Karnataka High Court
The State Of Karnataka vs Srinivasa on 24 July, 2025
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CRL.P No. 635 of 2021
HC-KAR
IN THE HIGH COURT OF KARNATAKA AT BENGALURU
DATED THIS THE 24TH DAY OF JULY, 2025
BEFORE
THE HON'BLE MS. JUSTICE J.M.KHAZI
CRIMINAL PETITION NO. 635 OF 2021
(482(Cr.PC) / 528(BNSS))
BETWEEN:
THE STATE OF KARNATAKA
BY DEVARAJ POLICE STATION
REPRESENTED BY STATE PUBLIC
PROSECUTOR, HIGH COURT BUILDING
BENGALURU-560 001
...PETITIONER
(BY SRI.M.R.PATIL, HCGP)
AND:
1. SRINIVASA
Digitally S/O LATE VENKATARMAIAH
signed by AGED ABOUT 48 YEARS,
REKHA R
GURUVAYYAN PALYA
Location:
High Court HALAPANAHALLI VILLAGE
of BAKTHARAHALLI POST
Karnataka DODDABALLAPURA TALUK
BENGALURU RURAL DISTRICT-561203
2. SHAIK NAJIBULLA
S/O JILLUR RAHIM SHAIK
JAK AHAMED
ARAMBAG, HONGIL-712615
WEST BENGAL
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3. SANTOSH KUMAR MISHRA
S/O BANAMALI MISHRA
S MIRZAPURA, ACHUTPURA
KYRA BALASUR, ORISSA-756 031
4. DAVID HASLAP
R/O BAGPUL JAIPUL
BIRABARASATH, 24 PARAGANA NORTH
WEST BENGAL - 743 248
OFFICE MULTINATIONAL INDUSTRIES LTD
2ND FLOOR, NO.4 METROPOLITAN PLAZA
H L SARKAR RASTHE,
BANS DRONI, KOLKATTA
5. SANDEEP PAL
S/O TARPADA PAL MOUZA
GOPALAPURA, J L NO. 34
MIRAJPURA, KOTHALAPURA,
BANKURA-722141
WEST BENGAL
6. SUCHANDRA GOSH
S/O PARESHNATH
NO.160/A, KALICHARAN GOSH ROAD,
KOSIPURA, KOLKATTA -700 071
WEST BENGAL
...RESPONDENTS
(BY SRI. MALIPATIL P S, ADVOCATE FOR R1;
V/O DTD: 06.03.2023 ISSUANCE OF NOTICE TO RESPONDENT
IS D/W)
THIS CRL.P IS FILED U/S.482 CR.P.C BY THE S.P.P FOR
THE STATE PRAYING TO A. SET ASIDE THE JUDGMENT AND
ORDER DATED 17.12.2019 PASSED BY THE PRINCIPAL
DISTRICT AND SESSIONS JUDGE, MYSURU IN CR.NO.46/2016
B. RESTORE THE CASE ON THE FILE OF THE DISTRICT AND
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SESSIONS JUDGE, MYSURU IN CR.NO.46/2016 AND DIRECT
THE TRIAL COURT TO TAKE COGNIZANCE OF THE OFFENCE
AGAINST THE RESPONDENTS-ACCUSED.
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
The State has filed this petition under Section 482 of the Code of Criminal Procedure to set aside the judgment and order dated 17.12.2019 in Cr.No.46/2016 on the file of Prl.District and Sessions Judge, Mysuru for the offences punishable under Sections 406, 420, 109, 120 r/w Section 34 IPC and Section 9 of Karnataka Protection of Interest of Depositors Act, 2004 ('KPID Act, 2004' for short) and to restore the same to the file of District and Sessions Judge, Mysuru to enable it to take cognizance and proceed with the matter.
2. For the sake of convenience, the parties are referred to by their ranks before the trial Court. -4-
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3. In support of the petition, the State has contended that the accused are running a company under the name and style of Alite India Ltd. The accused have colluded together and assuring general public return of their investment with highest interest and bonus, have collected huge amount under different schemes. However, later they have failed to return the same with interest. 3.1 Based on complaint filed by Sri.Chandrashekhar Aradhya, a case in Cr.No.46/2016 came to be registered and after investigation charge sheet is filed for the offences punishable under Sections 406, 420, 109, 120 r/w Section 34 IPC and Section 9 of 'KPID Act, 2004. Since the issue involved is serious on the directions of the Government investigation was carried out by CID, invoking the provisions of KPID Act, 2004. However, the trial Court has rejected the charge sheet with a direction to the investigating officer to present the charge sheet before jurisdictional Court. Aggrieved by the same, this petition is filed on the following:
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(i) The impugned order is erroneous and unsustainable. It is based mainly on the ground that there is lack of authority in the investigating officer, who has filed charge sheet and common charge sheet should have not been filed, as each offence is distinct and different.
