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All India Networks Welfare Trust & Others v/s Superintendent of Police, Criminal Investigation Department & Others

    W.P.(C) No.7693 of 2011

    Decided On, 12 December 2012

    At, High Court of Orissa

    By, THE HONOURABLE CHIEF JUSTICE MR. V.GOPALA GOWDA & THE HONOURABLE MR. JUSTICE B.N.MAHAPATRA

    For the Petitioners: Bijan Ray, B.P.Nayak, B.Mohanty, S.Mohanty, B.Moharana, Sidharth Prasad Mishra, B.K.Nayak, D.P.Patra, R.Rath, D.Mishra & D.Behera, A.K.Behera, K.Mahanta, K.P.Mishra, S.Mohapatra, T.P.Tripathy, K.M.Mishra, R.K.Nanda, S.Chakrabarty & T.Sinha, Advocates. For the Opposite Parties: Debasis Panda, Addl. Government Advocate, N. K. Dash, S.K.Barik, S.K.Nayak, A.P.Rath, K.T.S.Tulsi, S. K. Dalai, B.K.Parida, S.Mohanty, B.Sahu, Advocates.



Judgment Text

B.N. MAHAPATRA, J:

1. This Writ Petition has been filed with a prayer to protect the deposits, investments made by members of the Petitioner-Trust & similarly situated other investors & to issue a writ of mandamus and/or any other appropriate writ order/direction to Opp. Parties 2 to 7-Banks to give refund & recovery of the investments/deposits made by the public investors on due production of their receipts.

2. Petitioners’ case in a nutshell is that Petitioner No.1 in the Writ Petition is a registered Trust of duped & gullible thousands & thousands of investors of Karnataka, Tamil Nadu & Andhra Pradesh, who have invested their money with M/s Fine Indisales Pvt. Ltd. through Opp. Party-Banks, i.e., ICICI Bank, Axis Bank, HDFC Bank, YES Bank & IDBI Bank (Opp. Parties 2 to 6). Petitioner No.2 is the President of Petitioner No.1-Trust. Members of the Trust, who are the investors, are poor people of the society working as rickshaw pullers, taxi drivers, shopkeepers, Class-IV employees of private companies, hotels & other establishments, tea-shop owners, cabin holders etc., who invested their life savings with a hope of getting effective & speedy return from the Company. The deposits made by these umpteen number of investors with Opp. Party Nos. 2 to 6-Banks were defreezed by the statutory orders under Section 102 of the Code of Criminal Procedure by the Crimes Department of the State of Odisha & presently the investments/deposits of these investors are in the lawful custody of Learned S.D.J.M., Balasore. Opp. Party No.7-M/s Fine Indisales Pvt. Ltd. (for short ‘the Company’), a Company registered under the Companies Act, promoted a multi-level marketing business & floated the Scheme/Project on the Website without obtaining any permission from the Reserve Bank of India. The said Company is a non-banking financial Company. The Company represented on the Website that its registered office is in Uttar Pradesh & Corporate office in Mumbai. Members of the Trust being enamored by the brochures & prospectus published on the website applied for distributorship/membership of the said Company & each one deposited/subscribed Rs.10,000 to Rs.2,50,000 for purchase of the purported product as published on the website in Opp. Parties 2 to 6-Banks in the name of Opp. Party No.7-Company. The deposits were multiples of Rs.10,000, Rs.20,000, Rs.40,000, Rs.50,000, Rs.80,000 & Rs.1,70,000. Opp. Party No.7-Company failed to comply with the terms of the Scheme & contract till the date of filing of Writ Petition while accepting such deposit. The Company also failed to send any product or benefits to its members & other similarly situated investors/depositors. The Company also entered into an agreement of distributorship with the members/distributors/investors. The amount deposited and/or invested by the Trust & its members is more than Rs.100.00 crores & the Petitioners understand which they verily believe to be true that allover India such deposits are more than thousands of crores. Agreement of the said Company amounts to a scam involving lakhs of gullible depositors all over India. The Reserve Bank of India on or about 01.08.2009 issued Circular to all scheduled Commercial Banks that Opp. Party No.7 Company & six other Companies are not non-Banking financial organization as defined under Section 45 of the Reserve Bank of India Act & none of these Companies had been issued with a certificate to conduct non-banking financial activity.

3. One Niranjan Sahoo of Balasore district of the State of Odisha being aggrieved by the malicious & fraudulent conduct of the said Company lodged an F.I.R. on 17.07.2009 in Sahadev Khunta Police Station in the district of Balasore, which has been registered as P.S. Case No.118 dated 17.07.2009 under Sections 406/420/468/471/34, IPC & Sections 4, 5, & 6 of Prize Chits & Money Circulation Scheme (Banning) Act, 1978 (for short ‘the Act, 19781, which has been turned to CBPS Case No.17 of 2009. The matter was investigated by the Crime Branch of the State, Criminal Investigation Department, which unearthed a magnitude of total loss & money squandered away by the said Company. The Criminal Investigation Department freezed the accounts of Opp. Party No.7-Company. So far investments/deposits by the investors, all the concerned Banks hold such deposits as trustees, with the investors as beneficiaries. Insofar as such fiduciary relationship is concerned, the said Trustee-Bank remains liable to refund the money on appropriate direction by this Court. Despite execution of the agreement & fabulous deposits by thousands & thousands of investors, the said Opp. Party No.7-Company wilfully failed to comply with the requirements of the assurances & stipulations of the contract within last 2 years. Under such strange circumstances, there was panic among the investors & they expressed & demanded refund of their life savings from the said Company. As the Company purported to act online through its website, the investors demanded refund of their money as per the agreement of the contract on the website of the said Company. In contravention of all assurances, representations & stipulations contained in the agreement, the Company on its website published that refund option has been suspended awaiting results from the appropriate Company Court & the matter pending before this Court & kept watching this website for latest updates. Hence, the Writ Petition.

4. Mr.Bijan Ray, Learned Senior Advocate appearing for the Petitioners submitted that the refund policy as incorporated in the agreement stipulates 100% refund of money & when the refund has been suspended the Petitioners & the investors in their anxiety to obtain refund of their savings approached this Court for getting refund of their money. The Petitioners came to understand that one Writ Petition bearing W.P.(Crl.) No.267 of 2010 has been filed by Opp. Party No.7 Company for quashing of F.I.R. lodged against the said Opp. Party No.7. Therefore, on advice of the Counsel the Petitioners filed Misc. Case No.29 of 2011 to be impleaded as parties to the said Writ Petition & also filed an application for protection of their deposits. This Court by Order Dated 04.02.2011, while holding that such applications are in no manner connected with the issue relating to quashing of F.I.R. directed the Petitioners to initiate appropriate legal action before the appropriate Court if they so advised. Being advised, Petitioners filed application under Section 457 of the Code of Criminal Procedure before the Learned S.D.J.M., Balasore & further invoked the extra-ordinary jurisdiction of this Court under Article 226 of the Constitution of India for appropriate order as advised/instructed/directed by this Court in Order Dated 04.02.2011 passed in Misc. Case Nos.29 & 30 of 2011 arising out of W.P.(Crl.) No.267 of 2010.

