Dismissed

New Look Retails Pvt. Ltd., v. The State of Andhra Pradesh

Telangana HC4 Feb 2014CRLP/6981/2013

Case brief

AI extract

What is this about?

This common order disposed of two criminal petitions challenging a Sessions Court order. The court held that the Superintendent of Police had the power under Sections 91 and 102 CrPC to block the website and freeze accounts for investigation purposes in a cognizable offence, interpreting 'document' to include electronic records. The petitions were dismissed with liberty to renew applications post-

What did the court decide?

The impugned orders directing blocking of website and freezing of accounts were upheld; petitions dismissed with liberty to renew application after investigation completion.

New Look Retails Pvt. Ltd., Vs The State of Andhra… — Company and Corporate | Telangana HC (2014)

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HON’BLE SRI JUSTICE C. PRAVEEN KUMAR CRIMINAL PETITION No.6981 OF 2013 & CRIMINAL PETITION No.6982 OF 2013

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COMMON ORDER:

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Assailing the orders dated 18.01.2013 passed in Crl.M.P. Nos.282 of 2012 and 283 of 2012 on the file of the Principal Sessions Judge, Prakasam District, the present applications are filed under Sections 482 CrPC seeking quashing of the said orders.

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2. Since the facts involved in the above two petitions being one and the same, though reliefs are different, these two petitions were disposed of by this common order.

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3. (a) The 2^nd respondent herein, describing itself as Corporate Frauds Watch, represented by its Secretary lodged a report against the petitioner stating that the company named M/s. N-Mart retail has established a retail branch at Kandukuru town of Prakasam District and collected deposits from public with an offer of easy and quick money by enrolling members into the scheme. It is alleged in the complaint that the scheme of the company is a binary scheme, which means each person has to enroll/sponsor two persons. One on right side and another on left side. The person who enrolls member into the scheme are called sponsor or upline member and the person who have joined the scheme are called as sponsored or downline member. Joining fee was fixed at Rs.5,500/-, out of which the upline members/sponsorors will get commission. The commissions/incentives are based on enrolment activity. As the enrolment activity increases, the commission incentives will increase.

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(b) It is alleged that collection of money and enrollment of several hundreds of thousands of members throughout the State of Andhra Pradesh was in violation of The Prize Chits and Money Circulation

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Schemes (Banning) Act, 1978 and hence the above report came to be registered as Cr.No.154 of 2012 of Kandukur Town Police Station, for the offences punishable under Sections 4 and 5 of The Prize Chits and Money Circulation Schemes (Banning) Act, 1978, Section 5 of The Andhra Pradesh Protection of Depositors of Financial Establishments Act, 1999 and Section 420 IPC.

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4. During the course of investigation, the Superintendent of Police wrote a letter dated 26.08.2012 to M/s. Cybersites India, Technologies India Private Limited, Mumbai informing them about the registration of the crime against the petitioner and also sought for certain information from them. It may be appropriate to extract the relevant portion of the letter, which is as under :-

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(1) Blocking/Holding of all domains register with you by/or on behalf of NMART retails Pvt. Ltd., or any of its other subsidiaries.

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(2) Block www.nmart.co.in website and down the server and give database backup.

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(3) Provide us the user name and passwords of domain control panel and hosting control panel of website and database server ip address, port no., sh username, sh password and root password.

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(4) Down load the entire data base hosted with you or else where in sql format and copy in backup device.

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Pursuant to the said letter the accounts were freezed and the website was blocked.

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5. Thereafter, the petitioner herein filed two applications before the trial court seeking permission of the court to operate the website known as www.nmart.co.in and also to defreeze the accounts seized by the police during the course of investigation. In the said applications only State of Andhra Pradesh was made as a party. After hearing the counsel for the petitioner and learned Additional Public

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Prosecutor, the Sessions Court dismissed both the applications. Aggrieved by the same, these two petitions are filed.

