Bombay High Court
Multifaced Impex Limited vs State Of Maharashtra And Anr on 31 January, 2025
Author: Prithviraj K. Chavan
Bench: Revati Mohite Dere, Prithviraj K. Chavan
2025:BHC-AS:5207-DB WP-4248-2024-F.doc
Shailaja
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
CRIMINAL APPELLATE JURISDICTION
CRIMINAL WRIT PETITION NO.4248 OF 2024
Mr. Shoaib Richie Sequeira ]
Aged 61 years, Occ: Business, ]
permanently residing at Rustomejees ]
Ozone CHSL, Tower No.3, Flat 1203 ]
Goregaon (W), Mumbai - 400 104 ] Petitioner
Versus
1. State of Maharashtra ]
Through Police Commissioner ]
and Jt. Commissioner, Economic ]
Offences Wing, 3rd Floor, New ]
Police Commissioner Office ]
Building, Crawford Market, ]
Mumbai - 400 001. ]
2. Directorate of Enforcement ]
Through its Director, 6th Floor, ]
Lok Nayak Bhawan, Khan ]
Market, New Delhi - 110003 ]
And Through Jt. Director, ]
(Western Region), Kaiser-I-Hind ]
Building, 4th Floor, Currimbhoy ]
Road, Ballard Estate, Mumbai ]
400 001. ]
3. Securities and Exchange Board of ]
India, A statutory body set up ]
under Section 3 of the Securities ]
and Exchange Board of India Act, ]
1992 having its headquarters at: ]
SEBI Bhavan, Plot No. C4-A, ]
'G' Block, Bandra-Kurla Complex, ]
SHAILAJA Digitally signed by SHAILAJA
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SHRIKANT HALKUDE
SHRIKANT Date: 2025.02.04 10:48:26
HALKUDE +0530
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Bandra (East), Mumbai - 400 051 ]
Maharashtra. ]
4. The Joint Director ]
Central Bureau of Investigation ]
EOB, Mumbai, 11th/12th Floor, ]
Plot No. C-35A, G Block, ]
Bandra Kurla Complex BKC, ]
Near MTNL Exchange, Bandra ]
(E), Mumbai 400 098. ]
5. The Joint Director ]
Serious Fraud Investigation Office ]
Mumbai ]
Fountain Telecom Building - I, ]
Near Central Telegraph Office, ]
M.G. Road, Fort, Mumbai - ]
400 001. ]
6. Crime Investigation Department, ]
Maharashtra Crawford Market, ]
Lokmanya Tilak Road, ]
Police Colony, Dhobi Talao, ]
CST, Fort, Mumbai 400 001. ] Respondents
a/w
INTERIM APPLICATION [STAMP] NO.24444 OF 2024
IN
CRIMINAL WRIT PETITION NO.4248 OF 2024
Multifaced Impex Limited ] Applicant
IN THE MATTER BETWEEN:
Mr. Shoaib Richie Sequeira ] Petitioner
Vs.
State of Maharashtra and others ] Respondents
a/w
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INTERIM APPLICATION [STAMP] NO.24377 OF 2024
IN
CRIMINAL WRIT PETITION NO.4248 OF 2024
Jai Corp Limited ] Applicant
IN THE MATTER BETWEEN:
Mr. Shoaib Richie Sequeira ] Petitioner
Vs.
State of Maharashtra and others ] Respondents
a/w
INTERIM APPLICATION [STAMP] NO.24376 OF 2024
IN
CRIMINAL WRIT PETITION NO.4248 OF 2024
Anand Jaikumar Jain ] Applicant
IN THE MATTER BETWEEN:
Mr. Shoaib Richie Sequeira ] Petitioner
Vs.
State of Maharashtra and others ] Respondents
.....
Mr. Aabad Ponda, Senior Advocate a/w Mr. Parth Jain, Mr. Puru
Jain and Ms. Rutvi Soni i/b Jain Law Partners LLP, for Petitioner.
Mr. H.S. Venegavkar, P.P a/w Ms. P.P. Shinde, A.P.P, for Respondent
- State.
Mr. H.S. Venegavkar, S.P.P a/w Mr. Ayush Kedia, for Respondent
No.2 - Enforcement Directorate.
Mr. Rafique Dada, Senior Advocate a/w Mr. Bhushan Shah, Mr.
Akash Jain a/w Mr. Abhishek Nair i/b Mr. Mansukhlal & Co., for
Respondent No.3 (SEBI).
Mr. Kuldeep S. Patil, Special Public Prosecutor a/w Mr. Dhavalsinh
Patil, Mr. Ashish Kumar Srivastava and Ms. Sampada S. Patil, for
Respondent No.4 - CBI.
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Mr. H.S. Venegavkar a/w Mr. Aayush Kedia a/w Ms. Divya Gontia
i/b Mr. Pradeep Yadav, for Respondent No.5 - SFIO.
Mr. Ravi Kadam, Senior Advocate a/w Mr. Vikram Nankani, Senior
Advocate a/w Mr. Vineet Naik, Senior Advocate a/w Mr. Ameet
Naik, Mr. Abhishek Kale, Ms. Vaibhavi Bhure, Mr. Aditya
Ajgaonkar, Mr. Harish Khedkar, Mr. Vivek Dwivedi, Mr. Nevil
Chopra, Ms. Antara Kulkarni and Ms. Rebecca Singh i/b M/s. Naik
Naik & Co., for Applicants in Interim Application [Stamp]
No.24376 of 2024 and Interim Application [Stamp] No.24377 of
2024.
Mr. Pranav Badheka a/w Mr. Rajendra Barot, Mr. Dhirajkumar
Totala a/w Ms. Vaibhavi Bhure, Mr. Vivek Shetty, Ms. Harsha
Uppal, Mr. Prince Todi, Mr. Harsh Sethi i/b AZB & Partners, for
Applicant in Interim Application [Stamp] No.24444 of 2024.
Mr. Nikhit Mishra Joint C.P. a/w Mr. Sangramsinh Nishandar and
Mr. Nitin Gije, PI, EOW Unit VII, Mumbai present.
.....
CORAM : REVATI MOHITE DERE &
PRITHVIRAJ K. CHAVAN, J.J.
RESERVED ON : 29th November, 2024.
PRONOUNCED ON : 31st January, 2025.
JUDGMENT:
[Per Prithviraj K. Chavan, J.]:
1. The petitioner, who is a public rights activist and founding
member of a Non-Governmental Organizations involved in
espousing public interests has approached this Court invoking writ
jurisdiction under Article 226 of the Constitution of India, inter
alia, seeking the following substantive prayers;
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"A. That this Hon'ble Court be pleased to issue a
Writ of mandamus or any other appropriate writ,
order or direction to direct the Respondent No.1 and
2 to jointly and/or severally carry out a preliminary
investigation on the basis of the Complaint dated 22 nd
December 2021 (Exhibit E and F) and the Complaint
dated 3 April 2023 (Exhibit J) and submit a report to
this Hon'ble Court within a period of 3 weeks from
the date of the Order or any such other time as this
Hon'ble Court may deem it fit and proper;
B. Ad interim reliefs in terms of prayer clause (A)
above;
B-1. That this Hon'ble Court be pleased to transfer
the investigation of the Complaints to the Crime
Investigation Department, Maharashtra;
B-2.The petitioner submits that in light of the manner
in which the investigation in being conducted by
Respondent No.2 and Respondent No.4, it is
necessary and in the interest of justice that the
investigation be transferred to another investigating
agency, namely the Criminal Investigation
Department, Maharashtra for necessary action of the
Petitioner's complaints;
C. For costs;
D. For any other reliefs as this Hon'ble Court may
deem fit and necessary in the facts and circumstances
of the present matter".
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2. Before adverting to the facts, it is pertinent to note that this is
not the first case in public interest that the petitioner has agitated,
but previously he had filed a Public Interest Litigation (for short
"PIL") No.1942 of 2005 before this Court exposing scams of
approximately Rs. 1,00,000/- Crores (Rupees one lac Crore) in
incentive schemes in Import Export Policies. The PIL was admitted
on 25th January, 2006.
