Orissa High Court
Sri Alok Kumar Dash vs State Of Orissa & Another ....... ... on 20 June, 2024
THE HIGH COURT OF ORISSA AT CUTTACK
CRLMC No.08 of 2023
(In the matter of an application under Section 482 of the Cr.P.C.)
Sri Alok Kumar Dash ....... Petitioner
-Versus-
State of Orissa & another ....... Opposite Parties
For the Petitioner : Mr. Ashwini Kumar Das, Advocate
For the Opp. Parties : Mr. Bibekananda Bhuyan,
Advocate for O.P.I.D.
CORAM:
THE HONOURABLE SHRI JUSTICE SIBO SANKAR MISHRA
Date of Hearing: 02.05.2024 : Date of Judgment: 20.06.2024
S.S. Mishra, J. The petitioner in this petition invoked the inherent jurisdiction
of this Court under Section 482 of Cr.P.C. seeking quashing of the alleged
offence punishable under Section 6 of the Odisha Protection of Interests of
Depositors (In Financial Establishments) Act, 2011 (hereinafter referred to
as "the OPID Act") in C.T. Case No.13 of 2022 arising out of Kalinganagar
P.S. Case No.224 of 2022 pending in the Court of the learned Presiding
Officer, Designated Court under the O.P.I.D. Act, Cuttack.
2. On the basis of the written complaint of Ms Banita Mohapatra and
others, the aforementioned P.S. Case No.224 of 2022 was registered on
19.10.2022 against the petitioner and others for alleged offences under
Sections 406/420/34 of the I.P.C. After completion of investigation, charge
sheet was filed on 07.04.2023 against the present petitioner and others for
alleged offences under Sections 406/420/467/468/471/120-B/34 of I.P.C.
read with Section 6 of the OPID Act and the further investigation has been
kept open under Section 173(8) Cr.P.C.
3. The petitioner in this petition has questioned the invocation of
offence under Section 6 of the OPID Act against him.
4. The facts emerged from the investigation are that Neelachal Multi
Purpose Cooperative Society Limited, (hereinafter referred to as "the
NMPCSL") is a Cooperative Society registered under the Odisha
Cooperative Societies Act on 04.08.2010. It accepts the deposit from its
members as investment with a promise to give exorbitant return and
disburses the deposit amount to its members on loan basis charging 18 % of
Page 2 of 14
interest. There are as many as six hundred members in the Society, out of
them three hundred members had invested their money in the Society in
different Schemes with an expectation that they will get high return as
promised by the Society. Further, the members had invested around Rs.5
Crores. As on 25.12.2021 about Rs.1.60 Crores was landed to its members
as loan, which was to be recovered from them. It is further alleged that the
Society had conducted no audit as per law, accounts were not properly
reconciled. The present petitioner has been in the helm of the affair of the
Society throughout. All the accounts were being operated by the present
petitioner as per the Board resolution dated 19.04.2011 and 05.08.2012.
The petitioner has signed in all the receipt vouchers, investment documents
of the members, share-certificate, etc. Since the Society has been
completely mismanaged, the money invested by the members could not be
returned. Therefore, the members have agitated against the society
management. Eventually, the present F.I.R. has been lodged at the instance
of few members.
5. Heard Mr. Ashwini Kumar Das, learned counsel for the petitioner
and Mr. Bibekananda Bhuyan, learned counsel for the OPID.
Page 3 of 14
6. Mr. Das, learned counsel for the petitioner submits that criminal
prosecution cannot lie in so far as the Society is concerned and while
contending so, he refers to the definition of 'Financial Establishment'
contained in Section 2(d) of the OPID Act. It is submitted that as per the
said definition, a financial establishment means an individual or an
association of individuals, a firm or a company but does not include a co-
operative society owned or controlled by State Government or the
Government of India and also a banking company as defined in Section
clause(c) of Section 5 of the Banking Regulation Act, 1949. The sum and
substance of the argument is that the co-operative society duly registered
and virtually controlled by the State Government and therefore, prosecution
under Section-6 of the OPID Act cannot be fasten against the petitioner.
7. Mr. Bhuyan, learned counsel for the OPID opposed the contention of
Mr. Das, on the ground that though the Society is now taken over by the
State Government and an Administrator has been appointed but for the
alleged mischief and misappropriation of the money received from the
members of the Society, the petitioner cannot be absolved and hence, the
proceeding under Section 6 of the OPID Act is well maintainable.
