CRIMINAL MISCELLANIOUS NO.3752 OF 2001 ------- In the matter of application under section 482 of the code of Criminal Procedure. -------- CANBANK MUTUAL FUND, ORIENT HOUSE, ADI MARZBAN PATH, Ballard Estate, Mumbai, 400038, having their Branch Office situated at 401/402 Ashiana Hariniwas ((4th Floor) Dak Bunglow Road, Patna 800001, through Sri K.Venkatesan, Branch In-Charge, Cims Ltd., Patna 80001 …… ……Petitioner Versus 1.THE STATE OF BIHAR 2.Dilip Churiwal son of Shri Bishwanath Churiwal, resident of 53, Kaveri Apartment, Bandar Bagicha, P.S.-Kotwali, Dist.Patna …… …….Opp. Parties. -------- For the petitioner: Mr.Partha Sarthy, Advocate For the State: Mr.Hriday Prasad Singh, Addl. Public Prosecutor ------ P R E S E N T THE HON’BLE MR JUSTICE RAKESH KUMAR Rakesh Kumar,J. The petitioner, which is a trust constituted under the Indian Trust Act and registered under the Indian Registration Act and Securities and Exchange Board of India (Mutual Fund) Regulations, has approached this court with a prayer to quash an order dated 29.11.1999 passed by Shri D.N.Pandey, Judicial Magistrate, Ist Class, Patna in Complaint Case No.1074(C) of 1999. By the said order, the learned Magistrate has taken cognizance of the offence under section 403 of the Indian Penal Code. The petitioner has further prayed for quashing on of an order dated 17.1.2001 passed by learned Sessions Judge, Patna in Cr.Revision No.88 of 2000. By the said order the learned Sessions Judge has dismissed the revision petition filed against the order dated 29.11.1999 and the learned Sessions Judge has approved the order of cognizance. 2. Short fact of the case is that opposite party no.2, who claims to be authorized by his mother, filed a complaint in the 2 court of Chief Judicial Magistrate, Patna which was registered as Complaint Case No.1074C of 1999. It was alleged that the accused persons came out with an offer memorandum in the month of November, 1991 which was largely circulated all over India including Patna. Through offered memorandum the petitioner came out with a Cantriple Scheme for Canbank Mutual Fund of which principle trustee was Canara Bank. It was advertised that Canbank Mutual Fund will issue units to be called Cantriple Plus, each of face value of Rs.10/-. It was clarified that Cantriple Plus was redeemable non-debt security of face value of Rs.10/- and under the scheme an investor was required to subscribe for a minimum of 100 Cantriple Plus or in multiples of 100 Cantriple Plus. The complainant further disclosed in the complaint petition that features mentioned in the bold letters of the offer memorandum with the objects of the scheme was to cumulate the capital fund in such a way that at the end of 90th month from the date of allotment, the Cantriple Plus holders shall get an amount three times of their investment or more which works out to a return of more than 14.90 per cent per annum. The complainant alleged that believing on the representation of assured return of three times of the amount invested, the mother of the complainant Smt. Sunder Devi Churiwal subscribed for 9000 Cantriple Plus units, cost of which was to the tune of Rs.90,000/- and she also received certificate for the same. The units were to be matured after 90 months i.e. 30.6.1999. It was further alleged that mother of the complainant in the year 1999 became shocked to see the advertisement in the daily news paper stating therein and suggesting the investors of Cantriple Plus Scheme to opt to continue investment in the open ended Cantriple Plus Scheme or in case they opted for 3 redemption then that was available at NAV linked price and not three times the amount invested as assured. On the aforesaid allegations, the complaint was filed and after conducting enquiry the learned Judicial Magistrate took cognizance of the offence under section 403 of the Indian Penal Code. 3. Aggrieved with the order of cognizance, the petitioner preferred a revision vide Cr.Revision No.88 of 2000. The learned Sessions Judge by its order dated 17.1.2001 dismissed the revision petition. After rejection of the said revision petition, the petitioner approached this court by filing the present petition. On 4.2.2002, while issuing notice to opposite party no.2, this court directed that until further orders, further proceeding in Complaint Case No.1074(C) of 1999, pending in the court of learned Judicial Magistrate, Ist Class, Patna shall remain stayed. In spite of valid service of notice, opposite party no.2 preferred not to appear before this court and, as such, on 1.11.2002 the case was admitted for hearing and again notice was issued to opposite party no.2 in hearing matter and it was directed that the interim order passed earlier on 4.2.2002 shall continue during the pendency of this application and interim order of stay is still continuing. Again during the pendency of the present petition notice was issued and validly served even then the opposite party no.2 has preferred not to appear in the present case and, as such, in absence of opposite party no.2 matter was heard. 