Ozone Urbana Infra Developers Pvt. Limited vs The Directorate Of Enforcement & Ors.

8. Facts in Writ Petition No.34702 of 2024:

9. Facts in Writ Petition No.31006 of 2025:

SUBMISSIONS:

PETITIONERS:

11.1. Writ Petition No.20063 of 2022:

11.2. Writ Petition No.25722 of 2022

11.3. Writ Petition No.4968 of 2024:

11.4. Writ Petition No.27587 of 2024 :

11.5. Writ Petition No.34702 of 2022:

11.6. Writ Petition Nos. 31006 of 2025

RESPONDENTS:

HOME BUYERS:

DIRECTORATE OF ENFORCEMENT:

STATE:

CONSIDERATION

19. Writ Petition No.20063 of 2022:

".... .... ....

5.

The complainant submits that, in the year 2013 to 2019-20 the accused has given 12 projects to the complainant for a sum of Rs. 4,04,50,000/- (Rupees Four Crores, Four Lakhs Fifty Thousand Only), the complainant has completed the said project works in time, the accused has made the payment of Rs. 2,49,00,000/- (Rupees Two Crores Forty Nine Lakhs Only), and the balance amount of Rs. 1,32,00,000/-(Rupees One Crore Thirty Two Lakhs Only) the accused assured that, he will pay shorty.

6.

The complainant submits that, after several request made by the complainant, the accused has drag on the dates by saying one or the other pretext for the payment of the balance amount, and also informed that due to the Covid-19 effect, he has suffered a huge loss in business, and he seeks time with the complainant, the complainant has agreed for the same, thereafter 2 years the accused was not contacted the complainant, thereafter the complainant visited the accused office, at that time the accused No. 2 & 3 has requested the complainant that, they will pay the said amount within 5 months.

7.

The complainant submits that, after completion of 5 months, the accused persons have not paid the said balance amount, on 05-05-2022 the complainant went to the accused office, at that time the accused person along with other person have started to abuse the complainant and threatened him that, kidnap him and kill him, if again he ask the balance amount, with great difficult the complainant has escaped, with the clutches of the accused. On the treat of the accused persons, the complainant has not lodged any complaint and waited till 20-05-2022. But the accused persons has failed to do the balance amount to the complainant.

8.

The complainant submits that, on 20-05-2022 before the HAL police station, but the police officials have taken his complaint, and not issued any acknowledgment, and also not taken any action against the accused person. The copy of the complaint is herewith produce for the kind perusal of this Hon'ble Court.

9.

The complainant submits that, thereafter on 07-06-2022 the complainant has lodged the complaint before the Commissioner of Police, Infantry Road Bangalore. The copy of the complaint and acknowledgment is herewith produce for the kind perusal of this Hon'ble Court. So far no action has been taken against him. Hence there is no alternative the complainant is hereby approaching this Hon'ble Court.

10.

The complainant submits that, after completion of the entire work made by the complainant, the accused persons have intentionally not paid the full amount, they had paid partial amount, and balance amount they have assured that, they will pay shortly, but till today with an intention to cheat the complainant they have not paid the said balance amount in order to his wrongful gain.

11.

The complainant submits that, the accused persons with an common intention to cheat the complainant, they have committed the offence punishable under section 420, 341, 323, 504, 506 R/w 34 of IPC.

12.

The complainant submits that, the accused persons have local persons and highly influenced persons. Hence the police have colluded with accused persons and hence the complainant has no other alternative, hence approaching this Hon'ble Court.

13.

The complainant submits that, the accused persons are having common intention for cheat the complainant and wrongful gain go grab the money illegally. Hence the accused is committed an offence punishable under section 420, 341, 504, 506 R/w 34 of IPC.

14.

The complainant submits that, all the above said incidents took place on the complainant residence in the jurisdiction of the HAL police station.

15.

The complainant submits that, this Hon'ble court got jurisdiction to try this matter."

".... .... ....

13.

The record reveals that within a short span, as many as eight FIRs were registered against the appellant. The gravamen of the allegations in the present FIR is that Respondent No. 2/complainant approached the appellant for a loan of Rs. 2,00,000/-, but was allegedly advanced only Rs. 1,40,000/-. It is further alleged that, in connection with the said transaction, an agreement to sell dated 09.11.1998 was executed in respect of a plot owned by the complainant, and that the appellant procured three cheques from Respondent No. 2, which, upon presentation, were dishonoured for insufficiency of funds. Even if accepted in entirety, these allegations disclose, at best, a civil dispute and do not prima facie constitute the essential ingredients of the criminal offences alleged.

.... .... ....

16.

Despite this background, the police proceeded to file a charge sheet dated 16.04.2003 against the appellant for offences under sections 420, 467, and 468 IPC. Even if the allegations are assumed to be true, they unmistakably arise out of a commercial/contractual transaction relating to loan and repayment, which has been given a criminal colour. The case thus falls squarely within categories (1) and (7) of Bhajan Lal, namely, where the allegations do not disclose the commission of an offence, and where the proceedings are maliciously instituted with an ulterior motive. Continuation of such prosecution would amount to an abuse of process of law and consequently, warrant quashing under Section 482 Cr.P.C.

17.

This Court has, in a long line of decisions, deprecated the tendency to convert civil disputes into criminal proceedings. In Indian Oil Corporation v. NEPC India Ltd.¹⁷, it was held that criminal law cannot be used as a tool to settle scores in commercial or contractual matters, and that such misuse amounts to abuse of process. The following paragraphs from the decision are apposite:

“9.

The principles, relevant to our purpose are:

(i)

A complaint can be quashed where the allegations made in the complaint, even if they are taken at their face value and accepted in their entirety, do not prima facie constitute any offence or make out the case alleged against the accused. For this purpose, the complaint has to be examined as a whole, but without examining the merits of the allegations. Neither a detailed inquiry nor a meticulous analysis of the material nor an assessment of the reliability or genuineness of the allegations in the complaint, is warranted while examining prayer for quashing of a complaint.

(ii)

A complaint may also be quashed where it is a clear abuse of the process of the court, as when the criminal proceeding is found to have been initiated with malafides/malice for wreaking vengeance or to cause harm, or where the allegations are absurd and inherently improbable.

(iii)

The power to quash shall not, however, be used to stifle or scuttle a legitimate prosecution. The power should be used sparingly and with abundant caution.

(iv)

The complaint is not required to verbatim reproduce the legal ingredients of the offence alleged. If the necessary factual foundation is laid in the complaint, merely on the ground that a few ingredients have not been stated in detail, the proceedings should not be quashed. Quashing of the complaint is warranted only where the complaint is so bereft of even the basic facts which are absolutely necessary for making out the offence.

(v)

A given set of facts may make out: (a) purely a civil wrong; or (b) purely a criminal offence; or (c) a civil wrong as also a criminal offence. A commercial transaction or a contractual dispute, apart from furnishing a cause of action for seeking remedy in civil law, may also involve a criminal offence. As the nature and scope of a civil proceedings are different from a criminal proceeding, the mere fact that the complaint relates to a commercial transaction or breach of contract, for which a civil remedy is available or has been availed, is not by itself a ground to quash the criminal proceedings. The test is whether the allegations in the complaint disclose a criminal offence or not.

10.

While on this issue, it is necessary to take notice of a growing tendency in business circles to convert purely civil disputes into criminal cases. This is obviously on account of a prevalent impression that civil law remedies are time consuming and do not adequately protect the interests of lenders/creditors. Such a tendency is seen in several family disputes also, leading to irretrievable break down of marriages/families. There is also an impression that if a person could somehow be entangled in a criminal prosecution, there is a likelihood of imminent settlement. Any effort to settle civil disputes and claims, which do not involve any criminal offence, by applying pressure though criminal prosecution should be deprecated and discouraged.”

“9.

What we have been able to understand is that there is an oral agreement between the parties. The Respondent No. 4 might have parted with some money in accordance with the oral agreement and it may be that the appellant - herein owes a particular amount to be paid to the Respondent No. 4. However, the question is whether prima facie any offence of cheating could be said to have been committed by the appellant.

10.

How many times the High Courts are to be reminded that to constitute an offence of cheating, there has to be something more than prima facie on record to indicate that the intention of the accused was to cheat the complainant right from the inception. The plain reading of the FIR does not disclose any element of criminality.

11.

The entire case is squarely covered by a recent pronouncement of this Court in the case of “Delhi Race Club (1940) Limited v. State of Uttar Pradesh”, (2024) 10 SCC 690. In the said decision, the entire law as to what constitutes cheating and criminal breach of trust respectively has been exhaustively explained. It appears that this very decision was relied upon by the learned counsel appearing for the petitioner before the High Court. However, instead of looking into the matter on its own merits, the High Court thought fit to direct the petitioner to go for mediation and that too by making payment of Rs. 25,00,000/- to the 4^th respondent as a condition precedent. We fail to understand why the High Court should undertake such exercise. The High Court may either allow the petition saying that no offence is disclosed or may reject the petition saying that no case for quashing is made out. Why should the High Court make an attempt to help the complainant to recover the amount due and payable by the accused. It is for the Civil Court or Commercial Court as the case may be to look into in a suit that may be filed for recovery of money or in any other proceedings, be it under the Arbitration Act, 1996 or under the provisions of the IB Code, 2016.

12.

Why the High Court was not able to understand that the entire dispute between the parties is of a civil nature.

13.

We also enquired with the learned counsel appearing for the Respondent No. 4 whether his client has filed any civil suit or has initiated any other proceedings for recovery of the money. It appears that no civil suit has been filed for recovery of money till this date. Money cannot be recovered, more particularly, in a civil dispute between the parties by filing a First Information Report and seeking the help of the Police. This amounts to abuse of the process of law.

14.

We could have said many things but we refrain from observing anything further. If the Respondent No. 4 has to recover a particular amount, he may file a civil suit or seek any other appropriate remedy available to him in law. He cannot be permitted to take recourse of criminal proceedings.

15.

We are quite disturbed by the manner in which the High Court has passed the impugned order. The High Court first directed the appellant to pay Rs. 25,00,000/- to the Respondent No. 4 and thereafter directed him to appear before the Mediation and Conciliation Centre for the purpose of settlement. That's not what is expected of a High Court to do in a Writ Petition filed under Article 226 of the Constitution or a miscellaneous application filed under Section 482 of the Criminal Procedure Code, 1973 for quashing of FIR or any other criminal proceedings. What is expected of the High Court is to look into the averments and the allegations levelled in the FIR along with the other material on record, if any. The High Court seems to have forgotten the well-settled principles as enunciated in the decision of this Court in the “State of Haryana v. Bhajan Lal”, 1992 Supp (1) SCC 335”

"... .... ....

12.

The appellants and the respondents are both business owners. They allegedly entered into an agreement where one party would make monetary investment and the other would supply textile goods. One party says that the relationship continued without any incident between 1995 and 2000 and it is only thereafter that disputes arose regarding the nature of arrangement particularly an attempt to make the agreement between the parties exclusive which the appellants were not in favour of, did the dispute arise. On the other hand, the other party says that they had entered into an agreement and the very terms of the initial agreement itself were not complied with i.e., sharing of profits in return of capital investment in so far as the trading of textiles in USA and Canada is concerned. Either way, it is plain as day that the dispute between the parties concerns the business relationship or in other words concerning whether or not a joint venture stood established between them and if yes, the distribution of profits arising therefrom. That clearly is in the nature of civil dispute.

13.

When it comes to alleged forgery of documents, why is it that the allegation came only in the Court in Bangalore and the suit filed before the District Court Illionis, does not make any mention of the same. After all it is before that Court that the alleged forged documents were filed. Still further, the report of the handwriting expert on which reliance is placed to prove that the documents were forged is dated prior to the judgment of the District Court i.e., 1st September 2009 and the judgment was entered on 2nd February 2004. It only stands to reason that if such hard, conclusive evidence was in the possession of the complainant, the same could have been furnished to the Court and if accepted, could have led to further punitive damages being awarded in his favour. This obviously was not done. It be clarified here itself that the sanctity of the report of the handwriting expert has not been examined by us and so we do not comment thereupon. It is only the timing or the sequence of events that renders the reliance placed thereon, suspect, in our considered view.

14.

It is also a matter of record that for the reasons as recorded in the judgment, the civil suit of the complainant has also been dismissed. Well, we do not comment on the merits of that case and the complainant is obviously free to take recourse to the law as he may be advised if not already taken.

15.

In the cumulative view of circumstances prevailing in this case, criminal action against the appellants would be contrary to the authority of law and therefore an abuse of process of law for the reason that the third round of further investigation as a consequence of which the chargesheet was filed, did not have the concerned Magistrate's approval. That apart, in view of ground (3) mentioned in Para 102 of State of Haryana v. Bhajan Lal, the FIR and subsequent proceedings which is the subject matter of the present appeal as mentioned in Para-1 are quashed and set aside.”

20. Writ Petition No.25722 of 2022:

“ವಿರೋಧದಾದಾರರ ಶ್ರೀ ಮೋಹಿತ ಶರ್ಮಾ ಎಂಬುವವರು ರಾಜಿಗೆ ಹಾಜರಾಗಿ ದೂರನ್ನು ನೀಡಿದ್ದು ಸದರಿ ದೂರಿನಲ್ಲಿ ತಾನು ಮೇಲ್ಕಂಡ ವಿಳಾಸದಲ್ಲಿ ವಾಸವಾಗಿದ್ದು, ಓಜೋನ್ ಅರ್ಬನ್, ಇನ್ಸ್ಟಾ ಡೆವಲಪ್ಷರ್ಸ್, ಪ್ರೈ.ಲಿ. ಕಂಪನಿಯ ರೆಪ್ಪೆಸೆಂಟ್ರೇಟ್ ರವರು ನಮ್ಮನ್ನು ಸಂಪರ್ಕಿಸಿ ಓಜೋನ್ ಕಡೆಯಿಂದ ಉತ್ತಮ ಗುಣಮಟ್ಟದ ಅಪಾರ್ಟ್‌ಮೆಂಟ್ ಗಳನ್ನು ನಿರ್ಮಾಣ ಮಾಡುತ್ತಿದ್ದು, ಅಪಾರ್ಟ್‌ಮೆಂಟ್‌ನ್ನು ಖರೀದಿಸುವುದಾದರೆ ತಗಲುವ ಹಣವನ್ನು 10 : 80 : 10 ಪ್ರಮಾಣದಲ್ಲಿ ಪಾವತಿಸಬಹುದೆಂದು ನಂಬಿಸಿದ್ದು, ಇದರಿಂದ ನಾನು ಮತ್ತು ನನ್ನ ಪತ್ನಿ ಅಕಾಂಕ್ಷೆ ಶರ್ಮ ರವರು ಸೇರಿ ಸದರಿ ಓಜೋನ್ ಕಂಪನಿಯ ಪ್ರಾಜೆಕ್ಟ್‌ನ Aqua 2 ರಲ್ಲಿ, ಕೆ-202 ನಂಬರಿನ 3 BHK ಅಪಾರ್ಟ್‌ಮೆಂಟ್‌ನ್ನು ಬುಕ್ ಮಾಡಿ ರೂ 858855/-ರೂಪಾಯಿಗಳನ್ನು ಪಾವತಿಸಿ ದಿನಾಂಕ: 14/08/2015 ರಂದು ಅಗ್ರಿಮೆಂಟ್ ಮಾಡಿಕೊಂಡಿರುತ್ತೇವೆ. ನಂತರ ಕಂಪನಿಯ ಸಿಇಒ ಶ್ರೀನಿವಾಸ ಗೋಪಾಲನ ರವರು ನಮಗೆ HDFC ಲಿಮಿಟೆಡ್ ನ ರೆಪ್ಪೆಸೆಂಟ್ರೇಟ್ ರಾಜರಾಜೇಶ್ವರಿ ಎಂಬುವರನ್ನು ಪರಿಚಯಿಸಿ HDFC ಲಿಮಿಟೆಡ್ ನಿಂದ ಸಾಲವನ್ನು ಪಡೆಯುವಂತೆ ತಿಳಿಸಿದ್ದು ಅವರಂತೆ ನಾವು HDFC ಲಿಮಿಟೆಡ್ ನಿಂದ ಅಪಾರ್ಟ್‌ಮೆಂಟ್ ಖರೀದಿಸಲು 68,2000/- ಸಾಲಕ್ಕಾಗಿ ನಾವು ಬ್ಯಾಂಕ್ ಓಜೋನ್ ಕಂಪನಿಯವರು ಮೂರು ಜನ ಸೇರಿ (ಟ್ರಿಪಾರ್ಟೆಟ್) ಅಗ್ರಿಮೆಂಟ್ ಅನ್ನು ಮಾಡಿಕೊಂಡಿರುತ್ತೇವೆ. ಅಗ್ರಿಮೆಂಟ್ ಪ್ರಕಾರ ಅಪಾರ್ಟ್‌ಮೆಂಟ್ ಕಡೆವವರಿಗೂ ಸಾಲದ ಕಂತನ್ನು (ಇಎಂಐ) ಓಜೋನ್ ಕಂಪನಿಯವರ ಪಾವತಿಸುವುದಾಗಿ ಒಪ್ಪಿರುತ್ತಾರೆ. ಅಗ್ರಿಮೆಂಟ್ ಪ್ರಕಾರ ಅಪಾರ್ಟ್‌ಮೆಂಟ್ ನ್ನು ಡಿಸೆಂಬರ್ 2017 ರಲ್ಲಿ ಮುಗಿಸಿ ನೀಡಬೇಕಿತ್ತು, ಆದರೆ ಅಪಾರ್ಟ್‌ಮೆಂಟ್ ಗಳು ಇನ್ನೂ ನಿರ್ಮಾಣ ಹಂತದಲ್ಲಿದ್ದು ಕೇವಲ 60% ಕಾಮಗಾರಿಯು ಮುಗಿದಿರುತ್ತವೆ, ಸಾಲದ ಶರತ್ತು, ಪ್ರಕಾರ HDFC ರವರು ಹಂತ ಹಂತವಾಗಿ ಹಣವನ್ನು ಬಿಡುಗಡೆ ಮಾಡದೇ 90% ಹಣವನ್ನು ಅಂದರೆ ರೂ 72,14,855/- ರೂ. ಗಳನ್ನು HDFC ನವರು ನಮಗೆ ತಿಳಿಯದ ಹಾಗೆ ಓಜೋನ್ ಡೆವಲಪ್ಷರ್ಸ್ ಕಂಪನಿಯವರಿಗೆ ಬಿಡುಗಡೆ ಮಾಡಿರುತ್ತಾರೆ. ಅಗ್ರಿಮೆಂಟ್ ಪ್ರಕಾರ ಜೂನ್-2019 ರವರೆಗೆ ಪ್ರೀಮಿಯಂ ಅನ್ನು ಪಾವತಿಸಿದ್ದು ನಂತರ ಡಿಸೆಂಬರ್-2019 ರಲ್ಲಿ, ಅಪಾರ್ಟ್‌ಮೆಂಟ್ ನ್ನು ಮುಗಿಸಿ ನಮಗೆ ನೀಡುವುದಾಗಿ ನಂತರ ಇ.ಎಂ.ಐ ಅನ್ನು ನಮಗೆ ಪಾವತಿಸುವಂತೆ ಮುಂದುವರೆಸುವಂತೆ ಸೂಚಿಸಿರುತ್ತಾರೆ. 2019ರಲ್ಲೂ ಕೂಡ ಅಪಾರ್ಟ್‌ಮೆಂಟ್ ನ್ನು ನೀಡದ ಕಾರಣ HDFC ನಲ್ಲಿ ವಿಚಾರಿಸಿದಾಗ ನಮ್ಮ ಸಾಲದ ಸಂಪೂರ್ಣ ಹಣವನ್ನು ಓಜೋನ್ ಕಂಪನಿಗೆ ಪಾವತಿಸಿರುವುದಾಗಿ ತಿಳಿಸಿ ನಮ್ಮನ್ನು HDFC ನಿಂದ ಹೊರಗೆ ಕಳುಹಿಸಿರುತ್ತಾರೆ, 2017 ರಿಂದ 2021 ರವರೆಗೆ ಕಾಮಗಾರಿಗಳನ್ನು ಪೂರ್ಣ ಮಾಡದೆ ನಮಗೆ ಮೋಸ ಮಾಡಿರುವುದು ತಿಳಿದು ಓಜೋನ್ ಕಂಪನಿಗೆ ತೆರಳಿ ವಿಚಾರಿಸಿದಾಗ ಯಾರೂ ಕೂಡ ನಮಗೆ ಸರಿಯಾಗಿ ಸ್ಪಂದಿಸದೇ ಸಿ. ಇ.ಓ ರವರನ್ನು ಬೇಟೆ ಮಾಡಲು ಹೇಳಿ ಹೊರಗೆ ಕಳುಹಿಸಿರುತ್ತಾರೆ, ನಂತರ ನಾನು ರೇರ್ ಗೆ ದೂರು ನೀಡಿದಾಗ ಜುಲೈ 2020 ರೊಳಗೆ ಕಾಮಗಾರಿಯನ್ನು ಮುಗಿಸಿಕೊಡುವುದಾಗಿ ಹಾಗು ದೂರನ್ನು ಹಿಂಪಡೆಯಲು ತಿಳಿಸಿದ್ದು, ನಂಬಿಕೆಯಿಂದ ನಾವು ದೂರನ್ನು ಹಿಂಪಡೆದುಕೊಂಡಿರುತ್ತೇವೆ. ಅಲ್ಲಿಯವರೆಗೂ ಓಪೋನ್ ಕಂಪನಿಯವರು ನಮಗೆ 18,19,185/- ರೂಗಳ ಕ್ರೆಡಿಟ್ ನೋಟ್ ನ್ನು ನೀಡಿರುತ್ತಾರೆ. ಅಕ್ಟೋಬರ್ 2021 ರಲ್ಲಿ, ನಾವು ಸದರಿ ಅಪಾರ್ಟ್‌ಮೆಂಟ್‌ನ ಕಾಮಗಾರಿಯನ್ನು ನೋಡಲು ಹೋದಾಗ ನೆಕ್ಯೂರಿಟರವರು ನಮ್ಮನ್ನು ಹೊರಹಾಕಿರುತ್ತಾರೆ. ಆಗ ಕಂಪನಿಯವರನ್ನು ಸಂಪರ್ಕಿಸಲು ಪ್ರಯತ್ನಿಸಿದಾಗ ಯಾರೂ ಕೂಡ ನಮಗೆ ಸ್ಪಂದಿಸಿರುವುದಿಲ್ಲ, ಕಂಪನಿಯವರು ಗ್ರಾಹಕರ ಹಣವನ್ನು ಬೇರೆ ಕಡೆಗೆ ಬಳಸಿ ಕೆಲಸವನ್ನು ಅಪೂರ್ಣ ಮಾಡಿರುತ್ತಾರೆ. ನಮಗೆ ನಂಬಿಕೆ ದ್ರೋಹ ಮಾಡಿ ವಂಚನೆ ಮೋಸ ಮಾಡಿರುವ ಕಂಪನಿ ಸಿ.ಇ.ಓ ಶ್ರೀನಿವಾಸ ಗೋಪಾಲನ್, ಡೈರೆಕ್ಟರ್‌ಗಳಾದ ವಾಸುದೇವನ್ ಸತ್ಯಮೂರ್ತಿ ಪ್ರಿಯಾ ವಾಸುದೇವನ್, ರಾಜೀವ್ ಬಂಡಾರಿ,, ಸಿವುಸಾಗರ್ ನೇಮಿಚನ್ ದರ್ಬಕುಲ ವಂಶಿ, ಎಸ್.ಬಾಸ್ಕರನ್, ಗ್ರೇಟಾ ಹಾಗೂ ಹೆ.ಡಿ.ಎಫ್.ಸಿ ಲಿಮಿಟೆಡ್ ಅಧಿಕಾರಿಗಳ ವಿರುದ್ಧ ಸೂಕ್ತ ಕಾನೂನು ಕ್ರಮ ಜರುಗಿಸಬೇಕೆಂದು ನೀಡಿದ ದೂರು ಇತ್ಯಾದಿ."

