Bombay High Court

Hemant Vrajlal Zaveri vs The State Of Maharashtra on 6 February, 2024

Author: N. J. Jamadar

Bench: N. J. Jamadar

2024:BHC-AS:5814

919-BA-1695-23+IA.DOC

Sayali Upasani

IN THE HIGH COURT OF JUDICATURE AT BOMBAY
CRIMINAL APPELLATE JURISDICTION

BAIL APPLICATION NO. 1695 OF 2023
WITH
INTERIM APPLICATION NO. 2827 OF 2023

Hemant Vrajlal Zaveri ...Applicant
Versus
The State of Maharashtra ...Respondent

Mr. Aabad Ponda, Senior Counsel with Mr. Rahul Moghe with
Mr. Subhash Jadhav with Mr. Amit Patil with Ms. Kalyani
Rathod with Mr. Rishabh Jadhav i/b Praniram Law
Associates, for Applicant.
Mr. Y. M. Nakhwa, APP for State/Respondent.
Mr. Santosh Budhwani with Mr. Sujit Suresh i/b Manilal
Kher Ambalal and Co., for Applicant in IA/2827/2023.
Ms. Suvarna Umap, API, EOW Banking III Unit XI, Present.

CORAM:- N. J. JAMADAR, J.
RESERVED ON : 23rd JANUARY, 2024.
PRONOUNCED ON:- 6th FEBRUARY, 2024.

ORDER:

1) Heard the learned Counsel for the applicant, the learned

APP for the State and the learned Counsel for the applicant in

Intervention application- first informant.

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2) The applicant, who is arraigned in CR No. 21 of 2022 with

Economic Offences Wing, original CR No. 52 of 2022, registered

with Colaba Police Station, for the offences punishable under

Sections 120-B, 406, 409, 420, 477(A) of Indian Penal Code,

1860 ("the Penal Code"), has preferred this application to enlarge

him on bail.

3)      The prosecution case runs as under:-

(a)     M/s. Tribhovandas Bhimaji Zaveri & Sons Retail Pvt. Ltd.

(M/s. Tribhovandas), the accused No.1 is a Private Limited

Company. The applicant and Girish Nayak, accused No. 3, were

the Directors of M/s. Tribhovandas. In the month of March,

2015, the applicant and the co-accused Girish Nayak started M/

s. Tribhovandas to engage in the business of gold, silver,

diamond, precious gems and jewellery.

(b) On 2nd September, 2015, the accused applied to Axis Bank,

for a cash credit facility to the tune of Rs. 40 Crores. After

following the usual process, on 19th September, 2015, a cash

credit facility to the tune of Rs.36 Crores was sanctioned to M/s.

Tribhovandas. Appropriate securities were furnished by M/s.

Tribhovandas. The loan installments were regularly repaid till

December, 2018. As M/s. Tribhovandas committed default in

payment of the installment since May, 2019, the account was

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declared NPA, on 29th August, 2019, and a notice recalling the

cash credit facility was issued, on 24th January, 2020.

forensic audit. In the report submitted by the auditor dated, 18th

February, 2021, it transpired that the accused had indulged in

several serious financial irregularities. M/s. Tribhovandas had,

inter alia, utilised and diverted funds for purposes other than the

one for which the cash credit facility was availed. There were

related party transactions and funds were diverted to the entities

of the accused. Non-existent and false transactions of sale and

purchase of commodities and jewelleries, were shown. The

financial statements submitted to the bank did not tally with the

audited balance-sheets and stock statements. The amounts

advanced by Axis Bank to M/s. Tribhovandas were, thus,

siphoned off.

(d) It is, inter alia, alleged that M/s. Tribhovandas had entered

into transactions with Midas Touch Pvt. Ltd., which was not at

all dealing in the business of jewellery. Likewise, transactions

were shown to have been entered with M/s Dreamgold Jewelry

Pvt. Ltd., again a company in which the applicant had controlling

interest. A sum of Rs.2.8 Crores was transferred to M/s. Dreamgold

Jewellery Pvt. Ltd. There were financial transactions with Better

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Value Properties Ltd., another related party. The ledger statements

did not match with the Bank statements. Unsecured loans were

obtained from Better Value Leasing and Finance Pvt Ltd., to the

tune of Rs.21.79 Crores and against which a payment of Rs.11.78

Crores was shown to have been made, in breach of an express

condition that M/s. Tribhovandas shall not obtain any

unsecured loan without the prior permission of the Axis Bank.

