THE HON'BLE THE CHIEF JUSTICE SHRI NISAR AHMAD KAKRU and THE HON'BLE SHRI JUSTICE VILAS V. AFZULPURKAR Dated: 10-08-2011 WRIT PETITION No. 29358 OF 2010 Between: P. Shankar Rao ... PETITIONER AND The Government of Andhra Pradesh, rep., by its Principal Secretary, Industries Department, Secretariat, Hyderabad and others …RESPONDENTS HON’BLE THE CHIEF JUSTICE SHRI NISAR AHMAD KAKRU AND THE HON’BLE SHRI JUSTICE VILAS V. AFZULPURKAR WRIT PETITION No.29358 of 2010 ORDER: (Per the Hon’ble the Chief Justice, Shri Nisar Ahmad Kakru) 1. This Public Interest Litigation Petition owes its origin to a letter dated 22-11-2010 of one Shri P. Shankar Rao, a Member of the Legislative Assembly (MLA), Secunderabad Cantonment, (SC) Constituency, Andhra Pradesh, seeking a direction for enquiry by the Central Bureau of Investigation (“CBI” for short), inter alia, into the alleged misappropriation of public property and criminal conspiracy, consideration whereof resulted in a direction dated 23-11-2010 in the following words of the then Acting Chief Justice, “Registrar Judicial. Check & put up as Taken-up case before DB IV”. In compliance with the said direction of the Acting Chief Justice, the letter of the MLA came to be registered as a “Taken-up Writ Petition”, maintainability whereof was questioned by the respondents mainly on the ground that it is politically motivated and is filed to settle the political scores. The objection was turned down by a detailed reasoned order by one of the co-ordinate Benches of this Court which was questioned by medium of a Special Leave Petition before the Hon’ble Supreme Court but of no avail to the respondents. A Review Petition was also filed in this Court which too was dismissed. Adjudication upon maintainability having attained finality, the PIL came up for final hearing with other Writ Petitions, three in number. We have had the privilege of hearing a galaxy of Advocates, including a few renowned Senior Advocates for four consecutive days at length. A glance at the material and record, particularly, counter affidavits of the State of Andhra Pradesh, Andhra Pradesh Industrial Infrastructure Corporation (APIIC), interim report of the Director of Vigilance and his counter would show that the Government of Andhra Pradesh aimed at establishment of an international integrated project comprising of convention centre, a star hotel with 300 rooms, multi use zone comprising of villas and commercial space and 18- hole golf course. APIIC was designated as a nodal agency, which selected M/s. EMAAR Properties, PJSC, Dubai as a developer and the same was approved by the Government of Andhra Pradesh by issuance of G.O.Ms.No.359, Industries and Commerce Department, dated 04.09.2002, envisaging creation of Special Purpose Vehicles (SPVs) to develop golf course and multi use zone on an extent of 535 acres. The aforesaid development through SPVs was to have equity of developer at 74% and APIIC at 26%. A memorandum of understanding to that effect was executed on 06.11.2002 between the developer and APIIC. A collaboration agreement dated 19.08.2003 was also executed by and between the APIIC and Emaar Properties, PJSC, Dubai. 2. The Government of Andhra Pradesh revised the aforesaid structure under G.O.Ms.No.14, dated 14.01.2005 and G.O.Ms.No.22, dated 27.01.2005 whereunder it was envisaged that three SPVs will be incorporated as under: SPV (I) – In the name of EMAAR Hills – EHTPL – which is a township project envisaged on an extent of 258.36 acres. APIIC contributed its equity in the share of land by transferring the said extent to EHTPL at the negotiated rate of Rs.29 lakhs per acre. SPV (II) – BHLPL, wherein golf course and resort hotel was envisaged to be developed, and for that purpose APIIC transferred 235 acres to BHLPL on lease basis for golf course and 17 acres were transferred by sale for the resort hotel. SPV (III) – In the name of M/s. Cyberabad Convention Centre, for development of business hotel and convention centre, 15.39 acres were contributed by APIIC on lease basis. 3. A supplementary agreement dated 19.04.2005 was executed by and between APIIC and EMAAR Properties, PJSC, Dubai, with equity sharing of 26% and 74% respectively. Vide clause 3.1 (III) of collaboration agreement and clause 9.1 of shareholders’ agreements, restrictions were placed on the parties from bringing in any third party or from altering the share capital without consent of the other. 4 . EMAAR Properties, however, transferred all their rights under the development agreement to EMAAR MGF under a development agreement–cum–GPA dated 25.07.2007 without consent of APIIC. In terms of the said development agreement-cum-GPA, the entire land stood transferred to EMAAR MGF and revenue sharing for villas and commercial space was fixed at 75% to EMAAR MGF and 25% to EHTPL. Similarly, for plots and villas, EHTPL was to share 5% revenue and EMAAR MGF the balance 95%, and in common areas also, EHTPL was to share 25% and EMAAR MGF to share 75%. 