Karnataka High Court
Mr Moodbidri Nagavarma Gunasheela vs Registrar Of Companies on 25 April, 2026
Author: M.Nagaprasanna
Bench: M.Nagaprasanna
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IN THE HIGH COURT OF KARNATAKA AT BENGALURU
DATED THIS THE 25TH DAY OF APRIL, 2026
BEFORE
THE HON'BLE MR. JUSTICE M. NAGAPRASANNA
CRIMINAL PETITION No.12441 OF 2022
C/W
WRIT PETITION No.27046 OF 2019 (GM - PASS)
IN CRIMINAL PETITION No.12441 OF 2022
BETWEEN:
MR.MOODBIDRI NAGAVARMA GUNASHEELA
S/O MOODABIDRI NAGAVARMA
AGED ABOUT 56 YEARS
RESIDING AT: NO.5303
ANRIYA GREINBERG
8TH MAIN ROAD
13TH A CROSS ROAD
JUDICIAL LAYOUT
BENGALURU - 560 065.
... PETITIONER
(BY SRI V.VINAY GIRI, ADVOCATE)
AND:
REGISTRAR OF COMPANIES, KARNATAKA
MINISTRY OF CORPORATE AFFAIRS
GOVERNMENT OF INDIA
II FLOOR, 'E' WING
KENDRIYA SADAN
2
KORAMANGALA
BENGALURU - 560 034.
... RESPONDENT
(BY SRI M.N.KUMAR, CGSPC)
THIS CRIMINAL PETITION IS FILED UNDER SECTION 482 OF
CR.P.C., PRAYING TO 1.SET ASIDE THE ORDER DATED 20.08.2022,
PASSED BY THE HON'BLE LIX ADDL.CITY CIVIL AND SESSIONS
JUDGE (CCH-60) BENGALURU IN SPL.C.NO.2001/2022 ISSUING
SUMMONS TO THE PETITIONER (ANNEXURE-R); 2.QUASH THE
COMPLAINT IN SPL.C.NO.2001/2022, AS AGAINST THE
PETITIONER, PENDING ON THE FILE OF THE HON'BLE LIX
ADDITIONAL CITY CIVIL AND SESSIONS JUDGE (CCH-60),
BENGALURU (ANNXURE-Q).
IN WRIT PETITION No.27046 OF 2019
BETWEEN:
GUNASHEELA. M. N.
S/O MOODABIDRI NAGAVARMA
AGED ABOUT 53 YEARS
NO. 5303,
ANRIYA GREINBERG,
13TH CROSS, 8TH MAIN,
JUDICIAL LAYOUT,
BENGALURU - 560 065.
... PETITIONER
(BY SRI CHIDANANDA URS B.G., ADVOCATE)
AND:
1. UNION OF INDIA
REPRESENTED BY ITS SECRETARY,
MINISTRY OF HOME AFFAIRS,
GOVERNMENT OF INDIA,
3
SOUTH BLOCK,
NEW DELHI - 110 001.
2. REGIONAL DIRECTOR
SOUTH EAST REGION,
MINISTRY OF CORPORATE AFFAIRS,
GOVERNMENT OF INDIA,
HYDERABAD, TELANGANA.
3. REGISTRAR OF COMPANIES
OFFICE OF THE REGISTRAR OF COMPANIES,
KARNATAKA, II FLOOR,
KENDRIYA SADAN,
"E" WING, KORAMANGALA,
BENGALURU - 560 034.
4. CHIEF IMMIGRATION OFFICER
BUREAU OF IMMIGRATION,
BANGALORE INTERNATIONAL AIRPORT,
DEVANAHALLI,
BENGALURU - 560 300.
5. REGIONAL PASSPORT OFFICER
MINISTRY OF EXTERNAL AFFAIRS
8TH BLOCK, 80 FT ROAD,
KORAMANGALA,
BENGALURU - 560 095.
