Full Judgement
Bombay High Court
Hemant Vrajlal Zaveri vs The State Of Maharashtra on 6 February, 2024
Author: N. J. Jamadar
Bench: N. J. Jamadar
2024:BHC-AS:5814
919-BA-1695-23+IA.DOC
Sayali Upasani
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
CRIMINAL APPELLATE JURISDICTION
BAIL APPLICATION NO. 1695 OF 2023
WITH
INTERIM APPLICATION NO. 2827 OF 2023
Hemant Vrajlal Zaveri ...Applicant
Versus
The State of Maharashtra ...Respondent
Mr. Aabad Ponda, Senior Counsel with Mr. Rahul Moghe with
Mr. Subhash Jadhav with Mr. Amit Patil with Ms. Kalyani
Rathod with Mr. Rishabh Jadhav i/b Praniram Law
Associates, for Applicant.
Mr. Y. M. Nakhwa, APP for State/Respondent.
Mr. Santosh Budhwani with Mr. Sujit Suresh i/b Manilal
Kher Ambalal and Co., for Applicant in IA/2827/2023.
Ms. Suvarna Umap, API, EOW Banking III Unit XI, Present.
CORAM:- N. J. JAMADAR, J.
RESERVED ON : 23rd JANUARY, 2024.
PRONOUNCED ON:- 6th FEBRUARY, 2024.
ORDER:
-
1) Heard the learned Counsel for the applicant, the learned
APP for the State and the learned Counsel for the applicant in
Intervention application- first informant.
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2) The applicant, who is arraigned in CR No. 21 of 2022 with
Economic Offences Wing, original CR No. 52 of 2022, registered
with Colaba Police Station, for the offences punishable under
Sections 120-B, 406, 409, 420, 477(A) of Indian Penal Code,
1860 ("the Penal Code"), has preferred this application to enlarge
him on bail.
3) The prosecution case runs as under:-
(a) M/s. Tribhovandas Bhimaji Zaveri & Sons Retail Pvt. Ltd.
(M/s. Tribhovandas), the accused No.1 is a Private Limited
Company. The applicant and Girish Nayak, accused No. 3, were
the Directors of M/s. Tribhovandas. In the month of March,
2015, the applicant and the co-accused Girish Nayak started M/
s. Tribhovandas to engage in the business of gold, silver,
diamond, precious gems and jewellery.
(b) On 2nd September, 2015, the accused applied to Axis Bank,
for a cash credit facility to the tune of Rs. 40 Crores. After
following the usual process, on 19th September, 2015, a cash
credit facility to the tune of Rs.36 Crores was sanctioned to M/s.
Tribhovandas. Appropriate securities were furnished by M/s.
Tribhovandas. The loan installments were regularly repaid till
December, 2018. As M/s. Tribhovandas committed default in
payment of the installment since May, 2019, the account was 2/15
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declared NPA, on 29th August, 2019, and a notice recalling the
cash credit facility was issued, on 24th January, 2020.
(c) Axis Bank appointed Mazars India LLP to conduct a
forensic audit. In the report submitted by the auditor dated, 18th
February, 2021, it transpired that the accused had indulged in
several serious financial irregularities. M/s. Tribhovandas had,
inter alia, utilised and diverted funds for purposes other than the
one for which the cash credit facility was availed. There were
related party transactions and funds were diverted to the entities
of the accused. Non-existent and false transactions of sale and
purchase of commodities and jewelleries, were shown. The
financial statements submitted to the bank did not tally with the
audited balance-sheets and stock statements. The amounts
advanced by Axis Bank to M/s. Tribhovandas were, thus,
siphoned off.
(d) It is, inter alia, alleged that M/s. Tribhovandas had entered
into transactions with Midas Touch Pvt. Ltd., which was not at
all dealing in the business of jewellery. Likewise, transactions
were shown to have been entered with M/s Dreamgold Jewelry
Pvt. Ltd., again a company in which the applicant had controlling
interest. A sum of Rs.2.8 Crores was transferred to M/s. Dreamgold
Jewellery Pvt. Ltd. There were financial transactions with Better 3/15
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Value Properties Ltd., another related party. The ledger statements
did not match with the Bank statements. Unsecured loans were
obtained from Better Value Leasing and Finance Pvt Ltd., to the
tune of Rs.21.79 Crores and against which a payment of Rs.11.78
Crores was shown to have been made, in breach of an express
condition that M/s. Tribhovandas shall not obtain any
unsecured loan without the prior permission of the Axis Bank.
