criminal petition no.1643 of 2020 s/o late vasudeva … · 1. sri. azim hasham premji s/o shri mohd...

IN THE HIGH COURT OF KARNATAKA AT BENGALURU

DATED THIS THE 15TH DAY OF MAY 2020

BEFORE

THE HON’BLE MR. JUSTICE JOHN MICHAEL CUNHA

CRIMINAL PETITION NO.1643 OF 2020

C/W CRIMINAL PETITION NO.1729 OF 2020

CRIMINAL PETITION NO.1496 OF 2020 CRIMINAL PETITION NO.1499 OF 2020


CRIMINAL PETITION NO.1643 OF 2020 BETWEEN:

M R BHAT

S/O LATE VASUDEVA BHAT AGED ABOUT 58 YEARS,

REGIONAL DIRECTOR (SOUTHERN REGION) MINISTRY OF CORPORATE AFFAIRS

SHASTRI BHAVAN 5TH FLOOR, 26 HADDOWS ROAD

CHENNAI-600006.

PRESENT ADDRESS AS PER THE PCR NO.4/2018

MR.BHAT

3RD FLOOR CORPORATE BHAVAN

BANDALAGUND NAGOLE HYDERABAD 500 068

...PETITIONER (BY SRI:UDAYA HOLLA, SR. ADVOCATE A/W

SRI: T.KRISHNA, ADVOCATE )

2

AND:

INDIA AWAKE FOR TRANSPARENCY

A COMPANY INCORPORATED UNDER THE COMPANIES ACT 1956 HAVING REGISTERED

OFFICE AT NO.24, DESIKA ROAD, MYLAPORE

CHENNAI-600004. REP BY SRI P SADANAND GOUD

S/O MR.P.BIKSHAPATHI GOUD, AGE 40 YEARS,

24, DESIKA ROAD, MYLAPORE.

CHENNAI 600 004 …RESPONDENT

(BY SRI: R. SUBRAMANIAN, ADVOCATE A/W SRI: SHAKEER ABBAS M., ADVOCATE)

THIS CRIMINAL PETITION IS FILED U/S 482 CR.PC

PRAYING TO QUASH THE COMPLAINT, ORDER TAKING COGNIZANCE DATED 27.01.2020, AND THE ENTIRE

PROCEEDINGS IN PCR.NO.4/2018 AND FURTHER ACTIONS CONNECT WITH SPECIAL C.C.NO.69/2020 PENDING ON THE

FILE OF THE COURT OF THE XXIII ADDITIONAL CITY CIVIL AND SESSIONS JUDGE, SPECIAL JUDGE, BENGALURU URBAN

DISTRICT (CCH-24) BENGALURU CITY IN THE COMPLAINT FILED BY THE RESPONDENT NO.1 AGAINST THE PETITIONERS FOR

THE OFFENCES P/U/S 409,34,120B OF IPC AND SECTION 13(1)(d) R/W 13(2) OF THE PREVENTION OF CORRUPTION ACT.


BETWEEN:

G VENKATESHWARA RAO S/O LATE G VENKATA SUBBAIAH NAIDU

AGED ABOUT 62 YEARS, PARTNER AT M/S. RAMRAJ AND CO.,

3

CHARTERED ACCOUNTANT,

NO.65, 4TH FLOOR, 29TH A CROSS, GEETHA COLONY, 4TH BLOCK,

JAYANAGAR, BANGALORE-560011.

...PETITIONER

(BY SRI:UDAYA HOLLA, SR. COUNSEL A/W SRI: T.KRISHNA, ADVOCATE )

AND:

INDIA AWAKE FOR TRANSPARENCY

A COMPANY INCORPORATED UNDER THE COMPANIES ACT 1956 HAVING REGISTERED

OFFICE AT NO.24,

DESIKA ROAD, MYLAPORE CHENNAI-600004.

REP BY SRI P SADANAND GOUD S/O MR.P.BIKSHAPATHI GOUD,

AGE 40 YEARS, 24, DESIKA ROAD,

MYLAPORE. CHENNAI 600 004

…RESPONDENT

(BY SRI: R. SUBRAMANIAN, ADVOCATE A/W SRI: SHAKEER ABBAS M., ADVOCATE)

THIS CRIMINAL PETITION IS FILED U/S.482 CR.P.C

PRAYING TO QUASH THE COMPLAINT, ORDER TAKING COGNIZANCE DATED 27.01.2020 AND THE ENTIRE

PROCEEDINGS IN P.C.R.NO.2/2018 AND FURTHER ACTIONS CONNECT WITH SPL.C.C.NO.69/2020 PENDING ON THE FILE OF

XXIII ADDITIONAL CITY CIVIL AND SESSIONS JUDGE AND SPECIAL JUDGE, BENGALURU URBAN DISTRICT, BENGALURU

THE COMPLAINT FILED BY THE RESPONDENT NO.1 AGAINST

4

THE PETITIONER FOR THE OFFENCE P/U/S 409,34,120B OF IPC

AND SECTION 13(1)(d) R/W 13(2) OF P.C. ACT.


BETWEEN:

1. SRI. AZIM HASHAM PREMJI S/O SHRI MOHD HASHAM PREMJI

AGED ABOUT 74 YEARS, SURVEY NO.75, 133, 135/1, 136/1

NO.574, DOKKAKANNELLI VILLAGE, SARJAPUR ROAD

BENGALURU-560035

2 . MRS YASEEM AZIM PREMJI

W/O SHRI AZIM HASHAM PREMJI AGED ABOUT 72 YEARS,

SURVEY NO.574 DOKKAKANNELLI VILLAGE,

SARJAPUR ROAD BENGALURU-560035

3 . MR PAGALTHIVARTHI SRINIVASAN

AGED ABOUT 59 YEARS, S/O SRI P VASUDEVAN

NO.524, 16TH CROSS, INDIRA NAGAR II STAGE

BENGALURU-560038

4 . M/S HASHAM INVESTMENT AND

TRADING COMPANY PVT LTD NO.134,

NEXT TO WIPRO CORPORATE OFFICE DODDAKANNELLI SARJAPUR ROAD

BENGALURU-560035 REP BY MR PAGALTHIVARTHI SRINIVASAN

...PETITIONERS

5

(BY SRI: RAVI B.NAIK, SR. ADVOCATE A/W SRI: K.B. MONESH KUMAR, ADVOCATE)

AND:

1 . INDIA AWAKE FOR TRANSPARENCY NO.24, DESIKA ROAD

MYLAPORE CHENNAI-600004

REP SRI P SADANAND GOUD

2 . SRI G VENKATESWARA RAO CHARTERED ACCOUNTANT

PARTNER M/S RAMRAJ AND CO

CHARTERED ACCOUNTANTS NO.65 IV FLOOR, 29TH CROSS

GEETHA COLONY, 4TH BLOCK JAYANAGAR

BENGALURU-560011 …RESPONDENTS

(BY SRI: R. SUBRAMANIAN, ADVOCATE A/W

SRI: SHAKEER ABBAS, ADVOCATE FOR R1; SRI: UDAYA HOLLA, SR. ADVOCTE A/W

SRI: T. KRISHNA, ADVOCATE FOR R2)

