in the high court of karnataka before the...
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IN THE HIGH COURT OF KARNATAKA
CIRCUIT BENCH AT DHARWAD
DATED THIS THE 23RD
DAY OF AUGUST, 2012
BEFORE
THE HON’BLE MR. JUSTICE ANAND BYRAREDDY
WRIT PETITION No.64368-64375 OF 2012 (GM-RES)
CONNECTED WITH
WRIT PETITION No.64479-64485/2012(GM-RES)
IN W.P.No.64368-64375/2012
BETWEEN:
1. Coastal Mines and Minerals,
A Partnership Firm,
Registered with the Registrar
of Firms and Societies,
Represented by one of its partners
Petitioner No.2
2. Mr. Prasanna V. Ghotage,
Aged 48 years, Occupation: Business,
Resident of 1088/B, ‘Prerana Hommes’,
Ranade Colony, Hindwadi,
Belgaum-590 011.
3. Mr. K.J.V. Sharma,
Aged 56 years, Occupation: Service,
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Resident of D-7, Ayodhya Co-operative
Housing Society,
Ambaji, Fatorda, Margao-403 602.
4. Mr. Jayesh V. Parab,
Aged 34 years, Occupation: Service,
Resident of A-102, Sushela Sankul,
Orulem, Vasco – Goa.
5. Mrs. Vibhita Kumari,
Aged 28 years, Occupation: Service,
Resident of House No.25/A,
Bauxite Road,
Sahyadri Nagar, Belgaum.
6. Mr. Hassan M. Angolkar,
Aged 65 years, Occupation: CEO of
Hira Steel Limited, Resident of 9th Cross,
Bhagyanagar, Tilakwadi, Belgaum,
7. Mr. Imran Shaikh,
Aged about 38 years,
Occupation: Service,
Resident of House No.29, Benawada,
Sanguem – Goa.
8. Shri. Sanjay Shirodkar,
Aged 38 years,
Occupation: Service,
Resident of House No.35,
Guruduwara Road,
Mangor Hill, Vasco – Goa. … PETITIONERS
(Shriyuths. Anoop Chaudhari and June Chaudhari, Senior
Advocates for Shri Sangram S. Kulkarni, Advocates)
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AND:
1. State of Chattisgarh,
Principal Secretary, Home,
Home Secretariat,
Raipur, Chattisgarh.
2. Inspector-in-Charge,
Special Investigation Cell,
Civil Line Police Station,
Raipur, Raipur District, Chhattisgarh.
3. The State of Karnataka,
Through its Principal
Secretariat, Home,
Bangaluru, Karnataka.
4. Hira Steels Limited,
Through Mr. Jagdish Prasad
Agarwal, Director,
Hira Steels Limited,
Having its Registered Office at G-16,
Hira Arcade, Near New Bus Stand,
Pandri, Raipur, Chhatisgarh.
5. Allahabad Bank,
Bhayanagar, Belgaum,
Represented by its General Manager.
6. Axis Bank,
Kalburgi Plaza, 163/20a, Main Road,
Deshpande Nagar, Hubli,
Represented by its Manager.
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7. Axis Bank,
Khanapur Road, Tilakwadi, Belgaum,
Represented by its Manager.
8. Axis Bank,
Shop 1, 2, 3, ‘Garden View’ Padre Miranda Road,
Margao, Salcete,
Represented by its Manager.
9. Bank of India,
278/2, A-1, Dr. Shama Prasad
Mukherjee Road,
Shahapur, Belgaum – 590 003,
Karnataka.
Represented by its General Manager.
10. Bank of Maharashtra,
R.P.D. Corner, Tilakwadi,
Belgaum- 590 006,
Karnataka.
Represented by its General Manager.
11. Canara Bank,
Shop No.3, Plot No.19,
Ground Floor, City Centre,
Patto Plaza, EDC Complex-403 001.
City: Panaji, District: North Goa, Goa.
Represented by its General Manager.
12. Canara Bank,
J.M. Building, 942, First Floor,
Opposite to New Bus Stand,
Station Road,
Hospet – 583 201. Karnataka.
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Represented by its General Manager.
13. Canara Bank,
P.B.525, 197 – D/2,
Khanpur Road, Tilakwadi,
Belgaum – 590 006. Karnataka.
Represented by its General Manager.
14. Canara Bank,
Ghotage Building, Market Road,
Castle Rock,
District: Uttara Kannada-581 121
Karnataka.
Represented by its General Manager.
15. Canara Bank,
Verna-Goa Verna,
South Goa, Goa,
Represented by its General Manager.
16. CITI Bank,
Bangalore,
Represented by its Manager.
17. Corporation Bank,
Karnataka Law Society, Tilakwadi,
Belgaum, Karnataka,
Represented by its General Manager.
18. Corporation Bank,
Sri. Kamakshi Building,
Plot No.30, P.B. Road,
Tilakawadi, Belgaum,
Represented by its General Manager.
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19. Deutsche Bank,
M.G. Road, Bangalore,
Represented by its General Manager.
20. Development Credit Bank,
Vasco Citi Centre, Swatantra Path,
Vasco Da Gama, Goa-403 802,
Represented by its General Manager.
21. Federal Bank,
No.14, Sun Flower Apartments,
Near 3rd
Railway Gate,
Khanapur Road, Tilakwadi,
Belgaum-590 006, Karnataka.
Represented by its General Manager.
22. HDFC Bank,
4830/28A, Opposite to District Hospital,
Dr. Ambedkar Road,
Belgaum – 590 002,
Karnataka.
Represented by its General Manager.
23. HDFC Bank,
S-2/3/4, Excel Elite, Caranzalim,
Panjim, Goa.
Represented by its General Manager.
24. ICICI Bank,
Shop No.G2 & G3, Padmakar Complex,
Ground Floor, Ponda, Goa-403 401.
Represented by its General Manager.
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25. ICICI Bank,
Sindur Business Centre,
Opp. Passport Office,
Panjim Goa-403 001.
Represented by its General Manager.
26. IDBI Bank,
Pai Restaurant, At Corner of College &
Samadevi Galli, Belgaum.
Represented by its General Manager.
27. Indian Bank,
Basavangudi, Bangalore
Represented by its General Manager.
28. Indusind Bank,
Shop No.123, LandScape Excelsior,
Dayanand Bandodkar Marg,
Panjim, Goa.
Represented by its Manager.
