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 the investigation was at a nascent stage and that it should be slow to interfere with the investigation under its inherent powers (Section 482 of Cr.P.C.) and constitutional writ jurisdiction (Articles 226 and 227 of the Constitution). Regarding the petitioners' claim that the raids were illegal due to the absence of a search warrant, the Court stated that this could not be gone into at the present stage of proceedings, particularly when the investigation is ongoing. The Court noted that if the investigation reveals the petitioners are not involved in any offence, the investigating officer could file an appropriate report before the Magistrate. Conversely, if the petitioners are charge-sheeted, they would have the liberty to question it. The Court found no reason to interfere with the investigation at this juncture. The petitions were dismissed, with liberty reserved for the petitioners to question the charge-sheet if one is filed. The Court did not decide on the merits of whether the business constituted gambling or if the raids were legal, deferring these issues to the investigation and potential subsequent proceedings.

Facts

The petitioners, SDS Broking and Trading Auctioning Center & Anr., are challenging multiple First Information Reports (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 is patented and conducted transparently. The FIRs, filed between December 2020 and January 2021, allege offences under the Indian Penal Code (IPC) including cheating (Section 420), the Maharashtra Lottery Act, the Maharashtra Gambling Act, and the Information Technology Act, Section 66(D). The petitioners contend that the raids conducted were illegal as search warrants were not obtained, and their business does not constitute gambling. The respondents, represented by the State of Maharashtra, argue that the investigation prima facie indicates the petitioners were conducting an illegal online lottery and gambling 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, Sections 3, 4, 5, 6 of the Maharashtra Lottery Act, and Section 66(D) of the Information Technology Act, thereby warranting quashing of the FIRs? 2. Whether the business conducted by the petitioners can be considered "Gambling" within the meaning of Section 3 of the Maharashtra Gambling Act, 1987, and whether the establishment qualifies as a common gambling house as per the Act? 3. Whether the raids conducted by the police were illegal due to the absence of a search warrant, as mandated by Section 6 of the Maharashtra Prevention of Gambling Act, 1987? Petitioner's Arguments: The petitioners argued that their business is a patented online auctioning system for commodities, conducted transparently and legally. They relied on the Supreme Court judgment in *Veer Prakash Sharma vs. Anil Kumar Agarwal & Anr.* (2007) 7 SCC 373, stating that the allegations do not disclose an offence. They also cited a Bombay High Court judgment in *Kundalik s/o. Shivaji Kolekar & Anr vs. State of Maharashtra* (Criminal Application No. 3740 of 2017) to argue that their activities do not amount to gambling and that the ingredients of Sections 3 to 5 of the Gambling Act are not fulfilled. They further contended that the raids were illegal due to the lack of search warrants. Revenue's Arguments: The State of Maharashtra (respondent) argued that secret inputs led to a raid on the "Kailash Lottery Center." During the raid, it was found that participants paid Rs. 124/- to select figures, with four receipts issued. The mode of operation prima facie suggested an illegal online lottery and gambling under the pretext of online trading of rice and other commodities. The small quantity of goods auctioned against small bid amounts, as reflected in the recovered material, supported this contention. The State argued that the petitioners' claim of no sanction or illegal raid cannot be gone into at this stage, especially when the investigation is in progress.