Karnataka High Court
Sri Hari Adurty vs The State Of Karnataka on 4 August, 2025
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NC: 2025:KHC:30054
CRL.P No. 11799 of 2022
HC-KAR
IN THE HIGH COURT OF KARNATAKA AT BENGALURU
DATED THIS THE 4TH DAY OF AUGUST, 2025
BEFORE
THE HON'BLE MS. JUSTICE J.M.KHAZI
CRIMINAL PETITION NO. 11799 OF 2022
(482(Cr.PC) / 528(BNSS))
BETWEEN:
1. SRI HARI ADURTY
AGED 45 YEARS
S/O AVSN ROA
NOW AT D-003, GROUND FLOOR
WESTENDKUDLU GATE
KUDLU GATE METRO ENTRANCE
GAREBHAVIPALYA, BANGALORE-560068.
ALSO RESIDING AT:
13, FOXGLOVE WAY, SM67JJ,
WALLINGTON LONDON, UK
Digitally
signed by 2. GANAPATHY SUBRAMANIAN SWAMINATHAN
REKHA R
AGED 42 YEARS
Location:
High Court S/O SWAMINATHAN
of NOW R/AT F-301, SIDHARTH UPSCALE
Karnataka 76 KUNRATHUR MAIN ROAD
MADANANDAPURAM, PORUR
CHENNAI-600116.
ALSO RESIDING AT:
7 CAPANO DRIVE, NEWARK,
DELAWARE - 19702, USA
...PETITIONERS
(BY SRI.SANDESH.J.CHOUTA, SR.COUNSEL FOR
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NC: 2025:KHC:30054
CRL.P No. 11799 of 2022
HC-KAR
SRI. KARTHIK.N, ADVOCATE)
AND:
1. THE STATE OF KARNATAKA
BY HSR LAYOUT POLICE STATION
REP BY SPP OFFICE
HIGH COURT BUILDING
BANGALORE-560001
2. SRI NIRANJAN N Y
AGED ABOUT 36 YEARS
S/O NARAYANA RAO K
NO.2, KILARI ROAD, AVENUE ROAD CROSS
BENGALURU-560053.
...RESPONDENTS
(BY SRI.VENKAT SATYANARAYAN.A, HCGP FOR R1;
SRI.SIDDHARTH.B.MUCHANDI, ADVOCATE FOR R2)
THIS CRL.P IS FILED U/S.482 CRPC BY THE ADVOCATE
FOR THE PETITIONER PRAYING TO QUASH THE COMPLAINT
DATED 28.09.2022 LODGED BY RESPONDENT NO.2 PURSUANT
TO THE FIR DATED 28.09.2022, REGISTERED IN
CR.NO.230/2022 REGISTERED BY 1ST RESPONDENT HSR
LAYOUT P.S., FOR THE OFFENCES P/U/S 403,406,420 OF IPC,
1860, PENDING ON THE FILE OF 3RD ADDL. CHIEF
METROPOLITAN MAGISTRATE COURT, NRUPATHUNGA ROAD,
BENGALURU CITY.
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NC: 2025:KHC:30054
CRL.P No. 11799 of 2022
HC-KAR
THIS PETITION, COMING ON FOR DICTATING ORDERS,
THIS DAY, ORDER WAS MADE THEREIN AS UNDER:
CORAM: HON'BLE MS. JUSTICE J.M.KHAZI
ORAL ORDER
Petitioners who are arraigned as accused Nos.1 and 2 have filed this petition under Section 482 Cr.P.C, with a prayer to quash the criminal proceedings initiated against them in FIR No.230/2022 of HSR Layout P.S, on the file of III ACMM, Bengaluru, for the offences punishable under Sections 403, 406 and 420 of IPC.
2. In support of the petition, the petitioner has contended that petitioners promoted a start-up company by name M/s Fundscorner Fintech Solutions Private Ltd ('FCFSPL' for short) during the year 2019 and they are the promoter directors. They presented the business model to various investors and sought investment. However, they never promised any guaranteed returns immediately. Complainant claims to have invested ₹6.5 Crores and in this regard has entered into a agreement dated -4- NC: 2025:KHC:30054 CRL.P No. 11799 of 2022 HC-KAR 30.10.2019. In March 2020, after few months of rising the funds, the global market was shattered due to First wave of COVID-19 Pandemic and therefore, the company could not effectively do the business and it was first to stop its operations temporarily. It was explained to the investors in March 2020 on 23.6.2020. An email was sent to all the investors about the status of the company and also highlighting the Supply Chain Finance Business Model and the Olx used car business model and queries from the investors relating to usage of data to access creditworthiness, etc, are also addressed over emails. A detailed investor status report was also sent to the investors.
