Full Judgment Text
* IN THE HIGH COURT OF DELHI AT NEW DELHI
+ BAIL APPLN. 2722/2021 & CRL.M.(BAIL) 986/2021,
CRL.M.As. 13268/2021, 13269/2021, 13545/2021, 14956/2021,
14957/2021, 15515/2021, 15516/2021
Reserved on : 26.10.2021
Date of Decision : 13.12.2021
IN THE MATTER OF:
SIDHARTH CHAUHAN ..... Petitioner
Through: Mr. Maninder Singh, Senior
Advocate with Mr. R.K Handoo,
Mr. Niranjan Singh, Mr. Shiv
Mangal Sharma, Mr. Saurabh
Rajpal and Mr. Rajiv Singh
Pilania, Advocates.
Versus
STATE (GOVT. OF NCT OF DELHI) THROUGH SHO
..... Respondent
Through: Ms. Neelam Sharma, APP for
State.
Mr. Ajay Laroia, Mr. Tarun
Gupta, Ms. Madhu Laroia, Ms.
Jainika Mohan, Mr. Rajinder
Kumar and Mr. Sandesh Kumar,
Advocates for complainants.
AND
BAIL APPLN. 2746/2021 & CRL.M.(BAIL) 995/2021
Signature Not Verified
Digitally Signed
By:SANGEETA ANAND
Signing Date:13.12.2021
12:24:47
BAIL APPLN. 2722/2021 & BAIL APPLN. 2746/2021 Page 1 of 22
SIDHARTH CHAUHAN ..... Petitioner
Through: Mr. Maninder Singh, Senior
Advocate with Mr. R.K Handoo,
Mr. Niranjan Singh, Mr. Shiv
Mangal Sharma, Mr. Saurabh
Rajpal and Mr. Rajiv Singh
Pilania, Advocates.
Versus
STATE (GOVT. OF NCT OF DELHI) THROUGH
SHO ..... Respondent
Through: Ms. Neelam Sharma, APP for
State.
Mr. Ajay Laroia, Mr. Tarun
Gupta, Ms. Madhu Laroia, Ms.
Jainika Mohan, Mr. Rajinder
Kumar and Mr. Sandesh Kumar,
Advocates for complainants.
CORAM:
HON'BLE MR. JUSTICE MANOJ KUMAR OHRI
JUDGMENT
1. The above-noted bail applications have been filed under Section
438 Cr.P.C. on behalf of the applicant seeking anticipatory bail in FIR
Nos. 97/2018 and 118/2018 both registered under Sections
406/420/409/120B IPC at Police Station Economic Offences Wing,
Mandir Marg, New Delhi.
2. Since the applicant and respective counsels in both the bail
applications are same and common arguments have been advanced in
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Signing Date:13.12.2021
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BAIL APPLN. 2722/2021 & BAIL APPLN. 2746/2021 Page 2 of 22
both the cases, the above-noted applications shall be disposed of vide a
common judgment.
3. While BAIL APPLN. 2722/2021 pertains to FIR No. 97/2018
which was registered with respect to project “Estella”, measuring 15.74
acres, housing 850 residential units in 16 towers, located in Sector-103,
Gurugram, Haryana, the BAIL APPLN. 2746/2021 pertains to FIR No.
118/2018 registered with respect to project “NCR One”, measuring
10.712 acres, housing total of 552 residential units in 10 towers and 5
executive floors, located in Sector-95, Gurugram, Haryana .
As per the allegations levelled in the FIR, while project “Estella”
is being jointly developed by M/s Sidhartha Buildhome Pvt. Ltd.
(hereinafter referred to as ‘the accused Company’) and Ansal Housing &
Construction Ltd., project “NCR One” is being developed by M/s
Sidhartha Buildhome Pvt. Ltd.
The applicant is stated to be the Managing Director of the accused
Company, holding 97% shareholding in the share capital thereof.
4. Mr. Maninder Singh, learned Senior Counsel for the applicant,
contended that no criminality is involved in the present cases, and rather,
the dispute relates to delay in construction of flats. He submitted that
both the FIRs pertain to the year 2018 and upon issuance of notices under
Sections 91 and 41A Cr.P.C. by the Investigating Officer, the applicant
has joined the investigation on more than 20 occasions and furnished all
the documents sought by the Investigating Officer. He further submitted
that the entire record relating to the construction of the projects is with
the Investigating Officer and no custodial interrogation of the applicant is
required.