5. Mr. Ray submitted that Section 58-A of the Companies Act, 1956 prescribes that only the Central Government in consultation with the Reserve Bank of India, may prescribe the limits up to which, under what conditions & subject to which, deposits may be invited or accepted by a Company from the public or from its member. From the Circular of Reserve Bank of India, it is evident that neither the Central Government nor the Reserve Bank of India has prescribed any limit in the case relating to the advertisement & invitation on website by Opp. Party No.7 Company inviting such deposits. Thus, the invitation by Opp. Party No.7-Company & acceptance of investments from the gullible public are not only illegal or irregular but also violative of the statutory provisions contained under Section 58-A of the Companies Act. Opp. Party No.7 Company violates mandatory provisions of the Act, 1978. The State Crimes Department has lodged an F.I.R. & has been investigating into the offences committed by Opp. Party No.7-Company. Thousands of investors are deprived of their hard-earned money by the fraudulent representations of Opp. Party No.7-Company.

6. It is submitted that the company has fraudulently transferred money deposited by the gullible investors to the business organization owned by the Directors & relations. No affidavit has been filed by any of the Opp. Party-Companies, the bankers & the Prosecution disclosing the amounts deposited, amounts withdrawn / transferred & the remaining amount that was freezed. Placing reliance upon the Judgment of the Hon’ble Supreme Court in the cases of S.P. Gupta vs. Union of India, AIR 1982 SC 149 & B.P.Singhal vs. Union of India, (2010) 6 SCC 33, Mr. Ray submitted that where there is public injury the Court can exercise its jurisdiction to dispense justice. Specific class or group of investors having sufficient interest can certainly maintain an action challenging the legality of the scheme. Placing reliance upon the decision of the Hon’ble Supreme Court in the case of Mumbai Kamgar Sabha vs. Abdulbhai Faizullabhai, AIR 1976 SC 1455, Mr. Ray submitted that the Writ Petition is maintainable. Further referring to State v. Union of India, AIR 1996 Calcutta 181; Reserve Bank of India v. .Peerless General Finance & Investment Co. Ltd., AIR 1987 SC 1023; & Peerless General Finance & Investment Co. Ltd. v. Reserve Bank of India, AIR 1992 SC 1033, it was submitted that this Court should save small investors. It is submitted that this Court should pass necessary order directing disbursement of Rs.194 crores seized & freezed by the local police in exercise of power under Section 102, Cr.P.C. The depositors have right to get refund of the entire amount invested. Opp. Party No.7 has admitted such right & declared on the website as late as on 30.01.2011 that refund has been deferred due to pendency of litigation. Placing reliance upon the Judgment of the Hon’ble Supreme Court in the case of ABL International Ltd. & Anr. Vs. Export Credit Guarantee Corporation of India Ltd. & Ors., (2004) 3 SCC 553. Mr. Ray submitted that disputed facts are not absolute bar. Merely one party disputing a fact, don’t make it disputed question.

7. Mr. Ray submitted that issue in the Writ Petition is for issuance of a direction for refund of the amounts invested by the investors & no Court has passed any order relating to the same. W.P.(C) No.1443 of 2009 was filed on 27.07.2009 before the High Court at Mumbai assailing the F.I.R. & freezing of Bank accounts dated 17.07.2009. None of the investors was party. The said Writ Petition was withdrawn. Criminal Misc. Writ Petition No.16901 of 2009 filed by Opp. Party No.7 before the Allahabad High Court has been rejected vide Order Dated 19.08.2009. Thereafter, Opp. Party No.7 initiated a fraudulent Company Application No.16 of 2009 on 29.10.2009. The petition under Sections 391 & 494 was filed for getting approval of Scheme impleading four shareholders & thirteen unsecured creditors. None of the investors is shown as unsecured creditor. On 26.03.2010 Judgment was passed in Company Petition No.3 of 2010 approving the scheme. It is submitted that said Judgment has been fraudulently obtained. The said Judgment is neither binding on the Petitioners nor on anyone of 2,15,000 investors; thus the matters in issue in this Writ Petition & determination thereof will not conflict to any decision of any Court. Referring to the Auditor’s report & income tax assessment orders & enquiry & investigation by the Reserve Bank of India, it was submitted that the company is fraud. Referring to the report of the Crime Branch, Mr. Ray submitted that the company had furnished false address. The Investigating Agency stated that there is reliable indication that major part of the money has been used for funding questionable purposes. Further placing reliance upon the Judgment of the Hon’ble Supreme Court in, the case of K.K. Baskaran Vs. State of Tamilnadu 2011 SCW 1799 Mr. Ray submitted that the small investors cannot approach conventional legal proceedings incurring huge expenses of Court fees, advocate’s fees etc.

8. It was submitted that Section 457 Cr.P.C. and/or revisional forum don’t create any impediment for this Court to exercise its jurisdiction under Article 226 of the Constitution in giving relief to these specified class or injured public, who have been defrauded of their life earnings. The Company & subsequent act of Investigating Agency deprived the investors from enjoying their property, which amounts to deprivation of the property under Article 300-A of the Constitution. Even temporary &/ or non-final deprivation of property amounts to deprivation within the meaning of Article 300-A of the Constitution. Public Authorities cannot arbitrarily & on technical ground withhold payment due to Petitioners.

9. Mr.Ray, Learned Senior Advocate placing reliance on the decision of the Hon’ble Supreme Court in Civil Appeal No.2341 of 2011 disposed of on 04.03.2011 submitted that a conspiracy was effected by certain fraudulent financial establishments which not only committed fraud on the depositor, but also siphoned off or diverted the depositor’s funds mala fide. Therefore, it was prayed that this Court being the custodian of the welfare of the citizens may delve into the fraudulent conduct of Opp. Party No.7, who are nothing but cheats & charlatans & having no social responsibility but only a lust for easy money by making false promise of attractive returns for the gullible investors.

