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RESERVED

CRIMINAL MISC WRIT PETITION NO 24225 OF 2009

Amar Singh................v...............State of U.P and others

Criminal Misc Writ Petition No 4909 of 2010

Shiv Kant Tripathi........V ............State of U.P and others

Hon Imtiyaz Murtaza J

Hon. S.S. Tiwari, J

(Delivered by Hon Imtiyaz Murtaza, J)

In the writ petition preferred by petitioner Amar Singh has

mounted onslaught on the FIR dated 15.10.2009 registered at case

crime no 458 of 2009 under section 420, 467, 471, 120 B IP,

sections 7/8/9/13 (1) (e) of the Prevention of Corruption Act, 1988

and section 3 and 4 of the Prevention of Money Laundering Act

2002 at police Station Babu Purwa Kanpur Nagar and sought

quashing of the same by issuing a writ of certiorari.

In the second petition preferred by petitioner Shiv Kant

Tripathi, the relief sought in this petition is for a writ of mandamus

directing Enforcement Directorate arrayed as respondent no 4 to

take up the investigation of case crime no 458 of 2009 registered

at PS Babu Purwa Distt Kanpur Nagar and investigate the same in

accordance with Law attended with further relief of a writ of

mandamus directing the Special Cell Economic offences Wing as

also the Enforcement Directorate to submit such periodical reports

as may be deemed fit as to the stage, status and manner of

investigation to this Court and also for direction to complete the

investigation within such period as may be directed by the Court.

Neutral Citation No. - 2011:AHC:73020-DB

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The allegations in the FIR under challenge in writ petition

preferred by petitioner Amar Singh, pertain to the period when the

petitioner was the Chairman of the U.P Development Council in the

year 2003. The office of Chairman was said to be equal in rank to a

Cabinet Minister. The first part of the allegations substantially is

that the petitioner while holding the office of Chairman, misused

his official position and awarded various Government contracts

worth thousands of crores to companies owned and controlled by

him and he also received kick-backs in the form of commission.

The second part of the allegation is that the petitioner indulged in

money laundering business by creating a web of shell companies.

It is alleged that the major share holders of M/S Pankaja Arts and

Credit Private Limited and M/S Sarvottam Caps Limited is the wife

of the petitioner and close family associate namely Sri Amtabh

Bachchan, a noted cine artist and former member of Parliament. It

is further alleged that in all there are six companies which are

under the control of the petitioner but at the same time, they are

not involved in any active business and further that as many as 41

companies merged with M/S Pankaja Arts and Credit Private

Limited and M/S Sarvottam Caps Limited by orders of Kolkata High

Court dated 31.12.2003 and 31.1.2005. It is further alleged that

the aforesaid 41 Companies were shell companies with little or no

business. It is further alleged that amalgamation process was a

deception and by this process the companies in which the

petitioner had controlling shares, were enriched by wealth of

around 400 crores. By this reckoning, it is alleged that the

petitioner came in possession of wealth disproportionate to his

known sources of income and it is further alleged that it would thus

be eloquent that the petitioner misused his position by indulging in

money laundering business and for this purpose he conspired with

other Directors, officials and statutory authorities.

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Sri Ram Jethmalani, learned Senior Advocate assisted by Sri

Kunwar Sidharth Singh, appearing for petitioner Amar Singh,

argued the matter at prolix length. On the other hand, Sri Gopal

Chaturvedi, learned Senior Advocate, assisted by Sri Samit Gopal,

appearing for Shiv Kant Tripathi, petitioner in Writ Petition No 4909

of 2010 advanced his submissions at elaborate length. We have

also heard Additional Solicitor General, Government Advocate and

other counsel assisting them. We have also been taken through the

materials on record in the course of arguments.

