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Infinity Fincorp Solutions Private Limited Infinity through Authorised Signatory Aravind Shinde & Another v/s State of A.P., rep. by its Public Prosecutor & Others

    Criminal Petition No. 1407 of 2020

    Decided On, 20 May 2020

    At, High Court of Andhra Pradesh

    By, THE HONOURABLE MR. JUSTICE BATTU DEVANAND

    For the Petitioner: Raviteja Padiri, Advocate. For the Respondents: Public Prosecutor (AP).



Judgment Text

1. This criminal petition is filed under Section 482 of the Code of Criminal Procedure praying to quash the docket orders, dated 17.02.2020 in SR No.441 of 2020 (Crl.M.P.No._____/2020) in Crime No.149 of 2019 on the file of the Junior Civil Judge-cum-Judicial Magistrate at Anaparthi and allow the petitioners to sale the stocks of cashew nuts lying in M/s. Sree Satya Sai Gowdown situated at Duppalapudi Village, Anaparthi Mandal, East Godavari District covered under the mediators report dated 06.08.2019 to 15.08.2019 in Crime No.149 of 2019 of Anaparthi Police Station.2. The petitioners also filed I.A.No.2 of 2020 seeking direction to the Junior Civil Judge-cum-Judicial Magistrate at Anaparthi to receive and dispose of the petition filed by the petitioners under Section 451 and 457 of Cr.P.C. in Crime No.149 of 2019 of Anaparthi Police Station in accordance with law pending disposal of the criminal petition.3. Heard Sri Raviteja Padiri, learned counsel for the petitioners and the learned Public Prosecutor appearing for the 1st respondent/State and Sri Jyosula Bhaskara Rao, learned counsel representing the respondents 2 and 3.4. Learned counsel for the petitioners submits that the 1st petitioner is a company registered under the Companies Act, 2013 under the guidelines of RBI as a non-banking financial company engaged in the nosiness of providing loans. The 2nd petitioner is a warehouse service provider and assayer for agriculture and certain non-agriculture commodities. The 2nd petitioner acts as a service provider to the lending banks and financial institutions to keep in its custody the commodities offered for security.5. Learned counsel for the petitioners submits that accused No.1 is proprietor of M/s.Sree Siva Durga Cashew Prodcuts, Mukkindada Village. He as a proprietor of M/s.Sree Siva Durga Cashew Products availed a loan from the 1st petitioner by pledging the goods (raw cashew nuts) stored in M/s. Sree Satya Sri Godown situated at Duppalapudi Village, Ananaparthi Mandal in favour of the 1st petitioner. Learned counsel for the petitioners further submits that Facility cum Pledge agreement dated 05.09.2018 was executed and Rs.15,00,00,000/- (Rupees fifteen crores only) was sanctioned against the pledged commodity cashew nuts in shell as a security and the said amount was disbursed by the 1st petitioner to the borrower (M/s. Sree Siva Durga Cashew Products, represented by its Proprietor i.e., Accused No.1). Later the accused No.1 defaulted in payment of the amount to the 1st petitioner and by 31.07.2019 Rs.15,55,86,692/- (Rupees fifteen crores fifty lakh eighty six thousand six hundred and ninety two only) was due as on 31.07.2019.6. It is contended by the learned counsel for the petitioners that the petitioners conducted general inspection on 25.07.2019 and found inferior quality stock of goods and bags with lesser quantity, storage of goods and also found shell of the cashew instead of cashew with kernel. Instead of 32,414 cashew bags, it was found that 5,261 cashew bags with kernels were found. That 19,004 bags with shells without cashew and 5,261 cashew in shell bags of cashew commodity stored in the Sri Satya Sri Godown, Duppalapudi. On noticing the fraud played by the accused, the petitioners lodged a complaint on 01.08.2019 with Anaparthi Police Station and the same was registered as FIR in Crime No.149 of 2019 for the offences under Sections 420, 403, 408, 379, 448 R/w 34 of IPC.7. Learned counsel for the petitioners submits that the investigation Officer along with mediators visited M/s. Sree Satya Sri Godowns and observed the scene and the stock of the goods in the godowns and drafted mediators report dated 06.08.2019, 07.08.2019, 08.08.2019, 09.08.2019, 10.08.2019, 11.08.2019, 12.08.2019, 13.08.2019, 14.08.2019 and 15.08.2019. The godown locks were given to the National Bulk Handling Corporation cluster head i.e, Deepak Beura and to its warehouse supervisor i.e., K.S. Krishnam Raju by the investigation Officer to protect the stock in the subject godown until further orders from the Police or from the Hon’ble Court.8. Learned counsel for the petitioners further submits that as per the facility cum pledge agreement dated 05.09.2018 the petitioners can sell or otherwise dispose of the said security if in the opinion of the lender value of the security shall be or is being adversely affected and the money realized from the said sale or disposal shall be appropriated to the amounts outstanding and owned by the borrower to the lender. Learned counsel further submits that the loan recall notice dated 21.08.2019 was sent to the accused No.1 by the 1st petitioner by way of registered post with acknowledgement due, but the accused No.1 failed to comply the demand.9. Sri Raviteja, learned counsel for the petitioners submits that the 