29. ING-Vysya,
315, Main Bazar, P B No.41,
Hospet – Karnataka.
Represented by its General Manager.
30. ING-Vysya,
2893-A, 1st Floor,
Amarcon Complex, Khade Bazar,
Belgaum – 590 002. Karnataka.
Represented by its General Manager.
31. Karnataka Bank Ltd,
Near Caculo Island, M.G.Road,
PB 374, Panaji, Goa.
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Represented by its General Manager.
32. Karur Vysya Bank,
C.T.S.No.1835 Sai Ganesh Plaza,
Hans Talkies Road, Belgaum - 590 002.
Represented by its General Manager.
33. NKGSB Co-Operative Bank Limited,
Congress Road Belgaum.
Represented by its General Manager.
34. Ratnakar Bank,
Shop No.G-10 & 11, Nizamar Centre,
Ground Floor, Dr. Atmaram Road,
Panaji-Goa – 403 001.
Represented by its General Manager.
35. Saraswat Bank,
Mushtifund Saunstha Building,
Dr.Dada Vaidya Road,
Panjim, Goa-403 001.
Represented by its General Manager.
36. Saraswat Bank,
Mahalaxmi Plaza, R.P.D. Cross,
Khanapur Road, Belgaum – 590 006.
Karnataka.
Represented by its General Manager.
37. State Bank of India,
New Admin.Building,
Karwar Port Complex,
Karwar, Karnataka.
Represented by its General Manager.
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38. State Bank of India,
Zuarinagare, Vasco Da Gama, Goa.
Represented by its General Manager.
39. Union Bank of India,
R.P.D. College Compound,
Tilakwadi, Belgaum, Karnataka.
Represented by its General Manager.
40. Union Bank of India,
Pandurang Plaza, Tisk Usgao,
Ponda Block, North Goa,
Goa 403 406.
Represented by its General Manager.
41. HDFC Bank,
Malkhed, Gulbarga, Karnataka.
Represented by its General Manager.
42. Bank of India,
Angol Branch, Belgaum.
Represented by its General Manager.
43. Corporation Bank,
Sri Kamakshi Building, Plot No.30,
P.B.No.530, Congress Road,
Tilakawadi, Belgaum, Karnataka.
Represented by its General Manager.
… RESPONDENTS.
(By Shri P.H.Gotkhindi, Government Pleader for R1-R3,
Shri Ravi B.Naik, Senior Advocate and
Shri K.N.Shukul, Advocate for R4,
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Shri Anoop G.Deshapande, Advocate for R22,R23,R4
Shri Sachin Bichu Associates for R32,
Shri Shafi Ahmed B.Shaikh, Advocate for – R6,R7,R8
and R17,
M/s J.S.Advocates and Legal Consultants - for R24 and
R25.
Writ Petition Nos.64368-64375/2012 are filed under
Articles 226 and 227 of the Constitution of India, quashing FIR
179/2012 Annexure-J filed by Respondent No.4 against the
petitioners in Civil Lines, Police Station, Raipur, Chhattisgarh
and also return all the books, documents and other materials
belonging to the petitioners seized mentioned in Annexure-R.
IN WP 64479-64485/2012
BETWEEN:
1. Upsurge Multitrade Pvt. Ltd.
A Company Registered under
Companies Act,1956
32, Shop No.3, Chintamani Plaza,
Angol Road, Tilakwadi,
Belgaum.
Represented by one of its Director.
2. PVG Exports Pvt Ltd.
A Company Registered under
Companies Act,1956,
1088/b Prerana Hommes,
Ranade Colony, Hindwadi,
Belgaum.
Represented by one of its Director.
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3. Waterbase Multitrade Pvt.Ltd.,
A Company Registered under
Companies Act,1956
301, Gouviea Chambers, 3rd
Floor,
Opp.Goa Sahakari Bhandar,
Market Road, Panaji,
Goa.
Represented by one of its Director.
4. PVG Lifestyle Pvt.Ltd.
A Company Registered under
Companies Act,
Ganesh Empire, RPD Cross,
Khanapur Road, Tilakwadi,
Belgaum.
Represented by one of its Directors.
5. PVG Logistics Pvt Ltd.
A Company Registered under
Companies Act,
1088/B, Prerena Hommes,
Ranade Colony, Hindwadi,
Belgaum –590 011.
Represented by one of its Directors.
6. Star PVG Exports,
A Partnership Firm registered under
Indian Partnership Act,
201, Anjana Plaza, R.P.D. College Road,
Tilakwadi,
Belgaum.
Represented by one of its partners petitioner 2.
7. Castlerock Minerals and Traders,
A Partnership Firm registered under
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Indian Partnership Act,
1088/B, Prerana Hommes,
Ranade Colony, Hindwadi,
Belgaum – 590 011.
Represented by one of its partners petitioner 2.
….PETITIONERS
(By Shri Anoop Chaudhari and June Chaudhari, Senior
Advocates for Shri.Sangram S.Kulkarni, Advocate )
AND:
1. The State of Karnataka,
Through its Principal Secretary, Home,
Home Secretariat,
Bangaluru, Karnataka.
2. State of Chattisgarh,
Principal Secretary, Home,
Home Secretariat,
Raipur, Chattisgarh.
3. Inspector-in-Charge,
Special Investigation Cell,
Civil Line Police Station, Raipur,
Raipur District, Chhattisgarh.
4. Hira Steels Ltd.,
Through Mr.Jagdish Prasad Agarwal,
Director, Hira Steels Ltd.,
Having its Registered Office at G-16,
Hira Arcade, Near New Bus Stand,
Pandri, Raipur, Chhatisgarh.
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5. Saraswat Bank,
Mahalaxmi Plaza, R.P.D.Cross,
Khanapur Road, Belgaum-590 006.
Karnataka.
Represented by its General Manager.
6. HDFC Bank,
4830/28A, Opp. District Hospital,
Dr.Ambedkar Road, Belgaum-590 002.
Karnataka.
Represented by its General Manager.
7. Canara Bank,
Shop No.3, Plot No.19,
Ground Floor, City Centre,
Patto Plaza, edc Complex, 403 001,
City: Panaji District: North Goa, Goa.
Represented by its General Manager.
8. Saraswat Bank,
Mushtifund Saunstha Building,
Dr.Dada Vaidya Road, Panjim,
Goa-403 001.
Represented by its General Manager.