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6. (a) The learned counsel appearing for the petitioner mainly submits that the petitioner owns a chain of retail stores under the name and style of “NMart Retails” which is the first ever chain of retail stores operated on a network plan. It has established more than 275 stores across India providing employment to 4250 working staff directly and with a combination of more than 13 lakhs of networking field force across the country selling the goods under direct marketing. 26 stores are said to have been opened in different towns of Andhra Pradesh. NMart stores are established with necessary licences/approvals including VAT, labour, weights and measures etc. It is said that the petitioner was not manufacturing any of the commodities/products offered on sale but was purchasing the same from well established manufacturing companies in bulk and selling the same to its customers with negligible margin. About 5000 varieties of branded products are sold through their retail stores. The main motto behind the establishment of the said company was to supply household articles to a common-man at lesser price than the Maximum Retail Price (MRP). It is not in dispute that that the company stores are operated on a membership basis when compared to other retail stores and the incentive programme of the company was that if any person wants to be an associate (permanent shopping customer) of the company, he has to pay Rs.5,500/- and after getting himself enrolled he would get products and accessories worth the said amount and also some benefit i.e., premium suit length equivalent to membership cost. Each associate will get free purchase vouchers of NMart stores worth Rs.220/- per month for 48 months, which can be redeemed at its retail outlets across India. The company also introduced credit facility of Rs.1,500/- to its associates, which will be on the first of every month and account has to be settled by 15^th of every month. The counsel

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also narrates the manner how a customer is benefited if he becomes a member of the said scheme.

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(b) The learned counsel for the petitioner submits that even accepting the allegations in the complaint to be true, ingredients constituting offence under The Prize Chits and Money Circulation Schemes (Banning) Act, 1978 and The Andhra Pradesh Protection of Depositors of Financial Establishments Act, 1999 are not made out. He also submits that the Superintendent of Police, Prakasam District, has grossly abused his powers by issuing a notice dated 26.08.2012 under Section 91 CrPC to M/s. Cybersites India Technologies India Private Limited, Mumbai, Maharashtra, directing them to block/hold off all domains registered on behalf of the petitioner or any of its private subsidiaries, block the website of the petitioner i.e., www.nmart.co.in and take the server offline apart from downloading the database back up. He further submits that the Superintendent of Police has no authority or power to issue such orders and instructions and they are illegal. According to him, no useful purpose would be served in blocking the website after commission of the offence. He further submits that specific provisions are made in the Information Technology Act for blocking the website if an offence is committed by an agency authorized under the said Act and as such the Superintendent of Police abused his position in getting the website blocked by invoking his power under Section 91 CrPC. He further submits that even assuming that there was a publication as contemplated under Section 95 CrPC, it is only the State Government which is competent to initiate the reliefs as sought for. Referring to Sections 4 and 5 of The Prize Chits and Money Circulation Schemes (Banning) Act, 1978 and Section 5 of The Andhra Pradesh Protection of Depositors of Financial Establishments Act 1999, he submits that it is only the State Government that is competent to make an appropriate application before the Court for freezing the accounts and not by the investigating agency. He also takes shelter under Section 105 CrPC

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to show that the Superintendent of Police has no right or authority for initiating the action. He submits that website of the company plays a crucial role in the day to day activities of the company as the members download the coupons worth Rs.220/- from the website. Relying upon the observations made by the learned Sessions Judge he submits that there is no material on record to show that the said accounts were used for commission of any offence and hence seeks defreeze of the accounts of the petitioner. Since the entire scheme is for the benefit of a common-man and that the damage which is caused during interregnum is irretrievable he seeks indulgence of the Court under Section 482 CrPC.

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7. On the other hand, the learned Additional Public Prosecutor representing the State would contend that a plain reading of Sections 91, 92 and 105 CrPC give ample power to the Superintendent of Police to investigate into any cognizable offence. As the website was used for the commission of a cognizable offence, the Superintendent of Police has ample power to investigate into the matter. Referring to Section 6 of The Prize Chits and Money Circulation Schemes (Banning) Act, 1978, the learned Additional Public Prosecutor would contend that the offences under this Act being cognizable, the Superintendent of Police will get jurisdiction to investigate into the offence in view of Section 149 CrPC. Hence, the learned Additional Public Prosecutor submits that there is no illegality or impropriety in the order which is subject matter of the challenge in the present petitions.

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8. Before proceeding further, it may be relevant to mention that the present petitions are not filed for quashing the investigation in the said crime. Therefore, it is not necessary for this Court to go into the issue, “as to whether an offence under Sections 4 and 5 of The Prize Chits and Money Circulation Schemes (Banning) Act, 1978 and Section 5 of The Andhra Pradesh Protection of Depositors of Financial

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Establishments Act, 1999 and Section 420 IPC are made out against the petitioner.” The material on record would disclose that challenging the registration of crime, the petitioner herein filed W.P. No.27101 of 2012 to declare the action of the Police officials in interfering with the civil disputes, as arbitrary and illegal and the same is pending.

