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Judgment
A.S. Pachhapure, J.—The Petitioners have challenged the order passed by the Court below taking cognizance against them for the offence punishable under Sections 403 and 420 IPC.
The facts relevant for the purpose of this petition are as under:
I will refer to the parties as per their rank in the Court below for the purpose of convenience.
The Petitioners herein are Accused Nos. 2 to 7, whereas Respondent herein is the complainant.
The complainant is a non-banking finance company registered with the Reserve Bank of India and it accepts the deposits from the public in turn giving them a good rate of interest on the said deposits, The money so deposited is being generated for further finance for industries, hire purchasing and leasing and the Company is receiving attractive Interest and thereby the complainant is conducting the business.
Accused No. 1 was appointed as an Executive Director in the year 1995 after he took voluntary retirement from the State Bank of India, wherein he was working as Deputy General Manager. The promoters of the complainant company thought that Accused Nol. was having sufficient financial background and would serve a good purpose on the Board and accordingly, he was inducted into the Board as an Executive Director. The complainant was unaware that the first accused wanted to enter into this company only to build subterfuge and to siphon off the Company''s money by misappropriation and cheating.
The first accused adopted the modus operandi and was illegally encasing the monies of the Company through various accounts held by his direct relatives in the said company. It is stated that the height of his criminality was achieved in the year 1999 when he became the Managing Director of the Company. In furtherance of his intention, he is said to have misappropriated the amount to the tune of Rs. 5,94,21,914-36. He also purchased property in his name and in the name of his wife Accused No. 2 by withdrawing the amount from the complainant company by fraudulent means and induced a depositor to file a company petition for winding up of the complainant company. He is said to have siphoned off huge amount from the complaint company. He dropped three directors and in their place took Sri. R.N. Kamath and G.H. Patel who are blissfully unaware of the fraudulent games being enacted by Accused No. 1 and everyone had the belief on Accused No. 1 that he is an able person. The complainant states that Accused No 1 used to withdraw the amount and deposit it in the names of his relatives and the amount of deposit misappropriated by Accused No. 1 in connection with other accused has been enumerated in para 14 of the complaint. The amount of deposits in the names of the respective persons has been given in detail and totally a sum of Rs. 5,94,21,914-36 is said to have been misappropriated. The depositors are none else than the wife of Accused No. 1 i.e., Accused No. 2 the daughter Accused No. 3, the sister of Accused No 2 who is Accused No. 4, the brother in law of Accused No. 1 who is Accused No. 5 and the Indian Institute of Entrepreneur Development, wherein Accused No. 1 is the President of the said institute and Accused No. 7 Smt. Geetha who is also said to be a relative of Accused No. 1, The complainant alleges that the properties worth Rs. 2,65,92,848/- were purchased by Accused No. 1 in his name and the name of his relatives and the properties have been valued by an expert. So it is the case of the complainant that Accused No. 1 in connivance with Accused Nos. 2 to 7 misappropriated huge amount of money of the complainant company. The complainant has also given the particulars of the properties by way of Annexures A to H to the complaint. In addition, the complainant has produced many documents in support of his claim and also submitted the list of witnesses to prove the case against the accused.
The Trial Court after registering the complaint, recorded sworn statement and under the impugned order has taken cognizance against Accused Nos. 2 to 7 and aggrieved by the said order, Accused Nos. 2 to 7 have filed this petition challenging the validity of the order.
I have heard the learned Counsel for the Petitioners and also the Respondent. The point that arises for my consideration is:
Whether the Trial Court was justified in taking cognizance against the Petitioners for the offence under Sections 403 and 420 IPC?
It is the contention of the learned Counsel for the Petitioners that the deposits in the name of the Petitioners are their own deposits and the company has no nexus with the amount deposited by them. So also, he submits that Dr. K.R. Padmavathi who is Petitioner No. 3 (Accused No. 4) has tiled a complaint to the Karnataka State Consumer Disputes Redressal Commission for taking action against the company for not refunding the deposit amount. It is his submission that the matter is purely of civil nature wherein the company has even instituted the suit against the Petitioners and Accused No. 1 and in the circumstances, the order taking cognizance is illegal and perverse.
