Judgment :- In Crl.M.P.No.567 of 2007 on the file of the I Additional Chief Metropolitan Magistrate, Hyderabad, the petitioner is the Authorized Officer appointed by the Government of A.P. through G.O.Ms. No.801, dated 19-12-2006. The respondents are M/s Margadarsi Financiers and Mr. Ramoji Rao. For the purpose of convenience, the parties in this Petition are referred to as they are arrayed in the Application filed before the Magistrate. 2. This Criminal Petition has been filed by the respondents under Section 482 of Cr.P.C. to quash the order, dated 14-03-2007 in Crl.R.P.No. 33 of 2007 on the file of the I Additional Metropolitan Sessions Judge, Hyderabad, arising out of the order, dated 21-02-2007 in Crl.M.P.No.567 of 2007 on the file of the I Additional Chief Metropolitan Magistrate, Hyderabad, and consequently to direct the petitioner to return all the documents and other material seized from the respondents. 3. Sri S. Satyanarayana Prasad, Special Public Prosecutor, representing the petitioners and Sri Nalin Kumar and Sri. P. Padmanabha Reddy, Senior Counsel, representing the respondents advanced arguments. 4. The Petitioner filed Crl.M.P.No.567 of 2007 before the I Additional Chief Metropolitan Magistrate, Hyderabad requesting to issue search warrant under Section 45-T of the Reserve Bank of India Act, 1934 (for short 'the RBI Act') to the Authorized Officer to search the premises of the respondents. The said Application was allowed through the order, dated 21-02-2007 by issuing search warrant. Being aggrieved by the said order, the petitioners filed Crl.R.P.No.33 of 2007 before the I Additional Metropolitan Sessions Judge, Hyderabad challenging the order of the learned Magistrate and the learned Sessions Judge dismissed the Revision Petition through the order, dated 14-03-2007 by observing that there is no illegality in the order passed by the learned Magistrate. Being aggrieved by the order of the Sessions Judge, the present Criminal Petition has been filed to quash the orders passed by the Courts below. 5. The petitioner contended that the first respondent is a unit of Sri Ramoji Rao-HUF of which the second respondent is the Kartha. The HUF is engaged in a number of businesses through investments in companies owned by it. In the Application filed for issuing of search warrant, the petitioner mentioned that it was brought to the notice of the Government of A.P. that the first respondent has been raising crores of rupees as deposits in violation of Section 45-S of the RBI Act. In the Application filed for issuing of search warrant, the petitioner mentioned that it was brought to the notice of the Government of A.P. that the first respondent has been raising crores of rupees as deposits in violation of Section 45-S of the RBI Act. In pursuance of that, the Government of A.P. appointed the petitioner as an Authorized Officer through G.O.Ms.No.801, General Administration (L&O.I) Department, dated 19-12-2006. The Government also appointed Sri N. Rangachari through G.O.Ms.No.800, General Administration (L&O.I) Department, dated 19-12-2006 to study and report the irregularities, if any, committed by the Margadarsi Financiers in accepting the deposits from the public against the law. The respondents were served with the notices by the said Rangachari requiring them to furnish certain information, but they did not give any reply to the said notice instead they filed W.P.No.27065 of 2006 along with W.P.M.P.Nos.34785 and 34786 of 2006 before the High Court of A.P. questioning the legality of the G.Os in appointing the petitioner and Sri N. Rangachari and the Writ Petitions are pending. Aggrieved by the dismissal of the W.P.M.Ps refusing to stay the G.Os, the respondents approached the Hon'ble Supreme Court of India by filing Special Leave Petition and the Supreme Court refused to interfere with the orders of the High Court. The petitioner further mentioned in the Petition that in the report, dated 14-02-2007, the Rangachari observed that M/s Margadarsi Financiers is not a limited company established under the Companies Act, 1956. It is prima facie a Hindu undivided family as is established by reference to the income tax records made available to him. It is an unincorporated body of individuals, therefore, the petitioners have been violating the provisions of Section 45-S of the RBI Act continuously for over a period of years and hence, the penal provisions of RBI Act get attracted. 6. The petitioner further mentioned in the petition that the respondents have secreted the relevant documents relating to the acceptance of deposits by them. These documents are highly essential to prove the culpability and grievous nature of the offence and violation committed by them. These documents and information will have a direct bearing on the quantum of penalty to which they are liable for the violation committed by them. The High Court refused to suspend the operation of G.O.Ms.No. 801 regarding the appointment of the petitioner. These documents and information will have a direct bearing on the quantum of penalty to which they are liable for the violation committed by them. The High Court refused to suspend the operation of G.O.Ms.No. 801 regarding the appointment of the petitioner. It is further mentioned that any further delay in searching the premises will result in failure of justice. The petitioner reliably learnt and believe it to be true that the respondents had secreted the information and the documents relating to the deposits. He further mentioned that the purpose for enquiry, trial and further investigation into the violations and the offence committed by the respondents will be sub served by a general search and inspection of the premises. Despite the notices issued by Sri Rangachari, the respondents failed to produce any document or furnish information. He, therefore, requested the court to issue search warrant. 7. The learned Magistrate mentioned in the order that the petitioner filed the report of Rangachari who stated in the report that the respondents have been collecting deposits in violation of Section 45-S of the RBI Act and copies of the G.Os. issued by the Government of A.P. The petitioner satisfied the Court that he has complied with all the conditions required to be satisfied under Section 45-T of the RBI Act, therefore, the Petition is allowed directing to issue the search warrant. 8. In the light of the circumstances, the point for consideration is: "Whether there are sufficient grounds to issue the search warrant and whether the orders of the Chief Metropolitan Magistrate are liable to be set aside." 