1 (Crim. Appeal 209 of 2003) IN THE HIGH COURT OF JUDICATURE AT BOMBAY CRIMINAL APPELLATE JURISDICTION CRIMINAL APPEAL NO.209 OF 2003 Vijaya Bank ...Appellant Vs. The State of Maharashtra and Ors. ...Respondents ----- Mr.Dipankar Das i/b. M/s.M.V. Kini & Co. for Appellant Mr.D.R. More -APP for the State. Mr.Prakash Naik for Amicus Curiae Mr.Ravindra Aasure a/w. Mr. Ashwin C. Thod for Respondent Nos.3 to 5 ----- CORAM: V.M. KANADE J. DATED: 23rd June, 2011 P.C. 1. The Appellant Vijaya Bank has filed this appeal, challenging the judgment and order passed by the Designated 16th Sessions Court dated 21.11.2002 in Misc. Application No.514 of 2002 in C.R. No. 66 of 2002 and for a further direction to the Respondents to lift the attachment over the mortgaged properties and also for the cancellation of the notice dated 6.8.2002 issued by the Respondents. 2. Brief facts are that the Appellant-Vijaya Bank had 2 (Crim. Appeal 209 of 2003) sanctioned certain credit facilities to M/s. Noel Pharmaceuticals Ltd. The guarantors deposited their title deeds with the Appellant Bank and the said properties were mortgaged to secure the payment of all liabilities of M/s. Noel Pharmaceuticals Ltd. One M/s. Lancer Laboratories Pvt. Ltd. also deposited their title deeds. Thereafter, M/s. New Oriental Ethicals Labs Ltd. deposited their title deeds in respect of their immovable properties. Thereafter, Vijaya Bank gave credit facility to the tune of Rs.3.00 crores to M/s. Noel Pharmaceuticals Ltd. 3. A complaint was lodged by one Anil B. Gupta on 20th June, 2002, which was registered with the MIDC Police Station, Andheri as C.R. No.198 of 2002 and it was subsequently transferred to Economic Offences Wing for investigation and the C.R. Number was changed to 66 of 2000. In all 22 properties of the accused M/s. Noel Pharmaceuticals Ltd. and other accused were attached and 46 bank accounts were frozen by the EOW and Investigating Officer. 4. On 9.2.2005, EOW filed a chargesheet before MPID Special Court against Suresh Hinduja and John Manmohan Bangera and five others, in which, it was 3 (Crim. Appeal 209 of 2003) alleged that in all about 122 persons invested their money in the said three companies and the total amount recoverable was Rs.2,32,85,500/-. It is alleged that an amount of Rs.1,82,83,500/- was recoverable from M/s. Noel Pharmaceuticals Ltd. and M/s. Sherley Enterprises; and secondly, an amount of Rs.50,02,000/- was recoverable from M/s. Medley Farma. Accordingly, MPID Special Case No. 10 of 2005 was registered. 5. In the meantime, Vijaya Bank, who had given credit facility to M/s. Noel Pharmaceuticals Ltd., filed an application before the Debt Recovery Tribunal being O.A. No.215 of 2005 for recovery of the amount which was due and payable. The DRT issued a recovery certificate in favour of Vijaya Bank on 5.3.2007 for an amount of Rs.2,67,87,566/-. 6. Vijaya Bank gave an offer for 'One Time Settlement' initially on 25.8.2005 for an amount of Rs.1.75 crores. Thereafter, another offer was given on 12.4. 2010 of Rs.2.93 crores. 7. Thereafter, Vijaya Bank filed an application on 21.11.2002 before MPID Special Court vide M.A. No.514 of 2004 for releasing the property attached at Serial No.9. 4 (Crim. Appeal 209 of 2003) The said application was partly allowed and the Special Court permitted the Bank to sell the said property. However, Vijaya Bank was directed not to utilize the sale proceeds. Accordingly, as of today, Vijaya Bank is holding total deposits of Rs.3,36,06,504/- as a result of sale proceedings of properties at Serial Nos.3,4 and 9 along with interest that has accrued on the said amount. 8. Being aggrieved by the order passed by the Special Court, the present appeal has been filed by Vijaya Bank, in which it is prayed that permission may be granted to adjust the said amount against the existing loan facility. 9. The learned counsel appearing on behalf of Vijaya Bank submitted that initially this Court had rejected the said appeal filed by Vijaya Bank since SLP was pending in the Apex Court against the judgment and order passed by the Division Bench of this Court which had held that the MPID Act was ultra-vires the Constitution of India since the State of Maharashtra did not have the legislative competence to enact the said Act and, therefore, this Court declined to interfere in the said order. Against this order, the original accused M/s. Noel Pharmaceuticals Ltd. preferred a criminal application and the criminal application was allowed and the Apex 5 (Crim. Appeal 209 of 2003) Court has directed this Court to consider the application. 10. In view of the direction given by the Apex Court by its judgment and order dated 1st February, 2011, I have heard the learned counsel appearing on behalf of Appellant, Respondents and the Original Complainants. 11. The learned counsel appearing on behalf of Vijaya Bank has given a fresh proposal for 'One Time Settlement' of the overdues accounts of M/s. Noel Pharmaceuticals Ltd. It is stated in the said proposal that M/s. Noel Pharmaceuticals Ltd. is liable to pay Rs.301.00 crores plus expenses incurred to the tune of Rs.12,01,077 plus legal and other expenses incurred. It is also stated that the entire process should be completed within a period of 90 days from 20th June, 2011 and on receiving payment of the said amount, the immovable properties belonging to M/s. Noel Pharmaceuticals Ltd. which are mortgaged with Vijaya Bank shall be released. A copy of the said proposal is tendered to this Court. 