"This petition is filed by the petitioner accused Nos.1 and 2 under Section 482 of Cr.P.C. for quashing the FIR in Crime No.183/2021 registered by the Kodigehalli Police station for the offences punishable under Sections 403, 406, 420 and 120B of IPC, pending on the file of IV Additional Chief Metropolitan Magistrate, Bengaluru."

2.

Heard the arguments of learned counsel for the petitioners, learned HCGP for the State and learned counsel for respondent No.2.

3.

During the pendency of the petition learned counsel for the petitioners and respondent No.2 submits the matter has been settled between the petitioners and respondent No.2 before the Real Estate Regulatory Authority (RERA), and he has no objection for quashing the criminal proceedings

4.

Learned counsel for the petitioners submits the accused Nos.1 and 2 are the main accused who is MD and other two persons are only employees and there is no objections for the respondent to quash the entire FIR in view of the settlement between the parties before the RERA. Hence, conducting investigation against the petitioner is nothing but abuse of process of law in view of the settlement between the parties.

5.

In view of joint compromise between the parties and in view of the judgment of Hon'ble Supreme Court in the case of Gian Singh vs. State of Punjab and Another reported in 2012 CRI.L.J.4934, the criminal proceedings requires to be quashed.

6.

Accordingly, the criminal petition is allowed.

7.

The proceedings against petitioners/accused Nos.1 and 2 in Crime No.183/2021 registered by the Kodigehalli Police station for the offences punishable under Sections 403, 406, 420 and 120B of IPC, pending on the file of IV Additional Chief Metropolitan Magistrate, Bengaluru, is hereby quashed."

".... .... ....

3.

The present complaint is being filed against the Accused No. 1 to 7 and various other accused persons being all officials of Accused No. 1, who are/were responsible for the day-to-day management of the affairs of the Company, and also against various Banks, Housing Finance Companies, namely, Accused No. 8 to 11 and their officials and various other unknown accused persons involved in the conspiracy for commission of offences punishable under Sections 406, 409, 417, 418, 420 and 120B r/w Section 34 of the Indian Penal Code, 1860 and Section 9 of the Karnataka Protection of Interest of Depositors Act, 2004.

4.

The Accused No. 2 to 7 are the Directors of the aforementioned Company (Accused No.1) and have deliberately committed the aforementioned offences on behalf of the Company. The other Accused persons being the channel partners, the Banks/housing finance companies, namely, (1) Indiabulls Housing Finance Ltd (2) Housing Development Finance Corporation Ltd (3) Piramal Capital & Housing Finance Limited and (4) Bank of Baroda, arrayed as accused Nos.8-11 above, and various bank officials who have connived with Accused Nos. 1-7 and have acted under their directions jointly for illegal gains with dishonesty and have caused huge financial loss to the Complainants. The total amount of loss caused to the Complainants jointly is approximately around Rs. 80,00,00,000/-(Rupees Eighty Crore only).

5.

All the Accused, conspired together, portrayed a very rosy and lucrative picture and fraudulently promoted a real estate project being developed and constructed by Accused No. 1 in 2014 under the name of 'Ozone Urbana' situated at Kannamangala Village and Poojanahalli Village, Kasaba Hobli, Devanahalli Taluk, Bangalore Rural District, Karnataka.

6.

All the aforesaid Accused persons, with a dishonest intention to cheat the Complainants, lured and induced the Complainants to purchase units/flats/apartments in the said real estate project by offering various predefined schemes, like Subvention Scheme; Buy-Back Scheme, 2X Scheme etc. jointly launched by Accused Nos. 1-7 along with Accused No. 8 to 11. Based on the said schemes which were projected as being most profitable and lucrative and being induced by the representations made by the Accused, the innocent Complainants booked the units with the Company in its real estate project by paying almost 95% of the initial sale consideration amount within 30 - 45 days from the date of signing of the Builder Buyers Agreement.

7.

Accused Nos. 1-7 represented that they are a leading market player in the real estate industry and are well known for providing timely possession of the projects with good quality construction materials, satisfied clients, etc. Accused Nos. 1-7 assured and represented to all homebuyers including the Complainants herein that they have tie-ups with various credible Banks and Housing Finance Companies (Accused Nos. 8-11) who are willing to grant home loans to homebuyers by taking in mortgage the flats/units/apartments under purchase. Thereafter, all the Accused Nos. 1-11 acting jointly and severally represented to the Complainants that the payment options under the various Schemes, rates of interest etc. were very, reasonable and further that the Accused Nos. 1-7 shall make payment of the installments of the pre-EMI/EMI amounts till the date of possession.

.... .... ....

11.

As mentioned hereinabove, all the Accused persons proposed various schemes to allure and induce the Complainants to purchase flats/units in the said real estate project. Some of the schemes which were offered are Buy-back scheme with assured returns, subvention scheme with payment of Pre-EMIs till possession, free-rental scheme with payment of rent by the accused builder till possession, etc. Accused Nos. 1-7 employed experienced and skilled personnel to mislead and deceive the general public especially the NRI's to believe that the promises made were true. The Accused Nos. 1-7 provided assurances to the Complainants that they are very experienced and efficient developers and by any means the dates as stipulated in the Agreements would be met.

.... .... ....

14.

After the bookings and disbursal of the loan amounts, the accused persons represented that they are following the proposed plans to gain the confidence of the complainants/allottees and to allure new allottees for the vacant flats.

15.

After taking the advance payments, Accused Nos. 1-7 started to show their true colours inasmuch as Accused Nos. 1-7 made continuous and intentional defaults in the process of construction and held-up the hard-earned money of the complainant allottees for their illegal personal gain.

16.

As stated already, in order to finance the sale of the purchased flat, the Complainants had taken home loans from the Banks and Housing Finance companies' abovementioned as part of pre-condition of the various Scheme(s) by signing and executing a Tri-Partite Agreement (the 3 parties to the said Agreement were the Company, the Complainant/allottee and the Bank/Housing Finance Company). It is important to point out here that in accordance with the Tri-Partite Agreement, the amount of loan was disbursed directly to Accused No. 1, for purchase of the units. Most the sale transactions took place/were executed in the year 2015-17. The Complainants/allottees were promised possession of their respective units/flats within 3 years from the date of signing of the Construction Agreement. in particular, the Complainants No.1 to 7 were promised the possession of their units by 31.03.2019, 31.03.2019, 01.12.2017, 01.12.2017, 01.10.2016, 31.03.2019 and 31.12.2022 respectively. .... .... ....

18.

It will be further most important to point out here that as per the contracted Subvention Scheme, Accused No. 1 was obligated and mandated to make payment of PRE-EMI/EMI till the date of possession of the unit and/or exercise of the Buy-Back option by the Complainants. However, Accused No. 1 along with Accused Nos. 2-4 have drastically failed to honour their various bounden commitments/promises and assurances including their obligations under the Subvention Scheme, 2X Option, Buy-Back option, etc. Ever since 2016, there has been no construction at the site of the Project. Thus, it is evident that the project is struck and there is extra-ordinarily delayed by more than 4 years.

19.

Since around 2016, the other Accused persons, namely, the Banks and Housing Finance Companies, instead of getting their Pre-EMIs/Money from Accused Nos. 1-7, are harassing the innocent homebuyers, viz, the Complainants/allottees, through calls, legal notices, threat of initiation of Civil and Criminal proceedings, etc., despite the fact that they are aware that no fault can be attributable on the part of Complainants in any manner whatsoever, .... .... ....

21.

Finding themselves in a position where it was clear that the Complainants had been cheated by all the Accused persons, the Complainants tried to make efforts, and seek a remedy to resolve their agony. For that, the Complainants tried to find out the prevalent law on the subject and the requisites to be mandatorily followed by Accused Nos. 1-7 at the time of commencement of a real estate project under RERA Act. It was at that time that the Complainants got to know that Accused Nos. 1-7 have also violated various provisions of law which includes but not limited to RERA Act, 2016, for which various complaints have been filed and the same are pending against Accused Nos. 1-7 before various authorities.

22.

It also came to the knowledge of the Complainants that Accused Nos. 1-7 have also never deposited or maintained 70% of the deposited amounts into the Escrow account, specifically opened for this purpose in accordance with the RERA Act. Further, Accused Nos. 1-4 have also withdrawn the inordinate amounts from the said Escrow account which was not in proportion of the construction as required by the law.

23.

Further, despite receiving 95% payment of the sale consideration of the respective flats from the Complainants, Accused Nos. 1-7 has grossly and fraudulently failed to offer and hand over possession of the purchased unit/flat on the time as stipulated in the Construction Agreement. Be that as it may, Accused Nos. 1-7 have even failed to consider or even make sincere attempts and efforts of completing the project in time or even thereafter.

24.

It is clear that Accused Nos. 1-4 along with all other Accused persons employed this Ponzi scheme fraud by alluring the Complainants/allottees with high return. The facts reveal that as soon as the money was deposited by the Complainants with Accused Nos. 1-7 through the aegis of the other Accused persons who financed the sale consideration, the Accused Nos. 1-7 siphoned off the deposits and took the money from the bank that belonged for the construction of this project to pay off or invest in its other projects/sister concerns. Thereafter, having unjustly enriched itself after causing huge financial loss to the Complainants/allottees, Accused Nos. 1-7 have been purposely delaying the construction of the project. The Complainants/allottees have knowledge that Accused Nos. 1-7 have siphoned off the amounts deposited for this project to other projects/sister concerns to employ them into several other projects. Also, the other Accused persons without considering the pace of the construction disbursed the loan amount directly to Accused Nos. 1-7.

25.

The Accused Nos. 1-7 proposed the scheme of buyback with assured returns but intentionally defaulted to fulfill their promise. Now, Accused Nos. 1-7 are purposely delaying the performance with the motive of wrongfully enjoying the money paid by the complainant allottees and are employing the same in some other project(s) which tantamount to clear criminal breach of trust.

26.

Accused Nos. 1-7 along with the all other Accused persons have pressurized, lured and coerced the complainants herein, who have exercised or wish to exercise their buy-back option as per the agreements, to execute supplementary or roll over agreements to provide their consent to the accused builder to retain their hard-earned money into the project without any payments. Moreover, it was agreed between the accused builder and the allottees that after exercising buy-back option, the accused builder shall cancel the unit allotted, pay the agreed amount to the said allottee within 45 days of exercising the option and foreclose the loan taken by the allottee for the payment of the said unit.

27.

In the case of the allottees who have not surrendered to the pressure, undue influence or coercion of the accused builder and have not executed supplementary or roll over agreement(s), the accused builder has forcefully got the cancellation forms executed by them without making any payments in return and thereby cancelled their units and sold these units to some other persons and accepted the payments from them also. These allottees are left to the mercy of the accused builder and have nothing in their hands, their units have been cancelled and resold but no payments are made to them and the obligation of repayment of the loan is also left on their heads.

28.

The accused persons, even after cancelling the unit and selling it to the other some persons, intentionally defaulted to make the said payments within the time agreed after, due exercise of the buy-back option and has been wrongly enjoying the hard-earned money of the innocent allottees.

29.

The accused persons proposed the Subvention scheme with no EMI till possession but they have been a regular defaulter in fulfilling their promises. Beside taking the exaggerated amount for the units from the allottees and making the promise of paying the EMIs till possession, the accused persons no. 1 to 4 have intentionally made defaults due to which the allottees are suffering. Further, the accused persons promised to pay the EMIs till possession which they intentionally failed to perform due to which the banks started pressuring and harassing the allottees to pay the EMIs, intimidated and threatened by the accused bank officials, the allottees were forced to file a writ petition before the Hon'ble Karnataka High Court against the banks wherein interim relief has been provided to the Allottees. A copy of the Interim Order passed by the Hon'ble Court of Karnataka in W.P.NO.18713/2021 is produced herewith and marked as ANNEXURE-E. .... .... ....

31.

The accused bank officials in connivance with the accused no. 1 to 7 and its officials, after the approval of the loan in the name of the complainant, disbursed whole of the loan amount directly to the accused no. 1 company without satisfying themselves as to the genuineness of the project at the initial stages of the construction and without conducting proper due diligence w.r.t. the company which is in strict violations of the legal policies formulated by the RBI and the Central Government.

32.

The accused no. 1 to 7 are liable for falsification of accounts as they have got disbursed the amount from the bank in regard of completion of the project but wrongly allocated the money in some other projects due to which the construction of this specific project is struck and allottees are suffering. .... .... ....

37.

To summarize, the Accused above named, with a dishonest intention induced the Complainants to pay a sums as aforesaid and being induced by the same, the Complainants paid the said amounts to the Accused No. 1 to 7. Further, the all the Accused conspired and connived together to raise loans in the name of the Complainants and thereafter, the Accused No. 1 to 7 intentionally defaulted in repaying the same to the Accused No. 8 to 11. The Accused Nos. 1 to 7 have now, neither given possession of the property nor have repaid the loan to the Accused No. 8 to 11 as agreed. The Accused No. 8 to 11, fully having knowledge of the intentions of the Accused Nos. 1 to 7 disbursed the loan to the Accused No. 1 to 7 and now seek to recover the said loan from the Complainants. The Accused No. 1 to 7 are also not returning the money to Complainants. This way, the Accused have conspired together and have defrauded the Complainants. The 409, 417, 418, 420 and 120B r/w Section 34 of the Indian Penal Code 1960 and Section 9 of the Karnataka Protection of Interest of Depositors Act, 2004.

38.

The above said facts and circumstances disclose commission of various crimes under various laws which calls for immediate and strict enquiry and investigation into the affairs of the accused persons.

39.

It is pertinent to mention here that, the Complainants had approached the Halsoor Police Station and had informed them similarly regarding the offences that have been committed by the Accused, vide letter dated 20.02.2022. However, the officers of the said Police Station refused to register the FIR and also refused to acknowledge the receipt of the complaint, which is in clear violation of the judgment of the Hon'ble Apex Court in Lalita Kumari vs. State of Uttar Pradesh. Also, the Complainants approached the Commissioner of Police seeking redressal of their grievance vide letter dated 25.02.2022, but in vain. Thus the Complainants having no other remedy have approached this Hon'ble Court seeking a direction under Section 156(3) of the Code of Criminal Procedure, 1973. Copy of the letter addressed to the Halsoor Police Station and the Commissioner of Police are produced herewith and marked as ANNEXURE - F and G respectively."

“.... .... ....

3.

The case of the petitioners is that the respondent Nos.1 to 128 have filed private compliant before the Spl. Court under Section 2 (d) read with Section 156(3) of Cr.P.C. The same is registered as PCR No.20/2022 alleging that the accused Nos.1 to 7 in the complaint and various other accused being the officials of accused No.1, the company called Ozone Urbana Infra Developers Pvt. LTD., and they were looking after the day-to-day managements of the company. The accused Nos.2 to 7 are Directors of the company and they are being channel partners, the banking/housing finance companies, namely, 1) Indiabulls Housing Development Finance Ltd. 2) Housing Development Finance Corporation Ltd. 3) Piramal Capital & Housing Finance Limited and (4) Bank of Baroda, arrayed as accused Nos.8 to 11 and various bank officials who have jointly for illegal gains with dishonesty and have caused huge financial loss to the complainants to the worth of Rs.80,00,00,000/-(Rupees Eighty Crore).

4.

The accused persons have conspired together, portrayed a very rosy and lucrative picture fraudulently promoted a real estate project being developed and constructed by the accused No.1 in 2014. They have induced the complainants, who purchased units/flats/apartments in the real estate project and various predefined schemes like Subvention Scheme, Buy-Back Scheme, 2X-Scheme etc., jointly launched by accused Nos.1 to 7 along with accused Nos.8 to 11 and projected as being most profitable and lucrative and being induced by the representations made by the accused, the innocent complainants booked the units with accused No.1/company in its real estate project by paying almost 95% of the initial sale consideration amount within 30 to 45 days by signing of the Builder Buyers Agreement. .... .... ....

19.

Having heard the arguments and perused the records, as per the complaint filed before the Special Court by the respondents, who are the home buyers from the petitioner company, the petitioner company entered into a tripartite agreement with accused Nos.8 to 11 the bankers and the complainants. As per the agreement, the accused persons/developers used to construct the plots and allot it to the respondent/complainant’s for making payment. The accused Nos.8 to 11 being bankers agreed to lend financial assistance. Accordingly, the loans were raised by the complainants with accused Nos.8 to 11. The loans were directly paid to the accused persons even though loans were sanctioned to the complainants. Apart from that some of the complainant also paid money to the petitioners as advance consideration for allotting the plots. It is agreed between the parties mutually in case the complainants are not able to pay the full amount within the prescribed time, the accused persons will buy back the plots by paying the money to the complainants or they shall repay the loans directly to the banker by way of EMI. Admittedly, the accused persons were a developing company and they are owning land and they started developing the same. Though, they started putting up construction on the plots, there were not able to complete the plots due to various reasons, like not obtaining the sanction plan from the concerned authority. Though, they are said to have obtained a plan from the Village Panchayat, it is not the competent authority. Therefore, the building was not able to complete.

20.

It is also admitted fact that in the meanwhile the respondents have approached the RERA Court and the accused persons have undertaken to complete the project, but the same is not completed. Still the more than 50% of the work is pending. It is also admitted fact that in the meanwhile, against the accused person a dispute was raised before NCLT, Bangalore Bench. Where the insolvency proceedings were initiated and the NCLT initially dismissed petition and later it was restored by the NCLT. Admittedly, one proceeding is pending before the NCLT and another before the RERA court in respect of same cause of action. In the meanwhile the present complaint came to be filed by 128 complainants before the Special Court both under the IPC as well KPID Act.

21.

The leaner senior counsel as taken main contention that KPID is not applicable in view of the Section 2(2) of the KPID Act, as the petitioner company is not a financial company. For the conveyance, the defines of Section 2(2) read as under:

“Section 2(2): Definitions- In this Act unless the context otherwise requires,-

(1)

"Competent Authority" means the authority appointed under Section 5;

(2)

"Deposit” includes and shall be deemed always to have included any receipt of money or acceptance of any valuable commodity by any Financial Establishment to be returned after a specified period or otherwise, either in cash or in kind or in the form of a specified service with or without any benefit in the form of interest, bonus, profit or in any other form, but does not include, -

(i)

amount raised by way of share capital or by way of debenture, bond or any other instrument covered under the guidelines given and regulations made, by the Security Board of India, established under the Securities and Exchange Board of India Act, 1992;

(ii)

amounts contributed as capital by partners of a firm;

(iii)

amounts received from a scheduled bank or a co-operative bank or any other banking company as defined in clause (c) of section 5 of the Banking Regulation Act, 1949 (Central Act 15 of 1992) :

(iv)

any amount received from,-

(a)

the Industrial Development Bank of India,

(b)

a State Financial Corporation,

(c)

any financial institution specified in or under section 4A of the Companies Act, 1956 (Central Act 1 of 1956) or

(d)

any other institution that may be specified by the Government in this behalf:

(v)

amounts received in the ordinary course of business by way of,-

(a)

security deposit,

(b)

dealership deposit,

(c)earnest money,

(d)

advanced against order for goods or services;

(vi)

any amount received from an individual or a firm or an association of individuals, registered under any enactment relating to money lending which is for the time being in force in the State: and

(vii)

any amount received by way of subscriptions in respect of a Chit.

