Karnataka High Court
The State Of Karnataka vs Srinivasa on 24 July, 2025
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IN THE HIGH COURT OF KARNATAKA AT BENGALURU
DATED THIS THE 24TH DAY OF JULY, 2025
BEFORE
THE HON'BLE MS. JUSTICE J.M.KHAZI
CRIMINAL PETITION NO. 635 OF 2021
(482(Cr.PC) / 528(BNSS))
BETWEEN:
THE STATE OF KARNATAKA
BY DEVARAJ POLICE STATION
REPRESENTED BY STATE PUBLIC
PROSECUTOR, HIGH COURT BUILDING
BENGALURU-560 001
...PETITIONER
(BY SRI.M.R.PATIL, HCGP)
AND:
1. SRINIVASA
Digitally S/O LATE VENKATARMAIAH
signed by AGED ABOUT 48 YEARS,
REKHA R
GURUVAYYAN PALYA
Location:
High Court HALAPANAHALLI VILLAGE
of BAKTHARAHALLI POST
Karnataka DODDABALLAPURA TALUK
BENGALURU RURAL DISTRICT-561203
2. SHAIK NAJIBULLA
S/O JILLUR RAHIM SHAIK
JAK AHAMED
ARAMBAG, HONGIL-712615
WEST BENGAL
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3. SANTOSH KUMAR MISHRA
S/O BANAMALI MISHRA
S MIRZAPURA, ACHUTPURA
KYRA BALASUR, ORISSA-756 031
4. DAVID HASLAP
R/O BAGPUL JAIPUL
BIRABARASATH, 24 PARAGANA NORTH
WEST BENGAL - 743 248
OFFICE MULTINATIONAL INDUSTRIES LTD
2ND FLOOR, NO.4 METROPOLITAN PLAZA
H L SARKAR RASTHE,
BANS DRONI, KOLKATTA
5. SANDEEP PAL
S/O TARPADA PAL MOUZA
GOPALAPURA, J L NO. 34
MIRAJPURA, KOTHALAPURA,
BANKURA-722141
WEST BENGAL
6. SUCHANDRA GOSH
S/O PARESHNATH
NO.160/A, KALICHARAN GOSH ROAD,
KOSIPURA, KOLKATTA -700 071
WEST BENGAL
...RESPONDENTS
(BY SRI. MALIPATIL P S, ADVOCATE FOR R1;
V/O DTD: 06.03.2023 ISSUANCE OF NOTICE TO RESPONDENT
IS D/W)
THIS CRL.P IS FILED U/S.482 CR.P.C BY THE S.P.P FOR
THE STATE PRAYING TO A. SET ASIDE THE JUDGMENT AND
ORDER DATED 17.12.2019 PASSED BY THE PRINCIPAL
DISTRICT AND SESSIONS JUDGE, MYSURU IN CR.NO.46/2016
B. RESTORE THE CASE ON THE FILE OF THE DISTRICT AND
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SESSIONS JUDGE, MYSURU IN CR.NO.46/2016 AND DIRECT
THE TRIAL COURT TO TAKE COGNIZANCE OF THE OFFENCE
AGAINST THE RESPONDENTS-ACCUSED.
THIS PETITION, COMING ON FOR DICTATING ORDERS,
THIS DAY, ORDER WAS MADE THEREIN AS UNDER:
CORAM: HON'BLE MS. JUSTICE J.M.KHAZI
ORAL ORDER
The State has filed this petition under Section 482 of
the Code of Criminal Procedure to set aside the judgment
and order dated 17.12.2019 in Cr.No.46/2016 on the file
of Prl.District and Sessions Judge, Mysuru for the offences
punishable under Sections 406, 420, 109, 120 r/w Section
34 IPC and Section 9 of Karnataka Protection of Interest of
Depositors Act, 2004 (‘KPID Act, 2004’ for short) and to
restore the same to the file of District and Sessions
Judge, Mysuru to enable it to take cognizance and proceed
with the matter.
2. For the sake of convenience, the parties are
referred to by their ranks before the trial Court.
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3. In support of the petition, the State has
contended that the accused are running a company under
the name and style of Alite India Ltd. The accused have
colluded together and assuring general public return of
their investment with highest interest and bonus, have
collected huge amount under different schemes. However,
later they have failed to return the same with interest.
