TaxTMI 
TaxTMI 
2013 (6) TMI 147
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....Director on the Boards of various renowned companies including ORE Holdings Limited (in short, "ORE"), a Fairfax Group company, based in Mauritius, and has to travel to India on business commitments. The said holding company, ORE on 30th January, 2004 entered into a Joint Venture Agreement (JVA) with CG Holdings Private Limited (respondent No. 1 - K.C. Palanisamy's company) and N. Athappan (a Singapore citizen) for constructing and developing a hotel property, a shopping complex and an IT Park of the properties owned by Cherraan Properties Limited (CPL) and Vasantha Mills Limited (VML) (respondent No.1's companies). ORE invested Rs.75 crores and got 45% in Cheran Enterprises Private Limited (CEPL). N. Athappan invested Rs. 4 crores and got 10% in CEPL. It is alleged that as CPL and VML have immovable assets, respondent No. 1 transferred shares of CPL and VML to CEPL instead of bringing money and got 45% share holding in CEPL. Respondent No. 1 is alleged to have swindled the said Rs. 75 crores that was deposited in the bank account contrary to the JVA and transferred the immovable assets of CPL and VML, subsidiaries of CEPL. Thereupon, ORE filed Company Petition No. 76 of 2005 befor....
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.... and in the meantime, operation of the impugned agreements is suspended, to expedite and ensure due completion of the modalities of exit by ORE and Athappan, thereby, bringing to an end the acts complained of in the present proceedings. CEPL shall ensure necessary statutory compliances till the whole process, in accordance with the aforesaid directions, is properly completed. The parties are at liberty to apply in the event of any difficulty in implementation of the smooth exist of ORE and Athappan from CEPL." 4. Cross appeals were filed by the parties before the High Court of Judicature at Madras and the High Court vide order dated 5th August, 2011 confirmed the order dated 13th August, 2008 passed by the CLB, in the following terms: "54. On analysis of various aspects, Company Law Board concluded that it was no longer possible for the parties to carry out joint venture business of CEPL as per the terms of JVA. Only to have smooth exit of ORE and Athappan, the Company Law Board passed the order directing CEPL to repay Rs. 75 Crores and Rs. 4 Crores invested by ORE Holdings and Athappan respectively. By perusal of the order of Company Law Board, in ou....
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....to invoke the arbitration of the dispute by filing of criminal complaints. When a party deliberately chooses not to adopt a particular course of action, the arbitration agreement becomes inoperative and as the parties have waived or abandoned the arbitration clause, by invoking the jurisdiction of Civil Court, the doctrine of wavier applies. The appellants had the option to go before ICC even in 2005 but the appellants chose to file C.P. No.65 of 2005 and also stoutly defended C.P. No.76 of 2005 filed by ORE Holdings. Even in C.P. No.76 of 2005, the appellants have not sought for reference to arbitration. By agitating the matter before the Company law Board for nearly two years, and filing the Civil Suit in O.S. No.90 of 2007 before District Munsif's Court, Kangeyam, by their conduct the appellants must be deemed to have given a go bye to the arbitration clause. 113. The parties have been engaged in pitched battle before the Company Law Board and orders were passed by the Company Law Board on 13.8.2008. When the matter was pending before the Company Law Board, the Company Law Board has passed interim orders at various stages. The learned counsel for plai....
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.... of foreign origin, as per FEMA, cannot own immovable property in India. Compliance of FEMA or other applicable regulations cannot be bypassed. By the order dated 3.8.2009, Company Law Board modified its earlier order directing VML to execute the sale deed conveying immovable properties of 17.15 acres to the nominee of ORE and thereby modified its earlier order. The Order of the Company Law Board modifying its earlier order directing VML to convey the properties to 'nominee of ORE' is to be modified to the effect that any such conveyance should be subject to applicable laws and regulations and with required approval/permission to be obtained by ORE from the competent authorities. The Order of the Company Law Board in C.A. No.155 of 2008 is to be modified to that extent. 146. .... Company Appeal Nos. 21 and 29 of 2009 preferred by ORE and Company Appeals Nos. 25 and 26 of 2009 preferred by N. Athappan and R. Athappan are allowed. Company appeal No.27 of 2009 is disposed of modifying the order of Company Law Board dated 3.8.2009 in C.A. No.155 of 2008 to the effect that the conveyance of immovable properties to nominee of ORE is subject to all applicable l....