Signature Not Verified
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By:SANGEETA ANAND
Signing Date:13.12.2021
12:24:47
BAIL APPLN. 2722/2021 & BAIL APPLN. 2746/2021 Page 3 of 22
5. Learned Senior Counsel, while challenging the conclusions of the
Forensic Audit conducted by the Interim Resolution Professional (IRP),
submitted that as per the Status Reports filed before the Sessions Court
the total proceeds obtained by the accused Company from the
homebuyers as well as the Banks, combined for both the projects,
amount to approx. Rs.557 crores, whereas the valuation of both the
projects is to the extent of Rs.566.33 crores. Thus, the conclusion in the
Forensic Audit Report of the IRP, that funds to the tune of Rs.408 crores
were diverted by the accused Company, is ill-founded. It was further
submitted that the said Forensic Audit is also at variance from the audit
conducted by the Oriental Bank of Commerce (now merged with PNB
and hereinafter referred to as OBC) inasmuch as, the Forensic Audit
conducted by OBC shows that an amount of Rs.62 crores out of the
sanctioned loan amount was utilized in the construction of project
“Estella”, but the Forensic Audit conducted by the IRP shows that an
amount of Rs.22.90 crores, out of the sanctioned loan of Rs.75 crores
(the disbursed amount being Rs.65.42 crores) from PNB, was mis-
utilized.
6. Learned Senior Counsel further submitted that the action of the
Investigating Officer in not filing the charge sheets even after a lapse of
more than three years since registration of the FIRs shows mala fides as
according to the Status Report placed on record, entire documentary
record has been collected. He also submitted that the reasons stated in the
Status Report for seeking custodial interrogation of the applicant are
misconceived.
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By:SANGEETA ANAND
Signing Date:13.12.2021
12:24:47
BAIL APPLN. 2722/2021 & BAIL APPLN. 2746/2021 Page 4 of 22
7. It was next contended on behalf of the applicant that the
ingredients of the offence of cheating are not made out in the present
cases, as the applicant is still desirous of completing the projects and is
ready to raise funds through sale of personal assets and assets of related
entities. It was also contended that the projects could not be completed in
time as the homebuyers had not paid the remaining balance amount .
8. In support of his submissions, learned Senior Counsel placed
reliance on the decisions in Siddharth v. State of Uttar Pradesh and
Another reported as 2021 SCC OnLine SC 615 and Aman Preet Singh v.
C.B.I. Through Director reported as 2021 SCC OnLine SC 941 .
9. Ms. Neelam Sharma, learned APP for the State, duly assisted by
learned counsel for the complainant, vehemently opposed the bail
applications. She stated that in the year 2010-11, the Directors of the
accused Company placed advertisements in newspapers offering booking
of the apartments in the aforesaid projects. It was promised that the
possession of the apartments would be handed over within 3 years with a
further grace period of six months. Learned APP further submitted that
the Flat Buyer Agreements pertain to the year 2012, when payments
were also received by the accused Company. She also submitted that the
initial promise to deliver the possession of flats within a maximum
period of 42 months from the date of Flat Buyer Agreements (i.e.,
31.01.2012 in “NCR One” and 04.09.2012 in “Estella” ), was an
intentional false promise, which induced the homebuyers to part with
their money. The applicant collected 95% of the total consideration
amount under the aforesaid Agreements from the buyers and further got
loans sanctioned from Banks, and yet failed to hand over the possession
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Signing Date:13.12.2021
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BAIL APPLN. 2722/2021 & BAIL APPLN. 2746/2021 Page 5 of 22
of the flats in due time. It was further submitted that the present cases
relate not only to delay in handing over of the possession of flats, but
also to the fraudulent diversion of funds by the applicant through the
accused Company to its other sister/group concerns. It was also
contended that many homebuyers took loans from various Banks to make
payment to the accused Company and were constrained as a result to pay
heavy installments, without receiving the possession of the promised
flats.
10. It was further submitted that the loans of the accused Company
have been declared as NPA. So far, 80 victims have approached the
Investigating Officer with respect to project “Estella”, having invested
approx. Rs.48.30 crores, while 60 victims have approached the
Investigating Officer in respect of project “NCR One”, having invested
approx. Rs.26.59 crores.
