Delhi High Court
Nishant Muttreja vs Serious Fraud Investigation Office on 23 December, 2024
Author: Chandra Dhari Singh
Bench: Chandra Dhari Singh
* IN THE HIGH COURT OF DELHI AT NEW DELHI
% Date of order: 23rd December, 2024
+ BAIL APPLN. 1287/2023, CRL.M.A. 16403/2024, CRL.M.A.
20964/2024, CRL.M.(BAIL) 1850/2024
SUSHANT MUTTREJA .....Petitioner
Through: Mr. Trideep Pais, Senior Advocate
with Ms. Sanya Kumar and Ms.
Saloni Ambastha, Advocates.
versus
SERIOUS FRAUD INVESTIGATION OFFICE .....Respondent
Through: Mr. Amit Tiwari, CGSC, Mr. Piyush
Kumar, Senior Prosecutor, Mr.
Devender Pal( Dy. Dir.), Mr. Vibhav
Singh, Mr. Divyanshu Bharadwaj,
Mr. Abhishek Pratap Singh,
Advocates along with Mr Vedansh
Anand GP for UoI.
+ BAIL APPLN. 1289/2023, CRL.M.A. 16405/2024, CRL.M.A.
20849/2024 & CRL.M.(BAIL) 1847/2024
NISHANT MUTTREJA .....Petitioner
Through: Ms. Tara Narula, Mr. Harshvardhan
Jain and Mr. Anirudh Ramanathan,
Advocates.
versus
SERIOUS FRAUD INVESTIGATION OFFICE .....Respondent
Through: Mr. Amit Tiwari, CGSC, Mr. Piyush
Kumar, Senior Prosecutor, Mr.
Signature Not Verified
BAIL APPLN. 1287/2023 & BAIL APPLN. 1289/2023 Page 1 of 58
Digitally Signed By:PRAVEEN
KUMAR BABBAR
Signing Date:24.12.2024
18:47:57
Devender Pal( Dy. Dir.), Mr. Vibhav
Singh, Mr. Divyanshu Bharadwaj,
Mr. Abhishek Pratap Singh,
Advocates along with Mr Vedansh
Anand GP for UoI.
CORAM:
HON'BLE MR. JUSTICE CHANDRA DHARI SINGH
ORDER
CHANDRA DHARI SINGH, J (Oral)
1. The instant applications under Section 439 of the Code of Criminal
Procedure, 1973 (hereinafter “CrPC”) [now Section 483 of the Bharatiya
Nagarik Suraksha Sanhita, 2023 (hereinafter “BNSS”)] has been filed on
behalf of the applicants/petitioners seeking regular bail in complaint bearing
no. CC/1313/2021 titled as „Serious fraud Investigation Office v. Cosmic
Structures Ltd. & Ors.‟, filed under Sections 129, 134, 143, 144, 147, 447,
448 of the Companies Act, 2013 and Sections 77 (2), 77(4), 211, 217, 227,
233, 628 of the Companies Act, 1956.
2. At the outset, it is pertinent to state that both the captioned bail
applications arise out of the same complaint wherein both the applicants
have been named as accused and have been assigned similar roles in the
aforesaid complaint. Since both the applications contain similar grounds of
bail and the same have been opposed by the State on similar grounds, this
Court deems it appropriate to adjudicate the captioned applications by way
of the instant common order.
Signature Not Verified
BAIL APPLN. 1287/2023 & BAIL APPLN. 1289/2023 Page 2 of 58
Digitally Signed By:PRAVEEN
KUMAR BABBAR
Signing Date:24.12.2024
18:47:57
3. For the sake of convenience, this Court has culled out the facts,
grounds, reply, rejoinder, written submissions and compilations from the
BAIL APPLN. 1287/2023, titled as „Sushant Mutreja v. Serious fraud
Investigation Office‟.
4. The relevant facts that led to the filing of the instant application are as
follows:
a. It is stated by the applicant that he is the ex-promoter/ex-director
of M/s Cosmic Structures Ltd. (hereinafter “CSL”) which was
primarily incorporated for establishing business of real estate
development.
b. The CSL launched six projects between the years 2012 and 2014
which were of residential as well as commercial nature and started
the construction works/booking units in the said projects, whereby,
certain „payment plans‟ were offered including but not limited to
„construction linked plan, flexi payment plans, down payment
plans‟. The names of the said six projects are as under:
i. Cosmic Corporate Park – I
ii. Cosmic Corporate Park – II
iii. Urban Young
iv. Cosmetic Masterpiece/ CCP – III
v. Cosmic Business Centre
vi. Cosmic Cruise
c. It is stated that under some of the above-mentioned payment plans
certain assured returns were also offered to the buyers/Signature Not Verified
BAIL APPLN. 1287/2023 & BAIL APPLN. 1289/2023 Page 3 of 58
Digitally Signed By:PRAVEEN
KUMAR BABBAR
Signing Date:24.12.2024
18:47:57
allottees/customers of the units on the basis of the amount invested by
such buyers/allottees for the allotment of their respective units. Such
assured returns were payable by the Company from the date of
booking till the offer of possession of their respective units.
d. With regard to the above-mentioned payment plans and the scheme
for assured returns, it is stated that the CSL only received payments
against respective units being booked in the projects by the
investors/customers. Around 50% of the investors opted for assured
return plans, and as such, the assured returns were undeniably given to
all the eligible customers from April, 2012 to March, 2015.
e. It is stated that due to the global recession and real estate slump, the
CSL was unable to make the payment of assured returns beyond
March, 2015. Thereafter, the CSL offered additional spaces in lieu of
past/future assured returns which was accepted by more than 35%
customers and a revised Memorandum of Understanding was signed.
f. In the meanwhile, the investors of CSL moved a petition for initiation
of winding up proceedings against the CSL in company petition no.
152/2016 titled as „Rajni Anand v. Cosmic Structures Ltd.‟ and vide
order dated 29th May, 2018, by the Coordinate Bench of this Court,
the Serious Fraud Investigation Office (hereinafter “SFIO”) was
directed to conduct an investigation into the affairs of the CSL.
g. In compliance of the order dated 29th May, 2018, the Ministry of
Corporate Affairs (hereinafter “MCA”) directed SFIO to investigate
into the affairs of CSL. The investigation of the SFIO was completeSignature Not Verified
BAIL APPLN. 1287/2023 & BAIL APPLN. 1289/2023 Page 4 of 58
Digitally Signed By:PRAVEEN
KUMAR BABBAR
Signing Date:24.12.2024
18:47:57
and the investigation report dated 8th October, 2021 was submitted to
the MCA on the basis of which the MCA directed the SFIO to file a
complaint against the CSL and other accused persons in the complaint
case bearing no. CC/1313/2021 before the learned Additional
Sessions Judge-03 & Special Judge (Companies Act), Dwarka Courts,
South West, New Delhi under Sections 129, 134, 143, 144, 147, 447,
447, 448 of the Companies Act, 2013 and Sections 77 (2), 77(4), 211,
217, 227, 233, 628 of the Companies Act, 1956.
h. It is alleged in the said complaint that the CSL is a company
incorporated on 20th October, 2011 and that the CSL deals in the
business of real estate & infrastructure projects including consultancy
& construction of housing & commercial spaces. In the said
Complaint, it is also alleged that the applicants, i.e. Sushant Muttreja
(accused no. 6) and the Nishant Muttreja (accused no. 7) are the
„actual controlling mind and will‟ of CSL.
i. In the said Complaint, it is further alleged that the money invested by
the homebuyers/investors was spent recklessly and diverted for
reasons which were not in consonance with the purpose for which it
was received. It is further alleged that owing to the alleged illegal
acts/omissions on the part of the CSL and its directors, the
construction of the projects launched by the CSL have remained
uncompleted.
j. It is alleged in the said Complaint that the applicants were engaged in
siphoning off/diversion of funds from the funds of the CSL throughSignature Not Verified
BAIL APPLN. 1287/2023 & BAIL APPLN. 1289/2023 Page 5 of 58
Digitally Signed By:PRAVEEN
KUMAR BABBAR
Signing Date:24.12.2024
18:47:57
subsidiaries, directors owned companies, purchase of properties in the
name of directors and huge cash withdrawals. It is further alleged that
the applicants have committed fraud as defined under Section 447 of
the Companies Act, 2013. It is also alleged that the applicants have
availed bogus long term capital gain and have falsified books of
accounts of the CSL.
k. It is stated that the learned ASJ, vide order dated 16th August, 2021,
directed SFIO to take the applicant into judicial custody.
l. In the meanwhile, both the applicants moved applications seeking
regular bail before the learned ASJ, however, the said applications
were dismissed vide order dated 6th March, 2023. Being aggrieved by
the same, the applicants have approached this Court seeking grant of
regular bail.
m. It is pertinent to mention here that the applicants were enlarged on
interim bail vide order dated 22nd November, 2023 and the same has
been extended from time to time.
5. Mr. Trideep Pais, learned senior counsel appearing on behalf of the
applicant submitted that apart from the instant case filed by the SFIO, there
are total 12 FIRs that have been registered against the applicant.
Significantly though, apart from the present complaint, the applicant has
been granted bail in all the rest of the FIRs. The said details are as under:
Signature Not Verified
BAIL APPLN. 1287/2023 & BAIL APPLN. 1289/2023 Page 6 of 58
Digitally Signed By:PRAVEEN
KUMAR BABBAR
Signing Date:24.12.2024
18:47:57
Signature Not Verified
BAIL APPLN. 1287/2023 & BAIL APPLN. 1289/2023 Page 7 of 58
Digitally Signed By:PRAVEEN
KUMAR BABBAR
Signing Date:24.12.2024
18:47:57
6. It is submitted that the applicant was first arrested in the FIRs alleging
the same allegations arising out of similar facts and circumstances as of the
present complaint on 31st July, 2016, thus, total period of incarcerations of
the applicant as on 24th November, 2023 is 7 years 1 month and 26 days.
Further, in the present complaint, the applicant was arrested on 16th August,
2021 and thereby, he was in custody for 2 years 3 months and 8 days as on
24th November, 2023 in the present complaint.
Signature Not Verified
BAIL APPLN. 1287/2023 & BAIL APPLN. 1289/2023 Page 8 of 58
Digitally Signed By:PRAVEEN
KUMAR BABBAR
Signing Date:24.12.2024
18:47:57
7. It is submitted that significantly the applicant is being prosecuted on
the same facts by two different prosecuting agencies, which becomes clear
from the Economic Offences Wing‟s (hereinafter “EOW”) status reports.
This is also clear from the nature of the allegations in the SFIO‟s complaint
and the investigation report.
8. It is submitted that in the matter titled as Tejinder Singh @ Teja vs
State Of Punjab, CRM-M-21934-2015 (O&M), the Punjab and Haryana
High Court, vide an order dated 17th March, 2016 held that when multiple
proceedings are pending against the accused, the period of custody shall be
calculated from the date when the accused was first taken into custody.
