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Andhra High Court · body

2020 DIGILAW 28 (AP)

Chan Basha Sheik v. State of A. P.

2020-01-22

U.DURGA PRASAD RAO

body2020
JUDGMENT : U. DURGA PRASAD RAO, J. 1. In this petition filed under Section 482 of Cr.P.C. petitioners/A2 to A9 seek to quash the proceedings against them in C.C. No. 256 of 2014 on the file of IV Additional Judicial First Class Magistrate, Kakinada, East Godavari District, which was taken cognizance for the offences under Sections 403, 406 and 411 r/w 34 IPC and Section 297 of Companies Act, 1956. So far as the petitioners/A2 to A9 are concerned, they are imputed with the offence under Section 411 IPC. 2. The 2nd respondent/defacto complainant filed private complaint which was forwarded by the learned IV Additional Judicial First Class Magistrate, Kakinada to the Police of III Town CCS, Kakinada, which was registered as case in Crime No. 38 of 2013 and after investigation, charge-sheet was filed. 3........ (a) The charge-sheet allegations succinctly are that the defacto complainant is the Managing Director of M/s Atlas Offshore Service Private Limited, Kakinada. A-1 to A-9 are blood relations. A-1 and A-2 are own brothers; A-3 is the wife of A-1; A-4 is the sister of A-1 and A-2; A-5 is the mother of A-1 and A-2; A-6 and A-7 are brothers-in-law of A-1; A-8 and A-9 are the parents-in-law of A-1 and they are all residents of Kakinada. (b) While so, in the year 2008, the complainant along with A-1 registered the said company with the Registrar of Companies, Hyderabad and on 20.11.2008 LW-9 Om Prakash Chowdary and Ch. V. Rajeswara Rao on, 16.07.2009 LW-2 D. Madhuri and petitioner/A-2 Sk. Chan Basha, who is the brother of A-1, on 12.07.2012 Meka Sunil Kumar, on 04.08.2012 LW-7 Triupuraneni Mahidhar Chowdary and LW-8 Tripuraneni Rohit Chowdary were appointed as Directors. The company is having bank account with IDBI, Kakinada which was agreed to be operated through net by the complainant and A-1 only. (c) The further allegations in the charge-sheet are that on 04.08.2012, 21.12.2012 and 04.01.2013, A-1 and A-2 failed to attend meetings of Board of Directors. However, A-1 by using his net bank authentication made transaction on 31.07.2012 for an amount of Rs. 8,00,000/- and paid income tax of Global Lions Company, which is the proprietary concern to A-1 to A-5. Again on 31.08.2012 and 03.09.2012, A-1 made similar transactions and paid income tax for the Global Lions Company. However, A-1 by using his net bank authentication made transaction on 31.07.2012 for an amount of Rs. 8,00,000/- and paid income tax of Global Lions Company, which is the proprietary concern to A-1 to A-5. Again on 31.08.2012 and 03.09.2012, A-1 made similar transactions and paid income tax for the Global Lions Company. In the meanwhile, the Board of Directors of complainant's company passed resolution and removed A-1 and A-2 and intimated to Registrar of Companies and all the banks including the IDBI bank on 07.01.2013. However, in the meanwhile A-1 misused his online access on 23.01.2013 and paid an amount of Rs. 7,50,000/- towards income tax for Bright Offshore Company and Sharaff Engineering Company, which is the proprietary concern of A-6, who is the brother-in-law of A-1 and A-2. Thus, in all A-1 committed breach of trust and misappropriated an amount of Rs. 31,50,000/- which came to the notice of complainant on 28.01.2013 while perusing the statements of IDBI bank. All the accused have thus committed the offences as stated supra. Hence the charge-sheet. 4. Heard Sri G.L. Nageswara Rao, learned counsel for the petitioners and Sri E.V.V.S. Ravi Kumar, learned counsel for 2nd respondent. 5. While denying the charge-sheet allegations as false and baseless, learned counsel for the petitioners would submit that the petitioners/A-2 to A-9 have not committed any offence and they are falsely implicated, except their relationship with A-1, the petitioners have no nexus with the allegations made against A-1. learned counsel would submit that in fact Global Lions Company, Bright Offshore and Shariff Engineering Company are the sister concerns of M/s Atlas Offshore Services Private Limited. The complainant played fraud against A-1 and captured Atlas Offshore Services Private Limited and foisted the false case against him and other accused to avoid payment of the amounts due to the sister concern companies and also the loan availed by the Atlas Offshore Services Private Limited from Indian Bank, Kakinada Branch to a tune of Rs. 17 crores to which the petitioners stood as guarantors by mortgaging their properties as collateral security. Learned counsel would further argue that it was not the first time but it was the practice of paying the income tax of the petitioners' firms by the Atlas Offshore Services Private Limited. Therefore, the complainant cannot harp that A-1 committed breach of trust or criminal misappropriation. Consequently, he cannot also impute the petitioners/A-2 to