The Allahabad High Court, in a decisive judgment, dismissed a writ petition seeking the quashing of an FIR against Vuenow Infotech Pvt. Ltd. (VIPL) and its associated entities. The case involves allegations of a fraudulent investment scheme related to cloud storage. The court underscored the severity of economic offences, calling them a “public threat that demand rigorous investigation.”
Case Background
The FIR, filed on November 24, 2024, at Police Station Sector 58, Noida, accused VIPL and its affiliates—Vuenow Marketing Services Ltd. (VMSL), Zebyte Infotech Pvt. Ltd. (ZIPL), and Zebyte Rental Planet Pvt. Ltd. (ZRPPL)—of luring investors into a deceptive “sale and leaseback” cloud storage scheme. The companies allegedly promised guaranteed monthly rent for 10 years but sold cloud storage capacity far exceeding their actual resources. Investigations revealed that out of 553 TB available, only 1.9 TB was in use.
Further, the business allegedly operated on a Ponzi-like model, with funds from new investors being used to pay returns to earlier ones.
Court Proceedings
Arguments by the Petitioner
Senior Advocate G.S. Chaturvedi, representing VIPL, contended that:
– The FIR lacked specific complaints from investors and was based on assumptions.
– The business model was legitimate, and no breach of trust or cheating could be established without evidence of fraudulent intent.
– He cited the Lalita Kumari v. Govt. of U.P. judgment to argue that a preliminary inquiry should have been conducted before the registration of the FIR.
State’s Counterarguments
Representing the State, A.G.A. Shashi Dhar Pandey argued:
– Investigations revealed the sale of non-existent cloud storage space and an unsustainable business model.
– The alleged Ponzi scheme posed a severe risk to public funds and confidence.
– The FIR was based on credible findings from the Enforcement Directorate (ED), which warranted a deeper investigation.
Key Observations by the Court
The Bench, comprising Justice Mahesh Chandra Tripathi and Justice Prashant Kumar, highlighted the critical nature of economic offences:
1. Broader Impact: The Court emphasized that economic offences undermine public confidence and require thorough scrutiny.
2. Investor Protection: The Court observed that fraudulent schemes, often disguised under complex business models, can cause substantial harm to unsuspecting investors.
3. Need for Investigation: It ruled that even in the absence of individual complaints, the allegations warranted a rigorous investigation to safeguard public interests.
Quoting the Supreme Court, the Bench remarked, “The Court must be cautious while dealing with economic offences, which affect the public at large.”
Judgment
The Court concluded that the allegations in the FIR prima facie disclosed cognizable offences and dismissed the petition. It ruled that “rigorous investigation is essential in cases where public funds are at risk.”
The writ petition was dismissed with no order as to costs.
Case Details
– Case Title: Criminal Misc. Writ Petition No. 22470 of 2024
– Petitioner: Vuenow Infotech Pvt. Ltd. (VIPL), represented by Director Nitin Srivastava
– Respondents: State of Uttar Pradesh and others
– Bench: Justice Mahesh Chandra Tripathi and Justice Prashant Kumar
– Petitioner’s Counsel: G.S. Chaturvedi, Anubhav Singh, Mohd Haider
– State’s Counsel: Shashi Dhar Pandey
