Telangana High Court
Shri Bhuwan Kumar Chaturvedi, ... vs State Of Ap., Rep. Spl.Pp., Cbi Cases, ... on 26 September, 2018
THE HON'BLE SRI JUSTICE M.SATYANARAYANA MURTHY
CRIMINAL PETITION NO.1682 OF 2013
ORDER:
This criminal petition is filed by the petitioner herein/A-6 to quash the proceedings in C.C.No.281 of 2012 pending on the file of Additional Chief Metropolitan Magistrate (CBI Cases), Hyderabad, registered for the offences punishable under Sections 120-B & 420 IPC.
For better appreciation of the case, the details of all the accused in Crime RC No.22(S)/2005-CBI/Hyd dated 25.09.2010, is tabulated as follows:
A-1 - Dr. Helmuth Wolfgang Schuster, Member of the Board of Skoda Auto and also the Chairman of Volkswagen Pension Trust.
A-2 - Sri Ashok Kumar Jain, Indian representative of
Vokswagen AG, Germany
A-3 - M/s Vashishta Wahan Private Limited
A-4 - Sri Jagadeesh Alaga Raja, one of the Directors of
M/s Vashishta Wahan Private Limited
A-5 - Smt. Gayathri Rai @ Gayathri Chandravadhanan,
Sister-in-law of Sri Jagadeesh Alaga Raja and Proprietrix of M/s K.R. International, Chennai A-6 - Sri Bhuwan Kumar Chaturvedi, one of the two Directors of M/s Vashishta Wahan Private Limited A-7 - Dr. Joseph V. George, Chairman of Garden City Educational Trust, Bangalore It is alleged by the respondent/C.B.I that, all the above accused entered into criminal conspiracy, cheated the Government of Andhra Pradesh and siphoned-off an amount of Rs.11.674 crores (equivalent to Euro 2 million). The allegations made against the petitioner/A-6 and other accused for their alleged acts are as follows:
2 MSM,J Crl.P_1682_2013 In the year 2002, the Government of Andhra Pradesh and M/s Volkswagen AG Germany started negotiations for setting up of a car manufacturing plant in the State of Andhra Pradesh. Dr. Helmuth Schuster (A-1) was appointed as Head of Volkswagen India Project by M/s Volkswagen AG Germany and Sri Ashok Kumar Jain (A-2) as the Chief Advisor. After several correspondence between Dr. Helmuth Schuster (A-1), Sri Ashok Kumar Jain (A-2), M/s Volkswagen AG Germany and the officials of Government of Andhra Pradesh regarding setting up of car manufacturing unit in the State of Andhra Pradesh, on
02.01.2004, Government of Andhra Pradesh issued G.O.Ms.No.1, sanctioning Rs.25 crores for purchase of 50 ambulances from M/s Volkswagen AG Germany and 2,700 Euros per ambulance towards additional transportation cost.
Further, subsequent to the change in the political leadership in the State of Andhra Pradesh in May 2004, after the General Elections, the negotiations pertaining to setting up of car manufacturing unit continued. During the visit of Dr. Helmuth Schuster (A-1) and Sri Ashok Kumar Jain (A-2) to Hyderabad on 04.06.2004 and 05.06.2004, they held discussions with various officials of Government of Andhra Pradesh and conveyed their interest in continuing the project with the new government. They also met the then Hon'ble Chief Minister of Andhra Pradesh late Sri Y.S. Rajashekar Reddy during the aforesaid visit. On 05.06.2004, the Hon'ble Chief Minister of Andhra Pradesh addressed a letter to Dr. Helmuth Schuster (A-1) reiterating the commitments made by the previous government and invited M/s Volkswagen, AG, Germany to set up their plant at Visakhapatnam, Andhra Pradesh.
3 MSM,J Crl.P_1682_2013 On 27.07.2004 a meeting between the representatives of M/s Volkswagen AG, Germany and the officials of the Government of Andhra Pradesh was held at Hyderabad. The said meeting was attended by Sri Botsa Satyanarayana, the then Hon'ble Minister for Major Industries, Sri K.V. Rao, IAS, Principal Secretary, Government of Andhra Pradesh and Sri Sameer Sharma, IAS, Commissioner for Industries as the representatives of Government of Andhra Pradesh, while Dr. Helmuth Schuster (A-1) and Sri Ashok Kumar Jain (A-2) represented M/s Volkswagen AG, Germany. In this meeting, Government of Andhra Pradesh had agreed to extend incentives like tax rebates, uninterrupted power supply, water, 350 acres of land at free of cost, commitment to purchase vehicles for Government of Andhra Pradesh while replacing current fleet from M/s Volkswagen AG, Germany. However, in August, 2004 Sri K.V. Rao, Principal Secretary to Government of Andhra Pradesh had addressed a letter to Dr. Helmuth Schuster (A-1) referring the meeting held in July, 2004 and stated that instead of Ambulances, Government of Andhra Pradesh would like to buy an assorted mix of various models of vehicles manufactured by M/s Volkswagen AG, Germany for the same amount committed earlier. This letter was acknowledged by M/s Volkswagen AG, Germany and they have sought the requirements with regard to the types of vehicles required by the Government of Andhra Pradesh. Further, on 10.8.2004, a meeting took place to finalize the mix of vehicles to be purchased from M/s Volkswagen AG, Germany. However, no final decision was taken. The negotiations continued and various delegations both from M/s Volkswagen AG, Germany and the Government of Andhra Pradesh visited India and Germany respectively and held discussions with regard to the 4 MSM,J Crl.P_1682_2013 setting up of the aforesaid plant. On 5-1-2005, Dr. Helmuth Schuster (A-
1) sent an e-mail to Sri Ashok Kumar Jain (A-2), who was camping at Hyderabad mentioning that M/s Volkswagen AG, Germany, after detailed deliberations had taken a decision to set up the project at Visakhapatnam and that the Government of Andhra Pradesh had offered a package of incentives to facilitate the location and operation of the project. In the same e-mail, it was further mentioned that M/s Volkswagen AG, Germany would have 51% stake in the project and the Government of Andhra Pradesh may consider to take a nominal Equity position which can be redeemed at the discretion of the Government of Andhra Pradesh in the project to affirm its commitments and that the project would be implemented immediately. Further, on a hard copy of the said e-mail, endorsement by Dr. Helmuth Schuster (A-1) with his signature which reads as follows:
"I agree and will authorise it in Hyderabad tomorrow 7-1-2005 in a joint protocol".
On the strength of this e-mail Sri Ashok Kumar Jain (A-2) held discussion with the officials of Government of Andhra Pradesh on 6-1-2005. On 6-1-2005, Sri Raghavendra Rao, the then Officer on Special Duty (OSD) to the then Minister for Major Industries Sri B. Satyanarayana initiated a note for obtaining the approval for the Equity participation by the Government of Andhra Pradesh by citing the e-mail sent by Dr. Helmuth Schuster (A-1) dated 5-1-2005 which was handed over to him by Sri Ashok Kumar Jain (A-2). In the said note, it was mentioned that Dr. Helmuth Schuster (A-1) would be visiting Hyderabad on 7-1-2005 and would call on the Hon'ble Chief Minister and make a formal request to the Government of Andhra Pradesh to commit 5 MSM,J Crl.P_1682_2013 Equity participation of 5 million Euros with a further confirmation of 2 million Euros which shall be remitted to the Bankers of M/s Volkswagen AG, Germany within a period of 5 to 7 days from 7-1-2005. In the said note, he further mentioned that the project would be formally announced by M/s Volkswagen AG, Germany by 18-1-2005, confirming its location at Visakhapatnam. Further, on confirmation of the Equity participation in the project, the earlier understanding of purchase of 50 numbers of vehicles from M/s Volkswagen AG, Germany should be reconsidered. In the same note, it was also mentioned that the Government may agree to contribute a sum of Euro 5 million as Equity in the form of "optionally fully convertible cumulative preference shares carrying dividend". The conversion option would be available to Government of Andhra Pradesh at par.
Further, it was also suggested in the note that the Government may engage services of a reputed consulting agency with automobile sector through APIIC (Andhra Pradesh Industrial Infrastructure Corporation). APIIC, a separate Corporation was established by the Government of Andhra Pradesh under the Companies Act for the Development of Industrial Infrastructure for speedy promotion and development of Industrial Growth. A draft letter from the Government of Andhra Pradesh to Dr. Helmuth Schuster (A-1) was also placed in the file for approval. The aforesaid note was signed by the OSD to the Minister, Sri Raghavendra Rao and approved by the then Principal Secretary (Industries), Sri K.V. Rao and the then Principal Secretary (Finance) approved the Equity participation by the Government of Andhra Pradesh through APIIC in M/s Volkswagen AG, Germany or the company duly Incorporated in India for this purpose. This note was later approved by 6 MSM,J Crl.P_1682_2013 then Minister for Major Industries, the then Minister (Finance) and then Chief Minister of the Government of Andhra Pradesh. Sri Ashok Kumar Jain (A-2) had informed about the quantum of Equity participation in the aforesaid project to Sri K.V. Rao, the then Principal Secretary (Industries). Sri K.V. Rao, the then Principal Secretary (Industries) had taken an informal advise from M/s Capital Fortunes Ltd., regarding the steps to be taken about Equity participation by the Government of Andhra Pradesh in the above said project. On 7-1-2005, Dr. Helmuth Schuster (A-1) visited Hyderabad and held discussions with the then Hon'ble Minister for Major Industries and the other officials of Government of Andhra Pradesh. During this meeting, Dr. Helmuth Schuster (A-1) wanted the Government of Andhra Pradesh to transfer 5 million Euros to a company by name M/s EE Trading at Dubai. However the officials of Government of Andhra Pradesh did not agree to this proposal, but stated that they were ready to pay the said amount as an Equity Participation in the whole project. Accordingly, at the end of the meeting, Dr. Helmuth Schuster (A-1) wrote a letter dated 7-1-2005 addressed to the then Hon'ble Minister for Major Industries, Andhra Pradesh, Sri B. Satyanarayana and mentioned as follows:
"After detailed deliberations, a decision has been taken by the Volkswagen-AG, to set up the project in Visakhapatnam, Andhra Pradesh, India. Government of Andhra Pradesh has offered a package of incentives to facilitate location and operation of the project. Volkswagen-AG will have a minimum 51% stake in the project and the Government of Andhra Pradesh may consider to take a nominal Equity position which can be redeemed at the discretion of the Government of Andhra Pradesh in the project to its commitments. The project shall be implemented immediately".
This letter was signed by Dr. Helmuth Schuster (A-1) in his capacity as VW Chairman of Pension Trust and Head of VW India Project.
7 MSM,J Crl.P_1682_2013 Sri K.V. Rao, the then Principal Secretary (Industries) had addressed a letter on 7.1.2005 to M/S Volkswagen AG, Germany with attention to Dr. Helmuth Schuster (A-1), Head of VW India Project referring the letter received from Dr. Helmuth Schuster (A-1) dated 7.1.2005 that Government of Andhra Pradesh, after due consideration of the proposal, had decided to participate in the equity through their wholly owned government undertaking namely APIIC. The letter further mentioned that the equity participation would be to the tune of 5 million Euros, out of which 2 million Euros will be released by APIIC immediately after confirmation from M/s Volkswagen AG, Germany about the structure of the project being incorporated and the Head of the account of M/s Volkswagen AG, Germany or an Indian company nominated by M/s Volkswagen AG, Germany towards which the remittances would be made. However, in this letter the words, "equity in the form of optionally fully convertible cumulative preference shares carrying dividend with redeemable option to the government through the wholly owned government undertaking which is APIIC" which were there in the draft were struck off and the final letter merely mentioned "equity through the wholly owned government undertaking which is APIIC". Similarly in the draft Dr. Helmut Schuster (A-1) inserted the words "Indian Company nominated by VW" in his own handwriting.