9. The Government of A.P. issued G.O.M.sNo.800, dated 19-12-2006 appointing Sri N. Rangachari, Advisor to Government, finance, under A.P. Protection of Depositors of Financial Establishments Act, 1999 (for short 'the A.P. Protection of Depositors Act') to probe into the allegations of raising deposits against M/s Margadarsi Financiers and to report 1) Whether the financial establishment is acting in the manner prejudicial to the interests of the depositors and 2) Whether the financial establishment is not likely to return the deposits collected from the public. In pursuance of the said G.O. Sri N. Rangachari sent a letter to M/s Margadarsi Financiers mentioning that he was appointed by the Government to examine all the papers and other material relating to the deposits raised by the said organization from the members of public and the possibility of return of those deposits to the members in full, therefore, he requested to file the following documents within ten days: 1) Balance Sheet of M/s Margadarsi Financiers for the financial years of 2003, 2004, 2005 and 2006; 2) The details of investments it made; 3) Particulars of properties acquired with the money deposited by the public and the estimated market value of those properties; and 4) Any other relevant material in the possession of the establishment, which would establish the liability in regard to the liabilities hold by it. 10. On receipt of the said notice, M/s Margadarsi Financiers filed W.P.No.27065 of 2006. The respondents also filed W.P.No.27403 of 2006 questioning the constitutional validity of the A.P. Protection of Depositors Act. They also requested for stay of operation of the G.O. through W.P.M.P.Nos. 34785 and 34786 of 2006 before this Court. A Division Bench of this Court dismissed the said Applications and the matter was carried on Special Leave to the Supreme Court of India and filed I.A.No.8 of 2007 in Petition for Special Leave to Appeal (Civil) No.2847 of 2007. The Hon'ble Supreme Court, after hearing both parties, passed an order to the effect that there shall not be any freezing of the accounts of the respondents or attachment under the A.P. Protection of Depositors Act till 23-07-2007. 11. On the date of appointment of Sri N. Rangachari under G.O.Ms.No.800, the Government also issued another G.O.Ms.No.801 appointing Sri T. Krishna Raju, IPS as an Authorized Officer under Section 58-E of the RBI Act. In that G.O., it is mentioned as follows: "The State Government hereby authorize Sri Krishna Raju, IPS, Inspector General of Police, C.I.D., as the Authorized Officer to file an application in Courts of jurisdiction and take other action as enjoined under the provisions of the Reserve Bank of India Act, 1934 and in particular authorize the said Officer to take action under Section 45(T) and 58(E) of the said Act." 12. In pursuance of the said G.O., Krishna Raju filed an Application before the I Additional Chief Metropolitan Magistrate, Hyderabad to issue search warrant. In pursuance of the said G.O., Krishna Raju filed an Application before the I Additional Chief Metropolitan Magistrate, Hyderabad to issue search warrant. The learned Magistrate on perusal of the documents, Application under Section 45-T of the RBI Act and the contents of the Government Orders, held that the petitioner was appointed under G.O.Ms.No.801, dated 19-12-2006 as an Authorized Officer to file an Application before the Court for necessary action under Sections 45-T and 58-E of the RBI Act. He also filed a copy of the Report filed by Sri N. Rangachari who observed that M/s Margadarsi Financiers have been accepting deposits by violating the provisions of Section 45-S of the RBI Act. The said order reveals that the respondents have been violating the provisions of Section 45-S of the RBI Act. As per the legal position explained by the petitioner's counsel, there is no condition precedent that the application for search can be filed only in matters where there is enquiry, investigation and other proceeding pending before the Court and it can be filed before the Court even if one o those are pending before the Court. The learned Magistrate observed that in view of Section 45-T of RBI Act, it is clear that a warrant issued under Sub-Section 1 of Section 45-T shall be executed as per the procedure prescribed under the Criminal Procedure Code, 1974. As per Section 45-T (1) the following conditions for issuing search warrant have to be fulfilled: 1. On an application; 2. By authorized person; 3. Belief that certain documents are secreted at some place has to stand; 4. The place where search is required should be within the territorial jurisdiction of the Court; 5. Prima facie it should be shown that there is violation of Section 45-S of the Act. 13. The learned Magistrate further observed that the following documents are filed in support of the Application for issuing search warrant: 1. G.O.Ms.No.801, dated 19-12-2006; 2. Memo, dated 15-02-2007 issued by the State Government; 3. Copy of the Report, dated 14-02-2007 submitted by Sri N. Rangachari; 4. Letter, dated 13-02-2007 by the State Government; 5. The copy of the letter 29-12-2006 from RBI to the State Government with enclosures. From the above documents, the learned Magistrate satisfied that the petitioner complied with the conditions under Section 45-T of the RBI Act. 14. Copy of the Report, dated 14-02-2007 submitted by Sri N. Rangachari; 4. Letter, dated 13-02-2007 by the State Government; 5. The copy of the letter 29-12-2006 from RBI to the State Government with enclosures. From the above documents, the learned Magistrate satisfied that the petitioner complied with the conditions under Section 45-T of the RBI Act. 14. Section 45-T of the RBI Act reads as follows: "45-T. Power to issue search warrants.- (1) Any Court having jurisdiction to issue a search warrant under the Code of Criminal Procedure, 1973 (2 of 1974), may, on an application by an officer of the bank or of the State Government authorized in this behalf stating his belief that certain documents relating to acceptance of deposits in contravention of the provisions of Section 45-S are secreted in any place within the local limits of the jurisdiction of such Court, issue a warrant to search for such documents. (2) A warrant issued under sub-section (1) shall be executed in the same manner and shall have the same effect as a search warrant issued under the Code of Criminal Procedure, 1973 (2 of 1974)." As per the above Section, the learned Magistrate is required to satisfy that the Authorized Officer was of the belief that certain documents relating to acceptance of deposits in contravention of Section 45-S of RBI Act are secreted in any place within the local limits of the Court. 