Case: Indiabulls Housing Finance and ors Vs. State of Maharashtra and ors

7. A ground was also raised before this Court that the complaint filed by Respondent No. 2 before the Judicial Magistrate was not supported by an affidavit which is a pre-requiste not only as per the provisions of law but as per the judgments of the Apex Court as well as this Court. The Division bench was pleased to make following observations on that point:15. Apart from this, by referring to copy of the complaint filed by respondent no. 2 on record, it has been strenuously argued on behalf of the petitioner that complaint is not supported by an affidavit. We have perused copy of complaint on record and prima facie find that the statement appears to be correct.16. In the case of Priyanka Shrivastava [cited supra] followed by judgments of this Court in the case of Sayed Anwar Ahmed V. State of Maharashtra [2017 SCC OnLine Bom 3972] and Devidas V. State of Maharashtra [2017 SCC OnLine Bom 8416] it has been laid down that complaints filed before the Magistrates need to be supported by affidavit so that the complainant can be held responsible for allegations and statements made in the complaint. It has been laid down that such requirement has to be satisfied so as to ensure that citizens are protected from pervert litigations and complaints filed before the Magistrates for initiating criminal proceedings only with a view to harass fellow citizens. Therefore, prima facie, we find some substance in the contentions raised in this context on behalf of the petitioners.8. The Division bench in clear words observed that it was the prima facie opinion of this Court that the complaint filed by Respondent No. 2 appears to be malafide and deficient as such, this Court was inclined to grant ad-interim stay. This observations find place in paragraph 17 of the order and the same reads thus:17. As regards the contentions raised on behalf of respondent no. 2 that since FIR is already registered, investigation ought to continue, we are of the opinion that in view of above, since we prima facie are of the opinion that the complaint filed by respondent no. 2 appears to be malafide and deficient, insofar as the complaint is not supported by a proper affidavit, ad-interim stay of the investigation deserves to be granted.9. The Division bench then granted ad-interim relief in terms of prayer clause b and further observed that since the Division bench had stayed the investigation the question of taking any further action on the basis of said FIR would not arise.10. It was brought to the notice of this Court during the pendency of the Petition and post order of this Court, the investigation was transferred to the State- CID. As such, this Court made it clear that the orders granting stay to the investigation applies to the agency to whom the investigation was subsequently entrusted i.e., the State CID – Pune.11. Similarly, in Writ Petition No. 6812 OF 2021 following order was passed by the Division bench on 27th April, 2021:2. This petition arises out of the same order of the Magistrate and F.I.R., which are subject matter of Criminal Writ Petition No. 1805 of 2021.3. Insofar as contentions pertaining to malafide complaint and it being deficient as it is not supported by affidavit of Respondent No. 2 (original complainant) are concerned, Dr. Chandrachud, learned counsel appearing for the Petitioner has adopted the submissions made on behalf of the Petitioners in the said connected writ petition by Mr. Amit Desai, learned Senior Counsel. Additionally, it is submitted by Dr. Chandrachud appearing for the Petitioner herein that insofar as the said Petitioner is concerned, there is only one statement made against him in the entire complaint filed by the Respondent No. 2, which is at paragraph 84 of the complaint.4. By inviting our attention to the said paragraph, the learned counsel submitted that even if the statement made therein is accepted as it is, only a non-cognizable offence under Section 86 read with 439 of the Companies Act, 2013, can be alleged pertaining to no charge being filed with the Ministry of Corporate Affairs regarding loan advances. On this basis, it is submitted that the order passed by the Magistrate dated 7 th April, 2021 under Section 156(3) of Cr.P.C. shows total non application of mind, insofar as it directs registration of F.I.R. against the Petitioner.5. In the order passed today in Writ Petition No. 1805 of 2021, we have already stated detailed reasons as to why we have prima facie found that the complaint filed by Respondent No. 2 appears to be malafide and deficient. The same reasons apply in the present case also. Additionally, insofar as the present Petitioner is concerned, the said contention raised specifically in the context of the provisions of Companies Act, 2013, also makes out a prima facie case for stay of further investigation, against the Petitioner herein.6. Issue notice returnable on 28 th June, 2021.7. Dr. F.R. Shaikh, learned APP waives service of notice on behalf of Respondent No.1- State and Mr. Dubey, learned counsel waives service of notice on behalf of Respondent No. 2.8. In the meanwhile, there shall be ad-interim relief in terms of prayer clause (b), which reads as follows :(b) That this Honble Court be pleased to issue a Writ of Mandamus or any other Writ, order or direction, directing the Respondent No.1 not to initiate any action against the Petitioner in furtherance of FIR bearing No.129 of 2021 dated 13.04.2021 (Exhibit A hereto).9. The Respondents may file their affidavits-in-reply before the returnable date.10. Tag with Writ Petition No. 1805 of 2021.