11. It was also stated that on an application filed by the financial
creditor/ Punjab National Bank under Section 7 of the IBC, 2016,
Corporate Insolvency Resolution Process (CIRP) was initiated against
the accused Company and an IRP, namely Mr. Devendra Singh , was
appointed vide order dated 04.03.2021 passed by the NCLT. Upon
issuance of notice under Section 91 Cr.P.C. by the Investigating Officer,
Mr. Devendra Singh , IRP had furnished his Report relating to the total
flats booked and total funds collected by the accused Company under
both the projects. In the said Report, it was stated that under project
“Estella”, the accused Company had booked 468 flats out of a total of
510 flats and collected Rs.276.06 crores from the homebuyers, whereas
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Signing Date:13.12.2021
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BAIL APPLN. 2722/2021 & BAIL APPLN. 2746/2021 Page 6 of 22
under project “NCR Green, Phase-2”, 365 flats out of a total of 399 flats
were booked and Rs.170.59 crores collected.
12. Learned APP also contended that the Forensic Audit conducted by
the IRP would not only show that the proceeds collected from
homebuyers were not invested in the projects, but also that the funds
received from Banks were also misappropriated and illegally diverted to
accounts of entities related to the accused Company and its Directors.
She further submitted that the difference as to the siphoned-off amount in
the audit report filed by the IRP and the audit conducted by OBC is on
account of the fact that all relevant materials were not available at the
time of Bank audit. The audit conducted by the IRP is much more
comprehensive, in view of the additional materials which have come on
record since then.
13. Lastly, she submitted that the present applicant has shown no
regard for the Court-appointed IRP, as he not only threatened the
employees and Key Managerial Personnel of the accused Company to
not cooperate with the IRP, but also threatened the IRP himself, for
which an application was filed by the IRP before the NCLT, besides a
police complaint which was filed on 21.09.2021 with the SHO, Police
Station Sushant Lok, Gurugram, Haryana.
14. In addition, learned counsels for the complainants submitted that
the applicant has duped about 833 homebuyers and despite having
surplus funds since the last 7-8 years, he has not invested any money in
either of the projects since 2016. It was further submitted that only 40-
50% construction has been completed in project “Estella”, even though
some of the homebuyers have paid almost 95% of the sale consideration
Signature Not Verified
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Signing Date:13.12.2021
12:24:47
BAIL APPLN. 2722/2021 & BAIL APPLN. 2746/2021 Page 7 of 22
amount. It was also submitted that despite collecting excess amount from
the homebuyers, the applicant further took loans from the Banks and the
total outstanding liability of the applicant as on date is Rs.390.25 crores,
against which he had given proposal to Committee of Creditors (COC) to
infuse a paltry sum of Rs.30 crores, that too, in three instalments, over a
long period of time, which has been rejected by the COC in its meeting
held on 28.07.2021.
Reference was also made to the order dated 13.11.2019 passed by
the Punjab and Haryana High Court in CRM-M-38926/2019 titled as
Siddharth Chauhan v. Serious Fraud Investigation Office, to submit that
while deciding the applicant’s anticipatory bail application, it was
observed that he is a manipulator and cannot be trusted. The said bail
application was filed by the applicant in proceedings arising out of
investigation conducted by the Serious Fraud Investigation Office
(SFIO), in connection with which proceedings are pending before the
Special Court, Gurugram.
Lastly, it was submitted that out of total area of 15.74 acres falling
under project “Estella”, the applicant fraudulently sold about 6 acres to
Ansal Housing and Construction Ltd. and the accused Company
collected payments towards External Development Charges (EDC) and
Infrastructure Development Charges (IDC) from the homebuyers but did
not deposit the same with concerned authorities, resulting in non-renewal
of licenses.
15. In rebuttal, learned Senior Counsel submitted that a One-Time
Settlement (OTS) proposal dated 05.04.2021 is pending consideration
with OBC. To disprove the allegation of diversion of funds, reliance was
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Signing Date:13.12.2021
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BAIL APPLN. 2722/2021 & BAIL APPLN. 2746/2021 Page 8 of 22
placed on Government Approved Valuer Reports dated 16.06.2021 and
CA certificates dated 19.06.2021. It was submitted that as per these
documents, surplus amount received under project “Estella” is Rs.18.67
crores and that received under project “NCR Greens, Phase-II” is Rs.22
crores. Therefore, a total surplus amount of Rs.40.67 crores was received
under the two projects, which is nowhere close to the amount estimated
in the report of the IRP. Insofar as status of construction is concerned, it
was submitted that PNB had got conducted a project valuation and as per
the Report, more than 55% of the construction was complete in 2018,
and the same is now about 70-75% complete.
