Karnataka HC rejects petition to quash CID closure report in Anand Rathi case

Court orders further investigation into allegations of misappropriation and loan-related misconduct
Image used for representational purposes
Image used for representational purposes
Updated on
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BENGALURU: The Karnataka HC refused to quash a magistrate’s order, rejecting the ‘B’ (closure) report filed by the CID against 11 accused of Anand Rathi Shares and Stock Brokers Ltd (ARSSBL) from Mumbai, based on a complaint filed by a city investor.

Justice M Nagaprasanna passed the order, rejecting the petition filed by Anand Rathi, Pradeep Kumar Gupta, Priti Pradeep Gupta, Jugal Kishore Mantri, Roop Bhootra, Shankar Raja MP, Amarnath HS, Rekha C, BL Nagaraja, Amit Anand Rathi and Nimal Chandak.

The complainant, Vishwanath Pujari, had invested in stocks through ARSSBL. An agreement for a loan against shares was entered into between him and the petitioners. The complainant is said to have defaulted in clearing the loan after four years, and the petitioners sought his stocks worth Rs 1.04 crore to be liquidated.

The complainant filed a suit seeking an injunction against the petitioners not to liquidate the amount towards the loan, and approached the Investment Grievance Redressal Cell under SEBI for redressal on October 27, 2016. He registered a complaint on January 28, 2017. His suit was dismissed in 2019 saying the arbitration clause was part of the agreement.

Investigation continued and CID filed a ‘B’ report in 2019. The magistrate referred the matter for further investigation. On June 30, 2021, police filed a second ‘B’ report. The complainant filed a protest petition in July 2022. The magistrate rejected the ‘B’ report and took cognisance of the offences against the petitioners, who moved the high court.

The magistrate recorded that reports by the investigation officer are not supported by cogent reasons and allegations of misappropriation of funds by the accused in share trading and account of the complainant. The IO had not looked into allegations that the accused had treated profits earned by Pujari in shares as a loan amount and charged heavy interest on profit, and withdrawn money as per their whims, the magistrate said. Pujari said transactions worth several crores of rupees had happened in his account and not a rupee had come into him.

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