Calcutta High Court
Kanwar Deep Singh Etc. vs State Of West Bengal on 8 October, 2002
Equivalent citations: 2004CRILJ1116
ORDER Gora Chand De, J.
1. Kanwar Deep Singh, Managing Director of a Company named and styled as M/s. Tubrao Infotech and Industries Ltd., a Public Limited Company under the Companies Act, 1956, filed separate applications under Section 482 of the Code of Criminal Procedure, 1973 praying for quashing of the F.I.R as well as investigational proceedings in all these six cases, five of which were started on the basis of private complaints and one was started by the Police suo motu, mainly on the ground that no case was made out in the F.I.R. and the allegation of cheating, breach of trust, etc. are without any basis and that there is no reason to investigate the case inasmuch as a separate complaint has been filed by the Security Exchange Board of India (hereinafter referred to as SEBI for brevity) under Section 56(3), 63 and 68 of the Companies Act, 1956 and it is still pending before the Court of the learned Chief Judicial Magistrate, Calcutta. In all these cases, the opposite party/State appeared and made their respective submissions alleging that a prima facie case under Sections 420/406/468/471/421/120B of the Indian Penal Code having been established, the extraordinary power under Section 482 of the Code should not be exercised at this initial stage of investigation.
2. Before entering into the details of the arguments, I deem it proper to point out how these cases were registered.
3. First case was started on the basis of a complaint lodged by one Gobindalal Bhattachrya of 180/1, Pasupati Bhattacharjee Road, P. S. Behala, Calcutta-700 041 with the Inspector-in-Charge of Behala P. S. alleging that his relative Soumen Bhattacharya along with Johnny Sadhukhan and Pradip Pal being the authorised agents of the Company of the present petitioner came to the residence of the complainant in the month of August, 2000 and showed prospectus of the Company and allured him to invest a sum of Rs. 5,000/- which was collected on the basis of A/c. Payee Cheque after issuing Kutcha receipt. Again on 9th March, 2001, those persons came to the complainant and allured him to invest a further sum of Rs. 1,00,000/-. All those amounts were invested for a period of four years. The certificate relating to the secured redeemable debentures along with post dated cheques was handed over to the complainant. On scrutiny of the documents issued by the said Company, it was detected that the following false and misleading statements were made:
(i) It was falsely written that the returns on the debentures were tax free, though it was not.
(ii) It was falsely stated that the secured debentures issued by the Company were assigned credit rating by its banker, but it was not so.
(iii) The debentures were issued without obtaining necessary permission from SEBI which is mandatory.
(iv) Those debentures were described to be issued for private placement, but those were issued publicly by engaging commission agent with high rate of commission. So, it was submitted that the Company and others manufactured documents containing false and misleading statements and thereby allured the investors, and by such inducements they defrauded the investors of their investments for the wrongful gain of the Company. So the complainant claimed that he was cheated in respect of cash amount of Rs. 1,05,000/-. On the basis of the said complaint, Behala P. S. Case No. 222 dated 13-5-2001 was started.
4. Thereafter, a suo motu case was started by Kotwali (Cooch Behar) P. S. Case No. 192 dated 14-2-2001 on the allegation that in course of mobile duty on 14-6-2001, Police Officer had been to Rupnarayan Road, Cooch Behar and noticed a mob demonstrating at the office of the Company. On enquiry, it was ascertained from the mob that the persons assembled were certificate holders of the Company and they came to know from the newspapers and from other sources that the Company was a cheating organisation and the depositors would be cheated. The mob also demanded return of the deposited money from the Assistant Branch Manager of the Company, Cooch Behar. The police officer interrogated the said Assistant Branch Manager, Sri Soumen Mukherjee and wanted production of papers and documents in respect of those deposits, but the said officer failed to produce any documents. Since the public being agitated and were demanding immediate return of the deposited money, Assistant Branch Manager was arrested by the police and the case was started.
5. On the same day, Durgapur P. S. Case No. 166, dated 14-6-2001 was also started on the basis of a written complaint at the instance of some of the depositors and the allegations made therein are almost the same as indicated in respect of Behala P. S. Case No. 222 dated 13-6-2001.
6. The fourth case was started in respect of Dhaniakhali P. S. Case No. 45 dated 30-6-2001 at the instance of some of the depositors having the same allegations of cheating and fraud, etc. The fifth case was started in respect of Airport P. S. Case No. 102, dated 23-7-2001 at the instance of selfsame allegations.
