Karnataka High Court
Sri. B Gangadharaiah vs State Of Karnataka on 10 October, 2023
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NC: 2023:KHC:36832
CRL.P No. 3583 of 2019
C/W CRL.P No. 5752 of 2019
CRL.P No. 5754 of 2019
CRL.P No. 1018 of 2020
IN THE HIGH COURT OF KARNATAKA AT BENGALURU
DATED THIS THE 10TH DAY OF OCTOBER, 2023
BEFORE
THE HON'BLE MR JUSTICE R. NATARAJ
CRIMINAL PETITION NO. 3583 OF 2019
C/W
CRIMINAL PETITION NO. 5752 OF 2019
CRIMINAL PETITION NO. 5754 OF 2019
CRIMINAL PETITION NO. 1018 OF 2020
IN CRL.P NO.3583/2019:
BETWEEN:
1. SRI. B. GANGADHARAIAH,
S/O. LATE BORAIAH,
AGED ABOUT 56 YEARS,
R/AT NO.323, SERVICE ROAD,
VINAYAKA LAYOUT,
9TH BLOCK, NAGARABHAVI,
BENGALURU - 560 072.
2. SRI. N. RAMESH,
S/O. H. NANJUNDAIAH,
Digitally AGED ABOUT 44 YEARS,
signed by
SUMA R/AT NO.208, 9TH CROSS,
Location: M.P.M. LAYOUT,
HIGH NAGARABHAVI II STAGE,
COURT OF
KARNATAKA BENGALURU - 560 056.
3. S. SURESH,
S/O. LATE SANNA PUTTE GOWDA,
AGED ABOUT 42 YEARS,
R/A SINDENAHALLI VILLAGE,
HANAGUDU HOBLI,
HUNSUR TALUK,
MYSORE DISTRICT.
4. SRI. CHANNAKESHAV,
S/O. LATE B.C. MUDDAIAH,
AGED ABOUT 31 YEARS,
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CRL.P No. 5754 of 2019
CRL.P No. 1018 of 2020
R/AT BHANDIHALLI,
NITTUR HOBLI, GUBBI TALUK,
TUMKUR DISTRICT.
(DELETED AS PER ORDER DATED 10.10.2023)
5. SRI. NAGARAJU,
S/O. LATE CHANNEGOWDA,
AGED ABOUT 46 YEARS,
RESIDING AT NO.107/1,
DODDAMANDINAHALLI,
KANDLI POST,
VIJAYANAGARA EXTENSION,
HASSAN.
6. SRI. RAJESHA H.T.,
S/O. THIMMEGOWDA,
AGED ABOUT 33 YEARS,
R/AT HANIYAMBADI VILLAGE,
MANGALA POST, MANDYA TALUK,
MANDYA DISTRICT.
7. SRI. H.G. LOKESH,
S/O. GOWDEGOWDA,
AGED ABOUT 43 YEARS,
R/AT VIDHYANAGARA,
CHANNARAYAPATNA TOWN,
HASSAN DISTRICT.
8. SRI. KEMPEGOWDA D.K.,
S/O. KARIGOWDA,
AGED ABOUT 47 YEARS,
R/AT NO.163, 4TH CROSS,
4TH MAIN, SAMPIGE LAYOUT,
BENGALURU - 560 079.
...PETITIONERS
(BY SRI. D.L. JAGADEESH, SENIOR ADVOCATE FOR
SMT. RAKSHITHA D.J., ADVOCATE)
AND:
1. STATE OF KARNATAKA,
BY VIJAYANAGAR POLICE STATION,
VIJAYANAGAR,
BENGALURU - 560 040,
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CRL.P No. 3583 of 2019
C/W CRL.P No. 5752 of 2019
CRL.P No. 5754 of 2019
CRL.P No. 1018 of 2020
BY ITS ASSISTANT
SUB-INSPECTOR OF POLICE,
REP. BY STATE PUBLIC PROSECUTOR,
HIGH COURT OF KARNATAKA BUILDING,
BENGALURU - 560 001.
