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Madhya Pradesh High Court · body

2014 DIGILAW 37 (MP)

Pushpa Yadav v. State of M. P.

2014-01-08

G.D.SAXENA, S.K.GANGELE

body2014
ORDER Gangele, J. -- 1. The petitioner has filed this petition under section 482 CrPC for quashment of the FIR No.256/2011 registered at Police Station Inderganj, Gwalior. 2. The petitioner pleaded that he is an employee and he was working in the capacity of Junior Executive in PACL India Ltd., a company incorporated on 13.2.1996. The aforesaid company is in the business of real estate dealing and it is in the sale and purchase of lands and development of lands. It is one of the premier companies. An FIR was registered against the petitioner companies at the police station on the ground that the company had been receiving deposits from various persons in contravention to the provisions of Madhya Pradesh Nikshepakon Ke Hiton Ka Sanrakshan Adhiniyam, 2000 (hereinafter referred to as the ‘Act of 2000’). A complaint was received from one person Girish Chand Bhadoriya. The Collector Gwalior vide order dated 3.9.2010 directed the company to submit all the documents for his investigation within a week, however, the company did not submit any document to the Collector. Thereafter, the Collector vide letter dated 8.2.2010 directed the S.P. Gwalior to conduct an enquiry. 3. The Station House Officer in-charge Inderganj, Gwalior directed the Director of the company vide letter dated 12.3.2011 to produce certain documents, however, the company did not produce the documents. It is further observed in the FIR that the company was not in the business of any real estate, but it was in banking business and it had received deposits from the various investors in the name of sale and purchase and development of plots, however, there was no development of plot, hence, the company committed offences. 4. The District Magistrate in exercise of powers under section 144 of CrPC also passed an order of seizure of the office of the PACL India Ltd. Company. The aforesaid order was challenged by the company in Writ Petition No.3599/2011. This Court vide order dated 22.2.2011 (reported in 2011(2) JLJ 375 ) passed in Writ Petition No.359/2011 dismissed the writ petition. The Court recorded following observations in para 28 of the order : “28. In the present case, as we have discussed earlier, that by playing fraud the petitioner-company had been accepting deposits from general public. This Court vide order dated 22.2.2011 (reported in 2011(2) JLJ 375 ) passed in Writ Petition No.359/2011 dismissed the writ petition. The Court recorded following observations in para 28 of the order : “28. In the present case, as we have discussed earlier, that by playing fraud the petitioner-company had been accepting deposits from general public. Admittedly, it had no licence or necessary sanction from the Reserve Bank of India, SEBI or other financial body or it had also not allowed the mandatory provisions of the Act of 2000. The petitioner-company itself stated that on a single day at Gwalior it returned the money of near about 51,000 depositors. It has also filed a list of depositors, which runs into 443 pages. The number of depositors we have not calculated, but, may be 50,000 and it returned the money of near about 45 crore. Hence, the situation was certainly grave in nature and prima facie was are of the opinion that the petitioner-company had been doing this work illegally. The real number of investors have not been disclosed by the petitioner-company in this petition or the District Magistrate or to police. This Court has also passed an interim order in the Public Interest Litigation and the petitioners were permitted to inspect the record of the company, in spite of that the petitioner did not submit the information, hence, it can safely be held that the activities of the petitioner-company would have created serious disturbances of grave character in the society. It is clearly stated that on real apprehension or real danger provisions of section 144 CrPC can be applied with. Hence, in such circumstances, in our opinion, there is no illegality or irregularity in passing the order dated 4th May 2011, Annexure P-1 by the District Magistrate.” 5. Against the aforesaid order, an SLP was filed before the Hon’ble Supreme Court and it is pending. 6. Earlier also some persons filed a petition under section 482 of CrPC for quashing of the same FIR registered against PACL India Ltd. vide Crime No.256/2011 dated 29.5.2011. The case was registered as M.Cr.C. No.4525/2011 (Jitendra Kumar and others v. State of M.P.). The aforesaid petition had been withdrawn. Consequently, it was dismissed vide order 28.7.2011. 6. Earlier also some persons filed a petition under section 482 of CrPC for quashing of the same FIR registered against PACL India Ltd. vide Crime No.256/2011 dated 29.5.2011. The case was registered as M.Cr.C. No.4525/2011 (Jitendra Kumar and others v. State of M.P.). The aforesaid petition had been withdrawn. Consequently, it was dismissed vide order 28.7.2011. The company PACL India Ltd. also filed a case under section 482 of CrPC for quashing the FIR and the case which was registered against the company vide Crime No.256/2011 dated 29.5.2011. It was registered as M.Cr.C. No.4484/2011 (PACL India Ltd. v. State of M.P.). The aforesaid petition had also been withdrawn. Consequently, it was dismissed vide order dated 3.8.2011. 