10. Mr. Ray submitted that the amount invested, amount withdrawn, amount transferred & amount that remained with the Petitioners are within the knowledge of Opp. Party No.7 & the bankers. The Petitioners being gullible investors had no access to bank account of Opp. Party No.7 & could not furnish the account. No affidavit has been filed by any of the Opp. Parties disclosing the details about the amount deposited, amount withdrawn & amount transferred. Opp. Parties willfully violated the Hon’ble Courts’ order. The flimsy plea of Opp. Party No.7 that all their documents have been seized is a mischievous one as they have at relevant time submitted their income tax returns & the audited accounts have been filed before this Court. As per the statement of Learned Counsel appearing for Opp. Party No.7, Dibakar Sinha is missing from the date of F.I.R. Dibakar Sinha transferred 1000 shares from Opp. Party No.7 to one Sushila during the year 2009-10. All those who are personally injured have moved this Court for relief through their Trust as individually it was not possible for them to approach the Court or bear the huge expenses.

11. Placing reliance upon the Judgment of this Court in the case of Nishakar Khatua & Five ors vs. State of Orissa & four ors, 2012 (I) ILR - CUT -19, Mr. Ray submitted that this Court must entertain the Writ Petition as the decision of the Hon’ble Supreme Court in the case of Guruvayoor Devasom Managing Committee & anr vs. C.K. Rajan & ors, (2003) 7 SCC 546 has no application to the present case.

12. Placing reliance upon the Judgments of the Hon’ble Supreme Court in the case of National Textile Workers’ Union Vs. P.R. Ramakrishnan & others, AIR 1983 SC 75 & Nawabganj Sugar Mills Co. Ltd. & others Vs. Union of India & others, AIR 1976 SC 1152, Mr. Ray submitted to issue direction for refund of money seized by the Investigating Agency.

13. Mr.K.P.Mishra, Learned Counsel appearing for intervenor Petitioners supporting the case of the Petitioners & adopting their stand further submitted that Opp. Party No.7-Company has raised Rs.578,22,17,252 from public & the total number of depositors is 2,43,356. The Company has launched a Multi Level Marketing Scheme from 2008. As per the status report of the Investigating Agency, the registered office of the Company is running in a rented house which is registered as tannery under the Municipality of Kanpur, U.P. The address furnished by the Company as its registered office in W.P.(C) No.1443 of 2009 before the Bombay High Court & W.P.(Crl.) No.267 of 2010 before this Court found to be wrong. A.C.P., Mumbai Police confirmed that no such address exists in Mumbai. The Company is not carrying on sale & trading business of clothes. No sales tax & VAT has been paid by the Company. Referring to the status report of the Investigating Agency, Crime Branch (O.P. No.1), Mr.Mishra submitted that Opp. Party No.7-Company is a fraud Company. Deputy Commissioner of Income Tax, Kanpur, UP has disallowed Company’s tax return with observation that it is a case of .siphoning of funds of assessee Company by the members of group for their own benefit of the group. The Auditor’s report reveals that the Company does not maintain proper record & there is no transaction of purchase of goods & materials & sale of goods. R.B.I. on due investigation issued Circular about seven number of Companies including Opp. Party No.7 observing that the Company is actually mobilizing large amount of deposits from the public with promises of high return. Another Director of the Company Mr. Mahesh Bahadur Singh Chandal filed a Writ Petition before the Allahabad High Court for quashing of the F.I.R. in PS Case No.118 of 2009, Sahadev Khunta Police Station, Balasore, which was rejected by the Allahabad High Court. The order passed in the application under Sections 391 & 394 of the Companies Act by the Allahabad High Court is not applicable to the depositors. Arrangement has been made between four shareholders with thirteen creditors of the Company without hearing the affected persons. The Company has paid a sum of Rs.74,30,000 towards legal fees from 1st April, 2009 to March, 2011. Mr. Mishra submitted that the Company specifically targeted & lured the lower Section of the society, house-wife, retired person & unemployed youth. The Company invited deposits of Rs.10,000 only because for such amount no individual can dare to sue the Company in future. The Company has raised depositors not particularly from any single town/ district/ State but from entire country.

14. Placing reliance on the case of T.K.Rangarajan Vs. Government of Tamil Nadu & others AIR 2003 SC 3032 & Nawabganj Sugar Mills Co. Ltd. Vs. Union of India, AIR 1976 SC 1152, Mr.Mishra submitted that the Writ Petition is maintainable. Further placing reliance on the Judgment of Hon’ble Supreme Court in the case of Union ,of India Vs. Tantia Construction Put. Ltd., (2011) 5 SCC 697 it was submitted that alternative remedy is not a bar to maintain the Writ Petition. Relying upon the Judgment of the Hon’ble Supreme Court in Nirmal Singh Kahlon Vs. State of Punjab & others, (2009) 1 SCC 441, it was submitted that Article 21 right to fair trial is equally applicable to accused & the victim. Relying on a Judgment of the Calcutta High Court in the case of Radcliff & Asplay Put. Ltd. Vs. Union of India, (1997) 5 Comp LJ 237 (Cal), it was submitted that no person can be deprived of his property save by authority of law. Right to sum of money is such property. Referring to the Judgment of the Hon’ble Supreme Court in the case of National Textile Workers Union Vs. P.R.Ramkrishnan & others, AIR 1983 SC 75 it was submitted that social scientists & thinkers regard a Company as a living, vital & dynamic, social organism with firm & deep rooted affiliations with the rest of the community to which it functions. Further, placing reliance on the Judgment of High Court of Gujarat in Arvind-Bhai V. Patel Vrs. State of Gujarat & another, (1995) 4 Compo W 410 (Guj) the High Court of Gujarat did not want to continue ad-interim relief on the ground that the poor & unfortunate person like the complainant is the victim in that case.

15. Further placing reliance on the Judgment of the Hon’ble High Court of Calcutta in State of West Bengal Vrs. Union of India, AIR 1996 Cal 181, it was submitted that the -present Writ Petition is in the nature of a PIL seeking remedy of prompt relief for the poor depositors.

16. Mr.D. Panda, Learned Additional Government Advocate appearing for Opp. Party No.1-Superintendent of Police, CID, CB, Odisha, Cuttack submitted that the C.I.D., C.B., Odisha has taken up investigation into a multi-crore scam floated in the guise of MLM activities by Opp. Party No.7-Company on the basis of the F.I.R. initially lodged by one Niranjan Sahoo at Sahadev Khunta P.S., Balasore district & is investigating into the channeling of moneys of several gullible investors of Odisha especially in the districts of Balasore, Bhadrak, Sundargarh & Sambalpur. In the course of investigation, Opp. Party No.1 thought it fit for protection of the interest of these investors & others to freeze the various bank accounts of Opp. Party No.7-Company maintained with Opp. Parties 2, 3, 4, 5 & 6 in their branches situated all over India. Primary investigation has disclosed that the account-holders being ex Directors as well as Directors of Opp. Party No.7-Company & were attempting to siphon moneys of these small investors deposited in Opp. Party No.7-Company’s account to their own personal accounts maintained in various branches including Opp. Parties 2 to 6 banks. The investigation into the F.I.R. is on at present & has been held up due to non-cooperation of the accused Directors & Ex-Directors of Opp. Party No.7-Company. As the investigation is on, it is not possible to quantify the exact amount deposited by the investors from Odisha or to separate the same from the amounts deposited by the investors of Karnataka, Tamil Nadu & Andhra Pradesh, who are members of the Petitioners’ Trust. Therefore, the prayer for refund of the amounts to the investors at the present stage is misconceived. Moreover, in view of the facts presented in this Writ Petition the ambit of investigation has become widen & refund if any can only be possible at the end of trial, if any, which may be initiated on completion of investigation currently going on.

