# Vuenow Infotech Pvt. Ltd v. State of U.P. & Ors

- **Citation:** (2025) 1 ILRA 675
- **Court:** High Court of Judicature at Allahabad
- **Decided:** 2025-01-08
- **Case number:** Crl. Misc. Writ Petition No. 22470 of 2024
- **Bench:** Mahesh Chandra Tripathi, Prashant Kumar
- **Source:** https://unisonlegal.in/judgment/allahabad-high-court/vuenow-infotech-pvt-ltd-v-state-of-u-p-ors-53059
- **Pages:** 11

## Headnote

Criminal Law -Constitution of India,1950
- Article 226- Bharatiya Nyaya Sanhita,
2023 - Sections 316(2), 318(4) & 61(2)-
Foreign Exchange Management Act, 1999Prevention of Money Laundering Act,
2002, Section 66- FIR - Quashing of -
Allegation
of
fraudulent
investment
scheme through sale and leaseback of
cloud particles - Petitioner company and
its affiliates accused of inducing public to
invest in non-existent cloud data assets -
No complaint from individual investors -
FIR lodged based on ED's report -
Allegation of Ponzi scheme where investor
returns paid from new investments -
Held, economic offences involving public
interest require deeper investigation -
Absence of complaint from investors not
fatal
where
prima
facie
allegations
676 INDIAN LAW REPORTS ALLAHABAD SERIES
disclosing cognizable offence exist - No
case made out for interference under
Article 226 - Writ petition dismissed.
(Paras 24, 25, and 26)

HELD:
Even as per the FIR, the business of the
petitioner and its associate entities is nonfunctional. There is rotation of money and the
business
model
appears
ambiguous
and
unsustainable. The Investigating Agency has
come out with a case that petitioner is running a
ponzi business, which would burst like a bubble
and the investment made by the gullible
investors, who at the present time is not coming
up as complainant as they are receiving regular
income, would be lost. The investors lured to
extraordinary returns is typically attributed to
something that sounds impressive but is
intentionally vague, such as hedge fund in land,
resorts, tours and travel plans, high yield
investment programs. The allegations levelled in
the FIR cannot be denied at this stage. Even
petitioner has not placed any document to
demonstrate that they are running a sustainable
business and have earned substantial income
from the customers. (Para 24)

The law laid down in the case of Lalita Kumari
(supra) and Delhi Race Club (supra) would also
not benefit the petitioner inasmuch as this Court
is of the prima facie opinion that there appears
commission of cognizable offence. Detailed
search and seizure has been conducted by the
E.D. and the same has resulted in lodging of FIR
and the police authorities are not bound to
conduct the preliminary inquiry, when prima
facie there appears commission of cognizable
offence. There are allegations of alluring the
investors for investing huge chunk of money to
get monthly regular income, which cannot be
negated at this stage, more so, when the
business model is unsustainable. The Court
must be cautious while dealing with the
economic offences, which would affect the
public at large. (Para 25)

Writ Petition dismissed. (E-14)

List of Cases cited:

## Text

1 All. Vuenow Infotech Pvt. Ltd. Vs. State of U.P. & Ors.
675
27. Accordingly the impugned
history sheet/sheets opened with regard to
the petitioners noted above by the order of
respondent no.3, Deputy Commissioner of
Police, Greater Noida, Gautam Buddh
Nagar, dated 16.6.2021 are hereby quashed.
The surveillance of petitioners shall be
stopped forthwith.

28. The State Government is
directed to look into the procedure of
opening of history sheet and make/ issue
necessary
amendments/guidelines
for
providing opportunity of objection to the
person, against whom, the police submits
report recommending the opening of
history sheet of Class-A or Class-B before
the Senior Police Official. The State
Government will also provide for review of
the history sheets opened against the
citizen, every year, so that, in the cases
where implication of persons against whom
history sheet was opened and who have
been subsequently exonerated/acquitted of
the criminal charges, their history sheets
are closed and shadow of surveillance by
police on their life and liberty gets
removed.

29. The Registrar (Compliance) of
this Court is directed to communicate this
order to the Principal Secretary (Home)
State of U.P., Lucknow, within a period of
one week.

30.
 The
Principal
Secretary
aforesaid will submit compliance report to
this Court, within a period of three months,
which shall be kept on record by the
Registrar (Compliance) of this Court. If the
report is not received from the Principal
Secretary
aforesaid,
the
Registrar
(Compliance) will put this matter before
the Court again after expiry of period of
three months.
31. The record of these writ
petitions shall be retained by the office till
compliance report of Principal Secretary
aforesaid is received by this Court.

