[Cites 33, Cited by 0]
Bombay High Court
M/S. Dulisons Cereals Through Its ... vs State Of Maharashtra And Anr. on 10 March, 2026
Author: A.S. Gadkari
Bench: A.S. Gadkari
PREETI
2026:BHC-AS:12492-DB
HEERO
JAYANI P.H. Jayani 21 APEAL5.2024.doc
Digitally signed IN THE HIGH COURT OF JUDICATURE AT BOMBAY
by PREETI
HEERO JAYANI CRIMINAL APPELLATE JURISDICTION
Date: 2026.03.13
20:09:20 +0530 CRIMINAL APPEAL NO.5 OF 2024
M/s. Dulisons Cereals
Through its proprietor Smt. Kanta Gupta,
House No.2249, Sector 7, Urban Estate,
Karnal, Haryana 132001 .... Appellant
(Orig. Respondent No.2)
V/s.
1. The State of Maharashtra
(Through Competent Authority appointed
under the MPID Act, 1999
3rd floor, MPID branch, Old Custom House,
Mumbai - 400001 .... Respondent No.1
(Orig. Applicant)
2. National Spot Exchange Ltd.
A Company incorporated under the
Companies Act 1956 and having its
Office at Malkani Chambers, 1st Floor,
Off. Nehru Road, Near Hotel Orchid,
Vile Parle (East), Mumbai - 400 099 .... Respondent No.2
(Orig. Intervenor)
_______________________________
Mr. Vinay Bhanushali a/w. Mr. Abhiraj Rao, Mr. Sanmit Vaze and
Ms. Diksha Sharma for the Appellant.
Ms. Leena Patil, Special PP a/w. Smt. P.P. Shinde, APP for Respondent
No.1 - State.
Mr. Arvind Lakhawat a/w. Mr. Nimeet Sharma, Mr. Vinit Vaidya, Adv. Jalpa
Shah and Ms. Himani Narula i/b. MZM Legal LLP for Respondent No.2.
_______________________________
CORAM: A.S. GADKARI AND
SHYAM C. CHANDAK, JJ.
RESERVED ON : 3rd FEBRUARY, 2026
PRONOUNCED ON : 10th MARCH, 2026
JUDGMENT :
[PER : SHYAM C. CHANDAK, J.] :-
1) Present Appeal filed under Section 11 of The Maharashtra
Protection of Interest of Depositors (In Financial Establishments) Act,
P.H. Jayani 21 APEAL5.2024.doc
1999 (for short 'MPID Act') impugning the Order dated 4th November
2023, passed by the learned Special Judge (MPID), City Civil & Sessions
Court, Gr. Bombay, thereby, rejecting the Application at Exh.11, in Misc.
Application No.151/2020 (for short 'MA/151/2020'), in MPID Special Case
No.1/2014, seeking quashing and setting aside of said Order and to allow
the Application (Exh.11) thereby staying the proceedings in MA/151/2020.
2) Heard Mr. Bhanushali, learned Advocate for the Appellant, Ms.
Patil, learned Special PP and Smt. Shinde, learned APP for the Respondent
No.1, State and Mr. Lakhawat, learned Advocate for Respondent No.2
("NSEL").
3) Facts giving rise to this Appeal are as under :-
3.1) The said MPID Case has been filed for the offences under
Section 3 of MPID Act and Section 120B read with Sections 406, 409,
420, 467 and 477A of IPC. Therein Appellant and Smt. Kanta Gupta are
being prosecuted as Accused Nos.129 and 130. Smt. Kanta Gupta has
been a sole proprietor of the Appellant. Respondent No.1 has filed said
MA/151/2020 under Section 8 of MPID Act, arraigning M/s. PD Agro
Processors Pvt. Ltd. ("M/s. PD Agro", for short) and the Appellant as
Respondent Nos.1 and 2, respectively. Therein, it has been contended
that the forensic audit report of M/s. PD Agro has revealed that M/s. PD
Agro has received the investors' money via NSEL and owes its liability to
the tune of Rs. 680.29 Crores. M/s. PD Agro became member of NSEL on
P.H. Jayani 21 APEAL5.2024.doc
26th September, 2011 and has traded on NSEL platform from 1 st October,
2011 till 31st August, 2013. The said forensic audit report concluded that
M/s. PD Agro has transferred that investors' money from its settlement
account to various entities. This includes the transfer of certain amount
to the Appellant. Said transfer by M/s. PD Agro to the Appellant is
malafide as per Section 8 of the MPID Act and is liable to be attached.
