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Madhya Pradesh High Court

Pankaj Pathak vs The State Of Madhya Pradesh on 27 January, 2016

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                                                    M.Cr.C. No.2991/2007



      THE HIGH COURT OF MADHYA PRADESH:
                              JABALPUR


             (Single Bench- Rajendra Mahajan, J.)


                       M.Cr.C. No.2991/2007

       Pankaj Pathak, S/o G.P. Pathak,
       Aged about 32 years,
       Occupation- Business,
       R/o 152/A, Wright Town,
       Near Arun Dairy, Police Station Madan Mahal,
       District Jabalpur, (M.P.).

                                                               Petitioner

                                  VERSUS

1.     State of Madhya Pradesh,
       through Police Station Madan Mahal,
       District Jabalpur (M.P.).

2.     Naveen Guru, S/o S.D. Kabirpanthi,
       Aged 31 years,
       R/o 356/3 Shanti Nagar, Damohnaka,
       P.S. Gohalpur, District Jabalpur (M.P.).

                                                            Respondents
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For Petitioner: Shri Manish Datt, learned senior counsel
                       with Shri Vipin Yadav and Shri Yogesh
                       Soni, learned counsel.

For Respondent Smt. Shobhna Sharma, learned Panel
No.1/State:    Lawyer.

For Respondent Shri A.K. Dubey, learned counsel.
No.2:

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                               ORDER

(Passed on the 27th Day of January, 2016) 2 M.Cr.C. No.2991/2007 The petitioner has filed this petition under Section 482 of the Cr.P.C. for quashment of the FIR registered at Crime No.265/2006 at Police Station Madan Mahal, Jabalpur, against him under Sections 420 of the IPC and 17 r.w. 23 (1) (g) and

(h) of the Securities Contracts (Regulation) Act, 1956 as amended by Securities Laws (Amendment) Act, 2004 (for short the 'Act') and the subsequent criminal proceedings of Criminal Case No.23197/2006 pending on the file of Chief Judicial Magistrate, Jabalpur.

2. The relevant and necessary facts for the just and proper disposal of this petition are given below:-

2.1 On 09.04.2006, respondent No.2 Naveen Guru lodged a detail written report alleging therein that petitioner Pankaj Pathak has been doing the business of dealing in stocks/shares online in the name and style of Usha Stock Broking Corporation at Jabalpur. During a period between 20 to 22 May 2005, he paid him Rs.47,000/- (rupees forty seven thousand only) for the purchase of shares of the companies of his choice. He had not given him the shares nor did he return the money. Later, he came to know that he does not obtain the licence as per the provisions of Section 17 of the Act and he is not a broker/sub-broker/agent or a member of any recognized Stock Exchange. Thus, he is trading in shares violating the provisions of Section 17 of the Act, which is punishable under Section 23 (1) (g) and (h). Upon the 3 M.Cr.C. No.2991/2007 report, the police Madan Mahal registered a case at Crime No.265/06 against the petitioner under the aforesaid Sections.

2.2 The petitioner has filed the petition under Section 482 of the Cr.P.C. for quashment of the FIR and the subsequent criminal proceedings on the grounds that he is a Sub-broker of M/s Dalal Street Credit Capital Limited, Bombay, which is listed in the Bombay Stock Exchange. He is also a broker of M/s VNS Finance & Capital Services Private Limited, Mumbai and M/s J.V. Capital Services Private Limited, Mumbai, which are registered with the Securities Exchange Board of India (for short the 'SEBI').

Thus, he has been doing lawful trading in shares and stocks. Respondent Naveen Guru had never given him money for the purchase of the shares, which is why he had not purchased shares in his name. Therefore, the question of delivery of shares to him does not arise. Respondent Naveen Guru has levelled false accusations against him.

2.3 It is also averred in the petition that the Central Government has not issued so far any notification under Section 17 of the Act as per information made available by the SEBI to the petitioner under the provisions of RTI Act, 2005 vide letter dated 12.12.2006. Thus, the question of taking licence by the petitioner under Section 17 of the Act does not arise. It is also averred that as per the provisions of 4 M.Cr.C. No.2991/2007 Section 26 (1) and (2) of the Act only a Court of Session shall take cognizance of the offences punishable under the Act or any rules or regulation or bye-laws made thereunder upon a complaint made by the Central Government or the State Government or the SEBI or a Recognized Stock Exchange or by any person. Hence, the police have no jurisdiction to register the FIR under Section 17 r.w. 23 (1) (g) and (h).

3. On 30.06.2015, the petitioner and respondent Naveen Guru filed jointly the compromise petition in terms of Section 320 (2) of the Cr.P.C.

4. As per the order dated 05.10.2015 of this Court, the Registrar (Judicial) verified and recorded the compromise. According to his report, the petitioner and respondent Naveen Guru have voluntarily entered into compromise with free consent. However, the offence under Section 17 r.w. 23 (1) (g) and (h) of the Act are not compoundable.

5. As per the aforestated letter dated 12.12.2006 issued by the SEBI, no notification has been issued under Section 17 of the Act. Therefore, the question of getting licence by the petitioner in compliance with the provisions of the aforesaid Section does not arise. As per the provisions of Section 26 of the Act, the police cannot take cognizance of any offences punishable under the Act. Hence, the police have exceeded the jurisdiction by registering the FIR for the offences punishable under the Act.

6. Indisputedly, the offence under Section 420 is compoundable in terms of Section 320 (2) of the Cr.P.C.

7. In the case of Gian Singh Vs. State of Punjab [2012 (10) SCC 303], the Supreme Court has laid down broad guidelines for quashing of the FIR and subsequent criminal proceeding under Section 482 of the Cr.P.C. in Para-61 of the decision. In the instant case, the guidelines are applicable in toto.

8. In view of the above discussion, the compromise arrived at between the petitioner and respondent Naveen Guru under Section 420 of the IPC is accepted and the petitioner is acquitted of the aforesaid offence. It has been held in Para No.5 of this order, the police have no authority to register the F.I.R. under the Act. Hence, the FIR and the subsequent criminal proceeding of Criminal Case No.23197/2006 insofar as relate to Section 17 r.w. 23 (1) (g) and (h) are hereby quashed.

9. Accordingly, this petition stands finally disposed of.

10. Let a copy of this order be sent to the Court of C.J.M., Jabalpur for information and compliance.

(RAJENDRA MAHAJAN) JUDGE sp/-

27.01.2016 Shri Chetan Jaggi, learned counsel for the applicant. Shri Y.D. Yadav, learned Panel Lawyer for the respondent No.1/State.

None for the respondent No.2.

The order is passed separately, signed and dated.

(RAJENDRA MAHAJAN) JUDGE sp/-