TaxTMI 
TaxTMI 
2025 (2) TMI 144
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....P a/w Mr. Ayush Kedia,. For the Respondent No. 3 (SEBI): Mr. Rafique Dada, Senior Advocate a/w Mr. Bhushan Shah, Mr. Akash Jain a/w Mr. Abhishek Nair i/b Mr. Mansukhlal & Co.,. For the Respondent No. 4 - CBI: Mr. Kuldeep S. Patil, Special Public Prosecutor a/w Mr. Dhavalsinh Patil, Mr. Ashish Kumar Srivastava and Ms. Sampada S. Patil,. For the Respondent No. 5 - SFIO: Mr. H.S. Venegavkar a/w Mr. Aayush Kedia a/w Ms. Divya Gontia i/b Mr. Pradeep Yadav,. For the Applicants in Interim Application: Mr. Ravi Kadam, Senior Advocate a/w Mr. Vikram Nankani, Senior Advocate a/w Mr. Vineet Naik, Senior Advocate a/w Mr. Ameet Naik, Mr. Abhishek Kale, Ms. Vaibhavi Bhure, Mr. Aditya Ajgaonkar, Mr. Harish Khedkar, Mr. Vivek Dwivedi, Mr. Nevil Chopra, Ms. Antara Kulkarni and Ms. Rebecca Singh i/b M/s. Naik Naik & Co., for Applicants in Interim Application [Stamp] No. 24376 of 2024 and Interim Application [Stamp] No. 24377 of 2024. For the Applicant in Interim Application [Stamp] No. 24444 of 2024: Mr. Pranav Badheka a/w Mr. Rajendra Barot, Mr. Dhirajkumar Totala a/w Ms. Vaibhavi Bhure, Mr. Vivek Shetty, Ms. Harsha Uppal, Mr. Prince Todi, Mr. Harsh Sethi i/b AZB & Partners,. Mr. ....
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....on of approximately Rs. 50 Crores availed as a loan from United Trust of India; and (ii) misappropriation of approximately Rs. 76 Crores availed as loan from a consortium of six banks wherein Union Bank of India was the lead Bank. After filing the aforesaid two PILs' sometime in the month of April, 2009, the banks have collectively recovered approximately Rs. 14,00,00,000/- (Rs. Fourteen Crores only) from M/s. Autoriders Finance Limited. This Court, by a common order dated 9th July, 2009 disposed of the aforesaid two PILs' by entrusting the investigation of the subject matter therein to the State C.I.D, Pune, Maharashtra State under the overall supervision of Additional Director General of Police, C.I.D, Maharashtra State, Pune. 4. The present petition is filed seeking limited directions, inter alia, issuance of an appropriate writ of mandamus directing the respondent Nos.1 and 2 to jointly act upon the complaint dated 22nd December, 2021 (First EOW complaint) and the complaint dated 3rd April, 2023 (Second EOW complaint) filed by the petitioner wherein he has prayed for conducting preliminary investigation/inquiry into the fraudulent activities undertaken by one Ana....
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.... associates and subsidiaries. The petitioner further contends that he noticed the method adopted by Anand Jaikumar Jain to funnel and illegally route back public money for his personal gain by collecting, collating and analyzing voluminous data over a span of eleven months. Having analyzed the aforesaid, the petitioner filed the first EOW complaint with respondent No. 1 and respondent No. 2 disclosing various offences committed by Jai Corp Ltd and its subsidiary Companies at the behest of Anand Jaikumar Jain which attract the provisions of the PMLA and IPC. The respondent No. 1 vide communication dated 25th January, 2021 replied to the First EOW Complaint stating therein that the contents of the complaint pertain to jurisdiction of SEBI and hence, the complaint was forwarded to SEBI for necessary action. No response was received from SEBI with reference to his first EOW complaint. 7. The petitioner contends that in 31st October, 2022, SEBI passed an order (UIVCF Winding Up Order) in the matter of Urban Infrastructure Venture Capital Fund (UIVCF) (registered with SEBI as a Venture Capital Fund) directing that UIVCF be wound up in the terms, more particularly, contained therein. A....
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....f fabricated and dubious invoices. 10. The petitioner further contends that Jai Corp Ltd alongwith its subsidiaries managed to launder public money by various methods inter alia routing funds from entities based in tax havens, diversion of funds by way of buy back of equity shares, round tripping of funds for personal gain, making unsecured advances to sister/subsidiary concerns, recording fictitious entries in books of accounts and writing off projects. As such, the first EOW complaint and the second EOW complaint disclose commission of cognizable offences under the IPC and the PMLA which is within the exclusive jurisdiction of respondent No. 1 and 2 to investigate and take necessary action in pursuance thereof. 11. The petitioner has enclosed the following documents; (a) A list of individuals who are associated with Anand Jaikumar Jain by virtue of being Directors in the sister/subsidiary concerns, annexed as "Exhibit L" to this petition; (b) A list of subsidiary companies of Jai Corp Ltd incorporated in India having played a role in the entire conspiracy to defraud investors and launder public money, annexed as "Exhibit M" to this petition; (c) A....
