BYRRAJU RAMALINGA RAJU Vs. ENFORCEMENT DIRECTORATE

JUDGEMENT

(1.) BOTH the Criminal petitions (Criminal petition Nos. 3805 and 3828 of 2009) are directed against the order of the XIV Additional chief Metropolitan Magistrate, Hyderabad, dated 08-06-2009 in Criminal Miscellaneous petition No. 1962 of 2009 in Crime No. 04 (S)of2009.

(2.) THE Enforcement Directorate government of India represented by its assistant Director filed Criminal Miscllaneous petition No. 1962 of 2009, purportedly under section 167 of the Code of Criminal Procedure (for short "the Code") for permission to record the statements of the accused in Crime no. 04 (S)of2009. The Enforcement Directorate is stated to be an Investigating Agency of government of India dealing with the offences punishable under the Prevention of Money-Laundering Act, 2002 (for short "the Act") and the Foreign Exchange Management Act, 1999 triable by Special Courts constituted under the enactments. It was claimed that the first information report No. 02 of 2009, dated 09-01 -2009, registered by C. I. D. police station, discloses that M/s. Satyam Computer Services limited, its Chairman and other Director caused loss to the de facto complainant on account of fudging of accounts and manipulation of records showing incorrect and inflated figures in the balance-sheet by the Chairman, the Managing director and other Directors, which are certified by the Auditors. The Central Bureau of investigation was stated to have subsequently taken up investigation and the accused are in judicial custody. It was claimed that the details collected from the Registrar of Companies and C. I. D. revealed fudging of books of account and other records by the Company, it Chairman, managing Director, Chief Financial Officerand other Directors who diverted funds and purchased a lot of immovable properties in and around Hyderabad in the names of themselves, their family members, relatives and other benami names. While the properties are being identified, the preliminary inquiry, the examination of documents and the reports that appeared in newspapers were claimed to have shows a prima facie case against the accused under Section 3 of the Act and under foreign Exchange Management Act, 1999, which requires further investigation in accordance with the said Acts and the Rules framed thereunder. Accordingly, ECIR No. 1/ hno/2009/209 (Enforcement Case Information report) was filed before the Courts. The enforcement Directorate claimed to have conducted investigations, which revealed fudging of books of account by the accused showing inflated sales and profits to reflect higher share value and off loading of shares of m/s. Satyam Computer Services Limited investing the proceeds in land and other immovable properties. The Chairman and the managing Director transferred Rs. 2. 78 crore shares to SRSR Holdings Private Limited, a front company for purchase of properties. The accused floated more than 300 companies and the proceeds of pledging of shares and dividends of M/s. Satyam Computer Services limited were used for purchase of immovable properties across the country. The Chairman was instrumental in showing non-existing fixed deposits to an extent of Rs. 3. 30 crore in the balance-sheet, and the export invoices are apprehended to have been forged to show high and inflated export remittances. The Auditors conspired with the other accused and hence, the Enforcement Directorate sought for grant of custody of the Chairman, the Managing director, Senior Vice President and two chartered Accountants of M/s. Satyam computer Services Limited in the Jail itself to enable recording of their statements under section 50 of the Act.

(3.) THE application, dated 30-03-2009 was opposed by the Chairman and the Managing director denying committing the alleged offences and the allegations made against them. As they were in judicial custody since 10-01 -2009 and as the prison is not a conducive place to record a statutory statement which can be used against them at a later stage and as they have no access to all the relevant records seized by different agencies, compelling them to give statements is against statutory rights and safe-guards. The claim that the proceeds of crime are in their hands, which are projected as untainted property, is unsubstantiated and all the allegations, even if assumed to be correct, do not make out the ingredients of Section 467 of the Indian Penal code (for short "ipc"), which alone would enable taking up of investigation under the act. The Assistant Director is not authorized under the Act to gather evidence or conduct investigation and he cannot maintain the petition. There are no enabling provisions under the Act or the Code to permit recording of statements by the Assistant Director who cannot be equated with police and any such permission is against the principles of natural justice, as the Chairman and the Managing director, without access to any records of the company, will not be in a position to support their statements with reference to their documents. The recording of statements will be an exercise in futility, more so in the constrained and stressful atmosphere prejudicing the Chairman and the managing director. Hence, they sought for dismissal of the Criminal Miscellaneous Petition No. 1962 of 2009.