5. By introduction of EMAAR MGF and transfer of all rights to it, the equity share holding was altered to bring down APIIC’s share to 5% - 6.5%. EMAAR MGF again transferred its rights under an agency agreement to M/s. Stylish Homes Private Limited authorizing it to sell the land / plots. However, being faced with public uproar, APIIC issued notice to EMAAR Properties because of violation of development agreement, collaboration agreement, supplementary agreement, revenue sharing etc. APIIC also filed a suit being O.S.No.655 of 2010 in the City Civil Court, Hyderabad for permanent injunction and rendition of accounts against EMAAR Properties. APIIC also filed a company petition before the Company Law Board and meanwhile the Vigilance Department of Government of Andhra Pradesh initiated enquiries into the allegations, appearing on record, which are as under: i. The sale of 535 acres by APIIC to EMAAR Properties at Rs.29 lakhs per acre was grossly undervalued as against the basic market value at Rs.10,300/- per sq. yard. [which works out to Rs.4,98,52,000/- per acre.] ii. The transfer of entire project by developer – EMAAR Properties to EMAAR MGF with all rights and further agency agreement from EMAAR MGF to M/s. Stylish Homes Private Limited was never brought to the notice of APIIC and transfer thereby, was without consent of APIIC. iii. The equity shareholding of APIIC in all the projects, which was fixed at 26% was reduced to 5% - 6.5%. iv. In SPV-II, BHLPL was given 531.36 acres, for which it enjoyed exemption from payment of conversion charges to partly residential, partly commercial and partly recreational on the APIIC’s account, and under G.O.Ms.No.894 MA, dated 02.11.2005, it got benefit of Rs.2,65,43,707/-. Similarly, under G.O.Ms.No.879 MA, dated 05.12.2007, BHLPL got exemption from payment of development fee of Rs.24,73,28,163/-. v. The interim report of the Director of Vigilance, Government of Andhra Pradesh and their counter affidavit show that 18 plots were allotted to various beneficiary companies and individuals by EMAAR MGF on 16.06.2006, but those companies were not in existence. The allotment to companies was made on a single day i.e. on 23.02.2010, whereas, even for allotment made on 16.06.2006 payments were shown to have been received on 23.02.2010 without any explanation. The allottee companies appeared to have come into existence only in February, 2010 and the individuals to whom plots were allotted were all employees of EMAAR MGF, even before EMAAR MGF was inducted in the project. The companies to whom the plots were sold have neither done any business nor have financial capacity and no records of the transactions are available either with EHTPL or with M/s. Stylish Homes Private Limited. vi. Out of the sales, aforesaid, huge revenue was earned by EMAAR MGF by showing the sales at Rs.5,000/- per sq. yard as against prevailing market value of Rs.14,000/- per sq. yard and major part of the cash transaction was taken away by EMAAR MGF possibly to Dubai but no single paisa was credited to APIIC. vii. EMAAR MGF obtained a loan of Rs.150 Crores from Axis Bank Limited to which EHTPL stood as guarantor and in view of transfer of all rights of EHTPL to EMAAR MGF, EHTPL has remained only a shell company without any assets. viii. The top management of EHTPL and EMAAR MGF is the same person, who is the Chief Executive Officer of both companies, and Finance Head (South) in both companies is common. 6. Learned Amicus Curiae explained sequence of events leading to the present proceedings, set out as annexure to his written note, particularly, stressing on M/s. Emaar Properties’ agreement with M/s. Stylish Homes dated 20.01.2005 on behalf of SPV-I selling 100 villa plots at an aggregate price of Rs.5,000/- per sq. yard for a period of five years prior to formation of SPV-I as per the revised structure under the State policy and even before EHTPL was brought into picture. He submitted that the conveyance deed under which APIIC transferred 258.36 acres of land to EHTPL was itself dated 28.12.2005 and was registered on 12.10.2006 for an aggregate value of Rs.74,92,44,000/-, and as per the sale consideration, 26% equity of Rs.1,70,03,070/- in SPV-I was allotted to APIIC and out of the balance consideration, similar 26% equity was credited in SPVs – II & III. He pointed out that EHTPL executed development agreement-cum-GPA in favour of EMAAR MGF contrary to the terms of agreement between Emaar Properties and APIIC and thereby the equity of APIIC was reduced to 6% and EHTPL became only a shell company. 