M/S.Hetero Group Of Companies A4 vs State Of Telangana
2021 Latest Caselaw 3856 Tel

        THE HON'BLE Dr. JUSTICE SHAMEEM AKTHER


              CRIMINAL PETITION No.5381 of 2016


ORDER:

This Criminal Petition, under Section 482 of Criminal

Procedure Code, 1973, is filed by the petitioners/A-4 and A-6,

seeking to quash the proceedings against them in C.C.No.8 of 2012

on the file of the Principal Special Judge for CBI Cases, Hyderabad

(arising out of FIR No.RC.19(A)/2011-CBI/Hyd, dated 17.08.2011,

of CBI, ACB, Hyderabad), wherein, cognizance was taken against

the petitioners/A-4 and A-6 for the offences punishable under

Sections 120B read with 420 of IPC.

2. Heard the submissions of Sri T.Niranjan Reddy, learned senior

counsel appearing for Sri T.Nagarjuna Reddy, learned counsel for

the petitioners/A-4 and A-6, Sri K.Surender, learned Special Public

Prosecutor for CBI appearing for the sole respondent and perused

the record.

3. Learned senior counsel appearing for the petitioners/A-4 and

A-6 vehemently contended that the Court below took cognizance

against the petitioners/A-4 and A-6 for the alleged offences in a

highly mechanical fashion, without adverting to the material placed

on record. No valid reasons were recorded in the cognizance order,

which shows clear non-application of mind by the Court below, and

as such, the cognizance order is vitiated. The petitioner/A-4 is a

Company and the petitioner/A-6 is its Director. The petitioner/A-4,

being a 'juristic person' and a 'corporate entity', cannot be charged

with the offence of criminal conspiracy under Section 120B of IPC.

Dr.SA, J Crl.P. No.5381/2016

The allegations in the subject charge-sheet are entirely against the

petitioner/A-4 company, which is a corporate entity. The

petitioner/A-6 is only a Director and has no personal role to play in

taking decisions unilaterally for and on behalf of the petitioner/A-4

company. No vicarious liability for the offences under the Penal

Code can be cast upon the Chairman and Managing Director of a

company or its Directors, when the accused is alleged to be a

company. The allegations in the subject charge-sheet are based on

surmises and conjectures and not substantiated by any evidence.

There is no iota of material on record to indicate that there was any

deceptive intention on the part of the petitioners/A-4 and A-6 at the

inception to cheat the State exchequer and as such, there is no

prima facie material to attract the provisions of section 420 of IPC.

Except making a bald allegation that the petitioners/A-4 and A-6

conspired with A-9 (the then Managing Director of APIIC) and got

allotted 75 acres of land at Jadcherla for lesser consideration, there

is no material to substantiate the same. The Prize Fixation

Committee was constituted to fix the price of the land for 'outright

sale on free hold basis' and the said Committee was not competent

to determine the lease amount for the lands leased under Special

Economic Zones Act, 2005 (for short, 'SEZ Act') and the Rules

made thereunder. The subject land was leased to the petitioner/A-

4 company by strictly following the statutory procedure prescribed

under SEZ Act and the Rules made thereunder. There is no quid

pro quo arrangement as alleged. The investments made by

petitioner/A-4 company are genuine investments and there is no

wrongful gain to the petitioner/A-4 company and corresponding loss

to the State Exchequer as alleged. Further, there is no single Dr.SA, J Crl.P. No.5381/2016

averment in the charge-sheet that the investments made by the

petitioners/A-4 and A-6 in A-1's companies are not genuine

investments. The petitioners/A-4 & A-6 are falsely implicated in

this case, due to political ramifications. Further, the investigation

conducted by CBI is unfair, inasmuch as the CBI failed to segregate

the genuine investors, as directed by a Division Bench of this Court

in W.P.Nos.794 and 6604 of 2011. Right to fair investigation is a

fundamental right and the petitioners/A-4 and A-6 cannot be

deprived of the same. It is the bounden duty of the investigating

authority to produce all the documents during the investigation,

enabling the Court to come to a just conclusion. In the instant

case, the investigating authority wantonly withheld the crucial

documents, without producing the same before the Court. The

petitioner/A-4 company is an 'anchor investor', selected by Central

Government under the SEZ Act. Though it is alleged by CBI that

the subject land was 'allotted' to the petitioner/A-4 company, but in

fact, the subject land was given on 'lease' on 'as is and where is

basis' and the petitioner/A-4 company invested huge money for

development of the subject leased land, established companies and

provided employment to 1100 unemployed persons. The

petitioner/A-4 company is getting millions of foreign money for

their investigations in Hyderabad and in fact, it lost several

international bids because of this case. Further, it is the discretion

of the company, which is running in profits, to invest money in any

company of their choice and in any event, it would not amount to

commission of offence. The investments made by petitioner/A-4

company in A-1's companies cannot be termed as bribe. There is

no fraudulent or dishonest intention on the part of petitioner/A-4 Dr.SA, J Crl.P. No.5381/2016

company to constitute offence under Section 420 of IPC. Further,

there is no illegality in leasing out the subject land to the

petitioner/A-4 company. At the most there can be procedural

violations, which, in any event, would not vitiate the entire lease of

the subject land. Though as many as four Governments have

changed from the date of the lease of the subject land, no

Government, at any point of time, either cancelled the lease or

taken back the leased land. The learned senior counsel, taking this

Court through the statements of several witnesses recorded by the

CBI in the subject Calendar Case, particularly the statements of

L.W.82 and L.W.83, which are crucial according to him, would

submit that nothing is elicited from the statements of the said

witnesses as regards the alleged conspiracy between the

petitioners/A-4 and A-6, A-1 and his late father, in relation to lease

of subject land. The petitioner/A-6 is a respectable person in the

society and he is falsely implicated in the subject case and

ultimately prayed to allow the Criminal Petition as prayed for. In

support of his contentions, the learned senior counsel had placed

reliance on the following decisions.

1. Smt. Nagawwa Vs. Veeranna Shivalingappa Konjalgi and others1

2. State of Haryana Vs. Ch.Bhajan Lal and others2

3. Pepsi Foods Ltd and another Vs. Special Judicial Magistrate and others3

4. Inder Mohan Goswami and another Vs. State of Uttaranchal and others4

5. Chandran Ratnaswami Vs. K.C.Palanisamy and others5

6. Mehmood Ul Rehman Vs. Khazir Mohammad Tunda and others6

7. Mahendra Singh Dhoni Vs. Yerraguntla Shyamsundar and another7

8. GHCL Employees Stock Option Trust Vs. India Infoline Limited and others8

(1976) 3 Supreme Court Cases 736

AIR 1992 Supreme Court 604

(1998) 5 Supreme Court Cases 749

(2007) 12 Supreme Court Cases 1

(2013) 6 Supreme Court Cases 740

(2015) 12 Supreme Court Cases 420

(2017) 7 Supreme Court Cases 760

(2013) 4 Supreme Court Cases 505 Dr.SA, J Crl.P. No.5381/2016

9. Sarah Mathew Vs. Institute of Cardio Vasular Diseases by its Director Dr.K.M.Cherian and others9

10.S.R.Sukumar Vs. S.Sunaad Raghuram10

11.Maksud Saiyed Vs. State of Gujarat and others11

12.S.K.Alagh Vs. State of Uttar Pradesh and others12

13.Keki Hormusji Gharda and others Vs. Mehervan Rustom Irani and another13

14.Maharashtra State Electricity Distribution Company Limited and another Vs. Datar Switchgear Limited and others14

15.Sunil Bharti Mittal Vs. Central Bureau of Investigation15

16.N.Srinivasan Vs. State of Telangana and another16

17.Matilal Chakravarthy Vs. The King17

18.Hira Lal Hari Lal Bhagwati Vs. CBI, New Delhi18

19.Hridaya Ranjan Prasad Verma and others Vs. State of Bihar and another19

20.International Advanced Research Centre for Powder Metallurgy and new materials (ARCI) and others Vs. Nimra Cerglass Technics Private Limited and another20

