[Cites 35, Cited by 0]
Bombay High Court
Dy Director Of Income Tax (Inv) vs Mohan India Pvt Ltd And Ors on 10 March, 2026
Author: A.S. Gadkari
Bench: A.S. Gadkari
PREETI
2026:BHC-AS:12494-DB
HEERO
JAYANI P.H. Jayani 04 APEAL220.2014.doc
Digitally signed IN THE HIGH COURT OF JUDICATURE AT BOMBAY
by PREETI
HEERO JAYANI CRIMINAL APPELLATE JURISDICTION
Date: 2026.03.13
20:09:19 +0530
CRIMINAL APPEAL NO. 220 OF 2014
WITH
CRIMINAL APPLICATION (APPA) NO. 377 OF 2014
Dy. Director of Income Tax (Inv.),
Unit (3) E-2, ARA Centre,
Jhandewalan Extension, New Delhi .... Appellant
v/s.
1) Mohan India Pvt. Ltd.
The Company registered with the
Companies Act, 1956 and having
registered Office at 354,
Tarun Enclave Pitampura,
New Delhi - 110 034.
2) Tavishi Enterprises Pvt. Ltd.,
The Companies Registered under the
Companies Act, 1956 and having
registered office at 1A/101,
Rangrasyan Apartments, Sector - 13,
Rohini, New Delhi
3) Brinda Commodity Pvt. Ltd.,
The Companies Registered under the
Companies Act, 1956 and having
Registered Office at 406, D Mall,
Pitampura, New Delhi - 110008.
4) The State of Maharashtra
Through EOW, Unit-V, in C.R.No.89/2013.
5) National Spot Exchange Ltd. (NSEL)
F.T. Towers, CTS No.256 and 257,
4th Floor, Surren Road, Chakala,
Andheri (East), Mumbai - 400 093.
6) Enforcement Directorate,
Mittal Chambers, IInd Floor,
Nariman Point Mumbai - 400 021. .... Respondents
1/16
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P.H. Jayani 04 APEAL220.2014.doc
WITH
CRIMINAL APPLICATION (APPA) NO. 1573 OF 2017
IN
CRIMINAL APPEAL NO. 220 OF 2014
Pankaj Ramnaresh Saraf
Aged : 42 years, residing at 182,
Venus Apartment, Cuffe Parade,
Mumbai - 400 005. .... Applicant
In the matter between :-
Dy. Director of Income Tax (Inv.),
Unit (3) E-2, ARA Centre,
Jhandewalan Extension, New Delhi .... Appellant
v/s.
1) Mohan India Pvt. Ltd.
The Company registered with the
Companies Act, 1956 and having
registered Office at 354,
Tarun Enclave Pitampura,
New Delhi - 110 034.
2) Tavishi Enterprises Pvt. Ltd.,
The Companies Registered under the
Companies Act, 1956 and having
registered office at 1A/101,
Rangrasyan Apartments, Sector - 13,
Rohini, New Delhi
3) Brinda Commodity Pvt. Ltd.,
The Companies Registered under the
Companies Act, 1956 and having
Registered Office at 406, D Mall,
Pitampura, New Delhi - 110008.
4) The State of Maharashtra
Through EOW, Unit-V, in C.R.No.89/2013.
5) National Spot Exchange Ltd. (NSEL)
F.T. Towers, CTS No.256 and 257,
4th Floor, Surren Road, Chakala,
Andheri (East), Mumbai - 400 093.
2/16
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P.H. Jayani 04 APEAL220.2014.doc
6) Enforcement Directorate,
Mittal Chambers, IInd Floor,
Nariman Point Mumbai - 400 021. .... Respondents
_______________________________
Mr. A.K. Saxena for the Appellant.
Mr. Vinay J. Bhanushali a/w. Mr. Abhiraj Rao, Mr. Sanmit Vaze and
Ms. Diksha Sharma for Respondent Nos.1 to 3.