Explanation I.- "Chit" has the meaning as assigned to it in clause (b) of section 2 of the Chit Funds Act, 1982 (Central Act 40 of 1982);

Explanation II.- Any credit given by a seller to a buyer on the sale of any property(whether movable or immovable) shall not be deemed to be deposit for the purposes of this clause,”

23.

The learned Senior Counsel for the petitioners contended that there is violation of guideline issued by the Hon’ble Supreme Court in Priyanka Srivatsava’s case and affidavit was not filed.

24.

In this regard, on perusal of the records, the respondents have represented by the authorized signatory of 07 persons who are signed the complaint. The respondents have not filed any affidavit in respect of filing the complaint to the police. Admittedly, there is no complaint filed to the official of the police under Section 154 (3) of Cr.P.C. But the private complaint directly filed without complying the part of the guidelines of the Hon’ble Supreme Court. Of course, the Trial Court has not taken cognizance and just referred the case to the police for investigation under Section 156 (3) of Cr.P.C. Therefore, without compliance the very reference itself is not in accordance with law. .... .... ....

27.

Therefore, the very filing of the complaint before the Prl. District and Sessions Judge, at Bengaluru is not correct. The learned Prl. District and Sessions Judge, at Bengaluru could have forward the complaint to the designated Court and without doing so, by ignoring the its own order and notification dated 09.07.2021 referring the compliant to the police station, is not correct. That part there is no application of mind by the learned Sessions Judge, while referring the matter to the police and not verified the affidavit and guidelines of the Hon’ble Supreme Court issued in the case of Priyanka Srivatsava. Therefore, the very reference of the complaint and the registering the FIR is liable to be set-aside.

28.

Apart from that though the respondents have already approached RERA Court and NCLT, that is a not ground for quashing the case on merits. The FIR shall be set-aside only on the technical grounds and the complaint is entertainable by the Special Court under the KPID Act. Accordingly, this Court may not be go into the merits of the case. Hence, I proceed to pass the following;

O R D E R

i.

The petition is allowed in part.

ii.

The reference order dated 26.05.2022 in PCR.No.20/2022 and consequential registering the FIR by the police in Crime No.143/2022 dated 17.07.2022 is hereby set-aside. The FIR and the reference order is quashed.

iii.

The complaint is restored to the Prl. City Civil and Sessions Judge, Bengaluru and Special Court for KPIDEF Act, at Bangaluru (CCH-1) with a direction to transfer the complaint to the CCH-92 Special Court.

iv.

The complainants have liberty to approach the police higher authorities as per the provisions of 156 (3) of Cr.P.C. (Old Code). Thereafter they have required to file detailed affidavit as per the guidelines issued by the Hon’ble Supreme Court in the case of Priyanka Srivatsava.

v.

After the compliance by the complainants and if they file affidavits before the Special Court, the Special Court shall proceed in accordance with law." (Emphasis supplied)

“.... .... ....

109.

Tersely put, it is only such property which is derived or obtained, directly or indirectly, as a result of criminal activity relating to a scheduled offence that can be regarded as proceeds of crime. The authorities under the 2002 Act cannot resort to action against any person for money laundering on an assumption that the property recovered by them must be proceeds of crime and that a scheduled offence has been committed, unless the same is registered with the jurisdictional police or pending inquiry by way of complaint before the competent forum. For, the expression “derived or obtained” is indicative of criminal activity relating to a scheduled offence already accomplished. Similarly, in the event the person named in the criminal activity relating to a scheduled offence is finally absolved by a court of competent jurisdiction owing to an order of discharge, acquittal or because of quashing of the criminal case (scheduled offence) against him/her, there can be no action for money laundering against such a person or person claiming through him in relation to the property linked to the stated scheduled offence. This interpretation alone can be countenanced on the basis of the provisions of the 2002 Act, in particular Section 2(1)(u) read with Section 3. Taking any other view would be rewriting of these provisions and disregarding the express language of the definition clause “proceeds of crime”, as it obtains as of now. .... .... ....

382.8.

The offence under Section 3 of the 2002 Act is dependent on illegal gain of property as a result of criminal activity relating to a scheduled offence. It is concerning the process or activity connected with such property, which constitutes the offence of money laundering. The authorities under the 2002 Act cannot prosecute any person on notional basis or on the assumption that a scheduled offence has been committed, unless it is so registered with the jurisdictional police and/or pending enquiry/trial including by way of criminal complaint before the competent forum. If the person is finally discharged/acquitted of the scheduled offence or the criminal case against him is quashed by the court of competent jurisdiction, there can be no offence of money laundering against him or any one claiming such property being the property linked to stated scheduled offence through him.”

“ …. …. ….

31.

When there are findings arrived at independently in both the FIR and ECIR, can the Court completely disregard those findings and bring the proceedings to an unjustified end just because one of the proceedings was quashed on procedural/technical grounds without due impetus to the substantive grounds? This question requires an in-depth consideration.

F) DELIBERATIONS ON THE PRINCIPLE OF AUTOMATIC QUASHING OF ECIR ONCE FIR STANDS QUASHED:

32.

It shocks the conscience of the Court that in recent cases involving money laundering, a certain pattern has emerged, whereby, the FIR quashed through minor technical glitches or procedural irregularities and with that as a ground they seek for quashing of ECIR also. The wordings in the final summary portion of the Vijay Madanlal's judgment in paragraph 467 (5)(d) is used in isolation without due consideration to the judgment as a whole to wriggle away from the clutches of PMLA. The wordings in Vijay Madanlal's case cannot be accorded a narrow meaning by relying only on the summarisation towards the end of the judgment, but the observations in various paragraphs and the findings made therein must be read in tandem to extract its true essence. At the outset, this Court would clarify that we are neither attempting nor intending to rewrite the Vijay Madanlal's judgment. This Court is merely restraining from a pick and choose application of the principle established in Vijay Madanlal case and rather, is for the complete harmonious application of the judgment as a whole in letter and spirit. Any application of principle, even if in its literal form paves way for injustice, then the Court is allowed to take a detour to expound the law in such a way which serves the cause of justice. If the principles of automatic quashment of ECIR is adopted arithmetically, the very purpose and objective of PMLA is defeated.

33.

This point of contention in the present Petition falls within the contours of the judgment rendered by the Hon'ble Supreme Court in Vijay Madanlal case. The Vijay Madanlal case extensively dealt with the validity of different provisions in the PMLA, 2002. The observations made in the Paragraph No. 281 relevant to the case on hand is extracted below:

“281.

The next question is : whether the offence under Section 3 is a standalone offence? Indeed, it is dependent on the wrongful and illegal gain of property as a result of criminal activity relating to a scheduled offence. Nevertheless, it is concerning the process or activity connected with such property, which constitutes offence of money-laundering. The property must qualify the definition of “proceeds of crime” under Section 2(1)(u) of the 2002 Act. As observed earlier, all or whole of the crime property linked to scheduled offence need not be regarded as proceeds of crime, but all properties qualifying the definition of “proceeds of crime” under Section 2(1)(u) will necessarily be crime properties. Indeed, in the event of acquittal of the person concerned or being absolved from allegation of criminal activity relating to scheduled offence, and if it is established in the court of law that the crime property in the concerned case has been rightfully owned and possessed by him, such a property by no stretch of imagination can be termed as crime property and ex-consequenti proceeds of crime within the meaning of Section 2(1)(u) as it stands today. On the other hand, in the trial in connection with the scheduled offence, the Court would be obliged to direct return of such property as belonging to him. It would be then paradoxical to still regard such property as proceeds of crime despite such adjudication by a Court of competent jurisdiction. It is well within the jurisdiction of the concerned Court trying the scheduled offence to pronounce on that matter.”

34.

A blanket application of the observations made in the aforementioned judgment will not advance the object set out under the PMLA, 2002 and in turn will defeat its primary object. The Vijay Madanlal case is a binding precedent for all Courts below. And on careful application of the judgment, analysing on a case to case basis, the output shall defer for each case and not render the same result.

35.

Every case is marinated with different facts and circumstances and the application of law should not only meet the ends of Justice, but should also further the object behind the statute. The principles in Vijay Madanlalis set out clear with respect to proceeds of crime under PMLA, 2002, as under;

“281……….In the event of acquittal of the person concerned or being absolved from allegation of criminal activity relating to scheduled offence, and if it is established in the court of law that the crime property in the concerned case has been rightfully owned and possessed by him, such a property by no stretch of imagination can be termed as crime property and ex-consequenti proceeds of crime within the meaning of Section 2(1)(u) as it stands today..”

36.

The Court's observations above hold that where a person is acquitted or absolved of a criminal activity relating to a scheduled offence and on establishing in a Court of law that the crime property is in legitimate ownership, such property cannot be termed as crime property and in consequence the PMLA offences loses its significance. Hence, to warrant a quashing of the ECIR, mere quashing of the FIR on technical grounds by itself does not make the ECIR liable to be quashed. That is not the observations set out in the Vijay Madanlal case. Rather in proceedings pertaining to the quashing of the FIR in a scheduled offence, the Court must have dealt with not mere procedural irregularities, but something more in the nature of substantive grounds.

37.

The exact wordings of the Court culls out the object. That the accused person should have been acquitted or absolved from the allegations of criminal activity relating to the scheduled offence and that the crime property should be rightfully owned and possessed by him. So the essence of the observations made herein is that the accused person should be exonerated from the charges levelled against him.

38.

Though there are multiple grounds for quashing an FIR, and in one of the many grounds an FIR can be quashed, when it comes to proceedings pertaining to quashing the ECIR, the Court must examine the grounds based on which FIR concerning the scheduled offence was quashed and after careful examination on a case to case basis, if the FIR was quashed on substantive grounds of absence of prima facie offence and not mere procedural irregularities, then the ECIR loses its significance and is liable to be quashed. Since the scheduled offence itself is not made out, then automatically no predicate offence can hold good in the ECIR. However, if the FIR was quashed purely on technical grounds or procedural irregularities, then it is to be understood that mere quashing of the FIR does not absolve the accused under the PMLA proceedings and inturn cannot collapse the predicate offence in the PMLA proceedings.

39.

Further, when the PMLA proceedings is set in motion and prima facie findings are already made, including completion of filing of chargesheet, then an FIR quashed after this stage cannot be a viable ground to quash the ECIR also. More so, the PMLA requires the presence of a scheduled offence to initiate proceedings under the Act. So it also becomes a mandate that the grounds on which scheduled offence was quashed is thoroughly examined before rendering the PMLA offence ineffective.

40.

This Court is not venturing into the grounds of quashing an FIR as the principles pertaining to the same has already been laid down elaborately by the Hon'ble Supreme Court. But the rationale here is to cull out the level of bearing that a quashed FIR has on an proceedings challenging the ECIR. This Court feels that all cases where FIR is quashed shall not automatically become a ground for quashing an ECIR. Instead a case to case analysis is a pre requisite for deciding on the sustenance of an ECIR. To put it in comprehensive terms, When the Court in an FIR quash proceedings has not delved into the merits of the offence, but rather found technical errors on the face of it, then the Court directs the quashing of the said FIR. The accused then goes on to challenge the ECIR by placing reliance on the said FIR Quash order to quash the ECIR also. But a reading of relevant paragraphs in the Vijay Madanlal's case clearly showcases that this is not the object behind the said judgment. The final summarisation, when read in tandem with the observations set out in paragraphs of the judgment and also keeping in line with the explanation to Section 44 of the PMLA, 2002, this Court comes to the irresistible conclusion that cases where FIR pertaining to the scheduled offence is quashed it does not automate the exoneration of the accused from the predicate offence. Rather FIR quashes on grounds of mere technicalities or procedural irregularities in the FIR, cannot by itself form a basis to grant an automatic quash of ECIR. Also in the aforementioned instance, there needs to be a case to case examination of the offence registered under the PMLA before the offence is rendered ineffectual.

41.

Hence, the moot point for consideration whether all cases where FIR has been quashed can pave way for quashing of ECIR? This Court feels that each case must be tested on its own, in consonance with the Vijay madanlal judgment and a blanket application of the principle without due regard to the facts of each and every case shall render both the judgment and the object of the PMLA ineffective.

G) IMPLICATIONS OF AUTOMATIC QUASHING OF ECIR BASED ON FIR QUASH:

42.

In cases as such where on initiation of PMLA proceedings, prima facie proceeds of crime has been traced, there arises a pertinent question as to whether this Court can stall such proceedings inspite of preliminary findings of the existence of proceeds of crime. The conscience of this Court is directed towards delivery of justice and though the FIR of scheduled offence stands quashed, it is merely on technicalities without analysing the merit of the scheduled offence. Hence, when “proceeds of crime” is traced in a parallel investigation by the Enforcement Directorate, this gives rise to another question that, once proceeds of crime isprima facie unearthed can ECIR be quashed on the ground that FIR was quashed. This clearly is an unjustified approach.”

21. Writ Petition No.4968 of 2024:

“Date 31/01/2024

To The Station House Officer Devanahalli Police Station. Bengaluru, Karnataka

Complainant:

Bhavna Sadhwani/Raju Sadhwani

9886406779 9845425000

Complaint against:

1.

Ozone Urbana Infra Developers Pvt Ltd. No.38, Ulsoor Road, Bangalore 560042. Web site: www.ozonegroup.com

2.

Mr.Vasudevan Satyamoorthy (Chairman and Managing director) DIN:00022732 Resident of No.32, Norris Road, Richmond Town, Bengaluru 560025, Mob:9845016477

3.

Mr.Satyamoorthy Sai Prasad(director) DIN:00022813 Resident Of : Nishanth Prime Apartments 5, Prime Street, Richmond Town, mOpp Hockey stadium, Museum road, Bengaluru 560025.

4.

Mrs. Priya Vasudevan (Ez-Director and wife of Chairman and MD of Ozone Group) DIN:00774484 Resident of No.32, Norris Road, Richmond Town, Bengaluru 560025.

5.

Mr.S.Baaskaran (Ex CEO) Address: Not Known Mob:9606035340

6.

Mr Srinivasan Gopalan(Ex CEO) DIN:06414360 Resident of No.34.G2.Sona Palace Apartments, Norris Road, Richmond Town, Bengaluru 560025

7.

Rajeev Bhandari (nominee Director) DIN:01176913 Address: NOT KNOWN

8.

Mr.Seewoosagar Nemchand (nominee Director) Din:08365678 Address: NOT KNOWN

Respected Sir,

Date: 31/01/2024

SUBJECT: Written Compliant

We, Bhavna Sadhwani (age 68) and Raju Sadhwani (age 70) (Complainants) residing at 2311, 1^st Cross, HAL 3^rd Stage, Extn, Opp Kemp Fort, Airport Road, Bangalore 560017, are Home Buyers in the residential township Ozone Urbana "Pavillion" Flat no. K 403 located at Devanahalli, Kannamangla village, Bangalore 562110('Apartment') and said to be constructed by Ozone Urbana Infra Developers Pvt Ltd (part of Ozone Group) having their office at No.38, Ulsoor Road, Bangalore 560042.('Ozone Group').

We the complainants are ordinary Senior Citizens of India and as flat purchasers constitute the vulnerable sections of society who have invested their life time savings for their dream home in Ozone Urbana "Pavillion" which was to be constructed by Ozone Urbana Infra Developers Pvt Ltd having their office at the address as stated above.

We state that Ozone group falsely represented to us that they are a leading company in real estate and are known for timely delivery of projects and use of the best quality construction materials. They advertised as building a fully contained township with Villa plots (meadows), senior living complexes (Serene, Irene Etc), various residential apartment projects (Aqua, Pavillion, Avenue Etc). With all quality amenities and facilities (Hospital,5 Star Hotel, School, retail Mall, Cineplex, Essentially promising a City within a City) necessary for a quality living in 185 acres of land situated in Kannamangla Village, Devanahalli, Bangalore 562110. They then marketed the above project township by taking out misleading full page advertisments in leading newspapers, Magazines, social Media etc and also falsely marketed themselves thru their own staff, channel partners and hired marketing agencies.

My husband and I on 04/02/2014 met with few Ozone group sales persons at their office in their project site at Kannamangala Village, Devanahalli, Bangalore. They took us around the model flat that they had constructed streeing upon their uncompromising attention to quality and detail of both materials and construction, they also stressed that they had the reputation of timely construction and hand over of flats to purchasers for possession. During this meeting they convinced us to put a down payment and book a 3 BHK flat in project "Pavillion" in Ozone Urbana. On 10/02/2014 we made two payments to Ozone by cheque no.065387 for Rs.3,00,000/-and cheque no.003406 for Rs.2,81,279/-drawn on HDFC bank and Standard Chartered Bank respectively.

Payment and book a flat :

We, quote, the following facts and details, We have invested in their project "Pavillion" in Ozone Urbana in a 3 BHK apartment bearing no.K 403 bought in March 2014 for delivery in Oct 2016 with grace period of 6 months that is March 2017, the building is yet NOT COMPLETE and there is no hope of it being completed. We paid the full value of the flat as demanded by the developer Ozone which is Rs,64,52,418/-(Rupees sixty Four Lakhs Fifty Two Thousand Four hundred and Eighteen) payment details attached, from our hard earned retirement savings. Due to all the broken promises by the builder we have been put in to a lot of Physical, Financial and Mental hardship. We have lost our health completely due to Ozone's malafide intentions. Please note they have not got the occupancy certificate hence there is no legal electricity, water connection, fire and pollution NOC's and other statutory clearancies since the building is not complete. As a result of the broken promises by the builder we Ordinary Law Abiding Senior Citizens with no source of income have had to borrow money from our son to survive.

When we questioned on several occasions about not handing over of the apartment as agreed the CRM manager have only given us excuses and have taken months and months to respond to us. Every March became December and every December became March of the following year. This again shows that all of the persons such as the Directors, CEO, the CRM Manager, Sales Representatives have colluded to Defraud and Cheat HomeBuyers like us. We have been in constant touch with their sales representative Ms.Bhuvna in person as well as email/letters. We had written to them on 29/08/2020 wherein we had highlighted that they are late by 4 yrs, Ms Bhuvna (CRM) assured us that the flat would be handed over in March 2021. Hence it is evident that grave injustice has been done to us as well as several Home buyers such as us. Ozone Group has CHEATED us.

Cause of Compliant:

The main reason for us filing a complaint and to register a F.I.R. is as follows

1.

Ozone has its License revoked by RERA for all its projects in Bangalore, hence it cannot construct nor will it be able to sell. At present the project construction and completion in the near future is completely out of the question. Inspite of this the Ozone Company is still continuing to market and sell flats/Apartments to the general innocent public which truly reveals the true characters behind this company.

2.

Ozone and its Chairman and MD Mr. Vasudevan Satyamoorthy has used the proposed project 185 Acres land to mortgage and fund his other company projects and ventures

3.

Mr.Vasudevan Satyamoorthy has diverted funds received from bookings and sale of apartments/Flats as Ozone Urbana project to offshore accounts, fund his personal estate purchases and other companies.

4.

It has come to our notice thru some confidential sources that Mr.Vasudevan Satyamoorthy the Chairman and MD of Ozone group is planning and making all arrangements to flee the country. 5.Mr.Vasudevan Satyamoorthy has already sold Two patches of the proposed land and buildings (National Public School and Hotel) in late 2023. And he is into negotiations with some prospective buyers to sell other assets.

6.

Mr.Vasudevan Satyamoorthy has not displayed any character befitting a businessman and Chairman and a MD of a reputed construction company, instead he has displayed lack of espect towards Law, Rules and regulations, Court Orders, lack of Compliance etc, everything that a crook in a suit employs.

7.

Its about 10 Years since we made the initial booking for this apartment from then till today we have suffered and continuing to suffer irreparable damage all around (360 degrees, and at the end of it our life is still in disarray. This man Satyamoorthy is oblivious to all this and unwilling to refund our amount with even simple interest. This man has scammed Hundreds of innocent people and should not be allowed to escape and go free.

We therefore humbly request that your good offices take cognizance of this compliant, investigate the matter and help us recover our money from this fraudulent developer and book Ozone Group, Its Directors and its Group companies involved under relevant provisions of the law.”

“15.

Offences by Companies.—(1) If the person committing an offence under this Act is a company, every person who at the time the offence was committed was in charge of, and was responsible to the company for the conduct of business by the company, as well as the company, shall be deemed to be guilty of the offence and shall be liable to be proceeded against and punished accordingly:

Provided that, nothing contained in this sub-section shall render any such person liable to such punishment provided in this Act if he proves that the offence was committed without his knowledge or that he exercised all due diligence to prevent the commission of such offence.

(2)

Notwithstanding anything contained in sub-section (1) where an offence under this Act, has been committed with the consent or connivance of, or is attributable to any negligence on the part of, any director, manager, secretary or other officer of the company, such director, manager, secretary or other officer shall also be deemed to be guilty of that offence and shall be liable to be proceeded against and punished accordingly.

Explanation.—For the purpose of this section,—

(a)

‘company’ means a body corporate and includes a firm or other association of individuals; and

(b)

‘director’ in relation to a firm means a partner in the firm.”

22. Writ Petition No.27587 of 2024:

“To, The Police Inspector, Devanahalli Police Station, Bengaluru.