The Government of Andhra Pradesh has issued a Government Order vide GO Ms No. 12 dt. 10-1-2005 stating that APIIC would participate in the Equity of the project on behalf of the Government of Andhra Pradesh to the tune of 5 million Euros out of which 2 million Euros would be released by APIIC immediately after confirmation from 8 MSM,J Crl.P_1682_2013 M/s Volkswagen AG, Germany about the structure of the project being incorporated and Head of the Volkswagen AG Germany or an Indian company nominated by Volkswagen AG towards which remittance should be made. In the said Government Order, the Vice Chairman & MD of APIIC was directed to take necessary further action to release the funds and remit the same to the Head of the account to be informed by M/s Volkswagen AG, Germany for contribution towards equity.
On 10-1-2005, a fax message was received by Sri K.V. Rao, the then Principal Secretary (Industries) from Dr. Helmuth Schuster (A-1) wherein he had referred the letter of Government of Andhra Pradesh dated 7-1-2005 conveying their acceptance for contributing a sum of 5 million Euros towards Equity in the project through APIIC, out of which 2 million Euros would be released immediately and that the balance of 3 million Euros within one week. In the same letter, Dr. Helmuth Schuster (A-1) also mentioned that a company by name and style "Vashishta Wahan Pvt Ltd" was being incorporated for the purpose of establishing Volkswagen manufacturing plant at Visakhapatnam, wherein M/s Volkswagen AG, Germany would have a 51% stake in the project. In the same letter, Dr. Helmuth Schuster (A-1) informed that the Equity share of Government of Andhra Pradesh shall be deposited in the accounts of M/s Vashishta Wahan Private Limited at HSBC South Extension, New Delhi, in Account No. 053-052577-001.
As per Investigation, after the receipt of the fax message dated 10- 1-2005 from Dr. Helmuth Schuster (A-1), wherein he requested the Government of Andhra Pradesh to transfer the funds to the account of M/s Vasishta Wahan Private Limited (VWPL), on 10.01.2005, 9 MSM,J Crl.P_1682_2013 Sri L.V. Subramanyam, the then Vice-Chairman & Managing Director of APIIC had engaged the services of M/s Amarchand Mangaldas and Shroff and company, Advocates and Solicitors, Mumbai as consultants. They were provided with all the correspondence and were asked to work out proper legal procedure required for the transaction pertaining to Equity participation by the Government of Andhra Pradesh. Accordingly on 11-1-2005 Sri L.Vishwanadhan, Partner in M/s. 'Amarchand Mangaldas from Mumbai along with Smt. Vijayalakshmi representative of M/s Amarchand Mangaldas in Hyderabad went to APIIC and held discussions with the officials of Legal and Finance Department of APIIC as well as with Sri L.V. Subrahmanyam the then VC & MD of APIIC. After detailed discussions, Sri L.Vishwanadhan advised Sri L.V. Subrahmanyam VC & MD of APIIC that an amount of 2 million Euros proposed to be given to M/s Vashishta Wahan Private Limited by APIIC may be held in an "Escrow Account" (Escrow means money/property/bond is put in the custody of a third party for delivery to a guarantee only after the fulfilment of the specified conditions). Accordingly, the request of the APIIC, Sri L.Vishwanadhan addressed a letter to Sri Vikas Batra, Senior Vice President, HSBC, New Delhi on 12- 1-2005 wherein he mentioned that his clients namely APIIC proposed to send a Bankers cheque for a sum of 2 million Euros equivalent in Indian Currency and requested the bank to hold the same in Escrow to be transferred to the credit of M/s Vashishta Wahan Private Limited, Account No. 053-052577-001 {account no. furnished by Dr. Helmuth Schuster (A-1) in his letter dated 10.01.2005} upon receipt of instructions from the clients, certain conditions were required to be fulfilled.
10 MSM,J Crl.P_1682_2013 Sri Jagdeesh Alaga Raja (A-4) in furtherance of the conspiracy with Dr. Helmuth Schuster (A-1) and others, reached Hyderabad along with Sri Ashok Kumar Jain (A-2) on 13-1-2005, visited APIIC and met Sri L.V. Subrahmanyam the then VC & MD of APIIC and persuaded him to show the commitment of Government of Andhra Pradesh by participating in the form of Equity in the said project. Sri L.V. Subrahmanyam the then VC & MD sent a letter to the Manager, HSBC, Punjagutta, Hyderabad enclosing the letter dated 12-1-2005 of M/s Amarchand Mangaldas to HSBC, New Delhi and also enclosed a cheque No. 966728 dt. 13-1-2005 for Rs. 11.674 crores (equivalent to 2 million euros), with a request to hold the same in "Escrow Account" subject to the conditions mentioned in the letter dated 12-1-2005 of the Solicitors. Copy of the said letter was marked to Sri Vivek Batra, Senior Vice-President, HSBC, New Delhi. Further, Sri Vivek Batra was requested to communicate to M/s Volkswagen AG about the deposit of funds with HSBC by APIIC. However, Sri Jagadeesh Alaga Raja (A-4), Director of M/s Vashishta Wahan Private Limited asked HSBC to inform one Mr. Olaf Gothal of Commerz Bank, Germany about the receipt of this money.
On 13-1-2005, a meeting took place between the officials of APIIC, Sri Ashok Kumar Jain (A-2), Sri Jagadeesh Alaga Raja (A-4), Mr. Alfred Strohlein, Sr. Counsel, M/s Volkswagen AG, Germany and Dr. Hans Raber, Attorney of M/s Volkswagen AG, Germany in the Office of APIIC. This meeting was also attended by Raghavendra Rao, the then OSD to the then Minister for Major Industries. Sri L. Vishwanadhan and Smt. Vijayalakshmi of M/s Amarchand Mangaldas were also part of the meeting. The then Hon'ble Minister for Major Industries, Sri B. Satyanarayana was also present for a brief period during the 11 MSM,J Crl.P_1682_2013 aforesaid meeting. Because of the pressure exerted by Sri Ashok Kumar Jain (A-2) and Sri Jagadeesh Alaga Raja (A-4), who were constantly appeared to be in touch with Dr. Helmuth Schuster (A-1) over phone as observed by others, Sri L.V. Subrahmanyam the then VC & MD, APIIC informed Sri L. Vishwanadhan that the HSBC, New Delhi was unable to accept the cheque as they could hold the cheque in Escrow only if there was an agreement between the parties i.e. APIIC and M/s Vashishta Wahan Private Limited. At this stage, Sri L. Vishwanadhan spoke to Sri Vivek Batra over phone and asked him to send a standard proforma of the agreement for the Escrow Account. In the meantime, Sri L.V. Subrahmanyam, the then V.C.& M.D. of APIIC informed Sri L.Vishwanadhan that keeping the money in Escrow Account and holding the cheques was not acceptable to the concerned and the same had to be released immediately. Sri L.Vishwanadhan informed Sri L.V. Subrahmanyam that release of funds was the discretion of APIIC, but certain documents like Memorandum and Articles of Association, Certificate of Incorporation and Board Resolution authorising allotment of shares to APIIC need to be perused. Sri L.Vishwanadhan then addressed another letter to VC & MD, APIIC Sri L.V. Subramanyam dated 13-1-2005, mentioning as follows:
"We understand M/s Volkswagen AG, Germany required monies in the account of captioned company Vashist Wahan Pvt. Ltd., evidencing the commitment of APIIC in the project prior to their Board meeting (at Germany) scheduled for 17-1-2005 to consider investment in the project. While in the normal course, subscription monies would be remitted only when documentation for investment is completed, however, in view of the circumstances, and since the below mentioned documents are being made available to APIIC, APIIC may release the amounts to the accounts designated by M/s Volkswagen AG, Germany"
a) Memorandum of articles of association of the company
b) Certificate of incorporation; and
c) Board Resolution of the Company authorising allotment of shares to APIIC"
12 MSM,J Crl.P_1682_2013 On the strength of this letter 13.1.2005 from Sri L.Vishwanadhan, Sri L.V. Subrahmanyam the then & MD of APIIC wrote another letter to Sri Vivek Batra, Senior Vice President, HSBC, New Delhi which reads as follows:, "On the advise of our Solicitors vide their letter dated 13.01.2005 and also taking into account the decision of the Board of M/s Vashishta Wahan Private Limited, Delhi dated 13.01.2005 for allotment of shares pro rata for the above amount in favour of APIIC, Hyderabad, we instruct you kindly credit the amount of the cheque in favour of M/s Vashishta Wahan Private Limited, Delhi Account No. 053-052577-001 under intimation to us. Since allotment of shares can only be done on receipt of this amount, your action is solicited".
Along with the said letter, Sri LV Subramanyam enclosed a copy of the resolution passed by the Board of Directors of M/s Vashishta Wahan Private Limited. This resolution pertains to a board meeting purported to be held by the Board of Directors of M/s Vashishta Wahan Private Limited at New Delhi on 13-1-2005. This resolution is as follows:
"resolved that APIIC a wholly owned undertaking of Government of Andhra Pradesh may be invited to participate in the proposed project of the company and further that an Equity Stake of 2.5% will be offered to APIIC and that shares equivalent to 2.5% shall be allocated in favour of APIIC on the receipt of full consideration of 5 million euros and the shares will be made available to APIIC pro-rata to the subscriptions received".
It is to be noted that, this text was certified as true copy by Sri Jagadeesh Alaga Raja (A-4).
Investigation revealed that the said document was falsely created by Sri Jagadeesh Alaga Raja (A-4) as he was in Hyderabad on 13.01.2005 and whereas the other Director Sri B.K. Chaturvedi (A-6) was at Delhi. In view of this the contention that the resolution was passed in New Delhi in a meeting is found to be false. Sufficient oral and documentary evidence is enclosed here with to prove the same and Sri Vinod Dua, the Chartered Accountant of M/s Vashishta Wahan Pvt. Limited admitted that none of the Directors of M/s Vashishta Wahan Private Limited came 13 MSM,J Crl.P_1682_2013 to the registered address of M/s Vashishta Wahan Private Limited and that no board resolution was passed on 13-1-2005. According to him, the minutes of the said board resolution were prepared at a later point of time. He further informed that on 13-1-2005 at the instance of Sri Jagadeesh Alaga Raja (A-4), he despatched the Memorandum and Articles of Association of M/s Vashishta Wahan Private Limited to Sri L.V. Subrahmanyam through a private courier namely M/s Blazeflash Couriers, New Delhi. The original receipt of the courier confirms the same. Shri Vinod Dua further mentioned that, at the instance of Sri Jagadeesh Alaga Raja (A-4), he sent a draft copy of the Board Resolution on 13-1-2005 to Sri L.V. Subrahmanyam, the then VC & MD of APIIC by fax.
The Memorandum and Articles of Association of M/s Vashishta Wahan Private Limited merely mentions Sri Jagadeesh Alaga Raja (A-4) and Sri B.K. Chaturvedi (A-6) as the Directors of the company and the main objects of the company are to manufacture, assemble, import and export of motor cars, motor trucks, vans etc. However, there is no mention about M/s Vashishta Wahan Private Limited being the nominee as Indian company of Volkswagen AG nor there was any mention of M/s Volkswagen AG being the holding company Limited. There were no details about M/s Volkswagen AG, Germany neither participating in the Equity of M/s Vashishta Wahan Private Limited nor nominating one of its persons as one of its persons as the Director of M/s Vashishta Wahan Private Limited.
On receipt of the 2nd letter dated 13.01.2005 from Sri L.V. Subrahmanyam authorizing the credit of the cheque for 14 MSM,J Crl.P_1682_2013 Rs.11,67,40,000/-, the HSBC deposited the amount in the account of M/s Vashishta Wahan Private Limited maintained at New Delhi.
From 25-5-2005 to 27-5-2005, a team of 8 officials of M/s Volkswagen AG, Germany led by Dr. Helmuth Schuster (A-1) visited Hyderabad and held a detailed discussion with the officials of the Government of Andhra Pradesh. At the end of the meeting, a joint protocol dt. 27-5-2005 was signed. In this protocol, it was mentioned that Government of Andhra Pradesh would provide all the necessary infrastructure like electricity, water, land for the factory as well as for housing, access to natural gas etc., further the Government of Andhra Pradesh would set up facilities for disposal of solid waste, affluent treatment and also make best efforts for facilitating setting up of international schools, laying of optical fiber cables, getting the project site declared as SEZ and also to develop exclusive industrial estate for locating ancillary units near the project. However, this joint protocol did not mention anything about the equity participation by Government of Andhra Pradesh or the release of 2 million Euros into the account of M/s Vashishta Wahan Private Limited or about the incorporation of M/s Vashishta Wahan Private Limited as an Indian company nominated by Volkswagen AG, Germany.