Reasoning: 6. While considering the prayers for grant of interim stay on the backdrop of recent judgment of the Apex Court in the case of Neeharika Infrastructure Pvt. Ltd V. State of Maharashtra and others 2021 SCC OnLine SC 315 , the Division bench made following observations:7. Therefore, we need to examine in the present case as to whether prayer made on behalf of Petitioners for grant of interim stay of further investigation can be granted and if so, reasons for the same.8. We are conscious of the fact that since FIR has been recently registered on 13/04/2021, investigation is at nascent stage and that there ought to be compelling reasons to favourably consider the prayer for grant of ad-interim stay of investigation.9. We are proceeding on the basis of facts discernible from the complaint itself filed by respondent no. 2 and documents on record with which respondent no. 2 cannot have any quarrel. It is evident from the complaint itself that respondent no. 2 for the first time purchased shares of petitioner no. 1 company on 17/03/2021. In the De-mat account from which respondent no. 2 purchased the said 500 shares, he is shown to be resident of Dadar, Mumbai. On 26/03/2021, respondent no. 2 executed a leave and licence agreement pertaining to a room at Palghar. It is on that very day that respondent no. 2 approached the police Station Wada to raise his alleged grievance against the Petitioners. Immediately thereafter, on 30/03/2021, respondent no. 2 went to Superintendent of Poilce, Palghar claiming that he disclosed facts showing cognizable offences committed by the petitioners and other accused persons. Thereafter, immediately on 03/04/2021, respondent no. 2 filed the complaint before JMFC Wada under Section 156 (3) of Cr.P.C. In the detailed complaint consisting of 92 paragraphs, respondent no. 2 made allegations against the petitioners and others regarding alleged fraud, siphoning of money through dummy entities etc. As noted above, on 07/04/2021, Magistrate passed the order directing registration of F.I.R. against the petitioners and others, on the basis of the aforesaid complaint.10. Perusal of the complaint shows that detailed statements have been made about alleged fraud committed by petitioners on innocent investors and the alleged modus operandi has been stated. Respondent no. 2 has also stated that he came to know about rigging of shares by promoters/ directors of the petitioner no. 1, as far as back as on 10/06/2019. Respondent no. 2 has also referred to number of litigations filed before the Honble Supreme Court of India wherein allegations were made against the petitioners, which were subsequently withdrawn. A reference is made to alleged manner in which funds were diverted by the petitioners through companies in Mauritius and pumped back illegally. All this information, even according to respondent no. 2, was in the public domain since 2018-2019 and he was aware about the same. Yet, admittedly he chose to purchase 500 shares of petitioner no. 1 company on 17/03/2021. He had no concern with the said company till he purchased shares on 17/03/2021 and that too allegedly knowing fully well from 2019 onwards about the manner in which petitioners were allegedly committing fraud and duping innocent investors.11. Even as per the complaint, the respondent no. 2 within less than 10 days of purchasing the shares, found that he was cheated and approached the police station, Wada with his grievance. Respondent no. 2 did not wait for the police to examine the grievance raised by him and immediately rushed to Superintendent of Police on 30/03/2021 and without waiting for the senior officer to take any steps in the matter, within 4 days lodged complaint dated 03/04/2021 before the Magistrate. Therefore, from 17/03/2021 when respondent no. 2 for the first time bought 500 shares of petitioner no. 1 company to 03/04/2021, when he rushed to the Magistrate with a detailed complaint consisting of 92 paragraphs, entire set of grievances of respondent no. 2 were supposed to have arisen requiring an order of registration of FIR under Section 156(3) of Cr.P.C.12. These admitted facts prima facie raise a suspicion about bonafide of respondent no. 2 and prima facie it appears that respondent no. 2 has been set up to initiate criminal proceedings in the matter. This is accentuated by the admitted position that respondent no. 2 for the first time executed a leave and licence agreement about a room at Palghar on 26/03/2021 and on that very day approached the police station with his grievances, prima facie indicating that this modus operandi was undertaken to foist jurisdiction on the Magistrate at Wada. No part of the transaction is shown to have been undertaken within the jurisdiction of the