9. It is submitted that the respondent has failed to take into account the
fact that cash was required for day to day expenses, making payments to
house- keeping, casual labours, miscellaneous expense & refreshments. Such
cash payments were supported by cash vouchers and requisite documents,
the record of which was duly stored in the servers seized by the respondent.
However, as per the respondent‟s investigation report, at the time of seizure
of the servers on 11th February, 2019, the servers were in dilapidated
condition due to water logging in the main server room and the Computer
Forensic and Data Mining Lab was unable to extract any data from the
storage devices. As such, the money spent in cash in operations of business
could not be ascertained. It is further submitted that the applicant cannot be
penalized for the respondent‟s failure to examine the servers.
10. It is submitted that despite having access to the bank statements of
CSL, the respondent has failed to note that substantial cash deposits were
Signature Not Verified
BAIL APPLN. 1287/2023 & BAIL APPLN. 1289/2023 Page 9 of 58
Digitally Signed By:PRAVEEN
KUMAR BABBAR
Signing Date:24.12.2024
18:47:57
also made into the account of the company during this period, thus falsifying
the allegation of withdrawals of Rs. 26.39 Crores. It is evident from the
chargesheet documents itself that between the period of April, 2013 to May,
2016, an amount of Rs. 18.50 Crores was deposited in the account of CSL. It
is not out of place to mention that total cash deposits in the account would be
a bigger amount as cash deposits between 2011 – March, 2013 have not
been taken into account.
11. It is submitted that after considering the charge-sheet filed by the
respondent, the Coordinate Bench of this Court had granted bail to the
applicant in the six FIRs vide order dated 16th December, 2022, .
12. It is also submitted that the Coordinate Bench of this Court, in the
aforesaid order, observed in paragraph no. 24 that “the chargesheet has
since been filed; the trial has not yet begin; there are numerous witnesses to
be examined and it would take years to examine them; there is no possibility
of dropping of evidence; the petitioners are not at flight risk as their
passports have since been surrendered; they were earlier released on
interim bail and did not misuse their liberty…”. The Court further observed
in paragraph no. 13 that “thus, whatever was received, it is alleged
maximum was spent on the construction. The Petitioners are still inclined to
co-operate with the investors and time and again are giving various schemes
to revive the projects”.
13. It is further submitted that the aforesaid order was challenged by the
Cosmic Victim Association by filing a SLP bearing SLP (Criminal) No.
20728/2023 before the Hon‟ble Supreme Court which was dismissed after
Signature Not Verified
BAIL APPLN. 1287/2023 & BAIL APPLN. 1289/2023 Page 10 of 58
Digitally Signed By:PRAVEEN
KUMAR BABBAR
Signing Date:24.12.2024
18:47:57
admitting the SLP vide Order dated 3rd January, 2024.
14. It is vehemently submitted that the applicant has been making
constant efforts towards revival of the CSL so that the pending projects may
be completed. It is submitted that the applicant has no malicious intent to
defraud the investors/home buyers and the projects remained uncompleted
only because of the real estate slump and recession in the financial market.
Therefore, the applicant has been making consistent efforts to show his bona
fide. It is further submitted that the applicant is seeking grant for regular bail
so that he may be allowed to explore revival schemes in order to protect the
interests of the investors.
15. It is submitted that the Company Court, vide order dated 24th August,
2023 deemed fit to consider schemes for the revival of the CSL in the
interest of allottees and creditors and allowed the applicant to file the
scheme.
16. It is also submitted that pursuant to their release on interim bail, the
applicant along with his brother Nishant Muttreja, filed a scheme for revival
of the company before the concerned Company Court in Co. Pet. No.
152/2016 vide Co. App (M) 3/2023, which was taken on record vide order
dated 21st December, 2023.
17. It is submitted that schemes have also been proposed by other parties,
including the scheme by Cosmic Victim Association/Alpha Corp, scheme by
Cosmic Promoters, Scheme of Members of Asset Revival Society (MARS)
and also the scheme of Mega Nirman and Industries Ltd (Vinayaja Group).
Thus, in view of the differences in the schemes on different parameters, the
Signature Not Verified
BAIL APPLN. 1287/2023 & BAIL APPLN. 1289/2023 Page 11 of 58
Digitally Signed By:PRAVEEN
KUMAR BABBAR
Signing Date:24.12.2024
18:47:57
applicant prepared a comparative chart highlighting the difference between
the four schemes which was filed vide Co. App. No. 52/2024.
18. It is submitted that the applicant and is brother (Nishant Mutreja) are
making efforts with the help of co-developers towards the revival of the
scheme and its implementation once the scheme gets approved by the
concerned Company Court.
19. It is also submitted that the applicant has filed a comparison chart of
the Revival Scheme placed by the applicant with the schemes placed by
other parties before the concerned Company Court. A copy of the updated
Comparison Chart is annexed with the present application which is available
on record. Moreover, the applicant has already placed the revival scheme
along with all the relevant documents, relevant affidavits duly sworn by the
co-developers pertaining to all the six projects before the concerned
Company Court as well as this Court.
20. It is submitted that the last date of hearing before the learned ASJ was
5th August, 2024 and the next date of hearing is 17th December, 2024 for the
purpose of appearance of the Official Liquidator, scrutiny of documents and
further proceedings. Therefore, even after filing the present criminal
complaint on 14th October, 2021, the trial of the matter has not yet started
and the matter is still at the stage of summoning and scrutiny of documents.
21. It is also submitted that from the above facts, it is likely that the
conclusion of the trial of the said complaint will be delayed, owing to which
the applicant will be in judicial custody for an undetermined period of time.
22. It is further submitted that the applicant has already served a period of
Signature Not Verified
BAIL APPLN. 1287/2023 & BAIL APPLN. 1289/2023 Page 12 of 58
Digitally Signed By:PRAVEEN
KUMAR BABBAR
Signing Date:24.12.2024
18:47:57
more than 2 years in judicial custody in connection with the said complaint
and more than 7 years in judicial custody in connection with other FIRs
containing similar allegations arising out of similar facts and circumstances.
It is submitted that the delay in conclusion of trial of the said complaint will
result in violation of fundamental rights guaranteed under the Constitution of
India.
23. It is submitted that in the matter titled Jainam Rathod vs State of
Haryana, CrL. A. 640/2022 and Sujay U Desai vs SFIO, CrL. A.
1023/2023, the Hon‟ble Supreme Court has held that despite the mandatory
twin conditions laid down in Section 212(6) of the Companies Act, 2013, in
absence of fair likelihood of the trial being completed within a reasonable
time period, the Court must be mindful of the need to protect the personal
liberty of the accused in face of delay in conclusion of the trial.
24. It is further submitted that the applicant was released on interim bail
granted by the Predecessor Bench of this Court vide order dated 24 th
November, 2023, which was extended vide order dated 20 th December, 2023
and subsequently on 8th January, 2024.
25. It is further submitted that the applicant had filed an application
bearing Crl M. (Bail) 164/2024 seeking extension of the interim bail, in
which notice was issued vide order dated 30 th January, 2024. The interim
bail granted to the applicant expired on 30th January, 2024, and the applicant
duly surrendered to show his bona fides in compliance with the directions of
the Predecessor Bench of this Court and the regular bail application was
heard on merits on 6th February, 2024, 9th February, 2024 and 27th February,
Signature Not Verified
BAIL APPLN. 1287/2023 & BAIL APPLN. 1289/2023 Page 13 of 58
Digitally Signed By:PRAVEEN
KUMAR BABBAR
Signing Date:24.12.2024
18:47:57
2024.
26. It is also submitted that vide order dated 27th February, 2024, the
Predecessor Bench of this Court was pleased to release the applicant on
interim bail for a period of three weeks subject to certain conditions, which
the applicant duly complied with. The interim bail granted to the applicant
has been extended on each date of hearing, keeping in view their attempts to
revive the company and work to complete pending projects.
27. It is submitted by the learned senior counsel, on instructions, that the
applicant is an innocent person and a law abiding citizen and undertakes that
the he shall abide by any conditions imposed by this Court while granting
bail. The address of the applicant has already been verified by the
respondent and found to be true and correct. Hence, it is prayed that the
applicant may be released on bail.
28. Per Contra, learned CGSC appearing on behalf of the SFIO
vehemently opposed the bail application and submitted that the present
applicant is involved in heinous crime of siphoning of funds of the
investors/homebuyers/allottees and falsifying books of accounts with the
intention to dispute its innocent investors. Therefore, he is not entitled to the
concession of bail and if released on the bail he may influence the trial.
29. It is submitted that the CSL had taken advances from more than 6,000
customers totaling to Rs. 524.16 Crores and had shown the WIP of all the
projects at Rs. 422.85 Crores as on 31st March, 2015 inclusive of assured
return given to the home buyers/investors at Rs. 76.74 Crores. Funds were
collected by the CSL under aforementioned three schemes launched by the
Signature Not Verified
BAIL APPLN. 1287/2023 & BAIL APPLN. 1289/2023 Page 14 of 58
Digitally Signed By:PRAVEEN
KUMAR BABBAR
Signing Date:24.12.2024
18:47:57
CSL at the beginning of the construction projects.
30. It is submitted that in order to attract customers, the CSL promised to
give an assured return on the mobilized advances at the rate of 10% to 12%
per annum payable monthly. Apart from assured return the CSL paid
brokerage/commission ranging between from 10-12% of the basic selling
price to the brokers or channel partners. An amount of Rs. 76.74 Crores and
Rs. 55.18 Crores were paid to the home buyers/investors as assured return
and the brokers/channel partners as commission respectively up to 31 st
March, 2015. It is submitted that the source of these payments was nothing
but the funds received from subsequent home buyers/investors.
31. It is submitted that the homebuyers/investors funds amounting to Rs.
31.73 Crores meant to be used for construction activities were diverted in
various subsidiary companies namely M/s Bluebelt Infra Developers and M/s
Realtors Pvt. Ltd., M/s 51 Rohini Infradevelopers Pvt. Ltd., M/s Cosmick
Eagle Realtors Pvt. Ltd., M/s Cosmic Yojana Infratech Pvt. Ltd. and used to
purchase properties in the names of the subsidiaries.
32. It is further submitted that a perusal of the complaint would also show
that apart from the above, the applicant, also diverted/siphoned off money
received by the CSL to various other entities, family members and
relatives/friends etc. It is also submitted that the applicant also made huge
cash withdrawals, without any commensurate requirement
33. It is submitted that pertinently the criminal complaint filed bearing no
CC/1313/2021 by the answering respondent is pending for adjudication
before the learned ASJ and charges have not been framed and trial has not
Signature Not Verified
BAIL APPLN. 1287/2023 & BAIL APPLN. 1289/2023 Page 15 of 58
Digitally Signed By:PRAVEEN
KUMAR BABBAR
Signing Date:24.12.2024
18:47:57
yet started.
34. It is submitted that the applicant being arrayed as accused no. 6 is the
director of the CSL and has sufficient means and resources, thus, there are
high probabilities of him influencing the prime witnesses in this case.
