Karnataka High Court refuses to quash criminal proceedings against company founder and others on allegation of cheating a Bengaluru-based stock investor  

High Court refuses to quash criminal proceedings against Anand Rathi and others for alleged cheating and unauthorized transactions.

The High Court of Karnataka has refused to quash criminal proceedings against Anand Rathi, founder and director of Anand Rathi Shares and Stock Brokers Ltd. (ARSSBL), and 10 other executives and officers of the company in a case of allegedly cheating a 67-year-old investor and indulging unauthorised monetary transactions through his bank account.

“I do not find any error in the order of rejection of ‘B’ report or taking of cognisance by the magistrate...,” observed Justice M. Nagaprasanna in his recent order of refusing to interfere with the order passed in December 2022 by a metropolitan magistrate court in Bengaluru.

The High Court passed the order while rejecting the petitions filed by Anand Rathi, Pradeep Gupta, Priti Pradeep Gupta, Jugal Kishore Mantri, Shankar Raja M.P, Amarnath H.S., Rekha C., B.L. Nagaraja, Amith Anand Rathi, and Nimal Chandak, all part of ARSSBL and Anand Rathi Global Finance Ltd.

The petitioners had questioned the December 2022 order passed by the magistrate court in taking cognisance of the offences of cheating, criminal breach of trust, etc., against them while claiming that the dispute with the complainant was civil in nature.

Vishwanath Pujari, a resident of Bengaluru and a seasoned investor trading in securities at the stock exchange platform, had lodged the complaint in 2017. The police initially filed a ‘B’ report in January 2019, indicating that no offence could be established against accused persons belonging to the ARSSBL. However, the magistrate court rejected the ‘B’ report and directed the police to conduct further investigation. After further probe, the police filed a second ‘B’ report in June 2021. Rejecting the second ‘B’ report, the magistrate court had taken cognisance of offences against the petitioner-accused.

The ARSSBL, while liquidating some stocks, worth around ₹1.04 crore held by him, towards the recovery of loan amount that he had allegedly defaulted in repayment, had allegedly indulged in unauthorised transaction of several crores of rupees through the bank account of the complainant by illegal use of the general power of attorney executed by the complainant.

The magistrate court had held that the investigating officer (IO) had not properly investigated the flow of money and huge share trading transactions through the account of the complainant besides not recording the statements of the accused on the allegation of operating the complainant’s bank account, etc.