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TMI Blog2019 (12) TMI 1607X X X X Extracts X X X X X X X X Extracts X X X X ..... the provisions of the Companies Act, 2013 since respondent Nos.1 to 10 have no authority to register the said F.I.R.s in view of the provisions of Section 212 (2) and sub-Sections 6 and 8 of Section 435 and Section 436 of the Companies Act, 2013; the arrest of the 2nd petitioner by the police in respect of the aforesaid crimes amounts to illegal detention and consequently sought for directions to respondents 1 to 10 to release the 2nd petitioner from Women Prisoners Jail, Chenchalguda, Hyderabad, forthwith; not to entertain any further complaint in respect of the alleged offences relating to the petitioners' company which might be lodged by any investor of the 1st petitioner company; to withdraw the above complaints in the aforesaid F.I.Rs.; and to forward the complaints lodged by respondent Nos.12 to 15 to respondent No.11 (Serious Fraud Investigation Office) in terms of the Companies Act, 2013. Writ Petition No.7950 of 2019 is filed seeking a Writ of Certiorari calling for records in respect of F.I.Rs., vide F.I.R.No.33 of 2019 dated 07.02.2019, F.I.R.No.40 of 2019 dated 16.02.2019 and F.I.R.No.53 of 2019 dated 01.03.2019 of Central Crime Station, Hyderabad, and declare that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... accordingly the lock-in period for such investment was one year and also two years and the dividends for the investments to be payable to the investors once in a month. It is also stated that many investors of the 1st petitioner company have earned more dividends than the actual capital amount which they invested with the company. It is stated that few months prior to filing of the complaints by the investors there was a delay for payment of the dividends due to the fact that there is some unexpected down flow in the market, as a result of which, the 1st petitioner company has decided to pay the dividends to its investors once in three months and the said factum has been intimated to the respective investors. In view of the delay in payment of dividends, some hyper-sensitive investors demanded for refund of the investment made by them with the 1st petitioner company. As per the arrangement and contracted terms and conditions, the investment cannot be refunded to its customers after the expiry of the lock-in period and the investors have to make an application as per the terms and conditions of the agreement entered with the 1st petitioner company and then only the investments will ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ency, Vali Colony, Golconda, Hyderabad, and she is a law abiding citizen, social worker and she has been working for the uplift of minority Muslim women and she is also the President of Madarsa-e-NiswanIsha-Atul-Islam-Urdu, an Arabic Development Society. It is also stated that the 2nd petitioner launched a political party by name All India Mahila Empowerment Party in the State of Telangana, by virtue of good reputation in the Muslim Community. The existing Muslim leader, who belongs to political party AIMIM namely Asaduddin Owaisi, lodged a false complaint vide F.I.R.No.154 of 2012 dated 14.08.2012 on the file of the Additional Director General of Police, Law and Order, for the offences punishable under Sections 420 and 406 of I.P.C., and ultimately the police has filed a report stating that it is a false complaint. It is stated that if the party launched by the 2nd petitioner contest in the State General Elections in 2018, it would be an impediment to the AIMIM party and this would divide the votes between both the parties, in which event the said AIMIM party may be defeated. However, as against the said complaint, the 2nd petitioner filed a suit for defamation vide O.S.No.835 of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Limited, (6) Heera Retail (Hyderabad) Pvt. Ltd., (7) Heera Haj Services Pvt. Ltd., (8) Heera Fin. Capital India Limited, (9) Heera News Media Private Limited, (10) Heera Textiles Limited, (11) Heera Developers (Hyd.) Pvt. Ltd., (12) Heera Medical City Private Limited, (13) Heera Foodex Private Limited, (14) Heera Gold Fabrics Private Limited and (15) HG Gold Private Limited, in which some companies are shell companies. There is no business and no returns have been submitted by the petitioners/accused since incorporation of the above said companies. Apart from that during the course of investigation, it is disclosed that the 1st petitioner and others diverted funds from one company to other companies, by violating their M.O.A. of companies for their wrongful gain, for which effect the above criminal cases have been registered, as the profits/dividends are not paid to the complainants. The contention of the 2nd petitioner/A2 that the 1st petitioner is doing business not only from all over India and also in other Countries and paying dividends regularly to the investors is not correct. It is stated that the office of the 1st petitioner company is located at H.No.8-2-609/K, Road No.1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bank accounts were identified across India, pertaining to Nowhera Shaik (2nd petitioner), her companies, its Directors and others. On verification, only