It was also submitted that the selling of 6 acres of land to Ansal
Housing and Construction Ltd . was in terms of the conditions of license,
as also reflected in the Builder-Buyer Agreements.
With respect to the complaint filed by the IRP, learned Senior
Counsel submitted that the same was a counterblast, filed in order to
prejudice the NCLT.
16. I have heard learned counsels for the parties and have also perused
the entire material placed on record.
17. At the cost of repetition, this Court notes that under project
“Estella” , the accused Company sold about 468 units/flats and received
an amount of Rs.276.06 crores from the homebuyers. It further got
sanctioned a loan of Rs.75 crores from OBC. For project “NCR One”, an
amount of Rs.170.59 crores was received by the accused Company
towards 365 units/flats sold and further, a loan of Rs.54 crores was got
sanctioned from the Punjab & Sind Bank. The applicant along with
another Director, namely Randhir Singh Chauhan (i.e., father of the
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By:SANGEETA ANAND
Signing Date:13.12.2021
12:24:47
BAIL APPLN. 2722/2021 & BAIL APPLN. 2746/2021 Page 9 of 22
applicant), stood as personal guarantors. Eventually, both the term loans
were declared as NPA in the year 2017.
18. It is apparent that total funds of Rs.338.06 crores were collected
for infusion into project “Estella”, even though the cost of the project
was initially projected as Rs.248 crores and later revised to Rs.273
crores. Thus, the accused Company had surplus funds to the tune of
Rs.65.06 crores under project “Estella” .
Similarly, for project “NCR Green, Phase-2”, a total sum of
Rs.224.59 crores was collected for infusion in the project, while the
estimated cost of construction was Rs.192.78 crores. In view of the same,
it is discernible that excess amount to the tune of Rs.31.81 crores was
secured under project “NCR Green, Phase-2”.
From the aforesaid, it is deducible that the surplus funds collected
by the accused Company, when combined for both the projects, amount
to Rs.96.86 crores.
19. Initially, on 21.08.2017, joint complaints were received against the
accused Company and its Directors from 28-30 complainants in respect
of project “Estella” and from 24 complainants regarding project “NCR
One”. Subsequently, a total of 80 complainants have approached the
Investigating Officer with respect to project “Estella” and 60
complainants have approached in connection with project “NCR One”.
The record of proceedings before the NCLAT in its order dated
31.03.2021 passed in Company Appeal (AT) (Insolvency) No. 270/2021
shows that as many as 550 claims of homebuyers had been received by
the IRP, besides one claim of financial creditor/ Punjab & Sind Bank , till
that date.
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Signing Date:13.12.2021
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BAIL APPLN. 2722/2021 & BAIL APPLN. 2746/2021 Page 10 of 22
20. After the term loan advanced by OBC turned NPA, an Auditor was
appointed by the Bank for conducting the Forensic Audit of the accounts
of the accused Company. On 16.07.2018, the auditor submitted its
Report, where it was noted that Rs.152 crores were collected by the
accused Company from homebuyers and Rs.203.9 crores were projected
to be realized from the sale of about 244 flats which were unsold. In this
backdrop, it was opined that funds were not infused by promoters for the
completion of the projects, and that resulted in the projects remaining
incomplete.
21. It has also come in the investigation that the accused Company did
not deposit renewal fee with the Director, Town & Country Planning
(DTCP), Haryana and consequently, the licenses for the two projects
lapsed on 07.03.2015 and 18.03.2016 respectively. As the licenses were
not got renewed from the DTCP, Haryana, neither of the projects are
registered with the Haryana Real Estate Regulatory Authority. It has also
come on record that as on 23.06.2021, the DTCP had issued notice to the
accused Company with respect to default in payment of Rs.36.10 crores
against EDC and Rs.4.29 crores against IDC, which are stated to be
outstanding for project “Estella”.
22. The Auditor appointed under the IBC proceedings had submitted a
detailed transaction report of the accused Company, as per which, the
applicant along with other Directors of the accused Company, has
misappropriated an amount of Rs.408.74 crores out of the funds received
for the aforesaid two projects. The observations made in the said Report
were placed before the Court vide an Additional Status Report dated
17.09.2021. The observations are discussed below:-
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By:SANGEETA ANAND
Signing Date:13.12.2021
12:24:47
BAIL APPLN. 2722/2021 & BAIL APPLN. 2746/2021 Page 11 of 22
i) Repayment of Overdraft Facility of Karnataka Bank – The accused
Company had obtained an overdraft facility of Rs.20 crores from
Karnataka Bank in the year 2016. Subsequently, the Company made a
payment of Rs.15.15 crores to the Bank through another company i.e.,
M/s Millennium Diplomats Private Ltd. Considering that neither the
Bank nor M/s Millennium Diplomats Private Ltd. has filed any claim
before the IRP since initiation of the CIRP, it is suspected that the
aforesaid amount of Rs.15.15 crores was utilized for releasing of
properties of the applicant and two associate companies, rather than
being used for construction of the projects .