7. The sixth case was started at the instance of a few depositors, being Ghola P. S. Case No. 4 dated 7-1-02. In the said case, it has also been alleged that other depositors were practically cheated on the basis of manufactured documents containing false and misleading statement.
8. In course of investigation of the cases, a prayer was also made by the Investigating Agency for seizing of the Bank Accounts of the Company and by an order dated 21-6-2001 passed by the learned Sub-Divisional Judicial Magistrate, Alipore in Behala P. S. Case No. 222 dated 13-6-2001, all the Bank Accounts of the Company were seized. Subsequently, on the prayer of the Investigating Agency, the learned Sub-Divisional Judicial Magistrate, Hooghly (Sadar) by an order dated 5-7-2001, in Dhaniakhali P. S. Case No. 45 dated 30-6-2001 also seized 19 other accounts of the Bank.
9. It appears from the materials on record and also from the submissions made by the learned counsel of both sides that the present petitioner unsuccessfully tried for anticipatory bail before the Bench of Madras High Court and also tried for quashing of the cases earlier. Though the details of this statement are not supplied but it appears from the submissions that the present petitioner has not yet been arrested in connection with these cases and that the prosecution wants to interrogate him after taking him into custody. At this juncture, the present petitioner moved this Court under Section 482 of the Code praying for quashing the F.I.R. as well as further investigation. Number of those applications along with case numbers are indicated below.
1. C.R.R. 1447 of 2002 was registered challenging the F.I.R. of Airport P. S. Case No. 102, dated 23-7-2002.
2. C.R.R. 1448 of 2002 was registered in respect of Kotwali (Cooch Behar) P. S. Case No. 192, dated 14-2-2001.
3. C.R.R. 1449 of 2002 was registered in respect of Dhaniakhali P. S. Case No. 45 dated 30-6-2001.
4. C.R.R. 1450 of 2002 was registered in respect of Durgapur P. S. Case No. 166, dated 14-6-2001.
5. C.R.R. 1451 of 2002 was registered in respect of Behala P. S. Case No. 222, dated 13-6-2002.
6. C.R.R. 2085 of 2002 was registered in respect of Ghola P. S. Case No. 4, dated 7-1-2002.
10. In course of hearing, the learned counsel appearing for the present petitioner pointed out that in five of the complaints made before the police, the allegations are same which can be indicated as hereunder:
(a) that false documents were manufactured;
(b) forgery was made in respect of the documents for the purpose of cheating.
(c) they are under apprehension that the Company cheated them.
It is also pointed out by the learned counsel for the present petitioner that the reasons assigned by the complainants as regards allurement and cheating are:--
I. It is wrongly indicated that A-rating credit facility was given by the bankers.
II. The amount to be paid against debentures are tax free and that the debentures were for private placement.
11. So, the learned counsel pointing out the complaints contended that all the complainants became apprehensive of the said descriptions and accordingly lodged the complaints alleging that they have been cheated, though, in fact, no such occasion has arisen as yet.
12. The learned counsel further pointed out that the said Company M/s. Tubro Infotech Ltd. is a Public Ltd. Company within the meaning of Companies Act, 1956 and its registered office is at village Dappar, District-Patiala, Punjab and its Head Office is at SCO -- 12-13, Sector-90, Chandigarh. It is also pointed out that the said Company is a manufacturing company and was promoted with the help of Small Scale Industries Development Bank of India. The learned counsel accordingly, contended that the said company never indulged in any financial activities or banking activities and its main activities are for manufacturing of steel, flori-culture, bio-technical products, food processing, publishing newspapers and general trading. The learned counsel pointing out the balance-sheet of the Company for the year 1998-2000 contended that there was a net profit of Rs. 3,26,00,000/- and there are reserves surplus of the Company at present.
13. The learned counsel for the present petitioner further contended that immediately after promotion of the said Company with the help of Small Scale Industries Development Bank, the Board of Directors of the Company with a view to augment its financial reserves and also for the purpose of funding its various projects decided to issue non-convertible secured debentures through private placement for a total amount of Rs. 1000 lacs and the said proposal was approved by the Board of Directors of the Company on 14-11-2000. It is also contended that the present petitioner is a respected Industrialist and was honoured by an award of "Udyog Ratna" by the Institute of Economic Studies. It is also contended that the present petitioner is a member of Punjab Export Promotion Board.