There was diversion of funds by entering into transactions with
Enafin Investment Pvt. Ltd., the payment and receipt of Rs.8
Crores, in the ledger account of Enafin Investment Pvt Ltd., did
not match with the Bank statement of M/s. Tribhovandas.
(e) In the month of March, 2017, jewellery worth Rs.25 Crores
was shown to have been sold and purchased from National
Bullion Refinery. However, there was no corresponding entry in
the books of accounts. Thus, the accused furnished false
financial statements and indulged in falsification of the accounts
to show that M/s. Tribhovandas was in a sound financial health.
Lastly, the applicant had diverted funds to the personal account
of the applicant to the tune of Rs.1,62,40,711/-. Thereby the
applicant committed offences punishable under Sections 120-B,
406, 409, 420, 477(A) in pursuance of a criminal conspiracy with
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the co-accused punishable under Section 120-B of the Penal
Code, 1860.
4) The applicant was arrested on 7th November, 2022. Post
completion of investigation, charge-sheet came to be lodged on
2nd February, 2023, reserving the liberty to carry out further
investigation under Section 173 (8) of the Code of Criminal
Procedure, 1973.
5) The Investigating Officer has carried out further
investigation, and lodged a supplementary charge-sheet on 23 rd
November, 2023 against Girish Nayak and Anant Gawande. The
Co-accused have also been arraigned for the offences punishable
under Sections 120-B, 406, 409, 420, 477(A) of the Penal Code,
1860.
6) Mr. Ponda, the learned Senior Advocate, for the applicant
submitted that the co-accused Girish Nayak, the Director of M/s.
Tribhovandas and Anant Gawande, who were intimately
connected with M/s. Tribhovandas, nay were instrumental in the
alleged fraud and falsification of the accounts, have been treated
with favourably. The Investigating Officer did not deem it
necessary to arrest co-accused Girish Nayak and Anant Gawande
on the specious ground that, though overwhelming evidence to
establish the complicity of those accused could be collected 5/15
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during the course of investigation, yet, since those accused had
rendered full co-operation during the course of investigation,
they were not arrested.
7) Mr. Ponda submitted that on account of the discriminatory
treatment itself, the applicant deserves to be released on bail.
What accentuates the situation, according to Mr. Ponda, was the
existence of material in the form of the statements of the
prosecution witnesses which show that Girish Nayak and Anant
Gawande were the prime characters in the commission of the
alleged offences. To lend support to the submission that such
discriminatory approach entitles an accused, who is
discriminated against, to bail, reliance was placed on a judgment
of Delhi High Court, in the case of R. Vasudevan Vs. CBI, New
Delhi1.
8) In any event, Mr. Ponda would urge that the investigation is
complete for all intent and purpose. Charge-sheet and
supplementary charge-sheet have been lodged. The applicant,
who is 64 years of age, has been in custody for 15 months.
Therefore, the applicant deserves to be released on bail.
9) In opposition to this, Mr. Nakhwa, the learned APP, stoutly
resisted the prayer for bail. Taking the Court through the report
1 2010 SCC Online Del 130 6/15
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under Section 173 of the Code, 1973 and the documents annexed
with it. Mr. Nakhwa would urge that the intention of the
applicant was dishonest since the inception of the transaction as
the forensic audit has revealed that the amount of Rs.8 Crores,
invested on 30th September, 2015, by way infusion of equity share
capital was transferred to Dreamgold Jewelry Pvt. Ltd., on the
very day the cash credit facility was sanctioned. Mr. Nakhwa
made an endeavour to demonstrate how the funds availed from
the Axis Bank for working capital were diverted to the account of
the applicant. Emphasis was laid on the fact that the false
entries were made in the stock register to show an untrue
financial position of the company.
10) Mr. Nakhwa would urge that the fact that the co-accused
have not been arrested would not enure to the benefit of the
applicant, who is the principal accused and the beneficiary of
the fraud. It was further submitted that there are three more
identical offences registered against the applicant and, therefore,
he does not deserve to be released on bail.
