Jonna Venkata Tirupati Rao vs State Of Gujarat
2023 Latest Caselaw 2125 Guj

      R/CR.MA/21279/2022                              ORDER DATED: 07/03/2023




              IN THE HIGH COURT OF GUJARAT AT AHMEDABAD

              R/CRIMINAL MISC.APPLICATION NO. 21279 of 2022

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                           JONNA VENKATA TIRUPATI RAO
                                     Versus
                               STATE OF GUJARAT
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Appearance:
MR MUKESH RANA WITH MR KUNAL N SHAH(6521) for the Applicant
MR DK TRIVEDI, for respondent no.2
MR LB DABHI APP for the Respondent(s) No. 1
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     CORAM:HONOURABLE MR. JUSTICE ILESH J. VORA

                                 Date : 07/03/2023

                                  ORAL ORDER

1. Apprehending the arrest in connection with FIR being I. CR. No. 9 of 2022 registered with Economic Offices Wing, CID Crime, Gandhinagar for the offences punishable under Sections 409, 406, 420, 467 468, 477(A) of the IPC, the applicant herein is seeking pre- arrest bail under Section 438 of the Cr.P.C.

2. Facts and circumstances giving rise to file present application are that, the complainant Shashikant Patel, being a Director of Sadbhav Engineering Ltd, lodged an FIR against in all 7 persons. The applicant Mr. Jonna Venkata Rao, has been impleaded as accused no.1 in the FIR. He is the Director of Gayi Adi Management Trends Pvt. Ltd., which is in the business of investment and finance. According to case of the complainant, he met the applicant herein and other persons through finance broker and requested for loan of Rs.6 crore. The company Gayi Adi Management extended a loan of

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Rs.6 crore to the borrower company / Shailesh Patel, against which, as per the arrangement/ understanding which was also reduced into writing, the borrower had to transfer / securities 3183300 shares of M/s. Sadbhav Engineering Ltd., as a collateral against the loan amount, which transaction called 'loan against share'. Accordingly, the amount was transferred by the accused company and reciprocally the shares were transferred in the multiple tranches. As per the understanding the complainant borrower opened demate account with accused company i.e. GSV Securities Pvt. Ltd., and has also provided signed DIS Slips to the lender company as a collateral as a loan against advance and further agreed to pay borrowed amount and interest thereof. It is alleged in the FIR that, at relevant time, value of the shares was about 24 crores and without knowledge of the complainant borrower, the shares sold off in the open market and fetched priace was Rs.16,44,33,083/-. It is further alleged that, the borrower company had never signed the DIP slips and after selling of the shares, the false mails were sent to the borrower company informing that, their shares are still lying in the demate account. In such circumstances, it is alleged that, the applicant accused and others have hatched the conspiracy for their economic benefits and fraudulently, by forging the signatures on the DIP slips, committed an offence of cheating, criminal breach of trust and forgery.

3. In the aforesaid facts, learned counsel Mr. Mukesh Rana with Mr. Kunal A. Shah and Randhir Kumar submitted that the questioned FIR arising out of third subsequent new complaints filed in the year 2022 regarding the same transaction and is gross abuse of process of

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law and maliciously, a fresh complaint for the same transaction concealing the closure of previous complaint, having been filed with a view to humiliating the applicant by arresting him. It is submitted that, the applicant being a Director, never met, communicated or iterated with the complainant regarding the said transaction in any manner / capacity whatsoever personal or otherwise and the applicant is based out of Hyderabad and has never visited Gujarat regarding said transaction. The applicant is a Director of the Companies and has to supervise around more than 600 employees working under him. Thus, the alleged transaction as referred in the FIR is purely a contractual and civil in nature and relationship with the accused the accused company and complainant is borrower and lender. The agreement / term sheet were admittedly exchanged between the parties over e-mail. Thus, therefore the applicant is unnecessarily being roped in as an accused. The Apex Court time and again held in its various judgment that, merely because the accused are Chairman, Director of the Company, without any specific role attributed and the role played by them in their capacity, they cannot be arraigned as an accused, more particularly, they cannot be held vicariously liable for the offence committed.

4. In view of the aforesaid contentions, learned counsel for the applicant would submit that, when prima-facie case is not made out against the applicant herein and considering the false and frivolous prosecution, the case is made out for exercising judicial discretion, more particularly, when custodial interrogation of the applicant is not necessary, the application may be allowed with appropriate

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condition.

5. Learned State Counsel Mr. L.B. Dabhi and the counsel Mr. D.K.

Trivedi, appearing for the original informant, vehemently opposed the prayer made by the applicant and contended that, the accused being a Director of both the Companies, with malafide intention sold, redeemed and transferred the shares at a lower price, without giving any prior notice as per the terms and conditions of the contract, which shows that accused had fraudulent and dishonest intention at the time of entering into contract. It is submitted that, the accused have misused the Delivery Instructions Slips (DIP) and by forging the sign of the complainant, the shares were redeemed and transferred with discounted price without informing the complainant which prima-facie established that the applicant and co-accused, in furtherance of their common object to cheat the complainant, have committed the offence of cheating, criminal breach of trust and forgery. It is further submitted that, under which circumstances, the accused have forged the signature of the complainant for using the DIP slips and the transferred and redeemed the shares at discounted price and what the monetary benefits they have received is required to be investigated at grass-root level for which, without custodial interrogation of the applicant, the investigation officer cannot reached at the grass-root level of the entire conspiracy. It is further submitted that, it is not simple a breach of contract but a systematic planned conspiracy hatched by the accused, to cheat the complainant for financial benefits. Lastly, it is submitted that, the accused are habitual offender. In Delhi, the FIR on the same line registered

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against the accused, which facts established that, the prima-facie case is made out against the applicant accused and others and therefore, no exceptional circumstances exist for exercising judicial discretion.

