Pravara Medical Trust Loni Thr. ... vs The State Of Maharashtra Thr. Its ...
2025 Latest Caselaw 1671 Bom

Bombay High Court

Pravara Medical Trust Loni Thr. ... vs The State Of Maharashtra Thr. Its ... on 20 January, 2025

2025:BHC-NAG:584




              Judgment

                                                                     342 wp925.24

                                             1

               IN THE HIGH COURT OF JUDICATURE AT BOMBAY,
                          NAGPUR BENCH, NAGPUR

                         CRIMINAL WRIT PETITION NO.925 OF 2024

              1. Pravara Medical Trust, Loni, tahsil Rahata,
              district Ahmednagar, through its Secretary.

              2. Dr.Rajendra Eknathrao Vikhe Patil,
              Secretary Pravara Medical Trust, Lone,
              tahsil Rahata, district Ahmadnagar.              ..... Petitioners.

                                     :: V E R S U S ::

              1. State of Maharashtra, through its
              Investigating Officer, Economic Offences
              Wing, Nagpur Branch, Nagpur.

              2. M/s.Wasankar Wealth Management Pvt.
              Ltd. Co., through its Director Prashant
              Jaideo Wasankar and others, office at 247,
              Wasankar House Hill Road, Shivaji Nagar,
              Nagpur.

              3. Prashant s/o Jaideo Wasankar, age 44 years,
              occupation Trading Business/Director of
              M/s.W.W.M. Pvt.Ltd.Co. and
              M/s.Wasankar Investment, r/o 42 Shri
              Natharpan Cosmos Town, Jaitala Road,
              Nagpur.

              4. Smt.Mithila w/o Vinay Wasankar, age 44
              years, occupation- Trading Business/
              Director of M/s.W.W.M. Pvt.Ltd. Co. and
              M/s. Wasankar Investment, r/o 42 Shri
              Natharpan Cosmos Town, Jaitala Road,

                                                                           .....2/-
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                                                       342 wp925.24

                                 2

Nagpur. At present r/o R-14, Marigold
Apartment, plot No.401, Laxminagar,
Nagpur.

5. Abhijeet s/o Jayant Choudhari, age 31 years,
occupation Trading Business/Director of M/s.
W.W.M. Pvt Ltd. Co and M/s.Wasankar
Investment, r/o 42 Shri Natharpan Cosmos
Town, Jaitala Road, Nagpur.            ..... Respondents.
=================================
Shri Akshay Naik, Senior Counsel assisted by Shri Rohan Deo,
Advocate for Petitioners.
Mrs.S.S.Dhote, Additional Public Prosecutor for Respondent
No.1/State.
=================================
CORAM : URMILA JOSHI-PHALKE, J.
CLOSED ON : 09/01/2024
PRONOUNCED ON : 20/01/2025

JUDGMENT

1. Heard learned Senior Counsel Shri Akshay Naik for

petitioners and learned Additional Public Prosecutor

Mrs.S.S.Dhote for the State.

2. Rule.

3. By this petition, petitioners challenge order dated

9.1.2024 passed below Exhibit-1 by learned Additional

Sessions Judge, Nagpur in Misc.Criminal Application

.....3/-

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No.316/2017 arising out of Crime No.156/2014 in Special

MPID Case No.4/2014.

4. Petitioner No.1 (the said Trust) is registered under the

Maharashtra Public Trusts Act, 1950. It is also a Society

registered under the Societies Registration Act, 1860. Petitioner

No.2 is Secretary of the said Trust. The said Trust is working

in the field of Medical Care and Training Research. The aim

and object of the said Trust is to provide community oriented

treatment to poor patients. The said Trust has 1270 bedded

hospital at village Loni, Ahmadnagar and 80% patients are

treated free of cost on charity basis. The said Trust is not a

profit making organization and meets its expenses principally

through charity received from donors. The said Trust is also

registered in the register of Trust/Institution under the Income

Tax Act, 1967 and donations made to the said Trust are eligible

for benefits of deduction under Section 80G(5)(IV) of the

Income Tax Act. The exemption certificate was initially

granted from 1.4.2007 to 31.3.2010 and, thereafter, the same

.....4/-

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is renewed from time to time. The order dated 18.6.2008

shows that the said Trust is held eligible for benefits of

deduction under Section 80G(5)(IV) of the Income Tax Act.