15. The Authorized Officer filed an Application on 17-02-2007 before the Magistrate under Section 45-T of the RBI Act. In the first Application, dated 17-02-2007, the Authorized Officer mentioned that it was brought to the notice of the Government of A.P. that M/s Margadarsi Financiers has been raising hundreds of crores of rupees as deposits from public in violation of section 45-S of the RBI Act and the interests of few lakhs of depositors is at stake. The Government has, therefore, decided to study whether the Margadarsi Financers is acting in a manner prejudicial to the interest of the depositors and whether there has been any violation of law. Mr. N. Rangachari submitted a report that Margadarsi Financiers have collected crores of rupees in the form of deposits from public violating Section 45-S of the RBI Act. The Government has, therefore, decided to study whether the Margadarsi Financers is acting in a manner prejudicial to the interest of the depositors and whether there has been any violation of law. Mr. N. Rangachari submitted a report that Margadarsi Financiers have collected crores of rupees in the form of deposits from public violating Section 45-S of the RBI Act. He further mentioned that M/s Margadarsi Financiers did not respond to the notice issued by N. Rangachari for furnishing certain records pertaining to the depositors and the total amount collected from public. In a Writ petition filed by M/s Margadarsi Financiers, the Interlocutory Applications were dismissed by refusing to stay the appointment of Sri. N. Rangachari to study the matter and to submit the report. 16. In view of the collection of deposits and in view of non-responding of the respondents to the notice of Sri. N. Rangachari, there is every reason to believe that certain documents relating to the deposits, in contravention of the provision of Section 45-S of the RBI Act, are secreted in the premises and such other offices of the Margadarsi Financiers. He, therefore, requested to issue search warrant for the documents relating to deposits collected from the public. 17. When the Court raised certain objections, another Application was filed by the Authorized Officer answering the objections raised by the learned Magistrate on 19-02-2007. In the resubmitted Application, the petitioner mentioned that it was brought to the notice of the State Government that the respondents have received Rs.2600 crores as deposits from general public in violation of Section 45-S of the RBI Act, therefore, they are liable for prosecution. The petitioner is authorized to take necessary action in this regard. Section 45-T of the RBI Act confers jurisdiction on the Court to issue search warrant for relevant documents relating to the acceptance of deposits. The State Government has made best efforts to get the information. But, the respondents did not furnish the information and the documents relating to the acceptance of the deposits. Sri Rangachari appointed by the Government reported that Margadarsi Financiers continued to breach the provisions of section 45-S of the RBI Act. The respondents have secreted the relevant documents relating to the acceptance of deposits made by them. Those documents are highly essential to prove the culpability and grievous nature of the offence violations committed by them. Sri Rangachari appointed by the Government reported that Margadarsi Financiers continued to breach the provisions of section 45-S of the RBI Act. The respondents have secreted the relevant documents relating to the acceptance of deposits made by them. Those documents are highly essential to prove the culpability and grievous nature of the offence violations committed by them. The documents and the information will have direct bearing on the quantum of penalty to which they are liable for the violations committed by them. The High Court of A.P. refused to suspend the operation of G.O.Ms.No.801, dated 19-12-2006 pending disposal of the Writ Petition. The delay in taking steps to search the premises of the respondents of the relevant information and documents will result in failure of justice. The purpose of enquiry, trial and further investigation into the violations and offences committed by the respondents will be sub versed by a general search and inspection of the premises. All the relevant particulars, which were not available on the date of filing of the earlier Petition, have been furnished with the present Petition, therefore, he requested the court to issue search warrant under Section 45-T of the RBI Act for general search of the premises of the respondents. 18. On coming to know about the application filed by the Authorized Officer to issue search warrant, the respondents filed an application before the learned Magistrate bringing to the notice of the Court that they are willing to file such of the documents which fall within the parameters of Section 45-T of the RBI Act, but a roving search cannot be ordered as it will damage the reputation and credibility of the respondents and create panic among the depositors. But, the learned Magistrate did not take the said application on file on the ground that they did not file Crl.M.P.(sr) Number of the Application filed by the Authorized Officer, therefore, it was returned. But, the learned Magistrate did not take the said application on file on the ground that they did not file Crl.M.P.(sr) Number of the Application filed by the Authorized Officer, therefore, it was returned. Without taking into consideration the willingness of the respondent to furnish the documents relating to the deposits collected from various persons, the warrant was issued on 21-02-2007 and on a subsequent date, the respondents filed Crl.M.P.(Sr) No.1724 of 2007 under Section 457 of Cr.P.C. mentioning that the Authorized Officer conceded before the I Additional Metropolitan Sessions Judge that the petitioner can take back the documents by filing an application in the Magistrate Court by giving undertaking to produce the same as and when they are required. The respondents are giving an undertaking to produce the documents as and when required by the Court. They further mentioned that the Authorized Officer can take only copies of such documents which relate to the acceptance of the deposits namely, the application forms and counterfoils of FDR depositors. As the other documents do not relate to acceptance of deposits, the Authorized Officer is not entitled to have the copies of the same and the same may be directed to be returned in terms of the order passed by the Metropolitan Sessions Judge. No orders have been passed by the learned Magistrate on the said Application on the ground that the Criminal Petition preferred against the order of the Sessions Judge in the Revision is pending before the High Court for consideration. 19. Under Section 45-T of the RBI Act, the procedure prescribed under the Criminal Procedure Code is applicable to Search warrants. Chapter 7-B of Cr.P.C. deals with the search warrants. Section 93 of Cr.P.C. provides as to when the search warrant may be issued and it reads as follows: "93. 