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HIGH COURT OF DELHI
VIKAS KUMAR SIKARIA
S/o Mr. Jugal Kishor Sikaria R/o Ward-25, Triloki Nagar, Koriya Tola, Raxaul. ....Petitioner No.1
VISHAL HURKUTE
S/o Vitthal Rao Hurkute, R/o Ward-14, Tahsil Road, Khilchipur, Rajgarh. .....Petitioner No.2
SHWETA JHA
W/o Dr Gouri Shankar Jha, R/o Ramanand Path, Balbhadrapur, Laheriasarai, Darbhanga. .....Petitioner No.3
RAKESH SINGH
S/o Tejpal Singh R/o C-122 , Defense Enclave, Sardhana Road, Meerut. .....Petitioner No.4
YOJNA GUPTA
W/o Mr. Manoj Gupta R/o 268, Sita Road, Ghandausi, Sambhal. .....Petitioner No.5
Through: Mr. Ahwini Kmar Upadhyay, Mr. Ashwani Kumar Dubey and
Mr. Chandra Shekhar, Advocates.
Through the Secretary, Ministry of Home Affairs, North Block, New Delhi. .....Respondent No.1
Through the Secretary, Ministry of Finance, North Block, New Delhi. .....Respondent No.2
CENTRAL BUREAU OF INVESTIGATION
Through the Director, CGO Complex, Lodhi Road, New Delhi. .....Respondent No.3
ENFORCEMENT DIRECTORATE Lok Nayak Bhawan, Khan Market. .....Respondent No.4
POLICE COMMISSIONER
Delhi Police, ITO, New Delhi. .....Respondent No.5
POLICE COMMISSIONER - NOIDA Sector-108, Noida, U.P. .....Respondent No.6
Through: Mr. Yasir Rauf Ansari, ASC for State/R-5.
Mr. Ripudaman Bhardwaj, SPP CBI
Mr. Amit Kumar Rana, Mr. Rajat Nair, Spl. Counsel for
ED.
Mr. Arkaj Kumar, Ms. Vaishnavi Bhargava, Mr. Ishank Jha and
Mr. Aakarsh Mishra, Advocates for ED.
Mr. Prem Prakash, Ms. Deepali anda and Mr. Tarush, Advocates for Intervenors.
Mr. Anil Mittal and Mr. Atul Chauhan, Advocate for State of
UP.
MAHENDER SINGH RANA
S/o Sh. Govind Singh Rana, R/o 15B/418, Gali No.-9C, Laxmi Vihar, Burari, Delhi. .....Petitioner No.1
SANJEEV KUMAR
S/o Vitthal Rao Hurkute, R/o 493, Sector-6, Jagrati Vihar, Meerut, U.P. .....Petitioner No.2
ARTI KHANNA
W/o Sh. Vijay Kumar Khanna, R/o 2448, Sector 32A, Chandigarh Road, Jamalpur, Ludhiana, Punjab. .....Petitioner No.3
ANIL KUMAR
S/o Mr. Karan Singh, R/o 26, Ward-7, Mohalla Gojran Chowk, Bawal, Rewari, Haryana. .....Petitioner No.4
PRATAP SINGH
S/o Sh. Dayal Chand, R/o 26, Sandhi Ka Bass, Rewari, Haryana. .....Petitioner No.5
Through: Mr. Ahwini Kmar Upadhyay, Mr. Ashwani Kumar Dubey and Mr. Chandra Shekhar,
Through: Ms. Shiva Laksmi CGSC
Mr. Yasir Rauf Ansari, ASC for State/R-5.
Mr. Ripudaman Bhardwaj, SPP CBI
Mr. Rajat Nair, Spl. Counsel for ED.
Mr. Arkaj Kumar, Ms. Vaishnavi Bhargava, Mr. Ishank Jha and Mr. Aakarsh Mishra, Advocates for ED.
Mr. Prem Prakash, Ms. Deepali Nanda and Mr. Tarush, Advocates for
Intervenors.
Mr. Anil Mittal and Mr. Atul Chauhan, Advs. for State of
UP.
AARYAVRAT INDIA LIMITED (Formerly known as Aaryavrat Products India Pvt. Ltd.)
