Pradeep Jain v. Inspector of Police, CCB, Chennai

IN THE HIGH COURT OF JUDICATURE AT MADRASDATE: 22.7.2009CORAMTHE HON'BLE MR.JUSTICE M.JEYAPAULCrl.R.C.No.1326 of 2007andCrl.R.C.No.1435 of 2007Pradeep JainPetitioner in Crl.R.C.No.1326/2007Vinoth Kumar MehtaPetitioner in Crl.R.C.No.1435/2007vs. 1. Inspector of Police, CCB, Chennai. 2. The Assistant Commissioner of Police, CCB, Chennai.3. Shantilal Surana4. Gouthamraj Surana5. Vijayraj Surana6. Dinesh Baghmar 7. Dinesh SuranaRespondents in both the casesCriminal Revision Cases filed under sections 397 and 401Cr.P.C. to call for the records in order M.P.Nos.7786 of 2007 and7783 of 2007 dated 6.8.2007 on the file of the III MetropolitanMagistrate, George Town, Chennai and revise the same and direct theinvestigation to be conducted by CBI or CBCID or any independentpolice. For petitioners : Mr.R.SankarappanFor RR 1 and 2 : Mr.N.Kumanan, Govt. Advocate (Crl. Side)For RR 3 to 7 : Mr.A.Ramesh, Senior Counsel for Mr.A.KrishnanCOMMON ORDERChallenging the order of the learned III Metropolitan Magistrateaccepting the final report filed by the second respondent in CrimeNo.28 of 2007 as mistake of fact, by his order dated 6.8.2007,Criminal Revision Case No.1326 of 2007 is filed by the de factocomplainant Pradeep Jain. https://hcservices.ecourts.gov.in/hcservices/

2. Aggrieved by the order of the learned III MetropolitanMagistrate accepting the final report filed in Crime No.92 of 2007as mistake of fact by his order dated 6.8.2007, the de factocomplainant Vinoth Kumar Mehta has preferred Criminal Revision CaseNo.1435 of 2007. 3. Both the cases are found to be connected with each other inalmost all respects. Therefore, arguments were heard in common andthe following common order is passed. 4. The prosecution case, in brief, is as follows:-Dinesh Baghmar, the sixth respondent herein ranked as A4 inCrime Nos.28 of 2007 and 92 of 2007, having introduced himself as asub agent for Surana Corporation, approached the de factocomplainants Pradeep Jain and Vinoth Kumar Mehta and convinced themto invest their money in the bullion trade business in gold andsilver carried on by M/s.Surana Corporation Limited. The de factocomplainant Pradeep Jain invested the money to the tune of Rs.1.25crores into Surana Corporation and the other de facto complainantVinoth Kumar Mehta invested the money to the tune of Rs.84.40 lakhswith Surana Corporation accepting return of gold after the stipulatedperiod. The de facto complainant Pradeep Jain would claim that a sumof Rs.1.05 crores was transferred to ICICI account of the accusedthrough 28 transactions on 28 different dates between 17.11.2005 and24.1.2006 in addition to the payment of Rs.20,00,000/= made to thefifth accused Vijayraj Surana in crime No.28 of 2007. The other defacto complainant Vinoth Kumar Mehta would allege that Rs.84.40 lakhswas transferred to Surana Corporation by cash and through banktransactions between 6.10.2005 and 9.12.2005. After one year, the defacto complainants approached Surana Corporation and claimed returnof gold based on the value realised from their investments. But,they were threatened mortally by the accused. A case in Crime No.28of 2007 was registered by the first respondent based on the complaintof fraud, cheating and breach of trust alleged by the de factocomplainant Pradeep Jain as against the accused therein. Based onthe complaint given by the de facto complainant, Vinoth Kumar Mehtaalleging criminal breach of trust and cheating punishable undersection 406 and 420 of the Indian Penal Code, the case in Crime No.92of 2007 was registered by the first respondent as against theaccused. 5. The second respondent, Assistant Commissioner of Police, whotook up the case for investigation after the transfer of the firstrespondent, filed closure report as mistake of fact in respect ofboth the accused. https://hcservices.ecourts.gov.in/hcservices/

6. It is relevant to refer to the finding of the investigatingofficer found a place in the closure report filed by him. The sumand substance of the closure report would read as follows:-The de facto complainants Pradeep Jain and Vinoth Kumar Mehta,the author of the complaints were not able to substantiate theirclaim that Dinesh Baghmar was sub agent of Surana Corporation. The defacto complainant could not produce any material to support such aclaim made in the complaint. No agreement between the de factcomplainant and Surana Corporation with respect to their allegedbusiness transaction was also produced. Nothing was produced by thede facto complainants to show prima facie that Surana Corporationowed the huge sum of money to the de facto complainants as alleged inthe complaints. On physical verification of the remittances made bythe de facto complainants Pradeep Jain to ICICI bank account ofM/s.Surana Corporation of Mayiladuthurai Branch, there were onlynine transactions relating to the transaction made by Pradeep Jain.Pradeep Jain, during the course of investigation has come out with arevelation that he pumped in black money for investment with SuranaCorporation and therefore, the remittance challans were not signed byhim personally. The account books of the de facto complainantPradeep Jain were not produced to show that such a huge sum ofRs.1.25 crores were paid from their accounts. The main source of theamount of