Therefore, it has been prayed to attach the properties of the Appellant to
safeguard the interest of the investors.
4) During pendency of the MA/151/2020, the Appellant filed
an Application below Exh.11, through Smt. Kanta Gupta. The Appellant
asserted therein that Smt. Kanta Gupta had inherited the Appellant firm
M/s. Dulisons Cereals after the demise of her husband late Shri.
Narendra Agarwal and mother-in-law Smt. Pishta Agarwal. Appellant
was not engaged in any trading activities as Smt. Kanta Gupta has been a
housewife. That, earlier, the SBI had filed an Application before the NCLT,
Mumbai bearing CP(IB)/1145/MB/2021 against the Appellant. Said
Application has been titled as "State Bank of India v/s. Smt. Kanta
Gupta" and it has been filed under Section 95(1) of the Insolvency and
Bankruptcy Code, 2016 (IBC) read with Rule 7(2) of the Insolvency and
Bankruptcy (Application to Adjudicating Authority for Insolvency
Resolution Process for Personal Guarantors to Corporate Debtors) Rules,
2019, to initiate Insolvency Resolution Process against the Appellant. On
P.H. Jayani 21 APEAL5.2024.doc
account of filing of said Application, interim moratorium had commenced
against the Appellant in terms of Section 96 of the IBC. In MA/151/2020,
the Competent Authority has sought for an attachment of the property of
the Appellant under Section 8 of MPID Act. However, since said interim
moratorium was set and continuing qua Smt. Kanta Gupta, therefore, no
legal action can be instituted or commenced or continued against her in
view of the provisions of Section 96. As a result, the proceedings in
MA/151/2020 would deemed to be stayed. In this background, the
Appellant filed the Application at Exh.11 and prayed to stay the said
proceedings.
5) Respondent Nos.1 and 2 opposed the Application with their
say at Exh.11A & Exh.11B. Respondent No.1 contended that, Section 96
of the IBC is applicable only when the statutory attachment at the
instance of Respondent No.1 under Section 4 of the MPID Act is 'debt'.
There is no material on record to show that there was such a 'debt' which
has been sought to be secured by the State with the help of the
attachment under Section 4(1). There existed no relationship as 'debtor-
creditor' between Smt. Kanta Gupta and Respondent No.1. The property
of the Appellant has not been attached by Respondent No.1 to secure any
debt whatsoever but to protect the interest of the depositors who have
lost their monies.
That M/s. PD Agro is one of the defaulters on the exchange
P.H. Jayani 21 APEAL5.2024.doc
platform of the NSEL and owes it liability to the tune of Rs.673.85 crores.
The NSEL has obtained a decree of INR 633,66,98,350.40 along with
interest @ 9% p.a. Execution proceedings has been initiated to execute
the said decree. M/s. PD Agro has been declared as Financial
Establishment under the MPID Act. That, Smt. Kanta Gupta, sole
proprietor of the Appellant, has been a family member of the Director of
M/s. PD Agro. The relevant Forensic Audit Report revealed the money
trail of about Rs.13.60 Crores from M/s. PD Agro to the Appellant. Said
direct money trail of deposits from M/s. PD Agro to the Appellant, per se,
liable to be attached under Section 4 (1) and 8 of the MPID Act. It was
contended that only the Interim Resolution Professional has the locus to
file an Application under the IBC. As a result, Section 96 is not applicable
to the case. Hence, there is no substance in the Application at Exh.11.