14. In terms of the decision taken by the Board of Directors of the Company on 14-11-2000, the Company published an offer document for private circulation and thereafter issue was opened on 1-11-2000. It is contended that the debentures stood secured against the assets of the Food Processing Division of the Company.
15. The learned counsel further contended that the Company, in view of its good reputation, received adequate subscriptions from those debentures and after conclusion of issue, a charge was created on the assets of the Company in accordance with the provisions of the Companies Act, 1956 at the office of the Registrar of Companies, Jalandhar.
16. The learned counsel further contended that for the purpose of serving the investors and to ensure delivery of allotment letter, debentures and interest, etc. different service centres were set up by the Company at different places and the relevant documents and correspondence were delivered personally by a representative of the Company. Money so collected from the issue of debentures, it is alleged, has been invested in Fixed Deposits in various Banks as well as the State Bank of India -- Mutual Fund till the amounts are required for the projects of the Company.
17. The learned counsel for the present petitioner also contended that the Company never defaulted in any payment to its investors in its entire history of operations since, 1988. But due to freezing of the bank accounts in terms of the order passed by the learned S.D.J.M., Alipore and the learned S.D.J.M. Hooghly (Sadar) from 14-6-2001 onwards, it has not been possible on the part of the Company to realise the necessary fund as assured, nor it has been possible to issue relevant certificate, etc. due to the seizure of the relevant documents and papers by the Police in course of Investigation of these cases. The freezing of the account and seizure of the documents and sealing of the offices of the Company created a fear psychosis amongst the general public and the investors resulting into filing of these false and frivolous cases.
18. The learned counsel for the petitioner also contended that due to freezing of the bank accounts it has not been possible on the part of the Company to fulfil its financial commitments as promised to the investors. Side by side, the media hype generated by a civil business house of West Bengal caused panic among the general public and created a false sense of insecurity about the possibility of non-payment by the Company. So, it is pointed out that non-payment by the Company is mainly due to freezing of the bank accounts and these cases are simply outcome of the fear psychosis generated on account of media hype. The learned counsel for the petitioner, accordingly, contended that there is no substance in the five complaints made by the complainants and there exists simply an indication that the petitioner had apprehension of being cheated by the said Company.
19. As regards suo motu case started by the police, being Kotwali (Cooch Behar) P. S. Case No. 192 dated 14-6-2001, the learned counsel for the petitioner pointed out that there was no ingredient of any cognizable offence and as the agitated mob demanded arrest of the Assistant Branch Manager of the Company being frightened due to media hype, the case was started. So, the learned counsel pointed out that in the suo motu case, there is no material to justify starting of a case or to allow further proceeding to continue.
20. So, the learned counsel referring to the provisions of different Sections, in respect of which F.I.R. was drawn, contended that there is no element of commission of any offence as alleged under Sections 420/406/468/471/421/120B of I.P.C. It is also contended that since the cases so started only on the basis of a fear psychosis and without any basis all the F.I.Rs. are to be construed as premature and the Court of law should not allow investigation of premature cases of this nature and consequently, the prayer of the present petitioner under Section 482 of the Code of Criminal Procedure should be allowed and all the cases are required to be quashed.
21. The learned counsel appearing on behalf of the State headed by Mr. Sudlpto Moitra, the learned Additional Public Prosecutor, however, made a forceable argument alleging that there are sufficient elements in the complaints to justify starting of the case and also to proceed with further investigation of the case. It is contended that by preparing false documents in which false assurances are given, like tax free debentures and giving A-rating credit facility by the bankers and high rate of interest are sufficient to constitute an offence. It is also pointed out that though the debentures were made for private placement, those were issued publicly by engaging commission agents at a very high rate of commission after opening different offices and in this way, public placement has been started at a high rate of interest violating the conditions imposed by the Reserve Bank of India and different provisions of the Security and Exchange Board of India Act, 1992 (hereinafter referred to as SEBI Act for brevity).
22. It is also argued on behalf of the State that the present petitioner by a false representation tried to get rid of these cases on the basis of filing applications in different Courts of Chandigarh and Madras. All the Courts turned down the prayer of the present petitioner keeping in view the seriousness in the allegations. It is also pointed out that this Court also rejected the prayer of the present petitioner for anticipatory bail in connection with Behala P. S. Case No. 222, dated 13-6-01. So, it is argued that the seriousness of the offence and the fact that crores of rupees have been collected from the general public without any authority of law, justify starting of these cases, and, hence, for the protection of the investors, investigations are required to be continued. It is also contended that if no material is collected in course of investigation, there would not be any difficulty in filing the final report against the present petitioner absolving him from the allegations made in the complaints.