17. Accounts of Opp. Party No.7 Company have been seized in the course of investigation & the seizure has been reported to the Court of S.D.J.M., Balasore. An application under Section 457, Cr.P.C. seeking interim release was filed on behalf of the Writ Petitioners before the said Court which has rejected the same by Order Dated 09.05.2011 & in that event the Petitioners have remedy of moving either the Court of Session or this Court in Criminal Revision by assailing the order of rejection. Since recourse is available to the Petitioners under the ordinary laws of the land to redress their grievances, the present Writ Petition is not maintainable. Opp. Party No.1 is not aware of any demand for refund made by the investors to Opp. Party No.7-Company. Insofar as the refund policy uploaded in the Company’s website is concerned, it is an internal matter, which is of no concern to Opp. Party No.1. The Bank accounts of the Company with Opp. Parties 2 to 6 Banks having been suspended the investors are already protected. Since Petitioners have not produced any record before this Court with exactitude of amounts deposited by them into the accounts of Opp. Party No.7-Company & also have not filed any scrap of paper showing deposits to have been made by the Petitioner No.1-Trust. on behalf of its members & also not filed any certified documents indicating the names of its members, the amounts received by the Trust from them as well as interest received from the Company allowing the petition for release & directing release of Rs.100 crores in favour of the Petitioners would neither be just nor reasonable nor it would be in the interest of other depositors. The Writ Petition is otherwise improper, unjustified & as such is liable to be dismissed.

18. Mr. Tulsi, Learned Senior Advocate appearing for Opp. Party No.7-Company submitted that the Writ Petition is not maintainable either in fact or in law & the same is liable to be dismissed. There is no privity of contract between the Petitioners & Opp. Party No.7 Company & as such no cause of action had arisen in favour of the Petitioners to file the Writ Petition. The entire relief sought for in the present Writ Petition is against Opp. Party No.7 &/ or in respect of the amounts lying deposited in Opp. Parties 2 to 6-Banks. Neither Opp. Party No.7 nor Opp. Party Nos. 2 to 6-Banks can be said to be a State under the provisions of Constitution of India & therefore the present Writ Petition filed by the Petitioners is not maintainable & no relief can be granted while exercising writ jurisdiction by this Court. The present Writ Petition involves disputed question of facts as to whether any such person is entitled to claim refund of the amounts as against Opp. Party No.7. Therefore, such recovery proceeding between the private parties deserves to be dismissed.

19. The Writ Petition has been filed suppressing the material facts from this Court & attempts are made to play fraud upon this Court. The Petitioners have approached the Learned SDJM, Balasore by filing an application under Section 457, Cr.P.C. vide Misc. Case No.29 of 2011 which was rejected by passing a speaking Order Dated 09.05.2011. This fact has been suppressed before this Court. Opp. Party No.7-Company had been in the business of selling necessary consumer products which were being sold by them by utilizing electronic media facilities, i.e., internet. Internet facility has been used to avoid the expenses & investment on the premises necessary for commencing any such retail outlet. As per the policy of the Company, all the terms & conditions have been displayed by the Company on their website, which are copies of the terms & conditions for purchase of the products published in the website of Opp. Party No.7-Company. A person who intends to purchase the product manufactured and/or sold by opposite ‘party No.7Company is required to purchase the said product subject to compliance of the terms & conditions appearing in the website. As per the policy, the Company has been selling the Suit length to the people at large for which, a purchaser is required to deposit necessary value of the suit length in the Bank account maintained by the Company with ICICI Bank by Cheque and/or by pay order. Subject to deposit of the amounts, Opp. Party No.7-Company has been issuing necessary purchase voucher on the basis of which, the Company had been delivering the product to the concerned purchaser. As per the policy of the Company, if a customer does not intend to take delivery of the product immediately, he is entitled to enter into a regular agreement with the Company draft of which is also published on the website' & upon such agreement being signed, it was provided that if the said customer brings other customers for the Company, he is being made entitled to get necessary commission on the amounts paid by the other customers. The Company has been dealing in sales of cloth, there was huge margin in the sale price & the cost of the Company & accordingly as per the Policy of the Company, it had also been sharing the profit generated by the Company with their respective customers, which were paid on monthly basis subject to Company making profits & no such deposit had ever been taken from any of the customers nor any fixed income had been promised. The said facility had been available only for a period of one year & within the said period, the concerned customer was duty bound to take delivery of the cloth material. Within a period of one year, if the customer so chooses is being made entitled to claim refund of the amounts paid by him which were refunded by the Company on the terms & conditions already published on their website. Although the Company has been functioning regularly without committing any default & has been making the profits which were shared with their respective customers, the Bank account of the Company maintained with ICICI Bank Ltd. having a huge balance, came to be frozen from 3rd July, 2009 by the Bank Authority without any notice of whatsoever nature. Against such action of Opp. Party No.2-ICICI Bank, one of the Director, Diwakar Sinha of Opp. Party No.7-Company immediately filed Writ Petition bearing W.P.(C). No.1443 of 2009 before the High Court, Mumbai. While the matter stood thus, the Police authorities at Balasore registered a complaint against the Opp. Party No.7-Company, which came to be registered vide Sahadev Khunta P.S. Case No.118 of 2009 under the provisions of Sections 406/420/468/471 of I.P.C. & Section 4, 5 & 6 of the Act, 1978, corresponding to C.T. Case No.1339 of 2009 in the file of S.D.J.M., Balasore & the said case was subsequently transferred to the present Investigating Agency on the very day of registration of the same by Balasore. Police Station. Though the said F.I.R. only pertained to Rs.10,000, the Police Authorities directed the Bank Authorities to freeze the Bank account of the Company & in such manner, the illegal act on the part of the Bank authorities was sought to be regularized by the Police authorities.

20. It is further submitted that the complainant had no grievance against the Company & despite the same, he had been forced by the Police Authorities to lodge such complaint & in view thereof, the complainant of his own conscious, filed W.P.(Crl.) No.503 of 2009 before this Court for quashing of the complaint. Opp. Party No.7-Company had also preferred to file a Writ Petition before this Court for quashing of the said complaint which was registered as W.P.(Crl.) No.267 of 2010 & both the petitions have been heard finally by this Court & the matter is reserved for Judgment. The present Petitioners made an attempt to intervene in the said proceedings & their intervention application was rejected by this Court.

