Dismissed

Narayana Rao v. Raghavendra Udupa

Karnataka HC17 Sept 2013CRL.RP/398/2013

Case brief

AI extract

What is this about?

High Court of Karnataka dismissed a criminal revision petition challenging the discharge of an accused in a cheating case. The Court held that the issue of whether the accused ceased to be a director before the offences was a factual question for trial and found sufficient grounds to presume the accused committed the offence.

What did the court decide?

Criminal Revision Petition dismissed; order of reversal by the Revisional Court affirmed; accused kept on trial.

Narayana Rao Vs Raghavendra Udupa — Cheating and Forgery | Karnataka HC (2013)

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IN THE HIGH COURT OF KARNATAKA AT BANGALORE DATED THIS THE 17^TH DAY OF SEPTEMBER 2013

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BEFORE

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THE HON’BLE MR.JUSTICE N.ANANDA

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CRIMINAL REVISION PETITION NO.398 OF 2013

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BETWEEN:

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NARAYANA RAO S/O RAGHAVENDRA ACHARYA, AGED ABOUT 87 YEARS, HOTEL DWARAKA, ANANDARAO CIRCLE, BANGALORE-560 009. ... PETITIONER.

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(By Sri. B ANAND, ADVOCATE)

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AND:

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1.RAGHAVENDRA UDUPA S/O ANANDARAM UDUPA, AGED ABOUT 42 YEARS, DHANAVANTARI CLINIC, 2ND MAIN, 5TH CROSS,NITTUVALLI NEW EXTENSION, DAVANAGERE-577 001.

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2.STATE OF KARNATAKA BY EXTENSION POLICE, DAVANAGERE-577 001. ... RESPONDENTS.

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(By Sri. S KRISHNA SWAMY, ADVOCATE FOR R1, SHRI VIJAYAKUMAR MAJAGE, HCGP FOR R2)

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THIS CRL.RP IS FILED U/S.397 R/W 401 CR.P.C PRAYING TO SET ASIDE THE ORDER PASSED BY THE PRL. S.J., DAVANAGERE IN CRL.RP.NO.47/12 AND CRL.RP.NO.62/12, DATED:14.3.13.

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THIS PETITION, COMING ON FOR ADMISSION, THIS DAY, THE COURT MADE THE FOLLOWING:

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O R D E R

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The petitioner is arrayed as Accused No.11 in

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C.C.No.1384/2006 registered for an offence punishable under

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Section 420 read with Section 34 of the Indian Penal Code, 1860 (for short ‘the IPC’).

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The petitioner, along with the other accused, had floated a company called “M/s. Yeshasvi Finance Company” in the year 1995, having its head office at Bangalore and branches

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in different places of the state, including one at Davanagere. M/s. Yeshasvi Finance Company, represented by its Directors, collected deposits from the public by holding false promises to pay interest at 15% per annum. On maturity, neither the principal amount nor the interest was paid to investors. One of

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the investors lodged the first information and on the basis of which, the Jurisdictional police took up investigation and submitted a final report against the petitioner and other Directors of the company, for offences punishable under Section 420 read with Section 34 of the IPC. The learned Magistrate accepted the plea of discharge of Accused Nos.2, 4 to 9 and 11 and discharged them. Therefore, the first informant (victim), as also the State, had filed revision petitions before the Jurisdictional Sessions Judge. The learned Sessions Judge has reconsidered the matter and has held that there are grounds to presume that the accused have committed offences punishable under Section 420 read with Section 34 IPC. The learned Sessions Judge, having regard to the scope of consideration of material under Section 239 and 240 Cr.P.C., has held that at the time of framing charges, there is no need for the court to weigh the pros and cons of all the implications of the materials and there is no need to sift the materials presented by the prosecution. The exercise at this stage should be confined to

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consider the police report and the documents to decide whether the allegations made against the accused are groundless, or whether there are grounds for presuming that the accused have committed the offences alleged against them.

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In the case on hand, it is not in dispute and cannot be

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disputed that the petitioner and other accused had floated a company under the name and style of M/s. Yeshasvi Finance Company. They had induced the public to invest their hard earned money by holding out false promises to pay higher rate of interest. The petitioner and other accused did not pay either the principal or the interest. The company was wound up for carrying on banking activities without the previous permission from the Reserve Bank of India. In my considered opinion, these materials disclosed from the investigation report, are sufficient to hold that there are grounds for presuming that the accused have committed the offences alleged against them.

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The learned counsel for the petitioner would submit

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that the petitioner (Accused No.11), had ceased to be Director

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of the Company with effect from 12.11.2000, and as on the date

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of the alleged offence, he was not the Director.

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The learned counsel for the petitioner also relied on the

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judgment of the Supreme Court reported in 2011 (1) AIR KAR 236 in the case of M.A.A. ANNAMALAI VS. STATE OF

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KARNATAKA, to contend that a Director who has resigned before the alleged offences, cannot be held vicariously liable.

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In the afore-stated case, the company was operating under the licence given by the Reserve Bank of India. The Supreme Court has held that, the lawful activity undertaken by company of investing in mutual funds being duly approved by the Reserve Bank of India, cannot fall under the mischief of the

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1978 Act.

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In the case on hand, the company to carry on banking

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activities had not obtained permission from the Reserve Bank of India. The company was wound up for having indulged in banking activities, without permission of the Reserve Bank of India.

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The contention of the petitioner that he had ceased to

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be a Director from a particular date, by tendering resignation, is a question of fact which the petitioner is required to prove during the trial. In the circumstances, the learned Trial Judge was not justified in discharging the accused and the learned Judge of the Revisional Court was justified in reversing the order of the Trial Court. Therefore, I do not find any reason to interfere with the impugned order. In the result, I pass the following order:

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The revision petition is dismissed.

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Sd/JUDGE

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Narayana Rao v. Raghavendra Udupa

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Narayana Rao v. Raghavendra Udupa

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