Bombay High Court: In a set of two writ petitions filed by Adani Enterprises Ltd. (‘Adani’) against the orders passed by the Additional Sessions Judge (‘Sessions Court’) setting aside the discharge orders passed in favour of Adani by the Trial Court in a capital market manipulation case worth Rs. 388.11 Crores, a Single Judge Bench of R.N Laddha, J., allowed the petitions, holding that the Sessions Court interfered despite finding no infirmity in the Trial Court’s orders. The Court also held that the complaint failed to satisfy the essential ingredients of cheating under Section 420 of the Penal Code, 1860 (‘IPC’), and consequently, the ancillary charge of criminal conspiracy under Section 120B of the IPC also became unsustainable.
Background
In 2012, the Union filed a complaint against Adani, Triumph Securities Ltd., and ten other accused under Section 420 read with 120B of the IPC. It was alleged that Adani and its group, its associates and subsidiaries, entered a criminal conspiracy with the convict to artificially and unlawfully manipulate the share price of Adani Enterprises Ltd. with the dishonest intention of causing unlawful gain to the promoters of Adani and its group companies and causing resultant unlawful loss to the public during the period of the scam.
Allegedly, the promoters of Adani made unlawful gains by providing funds and shares to an entity for artificially manipulating shares of the company and offloading their shareholding when the share price was high and reacquire them when the prices dropped, thus profiting from these unlawful trades. By doing so, the accused misled the public into believing that the scrip’s price movement was normal, and they were induced to acquire the shares offloaded in the market by the promoters. Consequently, the aforesaid entity made an unlawful gain of about Rs.151.40 Crores from these transactions, whereas the promoters of the Adani Group made an unlawful gain of about Rs. 388.11 Crores.
Initially, the Trial Court had discharged Adani under Section 245(2) of the Code of Criminal Procedure, 1973 (‘CrPC’), but when the case was remanded for reconsideration, the Trial Court rejected the discharge plea. Aggrieved therein, Adani filed the present petitions.
Analysis
Regarding the scope and extent of the Trial Court’s discharge powers under Section 245(2) of the CrPC and the revisional power of the Sessions Court under Section 397 of the CrPC, the Court stated that the Trial Court was under no obligation to direct the complainant to present evidence prior to addressing the discharge application under Section 245(2) of the CrPC. The Court noted that while there was no legal bar preventing the complainant from requesting permission from the Trial Court to lead evidence under Section 244 of the CrPC, the complainant opted not to exercise this right. Thus, the Court held that, resultantly, the Trial Court could not be faulted for deciding the discharge applications solely based on the allegations outlined in the complaint, particularly since the investigation records did not form a part of the proceedings before it. In this regard, the Court placed reliance on Ajoy Kumar Ghose v. State of Jharkhand (2009) 14 SCC 115.
The Court stated that despite the Sessions Court acknowledging the applicability and significance of the legal principles established in Ajoy Kumar Ghose (supra) and concurring that the Revisional Court cannot go beyond the record of the Trial Court, it erred by independently presuming that the investigation report formed the core basis of the case. Additionally, the Sessions Court considered the complainant’s failure to place the investigation report on record as an error. The Court held that these interferences and conclusions exceeded the Revisional Court’s jurisdiction under Section 397 of the CrPC, and therefore, the impugned orders were unsustainable.
Upon perusal of the submissions and records, the Court stated that it was evident that the complaint failed to satisfy the essential ingredients of the offence of cheating under Section 420 of the IPC. Further, the Sessions Court also categorically acknowledged that the complaint lacked any assertion from any member of the public alleging that they were deceived or induced, whether fraudulently or dishonestly, to part with their money or the shares due to alleged price manipulation.
The Court remarked that a fundamental requirement for an offence under Section 420 was the presence of an element of deception, which leads to the victim suffering from loss while the accused gains wrongfully. However, in the present case, there was a conspicuous absence of any such allegations from an affected party.
Merely asserting that the accused has made a wrong gain without demonstrating the corresponding wrongful loss or deception suffered by a specific victim does not suffice to attract the offence of cheating under the IPC.
In this regard, the Court referred to Mariam Fasihuddin v. State 2024 SCC OnLine SC 58, wherein the Supreme Court reinforced the principle that a charge under Section 420 of the IPC cannot be sustained in the absence of clear evidence of deception and resultant inducement.
The Court further stated that since the foundational charge of cheating was not made out, the ancillary charge of criminal conspiracy under Section 120B of the IPC, which pre-supposes the existence of a substantive offence, also became unsustainable.
Furthermore, the Court noted that the Sessions Court did not find any errors, irregularities, or legal improprieties in the Trial Court’s findings noted in the discharge orders. Thus, those findings remained undisturbed and were deemed to not be in contravention of any established legal principles. The Court reiterated that the scope of the Revisional Court’s powers under Section 397 of the CrPC was limited to examining the correctness, legality, or propriety of the Trial Court’s order. Thus, the Court held that in the absence of any substantive findings, error, or legal infirmity in the discharge orders, the interference by the Sessions Court was unwarranted and beyond its jurisdictional mandate.
Thus, the Court allowed the writ petitions. Accordingly, the impugned orders were quashed, and the Trial Court’s discharge orders were reinstated.
[Rajesh Shantilal Adani v. State of Maharashtra, Criminal Writ Petition No.6289 of 2019, decided on 17-03-2025]
Advocates who appeared in this case:
For the petitioner: Senior Advocate Amit Desai, Senior Advocate Vikram Nankani, Ishwar Nankani, Prithwiraj Choudhari, Gopalkrishna Shenoy, Rhea Sinkar, and Prajakta Sarwadekar
For the respondent: APP Manisha Tidke, ASG Anil Singh, DP Singh, Adarsh Vyas, Pradeep Yadav, Divya Gontia, and Ruchita Verma
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