Telangana High Court
Anil Karkala Upadhyaya vs State Of Telangana on 2 December, 2020
Author: K. Lakshman
Bench: K.Lakshman
THE HONOURABLE SRI JUSTICE K. LAKSHMAN
CRIMINAL PETITION Nos.5658 & 5659 OF 2020
COMMON ORDER:
This Criminal Petition is filed seeking to grant regular bail to the petitioner/A5 in Crime No.93 of 2020 pending on the file of Central Crime Station (Detective Department), Hyderabad. The very same petitioner filed Crl.P.No.5659 of 2020 seeking regular bail, who is A6 in Crime No.92 of 2020 pending on the file of very same Police Station. The offences alleged against the petitioner herein in both the crimes are under Sections 406, 409, 420 r/w 34 of IPC. The defacto complainant is also same in both the crimes.
2. Heard Sri Rases Parik, learned counsel representing Sri Mr. M.A. Khader, learned counsel for petitioner herein and the learned Public Prosecutor. Perused the record.
3. The allegations against the petitioner in Crime No.93 of 2020 are that the petitioner along with other Accused have cheated, committed breach of trust and induced the complainant under the guise of investment/funding of amount in share trading business and promised to give high returns over the investment and took Rs.5.81 crores from the complainant and other victims. The petitioner deliberately, intentionally and with a malafide intention, in collusion with other Accused, cheated the complainant causing huge loss to him. It is further alleged that petitioner herein has 2 approached the complainant, introduced himself as one of the shareholders of A1 company i.e., M/s Conard Securities Pvt. Ltd,, and M/s Manoj Javery Stock Broking Pvt. Ltd., and offered to invest/funding amount in share trading through M/s Manoj Javery Stock Broking Pvt. Ltd. Thereafter, the Directors of M/s Manoj Javery Stock Broking Pvt. Ltd., and petitioner herein gave assurance to pay high returns to the defacto complainant. Accordingly, in the month of July, 2017, defacto complainant and his wife (L.W.1 and L.W.2) opened Demat Accounts and transferred funds into the account of M/s Manoj Javery Stock Broking Pvt. Ltd., to a tune of Rs.5.81 crores for shares trading through their Bank account. Thereafter, A1, A2 and A3 transferred the said amounts of L.W.1 and L.W.2 into the personal accounts of their shareholders i.e. A4 and A5. It is further alleged against the petitioner herein and other Accused that after knowing the cases filed against M/s Manoj Javery Stock Broking Pvt. Ltd., and M/s Conard Securities Pvt. Ltd., at National Stock Exchange, the defacto complainant requested for redemption of funds from A1 company. There was no proper response from the Directors i.e. A2 and A3 of the said M/s Manoj Javery Stock Broking Pvt. Ltd. Thus, all the Accused including petitioner herein have colluded with each other and intentionally cheated and caused wrongful gain to the complainant.
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4. In Crime No.92 of 2020 similar allegations were made against the petitioner and other Accused i.e. petitioner and other Accused persons have taken an amount of Rs.1.5 crores from the defacto complainant and other victims.
5. In the remand reports filed in both the crimes, the account numbers, the amount transferred and name of the transferee company etc., are specifically mentioned in a tabular form. It is specifically alleged against the petitioner and other accused that the petitioner herein along with other accused have committed cheating and criminal breach of trust by collecting deposits with promise to pay high returns. The petitioner, acting as Broker/Agent of M/s Manoj Javery Stock Broking Pvt. Ltd., which was declared as defaulted company by SEBI in the year 2017, took Rs.7.19 crores from the complainant and other victims and intentionally cheated the complainant in collusion with other accused and caused huge loss to the complainant.