On 22.06.2005, Volkswagen AG, Germany had informed the Government of Andhra Pradesh that Helmuth Schuster (A-1) had resigned from the services of Volkswagen AG, Germany on 15-6-2005 and that as a consequence the services of Sri Ashok Kumar Jain (A-2) were also being withdrawn. In the same letter the names and designations of the new team who would be dealing with VW India project were also mentioned. Further M/s Volkswagen AG, Germany had 15 MSM,J Crl.P_1682_2013 requested Government of Andhra Pradesh to give the details about M/s Vashishta Wahan Private Limited which was incorporated in India. As a reply to this letter, Sri B. Satyanarayana, the then Minister for Major Industries wrote a letter to M/s Volkswagen AG, Germany on 1-7-2005 stating that Government of Andhra Pradesh was surprised that M/s Volkswagen AG, Germany was seeking information about the current status of M/s Vashishta Wahan Private Limited which was incorporated by M/s Volkswagen AG, Germany in India for the purpose of the project. The Minister further said that based on the letter dt. 10-1-2005 from M/s Volkswagen AG, Germany, Government of Andhra Pradesh had released 2 million Euros into the account of M/s Vashishta Wahan Private Limited on 13-1-2005. This was the first time that Government of Andhra Pradesh had committed in writing to M/s. Volkswagen AG, Germany about the release of 2 million Euros to M/s Vashishta Wahan Private Limited.
On 11-7-2005 M/s Volkswagen AG, Germany wrote to the Government of Andhra Pradesh mentioning that Volkswagen had filed a criminal charge against Dr. Helmuth Schuster (A-1) on various issues including the VW India project in Andhra as there was suspicion of fraud and breach of trust. Investigation revealed that, another fax message signed by Helmuth Schuster (A-1) was seized from the Office of one M/s Amarchand and Mangaldas, Mumbai who were the legal Advisors of M/s Andhra Pradesh Industrial Infrastructure Corporation Limited, a Government of Andhra Pradesh's Official Company. This undated fax was not addressed to anyone. This was sent after 07.01.2005 as there was a reference to the Government of Andhra Pradesh dated 7-1-2005 in this fax. In the said fax Dr. Helmuth Schuster stated that Government of 16 MSM,J Crl.P_1682_2013 Andhra Pradesh may kindly transfer the funds pertaining to the equity in VW India Project into the bank account of Project Management Committee i.e. M/s EE Trading FZ-LLC. Further the fax mentioned that the shares would be allocated to APIIC by the Indian company (VW India Project) which was under formation. Further Dr. Helmuth Schuster (A-1) asked that the copy of the TT advice be sent as soon as possible. This fax was not available in the records of Government of Andhra Pradesh or APIIC. But the fax copy was seized from the O/o Amarchand and Mangaldas clearly shows that the same was faxed from the Industries Department of Government of Andhra Pradesh as per the header information on the said fax. It appears that initially Dr. Helmuth Schuster (A-1) wanted the transfer of funds to be done to M/s EE Trading which is a foreign company and later changed it to M/s Vashishta Wahana Private Limited in the subsequent letter, might be due to the objections raised by Government of Andhra Pradesh.
The APIIC had released an amount of Rs. 11.674 crores into the account of M/s Vashishta Wahan Private Limited at HSBC, New Delhi on 13-1-2005. Investigation further revealed that one million US dollars from the 2 million Euros, from the account of M/s Vashishta Wahan Private Limited was transferred in to the account of M/s IXXXT at Stadtsparkase, Dusseldorf, Germany, which is the front company of Dr. Helmuth Schuster (A-1).
Investigation also revealed that the beneficiaries identified from the account of M/s Vashishta Wahan Private Limited are as follows:
a) Sri Ashok Kumar Jain (A-2) received an amount of Rs. 3.90 lakhs
b) Sri Jagadeesh Alaga Raja (A-4) withdrawn various amounts through self cheques on different occasions for an amount of Rs. 18 lakhs.
17 MSM,J Crl.P_1682_2013
c) M/s K.R. International represented by Smt Chandravadhanan (A-5) received an amount of Rs. 2 crores and this amount was further transferred into her personal account and the personal account of Sri Jagadeesh Alaga Kaja (A-4) and then withdrawn as cash.
d) M/s IXXXT, a Switzerland incorporated company received an amount of one million US dollars (minus tax deduction of 15%) i.e. Rs. 3.74 crores.
e) 15% tax deducted at source on the transfer of money to M/s IXXXT i.e. Rs. 66 lakhs.
f) Dr. Joseph V. George (A-7), Chairman of Garden City Educational Trust, Bangalore received an amount of Rs. 5 crores from Sri Jagadeesh Alaga Raja (A-4). This amount has been recovered from the aforesaid person and is deposited in fixed deposit as per the orders of XIV ACMM Court, Hyderabad, in Andhra Bank Nampally Branch since then.
g) Sri Vinod Dua, Chartered Accountant Wahan Private Limited received an amount of Rs. 62,442/-
The total amount mentioned above comes upto Rs. 11.623 crores. The balance of Rs. 5.07 lakhs is available in the account of M/s Vashishta Wahan Private Limited. Apart from these monies, Sri Ashok (A-2) had received various other amounts from time to time from Jagadeesh Alaga Raja (A-4) through his associate, Sri Mannil Govindan. The total amount is to the tune of about Rs. 146.5 lakhs. However, these payments were not made directly from M/s Vashishta Wahan Private Limited account. Various statements of accounts of Sri Ashok Kumar Jain (A-2) and a firm represented by him in the name of M/s Trade Partner International shows the flow of these amounts. An agreement was signed by M/s K.R. International represented by Smt. Gayatri Chandravadhanan (A-5) and M/s Vashishta Wahan 18 MSM,J Crl.P_1682_2013 Private Limited for the purchase of land for setting up of agencies for sale of cars etc., and accordingly an amount of Rs. 2 crores was transferred into the account of M/s K.R. International at Standard Chartered Bank in Chennai. These Rs. 2 crores were further transferred into the private accounts of Sri Jagadeesh Alaga Raja (A-4) and Smt Gayathri Chandravadhanan (A-5) and later withdrawn in cash.
M/s IXXXT was a company incorporated in Switzerland having an account at Dusseldorf, Germany. M/s IXXXT had signed an agreement with M/s Vashishta Wahan Private Limited for carrying out a detailed market surveys for automobiles for Volkswagen AG India on behalf of M/s Vashishta Wahan Private Limited. For this purpose, it was shown that one million US dollars minus tax deducted at source was transferred into the account of M/s IXXXT i.e., after deduction of 15% tax, an amount of Rs. 3.74 crores was transferred into the account of M/s IXXXT and an amount of Rs. 66 lakhs was remitted to the Income Tax Department as tax.
Further, Dr. Joseph V. George (A-7), Chairman of Garden Educational Trust, Bangalore had signed a MoU with Jagadeesh Alaga Raja (A-4) on 15-2-2005 for acquiring land in and around Bangalore city for developing sales and service outlets for the cars to be manufactured by M/s Vashishta Wahan Private Limited and accordingly Rs. 5 crores was transferred into the account of Dr. Joseph V. George. From this account he issued cheques to various persons for purchasing land located at Kithaganur Village, Bidarhalli, Bangalore East Taluk. During investigation the aforesaid Rs.5 crores was seized from Dr.Joseph V. George (A-7) in the form of cheques and the said money was deposited in 19 MSM,J Crl.P_1682_2013 Andhra Bank, Nampally Branch as per the orders of XIV ACCMM Court at Hyderabad. Investigation further disclosed that Sri Jagadeesh Alaga Raja (A-4) had also entered into agreements with certain persons in India and collected huge amount of money by promising to give them dealerships of M/s Volkswagen AG and thereby cheated them. On this issue various cases are pending in courts against him. Further, Letter Rogatories (LRs) under the provisions of Section 166-A Cr.P.C were sent through XIV ACMM Court, Hyderabad to Germany, Switzerland and Dubai. Replies in respect of the LRs sent to Germany, Switzerland were received and the same were got translated into English. The LR reply from Dubai is still awaited.
As per the German Law, the witnesses depose in front of the Prosecutor and the Prosecutor administers the questionnaire sent by the CBI. At the end of the same, supplementary questions can also be asked through the Prosecutors. Further at the end of the deposition, the witness signs the statement along with the Police Officer, who recorded the same. Through the LRs, five important witnesses namely Mr. Strohlein, Attorney of Volkswagen AG, Dr. Hans Raber, Senior Counsel, Volkswagen AG, Mr. Bernd Pischitsrieder, Chief Executive of Volkswagen AG, Mr. Ganninger, Attorney to Volkswagen AG were examined in the presence of Prosecutors and their detailed statements were got recorded. Further Mr. Olaf Gothal, employee of Commerz Bank, Dusseldorf, Germany was also examined. These statements were obtained through proper channel and got translated into English and the same are enclosed with the Charge Sheet.
It is stated in the charge sheet that the witnesses mentioned above stated that neither Dr. Helmuth Schuster (A-1) nor Sri-Ashok Kumar 20 MSM,J Crl.P_1682_2013 Jain A-2) nor Sri Jagdeesh Alaga Raja (A-4) was authorized to make any commitment on behalf of Volkswagen AG Germany and were not authorized to accept an amount of 2 Million Euros (Equivalent Indian currency of Rs.11,67,40,000/-) and till then, there was no decision of Board of M/s Volkswagen AG to set up a car manufacturing unit in Andhra Pradesh, India. Further, it is stated in the charge sheet that, the records received through Letter Rogatory (LR), it has come to light that M/s IXXXT had indeed received 8,50,000 US dollars and later transferred various amounts between 09.02.2005 to 17.05.2005 into the account of M/s EE Trading and certain cash withdrawals were made by one Mr. Jesco Beck who is the promoter of M/s IXXXT. Mr. Jesco Beck is the person who signed the agreement between M/s IXXXT and M/s Vashishta Wahan Private Limited. The records reveal that the account of M/s EE Trading that an amount of 4,05,000 Euros was transferred to various persons including Dr. Helmuth Schuster (A-1) having an account in Prague (Czech Republic). It is also revealed that M/s IXXXT was incorporated in Switzerland and that the said company had become bankrupt and was closed on 27-10-2006. M/s EE Trading is a company based at Dubai and is represented by one Mr. Eric Boesler. It was confirmed that there are remittances from M/s Celestial Overseas to M/s IXXXT. An amount of 4,60,000 Euros was transferred from M/s Celestial, Overseas to M/s IXXXT during the month of February and May, 2005. Further, M/s Celestial Overseas has paid another 1,00,000 Euros to the private account of Dr. Helmuth Schuster (A-1) held with Bawg in Prague, as such, a total of about 12,00,000 Euros i.e. around Rs. 7 crores were transferred to the accounts of Dr. Helmuth Schuster (A-1) by Sri Jagadeesh Alaga Raja (A-4) both from the bank account of 21 MSM,J Crl.P_1682_2013 M/s Vashishta Wahan Private Limited (A-3) and M/s Celestial Overseas. From the German prosecutors it has come to light that M/s IXXXT is the front company of Dr. Helmuth Schuster (A-1). They also informed that Dr. Helmuth Schuster (A-1) had involved in various frauds and breach of trust in different projects of M/s Volkswagen AG, Germany at Angola and Prague. The report of Prosecutors of Germany in the LRs received shows that there are various transfer of funds and Dr. Helmuth Schuster (A-1) was the ultimate beneficiary.