The learned counsel appearing for the petitioner namely,

Amar Singh, while assailing the allegations in the FIR, has set out

summary of own facts which are that the petitioner was born and

had received his education at Calcutta and he set up his business

in Calcutta as well. It is also stated that the petitioner has his

dwelling place at Calcutta at 35 Rowland Road and he is also

registered there for income Tax purposes. It is also stated that

barring EDCL Limited and Ester India Chemicals Ltd, all other

companies mentioned in the FIR in which the petitioner had share-

holdings are registered at Kolkata at the address (1) Azimganj

House Block 1, Ist Floor 7 Camac Street Kolkata. It is also stated

that out of 6 companies alleged to be under control of the

petitioner, only Ester India Chemicals Ltd is filing its income Tax

Returns at New Delhi while other five companies as mentioned

below are filing their Annual returns at Kolkota. (1) M/S EDCL Ltd,

(2) M/S Pankaja Art and Credit Pvt Ltd, (c) M/S Sarvottam Caps

Ltd , (d) M/S EDCL Power Projects Ltd and M/S EDCL

infrastructure. It is also stated that the above fact would be borne

out from the perusal of the documents filed by the informant

alongwith the FIR. It is also stated that the first company in which

the petitioner had shareholding was registered in the year 1984

which is known as M/S Ester India Chemicals Ltd. The other

companies namely, M/S Pankaja Art and Credit Pvt Ltd and M/S

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Sarvottam Caps Ltd and EDCL Ltd were all incorporated in the year

1992, 1995 and 1995 respectively. It is also stated that similarly

M/S EDCL Power Projects Ltd was incorporated in the year 2002. It

is thus submitted that all the aforesaid companies were

incorporated before the formation of Samajwadi Party Government

in the State of U.P which came into power on 29th August 2003. It

is explained that only one company known as EDCL Infrastructure

came to be incorporated after the formation of the Government in

the year 2004. It is also stated that 41 companies which are stated

to have merged in M/S Panakaja Arts and Credit Pvt Ltd and M/S

Sarvottam Caps Ltd are the companies which are incorporated in

Kolkata It is also stated that the 41 companies as aforesaid had

applied for merger sometime in 2004 and Feb 2005 and for that

purpose company petition was presented in the Kolkata High Court

which was allowed vide order dated Sept 20th, 2004 and Sept 7th,

2005. By that order, the transferee companies were allowed to

convene separate meetings of equity shareholders for the purposes

of considering the proposed scheme of amalgamation and in

consequence, the companies had issued notices and reports were

submitted which amply manifested that the proposed scheme of

amalgamation had been approved by the requisite majority of the

equity share holders. It is also stated that the Central Govt through

its Advocate had also indicated that it had no objection to the

proposed scheme of amalgamation. After completion of the above

process, the Kolkata High Court approved the proposed scheme of

amalgamation and declared it to be binding with effect from

1.1.2004 and 31.1.2005 respectively. It is further mentioned that

allotment of share to the share holders of the transferor company

had been done strictly as approved by the Kolkata High Court.

Assailing the bonafide of the informant, the learned Counsel

has stated that the informant had given fake address and mobile

number. By this reckoning, the learned counsel submitted that the

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FIR has not been lodged with any bonafide intention. The learned

counsel also called in question the jurisdiction of PS Babu Purwa.

The learned counsel also submitted that the U.P.D.C was

constituted on 15.10.2003 to advise the Government on matters of

economic policies and development and it was not given any power

to award any Government contracts. Drawing attention to the

allegations as contained in the FIR it is stated that no allegation

has been made that the UPDC was conferred any power to award

any govt contracts. It is also submitted that UPDC has not awarded

any govt contract or other contract to any industrialist. He also

submitted that the UPDC with all its members acted collectively

and all resolution passed by UPDC were only recommendatory,

general and policy related and further that Sri Atul Gupta who was

secretary Industries Department in the said Government was the

ex officio secretary of the UPDC and even the advisory opinions of

the UPDC were routed to Govt through Sri Atul Gupta.

The learned counsel also submitted that after lodging of the

FIR, the cabinet decision was widely aired that UP police had no

jurisdiction to investigate the matter and the matter was

transferred to Kolkata Police. The Kolkata Police after receipts of

papers, returned the entire matter on 23.10.2009 observing that

the matter was not worth registering. It is thereafter, the UP Police

swung into action and commenced investigation. It is also alleged

that Dinesh Tripathi who was till then under suspension was

reinstated and he was given charge of PS Babu Purwa and the very

next day Shivakant Tripathi author of the FIR got the FIR lodged at

PS Babu Purwa. He also adverted attention to calls details of

conversations between the complainant and the SHO Babu Purwa

between Sept 10 and Oct 15, 2009. He also referred to calls details

of conversation between the complainant and a top official of CM

Secretariat. It is alleged that informant made 23 calls to Navneet

Sehgal an official of CM Secretariat and the said bureaucrat called

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the informant 33 times within a span of 35 days. He also referred

to criminal antecedents and criminal cases registered against the

informant at PS Chakeri Kanpur. Lastly it is argued that the

allegations made in the FIR are absurd and inherently improbable

and there is no sufficient ground for proceeding against the

petitioner and it is nothing but a desperate attempt to harass and

humiliate the petitioner by making baseless allegations. He also

alluded to political rivalries and the entire facts have been

concocted to malign the petitioner and for settling political scores

and therefore, it is submitted that the FIR is clearly an act of

malice and fraud and it is liable to be quashed.