19. Under Section 45-T of the RBI Act, the procedure prescribed under the Criminal Procedure Code is applicable to Search warrants. Chapter 7-B of Cr.P.C. deals with the search warrants. Section 93 of Cr.P.C. provides as to when the search warrant may be issued and it reads as follows: "93. When search-warrant may be issued:- (1) (a) Where any Court has reason to believe that a person to whom a summons or order under Section 91 or a requisition under sub-section (1) of Section 92 has been, or might be, addressed, will not or would not produce the document or thing as required by such summons of requisition, or (b) where such document or thing is not known to the Court to be in the possession of any person, or (c) here the Court considers that the purposes of any inquiry, trial or other proceeding under this Court will be served by a general search or inspection, it may issue a search-warrant; and the person to whom such warrant is, directed, may search or inspect in accordance therewith and the provisions hereinafter contained. (2) The Court may, if it thinks fit, specify in the warrant the particular place or part thereof to which only the search or inspection shall extend; and the person charged with the execution of such warrant shall then search or inspect only the place or part so specified. (3) Nothing contained in this section shall authorise any Magistrate other than a District Magistrate or Chief Judicial Magistrate to grant a warrant to search for a document, parcel or other thing in the custody of the postal or telegraph authority." As per the above Section, where the Court has reason to believe that a person to whom an order was issued would not produce the document required by such order or requisition and where the court do not know in whose possession the document was available and the court considers that for the purpose of an enquiry, trial or other proceeding, the document is required, the Court may issue a search warrant. 20. In this regard, it is pertinent to refer to the legal position. Both parties cited several decisions covered several provisions of the RBI Act and various other aspects. 20. In this regard, it is pertinent to refer to the legal position. Both parties cited several decisions covered several provisions of the RBI Act and various other aspects. But in view of the limited scope of the issue before this Court, it is not necessary to deal with all of them while appreciating whether there are grounds to issue the search warrant against the respondents. In C. IYAVOO CHETTI v. JEHANGHIR M. HOLMES (AIR 1918 MADRAS 587 (1)), the Madras High Court held: "The act of issuing a search warrant is a Judicial act, and before a Magistrate issues it, it is his duty to weigh the circumstances before making up his mind on the question. A mere statement in an affidavit that, in the opinion of the deponent, a summons may not have the desired effect, is not sufficient to justify the issue of a search warrant." In the case covered by the above decision, the deponent filed an affidavit in support of the Application. It does not state when the applicant became aware of the complaint. It gives the opinion of the deponent that a summons may not have the desired effect. The Magistrate should, under the circumstances, have asked the complainant for further proof from the complainant before issuing the warrant. The Magistrate seems to have ignored the existing provisions and the limitations it places upon his powers to issue a search warrant. He has to record reasons for taking the unusual step of issuing a search warrant in the first instance. It is desirable to draw his attention to the fact that the act of issuing a search warrant is a judicial act, as pointed out in MAHOMED JACKARIAH & CO v. AHMED MAHOMED ((1888) 15 Cal 109). The Court further held that it was his duty to have weighed the circumstances before making up his mind on the question. The materials placed before the Magistrate were wholly insufficient to issue a search warrant. In SHIV DAYAL v. SOHAN LAL (AIR 1970 PUNJAB & HARYANA 468), the Punjab and Haryana High Court held as follows: "The function of issuing a warrant is a judicial function. The materials placed before the Magistrate were wholly insufficient to issue a search warrant. In SHIV DAYAL v. SOHAN LAL (AIR 1970 PUNJAB & HARYANA 468), the Punjab and Haryana High Court held as follows: "The function of issuing a warrant is a judicial function. Though it is not specifically laid down in Section 96 (old) that the order should contain reasons there for, but it has been repeatedly laid down that where the orders of the Court are open to appeal or revision by a higher court it is highly desirable to give reasons in support of the order so that the superior Courts would be in a position to judge whether there has been a proper exercise of the discretion or not. Unless the reasons are apparent on the record, failure to state reasons could lead to the interference that the exercise of discretion was arbitrary and not based on well-recognized principles and this Could be a ground for setting aside the order." The Court further held that while issuing the warrant, the Magistrate shall bear in mind that a warrant for search is not a mere formality and it is a drastic act, therefore, the power should be exercised sparingly. By following the Supreme Court Judgment, the Court laid down the above principle. In HOSHIDE v. EMPEROR (AIR 1940 CALCUTTA 97), the Calcutta High Court held: "For a Magistrate to use his powers under Section cl. (3) of S. 96 (1) it is not necessary that there should be an inquiry, trial or other proceeding pending at the time the search warrant was issued. A Magistrate can use his powers under this clause in anticipation of such inquiry or trial." The Court further held that: "When the Privy Council interprets a Section or lays down a principle of law High Court is bound to follow the interpretation or principle whether it is obiter or not." The Court further held that: "A search warrant is not to be issued automatically or for the mere asking. It can only be issued when the court considers that the purpose of an enquiry would be served. The Magistrate must apply his judicial mind to the question and must satisfy himself that the issue of the warrant is necessary and that the requirements of the law for the issue of the warrant are present. It can only be issued when the court considers that the purpose of an enquiry would be served. The Magistrate must apply his judicial mind to the question and must satisfy himself that the issue of the warrant is necessary and that the requirements of the law for the issue of the warrant are present. A search warrant should not be issued as a matter of course on the bare statement of a police officer that a search was necessary. When it appears that a Magistrate has not applied his mind in this way and when it appears that action has been taken on insufficient