35. It is further submitted that applicant is in a dominant position as most
of the other accused are directly linked to him and exerts dominance over the
other accused persons. Hence, there is a high probability of the applicant
influencing the other witness on account of his strong economic position, the
fact of him being the director of the CSL and him being the mind and will of
the whole fraud. Therefore, it is submitted that when the case is in the
nascent stage, his plea of regular bail should be rejected.
36. It is submitted that it is a settled law that twin conditions, under
Section 212(6) of the Companies Act, 213 are mandatory to be satisfied for
such accused persons who are arrested in connection with the offence
punishable under section 447 of the Companies Act, 2013 (hereinafter
“Companies Act”) and a fair consideration of the material against the
accused as provided in the criminal complaint would establish that twin
conditions have not been satisfied.
37. It is further submitted that in the present case, the investigation has
thoroughly established that the accused-applicants, Muttreja Brothers, were
the „mind and will‟ and in direct control of the affairs of the CSL at such
time when the homebuyers and investors were lured to invest their money in
projects launched by the CSL.
38. It is submitted that the investigation has revealed sufficient
Signature Not Verified
BAIL APPLN. 1287/2023 & BAIL APPLN. 1289/2023 Page 16 of 58
Digitally Signed By:PRAVEEN
KUMAR BABBAR
Signing Date:24.12.2024
18:47:57
incriminating material as duly available on record, to establish both the key
ingredients under Section 447 of the Companies Act. Therefore, the
applicant-accused‟s claim that the learned ASJ failed to appreciate that the
applicant-accused fulfilled the twin conditions under Section 212(6) of the
Companies Act are ill-founded and only misleading, without any sufficient
basis or explanation.
39. Therefore, in view of the foregoing submissions, it is prayed that the
instant application may be dismissed.
40. Heard learned counsel for the parties and perused the record. This
Court has meticulously examined the contentions made in the complaint,
instant application, reply, rejoinder, status report, written submissions,
compilations of judgments and the Lower‟s Court Record of complaint
bearing no. CC/1313/2021 etc.
41. Upon perusal of the entire material on record, the surmise of the entire
facts is that the CSL launched its various projects in the year 2012 but the
real estate sector was hit by market downturn in 2014 – 2015, due to which
the applicants faced a huge financial slump and projects could not be
completed. Thereafter, during 2016 – 2018, various complaints were lodged
by several investors, culminating into registration of multiple FIRs against
the applicants. Following the same, in the year 2016, investors of the CSL
moved this Court by filing a winding up petition being Company Petition
No. 152/2016.
42. In the year 2021, the respondent herein, i.e., the SFIO filed a
complaint against the CSL and other accused including the applicants under
Signature Not Verified
BAIL APPLN. 1287/2023 & BAIL APPLN. 1289/2023 Page 17 of 58
Digitally Signed By:PRAVEEN
KUMAR BABBAR
Signing Date:24.12.2024
18:47:57
various provisions of the Companies Act bearing complaint no.
CC/1313/2021 in which regular bail was denied to the applicants by order
dated 6th March, 2023.
43. In the meanwhile, in order to save the CSL and its projects from
winding up and to safeguard the interests of the investors, the applicants in
furtherance of their bona fide intentions have time and again proposed a
revival scheme of compromise between the CSL and its
creditors/investors/homebuyers/allottees for revival of the Company which
was however initially rejected by the concerned Company Court vide order
dated 6th April, 2023.
44. Subsequently, as per the material available on record, it is noted that
vide order dated 26th April, 2022, another scheme propounded by the Cosmic
Victim‟s Association for an entity by the name of M/s Alpha Corp. Pvt. Ltd.,
was also dismissed by the concerned Court on the ground that the scheme
did not envisage any upfront payment by the developer. Accordingly, liberty
was granted to the Cosmic Victim‟s Association to file a fresh scheme with
an upfront deposit of the threshold amount.
45. It is also observed that a third scheme was thereafter propounded
again by the CSL with one M/s Good Living Infrastructure Pvt. Ltd., which
proposed an infusion of Rs.300 Crores for completion of all the six projects
of the CSL. Thereafter, one M/s Renowned Buildtech Pvt. Ltd. agreed to
invest Rs. 50 Crores and collaborate with the Company on two projects in
furtherance of which the ex-directors (accused herein) of the CSL filed their
scheme before the concerned Company Court, thereby, proposing a deposit
Signature Not Verified
BAIL APPLN. 1287/2023 & BAIL APPLN. 1289/2023 Page 18 of 58
Digitally Signed By:PRAVEEN
KUMAR BABBAR
Signing Date:24.12.2024
18:47:57
in the form of a Bank Guarantee of Rs.50 Crores. An affidavit was also filed
by the builder stating that it was ready to give upfront Bank Guarantee of
Rs.5 Crores in support of the scheme. Therefore, the bona fide of the
applicants is prima facie discernible from the said actions which have been
duly stated in the captioned bail applications on affidavit.
46. At this stage, it is pertinent to mention here that the
investors/homebuyers/allottees are the real entities/individuals who have
been actually affected by the failure of the completion of the projects even
after they have paid their due share of amount to some extent. Ultimately, it
is the investors who have actually suffered by the hands of the culprits.
47. At the stage of deciding this bail application, this Court is not going
into the details of the offences and their merits but is primarily concerned for
the investors who have invested substantial amount of their money with the
applicants, but have not received any unit/return in lieu of the same.
48. After taking into consideration the entire contents advanced by both
the parties, it is observed by this Court that it is a common ground between
the CSL and the investors that the liquidation of the Company is not in the
interest of the investors as substantial amounts have been invested by them
in residential/commercial projects proposed by the CSL and the said fact has
been duly noted by the concerned Company Court in its order dated 24 th
August, 2023 (which is part of the record). It is pertinent to mention here
that the said facts and circumstances were also taken into consideration by
the Predecessor Bench of this Court while deciding the grant of interim bail
to the applicants.
Signature Not Verified
BAIL APPLN. 1287/2023 & BAIL APPLN. 1289/2023 Page 19 of 58
Digitally Signed By:PRAVEEN
KUMAR BABBAR
Signing Date:24.12.2024
18:47:57
49. It has been contended on behalf of the applicants that they may be
released on bail so that they may explore the possibilities of revival of the
company to so that the projects may be completed. Further, they have
remained in custody for more than 2 years for the offences for which the
maximum punishment is 10 years and the trial will take some time to
conclude.
50. With regard to the same, it is an admitted position of fact, which has
not been disputed by the learned CGSC, that the applicants have been
making serious and constant efforts to revive the Company in order to
complete the projects launched by them which have remained pending and
which is the real grievance of the investors/homebuyers.
51. At this stage, this Court has referred to the „summary and
implementation schedule of the revival scheme which has been filed along
with the affidavits of the co-developers‟ which is annexed with the written
submissions filed on behalf of the applicant as „Annexures‟ therein. The
relevant portion of the summary of revival scheme has been reproduced
hereunder for reference:
“…5.The relevant facts in relation to the Revival Scheme are
detailed herein. At the outset, it bears mention that there are 6
projects which are the subject matter of the Revival Scheme and
the details of these projects are as follows:
Project Address Approx. Land Use Co-
Name Plot Develo
Area per
Cosmic Plot No. 10 Acres IT/ITES Indiho
Corporate 10, mixed mz
Signature Not Verified
BAIL APPLN. 1287/2023 & BAIL APPLN. 1289/2023 Page 20 of 58
Digitally Signed By:PRAVEEN
KUMAR BABBAR
Signing Date:24.12.2024
18:47:57
Park Tech Zone, land use Infra
(CCP-1) Yamuna LLP.
Expressway
,
Greater
Noida
Cosmic Plot No. 5, 5 acres IT/ITES Lord
Corporate Sector 140, mixed Krishna
Park- Noida land use Infraco
140 (CCP- n
2/CCP-140) Pvt.
Ltd.
Cosmic Plot No. 1, 5 acres IT/ITES Renown
Masterpiece Sector 154, mixed ed
(CCP- Noida land use Buildte
3/CCP- ch
154) Pvt.
Ltd.
Cosmic Plot No. 10 acres IT/ITES Sirda
Cruise 15, mixed Homes
(CC/KP 5) Knowledge land use Pvt.
Park- V, Ltd.
Greater
Noida
Cosmic TS 04, 2.5 acres Residentia Renown
Urban Sector + 2.5 l ed
Young (UY) 22D, acres Buildte
Yamuna ch
Expressway Pvt.
, Ltd.
Greater
Noida
Cosmic Plot No. 1844 IT/ITES JMS
Business 5/9, squares mixed Infra
Center Sector 35, meters land use Realty
Signature Not Verified
BAIL APPLN. 1287/2023 & BAIL APPLN. 1289/2023 Page 21 of 58
Digitally Signed By:PRAVEEN
KUMAR BABBAR
Signing Date:24.12.2024
18:47:57
(CBC/Gurga NH- Pvt.
on) 8, Ltd.
Gurugram ("JMS
Infra")
6. Salient Features of the Revival Scheme with respect to
Cosmic Masterpiece (CCP3) Project and Cosmic Urban
Young Project:
6.1. As per the Scheme, one of the Co-developer namely M/s
Renowned Buildtech is taking up the captioned two projects
(CCP3 and Cosmic Urban Young) for development.
Renowned Buildtech proposed to make an upfront investment
of Rs. 35 crores in an Escrow account and shall be used for
the purpose of the construction of the said two projects. Out
of 35 crores, 10 crores will remain with this Hon‟ble
Company Court in the form of FD till the period when the
existing customers are delivered the booked space. Further
the Renowned Buildtech will be infusing 50 crores each year
for over 3 years i.e. 150 crores as per the requirement of
projects, which makes a total of Rs. 185 crores of investment.
6.2. Renowned Buildtech will take over the entire
development of these 2 projects and subsume all liabilities
including payment to authorities and settlement of unit
allottees of the said two projects as proposed in the Scheme.
The Codeveloper further undertakes all further cost of
construction to complete these 2 projects and bring them to
saleable condition.
6.3. All customers/unit allottees in respect of Cosmic Urban
Young shall be refunded the principal amounts invested by
them without interest and the said refund shall be processed
in 6 months (subject to the Co-developer undertaking) from
the date of approval of the revised map from Authority.
Signature Not Verified
BAIL APPLN. 1287/2023 & BAIL APPLN. 1289/2023 Page 22 of 58
Digitally Signed By:PRAVEEN
KUMAR BABBAR
Signing Date:24.12.2024
18:47:57
6.4. Renowned Buildtech will construct the said 2 projects
and deliver to the existing buyers of the said Projects (except
for Cosmic Urban Young) and sell the unsold units to the
new customers. All the allottees shall be given the units as
already sold by the Applicant‟s Company. The existing
allottees shall only pay the balance payment as per the
original agreements with buyer. The Co-developer is fully
entitled to sell the unsold units at their discretion to recover
the cost of Projects and profits.
6.5. Once the Scheme is approved by this Hon‟ble Company
Court, Renowned Buildtech will apply for the relevant
approvals within 60 days (subject to the Co-developer
undertaking) from the date of sanction of the Scheme and the
release of the properties by the Official Liquidator.