Respected Sir/Madam,

Subject: Written Complaint

I am a home buyer in the residential township Ozone Urbana "Avenue" Flat no. S1102 located at Devanahalli, Kannamangala village, Bangalore 562110 ('Apartment) and said to be constructed by Ozone Urbana Infra Developers Pvt Ltd (part of Ozone Group) having their office at No.38, Ulsoor Road, Bangalore, 560042 (' Ozone Group'). Ozone group falsely represented to us that they are a leading company in real estate and are known for timely delivery of projects and use of the best quality construction materials. They advertised as building a fully contained township with Villa plots (meadows), senior living complexes (Serene, Irene Etc), various residential apartment projects (Aqua, Pavillion, Avenue Etc) With all quality amenities and facilities (Hospital, 5 Star Hotel, School, retail Mall, Cineplex, Essentially promising a City within a City) necessary for a quality living in 185 acres of land situated in Kannamangla Village, Devanahalli, Bangalore 562110. They then marketed the above project township by taking out misleading full page advertisments in leading newspapers, Magazines, social Media etc. and also falsely marketed themselves through their own staff, channel partners and hired marketing agencies. I purchased dream home in the said project in the year 2017 after inspecting the project which was introduced and personally shown to us by the company officials, I was taken to the company office in Ulsoor and was given a trust and asssurance by the directors of the company hence I was convinced to pay booking amount and I paid booking amount but the booking was not confirmed by the company, after due course of time and after constantly pushing for the receipts the company compelled me to change my choice of flat to another one by giving excuses. After a year the company headed by the people listed below convinced me and finally gave me a allotment letter in the year 2018. Subsequently I was made to enter into a sale agreement between me and the company. They gained my trust and confidence that the house/flat will be delivered and given possession by Dec 2022. They even offered me a attractive tripartite agreement between me, officials of the company and the bank, thereby the company ensured that I get the loan for the said purchase. I was ensured by the said company officials that they would be paying the Pre-emi up till the date of possession. In due course of time the company sent me a letter stating that the I will have to pay the Pre-emi before the possession was given. Ultimately the burden of paying for the delay was cast on me. Banks released 93 percent of funds to the said accused people without checking into the actual progress of the property. The flat that I booked was taken as a surety by the bank and they funds were released. Ultimately the possession was never given to me. A sum of 1,32,10,000/- (one crore thirty two lakh ten thousand rupees only) has been paid to the said accused company officials. As on date I do not have the flat, the building construction has been stalled. The developer and the company officials have lost the license to continue with the development of the project.

In due course of time in search of solution to this issue of not getting the flat and no refund from the builder for defaulting the possession of the property. I joined group of people who had purchased the flats in the same project. When I interacted with them I got to know that there was yet another person who had been sold the flat which was previously sold to me. When we exchanged the documents to see the details and reverify, I discovered that the flat which I purchased in the year 2017 was later sold to the other person on 09/11/2021 without informing me, without my consent, without giving me back the money I have paid, etc. The other person to whom the flat was sold also was offered bank loans organised by the developer builder accused. My property was given as a surety and security to get the bank loan, amount was dispersed by the bank. Later the developer took money from both of us and has now defaulted the possession. Now the banks are after me for the payments as the flat is mortgaged by multiple banks. They do not have exclusive rights over the property to be proceeding against. Ultimately the developer has cheated me, breached my trust, taken double the money, has not completed it, has not given possession, and also is not refunding me even after I got to know about such illegal acts.

It is also important to note that there are many people who have been cheated and who have face the similar situation and are systematically cheated by the officials of the company. Hence it is requested of this authority to register an FIR and immediately take actions against the said Accused people.

Complaint against :

1.

Ozone Urbana Infra Developers Pvt Ltd. No.38, Ulsoor Road, Bangalore 560042. Web site: www.ozonegroup.com

2.

Mr. Vasudevan Satyamoorthy R/O No.32, Norris Road, Richmond Town, Bengaluru 560025. Mob: 9845016477

3.

Mr.Satyamoorthy Sai Prasad, R/O Nishanth Prime Apartments, Prime Street, Richmond Town, Opp Hockey stadium, Museum road, Bengaluru 560025.

4.

Durbhakula Vamsi Sai Mob No: 9845000799

5.

Seewosagar Nemchand

6.

Rajeev Bhandari”

23. Writ Petition No.34702 of 2024:

3.

The present complaint is being filed against the Accused No. 1 to 7 and various other accused persons being all officials of Accused No. 1, who are/were responsible for the day-to-day management of the affairs of the Company, and also against various Banks, Housing Finance Companies, namely, Accused No. 8 to 11 and their officials and various other unknown accused persons involved in the conspiracy for commission of offences punishable under Sections 406, 409, 417, 418, 420 and 120B r/w Section 34 of the Indian Penal Code, 1860 and Section 9 of the Karnataka Protection of Interest of Depositors Act, 2004.

4.

The Accused No. 2 to 7 are the Directors of the aforementioned Company (Accused No. 1) and have deliberately committed the aforementioned offences on behalf of the Company. The other Accused persons being the channel partners, the Banks/housing finance companies, namely, (1) Indiabulls Housing Finance Ltd (2) Housing Development Finance Corporation Ltd (3) Piramal Capital & Housing Finance Limited and (4) Bank of Baroda, arrayed as accused Nos.8-11 above, and various bank officials who have connived with Accused Nos 1-7 and have acted under their directions jointly for illegal gains with dishonesty and have caused huge financial loss to the Complainants. The total amount of loss caused to the Complainants jointly is approximately around Rs. 80,00,00,000/-(Rupees Eighty Crore only).

11.

As mentioned hereinabove, all the Accused persons proposed various schemes to allure and induce the Complainants to purchase flats/units in the said real estate project. Some of the schemes which were offered are Buy-back scheme with assured returns, subvention scheme with payment of Pre-EMIs till possession, free-rental scheme with payment of rent by the accused builder till possession, etc. Accused Nos. 1-7 employed experienced and skilled personnel to mislead and deceive the general public especially the NRI's to believe that the promises made were true. The Accused Nos. 1-7 provided assurances to the Complainants that they are very experienced and efficient developers and by any means the dates as stipulated in the Agreements would be met. The Complainants believing in the assurances of the accused persons as true, booked various units in the said project during the years 2014 to 2016. Particularly, the Complainants No. 1 to 7 booked their units in their respective order on the following dates: 20.12.2016. 30.12.2016. 23.09.2015. 08.04.2015. 01.03.2014 18.08.2016 08.07.2015 23.12.2017. In pursuance thereto, complainants were allotted various units in the said project and loans were also immediately processed and sanctioned on all the units by the other accused persons, viz.. banks and housing finance companies abovementioned. Particularly, the Complainants No. 1 to 7 were allotted the following units in their respective order: 'S-1002', 'S-7001, 'D-501' 'H-404', 'K-302', 'U-604'. 'E-G003'. 'C-601'. Copies of the allotment letters issued to the Complainants No. 1 to 7 are the respective order and are marked as ANNEXURE - A.

13.

Consequently, various agreements, namely agreement for sale, construction agreement, tripartite agreement, buy-back agreement, etc., were executed between the complainants/allottees, the Accused Nos. 1 real estate company and the other Accused i.e. Banks/Housing Finance companies to represent the allottees that the whole project will proceed as per the assurances only but alas, that was not the case in real. The said agreements were executed between the Accused No. 1, the Accused Finance Company and the Complainants No. 1 to 7, in particular, on the following dates in the respective order of the Complainants: 21.12.2016, 08.12.2016, 03.07.2015, 12.05.2015, 01.03.2014, 04.08.2016, 11.12.2017. Copies of the Agreements entered into by the Complainants No. 1 to 7 are produced in the respective order herewith and collectively marked as ANNEXURE - B.

14.

After the bookings and disbursal of the loan amounts, the accused persons represented that they are following the proposed plans to gain the confidence of the complainants/allottees and to allure new allottees for the vacant flats.

15.

After taking the advance payments, Accused Nos. 1-7 started to show their true colours inasmuch as Accused Nos. 1-7 made continuous and intentional defaults in the process of construction and held-up the hard-earned money of the complainant allottees for their illegal personal gain.

16.

As stated already, in order to finance the sale of the purchased flat, the Complainants had taken home loans from the Banks and Housing Finance companies' abovementioned part of pre-condition of the various Scheme(s) by signing and executing a Tri-Partite Agreement (the 3 parties Agreement were the Company, the Complainant/allottee and the Bank/Housing Finance Company). It is important to point out here that in accordance with the Tri-Partite Agreement, the amount of loan was disbursed directly to Accused No. 1, for purchase of the units. Most the sale transactions took place/were executed in the year 2015-17. The Complainants/allottees were promised possession of their respective units/flats within 3 years from the date of signing of the Construction Agreement. In particular, the Complainants No. 1 to 8 were promised the possession of their units by 31.03.2019, 31.03.2019 01.12.2017, 01.12.2017. 01.10.2016. 31.03.2019 and 31.12.2022 respectively.

19.

Since around 2016, the other Accused persons, namely, the Banks and Housing Finance Companies, instead of getting their Pre-EMIs/Money Nos. 1-7, are harassing the innocent homebuyers, viz, the allottees, through calls, legal notices, threat of initiation of legal proceedings, etc., despite the fact that they are aware that no fault can be attributable manner whatsoever on the part of Complainants in any.

22.

It also came to the knowledge of the Complainants that Accused Nos. 1-7 have also never deposited or maintained 70% of the deposited amounts into the Escrow account, specifically opened for this purpose in accordance with the RERA Act. Further, Accused Nos. 1-4 have also withdrawn the inordinate amounts from the said Escrow account which was not in proportion of the construction as required by the law.

23.

Further, despite receiving 95% payment of the sale consideration of the respective flats from the Complainants, Accused Nos. 1-7 has grossly and fraudulently failed to offer and hand over possession of the purchased unit/flat on the time as stipulated in the Construction Agreement. Be that as it may, Accused Nos. 1-7 have even failed to consider or even make sincere attempts and efforts of completing the project in time or even thereafter.

24.

It is clear that Accused Nos. 1-4 along with all other Accused persons employed this Ponzi scheme fraud by alluring the Complainants/allottees with high return. The facts reveal that as soon as the money was deposited by the Complainants with Accused Nos. 1-7 through the aegis of the other Accused persons who financed the sale consideration, the Accused Nos. 1-7 siphoned off the deposits and took the money from the bank that belonged for the construction of this project to pay off or invest in its other projects/sister concerns. Thereafter, having unjustly enriched itself after causing huge financial loss to the Complainants/allottees, Accused Nos. 1-7 have been purposely delaying the construction of the project. The Complainants/allottees have knowledge that Accused Nos. 1-7 have siphoned off the amounts deposited for this project to other projects/sister concerns to employ them into several other projects. Also, the other Accused persons without considering the pace of the construction disbursed the loan amount directly to Accused Nos. 1-7.

25.

The Accused Nos. 1-7 proposed the scheme of buyback with assured returns but intentionally defaulted to fulfill their promise. Now, Accused Nos. 1-7 are purposely delaying the performance with the motive of wrongfully enjoying the money paid by the complainant allottees and are emploving the same in some other project(s) which tantamount to clear criminal breach of trust.

27.

In the case of the allottees who have not surrendered to the pressure, undue influence or coercion of the accused builder and have not executed supplementary or roll over agreement(s), the accused builder has forcefully got the cancellation forms executed by them without making any payments in return and thereby cancelled their units and sold these units to some other persons and accepted the payments from them also. These allottees are left to the mercy of the accused builder and have nothing in their hands, their units have been cancelled and resold but no payments are made to them and the obligation of repayment of the loan is also left on their heads.

28.

The accused persons, even after cancelling the unit and selling it to the other some persons, intentionally defaulted to make the said payments within the time agreed after due exercise of the buy-back option and has been wrongly enjoying the hard-earned money of the innocent allottees.

29.

The accused persons proposed the Subvention scheme with no EMI till possession but they have been a regular defaulter in fulfilling their promises. Beside taking the exaggerated amount for the units from the allottees and making the promise of paying the EMIs till possession, the accused persons no. 1 to 4 have intentionally made defaults due to which the allottees are suffering. Further, the accused persons promised to pay the EMIs till possession which they intentionally failed to perform due to which the banks started pressuring and harassing the allottees to pay the EMIs. Intimidated and threatened by the accused bank officials, the allottees were forced to file a writ petition before the Hon'ble Karnataka High Court against the banks wherein interim relief has been provided to the allottees. A copy of the Interim Order passed by the Hon'ble High Court of Karnataka in W.P.No.18713/2021 is produced herewith and marked as ANNEXURE-F.

30.

The accused persons no. 1 to 7 have breached the trust of the allottees by mentioning the different dates of possession irrespective of the tower, floor and date of sale. As observed in many agreements the builder has proposed different dates of possession without considering the factual and logical working of construction. The accused persons have intentionally proposed different dates of possession to different allottees with a motive to illegally and unlawfully retain and use the hard-earned money paid by the complainant allottees. This conduct of the accused builder makes it apparent that the accused builder is not interested in sale or completion of the project but only interested in enjoying the hard earned money paid by the allottees and to employ it in its other projects.

31.

The accused bank officials in connivance with the accused no. 1 to 7 and its officials, after the approval of the loan in the name of the complainant, disbursed whole of the loan amount directly to the accused no. 1 company without satisfying themselves as to the genuineness of the project at the initial stages of the construction and without conducting proper due diligence w.r.t. the company which is in strict violations of the legal policies formulated by the RBI and the Central Government.

32.

The accused no, 1 to 7 are liable for falsification of accounts as they have got disbursed the amount from the bank in regard of completion of the project but wrongly allocated the money in some other projects due to which the construction of this specific project is struck and allottees are suffering.

33.

When the accused persons were satisfied that there was no scope for further sale, they started making defaults and ignoring the queries of the complainants herein and it was apparent that the accused persons no. 1 to 7 have no intention to deliver the project and have dishonestly cappropriated the amount for their personal use and gain due to which stalled and no construction was in process, the accused person stopped paying the Pre-EMIS and also stopped following all other obligations which they agreed to perform into various agreements.

34.

The accused persons no. 1 is a private limited company having authorised capital of Rs. 10,60,00,000/- and paid-up capital of Rs. 9,18,14,000/-but in connivance with the some banks and their officials it has secured various loans from which Rs. 29,05,00,00,000/- (Rupees Two Thousand Nine Hundred and Five Crores only) is still pending on records and all this amount is over and above the payments received from all of the allottees.

PRAYER

WHEREFORE, the Complainants above named most respectfully pray that this Hon'ble Court be pleased to direct the Halsoor Police Station to register FIR and investigate into the offences alleged hereinabove and pass such other orders that this Hon'ble Court deems fit in the interest of justice and equity."

2.

Definitions.—In this Act unless the context otherwise requires,— ….. ….. …..

(2)

“Deposit” includes and shall be deemed always to have included any receipt of money or acceptance of any valuable commodity by any Financial Establishment to be returned after a specified period or otherwise, either in cash or in kind or in the form of a specified service with or without any benefit in the form of interest, bonus, profit or in any other form, but does not include,—

(i)

amount raised by way of share capital or by way of debenture, bond or any other instrument covered under the guidelines given and regulations made, by the Security Board of India, established under the Securities and Exchange Board of India Act, 1992;

(ii)

amounts contributed as capital by partners of a firm;

(iii)

amounts received from a scheduled bank or a co-operative bank or any other banking company as defined in clause (c) of Section 5 of the Banking Regulation Act, 1949 (Act 15 of 1992);

(iv)

any amount received from,—

(a)

the Industrial Development Bank of India,

(b)

a State Financial Corporation,

(c)

any financial institution specified in or under Section 4-A of the Companies Act, 1956 (Act 1 of 1956) or

(d)

any other institution that may be specified by the Government in this behalf;

(v)

amounts received in the ordinary course of business by way of,—

(a)

security deposit,

(b)

dealership deposit,

(c)

earnest money,

(d)

advanced against order for goods or services;

(vi)

any amount received from an individual or a firm or an association of individuals, registered under any enactment relating to money lending which is for the time being in force in the State: and

(vii)

any amount received by way of subscriptions in respect of a Chit.

Explanation I.—“Chit” has the meaning as assigned to it in clause (b) of Section 2 of the Chit Funds Act, 1982 (Act 40 of 1982);

Explanation II.—Any credit given by a seller to a buyer on the sale of any property (whether movable or immovable) shall not be deemed to be deposit for the purposes of this clause;

(3)

“Depositor” means a person who has made deposits with Financial Establishment hereinafter defined but excludes any former or present promoter, owner, partner in any form, Director, manager, member, administrator, accountant or collaborator, employee or any other person with the said establishment or its subsidiaries, whose complicity in the fraudulent activity is proved.

(4)

“Financial Establishment” means any person or a group of individuals accepting deposit under any scheme or arrangement or in any other manner but does not include a corporation or a co-operative society owned or controlled by any State Government or the Central Government or a banking company as defined under clause (c) of Section 5 of the Banking Regulation Act, 1949 (Act 10 of 1949);

9.

Fraudulent default by Financial Establishment.—(1) Any Financial Establishment, which fraudulently defaults any repayment of deposit on maturity or on demand or otherwise by the depositor or his successor along with or without benefit in the form of interest, bonus, profit or in any other form as promised or fraudulently fails to render service as assured against the deposit, every person including the promoter, director, partner, manager former directors, partners, promoters who have demitted or resigned from establishment provided their liability is limited to the period of office or any other person or an employee responsible for the management or conducting of the business or affairs of such Financial Establishment, shall on conviction, be punished with imprisonment for a term not less than three years and which may extend to seven years and with fine which may extend to ten lakh rupees and such Financial Establishment also shall be liable for a fine which may extend to an amount equivalent to five lakh rupees or where such deposits is quantifiable in terms of money twice the amount of aggregate funds collected from subscriber or member whichever is more.

Explanation.—For the purpose of this section a Financial Establishment, which commits default in repayment of such deposit with such benefits in form of interest, bonus, profit or in any other form as promised or fails to render any specific service promised against such deposit, or fails to render any specific service agreed against the deposit with an intention of causing wrongful gain to one person or wrongful loss to another person or commits such defaults due to its inability arising out of impracticable or commercially not viable promises made while accepting such deposit or arising out of deployment of money or assets acquired out of the deposits in such manner as it involves inherent risk in recovering the same when needed shall, be deemed to have committed a default or failed to render the specific service, fraudulently.

(2)

Whoever having been previously convicted of an offence punishable under this Act, is subsequently convicted of an offence punishable under this Act, shall be punished with imprisonment for a term of not less than five years which may extend to seven years and a fine which shall not be less than ten lakh rupees and which may extend to fifty crore rupees.

(3)

(i) Where an offence under this Act has been committed by a financial establishment other than an individual, every person who, at the time the offence was committed, was in conduct of its business, as well as the financial establishment, shall be deemed to be guilty of the offence and shall be liable to be proceeded against and punished accordingly.

(ii)

Nothing contained in clause (i) above, shall render any such person liable to any punishment provided in this Act, if he proves that the offence was committed without his knowledge or that he exercised all due diligence to prevent the commission of such offence.

(iii)

Notwithstanding anything contained in clause (i) above, where an offence under this Act has been committed by a financial establishment other than an individual, and it is proved that the offence,—

(a)

has been committed with the consent or connivance: or

(b)

is attributable to any negligence on the part of any such current or former Director, Manager, Secretary, Promoter, Partner, Employee or other Officer of the financial establishment; such persons shall also be deemed to be guilty of that offence and shall be liable to be proceeded against and punished accordingly.”

“…. …. ….

C.3. Definitions of “Deposit” and “Financial Establishment” : Interpretation of Sections 2(c) and 2(d)

of the MPID Act

44.

The notifications attaching the properties of the respondent were issued under Section 4 of the MPID Act. Section 4 covers only those situations where a “financial establishment” is a defaulting entity. Section 4 is reproduced below:

“4. Attachment of properties on default of

return of deposits.—(1) Notwithstanding anything contained in any other law for the time being in force—

(i)

where upon complaints received from the depositors or otherwise, the Government is satisfied that any financial establishment has failed—

(a)

to return the deposit after maturity or on demand by the depositor; or

(b)

to pay interest or other assured benefit; or

(c)

to provide the service promised against such deposit; or

(ii)

where the Government has reason to believe that any financial establishment is acting in a calculated manner detrimental to the interest of the depositors with an intention to defraud them;” (emphasis supplied)

45.

The primary issue is whether NSEL is a “financial establishment” within the meaning of Section 2(d). Section 2(d) reads as follows:

“2.(d) “Financial Establishment” means any person accepting deposit under any scheme or arrangement or in any other manner but does not include a corporation or a co-operative society owned or controlled by any State Government or the Central Government or a banking company as defined under clause (c) of Section 5 of the Banking Regulation Act, 1949;” (emphasis supplied)

46.

“Financial establishment” is defined as any person accepting a “deposit”. The definition excludes from its purview (a) a corporation or cooperative society controlled or owned either by the State or the Central Government; and (b) a “banking company” as defined under Section 5(c) of the Banking Regulation Act, 1949. Since NSEL does not fall within any of the exceptions, it would be a “financial establishment” for the purposes of the Act if it is a “person accepting deposit”. Section 3(42) of the General Clauses Act, 1897 provides an inclusive definition of “person” to include both incorporated and unincorporated companies [New Horizon Sugar Mills Ltd. v. State of Pondicherry, (2012) 10 SCC 575, para 58 : (2013) 1 SCC (Civ) 516 : (2013) 1 SCC (Cri) 1061] as:

“3.

(42) “person” shall include any company or association or body of individuals, whether incorporated or not.”

47.

The expression “deposit” is defined in Section 2(c) of the MPID Act in the following terms:

“2.