In this regard, learned Senior Counsel referred to a No-
Objection Certificate from Karnataka Bank and submitted that an amount
of Rs.20 crores has been paid back to the Bank by the accused Company
through M/s Millennium Diplomats Private Ltd., for which payment,
shares in the land of village Fazilpur were given to M/s Millennium
Diplomats Pvt. Ltd.
ii) Introduction of Fictitious Share Capital in FY 2014-15 – At the
time of sanctioning of term loan by Oriental Bank of Commerce (now
PNB), the promotor/applicant contribution was to be increased from
Rs.30 crores to Rs.50 crores. To this end, the applicant was allotted 2
crore shares of Rs.10/- each on 26.02.2015. However, the balance
receivable from the applicant was transferred to six related parties, from
which no money was received during the said period. It is thus suspected
that the applicant gave false certificate of introduction of capital to the
Bank by way of book entries while there was no actual inflow of money
into the Company, so that the loan could be obtained from the Bank.
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By:SANGEETA ANAND
Signing Date:13.12.2021
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BAIL APPLN. 2722/2021 & BAIL APPLN. 2746/2021 Page 12 of 22
iii) Mis-utilization of the Term Loans disbursed by PNB and PSB – The
accused Company had got sanctioned term loans of Rs.75 crores and
Rs.54 crores respectively, for its two projects namely “Estella” and
“NCR Green, Phase-2”. It has been found in the audit that the loan
amounts were utilized for purposes other than for which they were got
sanctioned. In case of term loan obtained from PSB, Rs.1.50 crores were
paid to associates/sister concerns, Rs.3.29 crores were paid towards
interest on the loan and Rs.5.98 crores were utilized towards the other
project i.e., “Estella”. Likewise, in case of term loan obtained from
PNB, Rs.22.90 crores were mis-utilized, insofar as Rs.18.02 crores were
paid to associates/sister concerns, Rs.2.85 crores were paid towards
interest on the loan and Rs.2.03 crores were utilized towards the other
project i.e., NCR, Sector-95.
iv) Transferring/Selling of Vehicles at an undervalued consideration –
Since the initiation of CIRP, the company has transferred eight vehicles
to related parties/others at throwaway prices. Apparently, the money was
received in cash to hide the name of the beneficiary. For example, a
Fortuner was sold in cash only for Rs.80,829/-. Out of the aforesaid eight
vehicles, six were transferred on a single day.
v) Huge Balance Receivable - As per the documents analyzed, the
accused Company had a balance of Rs.151.28 crores receivable from 289
parties on the date of initiation of CIRP. Out of the aforesaid balance
receivables, Rs.109.32 crores were receivable from 10 related parties. To
confirm the genuineness of the receivables shown in the books of
accounts of the accused company, the auditor had sent balance
confirmation letters however, no reply was received from any of the
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Signing Date:13.12.2021
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BAIL APPLN. 2722/2021 & BAIL APPLN. 2746/2021 Page 13 of 22
related parties. Letters were also sent to other parties, but most of them
were returned undelivered.
vi) Fraudulent Excess Recovery of EDC and IDC from the Homebuyers -
The accused Company had collected an excess of Rs.2.37 crores as
excess money from the homebuyers in lieu of EDC and IDC.
vii) Falsification of Books of Accounts – The accused Company had
recorded various journal entries resulting in setting off balances of
debtors and creditors without routing the transaction through banking
channels. It is opined by the IRP that transactions do not appear to be in
ordinary course of business and the method adopted by the accused
company has not been disclosed in financial statements or notes to
accounts.
viii) Receipt of Material at Project Sites through Vehicles not fit for
Transportation – On verification of purchase invoices, it came to the
notice that material i.e., cement, steel etc. was received through
motorcycle, scooter, motor car, bus, E-rickshaw etc. Almost 20% of the
verified transactions took place in the aforesaid manner. Resultantly, the
purchase transactions recorded in the books of accounts appear to be
bogus.
ix) Investment in Subsidiary Companies – The accused Company had
made investment in three subsidiary companies for a total of Rs.15.98
crores. The funds are opined to have been misused by the accused
Company for the benefit of suspended Directors, promoters etc., as there
is no record/documentary evidence of any return on the investment made
or of the reasons for such investment.
