M/S Stepping Stone Private ... vs State Of Rajasthan
2021 Latest Caselaw 7630 Raj/2

                                            (1 of 9)                  [CRLMP-5867/2020]


             HIGH COURT OF JUDICATURE FOR RAJASTHAN
                         BENCH AT JAIPUR

             S.B. Criminal Miscellaneous (Petition) No.5867/2020

     M/s.     Stepping   Stone      Private       Limited       Shahjhanpur     Tehsil
     Neemrana District Alwar Rajasthan Through Its Authorized
     Representative Sh. Vijay Kumar
                                                                        ----Petitioner
                                           Versus
     1. State Of Rajasthan through PP
     2. Union of India, Ministry of Corporate Affairs, A Wing, Shastri
     Bhawan Rajendra Prasad Road, New Delhi - 110001
                                                                      ----Respondent

     For Petitioner(s)         :     Mr. Rakesh Kumar
     For Respondent(s)         :     Mr.   Ramesh Choudhary, PP
                                     Mr.   Anand Sharma
                                     Mr.   Sandeep Sharma
                                     Mr.   Bhrigu Sharma
                                     Mr.   Lokesh Kumar Sharma

HON'BLE MR. JUSTICE SANJEEV PRAKASH SHARMA

Judgment

RESERVED ON 22nd November, 2021

PRONOUNCED ON 15th December, 2021

1. Heard learned counsel for the parties.

2. The present order shall dispose of application (Nos.2/21,

1/21, 3/21, 4/21, 5/21, 6/21, 7/21, 8/21, 9/21, 10/21) moved

under Section 482 Cr.P.C. by various parties as well as application

(Nos.11/21) moved by the petitioner and the misc. petition itself.

3. A misc. petition was preferred by the complainant stating

therein that criminal complaint was filed by the petitioner-

company against the named accused persons before the Civil

Judge and Judicial Magistrate Behror Alwar under Section 156(3)

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Cr.P.C. The Court concerned forwarded the complaint for

investigation to Police Station Shahjanpur District Bhiwadi and an

FIR was registered bearing No.213/2020 for offence under Section

420 IPC. It is stated that petitioner moved an application before

the Investigating Officer pointing out that the accused persons

had generated funds through forgery and criminal offences and

the said amount was invested in purchasing shares of several

companies with intent to get away with the money. The

Investigating Officer on the basis of such request sent the letter

on 12.11.2020 to the Central Depository Services Limited and

another letter on 12.11.2020 to National Security Depository

Limited with request not to transfer the shares detailed and tabled

therein. The entire requisite material mentioning the details of the

shares and intended transferring of the shares was given out to

the Investigating Officer, however, the Investigating Officer did not

arrest the accused and petitioner submitted representation to the

higher authorities but instead of arresting, the police are intending

to close the case. It was stated at the time of argument by the

petitioner that the SHO has withdrawn his letter dated 12.11.2020

and the accused are likely to sell off the entire shares and

equities.

4. This court vide order dated 17.12.2020 passed following

order:-

"Learned counsel submits that the SHO had sent a letter on 12.11.2020 giving out details of the shares and equities which were restrained from being sold or put to mortgage. However, learned counsel submits that the investigation is being hampered and managed. The SHO has withdrawn the letter dated 12.11.2020 and the accused are likely to sell off entire shares and equities.

Let the SHO remain present on the next date and give affidavit as to why he has withdrawn the letter

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dated 12.11.2020. In the meanwhile, the Superintendent of Police is directed to issue a letter restraining from releasing of shares and equities as mentioned in the letter dated 12.11.2020.

A copy of this order be also sent by the petitioner to the Central Depository Services of India.

List this case again on 13.01.2021.

It is made clear that, if the Investigating Officer is not present on the next date, the Superintendent of Police shall be free to take action against him."

5. After the said order was passed, the series of applications

have been filed for impleadment and passing of orders and

directions to the Investigating Agency and to the Central

Depository Services Limited to unfreeze the shares which the

concerned applicants have purchased. Details of the shares which

the concerned applicants have purchased have been mentioned in

each and every application and they have requested for being

impleaded as party to the present criminal misc. petition. It is

stated that in the original FIR, there was no such fact mentioned

and the applicants who have purchased their shares have not

been given any opportunity of hearing and the shares have been

freezed. It is stated that the shares purchased by them ought not

be freezed. It is stated that they are bona fide purchasers from

BSE and NSE and the shares were purchased through their

respective brokers. The broker has informed them about the said

freezing of shares, following which the applicants have moved

applications.

