Bangalore District Court
Serious Fraud Investigation Office vs A1-C.P.Yogeshwara on 21 November, 2025
KABC030815982021
Presented on : 10-11-2021
Registered on : 10-11-2021
Decided on : 21-11-2025
Duration : 4 years, 0 months, 11 days
IN THE COURT OF THE XLII ADDITIONAL CHIEF JUDICIAL
MAGISTRATE, BENGALURU CITY
Present: Shri.K.N.SHIVAKUMAR, B.Sc.,(Agri),L.L.M.,
XLII Addl.CJM, Bengaluru City
Dated this the 21st day of November, 2025
C.C.No. 30789/2021
COMPLAINANT: SERIOUS FRAUD INVESTIGATION
OFFICE
Ministry of Corporate Affairs
Government of India
2nde Floor, Paryavaran Bhawan,
CGO Complex, Lodhi Road,
New Delhi - 110003.
Represented by Assistant Director
Mr. Saumendra Kumar Nanda.
(Represented By Sri. NCS, Advocate)
-Vs-
ACCUSED: 1.Sh. C.P. Yogeshwara
S/o Sh. Puttamadegowda,
Aged about 48 years,
Managing Director of Megacity
2 C.C. No. 30789/2021
(Bangalore) Developers & Builders
Limited,
464, 1st 'G' Cross, 2nd Phase,
BSK 3rd Stage,
Bangalore- 560 085.
2. Ms. Manju Kumari
W/o. C.P. Yogeshwara,
Aged about 42 years,
Director of Megacity (Bangalore)
Developers & Builders Limited,
143, 5th Main, BSK 3rd Stage,
Bangalore - 560 085.
3. Shri. P. Mahadevaiah
S/o Sh. Puttamadegowda, (Abated)
Aged about 56 years,
Director of Megacity (Bangalore)
Developers & Builders Limited,
143, 5th Main, BSK 3rd Stage,
Bangalore - 560 085.
4. Shri. C.P. Gangadhareshwara,
S/o. Sh. Puttamadegowda,
Aged about 46 years,
Whole time Director of
Megacity (Bangalore)
Developers & Builders Limited,
367, 1st "E" Cross, 2nd Phase,
BSK 3rd Stage,
Bangalore - 560 085.
5.Shri. Ramesh. H.R
S/o. Late. K. Ramaiah
Aged about 42 years,
Director of Megacity (Bangalore)
Developers & Builders Limited,
3 C.C. No. 30789/2021
435, 1st G Cross, 6th Block,
Bangalore - 560 085.
6.Shri. Sambashiv Rao
S/o. Late. M. Subba Rao,
Aged about 42 years,
Statutory Auditor of Megacity
(Bangalore)
Developers & Builders Limited,
M.Sambasiv Rao & Co.
No.35, 3rd Floor, Balaji Silk Complex,
Annadanappa Lane, Avenue Road,
Bangalore - 560 002.
7. M/s. Megacity (Bangalore) Developers
& Builders Pvt Ltd (Presently Megacity
(Bangalore) Developers and Building
Ltd.,)
(Represented by its Nominee Director)
C.V.Sanjeeva,
Mega Tower, 120,
Kengal Hanumanthaiah Road,
Bangalore- 560 027.
(Accused No.1, 2, 4, 5 & 6 Represented by
Sri. VKJ Advocate)
(Accused No.7 Represented by Sri.
KMN Advocate)
4 C.C. No. 30789/2021
JUDGMENT
The Complainant has filed complaint U/Sec.200 of Code of Criminal Procedure against the accused for the offences punishable under Sec. 120B, 409 & 468 of IPC.
2. The case of the prosecution in brief is as follows; The accused No.1 was the Managing Director, accused No.2 to 5 were the whole time Directors and accused No.6 was the statutory auditor of accused No.7 company - M/s. Megacity (Bengaluru) Developers & Builders Ltd., (herein after referred to as 'MDBL'). Which was incorporated as a private limited company on 11/08/1994 and converted into a public limited company on 12/08/1998, with the object of carrying on the business to develop, construct, furnish, let-out, sell, deal in and to carry on all or any of the functions of Proprietors of lands, flats, dwelling houses, shops, offices, commercial complexes, factory sheds, buildings and 5 C.C. No. 30789/2021 accommodation of all kinds. The accused under the said company have floated a real estate project named Vajragiri township project and collected about Rs.60 Crores towards booking amounts in respect of the same. However, the said project was not materialized and large number of investors' money was not refunded. Accordingly, there were several complaints from the investors pointing towards the financial affairs of said company being conducted prejudicial to the interest of said investors. In view of such complaints regarding financial fraud against the company received by the Ministry of corporate Affairs (in short MCA) an inspection of the company U/Sec. 209A of the companies Act, was ordered and accordingly, the inspection report was submitted to the Ministry of Corporate Affairs on 31/09/2007, which brought out violation of various provisions of the companies Act by the said company. Further, the Registrar of companies, Karnataka has also conducted a scrutiny of the balance sheet of said 6 C.C. No. 30789/2021 company as on 31/03/2006 U/Sec.234(1) of the Companies Act, 1956 and submitted a report to the Ministry of Corporate Affairs, Government of India U/Sec. 234(6) of the Act, indicating the possible diversion and miss-utilization of funds by the promoters of said company. In the light of said reports, the Ministry of Corporate Affairs, Government of India has directed an investigation into the affairs of said MDBL company U/Sec.235 of the Companies Act, by its order dated:
17/04/2009. Accordingly, a team of investigators was appointed to investigate into the financial and other irregularities, contraventions / violations of the provisions of the companies Act, 1956 or fraudulent Acts committed by the said company and its Directors or its Officers or any other persons in the conduct of affairs of the company. After the investigation, the said team of investigators submitted the investigation report to the Government of India. On the basis of the findings given in the investigation report as to several irregularities, 7 C.C. No. 30789/2021 fraudulent acts and contravention / violation of the provisions of the companies Act, the Ministry of Corporate Affairs had directed the complainant office i.e., The Serious Fraud Investigation Office (herein after referred as SFIO), Ministry of Corporate Affairs, Government of India, New Delhi to file complaints against the said company, its Directors and Officers by its letter dated: 14/09/2011. Accordingly, on the basis of one of the findings of said investigation report as to the misappropriation of an amount of Rs.37.22 crores out of the fund of Rs. 60 crores collected under the said project, this complaint is filed. It is the specific allegation that, the Directors of said MDBL company have coined a criminal conspiracy for misappropriation of funds of said project and in furtherance of said conspiracy, they have authorized the accused No.1 - the Managing Director of Said Company to purchase the lands from the farmers in his name on behalf of the company for the purpose of said project by resolution dated 01.09.1994. But, the said 8 C.C. No. 30789/2021 accused No.1 though not purchased the lands from the farmers / landlords, in the balance sheet of said company for the year 2005-2006 shown to have entered into agreement to sell with 450 farmers for an amount of about 37 crores and said amount was shown to have been paid in cash as land advance. But, there were no such 450 sale agreements executed by the MDBL with the the farmers, rather they have created false documents like agreements of sale in the name of dead persons, under the survey numbers which are not in existence, showing the extent of land which is in excess of the actual extent in the survey numbers etc., and shown all the names of 450 farmers as sundry debtors in the balance sheet with the sole intention of misappropriation of said Rs.37.22 crores and to cheat the MDBL Company and it members. Accordingly, the accused No.1 to 7 have committed the offences punishable Sec. 120B, 409, & 468 of IPC.9 C.C. No. 30789/2021