material, High Court will always interfere." In V.S. KUTTAN PILLAI v. RAMAKRISHNAN ( AIR 1980 SC 185 ), the Supreme Court held that: "Issuance of a search warrant is a serous matter and it would be advisable not to dispose of an application for search warrant in a mechanical way by a laconic order. Issue of search warrant being in the discretion of the Magistrate it would be reasonable to expect of the Magistrate to give reasons which swayed his discretion in favour of granting the request. A clear application of mind by the learned Magistrate must be discernible in the order granting the search warrant." The learned Magistrate in the order relied on the decision of the Privy Counsel in CLARKE v. BRAJENDRA KISHORE ROY CHOWDHURI, wherein the Privy Council held that the pendency of a proceeding before a Magistrate is not a condition precedent to issue a search warrant under Section 45-S of the RBI Act. It was also observed that though there is no investigation, proceeding pending enquiry in this case also, the warrant can be issued. But, in the light of the case law referred above, the issuing of warrant cannot be automatic and the Court has to take into consideration the circumstances explained by the Authorized Officer and has to apply its mind to satisfy whether there are sufficient reasons to issue a search warrant. 21. The following are the circumstances to be considered whether the issuing of warrant is essential in the interest of justice in the light of the submissions made by M/s Margadarsi Financiers: 1) G.O.Ms. No. 801, dated 19-12-2006 issued by the Government appointing Sri. 21. The following are the circumstances to be considered whether the issuing of warrant is essential in the interest of justice in the light of the submissions made by M/s Margadarsi Financiers: 1) G.O.Ms. No. 801, dated 19-12-2006 issued by the Government appointing Sri. Krishnam Raju as the Authorized Officer to file Application in the Court of jurisdiction to take action under Sections 45-T and 48-E of the RBI Act is general in nature and there is no specific authorization to take appropriate action against the respondents. 2) G.O.Ms.No. 800, dated 19-12-2006 issued under the A.P. Protection of Depositors Act appointing Sri N. Rangachari to examine all the relevant papers and other material and to submit a report whether the respondents have raised deposits from the public in violation of the provisions of the RBI Act or under the provisions of the of A.P. Protection of Depositors Act. The G.O. was also issued to verify whether there is any reason to believe that the respondents are acting in a manner prejudicial to the interests of the depositors and whether the respondents are not likely to return the deposits collected from the public. This G.O. will not come within the purview of the RBI Act, therefore, it is for a different purpose. The Government issued the G.O. on the basis of the news items in several newspapers. According to the said newspapers, M/s Margadarsi Financiers is not an incorporated body as it is a HUF and is consequently, not expected to raise or receive deposits from the public and it is reported to have accumulated losses and not in a position to discharge the amounts due to the depositors. It is also mentioned in para No.2 of the G.O. that it is the duty of the Government to take deterrent action against the Financial Establishments indulging in malpractice during the course of acceptance of public deposits. It is further mentioned that with a view to protect the interests of the depositors, Sri Rangachari was appointed. It is also mentioned in para No.2 of the G.O. that it is the duty of the Government to take deterrent action against the Financial Establishments indulging in malpractice during the course of acceptance of public deposits. It is further mentioned that with a view to protect the interests of the depositors, Sri Rangachari was appointed. 3) The Reserve Bank of India addressed a letter to the Government of A.P. on 29-12-2006 informing that in view of the limited statutory powers, the Bank has no relevant original documents relating to Margadarsi Financiers available on its records to enable its officers to give an authentic evidence on behalf of the bank and further mentioned that in case the State Police needs any assistance in analyzing the statements/books of accounts relating to Margadarsi Financiers, the Bank would be glad to make available an appropriate resource person for such specific purpose. It is further mentioned in the letter that unincorporated body like Margadarsi Financiers are not required to submit any statutory statements or returns to the Bank on their deposit acceptance activities. As such, the Bank does not have the names and details of the depositors of Margadarsi Financiers or original documents like certified copies of balance sheets etc. on its records. When the letter of the Reserve Bank of India was not helpful to the Government, they have issued the G.Os to move its machinery for appropriate action against the respondents. 4) The Rangachari's Report, dated 14-02-2007 discloses that the respondents collected huge amounts by way of deposits from the members of the public and the outstanding amount including interest payable as on 31-03-2006 was Rs.2,610.38 crores which will attract Section 45-S of the RBI Act. M/s Margadarsi Financers are not registered with the Reserve Bank of India. The prohibition imposed under Section 45-S of the RBI Act came into operation from 01-04-1997 when the Act was amended. Proviso to the said Act gives the Reserve Bank of India permission to extend this time limit for a period not exceeding one year but subject to such condition as the Reserve Bank of India imposes. As per the said Section, the deposits are to be repaid within three years from the date of commencement of the deposits subject to the time extended by the Reserve Bank of India. As per the said Section, the deposits are to be repaid within three years from the date of commencement of the deposits subject to the time extended by the Reserve Bank of India. It was further observed that a Hindu Undivided Family is a collection of individuals who are lineal descendents from a common ancestor, therefore, Margadarsi Financiers are directly covered by the provisions of Section 45-S of the RBI Act and accordingly, should not receive any deposits from the members of the public. In 1998, the Reserve Bank of India instructed respondents not to accept the fresh deposits and to prepare a plan of repayment of the existing deposits to be in line with the provisions of Section 45-S of the RBI Act. 5) The learned counsel representing the Authorized Officer conceded that the appointment of Sri. N. Rangachari and Sri T. Krishna Raju is under challenge in W.P.No.27065 of 2006, therefore, the validity or otherwise of the said appointment