In support of the above submissions, the learned counsel

relied upon following decisions.

(i) State of Haryana v Bhajan Lal and others 1992 (Supp) 1 SCC

335.

(ii) Mohd Ibrahim and others v State of Bihar (2009) 8 SCC 751

(iii) State of Bihar v Murad Ali Khan (1988) 4 SCC 655

(iv) MCD v Ram Kishan Rohatgi AIR 1983 SC 67

(v) Moti Singh Gambhu Singh v State AIR 1961 Guj 177.

As stated supra, subsequent to the aforesaid petition, the

informant Shiv Kant Tripathi also filed a writ petition in this Court

which is docketed in this Court as Criminal Misc Writ Petition No

4909 of 2010. The relief sought in this petition is for a writ of

mandamus directing Enforcement Directorate arrayed as

respondent no 4 to take up the investigation of case crime no 458

of 2009 registered at PS Babu Purwa Distt Kanpur Nagar and

investigate the same in accordance with Law attended with further

relief of a writ of mandamus directing the Special Cell Economic

offences Wing as also the Enforcement Directorate to submit such

periodical reports as may be deemed fit as to the stage, status and

manner of investigation to this Court and also for direction to

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complete the investigation within such period as may be directed

by the Court. In the aforesaid petition, the petitioner namely Sri

Tripathi has cited certain instances which according to him, which

generated doubts about shady dealings. The instances are:

(i) that Amar Singh formed a never ending chain through the web

of companies with complex cross holdings coupled with

amalgamations which helped in erasing the trail and by this

reckoning, it was not only an attempt at converting black money

into legitimate money but involved appropriating outlandsih sums

of money that could not have been legitimately earned by him

through his known and admitted sources of income.

(ii) that in respect of M/S Energy Development Company ltd a

flagship company of Amar Singh, it is stated that on scrutiny it was

found to be registered in Bangalore with Amar Singh as its

Chairman cum Managing Director with his wife as one of the

Directors . It is stated that aforesaid company for the first year i.e

2005-06 is shown to have earned Rs 2.49 crores during financial

year 2005-06 and out of this amount, the company has shown to

have expended only a sum of Rs 38.30 lacs under the head "Salary

and Allowances. In the next financial year 2006-07, the company

has shown to have spent Rs 97.28 lakhs on salary and allowances.

It is stated that it is unbelievable that the company would be able

to sustain experienced staff on such meagre salary and allowances

The aforesaid amount would not be sufficient to meet the salary

and allowance of an experienced CEO not to speak of other

experienced staff.

(iii) That for the financial year 2006-07 the company is shown to

have earned contractual income to the tune of Rs 52.40 crores. It

is stated that such a huge amount cannot be legitimately earned

by the company with its limited resources.

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(iv) That upon closely scrutinizing the share holding pattern in the

above six companies it is noticeable that besides individuals the

companies had in all 23 corporate share holders excluding 4. From

further dissection it is stated it appeared that a majority of them

were non existent companies

(v) That the petitioner reiterated that all the companies which were

amalgamated were in fact shell companies with little or no business

activities.

(vi) That from analysis of financial statements of the companies,

bitter truth was discovered that most of these companies were

either incurring losses or earning negligible income and yet the

shares of these companies were subscribed at preposterous

premiums.

(vii) It is also stated that amalgamation process was a mere

deception inasmuch as it brooks no dispute that the transferee

company stands to gain everything from the deal while the

transferor company does not stand to benefit in any manner

whatsoever and the same is the case with almost all the

amalgamated companies.

The distillate of exhaustive enquiries with professional

assistance as averred by petitioner Shiv Kant Tripathi in the

petition is as under>

(a) The entire modus operandi is a racket which is very deep

rooted in our economy. It had started long back and is prevalent till

date. Parallel economy is a well known phenomenon in the country.

