Bombay High Court
Vyomesh Shah And Ors vs The State Of Maharashtra And Ors on 10 November, 2017
Bench: Ranjit More
WP-4197/16.
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
CRIMINAL APPELLATE JURISDICTION
WRIT PETITION NO. 4197 OF 2016
1] Vyomesh Shah, ]
Age 56 years, Residing at 23-F, ]
Dongersi Road, Walkeshwar, ]
Mumbai - 400 006. ]
]
2] Kiran Contractor, ]
Residing at 7C/303, Spring Leaf, ]
Lokhandwala Township, ]
Akurli Road, Kandivli (East), ]
Mumbai - 400 001. ]
]
3] Suhass Dumbre, ]
Residing at 2/A/1601, Dreams ]
Complex, L.B.S.Marg, Bhandup ]
West, Mumbai - 400 078. ] ..Petitioners.
Versus.
1] State of Maharashtra. ]
]
2] Supdt. Of Police,State CID (Kokan ]
Bhavan) ]
]
3] Dy. Supdt. Of Police, State CID ]
(Kokan Bhavan) ] ..Respondents.
Mr. Abad Ponda, Pooja Thorat, Anukul Seth and Shridevi Kotkar i/b
Fauzan Shaikh for the Petitioner.
Mr. P.P.Chavan, Spl. PP and Mr. K. V. Saste, APP for Respondent-State.
CORAM : RANJIT MORE & PRAKASH D. NAIK, JJ.
Date on which judgment reserved : October 10, 2017.
Date on which judgment pronounced: November 10, 2017.
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JUDGMENT :
1. This petition is filed under Article 226 of the Constitution
of India seeking declaration that (i) arrest of the Petitioners is illegal,
unlawful and unwarranted, (ii) the proceedings against the Petitioners
in respect of CR. No. 336 of 2015 of Dahisar Police Station are illegal.
The Petitioners are also claiming relief for quashing and setting aside
condition Nos. 2(i), 2(ii) and 2(iii) in the order dated 12 th February 2016
passed by the learned Special Judge in CR. No. 336 of 2015 registered
with Dahisar Police Station to the extent that it imposes conditions of
depositing Rs.59 crore for granting bail. The Petitioners have further
sought direction to the Respondents to defreeze the bank account No.
0111256053215 of Hubtown Limited maintained with Canara Bank,
Santacruz (East),
2. On 20th January 2017, this petition was placed for
admission before this Court. After hearing the learned Counsel
appearing for the respective parties, we passed following order :
"Having considered the rival submissions of the
learned counsel and learned Special PP appearing for the
respective parties and having gone through the
compilation of the petition, at this stage, we find that :
1. The transaction between Hubtown Ltd. and
Mr.Ramesh Kadam for divesting the holding in Comral
Realty Pvt. Ltd. is commercial one.
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2. The amount received by Hubtown Ltd. and others
was never received directly from Sahityaratna Lokshahir
Annabhau Sathe Development Corporation and the same
was received by cheques and/or RTGS.
3. The land admeasuring about 800 square yards
situated at Bhulabhai Desai Road, bearing Cadastral
Survey No.1/701 and 1/72 of Malabar and Cumballa Hill
Division, situate in 'D' Ward of the Municipal Corporation
of Greater Mumbai was valued at Rs.101 crores in the
transaction between Hubtown Ltd. and Mr.Ramesh
Kadam. Even in the charge-sheet filed by respondent
No.2, the value of this property is shown to be Rs.111
crores. The application filed by respondent for
attachment of the said land is pending before the Special
Court and as a matter of fact, this property is already
attached by Enforcement Directorate. The petitioners
cannot be made to lose the property and money both.
4. The petitioners were arraigned as accused in the
subject complaint for the purpose of recovery of money.
Though the petitioners undertook to deposit the amount
of Rs.59,00,00,000/- as a condition for bail, it is the
contention of the petitioners that they were forced to
make that statement when they were in police custody.
In the above circumstances, fairly arguable
case is made out. We, accordingly, grant Rule. Rule is
made returnable on 17th February, 2017. To be placed at
the bottom of admission matters.
2. By way of interim relief, further deposits as
per Condition Nos. 2(i), 2(ii) and 2(iii) of the impugned
order dated 12th February, 2016, are stayed. "
. In due course, the writ petition is place before us for final
hearing. Accordingly, we have heard Mr. Ponda, the learned Counsel
for the Petitioner and Mr. Chavan, the learned Special PP for the
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Respondent - State. We have also gone through compilation of writ
petition and annexures annexed thereto as well as affidavit-in-reply
and rejoinders.