3.1 Based on complaint filed by Sri.Chandrashekhar
Aradhya, a case in Cr.No.46/2016 came to be registered
and after investigation charge sheet is filed for the
offences punishable under Sections 406, 420, 109, 120
r/w Section 34 IPC and Section 9 of ‘KPID Act, 2004. Since
the issue involved is serious on the directions of the
Government investigation was carried out by CID, invoking
the provisions of KPID Act, 2004. However, the trial Court
has rejected the charge sheet with a direction to the
investigating officer to present the charge sheet before
jurisdictional Court. Aggrieved by the same, this petition is
filed on the following:
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GROUNDS
(i) The impugned order is erroneous and
unsustainable. It is based mainly on the ground that there
is lack of authority in the investigating officer, who has
filed charge sheet and common charge sheet should have
not been filed, as each offence is distinct and different.
The entire approach of the trial Court in returning the
charge sheet is erroneous. There is no application of mind.
The trial Court has not appreciated the scheme, aims and
objects of KPID Act, 2004. The Act is enacted with an aim
not only protecting the interest of the depositors by
attaching the property, but also to prosecute the accused
who are responsible for fraud and cheating.
(ii) The trial Court has completely misread the Act. The
KPID Act clearly states that the competent authority is
appointed to exercise control over the attached property
until Special Court passes an order for realization of assets
and payments to depositors. The competent authority is
appointed under Section 5 of the KPID Act, 2004 to
safeguard the financial interest of the depositors and to
exercise such other power for carrying out the purpose of
the Act. The trial Court has not considered the role of the
competent authority which is restricted to deal with the
attached property, distribution of same among the
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aggrieved depositors, compounding all the offences and
assisting the Special Public Prosecutor. However, he has
not been empowered to investigate the case and file
charge sheet.
(iii) The trial Court has not taken note of Section 7 of
the KPID Act 2004, which clearly state that the competent
authority is empowered to submit report with regard to
the assets of the financial institutions and its liabilities. The
trial Court has erred in holding that the competent
authority is empowered to investigate. There is no such
provision under the Act or in the code empowering a
Revenue Officer to conduct investigation. Under the Act,
Special Court is given powers to realize assets of the
financial institutions and pay to the depositors and also
punish the accused.
(iv) While the Revenue official in the capacity as the
competent authority if given the powers to take physical
possession of assets and submit report, the Special Public
Prosecutor is authorized to conduct the trial and assist the
Court. The modus operandi of the accused indicate that
thre is commonality in committing the offence, even
though the victims are different. Therefore, rightly the
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investigating officer has filed a common charge sheet in
respect of all the FIRs.
(v) The trial Court has also not appreciated that even
in a common charge sheet distinct charges may be framed
against the accused. In the above facts and
circumstances, the impugned order is not sustainable and
calls for interference by this Court and hence, the petition.
4. In support of his arguments, learned High Court
Government Pleader for petitioner State has relied upon
the decision in The State of Karnataka Vs. Greenbuds Agro
Form Ltd. Company and others (Greenbuds Agro)1.
5. On the other hand learned counsel for
respondents has supported the impugned order and
sought for dismissal of the petition.
6. Heard arguments and perused the record.
1
Crl.P.No.9302/2016 Dt: 31.05.2021
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7. Facts leading to the passing of the impugned
order under challenge are that one Chandrashekar
Aradhya filed a complaint against 6 persons, who were
running a company by name Angel Alide India Ltd.
Company (‘company’ for short) alleging that he was a car
driver by profession and also agent of the said company,
which was a financial establishment taking deposits
promising to pay high returns in the form of interest, etc.
As an agent, he collected money from several persons and
deposited the same with the said company. However,
during October 2014, the said company was closed.
Though accused No.1 promised to return the money, later
he evaded.
8. Based on the complaint, the Devaraj P.S,
Mysuru registered case in Cr.No.46/2016 and submitted
the FIR to the Special Court. After concluding the
investigation, the concerned police have filed charge sheet
against accused Nos.1 to 6 who are shown as absconding,
for the offences punishable under Sections 406, 420, 109,
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120 r/w Section 34 of IPC and Section 9 of the KPID Act,
2004.
9. However, the Special Court instead of taking
cognizance, has passed the impugned order and returned
the charge sheet for presentation through the competent
authority under Section 5 r/w Section 8 of KPID Act 2004
and so far as IPC offences are concerned, the Special
Court directed the investigating officer to file charge sheet
before the jurisdictional Magistrate.
10. In the present petition, the State has
challenged the said order. As rightly argued by the learned
High Court Government Pleader, the scheme of the KPID
Act, 2004, is not only to protect the interest of the
depositors by attaching the property, but also to prosecute
the accused of the financial institution and establishment
who are responsible for fraud and cheating.
11. Section 2(1) defines the term ‘competent
authority’ means the authority appointed under Section 5.
