Supreme Court Stays Criminal Proceedings Against Azim Premji And Wife Over Merger Of Companies

The Supreme Court on Friday issued notice on WIPRO founder Azim Premji's petition questioning summons issued by an Additional City Civil and Sessions Court in January on a private complaint over allegations of illegally transferring crores of rupees worth of assets from three companies into a private trust and newly formed company.

The bench headed by Justice Sanjay Kishan Kaul also directed stay of proceedings before the trial court in the meantime.

The Karnataka High Court had in May this year dismissed petitions filed by Wipro founder Azim Premji, his wife and two others questioning summons issued by an Additional City Civil and Sessions Court in January. Justice John Michael Cunha dismissed the petitions filed by Premji, his wife, Pagalthivarthi Srinivasan and Regional Director of Ministry of Corporate Affairs M R Bhat.

The trial court had issued summons on January 27 against the four based on a private complaint filed by Chennai-based company India Awake for Transparency, about allegations of illegally transferring crores of rupees worth of assets from three companies into a private trust and newly formed company. It was alleged in the complaint that Premji, his wife and Srinivasan were entrusted with the dominion over properties and assets of three companies as directors.

They were holding assets of these three companies of a total worth Rs 31,342 crore in fiduciary capacity, without having any financial interest or ownership therein, the complaint said. Based on the private complaint alleging that the accused had committed offences punishable under Sections 409, 34 read with 120B IPC and Section 13(1)(d) read with Section 13(2) of the Prevention of Corruption Act, the trial court issued summons to Premji and others. They have challenged it before the high court. In the HC, the counsel for the accused argued that the allegations made in the complaints, even if they are taken at their face value and accepted in their entirety, do not prima facie constitute any offences or make out a case against accused 1 to 4.

On Friday, Senior Advocate A. M. Singhvi, for the petitioner, advanced, "This is a bizarre case. 3 companies of the Azim Premji group, entirely owned by Premji and his mother, merged into a fourth company of the Azim Premji group known as 'Hasham'. And it is being said that this amount to bona vacantia?"

"I have seen the brief and have a specific question. Other than the amalgamation which is approved by the High Court, is there any other material? Allegations against you are beyond the scheme of amalgamation or within? , asked Justice Kaul.

"Within the scheme of amalgamation", replied Dr. Singhvi.

The bench then issued notice.

Dr. Singhvi brought to the bench's notice that the petitioners are due for physical appearance before the court on Saturday. The bench also clarified that the proceedings before the trial court shall also remain stayed.

Advocate R. Subramanium, appearing for the respondent-caveator and the defacto complainant before the special court, NGO 'India Awake for Transparency', advanced,

"Dr. Singhvi is not right. The companies which merged have neither Azim Premji, his wife or any member of his family or any person connected to him as a shareholder!"

"What do you have to do with the transaction? Are you a shareholder?", inquired Justice Kaul.

"No, he is not! 27 litigations have been lodged by him against 39 companies", contended Senior Advocate Mukul Rohatgi, also for the petitioners.

Dr. Singhvi also prayed that the organisation not be heard.

"There is absolutely nothing to be heard", remarked Justice Kaul, though the bench issued notice to the organisation.

"Next, Mr. Subramanium prayed for the quashing of the order where the NGO had moved the trial court under section 18A of the Prevention of Corruption Act for the attachment of properties of the amalgamated companies, and the court had expressed the view that there is no prima facie case that any of the five respondents before it had committed any offence"

Senior Advocate S. Ganesh countered this prayer, arguing that the attachment was sought on the ground that the properties in question belonged to the Central government and that the government had itself clarified that the properties were not owned by them.

"You sought interim relief. The court declined it and indicated its prima facie opinion in doing so. What about that should we consider under Article 136?", asked Justice Dinesh Maheshwari.

"But the issue of prima facie case has been decided by the Karnataka High Court in its impugned judgment", pressed Mr. Subramanium.

 Click here to read/download the order