Manismran Kaur

Bangalore, May 25, 2022: Referring to a notification dated  January 10, 2005 issued by the State Government, the Karnataka High Court has clarified that the CBI has jurisdiction to register and investigate the case of a person who is the servant under the Central Government institution in the State of Karnataka.

A Single-Judge Bench of Justice K. Natarajan referred to the notification of the State Government produced by the respondent’s counsel wherein it is clearly mentioned that the State of Karnataka has accorded consent under Section 6 of the Delhi Special Police Establishment Act for exercising powers and jurisdiction by the members of the Delhi Special Police Establishment within the State of Karnataka for investigation of all types of cases involving either Central Government servants or officers belonging to Public Sector Undertakings under the Central Government under different State and Central Government Acts.

Facts of the case were such that one Smt. Pooja Tikku, the Deputy General Manager of the Industrial Finance Corporation  (IFCI) lodged a written complaint against the petitioner and others to the CBI alleging that the company VNR Infrastructure Ltd. and the petitioner-second accused (Managing Director) along with the other accused persons  committed fraud to the tune of Rs.205.02 crores by way of misappropriation, cheating and criminal misconduct. It was further alleged that the first and second accused availed corporate loan from the complainant bank IFCI to the tune of Rs.190 crores. It was further alleged by the complainant that in the month of April 25, the second and third accused acting on behalf of the company approached the complainant for another Rs. 100 crore loan to meet and fulfill the IPO objectives. The same was accepted by the complaint and the loan was granted. 

Thereafter,the second accused started defaulting on repayment of the loan amount and on March 15, 2016 the loan amount of the first accused was classified as Non- Performing Asset as the total loan amount along with the interest stood up to 205 crores. In view of the same, the proceedings were initiated under Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 for recovery of the said loan amount by issuing notice under Section 13 (2) of the said Act.  Eventually, the Trial Court took cognizance against the accused persons. The present petitions were filed by the petitioner-second accused under Section 482 of Cr.P.C. for quashing the FIR filed  by the respondent for the offence punishable under Section 120- B read with Section 420 of IPC and Section 13 (2) read with Section 13 (1) (d) of Prevention of Corruption Act , 1988 and also the charge sheet lying pending on the file of XXI Additional City Civil and Sessions Judge and Special Judge for CBI cases, Bengaluru.

Stating that the respondent- CBI clearly had the jurisdiction to register and investigate the case of a person who was a servant under the Central Government institution in the State of Karnataka, the Court observed that IFCI is a Public Limited Company as per the definition of the Companies Act and the same was registered under the Companies Registration Act. Thus, on the aforesaid ground, the proceedings cannot be quashed, the Court noted. It was further observed that as per the circular issued by the bankers in respect of prevention, classification and reporting frauds, it was stated therein that if fraud is above Rs.3 crores, the complaint shall be filed before the CBI Anti Corruption Branch.

In the instant case, the first and second accused approached the third accused, who was the General Manager, and all the accused persons conspired together to commit the alleged fraud of above stated value and thus the complaint filed before the CBI was valid, the Court noted. Hence, the Bench opined that no case was made out by the petitioner to quash the criminal proceedings against him before the Trial Court. Accordingly, the criminal petitions were dismissed. 

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