Case BriefsDistrict Court

Rouse Avenue, District Court, New Delhi: Sanjeev Aggarwal, Special Judge (PC Act) (CBI)-02, dismissed a bail application Anand Subramanian while observing that,

“…investigations are going on and the investigating agency is in the process of removing the secret veil to show to the Court the true face of this Himalyan Yogi, who is as elusive as anecdotal Himalyan Yeti.”

During 2010 to 2014, Sanjay Gupta owner and promoter of OPG Securities Private Limited abused the server architecture of the National Stock Exchange (NSE) in criminal conspiracy with unknown officials of NSE.

Sanjay Gupta along with the help of his brother-in-law and other unknown persons, managed the data centre staff of NSE who passed the information regarding switching on time of NSE exchange servers.

OPG Securities was also given access to servers that were technologically latest and least crowded at that particular period, which resulted in OPG being the first one to log in on the Exchange Server of NSE.

Unfair access to co-location facility was also obtained by Sanjay Gupta which helped his company to get geta before everyone else which allowed a split-second faster access to the data feed of NSE.

Further, source information revealed that on receiving the complaints of exploitation of TBT architecture by OPG Securities Pvt. Ltd., SEBI conducted enquiry and according to its Technical Advisory Committee (TAC) report, OPG Securities gained materially by exploiting the TBT architecture of NSE.

In order to ensure the favorable report from SEBI in the on-going enquiry being carried out against the role of OPG Securities Pvt. Ltd in the misuse of TBT architecture of NSE, Sanjay Gupta dishonestly and fraudulently influenced the official of SEBI for which bribe money was exchanged between Sanjay Gupta and some unknown officials of SEBI.

One Ajay Narottam Shah had been instrumental in exploitation of NSE TBT architecture. Source revealed that he had collected NSE trade data in the name of carrying out research and subsequently, passed it to private persons who in turn developed an algo software named ‘Chanakya’ which was later sold to selected brokers.

OPG securities had been illegally trading in certain countries and also raised funds from abroad.

Hence, the above stated information revealed offences punishable under Sections 120 B and 204 of Penal Code, 1860 and Section 66 of the IT Act 2000 alongwith Sections 7,12 and 13(2) read with 13(1)(d) of PC Act 1988 against Sanjay Gupta, Aman Kokrady, Ajay Narottam Shah, M/s OPG Securities Pvt. Ltd., unknown officials of SEBI & NSE and other unknown persons for entering into criminal conspiracy for attempt to give and receive bribe, abuse of official position, unfair access of TBT servers of NSE for wrongful gain, for manipulating the server of NSE and for destroying the electronic evidences.

Analysis and Decision


Court expressed that the main duty of the SEBI is to regulate the Indian Capital Markets, it monitors and regulates the stock markets and protects the interests of the investors by enforcing rules and regulations.

SEBI has no powers to determine the criminality of the accused in offences other than with which the SEBI Act deals, though some times, there may be some overlapping, as observed earlier while deciding the anticipatory bail application of co-accused Chitra Ramkrishna, although it is a completely different matter that all this while the SEBI has looked other way with regard to launching criminal proceedings against the present accused as well as other accused persons involved in the co-location scam, despite being the market watch dog.

It was alleged that the co-accused Chitra Ramkrishna by misusing her official position had appointed the accused in NSE and re-designated the pose of accused as Group Operating Officer and advisor to MS without bringing the same to the notice of NRC and the Board and substantial powers alike to that of MS were delegated to the present accused and he was in knowledge of important and confidential information regarding the working of NSE.

Being posted at NSE, it was the public duty of the accused to protect the interest of common investors, rather he indulged in criminal conspiracy and caused huge advantage to various trading members/brokers, thus he had committed grave economic offence.

There were no allegations that the accused tried to abscond at any point of time. However, with regard to tampering and influencing the witnesses, considering that the accused was holding a pole position in NSE, there were strong chances that he may influence the relevant witnesses or tamper with evidence.

The Bench expressed that, the investigations are going on and the investigating agency is in the process of removing the secret veil to show to the Court the true face of this Himalyan Yogi, who is as elusive as anecdotal Himalyan Yeti.