3. The petitioner contends that in April, 2006, he has filed two
PILs' bearing Criminal Writ Petition No.3 of 2006 and Criminal
Writ Petition No.13 of 2006 against M/s. Autoriders Finance
Limited for;
(i) misappropriation of approximately Rs.50 Crores
availed as a loan from United Trust of India; and
(ii) misappropriation of approximately Rs.76 Crores
availed as loan from a consortium of six banks wherein
Union Bank of India was the lead Bank.
After filing the aforesaid two PILs' sometime in the month of April,
2009, the banks have collectively recovered approximately
Rs.14,00,00,000/- (Rs. Fourteen Crores only) from M/s. Autoriders
Finance Limited. This Court, by a common order dated 9 th July,
2009 disposed of the aforesaid two PILs' by entrusting the
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investigation of the subject matter therein to the State C.I.D, Pune,
Maharashtra State under the overall supervision of Additional
Director General of Police, C.I.D, Maharashtra State, Pune.
4. The present petition is filed seeking limited directions, inter
alia, issuance of an appropriate writ of mandamus directing the
respondent Nos.1 and 2 to jointly act upon the complaint dated
22nd December, 2021 (First EOW complaint) and the complaint
dated 3rd April, 2023 (Second EOW complaint) filed by the
petitioner wherein he has prayed for conducting preliminary
investigation/inquiry into the fraudulent activities undertaken by
one Anand Jaikumar Jain- the Director/Promoter of Jai Corporation
Ltd (Jai Corp Ltd) which includes;
(i) misappropriation of public monies for personal
enrichment;
(ii) defrauding investors;
(iii) round tripping of funds through shell companies based
in tax havens;
(iv) making unsecured advances to subsidiaries with the
intention to launder public money and;
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(v) creation of dubious and fictitious invoices, all of which
are predicate offences under the Indian Penal Code,
1860 ("IPC") and the Prevention of Money Laundering
Act, 2002 ("PMLA")
5. The petitioner further contends that the respondent No.1
failed to act upon the complaints filed by him, instead, on two
occasions by communication dated 25 th January, 2021 (First EOW
reply) and 2nd May, 2023 (Second EOW reply) forwarded the
complaints filed by him to Securities and Exchange Board of India
(for short "SEBI") for investigation on the ground, that the subject
matter of the complaint is within the jurisdiction of SEBI. Hence,
the petitioner has approached this Court.
6. The petitioner further contends that the first EOW complaint
dated 22nd December, 2021 brings to the fore various economic
offences committed by Anand Jaikumar Jain in his capacity as a
Director/Promoter of Jai Corp Ltd and its subsidiary Companies in
collusion with sister concerns, wholly owned subsidiaries, shell
companies, associates, family members and Private Trust Funds
based in India and abroad which are cognizable offences not only
under the provisions of the PMLA Act but also under the I.P.C. The
petitioner contends that reason for filing the complaints before
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respondent Nos.1 and 2 arose from the fact, that he found out
through the print media that vide order dated 1 st January, 2021, the
Adjudicating Officer of SEBI has imposed a hefty penalty of
Rs.20,00,00,000/- (Rs. Twenty Crores only) and Rs.10,00,00,000/-
(Rs. Ten Crores only) on two companies wherein, Mr. Anand
Jaikumar Jain was the Chairman, viz: Mumbai Sez Ltd and Navi
Mumbai Sez Pvt. Ltd for fraudulent futures trading in stocks of
Reliance Petrochemicals Ltd. (for short "RPL"). Upon procuring
copy of the SEBI order, he undertook an in-depth analysis of the
modus operandi of Anand Jaikumar Jain in perpetuating the
economic and investor fraud amounting to the tune of Rs.3000
Crore (Rs. Three Thousand Corers only) through various associates
and subsidiaries. The petitioner further contends that he noticed
the method adopted by Anand Jaikumar Jain to funnel and illegally
route back public money for his personal gain by collecting,
collating and analyzing voluminous data over a span of eleven
months. Having analyzed the aforesaid, the petitioner filed the first
EOW complaint with respondent No.1 and respondent No.2
disclosing various offences committed by Jai Corp Ltd and its
subsidiary Companies at the behest of Anand Jaikumar Jain which
attract the provisions of the PMLA and IPC. The respondent No.1
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vide communication dated 25 th January, 2021 replied to the First
EOW Complaint stating therein that the contents of the complaint
pertain to jurisdiction of SEBI and hence, the complaint was
forwarded to SEBI for necessary action. No response was received
from SEBI with reference to his first EOW complaint.
7. The petitioner contends that in 31 st October, 2022, SEBI
passed an order (UIVCF Winding Up Order) in the matter of Urban
Infrastructure Venture Capital Fund (UIVCF) (registered with SEBI
as a Venture Capital Fund) directing that UIVCF be wound up in
the terms, more particularly, contained therein. Admittedly, Jai Corp
Ltd, being a company promoted by Anand Jaikumar Jain and his
related entities, own a 100% stake in Urban Infrastructure Venture
Capital Limited (UIVCL) and Urban Infrastructure Trustees Limited
(UITL) i.e the Settlor and Trustee of UIVCF respectively. In essence,
the affairs and management of UIVCF were controlled by Anand
Jaikumar Jain who was the sole beneficiary of the Fund. The
Adjudicating Authority in paragraph 33 of it's order in the UIVCF
Winding up, against Anand Jaikumar Jain held as under;
"I am constrained to hold that the aforesaid
Noticees have abdicated their responsibility and
duty as a Director of UIVCL and UTIL and
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consequently were not diligent enough in
managing the affairs of the Fund, which is not
permissible in law".
The petitioner noticed that the first EOW complaint made by him
which was forwarded to SEBI was not adverted to or dealt with in
the UIVCF Winding Up Order by SEBI.
8. The petitioner, therefore, once again filed a complaint dated
3rd April, 2023 with the respondent No.1 (second EOW complaint),
inter alia, requesting the respondent No.1 to conduct a preliminary
investigation into the cognizable offences disclosed in the first EOW
complaint and the second EOW complaint against the
Director/Promoter of Jai Corp Ltd. However, in abdication of their
duties, the respondent No.1 vide communication dated 2 nd May,
2023 has forwarded the second EOW complaint to SEBI stating that
the subject matter pertains to SEBI jurisdiction.
9. The sum and substance of the first EOW complaint and the
second EOW complaint is that Jai Corp Ltd controlled by Anand
Jaikumar Jain along with the subsidiaries are responsible for
colluding and fraudulently misappropriating;
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(i) Monies to the tune of Rs.4255 Crores
availed by Jai Corp Ltd and its subsidiaries from
financial institutions;
(ii) Rs.2434 Crores of investor money
collected by Urban Infrastructure Opportunities
Fund (UIOF) which is a scheme launched by
UIVCF i.e wholly owned and controlled by Mr.
Anand Jaikumar Jain;
(iii) Monies to the tune of Rs.513.12 Crores
generated by fraudulent trading in the Futures of
RPL shares;
(iv) Rs.98.83 Crores of financial assistance
availed from Indian Banks which has been
diverted to Mauritius and Sharjah, UAE and lastly,
(v) funneling funds for personal gain by
creation of fabricated and dubious invoices.
10. The petitioner further contends that Jai Corp Ltd alongwith
its subsidiaries managed to launder public money by various
methods inter alia routing funds from entities based in tax havens,
diversion of funds by way of buy back of equity shares, round
tripping of funds for personal gain, making unsecured advances to
sister/subsidiary concerns, recording fictitious entries in books of
accounts and writing off projects. As such, the first EOW complaint
and the second EOW complaint disclose commission of cognizable
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offences under the IPC and the PMLA which is within the exclusive
jurisdiction of respondent No.1 and 2 to investigate and take
necessary action in pursuance thereof.
