IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT : THE HONOURABLE MR. JUSTICE K.T.SANKARAN MONDAY, THE 29TH MARCH 2010 / 8TH CHAITHRA 1932 Bail Appl..No. 6920 of 2009(B) ------------------------------------------- CRIME NO.433/2009 OF SULTHAN BATHERY POLICE STATION, WYNAD. .................... PETITIONER/4TH ACCUSED: ------------------------------------------ R.S.MANOJ KUMAR, AGED 39 YEARS, S/O.SREEDHARAN NAIR, GANESHAPURAM HOUSE, KAMBALAKKAD (P.O), KANIYAMPETTA AMSOM, DESOM, WYNAD DISTRICT. BY ADV. SRI.NAGARAJ NARAYANAN SRI.SAIJO HASSAN RESPONDENT/ STATE: ----------------------------------- STATE OF KERALA, REPRESENTED BY THE PUBLIC PROSECUTOR, HIGH COURT OF KERALA, ERNAKULAM. SRI.C.K.SURESH, PUBLIC PROSECUTOR SRI. V.G.GOVINDAN NAIR, DGP THIS BAIL APPLICATION HAVING BEEN FINALLY HEARD ON 29/03/2010, ALONG WITH BA NO. 779 OF 2010 AND CONNECTED CASES, THE COURT ON THE SAME DAY PASSED THE FOLLOWING: K.T. SANKARAN, J. --------------------------- B.A. Nos.6920 of 2009 & 779, 813,1013 & 1054 of 2010 --------------------------------------- Dated this the 29th day of March, 2010 O R D E R These Bail Applications are filed by R.S. Manoj Kumar, a registered dealer under the Kerala Value Added Tax Act, dealing in live chicken. These five Bail Applications relate to five crimes, of which four were registered by Kozhinjampara Police, while the other was registered by Sulthan Bathery Police. In the crimes registered by Kozhinjampara Police referred to above, the petitioner is accused No.1, whereas he is accused No.4 in Crime No.433/2009 of Sulthan Bathery Police Station. 2. The offences alleged against the petitioner are under Sections 420, 465, 468, 471 and 120B read with Section 34 of the Indian Penal Code. 3. It is not in dispute that the petitioner used to purchase live chicken from Tamil Nadu and used to bring the same to Kerala in lorry loads through Naduppuni Check Post in Palakkad district and Muthanga Check Post in Wynad district. As a dealer, the petitioner has to pay advance tax under the Kerala B.A. Nos.6920 of 2009 and connected cases 2 Value Added Tax Act. As per the circulars issued by the department, the dealer has to pay the advance tax by demand drafts. 4. It is alleged that during the period from 21/7/2009 to 12/10/2009, various dealers brought live chicken via Naduppuni Check Post and that they produced some instruments as if they were demand drafts. It is alleged that a society was registered under the name and style ‘Peroorkkadavu Farmers Development Society’, by a few persons. Two other societies were also registered under the name and style ‘South Malabar Rural Development Society’ and ‘State Agricultural Rural Development Society’. It is alleged that these societies were really societies for name sake and their activities were intended to defraud the Government. Modus operandi of the societies is stated to be the following: The dealers would pay the amounts payable as tax to ‘Peroorkkadavu Farmers Development Society’. The society would get pay orders from Axis Bank, Palakkad or Indusind Bank, Palakkad payable to the Commercial Tax Officer. The instruments would be produced before the Check Post, while lorries containing live chicken pass through the Check Post. The instruments would be presented by the Commercial Tax Authorities before the bank B.A. Nos.6920 of 2009 and connected cases 3 and collect the amounts. It would appear that for a few months everything went on smoothly and Crores of rupees payable as advance tax was collected by this method. For the period from 21/7/2009 to 12/10/2009, a total sum of rupees about 14 crores was to be collected as advance tax at Naduppuni Check Post. ‘Peroorkkadavu Farmers Development Society’ had issued several instruments for these amounts and on presentation of the instruments, the bank dishonoured the same. Thereby, the Government sustained loss of about 14 crores. 5. It is alleged that there was a conspiracy among the dealers in live chicken, the persons who are responsible for registering the ‘Peroorkkadavu Farmers Development Society’ and other societies and the Check Post Authorities, to accomplish this deal. The dealers are accused Nos.1 to 14, while accused Nos.15 to 23 are either the office bearers or governing board members of the Society referred to above. Accused Nos. 28 to 34 are the Commercial Tax Inspectors attached to Naduppuni Check Post. 6. The learned counsel for the petitioner submitted that the practice referred to above was being followed as a proper and legal arrangement for several months. The dealers used to pay the amounts to the society. The instruments to be submitted B.A. Nos.6920 of 2009 and connected cases 4 before the Check Post would be issued by the Society. The Check Post Authority would receive the same when lorries containing live chicken pass through the Check Posts and the department would collect the amount from the bank concerned by presenting the instruments. There was no complaint whatsoever from any quarters and this arrangement continued for several months. It is submitted that the petitioner cannot be blamed as he had deposited a sum of Rs.1,93,00,000/-(Rupees One Crore and ninety three lakhs only) payable as advance tax in the ICICI Bank, Malappuram and those amounts were transferred by the bank to the account of ‘Peroorkkadavu Farmers Development Society’ and appropriate instruments were submitted before the Naduppuni Check Post. The learned counsel submits that the petitioner has already parted with the money and any fraud or mistake committed by the Society should not result in any criminal action being taken against the petitioner. 