Kailash Shreeram Agarwal vs The State Of Maharashtra
2022 Latest Caselaw 588 Bom

VAISHALI                                            1 / 13   11 ABA 1124 of 2019.odt

ANIL                      IN THE HIGH COURT OF JUDICATURE AT BOMBAY
TIKAM                          CRIMINAL APPELLATE JURISDICTION
Digitally signed by
VAISHALI ANIL
TIKAM                   ANTICIPATORY BAIL APPLICATION No. 1124 OF 2019
Date: 2022.01.20
17:30:49 +0530
                      Kailash Shreeram Agarwal                ...Applicant
                            Vs.
                      The State of Maharashtra                ...Respondent

                                            WITH
                            CRIMINAL APPLICATION No. 815 OF 2019
                                             IN
                        ANTICIPATORY BAIL APPLICATION No.1124 OF 2019

                      Dilipkumar A. Nagpal                    ...Applicant
                            Vs.
                      The State of Maharashtra and Anr.       ...Respondents

                                            WITH
                            CRIMINAL APPLICATION No.1024 OF 2019
                                             IN
                        ANTICIPATORY BAIL APPLICATION No. 1124 OF 2019

                      Spectrum Trimpex Pvt. Ltd.
                      Thorugh Director
                      Anil Chokani                            ...Applicant
                            Vs.
                      The State of Maharashtra and Anr.       ...Respondents

                                                 .......
                      Mr. Rizwan Merchant a/w. Mr. Kiran Jain a/w. Ish Jain a/w.
                      Kush Dhawan i/b. Kiran Jain & Co. for Applicant
                      Mr. Pradeep Gharat, Spl. P.P. a/w. Rutuja Ambekar, APP for
                      the State/Respondent
                      Mr. Maitreya G. Shukla for Intervenor in APPP No. 815 of
                      2019.




               Tikam
                                   2 / 13   11 ABA 1124 of 2019.odt

                  CORAM: SARANG V. KOTWAL, J.

DATE : 18th JANUARY, 2022 (Through Video Conferencing)

P.C. :

1. Applicant is seeking anticipatory bail in connection

with C.R. No. 79 of 2019 registered with Byculla Police

Station, Mumbai under sections 409, 420, 120 B of the

Indian Penal Code and under section 3 of the Maharashtra

Protection of Interest of Depositors (In Financial

Establishments) Act, 1991 (MPID Act).

2. The FIR is lodged by one Dilipkumar Nagpal. He has

stated that he and his brother were having business of

financial consultancy. In the year 2010, the informant got

acquainted with one Sachin Wagh, who in turn, informed

the informant about the business of M/s. Varun Industries

Ltd. and M/s. Varun Jewels Pvt. Ltd. The informant was

told that Varun Industries was a listed company and the

prospect of the comapny was very good. Sachin told the

informant that the companies wanted to expand their 3 / 13 11 ABA 1124 of 2019.odt

business and they were in need of financial assistance

and for that purpose they were accepting the investments

from the investors and were offering attractive interest

rate on the investments. The informant showed his

interest. Accordingly, a meeting was arranged. The FIR

mentions that the informant met the present Applicant in

the companies' office at Byculla. The informant went

there on 17th June, 2010 at about 2.00 p.m. The

Applicant was introduced to one Kiran Kumar Mehta as

the chairman and managing director and the present

applicant was introduced to the informant as the joint

managing director of the company. Other persons were

introduced as other directors of these companies. The

present applicant and Kiran Kumar Mehta showed

balance-sheet of the company to the informant. Both of

them represented to the informant that their company

was in the business of steel industry and they had

business of uranium mines in Madagascar and they had

business in diamonds and petroleum and that they

wanted to expand their business and for that purpose, 4 / 13 11 ABA 1124 of 2019.odt

they were in dire need of finance. They further told the

informant that they were accepting the money from the

investors and were offering attractive rate of interest on

the investments. They told that the company had steel

sheet factories at Jodhpur, Vasai and Palghar. He was told

that they had firms in Rajasthan and Tamilnadu. They told

that they also had pressure cooker factory at Nasik,

Petrol mines in Karnataka. They further represented that

their Petrol and Gas division office was in Govandi.