7. He contended further that as per the Vigilance report of the State, 100 villa plots are shown to have been sold by EMAAR MGF at Rs.5,000/- per sq. yard, but in reality, the seized laptops of officials of EMAAR and EHTPL show that 7 villa plots and 3 villas were sold for Rs.47.43 Crores in cash in addition to Rs.30.33 Crores through cheques. Similarly, in the SPV relating to golf course, 627 members are shown to have been admitted and Rs.13.20 Crores were collected by the developer but APIIC was credited with only Rs.15 lakhs and no membership fee appears to have been collected from 39 members describing them as honorary. Similarly, SPV-III relating to development of convention centre generated revenue of Rs.365.94 Crores, whereas, only lease rentals of Rs.7.75 Crores were paid to APIIC. Thus, the total income from the project earned by Emaar group is quantified at Rs.422 Crores. It is also pointed out that out of the flats constructed in 4 blocks in 258 acres allotted to EHTPL, 205 flats are shown to have been sold and majority of the sales is in the name of benami or fictitious persons, resultantly, a loss to APIIC estimated as follows: (i) Sale of villa plots - Rs.1347 Crores (ii) Sale of villas - Rs.1256.50 Crores (iii) Sale of apartments - Rs.1706.50 Crores Learned Amicus Curiae, therefore, submitted that in view of the report of the Vigilance Department, which is on record and copies of which are served to all the parties, wherein prima facie conclusion was recorded by the Director of Vigilance that serious offences have been committed, it is just and appropriate, in public interest, to entrust the investigation to the Central Bureau of Investigation. Learned Standing Counsel for APIIC also made submissions on the lines of learned Amicus Curiae and has categorically stated before us that so far as APIIC is concerned they are ready for any probe so as to safeguard the property. 8. Mr. L. Nageswara Rao, learned Senior Counsel appearing for respondents 4, 11 and 12 – representing the Emaar group of companies, submitted that the nature of dispute as seen from the pleadings of the parties seems to be a monetary dispute of a civil and commercial nature and does not lead to an inference of any offence. He submits that in view of pendency of a civil suit for injunction and rendition of accounts filed by APIIC, proceedings before the Company Law Board and Writ Petition No.32285 of 2010 against the terminated collaboration agreement, the investigation by CBI is unwarranted. He relied upon ALL INDIA INSTITUTE OF MEDICAL SCIENCES EMPLOYEES' UNION (REGD.) THROUGH ITS PRESIDENT v. UNION OF INDIA AND ORS.[1] to contend that in the absence of any complaint being filed under the Code of Criminal Procedure, 1973 wherein Chapter XII provides an elaborate mechanism, straightaway investigation by CBI cannot be prayed for. We are, however, of the view that this decision does not assist the learned Senior Counsel as noticed from penultimate paragraph of the judgment which depicts that the alleged cognizable offence was only under Section 409 IPC, therefore, the Supreme Court felt that seeking direction to conduct an investigation by CBI into all and every offence, was not tenable. 14. Learned Senior Counsel also relied upon FARHD K. WADIA v. UNION OF INDIA[2]. In our view, this decision does not throw any light on the controversy in question. Learned Senior Counsel also relied upon STATE OF KARNATAKA v. ARUN KUMAR AGARWAL[3] wherein the Supreme Court found that the High Court had ordered investigation by CBI without recording even prima facie satisfaction on commission of crime and investigation was entrusted to CBI merely on the basis of conjectures and surmises. The proposition therein is, therefore, unexceptionable. Another judgment of the Supreme Court in SAKIRI VASU v. STATE OF U.P[4] is relied upon to contend that no person can claim a right to have an investigation conducted by a particular agency of his choice. However, on the facts of that case, the Supreme Court found that the primary grievance was that FIR was not being registered at police station and proper investigation was not being done, and in that context, the Supreme Court pointed out that the power of Magistrate under Section 156(3) Cr.P.C. would be sufficient to take care of such a situation. Para 34 of the judgment points out that mere allegation of the appellant that his son was murdered because he has discovered some corruption, cannot justify a CBI enquiry when enquiries were already held by Army authorities as well as by JRP at Mathura, which reveal that it was a case of suicide. 