Through its Director/Authorised Signatory Mr. Rajesh Goyal, Having Registered Office at: 40/3, East Patel Nagar, Delhi. ....Petitioner
Through: Mr. B. P. A. Srinivasan, Mr.Sumit, Ms. Srishti Bansal
& Ms. Aanchal Pundhir,
Mr. Manish Jain, Spl.
Counsel for ED
Gulnaz Khan, Advocates.
Mr. Rahul Tyagi, ASC for the State
HON'BLE MS. JUSTICE NEENA BANSAL KRISHNA
JUDGMENT
1. Aforesaid three Writ Petitions under Article 226 of the Constitution of India read with Section 482 of the Code of Criminal Procedure, 1973 (hereinafter referred to as “Cr.P.C.”)have been filed on behalf of the Petitioners for directing CBI to investigate collusion of ROC staff, bank employees and politicians in this gigantic scam; to direct the ED to investigate money laundering, benami transactions, disproportionate assets and other economic offences; to directSFIO to investigate corporate, capital market & forensic fraud, etc.; and appoint a Forensic Auditorfor recovery of petitioners’ hard earned money.
2. The facts narrated in the Petitions are that on 01.04.2020, Petitioners came to know that Westland Trade Pvt. Ltd. is a fake, bogus and ghost Company, created by an organized international racket of money launderers. It is not a simple case of forgery, criminal breach of trust, dishonestly inducing delivery of property, cheating by personation, falsification of accounts, concealment of property, dishonest misappropriation, corporate fraud, benami transaction and black money hoarding, but the biggest franchisee scam of India.
3. This Company was registered on 26.04.2019, at Village Wazirpur, Patudi Road, Gurugram, Haryana, having Head Office at E-29, 1st Floor, Sector 63, Noida, U.P. The Directors were Mr. Manish Dahiya, Mr. Kunal Keshav, Mr. Ankur, Mr. Sanjeev Sharma, Mr. Anshul Sharma and Mr. Ashish Joshi. In collusion with ROC and Bank Staff, they registered many fake, bogus & ghostCompanies and brands viz. Hyper Supermarket, Hyper Mart, Big Mart, Super Mart, Louies Salon, Midnight Cafe, Franchisee World, BM Mart, H Mart and S Mart, etc. They claimed to help individuals to start business in Retail sector, but dishonestly misappropriated and converted Petitioners hard-earned money into black money and benami properties, in violation of the contract.
4. It is submitted that the Company from the Petitioners along with many other persons, collected Franchisee Fees of Rs.4,00,000/- plus 18% GST and Set up cost of Rs.5,000/- per square feet and on assured payout of: (i) 2% minimum guaranteed income on total setup cost paid by franchisee owner (ii) Store rent 60 INR/SQFT (iii) 10% of sales as commission.The Company also assured to take care employee salaries, electricity bill, required licenses to run the store etc. In May 2019, Company started appointing franchisees and they were able to attract more than 500 investors. Petitioners are not sure of how many otherpersons have been duped by the Company, as they don’t have contacts of all franchisees.
5. Things started going wrong from 01.04.2020 as the payment of the month of March 2020 which was due in April, was paid in installments, after rigorous follow up by each of the Petitioners with Company. March month's payment was cleared in April and May. Some of the Petitioners/victim got e-mail in May saying that Company is enforcing Force Majure clauseof the Agreement and shall not be making payments for the months of April-May,2020. This was strange because even during the lockdown, Grocery stores were open and the business were being run as usual.
6. Petitioners raised questions with regard to the sales and operation of the Company, on which they were guided to contact one Mr. Arun Modi, who claiming to be an Advocate, started threatening them saying that the Company had right to terminate the Agreement because of pandemic and petitioners are not entitled to any payment.
7. By May 2020, all email IDs started bouncing back. The registered addresses were found to be locked and no one was there. Registered Head Office in Noida hardly had two people working, who had no idea about the owner or mastermind of the alleged scam. Director Mr. Kunal Keshav sent a note to the Petitioners saying that he had resigned from the Company. Mr. Manish Dahiya said that he is a college student and his identity was stolen and he has no idea about being registered as a Director of any Firm.
