Telangana High Court
Prithvi Raj Bijlani vs State Of Telangana And 3 Others on 22 March, 2022
Author: K.Lakshman
Bench: K.Lakshman
THE HON'BLE SRI JUSTICE K.LAKSHMAN
CRIMINAL PETITION NOs.1682 AND 3600 OF 2021
COMMON ORDER
As the lis involved in both the criminal petitions and the petitioner is one and the same, they are being heard in common and disposed of with the following common order:
1-a. The Crl.P.No.1682 of 2021 is filed under Section - 482 of the Code of Criminal Procedure, 1973 (for short, 'the Cr.P.C.') to quash the proceedings in C.C.No.511 of 2015 on the file of the Chief Metropolitan Magistrate, Nampally, Hyderabad.
1-b. The Crl.P.No.3200 of 2021 is filed to quash the proceedings in C.C.No.648 of 2016 pending on the file of the very same Court.
1-c. In both the Calendar Cases, the petitioner herein is A.3 and the offences alleged against the petitioner herein are under Sections 420 read with Section 120-B of IPC and Section 2 (c) 3 to 6 of the Prize Chits and Money Circulation Schemes (Banning ) Act, 1978 ( for short, 'the Act').
KL,J Crl.P. Nos.1682 and 3600 of 2021 2
2. Heard Sri T.Niranjan Reddy, learned Senior Counsel, representing Sri N.Harinath, learned counsel for the petitioner and learned Public Prosecutor. Perused the record.
FACTS OF THE CASE:-
3. The petitioner herein is Director-Finance of A.1 Company i.e. M/s Amway India Enterprises Private Limited (for short, 'the company'). The allegations against the petitioner herein and other accused are that they have conspired together, promoted and conducted money circulation scheme and fraudulently collected huge money from subscribers and thereby committed the above referred offences. A.1 company is USA based company. It has started in the year 1959. It is operating its business in more than 100 countries. It has started its business in India in the year 1998 and it has about 1100 products. The enrolment of Members in the scheme and amounts collected etc., are specifically mentioned in the charge sheet. This Court in a judgment in W.P.No.20470 of 2021 held that the scheme of A.1 company is nothing but illegal Money Circulation Scheme. The Government of Andhra Pradesh has also issued G.O.Ms.No.178, dated 15.09.2008 restraining the A.1 company from issuing advertisements. Even then, the A.1 company has issued advertisements in contravention of the Act. The commissions are KL,J Crl.P. Nos.1682 and 3600 of 2021 3 said to be distributed to all the members in the chain/network from last person to Amway in USA as commissions on group turnover.
4. As per the orders in W.P.No.15943 of 2014, the Additional Director of General of Police, CID Hyderabad entrusted the crimes viz: 1) Cr.No.232 of 2014 of Khammam I Town Police Station,
2) Cr.No.161 of 2014 of Jangam Police Station, 3) Cr.No.302 of 2014 of Subedari Police Station and 4) Cr.No.123 of 2014 of CCs, DD, Hyderabad to the Crime Investigation Department, Hyderabad and other 5 cases are transferred to CID TS Hyderabad, for further investigation.
5. The A.1 company is subsidiary M/s Alticor Inc, USA which, in turn, is a subsidiary to M/s Alticor Golobal Holdings Inc. USA M/s Alticor Inc, USA controls three district and different business namely Amway Corporation, Access Business LLC and Alticor Corporate Enterprises. The petitioner herein is one of the Directors of A.1 company. The A.1 company represented by its Directors-A.2 to A.8 and other accused, promoted and conducted money circulation scheme and fraudulently collected huge amounts from subscribers. The A.1 company involved in 9 cases which are pending. The A.1 company filed W.P.Nos.20470 and 20471 of 2006 contending that the business activities being carried out by it do not attract the provisions of the Act and sought a direction to the Police officials not KL,J Crl.P. Nos.1682 and 3600 of 2021 4 to interfere with the activities of the A.1 company by invoking the provisions of the Act. Against the said orders in W.P.Nos.20470 and 20471 of 2006, the A.1 company preferred SLP No.13414 of 2007 before the Apex Court and the same was dismissed on 04.08.2007.