2.1. On 17.12.2020, the promoter directors for better prospects of the company decided to amend the objects of the company and received the consent of all the shareholders. On 21.06.2021, a detailed status report on the post COVID-19 situation and proposal to merge with another non-banking finance company was also shared -5- NC: 2025:KHC:30054 CRL.P No. 11799 of 2022 HC-KAR with investors through email. However, on 28.07.2021, it was decided to stop the operations of the company. Most of the employees were let to go by June 2021 and all the operations were stopped in September 2021. In May 2022, Sri Nader, one of the investors expressed his intention to join the board of directors. Petitioner No.1 welcomed the proposal. Complainant also wanted to join the board and requested for documents. He wanted an external audit firm to do the audit before joining the board. To avoid a heavy rent and to reduce the overhead of the company, office was shifted from Bengaluru to the residence of petitioner No.1 at Hyderabad.
2.2 In the above facts and circumstances filing of the complaint and registering of the case suffers from malafides, arbitrary and liable to be quashed. The allegations do not constitute offences punishable under Sections 403, 406 and 420 IPC. Petitioners have already shared the entire details with the shareholders on the current situation of the new company to be formed and -6- NC: 2025:KHC:30054 CRL.P No. 11799 of 2022 HC-KAR short-term arrangements to place the funds with the Arman under OCRPS, FCFSPL and the company also shared Arman OCRPS details to Mr. Nader over whatsapp on 19.07.2022 and in the end of July 2022, petitioner and others having 66% votes decided to go ahead with the said proposal. However, another company replied back with the disproval of the same. Company is not made party. Continuation of the proceedings would amount to abuse of the process of the Court and pray to dismiss the complaint.
3. In support of his arguments, learned counsel for petitioner has relied upon the following decisions:
(i) Mohammed Ibrahim & Ors. Vs. State of Bihar and Anr. (Mohammed Ibrahim)1
(ii) Sri.Naleen Kumar Kateel Vs. State of Karnataka and Ors. (Naleen Kumar Kateel)2
(iii) Sri.B.Y.Vijayendra Vs. State of Karnataka (B.Y.Vijayendra)3 1 (2009) 8 SCC 751 2 Crl.P.No.10321/2024 Dt 03.12.2024 3 Crl.P.No.13192/2024 Dt.17.12.2024 -7- NC: 2025:KHC:30054 CRL.P No. 11799 of 2022 HC-KAR
(iv) Paramjeet Batra Vs. State of Uttarakhand & Ors. (Paramjeet Batra)4
(v) Ms.Ann Nimmi Sebastian Vs. State of Karnataka (Ms.Ann Nimmi Sebastian)5
(vi) Sarabjit Kaur Vs. State of Punjab (Sarabjit Kaur)6
(vii) Naresh Kumar & Anr. Vs. State of Karnataka and Anr. (Naresh Kumar)7
(viii) Manish Vs. State of Majarashtra & Anr.
