IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT : THE HONOURABLE MR. JUSTICE K.T.SANKARAN WEDNESDAY, THE 7TH SEPTEMBER 2011 / 16TH BHADRA 1933 Bail Appl..No. 6339 of 2011() --------------------------- CRIME NO. 753/2011 OF PALARIVATTOM POLICE STATION, ERNAKULAM .............................. PETITIONERS/ACCUSED NOS.1 & 2 : ---------------------------------------------------- 1. K.A.SAJU, S/O. ABDUL KADER, POOVATTUMMOOTTIL KADAVIL, PUTUPALLIPRAM KARA, THRIKKAKARA NORTH VILLAGE, ERNAKULAM DISTRICT. (MANAGING DIRECTOR, APPLE A DAY PROPERTIES PVT. LTD., APPLE TOWER, PALARIVATTOM, EDAPPALLY). 2. RAJEEV KUMAR CHERUVARA, S/O. GOVINDAN NAIR, D.NO.1/77, CHANDRA NIVAS, KUDIYIRICKKAQPALLIL HOUSE, EDAPPALLY, ERNAKULAM DISTRICT. (DIRECTOR, APPLE A DAY PROPERTIES PVT. LTD.). BY ADV. SRI.K.GOPALAKRISHNA KURUP, SENIOR ADVOCATE SMT.K.DEEPA (PAYYANUR) SRI.K.SURESH RESPONDENT : ---------------------- STATE OF KERALA, REP. BY THE PUBLIC PROSECUTOR, HIGH COURT OF KERALA, ERNAKULAM. BY PUBLIC PROSECUTOR SRI. V. TEKCHAND THIS BAIL APPLICATION HAVING COME UP FOR ADMISSION ON 01/09/2011, ALONG WITH BA NO. 6844 OF 2011 & CONNECTED CASES, THE COURT ON 07/09/2011 PASSED THE FOLLOWING: Mn K.T.SANKARAN, J. ------------------------------------------------------ Bail Appl. NOS. 6339, 6398, 6833, 6844, 6848, 6851, 6853, 6857, 6861, 6870, 6871, 6873, 6909, 6917, 6938, 6940, 6949, 6953, 6984, 7004, 7006, 7019, 7050, 7052, 7054, 7055, 7069, 7070 and 7226 OF 2011 ------------------------------------------------------ Dated this the 7th day of September, 2011 O R D E R These Bail Applications are filed by the Managing Director (K.A. Saju) and the Director (Rajeev Kumar Cheruvara) of Apple A Day Properties Private Limited under Section 439 of the Code of Criminal Procedure. 2. More than 100 Crimes were registered against the Petitioners alleging offence under Section 406 and 420 read with Section 34 of the Indian Penal Code. The petitioners are accused Nos.1 and 2 in the Crimes. The petitioners were not available for arrest for about two months. They surrendered before the Judicial Magistrate of the First Class, Kanjirappally, which is not the jurisdictional court. They were produced before the jurisdictional courts on production warrants and their arrest was recorded on different dates. In a large number of cases, the period of sixty days B.A.NO.6339 OF 2011 AND CONNECTED CASES :: 2 :: are over from the date of the arrest of the petitioners. In those cases, default bail is being granted to them under the proviso to Section 167 (2) of the Code of Criminal Procedure as per a separate common Order. The Bail Applications in respect of the Crimes in which the period for filing the charge sheet has not expired, are dealt with under this common Order. 3. The State Prosecutor submitted that more than one thousand persons approached the police complaining that they were cheated by the accused by collecting huge amounts promising to deliver flats, villas and plots in the various projects of Apple A Day Properties Private Limited (hereinafter referred to as the ‘Company’) and by not fulfilling the promises. The State Prosecutor submitted that from the persons who approached the police, the accused collected more than Rupees 124 Crores. It is submitted that there are hundreds of persons who have not approached the police. 4. Sri.K.Gopalakrishna Kurup, Senior Advocate, appearing for the Petitioners submitted the following: The Company was registered under the Companies Act 1956. The Company was incorporated on 27-1-2004. They successfully completed nine projects consisting of B.A.NO.6339 OF 2011 AND CONNECTED CASES :: 3 :: about 500 apartments and villas and delivered the same to the customers. At present, there are 15 projects under construction. They are Apple Ice, New Cochin, Apple Guest House, Apple Tower, Apple Hill Palace Phase I, Apple.com., Apple Town, Big Apple, Apple Cool Home, Golden Apple, Apple Heights, Apple Hill Palace Phase II, Apple Limited Edition, Apple My Home, Apple Neighborhood, Apple One BHK, Apple Studio and Apple Suite. Except Apple Ice and New Cochin Projects, the work of the other projects is almost (about 80% ) completed. The delay was caused because of the economic recession which affected all commercial ventures and also because of the obstruction caused by the local people during the development of land, and other reasons such as short supply of labour and materials. There was no attempt to defraud or cheat any one. After registration of the Crime, the police conducted a raid at the office of the Company on 18-5-2011. All original documents in the office were seized on 23-5-2011. The police issued look out notice against the Petitioners. Freezing of the bank accounts of the Company made it