TMI Blog2014 (11) TMI 1252X X X X Extracts X X X X X X X X Extracts X X X X ..... ess and the applicant remained absconding, he has filed the instant petition under Section 482 of the Code of Criminal Procedure seeking quashment of the FIR on the ground that on the face of the FIR no offence is made out against any Act much less the Act of 2000. The Court has noticed various clauses of the agreement executed by the parties only to ascertain the nature of activities of the applicant's company with due advertence to what has been averred in the petition. Various clauses of the agreement do not suggest that the company is a mere financial consultant, as claimed in the petition. Allegations have been made by the complainant in the FIR that under the garb of aforesaid franchisee agreement the applicant has fraudulently taken deposit of ₹ 2.5 Lakh as franchisee royalty and Rs. Two Lakh towards expenses and Rs. One Lakh as security deposit through cheques and cash with the assurance of 40% dividend - Considering the definition of deposit as contained under Section 2 (b), financial establishment under Section 2 (c) and the penal provisions under Section 6 of the Act, this Court is of the view that in the backdrop of facts and circumstances narrated above a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... all intimate about its business in the area of jurisdiction of competent authority and shall file a copy of each of such periodical statement to the competent authority as may be required to be filed under any law, with any other supervisory authority including Securities and Exchange Board of India (SEBI) and Reserve Bank of India (RBI). The competent authority has a discretion to direct such financial establishment to furnish in such form, at such intervals and within such time, such statements, information or particulars relating to or connected with deposits received by the establishment, as may be specified in a general or a special order. Whosoever contravenes the provisions of Section 3 of the Act of 2000, as referred above, shall be punished with imprisonment which may extend to three months or with fine which may extend to one thousand rupees or with both. 3. Section 4 of the Act of 2000 provides for attachment of properties on default of return of deposits in the event such deposits in cash or in kind or as promised, not returned after maturity or where the competent authority has reason to believe that any financial establishment is acting in a calculated manner wi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t. In the context of factual matrix in hand following judgments, in the opinion of this Court, are relevant for addressing the contentions raised by the learned counsel with due regard to the provisions of the Act of 2000:- 1. R. Kalyani Vs. Janak C. Mehta and others, (2009) 1 SCC 516. 2. Dalip Kaur and Others Vs. Jagnar Singh and another, (2009) 14 SCC 696. 3. Vijayander Kumar and others Vs. State of Rajasthan and another, (2014) 3 SCC 389. 11. In R. Kalyani (supra) the Hon'ble Supreme Court after having discussed series of judgments on issue viz. State of Haryana v. Bhajan Lal, 1992 Supp (1) SCC 335, Rajesh Bajaj v. State NCT of Delhi, (1999) 3 SCC 259, Hamida v. Rashid, (2008) 1 SCC 474, Sunita Jain v. Pawan Kumar Jain, (2008) 2 SCC 705, State of Orissa v. Saroj Kumar Sahoo, (2005) 13 SCC 540, Kailash Verma v. Punjab State Civil Supplies Corporation, (2005) 2 SCC 571 and Monica Kumar (Dr.) v. State of U.P., (2008) 8 SCC 781 has laid down the following propositions of law:- para 15 and 16. 15. Propositions of law which emerge from the said decisions are: (1) The High Court ordinarily would not exercise its inherent jurisdiction to quash a crimi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ment in Ravindra Kumar Madhanlal Goenka v. Rugmini Ram Raghav Spinners (P) Ltd., (2009) 11 SCC 529 : (2010) 3 SCC (Cri) 1011. 13. On considering the facts of the present case it is found that the facts were properly noticed by the High Court on earlier occasion while examining the petition preferred by the appellants for quashing of FIR of this case. The same view has been reiterated by the High Court in the order under appeal for not interfering with the order of cognizance by the learned Magistrate. Hence, we do not find any good ground to interfere with the criminal proceedings against the appellants at this stage. The appeal is, therefore, dismissed. No costs. 14. Learned counsel for the applicant laid great emphasis on the fact that the earlier complaint made by the complainant was filed by the SHO, Thatipur. It was found that the dispute between the parties was only as regards money transaction and civil in nature, therefore, no further investigation was required. On perusal of aforesaid report dated 13/3/2011 (Annexure- E), it appears that there was no investigation at all, instead the concerning SHO had just taken a bird's eye view for his prima facie understa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing legal proceeding the aforesaid Act of 2000 has been enacted, which provides for procedure not only for taking legal proceedings against the financial establishments, but also makes every person responsible for the management of affairs of such establishments. Special Courts have been incorporated to punish the persons responsible for the aforesaid defaults for a term which may extend to six years and also imposition of fine which shall not be less than ₹ 50,000/-. 