TaxTMI 
TaxTMI 
2026 (9) TMI 1926
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....ipalli Anilkumar, M. Shanti Reddy, Dharmendran Palani Swamy, Nagarathna Dharmendran, Shaila Manohar W/O Manohar C.R., Errol John Noronha, Raju Sadhwani, State By Devanahalli P.S., Bengaluru, Smt. Bhavanasadhvani And State Of Karnataka Represented By HGCP, Bengaluru, Shashikanta Guptha S/O Santhosh Kumar Guptha, Mr. Errol John Narhona For the Petitioner : Sri M.S. Shyam Sundar, Sr. Advocate A/W Dr. Vandana P.L., Advocate For the Respondents : Sri K. Arvind Kamath, ASG A/W Ms. Anuparna Bordoloi, CGC For R-1; Sri Akash Bantia, Advocate For R-2 To 18; Sri Reynold D. Souza, Advocate For R-19; Sri A. Velan, Advocate A/W Sri Sathies Kumar And Sri Navpreet Kaur, Advocates For R-20 And R-21, Sri B.N. Jagadeesha, SPP-I For R-2, Sri B.N. Jagadeesha, SPP-I, For R-1 CAV ORDER : The petitioners in all these cases are the Company/Ozone Urbana Infra Developers Private Limited ('the Company' for short) and its office bearers. The respondents - complainants are primarily home buyers who have registered complaints before the jurisdictional Police. 2. Before embarking upon narration of facts, I deem it appropriate to notice the protagonists in each of the petitions. Writ Petition No.310....
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....in this and other companion cases who are the petitioners herein. These accused are the office bearers of the Company. The allegation is that the accused had approached the complainant for excavation and civil works and had handed over 12 projects to the complainant between the years 2013 to 2019-2020 for a sum of Rs.4,40,50,000/-. It is the case of the complainant herein that despite completing the project in time, the accused made a payment of Rs.2,49,00,000/- only and the remaining is not paid. 4.2. The accused are said to have dragged the payment on account of COVID-19 for over two years and therefore, the complainant was constrained to approach H.A.L. Police Station for registering the complaint but they refused to register the complaint. It is then the complainant approaches the learned Magistrate in P.C.R.No.54725 of 2022 who refers the matter for investigation under Section 156(3) of the Cr.P.C. The subject petition is preferred calling question the entire proceedings in P.C.R.No.54725 of 2022. A coordinate Bench of this Court on 21-10-2022 grants an interim order of stay of investigation and all further proceedings in P.C.R.No.54725 of 2022. The said interim order is in....
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.... dated 26-05-2022, referred the complaint for investigation under Section 156(3) of the Cr.P.C., pursuant to which an FIR in Crime No.143 of 2022 comes to be registered on 17-07-2022 for the aforementioned offences. 5.4. On the predicate offence being registered in Crime No.183 of 2021 and Crime No.143 of 2022 an Enforcement Case Information Report ('ECIR' for short) in ECIR No.BGZO/70/2022 ('2022 ECIR' for short) is registered on 12-12-2022 by the Directorate of Enforcement. In connection with the said ECIR, summons under Section 50 of the Prevention of Money Laundering Act, 2002 ('Act' for short) come to be issued to the petitioner on 20-12-2022. Challenging the proceedings, initiated by the Directorate of Enforcement, arising from the 2022 ECIR and the summons issued thereafter, the petitioner is before this Court in the subject petition. A coordinate Bench of this Court on 22-12-2022, grants an interim order staying the summons issued by the Directorate of Enforcement, which is subsisting even today. 6. Facts in Writ Petition No.4968 of 2024: 6.1. The de facto complainant - respondent No.2 in the case at hand is a home buyer named one Smt. Bhavanasadhvani. A complaint ....
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....thin the time and later on enquiry it is learnt that the Company had sold the flat to a third person despite taking the entire consideration from the hands of the complainant. The total amount that was taken by the Company from the complainant in the subject petition for purchase of the flat is said to be Rs.1,32,10,000/-. The constructed flat is not handed over to the complainant nor is the amount returned which was taken way back in the year 2017. The further allegation is that the license to continue with the development of the project given to the Company itself was withdrawn. Therefore, the complainant registers the complaint against the petitioners which becomes a crime in Crime No.161 of 2024 for the offences punishable under Sections 406 and 420 of the IPC. The subject petition is preferred seeking quashment of the said crime and an interim order of stay of investigation in Crime No.161 of 2024 is granted by the coordinate Bench on 27-02-2025. The same is subsisting even today. 8. Facts in Writ Petition No.34702 of 2024: 8.1. The 2nd respondent who is the complainant, is the President of Ozone Urbana Buyers Welfare Association. A complaint comes to be registered on 18....
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..../2025 ('2025 ECIR' for short) registered by the Directorate of Enforcement in the year 2025 and the subsequent Provisional Attachment Order ('PAO' for short) issued under Section 5(1) of the Act. The 2025 ECIR is registered by the Directorate of Enforcement based upon five crimes which are Crime Nos.183 of 2021; 19 of 2024; 77 of 2024; 161 of 2024 and 271 of 2024. Of these five crimes, Crime Nos.19 of 2024; 77 of 2024 and 161 of 2024 are challenged in the companion petitions i.e., W.P.Nos.4968 of 2024; 34702 of 2024 and 27587 of 2024, which are stayed by this Court. Crime No.183 of 2021 comes to be quashed by a co-ordinate Bench of this Court in Crl.P.No.245 of 2022 vide order dated 07-03-2024, on account of settlement between the parties before the RERA and Crime No.271 of 2024 arising out of a private complaint in P.C.R.No.8537 of 2024 is quashed by a co-ordinate Bench of this Court in W.P.No.27473 of 2024 vide order dated 23-09-2024 on account of lack of jurisdiction by the concerned Court to entertain the complaint. However, the private complaint still remains. 9.2. Subsequently upon registration of the 2025 ECIR the Directorate of Enforcement conducts search and seizure pro....
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....3 of 2022, 4968 of 2024, 27587 of 2024 and 34702 of 2024; learned Counsel Sri A. Velan appearing for the respondent No.2 in Writ Petition Nos.4968 of 2024 and 34702 of 2024 and respondent Nos.20 and 21 in Writ Petition No.31006 of 2025; learned Counsel Sri Akash Bantia appearing for respondent Nos.2 to 18 in Writ Petition No.31006 of 2025; learned Counsel Sri Renoyld D'zouza appearing for the respondent No.19 in Writ Petition No.31006 of 2025 and learned Counsel Sri S.K. Ravi appearing for the respondent No.2 in Writ Petition No.27587 of 2024. The respondent No.1 in Writ Petition No.20063 of 2022 though served, stands unrepresented. SUBMISSIONS: PETITIONERS: 11. The learned Senior Counsel, Sri M.S. Shyam Sundar, appearing for the petitioners in all the cases, would submit petitionwise as follows: 11.1. Writ Petition No.20063 of 2022: 11.1.1. The learned Senior Counsel appearing for the petitioners would submit that the very foundation of the complaint discloses a civil dispute, as it arises out of the award of work contracts, execution of contractual works, raising of invoices/bills and alleged failure to clear the outstanding amounts. He would submit that the compla....
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.... are also no specific allegations against the Directors, the allegations being vague and omnibus. Further, the Company has not been arraigned as an accused in the subject crime without due to which the offence against the petitioners cannot be permitted to continue. 11.3.2. Mere delay in completion of the project, according to the learned Senior Counsel, cannot constitute cheating, particularly when the FIR is lodged after an inordinate and unexplained delay. He would further contend that vicarious criminal liability cannot be fastened on the Directors in the absence of a statutory provision and that the FIR discloses, at the highest, a recovery dispute. The complainants, having already availed the remedy under the RERA, cannot pursue parallel criminal proceedings on the same cause of action. He would accordingly submit that continuation of the investigation amounts to an abuse of the process of law and that the case falls within the categories enunciated in STATE OF HARYANA v. BHAJAN LAL reported in 1992 Supp (1) SCC 335 warranting quashing of the proceedings. 11.4. Writ Petition No.27587 of 2024 : 11.4.1. The learned Senior Counsel appearing for the petitioners would sub....
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....mplainants having projected themselves as purchasers before the RERA and as financial creditors before the National Company Law Tribunal ('NCLT' for short), cannot, for the very same transaction, claim the status of depositors under the KPIDFE Act. Such mutually inconsistent stands, according to the learned Senior Counsel, render the invocation of the KPIDFE Act artificial and unsustainable. He would further submit that, with the commencement of the corporate insolvency resolution process ('CIRP' for short), the complainants are required to pursue their claims within the insolvency framework and, in view of Section 238 of the Insolvency and Bankruptcy Code, 2016 ('IBC' for short) the provisions of the IBC have overriding effect over inconsistent laws. The present criminal proceedings, founded upon the very same underlying claims and instituted in the backdrop of the ongoing insolvency proceedings, are therefore nothing but an attempt to exert pressure and secure leverage outside the insolvency mechanism. He would accordingly submit that, particularly when the terms of settlement have also been fulfilled, continuation of the criminal proceedings would amount to an abuse of the proce....
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....contending as follows: 12.1. The petitioner - Company and it's directors are accused of large scale diversion and misappropriation of funds belonging to the home buyers. Multiple FIR's are filed against hem for the offences of cheating, breach of trust and fraud on various allegations including the double sale of residential units, creation of fictitious loan agreements and diversion of money through escrow accounts to related or offshore entities. The amounts involved exceed Rs.3,300 Crores and constitutes the "proceeds of crime" under the Act, leading to the Directorate of Enforcement initiating investigation under the Act. The subject petition has filed to paralyze the proceedings initiated by the Directorate of Enforcement and interference at such a nascent sage would frustrate the object of the Act and all the petitioners to tamper with the evidence and manipulate accounts. 12.2. The allegations against the petitioners have wide public interest. The transactions involve systematic laundering of funds collected from home buyers, concealment of illegal gains and layering of money through shell entities. The Apex Court has also recognized the criminal element in similar bui....
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....gated under the Act. 14.3. The PAO has been issued on the basis of sufficient material and records sufficient reasons to believe to indicate that the properties represent proceeds of crime or equivalent value thereof and that there is a likelihood of dissipation of the assets. The allegations in the PAO include diversion and siphoning of funds received from homebuyers to other entities without any corresponding purpose connected with construction of the flats. The PAO is only a provisional and protective measure, and the validity of the attachment is required to be examined by the Adjudicating Authority under Section 8 of the Act, with a further statutory remedy before the Appellate Tribunal under Section 26 of the Act. 14.4. The proceedings have been initiated and the provisional attachment has been effected strictly in exercise of the statutory powers under the Act and in view of the efficacious alternative remedies available, this Court at the present stage ought not to interfere. On this score the learned Additional Solicitor General would seek for dismissal of the subject petitions. STATE: 15. The learned State Public Prosecutor - I, Sri B.N. Jagadeesha, appearing ....
