TaxTMI 
TaxTMI 
2024 (5) TMI 981
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.... are before this Court under Section 482 of Cr. P.C. with a prayer to quash the FIR in Crime No. 9/2024 registered by High Grounds Police Station for the offences punishable under Section 78 (1) (a) (i) of the Karnataka Police Act, 1963 (hereinafter referred to as 'the Act' for short) Section 12 of Karnataka Race Betting Act and Section 420 of IPC, which is now pending before the Court of I Additional Chief Metropolitan Magistrate, Bengaluru. 2. Heard the learned Senior counsel appearing on behalf of the petitioners and the learned Advocate General appearing on behalf of respondents. 3. Factual matrix of the case are as follows:- On 12.01.2024 credible information was allegedly received by the first informant, who is a Police Inspector attached to CCB Unit, Special Investigation Squad, Bengaluru City, to the effect that in Bangalore Turf Club, certain bookies, who have been issued license from the State Government were accepting betting on the horse races, without maintaining proper registers, documents etc. with regard to the amount collected by them from the punters and thereby they were evading tax payable to the State and certain others, who had no licens....
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.... authority. He submits that Section 420 of IPC is not applicable and the same does not get attracted considering the allegations found in the first information. The other offences are non-cognizable in nature and therefore, to avoid compliance of Section 155 (2) of Cr. P.C., the police have wrongly invoked Section 420 of IPC. He submits that even if the allegations made are presumed to true, it is only competent GST Officers, who can take action and not the police. He submits that the CCB is not a Police Station and therefore, the first informant could not have received credible information and visited the Bangalore Turf Club, even before registering the FIR. He submits that the entire exercise is done by the CCB and only thereafter, an FIR was registered by the jurisdictional police. 6. He submits that the Hon'ble Supreme Court in the case of Dr. K. R. Lakshmanan vs. State of T. N. And Another reported in (1996) 2 SCC 226, has held that Horse Race is a game of skill and it cannot be considered as a 'Gaming' for the purpose of Police Act. He has referred to the judgment of the Co-ordinate Bench of this Court in Rakesh Shetty vs. State of Karnataka reported in 2020 SC....
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....e average from four races that were held on the date of raid is taken into consideration, the total betting amount for the aforesaid period amounts to Rs. 1302,57,69,570/- and as against the same, collection shown for the aforesaid period is Rs. 24,96,30,667/-. He submits that during the course of investigation, the statement of the President of Bangalore Turf Club has been recorded and the said statement reflects that the bookies are not authorized to enter transactions in Pencil Sheets, which were recovered from the bookies during the course of raid. He submits that the sample of betting card has been produced as Anenxure-R3 before this Court, whereas petitioners have been issuing betting cards which are not in the requisite format and the same does not even contain tax invoice or GST number. He submits that since a huge fraud has been unearthed, wherein crores of money has been collected by accused under the guise of payment towards GST and TDS and the so collected amount has not been deposited to the account of the concerned Department, investigation in the case is necessary. 8. He submits that since the material collected by the Investigation Officer are sufficient to make ....
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....punishable under Section 78 (1) (a) (i) of the Act, Section 12 of Karnataka Race Betting Act and Section 420 of IPC, against the petitioners herein and others. 11. Section 78 (1) (a) (i) of the Act, reads as follows:- "78. Opening, etc., of certain forms of gaming.-(1) Whoever.- (a) being the owner or occupier or having the use of any building, tent room, enclosure, vehicle, vessel or place or at cyber cage or online gaming involving wagering or betting including computer resource or mobile application or internet or any communication devise as defined in the Information Technology Act, 2000 (Central Act 21 of 2000) opens, keeps or uses the same for the purpose of gaming.- (i) on a horse race; or (ii) to (vii) xxx (b) to (d) xxx shall, on conviction, be punished with imprisonment which may extend to three years, or with fine which may extend to one lakh rupees, or with both: Provided that in the absence of special reasons to be recorded in writing, the punishment to be imposed on an offender on conviction for an offence under this sub-section shall be imprisonment for not less than six month or fine of not less than ....