3. The complaint was filed by a Public Servant one Sri. Samendra Kumar Nanda, Assistant Director of SFIO, Ministry of Corporate Affairs, Government of India. On perusal of the complaint allegations and the documents produced along with the complaint, this court has taken cognizance of alleged offences punishable U/sec.120B, 409 & 468 of IPC and issued summons to the accused. The accused upon service of summons entered their appears through their counsel and they are enlarged on bail. Subsequently, as the accused No.3 was died, the case against accused No.3 stood abated and the charges were framed, read over & explained to the accused No.1, 2, 4, 5 & 6 in the language known to them, wherein they have not pleaded guilty, but claimed for trial. Hence, the case was taken up for trial.
4. In order to prove its case, the Representative of the complainant - Samendra Kumar Nanda, himself got 10 C.C. No. 30789/2021 examined as PW1 and also examined three more witnesses as PW.2 to 4 and got marked 23 documents as Ex.P1 to 23. Thereafter, the accused were examined U/sec.313 of Cr.P.C., wherein they have denied the incriminating evidences appeared against them in the evidence of complainant side and submitted to have no defence evidence.
5. Heard arguments of the learned Counsel for the complainant and learned advocates for the accused and perused the materials available on record.
6. The points that arise for consideration are:
1. Whether the complainant proves beyond reasonable doubt that accused No.1 to 5 being the Directors & accused No.6 being the statutory auditor of accused No.7 company - Megacity (Bangalore) Developers & Builders Pvt Ltd., during 1996-97 to 2005-06 have entered into a criminal conspiracy to dishonestly misappropriate the funds collected from the Members / public under 11 C.C. No. 30789/2021 the housing scheme - Vajragiri project of said MDBL company & cheat the members / site aspirants of said project and thereby committed the offence punishable U/sec.120B of Indian Penal Code ?
2. Whether the complainant proves beyond reasonable doubt that accused No.1 to 5 being the Directors & accused No.6 being the statutory auditor of accused No.7 company - Megacity (Bangalore) Developers & Builders Pvt Ltd., and entrusted with the fund of Rs.60 Crores collected by the said company from the members / public under the said Vajragiri project, have dishonestly misappropriated about Rs.37.22 Crores out of the said fund by fraudulently showing to have purchased the lands worth of said amount on behalf of the company from 1996-97 to 2005-06 in ordered to make an illegal gain for themselves & wrongful loss to the company & members and thereby committed the offence punishable U/sec.409 of Indian Penal Code ?
3. Whether the complainant proves beyond reasonable doubt that accused No.1 to 5 being the Directors & accused 12 C.C. No. 30789/2021 No.6 being the statutory auditor of accused No.7 company - Megacity (Bangalore) Developers & Builders Pvt Ltd., have created false and forged sale agreements for the purpose of cheating the company & its members and thereby committed the offence punishable U/sec.468 of Indian Penal Code ?
4. What Order ?
7. My answer to the above points are as follows :
Point No.1 to 3 : In the Negative Point No.4: As per final order for the following;
REASONS
8. Point No.1 to 3 :- As these three points are interlinked, they are taken together for common discussion in order to avoid repetition of facts & evidences.
9. It is the specific case of the complainant that, accused No.1 being the managing director, Accused No.2 to 5 being the directors and the accused No.6 being 13 C.C. No. 30789/2021 Statutory Auditor of accused No.7 - M/s. Megacity (Bangalore) Developers & Builders Limited, Bangalore during the period 2005-06 dealing with land developments, having responsibility of day to day affairs of the company & signatories to the Balance sheet of said company as at 31.03.2006 have coined a criminal conspiracy for misappropriation of funds of said Vajragiri Township project and in furtherance of said conspiracy the accused No.1 to 5 have passed a resolution authorizing the accused No.1 - M.D of said company to purchase lands in his name on behalf of the company for the purpose of said project out of the funds collected under the said project. Further, they have dishonestly misappropriated an amount of Rs.37.22 Crores by fraudulently showing to have entered into agreements of sale of lands with 450 farmers by making payments towards land advances under the sale agreements from 1995-96 to 2005-06. But, there are no such 450 agreements of sale executed by the accused with the 14 C.C. No. 30789/2021 farmers. When it was revealed from the balance sheet for the period 2005-06, the investigating team had questioned the accused about the same, wherein the accused No.1 & 4 in their statements before the investigating team stated that the documents relating to those agreements were seized by Income Tax authorities. As such, the investigation team of the complainant - SFIO had approached the Income Tax department in Karnataka and collected the Income Tax appraisal report along with Annexures of seized materials. In the Annexures of seized materials only 62 agreements of sale in 9 villages were mentioned, but not 450 agreements of sale as shown in the balance sheet 2005-06. The remaining 388 agreements of sale were neither found with the accused company nor seized by IT authorities. As such, the investigation team inevitably come to an inference that either no such 388 agreements of sale were executed by the farmers in favour of the accused company - MDBL or those agreements of sale were 15 C.C. No. 30789/2021 retained by the promoters or Directors of said company. As such, the investigation team asked the Directors of accused company i.e., the accused No.1 to 5 herein to produce those 388 agreements of sale, but they have not produced.
