Dr Neh Srivastava v. State of NCT of Delhi

16. During interrogation, complete details of the homebuyers / victims were recovered and it was revealed that a total of 524 members had invested in CSSOS.

17. The applicant is the President of CSSOS and was arrested in the present FIR on 16.11.2022. Submissions

18. The learned counsel for the applicant submitted that the applicant has been falsely implicated in the present case. He submitted that the investigation is complete and the chargesheet has already been filed and there is no point of keeping the applicant in further incarceration. He submitted that the applicant is in custody since 16.11.2022 and the trial is not likely to be concluded in near future.

19. He submitted that the applicant and the other co-accused were all Central Government employees and formed a society CSSOS incorporated on 15.11.2015 under the Societies Registration Act, 1860 with an aim to acquire land for its members who would be co-owners in the said acquired land, for which they had obtained a NOC from the Department of Personnel and Training.

20. He submitted that the applicant was made the President of the society and invited the Government employees, ex-Government employees, their family members, MPs, MLAs, Civil Officers etc. to become its members. In order to procure the land from the farmers under the name of the society, funds were collected as membership fees for the purchase of land and for developing the residential project in terms of Land Pooling Regulations, 2018 policy as notified by DDA.

21. He submitted that the implementation of the policy was delayed by DDA as 70% of the contagious land was not achieved within the notified sector and verification of pool land by the Revenue Department was not completed which led to the delay in the Society’s project and on account of the same, certain rumours spread due to which certain members started demanding refund of the membership fees.

22. He submitted that the Land Pooling Policy was issued by DDA vide notification dated 05.09.2013 and, subsequently, on 24.10.2018, wherein the society surrendered the land proportionately, free from encumbrances, with DDA as per the policy.

23. He submitted that the society had collected funds through membership, subscription, for fulfilment of the objectives for its members and from the said funds so collected, the society purchased the land from the farmers vide registered sale deeds in favour of the society and ARPL to the tune of 27.144 acres situated in Sector 33,34,35 and 40, Village Sarangpur, Samaspur, Ujwa, Khalsa, New Delhi. He submitted that after paying the sale consideration, commission, requisite stamp duty, TDS and other charges, the net worth of the land procured and purchased by the society at present is more than ₹100 crores. He submitted that the villages are under notified villages by the Delhi Government vide notification dated 16.06.2017 wherein the area was declared as development area.

24. He submitted that the society had two categories of members, that is, temporary and permanent members. He submitted that the temporary members had paid ₹11,000/- as fixed membership fees and the permanent members are the ones who had contributed towards the proportionate land cost being purchased by the society for the purpose of developing the flats under the Land Pooling Policy and are also made co-owners.

25. He submitted that the application was signed and acknowledged by the members of the society wherein all the disclosures with respect to the allotment of land and construction under the Land Pooling Policy were made as per the Master Plan 2021. He submitted that the members only after scrutinising every document and the records had participated and there is no cheating by the society in any manner.

26. He submitted members are neither investor nor buyers of the said property but are co-owner of the said land for which they had signed the ‘Membership cum Housing Application Form’. He submitted that since the land is available and everyone can avail the benefit of the said land, no offence of cheating can be inferred on the applicant.

27. He submitted that the delay was on the part of DDA in implementing the Land Pooling Policy and it was only after the DDA published the notification, the society submitted the entire copy of the sale deeds including the requisite documents as an expression of interest with DDA in terms of the policy in November-December, 2021.

28. He submitted that the applicant had entered into a mutual Facilitation Agreement with M/s Aditia Reality Private Limited for purchasing the land, management of the land, procurement of the land from farmers and its development. He submitted that the right to enter into the Facilitation Agreement was also reflected in the application form signed by the members. He submitted that as per the agreement, all the expenses had to be incurred by ARPL for which the money was transferred from society’s bank account to the bank account of ARPL, on a regular basis. He submitted that all project related expenses, stamp duties, commissions, GST, on land purchase and promotion etc. were met apart from the purchase of land as per the agreement.

29. He submitted that ARPL had incurred project/ administrative expenditure in the ratio of 70:30 percent and registry of the land was over ₹70 crores and was done in the name of society by ARPL.

30. He submitted that there is no reason to keep the applicant in further incarceration since the land valuing Crores of rupees and the bank accounts of the Society are all seized, and an administrator is also appointed by the orders passed by a Co-ordinate bench of this Court in W.P.(C) 13740/2019.

