₹73,00,000/- (Rupees Seventy-Three Lakhs only)
and the remaining amount was available in the said
account as on 30-11-2011. These withdrawals were
by way of transfer of the amounts in favour of the
Trustees and other dummy accounts held by the
Trustees. This is one of the methods adopted by
the Accused 1 to 5 to misappropriate the funds
of the trust.
employee concerned with the collection of the fees.
The pass books available with the aforesaid persons
of the various accounts of such nature will indicate
that crores of rupees have been siphoned by the
aforesaid persons. The actual collection of the
donations and the fees are not reflected truly in the
accounts of the Trust. On the other hand, the
donations and the fees are siphoned off personally
by the aforesaid persons. All these facts had been
amply brought to the notice of the IO CCB.
4. The protestors submit that, as per the Trust Deed, the
office bearers of the Trust are permitted to draw a reasonable
salary commensurate with the duties they discharge. All the
trustees are not entitled to draw the salary. It is only the real
office bearers who are entitled to draw salary. In the guise of
drawing the salary, the Accused 1 to 5 have
misappropriated funds to the extent of ₹3.50 Crores in
just 5 years. The funds so withdrawn during the years 2007-08
to 2012-13 is as follows:
... ... ...
18. The protestors submit that the entire funding and
induction of the complainants as Trustees, and the resignations
of Accused 1 and 2, have been witnessed by Mr. V.N. Yadunath
the Auditor of the trust. The complainants discovered huge
misappropriation of Trust funds by the accused 1 to 5. During
the course of the CCB investigation, the accused 1 to 4 have
illegally and surreptitiously claimed to have inducted Accused 6
to 8 as trustees who have now been handed over the
management of the Trust and that Accused 6 to 8 are
continuing to mismanage and misappropriate the Trust funds.
Hence, the CCB had arrayed accused 6 to 8 also in the FIR. The
complainants had earlier cautioned by way of Public Notice as
well as personally to Accused No.6 not to get involved with the
accused 1 to 5 with respect to the Trust.
... .... ...
23. The complainants/informants on 31-10-2014 had
appeared before the one Smt. Rudhramma G.K., Sub-Inspector
of Vijayanagar Police Station and filed a complaint against the
accused for the offences punishable under Sections 406 and 420
of the Indian Penal Code, 1860, which came to be registered as
Crime NO.490/2014 bearing F.I.R. No.490/2014. The above
complaint was then transferred to Central Crime Branch (OCW).
Copy of the said complaint is submitted herewith as Annexure
C & C1 cited supra and for the sake of brevity the nature of
complaint has not been repeated an this Hon'ble Court be
pleased to refer to the said complaint for complete details.
24. Based on the initial investigations and the subsequent
events that led to the accused 1 to 5 illegally arraying Accused
Nos. 6 to 8 as Trustees with criminal intention to defraud the
complainants, accused 6 to 8 were added to the said complaint.
25. The Deputy Commissioners office passed an order
bearing No.T.Pr.Pi(Sm.A)/01/DCP/Crime/2015 dated 06-08-
2015 reassigning the investigation from one Mr. Balraj (PI) CCB
to the present investigating officer Mr. Pratap Singh Thorat (IO)
CCB who in turn filed the 'B' report, a copy of the same along
with the translated copy are submitted herewith as Annexures
D & E respectively for the kind perusal of this Hon'ble Court.
26. The complaint filed is for criminal breach of trust,
cheating, misappropriation of funds of the Trust and various
other offences committed by the accused persons."
Based upon the said protest petition and taking recourse to law, the
concerned Court on 06-07-2023 passes the following order:
"Complainant present. The counsel Sri K.P. representing
complainant urged that there are sufficient materials to probe
into the matter as the accused persons in guise of running
educational institution have mis-appropriated huge funds which
was advanced by complainant and the transactions have
transpired through Bank transfer, but unfortunately
investigating agency have closed the hushed up matter and bent
on filing 'B' report on the count that matter is civil in nature.