10. Further, it is alleged that, with regard to 62 agreements of sale that were seized by IT Department, the investigation team had issued letters to those 62 farmers for verification as to the genuineness of those agreements. But, only few of those farmers have given their reply and few of them were approached by the investigation team and recorded their statements. One Sri. C. Venkataraju S/o. Venkataramanam Setti, who stated to be holding agricultural land bearing Sy.No. 15/2, 15/3, 15/5, 67/4, 67/6 & 89 to an extent of 12.09 acres at Sheshagirihalli Village, Ramanagara District, which was depicted in the agreement of sales and shown to have paid Rs.84,97,000/- towards land advance, has 16 C.C. No. 30789/2021 given a reply dated: 09/06/2011 stating that he has not executed any agreement of sale infavour of C.P. Yogeshwara, the MD of MDBL in respect of those lands. He also stated that, he had not received any consideration amount as mentioned in the letter issued by SFIO and there were no transactions between him and said C.P. Yogeshwara in respect of those lands. Thereafter, the investigation team stated to had issued summons to accused No.1 & 4 on 01/07/2011 for recording their statements about the same. But, the accused No.1 & 4 neither appeared nor given any reply to said summons.
11. Further, it is stated that, the investigation team had approached one Lakshmana S/o. Puttabatappa of Hampapura village and recorded his statement on 15/06/2011, wherein he has stated that, he was paid with only Rs.5,55,000/- by the accused No.1, but not Rs.32,14,350/- as shown in the list of sundry debtors in 17 C.C. No. 30789/2021 the balance sheet. He also stated that, after the said agreement of sale the accused No.1 did not turn up for either execution of sale deed or for payment of remaining consideration. As such, the investigation team has arrive at a conclusion that, the accused No.1 had siphoned off the difference amount of Rs.26,59,350/- from the fund of MDBL. Similarly, the investigation team had also approached one Betethimmaiah S/o. Rudraiah of Manchanayakanayahalli, Ramanagar District and recorded his statement on 15/06/2011, wherein he has categorically stated that no agreement of sale was executed between himself and the MDBL. But, in the list of sundry debtors in the balance-sheet an amount of Rs.7,60,000/- was shown to have been paid to him towards purchase of land.
12. Further it is alleged that, the investigation team in the course of investigation studied the list of sundry debtors, wherein it was found that, there were 18 more 18 C.C. No. 30789/2021 agreements to sale, shown to be executed between farmers and the company through accused No.1. Thereafter, the investigation team approached said 18 farmers or landlords to know genuineness of said agreements, but due to local language problem actual position could not be found out. As such, the investigation team as per the advice of District Magistrate Bengaluru (South) had approached the Tahasildar Bengaluru (South) Taluk by giving a letter of request dated: 16/06/2011 along with copies of said 18 agreements of sale for verification. In response to said letter the then Tahasildar Bengaluru South Taluk vide his letter dated: 14/07/2011 furnish a detailed enquiry report of Jurisdictional Revenue Inspector dated:
20/06/2011, wherein the details of said 18 agreements were furnished. From the said report it was revealed that, some of those agreements were created in the name of dead persons, in the name of the persons who are not the original Khathedars, under the Survey numbers 19 C.C. No. 30789/2021 which were not in existence, for the extent of lands in excess of the actual extent available in the said Survey numbers etc.,. Thus, from the said report and the information furnished therein the investigation team had come to a conclusion that the accused have created and concocted those agreements by forging the names & signatures of the farmers and also by making false representation as to the extent of lands agreed to be purchased and the amount of advance sale consideration stated to have been paid, in order to siphon the funds of said project.
13. In the light of the above stated specific allegations, let us examine as to whether the complainant has adduced & produced sufficient & substantive evidences to substantiate all those allegations. Firstly with regard to the allegation that in the balance sheet for the year 2005-06 an amount of Rs.37.22 Crores was shown under sundry debtors, which was stated to had 20 C.C. No. 30789/2021 been paid in parts & in cash to the farmers as land advance for purchase of lands for the said Vajragiri Township project. The complainant who was examined as PW1 got produced the Certified copy of balance sheet of said MDBL company from 31/03/2000 to 31/03/2006 as per Ex.P13. On perusal of Ex.P13 & the balance sheet as on 31/03/2006 in particular, it is found that under the Heading assets / Current Assets an amount of Rs.37.22 Crores was shown as sundry debtors. More so, schedule-7 relating to said balance sheet as at 31/03/2006 also shows that an amount of Rs.37.22 Crores is shown under sundry debtors. In the complaint allegations as well as the evidence of complainant - PW1 as well as the Head of Investigation Team - PW3, it is specifically alleged that in the balance-sheet of MDBL for the year 2005-06, in total 450 agreements of sale were shown to have been entered with the farmers of 9 villages. In schedule-7 of said balance-sheet as at 31/03/2006, it is mentioned that 'as per Annexure' under 21 C.C. No. 30789/2021 sundry debtors. But, under Ex.P13 at the balance-sheet as at 31/03/2006 no such annexure is produced. That being the case, it cannot be understood as to how the complainant in his complaint as well as evidence stated that in the balance-sheet for the financial year 2005-06, 450 agreements of sale were shown to have been entered with the farmers for purchase of lands. However, in the said Ex.P13 there are such annexures corresponding to schedule-7 under the Heading Sundry Debtors under the balance-sheets as on 31/03/2000, balance-sheet as on 31/03/2001, balance-sheet as on 31/03/2003, balance- sheet as on 31/03/2004 & balance-sheet as on 31/03/2005. But, no such Annexure is there along with the balance-sheet as on 31/03/2006. Even if, the balance-sheets for the period 31/03/2000 to 31/03/2005 were looked into, the amounts mentioned under the said Sundry debtors appears to be different. More so, the names of farmers / landlords and the amounts shown to have been paid to them also various, 22 C.C. No. 30789/2021 except overlapping of some of the names of said Sundry debtors. Even if all those entries in the balance-sheet from 31/03/2000 to 31/03/2005 are assumed to have been carried forward to the balance-sheets for the financial year ending 31/03/2006, all those entries should have been reflected in the Annexures to said balance-sheet of 2006. But, as already stated in herein above no such Annexure is found along with said balance-sheet as on 31/03/2006. Even if the entries in the earlier balance-sheets are taken into account, as argued by the Ld.Defence counsel those entries reflect only the names of farmers or landlords with corresponding advance amount paid to them, but