6. It is further alleged in the charge sheet against the petitioner herein/A.3 that during his tenure from 28.06.2000 to 30.03.2009 as a Director-Finance of A.1 company, he has submitted the balance sheet of the A.1 company for the years from 2006 to 2008 and signed along with the A.2. He worked 5 years prior to registration of subject FIR against the A.1 company. Therefore, during his tenure as a Director-Finance, of the A.1 company, the petitioner/A.3 along with A.2, A.4 to A.8 were responsible for the entire business in the State for implementation of the scheme all over the Country. The petitioner/A.3 and A.4 to A.8 are responsible for procurement of products from India and do business and to make huge profits from the A.1 company and to send said profits out of the countries. The petitioner herein is part of conspiracy and conducting money circulation scheme and fraudulently collecting huge amount from the subscribers. The details of the subscribers etc, are specifically mentioned in the charge sheet. The petitioner herein/A.3, being the Director-Finance of A.1 company filed balance sheets by signing the same as the said balance sheets for the period from 1999-2000 to KL,J Crl.P. Nos.1682 and 3600 of 2021 5 2012- 2013 and the same would reveal that the company has been remitting dividends, royalty from their holding companies/ultimate holdings, amounts paid towards import of goods and other services, etc, to their Holding and Associate companies and the A.1 company has made certain profits. The A.1 company has transferred the amount of Rs.2227.38 Crores approximately from 1999 to 2013. Thus, the petitioner herein/A.3 being Director-Finance of A.1 company committed offences alleged against him for his pecuniary gains with active connivance with other accused and later he resigned to A.1 company on 30.03.2009.
CONTENTIONS OF THE LEARNED COUNSEL FOR THE PETITONER:-
7. Sri T.Niranjan Reddy, learned Senior Counsel representing Sri N.Harinath, learned counsel for the petitioner would submit that the petitioner herein has submitted resignation on 30.03.2009 itself and in proof of the same he has filed certified copy of Form-32. The subject crimes were registered in the year 2014 by which time, the petitioner herein has submitted his resignation. Therefore, he is not responsible for the day-to-day affairs of the company during that particular point of time. He is only a Director-Finance and he is not responsible for the day-to-day affairs of the company. In the entire charge sheet in both the Cases, there is no mention that the KL,J Crl.P. Nos.1682 and 3600 of 2021 6 petitioner herein is responsible for the day-to-day affairs of the company. Therefore, the petitioner herein has not committed any offence as alleged by the prosecution. The contents of the charge sheet lacks the ingredients of the offences alleged against the petitioner herein and Section 6 of the Act and the offences under Section 7 of the Act cannot go on. In the complaints as well as charge sheet, there should be specific contention that the petitioner herein is responsible for the day-to-day affairs of the company. Whereas, in the present case, there is no such contention.
8. Referring to the order dated 26.02.2019 in Crl.P.No.650 of 2019 filed by the petitioner herein/A.3 in C.C.No.1 of 2019, learned Senior Counsel would submit that the proceedings in C.C.No.1 of 2019 against the petitioner herein/A.3, in the said case was quashed on the ground that the petitioner herein is not responsible for the day-to-day affairs of the A.1 company and there is no specific contention in the entire charge sheet that the petitioner herein is responsible for the day-to-day affairs of the A.1 company. The prosecution has not filed any SLP challenging the said order. Therefore, the said order attained finality.
9. Referring to the statements of the witnesses, learned senior counsel would submit that there is no specific allegation against the petitioner herein. There is vague allegation that the A.1 company KL,J Crl.P. Nos.1682 and 3600 of 2021 7 and its Directors A.2 to A.8 started selling goods etc. therefore, the present proceedings against the petitioner herein/A.3 is an abuse of process of law. With the said submissions, he sought to quash the proceedings in the above said Calendar Cases against the petitioner herein.