The entire approach of the trial Court in returning the charge sheet is erroneous. There is no application of mind. The trial Court has not appreciated the scheme, aims and objects of KPID Act, 2004. The Act is enacted with an aim not only protecting the interest of the depositors by attaching the property, but also to prosecute the accused who are responsible for fraud and cheating.
(ii) The trial Court has completely misread the Act. The KPID Act clearly states that the competent authority is appointed to exercise control over the attached property until Special Court passes an order for realization of assets and payments to depositors. The competent authority is appointed under Section 5 of the KPID Act, 2004 to safeguard the financial interest of the depositors and to exercise such other power for carrying out the purpose of the Act. The trial Court has not considered the role of the competent authority which is restricted to deal with the attached property, distribution of same among the -6- NC: 2025:KHC:28802 CRL.P No. 635 of 2021 HC-KAR aggrieved depositors, compounding all the offences and assisting the Special Public Prosecutor. However, he has not been empowered to investigate the case and file charge sheet.
(iii) The trial Court has not taken note of Section 7 of the KPID Act 2004, which clearly state that the competent authority is empowered to submit report with regard to the assets of the financial institutions and its liabilities. The trial Court has erred in holding that the competent authority is empowered to investigate. There is no such provision under the Act or in the code empowering a Revenue Officer to conduct investigation. Under the Act, Special Court is given powers to realize assets of the financial institutions and pay to the depositors and also punish the accused.
(iv) While the Revenue official in the capacity as the competent authority if given the powers to take physical possession of assets and submit report, the Special Public Prosecutor is authorized to conduct the trial and assist the Court. The modus operandi of the accused indicate that thre is commonality in committing the offence, even though the victims are different. Therefore, rightly the -7- NC: 2025:KHC:28802 CRL.P No. 635 of 2021 HC-KAR investigating officer has filed a common charge sheet in respect of all the FIRs.
(v) The trial Court has also not appreciated that even in a common charge sheet distinct charges may be framed against the accused. In the above facts and circumstances, the impugned order is not sustainable and calls for interference by this Court and hence, the petition.
4. In support of his arguments, learned High Court Government Pleader for petitioner State has relied upon the decision in The State of Karnataka Vs. Greenbuds Agro Form Ltd. Company and others (Greenbuds Agro)1.
5. On the other hand learned counsel for respondents has supported the impugned order and sought for dismissal of the petition.
6. Heard arguments and perused the record. 1 Crl.P.No.9302/2016 Dt: 31.05.2021 -8- NC: 2025:KHC:28802 CRL.P No. 635 of 2021 HC-KAR
7. Facts leading to the passing of the impugned order under challenge are that one Chandrashekar Aradhya filed a complaint against 6 persons, who were running a company by name Angel Alide India Ltd. Company ('company' for short) alleging that he was a car driver by profession and also agent of the said company, which was a financial establishment taking deposits promising to pay high returns in the form of interest, etc. As an agent, he collected money from several persons and deposited the same with the said company. However, during October 2014, the said company was closed. Though accused No.1 promised to return the money, later he evaded.
8. Based on the complaint, the Devaraj P.S, Mysuru registered case in Cr.No.46/2016 and submitted the FIR to the Special Court. After concluding the investigation, the concerned police have filed charge sheet against accused Nos.1 to 6 who are shown as absconding, for the offences punishable under Sections 406, 420, 109, -9- NC: 2025:KHC:28802 CRL.P No. 635 of 2021 HC-KAR 120 r/w Section 34 of IPC and Section 9 of the KPID Act, 2004.
9. However, the Special Court instead of taking cognizance, has passed the impugned order and returned the charge sheet for presentation through the competent authority under Section 5 r/w Section 8 of KPID Act 2004 and so far as IPC offences are concerned, the Special Court directed the investigating officer to file charge sheet before the jurisdictional Magistrate.
10. In the present petition, the State has challenged the said order. As rightly argued by the learned High Court Government Pleader, the scheme of the KPID Act, 2004, is not only to protect the interest of the depositors by attaching the property, but also to prosecute the accused of the financial institution and establishment who are responsible for fraud and cheating.
11. Section 2(1) defines the term 'competent authority' means the authority appointed under Section 5.
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12. Under Section 5 of the KPID Act, 2004, the State Government is required to appoint an officer not below the rank of Assistant Commissioner to be the competent authority.