cannot be a subject matter of these quash proceedings. Whether the Margadarsi Financiers constitutes an unincorporated body of individuals, whether it is a Hindu Undivided Family represented by the Kartha Sri Ramoji Rao, whether they are exempted from the purview of Section 45-S of the RBI Act and whether they are liable for Penal Action under Section 58-E of the RBI Act are to be decided in the appropriate proceedings. The State has concurrent power to prosecute. In the application made by the Authorized Officer, it is stated that certain documents relating to the acceptance of the deposits in contravention of Section 45-S of the RBI Act are secreted in any place. Though there is no crime as yet, is pending against the respondents, the court has jurisdiction to issue search warrant. The contention of the respondents that there is no proof that the documents are secreted at this place, therefore, has no substance at this stage. Though ample opportunity was given to the respondents to produce relevant documents through the commission appointed by the Government, they failed to produce the documents, therefore, the learned Magistrate was justified in issuing the search warrant. It is contended on behalf of the Authorized Officer that the entire data of the depositors, the amount payable to them after maturity is available with the respondents, therefore, there is no obstruction for them to continue to make payments to the depositors towards matured deposits. It is contended on behalf of the Authorized Officer that the entire data of the depositors, the amount payable to them after maturity is available with the respondents, therefore, there is no obstruction for them to continue to make payments to the depositors towards matured deposits. 6) The respondents contended that the Margadarsi Financiers started receiving deposits since 34 years. They have been promptly paying all matured deposits on time. There is not even a single complaint from any of the depositors, either there is any delay of payment of matured amount or there is any indication that they committed default in making such payment. There is not a single complaint received by the Government from any individual or depositor apprehending about the financial capacity of the respondents in making payments to them on maturity of deposits. The respondents are contending that the said business was being run by the HUF of Ramoji Rao and the family members. In 1997 for the first time, Section 45-S of the RBI Act was introduced prohibiting certain individuals or group of individuals collecting deposits from the public. In the letter, dated 20-12-2006, the respondents addressed the Reserve Bank of India regarding the applicability of Section 45-S to HUF. In the said letter, the respondents mentioned that consequent on the amendment to Reserve Bank of India Act, 1997, the respondents sought an opinion of the Former Chief Justice of India who mentioned that the prohibition contained in the amended Section 45-S (1) has no applicability to a HUF. When there was another letter, dated 20-10-1998 received by the Reserve Bank of India, the respondents suspended the acceptance of deposits with effect from 01-11-1998 and again sought opinion from legal luminaries and when they opined that HUF is not covered under Section 45-S of the Act and falls out of chapter III thereof and they were advised that 45-I (c) of the RBI Act is not prohibiting acceptance of deposits, since it is not the principal business of the respondents. The respondents addressed a letter, dated 31-12-1998 undertaking not to accept fresh deposits till such time as these activities were discontinued. The respondents addressed a letter, dated 31-12-1998 undertaking not to accept fresh deposits till such time as these activities were discontinued. The RBI considered the submissions made by the respondents and through the letter, dated 26-02-1999, accepted the contention that Section 45-S of the RBI Act would not be attracted in cases of business of the HUF of respondents and advised the respondents to restructure the business as per the advise of the Reserve Bank of India. The respondents complied with the directions containing in the letter. The respondents also furnished a certificate from a Chartered Accountant and the RBI Representative also visited the respondents Financiers and the inspection was duly carried out. It is further represented that since 1972, there was never any instance of complaint from any depositor. The assets owned by HUF are substantially higher than the liability of the deposits and good security for the depositors. It is further mentioned that the respondents had discontinued the acceptance of the deposits below Rs.1 lakh w.e.f. 16-09-2006 and have decided to discontinue acceptance of all deposits including renewals w.e.f. 20-11-2006 and the respondents also expressed their intention to continue to make repayments of deposits on maturity and are also expecting to complete the process of repayment of all the deposits within a period of three years. 7) In the application, dated 20-02-2007 filed before the learned Magistrate, the respondents brought to the notice of the said Court that they are willing to furnish such of the documents which fall within the parameters of the Section 45-T of the RBI Act, but a roving search cannot be ordered as it is likely to create panic among 2.5 lakh depositors. 8) Before the Supreme Court of India also, it was submitted by the respondents that there might be a liability of Rs.2,300 crores to the depositors and the entire amount will be paid on maturity. They have secured credit facility of Rs.800 crores and necessary funds will be deposited in escrow account periodically and as and when the deposits matured the amount would be paid to the depositors. The Hon'ble Supreme court recorded the undertaking given by the respondents. They have secured credit facility of Rs.800 crores and necessary funds will be deposited in escrow account periodically and as and when the deposits matured the amount would be paid to the depositors. The Hon'ble Supreme court recorded the undertaking given by the respondents. It was represented on behalf of the respondents that another Rs.1217 crores is being secured by Blackstone Capital Partners (Mauritius) V Limited to invest 26% of its share capital in Ushodaya Enterprises Limited and that amount also will be made available for repaying the depositors. The Hon'ble Supreme Court directed that the details of repayments shall be furnished to both the Reserve Bank of India and the State Government and if there is any delay in making the payments to depositors whose deposits have matured, the same shall be reported to the RBI and the RBI and the State Government would be at liberty to take appropriate action against the applicants under the A.P. Protection of Depositors Act. When the counsel for the Authorized Officer represented that the petitioners are not in a apposition to pay the amount as the business concerns are at loss and the I.A. itself is not maintainable, the Hon'ble Supreme Court left all the questions open and made it clear that there shall not be any freezing of the accounts of the applicants or attachment till 20-07-2007. 