(c) “deposit” includes and shall be deemed always to have included any receipt of money or acceptance of any valuable commodity by any financial establishment to be returned after a specified period or otherwise, either in cash or in kind or in the form of a specified service with or without any benefit in the form of interest, bonus, profit or in any other form, but does not include—

(i)

amount raised by way of share capital or by way of debenture, bond or any other instrument covered under the guidelines given, and regulations made, by the SEBI, established under the Securities and Exchange Board of India Act, 1992;

(ii)

amounts contributed as capital by partners of a firm;

(iii)

amounts received from a scheduled bank or a cooperative bank or any other banking company as defined in clause (c) of Section 5 of the Banking Regulation Act, 1949;

(iv)

any amount received from—

(a)

the Industrial Development Bank of India,

(b)

a State Financial Corporation,

(c)

any financial institution specified in or under Section 6-A of the Industrial Development Bank of India Act, 1964, or

(d)

any other institution that may be specified by the Government in this behalf;

(v)

amounts received in the ordinary course of business by way of—

(a)

security deposit,

(b)

dealership deposit,

(c)

earnest money,

(d)

advance against order for goods or services;

(vi)

any amount received from an individual or a firm or an association of individuals not being a body corporate, registered under any enactment relating to money lending which is for the time being in force in the State; and

(vii)

any amount received by way of subscriptions in respect of a Chit.

Explanation I.—“Chit” has the meaning as assigned to it in clause (b) of Section 2 of the Chit Funds Act, 1982;

Explanation II.—Any credit given by a seller to a buyer on the sale of any property (whether movable or immovable) shall not be deemed to be deposit for the purposes of this clause;”

48.

The statutory definition of the expression “deposit” comprises of the following ingredients:

(i)

Any receipt of money or the acceptance of a valuable commodity by a financial establishment;

(ii)

Such acceptance ought to be subject to the money or commodity being required to be returned after a specified period or otherwise; and

(iii)

The return of the money or commodity may be in cash, kind or in the form of a specified service, with or without any benefit in the form of interest, bonus, profit or in any other form.

These elements of the definition are followed by specific exclusions contemplated in clauses (i) to (vii). Clause (i) of the exceptions covers an amount which is raised by way of share capital or by debenture, bond or other instrument governed by the guidelines and regulations of SEBI. Clause (v) states that money received in the ordinary course of business by way of security deposit, dealership deposit, earnest money or advance against an order of goods or services shall be excluded. The exclusions in clauses (i) to (vii) indicate that transactions which would otherwise fall within the broad sweep of the definition are excluded.

49.

The legislature may define a word artificially by restricting or expanding its natural meaning. When the legislature employs the phrase “means”, the definition is intended to be exhaustive. In Indra Sarma v. V.K.V. Sarma [Indra Sarma v. V.K.V. Sarma, (2013) 15 SCC 755 : (2014) 5 SCC (Civ) 440 : (2014) 6 SCC (Cri) 593] , this Court observed that the definition of the expression “domestic relationship” in Section 2(f) of the Protection of Women from Domestic Violence Act, 2005 is restrictive since it is defined by the use of the term “means”. On the other hand, the Court has taken a consistent view that where the definition of a word is inclusive, as presaged by the adoption of the expression “includes,” it is prima facie extensive [Karnataka Power Transmission Corpn. v. Ashok Iron Works (P) Ltd., (2009) 3 SCC 240 : (2009) 1 SCC (Civ) 802; Ramanlal Bhailal Patel v. State of Gujarat, (2008) 5 SCC 449] . The definition of “deposit” uses the phrase “includes and shall be deemed to have always included”. The import of this is to create a legal fiction by which actions which though not included within the natural meaning of the expression are intended to be included. The combined use of “includes” and “deemed to have always included” while defining the term “deposit” makes the term inclusive and not restrictive.

50.

The expression “deposit” is conspicuously broad in its width and ambit for it includes, not only any receipt of money but also the acceptance of any valuable commodity by a financial establishment under any scheme or arrangement. As a matter of interest, we may note at this stage that the expression “any” is used in the substantive part of the definition of the expression “deposit” on five occasions, namely:

(i)

Any receipt of money;

(ii)

Any valuable commodities;

(iii)

By any financial establishment;

(iv)

With or without any benefit; and

(v)

In any other form.

51.

Likewise, the definition of financial establishment refers to the acceptance of deposits:

(i)

Under any scheme or arrangement; or

(ii)

In any other manner.

52.

The repeated use of the expression “any” by the statute while defining both the above expressions is a clear reflection of the legislative intent to cast the net of the regulatory provisions of the law in a broad and comprehensive manner. Unlike many other State enactments which govern the field, clause (c) of Section 2 of the MPID Act comprehends within the meaning of a deposit not only the receipt of money but of any valuable commodity as well. For example, in contrast, Section 2(2) of the Tamil Nadu Act defines “deposit” only in terms of money and not commodity. Section 2(2) reads as follows:

“2.

(2) “deposit” means the deposit of money either in one lump sum or by instalments made with the financial establishments for a fixed period, for interest or for return in any kind or for any service;”

53.

Similarly, statutes protecting the interest of depositors in Orissa [ The Odisha Protection of Interests of Depositors (in Financial Establishments) Act, 2011.] , Kerala [ The Kerala Protection of Interests of Depositors in Financial Establishments Act, 2013.] , Himachal Pradesh [ The Himachal Pradesh [Protection of Interests of depositors (in Financial Establishments)] Act, 1999.] , Goa [ The Goa Protection of Interests of Depositors (in Financial Establishments) Act, 1999.] , Telangana [ The Telangana Protection of Depositors of Financial Establishments Act, 1999.] , Andhra Pradesh [ The Andhra Pradesh Protection of Depositors of Financial Establishments Act, 1999.] and Sikkim [ The Sikkim Protection of Interests of Depositors (in Financial Establishments) Act, 2000.] define the phrase “deposit” only in terms of money and not the acceptance of a commodity.

54.

According to the second ingredient of Section 2(c), the money or commodity must be liable to be returned. However, such return need not necessarily be in the form of cash or kind but also in the form of a service, with or without any benefit such as interest. It needs to be recalled that clause (v) of Section 2(c) states that a deposit of money or commodity made as a security deposit, dealership deposit or an advance amount is excluded from the definition of the phrase “deposit”. To illustrate, if a member of a financial establishment deposits Rs 25,000, and that money is returned on cessation of membership by making deductions, the issue of whether the deposit is a security deposit or of the nature covered under Section 2(c) should be determined with reference to the structure of operation and functioning of the financial establishment. It is to be noted that the definition also states that the return may be with or without interest or any benefit. Therefore, the submissions made by both the sides on whether NSEL had through its representations assured a 16% return on trading in the platform is immaterial for the purpose of determining if NSEL accepted deposits.

55.

Having referred to the relevant bye-laws, we shall determine if NSEL receives “deposits” as defined by Section 2(c) of the MPID Act. The bye-laws elucidate that NSEL receives both money and commodities from trading members. In order to decide if these receipts by NSEL could be regarded as “deposits”, the test of “return” will have to be satisfied. The test is that the return be in cash, kind or service. It is not necessary that the return should be with the benefit of interest, bonus or profit. Therefore, if the financial establishment is obligated to return the deposit without any increments, it shall still fall within the purview of Section 2(c) of the MPID Act, provided that the deposit does not fall within any of the exceptions. The exception of relevance to our case is clause (v) which states that amounts received in the ordinary course of business by way of (a) security deposit; (b) dealership deposit; (c) earnest money; and (d) advance against order for goods or services shall be excluded from the purview of the term “deposit”.”

“…. …. ….

5.

The MPID Act, which received the assent of the President on 20^th January 2000 and published in the Maharashtra Government Gazette, Part IV, dated 21^st January 2000, was enacted with a view to protect the interests of depositors in the financial establishments and the matters relating thereto. At the time of introduction of the Bill in the Legislature, the Statement of Objects and Reasons mentioned that the Statute was designed to protect the public from the increasing menace of Financial Establishments which, very often, grab money from the public in the form of deposits.

5.1

Noticing at the outset the purpose and spread of the MPID Act, following was stated in the Statement of Objects and Reasons,

“There is a mushroom growth of Financial Establishments in the State of Maharashtra in the recent past. The sole object of these establishments is of grabbing money received as deposits from public, mostly middle class and poor on the promises of unprecedented high attractive interest rates of interest or rewards and without any obligation to refund the deposit to the investors on maturity or without any provision for ensuring rendering of the services in kind in return, as assured. Many of these Financial Establishments have defaulted to return the deposits to public. As such deposits run into crores of rupees, it has resulted in great public resentment and uproar, creating law and order problem in the State of Maharashtra, especially in the city like Mumbai which is treated as the financial capital of India. It is, therefore, expedient to a make a suitable legislation in the public interest to curb the unscrupulous activities of such Financial Establishments in the State of Maharashtra.” ….. ….. …..

5.1.3

Thus, the MPID Act is served by elaborate provisions both regulatory and penal in nature enacted to protect the depositors' interest. The Act could be said to be providing a quasi-criminal remedy, as Section 3 makes the offence of fraudulent default by the Financial Establishment to be an offence punishable with imprisonment for a term which may extend to six years with fine to extend to one lakh rupees on conviction. Criminal action for the said offence would lie against the defaulter and FIR could be lodged under the said Section 3 of the MPID Act.

5.1.4

The MPID Act is a self-contained Code, which creates an independent machinery and mechanism to provide remedial measures to the victim depositors and to check and punish Financial Establishments, which will include any person accepting deposit has fraudulently committed default duping the investors.

“2.

Definitions.— In this Act, unless the context otherwise requires,— …………..

(c)

“deposit” includes and shall be deemed always to have included any receipt of money or acceptance of any valuable commodity by any Financial Establishment to be returned after a specified period or otherwise, either in cash or in kind or in the form of a specified service with or without any benefit in the form of interest, bonus, profit or in any other form, but does not include—

(i)

amount raised by way of share capital or by way of debenture, bond or any other instrument covered under the guidelines given, and regulations made, by the SEBI, established under the Securities and Exchange Board of India Act, 1992 (15 of 1992);

(ii)

amounts contributed as capital by partners of a firm;

(iii)

amounts received from a scheduled bank or a co-operative bank or any other banking company as defined in clause (c) of section 5 of the Banking Regulation Act, 1949 (10 of 1949);

(iv)

any amount received from,—

(a)

the Industrial Development Bank of India,

(b)

a State Financial Corporation,

(c)

any financial institution specified in or under section 6A of the Industrial Development Bank of India Act, 1964 (18 of 1964), or

(d)

any other institution that may be specified by the Government in this behalf;

(v)

amounts received in the ordinary course of business by way of,—

(a)

Security deposit,

(b)

dealership deposit,

(c)

earnest money,

(d)

advance against order for goods or services;

(vi)

any amount received from an individual or a firm or an association of individuals not being a body corporate, registered under any enactment relating to money lending which is for the time being in force in the State; and

(vii)

any amount received by way of subscriptions in respect of a Chit.

Explanation I.— “Chit” has the meaning as assigned to it in clause (b) of section 2 of the Chit Funds Act, 1982 (40 of 1982);

Explanation II.— Any credit given by a seller to a buyer on the sale of an property (whether movable or immovable) shall not be deemed to be deposit for the purposes of this clause;”

“2.

Definitions.— In this Act, unless the context otherwise requires,— …………..

(d)

“Financial Establishment” means any person accepting deposit under any scheme or arrangement or in any other manner but does not include a corporation or a co-operative society owned or controlled by any State Government or the Central Government or a banking company as defined under clause (c) of section 5 of the Banking Regulation Act, 1949;”

“3.

Fraudulent default by Financial Establishment.— Any Financial Establishment, which fraudulently defaults any repayment of deposit on maturity alongwith any benefit in the form of interest, bonus, profit or in any other form as promised or fraudulently fails to render service as assured against the deposit, every person including the promoter partner, director, manager or any other person or an employee responsible for the management of or conducting of the business or affairs of such Financial Establishment shall, on conviction, be punished with imprisonment for a term which may extend to six years and with fine which may extend to one lac of rupees and such Financial Establishment also shall be liable for a fine which may extend to one lac of rupees.

Explanation.— For the purpose of this section, a Financial Establishment, which commits default in repayment of such deposit with such benefits in the form of interest, bonus, profit or in any other form as promised or fails to render any specified service promised against such deposit, or fails to render any specific service agreed against the deposit with an intention of causing wrongful gain to one person or wrongful loss to another person or commits such default due to its inability arising out of impracticable or commercially not viable promises made while accepting such deposit or arising out of deployment of money or assets acquired out of the deposit in such manner as it involves inherent risk in recovering the same when needed shall, be deemed to have committed a default or failed to render the specific service, fraudulently.”

“The expression “deposit” is conspicuously broad in its width and ambit for it includes, not only any receipt of money but also the acceptance of any valuable commodity by a financial establishment under any scheme or arrangement. As a matter of interest, we may note at this stage that the expression “any” is used in the substantive part of the definition of the expression “deposit” on five occasions, namely:(i) Any receipt of money; (ii) Any valuable commodities; (iii) By any financial establishment; (iv) With or without any benefit; and (v) In any other form.”

“…. …. ….

19.

It is argued on behalf of the appellants that Section 4 of the MPID Act is attracted when property is acquired by using depositors money and acquisition means the property should absolutely vest in the “Financial Establishment”. The factual position on record shows that substantial payments were made to the appellants after “Builders/Developers” sold flats proposed to be constructed on said plot to flat purchasers and, therefore, it is clear that the depositors' monies were used substantially in acquiring the said property. Learned Senior Counsel appearing for the appellants is conscious of this position and therefore has not argued much on this aspect. However, his emphasis is on the word “acquire” which according to him is absolute acquisition of rights regarding the property. As observed earlier, the ‘property’ is a term of the widest import and is subject to any limitation or qualification which the context might require. It signifies every possible interest which a person can acquire, hold and enjoy. If we examine the said rights acquired by “Builders Developers” i.e Financial Establishment within the frame work of MOFA, then it is clear that the property which is the subject matter of the present appeal need not be the absolute property of the appellants. This is so as on the basis of said agreement of sale dated 04.06.2012, flats were sold to about 514 flat purchasers. Thus, it is clear that the “Financial Establishment” has got rights in the said property. Apart from this aspect both appellants as well as the respondents i.e “Builders/Developers/Financial Establishments” are under obligation to perform their statutory duties under the MOFA. In fact Section 8 of the MOFA creates charge of flat purchasers on the said property. Thus, it is clear that not only the said property is the property of the “Financial Establishment” as set out herein above but there is also a charge of the flat purchasers on the said property. Therefore, looking from any angle it cannot be said that no right is created by the said agreement dated 14.06.2012 and in fact, as set out herein above as the “Financial Establishment” has rights in the said property, Section 4 of the MPID Act is applicable to the same. Thus, it is very clear that the property which is the subject matter of the present appeal comes under the purview of Section 4 of the MPID Act.

20.

The MPID Act was enacted to protect the interest of depositors in the Financial Establishments and matters relating thereto. The term “Deposit” as defined in Section 2(c) of the MPID Act inter alia includes any receipt of money by any “Financial Establishment” to be returned after a specified period or otherwise either in cash or in kind or in the form of specified service with or without any benefit in the form of interest, bonus, profit or in any other form. Thus, what is contemplated is receipt of money by the “Financial Establishment” and return of the same in any other form. In the present case, about 514 flat purchasers have paid substantial amounts to the “Financial Establishment” as “Financial Establishment” agreed to hand over to them possession of the flats to be constructed on the same plots. Thus, it is clear that the purchase of flats by flat purchasers from the “Financial Establishment” and for that purpose payment of money to the “Financial Establishment” by flat purchasers is covered under the definition of the term “Deposit” under MPID Act. The exceptions mentioned in the definition of “Deposit” are not applicable to such purchase of flats by flat purchasers from “Financial Establishment”. It is also to be noted that neither the appellants nor any of the respondents contended that money advanced by the flat purchasers to said M/s. Rana Landmark Pvt. Ltd. is not deposit as per MPID Act and only argument was that the title of the property has not transferred to M/s Rana Landmark Pvt. Ltd. and that the same is not the absolute property of said M/s. Rana Landmark Pvt. Ltd. and therefore, Section 4 of the MPID Act is not applicable. We have already discussed in detail this aspect and held that the said property comes within the purview of Section 4 of the MPID Act.

21.

Section 4 of the MPID Act contemplates that two types of properties can be attached:

(i)

Property believed to have been acquired by the “Financial Establishment” either in its own name or in the name of any other person from out of the deposits, collected by the “Financial Establishment”.

(ii)

If it is found that property as contemplated above is not available for attachment or not sufficient for repayment of the deposits, such other property of the said “Financial Establishment” or the promoter, director, partner or manager or member of the said “Financial Establishment”.

22.

The Notification dated 29.03.2016 issued by the Home Department of the Government of Maharashtra by exercising power under Section 4(1) and Section 5 of MPID Act shows that only two properties at Sr. No. 2 and 3 in the Schedule to the said Notification are in the name of M/s. Rana Landmark Pvt. Ltd. having approximate value of Rs. 1,20,00,000/- and Rs. 3,50,000/-. The property as Sr. No. 1 of the said Schedule is the subject matter of the present appeal. The properties at Sr. No. 10 and 11 are in the name of third persons and said M/s. Rana Landmark Pvt. Ltd. are shown to be the purchasers and that they have paid certain earnest amount. As far as the other properties are concerned, either they are in the name of third persons or in the name of Directors. Therefore, only properties at Sr. No. 2 and 3 which are in the name of M/s. Rana Landmark Pvt. Ltd. i.e. “Financial Establishment” can be considered as properties of said “Financial Establishment” and aggregate value of both these properties is Rs. 1,23,50,000/-. In this background of the matter, the affidavit in reply of Pravinkumar Bansilal Patil, PSI, Economic Offence Wing, Amravati City dated 14.12.2018 filed on behalf of the respondent No. 1 - State of Maharashtra states that the total fraud committed by the accused persons is to the tune of Rs. 13.88 Crores. Thus, it is clear that even if it is assumed that the said property is not the property acquired by the “Financial Establishment” out of the deposits collected by the “Financial Establishment”, the said property will fall in the category of “such other property” of the said “Financial Establishment” coming in the purview of Section 4 of the MPID Act as the properties in the name of the “Financial Establishment” acquired out of the deposits collected by the “Financial Establishment” or otherwise are not sufficient for repayment of the deposits to the depositors. If we consider all the properties mentioned in Notification dated 29.03.2016 irrespective whether they are in the name of the “Financial Establishment” or not then also the aggregate approximate price of the said properties is Rs. 17,85,85,900/- and if the price of the present property of Rs. 5,75,00,000/- is excluded from the same then it is clear that the same will not be sufficient for repayment of the deposits. Therefore, it is clear that the property which is subject matter of the present appeal is the property which is acquired by M/s. Rana Landmark Pvt. Ltd. i.e. “Financial Establishment” in its own name from out of the deposits collected by said “Financial Establishment” or other property belonging to the “Financial Establishment” and therefore, Section 4 of the MPID Act is squarely attracted to the same.

23.

As we have held for the reasons set out herein that the said property is the property of financial establishment, the contention that the earnest money is excluded from the definition of “deposits” becomes irrelevant.”

“…. …. ….

15.

Learned counsel for the applicant submitted that provisions of Sections 3 and 4 of the MPID Act are not applicable as allegations levelled against the applicant nowhere show that the “deposits” with the said Society are misappropriated.

16.

Clause(c) of Section 2 of the MPID Act defines 'deposit' as under :

"(c)

"Deposit" means the deposit of money either in one lump sum or by installments made with the Financial Establishment for a fixed period for interest or for return in any kind or for any service and includes and shall be deemed always to have included any receipt of money or acceptance of any valuable commodity by any Financial Establishment to be returned after a specified period or otherwise, either in cash or in kind or in the form of specified service with or without any benefit in the form of interest, bonus, profit, or in any other form, but does not include—

(i)

amount raised by way of share capital or by any way of debenture, bond or any other instrument covered under the guidelines given, and regulations made, by the SEBI, established under the Securities and Exchange Board of India Act, 1992 (15 of 1992) ;

(ii)

amounts contributed as capital by partners of a film;

(iii)

amounts received from a Scheduled bank or Shraddha Talekar PS Co-operative Bank or any other banking company as defined in clause (c) of Section 5 of the Banking Regulation Act, 1949 (10 of 1949);

(iv)

any amount received from—

(a)

the Industrial Development Bank of India;

(b)

a State Financial Institution;

(c)

any financial institution specified in or under section 6-A of Industrial Development Bank of India Act, 1964 (18 of 1964) ; or

(d)

any other institution that may be specified by the Government in this behalf;

(v)

amounts received in the ordinary course of business by way of –

(a)

security deposit;

(b)

dealership deposit; and

(c)

earnest money;

(vi)

any amount received from an individual or a firm or an association or individuals not being a body corporate, registered under any enactment relating to money lending which is for the time being in force in the State ; and

(vii)

any amount received by way of subscriptions in receipt of a Chit.

Explanation I -- "Chit" has the meaning as assigned to in clause (b) of Section 2 of the Chit Funds Act, 1982 (40 of 1982);

Explanation II .-- "Any credit given by a seller to a buyer on the sale of any property (whether movable or immovable) shall not be deemed to be a deposit for the purposes of this clause."