6.6. The CCP3 Project will be completed within 4 years from
the date of RERA registration, extendable for a period of
maximum 6 months.
A duly sworn Affidavit on behalf of M/s Renowned Buildtech
Private Limited is annexed to the present Compilation at pg
23-27.
7. Salient Features of the Revival Scheme with respect to
Cosmic Corporate Park (CCP-1) Project, Cosmic Corporate
Park- 140 (CCP-2), Cosmic Cruise (KP 5) and Cosmic
Business Center, Gurgaon (CBC) Projects:
7.1. At the time of filing the Scheme, the Applicant and his
brother proposed to partly dispose of other assets of the
Applicant‟s Company as well as their personal assets, from
the customer‟s infusion of funds, from bringing in other co-
developers in order to revive the remaining 4 projects i.e.
Signature Not Verified
BAIL APPLN. 1287/2023 & BAIL APPLN. 1289/2023 Page 23 of 58
Digitally Signed By:PRAVEEN
KUMAR BABBAR
Signing Date:24.12.2024
18:47:57
CCP-1, CCP-2, Cosmic Cruise (KP5) and Cosmic Business
Center (CBC) Gurgaon. However, the Applicant and his
brother have been making endeavours to involve the other
Co-developers for the revival of remaining 4 projects of the
Company and they were successful in involving other Co-
developers namely M/s Indihomz Infra LLP for CCP-1
project, M/s Lord Krishna Infracon Pvt. Ltd. for CCP-2
project, Srida Homes Pvt. Ltd. for KP5 project and JMS
Infra Realty Pvt. Ltd. (JMS Infra) for CBC project. The duly
sworn Affidavits of all the Codevelopers involved in revival
of the projects of the Company are already on record before
the Hon‟ble Company Court.
7.2. M/s Indihomz Infra LLP will make an upfront deposit of
Rs. 3 crores in an Escrow Account, which will be used for the
construction of CCP-1 project as per the requirements.
Further, the Co-developer will deploy Rs. 2 crores each
month for the completion of the said project. The
Codeveloper undertakes to deliver the units booked by the
customers in the said project (apart from the Studio
Apartments) within 4 years, extendable for a period of 6
months. The Co-developer proposed that they will refund the
amount paid by the customers as booking amount for Studio
Apartments within 1 year from the date of approval of the
Revival Scheme by this Hon‟ble Company Court or from the
date of making an application for refund by the customer,
whichever is later. No interest or penalty will be paid on this
amount.
7.3. M/s Lord Krishna Infracon Pvt. Ltd. will make an
upfront deposit of Rs. 50 crores in an Escrow Account, which
will be used for the construction of CCP-2 project as per the
requirements. The said Co-developer undertakes to give a
Corporate Guarantee of Rs. 20 crores in favour of the
Hon‟ble Company Court towards guarantee of timely
Signature Not Verified
BAIL APPLN. 1287/2023 & BAIL APPLN. 1289/2023 Page 24 of 58
Digitally Signed By:PRAVEEN
KUMAR BABBAR
Signing Date:24.12.2024
18:47:57
completion of project.
7.4. The Co-developer will take over the entire development
of CCP-2 and undertakes to infuse funds as estimated from
internal accruals receivables from existing customers, sale of
balance saleable inventory and other fund-raising
mechanisms available to the company and shall complete the
development of the Tower-1 of project and settle all
customers and creditors of the project within 4 years
(extendable for a period of 6 months) subject to timely due
payment by the existing customers. The Co-developer will
apply for all the relevant approvals/NOCs/RERA Regd.
within 90 days from the date of sanction of the Scheme and
all expenditure pertaining to getting approvals/NOC/RERA,
will be borne by the Codeveloper.
7.5. M/s Srida Homes Pvt. Ltd. will make an upfront deposit
of Rs. 10 crores in an Escrow Account, which will be used
for the construction of KP5 project as per the requirements.
The Co-developer undertakes to infuse Rs. 3 crores per
month for the development of this project. It undertakes to
further infuse funds as per the requirements from internal
accruals receivables from existing customers, sale of balance
saleable inventory and other fund-raising mechanisms
available to the company.
7.6. The said Co-developer undertakes to complete the
phasewise development of the project and settle all the
existing customers and creditors of the project within 4 years
extendable for a period of 6 months subject to receipt of
timely due payments from the existing customers.
7.7. M/s JMS Infra Realty Pvt. Ltd. (JMS Infra) proposes to
invest upto Rs. 10 crores over a period of 2 years as per
requirement of the Cosmic Business Center, Gurgaon (CBC)
Signature Not Verified
BAIL APPLN. 1287/2023 & BAIL APPLN. 1289/2023 Page 25 of 58
Digitally Signed By:PRAVEEN
KUMAR BABBAR
Signing Date:24.12.2024
18:47:57
project. It undertakes to complete the said project within a
period of 2 years post receipt of requisite approvals from the
Concerned Authorities and HARERA. The Co-developer is
willing to submit a security deposit in the form of FD of Rs. 2
crores within 7 days of approval of the said scheme and the
same shall be subsequently allowed to be utilized towards
Project development and construction.
A duly sworn Affidavit on behalf of M/s Indihomz Infra LLP
is annexed to the present Compilation at pg. 33-35.
A duly sworn Affidavit on behalf of M/s Lord Krishna
Infracon Pvt. Ltd is annexed to the present Compilation at
pg. 28-32.
A duly sworn Affidavit on behalf of M/s Srida Homes Pvt.
Ltd. is annexed to the present Compilation at pg. 36-38.
A duly sworn Affidavit on behalf of M/s JMS Infra Realty Pvt.
Ltd. (JMS Infra) is annexed to the present Compilation at pg.
39-42.
8. Common/General features of the Revival Scheme with
respectto all 6 projects and their implementation schedule:
8.1. Sincere endeavours will be made to obtain
NOCs/approvals within the maximum period of 6 months
except where the Co-developer undertakes to obtain it within
a period of less than 6 months.
8.2. Projects will be completed within a period of 4 years
extendable by a maximum period of 6 months from the date
of receipt of revised NOCs/approvals or RERA registration,
except where the Co-developer undertakes to complete the
project within a period of less than 4 years. In case of delaySignature Not Verified
BAIL APPLN. 1287/2023 & BAIL APPLN. 1289/2023 Page 26 of 58
Digitally Signed By:PRAVEEN
KUMAR BABBAR
Signing Date:24.12.2024
18:47:57
from the aforesaid period due to some unforeseen reasons,
delay charges will be paid as per RERA rules.
8.3. 1200 Psft will charged upon approval of scheme as
Customer Infusion Fund which will be adjusted in their
balance payments. Customers don’t have to pay anything
over and above the agreed price. As per the Revival Scheme,
Cosmic will take all the pending liabilities, be it statutory or
towards the Authorities or land owning Company etc.8.4. As per the Revival Scheme, Cosmic will take all the
pending liabilities, be it statutory or towards the Authorities
or land owning Company etc.8.5. New Co-developers shall not be liable for payment of
any past or future assured return, any delay charges or
interest/penalty in any form in respect of any of the project,
however, extra space in lieu of AR already signed with
customers will be honoured. Further all costs pertaining to
any change in building/layout plan of the project to comply
with the applicable laws will be borne by Cosmic or
Codevelopers.
8.6. Any and all buy-back agreements, subvention schemes
or similar arrangements shall stand automatically
terminated on and from the date of the sanction of the
Scheme.
8.7. The entire process from application for sanction to
funding, construction, development or Escrow Account shall
be continuously under the supervision of Monitoring
Committee as appointed by this Hon‟ble Company Court.
The said committee may comprise of two promoters, one
person from customers and one retired judicial officer
appointed by this Hon‟ble Company Court or such committee
may be formed in any other way as decided by this Hon‟ble
Signature Not Verified
BAIL APPLN. 1287/2023 & BAIL APPLN. 1289/2023 Page 27 of 58
Digitally Signed By:PRAVEEN
KUMAR BABBAR
Signing Date:24.12.2024
18:47:57
Company Court.
9. The Applicant has already placed the Revival Scheme along
with all the relevant documents, relevant Affidavits duly sworn
by the Co-developers pertaining to all the six projects before
the Hon‟ble Company Court.
10. It may not be out of place to state that other parties have
also filed Schemes before the Hon‟ble Company Court. The
Applicant has filed a comparison chart of the Revival Scheme
placed by the Applicant with the Schemes placed by other
parties before the Hon‟ble Company Court. A copy of the
updated Comparison Chart is annexed to the present
Compilation at pg. 94-99….”
52. Perusal of the aforesaid extracts show that the applicants and the other
promoters of the CSL have submitted a scheme of settlement, compromise
and arrangement between the CSL and its members, creditors and customers
which is prima facie with the objective of ensuring maximization of assets
of the unit allotees of the Company and reviving and rehabilitating all six
projects to the maximum extent possible before the concerned Company
Court. Although this Court is unaware of the current status of the revival
scheme, however, the same is showing the bona fide of the applicants.
53. Here, reliance may be placed on the judgment of the Hon‟ble Supreme
Court passed in SEBI v. Sahara India Real Estate Corpn. Ltd., (2014) 5
SCC 429, wherein, the Hon‟ble Court dealt with a significant issue
involving the recovery of money raised by the Sahara entities from investors
through optionally fully convertible debentures etc., which deemed to have
violated regulatory norms under the Securities and Exchange Board of India
Signature Not Verified
BAIL APPLN. 1287/2023 & BAIL APPLN. 1289/2023 Page 28 of 58
Digitally Signed By:PRAVEEN
KUMAR BABBAR
Signing Date:24.12.2024
18:47:57
Act, 1992.
54. The Hon‟ble Court was dealing with a similar factual and legal
consideration, wherein, it had previously ordered Sahara entities and its
chairman to deposit the collected funds with the SEBI for repayment to the
investors. Subsequently, Subrata Roy Sahara, the Chairman of the Sahara
Group, was taken into custody for non-compliance with these directions.
55. In the said abovementioned judgment, the Hon‟ble Supreme Court
granted conditional bail to Subrata Roy Sahara, recognizing that his liberty
could aid in arranging funds to comply with the repayment orders. The
Hon‟ble Court emphasized that ensuring repayment to investors was the
ultimate relief in the matter. It held that the grant of bail was not merely a
matter of personal liberty but was also aimed at facilitating the recovery
process, as arranging money for investors was of paramount importance in
achieving justice and upholding investor protection.
56. It is observed by this Court that the aforesaid decision highlights the
practical approach which may be taken in balancing judicial accountability
with economic justice, prioritizing the interests of the investors over punitive
measures for the crime alleged to be committed. The relevant portion of
SEBI v. Sahara India Real Estate Corpn. Ltd. (Supra) is as under:
“..Contempt Petition (C) No. 412 of 2012 in Civil Appeal No.
9813 of 2011
1. List on 8-5-2013, immediately after the normal work in
the Court comprising Hon’ble Mr Justice Jagdish Singh Khehar
is over.