There was diversion of funds by entering into transactions with

Enafin Investment Pvt. Ltd., the payment and receipt of Rs.8

Crores, in the ledger account of Enafin Investment Pvt Ltd., did

not match with the Bank statement of M/s. Tribhovandas.

(e) In the month of March, 2017, jewellery worth Rs.25 Crores

was shown to have been sold and purchased from National

Bullion Refinery. However, there was no corresponding entry in

the books of accounts. Thus, the accused furnished false

financial statements and indulged in falsification of the accounts

to show that M/s. Tribhovandas was in a sound financial health.

Lastly, the applicant had diverted funds to the personal account

of the applicant to the tune of Rs.1,62,40,711/-. Thereby the

applicant committed offences punishable under Sections 120-B,

406, 409, 420, 477(A) in pursuance of a criminal conspiracy with

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the co-accused punishable under Section 120-B of the Penal

Code, 1860.

4) The applicant was arrested on 7th November, 2022. Post

completion of investigation, charge-sheet came to be lodged on

2nd February, 2023, reserving the liberty to carry out further

investigation under Section 173 (8) of the Code of Criminal

Procedure, 1973.

5) The Investigating Officer has carried out further

investigation, and lodged a supplementary charge-sheet on 23 rd

November, 2023 against Girish Nayak and Anant Gawande. The

Co-accused have also been arraigned for the offences punishable

under Sections 120-B, 406, 409, 420, 477(A) of the Penal Code,

1860.

6) Mr. Ponda, the learned Senior Advocate, for the applicant

submitted that the co-accused Girish Nayak, the Director of M/s.

Tribhovandas and Anant Gawande, who were intimately

connected with M/s. Tribhovandas, nay were instrumental in the

alleged fraud and falsification of the accounts, have been treated

with favourably. The Investigating Officer did not deem it

necessary to arrest co-accused Girish Nayak and Anant Gawande

on the specious ground that, though overwhelming evidence to

establish the complicity of those accused could be collected

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during the course of investigation, yet, since those accused had

rendered full co-operation during the course of investigation,

they were not arrested.

7) Mr. Ponda submitted that on account of the discriminatory

treatment itself, the applicant deserves to be released on bail.

What accentuates the situation, according to Mr. Ponda, was the

existence of material in the form of the statements of the

prosecution witnesses which show that Girish Nayak and Anant

Gawande were the prime characters in the commission of the

alleged offences. To lend support to the submission that such

discriminatory approach entitles an accused, who is

discriminated against, to bail, reliance was placed on a judgment

of Delhi High Court, in the case of R. Vasudevan Vs. CBI, New

Delhi1.

8) In any event, Mr. Ponda would urge that the investigation is

complete for all intent and purpose. Charge-sheet and

supplementary charge-sheet have been lodged. The applicant,

who is 64 years of age, has been in custody for 15 months.

Therefore, the applicant deserves to be released on bail.

9) In opposition to this, Mr. Nakhwa, the learned APP, stoutly

resisted the prayer for bail. Taking the Court through the report

1 2010 SCC Online Del 130

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under Section 173 of the Code, 1973 and the documents annexed

with it. Mr. Nakhwa would urge that the intention of the

applicant was dishonest since the inception of the transaction as

the forensic audit has revealed that the amount of Rs.8 Crores,

invested on 30th September, 2015, by way infusion of equity share

capital was transferred to Dreamgold Jewelry Pvt. Ltd., on the

very day the cash credit facility was sanctioned. Mr. Nakhwa

made an endeavour to demonstrate how the funds availed from

the Axis Bank for working capital were diverted to the account of

the applicant. Emphasis was laid on the fact that the false

entries were made in the stock register to show an untrue

financial position of the company.

10) Mr. Nakhwa would urge that the fact that the co-accused

have not been arrested would not enure to the benefit of the

applicant, who is the principal accused and the beneficiary of

the fraud. It was further submitted that there are three more

identical offences registered against the applicant and, therefore,

he does not deserve to be released on bail.