Page 4 of 14
8. In order to appreciate the aforementioned stand taken by both the
parties, the following provisions of the OPID Act are relevant to be delved
upon:
"2. xxx xxx xxx
(b) "Deposit" means the deposit of money
either in one lump sum or by installments made
with the Financial Establishment for a fixed
period for interest or for return in any kind or
for any service;
xxx xxx xxx
(d) "Financial Establishment" means an
individual or an association of individuals, a
firm or a Company registered under the
Companies Act, 1956 carrying on the business
of receiving deposits under any scheme or
arrangement or in any other manner but does
not include a corporation or a co-operative
society owned or controlled by any State
Government or the Central Government, or a
banking company as defined under clause (c) of
section 5 of the Banking Regulation Act, 1949;
(e) "Government" means the Government of
Odisha; and
3. Attachment of properties on default of return
of deposit - Notwithstanding anything contained
in any other law for the time being in force,--
Page 5 of 14
(i) where, upon complaints received from a
number of depositors that any Financial
Establishment defaults the return of deposits
after maturity or fails to pay interest on deposit
or fails to provide the service for which deposit
has been made, or
(ii) where the Government have reason to
believe that any Financial Establishment is
acting in a calculated manner with an intention
to defraud the depositors,
and if the Government are satisfied that such
Financial Establishment is not likely to return
the deposits or to make payment of interest or to
provide the service, the Government may, in
order to protect the interest of the depositors of
such Financial Establishment, pass an ad-
interim order attaching the money or other
property alleged to have been procured either in
the name of the Financial Establishment or in
the name of any other person from and out of
the deposits collected by the Financial
Establishment, or if it transpires that such
money or other property is not available for
attachment or not sufficient for repayment of the
deposits, such other property of the said
Financial Establishment or the Promoter,
Director, Partner or Manager or Member of the
said Financial Establishment or a person who
has borrowed money from the Financial
Establishment to the extent of his default or such
other properties of that person in whose name
properties were purchased from and out of the
deposits collected by the Financial
Establishment, as the Government may think fit
Page 6 of 14
and transfer the control over the said money or
property to the Competent Authority.
xxx xxx xxx
6. Default in Repayment of deposits and
interests honouring the commitment -
Notwithstanding anything contained in section
3, where any Financial Establishment defaults
the return of the deposit or defaults the payment
of interest on the deposit or fails to return in any
kind or fails to render service for which the
deposit have been made, every person
responsible for the management of the affairs of
the Financial Establishment shall be punished
with imprisonment for a term which may extend
to ten years and with fine which may extend to
one lakh rupees and such Financial
Establishment is also liable for a fine which may
extend to two lakh rupees."
9. Mr. Das, learned counsel for the petitioner emphasized on the
definition of financial establishment and contends that the NMPCSL is a
Cooperative Society controlled by the State Government. The same shall be
out of the purview of liability of the OPID Act. Accordingly, the offence
under Section 6 of the OPID Act cannot be foisted upon the petitioner. The
Society registered under the Cooperative Society Act, hence, the same is
controlled by the State Government under the instrumentality of the
Page 7 of 14
Registrar of the Cooperative Society and does not come under the category
of financial establishment under Section 2(d) of the OPID Act. Likewise,
the informant and others are also not the depositors as defined under
Section 2(b) of the OPID Act as they are the members of the Society and
through their investment, they acquire their share holding of the Society.
Mr. Das further relied upon many judgments of the Hon'ble Supreme Court
to buttress his argument regarding the expression "control" and submitted
that the expression "control" is synonymous with superintendence,
management or authority to direct, restrict or regulate. The NMPCSL being
a registered cooperative society, is directly under the control of the
Registrar of the Cooperative Society. He further submitted that the
Committee of the members has already been suspended and the Registrar
has been appointed as Administrator to manage the affairs of the Society on
13.07.2020. Therefore, he submitted that the Registrar of the Cooperative
Society has direct control over the NMPCSL. Mr. Das has relied upon the
following judgments of the Hon'ble Supreme Court:
"1. AIR 1972 SC 1248 (The Shamarao Vitha Co-operative Bank Ltd.
vs. Kasargod Panduranga Mallya),
Page 8 of 14
2. AIR 1974 SC 1863 (State of Mysore vs. Allum Karibasappa and
others),
3. AIR 2007 SC 1269 (Prasar Bharati and others vs. Amarjeet Singh
and others),
4. (2002) 4 SCC 524 (Gauhati High Court and others vs. Kuladhar
Phukan and others)
5. AIR 1963 SC 1464 (K.S. Ramamurthi Reddiar vs. The Chief
Commissioner, Pondicherry and another) and
6. AIR 1966 SC 447 (The State of West Bengal vs. Nripendra Nath
Bagchi)."
10. All the aforementioned judgments relied upon by Mr. Das only to
explain the expression "control" occurring in the definition of financial
establishment under Section 2(d) of the OPID Act. Mr. Das further
submitted that in plethora of the judgments, the word "control" has been
well explained to say that "control" means power or authority to
manage/direct, superintend, restrict, regulate, govern, administer. Insofar as
the NMPCSL is concerned, the same is directly under the control of the
State Government. Therefore, the co-operative society cannot be brought
under the definition of a financial establishment as contemplated under
Section 2(d) of the OPID Act. Accordingly, the charges/offences alleged
Page 9 of 14
against the petitioner punishable under Section 6 of the OPID Act have to
be quashed.