23. The learned counsel for the State placing reliance on the celebrated decision in the case of King Emperor v. Khwaja Nazir Ahmad, , contended that there is a statutory right on the part of the police to investigate the circumstances of an alleged cognizable crime without requiring any authority from the judicial authorities. It is also contended, placing reliance on the said decision, that the functions of the judiciary and the police are complementary, not overlapping, and the combination of individual liberty with a due observance of law and order is only to be obtained by leaving each to exercise its own function, subject to the right of the Court to intervene in an appropriate case when moved under Section 491 of the Code (old). So, it is argued that keeping in view the said decision of the Judicial Committee, the investigation is required to be allowed in the field of detection of crime, specifically in respect of a cognizable offence.
24. The learned counsel for the State also placed reliance on a decision of the Apex Court in the case of State of Bihar v. J.A.C. Saldanha, in support of the contention that the Court should not interfere with the investigation of a cognizable offence. In this case also the Apex Court took into consideration the views taken by the Judicial Committee indicated hereinabove. Previous to this, the Apex Court in the case of State of West Bengal v. S.N. Basak, also took into consideration the views of the Judicial Committee in Khwaja Nazir Ahmad's case (supra) and took the view that the investigation into a cognizable offence cannot be interfered with by exercising power under Section 439 or under the inherent power of the Code (under Section 561-A of the Old Case).
25. In the case of S.M. Datta v. State of Gujarat, , the Apex Court also took the view that the FIR ought not to be thwarted at initial stage unless materials (sic) disclose an offence. Of course in the same decision, the Apex Court also took the view that if the materials do not disclose an offence, no investigation should normally be permitted. It is also viewed by the Apex Court that in the normal course of events, criminal proceedings ought not to be scuttled at the initial stage, unless the same amounts to an abuse of the process of law. It is also argued that in the said decision, the view Is also taken that the genuineness of the averments in the FIR cannot possibly be gone into and the documents shall have to be read as to decipher the intent of the maker thereof.
26. In an earlier decision also, (Union of India v. B.R. Bajaj), it was held by the Apex Court that the FIR containing some important allegations making out a cognizable offence should not be quashed.
27. In the case of Rupan D. Bajaj v. Kanwar Pal S. Gill, (1995) 4 Crimes 171 : (1996 Cri LJ 381) (SC), the Apex Court held that at the stage of quashing an FIR or complaint, the High Court is not justified in embarking upon an enquiry as to the probability, reliability or genuineness of the allegations made therein.
28. It is also argued on behalf of the State that the power under Section 482 of the Code of Criminal Procedure, 1973, should be exercised very sparingly with circumspection and that too in the rarest of rare cases as held by the Supreme Court in the case of State of Kerala v. O. C. Kuttan, (1999) 1 Crimes 104 (1999 Cri LJ 1623) (SC).
29. So, after scanning the materials on record and the circumstances, it is argued that since the FIR discloses a cognizable offence and the investigation is in progress, quashing of the same should not be allowed.
30. It is also argued that for the violation of SEBI Act a case has already been started by the SEBI before the learned Chief Metropolitan Magistrate, Calcutta and is still in progress. Similarly, these complaints also indicate that the present petitioner and his Company committed an offence punishable under SEBI Act. So it is contended that when violating the relevant provision of SEBI Act, the public at large was allured and were forced to invest their hard-earned money, that is to be construed as an offence coming within the purview of Section 420 of IPC read with Section 406/468/471/120B, IPC. Accordingly, the State prayed for dismissal of all these six applications.
31. Admittedly, the present petitioner is a Director of the Company registered under the Companies Act, 1956. There are materials to indicate that the said Company is involved in different manufacturing process throughout India and it has been carrying on its business under the provisions of the Companies Act, 1956. It also transpires that the said company for the purpose of private placement issued debentures with the statement that it had A-rating credit facility from its bankers and that the returns on the debentures are tax free.
32. So, the problem centres round the question as to whether the Company of the present petitioner obtained necessary permission from the SEBI as regards private placement Of the debentures in the manner done in this case. Similarly, it Is also questioned whether the Company had A-rating credit facility from the bankers and whether the returns on the debentures are tax free.