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....bsp; ** ** ..... On the one hand the accused had miserably failed to organize the funds even after the complainant had parted with the ownership rights over valuable properties held by him through VML and CPL and on the other hand they defrauded and cheated the complainant by not organizing the promised funds, upon the receipt of which alone, the complainant would be able to commence the projects worth thousand of crores. .... From the above, it is therefore evident that the consideration of entering into the JV agreement was the promise and assurance that the accused 2 to 6 shall also arrange for a loan of Rs. 300 crores in addition to the share investment of Rs. 75 crores as stipulated under the JV agreement. ** ** ** Thus the accused have induced the complainant to enter into an agreement under the guise of....
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....documents were filed to show that the shares of Rs. 10/- face value of the Cheran Properties were sold in the market for Rs.60/- and the shares of Rs.10/- face value of the Vasanthi Mills were sold at Rs.105/-. It is not believable that the shares of Rs. 10/- face value was transferred to the same value of Nandakumar and paid about Rs. 22 crores as commission, as the complainant himself has admitted in the complaint that some of the respondents and the complainant have started a Joint Venture Company. The memorandum of understanding/Joint venture agreement is not submitted for the perusal of the court. In the memorandum of understanding the details to the investment of each of the parties, the shares allotted to each of them, the relief to the parties when the conditions are violated, and the court which has jurisdiction to entertain such matter. The failure to file the memorandum of understanding in the court, and the failure to give the reasons for not filing the same is not acceptable. 8. It is clearly seen from the deposition of the petitioner and the complaint that the respondents have arranged for about 17 million American Dollars through a firm Od....
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....g the respondents as accused the court considers that it cannot be accepted. 13. On world level, the foreign investments made in each country enhance the economy and it is a day to day commercial activities. The petitioner and the respondents and some others, with an intention to establish a joint venture company having done so, have to take steps for the developmental activities, and one party should not, with intention to wreak vengeance against the other should not, term them as accused and approach the court, and this court cannot accept it. Because, the petitioner has not handed over any property to the respondents under section 406 IPC. Hence there is no ingredient for breach of trust. In the circumstances that the respondents have arranged for 17 million American Dollars, that Chandran Ratnaswamy himself has agreed to the Rs.78 crores case in the Hon'ble High Court, Delhi that the petitioner has not mentioned in the complaint that date, time and place where he was cheated, that like wise, the Respondent cheated the petitioner and thereby he sustained loss, and that there are no ingredients for sections 420, 467 read with 420 are found in the compl....
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....ition, if any, said to be pending on the file of the Judicial Magistrate, Kangayem. It is alleged that no protest petition was pending on that day. 10. Though in different context, respondent No.1, K.C. Palanisamy, filed three writ petitions against the State of Tamil Nadu, Superintendent of Police, Economic Offences Wing, Chennai, Director General of Police, State of Tamil Nadu, Union of India, Central Bureau of Investigation and Reserve Bank of India, in which respondent No.1 prayed for issuance of writ of mandamus directing the respondents in writ petitions for investigation as also for transfer of investigation and FIR making allegations against another Company, DAIL. In the said writ petitions, the contention of the writ petitioner was that he was the resident of Coimbatore and former Member of Legislative Assembly of the State of Tamil Nadu and Managing Director of the Company viz. CEPL. The said Company was formed for the purpose of sharing a Joint Venture between the CG Holdings Private Limited, ORE Holdings Limited, Mauritius and one N. Athappan. As part of the Joint Venture business CEPL looked for acquiring a Telecom Company called DAIL which was a Delhi based Company....