9. Corporation Bank,
Karnataka Law Society, Tilakwadi,
Belgaum – Karnataka.
Represented by its General Manager.
10. HDFC Bank,
CTS No.5854, Congress Road,
Tilakwadi, Belgaum,Karnataka.
Represented by its General Manager.
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11.Union Bank of India,
R.P.D.College Compound,
Tilakwadi, Belgaum, Karnataka.
Represented by its General Manager.
12.State Bank of India,
Goaves, Belgaum, Karnataka,
Represented by its General Manager.
13. Allahabad Bank,
Bhagya Nagar, Belgaum, Karnataka,
Represented by its General Manager.
14. Bank of India,
Angol Road, Belgaum – 590 006.
Karnataka.
Represented by its General Manager.
15. IDBI Bank, Pai Restaurant,
At Corner of College & Samadevi Galli,
Belgaum.
Represented by its General Manager.
16. HDFC Bank,
CTS No.5854, Congress Road,
Tilakwadi, Belgaum,
Karnataka.
Represented by its General Manager.
17. ICICI Bank,
Shree Krishna Towers,
#14, Khanapur Road,
RPD Cross, Tilakwadi,
Belgaum – 590 006.
Represented by its General Manager.
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18. HDFC Bank,
Ground Floor, Sesa Ghor,
Patte-403 001, Goa.
Represented by its General Manager.
…. RESPONDENTS.
(By Shri P.H.Gotkhindi,Government Pleader - for R1-R3
Shri Anoop G.Deshapande and G.M.Somakkalavar,
Advocates for R6, R10, R16, R18
Shri Ravi B.Naik, Senior Advocate and K.N.Shukul,
Advocates for R4
Shri Shafi Ahmed B Shaikh, Advocate for R17).
Writ Petition Nos.64479-64485/2012 are filed under
Articles 226 and 227 of the Constitution of India, quashing the
notices issued without jurisdiction by the Special Investigation
Cell, Raipur, Chhattisgarh as per Annexure R-6 on behalf of
Respondent Nos.1 and 2 to Respondent No.5 to 18 Banks
under Sections 91 and 102 of Criminal Procedure Code,1973.
These petitions having been heard and reserved on
06.08.2012 and coming on for ‘Pronouncement of Orders’ this
day, the Court delivered the following:
O R D E R
These petitions are heard and decided together since
certain common issues arise.
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2. In first of these petitions, petitioner no.1, M/s
Coastal Mines and Minerals (Hereinafter referred to as
‘CMM’, for brevity) is a registered partnership firm. Petitioner
no.2, Prasanna V Ghotage (Hereinafter referred to as ‘Ghotage’,
for brevity), is one of the partners of CMM. Petitioner no.3
has no connection with CMM. He is the General Manager of a
proprietory concern, of which, Ghotage is the proprietor.
Petitioner no.4 claims that he is not at all associated either with
Petitioner No.1 or 2. Petitioner no.5 is said to be the Export
Manager of a proprietory concern of Ghotage. Petitioner no.6
is said to be the Chief Executive Officer of M/s Hira Steels
Limited (Hereinafter referred to as ‘HSL’, for brevity) of
Raipur, Chhattisgarh. Petitioner no.7 also claims no association
with Petitioner no.1. Petitioner no.8 also claims to have no
connection with petitioner no.1. But, all the petitioners have
joined in filing this petition in the light of a First Information
Report in FIR 179/2012 filed by HSL at Raipur, Chhattisgarh
State, in which they have been named. The present writ
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petitions, therefore, are filed questioning the said First
Information Report and to quash the same, apart from
consequential reliefs.
3. The background to the case is as follows:-
CMM is said to have entered into a contract dated
7.5.2011, with HSL agreeing to sell iron ore fines. The quantity
was 110000 Metric Tonnes. It was agreed that the iron content,
or the Fe content, would be a minimum of 51.50%. HSL had
applied for a ‘No Objection Certificate’ with the Directorate of
Mines and Geology of the State Government of Goa, dated
7.6.2011, to export 41253 Wet Metric Tonnes of processed iron
ore fines to China on the ship M.V.Everbright as a part of the
contract, and had also submitted challans towards payment of
royalty in respect of the above quantity of 41253 Wet Metric
Tonnes to the State Government of Goa. A ‘No Objection
Certificate’ was accordingly issued by the competent officer
dated 8.6.2011.
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It is stated that on 1.7.2011, HSL had in turn entered into
a contract of sale with one Neeraj Sreevastava, of M/s
N.R.Resources (Hereinafter referred to as ‘NRR’, for brevity)
agreeing to sell 41253 Wet Metric Tonnes of iron ore fines.
The bill of lading in respect of the cargo on M.V.Everbright
was also endorsed by HSL in favour NRR and all the
documents for negotiation of a Letter of Credit in respect of the
consignment was submitted to Canara Bank, New Delhi by
NRR. It is claimed that the said consignment was, in turn, sold
by Neeraj Srivatsava to M/s China Railways Materials Import
and Export Private Limited (Hereinafter referred to as ‘China
Railways’, for brevity). This is evidenced by a Letter of Credit
opened by China Railways on Neeraj Srivastava, who was
shown as the beneficiary. The money was duly received by
M/s Canara Bank corresponding to the said Letter of credit.
HSL, however, had raised an objection to the said sale by
Neeraj Sreevatsava in favour of China Railways and had
lodged its protest with Canara Bank, calling upon the bank not
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to release payment under the Letter of Credit, while claiming
that the sale was illegal and filed a First Information Report in
FIR 9/2012 against NRR at Raipur, Chhattisgarh, while
alleging that Neeraj Srivastava was its agent but was not
authorised to sell the iron ore fines at the rate at which it was
sold to China Railways. Consequent upon the FIR, the Civil
Lines Police Station, Raipur, Chhattisgarh issued notices under
Section 91 of the Code of Criminal Procedure, 1973
(Hereinafter referred to as the ‘Cr.PC’, for brevity) to all the
bankers of NRR, freezing the accounts of NRR. Neeraj
Sreevastava was therefore, constrained to approach the High
Court of Delhi, challenging the action of the Raipur Police and
the said High Court is said to have issued notices. It is claimed
that a First Information Report, in FIR 179/2012, is also
similarly lodged against the petitioners in respect of the same
transaction.