Ms. Leena Patil, Special PP and Smt. P.P. Shinde, APP for Respondent No.4 -
State.
Mr. Arvind Lakhawat a/w. Adv. Nimeet Sharma, Mrs. Jalpa Shah, Mr. Vineet
Vaidya & Ms. Himani Narula i/b. MZM Legal LLP for Respondent No.5 -
NSEL.
Mr. Anil Yadav for Respondent No.6-ED.
Mr. Rahul Landge, API, EOW, Unit - 14, Mumbai, present.
________________________________
CORAM: A.S. GADKARI AND
SHYAM C. CHANDAK, JJ.
RESERVED ON : 24th 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, 1999
(for short 'MPID Act') seeking to quash and set-aside the Order dated 8 th
January, 2014 passed by the learned Special Judge, City Civil Court, Gr.
Bombay, allowing the MA/107/2013 filed under Section 9 of the MPID Act
in C.R.No.89/2013 registered with EOW, Unit-V Mumbai.
2) Heard Mr. Saxena, learned counsel for Appellant, Mr.
Bhanushali, learned counsel for Respondent Nos.1 to 3, Ms. Patil, learned
Special PP appearing for Respondent No.4, State, Mr. Lakhawat, learned
P.H. Jayani 04 APEAL220.2014.doc
counsel for Respondent No.5, NSEL and Mr. Anil Yadav, learned counsel for
Respondent No.6, ED.
3) Facts giving rise to this Appeal are that, a survey action under
Section 133A of the Income Tax Act, 1961 (for short 'I.T. Act') was carried
out by the Appellant-Deputy Director of Income Tax, New Delhi on the
business premises of Respondent No.1-M/s. Mohan India Pvt. Ltd and
Respondent No.2-M/s. Tavishi Enterprises Pvt. Ltd. on 22 nd August 2013. A
search action under Section 132 of I.T. Act was carried out in the cases of
Respondent Nos.1, 3-Brinda Commodity Pvt. Ltd. and one Mr. Ram Awadh
Sharma on 26th August 2013. During that search, unexplained money
totaling to Rs.59.53 Crores in the form of bank deposits were seized.
According to the Appellant, said money was required for recovering any
liability likely to arise after completion of the assessment under Section
153A of I.T. Act and as provided under Section 132B of I.T. Act.
3.1) In this background, initially, Respondent Nos.1 to 3 had
preferred a Miscellaneous Application No.98/2013 before the Special Court
and claimed following reliefs :-
a) Stay to attachment against EOW.
b) To restrain EOW for not taking coercive action.
c) Permission to sell properties of respondent nos.1 to 3.
d) Releasing the bank account bearing No.912020033806451
in Axis Bank, Rohini West Branch, Delhi.
e) Directing EOW to deseal various godowns and permission to
sell the stock of sugar.
f) Directing the Income Tax Department, Delhi to release the
cash of Rs.60.15 Crore.
P.H. Jayani 04 APEAL220.2014.doc
3.2) In said MA/98/2013 Respondent Nos.1 to 3 had asserted
that, pursuant to a conciliation process initiated under Section 73 of the
Arbitration and Conciliation Act, 1996 a settlement dated 30 th October
2013 was arrived at amongst Respondent Nos.1 to 3 and Respondent
No.5. In view of said settlement, Respondent Nos.1 to 3 had paid an
amount of Rs.11 Crores to the Respondent No.5 and said Respondents
were under obligation to comply with the terms and conditions of said
settlement. Respondent No.4-EOW, Mumbai had also initiated an
investigation by registering C.R.No.89/2013. During investigation,
Respondent No.4 has sealed certain bank accounts with Axis Bank, Delhi
and the godowns at Khasra No.106/255 Khera Kalan, Delhi and Khasra
No.398/2 Hamidpur, Delhi on 2nd October 2013. Respondent Nos.1 to 3
submitted that, sugar stored in the godowns was perishable and it may
be ruined. The Respondent No.4 had also issued notices to the Tahsildar
concerned to secure properties of Respondent Nos.1 to 3 for the purpose
of attachment. Respondent Nos.1 to 3 wanted to honour their obligations
under the Settlement Award dated 30th October 2013 and intending to
pay Rs.771 Crores to Respondent No.5 which would protect the interest
of the depositors. If the amount of Rs.60.15 Crores would be released, it
will be deposited with the Respondent No.5. Therefore, they prayed for
the said reliefs.
