High Court quashes FIR by Andhra CID alleging insider trading of land

A bench of Justice Cheekati Manvendranath Roy on Tuesday, while quashing the FIR, observed that right to acquire property was a constitutional and legal right and since the lands were purchased

Amaravati: The Andhra Pradesh High Court on Tuesday quashed an FIR registered by the state Crime Investigation Department (CID) alleging insider trading in land dealings in Amaravati Capital Region.

A bench of Justice Cheekati Manvendranath Roy on Tuesday, while quashing the FIR, observed that right to acquire property was a constitutional and legal right and since the lands were purchased from the sellers who willingly and voluntarily sold them to the petitioners, the said private sale transactions cannot be criminalized.

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“The said private sale transactions cannot be criminalized and no criminal liability can be attributed to the petitioners in the facts and circumstances of the case to prosecute them for any offences much less for the offences punishable under Sections 420, 406, 409 and 120-B of IPC.

“The concept of the offence of insider trading which is essentially an offence in the field of stock market relating to selling and buying the securities and bonds cannot be applied to the offences under Indian Penal Code and cannot be read into Section 420 IPC or into any provisions in the scheme of Indian Penal Code. The said concept of offence of insider trading is totally alien to IPC and it is unknown to our criminal jurisprudence under the Indian Penal Code,” the court said.

“The petitioners have no legal obligation to disclose the information relating to latent advantages in purchasing the land to the sellers at the time of buying the said land. Therefore, it does not amount to dishonest concealment of fact as contemplated under the Explanation appended to Section 415 IPC. It does not amount to any deception under Section 420 IPC read with Section 415 IPC. The sellers did not sustain any loss on account of the said sale transactions. No element of criminality is involved in the sale transaction. So, the petitioners cannot be even remotely connected with any criminal acts or offence to attribute or fasten any criminal liability to them in the facts and circumstances of the case”, the court in its judgement further said.

“In the light of the aforesaid findings, the only irresistible conclusion that can be drawn in the facts and circumstances of the case is that the prosecution against the petitioners for the alleged offences is not at all maintainable and the same is liable to be quashed”, it added.

The First Information Report (FIR) was registered under Sections 420 (Cheating and dishonestly inducing delivery of property), 406 (Punishment for criminal breach of trust), 409 (Criminal breach of trust by public servant, or by banker, merchant or agent) and 120-B of IPC (Criminal conspiracy) of the Indian Penal Code (IPC).

The Andhra Pradesh Crime Investigation Department (AP CID) had filed a case that insider trading took place in land dealings in Amaravati, based on the complaint given by one S Suresh, resident of Velagapudi, a village in Amaravati capital region.

Kilaru Rajesh, who was one of the persons facing allegations of getting undue benefit through insider trading, has filed a quash petition against the AP CID. After hearing the arguments, the high court quashed the FIR registered by the AP CID. The high court said that insider trading is related to stock markets only, it cannot be attributed to land dealings and the sections of IPC do not apply to insider trading.

The Andhra Pradesh government lead by YSRCP has been alleging that the previous TDP government has indulged in insider trading and persons close to the higher echelons had bought lands in the Amaravati region at cheaper rates before announcing that area as the capital region. Now, the verdict, in this case, is against the contentions of the YSRCP lead state government.