11) Mr. Budhwani, the learned Counsel for the applicant in IA

No. 2827 of 2023 - first informant - Axis Bank, supplemented

the submissions of Mr. Nakhwa. It was urged that the instant

case involves a financial fraud of huge public money. By resorting

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to fabrication of documents since the very inception of the

transaction the applicant had deceived the Bank to part with a

huge amount. Laying emphasis on the conduct of the applicant

reflected in an order passed by this Court in Criminal

Application (ABA) No. 106 of 2020, wherein the applicant had

allegedly submitted false and forged documents in support of the

prayer for pre-arrest bail, Mr. Budhwani submitted that the

applicant does not deserve the relief of bail.

12) I have carefully perused the material on record, especially

in the backdrop of the nature of the accusation. Prima facie,

there are documents which indicate that there was diversion of

funds availed from Axis Bank by way of cash credit for working

capital requirement in the sense that the funds were utilised for

purposes other than the one for which the financial facility was

extended. The documents also indicate that there was a mesh of

transactions between M/s. Tribhovandas and related parties; be

it corporate entities or individuals. The allegations that the

transactions of sale and purchase of precious metals and

jeweleries were shown to have been entered, with entities which

did not at all deal in those commodities are also prima facie

made out. At this stage, there is material to show that the

utilisation of the funds, advanced by the Axis Bank, was prima

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facie in such a manner as to give rise to an element of

criminality.

13) The question that, however, warrants consideration, at this

stage, is, taking the prosecution case as its stands, whether the

applicant is entitled to be released on bail. To put in other words,

is there such qualitative difference in the role attributed to the

co-accused and the applicant in the matter of alleged fraud and

falsification of the statements of accounts.

14) First and foremost, it is imperative to note that the

prosecution alleges that the offences were committed in

pursuance of a criminal conspiracy with co-accused Girish

Nayak and Anant Gawande. Interestingly, the prosecution also

alleges that there is overwhelming evidence to support the

indictment against Girish Nayak and Anant Gawande. The

reason ascribed for not arresting those co-accused was that they

had co-operated in the investigation. The Investigating Officer

may be justified in taking that position. However, prima facie, the

statements of the witnesses, banked upon by the prosecution, in

support of the indictment against the applicant, suggest the

complicity of the co-accused in equal measure.

15) As noted above, the first informant, the Deputy Vice

President of Axis Bank, had explicitly named Girish Nayak as an

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accused while lodging the FIR. Nimish Anil Chodankar and

Hitesh Ashok Narang, whose statements were pressed into

service in support of the indictment against the applicant, have

stated in their supplementary statement that M/s. Midas Touch

Pvt. Ltd., a 100 % subsidiary of M/s. Talwalkars Better Value

Fitness Pvt. Ltd., is a related party of Vans Scientific Information

Pvt Ltd of which Anant Gawande is a Director. Girish Nayak is

the Chief Financial Officer (CFO) of M/s. Talwalkar Group. M/s.

Abhipray Enterprises Pvt. Ltd is a 100% subsidiary of M/s.

Talwalkars Healthclubs Ltd. Girish Nayak and Anant Gawande

are the Directors and CFO of M/s. Talwalkar's Group Companies.

The transactions shown between M/s. Tribhovandas, on the one

part, and M/s. Midas Touch Pvt. Ltd., and M/s. Abhipray

Enterprises, on the other part, are false. They were a subterfuge

for circulation of funds. The financial statements were fudged to

show the financial position of M/s. Tribhovandas.

16) Mr. Prashant Martin states that Anant Gawande is the

Director/Promoter of M/s. Talwalkar Better Value Fitness Pvt.

Ltd. Girish Nayak is the CFO. Anant Gawande is concerned with

many entities including M/s. Enafin Investment Pvt. Ltd., M/s.

Abhipray Enterprises Pvt Ltd and M/s. Midas Touch Pvt. Ltd. All

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the transactions in M/s. Talwalkar Better Value Fitness Pvt. Ltd.,

were as per the directions of Anant Gawande.

17) Mr. Satish Talekar, who worked with M/s. Talwalkar Better

Value Fitness Pvt Ltd., as an Accountant, informed that he had

made entries in the monthly stock statement of M/s.