6) The NSEL/Respondent No.2 has raised similar contentions
and has opposed the Application.
7) After considering the record and submissions made by the
parties, the learned Judge of the trial Court accepted the contentions of
the Respondents and held that the proceedings in MA/151/2020 filed
under Section 8 of the MPID Act against the Appellant cannot be stayed
and therefore rejected the Application at Exh.11.
8) Mr. Bhanushali, learned Counsel appearing for the Appellant
submitted that, the term "debt" defined under the IBC includes the term
P.H. Jayani 21 APEAL5.2024.doc
"deposit" as defined in MPID Act. Since, the subject matter, money was a
debt, for the purpose of Section 96, the attachment proceedings initiated
before the trial Court is illegal. However, the trial Court erroneously held
that the proceeding under Section 8 is not in relation to debt. The trial
Court has failed to appreciate that the guarantors may be completely
strangers to the debtors and therefore the moratorium mentioned in
Section 96 of IBC would cover the proceedings initiated by the
Competent Authority. The learned Counsel submitted that, considering
the provisions of Article 254 (2) of the Constitution of India and Section
238 of IBC, it has been held that the non obstante clause of IBC would
prevail over the non obstante clause of MPID Act. Therefore, the MPID
Act must give way to the subsequent Parliamentary law. In the backdrop,
the said attachment proceedings were liable to be stayed.
To support these submissions, Mr. Bhanushali has relied upon
the decision in the case of P. Mohanraj v. Shah Bros. Ispat (P) Ltd. ,
reported in (2021) 6 SCC 258. It is held therein that, a legal action or
proceeding in respect of any debt as mentioned in Sections 81, 85, 96
and 101 IBC, would on its plain language include a Section 138 N.I. Act
proceeding. "In respect of" is a phrase which is wide and includes
anything done directly or indirectly. This, coupled with the fact that the
Section is not limited to "recovery" of any debt, would indicate that any
legal proceedings even indirectly relatable to recovery of any debt
P.H. Jayani 21 APEAL5.2024.doc
would be covered. Therefore, according to Mr. Bhanusahli, the
Application at Exh.11 was fit to be allowed.
9) In reply, Ms. Patil, the learned Special PP appearing for
Respondent No.1 and Mr. Lakhawat appearing for the Respondent No.2
submitted that, the Appellant has not denied the money trail deposits of
Rs.13.60 Crores which was part of the investors' money. The amount
invested by the investors cannot be termed as debt because there was no
debtor-creditor relationship between the Appellant and the State. The
MPID Act and the IBC work in different spheres and the two do not
overlap. The attachment is carried out in exercise of specific power
granted by a special statute i.e. MPID Act which has been enacted as a
public law remedy to protect the interest of innocent depositors from
the evil of fraud. The proceedings under Section 8 are quasi-civil and
quasi-criminal in nature and arises out of a crime. Mr. Lakhawat
submitted that, the said proceedings are intended to benefit the investors
and individual Directors cannot be exempted or allowed to take shelter of
IBC. Therefore, question of attracting the provisions of Section 96 does
not arise in this case. In the backdrop, rejection of the Application
(Exh.11) by the impugned Order, is lawful. Mr. Lakhawat has relied upon
following decisions:-
(i) National Spot Exchange Ltd. V/s. Union of India reported in
(2025) 8 SCC 393.
P.H. Jayani 21 APEAL5.2024.doc
(ii) ICICI Bank Limited V/s. The State of Maharashtra (EOW)
and Ors., with Criminal Appeal No. 263 of 2023 along with
connected matters, decided on 15th December, 2025
(iii) Report by the Supreme Court Committee comprising Justice
(Retd) Pradeep Nandrajog constituted by the Hon'ble Supreme
Court vide Order dated 04.05.2022 in W.P.(C) No. 995/2019.
