Mumbai, Maharashtra – April 12, 2024 – The Designated Court under the Maharashtra Protection of Interest of Depositors (MPID) Act, at the City Civil & Sessions Court in Mumbai, has granted bail to Suresh Meghraj Shroff, a 65-year-old developer, in connection with a case of alleged cheating and misappropriation of funds from investors. Her Honour Judge Aditee Uday Kadam passed the order in Bail Application No. 233 of 2024, allowing Shroff’s release on a personal bond of ₹1,00,000 and one or more sureties of the like amount.

Shroff was booked under Sections 406 and 420 of the Indian Penal Code (IPC), Sections 4, 5, 13, and 14 of the Maharashtra Ownership Flats (Regulation of Promotion of Construction, Sale, Management and Transfer) Act, 1963 (MOFA Act), and Section 3 of the MPID Act, 1999, in relation to C.R. No. 412 of 2023 registered at D. N. Nagar Police Station.

Prosecution Alleges Misappropriation of Investor Funds

The prosecution’s case, in brief, alleged that since 2013, Shroff, as a Director of Harileela project and investment Pvt. Ltd. (FE), induced investors to invest a total of ₹2,72,00,000 in a redevelopment project named Adhyay / Visava Co-operative Housing Society in D. N. Nagar, Andheri (W), Mumbai. The investors were promised attractive economic profits and gains for the construction of the project and towards the sale transactions of flats. However, the prosecution claimed that Shroff did not use the invested amount for construction but misappropriated it for his personal gain, thereby cheating the investors.

Applicant Claims Settlement with Original Complainant

Ld. Advocate Hrishekesh Mundargi, along with Advocates Madan Gupta and Shrishti Singh, appeared for the applicant, Shroff. They submitted that the applicant and the original informant had settled their dispute, and consent terms to that effect were finalized and produced before the court (Exhibit 7). The informant also supported the applicant’s contention and stated that they had no objection to the grant of bail.

Apart from the settlement, the applicant’s counsel argued that the allegations lacked substance and it was purely a business transaction. They stated that there was some delay in compliance, leading to the execution of a Memorandum of Understanding (MoU) on January 9, 2024, to resolve the issues. The applicant’s side detailed certain payments made in accordance with the terms of the MoU, asserting that there was no intention to deceive the flat purchasers and that the issues between the parties were now settled, with the flat purchasers having no objection to bail.

Intervenor Objects, Claiming Investment in Another Project

Ld. Advocate Sunny Punamiya appeared for the original complainant, supporting the bail. However, Ld. Advocate Jugal Kanani represented intervenors, Mr. Rajeev Manmohan Gupta and Mr. Vicky Madanmohan Gupta, who objected to the bail. The intervenors claimed to have invested a significant amount in a landed property in another project of the applicant, through Mr. Brijamohan Gupta, and argued that their investment should also be considered for recovery. They contended that the applicant’s company mentioned in the FIR and the company they invested in (M/s. Sun-vision Estate and Consultants Pvt. Ltd.) were one and the same, making the applicant liable for their investments as well. They argued that their complaint should merge with the present FIR to avoid multiple litigations for the same cause and that the settlement between the informant and the applicant should not concern them. They sought investigation into their claims and recovery of their invested amount.

Applicant Argues Intervenor Has No Connection to Present FIR

The applicant’s counsel countered the intervenor’s objection, arguing that the intervenors had no direct concern with the present FIR or any direct business transaction with the applicant or his company related to this specific project. They pointed out that Mr. Brijamohan Gupta, through whom the intervenors claimed their investments, had given his no objection to the bail application and declared that the MoU dated February 28, 2017, between him and the applicant (as a Director of M/s. Sun-vision Estate and Consultants Pvt. Ltd.) was still valid, with all rights belonging exclusively to him. Thus, the applicant argued that the intervenors had no nexus with the present complaint.

Court Finds Intervenor’s Objections Without Substance

After perusal of the record, the court noted that the only objection to the bail application came from the intervenors, claiming to be investors in another company where the applicant was also a director. The original informant had not only consented to the bail but also supported the applicant’s case based on the compromise.

The Investigating Officer filed an additional statement clarifying that the intervenors’ alleged investment was in a project at Malad, and the intervenors were residents of Borivali (W), Mumbai. Their complaint had no connection with the present FIR, and their complaint application had been transferred to Malad police station.

Thus, the court found it prima facie clear that the intervenors had no direct concern with the present FIR. The facts of the judgments relied upon by the intervenor’s counsel, which pertained to pre-arrest bail, were also deemed not entirely identical to the present case. Furthermore, the court noted that the intervenors’ complaint had been transferred to another police station, and the project related to the FIR was different from the project in which the intervenors allegedly invested. The court also considered that the applicant was one of the directors and not the sole authority of the project in question, and the person through whom the intervenors claimed their rights had negated their claim. Consequently, the court found no substance in the objections raised by the intervenors.

Bail Granted Considering Settlement and Object of MPID Act

The court noted that the applicant was arrested on February 29, 2024, and had been incarcerated for a substantial period. The applicant had also expressed readiness to settle the claims of investors, and consent terms were filed on record. Considering the object of the MPID Act to protect the interests of investors and the settlement reached with the original complainant, the court was of the view that the bail application deserved to be allowed.

Order

The court passed the following order:

1. Bail Application No. 233 of 2024 is allowed and disposed of.
2. The applicant Suresh Meghraj Shroff is released on bail in connection with C.R. No. 412 of 2023 upon furnishing a PR bond of ₹1,00,000 with one or more sureties of the like amount.
3. The applicant is permitted to furnish provisional cash bail of ₹1,00,000 for three months.
4. The applicant shall make surety compliance before the concerned court.
5. The applicant shall surrender his passport to the investigating officer within one week of his release.
6. The applicant shall be available for interrogation by the Investigating Officer as and when required, under written intimation.
7. The applicant shall not leave India without prior permission of the court.
8. The applicant shall not alienate any movable or immovable property in his or his wife/children’s name without the court’s permission.
9. The applicant shall not tamper with prosecution evidence or pressurize prosecution witnesses.
10. The applicant shall furnish his contact number and residential address to the Investigating Officer and keep him updated of any changes.
11. The applicant shall attend trial dates regularly.

This order highlights the court’s consideration of settlements reached between the accused and the original complainants, especially in cases under economic offenses laws like the MPID Act, while also ensuring the accused’s cooperation with the investigation and trial. The rejection of the intervenor’s objection underscores the importance of a direct nexus between the intervenor’s grievance and the specific FIR in question for it to be considered at the bail stage.