2. SMT. K.P. SHOBHA,
W/O. K.C. JAYACHANDRA,
NO.41/2, 'SAIKRUPA',
HAROHALLI, S.N. HALLI POST,
YELAHANKA,
BENGALURU - 560 064.
...RESPONDENTS
(BY SRI. VENKATA SATYANARAYANA, HIGH COURT GOVERNMENT
PLEADER FOR RESPONDENT NO.1;
NOTICE SERVED ON RESPONDENT NO.2)
THIS CRL.P IS FILED U/S.482 OF CR.P.C PRAYING TO QUASH
THE PROCEEDINGS SO FAR AS THE PETITIONERS ARE CONCERNED
IN SPL.C.C.NO.416/2016 (CRIME NO.158/2016) ON THE FILE OF THE
LEARNED PRINCIPAL CITY CIVIL AND SESSIONS JUDGE, BANGALORE
(CCH-1) INITIATED BY THE 1ST RESPONDENT-VIJAYANAGAR POLICE
STATION, BENGALURU FOR THE ALLEGED OFFENCES PUNISHABLE
UNDER SECTIONS 409, 120B OF IPC READ WITH SECTION 9 OF THE
KARNATAKA INTEREST OF DEPOSITORS IN FINANCIAL
ESTABLISHMENT ACT, 2004.
IN CRL.P NO.5752/2019:
BETWEEN:
1. SRI. B.G. GANGADHARAIAH,
S/O. LATE BORAIAH,
AGED ABOUT 56 YEARS,
R/AT NO.323, SERVICE ROAD,
VINAYAKA LAYOUT,
9TH BLOCK, NAGARABHAVI,
BENGALURU - 560 072.
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CRL.P No. 5754 of 2019
CRL.P No. 1018 of 2020
2. SRI. N. RAMESH,
S/O. H. NANJUNDAIAH,
AGED ABOUT 44 YEARS,
R/AT NO.208, 9TH CROSS,
M.P.M. LAYOUT,
NAGARABHAVI II STAGE,
BENGALURU - 560 056.
3. SURESH,
S/O. SANNAPUTTEGOWDA,
AGED ABOUT 50 YEARS,
R/AT NO.1030/1,
GANESHA GUDI STREET,
HUNSUR,
MYSORE DISTRICT - 571 105..
4. SRI. CHANNAKESHAVA,
S/O. LATE B.C. MUDDAIAH,
AGED ABOUT 31 YEARS,
R/AT BHANDIHALLI,
NITTUR HOBLI, GUBBI TALUK,
TUMKUR DISTRICT - 572 223.
(DELETED AS PER ORDER DATED 10.10.2023)
5. SRI. NAGARAJU,
S/O. LATE CHANNEGOWDA,
AGED ABOUT 46 YEARS,
R/AT NO.107/1,
DODDAMANDINAHALLI,
KANDLI POST,
VIJAYANAGARA EXTENSION,
HASSAN - 573 217.
6. SRI. RAJESHA H.T.,
S/O. THIMMEGOWDA,
AGED ABOUT 33 YEARS,
R/AT HANIYAMBADI VILLAGE,
MANGALA POST, MANDYA TALUK,
MANDYA DISTRICT - 571 403.
7. SRI. H.G. LOKESH,
S/O. GOWDEGOWDA,
AGED ABOUT 43 YEARS,
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CRL.P No. 5754 of 2019
CRL.P No. 1018 of 2020
R/AT VIDHYANAGARA,
CHANNARAYAPATNA TOWN,
HASSAN DISTRICT - 573 116.
8. SRI. KEMPEGOWDA D.K.,
S/O. KARIGOWDA,
AGED ABOUT 47 YEARS,
R/AT NO.163, 4TH CROSS,
4TH MAIN, SAMPIGE LAYOUT,
BENGALURU - 560 079.
9. SRI. HONNEGOWDA @ MANJUNATHA,
S/O. NINGAPPA,
AGED ABOUT 45 YEARS,
R/AT NO.36/4, 1ST 'A' CROSS ROAD,
SUVARNAJYOTHI NAGAR,
NAGADEVANAHALLI,
BENGALURU - 560 056.