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....laint. The complaint reads as follows: ".... .... .... 5. The complainant submits that, in the year 2013 to 2019-20 the accused has given 12 projects to the complainant for a sum of Rs. 4,04,50,000/- (Rupees Four Crores, Four Lakhs Fifty Thousand Only), the complainant has completed the said project works in time, the accused has made the payment of Rs. 2,49,00,000/- (Rupees Two Crores Forty-Nine Lakhs Only), and the balance amount of Rs. 1,32,00,000/(Rupees One Crore Thirty-Two Lakhs Only) the accused assured that, he will pay shorty. 6. The complainant submits that, after several request made by the complainant, the accused has drag on the dates by saying one or the other pretext for the payment of the balance amount, and also informed that due to the Covid19 effect, he has suffered a huge loss in business, and he seeks time with the complainant, the complainant has agreed for the same, thereafter 2 years the accused was not contacted the complainant, thereafter the complainant visited the accused office, at that time the accused No. 2 & 3 has requested the complainant that, they will pay the said amount within 5 months. 7. The complainant submits th....
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....ommitted an offence punishable under section 420, 341, 504, 506 R/w 34 of IPC. 14. The complainant submits that, all the above said incidents took place on the complainant residence in the jurisdiction of the HAL police station. 15. The complainant submits that, this Hon'ble court got jurisdiction to try this matter." (Emphasis added) A mere perusal of the complaint would render it unmistakably clear that the predominant, if not the solitary, object behind setting the criminal law into motion is recovery of money. The complaint is sought to be given the colour and complexion of criminality by introducing an allegation that the petitioners threatened the complainant that, if he were to once again demand repayment, he would have to face consequences. This embellishment, however, cannot obscure what lies at the heart of the complaint. Paragraph 5 thereof makes the purpose conspicuous-it is the recovery of the alleged balance amount of Rs.1,32,00,000/- that is sought to be achieved through the coercive machinery of criminal law. 19.2. It is too well settled to warrant elaborate reiteration that criminal law cannot be converted into an engine for recovery ....
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....al transaction relating to loan and repayment, which has been given a criminal colour. The case thus falls squarely within categories (1) and (7) of Bhajan Lal, namely, where the allegations do not disclose the commission of an offence, and where the proceedings are maliciously instituted with an ulterior motive. Continuation of such prosecution would amount to an abuse of process of law and consequently, warrant quashing under Section 482 Cr.P.C. 17. This Court has, in a long line of decisions, deprecated the tendency to convert civil disputes into criminal proceedings. In Indian Oil Corporation v. NEPC India Ltd. ^17, it was held that criminal law cannot be used as a tool to settle scores in commercial or contractual matters, and that such misuse amounts to abuse of process. The following paragraphs from the decision are apposite: "9. The principles, relevant to our purpose are: (i) A complaint can be quashed where the allegations made in the complaint, even if they are taken at their face value and accepted in their entirety, do not prima facie constitute any offence or make out the case alleged against the accused. For this purpose, the complaint has ....
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....here is also an impression that if a person could somehow be entangled in a criminal prosecution, there is a likelihood of imminent settlement. Any effort to settle civil disputes and claims, which do not involve any criminal offence, by applying pressure though criminal prosecution should be deprecated and discouraged." 18. Similarly, in Inder Mohan Goswami v. State of Uttaranchal^18, it was emphasized that criminal prosecution must not be permitted as an instrument of harassment or private vendetta. In Ganga Dhar Kalita v. State of Assam19, this Court again reiterated that criminal complaints in respect of property disputes of civil nature, filed solely to harass the accused or to exert pressure in civil litigation, constitute an abuse of process. 19. Most recently, in Shailesh Kumar Singh @ Shailesh R. Singh v. State of Uttar Pradesh^20, this Court disapproved the practice of using criminal proceedings as a substitute for civil remedies, observing that money recovery cannot be enforced through criminal prosecution where the dispute is essentially civil. The Court cautioned High Courts not to direct settlements in such matters but to apply the settled principles....
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....ceedings for recovery of the money. It appears that no civil suit has been filed for recovery of money till this date. Money cannot be recovered, more particularly, in a civil dispute between the parties by filing a First Information Report and seeking the help of the Police. This amounts to abuse of the process of law. 14. We could have said many things but we refrain from observing anything further. If the Respondent No. 4 has to recover a particular amount, he may file a civil suit or seek any other appropriate remedy available to him in law. He cannot be permitted to take recourse of criminal proceedings. 15. We are quite disturbed by the manner in which the High Court has passed the impugned order. The High Court first directed the appellant to pay Rs. 25,00,000/- to the Respondent No. 4 and thereafter directed him to appear before the Mediation and Conciliation Centre for the purpose of settlement. That's not what is expected of a High Court to do in a Writ Petition filed under Article 226 of the Constitution or a miscellaneous application filed under Section 482 of the Criminal Procedure Code, 1973 for quashing of FIR or any other criminal proceedings. ....
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....urther, the report of the handwriting expert on which reliance is placed to prove that the documents were forged is dated prior to the judgment of the District Court i.e., 1st September 2009 and the judgment was entered on 2nd February 2004. It only stands to reason that if such hard, conclusive evidence was in the possession of the complainant, the same could have been furnished to the Court and if accepted, could have led to further punitive damages being awarded in his favour. This obviously was not done. It be clarified here itself that the sanctity of the report of the handwriting expert has not been examined by us and so we do not comment thereupon. It is only the timing or the sequence of events that renders the reliance placed thereon, suspect, in our considered view. 14. It is also a matter of record that for the reasons as recorded in the judgment, the civil suit of the complainant has also been dismissed. Well, we do not comment on the merits of that case and the complainant is obviously free to take recourse to the law as he may be advised if not already taken. 15. In the cumulative view of circumstances prevailing in this case, criminal action against....
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....#39;ಓಝೋನ್' ಯೋಜನಾ ಸ್ಥಳಕ್ಕೆ ಭೇಟಿ ನೀಡಿ, ಅವರು ನೀಡುವ ಉತ್ತಮ ಗುಣಮಟ್ಟದ ಅಪಾರ್ಟ್‌ಮೆಂಟ್‌ಗಳು ಹಾಗೂ ಪಾವತಿ ವಿಧಾನದ (10:80:10) ಬಗ್ಗೆ ತಿಳಿದುಕೊಂಡ ನಂತರ, ನನ್ನ ಪತ್ನಿ ಶ್ರೀಮತಿ ಶಾಂತಿ ಮತ್ತು ನಾನು 'ಓಝೋನ್ ಆಕ್ವಾ 2' (Ozone Aqua 2) ಯೋಜನೆಯಲ್ಲಿ 3 BHK ಅಪಾರ್ಟ್‌ಮೆಂ....
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....3250;ದ ಕಂತುಗಳನ್ನು ಪಾವತಿಸಬೇಕಿತ್ತು. EMI ವ್ಯವಸ್ಥೆಗೆ ಸಂಬಂಧಿಸಿದಂತೆ 'ಓಝೋನ್' ಕಂಪನಿಯೊಂದಿಗೆ ಒಪ್ಪಂದ ಮಾಡಿಕೊಳ್ಳಲಾಯಿತು. ಈ ಒಪ್ಪಂದದ ಅಡಿಯಲ್ಲಿ, ನವೆಂಬರ್ 2017 ರಲ್ಲಿ ಸಾಲ ಮಂಜೂರಾಯಿತು; ಆದರೆ, ಯೋಜನೆಯು ಇನ್ನೂ ನಿರ್ಮಾಣ ಹಂತದಲ್ಲಿದ್ದು ಕೇವ&#....
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....77;ನು ಪೂರ್ಣಗೊಳಿಸುವ ಜವಾಬ್ದಾರಿಯನ್ನು ನಾವು ಓಝೋನ್ ಕಂಪನಿಗೆ ವಹಿಸಿದ್ದೆವು. ಆದಾಗ್ಯೂ, ಅವರನ್ನು ಸಂಪರ್ಕಿಸುವ ನಮ್ಮ ಪ್ರಯತ್ನಗಳಿಗೆ ಯಾರೂ ಪ್ರತಿಕ್ರಿಯಿಸಲಿಲ್ಲ. ನಾವು ಸಿಇಒ ಅವರನ್ನು ಭೇಟಿಯಾಗಲು ಪ್ರತಿನಿಧಿಯನ್ನು ಕಳುಹಿಸಿದ್ದೆವು ń....
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....265; ಬೇರೆ ಉದ್ದೇಶಗಳಿಗೆ ಬಳಸಿಕೊಂಡು, ಕಾಮಗಾರಿಯನ್ನು ಅಪೂರ್ಣವಾಗಿ ಬಿಟ್ಟಿರುವಂತೆ ತೋರುತ್ತದೆ. ನಮ್ಮನ್ನು ವಂಚಿಸಿರುವ ಆರೋಪವಿರುವ ಕಂಪನಿಯ ಸಿಇಒ (CEO), ನಿರ್ದೇಶಕರು (ವಾಸುದೇವ ಸತ್ಯಮೂರ್ತಿ ವಸುದೇವ ಮತ್ತು ಇತರರು ಸೇರಿದಂತೆ) ಹಾಗೂ ನಿರ್ದೇಶಕ&#....
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....e quashed. 6. Accordingly, the criminal petition is allowed. 7. The proceedings against petitioners/accused Nos.1 and 2 in Crime No.183/2021 registered by the Kodigehalli Police station for the offences punishable under Sections 403, 406, 420 and 120B of IPC, pending on the file of IV Additional Chief Metropolitan Magistrate, Bengaluru, is hereby quashed." (Emphasis supplied) Crime No.183 of 2021 is quashed in Crl.P.245 of 2022 on account of settlement between the parties before the RERA. 20.2. Now Crime No.143 of 2022 is required to be noticed which is registered on account of an order of reference by the concerned Court under Section 156(3) of the Cr.P.C. arising from a private complaint filed under Section 200 of the Cr.P.C. in P.C.R.No.20 of 2022 by 128 home buyers who have purchased apartments in the project of the Company. Therefore, it becomes apposite to notice the allegations in the private complaint which is filed alleging the offences punishable under Sections 406, 409, 417, 418, 420, 120B read with Section 34 of IPC and Section 9 of KPIDFE Act. The complaint reads as follows: ".... .... .... 3. The present complaint is being filed ....
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....ration amount within 30 - 45 days from the date of signing of the Builder Buyers Agreement. 7. Accused Nos. 1-7 represented that they are a leading market player in the real estate industry and are well known for providing timely possession of the projects with good quality construction materials, satisfied clients, etc. Accused Nos. 1-7 assured and represented to all homebuyers including the Complainants herein that they have tie-ups with various credible Banks and Housing Finance Companies (Accused Nos. 8-11) who are willing to grant home loans to homebuyers by taking in mortgage the flats/units/apartments under purchase. Thereafter, all the Accused Nos. 1-11 acting jointly and severally represented to the Complainants that the payment options under the various Schemes, rates of interest etc. were very, reasonable and further that the Accused Nos. 1-7 shall make payment of the installments of the preEMI/EMI amounts till the date of possession. .... .... .... 11. As mentioned hereinabove, all the Accused persons proposed various schemes to allure and induce the Complainants to purchase flats/units in the said real estate project. Some of the scheme....