THIS CRIMINAL PETITION IS FILED U/S 482 CR.PC PRAYING TO QUASH THE COMPLAINT, ORDER TAKING

COGNIZANCE DATED 27.01.2020 AND THE ENTIRE

PROCEEDINGS IN PCR NO.2/2018 PENDING ON THE FILE OF THE XXIII ADDITIONAL CITY CIVIL AND SESSIONS JUDGE,

BENGALURU ON THE COMPLAINT FILED BY THE RESPONDENT NO.1 AGAINST THE PETITIONERS FOR THE OFFENCES P/U/S

409,34,120B OF IPC AND SECTION 13(1)(d) R/W 13(2) OF THE P.C ACT.

6

CRIMINAL PETITION NO.1499 OF 2020 BETWEEN:

1. SHRI AZIM HASHAM PREMJI

S/O SHRI MOHD HASHAM PREMJI AGED ABOUT 74 YEARS,

SURVEY NO.75, 133, 135/1, 136/1 NO.574, DOKKAKANNELLI VILLAGE,


2 . MRS YASEEM AZIM PREMJI W/O SHRI AZIM HASHAM PREMJI

AGED ABOUT 72 YEARS, SURVEY NO.574

DOKKAKANNELLI VILLAGE,




NO.524 16TH CROSS, INDIRA NAGAR II STAGE

BENGALURU-560038

4 . M/S HASHAM INVESTMENT AND TRADING COMPANY PVT LTD

NO.134, NEXT TO WIPRO CORPORATE OFFICE DODDAKANNELLI, SARJAPUR ROAD

BENGALURU-560035

REP BY MR PAGALTHIVARTHI SRINIVASA ...PETITIONERS

(BY SRI: RAVI B.NAIK, SR. COUNSEL A/W

SRI: K.B. MONESH KUMAR, ADVOCATE)

7

AND:

1. INDIA AWAKE FOR TRANSPARENCY

NO.24, DESIKA ROAD MYLAPORE

CHENNAI-600004 REP SRI P SADANAND GOUD

2 . SRI A N JAYARAM

C/O RESERVE BANK OF INDIA 10/3/8

NRUPATHUNGA ROAD BENGALURU-560001

(DELETED VIDE COURT ORDER DATED 18.3.2020)

…RESPONDENTS

(BY SRI: R. SUBRAMANIAN, ADVOCATE AND SRI: SHAKEER ABBAS, ADVOCATE FOR R1)


PRAYING TO QUASH THE COMPLAINT, ORDER TAKING COGNIZANCE DATED 27.01.2020 AND THE ENTIRE

PROCEEDINGS IN PCR NO.3/2018 PENDING ON THE FILE OF THE XXIII ADDITIONAL CITY CIVIL AND SESSIONS JUDGE,

BENGALURU ON THE COMPLAINT FILED BY THE RESPONDENT NO.1 AGAINST THE PETITIONERS FOR THE OFFENCES P/U/S

409,34,120B OF IPC AND SECTION 13(1)(d) R/W 13(2) OF THE P.C ACT.


BETWEEN:

1. SHRI AZIM HASHAM PREMJI S/O SHRI MOHD HASHAM PREMJI

AGED ABOUT 74 YEARS, SURVEY NO.75, 133, 135/1, 136/1

8

NO.574, DOKKAKANNELLI VILLAGE,


2 . MRS YASEEM AZIM PREMJI

W/O SHRI AZIM HASHAM PREMJI AGED ABOUT 72 YEARS,

SURVEY NO.574 DOKKAKANNELLI VILLAGE,




NO.524 16TH CROSS,

INDIRA NAGAR II STAGE BENGALURU-560038

4 . M/S HASHAM INVESTMENT AND

TRADING COMPANY PVT LTD NO.134, NEXT TO WIPRO CORPORATE OFFICE

DODDAKANNELLI, SARJAPUR ROAD BENGALURU-560035

REP BY MR PAGALTHIVARTHI SRINIVASA ...PETITIONERS

(BY SRI: RAVI B.NAIK, SR. COUNSEL A/W

SRI: K.B. MONESH KUMAR, ADVOCATE)

AND:

1. INDIA AWAKE FOR TRANSPARENCY NO.24, DESIKA ROAD

MYLAPORE CHENNAI-600004

REP SRI P SADANAND GOUD

9

2. SRI M R BHAT

3RD FLOOR, CORPORATE BHAVAN, BANDALAGUDU NAGOLE,

HYDERABAD-500068. …RESPONDENTS

(BY SRI: R. SUBRAMANIAN, ADVOCATE AND

SRI: SHAKEER ABBAS, ADVOCATE FOR R1 SRI: UDAYA HOLLA, SENIOR COUNSEL A/W

SRI: T. KRISHNA, ADVOCATE FOR R2)


PRAYING TO QUASH THE COMPLAINT, ORDER TAKING

COGNIZANCE DATED 27.01.2020 AND THE ENTIRE

PROCEEDINGS IN PCR NO.4/2018 PENDING ON THE FILE OF

THE XXIII ADDITIONAL CITY CIVIL AND SESSIONS JUDGE,

BENGALURU ON THE COMPLAINT FILED BY THE RESPONDENT

NO.1 AGAINST THE PETITIONERS FOR THE OFFENCES P/U/S

409,34,120B OF IPC AND SECTION 13(1)(d) R/W 13(2) OF THE

P.C ACT.

---

THESE CRIMINAL PETITIONS HAVING BEEN HEARD AND

RESERVED FOR ORDERS ON 18.03.2020 AND COMING ON FOR

PRONOUNCMENT OF ORDER THROUGH VIDEO CONFERENCE,

THIS DAY, THE COURT MADE THE FOLLOWING:-

10

O R D E R

These petitions are directed against the common order

passed by the XXIII Additional City Civil and Sessions Judge,

Special Judge, Bengaluru Urban District (CCH.24) dated

27.01.2020 in PCR.No.2/2018, PCR.No.3/2018 and

PCR.No.4/2018, whereby summons are issued to the petitioners

to face trial for the offences punishable under sections 409, 34

and 120-B of Indian Penal Code and section 13(1)(d) read with

section 13(2) of the Prevention of Corruption Act, 1988.

2. The outline facts leading to the petitions are as follows:

(i) Respondent No.1 herein namely India Awake for

Transparency, Chennai, presented three private complaints

(PCR Nos.2/2018, 3/2018 and 4/2018) against the petitioners

herein under section 200 Cr.P.C., seeking their prosecution for

the above offences. In all the three complaints, accused Nos.1

to 4 are common and accused No.5 in the respective complaints

is different.

