THE HON'BLE SRI JUSTICE P.NAVEEN RAO WRIT PETITION No.37056 of 2013 24-01-2014 Metkore Alloys & Industries Limited,(A Public Limited Company incorporated under the Provisions of the Companies Act, 1956),having its regd.,office at Sagar Society, Street No.1, Road No.2, Banjara Hills,Hyderabad, rep.by its Managing Director Sri Boorugu Prashanth s/o.Boorugu Ramesh,Plot No.18, Sagar Society Street No.1,Road No.2, Banjara Hills, Hyderabad and another .....Petitioners The Union of India, rep.by its Secretary,Home Affairs, New Delhi and others......Respondents Counsel for the petitioners : Sri D.V.Sitarama Murthy Counsel for the Respondents:
1. Sri N.V.Ramanujam, Standing counsel for Central Government for respondent No.1 2)Sri Deepak Bhattacharjee for respondent No.2 3) Sri B.S.Prasad for respondent No.3 4) None appeared for other respondents : : ?.Cases referred:
1. (2000) 7 Supreme Court Cases 640 2. (2007) 5 Supreme Court Cases 786 3. (2006) 3 Supreme Court Cases 658 4. 2005 (3) ALD233(LB) 5. 1997 (5) ALD748HON'BLE SRI JUSTICE P. NAVEEN RAO WRIT PETITION No.37056 of 2013 Dated:
24. 01.2014 ORDER
: First petitioner is the company incorporated under the provisions of the Companies Act, 1956 and second petitioner is the Managing Director of first petitioner company. The National Spot Exchange Limited (NSEL) (6th respondent) is also a company registered under the Companies Act, 1956. The said company is promoted by another company, by name, Financial Technologies (India) Limited (FTIL). First petitioner is a trading-cum-clearing member of 6th respondent.
2. Pankaj Ramnaresh Saraf, resident of Mumbai is a Director of M/s.Vostok Far East Securities Private Limited, a company registered under the Companies Act, 1956, with registered office in Mumbai. The company is in business of investments, trading and financing. Mr. Pankaj lodged complaint dated 30.09.2013 alleging large scale financial irregularities, misrepresentation and misappropriation of huge funds belonging to complainant and similarly situated investors by National Spot Exchange Limited (NSEL). Board of Directors of FTIL and NSEL and 25 borrowing companies/trading members along with their Directors, are alleged as persons responsible for causing huge financial loss to the complainant. The complainant claimed that he had surplus funds and, therefore, invested in NSEL. His broker was informed that NSEL has defaulted in making payments due to him as per the settlement schedule issued. He alleged that all this happened due to fraudulent activities of Board of Directors of NSEL as well as trading members.
3. The complaint lodged by Mr. Pankaj was registered initially as Crime No.216 of 2013 and subsequently re-numbered as Crime No.89 of 2013 under Sections 120(B), 409, 465, 467, 468, 571, 474 and 477(A) of the Indian Penal Code. The Economic Offences Wing of CBCID, Mumbai, State of Maharastra, is also investigating into the allegations leveled by the complainant as per the provisions of Maharashtra Protection of Interest of Depositors (in Financial Establishments) Act, 1999 (Act, 1999). As part of the investigation, the fixed assets of the petitioner company was seized and information regarding the operation of the bank accounts of the first petitioner company in State Bank of India (two branches) and ING Vysya Bank Limited (one branch) were called and pending further investigation, the banks were directed to freeze the accounts of the 1st petitioner. An order of restraint is passed by Special Sessions Court, Mumbai, which is the designated Court under Act, 1999. Two out of three bank accounts of the first petitioner company are in the branches located in State of Andhra Pradesh, the warehouse of the first petitioner company is located in Srikakulam District and the Head Office of the company is located in Hyderabad.
4. This writ petition is instituted praying for a declaration that the provisions of Maharashtra Protection of Interest of Depositors (in Financial Establishments) Act, 1999, have no application to the proceedings initiated by the State of Maharashtra in Crime No.89 of 2013 and seeks to quash the First Information Report insofar as it implicates Sections 3 and 4 of Maharashtra Protection of Interest of Depositors (in Financial Establishments) Act, 1999. Further prayed to set aside the public notice dated 09.11.2013. Two interim prays sought are, 1) suspension of public notice dated 09.11.2013 and 2) to direct the respondent banks where the 1st petitioner is holding accounts to defreeze the accounts.
5. When the Matter is taken up for consideration, learned standing counsel for Central Government has raised preliminary objection on maintainability of the writ petition contending that the crime was registered in State of Maharashtra based on a complaint lodged by a person living in Mumbai in State of Maharashtra, and according to the complaint, crime is committed in State of Maharastra and, therefore, this Court has no jurisdiction to entertain the writ petition and to grant relief as prayed for.
6. Learned Senior Counsel Sri D.V.Sitarama Murthy, appearing for the petitioners contended that this Court has jurisdiction to entertain the writ petition even if small cause of action arises within the territorial jurisdiction of State of Andhra Pradesh. Learned senior counsel contended that the company is registered in State of Andhra Pradesh, having its head quarters in Hyderabad and the warehouse of the company is located in Srikakulam District of State of Andhra Pradesh, which is also seized now and two of the banks accounts frozen are in the State of Andhra Pradesh and, therefore, this Court has jurisdiction to entertain the writ petition. Elaborate submissions are made by the learned senior counsel on merits. Learned senior counsel pressed for interlocutory order contending that due to freezing of the bank accounts, the first petitioner company is unable to honour its obligations even to pay the salaries to the employees and employees are suffering.