5. The Board of Directors of Wasankar Wealth

Management Private Limited, in its meeting dated 14.8.2013,

unanimously resolved to donate Rs.1.00 crore to the said Trust

for charitable purpose and issued cheque dated 2.9.2013

bearing No.10514. The Board Resolution and the cheque were

received by the said Trust on 31.8.2013. The said Trust also

issued a certificate of deduction under Section 80G of the

Income Tax Act in favour of Wasankar Wealth Management

Private Limited vide letter dated 31.8.2013. After a period of

more than two years from the date of receipt of donation, the

said Trust received summons dated 25.8.2015 under Sections

91 and 160 of the Code of Criminal Procedure directing the

said Trust to produce documents relating to the aforesaid

donation of Rs.1.00 crore received from Wasankar Wealth

Management Private Limited. The Authority also recorded

.....5/-

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statement of accountant of the said Trust on 9.9.2015. The

Authority again issued summon dated 4.11.2015 under

Section 102 of the Code and under Section 8 of the

Maharashtra Protection of Interest of Depositors (In Financial

Establishments) Act, 1999 (the MPID Act) alleging that

donation of Rs.1.00 crore received by the said Trust is part of

criminal proceeds and the said Trust was directed to deposit

amount of Rs.1.00 crore with designated court under the MPID

Act. The said Trust explained that the amount was received as

donation and the said amount was already spent towards

treatment of patients and Audit Report in that regard was

already submitted to the Office of the Charity Commissioner.

Despite of the application dated 8.1.2016, again a reminder

was issued to the said Trust by the respondent Authority by

issuing summons under Section 91 of the Code seeking

particulars of the manner in which amount Rs.1.00 crore was

spent with relevant documents. The said trust forwarded all

relevant documents along with Balance Sheet certified by its

.....6/-

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Chartered Accountant. Thereafter, the respondent Authority

by letter dated 14.6.2016 directed Central Bank of India to

withhold amount Rs.1.00 crore in the bank account of the said

Trust in the light of the criminal complaint filed by Shri Vivek

Pathak against Wasankar Wealth Management Private Limited

and others. The order dated 14.6.2016 had the effect of

attachment of the property of the said Trust. The said order

was passed without any authority of law.

6. Being aggrieved of order of attachment, the said Trust

preferred an application under Section 10 of the MPID Act

before learned Additional Sessions Judge, Nagpur and the said

application was registered as Misc.Criminal Application

No.2243/2016. The said application was rejected by learned

Sessions Judge. The application filed by respondents bearing

Misc.Criminal Application No.316/2017 under Section 8 of the

MPID Act for attachment of property was allowed by learned

Sessions Judge by order dated 9.1.2024 and issued attachment

warrant to the extent of Rs.1.00 crore against the said Trust.

.....7/-

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Hence, the petition.

7. By this petition, the petitioners are challenging legality

and validity of order dated 9.1.2024.

8. The petition is strongly opposed by the State on ground

that offences under Sections 420, 406, and 506 read with 34

of the Indian Penal Code and read with 3 of the MPID Act vide

Crime No.156/2014 were registered against Wasankar Wealth

Management Limited, Wasankar Investment, Sarla Securities

and its Directors Prashant Wasankar, Bhagyashree Wasankar,

and Vinay Wasankar and ors. The amount donated was a

crime proceeds and, therefore, it was attached. The order

passed by learned Sessions Judge had considered that though

the donated amount has been utilized for charitable purpose

and donation for noble work, the fact is that hard earned

money of number of investors had been misapplied or

misappropriated by respondent Nos.2 to 5 and considerable

amount thereof came to be transferred to the said Trust and,

therefore, no interference is called for.