21.V.P.Shrivastava Vs. Indian Explosives Limited and others21

22.Ajay Mitra Vs. State of M.P. and others22

23.Bhagwan Swarup Lal Bishan Lal Vs. State of Maharashtra23

24.Central Bureau of Investigation Vs. K.Narayana Rao24

25.Arun Kumar Agrawal Vs. Union of India and others25

26.Pathan Mohammed Suleman Rehmatkhan Vs. State of Gujarat and others26

4. Per contra, the learned Special Public Prosecutor for CBI

would contend that a scheme was formulated by A-1 and A-2 in the

subject C.C. to collect bribes from various persons and companies

under the guise of investments in A-1's companies and in turn

extend undue benefits to them by using the official position of

father of A-1, the then Chief Minister of Andhra Pradesh. There is

illegal gain to A-1's companies and also to the other accused in this

case. Further, the prosecution case is based on oral and

documentary evidence. The role of each and every accused cannot

(2014) 2 Supreme Court Cases 62

(2015) 9 Supreme Court Cases 609

(2008) 5 Supreme Court Cases 668

(2008) 5 Supreme Court Cases 662

(2009) 6 Supreme Court Cases 475

(2010) 10 Supreme Court Cases 479

(2015) 4 Supreme Court Cases 609

2017 (1) ALD (Crl.) 413

AIR 1949 Calcutta 586

(2003) 5 Supreme Court Cases 257

(2000) 4 Supreme Court Cases 168

(2016) 1 Supreme Court Cases 348

(2010) 10 Supreme Court Cases 361

(2003) 3 Supreme Court Cases 11

AIR 1965 Supreme Court 682

(2012) 9 Supreme Court Cases 512

(2013) 7 Supreme Court Cases 1

(2014) 4 Supreme Court Cases 156 Dr.SA, J Crl.P. No.5381/2016

be read in isolation. The circumstances of the case are required to

be read as a whole and the burden is on the prosecution to prove

the circumstances. It would be suffice for the prosecution to come

up with circumstances, which show that there is a strong suspicion

to proceed against the accused. In the instant case, the role of the

petitioners/A-4 and A-6 cannot be read in isolation. As per the

Inspection Report of Hetero Healthcare Limited submitted by the

Government of India, the Articles of Association of M/s.Jagati

Publications Limited (A-12) contain prohibitive clauses regarding

transferability of shares, whereunder, the Board of M/s.Jagati

Publications Limited can decline any transfer, without assigning any

reason, except such transfer is in between the family members.

With utter disregard to the said clause, shares were sold to

outsiders at an exaggerated premium. Without investing a single

rupee, an amount of Rs.1246 crores was received by M/s.Jagati

Publications Limited towards issuance of shares, which, in fact, was

subscribed totally by the outsiders. Further, as per Section 2(b) of

Prevention of Corruption Act, 1988 (for short, 'PC Act'), 'public duty'

means a duty in the discharge of which the State, the public or the

community at large has an interest. There is absolutely no public

duty involved in extending undue governmental benefits by the

then Chief Minister of Andhra Pradesh to selected persons, who

have invested money in the companies floated by his son (A-1).

Further, none of the circumstances narrated by the prosecution

were disputed by the petitioners/A-4 and A-6. When the

prosecution has come up with a case which raises strong suspicion

with regard to quid pro quo arrangement viz., extending undue

governmental benefits to the petitioners/A-4 and A-6 causing Dr.SA, J Crl.P. No.5381/2016

wrongful loss to the State exchequer in lieu of their investments in

the companies belonging to A-1, it should be given a chance to

adduce evidence to prove its case, which can only be done at the

trial of the case. In order to substantiate/validate the so-called

investments made by the petitioners/A-4 and A-6 in A-12 company,

A-2, who is one of the key conspirators, got prepared an ante-dated

report from M/s.Delloitte Touche Tohmatsu India Private Limited

with the projections provided by him, A-1 and A-13. The

companies which invested money in the companies of A-1 were

unduly benefited in one way or the other. Further, the petitioner/A-

6, as a Director of petitioner/A-4-Hetero Group of companies, has

been participating in the day-to-day affairs of the said group of

companies. The petitioner/A-6, in furtherance of criminal

conspiracy, got allotted 75 acres of SEZ land at Jedcherla, at a

relatively lower rate of Rs.7 lakhs per acre than the price fixed by

the Prize Fixation Committee, in gross violation of rules and

procedures, resulting in wrongful gain of Rs.8.60 crores to him and

his company and corresponding wrongful loss to the State

Exchequer. As a quid pro quo to the said undue benefit, the

petitioners/A-4 and A-6 invested an amount of Rs.19.50 crores in

A-12 and A-13 companies belonging to A-1. All the transactions in

question cannot be isolated and confined to the mere acts of the

petitioners, but the prosecution case has to be looked into as a

whole, which prima facie makes out the offences alleged against the

accused. At the stage of discharge, the Court should not make a

roving enquiry into the pros and cons of the matter and weigh the

evidence, as if it is conducting a trial. The only aspect which is

required to be considered in a petition filed under Section 482 of Dr.SA, J Crl.P. No.5381/2016

Cr.P.C., is that on a plain reading of the averments in the charge-

sheet and the documents submitted by the investigating agency,

whether a prima facie case is made out against the alleged accused

or not. Filing of this petition under Section 482 of Cr.P.C., is only a

premature attempt by the petitioners/A-4 and A-6 to escape from

penal liability. Conspiracies are not hatched in open. By their

nature, they are secretly planned and they can be proved by

circumstantial evidence. Lack of direct evidence relating to

conspiracy has no consequence. The inherent jurisdiction of the

High Court under Section 482 of Cr.P.C. is very limited, which can

only be exercised in a proper case, either to prevent the abuse of

the process of any Court or otherwise to secure the ends of justice.

The Court below rightly took cognizance against the petitioners/A-4

and A-6 for the alleged offences, after considering the material

placed before it and after satisfying that there is prima faice case to

proceed against the petitioners/A-4 and A-6. All the procedures

and guidelines were strictly followed in filing the charge-sheet

before the Court below. The Hon'ble Supreme Court, in catena of

decisions, deprecated the practice of staying criminal trials and

police investigations, except in exceptional cases. The present case

do not fall under exceptional cases, where the inherent power under

Section 482 Cr.P.C. can be exercised in favour of the petitioners/A-

4 and A-6. The submissions made on behalf of the petitioners/A-4

and A-6 does not merit consideration. There are no circumstances

to quash the proceedings against the petitioners/A-4 and A-6 and

ultimately prayed to dismiss the Criminal Petition. In support of his

contentions, the learned Special Public Prosecutor relied on the

following decisions.

Dr.SA, J Crl.P. No.5381/2016

1. State of H.P. Vs. Krishan Lal Pardhan and others27

2. Ram Narain Poply Vs. Central Bureau of Investigation and others28

3. State of Tamil Nadu Vs. Mariya Anton Vijay and others29

4. State of Tamil Nadu Vs. J.Jayalalitha30

5. Amit Kapoor Vs. Ramesh Chander and another31

6. Rajat Prasad Vs. Central Bureau of Investigation32

7. B.Venkat Swamy Vs. Vijaya Nehru and another33

5. In reply, the learned senior counsel appearing for the

petitioners/A-4 and A-6 would submit that there is no vicarious

liability in criminal law. The investigation conducted by CBI in the

instant case is unfair and attended with malice and the same is

perfunctory. The investigating authority deliberately omitted

certain facts to take into consideration and filed the charge-sheet.

Cognizance was taken against the petitioner/A-6 basing on

vicarious liability. The petitioner/A-6 is only a Director of

petitioner/A-4 company and he cannot be held vicariously liable.

Further, statutory provisions of SEZ Act have not been disputed by

the learned Special Public Prosecutor. Right to fair trial precedes

right to fair investigation.

6. In view of the above rival contentions, the points that arise

for determination in this Criminal Petition are as follows:

1. Whether there is sufficient material evidence to proceed against the petitioners/A-4 and A-6 in the subject Calendar Case No.8 of 2012?

2. Whether the Court below is justified in taking cognizance against the petitioners/A-4 and A-6 in the subject Calendar Case No.8 of 2012 for the offences punishable under Sections 120B r/w 420 of IPC?

3. Whether continuation of proceedings against the petitioners/A-4 and A-6 would amount to abuse of process of Court and whether the

1987 Criminal Law Journal 709

2003 Criminal Law Journal 4801

(2015) 9 Supreme Court Cases 294

(2000) 5 Supreme Court Cases 440

(2012) 9 Supreme Court Cases 460

(2014) 6 Supreme Court Cases 495

(2008) 6 Supreme Court Cases 260 Dr.SA, J Crl.P. No.5381/2016

proceedings against the petitioners/A-4 and A- 6 in the subject Calendar Case can be quashed as sought for, in the interest of justice?

