Y Vikranth Reddy Vs State of Andhra Pradesh

HONOURABLE SRI JUSTICE K SREENIVASA REDDY

CRIMINAL PETITION NO: 8912 OF 2024

O R D E R :

This Criminal Petition, under Section 482 of the Bharatiya Nagarik Suraksha Sanhita, 2023 (for short ‘the BNSS’), has been filed on behalf of the petitioner/accused No.1 to grant anticipatory bail in connection with Crime No.30 of 2024 of CID PS., Mangalagiri.

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A case has been registered against the petitioner/accused No.1 and other accused for the offences punishable under Sections 506, 384, 420, 109, 467, 120B read with 34 of the Indian Penal Code, 1860 (for short, ‘IPC’) and Section 111 of the Bharatiya Nyaya Sanhita, 2023 (for brevity ‘BNS’).

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Pursuant to a report dated 02.12.2024 lodged by 2^nd respondent/defacto complainant, the subject crime came to be registered. The allegations, in brief, are as follows:

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(a) M/s. Kakinada Seaports Limited (for short, ‘KSPL’) is a concessionaire from the Government of Andhra Pradesh (for short, ‘GoAP’) vide Concession

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Agreement dated 19.03.1999, to carry on business of Kakinada Deep Water Port (for short, ‘KDWP’). KSPL made huge investments and developed KDWP. It became a profit-making company. M/s. Kakinada SEZ Limited (for short, ‘KSEZ’) acquired 8320 acres of land in various villages around Kakinada for setting up of SEZ and the Government of India also granted permission to set up multiproduct SEZ. The shareholders in the said company are M/s. Kakinada Infrastructure Holdings Private Limited (for short, ‘KIHPL’), M/s. Veda Infra Products (India) Private Limited and 2^nd respondent/defacto complainant in personal capacity, altogether holding 48.74% shares, and the rest of the shareholding was by M/s. GMR SEZ and Ports Holdings Limited. KSEZ borrowed about Rs.2,000 crores, by way of inter-corporate deposits or sub-debts from GMR Group, for the purpose of undertaking acquisition of land, development of infrastructure, etc. As GMR Group has substantial interest in addition to 51% of shareholding and to avoid liabilities arising out of the debt and not been able to earn any income from KSEZ, KVR Group desired to part with

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their shares, and after negotiations between GMG Group and group of 2^nd respondent/defacto complainant, it was agreed that GMR would pay Rs.400 crores for acquisition of his 48.74% of the shareholding and an agreement was executed by the parties on 22.10.2019. KIHPL is a group investment company, which holds 41.12% of shareholding in KSPL and 48.74% (along with KVR Group), in KSEZ. KIHPL is totally held by 2^nd respondent and his family members.

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(b) After change of regime in GoAP in 2019 general elections, KSPL was not receiving co-operation from the Directors of the Port/AP Maritime Board in conduct of operations. KSPL is paying 22% of gross earnings of the company as revenue share to the State Government. The company had been paying the revenue share to the GoAP without any default. In addition to the calculations made by the Company to arrive at the gross earnings, the GoAP is also conducting audit of the revenues of the Company for determining the gross revenue as per the Concession Agreement. There was never substantial difference between the figures arrived at and paid by the Company

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and the determination by the audit authorities of the GoAP.

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(c) While so, the KSPL received a Letter, dated 13.11.2019 from the GoAP, appointing M/s. PKF Sridhar & Santhanam LLP (for short, ‘PKF’) for conducting special audits for PPP Ports, and the KSPL was called upon to furnish the entire data for the Financial Years ending 31.03.2015 to 31.03.2019, and the audit company called for records of the company, visited port office and started conducting the special audit. The GoAP vide Letter, dated 04.12.2019 informed the Port Company that it had appointed M/s. KROLL India, a Bombay based consulting firm, for conducting forensic audit in respect of KSPL and directed the company to furnish all the required documents, to enable smooth conduct of forensic audit. Accordingly, the Company furnished all the records. A team of said KROLL India came to Kakinada and obtained requisite documents and also gained remote access to all the financial operations of the Company for the period in question. M/s. KROLL India completed the forensic audit as directed by the GoAP and it was learnt that they

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submitted their report to the GoAP and subsequently it was learnt that the GoAP had terminated the engagement of M/s. KROLL India, Mumbai.

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(d) It was learnt that they submitted a report to the GoAP and at the time of closure of the audit operations, the members of the audit party orally informed that they found during the course of audit, huge accounting irregularities by way of suppression of gross revenue and thereby, the Government was deprived of revenue share to the extent of about Rs.1,000.00 crores during the Financial Year 2014-15 to 2018-19.