3.3) Respondent No.4 filed its reply in said MA/98/2013 and
P.H. Jayani 04 APEAL220.2014.doc
contended that, the Respondent No.5 had accepted the deposits of
Rs.5,660 Crores from 13,000 investors and cheated them. As a result,
C.R.No.89/2013 was registered by Respondent No.4 under Sections 465,
467, 468, 471, 474, 477(a), 409 read with 120B of the Indian Penal Code
(for short 'IPC') and Sections 3 and 4 of the MPID Act. About 25 member
companies of NSEL had not repaid any amount to Respondent No.5 and
have misappropriated it. Respondent No.1 was set up in 2010 and
Respondent Nos.2 and 3 were set up in 2013 to deal in real estate and
commodity trading. These companies had received an amount of
Rs.929.40 Crores from Respondent No.5. The said amount was not
invested to purchase sugar but to purchase various properties in Delhi,
Gurgaon and Haryana. Therefore, the said settlement was not legal.
Accordingly, it had prayed for rejection of the Application.
3.4) Respondent No.5 also filed its reply and has admitted that, it
had entered into the Settlement Agreement dated 30th October, 2013.
Thereunder, Respondent Nos.1 to 3 had undertaken to pay Rs.771 Crores
within 14 months from 30th October 2013. Therefore, the Respondent
No.5 has no objection to allow the Application.
3.5) After hearing the parties and considering the record, the trial
court held that, the settlement arrived at between the parties was lawful.
Respondent Nos.1 to 3 were entitled for the reliefs in terms of prayer
clauses (a) to (e) in MA/98/2013. However, for not arraying the
P.H. Jayani 04 APEAL220.2014.doc
Appellant-I.T. Authority, Delhi as a 'party' to the Application, the trial
court declined to grant the prayer clause (f), i.e., direction to the
Appellant to release the seized amount of Rs.60.15 Crores and thus,
partly allowed the MA/98/2013.
4) It is in this background Respondent Nos.1 to 3 had preferred
MA/107/2013 under Section 9 of the MPID Act. Therein they asserted
that, the entire amount of Rs.60.15 Crores was received by them from
Respondent No.5. No tax liability was assessed by the Appellant in
respect of said amount. In case such a liability would accrue in the future,
Respondent Nos.1 to 3 alone would discharge the same. In view of
Section 14, the MPID Act has overriding effect on I.T. Act. The
Respondents have no objection if that amount is transferred to the
Escrow Account maintained by Respondent No.5 for the benefit of the
investors. Therefore, it was prayed to direct (i) the Appellant to deposit
the said amount of Rs.60.15 Crores with the Respondent No.5, (ii)
Respondent No.4 not to take any coercive action including but not
limited to attachment of any property/assets of Respondent Nos.1 to 3,
etc. and (iii) to direct Respondent No.4 to return the original title
documents of their properties, permit them to sell the properties and to
deposit the sale proceeds into the Escrow Account of Respondent No.5
for the benefit of depositors.
5) Respondent No.5 responded the MA/107/2013 with its reply.
P.H. Jayani 04 APEAL220.2014.doc
The Respondent No.5 has conceded about execution of the Agreement
dated 30th October 2013. It was contended that Respondent Nos.1 to 3
had to pay Rs.59 Crores to the Respondent No.5 on or before 2 nd
December 2013, as 2nd installment of the settlement agreement. In case
of delay in payment of said installment, the 1 st installment of Rs.11
Crores was liable to be forfeited as per said settlement. Cheques drawn in
favour of the Respondent No.5 towards the settlement were dishonoured.
