Dismissed

Sri Ratan Babulal Lath v. State of Karnataka

Karnataka HC10 May 2022CRL.P/1367/2022

Case brief

AI extract

What is this about?

Petition under Section 482 Cr.P.C. seeking quashing of proceedings and of the order taking cognizance for offences under the Prevention of Corruption Act and the IPC arising out of a TDR transaction. The court held the cognizance order showed application of mind and that disputed questions of fact required trial, and rejected the petition.

What the court decided

AI extract

Sri Ratan Babulal Lath Vs State of Karnataka — Corruption | Karnataka HC (2022)

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IN THE HIGH COURT OF KARNATAKA AT BENGALURU

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DATED THIS THE 10^TH DAY OF MAY, 2022

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BEFORE

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THE HON'BLE MR. JUSTICE M. NAGAPRASANNA CRIMINAL PETITION No.1367 OF 2022

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BETWEEN:

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SRI RATAN BABULAL LATH S/O SRI BABULAL LATH AGE 61 YEARS R/O NO.35/1, SAINT MARKS ROAD RICHMOND TOWN BENGALURU – 560 001.

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... PETITIONER

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(BY SRI ASHWIN VAISH, ADVOCATE FOR SRI GAUTHAM S.BHARADWAJ, ADVOCATE)

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AND:

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STATE OF KARNATAKA THROUGH ANTI-CORRUPTION BUREAU KHANIJA BHAVAN RACE COURSE ROAD BENGALURU CITY – 560 001.

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... RESPONDENT

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(BY SRI P.N.MANMOHAN, ADVOCATE)

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THIS CRIMINAL PETITION IS FILED UNDER SECTION 482 CR.P.C., PRAYING TO ISSUE AND APPROPRIATE ORDER DIRECTING THE QUASHING OF ORDER DATED 03.08.2020 TAKING COGNIZANCE UNDER SECTION 13(1)(c)(d) R/W 13(2) OF PREVENTION OF CORRUPTION ACT AND SECTION 420, 409, 468, 471, 120(B) R/W 34 OF IPC PASSED IN SPL.C.C.NO.318/2020 ARISING OUT OF CR.NO.24/2019 BY POLICE STATION ACB, BY THE

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COURT OF XXIII ADDITIONAL CITY CIVIL AND SESSIONS JUDGE AND SPECIAL JUDGE FOR PREVENTION OF CORRUPTION ACT, BENGALURU CITY (ANNEXURE-C) AND CONSEQUENTLY QUASH THE ENTIRE PROCEEDINGS AGAINST THE PETITIONER HEREIN.

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THIS CRIMINAL PETITION HAVING BEEN HEARD AND RESERVED FOR ORDERS ON 05.03.2022, COMING ON FOR PRONOUNCEMENT THIS DAY, THE COURT MADE THE FOLLOWING:-

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ORDER

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Petitioner/accused No.11 in Special Case No.318 of 2020 is before this Court calling in question entire proceedings registered for offences punishable under Sections 420, 409, 468, 471, 120-B read with Section 34 of the IPC and under Section 13(1)(c)(d) r/w Section 13(2) of the Prevention of Corruption Act, 1988 (‘the Act’ for short) in Crime No.24 of 2019 against all the accused.

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Heard Sri Ashwin Vaish, learned counsel for Sri Gautam S.Bharadwaj, learned counsel for the petitioner and Sri P.N.Manmohan, learned counsel for the respondent.

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Brief facts leading to the filing of the present petition, as borne out from the pleadings, are as follows:-

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On 10-04-2003 one N.Muniraju and N.Srinivas became owners of property in Sy.No.9 measuring 8.08 guntas of Kowdenahalli Village, K.R.Puram Hobli, Bangalore East Taluk and revenue records and other necessary ownership details also claimed to be standing in the name of the said persons. On 18.01.2005 amended Section 14B of the Karnataka Town and Country Planning Act permitted Bruhat Bengaluru Mahanagara Palike (‘BBMP’ for short) to grant Transferable Development Rights (‘TDR’) certificate against voluntary surrender of land by a citizen for public purpose.

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On 20-12-2014 a General Power of Attorney (‘GPA’ for short) was executed by the aforesaid owners of land measuring 7114.76 sq.mts. in favour of one Sri B.S. Surendranath. The purpose of GPA being executed was for the purpose of execution of relinquishment deed in favour of BBMP to obtain Development Rights Certificate (‘DRC’ for short) from the BBMP and sell the TDR to prospective buyers. On 20-01-2014, in furtherance thereof, the owners also executed an agreement to sell in favour

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of one Suresh K and Gautham K who were confirming parties to the GPA executed as afore-quoted.

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On 10-03-2014 the GPA holders execute a relinquishment deed qua 301 sq.mts. in favour of the BBMP to secure TDR against surrendered property for public purpose. On 1-04-2014, TDR is issued by the BBMP to the said aforesaid owners in terms of DRC in lieu of surrendering of the properties. On 16-05-2014 a deed of transfer of development is executed by the owners in favour of M/s Sri Nakoda Constructions Limited, whose Director is the petitioner. Therefore, TDR was issued by the BBMP in favour of the petitioner. On 11.04.2019 a complaint is registered against several officers of the BBMP which becomes a crime in Crime No.13 of 2019 alleging offences punishable under Section 13(1)(a) read with Section 13(2) of the Act and Sections 420, 465, 468, 471, 120B of the IPC in respect of Sy.No.132 of Kowdenahalli Village, K.R.Puram Hobli, Bangalore East Taluk. This FIR did not concern the petitioner.

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On 23-07-2019 a second FIR is registered in Crime No.24 of 2019 by the Anti Corruption Bureau which pertained to Sy.No.9 of Kowdenahalli Village, K.R.Puram Hobl, Bangalore East Taluk which land concerns the present petition. The petitioner is not named in the FIR. Police, after investigation, file a charge sheet in Crime No.24 of 2019 on 15-06-2020 against 11 accused. It is here the name of the petitioner figures as accused No.11. On filing of the charge sheet, the learned Sessions Judge takes cognizance for the offences punishable under the Act and the IPC as afore-quoted. It is at that juncture, the petitioner has knocked the doors of this Court in the subject petition.