1st petitioner initiated arbitration proceedings vide Arbitration Case No.1/Infinity/2019 against the 2nd petitioner and sought interim relief as a measure to protect its interest and to secure the amount involved so that the perishable commodities can be liquidated and the amount can be secured. The learned sole Arbitrator vide interim order dated 18.12.2019 was pleased to pass order that by entitling the petitioner No.1 to cause liquidation of the commodities for realization of the outstanding dues and the 2nd petitioner is contractually obliged to follow the instructions regarding liquidation and the custody/sale permission should be sought from the concerned Hon’ble Court.10. It is the case of the petitioners that the petitioners herein moved an application (Crl.M.P.) on 17.12.2019 vide SR.No.4632 of 2019 in Crime No.149 of 2019 on the file of the Junior Civil Judge-cum-Judicial Magistrate at Anaparthi praying to accord permission to the petitioners to sell the stock in M/s.Sree Satya Sri Godown situated at Duppalapudi Village, Ananaparthi Mandal covered under the mediators reports, dated 06.08.2019 to 15.08.2019 in Crime No.149 of 2019 of Anaparthi Police Station and to appropriate the sale proceeds towards the loan account on such terms and conditions which the Hon’ble Court deems fit and proper.11. It is submitted by the learned counsel for the petitioners that the Junior Civil Judge-cum-Judicial Magistrate at Anaparthi vide its docket order dated 21.12.2019 raised the objections that “Form 16 not filed, hence returned”. The petitioners submits that the same was complied with and the said application was represented as “the property referred in mediators report dated 25.07.2018 which are perishable in nature, over in the godowns of allowed to continue till deteriorative damage in toto. Hence, in the interest of justice, the petition may be called at bench.” Again the Junior Civil Judge-cum-Judicial Magistrate at Anaparthi raised the objection as “previous objections should be complied with”. The petitioners represented the said application on 01.01.2020 with endorsement “it is humbly submitted that the matter may be called at bench”. On 21.01.2020 the Junior Civil Judge-cum-Judicial Magistrate at Anaparthi raised objection as “previous objections should be complied with, hence returned” and the petitioners again represented the said application as “fresh petition is filed, objection complied with”. The Junior Civil Judge-cum-Judicial Magistrate at Anaparthi raised the objection on 04.02.2020 with endorsement “how the petition is maintainable for relief of sale in the petition. Hence, returned”. Thereafter the said objection was complied with and the application was represented by the petitioners in the Junior Civil Judge-cum-Judicial Magistrate at Anaparthi by citing the case law i.e., Lenovo India (P) Ltd Vs. The State (2013 SCC Online Mad 3461) on 10.02.2020. Again the learned Junior Civil Judge-cum-Judicial Magistrate at Anaparthi returned the application on 17.02.2020 by raising the same objection as “how the petition is maintainable for relief sale of the case property as prayed for”.12. Learned counsel for the petitioners submitted that the grievance of the petitioners is that the Junior Civil Judge-cum-Judicial Magistrate at Anaparthi is returning the application filed by the petitioners number of times with raising the same objections though the petitioners have complied those objections, the criminal petition is not numbered or the petition was not placed before the bench.13. Sri Raviteja, learned counsel for the petitioners vehemently argued that the goods which are lying in the godown are perishable commodities, if the goods are to be continue in the godown, the petitioners will suffer irreparable loss and damage and the self-life of cashew nuts are six months to one year and as such the learned Junior Civil Judge-cum- Judicial Magistrate at Anaparthi ought to have seen that the petition which was filed by the petitioner is maintainable under law and the learned Junior Civil Judge-cum-Judicial Magistrate at Anaparthi ought to have receive and dispose of the petition in accordance with law. He further contends that the objections raised by the learned Junior Civil Judge-cum- Judicial Magistrate at Anaparthi while returning the Crl.M.P. is erroneous, illegal, unsustainable and deserves being quashed by this Hon’ble Court in exercise of its extraordinary jurisdiction under Section 482 of Cr.P.C.14. Sri Jyosula Bhaskara Rao, learned counsel appearing for the respondents 2 and 3 submits that as and when the petitioners filed petition for release of the stocks they have to pursue the matter before the concerned Magistrate and the interference of this Court is not required. Learned Public Prosecutor submits that the petition may be disposed of in accordance with law.15. Having heard the submissions of the learned counsel and upon perusing the material placed on record, there is no any dispute with regard to the facts of the case as submitted by the learned counsel for the petitioners. It is also noticed that sole Arbitrator passed the following interim order dated 18.12.2019 in Arbitration Case No.1/Infinity/2019:“Upon perusal of the record and consideration of the arguments advanced by the counsels of the