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12. Under Section 5 of the KPID Act, 2004, the
State Government is required to appoint an officer not
below the rank of Assistant Commissioner to be the
competent authority.
13. Section 6 of the KPID Act, 2004 deals with
duties and powers of competent authority, which enables
him to take necessary action by taking physical possession
of all the monies and assets of the concerned financial
establishment expeditiously and sub-Section (2)
enumerates its powers.
14. Section 7 deals with assessment of assets and
deposit liabilities. After making report under Section 7, as
per Section 8 of the KPID Act, 2004, the competent
authority is required to submit report to the Special Court
and make an application seeking permission to make
payment to the depositors out of the money realized.
15. On the other hand, Section 9 prescribes
punishment for fraudulent default by the financial
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establishment and makes every person including the
promoter, director, partner, manager or any other person
or an employee responsible for the management or
conducting of the business or affairs of such financial
establishment and on their conviction, they are liable for
imprisonment for a term, which may extend to 6 years
and with fine, which may extend to Rs.1 lakh and such
financial establishment also shall be liable for fine which
may extend to an amount equivalent to Rs.5 lakhs or
where such deposits is quantifiable in terms of money,
twice the money involved in such default whichever is
more. The proviso mandates that in the absence of any
special and adequate reasons recorded by the Special
Court in the judgment, the imprisonment shall not be less
than 3 years and fine shall not be less than Rs.20,000/- in
case of individuals and not less than Rs.1 lakh in case of
financial establishment.
16. It is pertinent to note that as per Section 2(4),
the term financial establishment is defined as:
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“(4) Financial Establishment means any person or a group of
individuals accepting deposit under any scheme or
arrangement or in any other manner but does not include a
corporation or a co-operative society owned or controlled by
any State Government or the Central Government or a
banking company as defined under clause (c) of Section 5 of
the Banking Regulation Act, 1949 (Central Act 10 of 1949);”
17. The definition makes it clear that the financial
establishments which comes under purview of KPID Act,
2004 are necessarily those run by private individuals or
group of individuals accepting any scheme or
arrangement. It does not include regulated deposit
schemes. Therefore, as in case of Section 27 of the
Banning of Unregulated Deposit Schemes Act, 2019
(‘BUDS Act‘ for short), there is no prohibition for the trial
Court taking cognizance except on a complaint by
regulator. Since KPID Act, 2004 does not cover regulated
schemes and it necessarily means the schemes run by
private, individuals or group of individuals, anyone who is
aggrieved is at liberty to file complaint with the concerned
police, who after due investigation may file charge sheet.
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Since Section 8 of the KPID Act, 2004 require the matters
arising under the Act, to be decided by designated Court,
necessarily, the charge sheet is to be filed before the
Special Court.
18. The duties and responsibilities of authorized
Officer is to realize the assets and distribute among the
investors. He is not authorized to file a complaint and
present the charge sheet as per Section 5 r/w 8 of KPID
Act, 2004 as directed by the designated Court. The report
referred to in Section 8 concern with the report that would
be prepared by the competent authority in exercise of its
duties under Section 6 with regard to collecting the assets
of the persons who were running the establishment, for
the purpose of realizing the same and distributing
compensation to the investors. The report referred in
Section 8 is not a charge sheet. The learned Sessions
Judge, has confused himself regarding powers and
responsibilities of the competent authority and passed the
impugned order which is not sustainable.
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19. At the same time, the designated Court shall
ascertain whether in exercise of its power under Sections
3, 4, 6 to 8, the competent authority has taken steps for
realization of the assets of the accused persons and the
establishment for the purpose of paying compensation to
the investors in a parallel proceedings.
20. For the above reasons, this Court is of the
considered opinion that the impugned order is liable to be
set aside and accordingly, the following:
ORDER
(i) Petition filed by the State under Section
482 Cr.P.C is hereby allowed.
(ii) The impugned order dated 17.12.2019 in
Cr.No.46/2016 on the file of Prl.District
and Sessions Judge, Mysuru for the
offences punishable under Sections 406,
420, 109, 120 r/w Section 34 IPC and
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Section 9 of Karnataka Protection of
Interest of Depositors Act, 2004, is set
aside.
(iii) The matter is restored to the file of
Prl.District and Sessions Judge, Mysuru.
The Sessions Court shall register the case
and proceed with the matter in accordance
with law.
(iv) The Registry is directed to send a copy of
this order to the trial court through e-mail.
Sd/-
(J.M.KHAZI)
JUDGE
RR
List No.: 1 Sl No.: 46