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TMI Blog2024 (11) TMI 373X X X X Extracts X X X X X X X X Extracts X X X X ..... ice that the sale proceeds of such clandestine supply/sale of goods were collected in cash that has been utilized for purchase of unaccounted raw material like lime stone, packing material (PP bags), jewellery, paintings and other articles and also used for meeting travel expenses etc. It is pertinent to mention that FIR No. 24/2024 is primarily regarding fabrication of documents for ousting the Complainant and other class-I heir of Late KJS Ahluwalia from the Company by forging and fabricating the documents. Whereas the present FIR pertains to misappropriation of funds of the Company for personal use - The allegation in the present FIR is regarding misappropriation of funds of the Company and any person who has interest in the company can give the information to the Police and since these allegations constitute a cognizable offence, the Police has to investigate into the allegations. Material on record also indicates that there are several proceedings pending before the NCLT regarding transfer of shares of the Company and, therefore, it cannot be said that the Complainant does not have any locus standi to initiate the proceedings under IPC. It is well settled that High Court shoul ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... over-lap between the two FIRs does not mean that they arise out of same cause of action and, therefore, the second FIR would not be maintainable. The Petition is dismissed along with the pending application. - HON'BLE MR. JUSTICE SUBRAMONIUM PRASAD For the Petitioners Through: Mr. Dayanan Krishnan, Sr. Advocate with Mr. Vikram Singh, Mr. Ambar Tewari, Mr. Varun Agarwal, Mr. Advait Joshi, Advocates for P-1. Mrs. Rebecca John, Sr. Advocate with Mr. Vikram Singh, Mr. Ambar Tewari, Mr. Varun Agarwal, Mr. Advait Joshi, Advocates for P-2 to 6. For the Respondents Through: Mr. Yudhvir Singh Chauhan, APP for the State with Mr. Anvesh Chandila, Mr. Ujjwal Gupta, Mr. Nikhil Kunal, Mr. Vishal Kaushik, Mr. Sushant Chaudhary, Ms. Sunita Farswan and Mr. Dishant Tiwari, Advocates. Mr. Vijay Aggarwal, Mr. Rachit Bansal, Mr. Pankush Goyal, Mr. Kshitiz Garg, Mr. Shekhar pathak, Ms. Barkha, Mr. Sameer Chaudhary, Mr. Avik Sarkar, Advocates for the Complainant. Insp. Satish Kumar, PS EOW JUDGMENT 1. Petitioner has approached this Court seeking quashing of FIR No.47/2024, dated 29.04.2024, registered at Police Station Economic Offences Wing, for offences under Sections 409/420/467/468/471/477A/120 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eholding of KJS, but his shareholding has been reduced to 21% at the time of his death on 15.10.2021 due to various illegalities and fraudulent acts committed by the accused persons by way of illegal fraudulent allotment of shares. It is stated in the complaint that on the death of Late Sh. KJS Ahluwalia the shares of KJS Ahluwalia were to be transmitted to the Respondent No. 2 herein and other Class-I legal heirs of KJS Ahluwalia and a letter dated 01.02.2022 to this effect was sent to KJS on 09.02.2022 along with email dated 09.02.2022, however, despite receipt of the said letter the said shares have not been transmitted in the name of the Respondent No. 2 or any of the class-I heir of KJS Ahluwalia. iv. It is further stated in the Complaint that huge investments were bought into KJS Cements by Late Sh. KJS Ahluwalia ever since its beginning from 2007. It is stated that Late Shri KJS Ahluwalia contributed about Rs. 460 Crores in the form of investments and extended loans of over Rs. 130 Crore in KJS for its growth and expansion. It is stated that since the funds were being provided by Late Shri KJS Ahluwalia alone upon clear understanding that the shares held in individual names ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ut the cover of GST invoices. The Show Cause Notice further states scrutiny of incriminating documents, registers, computer hard discs, electronic data and devices found in the factory premises, registered office, residential premises and the premises of the dealers and transporters revealed large scale evasion of GST by KJS and accordingly further investigation has been carried out. It is stated that during the course of search and seizure operations conducted the premises of KJS statements of employees and top management officials were recorded which confirms under reporting of receipt and use of lime stone in the Standard Accounting Procedure (SAP) which is a software system application products in data processing (pithily put, it is an accounting software). The Show Cause Notice also indicates unrecorded manufacture and supply of cement and its entries in 600 SAP (quality/development) instead of 900 (production) SAP. It is further stated in the Show Cause Notice that during the search operations, stock taking was done by using professional support which revealed shortage of raw materials like coal, laterite and PP bags indicating clandestine manufacture and supply of clinker an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e requires investigation from the perspective of expert opinion also in the form of forensic examination. vii. Pursuant to the said Order, FIR No.47/2024 was registered which is sought to be quashed in the present Petition. 