Mr. Dumpala Madhusudhana Reddy vs State Of Maharashtra
2022 Latest Caselaw 504 Tel

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                                                                                     KL,J
                                                                     W.P. No.6470 of 2022


                   HON'BLE SRI JUSTICE K.LAKSHMAN

                       WRIT PETITION No.6470 OF 2022
ORDER:

The present writ petition is filed seeking a writ of certiorari to quash FIR No.

40 of 2022 dated 27.01.2022 filed on the file of P.S. Goregaon (Thane), Greater

Mumbai City in relation to the Petitioner.

2. Heard Mr. D. Prakash Reddy, learned Senior Counsel representing Mr. P.

Vikram, learned counsel for the petitioner and Mr. S. Rama Mohan Rao, learned

Assistant Government Pleader appearing on behalf of respondent No.1 - State.

3. Facts of the case and allegations levelled against the petitioner:

i) The petitioner herein is accused in Crime No.40 of 2022 pending on the

file of Goregaon Police Station (Thane), Greater Mumbai City. The offences

alleged against him are under Sections - 406, 409 and 420 read with 34 of IPC.

ii) Respondent No.2 is the Vice President of M/s. Gandhar Oil Refinery

(India) Limited. It is Non-banking Company. It deals with manufacture of

Lubricant Oil, Petroleum Jelly and exports as per demand. It also imports coal and

sells the same as per demand. It also imports industrial coal and the same is sold at

Coal and Cement Industry, Power Plant, Steel Industry etc. It has been in the said

business since 2010.

iii) The said Company imports industrial coal for its business from

Indonesia and South Africa. For the purchase of coal, the said company contacts

the Coal Suppliers online. Since the said imported coal is for sale purpose, the said

Company received the same at the docks of Dharmatar, P.N.P. Port, Alibagh,

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Visakhapatnam, Tuticorin Port of Tamil Nadu State etc. After receipt of the same,

the coal is sent to the place as per the related demand.

iv) In the year 2013-14, when respondent No.2 was working in the market,

he got connected with Mr. Kannamuru Raghu Rama Krishna Raju for business

related reasons and they were in contact with each other from his Mumbai Office.

At that particular point of time, he was the Member of Parliament from Y.S.R.

Congress Party as well as his Companies, M/s. Ind Bharat Thermal Power Limited

and M/s. Ind Bharat Power Gencom Limited are into power generation and

requires huge quantity of coal for the business. He also took respondent No.2 into

confidence mentioning that he is a well-known and big industrialist and he can

help respondent No.2 in getting huge profit by placing big orders and relying on

the said facts, respondent No.2 decided to work with Mr. Raghu Rama Krishna

Raju together.

v) At that time, the petitioner herein and the said Raghu Rama Krishna Raju

and others are Directors of M/s. Ind Bharat Thermal Power Limited and also

Directors of M/s. Ind Bharat Power Gencom Limited. A high seas sales agreement

was entered on the terms and conditions mentioned therein for an amount of

Rs.61,57,54,027/- in total.

vi) The said coal was imported by respondent No.2 company from

Indonesia and arrived at Tuticorin Port and was taken by the above said two

Companies. Respondent No.2 has to get an amount of Rs.61,57,54,027/-, but it has

received only Rs.14,88,35,174/- leaving a balance of Rs.46,69,18,853/-. It has

filed a petition No.39 of 2019 against M/s. Ind Thermal Power Limited and

Petition No.40 of 2018 against M/s. Ind Bharat Power Gencom Limited on the file

of NCLT, Hyderabad, which in turn passed an order of Corporate Insolvency

KL,J W.P. No.6470 of 2022

Resolution Process (CIRP). The said order was under challenge by way of filing

an appeal before NCALT. During pendency of the said appeal, the above said two

companies and de facto complainant company have entered into agreement dated

19.12.2018, as peer which M/s. Ind Bharat Thermal Power Limited agreed to pay

an amount of Rs.24,82,60,270/- and an interest on the said amount till January,

2018, Rs.6,11,61,933 /- and M/s. Ind Bharat Power Gencom Limited was due an

amount of Rs.21,97,28,209/- and an interest till 30.10.2017 was Rs.12,44,19,018/-

and total sum of Rs.65,35,69,430/-. As per the said agreement, the above said two

companies agreed to pay an amount of Rs.25.00 Crores to respondent No.2. Out of

the said amount of Rs.25.00 Crores, Rs.8.00 Crores will be paid within eight days

from the date of contract and remaining Rs.17.00 Crores will be paid in two

installments i.e., first payment within fifteen days and balance within thirty five

days. If the said amount is not paid within the stipulated time, 18% interest will be

charged.