That, after hearing complainant's counsel, justice
demands for further probing of the matter. Hence, concerned
I.O. of Vijayanagara P.S is directed to reinvestigate and file final
report by 26-10-2023."
The learned Magistrate directs the investigating agency to
re-investigate into the matter and submit report by 26-10-2023.
This order is called in question in Criminal Petition No.8316 of 2024.
This Court stayed further proceedings on the ground that the action
taken by the learned Magistrate was contrary to the judgment in
the case of RAVIKUMAR supra. Now, the issue would be, whether
the learned Magistrate is empowered to direct further investigation
into the matter on the 'B' report filed before him. The course open
to the learned Magistrate is as delineated by the coordinate Bench
in the case of RAVIKUMAR supra. The coordinate Bench has held
as follows:
".... .... ....
5. The procedure followed by the Learned Magistrate is
not in accordance with law. It is well recognized principle of
law that, once the Police submit 'B' Summary Report and
protest petition is filed to the same, irrespective of contents of
the protest petition, the Court has to examine the contents of
'B' Summary Report so as to ascertain whether the Police have
done investigation in a proper manner or not and if the Court
is of the opinion that the investigation has not been conducted
properly, the Court has got some options to be followed, which
are,-
i) The court after going through the contents of the
investigating papers, filed u/s 173 of Cr. P.C., is of
the opinion that the investigation has not been
done properly, the court has no jurisdiction to
direct the Police to file the charge sheet however,
the Court may direct the Police for re or further
investigation and submit a report, which power is
inherent under section 156(3) of Cr. P.C., but
before taking cognizance such exercise has to be
done. This my view is supported by the decisions of
the Hon'ble Apex Court in a decision reported in
between Abhinandan Jha v. Dinesh Mishra [AIR
1968 S.C. 117.] (para 15) and also Full Bench
decision of Apex Court in between Kamalapati
Trivedi v. State of West Bengal [(1980) 2 SCC 91.]
(second head note.)
ii) If the court is of the opinion that the material
available in the 'B' Summary Report makes out a
cognizable case against the accused and the same
is sufficient to take cognizance, and to issue
process, then the court has to record its opinion
under Sec. 204 of Cr. P.C., and the Court has got
power to take cognizance on the contents of 'B'
Summary Report and to proceed against the
accused, by issuance of process.
iii) If the court is of the opinion that the 'B' Summary
Report submitted by the Police has to be rejected,
then by expressing its judicious opinion, after
applying its mind to the contents of 'B' report, the
court has to reject the 'B' Summary Report.
iv) After rejection of the 'B' Summary Report, the
court has to look into the private complaint or
Protest Petition as the case may be, and contents
therein to ascertain whether the allegations made
in the Private complaint or in the Protest Petition
constitute any cognizable offence, and then it can
take cognizance of those offences and thereafter,
provide opportunity to the complainant to give
Sworn Statement and also record the statements of
the witnesses if any on the side of the complainant
as per the mandate of Sec. 200 Cr. P.C.
v) If the court is of the opinion that the materials
collected by the police in the report submitted
under section 173 of Cr. P.C. are not so sufficient,
however, there are sufficient materials which
disclose that a cognizable offence has been
committed by the accused, the court can still take
cognizance of the offence/s under Section 190 read
with 200 Cr. P.C. on the basis of the original
complaint or the protest petition as the case may
be. After taking cognizance and recording sworn
statement of the complainant and statements of
witnesses if any and also looking into the
complaint/Protest Petition and contents therein, if
the Magistrate is of the opinion that, to ascertain
the truth or falsity of the allegations further inquiry
is required and he thinks fit to post pone the issue
of process he can still direct the investigation under
section 202 of Cr. P.C., to be made by a Police
officer or by such other officer as he thinks fit, to
investigate and submit a report, for the purpose of
deciding whether or not there is sufficient ground
for proceeding against the accused. In the above
eventuality, care should be taken that, the case
shall not be referred to the Police under section
156(3) of Cr. P.C., once the magistrate takes
cognizance and starts inquiring into the matter
himself.
vi) After taking such report under section 202 of Cr.