11. The petitioner has enclosed the following documents;
(a) A list of individuals who are associated with
Anand Jaikumar Jain by virtue of being Directors in the
sister/subsidiary concerns, annexed as "Exhibit L" to
this petition;
(b) A list of subsidiary companies of Jai Corp Ltd
incorporated in India having played a role in the entire
conspiracy to defraud investors and launder public
money, annexed as "Exhibit M" to this petition;
(c) A list of subsidiary companies of Jai Corp Ltd
incorporated abroad having played a role in the entire
conspiracy to defraud investors and launder public
money, annexed as "Exhibit N" to this petition;
12. The petitioner had given chronological events throwing light
on the nature of the fraud committed by Anand Jaikumar Jain
which is as under;
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(i) On 5th April, 2004 and 15th May, 2004, Mumbai
SEZ and Navi Mumbai SEZ are respectively
incorporated. Anand Jaikumar Jain is the Chairman and
Director for both Mumbai SEZ as well as Navi Mumbai
SEZ;
(ii) Mumbai SEZ has availed loans to the tune of
Rs.686 Crores from Public Sector Banks. (Rs.486 Crores
from IDBI Bank and Rs.200 Crores from IDFC). The
petitioner craves leave to refer and reply upon the copies
of the Annual Reports/Balance Sheet of Mumbai SEZ;
(iii) Navi Mumbai SEZ has availed loans to the tune
of Rs.3252.11 from Public Sector Banks. The petitioner
creaves leave to refer and reply upon the copies of the
Annual Reports/Balance Sheet of Navi Mumbai SEZ;
(iv) On 17th July, 2007, Vinamra Universal Traders
Pvt. Ltd ("Vinamra Traders") was incorporated. One Mr.
Sanjay Punkhia is the Director of Vinamra Traders.
Pertinently, (i)Mr. Sanjay Punkhia is also a Director in
Mumbai SEZ and Navi Mumbai SEZ and (ii) the
registered address of Vinamra Traders, Mumbai SEZ and
Navi Mumbai SEZ are the same;
(v) On 4th August, 2007 and 22nd September, 2007,
Mumbai SEZ and Navi Mumbai SEZ, respectively,
advanced unsecured loans to the tune of Rs.550 Crores
at 6.5% p.a and Rs.2275 Crores at 8% to Vinamra
Traders;
(vi) In turn, Vinamra Traders advanced unsecured
loans in the form of Inter Corporate Deposits to 10
other agents as well as one Dharti Investment Holdings
Ltd. (Dharti Investment) i.e a subsidiary of Jai Corp Ltd.
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(vii) SEBI has vide Order dated 1st January, 2021 held
that 12 agent Companies of RPL were manipulating the
Futures of the RPL stock. A table showing the collective
illegitimate profit of Rs.513.12 Crores earned by futures
stock manipulation is provided hereinbelow;
Name of Company Amt in
(Rs.Crore)
Relpol Plastic Products Pvt. Ltd. 60.51
Aarthik Commercial Pvt Ltd 53.87
Gujarat Petcoke & Petro Product Supply 48.00
Pvt. Ltd;
Fine Tech Commercial Pvt Ltd 33.76
Motech Software Pvt Ltd 38.56
LPG Infra Structure India Pvt Ltd 42.57
Darshan Securities Pvt. Ltd. 37.17
Relogistics (India) Pvt Ltd 10.94
Pipeline Infra Structure Indian Pvt. Ltd 54.42
Relogistics Rajasthan Pvt. Ltd. 00.49
Vinamra Universal Traders Pvt Ltd 60.30
Dharti Investments & Holding Ltd 72.53
Total 513.12
(viii) SEBI has imposed a penalty of Rs.20 Crores and
Rs.10 Crores on Navi Mumbai SEZ and Mumbai SEZ
respectively, for aiding and abetting in the fraud while
stating in Paragraph 87 that, "Noticee No.3 and Noticee
No.4 actively aided and abetted RIL by providing funds
to Vinamra, which was ultimately used in providing
margin money to stock brokers for taking the short
positions by the Agents of RIL in RPL futures for
earning illegitimate profits from the said positions. "
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(ix) SEBI has held in Paragraph 82 that Vinamra
Traders was incorporated on 11th July 2007 and
immediately thereafter, on 4th August, 2007 and 22nd
September, 2007, Navi Mumbai SEZ and Mumbai SEZ
entered into unsecured facility agreements (ICDRs) with
Vinamra Traders for staggering amounts of Rs.2775
Crores and Rs.550 Crores respectively days within it's
incorporation. The relevant excerpt of Paragraph 82 is
being reproduced hereinbelow;
"Therefore, I note that both Noticee No.3 and
Noticee No.4 have advanced unsecured loans
to vinamra at concessional rates of interest,
despite their claims that they are not
connected with Vinamra. However, I am of
the view that placing of ICDs at such a low
interest rate with a new company but
unrelated entities is not in the normal course
of business".
(x) Hence, what evolves from the aforesaid is that a
total profit of Rs.513.12 Crores has been generated by
Vinamra Traders during the fraudulent trading of RPL
futures. The mastermind behind the scheme is Anand
Jaikumar Jain who is the Chairman/Director of Navi
Mumbai SEZ and Mumbai SEZ i.e the Companies that
forwarded the unsecured loans to Vinamra Traders
days within its incorporation. Vinamra Traders in turn
made unsecured advances to the 12 Agent Companies
that used these funds as margin money for taking short
positions and earning illegal profits.
(xi) From the amount of Rs.513.12 Crores that was
generated by fraudulent trading in futures of RPL, an
amount of Rs.387 Crores was advanced by Jai Corp
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Ltd to Jai Realty Ventures Ltd ("Jai Realty") as
unsecured loans. Jai Realty is a 100% subsidiary of Jai
Corp Ltd.
(xii) From the above Rs.387 Crores that was advanced
by Jai Corp, an amount of Rs.330 Crores was
advanced to 18 of Jai Realty's subsidiary companies
without any security.
(xiii) The 18 subsidiary companies of Jai Realty
that have received unsecured loans have in their books
of accounts shown the monies advanced as utilized for
the purchase benami lands or benami development
rights, constructions expenses pertaining to the
benami lands or benami development rights, payment
of Income Tax penalties, etc. The subsidiary
Companies have shown the amounts received by them
as losses over a period of years. This could only have
been accomplished either by procuring fictitious bills
for material/labour allegedly used for the alleged
constructions or by executing forged and fabricated
documents/agreements against advances paid for
purchase of benami land and/or benami development
rights. The Petitioner craves leave to refer to and rely
upon the copies of the Annual Report/Balance Sheets
of Jai Reality Venture Ltd;
(xiv)The table provided hereinbelow details the
manner in which 330.71 Crores have been laundered
by Anand Jaikumar Jain through his subsidiaries:
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Name of Date of Loan Amt Amt spent Amt
Company Incorporati from / paid/paid as on syphoned
on by Jai advance for construction /misappr
Realty purchase of etc in Rs opriated
Venture land/develop (Crore) and in (Rs.
Ltd in ment rights management Crore)
(Rs in (Rs.
Crore) Crore)
A B C B+C=
Multifaced 21.11.1994 01.36 00.93 00.43
Impex Ltd
Hill Rock 13.10.2005 10.42 00.58 09.84
Constructi
on Ltd
Hari 14.10.2005 07.86 01.06 06.80
Darshan
Realty Ltd
Vasant 18.10.2005 00.25 00.80 01.14
Bahar
Realty Ltd
Welldone 21.02.2006 04.72 00.12 04.60
Real Estate
Ltd
Hind Agri 04.12.2006 09.44 09.44
Properties
Ltd
Yug 03.02.2007 11.39 01.07 10.32
Developers
Ltd
Swar Land 05.03.2007 31.00 00.38 30.62
Developers
Ltd
Swastik 05.03.2007 08.76 08.76
Land
Developers
Ltd
Krupa 06.08.2007 23.60 04.22 19.38
Land Ltd
Novelty 20.08.2007 12.23 09.53 02.70
Realty &
Developers
Ltd
Iconic 20.08.2007 119.41 30.35 89.06
Realtors
Ltd
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Krupa 21.08.2007 08.26 00.04 08.22
Realtors
Ltd
Ekdant 21.08.2007 16.80 14.00 02.80
Realty &
Developers
Ltd
Rainbow 27.09.2007 15.00 11.50 03.50
Infraprojec
ts Ltd
Rudradev 01.10.2007 11.74 10.00 01.74
Developers
Ltd
Jailaxmi 09.01.2008 19.42 17.31 02.11
Realty &
Developers
Ltd.