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The learned counsel appearing for the petitioner would vehemently argue and contend that the petitioner is no way concerned with the entire transaction as he is only a Director of the Company – M/s Sri Nakoda Construction Limited and is not the recipient of any TDR rights in the entire process. He has been wrongly shown as a TDR agent. The learned counsel would

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strenuously contend that the order taking cognizance suffers from want of application of mind as the order taking cognizance is vague and bald. He would place reliance upon the judgments of the Apex Court in the case of SUNIL BHARATI MITTAL v. CBI

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– (2015) 4 SCC 609 and SUSHIL SETHI v. STATE OF ARUNACHAL PRADESH – (2020) 3 SCC 240 to buttress his submission on the aforesaid issue of the order of cognizance suffering from non-application of mind. He would further contend that even the TDR rights that are received are in favour of M/s Valmark Reality Holding Private Limited or in favour of M/s Sri Nakoda Construction Limited. The petitioner is no doubt a Director of the Company but the Company itself is not arrayed as a party, notwithstanding the fact that he is not a signatory to any document which forms the basis of the entire case. He would place reliance upon the judgment of the Apex Court in the case of MAKSUD SAIYED v. STATE OF GUJARAT– (2008) 5 SCC 668 to buttress his submission on the said issue.

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On the other hand, the learned counsel appearing for the respondent would vehemently refute the submissions and contends that the order taking cognizance does bear application of mind and the judgment in the case of SUNIL BHARTI MITTAL (supra) is later considered by the Apex Court in the case of PRADEEP S.WODEYAR v. STATE OF KARNATAKA – 2021 SCC OnLine SC 1140 wherein it is clearly held that the learned Magistrate while taking cognizance on the charge sheet need not pass an elaborate order.

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Insofar as the issue whether the petitioner is a TDR agent or otherwise is a matter of trial as amounts are received into the accounts of the petitioner or the companies. It is a huge racket or a TDR scam which he would call that shook the BBMP and resulted in loss of hundreds of crores. He would submit that there are serious disputed questions of fact and technicalities cannot override such disputed questions of fact which would certainly require trial. He would seek dismissal of the petition.

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I have given my anxious consideration to the submissions made by the respective learned counsel and perused the material on record.

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The afore-narrated facts are not in dispute. The issue with regard to the amendment to the Town and Country Planning Act and the TDR rights becoming misuse of surrendering of lands for public purposes and development rights being accorded to such land owners is a matter of record. Transactions of several crores have happened in the case at hand. Agreements are entered into between the parties and several amounts are drawn. What is required to be noticed is, to whom the Development Right Certificate is executed which has become the bone of contention.

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The Development Right Certificate which is appended to the petition is issued pursuant to a deed of transfer of development rights on 16-05-2014. To the said deed of Transfer of Development Rights the petitioner who is the Director of the

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Company M/s Sri Nakoda Construction Limited is the purchaser. Confirming parties are one Suresh. K and Gautham K. Vendors are the original owners – N.Muniraju and N.Srinivas. The link in the events would travel this way.

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Sri N.Muniraju and Sri N.Srinivas execute a GPA in favour of one B.S. Surendranath. Sri B.S.Surendranath on the strength of the said GPA as well as development rights sells development rights in favour of M/s Sri Nakoda Constructions Limited. One Sri K.Suresh and Sri K. Gatham, as stated above, were confirming parties to the deed of transfer. They had no role to play either as a vendor or a purchaser. The vendors are N. Muniraju and N.Srinivas and purchasers are M/s Sri Nakoda Constructions Limited. The document witnesseth the

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transaction to be in the following manner:

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“NOW, THEREFORE, THIS DEED WITNESSETH AS FOLLOWS:

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A sum of Rs.4,88,21,790/- (Rupees Four Crores Eighty Eight Lakhs Twenty One Thousand Seven Hundred and Ninty Only) ( “Sale Consideration”) has been paid as Consideration for purchase of the TDR in favor of

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Confirming Party No.1 and Confirming party No.2 for which Vendors do not have any objection:

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The said amount of Rs.4,88,21,790/- (Rupees Four Crores Eighty Eight Lakhs Twenty One Thousand Seven Hundred and Ninty Only) is paid as detailed below:

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a) Rs.25,00,000/- (Rupees Twenty Five Lakhs Only) vide cheque No.694767 dated 13.5.2014 drawn on Corporation Bank, M.G. Road, Branch, Bangalore. Drawn in favor of Sri Suresh K. confirming party No.1.

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b) Rs.40,00,000/- (Rupees Forty Lakhs Only) vide cheque No.694768 dated 13.5.2014 drawn on Corporation Bank, M.G. Road, Branch, Bangalore. Drawn in favor of Sri Suresh K. confirming party No.1.

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c) Rs.45,00,000/- (Rupees Forty Five Lakhs Only) vide cheque No.69477 dated 14.5.2014 drawn on Corporation Bank, M.G. Road, Branch, Bangalore. Drawn in favor of Sri Suresh K. confirming party No.1.

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d) Rs.40,00,000/- (Rupees Forty Lakhs Only) vide cheque No.694772 dated 14.5.2014 drawn on Corporation Bank, M.G. Road, Branch, Bangalore. Drawn in favor of Sri Suresh K. confirming party No.1.

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e) Rs.30,00,000/- (Rupees Thirty Lakhs Only) vide cheque No.694775 dated 15.5.2014 drawn on Corporation Bank, M.G. Road, Branch, Bangalore. Drawn in favor of Sri Suresh K. confirming party No.1.

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f) Rs.45,00,000/- (Rupees Forty Five Lakhs Only) vide cheque No.694776 dated 15.5.2014 drawn on Corporation Bank, M.G. Road, Branch, Bangalore. Drawn in favor of Sri Suresh K. confirming party No.1.

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g) Rs.19,10,895/(Rupees Nineteen Lakhs Ten Thousand Eight Hundred and Ninety Five Only) vide cheque No.694779 dated 16.5.2014 drawn on Corporation Bank, M.G. Road, Branch, Bangalore. Drawn in favor of Sri Suresh K. confirming party No.1.