31. He submitted that the Society had started refunding the membership amount and the process of refund of unwilling members is an ongoing process since 2017 and the applicant has already refunded around 225 members. He submitted that the society till date has, before the freezing of the bank accounts, refunded an amount of approximately ₹6 Crores.

32. He submitted the applicant is in custody since 16.11.2022, and the chargesheet has already been filed. The applicant has clean antecedents.

33. Per Contra, the learned Assistant Public Prosecutor for the State strongly opposed the grant of bail to the applicant. He submitted that the applicant was under the Secretary of the Ministry of Home Affairs (resigned subsequent to the registration of the present FIR) and has misused his position to induce general public to invest substantial amounts in the projects of CSSOS.

34. He submitted that there is strong evidence to show the involvement of the applicant in the alleged offence. During the investigation, notices were served upon RERA, DDA, SDM (HQ-V), Societies revealed that the registration of CSSOS was revoked under Section 12 of the Societies Registration Act, 1980 vide order dated 05.12.2019. Further, DDA also submitted that it had not issued any approval to a housing project involving CSSOS under the Land Pooling Policy in Dwarka. Further, the provisions of RERA Act, 2016 do not allow sale of plots in a project without prior registration of the project.

35. He submitted that pursuant to the notice under Section 91 of CrPC, CSSOS had furnished documents which revealed that the applicant was the president of CSSOS whereas his sister and mother were shareholder and director in the company. Further, the bank statements revealed that huge amounts had been transferred from the accounts of CSSOS and the applicant diverted and siphoned off these sums through shell companies including Aditia Reality Pvt. Ltd. It is alleged that CSSOS transferred more than Rs. 100 crores to Aditia Reality Pvt. Ltd., a company, in which the applicant’s mother held 99.9% shares.

36. He submitted that the monies were siphoned off in to the banks of the companies in which the family members of the applicant had the major share holding.

37. Certain documents such as pamphlets and prospects of CSSOS were also recovered at the instance of the applicant. The applicant and his brother were the joint signatories in the bank account of CSSOS.

38. However, during the investigation, the applicant’s sister, mother, and brother claimed that they were unaware of CSSOS or any bank accounts opened under their names. The documents where forgery is alleged by the applicant’s mother, sister and brother were sent to the Forensic Science Laboratory (‘FSL’), Rohini on 01.03.2024. The result from FSL is awaited.

39. The State has also filed an Additional Status Report to bring on record the agreements to sell and the sale deeds executed with the farmers, Balwan and Inderjeet. It is alleged that the agreements to sell were executed at lower consideration value than mentioned in the alleged sale deeds.

40. He submitted that the applicant is the main conspirator in alleged conspiracy and was also one of the two authorized signatories in the bank accounts of the CSSOS. He submitted that the applicant had an active involvement in the commission of the alleged offence.

41. He submitted that 93 complaints have been filed against the applicant and CSSOS, alleging misappropriation of funds and in light of the severe allegations against the applicant from general public, involving huge sums of money, no bail should be granted to the applicant. He also submitted that if the applicant is released on bail, he may tamper with the evidence and influence the complainants and witnesses. Analysis

42. It is settled law that the Court, while considering the application for grant of bail, has to keep certain factors in mind, such as, whether there is a prima facie case or reasonable ground to believe that the accused has committed the offence; circumstances which are peculiar to the accused; likelihood of the offence being repeated; the nature and gravity of the accusation; severity of the punishment in the event of conviction; the danger of the accused absconding or fleeing if released on bail; reasonable apprehension of the witnesses being threatened; etc.

43. The Hon’ble Supreme Court in the case of Virupakshappa Gouda v. State of Karnataka: (2017) 5 SCC 406 held as under:

Sarkar v. Ashis Chatterjee, (2010) 14 SCC 496: (2011) 3 SCC (Cri) 765], it has been opined that while exercising the power for grant of bail, the court has to keep in mind certain circumstances and factors. We may usefully reproduce the said passage: (SCC p. 499, para 9)

44. As per the facts of the present case, the applicant is stated to have created a society–CSSOS, and was also the president of the same. The applicant is alleged to be main conspirator in the present case, since he was the president of the CSSOS and was also one of the two authorized signatories in the bank accounts of the Society wherein the members have deposited the money as membership fees thereby booking their flats in residential complex, which was to be developed by the society. Admittedly, the applicant was managing the day-to-day affairs of the society.