21. Mr. Tulsi submitted that the Company having realized that their entire functioning has come to stand still because of freezing of the accounts & in the absence of operation of the account, they are unable to refund the amounts & since they are not generating any profit, they are not in a position to share the profit, the Company approached the Company Judge, Allahbad High Court by presenting a Scheme through an application. Pursuant to such application, the Company Judge, Allahbad High Court has been pleased to appoint the Chairman & Vice-Chairman for holding a meeting of all the creditors & necessary notices were published in the newspaper & accordingly, a meeting of the creditors had taken place on 26th December, 2009. In the said meeting, a Resolution came to be passed in presence of the Chairman appointed by the Allahabad High Court to the effect that henceforth, the Company shall not refund any amounts to any of the customers/depositors & all the customers are liable to take delivery in respect of the product manufactured/ sold by the Company. On the basis of the said resolution, a further application had been presented before the Company Judge, Allahabad High Court & by Order Dated 26.03.2009, after hearing the Advocate including the Advocate for the Company Registrar, the Allahabad High Court has been pleased to approve the said Scheme. It was further submitted that in view of the order of the Allahabad High Court, the Company had not been made liable to refund any of the amounts to any of their customers & they are entitled to take delivery in respect of the products manufactured by the Company; more particularly, the Suit length. The orders passed by the Allahabad High Court were also published on the website of the Company & the Company had received request from many customers & accordingly, the Company had dispatched the Suit length to all those customers. If any identical request is made by any other customers of the Company, the Company is ready & willing to deliver the material and/or they are at liberty to take delivery of the product from the registered office of the Company by presenting their documents. Therefore, in view of the order of the Allahabad High Court the claim of other customers seeking refund of any such amount from the Company does not arise.

22. It is further submitted that in view of the orders passed by the Allahabad High Court, this Court cannot exercise any Appellate jurisdictional power in respect of the said orders. Therefore, this Writ Petition is not maintainable even on facts & law & deserves to be dismissed. The allegation made in the Writ Petition that the Company has accepted deposits is false on the face of it. At no point of time, Company has accepted any such deposits & in view thereof, all the contentions, citations & the quotations made in the said petition are not applicable to the facts of the present case. The Writ Petitioners are running a parallel institute as a recovery agency for & on behalf of the poor uneducated people to grab the benefits to be received by such poor people including the receipt of the cloth material & the Petitioner No.1-Trust has been formed only to blackmail the genuine Companies like that of Opp. Party No.7. A careful perusal of the deed of trust does not show and/or form any legal documents by virtue of which, the Petitioners get any such cause of action against Opp. Party No.7-Company in any manner whatsoever. The agreement referred to & relied upon by the Petitioners categorically shows that the entire Agreement is in respect of commercial transaction for sale & purchase of the material between the respective customers of Opp. Party No.7-Company.

Clause 29 of the said Agreement contemplates that in case of dispute, the matter shall be referred for arbitration & by filing the present petition, the Petitioners can never be permitted to give overriding effect to the provisions of Arbitration & Conciliation Act in any manner whatsoever. Receipt relied upon by the Petitioner at page 58, clearly mentions that the payment has been received against the sales of the product. Concluding his argument, Mr.Tulsi submitted for dismissal of the Writ Petition.

23. Mr. Tulsi, Learned Senior Advocate appearing on behalf of Opp. Party No.7 further submitted that the present Writ Petition cannot be treated as a public interest litigation petition as it is an application for refund of money by the alleged purchasers of Opp. Party No.7. A private dispute cannot be permitted to take shape of public interest litigation. Personal disputes are termed as 'private interest litigation'. The present Writ Petition is completely beyond the scope of PIL. In support of his contention, Mr. Tusli relying upon the decision of the Hon’ble Supreme Court in the case of Guruvayoor Devasom Managing Committee & another vs. C.K. Rajan & others, (2003) 7 SCC 546, submitted that the dispute between two warring groups are in the realm of private law & would not be allowed to be agitated as PIL. 'PIL is not a pill or panacea for all wrongs'.

24. Placing reliance upon the decisions of the Hon’ble Supreme Court in the case of Ashok Kumar Pandey vs. State of West Bengal, (2004) 3 SCC 349 & R & M Trust vs. Koramangla Residents Vig. Group, (2005) 3 SCC 91, Mr. Tulsi submitted that the only prayer in the present Writ Petition is to direct the Opp. Parties to give refund & recovery of the investment deposits. All the members of Petitioner No.1-Trust claiming to be investors sought to file a Writ Petition for a declaration protecting the rights of the member investors for refund of the amount they have invested with Opp. Party No.7. Therefore, this being a private interest litigation, it ought not to be entertained as PIL. It is further submitted that the decision of the Hon’ble Supreme Court in the case of National Textiles Workers’ Union & others vs. P.R. Ramakrishnan & others, AIR 1983 se 75 has no application to the present case as the said demand was in the context of workers’ compensation under a statute & not a civil dispute like the present case. It was also submitted that the decision of the Hon’ble Supreme Court in the case of Nawabganj Sugar Mills Co. Ltd. & others Vs. Union of India & others, AIR 1976 SC 1152 has also no application to the present case.

25. It was argued that the present Writ Petition is not maintainable as the same relates to hundreds of disputed questions of facts. The substance of the dispute falls in the realm of the alleged breach of contract &/ or for enforcement of the same for which the Writ Petition is not maintainable. Referring to paragraph-5 of the Writ Petition, it was submitted that the Petitioners claim that the amount deposited or invested by the trust members is more than Rs.100 crores, yet when they are directed to give details, the statement filed by them is only able to provide details of Rs.9.48 crores of investment made by 4427 members. In this statement, it is found that 772 names are duplicate entries. The allegation of the Petitioners’ investment of Rs.100 crores is ridiculous. Mr. Tulsi further submitted that the Writ Petition merely deals with the allegation of breach of contract for which the only remedy available is in Civil Court, as the Criminal Courts are already ceased of petitions for quashing and/or refund of investments.