POINT Nos.1 to 3:-

7. The submissions made by learned counsel for both sides as

well as the material placed on record reveals that pursuant to the

common order, dated 10.08.2011, passed by the erstwhile High

Court of Andhra Pradesh in W.P.No.794 of 2011 filed by

Mr.P.Shankar Rao, the then MLA, Secunderabad Cantonment, and

W.P.No.6604 of 2011 filed by Mr.K.Yerrannaidu and two others, the

Central Bureau of Investigation (CBI) registered a Crime in RC

19(A)/2011-CBI/HYD on 17.08.2011, against Sri Y.S.Jagan Mohan

Reddy, the then Member of Parliament, Kadapa, and 73 others, for

the offences punishable under Sections 120B, 420, 409 & 477A of

IPC and Section 13(2) r/w 13(1)(c)&(d) of PC Act. The

petitioner/A-4 is M/s.Hetero Group of Companies (M/s.Hetero

Drugs Limited and M/s.Hetero Labs Limited) and the petitioner/A-6

is the Director of petitioner/A-4 group of companies in the subject

Calendar Case No.8 of 2012. The main allegations against them

are that they conspired with the other accused in the subject C.C.

and got allotted an extent of 75 acres of land at Jadcherla, at a low

cost of Rs.7 lakhs per acre as against the cost of Rs.15 lakhs per

acre fixed by Price Fixation Committee, which resulted in wrongful

gain to the petitioner/A-4 company and corresponding wrongful

loss to the State Exchequer. The petitioners/A-4 and A-6 invested

Rs.19.50 crores in A-12 (M/s.Jagati Publications Private Limited)

and A-13 (M/s.Janani Infrastructure Private Limited) companies,

belonging to A-1 (Mr.Y.S.Jagan Mohan Reddy), who prevailed upon Dr.SA, J Crl.P. No.5381/2016

his father (the then Chief Minister of Andhra Pradesh) to extend

the undue benefit to petitioners/A-4 and A-6.

8. There is record to show that the then Andhra Pradesh

Industrial Infrastructure Corporation (APIIC) acquired land

admeasuring 954 acres situated at Jadcherla Village, to develop it

as 'Green Industrial Park' (GIP). The Vice-Chairman and Managing

Director of APIIC (A-9) obtained approval from the then State

Government and submitted proposals to the Ministry of Commerce,

Government of India, for development of Special Economic Zone

('SEZ') in an extent of 250 acres out of the acquired land. Vide

proceedings, dated 27.10.2006, the Government of India gave

formal approval on certain terms and conditions and the APIIC

accepted the same on 14.11.2006. The Price Fixation Committee,

in its meeting held on 13.07.2006, after examining the information

furnished by the Zonal Office, Shamshabad, Engineering

Department and Finance Department etc., fixed the price at Rs.15

Lakhs per acre, with validity till 31.12.2006. A-9 approved the said

proposal on 14.08.2006. At a later point of time, the Price Fixation

Committee revised the land cost to Rs.20.235 lakhs per Acre. On

17.11.2006, the petitioner/A-6, Director of petitioner/A-4

company, along with A-7 (Managing Director of M/s.Aurobindo

Pharma Limited), addressed letters to APIIC requesting for

allotment of 75 acres of land to each company @ Rs.7 lakhs per

Acre. A-9, by abusing his official position, in order to facilitate the

companies, on the same day i.e., 17.11.2006, processed the

letters of the two companies. Though a note file was put up

indicating the price @ Rs.15 Lakhs per acre as fixed by the Price Dr.SA, J Crl.P. No.5381/2016

Fixation Committee, in view of instructions given by the then Chief

Minister, the land value for these two companies was finalized @

Rs.7 lakhs per acre and offer letters were issued in the name of A-

3 and petitioner/A-4 companies for allotment of 75 Acres of land

each, on lease basis, at a lease premium of Rs.7 lakhs per acre and

annual lease rental was fixed @ 1%. A-9 signed the offer letters

on the same day and by abusing his official position and breach of

trust, personally took those letters to the then Chief Minister, who

in turn, handed over those letters to the parties on the same day.

A-9 signed the note in confirmation of his decision on 18.11.2006,

i.e., on the next day of handing over the offer letters to the A-3

and petitioner/A-4 showing allotment of 75 acres of land to each

company. Though M/s.Lee Pharma Limited approached APIIC for

allotment of land in SEZ on 13/14.11.2006, its application was not

processed along with the applications of A-3 and petitioner/A-4

companies. A-3 company paid entire lease premium amount of

Rs.5.25 crores for 75 acres of land by March 2007, whereas, the

petitioner/A-4 company paid Rs.3,88,75,000/- only. On

13.06.2007, the Ministry of Commerce, Government, issued

Gazette Notification for Pharmaceutical Formulation SEZ for 250

acres of land. Mr.T.L.Ramachandran (LW-3), the then Chief

General Manager (Projects), APIIC, indicated in the note file to allot

75 acres of land to A-3 and to restrict allotment of land of 50 acres

only to the petitioner/A-4 company, since they paid the amount

equivalent to the said extent only. Accordingly, on 19.07.2007,

letter allotting 50 acres of land was issued in favour of the

petitioner/A-4 company. By enclosing cheque for balance amount,

the petitioner/A-6, the Director of petitioner/A-4 company, vide Dr.SA, J Crl.P. No.5381/2016

letter, dated 01.08.2007, requested for allotment of 75 acres of

land. Accordingly, revised allotment letter was issued on

26.10.2007 allotting 75 acres of land to the petitioner/A-4

company. A-9 allotted huge extents of land of 75 acres each to A-

3 and petitioner/A-4 companies, without proper assessment of

requirement of land, on the pretext that extents and rates were

decided by the then Chief Minister. The Audit Enquiry Report,

dated 23.10.2008, observed that due to allotment of land at

arbitrary rates without considering the rate fixed by the Price

Fixation Committee from time to time, it has resulted in undue

benefit to the allottees and corresponding loss of Rs.6,13,13,850/-

by each of the companies to APIIC, which is a Governmental

organization. It clearly establishes quid pro quo arrangement

between the petitioners/A-4 and A-6 and A-9 and the then Chief

Minister, at the instance of A-1 and A-2. Further, the proposal for

development of SEZ was kept in dark by not publishing in

newspapers, as stipulated in APIIC regulations, with a view to show

undue favour to A-3 and petitioner/A-4 companies. After obtaining

formal approval from SEZ, the requests of A-3 and petitioner/A-4

companies were considered without assessment of their

requirement of land. Without any basis, the rate per acre was cut

down to half of the price, i.e., Rs.7 Lakhs per acre as against Rs.15

lakhs per acre (fixed to encourage Anchor Units for 50 Acres or till

31.12.2006), which was further revised to Rs.20.235 Lakhs per

acre, with effect from 01.01.2007. The allotments and rates in

respect of A-3 and petitioner/A-4 companies were decided by A-9

at the instance of the then Chief Minister, in gross violation of the

procedure contemplated. The price per acre in respect of other Dr.SA, J Crl.P. No.5381/2016

allotments was decided by Plot Allotment Committee as per the

rates fixed by the Price Fixation Committee. Allotment of lands by

violating the existing norms, regulations etc., and deliberately

reducing the price per acre on the plea that the allotments were

made on "as is where is basis" caused wrongful gain to A-3 and

petitioner/A-4 companies to a tune of Rs.8.60 Crores each and

corresponding loss to APIIC, and in furtherance of criminal

conspiracy, A-9 committed criminal breach of trust by allotting the

lands to A-3 and petitioner/A-4 companies in gross violation of

rules and regulations. In view of favour extended by A-9 and the

then Chief Minister, the petitioner/A-4 group of companies have

invested an amount of Rs.19.50 crores in A-12 and A-13

companies belonging to A-1, who is the son of the said Chief

Minister. For the said investment of Rs.19.50 crores, A-12 and A-

13 companies have issued several share certificates on various

dates for whooping premiums in the names of various companies

belonging to the petitioner/A-4 group of companies.

9. There is also material evidence to show that though

M/s.Jagadisan and Company and M/s. Deloitte company have

valuated A-12 company, but they have not suggested any premium

per share and A-12 company, on their own, have fixed the share

premium at Rs.350/- without any rationale and with an intention to

solicit huge investments, though the said company was yet to

commence business and make profits. A-2, one of the key

conspirator, had approached M/s.Delloitte Touche Tohmatsu India

Private Limited, and got valuated A-12 company at a very high

value and got prepared an ante-date report, thereby created a Dr.SA, J Crl.P. No.5381/2016

falsified report. The main object of A-1 and A-2 is to accept bribes

in the name of investments from various companies and persons

for extending undue official favours to them by prevailing upon the

then Chief Minister, who is the father of A-1. There is no equity

base for A-12 company. The total project cost and the means of

finance envisaged were also not specified by A-12 company.