22. The repeated undertakings given by the respondents to the Reserve Bank of India, to the Magistrate by filing an Application, which was returned, and to the Revisional Court is an indication that they have no intention to secret the documents relating to the transactions of deposits received from the customers at any time, therefore, there is no scope for the Authorized Officer to gain an impression that the respondents are secreting the documents relating to the deposits and the said allegation is made only to meet the requirement of Section 45-T of the RBI Act without indicating the mind of the Authorized Officer under what circumstances he gained such impression without giving opportunity to the respondents. As the respondents made their intention very clear that they have committed to the schedule of repayment and they have sufficient assets to show that they have capacity to repay the matured deposits and they also gave an undertaking before the Supreme Court of India that they will make payments without fail which was recorded by the Hon'ble Supreme Court. The Metropolitan Sessions Judge in the Revision Petition preferred by the respondents observed in the operative portion of Judgment as follows: "If the respondent takes away the cheques etc., it will certainly cause inconvenience to the revision petitioner and also to the depositors, since it is the revision petitioner who has to pay back the amounts to the depositors. The respondent can take the copies of the documents pertaining to the acceptance of deposits and see that no inconvenience is caused either to revision petitioner or depositors with regard to return of deposit amounts. Learned counsel for respondent submits that the revisions petitioner can take back the required documents by filing an application in the Magistrate Court by giving undertaking to produce the same as and when required." 23. The Authorized Officer did not challenge the direction given by the Revisional Court that the respondents can take copies of the documents pertaining to the acceptance of deposits and see that no prejudice is caused to the depositors with regard to return of deposit amounts. The learned counsel for the Authorized Officer also repeatedly stated that it is not the intention of the Government to cause any kind of inconvenience to the depositors and the welfare of the depositors is the prime concern of the Government. But the State Government could not place at least one instance of default in payment of money of the depositors. 24. In W.P.No.27065 of 2006, a Division Bench of this Court, while dismissing W.P.M.P.Nos.34785 and 34786 of 2006, observed that the enquiry instituted by the Government is not going to cause any injury to the writ petitioners and if at all the report of Sri N. Rangachari is adverse to the writ petitioners and if the competent authority proposes to take action on the basis of the said report, the writ petitioner will be entitled to notice and reasonable opportunity of hearing. At that stage, writ petitioner No.1 will be free to challenge the adverse report, if any submitted by Sri N. Rangachari and the action, if any initiated by the competent authority. The assurances given by the writ petitioners to Reserve Bank of India not to accept any investment from the depositors and opening of Escrow Account are not sufficient to restrain Sri N. Rangachari from making enquiry in furtherance of G.O.Ms.No.800, dated 19-12- 2006. The issue regarding the validity of the search warrant did not come for consideration in the writ Court. 25. Since the issue whether the respondents business is run by HUF, whether it comes within the purview of Section 45-S of the RBI Act and whether the collection of the deposits prior to 20-11-2006 was in violation of Section 45-S are the matters to be decided in a separate proceedings and they are left open for the parties to agitate before the appropriate forums. In view of the undertaking given by the respondents before the Supreme Court of India and in view of stopping of receiving deposits wit effect from 20-11-2006, in view of the non-reporting of grievance from any of the depositors and the unconditional offer given by the respondents that they are prepared to furnish all the particulars regarding the deposits collected from various customers, in view of non-reporting of any instance of malpractice against the depositors, in view of non-reporting of any acts prejudicial to the interests of depositors, the non challenging of the direction by the Revisonal Court that the respondents can take copies of the documents relating to the deposits to avoid any inconvenience to the depositors, the non-affording of opportunity to the respondents by the learned Magistrate to make their submissions before ordering search warrant, as there is no indication that the respondents have resorted to secret any of the information relating to the collection of the deposits and the admission of the Authorized Officer that the entire information relating to the collection of the deposits is available in the computer itself is a clear indication that the respondents have no intention to secret any of the documents. The Authorized Officer, without giving any notice to the respondents to furnish the information, came to his own conclusion that there is no likelihood of the respondents furnishing the information. The Authorized Officer, without giving any notice to the respondents to furnish the information, came to his own conclusion that there is no likelihood of the respondents furnishing the information. But the learned Magistrate came to a conclusion that since they failed to furnish the information to Sri Rangachari, the search warrant was ordered. The observation of the learned Magistrate that the documents will not be supplied by the respondents has no basis since the documents required by Sri. Rangachari are different from the documents required by the Authorized Officer Sri T. Krishna Raju. The Authorized Officer has already collected the entire information from the respondents towards deposits as on 31-03-2006 and as the respondents are willing to furnish copies of the documents relating to the deposits, the learned Magistrate did not consider all these aspects and the order passed on the mere allegation that the respondents have secreted the documents without proper application of mind is not sustainable under law. 26. The learned Magistrate took into consideration the following circumstances to issue search warrant in favour of the petitioner: 1) The Authorized Officer was appointed by the Government hrough G.O.Ms.No.801, dated 19-12-2006. 