(DELETED AS PER ORDER DATED 10.10.2023)
10. SRI. PRABHAKAR,
S/O. PAPEGOWDA,
AGED ABOUT 60 YEARS,
R/AT NO.10, AMMA NILAYA,
3RD CROSS, BEHIND ULLALA MAIN ROAD,
JNANABHARATHI POST,
BENGALURU - 560 056.
(DELETED AS PER ORDER DATED 10.10.2023)
...PETITIONERS
(BY SRI. D.L. JAGADEESH, SENIOR ADVOCATE FOR
SMT. RAKSHITHA D.J., ADVOCATE)
AND:
1. STATE OF KARNATAKA,
BY KADUR POLICE,
CHIKKAMAGALURU,
BY ITS ASSISTANT,
DY.S.P, E.O.D., C.I.D.,
BENGALURU,
REP. BY STATE PUBLIC PROSECUTOR,
HIGH COURT OF KARNATAKA BUILDING,
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C/W CRL.P No. 5752 of 2019
CRL.P No. 5754 of 2019
CRL.P No. 1018 of 2020
BENGALURU - 560 001.
2. SRI. K.H. SHANKAR,
KADUR TALUK,
CHIKKAMAGALURU,
KARNATAKA - 577 548.
...RESPONDENTS
(BY SRI. VENKATA SATYANARAYANA, HIGH COURT GOVERNMENT
PLEADER FOR RESPONDENT NO.1;
NOTICE SERVED ON RESPONDENT NO.2)
THIS CRL.P IS FILED UNDER SECTION 482 OF THE CODE OF
CRIMINAL PROCEDURE, 1973 PRAYING TO QUASH THE
PROCEEDINGS SO FAR AS THE PETITIONERS ARE CONCERNED IN
SPL.C.C.NO.152/2018 (CR.NO.113/2015) ON THE FILE OF THE
LEARNED PRINCIPAL DISTRICT AND SESSIONS JUDGE,
CHIKKAMAGALURU, INITIATED BY THE 1ST RESPONDENT-KADUR
P.S., CHIKKAMAGALURU FOR THE ALLEGED OFFENCES PUNISHABLE
UNDER SECTIONS 409, 420, 506, 120B OF IPC READ WITH SECTION
9 OF KARNATAKA INTEREST OF DEPOSITORS IN FINANCIAL
ESTABLISHMENT ACT.
IN CRL.P NO.5754/2019
BETWEEN:
1. SRI. B.G. GANGADHARAIAH,
S/O. LATE BORAIAH,
AGED ABOUT 56 YEARS,
R/AT NO.323, SERVICE ROAD,
VINAYAKA LAYOUT,
9TH BLOCK, NAGARABHAVI,
BENGALURU - 560 072.
2. SRI. N. RAMESH,
S/O. H. NANJUNDAIAH,
AGED ABOUT 44 YEARS,
R/AT NO.209, 9TH CROSS,
M.P.M. LAYOUT,
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NAGARABHAVI II STAGE,
BENGALURU - 560 056.
3. SRI. SURESH,
S/O. SANNA PUTTE GOWDA,
AGED ABOUT 50 YEARS,
R/AT NO.1030/1,
GANESHA GUDI STREET,
HUNSUR,
MYSORE DISTRICT - 571 105..
4. SRI. CHANNAKESHAV,
S/O. LATE B.C. MUDDAIAH,
AGED ABOUT 31 YEARS,
NO.212, R/AT BHANDIHALLI,
NITTUR HOBLI, GUBBI TALUK,
TUMKUR DISTRICT - 572 223.
(DELETED AS PER ORDER DATED 10.10.2023)
5. SRI. NAGARAJU,
S/O. LATE CHANNEGOWDA,
AGED ABOUT 46 YEARS,
R/AT NO.107/1,
DODDAMANDINAHALLI,
KANDLI POST,
VIJAYANAGARA EXTENSION,
HASSAN - 573 217.
