AI Drafter 
TaxTMI 
TaxTMI 
2023 (3) TMI 1277
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....GSPC with Mr. Gokul Sharma, Advocate for UOI/SFIO with Mr. Hemant Tyagi, IO, SFIO and Ms. Sonam Sharma. Mr. Anupam S. Sharma, Special Counsel for ED with Mr. Prakarsh Airan, Ms. Harpreet Kalsi and Mr. Abhishek Batra, Advocates. SI Dharm Singh, PS Hauz Khas. JUDGMENT SATISH CHANDRA SHARMA, C.J. 1. The instant Writ Petition under Article 226 of the Constitution of India has been filed with the following prayers: "a) Pass a writ of mandamus or any other appropriate writ, order or direction directing Respondent No. 2 / ED to investigate in a time bound manner, the various offences committed by Respondent Nos. 3 to 15 and other unknown accused persons under the provisions of Indian Penal Code, 1860 and Prevention of Money Laundering Act 2002 in relation to the alleged purchase of development rights by Respondent No. 5 / IPL in land parcel admeasuring 78 acres in Bhiwadi, Rajasthan for a consideration of INR 396 Crores; b) Direct Respondent No. 16 / SFIO to specifically investigate the fraudulent Bhiwadi Land Transaction and to extend the scope of investigation under Order No. 3/404/2018-CL-II (NR) dated 13.09.2019 to include connected parties and to file final....
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....Land Transaction". It is the Petitioner's case that the Economic Offences Wing (EoW) of the Delhi Police/Respondent No. 1, the Enforcement Directorate (ED)/Respondent No. 2 and the Serious Fraud Investigating Office (SFIO)/Respondent No. 16 have failed to perform their duty of investigating into these allegations. 3. For a better understanding of the case at hand, the Petitioner herein as provided the structure of the IREO Group of Companies which is as under: a. It is stated that two companies by the names of IREO Fund-II Ltd. and IREO Fund II Co-Investment-1 Ltd. (hereinafter referred to as "IREO Fund Companies") were incorporated in Mauritius and received an investment of around UDF 1.6 Billion between 2004-2009. These IREO Fund Companies infused money into wholly owned subsidiaries incorporated in Mauritius and/or Cyprus which infused equity into companies incorporated and operating in India. b. It is stated that the IREO Group also incorporated IPL/Respondent No. 5, IREO Residencies Company Private Limited, IREO Grace Realtech Private Limited and IREO Victory Valley Private Limited, which were subsidiaries of companies incorporated in Mauritius and ultimat....
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....tels Pvt. Ltd. INR 40 Cr R13 Bulls Realtors Pvt. Ltd. INR 40 Cr R14 Adson Software Pvt. Ltd. INR 40 Cr R15 Hardcore Realtors Pvt. Ltd. INR 40 Cr Total INR 396 Cr b. It is stated that while Respondent No. 5 accounted for the said purchases in its financial statements, the same was not done by Respondent Nos. 6 to 15 in their financial statements for the financial year 2013-2014. It is stated that Respondent Nos. 6 to 15 disclosed the said amounts as a security deposit and adjusted the said amounts in their respective financial accounts against outstanding advances of Respondent No. 5. It is also stated that the said transactions were not disclosed as a related party transaction. c. With regards to the allegation that Respondent Nos. 6 to 15 are related to Respondent No. 5 and is under the control of Respondent No. 3, it is stated that the Institute of Chartered Accountants of India (ICAI)/Respondent No. 17, in its prima facie opinion dated 23.08.2019 rejected the contention of the Respondents that these entities are private close entities and have no relation with each other or IREO Group. d. The Petitioner has....
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....n on 23.12.2021. Status Reports have been filed by the Directorate of Enforcement (ED), Economic Offence Wing (EoW) and Serious Fraud Investigation Office (SFIO) from time to time. 9. The Petitioners have filed an additional affidavit dated 15.02.2023 wherein he has disclosed the details regarding a petition filed by him before the Hon'ble High Court of Punjab and Haryana registered as CRM-M-48933/2021 (O&M) wherein he has prayed for impounding/revoking/suspension of passport of Mr. Lalit Goyal/Respondent No. 3. He states that the siphoning of funds by the IREO Group of Companies has been confirmed by the provisional attachment order of the Enforcement Directorate dated 14.10.2022. The said attachment order also states that around 4705 customers had made a booking in different projects of the IREO Group of Companies and the said Group have siphoned off around Rs. 1376.25 crores of 640 homebuyers ouot of the total amount of Rs. 1777.48 crores received by the Group till 31.03.2017. 10. The Respondent No. 1/EOW of Delhi Police has filed a Status Report dated 07.02.2022 wherein it is stated that the Complaint No. C-1962/DCP/EOW dated 17.11.2021& Dy. No. 9833/DCP/EOW dated 12.11.2....
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.... the time of filing of the Status Report, was under judicial custody. The ED also conducted a search against IREO Group of Companies and related persons on 22.11.2021 leading to seizure of incriminating documents which are being examined by the ED. As per the investigation carried out by the ED thus far, it prima facie appears that there are approximately 25-27 operating companies, including those mentioned in the writ petition and approximately 150 land owning companies involved, however the same is subject to examination of material on record. It is stated that the investigation by Respondent No. 2 into these transactions is still ongoing. 13. Material on record also indicates that persons similarly situated to the Petitioner herein have also filed petitions before this Court and the Apex Court seeking similar reliefs. Material on record shows that one Mr. Ramesh Sankha has filed W.P.(CRL.) 142/2018 before the Apex Court seeking a direction to the CBI to investigate into the transactions and the Apex Court disposed of the Writ Petition leaving it open to the Petitioner therein to take recourse to civil remedies. Similarly, one Col. Sanjeev Dhawan has filed W.P.(CRL.) 679/2020 ....