impossible for the Petitioners to function their office or to undertake works at the project sites. Wide spread reports appeared in the print and electronic media giving an impression that the petitioners committed fraudulent B.A.NO.6339 OF 2011 AND CONNECTED CASES :: 4 :: transaction involving crores of rupees. “Repeated postings” were seen in the “face book” under the caption “Apple A Day Property Fraud”. News in the print and electronic media caused panic among the allottees of the different projects which led to the filing of petitions before the police. The petitioners could not even move about freely. They apprehended danger to their lives. Employees of the Company did not attend the office. These events led to the surrender by the petitioners before the Court of the Judicial Magistrate of the First Class, Kanjirappally. The Bail Applications filed by the Petitioners were dismissed by the Judicial Magistrate of the First Class I, Ernakulam. 5. Sri.Gopalakrishna Kurup submitted that even if all the allegations levelled against the petitioners are taken as true, no offence under Sections 406 and 420 would be made out. Several allottees have not paid the amounts payable by them. Mere delay in completion of the projects would not amount to criminal breach of trust or cheating. If the petitioners are released on bail, they will be able to complete the projects to the satisfaction of the allottees. They can arrange finance and complete the projects. In the New Cochin Project at Thaikkattusseri, the total area of land is 66 acres. B.A.NO.6339 OF 2011 AND CONNECTED CASES :: 5 :: There are 2123 units in the project. The New Cochin Project consists of (1) 78 Nos. Nano villas out of which 57 were sold; (2) 219 luxury villas (25 Nos. sold); (3) 720 Nos. Nano Homes Flats (268 Nos. sold); (4) 59 Nos. My Own Huts (17 Nos. sold); (5) 190 Nos. Cottage Apartments (26 Nos. sold); (6) 522 Nos. I BHK (48 Nos. sold) and (7) 335 Nos. Nano Plots (254 sold). In the New Cochin Project, the amount received from 695 allottees was only Rupees 38.34 crores. An amount of Rupees 52.96 crores remain to be paid by those allottees as per the terms of the agreement. A total cost of Rupees 240 crores is estimated for the competition of the project. A chart showing the details of the projects under the caption “Apple A Day Overview” is produced alongwith the Bail Application which shows that in respect of the rest of the projects, the total estimated cost for completion would be Rupees 101. 37 Crores. 6. Sri.Gopalakrishna Kurup, Senior Advocate, submitted that if the Court is not inclined to grant regular bail to the petitioners, at least interim bail for a period of 90 days may be granted to the petitioners. During this period of 90 days, the petitioners would be able to arrange finance and complete the New Cochin Project. As regards plots, the same can be registered in favour of the allottees. B.A.NO.6339 OF 2011 AND CONNECTED CASES :: 6 :: The Senior counsel also submitted that in respect of the other projects which are only partly constructed, the allottees can be paid the principal amount paid by them. It is submitted that the grievance of the allottees can be to a great extent redressed by adopting such a method. The counsel also submitted that the Court can closely monitor the progress of the work and if it is found that the petitioners do not earnestly do the work, the interim bail can be cancelled. 7. Sri.T.Asaf Ali, the State Prosecutor submitted that the suggestions put forward by Sri.Gopalakrishna Kurup are as attractive as the promises given by the Petitioners to the allottees of different projects. The promises were turned out to be false promises. The petitioners indulged in rank fraud. They spent about Rupees 20 crores for advertisements in India and abroad. Huge amounts were collected as a result of the wide publicity. Attractive brochures were issued. By looking at the multi coloured brochures printed in superfine paper, anybody would get attracted. The New Cochin Project is nowhere near Cochin. The pictures are fake and imaginary. They do not constitute realistic depiction of a project which could be completed as promised. The Company has only a sum of Rupees 2.5 lakhs in their bank accounts. The huge amounts B.A.NO.6339 OF 2011 AND CONNECTED CASES :: 7 :: collected from the allottees were diverted for purchase of properties not in the name of the Company but in individual names of the petitioners and their relatives. In respect of the project, “Apple Ice” at Manjummal, only 15 floors could be constructed as per the permit. But even in the 16th and 17th floors of the building, allotments have been made to the allottees by the Company. 