Karnataka High Court

Sri Sheik Abdul Ajeez vs The Station House Officer on 27 November, 2023

Author: Mohammad Nawaz

Bench: Mohammad Nawaz

                                           -1-
                                                         NC: 2023:KHC:42865
                                                      CRL.A No. 364 of 2023




                    IN THE HIGH COURT OF KARNATAKA AT BENGALURU

                     DATED THIS THE 27TH DAY OF NOVEMBER, 2023

                                        BEFORE
                      THE HON'BLE MR JUSTICE MOHAMMAD NAWAZ
                           CRIMINAL APPEAL NO. 364 OF 2023
               BETWEEN:

               1.    SRI SHEIK ABDUL AJEEZ
                     S/O MOHAMMED
                     AGED ABOUT 38 YEARS (68 YEARS)
                     R/AT NO.114 TAAJ HOUSE
                     2ND BLOCK 4TH CROSS
                     AKSHAY NAGAR
                     BANGALORE-560016.
                                                               ...APPELLANT
               (BY SRI. JAIRAJ G., ADVOCATE)
               AND:

               1.    THE STATION HOUSE OFFICER
                     STATE OF KARNATAKA
                     BY KADUGONDANA HALLI
                     POLICE STATION
Digitally            REP. BY STATE PUBLIC PROSECUTOR
signed by
SUMITHRA             HIGH COURT
R                    BANGALORE-560001.
                                                             ...RESPONDENT
Location:
               (BY SMT. SOWMYA R., HCGP)
High Court
of Karnataka
                    THIS CRL.A IS FILED U/S 16 K.P.I.D.F.E. ACT PRAYING
               TO SET ASIDE THE ORDER DATED 22.08.2022 OF THE COURT
               BELOW BY DISCHARGING THE APPELLANT WHO ARRAYED AS
               ACCUSED NO.7 IN SPL.C.C.NO.1443/2019, NOW PENDING ON
               THE FILE OF XLVII ADDL. CITY CIVIL AND SESSIONS JUDGE
               AND SPECIAL JUDGE FOR CBI CASES, BENGALURU (CCH-48)
               FOR OFFENCE P/U/S 3, 4 AND 5 OF PRIZE CHITS AND MONEY
               CIRCULATION SCHEMES (BANNING) ACT, 1978 AND SEC. 420,
               406, 506, 120B R/W 34 OF IPC AND SEC. 9 OF THE
                             -2-
                                        NC: 2023:KHC:42865
                                     CRL.A No. 364 of 2023




KARNATAKA PROTECTION OF INTEREST OF DEPOSITORS IN
FINANCIAL ESTABLISHMENT ACT, 2004.

     THIS APPEAL IS COMING ON FOR ADMISSION, THIS
DAY, THE COURT DELIVERED THE FOLLOWING:
                       JUDGMENT

This appeal is preferred by accused No.7 under

Section 16 of the Karnataka Protection of Interest of

Depositors in Financial Establishments Act, 2004 (for short

'KPIDFE Act'), against the order dated 22.08.2022 passed

in Spl.CC.No.1443/2019 by the Court of XLVII Additional

City Civil and Sessions Judge and Special Judge for CBI

Cases, Bengaluru.

2. Vide impugned order, the learned Sessions

Judge was pleased to allow the applications filed by

accused Nos.1 to 9 under Section 227 of Cr.P.C., and

discharged the said accused of the offence under Sections

3, 4 and 5 of Prize Chits and Money Circulation Scheme

(Banning) Act (PCMCS (Banning) Act), 1978, but refused

to discharge them for offences under Sections 406, 420,

506, 120(B) of IPC and Section 9 of KPIDFE Act.

NC: 2023:KHC:42865

3. I have heard the learned counsel for the

appellant and the learned High Court Government Pleader

for the State and perused the material on record.

4. Cr.No.594/2018 of Kadugondana Halli Police

Station is registered against accused Nos.1 to 5 and

others, on a complaint lodged by one Arif Pasha, for the

offence punishable under Sections 420, 406, 506 r/w 34

IPC. In the complaint lodged to the Additional

Commissioner of Police, Bengaluru, which was later

directed to the Station House Officer (SHO) of

Kadugondana Halli Police Station, Bengaluru, the

allegations of cheating, criminal breach of trust, conspiracy

and threat to life were made against the Chairman and

Trustees etc., of one 'Aala Ventures Limited'. It is alleged

that the accused persons made conspiracy to cheat the

public and started a company under the name of "Aala

Ventures Limited', gave wide advertisement, conducted

seminars, posing themselves as experts in marketing in

the line of construction, trading and other activities and

NC: 2023:KHC:42865

invited funds from the public for investment of money in

their company. On such motivation by the company, the

complainant and his family members invested an amount

of Rs.1,09,50,000/- (Rupees one crore nine lakhs fifty

thousand only), on an assurance that they would get

returns varying from 0% - 11% per month profit amount

on the basis of profit sharing. Further, to attract further

customers and to expand business, profits were paid but

gradually the accused stopped paying the profits from the

fourth month of their establishment, which is from the

month of April, 2018 etc.