6. Faced with the said situation, the petitioner has moved an

application and has also placed on record the document to show

that the accused Anil Hira Lal Shah and Atul Hira Lal Shah known

as Barter Brothers have been barred and a circular has been

issued by the Investigation Department of National Stock

Exchange earlier on 07.07.2008 mentioning that the applicants

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have undertaken voluntary bar from buying, selling or otherwise

dealing in security market. The case confirming Barter Brothers

involvement in Mehul Choksi Fraud and Hawala Transactions has

also been pointed out. The petitioner has therefore also moved an

application to transfer the investigation to a specialized agency

stating that the shares which have been purchased by the

respective applicants are those which have been identified by the

Investigating Officer and the accused named in the FIR involved in

parking black money and in other illegal activities relating to share

market and therefore, as per the Companies Act, 2013

investigation be transferred to the Serious Fraud Investigation

Agency known as Serious Fraud Investigation Office as established

under Section 211 of the Companies Act, 2013. It is stated that

there are several companies which are run by Anil Shah and Atul

Shah who are named in the FIR and investigation of these

companies and all other companies which are sister concerns of

each other or all the other companies wherein the accused named

in the FIR are Directors can be found and the truth can be

unfolded.

7. The Serious Fraud Investigation Office being under the

Ministry of Corporate Affairs, Union of India, a notice was issued

to the Union of India to submit its reply. The Union of India has

submitted its reply and stated that the petitioner has tried to

enlarge the scope of the misc. petition and it is stated that the

Government of India has set up a committee under the

Chairmanship of former Cabinet Secretary Naresh Chandra known

as Naresh Chandra Committee for setting up of a Corporate

Serious Fraud Office.

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8. Learned counsel submits that the Central Government vide

resolution dated 02.07.2003 constituted this organization and a

charter of Serious Fraud Investigation Office was issued on

21.08.2003 stating responsibility and functions of SFIO including

but not limited to the following:-

"a) The SFIO is expected to be a multi-disciplinary organisation consisting of experts in the field of accountancy, forensic auditing, law, information technology, investigation, company law, capital market and taxation for detecting and prosecuting or recommending for prosecution white collar crimes/ frauds.

b) The SFIO will normally take up for investigation only such cases, which are characterized by -

I) complexity and having inter-departmental and multidisciplinary ramifications; II) Substantial involvement of public interest to be judged by size, either in terms of monetary III) the possibility of investigation leading to or contributing towards a clear improvement in systems, laws or procedures.

c) The SFIO shall investigate serious cases of fraud received from Department of Company Affairs. SFIO may also take up cases on its own, subject to para (d) below. The SFIO would make investigations under the provisions of the Companies Act and would also forward the investigated reports on violations of the provisions of other acts to the concerned agencies for prosecution/appropriate action. d) Whether or not an investigation should be taken up by the SFIO would be decided by the Director, SFIO who will be expected to record the reasons in writing. These decisions will be further subject to review by a co-ordination committee."

9. It was further stated that as per Companies Act, 2013 SFIO

has been established vide notification dated 21.07.2015 and it is

stated that investigation into the affairs of a company is assigned

to SFIO where Government is of the opinion that:-

"(a) on receipt of a report of the Registrar or inspector under Section 208 of the Companies Act, 2013;

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(b) on intimation of a special resolution passed by a company that its affairs are required to be investigated;

(c) in the public interest; or

(d) on request from any department of the Central Government or a State Government."

10. Learned counsel submits that if complaint is submitted to the

Central Government, they would look into it and take a decision

for transferring it to SFIO or not.

11. Since an affidavit was asked from the concerned SHO as to

why he has withdrawn the letter dated 12.11.2020, in compliance

thereof, the ASI has filed its affidavit and simply stated that

because the complainant did not submit any link or details of

accused persons after submitting the details of accounts of the

shares and equities, the shares and equities were unfreezed vide

letter dated 20.11.2020.

