Bombay High Court
Arun Digambar Kulkarni vs Directorate Of Enforcement Through ... on 10 October, 2022
Bench: Dipankar Datta, Madhav J. Jamdar
8-CRPIL.12.2022
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
CRIMINAL APPELLATE JURISDICTION
PUBLIC INTEREST LITIGATION NO. 12 OF 2022
Arun Digambar Kulkarni } Petitioner
Versus
Directorate of Enforcement }
and Ors. } Respondents
Mr. Subhash Jha with Mr. Bhojraj Baral for
the petitioner.
Mr. Hiten Venegaonkar for respondent no.
1 (ED).
Mr. Sharan Jagtiani, Senior Advocate with
Ms. Shradha A., Mr. Jatin Pore and Ms.
Ankita Agrawal i/b. DSK Legal for
respondents 2 to 4.
Mr. Zal Andhyarujina, Senior Advocate
with Mr. Karan Bhide, Mr. Aditya Shiralkar,
Ms. Nanki Grewal and Ms. Manasi
Joglekar i/b. Wadia Ghandy and Co. for
respondents 5 and 6.
Ms. Shweta R. Rathod with Ms. Purvi
Doctor i/b. Elixir Legal Services for
respondents 7 and 8.
CORAM: DIPANKAR DATTA, CJ. &
MADHAV J. JAMDAR, J.
DATE: OCTOBER 10, 2022 P.C.:
1. The petitioner claims to be a social worker based at Pune, and is a responsible citizen of the country. By presenting this petition, he seeks intervention of this Court in exercise of its public interest litigation jurisdiction (hereafter Page 1 of 9 J.V.Salunke,PS 8-CRPIL.12.2022 "PIL jurisdiction", for short), inter alia, for a direction on the Enforcement Directorate (ED) to take cognizance of violations of Regulations framed under the Foreign Exchange Management Act, 1999 (hereafter "FEMA Regulations", for short) by the respondents 2 to 8/companies and for quashing of the consent award passed by the Arbitral Tribunal comprising of 3 (three) former Judges of the Supreme Court of India dated 14th July 2014 based on consent terms of even date and a further award dated 9th January 2021 based on consent terms dated 24th November 2020.
2. The prayers in the PIL petition both, substantive and interim, read as follows: -.
" It is therefore prayed that by appropriate Writ, Order or direction, this Hon'ble Court may kindly be pleased to:
a. Exercise its Extra Ordinary Jurisdiction under Article 226 of Constitution of India, in the particular facts and circumstances of the present case;
b. Direct the Respondent No.1 to take cognizance of the violation of FEMA regulation done by Respondent Nos.2 to 8, by executing consent terms in violation of FEMA regulations by the Respondent Nos.7 & 8 - Kakade Construction Company Pvt. Ltd. (KCCPL) and Kakade Estate Developers Pvt Ltd (KEDPL) and their associates, in accordance with law;
c. Hon'ble Court be pleased to declare that both the Consent Terms executed and Consent Award passed are against the Public Policy, non-est and bad in law;
d. The Hon'ble Court be pleased to issue directions against the Respondent No.2 to 8 to comply with FEMA Regulation in exercise of their exit option by the Respondent Nos.2 to 6 from their investment in KCCPL and KEDPL;
Page 2 of 9J.V.Salunke,PS 8-CRPIL.12.2022 e. That pending the hearing and final disposal of present Petition, the Hon'ble Court be pleased to stay the effects, operation and execution of both Consent Award viz. Exhibit-A & Exhibit-j respectively passed against Kakade Construction Company Pvt. Ltd. (KCCPL) and Kakade Estate Developers Pvt. Ltd. (KEDPL) respectively."
3. According to the petitioner, public interest warrants these orders to be passed.
4. Rule 7(c) of the Bombay High Court Public Interest Litigation Rules, 2010 (hereafter "the PIL Rules", for short) requires a litigant invoking the PIL jurisdiction of this Court to file an undertaking that he/it will disclose the source of his/its information leading to the filing of the public interest litigation if and when called upon by the Court to do so. In purported compliance therewith, the petitioner has pleaded in paragraph 5 as follows: -
"5. Source of Information: -
Notice dated 30th March 2022 published in the Economics Times is the source of information and thereafter, the Petitioner obtained further information and verified the same from its sources engaged in social work in and across Pune. The Petitioner has verified the authenticity of the facts after going through the Orders passed by this Hon'ble Court from website."