10) We have considered these submissions and carefully gone
through the reported cases and the said report. Before adverting to the
controversy raised out of the rival submissions, firstly it is necessary to
look into the facts which led to the filing of the MA/151/2020 under
Section 8 of the MPID Act. The same are as under :
(a) Respondent No.2 is a company which was registered
under the Companies Act, 1956. Respondent No.2 had provided an
electronic platform for spot trading in commodities and used to operate
from 16 States. Respondent No.2 was promoted by Financial Technologies
(India) Limited, now "63 Moons Technologies Pvt. Ltd.".
(b) By way of a Notifications dated 5 th June 2007 and 6th
February 2012 issued by the Department of Consumer Affairs, Ministry
of Consumer Affairs, Government of India, exemption was granted to
Respondent No.2 from the operation of the Forward Contracts
(Regulation) Act, 1952 for all forward contracts of one day duration for
sale and purchase of commodities traded on its platform subject to
certain conditions.
P.H. Jayani 21 APEAL5.2024.doc
(c) Initially, the member companies squared off the
contracts on the date of maturity. Later on it did not honour their
commitments which led to wrongful loss of about Rs.5,600 Crores to
about 13000 investors. The members of Respondent No.2 fraudulently
obtained huge funds from Respondent No.2 against non-existent stocks
of commodities. The alleged trading was being done in non-existent
goods by issuing forged warehouse receipts. The designated warehouse
wherein the commodities were required to be deposited, lacked in
capacity and some of them had no stocks. This led to issuance of a
circular dated 14th August, 2013 by Respondent No.2 thereby announcing
a settlement schedule. Said circular was issued with an intent to pay
total Rs.5574.31 crores to the members of Respondent No.2.
Subsequently Respondent No.2 did not stick to that settlement schedule
rather defaulted in all the pay outs. Consequently, FIR bearing
C.R.No.216/2013 came to be registered at MRA Marg Police Station,
Mumbai. Investigation revealed that, the mode of transaction allowed by
the Government of India which was to be followed by Respondent No.2,
was ignored and Respondent No.2 had promised attractive returns to
persons who had traded on Respondent No.2 platform. The Forensic
Audit Report revealed malafide transfer of crores of rupees by the
member companies which they had received through Respondent No.2.
Therefore, Respondent No.1 was constrained to file the MA/151/2020
P.H. Jayani 21 APEAL5.2024.doc
invoking Section 8 of MPID Act.
11) With the help of Section 94 of IBC Code, a debtor at default,
personally or through resolution professional, may apply to the
Adjudicating Authority for initiating the insolvency resolution process.
With the aid of Section 95 of the IBC, the creditor may apply either by
himself or jointly with other creditors through the resolution
professional to the Adjudicating Authority for initiating an insolvency
resolution process. In this factual matrix, the SBI had initiated the
insolvency resolution process under Section 95 of IBC.
12) Section 96 of the IBC provides that, (1) when an
application is filed under section 94 or section 95 (a), an interim-
moratorium shall commence on the date of the application in relation
to all the debts and shall cease to have effect on the date of admission
of such application and during the interim-moratorium period - (i) any
legal action or proceeding pending in respect of any debt shall be
deemed to have been stayed and (ii) the creditors of the debtor shall
not initiate any legal action or proceedings in respect of any debt. (2)
Where the application has been made in relation to a firm, the interim-
moratorium under sub-section (1) shall operate against all the partners
of the firm as on the date of the application. (3) The provisions of sub-
section (1) shall not apply to such transactions as may be notified by the
Central Government in consultation with any financial sector
P.H. Jayani 21 APEAL5.2024.doc
regulator.
13) Mr. Bhanushali has emphatically submitted that, there is
repugnancy between the MPID Act and the IBC. In this regard we have
considered Article 245, Article 246 and Article 254 of the Constitution
of India and referred the decision in case of M/S. Innoventive Industries
Ltd v. ICICI Bank, reported in (2018) 1 SCC 407.
