The Hindu : Front Page : Search warrant against Margadarsi Financiers quashed

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Wednesday, May 02, 2007
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Search warrant against Margadarsi Financiers quashed

Legal Correspondent

Warrant based on insufficient material and did not disclose application of mind: Judge

HYDERABAD: Justice G. Yethirajulu of the Andhra Pradesh High Court on Tuesday quashed the order of search warrant against Margadarsi Financiers issued by the authorised officer of the State Government and ordered the return of all documents to the firm.

The judge declared that the search warrant was issued on the basis of insufficient material and the order did not disclose application of mind. The authorised officer did not show any basis for the documents being "secreted," which prevented him from getting the necessary information.

Margadarsi had informed the Reserve Bank of India that no further deposits were being collected but this was not taken into cognisance by the magistrate. The pendency of the writ petition challenging the appointment of the Rangachary Commission was also not considered by the magistrate. "The magistrate failed to apply her judicial mind."

The search warrant initially issued by a Metropolitan Magistrate was later confirmed by the Metropolitan Sessions Judge. Margadarsi filed the present petition before the High Court challenging the search warrant, which was allowed subject to the condition that the petitioner shall supply the entire information relevant to the collection of deposits and documents.

The High Court judge felt that the "magistrate did not discharge the judicial functions properly" and that the search warrant was issued automatically for the mere asking. After perusing the records, affidavits, undertakings and other material, he felt that no ground existed to say that "secreting" (keeping the documents out of reach) of documents was taking place which led to the request for the search warrant.

Section 45 T of the Reserve Bank of India Act provides for the search warrant and Section 93 of Criminal Procedure Code defines the parameters when such a warrant could be issued. The judge analysed the two statutory provisions and came to the conclusion that the magistrate did not consider the situation in the correct perspective.

Mr. Justice Yethirajulu listed out 17 issues, which were not considered by the magistrate while issuing the search warrant. These included Margadarsi's past record of 34 years, lack of any complaint and its offer to provide copies of documents.

He clarified that this order did not prevent the authorised officer to act as per the law.

After Congress MP V. Arun Kumar levelled a series of allegations against Margadarsi, the State Government initiated several steps.

It declared that the firm had collected huge deposits in violation of several provisions of the Reserve Bank of India Act and the Andhra Pradesh Protection of Depositors of Financial Establishments Act and other statutory provisions.

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