Partly allowed

Shri Vivek Nagpal v. the State of Karnataka

Karnataka HC13 Dec 2022CRL.P/62/2016

Case brief

AI extract

What is this about?

The High Court allowed Criminal Petitions 61/2016 and 62/2016, quashing the order of cognizance against Accused Nos. 4 and 6 in C.C. No. 9051/2006 due to lack of prima facie evidence for conspiracy and cheating, while dismissing the petitions regarding Accused Nos. 7 and 8.

What did the court decide?

Cognizance against Accused Nos. 4 and 6 quashed; application for discharge allowed; petitions regarding Accused Nos. 7 and 8 dismissed.

Shri Vivek Nagpal Vs the State of Karnataka — Cheating and Forgery | Karnataka HC (2022)

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IN THE HIGH COURT OF KARNATAKA AT BENGALURU

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DATED THIS THE 13^TH DAY OF DECEMBER, 2022

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BEFORE

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THE HON’BLE MR. JUSTICE HEMANT CHANDANGOUDAR

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CRIMINAL PETITION NO.61/2016 C/W CRIMINAL PETITION NO.62/2016

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IN CRL.P NO.61/2016:

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BETWEEN:

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SRI. C.V.R. RAO, S/O C.G.V. RAO AGED ABOUT 50 YEARS, FORMERLY DIRECTOR OF M/S SHONKH TECHNOLOGIES INTERNATIONAL LTD. NO.3, 1ST MAIN ROAD, DOLLARS COLONY, J.P. NAGAR, 4TH PHASE, BANGALORE-560 078.

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SRI. PRASANTH KUMAR, S/O LATE R.P. KULSHRESTHA AGED ABOUT 40 YEARS, FORMERLY DIRECTOR OF M/S SHONKH TECHNOLOGIES INTERNATIONAL LTD. O-26A, NEW MAHAVIR NAGAR, NEW DELHI-110 018.

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M/S. SHONKH TECHNOLOGIES INTERNATIONAL LTD., OFFICE NO.6, 1ST FLOOR, APOLLO HOUSE, 82/84, BOMBAY SAMACHAR MARG, FORT, MUMBAI-400023, AND DELHI OFFICE AT A-6, MAIN ROAD, HIMGIRI ENCLAVE, NEA BURARI AUTHORITY, BURARI, DELHI-110084.

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...PETITIONERS

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(BY SRI B.A. BELLIAPPA, ADVOCATE FOR P-1; SRI KIRAN S. JAWALI, SENIOR COUNSEL FOR SRI K.R. KRISHNAMURTHY, ADVOCATE FOR P-2; SRI SHISHIRA AMARANATH, ADVOCATE FOR P-3)

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AND:

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THE STATE OF KARNATAKA BY CBI: BS & FC, BANGALORE, BELLARY ROAD, GANGANAGAR BANGALORE-32.

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...RESPONDENT

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(BY SRI P. PRASANNA KUMAR, ADVOCATE)

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THIS CRIMINAL PETITION IS FILED UNDER SECTION 482 OF THE CODE OF CRIMINAL PROCEDURE, PRAYING TO SET ASIDE THE ORDER DATED 23.03.2015 PASSED BY HON'BLE XLVII ADDL. CITY CIVIL AND S.J., AND SPL. JUDGE FOR CBI CASES, BANGALORE IN CRL.R.P.397/2011 CONFIRMING THE ORDER DATED 10.10.2011 PASSED BY THE HON'BLE XVII ADDL. C.M.M., (SPL. COURT FOR CBI CASES) BANGALORE IN C.C.NO.9051/2006 AND TO DISCHARGE OF ALL OFFENCES.

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IN CRL.P NO 62/2016:

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BETWEEN:

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SHRI VIVEK NAGPAL, S/O LATE MOTILAL NAGPAL AGED ABOUT 45 YEARS EX-DIRECTOR OF M/S. SHONKH TECHNOLOGIES INTERNATIONAL LTD, H/27-1, SAINIK FARMS NEW DELHI-110 062.

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...PETITIONER

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(BY SRI C.V. NAGESH, SENIOR COUNSEL FOR SRI NISHAN G.K., ADVOCATE)

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AND:

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THE STATE OF KARNATAKA BY CBI: BS & FC, BANGALORE. BELLARY ROAD, GANGANAGAR BANGALORE-32.