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(e) In addition to the audits directed as against KSPL, the PKF was also asked to verify the records and transactions of various companies such as (i) United Port Services Limited; (ii) Bothra Shipping Services Limited; (iii) Sarat Chatarjee and Co. (Visakhapatnam) Private Limited; (iv) Sembmarine Kakinada Limited and (v) M/s.Belair Logistics Limited, and by a Letter, dated 03.03.2020, instructed KSPLs to enable a similar audit in respect of the aforesaid companies, though the said Companies have no contractual relationship with the

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Government and except providing various services to KSPL and its customers, they have no privity of contract with GoAP. But, nonetheless, such verification was ordered only to coerce the Company to come to its terms. In the course of proceedings, the auditors approached the said Companies, obtained various records without any authority and started raising various issues with them, which were duly answered by the said Companies.

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(f) With a view to further threaten the respondent No.2 herein/ de facto complainant and the Company, vide Letter, dated 20.05.2020, the CEO of AP Maritime Board had informed that the Government by Memo dated 07.04.2020 accepted the request of the auditors to conduct special audit of KSPL for the years 2008-09 to 2013-14 and also for the year 2019-20 and the Company was asked to cooperate with the above audit party. The Company raised a protest against such audit and since share purchase was completed, no further action was taken in the matter.

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(g) In the month of May, 2020, V.Vijaysai Reddy, Member of Parliament was alleged to have called the

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respondent No.2 herein/ de facto complainant and

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informed that the petitioner herein/accused No.1 would contact him in respect of KSPL, and he was asked to meet him and explain the things; it was also informed that the petitioner herein/accused No.1 son-in-law’s brother viz. Sarath Chandra Reddy would also be present. In the month end of May, 2020, as per the direction of the petitioner herein/accused No.1 he went to the home of petitioner herein/accused No.1 situated at Plot No.97, Road No.10C, MLA, MPs Colony, Jubilee Hills, Hyderabad and met the petitioner herein/accused No.1 and during the course of conversation, he was informed that there would be a demand of about Rs.1,000.00 crores from the GoAP in respect of revenue share of the GoAP as per the Special Audit Report. He was alleged to have tried to explain that there were no irregularities and all this was invented with the help of fabricating the record by the auditors, who conducted the audit; it was further informed that if a demand is raised by GoAP, the KSPL would be in deep trouble and hence, he was asked to part with 50% stake in KSPL and 48.74% in KSEZ, but he

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informed that he holds only 41.12% shares in KSPL through KIHPL and holds only 20 shares in his personal capacity. He also informed that KSPL is a profit- making company, through which they were all gaining by way of dividend. It was further informed that KSEZ holds large land bank, which is valuable and there is no need for him to part with his share holdings. Then, the petitioner herein/accused No.1 was alleged to have informed that it is not him trying to acquire shares, but they are being acquired by one Y.S.Jagan Mohan Reddy and if he does not agree for transfer of shares, there would be a spate of criminal cases and vigilance inquiries leading to his arrest and other family members. He was also alleged to have informed that they would pay him a nominal amount of for transfer of his shareholdings.

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(h) The petitioner herein/ accused No.1 was alleged to have informed that he is making arrangements for executing a share transfer, agreements and the respondent No.2 herein/ de facto complainant was asked to cooperate. He was also informed that M/s.Varuna Law Associates LLP were appointed to prepare the requisite

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documentation and the said law firm made

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correspondence with the office of the KSPL and KSEZ and at that time, he learnt that they are also preparing a Corporate Deposit Agreement, whereunder, they would pay Rs.100.00 crores as deposit at the time of agreement. At that time, he was not aware in whose favour the agreements are being executed or who will pay the deposit amount. During the course of preparation of the agreements, they came to know that the shares in KSPL and KSEZ are being sold to M/s. Aurobindo Realty and Infrastructure Private limited (for short ‘Aurobindo’).

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(i) On 24.06.2020, the respondent No.2 herein/ de

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facto complainant was alleged to have gone to the residence of the petitioner herein/accused No.1 and at that time, one Sarathchandra Reddy of Aurobino and other persons were present along with counsels of Varuna Law Firm. They were alleged to have given two agreements

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i.e. (1) Share Purchase Agreement and (2) Deposit Agreement. As per the Share Purchase Agreement, KIHPL would transfer 41.12% of shares held by the aid Company

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in KSPL in favour of Aurobindo. The Agreement does not

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mention the sale consideration amount and the sale price will be determined by the merchant banker, to be appointed by the purchaser. The other agreement relates to a deposit agreement, whereunder, Aurobindo would lend a sum of Rs.100.00 crores as an inter-corporate deposit to KIHPL. The agreements contemplate that KIHPL would offer the shareholdings held by it in KSPL by executing a Share Pledge Agreement.