6. It is further alleged that petitioner herein in both the crimes has lured the complainant for investment into M/s Manoj Javery Stock Broking Pvt. Ltd. (A-1). Petitioner, as a CEO of M/s Trillion Capital Pvt. Ltd., periodically sending fake and fabricated share holding statements on the name of L.Ws.1 and 2 to gain trust of L.Ws.1 to 3 and that the petitioner received huge money of Rs.2.00 crores from M/s Manoj Javery Stock Broking Pvt. Ltd., as commission. In 4 proof of the same, the Investigating Officer has also collected bank account statements of the said company and the petitioner personal accounts. Thus, the petitioner herein has induced L.Ws.1 to 4 and LW-5 Mr.Abdul Rawoof to invest in M/s Manoj Javery Stock Broking Pvt. Ltd.,, which was declared as defaulted company by SEBI in the year 2017 and the said fact was suppressed by petitioner and other accused for their wrongful gains. It is also further alleged against the petitioner herein that similar cases were registered against the petitioner and other accused i.e. Crime No.54 of 2020 for the offences under Sections 409, 420, 120B of IPC at Devaraja Police Station, Mysore district of Karnataka State. Crime No.203 of 2020 for the offence under Sections 406, 420 r/w 34 of IPC and 66C of I.T. Act at Koramangala Police Station, Bangalore city. Crime Nos.131 and 132 of 2020 at Jayanagar Police Station, Bangalore city. Crime No.1055 of 2020 for the offence under Sections 403, 406, 409, 420 r/w 34 of IPC registered at Madhapur Police Station, Cyberabad, Hyderabad.
7. Learned counsel for petitioner would submit that the petitioner is not perpetrator of the crime, but he is victim of the crime. He would further submit that the petitioner and other Relationship Managers are victims of financial frauds of M/s Manoj Javery Stock Broking Pvt. Ltd. Petitioner on behalf of himself and other Relationship Managers filed 5 complaint before Serious Fraud Investigation Office, investigating agency established under the Companies Act, 2013 for misappropriation of funds by M/s Manoj Javery Stock Broking Pvt. Ltd. It is the defacto complainant who has approached the petitioner herein for the purpose of investment in stock trading. Petitioner as CEO of M/s Trillion Capital Limited used to provide technical and portfolio management services apart from marketing of financial products of M/s Manoj Javery Stock Broking Pvt. Ltd. By the time the complainant was introduced to petitioner, the complainant already made investments with the said company. Therefore, the allegation of the complainant that the petitioner introduced himself as stock broking agent is false and far from truth. Learned counsel for petitioner would further submit that the complainant used to call the petitioner to understand the financial products of M/s Manoj Javeri Stock Broking Pvt. Ltd., and to this end, there used to be requests for meeting from complainant to petitioner. Petitioner and complainant used to book their air tickets from Mumbai to their respective places whereby flights will be in close approximation. Thereafter, both of them will meet at Sahara Air Port couple of hours prior to departure of their flights.
8. It is further stated by the learned counsel for petitioner that M/s Manoj Javery Stock Broking Pvt. Ltd., is a registered 6 stock broker on National Stock Exchange in the year 2019, Conard Securities Pvt. Ltd., also became registered stock broker on National Stock Exchange. Petitioner was successful and long career in Debt and Capital markets. Due to this, petitioner came into contact with Manoj Javeri, founder promoter of M/s Manoj Javeri Stock Broking Pvt. Ltd. At one point of time, M/s Manoj Javeri Stock Broking Pvt. Ltd., was having highest number of institutional clients for stock market investment. After due diligence about the said company and personally about Manoj Javeri, petitioner incorporated M/s Trillion Capital Limited wherein Manoj Javeri was invited to become member of Board of Directors as well as Chairman. The said Trillion Capital Ltd., through its network of Relationship Managers across India used to market financial products of M/s Manoj Javery Stock Broking Pvt. Ltd. Once customer subscribes to financial products of M/s Manoj Javery Stock Broking Pvt. Ltd., , there would be direct relationship between the said company and the customer. Learned counsel would further submit that the defacto complainant has directly invested his money into the above company. At no point of time, petitioner or M/s Trillion Capital Limited were involved in relationship between complainant and above two companies. Initially, M/s Trillion Capital Limited used to send financial statement to the complainant but thereafter complainant showed his interest to become Relationship Manager of the said M/s Manoj 7 Javery Stock Broking Pvt. Ltd., and therefore, Manoj Javeri introduced complainant to petitioner as M/s Trillion Capital Limited was technical service provider to the said company.