33. It appears that the Assistant General Manager of SEBI has already filed a complaint before the learned Chief Metropolitan Magistrate, Calcutta, against the present petitioner, other directors and also against the company for violation of the provision of Sections 56(3), 63 and 68 of the Companies Act, 1956. A copy of the said complaint was placed in course of argument. Section 56(3) of the Companies Act is reproduced below :
"No one shall Issue any form of application for shares in or debentures of a company, unless the form is accompanied by a memorandum containing such salient features of a prospectus as may be prescribed which complies with the requirements of this section :
Provided that a copy of the prospectus shall, on a request being made by any person before the closing of the subscription list, be furnished to him :
Provided further that this sub-section shall not apply if it is shown that the form of application was issued either --
(a) in connection with a bona fide invitation to a person to enter into an underwriting agreement with respect to the shares or debentures; or
(b) in relation to shares or debentures which were not offered to the public.
If any person acts in contravention of the provisions of this sub-section, he shall be punishable with fine which may extend to five thousand rupees."
34. So, if any person acts in contravention of the said provision, he shall be punished with fine which may be extended to five thousand rupees. Section 63 of the Act relates to criminal liability for mis-statements in prospectus and Section 68 of the Act is with regard to penalty for fraudulently inducing persons to invest money. The punishment imposed under Section 68 of the Act is imprisonment for a term which may extend to five years, or with fine which may extend to ten thousand rupees, or with both.
35. So, it appears that SEBI has already taken steps against the petitioner and his Company for non-compliance of certain provisions of the Companies Act. But it is to be noted that in most of the complaints in the present cases, the allegation of preparation of false documents, fraudulent transaction, cheating, etc. are based on the allegations of violation of the provisions of the Companies Act indicated hereinabove. So, at one hand, the Court (Chief Metropolitan Magistrate, Calcutta) is in seisin of the complaint as regards non-compliance with the provisions of the Companies Act, and side by side, the above mentioned six cases have been started by the police in which attempts are being made to find out whether the petitioner or his company has actually cheated the public at large due to non-compliance with the provision of the Companies Act, In this connection, it would be proper to reproduce Section 624 of the Companies Act which is as follows :
"Notwithstanding anything in the Code of Criminal Procedure, 1898 (5 of 1898), every offence against this Act shall be deemed to be non-cognizable within the meaning of the said Code."
36. So, it is sufficiently clear that non-compliance with the provisions of the Companies Act are offences within that Act and those are non-cognizable within the meaning of the Code of Criminal Procedure and thereby prohibiting their investigation directly by the police after taking cognizance like cognizable offence. In this connection, it is to be mentioned that Section 5 of the India Penal Code provides that nothing under the said Code shall affect the provision of any special law.
37. Section 41 of the Indian Penal Code defines special law as a law applicable to a particular subject. It is already indicated above that the allegations in the FIR make out violations of the provisions of the Companies Act and hence, in view of the provisions of Section 624 of the Companies Act initiation of the investigation proceedings by the investigating agency amounts to circumvention of the expressed bar provided under the Companies Act. It is needless to mention that Section 624 of the Companies Act makes an inroad on the provisions of Criminal Procedure Code. The section starts with non-obstante clause which bars application of the said Code in respect of cognizable and non-cognizable offence and says that "every offence against this Act shall be deemed to be non-cognizable within the meaning of the said Code". The complaint made by SEBI in respect of offences under Sections 56(3), 63 and 68 of the Companies Act indicate that whatever have been alleged in the first information report in all the six cases are almost a replica of the allegations revealed in the said petition of complaint. It is rightly argued that the "doctrine of circumvention" is applicable in a case of this nature. This old doctrine based on the idea that what is not permitted to be done directly cannot be done in an indirect way. Any attempt to circumvent a law by an indirect process will yield an impression that it is not violated or contravened directly. The acts of commission of the alleged offence under the provisions of the Companies Act as discussed hereinabove are non-cognizable under the provisions of the Code of Criminal Procedure, and cannot be investigated into by merely changing the lexical character and describing the same as offences under Section 417 or 420 of the Indian Penal Code. If the investigation as proposed to be done in all the six cases is allowed to continue, it will undoubtedly lead to disastrous conclusion at the detriment of the petitioner.