3. The Crime Investigation Department of State (for short
"CID") conducted an enquiry into the allegations about mis-
appropriation and defalcation of funds given by the State
Government to Sahityaratna Lokshahir Annabhau Sathe Development
Corporation [in short "the Corporation"]. The enquiry revealed that
there was misappropriation of huge funds of the Corporation to the
tune of Rs.147 crore. Accordingly FIR bearing CR.No. 336 of 2015 was
registered on 18th July 2015 for the offence punishable under sections
406, 408, 409, 420, 465, 467, 468, 471, 384, 120(b), 201 and 109 read
with section 34 of the Indian Penal Code, 1860 and sections 7, 8, 13(1)
(c) and (d) of the Prevention of Corruption Act, 1988 against one
Ramesh Kadam, the then Chairman of the said Corporation and
others. Mr. Ramesh Kadam and others were arrested on 17 th August
2015. The charge-sheet was filed on 15 th October 2015. It is the case
of the prosecution that during investigation it was revealed that
initially main conspiracy was hatched by accused Ramesh Kadam, Vijay
Kasabe and others with dishonest intention of misappropriating and
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siphoning of crores of rupees from the Corporation. Around August
2014, the present Petitioners knowingly and with common intention
participated in the said conspiracy to misappropriate funds of the
Corporation. The Petitioners were arrested in the said FIR on 8 th
February 2016 and produced before the Special Court for remand on
9th February 2016. The police remand was granted till 12th February
2016. The Petitioners preferred bail applications along with
undertaking that they are ready and willing to deposit the amount of
Rs.59 crore. The prosecution gave no objection to the release of the
Petitioners on bail. Accordingly, the learned Special Judge by his order
dated 12th February 2016 granted bail to the Petitioners on conditions
that Hubtown Limited would deposit total amount of Rs. 59 crore in 12
monthly installments.
4. It is the case of the Petitioners that the only property
owned by Comral Realty Private Limited was the plot of land at Peddar
Road, the market value of the plot is more than Rs.120 crore. In the
year 2013, in view of the huge losses, the Petitioners intended to sell
this property. Once, they had received offer of 90 crore, but the
transaction did not go through. Prior to last week of November 2014,
they did not know Ramesh Kadam. The transaction between Comral
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Realty Private Limited and Ramesh Kadam for transfer of shares of
Comral Realty Private Limited is purely a commercial transaction. The
Petitioners had adopted the similar procedure when they acquired
Kamala Shanti Realty Private Limited. The Petitioners were arrested
only to recover the amount misappropriated by Ramesh Kadam. They
have no role in the offence of misappropriation, cheating, forgery
committed by Ramesh Kadam. The Petitioners cannot be made to
loose the land as well as money.
5. It is the stand of the State CID that main conspiracy was
hatched around 2009 by group of accused, namely, Ramesh Kadam
and others by first diverting the huge funds from the Corporation and
routing it to Metri Sugar and Trading Company, Sutgirani, Shree
Santoshi Civil Services Pvt. Ltd, etc., the dummy institutions where
either Ramesh Kadam is a Chairman or his ally has control over it and
then in August 2014 routed it to Hubtown Limited and Comral Realty
Private Limited in which the Petitioners have control. The stand of the
State CID is that transaction was suspicious for want of document to
discharge the liability of Comral Realty Private Limited to the extent of
Rs.59.19 crore.
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6. Having heard the learned Counsel appearing for the
respective parties, we find merit in the petition.
7. There is no dispute that piece of land admeasuring 800
square yards situated at Bhulabhai Desai Road, bearing cadastral
survey No. 1/701 and 1/702 of Malbar and Cumballa Hill Division, prior
to 2007 was owned by one Dr. Rajendra R. Singh. By the registered
deed of conveyance dated 17th August 2007, said Dr. Rajendra Singh
sold, transferred and conveyed his rights in the said land to Kamla
Shanti Realty Private Limited for consideration of Rs.29.70 crore.