(IMPLEADED VIDE COURT ORDER DATED
15.12.2023)
... RESPONDENTS
(BY SRI M.N.KUMAR, CGSPC)
THIS WRIT PETITION IS FILED UNDER ARTICLES 226 AND
227 OF THE CONSTITUTION OF INDIA PRAYING TO a) DIRECT BY A
WRIT OF CERTORARI TO R-2 AND HIS AGENTS TO BRING INTO
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THIS HON'BLE COURT THE ENTIRE RECORDS AND PROCEEDING
WHICH CULMINATED IN THE ISSUANCE OF THE LOOK OUT
CIRCULAR WHICH HAD RESULTED IN DETENTION OF THE
PETITIONER AND DEPLANED ON 14.06.2019 WHICH STATEMENT
HAVING BEEN TAKEN ON OATH DATED 14.06.2019 WHICH IS
HEREWITH ENCLOSED AT ANNEXURE-'D' TO THIS PETITION SO
THAT CONSCIONABLE JUSTICE MAY BE ADMINISTERED BY
QUASHING THE SAME; b) DIRECT THE RESPONDENT AND OR ITS
OFFICERS OR SERVANTS OR SUB-ORDINATES OR AGENTS OR ITS
SUCCESSORS IN OFFICE TO QUASH THE LOOKOUT CIRCULAR
ISSUED AGAINST THE PETITIONER HOLDING INDIAN PASSPORT
NO.H9916160 WHICH IS ANNEXURE-'C' TO THIS PETITION;
c) TO ALSO ISSUE A WRIT OF PROHIBITION DIRECTING THE
RESPONDENTS TO NOT TO IMPOSE ANY RESTRICTION ON
MOVEMENT OF THE PEITTIONER INCLUDING HIS RIGHT TO TRAVEL
ABROAD; d) TO ALSO DECLARE THAT, IN THE ABSENCE OF ANY
RESTRICTION ORDER PASSED BY APPROPRIATE AUTHORITY IN
ACCORDANCE WITH LAW, THE RESPONDENTS ARE NOT ENTITLED
TO PLACE ANY RESTRICTION OF MOVEMENT OF THE PETITIONER;
e) TO ALSO HOLD AND DECLARE THAT THE ACTION OF THE
RESPONDENTS IN DETAINING THE PETITIONER AT THE
KEMPEGOWDA INTERNATIONAL AIRPORT ON 14th JUNE, 2019 IS
WITHOUT THE AUTHORITY OF LAW AND VIOLATION OF ARTICLE 21
OF THE CONSTITUTION OF INDIA; f) TO DIRECT THE
RESPONDENTS TO EXPUNGE THE REMARK "OFF LOADED" ON THE
PASSPORT OF THE PETITIONER; g) TO ALSO ISSUE RULE IN TERMS
OF PRAYERS (a) TO (c) ABOVE; h) RULE TO BE MADE ABSOLUTE.
THESE PETITIONS HAVING BEEN HEARD AND RESERVED FOR
ORDERS, COMING ON FOR PRONOUNCEMENT THIS DAY, THE
COURT MADE THE FOLLOWING:-
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CORAM: THE HON'BLE MR JUSTICE M.NAGAPRASANNA
CAV ORDER
The petitioner is common in both these cases. The challenge
is different - one to the proceedings in Special case No.2001 of
2022 and the other to the administrative order, a look out circular.
2. Heard in both the cases Sri V.Vinay Giri and Sri
Chidananda Urs B.G., learned counsel appearing for the petitioner
and Sri M.N. Kumar, learned Central Government Senior Panel
Counsel appearing for the respondents.
3. Facts in brief, as obtaining in Criminal Petition No.12441 of
2022 would be narrated for the purpose of convenience.
3.1. The petitioner is a Chartered Accountant in practice for
close to 30 years and claims to be providing service in the field of
audit, accounting and tax consulting at Bengaluru. In the year
2011, the averment in the petition is that, he was introduced to one
Mr. Malcom N.Desai and Mr. Micheal Ferreira who expressed
interest to incorporate a Company for the purpose of starting
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business in India. Those two then requested the petitioner to advise
them on incorporation of the Company on financial and tax aspects
and to be its auditor. During the process of incorporation, the two
inform the petitioner that one Vanka Srinivasa Rao and another
Guhan Ramachandran would be the first Directors of the Company
to be incorporated. After the aforesaid interaction, in the year 2011
the process of obtaining Director Identification Number ('DIN', for
short), took some time and persons who had contacted the
petitioner requested him to become one of the Directors of the
Company at the time of incorporation till Mr. Vanka Srinivasa Rao
and Mr. Guhan Ramachandran obtain their respective DINs. The
petitioner has had his DIN long ago. The petitioner acceded to the
request and along with one of his colleagues agreed to become
Director of the Company till the other two obtain their DINs. The
petitioner avers that he had informed that he will not start any
commercial operations of the Company and will resign immediately
after the aforesaid two receiving their DIN and then they being
made Directors of the Company. They are said to have agreed to
the same. Accordingly, a Company by name Vihaan Direct Selling
(India) Private Limited ('the Company' for short) was incorporated
7
on 10-10-2011 and the petitioner became its Director with effect
from 10-10-2011 which is discernible from Form No.32.
