2022 (9) TMI 1627 - HC - Indian Laws

Housing project fraud accused denied bail despite 4-year custody as fund diversion affected 450+ victims

Ajay Kumar Versus State (NCT of Delhi)

Delhi HC denied regular bail to accused in housing project fraud case involving illegal diversion of funds. Over 450 victims awaited possession of housing ... Seeking grant of regular bail - illegal diversion of funds - housing projects not completed - HELD THAT:- It may be observed that more than 450 victims await for the possession of the housing units, which were agreed to be delivered within a period of 36 months along with an additional grace period of 6 months since 2014 to 2016. It is important to keep in perspective as to the reasons for the non-construction/development activities not being undertaken at the project sites to evaluate the role of the petitioner despite approval of the building plans by the competent authority in 2011 and approval of revised layout plan in 2014. Mere partial completion of the projects cannot absolve the functionaries as it cannot be ignored that the site was ultimately abandoned on account of illegal diversion of funds, which were required to be used for the purpose of completion of projects. Merely because the petitioner may not have been a Director at the relevant time when the bookings were made, as claimed, does not absolve the petitioner of his responsibility as the funds were diverted with his active role and were within his knowledge. The fact that the accused has been in custody since 26.04.2019 and the trial is likely to take some time cannot be the sole governing factors for releasing the accused on bail, at this stage. The petitioner in the light of the evidence on record cannot claim that he was unaware of the transactions and was not responsible for the affairs of the company at the relevant time and, as such, it does not appear to be a case of vicarious liability, as claimed by the learned counsel for the petitioner - it has been held in NIMMAGADDA PRASAD VERSUS CENTRAL BUREAU OF INVESTIGATION [2013 (5) TMI 920 - SUPREME COURT], that economic offences constitute a class apart which need to be visited with a different approach in the matter of bail. Considering the nature of evidence on record, grave allegations of siphoning of funds and the fact that the innocent home buyers stand duped, the case is not fit for grant of bail, at this stage. The possibility of the accused jumping the bail also cannot be ruled out. Application dismissed. Issues:Grant of regular bail under Section 439 Cr.P.C. in FIR involving Sections 406/420/120B IPC against M/s Amrapali Dream Valley Pvt. Ltd. for alleged diversion of funds and non-completion of housing projects.Analysis:The prosecution's case involves more than 450 victims who booked housing units in group housing projects developed by M/s Amrapali Dream Valley Pvt. Ltd. The projects were not completed as per schedule, leading to complaints from multiple victims. The accused company was alleged to have diverted funds collected from buyers, resulting in incomplete projects despite approvals and partial construction.The petitioner, one of the directors of the holding company, claimed limited involvement in day-to-day management and construction activities. The defense argued lack of fraudulent intent in project delays, citing completion percentages in other projects. Additionally, assets of the company and directors were attached following a forensic audit ordered by the Supreme Court. The petitioner's role as an authorized signatory and director during specific periods was emphasized.The State opposed the bail application, alleging unauthorized diversion of funds amounting to Rs. 563 Crores, leading to project delays since 2016. The prosecution highlighted the forensic audit report and cited relevant case laws to support the seriousness of economic offenses. The court considered the delay in project completion, fund diversion, and the impact on innocent buyers awaiting possession.After evaluating the contentions, the court noted the significant number of victims awaiting possession and the illegal diversion of funds leading to project abandonment. The petitioner's active role during the fund diversion period was highlighted, indicating knowledge and responsibility. The court emphasized the seriousness of economic offenses and the impact on public funds, leading to a different approach in bail matters.Considering the grave allegations, evidence of fund diversion, and potential risk of bail jumping, the court dismissed the bail application. The judgment emphasized the seriousness of economic offenses affecting public trust and financial stability, warranting a cautious approach in granting bail.The judgment does not express an opinion on the case's merits but focuses on the gravity of the allegations, impact on innocent buyers, and the need to prevent economic offenses.