(b) the three amalgamations consisting of 55 companies has been

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undertaken by Amar Singh from the year 2003 to 2008. In other

words, Amar Singh got control management and economic benefit

of this huge amount of money.

(c) that the amalgamations have been carried out with companies

having no business relations or being connected with Amar Singh

in any way.

(d) that Amar Singh in the entire operation has introduced his ill

earned wealth either at the time of issue of share capital at a

premium of amalgamating companies or at the time of

amalgamation and this can be unravelled only through a thorough

investigation.

(e) that Directors of the companies were either the operators of

these companies or their close associates. In certain cases, income

tax authorities found that the directors of these companies were

either drivers or peons of the operators etc.

In this matter, it would appear that by means of the order

dated 5.12.2009 the Division Bench headed by Hon Yatindra Singh

J passed orders staying arrest of the petitioner till next date of

listing or till submission of police report under section 173 (2) Cr.PC

whichever is earlier attended with direction that the matter would

be investigated by people having expertise in accounting and that

the matter would be referred to the appropriate authority under

the Money laundering Act or any other Central act for taking

appropriate action.

In the writ petition filed by Shiv Kant Tripathi, the Court

observed in its order dated 23.8.2010 that according to the

averments in para 12 of the counter affidavit, papers and materials

have been entrusted to Enforcement Directorate New Delhi. The

Court taking notice of the statement made across the bar by the

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Addl Solicitor General observed that papers have not yet been

made available to Enforcement Directorate.

It is a settled principle that the High Court being the highest

court of a State should normally refrain from giving a prima facie

decision in a case where the entire facts are incomplete and hazy,

more so when the evidence has not been collected and produced

before the Court and the issues involved, whether factual or legal

are of magnitude and cannot be seen in their true perspective

without sufficient material. The power under Article 226 of the

Constitution is a discretionary power and one of the grounds

against the exercise of the discretion in such cases would be that

the relief sought by the petitioner is not capable of being

established in the summary proceeding under Article 226 because

it requires a detailed examination of the evidence. The object of Art

226 is the enforcement and not the establishment of a right.

In Divine Retreat Centre v State of Kerala and others

AIR 2008 SC 1614 , the Apex Court held that the High Court in

exercise of its power under Art. 226 of the Constitution of India can

always issue appropriate directions at the instance of an aggrieved

person if the High Court is convinced that the power of

investigation has been exercised by an Investigating Officer mala

fide. That power is to be exercised in rarest of the rare cases where

a clear case of abuse of power and non-compliance with the

provisions falling under Chap. XII of the Code is clearly made out

requiring the interference of the High Court. But even in such

cases, the High Court cannot direct the police as to how the

investigation is to be conducted but can always insist for the

observance of process as provided for in the Code. Even in cases

where no action is taken by the police on the information given to

them, the informant's remedy lies under Ss. 190, 200, Cr. P. C., but

a Writ Petition in such a case is not to be entertained. (Paras 35,

36).

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This Court by means of its order dated 5.12.2009, the Court

issued following directions.

" We wish to clarify that it will be open to respondents

no 1 to 3 to :

(1) get the matter investigated by special cell

consisting of people who are expert in accounting.

(2) refer the matter to the appropriate authority under

the Money Laundering Act or any other Central Act for

taking appropriate action therein. In case any such

reference is made, this order will not prevent the

authorities to proceed to inquire, investigate, (including

arrest of the petitioner) under those Acts."

In connected writ petition no 24225 of 2009, the Division

Bench headed by Hon Amar Saran, J passed the order dated

23.8.2010 in which it was noted on the basis of statement made by

Addl Solicitor General that according to his information, the

Enforcement Directorate of the Central Government has not yet

received any such papers attended with direction that State and

Central Government may clarify the aforesaid matter about

handing over papers to the Enforcement Directorate and about the

progress of investigation on that date. Even at the time of

reserving the order, the papers were said to have not been

entrusted to the Enforcement Directorate.

As observed supra referring to the order passed by the

earlier Bench of this Court, whereby liberty was given to the

respondents 1 to 3 to have the matter investigated thoroughly by

Special Cell consisting of people who are expert in accounting. The

choice it would appear, fell on Enforcement Directorate which was

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already arrayed as respondent no 3 in the connected writ petition.

The matter ever-since then has been hanging in balance inasmuch

as the matter is stuck at the level of handing over of papers to the

said Agency.