11

(ii) The common case of the complainant in all the three

private complaints is that, accused No.1 – Mr.Azim Hasham

Premji, accused No.2 – Mrs.Yaseem Azim Premji and accused

No.3 – Mr.Pagalthivarthi Srinivasan were entrusted with the

dominion over the properties and assets of three Companies by

name (a) Vidya Investment and Trading Company Private

Limited (“Vidya” for short), (b) Regal Investment and Trading

Company Private Limited (“Regal” for short) and (c) Napean

Trading and Investment Company Private Limited (“Napean” for

short) as Directors and they were holding the assets of these

three Companies of the total worth of Rs.31,342 Crores in

fiduciary capacity, without having any financial interest or

ownership therein and that by allowing these assets transferred

to a newly constituted Company by name Hasham Investment

and Trading Company Private Limited (“Hasham” for short)

namely accused No.4, in collusion and connivance with

respective accused No.5 who were then occupying the position of

public servants as on the date of the alleged transaction, they

have committed the offences punishable under sections 409, 34

12

read with 120B of IPC and section 13(1)(d) read with section

13(2) of the Prevention of Corruption Act, 1988.

3. These allegations were founded on the premise that the

aforesaid three Companies (hereinafter referred to as

“Transferor Companies”) were owned by each other in such

manner that 2 of the 3 Companies held 50% of the shares in the

other i.e., Regal and Napean held 50% each of the shares of

Vidya and similarly, Regal and Vidya each held 50% of the

shares of Napean and further Vidya and Napean each held 50%

of the shares of Regal. These three Companies had total assets

of Rs.51,549.47 Crores. However, by taking advantage of their

position as Directors, during 2010-2012, accused Nos.1 to 3 took

away Rs.13,602 Crores of assets of the above three Companies

by way of gifts and transferred the same to a Private Trust

controlled by accused Nos.1 and 2. In respect of the remaining

assets of Rs.31,342 Crores, it is alleged that accused persons

conspired among themselves and merged the three Companies

into fourth accused Company namely Hasham Investment and

Trading Company Private Limited – a Company wholly owned by

13

the Private Trust run by accused Nos.1 and 2 without any

payment and through this device got control over the entire

assets worth Rs.31,342 Crores belonging to the Transferor

Companies of which they were the Directors. According to the

complainant, the decision to seek the merger of Transferor

companies attracted the offence under section 409 IPC and

further all the accused persons having entered into a criminal

conspiracy with a view to enrich accused Nos.1 to 3 of the huge

assets belonging to the Transferor Companies which otherwise

would have vested with the Union of India as bona vacantia or

escheat have rendered themselves liable for prosecution for the

above offences.

4. Learned Special Judge on taking cognizance of the

above offences recorded the sworn statement of the

complainant and considering the statements made on oath and

the large number of documents produced in support of the

allegations made in the complaint, issued summons to the

petitioners to face trial for the above offences which are

impugned in these petitions.

14

5. The contentions of accused Nos.1 to 4 (petitioners in

Criminal Petition Nos.1496/2020, 1499/2020 and 1500/2020)

are that the learned Special Judge has proceeded to take

cognizance of the matter mechanically without application of

mind. She failed to note that the complainant had invoked

section 200 Cr.P.C. without taking recourse to section 154(3) of

Cr.P.C. Learned Special Judge also failed to appreciate that the

amalgamation was accepted by the High Court of Karnataka

after issuance of notices and by following due process of law.

The Ministry of Corporate Affairs, the Regional Head of the RBI

were parties to the proceedings and the scheme was accordingly

sanctioned by the High Court. Learned Special Judge, by holding

that the reports submitted to the scrutiny of the High Court were

fabricated, has virtually cast aspersions on the orders passed by

the High Court. The allegations made in the complaints, even if

they are taken at their face value and accepted in their entirety,

do not prima facie constitute any offences or make out a case

against accused Nos.1 to 4. The uncontroverted allegations

made in the complaints and the evidence made available in

15

support of the same do not disclose commission of any offences.

Learned Special Judge also failed to note that the scheme of

amalgamation was sought to be challenged by the complainant

on the same set of allegations as contained in the complaints.

The NCLT, Bengaluru, dismissed the petition of respondent No.1

/ complainant and the complainant took up the same in Appeal

before the NCLAT, Delhi. The Hon’ble NCLAT, Delhi was pleased

to dismiss the appeal by imposing cost of Rs.2 lakhs. Learned

Special Judge also failed to note that the complainant had given

a false affidavit to the effect that no complaint has been filed in

any other Court touching the subject matter of the complaints

eventhough the complainant had filed separate complaints dated

01.11.2016, 14.03.2017 and 28.04.2017 addressed to RBI

Governor, Union of India which were followed up through a Writ

Petition before the High Court of Delhi. Further the complainant

had also filed an application before the High Court of Karnataka

to recall the order of amalgamation passed by the High Court

and the same is pending consideration of the High Court and

hence, initiation of criminal proceedings being manifestly

attended with mala fides and are maliciously instituted with an

16

ulterior motive of wreaking vengeance on the petitioners, with a

view to spite them due to private and personal grudge, are liable

to be quashed.

6. The petitioner in Criminal Petition No.1729/2020 namely

accused No.5 in PCR No.2/2018 – Sri.G. Venkateshwara Rao has

also set up identical contentions in his petition and in addition

has taken up a plea that he was not a public servant and was

only providing consultancy services as a Chartered Accountant.

There was no employee - employer relationship with the official

liquidator/ High Court with the petitioner, as such, the PCR was

not maintainable.

7. The petitioner in Criminal Petition No.1643/2020

namely accused No.5 in PCR.No.4/2018 – Sri.M.R.Bhat has

urged similar contentions as stated above and in addition has

contended that the trial court failed to appreciate the basic tenet

of Company Law that a Company is a legal or artificial person

capable of holding property in its name and be the owner of yet

another company. The Trial Court failed to appreciate that the

provisions of Article 296 get attracted only when there are no

17

claimants to a property. The petitioner is a public servant with

Union Government and is presently working as the Regional

Director, Ministry of Corporate Affairs (Southern Region),

Chennai and proceedings could not be initiated against him

without previous sanction under section 19 of the PC Act.

Hence, the order of cognizance and issuance of process being

opposed to facts and circumstances and the law is liable to be

quashed.

8. Elaborate arguments are advanced by learned Senior

Counsels appearing for the respective petitioners touching the

merits of the case as well as the legality of the order passed by

learned Special Judge in line with the statement of objections

filed into the Court and have referred to large number of

authorities in support of their contentions. But the petitioners

having invoked the jurisdiction of this Court under section 482

Cr.P.C., the scope of the petitions being limited, I have

considered only the relevant material which is necessary for

deciding the controversy involved in these petitions.