CONTENTIONS OF LEARNED ASST.PUBLIC PROSECUTOR:-
10. Whereas, on the other hand, Sri Khaja Vizarath Ali, learned Assistant Public Prosecutor, would submit that the petitioner herein/A.3 was Director of A.1 company from 28.06.2000 to 30.03.2009 including the period during which the petitioner/A.3 was a Director-Finance of A.1 company. There are specific allegations against the petitioner herein. He has signed balance sheets for the period from 2006 to 2008. The A.1 Company filed two writ petitions questioning the action of Police in interfering with their activities and the said writ petitions were dismissed on 19.07.2007 against which the A.1 company filed SLP which was also dismissed on 14.08.2007. Thereafter, the petitioner herein had submitted his resignation on 30.03.2009. This petitioner herein has aware of the illegal activities carried out by the A.1 company and as part of the conspiracy, now he cannot say that he is not responsible for the day-to-day affairs of the company. The details of the fraud committed and the commissions paid etc., are specifically mentioned in the charge sheet KL,J Crl.P. Nos.1682 and 3600 of 2021 8 and total amount remitted outside India towards multi level purchase of goods and other expenses are about 2227.28 Crores. The defences taken by the petitioner herein are triable aspects and the petitioner has to face trial to prove his innocence. With the said submissions, he sought to dismiss the present petition.
CONSIDERATION BY THE COURT:-
11.In view of the above rival contentions, perusal of the record would reveal that there is no dispute that the petitioner herein was Director-Finance of the A.1 company from 28.06.2000 to 30.03.2009.
There is also no dispute that when the police interfered with the activities of the A.1 company, it had filed the above said two writ petitions vide W.P.Nos.20470 and 20471 of 2016 to declare the action of the respondents/Police in interference with the activities of the A.1 company by invoking the provisions of the Act. Vide common order dated 19.07.2007 the said writ petitions were dismissed. The SLP vide SLP No.13414 of 2007 filed by the A.1 company before the Apex Court was also dismissed on 14.08.2017. Thus, the petitioner herein being the Director-Finance of A.1 company is aware of the said fact. During the said period, the petitioner herein was a Director-Finance of A.1 company. In tabular form at paragraph No.22 of the charge sheet, it is specifically mentioned about the financial year, royalty, dividends, purchase of goods, other business KL,J Crl.P. Nos.1682 and 3600 of 2021 9 expenses and total amount sent to abroad. The role played by the accused including the petitioner herein is also specifically mentioned in the charge sheet.
12. It is relevant to note that the order dated 26.02.2019 in Crl.P.No.650 of 2019 was passed on the ground that the submissions made by the petitioners are not rebutted by the learned Public Prosecutor. Whereas, in the charge sheet, there is prima facie specific allegation against the petitioner herein/A.3, the Director- Finance of A.1 company and the particulars of the financial year, royalty, dividends, purchase of goods, other business expenses and total amount transferred abroad etc., are specifically mentioned in the tabular form. The conspiracy and role played by the petitioner herein/A.3, being Director Finance of A.1 company was also specifically mentioned. Therefore, the facts in Crl.P.No.650 of 2019 are altogether different from the case on hand.
13. It is relevant to note that the Apex Court in S.M.S. Pharmaceuticals Ltd vs Neeta Bhalla1 held that the complaint and nature of offence etc. therein committed by the accused were under Section 138 of the NI Act. In the said complaint, there is no specific contention that the petitioner therein, the Director of Company is 1 2005 (8) SCC 89 KL,J Crl.P. Nos.1682 and 3600 of 2021 10 responsible for day-to-day affairs of the company in terms of sub Section 1 of Section 141 of the NI Act. Proviso to the said Section would say that nothing contained in this sub-section shall render any person liable to punishment if he proves that the offence was committed without his knowledge, or that he had exercised all due diligence to prevent the commission of such offence. Thus, it is a triable issue. Therefore, the petitioner herein has to face trial and prove his innocence.