Magistrate at Wada or District Palghar. (Emphasis supplied)14. It is also significant that perusal of complaint itself would show that details stated therein running into as many as 92 paragraphs, which appear to be akin to allegations sought to be made against the petitioners in the PIL. At this stage, prima facie it appears suspicious that respondent no. 2 became aware of all such alleged facts regarding functioning of the petitioners in the short period between 17/03/2021 when he purchased shares and 26/03/2021, when he sought to raise the grievance before Police Station, Wada. It is also significant that in the complaint, respondent no. 2 has claimed that he holds a De-mat account having number 613440 and that he was involved in regular trading of shares in the stock market. But, a document is placed on record by the petitioner to show that the share register of the transfer agent of the petitioner-company has stated as per record that the said De-mat account bearing no. 613440 is not connected with respondent no. 2 at all and that in fact, respondent no. 2 purchased 500 shares of the company for the first time on 17/03/2021 through De-mat account 1202990006916691 showing the address of respondent no. 2 at Dadar, Mumbai. Although, we are aware that such documents may need further confirmation and they would be subject to reply of respondent no. 2, nonetheless they prima facie indicate false statement made by respondent no. 2 in the complaint itself.24. On hearing the learned Counsel appearing for respective parties and on going through the material placed on record, we find considerable merit in the submissions of learned Counsel appearing for Petitioners.25. Perusal of the complaint submitted by Respondent No. 2 shows that the Respondent No. 2 submitted that he is working with one Illuminati services as Office Clerk since last couple of years and it is admitted in the complaint that the complainant is residing at Biloshi, Tq. Wada, District Palghar on leave and license basis since 26.03.2021.Thus, there is merit in the submission of learned Senior Counsel appearing for the Petitioner that the Respondent No. 2 with a designed motive shifted his residence in Tq. Wada only to select the jurisdiction of the Wada Court.26. Perusal of the complaint further shows that it is stated in the complaint that Respondent No. 2 is regularly trading in shares but the complaint clearly discloses that the Respondent No. 2 purchased the shares of the Petitioner Company only in one solitary instance. Then the complaint run in nearly 40 pages. The complaint refers to the Public Interest Litigation bearing Writ Petition (Criminal) Diary No. 20710/2019 before the Supreme Court of India by one Mr. Abhay Yadav. Then there are allegations against one Jasol Investment and Trading Company. Then reference is made to AmeriCorp Capital Private Limited advancing loans to the Petitioner company. Then there are allegations against one Mr. Harish Fabiani stating that Mr. Harish Fabiani by playing mischief and fraud diverted certain funds to other country. The Judicial Magistrate by referring to mere allegations in the complaint observed that as per offences as alleged in the complaint a huge amount is siphoned of.27. It seems that Magistrate was influenced by the lengthy complaint placed before him and arrived at a conclusion that there was a diversion of huge monetary funds to the tune of Rs. 300 crores and the money was transferred to other country i.e., Mauritius. Admittedly, it was only allegations in the complaint and except bare words of the complainant there was no other material before the Magistrate to form such an opinion as such, there is merit in the submissions of learned Senior Counsel Mr. Rohatgi that the Magistrate without applying his mind passed mechanical order under Section 156(3) of Code of Criminal Procedure.28. Learned Counsel appearing for Petitioners were justified in making submissions that the Respondent No. 2 who is a resident of Dadar with some designed motive shifted to Biloshi, Tq. Wada, Dist. Palghar, obtained a room on leave and license basis and lodged a complaint before the JMFC, Wada. The complaint also reveals that the Respondent No. 2 had purchased 800 shares in two lots by opening Demat account from Dadar and this was solitary transaction of the Petitioner. As such, the claim of the Respondent no. 2 that he was regularly trading in shares is falsified. It is also difficult to believe that the Respondent No. 2 complainant was in a position to study the balance sheet of the Petitioner for a past several years in a very limited span of purchasing the shares and lodging the report to the Magistrate so as to arrive at a conclusion that the Petitioner Company has siphoned the