Signature Not Verified
BAIL APPLN. 1287/2023 & BAIL APPLN. 1289/2023 Page 29 of 58
Digitally Signed By:PRAVEEN
KUMAR BABBAR
Signing Date:24.12.2024
18:47:57
IAs Nos. 72-73 of 2013 in Civil Appeal No. 9813 of 2011
2. Issue notice. The counsel appearing for the respective
petitioners (non-applicants) accept notice.
3. List on 8-5-2013, immediately after the normal work in
the Court comprising Hon’ble Mr Justice Jagdish Singh Khehar
is over.
4. Counter-affidavit, if any, be filed before the next date.
5. We are inclined to stay all further proceedings in Appeals
Nos. 42 of 2013 (Subrata Roy Sahara v. SEBI), 48 of 2013
(SHICL v. SEBI), 49 of 2013 (SIRECL v. SEBI) and 50 of 2013
(Ashok Roy Chaudhary v. SEBI) pending before the Securities
Appellate Tribunal, Mumbai, and in Writ Petition No. 2088 of
2013 pending before the High Court of Judicature of
Allahabad, Lucknow Bench, since we are examining the
question, whether the respondents have complied with the
various conditions stipulated in our judgment dated 31-8-2012
[Sahara India Real Estate Corpn. Ltd. v. SEBI, (2013) 1 SCC 1
: (2013) 1 SCC (Civ) 1 : (2013) 1 SCC (Cri) 257] .
6. Ordered accordingly.
8. Heard the counsel for either side.
9. Due to paucity of time, it would not be possible for us to
hear the contempt petition and the same stands adjourned to
17-7-2013 at 2.00 p.m. Parties shall complete pleadings in all
IAs/petitions before that date.
Signature Not Verified
BAIL APPLN. 1287/2023 & BAIL APPLN. 1289/2023 Page 30 of 58
Digitally Signed By:PRAVEEN
KUMAR BABBAR
Signing Date:24.12.2024
18:47:57
10. Mr Arvind Datar, learned Senior Advocate appearing
for the petitioner, submits that the money so far deposited by
Saharas be permitted to be refunded to the genuine investors,
with interest, after verifying the genuineness of the documents.
SEBI may do so.
ORDER DATED 8-5-2013
IAs Nos. 68-69 of 2013 in CA No. 9813 of 2011
7. Application praying for filing additional documents is
allowed.
8. Heard the counsel for either side.
9. Due to paucity of time, it would not be possible for us to
hear the contempt petition and the same stands adjourned to
17-7-2013 at 2.00 p.m. Parties shall complete pleadings in all
IAs/petitions before that date.
10. Mr Arvind Datar, learned Senior Advocate appearing
for the petitioner, submits that the money so far deposited by
Saharas be permitted to be refunded to the genuine investors,
with interest, after verifying the genuineness of the documents.
SEBI may do so.
11. As far as genuine multiple investors are concerned, the
issue be examined on the next date of hearing. Ordered
accordingly.
ORDER DATED 1-11-2013
IA No. 4 in Contempt Petition (C) No. 260 of 2013 in Civil
Appeal No. 8643 of 2012Signature Not Verified
BAIL APPLN. 1287/2023 & BAIL APPLN. 1289/2023 Page 31 of 58
Digitally Signed By:PRAVEEN
KUMAR BABBAR
Signing Date:24.12.2024
18:47:57
12. We have heard Mr C.A. Sundaram, learned Senior
Advocate appearing for the applicants. For the reasons
indicated in Para 4 of the application, we make it clear that it is
open for the alleged Contemnor No. 5 in Contempt Petitions
(Civil) Nos. 412 and 413 of 2012 to go abroad, but, in the event
of non-compliance with the directions contained in the order
dated 28-10-2013 [SEBI v. Sahara India Real Estate Corpn.
Ltd., (2013) 9 SCC 331 : (2013) 4 SCC (Civ) 456 : (2013) 3
SCC (Cri) 813] , he shall immediately return back and be
present in the country before the expiry of the period of three
weeks, as indicated in the said order. With the aforesaid
observation, IA No. 4 is disposed of.
ORDER DATED 21-11-2013
13. We are convinced that the order dated 28-10-2013
[SEBI v. Sahara India Real Estate Corpn. Ltd., (2013) 9 SCC
331 : (2013) 4 SCC (Civ) 456 : (2013) 3 SCC (Cri) 813] passed
by this Court has not been complied with in its letter and spirit.
In such circumstances, we direct that Sahara Group of
Companies shall not part with any movable and immovable
properties until further orders. We further direct that all the
alleged contemnors shall not leave the country without the
permission of this Court. List on 11-12-2013 at 2.00 p.m. for
further arguments.
ORDER DATED 11-12-2013
14. Heard the counsel on either side. Following our orders
dated 28-10-2013 [SEBI v. Sahara India Real Estate Corpn.
Ltd., (2013) 9 SCC 331 : (2013) 4 SCC (Civ) 456 : (2013) 3
SCC (Cri) 813] , 1-11-2013 [See para 12, above.] and 21-11-
2013 [See para 13, above.] , Mr C.A. Sundaram, learned
Senior Counsel, has taken us through Annexure-A, filed along
Signature Not Verified
BAIL APPLN. 1287/2023 & BAIL APPLN. 1289/2023 Page 32 of 58
Digitally Signed By:PRAVEEN
KUMAR BABBAR
Signing Date:24.12.2024
18:47:57
with IA No. 82 of 2013, which gives details of various
properties which the alleged contemnors have agreed to offer to
SEBI. Reference was specifically made to properties mentioned
at Items 68, 69 and 70, which, according to Mr Sundaram,
would fetch a value of more than Rs 11,000 crores.
15. Mr Arvind Datar, learned Senior Counsel appearing for
SEBI, prayed for some time to verify the same as well as the
valuation reports filed along with the IA in support of that
prayer. However, he submitted that if it is the stand of the
alleged contemnors that they had refunded the amounts (Rs
17,443 crores approximately in case of SIRECL and Rs 5442
crores approximately in case of SHICL), then they should
produce the relevant records, duly certified by a competent
authority which is acceptable in a court of law, indicating the
sources from which they got the money for repayment, as
requested vide SEBI’s letter dated 28-5-2013.
16. Put up on 9-1-2014 at 2.00 p.m.
ORDER DATED 9-1-2014
17. Heard the counsel on either side.
18. Mr C.A. Sundaram, learned Senior Counsel appearing
for one of the alleged contemnors, submitted that earlier this
Court on 11-12-2013 [See paras 14-16, above.] has only
reiterated the submission made by Mr Arvind Datar, learned
Senior Counsel appearing for SEBI, that they did not disclose
the source from which they got money for repayment, despite
SEBI’s letter dated 28-5-2013. Mr Sundaram is right in his
submission. However, we feel that it would be appropriate to
give a direction of the nature stated above.
Signature Not Verified
BAIL APPLN. 1287/2023 & BAIL APPLN. 1289/2023 Page 33 of 58
Digitally Signed By:PRAVEEN
KUMAR BABBAR
Signing Date:24.12.2024
18:47:57
19. Accordingly, we direct the alleged contemnors to
disclose the complete details and source from which they repaid
the amount to the investors as also the manner of making
payments. They shall also disclose the information which SEBI
has sought from them from time to time. Such information shall
be provided to SEBI and also be filed in this Court by 23-1-
2014.
ORDER DATED 28-1-2014
21. Heard Mr Ram Jethmalani, learned Senior Counsel and
Mr Arvind P. Datar, learned Senior Counsel.
20. Put up on 28-1-2014 at 2.00 p.m. In the meantime, SEBI
shall verify the information provided to it by the alleged
contemnors.
22. Mr Datar submitted that the Saharas have not disclosed
the details as to when the refund was made. Reference was
made to pp. 6 to 9 of the reply-affidavit filed today. Mr Datar
further submitted that SEBI requires an explanation from the
Saharas with regard to the payments made on behalf of Sahara
India Real Estate Corpn. Ltd. (SIRECL) (partnership firm) by the
following firms, as mentioned below:
Rupees
(in crores)1 Sahara Credit Cooperative Rs. 13,366.18
Society Ltd.
2 Sahara India Commercial Rs. 4384.00
Corpn. Ltd.
3 Sahara Q Shop Rs. 2258.32
4 Ketak City Homes Ltd. Rs. 19.43
5 Kirti City Homes Ltd. Rs. 14.05Signature Not Verified
BAIL APPLN. 1287/2023 & BAIL APPLN. 1289/2023 Page 34 of 58
Digitally Signed By:PRAVEEN
KUMAR BABBAR
Signing Date:24.12.2024
18:47:57
23. Similarly, SEBI requires the Saharas to show the
following payments made on behalf of Sahara Housing
Investment Corpn. Ltd. (SHICL) (partnership firm), by the
following firms, as mentioned below:
Rupees
(in crores)1 SICCL Rs. 2479.00
2 Sahara Q Shop Rs. 2411.90
24. Further, the Saharas will also provide the bank
statements of the above firms showing when the amount was
paid to the partnership firms and subsequently, when and how
partnership firm made the disbursement, as sought for by SEBI.
25. Mr Ram Jethmalani, learned Senior Counsel appearing
for the respondents submitted that he will examine the same
and come out with a response within a week.
26. Post on 11-2-2014 at 2.00 p.m.
ORDER DATED 20-2-2014
27. Heard Mr Ram Jethmalani and Mr C.A. Sundaram,
learned Senior Counsel appearing for the alleged contemnors
and Mr Arvind P. Datar, learned Senior Counsel appearing for
SEBI.
28. In view of the conflicting stands taken by the Senior
Counsel appearing for the alleged contemnors and the defiant
and non-cooperative attitude adopted by the contemnors in
honouring the judgment dated 31-8-2012 [Sahara India Real
Signature Not Verified
BAIL APPLN. 1287/2023 & BAIL APPLN. 1289/2023 Page 35 of 58
Digitally Signed By:PRAVEEN
KUMAR BABBAR
Signing Date:24.12.2024
18:47:57
Estate Corpn. Ltd. v. SEBI, (2013) 1 SCC 1 : (2013) 1 SCC
(Civ) 1 : (2013) 1 SCC (Cri) 257] , passed by this Court as well
as orders dated 5-12-2012 [Sahara India Real Estate Corpn.
Ltd. v. SEBI, (2013) 2 SCC 733 : (2013) 1 SCC (Civ) 1259 :
(2013) 1 SCC (Cri) 1152 : (2013) 1 SCC (L&S) 452] and 25-2-
2013 [Sahara India Real Estate Corpn. Ltd. v. SEBI, (2013) 2
SCC 738 : (2013) 1 SCC (Civ) 1264 : (2013) 1 SCC (Cri) 1156
: (2013) 1 SCC (L&S) 457] passed in Civil Appeal No. 8643 of
2012 and IA No. 67 of 2013 by a three-Judge Bench of this
Court, we direct the personal presence of the alleged
contemnors and the Directors of the respondent Companies in
Court on 26-2-2014 at 2.00 p.m., on which date the matter will
be next taken up.