P.C., and looking to the entire materials on record,
if the magistrate is of the opinion that there are no
grounds to proceed against the accused, then the
Magistrate is bound to dismiss the complaint or the
Protest Petition u/s. 203 of Cr. P.C. as the case
may be.
vii) If in the opinion of the Magistrate there are
sufficient grounds to proceed against the accused,
on examination of the allegations made in the
Protest Petition or in the complaint, as the case
may be and also after perusal of the sworn
statement, then he has to record his opinion
judiciously, and issue summons to the accused by
exercising power u/s. 204 of Cr. P.C."
The coordinate Bench holds that when the 'B' report is filed before
the learned Magistrate, five ways of dealing with 'B' report is
available. After going through the papers, if it is of the opinion that
investigation has not been done properly, the Court may direct the
Police to re or further investigate into the matter and submit report.
This power is inherent under Section 156(3) of the Cr.P.C. But,
such direction should be before taking of cognizance. The learned
Magistrate has exactly followed the law laid down by the coordinate
Bench in RAVIKUMAR. Before taking of cognizance, invoking the
power under Section 156(3) the learned Magistrate directs further
investigation into the matter. Therefore, no fault can be found with
the order of the learned Magistrate in directing further investigation
under Section 156(3) of the Cr.P.C.
11. It also becomes apposite to refer to the judgment of the
Apex Court in the case of CENTRAL BUREAU OF
INVESTIGATION v. R.S. PAI2, wherein it is held as follows:
".... .... ....
7. From the aforesaid sub-sections, it is apparent that
normally, the investigating officer is required to produce all the
relevant documents at the time of submitting the charge-
sheet. At the same time, as there is no specific prohibition, it
cannot be held that the additional documents cannot be
produced subsequently. If some mistake is committed in not
producing the relevant documents at the time of submitting
the report or the charge-sheet, it is always open to the
investigating officer to produce the same with the permission
of the court. In our view, considering the preliminary stage of
prosecution and the context in which the police officer is
required to forward to the Magistrate all the documents or the
(2002) 5 SCC 82
relevant extracts thereof on which the prosecution proposes to
rely, the word "shall" used in sub-section (5) cannot be
interpreted as mandatory, but as directory. Normally, the
documents gathered during the investigation upon which the
prosecution wants to rely are required to be forwarded to the
Magistrate, but if there is some omission, it would not mean
that the remaining documents cannot be produced
subsequently. Analogous provision under Section 173(4) of the
Code of Criminal Procedure, 1898 was considered by this Court
in Narayan Rao v. State of A.P. [AIR 1957 SC 737: 1958 SCR
283: 1957 Cri LJ 1320] (SCR at p. 293) and it was held that
the word "shall" occurring in sub-section (4) of Section 173
and sub-section (3) of Section 207-A is not mandatory but
only directory. Further, the scheme of sub-section (8) of
Section 173 also makes it abundantly clear that even
after the charge-sheet is submitted, further
investigation, if called for, is not precluded. If further
investigation is not precluded then there is no question
of not permitting the prosecution to produce additional
documents which were gathered prior to or subsequent
to the investigation. In such cases, there cannot be any
prejudice to the accused. Hence, the impugned order
passed by the Special Court cannot be sustained."
(Emphasis supplied)
Even after filing of the charge sheet, the Apex Court holds that the
Magistrate has power to secure a supplementary charge sheet by
way of documents in terms of the power under sub-section (8) of
Section 173 of the Cr.P.C. In the light of the law being unequivocal
and the action of the learned Magistrate impugned in Criminal
Petition No.8316 of 2024 being in tune with law, I do not find any
warrant of interference to the order dated 06-07-2023.