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....nder Section 78 (1) (a) (i) of the Act gets attracted as they are not covered under the exception found in Section 2 (7) of the Act. The question whether the licensed bookies have strictly complied the terms of license issued to them by competent authority is a subject which needs verification during the course of investigation and merely for the reason that petitioners are licensed bookies, it cannot be said that Section 78 (1) (a) (i) of the Act would not be applicable to them. 12. Section 2 (16) of the Act, reads as follows:- "(16) "police officer" means any member of the police force appointed or deemed to be appointed under this Act and includes a special or an additional police officer appointed under section 19 or 20;" Section 65 of the Act, reads as follows:- "65. Duties of a Police Officer.-It shall be the duty of every Police Officer,- (a) promptly to serve every summons and obey and execute every warrant or other order lawfully issued to him by competent authority, and to endeavour by all lawful means to give effect to the lawful commands of his superior; (b) to the best of his ability to obtain intelligence concerning the commis....
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....ay such information. 14. Learned Senior counsel for the petitioners has strenuously contended that even before registration of the FIR, first informant and other staff of the CCB had entered into the premises of Bangalore Turf Club and have held a preliminarily investigation which is illegal. The Hon'ble Supreme Court in the case of Dr. Saleem Ur Rehman (supra), in paragraph No. 30 has observed as follows:- "30. So far as the submission on behalf of the respondent that in the present case by conducting a preliminary enquiry, detailed investigation has been made and only thereafter the FIR is registered and that at the time of preliminary enquiry, investigation is not permissible since the FIR is lodged is concerned, the aforesaid submission seems to be attractive but has no substance. While holding a preliminary enquiry under Rule 3.16, whatever is conducted will be in the form of enquiry into the allegations to consider whether any prima facie case is made out or not which requires further investigation after registering the FIR or not. While considering the prima facie case for the purpose of registering the FIR, some enquiry/investigation is bound to be there, ho....
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....ment as per law. The petitioners were thus holding the amount collected from buyers in trust and they were bound by law to deposit the same with the government. The petitioner misappropriated this money and did not deposit the money with the government. The offence is squarely covered under Section 405 of IPC which defines criminal breach of trust. The Illustration (e) of Section 405 IPC which reads as under: (e) A, a revenue officer, is entrusted with public money and is either directed by law, or bound by a contract, express or implied, with the Government, to pay into a certain treasury all the public money which he holds. A dishonestly appropriates the money. A has committed criminal breach of trust." 18. I consider that all companies and employers and those persons who collect taxes under an obligation of tax : laws are legally bound to deposit the same with income tax/sales tax departments. They hold money in trust and if they do not deposit the money with the concerned department as per law and misappropriate the money for their own use, offence of breach of trust is committed. Similarly, those employers who receive money from their employees against provid....
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....Department and on the other hand, they have misappropriated the same. Therefore, as rightly contended by learned Advocate General, it cannot be said that there is absolutely no material to invoke the offences punishable under the provisions of Indian Penal code as against the accused. 19. Learned Senior counsel for the petitioners has submitted that even if the allegations made against accused are presumed to be true, it is only the competent authority of the GST Department, who can take action and the police have no jurisdiction to register a criminal case on the ground that the accused have not deposited the GST or TDS amount before the concerned Department. In the case of State (NCT of Delhi) vs. Sanjay reported in (2014) 9 SCC 772, the question that arose for consideration before the Hon'ble Supreme Court was whether the provisions contained under the Mines and Minerals (Development and Regulation) Act, 1957 operates as a bar against the prosecution of a person for the offences punishable under the Indian Penal Code. In other words, the question for consideration was whether the provisions of Mines and Minerals (Development and Regulation) Act, 1957 explicitly or implied....
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.... many organisms. If these illegal activities are not stopped by the State and the police authorities of the State, it will cause serious repercussions as mentioned hereinabove. It will not only change the river hydrology but also will deplete the groundwater levels. 70. There cannot be any dispute with regard to restrictions imposed under the MMDR Act and remedy provided therein. In any case, where there is a mining activity by any person in contravention of the provisions of Section 4 and other sections of the Act, the officer empowered and authorised under the Act shall exercise all the powers including making a complaint before the Jurisdictional Magistrate. It is also not in dispute that the Magistrate shall in such cases take cognizance on the basis of the complaint filed before it by a duly authorised officer. In case of breach and violation of Section 4 and other provisions of the Act, the police officer cannot insist the Magistrate for taking cognizance under the Act on the basis of the record submitted by the police alleging contravention of the said Act. In other words, the prohibition contained in Section 22 of the Act against prosecution of a person except on a....