12. This court finds that as the explanation is wholly dis-

satisfactory and Investigating Officer did not mention of having

taken any steps to investigate further apart from unfreezing the

shares, the investigation appears to be very patchy and it appears

that the Investigating Officer does not have any knowledge in

relation to the commercial frauds being done. It is also noticed

that the SHO who had directed to freeze the shares was not

present during the period from 11.11.2020 to 19.11.2020 and

charge was with another ASI Hanuman Prasad and on 20.11.2020

the charge was with some another ASI Sunil Kumar who have

written the letter for unfreezing the shares.

13. The applicants who have moved applications for

impleadment were heard. However, it is a settled law that such

persons cannot be made a party in misc. petition where the

complainant seeks invoking of inherent powers of this court for

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directing firm investigation and for seeking supervision of a proper

investigation in a case relating to fraud and cheating. The

applicants although may not be necessary party but they have a

right to be heard and recognizing their locus standi the counsels

have been heard.

14. In the case of Madhu Limaye Versus The State of

Maharashtra reported in 1977 (4) SCC 551 and in the case of

Simranjit Singh Mann Versus Union of India (UOI) & Others

reported in 1992 (4) SCC 653, the principle has been recognized

that even if a person may not be directly connected in a criminal

case and any order passed in a criminal case affects his rights, he

has a liberty to move appropriate applications for questioning the

legality and validity or correctness of the order which has affected

his rights.

15. Apparently, it is a matter which requires thorough

investigation as the allegations in the complaint and subsequent

action shows prima facie a notorious method of doing away with

money obtained by proceeds of crime. If shares are purchased by

money acquired through proceeds of crime, it is a serious offence.

16. It is also noticed that upon unfreezing and subsequent

freezing by this court, between the two dates, the applicants have

purchased these shares. Their involvement may be or may not be

there in the proceeds of crime but all this is a matter of

investigation in relation to such investigation, no opportunity of

hearing is required at this stage. The provisions of Companies Act,

2013 were amended by adding Section 211 with the sole purpose

and aim to unravel such frauds. Once it comes into the knowledge

of the Investigating Agency, they must act with utmost vigilance

and due caution in care.

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17. Keeping the said principle in mind, this court finds that

essentially all the applicants who have been named above are

those who have purchased share/shares from BSE and NSE

relating to the companies which have been mentioned by the

complainant in his complaint to the Investigating Officer. The

shares were purchased earlier they are liable to be unfreezed.

However, if the same were purchased in between and if it is found

that such shares were originally purchased by way of proceeds of

crime, they would be liable to be confiscated. In the event,

therefore, it would be all the more necessary that the present

shareholders namely the applicants are not allowed to further sell

off the shares till the decision is taken after thorough investigation

by the specialized agency. An alternate mode of securing the said

shares can also be one method which may be adopted by the

concerned specialized agency.

18. Be that as it may, it would be too pre-mature for this court to

draw conclusions with regard to the aforesaid aspects. However,

as pointed out earlier in the foregoing parts, it would be in the

interest of justice that the investigation relating to FIR and

subsequent complaint of using the proceeds of fraud committed in

buying shares, be conducted by SFIO in the matter.

19. The petitioner as well as the applicants before this court can

always submit their stand before the concerned SFIO who shall

look into the entire case and reach to its own independent

conclusion. If it is found that the shares as purchased by the

applicants are in no manner connected, the SFIO shall be free to

unfreeze the shares. However, if he reaches to the conclusion

otherwise that money is involved, he shall take all steps to

prevent loss to the Government and to the petitioner-company

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who claims of having been subjected to fraud. The investigation in

FIR No.213/2020 registered at Police Station Shahjanpur District

Bhiwadi is, therefore, transferred to the SFIO. The Investigation

Officer in FIR No.213/2020 shall handover all details as required to

the SFIO.

20. It is accordingly directed that the petitioner-company would

be free to submit all details which it possesses and also assist the

investigation. The applicants (herein) shall also be free to submit

their stand before the SFIO. The SFIO shall be empowered to take

all the steps accordingly. It is made clear that the investigation

shall be done as expeditiously as possible.

21. The interim order passed by the court shall continue to

operate till final decision is taken by the SFIO. The SFIO shall be

free to take possession of all the shares if it ultimately reaches to

the conclusion that the same are purchased and subsequently sold

as part of proceeds of crime.

22. The criminal misc. petition is accordingly disposed of. All

pending applications shall also stand disposed of.

(SANJEEV PRAKASH SHARMA),J

Karan/

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