18

9. The position of law is well settled that while issuing

the process, satisfaction of the Special Judge or the Magistrate is

confined to the issue as to whether prima facie case is made out

against the accused and not with regard to the sufficiency of

evidence to secure conviction of the accused. It is now well

settled that the inherent powers under section 482 of Cr.P.C. can

be exercised to give effect to an order under the Code to prevent

abuse of process of the court or to otherwise secure the ends of

justice. The inherent powers under this section should not be

exercised to stifle a legitimate prosecution. The High Court

should normally refrain from giving a prima facie decision in a

case where all the facts are incomplete and hazy; more so, when

the evidence has not been collected and produced before the

Court and the issues involved, whether factual or legal, are of

such magnitude that they cannot be seen in their true

perspective without full material. In MADHAVRAO JIWAJIRAO

SCINDIA vs. SAMBHAJIRAO CHANDROJIRAO ANGRE reported in

1988 Criminal Law Journal 853, it is held that,

“... The legal position is well settled that when a

prosecution at the initial stage is asked to quashed, the

19

test to be applied by the Court is as to whether the

uncontroverted allegations as made prima facie

establish the offence. It is also for the court to take into

consideration any special features which appear in a

particular case to consider whether it is expedient and in

the interest of justice to permit a prosecution to

continue.”

10. Tested on the touchstone of this settled legal

principle, it only needs to be considered as to whether the

allegation made in the above complaints and the material

produced in support thereof prima facie make out the

ingredients of the offences charged against the petitioners? In

that view of the matter, the points that arise for consideration in

these petitions are as follows:

(1) Whether the allegations made in the complaints prima

facie disclose the ingredients of offences punishable under

sections 409, 34, 120-B of IPC and sections 13(1)(d) read

with 13(2) of Prevention of Corruption Act, 1988?

(2) Whether the order of taking cognizance by the learned

Special Judge amounts to sitting over appeal against the

orders passed by the High Court of Karnataka in

20

sanctioning the scheme of amalgamation in Company

Petition No.182/2014 connected with Company Petition

Nos.183/14, 184/2014 and 185 /2014?

(3) Whether prosecution of accused No.5 in the respective

proceedings is bad in law for want of prior sanction under

section 19 of the Prevention of Corruption Act, 1988?

POINT No.1:

11. The essence of the complaints is that the accused

persons conspired with each other to enrich accused Nos.1 to 4

of Rs.31,342 Crores of public money which were the assets of

the three Companies namely Napean, Vidya and Regal.

According to the complainant, these assets were entrusted to

accused Nos.1 to 3 in their capacity as Directors of these

Companies. None of them had any financial interest, either

directly or indirectly, in the assets of these Companies by way of

holding any equity shares and therefore, the act of the accused

in getting these valuable assets transferred to the fourth accused

Company of which accused Nos.1 to 3 were the shareholders,

21

offend the provisions of sections 409, 120-B of IPC as well as

section 13(1)(d) of the PC Act.

12. The petitioners do not dispute the fact that accused

Nos.1 to 3 were the Directors of the Transferor Companies

namely Napean, Vidya and Regal and that the scheme

formulated by them for amalgamation of these Companies was

approved by this Court in Company Petition Nos.182/2014,

183/2014, 184/2014 and 185/2014 dated 26.03.2015 and

accordingly, the Transferor Companies were held dissolved

without the process of winding up. The material on record

disclose that as on the date of amalgamation, the equity

shareholdings with the three Transferor Companies were

interlinked/cross held by each of the Companies which means

that the ownership of the assets exclusively vested with the

three Companies and not with accused Nos.1 to 3.

13. Undeniably, accused Nos.1 to 3 were representing the

Transferor Companies as Directors and not as owners thereof. It

is also not in dispute that the fourth accused Company is wholly

owned and controlled by the Private Trust formed by accused

22

Nos.1 and 2 and accused Nos.1 to 3 are the only Directors of

accused No.4 Company. It is recorded by the learned Special

Judge in the impugned order that as on 31.03.2014, accused

No.4 – Company was under loss of Rs.22.53 Crores and had

accumulated further loss of Rs.169.15 Crores and had availed

Rs.170 Crores loan from accused Nos.1 and 2 to meet its losses

which fact has not been disputed. It is in this background, the

merger was proposed by accused Nos.1 to 3 and the same was

accepted and sanctioned by this Court by its order dated

26.03.2015.

14. The above facts clearly reveal that three financially

robust Companies of which accused Nos.1 to 3 were the

Directors have been absorbed / consolidated with accused No.4,

a loss making Company, through the process of amalgamation,

as a result, huge assets held by the three Transferor Companies

have been transferred to accused No.4 – Company without

accused No.4 paying any consideration for buying over the

assets of the Transferor Companies. By this device or

mechanism, the ownership and control of the assets of the

23

Transferor Companies have been effectively taken over by

accused Nos.1 to 3. These facts, in my view, clearly fall within

the mischief of section 409 of IPC.

15. It is trite that a shareholder is separate from the

Company in which he holds share. In the instant case, as on the

date of amalgamation, accused Nos.1 to 3 were neither the

owners nor the shareholders of the Transferor Companies. The

petitioners have virtually conceded the factual position that the

equity shares of the Transferor Company No.1 were held equally

by the Transferor Company No.2 and the Transferor Company

No.3. Likewise equity shares of Transferor Company No.2 and

Transferor Company No.3 were cross held equally by other two

Transferor Companies. Under the said circumstances, when the

corporate vehicle is set up for the purpose of acquiring the

control or ownership over the assets of the incorporated

Companies to which accused Nos.1 to 3 were not legally entitled,

it is necessary to find out the persons and the purpose behind

setting up such a corporate vehicle on the guise of

amalgamation. Moreover faced with the allegation that the entire

24

transaction was improper and sullied by breach of the obligation

cast under law on accused Nos.1 to 3 and the facade of

corporate entity has been used to circumvent a statute to

achieve or perpetuate monopoly over the assets of an

incorporated Company, it is imperative for the Court to tear the

web of legal entity by piercing the corporate veil.

16. In this context, it may be useful to refer to the view

endorsed by the Hon’ble Supreme Court in BALWANT RAI

SALUJA AND ANOTHER vs. AIR INDIA LIMITED & Others, (AIR

2015 SC 375, wherein following the decision in LIFE INSURANCE

CORPORATIN OF INDIA vs. ESCORTS LIMITED & Others, AIR

1986 SC 1370, it is held as under:

“66. The doctrine of “piercing the corporate veil”

stands as an exception to the principle that a

company is a legal entity separate and distinct from

its shareholders with its own legal rights and

obligation. It seeks to disregard the separate

personality of the company and attribute the acts of

the company to those who are allegedly in direct

control of its operation. The starting point of this

doctrine was discussed in the celebrated case of

Salomon v. A Salomon & Co. Ltd. [1897 AC 22]. Lord

25

Halsbury LC (paragraphs 31-33), negating the

applicability of this doctrine to the facts of the case,

stated that:

‘…. a company must be treated like any

other independent person with its rights

and liabilities [legally] appropriate to

itself … whatever may have been the

ideas or schemes of those who brought it

into existence.’