32. All the criminal writ petitions
are allowed.
----------
(2025) 1 ILRA 675
ORIGINAL JURISDICTION
CIVIL SIDE
DATED: ALLAHABAD 08.01.2025

BEFORE

THE HON'BLE MAHESH CHANDRA
TRIPATHI, J.
THE HON'BLE PRASHANT KUMAR, J.

Crl. Misc. Writ Petition No. 22470 of 2024

Vuenow Infotech Pvt. Ltd. ...Petitioner
Versus
State of U.P. & Ors. ...Respondents

Counsel for the Petitioner:
Sri Anubhav Singh, Sri Mohd. Haider, Sri Akshay,
Sri G.S. Chaturvedi (Sr. Advocate)

Counsel for the Respondents:
G.A.

Criminal Law -Constitution of India,1950
- Article 226- Bharatiya Nyaya Sanhita,
2023 - Sections 316(2), 318(4) & 61(2)-
Foreign Exchange Management Act, 1999Prevention of Money Laundering Act,
2002, Section 66- FIR - Quashing of -
Allegation
of
fraudulent
investment
scheme through sale and leaseback of
cloud particles - Petitioner company and
its affiliates accused of inducing public to
invest in non-existent cloud data assets -
No complaint from individual investors -
FIR lodged based on ED's report -
Allegation of Ponzi scheme where investor
returns paid from new investments -
Held, economic offences involving public
interest require deeper investigation -
Absence of complaint from investors not
fatal
where
prima
facie
allegations
676 INDIAN LAW REPORTS ALLAHABAD SERIES
disclosing cognizable offence exist - No
case made out for interference under
Article 226 - Writ petition dismissed.
(Paras 24, 25, and 26)

HELD:
Even as per the FIR, the business of the
petitioner and its associate entities is nonfunctional. There is rotation of money and the
business
model
appears
ambiguous
and
unsustainable. The Investigating Agency has
come out with a case that petitioner is running a
ponzi business, which would burst like a bubble
and the investment made by the gullible
investors, who at the present time is not coming
up as complainant as they are receiving regular
income, would be lost. The investors lured to
extraordinary returns is typically attributed to
something that sounds impressive but is
intentionally vague, such as hedge fund in land,
resorts, tours and travel plans, high yield
investment programs. The allegations levelled in
the FIR cannot be denied at this stage. Even
petitioner has not placed any document to
demonstrate that they are running a sustainable
business and have earned substantial income
from the customers. (Para 24)

The law laid down in the case of Lalita Kumari
(supra) and Delhi Race Club (supra) would also
not benefit the petitioner inasmuch as this Court
is of the prima facie opinion that there appears
commission of cognizable offence. Detailed
search and seizure has been conducted by the
E.D. and the same has resulted in lodging of FIR
and the police authorities are not bound to
conduct the preliminary inquiry, when prima
facie there appears commission of cognizable
offence. There are allegations of alluring the
investors for investing huge chunk of money to
get monthly regular income, which cannot be
negated at this stage, more so, when the
business model is unsustainable. The Court
must be cautious while dealing with the
economic offences, which would affect the
public at large. (Para 25)

Writ Petition dismissed. (E-14)

List of Cases cited:

1. St. of Haryana Vs Bhajan Lal, 1992 Supp (1)
SCC 335
2. R.P. Kapur Vs St. of Pun., AIR 1960 SC 866

3. Neeharika Infrastructure Pvt. Ltd. Vs St. of
Mah., (2021) 19 SCC 401

4. Lalita Kumari Vs Govt. of U.P., (2014) 2 SCC 1

5. Delhi Race Club (1940) Ltd. Vs St. of U.P.,
2024 0 Supreme (SC) 689

(Delivered by Hon'ble Mahesh Chandra
Tripathi, J. & Hon'ble Prashant Kumar, J.)

1. Heard Shri G.S. Chaturvedi,
learned Senior Advocate assisted by Mr.
Mohd. Haider, learned counsel for the
petitioner alongwith Shri Akshay, Advocate
and Shri Shashi Dhar Pandey, learned
A.G.A. for the State.

