Breaking-"Cannot Criminalize Private Sale Transactions": Andhra Pradesh High Court Quashes A Batch Of FIRs In Amaravati 'Insider Trading' Case

In a big blow to Andhra Pradesh Chief Minister Jagan Mohan Reddy, the Andhra Pradesh High Court has quashed few criminal cases filed in connection with the alleged 'insider trading' in land transactions at Amaravati.A single bench of Justice Cheekati Manavendranath Roy observed that private sale transactions cannot be criminalized and that 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 State had filed criminal cases alleging that the petitioners had purchased lands in Amaravati after being privy to the information from the then Chandrababu Naidu government that the area was being developed as state capital after the bifurcation of the erstwhile State of Andhra Pradesh in 2014.In the judgment delivered today, the Court observed that the land buyers had 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. The court also said that the said information about Amaravati being made a Capital was very much in the public domain and when even the sellers were aware of the same.Regarding the invocation of 'insider trading' concept, the judge observed:"Therefore, insider trading is only made an offence in India under the SEBI Act, 1992 and it essentially deals with the sale and purchase of securities in the field of stock market based on nonpublic material information. It is a special enactment which specifically and exclusively deals with the offences relating to sale of securities in stock market. Insider trading is not made an offence specifically under the Indian Penal Code. No provisions akin to Section 12-A and 15-G of the SEBI Act is incorporated in IPC by the Parliament relating to private sale transactions of purchase or sale of land which is an immovable property by invoking the said concept/theory of insider trading. Therefore, the offence of insider trading is totally alien to our criminal law under IPC. It is a concept or offence totally unknown to our criminal law under Indian Penal Code."The court further made the following observationsInformation about new capital was available in public domainWhen the said information is very much in the public domain and when even the sellers are aware of the same, it cannot be legitimately contended that there has been concealment of material fact dishonestly as required under Explanation appended to Section 415 IPC to attribute any criminal liability of deception to the petitioners. In fact the plan submitted by the Investigating Officer along with the C.D. file show that not only the petitioners, but there are several other people who have purchased lands in and around the proposed capital region. Probably on account of the information that is available to them in the public domain, which is published in newspapers, all of them have purchased lands in the said area. As the right to acquire and own property is a constitutional right, legal right and human right, none can find fault with the said buyers in purchasing the lands as any citizen is entitled to acquire lands in exercise of their constitutional and legal right. So, no criminal liability can be fastened to the petitioners or any persons who purchased lands in the proposed capital region to prosecute them for any offence under criminal law. Therefore, no offence under Section 420 IPC is made out or constituted from the facts of the case.The Jagan Mohan government had launched an SIT probe into alleged scam relating to Amaravati land transactions. Several prominent individuals such as the former Advocate General of the State, Dammalapatti Srinivas were arrayed as accused in the cases. The Andhra Pradesh High Court stayed the SIT probe in September last year.In the present judgment, the High Court quashed the FIRs registered against certain individuals who purchased lands around Amaravati in anticipation of the announcement of the new State capital."As they purchased the lands, in exercise of the said constitutional and legal right and acquired property from the sellers who willingly and voluntarily sold them to the petitioners for a valid sale consideration under registered sale deeds, 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 High Court observed.No criminality involved in sale transactions"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...

Breaking-"Cannot Criminalize Private Sale Transactions": Andhra Pradesh High Court Quashes A Batch Of FIRs In Amaravati 'Insider Trading' Case

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