67. Most of the cases subsequent to

Salomon case [supra], attributed the doctrine of

piercing the veil to the fact that the company was a

“sham” or a “façade”. However, there was yet to be

any clarity on applicability of the said doctrine.

68. In recent times, the law has been

crystallised around the six principles formulated by

Munby, J. in Ben Hashem v. Ali Shayif, [2008] EWHC

2380 (Fam]. The six principles, as found at paras

159-164 of the case are as follows:

(i) Ownership and control of a company were not

enough to

justify piercing the corporate veil;

(ii) The court cannot pierce the corporate veil, even

in the absence of third-party interests in the

26

company, merely because it is thought to be

necessary in the interests of justice;

(iii) The corporate veil can be pierced only if there is

some impropriety;

(iv) The impropriety in question must be linked to

the use of the company structure to avoid or conceal

liability;

(v) To justify piercing the corporate veil, there must

be both control of the company by the wrongdoer(s)

and impropriety, that is use or misuse of the

company by them as a device or facade to conceal

their wrongdoing; and

(vi) The company may be a “façade” even though it

was not originally incorporated with any deceptive

intent, provided that it is being used for the purpose

of deception at the time of the relevant transactions.

The court would, however, pierce the corporate veil

only so far as it was necessary in order to provide a

remedy for the particular wrong which those

controlling the company had done.

70. The position of law regarding this principle in

India has been enumerated in various decisions. A

Constitution Bench of this Court in LIC v. Escorts

Ltd. [(1986) 1 SCC 264]: (AIR 1986 SC 1370), while

discussing the doctrine of corporate veil, held that:

27

(SCC pp.335-36, para 90): (at p.1418, para 90 of

AIR).

‘90. … Generally and broadly speaking,

we may say that the corporate veil may

be lifted where a statute itself

contemplates lifting the veil, or fraud or

improper conduct is intended to be

prevented, or a taxing statute or a

beneficent statute is sought to be evaded

or where associated companies are

inextricably connected as to be, in reality,

part of one concern. It is neither

necessary nor desirable to enumerate the

classes of cases where lifting the veil is

permissible, since that must necessarily

depend on the relevant statutory or other

provisions, the object sought to be

achieved, the impugned conduct, the

involvement of the element of the public

interest, the effect on parties who may be

affected, etc.””

17. In the backdrop of the above principles, if the

provisions of section 409 of IPC under which the petitioners are

sought to be charged is analysed, the section reads as under:

28

409. Criminal breach of trust by public servant, or

by banker, merchant or agent.—Whoever, being

in any manner entrusted with property, or with

any dominion over property in his capacity of a

public servant or in the way of his business as a

banker, merchant, factor, broker, attorney or

agent, commits criminal breach of trust in respect

of that property, shall be punished with

1[imprisonment for life], or with imprisonment of

either description for a term which may extend to

ten years, and shall also be liable to fine.

Section 405 of IPC defines criminal breach of trust as

under:

405. Criminal breach of trust.—Whoever, being in

any manner entrusted with property, or with any

dominion over property, dishonestly

misappropriates or converts to his own use that

property, or dishonestly uses or disposes of that

property in violation of any direction of law

prescribing the mode in which such trust is to be

discharged, or of any legal contract, express or

implied, which he has made touching the

discharge of such trust, or wilfully suffers any

other person so to do, commits “criminal breach

of trust”.

29

18. As held by the Hon’ble Supreme Court in

R.VENKATAKRISHNAN VS CENTRAL BUREAU OF

INVESTIGATION, (2009) 11 SCC 737, in para 143,

“The terms of the section are very wide. They

apply to one who is in any manner entrusted with

property or dominion over property. The section

does not require that the trust should be in

furtherance of any lawful object. It merely

provides, inter alia, that if such a person

dishonestly misappropriates or converts to his

own use the property entrusted to him; he

commits criminal breach of trust.”

19. Further, in JAIKRISHNADAS MANOHARDASDESAI vs.

THE STATE OF BOMBAY, AIR 1960 SC 889, the Hon’ble Supreme

Court, in para 6, has held thus,

“6. ... to establish a charge of criminal

breach of trust, the prosecution is not obliged to

prove the precise mode of conversion,

misappropriation or misapplication by the accused

of the property entrusted to him or over which he

has dominion. The principal ingredient of the

offence being dishonest misappropriation or

conversion which may not ordinarily be a matter

of direct proof, entrustment of property and

30

failure in breach of an obligation to account for

the property entrusted, if proved, may in the light

of other circumstances, justifiably lead to an

inference of dishonest misappropriation or

conversion. Conviction of a person for the offence

of criminal breach of trust may not, in all cases,

be founded merely on his failure to account for

the property entrusted to him, or over which he

has dominion, even when a duty to account is

imposed upon him, but where he is unable to

account or renders an explanation for his failure

to account which is untrue, an inference of

misappropriation with dishonest intent may

readily be made.”

20. In CHELLOOR MANKKAL NARAYAN ITTIRAVI

NAMBUDIRI vs. STATE OF TRAVANCORE- COCHIN, AIR 1953 SC

478, in para 21, it is observed that,

“ ... to constitute an offence of criminal breach of

trust it is essential that the prosecution must

prove first of all that the accused was entrusted

with some property or with any dominion or

power over it. It has to be established further

that in respect of the property so entrusted, there

was dishonest misappropriation or dishonest

conversion or dishonest use or disposal in

violation of a direction of law or legal contract, by

31

the accused himself or by someone else which he

willingly suffered to do.”

21. In the instant case, undeniably accused Nos.1 to 3

were only the Directors of the Transferor Companies as on the

date of the alleged transaction. As explained in Palmer’s

Company Law, 20th Edition, page 513, “Directors” are in the eye

of law, agents of the Company for which they act, and the

general principles of the law of principal and agent regulate in

most respects the relationship of the Company and its Directors.

22. In R.K.DALMIA etc., vs. DELHI ADMINISTRATION, AIR

1962 SC 1821, interpreting the expression “dominion over the

property”, the Hon’ble Supreme Court in para 97 thereof has

observed that,

“Both Dalmia and Chokhani being agents of the

company the control, if any, they had over the

securities and the funds of the company, would

be in their capacity as agents of the company and

would be in the course of Dalmia’s duty as the

Chairman and Director or in the course of

Chokhani’s duty as a duly appointed agent of the

company. If they committed any criminal breach

32

of trust with respect to the securities and funds of

the company, they would be committing an

offence under section 409 IPC.”