parties, it undisputedly transpires that the commodities have been pledged in favour of the Applicant-Claimant which has advanced loans against the pledged commodities. The agreement as well as the legal position empowers the Applicant-Claimant to exercise the rights with regard to the pledged commodities in case of default. The exercise of these rights is well recognized within the Indian Contract Act. The Applicant-Claimant is therefore, entitled to cause liquidation of the commodities for realization of the outstanding dues and the Non-Applicant is contractually obligated to follow the instructions regarding liquidation.However, in the present matter the commodities are a subject matter of an ongoing investigation which is an outcome of the complaint filed jointly by the parties and in such circumstances, the custody/sale permission should be sought from the concerned Trial Court. The Applicant-Claimant is directed to send a copy of this order to the Borrower.”16. It appears in the light of the interim order dated 18.12.2019 in Arbitration Case No.1/Infinity/2019 passed by the sole Arbitrator, the petitioners herein approached the learned Junior Civil Judge-cum-Judicial Magistrate at Anaparthi which is having the jurisdiction to deal this issue by filing a criminal petition in SR No.4632 of 2019 dated 17.12.2019 seeking to accord permission to the petitioners to sell the stocks in M/s.Sree Satya Sri Godown situated at Duppalapudi Village, Anaparthi Mandal covered under the mediators report dated 06.08.2019 to 15.08.2019 in Crime No.149 of 2019 of Anaparthi Police Station and to appropriate the sale proceeds towards the loan account on such terms and conditions which the Hon’ble Court deems fit and proper.17. It is stated that the above said criminal petition was returned on 21.12.2019 with certain objections and the same was represented and again on 02.01.2020 the said petition was returned and it was represented and again on 21.02.2020 the criminal petition was returned and the petitioners represented with endorsement “fresh petition is filed, objections complied with”. It appears the fresh criminal petition filed vide SR No.415 of 2020 was also returned on 04.02.2020 raising objections with regard to the maintainability (the petitioners represented with endorsement “it is humbly submitted that the matter may be called at bench).” The petitioners resubmitted the application by citing the case law i.e., Lenovo India (P) Ltd Vs. The State (2013 SCC Online Mad 3461). Again the application was returned on 17.02.2020.18. Section 451 of the Code of the Criminal Procedure, 1973 reads as under:Section 451 of Cr.P.C.:- Order for custody and disposal of property pending trial in certain cases:-“When any property is produced before any Criminal Court during any inquiry trial, the Court may make such order as it thinks fit for the proper custody of such property pending the conclusion of the inquiry or trial, and, if the property is subject to speedy and natural decay; or if it is otherwise expedient so to do, the Court may, after recording such evidence as it thinks necessary, order it to be sold or otherwise dispose of.”19. From the plain reading of the above provision of law it is categorically clear that if the property is subject to speedy and natural decay, the criminal Court before which it was produced, the Court is empowered to pass orders as per the procedure prescribed there under. In the present case it appears that the petitioners filed an application vide SR No.4632 of 2019 on 17.12.2019 and an application in SR No.441 of 2010 was filed on 11.02.2020. The said criminal petition was not numbered or it was not called at bench till then. In my considered view that the learned Junior Civil Judge-cum-Judicial Magistrate at Anaparthi has to follow the procedure contemplated under Section 451 of Cr.P.C. but it was not done in the present case, for which there is every possibility that the property i.e., cashew nuts will be damaged/spoiled and they are subject to deterioration. The goods, if kept for just a few months would not fetch even half the price. It has therefore become necessary that in order to mitigate the losses, both by way of lying useless or by way of damages that may arises out of contracts for sale entered into which have to be mitigated at all costs.20. The Hon’ble Apex Court in Sunderbhai Ambalal Desai Vs. State of Gujarat (2003 (1) CTC175)held that properties involved in a criminal case has to be prevented from becoming a waste or junk.21. On perusal of the docket sheet of the criminal petition filed on 17.12.2019 vide SR No.4632 of 2019 and criminal petition filed vide SR No.441 of 2020 on 11.02.2020 in Crime No.149 of 2019, it appears that there is no any justification on the part of the Court of the Junior Civil Judge-cum-Judicial Magistrate at Anaparthi in not numbering the criminal petition filed by the petitioners and taking up for hearing. Even though while resubmitting the returned petition, the petitioners requested to call the petition at bench, it appears it was not considered. It is true that self-life of the cashew nuts are six months to one year as contended by the learned counsel for the petitioners. If the said cashew nuts which are lying in the godown or to be continued in the godown,