not the extent of land & survey numbers of each of said Sundry debtors, which was categorically admitted by PW3 in his cross examination. As such, mere mention of names of farmers and the amounts paid to them itself does not mean that in respect of all those farmers there are separate Sale agreements. Though in the schedule 4 & 7 23 C.C. No. 30789/2021 of those balance-sheets about 450 farmers were shown, that does not mean that there should be such number of agreements of sale. It is the burden of the complainant to prove that there should be 450 agreements in respect of said 450 farmers as shown in the balance-sheet. But except stating in the complaint and their evidence that, as revealed from the balance-sheet for the financial year 2005-06 about 450 agreements to sell were shown to have been executed with the farmers or landlords of 9 villages, the complainant has neither adduced any evidence nor produced any materials to substantiate that the entries in the said schedule 4 & 7 of the balance- sheets mean that there were 450 agreements of sale. In this regard, it is the specific case of the complainant that, during investigation one of the member of investigation team Mrs. Indrani Sen Chawdhuree was directed to collect the balance-sheet for the period 2004- 05 & 2005-06 and accordingly she has collected and produced said balance-sheets from the Income Tax 24 C.C. No. 30789/2021 Department. Said Mrs. Indrani Sen Chawdhuree is examined as PW2, wherein she has categorically deposed that she has not collected any documents from Income Tax department which are relevant for this case. Further, in the course of her cross examination, she has also stated that any such correspondences made with the Income Tax department would be through documents and such documents would be available with the SFIO office. But, for the reasons best known to them, the complainant has not produced any such documents supporting any such correspondences made with the Income Tax Department. Rather, he has categorically deposed in his cross examination that he has not seen any letter communication made by SFIO with the Income Tax Department and the documents as to supply of alleged 62 agreements by the Income Tax Department to the SFIO. More so, he also stated that, he has not seen any such forged agreements of sale or 62 agreements alleged to have been obtained by Income Tax Department 25 C.C. No. 30789/2021 in the 6 Volumes of documents produced along with the investigation report.
14. Apart from the above, it is pertinent to note that, in the complaint allegations as well as the testimony of PW1 & PW3, it was specifically stated that when the accused did not produce the documents relating to alleged agreements of sale and stated that those documents were seized by Income Tax department, the investigation team had approached the Income Tax authorities and collected the Income Tax Appraisal report along with Annexure of seized materials and in the course of scrutiny of such seized materials it was found that there were only 62 agreements of sale seized from the MDBL company, but not 450 agreements as shown in the balance-sheet - 2005-06. But, the complainant has not produced any such Income Tax Appraisal report as well as the Annexure of seized materials before this court. Further, it is alleged that in respect of the said 62 26 C.C. No. 30789/2021 agreements of sale that were collected from Income Tax authorities, the investigation team had sent letters to all those 62 farmers to verify the genuineness of said 62 agreements. But, no such agreements of sale that were stated to have been collected from the Income Tax Department are produced before this court by the complainant or the PW3. In this regard the complainant
- PW1 in the course of his cross examination categorically deposed that he has not seen any letter communications made by the SFIO with the Income Tax Department and the documents as to supply of alleged 62 agreements by the Income Tax department to the SFIO, in the investigation report, on the basis of which he was authorized to file this complaint. More so, he also stated that he has not seen any letter communication made by SFIO with the accused company for furnishing the remaining 388 sale agreements. Further, he has categorically deposed that, he has not seen alleged 62 agreements stated to have been furnished by the Income 27 C.C. No. 30789/2021 Tax Department. Similarly, as already discussed herein above, the PW2 Mrs. Indrani Sen Chawdhuree who stated to had been entrusted with the task of collecting those documents from Income Tax department, in her evidence categorically stated that, she has not collected any documents from Income Tax Department which are relevant for this particular case. More so, as already discussed herein above though she says that the documents in respect of all correspondences made with the Income Tax Department are there in SFIO office, the complainant has not produced any such documents to substantiate their contentions as to the correspondences made with Income Tax department and collection of those 62 agreements of sale.
15. Further, it is alleged that as the accused have shown in the balance-sheet for the financial year 2005-06 about execution of 450 sale agreements, but only 62 agreements were seized by Income Tax department, the 28 C.C. No. 30789/2021 investigation team had come to a conclusion that either the remaining 388 sale agreements were not at all executed or those agreements were intentionally and knowingly retained by the promoters or Directors of said company. It is further alleged that in that regard they had asked the Directors of said company to produce those remaining 388 agreements of sale, but they did not provide any such agreements. In this regard, it is pertinent to note that, except making such allegations in the complaint, the complainant or the investigating officer
- PW3 or the Member of Investigation Team - PW2 have not stated anything as to when, how & where they have asked so and whom among the 5 Directors of said company was asked so. More over, as already discussed herein above, the complainant has not substantiated the allegation that the Income Tax authorities have seized alleged 62 agreements from the accused company and such an information along with documents was obtained by the investigation team from said Income Tax 29 C.C. No. 30789/2021 authorities. That being the case, it appears not proper to draw any such inference or presumption that there were either 388 more agreements of sale or no such agreements of sale with the accused company. More so, it may not be possible to arrive at any conclusion that either those 388 agreements were not executed by the accused company with the farmers as shown under Sundry debtors or those agreements of sale were knowingly and intentionally withheld by the Directors of said company. It is the cardinal principle of the criminal Justice Administration that on a fact when two views could be possible, the view towards innocence of the accused has to be taken into consideration. Therefore, from the facts & evidence discussed herein above, the view towards innocence of the accused i.e., the existence of alleged remaining 388 agreements shall have to be taken into consideration.