9. Learned counsel for petitioner would submit that there are variations in the versions of complainant and the Investigating Officer in the remand report. Vide order dated 20.10.2020, lower Court has granted anticipatory bail to four family members and friends of petitioner. Petitioner was apprehended at Sahara Air Port, Mumbai on 2.10.2020 at the instance of defacto complainant and since then he is in jail. Petitioner is aged about 53 years, suffering with various health ailments. According to learned counsel for petitioner, the Investigating Officer has completed investigation and also custodial interrogation was also completed. With the said submission, learned counsel sought to consider the bail application to the petitioner in both the crimes.
10. Whereas, the learned Public Prosecutor, by referring to the contents of the counter in both the cases, opposed the bail applications. According to the learned Public Prosecutor, petitioner introduced himself to the defacto complainant and made him to believe to pay high returns for the deposits made by defacto complainant. Thus, the petitioner along with other accused have induced the defacto complainant (L.Ws.1 to 4 and LW-5) to invest/deposit the amounts into M/s Manoj Javery Stock Broking Pvt. Ltd. (A1), and the investments of 8 Lws.1 to 5 were diverted into the personal accounts of A4 and A5 for their own purpose. The learned Public Prosecutor would further submit that the petitioner herein has induced L.Ws.1 to 4 and LW-5 Mr.Abdul Rawoof to invest in M/s Manoj Javery Stock Broking Pvt. Ltd., , which was declared as defaulted company by SEBI in the year 2017 and the said fact was suppressed by petitioner and other accused for their wrongful gains. Petitioner as a CEO of M/s Trillion Capital Pvt. Ltd., sending fake and fabricated share holding statements on the name of L.Ws.1 and 2 to gain trust and received huge money of Rs.2.00 crores from A1 company as commission for inducing L.Ws.1 to 4. In proof of the same, the Investigating Officer has also collected bank account statements of M/s Manoj Javery Stock Broking Pvt. Ltd., and petitioner personal accounts.
11. According to the learned Public Prosecutor, the contents of the complaint would attract the provisions of Telangana Protection of Depositors of Financial Establishments Act, 1999. The defacto complainant (L.Ws.1 to 4 and LW-5 Abdul Rawoof) have invested money in M/s Manoj Javery Stock Broking Pvt. Ltd., since July 2017 on the inducement of petitioner herein as Agent/Relationship Manager of the said company and as CEO of M/s Trillion Capital, which is a sister concern M/s Manoj Javery Stock Broking Pvt. Ltd. One of the Director of M/s Manoj Javery Stock Broking Pvt. Ltd., 9 Mr.Manoj Mohanchandra Javeri is also the Director of M/s Trillion Capital, wherein petitioner herein is CEO and his wife is another Director. Both the companies are inter-related and petitioner used to send fake and fabricated share transaction statements without purchasing any stocks on the name of L.Ws.1 to 4 and L.W.5. The petitioner is having multiple trading demat accounts in various stock broking agencies. The said fact has to be ascertained during the course of investigation. According to the learned Public Prosecutor, the investigation is still pending. Petitioner is an influential person and there is every possibility of interfering with the investigation and there is also a threat of influencing the witnesses. Petitioner is involved in several cases as mentioned supra. With the said submissions, the learned Public Prosecutor sought to dismiss the bail applications in both the crimes.