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...RESPONDENT

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(BY SRI P. PRASANNA KUMAR, ADVOCATE)

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THIS CRIMINAL PETITION IS FILED UNDER SECTION 482 OF THE CODE OF CRIMINAL PROCEDURE, PRAYING TO SET ASIDE THE ORDER DATED 23.03.2015 PASSED BY HON'BLE XLVII ADDITIONAL CITY CIVIL AND SESSIONS JUDGE AND SPL. JUDGE FOR CBI CASES, BANGALORE IN CRL.RP.NO.380/2011 CONFIRMING THE ORDER DATED 10.10.2011 PASSED BY THE HON'BLE XVII ADDL.C.M.M. (SPECIAL COURT FOR CBI CASES) BANGALORE IN C.C.NO.9051/2006 AND TO DISCHARGE OF ALL OFFENCES.

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THESE CRIMINAL PETITIONS ARE COMING ON FOR FURTHER DICTATION THIS DAY, THE COURT MADE THE FOLLOWING:

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O R D E R

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Since the issue involved in these petitions is interlinked, they are taken up together and heard and disposed of.

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The Central Bureau of Investigation (for short `CBI’) after investigation submitted a charge sheet for the offences punishable under Section 120B and 420 of IPC alleging that the petitioners–accused hatched a criminal conspiracy during the

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period 2001-2002 to cheat the erstwhile Global Trust Bank Ltd. in the matter of sanctioning/disbursing and availing an overdraft limit of Rs.37 crore by fraudulent and dishonest means and diverted the funds disbursed by the Bank for settling the outstanding dues in the accounts of the company created by accused No.5 without utilizing for the purpose for which it was sanctioned and accused Nos.1 to 3 and accused No.9 who were having dominion over the bank funds committed criminal breach of trust and the accused persons cheated the Bank by causing wrongful loss of Rs.37 crore plus interest and corresponding gain for themselves during the aforesaid period.

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The learned Magistrate after accepting the charge sheet took cognizance for the aforesaid offence and as against accused No.8, cognizance was taken for the offence punishable under Section 420 of IPC. The accused herein filed an application for discharge before hearing charge. The learned Magistrate dismissed the application, against which, a revision petition was filed before the learned Specials Judge. The learned Specials Judge dismissed the revision petition confirming the

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order of dismissal of the application for discharge against which, the present petitions are filed.

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Sri C V Nagesh, learned Senior counsel appearing for the learned counsel for accused No.4 would make the following submissions:

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a) Accused No.4 was neither the signatory to any of the loan documents nor he created mortgage in favour of the Bank as a Director of the accused No.8–Company and the Debt Recovery Appellate Tribunal (for short `Tribunal’) at Chennai, taking into account the same, has struck off the name of accused No.4 as 2^nd defendant in Original Application filed by the Bank under Section 19 of the Recovery of Debts due to the Bank and Financial Institution Act, 1993 for the recovery of money from the accused No.8–company and its Directors.

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b) The charge against accused No.4 is that accused No.3 conniving with accused No.4 released the loan amount without obtaining pledge of 20 lakh shares of accused No.8-company as stipulated in the terms of sanction and accused No.7 in connivance with accused No.4 issued a cheque dated 21.12.2001 for Rs.1,22,51,198/- favouring the erstwhile Bank from the account of accused No.8–company and when the cheque

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was presented for realization, the same came to be dishonoured for want of funds. Except the said allegation, there is no corroborative material placed along with the charge sheet to substantiate the allegation that the accused No.4 connived with accused No.3 and 7 to cheat the Bank.

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c) The learned Magistrate has taken cognizance without forming an opinion for proceeding against the accused No.4. Hence, the cognizance is taken without application of mind and the same is contrary to Section 204 of Cr.PC. In support, reliance is placed on the decision of the Hon’ble Supreme Court in Sunil Bharti Mittal –vs- Central Bureau of Investigation reported in (2015) 4 SCC 609 and Sunil Todi and Others v State of Gujarat and Another reported in 2021 SCC OnLine 1174.

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d) There must be an agreement and meeting of minds between the parties to commit an illegal act to constitute criminal conspiracy. Mere statement of one of the witnesses that accused number 4 was seen in conference room does not constitute the offence punishable under section 120B of IPC. In support he places reliance on the

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decision of the Hon’ble Supreme Court in Parveen @ Sonu v State of Haryana reported in 2021 SCC OnLine SC 1184.