11. Mr. Bhuyan, learned counsel for the OPID submitted that the term
"control" occurring in Section 2(d) of the OPID Act has to be understood in
the context that it has been used besides a body owned or subsequently by
appropriate Government. "Control" means substantial control over the
management, which is not supervising in nature. So, it is clear that
cooperative society in subject is not in direct control by the State rather is
regulated or supervised under the realm of Co-Operative Societies Act. In
the instant case, the Society has its own management to run its business and
its entire management vest in the Board constituted under the Cooperative
Society Act. All the financial affairs of the Society are directly controlled
by the petitioner. The financial irregularities and mismanagement of the
Society had occurred much prior to the appointment of the Administrator
on 13.07.2020. Many resolutions have been passed by the Board of the
society authorizing the petitioner to deal with the financial matters of the
Society. Therefore, insofar as financial management of the Society is
concerned, it is being independently handled by the Board constituted
Page 10 of 14
under the Societies Act. Therefore, the Government or the Registrar of
Societies for that matter has no control over the financial management or
transactions of the Society. Thus, it cannot be said that the State
Government is controlling the Society when it comes to its financial
management.
Mr. Bhuyan further submitted that the NMPCSL was although
registered under the Cooperative Societies Act, but neither created nor
established by the Government or the State authorities. The State has no
control in any manner whatsoever regarding the financial affairs, profit and
loss of the NMPCSL. The Government has also no say regarding the day to
day affairs and the fund management of the NMPCSL. Save and except the
power exercised by the Registrar of the Cooperative Society only a
statutory nature and to act as a watch dog over all the cooperative societies
in the State so also the NMPCSL to ensure transparency in the management
of the society like Reserve Bank of India to have a governing authority over
all the Nationalized Banks as well as private banks. Hence, he submitted
that it is not correct to say that State is either owning or controlling the
NMPCSL in any manner whatsoever. He further pointed out that even after
Page 11 of 14
the appointment of the Administrator on 13.07.2020 on the very next day,
i.e., on 14.07.2020, the Administrator again appointed the petitioner as
Secretary of the NMPCSL to manage the day to day affairs of the Society.
Therefore, the petitioner again started controlling the financial affairs of the
society. He further submitted that the defence of the petitioner that non-
refund of the funds invested by the members, due to the default in
repayment of loans taken by the members is completely false, because from
the investigation it is revealed that the society had collected
Rs.5,27,25,000/- under various investment schemes from its members, out
of which only Rs.1.61 Crores has been left to be recovered as loan amount
given to the members. The charge of offence under Section 6 of the OPID
Act is well made out against the petitioner as investigation reveals that the
petitioner and other accused persons with a criminal intention to siphon the
funds of the members have deliberately not even maintained proper books
of account and not even audited the accounts. Therefore, it is a well
planned and well thought out crime committed by the petitioner and other
co-accused.
Page 12 of 14
12. From the sequence of event unfolded with the present case ample
material has come on record to suggest that it is the Board of the NMPCSL
society, which has authorized vide its Resolution No.1 dated 19.04.2011,
Resolution No.2 dated 05.08.2011 and Resolution Nos.1 & 2 dated
29.08.2019 to the petitioner being the Secretary of the society to deal with
the financial affairs of the society. Therefore, the petitioner has direct
control over the financial dealing of the society. Accordingly, all the
investments and disbursement of loan of the members of the society are
being done under the commands of the petitioner. Therefore, the expression
"control" used in Section 2(d) of the OPID Act has to be understood in that
context. In that view of the matter, I am in disagreement with the
contention raised by Mr. Das, learned counsel for the petitioner that the
NMPCSL being controlled by the State Government as evident from the
fact that the Administrator has been appointed. Undoubtedly the society is
statutorily controlled by the State Government, but insofar as the financial
affairs are concerned, the State Government has no say in the overall
functioning of the society. The entire investment and decision to lend loan
to and by the members of the society has always been done by the Board
Page 13 of 14
and the same is always in the absolute domain of the Board. Once the
Board is constituted by the members of the society through resolution and
thereafter, the Board authorized one amongst the Board members or office
bearers to handle the financial affairs of the society, such authorized person
cannot escape from the liabilities of his actions. Therefore, it stricto-senso
the expression "control" occurring in Section 2(d) of OPID Act cannot be
understood in the context as has been portrayed by Mr. Das.
13. In view of the aforementioned, I am not inclined to quash the alleged
offence under Section 6 of the OPID Act as has been invoked by the
investigating agency by filing charge sheet.
14. The CRLMC is accordingly dismissed.
......................
(S.S. Mishra)
Judge
The High Court of Orissa, Cuttack
Dated the 20th June, 2024/ Amit
Location: HIGH COURT OF ORISSA, CUTTACK