12. The above stated facts would reveal that the petitioner herein is a stock broking agent. Even according to him, he was successful and has long career in Debt and Capital markets. He came into contact with Manoj Mohan Chandra Javeri (accused No.2 in Crime No.92 of 2020), founder promoter of M/s Manoj Javeri Stock Broking Pvt. Ltd., accused No.1 in Crime No.92 of 2020. At one point of time, M/s Manoj Javeri Stock Broking Pvt. Ltd., was having highest number of institutional clients for stock market investment. 10 After due diligence about the said company and making enquiries personally about Manoj Mohan Chandra Javeri, petitioner incorporated M/s Trillion Capital Limited wherein Manoj Mohan Chandra Javeri was invited to become member of Board of Directors as well as Chairman. Accordingly, Mr.Manoj Javeri has accepted the said request of the petitioner and became Chairman of M/s Trillion Capital Limited. According to petitioner, the said Trillion Capital Limited has state of art software that can help to provide financial services on real time basis to customers. Apart from this, due to experience and knowledge of petitioner, M/s Manoj Javery Stock Broking Pvt. Ltd., used to take portfolio management services of petitioner through M/s Trillion Capital Limited that included advice on trading strategies on Futures and Options.
13. Thus, even according to petitioner, he is having relationship with M/s Manoj Javery Stock Broking Pvt. Ltd. He is the CEO of M/s Trillion Capital Limited and his wife is Director. According to prosecution, M/s Manoj Javery Stock Broking Pvt. Ltd., accused No.1 in Crime No.92 of 2020 was declared as defaulted company by SEBI in the year 2017 itself. The said fact was suppressed by petitioner herein and other accused. On the other hand, they made to believe the complainant and other victims to invest in the said company. Believing the petitioner and other accused in good faith, 11 L.Ws.1 to 4 and LW.5 have invested/deposited Rs.7.19 crores in the said company.
14. According to the prosecution, petitioner herein has received an amount of Rs.2.00 crores from M/s Manoj Javery Stock Broking Pvt. Ltd., accused No.1 in Crime No.92 of 2020, as commission for inducing L.Ws.1 to 5 to invest in the said company. In proof of the same, the Investigating Officer has also collected the bank account statements of the said company and the petitioner personal accounts. All the accused persons have purchased properties worth Rs.71.00 crores during the year 2019. The investigation is still pending. Further properties have to be identified by the Investigating Officer.
15. The petitioner is having multiple trading demat accounts in various stock broking agencies. The said fact has to be ascertained during the course of investigation. The petitioner acted as Agent/Relationship Manager on behalf of M/s Manoj Javery Stock Broking Pvt. Ltd., accused No.1 in Crime No.92 of 2020, and gained benefit of Rs.2.00 crores on the investment of L.Ws.1 to 5 as per the bank statements of Accused Company. Out of investment amount, an amount of Rs.1.5 corres was transferred into the Bank account of petitioner as commission for inducing L.Ws.1 to 5. The details of bank account, date of transfer, amount transferred, name of transferee company etc., were mentioned in a tabular 12 form in the remand reports of both the crimes. Thus, there are serious and specific allegations of cheating and criminal breach of trust by petitioner and other accused.
16. The allegation against the petitioner in Crime No.93 of 2020 is that L.W.1 and L.W.2 invested an amount of Rs.1.55 crores and L.W.3 invested Rs.25.00 lakhs into M/s Conard Securities Pvt. Ltd., accused No.1 in Crime No.93 of 2020 in 2019 on the advise of petitioner to open trading account in the above said company. The said amount was transferred to M/s Manoj Javeri Stock Broking Pvt. Ltd., accused No.1 in Crime No.92 of 2020, a defaulted company by SEBI in the year 2017, from there they have diverted into different accounts including the account of the petitioner. He used to send fabricated share purchasing statements frequently to L.Ws.1 to 3 through M/s Trillion Capital Pvt. Ltd. Investigation is still pending even in Crime No.93 of 2020. Diversion of funds of L.Ws.1 to 5 and other investors/victims, identification has to be made during the course of investigation. The details of share trading statements if any of SEBI/NSDL/CSDL/NSE have to be ascertained. The other bank statements have to be collected.