Rs.1.25 crores claimed to have been invested with SuranaCorporation was not even prima facie shown by the de factocomplainant Pradeep Jain. The de facto complainant Vinoth Kumar Mehtaalso was not able to substantiate the payment of money to the tune ofRs.84.40 lakhs to Surana Corporation. He only produced certaincounterfoils for remittance. But, he disowned the initials found onthe counterfoils saying that he had just scribbled in order toconceal his identity. The payment of Rs.84.40 lakhs by Mr.VinothKumar Mehta was also not accounted in his books of accounts. He wasnot able to show the source of the whopping sum of Rs.84.40 lakhswhich he claimed to have invested in Surana Corporation. Both the defacto complainants claim that they generated funds through dealingsin diamonds. But, when letters were sent to the diamond merchantsclaimed to have traded in diamonds, those letters were returned withthe endorsement that there was no such person existing. The de factocomplainant Pradeep Jain remitted a sum of Rs.25,00,000/= to theICICI bank account of M/s.Surana Corporation Mayiladuthurai Branch.A sum of Rs.35,00,000/= was remitted by the de fact complainantVinoth Kumar Mehta into ICICI bank account of M/s.Surana Corporation.The sales bills produced by Surana Corporation would go to show thatgold worth Rs.27,43,249/= was delivered to the de facto complainantPradeep Jain and gold worth Rs.35,16,096/= was delivered to the defacto complainant Vinoth Kumar Mehta. Though the sales bills did notcarry the signature of the de facto complainants, the custom inpractice was confirmed from other reputed jewellers in the city. https://hcservices.ecourts.gov.in/hcservices/ With the aforesaid findings, the second respondent, AssistantCommissioner of Police, CCB, Chennai chose to file the final reportsclassifying both the cases as mistake of fact. 7. Both the de facto complainants filed protest petitions beforethe learned III Metropolitan Magistrate, George Town, Chennai. Inthe protest petitions, the de facto complainants have alleged asfollows:-The investigation is normally carried out only by the Inspectorof Police. The Assistant Commissioner of Police, second respondenthad no authority whatsoever to file the final report classifying thecases as mistake of fact. The accused were shielded by theinvestigating official. The investigating official failed to notethat all the ingredients of the offences have been made out clearlyin both the cases. The closure report reflects flawed investigationembarked upon by the second respondent.8. The court below, having adverted to the allegations found inthe complaint, materials collected by the investigating official andthe closure report, arrived at a decision that sufficient grounds donot exist for taking the case on file and as a consequence, itaccepted the closure reports filed by the second respondent. 9. Learned counsel appearing for the petitioners/de factocomplainants would vehemently submit that the important recordspertaining to the case were not called for by the investigatingagency to find the truth or otherwise of the claim made by theaccused that gold was delivered to the de facto complainants andcertain important aspects were not thoroughly probed into by theinvestigating team. It is his further submission that when theaccused had taken a stand that there was delivery of gold by SuranaCorporation to the de facto complainants, the investigating officershould have directed the accused to produce the relevant accountbooks viz., stock book, delivery note, sales tax returns and incometax returns of the Corporation to decide whether there was deliveryof gold by Surana Corporation to the accused. It is his furthersubmission that the investigating officer's finding that invoicesthemselves are proof of delivery cannot be legally accepted. Evenafter the investigating officer comes to know from the records thatthe de facto complainants have respectively remitted a sum ofRs.25,00,000/= and Rs.35,00,000/=, he was not so serious to find outthe truth revolving around such remittances made by the de factocomplainants to the account of Surana Corporation. The secondrespondent should not have dealt with the matter as his conduct wasseriously criticized by this court while dealing with CriminalO.P.Nos.2142 and 5042 of 2007. The learned Trial Magistrate has cometo a decision that the transaction was of civil nature when theinvestigating officer had not found so in his closure report. It is https://hcservices.ecourts.gov.in/hcservices/ his last submission that only during the course of trial, the defacto complainant could establish by calling for records from theperson concerned that there was criminal breach of trust and cheatingcommitted by the accused. 10. Learned Government Advocate (Criminal Side) appearing forrespondents 1 and 2 would submit that the de fact complainants couldnot substantiate their allegations with prima facie materials thatthey were cheated by the accused. The investigating official hasrightly filed the closure report and the learned MetropolitanMagistrate, having adverted to the entire findings arrived at by theinvestigating official, held that it was a fit case for closure. 