8. All employees who were in touch with the Petitioners were either asked to resign or they quit on their own, leaving only one person to be contacted with i.e. Mr. Arun Modi, who communicated only through WhatsApp messages. He sent information asking the Petitioners to lodge FIR against employees, claiming they defrauded him and they took all money. He further communicated through WhatsApp that he needed six months to pick up the business or else he would file for Bankruptcy and none would get anything.
9. There was no office or employee left and Mr. Arun Modi was also untraceable. The Directors, partners and beneficiaries of Westland Trade Pvt. Ltd. cheated the petitioners and converted their hard-earned money into black money and benami property, and the Store was just a way to lure innocent people by promising fake business model. The Company opened stores in Karnataka, Telangana, Goa, Maharashtra, Bihar, West Bengal, Chhattisgarh, Gujarat, U.P., Haryana, Rajasthan, Punjab, M.P., Delhi and many other States.
10. Petitioners have paid money through digital or cheque and all proofs are available. The details of the persons, who made the payments/investment including the Petitioners are as under: DETAILS OF THE INVESTORS AMOUNT Vikas Kumar Sikaria 29,00,000 Vishal Hurkute 24,72,000 Shweta Jha 1,08,50,000 Rakesh Singh 19,83,000 Yojna Gupta 29,00,000 Pravati Priyadarshini Mohapatra 44,00,000 Parvesh Kapoor 25,00,000 Naveen B R 24,72,000 Sayyed Ubedraza 15,00,000 Charanjit Saba 54,72,000 Rajiv Kumar Bariar 55,00,000 Shaik Tajbaba 20,00,000 Barun Chandra Brahma 22,00,000 R Muniswamy 30,00,000 Nidhi Jaiswal 19,72,000 Asifulla 25,75,000 Ankit Jain 29,72,000 Chandan Singh 34,00,000 Rupali GoverdhanGotecha 61,50,000 Manoj Kumar Singh 2,86,00,000 Vikas Mehra 15,00,000 Kavya Ag 31,10,000 Sanjay Kumar Singh 15,00,000 Ujjwal Raj 24,72,000 Kuldeep Jadhav 24,72,000 Dr Msr Pradeep 24,72,000 Jaishri Baronia 21,50,000 Pankaj Kumar Nanda 30,00,000 Ayush Kumar 19,00.000 Pradeep Kanthi 55,00,000 Parag Wadiya 34,72,000 Rajinder Kumar Verma 54,00,000 Vitthal Agrawal 32,00,000 Susheel Kumar Dutta 23,00,000 Neeraj Khare 29,72,000 Vishwa Ranjan Prasad 64,67,000 Saurabh Sahu 54,00,000 Kamalesh Kumar 34,72,000 Ayesha Siddiqua 19,00,000 GyanenduSuryanand Singh 25,00,000 Mahbub Mulla 1,07,50,000 Pihu Thakur 29,00,000 Soumya Ranjan Dhal 19,72,000 Birendra Pratap Singh 27,20,000 Mamta Jain 4,72,000 Sumit Khaniya 19,72,000 Akshay Barapatre 30,00,000 Silla Murali Mohan 46,50,000 Mastanbasha Shaik 14,72,000 Kanhaiya Kumar Keshri 19,72,000 Palak Agrawal 29,00,000 Deepak Panwar 24,00,000 Harshad Gawtepatil 29,00,000 Ajay Kumar 20,00,000 Rupam Arya 54,50,000 Mahender Singh Rana 28,54,000 Sanjeev Kumar 28,00,000 Arti Khanna & Vijay Kumar 29,00,000 Anil Kumar 23,50,000 Pratap Singh 28,50,000 Om Prakash Singh 17,00,000 Krishan Yadav 26,18,000 Rajesh Dubey 30,40,500 Akash Garg 23,00,000 Pradeep Kumar Rai 18,50,000 Satnam Singh Narula 33,00,000 Malti Devi 38,54,000 Gopal Shukla 53,00,000 Ashutosh Kumar 53,54,000 Rana Mahanama 23,54,000 Bhupinder Singh 23,50,000 Arun B V 20,00,000 Mithlesh Kumar Mishra 53,00,000 Anupama Chauhan 18,00,000 Isulal Katre 58,34,000 Prem Jha 28,54,000 Sandeep Kumar Mandal 31,30,000 Subodh Kumar Singh 36,72,500 Safal Rai 8,54,000 I.V. Sagar 53,00,000 Vikash Kumar 37,10,500 Ramshetty 53,00,000 Arvinder Singh Bajwa 28,00,000 Anil Kishore Negi 21,00,000 Rajeev Kumar 20,19,000 Naimudden Khan 18,50,000 Rupinder Singh 23,00,000 Rajendra Talekar 39,28,000 KishankunwarBhanwarsingh Rathore 52,54,000 Dr. Sanjotha Sunil Pujari 25,00,000 Sh. C.N. Biradar 38,54,000 Rajneesh Kumar 30,83,000
