Sds Broking And Trading Auctioning Center Thro Its Manging Director Sudhir Dhananjay Sarode And Anr vs. The State Of Maharashtra

Held

The Court held that it should be slow to interfere with an investigation at its nascent stage, particularly when exercising inherent powers under Section 482 of the Cr.P.C. and Articles 226/227 of the Constitution. Regarding the legality of the raids, the Court found that this issue could not be gone into at the present stage of proceedings, especially when the investigation is ongoing. The Court noted that if the investigation reveals the petitioners are not involved, the investigating officer can file an appropriate report. If the petitioners are charge-sheeted, they would have the liberty to question it then. The Court found no reason to interfere with the investigation at this juncture. The petitions were dismissed as lacking merit, with liberty reserved for the petitioners to question the charge-sheet if one is filed.

Facts

The petitioners, SDS Broking and Trading Auctioning Center & Anr., are seeking to quash multiple FIRs registered against them. The petitioners claim to be in the business of online food grain auctioning, operating under valid government registrations and licenses, including GST registration since August 17, 2019. They assert that their business model, which involves online auctioning of commodities like rice and lentils with doorstep delivery upon successful auction, is patented and conducted transparently. The FIRs, however, allege offences under Section 420 of the Indian Penal Code, sections of the Maharashtra Lottery Act, Maharashtra Gambling Act, and Section 66(D) of the Information Technology Act. The petitioners contend that the raids conducted were illegal as search warrants were not obtained, and their business does not constitute gambling as defined under the law. The respondents, represented by the State, argue that the raids were conducted based on secret inputs, and the mode of operation, involving participants selecting figures after payment and receiving receipts, prima facie indicates an illegal online lottery and gambling business conducted under the guise of online trading.

Key Issues

1. Whether the allegations in the FIRs, even if taken at face value, disclose the commission of offences under Section 420 of the IPC, the Maharashtra Lottery Act, the Maharashtra Gambling Act, and Section 66(D) of the Information Technology Act, warranting the quashing of the FIRs? (Question of law) 2. Whether the raids conducted by the police were illegal due to the absence of search warrants, as required under Section 6 of the Maharashtra Prevention of Gambling Act, 1987? (Question of mixed law and fact) Petitioner's arguments: The petitioners argued that the allegations do not disclose any offence, citing the Supreme Court judgment in *Veer Prakash Sharma vs. Anil Kumar Agarwal & Anr.* (2007) 7 SCC 373. They contended that their business activities do not fall within the definition of 'Gambling' under Section 3 of the Gambling Act, relying on a Bombay High Court judgment in *Kundalik s/o. Shivaji Kolekar & Anr vs. State of Maharashtra*. They further argued that the necessary ingredients for Sections 3 to 5 of the Gambling Act are not fulfilled, and the establishment was not a common gambling house. They also challenged the legality of the raids due to the lack of search warrants. Respondent's arguments: The State argued that the raids were conducted based on secret inputs regarding an online lottery. The mode of operation, involving payment and receipt issuance, prima facie indicated an illegal online lottery and gambling business. They contended that the petitioners were indulging in online gambling under the pretext of online trading. The State also argued that the legality of the raid and the petitioners' involvement cannot be gone into at this stage when the investigation is in progress, citing Supreme Court judgments on the court's reluctance to interfere under Section 482 of the Cr.P.C. and Articles 226/227 of the Constitution at the nascent stage of investigation.