2. The present writ petition is
preferred inter-alia with following reliefs:-

(a) Call for records and
issue order, direction or writ in
the nature of certiorari or any
other
similar
writ,
thereby
quashing the impugned FIR dated
24.11.2024 registered as Case
Crime No.463 of 2024 under
Sections 318(4), 61(2) and 316(2)
BNS 2023 registered at P.S.
Sector
58,
Noida
District
Commissionerate.
(b) Issue any other writ,
order or direction which this
Hon'ble Court may deems fit and
proper in the circumstances of the
case.
(c) Award the cost of the
writ petition to the petitioner.

Facts of the Case:

3. A First Information Report was
lodged on 24.11.2024 in P.S. Noida Sector-
1 All. Vuenow Infotech Pvt. Ltd. Vs. State of U.P. & Ors.
677
58, District Gautam Buddh Nagar under
Section 318(4), 61(2), 316(2) BNS 2023.
As per the FIR, against the petitioner- M/s
Vuenow Infotech Pvt. Ltd. and other
related companies and individuals, the
Enforcement
Directorate
conducted
a
search and seizure on 17.10.2024 at various
places including the premises of petitioner
as well as related companies, which are
M/s Vuenow Marketing Services Pvt. Ltd1 ,
M/s Zebyte Infotech Pvt. Ltd.2 and M/s
Zebyte Rental Planet Pvt. Ltd.3 and persons
associated with the said entities. During the
course of investigation, it was revealed that
M/s VMSL under its MyCloudParticle
brand, was offering various customers an
investment opportunity by which the
investors were induced to invest by buying
Data Centre Asset or Cloud Particle servers
through Sale and Lease Back model,
whereby, a customer buys a cloud particle,
which is a storage space in cloud and the
same would be leased back for a term of 10
years to M/s ZRPPL and M/s ZIPL, which
are marketing affiliates of M/s VMSL, and
in response the customers/buyers were
offered minimum guaranteed rent for ten
years. Each Cloud Particle comprises of 1
TB of cloud storage space.

4. The FIR further discloses that
the business model of these companies was
that M/s VIPL used to purchase Servers
(Data Storage Facility) and IT equipments,
M/s VMSL, who thereafter sell it to
different individuals/investors and M/s
ZIPL and M/s ZRPPL were the marketing
companies for lease back policy, however,
M/s ZIPL and M/s ZRPPL receives money
from M/s VIPL and not from its end
customers and the same is being paid to the
investors/individuals in the form of rent.
During the search it was found that as on
18.10.2024 the total storage capacity for
cloud with the petitioners was only 553 TB
and out of which only 1.9 TB was being
used and the balance 551.1 TB remained
unused. In the premises there were 1119
servers, which were not connected to any
power source, which means they were not
in working condition. It was also found that
M/s ZRPPL had earned Input Tax Credit
(ITC) by purchasing goods and services
from bogus suppliers. The total invoice
value of such purchase transactions is
Rs.66,23,58,209/-.

5. In the FIR it is mentioned that
during the Course of investigation, the
statement of members of M/s VIPL were
recorded, wherein, it is stated that total live
data storage capacity is 2701 TB across
various data centres. The total quantum
data facility provided by ZRPPL to its
clients is substantially low in comparison
with the quantum of cloud particle leased
by M/s ZRPPL to individuals/investors.
The Statement of Nitin Srivastav, Director
of M/s VIPL reveals that individual
investors were being paid from the
investments received from new investors.
As per the balance sheet of M/s VMSL, the
total revenue received by the Company was
Rs.5,33,38,06,158/- and M/s VMSL has
received the total amount of Rs.2236.07
crores as credit. Perusal of different tables
goes to show that M/s VMSL has sold
cloud particles to individuals/investors
beyond the actual capacity. M/s VMSL
only had server capacity of 2701 TB in all
its data centres. Against this available
capacity, they have already sold 1,29,294
TB of cloud space.

6. It is alleged in the FIR that the
business model followed by the petitioner
and associate companies is that the money
collected from the individuals/investors is
being rotated and paid to them as monthly
assured income. Money received from the
678 INDIAN LAW REPORTS ALLAHABAD SERIES
new individuals/investors is paid to old one
as monthly assured rental income. Further
it is alleged in the FIR that this business
model is a fraudulent investment scheme as
it is a non sustainable business model. Such
type of business collapses when the new
investment stops coming, therefore, there is
all likelihood that investors will be cheated
and their investment is at risk. The accused
have
dishonestly
induced
various
individuals/investors to invest in cloud
particles, which do not exist and, therefore,
they have cheated the investors and clearly
there is breach of trust. It is clear that the
accused have committed an offence under
Sections 318(4), 316(2) and 61(2) BNS
2023.