(Manish)8
4. On the other hand learned counsel representing respondent No.2 as well as learned High Court Government Pleader representing the respondent No.1 State submit that the petition is not maintainable and the grounds urged are not sustainable. Respondent No.2 is the GPA holder of defacto complainant Mr.Fayaz Patel. The defacto complainant is a banker by profession having lots experience in investments. He has worked with HDFC Bank 4 (2013) 11 SCC 673 5 Crl.P.No.9212/2021 Dt 24.11.2023 6 (2023) 5 SCC 360 7 2024 SCC Online SC 268 8 2025 SCC Online SC 707 -8- NC: 2025:KHC:30054 CRL.P No. 11799 of 2022 HC-KAR Ltd, Dubai for a decade through Sri.Debashish Neogi. Defacto complainant came in contact with the petitioners. 4.1 Petitioners offered investment into a business of Supply Chain Finance for supermarkets, which are short on cash and available huge discount. The supermarkets would make payment to petitioners company Fundscorner along with profit. Petitioners represented that NBFC are governed by RBI and ROC and have to maintain minimum capital or net owned funds of ₹2 Crores at any point of time and 50% of the income and 50% of the assets should be principle business for financial activity and insisted upon the defacto complainant to get capital of about 6-7 Crore with 300% to 500% profit over five years. Since defacto complainant was not in a position to invest the entire amount, petitioner No.1 encouraged him to make his friends to invest. Accordingly, he, his friend Nader Adam Ali agreed to invest ₹3,54,99,580 in Fundscorner through his wife, Mrs. Shermeen Arif Nathani from their joint NRE savings. It is clear that the petitioner No.1 was intending to cheat a -9- NC: 2025:KHC:30054 CRL.P No. 11799 of 2022 HC-KAR select few people who would not be in a position to initiate any action against him, when he would ultimately divert the entire investment to his personal accounts.
5. To connive the defacto complainant into investing in a new company, petitioner No.1 secured legal opinion dated 12.08.2019 to the effect that since an application of a body corporate is pending before the regulatory, no further changes in the capital structure of the body corporate will be allowed and hence alternatives were suggested i.e, mirroring of a shareholding pattern. Petitioners fully avoided the incorporation of the company in Hyderabad stating that RBI Hyderabad lacked proper understanding of such business and that most finetech NBFCs are registered with RBI, Bengaluru, Mumbai or Delhi and hence insisted for incorporation in Bengaluru.
6. Accordingly, petitioner incorporated Funds Corner Fintech Solutions Private Ltd on 25.09.2019. Moreover, Rajkamal Leasing and Investments Pvt Ltd and Funds
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NC: 2025:KHC:30054 CRL.P No. 11799 of 2022 HC-KAR Corner Fintech executed IP assignment agreement dated 10.10.2019 for transferring all the IPs of the company. On being induced, defacto complainant invested ₹99,99,940/- on 11.11.2019 and Mrs. Shermeen Arif Nathani invested ₹3,54,99,580 into the accounts of Funds Corner. They were inducted as directors and were made to fill up the Annexure-X form and sign the share agreement and other forms. Defacto complainant was allotted 21,739 equity shares i.e., 3.38%. Petitioner executed an undertaking and Undertook to transfer 8% economic interest to defacto complainant for benefit generated by the promoters by way of sale, merger or acquisition or any such economic transactions, resulting in benefits. False assurance and inducements regarding the project are reflected in the PPT sent by petitioner No.1 in April 2020. Even over phone calls and zoom meetings also, petitioner No.1 made a big projections about the business prospects and high returns which he knew impossible to achieve.
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NC: 2025:KHC:30054 CRL.P No. 11799 of 2022 HC-KAR
7. However, to the shock of defacto complainant, petitioners never started any business and kept assuring of new business ideas like getting into second-hand car finance, etc, and diverted money towards high paying salaries, rent, bonus during lockdown, etc. Money was diverted by showing false expenditures. They failed to share the data of the company and the manner in which funds are utilised. One Abhinav Shrivastava of Martand Legal Advisers LLP, who was engaged by Funds Corner as legal advisor, demanded sum of ₹3 lakhs from defacto complainant to share the company's financial documents. The status of the said records indicate that the information furnished by petitioners was false and concocted. They were diverting funds abroad. Grave discrepancies were noted. They have illegally shown losses to the tune of ₹2.42 Crores and illegally diverted the money to other entities and also to their accounts in the United States of America, with an intention to making unlawful gains and to cause wrongful loss to the defacto complainant.
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NC: 2025:KHC:30054 CRL.P No. 11799 of 2022 HC-KAR
8. When questioned petitioners began avoiding and giving evasive reply. During August 2022, they pressurized the defacto complainant to give consent for investment in a company which was their own affiliate. Having found about their fraudulent intentions, he refused consent. Later petitioner No.1 abruptly abandon the company and migrated to USA and took an employment there without even informing the complainant and thereby putting the complainant investment into further jeopardy. Petitioner No.2 is also avoiding the complainant and not providing any details. Petitioners have conspired tactfully and hatched a plan. They have created a fake and imaginary business plan, inflated the valuation of the company to induce and cheat the complainant and Mrs.Shermeen Arif Nathani.