. Under the agreement for purchase of shares dated 26 th
March 2010, copy of which is annexed at Exhibit-B, Akruti City now
known as Hubtown Limited along with others purchased the shares of
Kamla Shanti Realty Pvt. Limited for Rs.15.45 lakh and the new
shareholders cleared out the old liabilities of Kamla Shanti Realty
Private Limited aggregating to Rs.32.72 crore by advancing loans /
advances to the company - Kamla Shanti Reality Private Limited on
interest basis. On acquisition of shares of said Kamla Shanti Reality
Private Limited, the new shareholders (1) Hubtown Group (2) Shah
group and (3) Adani Group appointed Rajendra Shah and Mayur D.
Shah as the directors of Kamla Shanti Reality Private Limited.
Hubtown group was 50% shareholder of the entire project. On 26 th
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November 2011 the name of said company was changed from Kamla
Shanti Reality Private Limited to Comral Realty Private Limited.
. Over a period of time, substantial funds were pumped into
Comral Realty Private Limited for the development of the project on
the said land. A substantial amount of these funds were brought in by
Hubtown Limited by way of advances and loan. This fact is evident in
the final account of Comral Realty Private Limited which were audited
and submitted to the statutory authorities, like Registrar of Companies
and Income Tax Authorities. The chart given at page No. 5 of the
petition deals with the amounts reflecting in the account of Comral
Realty Private Limited and the annual accounts which have been duly
filled at the office of Registrar of Companies and the Income Tax
Authorities. This chart shows that between 2009 and 2015 an amount
of Rs.67,39,31,754/- was the amount reflecting in the accounts of
Comral Realty Private Limited. This was because there was interest
running on this amount from March 2010 to April 2014 plus there
were other expenses made like security expenses, architectural fees,
construction upto plinth, approval cost and professional fees.
8. We find material on record that in September 2013, the
shareholders of Hubtown Limited attempted to sell the property and
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there were negotiations going on based upon a broker between Mr.
Vallabh Bhansali and Mr. Rajesh Gupta and in this regard Kanga and
Company, Solicitors and Advocates were involved in the negotiation
process and there was an advertisement published in the Times of
India and the Economic Times on 20th September 2013, inviting
objections. The copy of the said advertisement is annexed at page 80.
It is the case of the Petitioners that they received an offer of Rs.90
crore for the subject land. This corroborates the Petitioner's
contention that they were not knowing Ramesh Kadam. Even
otherwise also there is no material on record to show that prior to
November 2014, the Petitioners were knowing Ramesh Kadam. We
also find that the Petitioner while entering into transaction with
Ramesh Kadam, followed the similar procedure which was adopted by
them at the time of transfer of shares of Kamala Shanti Realty Private
Limited. The value of the land arrived at was Rs.101 crore and this
amount is paid to Hubtown Limited and others. Out of this amount,
approximately an amount of Rs.67 crore was paid towards the
liabilities and Rs.32 crore were paid towards the share value which
was fixed at Rs.414/- per share.
9. It is the case of the Petitioners that in the last week of
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November 2014, a broker by name Mr. Rahul Jadhav introduced
Ramesh Kadam to Hubtown Limited. Ramesh Kadam claimed that he
was an MLA. In fact, none of the other shareholders or other persons
of Comral Realty Private Limited had met Ramesh Kadam before that.
He was introduced as he was interested in taking over Comral Realty
Private Limited. It was explained to him that he had to follow the
same procedure of taking over Comral Realty Private Limited as was
done by the existing shareholders when they had acquired Kamala
Shanti Realty Private Limited. Ramesh Kadam was aware that the
company had the land at Peddar Road as the only asset, based upon
the current market value, value of the land was Rs.120 crore and it was
agreed to sell this property at Rs.101 crore wherein the liabilities of
Comral Realty Private Limited will be taken over along with other
expenses. Ramesh Kadam agreed to acquire 9 lakh shares of Comral
Realty Private Limited at the rate of Rs.441/- per share, aggregating to
Rs.39.69 crore. The liabilities were ascertained at Rs.67.91 crore.
Ramesh Kadam agreed to pay Rs.67.91 crore which included Rs.5.88
crore, which was paid towards the BMC and other expenses bringing
the total amount to Rs.107 crore.
. Said Ramesh Kadam was made director of Comral Realty
Private Limited and thereafter an amount of Rs.50 crore under his
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signature was received by way of cheque into Comral Realty Private
Limited towards the clearing of old liabilities of the said company. The
balance amount of Rs.17.19 crore towards clearing the other
outstanding liabilities and incurring further expenses were caused to
be paid into Comral Realty Private Limited periodically through RTGS
by Ramesh Kadam.
