Karthik M S/O Lakshman M Vs the State of Karnataka

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NC: 2025:KHC-D:11751 CRL.P No. 100798 of 2025

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HC-KAR

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IN THE HIGH COURT OF KARNATAKA, AT DHARWAD DATED THIS THE 10^TH DAY OF SEPTEMBER, 2025

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BEFORE

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THE HON'BLE MR. JUSTICE S.VISHWAJITH SHETTY CRIMINAL PETITION NO. 100798 OF 2025 (482(CR.PC)/528(BNSS))

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BETWEEN:

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KARTHIK M. S/O LAKSHMAN M., AGE. 20 YEARS, OCC. HAIR CUTTING, R/O. RAILWAY STATION ROAD, RANIPETE, SREERAMULU PARK, 5^TH WARD, HOSAPETE, DIST. VIJAYANAGAR-583 201.

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ANATHA S. NAIDU S/O PATRE SEENAPPA, AGE. 47 YEARS, OCC. BUSINESS, R/O. BHAGYA JYOTHI COLONY, OPP. KSRTC DEPO, SANDUR-583 119.

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… PETITIONERS

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(BY SRI. B. ANWAR BASHA, ADVOCATE)

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AND:

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Digitally signed by RAKESH S RAKESH HARIHAR SHARIHAR Location:HIGH COURTOF KARNATAKA DHARWAD BENCH

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THE STATE OF KARNATAKA, THROUGH SANDUR P.S. BALLARI, R/BY ITS STATE PUBLIC PROSECUTOR, HIGH COURT OF KARNATAKA, DHARWAD-580 001.

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A. PAMPAPATHI S/O A. KUMARSWAMY, AGE. 43 YEARS, OCC. PARTNER IN SRI. KUMARSWAMY ENTERPRISES, R/O. H.NO.30, PINJAR STREET, SANDUR-583 119.

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… RESPONDENTS

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(BY SMT. GIRIJA S. HIREMATH, HCGP FOR R1; R2-SERVED)

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NC: 2025:KHC-D:11751 CRL.P No. 100798 of 2025

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HC-KAR

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THIS CRIMINAL PETITION IS FILED UNDER SECTION 482 OF CR.P.C. (UNDER SECTION 528 OF BNSS), PRAYING TO QUASH THE COMPLAINT AND FIR AND CHARGE SHEET IN CRIME NO.150/2019 BY SANDUR P.S. BALLARI AND ENTIRE PROCEEDING IN SPL. CASE NO.1393/2021 PENDING BEFORE PRL. DISTRICT AND SESSIONS JUDGE, BALLARI, IN THE INTEREST OF JUSTICE FOR THE OFFENCE PUNISHABLE UNDER SECTIONS 406, 420, 120B R/W SECTION 34 OF IPC AND 21(3), 23 OF BANNING OF UNREGULATED DEPOSIT SCHEME ACT 2019.

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THIS PETITION COMING ON FOR ADMISSION, THIS DAY, ORDER IS MADE THEREIN AS UNDER:

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ORAL ORDER

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(PER: THE HON'BLE MR. JUSTICE S.VISHWAJITH SHETTY)

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Petitioners are before this Court with a prayer to quash the entire proceedings in Spl. Case No.1393/2021 pending before the Court of Prl. District & Sessions Judge, Ballari, arising out of Crime No.150/2019 registered by Sandur Police Station, Ballari District, for the offences punishable under Sections 406, 420, 120B read with 34 IPC and Sections 21(3) & 23 of the Banning of Unregulated Deposited Schemes Act, 2019 (for short, ‘Act of 2019’).

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Heard the learned Counsel for the parties.

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FIR in the present case was registered invoking the offences punishable under Sections 120B, 406, 420, 504, 506,

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NC: 2025:KHC-D:11751 CRL.P No. 100798 of 2025

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HC-KAR

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34 IPC. After completing investigation, charge sheet has been filed against the petitioners for the offences punishable under Sections 406, 420, 120B read with 34 IPC and Sections 21(3) & 23 of the Act of 2019. Section 7 of the Act of 2019 reads as under:

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“7. Competent Authority. — (1) The appropriate Government shall, by notification, appoint one or more officers not below the rank of Secretary to that Government, as the Competent Authority for the purposes of this Act.

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(2) The appropriate Government may, by notification, appoint such other officer or officers as it thinks fit, to assist the Competent Authority in discharging its functions under this Act.

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(3) Where the Competent Authority or officers appointed under sub-section (2), for the purposes of this section, has reason to believe (the reason for such belief to be recorded in writing), on the basis of such information and particulars as may be prescribed, that any deposit taker is soliciting deposits in contravention of section 3, he may, by an order in writing, provisionally attach the deposits held by the deposit taker and the money or other property acquired either in the name of the deposit taker or in the name of any other person on behalf of the deposit taker from the date of the order, in such manner as may be prescribed.

