Himachal Pradesh Cricket Association vs The State Of Himachal Pradesh

2) During the pendency of these proceedings, investigation was completed. On the day judgment was pronounced by the High Court, the chargesheets were filed in the Court of Special Judge. After the filing of the said chargesheets, the appellants have also filed Writ Petition (Criminal) No. 135 of 2017 in this Court seeking quashing of these chargesheets. Both these proceedings were clubbed and heard together which we propose to dispose of by this common judgment.

5) Having regard to this report, the appellants decided to construct a club house on the leased land. There was also a parcel of idle land in the middle of the land allotted for the stadium. Appellant No.1 towards this end made a request to the Director, Youth Services and Sports for allotment of additional land adjacent to the stadium admeasuring 720 square metres, vide its letter dated July 03, 2008. Since it was Gram Panchayat land, consent thereof was also needed for its allotment to the appellant No.1. Appellant No.1, thus, approached the Gram Panchayat. Pursuant to meetings between the office bearers of appellant No. 1 and Gram Panchayat, members of Uparali Dhari Development Division, Dharamshala, the said Gram Panchayat issued no objection for allotment of the land. Proposal of appellant No. 1 for allotment of additional land was mooted with the Criminal Appeal Nos. 1258-1259 of 2018 & Anr. Page 4 of 53 authorities as well. Respondent No. 1 vide letter dated November 16, 2009 took up the matter with the ACS-cum-FC Revenue to the Government of Himachal Pradesh for approval to lease out government land in Mohal Kand Mauja Khanyara, Tehsil Dharamshala, District Kangra, measuring in 3-28-06 hectare in favour of appellant No. 1. Respondent No. 1 granted approval to lease out the aforesaid land in favour of appellant No. 1 vide letter dated November 16, 2009 which was conveyed vide letter dated November 18, 2009. As a result, lease deed was executed between appellant No. 1 and respondent No. 1 for lease of the said land situated at Mohal Kand Mauza Khanyara, Tehsil Dharmashala.

6) Club house was constructed at the stadium premises at Dharamshala under the name and style of “Aveda HPCA Club House”. Completion Certificate was issued on March 10, 2011 and was certified complete in all aspects as per approved plan of the Executive Officer, Municipal Council, Dharamshala. The Town and Country Planning Department, Dharamshala also issued no objection certificate dated March 15, 2011 for use of part of the infrastructure of cricket stadium as club house for cricket activities. Respondent No. 1 also approved the tariff for availing the Criminal Appeal Nos. 1258-1259 of 2018 & Anr. Page 5 of 53 accommodation facilities of the club house vide its letter dated September 08, 2011.

7) The Board of Control for Cricket in India (BCCI) granted permission to the Himachal Pradesh Cricket Association to convert itself from a "not for profit" society to a "not for profit" company during its annual general meeting held on September 19, 2011. A majority of cricket associations throughout the country have been converting themselves from a not for profit society to a not for profit company registered under the Companies Act, 1956 in order to ensure better and transparent management of their affairs.

Realising that unless world class accomodation was available for the teams playing at the stadium and the officials concerned accompanying such teams, the venue at Dharamshala that was being painstakingly developed by the appellant No. 1 from its own funds would be grossly underutilised and the State would lose out in hosting cricket matches, appellant No. 1 and its office bearers began working out a method to construct a world class motel for such purposes.

