TaxTMI 
TaxTMI 
2023 (5) TMI 1241
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....nt police in Crime Nos. 39 and 282 of 2019. 2. The crux of the allegation in Crime No. 39 of 2019 is that the defacto complainant borrowed a sum of Rs. 37,00,00,000/- (Rupees Thirty Seven Crores Only) from a company by the name M/s. Quantum Global Securities Limited (hereinafter referred to as 'M/s. Quantum' for the sake of convenience) by pledging Fourteen Lakhs shares of his company M/s. 8K Miles Software Services Limited (hereinafter referred to as 'M/s. 8K Miles' for the sake of convenience); that M/s. Quantum had disbursed Rs. 35,00,00,000/- (Rupees Thirty Five Crores) a loan; that the defacto complainant was asked to transfer another Nine Lakhs shares as the value of the shares had fallen down; that the defacto complainant came to know that the accused transferred Three Lakhs Seventy Four Thousand Five Hundred shares from his Demat Account by forging his signature on the Delivery Instructions Slip; that the accused thereafter transferred Ten Lakhs Twenty Five Thousand shares, by forging his signature and thus cheated the defacto complainant of his shares worth Rs. 98,00,00,000/- (Rupees Ninety Eight Crores only). Similarly the allegation in the Crime No. 282 of 2019 is tha....
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....65, 468, 471 & 120B of IPC. There after the FIR No. 39/2019 was stayed by the Hon'ble High Court in CRL.OP of No. 23607, 15869, 18078, 18075, 30986 of 2019. In these circumstances in the order passed by the Hon'ble High Court in the anticipatory bail petitions given a conclusion that: "13. The Facts remains that the entire transactions has been borne out by records and is governed by MOU entered into between the parties. There is no privity of contract between the petitioners and the de facto complainant. This court is not able to find any strong materials in order to come to prima facie conclusion that these petitioners have acted in concert with A1 & A2. The entire sale / transfer of shares has happened in the normal course of business and all these transaction's have happened online and is borne out by records. In the considered view of this court there is no need for custodial interrogation of the petitioners and the petitioners can be granted anticipatory bail by imposing some conditions." 3. I most respectfully submit that I am Advised that all the transactions are predominantly civil in nature and therefore criminal prosecution may not be a just....
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....rate. Further, it is the case of the Enforcement Directorate that the petitioners have not committed the offences alleged by the defacto complainant in the instant case. The grounds of the arrest of Mr. Hemal Arun Mehta and the impleading petition would show that it's their case that the defacto complainant's claim that he was duped cannot be believed. Therefore, when the Enforcement Directorate themselves have found out that the offences alleged by the defacto complainant have not been made out, the impugned FIRs are liable to be quashed. If the Enforcement Directorate have unearthed some other offences, it is for them to inform the concerned Agencies about the commission of the other offences under Section 66 (2) of Prevention of Money Laundering Act, 2002. However, in the instant case, the Enforcement Directorate had admittedly not informed, about the commission of any other offence unearthed during their investigation, either to the 1st respondent or any other agency. (d) The present claim of the Enforcement Directorate, that the defacto complainant had sold the shares of the company at manipulated prices and thereby cheated the general public was the subject matte....
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....r of interim stay of the ECIR. (h) Therefore, the petitioners prayed that the impugned FIRs might be quashed on the basis of the compromise arrived at between the parties. 6. Per Contra, Mr. A. Damodaran, the learned Additional Public Prosecutor, submitted that the FIRs cannot be quashed on mere asking just because the parties have compromised the issue. The impugned FIRs cannot be classified as disputes between private parties. It involves economic offences, and unless the Police are allowed to investigate and ascertain the truth, the FIRs cannot be quashed on the ground of compromise. The learned Additional Public Prosecutor further submitted that since the impugned FIRs were stayed by this Court, they could not conduct further investigation. Hence, he prayed for the dismissal of the quash petition. 7. Mr. AR.L. Sundaresan, the learned Additional Solicitor General of India (ASGI), for the impleading petitioner (i.e.) the Enforcement Directorate submitted that: (a) The impugned FIRs cannot be quashed on the basis of a compromise since other offences have been unearthed by the Enforcement Directorate, which has to be investigated. That investigation cannot b....