12. The learned senior counsel for the petitioners
Sri Jayakumar S. Patil submits that there is no warrant for the
concerned Court to order further investigation into the matter. The
Police had filed the 'B' report after a lengthy process of
investigation which ought to have been accepted. The said
submission is unacceptable both on law and facts. The allegation
against the accused is succinctly brought out in the financial due
diligence report that is secured by the Trust. The said report
showed large scale misappropriation. Misappropriation is amply
demonstrated by stating that the petitioners have bought lands in
and around the city of Bengaluru not in the name of the Trust but in
their personal names. Funds of the Trust are transferred by forging
signatures on the cheques to the tune of several crores. Swanky
cars are bought by the accused all from out of the funds of the
Trust. Income tax authorities had indicated gross violations of the
Income Tax Act. In a proceeding under the Income Tax Act, the
accused have suffered orders at the hands of the Commissioner of
Income Tax, which are challenged before this Court and are
pending.
13. The signatures that the accused have at all times used for
all the aforesaid acts were sent to examination by the Forensic
Science Laboratory. The report of examination of signatures is
against these accused; the opinion is forgery. Therefore, with all
these allegations, it is ununderstandable as to how the 'B' report
had been filed by the Police on the ground that it was purely civil in
nature. There was abundant material before the learned Magistrate
to have ordered further investigation into the matter.
14. Now the issue is, against two accused order had been
stayed and against other accused the order had not been stayed, as
they have not approached this Court. The Police conduct further
investigation and file charge sheet against accused Nos. 6 and 7.
The summary of the charge sheet filed against accused Nos. 6 and
7 is as follows:
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The narration is against all the accused. Since there is an interim
order of stay in favour of accused Nos. 3 and 4, the charge sheet is
filed only against accused Nos. 6 and 7. The filing of charge sheet
against accused Nos. 6 and 7 is what is called in question in
Criminal Petition No.13828 of 2024. The reasons indicated
hereinabove would clearly depict, a maze of facts, against all these
accused which are seriously disputed. Forgery, cheating, breach of
trust, destruction of evidence and criminal conspiracy are alleged
against accused Nos. 6 and 7.
15. A perusal at the complaint supra and the summary of the
charge sheet would not leave this Court in doubt that the entire
matter requires a full-blown trial against these petitioners to come
out clean, as this Court would not quash the proceedings where
forgery has been prima facie proved by the report of FSL. The
allegations of siphoning of funds of the Trust is prima facie
demonstrated against the accused. In such circumstances,
entertainment of the petitions under Section 482 of the Cr.P.C.,
would run foul of the judgment of the Apex Court in the case of
KAPTAN SINGH v. STATE OF UTTAR PRADESH3, wherein it is
held as follows:
"9.1. At the outset, it is required to be noted that
in the present case the High Court in exercise of powers
under Section 482 CrPC has quashed the criminal
proceedings for the offences under Sections 147, 148,
149, 406, 329 and 386 IPC. It is required to be noted
that when the High Court in exercise of powers under
Section 482 CrPC quashed the criminal proceedings, by
the time the investigating officer after recording the
statement of the witnesses, statement of the
complainant and collecting the evidence from the
incident place and after taking statement of the
independent witnesses and even statement of the
accused persons, has filed the charge-sheet before the
learned Magistrate for the offences under Sections 147,
148, 149, 406, 329 and 386 IPC and even the learned
Magistrate also took the cognizance. From the impugned
judgment and order [Radhey Shyam Gupta v. State of U.P.,
2020 SCC OnLine All 914] passed by the High Court, it does
not appear that the High Court took into consideration the
material collected during the investigation/inquiry and even
the statements recorded. If the petition under Section 482
CrPC was at the stage of FIR in that case the allegations
in the FIR/complaint only are required to be considered
and whether a cognizable offence is disclosed or not is
required to be considered. However, thereafter when
the statements are recorded, evidence is collected and
the charge-sheet is filed after conclusion of the
investigation/inquiry the matter stands on different
footing and the Court is required to consider the
material/evidence collected during the investigation.