Rs.25.00 Crores approximately was found in the said bank accounts and the same were frozen under Section 102 of Cr.P.C. Apart from, several foreign bank accounts pertaining to the said Nowhera Shaik (2nd petitioner) and her companies were also identified. In this regard to ascertain the details of foreign accounts/deposits, letters were addressed to the Enforcement Director, Income Tax Department, Serious Fraud Investigation Office and Reserve Bank of India, for information about foreign accounts and analyse the large data, for taking the investigation further. It is also stated that so far 81 properties have been identified pertaining to Nowhera Shaik (2nd petitioner) and her companies, its Directors and others in the States of Telangana, Delhi, Andhra Pradesh, Maharastra, Kerala and Karnataka. The market value of the said properties is approximately Rs.213.00 Crores. Proposals have been sent to Government of Telangana for attachment of properties under Section 3 of the Telangana Protection of Depositors of Financial Establishmen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... read with Section 34 of the I.P.C., as well as Section 5 of the Telangana Protection of Depositors of Financial Establishments Act, 1999 and sections 3, 4, 5 and 6 of the Prize Chits and Money Circulation Schemes (Banning) Act, 1978. Further, Section 14 of the Telangana Protection of Depositors of Financial Establishments Act, 1999, states that the provisions of the said Act shall have over riding effect in any other laws. Therefore, viewed from any angle, the conduct of investigation by the police authorities is different and distinct with the different object in compliance with the offences, from the investigation conducted by the Serious Fraud Investigation Office under Companies Act. It is also stated that Section 2 (c) of the Andhra Pradesh Protection of Depositors of Financial Establishment Act, 1999, was amended in the year 2003, thereby bringing the companies under the purview of the Depositors Act, 1999. Thus, the investigation being conducted by the police is legally justified. It is also stated that the bail granted to the petitioners in Crime No.223 of 2018 of Nampally Police Station, was cancelled by this Court vide Criminal Petition No.11354 of 2018, dated 13.11.2018 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... onsider necessary, for the purpose of investigation. The Director, Serious Fraud Investigation Office, in exercise of powers conferred under Section 212 (1) of the Companies Act, 2013, designated three officers as Inspectors to carry out the investigation into the affairs of 14 Heera Group Companies. The aforesaid investigation is presently continuing in terms of the provisions of the Companies Act, 2013. However, pending investigation into the affairs of the said companies, the petitioners herein sought, inter alia, calling for the records in respect of the F.I.R.s registered against them and declaring the registration of the said F.I.R.s as illegal, arbitrary, unconstitutional, violative of principles of natural justice and also violative of the fundamental rights of the petitioners and consequently release the 2nd petitioner from Women Prisoners Jail, Chenchalguda. It is also stated that in view of the legal position, the respondents are not in a position to comment on the various averments made in the Writ Petitions except that the investigation process is being carried out by the Inspectors appointed under the Companies Act, 2013. It is also stated that the F.I.R.s registered ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... itment. It is also stated that on 31.08.2019, the petitioners forced her to accept and sign in an undertaking that they would return the money within two months and also not to approach the police regarding this issue and after constant threats and harassment they would not refund the money. As she has no other option, she lodged the complaint. It is also stated that almost all 26 F.I.R.s have been lodged throughout India against the 1st petitioner company represented by the 2nd petitioner. The said F.I.Rs are genuinely lodged by the innocent investors, who have been cheated in broad daylight at behest of getting high interests in the name of profits up to 36% to 40% per annum by luring gullible people of high returns contrary to public policies. The company is not solvent as stated in paragraph No.7 of the writ petition. It is also stated that the police have followed the due procedure while dealing with the cases. It is also stated that the 2nd petitioner has shown a tendency of using arm twisting tactics to foist false cases and she foisted a false F.I.R. against respondent No.14 vide Crime No.191 of 2010 for the offences punishable under Sections 354, 504 and 506 read with 34 o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... issed. Respondent No.14 in W.P.No.5449 of 2019, who is the President of Heera Group Victims Association, also filed counteraffidavit reiterating the contentions made in the counter-affidavit filed by respondent No.12 in W.P.No.5449 of 2019. Apart from that, respondent No.14 also stated that another victim Dr.Aluru Shamsunnisa, working as a Gynaecologist in Riyadh, Saudi Arabia, also invested Rs.50,00,000/- in Heera Textiles on 23.07.2017 and after maturity, the amount was not refunded and she has come over to India and her statement was recorded by the police in Crime No.170 of 2018. Presently, as many as 10,000 applications are pending for withdrawal and more particularly Heera Textiles is not made as party in this writ petition and contrary to that the petitioner is seeking bail against the company. It is also stated that he filed W.P.