4. Mr.Partha Sarthy, learned counsel appearing on behalf of the petitioner, while challenging both the orders i.e. order of revisional court as well as order of cognizance, submits that on the basis of materials available on the record no offence was made out and, as such, the learned Magistrate was required to reject the 4 petition at enquiry stage under section 203 of the Code of Criminal Procedure. Learned counsel for the petitioner has highlighted the offer memorandum which was widely circulated and published. He firstly submitted that offer memorandum contains important instructions which were mentioned in its block portion. Learned counsel has pointedly placed the portion of the said instruction which specifies regarding the risk perceived by the trustee. It would be better to quote the same for just decision in the present case which is as follows: “Risks perceived by Trustee: Investing of Cantriple + funds in securities like equity shares etc. is prone to volatility potential or otherwise and limited liquidity of securities market and also political and economic consideration. However, these risks may be averaged out in view of the large portfolio of investment. As with any investment in stocks and shares, The NET ASSEST VALUE (NAV) of units of CANTRIPLE + and income, if any, can go down as well as go up and it is possible that the value may fall below that of original investment”. 5. On the basis of risk factor it was submitted by learned counsel for the petitioner that even at the time of publication it was made clear that there is some risk in investment. Net Asset Value (NAV) of the Cantriple Plus and income was likely either to get down or go up and, as such, the value may fall below that of original investment. It was submitted that after noticing the aforesaid 5 condition and instruction the mother of the complainant had invested under the Cantriple Plus scheme. It was submitted that once after noticing the instruction the mother of the complainant had invested in the scheme, in case of fall in the value the complainant was not entitled to allege that offence was committed in the present case. This indicates that there was no intention of the petitioner for putting the complainant to any loss. 6. Learned counsel for the petitioner has further referred to Clause III of the features incorporated in offer memorandum which has been annexed as annexured-2 to the petition. It was submitted that offer memorandum contemplated the objects of Cantriple Plus scheme which was specified in para-3 of the features of offer memorandum which is as follows: “The object of the CANTRIPLE PLUS Scheme is to cumulate the capital fund in such a way that at the end of 90th month from the date of allotment, the CANTRIPLE PLUS holders shall get an amount equivalent to THREE TIMES of their investment or more, which works out to a return of more than 14.90% p.a.” 7. It was submitted that this shows that object of the petitioner was to achieve three times of the investment. It does indicate that it was binding on the petitioner to refund the maturity value three times but it was an object and the petitioner had taken sincere steps to achieve the object. However, due to unavoidable circumstances, the same could not be achieved. It was submitted that object never means an assurance or promise. Learned counsel has also referred to a judgment of High Court of Gujarat at Ahmedabad in Cr.Misc. Application No.3023 of 2000, a copy of 6 which has been annexed as annexure-6 to the petition. Learned counsel for the petitioner has submitted that in similar circumstance the Gujarat High Court has quashed the order of cognizance. I have also perused the judgment of the Gujarat High Court which was passed in similar circumstance. 8. Learned counsel for the petitioner has lastly submitted that while the revision application was pending before the learned Sessions Judge, Patna the mother of the complainant has already accepted and received a cheque for the maturity amount calculated on the basis of NAV of the unit and it appears that after receipt of the payment the complainant has lost his interest in the case and this is one of the reasons that opposite party no.2 has preferred not to appear before this court in the present proceeding. It was submitted that this is also one of the grounds for quashing of both the orders i.e. revisional order as well as order of cognizance. On the aforesaid grounds it has been prayed to quash both the orders. 9. I have heard Mr.Hirday Prasad Singh, learned Addl. Public Prosecutor appearing on behalf of the State and perused the judgment of Gujarat High Court which was passed in similar circumstances. 10. Besides hearing learned counsel for the petitioner and the State, I have also perused the materials available on the record. On the basis of materials available in the complaint petition, this court is satisfied that the learned Magistrate was not required to proceed with the complaint case and the petition was liable to be rejected. Similarly, the revisional court has not appreciated that from the offer memorandum it was evident that there was no 7 Patna High Court The 10th August,2010 Md.S./NAFR intention on the part of the petitioner to commit any offence. It was clarified by the petitioner in its publication that there was risk factor also. Besides this, there is no reason for this court to differ with the judgment of the High Court of Gujarat, a copy of which has been brought on record vide annexure-6 to the petition. Moreover, during the pendency of the present petition, as stated by the learned counsel for the petitioner, mother of the complainant has received payment and non-appearance of opposite party no.2 in the present case further makes it clear that opposite party no.2 has lost his interest to pursue the case. In such a situation, this court is of the view that allowing the prosecution in Complaint Case No.1074C of 1999 before the court below to proceed further will amount to abuse of process of the court and with a view to prevent abuse of process of the court, it is necessary to intervene into the matter and, as such, the order of cognizance dated 29.11.1999 passed by Mr.D.N.Pandey, Judicial Magistrate, Ist Class, Patna in Complaint Case No.1074C of 1999 and the order dated 17.12001 passed in Cr.Revision No.88 of 2000 by learned Sessions Judge, Patna are hereby set aside and the petition stands allowed. (Rakesh Kumar,J.)