.....8/-

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9. Learned Senior Counsel Shri Akshay Naik for

petitioners, submitted that there is no dispute as to the fact

that the said Trust is a charitable trust and amount Rs.1.00

crore was transferred towards donation by Resolution dated

14.8.2014 by Wasankar Wealth Management Private Limited.

The communication dated 18.6.2008 issued by the Income Tax

Department shows that donations made to "Pravara Medical

Trust" are eligible for the benefit of deduction under Section

80G(5)(vi) of the Income Tax Act in the hands of the donors

subject to the limits and conditions therein. The cheque was

issued by Wasankar Wealth Management Private Limited along

with referral letter dated 31.8.2013 and, thereafter, on

25.8..2015, first time, after two years of the receipt of the

donation, the communication from the Economic Offence

Wing, Nagpur City was received by the Secretary of "Pravara

Medical Trust" informing that during course of investigation, it

revealed that the accused have transferred fraudulent amount

of Rs.1.00 crore from their account and it is necessary to

.....9/-

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examine these transactions and called upon to attend the

office. Accordingly, the Secretary of the said Trust attended

the office and rendered his explanation as per letter dated

3.9.2015 stating that "Pravara Medical Trust" is a charitable

trust and working in the field of Medical Care and Training

and Research. It also runs a rural hospital and aims and

objects of the said Trust are to provide medical treatment to

poor patients. Again, another notice was also issued to the

Secretary of said Trust asking explanation why that amount is

not to be attached and asked to deposit the said amount in the

designated court. The said notice is also replied by the said

Trust on 8.1.2016 contending that the donation was given for

charity purpose. The trust has already spent that amount to

health care of poor patients and also submitted the list of

patients for whom the amount was spent.

10. Learned Senior Counsel for petitioners invited my

attention to Section 4 of the MPID Act which authorizes the

Government to protect the interest of the depositors by

.....10/-

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attaching the money or property believed to have been

acquired by such financial establishment either in its own

name or in the name of any other persons, from out of the

deposits of the depositors. He submitted that the term "any

other person" used in the said Section refers to such persons in

whose name the financial establishment has acquired the

property from out of the deposits. The said Section does not

cover each and every person with whom the financial

establishment has entered into business or has paid

consideration for the services received. The donation of

Rs.1.00 crore to the said Trust does not come within the ambit

of Section 4 of the MPID Act.

11. Learned Senior Counsel for petitioners, further

submitted that Section 8 of the MPID Act provides for

attachment of property of mala fide transferee. A bear perusal

of the said Section would reveal that the property transferred

otherwise than in good faith and for consideration shall be

attached. The amount transferred is also not covered under

.....11/-

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the said Section for the attachment as the said Trust is not a

mala fide transferee. The designated court has failed to

consider that the application under the said Section was not

maintainable as the requirement of Sections 4 and 8 of the

MPID Act itself are lacking. The designated court has also not

recorded satisfaction which is required to be recorded under

Section 8 of the MPID Act. He submitted that a thing shall be

deemed to be done in good faith when it is in fact done

honestly whether it is done negligently or not. The definition

of "good faith" provided under Section 52 of the Indian Penal

Code states that nothing is said to be done or believed in "good

faith" which is done or belief without due care and attention.

The donation is a gift, a voluntary transfer without

consideration and, therefore, the words "otherwise than in

good faith" and "for consideration" are used conjunctively and

not disjunctively. The designated court while allowing the

application under Section 8 of the MPID Act ought to have

recorded satisfaction that donation received by the petitioners

.....12/-

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was otherwise not in "good faith" and was for consideration.

In absence of the said findings, the order deserves to be

quashed and set aside.

12. Per contra, learned Additional Public Prosecutor

Mrs.S.S.Dhote for the State supported the order and submitted

that the donation was given with fraudulent intention to

deprive investors from getting their invested amounts. It is out

of crime proceeds and, therefore, the order passed by learned

Sessions Judge is correct and legal one. There is nothing on

record to show that the transferee accepted the amount in

"good faith". Moreover, how and in what manner, it is

accepted is immaterial. What is material is that it is out of

crime proceedings.