8. The State Prosecutor submitted that the offer made by the petitioners is not realistic. There is no material to arrive at the conclusion that the petitioners have enough finances for completing the projects. In Annexure VI “Apple a Day Overview”, there is no indication as to how much money the Company invested. For the purposes of the projects, a total extent of 77 acres of land is required. But the Company has title to only 5.37 acres of land. Even that extent of land is acquired in the name of Sabu, the brother of the first accused. Sabu is not a Director of the Company. 9. The State Prosecutor submitted that even at the inception, elements of cheating were manifest. The offences alleged are clearly made out. If bail is granted to the petitioners, they would terrorise, intimidate and influence the allottees and witnesses and B.A.NO.6339 OF 2011 AND CONNECTED CASES :: 8 :: put hurdles in the proper investigation of the case. Final reports will be filed in these cases before the expiry of time prescribed. The prayer for interim bail is also not bonafide. The court cannot be expected to monitor the construction of flats, execution of documents etc. and decide disputed questions of fact on a regular basis in a Bail Application. 10. Sri.Gopalakrishna Kurup submitted in reply that only 66 acres of land is required for completion of the project and the Company has acquired 14 acres as of now. He submitted that proceedings for liquidation are pending before the Company Court. It will take several years to settle the claims. The allottees would not be benefited by the winding up of the Company. 11. In the nature of the allegations made and taking note of the admitted facts, I am not inclined, prima facie, to accept the contention of the petitioners that no offence is made out against them. The petitioners were bound to fulfill their promises within the time agreed upon. It is not a question of mere delay. There are grave allegations of diversion of funds and acquisition of properties in the individual names of the petitioners and their relatives. The B.A.NO.6339 OF 2011 AND CONNECTED CASES :: 9 :: petitioners were bound to fulfill the trust reposed in them by the allottees. After receiving crores of rupees from the allottees, the petitioners are not entitled to say that the disputes are of a civil nature or that “it is only a question of delay”. 12. The prayer for interim bail cannot be granted in the facts and circumstances of the case. The court dealing with Bail Applications cannot be expected to monitor the activities in the matter of construction of the different projects. The court also cannot be expected to issue directions in respect of the same, while dealing with the Bail Applications. The court also would not be justified in arriving at conclusions on facts, on the disputes which may emerge in the course of the implementation of the promises made by the petitioners before Court. The allottees are not before Court. No orders could be passed touching upon their rights without affording an opportunity of being heard to them. In the Bail Applications, such a hearing is not contemplated also. 13. There are no bonafides in the suggestions made by the petitioners as a condition for granting interim bail. According to the prosecution, in the bank accounts of the Company, only `2,50,000/- B.A.NO.6339 OF 2011 AND CONNECTED CASES :: 10 :: is available. There is no case for the petitioners that they have kept the money collected from the allottees elsewhere. There is also no case for the petitioners that they have liquid resources to carry out the construction activities. Their hope that they would be able to “arrange finance” is without any basis. There is no material to support such a hope. 14. The petitioners could not deny the submission made by the State Prosecutor that about `20 crores were spent by the Company on advertisements. The various poster like brochures produced by the State Prosecutor for perusal would justify his submission that large sums of money were spent by the Company to attract the investors. 15. The projects were commenced in 2008-2009. What the Company could not do all these years could not be expected to be done by the petitioners within a period of 90 days and that too with a bank deposit of `2.5 lakhs. Even going by the statements made by the petitioners in Annexure VI, a total sum of `341.37 Crores is required for completing the projects. As against this, only a sum of `2.5 lakhs is available with the Company. Even the title of the B.A.NO.6339 OF 2011 AND CONNECTED CASES :: 11 :: property which is required for the projects is not acquired by the Company. 16. The petitioners have not made true disclosure of the real state of affairs. Annexure VI (Apple A Day Overview) is a unilateral and self serving statement. The petitioners have not disclosed in Annexure VI the amounts actually spent by the Company in the projects. 