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CDJ 2026 MPHC 050
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| Court : High Court of Madhya Pradesh (Bench at Indore) |
| Case No : Criminal Appeal Nos. 2795, 4760 Of 2024 |
| Judges: THE HONOURABLE MR. JUSTICE GAJENDRA SINGH |
| Parties : Rohit Versus The State Of Madhya Pradesh |
| Appearing Advocates : For the Appellant: Rajesh Yadav, Amar Singh Rathore, Advocates. For the Respondent: Anand Bhatt, Govt. Advocate. |
| Date of Judgment : 12-02-2026 |
| Head Note :- |
Prevention of Corruption Act -
Comparative Citation:
2026 MPHC-IND 4555,
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| Judgment :- |
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1. Regard being had to the similitude in the controversy involved in both these criminal appeals, therefore, both these criminal appeals were analogously heard and are being disposed off by this common order.
2. Both the criminal appeals are arising out of the judgment dated 05.02.2024 passed in Special SC No.714/2016 by Special Judge, Prevention of Corruption Act, Indore whereby the all the appellants have been convicted and sentence as under:-
Sr. No.
| Conviction
| Imprisonment
| Fine
| Default Stipulations
| 1.
| 420 of IPC r/w Section 120-B of IPC
| 03 Years R.I.
| Rs.50,000/-
| 06 Months R.I.
| 2.
| 409 of IPC r/w Section 120-B of IPC
| 05 Years R.I.
| Rs.1,50,000/-
| 06 Months R.I.
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3. The appellant Santosh Devsat was put to trial under Sections 120-B, 420, 409, 467, 468 and 471 of the IPC and Section 58B(4A) r/w Section 45-1A of Reserve Bank of India Act, 1934 and appellants Munnibai and Rohit were put to trial under Sections 120- B, 420 and 409 of the IPC and Section 58B(4A) r/w Section 45-1A of Reserve Bank of India Act, 1934. The prosecution was lodged on the allegations that the appellants were directors of Guru Sai Reality Estate and Allied Ltd. with head office at 105-106, First Floor, Gold Star, in front of Treasure Iland Mall, M.G. Road, Indore. They conspired to cheat the investors and solicited the investors to invest on the allurement of making the money double in a short duration. Santosh Khichi and family members also invested in the company through Agent of the Company, Sharda. On the Maturity of the policies issued by the company, they contacted for encashment. It came to their knowldge that the company has closed the office and ran away even before the maturity. The application Ex.P/3 was preferred to Police Station-South Tukoganj, Indore where Crime No.105/2022 was regisered as Ex.P/34. On investigations, it was found that huge amount has been received from the investors and Managing Director Santosh devsat, Director Munni Devsat and Rohit Devsat purchased huge property valued at Rs.9,89,71,7000/- from the money received from the investors in Guru Sai Reality Estate and Allied Ltd.
4. The appellants abjured the guild and prosecution examined as many as 19 witnesses including N.N. Prasad PW-1, Investigation Officer Rajkumar Sonkar PW-2, Prakash Chandra Jain PW-3, Kailash Narayan Rathore PW-4, Birhari lal Patidar PW-5, Manjit Singh Bhatia PW-6, Girijesh Bairagi PW-7, Rajesh Yadav PW-8, Shri Ram Patidar PW-9, Kamal Verma PW-10, Balaram Pw-11, Dinesh PW-12, Anand Yadav PW-13, Pratap Singh Ranawat PW- 14, Kamal Krishna Sharma PW-15, Shajjad Khan PW-16, S.K. Khanna PW-17, Ashish Verma PW-18 and Kamal Bhilala PW-19.
5. In examination under section 313 of Cr.P.C., 1973, the appellant/accused either denied or expressed the ignorance regarding all the facts and circumstances appeared against them in prosecution evidence. Their explanation was that the complaint was preferred before the maturity date, they did not deposit the installments within time and on maturity, the company makes the payment. They have been falsely implicated.
6. No evidence was adduced in defense.
7. After appreciating the evidence, the learned trial Court convicted the appellants as mentioned in para no.1 above and acquitted from rest of the charges.