6. SRI. RAJESHA H.T.,
S/O. THIMMEGOWDA,
AGED ABOUT 33 YEARS,
R/AT NO.1, HANIYAMBADI VILLAGE,
MANGALA POST, MANDYA TALUK,
MANDYA DISTRICT - 571 403.
7. SRI. H.G. LOKESH,
S/O. GOWDEGOWDA,
AGED ABOUT 43 YEARS,
R/AT NO.11, VIDHYANAGARA,
CHANNARAYAPATNA TOWN,
HASSAN DISTRICT - 573 116.
8. SRI. KEMPEGOWDA D.K.,
S/O. KARIGOWDA,
AGED ABOUT 47 YEARS,
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R/AT NO.163, 4TH CROSS,
4TH MAIN, SAMPIGE LAYOUT,
BENGALURU - 560 079.
9. HONNEGOWDA @ MANJUNATHA,
S/O. NINGAPPA,
AGED ABOUT 45 YEARS,
R/A NO.36/4, 1ST 'A' CROSS ROAD,
SUVARNAJYOTHI NAGAR,
NAGADEVANAHALLI,
BENGALURU - 560 056.
(DELETED AS PER ORDER DATED 10.10.2023)
10. PRABHAKARA,
S/O. PAPEGOWDA,
AGED ABOUT 60 YEARS,
R/A NO.10, AMMA NILAYA,
3RD CROSS, JNANABHARATHI POST,
BENGALURU - 560 056.
(DELETED AS PER ORDER DATED 10.10.2023)
...PETITIONERS
(BY SRI. D.L. JAGADEESH, SENIOR ADVOCATE FOR
SMT. RAKSHITHA D.J., ADVOCATE)
AND:
1. STATE OF KARNATAKA,
BY SUNTIKOPPA POLICE STATION,
KODAGU,
BY ITS ASSISTANT
DY.SP., EOD, CID, BENGALURU.
REP. BY STATE PUBLIC PROSECUTOR,
HIGH COURT OF KARNATAKA BUILDING,
BENGALURU - 560 001.
2. SRI. MANJUNATH RAI B.S.,
S/O. LATE SHANTHAPPA RAI,
ANDAGOVE VILLAGE AND POST,
SUNTIKOPPA, KODAGU - 571 237.
...RESPONDENTS
(BY SRI. VENKATA SATYANARAYANA, HIGH COURT GOVERNMENT
PLEADER FOR RESPONDENT NO.1;
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C/W CRL.P No. 5752 of 2019
CRL.P No. 5754 of 2019
CRL.P No. 1018 of 2020
NOTICE SERVED ON RESPONDENT NO.2)
THIS CRL.P IS FILED UNDER SECTION 482 OF THE CODE OF
CRIMINAL PROCEDURE, 1973 PRAYING TO QUASH THE
PROCEEDINGS SO FAR AS THE PETITIONERS ARE CONCERNED IN
SPL.C.C.NO.170/2018 (CR.NO.13/2016) ON THE FILE OF THE
LEARNED PRINCIPAL DISTRICT AND SESSIONS JUDGE, MAKIKERI,
INITIATED BY THE 1ST RESPONDENT-DYSP, EOD, CID, BANGALORE
FOR THE ALLEGED OFFENCE PUNISHABLE UNDER SECTIONS 409,
420, 506, 120-B OF IPC READ WITH SECTION 9 OF THE KARNATAKA
INTEREST OF DEPOSITORS IN FINANCIAL ESTABLISHMENT ACT,
2004.
IN CRL.P NO.1018/2020:
BETWEEN:
STATE OF KARNATAKA,
BY V.V. PURAM POLICE STATION,
REPRESENTED BY
STATE PUBLIC PROSECUTOR,
HIGH COURT BUILDING,
BENGALURU-01.
...PETITIONER
(BY SRI. VENKATA SATYANARAYANA, HIGH COURT GOVERNMENT
PLEADER)
AND:
1. M/S. HINDUSTAN INFRACON (INDIA) LTD.,
NO.826/A, 5TH CROSS,
5TH MAIN, VIJAYNAGAR,
BENGALURU - 560 056.