3.2. The petitioner further avers that he had become one of
the Directors of the Company on a stop gap arrangement without
involving in day-to-day affairs of the Company, till the two obtain
their DIN. The other two obtained their DIN which resulted in the
resignation of the petitioner on 29-02-2012. Therefore, the
petitioner was only a Director of the Company for a period of four
months. The Company, at that point in time, did not commence any
commercial operations. After the resignation of the petitioner, the
commercial operations commenced only from the financial year
2013-14 that too after the other two obtained their DIN. The
Company, thereafter appointed the petitioner as its auditor from
the financial year 2012-13 up to 2014-15. The petitioner after the
said period is said to have rendered advisory services to the said
Company.
3.3. In the year 2016, certain complaints come to be filed
against the Company and its Directors by the customers and the
Investigating Agencies commenced investigation on the affairs of
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the Company. No complaint was made against the petitioner. In
October, 2016 the petitioner receives a communication from the
office of the Senior Inspector of Police, Economic Offences Wing,
Mumbai, informing him that a crime had been registered against
the Company and its Directors in EOW C.R. No.78 of 2013 for
offences punishable under Sections 409, 420, 465, 471, 120B and
201 of the IPC r/w Sections 3, 5 and 6 of the Prize Chits and Money
Circulation Schemes (Banning) Act, 1978 ('PCMCB Act' for short)
r/w Section 3 of the Maharashtra Protection of Interest of
Depositors (in Financial Establishments) Act, 1999 ('MPID Act' for
short) r/w Sections 5 and 7 of Drugs and Magic Remedies Act,
1954. In response to the said communication, the petitioner
appears before the Competent Officer, Economic Offences Wing,
produces all the documents that were sought for and submitted a
detailed explanation thereon. After a detailed investigation, a
charge sheet is filed in the case and the name of the petitioner is
dropped from the array of accused in the Economic Offences Case
No.78 of 2013.
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3.4. The petitioner receives another notice from the Crime
Investigation Department, Bengaluru to appear before the Deputy
Superintendent of Police for the purpose of investigation. The
petitioner again appears and submits all the documents and
completely assisted in the investigation so conducted against the
Company. Despite the petitioner submitting everything, it appears
a look out circular was issued against him, which stopped him from
undertaking travel beyond the shores of the nation. It is this look
out circular which forms the challenge in the companion petition -
Writ Petition No.27046 of 2019.
3.5. As observed hereinabove, the complaints against the
Company did not stop. The respondent issues a show cause notice
on 27-10-2021 setting out details of allegations against the
Company and its Directors who were holding the posts of Directors
during the financial years 2014-15, 2015-16 and 2016-17. In
response to the show cause notice, the petitioner again files a
detailed reply on 08-11-2021 setting out in detail the circumstances
in which he became a Director and how he resigned from the post
of Director. Notwithstanding the said explanation, a private
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complaint invoking Section 200 of the Cr.P.C., comes to be filed by
the respondent for offences punishable under Section 447 r/w
Section 448 of the Companies Act, 2013, drawing in all the present
and former Directors including the petitioner, in P.C.R. No.35 of
2022 alleging fraud and rendering false statement committed by
the petitioner during 2014-15, 2015-16 and 2016-17. The
petitioner is arrayed as accused No.10 on the score that he was a
former Director of the Company. The concerned Court takes
cognizance of the offence on 20-08-2022 and directed registration
of a special case in Spl.C.No.2001 of 2022. Taking of cognizance
and issuance of summons is what is challenged in the subject
petition.
4.1. The learned counsel appearing for the petitioner would
vehemently contend that the Company was incorporated on
10-10-2011 with the petitioner as one of the Directors. On
29-02-2012 he resigned, as the promoters obtained their DIN and
became Directors of the Company. Commercial operations of the
Company had not commenced when the petitioner was one of the
Directors. They commenced the said operation only from the year
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2013-14, which is the narration in the complaint also. The
complaint itself alleges that the acts are committed in the year
2014-15 and onwards. The Economic Offences Wing, Mumbai which
had commenced proceedings, after the information was rendered
by the petitioner, had dropped the petitioner from the array of
accused on this very score. Long thereafter, the Crime Investigation
Department ('CID' for short) calls upon the petitioner to submit his
reply. Reply is submitted. Here again, the petitioner is not arrayed
as an accused. But, a look out circular is issued and later a show
cause notice was issued by the respondent - Registrar of
Companies, Karnataka and then a private complaint is filed in which
the petitioner is drawn as accused No.10, all for offences under
Sections 447 and 448 of the Companies Act.
4.2. The learned counsel submits that, as on the date on
which the petitioner was a Director and resigned, Sections 447 and
448 were not in the statute book. They are brought in as offences
under the new Act, the Companies Act, 2013. He would, therefore,
submit that the petitioner cannot be permitted to be prosecuted for
reasons more than one. Insofar as challenge to the look out circular
12
is concerned, the learned counsel would submit that if these
proceedings are obliterated, the corollary would be the look out
circular getting quashed. Though it is earlier in time, the fulcrum is
impending crime against the Company. He would seek quashment
of proceedings on the aforesaid score.