Further, there was no shareholder agreements, detailing the rights

of the investors like anti-dilution protection and pre-emptive rights

etc., which are standard safeguards for investment in an unlisted

company. Further, there was no agreement, a defined dividend

policy, or any other form of returns for the investors. Hence,

investing huge amount in such a company is nothing but bribing

them for deriving undue benefits in another form. Thus, the

material evidence on record demonstrates that the petitioners/A-4

ad A-6, in criminal conspiracy with the then Chief Minister and A-9,

got allotted 75 Acres of land each at SEZ, Jadcherla, without

following rules and regulations at a price, which is much below the

rate fixed by Price Fixation Committee, and thereby wrongfully

gained an amount of Rs.17.20 Crores and caused corresponding

wrongful loss, i.e., Rs.17.20 Crores to the State Exchequer.

10. The material on record further reveals that the report of

M/s.Jagadisan & Company was ante-dated as 12.07.2007 at the

instance of A-2, which was actually completed in the month of

January, 2008. The main reason for ante-dating the report was to

justify the high premiums already received by A-12 company. The

petitioner/A-4 company invested a total of Rs.15 crores in A-13

company and Rs.4.50 crores in A-12 company. As on the date of Dr.SA, J Crl.P. No.5381/2016

first instalment of investment of Rs.2 crores in A-13 company, the

petitioner/A-4 company had sufficient balance to invest almost the

entire amount of Rs.15 crores, had it been a genuine investment,

the petitioner/A-4 would have invested the entire amount.

Further, as on the date of first instalment of investment of Rs.1

crore in A-12 Company, the petitioner/A-4 company had sufficient

balance to invest the total amount of Rs.4.50 crores. However, the

investments were specifically made on the dates during which, the

proposal for allotment of 75 acres of land was under process.

Though A-12 company was not making any profits, it did not make

any attempt to withdraw the money, which indicate that the money

invested was towards bribe and the investor company did not

expect any returns/profits. A-1 accepted illegal gratification, under

the guise of investments in his companies, influenced his father

who was the then Chief Minister, for the purpose of doing official

favour by abusing his official position for getting the land allotted in

SEZ by flouting the established norms and thereby unduly

benefitting the investor companies.

11. There is also material to show that though Rs.5.25 crores

was paid by the petitioner/A-4 company to A-13 company by

07.08.2007, shares (2,45,535) were allotted on 13.03.2008, i.e.,

after a gap of seven months from the date of remittance of Rs.5.25

crores. The petitioner/A-4 company did not bother to get share

certificates immediately after payment of Rs.5.25 crores. It waited

for seven months to get the share certificates, which indicates that

the investor company was not having any interest to procure the

share certificates was well as profitability of investment. The Dr.SA, J Crl.P. No.5381/2016

petitioner/A-4 company's entire free reserves were to the tune of

Rs.182 crores as on 31.03.2006 and was locked up as a net

working capital to the tune of Rs.234 crores and the company's

indebtedness as on 20.07.2006 stood at Rs.144 crores and at that

stage, the company required full liquidity, hence the investment of

Rs.6.75 crores cannot be categorized as a bona fide investment.

Further, the payment is not in accordance with the Memorandum of

Association of the company and ultra vires the power of the

company. There are gross violations of several provisions of

Companies Act on the part of petitioner/A-4 group of companies in

the process of the so-called investments. The petitioner/A-4 group

of companies has not received any invitation from A-12 and A-13

companies regarding allotment of shares. The available financial

resources considering the bank borrowings and repayment burden

comes to nil and hence, the investment of Rs.9.5 crores by M/s.

Hetero Labs (one of the petitioner/A-4 group of companies) cannot

be treated as a genuine investment. Further, the investment

cannot be treated as genuine investment as the same was not

meant for the promotion of the objectives or to secure high

dividend and thereby corporate powers were abused. The

investment of Rs.1 Crore by M/s.Hetero Healthcare Limited (one of

the petitioner/A-4 group of companies) cannot be categorized as a

bona fide investment, as the said company suffered cash losses

during the years 2006-2007 and 2007-2008 respectively. The

investments prima facie do not appear in the nature of investment

and thus violative of Sections 209 and 211 of Companies Act, as

the accounts do not represent true and fair view. In the

statements of one Mr.E.Surya Narayana Reddy (L.W.82), the Dr.SA, J Crl.P. No.5381/2016

Investigating Agency found that the petitioner/A-6 and A-7 used to

meet the then Chief Minister at his Camp Office for the benefits

received and that A-1 and A-2 were present during such meetings,

which would clearly establish criminal conspiracy in the quid pro

quo dealings between the said accused.

12. Several contentions were raised by the petitioners/A-4 and

A-6 in support of their case. Before proceeding further, it is apt to

discuss the decisions relied by the learned senior counsel for the

petitioners/A-4 and A-6. Learned senior counsel, while highlighting

the scope of Section 482 of Cr.P.C, relied on Smt.Nagawwa's case

(1 supra), Bhajan Lal's case (2 supra), Pepsi Foods Ltd's case (3

supra), Inder Mohan Goswami's case (4 supra), Chandran

Ratnaswami's case (5 supra), Mehmood Ul Rehman's case (6

supra) and Mahendra Singh Dhoni's case (7 supra). The purport

of the principles laid down in all these decisions is that where the

allegations made in the First Information Report or the complaint,

even if they are taken at their face value and accepted in their

entirety, do not prima facie constitute any offence or make out a

case against the accused, the proceedings against the accused can

be quashed or set aside. There cannot be any dispute with regard

to the said preposition of law. Further, the principles laid down in

the above mentioned judgments is nothing but reiteration of the

law laid down by the Hon'ble Apex Court in Bhajan Lal's case (2

supra).

13. On the aspect of taking cognizance of the matter, learned

senior counsel appearing for the petitioners/A-4 and A-6 relied on

GHCL Employees Stock Option Trust's case (8 supra), Sarah Dr.SA, J Crl.P. No.5381/2016

Mathew's case (9 supra), and S.R. Sukumar's case (10 supra).

In GHCL Employees Stock Option Trust's case (8 supra), it was

held that that summoning of accused in a criminal case is serious

matter, hence, criminal law cannot be set into motion as a matter

of course; the order of Magistrate summoning the accused must

reflect that the learned Magistrate has applied his mind to the facts

of the case and the law applicable thereto; the Magistrate has to

record his satisfaction with regard to existence of prima facie case

on the basis of specific allegations made in the complaint and

enclosures made thereto. In Sarah Mathew's case (9 supra), it

was held that sectional headings have a limited role to play in the

construction of statutes; for computing period of limitation under

Section 468 of Cr.P.C. the relevant date is that of filing of the

complaint and not the date when cognizance is taken; although

penal statutes must be strictly construed, however, looking to the

legislative intent, the provisions of Chapter XXXVI of Cr.P.C., have

been harmoniously construed, so as to strike a balance between

the right of the complainant and the right of the accused; Chapter

XXXVI of Cr.P.C. is part of the Criminal Procedure Code, which is a

procedural law, and it is well settled that procedural laws must be

liberally construed to serve as the handmaid of justice and not as

its mistress. In S.R. Sukumar's case (10 supra), it was held that

'cognizance' has a reference to the application of judicial mind by

the Magistrate; under Section 200 of Cr.P.C., when the

complainant is examined, the Magistrate cannot be said to have

ipso facto taken the cognizance, when the Magistrate was merely

gathering the material on the basis of which he will decide whether

a prima facie case is made out for taking notice of the accusations Dr.SA, J Crl.P. No.5381/2016

and applying the judicial mind to the contents of the complaint and

the material filed therewith; it is neither practicable nor desirable

to define as to what is meant by taking cognizance; whether the

Magistrate has taken cognizance of the offence or not will depend

upon the facts and circumstances of particular case.

14. There cannot be any dispute with regard to the law laid down

in the aforementioned decisions on the aspect of taking cognizance

of the matter. However, it is equally settled law that at the time of

taking cognizance of offence(s), the Court has to consider only the

averments made in the complaint or in the charge-sheet filed and

that it is not open for the Court to sift or appreciate the evidence at

that stage, with reference to the material, and come to the

conclusion that no prima facie case is made out for proceeding

further in the matter. It is also well settled that at the stage of

issuing process, the Magistrate is mainly concerned with the

allegations made in the complaint or the evidence led in support of

the same and the Magistrate is only required to be satisfied that

there are sufficient grounds for proceeding against the accused.