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....cture India Pvt Ltd 42.57 Darshan Securities Pvt. Ltd. 37.17 Relogistics (India) Pvt Ltd 10.94 Pipeline Infra Structure Indian Pvt. Ltd 54.42 Relogistics Rajasthan Pvt. Ltd. 00.49 Vinamra Universal Traders Pvt Ltd 60.30 Dharti Investments & Holding Ltd 72.53 Total 513.12 (viii) SEBI has imposed a penalty of Rs.20 Crores and Rs.10 Crores on Navi Mumbai SEZ and Mumbai SEZ respectively, for aiding and abetting in the fraud while stating in Paragraph 87 that, "Noticee No. 3 and Noticee No. 4 actively aided and abetted RIL by providing funds to Vinamra, which was ultimately used in providing margin money to stock brokers for taking the short positions by the Agents of RIL in RPL futures for earning illegitimate profits from the said positions." (ix) SEBI has held in Paragraph 82 that Vinamra Traders was incorporated on 11th July 2007 and immediately thereafter, on 4th August, 2007 and 22nd September, 2007, Navi Mumbai SEZ and Mumbai SEZ entered into unsecured facility agreements (ICDRs) with Vinamra Traders for staggering amounts of Rs.2775 Crores and Rs.550 Crores respectively days within it's incorporation. The relevant ex....
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.... been laundered by Anand Jaikumar Jain through his subsidiaries: Name of Company Date of Incorporation Loan from / by Jai Realty Venture Ltd in (Rs Crore) A Amt paid/paid as advance for purchase of land/development rights in (Rs. Crore) B Amt spent on construction etc in Rs (Crore) and management C Amt syphoned/ misappropriated in (Rs. Crore) B+C= Multifaced Impex Ltd 21.11.1994 01.36 00.93 00.43 Hill Rock Construction Ltd 13.10.2005 10.42 00.58 09.84 Hari Darshan Realty Ltd 14.10.2005 07.86 01.06 06.80 Vasant Bahar Realty Ltd 18.10.2005 00.25 00.80 01.14 Welldone Real Estate Ltd 21.02.2006 04.72 00.12 04.60 Hind Agri Properties Ltd 04.12.2006 09.44 09.44 Yug Developers Ltd 03.02.2007 11.39 01.07 10.32 Swar Land Developers Ltd 05.03.2007 31.00 00.38 30.62 Swastik Land Developers Ltd 05.03.2007 08.76 08.76 Krupa Land Ltd 06.08.2007 23.60 04.22 19.38 Novelty Realty & Developers Ltd 20.08.2007 12.23....
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....r contends that Income Tax Department carried out search and seizure operations under section 132 of the Income Tax Act in the case of eleven of the aforesaid subsidiary companies of Jai Reality. It was for the assessment year 2008-2009. The penalty imposed by Income Tax Department on the companies is depicted in the following chart; Name of Company Penalty imposed by Income Tax in (Rs. Crore) Penalty paid by company in (Rs. Crore) Penalty disputed by Company in (Rs. Crore) Iconic Realtors Ltd 20.20 14.30 05.71 Krupa Land Ltd 12.71 06.87 05.84 Jailaxmi Realty & Developers Ltd 08.94 02.12 06.82 Rudradev Developers Ltd 02.07 01.77 00.288 Krupa Realtors Ltd 01.33 01.04 00.29 Ekdant Realty & Developers Ltd 00.60 00.48 00.12 Yug Developers Ltd 00.48 00.374 00.1159 Welldone Real Estate Ltd 00.329 00.255 00.073 Vasant Bahar Realty Ltd 00.24 00.10 00.14 Novelty Realty & Developers Ltd 00.23 00.15 00.08 Krupa Land Ltd 00.13 00.07 00.06 TOTAL 47.259 27.529 19.73 17. The petitioner has contended about fraud through Real Estate Private F....
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.... Infra developers Pvt Ltd Urban Akarsh Infrastructure Pvt. Ltd R.K. Group 95.40 54.00 Suyojit Group 94.00 94.00 Maker Group 178.00 Raheja Universal 125.00 Integrated Township near SEZ Puducherry 54.00 35.00 Panvel Residential Project 04.00 Total 1995.40 1374.00 996.01 a) An amount of Rs.1667 Crore of the principal amount has been recovered and distributed to Investors. b) An amount of Rs.240 Crore has been earned as income on the Rs.1995 Crore invested over a period of 14 years and has been distributed to Investors. c) Out of the Rs.996.01 Crore investment and profit to be received Rs.732 Crore is under litigation. The documents showing the investment of Rs.1995.40 Crore in other companies and the amounts received and amounts pending are part of the Quarterly Reports of Urban Infrastructure Opportunities Fund. d) A total of 1060 Crores is still to be paid to Investors of UIOF as on 30 June 2021. (ix) Advisory and Management Fee of....