12. The learned counsel appearing on behalf of M/s. Noel Pharmaceuticals Ltd. has no objection if the Appellant-Vijaya Bank is permitted to adjust this amount 6 (Crim. Appeal 209 of 2003) towards full and final settlement out of the amount which is lying with them on account of sale of other properties. 13. Shri More, the APP- appearing on behalf of the State submits that so far as the other properties are concerned over which Vijaya Bank has created a mortgage, upon release of the said mortgaged properties, these properties should continue to remain attached until further orders are passed by the Special Court. 14. The learned counsel appearing on behalf of M/s. Noel Pharmaceuticals Ltd. submits that after the said amount which is due and payable to Vijaya Bank is squared off, the amount which is due and payable to the Complainant and Investors can be cleared, after the sale of the other properties which would be due and payable for the purpose of clearing the principal amount. 15. The learned counsel appearing on behalf of the Complainant and the Investors submits that his clients have no objection if the said amount is adjusted by Vijaya Bank. He, however, supports the submissions made by Shri More, the learned APP for the State and submits that all other properties should remain 7 (Crim. Appeal 209 of 2003) attached until the dues of the investors are cleared. It is an admitted position that as on 2001, the amount which is due and payable to the investors was Rs.1,82,83,500/- being principal amount. 16. Mr.Naik appearing on behalf of the Complainants, however, states that initially 122 investors had filed complaints and there are other investors, who have not come forward to raise their claim. However, it is an admitted position that even if all the claims along with interest are taken into consideration, it would not be more than Rs.7 crores plus Rs.3 crores in respect of persons who have not registered their claims. It is also an admitted position that the value of the other properties, which were attached, is at least more than Rs.12 crores. 17. This being the position, no prejudice would be caused to the Complainants if the claim of Vijaya Bank is settled, particularly taking into consideration the fact that the rate of interest which is payable to Vijaya Bank will continue to mount if the amount is not paid. This is evident from the fact that initially Vijaya Bank had given one time settlement offer to the tune of Rs.1.75 crores in 2005. In 2010, this amount was increased to Rs.2.93 8 (Crim. Appeal 209 of 2003) crores and, today, the said amount is increased to Rs.301 crores. If the claim of Vijaya Bank is kept pending, the genuine investors would stand to loose in the long run since Vijaya Bank has a decree in their favour. In the fitness of things and in the interest of all the investors, therefore, it would be appropriate if the appeal filed by Vijaya Bank is allowed. 18. For the aforesaid reasons, therefore, the order passed by the Special Court is modified and Vijaya Bank is permitted to adjust an amount of Rs.301 crores plus expenses and in other words, the entire amount which is lying in their custody to the tune of Rs.3,36,06,502/-. It is submitted that Rs.23 lacs approximately are to be kept for the purpose of contingency claim in respect of two persons in property at Serial No.9, who claimed that their consent was not taken. The appeal is, accordingly, allowed. Vijaya Bank is permitted to adjust the said amount towards their dues by way of full and final settlement and that they shall not make any claim whatsoever out of the other funds which would be made available for distribution to the investors and this amount shall be adjusted by way of full and final settlement of decree which has been passed by the DRT. 9 (Crim. Appeal 209 of 2003) 19. It is clarified that the figures of liabilities which are mentioned by the Complainants / Investors who have registered their complaints and those investors who have not registered their claims are only the approximate figures and the Special Court will have to decide their applications on merits and in accordance with law. The properties which are mortgaged with Vijaya Bank stands released. Consequential steps may be taken by Vijaya Bank for the purpose of releasing the said property and by delivering the title deeds to the Special Court, MPID. 20. I must observe that the officer of the Vijaya Bank though they are entitled to lodge their claim, have acted in a most unfair manner. Though it is true that there is a decree which is passed in their favour by the DRT and the money which is deposited in the bank are public funds, yet, I must observe that Vijaya Bank has increased their offer of one time settlement from time to time and though the initial offer was Rs.1.75 crores, the said offer has been increased to Rs.3.00 crores along with other claims. The said amount equals to the amount which is deposited with their bank pursuant to the orders which are passed by the Special Court. Today, therefore, they have succeeded in retaining the entire amount which was deposited after the sale of the 10 (Crim. Appeal 209 of 2003) properties. It is obvious that every attempt is made to ensure that the amount which has been deposited with them is not returned to the small investors, who had invested their amount with the accused company. This attitude of the officers of the bank is deprecated. This fact should be brought to the notice of the Managing Director of Vijaya Bank. Criminal Appeal is, accordingly, disposed of. (V.M. KANADE J.)