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Sri B A Belliappa, learned counsel appearing for the accused No.6 would submit that the charge against the accused No.6 is that he submitted an incomplete application with the erstwhile Bank for sanctioning of loan of Rs.40 crore and the cheque issued by accused No.6 for a sum of Rs.37 crore in favour of Gold Fish Computers Pvt. Ltd. when presented for realization was dishonoured for want of funds since the over draft facility for a sum of Rs.40 crore was not released in favour of accused No.8-company of which the accused No.6 is the director. Hence, the allegation even accepted on the face of it does not constitute the commission of offence under Section 120B and 420 of IPC. In support, he places reliance on the decision of the Hon’ble Supreme Court in the case of R Kalyani - vs- Janak C Mehta and others reported in (2009)1 SCC 516.

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Sri Kiran S. Jawali, learned Senior counsel appearing for accused No.7 and learned counsel appearing for accused No.8 submits that the criminal prosecution was launched mainly

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on the ground that accused Nos.1, 2, 3 and 9, who are the officials of the erstwhile Bank without following the procedure and without securing the pledge of 20 lakh shares of the accused No.8–company towards security for repayment of loan sanctioned and disbursed to the accused No.8-company. There is no specific allegation against the petitioners–accused No.7 and 8 that the said accused induced the erstwhile bank to sanction and disburse the loan to the accused No.8-company with a dishonest intention to cheat the erstwhile Bank. Hence, in the absence of essential ingredients so as to constitute the commission of offence punishable under Section 120B and 420 of IPC, the cognizance taken is impermissible.

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The learned counsel appearing for the CBI would make the following submissions:

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a) It is not obligatory for the Special Judge to pass a fully reasoned order since the cognizance was taken based on a police report and not on a private complaint. In support, he places reliance on the decision of the Hon’ble Supreme Court in the case of Pradeep S Wadeyar –vsState of Karnataka reported in 2021 SCC OnLine SC 1140.

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b) The petitioners-accused herein were an integral part of the conspiracy to cheat the bank from the beginning and were actually involved in the credit limit availed by the accused No.8–company.

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c) The accused No.7 executed a loan document in favour of the bank knowing fully well that the loan is being availed for the benefit of accused No.5 in share business and not for the purpose for which it was sought to be sanctioned.

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d) The charge sheet material clearly discloses the commission of offences alleged against each of the accused and this Court in exercise of power under Section 482 of Cr.P.C cannot hold a mini trial so as to go into the veracity of each of the allegation and the various contentions raised by the petitioners can only be considered after full fledged trial and at this stage the cognizance taken by the learned Special Judge cannot be interfered with.

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I have examined the submissions of the learned counsel appearing for the parties.

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To constitute an offence punishable under Section 120B of IPC, it is necessary to establish that there was an agreement between the parties for doing an unlawful act. The Apex Court in the case of Parveen @ Sonu (supra) has held that it is difficult to establish conspiracy by direct evidence at all, but at the same time, in the absence of any evidence to show meeting of minds between the conspirators for the intended object of committing an illegal act, it is not safe to hold a person guilty for an offence punishable under Section 120B of IPC. In the present case, none of the complainant witnesses have stated that the accused Nos.4 and 6 hatched criminal conspiracy for the commission of the offence and in furtherance of such conspiracy, the offence alleged came to be committed.

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As against accused Nos.7 and 8, there are specific allegations that the accused No.7 as director of the accused No.8–company signed the loan documents and got sanctioned loan in favour of accused No.8-company in connivance with accused No.3. Whether accused Nos.7 and 8 hatched the

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criminal conspiracy with the officials of the Bank is the matter which can be considered only after full fledged trial.

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To constitute the commission an offence punishable under Section 420 of IPC, there is no clear specific allegation that from inception of the loan transaction, there was a dishonest intention on the part of the petitioners–accused to cheat the Bank. In the instant case, the allegation is that accused No.3 conniving with accused No.4 released the loan amount without obtaining pledge of 20 lakh shares of accused No.8-company as stipulated in terms of sanction. Except the said allegation, there is no corroborative material placed along with

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the charge sheet to substantiate the allegation that the accused No.4 connived with accused No.3 and 7 to cheat the Bank. The accused No.4 is neither the signatory to the loan documents nor did he actively participate in the disbursement of the loan in favour of accused No.8–company by the erstwhile Bank. The Debt Recovery Appellate Tribunal taking into this account has struck off the name of accused No.4 as respondent in the application filed by the Bank for recovery of the loan amount

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from the accused No.8-company and other directors. In the absence of any corroborative material to substantiate the allegation that the accused No.4 connived with other accused to cheat the Bank, the charge sheet filed against the said accused only on the basis of omnibus and general allegations is without any substance.