(SRI V.N. LAKSHMINARAYANA,
MANAGING DIRECTOR)
2. SRI. V.N. LAKSHMINARAYANA,
MANAGING DIRECTOR OF
HINDUSTAN INFRACON (INDIA) LTD.,
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S/O. NINGAPPA,
AGED ABOUT 47 YEARS,
R/AT NO.36/4, 1ST 'A' CROSS,
SUVARNAJYOTINAGAR,
NAGADEVANAHALLI,
BENGALURU - 560 056.
3. SRI. GANGADHARAIAH,
DIRECTOR OF HINDUSTAN INFRACON (INDIA) LTD.,
S/O. LATE BORAIAH,
AGED ABOUT 55 YEARS,
R/AT NO.323, 2ND FLOOR,
9TH BLOCK, VINAYAKANAGAR,
NAGARBHAVI,
BENGALURU - 560 056.
PERMANENT ADDRESS:
KALLIPALYA, KOTHIGERE HOBLI,
KUNIGAL TALUK,
TUMKUR DISTRICT-572 130.
4. SRI. N. RAMESH,
DIRECTOR OF HINDUSTAN INFRACON (INDIA) LTD.,
S/O. H. NANJUNDAIAH,
AGED ABOUT 42 YEARS,
R/AT NO.208, 9TH CROSS,
MYSURU PAPERBILL LAYOUT,
NAGARABHAVI 2ND STAGE,
BENGALURU - 560 056.
5. SRI. SURESH,
DIRECTOR OF HINDUSTAN INFRACON (INDIA) LTD.,
S/O. SANNAPUTTEGOWDA,
AGED ABOUT 50 YEARS,
R/AT NO.1030/1, GANESH GUDISTREET,
HUNASURU,
MYSURU DISTRICT - 570 001.
6. SRI. CHANNAKESHAVA,
DIRECTOR OF HINDUSTAN INFRACON (INDIA) LTD.,
S/O. SRI. MUDDAIAH,
AGED ABOUT 35 YEARS,
R/AT NO.212, BHANDIHALLI,
NITTUR HOBLI, GUBBI TALUK,
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TUMKUR DISTRICT - 572 101.
7. SRI. NAGARAJ,
DIRECTOR OF HINDUSTAN INFRACON (INDIA) LTD.,
S/O. LATE CHANNEGOWDA,
AGED ABOUT 42 YEARS,
NO.107/1, DODDAMANDIGANAHALLI,
KANDLE POST,
VIJAYNAGARA EXTENSION,
HASSAN DISTRICT - 573 201.
8. SRI. RAJESH,
DIRECTOR OF HINDUSTAN INFRACON (INDIA) LTD.,
S/O. SRI. THIMMEGOWDA,
AGED ABOUT 34 YEARS,
R/AT NO.01, POST HANIAMBADI,
MANDYA TALUK,
MANDYA DISTRICT - 571 401.
9. SRI. H.G. LOKESH,
DIRECTOR OF HINDUSTAN INFRACON (INDIA) LTD.,
S/O. GOWDEGOWDA,
AGED ABOUT 40 YEARS,
NO.11, HONNAVARA VILLAGE,
NAGAMANGALA TALUK,
MANDYA DISTRICT - 571 401.
PRESENTLY RESIDING
AT NO.11, VIDHYANAGAR,
CHANNARAYAPATNA,
HASSAN DISTRICT.
10. SRI. D.K. KEMPEGOWDA D.K.,
DIRECTOR OF HINDUSTAN INFRACON (INDIA) LTD.,
S/O. SRI. KARIGOWDA,
AGED ABOUT 55 YEARS,
NO.163, 4TH MAIN,
4TH CROSS, SAMPIGE LAYOUT,
VIJAYNAGAR,
BENGALURU - 560 056.
11. SRI. SOMESHWAR,
DIRECTOR OF HINDUSTAN INFRACON (INDIA) LTD.,
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S/O. SRI. NAGAPPA,
AGED ABOUT 38 YEARS,
SAKKARA GRAMA,
DHARMAPURA HOBLI,
HIRIYUR TALUK,
CHITRADURGA DISTRICT - 577 501.