14) The Hon'ble Supreme Court in Innoventive Industries Ltd.
(supra), while examining the question of repugnancy, relied upon and
followed the principles laid down in Hoechst Pharmaceuticals Ltd. v. State
of Bihar, reported in (1983) 4 SCC 45, wherein the scope, ambit, and
applicability of Article 254 of the Constitution and the circumstances in
which repugnancy between Parliamentary and State enactments would
arise, were considered. It was observed that the doctrine of repugnancy
contemplated under Article 254 (1) of the Constitution becomes applicable
only when two conditions are satisfied, namely, that both the Parliamentary
enactment and the State enactment relate to the same subject-matter falling
within the Concurrent List and that there exists a direct inconsistency
between the provisions of the two enactments. It is only upon the
fulfillment of these conditions that the State legislation would be rendered
void and that too limited to the extent of such repugnancy.
Article 254(1) of the Constitution does not apply to cases of
repugnancy where the alleged inconsistency arises due to an overlap
P.H. Jayani 21 APEAL5.2024.doc
between subjects falling under List II and those contained in List I or List III.
In such circumstances, the validity of the State law must be determined
with reference to Article 246 and in view of the non-obstante clause in
Article 246(1), read with the opening words "subject to" in Article 246(3).
The State Legislature cannot enact a law in a field reserved for Parliament.
If such an overlap occurs, the State law would be ultra vires, not on account
of repugnancy, but for want of legislative competence.
It is true that the words "a law made by Parliament which
Parliament is competent to enact" in Article 254(1) may, if read alone,
suggest that repugnancy between a State law and a Parliamentary law
could arise even outside the Concurrent List, since Parliament is
competent to legislate on matters in both List I and List III. However,
Article 254(1) must be read as a whole and in conjunction with clause
(2), which specifically refers to repugnancy in respect of matters in the
Concurrent List. Clause (2) thus guides the interpretation of clause (1),
making it clear that the repugnancy contemplated is confined to the
concurrent field, where a State law is inconsistent with either ( a) a law
enacted by Parliament or (b) an existing law.
There was a controversy at one time as to whether the
succeeding words "with respect to one of the matters enumerated in the
Concurrent List" govern both (a) and (b) or (b) alone. It is now settled
that the words "with respect to" qualify both the clauses in Article
P.H. Jayani 21 APEAL5.2024.doc
254(1) viz, a law made by Parliament which Parliament is competent to
enact as well as any provision of an existing law. The underlying
principle is that the question of repugnancy arises only when both the
Legislatures are competent to legislate in the same field i.e. with respect
to one of the matters enumerated in the Concurrent List. Hence, Article
254(1) cannot apply unless both the Union and the State laws relate to
a subject specified in the Concurrent List, and they occupy the same
field.
14.1) Similarly, in case of K.K. Baskaran v. State rep. by its Secretary,
Tamil Nadu & Ors., reported in (2011) 3 SCC 793 while dealing with
question of validity of the Tamil Nadu Protection of Interests of Depositors
in Financial Establishments) Act, 1997 [T.N.P.I.D. Act 1997], which is pari
materia with the MPID Act, the Hon'ble Supreme Court has held that the
T.N.P.I.D. Act 1997 comes under List II Entries 1, 30 and 32 and not under
List I Entries 43, 44 and 45 of Schedule VII of the Constitution.
14.2) Referring this enunciation in case of National Spot Exchange
Ltd. (supra), the Apex Court held that the State of Maharashtra was within
its legislative competence to enact the MPID Act, the subject matter of
which in pith and substance was relatable to Entries 1, 30 and 32 of the
State List (List II) of the Seventh Schedule of the Constitution of India. The
IBC is enacted by the Parliament under list III (Concurrent List). These
factors and the aforestated enunciation of law have been well considered by
P.H. Jayani 21 APEAL5.2024.doc
the learned trial Judge in paragraphs 14 to 18 of the impugned Order.
