AI Drafter 
TaxTMI 
TaxTMI 
2020 (12) TMI 1128
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....s') since very inception. The Companies started several housing/real-estate projects in Noida and Greater Noida and, proposed to construct approximately forty-two thousands flats. In their brochure published, they promised to deliver possession of flats/homes, complete in all respects, within thirty-six months, having world-class amenities. 3. Having own home is a cherished dream of every middle class Indian. Impressed by the promises made by the Companies and believing in their bona fide, thousands of flat/home buyers entered into allotment-cum-flat-buyer agreement and, made payment of 40-100% of the total, consideration. However, despite having invested their life-time-saving money, to have their own home and, making payment to the extent of 40-100%, the Companies failed to keep their promise to deliver the flats/homes to the buyers. Several revised dates of possession were also made by them. Several home buyers, feeling cheated of their life-time-saving money by the builder, who failed to keep their promise every time as their cherished dream of having their homes had come crushing down in the hands of promoters of these Companies, some of them had approached the National....
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....information had been submitted on behalf of the Directors of the Companies. Considering the conduct of the Directors of the Companies, its Statutory Auditor, the Supreme Court vide order dated 6th September, 2018 appointed Mr. Ravi Bhatia of M/s. Bhatia & Co. and Mr. Pawan Kumar Aggarwal of M/s. Sharp and Tannan Company to conduct the forensic audit, which was for the period from 2008 till date. It was further directed that the said forensic audit was to be completed within a period of two months. 6. The present accused-applicant was directed to handover the original records of the Companies to the Forensic Auditors, including the documents required by the Forensic Auditors. Despite the said order, the accused did not handover the records to the Forensic Auditors in utter violation of the order passed by the Supreme Court and, thus the Supreme Court directed the police to seize all the documents and handover them over to the Forensic Auditors from the possession of 46 companies and their Directors. 7. The Forensic Auditors, on 24th October, 2018 disclosed before the Supreme Court with respect to diversion of funds of more than Rs. 100 Crores to a shell company known as GauriS....
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....cted in the audit report, which was signed by him in the audited Balance Sheet, in spite of knowing the fact that money has flown out of the accounts of the Amrapali Group of Companies to aforesaid companies." 10. The Forensic Auditors further pointed out that 23 more companies had been created by the M/s Amrapali Group of Companies for diversion of funds collected from the flat/home buyers with connivance and criminal conspiracy with the present accusedapplicant, who was the Statutory Auditor. The Supreme Court noted the conduct of non-compliance of the order by the accused in its order dated 13th November, 2018 and in paragraphs-17 and 20 of the said order observed as under:- 17. It is a case where we find ourselves in a situation that the money of Greater Noida and Noida Authorities has not been paid, buyers have also been duped. Other financial institutions have not been paid. Construction has not been completed. Money paid by buyers has been diverted for the creation of various companies and assets have been created. All these assets are accountable and have to be sold as it is not the independent investment made by these directors. It is a patent and blatant fraud....
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....chased shares of Amrapali Zodiac for Rs. 140 Crores, which amount was withdrawn by M/s. J.P. Morgan. The Supreme Court also directed the police to investigate the role of the present accused-applicant and CFO in the commission of the offences along with Directors Anil Kumar Sharma, Shivpriya and Ajay Kumar. 12. The Supreme Court, on the basis of the reports submitted by the Forensic Auditors, prima facie, found that the flat/home buyers' fund had been diverted to other companies/directors through payment of professional fees, by way of booking of bogus bills of Rs. 837 Crores, by selling flats as undervalued prices in book and received differential market value in cash, by paying commission and brokerage on bogus booking of flats and by way of granting inter-corporate deposits of Rs. 3,000 Crores to related entities and Rs. 500 Crores to unrelated entities/trusted partners for ultimately diverting funds to unapproved uses. The Supreme Court had also noted that several companies were created for delivering assets. There was no compliance of the statutory obligations by the companies. The home buyers' fund to the extent of Rs. 5,619.47 Crores had been diverted and, the pre....