4. Learned Counsel for the Petitioner contends that FIR No.47/2024 could not have been registered because all the allegations contained in the said complaint forms a part of the Show Cause Notice dated 31.07.2023, issued by the Directorate General of GST. He states that till the said Show Cause Notice is not adjudicated upon and it does not attain finality, the present FIR could not be registered. He states that GST Act itself provides for penalties for offences under Sections 122, 132 of the GST Act and, therefore, the present FIR could not have been registered. It is further stated that the Complainant/Respondent No. 2 is not a shareholder of KJS and, therefore, she has no locus standi to prefer the complaint. It is contended by the learned Counsel for the Petitioner that the Complainant has misrepresented that she is a shareholder of KJS. Learned Counsel for the Petitioner further contends that a majority of the allegations in the present FIR are a repetition ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sant Vihar, South-west, New Delhi-110057 and 9. Smt. Indu Ahluwalia wife of Sh. Pawan Kumar Ahluwalia (Sr. No. 1) For cognizable offences of forgery committed by the accused persons in collusion connivance with each other. 1. I, Himangini Singh, daughter and Class-I legal heir of Late Shri KJS Ahluwalia, R/o: 75, Friends Colony West, New Delhi-110065, am one of the aggrieved persons and the victim of the fraud perpetrated by the accused persons. I am fully familiar and conversant with the complete facts and circumstances of the present matter and fully competent to lodge the present complaint. My father, Late Shri KJS Ahluwalia, unfortunately passed away on 15.10.2021 leaving behind the following three Class-I, Legal Heirs: i. Mrs. Manjula Ahluwalia (Wife) ii. Mrs. Himangini Singh (Daughter) iii. Mst. Naman Pal Singh (Minor adoptive son) Copy of the death certificate of Late Shri KJS Ahluwalia dated 22.10.2021 is annexed herewith and marked as Annexure-1. Copy of the Legal Heir Certificate is annexed herewith and marked as Annexure-2. 1. Sh. Pawan Kumar Ahluwalia; 2. Sh. Neeraj Kumar Verma; 3. Sh. Abha Kushal Singh Singhvi; 4. Sh. Kushal Singh Singhvi; 5. Sh. Sanjeev Bhalla; 6. Sh. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ocuments as part of the conspiracy hatched by them to ensure unlawful gain for themselves. 3. Pawan Kumar Ahluwalia, the Accused No. 1, is the Managing Director of KJS and younger brother of Late Shri KJS Ahluwalia. The accused persons led by Pawan Kumar Ahluwalia hatched a conspiracy to oust me and my family from the ownership and control of KJS (as defined herein). Neeraj Kumar Verma, the Accused No. 2, is the Whole Time Director of KJS. Abha Kushal Singh Singhvi, the Accused No. 3 is the Director of KJS and wife of Accused No. 4. Kushal Singh Singhvi, the Accused No. 4, is the whole-time director of KJS. Sanjeev Bhalla, the Accused No. 5, is the Director of KJS. Manoj Kumar Chaudhary, the Accused No. 6, is the Director of KJS. Sharad Mehta, the Accused No. 7, was the Director of KJ Sat the relevant time when the various cognizable offences were committed. Sanjay Verma, the Accused No. 8, was the Director of KJS at the relevant time when the various cognizable offences were committed. Indu Ahluwalia, the Accused No. 9, is the wife of Pawan Kumar Ahluwalia, the Managing Director of KJS and Accused No. 1. The Accused Person Nos. 2 to 8 have acted at the behest and on the instructio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uly, 2012. 6. The first cement plant of KJS Group having rated clinker production capacity of 6000 million tons per day and cement production capacity of 2.25 million tons per annum was commissioned in March, 2012. KJS launched its product under the brand name 'KJS Cement' in July,2012. 6. KJS is a closely held family company conducting its affairs in the nature of quasi-partnership. The accused persons have breached the principles of quasi-partnership by their fraudulent acts as described hereinafter. 7. KJS is a closely held family company conducting its affairs in the nature of quasi-partnership. The accused persons have breached the principles of quasi-partnership by their fraudulent acts as described hereinafter. 