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(j) There is no due diligence of the KSPL and the purchaser was not aware of the financial strength of the company and the respondent No.2 herein/ de facto complainant does not know the net asset value of the Company and liabilities to determine the share purchase price; that he was simply asked to sign the Share Purchase Agreement and Deposit Agreement, on behalf of KIHPL agreeing to sell the shares for an unspecified sum and he has no other option and that itself demonstrates that the said Share Purchase Agreement is nothing but a product of fraud, cheating, extortion by use of fabricated document; that later the deposit amount of Rs.100.00 crores was remitted by RTGS on 10.07.2020 in favour of

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KIHPL. He protested against the valuation since the same does not represent true value of the shares, and the valuation procedure adopted is only to comply with the Income Tax Rules rather than arriving at the true value based on the net assets value, the profits earned by the company in the preceding years and the future earning capacity of the company, and the value would be not less than Rs.2,500 crores for 41.12% of shares. On that, A.1 stated that even payment of Rs.494 crores is only to enable legitimate transfer of shares and reminded him of the consequences of refusal i.e. arrest of him and his family members, besides stalling his other business. Hence, he had no other option except to sign the agreement in the manner suggested by them. On 03.09.2020, an Addendum to the Share Purchase Agreement was executed, signed by him, whereunder he agreed to transfer 41.12% of shares in KSPL for a consideration of Rs.494 crores, @ Rs.229.42 ps, per share of Rs.10/-, and the purchaser paid Rs.100 crores already as purchase consideration under deposit agreement, but

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not as sale consideration of purchase of shares.

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Thereafter, petitioner/A.1 and Sarathchandra Reddy took him to the Chief Minister, who did not listen to his protest and asked to follow that is said by petitioner/A.1. The balance amount of Rs.394 crores was paid to KIHPL on 09.02.2021 and thereupon necessary share transfer documents were executed and accordingly shares were transferred in favour of Aurobindo, which became shareholder in place of KIHPL. The same is done in harried manner, without obtaining approval of the lenders i.e. Axis Bank and Bank of India Limited, and the lenders objected the same and red-flagged the company, which debars it from approaching any banker for credit facilities. At the instance of petitioner/A.1, GoAP issued G.O.Ms.No.17, Infrastructure and Investments (Ports) Department, dated 24.12.2020, approving for transfer of shares in favour of Aurobindo. The bargain was not limited to KSPL, but also in respect of shareholding of KSEZ. He was called again to sign agreement in respect of KSEZ on 12.10.2020 and the consideration was fixed at Rs.12 crores, which was paid by way of cheque dated 31.03.2021, and on 03.07.2021, transfer of shares was

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completed and Aurobindo became shareholder in KSEZ to the extent of 48.74% shares for just Rs.12.00 crores. The shareholding of 48.74% was offered for sale to GMR for a sum of Rs.400 crores, but he was paid only Rs.12.00 crores. Later, Aurobindo acquired the balance of stake of GMR group and thereby it became 100% share holder in KSEZ. By virtue of transfer of KSEZ, M/s. Kakinada Gateway Ports Limited, which is subsidiary of KSEZ, also stood transferred to Aurobindo by virtue of its acquisition of KSEZ. The share sale and purchase agreement between his group and Aurobindo is a part of fraud, coercion based on fabricated document and employed by petitioner/A.1 in collusion with Aurobindo. Hence, the report.

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Learned senior counsel Sri T.Niranjan Reddy,

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appearing on behalf of Sri G.Venkat Reddy, learned counsel for the petitioner submitted that the petitioner is nothing to do with the alleged offences, and he, being son of a sitting Member of Parliament (Rajya Sabha), and a close relative of the then Chief Minister of Andhra

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Pradesh, has been falsely implicated in the present case with an ulterior motive. The learned senior counsel further submitted that there is inordinate delay of four years and six months in lodging the present report from the alleged period of offence, and the delay raises any amount of doubt and the report is an after-thought, influenced by extraneous considerations, including political motives.

