vs. Union of India [AIR 1994 Delhi 126]." (emphasis supplied) 22. In the above decision (Kusum Ingots and Alloys Ltd. case) of the Supreme Court, the Apex Court held that a High Court may refuse to exercise its discretionary jurisdiction by invoking the doctrine of "forum conveniens". Thus, there is no question of granting leave to file Writ Petition under Article 226(2) of the Constitution of India in case where a small fraction of cause of action may have arisen. In appropriate cases, the High Court may however refuse to exercise its discretionary jurisdiction by invoking the Doctrine of "Forum-Conveniens". 23. Wheth ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Pvt. Limited and three others), by judgment dated 11.11.2020 that, even though a part of cause of action arises in one Court and the major part of cause of action had arisen within the jurisdiction of the other Court, the petition is not maintainable before the Court where the small part of cause of action had arisen." 6.4 The High Court of Madras in Karthi P. Chidambaram and Ors. Vs. Superintendent of Police held that: "12. Once an FIR is filed, it is mandatory for the Investigation Agency to send the copy of the FIR to the Magistrate/Special Court having jurisdiction. The Court which monitors the actions of the investigating agency and also addresses/redresses the grievances, if any, of either the accused or the investigating agency as per the code of Criminal Procedure. In matters pertaining to all criminal investigations/proceedings arising therefrom, it is the High Court which has the supervisory jurisdiction over the said jurisdictional Court monitoring/supervising the investigation, which would exercise the jurisdiction either under Article 226 or 227 of the Constitution of India and under Section 482 of the Code. 13. As already conclusively held by the Hon'ble Sup ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eat of that authority is outside the territorial jurisdiction of this Court. But, the cause of action which must arise in Kerala for issuing the writs of certiorari or prohibition, must relate to the commissions or omissions of an inferior court or Tribunal amenable to the writ jurisdiction of that court and not that of a private party. This Court cannot judicially review the actions of the first respondent therein (the complainant concerned) and that if a complainant files any complaint before any court it may do it rightly or wrongly and the complainant in a complaint alleging offence under Section 138 of the Negotiable Instruments Act, being a private party is not amenable to the writ jurisdiction of this Court under Article 226 and therefore, this Court cannot judicially review the actions of such a complainant by invoking the powers conferred under Article 226 of the Constitution of India. The other point that was considered by the Full Bench was as to whether the court could judicially review the action of the Magistrate in taking cognizance of the offence under Section 190(1)(a) read with Section 200 of the Cr.P.C and in issuing process under Section 204 Cr.P.C It was found ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mendment Act, 1963, in view of the decisions of the Apex Court in Election Commission, India v. Saka Venkata Subba Rao ((1953) S.C.R 1144), Rashid v. I.T Investigation Commission ((1954) S.C.R 738), Lt. Col. Khajoor Singh v. Union Of India & Another (AIR 1961 SC 532) and Collector of Customs v. E.I Commercial Co. (AIR 1963 SC 1124). The result of the above decisions was that Writ Petitions under Art.226 against the Union of India were maintainable only in the High Court of Punjab, as at the relevant time the territory of national capital was under the jurisdiction of the said High Court. The High Courts of Madras and Assam took a different view that if part of the cause of action arose within the respective States, writs could be issued to the Union of India by them. To get over the above decisions of the Apex Court and make the law in tune with the decisions of the above High Courts, the amendment was introduced. Art.226 was drastically amended by Constitution 42nd Amendment Act, 1976. The original position was substantially restored later, by the Constitution 44 Amendment Act, 1978. In view of clause (2) of Art.226, if part of the cause of action arose in the State, writ could be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the Kerala High Court takes cognizance and proceeds with the trial. So, the observation in Krishnakumar Menon's case, concerning the jurisdiction of the High Court under Article 226 of the Constitution of India, does not lay down the correct legal position, as far as private complaints are concerned. Even if the cause of action for the complaint under S.138 of the Negotiable Instruments Act arose in Kerala, the Kerala High Court cannot interfere with the proceedings before a criminal court, outside the jurisdiction of this Court." 9. In the present case also the learned senior counsel for the petitioners placed reliance upon the decision of the Hon'ble Supreme Court reported in Navin Chandra N. Majithia's case (1 supra) to contend that from the provision in clause (2) of Article 226 it is clear that the maintainability or otherwise of the writ petition in the High court would depend on whether the cause of action for filing the same arose, wholly or in part, within the territorial jurisdiction of the Court. 10. This Court also agrees with the view taken by the Kerala High Court as the present case has reached the stage of completion of investigation and entered the stage ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
