HC: Greed driven investors aiming High interest shall be prepared for consequences

In a significant judgment that may change the way courts proceed against those receiving investments on promises of giving unbelievably high returns, the Punjab and Haryana High Court has made it clear that investors, perhaps, are not all that gullible and greed is the driving force as they are happy as long as they get high returns, but term the recipients as criminals if they collapse under debt burden.

Justice Arun Monga made it clear that another question required to be considered was whether the recipient alone could be held responsible for intention to commit offences if things went wrong for him. It was for the appropriate court to address the questions if these arose or were raised during trial.

In his detailed order, Justice Monga asserted:

“Are these investors as gullible as they project in their complaints or FIRs? May be not! After all, what drives them to invest their money by giving unsecured loans at unbelievable return or interest of 1.5 per cent to 2 per cent per month or 18 per cent to 24 per cent per annum? Sure, it is greed!”

Justice Monga pointed out that it was time for them to realise the harsh reality that if they had the ability to take such a risk, they were required to be equally prepared for consequences too as any claim of unrealistic returns on investment was required to ring alarm bells in their mind.

Going into the genesis of the problem in case of a recipient investing in land, Justice Monga noted that he, in his zeal to expand his business, could overexpand it or go in liquidation for non-service of debt. It could be triggered by excessive land purchase disproportionate to development funds, coupled with failure of the allottees defaulting in their payment. Could he, under the circumstances, alone be held blameworthy of mens rea or intention to commit offences as complained?

As long the accused was giving the investors high return of 18 per cent per annum, he was not a criminal. But once he collapsed under debt burden, he became a criminal, notwithstanding his claims of spending all the money to create group or company assets for future use.

“Are in some way these investors also not culpable to accept such tall claims of interest on their speculative investment? A genuine end-user allottee stands definitely on different and better footing than an investor,” Justice Monga asserted.

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