The first and foremost argument advanced across the bar is

that all the companies being registered at Kolkota, and carrying on

their venture in Kolkata, the FIR lodged at Babu Ka Purwa Police

station cannot be acted upon or investigated by the U.P Police. It is

further argued that after registration of the case at PS Babu Ka

Purwa Kanpur Nagar, it was realized that the cognizance of the

matter cannot be taken in U.P and hence the Cabinet took a

decision of transferring the matter to Kolkata Police. He also

argued that Kolkata Police after receipts of papers, returned the

entire matter on 23.10.2009 observing that the matter was not

worth registering and it is only thereafter that the U.P Police again

galvanized into action. In this connection, the learned counsel also

argued that it is now not open for the U.P police to embark upon

investigation in the matter as the companies in question are

registered in Kolkata and are doing business from there. The

learned counsel also argued that all mergers of companies took

place in Kolkata and on this count also, the jurisdiction does not lie

in the State of U.P. It is further argued that merger is a judicial

proceeding and the same cannot be construed to be an offence.

The learned Government Advocate denied that any decision as

alleged by taken to transfer the papers to Kolkata Police. In para

20 it is averred that the decision to transfer the investigation to

Kolkata was taken by Smt Neera Rawat Deputy Inspector General

of Police/Senior Supdt of Police Kanpur Nagar for which she wrote a

letter to the Commissioner of Police Kolkata on 17.10.2009 to take

up the investigation. However, the papers were returned to the said

police officer by Kolkata police on 22.10.2009 and it was thereafter

that the matter was referred to the State Government to entrust

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the matter to any competent agency whereupon the investigation

was entrusted by the State Govt to the Economic offences Wing

C.I.D UP. However, in the counter affidavit, the deponent refused to

comment upon press report to which learned Counsel appearing for

petitioner Amar Singh copiously referred. In the rejoinder affidavit,

this fact is much highlighted that there was no averment that Amar

Singh as Chairman awarded any contracts and hence no offence

under Prevention of Corruption Act is ex facie made out.

There is no gainsaying of the fact that the genesis of the

allegations relate to the period when Amar Singh held the office of

Chairman U.P. Development council in the year 2003 and the brunt

of allegations is that he misused the office and laundered the

money through web of companies created by him by abusing his

official position. In the light of the facts on record, it would suffice

to say that the genesis of the entire matter is in the State of U.P.

Yet another aspect which lends cogency to the fact that the

matter can be investigated by the police of State of U.P is that the

FIR lodged includes section 120 B IPC covered with section 120 A

IPC. The allegations are against the petitioner namely Amar Singh

that as a Chairman UPSIDC, he committed all the overt and covert

acts covered by section 120 A IPC.

In connection with the contention pertaining to jurisdictions

we would like to refer to a decision of Apex Court in Satvinder Kaur

V State o(Govt of NCT of Delhi) (AIR 1999 SC 3596 in which the

Apex Court substantially observed as under:

"F.I.R cannot be quashed by High Court under S. 482

on ground that police station officer of particular police

station (Delhi in instant case) was not having territorial

jurisdiction to entertain and investigate the F.I.R.

lodged by the appellant because the alleged dowry

items were entrusted to the respondent at Patiala and

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that the alleged cause of action for the offence

punishable under S. 498-A, I.P.C. arose at Patiala. The

appreciation of the evidence is the function of the

Courts when seized of the matter. At the stage of

investigation, the material collected by an Investigating

Officer cannot be judicially scrutinized for arriving at a

conclusion that police station officer of particular police

station would not have territorial jurisdiction. In any

case, it has to be stated that in view of S. 178(c) of the

Criminal Procedure Code, when it is uncertain in which

of the several local areas an offence was committed, or

where it consists of several acts done in different local

areas, the said offence can be inquired into or tried by

a Court having jurisdiction over any of such local areas.

Therefore, to say at the stage of investigation that

S.H.O., Police Station, New Delhi was not having

territorial jurisdiction, is on the face of it, illegal and

erroneous. That apart, S. 156(2) contains an embargo

that no proceeding of a police officer shall be

challenged on the ground that he has no territorial

power to investigate."

It would thus transpire that merely on the ground that all the

companies were registered at Kolkota and that merger of the

companies was also allowed judicially by Kolkata High Court, would

not divest the courts from taking cognizance of the matter or the

police of State of U.P from investigating into the matter.