18. Now in the background of the aforesaid enunciation of law as regards scope of jurisdiction of this Court under Section 482 of Cr.P.C. and the provisions of the Act of 2000 this Court proposes to examine the factual matrix of the case in hand to consider and decide 'as to whether the FIR dated 10/1/2012 registered against the applicant at Crime No.14/2012 in Police Station Thatipur, Morar, Gwalior for the offence punishable under Section 6 of the Act of 2000 does not disclose any offence and can be quashed in exercise of powers under Section 482 of the Code of Criminal Procedure'. 19. Close scrutiny of nature of transaction is inevitable before we address on the nature of allegations made by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... id to franchisee on receipt of payment from customer. (Clause 11) I- Product charge mean the entire amount received by the franchisee from customer. (Clause 12) (Emphasis supplied) J- If franchisee does not generate and/or do not remit to NPCL franchisee commission as indicated above for consecutive three months, NPCL has right to recover from security deposit. (Clause 14) K- Registration of customers shall be done in the NPCL application form for all customers on payment as prescribed from time to time. (Clause 16) L- Franchisee must forward copies of all the bills cash receipts issued to the customers monthly as per format issued, collected by the franchisee on the date fixed therein every month to NPCL, failing which 18% interest will be charged. The franchisee shall be required to maintain enquiry register, ledger register. (Clause 17) M- Franchisee shall have to deposit a total refundable amount of ₹ 1,00,000/- as security deposit after completion of six months. (Clause 32) 21. On perusal of the aforesaid agreement and various clauses relevant portions whereof are mentioned hereinabove, it is found that they do not indicate nature of activity inte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erved by the grantor of a patent, lease of a mine or similar right, and payable proportionately to the use made of the right by the grantee'. In the case of State of Orissa v. Titaghur Paper Mills Co. Ltd., 1985 Supp SCC 280 similar is the meaning attributed to the word 'royalty'. In the case of Continental Construction Ltd. v. CIT, 1992 Supp (2) SCC 567 the Supreme Court held that 'royalty' is generally a consideration paid to the owner of a right or asset such as copyright, patent right, mining right etc. for the privilege of using it for one's own purpose. 23. In the teeth of the fact that the nature of activities claimed to be carried on by the NPCL is not clear from the terms of the agreement and the corresponding obligation of the franchisee as to what nature of activities are required to be carried on by the franchisee, no rules and regulations claimed to have been set up by NPCL from time to time as contemplated under clause 30 of the agreement is placed before this Court to understand the nature of the activities and regulations thereof, under such facts and circumstances, it is difficult to understand as to why there is a requirement to depo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s that the aforesaid complaint was presented before the Superintendent of Police, Gwalior and on his orders the FIR was registered by the In-charge Station House Officer, Thatipur, which is under investigation. 25. While investigation is in progress and the applicant remained absconding, he has filed the instant petition under Section 482 of the Code of Criminal Procedure seeking quashment of the FIR on the ground that on the face of the FIR no offence is made out against any Act much less the Act of 2000. The applicant in his petition has tried to explain the nature of business of the company stating that the business of the company is only to carry on the advisory services on equity analysis, financial consultant and to act as brokers for mutual funds, shares and securities, bonds etc. and then the memorandum of association of the company is also referred to, which upon perusal reflects, what has been stated in this petition as regards the nature of activities and business of the company is quite different and independent of what is deducible from the terms of the agreement between the company and franchisee i.e. the complainant. It is contended that company is a financial con ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... financial consultant, as claimed in the petition. Allegations have been made by the complainant in the FIR that under the garb of aforesaid franchisee agreement the applicant has fraudulently taken deposit of ₹ 2.5 Lakh as franchisee royalty and Rs. Two Lakh towards expenses and Rs. One Lakh as security deposit through cheques and cash with the assurance of 40% dividend. Since applicant/company has failed to repay and the cheque issued in favour of respondent/complainant by the applicant's company was dishonoured with the comment of insufficient fund, he has filed the complaint against the applicant, which with the orders of the Superintendent of Police has been registered as FIR and investigation is going on. Considering the definition of deposit as contained under Section 2 (b), financial establishment under Section 2 (c) and the penal provisions under Section 6 of the Act, this Court is of the view that in the backdrop of facts and circumstances narrated above as regards the complaint made and registered as FIR, it cannot be said that the dispute between the parties is of the nature of civil liability only arising out of financial transaction simplicitor. In fact unde ..... X X X X Extracts X X X X X X X X Extracts X X X X
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