15. In the instant case, learned senior counsel for the

petitioners/A-4 and A-6 vehemently contended that no valid

reasons were recorded in the cognizance order, which shows clear

non-application of mind by the Court below, and as such, the

cognizance order is vitiated. There is no force in the said

submission. A Magistrate, while issuing summons, need not

explicitly state the reasons for his satisfaction that there are

sufficient grounds for proceeding against the accused. The word

'cognizance' means 'become aware of' and when it is used with Dr.SA, J Crl.P. No.5381/2016

reference to a Court/Judge, it connotes 'to take notice judicially'.

Cognizance is taken of cases and not of persons. Under Section 190

of Cr.P.C., it is the application of judicial mind to the averments in

the complaint that constitutes cognizance. At that stage, the

Magistrate has to be satisfied whether there is sufficient ground for

proceeding and not whether there is sufficient ground for

conviction, as the sufficiency of evidence for conviction can be

determined only at the trial and not at the stage of enquiry. If

there is sufficient ground for proceeding against the accused, then

the Magistrate is empowered to issue process under Section 204 of

Cr.P.C. In so far as taking cognizance based on the police report,

the Magistrate has the advantage of the charge sheet, statement of

witnesses and other evidence collected by the investigating officer

during investigation. Evidence and material so collected are sifted

at the level of the Investigating Officer and thereafter, charge sheet

would be filed. The Court thus has the advantage of the police

report along with the material placed before it by the police. Under

Section 190(1)(b) of Cr.P.C., where the Magistrate has taken

cognizance of an offence upon a police report and the Magistrate is

satisfied that there is sufficient ground for proceeding, the

Magistrate directs issuance of process. Furthermore, in the cases of

taking cognizance of an offence based upon the police report, the

Magistrate is not required to record reasons for issuing the process

and the Magistrate is only required to pass an order issuing

summons to the accused. Such an order of issuing summons to the

accused is based upon and subject to satisfaction of the Magistrate

considering the police report and other documents enclosed thereto

and satisfying himself that there is sufficient ground for proceeding Dr.SA, J Crl.P. No.5381/2016

against the accused. In case, if the charge sheet is barred by law

or where there is lack of jurisdiction or when the charge sheet is

rejected or not taken on file, then the Magistrate is required to

record his reasons for rejection of the charge sheet and not for

taking on file. In the instant case, cognizance for the alleged

offences was taken against the petitioners/A-4 and A-6 by taking

into consideration the charge sheet and the documents filed along

with it by the investigating officer. Under these circumstances, the

order issuing process without explicitly recording reasons for the

same does not suffer from any illegality. The submissions made in

this regard are unsustainable.

16. With regard to vicarious liability, learned senior counsel

appearing for the petitioners relied on Maksud Saiyed's case (11

supra), S.K. Alagh's case (12 supra), Keki Hormosuji Gharda's

case (13 supra), Maharashtra State Electricity Distribution

Company Limited's case (14 supra), Sunil Bharathi Mittal's

case (15 supra) and N. Srinivasan's case (16 supra). In Maksud

Saiyed's case (11 supra), the Hon'ble Apex Court held as follows:

"Where a jurisdiction is exercised on a complaint petition filed in terms of Section 156(3) or Section 200 of the Code of Criminal Procedure, the Magistrate is required to apply his mind. Indian Penal Code does not contain any provision for attaching vicarious liability on the part of the Managing Director or the Directors of the Company when the accused is the Company. The learned Magistrate failed to pose unto himself the correct question viz. as to whether the complaint petition, even if given face value and taken to be correct in its entirety, would lead to the conclusion that the respondents herein were personally liable for any offence. The Bank is a body corporate. Vicarious liability of the Managing Director and Director would arise provided any provision exists in that behalf in the statute. Statutes indisputably must contain provision fixing such vicarious liabilities. Even for the said purpose, it is obligatory on the part of the complainant to make requisite allegations which would attract the provisions constituting vicarious liability."

Dr.SA, J Crl.P. No.5381/2016

17. In Sunil Bharti Mittal's case (15 supra), the Hon'ble

Supreme Court held as follows:

"A corporate entity is an artificial person which acts through its Officers, Directors, Managing Director, Chairman etc. If such a company commits an offence involving mens rea, it would normally be the intent and action of that individual, who would act on behalf of the Company. It would be more so, when the criminal act is that of conspiracy. However, at the same time, it is a cardinal principle of criminal jurisprudence that there is no vicarious liability unless the statute specifically provides so."

18. The other judgments relied by the learned senior counsel for

the petitioners/A-4 and A-6 on vicarious liability are not relevant

and as such, they are not discussed in detail.

19. Based on the principles laid down in the above judgments,

the Hon'ble Apex Court, in a recent judgment rendered in

K.Sitaram and another v. CFL Capital Financial Service Ltd. &

Another34, held that "no doubt, a corporate entity is an artificial

person which acts through its officers, Directors, Managing

Director, Chairman, etc. If such a company commits an offence

involving mens rea, it would normally be the intent and action of

that individual, who would act on behalf of the company, that too,

when the criminal act is that of conspiracy. Thus, an individual,

who has perpetrated the commission of an offence on behalf of the

company, can be made an accused, along with the company, if

there is sufficient evidence of his active role coupled with criminal

intent. Second situation in which an individual can be implicated in

those cases is where the statutory regime itself attracts the

Doctrine of Vicarious Liability."

JT 2017 (6) SC 52 Dr.SA, J Crl.P. No.5381/2016

20. In the instant case, the petitioner/A-6 is the Director of

petitioner/A-4 group of companies and has been participating in the

business and day-to-day affairs of the petitioner/A-4 group of

companies. The petitioner/A-6, in furtherance of criminal

conspiracy, got allotted 75 acres of SEZ land at Jedcherla, at a

relatively lower price of Rs.7 lakhs per acre than the price fixed by

the Prize Fixation Committee, in gross violation of rules and

procedures, resulting in wrongful gain of Rs.8.60 crores to him and

his company and corresponding wrongful loss to the State

Exchequer. As a Quid-Pro-Quo to the above undue benefit, the

petitioners/A-4 and A-6 invested an amount of Rs.19.50 crores in

A-12 and A-13 companies in the name of M/s.Hetero Drugs

Limited, M/s.Hetero Labs Limited, M/s.Hetero Healthcare Limited

and also in the name of petitioner/A-6. In the given facts and

circumstances of the case, the acts done by the petitioner/A-6 in

his capacity as Director of petitioner/A-4 group of companies will

have binding effect and the allegations made against the

petitioners/A-4 and A-6 needs to be examined in the light of the

law laid down in K.Sitaram's case (34 supra). For the specific

overt acts, both the petitioners/A-4 and A-6 are proceeded against

for the offences punishable under Section 120B r/w 420 of IPC. For

the said reasons, it is difficult to accept the contention of the

learned senior counsel appearing for the petitioners/A-4 and A-6

that the petitioner/A-6 is not liable for prosecution for the alleged

offences.

21. Learned senior counsel, in support of his contention that the

allegations made in the charge-sheet do not constitute any Dr.SA, J Crl.P. No.5381/2016

offences, much less offences punishable under Sections 420 &

120B of IPC, relied upon Matilal Chakrawarty's case (17 supra),

Hira Lal Hari Lal Bhagwati's case (18 supra), Hridaya Ranjan

Prasad's case (19 supra), Nimra Creglass Technics Pvt Ltd's

case (20 supra), V.P. Srivastava's case (21 supra), Ajay Mitra's

case (22 supra), Bhagwan Swarup Lal's case (23 supra) and

K.Narayana Rao's case (24 supra). The purport of the principles

laid down in all these decisions is that in order to constitute an

offence under Section 420 of IPC, it must be shown that the person

who parted with the property was cheated and thereby dishonestly

induced to deliver property; to bring home the charge of

conspiracy within the ambit of Section 120B IPC, it is necessary to

establish that there was an agreement between the parties for

doing an unlawful act; it is difficult to establish conspiracy by direct

evidence; to hold a person guilty of cheating under Section 415 of

IPC, it is necessary to show that he had fraudulent or dishonest

intention at the time of making the promise with an intention to

retain the property; to quash the prosecution at the initial stage,

the test to be applied by the Court is as to whether uncontroverted

allegations as made in the complaint establish the offence; The

High Court, being superior Court of the State, should refrain from

analyzing the material which are yet to be adduced and seen in

their true perspective; The distinction between mere breach of

contract and cheating would depend upon the intention of the

accused at the time of alleged inducement; A guilty intention is an

essential ingredient of the offence of cheating, in other words,

'mens rea' on the part of the accused must be established before

he can be convicted of an offence of cheating; There is no Dr.SA, J Crl.P. No.5381/2016

difference between the mode of proof of offence of conspiracy and

that of any other offence, it can be established by direct evidence

or by circumstantial, but Section 10 of Evidence Act introduces the

doctrine of Agency and if the conditions laid down therein are

satisfied, the act done by one is admissible against the co-

conspirators.