30 C.C. No. 30789/2021
16. Further, it is the case of the complainant that, pursuant to letters issued to alleged 62 farmers under the alleged 62 agreements of sale for verification as to genuineness of those agreements, One Mr. C. Venkataraju S/o. Venkataramanam setti alleged to be holding agricultural land bearing Sy.No. 15/2, 15/3,15/5, 67/4, 67/6 & 89 to an extent of 12.09 acres in Sheshagirihalli village has given a reply on 09/06/2011 stating that he has not executed any agreement of sale in favour of accused No.1 in respect of said lands and he has not received any sale consideration as stated in the letter issued by SFIO. But, as per the balance-sheet an amount of Rs.84,97,000/- was shown to have been paid to him as land advance. It is further alleged that, in this regard summons were issued to accused No.1 & 4 on 01/07/2011 for obtaining their statements regarding the same, but they have neither appeared nor given any reply. The defence counsel has contended that, except making such an allegations in the 31 C.C. No. 30789/2021 complaint, the complainant has neither produced any such letters issued to said Venkataraju and reply given by him nor examined said Venkataraju to substantiate their contentions. He also contended that, though the complainant alleges that, summons were issued to accused No.1 & 4 on 01/07/2011 for getting their statements in that regard, they have neither produced any such notices / summons dated: 01/07/2011 nor produced any materials as to service of the same on accused No.1 & 4. As rightly contended by the defence counsel, the complainant though makes such allegations in the complaint, in the course of evidence they have not produced any such letter issued to said Venkataraju and the reply given by him for the reasons best known to them. The PW3 in his cross examination categorically admitted that, they have not produced any such letter issued to said Venkataraju and the reply given by him and also any postal receipt or acknowledgment for having sent any such letter to said Venkataraju and the service 32 C.C. No. 30789/2021 of same on him. Similarly, though they alleged that, they had issued summons to accused No.1 & 4 on 01/07/2011 for recording their statements in that regard, for the reasons best known to them they have neither produced any copy of such summons nor produced any materials as to service of such summons on accused No.1 & 4. In the absence of any proof as to issuing of such summons and its service on accused No.1 & 4, it may not be proper to come to a conclusion that those accused No.1 & 4 have neither appeared nor given any reply.
17. Further, in the course of his further evidence, the PW3 got produced a copy of an agreement of sale in the name of said C. Venkataraju & the MDBL as per Ex.P23 contending that, the accused have created such an agreement without being executed in accordance with law. On perusal of said Ex.P23 it is revealed that said agreement was shown to be signed by said C. 33 C.C. No. 30789/2021 Venkataraju. But, admittedly there is no seal & signature of any authorized person of MDBL company. As such Ld.defence counsel has argued that, the said agreement of sale is not a valid agreement of sale as it is not in order. As such, no inference could be drawn on the basis of said documents. In this regard, the PW3 also admitted that, in the course of investigation they have not enquired said C. Venkataraju & not recorded his statement. Rather, he says they have written letter to him and obtained his reply, but admittedly as already discussed herein above, they have not produced any copy of such letter or the reply given by him about said Ex.P23 or any postal receipt / acknowledgment for having sent any such letter to him. Similarly, as admitted by PW3 himself they have neither obtained any Revenue records in respect of the lands under the said agreement nor produced any such Revenue records along with this complaint. In the absence of any such proof it may not be possible to accept the version of complainant as to 34 C.C. No. 30789/2021 creation of said agreement. More so, except producing said document, the complainant has not produced any material to show that said agreement was seized by Income Tax Department, from whom the same was obtained by the investigation team. In this regard the PW3 himself says that, they had seen the mahazar conducted by Income Tax Department regarding seizure of said document. If so, what prevented them to obtain a Certified copy of said mahazar and produce before this court to substantiate their contentions.
18. Further, it is the case of the complainant that, in the course of investigation the investigation team had approached One Sri. Lakshmana S/o. Puttabatappa of Hampapura village and recorded his statement on 15/06/2011, wherein he has stated that he was paid with only Rs.5,55,000/- by the accused No.1, but not Rs.32,14,350/- as shown in the list of Sundry debtors. He further stated that, the accused No.1 did not turn up 35 C.C. No. 30789/2021 either for executing sale deed or to pay the balance sale consideration. As such, the investigation team had concluded that the accused No.1 has siphoned off the difference amount of Rs.26,59,350/- from the fund of said Vajragiri project. The complainant got produced said statement of Lakshmana as Ex.P21. Similarly, the investigation team stated to had approached one Mr. Betethimmaiah S/o. Rudraiah of Manchanayakanahalli & recorded his statement on 15/06/2011, wherein he has stated that no sale agreement was executed between him and the MDBL & no such amount of Rs.7,60,000/- was received by him as sale consideration. But, in the list of Sundry debtors it was shown that an amount of Rs.7,60,000/- was paid to him for the purpose of purchasing land. The complainant got produced said statement as Ex.P20 through the Head of investigation Team - PW3. Ld.Defence counsel has argued that, alleged statement at Ex.P20 & 21 were not annexed to the investigation report. But, subsequently said 36 C.C. No. 30789/2021 statements were got produced & marked in the course of further evidence of PW3. There is no explanation as to why said statements were not part & parcel of the investigation report, when they were alleged to have been recorded in the course of investigation. Further, it is contended that though in the complaint it is stated that the investigation team had approached said Lakshmana & Betethimmaiah and recorded their statements on 15/06/2011, it is not stated as to who among the members of investigation team had approached them and where did they approach them and recorded their statements. Further, it is contended that said statements were recorded U/Sec.240 of the Companies Act, 1956. But, as provided U/Sec.240 (2)(b) of said Act, the investigating officer can record the statement of any person other than the persons relating to the company or firm, the affairs of which are under investigation, only after prior sanction by Central Government. But, in the present case though the investigation team of the 37 C.C. No. 30789/2021 complainant - SFIO stated to had recorded the statement of said Lakshmana & Betethimmaiah, they have neither stated as to whether they had obtained any such prior sanction from the Central Government nor produced any such order of sanction. Therefore, the very statement of said Lakshmana & Betethimmaiah recorded by the investigation team in this case is in violation of the provisions of Sec.240(2) of Companies Act, 1956 and as such said statements cannot be admitted in evidence and cannot be proved against the accused. He also argued that, the complainant except producing alleged statements as per Ex.P20 & 21, not chosen to examine said Lakshmana & Betethimmaiah. As such, no opportunity was given to the accused to testify the genuineness or truthfulness of said statements. Any evidence without subjecting to the test of cross examination is not at all an admissible evidence or a substantive evidence that can be used against the accused.