Per contra, the learned Counsel for the Respondent has supported the order of the Court, below.
A perusal of the complaint reveals that it runs to about 41 pages and in addition, there are documents produced by the complainant with his complaint and also the list of witnesses. Now, so far as the relationship between the accused is concerned, Accused No. 1 who is the main accused is the husband of Accused No. 2, father of Accused No. 3 and Accused No. 4 is the sister of Accused No. 2 and Accused No. 5 is the brother-in-law of Accused No. 1, whereas Accused No. 6 is the institute, wherein Accused No. 1 is the president and Accused No. 7 is also a relative of Accused No. 1. So in the background of this relationship amongst the accused, if the allegations are seen it is stated that Accused No. 1 who was a sole signatory on the cheques drew the amount either in his name or in the name of some other person, acquired the property mentioned in the schedule and deposited the money in the name of his relatives and the amount deposited in the respective names of the accused has been enumerated in para 14 of the complaint. Totally, an amount of Rs. 5,94,21,914-36 has been in deposit in the name of the accused and others. So these deposits were said to have been withdrawn by Accused No. 1 and Accused No. 1 is said to have been committed an act of misappropriation in conspiracy with the other accused who committed an act of cheating and misappropriated the funds of the company.
It may be true that the company has instituted a suit for recovery of money against the relatives of Accused No. 1, but that itself do not exempt the accused from criminal liability, if there is material against the accused for the offences alleged. It is no doubt true that Accused Nos. 4 and 5 had filed complaints to the Karnataka State Consumers Disputes Kediessal Forum in Complaint Nos. 12/2004 and 41/2004 and the Forum by its order dated 21-10-2005 has directed to pay Rs. 30 lakhs and Rs. 20 lakhs with interest at 13% p.a. to the complainants. The complainants before the Forum were Accused Nos. 4 and 5 in the complaint lodged before the Criminal Court. The mere fact that the Forum has passed such an order for refund itself is not a ground prima facie to hold that the accused are innocent and that there is a civil dispute. The question of misappropriation was not for consideration by the Karnataka State Consumer Disputes Redressal Commission. As to how much properties each of the accused had and whether the amount in deposit was acquired by them individually or it is the money of the company which has been withdrawn by Accused No. 1 and deposited in the names of different other accused is a matter for consideration in due course of trial.
So far as the allegations in the complaint are concerned, admittedly, all the accused are related to each other and huge amount has been deposited in the name of other accused and not less than 5 crores of money is said to have been misappropriated. At the stage of taking cognizance, it is only the allegations which will have to be looked into to find out as to whether they constitute an offence punishable under the provisions of the Penal Code. So there are specific allegations that Accused No. 1 in conspiracy with the other accused cheated the company and in these circumstances, the other accused who are relatives of Accused No. 1 prima facie are responsible and the question as to whether there is sufficient material to prove the allegations is a matter which will have to be taken into consideration in due course of the proceedings.
The learned Counsel also has produced the copy of the judgment in CC No. 5118/2003 wherein a complaint was lodged by the complainant against Accused No. 4 Mrs. K.R. Sathyavathi for the offence u/s 138 of the Negotiable Instrument Act (hereinafter called as ''the Act'' for short), wherein Accused No. 4 pleaded that she is not guilty and ultimately, she was acquitted for the charge u/s 138 of the Act. An acquittal for the offence u/s 138 of the Act is not a ground to refuse the cognizance for the offence under Sections 403 and 420 of IPC. The Court in due course of the proceedings has to look into the material produced by the complainant and after leading the evidence has to appreciate the same to find out as to whether there is sufficient material to convict the accused persons or not. At the stage of cognizance, I think an effort could be done by the Court below as it has to look into the allegations in the complaint which constitute an offence and the prima facie material on record. So the perusal of the complaint reveals that there is prima facie material against the Petitioners for the offence under Sections 403 and 420 of IPC. In that view of the matter, as there is no merit in this revision, I answer the point in affirmative and proceed to pass the following:
ORDER
The petition is dismissed.