Argument of Counsel for the
petitioner

7. Shri G.S. Chaturvedi, learned
Senior Advocate submitted that it is alleged
in the FIR, the petitioner alongwith its
sister concern sold or leased out the cloud
space. The Enforcement Directorate4 took
information under the Foreign Exchange
Management Act 19995, conducted search,
formed an opinion that suspectedly some
offence under BNS 2023 has taken place
and drafted a report to bypass the
proceeding, as they have no jurisdiction
and they are trying to do indirectly what
they cannot do directly. In the present
matter there is no complaint of any
investor/individual and the Authorities have
proceeded on their own.

8. Shri Chaturvedi vehemently
contended that there is no siphoning of
money. The money invested by the
investors in the Company, is Company's
money to use. If investors have made
investment and the Company failed to get
benefit of it, it cannot be said that there is
offence of cheating. He argued that Section
316(2) BNS pertains to criminal breach of
trust and if there is no investor stating
otherwise, the question of criminal breach
of trust does not arise. In this case there is
no indication as to who has been cheated.
Moreover, it is evident from the order dated
02.12.2024 passed in Writ Petition (Crl)
No.3765 of 2024 by the Delhi High Court
that the Assistant Director of E.D. has
admitted that there is no complaint against
the petitioner company by any investor.
The FIR has been filed mechanically and
without application of mind. There is not a
single investor/constituent in the entire
conspectus of facts to suggest that any
cheating or criminal breach of trust has
ever taken place.

9. Shri Chaturvedi, learned Senior
Advocate asserted that the FIR has been
registered in total violation of the ratio laid
down by the Supreme Court in Lalita
Kumari vs. Govt. of U.P.6, wherein, it has
been held that if the information received
does not disclose any cognizable offence,
then
a preliminary
inquiry
may
be
conducted to ascertain if any cognizable
offence is disclosed or not. A bare perusal
of the FIR shows that no cognizable
offence is made out. The wordings of the
FIR suggests that the respondent no.3 is not
sure about the commission of any offence.
The
information
under
Section
66
Prevention of Money Laundering Act 2002
shared by E.D. uses words 'likelihood' and
'appears' and when the E.D. itself is not
sure, then how a drastic step of registration
of FIR can be sustained. Even the police
has not conduced any inquiry before
registration of FIR.

10. Shri Chaturvedi, learned
Senior Advocate further contended that the
contents of the FIR fails to fulfill the basic
1 All. Vuenow Infotech Pvt. Ltd. Vs. State of U.P. & Ors.
679
ingredients of Section 316(2), 318(4), 61(2)
BNS. As per Section 318 BNS, the offence
of
cheating
happens
when
someone
deceives another person to fraudulently
induce them to deliver property or act
against their interest, potentially causing
harm to the victim, however, the entire FIR
fails to disclose even a single instance of
inducement being made by the petitioner or
any of the other entities.

11. He submitted that if no
complaint is made can a third person say
the investment is at risk in future and an
FIR can be lodged under Section 318 BNS
since there is no deceitful representation.
He has placed reliance on the judgement of
Supreme Court in Delhi Race Club (1940)
Ltd. and others vs. State of U.P. and
another7, wherein, the Supreme Court has
held that "In case of cheating, the intention
of the accused at the time of inducement
should be looked into which may be judged
by a subsequent conduct, but for this, the
subsequent conduct is not the sole test.
Mere breach of contract cannot give rise to
a criminal prosecution for cheating unless
fraudulent or dishonest intention is shown
right from the beginning of the transaction
i.e. the time when the offence is said to
have been committed. Therefore, it is this
intention, which is the gist of the offence.
Whereas, for the criminal breach of trust,
the property must have been entrusted to
the accused or he must have dominion over
it. The property in respect of which the
offence of breach of trust has been
committed must be either the property of
some person other than the accused or the
beneficial interest in or ownership' of it
must be of some other person. The accused
must hold that property on trust of such
other person. Although the offence, i.e. the
offence of breach of trust and cheating
involve dishonest intention, yet they are
mutually exclusive and different in basic
concept.