It was revealed from the reply to Letter Rogatory from the Swiss Government that M/s IXXXT was a registered company in Neuchatel, Switzerland since the year 2000. The main operative in the said firm was one Mr. Jesko Beck who is a German authorities. The said company was defunct for most of the time and was not doing any business leave alone Market Survey. The Swiss authorities had examined one Mr. Anton Edwin Deuber who was an associate in the aforesaid firm and this person denied his knowledge about the whole issue and put the blame on the aforesaid Mr. Jesko Beck and Mr. Anton Edwin Deuber was a mere signatory in establishing the firm with Mr. Jesko Beck being a Swiss National. The aforesaid Mr. Jesko Beck appears to be a front operating of Dr. Helmuth Schuster (A-1) and could not be traced during investigation.
Thus, from the above material, it is evident that, Sri Ashok Kumar Jain (A-2) received an amount of Rs. 3.90 lakhs, Sri Jagadeesh Alaga Raja (A-4) withdrawn various amounts through self cheques on different occasions for an amount of Rs. 18 lakhs, M/s K.R. International represented by Smt Chandravadhanan (A-5) received an amount of Rs. 2 crores and this amount was further transferred into her personal 22 MSM,J Crl.P_1682_2013 account and the personal account of Sri Jagadeesh Alaga Kaja (A-4) and then withdrawn as cash, M/s IXXXT, a Switzerland incorporated company received an amount of one million US dollars (minus tax deduction of 15%) i.e. Rs. 3.74 crores, 15% tax deducted at source on the transfer of money to M/S IXXXT i.e. Rs. 66 lakhs, Dr. Joseph V. George (A-7), Chairman of Garden City Educational Trust, Bangalore received an amount of Rs. 5 crores from Sri Jagadeesh Alaga Raja (A-4). This amount has been recovered from the aforesaid person and is deposited in fixed deposit as per the orders of XIV ACMM Court, Hyderabad, in Andhra Bank Nampally Branch since then and Sri Vinod Dua, Chartered Accountant, M/s Vashishta Wahan Private Limited received an amount of Rs. 62,442/-. Thus, the petitioner/A-6 and other accused conspired together and made APIIC to part with huge amount of Rs. 11.623 crores to the credit of M/s Vashishta Wahan Private Limited, making APIIC to believe that M/s Vashishta Wahan Private Limited is going to allot Equity participation in the project. The balance of Rs. 5.07 lakhs is available in the account of M/s Vashishta Wahan Private Limited.
It is to be noted that, M/s Vashishta Wahan Private Limited was at the formation stage even according to the fax message and the reason for crediting the amount to M/s Vashishta Wahan Private Limited is creation of a resolution for allotment of shares, though, both the Directors i.e. Sri Jagadeesh Alaga Raja (A-4) and the petitioner herein (A-6) were out of station and not visited the registered office of the company, as per the statement of Sri Vinod Dua, Chartered Account of M/s Vashishta Wahan Private Limited. As such, on account of the resolution made by Sri Jagadeesh Alaga Raja (A-4) and the petitioner herein/A-6 on 13.01.2005, APIIC parted with huge amount, and thus, the petitioner 23 MSM,J Crl.P_1682_2013 herein/A-6 committed offences punishable under Sections 120-B & 420 IPC.
In the charge sheet, the role played by each of the accused is discussed in various paragraphs separately and the role played by the petitioner herein/A-6 is as follows:
Sri B.K. Chaturvedi (A-6) was one of the Directors of M/s Vashishta Wahan Private Limited and Sri B.K. Chaturvedi (A-6) with dishonest and fraudulent intention and in furtherance of criminal conspiracy with others had put antedated signatures on the Board Resolutions and other company related documents, as if, those documents were signed on 13.01.2005, even though no such Board meeting had actually taken place and he did not stop the transfer of funds from the account of M/s Vashishta Wahan Private Limited (A-3).
Sri B.K.Chaturvedi (A-6) as one of the Director of M/s Vashishta Wahan Private Limited is liable for the acts on behalf of the company. The above overt acts of Sri B.K. Chaturvedi (A-6) reveal the offences punishable u/s 120-B r/w 420 of IPC.
The present criminal petition is filed under Section 482 Cr.P.C to quash the proceedings against the petitioner/A-6 in C.C.No.281 of 2012 pending on the file of XIV Additional Chief Metropolitan Magistrate, Hyderabad, registered for the offences punishable under Sections 120-B & 420 IPC.
The prime contention is that the allegations made in the charge-
sheet against this petitioner, even if the allegations are accepted on its face value as true, would not constitute offences punishable under Sections 120-B & 420 IPC.
24 MSM,J Crl.P_1682_2013 The petitioner claims himself as whistle blower as he addressed e-mail to Dr. Helmuth Schuster (A-1) on 02.02.2005 advising Dr. Helmuth Schuster (A-1) to strictly go by R.B.I guidelines and not to transfer money deposited by the Government of Andhra Pradesh to foreign banks. But, no reply was received by this petitioner. The other accused Sri Jagdeesh Alaga Raja (A-4) informed the petitioner that money equivalent to Euro 2 million had been already deposited to Swiss Bank account on 04.02.2005, under his authorization and the same was done without the knowledge of this petitioner. Therefore, he cannot be prosecuted for the offences punishable under Sections 120-B & 420 IPC. He further contended that, on 16.02.2005, Dr. Helmuth Schuster (A-1) informed the petitioner that he is not required any further in the project on account of objection he raised about transfer of money. Further, on 19.02.2005, after obtaining e-mail address of the Chairman of M/s Vasishta Wahan Private Limited from the website, the petitioner sent e-mail directly to the Chairman on 19.02.2005 about transfer of illegal money from APIIC to Swiss Bank accounts and also sent another e-mail on 23.02.2005 and also addressed another e-mail furnishing the details of amount remitted to the credit of Swiss Bank accounts. Though the petitioner did not get any reply for those e-mails, an enquiry was instituted by Volkswagen AG, Germany against Dr. Helmuth Schuster (A-
1). Again on 12.01.2005, the petitioner sent another e-mail to the Chairman, Volkswagen AG, Germany to take action in the matter, but no fruitful result was yielded.
The petitioner addressed letter to Sri Jagdeesh Alaga Raja (A-4) on 22.02.2005 regarding the details of transaction, but the written communication remained not replied and again called on information 25 MSM,J Crl.P_1682_2013 from HSBC Bank, New Delhi for company account statement on 14.03.2005 and received copy of the account provided by the bank. Thereupon, the petitioner came to know that most of money deposited by the APIIC was transferred to various other accounts of Sri Jagdeesh Alaga Raja (A-4). Thereupon, the petitioner addressed a letter to Sri Jagdeesh Alaga Raja (A-4) on 15.03.2005 with a request to return the money to APIIC and to act as per law. But, no reply was received by the petitioner from Sri Jagdeesh Alaga Raja (A-4). Thus, the petitioner claims himself as a whistle-blower and contends that he did commit no offence, as he has tried to protect the interest of APIIC, as well as Government of Andhra Pradesh.
It is the specific contention of the petitioner that he never met the officials of Government of Andhra Pradesh in connection with affairs of the company, as his involvement is practically nil, but assigned work of Director, which was only a technical advisory post, therefore, he has no connections with the financial transactions between the APIIC and other accused and did not receive even single rupee deposited by the Government of Andhra Pradesh. It is further contended that, the petitioner made every attempt to control the other accused, including Dr. Helmuth Schuster (A-1) and Sri Jagdeesh Alaga Raja (A-4) from transferring the amount from Government of Andhra Pradesh to Swiss Bank accounts and advised several times the higher authorities to conduct enquiry against them and ultimately tendered letter of resignation on 14.07.2005 to the posts of Director, as well as to the Board of Directors of the company to Sri Jagdeesh Alaga Raja (A-4). Receipt of the same was acknowledged on 05.09.2005 and he filed all 26 MSM,J Crl.P_1682_2013 copies of the e-mails and letters addressed along with the petition to substantiate his contention.
It is contended that none of the allegations made in the charge- sheet constitute either of the offences punishable under Sections 120-B & 420 IPC, as the essential ingredients of Section 420 IPC do not attract. Apart from that, there must be an agreement of two minds of committing crime to constitute an offence punishable under Section 120-B IPC. As, agreement of two minds is missing in the entire charge-sheet and the material produced along with the affidavit, in the absence of any material to proceed against the petitioner, the proceedings are liable to be quashed. It is further contended that, the petitioner did not receive even a single penny from the amount deposited by the State Government of Andhra Pradesh and he cannot be saddled with any criminal liability. It is further contended that, in fact, the negotiations were between officials of State Government and other accused i.e. A-1 to A-4, but not between the petitioner and the officials of Government of Andhra Pradesh. In such case, proceeding against this petitioner for the offences mentioned supra, would cause irreparable loss and injury to his character, besides affecting his personal liberty.
The petitioner mainly contended that the officials of the Government of Andhra Pradesh are the main persons who are responsible for transfer of amount from India to Swiss Bank Accounts and as the other accused received the amount, they are also liable to be impleaded atleast during trial by invoking the provisions of Criminal Procedure Code. Therefore, the proceedings against this petitioner are liable to be quashed for the offences referred supra.
27 MSM,J Crl.P_1682_2013 During hearing, Sri Chetluri Srinivas, learned counsel for the petitioner mainly contended that, none of the allegations made in the complaint would constitute offences punishable under Sections 120-B & 420 IPC, as the petitioner had never participated in the negotiations with the officials of Government of Andhra Pradesh or any bureaucrat and that, he never dishonestly induced the Government of Andhra Pradesh or its officials to part with any amount by his conduct and similarly, there was no meeting of two minds to constitute an offence punishable under Section 120-B IPC. On the other hand, the petitioner himself took steps by sending e-mail and letters to Dr. Helmuth Schuster (A-1) and Sri Jagdeesh Alaga Raja (A-4), advising them not to transfer the amount and get back the amount from Swiss Bank Accounts to Government of Andhra Pradesh. But, A-1 & A-4 did not heed the advise of this petitioner and transferred the amount from APIIC to various Swiss Bank accounts, including the accounts of A-1 & A-4 thereby to the accounts of A-2 to A-5, and not even a single rupee is credited to the account of this petitioner. Therefore, the petitioner is not liable to be prosecuted for the offences punishable under Sections 120-B & 420 IPC.
Learned counsel for the petitioner has drawn the attention of this Court to pages 24, 29 & 47 of the petition to contend that the allegations made in the charge-sheet against this petitioner are not suffice to constitute any of the offences punishable under Section 120-B & 420 IPC.
Learned counsel for the petitioner Sri Chetluri Srinivas would draw the attention of this Court to Section 289 of pre-amended Companies Act (Act No.1 of 1956 of Companies Act, 1956), contending that, passing of a resolution or circulating the same for the signature is legal and therefore, 28 MSM,J Crl.P_1682_2013 the alleged resolution passed by the petitioner and obtaining signature on circular by Sri Jagadeesh Alaga Raja (A-4) do not indicate the guilt of this petitioner to constitute an offence punishable under Section 120-B IPC. It is also contended that, none of the allegations made in the charge-sheet and the material collected during investigation do not disclose the role played by this petitioner to constitute an offence punishable under Section 420 IPC and in the absence of any material that no resolution was passed, continuation of the proceedings against this petitioner in C.C.No.281 of 2012 pending on the file of XIV Additional Chief Metropolitan Magistrate, Hyderabad, is an illegality.
In support of his contentions, learned counsel for the petitioner placed reliance on the judgments of the Apex Court in State of Haryana v. Ch. Bhajan Lal1, C.B.I, SPE, SIU (X) New Delhi v. Duncans Agro Industries Limited, Calcutta2, Ram Narayan Popli v. CBI3, Samir Sahay @ Sameer Sahay v. State of U.P. & others4, Ajay Mitra v. State of M.P5 and Bhuwan Kumar Chaturvedi v. The Assistant Director, Directorate of Enforcement of India, Hyderabad6 and requested to quash the proceedings against this petitioner in C.C.No.281 of 2012 pending on the file of XIV Additional Chief Metropolitan Magistrate, Hyderabad, for the offences punishable under Sections 120-B & 420 IPC.