The next submission of the learned counsel revolves round

the relief for quashing of the entire proceeding pursuant to the FIR

lodged at police Station Babu Ka Purwa Kanpur Nagar on various

grounds which included assailing of bonafide of the informant

urging that the informant had given fake address and mobile

number attended with submission that the FIR had not been lodged

with any bonafide intention again followed by submissions that the

allegations made in the FIR were absurd and inherently improbable

and there was no sufficient ground for proceeding against the

petitioner and it is nothing but a desperate attempt to harass and

humiliate the petitioner by making baseless allegations. The

learned counsel also alluded to political rivalries and that the entire

facts have been concocted to malign the petitioner and it is for

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settling political scores that the FIR was lodged and it was clearly

an act of malice and fraud and it is liable to be quashed. As stated

supra, in the connected writ petition, the petitioner gave substance

of exhaustive enquiries with professional assistance has been cited

as under>

(a) The entire modus operandi is a racket which is very deep

rooted in our economy. It had started long back and is prevalent till

date. Parallel economy is a well known phenomenon in the country.

(b) The three amalgamations consisting of 55 companies has been

undertaken by Amar Singh from the year 2003 to 2008. In other

words, Amar Singh got control management and economic benefit

of this huge amount of money.

(c) that the amalgamations have been carried out with companies

having no business relations or being connected with Amar Singh

in any way.

(d) That Amar Singh in the entire operation has introduced his ill

earned wealth either at the time of issue of share capital at a

premium of amalgamating companies or at the time of

amalgamation and this can be unravelled only through a thorough

investigation.

(e) That Directors of the companies were either the operators of

these companies or their close associates. In certain cases, income

tax authorities found that the directors of these companies were

either drivers or peons of the operators etc.

The allegations made are serious and it cannot be said that

ex facie the allegations do not make out any case for investigation.

Rather, from a close scrutiny of the materials on record, we are of

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the opinion that the entire matter requires thorough probe in order

to get at the truth of the matter.

In connection with the above contentions, we would like to

refer to the two decisions of the Apex Court in T. Vengama Naidu

v T. Doraswamy Naidu (2007) 12 SCC 93.

In T. VengamaNaidu (supra), the Apex Court observed as

under:

"7. It cannot be disputed that a private complaint was

filed before the learned Magistrate who had made over

the said complaint for investigation under Section

156(3) Cr.P.C. That order of the Magistrate has not

been challenged. On the basis of that order the police

registered a crime probably treating the complaint as

the FIR. It is settled law that an FIR and the

consequent investigation cannot be quashed unless

there is no offence spelt out from the same. The law in

this respect is settled that the said FIR has to be taken

on its face value and then it is to be examined as to

whether it spells out the offences complained of. There

was no question of considering the merits of the

allegations contained in the FIR at that stage or testing

the veracity of allegations. In this case, admittedly, the

investigation was in progress. The police had also not

reported back to the Magistrate the result of their

investigation. Under such circumstances, the FIR could

have been quashed only and only if there appeared to

be no offence spelt out therein. A glance at the FIR

suggests that there were serious allegations against

both the accused, respondents 1 and 2 herein

inasmuch as it was specifically alleged that in spite of

the revocation of the General Power of Attorney and in

spite of a specific notice to that effect by the

complainant to the first respondent, the first

respondent went on dishonestly to execute the sale

deed in favour of his own daughter on the basis of the

said revoked General Power of Attorney. It is alleged

against the first respondent that he had no right over

the property and yet he had executed a document in

favour of the second respondent without any authority

with an intention to cause loss to the complainant and

to cheat him. It was alleged against the second

respondent that she was well aware that the first

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respondent was not competent to sell the property so

as to defraud and cheat the complainant and,

therefore, she also was liable to be punished under

Sections 464, 423, 420 read with Section 34 IPC. It

was not for the learned Judge at the stage of

investigation to examine the nature of the transaction

and further to examine as to whether any offence was

actually committed by the accused persons or not. At

that stage the only inquiry which could have been

made was as to whether the complaint or the FIR did

contain allegations of any offence. Whether those

offences were made out, even prima facie, could not

have been examined at that stage as the investigation

was pending then. We, therefore, do not agree with the

learned Single Judge that the FIR was liable to be

quashed. We also do not agree with the learned Judge

that there are no ingredients of the offences

complained of in the FIR and this was a civil dispute.

