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

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

Justice Suraj Govindaraj of the Karnataka High Court on 18th January, 2021 dismissed the petition seeking directions to Reserve Bank of India (RBI) to register a criminal case against Wipro founder, Ajim Premji and others (respondent) under the RBI Act for misappropriation of funds.

The petitioner- India Awake for Transparency, an NGO challenged an order of a Magistrate Court which had dismissed the complaint against the respondents. The petitioner complained that Premji and others, directors of various companies, were carrying out non-banking financial business in the said companies without registration and were alleged to have committed offences under Section 45-IA of the RBI Act which deals with mandatory for all Non-Banking Financial Companies (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 Magistrate Court had, by an order dated 28th July, 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 could be issued to the Governor of the RBI, said the Court.

Per contra, the respondent raised a preliminary objection on the maintainability of the petition. According to them the petitioner had also filed another Public Interest Litigation (PIL) before the High Court in which the Governor of RBI and various other entities had been grouped as parties. In the said matter too, allegations were made as regards violation of RBI Act, contended the respondents.

Further the counsel appearing for RBI submitted that the claim of the petitioner comes under the purview of principles of res judicata in as much as the RBI vide its order dated 5th September, 2017 had rejected the claims of the petitioner. Furthermore, it was stated that a similar petition was filed before Delhi High Court and therefore, the present plea should be dismissed.

It was argued that the petitioner ought to have challenged the 2017 order, however since it was not challenged a private complaint could not have been filed by the petitioner.

The High Court after examining the submissions stated that, "Juxtaposing the same to what was sought for in the PIL before this Court, it is seen that there was a multi-disciplinary enquiry Committee which was requested to be formed for the purpose of investigating into various allegations including that made under para 26- A of the said PIL which has been reproduced hereinabove. Essentially the allegations made therein is also of conducting business as non-banking financial company without mandatory registration i.e., an alleged offence under Section 45-IA of the RBI Act".

The Court regarding the issue of private complaint remarked, that though the petitioners had by legal and linguistic gymnastics they had drafted the petition worded differently, however both the petition filed before the Delhi High Court as well as private complaint before the Magistrate were quite similar in their prayers.

The Court observed, "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 for alleged violation of Section 45-IA of the RBI Act".

The Court also emphasized that the RBI had categorically debunked the allegations made by the petitioners against respondents and categorically stated that the merger cannot be annulled or RBI cannot approach the Court for annulment of such merger.

The Court summarized in its judgment that the grievance of the petitioner being the same in all the proceedings, the action sought for by the petitioner also being the same.

"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 Court commented.

The High Court further asserted that the writ petition filed was an abuse of process of law and the same was not maintainable. The grievance of the petitioner had already been addressed by RBI by its order dated 5th September, 2017 and therefore the writ petitions were liable to be dismissed.