Considering the grave and serious allegations against the present accused, no bail was granted. [Anand Subramanian v. CBI, 2022 SCC OnLine Dis Crt (Del) 11, decided on 24-3-2022]

Case BriefsHigh Courts

Delhi High Court: Suresh Kumar Kait, J., while addressing the present matter, observed that,

Providing information regarding an ongoing investigation to its informer is not only inappropriate but also injurious to the ongoing investigation.

The instant petition was filed under Section 482 of Criminal Procedure Code, 1973 seeking setting aside of the orders passed in Rajiv Yaduvanshi v. Principal Director, Income Tax (Investigation-I), Crl. 102 of 2020.

Background

Investigation unit of the Income Tax Department received a Tax Evasion Petition by respondent 1 against Vandana Sodhi and Sandeep Sumbly (respondents 2 and 3, respectively).

The Tax Evasion Petition after going through the due procedure was marked to the Dy. Director of Income Tax, Investigation Unit 8(4) under the administrative control of Principal Director of Income Tax (Investigation-2). Department further commenced the proceedings as per the Standard Operating Procedure. 

On 23-09-2020, an “Application for Calling Status Report” was filed by respondent 1. In the said application, an ex-parte order was passed.

On 05-10-2020, the said application was again listed before ACMM and it was directed that a status report be filed. Thereafter the said application was again listed before the ACMM and time was sought on behalf of the petitioner as the concerned PDIT had been transferred. Again on 28-10-2020, the said application was again listed before the ACMM, wherein a Notice was issued.

Contention

Respondent 1 accepted the notice and counsel for respondent 1 submitted that the filed application before the Court to know the status of the investigation and the petitioner department is duty-bound to comply with the directions passed by ACMM.

Petitioners Counsel submitted that impugned order passed by ACMM calling for a status report were passed without jurisdiction as no provision of the CrPC gives such power to the ACMM.

Further, the counsel added that, it is a settled principle of law that neither the ACMM nor any Court below, however, only this Court has inherent powers under CrPC.

It was noted in the instant case that, respondent 1 had filed an application without any procedure mentioned in CrPC or Income Tax Act. Moreover, the Judge passed directions after directions without realizing even that he does not have inherent powers under CrPC.

Decision

Court observed that the said application was filed under Section 51 of the Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Rules Act, 2015 and ACMM did not consider Section 55 of the said Act.

In view of the above, ACMM usurped the inherent jurisdiction of this Court which is impermissible under the law.

Moreover, in the cases pertaining to Tax Evasion Petitions, this Court also exercises its powers sparingly and it is a well-settled principle that only the broad outcome of Tax evasion petition may be communicated to the complainant, that too upon culmination of the investigation.

Income Tax Department has a specific framework of investigations dealing with the TEPs and information in respect of the investigation carried out by the office of Directorate General of Income Tax (Investigation) is not required to be intimated to the complainant as the said office is even outside the purview of the RTI Act, 2005.

Reliance on the decision of the Central Information Commission was placed:

S.K. Agarwalla v. Directorate General of Central Excise Intelligence, CIC/AT/A/2007/01455, in this decision the appellant vide an RTI application requested information relating to the progress of the case under investigation, wherein it was held as under:

“..although speedy investigations in matters of revenue- evasion is salutary goal, it would be inappropriate and even injurious, to ongoing investigations if informers are allowed to intrude into the investigative progress all in the name of enforcing a Right to Information. Intrusive supervision of investigation work of public authorities especially by interested parties has the effect of impeding that process, in the sense it exposes the officers to external pressures and constricts the freedom with which such investigations are to be conducted. Commission also felt that there is no reason why officers of public authorities should space their investigations to benefit informants. Intrusive interference in investigation work is not conductive to such investigations and, in that sense, impedes it.”

Court held that since the application filed by respondent 1 before the ACMM was without the provisions of either CrPC or Income Tax Act which is bad in law.

Hence, the orders passed by Judge are declared as illegal, perverse and without jurisdiction and therefore the same are set aside. [Principal Director, Income Tax (Investigation-2) v. Rajiv Yaduvanshi, Crl. MC No. 2140 of 2020, decided on 06-11-2020]