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The learned senior counsel further submitted that on a perusal of the report, it goes to show that Auditors, including M/s. PKF Sridhar & Santhanam LLP (for short, ‘PKF’) and M/s. KROLL India, were accused of fabricating reports by alleging revenue suppression, however, 2^nd respondent/defacto complainant acknowledges that the final audit findings, reducing the revenue short fall to Rs.9.03 crores, were accepted by KSPL; that there is contradiction in validating their conclusions and on the other hand accusing the auditors would certainly affect the credibility of accusations. The learned senior counsel further submitted that GMR group initially agreed to purchase the shares at a much higher valuation, but it

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does not explain as to why the said agreement was not pursued; that it is further not clarified whether the agreement with GMR was abandoned due to the alleged coercion, and this aspect would create any amount of ambiguity as to the defacto complainant’s assertion that the transaction with Aurobindo was forced upon him.

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The learned senior counsel further submits that the allegation is that the defacto complainant had consistently paid revenue share to the GoAP without any discrepancies as verified by regular auditors, and at the same time, it is alleged that the accused threatened him by citing fabrication of documents and demanded Rs.1,000 crores for revenue shortfalls. According to him, these two assertions are self-contradictory. The learned senior counsel further submits that the defacto complainant claims that his shares were worth Rs.2500 crores, yet he also acknowledges that under an agreement with GMR, the valuation of 48.74% shares was only Rs.400 crores, and these two inconsistencies in the valuation figures lack logical or factual basis. According to the learned senior counsel, if really the worth of the shares was Rs.2500

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crores, there is no reason as to why the defacto complainant negotiated with GMR at a much lower valuation. According to him, the glaring inconsistency demonstrates lack of coherence in the report.

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The learned senior counsel further submitted that an offence punishable under Section 111 BNS would not be applicable to the petitioner herein. According to him, the said Section addresses serious and repeat offences that threaten public safety and order. He relied on a decision in Ali Akbar v. State of Kerala rep. by Public Prosecutor & another¹ .

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The learned senior counsel also relied on decisions - (i) in Siddharam Satlingappa Mhetre v. State of Maharashtra & others,² wherein it is held thus:

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(paragraph 8)

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“8. Section 438 of the Code of Criminal Procedure, 1973 reads as under:

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“438. Direction for grant of bail to person apprehending arrest .—(1) Where any person has reason to believe that he may be arrested on accusation of having committed a non-bailable offence, he may apply to the High Court or the Court of Session for a direction under this section

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1 2024 SCC OnLine Ker 4689

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2 (2011) 1 SCC 694

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that in the event of such arrest he shall be released on bail; and that court may, after taking into consideration, inter alia, the following factors, namely:

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( i ) the nature and gravity of the accusation;

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( ii ) the antecedents of the applicant including the fact as to whether he has previously undergone imprisonment on conviction by a court in respect of any cognizable offence;

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( iii ) the possibility of the applicant to flee from justice; and

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( iv ) where the accusation has been made with the object of injuring or humiliating the applicant by having him so arrested,

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either reject the application forthwith or issue an interim order for the grant of anticipatory bail:

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Provided that, where the High Court or, as the case may be, the Court of Session, has not passed any interim order under this sub-section or has rejected the application for grant of anticipatory bail, it shall be open to an officer in charge of a police station to arrest, without warrant the applicant on the basis of the accusation apprehended in such application.

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(1-A) Where the court grants an interim order under sub-section (1), it shall forthwith cause a notice being not less than seven days notice, together with a copy of such order to be served on the Public Prosecutor and the Superintendent of Police, with a view to give the Public Prosecutor a reasonable opportunity of being heard when the application shall be finally heard by the court.

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(1-B) The presence of the applicant seeking anticipatory bail shall be obligatory at the time of final hearing of the application and passing of final order by the court, if on an application made to it

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by the Public Prosecutor, the court considers such presence necessary in the interest of justice.

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(2) When the High Court or the Court of Session makes a direction under sub-section (1), it may include such conditions in such directions in the light of the facts of the particular case, as it may think fit, including—

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( i ) a condition that the person shall make himself available for interrogation by a police officer as and when required;

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( ii ) a condition that the person shall not, directly or indirectly, make any inducement, threat or promise to any person acquainted with the facts of the case so as to dissuade him from disclosing such facts to the court or to any police officer;

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( iii ) a condition that the person shall not leave India without the previous permission of the court;

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( iv ) such other condition as may be imposed under sub-section (3) of Section 437, as if the bail were granted under that section.

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(3) If such person is thereafter arrested without warrant by an officer in charge of a police station on such accusation, and is prepared either at the time of arrest or at any time while in the custody of such officer to give bail, he shall be released on bail; and if a Magistrate taking cognizance of such offence decides that a warrant should issue in the first instance against that person, he shall issue a bailable warrant in conformity with the direction of the court under sub-section (1).”

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and (ii) in Shri Gurbaksh Singh Sibbia & others v.