7. The learned counsel for the petitioner also submitted that there are provisions in the Kerala Value Added Tax Act and Rules for collection of advance tax and for recovery of the amounts and penalty, in case, the cheques issued by the dealers are dishonoured. Following that procedure, steps were taken B.A. Nos.6920 of 2009 and connected cases 5 against the petitioner. His licence was cancelled and proceedings were initiated for recovery of the amounts. The petitioner challenged the order cancelling the licence in a Writ Petition. This Court allowed that Writ Petition and set aside the order passed by the department and directed fresh proceedings to be initiated,in case, it was found necessary. The counsel submitted, in these circumstances, that it was not proper to initiate criminal proceedings against the petitioner. 8. The learned Director General of Prosecution submitted that this is a case of a big scam running to Rs.14 Crores and there was a conspiracy among the dealers in chicken, office bearers of the so-called society and officials of the Commercial Tax Department, by which huge loss was caused to the Government. Initiation of proceedings under the Kerala Value Added Tax Act and Rules framed thereunder would not stand in the way of action being taken for the offence committed by the persons concerned. The learned Director General of Prosecution submitted that a particular act may give rise to certain proceedings under the special statute. That does not mean that when the act committed by the party amounts to an offence, the provisions of the penal law should not be resorted to. The offence alleged against the B.A. Nos.6920 of 2009 and connected cases 6 petitioner and others is very grave in nature. Crores of rupees are involved in the alleged offence. Who was responsible for the loss sustained to the Government, whether there was a conspiracy, what was the nature of the conspiracy and what was the role of each accused in that conspiracy are all the matters for a detailed investigation. 9. The learned counsel for the petitioner relied on the following decisions: Rajeevan Vs. State of Kerala [2008(4)KLT 98], Thomas Cheriyan Vs. Commissioner of Commercial Taxes [2008(4) KLT 104], Ashok Kumar Gupta Vs. State [2008(1) KLD 323(Del.)], Jonathan Nitin Brady Vs. State of West Bengal [2008(8)SCC 660], Fida Hussain Bohra Vs. State of Maharashtra [2009(5) SCC 150] & Galaskasden Grace & Ors. Vs. Inspector of Police and another [AIR 2009 SCC 1629]. 10. Custodial interrogation of the petitioner may be required in these cases. If anticipatory bail is granted to the petitioner, it would adversely affect the proper investigation of the case. I do not think that the petitioner is entitled to the discretionary relief under Section 438 of the Code of Criminal Procedure. 11. I am not inclined, prima facie, to accept the contention B.A. Nos.6920 of 2009 and connected cases 7 raised by the learned counsel for the petitioner that since action was taken under the Kerala Value Added Tax Act and Rules, cases could not be registered by the police under the various provisions of the Indian Penal Code as referred to above. The provisions in the Kerala Value Added Tax Act and Rules are mainly intended for collection of tax and for imposing penalty for failure to pay tax. Rule 28, which was mentioned by the learned counsel for the petitioner as a provision which according to him would conclude the issue, only states that if the cheque is dishonoured, the dealers’ cheques should not be accepted thereafter for a period of six months. The rule also provides that if the amount is paid, the ban would be withdrawn. The procedure to be followed by the Commercial Tax Authority in cases where the cheque is dishonoured is provided in the Rules. However, if an offence is committed, that has to be dealt with under the penal law concerned. That the amounts can be recovered by resorting to coercive steps under the Kerala Value Added Tax Act and Rules therein, is not a ground not to initiate appropriate criminal action under the Indian Penal Code. 12. B.A. No.6920/2009 in respect of the crime registered by Sulthan Bathery Police (Crime No.433 of 2009) also relates to the B.A. Nos.6920 of 2009 and connected cases 8 matter similar in nature as in the case of the crimes registered by Kozhijampara Police. It is interesting to note that even in respect of advance tax payable at Muthanga Check Post by the petitioner, the instrument was given by the ‘Peroorkkadavu Farmers Development Society’ operating in Palakkad. For the aforesaid reasons, I do not find any ground to grant anticipatory bail to the petitioner. Bail Applications are accordingly dismissed. K.T. SANKARAN, JUDGE scm