SUBMISSIONS OF APPELLANTS COUNSEL
8. Challenging the conviction and sentence, Criminal Appeal No.2795/2024 is preferred on the ground that no independent witnesses have supported the prosecution case, the amount deposited in fixed amount would be paid in double after maturity of five years, but the FIR was filed before the date of maturity of the policies which goes to show that the FIR is mala fide. The learned trial Court has failed to consider this fact and has wrongly convicted the appellants. The Documents Ex.P-37-P/71 are does not show that they all are certificates/receipts as FDRs. The mentioned amount was deposited for purchasing of the plot which was mentioned on the back side of the certificates. The prosecution witnesses have stated in their statements that they have deposited the amount against the promise of return of their deposits alongwith the interest. Oral evidence of these witnesses is contrary to the condition of the certificates. The learned trial Court erred in not considering the material on record in its right perspective and wrongly convicted the appellants. The company was not involved in the banking or non- banking financial services and he learned trial Court has committed error in recording the finding that the appellants have committed breach of Section Section 58B(4A) r/w Section 45-1A of Reserve Bank of India Act, 1934 and without getting registration certificate from the RBI started providing non-banking services. The learned trial Court has further committed error in not considering that there are material contradictions and omissions in the statements of the witnesses in respect of commission of offence by the appellants.
9. Criminal Appeal No.4760/2024 is also based on the similar grounds as raised in Criminal Appeal No.2795/2024.
Heard.
10. Counsel for the State has opposed the criminal appeals and submitted that neither the conviction nor the sentence is require interference.
Perused the record.
APPRECIATIONS AND CONCLUSION
11. Appreciating the evidence on record, the trial Court has concluded in para 83 that the appellants accused Santosh Devsat, Munni and Rohit (who are the husband, wife and son) being directors of Guru Sai Real Estate and Allied Ltd. entered into criminal conspiracy and acting as banker solicited various peoples to invest the money on the promise that the same will be returned double in five years and accepted the deposit dishonestly and the amount was not returned and from that amount entrusted to them they purchased the lands in their personal capacity and the land was not allotted to the persons from whom the deposit was accepted or amount was received and convicted them under Section 420 r/w 120 and 409 r/w 120-B of the IPC.
12. For arriving at the above conclusions, the trial Court has appreciated the testimony of Shriram Patidar (PW-9), Balaram (PW- 11), Shajjad Khan (PW-16), Ashish Verma (PW-18) and Kamal Bhilala (PW-19) and the documents (certificate of deposits) and installment receipts-cum-acceptance (Ex.P-37 to P-71). The above findings have been assailed on the grounds that the maturity date of certificate (Ex.P-37) issued in favor of Shriram Patidar (PW-9) was 25.06.2014, maturity date of certificate (Ex.P-64) issued in favor of Balaram (PW-11) was also on 25.06.2014, maturity date of certificates (Ex.P-66 and 67) issued in favor of Ashish Verma (PW- 18) was 25.06.2014 and 07.04.2015 and the maturity date of certificate (Ex.P-47) issued in favor of Kamal Bhilala (PW-19) was also 25.06.2014 and no documentary proof has been produced regarding the deposit in his name by Shajjad Khan (PW-16) and the raid was conducted on 15.03.2012 i.e. prior to the period of maturity and no cause of action had arrived.
13. The trial Court has addressed the issue in para 61 and 63 of the judgment and recorded the finding that the deposits were accepted on the promise of double amount of deposit and thereafter, company fled away from their address, accordingly, they were not expected to further wait because in that position, there would be delay in setting the enforcement machinery in motion. The trial Court has also recorded the finding that after accepting of money, lands were purchased in personal capacity of the appellants accused and as per the Inventory (Ex.P-99) and Seizure Memo (Ex.P-10 to 12) prepared during the search conducted on 15.03.2012 at the house of appellants situated at 173, Chandramari Ka Bhatta, Dhar Road, Chandan Nagar, Indore.
14. In this case, the magnitude of the offence proved through certificates as (Ex.P-37 for Rs.51,000/-), (Ex.P-39 for Rs.25,500/-), (Ex.P-41 for Rs.25,500/-), (Ex.P-43 for Rs.25,500/-), (Ex.P-45 for Rs.25,500/-), (Ex.P-47 for Rs.25,500/-), (Ex.P-49 for Rs.20,000/-), (Ex.P-51 for Rs.25,500/-), (Ex.P-53 for Rs.25,500/-), (Ex.P-55 for Rs.2,04,000/-), (Ex.P-57 for Rs.2,29,500/-), (Ex.P-59 for Rs.2,04,000/-), (Ex.P-61 for Rs.2,04,000/-), (Ex.P-63 to Ex.P-68 for Rs.82,000 + 25,500 + 17,000 + 25,500 + 42,500 + 25,500 total Rs. 2,18,000/-) and (Ex.P-70 for Rs.51,000/-) total amounting to Rs.13,60,000/-.