38 C.C. No. 30789/2021
19. In the light of the contentions of defence counsel, on perusal of the provisions of Sec.240(2) of the Companies Act, 1956, it is evident that in the course of investigation into the affairs of any body corporate U/Sec.239 of the Companies Act, 1956, the concerned inspector may examine on oath any officer or other employees & agents of such company and he can examine any other persons with the previous approval of Central Government in relation to the affairs of such company or other body corporate and the statement of such person shall be reduced to writing, read over & obtain signature of such person. Further, such statement may be used in evidence against such person. Thus, it is very clear that the inspector conducting an investigation or enquiry of the affairs of a company or body corporate can examine on oath any person other than the officers or employees or agents of the company only with previous approval of the Central Government. But, in the present case though the investigation team of 39 C.C. No. 30789/2021 the complainant - SFIO stated to had examined said Lakshmana & Betethimmaiah, who were neither the officers nor the employees or agents of accused company and recorded their statements as per Ex.P20 & 21, they appear to have not obtained any such previous approval of Central Government as provided U/Sec.240(2)(b) of the Companies Act, 1956. Therefore, as rightly argued by the defence counsel the very statements of said Lakshmana & Betethimmaiah at Ex.P20 & 21 are not valid in the eye of law. As such, said statements cannot be considered for adjudication of the issue in this case as substantive evidence. More over as provided under sub - Sec.5 of said Sec.240, any such statement can be used only against such person. That being the case, said statements of Lakshmana & Betethimmaiah can only be used against them, but not against the accused herein only if such statements are put to test of cross examination by the accused. Therefore, said statements 40 C.C. No. 30789/2021 produced by the complainant may not come to its rescue.
20. Further, it is also alleged that during the investigation, when the list of sundry debtors found in the balance-sheet was studied, it was found that there were 18 more agreements to sell which were shown to be executed between the farmers & the MDBL company through accused No.1. It is stated that during investigation the investigation team had approached those 18 farmers to verify the genuineness of those sale agreements. But, due to language problem it was not possible to know the actual position. As such, as per the advice of the Dy. Commissioner, Bengaluru (South) District, they have approached the Tahasildar, Bengaluru (South) Taluk by addressing a letter dated: 16/06/2011 with a request to provide the details / information as per the Annexure to said letter about those 18 agreements to sell. It is also stated that they have enclosed copies of 41 C.C. No. 30789/2021 those 18 agreements along with said letter. Further, it is stated that in response to said letter the Tahasildar, Bengaluru (South) Taluk had given a reply along with the detailed report from the Jurisdictional Revenue Inspector, Kengeri Hobli, Bengaluru (South) Taluk on 20/06/2011 as stated at paragraph 28(a) to (s) of the complaint. It is alleged that, as per the report of Revenue Inspector, there are several anomalies & defects in each of those agreements such as some of those agreements were executed in the name of dead persons, some of them were executed in the name of a person who was not the original Khathedar of the lands mentioned therein, some of them were executed under the Survey Numbers which were not in existence, some of them were executed in respect of an excess extent of land than the actual extent available in such Survey numbers in the name of the executants and some of them were executed without there being any payment of sale consideration or payment of lesser amount than the amount shown to 42 C.C. No. 30789/2021 have been paid to the seller. It is further alleged that, though show cause notices were issued to the accused regarding alleged anomalies in the said sale agreements and showing those false & forged agreements in the balance-sheet of the company under the Head of sundry debtors, the accused have not given any reply.
21. In support of the above allegations, the complainant got produced alleged letter given to the Tahasildar Bengaluru South Taluk as per Ex.P18 & the reply given by said Tahasildar along with the report of Jurisdictional Revenue Inspector as per Ex.P19 through PW3. The defence counsel has contended that except stating in the complaint at paragraph 27, the complainant has not disclosed as to where from they got said 18 agreements of sale, whether those agreements were part of 62 agreements alleged to have been obtained from Income Tax Department or not. Even in the course of evidence also neither the complainant - PW1 nor the 43 C.C. No. 30789/2021 inspectors of investigation Team - PW2 & 3 stated about the same. More so, as rightly contended by the defence counsel those 18 agreements were not produced either along with the investigation report or this complaint or in the course of evidence. Though, PW3 in his cross examination stated that the farmers examined by them during investigation have produced photo copies of agreements of sale, admittedly no such agreements of sale even photo copies are produced either along with their report or along with this complaint. Further, it is stated that the copies of said agreements were enclosed along with the letter dated: 16/06/2011 given to the Tahasildar Bengalur South Taluk for getting the verification report on those agreements, which is also reflected in the said letter at Ex.P18. But, there is no such copies of agreements produced along with the said letter - Ex.P18. More so, no such agreements were returned along with the reply letter of Tahasildar and the report of Revenue Inspector. If at all, any such copies of 44 C.C. No. 30789/2021 agreements of sale were enclosed with said letter dated:
16/06/2011 given to the Tahasildar, what prevented the complainant to produce the copies of those agreements before this court. More so, if at all any such agreements were sent to the Tahasildar along with the letter, why the Tahasildar had not returned them along with his reply and report after due verification. There is no explanation in this regard by the complainant - PW1 or the Head of Investigation Team - PW3 or the Tahasildar Bengaluru South Taluk who was examined as PW4 before this court. In the absence of any such agreements, it may not be possible to appreciate the report submitted by the Tahasildar Bengaluru South Taluk about those agreements.