It is further stated that Neeraj Srivatsa had also
approached the High Court of Chhattisgarh at Bilaspur,
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questioning FIR 9/2012, as being without jurisdiction and the
matter being purely of a civil nature and has obtained an
interim order against HSL as well as the State of Chhattisgarh
and the Inspector-in-charge of the Civil Line Police Station,
Special Investigation Cell. It is thereafter that HSL has chosen
to file a complaint against petitioner no.2 and others in FIR
179/2012 alleging offences punishable under Sections 420, 468,
471, 120-B and Section 34 of the Indian Penal Code, 1860
(Hereinafter referred to as the ‘IPC', for brevity).
It is stated that pursuant to the filing of FIR 179/2012,
the Chhattisgarh Police had placed several banks, which are
named as respondents 5 to 44, on notice, under Sections 91 and
102 of the Cr.PC, freezing the bank accounts of petitioner no.2,
which are his personal accounts, as well as accounts relating to
CMM.
4. Shri Anoop George Chaudhari, Senior Advocate
appearing for the Counsel for the petitioners, contends that FIR
21
179/2012 is clearly mischievous and an abuse of process, as it
relates to the very consignment namely, 41,253 Metric Tonnes
of iron ore fines carried on M.V.Everbright, which was also the
subject matter of FIR 9/2012 filed against Neeraj Sreevastava
before the very same Police Station. It is contended that the
registration of FIR 179/2012 and the consequent investigation
by respondent no.2 is illegal and without jurisdiction as no
cause of action has accrued at Raipur. Admittedly, the contract
of sale was executed at Goa. The goods were despatched from
Goa. Further, the contract was clearly a commercial transaction
and the dispute sought to be raised, namely, that the contract
entered into by CMM with HSL contemplated supply of iron
ore fines with a minimum Fe content of a particular grade
whereas the ore supplied was of very poor quality and that the
CMM had managed to sell poor quality ore as being of
contractual specifications, after having received huge
advances, on the basis of a false and forged Quality Analysis
Certificate and therefore, had committed offences as alleged.
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The learned Senior Advocate would submit that these
allegations are, at best, of an alleged breach of contract and
cannot be construed as criminal offences. It is contended that
just as in FIR 9/2012, the intention of the complainant is to
bring relentless pressure on petitioner nos.1 and 2 by freezing
all the bank accounts, including the personal accounts of
petitioner no.2, with the active connivance of the Raipur Police.
The action of the Police, in turn, by issuing notices to the
several bankers under Section 91 and 102 of the Cr.P.C, is
contrary to the scope of those sections and the same being
exercised by the Police, without even the supervision of a court,
indicates an unholy nexus between HSL and the Police, which
has brought financial ruin on petitioners 1 and 2. The primary
requirement in seeking to freeze the bank accounts of
petitioner nos.1 and 2, was to establish a direct nexus between
the accounts frozen and the alleged crime, which is totally
absent. The claim by HSL that a huge advance of Rs.26.50
Crore was paid to CMM, which does not even correspond to the
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quantity that was agreed to be sold, as the said sum exceeds the
contractual rate by more than Rs.2 Crore, is not evidenced by
any document disclosing such payment by HSL and receipt by
CMM or petitioner no.2. It is also evident that the Raipur
Police had no jurisdiction to direct seizure of such bank
accounts outside their jurisdiction.
5. The learned Senior Advocate, who also appears for
the Counsel for the petitioners in the second of these writ
petitions, would submit that apart from the personal bank
accounts of petitioner no.2 and the bank accounts of CMM, the
bank accounts of various other entities, in which petitioner
no.2 is even remotely involved, have also been frozen, which
is, on the face of it, further evidence of the illegal manner in
which the Raipur Police have acted on the very same First
Information Report lodged by HSL and as there is no basis for
seeking such seizure of the bank accounts, when there is no
contractual relationship between HSL and those entities, the
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entire action is clearly illegal and requires to be quashed on
that ground alone.
6. On the other hand, the learned Senior Advocate Shri
Ravi B Naik, appearing for the Counsel for respondent no.4, in
support of statement of objections filed, would contend that the
petitioners have invoked the writ jurisdiction of this court under
Article 226 of the Constitution of India as well as its inherent
power under Section 482 of the Cr.PC. It is stated that this
court could exercise such jurisdiction within the State of
Karnataka and therefore, the First Information Report, which
has been lodged before the Civil Lines Police Station, Raipur,
Chhattisgarh, sought to be questioned, is beyond the territorial
jurisdiction of this court. It is also contended that no cause of
action has arisen in the State of Karnataka and therefore, it is
also one other ground, on which the petitions have to be
rejected. It is also brought to the attention of this court that
petitioner no.4 had filed a petition under Section 482 of the
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Cr.PC, before the High Court of Goa, to quash FIR 283/2011,
which was lodged by a sister concern of HSL. Notices having
been issued in the said petition, a preliminary objection had
been raised as to the jurisdiction of the High Court to quash the
First Information Report registered at Raipur in Chhattisgarh
State. The High Court of Goa had directed petitioner no.4 to
be present before the court. An application for withdrawal of
the petition was filed by petitioner no.4 and it was specifically
stated that in view of an objection raised as to the jurisdiction of
the Goa High Court, the petitioner would approach the High
Court at Bilaspur, Chhattisgarh State. The learned Senior
Advocate would, therefore, contend that petitioner no.4 had
accepted the jurisdiction of the High Court at Bilaspur insofar
as the First Information Report registered at Raipur is
concerned. By the same token of reasoning, the petitioner
cannot maintain this petition before this court, as it is admitted
by petitioner no.4 that it is the High Court at Bilaspur which
may have jurisdiction to consider the grant of relief sought for
26
by the petitioners. On facts, the learned Senior Advocate would
submit that the petition does not narrate the true and correct
facts. The agreement between respondent no.4 and petitioner
no.1 dated 7.5.2011 was for the sale of 1,10,000 Wet Metric
Tonnes of iron ore by petitioner no.1. It was agreed that the Fe
content would be not less than 52% of the said iron ore fines.