7. Late Shri KJS Ahluwalia was holding 26.52 % in KJS, out of the total issued, legal and valid shareholding of KJS. But his shareholding was reduced to 21 % at the time of his death on 15.10.2021 due to various illegalities perpetrated and fraudulent acts committed by the accused persons by way of illegal fraudulent allotment of shares. After the sad demise of Late Shri k.JS Ahluwalia, the said shares were to be transmitted to me, and a letter dated 01.02.202 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t activities. 10. Late Shri KJS Ahluwalia was induced by the sweet talks, representations and assurances/promises made by Pawan Kumar Ahluwalia and agreed to entrust Pawan Kumar Ahluwalia with authority and involve him in the affairs of KJS. Accordingly, representations and assurances/promises made by Pawan Kumar Ahluwalia he was given the responsibility of looking after the plant activities. 11. Pursuant to the investments and support provided by Late Shri KJS Ahluwalia, the Company kept growing at a very good pace. Late Shri KJS Ahluwalia contributed approx. over Rs. 460 Crores in the form of investments and extended loans of over Rs. 130 Crore ever since the Company was acquired by Late Shri KJS Ahluwalia and his family for the Company's growth and expansion. Since the funds were being provided by Late Shri KJS Ahluwalia alone upon clear understanding that the shares held in individual names of Pawan Kumar Ahluwalia and his family shall always inure to the benefit of all members of the family of Late Shri KJS Ahluwalia, particularly his daughter (i.e. myself) and his wife. Thus, Pawan Kumar Ahluwalia and his family members were to hold the shares only as trustees in KJS. Lat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es of the Company and assured that he will always work in the best interest of the company and family members of Late Shri KJS Ahluwalia, therefore, he may be entrusted with the authority and responsibility for carrying out the affairs of the Company. He further, represented that even, otherwise, he being the younger brother of Late Shri KJS Ahluwalia he could be trusted with the authority and responsibility for carrying out the affairs of the Company. 26. It is pertinent to mention here that Pawan Kumar Ahluwalia, the Accused No. 1, has a criminal background. He was held guilty and convicted in the matter titled CBI Vs. Kamal Sponge Steel Power Ltd. Ors. for offences u/s 120-B, 420, 120-B r/w 420 IPC and Sections 13 (1) (d) (ii) /13 (1) (d) (iii) PC Act, 1988 vide judgment dated 19.05,2017 passed by the Court of Shri Bharat Parashar, Ld. Special Judge (PC Act) CBI-07, New Delhi Courts. 20. It is pertinent to mention here that Pawan Kumar Ahluwalia, the Accused No. 1, has a criminal background. Pawan Kumar Ahluwalia was held guilty and convicted in the matter titled CBI Vs. Kamal Sponge Steel Power Ltd. Ors. For offences u/s 120-B, 420, 120-B r/w 420 IPC and Sections 13 (1) (d) (ii ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he considered view that Respondents should be restrained from proceeding further with the proposed EGM to be held on 06.03.2023. Accordingly, the interim prayer 'a' is granted. Consequently, we direct the Respondent No. 1 Company to maintain the status quo with regard to the shareholding of the R-1 Company as on today. This does not preclude Respondent No. 1 Company and the Company Secretary to effect the transmission of shares in favour of Petitioner No. 1 if it is otherwise in order and can be lawfully executed. Copy of the order dated 02.03.2023 passed by Hon'ble NCLT is annexed herewith and marked as Annexure-7. 28. It is settled law that both civil and criminal proceedings can be initiated by the victim simultaneously with distinct impetus and objective. Hon'ble Supreme Court in P. Swaroopa Rani vs. M. Hari Narayana (AIR 2008 SC 1884) held that ------- It is, however, well-settled that in a given case, civil proceedings and criminal proceedings can proceed simultaneously. Whether civil proceedings or criminal proceedings shall be stayed depends upon the fact and circumstances of each case. The criminal cases have to be proceeded with in accordance with the proc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ------ While examining a similar contention in an appeal against an Order directing filing of a complaint under Section 476 of old Code, the following observations made by a Constitution Bench in M.S. Sheriff vs. State of Madras AIR 1954 SC 397 give a complete answer to the problem posed: (15) As between the civil and the criminal proceedings we are of the opinion that the criminal matters should be given precedence.