. The documents on record reveal that On 4 th April 2015
share-purchase agreement was entered into between Hubtown
Limited and Ramesh Kadam and another agreement between
Hubtown Limited and Vijay Kasabe for the sale of Hubtown's shares of
Comral Realty Private Limited. Between 8 th to 11th April 2015, original
records were handed over to Ramesh Kadam and his company. After
transfer of shares was complete, post 7 th April 2015, new management
of Comral Realty Private Limited under Ramesh Kadam claimed that
his chartered accountant wanted the entire account entries to be
transferred and maintained in an account software called Oracle. This
request was accepted whereby the very same entries which were
already in the Excel-sheet were transferred to the Oracle package
without any kind of change in the entries or altering any figures. Last
payment of Rs.39.69 lakh was received by RTGS from Vijay Kasabe on
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18th May 2015 to complete the full consideration for divesting the
holding of Comral Realty Private Limited.
. In the charge-sheet filed against Ramesh Kadam on 15 th
December 2015, he is shown as holder of Comral Realty Private
Limited. The schedule at page 324 reveals that State CID has priced
the open plot of land in question at Rs.111 crore when they applied to
the Special Court for attachment of the said property. The schedule
shows that Ramesh Kadam is holder of the property. This means that
the transaction of transfer of property was accepted and complete
against valuable consideration. The record shows that the property is
attached by the ED and the said land is priced at Rs.110 crore. Against
this, it is the case of the Petitioner that market price of the land in
question at the relevant time was approximately Rs.120 crore. The
record shows that when Kamala Shanti Realty Private Limited was
taken over by Hubtown and others in the year 2010 there was only
one document of transfer of shares and no separate document for
land as an asset of the company got transferred with the shares.
There was no document for taking over the liabilities. The record
shows that identical procedure was followed in the current transfer of
shares in a transaction between Hubtown Limited and Ramesh Kadam.
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10. The entire amount of Rs.101 crore towards consideration
was paid to Hubtown and other shareholders either through banking
channel or RTGS. Hubtown and others already transferred the shares
of Comral Realty Private Limited along with the property owned by
them to Ramesh Kadam and he is shown as owner of the company.
The Petitioners appears to have received the said amount towards the
market price, which was fair market price of the said land at the time
of transaction. The Petitioners being seller were not obliged to
enquire into the source wherefrom Ramesh Kadam brought money for
the said transaction.
11. It appears that Ramesh Kadam has committed various
crimes and thereafter transferred the funds to his own entities, from
which he has purchased the Petitioners' property. The Petitioners
appears to had no knowledge about this but anyway, they have traded
their commodity against these monies and given their property, shares
and liabilities have been transferred.
12. Thus, in short the material on record shows that there was
a plot of land admeasuring 800 square yards at Peddar Road owned by
Comral Realty Private Limited. This property was acquired by
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Hubtown Limited and others by purchase of shares of Kamala Shanti
Realty Private Limited and the company was renamed as Comral
Realty Private Limited. By an agreement to transfer shares, the
ownership / control of Comral Realty Private Limited was transferred
to Ramesh Kadam and Vijay Kasabe. The entire property was
transferred through banking channel. The value of the shares was
commensurate with the fair market value of the property. The
property at Peddar Road was earlier in the year 2010 acquired by
Hubtown Limited and others. In the similar fashion it has been
transferred to Ramesh Kadam. We see no illegality in the manner of
transfer of shares of Comral Realty Private Limited.
13. It is not the case of prosecution that the Petitioners before
us and their company has undertaken this isolated transaction. The
record reveals that the Petitioners as well as Hubtown Limited were
into the business of real estate for many years and there were
attempts made to sell the property at Peddar Road on earlier
occasions. The reliance is placed on the advertisements issued in
Times of India and the Economic Times issued by Kanga & Company.
We are, therefore, not inclined to believe that the Petitioners have
hatched a conspiracy with common intention to cheat the Corporation
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or to misappropriate its funds. From the record before us it does not
appear at this stage that the Petitioners had knowledge about the
motives or intentions of Ramesh Kadam and his allies. The Petitioner
seem to be only unfortunate victims of the circumstances as it is
apparent that they have entered into pure commercial transaction,
which is valid and legal in the eyes of law and not benami or illegal
transaction as alleged.