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State of Punjab³ , wherein it is held thus: (paragraphs 26 and 31)

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“26. We find a great deal of substance in Mr Tarkunde's submission that since denial of bail amounts to deprivation of personal liberty, the court should lean against the imposition of unnecessary restrictions on the scope of Section 438, especially when no such restrictions have been imposed by the legislature in the terms of that section. Section 438 is a procedural provision which is concerned with the personal liberty of the individual, who is entitled to the benefit of the presumption of innocence since he is not, on the date of his application for anticipatory bail, convicted of the offence in respect of which he seeks bail. An over-generous infusion of constraints and conditions which are not to be found in Section 438 can make its provisions constitutionally vulnerable since the right to personal freedom cannot be made to depend on compliance with unreasonable restrictions. The beneficent provision contained in Section 438 must be saved, not jettisoned. No doubt can linger after the decision in Maneka Gandhi [ Maneka Gandhi v. Union of India , (1978) 1 SCC 248] , that in order to meet the challenge of Article 21 of the Constitution, the procedure established by law for depriving a person of his liberty must be fair, just and reasonable. Section 438, in the form in which it is conceived by the legislature, is open to no exception on the ground that it prescribes a procedure which is unjust or unfair. We ought, at all costs, to avoid throwing it open to a Constitutional challenge by reading words in it which are not to be found therein.

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31. In regard to anticipatory bail, if the proposed accusation appears to stem not from motives of

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3 (1980) 2 SCC 565

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furthering the ends of justice but from some ulterior motive, the object being to injure and humiliate the applicant by having him arrested, a direction for the release of the applicant on bail in the event of his arrest would generally be made. On the other hand, if it appears likely, considering the antecedents of the applicant, that taking advantage of the order of anticipatory bail he will flee from justice, such an order would not be made. But the converse of these propositions is not necessarily true. That is to say, it cannot be laid down as an inexorable rule that anticipatory bail cannot be granted unless the proposed accusation appears to be actuated by mala fides; and, equally, that anticipatory bail must be granted if there is no fear that the applicant will abscond. There are several other considerations, too numerous to enumerate, the combined effect of which must weigh with the court while granting or rejecting anticipatory bail. The nature and seriousness of the proposed charges, the context of the events likely to lead to the making of the charges, a reasonable possibility of the applicant's presence not being secured at the trial, a reasonable apprehension that witnesses will be tampered with and “the larger interests of the public or the State” are some of the considerations which the court has to keep in mind while deciding an application for anticipatory bail. The relevance of these considerations was pointed out in State v. Captain Jagjit Singh [AIR 1962 SC 253 : (1962) 3 SCR 622 : (1962) 1 Cri LJ 216] , which, though, was a case under the old Section 498 which corresponds to the present Section 439 of the Code. It is of paramount consideration to remember that the freedom of the individual is as necessary for the survival of the society as it is for the egoistic purposes of the individual. A person seeking anticipatory bail is still a free man entitled to the presumption of innocence. He is willing to submit to restraints on his freedom, by the acceptance of conditions which the court may think fit to impose, in consideration of the assurance that if arrested, he shall be enlarged on bail.”

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Hence, he prays to grant anticipatory bail to the petitioner/A.1.

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On the other hand, learned Advocate General appearing on behalf of the respondent-State contended that the petitioner herein played a pivotal role and entered into conspiracy with co-accused in undervalued transfer of shares from KSPL and KSEZ to A.5. According to the learned Advocate General, it is the petitioner, who summoned the defacto complainant, to his house, and by producing fabricated document whereby liability against KSPL to a tune of Rs.1,000 crores, was identified in government special audits, the petitioner pressurized the defacto complainant to relinquish his 41.12% shares in KSPL and 48.74% shares in KSEZ by threatening that he would take legal action, initiate criminal cases and cause personal harm if he refuses to transfer the shares as demanded by him.

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The learned Advocate General further submitted that the accused presented fabricated report dated 30.03.2019 to the Government that KSPL caused loss to the

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Government to the tune of Rs.965.65 crores, and later, the defacto complainant agreed to sell the shares to A.5 because of the immense pressure, and after receiving the entire shares, A.5 again presented a revised report by using the government mechanism dated 20.07.2023 to the Government which shows the drastic reduction of loss to the Government to a tune of Rs.9.03 crores. The learned Advocate General, after taking this Court to the accusations contained in the report, submitted that in view of the gravity of the offences, it is essential that custodial interrogation of the petitioner is necessary. Hence, he prayed to dismiss the present petition.