Ashok 09.10.2008 17.36 06.96 10.40
Realty &
Developers
Ltd
Total 329.02 127.05 203.66 330.71
13. The petitioner, however, contends that Jai Reality advanced a
loan of Rs.9.44 crore to Hind Agri Properties Limited and that
Hind Agri Properties Ltd utilized the loan amount to purchase
agricultural land and carry out construction on the said land.
Subsequently, the land and constructions thereon were transferred
to Nidhi Kanoj, Neha Bagaria and Ruchi Jain, the daughters of
Satyapal Jain, Anand Jain and Virendra Jain respectively, the
Directors and Promoters of Jai Corp Ltd.
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14. The petitioner further contends that Jai Reality has advanced
a loan of Rs.32.70 Crore to Swar Land Developers Ltd and Swar
Land Developers utilized the above loan amount to purchase
industrial plot at M.I.D.C Dombivili, Maharashtra. The industrial
galas constructed on the Plot were sold/rented and the invested
amount of Rs.32.70 Crore and profit earned on the investment by
Swar Land Developers Ltd was transferred to Jai Corp Ltd by
allotment and thereafter redemption of Optional Fully Convertible
Debentures exchanged between Jai Corp Ltd and its subsidiaries
i.e., Swar Land Developers Ltd, Swastik Land Developers Ltd and
Jai Reality.
15. It is contended by the petitioner that Jai Reality advanced a
loan of Rs.8.76 Crore to Swastik Land Developers Limited and
Swastik Land Developers Limited utilized the loan to purchase
development rights on a plot of land. Subsequently, the said
Company terminated the development rights and earned a compensation
of Rs.4 Crores. The loan amount of Rs.8.76 Crores and profits earned
on the loan amount were transferred to Jai Corp Ltd by Swastik Land
Developers Ltd by allotment and thereafter redemption of Debentures
was exchanged between Jai Corp Ltd and its subsidiaries.
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16. The petitioner further contends that Income Tax Department
carried out search and seizure operations under section 132 of the
Income Tax Act in the case of eleven of the aforesaid subsidiary
companies of Jai Reality. It was for the assessment year 2008-2009.
The penalty imposed by Income Tax Department on the companies
is depicted in the following chart;
Name of Penalty imposed Penalty paid by Penalty disputed
Company by Income Tax in company in by Company in
(Rs. Crore) (Rs. Crore) (Rs. Crore)
Iconic Realtors 20.20 14.30 05.71
Ltd
Krupa Land Ltd 12.71 06.87 05.84
Jailaxmi Realty 08.94 02.12 06.82
& Developers
Ltd
Rudradev 02.07 01.77 00.288
Developers Ltd
Krupa Realtors 01.33 01.04 00.29
Ltd
Ekdant Realty & 00.60 00.48 00.12
Developers Ltd
Yug Developers 00.48 00.374 00.1159
Ltd
Welldone Real 00.329 00.255 00.073
Estate Ltd
Vasant Bahar 00.24 00.10 00.14
Realty Ltd
Novelty Realty 00.23 00.15 00.08
& Developers
Ltd
Krupa Land Ltd 00.13 00.07 00.06
TOTAL 47.259 27.529 19.73
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17. The petitioner has contended about fraud through Real Estate
Private Funds in India by Jai Corp Ltd being a company promoted
by Anand Jaikumar Jain and his related entities who own a 100%
stake in UIVCL and UITL. Between May, 2006 and June, 2008, an
amount of Rs.2423 Crores was mobilized from the public at large
for and on behalf of UIOF. An amount of Rs.555 Crores out of
2423 Crores was diverted to four Real Estate Companies, which are
depicted in the chart below;
Name of Amounts/ Amounts spent on Loss to
Company Inventories of purchase of benami Investors/Contribu
UIOF diverted to land/development tors of UIOF in
the Company in rights and (Rs. Crore)
(Rs. Crore) construction thereon
in
(Rs.Crore)
Vidhant 72.92 +6.85 [A] 47.73 79.77
Reality Pvt Ltd
Urban Reality 59.27 65.27 65.27
Pvt Ltd
Urban Kshetra 114.86+259.87 374.73
Infrastructure [B]
Pvt. Ltd
Anacron 36.00 30.00 36.00
Realtors Pvt
Ltd
Total Loss 555.77
18. An amount of Rs.1995.40 Crores advanced as loans to
construction companies by UIOF vide 33 Special Venture Project
Agreements in 15 different cities as demonstrated in the table
hereinbelow:
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Company Disbursed Amt Outstanding Amt Outstanding Amt
in (Rs.Crore) (Rs Crore) with (Rs Crore) with
upto Profit as on Profit as on
30.09.2014 31.12.2016 30.16.2021
Aditya Housing & 264.00 00.01
Infrastructure Corp
Pvt Ltd
Light House 10.00
Developers Pvt. Ltd
Neelkanth Township 273.00 175.00 122.00
& Construction Pvt
Ltd, Neelkanth Urban
Developers Pvt Ltd &
Neelkanth Ricelands
Pvt Ltd
Ozone Projects Pvt 388.00 372.00 372.00
Ltd & Ozone Propex
Pvt Ltd
Skyline Mansions Pvt 111.00 81.00
Ltd
Ess Gee Realty Pvt
Ltd
Mayfair Urban
Developers Ltd
Sterling Urban 160.00 160.00 70.00
Infraprojects Pvt Ltd
Goldbricks 54.00
Infrastructure Pvt Ltd
Mindspace Reality Pvt 63.00 64.00 63.00
Ltd
Nirmal Infrastructure
Pvt Ltd
Prestige Construction 08.00
Ventures Pvt Ltd
Sun Infrastructure 94.00
Pvt Ltd
Joyce Realtors Pvt Ltd 186.00 187.00 186.00
Odyssey Developers 125.00
Pvt Ltd
Sanmati 44.00
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Infradevelopers Pvt
Ltd
Urban Akarsh
Infrastructure Pvt. Ltd
R.K. Group 95.40 54.00
Suyojit Group 94.00 94.00
Maker Group 178.00
Raheja Universal 125.00
Integrated Township 54.00 35.00
near SEZ Puducherry
Panvel Residential 04.00
Project
Total 1995.40 1374.00 996.01
a) An amount of Rs.1667 Crore of the principal amount has
been recovered and distributed to Investors.
b) An amount of Rs.240 Crore has been earned as income on the
Rs.1995 Crore invested over a period of 14 years and has been
distributed to Investors.
c) Out of the Rs.996.01 Crore investment and profit to be
received, Rs.732 Crore is under litigation. The documents showing
the investment of Rs.1995.40 Crore in other companies and the
amounts received and amounts pending are part of the Quarterly
Reports of Urban Infrastructure Opportunities Fund.
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d) A total of 1060 Crores is still to be paid to Investors of UIOF
as on 30 June 2021.