Similarly, the companies were dealing in diamonds in

foreign countries. The informant was impressed and he

decided to invest money in those companies. The

informant was informed that there were 60 to 70

investors in the companies. The Informant was appointed

as a Financial Broker for both the companies. Board

resolutions were passed to that effect to appoint the

informant as the financial broker.

3. The Applicant and Kiran Kumar Mehta asked the

informant to bring the investments from the investors.

5 / 13 11 ABA 1124 of 2019.odt

They had offered the interst at the rate of 18% per annum

to the investors. The investors were given the bills of

exchange and post-dated cheques as a security. The

informant and his brother invested their peronsal money.

They were to get 3% commission on investments and 5%

incentive, if the turnover increased. The informant

brought 54 persons/investors, who had deposited funds in

M/s. Varun Industries Ltd. and 51 depositors who

deposited funds in M/s. Varun Jewels Pvt. Ltd. The FIR

mentions that the bills of exchange and post-dated

cheques were signed by Kiran Kumar Mehta and the

present Applicant. The accused paid regular interest to

their depositors between June 2010 to April, 2013 and

after that they did not pay anything. The investments

were not returned. The post-dated cheques were not

honoured. The investors filed proceedings under the

provisions of the Negotiable Instruments Act. Thus the

Informant and the other investors were cheated to the

tune of Rs.7,14,75,000/-. On these allegations, the FIR is

lodged.

6 / 13 11 ABA 1124 of 2019.odt

4. Heard Mr. Rizwan Merchant, learned counsel for the

Applicant, Mr. Pradeep Gharat, Special P.P. for the State

and Mr. Maitreya Shukla, learned counsel for the

Intervenor.

5. Learned counsel for the Applicant submitted that

section 3 of the MPID Act is wrongly applied as the

investment made in this case does not fall within the

definition of "Deposit", as the investment made in the

present case is excluded from the term 'deposits' under

Section 2 (c) (i) of the MPID Act. He submitted that even

the offence under section 409 of IPC is not made out. The

dispute basically is of civil nature, which can be seen

from the fact that the winding up proceedings were

initiated against the companies, which resulted in

appointment of a liquidator. Other proceedings under

the provisions of the Negotiable Instruments Act were

also initiated. In addition, the proceedings under the

Securitization and Reconstruction of Financial Assets and

Enforcement of Security Interest Act, 2002 (SARFAESI 7 / 13 11 ABA 1124 of 2019.odt

Act) were initiated and private properties were seized by

the Authorities. There was no personal gain to the

applicant. There was no false inducement. The interest

was regularly paid between the years 2010 to 2013. It

was only after recession, when the companies had

suffered loss, the interest was not paid and therefore, the

proceedings were initiated for winding up of the

companies and, therefore, no criminal offence is made

out. The companies were wound up in the year 2016

itself. He submitted that the Applicant is on interim

protection since 2019. He has cooperated with the

investigation. Therefore, his custodial interrogation is not

necessary. He further submitted that a Division Bench of

this Court in a case of Mr. Ashish Mahendrakar Vs.

State of Maharashtra in Criminal Writ Petition No.

3228 of 2019 decided on 13th September, 2019 has

held that inter-corporate deposit/loan cannot fall within

the scope and ambit of MPID Act. He finally submitted

that the Applicant has fully cooperated with the 8 / 13 11 ABA 1124 of 2019.odt

investigation and, therefore, his custodial interrogation is

not necessary.

6. Learned counsel for the intervenor opposed the

present application for anticipatory bail. He submitted

that the present Applicant has issued bills of exchange by

putting his signature. This act on the part of the Applicant

is itself shows his direct involvement. The offences under

IPC are made out because there are false inducements

and misappropriation of money.

7. Learned Special Public Prosecutor has strongly

opposed this application. He submitted that the

Applicant's company did not have the business as

represented by the applicant. The company did not have

any business at various places as mentioned in the FIR.