Per contra, Sri K. Surendra, learned Special Public Prosecutor for C.B.I supported the prosecution case in all respects, while contending that, creating a fake resolution without holding any meeting of the Board of Directors of the company and calling for meeting of the Governing Body of the company, inducing Government of Andhra Pradesh with 1 1992 CrL.L.J 527 2 1996 Crl.L.J 3501 3 (2003) 3 Supreme Court Cases 641 4 CDJ 2017 SC 1155 5 CDJ 2003 SC 195 6 Crl.R.C.No.1153 of 2017 dated 01.09.2017 29 MSM,J Crl.P_1682_2013 dishonest intention to part with huge amount of Rs.11.674 crores and transferring the same to M/s IXXXT account directly from HSBC Bank, New Delhi, is itself suffice to conclude that this petitioner is responsible for the offence punishable under Sections 120-B & 420 IPC. Added to that, the correspondence between the officials of M/s Vasishta Wahan Private Limited and the officials of the Government of Andhra Pradesh, more particularly, insisting the Government not to keep the amount in ESCROW account and transferring the amount to M/s IXXXT account is also suffice to conclude prima facie that the petitioner and other accused had dishonest intention to part with huge amount. Apart from that, the conduct of the petitioner prior to and after the alleged transfer of money has to be taken into consideration to decide his complicity for the offence punishable under Section 120-B IPC.
Learned Special Public Prosecutor for C.B.I also contended that, though the present criminal petition is filed for quashment of the proceedings in C.C.No.281 of 2012 pending on the file of XIV Additional Chief Metropolitan Magistrate, Hyderabad, the petitioner did not place on record, entire material, including the statements of witnesses recorded by the police under Section 161(3) Cr.P.C during investigation to enable this Court to arrive at a definite conclusion. In the absence of producing statements of witnesses recorded under Section 161(3) Cr.P.C, which forms part for filing of the charge-sheet and the evidence collected during investigation and in the absence of producing the material collected during investigation and the statements recorded under Section 161(3) Cr.P.C, the proceedings against this petitioner cannot be quashed, based on the plea set-up by the petitioner in the petition by filing certain correspondence, letters and e-mails addressed to A-1 and A-4 30 MSM,J Crl.P_1682_2013 respectively, including the HSBC bank statements and requested to dismiss the criminal petition.
Considering rival contentions and perusing the material available on record, the points that arise for consideration are as follows:
1. Whether the allegations made in the charge-sheet would constitute offences punishable under Sections 120-B & 420 IPC prima facie. If not, whether the proceedings against this petitioner in C.C.No.281 of 2012 pending on the file of XIV Additional Chief Metropolitan Magistrate, Hyderabad, are liable to be quashed?
2. Whether the role played by the petitioner in addressing letters to A-1 & A-4 is sufficient to exonerate the petitioner from the offences punishable under Sections 120-B & 420 IPC in C.C.No.281 of 2012 pending on the file of XIV Additional Chief Metropolitan Magistrate, Hyderabad? If so, whether proceedings against this petitioner are liable to be quashed?
POINT NO.1:
Before deciding the rival contentions raised by the learned counsel for the petitioners and Public Prosecutor before this Court, I would like to discuss about the scope of Section 482 of Cr.P.C.
Section 482 of Cr.P.C. deals with inherent powers of High Court, it reads as follows:
482. Saving of inherent power of High Court- Nothing in this Code shall be deemed to limit or affect the inherent powers of the High Court to make such orders as may be necessary to give effect to any order this Code, or to prevent abuse of the process of any Court or otherwise to secure the ends of justice.
In view of the powers vested with this Court by Section 482 of Cr.P.C., it is apposite to advert to the law laid down by the Apex Court to 31 MSM,J Crl.P_1682_2013 exercise power to quash F.I.R. or any other proceedings.
In "R.P. Kapur v. State of Punjab7", the Apex Court laid down the following principles:
(i) Where institution/continuance of criminal proceedings against an accused may amount to the abuse of the process of the court or that the quashing of the impugned proceedings would secure the ends of justice;
(ii) where it manifestly appears that there is a legal bar against the institution or continuance of the said proceeding, e.g. want of sanction;
(iii) where the allegations in the First Information Report or the complaint taken at their face value and accepted in their entirety, do not constitute the offence alleged; and
(iv) where the allegations constitute an offence alleged but there is either no legal evidence adduced or evidence adduced clearly or manifestly fails to prove the charge.
Section 482 of the Code of Criminal Procedure empowers the High Court to exercise its inherent powers to prevent abuse of the process of Court. In proceedings instituted on complaint or on police report exercise of the inherent power to quash the proceedings is called for only in cases where the complaint or police report 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 is taken by the Magistrate it is open to the High Court to quash the same in exercise of the inherent powers under Section 482. It is not, however, necessary that there should be a meticulous analysis of the case, before the trial to find out whether the case would end in conviction or not. The complaint or charge sheet has to be read as a whole. If it appears on a consideration of the allegations, in the light of the statement on oath of the complainant that ingredients of the offence/offences are disclosed, 7 AIR 1960 SC 866 32 MSM,J Crl.P_1682_2013 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 as held by the Apex Court in "Mrs.Dhanalakshmi v. R.Prasanna Kumar8"
In "State of Haryana v. Bhajan Lal9" the Apex Court considered in detail the powers of High Court under Section 482 and the power of the High Court to quash criminal proceedings or FIR. The Apex Court summarized the legal position by laying down the following guidelines to be followed by High Courts in exercise of their inherent powers to quash a criminal complaint:
(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 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 officer without an order of a Magistrate as contemplated under Section 155(2) of the Code.8
AIR 1990 SC 494 9 1992 Supp (1) SCC 335 33 MSM,J Crl.P_1682_2013 (5) Where the allegations made in the FIR or complaint are so absurd and inherently improbable on the basis of which no prudent person can ever reach a just conclusion that there is sufficient ground for proceeding against the accused. (6) Where there is an express legal bar engrafted in any of the provisions of the Code or the concerned Act (under which a criminal proceeding is instituted) to the institution and continuance of the proceedings and/or where there is a specific provision in the Code or the concerned Act, providing efficacious redress for the grievance of the aggrieved party. (7) Where a criminal proceeding is manifestly attended with mala fide and/or where the proceeding is maliciously instituted with an ulterior motive for wreaking vengeance on the accused and with a view to spite him due to private and personal grudge. In Umesh Kumar v. State of Andhra Pradesh10, the Supreme Court held that law does not prohibit entertaining the petition under Section 482 Cr.P.C. for quashing the charge sheet even before the charges are framed or before the application of discharge is filed or even during its pendency of such application before the Court concerned. The High Court cannot reject the application merely on the ground that the accused can argue legal and factual issues at the time of the framing of the charge. Thus, the judgment of the Apex Court is clear that even if a petition for discharge is filed and pending, the High Court cannot reject the petition filed under Section 482 Cr.P.C. While discussing the facts of the above judgment, the Supreme Court held in paragraph 12 that, once criminal law is put in motion and after investigation the charge sheet is filed, it requires scrutiny in the court of law. However, before the charges could be framed, Umesh Kumar, appellant, approached the High Court 10 AIR 2014 SC 1106 34 MSM,J Crl.P_1682_2013 under Section 482 Cr.P.C. for quashing of the charge sheet. The scope of Section 482 Cr.P.C. is well defined and inherent powers could be exercised by the High Court to give effect to an order under the Cr.P.C.; to prevent abuse of the process of court; and to otherwise secure the ends of justice. This extraordinary power is to be exercised ex debito justitiae. However, in exercise of such powers, it is not permissible for the High Court to appreciate the evidence as it can only evaluate material documents on record to the extent of its prima facie satisfaction about the existence of sufficient ground for proceedings against the accused and the court cannot look into materials, the acceptability of which is essentially a matter for trial. Any document filed alongwith the petition labelled as evidence without being tested and proved, cannot be examined. Law does not prohibit entertaining the petition under Section 482 Cr.P.C. for quashing the charge sheet even before the charges are framed or before the application of discharge is filed or even during its pendency of such application before the court concerned. The High Court cannot reject the application merely on the ground that the accused can argue legal and factual issues at the time of the framing of the charge. However, the inherent power of the court should not be exercised to stifle the legitimate prosecution but can be exercised to save the accused to undergo the agony of a criminal trial.
In "M/s. Medchl Chemicals and Pharma Private Limited v. M/s. Biological E. Limited11" the Apex Court held that the power under Section 482 Cr.P.C has to be exercised with care and sparingly, High Court has only to see whether allegations in complaint make out prima facie case. It has no power to examine truth and correctness of 11 AIR 2000 SC 1869 35 MSM,J Crl.P_1682_2013 allegations. Exercise of jurisdiction under the inherent power as envisaged in Section 482 Cr.P.C to have the complaint or the charge- sheet quashed is an exception rather a rule and the case for quashing at the initial stage must have to be treated as rarest of rare so as not to scuttle the prosecution. To exercise powers under Section 482 of Cr.P.C. the complaint in its entirety shall have to be examined on the basis of the allegations made in the complaint and the High Court at that stage has no authority or jurisdiction to go into the matter or examine its correctness. Whatever appears on the face of the complaint shall be taken into consideration without any critical examination of the same, but the offence ought to appear ex facie on the complaint.
In view of the law declared by the Apex Court in various judgments referred supra, the Court can exercise its power in rarest of rare cases, and it cannot be used to stifle the legitimate prosecution, the only requirement is verification of the allegations made in the charge sheet to find out whether the allegations on their face value would constitute offence punishable under the penal provisions of any Act.
The undisputed facts of the case are that, the petitioner is one of the Director of M/s Vashishta Wahan Private Limited along with Sri Jagadeesh Alaga Raja (A-4). The petitioner also admitted about signing on the resolution dated 13.01.2005 and sending the same to APIIC. Further, the petitioner also requested APIIC to deposit an amount of Rs.11.674 crores to credit in the account of M/s Vashishta Wahan Private Limited at HSBC South Extension, New Delhi, in Account No. 053-052577-001, as furnished by Dr. Helmuth Schuster (A-1). On receipt of letter dated 13.01.2005, from APIIC authorising the credit of cheque for Rs.11.674 crores, HSBC, New Delhi deposited the amount to 36 MSM,J Crl.P_1682_2013 the credit of the account of M/s Vasishta Wahan Private Limited, and in- turn M/s Vasishta Wahan Private Limited diverted the funds to various personal accounts of accused, including the account of M/s IXXXT, which is a front company of Dr. Helmuth Schuster, the petitioner admitted the illegal transfer of amount deposited by APIIC in contravention of Reserve Bank of India guidelines by the other accused in the petition itself. Therefore, this Court need not examine the issue of illegal transfer of the amount, but the role of this petitioner needs to be examined.
The main role attributed to this petitioner in the charge-sheet is that, though he did not receive any amount, he is responsible for furnishing copy of the Board of Directors resolution of the company dated 13.01.2005 he signed with ante-date. Further, the role of this petitioner/A-6 is stated in the charge-sheet as follows:
"77. Sri B.K. Chaturvedi (A-6) was one of the Directors of M/s Vashishta Wahan Vashishta Wahan Private Limited.
78. Sri B.K. Chaturvedi (A-6) with dishonest and fraudulent intention and in furtherance of criminal conspiracy with others had put antedated signatures on the Board Resolutions and other company related documents as if they were signed on 13.01.2005, even though no such Board meeting had actually taken place and he did not stop the transfer of funds from the account of M/s Vashishta Wahan Private Limited (A-3).
79. Sri B.K.Chaturvedi (A-6) as one of the Directors of M/s Vashishta Wahan Private Limited is liable for the acts on the behalf of the company.
