Judicial Analysis Court Copy Headnote Facts Arguments Court observation

2025 Supreme(Bom) 651

IN THE HIGH COURT OF JUDICATURE AT BOMBAY
BHARATI DANGRE, MANJUSHA DESHPANDE, JJ.
Roop Kishor Bhootra - Appellant
Versus
The State of Maharashtra and Another - Respondents
Criminal Appeal Nos. 461, 462, 664, 665, 666, 667, 668, 669, 679, 681, 682, 683, 684, 884, 1155 of 2023, Interim Application Nos. 1770, 1771, 1772, 1774, 1775, 1776, 1777, 1819, 1821, 1822 of 2023
Decided On : 07-02-2025

Advocates:
Advocate Appeared:
Mr.Amit Desai, Senior Advocate a/w. Mr. Gopalakrishna Shenoy,
Mr.Vaibhav Singh, Ms. Radhika Indapurkar, Mr.Bryan Pillai, Mr.
Manas Kotak, Mr. Dhruv Dandekar, Mr. Pranav Chandhoke i/by.
Shardul Amarchand Mangaldas & Co. for Appellant in Criminal
Appeal No. 461/2023.
Mr. Pranav Badheka, Sr. Advocate a/w. Mr. Prashant Pawar, Vaibhav
Singh, Ms. Radhika Indapurkar, Mr.Bryan Pillai, Mr. Manas Kotak,
Dhruv Dandekar, Pranav Chandhoke i/b Shardul Amarchand
Mangaldas & Co. for appellant in Criminal Appeal No. 462/2023.
Mr. Prashant Pawar, Advocate for Intervenor in IA No. 1770/2023,
IA No.1771/2023, IA No.1772/2023, IA 1774/2023 and IA
1775/2023 and IA 1776/2023.
Mr. Vaibhav Singh a/w. Ms. Radhika Indapurkar, Mr. Bryan Pillai, Mr.
Manas Kotak, Mr. Dhruv Dandekar, Mr. Pranav Chandhoke i/b
Shardul Amarchand Mangaldas & Co. for applicant in Interim
Application No. 1826/2023 in Criminal Appeal No. 461/2023.
Mr. Prateek Seksaria, Senior Advocate i/b Prashant Pawar, for
Intervenor in IA No.1777/2023 in Criminal Appeal No.462/2023.
Mr.Amit Desai, Sr.Advocate a/w Mr. Mihir Gheewala a/w. Mr. Vikrant
Singh Negi, Ms. Ekta Tyagi, Ms.Sneha Barange, Ms.Priyamvada
Singhania, Mr.Gopalakrishna Shenoy, Sneha Barange i/b. DSK Legal
for appellant in Appeal Nos.679/2023 & 681/2023.
Mr.Raja Thakare, Senior Adv. a/w. Mr. Mihir Gheewala, Mr. Vikrant
Singh Negi, Ms. Ekta Tyagi, Ms. Sneha Barange, Ms.Priyamvada
Singhania, Mr. Siddharth Jagushte i/b. DSK Legal for Appellant in
Appeal 682/2023 & 683/2023.
Mr.Aditya Mehta for Applicant in Interim Application No.1819/
2023, 1821/2023 & 1822/2023.
Mr. Mihir Gheewala a/w Aditya Mehta, Farhad Panthaki Rishabh
Botadra i/b Santosh Pawar for Appellant in Appeal 684/2023.
Mr. Aabad Ponda Sr.Advocate, Arvind Lakhawat, Javed
Dhorajiwala, Nimeet Sharma, Vinit Vaidya, Jalpa Shah, Himani
Narula i/b. MZM Legal LLP for Respondent No.2 in Appeal
No.461/2023.
Mr.Arvind Lakhawat a/w Mr.Javed Dhorajiwala with Mr.Nimeet
Sharma, Mr. Vinit Vaidya, Ms.Jalpa Shah & Ms. Himani Narula i/b.
MZM Legal LLP for Respondent No.1 in Appeal No.1155 /2023 and
for respondent no.2 in Appeal 667/2023, 669/2023, 665/2023,
681/2023, 683/2023 and 684/2023.
Mr.Rajiv Chavan, Sr. Advocate i/b. Mr.Gaurav Parkar for Respondent
No.2 in Appeal no. 462/2023, 664/2023, 666/2023, 668/2023,
679/2023, 682/2023.
Mr. Manoj Mohite, Senior Advocate a/w Mr.Nimeet Sharma,Ms. Jalpa
Shah, Mr. Vinit Vaidya, Mr.Javed Dhorajiwala, i/b MZM Legal LLP,
for the respondent no.1 in Criminal Appeal No.884 of 2023.
Mr. Avinash B. Avhad, Spl. Public Prosecutor a/w. Mr. Mahesh V.
Rawool a/w. Mr. Sachin D. Gawade, Mr. Sahil S. Ghule a/w. Mr. J.P.
Yagnik, Addl. P.P. and Dr. Ashvini A. Takalkar, APP, for State in all
other Appeals.
Sr. PI Prakash Bagal (EOW) present.