26. Placing reliance upon the Judgments of the Hon’ble Supreme Court in the case of Kisan Sahkari Chini Mills Vs. Vardan Linkers, (2008) 12 SCC 500 & Pimpri Chinchwad Municipal Corporation & Ors. Vs. Gayatri Construction Company & Anr., (2008) 8 SCC 172 & FCI Vs. Harmesh Chand, (2006) 7 SCC 654, Mr. Tulsi further submitted that the Writ Petition is not maintainable in contractual matters. Filing of the present Writ Petition is nothing but abuse of process of this Court. The Petitioners having met their waterloo .at various forums have taken resort to the present Writ Petition. One of the creditors, namely, Ashok, who is a member of Petitioner No.1-Trust had sought for a stay against the initiation of the scheme from a Court in Mumbai which was denied; he challenged the stay in Bombay High Court which refused to intervene. Special Leave Petition (SLP) against the said order was also dismissed by the Hon’ble Supreme Court on 11.02.2010. Therefore, contention of Learned Counsel for the Petitioners that sanction of Scheme is fraud on the Court is not correct. The Petitioners then filed an application for refund of their investment which application was rejected by the Learned S.D.J.M., Balasore on 09.05.2011. The said order was challenged by the Petitioners by filing Criminal Revision No.533 of 2011, which is pending, the same relief of refund of money has been sought for therein.

27. The Deputy Commissioner of Income Tax, Kanpur by his Order Dated 31.12.2010 held that Opp. Party No.7 was not a NBFC & was only trading in consumer goods (FMCG) in the form of multi-level marketing. No sales tax is payable on textile material or unstitched clothes. Since the Writ Petition was styled as a Civil Writ Petition, the Petitioners misled this Court by seeking directions which were directly violative of Article 20(3) of the Constitution. Even though a dispute may be pursued simultaneously in Civil & Criminal Courts, yet so long as a party is an accused in a criminal proceeding, he is entitled to the protection under Article 20 even before a Civil Court.

28. Further placing reliance upon the decisions of the Hon’ble Supreme Court in the cases of Selvi vs. State of Karnataka, (2010) 7 SCC 263; Ayyub vs. State of U.P., (2002) 3 SCC 510; Sukhvinder Singh vs. State of Punjab, (1994) 5 SCC 152; State of Gujrat vs. S.M. Choksi, AIR 1965 SC 1251 & State of Bombay vs. Kathi Kalu Oghad, AIR 1961 SC 1808, Mr. Tulsi submitted that a person accused in a criminal case cannot be compelled to make a statement on oath nor can a person who is accused can be compelled to produce documents. These principles have been held to be the most precious values of the Constitution & can never be allowed to be diluted. All proceedings & directions which are found to be violative of Article 20(3) of the Constitution are liable to be treated as void.

29. Mr. Tulsi, further submitted that the Petitioners are not correct to say that there is no disputed question of fact. On the one hand; in the Writ Petition, it is claimed that members of the Petitioner No.1-Trust invested more than Rs.1 00 crores & yet, when they asked to give details, they gave details of only Rs.9.48 crores. Even the State has termed their claim of Rs. 100 Crores as ridiculous. The State has further claimed that Petitioners have not even filed a scrap of paper in respect of their claims. Submission of the Petitioners that FIR is against the Company is factually incorrect. The FIR is against the officials of the Company & Directors are obviously officials, who are entitled to protection under Article 20(3) of the Constitution. The Judgment of this Court in Nisakar Khatua (supra) can have no application to a case where the case property pending investigation is sought to be delivered to a person from whom the same is not seized.

30. Each time the Petitioners mention different amount & number of depositors/members. In their submissions, the Petitioners have sought to inflate the amount of Rs.5.87 crores & 2,45,000 depositors, whereas in paragraph 5 of the Writ Petition it was Rs.1 00 crores, & when the details were sought it was reduced to Rs.9.48 crores & 4427 members, out of whom 772 were duplicate entries. Concluding his argument, Mr. Tulsi submitted for dismissal of the Writ Petition 30. On the rival factual & legal contentions advanced by the parties, the following questions fall for consideration by this Court:

(i) Whether the Writ Petition is maintainable?

(ii) If answer to question No. (i) is in affirmative, whether the prayer made in the Writ Petition can be granted?

(iii) What order?

31. Question No.(i) is with regard to maintainability of the Writ Petition. It is not in dispute that a large number of gullible investors have invested their money in the scheme floated by Opp. Party No.7Company. The scheme provided deposits to the tune of Rs.10,000 & its multiple up to Rs.2.5 lakhs. Under the Scheme, the Company promises to give not less than 10% monthly commission to investors. The investors are from Karnataka, Andhra Pradesh, Tamil Nadu & Kerala. The Petitioners’ allegation is that Opp. Party No.7 promoted money circulation scheme under the guise of sale of its products. Investments were against the product of Company on issuance of Payment Verification Code (PVC). Auditors’ report reveals that there is no transaction of purchase of goods & material or sale of goods or materials. As per the policy of the Company, the entire (100%) purchase amount is refundable, if the product vouchers has not been redeemed & the investor has not violated any clause mentioned in the agreement. On 17.07.2009 FIR was lodged against Opp. Party No.7-Company at Sahadev Khunta Police Station vide P.S. Case No.118 of 2009 in the district of Balasore. Investigation against Opp. Party No.7 was initiated under Sections 406, 420, 468, 471 & 34 of I.P.C. read with Sections 4, 5 & 6 of the Act, 1978. The Investigating Officer in exercise of his powers under Section 102, Cr.P.C. freezed the bank accounts of Opp. Party No.7-Company. On 20.07.2009, the Investigating Officer freezed the Company’s accounts in three banks, namely, HDFC Bank, IDBI Bank & AXIS Bank.

32. Immediately after freezing of accounts under Section 102, Cr.P.C. Opp. Party No.7 moved High Court of Mumbai challenging the police action by filing Writ Petition No.1443 of 2009 on 27.07.2009 assailing the F.I.R. & freezing dated 17.07.2009. None of the investors was made party & the said Writ Petition was withdrawn. Opp. Party No.7 filed Criminal Misc. Writ Petition No. 1690 1 of 2009 before the Allahabad High Court & the Hon’ble Court vide Judgment dated 19.08.2009 refused the prayer for quashing of the impugned F.I.R. with the following observation:

'From the perusal of the F.I.R., it appears that on the basis of the allegations made therein prima facie cognizable offence is made out. There is no ground for interfering in the F.I.R. Therefore, the prayer for quashing the impugned F.I.R. is refused.'

On dismissal of the Writ Petition, Opp. Party No.7Company filed Company Application No.16 of 2009 on 29.10.2009 under Sections 391 to 394 of the Companies Act, 1956 for approval of a Scheme impleading four shareholders & thirteen unsecured creditors. None of the investors is shown as unsecured creditor. On 26.03.2010, order was passed in Company Petition No.3 of 2010 approving the said Scheme.