38. In this connection the argument made by the learned counsel for the petitioner as regards double jeopardy is also taken care of. It appears that the learned Chief Metropolitan Magistrate has already taken cognizance of the offences coming within the purview of Sections 56(3), 63 and 68 of the Companies Act on the basis of the complaint filed by SEBI. It is already indicated hereinabove that the allegations made in the said complaint are almost similar to the allegations made in all the six FIRs. It is specifically argued that if at any point of time in the same proceeding before the learned Chief Metropolitan Magistrate the petitioner is called upon to appear in Court and make statement as to the evidence against him what would then be the answer in the face of the investigation pending against him. If the petitioner is forced to say something it may be a boomerang on him in respect of the cases being investigated by the investigating agency. But in anticipation of any adverse effect on the pending cases if the petitioner remains silent and refrains from giving any answer that will give rise to presumption to be drawn by the Court against him. So the petitioner will be in an embarrassing and difficult situation on the face of both these cases. Judging from this angle it is rightly argued that it is not desirable that in a case where the first information report do not contain the necessary ingredient and all the facts disclosed does not continue the alleged offence the petitioner will be subjected to a position of discomfiture and will be forced to suffer from a situation of double jeopardy.
39. Much was argued an behalf of the petitioner that the impugned investigation proceeding was started with certain mala fide intention at the instance of a rival business house of West Bengal and also a panic was caused due to the media hype, I do not like to make any comment on the said aspect at this stage. But the fact remains that all the complainants in respect of five cases before this Court and the mob assembled in front of the office premises of the petitioner No. 1 at Cooch Behar were frightened by the media hype. It is pointed out that on or around the middle of June, 2001 the payments were to be made to the public, but due to starting of the six cases and freezing of the accounts immediately thereafter, it was not possible on the part of the present petitioner to disburse those amounts as assured to the public in respect of the debentures issued. It was rightly argued by the learned counsel for the petitioner that even if there was a desire on the part of the company to disburse the amounts as assured but it could not be given effect to due to the untimely order of freezing of all the accounts in West Bengal as well as outside West Bengal. So it cannot be said that the payments were not made intentionally or with some fraudulent intention. It was an impossibility on the part of the petitioner to honour his commitments to the public at large and the common law principle of doctrine of impossibility of performance is applicable in the present case.
40. It is not impermissible in the realm of law to import the principle of civil law into a criminal case in exigencies of situation or if the fact situation so permits. So I do not find any reason to disapprove the argument as advanced by the learned counsel for the petitioner on the point of common law principle of the doctrine of impossibility of performance.
41. After careful scrutiny of the materials disclosed in the FIR and the discussions hereinabove made, I am of the view that excepting the apprehension of commission of the alleged offences under Section 417 or 420 or under Section 468/417 or 406 of the Indian Penal Code, there is no tangible material to indicate that actually commission of any offence has been disclosed. The principles adopted by the Apex Court in the decisions cited hereinabove as regards noninterference of investigation in a cognizable offence is squarely applicable in the present case. There is nothing on the record to show or indicate that the fundamental requirements of the cognizable offence as alleged have been fulfilled in the first information report excepting the mere apprehension on the part of the subscribers. So, when there is no disclosure of commission of any cognizable offence there is no bar to interfere in the investigation on the basis of the principles enunciated by the Apex Court and also with the aid of Section 482 of the Code of Criminal Procedure. I am convinced from the materials on record that if the accounts of the present petitioner and his company were not seized there was no occasion of non-payment or to raise any objection as regards the non-payment or to file any complaint. In fact in one of the cases the de facto complainant in Durgapur P. S. Case No. 166 dated 14th June, 2001 filed a petition before this Court praying for withdrawal of the complaint alleging that he was persuaded by apprehension and that his apprehension subsequently appeared to be false. Of course it was argued on behalf of the State that the offence under Section 468/471 of Indian Penal Code being non-compoundable, the de facto complainant was not competent to withdraw the complaint in the manner done in this case, but at the risk of repetition it is to be stated that the cases under Section 468 or under Section 471 has not yet born, and as such, the question of compounding of such offence does not arise. In fact so long the complaint filed by SEBI is in the realm of decision by the Court of law, it is highly doubtful whether any case as alleged in the present complaint can born, or in other words, all the FIRs in the six cases are premature, and as such, interference under Section 482 of the Code of Criminal Procedure is necessary, and lawfully justified.