vii) The said Raghu Rama Krishna Raju and others have not paid the said

amount in terms of the said settlement. The above said two companies represented

by the Directors including Mr. Raghu Rama Krishna Raju, petitioner herein and

others have bought coal from respondent No.2 company showing lure of big

business and profit to it. In order to earn the trust of respondent No.2 company,

they have initially refunded the purchased coal. After that, while doing business,

between 2015 and 2017, bought a total of 198775 metric tons of coal as per four

different orders and returned some of the purchased coal amount to it.

viii) It is further alleged in the said complaint that by pretending to as

reimbursing respondent No.2 for the said business, the petitioner and other

accused, Directors of the above said two companies, have forced respondent No.2

KL,J W.P. No.6470 of 2022

to sell them more amount of coal, 198775 metric tons of coal sold was not

refunded in any transaction from them. Every time when asked about the

repayment, they have given vague answers. The Directors have done business

with respondent No.2 Company for the purpose of defrauding it. In the event of

making complaint, the petitioner and others may lose the Directorship and,

therefore, they have agreed to pay amount and accordingly made respondent No.2

to enter into the above said agreement dated 19.12.2018. Though they have agreed

to pay an amount of Rs.25.00 Crores in the manner stated above, they have not

paid the same. Thus, they have defrauded respondent No.2 Company by violating

the terms of the agreement and, therefore, they have committed the aforesaid

offences.

4. On receipt of the complaint dated 27.01.2022 from respondent No.2, the

police, Goregaon Police Station have registered a case in crime No.40 of 2022

against the petitioner and others for the aforesaid offences.

5. During the course of hearing, the maintainability of the present writ

petition was raised since the FIR No.40 of 2022 pending on the file of Goregaon

Police Station (Thane), Greater Mumbai City is sought to be quashed.

6. Contentions of the Petitioner

Mr. D. Prakash Reddy, learned senior counsel representing Mr. P. Vikram,

learned counsel for the petitioner, would submit as follows:

i) The above said two Companies were registered at Hyderabad and their

registered offices are at Hyderabad;

ii) All the purchase orders were placed from Hyderabad Office.

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iii) Respondent No.2 has filed two petitions before NCLT, Hyderabad,

which had passed an order dated 07.09.2018.

iv) Feeling aggrieved by the said order, an appeal was filed before NCALT.

v) There is part of cause of action in Hyderabad and, therefore, this Court is

having jurisdiction to entertain the present writ petition.

vi) Reliance was placed on the principle laid down in Navinchandra N.

Majithia v. State of Maharashtra1, Rajendra Ramchandra Kavalekar v. State

of Maharashtra2, Raju More v. Ram Chand Khandelwal3 and Rajendran

Chingaravelu v. R.K. Mishra, Addl. Commissioner of IT4.

7. Contentions on behalf of Respondent No.1 - State:

i) Mr. S. Rama Mohan Rao, learned Assistant Government Pleader for

Home, on instructions, would submit that there is no cause of action in Hyderabad

and just because the above said companies are registered in Hyderabad, their

offices in Hyderabad, the present writ petition is not maintainable.

ii) The petitioner herein has to file the present petition before the High

Court having jurisdiction.

8. Findings of the Court

i) In light of the above said submissions, it is apposite to discuss the scope

of power of this Court under Article 226 of the Constitution of India to quash First

Information Report (FIR) lodged outside its territorial jurisdiction.

(2000) 7 SCC 640.

(2009) 11 SCC 286.

Order passed in W.P. (C) No. 3595 of 2008 by the Gauhati High Court.

2009 (14) SCALE 211.

KL,J W.P. No.6470 of 2022

ii) The question regarding maintainability of writ petition to quash an FIR

registered in another State fell for consideration before the Supreme Court in

Navinchndra (supra).

iii) In Navinchndra (supra), the transactions between the parties took place

in Mumbai, but a complaint was lodged in Shillong. A writ petition was filed

before the Bombay High Court to quash the compliant registered in Shillong. The

Court held that the High Court may quash an FIR registered in another State if any

cause of action, wholly or in part, arises in its jurisdiction. The term 'cause of

action' means and includes all the bundle of facts which are necessary to be proved

in order to get relief. The Court also held that merely because FIR was registered

in another State will not impede the Court from exercising its power under Article

226 of the Constitution of India. The Court should satisfy itself whether any part

cause of action arose in its jurisdiction. In respect of exercising power under

Article 226 of the Constitution of India in the context of criminal offences, the

Court held that the main factor to be considered is the place where the alleged

offence is committed.

iv) The Supreme Court in Oil and Natural Gas Commission v. Utpal

Kumar Basu5 held that the High Court should exercise caution and should not

transgress into the jurisdiction of other High Courts merely by relying on an

insignificant event connected with the cause of action.

v) Explaining what constitutes cause of action, the Supreme Court in Union

of India v. Adani Exports Ltd.6 held that each and every fact pleaded does not,

ipso facto, leads to a conclusion that such facts form part of cause of action arising

(1994) 4 SCC 711.