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....It is relevant to note that petitioners in the present petition are also the petitioners in that petition. Clearly, the petitioners cannot approach multiple forums seeking the same relief." 14. Another Writ Petition, being W.P.(C) 10337/2019, was filed before this Court by Col. Sanjeev Dhawan and other homebuyers. This Court while disposing of the said Writ Petition vide Order dated 07.02.2020 has observed that the Respondent No.2 therein has directed the SFIO to nominate inspectors under Section 212(1) of the Companies Act, 2013 to investigate into the affairs of Ireo Group of Companies. 15. The latest Status Report filed by the SFIO, though has been filed in a sealed cover, is being reproduced in the Order because this Court does not feel that the information revealed in the Status Report would hamper investigation. The same reads as under: "Status Report to be submitted in the Hon'ble High Court of Delhi in the matter of Ireo Pvt Ltd. & 19 other Group Companies 1. Ministry of Corporate Affairs directed Serious Fraud Investigation Office to investigate the affairs of IREO Pvt Limited & 19 other IREO group companies. 2. The above mentioned 20 C....
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.... most of the cases, leading to the invested funds in these projects being stuck. 8. It has also been noted during the investigation that Ireo Group companies have been diverting term loans taken from one financial institution to repay the loan from another Financial Institution thus effecting engaging in evergreening of loans. 9. Investigation revealed that Ireo Private Limited had paid Rs. 396 Cr. to its 10 Land Owning Companies (LOCs) in F.Y. 2010-11 for purchase of development rights of land located at Bhiwadi. IPL did not conduct any development activity on the land for which rights were acquired. Later on, IPL started writing off the development rights from F.Y. 2012-13 to 2016-17. 10. On perusal of the Valuation Report of Bhiwadi Land & Auditor king, it has been identified that a total of Rs 385.36 Cr has been written off by IPL in a phased manner starting from F.Y 2012-13 to 2016-17 citing "non-profitable venture with negative returns on its investment". Details of the written-off amount is provided in the table below: Particulars F.Y. New Amount Written off Cumulative Amount Development cost written off- Bhiwadi 2012-13 (41,30....
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....vt. Ltd. U74900DL2010PTC204169 13. Ireo Fiveriver Pvt Ltd U4S200DL2007PTC160318 14. Sunflower Real Tech Pvt Ltd U70102DL2006PTC156901 15. Faith Buildtech Pvt Ltd U70101DL2010PTC207871 16. Pravesh Promoters Pvt Ltd U70100DL2006PTC146229 17. Sunsine Realbuild Pvt Ltd U70102DL2012PTC230650 18. Elite Township Pvt Ltd U45200DL2006PTC157126 19. Proud Buildwell Pvt Ltd U70100DL2013PTC259004 20. Wisdom Infrahome Pvt Ltd U70102DL2013PTC258945 17. In the Status Report it is stated that these 20 Companies are part of the IREO Group of Companies which were incorporated for carrying out construction and development of real estate activities in India by investing funds raised abroad primarily Mauritius and Singapore. Apart from investment as share capital and debenture from foreign funds, the management of IREO Group of Companies has borrowed funds from Banks & Financial Institutions for completion of housing/commercial projects, valued at over Rs. 4000 Crores and it has also taken advances from customers who have purchased apartments or plots from IREO Group of Companies. It is stated that the Company has defaulted in....
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....nd the questions and the manner of putting such questions to persons involved in such offences. A blanket order fully insulating a person from arrest would make his interrogation a mere ritual, (vide State rep. by the CBI v. Anil Sharma [(1997) 7 SCC 187 : 1997 SCC (Cri) 1039 : JT (1997) 7 SC 651] )." (emphasis supplied) 21. In P. Chidambaram v. Directorate of Enforcement, (2019) 9 SCC 24, the Apex Court has held as under: "61. The investigation of a cognizable offence and the various stages thereon including the interrogation of the accused is exclusively reserved for the investigating agency whose powers are unfettered so long as the investigating officer exercises his investigating powers well within the provisions of the law and the legal bounds. In exercise of its inherent power under Section 482 CrPC, the Court can interfere and issue appropriate direction only when the Court is convinced that the power of the investigating officer is exercised mala fide or where there is abuse of power and non-compliance of the provisions of the Code of Criminal Procedure. However, this power of invoking inherent jurisdiction to issue direction and interfering with the investigat....
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....f the Criminal Procedure Code in the conduct of the investigation, it is open to the court to quash the proceedings where there is a clear case of abuse of power. It is a different matter that the High Court in exercise of its inherent power under Section 482 CrPC, can always issue appropriate direction at the instance of an aggrieved person if the High Court is convinced that the power of investigation has been exercised by the investigating officer mala fide and not in accordance with the provisions of the Criminal Procedure Code. However, as pointed out earlier that power is to be exercised in rare cases where there is a clear abuse of power and non-compliance of the provisions falling under Chapter XII of the Code of Criminal Procedure requiring the interference of the High Court. In the initial stages of investigation where the Court is considering the question of grant of regular bail or pre-arrest bail, it is not for the Court to enter into the demarcated function of the investigation and collection of evidence/materials for establishing the offence and interrogation of the accused and the witnesses." (emphasis supplied) 22. The said judgment has been followed by the Apex....