33. Reserve Bank of India on due investigation issued circular in respect of 7 numbers of Company including Opp. Party No.7-Company & has observed that Opp. Party No.7-Company posing itself as Multi Level Marketing agency for consumer goods & services have been actually mobilizing large amount of deposit from the public with promises of high return. Opp. Party No.7 filed W.P.(Crl) No.267 of 2010 before this Court for quashing of the F.I.R. which still remains pending disposal. When the investors learnt about freezing of accounts, they demanded 100% refund pursuant to policy of the Company as uploaded on the website & stipulated in the agreement as well, but on the website Company refused to make payment indicating that refund option has been suspended awaiting results from the appropriate Company Court & pendency of the matter before this Court. The Investors at Karnataka, Andhra Pradesh & Tamil Nadu being harassed, prejudiced & defrauded of their life savings registered a deed of trust for taking steps for refund of the amount deposited by them. On 04.02.2011 in W.P.(Crl.) No.207 of 2010 this Court directed the Petitioners to initiate appropriate legal action before jurisdictional Court. On 25.03.2011, the Trust filed a Writ Petition seeking refund of the deposited amount. On 15.04.2011, this Court issued notice directing that there shall not be any disbursement without leave of the Court. On 02.01.2012, this Court directed to keep the amount in fixed deposit. On 08.02.2012, this Court further directed Opp. Party No.7 to disclose as to what happened to the balance amount deposited. On 09.05.2011, the Learned S.D.J.M., Balasore rejected the application under Section 457 of Cr.P.C. On 11.07.2011, CRLREV No.533 of 2011 was filed before this Court.

34. The Auditors specifically found that the Company has not maintained proper records. This fact is evident from the Audit report of the Company. No transaction of purchase & sale of goods & materials & service was made in pursuance of the contract. Sections 58-A & 98-AA of the Companies Act, 1956 have been violated & the Company has no internal audit system.

35. Status report submitted by the Crime Branch reveals as follows:

(1) Neither the memorandum nor the articles of association of the Company reflects that the Company is engaged in the business of multilevel marketing. (Para-5).

(2) Company has cited A-101A, Sterling Centre, Andheri West, Mumbai as its administrative Office in the writ application filed before Hon’ble Bombay High Court. After due verification by Mumbai Police it was found that no such location is available in Mumbai.

(3) Company had filed these applications:

a) Before the Hon’ble Mumbai High Court, W.P.(C) No.1443 of 2009 for defreezing of its account with regard to ICICI Bank only. The application has been dismissed as withdrawn. (Para-6)

b) Before Hon’ble Allahabad High Court vide Criminal Misc. Writ Petition No.16901 of 2009, the same has been disposed of with observation that F.I.R. reveals a prima-facie case & did not quash the FI.R. (Para 7)

(4) On perusal & verification of I.O. & reply from the Kanpur Municipality, it is found that the address furnished in the website by the Company is a tannery. (Para-11)

(5) As per the letter of Asst. Commissioner Commercial Tax, Kanpur the Company has not submitted returns from 2007-08 to 2009-10 (from 2007 to 2010) about their selling & trading of cloth.

(6) Around 2,43,356 depositors have deposited their money & enrolled in the scheme of the Company. (Para-29)

(7) Company has raised Rs.578,22,17,252 (Rs.578.23 Crores) from the depositors. & has paid Rs.67,32,54,190 towards the commission to the depositors. (Para - 29)

(8) The Investigating Agency state that there are reliable indication that major part of the money has been used for funding questionable purposes. (Para-33)

(9) Warning letter by Home Department bearing No.44555 dtd.08.10.2009 named the Company indulging in money circulations.

36. On the above backdrop, it is felt necessary to refer to the following decision of Hon’ble Supreme Court.

In the case of T.K. Rangarajan vs. Govt. of Tamil Nadu & ors, AIR 2003 SC 3032, the Hon’ble Supreme Court held as under:

'5. At the outset, it is to be reiterated that under Article 226 of the Constitution, the High Court is empowered to exercise its extraordinary jurisdiction to meet unprecedented extraordinary situation having no parallel. It is equally true that extraordinary powers are required to be sparingly used. The facts of the present case reveal that this was most extraordinary case, which called for interference by the High Court, as the State Government had dismissed about two lakh employees for going on strike.'

In the instant case, huge number of depositors have invested their hard-earned money/life savings with Opp. Party No.7-Company & it is practically impossible for those small investors to move individually before the procedural Court for redressal of their grievances.

37. In the case of Nawabganj Sugar Mills Co. Ltd. vs. Union of India, AIR 1976 SC 1152, the Hon’ble Supreme Court observed as follows:

'Who is to start? Against whom? How is he to meet the huge litigative costs & how long (O, Lord, how long !) he to wait with long-drawn-out trial procedures, appeal, second appeal, special appeal, & Supreme Court appeal? For, on the other side is the similar with the millions to be coughed up !’’ &

'... The difficulty we face here cannot force us to abandon the inherent powers of the Court to do.

The inherent power has its roots in necessity &, its breadth is coextensive with the necessity. xxx

...If there is to be relief, we must construct it here by simple legal engineering.'

The Petitioners & intervenors belong to the lower Section o the society & it is not practicable for them to fight against the mighty Opp. Party No.7-Company in a long legal battle.

38. In the case of Union of India vs. Tantia Construction Pvt. Ltd., (2011) 5 SCC 697, the Hon’ble Supreme Court held as under:

'... the constitutional powers vested in the High Court or the Supreme Court cannot be fettered by any alternative remedy available to the authorities. In justice, whenever & wherever it takes place, has to be struck down as an anathema to the rule of law & the provisions of the Constitution.'

39. In the case of S.P. Gupta Vs. Union of India reported in AIR 1982 SC 149, the Hon’ble Supreme Court held as under:

'It may therefore now be taken as well established that where a legal wrong or a legal injury is caused to a person or to a determinate class of persons by reason of violation of any constitutional or legal right or any burden is imposed in contravention of any constitutional or legal provision or without authority of law or any such legal wrong or legal injury or illegal burden is threatened & such person or determinate class of persons is by reason of poverty, helplessness or disability or socially or economically disadvantaged position, unable to approach the Court for relief, any member of the public can maintain an application for an appropriate direction, order or writ in the High Court under Art. 226 & in case of breach of any fundamental right of such person or determinate class of persons, in this Court under Art. 32 seeking judicial redress for the legal wrong or injury caused to such person or determinate class of persons.'

40. In the case of Mumbai Kamgar Sabha Vs. Abdulbhai Fatzullabhai reported in AIR 1976 SC 1455 at page 1458 Justice Krishna Iyer emphasized:

'Article 226 viewed in wider perspective may be amenable to ventilation of collective of common grievances xx xx xx Public interest is promoted by a spacious construction of locus standi in our socio economic circumstances.'

41. The investors belong to lower strata of the society. They are house-wives, rickshaw pullers, taxi drivers, small shopkeepers, Class-IV employees of Private Companies, hotels & other establishments, tea shop owners, cabin holders, retired persons & unemployed youth etc, who have invested their life savings with Opp. Party No.7-Company. Since the company invited deposits of Rs.10,000 & its multiple up to Rs.2.5 lakhs, no individual can be able to sue the Company in case of any injury caused to him. The gullible investors were tempted to make investments in the Company because of high return not less than 10% per month & 100% of refund of their deposited amount was assured to them. Accordingly, the investors were spread over throughout the country.