(PIL) No.33 of 2019 before this Court seeking CBI inquiry into this matter and the same is pending. It is also stated that the Writ Petition itself is infructuous as separate proceedings are already pending before the Serious Fraud Investigation Office at Corporate Bhavan, pertaining to the violations of Company Law. It is also stated that despite ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 0 of I.P.C. the intention should be from the inception till culmination. As there is no breach of trust, Section 406 of I.P.C. is also not applicable. It is further submitted that the 1st petitioner is a Company incorporated under the provisions of the Companies Act and the 2nd petitioner is its Managing Director. The 1st petitioner is doing its business since 1998 and it is confined only to Muslims. Under Muslim Law, the question of 'interest' does not arise. It is also stated that as per clauses 2, 14, 15, 19, 20, 21 and 22 of Heera Group Terms and Conditions, the membership is confined only to Muslims; payments are accepted only through bank, cash payment will not be entertained; members were strictly prohibited to handover cash to any HG Office/Executive/Person; withdrawal request shall be submitted as per the respective TCN's terms and conditions; HG TCN membership is deemed to be continued unless and until withdrawal request is submitted or else if HG terminates the membership; withdrawal amount will be remitted to the bank account of the members on any working day of related month along with the trading declaration as per eligibility. On reading of the aforementioned clauses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed with Section 212 (2) of the Companies Act, it is clear that no other agency, except the Serious Fraud Investigation Office, has to look into the complaints. Therefore, the complaints are already under investigation and the Serious Fraud Investigation Office issued summons to the petitioner on 28.08.2018. Therefore, the State Government ought not to have registered the F.I.R.s basing on the complaints lodged by the Unit Holders, who have complained to the concerned authority under the provisions of the Companies Act, 2013. All the complaints are stereo type and it is nowhere mentioned in the complaints that whether the amount due to them is outside the lock-in period or whether it is within the lock-in period. In view of the provisions of the Companies Act, State of Telangana has no authority or empowerment to register the F.I.R.s and the State is denuding from its powers to entertain the said complaints. It is submitted that the root cause for the episode is that the 2nd petitioner started a political party by name "All India Mahila Empowerment Party" and the same was not to the liking of the existing Muslim Political Party in the State of Telangana i.e., M.I.M. It is also submi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Serious Fraud Investigating Agency. It is also stated that the contention of the unofficial respondents that the other sister concern companies of the petitioners are not before this Court is falls to ground as there is nothing against the sister concern companies and they need not be made as parties in the writ petitions. It is also stated that the contention of the State that a single writ petition is not maintainable to quash more than one F.I.R., is a sheer technical objection, which is not tenable and liable to be rejected. In support of his contentions, learned Senior Counsel relied on the following citations. 1. Neeraj Singal v. Union of India and others (2019) Crl.L.J. 191 2. Rakesh Kumar Paul v. State of Assam (2017) 15 SCC 67 3. Vihaan Direct Selling (I) Pvt. Limited and others v. Union of India and others W.P.(Crl.) No.31 of 2017, Supreme Court 4. Kalyani Mathivanan v. K.V.Jeyaraj and others (2015) 6 SCC 363 5. Serious Fraud Investigation Office v. Rahul Modi and another (2019) 5 SCC 266 6. Binod Kumar and others v. State of Bihar and another (2014) 10 SCC 663 7. Indian Oil Corporation v. NEPC India Limited and others (2006) 6 SCC 736 8. Anil Mahajan v. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sum of Rs.5,600 Crores approximately across India and abroad. In order to protect the interest of the said victims, it is just and necessary to the police authorities to proceed with the investigation otherwise, the petitioners will be left off from the clutches of law. It is also submitted that writ petition is not maintainable as the prayer sought for is to quash more than one F.I.R. It is also submitted that charge sheets have been filed in some cases and as such the prayer has to be amended. He relied on the judgment of the High Court of Delhi in S.P.Gupta v. State (2005) 119 DLT 214. The learned Standing Counsel appearing for the Serious Fraud Investigation Office and the Union of India, would submit that as per the directions of the Central Government, the Director, Serious Fraud Investigation Office, has appointed the Inspectors to carry out the investigation into the affairs of 14 Heera Group Companies and the same is continuing in terms of the provisions of the Companies Act, 2013. It is also submitted that the F.I.R.s registered for commission of offences punishable under Sections 406, 409, 420 and 506 of I.P.C., and Section 5 of the Telangana Protection of Depositors o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... any, several innocent people have invested their hard earned money with Heera Group Companies. In the year 2014, the Marketing Executive of Heera Group of Companies, approached the proposed respondent No.17 stating that Heera Group is owning about 15 companies in India and abroad and running them with all legal permissions and induced him to invest in the said companies as Halal Policy on Islamic Religious Law in Assets Management, Real Estate Securities, stock bonds, shares, mutual funds etc. and assured of very high returns and believing the assurances made by the writ petitioners and the other Directors, he had invested huge amounts totaling to Rs.1,44,00,000/- under various cheques and the writ petitioners issued Unit Purchase Receipts for the amounts invested by him under different schemes and for different durations. Though the proposed respondent No.17 had requested for refund of the amount on 10.10.2018, but the writ petitioners failed to refund any amount till date, instead of paying they started threatening him with dire consequences. It is further submitted that the wife, son and daughter of the proposed respondent No.17 also deposited an amount of Rs.40,00,000/-, Rs.45, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ledge including accounting, compliance with regulatory mechanisms like ROC, SEBI, RBI etc., and for doing such kind of skilful investigation, it is the Serious Fraud Investigator under the Companies Act is the appropriate agency and normal investigation by the police may not be able to do such investigation. The contention of the learned Government Pleader for Home, is that under the pretext of a Corporate Veil, the 2nd petitioner has resorted to cheat the gullible people, collected multiple crores of money, played fraud on them and siphoned off those funds to foreign countries and if the investigation is completed, all these crimes committed by the accused will be unravelled. His further contention is that the Writ Petitions are intended to thwart the investigation by the Police and there is nothing to be investigated by the Serious Fraud Investigation Department under the Companies Act. Having regard to the above, the points that arise for consideration are: 1. Whether the offences alleged against the accused are falling within the purview of Serious Fraud Investigation under the provisions of Companies Act? 2. Whether the offences of similar nature, relating to the affairs ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t (9 supra) the Apex Court observed as under: "The law clearly recognizes a difference between simple payment/investment of money and entrustment of money or property. A mere breach of a promise, agreement or contract does not, ipso facto, constitute the offence of the criminal breach of trust contained in Section 405 of I.P.C., without there being a clear case of entrustment." It is further observed by the Apex Court that inducement and dishonest intention are necessary ingredients to attract the penal provisions of sections 415 and 420 of I.P.C. On the other hand, the Companies Act, which is a special legislation dealing with the affairs of the Company envisaged a special crime and investigation under the caption 'serious frauds'. Section 210 of the Companies Act, provides investigation into affairs of the company that may be initiated by the Central Government, or on the receipt of report of the Registrar or Inspector, or on the special resolution by the Company or in the public interest. It may also be initiated by order of Court or the Tribunal in any proceedings pending before it. To carry on the function of investigation, the Central Government may appoint one or more pe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of a party in getting a fair trial would be violation of Article 14 of the Constitution of India. In Zahira Habibulla H.Sheikh v. State of Gujarath the Apex Court has observed as under: "36. The principles of rule of law and due process are closely linked with human rights protection. Such rights can be protected effectively when a citizen has recourse to the courts of law. It has to be unmistakably understood that a trial which is primarily aimed at ascertaining the truth has to be fair to all concerned. There can be no analytical, all comprehensive or exhaustive definition of the concept of a fair trial, and it may have to be determined in seemingly infinite variety of actual situations with the ultimate object in mind viz. whether something that was done or said either before or at the trial deprived the quality of fairness to a degree where a miscarriage of justice has resulted. It will not be correct to say that it is only the accused who must be fairly dealt with. That would be tuning a Nelson's eye