13. After hearing both the sides and perusing of the record,

it is to be seen, whether the amount which is paid towards the

donation can be attached under Section 4 of the MPID Act.

.....13/-

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14. As far as factual aspect is concerned, it is not in dispute

that the said Trust is registered under the Maharashtra Public

Trusts Act, 1950 as well as Societies Registration Act, 1860.

There is also no dispute that the said Trust is eligible for

benefits of deduction under Section 80G(5)(IV) of the Income

Tax Act. The communication to that effect dated 18.6.2008

by the Commissioner of Income Tax-1, Pune substantiates the

said contention. It is also not disputed that by passing

Resolution on 14.8.2013, Wasankar Wealth Management

Limited donated amount Rs.1.00 crore to "Pravara Medical

Trust" for charitable purpose and issued cheque on 31.8.2013.

Thereafter, after two years, after spending the said amount

towards medical expenses of the poor persons, notice was

issued to the said Trust to attend the Office of the Economic

Offence Wing, Nagpur City which the Secretary of the said

Trust complied with. The said Trust has also submitted its

explanation that the said amount is already expended by them

.....14/-

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towards medical treatment of poor persons along with Audit

Report.

15. In the light of these admitted facts, whether the

amount already expended for charitable purpose can be

attached.

16. The MPID Act was enacted by legislature in the state of

Maharashtra. to protect the public from the increasing menace

of financial establishments grabbing money from the public in

the form of deposits. Section 3 of the MPID Act envisages

punishment upon conviction of every person including a

promoter, partner, director, manager or employee responsible

for the management of or the conduct of the business or affairs

of the financial establishment which has fraudulently defaulted

in the repayment of deposits on maturity.

17. Section 4 of the MPID Act, contemplates the levy of

attachment on properties of a financial establishment on

default of return of payment. The said Section provides that if

.....15/-

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on a complaint received from the depositors or otherwise, the

Government is satisfied that any financial establishment has

failed to return the deposit on maturity or demand, or to pay

interest or an assured benefit, or has failed to provide a service

that was assured against the deposit, or if the Government has

reason to believe that any financial establishment is acting in a

manner detrimental to the interest of the depositors with the

intention to defraud them, it may attach the money or

property acquired by the financial establishment out of the

deposit. The provision states that if such money or property is

not available to be attached, the property of the financial

establishment or the promoter, director, partner, manager or

member may be attached.

18. Section 5 of the MPID Act, provides for the

appointment of a Competent Authority while Section 6

contains a provision for a Designated Court. Section 7

enunciates the powers of the Designated Court regarding

attachment. Under Section 7, upon receipt of an application

.....16/-

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under Section 5, the Designated Court shall issue a show cause

notice to the financial establishment or any person whose

property is attached on why the order of attachment should

not be made. A notice shall also be issued to all persons who

are likely to have an interest in the property,

19. Thus, Section 4 of the MPID Act authorizes the

Government to protect the interest of depositors by such

financial establishment by attaching money or other believed

to have been acquired by such financial establishment either in

its own name or in the name of any other person from out of

the deposits. The term "any other person" is used to such

person in whose name financial establishment has acquired the

property out of the deposits. As far as the contents of the

Section 4 are concerned, it does not take in its ambit every

person with whom financial establishment has entered into

business or has paid consideration for services received. The

wording used shows that if the Government is satisfied that

such financial Establishment is not likely to return the deposits

.....17/-

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or make payment of interest or other benefits assured or to

provide the service against which the deposit is received, the

Government may, in order to protect the interest of the

depositors of such financial Establishment, after recording

reasons in writing, issue an order by publishing it in the

Official Gazette, attaching the money or other property

believed to have been acquired by such Financial

Establishment either in its own name or in the name of any

other person from out of the deposits, collected by the

Financial Establishment, or if it transpires that such money or

other property is not available for attachment or not sufficient

for repayment of the deposits, such other property of the said

Financial Establishment or the promoter, director, partner or

manager or member of the said Financial Establishment as the

Government may think fit.