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....ffence punishable under Section 21 of the MMDR Act. whereas dishonestly removing sand, gravel and other minerals from the river. which is the property of the State, out of the State's possession without the consent, constitute an offence of theft. Hence, merely because initiation of proceeding for commission of an offence under the MMDR Act on the basis of complaint cannot and shall not debar the police from taking action against persons for committing theft of sand and minerals in the manner mentioned above by exercising power under the Code of Criminal Procedure and submit a report before the Magistrate for taking cognizance against such persons. In other words, in a case where there is a theft of sand and gravel from the government land, the police can register a case, investigate the same and submit a final report under Section 173 CrPC before a Magistrate having jurisdiction for the purpose of taking cognizance as provided in Section 190(1)(d) of the Code of Criminal Procedure." (e) The learned ASGI also relied upon the observations of this Court in W.P.No. 5051 of 2023 in the order dated 29.03.2023. The said Writ Petition was filed by the second respondent/defact....
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.... disputed. The relevant observation in the said Judgment of this Court is as follows: "31. The aforesaid is the raison d'etre for Section 66(2) of the PML Act which states that, while investigating a case under the PML Act, if any information or material comes to the possession of the Investigating Officer, he shall share the information or material in his possession with the agency concerned for necessary action. This clearly means that he cannot arrogate to himself the power of the agency concerned under another statute and conduct investigation under that statute." 9. Thus, there cannot be any dispute that the Enforcement Directorate officials can neither investigate offences committed under the other acts nor interfere in the investigation conducted by another agency. However, this Court is of the view that would not mean that they have no right to file an impleading petition and oppose a quash petition filed against the FIR in the predicate offence. Since the Enforcement Directorate is concerned with the proceeds of the crime, it cannot be said as a rule that they have no right to intervene and assist the Court in a quash petition challenging the proceedings relati....
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....ing with M/s. Pro Fin Capital Services Private Limited and Unity Collateral Security Services Private Limited and he has received various amounts independently during the period from March and April, 2018. Curiously he is feigning ignorance and he is complaining against the very same Company to which 10,16,000/- shares were transferred and Rs. 9.70 crores was received by the de facto complainant through A-1 Company out of the total of Rs.35 crores received by the de facto complainant. 13.The facts remains that the entire transaction has been borne out by records and is governed by MOU entered into between the parties. There is no privity of contract between the petitioners and the de facto complainant. This Court is not able to find any strong materials in order to come to a prima facie conclusion that these petitioners have acted in concert with A1 & A2. The entire sale/transfer of shares has happened in the normal course of business and all these transactions have happened Online and is borne out by records. In the considered view of this Court there is no need for custodial interrogation of the petitioners and the petitioners can be granted anticipatory bail by imposing....
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....1, Chennai. Section 2(u) of the Prevention of Money Laundering Act, 2002, defines 'proceeds of crime', to mean any property derived or obtained, directly or indirectly, by any person as a result of criminal activity relating to a scheduled offence or the value of any such property.'' Thus, it can be seen from the above observations made by this Court and the case of Enforcement Directorate that the allegations in the impugned FIR need not be investigated further as it is the case of all concerned that no offence is made out on those allegations. 14. Thus, under normal circumstances, this Court would have quashed the impugned FIRs for the aforesaid reasons without any further discussion. However, the Enforcement Directorate have now in their impleading petition, stated that the petitioners and defacto complainant have committed other offences. The impleading petition would state that the defacto complainant had indulged in this transaction of availing loan by suppressing his nationality to get rid of the regulatory requirements of NRE/NRI accounts. That apart the allegation is that some of the accused offered to manipulate the share prices of M/s.8K Miles and t....