Appellant No. 1 realized that if the use of the same was restricted only to usage during match days for use of teams and Criminal Appeal Nos. 1258-1259 of 2018 & Anr. Page 6 of 53 their officials, the same would not be commercially viable. As the terms of the lease may not be technically wide enough to cover this allied infrastructure being developed for the game of cricket, vide its letter dated December 24, 2011, appellant No. 1 wrote to the respondent to request it to permit commercial activity on the said land on even non match days and amend the lease terms accordingly. The above letter was forwarded by the District Magistrate to the Principal Secretary (Revenue), Government of Himachal Pradesh and the Principal Secretary (Revenue), Government of Himachal Pradesh issued no objection for execution of a supplementary lease enabling commercial activity on the additional land at Kandi provided that the lease money was charged in accordance with the Lease Rules, 2011. A supplementary lease deed was executed between the appellant No.1 and the State of Himachal Pradesh enabling use of the additional land commercially. Necessary permissions for development on the said land were obtained including for commercial hotel. The hotel constructed under the name and style of “The Pavilion” obtained registration with the Tourism Department of the State and Tariffs, etc. were also fixed by the said Department on September 26, 2012. In the meantime, Criminal Appeal Nos. 1258-1259 of 2018 & Anr. Page 7 of 53 on September 22, 2012 resolution was passed by the appellant No. 1 company to take over the assets and liabilities of the society. Agreement dated October 01, 2012 was also executed between the Himachal Pradesh Cricket Association (the society) and Himachal Pradesh Cricket Association (the Company) to enable the Society to convert itself into a Company. Accordingly, the Society was converted into a Company and the Himachal Pradesh Cricket Association stood converted from a society to a not for profit company registered under the Companies Act, 1956 and the Registrar of Companies was informed of the same in due course.

8) Within a couple of months, from the aforesaid developments, there was a change of political executive in the State of Himachal Pradesh pursuant to the elections of legislative assembly. According to the appellants, with the change of political power, tirade against the appellants started by the new Government. In fact, even during the election campaign, the Congress (I) had published a ‘Congress Chargesheet’ wherein serious allegations were levelled against the appellants. The appellants department sprung into action and started seeking information from the appellants on various aspects, though this information was already available with the State Criminal Appeal Nos. 1258-1259 of 2018 & Anr. Page 8 of 53 Government. A formal FIR No. 12 of 2013 dated August 01, 2013 was registered which, according to the appellants, is the result of the said ‘Congress Chargesheet’. In fact, some time before that, a complaint under Section 156(3) Cr.P.C. was made by one Vinay Sharma against appellant No. 1 and its office bearers in which orders were passed by Special Judge, Kangra on July 02, 2013 directing the police authorities to investigate the said case and submit the report to it. Thus, two parallel proceedings were started.

9) Further allegation of the appellants is that investigation was personally monitored by respondent No. 2 herein who was the Chief Minister at that time. He had also made various public statements from time to time that he was interested in taking over the entire function of the Cricket Association and its assets. According to the appellants, at the behest of respondent No. 2, even the Registrar of Societies, Himachal Pradesh issued notice dated September 7, 2013 on the issue of formation of company under Section 25 of the Companies Act, 1956 and taking over the assets of the society. Against this notice, Writ Petition No. 7593 of 2013 was filed wherein the High Court passed the orders keeping in abeyance the Criminal Appeal Nos. 1258-1259 of 2018 & Anr. Page 9 of 53 allegations raised in the notice dated September 7, 2013 of the Registrar of Societies.