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h) Rs.25,00,000/- (Rupees Twenty Five Lakhs Only) vide cheque No.694769 dated 13.5.2014 drawn on Corporation Bank, M.G. Road, Branch, Bangalore. Drawn in favor of Sri Gautham K. confirming party No.2.

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i) Rs.40,00,000/- (Rupees Forty Lakhs Only) vide cheque No.694770 dated 13.5.2014 drawn on Corporation Bank, M.G. Road, Branch, Bangalore. Drawn in favour of Sri Gautham K. confirming party No.2.

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j) Rs.45,00,000/- (Rupees Forty Five Lakhs only) vide cheque No.694773 dated 14.5.2014 drawn on Corporation Bank, M.G. Road Branch, Bangalore. Drawn in favour of Sri Gautham K. confirming party No.2.

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k) Rs.40,00,000/- (Rupees Forty Lakhs Only) vide cheque No.694774 dated 14.5.2014 drawn on Corporation Bank, M.G. Road Branch, Bangalore. Drawn in favor of Sri Gautham K. confirming party No.2.

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l) Rs.30,00,000/- (Rupees Thirty Lakhs Only) vide cheque No.694777 dated 15.5.2014 drawn on Corporation Bank, M.G. Road, Branch, Bangalore. Drawn in favor of Sri Gautham K. confirming party No.2.

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m) Rs.45,00,000/- (Rupees Forty Five Lakhs Only) vide cheque No.694778 dated 15.5.2014 drawn on Corporation Bank, M.G. Road Branch, Bangalore. Drawn in favor of Sri Gautham K. confirming party No.2.

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n) Rs.19,10,895/(Rupees Nineteen Lakhs Ten Thousand Eight Hundred and Ninth Five Only) vide cheque No.694780 dated 16.5.2014 drawn on Corporation Bank, M.G. Road, Branch, Bangalore. Drawn in favor of Sri Gautham K. confirming party No.2.”

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Cheques amounting to a few crores, as narrated hereinabove,

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are all issued in favour of the confirming parties. It is this disputed question of fact that would require a trial to be conducted and for the petitioner to come out clean.

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If the vendors have sold their right to M/s Sri Nakoda Constructions Limited, the cheques ought to have been issued in favour of M/s Sri Nakoda Constructions Limited. But, the BBMP has issued cheques in favour of confirming parties. If further probe is required to be made in the case at hand it would become an effort to fish evidence in a petition under Section 482 of the Cr.P.C. which the Apex Court clearly holds that it is not a

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permissible exercise that the High Court can take any exercise of its jurisdiction under Section 482 of the Cr.P.C. in the teeth of seriously disputed questions of fact. Reference being made to the judgment of the Apex Court in the case of KAPTAN SINGH v.

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STATE OF UTTAR PRADESH¹ wherein it has been held as follows:

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“9.1 . At the outset, it is required to be noted that in the present case the High Court in exercise of powers under Section 482 CrPC has quashed the criminal proceedings for the offences under Sections 147, 148, 149, 406, 329 and 386 IPC. It is required to be noted that when the High Court in exercise of powers under Section 482 CrPC quashed the criminal proceedings, by the time the investigating officer after recording the statement of the witnesses, statement of the complainant and collecting the evidence from the incident place and after taking statement of the independent witnesses and even statement of the accused persons, has filed the charge-sheet before the learned Magistrate for the offences under Sections 147, 148, 149, 406, 329 and 386 IPC and even the learned Magistrate also took the cognizance. From the impugned judgment and order [Radhey Shyam Gupta v. State of U.P., 2020 SCC OnLine All 914] passed by the High Court, it does not appear that the High Court took into consideration the material collected during the investigation/inquiry and even the statements recorded. If the petition under Section 482 CrPC was at the stage of FIR in that case the allegations in the FIR/complaint only are required to be considered and whether a cognizable offence is disclosed or not is required to be considered. However, thereafter when the statements are recorded, evidence is collected and the charge-sheet is filed after conclusion of the

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1 (2021) 9 SCC 35

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investigation/inquiry the matter stands on different footing and the Court is required to consider the material/evidence collected during the investigation. Even at this stage also, as observed and held by this Court in a catena of decisions, the High Court is not required to go into the merits of the allegations and/or enter into the merits of the case as if the High Court is exercising the appellate jurisdiction and/or conducting the trial. As held by this Court in Dineshbhai Chandubhai Patel [Dineshbhai Chandubhai Patel v. State of Gujarat, (2018) 3 SCC 104 : (2018) 1 SCC (Cri) 683] in order to examine as to whether factual contents of FIR disclose any cognizable offence or not, the High Court cannot act like the investigating agency nor can exercise the powers like an appellate court. It is further observed and held that that question is required to be examined keeping in view, the contents of FIR and prima facie material, if any, requiring no proof. At such stage, the High Court cannot appreciate evidence nor can it draw its own inferences from contents of FIR and material relied on. It is further observed it is more so, when the material relied on is disputed. It is further observed that in such a situation, it becomes the job of the investigating authority at such stage to probe and then of the court to examine questions once the charge-sheet is filed along with such material as to how far and to what extent reliance can be placed on such material.

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9.2. In Dhruvaram Murlidhar Sonar [Dhruvaram Murlidhar Sonar v. State of Maharashtra, (2019) 18 SCC 191 : (2020) 3 SCC (Cri) 672] after considering the decisions of this Court in Bhajan Lal [State of Haryana v. Bhajan Lal, 1992 Supp (1) SCC 335 : 1992 SCC (Cri) 426] , it is held by this Court that exercise of powers under Section 482 CrPC to quash the proceedings is an exception and not a rule. It is further observed that inherent jurisdiction under Section 482 CrPC though wide is to be exercised sparingly, carefully and with caution, only when such exercise is justified by tests specifically laid down in the section itself. It is further observed that appreciation of evidence is not permissible at the stage of

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quashing of proceedings in exercise of powers under Section 482 CrPC. Similar view has been expressed by this Court in Arvind Khanna [CBI v. Arvind Khanna, (2019) 10 SCC 686 : (2020) 1 SCC (Cri) 94] , Managipet [State of Telangana v. Managipet, (2019) 19 SCC 87 : (2020) 3 SCC (Cri) 702] and in XYZ [XYZ v. State of Gujarat, (2019) 10 SCC 337 : (2020) 1 SCC (Cri) 173] , referred to hereinabove.

