Telangana High Court
Mr. Dumpala Madhusudhana Reddy vs State Of Maharashtra on 9 February, 2022
Author: K.Lakshman
Bench: K.Lakshman
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KL,J
W.P. No.6470 of 2022
HON'BLE SRI JUSTICE K.LAKSHMAN
WRIT PETITION No.6470 OF 2022
ORDER:
The present writ petition is filed seeking a writ of certiorari to quash FIR No. 40 of 2022 dated 27.01.2022 filed on the file of P.S. Goregaon (Thane), Greater Mumbai City in relation to the Petitioner.
2. Heard Mr. D. Prakash Reddy, learned Senior Counsel representing Mr. P. Vikram, learned counsel for the petitioner and Mr. S. Rama Mohan Rao, learned Assistant Government Pleader appearing on behalf of respondent No.1 - State.
3. Facts of the case and allegations levelled against the petitioner:
i) The petitioner herein is accused in Crime No.40 of 2022 pending on the file of Goregaon Police Station (Thane), Greater Mumbai City. The offences alleged against him are under Sections - 406, 409 and 420 read with 34 of IPC.
ii) Respondent No.2 is the Vice President of M/s. Gandhar Oil Refinery (India) Limited. It is Non-banking Company. It deals with manufacture of Lubricant Oil, Petroleum Jelly and exports as per demand. It also imports coal and sells the same as per demand. It also imports industrial coal and the same is sold at Coal and Cement Industry, Power Plant, Steel Industry etc. It has been in the said business since 2010.
iii) The said Company imports industrial coal for its business from Indonesia and South Africa. For the purchase of coal, the said company contacts the Coal Suppliers online. Since the said imported coal is for sale purpose, the said Company received the same at the docks of Dharmatar, P.N.P. Port, Alibagh, 2 KL,J W.P. No.6470 of 2022 Visakhapatnam, Tuticorin Port of Tamil Nadu State etc. After receipt of the same, the coal is sent to the place as per the related demand.
iv) In the year 2013-14, when respondent No.2 was working in the market, he got connected with Mr. Kannamuru Raghu Rama Krishna Raju for business related reasons and they were in contact with each other from his Mumbai Office.
At that particular point of time, he was the Member of Parliament from Y.S.R. Congress Party as well as his Companies, M/s. Ind Bharat Thermal Power Limited and M/s. Ind Bharat Power Gencom Limited are into power generation and requires huge quantity of coal for the business. He also took respondent No.2 into confidence mentioning that he is a well-known and big industrialist and he can help respondent No.2 in getting huge profit by placing big orders and relying on the said facts, respondent No.2 decided to work with Mr. Raghu Rama Krishna Raju together.
v) At that time, the petitioner herein and the said Raghu Rama Krishna Raju and others are Directors of M/s. Ind Bharat Thermal Power Limited and also Directors of M/s. Ind Bharat Power Gencom Limited. A high seas sales agreement was entered on the terms and conditions mentioned therein for an amount of Rs.61,57,54,027/- in total.
vi) The said coal was imported by respondent No.2 company from Indonesia and arrived at Tuticorin Port and was taken by the above said two Companies. Respondent No.2 has to get an amount of Rs.61,57,54,027/-, but it has received only Rs.14,88,35,174/- leaving a balance of Rs.46,69,18,853/-. It has filed a petition No.39 of 2019 against M/s. Ind Thermal Power Limited and Petition No.40 of 2018 against M/s. Ind Bharat Power Gencom Limited on the file of NCLT, Hyderabad, which in turn passed an order of Corporate Insolvency 3 KL,J W.P. No.6470 of 2022 Resolution Process (CIRP). The said order was under challenge by way of filing an appeal before NCALT. During pendency of the said appeal, the above said two companies and de facto complainant company have entered into agreement dated 19.12.2018, as peer which M/s. Ind Bharat Thermal Power Limited agreed to pay an amount of Rs.24,82,60,270/- and an interest on the said amount till January, 2018, Rs.6,11,61,933 /- and M/s. Ind Bharat Power Gencom Limited was due an amount of Rs.21,97,28,209/- and an interest till 30.10.2017 was Rs.12,44,19,018/- and total sum of Rs.65,35,69,430/-. As per the said agreement, the above said two companies agreed to pay an amount of Rs.25.00 Crores to respondent No.2. Out of the said amount of Rs.25.00 Crores, Rs.8.00 Crores will be paid within eight days from the date of contract and remaining Rs.17.00 Crores will be paid in two installments i.e., first payment within fifteen days and balance within thirty five days. If the said amount is not paid within the stipulated time, 18% interest will be charged.