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.... the Buy-Back option by the Complainants. However, Accused No. 1 along with Accused Nos. 2-4 have drastically failed to honour their various bounden commitments/promises and assurances including their obligations under the Subvention Scheme, 2X Option, Buy-Back option, etc. Ever since 2016, there has been no construction at the site of the Project. Thus, it is evident that the project is struck and there is extraordinarily delayed by more than 4 years. 19. Since around 2016, the other Accused persons, namely, the Banks and Housing Finance Companies, instead of getting their Pre-EMIs/Money from Accused Nos. 1-7, are harassing the innocent homebuyers, viz, the Complainants/allottees, through calls, legal notices, threat of initiation of Civil and Criminal proceedings, etc., despite the fact that they are aware that no fault can be attributable on the part of Complainants in any manner whatsoever, .... .... .... 21. Finding themselves in a position where it was clear that the Complainants had been cheated by all the Accused persons, the Complainants tried to make efforts, and seek a remedy to resolve their agony. For that, the Complainants tried to find out the preva....
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.... 25. The Accused Nos. 1-7 proposed the scheme of buyback with assured returns but intentionally defaulted to fulfill their promise. Now, Accused Nos. 1-7 are purposely delaying the performance with the motive of wrongfully enjoying the money paid by the complainant allottees and are employing the same in some other project(s) which tantamount to clear criminal breach of trust. 26. Accused Nos. 1-7 along with the all other Accused persons have pressurized, lured and coerced the complainants herein, who have exercised or wish to exercise their buy-back option as per the agreements, to execute supplementary or roll over agreements to provide their consent to the accused builder to retain their hard-earned money into the project without any payments. Moreover, it was agreed between the accused builder and the allottees that after exercising buy-back option, the accused builder shall cancel the unit allotted, pay the agreed amount to the said allottee within 45 days of exercising the option and foreclose the loan taken by the allottee for the payment of the said unit. 27. In the case of the allottees who have not surrendered to the pressure, undue influence or....
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....ed no. 1 to 7 are liable for falsification of accounts as they have got disbursed the amount from the bank in regard of completion of the project but wrongly allocated the money in some other projects due to which the construction of this specific project is struck and allottees are suffering. .... .... .... 37. To summarize, the Accused above named, with a dishonest intention induced the Complainants to pay a sums as aforesaid and being induced by the same, the Complainants paid the said amounts to the Accused No. 1 to 7. Further, the all the Accused conspired and connived together to raise loans in the name of the Complainants and thereafter, the Accused No. 1 to 7 intentionally defaulted in repaying the same to the Accused No. 8 to 11. The Accused Nos. 1 to 7 have now, neither given possession of the property nor have repaid the loan to the Accused No. 8 to 11 as agreed. The Accused No. 8 to 11, fully having knowledge of the intentions of the Accused Nos. 1 to 7 disbursed the loan to the Accused No. 1 to 7 and now seek to recover the said loan from the Complainants. The Accused No. 1 to 7 are also not returning the money to Complainants. This way, the Accused h....
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....king upon a mini-trial, prima facie exude the ingredients of the offences alleged. Whether the allegations would ultimately withstand the rigours of trial is altogether a different matter; but, at the threshold, they certainly furnish sufficient criminal content to permit the process of investigation to continue. 20.4. The said crime i.e., Crime No.143 of 2022 later comes to be challenged before this Court in W.P.No.14484 of 2022. The Co-ordinate Bench of this Court by way of a detailed order dated 12-08-2024 in W.P.No.14484 of 2022 quashes Crime No.143 of 2022, but retains the private complaint in P.C.R.No.20 of 2022. The order reads as follows: ".... .... .... 3. The case of the petitioners is that the respondent Nos.1 to 128 have filed private compliant before the Spl. Court under Section 2 (d) read with Section 156(3) of Cr.P.C. The same is registered as PCR No.20/2022 alleging that the accused Nos.1 to 7 in the complaint and various other accused being the officials of accused No.1, the company called Ozone Urbana Infra Developers Pvt. LTD., and they were looking after the day-to-day managements of the company. The accused Nos.2 to 7 are Directors of the company....
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....banker by way of EMI. Admittedly, the accused persons were a developing company and they are owning land and they started developing the same. Though, they started putting up construction on the plots, there were not able to complete the plots due to various reasons, like not obtaining the sanction plan from the concerned authority. Though, they are said to have obtained a plan from the Village Panchayat, it is not the competent authority. Therefore, the building was not able to complete. 20. It is also admitted fact that in the meanwhile the respondents have approached the RERA Court and the accused persons have undertaken to complete the project, but the same is not completed. Still the more than 50% of the work is pending. It is also admitted fact that in the meanwhile, against the accused person a dispute was raised before NCLT, Bangalore Bench. Where the insolvency proceedings were initiated and the NCLT initially dismissed petition and later it was restored by the NCLT. Admittedly, one proceeding is pending before the NCLT and another before the RERA court in respect of same cause of action. In the meanwhile the present complaint came to be filed by 128 complainants ....
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....Chit Funds Act, 1982 (Central Act 40 of 1982); Explanation II.- Any credit given by a seller to a buyer on the sale of any property(whether movable or immovable) shall not be deemed to be deposit for the purposes of this clause," 22. On careful reading of the provisions Sub-Section 2 (v) (d) and (vi) of the Act, which reveals that any amount received from individual relating to the money lending which is time being in force and any advance amount received against the goods or services, the KPID will attract. Here in this case, the accused persons being a firm and a company under the development projects, received more than 80 crores from the companies from making them as a purchaser and they made contract / agreement with the banking company and showing the complainants as borrowers of the loan. The amount has been received by the company and tri-partite agreement and the said amount repayable by the borrowers if the plots were given to them or else there is a buy back condition that plots shall be taken by the petitioner company and EMI shall be paid to the banker directly. But though they have received 80 crores on loan entered into between the bankers responden....
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....ounds and the complaint is entertainable by the Special Court under the KPID Act. Accordingly, this Court may not be go into the merits of the case. Hence, I proceed to pass the following; ORDER i. The petition is allowed in part. ii. The reference order dated 26.05.2022 in PCR.No.20/2022 and consequential registering the FIR by the police in Crime No.143/2022 dated 17.07.2022 is hereby set-aside. The FIR and the reference order is quashed. iii. The complaint is restored to the Prl. City Civil and Sessions Judge, Bengaluru and Special Court for KPIDEF Act, at Bangaluru (CCH-1) with a direction to transfer the complaint to the CCH-92 Special Court. iv. The complainants have liberty to approach the police higher authorities as per the provisions of 156 (3) of Cr.P.C. (Old Code). Thereafter they have required to file detailed affidavit as per the guidelines issued by the Hon'ble Supreme Court in the case of Priyanka Srivatsava. v. After the compliance by the complainants and if they file affidavits before the Special Court, the Special Court shall proceed in accordance with law." (Emphasis supplied) The Co-ordinate Bench has catego....
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....fore, was not founded upon an adjudication that the allegations did not constitute the scheduled offences or that no criminality existed in the transactions alleged. 20.8. As noticed hereinabove, though the FIR registered in Crime No.143 of 2022 came to be obliterated, the private complaint in P.C.R.No.20 of 2022 was consciously left untouched by the Co-ordinate Bench. The complaint continues to subsist and, with it, the allegations forming its substratum. The petitioner- Company, therefore, cannot contend that it stood completely absolved of the criminal proceedings or that the very foundation upon which the proceedings under the Act rested had disappeared altogether. The FIR may have fallen, but the complaint from which the allegations emanated continues to survive. 20.9. It is in this circumstance that the submission of the learned Senior Counsel for the petitioner - that the 2022 ECIR must necessarily perish because both the predicate offences have been quashed and, consequently, no predicate offence survives cannot be accepted. The premise on which the submission is built does not obtain on the facts. One of the proceedings which forms the very foundation of the schedule....
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....ney laundering. The authorities under the 2002 Act cannot prosecute any person on notional basis or on the assumption that a scheduled offence has been committed, unless it is so registered with the jurisdictional police and/or pending enquiry/trial including by way of criminal complaint before the competent forum. If the person is finally discharged/acquitted of the scheduled offence or the criminal case against him is quashed by the court of competent jurisdiction, there can be no offence of money laundering against him or any one claiming such property being the property linked to stated scheduled offence through him." The Apex Court categorically observes that prosecution for offences under the Act can continue even when there is a pending enquiry/trial by way of a criminal complaint before the competent forum. 20.10. Further the issue of whether an ECIR can be quashed on account of the FIR's forming the predicate offence being quashed on technical grounds is discussed by a Division Bench of the High Court of Madras in the case of VIJAYRAJ SURANA v. ENFORCEMENT DIRECTORATE [2024 SCC OnLine Mad 8404], wherein the Division Bench observes as follows: " .... .... .... ....
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.... on the wrongful and illegal gain of property as a result of criminal activity relating to a scheduled offence. Nevertheless, it is concerning the process or activity connected with such property, which constitutes offence of money-laundering. The property must qualify the definition of "proceeds of crime" under Section 2(1)(u) of the 2002 Act. As observed earlier, all or whole of the crime property linked to scheduled offence need not be regarded as proceeds of crime, but all properties qualifying the definition of "proceeds of crime" under Section 2(1)(u) will necessarily be crime properties. Indeed, in the event of acquittal of the person concerned or being absolved from allegation of criminal activity relating to scheduled offence, and if it is established in the court of law that the crime property in the concerned case has been rightfully owned and possessed by him, such a property by no stretch of imagination can be termed as crime property and ex-consequenti proceeds of crime within the meaning of Section 2(1)(u) as it stands today. On the other hand, in the trial in connection with the scheduled offence, the Court would be obliged to direct return of such property as belon....
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....tivity relating to the scheduled offence and that the crime property should be rightfully owned and possessed by him. So the essence of the observations made herein is that the accused person should be exonerated from the charges levelled against him. 38. Though there are multiple grounds for quashing an FIR, and in one of the many grounds an FIR can be quashed, when it comes to proceedings pertaining to quashing the ECIR, the Court must examine the grounds based on which FIR concerning the scheduled offence was quashed and after careful examination on a case to case basis, if the FIR was quashed on substantive grounds of absence of prima facie offence and not mere procedural irregularities, then the ECIR loses its significance and is liable to be quashed. Since the scheduled offence itself is not made out, then automatically no predicate offence can hold good in the ECIR. However, if the FIR was quashed purely on technical grounds or procedural irregularities, then it is to be understood that mere quashing of the FIR does not absolve the accused under the PMLA proceedings and in-turn cannot collapse the predicate offence in the PMLA proceedings. 39. Further, when....