7. A PIL (Writ Petition No.3332/2010) was also filed before this Court in regard to irregularities committed by the chit fund companies. This Court ordered a CBI enquiry in the aforesaid writ petition. The allegations against PACL India Ltd. were also made in the aforesaid writ petition. CBI recorded its findings that the PACL India Ltd. had been involved in violation of the provisions of Act of 2000 and the business of the company was banking in nature in that area. CBI recorded following findings in that case : “3.4.10. PACL India Limited. -- (i) It was revealed during enquiry that the company came into existence on 13th February, 1996, and has its operations all over India. It has offices at approx. 300 places all over India. The company is registered with the ROC Jaipur having its registered office at 22nd, IIIrd Floor, Ambar Tower, Sansar Chand Road, Jaipur. Vide ROC letter No.ROC/Approval/21/11577/376 dated 9.1.1998, the name of the company was changed from Pearls Agrotech Corporation Ltd. to PACL India Ltd. No.17-011577. (ii) As per the MOA of the company, it is engaged in real estate business i.e. the sale and purchase of the agricultural plots, carrying out agriculture development activities on behalf of the customers as well as construction of residential/commercial complexes including townships, cities, flats throughout India. (iii) According to the company, it has appointed commission agents who contract the prospective customers. Initially when the agreement is signed between a customers and the company, a registration letter on behalf of the company is issued to the customer in which, his name, address, made of payment, and land area is mentioned. (iii) According to the company, it has appointed commission agents who contract the prospective customers. Initially when the agreement is signed between a customers and the company, a registration letter on behalf of the company is issued to the customer in which, his name, address, made of payment, and land area is mentioned. Further, the customer is given two option (plants) for payments -- (i) Cash Down Payment Plan, (ii) Instalment Payment Plan. If the customer opts for cash down payment plan, the land is allotted to the customer within 270 days from the date of purchase (agreement). If he opts for the instalment plan, the land is allotted to him within 270 days of receiving fifty percent of the full payment. The allotment of land by the company to the customer is as per availability of land with the company at the time of issuance of the letter of allotment. The allotment letlter issued contains the exact details of land viz. Khasra No. location and its size etc. As per the company, after the issuance of the allotment letter, the sale-deeds are registered as the payment plans in the name of the customer within reasonable period of time. In both instances, at the end of the term, the customer has a right to either keep the land or seel it on his own. (iv) It was stated by the company representative that the company is not registered with RBI because it does not fall under the category of Non-Banking Financial Companies. (v) The company also does not have registration with SEBI. It has been revealed during enquiry that Hon’ble High Court of Judicature at Rajasthan, Jaipur in its judgment dated 28.11.2003 passed in Civil Writ Petition No.6735 of 1999 against SEBI, has ruled that the company does not fall in the category of collective investment scheme as defined by section 11AA of SEBI Act. However, against this order SEBI has filed a petition in the Supreme Court vide Civil Appeal No.6753-6754 of 2004. The proceedings are pending in the Hon’ble Supreme Court and on the last date 2.1.2012, the Hon’ble apex Court has granted four weeks further time to file additional affidavit and deferred the matter for 30.1.2012. However, against this order SEBI has filed a petition in the Supreme Court vide Civil Appeal No.6753-6754 of 2004. The proceedings are pending in the Hon’ble Supreme Court and on the last date 2.1.2012, the Hon’ble apex Court has granted four weeks further time to file additional affidavit and deferred the matter for 30.1.2012. (vi) As per the details provided by the company, it has a total of 65,07,895 customers under the instalment plan and 47,24,061 customer under cash down payment plan (i.e. total 1,12,31,956 customers) all over India. Out of these, 19,83,588 customers under instalment payment plan and 47,23,817 customers under cash down payment plan (i.e. total 67,07,405) have been issued allotment letters by the company, allotting them pieces of land at different places. Further the company has transferred the title by way of execution of sale-deed/GPA to 6,33,396 customers under instalment payment plan and 47,23,817 under cash down payment plan (i.e. total 53,57,213). The land area allotted to the customers for which titles have been transferred i.e. 42,57,050 square yards under instalment plan and 62,89,12,766 square yards under cash down payment plan. Thus, as per the details provided, the company has transferred the total of 87,31,69,816 square yards of land to its customers by way of general power of attorney (GPA) of sale-deed. (vii) The company PACL India Ltd. as well as its associate companies have a total land measuring 50,875.564 acres of land (equivalent to 24,62,37,729.716 square yards) in 14 States of India while the customers of the company