vii) The said Raghu Rama Krishna Raju and others have not paid the said amount in terms of the said settlement. The above said two companies represented by the Directors including Mr. Raghu Rama Krishna Raju, petitioner herein and others have bought coal from respondent No.2 company showing lure of big business and profit to it. In order to earn the trust of respondent No.2 company, they have initially refunded the purchased coal. After that, while doing business, between 2015 and 2017, bought a total of 198775 metric tons of coal as per four different orders and returned some of the purchased coal amount to it.
viii) It is further alleged in the said complaint that by pretending to as reimbursing respondent No.2 for the said business, the petitioner and other accused, Directors of the above said two companies, have forced respondent No.2 4 KL,J W.P. No.6470 of 2022 to sell them more amount of coal, 198775 metric tons of coal sold was not refunded in any transaction from them. Every time when asked about the repayment, they have given vague answers. The Directors have done business with respondent No.2 Company for the purpose of defrauding it. In the event of making complaint, the petitioner and others may lose the Directorship and, therefore, they have agreed to pay amount and accordingly made respondent No.2 to enter into the above said agreement dated 19.12.2018. Though they have agreed to pay an amount of Rs.25.00 Crores in the manner stated above, they have not paid the same. Thus, they have defrauded respondent No.2 Company by violating the terms of the agreement and, therefore, they have committed the aforesaid offences.
4. On receipt of the complaint dated 27.01.2022 from respondent No.2, the police, Goregaon Police Station have registered a case in crime No.40 of 2022 against the petitioner and others for the aforesaid offences.
5. During the course of hearing, the maintainability of the present writ petition was raised since the FIR No.40 of 2022 pending on the file of Goregaon Police Station (Thane), Greater Mumbai City is sought to be quashed.
6. Contentions of the Petitioner Mr. D. Prakash Reddy, learned senior counsel representing Mr. P. Vikram, learned counsel for the petitioner, would submit as follows:
i) The above said two Companies were registered at Hyderabad and their registered offices are at Hyderabad;
ii) All the purchase orders were placed from Hyderabad Office. 5
KL,J W.P. No.6470 of 2022
iii) Respondent No.2 has filed two petitions before NCLT, Hyderabad, which had passed an order dated 07.09.2018.
iv) Feeling aggrieved by the said order, an appeal was filed before NCALT.
v) There is part of cause of action in Hyderabad and, therefore, this Court is having jurisdiction to entertain the present writ petition.
vi) Reliance was placed on the principle laid down in Navinchandra N. Majithia v. State of Maharashtra1, Rajendra Ramchandra Kavalekar v. State of Maharashtra2, Raju More v. Ram Chand Khandelwal3 and Rajendran Chingaravelu v. R.K. Mishra, Addl. Commissioner of IT4.
7. Contentions on behalf of Respondent No.1 - State:
i) Mr. S. Rama Mohan Rao, learned Assistant Government Pleader for Home, on instructions, would submit that there is no cause of action in Hyderabad and just because the above said companies are registered in Hyderabad, their offices in Hyderabad, the present writ petition is not maintainable.
ii) The petitioner herein has to file the present petition before the High Court having jurisdiction.
8. Findings of the Court
i) In light of the above said submissions, it is apposite to discuss the scope of power of this Court under Article 226 of the Constitution of India to quash First Information Report (FIR) lodged outside its territorial jurisdiction. 1 (2000) 7 SCC 640.
2(2009) 11 SCC 286.
3Order passed in W.P. (C) No. 3595 of 2008 by the Gauhati High Court. 4 2009 (14) SCALE 211.
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KL,J W.P. No.6470 of 2022
ii) The question regarding maintainability of writ petition to quash an FIR registered in another State fell for consideration before the Supreme Court in Navinchndra (supra).
iii) In Navinchndra (supra), the transactions between the parties took place in Mumbai, but a complaint was lodged in Shillong. A writ petition was filed before the Bombay High Court to quash the compliant registered in Shillong. The Court held that the High Court may quash an FIR registered in another State if any cause of action, wholly or in part, arises in its jurisdiction. The term 'cause of action' means and includes all the bundle of facts which are necessary to be proved in order to get relief. The Court also held that merely because FIR was registered in another State will not impede the Court from exercising its power under Article 226 of the Constitution of India. The Court should satisfy itself whether any part cause of action arose in its jurisdiction. In respect of exercising power under Article 226 of the Constitution of India in the context of criminal offences, the Court held that the main factor to be considered is the place where the alleged offence is committed.
iv) The Supreme Court in Oil and Natural Gas Commission v. Utpal Kumar Basu5 held that the High Court should exercise caution and should not transgress into the jurisdiction of other High Courts merely by relying on an insignificant event connected with the cause of action.
v) Explaining what constitutes cause of action, the Supreme Court in Union of India v. Adani Exports Ltd.6 held that each and every fact pleaded does not, ipso facto, leads to a conclusion that such facts form part of cause of action arising 5 (1994) 4 SCC 711.