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....with the Vijay madanlal judgment and a blanket application of the principle without due regard to the facts of each and every case shall render both the judgment and the object of the PMLA ineffective. G) IMPLICATIONS OF AUTOMATIC QUASHING OF ECIR BASED ON FIR QUASH: 42. In cases as such where on initiation of PMLA proceedings, prima facie proceeds of crime has been traced, there arises a pertinent question as to whether this Court can stall such proceedings inspite of preliminary findings of the existence of proceeds of crime. The conscience of this Court is directed towards delivery of justice and though the FIR of scheduled offence stands quashed, it is merely on technicalities without analysing the merit of the scheduled offence. Hence, when "proceeds of crime" is traced in a parallel investigation by the Enforcement Directorate, this gives rise to another question that, once proceeds of crime is-prima facie unearthed can ECIR be quashed on the ground that FIR was quashed. This clearly is an unjustified approach." (Emphasis supplied at each instance) The Division Bench, while considering the interplay between the subsistence of a predicate offence and proceedi....
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....roup.com 2. Mr.Vasudevan Satyamoorthy (Chairman and Managing director) DIN:00022732 Resident of No.32, Norris Road, Richmond Town, Bengaluru 560025, Mob:9845016477 3. Mr.Satyamoorthy Sai Prasad(director) DIN:00022813 Resident Of : Nishanth Prime Apartments 5, Prime Street, Richmond Town, mOpp Hockey stadium, Museum road, Bengaluru 560025. 4. Mrs. Priya Vasudevan (Ez-Director and wife of Chairman and MD of Ozone Group) DIN:00774484 Resident of No.32, Norris Road, Richmond Town, Bengaluru 560025. 5. Mr.S.Baaskaran (Ex CEO) Address: Not Known Mob:9606035340 6. Mr Srinivasan Gopalan(Ex CEO) DIN:06414360 Resident of No.34.G2.Sona Palace Apartments, Norris Road, Richmond Town, Bengaluru 560025 7. Rajeev Bhandari (nominee Director) DIN:01176913 Address: NOT KNOWN 8. Mr.Seewoosagar Nemchand (nominee Director) Din:08365678 Address: NOT KNOWN Respected Sir, Date: 31/01/2024 SUBJECT: Written Compliant We, Bhavna Sadhwani (age 68) and Raju Sadhwani (age 70) (Complainants) residing at 2311, 1st Cross, HAL 3rd Stage, Extn, Opp Kemp Fort, Airport Road, Bangalore 560017, are Home Buyers in the residential ....
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....nd details, We have invested in their project "Pavillion" in Ozone Urbana in a 3 BHK apartment bearing no.K 403 bought in March 2014 for delivery in Oct 2016 with grace period of 6 months that is March 2017, the building is yet NOT COMPLETE and there is no hope of it being completed. We paid the full value of the flat as demanded by the developer Ozone which is Rs,64,52,418/-(Rupees sixty Four Lakhs Fifty Two Thousand Four hundred and Eighteen) payment details attached, from our hard earned retirement savings. Due to all the broken promises by the builder we have been put in to a lot of Physical, Financial and Mental hardship. We have lost our health completely due to Ozone's malafide intentions. Please note they have not got the occupancy certificate hence there is no legal electricity, water connection, fire and pollution NOC's and other statutory clearances since the building is not complete. As a result of the broken promises by the builder we Ordinary Law Abiding Senior Citizens with no source of income have had to borrow money from our son to survive. When we questioned on several occasions about not handing over of the apartment as agreed the CRM manager hav....
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.... 7. Its about 10 Years since we made the initial booking for this apartment from then till today we have suffered and continuing to suffer irreparable damage all around (360 degrees, and at the end of it our life is still in disarray. This man Satyamoorthy is oblivious to all this and unwilling to refund our amount with even simple interest. This man has scammed Hundreds of innocent people and should not be allowed to escape and go free. We therefore humbly request that your good offices take cognizance of this compliant, investigate the matter and help us recover our money from this fraudulent developer and book Ozone Group, Its Directors and its Group companies involved under relevant provisions of the law." (Emphasis added) 21.2. The afore-quoted complaint is instituted against the office-bearers of the Company, including its Directors, Managing Director, Chairman and other officials. The gravamen of the allegation is that the complainants had entered into an agreement with the representatives of the Company for purchase of a flat in the project christened "Ozone Urbana Pavilion" and, pursuant thereto, had parted with the entire sale consideration of Rs.64,....
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...., shall be deemed to be guilty of the offence and shall be liable to be proceeded against and punished accordingly: Provided that, nothing contained in this sub-section shall render any such person liable to such punishment provided in this Act if he proves that the offence was committed without his knowledge or that he exercised all due diligence to prevent the commission of such offence. (2) Notwithstanding anything contained in sub-section (1) where an offence under this Act, has been committed with the consent or connivance of, or is attributable to any negligence on the part of, any director, manager, secretary or other officer of the company, such director, manager, secretary or other officer shall also be deemed to be guilty of that offence and shall be liable to be proceeded against and punished accordingly. Explanation.-For the purpose of this section,- (a) 'company' means a body corporate and includes a firm or other association of individuals; and (b) 'director' in relation to a firm means a partner in the firm." (Emphasis supplied) 21.5. Section 15 of the Karnataka Ownership of Flats Act specifically deals with offences....
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....ore, 560042 (' Ozone Group'). Ozone group falsely represented to us that they are a leading company in real estate and are known for timely delivery of projects and use of the best quality construction materials. They advertised as building a fully contained township with Villa plots (meadows), senior living complexes (Serene, Irene Etc), various residential apartment projects (Aqua, Pavillion, Avenue Etc) With all quality amenities and facilities (Hospital, 5 Star Hotel, School, retail Mall, Cineplex, Essentially promising a City within a City) necessary for a quality living in 185 acres of land situated in Kannamangla Village, Devanahalli, Bangalore 562110. They then marketed the above project township by taking out misleading full page advertisments in leading newspapers, Magazines, social Media etc. and also falsely marketed themselves through their own staff, channel partners and hired marketing agencies. I purchased dream home in the said project in the year 2017 after inspecting the project which was introduced and personally shown to us by the company officials, I was taken to the company office in Ulsoor and was given a trust and asssurance by the directors of the ....
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....he developer builder accused. My property was given as a surety and security to get the bank loan, amount was dispersed by the bank. Later the developer took money from both of us and has now defaulted the possession. Now the banks are after me for the payments as the flat is mortgaged by multiple banks. They do not have exclusive rights over the property to be proceeding against. Ultimately the developer has cheated me, breached my trust, taken double the money, has not completed it, has not given possession, and also is not refunding me even after I got to know about such illegal acts. It is also important to note that there are many people who have been cheated and who have face the similar situation and are systematically cheated by the officials of the company. Hence it is requested of this authority to register an FIR and immediately take actions against the said Accused people. Complaint against : 1. Ozone Urbana Infra Developers Pvt Ltd. No.38, Ulsoor Road, Bangalore 560042. Web site: www.ozonegroup.com 2. Mr. Vasudevan Satyamoorthy R/O No.32, Norris Road, Richmond Town, Bengaluru 560025. Mob: 9845016477 3. Mr.Satyamoorthy Sai Pr....
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....the strength of the same or overlapping properties, thereby deceiving unsuspecting home buyers. Repeated demands and entreaties of the complainant allegedly fell on deaf ears. It is in this backdrop that the complaint came to be registered for offences punishable under Sections 406 and 420 of the IPC. 22.6. The allegations, viewed as they must be at this stage at their face value cannot be brushed aside as a mere breach of contract or an ordinary dispute between a developer and a purchaser. The complaint presents a far more disquieting picture. An amount of Rs.1,32,10,000/- is alleged to have been received by the Company through the Bank pursuant to the tripartite arrangement; possession of the promised property has not been delivered; the complainant continues to bear the burden of EMI's; and, above all, the very property allotted to him is alleged to have been sold to a third party without his knowledge or consent. The money is received, the property is not delivered, the loan burden remains with the home buyer, and the very property promised to him is allegedly sold to another. These allegations, if established, travel far beyond the realm of a mere contractual default and pr....
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....ing finance companies, namely, (1) Indiabulls Housing Finance Ltd (2) Housing Development Finance Corporation Ltd (3) Piramal Capital & Housing Finance Limited and (4) Bank of Baroda, arrayed as accused Nos.8-11 above, and various bank officials who have connived with Accused Nos 1-7 and have acted under their directions jointly for illegal gains with dishonesty and have caused huge financial loss to the Complainants. The total amount of loss caused to the Complainants jointly is approximately around Rs. 80,00,00,000/(Rupees Eighty Crore only). ..... ..... ..... 11. As mentioned hereinabove, all the Accused persons proposed various schemes to allure and induce the Complainants to purchase flats/units in the said real estate project. Some of the schemes which were offered are Buy-back scheme with assured returns, subvention scheme with payment of Pre-EMIs till possession, free-rental scheme with payment of rent by the accused builder till possession, etc. Accused Nos. 1-7 employed experienced and skilled personnel to mislead and deceive the general public especially the NRI's to believe that the promises made were true. The Accused Nos. 1-7 provided assurances ....
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.... process of construction and held-up the hard-earned money of the complainant allottees for their illegal personal gain. 16. As stated already, in order to finance the sale of the purchased flat, the Complainants had taken home loans from the Banks and Housing Finance companies' abovementioned part of pre-condition of the various Scheme(s) by signing and executing a Tri-Partite Agreement (the 3 parties Agreement were the Company, the Complainant/allottee and the Bank/Housing Finance Company). It is important to point out here that in accordance with the Tri-Partite Agreement, the amount of loan was disbursed directly to Accused No. 1, for purchase of the units. Most the sale transactions took place/were executed in the year 2015-17. The Complainants/allottees were promised possession of their respective units/flats within 3 years from the date of signing of the Construction Agreement. In particular, the Complainants No. 1 to 8 were promised the possession of their units by 31.03.2019, 31.03.2019 01.12.2017, 01.12.2017. 01.10.2016. 31.03.2019 and 31.12.2022 respectively. ..... ..... ..... 19. Since around 2016, the other Accused persons, namely, the Banks an....
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....intentionally defaulted to fulfill their promise. Now, Accused Nos. 17 are purposely delaying the performance with the motive of wrongfully enjoying the money paid by the complainant allottees and are employing the same in some other project(s) which tantamount to clear criminal breach of trust. ..... ..... ..... 27. In the case of the allottees who have not surrendered to the pressure, undue influence or coercion of the accused builder and have not executed supplementary or roll over agreement(s), the accused builder has forcefully got the cancellation forms executed by them without making any payments in return and thereby cancelled their units and sold these units to some other persons and accepted the payments from them also. These allottees are left to the mercy of the accused builder and have nothing in their hands, their units have been cancelled and resold but no payments are made to them and the obligation of repayment of the loan is also left on their heads. 28. The accused persons, even after cancelling the unit and selling it to the other some persons, intentionally defaulted to make the said payments within the time agreed after due exercise ....
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.... The accused no, 1 to 7 are liable for falsification of accounts as they have got disbursed the amount from the bank in regard of completion of the project but wrongly allocated the money in some other projects due to which the construction of this specific project is struck and allottees are suffering. 33. When the accused persons were satisfied that there was no scope for further sale, they started making defaults and ignoring the queries of the complainants herein and it was apparent that the accused persons no. 1 to 7 have no intention to deliver the project and have dishonestly appropriated the amount for their personal use and gain due to which stalled and no construction was in process, the accused person stopped paying the Pre-EMIS and also stopped following all other obligations which they agreed to perform into various agreements. 34. The accused persons no. 1 is a private limited company having authorised capital of Rs. 10,60,00,000/- and paid-up capital of Rs. 9,18,14,000/-but in connivance with the some banks and their officials it has secured various loans from which Rs. 29,05,00,00,000/- (Rupees Two Thousand Nine Hundred and Five Crores only) is sti....