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....ould be obtained against shares of 8K Miles belonging to Shri Suresh. 12. I submit that it is pertinent to note that the share brokers are not authorized to provide loan against shares and are only competent to facilitate margin funding for the purpose of trading in shares. Shri Suresh has already obtained loan against his shares of 8K Miles from Indian Bank and was well aware that the loan against shares can only be obtained from the banks or NBFCs. Thus, the criminal conspiracy for which he filed the complaint with CCB, Chennai was not hatched between Shri Rohit, Shri Atul and Shri Bhavesh but instead hatched between Shri. Rohit, Shri. Ramani and Shri. Suresh prior to obtaining loan from M/s. QGSL and continued till all other accused came on board." 13. I submit that in the said process of availing illegal loan by Shri Suresh and to manipulate the share price of 8k Miles, Shri Rohit Arora introduced Shri Hemal Mehta to Shri. Suresh Venkatachari and he offered to manipulate the price of share of 8k Miles. He was given the task of manipulation of share price as well as bringing back all 26 lakh shares of 8k Miles to account of 2-3 HNI clients. For the said work, S....
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.... facts and circumstances of the case, I, in exercise of the powers conferred upon me under Section 11 (1), 11(4), 11(4A), 11B (1) and 11B(2) of SEBI Act, 1992 read with section 19 of SEBI Act, 1992 and Rule 5 of the Rules, direct as under: (i) Noticee nos 1, 2 and 3 are restrained from accessing the securities market in any manner whatsoever, and further prohibited from buying, selling or otherwise dealing in securities, directly or indirectly, in any manner, whatsoever, for a period of three (3) years, from the date of coming into force of this order; (ii) Noticee no. 4 is restrained from accessing the securities market in any manner whatsoever, and further prohibited from buying, selling or otherwise dealing in securities, directly or indirectly, in any manner, whatsoever, for a period of one (1) year, from the date of coming into force of this order; (iii) The Noticee nos. 1, 2 and 3 are prohibited from being associated with the securities market in any manner whatsoever, including as a director or Key Managerial Personnel in a listed company or an intermediary registered with SEBI, for a period of one (1) year, from the date of coming into force of th....
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....EBI Act, 1992. 17. That apart, it is seen that the submission of the learned ASGI, that the general public were cheated and an offence under Section 420 of IPC is made out is not stated in the impleading petition. All the allegations relate to matters which have been already addressed by the SEBI. It is no doubt true that if an allegation constitutes an offence under the SEBI Act and offences under the Indian Penal Code, the right of the respondent police to investigate the Penal Code offences cannot be taken away. The Judgment of the Hon'ble Supreme Court in State (NCT of Delhi) vs. Sanjay and another reported in (2014) 9 SCC 722 makes that position very clear. The relevant observation of the Honourable Supreme Court is extracted in the earlier part of this order. The primary ingredient of the offence of Section 420 IPC is deception. Whether there was deception or not in the facts of the case is dependent on the findings of the SEBI. Therefore, the respondent police have to depend on the SEBI to ascertain if the deception has been practised on the general public. The deception, in this case, is the alleged manipulation of share prices which has been dealt with by SEBI. Therefor....
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.... quashing of the FIR which relates to an offence which is not made out even as per the stand taken by the Enforcement Directorate. 19. In this regard, the law is well settled in the decision in Vijay Madanlal Choudhary and others vs. Union of India and others reported in (2022) SCC Online SC 929, wherein it has been held as under:- "The Authorities under the 2002 Act cannot prosecute any person on notional basis or on the assumption that a scheduled offence has been committed, unless it is so registered with the jurisdictional police and/or pending enquiry/trial including by way of criminal complaint before the competent forum. If the person is finally discharged/acquitted of the scheduled offence or the criminal case against him is quashed by the Court of competent jurisdiction, there can be no offence of money-laundering against him or any one claiming such property being the property linked to stated scheduled offence through him.'' 20. Therefore, from the above discussion, it is seen that the Enforcement Directorate's opposition to the quashing of the FIRs cannot be accepted. The Enforcement Directorate cannot resist the quashing of the FIRs prayed on the....