Therefore, it was necessary to direct the Appellant to release the amount
of Rs.59 Crores and credit that amount in the Escrow Account of the
Respondent No.5. Accordingly, the Order dated 2nd December 2013 in
MA/98/2013 may be modified.
6) The Appellant contested the Application with its reply
contending that, the seized bank deposits are worth Rs.59.53 Crores.
Said deposits have been seized under the provisions of the I.T. Act. The
amount is required for recovering any liability likely to arise after
completion of assessment under Section 153 A of I.T. Act, as provided by
Section 132 B of the I.T. Act. The seized cash was not in the name of any
of the Respondent Nos.1 to 3 but in the name of the following
concerns/persons :-
SR No. Name of Holder of Bank Account Balance in bank Seized (Rs.)
account (Rs.)
1. Worldwin Consultant India Pvt. Ltd., 5,50,00,000/- 5,50,00,000/-
Axis Bank, D-81, Malviya Nagar, New
Delhi
P.H. Jayani 04 APEAL220.2014.doc
2. Sh. Jai Shankar Srivastava, Axis Bank, 33,93,195/- 33,93,195/-
Deepali Enclave, Pitampura, Outer
Ring Road, New Delhi
3. Sh. Jag Mohan, Axis Bank, D Mall, 16,29,985/- 16,29,985/-
Rohini, New Delhi
4. Sh. Ram Awadh Sharma 7,81,293/- 7,81,293/-
Axis Bank, Deepali Enclave, Pitampura,
Outer Ring Road, New Delhi
5. Sh. Ram Awadh Sharma 53,45,00,000/- 53,45,00,000/-
Axis Bank, Deepali Enclave, Pitampura,
Outer Ring Road, New Delhi
6.1) Investigation in respect of Respondent No.1 revealed an Axis
bank account belonging to one Mr. Ram Awadh Sharma with transactions
running into several crores. In his statement recorded on oath under
Section 132(4) of I.T. Act, Mr. Ram Awadh Sharma has stated that, he
was not aware of the said Axis Bank account in his name, nor he knew
from where said funds were received and were utilized. Twice statement
of Mr. Jai Shanker Srivastava, Director of Respondent Nos.1 and 3 was
recorded but he also could not explain the transactions in said bank
account nor could he give the necessary details. Since no explanation was
given by the parties concerned, the Appellant was bound to seize the
amount of Rs.53.45 Crores. The inquiry as to the Directors of M/s.
Worldwin Consultants India Private Limited did not reveal any fruitful
information about its Directors Mr. Devesh Singh and Bhipender Singh.
Mr. Jai Shanker Srivastava was not related to M/s. Worldwin Consultants
India Private Limited. No books of accounts were found in case of
P.H. Jayani 04 APEAL220.2014.doc
Respondent Nos.1 to 3. Despite repeatedly asked by the Appellant,
Respondent Nos.1 to 3 were evasive as to utilisation of the funds received
from Respondent No.5. As alleged, Mr. Ram Awadh Sharma had received
the funds from Respondent No.3 but according to Respondent No.5,
Respondent No.3 was not a defaulter. In the backdrop, it cannot be
maintained that the seized amount was received from Respondent No.5
and it belonged to Respondent Nos.1 to 3. This was a clear case of
embezzlement and therefore subject to income tax proceedings under
Sections 153A/143 (2) read with Section 68 of I.T. Act. The said amount
was lawfully seized under the provisions of Section 132 of I.T. Act. The
provisions of MPID Act are not applicable to such seizure. In the
backdrop, Respondent Nos.1 to 3 shall take recourse to Section 132 B of
I.T. Act. Hence, the Application may be rejected.