12. SRI. HONNEGOWDA @ MANJUNATH,
DIRECTOR OF HINDUSTAN INFRACON (INDIA) LTD.,
S/O. NINGAPPA,
AGED ABOUT 45 YEARS,
R/A NO.36/4, 1ST 'A' CROSS,
SUVARNAJYOTI NAGAR,
NAGADEVANAHALLI,
BENGALURU - 560 056.
13. SRI. P. PRABHAKAR,
S/O. SRI. PAPEGOWDA,
AGED ABOUT 60 YEARS,
R/AT NO.10, AMMA NILAYA,
3RD CROSS, NEAR RELIANCE FRESH,
BEHIND ULLAL MAIN ROAD,
GNANABHARATI POST,
BENGALURU - 560 056.
...RESPONDENTS
(BY SRI. J.V.S. MADHUKAR, ADVOCATE FOR RESPONDENT NOS.3 TO
10, 12 AND 13;
SRI. R. KUMAR, ADVOCATE FOR RESPONDENT NOS.2 AND 11;
NOTICE SERVED ON RESPONDENT NO.1)
THIS CRL.P IS FILED UNDER SECTION 482 OF THE CODE OF
CRIMINAL PROCEDURE, 1973 PRAYING TO SET-ASIDE THE ORDER
DATED 16.11.2018 PASSED IN CRIME NO.69/2015 ON THE FILE OF
THE HON'BLE PRL.DISTRICT AND SESSIONS JUDGE, MYSURU IN SO
FAR AS NOT TAKING THE COGNIZANCE OF THE OFFENCE
PUNISHABLE UNDER SECTION 9 OF KARNATAKA PROTECTION OF
INTEREST OF DEPOSITORS IN FINANCIAL ESTABLISHMENT ACT,
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2004 AND THEREBY REJECTING THE CHARGE SHEET FILED AGAINST
THE ACCUSED FOR THE SAID PROVISION.
THESE PETITIONS, COMING ON FOR ADMISSION, THIS DAY,
THE COURT MADE THE FOLLOWING:
ORDER
Crl.P.No.3583/2019 is filed by the accused Nos.3 to 5 and 7 to 10 challenging the prosecution launched against them in Spl.C.C.No.416/2016 (Crime No.158/2016) pending trial before the Principal City Civil and Sessions Judge, Bengaluru, for the offences punishable under Sections 409, 120B of IPC read with Section 9 of the Karnataka Protection of Interest of Depositors in Financial Establishment Act, 2004 (henceforth referred to as 'KPIDFE Act, 2004').
2. Crl.P.No.5752/2019 is filed by the accused No.3 to 5 and 7 to 10 challenging the prosecution launched against them in S.C.No.152/2018 (Crime No.113/2015) pending trial before the Principal District and Sessions Judge, Chikkamagaluru for the offences punishable under Sections 409, 120B, 420, 506 of IPC and Section 9 of the KPIDFE Act, 2004.
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3. Crl.P.No.5754/2019 is filed by the accused No.3 to 5 and 7 to 10 challenging the prosecution launched against them in Spl.C.No.170/2018 (Crime No.13/2016) pending trial before the Principal District and Sessions Judge, Madikeri for the offence punishable under Sections 409, 120B, 420, 506 of IPC and Section 9 of the KPIDFE Act, 2004.
4. Crl.P.No.1018/2020 is filed by the State challenging the order dated 16.11.2018 passed by the Principal Sessions Judge, Mysuru in Crime No.69/2015 discharging the accused for the offence punishable under Section 9 of the KPIDFE Act, 2004 and returning the records to the jurisdictional Magistrate.