ORDER DATED 26-2-2014
29. This Court passed an order on 20-2-2014 [See paras 27-
28, above.] directing the personal presence of the alleged
contemnors and the Directors of the respondent Companies
today i.e. on 26-2-2014 at 2.00 p.m. On our directions, Mr
Ashok Roy Choudhary, Mr Ravi Shankar Dubey and Smt
Vandana Bhargava are present in the Court today.
30. Even though, Mr Ram Jethmalani, learned Senior
Counsel appearing for the alleged contemnors, made a mention
yesterday i.e. on 25-2-2014, before this Bench for dispensing
with the personal presence of Mr Subrata Roy Sahara, alleged
Contemnor 5, that request was specifically turned down by this
Court.
31. Today, when the matter is taken up, the same request
was made by Mr Jethmalani, by moving an application, which
was supported by a medical certificate. The said medical
certificate was issued by Sahara Hospital and, in our view, the
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factual position indicated therein does not solicit the exemption
sought.
32. Since, we have already declined to grant exemption from
personal presence of the alleged Contemnor 5 on 25-2-2014,
we find no reason to accede to the renewal of the request made
today. Accordingly, we issue non-bailable warrants of arrest
qua Mr Subrata Roy Sahara, alleged Contemnor 5. He shall be
arrested and produced before this Court on 4-3-2014 at 2.00
p.m. The aforementioned Directors, who are present today,
shall also remain present in the Court on the next date. Put up
on 4-3-2014 at 2.00 p.m.
ORDER DATED 4-3-2014
33. The contemnors are personally present in the Court,
including the fifth respondent, who has been brought to the
Court by the U.P. Police, in due execution of our non-bailable
warrant of arrest.
34. We have heard the Senior Counsel on various occasions
and perused the various documents, affidavits, etc. We have
heard the learned counsel and the contemnors today as well.
We are fully convinced that the contemnors have not complied
with our directions contained in the judgment dated 31-8-2012
[Sahara India Real Estate Corpn. Ltd. v. SEBI, (2013) 1 SCC 1
: (2013) 1 SCC (Civ) 1 : (2013) 1 SCC (Cri) 257] , as well as
orders dated 5-12-2012 [Sahara India Real Estate Corpn.
Ltd. v. SEBI, (2013) 2 SCC 733 : (2013) 1 SCC (Civ) 1259 :
(2013) 1 SCC (Cri) 1152 : (2013) 1 SCC (L&S) 452] and 25-2-
2013 [Sahara India Real Estate Corpn. Ltd. v. SEBI, (2013) 2
SCC 738 : (2013) 1 SCC (Civ) 1264 : (2013) 1 SCC (Cri) 1156
: (2013) 1 SCC (L&S) 457] passed in Civil Appeal No. 8643 of
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2012 and IA No. 67 of 2013 by a three-Judge Bench of this
Court.
35. Sufficient opportunities have been given to the
contemnors to fully comply with those orders and purge the
contempt committed by them but, rather than availing of the
same, they have adopted various dilatory tactics to delay the
implementation of the orders of this Court. The non-compliance
with the orders passed by this Court shakes the very foundation
of our judicial system and undermines the rule of law, which we
are bound to honour and protect. This is essential to maintain
faith and confidence of the people of this country in the
judiciary.
36. We have found that the contemnors have maintained an
unreasonable stand throughout the proceedings before SEBI,
SAT, High Court and even before this Court. The
reports/analysis filed by SEBI on 18-2-2014 make detailed
reference to the submissions, documents, etc. furnished by the
contemnors, which indicates that they are filing and making
unacceptable statements and affidavits all through and even in
the contempt proceedings. The documents and affidavits
produced by the contemnors themselves would apparently
falsify their refund theory and cast serious doubts about the
existence of the so-called investors. All the fact-finding
authorities have opined that majority of investors do not exist.
Preservation of market integrity is extremely important for
economic growth of this country and for national interest.
Maintaining investors’ confidence requires market integrity and
control of market abuse. Market abuse is a serious financial
crime which undermines the very financial structure of this
country and will make imbalance in wealth between haves and
have-nots.
37. We notice, on this day also, no proposal is forthcoming to
honour the judgment of this Court dated 31-8-2012 [Sahara
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Digitally Signed By:PRAVEEN
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India Real Estate Corpn. Ltd. v. SEBI, (2013) 1 SCC 1 : (2013)
1 SCC (Civ) 1 : (2013) 1 SCC (Cri) 257] and the orders passed
by this Court on 5-12-2012 [Sahara India Real Estate Corpn.
Ltd. v. SEBI, (2013) 2 SCC 733 : (2013) 1 SCC (Civ) 1259 :
(2013) 1 SCC (Cri) 1152 : (2013) 1 SCC (L&S) 452] and 25-2-
2013 [Sahara India Real Estate Corpn. Ltd. v. SEBI, (2013) 2
SCC 738 : (2013) 1 SCC (Civ) 1264 : (2013) 1 SCC (Cri) 1156
: (2013) 1 SCC (L&S) 457] by the three-Judge Bench. In such
circumstances, in exercise of the powers conferred under
Articles 129 and 142 of the Constitution of India, we order
detention of all the contemnors, except Mrs Vandana Bhargava
(the fourth respondent) and send them to judicial custody at
Delhi till the next date of hearing. This concession is being
extended towards the fourth respondent because she is a
woman Director, and also, to enable the contemnors to be in a
position to propose an acceptable solution for execution of our
orders by coordinating with the detenus. Mrs Vandana
Bhargava, who herself is one of the Directors, is permitted to
be in touch with the rest of the contemnors and submit an
acceptable proposal arrived at during their detention, so that
the Court can pass appropriate orders.
38. List on 11-3-2014 at 2.00 p.m. All the contemnors be
produced in Court on that date. Mrs Vandana Bhargava, the
fourth respondent, to appear on her own. However, liberty is
granted for mentioning the matters for preponement of the date
if a concrete and acceptable proposal can be offered in the
meantime.
ORDER DATED 13-3-2014
39. Shri Ram Jethmalani, learned Senior Counsel,
appearing for the petitioner submitted that he has some
inconvenience for tomorrow i.e. 14-3-2014 and cannot address
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arguments tomorrow. The learned Senior Counsel made a
request that the matter be posted on 25-3-2014.
40. Consequently, the matter is posted on 25-3-2014 at 2.00
p.m., at the request of the learned Senior Counsel for the
petitioner.
41. Prayer made by Mr Ram Jethmalani, learned Senior
Counsel for the petitioner, for bail cannot be considered at this
juncture, since no written proposal for payment in compliance
with the directions issued by this Court has been made so far.
ORDER DATED 26-3-2014
42. We have gone through the fresh proposal filed on 25-3-
2014. Though the same is not in compliance with our order
dated 31-8-2012 [Sahara India Real Estate Corpn.
Ltd. v. SEBI, (2013) 1 SCC 1 : (2013) 1 SCC (Civ) 1 : (2013) 1
SCC (Cri) 257] or the order passed by the three-Judge Bench
of this Court on 5-12-2012 in Sahara India Real Estate
Exchange Corpn. Ltd. v. SEBI [Sahara India Real Estate
Corpn. Ltd. v. SEBI, (2013) 2 SCC 733 : (2013) 1 SCC (Civ)
1259 : (2013) 1 SCC (Cri) 1152 : (2013) 1 SCC (L&S) 452]
and on 25-2-2013 in Sahara India Real Estate Corpn.
Ltd. v. SEBI [Sahara India Real Estate Corpn. Ltd. v. SEBI,
(2013) 2 SCC 738 : (2013) 1 SCC (Civ) 1264 : (2013) 1 SCC
(Cri) 1156 : (2013) 1 SCC (L&S) 457] , we are inclined to
grant interim bail to the contemnors who are detained by virtue
of our order dated 4-3-2014 [See paras 33-38, above.] , on the
condition that they would pay the amount of Rs 10,000 crores,
out of which Rs 5000 crores to be deposited before this Court
and for the balance a bank guarantee of a nationalised bank be
furnished in favour of SEBI and be deposited before this Court.
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Digitally Signed By:PRAVEEN
KUMAR BABBAR
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On compliance, the contemnors be released forthwith and the
amount deposited be released to SEBI.
43. We make it clear that this order is passed in order to
facilitate the contemnors to further raise the balance amount so
as to comply with the Court’s orders mentioned above.
Court Masters…”
57. Perusal of the above makes it clear that it would not be impermissible
under the law to consider the aspect of grant of regular bail in order to allow
the accused applicants to revive the CSL in furtherance to the completion of
the pending projects.
58. Imperatively, the applicants were released on interim bail by the order
of the Predecessor Bench of this Court to allow them to explore the
possibilities towards the revival. Relevant portion of the order dated 22nd
November, 2023 is as under:
“…5. Present applications are essentially predicated on an
order dated 24.08.2023, passed by the Company Court where
the Court has taken note of the submissions of the Applicants,
who were produced in Court, that they had earlier filed
Schemes for revival, which were rejected and that they wish to
file a fresh Scheme for revival of the Company. Court has also
taken note of a Scheme of Arrangement filed on behalf of CVA
and Members of Assets Revival Society. Copy of the order has
been filed with the application and relevant paragraphs relied
upon by the Applicants read as under:-…….
***
6. It is the case of the Applicants as argued by the learned
Senior Counsel appearing on their behalf that it is a common
ground between the Company and the investors that liquidationSignature Not Verified
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of the Company is not in the interest of the investors as
substantial amounts have been invested by them in
residential/commercial projects proposed by the Company and
this fact is also noted by the Company Court in the order dated
24.08.2023. Applicants have made persistent efforts to revive
the Company so that the projects can be completed. It is urged
that in view of the order passed on 24.08.2023, Applicants be
enlarged on interim bail for a period of four weeks so that
effective steps can be taken towards revival Schemes in order to
save the Company from liquidation. Since the Applicants are in
judicial custody, this is hampering the finalisation of revival
Schemes. It is further argued that the Applicants were granted
interim bail in the past but have never misused the liberty or
violated any condition of grant of bail and that the Applicants
undertake that every effort will be made in four weeks towards
revival of the Company and no extension of bail shall be sought
beyond a period of four weeks from the date of release, if this
Court releases the Applicants on interim bail for the limited
purpose of revival of the Company.
7. Learned Senior Panel Counsel appearing on behalf of the
Respondent candidly shares the concern regarding the interest
of the investors who have infused substantial amounts out of
their savings in the proposed projects and submits that he
cannot have any objection against the Applicants taking sincere
steps towards revival of the Company. He, however, submits
that in case the Court is inclined to grant interim bail for this
limited purpose to the Applicants, it should be without
prejudice to the rights and contentions of the Respondent on the
merits of the matter and with a caveat that the Applicants be
bound by their undertaking that they shall not seek extension of
the bail, if granted and the order passed by this Court should
not affect the hearing on the regular bail applications, as the
allegations against the Applicants are very serious.
