Mr.Sohan Singh And Another vs. The State Of Telangana And Another

Facts

The complainant, M/s Metrochem API Private Limited, alleged a financial fraud involving its employee, Yerra Sudhakar, in conspiracy with officials of M/s P. Praful & Company Agency India Pvt. Ltd. and M/s Canbank Factors Limited. The accused allegedly fabricated five forged tax invoices totaling Rs. 6,24,92,800, showing fictitious supplies. Accused No. 1 confirmed receipt of goods, while Accused Nos. 2 and 3 generated fake invoices. Petitioner No. 1, the Branch Head of Canbank Factors Limited, processed these invoices for factoring without proper verification, leading to the fraudulent release of funds. The investigation revealed fabricated transporter consignment notes and that no goods were supplied. A criminal case was registered, and a final report was filed, leading to the petitioners (accused Nos. 4 and 5) filing a criminal petition to quash the proceedings.

Held

The Court held that the allegations in the complaint and charge sheet contain serious accusations against the petitioners, including their alleged involvement in creating, forging, and fabricating invoices and facilitating the fraudulent release of a huge amount of funds. The Court found that the inducement, exchange of forged electronic communications, confirmations relied upon, entrustment of funds, and resultant wrongful loss were all rooted in Hyderabad. Citing Sections 178(b), 178(d), and 179 of the Cr.P.C., and the Supreme Court's decision in Rupali Devi v. State of Uttar Pradesh, the Court affirmed that jurisdiction is attracted where an offense is committed partly in one local area and partly in another, or where the act is committed in one place and the consequence ensues in another. The Court also referred to a Division Bench ruling of the High Court in Radhika Anil Upadhyaya v. The Principal Secretary, the Home Department, stating that where deception, entrustment, and loss occur within the State, jurisdiction is validly attracted even if parts of the conspiracy or execution took place elsewhere. The Court concluded that the allegations have to be adjudicated in a full-fledged trial and cannot be decided in a criminal petition under Section 482 of the Cr.P.C. The Court also noted that the inherent powers under Section 482 Cr.P.C. should be exercised sparingly and cautiously, and not to weigh evidence or stifle a genuine prosecution, citing Sau. Kamala Shivaji Pokarnekar v. The State of Maharashtra & Ors. The Court found the case not to be one of the rarest of rare cases warranting quashing of proceedings.

Key Issues

1. Whether the allegations in the complaint are purely civil and contractual in nature, and if the ingredients of Sections 406, 420, 463, 465, 468, 471, and 409 of the Indian Penal Code (IPC) are attracted against the petitioners, considering they are alleged to have not forged documents and had no dishonest intention to cheat. 2. Whether the police have the jurisdiction to investigate and the Magistrate has the jurisdiction to take cognizance, given that the accused and petitioners are based in Ahmedabad, Gujarat, while the complainant is in Hyderabad. Petitioner's Arguments: The petitioners argued that the allegations are civil in nature, arising from a factoring transaction. They contended that they did not forge any documents or have dishonest intentions. They further argued that the police lacked jurisdiction as the accused and petitioners were in Gujarat, making the Magistrate in Hyderabad incompetent to take cognizance. They also stated that all correspondence was handled by Accused No. 1 and that there were no specific allegations against them for creating fake invoices. Revenue/State's Arguments: The judgment does not explicitly record arguments made by the Revenue/State. However, the court's reasoning implies that the State, through the Public Prosecutor, likely defended the jurisdiction and the maintainability of the criminal proceedings.