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NC: 2025:KHC-D:11751 CRL.P No. 100798 of 2025

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(4) The Competent Authority shall, for the purposes of sub-section (3), have the same powers as vested in a civil court under the Code of Civil Procedure, 1908 (5 of 1908) while conducting investigation or inquiry in respect of the following matters, namely:—

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(a) discovery and inspection;

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(b) enforcing the attendance of any person, including any officer of a reporting entity and examining him on oath;

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(c) compelling the production of records;

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(d) receiving evidence on affidavits;

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(e) issuing commissions for examination of

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witnesses and documents; and

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(f) any other matter which may be prescribed.

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(5) The Competent Authority shall have power to summon any person whose attendance he considers necessary whether to give evidence or to produce any records during the course of any investigation or proceeding under this section.

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(6) All the persons so summoned shall be bound to attend in person or through authorised agents, as such officer may direct, and shall be bound to state the truth upon any subject respecting which they are

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NC: 2025:KHC-D:11751 CRL.P No. 100798 of 2025

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HC-KAR

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examined or make statements, and produce such documents as may be required.

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(7) Every proceeding under sub-sections (4) and (5) shall be deemed to be a judicial proceeding within the meaning of section 193 and section 228 of the Indian Penal Code (45 of 1860).

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(8) Subject to any rules made in this behalf by the Central Government, any officer referred to in subsection (2) may impound and retain in his custody for such period, as he thinks fit, any records produced before him in any proceedings under this Act:

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Provided that the officer or officers referred to in sub-section (2) shall not—

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(a) impound any records without recording his reasons for so doing; or

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(b) retain in his custody any such records for a period exceeding three months, without obtaining the previous approval of the Competent Authority.”

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Section 7 of the Act of 2019 specifies that appropriate Government shall, by notification, appoint one or more persons not below the rank of Secretary to that Government as the Competent Authority for the purpose of this Act and Section 8 of the Act of 2019 specifies that appropriate Government shall, with the concurrence of the Chief Justice of the concerned High Court,

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NC: 2025:KHC-D:11751 CRL.P No. 100798 of 2025

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HC-KAR

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by notification, constitute one or more courts known as the designated courts for such area or areas to deal with the matters which the provisions of the Act of 2019 applies. Section 27 of the Act of 2019 provides that no designated court shall take cognizance of an offence punishable under that Section, except upon a complaint made by the Regulator.

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From a reading of the aforesaid provisions, it is very clear that the Government is required to first appoint a Regulator and thereafter designate a court to deal with the matters to which the provisions of the Act of 2019 applies and the designated court can take cognizance only on a complaint in writing made by the Regulator.

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In the present case, FIR was registered based on the first information received from the Police Officer attached to Sandur Police Station, Ballari District, and after investigation, charge sheet has been filed invoking the offences punishable under the Act of 2019, which is not permissible.

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So far as the offences punishable under the provisions of IPC is concerned, the said offences are cognizable in nature and

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HC-KAR

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the necessary ingredients so as to make out a prima facie case for the said offences is found in the first information.

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The Hon'ble Supreme Court in the case of M/S. NEEHARIKA INFRASTRUCTURE PVT. LTD. VS STATE OF MAHARASHTRA & OTHERS – 2021 SCC OnLine 315 and also in the case of SKODA AUTO VOLKSWAGEN (INDIA) PRIVATE LIMITED VS STATE OF UTTAR PRADESH & OTHERS – (2021)5 SCC 795 , has observed that police have a right to investigate in a case where FIR has been registered for cognizable offences and only in exceptional circumstances, the High Court can stall the investigation in a case registered for cognizable offences.

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In almost identical circumstances, this Court in Crl.P.No.201497/2024 and connected cases, while quashing similar FIRs registered for offences punishable under the Act of 2019 is concerned, has allowed the police to continue investigation for the offences punishable under the provisions of IPC. Under the circumstances, I am of the opinion that the impugned criminal proceedings insofar as it relates to the registration of FIR for offences punishable under the Act of 2019, is required to be quashed. According to the following order:

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NC: 2025:KHC-D:11751 CRL.P No. 100798 of 2025

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HC-KAR

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Petition is allowed in part. The proceedings in Spl. Case No.1393/2021 pending before the Court of Prl. District & Sessions Judge, Ballari, in so far as it relates to the offences punishable under Sections 21(3) & 23 of the Banning of Unregulated Deposited Schemes Act, 2019, is quashed, and the further proceedings in so far as it relates to the offences punishable under the provisions of IPC shall be continued before the appropriate Court, in accordance with law.

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Sd/(S.VISHWAJITH SHETTY) JUDGE

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KK CT:BCK LIST NO.: 1 SL NO.: 118.2

Karthik M S/O Lakshman M v. the State of Karnataka

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Karthik M S/O Lakshman M v. the State of Karnataka

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