15. Learned Senior Counsel also placed reliance upon COMMON CAUSE, A REGISTERED SOCIETY v. UNION O F INDIA[5], wherein the Supreme Court had reviewed directions given by it earlier ordering enquiry with regard to criminal breach of trust against a Minister. In that case also, the Supreme Court observed that the direction to the CBI to investigate any other offence was not sustainable as direction for investigation can be given only if the offence is prima facie found to have been committed or the person’s involvement is prima facie established but a direction to CBI to investigate whether a person has committed offence or not cannot be legally given, as, such a direction would be contrary to the concept and philosophy of ‘life’ and ‘liberty’ guaranteed to a person under Article 21 of the Constitution of India. The next case relied upon by the learned counsel is SECRETARY, MINOR IRRIGATION AND RURAL ENGINEERING v. SAHNGOO RAM ARYA[6] wherein it was held “decision to direct an enquiry by the CBI against a person can only be done if the High Court after considering the material on record comes to a conclusion that such material does disclose a prima facie case calling for an investigation by the CBI or any other similar agency and the same cannot be done as a matter of routine or merely because a party makes some such allegations”. In the aforesaid decision, the Supreme Court found that the High Court had directed enquiry without recording any prima facie finding but on the basis of ifs and buts and the said decision was interfered with and set aside by the Supreme Court. 16. Learned counsel also placed reliance upon DIVINE RETREAT CENTRE v. STATE OF KERALA[7], particularly paras 33 and 34. That was a case referable to the content and ambit of inherent powers of the High Court under Section 482 of Code of Criminal Procedure, 1973, where, on an anonymous complaint, which was the subject matter of Cr.No.381 of 2005, investigation was alleged to be put to cold storage due to influence exerted at high places. Although there were no allegations against the investigating officer, the High Court had changed him and ordered investigation by a Special Investigation Team. The Supreme Court, therefore, held that in exercise of inherent jurisdiction, change of the investigating officer in the midstream was not desirable. In para 34, the Supreme Court also observed that it is altogether a different matter if High Court had exercised power under Article 226 of the Constitution of India wherein High Court can always issue appropriate directions even with respect to investigation if it is satisfied that such directions are necessary in law. We, therefore, feel that the ratio of the said decision is not attracted to the present case. 17. The learned Senior Counsel relied upon a Constitution Bench judgment in STATE OF WEST BENGAL v. COMMITTEE FOR PROTECTION OF DEMOCRATIC RIGHTS[8] and placed reliance upon paras 44 and 46 thereof, wherein conclusions of the Bench are recorded. Lastly, the learned Senior Counsel submitted that the criminal law cannot be set in motion to settle civil disputes and in support of the proposition, he has relied upon decisions of the Supreme Court in SUNEET GUPTA v. ANIL TRILOKNATH[9] and INDER MOHAN GOSWAMY v. STATE OF UTTARANCHAL[10]. I n SUNEET GUPTA’s case (9 supra), as is evident from paras 12 and 13, there was a partnership dispute purely of a civil nature and as such it was held that it does not give rise to criminal liability and does not entitle the complainant to initiate criminal proceedings. In INDER MOHAN GOSWAMY’s case (10 supra), a criminal complaint of alleged breach of contractual obligations was investigated and a charge sheet was filed before the Special Magistrate pointing out that the dispute is purely of civil nature and no cognizable offence was committed. The charge sheet was sought to be quashed on that ground under Section 482 Cr.P.C., but was dismissed by the High Court. The order of the High Court was questioned before the Supreme Court. The Supreme Court found that the dispute was purely of civil nature and a civil suit being already pending, initiation of criminal proceedings was abuse of the process of the Court. 18. On the basis of the aforesaid decisions, learned Senior Counsel contended that the allegations in the complaint relate to contractual rights between Emaar Properties and APIIC and have given rise to monetary claims, which are subject matter of civil proceedings viz., a suit filed by APIIC before the City Civil Court, Hyderabad for injunction and rendition of accounts, and the termination notice had also been challenged by Emaar in Writ Petition No.32285 of 2010 before this Court, wherein an interim order restraining APIIC from taking further proceedings operates, and another litigation initiated by APIIC before Company Law Board is also pending with an interim order dated 21.12.2010, restraining alienation of the properties. Learned counsel also submitted that we should eschew from taking into consideration the report of the Vigilance and Enforcement Department on the ground that EHTPL had already filed Writ Petition No.13601 of 2011, which is pending before this Court questioning the jurisdiction of Vigilance and Enforcement Department to enquire into the affairs of private companies and private individuals. He submitted that under G.O.Ms.No.269, dated 11.06.1985, the Vigilance and Enforcement Department is created only for the purpose of monitoring Government activity, Government Departments and public servants and not for the private companies. 