11. The learned Senior Counsel appearing for respondents 3 to 6would submit that the de facto complainants could not come out withany source to part with the huge amount of Rs.1.25 crores andRs.84.40 lakhs respectively. The details of payments made were notadverted to either in the complaint or in the protest petition filedby the de facto complainants. The de facto complainants have comeout with a version that the unaccounted black money was pumped intothe account of Surana Corporation. The court should not go to therescue of such persons who allegedly transacted business with blackmoney. It is his further submission that the learned IIIMetropolitan Magistrate has rightly come to a decision that thecomplaints lodged by the de facto complainants deserve closure. 12. Unless sufficient grounds exist for proceeding further inthe criminal case, the learned Metropolitan Magistrate is notsupposed to take cognizance of the offences. The learnedMetropolitan Magistrate is duty bound to see whether or not there issufficient ground for proceeding against the accused. Of course,meticulous appreciation of evidence collected by the investigatingagency is outside the scope of the learned Judicial Magistrate whiletaking cognizance of the offences. He must also carefullydistinguish between civil and criminal liability. No one should beallowed to take recourse to criminal process to mount enormouspressure on the accused in order to redress his civil claim. 13. On filing the final report by the investigating official fordropping the proceedings four courses are left open to him:(1) He may agree with the conclusions arrived at bythe investigating official. Consequently, he mayexpedite the report and drop the whole criminalproceedings. He is duty bound to give anopportunity of hearing to the complainant beforeeverhe decides to drop the proceedings. https://hcservices.ecourts.gov.in/hcservices/ (2) He has every authority to take cognizance undersection 190(1)(b) and issue process straightway tothe accused untrammelled by the conclusions arrivedat by the investigating agency in a case where he issatisfied that there are sufficient grounds toproceed against the accused.(3) He may also order further investigation in casehe comes to a decision that there had been aperfunctory investigation done by the investigatingofficial.(4) He may also without taking recourse to issuingprocess or dropping proceedings, decide to takecognizance under section 190(1)(a) of the Code ofCriminal Procedure upon the original complaint orupon the protest petition treating the same ascomplaint and proceed to act under section 200 and202 of the Code of Criminal Procedure andthereafter, he may decide whether the complaintshould be dismissed or process should be issued.14. The learned Judicial Magistrate has got the aforesaiddiscretions. He can choose one of the above courses which isjustifiable. The court will have to find whether the optionexercised by the Metropolitan Magistrate in dropping the proceedingsaccepting the final report filed by the second respondent is proper. 15. The first and foremost charge levelled by the de factocomplainant is that Surana Corporation engaged their sub agent DineshBaghmar to approach the de facto complainant in order to persuadethem to invest their money in bullion traders business in gold andsilver. The materials collected by the second respondent would go toshow that there was no material to substantiate the allegation thatDinesh Baghmar was engaged by Surana Corporation as their sub agent.The de facto complainant Pradeep Jain has come out with a seriouscharge that he credited a sum of Rs.1.05 crores to the ICICI bankaccount held by Surana Corporation through 28 remittances. Theinvestigating officer had exerted himself and verified thetransactions that took place between the de facto complainant PradeepJain and Surana Corporation. It was found that only nine remittancesalone had been made by the de facto complainant Pradeep Jain withICICI account held by Surana Corporation. The records collected bythe investigating agency would disclose that only a sum ofRs.25,00,000/= was remitted to the ICICI account of M/s.SuranaCorporation by the de facto complainant Pradeep Jain and a sum ofRs.35,00,000/= was remitted by the de facto complainant Vinoth KumarMehta. There is no material shown before the investigating agencythat the remaining amount was paid by the de facto complainants to https://hcservices.ecourts.gov.in/hcservices/ Surana Corporation. 16. The sales bills were recovered by the investigating agencyto satisfy itself that Surana Corporation delivered gold worthRs.27,43,249/= to the de facto complainant Pradeep Jain and goldworth Rs.35,16,096/= to the de facto complainant Vinoth Kumar Mehta.As there was serious allegation that the delivery note, stock book,sales tax returns and income tax returns were not produced by theaccused to establish the delivery of the aforesaid gold to the defacto complainants, the investigating official, in order to satisfyitself that the delivery of gold is transacted only through salesbills, examined reputed Jewellers like Nathella Sampathu Chetty,Lalitha Jewellers, Prakash Gold House, etc. They have categoricallystated before the investigating official that the gold is deliveredonly through sales bills and the said practice is in vogue in thebullion trade. Therefore, necessity had not arisen for theinvestigating agency to go in search of the stock register, thedelivery note, the sales tax returns and income tax returns. Theaccused have satisfactorily explained the practice in vogue beforethe investigating official. But, the de facto complainants have notproduced any material to show that some amount was due as alleged bythem from the accused. 