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....e junior employees, peons and relatives etc. were inducted as Directors just to defraud the homebuyers money and siphon it out. Without material being supplied, a large amount of money had been paid by way of forged purchases, as a method to divert money even through authorized signatories and the Companies of the relatives, family members and relatives of the Directors and Guarantors. The Supreme Court directed the concerned authorities to look into the violation of the FEMA and FDI norms as projected by the Forensic Auditors in their report and to submit progress report to this Court. 14. The Supreme Court noted that the Forensic Audit had unfolded the true story of the Companies. Right from 2015, no construction activity had taken place. Account books had not been maintained and money had been transferred continuously. No audit was made. Money was taken out from banks, and fake purchases had been shown. The Supreme Court also observed that in view of their unholy conduct, defying discretion, their contumacious and fraudulent conduct had totally dis-entitled them any indulgence and, they were required to be dealt with as sternly as possible so as to make it exemplary one, that....
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....used-applicant which played instrumental role in diversion of funds from the Companies to the accused-directors as well as the accused-applicant. M/s Vrindawan Buildcon Pvt. Ltd., had acquired immovable properties from the funds diverted from the Companies through shell companies. He had played an active role in furtherance of criminal conspiracy of money laundering wherein the money of flat/home buyers had been illegitimately diverted and layered through various sham transactions involving shell companies having dummy directors. A flow chart showing flow of funds from the Companies to several bogus companies in active connivance with the accusedapplicant had been placed with the complaint. The investigation had revealed that the accused-applicant had purchased several properties from the funds of the proceeds of crime and looking at the gamut and extent of the conspiracy, further investigation is still pending. Learned trial Court has rejected the application for bail vide order dated 10.07.2020 in above extent. 18. Heard Mr. Sanjay Hegde, learned Senior Advocate assisted by Mr. Arun Sinha, Alok Kumar Singh and Mr. Ritwik Rai, learned counsels for the accused-applicants and Mr.....
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....and creation of bogus/sham companies in which his employees and relatives were directors. The investigation had revealed that the accused-applicant had created assets from the proceeds of crime. Investigation is still going on. 21. Mr. Shiv P. Shukla, learned counsel has further submitted that the offence involving financial fraud of such magnitude, should be viewed differently as it is a crime against the society and, poor home buyers have been cheated, defrauded in active connivance and criminal conspiracy of the accused-applicant with other accused, which has been noted by the Supreme Court meticulously in its order dated 23.07.2019. The accused-applicant has been involved in money laundering. Economic offence of such magnitude had deep rooted conspiracy and huge loss of public funds which needs to be viewed differently and while investigation is on, the accused-applicant should not be enlarged on bail. 22. I have considered the submissions advanced on behalf of the accused-applicant as well as the Directorate of Enforcement. 23. It would be evident from the facts, as noted above, that but for the Supreme Court's intervention and undertaking painful and strenuous ex....
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....nds need to be viewed seriously and considered as grave offences affecting the economy of the country as a whole and thereby posing serious threat to the financial health of the country." 27. The Supreme Court in the case of Nimmagadda Prasad vs CBI: (2013) 7 SCC 466 has observed that the alarming rise in white collar crimes has affected the fiber of country's economic structure. Economic offences have serious repercussions on the development of the country as a whole. Economic offences constitute a class apart and a different approach has to be adopted in the matter of bail. Para 23 to 25 of the aforesaid judgment are extracted hereinbelow:- "23. Unfortunately, in the last few years, the country has been seeing an alarming rise in white-collar crimes, which has affected the fibre of the country's economic structure. Incontrovertibly, economic offences have serious repercussions on the development of the country as a whole. In State of Gujarat v. Mohanlal Jitamalji Porwal [(1987) 2 SCC 364 : 1987 SCC (Cri) 364] this Court, while considering a request of the prosecution for adducing additional evidence, inter alia, observed as under: (SCC p. 371, para 5) "5. .....
