Sri C Parthasarthy vs State Of Karnataka
2021 Latest Caselaw 1549 Kant

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     IN THE HIGH COURT OF KARNATAKA AT BENGALURU

       DATED THIS THE 6TH DAY OF FEBRUARY, 2021

                         BEFORE

           THE HON'BLE MR. JUSTICE H.P. SANDESH

             CRIMINAL PETITION No.4606/2019

BETWEEN:

1.   SRI C PARTHASARTHY
     AGED ABOUT 63 YEARS
     S/O LATE C R RAJAGOPALAN
     NO.8-2-293/82/A/648
     PLOT NO.648, ROAD NO.34
     JUBILEE HILLS
     HYDERABAD-560 033

2.   SRI YUGANDHAR MEKA
     AGED ABOUT 67 YEARS
     S/O. LATE M ANANJANEYULU
     PLOT NO.22, NANDAGIRI HILLS
     ROAD NO.69, JUBILEE HILLS
     HYDERABAD-560 033

3.   SRI ABHIJIT BHAVE
     AGED ABOUT 46 YEARS
     S/O SRI CHINTAMAN BHAVE
     NO.1401, 14TH FLOOR
     AMARJIVAN BUILDING
     BANDRA EAST
     MUMBAI-400 050

4.   SRI ASHISH AGARWAL
     AGED ABOUT 46 YEARS
     S/O SRI VIJAYKUMAR AGARWAL
     FLAT D-3403, ASHOK TOWERS
     DR S S RAO ROAD, PAREL
     MUMBAI-400 013.
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5.   SRI PRAVEEN GARLE
     AGED ABOUT 41 YEARS
     S/O SRI SHAMRAO K GARLE
     NO.904, IRIS-B WING
     UNNATHI GARDENS
     OPP. TO DEVEDAYA NAGAR
     POKHRAN ROAD NO.1
     THANE-400 606.


6.   SRI BHAGAWAN DAS NARANG
     AGED ABOUT 74 YEARS
     S/O SRI GURDIT SINGH NARANG
     B-69, GROUND FLOOR
     GULMOHAR PARK
     NEW DELHI - 110 049.

7.   SRI NITIN SABHARWAL
     AGED ABOUT 34 YEARS
     S/O SRI RAMKISHAN SABHARWAL
     NO.E-23 (A), LAJPATH NAGAR
     NEW DELHI - 110 024.

8.   SRI PRAVEENBHAI BHAGAWANJI
     AGED ABOUT 70 YEARS
     S/O SRI BHAGWANJI MATHURADAS AMLANI
     C-8, GOKUL NANDANVAN CHS LIMITED
     MAHAKALI CAVES ROAD
     OPP.TO DOMINOS PIZZA SHOP
     ANDHERI EAST
     MUMBAI-400 093

9.   SRI NITIN SAXENA
     AGED ABOUT 51 YEARS
     S/O SHAILENDRA PRASAD SAXENA
     USHA SADAN, 24-PREMNAGAR
     OPP:JAWAHAR BHAVAN
     ASHOK MARG
     LUCKNOW-226 001
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10.    SRI PRATHIVADI BHAYANKARAM RAMPRIYAN
       AGED ABOUT 52 YEARS
       S/O LATE P B KRISHNASWAMY
       NO.1-D, MAYFAIR APARTMENT
       ROAD NO.2, BANJARA HILLS
       HYDERABAD-500 034

11.    SRI VENKATA SHESHA RAVI PRASAD CHAVALI
       AGED ABOUT 52 YEARS
       S/O SRI VENKATA SUBRAMANIAN CHAVALI
       NO.24-30/2 G1, VISHNUPURI COLONY
       BEHIND RAMACHANDRA THEATRE
       MALKAJGIRI
       HYDERABAD-500 047

12.    SRI CHETHAN DEHERKAR
       AGED ABOUT 40 YEARS
       S/O SRI DILIP SADASHIV DEHERKAR
       "MATOSHREE BUNGALOW"
       SRI MA VANASTHALI ASHRAM
       BEHIND MUNICIPAL COMMISSIONER'S BUNGALOW
       PATLIPADA
       THANE WEST-400 607

13.    SRI THOMAS STEPHEN
       AGED ABOUT 39 YEARS
       S/O SRI STEPHEN JOSEPH
       NO.6022/SOBHA CHRYSANTHEMUM
       THANISANDRA MAIN ROAD
       HEGDE NAGAR
       BENGALURU-560 077.                ... PETITIONERS

          [BY SRI C.V. NAGESH, SENIOR COUNSEL FOR
         SRI. AJAY KADKOL, ADVOCATE (THROUGH VC)]

AND:

1.     STATE OF KARNATAKA
       BY STATION HOUSE OFFICER
       BASAVANAGUDI POLICE STATION
       BENGALURU
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     REPRESENTED BY SPP
     HIGH COURT OF KARNATAKA
     BENGALURU-560 001

2.   SMT KETKI SHAH TALATI
     AGED ABOUT 46 YEARS
     W/O MAYANK HARSHAD TALATI
     NO.P-801, TOWER-7
     ADARSH PALM RETREAT
     DEVARABEESANAHALLI
     OUTER RING ROAD
     BENGALURU-560 103.                             ... RESPONDENTS

            (BY SRI. K.S. ABHIJITH, HCGP FOR R1
           SMT. SAHANA B.V., ADVOCATE FOR R2)

      THIS CRIMINAL PETITION IS FILED UNDER SECTION 482
OF CR.P.C PRAYING TO QUASH THE FIR IN CR.NO.90/2019
REGISTERED AT BASAVANGUDI P.S., BENGALURU FOR THE
OFFENCES PUNISHABLE UNDER SECTIONS 406 AND 420 OF
IPC, AS AGAINST THE PETITIONERS AND WHICH FIR IS
SUBMITTED TO THE COURT OF IV A.C.M.M., AT BENGALURU
CITY.

     THIS CRIMINAL PETITION HAVING BEEN HEARD AND
RESERVED FOR ORDERS ON 20.01.2021, THIS DAY, THE COURT
PRONOUNCED THE FOLLOWING:

                             ORDER

This petition is filed under Section 482 of Cr.P.C. praying

this Court to quash the FIR in Crime No.90/2019 registered by

Basavanagudi Police Station, Bengaluru, for the offences

punishable under Sections 406 and 420 of IPC.

2. The factual matrix of the case is that the

complainant in the complaint dated 14.06.2019 made an

allegation against different companies, who have acted as

facilitators to invest the money with the different limited

companies. Based on the complaint, the police have registered a

case against these petitioners, who have been arraigned as

accused Nos.1 to 13 in the FIR.

3. The main contention of the petitioners herein is that

neither the Karvy Group of Companies nor its executives, who

are the petitioners herein, have any role to play in the losses

caused to the complainant. The complainant was fully aware that

there was risk of default/loss on her investment. The petitioners

have no influence or control over the market forces and their

services and in spite of their best expertise and rich experience

in the field cannot cause or control the fluctuations or market

conditions, since the same are influenced by many unforeseen

factors. It is also contended that in terms of the contract that

the second respondent has entered into with the Karvy Group of

Companies, it is her responsibility to make enquiries and due

diligence before making the investments and Karvy Group of

Companies have no obligation to do the same or to indemnify

the complainant/second respondent. The complainant has

already initiated legal proceedings against the defaulting

companies to retrieve her investments by invoking the securities

that were offered by the companies in which she had made

investments. It is also contended that the role of Karvy Group of

Companies is only advisory in nature.

4. The petitioners have also contended that the very

registration of the case is an abuse of process and on going

through the face value of the complaint it does not constitute

any offence. The basic essential ingredients that would constitute

the commission of offences for which the crime is registered and

the same is lacking in the allegations and it requires an

interference of this court.

5. The learned counsel in support of the grounds urged

in the petition vehemently contends that when the petitioners

are acted as facilitators in between the complainant and the

Company in which the complainant invested the money they

have not promised to make good the loss. It is the risk of the

complainant for investing only they have given the advice.

Hence, there cannot be any criminal prosecution against these

petitioners.

6. The learned counsel in support of his arguments, he

relied upon the Judgment of the Apex Court in the case of

Central Bureau of Investigation, Hyderabad v. K.

Narayana Rao reported in (2012) 3 Supreme Court Cases

(Cri) 1183, in this Judgment, the Apex Court held that, the

Advocate, who gave the opinion had discharged only advisory

committee he cannot be fastened with criminal prosecution in

absence of tangible evidence that he had aided or abetted other

conspirators. The learned counsel referring to this Judgment also

would submit that the principle laid down in the Judgment is

aptly applicable to the case on hand. Since these petitioners

have also given the advisory for investment and facilitated the

complainant to invest the money and not assured any security

for their investment. It was the risk of the complainant only.

7. Per contra, learned counsel for respondent No.2

would submit that the petitioners have sought the relief of

quashing the proceedings. The case is registered based on the

complaint and while quashing the proceedings Court has to

looked into the contents of the complaint. The complaint, which

is given against the petitioners runs to page Nos.1 to 12. The

learned counsel referring to this complaint would submit that in

paragraph No.7 of the complaint, a specific allegation is made

against these petitioners that they have breached its fiduciary

duty towards the complainant by marketing and selling illegal

and unsafe investment products and failed to discharge duties as

portfolio Manager and Investment advisor. It has sold the

products as secured and safe while actively working towards

breaching the security cover by over selling and complete lack of

due diligence and requested to conduct thorough inspection of

Karvy's Books of accounts and builder's Books of Accounts and

find out how much money they have raised from investors for

each builder scheme vs. actual value of security marketed. The

complaint discloses prima facie case against the petitioners and

hence there cannot be any quashing.