----------------------- Undoubtedly, there is an over-lap in the two FIRs. The allegations in FIR No. 24/2024 are a part of the present FIR as well but this Court is of the opinion that those facts are only relevant to bring out the history of the case. The present FIR has been filed primarily after the Show-Cause Notice has been issued by the GST wherein certain additional facts have come to light which could not have been acknowledged in FIR No. 24/2024. 9. FIR No. 24/2024 was filed primarily containing Allegations regarding ousting of the complainant and her family members from management and control of KJS to gain control over the company by the accused and stating as to how the shareholding of Sh. Lt. KJS Ahluwalia was reduced from 26.52% to 21% at the time of his ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es not include the complaint regarding the offence of misappropriation. 10. On the other hand, FIR No.47/2024 while giving out a background of the company primarily talks about how the accused persons have sold a substantial quantity of cement and clinker in clandestine manner without recording the same in the books of accounts of the company, and how they have misappropriated the property and assets of the company causing wrongful losses to the company and shareholders while committing criminal breach of trust. She substantiates all these claims with the help of a Demand-cum-Show-Cause Notice vide No. 24/DGGI/BhZU/JD/GST/2023-24 dated 31.07.2023. She further states that the sale proceeds from clandestine supply and sale of goods in cash was used for purchase of unaccounted raw materials like limestone, packing material, jewellery, and paintings relying on the show cause notice for proof. She also mentions the findings of the GST department to support her case by mentioning the amount up to which they have evaded GST highlighting the losses to the shareholders and the public exchequer. She supplements the allegations by highlighting the roles of the accused which have led to this s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t personal was at the helm of all affairs including the clandestine activities of the Noticec No. 1. The ultimate beneficiary of all clandestine activities of the Noticee No. 1 appears to have gone to the Noticee No 2. Shri B.K. Tripathy. Shri K.S. Singhvi and Shri Satyendra Rai who were involved in clandestine activities. all directly reported to him. All of them were directly involved in clandestine supply of clinker and cement and collection of cash and its further disposal. From the Whatsapp chat of Shri Satyendra Rai (Exhibit-CIII) with Shri Pawan Kumar Ahluwalia. it appears that he reported all the minute details to Shri Pawan Kumar Ahluwalia on daily hourly basis and sought his permission for all sales. receipts and payments including cash receipts and payments in cash. The Noticee No. 1 vide office order dated 22.04.2020. Mr Satyendra Rai. CFO was ordered to functionally report to Shri Pawan Ahluwalia.MD and administratively to Shri KS Singhvi (Exhibit-CIV). The whatsapp chat between Shri Satyendra Rai and Shri Pawan Ahluwalia shows that he was seeking administrative approval from Shri Pawan Ahluwalia for all financial transactions of the company and also reporting to him t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... T regarding transfer of shares of the Company and, therefore, it cannot be said that the Complainant does not have any locus standi to initiate the proceedings under IPC. 16. It is well settled that High Court should be slow in interfering with the criminal proceedings at the initial stage. The Apex Court in Sanapareddy Maheedhar Seshagiri v. State of A.P., (2007) 13 SCC 165, has observed as under: 31. A careful reading of the abovenoted judgments makes it clear that the High Court should be extremely cautious and slow to interfere with the investigation and/or trial of criminal cases and should not stall the investigation and/or prosecution except when it is convinced beyond any manner of doubt that FIR does not disclose commission of any offence or that the allegations contained in FIR do not constitute any cognizable offence or that the prosecution is barred by law or the High Court is convinced that it is necessary to interfere to prevent abuse of the process of the Court. In dealing with such cases, the High Court has to bear in mind that judicial intervention at the threshold of the legal process initiated against a person accused of committing offence is highly detrimental t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Authority of the court exists for the advancement of justice. If any abuse of the process leading to injustice is brought to the notice of the court, then the court would be justified in preventing injustice by invoking inherent powers in absence of specific provisions in the statute. 