22. There cannot be any dispute with regard to the law laid down

in the aforementioned decisions. Here, it would be appropriate to

dwell upon the offences alleged against the petitioners/A-4 and A-6

in detail. The petitioners/A-4 and A-6 are being proceeded for

their alleged commission of offences of criminal conspiracy and

cheating. Section 120B of IPC provides for punishment for criminal

conspiracy. The definition of 'criminal conspiracy' is provided in

Section 120A of IPC, which reads as follows:

120A- When two or more persons agree to do, or cause to be done.-(1) an illegal act, or (2) an act which is not illegal by illegal means, such an agreement is designated a criminal conspiracy:

Provided that no agreement except an agreement to commit an offence shall amount to a criminal conspiracy unless some act besides the agreement is done by one or more parties to such agreement in pursuance thereof".

23. Broadly, the elements of criminal conspiracy can be stated to

be (a) an object to be accomplished; (b) a plan or scheme

embodying means to accomplish that object; (c) an agreement or

understanding between two or more accused persons whereby,

they become definitely committed to cooperate with each other for

accomplishment of the object by the means embodied in the

agreement or by any effectual means; (d) in the jurisdiction, where

the statute required an overt act. To prove criminal conspiracy,

there must be evidence, direct or circumstantial, to show that Dr.SA, J Crl.P. No.5381/2016

there was an agreement between two or more persons to commit

an offence. There must be meeting of minds resulting in ultimate

decision taken by the conspirators regarding the commission of an

offence. Where the conspiracy is to be inferred from the

circumstances, the prosecution has to show that the circumstances

give rise to a conclusive or irresistible inference of an agreement

between two or more persons to commit an offence. As in all other

criminal offences, the prosecution has to discharge its onus of

proving the case against the accused, beyond reasonable doubt.

The circumstances of a case, when taken together on their face

value, should indicate the meeting of the minds between the

conspirators for the intended object of committing an illegal act or

an act which is not illegal, by illegal means. The prosecution must

show that all means adopted and illegal acts done were in

furtherance of the object of conspiracy hatched. The

circumstances relied for the purposes of drawing an inference

should be prior in time than the actual commission of the offence in

furtherance of the alleged conspiracy. It is common experience

that direct evidence to prove conspiracy is rarely available. It is a

matter of inference and the inferences are normally deduced from

acts of parties in pursuance of a common intention between the

conspirators. Therefore, the circumstances proved before, during

and after the occurrence have to be considered to decide about the

complicity of the accused. The agreement may be express or

implied, or partly express and partly implied. The actus rues in a

conspiracy is the agreement to execute the illegal conduct, not the

execution of it. It is not enough that two or more persons pursued

the same unlawful object at the same time or in the same place. It Dr.SA, J Crl.P. No.5381/2016

is necessary to show meeting of minds, consensus to affect an

unlawful purpose. Further, there is no difference between the mode

of proof of the offence of conspiracy and that of any other offence.

It can be established by direct or circumstantial evidence.

24. Further, to constitute the offence of cheating (i) there should

be fraudulent or dishonest inducement of a person by deceiving

him; (b) the person so induced should be intentionally induced to

deliver any property to any person or to consent that any person

shall retain any property, or the person so induced should be

intentionally induced to do or to omit to do anything which, he

would not do or omit if he were not so deceived; (c) the act or

omission should be one which caused or is likely to cause damage

or harm to the person induced in body, mind, reputation or

property. A fraudulent or dishonest inducement is an essential

ingredient of the offence. A person who dishonestly induces

another person to deliver any property is liable for the offence of

cheating.

25. Keeping in view the aforementioned prerequisites of the

offences referred supra, if we look at the charge sheet allegations,

it is specifically alleged in the charge-sheet that the petitioner/A-4,

who is the Director of petitioner/A-6 group of companies conspired

with the other accused in the subject C.C. and got allotted an

extent of 75 acres of land at Jadcherla, at a low cost of Rs.7 lakhs

per acre as against the cost of Rs.15 lakhs per acre fixed by Price

Fixation Committee, which resulted in wrongful gain to the

petitioner/A-4 company and corresponding wrongful loss to the

State Exchequer; A-9 was instrumental in getting the lands leased Dr.SA, J Crl.P. No.5381/2016

to the petitioner/A-4 group of companies, at the instance of the

then Chief Minister of Andhra Pradesh, by flouting the rules and

regulations; As a quid pro quo to the said undue benefit, the

petitioners/A-4 and A-6 invested Rs.19.50 crores in A-12 and A-13

companies, belonging to A-1, who is the son of the then Chief

Minister of Andhra Pradesh. A-1 floated A-12 company with an

objective of conducting media business with ill-gotten wealth; As

on 31.03.2010, A-12 company had a paid up capital and share

premium of Rs.844.129 crores invested by various shareholders,

including the petitioners/A-4 and A-6. All the shareholders,

including the petitioners/A-4 and A-6, have subscribed to the

shares of A-12 company at a uniform price of Rs.350/- per share,

though the A-12 company is yet to start business and make

profits; To fix the share premium of A-12 company @ Rs.350/- per

share, A-2, one of the key conspirator, had approached

M/s.Delloitte Touche Tohmatsu India Private Limited, and got

valuated A-12 company at a very high value and got prepared an

ante-date report, thereby created a falsified report; though as per

the Articles of Association of A-12 company contain prohibitive

clauses regarding transferability of shares, shares were sold to

outsiders at an exaggerated premium; the subscribes of A-12

company include several small companies, which were not having

any profits to their credit; most of the shareholders are alleged to

be benamis of A-1; A-12 company continued to receive

investments from some companies at the same premium, i.e., @

Rs.350/- per share, for two years, making total investment of

Rs.1246 crores, though the said venture alleged to have

accumulated losses of Rs.349 crores during the period of these Dr.SA, J Crl.P. No.5381/2016

investments; Thus, A-1, without investing single rupee in A-12

company, had accumulated Rs.1246 crores by way of subscriptions

from various companies, including the petitioner/A-4 company.

26. In view of the material placed on record, it is too early to

decide as to whether there is a deceptive intention on the part of

the petitioners/A-4 and A-6 at the inception to cheat the State

Exchequer. The material placed on record by the CBI prima facie

indicates conspiracy in between the petitioner/A-4 and A-6 and the

other accused in getting allotted 75 acres of land at Jadcherla for

lesser consideration. Further, it is too early to comment on the

aspect as to whether the investments made by the petitioners/A-4

and A-6 companies in A-12 and A-13 companies are genuine

investments or not and the same is required to be decided in

accordance with the procedure established under law.

27. Learned senior counsel for the petitioners/A-4 and A-6 also

relied on Arun Kumar Agrawal's case (25 supra) and Pathan

Mohammed Suleman Rehmatkhan's case (26 supra), in support

of his contention that the Government is not accountable to the

Courts in respect of policy decisions. It is settled law that the

Courts would not ordinarily interfere with the policy decisions of the

executive, unless the same can be faulted on the grounds of mala

fides, unreasonableness, arbitrariness or unfairness, in which case,

the policy would render itself to be declared unconstitutional.

28. In Krishan Lal Pardhan's case (27 supra) relied upon by

the learned Special Public Prosecutor, the Hon'ble Apex Court, in

paragraph No.8, held as follows;

Dr.SA, J Crl.P. No.5381/2016

8. We also find that the order of the Special Judge suffers from some other infirmities. The first grievous error committed by him is in failing to comprehend the offence of criminal conspiracy and mistakenly treating the acts done in pursuance of the conspiracy as the offence of conspiracy itself. Because of this erroneous perception the Special Judge has vivisected the conspiracy into three different sets of acts and viewed in isolation the conspiratorial acts of the accused involved in each transaction and concluding that the other conspirators stood absolved of the offences. In the opinion of the Special Judge every one of the conspirators must have taken active part in the commission of each and every one of the conspiratorial act and only then the offence of conspiracy will be made out. Such a view is clearly wrong. The offence of criminal conspiracy consists in a meeting of minds of two or more persons for agreeing to do or causing to be done an illegal act by illegal means, and the performance of an act in terms thereof. If pursuant to the criminal conspiracy the conspirators commit several offences, then all of them will be liable for the offences even if some of them had not actively participated in the commission of the offences. The learned Judge is, therefore, wrong in taking the view that the offences complained of constitute three different sets of acts and should, therefore, be treated as individual acts and judges in that limited perspective.