7) Respondent No.6 also filed its Reply and opposed the
Application with contentions that, a case of predicate offences was made
out against the NSEL and its defaulter members. Consequently, FIR was
registered against them by Respondent No.6 under the IPC and PMLA
Act. Pursuant to the settlement, Respondent No.1 was liable to pay
Rs.921.40 Crores to NSEL. That, provisional attachment Order was
obtained against certain properties of Respondent Nos.1 to 3 under
Section 5 of PMLA Act. The PMLA Act being later in point of time and in
view of Section 71 thereof, it has an overriding effect over all other
P.H. Jayani 04 APEAL220.2014.doc
enactments. Therefore, the Application was liable to be rejected.
8) After hearing the parties and considering the record, the
learned Judge of the trial Court observed that Respondent No.5 has not
disputed that the subject matter 'money' belonged to the investors which
Respondent Nos.1 to 3 had received from Respondent No.5. The
statement of accounts filed by the Appellant also indicate the said fact.
The MPID Act has received the assent of the President on 21 January
2000 and then it was published in the official gazette. The PMLA Act is
later in point of time. In view of Articles 254 of the Constitution of India,
Section 4 & 14 of the MPID Act and the decision in case of K.K. Baskaran
v. State rep. by its Secretary, Tamil Nadu & Ors ., reported in (2011) 3
SCC 793, the MPID Act has overriding effect on the other Acts. The
provisions of Section 5 (3), 6 and 7 of the MPID Act has provided that
the trial Court has jurisdiction and powers to decide the controversy in
the matter and pass necessary order for release of the assets to satisfy
the investors. The settlement arrived between Respondent Nos.1 to 3
and the Respondent No.5 was lawful and it intended to protect the
interest of the investors who are the ultimate victims of the crime. In
wake of above, the learned Judge accepted the case of Respondent
Nos.1 to 3 and allowed the Application.
9) Mr. Saxena, learned counsel for Appellant submitted that
the trial Court has failed to consider that the subject matter 'money' was
P.H. Jayani 04 APEAL220.2014.doc
seized under the provisions of I.T. Act. Said money was not provisionally
attached under Section 4 of MPID Act. Respondent Nos.1 to 3 were not
defaulters of Respondent No.5 as provided in Section 3 of MPID Act.
Therefore, the trial Court had no jurisdiction to decide the subject
Application. The assessment proceedings initiated after seizure of the
money were decided against Respondent Nos.1 to 3. In this background,
the trial Court had no jurisdiction to adjudicate the question of release
of the money and only I.T. Authority was competent to decide that
question. Lastly, looking at the facts of the case, the PMLA Act and I.T.
Act has overriding effect on the case. For these reasons the impugned
Order is not sustainable in law. To buttress these submissions he has
relied upon the decision in Jalgaon District Central Coop. Bank Ltd. v.
State of Maharashtra and Ors reported in 2025 SCCOnLine SC 2513.
10) In reply, Mr. Bhanushali for Respondent Nos.1 to 3, Ms. Patil,
learned Special PP for Respondent No.4 - State, Mr. Lakhawat, learned
counsel for Respondent No.5 - NSEL and Mr. Yadav, learned counsel for
Respondent No.6-ED have maintained the stand which they had taken in
their Application and say filed before the trial Court. Additionally, Mr.
Lakhawat submitted that in the facts and law, the MPID Act has overriding
effect on the other laws applicable here.
11) We have carefully considered these submissions and perused
the record.
P.H. Jayani 04 APEAL220.2014.doc
12) It was the specific case of Respondent Nos.1 to 3 that they had
received the subject matter 'money' from the Respondent No.5. The latter
has not denied the said fact in its reply. According to Respondent No.4, an
amount of Rs.929.40 Crores was received by Respondent Nos.1 to 3 from
the Respondent No.5. Pursuant to the settlement, Respondent No.1 had
acknowledged the liability of Rs.921.40 Crores to Respondent No.5 and
undertaken to pay Rs.771 Crores within 14 months from the settlement
date 30th October, 2013. Therefore, the trial Court has held that the
subject matter 'money' was received from the NSEL. This finding of the
trial Court is not disputed by the Appellant.
