Karnataka High Court rejects plea seeking criminal action against Azim Premji, others for alleged misappropriation of funds

The Karnataka High Court recently dismissed a petition seeking directions to Reserve Bank of India (RBI) to register a criminal case against Wipro founder, Azim Premji and others under the RBI Act for misappropriation of funds. .The petition filed by NGO, India Awake for Transparency challenged an order of a magistrate court which had dismissed the complaint against Premji. ."I am of the considered opinion that the writ petition filed is an abuse of process of law and of this court, the same is not maintainable. The grievance of the petitioner has already been addressed by RBI by its order dated 5.09.2017 passed. If at all the petitioner has any grievance as regards the said order, the petitioner is required to take adequate and necessary steps not by filing of proceedings by way of a private complaint before the Magistrate or by way of writ petition before this Court," the High Court said..It was the complaint of the petitioner that Premji and others, being directors of various companies, were carrying on non-banking financial business in the said companies without registration and had, therefore, committed offences under Section 45IA of the RBI Act..Section 45 IA of the RBI Act makes it mandatory for all NBFCs to obtain registration from RBI failing which such an entity can be prosecuted under Section 58B(4A) and punished with imprisonment of upto 5 years and fine of upto Rs. 5 lakh..The petitioner had, therefore, prayed that Premji and others should be prosecuted under the relevant provisions of the RBI Act. .The magistrate court had, by an order dated July 28, 2020 dismissed the complaint holding that the representation earlier submitted by the petitioner was still pending before the Governor of the RBI for consideration. Therefore, no direction can be issued to the Governor of the RBI, said the Court..Arguments of Parties .Senior Advocate S Ganesh, instructed by advocate Sandeep Huligol appearing for Premji raised a preliminary objection on the maintainability of the petition..He pointed that the petitioner had also filed another PIL before the High Court in which the Governor of RBI and various other entities had been arrayed as parties. In the said matter too, allegations were made as regards violation of RBI Act, contended Ganesh..Senior advocate RVS Naik, instructed by advocate VV Giri, appearing for RBI, submitted that the claim of the petitioner is hit by the principles of res judicata inasmuch as the RBI vide its order dated September 5, 2017 had rejected the claims of the petitioner. Moreover, It was stated that a similar petition was filed before Delhi High Court and therefore, the present plea should be dismissed..If at all the petitioner has any grievance, the petitioner ought to have challenged the 2017 order. Since it was not challenged, a private complaint could not have been filed by the petitioner, it was argued. .Advocate R Subraminian, appearing for the petitioner organisation submitted that proceedings which had been filed before the Delhi High Court were different from that which had been filed before the Magistrate.Before the Delhi High Court, the relief sought was for a mandamus to decide on the representations given by the petitioner. Moreover, it was submitted that the 2017 letter of RBI cannot be said to be an order passed by the RBI inasmuch as there is no judicial or quasi judicial proceedings which took place..What the Court held .After going through the rival submissions, the Bench went on note that though the petitioners had deployed clever drafting, both the petition filed before the Delhi High Court as well as private complaint before the Magistrate were quite similar in their prayers. ."What this court is required to look into and appreciate is if the reliefs sought for on the allegations made are one and the same. Clever drafting and or subterfuge resorted to in such drafting would not take away the fact that the allegations made in all three proceedings are one and the same.The wording being different is only the careful and ingenious drafting of the prayers and/or the reliefs sought for since the forums are different but essentially in all the three matters what has been sought is a direction to the RBI to take action against respondents No.2 to 7 for alleged violation of Section 45-IA of the RBI Act," said the Court. .The Bench also noted that the RBI had categorically rejected the allegations made by the petitioners against the respondents and further said that the 2017 letter was an order. .Summarising the conduct of the petitioner organisation, the Court remarked that the grievance of the petitioner is the same in all the proceedings. ."In the present case, the grievance of the petitioner being the same in all the proceedings, the action sought for by the petitioner also being the same, in that for the RBI to take necessary action against respondents No.2 to 7. The petitioner having failed before the Magistrate tried his luck by addressing arguments in the PIL where also the petitioner failed and had to withdraw the same unconditionally without any liberty. The petitioner cannot agitate the same ground before this Court thereafter.".The High Court further noted that the allegations and complaints of the petitioner were considered by the RBI and a detailed order was passed by the banking regulator on September 5, 2017. ."The allegations and/or complaints of the petitioner having already been considered by the RBI and a detailed order dated 5.9.2017 having been passed by the RBI, I am of the considered opinion applying the principles laid down by the Apex Court in Sarguja's case that when the petitioner unconditionally withdraws a particular matter, the said subject matter could not be re-agitated in any other proceedings," the Court made it clear. .[Read Judgment]