19. Learned Senior Counsel also made an effort to answer the allegations of undervaluation, dilution of APIIC’s equity and execution of development agreement favouring EMAAR MGF as well as sale of villa plots by agent of EMAAR MGF, contending that approval of APIIC is implied as per correspondence relied upon. However, these contentions require adjudication on facts and adjudication on factual disputes is not within the province of this Court in the present proceedings. 20. Mr. S.S. Prasad and Mr. E. Manohar, learned Senior Counsel, appearing for respondents 12 and 13, while adopting the submissions of Mr. L. Nageswara Rao, submitted that the dispute is purely of civil nature and does not call for any investigation as no criminal offence, is prima facie made out. Mr. E. Manohar, learned Senior Counsel, appearing on behalf of respondent No.13, submits that the said respondent was impleaded suo motu by this Court while admitting the writ petition without notice or hearing to him and submits that respondent No.13 ought not to have been impleaded in this writ petition. The contention needs to be appreciated in the light of the relief sought for, which is primarily against Emaar group, therefore, we are of the opinion that presence of the impleaded respondent No.13 is neither necessary nor proper, as, at this stage, it cannot be said as to who others are involved even if there is any commission of offence by Emaar group and if we are satisfied about prima facie commission of offence and direct investigation, it would be open for the investigating agency to look into all aspects including all individuals, who may or may not have played a role in such commission of offence. Thus, we refrain from expression of opinion with respect to respondent No.13 and other beneficiary respondents similarly impleaded. 21. Regarding endeavour of the learned Senior Counsel to prevent us from taking notice of the report of the Director of Vigilance because of the challenge thrown to it in Writ Petition No.13601 of 2011 by the EHTPL on the specific ground that Vigilance and Enforcement Department has no power, authority or jurisdiction to interfere with the business and commercial activities of the petitioner (EHTPL) or its related companies in exercise of its powers under G.O.Ms.No.269, dated 11.06.1985, we have called for the file of the said writ petition and have examined the above said G.O., perusal whereof reveals that its issuance aims at achievement of a clean and efficient administration in the State and in furtherance of that purpose to provide for prevention of leakage of revenue, misuse or wastage of Government funds, resources, materials and properties, loss to State’s wealth and natural funds and to streamline internal vigilance in important departments and to create suitable machinery for prompt action on public complaints and to increase revenue of State and also for constituting State Vigilance Advisory Board. Since one of the objects of creation of Vigilance and Enforcement Department is prevention of leakage of revenue and loss to State’s wealth, we, prima facie, don’t find any legal impediment which would prevent the Vigilance and Enforcement Department from taking up the investigation and file report when the complaint specifically relates to huge loss and leakage of Government revenue, including loss of valuable prime lands of the Government. In any case, the report of the Director of Vigilance is one, which can be taken into consideration by this Court for recording its prima facie satisfaction of commission of criminal offences, therefore, the objection of the learned Senior Counsel is not tenable. 22. Objection to the report of the Director of Vigilance having failed, we find no impediment much less legal to place reliance on it. Record reveals that the Director of Vigilance and Enforcement was impleaded as tenth respondent who has filed a counter affidavit pointing out that the Vigilance Department has conducted enquiries in terms of G.O.Ms.No.269 GA (SCD) Department, dated 11.06.1985 and G.O.Ms.No.504 GA (V&EA) Department, dated 25.11.1997. He has filed a preliminary enquiry report along with the counter affidavit and the copies of the said report dated 10.01.2011 stand served on the parties, conclusions whereof are as follows: “Thus, gross failure to protect public interest, huge loss of revenue to Government, deliberate deception and misleading besides criminal misappropriation, cheating and falsification of records are all evident in this case. Money laundering, flight of capital, tax evasion and internal defrauding the Government are evident. Hence, in- depth probe by an investigating/prosecuting agency, which has the wherewithal to visit foreign countries like Dubai, Mauritius