Whereas clause (d) of Section 2 defines "Financial Establishment" as:

"(d)

Financial Establishment" means any person defined under clause (c) of Section 5 of the Banking Regulation Act, 1949 (10 of 1949)." accepting deposit under any scheme or arrangement or in any other manner but does not include a corporation or a co-operative society owned or controlled by any State Government or the Central Government or a banking company defined under clause (c) of Section 5 of the Banking Regulation Act, 1949 (10 of 1949)."

17.

Thus, definitions of 'deposit' and 'financial establishment' are rather expansive. The inclusive definition of 'deposit' covers any receipt of money or acceptance of any valuable commodity, except those amounts which have been specifically excluded by sub-clauses (i) to (vii) thereof. Thus, any person accepting deposits under any scheme or in any other manner satisfies the description of financial establishment except a corporation or a co-operative society owned or controlled by any State Government or the Central Government or a banking company defined under the Banking Regulation Act.

18.

In the present case, admittedly, the said Society, a cooperative institute, registered under the Cooperative Societies Act, is running a financial establishment and statements of witnesses disclose that they have collected “deposits.”

19.

Learned counsel for the applicant submitted that the entire controversy revolves around question as to whether loan amounts given to various investors are within the definition of “deposit.”

20.

The Hon’ble Apex Court, in the case of State of Maharashtra vs. 63 Moon Technologies Limited, reported in (2022)9 SCC 457, dealt with the scope and ambit of “deposit” and “financial establishment” and held as under:

“(i)

the expression 'deposit' is conspicuously broad in its width and ambit for it includes, not only any receipt of money but also the acceptance of any valuable commodity by a financial establishment under any scheme or arrangement;

(ii)

the money or commodity must be liable to be returned. However, such return need not necessarily be in the form of cash or kind but also in the form of a service, with or without any benefit such as interest;

(iii)

it is not necessary that the return should be with the benefit of interest, bonus or profit. Therefore, if the financial establishment is obligated to return the deposit without any increments, it shall still fall within the purview of Section 2(c) of the MPID Act, provided that the deposit does not fall within any of the exceptions;

(iv)

the phrase 'valuable commodity' cannot be restricted to only mean precious metals. Agricultural commodities which NSEL trades in will fall within the purview of the term, and

(v)

the definition is broadly worded to include even the possession of the commodities for a limited purpose.”

“i)

Any receipt of money;

(ii)

Any valuable commodities;

(iii)

By any financial establishment;

(iv)

With or without any benefit; and

(v)

In any other form.

24. Writ Petition No.31006 of 2025:

DIRECTORATE OF ENFORCEMENT (Prevention of Money Laundering Act, 2002) ENFORCEMENT CASE INFORMATION REPORT (ECIR)

1	ECIR No. as per assigned format	Year	Zone	Sub-Zone	Date (DD/MM/YYYY)
	ECIR/BGZO/01/2025	2025	Bangalore	-	05/02/2025

2. Detail and nature of the Scheduled Offence:
i. Scheduled Act(s)	ii. Section of the Act(s)	iii. Agency investigating the scheduled offence	iv. FATF Category
IPC 1860	Sections 420 and 120B	CCB Bengaluru City Police	(ix) Fraud (i) participation in an organized criminal group and racketeering
IPC 1860	Section 420	Devanahalli PS	(ix) Fraud
IPC 1860	Sections 420 and 120B	Kodigehalli PS	(ix) Fraud (i) participation in an organized criminal group and racketeering
IPC 1860	Sections 307, 419, 420 and 120B	Halasur PS	(ix) Fraud (i) participation in an organized criminal group and racketeering
IPC 1860	Section 420	Devanahalli PS	(ix) Fraud
3	Source from which the information / material has been received	1) FIR no. 0183/2021 dated 21.12.2021 registered at Kodigehalli PS, Bengaluru City.

		2) FIR no. 0019/2024 dated 31.01.2024 registered at Devanahalli PS, Bengaluru City. 3) FIR no. 0077/2024 dated 09.12.2024 registered at CCB Bengaluru City Police, Bengaluru City. 4) FIR no. 0161/2024 dated 28.09.2024 registered at Devanahalli PS, Bengaluru City. 5) FIR no. 0271/2024 dated 23.09.2024 registered at Halasur PS, Bengaluru City.
4	Place(s) of Occurrence of Scheduled Offence	Bengaluru City, Karnataka.
5	Name and address of suspected person(s) with full particulars	a) M/s Ozone Urbana Infra Developers Pvt Ltd No.38, Ulsoor Road, Bengaluru City, Karnataka b) Sh. Vasudevan Satyamoorthy, Director Of Ozone Urbana Infra Developers Pvt Ltd, No.32, Norris Road, Richmond Town, Bengaluru City, Karnataka c) Smt. Priya Vasudevan, No.32, Norris Road, Richmond Town, Bengaluru City, Karnataka d) Sh. Satyamoorthy Sai Prasad, Director Of Ozone Urbana Infra Developers Pvt Ltd, Nishanth Prime Apartments, Prime Street, Richmond T, Opp Hockey Stadium, Museum Road, Bengaluru City, Karnataka e) Sh. Durbhakula Vamsi Sai, Director Of Ozone Urbana Infra Developers Pvt Ltd, Bengaluru City, Karnataka f) Sh. Srinivasan Gopalan, Director Of Ozone Urbana Infra Developers Pvt Ltd, No.32,2, Sona Palace Apartments, Norris Road, Richmond Town, Bengaluru City, Karnataka

			g) Sh. Seewosagar Nemchand, Director Of Ozone Urbana Infra Developers Pvt Ltd, Bengaluru City, Karnataka h) Sh. Rajeev Bhandari, Director Of Ozone Urbana Infra Developers Pvt Ltd, Bengaluru City, Karnataka i) Sh. Bittal Mangilal Singhi Bengaluru City, Karnataka j) Sh. Baaskaran S, Bengaluru City, Karnataka k) Sh. Gaurav Goel, Bengaluru City, Karnataka l) Sh. Ganapathi Joshi, Bengaluru City, Karnataka m) Sh. Greta, Bengaluru City, Karnataka n) Car driver of Vasudevan Sathyamoorthy, o) Manager, HDFC Ltd. p) Unknown persons/entities
6	Details of property suspected to be Proceeds of Crime
	a.	Movable	Yet to be ascertained
	b.	Immovable
7	Material relating to commission of offence: 1) FIR no. 0183/2021 dated 21.12.2021 registered at Kodigehalli PS, Bengaluru City. 2) FIR no. 0019/2024 dated 31.01.2024 registered at Devanahalli PS, Bengaluru City. 3) FIR No. 0077/2024 dated 09.12.2024 registered at CCB Bengaluru City Police, Bengaluru City 4) FIR no. 0161/2024 dated 28.09.2024 registered at Devanahalli PS, Bengaluru City. 5) FIR no. 0271/2024 dated 23.09.2024 registered at Halasur PS, Bengaluru City.

Assessment of proceeds of crime:

- As per the FIR no. 0183/2021 dated 21.12.2021 registered at Kodigehalli PS, Bengaluru City, the complainant and his wife booked a flat in Ozone Urbana project by paying Rs. 8,58,855/- on 14/08/2015. Later, the complainant obtained a loan amount of Rs.68,20,000/- from HDFC bank as suggested by the company. Further, the company, complainant and the HDFC bank entered into a tripartite agreement vide which the company agreed to pay the EMIs on behalf of the buyer. The company didn't deliver the flat as per the agreed date and further the buyer was denied entry to the project when they visited to check the progress of the construction. Upon enquiry at the bank, it was found by the complainant that the bank transferred the amount directly to Ozone Developers without informing the complainant. When the complainant approached the RERA, the company issued a credit note of Rs. 18,19,185/- and promised to complete the construction by July 2020 and requested them to withdraw the complaint.

- As per the FIR no. 0019/2024 dated 31.01.2024 registered at Devanahalli PS, Bengaluru City, the complainant booked a flat in Ozone Urbana project by investing their retirement funds of Rs.64,52,418/- on 10.02.2014. The company which initially promised to deliver the flat by 2016-2017 has not completed the construction and didn't hand over the flat to the complainant till date.

- As per the FIR No. 0077/2024 dated 09.12.2024 registered at CCB Bengaluru City Police, Bengaluru City, the Ozone Urbana Developers Pvt Ltd. company started a project by name Ozone Urbana in Devanahalli Taluk in 2012 and buyers were promised with the project handover by 2017. However, till date only 49% of the project was completed. Meanwhile, when the buyers approached the concerned directors of the company, they assured the buyers stating that they had tied up with banks and will get loans from banks and housing finance companies. Further, they also promised that the EMIs would be paid by the company itself on behalf of the buyers until the project is completed. Later, they have collected about Rs.1500 crores through mortgaged loans in the names of the buyers in various banks and also collected more than Rs.1800 crores directly from the buyers. Thus, the directors of the said company cheated its buyers collectively to the tune of Rs.3300 crores and misappropriated the funds by transferring to various companies. As per the FIR no.0161/2024 dated 28.09.2024 registered at Devanahalli PS, Bengaluru City, seeing the advertisement of the Ozone Urbana Developers Pvt Ltd. company related to high-quality plots sale, the complainant booked a flat in the said project and did a sale agreement with the company in 2018. The complainant later obtained loan from the bank by mortgaging the sale agreement and paid the amount to the company. However, it was later found that the said flat was sold by the company to another person by accepting amount from him as well. As per the FIR no. 0271/2024 dated 23.09.2024 registered at Halasur PS, Bengaluru City, the complainant entered into an agreement with the accused person for the construction of a colony in Devanahalli for Rs.5.38 crores and accordingly completed the construction. However, the payment wasn't received from the accused person. On 12-10-2023, they entered into another agreement where the accused person agreed to pay Rs.3.38 crores and gave three cheques for the remaining amount. When the complainant tried to encash the said cheques, the accused person prevented him in doing so, threatened him and also the driver of the accused person attempted to run over the complainant with a Range Rover car, trying to kill him. The offences under Sections 420 and 120B of IPC,1860, in the FIR no. 0183/2021 dated 21.12.2021 registered at Kodigehalli PS, Bengaluru City, Section 420 of IPC,1860, in the FIR no. 0019/2024 dated 31.01.2024 registered at Devanahalli PS, Bengaluru City, Sections 420 and 120B of IPC,1860, in the FIR No. 0077/2024 dated 09.12.2024 registered at CCB Bengaluru City Police, Bengaluru City, Section 420 of IPC, 1860, in the FIR no. 0161/2024 dated 28.09.2024 registered at Devanahalli PS, Bengaluru City and Sections 307, 419, 420 and 120B of IPC,1860, in the FIR no. 0271/2024 dated 23.09.2024 registered at Halasur PS, Bengaluru City and are scheduled offences under section 2(1)(x) and 2(1)(y) of the Prevention of Money Laundering Act, 2002. 8On the basis of the aforesaid information / document(s), a prima facie case for an offence of money laundering under Section 3 of the Prevention of Money Laundering Act, 2002 and punishable under Section 4 of the said Act appears to have been made out. 9In view of above, a distinctive case bearing No. ECIR/BGZO/01/2025 is assigned to this case and the same is taken up for investigation under the provisions of Prevention of Money Laundering Act, 2002.

“….. ….. …..

9.

The controversy in these matters has arisen out of tripartite agreements between the home buyers, the developers, and the financial institutions. Though there is variance in facts in this batch of matters, we broadly find that the following information is required to be furnished by the builder-cum developers, financial institutions, or the home-buyers:

(i)

The status and details of the payments made by the builder-cum-developers to the financial institutions or such payments made by the home-buyers to the financial institutions/builder-cum-developers.

(ii)

The date of offering possession to the home-buyers, where the project is stated to have been completed.

(iii)

The current status of completion of the project, including the details of the Completion Certificate and other statutory certificates granted by the prescribed authorities, along with details of the possession given or offered to the home-buyers.

(iv)

The status of recovery from the home-buyers, namely, whether they have made EMI payments to the banks or not.

(v)

The amenities advertised by the builder-cum developers at the time of launching the project and the status re: completion thereof.

(vi)

The status as to whether the builder-cum developers has undergone CIRP (under IBC) or any other coercive or non-coercive recovery procedure, and the stage of such proceedings.

(vii)

Whether the home-buyers have received any relief or remedial order from the statutory authorities like Real Estate Regulatory Authority (RERA). If so, the details of such orders be also furnished.

10.

The aforesaid order contains obligations for the home buyers/builders-cum-developers as well as the financial institutions. All of them are, accordingly, directed to furnish the requisite information within four weeks”

“1.

The instant batch of petitions concern the disbursement of funds by banks to builders-cum-developers through subvention schemes for various housing development projects in Noida, Greater Noida, Gurugram, and other nearby areas.

2.

There are three parties to the subvention schemes – the aggrieved homebuyers, the builders-cum-developers, and the banks/financial institutions. The aggrieved homebuyers are the Petitioners before this court.

3.

All the aggrieved homebuyers purchased units in some or the other development projects launched by the builders-cum developers. Through the subvention scheme, the builders-cum developers advertised that they would pay the EMI/pre-EMI of the loans taken by the homebuyers to purchase the said units in their development projects, till the specified cut-off taken or till the date of possession, depending on the terms of each tripartite agreement. The homebuyers obtained loans from the respondent-banks.

4.

In furtherance of these tripartite agreements, the banks disbursed majority of the loan amounts to the builders-cum developers upfront. In 2018 and 2019, when the builders-cum developers defaulted on the required EMI/pre-EMI payments, the banks began to demand payments from the homebuyers. It is pertinent to note that at the time of demanding payment from them, the homebuyers had not still received possession of their purchased units. In fact, the development projects were still under construction, incomplete, or had not even begun construction till then. Many of these projects incomplete and to this day, most homebuyers have not been granted possession of their units. Owing to this, in 2020, Corporate Insolvency Resolution Process (in short, “CIRP”) proceedings commenced under the Insolvency and Bankruptcy Code, 2016 against the builders-cum-developers, before various National Company Law Tribunals across those regions.

5.

Aggrieved by the banks claiming monthly instalments from them, the homebuyers approached the High Court of Delhi for a writ of mandamus, inter alia, directing, among others: (i) the banks to charge EMI/pre-EMI payments from the builders-cum-developers, not the homebuyers; (ii) to refund the already recovered amount to the homebuyers and recover it from the builders-cum-developers; and (iii) the RBI to take strict action against the banks. Parallelly, some homebuyers approached the Real Estate Regulatory Authorities and various consumer fora for relief. The High Court, vide a common judgment dated 14.03.2022, dismissed the writ petitions owing to the alternate remedy available before the Real Estate Regulatory Authority.

12.

The Standing Counsel for the Central Bureau of Investigation (in short, “CBI”) is directed to remain present in this Court on the next date of hearing for the purpose of constituting an SIT. He may also have instructions as to why the CBI should not be asked to register a case and then proceed to investigate the nexus between the banks and the builders. Alternatively, constitution of a SIT at its own will also be considered by this Court.”

“1.

In deference to the order dated 04.03.2025, Ms. Aishwarya Bhati, learned Additional Solicitor General of India, has entered appearance on behalf of the Central Bureau of Investigation (CBI). She informs that some CBI officers are also present. We have impressed upon her to discuss with the CBI authorities and put up a proposal as to how would they intend to proceed with the enquiry/investigation into the issues that are briefly noticed in our order dated 04.03.2025 and those passed prior thereto. She assures that such a proposal shall be put up before the Court within two weeks.

2.

We also feel that in order to effectively unearth the underlying issues, an amicus curiae need to be appointed, especially someone having expertise and vast investigative/administrative experience besides a command over the legal intricacies. In this regard, we request Mr. Rajeev Jain, Advocate, former Director, Intelligence Bureau and a former Member of the National Human Rights Commission to assist the Court as an amicus curiae. He is also requested to submit a brief note as how to proceed further in the matter.

3.

The Registry is directed to supply an up-to-date soft copy of the SLP paperbooks to the learned amicus forthwith.”

“1.

This batch of cases, comprising more than 170 petitions have been filed by over 1200 homebuyers/borrowers. They have raised an issue of paramount importance re: the systematic failure of statutory and government authorities to discharge their functions, circumvention of regulatory framework by Banks and Housing Financial Corporations, and the resultant illicit benefits said to have been drawn by builders/developers at the cost of the homebuyers, who are now bearing the brunt of such failures.

2.

The common background of each of these matters, as noted by this Court on 04.03.2025 also, is that the builders/developers advertised the ‘subvention schemes’ assuring payment of the EMI/pre-EMI(s) of the home-loans taken by the homebuyers to purchase the units in their projects till a specified cut-off date or till the date of delivery of possession. The scheme was implemented in most cases by taking loans through a tripartite agreement among the bank/financial institution, homebuyer(s), and the builder/developer. While these projects were launched in the years 2013-2015, most of the builder/developers started defaulting in payment of EMIs in the years 2018-2019. Resultantly, the banks began to demand payments from the homebuyers, and consequential failure to make the payments led to the coercive actions against the homebuyers, despite the units being incomplete and there being no occasion to offer possession.

3.

Some of the aggrieved homebuyers approached the High Court of Delhi, and having failed to get the desired relief, they have approached this Court under Article 136, while some others have invoked the writ jurisdiction of this Court for similar reliefs.

4.

When the matter came up for hearing on 05.11.2024, this Court directed the parties to furnish the detailed information relating to the following aspects:

“(i)

The status and details of the payments made by the builder-cum-developers to the financial institutions or such payments made by the home-buyers to the financial institutions/builder-cum-developers.

(ii)

The date of offering possession to the home-buyers, where the project is stated to have been completed.

(iii)

The current status of completion of the project, including the details of the Completion Certificate and other statutory certificates granted by the prescribed authorities, along with details of the possession given or offered to the home-buyers.

(iv)

The status of recovery from the home-buyers, namely, whether they have made EMI payments to the banks or not.

(v)

The amenities advertised by the builder-cum developers at the time of launching the project and the status re: completion thereof.

(vi)

The status as to whether the builder-cum developers has undergone CIRP (under IBC) or any other coercive or non-coercive recovery procedure, and the stage of such proceedings.

(vii)

Whether the home-buyers have received any relief or remedial order from the statutory authorities like Real Estate Regulatory Authority (RERA). If so, the details of such orders be also furnished.”

5.

On receipt of that information, this Court, on 04.03.2025, prima facie found that there was some unholy nexus between the banks/Housing Financial Corporations on one hand and the builder cum-developers on the other. It was in this context that the Central Bureau of Investigation was asked to be represented on the next date of hearing.

6.

On 18.03.2025, learned Additional Solicitor General of India, along with some officers of the CBI, was present in Court. They were requested to suggest the manner in which the CBI would proceed with the inquiry or investigation into the issues that were briefly formulated in our previous order. With a view to have qualitative assistance to unearth the truth behind the challenges laid by the homebuyers/borrowers, we also requested Mr. Rajiv Jain, adv. (former Director, Intelligence Bureau and former member of the National Human Rights Commission) to assist this Court as an Amicus Curiae. He was also requested to submit a brief note with respect to the future course of action.

7.

In deference to the order dated 18.03.2025, learned Amicus Curiae has after deep analysis, submitted a self-explanatory report identifying (i) the builder-cum-developers; (ii) the banks and HFCs; and the approximate loan amount secured by them through the subvention schemes. The aforesaid note reveals that; (a) one of the builder-cum-developers, Supertech Limited, has over 21 projects in six cities; (b) it entered into tripartite agreements under the subvention scheme with 19 different banks/HFCs, concerning approximately 800 aggrieved homebuyers before us; (c) of the 19 banks/HFCs, 8 institutions, namely, Indiabulls Housing Finance Limited, Punjab National Bank Housing Finance Limited, Dewan Housing Finance Limited, HDFC Housing Finance Limited, ICICI Bank Limited, India Infoline Housing Finance Limited, L&T Housing Finance Limited, and Aditya Birla Housing Finance Limited, figure in most of the 21 projects of Supertech Ltd.; and (d) the rest of 11 banks/HFCs and funding of some projects by them are also duly mentioned in the report. Learned Amicus Curie has further recommended that the underlying nexus between Supertech Ltd. and these 8 banks deserves to be investigated on priority.

8.

The report further reveals that Supertech Ltd. alone has secured loans worth approximately Rs.5,157.86 crores since 1998. In this respect, the learned amicus has opined that the concerned agency should also examine the nexus of Supertech Ltd. with such other banks, namely, Corporation Bank, IDBI Bank, Punjab and Sind Bank, India Bank, and Punjab National Bank, who have extended separate loans of large amounts to the former.

9.

The details of the other builder-cum-developers and the financial institutions with whom there were tripartite agreements, have been executed are also highlighted in the note submitted by the learned Amicus.

10.

The learned Amicus Curiae has, in conclusion, made the following consolidated recommendations as to how to proceed further in the matter:

“39.