5. Per contra, the learned Central Government Senior Panel
Counsel Sri M.N. Kumar would seek to contend that the petitioner
though resigned, was still the face of the Company. All the
communications are by the petitioner for the Company. He has
only resigned on paper, but was managing the affairs of the
Company as its Auditor. Therefore, it is for him to come out clean in
a full-blown trial. He would admit that Sections 447 and 448 were
not in the statute book at the point in time, but the Company being
in subsistence prior to it and after it, the transactions happening
prior to it and after it would not mean that proceedings could be
obliterated against the petitioner or any other accused.
6. The learned counsel for the petitioner would join issue to
contend that if it is any other accused who had continued to be in
13
the affairs of the Company prior to and after, it would have been a
circumstance altogether different. He would seek to place reliance
on certain judgments to buttress his submissions, all of which would
bear consideration qua their relevance in the course of the order.
7. I have given my anxious consideration to the submissions
made by the respective learned counsel and have perused the
material on record.
8. The afore-narrated facts, dates, link in the chain of events
are all a matter of record, however, would require a skeletal
reiteration. The history of the case dates back to 2011; to be
precise on 10-10-2011, when the petitioner is said to have been
requested to become a Director of the Company owing to the fact
that the other two founder Directors did not have their DIN and had
taken steps for generation of their DINs. The petitioner thus
becomes the Director on 10-10-2011. He then resigns as a Director
on 29-02-2012. This is evidenced from Form No.32 appended to
Section 266(1)(b) of the Companies Act, 1956. It reads as follows:
14
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Till the date the petitioner was the Director, no commercial
operations of the Company started. It began only in the year 2013-
14 and thereon. Four years after the resignation of the petitioner,
a communication comes to be issued to him by the Economic
Offences Wing, Mumbai to appear before it along with certain
information and documents. It is here the petitioner comes to know
that Economic Offences Wing Crime No.78 of 2013 is registered for
offences under Sections 409, 420, 465, 468, 471, 120B, 201 of the
IPC r/w Sections 3, 5 & 6 of PCMCB Act r/w 2(c), 3 of MPID Act,
1999 r/w 5 & 7 of Drugs and Magic Remedies Act, 1954. It reads as
follows:
"To
Mr. Gunasheela M. N.
M/s. Gunasheela & Associates,
Chartered Accountants
No.140 'B', 3rd Floor, 9th Cross, Margosa Road,
Malleshwaram, Banglore 560 003.
Sub:- Attend this office along with Information and Documents
Ref:- EOW C. R. No. 78/2013 U/s. 409, 420, 465, 468, 471,
120(B), 201 of IPC r/w 3, 5, 6 PCMCB Act r/w 2(c), 3
MPID Act 1999 r/w 5, 7 Drug and Magic Remedies Act
1954. (Oshiwara Police Station, C. R. No. 316/2013)
This is to inform you that, the above mentioned
case has been registered against the directors and
officials of M/s. Vihaan Direct Selling (India) Pvt Ltd,
M/s. QNet Ltd, Hongkong, M/s. Transview Enterprise
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India Pvt Ltd, M/s. Vanmala Hotels, Travel and Tourism
Services Pvt. Ltd. and others and being investigated by
Economic Offences Wing, Crime Branch, Mumbai.
During the course of investigation, it has revealed
that you were the director as well as accountant/auditor
of one of the accused company M/s. Vihaan Direct Selling
India Pvt. Ltd., Banglore.
In this regard the following information and documents
are required for the purpose of further investigation.
1) How and When you came in contact with officials of M/s.
QNet Limited, Hongkong, M/s. QI/Group of Companies,
Malaysia and Hongkong, M/s. Questnet Enterprises India
Pvt. Ltd., Chennai and Banglore before you became the
director, of M/s. Vihaan Direct Selling India Pvt. Ltd.,
Banglore ? ( and the details of the officials of the above
mentioned companies)
2) Have you done the process of registration of the
companies M/s. Questnet Enterprises India Pvt. Ltd., M/s.
Vihaan Direct Selling India Pvt. Ltd., Banglore and M/s.
Transview Enterprises India Pvt. Ltd., Delhi / Banglore or
any other companies related to M/s. QNet Limited,
Hongkong, M/s. QI Group of Companies, Malaysia and
Hongkong ? if yes then so furnish certified copies of all
the related documents of registration.
3) How you became the director of M/s. Vihaan Direct
Selling India Pvt. Ltd., Banglore and who have
approached you for the same ?