Signature Not Verified
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By:SANGEETA ANAND
Signing Date:13.12.2021
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BAIL APPLN. 2722/2021 & BAIL APPLN. 2746/2021 Page 14 of 22
x) Issuance of Receipts to Homebuyers without realization of money of
Rs. 18.44 crores and discovered profile funding of Rs. 46.50 crores –The
Auditor came across 51 instances where the accused Company had
issued receipts (for booking and instalments), but against the same, no
money was ever realized. The receipts were for Rs.18.44 crores and on
the basis thereof various Banks had sanctioned loans in the name of
homebuyers, to the tune of Rs.46.50 crores in total, and disbursed the
amount directly to the accused Company.
xi) Payment for Personal Expenses of Suspended Board of Directors – It
is stated that the accused Company paid huge amount of money towards
expenses of directors such as lease rent of car owned by them, lease rent
of their residential apartment, fixed assets for their home etc. It is further
stated that this led to deterioration in the financial health of the company
and amounts to diversion of funds.
xii) Other Miscellaneous Observations leading to Outflow of Funds –
The Auditor noted various instances which resulted in outflow of money
to the tune of Rs.13.01 crores approximately and the same have been
opined as appearing to be fictitious.
23. A plain reading of the above Forensic Audit report would show
that the applicant not only collected surplus amounts from the
homebuyers, but also obtained loans from Banks over and above. Out of
the total funds accumulated, interest-free advances were given to
associates/sister concerns of the accused Company, instead of investing
them in the projects.
24. It is borne out from the material placed on the record that an
application was filed before the NCLT on behalf of the IRP, in which it
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Signing Date:13.12.2021
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BAIL APPLN. 2722/2021 & BAIL APPLN. 2746/2021 Page 15 of 22
was stated that one Harish Gupta, Head Projects of the accused
Company, had sent him an E-mail dated 26.08.2021, wherein he stated
that he had received WhatsApp voice calls from the applicant forcing
him to create complications and hurdles at both the sites, besides
threatening him. Excerpt from the relevant email is reproduced
hereunder:
“…I am informing you that I have received whatsapp voice calls
on 23.08.2021 (Monday) in the day time one around 12:00 noon
and another at 02:30 PM. As you are aware that I am working as
Head - Projects for both the project sites of the company NCR &
Estella situated at Sector 95 and Sector 103, Gurugram
respectively. In the whatsapp voice conversation Mr. Sidharth
Chauhan forcing me to create complications and hurdles at both
the sites in which IRP has initiated the construction work for
completion of the projects and also threatened me that if I do not
work as per his order then he can use the other means to stop the
work by sending his number of persons there.”
25. Similarly, one Ravi Kumar Singh, who has been working in the
CRM department of the accused Company, had also informed the IRP
through email dated 28.08.2021 that he was extended life threats by the
applicant. It was further informed that he was abused by the applicant
and directed not to provide any information to IRP’s team/Auditor. The
email sent by Ravi Kumar Singh reads as follows:
“…On 23.08.2021 when I was coming out from accounts
department, the room which is adjacent to Mr. Sidharth Chauhan,
CMD's Room, Mr. Dharam Chand Yadav who is Director in the
Company asked me to come to CMD's Room then from his phone
he called Mr. Sidharth Chauhan through whatsapp voice call and
handover the phone to me.
Over the phone call the CMD was asking how dare you have given
confidential information of CRM Data to IRP Team and to the
Auditor and provided data of profile funding without my directions
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Signing Date:13.12.2021
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BAIL APPLN. 2722/2021 & BAIL APPLN. 2746/2021 Page 16 of 22
and listening to me with shouting and abusive tone. I replied that
my reporting is to Mr. Devendra Singh, IRP and whatever
information he sought and is available in company record I
provided. Further he told me that don't try to be over smart and
asked from which route you are coming to office I replied that I
travel metro to my residence, he straightly threatened me that
"main tere andar itna peetal utaar dunga tu kisi layak nhi rahega"
and he continuously abused and threatened me and directed me
not to provide any information.”
26. Further, the IRP himself had received a threatening call from the
applicant on 18.09.2021 at 01:08 pm on his mobile. In the said
conversation, the applicant is stated to have used threatening words to the
following effect:-
“If you visit the Gurgaon Office of SBPL, then your children will
be regretful of the fact that their father is no more”.