However, we do not wish to go deeper into that

question. Our prima facie examination satisfies us that

there were ingredients of offences complained of and,

therefore, at that stage the High Court could not have

quashed the FIR as well as the investigation. The

appeal, therefore, has to be allowed, setting aside the

order of the learned Single Judge." (Emphasis

supplied)

In view of what has been ruled in the aforesaid decision by

the Apex Court, we find no substance in the submissions of the

learned counsel that FIR does not ex facie disclose an offence.

The next submission revolves round mala-fide and political

rivalries. It is stated that the informant has been set up out of

political vendetta. The ex -catehdra decision on this point is State

of Haryana V Bhajan Lal AIR 1992 SC 604. Para 114 of the said

decision being relevant is quoted below.

114. No doubt, there was no love lost between Ch.

Bhajan Lal and Dharam Pal. Based on this strained

relationship, it has been then emphatically urged by Mr.

K. Parasaran that the entire allegations made in the

complaint due to political vendetta are not only

scurrilous and scandalous but also tainted with mala

fides, vitiating the entire proceeding. As it has been

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repeatedly pointed out earlier the entire matter is only

at a premature stage and the investigation is not yet

proceeded with except some preliminary effort taken

on the date of the registration of the case, that is, on

21-11-1987. The evidence has to be gathered after a

thorough investigation and placed before the Court on

the basis of which alone the Court can come to a

conclusion one way or the other on the plea of mala

fides. If the allegations are bereft of truth and made

maliciously, we are sure, the investigation will say so.

At this stage, when there are only allegations and

recriminations but no evidence, this Court cannot

anticipate the result of the investigation and render a

finding on the question of mala fides on the materials

at present available. Therefore, we are unable to see

any force in the contention that the complaint should

be thrown overboard on the mere unsubstantiated plea

of mala fides. Even assuming that Dharam Pal has laid

the complaint only on account of his personal

animosity, that, by itself, will not be a ground to

discard the complaint containing serious allegations

which have to be tested and weighed after the

evidence is collected. In this connection, the following

view expressed by Bhagwati, CJ in Sheonandan Paswan

v. State of Bihar (1987) 1 SCC 288 at page 318: (AIR

1987 SC 877 at p. 891) may be referred to

"'It is a well established proposition of law that a

criminal prosecution, if otherwise, justifiable and based

upon adequate evidence does not become vitiated on

account of mala fides or political vendetta of the first

informant or the complainant." (Emphasis supplied)

In view of the above discussion, we find no substance in the

submissions that the proceeding is liable to be quashed on grounds

of malafide and political rivalries.

Coming to the decisions cited across the bar by learned

counsel appearing for the petitioner, it would suffice to say that we

have studied the ratio flowing from the decisions very scrupulously.

The ratio flowing from the said decisions, we must say with all

humility, cannot be imported for application in the context of the

disputation as involved in these two petitions.

19

In the above conspectus, the writ petition filed by the

petitioner namely Amar Singh for the relief of quashing the F.I.R

registered at case crime No 458 of 2009 under section 420, 467,

471, 120 B IP, sections 7/8/9/13 (1) (e) of the Prevention of

Corruption Act, 1988 and section 3 and 4 of the Prevention of

Money Laundering Act 2002 at Police Station Babu Ka Purwa

Kanpur Nagar fails and is accordingly dismissed.

Now the question that crops up for consideration is whether

it is a fit case constituting special reasons for being referred for

investigating to Special Cell. It is well enunciated by a stream of

decisions of the Apex Court that the High Court can direct an

investigation by the Special Cell without the consent of the State

concerned when matters related to corruption in public

administration, misconduct by the bureaucracy, fabrication of

official records and misappropriation of public funds.

In Secretary M.I and R.E Services U.P v Sahngoo Ram

Arya AIR 2002 SC 2225, the Apex Court observed that while

none can dispute the power of the High Court under Article 226 to

direct an inquiry by the CBI, the said power can be exercised only

in cases where there is sufficient material to come to a prima facie

conclusion that there is a need for such inquiry. It is not sufficient

to have such material in the pleadings. On the contrary, there is a

need for the High Court on consideration of such pleadings to come

to the conclusion that the material before it is sufficient to direct

such an inquiry by the CBI. This is a requirement which is clearly

deducible from the judgment of this Court in the case of Common

Cause. The Apex Court also referred to the judgment of the Apex

Court in AIR 1999 SC 2979 which in paragraph 174 it was has held

thus:

"The other direction, namely, the direction to CBI to

investigate "any other offence" is wholly erroneous and

cannot be sustained. Obviously, direction for

20

investigation can be given only if an offence is, prima

facie, found to have been committed or a person's

involvement is prima facie established, but a direction

to CBI to investigate whether any person has

committed an offence or not cannot be legally given.