17. In Mahipal v. Rajesh Kumar @ Polia1, a Two-Judge Bench of the Hon'ble Apex Court, Dr. D.Y. Chandrachud J., speaking for the Court, discussed with regard to the power of 1 . (2020) 2 SCC 118 13 granting bail under Section 439 of Cr.P.C. and held that the power to grant bail under Section 439 of Cr.P.C. is of a wide amplitude. Though the grant of bail involves the exercise of discretionary power of the Court, it has to be exercised in a judicious manner and not as a matter of course. In the said case, the guiding factors for exercise of power to grant bail as held in Ram Govind Upadhyay v. Sudarshan Singh2, were referred, which are as follows:
"3. Grant of bail though being a discretionary order - but, however, calls for exercise of such a discretion in a judicious manner and not as a matter of course. Order for bail bereft of any cogent reason cannot be sustained. Needless to record, however, that the grant of bail is dependent upon the contextual facts of the matter being dealt with by the court and facts, however, do always vary from case to case...The nature of the offence is one of the basic considerations for the grant of bail - more heinous is the crime, the greater is the chance of rejection of the bail, though, however, dependent on the factual matrix of the matter.
4. Apart from the above, certain other which may be attributed to be relevant considerations may also be noticed at this juncture, though however, the same are only illustrative and not exhaustive, neither there can be any. The considerations being:
(a) While granting bail the court has to keep in mind not only the nature of the accusations, but the severity of the punishment, if the accusation entails a conviction and the nature of evidence in support of the accusations.
(b) Reasonable apprehensions of the witnesses being tampered with or the apprehension of there being a threat for the complainant should also weigh with the court in the matter of grant of bail.
(c) While it is not expected to have the entire evidence establishing the guilt of the Accused beyond reasonable doubt 2 . (2002) 3 SCC 598 14 but there ought always to be a prima facie satisfaction of the court in support of the charge.
(d) Frivolity in prosecution should always be considered and it is only the element of genuineness that shall have to be (2002) 3 SCC 598 considered in the matter of grant of bail, and in the event of there being some doubt as to the genuineness of the prosecution, in the normal course of events, the Accused is entitled to an order of bail."
18. It was further held in the very same judgment that the determination of whether a case is fit for the grant of bail involves the balancing of numerous factors, among which the nature of the offence, the severity of the punishment and a prima facie view of the involvement of the Accused are important. No straight jacket formula exists for courts to assess an application for the grant or rejection of bail. At the stage of assessing whether a case is fit for the grant of bail, the court is not required to enter into a detailed analysis of the evidence on record to establish beyond reasonable doubt the commission of the crime by the Accused. That is a matter for trial. However, the Court is required to examine whether there is a prima facie or reasonable ground to believe that the Accused had committed the offence and on a balance of the considerations involved, the continued custody of the Accused sub-serves the purpose of the criminal justice system.
19. The Hon'ble Apex Court has also referred to the principles laid down by it in Kalyan Chandra Sarkar v. Rajesh Ranjan3, wherein it was held that the Court granting 3 . (2004) 7 SCC 528 15 bail should exercise its discretion in a judicious manner and not as a matter of course. Though at the stage of granting bail, a detailed examination of evidence and elaborate documentation of the merit of the case need not be undertaken, there is a need to indicate in such orders reasons for prima facie concluding why bail was being granted particularly where the Accused is charged of having committed a serious offence. Any order devoid of such reasons would suffer from non-application of mind.
20. In State of Bihar v. Amit Kumar @ Bacha rai4, Mallampati Gandhi v. State of Telangana5, State of Jharkhand v. Lalu Prasad Yadav6, the Hon'ble Apex Court held that bails cannot be granted to the Accused involved in economic offences. It was held that economic offences constitute a class apart and need to be registered with a different approach in the matter of bail. The economic offence having deep rooted conspiracies and involving huge loss of public funds needs to be viewed seriously and considered as a grave offence affecting the economy of Country as a whole and thereby posing serious threat to the financial health of the Country.