6. Having regard to the facts and circumstances of the present case and on perusal of the contents of the FIR and material placed on record, it appears that the complainant had availed loan of Rs.6 crore with certain terms and conditions and same has been reduced into writing. The loan was sanctioned to the complainant against which, he had transferred 31,83,300 shares of M/s. Sadbhav Engineering Pvt. Ltd as a collateral against the loan amount. The alleged transaction entered into between the parties in the month January-February, 2020. As per the agreement, the complainant borrower opened a demate account with accused company GSV Security Pvt. Ltd., and had provided DIP slips to the lender company. It is further agreed by the parties that, the borrower complainant was required to transferred additional shares to the lender in the event of value of shares falling down below the 2.5 times (as MTN) of the loan amount to maintain as collateral. It is alleged by the lender company that, the complainant borrower breached their contractual obligation and even the price of the shares drastically dropped, thereby, reducing the value to less than 25-30% of the initial value and failed to fulfill his reciprocal obligation and also failed repay the interest and principal amount inspite repeated reminder by the lender company and therefore, the company has no other option to recover the money and to reduce the loss, as a result, the company was

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constrained to redeem and transfer the shares and finally sold off in the market and same was within the knowledge of the borrower company as it is a listed company. So far case of the complainant is concerned, it is alleged that, without informing the company, the shares were transferred and sold off with discounted price despite the higher value of the shares. It is further alleged that, the borrower Shailesh Patel, never signed the DIP slips but fraudulently and with dishonest intention, by utilizing DIP slips by forging his signature, have committed an offence of forgery and thereby, caused the financial loss to the borrower company.

7. In view of the peculiar facts and circumstances of the present case, this Court is of the prima-facie view that, it is the third attempt on the part of the complainant to lodge an FIR. Earlier point of time, when complaint was submitted to Navrangpura Police Station, Ahmedabad the complainant had not raised the issue of forged signature allegedly made on DIP Slips. The second complaint with Regulatory Authority (SEBI), wherein, also, the issue of forged signature having not been raised. Both the earlier complaints closed by the authority concerned and did not register criminal complaint. In the present FIR, for the first time, the ingredients of forgery have been disclosed. Thus, prima-facie, the dispute raised in the FIR essentially a business transaction, relating to breach of contract. It needs to be noted that, it has not been alleged that accused had fraudulent or dishonest intention at the time of entering into loan agreement. The entire transaction of loan amount, was between borrower and lender company Gayi Adi Management Trends Pvt.

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Ltd.. The applicant being a Director of the Company has been implicated in the offence and it is settled law that, when the company is offender, vicarious liability of the Director, cannot be imputed automatically, in the absence of any statutory provision to this effect.

8. In view of the peculiar facts and circumstances of the present case and considering the allegations leveled against the applicant herein, it prima-facie appears that, in order to settle the dispute the criminal machinery put into motion by the complainant. In the case of Arnab Manoranjan Goswami Vs. State of Maharashtra & Ors., (2020) 13 Scale, 311, the Apex Court, in para-67 of the judgment, observed that, the High Court has to ensure that, criminal law does not become a weapon for selective harassment of citizens. In such circumstances, this Court is convinced that, exceptional circumstances exist to grant extra-ordinary remedy as there is no need for personal interrogation of the applicant and therefore, if relief is granted, then, no prejudice would cause to the investigation.

9. For the foregoing reasons, considering the facts and circumstances of the present case, and law laid down in case of Siddhram Stalingappa Mahetra Vs. State of Maharashtra, 2011(1) SCC 694, this is a fit case to grant pre-arrest bail as prayed for.

10. In the result, the present application is allowed. The applicant is ordered to be released on bail in the event of his arrest in connection with a FIR being I. CR. No. 9 of 2022 registered with Economic Offices Wing, CID Crime, Gandhinagar on his executing a

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personal bond of Rs.10,000/- (Rupees Ten Thousand Only) with one surety of like amount on the following conditions:

(a) shall cooperate with the investigation and make himself available for interrogation whenever required;

(b) shall remain present at concerned Police Station on 23.03.2023 between 11.00 a.m. and 2.00 p.m.;

(c) shall not directly or indirectly make any inducement, threat or promise to any person acquainted with the fact of the case so as to dissuade him from disclosing such facts to the court or to any police officer;

(d) shall not obstruct or hamper the police investigation and not to play mischief with the evidence collected or yet to be collected by the police;

(e) shall at the time of execution of bond, furnish the address to the investigating officer and the court concerned and shall not change their residence till the final disposal of the case till further orders;

(f) shall not leave India without the permission of the Trial Court and if having passport shall deposit the same before the Trial Court within a week; and

(g) it would be open to the Investigating Officer to file an application for remand if he considers it proper and just and the learned Magistrate would decide it on merits;

11. Despite this order, it would be open for the Investigating Agency to apply to the competent Magistrate, for police remand of the applicant. The applicant shall remain present before the learned Magistrate on the first date of hearing of such application and on all subsequent occasions, as may be directed by the learned Magistrate.

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This would be sufficient to treat the accused in the judicial custody for the purpose of entertaining application of the prosecution for police remand. This is, however, without prejudice to the right of the accused to seek stay against an order of remand, if, ultimately, granted, and the power of the learned Magistrate to consider such a request in accordance with law. It is clarified that the applicant even if, remanded to the police custody, upon completion of such period of police remand, shall be set free immediately, subject to other conditions of this anticipatory bail order.

12. At the trial, the Trial Court shall not be influenced by the prima facie observations made by this Court in the present order.

13. Rule is made absolute to the aforesaid extent. Direct service is permitted.

(ILESH J. VORA,J) P.S. JOSHI