27. In this backdrop, a police complaint dated 21.09.2021 was filed by
the IRP with the SHO, Police Station Sushant Lok, Gurugram, Haryana,
a copy of which has been placed on record. In the said complaint, it was
further stated that one Mr. Birpal, alongwith two other persons, was sent
by the applicant to the office of SBPL, Gurugram to intimidate the IRP
as well as the Project Head, CRM Manager.
28. With respect to the application filed by the IRP before the NCLT
under Section 19(2) read with Section 70 read with Section 60(5) of the
IBC, in which details of the events that had transpired were mentioned, it
has been informed that on 24.09.2021, the NCLT has passed orders
restraining the present applicant from engaging in direct conversation by
any means with any of the employees of the accused Company without
prior consent of the IRP. The applicant has further been restrained from
taking any action or posing any danger to the life of the IRP.
Signature Not Verified
Digitally Signed
By:SANGEETA ANAND
Signing Date:13.12.2021
12:24:47
BAIL APPLN. 2722/2021 & BAIL APPLN. 2746/2021 Page 17 of 22
29. In the Status Reports placed on record and during the course of
submissions, it has been repeatedly stated that though sufficient
documents have come on record which implicate the applicant,
investigation is still pending in order to unearth the details of funds
diverted by him, for which custodial interrogation is required.
30. In the facts of the case, reliance placed by the applicant on the
decisions in Siddharth (Supra) and Aman Preet Singh (Supra) is of no
consequence as in those cases, investigation was complete and the issue
was whether the accused was required to be arrested before or after filing
of the charge sheet.
31. Before proceeding further, I deem it apposite to reproduce a
noteworthy observation made by the Supreme Court in State Rep. by the
C.B.I. v. Anil Sharma reported as (1997) 7 SCC 187 :-
“6. We find force in the submission of the CBI that custodial
interrogation is qualitatively more elicitation-oriented than
questioning a suspect who is well ensconced with a favourable
order under Section 438 of the Code. In a case like this effective
interrogation of a suspected person is of tremendous advantage in
disinterring many useful informations and also materials which
would have been concealed. Success in such interrogation would
elude if the suspected person knows that he is well protected and
insulted by a pre-arrest bail during the time he is interrogated.”
( emphasis added )
32. A subsequent observation in Nimmagadda Prasad v. Central
Bureau of Investigation reported as (2013) 7 SCC 466 is also referred to,
before adverting to the facts of the present case:
“25. Economic offences constitute a class apart and need to be
visited with a different approach in the matter of bail. The
economic offence having deep-rooted conspiracies and
Signature Not Verified
Digitally Signed
By:SANGEETA ANAND
Signing Date:13.12.2021
12:24:47
BAIL APPLN. 2722/2021 & BAIL APPLN. 2746/2021 Page 18 of 22
involving huge loss of public funds needs to be viewed
seriously and considered as a grave offence affecting the
economy of the country as a whole and thereby posing serious
threat to the financial health of the country.”
33. The present case involves allegations of inducement of about 833
homebuyers to invest in housing projects, on a promise of time-bound
delivery of possession, and subsequent misappropriation and diversion of
money collected from them and funds obtained from Banks. The case is
not simpliciter of delay in construction. The homebuyers had paid money
out of their life savings and/or obtained loans from Banks, subsequent to
which possession of the promised flats was not delivered. The
investigation/audits conducted by various authorities further reveal that
the money collected from the homebuyers as well as the loans taken from
the Banks were not utilized appropriately in the construction of the two
projects.
34. It is noted that the RERA, Haryana had appointed a Local
Commissioner to ascertain the status of construction of project “Estella”,
whose report dated 12.04.2019 shows that the project as of 2019 was not
likely to be completed soon. It is relevant to reproduce the conclusion
arrived at by the Local Commissioner, which was as under:-
“The project to be developed by Sidhartha Buildhome is
physically inspected, it is observed that around 40-50 labour
were working on site and the work progress is based upon
actual construction at site and it is submitted that the overall
progress of the project is 45-50 per cent only. The work
progress in tower A is 50-50 per cent only. The work progress
of complainant unit is approximately 55-60 per cent only.