45. The present case seems to be a multi-victim scam as it is prima facie apparent that the applicant has induced more than 524 members, mostly government employees across the country, to invest huge chunks of their hard earned money in the hope of getting a home, in the project being developed by the society at Dwarka, Delhi. This has been solely achieved by painting a rosy picture before the members by the applicant by providing a lucrative pricing initially.

46. It is alleged that CSSOS advertised the name of the applicant as president, who was an Under Secretary with the Ministry of Home Affairs, to create an impression that the project being developed by CSSOS was a government project and to give an illusion of credibility to induce the victims to invest in the same. It is pointed out that the brochure of the project also mentioned that various office bearers of CSSOS were high ranking government officials from Ministries/ Departments in the Governing Body to assure the investors of the integrity of CSSOS as a builder.

47. It is alleged that the applicant thereafter siphoned of the invested amount through companies owned by his family members.

48. It is further alleged that the applicant along with the other office bearers had shown the project to be developed in an upcoming high demand area, and it was informed that the land near the society has already been acquired by various builders and that the same is being developed and there are upcoming plans of DDA to develop the said area.

49. It is suspicious that the land as acquired by the society was not cleared for construction and was not part of the Land Pooling Policy of the DDA as claimed by the applicant. It is alleged that DDA neither authorised CSSOS to offer any flat/plot in the name of DDA under the Land Pooling Policy.

CSSOS also was not registered with the Real Estate Regulation Authority. It is alleged that CSSOS collected money from investors despite knowing that they could not have done construction of the flats as promised. It is contended on behalf of the applicant that the project was delayed due to the onset of Covid -19 and delay in policy on part of the DDA, however, there is nothing placed on record to show that the land as required under the policy was available for construction. Prima facie, it appears that false representations were made by the applicant about having secured statutory clearances and land availability to induce the home-buyers into investing in the project.

50. There are also allegations that CSSOS bought land at an inflated cost of approximately ₹4 crores per acre and charged a land cost of approximately ₹10.45 crores per acre from the home-buyers even though the market value of the land was much lesser, that is, approximately 1.5-2 crores per acre. It is also pertinent to note that it was found during investigation that the amount as mentioned in the Sale Deed was not received by the farmers/landowners. Specific instances of discrepancies in the Agreements to Sell and Sale Deeds in relation to landowners, namely, Balwan Singh and Inderjeet, have been mentioned in the Additional Status Report filed by the State. The same is alleged to be a ploy by the applicant to siphon of the money of the home-buyers by making inflated entries of land cost in the books of accounts of CSSOS whereby the applicant and CSSOS only paid ₹45 crores to the farmers/ landowners and showed payment of ₹75 crores in the books.

51. Apart from enhancement of Sale consideration, it is also alleged that some landowners were given post-dated cheques that were never encashed nor reflected in any bank statements of either CSSOS or other companies such as Aditia Reality Pvt. Ltd, J.J. Enterprises, etc.

52. It is alleged that the funds were siphoned off by the applicant to companies that were majorly owned by his family members, including, Aditia Reality Pvt. Ltd. (99.9% of the shareholding was held by the applicant’s mother), J.J. Enterprises (proprietorship of the applicant’s daughter), CSSOS Office Enclave Pvt. Ltd. (99% of the issued share capital was held by the applicant’s sister) and CSSOS Office Club Pvt. Ltd. 99% of the issued share capital was held by the applicant’s sister).

53. It is argued by the applicant that the applicant had entered into a Facilitation Agreement with Aditia Reality Pvt. Ltd., whereby, all the expenses in relation to project had to be incurred by the said company and the money was transferred from the account of CSSOS to Aditia Reality Pvt. Ltd for the said purpose. However, it is not denied that the said majority shareholding in the said company is owned by the applicant’s mother, who stated during examination that she had no knowledge about the company and had not signed any cheque or opened any bank accounts.

54. At this stage, in view of the surrounding circumstances, this Court cannot ignore that the applicant’s relatives held majority stakes in the said companies and prima facie the invested amount has been taken out in the guise of making payment for land and other expenses.

55. It is pertinent to note that it is further alleged that even after lodging of the FIR, the applicant was actively inducing individuals to invest in the fraudulent scheme conceptualised by him. It is alleged that the applicant was doing this to settle the matter with the victims by using the funds brought in by the new investors. It is further alleged that despite being given multiple opportunities by the Courts in Crl. M.C.1635/2021 and WP (C) 8683/2021 to settle the matter with the victims, the applicant failed to undertake any attempts to make the payments. Further, the matter was also referred to mediation by the learned Trial Court when it was considering the second anticipatory application filed by applicant, however, the same failed and the interim protection granted to the applicant was vacated.