In terms of the contract, HSL had paid an amount of Rs.26.50
Crore as advance. This amount was transferred to the bank
account of petitioner no.1. However, petitioner no.1 had
supplied only 41,253 Wet Metric Tonnes of iron ore on the
cargo ship M.V.Everbright. A Quality Certificate dated
28.6.2011 was issued by M/s Geo Chem Laboratory Private
Limited (hereinafter referred to as the ‘Geo Chem’, for brevity)
Goa, certifying that the ore supplied by petitioner no.1 had an
Fe content of 53.69%. However, when the goods reached
China and on an analysis, it was found that the Fe content of
the iron ore was only 41.21%. A copy of such certificate by a
Chinese Governmental Agency is produced. Therefore, it is
27
contended that the petitioners, in connivance with the
employees of Geo-Chem, a certifying Laboratory, particularly,
one K.J.Rao, had defrauded HSL, of huge sums of money and
the consequent losses amount to about Rs.52 Crore.
It is in that background that a written complaint was
filed with the Senior Superintendent of Police, Raipur,
Chhattisgarh and a First Information Report was registered.
The learned Senior Advocate Shri Naik, would also point out
that the main controversy is as regards the quality of the iron
ore and not the quantity and nowhere in the petition have the
petitioners indicated that the iron ore supplied was as per the
contractual specifications nor has the Quality Certificate, issued
by the Chinese Agency, been disputed.
It is further contended that the petitioners claimed that
the offence registered in FIR 283/2011 filed by a sister concern
of HSL, namely, Shivnath Minerals and Chemicals
(Hereinafter referred to as the ‘SMC’ for brevity), is in no way
connected with the First Information Report filed against
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petitioner no.1. The learned Senior Advocate Shri Naik, would
submit that this is a false and incorrect statement. Petitioners 2
and 4 were arraigned as the accused in that case as they had
undertaken to ensure the quality of iron ore supplied under a
contract, which was the subject matter of that complaint, which
is pending investigation. Insofar as the contention that HSL
has duplicated its complaint in FIR 57/2012 brought against
one Neeraj Sreevastava and the First Information Report filed
against the present petitioners and that there are contradictory
claims in the two First Information Reports, firstly, that the iron
ore fines, which is the subject matter of controversy, had been
sold on the high seas to Neeraj Sreevastava when the goods
were on board the ship M.V.Everbright and destined for China
from Goa and at the same time, in FIR 179/2012 against the
petitioners, it has been stated that the iron ore is lying at a
Chinese port, is explained by the learned Senior Advocate by
the circumstance that HSL had entered into a contract of sale
with Neeraj Sreevastava on 16.1.2012 and it is in respect of
29
offences committed by the said Sreevastava under that contract,
that FIR 57/2012 was registered on a complaint dated
13.2.2012. In the background that Sreevastava had sold away
iron ore in contravention of the terms of the contract between
HSL and himself and it was the allegation of HSL that the iron
ore had been sold to a Chinese buyer. As on 6.1.2012, the iron
ore was in fact lying idle at China when the subsequent First
Information report, namely, FIR 57/2012 was filed and the iron
ore had been fraudulently sold by Sreevastava, when he was
not specifically authorized to do so. Therefore, it is contended
that the two complaints are in respect of two independent
offences committed by the petitioners on the one hand and
Sreevastava on the other. The two complaints are, therefore,
perfectly maintainable.
It is contended that the petition also draws inaccurate and
incomplete reference to three First information Reports. It is
true that there are three First Information Reports registered
with the Raipur Police Station, namely, FIR 283/2011, FIR
30
179/2012 and FIR 57/2012. FIR 283/2011 is registered on
29.8.2011 in respect of an agreement dated 2.6.2011 between
one Dream Logistics Company (Hereinafter referred to as the
‘DLC’ for brevity) and SMC. Under the agreement, DLC
was to supply SMC 56,450 Dry Metric Tonnes of iron ore fines.
The agreement required an Fe content at 52% and the goods
were supplied on the basis of a Quality Certificate issued by
one Intertek India Private Limited (Hereinafter referred to as
the ‘Intertek’, for brevity), which had duly certified that the Fe
content was 52%. However, when the iron ore reached China, a
Governmental Agency of China had certified that the Fe
content was only 42.02%. Petitioners 2 and 4 were also
involved in that contract as they had guaranteed the quality of
iron ore supplied to SMC. Therefore, FIR 283/2011 is filed
not only against the directors of DLC and Intertek, but also
petitioners 2 and 4.
FIR 57/2012 and FIR 179/2012 are filed in the
circumstances stated hereinabove. Hence, there is no
31
overlapping or duplication of the complaints. They pertain to
three distinct transactions though involving the petitioners
amongst others. The primary complaint of the petitioners that
pursuant to the investigation initiated by the competent Police,
the bank accounts of the petitioners have been frozen and that
the Police did not have the authority to do so and that it is being
done without the supervision of the court, is an incorrect
statement. According to HSL, it has been reliably learnt that a
report under Section 102 of the Cr.PC, has been filed with the
concerned Magistrate in respect of such freezing of the
accounts. Since petitioners 1 and 2 have received huge sums of
money from HSL and the amounts have been promptly
disbursed to various bank accounts of concerns, in which,
petitioner no.2 has a financial and controlling interest and the
fact that there are innumerable bank accounts, either
individually or in association with others by petitioner no.2,
requires the same to be salvaged. For otherwise, the illegal
gains obtained by petitioner no.2 by his acts of fraud, would be
32
irretrievably secreted. Incidentally, petitioner no.2 is said to
have approached the apex court seeking transfer of the case to
a court in the State of Goa, which was dismissed, thereby
affirming the fact that the Police authorities at Raipur had the
requisite jurisdiction to investigate the case as a part of the
cause of action did arise at Raipur. The incidental submission
that the transaction is purely a commercial transaction and the
dispute is of a civil nature etc., is also not significant, as the
transaction, though of a commercial nature, has given rise to
both civil and criminal liability. Hence, the exchange of notices
regarding arbitration proceedings is not material.
It is also brought to the attention of this court that insofar
as FIR 283/2011 where petitioner no.2 is arraigned as an
accused, a non-bailable warrant has been issued, which to this
day, has not been recalled and therefore, the petitioner, who has
not chosen to abide by the law, should not be assisted by this
court by considering the present petitions.
33
7. Respondents 1 and 2 have also filed statement of
objections.
8. The learned Government Pleader Shri Gotkhindi P.H.
appearing for these respondents reiterates the preliminary
objections raised by respondent no.4 as to the maintainability of
the petition. Even on facts, the assertions on behalf of
respondent no.4 are endorsed. It is emphasized that there is no
basis for an allegation of an unholy nexus by the Raipur Police
with respondent no. 4. It is highlighted that the police are
required in law to investigate any and every offence that may be
registered with them and the bona fide performance of its
statutory duties cannot be characterized as being illegal.