13) As held in case of National Spot Exchange Ltd. v. Union of
India reported in 2025 SCC OnLine 1137, merely because the SARFAESI
Act and RDB Act which are enacted in respect of the subject matter falling
in List-I and having been enacted by Parliament, they could not be
permitted to override the MPID Act, which is validly enacted for the subject
matter falling in List-II - State List. If such an interpretation is permitted to
be made, it would amount to denuding the State of its legislative power to
enact and enforce legislation, which is within the exclusive domain of the
State and it would offend the very principle of Federal Structure set out in
Article 246 of the Constitution of India, held to be a part of the basic
structure of Constitution of India.
13.1) Therefore, we are in agreement with the findings of the trial
P.H. Jayani 04 APEAL220.2014.doc
court that, the MPID Act has overriding effect on the PMLA Act and the
provisions of the I.T. Act under which subject matter 'money' was seized
and consequently, it was within its jurisdiction to decide the question of
releasing the subject money.
14) The settlement agreement was executed between the
Respondent No.5, Respondent Nos.1 to 3 and seven other parties. It was
specifically prayed by Respondent Nos.1 to 3 that in case the subject matter
'money' is released, it be credited to the Escrow Account of the Respondent
No.5 so as to further transfer it to the investors in view of the settlement.
Since the money was received fraudulently in violation of the law, the
related scheme and by dishonest means, and therefore it was necessary to
release that money. For these reasons the trial Court has allowed the
MA/107/2013. In the facts and circumstances of the case, said reasons are
justifiable.
15) Mr. Lakhawat, learned counsel submitted that, MA/452/2016
filed by Respondent No.4 to make absolute the attachment of the properties
of Respondent Nos.1 to 3, was allowed by the trial Court. This Court has
passed an Order and permitted the Respondent No.5 to enforce and execute
the said Settlement Agreement against Respondent Nos. 1 to 3 as an
Arbitral Award. Said Agreement has been held as lawful by the Hon'ble
Supreme Court when it rejected the objection filed by Respondent Nos.1 to
3 in the execution proceedings. In National Spot Exchange Ltd (supra),
P.H. Jayani 04 APEAL220.2014.doc
the Apex Court observed that vide Order dated 4th May 2022 Supreme
Court Committee was constituted and Order was made to transfer the
execution proceedings of all the decrees/orders/awards obtained by the
Respondent No.5 against the defaulters including Respondent Nos.1 to 3.
Further, said Committee has been empowered to execute the said
decrees.
16) In the wake of above, we do not find that impugned Order is
erroneous either on facts or in law and calls for an interference by this
Court. In the result, the Appeal fails and it is liable to be dismissed.
Hence, the following Order :-
16.1) Appeal is dismissed.
16.2) As a result, pending Applications do not survive and are
accordingly disposed off.
(SHYAM C. CHANDAK, J.) (A.S. GADKARI, J.)
17) At this stage, Mr. Saxena, learned Advocate appearing for the
Appellant requested this Court to continue the ad-interim relief granted
earlier, for a period of four weeks, to enable the Appellant to question the
correctness of this Judgment before the Hon'ble Supreme Court.
17.1) It be noted here that, present Appeal is pending for last 12
years. As noted in the body of the Judgment, it is the investors/victims
who are the ultimate sufferers in the present crime. We are of the view
P.H. Jayani 04 APEAL220.2014.doc
that, as per the intention of legislature in enacting the MPID Act the
interest of the investors/victims of the crime is to be given more
importance than the claim of the Government entities. Ultimately, the
said Act is enacted with an avowed object for protecting the interest of
the depositors and not for protecting the interest of other entities.
18) In view thereof and for the reasons stated in the Judgment
the said request is rejected.
(SHYAM C. CHANDAK, J.) (A.S. GADKARI, J.)