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10. The High Court has failed to appreciate and consider the fact that there are very serious triable issues/allegations which are required to be gone into and considered at the time of trial. The High Court has lost sight of crucial aspects which have emerged during the course of the investigation. The High Court has failed to appreciate and consider the fact that the document i.e. a joint notarised affidavit of Mamta Gupta Accused 2 and Munni Devi under which according to Accused 2 Ms Mamta Gupta, Rs 25 lakhs was paid and the possession was transferred to her itself is seriously disputed. It is required to be noted that in the registered agreement to sell dated 27-10-2010, the sale consideration is stated to be Rs 25 lakhs and with no reference to payment of Rs 25 lakhs to Ms Munni Devi and no reference to handing over the possession. However, in the joint notarised affidavit of the same date i.e. 27-10-2010 sale consideration is stated to be Rs 35 lakhs out of which Rs 25 lakhs is alleged to have been paid and there is a reference to transfer of possession to Accused 2. Whether Rs 25 lakhs has been paid or not the accused have to establish during the trial, because the accused are relying upon the said document and payment of Rs 25 lakhs as mentioned in the joint notarised affidavit dated 27-10-2010. It is also required to be considered that the first agreement to sell in which Rs 25 lakhs is stated to be sale consideration and there is reference to the payment of Rs 10 lakhs by cheques. It is a registered document. The aforesaid are all triable issues/allegations which are required to be considered at the time of trial. The High Court has failed to notice and/or consider the material collected during the investigation.

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11. Now so far as the finding recorded by the High Court that no case is made out for the offence under Section 406 IPC is concerned, it is to be noted that the High Court itself has noted that the joint notarised affidavit dated 27-10-2010 is seriously disputed, however as per the High Court the same is required to be considered in the civil proceedings. There the High Court has committed an error. Even the High Court has failed to notice that another FIR has been lodged against the accused for the offences under Sections 467, 468, 471 IPC with respect to the said alleged joint notarised affidavit. Even according to the accused the possession was handed over to them. However, when the payment of Rs 25 lakhs as mentioned in the joint notarised affidavit is seriously disputed and even one of the cheques out of 5 cheques each of Rs 2 lakhs was dishonoured and according to the accused they were handed over the possession (which is seriously disputed) it can be said to be entrustment of property. Therefore, at this stage to opine that no case is made out for the offence under Section 406 IPC is premature and the aforesaid aspect is to be considered during trial. It is also required to be noted that the first suit was filed by Munni Devi and thereafter subsequent suit came to be filed by the accused and that too for permanent injunction only. Nothing is on record that any suit for specific performance has been filed. Be that as it may, all the aforesaid aspects are required to be considered at the time of trial only.

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14. In view of the above and for the reasons stated above, the impugned judgment and order [Radhey Shyam Gupta v. State of U.P., 2020 SCC OnLine All 914] passed by the High Court quashing the criminal proceedings in exercise of powers under Section 482 CrPC is unsustainable and the same deserves to be quashed and set aside and is accordingly quashed and set aside. Now, the trial is to be conducted and proceeded further in accordance with law and on its own merits. It is made clear that the observations made by this Court in the present proceedings are to be treated to be confined to the proceedings under Section 482 CrPC only and the trial

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court to decide the case in accordance with law and on its own merits and on the basis of the evidence to be laid and without being influenced by any of the observations made by us hereinabove. The present appeal is accordingly allowed.”

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In the light of the aforesaid judgment of the Apex Court, thrashing out of seriously disputed questions of fact can only be by a full blown proceeding. There is no document that is so impeachable or of that sterling quality that is placed before this Court warranting interference at this stage owing to peculiarity obtaining in the case at hand, more so, in the light of the law laid down by the Apex Court in the case of KAPTAN SINGH (supra).

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Insofar as submission of the learned counsel appearing

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for the petitioner that the order taking cognizance does not bear application of mind is concerned, it is germane to notice the order itself, which reads as follows:

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“ORDER

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Superintendent of Police, Anti Corruption Bureau, Bengaluru has submitted charge sheet against the accused Nos 1 to 7, 10 and 11 for the offence punishable under section 13(1)(c), (d), read

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with section 13(2) of the Prevention of Corruption Act and Sections 420, 409, 468, 471, 120(b) read with section 34 of IPC alleging that one Sri K.P.Ravikumar, Deputy Superintendent of Police, ACB Police Station, Bengaluru City (herein after referred to as the complainant) while conducting investigation of crime No.13/2019 had seized several documents from the BBMP and while examining the Development Rights Certificates (DRC) he found that one Sri.G.K.Krishnamurthy and his wife Venkatarajamma are the owners of a commercial complex constructed in Sy.No.9, but the TDR is issued illegally vide D.R.C.No.002961, LF No.99 in favour of N.Muniraju S/o Late Nagappa and Sri N.Srinivasa S/o Late Nagappa. Further the sketch in respect of Sy.No.9 of Kowdenahalli for which TDR is issued was prepared by Sri Gulappa, BBMP Surveyor (Retired), BBMP Division, Bengaluru was approved by the accused No.1, Assistant Executive Engineer, Executive Engineer etc. but on enquiry it was found that the said the applicant Sri N.Muniraju and N.Srinivas colluding with the accused persons committed criminal breach of trust. It is further alleged that the TDR applicant N.Muniraju and Sri N.Srinivas have purchased the property measuring East-Wet 75 feet and North-South 120 feet (8.08 guntas of land) in Sy.No.9 of Kowdenahalli village from Sri M.Narayanaswamy, Smt.Sarojamma and Smt.Uma on 9.4.2003 under a registered sale deed and later on 24.7.2003 sold to Sri Ravi Jangeer S/o Hanuman Janageer for Rs.9,90,000/- and in spite of the said sale, the RTC and revenue documents are standing in the name of N.Muniraj and N.Srinivas. Later, the TDR brokers namely Suresh Surendranath and others after coming to know that the said property will be acquired for the widening