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6. Learned senior counsel Sri Posani

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Venkateswarlu, appearing on behalf of Sri Javvadi Sarath Chandra, learned counsel for 2^nd respondent/defacto complainant, concurred with the submissions made by the learned Advocate General and further submitted that a prima facie case is made as against the petitioner herein as he, in collusion and conspiracy with A.4, brought into existence a fabricated document, and by virtue of the

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same, it can be safely inferred that an offence punishable under Section 467 IPC would attract as against the petitioner.

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Heard and perused the record.

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KSPL is a company registered under the

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provisions of the Companies Act and it is a concessionaire from the GoAP, to carry on business of KDWP. The company and the GoAP entered into a Concession Agreement dated 19.03.1999. According to the defacto complainant, the company made huge investments and developed KDWP and became a profit-making company. The total shareholdings of the company are 52,412,239 out of which the defacto complainant possesses 20 shares. The company is being managed by experts in the field, on professional management lines. The company made profits from FYs 2014-15 to 2019-2020.

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KSEZ is a company registered under the provisions of the Companies Act in the year 2003. KSEZ acquired 8320 acres of land in Ponnada, Mulapeta and Ramannapeta villages around Kakinada for setting up of

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SEZ and the Government of India also granted permission to set up multiproduct SEZ. The shareholders in the said company are M/s. Kakinada Infrastructure Holdings Private Limited (for short, ‘KIHPL’), M/s. Veda Infra Products (India) Private Limited and 2^nd respondent/ defacto complainant in personal capacity, altogether holding 48.74% shares, and the rest of the shareholding was by M/s. GMR SEZ and Ports Holdings Limited. KSEZ borrowed about Rs.2000 crores, by way of inter-corporate deposits or sub-debts from GMR Group, for the purpose of undertaking acquisition of land, development of infrastructure, etc. As GMR Group has substantial interest in addition to 51% of shareholding and to avoid liabilities arising out of the debt and not been able to earn any income from KSEZ, KVR Group desired to part with their shares, and after negotiations between GMR Group and group of 2^nd respondent/defacto complainant, it was agreed that GMR would pay Rs.400 crores for acquisition of his 48.74% of the shareholding and an agreement was executed by the parties on 22.10.2019.

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In the year 2019, after the General Elections, Sri Y.S.Jagan Mohan Reddy became the Chief Minister of the State of Andhra Pradesh. KSPL was not receiving cooperation from the Directors of the Port/AP Maritime Board in conduct of operations. The accusation against the petitioner/A.1 and others is that on 13.11.2019, the GoAP appointed A.4 for conducting special audits for PPP Ports, and the KSPL was called upon to furnish the entire data for the Financial Years ending 31.03.2015 to 31.03.2019. On 04.12.2019, the GoAP hired M/s. KROLL India, a Bombay based consulting firm, for conducting forensic audit in respect of KSPL. According to A.4, huge accounting irregularities were found by way of suppression of gross revenue and thereby depriving the government revenue share to a tune of Rs.1,000 crores during the Financial Years 2014-15 to 2018-19. It is further alleged that the petitioner, in collusion with other accused, forcibly made the petitioner to transfer 41.12% share in KSPL for Rs.494.00 crores and 48.74% share in KSEZ for Rs.12.00 crores, to A.5. It is further alleged by the defacto complainant that the true market value of the

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same, being approximately Rs.2500 crores and Rs.1109 crores. The main accusation as against the petitioner is that he acted as a principal intermediary, causing threats on behalf of other accused. It is alleged that the petitioner threatened the defacto complainant in such a way that refusal to accept the demand would result in a spate of criminal cases, vigilance inquiries, arrests and harassment of him and his family.

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According to the learned senior counsel Sri T.Niranjan Reddy appearing for the petitioner, the petitioner is nothing to do with the alleged transactions. The only accusation that has been made as against the petitioner is that he is alleged to have threatened the defacto complainant about 4 ½ years prior to lodging the report. Even according to the said accusation, no offence would be made out as against the petitioner, as alleged by the defacto complainant.

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Insofar as KSPL is concerned, A.5 appears to have purchased shares for a sum of Rs.494.00 crores in the year 2021. According to defacto complainant, value of

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the 41.12% shares would be not less than Rs.2500 crores. In order to come to such a conclusion, there is absolutely no evidence that is forthcoming, as to how the value could be fixed at Rs.2500 crores. Irrespective of the said fact, the transaction is between the defacto complainant and A.5 and there is absolutely no accusation as against the petitioner that by virtue of the said transaction, the petitioner has been monetarily benefited. It is pertinent to mention here that the defacto complainant came to the conclusion, basing on the report submitted by one M/s. Manohar Choudhary and Associates, Chartered Accountants and the equity shares were valued on 31.03.2020. The defacto complainant is not disputing the share value fixed, but is claiming that the value of the shares would be around Rs.2500 crores.