5. The "sources engaged in social work in and across Pune"
not having been disclosed by the petitioner and the respondents 2 to 4 in their affidavit-in-reply having called upon the petitioner to disclose the identity of such sources, it is averred by the petitioner in his rejoinder affidavit that he would so disclose if called upon by the Court and not otherwise.Page 3 of 9
J.V.Salunke,PS 8-CRPIL.12.2022
6. Significantly, the notice dated 30th March 2022 published in the Economic Times, which forms the foundation of this petition, is at the instance of one Sanjay Kakade. We propose to take note of who the said Sanjay Kakade is and what have been his activities, a little later. Pertinently, the notice dated 30th March 2022 has not been placed on record by the petitioner. It has been brought on record by the respondent no.2 in its reply affidavit.
7. Interestingly enough, the petitioner has alleged in paragraph 4 that after reading the said notice dated 30th March 2022, he caused an inquiry and gathered relevant information in course thereof about the arbitral proceedings initiated by the respondents 2 to 4 against Kakade Construction Company Pvt. Ltd. (KCCPL)/respondent no.7, and that in such proceedings, a consent award dated 14th July 2014 was made by the Arbitral Tribunal based on consent terms entered into by and between the parties and that the consent award not having been honoured by the respondent no.7, proceedings in execution were initiated, which this Court is seized of. According to the petitioner, the facts and circumstances of the present case clearly demonstrate that a systematic conspiracy has been hatched by the private respondents (respondents 2 to 8) and their associates to violate the FEMA Regulations by misleading the authorities in an apparently fraudulent manner.
8. Preliminary objection to the maintainability of this petition has been raised by Mr. Jagtiani, learned senior advocate for the respondents 2 to 4 and Mr. Andhyarujina, learned senior advocate for the respondents 5 and 6.
Page 4 of 9J.V.Salunke,PS 8-CRPIL.12.2022
9. Mr. Jagtiani has expressed immense surprise at the lightning speed with which the petitioner read the said public notice, caused an inquiry leading to collection of documents, and lodged a complaint before the ED together with all relevant documents, all on the same day, but conveniently forgot to annex the said public notice to the petition. Had such notice been annexed, it would have been clear that the same had been published by none other than the said Sanjay Kakade. According to Mr. Jagtiani, the petitioner has been set up by the said Sanjay Kakade to obtain orders to preempt personal presence of the said Sanjay Kakade before a learned Single Judge of this Court on 12th October, 2022. It is the categorical submission of Mr. Jagtiani that if the petitioner's case is to be believed, he has no connection whatsoever with the said Sanjay Kakade; however, it is quite intriguing how in course of the same day that the notice was published on 30 th March 2022, the petitioner could lodge a complaint with the ED annexing documents to which he could not have had any access.
10. Our attention has been drawn by Mr. Jagtiani to the affidavit-in-reply of the respondents 3 and 4, more particularly to page 366 and onwards. It is the copy of a writ petition, numbered as Criminal Writ Petition (St.) No. 3050 of 2022, instituted by the said Sanjay Kakade, wherein ED, the respondents 2, 3 and 9 (office of the Court Receiver) herein are the respondents 1, 2, 3 and 4 respectively. Our pointed attention is drawn to prayers (a) and (c) of such writ petition reading as follows: -
Page 5 of 9J.V.Salunke,PS 8-CRPIL.12.2022 "a. This Hon'ble Court be pleased to issue a Writ of Mandamus or any other order, direction, Writ in that nature, directing Respondent No. 1 to take cognizance of violation of FEMA regulations by Respondent Nos. 2 and 3 by executing Consent Terms in violation of FEMA Regulations in Kakade Construction Company Pvt. Ltd.
("KCCPL") ***** c. that pending the hearing and final disposal of the present Petition, the Hon'ble Court be pleased to stay execution of Consent Award and Consent Order, Decree taken out by Respondent Nos. 2 and 3 against Kakade Construction Company Pvt. Ltd. (KCCPL)."
11. According to Mr. Jagtiani, prayers (a) and (c) of the writ petition of the said Sanjay Kakade bear similarity with prayers
(b) and (e) of this petition and it requires no in-depth examination to arrive at a conclusion at whose instance the PIL jurisdiction of this Court has been invoked.