are in 26 States. Out of this 50,875.564 acres of land, the company has in its name (ownership) has be 2,661.3398 acres all over India (1,28,80,885.5032 square yards) out of which 1,541.676 acres of land is in Andhra Pradesh, 531.602 acres in Chhattisgarh, 430.070 acres inKarnataka, 19.765 acres in Delhi, 83.021 acres in Rajasthan, 36.94598 acres in West Bengal and 18.26 acres in Uttar Pradesh. (viii) The company follows 12 levels of Estate Adviser/Agents hierarchy for the purpose of getting business. The company also gives commission to Estate Advisers as well as senior up-line members, on the business brought by the Estate Advisers. In case of instalment payment plan, the commission percentage is 15% for the Estate Advisers (in the first year) and 1.2% at the top most level i.e. Estate Executive Consultants. The company also gives commission to Estate Advisers as well as senior up-line members, on the business brought by the Estate Advisers. In case of instalment payment plan, the commission percentage is 15% for the Estate Advisers (in the first year) and 1.2% at the top most level i.e. Estate Executive Consultants. Similarly, this is 5, 6 and 7% to the Estate Advisers for the plans up to 5 years, 7 years, and above 10 years respectively under cash down payment plan. This also goes on reducing up wards the hierarchy and is 0.5% at the top most level. (ix) There are 662 complaints against this company as mentioned in the Hon’ble High Court order. A total of 33 customers for 61 complaints (78 agreements) as mentioned in the Hon’ble Court Order, were examined during the course of the enquiry. It was revealed that in most of the cases neither the company nor its representatives/agents have at any time intimated the investors about the plan being offered by the company to be relating to purchase of land in any manner and the customers were only explained the plan to be an investment policy for a better rate of return. In other cases, the investors were only informed that the company shall invest the amount in real estate business and at the end of the maturity period/agreement period they were assured of a return as mentioned by the company in the certificate issued by it. Only in few cases the customers were aware that the land may be allotted to them against the deposits. (x) It was seen that in most of the cases under both the plans, i.e. one-time payment plan and instalment plan, where the required amount of money has been deposited by the customer and the mandatory period of time for issuance of allotment letter has also expired, the company has not issued allotment letters. In some instances it was also seen that the customers were issued allotment letters but the land alloted to them was located hundreds of kilometers away from their place of their stay, for e.g. a customer from Gwalior was allotted land in South India. This indicates than even in such cases where the allotment letters were issued, the company’s intention was not to offer land which could be easily accepted by the customers, against the investment. This indicates than even in such cases where the allotment letters were issued, the company’s intention was not to offer land which could be easily accepted by the customers, against the investment. (xi) Enquiry also reveled that after the sealing of the company’s office at Gwalior, in most of the cases, where the refund claims were filed, the company has refunded some amounts to the complaining customers. But these amounts are found to be less than the deposited amounts in some cases while in some other cases the amounts refunded are with marginal interest or no interest. In none of the cases was any sale-deed found to be executed. (xii) Letters were also sent in the enquiry to the investors outside the State of Madhya Pradesh. The replies received from a few, stated that they have only made investments in the company under RD/FD. In some other cases of customers who stated to have entered into agreements for purpose of plots and received allotment letters, it has been confirmed that no sale-deeds were executed by the company. (xiii) As per the details provided, the company PACL India Ltd. as well as its associate companies have a total land measuring 50,875.564 acres (equivalent 24,62,37,729.716 square yards). Out of this, PACL India Ltd. has 26,661.3398 acres (1,28,80,885.50 square yards) in its name (ownership) all over India. The land transferred to its customers since its inception, by way of execution of sale-deed/GPA has been shown to be 87,31,69,816 square yards by the company which is more than thrice the total land available with PACL and its associate companies (and 67 times of that available PACL India Limited). (xiv) Further, the details of land owned by the company were attempted to be verified from the concerned District Collector/District Magistrates. Field visits conducted at Agra, Raipur and Allahabad have revealed that five out of the six properties which have been included in the land bank details of the company, are actually commercial places/offices, where the company is running its own offices. Thus it is indicated that the details of the land, as provided by the company, also include its own offices, which obviously would not be transferred to the investors against their deposits. (xv) Thus, it seems that the company is working as Non-Banking Financial Company (NBFC) and accepting deposits under different