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....ling such complaints and he himself has not obeyed the order passed by the Delhi High Court in the application for winding up and asking him to refund the amount siphoned off by him which was obtained as a loan by DAIL. Parties who come to court must come with clean hands. Not only the petitioner has come to this Court with unclean hands, but he himself being an accused in several cases had also suppressed the entire proceedings of the Delhi High Court including the order directing the company to retransfer the money siphoned off from DAIL. ** ** ** 31. In the present case, the petitioner has filed series of Crl.Ops including the prayer which has been made in the writ petitions and they were negatived by this Court more than once. All that this Court held was that investigation should be conducted by the State Police and a report should be filed expeditiously and that has been done in this case as noted in the counter affidavit filed by the second respondent. &nb....
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....2, the Dy. Superintendent of Police filed a report stating that he searched for the accused in Chennai and Mumbai but could not ascertain their whereabouts and accordingly prayed for issuance of Non-Bailable Warrants (NBWs) which were issued by the Judicial Magistrate, Erode on 27th September, 2012. Based upon the NBWs, the Superintendent of Police issued a Look-Out Circular on 9th January, 2013 against the appellant. Unaware of all this, the appellant landed in India and was detained by the immigration authorities. He filed a writ petition being W.P. No. 1764 of 2013 and on 22nd January, 2013 the High Court passed an interim order restraining appellant's detention and directed to post the writ petition on 29th January, 2013. SLP filed against this order was disposed of on 24th January, 2013 observing that the High Court had itself posted the matter on 29th January, 2013. On 29th January, 2013, the High Court directed the appellant to surrender before the trial court and pray for recall of NBWs vide order passed in Criminal O.P. No. 2283 of 2013 filed by him for quashing the chargesheet i.e. CC 162 of 2012. Crl.M.P. No. 3 of 2013 was also filed in Criminal O.P. No. 2283 of 2013 all....
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....Erode and the alleged Look Out Notice dated 9th January, 2013 issued by the Superintendent of Police and consequently from in any manner restraining/restricting the petitioner's entry into or exit out of India. Similar writ petition being W.P. No. 2740 of 2013 was also filed by the appellant - Chandran Ratnaswami who additionally prayed for directions to DSP, SP, MHA and respondent No. 1 herein K.C. Palanisamy to jointly and severally pay compensation of Rs. 10 crores to him for his illegal detention on 22nd January, 2013. 16. On 26th February, 2013, the High Court again directed the appellant to appear before the trial court by passing the following order in W.P. Nos. 2739 & 2740 of 2013 and Criminal O.P. Nos. 2166, 2282 and 2283 of 2013: "10. Accordingly, Mr. Chandran Ratnaswami the accused should appear before the learned Judicial Magistrate, where CC No. 162/2012 is pending, within a period of two weeks from today to comply with the following: (i) he must file an affidavit of undertaking before the court that he would not evade the due process of law and ensure his appearance as and when r....
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...., 2013 setting aside the order dated 14th March, 2013 passed by the Single Judge and observing: "12. From the above narrated facts it is evident that the first respondent has not filed bail application while surrendering himself before the Judicial Magistrate No.III, Erode, for recalling the Non-bailable Warrant and the fact remains, till date he has not obtained any order of anticipatory bail/bail. 13. The appellant challenged the interim order dated 26.2.2013 passed in Crl. O.P. No.2166, 2282 and 2283 of 2013 before the Hon'ble Supreme Court in SLP (C ) Nos. 1924-1926 of 2013. Accused No.2 in the said C.C. No.162 of 2012 viz. Paul Rivert filed SLP (Crl) No.1947-1948 of 2013 and prayed to quash the proceedings pending before the Judicial Magistrate Court No.III, Erode and also prayed for an interim order to dispense with hi9s personal appearance before the Judicial Magistrate Court No.III, Erode in connection with C.C. No.162 of 2012. The Hon'ble Supreme Court refused to pass any interim order in the applications filed by the appellant herein. 14. Insofar as the applications filed by Paul Rivert (A....