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9. The point that arises for consideration is “Whether the Superintendent of Police has power to initiate proceedings for blocking the website and freezing the account, when a case is registered for a cognizable offence?”

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10. It may be relevant to refer Sections 91, 95, 102 and 149

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CrPC.

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91. Summons to produce document or other thing.

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(1) Whenever any Court or any officer in charge of a police station considers that the production of any document or other thing is necessary or desirable for the purposes of any investigation, inquiry, trial or other proceeding under this Code by or before such Court or officer, such Court may issue a summons, or such officer a written order, to the person in whose possession or power such document or thing is believed to be, requiring him to attend and produce it, or to produce it, at the time and place stated in the summons or order.

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(2) Any person required under this section merely to produce a document or other thing shall be deemed to have complied with the requisition if he causes such document or thing to be produced instead of attending personally to produce the same.

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(3) Nothing in this section shall be deemed-

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(a) to affect sections 123 and 124 of the Indian Evidence Act, 1872 (1 of 1872 ), or the Bankers' Books Evidence Act, 1891 (13 of 1891 ) or

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(b) to apply to a letter, postcard, telegram or other document or any parcel or thing in the custody of the postal or telegraph authority.

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95. Power to declare certain publications forfeited and to issue search warrants for the same. Where-

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(a) any newspaper, or book, or

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(b) any document, wherever printed, appears to the State Government to contain any matter the publication of which is punishable under

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section 124A or section 153A or section 153B or section 292 or section 293 or section 295A of the Indian Penal Code (45 of 1860 ), the State Government may, by notification, stating the grounds of its opinion, declare every copy of the issue of the newspaper containing such matter, and every copy of such book or other document to be forfeited to Government, and thereupon any police officer may seize the same wherever found in India and any Magistrate may by warrant authorise any police officer not below the rank of sub- inspector to enter upon and search for the same in any premises where any copy of such issue or any such book or other document may be or may be reasonably suspected to be.

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(2) In this section and in section 96,-

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(a) " newspaper" and" book" have the same meaning as in the Press and Registration of Books Act, 1867 (25 of 1867 );

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(b) " document" includes any painting, drawing or photograph, or other visible representation.

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(3) No order passed or action taken under this section shall be called in question in any Court otherwise than in accordance with the provisions of section 96.

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102. Power of police officer to seize certain property.

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(1) Any police officer, may seize any property which may be alleged or suspected to have been stolen, or which may be found under circumstances which create suspicion of the commission of any offence.

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(2) Such police officer, if subordinate to the officer in charge of a police station, shall forthwith report the seizure to that officer.

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(3) 1[ Every police officer acting under sub- section (1) shall forthwith report the seizure to the Magistrate having jurisdiction and where the property seized is such that it cannot be conveniently transported to the Court, he may give custody thereof to any person on his executing a bond undertaking to produce the property before the Court as and when required and to give effect to the further orders of the Court as to the disposal of the same.]

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149. Police to prevent cognizable offences. Every police officer may interpose for the purpose of preventing, and shall, to the best of his ability, prevent, the commission of any cognizable offence.

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11. Section 91 CrPC deals with issuing of summons to produce a document or a thing. Whenever any Court or Officer in charge of a police station considers that the production of a document or a thing is necessary or desirable for the purpose of investigation, enquiry or trial or other proceedings under this Code, such Court can issue summons or such officer can pass a written order to the person in whose possession or power such document or thing is believed to be, requiring him to attend or to produce it at the time and place stated in the summons or order. The learned counsel for the petitioner submits that the said provision only deals with aiding an investigating agency by summoning the accused or a witness to produce any document or a thing which is necessary for the purpose of investigation, enquiry or trial. According to him, Section 91 CrPC is of no help to an act already done and the said provision will not aid the investigating agency. The learned counsel for the petitioner submits the Section 91 CrPC cannot be invoked by the Superintendent of Police, as the word used therein is officer in charge of police station. The said issue with regard to interpretation of the word “officer in charge of police station” came up for consideration before the A p e x Court in Central Bureau of Investigation through S.P., Jaipur v. State of Rajasthan and anothe r^[1] . The issue in the said case was “Whether a Magistrate while referring the complaint under Section 156(3) CrPC can direct the C.B.I. to investigate into the matter. After referring to Section 36 CrPC, the definition of word “officer in charge of a police station” and “police station” as defined in Section 2(o) and 2(s) of the CrPC, the Apex Court observed that the learned Magistrate cannot directly order investigation of a case by C.B.I, and that any police officer superior in rank to the Station House Officer can as well exercise the power to conduct an investigation and all such investigation would then be deemed to be the investigation conducted by the officer incharge of the police station. The Apex Court observed that Section 36 of the Code is not meant to substitute the magisterial power envisaged in Section