14. In Harshendra Kumar D. vs. Rebatilata Koley2, the similar facts were examined by the Apex Court. Whereas, in the present case, the petitioner herein was Director-Finance of A.1 company and the commission of offences includes the period in which the petitioner herein was Director Finance of A.1 company. Therefore, there is specific allegation against the petitioner herein. The principle laid down by the Apex Court in the said two judgments is not applicable to the facts of the present case. In Rajiv Thapar vs. Madan Lal Kapoor3, the Apex Court laid down certain steps to determine veracity of prayer for quashment raised by an accused by invoking power conferred in the High Court under Section 482 of Cr.P.C. which are as follows:-
2
(2011) 3 SCC 351 3 2013 (3)SCC 330 KL,J Crl.P. Nos.1682 and 3600 of 2021 11 Step one: whether the material relied upon by the accused is sound, reasonable, and indubitable i.e. the material is of sterling and impeccable quality?
Step two: whether the material relied upon by the accused would rule out the assertions contained in the charges levelled against the accused i.e. the material is sufficient to reject and overrule the factual assertions contained in the complaint i.e. the material is such as would persuade a reasonable person to dismiss and condemn the factual basis of the accusations as false? Step three: Whether the material relied upon by the accused has not been refuted by the prosecution/complainant, and/or the material is such that it cannot be justifiably refuted by the prosecution/complainant? Step four: Whether proceedings with the trial would result in an abuse of process of the Court, and would not serve the ends of justice? Step five: (d) whether proceeding with the trial would result in an abuse of process of the Court and would not serve the ends of justice. If the answer to all the steps is in the affirmative, the judicial conscience of the High Court should persuade it to quash such criminal proceedings in exercise of power vested in it under Section 482 of Cr.P.C. Such exercise of power, besides doing justice to the accused, would save precious court time, which would otherwise be wasted in holding such a trial (as well as proceedings arising therefrom) specially when it is clear that the same would not conclude in the conviction of the accused.
15. As discussed supra, in the present case, there is specific material and evidence both documentary and oral against the petitioner herein/A.3 with regard to the commission of offences being Director-Finance of A.1 company during his tenure. Therefore, the present case will not fall under any of the above steps in quashment of the present proceedings against the petitioner herein.
16. In M/S Cheminova India Ltd. vs The State Of Punjab4, the Apex Court dealing with the provisions of the Insecticides Act on KL,J Crl.P. Nos.1682 and 3600 of 2021 12 examination of the facts of the case therein held that where a company passes resolution, fixes any responsibility on one of the Managers and the same was furnished by the said Managing Director in the shape of an undertaking,when furnished such undertaking fixing the responsibility of the quality control of the products is not in dispute, there is no reason or justification for prosecuting the said Managing Director, on the vague and spacious plea that he was the Managing Director of the Company at the relevant time and prosecution against the said Managing Director is nothing but abuse of process of law. With the said findings, the Apex Court quashed the proceedings against the petitioners therein.
17. Whereas, in the present case, there is no such undertaking, no such responsibility fixed on any other accused. Admittedly, the petitioner herein was Director-Finance of A.1 company for the period from 28.06.2000 to 30.03.2009. He has conspired with the said company and committed offence during his tenure and he has signed auditors balance sheet. Thus, prima facie, there are specific allegations against the petitioner herein. Therefore, the facts of the said case are altogether different from the facts of the present case.
4 [2021 SCC Online SC 541] KL,J Crl.P. Nos.1682 and 3600 of 2021 13
18. Learned Senior Counsel has also relied on the following judgments viz: in Anita Malhotra Vs. Apparel Export Promotion Council5, judgment of the High Court of Andhra Pradesh in Crl.P.Nos.8268 and 8881 of 2012, judgment of Madras High Court in Cr.OP No.16519 of 2005 and judgment of the Apex Court in Crl.A.Nos.2604 and 610 of 2014 and the facts of the said cases are altogether different from the facts of the present case. At the cost of repetition, as discussed supra, prima facie, there are specific allegations against the petitioner herein and the role played by him as Director-Finance of A.1 company for the period from 28.06.2000 to 30.03.2009 is specifically mentioned. Thus, the allegations levelled against the petitioner herein are serious in nature. The above said defences raised by the petitioner herein cannot be considered in an application filed under Section 482 of the Cr.P.C. The petitioner herein has to take the said defences during the course of trial before the said Calendar Cases and it is for the trial Court to consider the same.