A-9. Learned counsel would further argue that it was not the first time but it was the practice of paying the income tax of the petitioners' firms by the Atlas Offshore Services Private Limited. Therefore, the complainant cannot harp that A-1 committed breach of trust or criminal misappropriation. Consequently, he cannot also impute the petitioners/A-2 to A-9. In fact, several lakhs of rupees are due to the petitioners' companies from the Atlas Offshore Services Private Limited and there are multiple online transactions between those sister concerns and Atlas Offshore Services Private Limited. Added to it, the civil disputes are pending between A-1 and A-2 and the complainant. For instance, O.S. No. 410 of 2013 is pending between the parties. To pressurize A-1 and the petitioners, the complainant has selectively chosen the present transactions to claim as if A-1 has misappropriated the amounts. In this backdrop, he would argue, the offence under Section 411 IPC is not legally sustainable against the petitioners, for, they did not receive any stolen property from A-1 and retained the same. On the other hand, even according to the complainant the amounts belonging to the complainant's company were transferred by A-1 towards income tax payable by the concerns of all the accused. Therefore, the petitioners have not received any amount and muchless retained the same. He thus prayed to allow the petition. 6. In oppugnation, Sri E.V.V.S. Ravi Kumar, learned counsel for respondent/complainant would argue that A-1, who is the authorized signatory for the bank transactions of complainant's company has, in breach of trust made online transactions and transferred Rs. 31,50,000/- from time to time for payment of income tax relating to the concerns of A-1 and other accused and in fact, this misdeed was committed by him to the knowledge and in collusion of other accused. Therefore, the petitioners/A-2 to A-9 are squarely liable for the offence under Section 411 IPC as they allowed him to deposit the amount towards the income tax payable by their concerns. Learned counsel would vehemently argue that there was no permission or ratification by the complainant's company for transfer of funds to the concerns of accused. Therefore, criminal proceedings are legally sustainable against all the accused. He thus prayed to dismiss the petition. 7. The point for consideration is: Whether there are merits in this criminal petition to allow? 8. Learned counsel would vehemently argue that there was no permission or ratification by the complainant's company for transfer of funds to the concerns of accused. Therefore, criminal proceedings are legally sustainable against all the accused. He thus prayed to dismiss the petition. 7. The point for consideration is: Whether there are merits in this criminal petition to allow? 8. Point: As per charge-sheet, the allegation the petitioners/A-2 to A-9 is that with their knowledge and connivance, A-1 has transferred funds from the company of defacto complainant to the companies of accused and, therefore, the petitioners/A-2 to A-9 are liable for the charge under Section 411 IPC. 9. It is pertinent to extract Section 411 IPC. It reads thus: “411. Dishonestly receiving stolen property - Whoever dishonestly receives or retains any stolen property, knowing or having reason to believe the same to be stolen property, shall be punished with imprisonment of either description for a term which may extend to three years, or with fine, or with both. As per the above section, a person is liable under Section 411 IPC, if he dishonestly receives or retains any stolen property having knowledge or reason to believe the same to be stolen property.” 10. The term "stolen property" is defined under Section 410 IPC. It reads thus: “410. Stolen property - Property, the possession whereof has been transferred by theft, or by extortion, or by robbery and property which has been criminally misappropriated or in respect of which criminal breach of trust has been committed, is designated as “stolen property” [whether the transfer has been made or the misappropriation or breach of trust has been committed, within or without (India)]. But, if such property subsequently comes into the possession of a person legally entitled to the possession thereof, it then ceases to be stolen property. Therefore, among others, a property which is subject matter of criminal breach of trust and has been received or retained by any other person, attracts the offence under Section 411 IPC.” 11. The Apex Court in Mir Nagvi Askari vs. C.B.I. (2010) AIR SC 528, has held that in order to establish the offence under Section 411 IPC, the prosecution has to prove: (i) that the stolen property was in the possession of the accused. The Apex Court in Mir Nagvi Askari vs. C.B.I. (2010) AIR SC 528, has held that in order to establish the offence under Section 411 IPC, the prosecution has to prove: (i) that the stolen property was in the possession of the accused. (ii) that some person other than the accused had possession of the property before the accused got possession of it and (iii) that the accused had knowledge that the property was stolen. 