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156(3) CrPC though it could support the power of an officer in charge of the police station. The Court held that it is permissible for any superior officer of police to take over the investigation from such officer in charge of the police station either suo-motu or on the directions of the superior officer or even that of the Court. Further, a reading of Section 149 CrPC, would show that every police officer is authorized to prevent the commission of cognizable offence to the best of his ability. Therefore, the argument of the learned counsel for the petitioner that the Superintendent of Police cannot investigate into the matter cannot be accepted.

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12. A perusal of the letter dated 26.08.2012 written by the Superintendent of Police to M/s. Cybersites India Technologies India Pvt. Ltd., would indicate that the intention of the Superintendent of Police was to download the data base hosted with M/s. Cybersites India Technologies India Pvt. Ltd., by providing the necessary user name and password. As stated above, under Section 91 CrPC if the investigating agency considers production of any document or a thing is necessary for the purpose of investigation, inquiry or trial, such officer can by written order cause production of such document. It is true that the word “website” is not mentioned in Section 91 CrPC. The framers of the Code might not have visualized offence being committed through a website. The word “document” used in Section 91 CrPC is not defined anywhere in the Code. But however, Section 29 of the IPC defines “document” and Section 29-A which has been inserted on 17.10.2000 deals with the meaning of the word “Electronic record”. It may be relevant to extract Sections 29 and 29-A of IPC which are as under :-

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Section 29. Document :

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The word “document” denotes any matter expressed or described upon any substance by means of letters, figures or marks, or by more than one of those means, intended to be used, or which may

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be used, as evidence of that matter.

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Explanation 1:- It is immaterial by what means or upon what substance the letters, figures or marks are formed, or whether the evidence is intended for, or may be used in, a Court of Justice, or not.

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29-A Electronic record :-

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The word “electronic record’ shall have the meaning assigned to them in clause (t) of sub-section (1) of Section 2 of the Information Technology Act, 2000.

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Section 2(t) of the Information Technology Act, 2000 defines “electronic record” which is as follows :

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(t) “electronic record” means data, record or data generated, image or sound stored, received or sent in an electronic form or microfilm or computer generated micro fiche;

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13. Though the word “document” does not refer to website or any message sent or stored by electronic device, but it refers to any matter expressed or described upon any substance by means of letters, figures or marks. Section 29-A of IPC which has been incorporated in the year 2000 does not also refer to the word website, but takes within itself the meaning of the said word as defined in Information Technology Act. Section 2(t) of Information Technology Act defines what an Electronic record mean. On a conjoint reading of Sections 29, 29-A and 2(t) of the Information Technology Act it has to be held that the word document as defined in Section 29 takes within the fold the data record, or data generated, received or sent in an electronic form.

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14. At this stage, the learned counsel for the petitioner submits that since Information Technology Act itself provides a mechanism for

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dealing with the offences of this nature, invoking Section 91 CrPC by the Superintendent of Police is unwarranted. It is true that in exercise of its powers conferred under clause (2) of sub section 2 of Section 87 read with Sub section 2 of Section 69-A of Information Technology Act, 2000, the Central Government brought into existence the procedure and safeguards for blocking the access of websites by the public under sub-section (2) of Section 69A;

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15. As per, Rule 3 of the Information Technology (Procedure and Safeguards for Blocking for Access of Information by Public) Rules, 2009 the Central Government shall designate by notification in Official Gazette, an officer of the Central Government not below the rank of a Joint Secretary, as the “Designated Officer, for the purpose of issuing direction for blocking for access by the public any information generated, transmitted, received, stored or hosted in any computer resource under sub-section (2) of Section 69A of the Act”. But the procedure for blocking the websites was issued vide notification No. GSR181(E) dated 27.02.2013. The said procedure which has been issued in the month of February 2013 could not have been invoked by the Investigating agency for the reason that the offence in the instant case took place in the year 2012 itself, and the letter was written by the Superintendent of Police in the month of August 2012. Therefore, the argument of the learned counsel for the petitioner that the Information Technology Act which provides a procedure for blocking the website should have been invoked, cannot be accepted as the same was not in existence either on the date of commission of the offence or on 26.08.2012 i.e., the date on which the Superintendent of Police wrote the letter.

