No Incriminating Material, Company Not Accused: Karnataka HC Quashes FIR and Charge Sheet Against Vijay Tata in Ambidant Money-Circulation Case
Karnataka High Court quashes FIR, charge sheet and cognizance order against Vijay Tata in the Ambidant Ponzi case, finding no admissible evidence and M/s Sanchaya Land and Estate not arraigned as an accused despite being the entity that received the alleged proceeds.
The High Court of Karnataka at Bengaluru has quashed the FIR, charge sheet and the order taking cognizance of offences against Vijay Tata, who was arraigned as accused No. 5 in a money-circulation fraud case arising out of the collapse of M/s Ambidant Marketing Private Limited. Justice R. Nataraj, sitting singly, found that the prosecution's only incriminating material against Tata consisted of confession statements of co-accused — inadmissible as a matter of law — and that the company through which he allegedly acted, M/s Sanchaya Land and Estate Private Ltd., had not itself been arraigned as an accused. The Trial Court's cognizance order was separately assailed for failing to apply judicial mind to the material before it. The Enforcement Directorate summons, however, survive the judgment.
The Ambidant Fraud and How Vijay Tata Came to Be Arraigned
FIR No. 137/2018 was registered on 29 May 2018 at the Devarajeevanahalli Police Station, Banaswadi Sub-Division, Bengaluru against the directors of M/s Ambidant Marketing Private Limited and its sister concern M/s Ambidant Construction Pvt. Ltd. for offences under Sections 4, 5 and 6 of the Prize Chits and Money Circulation Schemes (Banning) Act, 1978 and Sections 120B, 420, 465, 468 and 471 of the Indian Penal Code. The case concerned the alleged luring of investors with promises of higher returns. Vijay Tata was not named in the FIR.
On 9 October 2018, the Additional Commissioner of Police withdrew the case from Devarajeevanahalli Police Station and transferred it to the Assistant Commissioner of Police, Fraud and Misappropriation Squad, Central Crime Branch (CCB), Bengaluru. The CCB, after completing its investigation, filed a charge sheet arraigning Tata as accused No. 5. The Trial Court — the Principal City Civil and Sessions Judge and Special Judge for the Karnataka Protection of Interest of Depositors in Financial Establishments Act, 2004 — took cognizance on 7 March 2019 and issued process against him in Spl. C.C. No. 164 of 2019.
Tata filed WP No. 56732 of 2018 initially challenging the FIR, then amended it to also challenge the transfer of investigation to the CCB and the cognizance order. Separately, he filed WP No. 24980 of 2019 challenging summons dated 6 May 2019 and 10 June 2019 issued by the Enforcement Directorate in ECIR/BGZO/05/2018.
The Prosecution's Theory and the Confession Statements
The prosecution alleged that Tata, as an authorised representative of M/s Sanchaya Land and Estate Pvt. Ltd., had received proceeds of crime from M/s Ambidant. The charge sheet described a specific sequence: commercially injurious programmes were telecast against M/s Ambidant on Samaya News, prompting investor panic; accused No. 2 approached Tata (described as the owner of Samaya News) for an amicable settlement; Tata allegedly demanded Rs. 20 crore and, when told that was unavailable, represented that M/s Ambidant should instead invest Rs. 200 crore in residential flats being developed by M/s Sanchaya in Anekal and Devanahalli taluks.
According to the prosecution, M/s Ambidant Construction Pvt. Ltd. then agreed to purchase 83 flats from M/s Sanchaya, transferred Rs. 36 crore by bank transfer and paid Rs. 2 crore in cash. M/s Sanchaya subsequently executed sale deeds for 85 flats in favour of nominees of M/s Ambidant. The total consideration received by M/s Sanchaya was Rs. 35,31,99,996, on which GST of Rs. 3,78,42,857 was paid. The prosecution's case was that Tata, knowing the money belonged to investors, repeatedly received it and failed to complete the projects or hand over possession of the flats.
This account rested principally on confession statements of accused Nos. 2 and 3.
What the Court Found When It Asked for the Material
In an order dated 19 September 2023, Justice Nataraj called upon the High Court Government Pleader to place on record the material collected against Tata during the investigation of Cr. No. 137/2018, and to clarify whether the reply filed by Tata pursuant to the High Court's earlier order in WP No. 55460/2018 had been considered. The Government Pleader's response was telling: the respondents had not furnished any material to establish Tata's involvement in the offences under Sections 4, 5 and 6 of the Act, 1978 and Sections 120B, 420, 468 and 471 of IPC.
The Registrar of Companies extract placed on record showed that Tata was not a director of M/s Sanchaya.