5. The respondent No.2 in Crl.P.No.3583/2019, 5752/2019 and 5754/2019 set the criminal law into motion by informing the respondent No.1 about commission of cognizable offences by the petitioners and others. They all claimed that a company named, M/s. Hindustan Infracon India Limited which had received deposits from various customers assuring to repay with attractive rates of interest, had closed down business overnight and thereby cheated the customers of crores of rupees. Based on this information, the respondent No.1 in the
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NC: 2023:KHC:36832 CRL.P No. 3583 of 2019 C/W CRL.P No. 5752 of 2019 CRL.P No. 5754 of 2019 CRL.P No. 1018 of 2020 aforesaid petitions registered cases in Crime Nos.158/2016, 13/2016 and 113/2015 respectively and took up investigation and later filed charge-sheets for the offences punishable under Sections 409, 420, 120B, 506 of IPC read with Section 9 of the Karnataka Protection of Interest of Depositors in Financial Establishment Act, 2004. The Special Court under the provisions of the KPIDFE Act, 2004 took cognizance of the offences and issued process to the petitioners. The petitioners all claimed that they were the Ex-Directors of M/s. Hindustan Infracon India Limited and that they had all resigned from the directorship of the company in January and April, 2015. They further claimed that they were not in receipt of the deposits and were not in possession of any money belonging to the company. They also filed corresponding Form-DIR-12 filed before the Registrar of Companies which indicate that the petitioners had all resigned from the Directorship of the company during January and April, 2015.
6. In a similar case, registered in Crime No.69/2015 before the Principal District and Sessions Judge, Mysuru, a charge- sheet was filed for the offences punishable under
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NC: 2023:KHC:36832 CRL.P No. 3583 of 2019 C/W CRL.P No. 5752 of 2019 CRL.P No. 5754 of 2019 CRL.P No. 1018 of 2020 Sections 120B, 409, 420, 506 of IPC and Section 9 of the KPIDFE Act, 2004. The Special Court refused to take cognizance of the offence under Section 9 of the KPIDFE Act, 2004 and discharged the accused of the said offence and directed the investigating officer to present the charge-sheet for the offences punishable under the Indian Penal Code before the concerned jurisdictional Magistrate. Being aggrieved by the said order, the State has filed Crl.P.1018/2020.
7. The learned High Court Government Pleader submitted that the accused had all obtained deposits in a ponzi scheme and had not repaid the depositors. Therefore, he contends that an offence under Section 9 of the KPIDFE Act, 2004 was committed and the Special Court committed an error in not taking cognizance of the said offence.
8. The learned Senior counsel representing the petitioners/accused in Crl.P.No.3583/2019, 5752/2019 and 5754/2019 submitted that the petitioners were not the Directors of the company as on the date of the alleged offence and therefore, no prosecution could be launched against them. He submitted that the Director in a Company is a servant of the
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NC: 2023:KHC:36832 CRL.P No. 3583 of 2019 C/W CRL.P No. 5752 of 2019 CRL.P No. 5754 of 2019 CRL.P No. 1018 of 2020 Company and unless it is pointed out that the Directors knew about the criminal activities indulged in by the Company and its promoters, such Directors cannot be prosecuted. He also contended that the entire charge-sheet does not disclose that the petitioners had received any proceeds of the crime. Further, he contends that there is no specific allegation against each of the Directors to be prosecuted along with accused Company. In this regard he relied upon the following judgments:-
i) GHCL Employees Stock Option Trust vs. India Infoline Limited [(2013) 4 SCC 505];
ii) Pepsico India Holdings Private Limited vs. Food Inspector and another [(2011) 1 SCC 176];
iii) The judgment of the Calcutta High Court in Saroj Kumar Jhunjhunwala vs. The State of West Bengal and another [(2007) 3 CALLT 9 HC].
9. Per contra, the learned High Court Government Pleader submitted that the petitioners had all surreptitiously resigned before the offence was reported. He submitted that the petitioners were also part of the syndicate which was
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NC: 2023:KHC:36832 CRL.P No. 3583 of 2019 C/W CRL.P No. 5752 of 2019 CRL.P No. 5754 of 2019 CRL.P No. 1018 of 2020 collecting money from gullible customers and therefore, the petitioners are to be prosecuted. He submitted that the question whether the petitioners had any knowledge or not has to be established at the trial.