(ix) Advisory and Management Fee of Rs.340.035 Crores earned
by Anand Jaikumar Jain through UIVCL is demonstrated in the
table hereinbelow;
Financial Name of Entity paying Amount in
Year Advisory/Management Fees (Crore Rupees)
2007-08 Urban Infrastructure Opportunities Fund- 00.07
India
2008-09 Urban Infrastructure Trustees Ltd - India 55.00 +00.10
& Urban Infrastructure Opportunities
Fund - India
2009-10 Urban Infrastructure Trustees Ltd - India 54.96 +00.10
& Urban Infrastructure Opportunities
Fund - India
2010-11 Urban Infrastructure Trustees Ltd - India 53.00 +00.10
& Urban Infrastructure Opportunities
Fund - India
2011-12 Urban Infrastructure Trustees Ltd - India 50.34 + 00.09
& Urban Infrastructure Opportunities
Fund - India
2012-13 Urban Infrastructure Trustees Ltd - India 51.36+00.085
& Urban Infrastructure Opportunities
Fund - India
2013-14 Urban Infrastructure Trustees Ltd - India 29.79+00.08
& Urban Infrastructure Opportunities
Fund - India
2014-15 Urban Infrastructure Trustees Ltd - 06.28+00.08
India & Urban Infrastructure
Opportunities Fund - India
2015-16 Urban Infrastructure Capital Advisors - 12.15
Mauritius
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2016-17 Urban Infrastructure Capital Advisors - 11.85
Mauritius
2017-18 Urban Infrastructure Capital Advisors - 08.68
Mauritius
2018-19 Urban Infrastructure Capital Advisors - 08.18
Mauritius
2019-20 Urban Infrastructure Capital Advisors - 04.09
Mauritius
TOTAL 340.035
(a) UIVCL is the Indian Investment Advisor to Urban
Infrastructure Capital Advisors - Mauritius ("UICA - Mauritius)
which is under the control of Anand Jaikumar Jain.
(b) UICA - Mauritius is the Investment Manager to Urban
Infrastructure Real Estate Fund LP - Mauritius ("UIREF
Mauritius") which is under the control of Anand Jaikumar Jain.
(c) The Petitioner states that huge sums of money have been
usurped by Anand Jaikumar Jain towards management and advisory
fee when a staggering amount of Rs.1060 Crores is outstanding and
to be paid to the investors of UIOF. The details of the amount
(which is in excess of Rs.400 Crore) earned by Anand Jaikumar
Jain, his associates and family members through UIVCL as
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management/advisory fees is detailed in the Balance Sheet/Annual
Report of Urban Infrastructure Venture Capital Ltd hereinabove.
(x) What becomes clear is that Anand Jaikumar Jain has through
the Fund embezzled public money through various channels viz.
Unsecured loans to subsidiaries and related companies, diversion of
funds as advisory/management fee and transfer of assets for their
personal unlawful gain and interests. There has been a concerted
effort to unlawfully divert the investor money from UIOF and
usurp the same for personal gain. There is an urgent need to carry
out a forensic audit to determine the exact amount that has been
siphoned off from UIOF in light of the fact that, Rs.1060 Crores is
yet to be collectively paid to unit holders/investors of UIOF. Hence,
the intervention of Respondent No.1 and 2 is necessary to meet the
ends of justice.
(xi) The mala fide intention of Anand Jaikumar Jain is further
fortified by the fact although, he was statutorily and contractually
obliged to wind-up the Scheme i.e UIOF on 8 May 2013 or on 8
May 2015 UITL elected to elongate the tenure of the Scheme.
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(xii) Despite being mandatorily required to wind-up the Scheme
within the timelines as stipulated above, the Fund continued to
subsist as on 30 October 2022. Thus, due to the unlawful
elongation of the Fund's tenure, SEBI conducted a forensic
inspection of UIVCF's books, which was completed in February
2021, for the period 1 April 2019 till 31 March 2020 ("the
Inspection"). The UIVCF Winding Up Order inter alia recorded
that "By not complying with the terms specified in PPM in respect
of tenure of the scheme, not winding up of the Fund within the
time specified in PPM, the Fund has violated provisions of
Regulation 16 (1) (a) and 23 (1 (a) of VCF regulations ".
(xiii) The Petitioner has also filed a Complaint with SEBI on 25
March 2023, whereby the various facts pertaining to the fraud
perpetuated by Anand Jaikumar Jain vis-a-vis winding up of the
Fund were demonstrated. The petitioner craved leave to refer to
and rely upon a copy of the Complaint dated 25 March 2023 filed
with SEBI.
C. FORMATION OF REAL ESTATE FUNDS IN MAURITIUS
AND JERSEY - CHANNEL INSLANDS
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I. Urban Infrastructure Capital Advisors-Mauritius ("UICA
Mauritius") is a private equity company registered in Mauritius.
UICA Mauritius has made a filing before the competent authorities
in the USA on 19 March 2019 which reveals that:
(i) UICA Mauritius is a real estate private equity fund and its
activities are restricted to investment in the real estate sector in
India.
(ii) UICA Mauritius is an advisor to Urban Infrastructure Real
Estate Fund LP - Mauritius (UIREF Mauritius) and UIREF is the
Master Fund.
(iii) UICA Mauritius has two "Feeder Funds" namely, (i) Urban
Infrastructure Real Estate - Jersey Ltd. and (ii) Urban Infrastructure Real
Estate Partnership LP- Jersey, Channel Islands.
(iv) Gross Asset Value of UICA Mauritius as on 19 March 2019 is USD
77,322,542 which is equivalent to Rs.541 Crores.
(v) UIVCF is the Investment Advisor as well as client of UICA
Mauritius.
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(vi) UICA Mauritius is being controlled by an individual that is
not named in the filing before the competent authority.
(vii) On 27 June 2012, UIREF Mauritius sold assets worth USD
300,000,000/- which is equivalent to Rs.1710 Crores (as on 27
June 2012).
(viii) Importantly, the residential/commercial projects financed by
Anand Jaikumar Jain using the funds of UIOF are the same as the
projects claimed by UIREF Mauritius as "assets" valued at USD
486600000 which is equivalent to Rs.3406 Crores.
II. According to the petitioner, investment in real estate by
foreign investors is regulated under the Foreign Exchange
Management Regulations and the guidelines issued by RBI only
permit foreign investors to invest in equity and thus, in these
circumstances, there is an urgent need to ascertain how assets worth
Rs.3404 Crores were apparently acquired by UIREF Mauritius and
thereafter, how assets worth Rs.1710 Crores were sold on 27 May
2012. According to the petitioner, a forensic audit is required to be
conducted by the Respondent Nos.1 and 2 to ascertain whether any
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monies have been invested by Anand Jaikumar Jain in UIREF
Mauritius and the nature of such transactions.
19. It is petitioner's case that there was fraudulent diversion of
loans from India to Mauritius and Sharjah (UAE); that Anand
Jaikumar Jain has diverted/laundered the public funds to the tune of
Rs.98.83 Crores (Foreign Currency Loan) which were availed by
Navi Mumbai SEZ, by funneling them into subsidiary companies of
Anand Jaikumar Jain registered in Mauritius and Shahrjah, UAE.
The structure through which the funds have been diverted is set out
by the petitioner as under;
(i) On 4 June 2008, Belle Terre Realty Ltd. ("Belle Terre") was
incorporated in Mauritius and is a 100% subsidiary of Jai Realty.
Currently, Jai Realty has been merged with the Jai Corp Ltd on 21
August 2019. Hence, Belle Terre is a 100% subsidiary of Jai Corp
Ltd.
(ii) Belle Terre is the parent company of (i) Searock Developers
FZC (Sharjah UAE) ("Searock Sharjah") and (ii) Oasis Holding FZC
(Sharjah UAE) ("Oasis Sharjah"). Hence, Belle Terre, Searock
Sharjah and Oasis Sharjah are 100% subsidiaries of Jai Corp Ltd.
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(iii) Between 4 June 2008 and 31 March 2020, Belle Terre
transferred USD 1,56,42,554 to Searock Sharjah and USD
68,87,929 to Oasis Sharjah, for purchase of property in Sharjah.
(iv) Searock Sharjah and Oasis Sharjah collectively utilised USD
86,00,803 i.e approximately Rs.36,98,34,529/-, for purchase of
land on a 50 year lease.
(v) Upto March 2020, a sum of USD 88,65,335 which is
equivalent to approximately Rs.53,19,20,100/- has been utilised by
Searock Sharjah and Oasis Sharjah for construction of labour
accommodation camps in Sharjah, UAE and it seems that a total
amount of Rs.90,17,54,629/- has been spent collectively on
construction of these camps.
(vi) Importantly, neither Searock Sharjah nor Oasis Sharjah are
involved in any business activities which require any form of labour.