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At this stage, the learned Advocate General submitted that the petitioner, in collusion and conspiracy with A.5, inflated the figures to a tune of Rs.1000 crores and by virtue of the same, he is said to have threatened the defacto complainant. To come to such a conclusion, it

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is essential that there should be a consensus ad idem between the petitioner and A.4. This Court perused the contents of the police report. Nowhere it is alleged that the petitioner had a meeting with A.4 or as to when they met and no specific date has been mentioned. Apart from the same, when the petitioner is not a beneficiary in the aforesaid transactions, prima facie question of petitioner inflating the figures, as alleged, in collusion with A.4, does not arise.

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In respect of KSEZ, it is alleged that there was an agreement for selling 48.74% of shares of KSEZ to GMR for Rs.400 crores, whereas the same has been knocked away by A.5 for Rs.12.00 crores. The learned senior counsel appearing on behalf of the petitioner submits that the shares in KSEZ were sold along with debt to GMR, and the total value, including the debt, was determined at Rs.1684 crores. The learned senior counsel further submitted that the petitioner is no way connected with the entire transaction of the audit report. He further stated that on 20.04.2021, a letter was addressed by the

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Chief Financial Officer of the KSPL and the same would

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clinchingly establish that the said letter was addressed by the Chief Financial Officer for reduction of the

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quantification from Rs.965 crores to Rs.9.03 crores.

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This Court perused the entire record. The

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accusation as against the petitioner that he is alleged to have inflated the figures in the audit report in collusion with A.4 and by virtue of the same, he is said to have threatened the defacto complainant. Except the said accusation, it is not a case of the prosecution that because of the same, the petitioner has been benefited.

¶124

The learned Advocate General submitted that

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the accusation is that the petitioner, along with A.4, is alleged to have made a false document and the said document has been prepared by A.4 in collusion with the petitioner, which is punishable under Section 467 IPC. According to him, the petitioner, along with A.4, inflated the figures and by virtue of the same, the petitioner threatened the defacto complainant to part with the shares.

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On this aspect, the learned senior counsel Sri Posani Venkateswarlu, appearing on behalf of 2^nd respondent/defacto complainant relied on a decision in Mohammed Ibrahim & others v. State of Bihar & another,⁴ wherein it is held thus: (paragraphs 13 and 14)

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“13. The condition precedent for an offence under Sections 467 and 471 is forgery. The condition precedent for forgery is making a false document (or false electronic record or part thereof). This case does not relate to any false electronic record. Therefore, the question is whether the first accused, in executing and registering the two sale deeds purporting to sell a property (even if it is assumed that it did not belong to him), can be said to have made and executed false documents, in collusion with the other accused.

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14. An analysis of Section 464 of the Penal Code shows that it divides false documents into three categories:

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1 . The first is where a person dishonestly or fraudulently makes or executes a document with the intention of causing it to be believed that such document was made or executed by some other person, or by the authority of some other person, by whom or by whose authority he knows it was not made or executed.

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2 . The second is where a person dishonestly or fraudulently, by cancellation or otherwise, alters a document in any material part, without lawful authority, after it has been made or executed by either himself or any other person.

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3 . The third is where a person dishonestly or fraudulently causes any person to sign, execute or

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4 (2009) 8 SCC 751

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alter a document knowing that such person could not by reason of ( a ) unsoundness of mind; or ( b ) intoxication; or ( c ) deception practised upon him, know the contents of the document or the nature of the alteration.

¶136

In short, a person is said to have made a “false document”, if ( i ) he made or executed a document claiming to be someone else or authorized by someone else; or ( ii ) he altered or tampered a document; or ( iii ) he obtained a document by practising deception, or from a person not in control of his senses.”

¶137

The learned senior counsel submitted, by relying on the provision Section 464 IPC, that a case would be made out against the petitioner for the offence punishable under Section 467 IPC.

¶138

Section 467 IPC deals with ‘forgery of valuable security, will, etc.’. According to the said Section, whoever forges a document which purports to be a valuable security or a will, or an authority to adopt a son, or which purports to give authority to any person to make or transfer any valuable security, or to receive the principal, interest or dividends thereon, or to receive or deliver any money, movable property, or valuable security, or any document purporting to be an acquittance or

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receipt acknowledging the payment of money, or an acquittance or receipt for the delivery of any movable property or valuable security, shall be punished with the sentence mentioned therein. Section 463 IPC defines ‘forgery’. Section 464 IPC deals with ‘making a false document’. A person is said to have made a ‘false document’, if he made or executed a document claiming to be someone else or authorized by some else or he altered or tampered a document, etc.