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....earned single Judge dated 14.3.2013 is to be implemented immediately, it may be difficult to secure the presence of the first respondent in the criminal case. ** ** ** 22. On the above said background and in the light of the decision cited supra, we are of the considered view that the order passed by the learned single Judge in M.P. No.2 of 2013 in W.P. No.2740 of 2013 dated 14.3.2013 is liable to be set aside, and accordingly set aside. The writ appeal is allowed. Consequently, the first respondent is entitled to get refund of the amount deposited by him on 15.3.2013 pursuant to the interim order of the learned single Judge No costs. Connect M.P. No.1 of 2013 is closed." 20. Hence, this appeal arising out of SLP(C) No. 13120 of 2013 by the appellant - Chandran Ratnaswami. S.L.P.(Crl.) Nos. 3273-3274 of 2013 have also been filed by the same appellant (an accused in Chargesheet CC 162 of 2013) against orders dated 29th January, 2013 and 1st February, 2013 respecti....
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....ndent of Police, who directed reinvestigation in a matter which was finally closed. Learned counsel submitted that the Division Bench failed to note that the entire efforts of the respondent in prosecuting the appellant are serious abuse of the process of the Court. Learned counsel referred the allegations made in the complaint petition and submitted that the whole object of filing those complaints are nothing but to pressurize the appellant and to harass him. Learned counsel then submitted that the whole procedure in the proceedings initiated against the appellant is violative of Article 21 of the Constitution of India. It was contended that the conduct of respondent No.1 is deplorable and the same is contemptuous amounting to deliberate obstruction of the judicial proceedings and an abuse of the process of the Court. Learned counsel lastly contended that the Division Bench has erroneously set aside the order of the learned Single Judge on the ground that the issue was pending in this Court. 24. Mr. Mukul Rohatgi, learned senior counsel appearing in SLP(Crl.) Nos.1947-48 of 2013 after narrating the entire facts in the case and the sequence of events submitted that the continuat....
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....t the appellant and the other Director of CEPL etc. but did not make respondent No. 1 an accused. The Madras High Court quashed this complaint in Criminal O.P. No. 29737 of 2007. 26. Mr. Karthik Sheshadri, learned counsel appearing for the respondent, on the other hand in support of continuance of criminal proceedings, submitted that the respondent - complainant made out a case in the complaint for prosecuting the appellant for cheating and misappropriation of money. With regard to the filing of FIR being No.7 of 2007, learned counsel submitted that immediately after the FIR was lodged, the appellants approached the High Court of Madras and got an order of stay for further investigation in Criminal O.P. No. 12695/2007 and Criminal O.P. No.19384 of 2007 and consequently all further investigation of the crime alleged came to be stayed. Appellants also filed a case for quashing of the FIR before the Madras High Court. Learned counsel vehemently argued that FIR No.7/2007 was never closed at any point of time and, therefore, the direction for the reinvestigation was perfectly justified. Based on the investigation, charge-sheet was filed. According to the learned counsel, the Superint....
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....e indictment to proceed to trial. 30. In Hui Chi-Ming v. The Queen [(1992) 1 AC 34 (PC)], the Privy Council defined the word "abuse of process" as something so unfair and wrong with the prosecution that the court should not allow a prosecutor to proceed with what is, in all other respects, a perfectly supportable case. 31. In the leading case of Bennett v. Horseferry Road Magistrates' Court, [1993] 3 All ER 138, on the application of abuse of process, the court confirms that an abuse of process justifying the stay of prosecution could arise in the following circumstances: (i) where it would be impossible to give the accused a fair trial; or (ii) where it would amount to misuse/manipulation of process because it offends the court's sense of justice and propriety to be asked to try the accused in the circumstances of the particular case. 32. In R. v. Derby Crown Court ex p Brooks, [1985] 80 Cr.App.R. 164, Lord Chief Justice Ormrod stated: "It may be an abuse of process if either (a) the prosecution has manipulated or misused the process of the court so as to deprive the defendant of a protection provided by law or to ta....
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.... which the structure of the prosecution rests and the like would justify the High Court in quashing the proceeding in the interest of justice. The ends of justice are higher than the ends of mere law though justice has got to be administered according to laws made by the legislature. The compelling necessity for making these observations is that without a proper realisation of the object and purpose of the provision which seeks to save the inherent powers of the High Court to do justice, between the State and its subjects, it would be impossible to appreciate the width and contours of that salient jurisdiction." This case has been followed in a large number of subsequent cases of this Court and other courts. 35. In State of Haryana and Others v. Bhajan Lal and Others, 1992 Supp.(1) SCC 335, this Court in the backdrop of interpretation of various relevant provisions of Cr.P.C. under Chapter XIV and of the principles of law enunciated by this Court in a series of decisions relating to the exercise of the extraordinary power under Article 226 of the Constitution of India or the inherent powers under Section 482 Cr.P.C. gave the following categories of cases by way of illustratio....
