Continuity Of Proceedings Will Be 'Abuse Of Process': Bombay High Court Quashes Cheating FIR Against Indiabulls

"We are of the opinion that the lodgment of the complaint against the Petitioners and continuity of the proceedings, is an abuse of process of law. Thus, these are the fit cases for exercising inherent powers of this Court under Section 482 of Code of Criminal Procedure, 1973 to secure the ends of justice."

Two petitions were filed under Article 226 of the Constitution of India and Section 482 of CrPC, seeking quashing of the order passed by the Judicial Magistrate First Class and first information report for the offences punishable under Sections 420, 465, 467, 468, 469, 470, 471 read with Section 120(B) of the Indian Penal Code, 1860 against the Petitioners.

Arguments

The challenge was made on grounds that:

1. Respondent No. 2 at whose instance the complaint was submitted to the JMFC, Wada is wholly untenable and the Judicial Magistrate without application of mind passed the order under Section 156(3) of the Code of Criminal Procedure.
2. Respondent No. 2 submitted in the complaint that he had invested certain amount in the shares of the Petitioner – Company and it is admitted by the Petitioner himself that Respondent No. 2 had not suffered any personal loss.
3. Respondent No. 2 in his complaint admitted that the for the first time he had invested the amount in the shares of the company.
4. Respondent No. 2 who is otherwise resident of Dadar, Mumbai, with a designed motive shifted to Biloshi, Wada and by arranging the house on rental basis for a limited period approached the Magistrate by submitting his complaint. Thus, Respondent No. 2 for fulfilling his oblique intention selected the jurisdiction of said Court.

Counsel for Indiabulls Senior Advocate Rohatgi vehemently submitted that a similar attempt was made in other part of the country and the Delhi High Court, vide a detailed order, observed that the complaint was filed against Indiabulls with oblique motive. He said that the material in support of the complaint submitted before the Wada Court is nothing but an replica of a complaint in question before the Delhi High Court and that even if the complaint is considered on its face value, not a single offence is made out against the Petitioner.

It was also pointed out that the complaint filed by Respondent No. 2 before the Judicial Magistrate was not supported by an affidavit which is a pre-requiste not only as per the provisions of law but as per the judgments of the Apex Court as well as the High Court.

He also informed the Court, that another petition of similar nature was filed before the Apex court and withdrawn before it could get registered. The same got wide publicity and because of such negative publicity, the share value of the Company was reduced and the company was subjected to certain financial loss.

Public Prosecutor AS Pai opposed the petitions and submitted that during pendency of the petitions the investigation is transferred to State CID, Pune, and investigation is at preliminary stage, let the investigation be completed and prayed for dismissal of petition.

Advocate Akhilesh Dubey appearing for respondent No. 2 submitted that the petitioner has no concern with petition filed in Delhi High Court. Further, it was submitted that in one of the petitions filed before the Delhi High Court at the instance of Citizen Whistle Blower Forum which consists of reputed persons including Prashant Bhushan, Senior Advocate, certain orders were passed.

He also submitted that there was diversion of funds by certain private persons. The funds were diverted and routed through Mauritius and in support of this submission, the Counsel referred to the material in the complaint placed on record.

Findings

Court after perusal of the complaint submitted by Respondent No. 2 noted that it shows that the Respondent No. 2 submitted that he is working with one Illuminati services as Office Clerk since last couple of years and it is admitted in the complaint that the complainant is residing at Biloshi, Tq. Wada, District Palghar on leave and license basis since 26.03.2021.

Based on this the court noted that there is merit in the submission of the petitioner that the Respondent No. 2 with a designed motive shifted his residence in Tq. Wada only to select the jurisdiction of the Wada Court.

"It seems that Magistrate was influenced by the lengthy complaint placed before him and arrived at a conclusion that there was a diversion of huge monetary funds to the tune of Rs. 300 crores and the money was transferred to other country i.e., Mauritius. Admittedly, it was only allegations in the complaint and except bare words of the complainant there was no other material before the Magistrate to form such an opinion as such, there is merit in the submissions of learned Senior Counsel Mr. Rohatgi that the Magistrate without applying his mind passed mechanical order under Section 156(3) of Code of Criminal Procedure."

The Court also noted that the complaint also reveals that the Respondent No. 2 had purchased 800 shares in two lots by opening Demat account from Dadar and this was solitary transaction of the Petitioner.

The Court also found merit in submission of the petitioner that the majority material in the complaint is the replica of the material which was filed in the complaint which was the subject matter of Petition before Delhi High Court.

"Petitioners were also justified in submitting that the complaint submitted by Respondent No. 2 was lacking of the basic requirement i.e., an affidavit supporting the contents in the complaint," Court said.

The court opined that replies filed before the Delhi High Court at the instance of RBI and Ministry of Corporate Affairs is also not making any positive statement so as to hold that the Petitioner Company had played some mischief causing financial loss to this shareholder.

In view of the above, the Court allowed both the writ petitions.

Case Title: Indiabulls Housing Finance Ltd. and Ors. v. State of Maharashtra and Anr. , with connected matter

Citation: 2022 LiveLaw (Bom) 175