amount and played mischief.29. There is also merit in the submissions of Mr. Rohatgi, learned Senior Counsel that the majority material in the complaint is the replica of the material which was filed in the complaint which was the subject matter of Petition before Delhi High Court and though the Respondent No. 2 denied any connection with Mr. Yadav who had filed the Petition before Delhi High Court, there is a reason to believe that there was some nexus of the Respondent No. 2 and Mr. Yadav.30. Though, learned Counsel appearing for Respondent No. 2 relies on the judgments and there cannot be any dispute on the proposition of law expressed in the judgment, considering the peculiar facts referred to above by us, in our opinion, the judgments relied on by learned Counsel appearing for Respondent No. 2 are not of any help to Respondent No. 2.31. Learned Counsel appearing for Petitioners were also justified in submitting that the complaint submitted by Respondent No. 2 was lacking of the basic requirement i.e., an affidavit supporting the contents in the complaint. Though, learned Counsel appearing for Respondent No. 2 made an attempt to submit that the defect in the complaint was curable, but in view of the judgments of the Apex Court in the matter of Priyanaka Srivastava (supra) & Babu Venkatesh and Others (supra), we are unable to accept the submission and it will have to hold that the complaint lodged at the instance of Respondent No. 2 was defective. It may be useful for our purposes to refer to observations made in the matter of Priyanka Srivastava (supra) as under:27. Regard being had to the aforesaid enunciation of law, it needs to be reiterated that the learned Magistrate has to remain vigilant with regard to the allegations made and the nature of allegations and not to issue directions without proper application of mind. He has also to bear in mind that sending the matter would be conducive to justice and then he may pass the requisite order. The present is a case where the accused persons are serving in high positions in the bank. We are absolutely conscious that the position does not matter, for nobody is above law. But, the learned Magistrate should take note of the allegations in entirety, the date of incident and whether any cognizable case is remotely made out. It is also to be noted that when a borrower of the financial institution covered under the SARFAESI Act, invokes the jurisdiction under Section 156 (3) Cr.P.C. and also there is a separate procedure under the Recovery of Debts due to Banks and Financial Institutions Act, 1993, an attitude of more care, caution and circumspection has to be adhered to.28. Issuing a direction stating as per the application to lodge an FIR creates a very unhealthy situation in the society and also reflects the erroneous approach of the learned Magistrate. It also encourages the unscrupulous and unprincipled litigants, like the respondent no.3, namely, Prakash Kumar Bajaj, to take adventurous steps with courts to bring the financial institutions on their knees. As the factual exposition would reveal, he had prosecuted the earlier authorities and after the matter is dealt with by the High Court in a writ petition recording a settlement, he does not withdraw the criminal case and waits for some kind of situation where he can take vengeance as if he is the emperor of all he surveys. It is interesting to note that during the tenure of the appellant No.1, who is presently occupying the position of Vice-President, neither the loan was taken, nor the default was made, nor any action under the SARFAESI Act was taken. However, the act ion under the SARFAESI Act was taken on the second time at the instance of the present appellant No.1. We are only stating about the devilish design of the respondent No.3 to harass the appellants with the sole intent to avoid the payment of loan. When a citizen avails a loan from a financial institution, it is his obligation to pay back and not play truant or for that matter play possum. As we have noticed, he has been able to do such adventurous acts as he has the embedded conviction that he will not be taken to task because an application under Section 156 (3) Cr.P.C. is a simple application to the court for issue of a direction to the investigating agency. We have been apprised that a carbon copy of a document is filed to show the compliance of Section 154 (3), indicating it has been sent to the Superintendent of police concerned.29. At this stage it is seemly to state that power under Section 156 (3) warrants application of judicial mind. A court of law is involved. It is not the police taking steps at the stage of Section 154 of the code. A litigant at his own whim cannot invoke the authority of the Magistrate. A