2) Sri Rangachari mentioned in the Report that the respondents were collecting deposits in violation of Section 45-S of the RBI Act and the Report is filed before the Court. 3) Copy of the letter of the Reserve Bank of India, dated 29-12-2006 that the Government may take appropriate action as it has no control over the HUF of the respondents. 4) The petitioner mentioned in the Application that he believed that the respondents are secreting the documents relating to the deposits and there is no likelihood of the respondents producing the documents relating to the deposits as they failed to consider the request of Sri N. Rangachari for furnishing certain documents, though they are different from the documents required by the petitioner. 27. The learned Magistrate did not consider the following aspects before ordering search warrant against the respondents: 1) The past record of the respondents for a period of 34 years. 2) No single complaint has been filed by any of the depositors to consider that either there is delay in payment of the amount of the matured deposits or there is default in making the payments. 2) No single complaint has been filed by any of the depositors to consider that either there is delay in payment of the amount of the matured deposits or there is default in making the payments. 3) The offer made by the respondents that they are ready to give the copies of the documents relating to the deposits collected from the public. 4) The explanation of the respondents that they did not furnish the documents required by Sri N. Rangachari on the ground that his appointment itself is illegal. 5) Pendency of the writ petition regarding the appointment of Sri Rangachari and the Authorized officer. 6) The Authorized Officer did not place any material to show that any of the documents were secreted preventing the him to get the necessary information and he did not give any notice requiring the respondents to furnish the documents relating to the deposits. 7) The State Government also did not make any request to the respondents to furnish the information relating to the deposits. 8) The availability of the information in the computer with all particulars of the deposits and depositors as admitted by the petitioner. 9) The issue whether the respondents violated the provisions of Section 45-S and whether the HUF of the respondents is exempted from the purview of 45-S of the RBI Act are the questions to be decided in the appropriate forum. 10) The petitioner categorically mentioned in the additional information furnished to the learned Magistrate that the outstanding amount of the deposits collected by the respondents as on 31-03-2006 was Rs.2,610.38 crores. 11) The representation of the respondents that they have stopped receiving deposits from 20-11-2006. 12) The respondents categorically mentioned that they have sufficient assets of the sister concerns of HUF to discharge the liability due under the deposits collected by them. 13) The respondents continuously paying the matured deposits without a single default as on the date of passing of the order by the learned Magistrate. 14) Except that the respondents violated Section 45-S of the RBI Act, which has to be considered by appropriate forum, there was no intention on the part of the respondents to act prejudicial to the interests of the depositors. 15) There were no instances of the respondents applying malpractices either in collecting the deposits or dealing with the depositors. 14) Except that the respondents violated Section 45-S of the RBI Act, which has to be considered by appropriate forum, there was no intention on the part of the respondents to act prejudicial to the interests of the depositors. 15) There were no instances of the respondents applying malpractices either in collecting the deposits or dealing with the depositors. 16) The undertaking made by the respondents to the Reserve Bank of India to discontinue the receipt of the deposits and to make the payment of the matured deposits without fail. 17) The petitioner came to his own conclusion that there is no likelihood of the respondents furnishing the information without issuing any notice to them. 28. The above circumstances indicate that the learned Magistrate did not discharge the judicial function properly and the search warrant was issued automatically for mere asking by the petitioner without considering the material that the information would be made available even without issuing a search warrant. The learned Magistrate failed to apply her judicial mind and also failed to satisfy that the issuance of warrant is necessary and the requirements of the law for issuance of the warrant are satisfied. The learned Magistrate passed the order on insufficient material and the order did not disclose the application of mind and it is not discernible in the order granting search warrant. In the light of the non-consideration of the information favourable to the petitioner and in the light of the subsequent developments as mentioned above and the orders passed by the Revisional Court and the Supreme Court of India, I am inclined to quash the order passed by the learned Magistrate subject to the condition that the respondents shall supply the entire information relating to the collection of the deposits including the copies of the documents relating to it. 29. In the result, the Criminal Petition is allowed. The order of the learned Magistrate, dated 21-02-2007 and the order passed by the Revisional Court to the extent of confirming the order of the learned Magistrate are set aside subject to the condition that the respondents shall furnish copies of all the documents relating to the acceptance of the deposits pending with the them as on today. The order of the learned Magistrate, dated 21-02-2007 and the order passed by the Revisional Court to the extent of confirming the order of the learned Magistrate are set aside subject to the condition that the respondents shall furnish copies of all the documents relating to the acceptance of the deposits pending with the them as on today. The learned Magistrate shall release all the documents seized by the petitioner in pursuance of the order passed by the said Court in favour of the respondents after permitting the Authorized Officer to take copies of such documents, which relate to acceptance of deposits from the depositors. However, it is made clear that this order will not come in the way of the Authorized Officer to proceed against the respondents according to law if there is any violation of any of the provisions of the RBI Act subject to the outcome of the Writ Petitions and the directions of the Hon'ble Supreme Court.