Sd/-12.04.2019
Engineer Executive”
Signature Not Verified
Digitally Signed
By:SANGEETA ANAND
Signing Date:13.12.2021
12:24:47
BAIL APPLN. 2722/2021 & BAIL APPLN. 2746/2021 Page 19 of 22
35. An audit was conducted by OBC as well, which found non-
utilization of term loan advanced in the construction of the project. Later,
a detailed Forensic Audit was conducted by the IRP, which found
misappropriation and diversion of funds to the tune of Rs. 408.74 crores.
Though it was stated that there is variance in the two reports as to the
amounts alleged to have been diverted, I find force in the submission of
learned APP for the State that at the time when the audit was carried out
by the Bank, entire material was not available, which has subsequently
been collected during investigation and was available at the time of
Forensic Audit conducted by the IRP.
36. Even though the applicant’s case is that an OTS is pending before
th
PNB (earlier OBC), it is noted that as per Minutes of Meeting of 8 COC
meeting dated 17.08.2021, the IRP was apprised by the representative of
PNB that even though the applicant had met the competent authority
regarding settlement, no settlement proposal on his behalf was pending
with the Bank.
37. It is further noted that as per the complainants, estimated cost of
completion of both the projects as on date is approx. Rs.157.61 crores.
Per contra, estimated cost of completion of both the projects, in terms of
the preliminary proposal given by the applicant to the IRP vide email
dated 27.07.2021, is approx. Rs.135 crores. Without commenting on the
propriety of either claim, it is noted that in addition to his estimation of
the cost of completion of the projects, the applicant has admitted that the
amount payable to Banks is Rs.97.50 crores plus unapplied interest after
March, 2018. Yet, he is stated to have proposed before the Committee of
Creditors to infuse only about Rs.30 crores, which offer has reportedly
Signature Not Verified
Digitally Signed
By:SANGEETA ANAND
Signing Date:13.12.2021
12:24:47
BAIL APPLN. 2722/2021 & BAIL APPLN. 2746/2021 Page 20 of 22
been rejected. Suffice it to say that the applicant, by not making a
reasonable offer of settlement, has not only misled this Court and merely
bought time, but has further abused the concession of interim protection
granted to him vide order dated 05.08.2021 by threatening and
intimidating the witnesses. He has gone a step further by threatening the
Court-appointed IRP Mr. Devendra Singh who was constrained to file an
application before NCLT as well as a complaint with the police. The
observations made against the applicant in the order dated 13.11.2019 by
the Punjab and Haryana High Court that he is a manipulator and cannot
be trusted, assume great significance in the facts noted hereinabove.
38. This Court appreciates that there is a qualitative difference
between interrogation of the accused while in custody and while he is
enjoying protection against arrest. In the present case, it appears that the
applicant has been attempting to mislead the Court in the name of efforts
at settlement, instead of making any serious effort at addressing claims of
the aggrieved homebuyers, while also tampering with the evidence and
threatening the witnesses. Under these circumstances, his custodial
interrogation is deemed necessary.
39. Notably, the grant of anticipatory bail in a case of such large
magnitude is further likely to have an adverse impact not only in the
progress of the case, but also on the trust reposed by the society in the
criminal justice system. This Court also cannot discount the fact that in
case the applicant is granted the concession of anticipatory bail, he may
again tamper with the evidence/witnesses and/or threaten them, as has
been the case in the past.
Signature Not Verified
Digitally Signed
By:SANGEETA ANAND
Signing Date:13.12.2021
12:24:47
BAIL APPLN. 2722/2021 & BAIL APPLN. 2746/2021 Page 21 of 22
40. After due consideration of the material placed on record and the
submissions of the counsels for the parties, this Court is of the firm
opinion that prima facie, the applicant, being the only promoter and
having 97% shareholding of the accused Company, has misappropriated
and siphoned-off funds collected from the homebuyers as well as the
Banks. The magnitude of misappropriation and gravity of the offence
also necessitate his custodial interrogation, to unearth the money trail of
the siphoned-off amounts and to prevent him from attempting to tamper
with the evidence and threaten the witnesses. He already has shown scant
regard for the Court orders by threatening the witnesses while on interim
protection.
41. Consequently, the interim protection granted to the applicant is
withdrawn forthwith and the bail applications are dismissed, alongwith
the pending applications.
MANOJ KUMAR OHRI, J
DECEMBER 13, 2021
ga
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Signature Not Verified
Digitally Signed
By:SANGEETA ANAND
Signing Date:13.12.2021
12:24:47
BAIL APPLN. 2722/2021 & BAIL APPLN. 2746/2021 Page 22 of 22