6(2002) 1 SCC 567.
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KL,J W.P. No.6470 of 2022 the Court's jurisdiction. It was held that facts which have no bearing to the lis/dispute involved do not give rise to a cause of action conferring jurisdiction on the concerned High Court.
vi) Likewise, in Alchemist Limited v. State Bank of Sikkim7 the Apex Court held that only facts which are material, essential, or integral can form part of cause of action.
vii) In view of the principle laid down in the above decisions, coming to the facts of the case on hand, as discussed supra, the offences alleged arise out of an agreement dated 19.12.2018 entered into at New Delhi. The allegations against the petitioner and other accused are that they have not paid the amount agreed in terms of the said agreement dated 19.12.2018 and, thus, they have defrauded respondent No.2 Company by violating the terms of the said agreement. Mere registration of the Companies at Hyderabad, existence of its registered offices at Hyderabad, filing of insolvency proceedings in NCLT, Hyderabad, will not form part of cause of action with regard to allegations leveled against the petitioner herein at Hyderabad. Filing of insolvency proceedings in Hyderabad do not have any material bearing on the alleged offences as they arise out of the Settlement Agreement dated 19.12.2018 entered into at New Delhi. Further, the insolvency proceedings were initiated in NCLT Hyderabad because of specific territorial jurisdiction conferred on it under Section 60 (5) of the Insolvency and Bankruptcy Code, 2016.
viii) As held in the above referred judgments, the test for determining the scope of jurisdiction under Article 226 of the Constitution of India in criminal proceedings is to see where the alleged offence was committed. The above stated 7 (2007)11 SCC 335.
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KL,J W.P. No.6470 of 2022 facts and discussion would reveal that there is no cause of action that arise at Hyderabad and that the petitioner and other accused have committed the alleged offences from Hyderabad.
ix) In the present case, learned senior counsel placed heavy reliance on the principle laid down in Navinchandra (supra) and Rajendran Chingaravelu (supra). Both these decisions are distinguishable. The other decisions cited by the Petitioner also do not help him as they relied on Navinchandra (supra).
x) In Navinchandra (supra), the majority of the cause of action arose in Mumbai and none of it arose in Shillong. The Court therein held that majority of the investigation is to be done at Mumbai. The Court noted the peculiar nature and facts of the case and also considered the alternative prayer for change of investigation from Meghalaya to Mumbai Police. In the present case, no such circumstances exist and the facts in Navinchandra (supra) are different to the facts of the present case.
xi) In Rajendran Chingaravelu (supra), seizure took place in Chennai, but the writ petition was filed in the Andhra Pradesh High Court. The writ petition was dismissed for want of jurisdiction. The Supreme Court held that since the genesis of the seizure resulted from the action taken by the security/ intelligence officials at Hyderabad Airport who informed their counterparts about the accused who was to be intercepted and questioned, the Andhra Pradesh High Court had jurisdiction. The Court therein held that even if a small fraction of cause of action which gives a right to sue, the High Court will have jurisdiction.
xii) The decision in Rajendran Chingaravelu (supra) is not applicable to the facts of the present case. Small fraction of the cause of action also should be 9 KL,J W.P. No.6470 of 2022 material, essential, or integral which would confer a right on the Petitioner to seek relief. Merely because the Petitioner's companies are in Hyderabad, insolvency proceedings were initiated in Hyderabad, no cause of action arises at Hyderabad which has a bearing on to non-payment of settlement amount agreed under the Settlement Agreement dated 19.12.2018 entered into at New Delhi and also with regard to the allegations leveled against the petitioner herein.
xiii) As held in the above said judgments, each and every fact pleaded does not, ipso facto, leads to a conclusion that such facts form part of cause of action arising the Court's jurisdiction. The facts which have no bearing to the lis, dispute involved do not give rise to a cause of action conferring jurisdiction on the High Court. The facts which are material, essential or integral, can form part of cause of action. The term 'cause of action' means and includes all the bundle of facts which are necessary to be proved in order to get relief. The same are lacking in the present case.
9. Conclusion
i) No cause of action arose in Hyderabad which is within the territorial jurisdiction of this Court as contended by the petitioner. Therefore, the writ petition is not maintainable and is liable to be dismissed. However, liberty is granted to the petitioner to file a petition seeking to quash the proceedings in FIR No.40 of 2022 pending on the file of Goregaon Police Station (Thane), Greater Mumbai City in the High Court having jurisdiction.
ii) The present Writ Petition is accordingly dismissed. However, there shall be no order as to costs.
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KL,J W.P. No.6470 of 2022 As a sequel, miscellaneous petitions, if any, pending in the Writ Petition shall also stand closed.
_________________ K. LAKSHMAN, J 9th February, 2022 Mgr