Mumbai, Maharashtra – September 20, 2023 – The Designated Court under the Maharashtra Protection of Interest of Depositors (MPID) Act, at the City Civil & Sessions Court in Mumbai, has rejected the bail application of Kamlesh Rajendra Kumar Mehta, a 45-year-old businessman. Mehta was arrested in connection with C.R. No. 692 of 2021 registered at D. N. Nagar Police Station for offenses under Sections 406 and 420 read with Section 34 of the Indian Penal Code (IPC), and Sections 3 and 4 of the MPID Act, 1999. His Honour Judge Shri S. B. Joshi passed the order on September 18, 2023, denying bail.

Prosecution Alleges Inducement into Gold Scheme and Default on Returns

The prosecution’s case, based on the complaint of Rakesh Champalal Kothari, alleges that between April 2019 and the date of the complaint, Mehta and his wife, Sunita Kothari, induced the complainant and other investors to invest in a gold scheme promising high returns (36% interest). The complainant allegedly invested a total of ₹1,19,00,000 in four installments between April and June 2019. However, the prosecution claims that Mehta and his wife failed to pay the promised interest and the principal amount, thus committing offenses of criminal breach of trust and cheating.

Applicant Claims Repayment Attempt and Wife’s Anticipatory Bail

Mehta, in his bail application, denied all allegations and claimed he had already returned the invested money to the complainant via a blank cheque which the complainant did not encash due to the COVID-19 pandemic and Mehta’s subsequent financial instability. He argued a lack of mens rea (criminal intent) and highlighted that his wife had been granted anticipatory bail by the High Court on March 28, 2022. He stated he had been in jail since August 1, 2023, cooperated with the investigation during custody, and was willing to abide by any conditions for bail.

Prosecution Opposes Bail, Citing Failure to Honor High Court Undertaking and Ongoing Investigation

The Ld. SPP opposed the bail, pointing out that Mehta had previously sought anticipatory bail from the High Court and had given an affidavit undertaking to repay ₹1,19,00,000 to the complainant. However, upon his failure to do so, his interim protection was rejected, and his anticipatory bail application was also dismissed. The prosecution argued that releasing Mehta on bail could lead to tampering with the investigation and witnesses. They further stated that the end-use of the misappropriated funds was still being traced, with indications of property purchases in Rajasthan and Gujarat, and that Mehta’s bank lockers were yet to be checked. The prosecution also highlighted outstanding loans of ₹3,98,81,739 against Mehta’s properties, for which banks had initiated proceedings under the SERFESI Act, indicating that these properties were not secured for repayment to investors.

Court Notes Failure to Honor Undertaking and Ongoing Investigation into Assets

Judge Joshi, after hearing both sides, noted that Mehta had indeed been granted interim bail by the High Court based on his undertaking to repay ₹1,19,00,000 to the complainant but had failed to fulfill this commitment, leading to the rejection of his anticipatory bail. The court found Mehta’s current bail application silent on the reasons for this failure. Prima facie, the court observed that Mehta had failed to meet his liability to the first informant without any explanation. There was no indication that he had taken steps to ensure the claims of investors were met or how he intended to fulfill his repayment commitment.

While the Investigating Officer mentioned the seizure of five immovable properties belonging to Mehta, the court noted that these properties were under symbolic possession of banks due to substantial outstanding loans, negating the claim of secured properties for investors. Furthermore, the court highlighted the ongoing investigation into properties allegedly purchased by Mehta in Gujarat and Rajasthan using the defrauded amount, as well as the need to check his bank lockers. The balance in his seized bank accounts was also found to be meager.

The court concluded that prima facie, Mehta appeared to have collected funds from investors with a mala fide intention to cheat them. With the investigation still ongoing, including the tracing of properties and checking of lockers, and the charge sheet yet to be filed, the court found that the properties sufficient for repayment to investors were not yet secured or attached.

Conclusion: Bail Rejected Due to Failure to Honor Undertaking and Ongoing Investigation into Proceeds of Crime

Considering Mehta’s failure to honor his undertaking to the High Court, the ongoing investigation into the alleged fraudulent use of investors’ money in purchasing properties, the need to check his bank lockers, and the lack of secured assets for repayment, the court found that Mehta had not made out a case for regular bail. The bail application was accordingly rejected. The Investigating Officer was directed to take note of the order.