4) Have you resigned from the directorship of M/s. Vihaan
Direct Selling India Pvt. Ltd., Banglore? if yes then why
you have resigned ?
5) Have you done the accounting and auditing of the
company M/s. Questnet Enterprises India Pvt. Ltd.,
Chennai and Banglore and M/s. Vihaan Direct Selling
India Pvt. Ltd., Banglore ? if yes then furnish certified
copies of all the Audit Report and Balance Sheet.
17
6) How much payment have been received by you from the
above mentioned company against the services of
accounting / auditing provided by you or your company?
and furnish the statement of account of your bank in
which the payment is reflected.
7) Any other information / documents you would like to
share with the investigation agency.
8) Furnish all the certified copies of related documents
related to above queries.
In this regard you are directed to attend this office of
Senior Inspector of Police, SIT-QNET, Economic Offences Wing,
3rd floor at New Building, Mumbai Police Commissioner's Office
Compound, D. N. Road, Mumbai 400 001 along with above
mentioned information and related documents within three days
after receipt of this letter.
To avoid the inconvenience, you may contact
Investigating Officer, Police Inspector Kapse on 9870955002.
Sd/-
(Nikhil Kapse)
Inspector of Police,
E.O.W., Mumbai."
The petitioner appears and submits documents and details of his
entry and exit in the Company. The reply dated 14-11-2016 reads
as follows:
"To,
The Senior Inspector of Police,
Economic Offence Wing, SIT-Qnet,
Police Commissioner's Office
Compound, New Building, 3rd Floor,
Mumbai-400001.
18
Dear Sir,
Sub: Information & documents requested by your goodself
Ref: EOW C.R.No.78/2013 U/s 409, 420, 465, 468, 471, 120(B),
201 of IPC r/w 3,5,6 PCMCB Act r/w 2(c), 3 MPID Act 1999 r/w
5, 7 Drug and Magic Remedies Act 1954. (Oshiwara Police
Station, C.R.No.316/2013)
With reference to above, your requested us to appear before
your goodself with the following information.
1. During Financial year 2011-12, three officials of
Qnet Ltd/Honglong, Malasiya approached me to
provide my services regarding setting up of a
Franchise Company in Bangalore/India. Two main
persons whose name I recall are Mrs. Veni who was
a project manager & Mrs. Joanna who was a legal
advisor. Basically they wanted to know what kind of
company to be formed, what should be the capital
structure, if FDI was allowed & what are the
various taxes to be paid for their line of business in
India. I advised them on the various taxes to be
paid in India & in State of Karnataka. I also advised
them to seek opinion from experts on FEMA & FDI &
practicing Company Secretary regarding the
Company Structure. After consulting experts they
reverted back to me & said as their proposed
Directors Mr. Srinivas Rao Vanka & Mr.Guhan
Ramachnadran did not have Director Identification
Number, if I would lend my name to be Director of
the Company along with any other known person to
speed up the Company formation. Please note as
M/s Vihaan Direct Selling (India) Pvt. Ltd was
formed under the erstwhile Indian Companies Act,
1956. The Company formation in that period use to
take minimum 20-25 working days. As was general
practice then the professional or one of his staff or
family members used to lend their name to become
1st Director of the Company & till such time
proposed Directors got their DIN. Hence, I & junior
employee lent our name as 1st Director till such
time we were replaced by Mr. Srinivas Rao Vanka &
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Mr.Guhan Ramachandran. Please note I was
Director from 10.10.2011 to 29.07.2012 & was out
of the Board well before the commencement of any
commercial operation of the Company, which was
commenced only in May of 2012.
2. I have not done the process of registration of the
companies M/s Questnet Enterprises India Pvt.
Ltd., M/s Vihaan direct Selling India Pvt. Ltd., and
M/s Transview Enterprises India Pvt Ltd., or any
other companies related to M/s Qnet Limited,
Honkong, M/s QI Group of Companies, Malaysia and
Hongkong
3. The reason for becoming 1st Director of the
Company is mentioned in the point no.1
4. I have resigned from the directorship on
29.02.2012 as explained to you in point no. 1. This
was a just a stop gap arrangement only till such
time the proposed director of the company got their
DIN allotted & then were appointed as a Directors
of the Company. This is a routine practice and I
have assisted quite a few companies becoming 1st
Director of the Company in this manner.
5. I have not done any accounting & auditing services
for M/s Questnet Enterprises India Pvt. Ltd.,
Chennai. I was the Auditor of M/s Vihaan Direct
Selling (India) Pvt. Ltd. for the F.Y.2012-13. 2013-
14 & 2014-15. Please find attached certified copy of
Audit Report & Balance Sheet for your perusal.