23. In the light of the above factual and legal position, the

impugned order cannot be faulted with. As the allegations made

in the complaints prima facie make out the ingredients of the

offence under section 409 of IPC and there being clear

allegations of conspiracy which are duly supported by the

documents marked during the sworn statement of the

complainant, the learned Special Judge was justified in issuing

summons to the petitioners namely accused Nos.1 to 4 to

answer the above charges. At the stage of issuing summons,

learned Special Judge is not required to satisfy herself as to the

correctness or otherwise of the allegations made against the

petitioners nor is she required to record a finding that the

material produced by the complainant is sufficient to secure a

conviction against the proposed accused. As the material on

record prima facie made out the ingredients of the offences

alleged against the petitioners, I do not find any reason to

33

interfere with the impugned order insofar as accused Nos.1 to 4

are concerned.

24. The argument of the learned Senior Counsels

appearing for the petitioners that the amalgamation having been

sanctioned by the High Court, learned Special Judge had no

jurisdiction to proceed against the petitioners also does not merit

acceptance. Amalgamation, no doubt, is a process in which

separate organizations unite to form a larger organisation or a

group. The amalgamation of small firms is also permissible under

law. But in the instant case, no material has been produced

either by accused Nos.1 to 3 or any other accused to show that

any of the three Transferor Companies belonged to accused

Nos.1 to 3 or that they had any financial stake therein so that

they could decide to form a larger group of Companies for

whatever purpose. On the other hand, the circumstances alleged

in the complaints and the facts borne on the documents

produced by the complainant indicate that on the basis of

amalgamation, Transferor Companies are completely obliterated

and their assets are taken over by accused No.4. It may be that

34

initially accused Nos.1 and 2 themselves had invested in the

Transferor Companies, but the subsequent events emerging

from the records clearly go to show that accused Nos.1 to 3

ceased to hold any shares in the Transferor Companies ever

since 1980. As such, as on the date of the alleged transaction,

none of them had any beneficial ownership over the assets of

these Companies. Even otherwise, law on the point in clear that

“the Company is at law a different person altogether from the

subscribers ...; and, though it may be that after incorporation

the business is precisely the same as it was before, the same

persons are managers, and the same hands receive the profits,

the company is not in law the agent of the subscribers or trustee

for them.” See SALOMON vs. SALOMON & COMPANY Ltd., 1987

AC 22.

25. It also needs to be stated that the alleged transaction

is not a simple or innocuous amalgamation as sought to be made

out by the petitioners; rather the whole exercise as reflected in

the voluminous documents produced before the Special Court

indicate that the entire transaction was contrived to get hold of

35

the valuable assets of the Transferor Companies camouflaged as

amalgamation. But for this amalgamation, in the event of

winding up of the Transferor Companies, its assets would have

been taken over by its legitimate shareholders and in their

absence, the same would have been appropriated by the Union

as bona vacantia. Since the allegations proceed on the basis

that in order to take over the assets of the Transferor

Companies, accused Nos.1 to 3 misused their fiduciary position

as agents of the Company and have acted in breach of trust and

consequently managed to enrich themselves in collusion with

accused No.5 by transferring these assets to accused No.4,

which was wholly owned by the Private Trust controlled by

accused No.1 and 2, in my view, the facts alleged in the

complaints prima facie attract the ingredients of the offences

under section 409 read with section 34 and section 120B of IPC

entailing prosecution of the petitioners for the above offence.

26. The argument of the learned Senior Counsels that the

order passed by the learned Special Judge amounts to judicial

impropriety inasmuch it has the effect of sitting in appeal over

36

the orders passed by the Hon’ble High Court is totally misplaced

and is liable to be rejected outright. The complainant has not

questioned the validity of the amalgamation order passed by the

court, rather the accusations spring from the breach of trust

committed by accused Nos.1 and 3 in amalgamating the

Transferor Companies with accused No.4 and thereby taking

over the assets of the Transferor Companies of which they were

mere agents or Directors. Merger is not the subject matter of

the offence set out in the complaints. Complaints pertain to the

breach of trust by accused No.1 to accused No.3 as Directors

and their conspiracy with accused No.4 and accused No.5 in

committing the offences under section 13(1)(d) of P.C. Act. It

may be that as against the orders of the High Court, the

complainant has resorted to legal remedy available under law by

making an application to recall the order of amalgamation, but

that by itself does not debar the Special Court from deciding the

allegations constituting the criminal offence arising out of the

transaction.

37

27. A transaction may give rise to civil or criminal

remedies. It is trite that availability of civil remedy cannot be a

ground for quashing criminal prosecution. As held in M/s.INDIAN

OIL CORPORATION vs. M/s.NEPC INDIA LIMITED & Others,

(2006) 6 SCC 736, “The test is whether the allegations in the

complaint disclose a criminal offence or not.” For example, if a

collusive decree is obtained from a court of law fabricating

documents and later the said decree is set aside by the Civil

Court, the parties to fabrication and forgery cannot seek to avoid

criminal prosecution on the plea that the offending decree has

been set aside by a Civil Court when charged with the offence of

forgery and falsification of records. Likewise, assuming that the

proposal for amalgamation set up by the petitioners was not

accepted by the High Court and/or for any reason the High Court

which sanctioned amalgamation found it proper to recall its

order, even then, it does not afford a defence to the petitioners

to contend that their prosecution is illegal, as long as the acts

complained against the petitioners prima facie disclose the

ingredients of criminal breach of trust. Therefore, I do not find

any substance in the submissions canvassed by the learned

38

counsel for the petitioners that in view of the pendency of the

recall application filed by the complainant seeking to set at

naught the order of amalgamation, the prosecution of the

petitioners for the alleged offences is not legally tenable. As the

complainant has clearly made out the ingredients of the offences

under section 409 read with section 34 of IPC as well as the

ingredients of section 120-B IPC insofar as the accused Nos.1 to

4 are concerned, in my view, no fault could be found with the

impugned order passed by the learned Special Judge issuing

summons to accused Nos.1 to 4 to face trial for the above

offences.

28. Coming to the prosecution of accused No.5 in the

respective cases is concerned, the specific allegation against

accused No.5 in PCR.No.2/2018 (petitioner in Criminal Petition

No.1729/2020 Sri.G.Venkateshwara Rao) are that, he was a

practicing Chartered Accountant appointed by the Karnataka

High Court at Bengaluru to inspect the books and records of the

three Companies for the purpose of making the report in terms

of the second proviso to section 394 of the Companies Act 1956,

39

as to whether the affairs of the three Companies were conducted

in breach of these principles or public interest. It is alleged in

the complaint that the petitioner/accused No.5 therein conspired

with accused Nos.1 to 4 in commissioning the above offences

with a view to take over the assets of the three Companies by

accused Nos.1 to 4 of the net worth of Rs.31342 Crores as on

31.03.2004 wholly belonging to the public and for this purpose,

conspired to commit the offence within the meaning of section

13(1)(d) of the PC Act read with section 409 IPC. It is further

alleged that pursuant to the above conspiracy, accused No.5

allowed the merger to take place by falsely setting out in the

report made to the High Court of Karnataka as though the affairs

of the Company had not been conducted prejudicial to the

interest of the members and further as though the affairs of the

three Companies were not conducted against public interest and

that none of the Directors of the three Companies namely

accused Nos.1 to 3 derived any benefit from these Companies.