The court found that apart from the confessions of accused Nos. 2 and 3 — which are per se inadmissible — no incriminating material existed against Tata. The court also found that the allegations in the charge sheet did not, in any manner, constitute offences under Sections 120B, 406, 409, 420, 465, 468 and 471 of IPC against him.
The Company-Not-Arraigned Flaw
A separate, independent ground for quashing was that M/s Sanchaya — the entity that entered into the sale agreements, executed the sale deeds and actually received the consideration from M/s Ambidant — was not arraigned as an accused. The court accepted the petitioner's contention that Tata could not be prosecuted for acts of M/s Sanchaya when M/s Sanchaya itself had not been made an accused.
The State's counter-argument — that if the court found M/s Sanchaya ought to have been arraigned, it could exercise jurisdiction under Section 319 of the Code of Criminal Procedure to rope in additional persons — did not persuade the court in the context of quashing the prosecution against Tata entirely.
Cognizance Without Application of Mind
The court separately examined the Trial Court's order dated 7 March 2019 by which cognizance was taken. It found that the Trial Court made an omnibus statement that charge sheet papers were produced and proceeded to take cognizance, without examining whether the material justified proceeding against Tata specifically. Justice Nataraj reiterated that taking cognizance is not an administrative act but “a conscious judicial act, which has to be performed with great care and caution.” The cognizance order was quashed on this ground as well.
The CCB Jurisdiction Question Left Open
The petitioner had argued that the CCB is not a police station within the meaning of Section 2(s) of the Code of Criminal Procedure, and that no notification had been issued by the State treating the CCB as superior to the officer in charge of a police station, making the transfer of investigation from Devarajeevanahalli Police Station to CCB a violation of Section 36 of the Code. The State countered that the State Government issued a notification on 25 February 2021 treating CCB officers as superiors to station house officers, relying on the judgment in Sri. Ditul Mehta v. State of Karnataka — 2024 (3) Kar.L.J. 14.
The court declined to decide this question. In view of the pendency of SLP (Crl.) No. 2157-58/2021 before the Supreme Court — in which the order in Dr. M.G. Gopal Principal Dean of KIMS v. State by Central Police and Another — 2021 SCC Online Kar 339 had been stayed by the Supreme Court on 12 March 2021 — the question of whether the CCB qualifies as a police station and whether its investigation and charge sheet violate Section 36 of the Code was left open.
The Enforcement Directorate Summons Upheld
WP No. 24980 of 2019 challenged the ED summons dated 6 May 2019 and 10 June 2019 issued in ECIR/BGZO/05/2018, which arose from the same predicate offence. Tata's position was that the ED summons should abide by the outcome of the quashing petition.
The court rejected this. It held that the Enforcement Directorate is entitled to summon not only the accused in a predicate offence but also persons with knowledge of the placement of proceeds of crime. Since Tata had throughout the proceedings acknowledged being the authorised representative of M/s Sanchaya, the ED was entitled to summon him once the predicate offence had been registered against the other accused.
The court referred to its earlier judgment in WP No. 12451 of 2021, upheld by a Division Bench in WA No. 497 of 2024 and by the Supreme Court in SLP (Crl.) No. 24573/2025, and quoted from the Supreme Court's order in SLP (Crl.) No. 15189/2024: “all issues are left open to the respondent, in the event of him being arrayed as an accused.” WP No. 24980 of 2019 was dismissed. The ED was left free to seek the personal presence of the petitioner for recording his statement.
Order
WP No. 56732 of 2018 was allowed. The FIR in Cr. No. 137/2018 against Vijay Tata (accused No. 5) for offences under Sections 4, 5 and 6 of the Prize Chits and Money Circulation Schemes (Banning) Act, 1978 and Sections 120B, 420, 465, 468 and 471 of IPC was quashed. Consequently, the charge sheet in Spl. C.C. No. 164 of 2019 for offences under Sections 4, 5 and 6 of the Act, 1978, Sections 120B, 406, 409, 411, 413, 420, 465, 468 and 471 of IPC and Section 9 of the Karnataka Protection of Interest of Depositors in Financial Establishment Act, 2004 was quashed in so far as Tata is concerned. The Trial Court's cognizance order dated 7 March 2019 and the process issued against him were also quashed.
The order dated 9 October 2018 by the Additional Commissioner of Police transferring the investigation to the CCB was left subject to the outcome of SLP (Crl.) No. 2157-58/2021.
WP No. 24980 of 2019 was dismissed, leaving the ED free to seek Tata's personal appearance.
A sum of Rs. 4,71,18,816 deposited by Tata pursuant to interim directions shall be released to him only after the conclusion of the trial in Spl. C.C. No. 164 of 2019 against the remaining accused.