(2002) 1 SCC 567.

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the Court's jurisdiction. It was held that facts which have no bearing to the

lis/dispute involved do not give rise to a cause of action conferring jurisdiction on

the concerned High Court.

vi) Likewise, in Alchemist Limited v. State Bank of Sikkim7 the Apex

Court held that only facts which are material, essential, or integral can form part of

cause of action.

vii) In view of the principle laid down in the above decisions, coming to the

facts of the case on hand, as discussed supra, the offences alleged arise out of an

agreement dated 19.12.2018 entered into at New Delhi. The allegations against the

petitioner and other accused are that they have not paid the amount agreed in terms

of the said agreement dated 19.12.2018 and, thus, they have defrauded respondent

No.2 Company by violating the terms of the said agreement. Mere registration of

the Companies at Hyderabad, existence of its registered offices at Hyderabad,

filing of insolvency proceedings in NCLT, Hyderabad, will not form part of cause

of action with regard to allegations leveled against the petitioner herein at

Hyderabad. Filing of insolvency proceedings in Hyderabad do not have any

material bearing on the alleged offences as they arise out of the Settlement

Agreement dated 19.12.2018 entered into at New Delhi. Further, the insolvency

proceedings were initiated in NCLT Hyderabad because of specific territorial

jurisdiction conferred on it under Section 60 (5) of the Insolvency and Bankruptcy

Code, 2016.

viii) As held in the above referred judgments, the test for determining the

scope of jurisdiction under Article 226 of the Constitution of India in criminal

proceedings is to see where the alleged offence was committed. The above stated

(2007)11 SCC 335.

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facts and discussion would reveal that there is no cause of action that arise at

Hyderabad and that the petitioner and other accused have committed the alleged

offences from Hyderabad.

ix) In the present case, learned senior counsel placed heavy reliance on the

principle laid down in Navinchandra (supra) and Rajendran Chingaravelu

(supra). Both these decisions are distinguishable. The other decisions cited by the

Petitioner also do not help him as they relied on Navinchandra (supra).

x) In Navinchandra (supra), the majority of the cause of action arose in

Mumbai and none of it arose in Shillong. The Court therein held that majority of

the investigation is to be done at Mumbai. The Court noted the peculiar nature and

facts of the case and also considered the alternative prayer for change of

investigation from Meghalaya to Mumbai Police. In the present case, no such

circumstances exist and the facts in Navinchandra (supra) are different to the facts

of the present case.

xi) In Rajendran Chingaravelu (supra), seizure took place in Chennai, but

the writ petition was filed in the Andhra Pradesh High Court. The writ petition was

dismissed for want of jurisdiction. The Supreme Court held that since the genesis

of the seizure resulted from the action taken by the security/ intelligence officials at

Hyderabad Airport who informed their counterparts about the accused who was to

be intercepted and questioned, the Andhra Pradesh High Court had jurisdiction.

The Court therein held that even if a small fraction of cause of action which gives a

right to sue, the High Court will have jurisdiction.

xii) The decision in Rajendran Chingaravelu (supra) is not applicable to

the facts of the present case. Small fraction of the cause of action also should be

KL,J W.P. No.6470 of 2022

material, essential, or integral which would confer a right on the Petitioner to seek

relief. Merely because the Petitioner's companies are in Hyderabad, insolvency

proceedings were initiated in Hyderabad, no cause of action arises at Hyderabad

which has a bearing on to non-payment of settlement amount agreed under the

Settlement Agreement dated 19.12.2018 entered into at New Delhi and also with

regard to the allegations leveled against the petitioner herein.

xiii) As held in the above said judgments, each and every fact pleaded does

not, ipso facto, leads to a conclusion that such facts form part of cause of action

arising the Court's jurisdiction. The facts which have no bearing to the lis, dispute

involved do not give rise to a cause of action conferring jurisdiction on the High

Court. The facts which are material, essential or integral, can form part of cause of

action. The term 'cause of action' means and includes all the bundle of facts

which are necessary to be proved in order to get relief. The same are lacking in the

present case.

9. Conclusion

i) No cause of action arose in Hyderabad which is within the territorial

jurisdiction of this Court as contended by the petitioner. Therefore, the writ

petition is not maintainable and is liable to be dismissed. However, liberty is

granted to the petitioner to file a petition seeking to quash the proceedings in FIR

No.40 of 2022 pending on the file of Goregaon Police Station (Thane), Greater

Mumbai City in the High Court having jurisdiction.

ii) The present Writ Petition is accordingly dismissed. However, there shall

be no order as to costs.

KL,J W.P. No.6470 of 2022

As a sequel, miscellaneous petitions, if any, pending in the Writ Petition

shall also stand closed.

_________________ K. LAKSHMAN, J 9th February, 2022 Mgr