The court affirmed that it can summon additional accused at the cognizance stage based on prima facie evidence, ensuring all offenders are brought to trial.

Headnote:
(A) Indian Penal Code, 1860 - Sections 120B, 409, 465, 468, 471, 474, 477A - Maharashtra Protection of Interest of Depositors (in Financial Establishments) Act, 1999 - Section 3 - Complaint filed against Directors of National Spot Exchange Limited for misappropriation and fraud involving Rs. 202 lakhs due to non-payment under contracts - Allegations of false warehouse receipts and misuse of Settlement Guarantee Fund - Special Court allowed application for taking cognizance against promoters and directors of financial establishments. (Paras 1-6, 18-19)

(B) Criminal Procedure Code, 1973 - Section 190 - Cognizance of offences - Court can summon additional accused based on prima facie evidence even if not named in charge-sheet - Duty of the Court to ensure all offenders are brought to trial. (Paras 70-80)

Facts of the case:
The complaint involved allegations against the Directors of NSEL for failing to pay dues under various contracts and misappropriating funds through fraudulent practices. The application sought to include additional accused based on their roles in the alleged fraud. (Paras 1-6)

Findings of Court:
The Special Judge found that the application for taking cognizance was maintainable and that the Court had the authority to summon additional accused based on the evidence presented. (Paras 81-83)

Issues: Whether the application filed by NSEL to summon additional accused was maintainable at the stage of Section 190 of the CrPC. (Paras 70-80)

Ratio Decidendi: The Court ruled that it is the duty of the Magistrate to ascertain all offenders involved in the commission of an offence and that the application for summoning additional accused is permissible at the cognizance stage. (Paras 70-80)

Result: Appeals dismissed; application for taking cognizance allowed.

JUDGMENT :

(Bharati Dangre, J.)

I - THE BACKGROUND GIVING RISE TO APPEALS

1. On 30/9/2013, Pankaj Ramnaresh Saraf, Director of Vostak Far East Securities Pvt Ltd, Company involved in the business of investment, trading and financing, filed a complaint against the Directors and other persons holding key management post in National Spot Exchange Limited (for short ‘NSEL’), a Company incorporated under the Companies Act, 2013, being a wholly owned subsidiary of Financial Technologies (India) Ltd, at the relevant time, known as ‘63 Moons Technologies Ltd’. The complaint also involved 25 borrowers/trading members and some brokers of NSEL and it invoked offence punishable u/s. 120B, 409, 465, 468, 471, 474 and 477A of Indian Penal Code, 1860. The complainant made a grievance that he had primarily been transacting in T + 2 + T + 25 contracts and since NSEL suspended trading and deferred settlement of all one day forward contract by 15 days, he did not receive payment of Rs. 202 lakhs that was due to him under various contracts. In addition, he alleged that the commodities were traded by providing ‘false’ warehouse receipts of ‘non-existent commodities’ as NSEL held the commodities in warehouses accredited to it as ‘trustee’ on behalf of the depositors (buyers) and therefore, the misappropriation amounted to criminal breach of trust. In addition, it was also alleged that the Settlement Guarantee Fund has been misused by NSEL.

This FIR was transferred to EOW and a case was registered under Section 3 and 4 of the Maharashtra Protection of Interest of Depositors (in Financial Establishments) Act, 1999 (for short “MPID Act”) in addition to the relevant provisions of the Indian Penal Code and the case was transferred to the Special Court constituted under the MPID Act.

2. The present Appeals revolve around the said case which is pending before the Special Court in form of MPID Special Case No. 1/2014.

Before we come to the subject matter of the Appeals and the controversy raised therein, arising out of the impugned order passed by the Special Court, we must refer to the nature of transactions entered into by NSEL, a Company which received an exemption from the Union of India under section 27 of the Forward Contracts (Regulation) Act 1952, exempting the forward contracts of one day duration for sale and purchase of commodities traded on NSEL.

NSEL operated as an exchange for spot trading in commodities and it launched contracts for buying and selling of commodities on its platform with different settlement periods, ranging from T + 0 to T + 36 days, ‘T’ indicating the trade date i.e. the date on which the trade took place.

NSEL offered ‘paid contracts’ which enabled traders either by themselves or through their brokers, to simultaneously enter into paid contracts of T + 2 and T + 25 duration. The seller through his broker, put the commodities on sale and the buyer who was interested in these commodities through his broker, purchased commodities as per his requirement and NSEL paired the buyer and seller, if there was a match between the requirement of the buyer and the available commodities with the seller. This resulted into a contract between the buyer and seller in form of T + 2 and T + 25 contracts.

A structured stepwise trading process of the paid contracts was operated by NSEL and it would facilitate the transaction between the seller, who wish to trade on the platform and who placed a specific quantity of commodity in a warehouse accredited to NSEL, who offered the commodity for sale, stipulating the price and quantity offered.

3. Reciprocating this transaction, was a step initiated on behalf of the buyer, a trading members or his broker, who would input buy orders of a particular commodity and quantity on the NSEL trading platform and pursuant thereto, it would communicate all the trades effected at the end of the day and the obligation report recording the pay-in and delivery obligations would be forwarded to the trading members. NSEL would