11. Various Complaints have been filed by different Petitioners to CBI, EOW, SFIO and ED.
12. Investigations by CBI is sought, as the active Directors of these fake and bogus Companies are pawn and real criminal conspirators are high profile powerful politicians. ROC Officers, Bank Employees and Charted Accountants are also involved in this racket. Cheaters and fraudsters have created many fake-ghost Companies throughout the country and the victims are also all over country. In these circumstances, only CBI can effectively investigate this gigantic scam which includes bribery, corruption, breaches of central laws, multi-state organized crime, economic crime and special crimes. Detailed Complaint about this massive scam was submitted to CBI on 24.07.2020, but neither FIR nor any primary investigation has been commenced.
13. The investigation by ED is sought as Petitioners’ hard-earned money has been laundered out of country and also converted into black money and benami properties. ED is a specialist economic intelligence agency responsible for enforcing economic laws and fighting economic crime in India. It comprises officers from the Indian Revenue Service, Indian Corporate Law Service, Indian Police Service, Indian Administrative Service as well as promoted officers from its own cadre. The Complaint dated 24.07.2020 was submitted to ED, but no investigation has been commenced till date.
14. It is further submitted that this is biggest franchisee scam of India, which must be investigated by Serious Fraud Investigation Office (SFIO), as it has experts from financial sector, capital market, accountancy, forensic audit, information technology, company law, taxation law, customs and investigation. The Complaint dated 24.07.2020 was also submitted to SFIO, but no action has been taken till date.
15. Reliance is placed on K. V. Rajendran vs. CBCID, (2013) 12 SCC 481, wherein the Apex Court has observed that rare and exceptional cases can be transferred from State Police to CBI, where it is necessary to do justice and instill confidence in the investigations and to ensure that the investigations are conducted in fair and honest manner; where the State Police lacks credibility and where high state officials and authorities are involved and are likely to influence investigation; where investigations are tainted/biased and where they have national or international ramifications. It is claimed to be a gigantic scam, which is likely to influence the investigation/victims.
16. It is therefore submitted that for the reasons stated herein above and for fair and free investigations CBI, ED and SFIO be directed for registering the cases and to conduct the investigations.
17. Petitioners filed W.P.(CRL)263/2020before the Hon’ble Supreme Court of India seeking the same relief, but it was dismissed as withdrawn vide Order dated 08.02.2021 with liberty to approach the jurisdictional High Court.
18. It is further submitted that the Complaint was submitted before Commissioner of Police, Gautam Buddha Nagar, (Noida) U.P. on 24.07.2020, but Noida Police lodged only eight FIRs. It is not appropriate to use Sections of IPC as it is a clear-cut case of money laundering, benami transactions, black money, for which the intervention by CBI, ED and SFIO is required.
19. Hence, the present Petitions have been filed for issuing directions to CBI, ED and SFIO.
20. Response has been filed on behalf of EOW, wherein it is stated that no individual Complaint, whatsoever, has been filed before EOW by any of the Victim. A Joint Complaint of Mr. Akash Garg, Mr. Sajeev Kumar, Mr. Pratap Singh,Mr. Anil Kumar, Mr. Krishan Yadav, Mr. Mahender Rana and Complaints of Mr. Om Prakash, Mr. Rana Mahanama, Mr. Vipin Kumar Raghav, Mr. Mahender Singh Rana and Mr. Rajeev Kumar were received against the alleged Company i.e. M/s Westland Trade Pvt. Ltd. registered address at Gurugram, Haryana. The aforesaid Complaints were sent to SSP Gautam Budh Nagar, U.P. on 09.11.2020 for necessary action.
