No Evidence to prove Allegation of Diversion of Public funds of 45.37 Crores: Andhra Pradesh HC dismisses Revision Petition [Read Order]

The Andhra Pradesh High Court dismissed the revision petition as there is no evidence to prove allegation of diversion of public funds of 45.37 crores. The Court found no illegality in the Order passed by the Magistrate, and dismissed the Criminal Revision Case.

Prathipati Sarath, the petition is filed by the Petitioner/Complainant under Sections 397 and 401 of Cr.P.C., seeking to set aside the Order passed by the Additional Chief Metropolitan Magistrate, (“Magistrate”). The Revision Petitioner/Complainant filed a petition under Section 167(3) of Cr.P.C., on behalf of the Prosecution before the Additional Chief Metropolitan Magistrate, Vijayawada.

The Respondent/A.1 was an Additional Director of M/s.Avexa Corporation Pvt. Ltd., whose father is an Ex-Minister in the previous Government, indulged in unethical practices, conspired with the other Accused, who created Shell companies fraudulently, tampered with accounts, submitted forged documents to the Government and committed fraud and caused loss to a tune of Rs.26,25,19,393/- to the State Exchequer and committed serious economical offence by diverting the funds under the guise of developmental works at Amaravati during 2017 to 2022 even though no works were carried out by colluding with other companies and gained illegally Rs.8,00,00,000/-.

Based on the report, a case has been registered for the offences under Sections 420, 409, 467, 471, 477(A), 120(B) r/w. 34 IPC. Later, A.1 was produced by the S.H.O., Machavaram Police Station, before the learned Magistrate on 29.02.2024; after that, he was remanded to judicial custody.

Sri B. Adinarayana Rao, senior counsel appearing for the Respondent/A.1 submitted that the parties are the private entities and there is no contractual relationship with the Government; the invoices issued cannot be considered as a valuable security and there is no privity of contract between the parties, thereby charges under sections 471, 420, 477 and 467 of IPC cannot be attracted in the present case.

There is no privity of contract between the BSR (Principal) and the Government, hence, case against the Respondent/A.1 cannot be upheld; the execution of work is already done and therefore, there is no question of diversion of funds, as the funds are all utilized towards the works; the claim of investigating agency stating that execution of work nonetheless is of no relevance at this stage of case cannot be upheld; any concerned case against the Respondent is to be carried out by the GST authorities, as the orders are not granted yet in relevance to irregular input tax credits and the present allegations cannot be proved by the Petitioner/State.

It was viewed that the alleged forged invoices, submitted by the Accused company's Directors to claim the input tax credit, an purported fake bills from the shell company Tanisha Infra Zone Private Limited. Notably, these bills were raised on 18.03.2019, 22.03.2019, and 26.02.2019, respectively, when A.1 was not serving as an Additional Director at M/s. Avexa Corporation Private Limited. The Magistrate arrived at this conclusion based on the documents presented by the Prosecution, considering it as one of the reasons for denying the Order for police custody.

The Magistrate has additionally considered the remarks provided in the remand report, which highlight that the Directorate General of Goods and Services Tax Intelligence ( DGGI ) had previously investigated the submission of counterfeit invoice bills by the shell companies associated with the firm. These entities purportedly claimed to be engaged in development activities in the Amaravati region, although no actual work transpired. Consequently, the DGGI recommended a penalty of Rs.16 crores against A.1's company under the Central Goods and Services Tax Act, 2017.

It was observed in the report that the main allegation of diversion of public funds by M/s. Avexa Corporation Private Limited to the extent of Rs.45.37 Crores, is resorting to inward and outward bill trading. After having examined all the available records with ADCL (Amaravati Development Corporation, Vijayawada), it was concluded that there is no agreement between ADCL and M/s. Avexa Corporation Private Limited, the total mobilization advance was paid to M/s. BSRIIL is Rs.20.80 crores. The total bill amount paid to the Principal Contractor, i.e., M/s. BSRIIL so far is Rs.118.82 crores, and the GST Component Paid & released to the Principal contractor is Rs.5,18,10,138/-. Hence, the allegation has not been substantiated per ADCL's available records.

Justice T Mallikarjuna Rao observed that the detailed report of the committee, it is now somewhat difficult to appreciate the contention of the Petitioner/Complainant that the diversion of Government funds by Avexa through the shell companies has to be investigated.

The Court found no illegality in the Order passed by the Magistrate, and dismissed the Criminal Revision Case. Smt. Y.L. Shivakalpana Reddy, Standing Counsel-cum-Special Public Prosecutor, appeared for the Petitioner/Complainant, and Sri B. Adinarayana Rao, Senior Counsel appeared for the Respondent/A.1.

To Read the full text of the Order CLICK HERE

Support our journalism by subscribing to Taxscan premium. Follow us on Telegram for quick updates