In view of the above, it is imperative to reach a fair, just and equitable resolution; hence, an appropriate framework for this purpose needs to be evolved. To proceed further in the matter, this Hon’ble Court should consider thorough investigation in the matter. While some recommendations have been indicated in the contextual paragraphs above, following are the consolidated recommendations :-

a. The CBI be directed to initiate Preliminary Enquiries (PE) in this batch of cases to investigate the alleged collusion of Banks and builders/developers, etc. It has an all-India jurisdiction and the expertise to handle such cases.

b. Since a large number of Banks and builders/developers are involved in this batch of petitions, the CBI may initiate multiple PEs based on territorial and / or thematic considerations.

c. The PEs should be prioritised in the following order: on Supertech Ltd., on projects in the NCR region, on the remaining projects.

d. The CBI should immediately initiate a PE on the case relating to Supertech Ltd. (refer para 32 above). The enquiry should encompass the alleged underlying nexus between Supertech Ltd. and the above mentioned 8 Banks / HFCs (who have extended subvention loans in most of the projects) should be investigated by the concerned agency in priority. In addition, the agency should also examine the nexus, if any, with the 3 other Banks and their relevant related entities who have extended large amounts of separate loans to Supertech Ltd., including Corporation Bank, IDBI Bank and Punjab & Sind Bank. The agreements of Supertech Ltd. with the Lessees and developers should also be examined.

e. The CBI should thoroughly investigate the functioning of builders, and a forensic audit may be directed for this purpose. (Refer para 24 above).

f. The CBI should also examine the Joint Development Agreements (between the Lessee and developer) so that the entity which is liable to carry out the obligations and commitments of the builder to the Banks is identified and the homebuyers can have protection from the financial duress they are being put into. Noticeably, the Tripartite Agreement of Axis Bank, referred to hereinabove, specifically reserves the right to proceed against the builder/developer. (Refer para 28 above).

g. In the light of the issues highlighted hereinabove, the lukewarm stand of RBI and the apparent disdain of Banks/HFCs for RBI/NHB Regulations, the CBI should also enquire into the following with respect to each Bank :-

i.

Whether the Banks disbursed amounts to builders/developers in contravention of Directions/Guidelines of the RBI/NHB prohibiting upfront disbursal disconnected with stages of construction and also the construction linked payment plans and correlation, if any, between direct and upfront disbursals by the Banks (of loans sanctioned to homebuyers-borrowers) to builders/developers and the stages of construction of different projects.

ii.

If such disbursals had been made, then under whose authorization and with whose involvement.

iii.

Whether the amounts were in fact disbursed to the builder and not to any third party on their behalf. The said aspect may require a forensic audit of the Banks.

iv.

The manner in which tripartite/quadripartite loan agreements (which appear to be in a standard format for respective Banks) were formulated by different Banks and extended to customers, i.e., Board Resolutions/actions of key managerial personnel sanctioning it. Pertinently, the RBI has maintained that “innovative housing loans” are an instrument on the operational side of Banks who have independence on how to formulate them.

v.

Some Banks also entered into separate bilateral agreements with builders/developers on the subvention scheme. These also need to be investigated.

vi.

The policies formulated by Banks/HFCs on making customers aware of the risks associated with subvention plans and outright/bulk disbursals by Banks to builders may be directed to be produced. It needs to be inquired if the operational branches of Banks cautioned the borrowers accordingly.

vii.

Further, information may also be called regarding steps, if any, taken by Banks to recover the loan amounts from the builders/developers. (Refer para 19 above).

h. Directions be issued to authorities like the RBI, NHB, NOIDA Authority, Greater Noida Authority, Yamuna Expressway Development Authority, to appoint a Nodal Officer each to respond to queries of the CBI and to coordinate accordingly.

i.

The CBI will require additional resources to undertake this huge task. Hence, a team of officers headed by a Gazetted officer each from the concerned states like UP and Haryana should be sent on deputation by the state Police to the CBI. They will be involved in the PEs under the supervision of the CBI officers.

j. The CBI be directed to submit relevant information to the amicus curiae.

k. The RBI be directed to examine the case of a borrower each of a half a dozen different Banks who had opted for the subvention scheme to check whether the Banks complied with the provisions of extant RBI Guidelines/Circulars, particularly relating to disbursal of loan amounts based on stage of construction and suitable cautioning of borrowers by Banks about the potential pitfalls of innovative home loan schemes. (Refer para 14 above).

l. The NHB be directed to submit its report in the matter and also to examine the case of a borrower each of a half a dozen different HFCs who had opted for the subvention scheme to check whether the Banks complied with the provisions of its extant Circulars, particularly relating to disbursal of loan amounts based on stage of construction, suitable cautioning of borrowers by Banks about the potential pitfalls of innovative home loan schemes, Board approval for the schemes, etc. (Refer para 17 above).

m. All the parties be reminded to submit their reports as ordered vide Order dated 5.11.2024 of this Hon’ble Court.

n. All the parties and the CBI be directed to send a copy of each of their reports being submitted to the court directly to the amicus curiae.

o. Since there are a large number of petitions, all the parties having common Banks as Respondents should appoint a Nodal Advocate who can coordinate the submissions.

p. Interim protection to homebuyers to continue as per earlier orders.”

11.

Mr. Ram Singh, Superintendent of Police, Central Bureau of Investigation, EO-1, New Delhi has also submitted a proposal by way of an affidavit. It is pointed out that there are 174 petitions filed by 1205 homebuyers–petitioners, who had approached the Court with the following directions:

(i)

The banks/financial institutions to charge EMI/pre-EMI from the builders-cum-developers and not from the homebuyers;

(ii)

The banks/financial institutions to refund the already recovered amount to the homebuyer and recover it from the developers; and

(iii)

the RBI to take strict action against the banks.

12.

In his affidavit, the Superintendent of Police, CBI has explained that there are in total 40 builder-cum-developers who are involved in these matters, out of whom the largest number of petitioners (799) pertain to Supertech Ltd.

13.

The CBI has, thereafter, proposed that Preliminary Enquiries be undertaken, underlining that with the information available as of now being limited, commission of cognizable offence on the part of the builders and financial institutions is not clear. It is suggested that, with a view to arrive at a finding as to what actually transpired; what was the exact modus operandi of the builders; if and how they colluded with the financial institutions; and what was the exact criminality on the part of the builders or the financial institutions, it is necessary that 7 Preliminary Enquiries are registered and taken forward. The affidavit explains the details of the proposed 7 Preliminary Enquiries as follows:

9.

… … …

a)

Since, out of 174 SLPs filed by 1205 petitioners, 84 SLPs filed by 799 petitioners pertain to one builder group i.e. M/s. Supertech Ltd. and there are multiple projects of M/s Supertech Ltd. located in 8 different cities. It is propsoed that 01 Preliminary Enquiry may be initiated against the builder M/s Supertech Ltd. projects which is impleaded in these 174 SLPs.

b)

For rest of the builders, the maximum number of projects of the respondent builders are in NCR region i.e. Noida, Greater Noida, Gurugram, Yamuna Expressway and Ghaziabad. As, there would be separate development authority for each city, it is proposed to register 05 Prelimiary Enquiries, 1 each for the projects falling under one development authority i.e., Noida, Greater Noida, Yamuna Expressway, Gurugram and Ghaziabad.

c)

For the projects of the respondent builders except M/s Supertech Ltd. falling outside NCR region i.e., Mumbai, Bangalore, Kolkata, Mohali and Allahabad, it is proposed that 01 Preliminary enquiry may be registered for all such projects.

10.

That thus, in total 07 Preliminary Enquiries are being proposed to be registered with a prayer that 03 months’ time period may kindly be provided to submit the reports.”

….. ….. …..

16.

We find that the consolidated recommendations made by learned Amicus Curiae and the suggestions given by CBI to commence with 7 Preliminary Enquiries for the time-being are in tandem.

17.

While we propose to issue directions from time to time, pursuant to various recommendations made by the learned Amicus Curiae, as of now, we direct the Central Bureau of Investigation to register seven Preliminary Enquiries, in the manner as suggested in the affidavit filed on its behalf. To be specific, the scope of these Preliminary Enquiries shall be as per paragraph 9 of the CBI’s affidavit (reproduced above), namely;

(i)

One Preliminary Enquiry in respect of the projects launched by M/s Supertech Ltd;

(ii)

One Preliminary Enquiry each (total five) in respect of projects in NCR in different areas, namely, NOIDA, Greater NOIDA, Yamuna Expressway, Gurugram, and Ghaziabad; and

(iii)

One Preliminary Enquiry in respect of the projects outside of NCR, in which M/s Supertech Ltd. is not a builder/developer.”

“….. ….. …..

9.

In compliance with the order dated 29.04.2025, the Central Bureau of Investigation (CBI) has filed an interim status report, inter alia, stating: (i) the gist of common allegations of preliminary enquiries; (ii) Focal point of enquiry in 7 preliminary enquiries, registered pursuant to the earlier orders; (iii) summary of common action taken; (iv) discussion about subvention scheme; (v) outcome of enquiry from Reserve Bank of India and National Housing Bank; (vi) the preliminary enquiry against M/s. Supertech Ltd. highlighting the analysis of preliminary outcome based in physical inspection of projects etc. Similar analysis in respect of the other projects located in Greater Noida Authority, Gurugram Authority, Yamuna Expressway Industrial Development Authority, Ghaziabad Authority.

10.

As regard to the preliminary enquiry registered in respect of projects outside NCR, the report indicates that the said enquiry is still continuing and it will be completed in the next six weeks time period.

11.

So far as the preliminary enquiries undertaken in six cases is concerned, the CBI has proposed the further course of action in paragraph 83 of the report. The CBI has recommended registration of 22 regular cases to enable it to undertake further investigation into these matters. As of now, we accept the recommendations contained in Paragraphs 83, 84 and 85 of the report. Consequently, the CBI shall register the regular cases and proceed further in accordance with law.

12.

In the process of investigation, if the CBI finds any kind of impediment or additional support, they shall be at liberty to approach this Court and appropriate directions to that effect will be issued.

13.

So far as the preliminary enquiry in respect of the projects outside NCR, six weeks more time is granted to complete the preliminary enquiry.

14.

We appreciate the outstanding efforts made by the CBI in completion of the six preliminary enquiries for which, we believe that more than 1000 persons have been examined and voluminous records have been looked into by them, besides visiting 58 project sites. We expect that even after registration of the regular cases, the CBI will, having regard to the magnitude and gravity of the issues, promptly investigate and take the investigation to its logical conclusion.

15.

Mr. Rajiv Jain, learned Amicus Curiae, has submitted a comprehensive note dated 20.07.2025. His report has critically analysed the issues like: (i) unequal bargaining power between the parties resulting in contravention of guidelines of RBI and NHB; (ii) the status of the projects and payment plans; (iii) information about loan disbursements; (iv) lopsided terms of builder – homebuyer agreements; (v) possible recourse by banks/HFCS; (vi) property security myth and mortgage in builder builder and tripartite/quadripartite agreements and the role of development authorities; (vii) status of developers and hidden players – role and impact; (viii) on efficacy of RERA and disclosures on their websites; (ix) regulatory lapses by development authorities; and, (x) honoraria.

16.

In the aforesaid report, Note No. 1 highlights the transparency and responsibility of development authorities including RERA and the necessity to reconsider their role with reference to the protection of home buyers from unscrupulous builders.”

“1.

On oral mention, the main case is taken on the Board.

2.

Learned Additional Solicitor General of India, on instructions, informs that the preliminary enquiry by the CBI, in terms of the directions issued earlier, is complete and as per such enquiry, a cognizable offence is made out.

3.

That being so, the CBI will register the case under the appropriate provisions of law and proceed to investigate the same.

4.

A copy of the preliminary enquiry report be handed over to the learned amicus after completion of the search and seizure to enable him to assist the Court on the date fixed, i.e., 16.10.2025”

“….. ….. …..

7.

This matter pertains to the systematic misuse of the subvention scheme by various private builders-cum-developers, apparently in collusion and connivance with the banks and the financial institutions. On 22.07.2025, comprehensive directions were issued, and pursuant thereto, a brief note was handed over on behalf of the CBI to the effect that, in compliance with those directions, 22 regular cases were registered on 28.07.2025 as per the provisions of law. Thereafter, searches were carried out at the residential/ official premises of the accused persons. Out of these 22 cases, investigations in the following 3 cases are complete, and pursuantly, chargesheets have been filed against the builder companies and their directors:

“1.

RC 219 2025 E0015 (M/S. Rudra Buildwell Constructions Pvt. Ltd.), Project: 'KBNOWS Apartments' Greater Noida.

2.

RC 219 2025 E0017 (M/S. Dream Procon Private Ltd.) Project: 'Victory Ace' Noida.

3.

RC 219 2025 E0020 (M/S. Jaypee Infratech Ltd.) Project: "Orchards" Noida.”

8.

During the course of the hearing, we are informed that the above-stated chargesheets have been filed in the Court of Chief Metropolitan Magistrate at Rouse Avenue Courts, Delhi. We direct the Court concerned to consider the chargesheets filed and proceed with the matter in accordance with law within two weeks.

9.

With reference to the subsequent order dated 23.09.2025, the note submitted by the CBI reveals that 6 regular cases were registered on 25.09.2025, and some searches were carried out at the residential/official premises of the suspects. All these cases are still under active investigation. The extract of the status report is said to have been shared with the learned Amicus Curiae. It is also explained that the requisite police officers/officials have been taken on deputation from the State Police of Uttar Pradesh and Haryana. Learned Additional Solicitor General of India representing the CBI states that the investigation will be completed promptly, and a fresh status report shall be filed before the next date of hearing.

10.

Mr. Rajiv Jain, learned Amicus Curiae, has submitted a very comprehensive status report comprising two volumes. It delves into the details of the actions of 7 banks/financial institutions, particularly the circumstances surrounding the Ozone projects and the further course of action. The report provides an in-depth analysis of the role of the banks and financial institutions, leaving the land owners with very limited recourse but to agree to the terms of their respective agreements. In many Tripartite agreements, the banks have ample power to move against the builders for the recovery of money. They can also seek a full refund from the builders if the unit is abandoned by the purchasers, while the builders are only entitled to retain the earnest money paid by the purchasers. The report shockingly reveals how unfairly the home buyers or the land owners have been treated.

11.

It seems to us that the report submitted by the learned Amicus Curiae will be extremely helpful for the CBI to take the ongoing investigation to a logical conclusion. We have, therefore, impressed upon Mr. Rajiv Jain, learned Amicus Curiae, to handover a soft copy of the report to Ms. Aishwarya Bhati, learned Additional Solicitor General of India, representing the CBI, for further information and necessary action.

12.

The note submitted on behalf of the CBI reveals that, at present, 25 regular cases are under active consideration. These FIRs pertain only to those cases that came up for consideration before this Court when the orders dated 22.07.2025 and 23.09.2025 were passed. Thereafter, various other home buyers have also approached this Court by filing independent writ petition(s) or as intervenor(s).

13.

The counsel for the petitioners in the writ petition(s) as well as those who have applied to become intervenor(s) are directed to handover soft copies of their respective petitions/applications to Ms. Aishwarya Bhati, learned Additional Solicitor General of India representing the CBI, so as to enable the CBI to examine those matters and register further regular cases, wherever required”

“1.

This batch of petitions, largely instituted at the instance of certain home buyers-cum-borrowers, have been directed against the systemic failure of the statutory and Government authorities to discharge their functions, as also against the circumvention of the regulatory framework by Banks and Housing Financial Corporations (HFC), resulting in alleged illicit benefits drawn by the builders cum-developers at the cost of homebuyers, without completing the subject-projects and handing over possession of the allotted premises.

2.

This Court, having considered the recommendations of Shri Rajiv Jain, learned Amicus Curiae, in a self-speaking order dated 29.04.2025 and subsequent orders, initially directed the Central Bureau of Investigation (CBI) to complete preliminary enquiries and thereafter register regular cases for investigation into the alleged offences. In due course of time, the CBI has registered 56 FIRs, of which final reports have been filed in 18 cases, along with 17 charge-sheets and 1 closure report.

3.

The CBI has now filed its 5th Supplementary Status Report, according to which, out of the 17 cases where a chargesheet was filed, cognizance has been taken in 3 cases. In 5 cases, the delinquent role of officials of the financial institutions has also emerged during the course of investigation, and they too have been chargesheeted under the Prevention of Corruption Act, 1988. However, sanction under Section 19 of that Act is awaited from the competent authority/authorities. We are informed that, in total, 34 prosecution sanctions are awaited in respect of different officials, the details whereof have also been mentioned in the Report.

4.

It is further stated that the learned Amicus Curiae has forwarded an additional set of 38 Special Leave Petitions and 52 Interlocutory Applications on 04.05.2026 to the CBI for further examination and appropriate action thereon. These matters also pertain to similar allegations concerning real estate projects, but relate to the same companies and projects, in regard whereof CBI has already registered cases.

5.

The CBI has further pointed out that due to the increase in the volume and national scale of these investigations, additional police officials need to be requisitioned. Accordingly, requests for requisitioning police officers from the States of Uttar Pradesh, Rajasthan, Tamil Nadu, Maharashtra, Haryana, Punjab, and Karnataka were made through a communication sent by the Director, CBI. However, the aforementioned States have neither provided the requisite additional police personnel, nor responded to the CBI Director’s request. Consequently, the CBI has prayed for certain interim directions.

6.

The learned Amicus Curiae has filed his status reports in the form of Note Nos. 7 and 8, both dated 06.08.2026. In Note No. 7, it has been pointed out that a total of 283 Special Leave Petitions, Writ Petitions, Transfer Petitions, and Interlocutory Applications have been filed, relating to 2041 petitioners/applicants. Out of them, only 977 persons have furnished the requisite information as on 01.08.2026, as per the Form provided by the learned Amicus, while he has been able to obtain the necessary information for 45 more such persons from their filings. However, information qua several hundred petitioners/applications is still not available.

7.

The Report submitted by the learned Amicus Curiae is self speaking with respect to: (i) the present status of the projects and builders; and (ii) the exposure faced by the Banks and HFCs. At its conclusion, the Note contains certain recommendations made by the learned Amicus, which warrant necessary directions by this Court.

8.

Learned Amicus Curiae has also, through Note No. 8, submitted his comments on the investigation by the CBI and his comments on various representations seeking CBI enquiry/investigation. It is, inter alia, pointed out that the CBI has made available the investigation reports of three cases mentioned in paragraph 3 of the Report. The learned Amicus has also provided soft copies of 81 Special Leave Petitions and 52 Interlocutory Applications to the CBI, which have been filed meanwhile and have been scrutinised by him. Thereafter, it is explained that the learned Amicus Curiae has received detailed representations, notes, and supporting documents from the learned advocates/counsel and homebuyers across multiple States in connection with the subject-matter(s). The categorization of these representations too has been included as part of the Note. Finally, learned Amicus has also sought certain directions to the CBI.

9.

We have heard learned Amicus Curiae and other learned senior counsel/counsel for the parties. In addition, Ms. Aishwarya Bhati, learned Additional Solicitor General representing the CBI, has also been heard.

10.

In order to facilitate the expeditious and time-bound investigation by the CBI and as prayed for by it in its 5th Supplementary Status Report along with the directions sought by learned Amicus Curiae to CBI, we issue the following interim directions:

(i)

The Directors General of Police of the States of Uttar Pradesh, Rajasthan, Tamil Nadu, Maharashtra, Haryana, Punjab, and Karnataka are directed to expeditiously provide additional suitable police officials as per the request received from CBI, on deputation. The requisite suitable officers shall be nominated/deputed as early as possible, but not later than two weeks. In the event of any delay or failure, this Court will be constrained to take a serious view of the non-compliance;

(ii)

The competent authorities of the Bank of India, the State Bank of India, the United Commercial Bank, HDFC Bank Ltd., ICICI Bank, and Samman Capital Ltd. are directed to expeditiously process and accord necessary sanction under Section 19 of the Prevention of Corruption Act, 1988 for prosecution of their officers/officials who have been prima facie found involved by the CBI during the course of investigation. The needful shall be done within two weeks, failing which the competent authority shall submit an explanation to this Court;

(iii)

The CBI is directed to convey to the Directorate of Enforcement the details of such cases where the Directorate is required to take cognizance of offences relating to the proceeds of crime;

(iv)

The CBI is directed to scrutinise and take cognizance of the representations, documentary evidence, and further material as forwarded by the learned Amicus Curiae;

(v)

The CBI shall conduct a thorough investigation into the aspects highlighted by the learned Amicus Curiae, in his comments on the 3 charge-sheets. The detailed comments form part of Note No. 8, a soft copy whereof will be supplied by the learned Amicus Curiae in a pen drive or through email to the office of the learned Additional Solicitor General for the CBI’s consideration;

(vi)

The CBI is further directed to conduct a thorough investigation into the allegations and relied upon documents of the six representations alleging offences by the Banks, land authorities, and the builder, namely, Ozone Group in the States of Karnataka, Maharashtra, and Tamil Nadu; Vivansaa Baalsam in Bengaluru; Rudra Buildwell Construction Pvt. Ltd. in Greater NOIDA; and Omaxe Group in Chandigarh. A separate status report with respect to the investigation against these builders/banking institutions shall be submitted before this Court; and

(vii)

In the course of ongoing investigation, particularly where there is no quadripartite agreement, despite the lessee and developer/builder being different, the CBI shall examine whether the banks/HFCs, either ignorantly, negligently, or consciously, signed an agreement to create a mortgage over the flat/apartment in the absence of the actual leaseholders and whether any wrongful loss was caused to the banks/HFCs due to such exclusion.”

“In compliance to Order dated 29.04.2025 of Hon'ble Supreme Court of India In SLP (Civil) No. 7649/2023 titled Himanshu Singh vs Union of India & others; Preliminary Enquiry No. 2192025E0007 of projects falling outside Delhi/NCR was registered against various builders including M/s Ozone Urbana Infra Developers Pvt. Ltd having its project ""Ozone Avenue" addressed at NH-7, Kannamangalla Village, KasabaHobli, DevanahalliTaluk, Bangalore Rural District, Bengaluru, Karnataka, Unknown Bank Officials, Unknown Private Persons and Other Unknown. Enquiry revealed that there are 01 SLP and 03 petitioners involved in the SLPs pertaining to M/s Ozone Urbana Infra Developers Pvt. Ltd. as mentioned below:

SLP No.	No. of Petitioners
SLP/ Diary No. 49573 of 2024	03

It is revealed that M/s Ozone Urbana Infra Developers Pvt. Ltd. through its Directors, in connivance with officials of Indiabulls Housing Finance Limited (Now Sammaan Capital) innovated a subvention scheme for sale of its residential project stating "No Pre-EMI till delivery of possession of residential unit" and thereby lured the homebuyers for booking / purchasing residential units in its project. The homebuyers were induced by its attractive scheme and parted with their own fund to book the flats.