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....der IPC. Hence, for the commission of offence under Section 378 IPC, on receipt of the police report, the Magistrate having jurisdiction can take cognizance of the said offence without awaiting the receipt of complaint that may be filed by the authorised officer for taking cognizance in respect of violation of various provisions of the MMDR Act. Consequently, the contrary view taken by the different High Courts cannot be sustained in law and, therefore, overruled. Consequently, these criminal appeals are disposed of with a direction to the Magistrates concerned to proceed accordingly." 20. In the present case, allegation against the accused is that the licensed bookies who have collected GST amount from the punters and TDS amount from the winning bettors have failed to deposit the same before the competent authority. They have also failed to maintain proper registers and documents in their stalls and also had failed to give proper receipts to the punters for having collected the betting amount. So far as the unauthorized bookies, who had no license or authorization from the competent authority to collect the betting amount from the punters, the allegation is that they have colle....
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....Privy Council in Khwaja Nazir Ahmad, the following principles of law emerge: 13.1. Police has the statutory right and duty under the relevant provisions of the Code of Criminal Procedure contained in Chapter XIV of the Code to investigate into cognizable offences. 13.2. Courts would not thwart any investigation into the cognizable offences. 13.3. However, in cases where no cognizable offence or offence of any kind is disclosed in the first information report the Court will not permit an investigation to go on. 13.4. The power of quashing should be exercised sparingly with circumspection, in the "rarest of rare cases". (The rarest of rare cases standard in its application for quashing under Section 482 Cr.PC. is not to be confused with the norm which has been formulated in the context of the death penalty, as explained previously by this Court.) 13.5. While examining an FIR/complaint, quashing of which is sought, the Court cannot embark upon an enquiry as to the reliability or genuineness or otherwise of the allegations made in the FIR/complaint. 13.6. Criminal proceedings ought not to be scuttled at the initial stage. 1....
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....ose the commission of a cognizable offence and is not required to consider on merits whether the allegations make out a cognizable offence or not and the court has to permit the investigating agency/police to investigate the allegations in the FIR." 23. In the case of Anjan Dasgupta (surpa), the Hon'ble Supreme Court has observed that the receipt and recording of first information report is not a condition precedent for setting in motion of a criminal investigation and when information is received with regard to cognizable offence, the police was duty bound to start the investigation. 24. In the case of Skoda Auto Volkswagen (India) Private Limited vs. State of Uttar Pradesh and Others reported in (2021) 5 SCC 795, the Hon'ble Supreme Court in paragraph Nos.41 and 42, has observed as follows:- "41. As cautioned by this Court in State of Haryana v. Bhajan Lal, the power of quashing should be exercised very sparingly and with circumspection and that too in the rarest of rare cases. While examining a complaint, the quashing of which is sought, the Court cannot embark upon an enquiry as to the reliability or genuineness or otherwise of the allegations made in the....
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....otalizator is an electronically operated device which pools all the bets and after deducting betting tax and the Club charges, works out a dividend to be paid out as winnings to those who have backed the successful horses in the race. Bookmakers, on the other hand, operate on their own account by directly entering into contracts with the individual punters who come to them and place bets on horses on the odds specified by the bookmakers. The bookmakers issue to the punters printed betting cards on which are entered the bookmaker's name, the name of the horse backed, the amount of bet and the amount of prize money payable if the horse wins. The winning punters collect their money directly from the bookmaker concerned. The net result is that 75% of the tote collections of each race are distributed as prize money for winning tickets, 20% is paid as betting tax to the State Government and the remaining 5% is retained by the Club as commission. Similarly, the bookmakers collect from their punters, besides the bet amount specified in the betting card, 20% bet tax payable to the State and 5% payable to the Club as its commission. It is thus obvious that the Club is entitled to only 5%....
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.... and circumstances of the present case. 30. In the case of Lalita Kumari (surpa), the Hon'ble Supreme Court in paragraph No. 86, has observed as follows:- "86. Therefore, conducting an investigation into an offence after registration of FIR under Section 154 of the Code is the "procedure established by law" and, thus, is in conformity with Article 21 of the Constitution. Accordingly, the right of the accused under Article 21 of the Constitution is protected if the FIR is registered first and then the investigation is conducted in accordance with the provisions of law." 31. In the present case only for the purpose of verification of the correctness of the credible information received, the first informant, who is a police officer had visited the premises of the Bangalore Turf Club and after holding a preliminary enquiry, being satisfied with regard to the correctness of the first information received by him, had proceeded to lodge a first information before the jurisdictional Police Station, which had culminated in registration of FIR in Crime No. 9/2024 and investigation in the case was conducted only thereafter and therefore, the contention raised by the learned....