42. The scope of Section 482 of the Code of Criminal Procedure was fully discussed by the Apex Court in the case of State of Haryana v. Bhajan Lal, . In the said case it was viewed that the High Court can exercise the power preserved under Section 482 of the Code in order to quash such proceeding. It appears that the intimation and continuance of the impugned proceeding despite absence of any allegation to constitute any offence against the present petitioner and the mala fide intention on the basis of which the proceeding was started despite the expressed bar provided under Section 624 of the Companies Act, 1956 clearly renders the impugned proceeding liable to be quashed. The heart and soul of the judgment of the Apex Court is best summarised in paragraph 62 which is quoted below :
"The sum and substance of the above deliberation results to a conclusion that the investigation of an offence is the field exclusively reserved for the police officers, whose powers in that field are unfettered so long as the power to investigate into the cognizable offence is legitimately exercised in strict compliance with the provisions falling under Chapter XII of the Code and the Courts are not justified in obliterating the track of investigation when the investigating agencies are well within the legal bounds as aforementioned. Indeed, a noticeable feature of the scheme under Chapter XIV of the Code is that a Magistrate is kept in the picture at all stages of the police investigation but he is not authorised to interfere with the actual investigation or to direct the police how that investigation is to be conducted. But if a police officer transgresses the circumscribed limits and improperly and illegally exercises his investigatory powers in breach of any statutory provision causing serious prejudice to the personal liberty and also property of a citizen, then the Court on being approached by the person aggrieved for the redress of any grievance, has to consider the nature and extent of the breach and pass appropriate orders as may be called for without leaving the citizens to the mercy of police echelons since human dignity is a dear value of our Constitution. Needs no emphasis that no one can demand absolute immunity even if he is wrong and claim unquestionable right and unlimited powers exercisable up to unfathomable cosmos. Any recognition of such power will be tantamountto recognition of "Diving Power" which no authority on earth can enjoy."
43. In this connection it would not be out of place to keep in view the observation of the Apex Court in State of West Bengal v. Swapan Kumar Guha, that the condition precedent to the commencement of investigation under the Code is that FIR must disclose, prima facie, that a cognizable offence has been committed. So a First Information Report which does not allege or disclose that the essential requirements of the penal provision are prima facie satisfied, cannot form the foundation or constitute the starting point of a lawful investigation. In such a fact situation the only course open is to quash the FIR.
44. Since the FIRs do not disclose any offence, the only order that can be passed in all these cases is the quashing of the FIRs and the subsequent investigation for the present. If in course of progress of the proceeding pending before the learned Chief Metropolitan Magistrate or at any subsequent stage it is found that a case under Sections 468/471/420/406/120B of the Indian Penal Code is squarely made out there would not be a bar of starting a case afresh either on the basis of any complaint or suo motu by the police. But for the present in consonance with the views expressed by the Apex Court indicated hereinabove and also keeping in view the law on the point as enunciated in several decisions, I deem it proper to pass necessary order of quashing all these proceedings.
45. In this connection, I also keep in mind the views expressed by the Apex Court in the judgment (G. Sagar Suri v. State of U. P.), that when there is a special statute providing for an effective redressal of grievances that too by way of criminal prosecution, resort cannot be had to the provisions of Indian Penal Code, as the criminal process has a very serious implication for the accused and, therefore, cannot be resorted to casually. In the present fact situation the de facto-complainants were not debarred from taking recourse to the provisions of the Companies Act, 1956.
46. Be that as it may, after a careful scrutiny of the materials on record, I come to a conclusion that no case was made out in the complaints, not to speak of any cognizable offence for the purpose of investigation, and as such, the FIRs and the subsequent investigations are liable to be quashed for the present.
47. It is to be kept in mind that sufficient amount was collected on the basis of the alleged private placement of debentures and many of the members of the public have not yet received their requisite certificates/receipts or relevant papers. Similarly on account of the freezing of the accounts no amount could be disbursed in their favour. It is mentioned that though none of the debentures have matured but in terms of the contract between the company and the subscribers, certain amounts are undoubtedly payable on account of interest etc. So for the purpose of protecting the interest of these private individuals, I feel that it is within the competence of this Court to pass necessary order under Section 482 of the Code of Criminal Procedure by way of appointing certain agency which will be authorised to ensure that the amounts collected from public are suitably registered in the Office of the Registrar of Companies and that charged assets are available for disposal in the event of the company committing any default in making payment to the debenture holders. Such an action will also help in ensuring that the payments of monthly returns are made in terms of the agreement and matured debentures are also paid in due course.