18. In State of A.P. v. Golconda Linga Swamy, (2004) 6 SCC 522 , the Apex Court has held as under: 5. Exercise of power under Section 482 of the Code in a case of this nature is the exception and not the rule. The section does not confer any new powers on the High Court. It only saves the inherent power which the Court possessed before the enactment of the Code. It envisages three circumstances under which the inherent jurisdiction may be exercised, namely : (i) to give effect to an order under the Code, (ii) to prevent abuse of the process of court, and (iii) to otherwise secure the ends of justice. It is neither possible nor desirable to lay down any inflexible rule which would govern the exercise of inherent jurisdiction. No legislative enactment dealing with procedure can provide for all cases that may possibly arise. Courts, therefore, have inherent powers apart from express provisions of law wh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l [1992 Supp (1) SCC 335 : 1992 SCC (Cri) 426]. A note of caution was, however, added that the power should be exercised sparingly and that too in rarest of rare cases. The illustrative categories indicated by this Court are as follows : (SCC pp. 378-79, para 102) 102. (1) Where the allegations made in the first information report or the complaint, even if they are taken at their face value and accepted in their entirety do not prima facie constitute any offence or make out a case against the accused. (2) Where the allegations in the first information report and other materials, if any, accompanying the FIR do not disclose a cognizable offence, justifying an investigation by police officers under Section 156 (1) of the Code except under an order of a Magistrate within the purview of Section 155 (2) of the Code. (3) Where the uncontroverted allegations made in the FIR or complaint and the evidence collected in support of the same do not disclose the commission of any offence and make out a case against the accused. (4) Where, the allegations in the FIR do not constitute a cognizable offence but constitute only a non-cognizable offence, no investigation is permitted by a police offic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ded with. In a proceeding instituted on complaint, exercise of the inherent powers to quash the proceedings is called for only in a case where the complaint does not disclose any offence or is frivolous, vexatious or oppressive. If the allegations set out in the complaint do not constitute the offence of which cognizance has been taken by the Magistrate, it is open to the High Court to quash the same in exercise of the inherent powers under Section 482 of the Code. It is not, however, necessary that there should be meticulous analysis of the case before the trial to find out whether the case would end in conviction or acquittal. The complaint has to be read as a whole. If it appears that on consideration of the allegations in the light of the statement made on oath of the complainant that the ingredients of the offence or offences are disclosed and there is no material to show that the complaint is mala fide, frivolous or vexatious, in that event there would be no justification for interference by the High Court. When an information is lodged at the police station and an offence is registered, then the mala fides of the informant would be of secondary importance. It is the material ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... wers. ( Vide State of W.B. v. Swapan Kumar Guha [(1982) 1 SCC 561 : 1982 SCC (Cri) 283 : AIR 1982 SC 949], Pepsi Foods Ltd. v. Special Judicial Magistrate [(1998) 5 SCC 749 : 1998 SCC (Cri) 1400], G. Sagar Suri v. State of U.P. [(2000) 2 SCC 636 : 2000 SCC (Cri) 513 : AIR 2000 SC 754] and Ajay Mitra v. State of M.P. [(2003) 3 SCC 11 : 2003 SCC (Cri) 703] ) 21. In State of Odisha v. Pratima Mohanty, (2022) 16 SCC 703 , the Apex Court has held as under: 8.2. It is trite that the power of quashing should be exercised sparingly and with circumspection and in rare cases. As per the settled proposition of law while examining an FIR/complaint quashing of which is sought, the court cannot embark upon any enquiry as to the reliability or genuineness of allegations made in the FIR/complaint. Quashing of a complaint/FIR should be an exception rather than any ordinary rule. Normally the criminal proceedings should not be quashed in exercise of powers under Section 482 CrPC when after a thorough investigation the charge-sheet has been filed. At the stage of discharge and/or considering the application under Section 482 CrPC the courts are not required to go into the merits of the allegations an ..... X X X X Extracts X X X X X X X X Extracts X X X X
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