13. Section 6 of the KPID Act, 2004 deals with duties and powers of competent authority, which enables him to take necessary action by taking physical possession of all the monies and assets of the concerned financial establishment expeditiously and sub-Section (2) enumerates its powers.
14. Section 7 deals with assessment of assets and deposit liabilities. After making report under Section 7, as per Section 8 of the KPID Act, 2004, the competent authority is required to submit report to the Special Court and make an application seeking permission to make payment to the depositors out of the money realized.
15. On the other hand, Section 9 prescribes punishment for fraudulent default by the financial
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NC: 2025:KHC:28802 CRL.P No. 635 of 2021 HC-KAR establishment and makes every person including the promoter, director, partner, manager or any other person or an employee responsible for the management or conducting of the business or affairs of such financial establishment and on their conviction, they are liable for imprisonment for a term, which may extend to 6 years and with fine, which may extend to Rs.1 lakh and such financial establishment also shall be liable for fine which may extend to an amount equivalent to Rs.5 lakhs or where such deposits is quantifiable in terms of money, twice the money involved in such default whichever is more. The proviso mandates that in the absence of any special and adequate reasons recorded by the Special Court in the judgment, the imprisonment shall not be less than 3 years and fine shall not be less than Rs.20,000/- in case of individuals and not less than Rs.1 lakh in case of financial establishment.
16. It is pertinent to note that as per Section 2(4), the term financial establishment is defined as:
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NC: 2025:KHC:28802 CRL.P No. 635 of 2021 HC-KAR "(4) Financial Establishment means any person or a group of individuals accepting deposit under any scheme or arrangement or in any other manner but does not include a corporation or a co-operative society owned or controlled by any State Government or the Central Government or a banking company as defined under clause (c) of Section 5 of the Banking Regulation Act, 1949 (Central Act 10 of 1949);"
17. The definition makes it clear that the financial establishments which comes under purview of KPID Act, 2004 are necessarily those run by private individuals or group of individuals accepting any scheme or arrangement. It does not include regulated deposit schemes. Therefore, as in case of Section 27 of the Banning of Unregulated Deposit Schemes Act, 2019 ('BUDS Act' for short), there is no prohibition for the trial Court taking cognizance except on a complaint by regulator. Since KPID Act, 2004 does not cover regulated schemes and it necessarily means the schemes run by private, individuals or group of individuals, anyone who is aggrieved is at liberty to file complaint with the concerned police, who after due investigation may file charge sheet.
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NC: 2025:KHC:28802 CRL.P No. 635 of 2021 HC-KAR Since Section 8 of the KPID Act, 2004 require the matters arising under the Act, to be decided by designated Court, necessarily, the charge sheet is to be filed before the Special Court.
18. The duties and responsibilities of authorized Officer is to realize the assets and distribute among the investors. He is not authorized to file a complaint and present the charge sheet as per Section 5 r/w 8 of KPID Act, 2004 as directed by the designated Court. The report referred to in Section 8 concern with the report that would be prepared by the competent authority in exercise of its duties under Section 6 with regard to collecting the assets of the persons who were running the establishment, for the purpose of realizing the same and distributing compensation to the investors. The report referred in Section 8 is not a charge sheet. The learned Sessions Judge, has confused himself regarding powers and responsibilities of the competent authority and passed the impugned order which is not sustainable.
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19. At the same time, the designated Court shall ascertain whether in exercise of its power under Sections 3, 4, 6 to 8, the competent authority has taken steps for realization of the assets of the accused persons and the establishment for the purpose of paying compensation to the investors in a parallel proceedings.
20. For the above reasons, this Court is of the considered opinion that the impugned order is liable to be set aside and accordingly, the following:
ORDER
(i) Petition filed by the State under Section 482 Cr.P.C is hereby allowed.
(ii) The impugned order dated 17.12.2019 in Cr.No.46/2016 on the file of Prl.District and Sessions Judge, Mysuru for the offences punishable under Sections 406, 420, 109, 120 r/w Section 34 IPC and
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NC: 2025:KHC:28802 CRL.P No. 635 of 2021 HC-KAR Section 9 of Karnataka Protection of Interest of Depositors Act, 2004, is set aside.
(iii) The matter is restored to the file of Prl.District and Sessions Judge, Mysuru. The Sessions Court shall register the case and proceed with the matter in accordance with law.
(iv) The Registry is directed to send a copy of this order to the trial court through e-mail.
Sd/-
(J.M.KHAZI) JUDGE RR List No.: 1 Sl No.: 46