plans in the garb of receiving payment against booking of plots. (xv) Thus, it seems that the company is working as Non-Banking Financial Company (NBFC) and accepting deposits under different plans in the garb of receiving payment against booking of plots. (xvi) Examination of various agents of the company has also revealed that the company is following a commission structure of agents similar to the pyramid structure where a certain percentage of received depositrs, is being distributed amongst all levels of the agents. This is maximum for the lowest level (who brings the deposit) and goes on reducing as we move towards the top. It has also revealed that the company briefed its Estate Advisers about its various plans as simple investment plans only. Some Estate Advisers also stated that they were only aware that the company’s investment in land but not of the provisionof execution of sale-deeds with the customers. They were under impression that the company shall be refunding the maturity amounts as mentioned in the certificates issued by it, on completion of the agreement period. (xvii) It has also revealed that in some cases the company has neither refunded the amount nor allotted land/executed sale-deed with the customers, even after the expiry of agreement period and the completion of payment schedule. It was found that in these cases the documents are deposited with the company and it has not repaid the amount to the customers. The company has been only asking for more time from the customers to refund their amounts.” 8. This Court vide order dated 13th July 2012 disposed of the writ petition with the following directions : “(17) Consequently, the writ petition is disposed of with a direction that the Principal Registrar of this Bench shall forward a copy of this order to Union of India, through the Secretary, Ministry of Finance, New Delhi; Reserve Bank of India, through its Governor, Bombay (Maharashtra); State of M.P. through the Secretary, Ministry of Home and Ministry of Finance, Vallabh Bhawan, Bhopal; and Security Exchange Board of India (under Ministry of Finance) through its Chairman, Mumbai and concerned departments are at liberty to take appropriate action in accordance with law without prejudice to any observation made by this Court in the order. It is hereby clarified that this Court has not issued any mandatory order. However, it is in the interest of national economy that the report of CBI may be taken into consideration. It is hereby clarified that this Court has not issued any mandatory order. However, it is in the interest of national economy that the report of CBI may be taken into consideration. The authorities may also consider the facts of passing orders by the Hon’ble Supreme Court in special leave petitions as mentioned in para 6 of this order as per our information. (18) Writ petition is disposed of, with the aforesaid. No order as to costs.” 9. Learned senior counsel has contended that the petitioner is an employee of the company. He was not involved in illegal activities. It is further contended by the learned senior counsel that in another case Civil Appeal No.6753-6754 of 2004, which was filed by the Securities and Exchange Board of India against the PACL India Ltd. and other, Hon’ble Supreme Court has issued directions to SEBI to conduct an enquiry in regard to business activities of PACL India Ltd. and because the matter is pending before SEBI, hence, the registration of criminal offences against the employee is contrary to law. Learned senior counsel further contended that in some other case, Hon’ble Supreme Court granted stay in regard to chit fund company. 10. In our opinion, the petition filed by the petitioner under section 482 CrPC for quashment of FIR and proceeding registered against the petitioner vide Crime No.256/2011 to Police Station Inderganj, Gwalior is not maintainable because in earlier proceedings as mentioned in the order, it has been held that PACL India Ltd. was in banking business and it had received deposits from the investors with a promise to return back the money after certain period on a fixed interest. In order to cover up its operations, the company on papers had shown the fact that it was in the business of real estate. The aforesaid fact has been verified by the CBI in the preliminary enquiry. The findings have been recorded in regard to operations conducted by the PACL India Ltd. in Gwalior region. If the petitioner is an employee and he was not at all involved in any operation of the company, then he could have filed an application to the Investigating Officer. However, in our opinion, on his behalf, the FIR could not be quashed, which is registered against the company. Earlier also two cases were filed in regard to quashment of FIR and those were dismissed as withdrawn. However, in our opinion, on his behalf, the FIR could not be quashed, which is registered against the company. Earlier also two cases were filed in regard to quashment of FIR and those were dismissed as withdrawn. We have gathered the impression that anyhow the company in the garb of employees or other persons want to get some favourable order of this Court in regard to quashment of FIR. The act of the company as prima facie observed by this Court in other proceedings amounts to violation of the provisions of Act of 2000 and CrPC. 11. Consequently, we do not find any merit in this petition. It is hereby dismissed.