14) Dilating on the aforesaid plea, namely, the entire prosecution is due to political vendetta, without any legal basis, Mr. Patwalia submitted that the genesis of the prosecution starts with the failed attempt by the then State Government to take over appellant No. 1 in the year 2005 under the provisions of the HP Sports (Registration, Recognition and Regulation of Associations) Act, 2005 due to the interim protection granted by the Himachal Pradesh High Court on May 18, 2005. This Act was subsequently repealed. According to him, in view of the repeated interference by State Governments in the internal affairs of autonomous cricket associations, the BCCI has informally encouraged such member associations to re-register themselves as not for profit charitable Section 25 Companies under the Companies Act, 1956, as amended, for better legal compliances, transparency and to avoid interference in internal affairs by State Governments. Accordingly, various member associations of the BCCI have converted themselves to Section 25 not for profit charitable companies governed by the provisions of the Companies Act, 1956. Appellant No. 1 also followed the suit as a result of aforesaid mandate of the BCCI. Accordingly, a not for profit company in the name of Himalayan Players Cricket Association was Criminal Appeal Nos. 1258-1259 of 2018 & Anr. Page 17 of 53 incorporated under Section 25 of the Companies Act, 1956. On August 31, 2005, the said Company was permitted to change its name to Himachal Pradesh Cricket Association and was issued a fresh certificate of incorporation. During this process, the HP Sports (Registration, Recognition and Regulation of Associations) Act, 2005 stood repealed and no further steps were taken in the interregnum to convert the society to a section 25 company. Thereafter, on September 19, 2011, the BCCI took up the pending request of appellant No. 1 to permit it to convert itself to a Section 25 not for profit company and granted the same. Pursuant to the permission by the BCCI, amendments were carried out by the members at the AGM of the appellant No. 1 on September 22, 2012 resolving to convert the appellant No. 1 society to a Section 25 Company. Accordingly, an agreement was executed on October 01, 2012 converting the society to a Section 25 Company and informing the Registrar of Companies of the same. On October 31, 2012, appellant No. 1 now registered as a Section 25 Company under the Companies Act, 1956 informed the Registrar of Societies of the State of Himachal Pradesh of the change in the memorandum and rules of the appellants. Further, on November 02, 2012, once again Criminal Appeal Nos. 1258-1259 of 2018 & Anr. Page 18 of 53 the intimation regarding change in status of appellant No. 1 from a not for profit society to a not for profit company was given to the Registrar of Societies, State of Himachal Pradesh. Thus, from October 01, 2012, appellant No. 1 has been existing as a Company with due intimation to the State of Himachal Pradesh paying its lease rent and taxes in accordance with law. He also argued that the effect of such statutory conversion from a firm to a company by statutory provisions for income tax purposes has been considered by the Bombay High Court in the case of Commissioner of Income Tax, Mumbai v. Texspin Engg. and Mfg. Works, Mumbai2 and Punjab & Haryana High Court in the case of Commissioner of Income Tax (Central), Ludhiana v. M/s. Rita Mechanical Works, Ludhiana3 wherein it has been held as under:

16) It was highlighted by him that on the midnight of October 26, 2013, the State Government had cancelled the leases and forcibly dispossessed the appellants from the leased lands. However, on November 05, 2013, the Himachal Pradesh High Court strictured the Criminal Appeal Nos. 1258-1259 of 2018 & Anr. Page 20 of 53 State Government and ordered status quo ante and handed over the possession of the leased lands to the appellants. The State Government thereafter accepted this order and withdrew the cancellation of lease notices on November 19, 2013. Subsequently, another notice dated May 23, 2015 was issued seeking cancellation of the leases which too stands withdrawn on August 09, 2018. At present, there are no proceedings pending for cancellation of the leases.

(iii) two Officers Subhash Ahluwalia and T.G. Negi who processed the case of the appellants were made Principal Secretary to CM and Advisor to CM, respectively, by the respondent No. 2 and were not prosecuted;

(iii) The power to quash shall not, however, be used to stifle or scuttle a legitimate prosecution. The power should be used sparingly and with abundant caution.

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Principle Nos. (i) and (ii) of Indian Oil Corporation are, therefore, become applicable. The entire subject matter has been revisited in a recent judgment in Vineet Kumar and some of the discussion therein which takes note of earlier judgments is reproduced below:

47) As far as Writ Petition (Criminal) No. 135 of 2017 is concerned, the appellants came to this Court challenging the order of cognizance only because of the reason that matter was already pending as the appellants had filed the Special Leave Petitions against the order of the High Court rejecting their petition for quashing of the FIR/Chargesheet. Having regard to these peculiar facts, writ petition has also been entertained. In any case, once we hold that FIR needs to be quashed, order of cognizance would automatically stands vitiated.

48) As a consequence, criminal appeals are allowed thereby setting aside the impugned judgment of the High Court, allowing the petition Criminal Appeal Nos. 1258-1259 of 2018 & Anr. Page 52 of 53 filed by the appellants under Section 482 Cr.P.C. and quashing the FIR No. 12 of 2013 dated August 01, 2013 under Sections 406, 420, 120B of the IPC and Section 13(2) of the PC Act and FIR No.14 of 2013 dated October 03, 2013 under Section 447 read with Section 120B of the IPC, Section 3 of Prevention of Damage to Public Property Act, 1984 and Section 13(2) of the PC Act. In view thereof, writ petition also stands disposed of accordingly.

No order as to cost.

NOVEMBER 02, 2018.

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