(Emphasis supplied)

29. In Ram Narain Poply's case (28 supra) relied upon by

the learned Special Public Prosecutor, the Hon'ble Apex Court

held as follows:

Privacy and secrecy are more characteristics of a conspiracy, than of a loud discussion in an elevated place open to public view. Direct evidence in proof of a conspiracy is seldom available; offence of conspiracy can be proved by either direct or circumstantial evidence. It is not always possible to give affirmative evidence about the date of the formation of the criminal conspiracy, about the persons who took part in the formation of the conspiracy, about the object, which the objectors set before themselves as the object of conspiracy, and about the manner in which the object of conspiracy is to be carried out, all this is necessarily a matter of inference.

30. In Mariya Anton Vijay's case (29 supra), relied by the

learned Special Public Prosecutor, the Hon'ble Apex Court,

adverting to the facts of the said case, held as follows:

"These were some of the material questions, which had a bearing over the issues involved the case. Admittedly, these factual questions could be answered one way or the other on the basis of evidence to be adduced by the parties in the trial, but not otherwise. In other words, none of the aforementioned questions were capable of being answered without of the aid of evidence to be adduced by the parties, by mere reading of FIR, Final report, charge sheet, for the first time by the High Court in exercise of its inherent jurisdiction. Similarly, the High Court had no jurisdiction to appreciate the materials produced like an appellate Court while Dr.SA, J Crl.P. No.5381/2016

hearing the petition under Section 482 of the Code or/and Revision Petition under Section 397 ibid.

31. In J.Jayalalitha's case (30 supra) relied by the learned

Special Public Prosecutor, the Hon'ble Apex Court held as follows:

We would choose to refrain from dealing with the above contention, lest any comment made by us may turn out to be detrimental to one or the other side of the case. Nevertheless, it is for the prosecution to explain how certain relevant sheets were found missing and whether respondent had any knowledge of and also why the respondent should have caused them to be removed. This is not the stage for weighing the pros and cons of all the implications of the materials nor for sifting the materials presented by the prosecution. The exercise at this stage should be confined to considering the police report and the documents to decide whether the allegations against the accused are "groundless" or whether "there is ground for presuming that the accused has committed the offences." Presumption therein is always rebuttable by the accused for which there must be opportunity of participation in the trial.

32. In Amit Kapoor's case (31 supra) relied by the learned

Special Public Prosecutor, the Hon'ble Apex Court, having

discussed the scope of jurisdiction under Section 397 and Section

482 of Cr.P.C. and the fine line of jurisdictional distinction, enlisted

the principles with reference to which the Courts should exercise

such jurisdiction, as follows:

1) Though there are no limits of the powers of the Court under Section 482 of the Code but the more the power, the more due care and caution is to be exercised in invoking these powers. The power of quashing criminal proceedings, particularly, the charge framed in terms of Section 228 of the Code should be exercised very sparingly and with circumspection and that too in the rarest of rare cases.

2) The Court should apply the test as to whether the uncontroverted allegations as made from the record of the case and the documents submitted therewith prima facie establish the offence or not. If the allegations are so patently absurd and inherently improbable that no prudent person can ever reach such a conclusion and where the basic ingredients of a criminal offence are not satisfied then the Court may interfere.

3) The High Court should not unduly interfere. No meticulous examination of the evidence is needed for considering whether the case would end in conviction or not at the stage of framing of charge or quashing of charge.

4) Where the exercise of such power is absolutely essential to prevent patent miscarriage of justice and for correcting some grave error that might be committed by the subordinate courts even in such cases, the High Court should be loathe to interfere, at the threshold, to throttle the prosecution in exercise of its inherent powers.

Dr.SA, J Crl.P. No.5381/2016

5) Where there is an express legal bar enacted in any of the provisions of the Code or any specific law in force to the very initiation or institution and continuance of such criminal proceedings, such a bar is intended to provide specific protection to an accused.

6) The Court has a duty to balance the freedom of a person and the right of the complainant or prosecution to investigate and prosecute the offender.

7) The process of the Court cannot be permitted to be used for an oblique or ultimate/ulterior purpose.

8) Where the allegations made and as they appeared from the record and documents annexed therewith to predominantly give rise and constitute a 'civil wrong' with no 'element of criminality' and does not satisfy the basic ingredients of a criminal offence, the Court may be justified in quashing the charge. Even in such cases, the Court would not embark upon the critical analysis of the evidence.

9) Another very significant caution that the courts have to observe is that it cannot examine the facts, evidence and materials on record to determine whether there is sufficient material on the basis of which the case would end in a conviction, the Court is concerned primarily with the allegations taken as a whole whether they will constitute an offence and, if so, is it an abuse of the process of court leading to injustice.

10) It is neither necessary nor is the court called upon to hold a full-

fledged enquiry or to appreciate evidence collected by the investigating agencies to find out whether it is a case of acquittal or conviction.

11) Where allegations give rise to a civil claim and also amount to an offence, merely because a civil claim is maintainable, does not mean that a criminal complaint cannot be maintained.

12) In exercise of its jurisdiction under Section 228 and/or under Section 482, the Court cannot take into consideration external materials given by an accused for reaching the conclusion that no offence was disclosed or that there was possibility of his acquittal. The Court has to consider the record and documents annexed with by the prosecution.

13) Quashing of a charge is an exception to the rule of continuous prosecution. Where the offence is even broadly satisfied, the Court should be more inclined to permit continuation of prosecution rather than its quashing at that initial stage. The Court is not expected to marshal the records with a view to decide admissibility and reliability of the documents or records but is an opinion formed prima facie.

14) Where the charge-sheet, report under Section 173(2) of the Code, suffers from fundamental legal defects, the Court may be well within its jurisdiction to frame a charge.

15) Coupled with any or all of the above, where the Court finds that it would amount to abuse of process of the Code or that interest of justice favours, otherwise it may quash the charge. The power is to be exercised ex debito justitiae, i.e. to do real and substantial justice for administration of which alone, the courts exist.

33. In Rajat Prasad's case (32 supra) relied upon by the learned

Special Public Prosecutor, the Hon'ble Apex Court held as follows:

"...The offence of abetment defined by Section 107 of the IPC or the offence of criminal conspiracy under Section 120A of IPC would, thus, require criminal intent on the part of the offender like any other offence. Both the offences would require existence of a culpable mental state which is a matter of proof from the Dr.SA, J Crl.P. No.5381/2016

surrounding facts established by the materials on record. Therefore, whether the commission of offence under Section 12 of the PC Act read with Section 120B IPC had been occasioned by the acts attributed to the accused appellants or not, ideally, is a matter that can be determined only after the evidence in the case is recorded.

...The inherent possibilities of abuse of the operation as videographed, namely, retention and use thereof to ensure delivery of the favours assured by the receiver of the bribe has to be excluded before liability can be attributed or excluded. This can happen only after the evidence of witnesses is recorded. Also, merely because in the charge-sheet it is stated that the accused had undertaken the operation to gain political mileage cannot undermine the importance of proof of the aforesaid facts to draw permissible conclusions on basis thereof as regards the criminal intent of the accused in the present case."

34. In B.Venkat Swamy's case (33 supra) relied by the learned

Special Public Prosecutor, the Hon'ble Apex Court, held as follows:

The law relating to circumstantial evidence has been highlighted by this Court in a large number of cases. It has been consistently laid down by this Court that where a case rests squarely on circumstantial evidence, the inference of guilt can be justified only when all the incriminating facts and circumstances are found to be incompatible with the innocence of the accused or the guilt of any other person.

35. The word 'Quid Pro Quo', is alien to criminal law. It is not

defined anywhere in criminal law. According to Merriam Webster

Dictionary, 'Quid Pro Quo' means "something given or received for

something else". According to the Oxford Learner's Dictionary,

'Quid Pro Quo' means "a thing given in return for something else".