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....an Goswami and Another v. State of Ut-taranchal and Others, [2007] 12 SCC 1, this Court after considering series of decisions observed: "46. The court must ensure that criminal prosecution is not used as an instrument of harassment or for seeking private vendetta or with an ulterior motive to pressurise the accused. On analysis of the aforementioned cases, we are of the opinion that it is neither possible nor desirable to lay down an inflexible rule that would govern the exercise of inherent jurisdiction. Inherent jurisdiction of the High Courts under Section 482 CrPC though wide has to be exercised sparingly, carefully and with caution and only when it is justified by the tests specifically laid down in the statute itself and in the aforementioned cases. In view of the settled legal position, the impugned judgment cannot be sustained. ** ** ** 50. Civilised countries have recognised that liberty is the most precious of all the human righ....
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....e Code." 41. In the case of State of West Bengal and Others v. Swapan Kumar Guha and Others, AIR 1982 SC 949 while examining the power of a police officer in the field of investigation of a cognizable offence, Chandrachud, C.J. has affirmed the view expressed by Mathew, J. and observed as follows: (at p.958 of AIR) "22. .... There is no such thing like unfettered discretion in the realm of powers defined by statutes and indeed, unlimited discretion in that sphere can become a ruthless destroyer of personal freedom. The power to investigate into cognizable offences must, therefore, be exercised strictly on the condition on which it is granted by the Code. ...." 42. In the case of Uma Shankar Gopalika v. State of Bihar and Another, [2005] 10 SCC 336, this Court has held as under: "6. Now the question to be examined by us is as to whether on the facts disclosed in the petition of complaint any criminal offence whatsoever is made out much less offences under Sections 420/120-B IPC. The only allegation in the complaint petition against the accused persons is that they assured the complainant that when they receive the insuran....
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.... Private Limited (CEPL). Athappan invested Rs. 4 crores and got 10%. 44. Disputes arose between the parties when respondent No.1 alleged to have transferred shares of CPL and VML to CEPL instead of bringing money and got 45% shareholdings in CEPL. Respondent No.1 allegedly swindled the said 75 crores deposited by the appellant Company ORE and transferred the immovable assets of CPL and VML, subsidiaries of CEPL. Consequently, ORE filed Company Petition before the Company Law Board on account of alleged acts of oppression and mismanagement indulged by respondent No.1. The matter before the Company Law Board was hotly contested and finally the Company Law Board by order dated 13th August, 2008 directed respondent No.1, CG Holdings and CEPL to return the investment of appellant Company ORE and Athappan with 8% interest. On payment of money it was directed that respondent K.C. Palanisamy will take control of CEPL and its subsidiaries. Clarification Petition was also disposed of by Company Law Board on 13th August, 2008. 45. Both the parties moved the Madras High Court by filing appeals and those Company Appeals were finally disposed of on 5th August, 2011 and the order passed ....
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....lice, Tiruppur, the criminal case in FIR No.7 of 2007 was directed to be reopened for re-investigation. On this FIR, the Magistrate before whom the criminal case was pending passed various orders which were time to time challenged by the aggrieved party before the High Court and before this Court. Simultaneously, the appellant also filed counter criminal cases against the respondent which were also proceeded and are pending in those criminal courts. 50. In a nutshell, the dispute arising out of Joint Venture Agreement has been fully and finally settled by the Company Law Board and also the High Court and several directions were issued for compliance including the return of the amount by respondent No.1 to the appellant and to become the sole owner of those companies. 51. It is pertinent to mention here that in course of arguments the action of Superintendent of Police was challenged by the learned counsel appearing for the appellant. In order to justify the action of the Superintendent of Police in directing the investigation, Mr. P.S. Narsimhan, learned senior counsel submitted that on the instruction of Inspector General of Police such reinvestigation was directed by the Su....