42. In view of the above facts & case laws cited above, we are of the view that the Writ Petition is maintainable.

43. Question Nos.(ii) & (iii) being interlinked, they are dealt with together. Undisputedly, the criminal investigation is pending against Opp. Party No.7-Company. The exact number of investors & exact amount invested by each small depositor are yet to be ascertained although the Crime Branch Department in their status report stated as follows:

a) Total Amount Deposited : Rs.578,22,12,252

Company paid commission : Rs. 67,32,54,190

Balance with O.P. No.7 : Rs.510,89,58,062

Save Rs.511 Crores

b) Payments & Transfers by Opp. Party No.7-Company: Rupees in Crores)

i) Transferred to Eve Industries, paid to wife of

Director, Kamraj Khurshid (& Rs.64.00 Crores

eventually to Md. Naseer & Shamshed Alam : Rs.133.39

ii) Transferred to Great Entertainment of Md. Naseer : Rs.82.72

iii) Transferred to Shamshed Alam : Rs. 0.72

iv) Transferred to Sayeed Ahmed : Rs. 4.02

v) Transferred to Fine Consultancy: Rs. 29.60

vi) Transferred to Bhupinder Chamrvedi : Rs.29.92

vii) Transferred to Aman Enterprises : Rs. 0.83

viii) Transferred to B.T. Industries : Rs. 17.98

ix) Transferred to Fine

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Industrial : Rs. 1.75 x) Transferred to Key Stone : Rs. 9.00 xi) Transferred to Lemon T.V. & Luxury Car : Rs. 1.00 xii) Transferred to Ferox Shah : Rs. 0.50 _______________________________________________ Total transfers : Rs.311.43 C) Available with Banks on day accounts freezed : Rs.510.90 Crores (-) Rs.311.43 Crores ----------- Rs.199.47 Crores Income Tax paid (-) : Rs. 5.36 Crores ----------- With Bank : Rs.194.11 Crores 44. Mr. Tulsi, Learned Senior Advocate submitted that since the Directors of Opp. Party No.7-Company are already accused in the criminal case pending investigation, they are entitled to be protected by this Court of their constitutional rights guaranteed under Article 20(3) of the Constitution. It is further submitted that a person accused in a criminal case can neither be compelled to make a statement on oath nor he can be compelled to produce documents. These principles, which have been held to be of most precious values of the Constitution, can never be allowed to be diluted in any proceedings & directions which are found to be violative of Article 20(3) of the Constitution are liable to be treated as void. 45. Some of the aspects of the case which draw attention of this Court as matter of concern are that one investor claiming refund of Rs.10,000 filed complaint against the Company at Sahadev Khunta Police Station, which was registered as Sahadev Khunta PS Case No.118 of 2009 dated 17.07.2009 under Sections 406/420/468/471/34 of IPC & Sections 4, 5, & 6 of the Act, 1978, corresponding to CT Case No.113/2009 in the file of S.D.J.M., Balasore. The said case was transferred to the Investigating Agency & the Police Authorities directed the Bank Authorities to freeze the Bank account of the Company. The Complainant at whose instance Sahadev Khunta PS Case No.118 of 2009 dated 17.07.2009 was instituted, filed W.P.(Crl.) No.503 of 2009 for quashing of the complaint filed by him on the ground that he was forced by Police to file such complaint. Opp. Party No.7- Company also filed another Writ Petition bearing W.P.(Crl.) No.267 of 2010 for quashing of the F.I.R. 46. One more vital aspect of the case is that on 30.10.2009 Company Petition No. 16 of 2009 was filed under Sections 391 & 394 of the Companies Act, 1956 impleading 4 share holders & 13 un-secured creditors before the Company Judge, Allahabad High Court proposing a scheme of arrangement with a request for sanction of the same. In that Company case, 4 share holders of the Company had given their consent through affidavit & for 13 un-secured creditors a meeting was convened under the Chairmanship of Mr. S.C. Mishra, Advocate. Thus, the arrangement has been made between 4 share holders & 13 creditors of the Company. During continuation of the aforesaid proceeding, Company Petition No.3 of 2010 was filed for confirming the compromise & arrangement. Allahabad High Court vide its Order Dated 26.03.2010 in the said Company petition sanctioned the said Scheme, according to which, policy for encashment of purchase vouchers and/or refund of the amount paid by the purchaser stands withdrawn & all the purchasers shall compulsorily take delivery of the materials purchased. Grievance of the Petitioners is that the Company case was disposed of on 26.03.2010 by the Allahabad High Court without impleading all the affected parties more particularly the Petitioners. None of the investors is shown as unsecured creditor. It is settled principle that no adverse order shall be passed having civil consequence without hearing the affected persons. Only seventeen persons cannot decide the fate of 2.5 lakh depositors. Depositors are the real owner of the funds & without hearing them no adverse order can be passed having civil consequence. It is also not possible on the part of the gullible small investors to spend money & contest the case at Allahabad. 47. We have perused the events including the above that have taken place, but we are refraining ourselves from entering upon the details thereof lest it may prejudice any party. 48. In the instant case, the ground realities cannot be lost sight of in the maze of technicalities. The investigation by the Crime Branch, Odisha will not be effective all over the country. Therefore, investigation by CBI would be more effective to unearth the truth for doing complete justice. The High Court does not lack jurisdiction to modulate the relief to give aid to people who have been wronged. Whenever any wrong is done to a citizen, the Court cannot become a silent spectator to such illegality & it becomes the solemn duty of the Court to see that the affected person must get justice. 49. The Hon’ble Supreme Court in the case of Shivajirao Nilangekar Patil Vs. Dr.Mahesh Madhav Gosavi & Ors., AIR 1987 SC 294 held as under: '51. This Court cannot be oblivious that there has been a steady decline of public standards or public morals & public morale. It is necessary to cleanse public life in this country along with or even before cleaning the physical atmospheres. The pollution in our values & standards is an equally grave menace as the pollution of the environment. Where such situations cry out the Courts should not & cannot remain mute & dumb.' 50. Needless to say that whenever there is a wrong, there is a remedy. In our view this is a classic case where Court should not close its eyes to the injustice alleged to have been perpetrated. For the reasons indicated above & in the interest of justice, we direct that the investigation be handed over to the CBI & the Crime Branch shall assist the CBI in the investigation. The CBI is directed to submit quarterly status report before this Court. The prayer for refund of money shall be considered after receipt of periodical status report(s). List this matter after 3 months. V.GOPALA GOWDA, C.J. I agree. Ordered accordingly.
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