6. The details of payment received by M/s Vihaan Direct
Selling (India) Pvt. Ltd against the services of Auditing &
other services is attached along with proof of receipts in
the Bank Statement.
7. Please note I have also consulted the Company in Income
Tax & other Tax matters.
I will glad to furnish any further details you may require in this
regard."
(sic)
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Owing to the reply, the petitioner comes to be dropped from the
array of accused in the Economic Offences Case No.78 of 2013.
There are 31 accused named, but the name of the petitioner is not
found. This could be gathered from the names of the accused as
appended to the petition. The list reads as follows:
"Sections - 409, 420, 465, 468, 471, 120(b), 201, IPC a/w
Section 3, 5, 6, P.C.M.C.B. Act, a/w. no.2C, 3 M.P.I.D. Act a/w
5, 7 Drugs & Magic Remedies Act
Claimant: - Shri.Gurupreetsingh Inderjeetsingh Anand
Name of the Accused
21
9. Two years passed by, another notice comes to be issued by
the Criminal Investigation Department, Bengaluru on 04-09-2018.
The notice reads as follows:
"NOTICE
Whereas, it appears that there are been transfer of
founds form M/s Vihaan Direct Selling (India) Pvt. Ltd. in
to your accounts. In this regarded it appear that you are
acquainted with the facts & circumstances of the case
noted below, which I am investigating under the Code of
Criminal Procedure Code.
You are hereby required to appear before me for
investigation purpose on 07.09.2018 at 10.30 along with
relevant copies of records if any at Criminal Investigation
Department headquarters, (CID) Cyber Crime Division,
No.1 Carlton House, Palace Road, Bangalore-560001 for
the purpose of answering certain questions relating to
the case. Mentioned below.
Cr. No24/2018 U/s 406-420 IPC KDPI Act u/s 09 & Prize &
Money circulation scheme(Banning) Act u/s. 3/4/5/6/1978
Halasoor PS (Presently investigated by the undersigned at CID
head quarter, Carlton House, Palace, Road, Bangalore-560001.
Karnataka, Bangalore.)
Sd/-
(S. Badrinath)
Dy. Superintendent of Police
Criminal Investigation Department
Carlton House, Palace Road,
Bangalore - 560 001.
To,
Sri/Smt. Suriya Akil Jabbar
S/o. Jabbar Suriya
Gunsheela & Associates
No.140 B, 2nd Floor, 9th Cross
Margosa Road, Malleswaram,
Banglaore-560003."
(sic)
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The petitioner again appears before the CID and submits all the
documents to two communications. They read as follows:
"To,
Deputy Superintendent of Police
Cyber Crime Police Station,
C.I.D, Head Quarters, No.1,
Carlton House, Palace Road,
Bangalore-560001.
Dear sir,
Sub: Investigation In the case of M/s Vihaan Direct
Selling India Pvt Ltd
Ref: Your notice No.Cr-24/HalasoorPS/CID-Inv-18 dt.
04.09.2018
In continuation to our personal appearance, we wish to bring to
your notice the following:
1. The Undersigned are Chartered Accountants &
Partners of Gunasheela And Associates Firm in
existence for more than 10 years & with a combined
experience of 30 years in profession.
2. We have not received any funds from Vihaan Direct
Selling (India) Pvt Ltd (Vihaan) into our personal
accounts.
3. Our Firm has providing following services to them.
a. Statutory Auditor for the period F.Y.2012-
13,13-14 & 14-15
b. Tax consultant for the period F.Y.2012-13 to
February 2018.
4. Being Tax consultants they have mandated us to
pay all the Taxes on their behalf. In this regard they
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use to transfer the amount regularly to our Bank
account held in the name of Gunasheela And
Associates, IDBI Bank, Malleshwaram Branch,
Bangalore. As per their direction we have paid
Income Tax, TDS dues, Service Tax dues & VAT &
GST dues.
5. We have enclosed our ledger account giving details of
receipts & payments of Taxes. We are also enclosing
copies of all the challans of month May 2017 as sample
for your verification & if required we are ready to produce
before your goodself copies of all the Tax challans paid by
us on behalf of Vihaan. Hence, as can be seen from
above we are only rendering professional services
to Vihaan as Chartered Accountants. This matter
was also investigated by Enforcement Directorate,
Bangalore & EOW Mumbai Police.
We will be glad to furnish any further details you may
require in this regard."
..... ..... .....
19.09.2018
To,
Deputy Superintendent of Police
Cyber Crime Police Station,
C.I.D, Head Quarters, No.1,
Carlton House, Palace Road,
Bangalore-560001.