Even at this stage also, as observed and held by this Court in
a catena of decisions, the High Court is not required to go into
(2021) 9 SCC 35
the merits of the allegations and/or enter into the merits of
the case as if the High Court is exercising the appellate
jurisdiction and/or conducting the trial. As held by this Court
in Dineshbhai Chandubhai Patel [Dineshbhai Chandubhai
Patel v. State of Gujarat, (2018) 3 SCC 104 : (2018) 1 SCC
(Cri) 683] in order to examine as to whether factual contents
of FIR disclose any cognizable offence or not, the High Court
cannot act like the investigating agency nor can exercise the
powers like an appellate court. It is further observed and held
that that question is required to be examined keeping in view,
the contents of FIR and prima facie material, if any, requiring
no 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
observed it is more so, when the material relied on is
disputed. It is further observed that in such a situation,
it becomes the job of the investigating authority at such
stage to probe and then of the court to examine
questions once the charge-sheet is filed along with such
material as to how far and to what extent reliance can
be placed on such material.
9.2. In Dhruvaram Murlidhar Sonar [Dhruvaram
Murlidhar Sonar v. State of Maharashtra, (2019) 18 SCC 191 :
(2020) 3 SCC (Cri) 672] after considering the decisions of this
Court in Bhajan Lal [State of Haryana v. Bhajan Lal, 1992
Supp (1) SCC 335 : 1992 SCC (Cri) 426] , it is held by this
Court that exercise of powers under Section 482 CrPC to
quash the proceedings is an exception and not a rule. It is
further observed that inherent jurisdiction under
Section 482 CrPC though wide is to be exercised
sparingly, carefully and with caution, only when such
exercise is justified by tests specifically laid down in the
section itself. It is further observed that appreciation of
evidence is not permissible at the stage of quashing of
proceedings in exercise of powers under Section 482
CrPC. Similar view has been expressed by this Court in Arvind
Khanna [CBI v. Arvind Khanna, (2019) 10 SCC 686 : (2020) 1
SCC (Cri) 94] , Managipet [State of Telangana v. Managipet,
(2019) 19 SCC 87 : (2020) 3 SCC (Cri) 702] and
in XYZ [XYZ v. State of Gujarat, (2019) 10 SCC 337 : (2020) 1
SCC (Cri) 173] , referred to hereinabove.
9.3. Applying the law laid down by this Court in the
aforesaid decisions to the facts of the case on hand, we are of
the opinion that the High Court has exceeded its jurisdiction in
quashing the criminal proceedings in exercise of powers under
Section 482 CrPC.
10. The High Court has failed to appreciate and
consider the fact that there are very serious triable
issues/allegations which are required to be gone into
and considered at the time of trial. The High Court has
lost sight of crucial aspects which have emerged during
the course of the investigation. The High Court has
failed to appreciate and consider the fact that the
document i.e. a joint notarised affidavit of Mamta Gupta
Accused 2 and Munni Devi under which according to
Accused 2 Ms Mamta Gupta, Rs 25 lakhs was paid and
the possession was transferred to her itself is seriously
disputed. It is required to be noted that in the
registered agreement to sell dated 27-10-2010, the sale
consideration is stated to be Rs 25 lakhs and with no
reference to payment of Rs 25 lakhs to Ms Munni Devi
and no reference to handing over the possession.
However, in the joint notarised affidavit of the same
date i.e. 27-10-2010 sale consideration is stated to be
Rs 35 lakhs out of which Rs 25 lakhs is alleged to have
been paid and there is a reference to transfer of
possession to Accused 2. Whether Rs 25 lakhs has been
paid or not the accused have to establish during the
trial, because the accused are relying upon the said
document and payment of Rs 25 lakhs as mentioned in
the joint notarised affidavit dated 27-10-2010. It is also
required to be considered that the first agreement to
sell in which Rs 25 lakhs is stated to be sale
consideration and there is reference to the payment of
Rs 10 lakhs by cheques. It is a registered document.