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of the road, conspired with Sri Muniraj and N.Srinivas got the registered agreement from them after receiving Rs.25 lakhs by way of cheque. The accused No.1 and others inspected the said property and said N.Muniraju and Srinivas supressed the sale of the aforesaid property. Through no building is constructed in the said property i.e., Sy.No.9, the BBMP officials wrongly mentioned in the sketch that a building is situated in Sy.No.9 and the description of the building which was shown in the mahazar and sketch is actually situated at Sy.No.10 and thus the accused No.1 and others colluding with said Muniraju and Srinivas illegally got fixed the value of the property with building at Rs.1,26,27,798.72. The accused No.1 supressed the true facts of the case and recommended for issuance of DRC and also signed the note sheet along with the sketch prepared in this regard and misused his official position and hence, a complaint is made before the Dy.S.P. ACB by the complainant and on direction from the DyS.P. the complainant registered a crime in 24/2019 and the Investigating Officer after due investigation has submitted the charge sheet against the accused No1 to 7, 10 and 11.

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It is further stated in the charge sheet that there are several other public servants involved in this case but permission under section 17A of The Prevention of Corruption Act, 1988 has been sought with their competent authority and after obtaining permission, further investigation of the case would be carried on and additional report will be filed with respect to the newly added accused persons.

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After submission of this chargesheet, the Investigating Officer has submitted a report under

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section 173(8) stating that he is continuing investigation with respect to other accused against whom permission under section 17(A) of the Act has been obtained and hence prayed to stop the further proceedings of this case.

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I have perused the FIR, Complaint, Files 1 to 5, prosecution sanction order of accused No.1 and 2 issued by the Commissioner, Bruhath Bengaluru Mahanagara Palike, Bengaluru (accused No.3 to 7, 10 and 11 are private persons) statement of witnesses and other documents which prima-facie disclose the commission of the alleged offence by the accused No 1 to 7, 10 and 11. Accordingly, I pass the following:

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ORDER

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Cognizance for the offences punishable under section 13(1) (c), (d), read with section 13(2) of the Prevention of Corruption Act and Sections 420, 409, 468, 471, 120 (b) read with section 34 of IPC is taken against accused No.1 to 7, 10 and 11.

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Register the case as Special C.C. and call on for Further Report on 27.08.2020.”

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As contended by the learned counsel appearing for the petitioner, the order taking cognizance is neither bald nor laconic. It does bear application of mind. The offences against each of the individuals are narrated in the order and cognizance

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is taken. The Apex Court in the case of SUNIL BHARATI

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MITTAL² (supra) has held as follows:

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“48. Sine qua non for taking cognizance of the offence is the application of mind by the Magistrate and his satisfaction that the allegations, if proved, would constitute an offence. It is, therefore, imperative that on a complaint or on a police report, the Magistrate is bound to consider the question as to whether the same discloses commission of an offence and is required to form such an opinion in this respect. When he does so and decides to issue process, he shall be said to have taken cognizance. At the stage of taking cognizance, the only consideration before the court remains to consider judiciously whether the material on which the prosecution proposes to prosecute the accused brings out a prima facie case or not.

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51. On the other hand, Section 204 of the Code deals with the issue of process, if in the opinion of the Magistrate taking cognizance of an offence, there is sufficient ground for proceeding. This section relates to commencement of a criminal proceeding. If the Magistrate taking cognizance of a case (it may be the Magistrate receiving the complaint or to whom it has been transferred under Section 192), upon a consideration of the materials before him (i.e. the complaint, examination of the complainant and his witnesses, if present, or report of inquiry, if any), thinks that there is a prima facie case for proceeding in respect of an offence, he shall issue process against the accused.

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52. A wide discretion has been given as to grant or refusal of process and it must be judicially exercised. A person ought not to be dragged into court merely because a complaint has been filed. If a prima facie case has been

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2 (2015) 4 SCC 609

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made out, the Magistrate ought to issue process and it cannot be refused merely because he thinks that it is unlikely to result in a conviction.

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53. However, the words “sufficient ground for proceeding” appearing in Section 204 are of immense importance. It is these words which amply suggest that an opinion is to be formed only after due application of mind that there is sufficient basis for proceeding against the said accused and formation of such an opinion is to be stated in the order itself. The order is liable to be set aside if no reason is given therein while coming to the conclusion that there is prima facie case against the accused, though the order need not contain detailed reasons. A fortiori, the order would be bad in law if the reason given turns out to be ex facie incorrect.

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54. However, there has to be a proper satisfaction in this behalf which should be duly recorded by the Special Judge on the basis of material on record. No such exercise is done. In this scenario, having regard to the aforesaid aspects coupled with the legal position explained above, it is difficult to sustain the impugned order dated 19-3-2013 in its present form insofar as it relates to implicating the appellants and summoning them as accused persons. The appeals arising out of SLP (Crl.) No. 2961 of 2013 and SLP (Crl.) No. 3161 of 2013 filed by Mr Sunil Bharti Mittal and Ravi Ruia respectively are, accordingly, allowed and order summoning these appellants is set aside. The appeals arising out of SLPs (Crl.) Nos. 3326-27 of 2013 filed by Telecom Watchdog are dismissed.”

¶114

The Apex Court holds that the order taking cognizance should bear existence of sufficient reasons while issuing process. A three Judge Bench of the Apex Court in a

¶115

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subsequent judgment in the case of PRADEEP S. WODEYAR V.

¶117

STATE OF KARNATAKA (supra) has held as follows:

¶118

“C.5 Cognizance order and non-application of mind

¶119

76. The counsel for the appellant has contended that the order of the Special Judge taking cognizance has not sufficiently demonstrated application of mind to the material placed before him. To substantiate this contention, the appellant relied on the decisions in Pepsi Foods Ltd. v. Special Judicial Magistrate⁵⁰ , Fakhruddin Ahmad v. State of Uttarancha l⁵¹ Mehmood Ul Rehman v. Khazir Mohammad Tund a⁵² , Sunil Bharti Mittal v. CB I⁵³ and Ravindranatha Bajpe v. Bangalore Special Economic Zone Ltd. The respondent argued that this Court has made a distinction on application of mind by the judge for the purpose of taking cognizance based on a police report on the one hand and a private complaint under Section 200 CrPC on the other, and that the requirement of a demonstrable application of mind in the latter case is higher. For this purpose, the counsel relied on this Court's decisions in Bhushan Kumar v. State (NCT of Delhi) and State of Gujarat v. Afroz Mohammed Hasanafatta.