9. From the beginning, petitioners were intending to induce the complainant to invest in their company and diverted the investment which are proceeds of crime and have parked the same in various accounts in USA. Without
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NC: 2025:KHC:30054 CRL.P No. 11799 of 2022 HC-KAR any business in place, petitioners engaged several employees, occupied office space and also incurred legal fees with the help of several unknown persons to cheat the complainant and others.
10. There is prima facie material and allegations against the petitioners in the FIR, complaint and other supporting documents. It requires a full fledged investigation. Without providing opportunity to the investigating officers to ascertain the truth of the allegations, proceedings cannot be quashed and pray to reject the petition.
11. In support of his arguments, learned counsel for respondent No.2 has relied upon the following decisions:
(i) Neeharika Infrastructure Private Ltd. Vs. State of Maharashtra and Ors. (Neeharika Infrastructure)9
(ii) State of Haryana Vs. Bhajan Lal (Bhajan Lal)10 9 (2021) 19 SCC 401
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NC: 2025:KHC:30054 CRL.P No. 11799 of 2022 HC-KAR
(iii) CBI Vs. Tapan Kumar Singh (Tapan Kumar Singh)11
(iv) Ansar Ahmad Vs. State of U.P Thru Principal Secretary, Home and Ors. (Ansar Ahmad)12
(v) Priti Saraf Vs. State (NCT of Delhi) (Priti Saraf)13
(vi) Rajesh K.S.N Vs. State by Karnataka (Rajesh K.S.N)14
12. Heard arguments and produce the records.
13. It is not in dispute that petitioners promoted the start-up company FCFS during 2019 and on their presentation of the business model, attracted various investors. Complainant Fayaz Patel was introduced to the petitioners through Debashish Neogi. It was given to understand that the petitioners would make investment in supply chain finance for supermarkets, which are short of cash and thereby avail huge discount, which would be the profit. The investors were assured 300 to 500% of profit 10 AIR 1992 SC 604 11 (2003) 6 SCC 175 12 2019 SCC Online ALL 4614 13 (2021) 16 SCC 142 14 2023 SCC Online Kar 38
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NC: 2025:KHC:30054 CRL.P No. 11799 of 2022 HC-KAR over five years. It is a fact that defacto complainant invested Rs.99,99,940/- whereas Sharmin Arif Nathani invested Rs.3,54,99,580/-.
14. Complainant has alleged that the petitioner have failed to invest the money collected from complainant and others and on the other hand, it was diverted towards paying salaries, rent, bonus and by showing false expenditures. They have also failed to share the data of the company and the manner in which the funds have been utilized, the petitioners were also diverting the funds abroad. The documents furnished to the complainant indicate that the information furnished by petitioners was false and concocted. Grave discrepancies were noted and that the petitioners have illegally shown losses to the tune of Rs.2.42 Crores.
15. All these allegations are required to be investigated by the investigating officer. It is true that there is arbitration clause, which is with reference to the
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NC: 2025:KHC:30054 CRL.P No. 11799 of 2022 HC-KAR dispute regarding the investment returns, etc. However, so far as the allegations that the petitioners have conducted illegally and diverted the investments, which are proceeds of the crime and part of the same in various accounts in USA is concerned, it is criminal acts which are to be investigated by the concerned police. In the light of the specific allegations made and the material placed on record, there is prima facie case made out against the petitioners. The dispute between the parties is not purely a civil dispute. On the other hand in the light of allegations made, the criminal liability is also attracted. A full fledged investigation is necessary to unearth the truth. After conducting investigation, if the concerned police find that there is no truth in the allegations they may file a 'B' report.
16. In the light of the above discussions, this Court is of the considered opinion that it is not a case for quashing the criminal proceedings. In the result, petition's fail and accordingly the following:
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NC: 2025:KHC:30054 CRL.P No. 11799 of 2022 HC-KAR ORDER Petition filed by petitioners/accused Nos.1 and 2 under Section 482 of Cr.P.C is hereby rejected.
Sd/-
(J.M.KHAZI) JUDGE RR List No.: 1 Sl No.: 44