12. Mr. Jagtiani further submits that the point of alleged violation of FEMA Regulations was raised by the said Sanjay Kakade before the executing court (Single Judge of this Court) without success. Even proceedings carried before a Division Bench of this Court as well as the Supreme Court of India by the said Sanjay Kakade, wherein also similar point of violation of FEMA Regulations was raised, proved to be abortive. Having failed to succeed on such point, it is clear as crystal that the same point is now sought to be urged in this petition by a litigant who has failed to abide by the requirements of the PIL Rules to disclose the identity of his sources in the petition and the rejoinder affidavit as well, despite being called upon by the respondents 2 to 4 to do so.
13. Mr. Jagtiani concludes his arguments on the preliminary objection by submitting that the petitioner has abused the Page 6 of 9 J.V.Salunke,PS 8-CRPIL.12.2022 process of law as also of this Court and that the petition ought to be dismissed with exemplary costs.
14. Mr. Jagtiani hastens to add that he has all the answers to the points raised in the petition and that no case for interference has been set up even on merits; however, if called upon, he wishes to address us on the merits of the matter.
15. Mr. Andhyarujina referred to section 42A of the Arbitration and Conciliation Act, 1996 to highlight that arbitral proceedings are confidential in nature. He has invited our attention to unsigned consent terms which form part of the petition. According to him, ultimately, these consent terms were placed before the Arbitral Tribunal and crystalized into the consent award passed by such tribunal. He urges us to draw an inference that it is the said Sanjay Kakade who has supplied documents/materials to the petitioner to institute this thoroughly unmeritorious petition, since the petitioner (unrelated to the said Sanjay Kakade, as the petitioner now claims) could not reasonably have any access to the documents forming part of the proceedings before the Arbitral Tribunal.
16. Other arguments have also been advanced by Mr. Andhyarujina, which need not be recorded at this stage.
17. The hint of Mr. Jagtiani and Mr. Andhyarujina has been clear that this is not a bona fide petition. They assert that the petitioner could not have lodged the complaint with the ED or invoked the PIL jurisdiction of this Court, unless he has been working hand in glove with the said Sanjay Kakade.
Page 7 of 9J.V.Salunke,PS 8-CRPIL.12.2022
18. Having heard Mr. Jagtiani and Mr. Andhyarujina on the preliminary objections to the maintainability of the petition in the PIL jurisdiction, we called upon Mr. Jha, learned advocate for the petitioner to counter such objections and also to disclose the identity of the petitioner's "sources". We have clearly noticed and place on record Mr. Jha's disinclination to counter the preliminary objections and to disclose the identity of the "sources"; instead, his attempt has been to invite our attention to the merits of the contentions raised by the petitioner.
19. We record our reluctance to examine the merits of the plea, without the petitioner disclosing the identity of his "sources" who provided him information and without the petitioner disclosing to us how he could, in course of the same day, after reading the public notice dated 30th March 2022, lay his hands on vital documents that form part of the arbitral proceedings before the Arbitral Tribunal. Obviously, not being a party to the arbitral proceedings, the petitioner cannot have access to the documents unless the members of the Arbitral Tribunal or the parties have given him access thereto. It cannot be his claim that the members of the Arbitral Tribunal or the award-holders have given him access to the documents including the unsigned consent terms. What remains is anybody's guess.
20. We are, prima facie, satisfied that the PIL jurisdiction of this Court has not been invoked by the petitioner bona fide, to raise any genuine public cause, but for other reasons which need not be dilated upon at this stage.
Page 8 of 9J.V.Salunke,PS 8-CRPIL.12.2022
21. In our considered opinion, it would be most appropriate at this stage to call upon the petitioner to keep in deposit as security Rs. 10 lakh. This, we direct, in terms of the provisions contained in Rule 7A of the PIL Rules. By 9th November 2022, the petitioner shall keep in deposit as security Rs. 10 lakh which will be subject to forfeiture or return, depending on the fate of this petition.
22. List this petition once again for consideration on 14th November 2022.
23. It is, however, made clear that even if the petitioner does not deposit the said amount of Rs. 10 lakh as security, the petition shall not stand dismissed but would be listed on the returnable date for ensuring compliance of this order by passing further orders on this petition.
24. It is also made clear that if abuse of the process of law as well as this Court is established after further hearing, exemplary costs could be imposed on the petitioner apart from the security he is being ordered to deposit.
25. We record that Mr. Venegaonkar, learned advocate has accepted notice on behalf of the ED/respondent no.1 SALUNKE (MADHAV J. JAMDAR, J.) (CHIEF JUSTICE) JV Digitally signed by SALUNKE J V Date: 2022.10.11 17:01:02 +0530 Page 9 of 9 J.V.Salunke,PS