10. This Court in terms of the order dated 05.09.2023 had directed the counsel for the petitioners to place on record the Form - DIR - 12 filed before the Registrar of Companies and the learned High Court Government Pleader was directed to secure instructions whether the investigating officer before filing the charge-sheet had ascertained whether the petitioners herein were Directors of the Company as on the date of the alleged offence.
11. The learned High Court Government Pleader submitted that since the petitioners have placed on record Form - DIR -12 which indicates that the petitioners had all resigned much prior to the commission of the alleged offences, the same may be considered.
12. It is now well settled that the Directors of a Company cannot be vicariously held liable for the offences which may have been committed without their knowledge or
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NC: 2023:KHC:36832 CRL.P No. 3583 of 2019 C/W CRL.P No. 5752 of 2019 CRL.P No. 5754 of 2019 CRL.P No. 1018 of 2020 consent. (Refer. Everest Advertising (P) Limited vs. State, Government of NCT of Delhi [(2007) 5 SCC 54]). It could be that a Managing Director may be aware of the actual transaction while the Chairman of a large company or a Director of a Company may not be so aware. Therefore, it is incumbent upon every complainant to indicate, as to who was the person in-charge of and responsible for the conduct of business of the company at the time of commission of offence. Undoubtedly, the petitioners have all resigned from the Directorship of the accused company during January and April 2015, while the complainants furnished information long thereafter. Therefore, in the absence of any material to show that these petitioners were aware of the transactions brought about by the company and its intention to defraud the depositors, they cannot be prosecuted for any offence committed by the company or the person in-charge and responsible for its affairs. In that view of the matter, the prosecution against the petitioners deserve to be halted.
13. In so far as Crl.P.No.1018/2020 is concerned, the prosecution had filed a charge-sheet for the offence punishable
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NC: 2023:KHC:36832 CRL.P No. 3583 of 2019 C/W CRL.P No. 5752 of 2019 CRL.P No. 5754 of 2019 CRL.P No. 1018 of 2020 under Section 9 of the KPIDFE Act, 2004 and other offences under the Indian Penal Code. The Special Court after considering the fact that the competent authority had not filed the charge-sheet, rejected it for the offence punishable under Section 9 of the KPIDFE Act, 2004 and directed the investigating officer to re-present the charge-sheet before the appropriate Magistrate. As rightly held by the Special Court, an investigation of an offence under Section 9 of the KPIDFE Act, 2004 has to be done by a competent authority appointed under Section 5 of the KPIDFE Act, 2004 and such competent authority may make an application to the Special Court for adjudicating any issue or subject matter pertaining to financial establishment in question or passing appropriate orders to give effect to the provisions of the KPIDFE Act, 2004. Therefore, the Special Court was right in refusing to take cognizance of the offence punishable under Section 9 of the KPIDFE Act, 2004 as the investigation was not done by the competent authority and no steps were taken to launch a prosecution by the competent authority.
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NC: 2023:KHC:36832 CRL.P No. 3583 of 2019 C/W CRL.P No. 5752 of 2019 CRL.P No. 5754 of 2019 CRL.P No. 1018 of 2020
14. In that view of the matter, Crl.P.Nos.3583/2019, 5752/2019 and 5754/2019 are allowed. Consequently, the prosecution of the petitioners herein in Spl.C.C.No.416/2016 (Crime No.158/2016) pending trial before the Principal City Civil and Sessions Judge, Bengaluru, for the offences punishable under Sections 409, 120B of IPC read with Section 9 of the KPIDFE Act, 2004 and S.C.No.152/2018 (Crime No.113/2015) on the file of the Principal District and Sessions Judge, Chikamagaluru for the offences punishable under Sections 409, 120B, 420, 506 of IPC and Section 9 of the KPIDFE Act, 2004 as well as Spl.C.No.170/2018 (Crime No.13/2016) on the file of the Principal District and Sessions Judge, Madikeri, are quashed.
15. Crl.P.No.1018/2020 filed by the State is dismissed.
Sd/-
JUDGE PMR List No.: 1 Sl No.: 23