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The allegation against the accused No.6 is that he submitted the application with the Bank for sanctioning of loan, but however no corroborative material is placed along with the charge sheet to substantiate the said allegation. The accused No.6 is neither a signatory to the loan documents nor there is any allegation that he disbursed the loan amount from the account of accused No.8-company in favour of Gold Fish Computers Pvt. Ltd., except the general allegation that he along with accused Nos.2, 3 and 4 connived to transfer the amount of Rs.37 crore from the account of accused No.8-company to the account of Gold Fish Computers Pvt. Ltd.

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The Hon’ble Supreme Court in the case of Kalyani (supra) has held that mere sending a copy thereof to the National Stock Exchange without there being anything further to show that the respondent No.2 therein had any knowledge of the fact and the same was forged and fabricated document cannot constitute an offence of forgery. Even accepting the allegation on the face of it, that accused No.6 submitted the application for sanction of loan, would not constitute the commission of offence alleged against him in the absence of any corroborative material to substantiate that the accused No.6 connived with the other accused and also induced the Bank to disburse the loan with an intention to defraud the Bank. Hence, in the absence of essential ingredient to constitute the offence punishable under Sections 120B and 420 of IPC, the cognizance taken by the learned Magistrate for the aforesaid offences against the accused No.6 is impermissible.

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Insofar as it relates to accused No.7 and 8, there are specific allegations that the accused No.7 signed the loan documents and induced the Bank to disburse the loan amount

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with a fraudulent intention to cheat the Bank and the said allegation prima facie discloses the commission of offence punishable under Section 120B and 420 of IPC and the veracity of the said allegation can be gone into only after full fledged trial and at this stage, the cognizance taken by the learned Special Judge cannot be interfered.

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The learned Magistrate as well as learned Special Judge without considering this aspect have dismissed the application for discharge insofar as it relates to accused Nos.4 and 6 and the same is not sustainable in law.

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The learned magistrate has to consider judiciously whether the material on which the prosecution proposes to prosecute the accused brings out a prima facie case or not. The Hon’ble apex court in Sunil Bharti supra has laid that the essential condition for taking cognizance of the offence under section 190 of Cr.P.C is the judicial application of mind by the Magistrate who is bound to consider the question as to whether the allegations disclose the commission of an offence or not and

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is required to form an opinion by giving reasons in the order of taking cognizance. When he does so and decides to issue process, he shall be said to have taken cognizance.

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The Hon’ble Supreme in the case of Pradeep S Wadeyar (supra) at para-101(v)and (viii) has held as follows:

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“101.(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;

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(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;”

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In the instant case, the learned Magistrate on the final report submitted by the police and after perusing the records has taken cognizance for the aforesaid offences. Hence, in view of the principles enunciated by the Hon’ble Supreme Court in the case of Pradeep S Wadeyar (supra), the cognizance taken by the learned Magistrate after perusing the records

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without issuing a fully reasoned order does not vitiate criminal proceeding.

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In view of the preceding analysis, the continuation of criminal proceeding against the accused Nos.4 and 6 will be an abuse of process of law since the probability of conviction of accused Nos.4 and 6 is remote and bleak.

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Accordingly, I pass the following:

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ORDER

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i) Criminal petition No.61/2016 insofar as it relates to

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accused Nos.7 and 8 is dismissed and insofar as it relates to accused No.6 is allowed.

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ii) Criminal petition No.62/2016 is allowed.

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iii) The impugned order dated 23.3.2015 passed in Cr.RP No.397/2011 by the XLVII Additional City Civil and Sessions Judge and Special Judge for CBI Cases, Bangalore and the order dated 10.10.2011 passed in CC No.9051/2006 by the XVII Additional Chief Metropolitan Magistrate (Special Court for

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CBI Cases) Bangalore, insofar it relates to petitioner-accused Nos.4 and 6 is quashed.

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iv) The application for discharge filed by the petitioner – accused No.4 and 6 is hereby allowed. Consequently, the impugned proceeding in CC No.9051/2006 pending on the file of the XVII Additional Chief Metropolitan Magistrate (Special Court for CBI Cases), Bangalore in so far it relates to petitioners accused Nos.4 and 6 is hereby quashed.

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Sd/JUDGE

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bkm

Shri Vivek Nagpal v. the State of Karnataka

Case brief

What is this about?

What did the court decide?

Shri Vivek Nagpal v. the State of Karnataka

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