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BAIL APPLN. 1287/2023 & BAIL APPLN. 1289/2023 Page 42 of 58
Digitally Signed By:PRAVEEN
KUMAR BABBAR
Signing Date:24.12.2024
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8. I have heard the learned Senior Counsel for the Applicants
and learned Senior Panel Counsel for the Respondent. From a
reading of the averments in the applications, orders passed by
the Company Court in Company Petition No. 152/2016, from
time to time, including the order dated 24.08.2023, it emerges
that various revival Schemes have been offered, but so far
nothing has fructified. There can be no gainsaying that
liquidation of the Company will not be in the interest of the
investors and therefore, the Company Court has passed
directions to the propounders of the Schemes to file the
Schemes on record giving necessary details as enumerated in
the order. Interim bail is sought by the Applicants with the
objective of reviving the Company to save it from going into
liquidation as well as to revive the real estate projects. Looking
at the reason for seeking interim bail and in the interest of
investors and without prejudice to the rights and contentions of
the respective parties on the merits of the present matters and
the allegations against the Applicants, this Court directs that
the Applicants be released on interim bail for a period of four
weeks from the date of release, subject to the following
conditions:-…..
59. This Court is well cognizant of the fact that the Courts ought to bear
in mind that in a matter of regular bail under Section 439 of the CrPC (now
Section 483 of the BNSS), the larger interest of the State must be taken into
consideration. Further, a sensitive approach is required to be acquired by the
Courts while dealing with the offences constituting economic offences
which are increasing plight of this nation as the same impacts the individual
roots of the society which is a common man, ultimately leading to minimize
the trust of the public in law.
60. However, it is imperative to state that it is upon the judicial discretion
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of the Courts while granting or refusing a bail application and the said
discretion shall be exercised with regard to the facts and circumstances of
each case. Thus, while considering the allegations leveled against an
accused, the Courts shall, at the same time, adhere to the settled principle
with regard to “bail is a rule and jail is an exception”, which has been time
and again emphasized by various Courts. Therefore, if a Court on merits
deems it fit to release an accused on bail, withholding the aforesaid relief
will amount to be considered as a punishment.
61. For the purpose of dealing with the merits of a bail application, a
conjoint emphasis upon various factors is required to be looked upon, such
as the nature of accusation of offence, the severity of punishment in the
matter, the stage of trial, the probability of tampering or threatening the
witnesses, likelihood of absconding as well as the conduct of the accused in
each case.
62. As mentioned earlier, the fundamental postulate that “the grant of bail
is rule and the refusal is an exception”, has been elaborately and lucidly
explained in a catena of judgments such as Gurbaksh Singh Sibbia v. State
of Punjab, (1980) 2 SCC 565 and P. Chidambaram v. Directorate of
Enforcement, (2020) 13 SCC 791, wherein, it was held as under:
“…23. Thus, from cumulative perusal of the judgments cited on
either side including the one rendered by the Constitution
Bench of this Court, it could be deduced that the basic
jurisprudence relating to bail remains the same inasmuch as
the grant of bail is the rule and refusal is the exception so as to
ensure that the accused has the opportunity of securing fair
trial. However, while considering the same the gravity of theSignature Not Verified
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Digitally Signed By:PRAVEEN
KUMAR BABBAR
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offence is an aspect which is required to be kept in view by the
Court. The gravity for the said purpose will have to be gathered
from the facts and circumstances arising in each case. Keeping
in view the consequences that would befall on the society in
cases of financial irregularities, it has been held that even
economic offences would fall under the category of “grave
offence” and in such circumstance while considering the
application for bail in such matters, the Court will have to deal
with the same, being sensitive to the nature of allegation made
against the accused. One of the circumstances to consider the
gravity of the offence is also the term of sentence that is
prescribed for the offence the accused is alleged to have
committed. Such consideration with regard to the gravity of
offence is a factor which is in addition to the triple test or the
tripod test that would be normally applied. In that regard what
is also to be kept in perspective is that even if the allegation is
one of grave economic offence, it is not a rule that bail should
be denied in every case since there is no such bar created in the
relevant enactment passed by the legislature nor does the bail
jurisprudence provide so. Therefore, the underlining conclusion
is that irrespective of the nature and gravity of charge, the
precedent of another case alone will not be the basis for either
grant or refusal of bail though it may have a bearing on
principle. But ultimately the consideration will have to be on
case-to-case basis on the facts involved therein and securing
the presence of the accused to stand trial…”
63. Furthermore, the Allahabad High Court has also emphasized the
aforesaid legal principle in Peeyush Kumar Jain v. Union of India, (2022)
121 ACC 448, by stating that it is not advisable to categorize all of the
economic offences into one group and deny bail on that basis. It was held
therein that one of the key factors to determine the gravity of the offence is
the term of the sentence that has been prescribed under the provision of
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KUMAR BABBAR
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offence. The factors that cumulatively affect the grant of bail in an offence,
have been listed in the aforementioned judgment as follows:
“..31. While considering the prayer for grant of bail in any
offence, including an economic offence, the Court has to
consider:–
(i) the nature of accusation and the severity of the
punishment to which the party may be liable in the case of
conviction and the nature of the materials relied upon by
the prosecution;
(ii) reasonable apprehension of tampering with the witnesses
or apprehension of threat to the complainant or the
witnesses;
(iii) reasonable possibility of securing the presence of the
accused at the time of trial or the likelihood of his
abscondence;
(iv) character, behaviour and standing of the accused and
the circumstances which are peculiar to the accused;
(v) larger interest of the public or the State and similar other
considerations…”
64. Thus, it is the judicial discretion of a Court to allow a bail application
of an accused charged with non-bailable offences. However, in the instant
case, this Court, before proceeding to the conclusion, must deal with the
satisfaction of twin conditions given under Section 212(6) of the Companies
Act. The relevant portion of the said provision is as under:
“212. Investigation into affairs of Company by Serious Fraud
Investigation Office.– (1) Without prejudice to the provisions
of section 210, where the Central Government is of the opinion,Signature Not Verified
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that it is necessary to investigate into the affairs of a company
by the Serious Fraud Investigation Office–
***
(6) Notwithstanding anything contained in the Code of
Criminal Procedure, 1973 (2 of 1974), 1 [offence covered
under section 447] of this Act shall be cognizable and no
person accused of any offence under those sections shall be
released on bail or on his own bond unless–
(i) the Public Prosecutor has been given an
opportunity to oppose the application for such
release; and
(ii) where the Public Prosecutor opposes the
application, the court is satisfied that there are
reasonable grounds for believing that he is not guilty
of such offence and that he is not likely to commit any
offence while on bail:
Provided that a person, who, is under the age of
sixteen years or is a woman or is sick or infirm, may
be released on bail, if the Special Court so directs:
Provided further that the Special Court shall not take
cognizance of any offence referred to this subsection
except upon a complaint in writing made by–
(i) the Director, Serious Fraud Investigation
Office; or
(ii) any officer of the Central Government
authorised, by a general or special order in
writing in this behalf by that Government…”
65. Section 212(6) of the Companies Act imposes twin conditions for
granting bail to accused persons in cases involving serious frauds
investigated by the SFIO. These conditions are, that an offence covered
under Section 447 of the Companies Act shall be cognizable and no person
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accused thereof shall be released on bail or on his own bond unless the
Public Prosecutor has been given an opportunity to oppose the application
for such release and where the Public Prosecutor opposes the application, the
Court is satisfied that there are reasonable grounds for believing that he is
not guilty of such offence and that he not likely to commit an offence while
on bail.
66. Therefore, this Court must be satisfied that there are reasonable
grounds for believing that the applicants are not guilty of the offence alleged
against them and that they are not likely o commit any offence while on bail.
67. In the present case, this Court, while refraining from adjudicating on
the merits of the allegations, observes that the applicants have made bona
fide efforts to revive the projects and safeguard the interests of the investors.
The said actions not only reflect their intent to rectify the consequences of
the alleged offences rather than perpetuating fraudulent activities, but also
prima facie satisfies this Court that there are reasonable grounds to believe
that the applicants might not be guilty of the offences and they are not likely
to commit any offence while on bail as they have sought bail so that they
may make efforts towards revival of the CSL and complete the pending
projects.
68. The applicants‟ efforts to secure revival schemes and their active
engagement with investors and developers to complete pending projects
indicate that they are working toward a resolution rather than any
furtherance of criminality.
69. The revival schemes, particularly the infusion of funds by third parties
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and the contention of submission of bank guarantees, signify the applicants‟
focus on addressing investor grievances. This Court is thus satisfied that
granting bail will prima facie not create a risk of commission of any other
offence, as the applicants, who have spent more than 2 years in custody, are
unlikely to jeopardize the pending revival process which is their bone of
contention to seek bail.
70. In view of the above, this Court holds that the applicants meet the
twin conditions under Section 212(6) of the Companies Act and their release
on bail would serve the larger public interest without compromising the
ongoing legal proceedings.
71. During the course of arguments, the learned CGSC has also argued
that the applicant is already enlarged on interim bail, therefore, for the
adjudication of the present regular bail applications, the applicant ought to
surrender first.
72. In view of the abovesaid argument, this Court has referred to the
various judgments and has arrived to the conclusion of „constructive
custody‟ in context of interim bail. Constructive custody can be referred to a
legal state where an individual, even though not physically confined in
actual custody/jail, remains under the control and supervision of the
investigating agencies. Further, an accused, released on interim bail, is
considered to be in constructive custody as his liberty is conditional and
subject to final judicial orders on the question of grant of bail in view of the
peculiar facts and circumstances of the case concerned.
73. The contention of the learned CGSC that the applicant must surrender
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before adjudication of the regular bail application overlooks the settled legal
position on constructive custody.
74. In the case of Manish Jain v. Haryana State Pollution Control
Board, (2020) 20 SCC 123, the Hon‟ble Supreme Court has categorically
observed that a person released on bail is already in the constructive custody
of law. Furthermore, in a recent judgment titled Bhaskar Takri v. State of
Odisha, 2024 SCC OnLine Ori 2190, the Orissa High Court, while citing
earlier judgments of the Hon‟ble Supreme Court observed that in terms of
the settled position of law „an accused who has been released on interim bail
is deemed to be in constructive custody of the Court‟. The relevant portion
of the same is as under:
“..23. It is trite that in the face of express remedy, the power
under Section 482 Cr. P.C. is not to be exercised. But in the
factual matrix of the case at hand when the accused have been
remanded even in the face of an order of anticipatory bail being
granted by this Court, on a fallacious interpretation of the
order and oblivious of the law governing the field, this Court is
of the considered view that self-imposed embargo ought not to
deter this Court from exercising its inherent jurisdiction to sub-
serve justice.
24. As such the objection of the learned counsel for the
vigilance regarding maintainability is negated.
25. In the case at hand, the Petitioners were released on
interim bail, as already stated.