20. As far as documents on record are concerned, the same

show that the amount of Rs.1.00 crore was transferred to the

said Trust for charitable purpose on 14.8.2013 and it is already

.....18/-

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expended by the said Trust for treatment of patients in the year

2013 itself. Thus, it sufficiently shows that even if it is

accepted that out of the said deposit the money was

transferred, admittedly, such money is not available for

attachment and in that circumstances Section 4 of the MPID

Act states that the Government may attach such other property

of the said Financial Establishment or the promoter, director,

partner or manager or member of the said Financial

Establishment. The communication issued to the said Trust

shows that by issuing the notice under Section 102 of the

Code, the said Trust is directed to deposit the amount in the

designated court and subsequent to that, the notice was issued

to the Central Bank of India on 14.6.2016 to withhold the

amount of Rs.1.00 crore in the bank account of the said Trust

in view of the offence registered.

21. The communication dated 14.6.2016 had effect of

attachment of the property and, therefore, the said Trust filed

an application under Section 10 of the MPID Act. Learned

.....19/-

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Sessions Judge rejected the application on ground that the Act

does not empower the designated court to release the amount

when the proceedings of attachment is not under Section 8.

Thus, the application was rejected on the ground the

attachment is not as per Section 8 of the MPID Act and,

therefore, Section 10 cannot be invoked.

22. It is pertinent to note that on 30.1.2017, i.e. one day

before decision on the application under Section 10 of the

MPID Act, the respondent authority preferred Misc. Criminal

Application No.316/2017 under Section 8 of the MPID Act for

attachment of the property. The said application was opposed

by filing reply. By order dated 9.1.2024, learned Sessions

Judge allowed the application for issuing attachment warrant

to the extent of Rs.1.00 crore against the the said Trust.

23. Section 8 of the MPID Act, provides of attachment of

property of mala fide transferee. Perusal of the said Section

reveals that the property transferred otherwise than in good

faith and for consideration shall be attached. The requirement

.....20/-

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under the said Section is twofold i.e. (1) transfer otherwise

than in good faith and transfer for consideration. Further

requirement is that for issuing attachment warrant, the

designated court is required to record satisfaction that the

property transferred was "otherwise than in good faith" and

"for consideration". The said Section is reproduced, as under:

"8. Attachment of property of mala fide transferees.

(1) Where the assets available for attachment of a Financial Establishment or other person referred to in section 4 are found to be less than the amount or value which such Financial Establishment is required to repay to the depositors and where the Designated Court is satisfied, by affidavit or otherwise, that there is reasonable cause for believing that the said Financial Establishment has transferred {whether before or after the commencement of this Act) any of the property otherwise than in good faith and for consideration, the Designated Court may, by notice, required any transferee of such property (whether or not he received the property directly from the said Financial Establishment) to appear on a date to be specified in the notice and show cause why so much of the transferee's property as is equivalent to the proper value of the property transferred should not be attached.

.....21/-

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(2) Where the said transferee does not appear and show cause on the specified date, or where after investigation in the manner provided in sub-section (5) of section 7, the Designated Court is satisfied that the transfer of the property to the said transferee was not in good faith and for consideration, the Designated Court shall order the attachment of so much of the said transferer's property as is in the opinion of the Designated Court equivalent to the proper value of the property transferred."

24. Thus, the wording of Section 8 shows that where the

assets available for attachment of a Financial Establishment or

other person referred to in section 4 are found to be less than

the amount or value which such Financial Establishment is

required to repay to the depositors and where the Designated

Court is satisfied, by affidavit or otherwise, that there is

reasonable cause for believing that the said Financial

Establishment has transferred any of the property otherwise

than in good faith and for consideration, the Designated Court

may, by notice, required any transferee of such property to

appear on a date to be specified in the notice and on its

satisfaction issues order of attachment.