All the inducements are false. He submitted that the

Applicant was a joint managing director and it was clearly

told to the informant in the first meeting itself. The bills

of exchange and the post-dated cheques were actually

signed by the present Applicant as a joint managing 9 / 13 11 ABA 1124 of 2019.odt

director of the company. The Applicant was not in India

in the years from 2013 to 2016. Thereafter, the informant

and other victims did not get their money back. They filed

the FIR in the year 2019. He submitted that for all these

transactions involved money laundering. To find out

where the money has gone, the custodial interrogation of

the Applicant is necessary. He submitted that civil

proceedings will not show where the money has gone.

It's a case of serious criminal offences.

8. I have considered these submissions. As far as the

first argument that the amount invested with a company

does not fall within the definition of "Deposit", is

concerned, I am unable to accept this contention. Section

2(c) (i) of MPID Act reads as under:

"2(c) "deposit" includes and shall be deemed

always to have included any receipt of money

or acceptance of any valuable commodity by any

Financial Establishment to be returned after a

specified period or otherwise, either in cash or 10 / 13 11 ABA 1124 of 2019.odt

in kind or in the form of a specified service with

or without any benefit in the form of interest,

bonus, profit or in any other form, but does not

include-

(i) amount raised by way of share capital or by

any way of debentures, bond or any other

instrument covered under the guidelines given,

and regulations made by the SEBI, established

under the Securities and Exchange Board of

India Act, 1992 (15 of 1992)."

According to Mr. Merchant, the words "any other

instrument" refers the bills of exchange and, therefore, it

is excluded from the definition. However, this is not

correct reading of section. The instrument covered under

regulations of SEBI is excluded. This is not the case in the

present facts before this Court. The investments made

in this case will not be excluded under the definition of

"deposit" under section 2(c) (i) of the MPID Act.

Therefore, the offence under the provisions of MPID is 11 / 13 11 ABA 1124 of 2019.odt

clearly made out. The ingredients of section 3 are borne

out from the allegations.

9. As far as the offence under the provisions of the

Indian Penal Code is concerned, the same are revealed

by the investigation, as the inducements are based on

false promises. The company did not have business as

was projected to the informant. Therefore, right from the

inception, the Applicant and the other accused had only

intention to misappropriate the investments. Some

interest was paid only for a period of three years and

thereafter there was misappropriation of huge amount. As

rightly submitted by the Special Public Prosecutor that, in

this case, thorough investigation is necessary in respect

of money transactions and to find out where the huge

money has gone. Therefore, custodial interrogation of the

applicant is necessary. Merely because winding up

proceedings were initiated and proceedings under section

138 of the Negotiable Instruments Act were initiated, that

itself is not a ground to wipe out the allegations made in 12 / 13 11 ABA 1124 of 2019.odt

the FIR. The amount involved is huge and without

custodial interrogation, the answers of all these

questions will not be found.

10. As far as the reference to Ashish Mahendrakar's

Judgment passed by the Division Bench is concerned,

that judgment is not applicable to the facts of the

present case because that case is in respect of inter-

corporate deposits, which is not the subject matter of this

case.

11. Hence, in this view of the matter, no case for

protection is made out by the Applicant. The Application

is rejected.

12. At this stage, the learned counsel for the Applicant

prays for continuation of the interim order operating in

his favour since 20th May, 2019. The learned Special

Public Prosecutor does not have objection if the interim

order is extended for a period of ten days from today. The

learned counsel for the intervenor strongly opposed

continuation of the interim relief.

13 / 13 11 ABA 1124 of 2019.odt

13. Considering the fact that the Applicant was on

interim protection since 20th May, 2019, the interim order

operating in his favour is extended only for a period of

two weeks from today.

14. In view of the disposal of the anticipatory bail

application No. 1124 of 2019, nothing survives in Criminal

Application No. 815 of 2019 and Criminal Application No.

1024 of 2019. The same are also disposed of accordingly.

(SARANG V. KOTWAL, J.)