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....knowledge the receipt of the complaint, which is in clear violation of the judgment of the Hon'ble Apex Court in Lalita Kumari vs. State of Uttar Pradesh. Also, the Complainants approached the Commissioner of Police seeking redressal of their grievance vide letter dated 25.02.2022 but in vain. Thus the Complainants having no other remedy have approached this Hon'ble Court seeking a direction under Section 156(3) of the Code of Criminal Procedure. 1973. Copy of the letter addressed to the Halsoor Police Station and the Commissioner of Police are produced herewith and marked as ANNEXURE - F and G respectively. PRAYER WHEREFORE, the Complainants above named most respectfully pray that this Hon'ble Court be pleased to direct the Halsoor Police Station to register FIR and investigate into the offences alleged hereinabove and pass such other orders that this Hon'ble Court deems fit in the interest of justice and equity." (Emphasis added) 23.2. The case projected by the complainant is that the petitioners/accused induced respondent No.2 and the members of the Home Buyers Association to purchase apartments in the project promoted by the Company by entering....
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.... 2. Definitions.-In this Act unless the context otherwise requires,- ..... ..... ..... (2) "Deposit" includes and shall be deemed always to have included any receipt of money or acceptance of any valuable commodity by any Financial Establishment to be returned after a specified period or otherwise, either in cash or in kind or in the form of a specified service with or without any benefit in the form of interest, bonus, profit or in any other form, but does not include,- (i) amount raised by way of share capital or by way of debenture, bond or any other instrument covered under the guidelines given and regulations made, by the Security Board of India, established under the Securities and Exchange Board of India Act, 1992; (ii) amounts contributed as capital by partners of a firm; (iii) amounts received from a scheduled bank or a co-operative bank or any other banking company as defined in clause (c) of Section 5 of the Banking Regulation Act, 1949 (Act 15 of 1992); (iv) any amount received from,- (a) the Industrial Development Bank of India, (b) a State Financial Corporation, (c) any financial instit....
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....is limited to the period of office or any other person or an employee responsible for the management or conducting of the business or affairs of such Financial Establishment, shall on conviction, be punished with imprisonment for a term not less than three years and which may extend to seven years and with fine which may extend to ten lakh rupees and such Financial Establishment also shall be liable for a fine which may extend to an amount equivalent to five lakh rupees or where such deposits is quantifiable in terms of money twice the amount of aggregate funds collected from subscriber or member whichever is more. Explanation.-For the purpose of this section a Financial Establishment, which commits default in repayment of such deposit with such benefits in form of interest, bonus, profit or in any other form as promised or fails to render any specific service promised against such deposit, or fails to render any specific service agreed against the deposit with an intention of causing wrongful gain to one person or wrongful loss to another person or commits such defaults due to its inability arising out of impracticable or commercially not viable promises made while accept....
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....ctions 2(c) and 2(d) of the MPID Act 44. The notifications attaching the properties of the respondent were issued under Section 4 of the MPID Act. Section 4 covers only those situations where a "financial establishment" is a defaulting entity. Section 4 is reproduced below: "4. Attachment of properties on default of return of deposits.-(1) Notwithstanding anything contained in any other law for the time being in force- (i) where upon complaints received from the depositors or otherwise, the Government is satisfied that any financial establishment has failed- (a) to return the deposit after maturity or on demand by the depositor; or (b) to pay interest or other assured benefit; or (c) to provide the service promised against such deposit; or (ii) where the Government has reason to believe that any financial establishment is acting in a calculated manner detrimental to the interest of the depositors with an intention to defraud them;" (emphasis supplied) 45. The primary issue is whether NSEL is a "financial establishment" within the meaning of Section 2(d). Section 2(d) reads as follows: "2.(d) "Financ....
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....tion, (c) any financial institution specified in or under Section 6-A of the Industrial Development Bank of India Act, 1964, or (d) any other institution that may be specified by the Government in this behalf; (v) amounts received in the ordinary course of business by way of- (a) security deposit, (b) dealership deposit, (c) earnest money, (d) advance against order for goods or services; (vi) any amount received from an individual or a firm or an association of individuals not being a body corporate, registered under any enactment relating to money lending which is for the time being in force in the State; and (vii) any amount received by way of subscriptions in respect of a Chit. Explanation I.-"Chit" has the meaning as assigned to it in clause (b) of Section 2 of the Chit Funds Act, 1982; Explanation II.-Any credit given by a seller to a buyer on the sale of any property (whether movable or immovable) shall not be deemed to be deposit for the purposes of this clause;" 48. The statutory definition of the expression "deposit" comprises of the following ingredients: (....
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.... inclusive and not restrictive. 50. The expression "deposit" is conspicuously broad in its width and ambit for it includes, not only any receipt of money but also the acceptance of any valuable commodity by a financial establishment under any scheme or arrangement. As a matter of interest, we may note at this stage that the expression "any" is used in the substantive part of the definition of the expression "deposit" on five occasions, namely: (i) Any receipt of money; (ii) Any valuable commodities; (iii) By any financial establishment; (iv) With or without any benefit; and (v) In any other form. 51. Likewise, the definition of financial establishment refers to the acceptance of deposits: (i) Under any scheme or arrangement; or (ii) In any other manner. 52. The repeated use of the expression "any" by the statute while defining both the above expressions is a clear reflection of the legislative intent to cast the net of the regulatory provisions of the law in a broad and comprehensive manner. Unlike many other State enactments which govern the field, clause (c) of Section 2 of the MPID Act comp....
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....its representations assured a 16% return on trading in the platform is immaterial for the purpose of determining if NSEL accepted deposits. 55. Having referred to the relevant bye-laws, we shall determine if NSEL receives "deposits" as defined by Section 2(c) of the MPID Act. The bye-laws elucidate that NSEL receives both money and commodities from trading members. In order to decide if these receipts by NSEL could be regarded as "deposits", the test of "return" will have to be satisfied. The test is that the return be in cash, kind or service. It is not necessary that the return should be with the benefit of interest, bonus or profit. Therefore, if the financial establishment is obligated to return the deposit without any increments, it shall still fall within the purview of Section 2(c) of the MPID Act, provided that the deposit does not fall within any of the exceptions. The exception of relevance to our case is clause (v) which states that amounts received in the ordinary course of business by way of (a) security deposit; (b) dealership deposit; (c) earnest money; and (d) advance against order for goods or services shall be excluded from the purview of the term "deposi....
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....nce would lie against the defaulter and FIR could be lodged under the said Section 3 of the MPID Act. 5.1.4 The MPID Act is a self-contained Code, which creates an independent machinery and mechanism to provide remedial measures to the victim depositors and to check and punish Financial Establishments, which will include any person accepting deposit has fraudulently committed default duping the investors. 5.2 As the dispute in the present case, in its ultimate analysis, revolves around as to whether the payment made or amounts given by the appellants fall within the ambit of "deposit" as defined under the MPID Act, the relevant definition becomes pivotal to be considered. Section 2(c) of the MPID Act defines "deposit". 5.2.1 The definition is extracted hereinbelow: "2. Definitions.- In this Act, unless the context otherwise requires,- .............. (c) "deposit" includes and shall be deemed always to have included any receipt of money or acceptance of any valuable commodity by any Financial Establishment to be returned after a specified period or otherwise, either in cash or in kind or in the form of a specified service with or....
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.... owned or controlled by any State Government or the Central Government or a banking company as defined under clause (c) of section 5 of the Banking Regulation Act, 1949;" 5.2.3 "Financial Establishment" as defined in Section 2(d) means "any person" accepting deposit either under any scheme or arrangement or "in any other manner". The definition takes out from its purview a corporation or cooperative society controlled or owned either by the State or the Central Government. It also excludes a banking company as defined under Section 5(c) of the Banking Regulation Act, 1949. 5.2.4 The definition of "financial establishment" in Section 2(d) of the MPID Act has also a wide coverage to mean "any person accepting deposit under any arrangement or in any other manner". The expanse of Section 2(d) of the MPID Act undoubtedly covers "any person accepting deposit". 5.3 As stated, Section 3 of the MPID Act is in respect of fraudulent default committed by Financial Establishments. The section provides for punishment upon conviction of every person including the promoter, partner, director, manager or employee found responsible for the management or in conducting the b....
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....nd or in the form of a specified service, with or without any benefit in the form of interest, bonus, profit or in any other form." 5.4.1 It was observed that specific exclusions are provided in clauses (i) to (vii) of Section 2(c) of the MPID Act. The Court highlighted that when the legislature mentioned in the definition in Section 2(c) the word "means", the definition becomes exhaustive. It was pinpointed that Section 2(c) uses the phrase "includes and shall be deemed to have always included". The Court further stated that the import of the same creates a legal fiction and the use of the words "includes" and "deemed to have always included" make the term "deposit" inclusive and not restrictive. 5.4.2 Following was observed in 63 Moons Technologies Ltd. (supra) regarding the expression "deposit", "The expression "deposit" is conspicuously broad in its width and ambit for it includes, not only any receipt of money but also the acceptance of any valuable commodity by a financial establishment under any scheme or arrangement. As a matter of interest, we may note at this stage that the expression "any" is used in the substantive part of the definition of th....
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....be returned after a specified period or otherwise with or without benefit of interest". 6.1 The definition of "deposit" has three facets in the nature of ingredients. First is that there should be any receipt of money or acceptance of a valuable commodity by a financial establishment. On the second, the acceptance contemplated should be returnable after a specified period and thirdly, the return of such money or commodity could be in cash, kind, with or without any benefit of interest. All the above necessary ingredients to constitute "deposit" within the meaning of Section 2(c) of the MPID Act stands satisfied in respect of the transaction between the appellants and respondent Nos. 2 to 6. 6.2 Such "deposit" should be accepted by a "financial establishment". Looking to the wide import of the definition of Section 2(d) of the Act, since it includes any person accepting deposits, a private respondent like respondent Nos. 2 to 6 who accepted the money which was deposited stand covered within the concept of "Financial Establishment". The individual persons like respondents herein accepting the deposit and fraudulently defaulting become a "Financial Establishment" wit....
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.... field and in different ways. Nonmaking out of offences under the IPC cannot be equated with non-applicability of the provisions of MPID Act. The concepts thereunder have distinct and separate legal connotations and a complaint under Section 3 of the MPID Act is an independent recourse under the specific law. 6.7 The contention is therefore entirely misconceived that having failed to establish the offences under the IPC, the complaint under Section 3 of the MPID Act could not be maintained. In the same way, the plea that the dispute is of civil nature bear no relevance, once it is found that the transaction between the appellants and respondent Nos. 2 to 6 satisfies the essentials of the definition under Section 2(c) read with Section 2(d) of the MPID Act to become "deposit", accepted by "Financial Establishment" entitling the appellants to file a complaint under Section 3 of the MPID Act. 6.8 In light of the foregoing discussion and reasons, there is no escape from the conclusion that the amounts lent by the appellants to respondent Nos. 2 to 6 were "deposit" within the scope and ambit of the definition in Section 2(c) of the Maharashtra Protection of Interest of....
