Alleged Scam Of 20,000 Crores Involving Cholamandalam Group and Public Servants: Madras HC Refuses To Direct Investigation By CBI

In a slew of allegations about Cholamandalam Group and public servants indulging in a large scale scam of public money amounting to Rs 20,000 crores, Madras High Court has refused to entertain a plea seeking direction to the Central Bureau of Investigation to register a case and conduct an in-depth investigation.

The first bench of Chief Justice Munishwar Nath Bhandari and Justice D Bharatha Chakravarthy that the court cannot give such a direction to CBI under Section 156(3) Cr. P.C in reference to petitioner's complaint under Section 154 Cr. P.C r/w Sections 36 and 39 of Cr.P.C . Section 154 Cr. P.C refers to information disclosed about the commission of cognisable offences and the consequent duty of every officer in charge of a police station to record the same in the manner prescribed.

The petitioner, whose application for a vehicle loan from Cholamandalam Investment and Finance Company Limited got rejected earlier, submitted that the information available in the Public Domain points to a systematic siphoning and diversion of public money from one company to another, especially by utilising the 'Criminal Purpose Vehicle' of Cholamandalam Group- Coromandel Engineering Company. The petitioner also alleged that 'public servants' including the officeholders of Baroda and Indian Banks have entered into a criminal conspiracy with the Directors of Cholamandalam Investment and Finance Company Limited in return for pecuniary and another advantage via corrupt means, thereby defrauding the public to the tune of Rs 20,000 Crores. The petitioner alleged that these public servants have committed an offence under Section 13(1) (d) of the Prevention of Corruption Act, 1988 and various other provisions of IPC.

With respect to the prayer and directions sought by the petitioner, the court observed that information should have been given to the Police Officer in charge of the police station under whose jurisdiction the crime has been committed and not the Joint Director of CBI, Chennai. If FIR was not registered by the said police officer, then the petitioner would have recourse under Section 154(3) Cr. P.C to approach the Superintendent of Police for a direction that investigation must be made.

Looking at the large scale allegations, the petitioner could have then requested for investigation by the Central Bureau of Investigation under Delhi Special Police Establishment Act, 1946, the court noted.

The court also added that investigation by CBI can be undertaken only in the manner given under the amended Act of 1946. The court also specifically referred to Sections 6 and 6A of the Act of 1946.

The court observed that the amended provision of Section 6A requires the Central Government's approval for an investigation into any offence alleged to have been committed under the Prevention of Corruption Act, 1988. This section would be applicable for investigation against such officers as are appointed by the Central Government in corporations established by or under any Central Act, Government companies, societies and local authorities owned or controlled by that Government.

Similarly, Section 6 talks about the prerequisite of the State Government's consent to exercise the powers and jurisdiction of CBI in any area.

"In any instance, if a case is made out after the registration of FIR, the court can give a direction for investigation by CBI", the court remarked.

Section 17 A of the Prevention of Corruption Act was also referred to by the bench to underscore that any offences under Section 13 (1) (d) PCA shall not be investigated without obtaining permission from the appropriate Union/State Government in connection with whom the accused was employed.

The court noted that Section 17A of the Prevention of Corruption Act as amended in 2018 is in pari materia with Section 6A of Delhi Special Police Establishment Act, 1946.

"In view of the above, direction sought by the petitioner for registration of a case by CBI and in-depth investigation cannot be granted. The petitioner should have approached the police officer in charge of police station in whose jurisdiction the offence was committed and not the joint director of CBI", the court observed.

The court also added that the petition was filed without impleading the party respondents against whom the accusations have been made and it suffers from the non-joinder of necessary parties.

It is pertinent to note that an FIR has been registered with regards to the assault allegedly committed on the petitioner by the goondas working for the Cholamandalam Group. Referring to the same, the court pointed out that the petitioner could not satisfactorily explain as to why a similar FIR was not lodged for the alleged scam in the manner given in Cr. P.C.

"If an FIR is lodged, then the petitioner can very well pray to the High Court thereupon to conduct an investigation through CBI even in the absence of approval from Central/State Governments", the court added.

Accordingly, the writ petition was disposed of with a direction to the petitioner to take legal recourse for registration of the case and initiation of the investigation. Mr K. Srivasan, Public Prosecutor appeared for Central Bureau of Investigation. Mr N. Ramesh, Special Public Prosecutor (ED), appeared as the Senior Panel Counsel for the Union of India.

The petition was filed through M/s. R.S Yadav. M. Selvin and A. John. 

Case Title: N. Rahul Kumar v. Central Bureau of Investigation & Ors.

Case No: W.P No. 5352 of 2022 (PIL) 

Citation: 2022 LiveLaw (Mad) 96