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16. Section 95 CrPC deals with power to declare certain publications forfeited and for issuance of search warrants for seizure of the same. A reading of the said provision would indicate that whenever it appears to the State Government that any publication is

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punishable under Section 124-A or Section 153-A or Section 153-B or Section 292 or Section 293 or Section 295-A of the Indian Penal Code, the Government may, by notification, stating the grounds of its opinion, declare every copy of the issue of the news paper containing such matter and every copy of such book or document be forfeited to the Government and after perusal may seize the same wherever found in India. The Magistrate may issue warrant authorizing any officer not below the rank of Sub Inspector to enter upon and seize the same from any premises where any such copy or book or such document is suspected to be available. Section 96 of the Code prescribes a procedure to be followed in case of such forfeiture. As stated above, the Investigating agency never invoked Section 95 CrPC and as such it may not be necessary to advert to the contentions raised with regard to non compliance of Section 95 CrPC.

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17. As stated earlier, the present crime came to be registered not only for an offence punishable under the provisions of the Prize Chits and Money Circulation Schemes (Banning) Act, 1978 and the A.P. Protection of Depositors of Financial Establishments Act, 1999 but also under Section 420 IPC. The learned counsel for the petitioner submits that it is only the State Government, which is competent to investigate into the matter and as such the Superintendent of Police has no authority to block the website while dealing with the provisions of the Special enactments. It is true that under Section 8 of the Prize Chits and Money Circulation Schemes (Banning) Act, 1978, it is only the State Government which by notification in the official gazette, declare every copy of the newspaper and every copy of the publication containing such material or the advertisement to be forfeited to the State Government. But Section 7(3) of the said Act which deals with power to enter and search, states that all searches under the said Section shall be made in accordance with the provisions of the CrPC. Therefore, at this stage, it may not be necessary to delve into the powers of the Superintendent of Police to block the website more so

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when a case is registered not only for the offences punishable under the provisions of the Prize Chits and Money Circulation Schemes (Banning) Act, 1978 and also A.P. Protection of Depositors of Financial Establishments Act, 1999, but also under Section 420 IPC.

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18. The power of the police to freeze the account, is traced to Section 102(1) CrPC which is as under :

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Section 102 : Power of police officer to seize certain property :-

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(1) Any police officer may seize any property which may be alleged or suspected to have been stolen, or which may be found under circumstances which create suspicion of the commission of any offence.

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19. The issue as to whether the bank account is a property within the meaning of Section 102 CrPC came up for consideration before the Apex Court in State of Maharashtra v. Tapas D.Niyog i^[2] wherein the Apex Court categorically held that all the properties whether movable or immovable can be seized by the police under Section 102 CrPC.

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20. The power of police to freeze the account is not disputed by the learned counsel for the petitioner, but he submits that if the account is not defreezed irreparable damage would be caused to the petitioner. According to him it has become very difficult for the company to pay salaries to its employees and also to meet the day to day expenditure of the company. The learned Additional Public Prosecutor submits that the case is still at the stage of investigation and there is every likelihood of accused committing further offences of this nature if the account and website are released.

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21. The material on record would disclose that Writ Petition which has been filed challenging the registration of a crime and intervention of police in its business is still pending and no orders are passed till date. The applicability of the two special enactments to the

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facts of the case is still pending adjudication. Moreover, the letter dated 26.08.2012 would indicate that blocking of website was only for the purpose of gathering material with regard to the offences alleged to have been committed by the accused. The said letter does not anywhere indicate that website is being blocked so as to prevent the accused from committing the offences in future. Though the learned counsel for the petitioner submits that the police have investigated into the matter and filed a charge-sheet, no material is placed before this Court to substantiate the same. If the investigation is completed, it is always open to the petitioner to renew his application before the trial court as one of the grounds on which the petitions were dismissed was due to pendency of the investigation.

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22. With the above observations, both the criminal petitions are disposed of.

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As a sequel to it, miscellaneous petitions pending if any in these criminal petitions, shall stand closed.

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_____________________ C. PRAVEEN KUMAR, J

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Date:04.02.2014 GM

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[1] (2001) 3 SCC 333.

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[2] 1999 Crl.L.J. 4305

New Look Retails Pvt. Ltd., v. The State of Andhra Pradesh

Case brief

What is this about?

What did the court decide?

New Look Retails Pvt. Ltd., v. The State of Andhra Pradesh

Case brief

What is this about?

What did the court decide?

What the court decided

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