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....hat becomes clear is that Anand Jaikumar Jain has through the Fund embezzled public money through various channels viz. Unsecured loans to subsidiaries and related companies, diversion of funds as advisory/management fee and transfer of assets for their personal unlawful gain and interests. There has been a concerted effort to unlawfully divert the investor money from UIOF and usurp the same for personal gain. There is an urgent need to carry out a forensic audit to determine the exact amount that has been siphoned off from UIOF in light of the fact that Rs.1060 Crores is yet to be collectively paid to unit holders/investors of UIOF. Hence, the intervention of Respondent No. 1 and 2 is necessary to meet the ends of justice. (xi) The mala fide intention of Anand Jaikumar Jain is further fortified by the fact although, he was statutorily and contractually obliged to wind-up the Scheme i.e UIOF on 8 May 2013 or on 8 May 2015 UITL elected to elongate the tenure of the Scheme. (xii) Despite being mandatorily required to wind-up the Scheme within the timelines as stipulated above, the Fund continued to subsist as on 30 October 2022. Thus, due to the unlawful elongation ....
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....ent in real estate by foreign investors is regulated under the Foreign Exchange Management Regulations and the guidelines issued by RBI only permit foreign investors to invest in equity and thus, in these circumstances, there is an urgent need to ascertain how assets worth Rs. 3404 Crores were apparently acquired by UIREF Mauritius and thereafter, how assets worth Rs. 1710 Crores were sold on 27 May 2012. According to the petitioner, a forensic audit is required to be conducted by the Respondent Nos. 1 and 2 to ascertain whether any monies have been invested by Anand Jaikumar Jain in UIREF Mauritius and the nature of such transactions. 19. It is petitioner's case that there was fraudulent diversion of loans from India to Mauritius and Sharjah (UAE); that Anand Jaikumar Jain has diverted/laundered the public funds to the tune of Rs.98.83 Crores (Foreign Currency Loan) which were availed by Navi Mumbai SEZ, by funneling them into subsidiary companies of Anand Jaikumar Jain registered in Mauritius and Shahrjah, UAE. The structure through which the funds have been diverted is set out by the petitioner as under; (i) On 4 June 2008, Belle Terre Realty Ltd. ("Belle Terre") was....
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....dit is also a director in Jai Corp Ltd and other subsidiary companies of Jai Crop Ltd. (iii) Between 2012 and 2017, Sarbags NSW has sold products imported from Jai Corp Ltd to the tune of Rs. 17,28,46,980/- (AUD 31,39,692). II. ASSURENE PRODUCTS CORPORATION, USA. (i) The Petitioner has collated information regarding a company that was registered in California USA by the name of Assurene Products Corporation (Assurene) on 13 March 2014, which is as under; (ii) Assurene was wound up on 2 May 2015. Assurene was in the business of sale and distribution of rope, bags and geo textiles which were imported from Jai Corp Ltd. Furthermore, the Director of Assurene i.e Mr. Pramod Kumar Jaiswal is also a director in Jai Corp Ltd and other subsidiary companies of Jai Corp Ltd. (iii) That between 2014 and 2016, Assurene had sold products imported from Jai Corp Ltd to the tune of Rs. 268,28,05,358/- (USD 4,03,89,441). 20. This Court from time to time passed various orders in this petition which read as under; Order dated 18th September, 2024 reads as under; "1. We heard learned Senior Counsel appearing for the petitioner for some time. W....
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....e 27th October 2024. Statement accepted. 2. After the petitioner's statement is recorded, the police to take appropriate steps, in accordance with law. 3. Stand over to 18th November 2024. 4. Mr. Daruwalla, learned counsel for the respondent No. 3-SEBI has tendered an affidavit-in-reply of the said respondent. The same is taken on record and a copy thereof is served on the Counsel for the petitioner. 5. Mr. Ponda, learned senior counsel appearing on behalf of the petitioner seeks time to file an affidavit-in-rejoinder. The same to be filed in the Registry on or before 12th November 2024 with an advance copy to the other side". Order dated 18th November, 2024 reads thus; 1. Pursuant to our order dated 16th October, 2024, Ms.Shinde, learned APP has tendered a letter dated 7th November, 2024 addressed by the Deputy Commissioner of Police, EOW-I, Mumbai to the Joint Director, CBI, EOB, Mumbai as well as the Joint Director of SFIO, Mumbai. 2. From the said letters, it appears that the EOW, Mumbai, has forwarded the complaint of the petitioner for further action to the CBI, EOB, Mumbai. The said letters dated 8th November, 2024 are....