II. According to the petitioner, a collective reading of the
information gathered regarding the advances made by Belle Terre
Mauritius to Searock Sharjah and Oasis Sharjah, all three of which
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are 100% subsidiaries of Jai Corp Ltd suggests that (i) fictitious bills
and invoices were raised to claim expenses for alleged labour and
construction activities undertaken by Searock Sharjah and Oasis
Sharjah, and (ii) the sole beneficiaries of these dubious transactions
is Anand Jaikumar Jain and his subsidiary companies.
E. FICTITIOUS INVOICES RAISED FOR EXPORTS TO NEW
SOUTH WALES, AUSTRALIA AND CALIFORNIA, USA
1. SARBAGS, NSW
(i) The Petitioner has collated information regarding a company
that was registered in New South Wales, Australia by the name of
Sarbags PTY Ltd. (Sarbags, NSW) on 25 October, 2010, which
Sarbags NSW was later shut down on 1st November 2017.
(ii) Sarbags NSW was in the business of sale and distribution of
rope, bags and geo textiles which were imported from Jai Corp Ltd.
Furthermore, the Director of Sarbagas NSW i.e Mr. Vasudev
Shrinivas Pandit is also a director in Jai Corp Ltd and other
subsidiary companies of Jai Crop Ltd.
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(iii) Between 2012 and 2017, Sarbags NSW has sold products
imported from Jai Corp Ltd to the tune of Rs.17,28,46,980/- (AUD
31,39,692).
II. ASSURENE PRODUCTS CORPORATION, USA.
(i) The Petitioner has collated information regarding a company
that was registered in California USA by the name of Assurene
Products Corporation (Assurene) on 13 March 2014, which is as
under;
(ii) Assurene was wound up on 2 May 2015. Assurene was in the
business of sale and distribution of rope, bags and geo textiles which
were imported from Jai Corp Ltd. Furthermore, the Director of
Assurene i.e Mr. Pramod Kumar Jaiswal is also a director in Jai
Corp Ltd and other subsidiary companies of Jai Corp Ltd.
(iii) That between 2014 and 2016, Assurene had sold products
imported from Jai Corp Ltd to the tune of Rs.268,28,05,358/-
(USD 4,03,89,441).
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20. This Court from time to time passed various orders in this
petition which read as under;
Order dated 18th September, 2024 reads as under;
"1. We heard learned Senior Counsel appearing for
the petitioner for some time. We also heard learned
Special Public Prosecutor and the learned APP
appearing for the respondent nos. 1 and 2.
2. Learned Senior Counsel has invited our attention
to a communication dated 25.01.2022 addressed to the
Chairman, SEBI, by the Assistant Commissioner of
Police, Economic Offences Wing, Mumbai. Learned
Senior Counsel would submit that the copy of the said
communication has also been forwarded to the
petitioner, however, the petitioner is unaware with
regard to steps, if any, being taken by the respondents'
in respect of the allegations levelled by the petitioner as
well as in respect of the complaints dated 22.12.2021
and 03.04.2023.
3. Looking to the enormity of the alleged fraud /
misappropriation involved in this case, learned Senior
Counsel seeks directions to the respondent nos. 1 and 2
to place on record a report in that respect.
4. Learned Special P.P. and the learned APP seek two
weeks time to place on record an inquiry report or
investigation, if any, carried out by them.
5. Meanwhile, liberty to the petitioner to implead
the SEBI as a party respondent. Necessary amendment
shall be carried out within one week. After amending
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the petition, a notice be issued to the newly added
respondent, which shall be made returnable on the next
date.
6. List on 7th October, 2024"
Order dated 7th October, 2024 reads as under;
"1. Pursuant to our order dated 18th September
2024 issuing notice to SEBI, Mr. Daruwala states that
he has instructions to appear for SEBI. MR. Daruwala
learned Counsel seeks time to file an affidavit-in-reply.
Time granted. The same to be filed in the Registry
before the next date with an advance copy to the
learned Counsel for the petitioner.
2. Mr. Ponda, learned Senior Counsel has tendered
an additional affidavit of the petitioner and a copy
thereof is served on the learned Counsel for the
respective respondents. The same is taken on record.
3. Since no officer from EOW is present, we direct
a responsible officer, well versed with the facts to be
present on the next date.
4. Stand over to 16th October, 2024".
Order dated 16th October, 2024 reads thus;
1. Ms. Shinde, learned APP appearing on behalf of
the Economic Offences Wing (EOW), on instructions
states, that the petitioner's statement will be recorded
by the EOW any time on or before 27th October 2024.
Statement accepted.
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2. After the petitioner's statement is recorded, the
police to take appropriate steps, in accordance with
law.
3. Stand over to 18th November 2024.
4. Mr. Daruwalla, learned counsel for the
respondent No.3- SEBI has tendered an affidavit-in -
reply of the said respondent. The same is taken on
record and a copy thereof is served on the Counsel for
the petitioner.
5. Mr. Ponda, learned senior counsel appearing on
behalf of the petitioner seeks time to file an affidavit-
in-rejoinder. The same to be filed in the Registry on or
before 12th November 2024 with an advance copy to
the other side".
Order dated 18th November, 2024 reads thus;
1. Pursuant to our order dated 16th October, 2024,
Ms.Shinde, learned APP has tendered a letter dated
7th November, 2024 addressed by the Deputy
Commissioner of Police, EOW-I, Mumbai to the Joint
Director, CBI, EOB, Mumbai as well as the Joint
Director of SFIO, Mumbai.
2. From the said letters, it appears that the EOW,
Mumbai, has forwarded the complaint of the
petitioner for further action to the CBI, EOB,
Mumbai. The said letters dated 8th November, 2024
are taken on record. In the last paragraph of the said
letters, it is stated as under :
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"Upon perusal of the petitioner's statement and
the documents submitted, it is revealed that the
alleged offences involved significant sums
amounting to thousands of crores of rupees,
span multiple jurisdictions, and implicate
nationalized banks, a Mauritius-based private
equity fund, and trans- boarder transactions
with the USA, Australia, and the UAE.
Therefore, these matters carry substantial
financial implications at both national and
international levels.
In the best interest of conducting a through
inquiry /investigation, we are forwarding this
matter to your esteemed office for appropriate
action."
3. In view of the aforesaid, learned Senior Counsel
for the petitioner seeks leave to amend to implead the
CBI and SFIO as party respondents. Leave granted.
Amendment to be carried out forthwith, during the
course of the day.
4. On amendment being carried out, issue notice to
the newly added respondents i.e. the Joint Director,
CBI, EOB, Mumbai as well as to the Joint Director,
SFIO, Regional Office, Mumbai, returnable on 25th
November, 2024. In addition to Court notice, learned
Senior Counsel for the petitioner to ensure that the
private notice is served on the newly added
respondents and affidavit of service is filed in the
Registry before the next date.
5. Stand over to 25th November, 2024. To be listed
under the caption 'Due Admission'.
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Order dated 28th November, 2024 reads thus;
"1. Considering what transpired during the hearing
of the aforesaid petition i.e disclosure made by the
learned A.P.P as well as Mr. Patil, learned Special
Public Prosecutor appearing for the C.B.I, we deem it
appropriate to direct the Joint C.P, EOW, Mumbai to
remain present tomorrow i.e on 29th November, 2024.
2. Stand over to 29th November, 2024 at 1.00 p.m".
3. In the meantime, Mr. Ponda, learned Senior
Counsel appearing for the petitioner seeks leave to
amend the petition to implead State C.I.D as
respondent. Leave granted. Amendment to be carried
out forthwith.
4. Issue notice to the newly added respondent -
State C.I.D. Ms. Shinde, learned A.P.P waives notice
on behalf of the newly added respondent - State
C.I.D.
5. Considering the peculiar facts of the present case,
we direct our Sheristedar to take xerox copies of the
internal notings shown to us by Ms. Shinde, the
learned A.P.P and keep the same in the sealed envelope.
The letter tendered by Mr. Patil, learned Special
Public Prosecutor also be kept in the sealed
envelope".