12. He lastly submitted that there
is a distinction between criminal breach of
trust and cheating. For cheating, criminal
intention is necessary at the time of making
a false or misleading representation i.e.,
since inception. In criminal breach of trust,
mere proof of entrustment is sufficient.
Thus, in case of criminal breach of trust,
the offender is lawfully entrusted with the
property,
and
he
dishonestly
misappropriated the same. Whereas, in case
of cheating, the offender fraudulently or
dishonestly induces a person by deceiving
him to deliver any property. In such a
situation, both the offences cannot co-exist
simultaneously." He vehemently contended
that from bare reading of the FIR no
offence under Section 318(4), 61(2), 316(2)
BNS 2023 is made out. In this backdrop, he
contends that the FIR is only based on
assumption and the same is liable to be
quashed.

Argument of Counsel for the
respondent

13. Per contra Shri Shashi Dhar
Pandey, learned A.G.A. appeared for the
State and submitted that the petitioner and
its promoters are accused of sharing
information of the company and other
related persons and operating investment
schemes through Data Center Cloud by
giving wrong information to the investors
and manipulating/cheating the investors'
money by making them invest, in respect of
which investigation is underway. During
the investigation statements of various
officials of the petitioner company were
recorded regarding the evaluation of
hardware installed in the premises. In the
statement of these officials, currently only
680 INDIAN LAW REPORTS ALLAHABAD SERIES
1.9 TB space is utilized and storage
capacity of 551.1 TB is available or vacant.
No service, like customer care service, is
being provided by the petitioner company.
There were 1119 servers in the premises,
which were not connected to any power
source, even then it was sold at various
people. During the search conducted at a
different data center in Mohali, Punjab
between 17.10.2024 to 18.10.2024, it was
found that the total live data storage
capacity of all the data centers is 2701 TB.
He submitted that the essence of the matter
is that the amount of data storage facility is
much
less
than
the
space
sold
to
individuals. The total server capacity is
2701 TB cloud space and the petitioner
company and others have already sold
1,29,294 TB as per MCA data or to a total
capacity of 5,42,274 TB as per bank
account deposits, excluding 18% GST.

14. He asserted that the model
used by the said entities is apparently a
cycle circulation ponzy scheme and a nonsustainable business model. Such a scheme
depends on a continuous flow of fresh
investments to sustain itself. Therefore, it is
established that M/s Vuenow Marketing
Services Ltd., in connivance with other
entities i.e. M/s Viewnow Infotech Pvt.
Ltd., M/s Zebyte Infotech Pvt. Ltd. and M/s
Zebyte Rental Planet Pvt. Ltd. have
dishonestly
induced
various
individuals/investors to invest in Cloud
Particles by selling them Cloud Particles,
which do not exist and thereby defrauded
these individuals/investors and breached
their trust.

15. He further submitted that as far
as the proceedings of E.D. is concerned, the
same has been challenged by the petitioner
by means of Civil Misc. Writ Petition
No.30014 of 2024 before Hon'ble the
Panjab and Haryana High Court. Apart
from it, one of the sister concerned of the
petitioner namely M/s ZIPL has also filed
writ petition before the Hon'ble High Court
of Delhi seeking quashing of the entire
seizure
proceedings
carried
out
by
respondent no.3 on 07.10.2024, which is
still pending consideration. He asserted that
the petitioners are running ponzi scheme.
The entire business model, as suggested
and professed by the accused persons, is
based on principle of fraud and cheating.
The Company has no substantial earning as
reflected from the balancesheet but on a
contrary the accused persons are taking
huge
investments
from
the
gullible
investors promising them high return.

16. He lastly submitted that the
petitioner and other entities are continuing
the said business knowing fully well that
this is not a sustainable business, as the
money paid to the earlier investor is from
the
money
received
from
the
new
customers. The entire business is, therefore,
a big bubble. The day it would burst,
thousands of people/investors will loose all
their investments. He further submitted that
the genesis of the business model and
transactions are with a pre-planned intention
to defraud with dishonest intention, which is
present right from the very beginning. He
further submitted that the judgement passed
by the Supreme Court in the Delhi Race Club
(supra) would not be attracted in the present
case, as there are credible evidence of
manipulating
act
of
fraudulent
misappropriation and in such case, breach of
trust would be applicable being a penal
offence. The entire business of the accused
comes under the ambit of fraud under Section
316(2), 318(4), 61(2) BNS. It is a befitting
case where the investigation should be
carried out so that the hard earned money of
investors may not be manipulated.
1 All. Vuenow Infotech Pvt. Ltd. Vs. State of U.P. & Ors.
681
Discussion

17. Heard rival submissions and
perused the record.

18. In order to appreciate the rival
contentions of the parties, it would be
necessary to revisit the relevant laws.

19. Law relating to quashing of
FIRs has already been well-settled, as
reiterated by Hon'ble Supreme Court in
State of Haryana and Ors. vs. Bhajan Lal
and Ors.8, in which it is held that:

"102.
(1)
Where
the
allegations
made
in
the
first
information
report
or
the
complaint, even if they are taken at
their face value and accepted in
their entirety do not prima facie
constitute any offence or make out
a case against the accused.
(2) Where the allegations in
the first information report and
other
materials,
if
any,
accompanying the FIR do not
disclose
a
cognizable
offence,
justifying an investigation by police
officers under Section 156(1) of the
Code except under an order of a
Magistrate within the purview of
Section 155(2).
xxxxxxxxxx (7) Where a
criminal proceeding is manifestly
attended with mala fide and/or
where
the
proceeding
is
maliciously
instituted
with
an
ulterior
motive
for
wreaking
vengeance on the accused and with
a view to spite him due to private
and personal grudge.

20. It is to be noted that while
considering these aspects, the Court does
not have to go in detail by way of minute
examination about the correctness or
otherwise of the facts alleged and the Court
has to examine the same by taking a prima
facie view of the matter based on the
materials on record. If on consideration of
the factual matrix of the allegations, no
prima facie case is made out of commission
of any offence of which cognizance can be
taken, the Court would be within its power
to intervene and quash any such complaint
or FIR.

21. Similar view is also taken by
the Hon'ble Supreme Court in R.P. Kapur
v. State of Punjab9, wherein, Hon'ble
Supreme Court has cautioned the High
Courts in interfering with the criminal
proceeding at the stage of investigation but
at the same time also given leverage to the
extent that for preventing abuse of process
of any Court or otherwise to secure the
ends of justice, the Court can quash the
criminal
proceedings.
The
Hon'ble
Supreme Court in the judgement in
Neeharika Infrastructure Private Limited
v. State of Maharashtra & Ors.10 had also
carved out certain exceptions. For ready
reference, the same are reproduced as
under:-

"(i) Where it manifestly
appears that there is a legal bar
against
the
institution
or
continuance
of
the
criminal
proceeding in respect of the offence
alleged. Absence of the requisite
sanction may, for instance, furnish
cases under this category.
(ii) Where the allegations
in the first information report or the
complaint, even if they are taken at
their face value and accepted in
their entirety, do not constitute the
offence alleged; in such cases no
682 INDIAN LAW REPORTS ALLAHABAD SERIES
question of appreciating evidence
arises; it is a matter merely of
looking at the complaint or the first
information
report
to
decide
whether the offence alleged is
disclosed or not.
(iii) Where the allegations
made against the accused person do
constitute an offence alleged but
there is either no legal evidence
adduced in support of the case or
the evidence adduced clearly or
manifestly fails to prove the charge.
In dealing with this class of cases it
is important to bear in mind the
distinction between a case where
there is no legal evidence or where
there
is
evidence
which
is
manifestly and clearly inconsistent
with the accusation made and cases
where there is legal evidence which
on its appreciation may or may not
support the accusation in question.
In exercising its jurisdiction under
Section 561-A the High Court
would not embark upon an enquiry
as to whether the evidence in
question is reliable or not. That is
the function of the trial Magistrate,
and ordinarily it would not be open
to any party to invoke the High
Court's inherent jurisdiction and
contend that on a reasonable
appreciation of the evidence the
accusation
made
against
the
accused would not be sustained."
(emphasis supplied)

22. The main plank of argument
raised by learned Senior Counsel appearing
on behalf of petitioner is that petitioner and
its associate entities has not committed any
fraud as no individual/investor made a
complaint and the entire search and lodging
of FIR is based on mere assumption.
23. For ready reference Section
316 and 318 of the BNS 2023 is
reproduced as under:

316. Criminal breach of
trust

(1) Whoever, being in any
manner entrusted with property, or
with any dominion over property,
dishonestly
misappropriates
or
converts to his own use that
property, or dishonestly uses or
disposes
of
that
property
in
violation of any direction of law
prescribing the mode in which such
trust is to be discharged, or of any
legal contract, express or implied,
which he has made touching the
discharge of such trust, or wilfully
suffers any other person so to do,
commits "criminal breach of trust".
Explanation 1
A
person,
being
an
employer
of
an
establishment
whether exempted under section 17
of the Employees' Provident Funds
and Miscellaneous Provisions Act,
1952 or not who deducts the
employee's contribution from the
wages payable to the employee for
credit to a Provident Fund or
Family Pension Fund established
by any law for the time being in
force, shall be deemed to have been
entrusted with the amount of the
contribution so deducted by him
and if he makes default in the
payment of such contribution to the
said Fund in violation of the said
law, shall be deemed to have
dishonestly used the amount of the
said contribution in violation of a
direction of law as aforesaid.
Explanation 2
1 All. Vuenow Infotech Pvt. Ltd. Vs. State of U.P. & Ors.
683
A
person,
being
an
employer,
who
deducts
the
employees' contribution from the
wages payable to the employee for
credit to the Employees' State
Insurance
Fund
held
and
administered by the Employees'
State
Insurance
Corporation
established under the Employees'
State Insurance Act, 1948 shall be
deemed to have been entrusted with
the amount of the contribution so
deducted by him and if he makes
default in the payment of such
contribution to the said Fund in
violation of the said Act, shall be
deemed to have dishonestly used
the amount of the said contribution
in violation of a direction of law as
aforesaid.
(2)
Whoever
commits
criminal breach of trust shall be
punished with imprisonment of
either description for a term which
may extend to five years, or with
fine, or with both.
(3)
Whoever,
being
entrusted with property as a carrier,
wharfinger or warehousekeeper,
commits criminal breach of trust in
respect of such property, shall be
punished with imprisonment of
either description for a term which
may extend to seven years, and
shall also be liable to fine.
(4) Whoever, being a clerk
or servant or employed as a clerk or
servant, and being in any manner
entrusted in such capacity with
property, or with any dominion
over property, commits criminal
breach of trust in respect of that
property, shall be punished with
imprisonment of either description
for a term which may extend to
seven years, and shall also be liable
to fine.
(5) Whoever, being in any
manner entrusted with property, or
with any dominion over property in
his capacity of a public servant or
in the way of his business as a
banker, merchant, factor, broker,
attorney or agent commits criminal
breach of trust in respect of that
property, shall be punished with
imprisonment for life, or with
imprisonment of either description
for a term which may extend to ten
years, and shall also be liable to
fine.
318. Cheating
(1) Whoever, by deceiving
any
person,
fraudulently
or
dishonestly induces the person so
deceived to deliver any property to
any person, or to consent that any
person shall retain any property, or
intentionally induces the person so
deceived to do or omit to do
anything which he would not do or
omit if he were not so deceived,
and which act or omission causes
or is likely to cause damage or
harm to that person in body, mind,
reputation or property, is said to
"cheat".
Explanation
A dishonest concealment of
facts is a deception within the
meaning of this section.
(2) Whoever cheats shall be
punished with imprisonment of
either description for a term which
may extend to three years, or with
fine, or with both.
(3) Whoever cheats with
the knowledge that he is likely
thereby to cause wrongful loss to a
person
whose
interest
in
the
684 INDIAN LAW REPORTS ALLAHABAD SERIES
transaction to which the cheating
relates, he was bound, either by
law, or by a legal contract, to
protect, shall be punished with
imprisonment of either description
for a term which may extend to five
years, or with fine, or with both.
(4) Whoever cheats and
thereby dishonestly induces the
person deceived to deliver any
property to any person, or to make,
alter or destroy the whole or any
part of a valuable security, or
anything which is signed or sealed,
and which is capable of being
converted into a valuable security,
shall
be
punished
with
imprisonment of either description
for a term which may extend to
seven years, and shall also be liable
to fine.

24. Even as per the FIR, the
business of the petitioner and its associate
entities is non functional. There is rotation
of money and the business model appears
ambiguous
and
unsustainable.
The
Investigating Agency has come out with a
case that petitioner is running a ponzi
business, which would burst like a bubble
and the investment made by the gullible
investors, who at the present time is not
coming up as complainant as they are
receiving regular income, would be lost.
The investors lured to extraordinary returns
is typically attributed to something that
sounds impressive but is intentionally
vague, such as hedge fund in land,
resorts, tours and travel plans, high yield
investment programs. The allegations
levelled in the FIR cannot be denied at
this stage. Even petitioner has not placed
any document to demonstrate that they
are running a sustainable business and
have earned substantial income from the
customers.

25. The law laid down in the
case of Lalita Kumari (supra) and Delhi
Race Club (supra) would also not benefit
the petitioner inasmuch as this Court is
of the prima facie opinion that there
appears
commission
of
cognizable
offence. Detailed search and seizure has
been conducted by the E.D. and the same
has resulted in lodging of FIR and the
police authorities are not bound to
conduct the preliminary inquiry, when
prima facie there appears commission of
cognizable offence. There are allegations
of alluring the investors for investing
huge chunk of money to get monthly
regular income, which cannot be negated
at this stage, more so, when the business
model is unsustainable. The Court must
be cautious while dealing with the
economic offences, which would affect
the public at large.