11) Mr. Budhwani, the learned Counsel for the applicant in IA
No. 2827 of 2023 - first informant - Axis Bank, supplemented
the submissions of Mr. Nakhwa. It was urged that the instant
case involves a financial fraud of huge public money. By resorting 7/15
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to fabrication of documents since the very inception of the
transaction the applicant had deceived the Bank to part with a
huge amount. Laying emphasis on the conduct of the applicant
reflected in an order passed by this Court in Criminal
Application (ABA) No. 106 of 2020, wherein the applicant had
allegedly submitted false and forged documents in support of the
prayer for pre-arrest bail, Mr. Budhwani submitted that the
applicant does not deserve the relief of bail.
12) I have carefully perused the material on record, especially
in the backdrop of the nature of the accusation. Prima facie,
there are documents which indicate that there was diversion of
funds availed from Axis Bank by way of cash credit for working
capital requirement in the sense that the funds were utilised for
purposes other than the one for which the financial facility was
extended. The documents also indicate that there was a mesh of
transactions between M/s. Tribhovandas and related parties; be
it corporate entities or individuals. The allegations that the
transactions of sale and purchase of precious metals and
jeweleries were shown to have been entered, with entities which
did not at all deal in those commodities are also prima facie
made out. At this stage, there is material to show that the
utilisation of the funds, advanced by the Axis Bank, was prima 8/15
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facie in such a manner as to give rise to an element of
criminality.
13) The question that, however, warrants consideration, at this
stage, is, taking the prosecution case as its stands, whether the
applicant is entitled to be released on bail. To put in other words,
is there such qualitative difference in the role attributed to the
co-accused and the applicant in the matter of alleged fraud and
falsification of the statements of accounts.
14) First and foremost, it is imperative to note that the
prosecution alleges that the offences were committed in
pursuance of a criminal conspiracy with co-accused Girish
Nayak and Anant Gawande. Interestingly, the prosecution also
alleges that there is overwhelming evidence to support the
indictment against Girish Nayak and Anant Gawande. The
reason ascribed for not arresting those co-accused was that they
had co-operated in the investigation. The Investigating Officer
may be justified in taking that position. However, prima facie, the
statements of the witnesses, banked upon by the prosecution, in
support of the indictment against the applicant, suggest the
complicity of the co-accused in equal measure.
15) As noted above, the first informant, the Deputy Vice
President of Axis Bank, had explicitly named Girish Nayak as an 9/15
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accused while lodging the FIR. Nimish Anil Chodankar and
Hitesh Ashok Narang, whose statements were pressed into
service in support of the indictment against the applicant, have
stated in their supplementary statement that M/s. Midas Touch
Pvt. Ltd., a 100 % subsidiary of M/s. Talwalkars Better Value
Fitness Pvt. Ltd., is a related party of Vans Scientific Information
Pvt Ltd of which Anant Gawande is a Director. Girish Nayak is
the Chief Financial Officer (CFO) of M/s. Talwalkar Group. M/s.
Abhipray Enterprises Pvt. Ltd is a 100% subsidiary of M/s.
Talwalkars Healthclubs Ltd. Girish Nayak and Anant Gawande
are the Directors and CFO of M/s. Talwalkar's Group Companies.
The transactions shown between M/s. Tribhovandas, on the one
part, and M/s. Midas Touch Pvt. Ltd., and M/s. Abhipray
Enterprises, on the other part, are false. They were a subterfuge
for circulation of funds. The financial statements were fudged to
show the financial position of M/s. Tribhovandas.
16) Mr. Prashant Martin states that Anant Gawande is the
Director/Promoter of M/s. Talwalkar Better Value Fitness Pvt.
Ltd. Girish Nayak is the CFO. Anant Gawande is concerned with
many entities including M/s. Enafin Investment Pvt. Ltd., M/s.
Abhipray Enterprises Pvt Ltd and M/s. Midas Touch Pvt. Ltd. All
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the transactions in M/s. Talwalkar Better Value Fitness Pvt. Ltd.,
were as per the directions of Anant Gawande.
17) Mr. Satish Talekar, who worked with M/s. Talwalkar Better
Value Fitness Pvt Ltd., as an Accountant, informed that he had
made entries in the monthly stock statement of M/s.
Tribhovandas as per verbal directions of Anant Gawande and
Girish Nayak and obtained the signatures of the applicant
thereon by forwarding the same through e-mail.
18) Even Mr. Firoj Faram Balsara, on whose statement, the
learned APP placed reliance, stated that while he was working
with M/s. Micky Mehta's 360 Wellness Temple Pvt Ltd, at the
instructions of Girish Nayak he had put signatures on various
documents and it later transpired that he was shown a Director
of M/s. Midas Touch Pvt. Ltd. The said company was operated by
Mr. Girish Nayak.