17. Prima facie, it would appear that unrealistic promises were made by the petitioners to the customers. Intention to cheat is a mental state of affairs. It is to be established in evidence at the time of trial. It is too early to say that the petitioners had no intention to cheat the customers. On the other hand, prima facie, it would appear from the materials available now that the petitioners had no reason to believe that they would be able to fulfill the promises made by them to the customers. 18. If the petitioners are released on bail, it would adversely affect the investigation as well as the proper trial of the case. There is every likelihood that the petitioners would terrorise, intimidate or B.A.NO.6339 OF 2011 AND CONNECTED CASES :: 12 :: influence the witnesses and tamper with the evidence. The chances of the petitioners making themselves scarce also cannot be ruled out. The conduct of the petitioners before their surrender in Court would lead to this conclusion. The whereabouts of the petitioners were not known to the investigating agency for about two months after registering the Crimes. In spite of best efforts, the petitioners could not be arrested. 19. For the aforesaid reasons, I am not inclined to grant bail to the petitioners. I am also not persuaded to grant interim bail as prayed for by the petitioners. 20. Private ventures in the construction of residential flats and villas are quite essential and unavoidable. Scarcity of land and density of population in the State of Kerala make it impossible for the people to aspire for individual residential plots and villas. Lack of time, resources, expertise in the field of construction etc. compel the people to rely on the builders for getting flats and villas for them. It is true that most of the builders fulfill their promises and cater to the needs of customers. It is also true that there would have been acute shortage in the housing sector if multi-storied flats were not B.A.NO.6339 OF 2011 AND CONNECTED CASES :: 13 :: constructed by private builders. At the same time, it is quite disappointing that considerable number of customers do not get the required service within the time agreed upon. In some cases, the customers are duped and cheated. Increasing number of cases in courts touching upon these aspects indicate the same. The reasons for not completing the construction projects may be varied. But no explanation would be a solace to the customers who eagerly wait for getting title and possession of completed flats and villas. Many among the customers may be persons who retired from various services. All their earnings might have been invested by them for acquiring a dream home for their retired life. Many persons would have taken loans from various banks and financial institutions for paying amounts to the builders. Sometimes, even before they get possession of the flats, they would be made liable to repay the monthly instalments in respect of the loans. Banks and financial institutions cannot be expected to wait indefinitely; they may even take coercive steps against the borrowers. All these would add to the misery of the customers. 21. In the state of affairs existing in the State of Kerala, any adventurer can turn to be a builder. He can earn much with the B.A.NO.6339 OF 2011 AND CONNECTED CASES :: 14 :: money of others. If the project fails, he may not lose anything. There is no law to regulate the construction of flats, collection of amounts from customers at different stages of the construction, the progress to be achieved by the builder in proportion to the money collected, as well as to ensure successful competition of the construction within the time agreed upon. There is no mechanism to ensure that the builder completes the project and fulfills the promise. There is no guarantee against cheating. Courts only interpret laws, but do not make laws. The law makers would be able to protect the interests of unorganized, uninformed and helpless customers who dream for their dream homes. For the aforesaid reasons, the Bail Applications are dismissed. The Registry will send a copy of the Order to the Chief Secretary to the Government of Kerala for appropriate action. (K.T.SANKARAN) Judge ahz/ B.A.NO.6339 OF 2011 AND CONNECTED CASES :: 15 :: K.T.SANKARAN, J. ----------------------------------------------------- -Bail Appl. NOS. 6339, 6398, 6833, 6844, 6848, 6851, 6853, 6857, 6861, 6870, 6871, 6873, 6909, 6917, 6938, 6940, 6949, 6953, 6984, 7004, 7006, 7019, 7050, 7052, 7054, 7055, 7069, 7070 and 7226 OF 2011 ----------------------------------------------------- - Dated this the 7th day of September, 2011 O R D E R