21. During enquiry, it has emerged that the alleged company i.e. M/s Westland Trade Pvt. Ltd. registered address at Gurugram, Haryana has its Head Office is in Noida, U.P. All the agreements are executed at Noida using the stamp paper of U.P. Thereafter, the said joint Complaint as well as separate Complaints of the Complainants/Victims were received by EOW, Delhi from the Office of the Commissioner of Police, Gautam Budh Nagar, U.P. were returned to Commissioner of Police, Gautam Budh Nagar, U.P., on 26.02.2021.
22. It is further submitted that during enquiry, it was found that SIT had been constituted under the supervision of Inspector In charge Mr. Rajnesh Tiwari at Noida, U.P., in respect of eight FIRs registered at PS: Phase-III, Gautam Budh Nagar, U.P.
23. It is therefore, submitted that present Petitions are not maintainable before this Court as the investigation is subject-matter of SIT, U.P. Earlier similar Complaint, had been transferred from EOW, Delhi to SSP, Gautam Budh Nagar, U.P., where cause of action arose and is already being investigated.
24. Status Report has been filed on behalf of CBI, wherein it is submitted that in the case of Sakiri Vasu vs. State of UP, AIR 2008 SC 907, the Apex Court had observed that this Court or the High Court has power under Article 136 or Article 226 of the Constitution of India to Order investigation by CBI. However, this should be done only in some rare and exceptional cases, otherwise, the CBI would be flooded with a large number of cases and would find it impossible to do proper investigations.
25. There are no exceptional circumstances in this matter, which warrant investigation by CBI. There are no inter-State ramifications involved in the present Petition, which merits investigations by CBI.
26. The Constitution Bench of the Hon’ble Apex Court in the case of State of West Bengal and Others vs. Committee for Protection of Democratic Rights, West Bengal and Others, (2010) 3 SCC 571, had observed that extra ordinary transferring of cases to CBI must be done sparingly, cautiously and in exceptional situations, where it becomes necessary to provide credibility and instill confidence in investigation or where the incident may have national and inter-national ramification.
27. No such exceptional circumstances have been brought forth in the present Petitions, and they do not merit any directions.
28. Status Report has been filed on behalf of SFIO, wherein it is stated that SFIO is not a formal party and nor is the Ministry of Corporate Affairs, the nodal ministry for SFIO.SFIO was established under Section 211 Companies Act, 2013. Being a statutory body, the powers and functions of the SFIO are circumscribed by the provisions of the Companies Act, 2013 and it functions under the mandate, thereof. The investigation into the affairs of a Company may be ordered by the Central Government under the provisions of Sections 210, 212 and 213 of the Companies Act, 2013.
29. From Section 212 Companies Act, 2013, it is evident that SFIO can be directed to investigate by the Central Government, only when it forms an opinion that such investigation is necessary. As a corollary, if the Central Government does not form any such opinion, SFIO cannot suo moto initiate investigation into the affairs of the Company.
30. Apart thereto, the Companies Act also contemplates investigation into the affairs of the Company under Section 210 Companies Act, 2013, on receipt of Report from Registrar or intimation of a special Resolution passed by a Company or in public interest. It also mandates that Central Government shall order an investigation, if it is so directed by the Court or the Tribunal. Section 213 of the Companies Act, 2013, empowers the Tribunal to direct investigations in the affairs of the Company.
31. It is evident from these Sections of the Companies Act, 2013 that the investigation into the affairs of the Company by SFIO is divided into two distinct categories and they do not inter perse with each other. It is the Court or the Tribunal, which has the power to Order investigation in the affairs of the Company; the prerogative to refer to such investigation to SFIO vests solely on with the Central Government. No such powers are vested with SFIO to initiate investigation suo moto in the affairs of the Company.
32. Furthermore, SFIO has not received any directions or orders from the Central Government, i.e. Ministry of Corporate Affairs, till date to investigate into the affairs of DBM Retails Private Limited or any of its related Companies. Furthermore, if the Court so deems fit, the necessary directions may be given and a copy of the Order be sent to the Ministry of Corporate Affairs.
33. The Complaints received from the Petitioners have been forwarded to the respective Registrars of Companies (‘ROC’) being the subordinate office of the Ministry of Corporate Affairs, through e-mail(s), for its consideration and necessary action, if any.