19) The aforesaid material, prima facie, indicates that the
parties and entities with whom M/s. Tribhovandas allegedly
entered into transactions and, resultanly, there was diversion of
funds, were the related parties of Girish Nayak and Anant
Gawande. The witnesses have stated that at the instance of those
accused, incorrect statements were prepared. In the backdrop of
this material, if the Investigating Officer is satisfied with the co- 11/15
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operation rendered by the co-accused, the claim of the applicant
for bail cannot be jettisoned away by canvassing a submission
that the role of the applicant is distinct. In the case of R.
Vasudevan (supra), the Delhi High Court criticized the approach of
the Investigating Agency in not adopting a just and fair approach in
treating all the accused persons on an even pedestal.
20) Having considered the material on record, I find that the role
attributed to the applicant, especially in the backdrop of the
allegations of criminal conspiracy and falsification of the accounts,
prima facie does not appear to be materially distinct from that of
the co-accused. Thus, I find substance in the submission of Mr.
Ponda that in the face of the stand of the Investigating Agency qua
the co-accused, the applicant deserves bail.
21) Even otherwise, as is evident, the offences revolve around
documents. All the documents have been seized. Post further
investigation, the Investigating Officer has lodged a
supplementary charge-sheet. The supplementary statement of
the first informant indicates that the value of the security
furnished for the loan was assessed at Rs.19.47 Cores.
Possession of the secured assets had been obtained. Proceedings
under the Securitization and Reconstruction of Financial Assets
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and Enforcement of Security Interest Act, 2002 have been
initiated.
22) Evidently, M/s. Tribhovandas had serviced the loan
account regularly till December, 2018. The fraud was allegedly
unearthed after the account became NPA. Undoubtedly, this does
not dilute the gravity of the offences but it bears upon the
question as to whether the intention of the accused was
dishonest since the inception of the transaction.
23) In the aforesaid view of the matter, at this stage, further
detention of the applicant does not seem warranted.
24) So far as the antecedents of the applicant, it appears that
four crimes have been registered against the applicant primarily
for the offences punishable under Sections 406 and 420 of the
Penal Code, 1860. In one crime, charge-sheet has been lodged.
Three are under investigation. Mr. Ponda informed the Court that
in one of the crimes, the Supreme Court had granted pre-arrest
bail to the applicant. Having regard to the nature of the offences
registered against the applicant and in the facts of the case, in
my view, the antecedents are not such as to dissuade the Court
from exercising the discretion in favour of the applicant.
25) The applicant is 64 years of age. He has been in custody
since 7th November, 2022. In the backdrop of the nature of the 13/15
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accusation, it is unlikely that the trial can be concluded within a
reasonable period.
26) The applicant appears to have roots in society. The
apprehension on the part of the prosecution can be taken care of
by imposing conditions.
27) I am, therefore, inclined to exercise the discretion in favour
of the applicant.
28) Hence, the following order:
:ORDER:
(i) The application stands allowed.
(ii) The applicant Hemant Vrajlal Zaveri Kuni be
released on bail in CR No. 21 of 2022, registered with
Economic Offences Wing, for the offences punishable
under Sections 120-B, 406, 409, 420, 477(A) of Indian
Penal Code, 1860, on furnishing a P.R. Bond in the sum
of Rs.1,00,000/- with one or two sureties in the like
amount, to the satisfaction of the learned Sessions
Judge.
(iii) The applicant shall attend the office of EOW,
Mumbai on first Monday of every month between 10.00
am to 12.00 noon for a period of two years or till
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conclusion of trial, whichever is earlier.
(iv) The applicant shall not tamper with the
prosecution evidence and/or give threat or inducement
to the first informant and any of the persons acquainted
with the facts of the case.
(v) The applicant shall surrender his passport before
the jurisdictional Magistrate, if not already surrendered
before any Court or investigating agency.
(vi) The applicant shall not leave Indian without prior
permission of the jurisdictional Magistrate.
(vii) By way of abundant caution, it is clarified that the
observations made hereinabove are confined for the
purpose of determination of entitlement for bail and they
may not be construed as an expression of opinion on the
guilt or otherwise of the applicant and co-accused and
the trial court shall not be influenced by any of
observations made hereinabove.
(viii) In view of disposal of the Bail Application, the
Interim Application also stands disposed.
[N. J. JAMADAR, J.]
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