80. The above overt acts of Sri B.K. Chaturvedi (A-6) reveal the offences punishable u/s 120-B r/w 420 of IPC."
The other allegation made against this petitioner is, signing on the Board of Directors resolution dated 13.01.2005 with antedate, with dishonest intention to induce the Government of Andhra Pradesh to part 37 MSM,J Crl.P_1682_2013 with huge amount. The basis for this resolution is the statement of Sri Vinod Dua, Chartered Accountant of M/s Vashishta Wahan Private Limited who received Rs.62,442,/- towards registration expenses and the other material collected during investigation. In the petition, the relief claimed by the petitioner is only to quash the proceedings in C.C.No.281 of 2012 pending on the file of XIV Additional Chief Metropolitan Magistrate, Hyderabad, filed by the respondent in R.C.22(S)/05- CBI/HYD dated 25.09.2010 under Sections 120-B & 420 IPC.
When the petitioner is claiming relief of quashing the charge-sheet, it is the duty of the petitioner to produce the entire material, which forms part of the charge sheet. But, for one or the other reason, the petitioner did not produce the evidence collected during investigation and the statements of the witnesses recorded by the police under Section 161(3) Cr.P.C, which forms the very basis for filing proforma of charge sheet. Filing of a copy of charge sheet without any material annexing to it, disabled this Court to verify the material filed along with the charge sheet and decide whether there is prima facie material against this petitioner to proceed further for the offences punishable under Sections 120-B & 420 IPC in C.C.No.281 of 2012 pending on the file of XIV Additional Chief Metropolitan Magistrate, Hyderabad.
Failure to produce the material, including the statements recorded under Section 161(3) Cr.P.C is sufficient to deny the relief claimed in the present petition, since the statements recorded under Section 161(3) Cr.P.C form part of the charge-sheet. Though, this Court can exercise its power in rarest of rare cases, it cannot be used to stifle the legitimate prosecution, the only requirement is verification of the allegations made in the charge sheet to find out whether the allegations on their face value 38 MSM,J Crl.P_1682_2013 would constitute offence punishable under the penal provisions of any Act. The test to be applied by the Court is "whether uncontroverted allegations made in the complaint would establish any offence". In "State of H.P. v. Pirthi Chand12" the Apex Court held that "the power of the High Court is an exceptional one. Great care should be taken by the High Court before embarking to scrutinize the FIR/charge-Sheet/complaint. In deciding whether the case is rarest of rare cases to scuttle the prosecution in its inception, it first has to get into the grip of the matter whether the allegations constitute the offence. It must be remembered the FIR is only an initiation to move the machinery and to investigate into cognizable offence. After the investigation is conducted and the charge-sheet is laid the prosecution produces the statements of the witnesses recorded under Section 161 Cr.P.C in support of the charge- sheet. At that stage it is not the function of the Court to weigh the pros and cons of the prosecution case or to consider necessity of strict compliance of the provisions which are considered mandatory and its effect of non-compliance. It would be done after the trial is concluded. The Court has to prima facie consider from the averments in the charge- sheet and the statements of witnesses on the record in support thereof whether court could take cognizance of the offence, on that evidence and proceed further with the trial. If it reaches a conclusion that no cognizable offence is made out no further act could be done except to quash the charge sheet. But only in exceptional cases, i.e. in rarest of rare cases of mala fide initiation of the proceedings to wreak private vengeance process of criminal is availed of in laying a complaint or FIR itself does not disclose at all any cognizable offence - the court may embark upon the consideration thereof and exercise the power". 12
(1996) 2 SCC 37 39 MSM,J Crl.P_1682_2013 Thus, in view of the law declared by the Apex Court in "State of H.P. v. Pirthi Chand" (referred supra) unless the Court comes to a conclusion that the averments in the charge sheet and the statements of witnesses on the record in support thereof whether Court could take cognizance of the offence on that evidence and proceed further with the trial, if, it reaches a conclusion that no cognizable offence is made out, no further act could be done except to quash the proceedings.
As discussed above, the prime duty of the Court is to verify the allegations made in the charge sheet and the statements of witnesses recorded by the investigating agency during investigation, since, the statements produced before the Court, more particularly statements recorded under Section 161(3) Cr.P.C forms part of the charge-sheet. Though, such statement recorded under Section 161(3) Cr.P.C is not a substantive piece of evidence, it can be used only for limited purpose of contradicting the witness under Indian Evidence Act. However, this Court is competent to deduce its conclusion on the statements recorded under Section 161(3) Cr.P.C during investigation, though not a substantive piece of evidence.
In the present case, the petitioner did not place on record, the statements recorded by the Investigating Agency during investigation, which is the basis for filing charge-sheet, even according to the allegations made in the charge-sheet, the statement of Sri Vinod Dua, Chartered Accountant, recorded by the Investigating Agency is the basis for making allegations against this petitioner, more particularly, to prove that no meeting of Board of Directors of M/s Vasishta Wahan Private Limited was held on 13.01.2005 at New Delhi. But, a resolution was 40 MSM,J Crl.P_1682_2013 prepared ante-dated and the petitioner signed on the resolution with ante-date, which permitted the Government of Andhra Pradesh from accepting the proposal of equity in M/s Vasishta Wahan Private Limited. If, the resolution itself is fake or false with ante-date, signed by the Board of Directors of M/s Vasishta Wahan Private Limited, the contention of the prosecution is to be accepted that this petitioner also contributed by his acts or omissions in making the Government of Andhra Pradesh to make believe the representation.
Learned counsel for the petitioner Sri Chetluri Srinivas contended that, according to Section 289 of pre-amended Companies Act (Act No.1 of 1956 of Companies Act, 1956), the resolution of Board of Directors can be circulated to obtain signatures. But, Section 289 of pre-amended Companies Act reads as follows:
289. Passing of Resolutions By Circulation No resolution shall be deemed to have been duly passed by the Board or by a committee thereof by circulation, unless the resolution has been circulated in draft, together with the necessary papers, if any, to all the directors, or to all the members of the committee, then in India (not being less in number than the quorum fixed for a meeting of the Board or committee, as the case may be), and to all other directors or members at their usual address in India, and has been approved by such of the Directors as are then in India, or by a majority of such of them, as are entitled to vote on the resolution.
Even, accepting this contention, atleast one of the Board of Directors or Directors constituted in quorum must be available at the registered office of the company to pass such resolution and circulate the resolution draft with relevant papers to all the directors to all the members of the committee, for passing such resolution.
In the present case, it is the contention of the prosecution that, neither Sri Jagadeesh Alaga Raja (A-4) nor the petitioner herein (A-6) did not attend the registered office of the company at New Delhi, on the 41 MSM,J Crl.P_1682_2013 particular date of resolution. But, it was prepared by Sri Vinod Dua, Chartered Accountant conveniently to accept the proposal of allotment of equity in M/s Vasishta Wahan Private Limited. Therefore, whether the petitioner herein/A-6 or any of the Directors or Sri Jagadeesh Alaga Raja (A-4) passed the resolution dated 13.01.2005 at the registered office of the company at New Delhi is a question of fact to be decided, since the basis for entire episode is the resolution of the Board of Directors of M/s Vasishta Wahan Private Limited dated 13.01.2005. Such question and validity of such resolution cannot be decided by exercising power under Section 482 Cr.P.C. Conveniently, the learned counsel for the petitioner produced certain documents, more particularly, the resolution dated 13.01.2005 wherein it was resolved to grant Power of Attorney to the petitioner herein (A-6)/Director of M/s Vasishta Wahan Private Limited, to act as Attorney with full powers of authority and to undertake necessary acts and decisions on behalf of the company on all other matters including technical issues. The endorsement dated 31.05.2005 made by the Sri Jagadeesh Alaga Raja (A-4), Chairman & Managing Director of M/s Vasishta Wahan Private Limited on the resolution dated 13.01.2005 is as follows:
42 MSM,J Crl.P_1682_2013 43 MSM,J Crl.P_1682_2013 This endorsement is suffice to suspect passing of resolution on 13.01.2005, since Sri Jagdeesh Alaga Raja (A-4) was at Hyderabad on the relevant date of passing resolution, according to the allegations made in the charge-sheet. If, this endorsement is accepted as true, the resolution was got prepared by Sri Jagdeesh Alaga Raja (A-4) and the petitioner herein/A-6 was asked to sign on the resolution by retaining one copy and return two copies of the resolution to Sri Jagdeesh Alaga Raja (A-4) after duly signing on the resolution. This endorsement is suffice to doubt, passing of resolution on 13.01.2005 to invite equity participation of APIIC, a State Government enterprise. Curiously, this endorsement was made on 31.05.2005 i.e. after 4 ½ months from the date of passing of alleged resolution by appointing this petitioner as power of attorney on behalf of the company. Therefore, prima facie, it is evident that the resolution dated 13.01.2005 to invite equity partition of APIIC agreeing to allot 2.5% equity stake in favour of APIIC was not signed on the date when it was allegedly passed and according to the provisions of pre-amended Companies Act, the resolution, if any, passed by the Board of Directors shall be communicated to the Registrar of Companies within three months. But, signing on the resolution by the petitioner herein/A-6, the question of compliance of Section 289 of pre-
amended Companies Act by the Board of Directors of M/s Vasishta Wahan Private Limited does not arise. Assuming that, the resolution dated 13.01.2005 was passed on the day on which it was allegedly passed and signed, the question of failure to sign on the other resolution passed on the same day by the petitioner does not arise. Therefore, there is any amount of suspicion about passing of the resolution to invite equity participation of APIIC in the proposed project, this resolution is 44 MSM,J Crl.P_1682_2013 the basis for entire episode of fraud by diverting Rs.11.674 crores, thereby, such suspicious document cannot be accepted as true at the stage of exercising power under Section 482 Cr.P.C.
Furthermore, on a close look at the events that had taken place on 13.01.2005, A-2 & A-4 visited Hyderabad, persuaded APIIC to participate in the form of equity, then, a cheque for Rs.11.674 crores was sent by APIIC to the account of M/s Vasishta Wahan Private Limited. Adding to it, APIIC addressed a letter to HSBC, New Delhi, requesting to credit Rs.11.674 crores to the account of M/s Vasishta Wahan Private Limited, but, the solicitors engaged by APIIC took an objection and asked the officials of HSBC, New Delhi to withhold the amount in ESCROW Account till fulfilment of certain conditions. The officials of HSBC New Delhi stated that, they were not in a position to hold the cheque in ESCROW account, as there was no agreement between APIIC and M/s Vashishta Wahan Private Limited. Another facet of the case is, as, Memorandum of Articles of Association of the company, certificate of Incorporation and Board Resolution of the Company authorising allotment of shares to APIIC were required for crediting the amount to M/s Vasishta Wahan Private Limited, on the same i.e. on 13.01.2005, A-2 & A-4 conveniently got prepared resolution, as if they were at New Delhi. Adding to it, the very existence of the company - M/s Vasishta Wahan Private Limited is doubtful and it is a fraud committed by a shell company, allegedly established by A-1 to A-4.
Since, the very passing of resolution on 13.01.2005 to invite equity participation of APIIC agreeing to allot 2.5% of equity and enacting the same is disputed by the respondent, in view of the statement of Sri Vinod Dua, Chartered Accountant, who prepared the resolution, such question 45 MSM,J Crl.P_1682_2013 cannot be decided, minutely going into details, since this Court cannot appreciate the evidence while exercising power under Section 482 Cr.P.C, but this Court is competent to evaluate the material to come to a definite conclusion. Even on evaluation of material available on record, the resolution was not passed on a particular day, prima facie, on the day when it is allegedly passed, Court cannot appreciate the material to come to a conclusion, if no prima facie case is made out against this petitioner on evaluation of material, this Court can exercise such power.
But, in the present case, the disputed question of fact is the passing of resolution dated 13.01.2005 which cannot be decided at this stage, in view of the statement of Sri Vinod Dua, Chartered Accountant, who prepared the resolution with ante-date and forwarded to APIIC, to part with huge amount.
The offences allegedly committed by this petitioner are offences punishable under Sections 120-B & 420 IPC. The act done by this petitioner is alleged signing on the resolution with ante-date. Whether such act would constitute offences prima facie, if the allegations made in the charge-sheet are accepted on its face value, is the question to be decided.