¶120

77. The decision of this Court in Pepsi Foods Ltd. (supra), arose out of the institution of a complaint filed against the appellants under Section 7 read with Section 16 of the Prevention of Food Adulteration Act 1964. The allegation in the complaint was that the appellants sold a bottle of beverage which was adulterated. After recording primary evidence, the Magistrate passed orders summoning the appellants. The appellants instituted proceedings before the High Court under Section 482 CrPC for quashing the summoning order and the proceedings. It was in this backdrop, that while adverting to the procedure envisaged in Chapter XV of the CrPC more particularly the

¶121

¶122

provisions of Section 200, Justice DP Wadhwa speaking for a two judge Bench held:

¶123

“12. […] One of the modes by which a court can take cognizance of an offence is on filing of a complaint containing facts which constitutes such offence. A Magistrate taking cognizance of an offence on complaint shall examine upon oath the complainant and the witnesses present, if any, and the substance of such examination shall be reduced to writing and shall be signed by the complainant and the witnesses, and also by the Magistrate (Sections 190 and 200 of the Code).”

¶124

78. Having noticed that proceeding had been initiated on the basis of a complaint, this Court held:

¶125

“28. Summoning of an accused in a criminal case is a serious matter. Criminal law cannot be set into motion as a matter of course. It is not that the complainant has to bring only two witnesses to support his allegations in the complaint to have the criminal law set into motion. The order of the Magistrate summoning the accused must reflect that he has applied his mind to the facts of the case and the law applicable thereto. He has to examine the nature of allegations made in the complaint and the evidence both oral and documentary in support thereof and would that be sufficient for the complainant to succeed in bringing charge home to the accused. It is not that the Magistrate is a silent spectator at the time of recording of preliminary evidence before summoning of the accused. The Magistrate has to carefully scrutinize the evidence brought on record and may even himself put questions to the complainant and his witnesses to elicit answers to find out the truthfulness of the allegations or otherwise and then examine if any offence is prima facie committed by all or any of the accused.”

¶126

79. On the facts, the Court held that the allegations against the appellants did not establish any offence under Section 7 of the Prevention of Food Adulteration Act and

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¶128

there was no basis in the complaint to make such allegation. Setting aside the order of the High Court, this Court accordingly quashed the complaint. The genesis of the decision in Pepsi Foods Ltd. is founded on a complaint made to the Magistrate upon which steps had been initiated pursuant to the provision of Section 200 of the CrPC.

¶129

80. In Sunil Bharti Mittal (supra), the case before this Court arose out of alleged irregularities in the grant of an additional Spectrum in 2002. The case was being monitored by this Court. The CBI registered a case and after completion of the investigation filed a charge-sheet in the court of the Special Judge. The CBI, among others, mentioned three telecom companies as accused persons in respect of offences under Section 13(2) read with 13(1)(d) of the PC Act and allied offences. When the matter was taken up for the issuance of summons to the accused persons, the Special Judge while recording satisfaction that there was enough incriminating material to proceed against the accused named in the charge-sheet also found that three individuals, namely, the CMD, MD and Director of the three telecom companies were an alter ego of the respective companies. While taking cognizance of the cases, summons were issued not only to the accused in the charge-sheet but to the aforesaid three persons as well. Two of them moved this Court. Justice A K Sikri, while speaking for the three judge Bench, held that before taking cognizance of an offence, the Magistrate should have applied his mind to the case to satisfy himself that the allegations would constitute an offence:

¶130

“48. Sine qua non for taking cognizance of the offence is the application of mind by the Magistrate and his satisfaction that the allegations, if proved, would constitute an offence. It is, therefore, imperative that on a complaint or on a police report, the Magistrate is bound to consider the question as to whether the same discloses commission of an offence and is required to form such an opinion in this respect. When he does so and decides to issue process, he

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¶132

shall be said to have taken cognizance. At the stage of taking cognizance, the only consideration before the court remains to consider judiciously whether the material on which the prosecution proposes to prosecute the accused brings out a prima facie case or not.”

¶133

81. Justice Sikri observed that while the Magistrate is empowered to issue process against a person who has not been charge-sheeted, there has to be sufficient material in the police report showing his involvement. The Court held that no such exercise was carried out by the Special Judge and in its absence, the order summoning the appellants could not be sustained. The decision in Sunil Bharti Mittal (supra) arose out of a police report but clearly involved a situation where appellants had not been arraigned as accused in the charge-sheet. The Magistrate had issued summons to them merely treating them to be an alter ego of the company. This Court held that it was a wrong (and a ‘reverse’) application of the principle of alter ego and that the order summoning them could not be sustained.

¶134

82. In Mehmood Ul Rehman (supra), a complaint was filed by the Respondent under Section 500 of the Ranbir Penal Code (in pari materia to Section 500 of the IPC). The Magistrate passed the following order:

¶135

“4. […] Perused the complaint, and the statements recorded. In the first instance of proceedings, let bail warrant to the tune of Rs. 15,000/- be issued against the alleged accused persons, with direction to the accused persons to cause their appearance before this Court on 224-2007, to answer the material questions.”

¶136

83. The Respondent filed a petition before the High Court seeking to quash the proceedings initiated by the Magistrate. The High Court rejected the petition. Before this Court, a contention was raised that the Magistrate had not applied his mind to the complaint to form an opinion on whether the allegations would constitute an offence.