12. With the above jurisprudence on the subject, when the facts are perused, the complaint allegations are that A-1 committed criminal breach of trust by transferring the funds from complainant's company to the income tax department for payment of income tax relating to the companies of all the accused. It is also alleged that the other accused knew this fact and they colluded with A-1. A property obtained by one person by committing criminal breach of trust and passed to some other person and if the latter knew the origin of the property and still receives or retains it, certainly the offence under Section 411 IPC can be attributed against the latter. However, in the instant case, it is not the allegation of the complainant that the petitioners/A-2 to A-9 have received or retained the amount which is subject matter of criminal breach of trust. On the other hand, the amount was transferred by A-1 to the income tax department towards payment of tax by the concerns of the accused. Of course, it is pleaded that the other accused knew this fact. At the same time, it is not clear whether they got the knowledge prior or subsequent to A-1's transferring the amount to the income tax department. In any view, the crucial ingredient of receiving or retaining of stolen property by the petitioners/A-2 to A-9 is conspicuously missing in the instant case, for, admittedly the stolen property was not found in their physical or constructive possession. Therefore, in my considered view, the petitioners/A-2 to A-9 are not liable for the charge under Section 411 IPC. 13. The Apex Court in the case of State of Haryana and Others vs. Ch. Bhajan Lal and Others, (1992) AIR SC 604, has laid down the following guidelines as to when the High Court can exercise its plenary powers under Section 482 Cr.P.C. to quash the proceedings to prevent abuse of process of the Court. They are: “1. 13. The Apex Court in the case of State of Haryana and Others vs. Ch. Bhajan Lal and Others, (1992) AIR SC 604, has laid down the following guidelines as to when the High Court can exercise its plenary powers under Section 482 Cr.P.C. to quash the proceedings to prevent abuse of process of the Court. They are: “1. Where the allegations made in the First Information Report or the complaint, even if they are taken at their face value and accepted in their entirety do not prima-facie constitute any offence or make out a case against the accused. 2. Where the allegations in the First Information Report and other materials, if any, accompanying the F.I.R. do not disclose a cognizable offence, justifying an investigation by police officers Under Section 156(1) of the Code except under an order of a Magistrate within the purview of Section 155(2) of the Code. 3. Where the uncontroverted allegations made in the FIR or complaint and the evidence collected in support of the same do not disclose the commission of any offence and make out a case against the accused. 4. Where, the allegations in the F.I.R. do not constitute a cognizable offence but constitute only a non-cognizable offence, no investigation is permitted by a police officer without an order of a Magistrate as contemplated Under Section 155(2) of the Code. 5. Where the allegations made in the FIR or complaint are so absurd and inherently improbable on the basis of which no prudent person can ever reach a just conclusion that there is sufficient ground for proceeding against the accused. 6. Where there is an express legal bar engrafted in any of the provisions of the Code or the concerned Act (under which a criminal proceeding is instituted) to the institution and continuance of the proceedings and/or where there is a specific provision in the Code or the concerned Act, providing efficacious redress for the grievance of the aggrieved party. 7. Where a criminal proceeding is manifestly attended with mala-fide and/or where the proceeding is maliciously instituted with an ulterior motive for wreaking vengeance on the accused and with a view to spite him due to private and personal grudge.” 14. In terms of above guidelines, even if the prosecution case is uncontroverted, the offence under Section 411 IPC is not sustainable against the petitioners/A-2 to A-9. In terms of above guidelines, even if the prosecution case is uncontroverted, the offence under Section 411 IPC is not sustainable against the petitioners/A-2 to A-9. Therefore, continuation of criminal proceedings against them would amount to abuse of process of Court. 15. Accordingly, this criminal petition is allowed and the proceedings against the petitioners/A-2 to A-9 in C.C. No. 256 of 2014 on the file of IV Additional Judicial First Class Magistrate, Kakinada, East Godavari District are quashed. 16. As a sequel, Interlocutory Applications pending if any, shall stand closed. No costs.