22. Apart from the above, it is pertinent to note that, on comparing the said report with the list of sundry debtors as shown in Ex.P17, it is revealed that said report in respect of serial No.1 i.e., survey No. 51 of Hampapura 45 C.C. No. 30789/2021 village, which founds entry in the list of sundry debtors in Ex.P17, wherein the same was shown to be an absolute registered deed, but not an agreement of sale, appears to be not correct. Further, in respect of the same though the original khathedar Sri. Nagaraju S/o. Kariyappa & his wife were dead as on the date of agreement, he has not furnished the date of death of said Nagaraju. As per the details sought by the Investigation Team under the Annexure to said letter Ex.P18, it is specifically sought for information as to 'whether the vendor is existed or not and if dead to mention the date of death or year of death'. But, for the reasons best known to him, the Tahasildar or the Revenue Inspector for that matter has not furnished any such details as to the date of death or year of death of the vendors, not only in respect of that particular agreement relating to Sy.No.51, but also in respect of other agreements wherein he has reported that the vendors were dead as on the date of execution of agreements. In this view also said report appears to be 46 C.C. No. 30789/2021 not satisfactory. Similarly, in the letter given to the Tahasildar under the Annexure - A, the investigating team also sought for certified copies of RTCs mentioned in the said agreements of sale. But, though the Tahasildar or the Revenue Inspector for that matter in his report stated that some of those agreements were executed under the Survey numbers which were not in existence and in the name of persons who are not the original owners of said lands and in respect of an extent more than the actual extent of land available in such Survey numbers in the name of such vendors, he has not produced RTCs of any such Survey numbers among those 18 agreements, though it was specifically sought for. In this view of the matter also said report at Ex.P19 cannot be accepted. Further, in the conclusion remarks of the said report Ex.P19 it is stated as follows:
"It is submitted that from local enquiry the above facts are revealed. On verification of the revenue records, the available particulars in respect of Sl. Nos.3, 5, 8, 15 & 18 are collected and furnished. In respect of the remaining there are no specific particulars forthcoming 47 C.C. No. 30789/2021 forthcoming and the villagers have also not spoken specifically about them".
23. Thus, it is clear from the said report that, they have collected & furnished the particulars only in respect of 5 items i.e., Sl.No.3, 5, 8, 15 & 18 and in respect of the remaining 13 items they have not furnished any specific particulars. The reasons for the same is stated to be that no such specific particulars are forthcoming in respect of those items and the villagers have not spoken specifically about them. Further, on perusal of the report in respect of those 5 items in comparison with the list of sundry debtors shown in the balance-sheet and in Ex.P17, it appears that no such illegalities in respect of the agreements under those items were reported. Therefore, as rightly contended by the defence counsel said report of Tahasildar is not complete and not supported with the basic documents like alleged 18 agreements and as such that report cannot be admissible in evidence to substantiate the case of the complainant. 48 C.C. No. 30789/2021 Even if said report is accepted, as there is no illegality reported in respect of 5 items of properties under the agreements and no specific report is made in respect of the remaining 13 items of properties under the agreements, said report may not be helpful to the complainant to prove its case.
24. Further, it is alleged that during investigation on coming across the above stated anomalies in respect of alleged sundry debtors, they have issued notice or summons to accused No.1 & 3 seeking their clarification and for recording their statements. But, the accused neither appeared nor given any reply. In this regard the complainant - PW1 got produced the notice dated:
13/05/2011 & 02/06/2011 as per Ex.P15 & 16 and a reply dated: 19/05/2011 as per Ex.P17. On the contrary the Head of investigation team, in his evidence stated that upon his directions their team member - Mr. R.S. Chowdary / CW5 had recorded the statement of accused 49 C.C. No. 30789/2021 No.1 on 08/02/2011 and after perusal of said statement he has prepared a note as to the further information or materials to be collected. Accordingly, three more summons were issued to accused No.1 on 10/06/2011, 20/06/2011 & 01/07/2011, but he did not appeared. On considering the evidence of PW1 & PW3, it is very clear that alleged statement of accused No.1 appears to have been recorded prior to said notices dated:
13/05/2011 & 02/06/2011 as stated by PW1 and the summons dated: 10/06/2011, 20/06/2011 & 01/07/2011. Therefore, the statement recorded by said R.S. Chowdary on 08/02/2011 may not be relevant for this case. But, as admitted by PW3 in his cross examination said notices at Ex.P15 & 16 were returned un-served with the endorsement "Addressee Left". Similarly, as admitted by PW3 the reply at Ex.P17 is not related to said notices Ex.P15 & 16. Further, admittedly alleged summons dated: 10/06/2011, 20/06/2011 & 01/07/2011 were not produced either along with the 50 C.C. No. 30789/2021 investigation report or in this case. They have also not produced any materials to show that said summons were served on the accused or they were sent to the correct address of the accused. In this regard the PW3 in the course of his cross examination admitted that, in the course of investigation they have visited the office of said MDBL at Megacity Towers, K.H. Road, Bengaluru. He admits that they have not issued any notice or summons to said address. Rather, he says that said MDBL was having one registered office address & another corporate Address. But, not collected any information or documents about the same. Rather, he admits that in all the balance sheet produced by them along with their report, the address of accused company is shown as No.120, Megacity towers, K.H. Road, Bengaluru. If it is so, the summons at Ex.P15 & 16 should have been sent to said address as shown in the balance-sheets produced by them, in the absence of any materials to show that they got the Corporate address of said company. On 51 C.C. No. 30789/2021 perusal of said Ex.P15 & 16 it is evident that, said notices / summons were shown to have been sent to the address of accused at No.1, Chandralok, 5th cross, Gandhinagar, Bengaluru. Thus, it can be inferred that as admitted by PW3 said Ex.P15 & 16 might had been returned un-served with the endorsement "Addressee Left". Thereafter admittedly said notices were not resent or served on accused No.1 in any other modes. Therefore, it can be concluded that the complainant has failed to establish that alleged notices and summons were served on the accused No.1. When it is not established, it may not be possible to conclude that the accused No.1 had intentionally avoided to give any reply or appear before the investigation team.
