Kanchi Raju Venkata Ramana vs State of Andhra Pradesh

Judicial Analysis Court Copy Headnote Facts Arguments Court observation

2008 Supreme(AP) 536

2008(2) ALD(Cri.) 351(AP)
In the High Court of Judicature, A.P. at Hyd.
Dr. G. Yethirajulu, J.
Kanchi Raju Venkata Ramana - Appellant
Versus
State of Andhra Pradesh and another - Respondents
Crl. RC No.1938 of 2007
Decided on: 21.07. 2008

Advocates:
ADVOCATE APPEARED:M. Venkat Ram Reddy, Counsel for the Petitioner; Public Prosecutor, Counsel for the Respondent No.1; N V. Anantha Krishna, Counsel for the Respondent No.2.

Headnote:
Indian Penal Code –Sections 420, 406 – A.P. Protection of Depositors of Financial Establishments Act, 1999 –Sections 3, 5 –Companies Act, 1956 – Banking Regulation Act, 1949 –Section 5(c) – Applicability of Provisions – Reserve Bank of India Act, 1934 –Revision case has been filed by the petitioner-AI questioning the order passed in Crl. MP in CC by the Metropolitan Sessions Judge, registered for offences under Sections 420, 406 of Indian Penal Code and Sections 3 and 5 of A.P. Protection of Depositors of Financial Establishments Act, 1999 –Held, Under Article 20(1) of the Constitution of India no person shall be convicted of any offence except for the violation of the law in force at the time of the commission of the offence – No person can be punished for any Act, said to be committed by him, which was not an offence on the date on which it was committed – Charge-sheet in the present offence was filed much prior to the Amendment Act came into force – At the time of the incident the company was not a financial establishment – Petitioner is a Director of a Finance Corporation – Cause of action for civil remedy may be available to the respondent, but so far as the criminal liability is concerned, Section 5 of the Act has no retrospective effect and it cannot be treated as a continuous offence without there being any express provision to show that the offence mentioned in the charge-sheet is a continuous offence – Court is inclined to allow the application – Order Accordingly

Judgement Key Points

Key Points: - Under Article 20(1) of the Constitution, no person can be convicted for an act that was not an offence at the time it was committed (!) . - The petitioner company was not a financial establishment under the pre-amendment definition at the time the offence occurred (!) . - Section 5 of the Act contains penal provisions for defaults by financial establishments (!) . - The charge-sheet was filed before the amendment Act came into force, and the incident predated the amendment (!) . - Penal provisions must be strictly construed and given prospective application unless expressly provided otherwise (!) . - The court allowed the revision in part, discharging criminal liability under Section 5 but permitting other proceedings to continue (!) . - The definition of 'financial establishment' was amended to include companies registered under the Companies Act, but this change was not retrospective (!) . - The court referenced differing opinions on whether the cause of action’s survival after the amendment can attract retrospective liability (!) (!) . - The final order recalls the earlier judgment and allows the revision only to the extent of discharging prosecution under Section 5 (!) .

Whether the accused can be convicted under Section 5 of the A.P. Protection of Depositors of Financial Establishments Act, 1999 when the offence was committed prior to the amendment that included companies within the definition of 'financial establishment'.

Whether penal provisions of Section 5 can be applied retrospectively to an offence charged in a complaint filed before the amendment came into force.

Whether the cause of action for recovering deposits continues to attract liability under Section 5 after the amendment when the complaint was filed before the amendment.

ORDER :-This revision case has been filed by the petitioner-AI questioning the order dated 14.11.2007 passed in Crl. MP No.l372 of 2007 in CC No.5 of 2007 by the Metropolitan Sessions Judge, Hyderabad, registered for the offences under Sections 420, 406 of the Indian Penal Code and Sections 3 and 5 of A.P. Protection of Depositors of Financial Establishments Act, 1999.

2. The learned Counsel for the petitioner contends that the offence under Section 5 of the Act is not attracted since the non-banking financial companies were not included in the definition of 'financial establishment' prior to the amendment Act 17 of 1999. The learned Counsel further contends that the petitioner floated the company in the year 1996 long prior to the Amendment Act came into force, therefore, he is not liable to be prosecuted under Section 5 of the Act. The learned Counsel also submitted that A2 in the said case filed a quash petition before this Court and the said petition was ordered quashing chargesheet to the extent of the offence under Section 5 of the Act.

3. The learned Counsel for the respondent No.2 submitted that a learned Single Judge of this Court in Gourishetty Prabhakar v. State of A.P., 2002 (1) ALD(Crl.) 613 =2002 (1) ALT (Crl.) 492, considered the question of prospective or retrospective operation of the Act and held as follows:

"Coming to the question of retrospectivity of the Act, in my opinion, the contention of the learned Counsel for the petitioner cannot be upheld. It should not be forgotten that the cause of action survives till the date petitioner repays the amount accepted as deposit or till the expiry of the period of limitation prescribed for recovery of the same. Though the deposit matured on 3.10.1999, cause of action to recover the amount was surviving to the complainant by the date of filing of the complaint, i.e., 10.11.200 1 also, i.e., after the Act came into force. Therefore, the contention of the learned Counsel for the petitioner that since the deposit matured before the coming into force of the Act, the provisions of Section 5 of the Act cannot be made applicable to that deposit, cannot be accepted."

4. The learned Counsel for the respondent by referring the above decision submits that since the cause of action survives by the date of the Act came into force, the accused shall be made liable for the offence under Section 5 of the Act by treating the company of the petitioner as a financial establishment as defined under the amended Act, though the complaint was filed prior to the amendment Act came into force.

5. In D. Sudhakar Reddy v. State of A.P. rep. by P.P., in Criminal Petition No.4344 of 2004 dated 6.4.2006 a learned Single Judge of this Court gave a different opinion to the decision referred above and held that the ingredients of Section 5 of the Act 17 of 1999 are not attracted in the case as the amendment came into force after the date of cause of action arose in the case and by that date the non-banking institution was not included in the definition of 'financial establishment'.

6. Section 2(c) defines 'financial establishment', which reads as follows :

"Financial Establishment" means an individual, an association or body of individuals or a fine carrying on the business of receiving deposits under any scheme or arrangement or in any other manner but does not include a company registered under the Companies Act, 1956 (Central Act 1 of 1956) or a Corporation or a Co-operative Society owned and controlled by any State Government operative Society owned and controlled by any State Government or the Central Government, or a banking company as defined under Section 5(c) of the Banking Regulation Act, 1949 (Central Act 10 of 1949) or a non-Banking Financial Company as defined in Clause (f) of Section 45-1 of the Reserve Bank of India Act, 1934 (Central Act II of 1934)."

7. Clause (c) of Section 2 was amended by Act 12 of 2003. By virtue of that a company registered under the Companies Act has also been brought

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