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....ake xerox copies of the internal notings shown to us by Ms. Shinde, the learned A.P.P and keep the same in the sealed envelope. The letter tendered by Mr. Patil, learned Special Public Prosecutor also be kept in the sealed envelope". 21. We have perused the petitioner's statement as well as the affidavit-in-reply filed by the respondent No. 3 as well as internal notings of EOW. We are surprised and shocked to learn that the EOW Mumbai had forwarded the complaint of the petitioner for further action to the CBI, EOB, Mumbai wherein, EOW has stated as under; "Upon perusal of the petitioner's statement and the documents submitted, it is revealed that the alleged offenses involved significant sums amounting to thousands of crores of rupees, span multiple jurisdictions, and implicate nationalized banks, a Mauritius-based private equity fund, and trans-border transactions with the USA, Australia, and the UAE. Therefore, these matters carry substantial financial implications at both national and international levels. In the best interest of conducting a thorough inquiry /investigation, we are forwarding this matter to your esteemed office for appropriate action." 22....
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....cement Department. In view of the above facts and circumstances, the matter cannot be taken up on these allegations and the instant same complaint as received is returned herewith. For further n/a at your end, CBI did not conduct any enquiry in the instant complaint". 25. It can thus be seen, that both the EOW as well as the CBI, for the reasons best known to these Agencies, are reluctant to inquire/investigate into the complaints made by the petitioner having such large scale alleged misappropriation of public funds as well as laundering, by Mr. Anand Jaikumar Jain, who is the Promoter and Director of Jai Corp Ltd along with its subsidiary companies and others. 26. We have no words to demonstrate the conduct of the Investigating Agencies viz: EOW as well as CBI. We may say, we are disappointed. We feel that there will be no fair and impartial investigation into the alleged crimes either by the EOW or by the Superintendent of Police, CBI, EOW and hence, a special team needs to be constituted by the Zonal Director CBI to ensure efficient investigation into the offences of such magnitude. The need to instill confidence in the investigations and consequently, in the adm....
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....ution. There are, however, certain self-imposed limitations on the exercise of these Constitutional powers, but no inflexible guidelines can be laid down to decide whether to transfer the case or not. The power of transfer should not be exercised as a matter of routine or merely because a party has leveled some allegations against the local police. The power to transfer the investigation can be used when it becomes necessary to provide credibility and instil confidence in the investigation or where the incident may have national and international ramifications or where such an order may be necessary for doing complete justice and enforcing the fundamental rights. 28. This Court (Coram: N.M. Jamdar & Prithviraj K. Chavan, JJ.) in Criminal Writ Petition No. 134 of 2017 (Minna Pirhonen Vs. The State of Goa and another) while transferring the investigation to the Central Bureau of Investigation in case of death of 22 year old Finish National namely Felix Dahl has made following observations in paragraphs 19 and 20, which read thus; "19. In the case of State of West Bengal and others Vs. Committee for Protection of Democratic Rights and others (2010) 3 SCC 571 an issue was r....
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....under Article 32 of the Constitution of India. Allowing the petition, the Court held that the decision whether a transfer should or should not be ordered depends on the satisfaction of the Court that the facts and circumstances of a given case require such an order. No hard-and-fast rule has been or can be prescribed. Though transfer is not ordered just because a party seeks to lead the Investigating Agency to a given conclusion, the sensibility of the victims of the crime or their next of kin, is not wholly irrelevant. Further the transfer of investigation to an outside agency does not necessarily mean that the transferee agency will implicate anyone in the commission of the crime. The Apex Court took note of the fact that local influences, pressures and pulls are commonplace when State Police matters of some significance. It was observed that unless the Court sees any design behind the prayer for transfer, the same must be seen only an attempt to ensure that the truth is discovered and the transfer is the perceived on the independence of the transferee more than any other consideration. The Court underscored a basic proposition that the Court has rarely, viewed at the threshold t....
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....a given case, even if charge-sheet is filed, it is open for the High Court to direct investigation of the case to be handed over to CBI or to any other agency or to direct investigation de novo in order to do complete justice, in the facts of the case. In a given case the investigation could be transferred even after considering time period has elapsed. The State has a duty to safeguard human rights by providing for fair and impartial investigation. Grave responsibility lies upon the investigating agency, not to conduct an investigation in a manner prima facie indicative of a biased mind and every effort should be made to bring the guilty to law. A fair investigation is a part of the constitutional rights guaranteed under the Constitution of India and the investigating agency cannot be permitted to investigate in a tainted or biased manner. Fair trial includes a fair investigation. Any criminal offence is one against the society. The State is a guardian of human rights and protector of law. The concept of "fair and proper investigation" means that investigation must be unbiased, honest, just and in accordance with law. The primary purpose of an investigation is to bring out the tru....