Dear Sir,
Sub: Investigation in the case of M/s Vihaan
Direct Selling India Pvt Ltd
Ref: Your notice No.Cr-24/HalasoorPS/CID-Inv-18
In continuation to our personal hearing on 07.9.2018, we
furnish the following as requested by your goodself:
24
1. Copies of the all Tax challans paid by us on behalf of M/s
Vihaan Direct Selling India Pvt Ltd From F.Y.2012-13 to
F.Y.2017-18. This includes, TDS, VAT, ST, CST, GST, IT,
PT & other levies.
2. Please also find attached Pendrive containing data
relating to TDS payments. This includes name of the
payee, PAN, amount paid & TDS deducted challan wise.
Please note as informed to you this TDS returns are filed
by the Company themselves & our brief was only to pay
the Tax. Hence, for any further details for Tax deduction
you have to contact Vihaan itself.
We will be glad to furnish any further details you may require in
this regard."
The CID files its charge sheet arraigning 21 accused. The list of
accused are as follows:
".... .... ....
13. Particulars of Accused Persons: Separate sheet along with
POI and POA collected during investigation enclosed.
Sl. No. Name Designation - As
claimed by accused in
different documents
A1 M/s. Vihaan Direct Selling Company
(India) Private Limited
A2 Malcolm Desai Director
A3 Michael Ferreira Director
A4 Vanka Srinivas Rao Director
A5 Guhan Ramachandran Director
A6 Balaji Magaral Veeravalli Director
A7 Premdas Ramunni Kurup Director
A8 Raveendranath Surendranath Director
Wahal
A9 Suryanarayana Kantha Director
Vijayasarathy
25
A 10 Dilipraj Pukkella Director-(Director &
Service)
A 11 Muhammed Imthiaaz Director- Freelance
Dealer
A 12 D'Cruz Raymond Gregory Manager-IDC
A 13 Raghunandan S Senior Manager-ISC
A 14 Patla Udayashankara Bhat Manager-Logistics
A 15 Nagaraj Rama Rao Director-Head Finance
and Accounts
A 16 Chakarapani Manager-Finance
A 17 Umesh kanjarakandy -
A 18 Sushen A.R.A -
A 19 Bhanu Ramdas Senior Manager-
Finance
A 20 Bharathisha A -
A 21 Srinivasa Vara Prasad Velala Business Relationship
Manager"
The petitioner is not an accused. Therefore, after accepting the
reply of the petitioner by two Investigating Agencies - one under
the Economic Offices and the other by the CID, Cyber Crime - the
name of the petitioner was dropped from the array of accused. It is
presumably that the petitioner was dropped for the reason that
nothing was found against him and his reply was found satisfactory.
10. Then begins the third proceeding. Three years later, the
Registrar of Companies/the respondent in Crl.P.No.12441 of 2022
files a private complaint before the learned Magistrate under
Section 200 of the Cr.P.C., now for the offences under Sections 447
26
and 448 of the Companies Act, 2013. In the said complaint, in
P.C.R.No.35 of 2022 the petitioner is arrayed as accused No.10. In
the entire complaint the allegations/role of the petitioner are found
at paragraphs 3, 20(vi), 26 and 32. They read as follows:
".... .... ....
3. The accused No.1 i.e. the company had only two directors
from 28/09/2016 i.e. accused Nos. 2 and 3, respectively.
However, they have been disqualified under section
164(2) of the Companies Act, 2013 with effect from
16/05/2019 by the Complainant Accused Nos.4 to 10
are Former Directors and Accused Nos. 11 and 12
are Promoters and Shareholders of Accused No.1
Company and are liable for punishment under
section 447 read with section 448 of the Companies
Act, 2013. The accused Nos.2 and 3 have deliberately
provided/intimated incomplete residential address to
mislead the regulators and investors.
.... .... ....
20. The inspectors submitted supplementary inspection
report dated 02/09/2020, depicting in detail as to
how fraud has been committed by the accused No.1
company and its directors i.e. accused herein.
During the course of the inspection, the inspectors
observed that;
.... .... ....
vi. In India, since 2011, QNET through Transview
Enterprise India Private Limited and Vanamala
Hotels Travel and Tourism Services Private
Limited has been procuring products and
services and making payments to them. The
Inspectors have reported that from the bank
statements provided by the accused No.1
company, the said company has made payment
of around one crore rupees each on multiple
27
occasions to companies mentioned herein
above. The accused No.1 company and its
directors i.e. accused herein have failed to
explain the trading relationship with the
above companies.
26. Even after filing the winding up petition against the
accused No. 1 company by Union of India, before the
NCLT, Bengaluru Bench under section 271 read with
section 272 of Companies Act 2013, in the month of June
2019, the said company has continued its fraudulent
activities and luring new investors. The Covid 19
pandemic condition has probably facilitated the same, as
several people are desperate for new avenues for income,
given the job losses and pay cuts due to the pandemic.