Enquiry revealed that M/s Ozone Urbana Infra Developers Pvt. Ltd. further entered into a Builder Buyer Agreement mentioning therein that the possession of the allotted unit shall be given to the allottee/s by the Company within a fixed period.

Enquiry revealed that M/s Ozone Urbana Infra Developers Pvt. Ltd. prima facie entered into criminal conspiracy with unknown officials of Indiabulls Housing Finance Limited (Now Sammaan Capital)from whom home loans were availed by the homebuyers. Officials of these financial institutions approved the subvention plan of the builder and financed home loans accordingly. Indiabulls Housing Finance Limited (Now Sammaan Capital) in pursuance thereof sanctioned and disbursed home loan to the account of M/s Ozone Urbana Infra Developers Pvt. Ltdwithout exercising any due diligence and caused undue pecuniary advantage to the Builder and ignored the directives of RBI/NHB.

Enquiry revealed that M/s Ozone Urbana Infra Developers Pvt. Ltd. defaulted in payment of Pre-EMIs as promised till handing over the possession of the flat to homebuyers and did not complete the project/flats. Builder neither delivered possession of the residential units to homebuyers nor refunded their deposited amount and misappropriated the entire upfront booking amount/loan amount. It clearly indicates that the homebuyers have been cheated by M/s Ozone Urbana Infra Developers Pvt. Ltd in conspiracy with unknown officials of M/s Indiabulls Housing Finance Limited (Now Sammaan Capital) thereby causing wrongful loss to the homebuyers and corresponding wrongful gain to themselves.

Enquiry revealed that the M/s Indiabulls Housing Finance Umited (Now Sammaan Capital) started deducting EMI from the homebuyers and in the event of default reported the homebuyer's accounts as NPA and thereby CIBIL of the homebuyers were degraded.

Enquiry also revealed that the builder has sold the same flat to multiple homebuyers and same unit was also financed by the financial institution twice

On the basis of finding of preliminary enquiry, Hon'ble Supreme Court of India vide Order dated 23.09.2025 directed CBI to register regular case (copy enclosed).The Preliminary Enquiry prima facie discloses that M/s Ozone Urbana Infra Developers Pvt. Ltd had cheated the homebuyers in conspiracy with unknown officials of bank / financial Institution and their acts constitute the commission of offences of cheating, criminal conspiracy and criminal misconduct by public servants. Hence, a regular case is registered under section 120-B r/w 420 IPC and 13(2) r/w 13 (1)(d) of PC Act, 1988 against; 1.M/s Ozone Urbana Infra Developers Pvt. Ltd. and its directors at the relevant time,, 2. Mr. S. Vasudevan Managing director of M/s Ozone Urbana Infra Developers Pvt. Ltd. 3. Unknown officials of M/s Indiabulls Housing Finance Limited (Now Sammaan Capital) 4. Unknown private persons and 5. Unknown others. The investigation of this case is entrusted to Sh. Avinash Kumar, Inspector, CBI, EO-1, New Delhi.”

“ ….. ….. …..

8.

RECORDING OF REASON TO BELIEVE UNDER SECOND PROVISO TO SECTION 5(1); AND UNDER SECTION 5(1) READ WITH SECTION 2(1)(u) OF PMLA:

i.

M/s Ozone Urbana Infra Developers Pvt. Ltd. (hereinafter "OUIDPL"), promoted and controlled by Shri S. Vasudevan, collected approximately ``927.22 crores from around 1351 homebuyers in its Ozone Urbana township project at Devanahalli, Bangalore, apart from loans raised from financial institutions. The company failed to deliver possession of apartments/units against the said money, thereby dishonestly retaining and diverting the funds.

ii.

That the funds so collected from gullible customers and banks, instead of being applied for construction and delivery of the projects, were diverted, layered and siphoned-off to various group companies and personal bank accounts of Shri S. Vasudevan and his wife, Smt. Priya Vasudevan. These diversions include inter-corporate deposits of `49.07 crores to several group concerns, and transfer of over `180 crores to M/s Tuscan Consultants and Developers Pvt. Ltd., out of which large sums were immediately routed to the personal accounts of Shri S. Vasudevan and his wife Smt. Priya Vasudevan.

iii.

That Shri S Vasudevan himself admitted on oath under section 50 of the PMLA, 2002 that escrow funds were utilized for purposes other than construction, including corporate overheads, salaries, loan repayments and marketing expenditure. Further, substantial amounts were layered through multiple entities and were routed abroad into overseas ventures such as Ozone Agrow Pte. Ltd. (Singapore), Ozone Bolevine Agrow Ltd. (Laos), and Ozone Global DMCC (Dubai). This entire process resulted in layering and integration of the proceeds of crime, generated by cheating customers.

iv.

That the books of accounts of OUIDPL falsely reflect a Work-in-Progress (WIP) of ``1,310 crores, comprising largely of finance costs and overheads, despite the project land remaining undeveloped. This establishes manipulation of accounts to conceal the diversion of proceeds of crime.

v.

That despite directions of K-RERA (Karnataka, RERA) to refund amounts to homebuyers, Shri S. Vasudevan wilfully failed to comply with such orders. thereby reinforcing his fraudulent intent. Moreover, the company has not obtained RERA approval for construction post-2023, leading to a complete standstill of construction activity. Defaults in vendor payments have further worsened the standstill, creating a vicious cycle detrimental to innocent homebuyers who are left remediless that is they neither have possession of their flats nor they have been refunded of monies already paid. Further, there is no active construction on-going the project due to expiry of RERA approval and non- payment of dues to the vendors.

vi.

This situation has forced around 100 families to, reside in incomplete Ozone Urbana units, without possession letters or completion/occupancy certificates from the statutory authorities. This unfortunate situation has been created by the promoters by misappropriation of customer funds and in complete disregard for statutory obligations.

vii.

That Shri S. Vasudevan, with ill-intent, has further alienated Ozone Urbana properties by selling large parcels of land to third parties like Sattva Resi Pvt. Ltd., and used the proceeds thereof to settle debts with ACRE ARC and JC Flowers ARC, thereby alienating properties acquired out of customers' funds and depriving them of their right over such assets.

viii.

Sh. S Vasudevan in order to safeguard properties of M/s OUIDPL and other group companies from any legal action from various agencies including K-RERA, had taken loans from various banks after mortgaging the same, which has now been taken over by JC Flower for Rs. 1030 Crores. It is mentioned here that the real value of the assets mortgaged to JC Flower is much more that the book value as the same were purchased and mortgaged around the Year 2018.

ix.

It is also stated that the unsold inventory (only RC structure) in Urbana projects (Aqua2, Avenue, Prime etc.) measuring 8.83 lakh sq.ft. have also been constructed from the funds received from the customers (part of the Proceeds of Crime) and the same has not been completed till date, which has kept the customers waiting for delivery of the units. However, the funds received from them were used elsewhere illegally.

x.

It is pertinent to mention here that in many cases, the customer has arranged funds through a tri-party agreement with the financial institution, wherein M/s OUIDPL has promised to pay the pre-construction EMIs. However, the company has failed to honour that commitment for hundreds of customers, leaving them exposed to the high-handed loan recovery practices of these financial institutions. Further, in many cases CIBIL score of the customers have been adversely impacted due to inability to pay EMIs.

xi.

Shri S. Vasudevan with ill intention, instead of constructing flats/apartments and delivering the same to the gullible customers, sold some of these prime properties at very high value to third parties. The proceeds of the sale are still not being used for construction of apartments. Instead, the same are being used for development of new projects in other group entities and for reimbursement of loan to JC Flower and others. This has rendered hundreds of customers as helpless and vulnerable.

xii.

Therefore, the below mentioned properties are liable to be attached in M/s OUIDPL Project as value thereof of the proceeds of crime to safeguard the interests of the customers, leaving other properties for the financial institutions keeping in mind of their interest as well-

•

4.5 Acres of Commercial Land registered vide document nos. 5234/2005-06 in CD-DNHD 73 dt. 20.01.2006 and 3301/2004-05 in CD DNHD 29 dt 01.12.2004 situated at Sy. Nos. 115, 116 and 117, Kannamangala Village, Kasaba Hobli, Devanahalli Taluk, Bangalore Rural District.

•

Unsold inventory in Urbana Projects i.e. Aqua 2 and Avenue (Total number of 105 unsold flats admeasuring 2,04,919 Sq. Ft.)

xiii.

Sh. S. Vasudevan and Priya Vasudevan have received Proceeds of Crime to the tune of more than Rs. 28 Crores and exhausted the same for other purposes and hence, the properties below as the proceeds of crime are liable to be attached. In addition to this, Shri S. Vasudevan has also received Rs. 7.8 Crores from Ozone Urbana Infra Developers Pvt. Ltd., which is still outstanding and exhausted for other purposes/personal benefits.

•

Immovable property admeasuring 294 acres situated at Kannehalli Village, Gonibeedu Hobli, Mudigere Taluk, Chikkamagaluru District valuing to Rs. 47,40,00,000/- (To the extent of Rs. 35.8 Crores)

xiv.

That the totality of facts and evidences demonstrate that funds collected from gullible customers constitute "proceeds of crime" within the meaning of Section 2(1)(u) of the PMLA, 2002, having been derived or obtained as a result of criminal activity relating to the scheduled offence of cheating, criminal breach of trust, and Criminal conspiracy under the IPC.

xv.

That the said proceeds of crime have been (a) concealed in manipulated books of accounts, (b) layered through inter-corporate deposits and overseas transfers, and (c) integrated into immovable properties, group concerns, and personal assets of Shri S. Vasudevan and his wife Smt. Priya Vasudevan, thereby completing the cycle of money laundering.

xvi.

Thus, there are reasons to believe that properties mentioned at Schedule-A of properties at Para-6 above will be transferred or dealt with in any manner which may result in frustrating any proceedings relating to confiscation of such proceeds of crime, if not attached immediately. The subject assets may be transferred/disposed-of/encumbered without notice of this Directorate may result in frustrating any proceedings relating to confiscation of such proceeds of crime.

xvii.

Therefore, to ensure that properties involved in the offence of money laundering are not concealed. transferred. alienated, disposed of or dealt with in any manner that may frustrate the proceedings under PMLA, there are reasons to believe that the properties, as detailed in Schedule A in Para-6 above are involved in money laundering are liable for attachment under section 5(1) read with section 2(1)(u) of PMLA, 2002.

9.

THEREFORE, in view of the above discussion and material and evidences placed before me, I have reasons to believe that M/s Ozone Urbana Infra Developers Pvt. Ltd. and its promoters Shri S. Vasudevan along with others, who have been charged with Scheduled Offences i.e. Sections 419, 420 and 120B of IPC, 1860, within the meaning of Section 2(1) (y) of the PMLA, have indulged in criminal activities and committed scheduled offences and have generated proceeds of crime and from the part of the proceeds of crime they had acquired the immovable properties having total value of Rs. 423,37,84,000/- (FOUR HUNDRED TWENTY-THREE CRORES THIRTY-SEVEN LAKHS AND EIGHTY-FOUR THOUSAND) as mentioned above in detail in Schedule A of the properties at Para - 6 of this attachment order, and identified as proceeds of crime are hereby attached under section 5(1) read with section 2(1)(u) of PMLA, 2002. Such proceeds of crime are in conformity with the definition of proceeds of crime provided under section 2(1)(u) of PMLA, and the same are involved in money laundering. If such proceeds of crime in the form of immovable property (ies) involved in money laundering are not attached immediately under the provisions of the Act, the non-attachment of the properties are likely to frustrate any further proceedings under the Act. In addition, if the Proceeds of Crime are not attached, I have reasons to believe that the Proceeds of Crime would further be laundered;

10.

NOW THEREFORE on the basis of material in my possession and in exercise of the powers conferred under Second Proviso to Sub-Section (1) of the Section 5 of the Prevention of Money Laundering (15 of 2013) read with Rule 3 of The Prevention of Money Laundering (Issuance of Provisional Attachment Order) Rules, 2013 and in terms of authorization to act as statutory authority under PMLA, I, Brij Shankar, Deputy Director, Directorate of Enforcement, Bengaluru Zonal Office, Bengaluru, hereby order provisional attachment of movable properties duly mentioned in the schedule - A of the properties at Para-6 above, for a period of 180 days (One Hundred and Eighty Days) from the date of issuance of this Order, and further order that the same shall not be transferred, disposed of, alienated, removed or parted with or otherwise dealt with in any manner whatsoever until or unless specifically permitted to do so by the undersigned.”

“ PRESS RELEASE

4/10/2025

Directorate of Enforcement (ED), Bangalore has issued a Provisional Attachment Order dated 04.10.2025 under the Prevention of Money Laundering Act (PMLA), 2002, attaching immovable properties amounting to Rs. 423.38 Crores, in connection with an investigation against M/s Ozone Urbana Infra Developers Pvt. Ltd. and Others.

Investigation in this case by ED was initiated on the basis of multiple FIRs under sections 419, 420 and 120B of Indian Penal Code, 1860 registered at various police stations of Bengaluru City against M/s Ozone Urbana Infra Developers Pvt. Ltd and its promoters. Further, a FIR was also registered against the company and its promoter by the CBI, EO-1, New Delhi on the direction of Hon'ble Supreme Court.

The main allegation against the company M/s Ozone Urbana Infra Developers Pvt. Ltd. is that it has defaulted in completion of construction of projection in time and failed to hand over the possession to the customers. It is alleged that the company induced the gullible customer by offering to pay pre-construction EMIs till handing over the possession of the flat to homebuyers. However, it has failed to honour its commitments and did not complete the project/flats. The builder neither delivered possession of the residential units to homebuyers nor refunded their deposited amount and misappropriated the entire upfront booking amount/loan amount.

Earlier, (ED), Bangalore Zonal Office has conducted search operations under section 17 of PMLA,2002 on 01/08/25 at 10 premises in this case and seized various incriminating documents related to diversion and misappropriation of project fund from the various premises.

Further, during the course of ED investigation, it is revealed that M/s Ozone Urbana Infra Developers Pvt. Ltd. along with Sh. S Vasudevan (main promoter) have defrauded the home buyers to the tune of Rs. 927.22 Crores and did not deliver possession of apartments/units against the said money, thereby dishonestly retaining and diverting the funds. The accused diverted the funds to the other group entities and associated individuals including Sh. S. Vasudevan himself and his family members. Therefore, the company and Sh. S Vasudevan have generated proceeds of crime to the tune of Rs. 927.22 Crores and routed the same through various entities and used for the purpose other than the funds actually meant for i.e. for construction and development of projects in Ozone Urbana Infra Developers Pvt. Ltd.

Thus, in order to safeguard the interest of the customers, immovable properties of the M/s Ozone Urbana Infra Developers Pvt. Ltd. (Unsold stock in the Avenue (92 flats) and Aqua 2 projects (13 flats), 4.5 Acres of commercial land) and personal properties of itspromoter S. Vasudevan along with his wife (179 acres of land at Kannehalli Village, Mudigere) all totalling to the tune of Rs. 423.38 Crores has been provisionally attached.”

“ ….. ….. …..

27.

It is submitted that the Directorate of Enforcement recorded ECIR/09/BZ/2012 on 25.09.2012 and after investigation found that INR 33,80,87,617/-(Thirty-Three Crore Eighty Lakh Eighty-Seven Thousand Six Hundred Seventeen Rupees) remained payable by JSW to AMC which constituted “proceeds of crime” under Section 2(1)(u) of PMLA. To secure this amount, PAO No. 08 of 2015 dated 27.03.2015 for INR 24,37,00,733.50 (Twenty-Four Crore Thirty-Seven Lakh Seven Hundred Thirty-Three Rupees and Fifty Paise Only) and PAO No. 11 of 2016 dated 30.03.2016 for INR 9,43,86,883.50 (Nine Crore Forty-Three Lakh Eighty-Six Thousand Eight Hundred Eighty-Three Rupees and Fifty Paise Only) were issued under Section 5(1) of PMLA, attaching specific amounts in three JSW bank accounts. The PAOs were duly confirmed by the Adjudicating Authority on 09.04.2021.

28.

It is argued that despite a clear statutory bar, JSW, in collusion with bank officials, frustrated the attachment by withdrawing funds immediately after the issuance of PAO 08 of 2015 on 27.03.2015. He placed reliance on contemporaneous emails and letters from Vijaya Bank/Bank of Baroda, particularly communications dated 29.03.2016 and 25.05.2016, to submit that the lien on account no. 139500301000053 was wrongfully lifted despite written directions from the ED not to do so. The withdrawals left only INR 7.81 Crore available out of the attached sum, causing a shortfall of INR 16.55 Crore, which continues to be in the possession of JSW.

29.

It is stated that possession of confirmed attached property by the accused, in defiance of lawful attachment, squarely falls within Section 8(4) of PMLA and constitutes “concealment, possession, acquisition and use” of proceeds of crime punishable under Section 3 of PMLA. The High Court had dismissed writ petitions of the Appellants challenging the PAOs on 11.12.2020 and the two Writ Appeals Nos. 68 of 2021 and 97 of 2021 were also dismissed on 04.05.2021. Hence, the attachment has attained finality.

30.

The further contention is that, in pursuance to multiple summons issued under Section 50(2) of the PMLA to Shri M.V.S. Seshagiri Rao and Appellant No. 2, the officials of JSW Steel Ltd., on 10.12.2021, 15.12.2021, 04.02.2022, and 25.02.2022, there was no cooperation extended, and no authorised representative appeared to depose which shows the mens rea of the Appellants.

31.

The learned ASG submitted that bank accounts are considered “property” within the meaning of Section 2(1)(v) of the PMLA, as established by this Court in State of Maharashtra v. Tapas D. Neogy[State of Maharashtra v. Tapas D. Neogy, (1999) 7 SCC 685]. He further argued that the attachment of a specified quantum from these accounts is therefore valid. Additionally, he contended that the withdrawal of funds, even during the pendency of a stay order, does not absolve JSW of liability. This is because the stay order was prospective in nature and did not annul the lien that had already been marked on the accounts.

32.

In the light of the deliberate conduct of the appellants in dissipating attached amounts and their continued possession of INR 16.55 Crore of proceeds of crime, this Court ought not to exercise extraordinary jurisdiction to quash the cognizance order and prayed for dismissal of the appeals.

33.

Having heard learned Counsel for both the parties and on perusal of the records, we note that the Appellants have already invoked their statutory remedy before the Appellate Tribunal under Section 26 of the PMLA, which remains pending.

34.

It is important to note that the PMLA provides a comprehensive and self-contained adjudicatory mechanism. Section 5 enables Provisional Attachment, Section 8 contemplates confirmation by the Adjudicating Authority, and Section 26 provides an appellate remedy before the Appellate Tribunal. The appellants, in the present case, have already invoked their statutory remedy of Appeal, which remains pending.

35.

This Court has consistently held that constitutional or appellate jurisdiction should ordinarily not be exercised where an efficacious alternate remedy is available and is actively being pursued. Reference may be made to Union of India v. Guwahati Carbon Limited[Union of India v. Guwahati Carbon Ltd., (2012) 11 SCC 651], which cautions against bypassing statutory forums except in cases of patent illegality or jurisdictional error.

36.

We further note that it is undisputed that the ECIR registered by the ED does not name the appellants as accused persons. The charge-sheet filed by the CBI under RC 18(A)/2011/CBI/ACB/BLR also does not array them as accused, having dropped them in the supplementary report after finding no material to proceed. The complaint filed by the ED is predicated not on any independent act of laundering but on the allegation that the appellants withdrew certain sums from the attached bank accounts in violation of the PAOs, thereby frustrating the recovery of INR 33.80 Crore, alleged to be “proceeds of crime.”

37.

The core issue before us is not whether the appellants' entire banking operations are tainted, but whether the specific sum of INR 33,80,87,617/- (Thirty-Three Crore Eighty Lakh Eighty-Seven Thousand Six Hundred Seventeen Rupees), representing unpaid consideration for iron ore supplied by AMC, can be treated as “proceeds of crime” and whether its withdrawal post-PAO constitutes an offence under Section 3 PMLA. The apprehension that the entire account balance constitutes proceeds of crime is misplaced, particularly when the admitted position is that payments were made and received through regular banking channels and are duly reflected in the books of account.

38.

Viewed thus, the appropriate course would be to permit the statutory process to run its route to reach its logical conclusion. Interference at this stage would prejudge issues that are squarely within the domain of the Appellate Tribunal, including whether the attached property represents “proceeds of crime” within the meaning of Section 2(1)(u) PMLA and whether the withdrawals were in violation of law.

39.

In light of these findings, we are unable to hold that the case for quashing the cognizance order or interdicting proceedings is made out. The allegations, at this stage, are confined to the recovery of the quantified amount of INR 33.80 Crore and do not extend to fastening criminal liability upon the appellants beyond that process. The apprehension of arbitrary prosecution is, therefore, misplaced.

40.

Accordingly, we decline to interfere with the proceedings at this stage. The appellants shall be at liberty to pursue their statutory appeals before the Appellate Tribunal, which shall decide the same on their own merits and in accordance with law, uninfluenced by any observations contained herein above.”

ORDER