The resolution was passed to invite APIIC, a wholly owned undertaking of Government of Andhra Pradesh to participate in the proposed project of the company and further that, an equity stake of 2.5% will be offered to APIIC and that share is equivalent to 2.5% shall be allocated in favour of APIIC on receipt of full consideration of 5 million euros and the share will be made available on pro-rata to the subscription received. On the same day, the other two resolutions were passed. The contents of resolution would show that this petitioner along 46 MSM,J Crl.P_1682_2013 with Sri Jagadeesh Alaga Raja (A-4) and Sri Ashok Jain, Authorised Signatory were permitted to operate/close account with HSBC. On the basis of such resolution dated 13.01.2005, APIIC deposited Rs.11.674 crores and the entire amount of Rs.11.674 crores was transferred from APIIC to M/s Vasishta Wahan Private Limited and in-turn, Rs.11.623 crores was diverted into account of various beneficiaries/accused and credited to their personal accounts, viz, including Sri Jagadeesh Alaga Raja (A-4), Sri Ashok Jain, Dr. Helmuth Schuster (A-1), Smt. Gayatri Chandravadhanan (A-5). The amount withdrawn by Smt. Gayatri Chandravadhanan (A-5) who is representative of Volkswagen AG Germany in India was Rs.5 crores was recovered and kept in deposit. It is pertinent to note that, Rs.3.74 crores was diverted to the account of M/s IXXXT, which is the front company of Dr. Helmuth Schuster. Diversion of funds by the other accused from the account of M/s Vasishta Wahan Private Limited is not disputed by this petitioner. But, on the other hand, the petitioner himself produced certain e-mails addressed to Dr. Helmuth Schuster (A-1), Sri Jagdeesh Alaga Raja (A-4) and Volkswagen AG Germany. Even in those letters, it is pointed out that the alleged fraud committed by Dr. Helmuth Schuster (A-1) and others, diverting funds from M/s Vasishta Wahan Private Limited maintained at HSBC, New Delhi to account of M/s IXXXT and voluminous evidence was collected during investigation by the respondent to establish such diversion of funds by withdrawing and crediting the same to the account of the petitioner and others. Even if these e-mails and letters addressed by the petitioner to the other accused are accepted, wherein the petitioner requested the other accused not to commit such acts to defraud Government of Andhra Pradesh, at best, the resolution passed 47 MSM,J Crl.P_1682_2013 on 13.01.2005 made the APIIC to deposit Rs.11.674 crores and other resolution allowed them to divert the funds by withdrawing the same and credit to their personal accounts. Therefore, unless this petitioner had any intention initially, he would not have signed on the resolution with ante-date, as alleged by the prosecution. The entire material produced along with this petition, including the allegations made in the charge- sheet would show that all the accused had an intention to cheat APIIC and the Government of Andhra Pradesh and conspired together prima facie. When this petitioner also played a major role, which made the APIIC to deposit Rs.11.674 crores and enabled the other accused to withdraw the amount deposited by APIIC, a State Government Organization, the petitioner is also equally liable to be proceeded along with other accused.
To establish criminal conspiracy, no direct evidence is required to be produced and the Court shall take into consideration, the conduct of the petitioner, both prior and subsequent to decide his complicity for the offence punishable under Section 120-B IPC.
Section 120-B I.P.C. deals with punishment for criminal conspiracy. The offence of 'criminal conspiracy' is defined under Section 120A I.P.C and according to it, when two or more persons agree to do, or cause to be done an illegal act, or an act which is not illegal by illegal means, such an agreement is designated a criminal conspiracy, provided that no agreement except an agreement to commit an offence shall amount to a criminal conspiracy unless some act besides the agreement is done by one or more parties to such agreement in pursuance thereof.
Thus, the most important ingredient of the offence 'criminal conspiracy' is the agreement between two or more persons to do an 48 MSM,J Crl.P_1682_2013 illegal act or an act not illegal by illegal means (Kehar Singh and others v. State (Delhi Admin.)13. The offence of conspiracy is complete when two or more conspirators have agreed to do or cause to be done an act which is itself an offence, in which case no overt act need be established (Lennart Schussler and another v. Director of Enforcement and another14).
The basic ingredient to constitute an offence punishable under Section 120B I.P.C. is that there must be an agreement between the parties to do an act by illegal means or to do an act, which is not illegal by illegal means. In Noor Mohammad Mohd. Yusuf Momin v. The State of Maharashtra15, an identical issue came up for consideration before the Honourable Apex Court and the Honourable Apex Court clearly laid down distinction between Section 34, Section 109 and Section 120B I.P.C. and held that Section 34 I.P.C. embodies the principle of joint liability in doing a criminal act, the essence of that liability being the existence of a common intention. Participation in the commission of the offence in furtherance of the common intention invites its application. Section 109 I.P.C. on the other hand may be attracted even if the abettor is not present when the offence abetted is committed provided that he has instigated the commission of the offence or has engaged one or more other persons in a conspiracy to commit an offence and pursuant to that conspiracy some act or illegal omission takes place or has intentionally aided the commission of an offence by an act or illegal omission. Turning to the charge under Section 120B I.P.C., criminal conspiracy was made a substantive offence in 1913 by the introduction of Chapter V-A in the Indian Penal Code. Criminal 13 AIR 1988 SC 1883 14 AIR 1970 SC 549 15 AIR 1971 SC 885 49 MSM,J Crl.P_1682_2013 conspiracy postulates an agreement between two or more persons to do, or cause to be done an illegal act or an act which is not illegal, by illegal means. It differs from other offences in that mere agreement is made an offence even if no step is taken to carry out that agreement. Though there is close association of conspiracy with incitement and abetment the substantive offence of criminal conspiracy is somewhat wider in amplitude than abetment by conspiracy as contemplated by Section 107 I.P.C. A conspiracy from its very nature is generally hatched in secret. It is, therefore, extremely rare that direct evidence in proof of conspiracy can be forthcoming from wholly disinterested quarters or from utter strangers. But, like other offences, criminal conspiracy can be proved by circumstantial evidence. Indeed, in most cases proof of conspiracy is largely inferential though the inference must be founded on solid facts. Surrounding circumstances and antecedent and subsequent conduct, among other factors, constitute relevant material. In fact because of the difficulties in having direct evidence of criminal conspiracy, once reasonable ground is shown for believing that two or more persons have conspired to commit an offence then anything done by anyone of them in reference to their common intention after the same is entertained becomes, according to the law of evidence, relevant for proving both conspiracy and the offences committed pursuant thereto. As seen from the principle laid down by the Honourable Apex Court in the above judgment, there must be two or more persons to do an unlawful act by illegal means to constitute an offence punishable under Section 120B I.P.C.
Learned counsel for the petitioner placed reliance on the judgment of the Full Bench of the Apex Court in Ram Narayan Popli v.
50 MSM,J Crl.P_1682_2013 CBI (referred supra), wherein a similar question came up for consideration with regard to the offence punishable under Section 120-B IPC, wherein, the Supreme Court held in various paragraphs as follows:
"It was observed by this Court in State of Kerala v. P. Sugathan and Anr., [2000] 8 SCC 203, it would be extremely difficult to find direct evidence in case of criminal conspiracy. The circumstances and surrounding factors have to be taken note of. In the instant case, the accused 1, 2 and 5 have submitted that the role of PW-5 as described is that he did not want to be directly shown in the picture. In fact, A-l wanted that MUL did not want to involve brokers and did not want to deal with them This itself deals of fatal blow to the stand taken by the accused that there was no prohibition of acting through brokers and the intention was that dealing would be directly with the bank and not through any broker or intermediary. Much has been made out of use of the word 'through' in the resolution. If the clear understanding of A-l was that the deal should not be dealt with or involved any broker then the question of A-5 acting as broker does not arise. Use of the expression "through" is indicative of the fact that emphasis was on securities being not purchased in the open market, but "through" named PSU. These PSU were admittedly not brokers. They were either Banks or financial institutions. Evidence clearly shows that A-5 wanted that he will not directly come to the picture, and would not appear in the books of accounts of MUL; but would stand to gain by way of commission and as a brokerage from the Bank. The statement of A-l that he would look into any good proposals if A-5 does not come to the picture shows that the actual state of affairs was intended to be hidden from the MUL authorities and a totally distorted picture was sought to be given. These are factors which does not go in favour of the accused as contended, and on the contrary clearly proves conspiracy.
Much has also been submitted that repayment has been made. That itself is not an indication of lack of dishonest intention. Some times, it so happens that with a view to create confidence the repayments are made so that for the future transactions the money can be dishonestly misappropriated. This is a part of the scheme and the factum of repayment cannot be considered in isolation. The repayment as has been rightly contended by the Solicitor General can be a factor to be considered while awarding sentence, but cannot be a ground for proving innocence of the accused.
The elements of a criminal conspiracy have been stated to be: (a) an object to be accomplished, (b) a plan or scheme embodying means to accomplish that object, (c) an agreement or understanding between two or more of the accused persons whereby, the; become definitely committed to co-operate for the accomplishment of the object by the means embodied in the agreement. or by any
51 MSM,J Crl.P_1682_2013 effectual means, (d) in the jurisdiction where the statute required an overt act. The essence of a criminal conspiracy is the unlawful combination and ordinarily the offence is complete when the combination is framed. From this, it necessarily follows that unless the statute so requires, no overt act need be done in furtherance of the conspiracy, and that the object of the combination need not be accomplished, in order to constitute an indictable offence. Law making conspiracy a crime, is designed to curb immoderate power to do mischief which is gained by a combination of the means. The encouragement and support which co- conspirators give to one another rendering enterprises possible which, if left to individual effort, would have been impossible, furnish the ground for visiting conspirators and abettors with condign punishment. The conspiracy is held to be continued and renewed as to all its members wherever and whenever any member of the conspiracy acts in furtherance of the common design. (See: American Jurisprudence Vol.11 See 23, p. 559). For an offence punishable under Section 120- B, prosecution need not necessarily prove that the perpetrators expressly agree to do or cause to be done illegal act; the agreement may be proved by necessary implication. Offence of criminal conspiracy has its foundation in an agreement to commit an offence. A conspiracy consists not merely in the intention of two or more, but in the agreement of two or more to do an unlawful act by unlawful means. So long as such a design rests in intention only, it is not indictable. When two agree to carry it into effect, the very plot is an act in itself, and an act of each of the parties, promise against promise, actus contra actum, capable of being enforced, if lawful, punishable if for a criminal object or for use of criminal means.
No doubt in the case of conspiracy there cannot be any direct evidence. The ingredients of offence are that there should be an agreement between persons who are alleged to conspire and the said agreement should be for doing an illegal act or for doing illegal means an act which itself may not be illegal. Therefore, the essence of criminal conspiracy is an agreement to do an illegal act and such an agreement can be proved either by direct evidence or by circumstantial evidence or by both, and it is a matter of common experience that direct evidence to prove conspiracy is rarely available. Therefore, the circumstances proved before, during and after the occurrence have to be considered to decide about the complicity of the accused."
If, the principles laid down in the above judgment are applied to the present facts of the case, signing on the resolution dated 13.01.2005 by this petitioner with ante-date is suffice to infer that there is a meeting of minds to do an illegal act along with others prima facie. Therefore, on 52 MSM,J Crl.P_1682_2013 evaluating the material on record, I find that the petitioner is also part of the conspiracy, as he allegedly signed on the resolution with ante-date, which enabled the Government of Andhra Pradesh to deposit the amount believing the resolution allotting 2.5% equity in the proposed project and thereby, all the accused diverted funds from the account of M/s Vasishta Wahan Private Limited to their personal accounts. Though, the petitioner herein did not have any account, still he also contributed his role for criminal conspiracy by signing on resolution to allot 2.5% equity to APIIC in the proposed project, on deposit of diverted funds and withdrawing the same prima facie. Hence, it is not a fit case to quash the proceedings against the petitioner for the offence punishable under Section 120-B IPC.
The other offence allegedly committed by this petitioner is punishable under Section 420 IPC. The main endeavour of the learned counsel for the petitioner is that, there is no allegation in the entire charge-sheet that the petitioner had any dishonest intention at the inception of the transaction and in the absence of any such allegation and evidence collected during investigation in support of it, the Court cannot proceed against this petitioner, since, it is a sine qua non, for proceeding against this petitioner for the offence punishable under Section 420 IPC.