Such a direction would be contrary to the concept and

philosophy of "LIFE" and "LIBERTY" guaranteed to a

person under Article 21 of the Constitution. This

direction is in complete negation of various decisions of

this Court in which the concept of "LIFE" has been

explained in a manner which has infused "LIFE" into

the letters of Article 21".

In State of West Bengal v Committee for Protection of

Democratic Rights (2910 2SCC (Cri), the Apex Court in para 70

observed as under:

"Before parting with the case, we deem it necessary to

emphasize that despite wide powers conferred by

Articles 32 and 226 of the Constitution, while passing

any order, the Courts must bear in mind certain self

imposed limitations on the exercise of these

constitutional powers. The very plenitude of the power

under the said articles requires great caution in its

exercise. In so far as the question of issuing a direction

to CBI to conduct investigation in a case is concerned,

although no inflexible guidelines can be laid down to

decide whether or not such power should be exercised

but time and again it has been reiterated that such an

order is not to be passed as a matter of routine or

merely because a party has levelled some allegations

against the local police. This extraordinary power must

be exercised sparingly, cautiously and in exceptional

situations where it becomes necessary to provide

credibility and instill confidence in investigations or

where the incident may have national and international

ramifications or where such an order may be necessary

for doing complete justice and enforcing the

fundamental rights. Otherwise, CBI would be flooded

with a large number of cases and with limited

resources, may find it difficult to properly investigate

even serious cases and in the process, lose its

credibility and purpose with unsatisfactory

investigations."

In para 71 of the aforesaid decision, the Apex Court

concurred with the view taken in Minor Irrigation & Rural Engg.

21

Services, U.P v. Sahngoo Ram Arya (Supra). Para 71 being also

relevant is excerpted below.

"In Minor Irrigation & Rural Engg. Services, U.P v.

Sahngoo Ram Arya this Court had said that an order

directing an enquiry by CBI should be passed only

when the High Court, after considering the material on

record, comes to a conclusion that such material does

disclose a prima facie case calling for an investigation

by CBI or any other similar agency. We respectfully

concur with these observations."

Amongst the allegations are the allegations of money

laundering as well. the petitioner in the second petition has termed

the companies as shell companies. Shell companies mean those

companies which disguise the true owner of money. The methods

by which money may be laundered are varied and can range in

sophistication from simple to complex. The proceeds of crime are

made to appear legitimate. According to one estimate, the money

laundered each year is in billions and posses a significant policy

concern. Money laundering often occurs in three steps: first, cash

is introduced into the financial system by some means, the second

involves carrying out complex financial transactions in order to

camouflage the illegal source and the final steps entails acquiring

wealth generated from the transactions of the illicit funds. Money

laundering poses a serious threat to financial system integrity. It

may emerge as a parallel economic system within a nation

controlled by a few. This may destabilize and perish a sound

economy. Section 3 of the Act envisages; "Whosoever directly or

indirectly attempts to indulge or knowingly assists or knowingly is

a party or is actually involved in any process or activity connected

with the proceeds of crime and projecting it as untainted property

shall be guilty of offence of money laundering.

In the above perspective we are of the view that regard

being had to the various materials on record and also considering

22

the averments made in the writ petitions and also in counter and

rejoinder affidavits, we are of the firm view that it is a pre-

eminently fit case for exercise of extra-ordinary power and the

matter needs thorough probe by Special Cell as the matter of has

national ramifications. Regard being had to the fact that the

companies which are alleged to be shell companies are registered

in various States and therefore, the Enforcement Directorate being

Central Agency shall be the appropriate Cell capable of carrying out

thorough probe. It is therefore directed that the entire papers

relating to this matter shall be entrusted to the Enforcement

Directorate within 2 weeks and immediately after receipt of the

papers the Enforcement Director shall commence investigation.

The First Status report shall be submitted by the Enforcement

Directorate within one month after receipt of papers.

List this matter in the first week of July 2011 on which date

the authorities that be shall appear in person and shall submit the

first status report.

MH

May 20, 2011