56. While adjudicating the issue of bail, the Court acknowledges the legal principle that an exhaustive scrutiny of evidence and in-depth analysis of merits is not appropriate. However, exercising its discretion mandates the Court to articulate reasons for its decision to either grant or deny bail based on a prima facie evaluation of potential evidence and circumstances. The charge-sheet, statements from deceived investors, seized documents, and the fact this Court had to intervene, by appointing an administrator, to safeguard the interest of the society members collectively indicate, prima facie, the fraudulent nature and dishonest intentions attributed to the present applicant.

57. As discussed, the allegations at hand suggest the commission of a large scale economic offence where a number of reputed individuals were duped and induced into investing into a bogus project that prima facie is alleged to have lacked the necessary statutory compliances. The funds were thereafter also transferred to other entities that were owned by the relatives of the applicant. It is trite law that economic offences are to be dealt with a strict hand at the time of consideration of bail owing to the gravity and impact of such offences. This Hon’ble Apex Court in the case of Y.S. Jagan Mohan Reddy v. Central Bureau of Investigation: (2013) 7 SCC 439 held as under:

58. Further, in State of Gujarat v. Mohanlal Jitamalji Porwal: (1987) 2 SCC 364, the Hon’ble Apex Court observed as under:

an eye on personal profit regardless of the consequence to the Community. A disregard for the interest of the Community can be manifested only at the cost of forfeiting the trust and faith of the Community in the system to administer justice in an even handed manner without fear of criticism from the quarters which view white collar crimes with a permissive eye unmindful of the damage done to the national economy and national interest..”

59. The applicant in the present case is stated to be a reputed and influential government official. It is alleged that the repute of his position was one of the factors that was used to induce the victims into investing their monies Given the applicant’s alleged ability to deceive over 500 investors who are high ranking government employees into investing in his projects, there is concern that he may also have the capacity to exert influence over the investors, other witnesses, and evidence to protect his own interests. The applicant is facing allegations of a serious economic offences including cheating and misappropriation of significant public funds, and allegations have to be taken seriously.

60. Prima facie, the allegations of cheating appear to be made out inasmuch as the allegations with respect to taking money into the society’s account and later transferring the same to Aditia Reality Pvt. Ltd. for purchasing the land in the amount lesser than the amount mentioned in the sale deed, as supported by the investigation carried thus far.

61. In the present case, at this stage, the chargesheet, the statement of the members and the documents seized by the Investigation Agency prima facie establish the dishonest intention of the applicant. The applicant was the authorised signatory in the bank account, the president of CSSOS and was actively involved in the day-to-day functioning of CSSOS.

62. A Coordinate Bench of this Court in Sunil Dahiya v. State (Govt of NCT of Delhi): 2016:DHC:7006, while dealing with a similar issue where about 1000 persons had been duped and induced by the accused therein, had dismissed the bail application by observing that an accused who exercised such influence that he could manipulate such a large number of investors, may also be able to influence the witnesses to save his skin.

63. The chargesheet specifically also mentions that the applicant made an attempt to influence the complainant to take back the payment made by him after registration of FIR. This is evidenced by the fact that the complainant in the present case had handed over the cheque sent by the applicant to the Investigation Officer, and the applicant, thereafter proceeded to transfer the amount through RTGS without the complainant’s approval. In view of the same, at this stage, it cannot be ruled out that the applicant tried to influence the complainant by forcefully returning the money to shed light off the fraud committed. The Investigation Officer has been able to identify many members, who are the victims of the alleged fraud committed by the applicant.

64. In the opinion of this Court, the nature and gravity of the offence alleged against the applicant are serious. Granting bail in a case involving cheating, criminal breach of trust, and alleged false promise given the applicant’s knowledge of all the facts and circumstances, and the applicant being an active member in the day to day functioning, it cannot be ruled out that the release of applicant would have an adverse impact on the society. Further, there is a large sum of money involved and the applicant additionally appears to be an influential person. Therefore, there is a possibility that in the event that the applicant is granted regular bail, it is likely that the applicant may tamper with the evidence/witnesses.

65. In view of the above, in the opinion of this Court, the applicant has not made out a prima facie case for grant of bail.

66. The present application is accordingly dismissed.

67. Pending application also stands disposed of.

68. It is clarified that any observations made in the present order are for the purpose of deciding the present bail application and should not influence the outcome of the trial and also not be taken as an expression of opinion on the merits of the case. AMIT MAHAJAN, J AUGUST 05, 2024