14. We also find merit in the contention of the Petitioners that
they were arrested only to recover the amount of Rs.59 crore, as
according to the investigating agency this transaction is not supported
by any document. This is evident from the fact that the Petitioners
were co-operating in the investigation of subject crime. They diligently
remained present whenever they were called by the Investigating
Officer and were ultimately arrested on 8 th February 2016 and
thereafter prosecution obtained police custody of the Petitioners till
12th February 2016. On 12th February 2016, the investigating agency
gave no objection to release the Petitioner on bail as soon as they
showed willingness to deposit the amount of Rs.59 crore. These facts
show that the Petitioners were not arrested for the investigation
purpose but only to recover the money. Otherwise there is no reason
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for the investigating agency to give no objection for the Petitioners'
release on bail when they the Petitioners produced before the Court
for further remand.
15. It is well settled law that while granting bail though the
Court may impose such conditions as it thinks fit but the object of
putting conditions should be to avoid the possibility of the person
hampering investigation. The discretion of the Court while putting
conditions should be in exercise of judicial discretion. In an the
offence under sections 409 and 420 of IPC, the Court is certainly not
going to recover the alleged amount as a condition to granting of bail.
In other words, Courts are expected to put reasonable conditions in
exercise of judicial discretion and such conditions should be aimed at
securing the presence of the accused at the time of trial and he should
not hamper the evidence or prosecution witnesses during pendency of
trial. The Court is not expected to recover the amount in a criminal
proceedings by putting condition to deposit money while granting bail.
In this regard, reference can be made to Apex Court decisions in
Sandeep Jain vs. National Capital Territory of Delhi 1, Shyam Singh vs.
State through CBI2 and Sheikh Ayub vs. State of M.P3.
1 (2000) 2 SCC 66.
2 (2006) 9 SCC 169.
3 (2004) 13 SCC 457.
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16. The learned Counsel for the Respondents relied upon the
decision of the learned Single Judge of this Court in the matter of
Jamnaben H. Shah vs. Smt. Manjulaben4 to contend that the
Petitioners having voluntarily given undertaking to deposit the
amount, now cannot resile. We have gone through the said decision.
Perusal of the decision shows that the contempt proceedings were
initiated against the Respondent-tenant for breach of an undertaking
to vacate the suit premises. The learned Single Judge observed that
undertaking is a solemn promise made by the party to the Court and
once such promise has been made to the Court and on the faith of
such promise, the Court sanctions a particular course of action or
inaction, such parties are bound to observe or comply with such
undertaking. The facts of the present case and the case before the
learned Single Judge are clearly distinguishable. In the present case
when the undertaking was given by the Petitioners to deposit the said
amount, they were in the custody of State CID. The fact that once
Petitioners furnished the undertaking, State CID gave no objection to
release them on bail substantiates the Petitioner's contention in this
regard. It appears that in fact the Petitioners were arrested for the
purpose of recovery of money which was paid to them by Ramesh
4 [1997] 4 BomCR 65.
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Kadam towards a commercial transaction for sale of Comral Realty
Private Limited along with property owned by it.
17. In the above facts and circumstances, it appears that
arrest of the Petitioners was not necessary and the conditions of bail
are excessive, which are hereby quashed and set aside. We direct the
Respondents and Registrar of Sessions Court to return to the
Petitioners the monies deposited by them along with interest accrued
thereon. Since the property in question has been attached both by the
concerned Sessions Court as well as by the Directorate of
Enforcement, we find that no purpose would be served by keeping the
bank account of the Petitioners freezed. Accordingly, the Respondents
are directed to de-freeze the bank account of the Petitioners.
18. Rule is made absolute in above terms.
19. Before parting with this order, we must make note that
Petitioner No.1, the Managing Director of Hubtown Limited has filed
an affidavit cum undertaking on 1st August 2017 that in the event of
the Petitioners being found guilty in a case arising out of the subject
crime pending in the Sessions Court, Mumbai and being called upon to
deposit a sum of Rs.59 crore, which is the disputed amount and the
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subject matter of the current writ petition, then Hubtown Limited shall
pay the same. By way of abundant precaution, we are accepting this
undertaking.
20. It is clarified that observations made hereinabove are
made to support the present order and trial Court shall not be
influenced by any of those observations at the time of trial of Special
Case No. 12 of 2017, and same shall be disposed of independently on
its merit.
[PRAKASH D. NAIK, J.] [RANJIT MORE, J.]
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