7. Having regard to the arguments advanced by the learned counsels, it is imperative to first consider the question of jurisdiction before going into the merits of the case.
8. From the provision in clause (2) of Article 226 of the Constitution of India, it is clear that ordinarily the maintainability or otherwise of the writ petition in this High Court depends on whether the cause of action for filing the same arose, wholly or in part, within the territorial jurisdiction of this court. So far as the question of territorial jurisdiction with reference to a criminal offence is concerned, the main factor to be considered is the place where the alleged offence was committed (Navinchandra N.Majithia Vs. State of Maharashtra and others1 - Para 22).
9. In Asit Bhattacharjee Vs. Hanuman Prasad Ojha and others2, Supreme Court held as under: ". The necessary ingredients for proving a criminal offence must exist in a complaint petition. Such ingredients of offence must be referable to the places where the cause of action in regard to commission of offence has arisen. A cause of action as understood in its ordinary parlance may be relevant for exercise of jurisdiction under clause (2) of Article 226 of the Constitution of India but its definition stricto sensu may not be applicable for the purpose of bringing home a charge of criminal offence. The application filed by the appellant under Section 156(3) of the Code of Criminal Procedure disclosed commission of a large number of offences. The fact that major part of the offences took place outside the jurisdiction of the Chief Metropolitan Magistrate, Calcutta is not in dispute. But, even if a part of the offence committed by the respondents related to the appellant Company was committed within the jurisdiction of the said court, the High Court of Allahabad should not have interfered in the matter.".
10. In Mosaraf Hossain Khan Vs. Bhagheeratha Engg. Ltd. And others3, Supreme Court held as under: ".We have referred to the scope of jurisdiction under Articles 226 and 227 of the Constitution only to highlight that the High Courts should not ordinarily interfere with an order taking cognizance passed by a competent court of law except in a proper case. Furthermore only such High Court within whose jurisdiction the order of the subordinate court has been passed, would have the jurisdiction to entertain an application under Article 227 of the Constitution unless it is established that the earlier cause of action arose within the jurisdiction thereof. The High Courts, however, must remind themselves about the doctrine of forum non conveniens also. (See Mayar (H.K.) Ltd. V. Owners & Parties, Vessel M.V,.Fortune Express ( 2006) 3 SCC100 (2006) 2 Scale 30).".
11. Learned senior counsel for the petitioners placed reliance on the decision of larger bench of this Court in the case of Bhimidipati Annapoorna Bhavani Vs. Land Acquisition Officer, Yeluru Reservoir Project, Peddapuram, East Godavari District, A.P., and others4 regarding maintainability of writ petition. The said writ petition is on the issue of maintainability of writ petition when an alternative remedy is available seeking execution of award under Land Acquisition Act. The Larger Bench approved the principles laid down by this Court in the case of B.Govinda Reddy Vs. Revenue Divisional Officer-cum-Land Acquisition Officer5 and held that in cases arising out of the Land Acquisition Act where the amount of compensation, finally determined has not been paid, a person must first resort to the alternate efficacious remedy of taking out execution and when despite taking out execution proceedings, if there is any delay caused on the part of authorities, resort can be had to filing of a writ petition in this Court. The said decision do not come to the aid of the petitioners.
12. Company of complainant is registered in Mumbai. Said company made investments through the office located in Mumbai and the transactions were undertaken in Mumbai and amounts payable for the transactions undertaken by the complainant were to be made in Mumbai. The complainant alleges conspiracy and collusion by the Directors of NSEL and trading members in misappropriating huge public funds and causing default in making payment of amounts due to the complainant. A bare perusal of complaint brings out that entire cause of action arose within the State of Maharastra. Thus, Maharastra State Police are entitled to investigate into the crime. Petitioners do not assail the jurisdiction of Maharastra Police to investigate into the crime. The relief sought by the petitioners is against the decision of Maharastra Police applying the provisions of the Act, 1999, while investigating into the Crime No.89 of 2013. The consequential reliefs sought by the petitioners relate to the steps taken by the Maharastra Police to seize the properties of the petitioners and to freeze the accounts, consequent to the decision to investigate into the crime in accordance with the provisions of the Act, 1999. Once the competency of Maharastra State Police to investigate into Crime No.89 of 2013 is not doubted, this Court has no jurisdiction to entertain the writ petition and consider the grievance of the petitioners. This Court has no jurisdiction to go into the veracity and correctness of the decision taken by the Maharastra State Police as part of investigation into Crime No.89 of 2013. This Court cannot exercise jurisdiction over the Special Sessions Court, Mumbai, which is the designated Court under Act, 1999. The location of Head Office of first petitioner company, location of warehouse of the first petitioner company and the existence of bank accounts in the branches located in State of Andhra Pradesh, are not relevant to confer jurisdiction on this Court when allegation of criminal offence was committed in State of Maharastra.
13. In view of my decision holding that the writ petition is not maintainable, the other contentions of petitioners are not gone into and are left open for petitioners to agitate before appropriate forum.
14. Hence, this writ petition is dismissed, giving liberty to the petitioners to avail remedies available in accordance with law. It is made clear that this Court has not expressed any opinion on merits of the claim. Miscellaneous petitions if any pending in this writ petition shall stand closed. No costs. ___________________________ JUSTICE P. NAVEEN RAO Date:
24. 01.2014