Allegations Make Out Prima Facie Case Of Wrong Doing & Misappropriation Of Formula E Race Funds: Telangana HC Dismisses Ex-Minister KT Rama Rao’s Plea
Justice K Lakshman, Telangana High Court
The Telangana High Court has dismissed the Petition filed by Kalvakuntla Taraka Rama Rao, former Minister of the Municipal Administration and Urban Development (MA & UD) Department, Government of Telangana in a case relating to the misappropriation of Formula E Race Funds.
The Court was dealing with a Criminal Petition under Section 528 of the Bharatiya Nagrik Suraksha Sanhita, 2023 (BNSS), seeking to quash the proceedings in a case under Sections 409 read with 120B of the Indian Penal Code (IPC) and Sections 13(1)(a) read with 13(2) of the Prevention of Corruption Act, 1988 (PC Act).
A Single Bench of Justice K. Lakshman said, “In the present case, the allegations indicate that the Petitioner herein without any approval from the State Cabinet or the finance department directed the HMDA to pay huge sums of money to a foreign company. Whether the Petitioner directed the said payments with a dishonest intention to cause gain to himself or third parties is required to be investigated. The allegations when read together make out a prima facie case of wrong doing and misappropriation of funds of the HMDA. The same are enough to warrant an investigation.”
Senior Advocate Siddharth Dave and Advocate A. Prabhakar Rao appeared for the Petitioner while Advocate General (AG) A. Sudarshan Reddy, Standing Counsel T. Bala Mohan Reddy, Senior Advocate C.V. Mohan Reddy, and Additional Advocate General (AAG) Tera Rajinikanth Reddy appeared for the Respondents.
Factual Background -
A Complaint was lodged by the Respondent (Complainant) who was the Principal Secretary to the Government of Telangana, MA & UD department. It was alleged that the Petitioner decided to host a car racing event titled “FIA Formula E Championship” in Hyderabad city. Initially, a tripartite agreement was entered into between M/s Formula E Operations Ltd. (FEO), the MA & UD Department and M/s Ace Nxt Gen Private Ltd. (ACE). As per the terms of the said tripartite agreement, it was agreed that ACE would be the promoter of the event and would be obligated to make payments to FEO as per Schedule IV of the agreement. The MA & UD department was to act as a host and provide all the civic amenities. Further, the said tripartite agreement contemplated conducting four events in Hyderabad i.e., one event each in Seasons 9, 10, 11, and 12. The total fee agreed for Seasons 9 and 10 was £90,00,000/- ((ninety lakh Great British pounds, i.e., ‘GBP’).
Season 9 of the said car race was conducted successfully, however, as per the Complaint, ACE backed out as the promoter and the name of Hyderabad did not feature in the list of cities hosting an event in Season 10. It was alleged that the Petitioner had discussions with FEO officials to get the State Government to act as a promoter/host of the event. Allegedly, the Petitioner telephonically directed the Hyderabad Metropolitan Development Authority (HMDA) to act as a promoter. The Metropolitan Commissioner, HMDA put a file before the Petitioner seeking approval of the draft agreement wherein HMDA was shown as promoter and the same was approved by him. Accordingly, a new agreement was entered and the Model Code of Conduct was in operation owing to the State assembly elections due to which the agreement could not have been entered into. It was further alleged that HMDA was made to pay the huge sums of money even before the agreement and the foreign remittances caused HMDA an additional tax burden.
Also, the total amounts remitted to FEO came down to Rs. 54,88,87,043/- and HMDA cannot spend more than Rs. 10,00,00,000/- without obtaining administrative sanction from the Government and the Finance Department. However, the Petitioner allegedly abusing his authority and without obtaining the necessary sanctions, directed HMDA to make such payments. It was also alleged that the Petitioner and others conspired to cause loss to the State and a consequential gain to third parties. Based on this Complaint, an FIR was registered against the Petitioner and hence, he was before the High Court, seeking quashing of the proceedings.
The High Court in the above context of the case, observed, “The decision in Common Cause (supra) is inapplicable to the facts of the present case. The Petitioner herein is alleged to abuse his authority to misappropriate HMDA’s money. Therefore, it cannot be said that the Petitioner was using public money of which there can be no entrustment. HMDA is a body corporate which can own property, enter into contracts, sue and be sued. The allegations in the FIR clearly state that it was HMDA’s money which was misused. It is not in dispute that HMDA is under the control of MA & UD Department.”
The Court added that the Petitioner, being the Minister of MA & UD Department, has control over the HMDA, he has approved note before signing of the agreement and therefore, prima facie, the funds belongs to HMDA were entrusted with him.
“… investigating agencies need to be given enough opportunity to investigate the allegations”, it noted.
Furthermore, the Court emphasised that the investigating agency should have a reasonable opportunity to investigate and collect evidence and therefore, the Court cannot haste and thwart the investigation in this case.
“Once this Court holds that a prima facie case is made out, the other allegations pertaining to malice, absence of dishonest intention and misappropriation, failure to arraign the alleged third-party beneficiaries, etc. becomes a subject matter of investigation”, it concluded.
Accordingly, the High Court dismissed the Petition.
Cause Title- Kalvakuntla Taraka Rama Rao v. The State ACB, CIU, Hyderabad and Another