19. In this regard, it is apt to refer to the decision rendered by the Hon'ble Supreme Court in Kamal Shivaji Pokarnekar v. The 5 (2012) 1 SCC 520 KL,J Crl.P. Nos.1682 and 3600 of 2021 14 State of Maharashtra6, wherein the Apex Court has categorically held that quashing criminal proceedings was called for only in a case where complaint did not disclose any offence, or was frivolous, vexatious, or oppressive. If allegations set out in complaint did not constitute offence of which cognizance had been taken by Magistrate, it was open to High Court to quash same. It was not necessary that, a meticulous analysis of case should be done before trial to find out whether case would end in conviction or acquittal. If it appeared on a reading of complaint and consideration of allegations therein, in light of the statement made on oath that the ingredients of the offence are disclosed, there would be no justification for High Court to interfere. The defences that might be available, or facts/aspects which when established during trial, might lead to acquittal, were not grounds for quashing complaint at threshold. At that stage, only question relevant was whether averments in complaint spell out ingredients of a criminal offence or not. The Court has to consider whether complaint discloses that prima facie, offences that were alleged against Respondents. Correctness or otherwise of said allegations had to be decided only in trial. At initial stage of issuance of process, it was not open to Courts to stifle proceedings by entering 6 . AIR 2019 SC 847 KL,J Crl.P. Nos.1682 and 3600 of 2021 15 into merits of the contentions made on behalf of Accused. Criminal complaints could not be quashed only on ground that, allegations made therein appear to be of a civil nature. If ingredients of offence alleged against Accused were prima facie made out in complaint, criminal proceeding shall not be interdicted.
20. In Skoda Auto Volkswagen India Private Limited Vs. The State of Uttar Pradesh and Ors7, the Hon'ble Apex Court referring to the various judgments rendered by it categorically held that the High Courts in exercise of its inherent powers under Section 482 of Cr.P.C has to quash the proceedings in criminal cases in rarest of rare cases with extreme caution.
21. It is needless to mention that Section 6 of the Act deals with the offences by the Company and the same is relevant for the purpose of present case and therefore, extracted below:-
Section 6 of the Act:- Offences by companies -
(1) Where an offence under this Act has been committed by a company, every person who, at the time the offence was committed, was in charge of, and was responsible to, the company, shall be deemed to be guilty of the offence and shall be liable to be proceeded against and punished accordingly:
Provided that nothing contained in this sub-section shall render any such person liable to any punishment 7 AIR 2021 SC 931, KL,J Crl.P. Nos.1682 and 3600 of 2021 16 provided in this Act, if he proves that the offence was committed without his knowledge or that he exercised all due diligence to prevent the commission of such offence.
(2) Notwithstanding anything contained in sub-section (1), where an offence under this Act has been committed by a company and it is proved that the offence has been committed with the consent or connivance of, or is attributable to, any neglect on the part of, any director, manager, secretary or other officers of the company, such director, manager, secretary or other officer shall also be deemed to be guilty of that offence and shall be liable to be proceeded against and punished accordingly.
22. In view of law laid down by the Hon'ble Apex Court and the provisions of the Act, as discussed supra and the petitioner fails to establish any ground to quash the proceedings in the above said Calendar Cases, it does warrant this Court to quash the proceedings in the subject Calendar Cases, by invoking its inherent power under Section 482 Cr.P.C. Therefore, both the Criminal Petitions are liable to be dismissed.
CONCLUSION:-
23. In the result, both the Criminal Petitions are dismissed. Consequently, miscellaneous petitions, pending if any, in these criminal petitions shall stand closed.
___________________ K. LAKSHMAN, J Date:22.03.2022.
Vvr.