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.... said that no right is created by the said agreement dated 14.06.2012 and in fact, as set out herein above as the "Financial Establishment" has rights in the said property, Section 4 of the MPID Act is applicable to the same. Thus, it is very clear that the property which is the subject matter of the present appeal comes under the purview of Section 4 of the MPID Act. 20. The MPID Act was enacted to protect the interest of depositors in the Financial Establishments and matters relating thereto. The term "Deposit" as defined in Section 2(c) of the MPID Act inter alia includes any receipt of money by any "Financial Establishment" to be returned after a specified period or otherwise either in cash or in kind or in the form of specified service with or without any benefit in the form of interest, bonus, profit or in any other form. Thus, what is contemplated is receipt of money by the "Financial Establishment" and return of the same in any other form. In the present case, about 514 flat purchasers have paid substantial amounts to the "Financial Establishment" as "Financial Establishment" agreed to hand over to them possession of the flats to be constructed on the same plots. T....
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....perties at Sr. No. 2 and 3 which are in the name of M/s. Rana Landmark Pvt. Ltd. i.e. "Financial Establishment" can be considered as properties of said "Financial Establishment" and aggregate value of both these properties is Rs. 1,23,50,000/-. In this background of the matter, the affidavit in reply of Pravinkumar Bansilal Patil, PSI, Economic Offence Wing, Amravati City dated 14.12.2018 filed on behalf of the respondent No. 1 - State of Maharashtra states that the total fraud committed by the accused persons is to the tune of Rs. 13.88 Crores. Thus, it is clear that even if it is assumed that the said property is not the property acquired by the "Financial Establishment" out of the deposits collected by the "Financial Establishment", the said property will fall in the category of "such other property" of the said "Financial Establishment" coming in the purview of Section 4 of the MPID Act as the properties in the name of the "Financial Establishment" acquired out of the deposits collected by the "Financial Establishment" or otherwise are not sufficient for repayment of the deposits to the depositors. If we consider all the properties mentioned in Notification dated 29.03.2016 irr....
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....tributed as capital by partners of a film; (iii) amounts received from a Scheduled bank or Shraddha Talekar PS Co-operative Bank or any other banking company as defined in clause (c) of Section 5 of the Banking Regulation Act, 1949 (10 of 1949); (iv) any amount received from- (a) the Industrial Development Bank of India; (b) a State Financial Institution; (c) any financial institution specified in or under section 6-A of Industrial Development Bank of India Act, 1964 (18 of 1964) ; or (d) any other institution that may be specified by the Government in this behalf; (v) amounts received in the ordinary course of business by way of - (a) security deposit; (b) dealership deposit; and (c) earnest money; (vi) any amount received from an individual or a firm or an association or individuals not being a body corporate, registered under any enactment relating to money lending which is for the time being in force in the State ; and (vii) any amount received by way of subscriptions in receipt of a Chit. Explanation I -- "Chit" has the meaning as assigned to in clause (b) of Se....
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.... to be returned. However, such return need not necessarily be in the form of cash or kind but also in the form of a service, with or without any benefit such as interest; (iii) it is not necessary that the return should be with the benefit of interest, bonus or profit. Therefore, if the financial establishment is obligated to return the deposit without any increments, it shall still fall within the purview of Section 2(c) of the MPID Act, provided that the deposit does not fall within any of the exceptions; (iv) the phrase 'valuable commodity' cannot be restricted to only mean precious metals. Agricultural commodities which NSEL trades in will fall within the purview of the term, and (v) the definition is broadly worded to include even the possession of the commodities for a limited purpose." Thus, expression 'deposit' is conspicuously broad in its width and ambit for it includes, not only any receipt of money but also the acceptance of any valuable commodity by a financial establishment under any scheme or arrangement. The expression 'any' is used in the substantive part of the definition of the expression 'deposit' on fi....
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....ns of the MPID Act. 24. On going through the definition of "financial establishment", admittedly, the applicant, who was the Director and responsible for the day-to-day affairs of the Society, accepted the amounts from the various investors and disbursed the loan amount which is public money and has not taken steps to recover the same. It is not a simple breach of trust but it is an offence under breach of trust contemplated under Section 403 of the IPC." (Emphasis supplied at each instance) In the case of 63 MOONS TECHNOLOGIES supra, the Apex Court undertook an elaborate interpretation of the expressions "deposit" and "financial establishment" under Sections 2(c) and 2(d) of the Maharashtra Protection of Interest of Depositors Act, 1999 ('MPID Act' for short). It held that the definition of "deposit" is deliberately of wide and inclusive amplitude. The expression covers any receipt of money or acceptance of a valuable commodity by a financial establishment, provided it is liable to be returned- whether in cash, kind or by rendering a specified service, with or without interest, bonus, profit or other benefit. The expression "deposit" under the MPID Act is intentiona....
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....tablishment, subject to the statutory exceptions. The MPID Act must be understood in light of its depositor-protection object; "deposit" and "financial establishment" receive a broad construction, and monies collected from investors with an obligation of return fall within the statute. 23.10. Read together, the judgments establish a consistent thread: the nomenclature of the transaction is not decisive; its substance is. A "deposit" is capable of encompassing money received with an obligation to return the value in cash, kind or specified service. MANOHAR BHIMRAOJI MAHALLE goes a significant step further in the specific context of real estate by holding that payments made by flat purchasers to a developer against the promise of construction and delivery of flats can fall within the definition of "deposit". 24. Writ Petition No.31006 of 2025: 24.1. The subject petition calls in question proceedings instituted by the Directorate of Enforcement arising from an ECIR registered in the year 2025, which has now resulted in a PAO dated 04-10-2025. The 2025 ECIR arises from the registration of five regular FIR's, of which two were quashed on the ground of regular FIR's, of which tw....
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....ing the conduct alleged against builders/developers on the one hand and Banks/Financial Institutions on the other, in disputes arising out of builder-home buyer transactions. Those proceedings were not confined to the petitioner-Company alone, but encompassed similar grievances against several other developers and lending institutions. 24.4.1. The proceedings in HIMANSHU SINGH supra soon assumed a wider canvas. Following institution of the said petition, several home buyers, placed in similar circumstances, approached the Apex Court against different builders/developers and Banks/Financial Institutions raising substantially similar grievances. Those petitions came to be tagged with the principal proceedings in HIMANSHU SINGH. Among them was a petition instituted by home buyers of the petitioner - Company as well. 24.4.2. On 05-11-2024, the Apex Court, with a view to ascertain the true state of affairs obtaining in the projects and the financial arrangements surrounding them, directed the home buyers, builders/developers and the concerned Banks/Financial Institutions to place their respective affidavits on record. The exercise was intended to bring before the Court, inter alia....
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....tion Team to uncover the nexus between the Banks/Financial Institutions and builders/developers and therefore by order dated 04-03-2025 directs the CBI to be present on the next date of hearing. The order dated 04-03-2025 reads as follows: "1. The instant batch of petitions concern the disbursement of funds by banks to builders-cum-developers through subvention schemes for various housing development projects in Noida, Greater Noida, Gurugram, and other nearby areas. 2. There are three parties to the subvention schemes - the aggrieved homebuyers, the builders-cum- developers, and the banks/financial institutions. The aggrieved homebuyers are the Petitioners before this court. 3. All the aggrieved homebuyers purchased units in some or the other development projects launched by the builders-cum developers. Through the subvention scheme, the builders-cum developers advertised that they would pay the EMI/pre-EMI of the loans taken by the homebuyers to purchase the said units in their development projects, till the specified cut-off taken or till the date of possession, depending on the terms of each tripartite agreement. The homebuyers obtained loans from the....
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.... 7. On 05.11.2024, in order to have a better understanding of the latest stage of construction for the development projects and the large financial sums involved, and to ultimately ensure that reliefs are granted in a timely manner, this Court directed the homebuyers, builders-cum-developers, and banks/financial institutions to furnish the following information by way of compliance affidavits within 4 weeks: (i) The status and details of the payments made by the builder cum-developers to the financial institutions or such payments made by the homebuyers to the financial institutions/builder-cum-developers. (ii) The date of offering possession to the homebuyers, where the project is stated to have been completed. (iii) The current status of completion of the project, including the details of the Completion Certificate and other statutory certificates granted by the prescribed authorities, along with details of the possession given or offered to the home-buyers. (iv) The status of recovery from the home-buyers, namely, whether they have made EMI payments to the banks or not. (v) The amenities advertised by the builder-cum developers at....
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....o the order dated 04.03.2025, Ms. Aishwarya Bhati, learned Additional Solicitor General of India, has entered appearance on behalf of the Central Bureau of Investigation (CBI). She informs that some CBI officers are also present. We have impressed upon her to discuss with the CBI authorities and put up a proposal as to how would they intend to proceed with the enquiry/investigation into the issues that are briefly noticed in our order dated 04.03.2025 and those passed prior thereto. She assures that such a proposal shall be put up before the Court within two weeks. 2. We also feel that in order to effectively unearth the underlying issues, an amicus curiae need to be appointed, especially someone having expertise and vast investigative/administrative experience besides a command over the legal intricacies. In this regard, we request Mr. Rajeev Jain, Advocate, former Director, Intelligence Bureau and a former Member of the National Human Rights Commission to assist the Court as an amicus curiae. He is also requested to submit a brief note as how to proceed further in the matter. 3. The Registry is directed to supply an up-to-date soft copy of the SLP paper-books to....
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....t is stated to have been completed. (iii) The current status of completion of the project, including the details of the Completion Certificate and other statutory certificates granted by the prescribed authorities, along with details of the possession given or offered to the home-buyers. (iv) The status of recovery from the home-buyers, namely, whether they have made EMI payments to the banks or not. (v) The amenities advertised by the builder-cum developers at the time of launching the project and the status re: completion thereof. (vi) The status as to whether the builder-cum developers has undergone CIRP (under IBC) or any other coercive or noncoercive recovery procedure, and the stage of such proceedings. (vii) Whether the home-buyers have received any relief or remedial order from the statutory authorities like Real Estate Regulatory Authority (RERA). If so, the details of such orders be also furnished." 5. On receipt of that information, this Court, on 04.03.2025, prima facie found that there was some unholy nexus between the banks/Housing Financial Corporations on one hand and the builder cum- developers on the other. It ....
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....I Bank, Punjab and Sind Bank, India Bank, and Punjab National Bank, who have extended separate loans of large amounts to the former. 9. The details of the other builder-cum-developers and the financial institutions with whom there were tripartite agreements, have been executed are also highlighted in the note submitted by the learned Amicus. 10. The learned Amicus Curiae has, in conclusion, made the following consolidated recommendations as to how to proceed further in the matter: "39. In view of the above, it is imperative to reach a fair, just and equitable resolution; hence, an appropriate framework for this purpose needs to be evolved. To proceed further in the matter, this Hon'ble Court should consider thorough investigation in the matter. While some recommendations have been indicated in the contextual paragraphs above, following are the consolidated recommendations :- a. The CBI be directed to initiate Preliminary Enquiries (PE) in this batch of cases to investigate the alleged collusion of Banks and builders/developers, etc. It has an all-India jurisdiction and the expertise to handle such cases. b. Since a large number of Banks ....