Tribhovandas as per verbal directions of Anant Gawande and

Girish Nayak and obtained the signatures of the applicant

thereon by forwarding the same through e-mail.

18) Even Mr. Firoj Faram Balsara, on whose statement, the

learned APP placed reliance, stated that while he was working

with M/s. Micky Mehta's 360 Wellness Temple Pvt Ltd, at the

instructions of Girish Nayak he had put signatures on various

documents and it later transpired that he was shown a Director

of M/s. Midas Touch Pvt. Ltd. The said company was operated by

Mr. Girish Nayak.

19) The aforesaid material, prima facie, indicates that the

parties and entities with whom M/s. Tribhovandas allegedly

entered into transactions and, resultanly, there was diversion of

funds, were the related parties of Girish Nayak and Anant

Gawande. The witnesses have stated that at the instance of those

accused, incorrect statements were prepared. In the backdrop of

this material, if the Investigating Officer is satisfied with the co-

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operation rendered by the co-accused, the claim of the applicant

for bail cannot be jettisoned away by canvassing a submission

that the role of the applicant is distinct. In the case of R.

Vasudevan (supra), the Delhi High Court criticized the approach of

the Investigating Agency in not adopting a just and fair approach in

treating all the accused persons on an even pedestal.

20) Having considered the material on record, I find that the role

attributed to the applicant, especially in the backdrop of the

allegations of criminal conspiracy and falsification of the accounts,

prima facie does not appear to be materially distinct from that of

the co-accused. Thus, I find substance in the submission of Mr.

Ponda that in the face of the stand of the Investigating Agency qua

the co-accused, the applicant deserves bail.

21) Even otherwise, as is evident, the offences revolve around

documents. All the documents have been seized. Post further

investigation, the Investigating Officer has lodged a

supplementary charge-sheet. The supplementary statement of

the first informant indicates that the value of the security

furnished for the loan was assessed at Rs.19.47 Cores.

Possession of the secured assets had been obtained. Proceedings

under the Securitization and Reconstruction of Financial Assets

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and Enforcement of Security Interest Act, 2002 have been

initiated.

22) Evidently, M/s. Tribhovandas had serviced the loan

account regularly till December, 2018. The fraud was allegedly

unearthed after the account became NPA. Undoubtedly, this does

not dilute the gravity of the offences but it bears upon the

question as to whether the intention of the accused was

dishonest since the inception of the transaction.

23) In the aforesaid view of the matter, at this stage, further

detention of the applicant does not seem warranted.

24) So far as the antecedents of the applicant, it appears that

four crimes have been registered against the applicant primarily

for the offences punishable under Sections 406 and 420 of the

Penal Code, 1860. In one crime, charge-sheet has been lodged.

Three are under investigation. Mr. Ponda informed the Court that

in one of the crimes, the Supreme Court had granted pre-arrest

bail to the applicant. Having regard to the nature of the offences

registered against the applicant and in the facts of the case, in

my view, the antecedents are not such as to dissuade the Court

from exercising the discretion in favour of the applicant.

25) The applicant is 64 years of age. He has been in custody

since 7th November, 2022. In the backdrop of the nature of the

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accusation, it is unlikely that the trial can be concluded within a

reasonable period.

26) The applicant appears to have roots in society. The

apprehension on the part of the prosecution can be taken care of

by imposing conditions.

27) I am, therefore, inclined to exercise the discretion in favour

of the applicant.

28)     Hence, the following order:

                                     :ORDER:

        (i)      The application stands allowed.

        (ii)     The applicant Hemant Vrajlal Zaveri Kuni be

released on bail in CR No. 21 of 2022, registered with

Economic Offences Wing, for the offences punishable

under Sections 120-B, 406, 409, 420, 477(A) of Indian

Penal Code, 1860, on furnishing a P.R. Bond in the sum

of Rs.1,00,000/- with one or two sureties in the like

amount, to the satisfaction of the learned Sessions

Judge.

(iii) The applicant shall attend the office of EOW,

Mumbai on first Monday of every month between 10.00

am to 12.00 noon for a period of two years or till

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conclusion of trial, whichever is earlier.