21. We have perused the petitioner's statement as well as the
affidavit-in-reply filed by the respondent No.3 as well as internal
notings of EOW. We are surprised and shocked to learn that the
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EOW Mumbai had forwarded the complaint of the petitioner for
further action to the CBI, EOB, Mumbai wherein, EOW has stated
as under;
" Upon perusal of the petitioner's
statement and the documents submitted, it is
revealed that the alleged offenses involved
significant sums amounting to thousands of
crores of rupees, span multiple jurisdictions, and
implicate nationalized banks, a Mauritius-based
private equity fund, and trans-border transactions
with the USA, Australia, and the UAE. Therefore,
these matters carry substantial financial
implications at both national and international
levels.
In the best interest of conducting a
thorough inquiry /investigation, we are
forwarding this matter to your esteemed office
for appropriate action."
22. In view of the stand taken by EOW, learned Senior Counsel
appearing for the petitioner sought to amend the petition to
implead Central Bureau of Investigation (CBI) and Serious Fraud
Investigation Office (SFIO) as party respondents. Accordingly, they
were impleaded as party respondents. We even permitted the
learned Senior Counsel appearing for the petitioner to implead
State Crime Investigation Department (CID) as party respondent.
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23. The Deputy Commissioner of Police, EOW, Mumbai vide his
communication dated 7th November, 2024 forwarded the complaint
of the petitioner to the Joint Director Central Bureau of
Investigation EOB, Mumbai as well as to the Joint Director, Serious
Fraud Investigation Office, Regional Office, Mumbai by informing
both the Authorities as regards;
(a) Misappropriation of public funds for personal
enrichment;
(b) Defrauding investors;
(c) Round-tripping of funds through shell companies
to evade taxes;
(d) Misappropriation of public funds by granting
unsecured advances to subsidiary companies;
(e) Creation of dubious and fictitious invoices.
24. Admittedly, detailed statement of the petitioner came to be
recorded by the EOW on 28 th October, 2024. Looking to the
enormity of the offences and the fact that it involves thousands of
crores of rupees, spans multiple jurisdictions and implicate
nationalized Banks as well as foreign entities based in Mauritius,
USA, Australia and UAE involving substantial financial implications,
at both, national and international levels, the D.C.P, EOW, Mumbai
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requested the aforesaid Authorities for taking appropriate action.
Shockingly, Superintendent of Police, CBI, EOW, Mumbai has sent a
communication dated 26th November, 2024 to the Deputy
Commissioner of Police, EOW, Mumbai which is extracted below;
"1. It is observed that complaint pertains to
fraudulent trading in futures of stocks and
utilization of profit and also violation of Indian
Securities Law Matters and SEBI
regulations/guidelines which is within the
purview of SEBI to take appropriate action;
2. Further, it is observed that the Petitioner
has gathered information that Prima Facie
suggests a large scale operation has been
undertaken by Jai Corp Ltd through Anand
Jaikumar Jain and its subsidiaries to launder
public money and defraud investors that is in
the purview of Enforcement Department.
In view of the above facts and circumstances,
the matter cannot be taken up on these
allegations and the instant same complaint as
received is returned herewith. For further n/a at
your end, CBI did not conduct any enquiry in
the instant complaint".
25. It can thus be seen, that both the EOW as well as the CBI, for
the reasons best known to these Agencies, are reluctant to
inquire/investigate into the complaints made by the petitioner
having such large scale alleged misappropriation of public funds as
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well as laundering, by Mr. Anand Jaikumar Jain, who is the
Promoter and Director of Jai Corp Ltd along with its subsidiary
companies and others.
26. We have no words to demonstrate the conduct of the
Investigating Agencies viz: EOW as well as CBI. We may say, we are
disappointed. We feel that there will be no fair and impartial
investigation into the alleged crimes either by the EOW or by the
Superintendent of Police, CBI, EOW and hence, a special team
needs to be constituted by the Zonal Director CBI to ensure
efficient investigation into the offences of such magnitude. The need
to instill confidence in the investigations and consequently, in the
administration of justice, is of utmost concern. The case in question,
has national and international ramifications. No doubt, the EOW in
its internal notings which were placed before us for perusal,
observed, that considering the magnitude of the alleged scam which
runs into thousands of crores of rupees, multiplicity of jurisdictions,
the role of nationalized Banks (Union Bank, IDBI Bank, IDFC Bank)
and Mauritius based private equity fund plus trans-border
transactions with USA, Australia and UAE, it is in the best interests
of investigation that the matter be handled by CBI, SFIO. This is
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the noting by the Joint Commissioner of Police EOW on 4 th
November, 2024. The reluctance to inquire/investigate was writ
large during the hearing of the petition.
27. Looking to the conduct of both the EOW and CBI, we as
Constitutional Court cannot remain a mute spectator when it
becomes apparent that the Agencies are passing the buck from each
other. We must clarify, that transferring the investigation to SIT
does not mean that we have ruled on the guilt of the person/persons
named as that is not the scope of the petition. In the case of State of
West Bengal and others Vs. Committee for Protection of
Democratic Rights and others1, an issue was referred to the opinion
of the Constitution Bench as to whether in exercise of jurisdiction
under Article 226 of the Constitution of India, the High Court
could direct the CBI established under Delhi Special Police
Establishment Act, 1946 to investigate into a cognizable offence
alleged to have taken place within the territorial jurisdiction of the
State, without the consent of the State Government. The
Constitution Bench laid down the following legal position. In
exercise of its jurisdiction under Article 226 of the Constitution of
1 (2010) 3 SCC 571
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India has power to direct the CBI to investigate a cognizable offence
alleged to have been committed within the territory of a State
without the consent of that State and such direction will not
entrench upon the federal structure of the Constitution. The
direction to transfer the investigation to the CBI also does not
violate the doctrine of separation of power. The Superior Courts are
the protectors of civil liberties and have not only the power and
jurisdiction but also an obligation to protect the fundamental rights,
more particularly those guaranteed under Article 21 of the
Constitution. There are, however, certain self-imposed limitations
on the exercise of these Constitutional powers, but no inflexible
guidelines can be laid down to decide whether to transfer the case
or not. The power of transfer should not be exercised as a matter of
routine or merely because a party has leveled some allegations
against the local police. The power to transfer the investigation can
be used when it becomes necessary to provide credibility and instil
confidence in the investigation or where the incident may have
national and international ramifications or where such an order may
be necessary for doing complete justice and enforcing the
fundamental rights.
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28. This Court (Coram: N.M. Jamdar & Prithviraj K. Chavan,
JJ.) in Criminal Writ Petition No.134 of 2017 (Minna Pirhonen Vs.
The State of Goa and another) while transferring the investigation
to the Central Bureau of Investigation in case of death of 22 year
old Finish National namely Felix Dahl has made following
observations in paragraphs 19 and 20, which read thus;
"19. In the case of State of West Bengal and
others Vs. Committee for Protection of
Democratic Rights and others (2010) 3 SCC 571
an issue was referred to the opinion of the
Constitution Bench as to whether in exercise of
jurisdiction under Article 226 of the
Constitution of India, the High Court could
direct the CBI established under Delhi Special
Police Establishment Act, 1946 to investigate
into a cognizable offence alleged to have taken
place within the territorial jurisdiction of the
State, without the consent of the State
Government. The Constitution Bench laid down
the following legal position. In exercise of its
jurisdiction under Article 226 of the
Constitution of India has power to direct the
CBI to investigate a cognizable offence alleged to
have been committed within the territory of a
State without the consent of that State and such
direction will not entrench upon the federal
structure of the Constitution. The direction to
transfer the investigation to the CBI also does
not violate the doctrine of separation of power.
The Superior Courts are the protectors of civil
liberties and have not only the power and
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jurisdiction but also an obligation to protect the
fundamental rights, more particularly those
guaranteed under Article 21 of the Constitution.
There are however certain self-imposed
limitations on the exercise of these
Constitutional powers, but no inflexible
guidelines can be laid down to decide whether to
transfer the case or not. The power of transfer
should not be exercised as a matter of routine or
merely because a party has leveled some
allegations against the local police. The power to
transfer the investigation can be used when it
becomes necessary to provide credibility and
instil confidence in the investigation or where
the incident may have national and international
ramifications or where such an order may be
necessary for doing complete justice and
enforcing the fundamental rights.
