The court affirmed that proceedings against deposit takers under the BUDS Act can commence based on prima facie evidence of fraud, even if the initial complaint did not originate from the regulatory authority.

CAV COMMON ORDER

(PER: THE HON'BLE MS. JUSTICE J.M.KHAZI)

In these two petitions filed under Section 482 of the Cr.P.C, accused Nos.2 and 1 respectively have sought for quashing the criminal proceedings initiated against them in Spl.C.No.197/2022 on the file of Prl.District and Sessions Judge, Belagavi, for the offences punishable in Sections 406 and 420 IPC and Section 21 (1)(2) and (3) of The Banning of Unregulated Deposit Schemes Act, 2019 ('BUDS Act' for short).

2. While Crl.P.No.102510/2023 is filed by accused No.1, Crl.P.No.100048/2024 is filed by accused No.2.

3. Since these two petitions are arising out of the same case, they are clubbed together and disposed of by a common order.

4. In support of the petition, the petitioners have contended that absolutely there is no material in the charge sheet to proceed against them and as such, it is liable to be quashed, as it amounts to abuse of process of law. As per Section 27 of BUDS Act, no designated Court shall take cognizance of an offence punishable under the said section, except upon a complaint made by the regulator. As per Section 7 of the said Act, the Government shall first appoint a regulator and thereafter designate a Court to deal with the matters to which the provisions of the said Act apply, and the designated Court can take cognizance only on complaint in writing made by the regulator. In the present case, respondent No.2 who is a private person has given the first information and on the basis of it, FIR is registered. During the course of investigation, the provisions of BUDS Act are invoked and after investigation, charge sheet is filed. The trial Court ought to have complied with the provisions of Section 27 of BUDS Act. The non-compliance of said provision, has vitiated the entire proceedings.

5. The petitioners are in no way concerned with the allegations made in the complaint. Allegations made in the complaint are not believable. There is no material to show that complainant has invested Lakhs together. As per the statements of CW-2, 12 to 17, it is alleged that accused No.1 has cheated the innocent investors to the tune of `55 Crores, which is not believable. Viewed from any angle, the proceedings are not sustainable and pray to allow the petitions and quash the criminal proceedings against the petitioners.

6. In support of their arguments, the learned counsel for petitioners have relied upon the following decisions:

(i) Shivaji s/o Baburao Patil and Anr. Vs. The State of Karnataka (Shivaji), Cril.P.No.200861/2022

(ii) Santosh Kumar S/o Gadeppa Khot and anr. Vs. The State of Karnataka and Ors. (Santosh Kumar), W.P.No.102888/2022

(iii) Sri.Ravikiran s/o Sureshkamlakar and A