26. Hence, the other issue which arises for consideration is
as to whether the Petitioners have to surrender before the
learned Court below, to be released on bail. In the humble view
of this Court, law in this regard is no longer res intergraSignature Not Verified
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inasmuch as, in the case of Sundeep Kumar Bafna v. State of
Maharashtra, (2014) 16 SCC 623, there has been a detailed
analysis of the connotation of the word “custody”.
27. The word custody has not been defined in Cr. P.C. Yet
there is no cavil that the accused who has been released on
interim bail is deemed to be in the constructive custody of the
Court in seisin. In this context, it is apposite to refer in the
judgment of the Apex Court in the case of Sundeep Kumar
Bafna (Supra). Wherein, the Apex Court quoted with approval
its earlier judgment in the case of Directorate of
Enforcement v. Deepak Mahajan, (1994) 3 SCC 440 and that
of Niranjan Singh v. Prabhakar Rajaram Kharote, (1980) 2
SCC 559;
“xxx xxx xxx
48. Thus the Code gives power of arrest not only to a
police officer and a Magistrate but also under certain
circumstances or given situations to private persons.
Further, when an accused person appears before a
Magistrate or surrenders voluntarily, the Magistrate is
empowered to take that accused persons into custody and
deal with him according to law. Needles to emphasise that
the arrest of a person is a condition precedent for taking
him into judicial custody thereof. To put it differently, the
taking of the person into judicial custody is followed after
the arrest of the person concerned by the Magistrate on
appearance or surrender. It will be appropriate, at this
stage, to note that in every arrest, there is custody but not
vice versa and that both the words „custody‟ and “arrest”
are not synonymous terms. Though „custody‟ may amount
to an arrest in certain circumstances but not under all
circumstances. If these two terms are interpreted as
synonymous, it is nothing but an ultra legalist
interpretation which if under all circumstances accepted
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and adopted, would lead to a startling anomaly resulting
in serious consequence, vide Roshan Beevi.
49. While interpreting the expression „in custody‟
within the meaning of Section 439 CrPC, Krishna Iyer, J.
speaking for the Bench in Niranjan Singh v. Prabhakar
Rajaram Kharote observed that : (SCC p.563, para 9)
„9. He can be in custody not merely when the police
arrests him, produces him before a Magistrate and gets a
remand to judicial or other custody. He can be stated to be
in judicial custody when he surrenders before the court
and submits to its directions.‟”
(emphasis supplied)
If the third sentence of para 48 is discordant to
Niranjan Singh, the view of the coordinate Bench of
earlier vintage must prevail, and this discipline demands
and constrains us also to adhere to Niranjan Singh, ergo,
we reiterate that a person is in custody no sooner he
surrenders before the police or before the appropriate
court.
XXX XXX XXX”
(Emphasis added by this Court)
28. Hence, on the touchstone of the authoritative
pronouncement of the Apex Court in the case of Sundeep
Kumar Bafna (Supra), it is held that by virtue of the interim bail
granted, Petitioners are deemed to be in the constructive
custody of the Court in seisin and since for reasons already
stated, the impugned order is set-aside, the interim order is
made absolute till the conclusion of trial on the terms fixed,
while releasing the Petitioners…”
75. In the instant case, the applicants, though enlarged on interim bail,
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Digitally Signed By:PRAVEEN
KUMAR BABBAR
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remains under judicial supervision and is complying with the conditions
imposed by the Court. This can be termed to be constructive custody,
thereby, fulfilling the necessary legal requirements for considering the
regular bail applications as the applicants have not misused any bail
conditions and they have been appearing regularly before this Court, through
counsel. Furthermore, the respondent has not made any submission stating
to the effect that the applicants have violated the interim bail conditions.
76. Therefore, this Court is of the considered view that directing the
applicant to first physically surrender and then proceeding with the
adjudication of the instant regular bail applications would not serve any
substantial purpose and accepting the argument of the respondent might
hinder the applicants‟ ongoing pending efforts to resolve the grievances of
the investors by implementing the proposed revival schemes.
77. In view of the above, it is held that the applicants shall be deemed to
be in constructive custody and the same is sufficient for the purpose of
deciding the captioned regular bail applications. Additionally, the applicants
are not required to surrender physically.
78. Therefore, at this stage, for assessing whether an accused is fit for the
grant of bail involves numerous factors and this Court is not required to
examine the evidence qua the offences available on record, to establish the
conviction of the petitioner, rather, it needs to delve into the aspect that
whether the continued custody of the applicants serves any purpose for the
adjudication of the matter pending before the learned Trial Court.
79. In light of the aforesaid facts and circumstances, this Court is of the
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Digitally Signed By:PRAVEEN
KUMAR BABBAR
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view that ensuring the relief to the investors by facilitating the recovery or
arrangement of funds is paramount. Applying this rationale to the present
facts, the applicants have demonstrated consistent and bona fide efforts to
revive the projects of CSL and safeguard the interests of the investors.
80. From the material on record, it is evident that the liquidation of the
company would not be in the investors‟ interest, as substantial investments
have already been made in the pending projects. The applicants‟ revival
schemes, including collaborations with third parties and proposals for bank
guarantees, signify a sincere attempt to address the grievances of the
affected investors and homebuyers. Additionally, the applicants‟ judicial
custody has impeded their ability to effectively negotiate and implement
these revival schemes.
81. Given that the primary objective of this Court should be to ensure
relief for the aggrieved investors, granting bail to the applicants would
facilitate their active participation in finalizing and executing the revival
plans.
82. It is apposite to state here that this Court is conscious of the fact that
given the gravity of the offence alleged and seriousness of the investigation
that is required to unearth the truth, the applicants must be subjected to the
investigating process without letting the said process be impeded in any
manner. Thus, it is noted that this decision does not prejudice the merits of
the ongoing criminal proceedings but merely seeks to prioritize the larger
public interest of enabling the completion of the pending projects and
providing relief to the investors.
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Digitally Signed By:PRAVEEN
KUMAR BABBAR
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83. At last, it is observed by this Court that in the present complaint, the
applicant was arrested on 16th August, 2021 and thereby, he has been in
custody for 2 years 3 months and 8 days as on 24th November, 2023 as per
the submissions made.
84. Further, the last of hearing before the learned ASJ was 17th December,
2024 for the purpose of appearance of the Official Liquidator, scrutiny of
documents and further proceedings. Therefore, although the present criminal
complaint was filed on 14th October, 2021, the trial of the matter has not yet
started and the matter is still at the stage of summoning and scrutiny of
documents which is at a nascent stage.
85. Moreover, from the above facts and the documents presented before
this Court including the perusal of the Lower Court‟s Record in complaint
bearing no. CC/1313/2021, it is likely that the conclusion of the trial of the
said complaint will be delayed, owing to which the applicant will be in
judicial custody for an undetermined period of time. There is no doubt that
the investigation will take place sometime and the trial will take further time
in completion in view of the documentary evidences and multiple witnesses.
86. Admittedly, the applicant has already served a period of more than 2
years in judicial custody in connection with the said complaint wherein the
offences that have been alleged against the applicants have maximum
punishment of 10 years.
87. Further, no submission has been advanced by the learned CGSC that
the applicants, when released on interim bail, violated or misused the
conditions imposed upon them. Additionally, the nominal roll filed on
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Digitally Signed By:PRAVEEN
KUMAR BABBAR
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record also state that the conduct of the applicants has remained satisfactory
in the jail.
88. Furthermore, while granting interim bail to the instant applicants, in
paragraph no. 7 of the order dated 22nd November, 2023, it was noted that
the respondent candidly shares the concern regarding the interest of the
investors who have infused substantial amounts in the projects of the CSL,
of which the applicants are ex-directors/ex-promoters. It was further
submitted before the Court that he has no objection against the applicants
taking efforts towards revival of the Company. The relevant portion of the
said order is as under:
“..7. Learned Senior Panel Counsel appearing on behalf of the
Respondent candidly shares the concern regarding the interest
of the investors who have infused substantial amounts out of
their savings in the proposed projects and submits that he
cannot have any objection against the Applicants taking sincere
steps towards revival of the Company. He, however, submits
that in case the Court is inclined to grant interim bail for this
limited purpose to the Applicants, it should be without
prejudice to the rights and contentions of the Respondent on the
merits of the matter and with a caveat that the Applicants be
bound by their undertaking that they shall not seek extension of
the bail, if granted and the order passed by this Court should
not affect the hearing on the regular bail applications, as the
allegations against the Applicants are very serious…”
89. Therefore, in light of the principles laid down by the Hon‟ble
Supreme Court for grant of regular bail and the decision rendered in SEBI v.
Sahara India Real Estate Corporation Ltd., (Supra), this Court is inclined
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Digitally Signed By:PRAVEEN
KUMAR BABBAR
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to grant bail to the applicants.
90. The address given by the petitioner has been verified by the
respondent and found to be correct. Therefore, keeping in view the
contentions advanced by the learned counsel for the parties, the observations
made hereinabove and the interest of the investors/homebuyers/allotees, this
Court is inclined to allow the captioned applications seeking regular bail.
91. It is accordingly directed that both the applicants be released on
regular bail on them furnishing personal bonds in the sum of Rs.10,00,000/-
(Rupees Ten Lakhs only) with two sureties of like amount each to the
satisfaction of the Investigating Officer/Court concerned in complaint
bearing no. CC/1313/2021 subject to the conditions as follows:-
(a) the applicants shall deposit their respective passports with the
Court concerned and they shall under no circumstances leave India
without prior permission of the Court concerned;
(b) the applicants shall appear before the Investigating
Officer/Court concerned as and when required;
(c) the applicants shall not directly or indirectly make any
inducement, threat or promise to any person acquainted with the facts
of the case and the applicants shall not tamper with the evidence nor
otherwise indulge in any act or omission that is unlawful or that would
prejudice the proceedings in the pending trial;
(d) the applicants shall provide his mobile number(s) and keep it
operational at all times;
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Digitally Signed By:PRAVEEN
KUMAR BABBAR
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(e) the applicants shall commit no offence whatsoever during the
period he is on bail;
(f) in case of change of residential address and/or mobile number,
the same shall be intimated to the Court concerned by way of an
affidavit;
(g) the applicants shall report to the concerned jurisdictional Police
Station twice a week, i.e., on every Monday and Friday post their
release; and
(h) the applicants shall make all efforts for the implementation of the
revival scheme of the CSL and its projects, duly approved by the
Court concerned, to make good the investors/homebuyers/allotees.
92. Accordingly, the instant regular bail applications stand disposed of.
Pending applications, if any, stand disposed of.
93. Copy of this order be sent to Jail Superintendent for compliance.
94. It is made clear that any observations made hereinabove, touching
merits of the case, are purely for the purpose of deciding the question of
grant of regular bail by this Court and shall not be construed as an
expression of final observations in the proceedings pending before Trial
Court.
95. The order be uploaded on the website forthwith.
CHANDRA DHARI SINGH, J
DECEMBER 23, 2024
rk/ryp/av Click here to check corrigendum, if any
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Digitally Signed By:PRAVEEN
KUMAR BABBAR
Signing Date:24.12.2024
18:47:57