15. The above certificates mentioned the investors as the joint ventures of consideration with reference from accepted sum payable and terms and conditions either to receive the allotment of land or to opt out the allotment of the said property and receiving the payment after deducting actual expenditure on development and maintenance. There was a provision of 10% bonus that will be paid according to the scheme opted by the unit holders. The above certificates reflect that the deposits were accepted in Plan RIP and deposit for difference terms i.e. for 5 years, 7 years and 11 years. When the funds are utilized by the directors in securing assets in their personal names then the act amounts to breach of trust.
16. The liability under Section 409 of the IPC is of banker according to Section 5(b) of Banking Regulation Act, 1949, "the banker is a person, who undertakes business of banking". Banking means accepting deposits from the public for the purpose of lending or investment, repayable on demand or otherwise, and withdrawable by cheque, draft, order". For deciding the question whether the person is engaged in the business of banker, nomenclature is not material, it is the activities that he is not carrying on. In this case, the appellants have not registered the Guru Sai Real Estate Allied Ltd. with the Reserve Bank of India for carrying on the business of banking or non banking financial businesses as per (Ex.P-101) but they accepted the investment and issued certificates and thereafter, they utilized the funds for securing the assets in their personal capacity, hence, their acts fall within the ambit of "banker" as mentioned under Section 409 of the IPC.
17. There is a distinction between criminal breach of trust and cheating. For cheating, criminal intention is necessary at the time of making a false or misleading representation i.e. since inception. In criminal breach of trust, mere proof of entrustment is sufficient. Thus, in case of criminal breach of trust, the offender is lawfully entrusted with the property, and they dishonestly misappropriated the same. Whereas, in case of cheating, the offender fraudulently or dishonestly induces a person by deceiving them to deliver any property. In such a situation, both the offences cannot co-exist simultaneously.
18. In this case, the appellants accused got registered the Guru Sai Real Estate Allied Ltd. under the Companies Act, 1956 and floated the scheme solicited the investors and received the investment and issued certificates of deposits but utilized the amount in acquiring the assets in their personal names. Accordingly, the acts of the appellants accused fall within the purview of Banker and breach of trust. Being directors, they are liable under Section 409 of the IPC but their act does not fall within the purview of Section 420 r/w Section 120-B of the IPC. Hence, the conviction under Section 420 r/w Section 120-B of the IPC cannot be sustained and their conviction under Section 420 of the IPC r/w Section 120-B is set aside and they are acquitted from the charges of Section 420 of the IPC, their conviction under Section 409 r/w Section 120-B of the IPC is hereby affirmed.
19. Now come to the quantum of sentence for the offence under Section 409 r/w Section 120-B of the IPC, the trial Court has taken a note of the fact that the case is pending since 2016 but they are not entitled for undue leniency. The trial Court has further mentioned the fact that they are continuously in custody for considerable period. All the appellants are in continuous custody since 16.09.2022 and the appellant Rohit has additionally undergone a period of three days also. Accordingly, the appellants have undergone a period of 3 years and 5 months out of 5 years.
20. The economic offense are the result of greed of money. Imposition of sufficient amount of fine and adequate compensation to the victims balances the interest of both the parties. The jail sentence of the accused does not heal the wounds of the poor victims. I am keeping the arguments in mind that the properties have been seized and are not with the appellants for the disposal. Accordingly, the sentence of imprisonment under Sections mentioned above is reduced to the period already undergone and the sentence of fine is enhanced from Rs.50,000/- to 1,50,000/- and from Rs.1,50,000/- to Rs.3,50,000/- and the default stipulations of 6 months R.I. is also imprisoned from 6 months to 1 year R.I. The amount already deposited shall be adjusted towards the amount of fine.
21. The amount of compensation awarded to Gopal, Shobha, Kamla, Ganga, Kamal Bhilala, Kamal Verma, Kanahiyadas, Balram, Manohar, Ramabai and Mahesh is enhanced from Rs.10,000/- to Rs.50,000/- per person and compensation to Lila, Rohit and Bihari is enhanced from Rs.15,000/- to Rs.75,000/- and the compensation awarded to Bherulal is enhanced from Rs.40,000/- to Rs.2,00,000/-.
22. With the aforesaid modification in the sentence under Section 409/120-B of the IPC and acquittal from Section 420/120-B of the IPC, these appeals are partly allowed.
23. A copy of this order be supplied to the appellants accused through the concerned Superintendent of Central Jail.
24. The record of the trial Court be remitted back for information and necessary compliance.
25. The factum of enhancement of compensation be intimated to the persons mentioned in para 93 of the trial Court judgment.
26. Let a signed copy of this order be retained in CRA No.2795/2024 and photocopy of the same be kept in the record of CRA No.4760/2024.
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