.....22/-

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25. Thus, satisfaction of the designated court is one of

requirements of issuing the attachment order.

26. Whether the transfer of the amount is "in good faith" or

otherwise than "in good faith" or for consideration the

satisfaction of the court is required.

27. The definition of "good faith" under the General

Clauses Act states that a thing shall be deemed to be done in

"good faith" when it is in fact done honestly whether it is

negligently or not. The definition of "good faith" provides

under Section 52 of the Indian Penal Code states that nothing

is said to be done or believed in "good faith" which is done or

belief without due care and attention. The expression "good

faith" in criminal jurisprudence has a definite connotation.

28. The Hon'ble Apex Court in the case of Suo Motu

Contempt Petition (Cri.) No.5/2000, reported in AIR 2001 SC

2374 dealt with the expression "good faith" and in paragraph

No.28 held as under:

.....23/-

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"28. The expression "good faith" in criminal jurisprudence has a definite connotation. Its import is totally different from saying that the person concerned has honestly believed the truth of what is said. Good faith is defined in Section 52 of the Indian Penal Code thus:

"Nothing is said to be done or believed in 'good faith' which is done or believed without due care and attention."

The expression "good faith" in criminal jurisprudence

has a definite connotation. Its import is totally different from

saying that the person concerned has honestly believed the

truth of what is said. "Good faith" is defined in Section 52 of

the Indian Penal Code. In paragraph No.29 of the said

decision, it is further held that, "see the language of the law in

this regard. It starts in the negative tone excluding all except

what is allowed to be within its amplitude. Insistence sought to

be achieved through the commencing words of the definition

"nothing is said to be done or believed in good faith" is that the

.....24/-

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solitary item included within the purview of the expression

"good faith" is what is done with "due care and attention". Due

care denotes the degree of reasonableness in the care sought to

be exercised. In Black's Law Dictionary, "reasonable care" is

explained as "such a degree of care, precaution, or diligence as

may fairly and properly be expected or required, having regard

to the nature of the action, or of the subject matter and the

circumstances surrounding the transaction. It is such care as an

ordinary prudent person would exercise under the conditions

existing at the time he is called upon to act."

29. Thus, the donation is voluntarily transferred without

consideration. It is undisputed that the said Trust received the

amount of Rs.1.00 crore and nothing is on record to show that it

was accepted otherwise than in "good faith". Thus, while allowing

the application under Section 8 of the MPID Act the designated

court ought to have recorded satisfaction which is requirement of

the said Section. The said Section specially states when the

application is filed for attachment of the property of mala fide

.....25/-

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transferee and the designated court is satisfied, by affidavit or

otherwise, that there is reasonable cause for believing that the said

Financial Establishment has transferred any of the property

otherwise than in good faith and for consideration, the designated

court shall issue an order of attachment. The designated court has

not satisfied himself whether transfer of the amount is bona fide

transfer or not and, therefore, non recording of the said satisfaction

and passing of an order of attachment without satisfying itself that

transferee is a mala fide transferee directing or issuing the

attachment warrant is perverse which is liable to quashed and set

aside.

30. In view of that, the order passed by learned Sessions Judge

issuing attachment warrant and allowing the application filed under

Section 8 of the MPID Act deserves to be quashed and set aside.

Hence, I proceed to pass following order:

ORDER

(1) The Criminal Writ Petition is allowed.

.....26/-

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(2) The order dated 9.1.2024 passed by learned Additional Sessions

Judge, Nagpur in Misc.Criminal Application No.316/2017 is hereby

quashed and set aside and Misc.Criminal Application No.316/2017

is rejected.

Rule is made absolute in the aforesaid terms.

(URMILA JOSHI-PHALKE, J.)

!! BrWankhede !!

Signed by: Mr. B. R. Wankhede Designation: PS To Honourable Judge ...../- Date: 20/01/2025 18:56:58