Therefore, the question of repugnancy between the MPID Act and the IBC
does not arise in this case.
15) Section 238 of IBC provides that the IBC will have the
overriding effect over the other laws if any inconsistency therewith
contained in any other law for time being in force or any instrument
having effect by virtue of any such law. The comparative analysis of
Section 14 and Section 96 of IBC makes it clear that Section 14 provides
for a moratorium for corporate debtor whereas Section 96 deals with an
interim-moratorium in relation to all the debts. Section 96(i)(b) clearly
states that the moratorium provided in Section 96 applies to any legal
action or proceeding pending in respect of any debt of the individuals.
16) In the present case, the record does not indicate that the
Appellant or Smt. Kanta Gupta had obtained certain money as debt
from Respondent No.1. Therefore, it cannot be maintained that there
was 'debtor-creditor' relationship between the Appellant and
Respondent No.1. On the contrary, the proceedings in MA/151/2020
under Section 8 of the MPID Act have been intended for attachment of
property equivalent to the proper value of the property transferred
malafidely, not in good faith or for consideration. Said transaction was
and is tainted with a crime. Because, as rightly observed by the learned
trial Court, the depositors were induced to trade on the said exchange
P.H. Jayani 21 APEAL5.2024.doc
platform alluring them of handsome returns by 25 trading members of
Respondent No.2 including M / s . PD Agro. The said commitments were
not fulfilled by Respondent No.2, thus leading to wrongful loss of about
Rs.5600 crores to about 13000 investors. In the absence of a 'debt' to be
recovered, the moratorium under Section 96 of the IBC cannot be
applied in this case.
Section 3 (11) of IBC defines the term "debt" as a liability or
obligation in respect of a claim which is due from any person and
includes a financial debt and operational debt. Section 2(c) of the
MPID Act defined "deposit" which includes any receipt of money or
acceptance of any valuable commodity by any Financial Establishment
to be returned after a specified period or otherwise, either in cash or in
kind or in the form of a specified service with or without any benefit in
the form of interest, bonus, profit or in any other form, but does not
include the amount raised by way of share capital or by way of
debenture, bond or any other instrument covered under the guidelines
given and regulations made by the SEBI, established under the
Securities and Exchange Board of India Act, 1992. There are other
categories of receipts of money, i.e., 'deposits'. However, these deposits
are not included in the definition of "debt" provided by Section 3 (11)
of IBC. Therefore, the learned trial court has rightly held that said
proceedings have been initiated under specific power granted by a
P.H. Jayani 21 APEAL5.2024.doc
special statute MPID Act which has been enacted as a public law
remedy to protect the interest of innocent depositors who lost
monies.
17) In the wake of above, questions such as when the moratorium
started and till what time it was continued on account of initiation of the
IBC proceedings by the SBI, loses its significance.
18) Record indicates that, the notifications under Section 4 of the
MPID Act issued by the State of Maharashtra are of the year 2017 and
2018. Therefore, the subject property was already vested in the State
Government. Based on the facts and circumstances of the case, the
Competent Authority concluded that, the attached properties of M/s. P. D.
Agro would not be adequate to repay the depositors. The subject matter
transfer was patently malafide. In this background, the Authorities felt it
necessary to file the MA/151/2020 with an object to protect the claims of
the gullible investors/victims. This premise led the learned trial Court to
hold that, if the matter is stayed as prayed grave prejudice would be caused
to the innocent depositors, who have been pursuing with the litigation for
the last ten years against persons/companies like the Appellant who are
making every effort to frustrate the said proceedings. Such investors cannot
be made to run from pillar to post to redress their grievances. The
provisions of IBC cannot be stretched to protect persons who are charged
of committing offences of defrauding the investors. Therefore, the learned
P.H. Jayani 21 APEAL5.2024.doc
trial Court was persuaded to reject the Application at Exh.11. Which,
according to us is completely lawful.