In paragraph No.32 clauses (a) to (k) of the complaint, the

specific instances of false misrepresentations made by accused

No.5 have been enumerated and I do not find it necessary to

40

reproduce the same in verbatim. Suffice it to note that each of

these allegations are sought to be supported by voluminous

documents. These allegations, therefore, cannot be brushed

aside as false and baseless as contended by the petitioner. Even

otherwise, as already noted above, the power under section 482

Cr.P.C. cannot be exercised at the threshold to stifle legitimate

prosecution when the allegations disclose the ingredients of the

criminal offence.

29. Though the petitioner in Criminal Petition

No.1729/2020 has urged in the petition that he is not a public

servant as defined under the provisions of the PC Act, 1988, yet

in the course of hearing, learned Senior Counsel appearing for

him has fairly conceded that in view of the appointment made by

the Hon’ble High court to discharge the duties in connection with

the administration of justice, petitioner answered the description

of “public servant” within the meaning of section 2(c)(v) and (vi)

of PC Act, 1988. However, as on the date of taking cognizance

of the alleged offence, the petitioner namely accused No.5

Sri.G.Venkateshwara Rao ceased to be a public servant and

41

therefore, in view of the provisions of the unamended section

19 of the PC Act, 1988, sanction for the prosecution of the

petitioner/accused No.5 in PCR.No.2/2018 is not necessary.

30. The allegations insofar as accused No.5 in

PCR.No.4/2018 (petitioner in Criminal Petition No.1643/2020 -

Sri.M.R.Bhat) are that he was working as the Registrar of

Companies, Karnataka, when the offences set out in the

complaint were committed. Presently, he is holding the office as

the Regional Director (Southern Region), Ministry of Corporate

Affairs, Chennai. He conspired with accused Nos.1 to 4 in

commissioning of the alleged offences with a view to take over

the assets of the three Companies of the net worth of Rs.31342

Crores by accused Nos.1 to 4, thus committed offences

punishable under section 13(1)(d) of the PC Act read with

sections 409 and 120-B of IPC. It is alleged in the complaint

that notice under section 394A of the Companies Act was issued

to the Office of the Regional Director, Ministry of Corporate

Affairs, having jurisdiction in respect of the Companies

concerned in the merger, with the object of ensuring that all

42

relevant views of the various Government organizations were

obtained before the Central Government made its report to the

High Court. However, the Regional Director authorized the

petitioner/accused No.5, then functioning as the Registrar of

Companies, Karnataka, to deal with the requirements of section

394A of the Companies Act. The petitioner however allowed the

merger to take place by not setting out the essential facts in

respect of the merger. The various instances of misconduct

committed by the petitioner namely accused No.5 are detailed in

para 31 clauses (a) to (h) and are sought to be substantiated

through relevant documents. Therefore, it cannot be said that

the prosecution of the petitioner is vindictive and baseless as

contended. These allegations prima facie disclose the elements

of section 13(1)(d) of the PC Act as well as section 120-B of IPC.

Sub-clause (iii) of section 13(1)(d) of PC Act contemplates that,

a Public Servant who while holding office, obtains for any person

any valuable thing or pecuniary advantage without any public

interest would be guilty of criminal misconduct. At the stage of

issuing summons to the petitioner, the learned Special Judge

was not required to ascertain the veracity of these allegations.

43

Having regard to the nature of the allegations set out in the

complaint which are sought to be substantiated through

documentary evidence, in my view, learned Special Judge was

justified in taking cognizance of the alleged offences and issuing

summons to the petitioner to face trial for the said offences.

POINT No.2:

31. The contention urged on behalf of this petitioner that

the prosecution initiated against him is bad in law for want of

prior sanction as envisaged under section 19 of the PC Act does

not merit acceptance. Sri.Udaya Holla, learned Senior Counsel

appearing for the petitioner namely accused No.5 in Criminal

Petition No.1643/2020 vehemently submitted that the petitioner

is a “public servant” as defined under section 2(c) of the PC Act.

As per the amended section 19 of the PC Act, learned Special

Judge was debarred from taking cognizance of the offences

punishable under sections 7, 11, 13 and 15 against a public

servant without proper sanction. The PC Act, 1988 was

amended by the Amendment Act, 2018 from 26.07.2018. As on

that date, the court had not taken cognizance of the alleged

44

offences. The records indicate that till completion of recording of

the sworn statement i.e., on 28.11.2018, there was no credible

material before the learned Special Judge to take cognizance of

the offences. Hence, as on the date of coming into operation of

the amended provisions of section 19 of the PC i.e., 26.07.2018,

cognizance of the alleged offence was not taken and therefore,

the provisions of the amended section 19 of the PC Act apply to

the facts of this case. Developing on this point, the learned

counsel would submit that the amendment brought to the PC Act

repealed the earlier provisions and in its place, the new provision

has been replaced and therefore, learned Special Judge could

not have taken cognizance of the alleged offences insofar as

petitioner namely accused No.5 is concerned without the

previous sanction of the Central Government. In support of this

submission, learned Senior Counsel has placed reliance on the

decision of the Full Bench decision of this Court in the case of

THE HASSAN CO-OPERATIVE MILK PRODUCERS SOCIETIES

UNION LIMITED & Others vs. STATE OF KARNATAKA,

DEPARTMENT OF CO-OPERATIVE SOCIEITIES & Others, ILR

2014 Karnataka 4257, wherein it is held that, substitution of a

45

provision results in repeal of the earlier provision and its

replacement by the new provision. When the Legislature

amends the old provision by way of substitution it intends to

keep alive the old provision. Referring to the law laid down by

the Hon’ble Supreme Court on the issue, the Full Bench of this

Court has held that,

“… the amendment which has the effect of

substitution of a provision has the effect of

replacing the old provision by the substituted

provision and in the absence of repugnancy,

inconsistency and absurdity, must be construed

as if it has been incorporated in the Act right from

abinitio. In other words, an amendment by way

of substitution has retrospective operation.”