17. The investigating official chose to go deep into the sourcefor the huge fund mobilised by the de facto complainants. Firstly,such a huge amount did not find a place in the account books of thecomplainants. They have come out with a cock and bull story thatthey generated the fund through dealing in diamonds. Theinvestigating agency laboured to despatch letters to diamondmerchants with whom the de facto complainants claim to have had tradebut, to the shock and surprise, the investigating agency receivedreturned covers addressed to those traders with the endorsement "nosuch person exists". To top it all, they have admitted that the moneypaid to Surana Corporation is only black money. 18. At this juncture, it is relevant to refer to the observationmade by the Supreme Court in G.PANKAJAKSHI AMMA v. MATHAI MATHEW((2004) 12 SCC 83) as follows:-"There is any reason also why the impugnedjudgment cannot be upheld. According to the 1strespondent these transactions were to beunaccounted transactions. According to the 1strespondent, all these amounts are paid in cash.If these are unaccounted transactions then theyare illegal transactions. No court can come tothe aid of the party in an illegal transaction.It is settled law that in such cases the loss mustbe allowed to lie where it falls. In this case as https://hcservices.ecourts.gov.in/hcservices/ these are unaccounted transactions, the Courtcould not have lent its hands and passed a decree.For these reasons also the suit was required to bedismissed."19. That was a suit laid for recovery of dues from thedefendants based on illegal transactions. The Supreme Court has comedown heavily upon the shady transaction and held that unaccountedtransactions cannot have the blessings of the court and the courtshall not lend its hands by passing a decree as prayed for. Here, inthe instant case, the complainants, who allegedly remitted the blackmoney to the account of Surana Corporation, cannot set the law inmotion saying that their black money circulated was defrauded bySurana Corporation. At any rate, there is no evidence to show thatsuch a huge amount as alleged by the de facto complainant was pumpedinto the accounts of Surana Corporation. A sum of Rs.25,00,000/= andRs.35,00,000/= remitted to the account of Surana Corporation was alsorepaid through delivery of gold as per the documents collected by theinvestigating agency. The de facto complainants have come out withconcocted documents to show the source for generation of suchamounts. There is no material that could be collected by theinvestigating agency to show prima facie before the court that theaccused betrayed the trust posed by the de facto complainants andcommitted criminal breach of trust and cheating. 20. As regards the competency of the Assistant Commissioner ofPolice, CCB, Chennai to investigate the case, it is found that he wasdirected specifically in writing by the Commissioner of Police totake up the investigation on transfer of the erstwhile investigatingofficer Mr.Edward. Therefore, there is nothing wrong in entrustingthe investigation to a higher official by the competent authority. 21. Though the investigating official has not concluded that itwas a commercial transaction, the facts and circumstances woulddisclose that the transaction between the de facto complainant andSurana Corporation was only a commercial one. The de factocomplainants could not come out with sufficient materials to enablethe investigating officer to file a charge against the accused. Thesource of money could not be accounted by the de facto complainants.Only a part of the amount was paid into the account of SuranaCorporation. The said amount also was returned by delivery of goldby Surana Corporation. Even otherwise, the transaction being acommercial one, the de facto complainants should have approached thecivil court. But, unfortunately, there was no agreement between theparties. 22. The investigating officer has rightly taken a decision thatno materials are available to substantiate the prima facie case ofthe de facto complainants. Therefore, he has filed a closure report. https://hcservices.ecourts.gov.in/hcservices/ The learned III Metropolitan Magistrate also, having adverted to thefindings of the investigating officer, arrived at a right decisionthat it was a fit case for dropping the proceedings accepting theclosure report filed by the investigating officer. The order passedby III Metropolitan Magistrate dropping the proceedings accepting theclosure report is not tainted with impropriety or illegality. 23. In view of the above, both the revision cases fail and theystand dismissed.Sd/Asst.Registrar/true copy/Sub Asst.Registrarssk. To1. The III Metropolitan Magistrate, George Town, Chennai. 2.-DO-Though the Chief Metropolitan Magistrate, Egmore, Chennai-83. The Assistant Commissioner of Police, CCB, Chennai.4. Inspector of Police, CCB, Chennai. 2 cc To Mr.R.Sankarappan, Advocate, SR.33125 & 331264 cc To Mr.P.Krishnan, Advocate, SR.33599 Crl.R.C.Nos.1326 AND 1435 of 2007msm(co)pmk.29.7.2009.