to the needs of the society at large and the victims or their family members and relatives. Each one has an inbuilt right to be dealt with fairly in a criminal trial. Denial ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... m and an integral facet of rule of law. The investigation by the police under the Code has to be fair, impartial and uninfluenced by external influences. The Apex Court in the case of Sidhartha Vashisht @ Manu Sharma v. State (NCT of Delhi) 3 (2010) 6 SCC 1 held as under: "197. In the Indian criminal jurisprudence, the accused is placed in a somewhat advantageous position than under different jurisprudence of some of the Countries in the World. The criminal justice administration system in India places human rights and dignity for human life at a much higher pedestal. In our jurisprudence an accused is presumed to be innocent till proved guilty, the alleged accused is entitled to fairness and true investigation and fair trial and the prosecution is expected to play balanced role in the trial of a crime." The synopsis of the above law is that the investigation should be judicious, fair, transparent and expeditious to ensure compliance with the basic rule of law. These are the fundamental canons of our criminal jurisprudence and they are quite in conformity with the constitutional mandate contained in Articles 20 and 21 of the Constitution of India. In Sunair Hotels Limited v. U ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... th the absolute powers, competence and methodology for investigation into those special matters and not the normal police. If general Police investigates into a special offence, since they lacking expertise, as rightly argued by the learned Counsel for the petitioners that there is likelihood of ensuring prejudice to the accused. If that happens, the rule of law that State is under obligation to ensure unbiased and transparent investigation in furtherance of fair trial principle is abrogated. Inspection of Books of Accounts, taken up in isolation, would not serve much purpose. Indeed, in the present form as provided for under the Companies Act, there is a danger that such inspections may be taken as a part of administrative routine. There would be a considerable expenditure of time and energy both on the part of the inspecting agency as well as the company without accomplishing much. Compliance with law cannot be enabled by a presumption of violation. Nor can it be ensured by physically checking of entities involved. If that were the case it would be practically impossible to enforce any legal system. The benefits of having an elaborate framework of statute and rules would be lost ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... b-section (11) of Section 212 of the Companies Act, 2013, the Serious Fraud Investigation shall submit an interim report, if so directed by the Central Government. As per sub-section (12) of Section 212 of the Companies Act, 2013, on completion of investigation, the SFIO shall submit the Investigation Report to the Central Government. As per sub-section (17) (a) of Section 212 of the Companies Act, in case Serious Fraud Investigation Office has been investigating any offence under this Act, any other investigating agency, State Government police authority, income-tax authorities having any information or documents in respect of such offence shall provide all such information or documents available with it to the Serious Fraud Investigation office. As per sub-section (17) (b) of Section 212 of the Companies Act, the Serious Fraud Investigation Office shall share any information or documents available with it, with any investigating agency, State Government, police authority or income-tax authorities, which may be relevant or useful for such investigating agency, State Government, police authority or income-tax authorities in respect of any offence or matter being investigated or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ilar offences are registered in various police stations and they are falling within the Companies Act (a special legislation) and normal police are investigating into the offences at various police station limits, this will lead to absurdity, confusion, conflict of views and consume long time. On the other hand, it will cause harassment to the accused besides humiliation as she will be forced to run from pillar to post every day during investigation. Therefore, in view of the legal position above, and without expressing any opinion whether all the F.I.Rs., registered by the Police under Indian Penal Code are attracted or not, this Court is of the view that ends of justice would be met if all the crimes are transferred to SFIO for investigation with the following directions:- 1. Respondent Nos.6 to 10 in W.P.No.5449 of 2019 and respondent No.5 in W.P.No.7950 of 2019, are directed to assign the investigation in the aforesaid crimes to SFIO, Hyderabad, by obtaining necessary orders from the State Government, if necessary; 2. The 2nd petitioner shall be released on her furnishing a personal bond for Rs.50,00,000/- (Rupees Fifty Lakhs) with two sureties to the like amount to the sat ..... X X X X Extracts X X X X X X X X Extracts X X X X
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