32. Repelling the above argument, learned counsel

appearing for respondent No.1/ complainant referring to the law

laid down in Anthulay’s case, reiterated that petitioner namely

accused No.5 having ceased to hold the office of the Registrar of

Companies which position he was holding as on the date of

commission of the alleged offence, there was no requirement of

obtaining the prior sanction. Further placing reliance on the

46

exposition of law made by the Hon’ble Supreme Court in NANI

GOPAL MITRA vs. STATE OF BIHAR, AIR 1970 SC 1636 (para

Nos.5 and 6), learned counsel emphasized that,

As a general rule the amended law

relating to procedure operates retrospectively.

But there is another equally important principle

viz. that a statute should not be so construed as

to create new disabilities or obligations or

impose new duties in respect of transactions

which were complete at the time the amending

Act came into force. The same principle is

embodied in Section 6 of the General Clauses

act which is to the following effect:

“6. Effect of repeal – Where this Act or

any Central Act or Regulation made after the

commencement of this Act, repeals any

enactment hitherto made or hereafter to be

made, then, unless a different intention

appears, the repeal shall not-

(b) affect the previous operation of any

enactment so repealed or anything duly done or

suffered thereunder; or

(e) affect any investigation, legal

proceeding or remedy in respect of any such

47

right, privilege, obligation, liability, penalty,

forfeiture or punishment as aforesaid;

and any such investigation, legal

proceeding or remedy may be instituted,

continued or enforced, and any such penalty,

forfeiture or punishment may be imposed as if

the repealing Act or Regulation had not been

passed.”

6. The effect of the application of this

principle is that pending cases although

instituted under the old Act but still pending are

governed by the new procedure under the

amended law, but whatever procedure was

correctly adopted and concluded under the old

law cannot be opened again for the purpose of

applying the new procedure.”

33. Since the contentions raised by learned Senior

Counsel touches the very jurisdiction of the Trial Court, I have

given my thoughtful consideration to the submissions and have

meticulously examined the records of the Trial Court. On going

through the order sheet maintained by the Trial Court and the

observations made in para Nos.16 to 18 of the impugned order,

I find that the learned Senior Counsel has built up the above

48

argument on the supposition that cognizance of the alleged

offence was taken by the learned Special Judge subsequent to

the Amendment Act, 2018, but records speak otherwise. Of

course it is true that learned Special Judge has not stated in so

many words about taking cognizance of the alleged offences, but

the law is now well settled as held in CREF FINANCE LTD., vs.

SHREE SHANTHI HOMES (P) Ltd. and Another, (2005)7 SCC 467.

“… Cognizance is taken of the offence and not of

the offender and, therefore, once the court on

perusal of the complaint is satisfied that the

complaint discloses the commission of an

offence and there is no reason to reject the

complaint at that stage, and proceeds further in

the matter, it must be held to have taken

cognizance of the offence.”

34. In the instant case, the order sheet indicates that, on

receiving the complaint on 16.12.2017, the same was put up

before the learned Special Judge on 18.12.2017. Learned

counsel for the complainant was heard-in-part and the matter

was adjourned for further hearing and thereafter, the matter

was adjourned from time to time and written arguments of the

49

complainant was received on 06.03.2018 and the matter was set

down for recording sworn statement of the complainant on

02.08.2018.

35. What is taking cognizance has been explained by the

Hon’ble Supreme Court in R.R.CHARI vs. STATE OF UTTAR

PRADESH, AIR 1951 SC 207, wherein it is held,

“What is taking cognizance has not been

defined in the Criminal Procedure Code and I

have no desire to attempt to define it. It seems

to me clear however that before it can be said

that any Magistrate has taken cognizance of any

offence under Section 190(1)(a) of the Criminal

Procedure Code, he must not only have applied

his mind to the contents of the petition but he

must have done so for the purpose of

proceeding in a particular way as indicated in

the subsequent provisions of this Chapter-

proceeding under Section 200 and thereafter

sending it for inquiry and report under Section

202. When the Magistrate applies his mind not

for the purpose of proceeding under the

subsequent sections of this Chapter, but for

taking action of some other kind e.g. ordering

investigation under Section 156(3), or issuing a

50

search warrant for the purpose of the

investigation, he cannot be said to have taken

cognizance of the offence. The Court further

held that “as to when cognizance is taken of

an offence will depend upon the facts and

circumstances of each case and it is impossible

to attempt to define what is meant by taking

cognizance.”

36. Viewed in the light of the above exposition, the facts

noted in the order sheet clearly indicate that the learned Special

Judge has applied her mind to the facts of the case right from

the date of receiving the complaint and thereafter, decided to

proceed in the matter and therefore, it has to be held that

cognizance of the alleged offence was taken on 18.12.2017 itself

when the complainant was heard-in-part and the learned Special

Judge adjourned the matter for proceeding further in the matter.

Therefore, learned Special Judge having taken cognizance of the

offences much prior to the introduction of the amendment, it is

only the law prevailing as on the date of the cognizance is

applicable to the facts of the case. Hence, the submission of the

learned Senior Counsel that by virtue of the Amendment Act,

51

2018, the Trial Court has fallen in error in taking cognizance of

the alleged offences without prior sanction from the Central

Government cannot be accepted.

37. Lastly, the contention urged by learned Senior

Counsel Sri.Ravi B.Naik for the petitioners in Criminal Petition

Nos.1496/2020, 1499/2020 and 1500/2020 that the impugned

order is not in conformity with the directions issued by the

Hon’ble Supreme Court in PRIYANKA SRIVASTAVA AND ANOTHER

vs. STATE OF UTTAR PRADESH and Others reported in (2015) 6

SCC 287 also cannot be a ground to quash the proceedings. A

reading of the complaints indicate that the complainant did not

seek reference of the complaints for investigation under section

156(3) Cr.P.C., rather the prayer made in the complaint was to

proceed against the petitioners for the alleged offences under

section 200 Cr.P.C. In PRIYANKA’s case, referred to supra, the

Hon’ble Supreme Court has laid down that, there has to be prior

applications under Sections 154(1) and 154(3) while filing a

petition under Section 156(3) Cr.P.C. In para 31 of the above

decision it is observed that,

52

“… Both the aspects should be clearly spelt out in the application and necessary

documents to that effect shall be filed. The warrant for giving a direction that an application

under Section 156(3) be supported by an affidavit is so that the person making the application should be conscious and also

endeavour to see that no false affidavit is made. It is because once an affidavit is found to be

false, he will be liable for prosecution in accordance with law. This will deter him to casually invoke the authority of the Magistrate

under Section 156(3).”

Therefore, even this ground is not available to the petitioners to

seek quashment of the proceedings initiated against them.

POINT No.3:

38. In the light of the above discussion and for the

reasons stated above, I do not find any justifiable ground to

interfere in the impugned order. As a result, petitions are liable

to dismissed and accordingly, they are dismissed.

Sd/-

JUDGE

Bss.

criminal petition no.1643 of 2020 s/o late vasudeva … · 1. sri. azim hasham premji s/o shri mohd...

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