The credibility of petitioner No. 2 is questioned in having
named petitioner no.3 as one of the petitioners. The learned
Government Pleader draws attention to an affidavit of the said
petitioner no. 3, who has disowned the present petition and has
34
declared that he has no knowledge of the same having been
filed.
It is contended that in so far as the freezing of the bank
accounts are concerned, it is claimed that it has been done in
accordance with law. It is claimed that petitioner no.1 has
received crores of rupees from respondent no.4, as said to be
evidenced by Annexure- R.7 to the Statement of objections. It
is further stated that such action was necessary to prevent the
said money from being siphoned through various bank accounts
leaving no trace of the same. It is also stated that the
apprehension of respondent no.4 of such mischief is found to
have been confirmed by the conduct of petitioner no.2.
Attention is drawn to Annexure-R.8 to indicate the trail of
disbursements of such funds from the accounts of petitioners 1
and 2 to various accounts. It is asserted that it is only because
a direct nexus is discernible between the offence complained of
and the bank accounts that such action has been undertaken. It
is also contended that reports in this regard have been submitted
35
to the competent court at Raipur, dated 3.7.2012, copies of
which are produced at Annexure-R.9.
9. By way of reply, the Senior Advocate Shri Chaudhari
would contend that in so far as the matters being without the
jurisdiction of this court is concerned, having regard to the
circumstance that the bank accounts, both current and savings
accounts, of the petitioners 1 and 2 held in accounts with banks
in and around Belgaum, have been frozen with out any prima
facie material of the alleged amount of Rs. 26.50 crore having
been paid in advance to petitioner no.1, the funds available in
the accounts of the Petitioners 1 & 2 cannot even be claimed as
the proceeds received from HSL. A perusal of Annexures-R.7
and R.8 does not disclose the receipt of Rs.26.50 crore from
HSL at all. It is hence futile to draw attention to transactions
carried on by the petitioners in their usual course of business as
surreptitious and fraudulent money transfers to the detriment of
HSL. It is hence asserted that the action of the Raipur police
36
being ex-facie illegal and the effect being felt in Karnataka by
petitioner no.1 and 2 are entitled to invoke the jurisdiction of
this court. This issue, it is contended, is no longer res integra.
Majithya’s case (2000 (7) SCC 640 ) is cited in support of the
proposition.
It is contended that in so far as the reference to Petitioner
no.4 having conceded before the High Court at Goa , as to the
High Court at Bilaspur having jurisdiction in respect of the
proceedings that were under challenge therein is with reference
to FIR 283/2011 and not FIR 179/2012 with which the present
petitioners are concerned.
In so far as the affidavit of petitioner no.3 disowning the
petition is concerned, the learned Senior Advocate would
request this court to initiate criminal contempt proceedings
against the concerned respondents. It is alleged that the
affidavit was obtained under duress and draws attention to an
affidavit filed by petitioner no.3 now before this court dated
27.7.2012.
37
It is contended that there is no basis for the claim that
petitioner has been paid an advance of Rs.26.50 crore under the
contract in question. Only a sum of Rs.7 crore has been paid,
which is far below the value of ore already supplied. It is
reiterated that it is HSL which has committed a breach of
contract in respect of which the petitioner no.1 had already
issued a notice invoking the arbitration clause in terms of the
contract.
It is contended that the alleged compliance with Section
102 Cr.PC by the Raipur police as per Annexure-R.9 is not in
accordance with law. Section 102 (3) Cr. PC requires the
police to forthwith report the seizure of property to the
Magistrate having jurisdiction. In this case the property
concerned are bank accounts of Petitioner no.2 in Belgaum,
Goa and Bangalore. The so called compliance before the Court
in Raipur, Chattisgarh on 3.7.2011 was hence, neither done
forthwith nor within the territorial jurisdiction of the Court.
38
10. In the second of these petitions, the petitioners are
seven in number, five of whom are private limited companies
and two are partnership firms. It is their case that the two
partnership firms are represented by Ghotage. It is the case of
the petitioners that in respect of the very contract between
CMM and HSL, pursuant to FIR 179/2012 before the Raipur
Police, the said Police have proceeded to initiate the
proceedings insofar as these petitioners are concerned under
Sections 91 and 102 of the Cr.PC. It is contended that the
petitioners are independent legal entities and therefore, have
no connection with the commercial transaction between HSL
and CMM and hence, the memo issued by the Raipur Police to
the various banks, in which the petitioners hold accounts to
freeze those accounts is wholly illegal and without jurisdiction.
The petitioners have furnished the details of the accounts and
the banks in which each of the petitioners are operating the
accounts at Annexure-C to the writ petition. The mere fact that
Ghotage, as an individual, may have an interest in these
39
companies or firms does not justify the Raipur Police in taking
an extreme step of freezing the bank accounts of the
petitioners, unless a direct nexus is established insofar as the
commission of the offence alleged and the monies of the
petitioners held in their bank accounts is established. The claim
of the Raipur Police that the investigations have revealed that
monies paid by HSL under the contract was on a fraudulent
inducement of an assured supply of iron ore fines as per the
contractual specifications and that such advances paid have
been disbursed by Ghotage in the accounts of the petitioners
etc., is not borne out by any material produced on record. It is
also denied that such action is not justified with reference to
yet another FIR in 283/2011 said to have been initiated by
SMC, with which, the petitioners have no business transaction.
A reference to the same in the notices and memos issued by
the Raipur Police is therefore irrelevant. The petitioners plead
that on account of such illegal action by the Raipur Police, the
business of the petitioners may be brought to a total halt and
40
may result in financial ruin. When the dispute raised by HSL is
purely of a commercial nature and in the absence of any direct
involvement of the petitioners in that transaction, on mere
allegations of monies being routed into the accounts of these
petitioners, such extreme action being taken against the entities,
which are not within the jurisdiction of the criminal courts at
Raipur and which entities however are within the jurisdiction
of this court, warrants the interference of this court in order to
protect the rights of these petitioners.