The accused No.1 company is also allegedly making use
of Video Conferences - Zoom meet etc., to spread their
multi-level marketing business and give training to new
IRs on now to bring new people to the chain and thus
earn commission.
.... .. ....
32. The accused No.1 company and its directors accused Nos.
2 and 3 respectively have made false statement, as
defined in Section 448 of the Act by giving different
information/documents, one of which is at least obviously
false and are hence liable for penal action under section
447 of the Act on the particular ground. As the accused
No.1 company has had business operations of the
same nature from year 2013-14 onwards, the
promoters (who are also present shareholders)
who incorporated the accused No.1 company are
the ultimate beneficiaries of its activities, including
the directors at relevant periods of time. Therefore,
the directors of the said company have not acted in
utmost good faith and their action is not for proper
purpose as is evident from the fact that numerous
people have lost their hard-earned money by
investing in the said company. Thus, they are liable
for action under section 447 of the Companies Act,
2013 and a show-cause notice was sent to them to
28
show cause as to why penal action should not be
initiated against them."
On a blend of the aforesaid paragraphs, there is nothing that can be
said against the petitioner. It is the case of the complainant itself
that accused No.1/Company began its business operations in the
year 2013-14, before which the petitioner had resigned. The
complaint itself narrates that the petitioner was a Director for four
months, but he was a former Director and, therefore, he should be
prosecuted. The complaint is absolutely bald insofar as the
petitioner is concerned. Yet, against other Directors/accused, a
plethora of narrations of particular transactions are found. The
concerned Court upon complaint, takes cognizance by the following
order:
"Date: 30-07-2022
The Central Government Senior Panel Counsel for
complainant and complainant have filed the complaint U/sec.
200 of Cr.P.C., 1973 for violation of Section 447 r/w Section 448
of the Companies Act and prays this Hon'ble Court to:
(a) Take cognizance of this complaint, issue process to
the accused, try them according to law and punish
them for the offence under Sec.447 r/w Sec.448 of
the Companies Act, 2013.
(b) Direct the accused to pay costs of the proceedings and
remit to complainant office as provided under Section 446
of the Companies Act, 2013.
29
(c) Exempt the complainant and witnesses from examination
under Section 200 of the Code of Criminal Procedure,
1973.
(d) Dispense with attendance of the complainant before this
Hon'ble Court, in terms of proviso to Section 439(3) of
the Companies Act, 2013.
(e) And pass such order/s deemed fit under the fact and
circumstances of the case.
1. List of witnesses filed.
2. List of Documents filed
3. Memo of appearance is filed.
ORDER
Counsel for Complainant is present.
Register PCR and put up file by 30-07-2022."
(Emphasis added at each instance) With all the aforesaid narration and the petitioner being found innocent by two agencies - one by Economic Offences Wing and the other Criminal Investigation Department - can he be permitted to be prosecuted for the third time for offences under Section 447 or 448 of the Companies Act? The answer would be an unequivocal and emphatic 'no'.
11. Criminal prosecution against a person is a very serious thing. It cannot be a frolicsome act on the part of the respondent. 30 The role of the accused must be clearly spelt out and not vaguely said that he might have been involved in the offence. There are a plethora of documents to demonstrate that the petitioner was not a Director and had nothing to do with the Company when the Company began its operations. If it were to be otherwise, the other two Investigating Agencies would not have given the petitioner a clean chit. The documents were thoroughly scrutinized by both the Investigating Agencies. Therefore, it would not become necessary to go into the factor whether a post facto law can be used to punish the petitioner. Finding no allegation against the petitioner that could permit prosecution, it would suffice, on the said reason the proceedings are obliterated.
12. In the light of obliteration of proceedings in Crl.P.No.12441 of 2022, the companion petition W.P.No.27046 of 2019, which challenges the look out circular, also deserves to succeed, for the reason that the look out circular was obtained on a statement of oath. The Economic Offences Wing on whose proceedings LOC had been generated against the petitioner, has filed charge sheet in C.C.No.9 of 2023 detailing every act and every 31 accused for several offences. The name of the petitioner is not found as an accused.
13. For the aforesaid reasons, the following:
ORDER
(i) Criminal Petition and Writ Petition are allowed.
(ii) Proceedings in Special C. No.2001 of 2022 pending before the LIX Additional City Civil and Sessions Judge, Bengaluru stands quashed.
(iii) Look Out Circular issued against the petitioner by the respondents stands quashed.
(iv) It is made clear that the observations made in the course of the order only relate to the petitioner/ accused No.10 and would not be applicable to any other accused in the impugned proceedings.
Sd/-
(M.NAGAPRASANNA) JUDGE Bkp CT:MJ