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Relying on Pepsi Foods Ltd. (supra), it was observed that the Magistrate ought to have applied his mind to the allegations and must be satisfied that the facts alleged would constitute an offence. The order of the Magistrate was set aside by this Court on the ground that the order did not indicate an application of mind by the Magistrate. The facts in this case fall squarely within Section 190(1)(a) CrPC since the Magistrate was only guided by the complaint before him. Moreover, Justice Kurian Joseph, writing for the two-judge Bench has clearly taken note of the difference between Section 190(1)(a) and 190(1)(b):

¶139

“21. Under Section 190(1)(b) CrPC, the Magistrate has the advantage of a police report and under Section 190(1)(c) CrPC, he has the information or knowledge of commission of an offence. But under Section 190(1)(a) CrPC, he has only a complaint before him. The Code hence specifies that “a complaint of facts which constitute such offence”. Therefore, if the complaint, on the face of it, does not disclose the commission of any offence, the Magistrate shall not take cognizance under Section 190(1)(a) CrPC. The complaint is simply to be rejected.”

¶140

84. In Fakruddin Ahmed (supra), a complaint was lodged before the Judicial Magistrate alleging commission of offences under Sections 240, 467, 468 and 471 IPC. The Magistrate directed the police to register the case and investigate it. The Magistrate thus, instead of following the procedure laid down under Section 200 or 202 CrPC, ordered that the matter be investigated and a report be submitted under Section 173(2) of the Code. Based on the police report, cognizance was taken by the Magistrate. A two-judge Bench of this Court observed that the Magistrate must apply his mind before taking cognizance of the offence. However, no observation was made that the cognizance order based on a police report needs to be ‘well-reasoned’. On the facts of the case, the Court held that since the cognizance order was not placed before the High Court, it did not have the opportunity to review if the Magistrate had applied his mind while taking cognizance.

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The matter was thus remanded back to the High Court for it to peruse the documents and then decide the Section 482 petition afresh.

¶143

85. It must be noted that the decisions in Pepsi Foods Ltd. (supra) and Mehmood Ul Rehman (supra) arose in the context of a private complaint. Though the decision in Sunil Bharti Mittal (supra) arose from a police report, it is evident from the narration of facts in the earlier part of this judgment that in that case, the charge-sheet had not named the Chief Executive Officers of the Telecom Companies as accused. The Magistrate, however, furnished the reason that the CEO was an alter ego of the Telecom Company which, as this Court noted in its judgment was a “reverse application” of the alter ego doctrine. Similarly, the cognizance order in Fakruddin Ahmed (supra) was based on a police report. However, this Court remanded the case back to the High Court for fresh consideration of the validity of the cognizance order and did not review the Magistrate's satisfaction before issuing the cognizance order. Therefore, none of the above judgments referred to support the contention of the appellant. Though all the above judgments mention that the Magistrate needs to apply his mind to the materials placed before him before taking cognizance, they have been differentiated on facts from the present case as unlike the present case where cognizance was taken based on the SIT report, in those cases cognizance was taken based on a complaint. The difference in the standard of proof for application of mind with reference to cognizance based on a complaint and police report has been briefly discussed in Mehmood Ul Rehman (supra) and Fakruddin Ahmed (supra). A two-judge Bench of this Court in Afroz Mohammed Hasanfatta (supra) laid down the law on the difference of the standard of review of the application of mind by the Judge while taking cognizance based on a police report and a private complaint.

¶144

86. In Afroz Mohammed Hasanfatta (supra), a complaint was filed by the Manager of a Bank against a

¶145

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Private Limited Company alleging that in pursuance of a conspiracy, the Company was importing rough and polished diamonds from the foreign market and selling them in the local market. On verification, the bills of entry were found to be bogus. Based on the complaint, an FIR was registered for offences under Sections 420, 465, 467, 468, 471, 477A and 120B of the Penal Code. A chargesheet was submitted under Section 173 CrPC against two persons and the respondent was referred to as a suspect. A supplementary charge-sheet was submitted inter alia against the respondent and based on it, cognizance was taken by the Magistrate. The High Court set aside the order of the Chief Judicial Magistrate taking cognizance. Justice Banumathi speaking for the two judge Bench dealt with the issue as to whether while taking cognizance of an offence under Section 190(1)(b) CrPC, the Court has to record reasons for its satisfaction before the issuance of summons. Relying upon the decision in Pepsi Foods Ltd. (supra), it was urged by the accused that the order for the issuance of process without recording reasons was correctly set aside by the High Court. Moreover, it was urged that there was no application of mind by the Magistrate. While distinguishing the decision in Pepsi Foods Ltd. (supra) on the ground that it related to taking of cognizance in a complaint case, the court held since in a case of cognizance based on a police report, the Magistrate has the advantage of perusing the materials, he is not required to record reasons:

¶147

“23. Insofar as taking cognizance based on the police report is concerned, the Magistrate has the advantage of the charge-sheet, statement of witnesses and other evidence collected by the police during the investigation. Investigating officer/SHO collects the necessary evidence during the investigation conducted in compliance with the provisions of the Criminal Procedure Code and in accordance with the rules of investigation. Evidence and materials so collected are sifted at the level of the investigating officer and thereafter, charge-sheet was filed. In appropriate cases, opinion of the Public

¶148

¶149

Prosecutor is also obtained before filing the charge-sheet. The court thus has the advantage of the police report along with the materials placed before it by the police. Under Section 190(1)(b) CrPC, where the Magistrate has taken cognizance of an offence upon a police report and the Magistrate is satisfied that there is sufficient ground for proceeding, the Magistrate directs issuance of process. In case of taking cognizance of an offence based upon the police report, the Magistrate is not required to record reasons for issuing the process. In cases instituted on a police report, the Magistrate is only required to pass an order issuing summons to the accused. Such an order of issuing summons to the accused is based upon satisfaction of the Magistrate considering the police report and other documents and satisfying himself that there is sufficient ground for proceeding against the accused. In a case based upon the police report, at the stage of issuing the summons to the accused, the Magistrate is not required to record any reason. In case, if the charge-sheet is barred by law or where there is lack of jurisdiction or when the charge-sheet is rejected or not taken on file, then the Magistrate is required to record his reasons for rejection of the charge-sheet and for not taking it on file.”

¶150

(emphasis supplied)

¶151

87. The Special Judge, it must be noted, took cognizance on the basis of a report submitted under Section 173 CrPC and not on the basis of a private complaint. Therefore, the case is squarely covered by the decision in Afroz Mohammed Hasanfatta (supra). The Special Judge took note of the FIR, the witness statements, and connected documents before taking cognizance of the offence. In this backdrop, it would be far-fetched to fault the order of the Special Judge on the ground that it does not adduce detailed reasons for taking cognizance or that it does not indicate that an application of mind. In the facts of this case, therefore, the order taking cognizance is not erroneous.