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....er:- "8. A bare reading of the order impugned discloses that the High Court has not given any reasoning while granting bail. In a mechanical way, the High Court granted bail more on the fact that the accused is already in custody for a long time. When the seriousness of the offence is such the mere fact that he was in jail for however long time should not be the concern of the courts. We are not able to appreciate such a casual approach while granting bail in a case which has the effect of undermining the trust of people in the integrity of the education system in the State of Bihar. 9.We are conscious of the fact that the accused is charged with economic offences of huge magnitude and is alleged to be the kingpin/ringleader. Further, it is alleged that the respondent-accused is involved in tampering with the answer sheets by illegal means and interfering with the examination system of Bihar Intermediate Examination, 2016 and thereby securing top ranks, for his daughter and other students of Vishnu Rai College, in the said examination. During the investigation when a search team raided his place, various documents relating to property and land to the tune of Rs. 2....
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....een a judgment of acquittal and conviction and an order granting bail much before commencement of trial. The duty of the Court at this stage is not to weigh the evidence meticulously but to arrive at a finding on the basis of broad probabilities. Further, the Court is required to record a finding as to the possibility of the accused committing a crime which is an offence under the Act after grant of bail. 30. The Supreme Court in its judgment in Serious Fraud Investigation Office Vs. Nitin Johri and another, (2019) 9 SCC 165, while considering the factors to be taken into account while considering the bail involving serious economic offences in para 24-27 has held as under:- "24. At this juncture, it must be noted that even as per Section 212(7) of the Companies Act, the limitation under Section 212(6) with respect to grant of bail is in addition to those already provided in CrPC. Thus, it is necessary to advert to the principles governing the grant of bail under Section 439 of CrPC. Specifically, heed must be paid to the stringent view taken by this Court towards grant of bail with respect of economic offences. In this regard, it is pertinent to refer to the f....
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....own by this Court in Ranjitsing Brahmajeetsing Sharma v. State of Maharashtra[Ranjitsing Brahmajeetsing Sharma v. State of Maharashtra, (2005) 5 SCC 294 : 2005 SCC (Cri) 1057] , which discusses the effect of the twin mandatory conditions pertaining to the grant of bail for offences under the Maharashtra Control of Organised Crime Act, 1999 as laid down in Section 21(4) thereof, similar to the conditions embodied in Section 212(6)(ii) of the Companies Act. However, the High Court went on to grant bail to Respondent 1 by observing that bail was justified on the "broad probabilities" of the case. 27. In our considered opinion, this vague observation demonstrates non-application of mind on the part of the Court even under Section 439 CrPC, even if we keep aside the question of satisfaction of the mandatory requirements under Section 212(6)(ii) of the Companies Act." 31. Section 45 of PMLA starts with a non obstante clause which indicates that the provisions laid down in Section 45 of PMLA will have overriding effect on the general provisions of the Code of Criminal Procedure in case of conflict between them. Section 45 PMLA imposes the following two conditions for grant of ....
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....ion 45 of PMLA are mandatory and need to be complied with, which is further strengthened by the provisions of Section 65 and also Section 71 of PMLA. Section 65 requires that the provisions of CrPC shall apply insofar as they are not inconsistent with the provisions of this Act and Section 71 provides that the provisions of PMLA shall have overriding effect notwithstanding anything inconsistent therewith contained in any other law for the time being in force. PMLA has an overriding effect and the provisions of CrPC would apply only if they are not inconsistent with the provisions of this Act. Therefore, the conditions enumerated in Section 45 of PMLA will have to be complied with even in respect of an application for bail made under Section 439 CrPC. That coupled with the provisions of Section 24 provides that unless the contrary is proved, the authority or the Court shall presume that proceeds of crime are involved in money-laundering and the burden to prove that the proceeds of crime are not involved, lies on the appellant." 33. The Supreme Court in the case of Nikesh Tarachand Shav Vs. Union of India, (2018) 11 SCC 1 has struck down two conditions under Section 45 of the PMLA....