principled and really grieved citizen with clean hands must have free access to invoke the said power. It protects the citizens but when pervert litigations takes this route to harass their fellows citizens, efforts are to be made to scuttle and curb the same.30. In our considered opinion, a stage has come in this country where Section 156 (3) Cr.P.C. applications are to be supported by an affidavit duly sworn by the applicant who seeks the invocation of the jurisdiction of the Magistrate. That apart, in an appropriate case, the learned Magistrate would be well advised to verify the truth and also can verify the veracity of the allegations. This affidavit can make the applicant more responsible. We are compelled to say so as such kind of applications are being filed in a routine manner without taking any responsibility whatsoever only to harass certain persons. That apart, it becomes more disturbing and alarming when one tries to pick up people who are passing orders under a statutory provision which can be challenged under the framework of said Act or under Article 226 of the Constitution of India. But it cannot be done to take undue advantage in a criminal court as if somebody is determined to settle the scores. We have already indicated that there has to be prior applications under Section 154 (1) and 154 (3) while filing a petition under Section 156 (3) . Both the aspects should be clearly spelt out in the application and necessary documents to that effect shall be filed. The warrant for giving a direction that an the application under Section 156 (3) be supported by an affidavit so that the person making the application should be conscious and also endeavour to see that no false affidavit is made. It is because once an affidavit is found to be false, he will be liable for prosecution in accordance with law. This will deter him to casually invoke the authority of the Magistrate under Section 156 (3) . That apart, we have already stated that the veracity of the same can also be verified by the learned Magistrate, regard being had to the nature of allegations of the case. We are compelled to say so as a number of cases pertaining to fiscal sphere, matrimonial dispute/family disputes, commercial offences, medical negligence cases, corruption cases and the cases where there is abnormal delay/laches in initiating criminal prosecution, as are illustrated in Lalita Kumari (2014) 2 SCC 1 : (2014) 1 SCC (Cri) 524are being filed. That apart, the learned Magistrate would also be aware of the delay in lodging of the FIR.32. There is also merit in the submissions of learned Counsel appearing for Petitioners that though it was alleged in the complaint that one Mr. Harish Fabiani had obtained loan and misutilized the loan amount, the document placed on record and relied on by Mr. Rohatgi, learned Senior Counsel demonstrates that the said loan was repaid.33. We also find merit in the submissions of Dr. Chandrachud appearing for Petitioner in WP/6812/2021 that the Respondent No. 2 failed to provide necessary details in the complaint and only vague statements were made. Mr. Chandrachud justified in submitting that if the Petitioner could have failed in repayment of the loan the financial institution certainly would have initiated action against the Petitioner treating him either as defaulter or would have initiated proceedings by taking recourse to SARFEASI Act.34. The replies filed before the Delhi High Court at the instance of RBI and Ministry of Corporate Affairs is also not making any positive statement so as to hold that the Petitioner Company had played some mischief causing financial loss to this shareholder.35. The submission of learned Counsel appearing for Respondent No. 2 that the Directors of the Petitioner Company were instrumental to file the Petition against the Petitioner Company itself at Delhi High Court and thereby permitting to reduce the share value of the Company at the cost of loss of reputation to the Petitioner Company, cannot be accepted as no specific material supporting this statement is placed on record and further it would not stand to reason or logic that the Directors of Petitioner Company would permit themselves for reduction of share value of the Petitioner Company at the cost of loss to the reputation.36. The Division bench of this Court also find some merit in the contentions raised at the preliminary stage itself and granted interim relief by passing a detailed and reasoned order.37. In our opinion, Mr. Rohatgi, learned Senior Counsel justified in making submission that the case of Petitioner is squarely covered by categories laid down by the Apex Court in the matter of State of Haryana & Others Vs. Bhajan Lal & Others (supra) and particularly category 7.