19) Controversy similar to this Petition had arisen before the said
Supreme Court Committee. While dealing with the issues, reference was
made to the following observations of the Hon'ble Supreme Court in the
decision Biswanath Bhattacharya v. Union Of India & Ors. , reported in
(2014) 4 SCC 392 :
"39. If a subject acquires property by means which are not
legally approved, the sovereign would be perfectly justified to
deprive such persons of the enjoyment of such ill-gotten
wealth. There is a public interest in ensuring that persons who
cannot establish that they have legitimate sources to acquire
the assets held by them do not enjoy such wealth. Such a
deprivation, in our opinion, would certainly be consistent with
the requirement of Article 300A and 14 of the Constitution
which prevent the State from arbitrarily depriving a subject of
his property."
In view thereof, the Supreme Court Committee of Justice
(Retd) Pradeep Nandrajog in its Order dated 08th January 2024 held that
the provisions relating to attachment under the MPID Act have been
designed a mode and medium of civil forfeiture. The provisions thus
incorporated in Sections 4, 7, 8 to 10 are in essence the adoption of the
'non-conviction based asset forfeiture model' which now stands adopted the
world over. Therefore, in paragraph 37, the Committee observed and
concluded that, the concept of civil forfeiture being legally embedded as an
accepted form of State action, the vesting of such property upon attachment
P.H. Jayani 21 APEAL5.2024.doc
under Section 4, MPID Act removes it from the realm of inclusion as the
property of the Corporate Debtor or that of the Personal Guarantor which
may be protected under Section 14 or Section 96 and deployed as part of
the insolvency/liquidation estate. The IBC admittedly not having any
retrospective effect cannot reach back in time and assert any right of
application on such assets which are now in effect State property for the
purpose of the provisions of the MPID Act. Therefore the Committee
concluded that, such attachment proceedings do not represent a creditor
action and thus it is clear that such attachment action is above and beyond
the realm of such debtor-creditor relationship. As a result, the moratorium
provisions under the IBC would have no effect on the properties attached
under the provisions of the MPID Act or the further attachment. In this
context the Committee also considered the Order impugned in this Petition.
Said Order dated 08th January, 2024 of the Committee received a seal of
judicial approval from the Hon'ble Supreme Court in National Spot
Exchange Ltd. (supra), cited by Mr. Lakhawat.
20) In the wake of above, we find no substance in the present
Appeal in hand. As a result, the Appeal is liable to be dismissed.
21) In the case of State of Maharashtra v. 63 Moons Technologies
Ltd., (2022) 9 SCC 457 in paragraph 18 the Hon'ble Supreme Court has
held that :
P.H. Jayani 21 APEAL5.2024.doc
" 18. There is a mushroom growth of financial establishments
in the State of Maharashtra in the recent past. The sole object
of these establishments is of grabbing money received as
deposits from public, mostly middle class and poor on the
promises of unprecedented high attractive interest rates of
interest or rewards and without any obligation to refund the
deposit to the investors on maturity or without any provision
for ensuring rendering of the services in kind in return, as
assured. Many of these financial establishments have
defaulted to return the deposits to public. As such deposits
run into crores of rupees, it has resulted in great public
resentment and uproar, creating law and order problem in the
State of Maharashtra, especially in the city like Mumbai which
is treated as the financial capital of India. It is, therefore,
expedient to a make a suitable legislation in the public
interest to curb the unscrupulous activities of such financial
establishments in the State of Maharashtra."
21.1) In K.K. Baskaran (supra) in paragraph 2, the Hon'ble
Supreme Court has observed that "Financial swindling and duping of
gullible investors/depositors is not unique to India. It has been referred
to in Charles Dicken's novel ' Little Dorrit', in which Mr. Merdle sets up a
Ponzi scheme resulting in loss of the savings of thousands of depositors
including the Dorrits and Arthur Clennam. In recent times there have
been many such scandals e.g. the get-rich-quick scheme of the scamster
Bernard Madoff in which the estimated losses of investors were estimated
to be 21 billion dollars." In paragraph 3 it is observed that, "The present
case illustrates what has been going on in India for quite some time.