21. The Hon'ble Apex Court referred to the factors to be borne in mind while considering an application for bail in 4 . (2017) 2 ALD (Crl.) 227 (SC) 5 . 2018 (2) ALT (Crl.) 1 (AP) 6 . 2017 (6) SCJ 54 16 Prasanta Kumar Sarkar v Ashis Chatterjee7, and the said factors are as follows:
"(i) whether there is any prima facie or reasonable ground to believe that the Accused had committed the offence;
(ii) nature and gravity of the accusation;
(iii) severity of the punishment in the event of conviction;
(iv) danger of the Accused absconding or fleeing, if released on bail;
(v) character, behaviour, means, position and standing of the Accused;
(vi) likelihood of the offence being repeated;
(vii) reasonable apprehension of the witnesses being influenced;
and
(viii) danger, of course, of justice being thwarted by grant of bail.
...
12. It is manifest that if the High Court does not advert to these relevant considerations and mechanically grants bail, the said order would suffer from the vice of non-application of mind, rendering it to be illegal..."
22. The above said factors are lacking in the present case. Admittedly, investigation is pending in both the crimes viz., Crime No.92 of 2020 and Crime No.93 of 2020. The Investigating Officer has to ascertain the above details by collecting the evidence and recording the statements of material witnesses. This is a serious case of fraud, cheating and criminal breach of trust committed by the petitioner and other accused in the manner stated above. In Crime No.92 of 2020, the petitioner along with other accused have made the 7 . (2010) 14 SCC 496 17 de facto complainant to believe and that the petitioner and other accused have promised to give high rate over the investment and accordingly believing the same, the de facto complainant has invested an amount of Rs.5.81 Crores from the de facto complainant and other victim. Like-wise, in Crime No.93 of 2020, the de facto complainant and other victim have invested an amount of Rs.1.55 Crores. There are allegations of issuance of fake I.Ds. and sending fake share purchasing statements frequently to LWs.1 to 3 through M/s. Trillion Capital Private Limited. The following crimes were registered against the petitioner on the complaints lodged by the investors/victims in Hyderabad of Telangana State and Karnataka State.
Sl.No. Crime No. & Police Station Offences 01. Crime No.54 of 2020 of Devaraja Secs.409, 420 & P.S.Mysore District of Karnataka 120B of IPC State 02. Crime No.203 of 2020 of Secs.406, 420 r/w Coramandala P.S., Bangalore 34 of IPC & 66C of City, Karnataka State. I.T. Act 03. Crime No.131 of 2020 of -- Jayanagar Police Station, Bangalore. 04. Crime No.132 of 2020 of -- Jayanagar Police Station, Bangalore 05. Crime No.1055 of 2020 of Secs.403, 406, Madhapur Police Station 409, 420 r/w 34 of IPC
23. Thus, there are seven cases including the present two crimes are pending against the petitioners in different police stations and the said cases were registered on the complaints lodged by the investors / victims. There are serious 18 allegations of the petitioner and other accused inducing the investors / victims from various places, such as Karnataka State, Dubai and Hyderabad City. The investigation is pending in all the said crimes. In all, the petitioner and other accused, prima facie, have deliberately, intentionally and with a malafide intention in collusion with each other have cheated the complainant and other victims and caused them huge loss to a tune of Rs.7.19 crores in both the crimes. In view of the same and also considering the fact that investigation is pending and petitioner is involved in all seven cases including the present two crimes, this Court is not inclined to grant regular bail to the petitioner herein.
24. For the foregoing reasons, both the Criminal Petitions are dismissed.
As a sequel, the miscellaneous petitions, if any, shall stand closed.
__________________ K. LAKSHMAN, J Date: 02.12.2020 DA