The aforesaid are all triable issues/allegations which
are required to be considered at the time of trial. The
High Court has failed to notice and/or consider the
material collected during the investigation.
11. Now so far as the finding recorded by the High Court
that no case is made out for the offence under Section 406 IPC
is concerned, it is to be noted that the High Court itself has
noted that the joint notarised affidavit dated 27-10-2010 is
seriously disputed, however as per the High Court the same is
required to be considered in the civil proceedings. There the
High Court has committed an error. Even the High Court has
failed to notice that another FIR has been lodged against the
accused for the offences under Sections 467, 468, 471 IPC
with respect to the said alleged joint notarised affidavit. Even
according to the accused the possession was handed over to
them. However, when the payment of Rs 25 lakhs as
mentioned in the joint notarised affidavit is seriously disputed
and even one of the cheques out of 5 cheques each of Rs 2
lakhs was dishonoured and according to the accused they were
handed over the possession (which is seriously disputed) it can
be said to be entrustment of property. Therefore, at this stage
to opine that no case is made out for the offence under
Section 406 IPC is premature and the aforesaid aspect is to be
considered during trial. It is also required to be noted that the
first suit was filed by Munni Devi and thereafter subsequent
suit came to be filed by the accused and that too for
permanent injunction only. Nothing is on record that any suit
for specific performance has been filed. Be that as it may, all
the aforesaid aspects are required to be considered at the time
of trial only.
12. Therefore, the High Court has grossly erred in
quashing the criminal proceedings by entering into the
merits of the allegations as if the High Court was
exercising the appellate jurisdiction and/or conducting
the trial. The High Court has exceeded its jurisdiction in
quashing the criminal proceedings in exercise of powers
under Section 482 CrPC.
13. Even the High Court has erred in observing that
original complaint has no locus. The aforesaid observation is
made on the premise that the complainant has not placed on
record the power of attorney along with the counter filed
before the High Court. However, when it is specifically stated
in the FIR that Munni Devi has executed the power of attorney
and thereafter the investigating officer has conducted the
investigation and has recorded the statement of the
complainant, accused and the independent witnesses,
thereafter whether the complainant is having the power of
attorney or not is to be considered during trial.
14. In view of the above and for the reasons stated
above, the impugned judgment and order [Radhey Shyam
Gupta v. State of U.P., 2020 SCC OnLine All 914] passed by
the High Court quashing the criminal proceedings in exercise
of powers under Section 482 CrPC is unsustainable and the
same deserves to be quashed and set aside and is accordingly
quashed and set aside. Now, the trial is to be conducted and
proceeded further in accordance with law and on its own
merits. It is made clear that the observations made by this
Court in the present proceedings are to be treated to be
confined to the proceedings under Section 482 CrPC only and
the trial court to decide the case in accordance with law and
on its own merits and on the basis of the evidence to be laid
and without being influenced by any of the observations made
by us hereinabove. The present appeal is accordingly allowed."
(Emphasis supplied)
16. The learned senior counsel for the petitioners has sought
to contend that once a civil suit is filed, the criminal law must not
be permitted to be continued to be in motion. The said submission
is also unacceptable. In a given circumstance, an offence may
give rise to both the civil law and the criminal law. There can
be no embargo of continuance of criminal proceedings, in
certain cases which may project a civil wrong, at the outset.
Therefore, the contention that a class action suit under Section 92
of the CPC is preferred by the complainants and, therefore, the
criminal proceedings should be quashed, is noted only to be
rejected.
17. In the result, finding no merit in these petitions, both the
petitions stand rejected. Interim order operating in Crl.P.No.8316
of 2024 shall stand dissolved.
Consequently, applications pending in Crl.P.No.13828 of 2024
also stand disposed.
SD/-
(M. NAGAPRASANNA)
JUDGE
Bkp
CT:MJ