34. Status Report has been filed on behalf of ED, wherein it is submitted that eight FIRs have been registered against the Company at PS Haja. In respect of some FIRs, Chargesheets have already been filed.
35. The details of the FIRs have been collected and are being scrutinized for conducting investigations under Prevention of Money Laundering Act, 2002 (‘PMLA’). The Lucknow Zonal Office of Directorate of Enforcement is in the process of recording the case in terms of the provisions of PMLA.
36. It is further submitted that preliminary investigations had been initiated and appropriate further action would be taken in the subject matter.
37. Status Report has been filed on behalf of Commissioner of Police, Noida, U.P., wherein it is submitted that eight FIRs have been registered against Westland Trade Pvt. Ltd. The details of which have been mentioned therein. Aside from these eight FIRs, it is submitted that investigations have been conducted and various jewellery, money, electronic items and other items have been recovered from the accused persons. Aside from Mr. Arun Modi @ Rajesh Kumar @ Arvind Gandhi @ Rajesh Advani @ Sunil @ R.K.Advani @ Rohit Verma @ Rahul Gupta @ Rahul Kumar @ Vishal Modi @ Robert Blue @ Arun Kumar Modi s/o Omprakash Verma, who had severalalias, there are 28 other accused persons, out of which 14 have been arrested and have been sent to jail.
38. Chargesheet dated 10.11.2020, has already been filed against some of the accused and proceedings under Sections 2/3 of the Uttar Pradesh Gangsters and Anti-Social Activities (Prevention) Act, 1986 (‘Gangster Act’) in Case No.966/2020 have been completed against them.
39. Further Chargesheets have also been submitted against the various accused persons.
40. Section 82 Cr.P.C. proceedings have been initiated against many accused who are absconding and Section 83 Cr.P.C. proceedings have been initiated against some other accused.
41. It is submitted that the Complaints have been lodged in different States including Haryana, Rajasthan, Karnataka, Punjab and Bihar etc. and the Police of these States are investigating into the Complaints lodged with their respective Police Stations.
42. Since the matter involves the provisions of Companies Act and PMLA, letters have been written by the Investigating Officer to the Higher Officials for investigation of the matter by CBI, ED and SFIO. The Higher Officials have taken the issue further at the Government for the requisite permission action, but no action has been taken till date. Submissions heard and record perused.
43. Essentially, the major allegations of fraud, cheating, money laundering, etc. have been made against Westland Trade Pvt. Ltd., which allegedly had offered franchises to multiple persons, who had ultimately been cheated and defrauded of their hard-earned money. As has been brought forth in the Status Report of Commissioner of Police, Noida, U.P., several FIRs have been registered in different parts of the State and the Chargesheets have already been filed in many cases.
44. It is quite evident from the various Status Report that these Franchises Agreements were entered into with individual Complainant for different States. Therefore, though it is large scale scam committed by the accused Company, but these are all independent Franchisee Agreements entered into with Complainants. In fact, the clubbing of all these matters may lead to delay in investigating the Complaint of the individual Complainant, which pertains to a particular State.
45. In any case, another aspect which has been argued and is significant to note is that the Company was registered in Gurugram, Haryana and the agreements were all signed and stamped in Noida, U.P. and the FIRs had also been registered.
46. In case, the Petitioners are not satisfied with the investigations undertaken on their Complaints, the jurisdictional Court would be High Court of Judicature at Allahabad, Uttar Pradesh, or the concerned High Court of the State. Apparently, no complaint or any part of cause of action claimed to have arisen in Delhi. There is no Complaint filed in regard to the alleged fraud in Delhi. In any case, as has been stated in the Status Report of Commissioner of Police, Noida, U.P., the matter is being escalated at the higher level.
47. Insofar as SFIO is concerned, it is clearly indicated that the jurisdiction of SFIO can be invoked only on the directions of the Court or Tribunal, but in the light of aforesaid discussion, it is not considered to be a case where directions are required to be given to SFIO for conducting investigations.
48. Insofar as ED is concerned, they have already initiated their investigation and are collecting material to ensure that if any offence under PMLA has been committed.
49. Respective agencies have already taken requisite action as mandated.
50. In the circumstances, no further directions are merited by this Court, all three Writ Petitions along with pending Applications, are disposed of.
(NEENA BANSALKRISHNA) JUDGE