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....and with whose involvement. iii. Whether the amounts were in fact disbursed to the builder and not to any third party on their behalf. The said aspect may require a forensic audit of the Banks. iv. The manner in which tripartite/quadripartite loan agreements (which appear to be in a standard format for respective Banks) were formulated by different Banks and extended to customers, i.e., Board Resolutions/actions of key managerial personnel sanctioning it. Pertinently, the RBI has maintained that "innovative housing loans" are an instrument on the operational side of Banks who have independence on how to formulate them. v. Some Banks also entered into separate bilateral agreements with builders/developers on the subvention scheme. These also need to be investigated. vi. The policies formulated by Banks/HFCs on making customers aware of the risks associated with subvention plans and outright/bulk disbursals by Banks to builders may be directed to be produced. It needs to be inquired if the operational branches of Banks cautioned the borrowers accordingly. vii. Further, information may also be called regarding steps, if any, taken by Banks ....
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.... pointed out that there are 174 petitions filed by 1205 homebuyers-petitioners, who had approached the Court with the following directions: (i) The banks/financial institutions to charge EMI/pre-EMI from the builders-cum-developers and not from the homebuyers; (ii) The banks/financial institutions to refund the already recovered amount to the homebuyer and recover it from the developers; and (iii) the RBI to take strict action against the banks. 12. In his affidavit, the Superintendent of Police, CBI has explained that there are in total 40 builder-cum-developers who are involved in these matters, out of whom the largest number of petitioners (799) pertain to Supertech Ltd. 13. The CBI has, thereafter, proposed that Preliminary Enquiries be undertaken, underlining that with the information available as of now being limited, commission of cognizable offence on the part of the builders and financial institutions is not clear. It is suggested that, with a view to arrive at a finding as to what actually transpired; what was the exact modus operandi of the builders; if and how they colluded with the financial institutions; and what was the ex....
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....NOIDA, Yamuna Expressway, Gurugram, and Ghaziabad; and (iii) One Preliminary Enquiry in respect of the projects outside of NCR, in which M/s Supertech Ltd. is not a builder/developer." 24.4.6. On 22-07-2025, the CBI files the interim status report in respect of the preliminary enquiry being conducted pursuant to the directions of the Apex Court. By order dated 22-07-2025, the Apex Court proposes that, the CBI should register regular cases and proceed with the investigation. The order dated 22-07-2025 reads as follows: "..... ..... ..... 9. In compliance with the order dated 29.04.2025, the Central Bureau of Investigation (CBI) has filed an interim status report, inter alia, stating: (i) the gist of common allegations of preliminary enquiries; (ii) Focal point of enquiry in 7 preliminary enquiries, registered pursuant to the earlier orders; (iii) summary of common action taken; (iv) discussion about subvention scheme; (v) outcome of enquiry from Reserve Bank of India and National Housing Bank; (vi) the preliminary enquiry against M/s. Supertech Ltd. highlighting the analysis of preliminary outcome based in....
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....f development authorities; (vii) status of developers and hidden players - role and impact; (viii) on efficacy of RERA and disclosures on their websites; (ix) regulatory lapses by development authorities; and, (x) honoraria. 16. In the aforesaid report, Note No. 1 highlights the transparency and responsibility of development authorities including RERA and the necessity to reconsider their role with reference to the protection of home buyers from unscrupulous builders." 24.4.7. On 23-09-2025, CBI submits before the Apex Court that the preliminary enquiry in terms of the directions issued by the Apex Court on 29-04-2025 was complete and that post the preliminary enquiry it was found that a cognizable case was made out and directs that the CBI should register a case and proceed with the investigation. The order dated 23-09-2025 reads as follows: "1. On oral mention, the main case is taken on the Board. 2. Learned Additional Solicitor General of India, on instructions, informs that the preliminary enquiry by the CBI, in terms of the directions issued earlier, is complete and as per such enquiry, a cognizable offence is m....
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....r dated 23.09.2025, the note submitted by the CBI reveals that 6 regular cases were registered on 25.09.2025, and some searches were carried out at the residential/official premises of the suspects. All these cases are still under active investigation. The extract of the status report is said to have been shared with the learned Amicus Curiae. It is also explained that the requisite police officers/officials have been taken on deputation from the State Police of Uttar Pradesh and Haryana. Learned Additional Solicitor General of India representing the CBI states that the investigation will be completed promptly, and a fresh status report shall be filed before the next date of hearing. 10. Mr. Rajiv Jain, learned Amicus Curiae, has submitted a very comprehensive status report comprising two volumes. It delves into the details of the actions of 7 banks/financial institutions, particularly the circumstances surrounding the Ozone projects and the further course of action. The report provides an in-depth analysis of the role of the banks and financial institutions, leaving the land owners with very limited recourse but to agree to the terms of their respective agreements. In man....
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....nce of certain home buyers-cum-borrowers, have been directed against the systemic failure of the statutory and Government authorities to discharge their functions, as also against the circumvention of the regulatory framework by Banks and Housing Financial Corporations (HFC), resulting in alleged illicit benefits drawn by the builders cum-developers at the cost of homebuyers, without completing the subject-projects and handing over possession of the allotted premises. 2. This Court, having considered the recommendations of Shri Rajiv Jain, learned Amicus Curiae, in a self-speaking order dated 29.04.2025 and subsequent orders, initially directed the Central Bureau of Investigation (CBI) to complete preliminary enquiries and thereafter register regular cases for investigation into the alleged offences. In due course of time, the CBI has registered 56 FIRs, of which final reports have been filed in 18 cases, along with 17 charge-sheets and 1 closure report. 3. The CBI has now filed its 5th Supplementary Status Report, according to which, out of the 17 cases where a chargesheet was filed, cognizance has been taken in 3 cases. In 5 cases, the delinquent role of officia....
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....the learned Amicus, which warrant necessary directions by this Court. 8. Learned Amicus Curiae has also, through Note No. 8, submitted his comments on the investigation by the CBI and his comments on various representations seeking CBI enquiry/investigation. It is, inter alia, pointed out that the CBI has made available the investigation reports of three cases mentioned in paragraph 3 of the Report. The learned Amicus has also provided soft copies of 81 Special Leave Petitions and 52 Interlocutory Applications to the CBI, which have been filed meanwhile and have been scrutinised by him. Thereafter, it is explained that the learned Amicus Curiae has received detailed representations, notes, and supporting documents from the learned advocates/counsel and homebuyers across multiple States in connection with the subject-matter(s). The categorization of these representations too has been included as part of the Note. Finally, learned Amicus has also sought certain directions to the CBI. 9. We have heard learned Amicus Curiae and other learned senior counsel/counsel for the parties. In addition, Ms. Aishwarya Bhati, learned Additional Solicitor General representing the ....
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....il Nadu; Vivansaa Baalsam in Bengaluru; Rudra Buildwell Construction Pvt. Ltd. in Greater NOIDA; and Omaxe Group in Chandigarh. A separate status report with respect to the investigation against these builders/banking institutions shall be submitted before this Court; and (vii) In the course of ongoing investigation, particularly where there is no quadripartite agreement, despite the lessee and developer/builder being different, the CBI shall examine whether the banks/HFCs, either ignorantly, negligently, or consciously, signed an agreement to create a mortgage over the flat/apartment in the absence of the actual leaseholders and whether any wrongful loss was caused to the banks/HFCs due to such exclusion." (Emphasis supplied at each instance) 24.5. The sixth FIR, registered by the CBI as FIR No. RC2192025E0031 on 25-09-2025 pursuant to the directions issued by the Apex Court in the afore-quoted orders, is for offences punishable under Sections 420 read with 120-B of the IPC and Sections 13(2) read with 13(1)(d) of the PC Act. The gist of the allegations in the FIR read as follows: "In compliance to Order dated 29.04.2025 of Hon'ble Supreme Court of Indi....
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.... possession of the residential units to homebuyers nor refunded their deposited amount and misappropriated the entire upfront booking amount/loan amount. It clearly indicates that the homebuyers have been cheated by M/s Ozone Urbana Infra Developers Pvt. Ltd in conspiracy with unknown officials of M/s Indiabulls Housing Finance Limited (Now Sammaan Capital) thereby causing wrongful loss to the homebuyers and corresponding wrongful gain to themselves. Enquiry revealed that the M/s Indiabulls Housing Finance Umited (Now Sammaan Capital) started deducting EMI from the homebuyers and in the event of default reported the homebuyer's accounts as NPA and thereby CIBIL of the homebuyers were degraded. Enquiry also revealed that the builder has sold the same flat to multiple homebuyers and same unit was also financed by the financial institution twice On the basis of finding of preliminary enquiry, Hon'ble Supreme Court of India vide Order dated 23.09.2025 directed CBI to register regular case (copy enclosed).The Preliminary Enquiry prima facie discloses that M/s Ozone Urbana Infra Developers Pvt. Ltd had cheated the homebuyers in conspiracy with unknown o....
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....opers Pvt. Ltd., out of which large sums were immediately routed to the personal accounts of Shri S. Vasudevan and his wife Smt. Priya Vasudevan. iii. That Shri S Vasudevan himself admitted on oath under section 50 of the PMLA, 2002 that escrow funds were utilized for purposes other than construction, including corporate overheads, salaries, loan repayments and marketing expenditure. Further, substantial amounts were layered through multiple entities and were routed abroad into overseas ventures such as Ozone Agrow Pte. Ltd. (Singapore), Ozone Bolevine Agrow Ltd. (Laos), and Ozone Global DMCC (Dubai). This entire process resulted in layering and integration of the proceeds of crime, generated by cheating customers. iv. That the books of accounts of OUIDPL falsely reflect a Work-in-Progress (WIP) of Rs.1,310 crores, comprising largely of finance costs and overheads, despite the project land remaining undeveloped. This establishes manipulation of accounts to conceal the diversion of proceeds of crime. v. That despite directions of K-RERA (Karnataka, RERA) to refund amounts to homebuyers, Shri S. Vasudevan wilfully failed to comply with such orders. thereby ....
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....truction EMIs. However, the company has failed to honour that commitment for hundreds of customers, leaving them exposed to the high-handed loan recovery practices of these financial institutions. Further, in many cases CIBIL score of the customers have been adversely impacted due to inability to pay EMIs. xi. Shri S. Vasudevan with ill intention, instead of constructing flats/apartments and delivering the same to the gullible customers, sold some of these prime properties at very high value to third parties. The proceeds of the sale are still not being used for construction of apartments. Instead, the same are being used for development of new projects in other group entities and for reimbursement of loan to JC Flower and others. This has rendered hundreds of customers as helpless and vulnerable. xii. Therefore, the below mentioned properties are liable to be attached in M/s OUIDPL Project as value thereof of the proceeds of crime to safeguard the interests of the customers, leaving other properties for the financial institutions keeping in mind of their interest as well- * 4.5 Acres of Commercial Land registered vide document nos. 5234/2005-06 in CD-DNH....