8. Having heard the arguments of respective counsel

for the parties and while exercising the powers under Section

482 of Cr.P.C., quashing of the FIR, the Court has to look into

the contents of the complaint, whether the contents of the

complaint constitute an offence invoked against the petitioners.

9. This Court would like to refer to the Judgment of the

Apex Court in the case of DINESHBHAI CHANDUBHAI PATEL

v. STATE OF GUJARAT AND OTHERS WITH OTHER

CONNECTED MATTERS reported in (2018) 3 SCC 104, the

Apex Court in this Judgment while exercising the inherent

powers of High Court under Section 482 of Cr.P.C, in contest of

challenge to FIR summarized the principles. The Apex Court in

this Judgment has held that, the Court has to examine as to

whether the factual contents of FIR disclose any prima facie

cognizable offences or not. It is further held that the High Court

cannot act like an investigating agency and nor can exercise

powers like an appellate court. Question is required to be

examined, contents of FIR and prima facie material and the

same not requires 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 held that

once the Court finds that the FIR does disclose prima facie

commission of any cognizable offence, it should stay its hand

and allow the investigating machinery to step in to initiate the

probe to unearth crime in accordance with the procedure

prescribed in Cr.P.C.

10. Having perused the principles laid down in Central

Bureau of Investigation, Hyderabad's case (supra), the Apex

Court held that when the advice given by an Advocate there

cannot be any criminal prosecution against the counsel. The

Court has to look into the contents of the complaint and in the

case on hand, the petitioners have not discharge the duties of an

Advocate. The contents of the complaint disclose that there was

an agreement between these petitioners and the complainant

with regard to the investment is concerned.

11. Having considered the face value of the complaint,

the specific allegations are made against these petitioners that

they assured that there was a security for the investment and

also there was a due diligence and introduced the companies to

invest the money. Based on their assurance and their facilitators

consulted with the companies and it is a specific averment in the

complaint in paragraph Nos.6 and 7 that the loss of principal

caused by incorrect advice given by KPW who marketed illegal,

non viable schemes as secured schemes and listed by making

the table format. It is also an allegation that the amounts paid to

the builders and also advisory fee paid to these petitioners and

these petitioners have defrauded the complainant and chanalised

false investment giving advice and specific allegation is made

that breached its fiduciary duty towards the complainant

advising them for marketing and selling illegal and unsafe

investment products. It is also an allegation that the same is as

secured and safe. Hence, requested to take action against all

top brass of Karvy Group of Companies, who have benefited

from marketing these unsafe/unviable schemes.

12. When the specific allegation is made against these

petitioners that they have promised that it was secured and safe

investment and further allegation is made that there was no any

direct contact between the builders and complainant only

processed the entire papers on behalf of the said companies and

there was no any interaction between the complainant and the

builders everything was done by these petitioners including

obtaining the signature of the complainant, it requires an

investigation. The Court has to look into the contents of the

complaint at the initial stage when the specific allegation is made

with regard to defraud committed by these petitioners by

assuring that it was safe and secured investment. The

ingredients of Section 420 of IPC attracts whether such conduct

of the petitioners made with a dishonest intention makes the

complainant to invest the money at inception.

13. Having considered the complaint allegations, it is

clear that there was a promise in the beginning initial stage with

the dishonest intention made the complainant to invest the

money in different limited companies and all the transactions

took place at the instance of these petitioners. Hence, I am of

the opinion that it is not a fit case to exercise the powers under

Section 482 of Cr.P.C.

14. Having heard the respective counsel and materials

on record and also on perusal of the records and in view of the

principles laid down in the judgments referred supra, the Apex

Court has made it clear that the Court should not act as an

investigator and the same has to be probed to unearth the crime

only by Investigating Officer and also the Court cannot look into

the evidence when the crime is registered and the same has to

be investigated by the Investigating Officer. Only the Court has

looked into the material while taking cognizance whether the

Investigating officer has collected the material to proceed with

the case and not at the premature stage.

15. In view of the discussions made above, I pass the

following:

ORDER

(i) Petition is rejected.

(ii) Liberty is given to the petitioners to approach this Court after filing of the charge-sheet, if need arises.

In view of rejection of the main petition, I.A.No.2/2019 for

vacating stay does not survive for consideration and the same

stands disposed of.

Sd/-

JUDGE

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