26. In view of the above
deliberation made on the basis of
material placed on record, we are of
the
considered
opinion
that
the
allegation made in the FIR in question
against the accused company and its
associates
are
required
to
be
thoroughly investigated.

Conclusion

27. In view of the discussion as
well as the catena of judgements cited
above, no case has been made out for
interference with the impugned first
information report.

28. The writ petition stands
dismissed. No order as to costs.
----------
1 All. Sabhapati Verma Vs. Ved Prakash
685
(2025) 1 ILRA 685
APPELLATE JURISDICTION
CIVIL SIDE
DATED: LUCKNOW 24.01.2025

BEFORE

THE HON'BLE RAJNISH KUMAR, J.

Second Appeal No. 2 of 2017

Sabhapati Verma ...Appellant
Versus
Ved Prakash ...Respondent

Counsel for the Appellant:
Mohammad Aslam Khan

Counsel for the Respondent:
Vikas Vikram Singh, Ankit Pande, Rajeshwar,
Sharad Nandan Ojha, Virendra Bhatt

Civil Law - Civil Procedure Code, 1908 -
Sections 99 & 100, - Indian Evidence Act,
1860- Section 68 - Indian Registration
Act,
1908
-
Section
68,
-
Indian
Succession Act, 1925 - Section 63 -
Consolidation of Holdings Act, 1950 -
Section 171 - Second appeal - against the
judgments and decrees - passed in Regular Suit
and Civil Appeal - the appeal raises several
substantial questions of law, including whether
the will, which was sought to be cancelled on
the grounds of fraud, was proved in accordance
with Section 68 of the Evidence Act, and
whether the lower courts were justified in
dismissing the suit without considering the
ample evidence on record - Suit - for
permanent injunction - during pendency of suit,
a will was got executed by the defendantrespondent from their father - subsequently, a
prayer for cancellation of Will was added by an
amendment - The plaintiff-appellant argued
that the will was executed fraudulently, as the
father of the parties was an educated person
but only his thumb impression was on the will -
the will was not proved in accordance with
Section 68 of the Evidence Act - The trial court,
dismissed the suit on the grounds that the
plaintiff-appellant failed to prove ownership and
possession of the land in dispute - Civil Appeal -
The lower appellate court upheld the trial court's
decision - Second Appeal - court finds that, (i)
the will was proved by the attesting witness and
the plaintiff-appellant failed to prove the
grounds of challenge to the will and further, the
will was executed with free will and without any
influence or coercion - (ii) the plaintiff-appellant
was not the real son of the deceased father and
was not entitled to a share in the ancestral
property in view of section - 171 of the Act,
1950 - held, . the concurrent findings recorded
by the two courts below cannot be set aside by
this court in second appeal unless the findings
are perverse and without jurisdiction which is
not the case herein - hence, impugned the
judgments and decrees cannot be reversed or
modified in view of Section 99 of the CPC -
Second appeal is liable to be dismissed.(Para -
27, 38, 39)

Special Appeal Dismissed. (E-11)

List of Cases cited:

1. Guro (Smt) Vs Atma Singh & ors.; (1992) 2 SCC
507,

2. Sri Devi & ors. Vs Jayaraja Shethy & ors.; 2005
All. C.J. 631,

3. Benga Behera & anr. Vs Braja Kishore Nanda &
ors.; 2007 All. C.J. 2249,

4.
Santosh
Hazari
Vs
Purushottam
Tiwari
(Deceased) By LRs.; (2001) 3 SCC 179,

5. Dhirajlal Girdharilal Vs Commissioner of Incometax, Bombay; A.I.R. 1955 S.C. 271,

6. Dhannulal & ors. Vs Ganeshram & anr.; (2015)
12 SCC 301,

7. Committee of Management, Gangadin Ram
Kumar Inter College, Ramgarh Barwan, District
Jaunpur Vs Deputy Director of Education & ors.;
2006 (24) LCD 1328,

8. Daya Shankar Singh Vs Deputy Director of
Consolidation, Faizabad & ors.; 2014 (32) LCD
2167,

9. (Smt.) Savitri & ors. Vs Surendra Mohan
Mohana; 1987 (5) LCD 137,