48. I am not unmindful of the fact that SEBI was set up for all such purposes. SEBI Act, 1992 came into force with effect from 30th January, 1992 and the preamble of the Act explains the objective which is "an act to provide for the establishment of a Board to protect the interests of investors in securities and to promote the development of, and to regulate the security market and for matters connected therewith or incidental thereto". So the SEBI was established to protect the interest of the investors in securities and also for regulating the security market. Though it is alleged that the company of the present petitioner is not basically a financial institution but I am not called upon to answer this question at this stage so long the case at the instance of SEBI is pending before the Court of the learned Chief Metropolitan Magistrate, Calcutta and for this reason it would not be proper to direct the SEBI to take charge of the assets of the company for the present. But it would be open to the relevant Court prosecuting the case to pass appropriate order in this regard, if found necessary.
49. For the purpose of protecting the interest of the Subscribers until further order passed by the appropriate Court of law I deem it proper to appoint Mr. Justice Prabir Kumar Majumder, a retired Judge of this Court as Special Officer for the following purpose:
(1) To take charge of all the offices of the company situated in West Bengal and allow those offices to be opened and normal business transaction is started with the help of the staffs of the company;
(2) To take charge of all the monies and deposit receipts including fixed deposit receipts etc. seized by the Investigating Agency on the basis of the seizure list after making proper inventory thereof;
(3) To take charge of all the equipments as well as records seized by the Investigating Agency on the basis of the seizure list after making proper inventory thereof;
(4) To ensure that all the charges of the companies are suitably registered in the Office of the Registrar of Companies at Chandigarh and also to ensure that such charged assets are available for disposal in the event of the company committing any default in making payments to the subscribers/debenture holders;
(5) To ensure regular payments of monthly returns are made to the debenture holders;
(6) To ensure that payments against matured debentures are made to the holders thereof, unless such debenture holders agree otherwise with the company.
(7) To take such other steps as may be deemed necessary for normal business transaction of the Company.
(8) To take inspection of the assets of the company in West Bengal and other parts of India;
(9) To take such other steps as may be deemed necessary to protect the interest of the debenture holders/subscribers.
(9A) For the aforesaid purposes, the petitioner through its company shall hand over a sum of rupees seven crores to the Special Officer, within two days of giving effect to the defreezing order, who shall keep the said amount in a separate account in the name of the Company to be operated by the Special Officer alone and release the balance amount of the money to the company for being utilised in its projects yielding sufficient profit. The said sum of rupees seven crores shall be utilised for payment towards monthly return/matured debentures; and such payments at first be made in respect of the dues from the month of June, 2001 till date and, thereafter, on scheduled due dates.
(10) The Special Officer shall be entitled to attend the office of the company for the purpose of carrying out his obligations and for this purpose, he shall be at liberty to engage his assistant for a period of three months for the present at a remuneration not exceeding 300 GMs.
(11) The Special Officer shall be paid a monthly remuneration of -1500 Gms.
(12) The Special Officer shall also be entitled to incur such other expenditure for the purpose of carrying out his obligations.
(13) For carrying out the aforesaid order, the orders passed by the learned Sub-Divisional Judicial Magistrates in respect of different cases by way of freezing the Bank account of the company of the present petitioner are all set aside. The petitioner shall be at liberty to operate these accounts with the necessary permission/assistance from the Special Officer.
(14) The appointment of the Special Officer for the purpose indicated hereinabove, is initially restricted till 31st March, 2003 or until further orders whichever is earlier.
(15) The Special Officer shall maintain his account with the necessary vouchers and submit his report first by the end of November or towards the first week of December, 2002 and the second one by the first week of February, 2003 and the third one by the first week of April, 2003 before the Registrar General of this Court.
(16) Liberty is given to the Special Officer and the parties to pray for variation or modification of this order, if found necessary, during the said period of 31st March, 2003.
(17) The authorities are directed to render all sorts of assistance as required by this Special Officer for the purpose of implementation of this order.
50. It is made clear that I have not gone into the merits of the case pending before the learned Chief Metropolitan Magistrate at Calcutta, and as such, there will be no impediment on the part of the authorities to proceed with the case without being influenced by the orders passed in these cases.
51. In the result, the first information reports and the investigations impugned in these six cases are hereby quashed. The revisional applications are allowed. Let this order do govern the fate of all the six cases pending in this Court.
52. Learned counsel for the petitioners is hereby given liberty to communicate this order to the Special Officer.
53. Let the ordering portion of this order be communicated to the Courts below by a special messenger at the cost of the petitioner to be deposited by tomorrow.
54. Since the Puja Vacation is offing, let a xerox plain copy of the operative portion of the judgment duly countersigned by the Assistant Registrar (Court) or Assistant Court Officer be given to the learned counsel for the parties on usual undertaking.