5. Charge sheet was filed against accused Nos.1 to

10 for the offence punishable under Sections 420, 406,

506, 120(B) r/w 34 IPC and Sections 3, 4 and 5 of the

PCMCS (Banning) Act.

6. It is alleged that the accused have collected

money to the tune of Rs.1,88,72,800/- (Rupees one crore

eighty eight lakhs seventy two thousand eight hundred

only) from various persons assuring them returns from

NC: 2023:KHC:42865

0% - 11% per month on the basis of profit, but later

without returning the amount, committed misappropriation

etc., and further accused Nos.8 to 10 threatened the

complainant and others with dire consequences, when

they visited the company for return of their amount.

7. The learned Sessions Judge while partly

allowing the application filed under Section 227 of Cr.P.C.

came to the conclusion that the charge sheet papers and

the complaint does not disclose that the accused persons

conducted price chits and money circulation business. It

is observed that the accused have invited the investors to

make deposits in their company on an assurance to

provide high profits in short time and therefore the

averments made in the charge sheet does not attract the

ingredients of Sections 3, 4 and 5 of the PCMCS (Banning)

Act. Hence, under the said provisions, the accused were

discharged. However, insofar as other charge sheeted

offences are concerned, the application was rejected

observing that the investment agreement, statement of

NC: 2023:KHC:42865

account, copies of the sale deeds prima facie establish that

the accused persons received the deposits from the public

and failed to make repayment with profit and further, the

accused have acquired several properties out of the

deposits, which prima facie discloses their fraudulent

intention from the inception.

8. It is the contention of the learned counsel for

appellant that against the appellant there are no

allegations of cheating or misappropriation in the FIR.

He contends that the appellant had resigned from the

company, prior to the alleged commission of offence. He,

further contends that there is no material collected while

filing the charge sheet to show that the accused was a

part of the company in any capacity at the time of alleged

commission of the offence and no material is collected

showing that he has acquired the properties out of the

deposits. It is contended that similarly placed persons,

who were a part of the company prior to commission of

the offence, have not been charge sheeted.

NC: 2023:KHC:42865

9. The learned High Court Government Pleader

contends that as per the statements of the witnesses even

the appellant has committed the offence and on a false

assurance that the depositors will get profit from 5%-11%,

huge amount was received by the accused persons and

then they cheated the depositors. She therefore contends

that there are sufficient grounds to proceed against the

appellant.

10. The contents of FIR reveal that the offence is

alleged to have committed between 01.01.2018 and

29.11.2018. The complaint dated 27.11.2018 was sent to

the Additional Commissioner of Police, pursuant to which

FIR in Cr.No.594/2018 was registered at Kadugondana

Halli Police Station against accused Nos.1 to 5 and others.

11. The learned counsel for the appellant/accused

has furnished a copy of the Resolution passed at the

meeting of the Board of Directors of 'Aala Ventures

Limited' dated 11.12.2017, wherein it is seen that the

resignation of the appellant by name Sheik Abdul Aziz was

NC: 2023:KHC:42865

accepted, effective from 08.12.2017. Further, it could be

gathered that he has been appointed as Additional Director

of Aala Ventures Limited on 18.02.2015, but he was not

given any responsibilities to cash transactions, cheque

etc., and he was not involved in any set of transactions.

Be that as it may, the appellant was relieved from all

responsibilities from the date of his resignation i.e.,

08.12.2017. Charge sheet material does not indicate as

to in what way the appellant is responsible in committing

the offence between 01.01.2018 and 29.11.2018. It is

submitted that the other accused persons have continued

to be the Directors of the Company and accused No.1 is no

more.

12. It is also pertinent to see that some of the past

Directors, similarly placed as the appellant were not

arraigned as accused. Even the name of the appellant

does not figure in the FIR. There are material to show

that the appellant had resigned from the Company prior

to commission of the alleged offence and no sufficient

NC: 2023:KHC:42865

materials are collected by the prosecution to show that

even the appellant is involved in the commission of the

offence. The appellant has made out sufficient grounds for

his discharge. Hence, the prayer of the appellant for

discharge requires consideration. Accordingly, the

following:

ORDER

i. The criminal appeal is allowed.

ii. The Order dated 22.08.2022 passed in

Special C.C.No.1443/2019 by the Court of

XLVII Additional City Civil and Sessions Judge

and Special Judge for CBI Cases, Bengaluru,

directing to proceed under section 406, 420,

506, 120(B) of IPC and Sec. 9 of KPIDFE Act,

2004, insofar as Appellant/ accused No.7 is

concerned, is hereby set aside.

ii. The appellant/accused No.7 is discharged

in Special C.C.No.1443/2019 on the file of