According to the British Dictionary, 'Quid Pro Quo' means "a

reciprocal exchange or something given in compensation,

especially an advantage or object given in exchange for another".

'Quid Pro Quo' is a latin phase used in English to mean an

exchange of goods or services, in which one transfer is contingent

upon the other, i.e., "a favour for a favour", "give and take" or "tit

for tat". In every contract, there should be a consideration flowing

from each side for each other and the Latin maxim 'Quid Pro Quo'

signifies that part of the contract. The consideration will make Dr.SA, J Crl.P. No.5381/2016

both the parties oblige to do something or abstains from doing

something, as per the wish and/or desire of the other. However, if

such consideration is paid for the illegal act or the act which is

legally performed by illegal means with a criminal intent to confer

benefits at the cost of public at large, it would attract an offence.

Keeping the above in mind, if we look at the facts of the case on

hand, the alleged lease of 75 acres of land in favour of the

petitioner/A-4 group of companies for lesser price of Rs.7 lakhs by

A-9 at the instance of the father of A-1 by flouting the rules and

procedures, and in return, the petitioners/A-4 and A-6 investing

huge amount of Rs.19.50 crores in the companies floated by A-1,

more particularly in A-12 company which was yet to start business

and make profits, is prima facie nothing but abuse of political office

by the then Chief Minister of Andhra Pradesh and conferring undue

official benefit on the petitioners/A-4 and A-6 in utter disregard to

the Doctrine of Public Trust.

36. Further, though it is contended on behalf of the

petitioners/A-4 and A-6 that the prosecution wantonly withheld

some crucial documents without producing the same before the

Court to come to a just conclusion, the petitioners/A-4 and A-6

could not name those documents which are alleged to be withheld

by the prosecution. The contention of the petitioners/A-4 and A-6

that the petitioners/A-4 and A-6 have invested huge amount in

development of the subject land, established companies and

provided jobs to unemployed youth would not absolve their

criminal liability and cannot be a ground to quash the proceedings

in the subject Calendar Case against them. Though it is the Dr.SA, J Crl.P. No.5381/2016

prerogative of a company to invest money in the company of its

choice, but the said investments should be genuine, reasonable, in

accordance with law and not as a Quid Pro Quo. Though it is

contended on behalf of the petitioners/A-4 and A-6 that the

subsequent Governments neither cancelled the lease of the subject

land nor taken back the subject land, the said aspect cannot be a

ground to quash the proceedings against the petitioners/A-4 and

A-6 in the subject Calendar Case.

37. On a perusal of the allegations which are pointed out in the

foregoing paragraph Nos.7 to 11, it cannot be said that the

allegations made do not constitute offences under Sections 120B

read with 420 of IPC against the petitioners/A-4 and A-6. Further,

it cannot be held that if those allegations are uncontroverted, it

results in innocence of the petitioners/A-4 and A-6. The allegations

leveled in the charge-sheets have to be examined in detail and

decided in accordance with the procedure established under law.

At this moment, this Court is only concerned as to whether there

are valid grounds to quash the proceedings in the subject C.C.

against the petitioners/A-4 and A-6 by exercising inherent

jurisdiction under Section 482 of Cr.P.C.

38. Here, it is apt to state that though the inherent power of this

Court under Section 482 of Cr.P.C. is very wide, the said inherent

power should be exercised sparingly and with circumspection.

Generally, criminal proceedings are not to be scuttled at the initial

stage. Only in exceptional cases, where non-interference would

result in abuse of process of law and would jeopardize the interest

of the alleged accused, the Court has to invoke its inherent power Dr.SA, J Crl.P. No.5381/2016

under Section 482 of Cr.P.C. When a prosecution is sought to be

quashed at an initial stage, the test to be applied by the Court is as

to whether the uncontroverted allegations, as made in the

complaint/FIR/charge-sheet, prima facie establish the case. The

Criminal Procedure Code contains a detailed procedure for

investigation, framing of charge and trial, and when this Court is

inclined to put a halt to the known procedure of law by exercising

its inherent power under Section 482 of Cr.P.C., it should be done

on proper circumspection and with great care and caution.

Unjustified interference in any criminal proceedings by this Court,

even at the preliminary stage, may result in obstruction in progress

of the inquiry in a criminal case, which may not be in the public

interest. This Court has no jurisdiction to appreciate the evidence

in the proceedings under Section 482 of Cr.P.C. The inherent

power of this Court under Section 482 Cr.P.C. is very wide, but

conferment of such wide power requires the Court to be more

cautious. In other words, wider the power, higher the need for

caution and care while exercising such power. It casts an onerous

and more diligent duty on the court. In fact, the Hon'ble Supreme

Court, in catena of decisions, deprecated the practice of staying

criminal trials and police investigations, except in exceptional

cases.

39. Before parting, it is apt to observe that the prosecution case

is that A-1 and A-2 have formulated a scheme to collect bribe

under the guise of investment from companies and persons who

wanted Governmental benefits by way of land allotments, mining

leases and other benefits by misusing the official position of father Dr.SA, J Crl.P. No.5381/2016

of A-1 and in furtherance of the said conspiracy, A-1, with active

connivance of A-2, established A-12 and A-13 companies. Various

companies and individuals started investing money in A-12

company, including the petitioners/A-4 and A-6, much before

commencement of business by it. In all, 11 charge sheets were

filed by CBI and the investment solicited by A-12 company is

Rs.1246 crores, wherein, A-1 did not even invest a single rupee.

In this deep rooted conspiracy in between the accused in the

subject Calendar Case, the ultimate sufferers are the public at

large. Valuable Government land, which is meant to be used for

public good, was clandestinely given away to selected persons for a

lesser consideration by the persons in power by flouting the rules

and regulations, causing huge loss to the State Exchequer, in lieu

of their investments in the companies floated by A-1. This deep

rooted conspiracy can be well termed as serious economic fraud

against the State. An economic offence is committed with cool

calculation and deliberate design with an eye on personal profit

regardless of the consequence to the Community. A disregard for

the interest of the Community can be manifested only at the cost

of forfeiting the trust and faith of the Community in the system to

administer justice in an even handed manner without fear of

criticism from the quarters which view such crimes with a

permissive eye unmindful of the damage done to the national

economy and interest.

40. It has been contended on behalf of the petitioners/A-4 and

A-6 that the investigation conducted by CBI is unfair, inasmuch as

the CBI failed to segregate the genuine investors, as directed by a Dr.SA, J Crl.P. No.5381/2016

Division Bench of this Court in W.P.Nos.794 and 6604 of 2011. In

the instant case, in view of the specific allegations against the

petitioners/A-4 and A-6, they are made as accused in the subject

case and are being proceeding for the offences under Sections

120B r/w 420 of IPC. The other Directors of the petitioner/A-4

group of companies are not made as accused. This indicates that

the investigating agency has applied its mind and is being

proceeded against the petitioner/A-6 for the offences punishable

under Sections 120B r/w 420 of IPC, so also the petitioner/A-4

company, which cannot be faulted.

41. For the foregoing discussion and in view of the material

evidence available on record, this Court is of the considered

opinion that the proceedings against the petitioners/A-4 and A-6 in

the subject Calendar Case No.8 of 2012 cannot be quashed by

exercising inherent power under Section 482 of Cr.P.C. No

grounds, much less valid grounds, are made out to quash the

proceedings against the petitioners/A-4 and A-6. There is

sufficient material evidence to proceed against the petitioners/A-4

and A-6 in the subject Calendar Case No.8 of 2012. In the given

circumstances of the case, the Court below is justified in taking

cognizance against the petitioners/A-4 and A-6 in the subject

Calendar Case for the offences punishable under Sections 120B

r/w 420 of IPC. It cannot be said that continuation of proceedings

against the petitioners/A-4 and A-6 would amount to abuse of

process of Court. Even in the interest of justice also, it is not a fit

case to grant the relief as sought for. The petitioners/A-4 and A-6

are required to be proceeded in accordance with law. The Dr.SA, J Crl.P. No.5381/2016

contentions raised on behalf of the petitioners/A-4 and A-6 do not

merit consideration. The criminal Petition is devoid of merit and is

liable to be dismissed. The trial Court shall not get influenced by

the observations made above.

42. Accordingly, the Criminal Petition is dismissed. The interim

stay granted by this Court on 18.04.2016 and which is being

extended from time to time, stands vacated.

Miscellaneous petitions, if any, pending in this Criminal

Petition, shall stand closed.

____________________ Dr. Shameem Akther, J

30th November, 2021.

Bvv