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there is every possibility that the cashew nuts will become not fit for consumption and the petitioners has to suffer loss and damage to appropriate the value of the goods in terms and conditions of the facility-cum-pledge agreement dated 05.09.2018 which was executed between the petitioners and accused No.1.22. In view of the above discussion, in the considered opinion of this Court that the learned Junior Civil Judge-cum-Judicial Magistrate at Anaparthi has to number the criminal petition filed by the petitioners vide SR No.441 of 2020 in Crime No.149 of 2019 of Anaparthi Police Station and to dispose of the same in accordance with law by following the procedure in Section 451 of Cr.P.C. and as per Law laid down by the Hon’ble Apex Court in Sunderbhai Ambalal Desai case (1 supra).23. For the reasons stated above, the present Criminal Petition No.1407 of 2020 is allowed and the learned Junior Civil Judge-cum-Judicial Magistrate at Anaparthi is directed to number the criminal miscellaneous petition filed by the petitioners in SR No.441 of 2020 in Crime No.149 of 2020 of Anaparthi Police Station and dispose of the same in accordance with law after giving opportunity for hearing to the parties connected with the property involved in the present case. In view of the facts of the case and considering the property involved in this case, the learned Junior Civil Judge-cum-Judicial Magistrate at Anaparthi is directed to dispose of the criminal miscellaneous petition filed by the petitioner vide SR No.441 of 2020 as expeditiously as possible preferably within a period of two (02) months from the date of receipt of this order.As a sequel, pending miscellaneous petitions, if any, shall stand closed.
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