25. Thus, in view of all the above discussed facts & evidences, it is very clear that though the complainant has alleged that the accused have falsely shown to have entered into 450 agreements in the balance sheet under 52 C.C. No. 30789/2021 sundry debtors, it has failed to show that there are such 450 agreements specifically mentioned in the alleged balance-sheet. More so, though the complainant has alleged that the accused by showing such false & fabricated agreements to sell have misappropriated an amount of Rs.37.22 Crores from the funds of said Vajragiri project, they have failed to establish that the accused have withdrawn said Rs.37.22 crores from the funds of said Vajragiri project. Similarly, though they have alleged that the accused falsely shown to have executed 450 agreements of sale and also forged agreements, for the reasons best known to them they have failed to do any enquiry or investigation and collect evidences in respect of all those 450 agreements or the farmers / landlords as shown under the sundry debtors. Rather, they have chosen to examine only about 62 agreements alleged to have been secured from the Income Tax Department and 18 agreements alleged to have been found in the course of study of the list of sundry debtors. 53 C.C. No. 30789/2021 But, they have neither produced those 62 agreements as well as 18 agreements nor adduced any evidences to show that such agreements were there and procured by the investigation team in the course of investigation. Therefore, the complainant has failed to establish that the accused have forged & fabricated any such agreements of sale.
26. From all the above discussed facts, circumstance, evidences and the reasons, it can be concluded that the complainant has failed to prove that the accused have coined a criminal conspiracy to misappropriate the funds collected under the said Vajragiri project by creating forged and fake sale agreements & sale deeds and in furtherance of such conspiracy they have created false & forged sale agreements in the names of dead persons, fictitious persons, non-khathedhars and also under the Survey Numbers which were not in existence & in excess of the 54 C.C. No. 30789/2021 extent of land available under the Survey numbers and thereby misappropriated an amount of Rs.37.22 Crores out of the fund of Rs.60 Crores collected under said Vajragiri project and cheated the members / site aspirants who have deposited or invested their money under the said project. As such, it can be held that the complainant has failed to prove the guilt of the accused for the offences punishable U/Sec.120B, 409 & 468 of IPC beyond reasonable doubts. Accordingly, Point Nos.1 to 3 are answered in the Negative.
27. Point No.4 :- In view of the above findings on point Nos.1 to 3, the following order is passed;
ORDER Acting under section 248(1) of Cr.P.C., the accused No.1, 2, 4 to 7 are hereby acquitted of the offences punishable U/Sec.120B, 409 & 468 of IPC.
55 C.C. No. 30789/2021
Bail bonds and surety bonds of the accused shall stand canceled.
(Dictated to the Stenographer directly on computer, after her typing, corrected, signed and then pronounced by me in open Court this the 21st day of November, 2025).
(K.N. SHIVAKUMAR) XLII Addl. CJM,Bengaluru (Spl.Court for trial of cases filed against sitting as well as former MPs/MLAs, triable by the Magistrate in the State of Karnataka) ANNEXURE Witnesses examined for the Prosecution:
PW.1 - Samendra Kumar Nanda PW.2 - Indrani Sen Chawdhuree PW.3 - J. K. Teotia PW.4 - Kavitha .S
Documents exhibited for the Prosecution:
Ex.P1 - C/c of Gazette notification dated 17.10.2011 issued by Govt. of India Ex.P2 - C/c of orders passed by Ministry of Corporate Affairs issued dated 17.10.2011 Ex.P3 - C/c Certificate of Incorporation Ex.P4 - C/c of Memorandum of Association Ex.P5 - C/c of order passed by Ministry of Corporate Affairs to conduct investigation into the MDBL dated 17.04.2009 Ex.P6 - C/c of order passed by Ministry of Corporate Affairs dated 30.12.2009 Ex.P7 - C/c of sanction order issued by Ministry of Corporate Affairs dated 14.09.2011 56 C.C. No. 30789/2021 Ex.P8 - C/c of investigation report dated 30.07.2011 Ex.P9 - C/c of Brochure Ex.P10 - C/c of Pamphlet Ex.P11 - C/c of Statements Ex.P12 - C/c of Statement Ex.P13 - C/c of balance sheet of the accused company from 31.03.2000 to 31.03.2006 Ex.P14 - C/c of minutes of meeting dated 19.04.2005 Ex.P15 - C/c of notice dated 13.05.2011 issued to the accused No.1 Ex.P16 - C/c of notice dated 02.06.2011 issued to the accused No.1 Ex.P17 - C/c of reply dated 19.05.2011 given by the accused along with property purchased Ex.P18 - C/c of letter given by the Cw3 to the Tahasildar Ex.P19 - C/c of letter given by the Cw3 to the Additional Director / Inspector dated.13.07.2011 Ex.P20 - Xerox of statements of Thimmaiah Ex.P21 Ex.P21 - Xerox copy of statements of Lakshmana Ex.P22 - C/c of balance-sheet for the period 1994
- 2003 of the MDBL company Ex.P23 - C/c Sale agreement between C. Venkataraju and the MDBL Witnesses examined for the Defence:
- Nil -
Documents exhibited for the defence:
- Nil -57 C.C. No. 30789/2021
Material objections:
- Nil -
(K.N. SHIVAKUMAR) XLII Addl. CJM,Bengaluru (Spl.Court for trial of cases filed against sitting as well as former MPs/MLAs, triable by the Magistrate in the State of Karnataka) 58 C.C. No. 30789/2021 (Order pronounced in open court Vide Separate Judgment ) ORDER Acting under section 248(1) of Cr.P.C., the accused No.1, 2, 4 to 7 are hereby acquitted of the offences punishable U/Sec.120B, 409 & 468 of IPC.
Bail bonds and surety
bonds of the accused shall stand
canceled.
( K.N. SHIVAKUMAR )
XLII Addl. CJM,Bengaluru
(Spl.Court for trial of cases filed against sitting as well as former MPs/MLAs, triable by the Magistrate in the State of Karnataka)