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....edings under PMLA, there are reasons to believe that the properties, as detailed in Schedule A in Para-6 above are involved in money laundering are liable for attachment under section 5(1) read with section 2(1)(u) of PMLA, 2002. 9. THEREFORE, in view of the above discussion and material and evidences placed before me, I have reasons to believe that M/s Ozone Urbana Infra Developers Pvt. Ltd. and its promoters Shri S. Vasudevan along with others, who have been charged with Scheduled Offences i.e. Sections 419, 420 and 120B of IPC, 1860, within the meaning of Section 2(1) (y) of the PMLA, have indulged in criminal activities and committed scheduled offences and have generated proceeds of crime and from the part of the proceeds of crime they had acquired the immovable properties having total value of Rs. 423,37,84,000/- (FOUR HUNDRED TWENTYTHREE CRORES THIRTY-SEVEN LAKHS AND EIGHTY-FOUR THOUSAND) as mentioned above in detail in Schedule A of the properties at Para - 6 of this attachment order, and identified as proceeds of crime are hereby attached under section 5(1) read with section 2(1)(u) of PMLA, 2002. Such proceeds of crime are in conformity with the definition of proc....
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....le properties amounting to Rs. 423.38 Crores, in connection with an investigation against M/s Ozone Urbana Infra Developers Pvt. Ltd. and Others. Investigation in this case by ED was initiated on the basis of multiple FIRs under sections 419, 420 and 120B of Indian Penal Code, 1860 registered at various police stations of Bengaluru City against M/s Ozone Urbana Infra Developers Pvt. Ltd and its promoters. Further, a FIR was also registered against the company and its promoter by the CBI, EO-1, New Delhi on the direction of Hon'ble Supreme Court. The main allegation against the company M/s Ozone Urbana Infra Developers Pvt. Ltd. is that it has defaulted in completion of construction of projection in time and failed to hand over the possession to the customers. It is alleged that the company induced the gullible customer by offering to pay pre-construction EMIs till handing over the possession of the flat to homebuyers. However, it has failed to honour its commitments and did not complete the project/flats. The builder neither delivered possession of the residential units to homebuyers nor refunded their deposited amount and misappropriated the entire upfront bo....
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....e has ceased to exist does not obtain on the facts. The predicate proceedings continue to subsist and, more importantly, one of the crimes owes its genesis to an investigation undertaken by the CBI pursuant to the directions of the Apex Court. The allegations forming the substratum of those crimes, therefore, remain alive and are yet to undergo the rigours of investigation and trial. At this stage, this Court cannot presume their extinction and, on that premise, pull down the consequential proceedings under the Act. 24.9. So long as the scheduled offence subsists and the proceedings concerning it have not been obliterated, the contention that the 2025 ECIR has been rendered foundation-less is plainly unavailable to the petitioner. The challenge to continuation of the 2025 ECIR on the ground of absence or non-existence of a predicate offence, therefore, fails and is accordingly rejected. 24.10. Further, the subsequent PAO sets out clear reasons for attachment of the properties. The contentions of the learned Senior Counsel for the petitioner on the merits of the PAO and determination of "proceeds of crime" also deserve to be rejected, as the properties have only been provision....
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.... causing a shortfall of INR 16.55 Crore, which continues to be in the possession of JSW. 29. It is stated that possession of confirmed attached property by the accused, in defiance of lawful attachment, squarely falls within Section 8(4) of PMLA and constitutes "concealment, possession, acquisition and use" of proceeds of crime punishable under Section 3 of PMLA. The High Court had dismissed writ petitions of the Appellants challenging the PAOs on 11.12.2020 and the two Writ Appeals Nos. 68 of 2021 and 97 of 2021 were also dismissed on 04.05.2021. Hence, the attachment has attained finality. 30. The further contention is that, in pursuance to multiple summons issued under Section 50(2) of the PMLA to Shri M.V.S. Seshagiri Rao and Appellant No. 2, the officials of JSW Steel Ltd., on 10.12.2021, 15.12.2021, 04.02.2022, and 25.02.2022, there was no cooperation extended, and no authorised representative appeared to depose which shows the mens rea of the Appellants. 31. The learned ASG submitted that bank accounts are considered "property" within the meaning of Section 2(1)(v) of the PMLA, as established by this Court in State of Maharashtra v. Tapas D. Neogy[....
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....ecovery of INR 33.80 Crore, alleged to be "proceeds of crime." 37. The core issue before us is not whether the appellants' entire banking operations are tainted, but whether the specific sum of INR 33,80,87,617/- (Thirty-three Crore Eighty Lakh Eighty-Seven Thousand Six Hundred Seventeen Rupees), representing unpaid consideration for iron ore supplied by AMC, can be treated as "proceeds of crime" and whether its withdrawal postPAO constitutes an offence under Section 3 PMLA. The apprehension that the entire account balance constitutes proceeds of crime is misplaced, particularly when the admitted position is that payments were made and received through regular banking channels and are duly reflected in the books of account. 38. Viewed thus, the appropriate course would be to permit the statutory process to run its route to reach its logical conclusion. Interference at this stage would prejudge issues that are squarely within the domain of the Appellate Tribunal, including whether the attached property represents "proceeds of crime" within the meaning of Section 2(1)(u) PMLA and whether the withdrawals were in violation of law. 39. In light of these fi....
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....e contrary to law. These are matters requiring consideration on the material placed before the statutory forum and cannot appropriately be pronounced upon by pre-empting the adjudicatory process. Therefore, when the attachment is yet provisional and the statute provides a complete avenue for its adjudication, confirmation and appeal, interference at this stage would be both premature and unwarranted. 24.13. What also cannot escape consideration is the nature and magnitude of the allegations obtaining against the petitioner. The offences alleged are not ordinary crimes confined to an individual complainant or an isolated transaction. They bear the unmistakable features of economic offences, with ramifications extending far beyond the immediate parties to the proceedings. The allegations concern financial transactions of considerable magnitude, diversion and siphoning of funds and their alleged deployment for purposes other than those for which they were collected, thereby affecting the interests of several stakeholders, most significantly, scores of home buyers. 24.14. Economic offences stand on a footing distinct from conventional crimes, for their consequences are seldom con....
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....nd adjudication, and this Court, at this stage, cannot embark upon an exercise which would have the effect of prematurely putting the quietus to proceedings that otherwise warrant investigation in accordance with law. The challenge laid by the petitioners, viewed from any angle, does not merit acceptance, except in W.P.No.20063 of 2022. The subject petitions other than W.P.No.20063 of 2022, therefore, deserve to be dismissed and are accordingly dismissed. 25. For the aforesaid reasons, the following: ORDER (i) Writ Petition No.20063 of 2022 is allowed. (ii) All proceedings arising from P.C.R.No.54725 of 2022, pending on the file of the X Additional Chief Metropolitan Magistrate, qua the petitioners, stand quashed. (iii) All other Writ Petitions, stand dismissed. As a consequence, pending applications, if any, also stand disposed. This Court places its appreciation to the able assistance rendered by Miss. Sai Suvedhya R., Law Clerk cum Research Assistants attached to this Court. ============= Document 1 DIRECTORATE OF ENFORCEMENT (Prevention of Money Laundering Act, 2002) ENFORCEMENT CASE INFORMATION REPORT (ECIR) 1 ECIR No. as per assi....
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....Karnataka j) Sh. Baaskaran S. Bengaluru City, Karnataka k) Sh. Gaurav Goel, Bengaluru City, Karnataka 1) Sh. Ganapathi Joshi, Bengaluru City, Karnataka m) Sh. Greta. Bengaluru City, Karnataka n) Car driver of Vasudevan Sathyamoorthy, ) Manager, HDFC Ltd. p) Unknown persons/entities 6 Details of property suspected to be Proceeds of Crime a. Movable Yet to be ascertained b. Immovable 7 to commission of offence: Material relating 021 dated 21.12.2021 registered at Kodigehalli PS, Bengaluru City. ) FIR no. 0019/2024 dated 31.01.2024 registered at Devanahalli PS, Bengaluru City. 3) FIR No. 0077/2024 dated 09.12.2024 registered at CCB Bengaluru City Police. Bengaluru City 4) FIR no. 0161/2024 dated 28.09.2024 registered at Devamahalli PS, Bengaluru City. 5) FIR no. 0271/2024 dated 23.09.2024 registered at Halasur PS, Bengaluru City. E Assessment of proceeds of crime: As per the FIR no. 0183/2021 dated 21.12.2021 registered at Kodigchalli PS, Bengaluru City, the complainant and his wife booked a project by paying Rs. 8,58,855/- on 14/08/2015. Later ª flat in Ozone Urbana a loan amount of Rs.68,20,000/- from HDFC bank as suggested by....
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.... was sold by the company to ar 23.09.2024 registered at Halasur PS, As per the FIR no. 0271/2024 dated Bengaluru City, the complainantony in Devanahalli for Rs.5.38 crores and person for the construction of a colony m completed the construction. However, the payment wasn't received accordingly person. On 12-10-2023, they entered into another agreement where the accused person agreed the complainant tried to encash the said the remaining amount. When cheques, te ..... doing so, threatened him and also the driver of the accused person attempted to run over the complainant with a Range Rover car, trying to kill him. The offences under Sections 420 and 120B of IPC, 1860, in the FIR no. 0183/2021-dated 21.12.2021 registo. Section 420 of IPC, 1860, in the FIR no. 0019/2024 dated 31.01.2024 registered cheS. Bengaluru City, Sections 420 and 120B of IPC, 1860, in the City Section 420 of IPC, 1860, in the FIR no. 0161/2024 dated Bengaluru City, SerDevanahalli PS. Bengaluru City and Sections 307, 419, www . registered at Halasur PS, Bengaluru City and are scheduled offences under On the basis of the aforesald iuforevention of Money Laundering Act, 2002 & offence of money l....
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....scheme and parted with their own fund to book the flats. · M/s Ozone Urbana Infra Developers Pvt. Ltd. entered into a Builder Buyer Agreement mentioning therein that the possession of the allotted unit shall be given to the allottee/s by the Company within a fixed period. · M/s Ozone Urbana Infra Developers Pvt. Ltd. prima facie entered into criminal conspiracy with unknown officials of Indiabulls Housing Finance Limited (Now Sammaan Capital) from whom home loans were availed by the homebuyers. Officials of these financial institutions approved the subvention plan of the builder and financed home loans accordingly. . Indiabulls Housing Finance Limited (Now Sammaan Capital) in pursuance thereof sanctioned and disbursed home loan to the account of M/s Ozone Urbana Infra Developers Pvt. Ltd. without exercising any due diligence and caused undue pecuniary advantage to the Builder and ignored the directives of RBI/NHB. · Enquiry revealed that M/s Ozone Urbana Infra Developers Pvt. Ltd. defaulted in payment of pre-EMIs as promised till handing over the possession of the flat to homebuyers and did not complete the project/flats. Builder neither delivered possession of....