20. The contour of the jurisdiction of the High
Court to transfer the investigation to the CBI
came up for consideration of the bench of three
Judge in the case of Mithilesh Kumar Singh Vs.
State of Rajasthan and others 2. It was a case
where a young college student had fallen from
the fourth floor of a hostel where she was
staying with her sister. Her father had called for
a fair and proper investigation as to whether
there was a case of ragging by the seniors as
alleged by the father or she had committed
suicide. The father had invoked the jurisdiction
of Apex Court under Article 32 of the
Constitution of India. Allowing the petition, the
Court held that the decision whether a transfer
2 (2015) 9 SCC 795
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should or should not be ordered depends on the
satisfaction of the Court that the facts and
circumstances of a given case require such an
order. No hard-and-fast rule has been or can be
prescribed. Though transfer is not ordered just
because a party seeks to lead the Investigating
Agency to a given conclusion, the sensibility of
the victims of the crime or their next of kin, is
not wholly irrelevant. Further the transfer of
investigation to an outside agency does not
necessarily mean that the transferee agency will
implicate anyone in the commission of the
crime. The Apex Court took note of the fact
that local influences, pressures and pulls are
commonplace when State Police matters of
some significance. It was observed that unless
the Court sees any design behind the prayer for
transfer, the same must be seen only an attempt
to ensure that the truth is discovered and the
transfer is the perceived on the independence of
the transferee more than any other
consideration. The Court underscored a basic
proposition that the Court has rarely, viewed at
the threshold the prayer for transfer of
investigation to CBI with suspicion. It is not
necessary for the person seeking a transfer to
make out a cast-iron case of abuse or neglect on
the part of the State Police, before ordering a
transfer. Transfer can be ordered once the Court
is satisfied on the available material that such a
course will promote the cause of justice, in a
given case".
21. The aspect of transfer to CBI was
elaborately dealt with by the Apex Court in two
decisions rendered in the year 2016. The first
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being Pooja Pal Vs. Union of India and others 3
and second in Dharam Pal Vs State of Haryana
and others4. Both these decisions reiterated a
duty on the Superior Court to ensure complete
justice. The decision took a review of the earlier
law on the subject.
22. The gist of the legal position expounded in
the decision of Pooja Pal and Dharam Pal, which
will serve as a guideline in the present case, is as
follows. Crimes affect the entire society and
thus the interest of the society in the
investigation is not to be entirely ignored. The
society at large, the victims or their family
members and relatives have a right to be dealt
with fairly in a criminal trial. Denial of fair
investigation thereof is as much injustice as to
the victim and the society as to the accused. A
victim cannot be treated as an alien or a total
stranger in the criminal trial. With the passage
of time, there is a greater emphasis on
victimology, and the crime has to be viewed
from the perspective of the criminal as well as
the victim when judged in the social context.
The justice system will acquire credibility only
when the people will be convinced that justice is
based on the foundation of truth. The Courts
are meant for imparting justice, and if a
negligent or biased investigation is not
effectively rectified, the faith and confidence of
the people in the law enforcing agency and in
the institution for the administration of justice
would be shaken. The power vested in the
Superior Court to transfer the investigation has
3 (2016) 3 SCC 135
4 (2016) 4 SCC 160
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to be invoked sparingly, cautiously. But when it
becomes necessary to provide credibility and to
instil confidence in the investigation or where
the incident may have national and international
ramifications or where such an order may be
necessary for doing complete justice. The
Superior Courts can exercise the power. In a
given case, even if charge-sheet is filed, it is
open for the High Court to direct investigation
of the case to be handed over to CBI or to any
other agency or to direct investigation de novo
in order to do complete justice, in the facts of
the case. In a given case the investigation could
be transferred even after considering time
period has elapsed. The State has a duty to
safeguard human rights by providing for fair
and impartial investigation. Grave responsibility
lies upon the investigating agency, not to
conduct an investigation in a manner prima
facie indicative of a biased mind and every
effort should be made to bring the guilty to law.
A fair investigation is a part of the constitutional
rights guaranteed under the Constitution of
India and the investigating agency cannot be
permitted to investigate in a tainted or biased
manner. Fair trial includes a fair investigation.
Any criminal offence is one against the society.
The State is a guardian of human rights and
protector of law. The concept of "fair and
proper investigation" means that investigation
must be unbiased, honest, just and in
accordance with law. The primary purpose of an
investigation is to bring out the truth by
conducting a fair and proper investigation, in
accordance with law and to ensure that the
guilty are punished. It is necessary to ensure a
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fair and proper investigation and to prevent
misdirecting or hijacking of the investigation by
outside influences. Where non-interference of
the court would result in failure of justice, the
court must interfere and in the interest of justice
choose an independent agency to make a fresh
investigation. Paramount consideration for
directing the transfer of investigation is the
advancement of the cause of justice and to instil
confidence in the mind of the victims as well as
the public. If the investigation is neither
effective nor purposeful or fair, it would be the
duty of the courts, if considered necessary, to
order further investigation or reinvestigation to
prevent the miscarriage of justice".
29. Investigating Agency will do well keeping in mind the words
of the Supreme Court in the case of Dharam Pal (supra);
"2. Cry for fair trial by the accused as well as by the
victim sometimes remains in the singular and
individualistic realm, may be due to the perception
gatherable from the facts that there is an attempt to
contest on the plinth of fairness being provoked by
some kind of vengeance or singularity of "affected
purpose"; but, irrefutably a pronounced and
pregnant one, there are occasions when the
individual cry is not guided by any kind of revengeful
attitude or anger or venom, but by the distressing
disappointment faced by the grieved person in
getting his voice heard in proper perspective by the
authorities who are in charge of conducting
investigation and the frustration of a victim gets
more aggravated when he is impecunious, and
mentally shattered owing to the situation he is in and
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thereby knows not where to go, the anguish takes the
character of collective agony. When the investigation,
as perceived by him, is nothing but an apology for
the same and mirrors before him the world of
disillusionment that gives rise to the scuffle between
the majesty and sanctity of law on one hand and its
abuses on the other, he is constrained to seek
intervention of the superior courts putting forth a
case that his cry is not motivated but an expression of
collective mortification and the intention is that
justice should not be attenuated."
30. Our justice system will acquire credibility only when the
people at large will be convinced that the justice is based on the
foundation of truth, provided the investigation is carried out
impartially, fairly and in an unbiased manner. It is also equally
important to strengthen the faith and confidence of the people in
the law enforcing agency and also in the institution for
administration of justice, else, it would be shaken.
31. Crimes affect the entire society and thus interest of the society
in the investigation cannot be entirely ignored. We are hopeful and
confident that the Special Investigation Team (SIT) which would be
constituted will make every endeavour to uncover the truth and
examine the allegations/material and thereafter, take the case to its
logical end.
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32. In the result, we pass the following order by making the rule
absolute.
:ORDER:
(a) Petition is allowed.
(b) Zonal Director, CBI, Mumbai shall form a
Special Investigation Team comprising of officers as
are required for conducting thorough investigation
into the two complaints dated 22 nd December, 2021
and 3rd April, 2023 of the petitioner.
(c) Joint Director of the Central Bureau of
Investigation, Mumbai (Anti Corruption Bureau) shall
supervise the investigation.
(d) All the papers and documents to be handed over
to the SIT by EOW within one week from today.
(e) Rule is made absolute in the aforesaid terms.
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(f) Petition is disposed of in terms of the aforesaid
directions.
33. We make it clear that these are our prima facie observations
and that the SIT shall conduct the investigation impartially from all
possible angles uninfluenced by anyone on its own merits.
34. In view of disposal of the petition, Interim Applications also
stand disposed of.
35. All concerned to act on the authenticated copy of this order.
[PRITHVIRAJ K. CHAVAN, J.] [REVATI MOHITE DERE, J.]
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