Learned counsel for the petitioner placed reliance on the judgment of the Apex Court in C.B.I, SPE, SIU (X) New Delhi v. Duncans Agro Industries Limited, Calcutta (referred supra), while deciding an application under Section 482 Cr.P.C, had discussed about the constituents of offence punishable under Section 420 IPC and adverted to the definition of 'cheating under Section 415 IPC, wherein it was noted 53 MSM,J Crl.P_1682_2013 that 'cheating' consists of fraudulently and dishonestly inducing a person by deceiving him to deliver any property or to do or omit to do anything which he would not do or omit if he were not so deceived. The two essential ingredients of offence would be i) to make a false statement so as to deceive any person, and ii) fraudulently and dishonestly inducing the person to deliver any property or to do or omit to do something.
In the facts of the above judgment, there was no allegation to satisfy the requirements to constitute an offence, thereby, the Court in the operative portion of the judgment (vide paragraph 29) held that, there is enough justification for the High Court to hold that the case was basically a matter of civil dispute and when the suit is filed for recovery of amount from the bank, the proceedings under Section 420 IPC cannot be continued and quashed.
But, the principle laid down in the above judgment cannot be applied to the present facts of the case, for the reason that, the petitioner filed copy of proforma of charge-sheet before the Court and insisting to quash the proceedings, which is unjustifiable, for the simple reason that, the basis for filing charge-sheet is statements recorded by the Investigating Agency during investigation and they are not placed on record for perusal of this Court to find out whether the statements disclosed commission of any offence punishable under Section 420 IPC, satisfying the twin requirements pointed out by the learned counsel for the petitioner, based on the judgments of the Supreme Court referred supra. In the absence of such material, it is difficult to hold at this stage that the charge-sheet is bereft of such requirement and quash the proceedings.
54 MSM,J Crl.P_1682_2013 Learned counsel for the petitioner Sri Chetluri Srinivas would draw attention of this Court to the judgment referred in Ram Narayan Popli v. CBI (referred supra), to contend that, no case is made out by the prosecution for the offence punishable under Section 420 IPC, wherein, the Apex Court held that, normally, in cases involving offences which corrode the economic stability are to be dealt with sternly.
In the facts of the above judgment, trial was conducted and only after completion of trial, the Court laid down certain principles. In paragraph 366 of the judgment, the Apex Court observed that, Section 420 deals with cheating and dishonestly inducing delivery of property. The offence of cheating is made of two ingredients. Deception of any person and fraudulently or dishonestly inducing that person to deliver any property to any person or to consent that any person shall retain any property. To put it differently, the ingredients of the offence are that the person deceived delivers to some one a valuable security or property, that the person so deceived was induced to do so, that such person acted on such inducement in consequence of his having been deceived by the accused and that the accused acted fraudulently or dishonestly when so inducing the person. To constitute the offence of cheating, it is not necessary that the deception should be by express words, but it may be by conduct express or implied in the nature of the transaction itself.
If, these principles are applied to the present facts of the case, signing on the resolution dated 13.01.2005 by this petitioner with ante- date to invite APIIC to participate in the proposed project allotting 2.5% equity etc., itself indicates dishonest intention on the part of this petitioner to induce APIIC to part with huge amount of Rs.11.674 crores and thereafter, the amount was diverted from HSBC New Delhi and later 55 MSM,J Crl.P_1682_2013 the amount was transferred to the personal accounts of the other accused. This itself indicates that the petitioner also had an intention at the very inception itself. Therefore, the allegation in the complaint constitutes an offence punishable under Section 420 IPC prima facie. In Samir Sahay @ Sameer Sahay v. State of U.P. & others (referred supra), the Supreme Court had an occasion to advert to the requirements under Sections 420 & 415 IPC, while deciding an application for discharging all the accused for such offences. In paragraphs 16, 17 & 18, the Apex Court held that, on a reading of the section it is manifest that in the definition there are set forth two separate classes of acts which the person deceived may be induced to do. In the first place he may be induced fraudulently or dishonestly to deliver any property to any person. The second class of acts set forth in the section is the doing or omitting to do anything which the person deceived would not do or omit to do if he were not so deceived. In the first class of cases the inducing must be fraudulent or dishonest. In the second class of acts, the inducing must be intentional but not fraudulent or dishonest. In determining the question it has to be kept in mind that the distinction between mere breach of contract and the offence of cheating is a fine one. It depends upon the intention of the accused at the time of inducement which may be judged by his subsequent conduct but for this subsequent conduct is not the sole test. Mere breach of contract cannot give rise to criminal prosecution for cheating unless fraudulent or dishonest intention is shown right at the beginning of the transaction, that is the time when the offence is said to have been committed. Therefore it is the intention which is the gist of the offence. To hold a person guilty of cheating it is necessary to show that 56 MSM,J Crl.P_1682_2013 he had fraudulent or dishonest intention at the time of making the promise. From his mere failure to keep up promise subsequently such a culpable intention right at the beginning, that is, when he made the promise cannot be presumed."
The consistent view of the Supreme Court to constitute an offence punishable under Section 420 IPC, there must be cheating coupled with and dishonest inducement to deliver property at the time of commission of offence.
The essential ingredients of Section 420 IPC are deception of any persons, fraudulently or dishonestly inducting any person to deliver any property or to consent that any person shall retain any property and finally intentionally inducing that person to do or omit to do anything which he would not do or omit. (Dalip Kaur and others v. Jagnar Singh and other16).
In Ajay Mitra v. State of M.P17, the Supreme Court held as follows:
The High Court, therefore, should have posed a question as to whether any act of inducement on the part of the appellant has been raised by the second respondent and whether the appellant had an intention to cheat him from the very inception. If the dispute between the parties was essentially a civil dispute resulting from a breach of contract on the part of the appellants by non- refunding the amount of advance the same would not constitute an offence of cheating.
(emphasis supplied) In Hari Prasad Chamaria v. Bishun Kumar Surekha & Ors18 the Supreme Court held that unless the complaint showed that the accused had dishonest or fraudulent intention at the time the complainant parted with the money it would not amount to an offence under Section 420 IPC 16 2009 (14) SCC 696 17 2003 (3) SCC 11 18 AIR 1974 SC 301 57 MSM,J Crl.P_1682_2013 and it may only amount to breach of contract. The Supreme Court reiterated that guilty intention is an essential ingredient of the offence of cheating and, therefore, to secure conviction 'mens rea' on the part of the accused must be established. It has been further held that in order to constitute the offence of cheating the intention to deceive should be in existence at the time when the inducement was offered. (vide G.V. Rao v. L.H.V. Prasad & Ors19) In the facts of the judgment of Ajay Mitra v. State of M.P (referred supra), in July 1999, when various trademarks and brands of A-1 were purchased by A-6. The appellants were not at all in picture at the time when the complainant claims to have spent money in improvement of its bottling plant on the basis of the agreement executed with Cadbury Schweppes Beverages India Pvt. Ltd. (A-1). Since the appellants were not in picture at all at the time when the complainant alleges to have spent money in improving the bottling plant, neither any guilty intention can be attributed to them nor there can possibly be any intention on their part to deceive the complainant. No offence of cheating can, therefore, be said to have been committed by the appellants on account of the fact that a notice was given to the complainant that the bottling agreements will not be renewed any further after expiry of the initial term. Thus, even if the allegations made in the complaint are accepted to be absolutely true and correct, the appellants cannot be said to have committed any offence of cheating as provided in Section 420 IPC.
In V.Y. Jose and another v. State of Gujarat and another20, the Apex Court highlighted the ingredients to constitute an offence 19 2000 (3) SCC 693 20 (2009) 3 Supreme Court Cases 78 58 MSM,J Crl.P_1682_2013 punishable under Section 420 I.P.C in paragraph 14 and they are as follows:
"An offence of cheating cannot be said to have been made out unless the following ingredients are satisfied:
i) deception of a person either by making a false or misleading representation or by other action or omission;
(ii) fraudulently or dishonestly inducing any person to deliver any property; or
(iii) To consent that any person shall retain any property and finally intentionally inducing that person to do or omit to do anything which he would not do or omit.
For the purpose of constituting an offence of cheating, the complainant is required to show that the accused had fraudulent or dishonest intention at the time of making promise or representation. Even in a case where allegations are made in regard to failure on the part of the accused to keep his promise, in absence of a culpable intention at the time of making initial promise being absent, no offence under Section 420 of the Indian Penal Code can be said to have been made out."
Thus, the ingredients mentioned above would constitute an offence punishable under Section 420 and that there must be a dishonest inducement at the beginning and delivery of the property by a person so deceived.
Learned counsel for the petitioner also drawn attention of this Court to the judgment of learned single Judge of this Court in Bhuwan Kumar Chaturvedi v. The Assistant Director, Directorate of Enforcement of India, Hyderabad (referred supra). But, the principle laid down in the above judgment has no direct application to the present facts of the case, for the reason that, the communication dated 07.01.2005 was issued by K.V. Rao, the then Principal Secretary to M/s Volkswagen AG, Germany intimating that the Government of Andhra Pradesh has decided to participate in the equity, through their organization i.e. APIIC. This would go to show that, there was no involvement of the petitioner to make equity participation with 59 MSM,J Crl.P_1682_2013 Volskwagen AG Germany, as claimed in the complaint. Though the subject matter of the above decision and the present case is one and the same, Government of Andhra Pradesh through its organization APIIC intended to participate in the equity of M/s Vasishta Wahan Private Limited, in view of the letter addressed by the then Principal Secretary, Sri K.V. Rao. But, by then, there was no agreement between M/s Vasishta Wahan Private Limited and APIIC. Only on account of the resolution allegedly passed by the petitioner herein and Sri Jagadeesh Alaga Raja (A-4), APIIC parted with huge amount of Rs.11.674 crores and it accommodated other directors to withdraw the said amount. Though the petitioner did not induce APIIC initially, but, on account of the resolution dated 13.01.2005, to invite APIIC to participate in proposed project allotting 2.5% equity on payment of 5 million euros, enabled the accused to divert the funds to their personal accounts, including the account of M/s IXXXT, front company of Dr. Helmuth Schuster. As, the incident of transfer was occasioned on account of the resolution, at the same time the petitioner signed on the resolution with ante-date, as contended by the prosecution, unless such resolution was signed as directed by Sri Jagadeesh Alaga Raja, there was no possibility of depositing APIIC, an amount of Rs.11.674 crores and towards equity participation in the proposed project diverting the funds from HSBC to the personal accounts of the accused and M/s IXXXT would not arise, as such, the act of the petitioner prima facie constitute offence punishable under Section 420 IPC. Therefore, this petitioner prima facie accommodated the other accused to divert the funds deposited by APIIC, transferred to their personal accounts, signing on resolution referred above dated 13.01.2005 with ante-date prima facie, consequently, the 60 MSM,J Crl.P_1682_2013 petitioner is also equally liable to be prosecuted for the offences punishable under Sections 120-B & 420 IPC. Hence, I find prima facie material against this petitioner to constitute such offences punishable under Sections 120-B & 420 IPC.
Further, the offence is a serious economic fraud against the APIIC a wholly owned State Government organization itself and it caused a dent to the economic stability of the State. When such serious economic fraud is committed against the State, such person has to be sternly dealt with under law (vide State of Tamil Nadu v. R. Vasanthi Stanley21) and Ram Narayan Popli v. CBI (referred supra).
In view of the law declared by the Apex Court in long line of judgments referred supra and considering the allegations made in the charge-sheet alone, since the material collected during investigation is not placed on record, I do not find any ground to quash the proceedings at this stage and consequently, the petition is devoid of merits and liable to be dismissed.
In the result, the criminal petition is dismissed. Consequently, miscellaneous applications pending if any, shall also stand dismissed. No costs.
_________________________________________ JUSTICE M. SATYANARAYANA MURTHY Date:26.09.2018 SP 21 (2016) 1 SCC 376