Non-banking financial companies have duped thousands of innocent
and gullible depositors of their hard-earned money by promising high
P.H. Jayani 21 APEAL5.2024.doc
rates of interest on these deposits, and then done the moonlight flit,
often disappearing into another State or even foreign countries leaving
the depositors as well as the State police high and dry."
22) The case in hand is not an exception to the aforesaid
observations, rather, it is similar to those cases of financial fraud.
Notwithstanding the issue raised in this Appeal was settled as noted
above, the Appellant has caused this Court to hear this Appeal and
adjudicate the same issues on merit. The facts and circumstances clearly
indicate that this Appeal has been filed only to create hurdles and delay
the attachment and recovery proceeding in MA/151/2020 which are in
fact in the best interest of the gullible investors/victims. Said delay is
with a purpose of using the defrauded money to multiply it for the
benefit of the defaulters but at the cost of the investors. Although certain
investors have agreed to settle their claims between 42 % to 49 %, a
considerable number of investors have not received any amount towards
the settlement. As against this, they have been required to spend more
money and energy to recover their investments, without having received
any amount whatsoever. In the meantime, their invested money to be
refunded must have been considerably depreciated. On the other hand
the defaulters have multiplied the said amount, at least, 4 to 5 times, in
our estimation considering the rate of inflation prevailing since the time
of the investment. Additionally, out of the invested money or the interest
P.H. Jayani 21 APEAL5.2024.doc
accruing thereon the defaulters like M/s. PD Agro have been engaging in
litigation to defeat the claim of the investors. Thus, the delay benefits no
one except the defaulters. The defaulters are well aware that, the
magnitude of the criminal case arising out of this crime is such that it
may take a decade or more to reach its logical end that too at the trial
Court. Therefore, the defaulters are delaying the said case at every
possible stage just to reap its illegal and unethical benefits. It is a matter
of common experience that similar dilatory tactics are adopted by
accused persons facing cases of dishonour of cheque/s, cheating,
misappropriation of money/property etc. Therefore, heavy cost has to be
saddled upon the Appellant. Such a cost would help to restrict the
Appellant from continuing to drag the matter unnecessarily. Having these
consideration in mind, we deem it appropriate to impose a cost of
Rs.10,00,000/- on the Appellant for filing this Appeal as a dilatory tactic
to protract the litigation.
23) Hence, we pass following Order :
23.1) Appeal is dismissed with costs of Rs.10,00,000/- (Rupees Ten
Lakhs only).
23.2) Said cost of Rs.10,00,000/- shall be paid to the Bar Council of
Maharashtra and Goa's Advocate Academy and Research Center within a
period of four weeks from the date of uploading of the present Judgment
on the official website of the High Court of Bombay and the payment
P.H. Jayani 21 APEAL5.2024.doc
receipt(s) shall be submitted in the Registry of this Court.
23.3) Details of the bank account for payment of cost are as under :-
Account Name :- BCMG'S Advocate Academy & Research
Center
Account Number :- 000120110001327
Bank Name :- Bank of India
Branch Name :- Mumbai Main
IFSC Code :- BKID0000001
Type of Account :- Current A/c
23.4) List the Appeal on 15th April 2026 for reporting compliance.
(SHYAM C. CHANDAK, J.) (A.S. GADKARI, J.)
24) At this stage, Mr. Bhanushali, learned counsel appearing for
the Appellant requested that, the ad-interim relief granted earlier may be
continued for the period of four weeks, to enable the Appellant to
challenge this Judgment before the Hon'ble Supreme Court.
25) For the reasons recorded in the Judgment, we are not
inclined to accept the said request. Hence, said request is rejected.
(SHYAM C. CHANDAK, J.) (A.S. GADKARI, J.)