11. Objections have been filed on behalf of HSL. The
jurisdiction of this court to entertain the writ petition is raised
on the ground that the Raipur Police is not amenable to the
jurisdiction of this court and that the claim of the petitioners
that since the bank accounts held in banks within the
jurisdiction of this court are sought to be frozen, does not
extend such jurisdiction to bank accounts that are outside the
State of Karnataka. While reiterating the particulars of the
41
various contracts and events, as narrated in the first of these
petitions, it is asserted that the action taken by the Police is in
accordance with law and it is reiterated that since Ghotage has
routed the monies received by him by playing fraud on CMM,
the action taken against the petitioners was warranted. In the
face of the admitted circumstance that Ghotage holds an
interest in all the petitioner-entities is sufficient nexus to enable
the Police authorities to have taken action.
The Raipur Police represented by the Government
Pleader has reiterated similar objections.
12. The above narrative was not really necessary in view
of the circumstance that the challenge in the present
proceedings is primarily against the action of the Raipur Police,
who, it is alleged, have in the course of their investigation
pursuant to FIR 179/2012, over-reached their authority in
seeking to freeze the bank accounts of the several petitioners,
not only in the banks within the State of Karnataka, but
42
elsewhere as well. Insofar as the factual matrix and the points
on which the parties are at issue are concerned, are incidental.
Though elaborate arguments have been canvassed on the very
competence of the Raipur Police to have entertained the First
Information Report and to have initiated proceedings as well
as other preliminary objections on various other aspects, such
as the investigation by the Raipur Police in respect of the
dispute being without jurisdiction, on the ground that the
contract between CMM and HSL, for the supply of iron ore
fines dated 7.5.2011, having been entered into at Goa and the
goods in question having been shipped from Goa and that no
cause of action had arisen within the jurisdiction of the State of
Chhattisgarh or that the matter being of a purely civil in nature
as it pertained to an alleged breach of contract and no criminal
offence could be made out on the basis of the averments in the
complaint; nor the primary allegation that a huge advance of
over Rs.26 Crore had been paid to CMM by HSL and in order
to recover the same, the various bank accounts of the several
43
petitioners being frozen, was not even evidenced by any
document of such payment having been made in the first
instance; nor that pursuant to the supply of goods by CMM,
HSL having transacted with one Neeraj Sreevastava of the very
goods and thereby absolving CMM of all liability insofar as the
goods are concerned; nor the controversy as regards the goods
not conforming to the contractual specifications and the alleged
fraud having been committed by the production of a false
Quality Analysis Certificate in respect of the goods by CMM;
nor the circumstance that even if there was an alleged fraud
committed by CMM and Ghotage, it did not justify the
freezing of the bank accounts of other entities, merely on some
remote relationship being found between the several entities
and Ghotage etc., and notwithstanding the elaborate arguments
canvassed by the learned Senior Advocates referred to
hereinabove, this court is all too aware of the limited scope of
inquiry in these proceedings and therefore, would restrict the
consideration of these petitions to certain elementary aspects.
44
The following view of the apex Court in the case of State
of Bihar vs. J.A.C. Saldanha, 1981 SCC 554, is a guideline :-
“25. There is a clear-cut and well demarcated
sphere of activity in the field of crime detection and crime
punishment. Investigation of an offence is the field
exclusively reserved for the executive through the police
department the superintendence over which vests in the
State Government. The executive which is charged with a
duty to keep vigilance over law and order situation is
obliged to prevent crime and if an offence is alleged to
have been committed it is its bounden duty to investigate
into the offence and bring the offender to book. Once it
investigates and finds an offence having been committed it
is its duty to collect evidence for the purpose of proving
the offence. Once that is completed and the investigating
officer submits report to the Court requesting the Court to
take cognizance of the offence under Section 190 of the
Code its duty comes to an end. On a cognizance of the
offence being taken by the Court the police function of
investigation comes to an end subject to the provision
contained in Section 173(8), there commences the
adjudicatory function of the judiciary to determine
whether an offence has been committed and if so, whether
by the person or persons charged with the crime by the
police in its report to the Court, and to award adequate
punishment according to law for the offence proved to the
45
satisfaction of the Court. There is thus a well defined and
well demarcated function in the field of crime detection
and its subsequent adjudication between the police and the
Magistrate. This had been recognised way back in King
Emperor v. Khwaja Nazir Ahmad, AIR 1944 PC 18
where the Privy Council observed as under:
“In India, as has been shown, there is a statutory
right on the part of the police to investigate the
circumstances of an alleged cognizable crime without
requiring any authority from the judicial authorities and it
would, as their Lordships think, be an unfortunate result if
it should be held possible to interfere with those statutory
rights by an exercise of the inherent jurisdiction of the
Court. The functions of the judiciary and the police are
complementary, not overlapping, and the combination of
individual liberty with a due observance of law and order is
only to be obtained by leaving each to exercise its own
function, always, of course, subject to the right of the Court
to intervene in an appropriate case when moved under
Section 491 of the Criminal Procedure Code to give
directions in the nature of habeas corpus. In such a case
as the present, however, the Court’s functions begin when a
charge is preferred before it, and not until then.
26. This view of the Judicial Committee clearly
demarcates the functions of the executive and the judiciary
in the field of detection of crime and its subsequent trial
46
and it would appear that the power of the police to
investigate into a cognizable offence is ordinarily not to be
interfered with by the judiciary.”
Further, having regard to the stage of the proceedings,
the following words of caution, as expressed by the apex court
in the case of State of Bihar vs. P.P.Sharma, 1992 Suppl.(1)
SCC 22, is also kept in view:-
“68. Another crucial question is whether the High
Court, in exercise of its extraordinary jurisdiction under
Article 226 of the Constitution, would interfere and quash
the charge-sheet. The High Court found that the
documents relied on by the respondents/accused were not
denied by the State by filing the counter-affidavit.
Therefore, they must be deemed to have been admitted.