¶141

It is pertinent to mention here that it is the case of the defacto complainant that the said report was prepared by the Auditor himself. In such a case, whether the report has been brought into existence as authorized by someone else, is not the accusation that has been made as against the petitioner herein. Prima facie, the aforesaid provision would not be applicable to the petitioner herein because of the reason that there is no allegation of either tampering or altering of the Auditor’s report nor the said report has been obtained by deception. When once the defacto complainant categorically stated in

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the report that it is the Auditor, who prepared the report, the question of forgery would not arise. In order to attract the offence under Section 464 IPC, it is imperative that a false document is made and it is the accused person who is the maker of the same. It is not the case of either the prosecution or the defacto complainant that the said document has been forged. In the absence of it, it can safely be inferred that prima facie the petitioner is not liable for the offence of forgery or preparing a false document. In view of the said reasons, the aforesaid contention raised by the learned senior counsel is not sustainable.

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It is the further submission of the learned

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senior counsel appearing for 2^nd respondent/defacto complainant that a preliminary inquiry was conducted by police basing on the report given by 2^nd respondent/ defacto complainant during September, 2024. A perusal of the First Information Report and the report lodged by 2^nd respondent/defacto complainant, would clearly establish that the report was lodged to police on

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02.12.2024. Prior to 2.12.2024, no complaint was

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pending with the police. It is not known as to how the police would conduct a preliminary inquiry without there being any complaint. This Court is of the opinion that when once the report was lodged to police at a belated stage i.e. after lapse of 4 ½ years, police are supposed to conduct a preliminary inquiry. As rightly contended by the learned senior counsel appearing on behalf of the petitioner, without there being a report before police, police conducting a preliminary inquiry, as contended on behalf of 2^nd respondent/defacto complainant, throws any amount of doubt with regard to the way the investigation has been carried on.

¶149

To sum up, right from Shri Gurbaksh Singh Sibbia & others v. State of Punjab case (3 supra) to Satender Kumar Antil v. CBI⁵ case, the Hon’ble Supreme Court categorically held that the beneficial provision contained in Section 438 CrPC must be saved but not jettisoned. It is of paramount consideration to remember that the freedom of the individual is as necessary for the

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5 (2024) 9 SCC 198

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survival of the society as it is for the egoistic purposes of the individual.

¶153

The only accusation that has been made as against the petitioner is that he is alleged to have threatened the defacto complainant and by virtue of the same, shares have been transferred to A.5 at a throw away price. The present report has been filed after lapse of 4 ½ years of the alleged threat.

¶154

Learned senior counsel appearing on behalf of the petitioner submitted that he has reliably learnt through papers that A.5 transferred the said shares in favour of the defacto complainant. The learned senior counsel Sri Posani Venkateswarlu, appearing on behalf of 2^nd respondent/defacto complainant concurred with the said submission made by the learned senior counsel appearing on behalf of the petitioner. Apart from the same, quite surprisingly, A.5 has not filed any anticipatory bail application before this Court. In respect of A.4, a quash petition has been filed by A.4 before this Court and this Court was given to understand that an order has been passed by this Court directing not to take

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any coercive steps as against A.4. The alleged accusation relates to an incident occurred 4 ½ years back and there is no plausible explanation offered, as to why so much of delay had occurred. The explanation offered for the delay in lodging the report is that because of threat perception to the defacto complainant, he could not file the report within reasonable time, and now, as regime has changed, he preferred the present report on 02.12.2024. This argument cannot be accepted for the reason that the defacto complainant is also one of the top notch business persons, and if he is threatened, there is no reason as to why he has not filed any private complaint before the Court. There is absolutely no explanation for the same. The petitioner is son of a Member of Parliament (Rajya Sabha). There is no flight risk. The question of the petitioner absconding does not arise as he has fixed abode. In view of the aforesaid facts and circumstances, this Court is inclined to provide pre-arrest protection to the petitioner, however, on certain conditions.

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Therefore, in the event of his arrest in the

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aforesaid crime, the petitioner shall be released on bail in his executing a personal bond for a sum of Rs.25,000/with two sureties each for the like sum, to the satisfaction of the arresting officials.

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The petitioner shall not, directly or indirectly, make any inducement, threat or promise to any person acquainted with the facts of the case so as to dissuade him from disclosing such facts to the Court or to any police officer.

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The petitioner shall co-operate with the investigating agency and attend before it whenever called.

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