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¶153

In the afore-quoted paragraphs, the Apex Court considers entire spectrum of law with regard to the order of cognizance qua application of mind and at paragraph 101 holds as follows:

¶154

“D. The Conclusion

¶155

101. In view of the discussion above, we summarise our findings below:

¶156

(i) The Special Court does not have, in the absence of a specific provision to that effect, the power to take cognizance of an offence under the MMDR Act without the case being committed to it by the Magistrate under Section 209 CrPC. The order of the Special Judge dated 30 December 2015 taking cognizance is therefore irregular;

¶157

(ii) The objective of Section 465 is to prevent the delay in the commencement and completion of trial. Section 465 CrPC is applicable to interlocutory orders such as an order taking cognizance and summons order as well. Therefore, even if the order taking cognizance is irregular, it would not vitiate the proceedings in view of Section 465 CrPC;

¶158

(iii) The decision in Gangula Ashok (supra) was distinguished in Rattiram (supra) based on the stage of trial. This differentiation based on the stage of trial must be read with reference to Section 465(2) CrPC. Section 465(2) does not indicate that it only covers challenges to pre-trial orders after the conclusion of the trial. The cardinal principle that guides Section 465(2) CrPC is that the challenge to an irregular order must be urged at the earliest. While determining if there was a failure of justice, the Courts ought to address it with reference to the stage of challenge, the seriousness of the offence and the apparent intention to prolong proceedings, among others;

¶159

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(iv) In the instant case, the cognizance order was challenged by the appellant two years after cognizance was taken. No reason was given to explain the inordinate delay. Moreover, in view of the diminished role of the committal court under Section 209 of the Code of 1973 as compared to the role of the committal court under the erstwhile Code of 1898, the gradation of irregularity in a cognizance order made in Sections 460 and 461 and the seriousness of the offence, no failure of justice has been demonstrated;

¶161

(v) It is a settled principle of law that cognizance is taken of the offence and not the offender. However, the cognizance order indicates that the Special Judge has perused all the relevant material relating to the case before cognizance was taken. The change in the form of the order would not alter its effect. Therefore, no ‘failure of justice’ under Section 465 CrPC is proved. This irregularity would thus not vitiate the proceedings in view of Section 465 CrPC;

¶162

(vi) The Special Court has the power to take cognizance of offences under MMDR Act and conduct a joint trial with other offences if permissible under Section 220 CrPC. There is no express provision in the MMDR Act which indicates that Section 220 CrPC does not apply to proceedings under the MMDR Act;

¶163

(vii) Section 30B of the MMDR Act does not impliedly repeal Section 220 CrPC. Both the provisions can be read harmoniously and such an interpretation furthers justice and prevents hardship since it prevents a multiplicity of proceedings;

¶164

(viii) Since cognizance was taken by the Special Judge based on a police report and not a private complaint, it is not obligatory for the Special Judge to issue a fully reasoned order if it otherwise appears that the Special Judge has applied his mind to the material;

¶165

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(ix) A combined reading of the notifications dated 29 May 2014 and 21 January 2014 indicate that the SubInspector of Lokayukta is an authorized person for the purpose of Section 22 of the MMDR Act. The FIR that was filed to overcome the bar under Section 22 has been signed by the Sub-Inspector of Lokayukta Police and the information was given by the SIT. Therefore, the respondent has complied with Section 22 CrPC; and

¶167

(x) The question of whether A-1 was in-charge of and responsible for the affairs of the company during the commission of the alleged offence as required under the proviso to Section 23(1) of the MMDR Act is a matter for trial. There appears to be a prima facie case against A-1, which is sufficient to arraign him as an accused at this stage.

¶168

(Emphasis supplied)

¶169

The Apex Court in terms of clause-(viii) of the aforesaid conclusions holds that since cognizance is taken based on a police report and not a private complaint, it is not obligatory for the Judge to issue a completely reasoned order if it otherwise appears that the Judge has applied his mind to the material.

¶170

There would be cases where orders taking cognizance are called in question which would not have any application of mind. It is then the judgment in the case of SUNIL BHARTI MITTAL or even PRADEEP S. WODEYAR would come into play.

¶171

The Apex Court though does not distinguish SUNIL BHARATI

¶172

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MITTAL (supra) but holds that the bed-rock of order of taking cognizance should bear some semblance of application of mind. If the judgments of the Apex Court as afore-quoted are considered qua the impugned order taking cognizance which is extracted (supra) , it does bear application of mind on the part of the learned Sessions Judge and, therefore, cannot be held to be bald or laconic or consequently getting rendered unsustainable. The said ground urged is devoid of merit.

¶174

The other submission made that vicarious liability is fastened upon the petitioner being a Director of M/s Sri Nakoda Constructions Limited and no amount was received by the petitioner also cannot be considered at this juncture as M/s Sri Nakoda Constructions Limited is the purchaser of Development Rights but the cheques are issued in favour of confirming parties. The ploy is required to be unearthed only in a trial. Vicarious liability or the judgment of the Apex Court in the case of MAKSUD SAIYED (supra) which determines that there can be no vicarious liability in criminal law would not be applicable to

¶175

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the peculiar facts of the case on hand. Therefore, I do not find any merit in any of the grounds urged by the learned counsel for the petitioner.

¶177

This Criminal Petition fails and is accordingly rejected.

¶178

The observations made in the course of this order is only for the purpose of considering the case of the petitioner under Section 482 of the Cr.P.C. qua the order taking cognizance and they would not bind or influence any further proceedings against the petitioner or any other accused in Special Case No.318 of 2020 pending before the XXIII Additional City Civil and Sessions

¶179

Judge and Special Judge (P.C.Act), Bengaluru.

¶180

I.A.No.1/2022 stands disposed, as a consequence.

¶181

Sd/JUDGE

¶182

bkp CT:MJ

Sri Ratan Babulal Lath v. State of Karnataka

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Sri Ratan Babulal Lath v. State of Karnataka

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