On that premise the High Court found that no prima facie
case was made out on merits and chances of ultimate
conviction is “bleak”. The court is not passive spectator
in the drama of illegalities and injustice. The inherent
power of the court under Article 226 of the Constitution of
India is permitted to be resorted to. When the documents
relied on by the respondents “demonstrate that no prima
facie offence is made out on the face value of those
materials, then the criminal prosecution should not be
allowed to continue and so it should be quashed”, and “in
47
such a situation and circumstances the petitioners who
had got a right under the Constitution for the protection of
their liberty have rightly approached this Court and this
Court in these circumstances has no option but to grant
the relief by quashing the FIR and both the charge-
sheets”. Accordingly it quashed them. If this decision is
upheld, in my considered view startling and disastrous
consequence would ensue. Quashing the charge-sheet
even before cognizance is taken by a criminal court
amounts to “killing a stillborn child”. Till the criminal
court takes cognizance of the offence there is no criminal
proceedings pending. I am not allowing the appeals on
the ground that alternative remedies provided by the Code
as a bar. It may be relevant in an appropriate case. My
view is that entertaining the writ petitions against charge-
sheet and considering the matter on merit in the guise of
prima facie evidence to stand an accused for trial amounts
to pre-trial of a criminal trial under Article 226 or 227
even before the competent Magistrate or the Sessions
Court takes cognizance of the offence. Once the
proceedings are entertained the further proceedings get
stayed. Expeditious trial of a criminal case is the cardinal
rule. Delay feeds injustice to social order and
entertaining writ petitions would encourage to delay the
trial by diverse tricks. It is not to suggest that under no
circumstances a writ petition should be entertained. As
was rightly done by Rajasthan High Court in this case at
the instance of the directors of the company, wisdom lies
48
to keep the hands back and relegate the accused to pursue
the remedy under the Code. In several cases this Court
quashed the criminal proceedings on the sole ground of
delay. In a case FIR filed in 1954 for violation of the
provisions of the Customs Act and Foreign Exchange
Regulation Act was challenged in the Allahabad High
Court. It was deliberately kept pending in the High Court
and in this Court till 1990. The accusation was violation
of law by named persons in the name of non-existing firm.
The FIR was quashed in the year 1990 by another Bench
of which I was a member solely on the ground of delay.
He achieved his object of avoiding punishment. This
would show that an accused with a view to delay the trial,
resorts to writ proceedings, raises several contentions
including one on merit as vehemently persisted by Sri Jain
to consider this case on merits and have the proceedings
kept pending. The result would be that the people would
lose faith in the efficacy of rule of law. Documents relied
on by the respondents are subject to proof at the trial and
relevancy. If proved to be true and relevant then they may
serve as a defence for the respondents at the trial. The
State quite legitimately and in my view rightly did not
choose to file the counter-affidavit denying or
contradicting the version of the respondents, in those
documents. The commission of offence cannot be decided
on affidavit evidence. The High Court has taken short
course “in annihilating the still born prosecution” by
going into the merits on the plea of proof of prima facie
49
case and adverted to those facts and gave findings on
merits. Grossest error of law has been committed by the
High Court in making pre-trial of a criminal case in
exercising its extraordinary jurisdiction under Article 226.
After the charge-sheet was filed, the FIR no longer
remains sheet-anchor. The charge-sheet and the evidence
placed in support thereof form the base to take or refuse to
take cognizance by the competent court. It is not the case
that no offence has been made out in the charge-sheets
and the first information report. It is, therefore, not
necessary to consider all the decisions dealing with the
scope of the power of the High Court either under Section
482 CrPC or Article 226 of the Constitution to quash the
first information report.”
Therefore, this court does not choose to address the rival
contentions, on factual aspects of the matter. It is evident that
this court has entertained the present petitions on the primary
grievance of the petitioners that the Raipur Police have
compelled the several banks, where the petitioners hold bank
accounts within the jurisdiction of this court, to freeze the
operation of the accounts. The entertainment of the writ
petitions has been questioned by the respondents on the
50
question of jurisdiction and it is particularly sought to be
canvassed that even according to the petitioners, the contractual
relationship was created in the State of Goa and the transaction
has taken place in the State of Goa and that the cause of action,
if any, would be only in that State and therefore, the mere fact
that there are banks, in which accounts are held by the
petitioners within the jurisdiction of this court, would hardly
afford jurisdiction in respect of the transaction or in respect of
the proceedings initiated by the Raipur Police, who are outside
the jurisdiction of this court. This aspect of the matter is no
longer res integra, since Clause (2) of Article 226 of the
Constitution of India clearly would afford jurisdiction to this
court. If it is an admitted fact that the bank accounts of the
petitioners held by them in banks within the jurisdiction of this
court are involved, it could then be said that the cause of action
for the petitioners has arisen partly within the jurisdiction of
this court. This is affirmed in several decisions of the apex
Court.
51
The next question then would be whether this court can
exercise its power in the ends of justice and to prevent abuse
of power by the Raipur Police in granting relief, even partially
in favour of the petitioners. This would require this court to
address the controversy whether there is a direct nexus
established insofar as the alleged advances paid by HSL to
CMM and whether the said advances were received by CMM
and Ghotage and the same are sought to be secreted by
disbursing such advance amounts in the various bank accounts
that are sought to be frozen. It is not in dispute that the Police
are yet to submit a final report to the jurisdictional court and
even if it can be held by this court that the Raipur Police have
over-reached their authority and are actively conniving with
HSL, in proceeding against the several petitioners, without
any semblance of a relationship being established as between
the several petitioners and CMM or Ghotage and the
transactions concerned, it would be premature for this court to
adjudicate on the factual aspects of the matter.
52
Having regard to the several disputed issues between the
parties and the transactions as well as the parties being spread
over several States and the proceedings having been initiated
before the Raipur Police in Chhattisgarh State and if those
proceedings are the main concern, when a part of the cause of
action that affords jurisdiction to this court, being only a fall
out of the said proceedings, this court will have to remind
itself that a partial cause of action arising within the territorial
jurisdiction of this court cannot be considered to be a
determinative factor compelling it to decide the issues on merits
and therefore, on the doctrine of forum conveniens, (See:
Kusum Ingots and Alloys Limited vs. Union of India,(2004)6
SCC 254; Bhagat Singh Bugga vs. Dewan Jagbir Sawhney,
AIR 1941 Cal.670; Madanlal Jalan vs. Madanlal, AIR 1949
Cal.495; Bharat Coking Coal Limited vs. Jharia Talkies and
Cold Storage (P) Limited, 1997 CWN 122; S.S.Jain and
Company vs. Union of India, (1994)1 CHN 445, and New
Horizons Limited vs. Union of India, AIR 1994 Del.126.), it is
53
more appropriate for the petitioners to invoke the jurisdiction
of such other High Court, which would be competent to address
all aspects of the matter, if at all, vis-à-vis the Raipur Police and
its actions, given the nascent stage of the pending proceedings.
Consequently, both these petitions are dismissed. The
interim orders granted earlier stand dissolved.
Sd/-
JUDGE
nv