Promise Of Unrealistic High Returns In Share Trading Is Prima Facie Cheating, Not A Civil Dispute: Bombay High Court - 2025-09-20

Bombay High Court Denies Bail to Lawyer Couple in Investment Fraud Case, Cites 'Unrealistic' Profit Promises

Mumbai: The Bombay High Court has rejected the anticipatory bail application of a lawyer and his wife, ruling that luring investors with promises of "unrealistic and impractical" profits of 10-15% per month on share trading constitutes a prima facie case of cheating, not merely a civil dispute. Justice Amit Borkar, while denying pre-arrest bail, also made strong observations about the professional misconduct of the lawyers involved in the case.

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Background of the Case

The case involves an anticipatory bail application filed by Rupali Bapurao Jadhav and her husband, apprehending arrest in a cheating case registered at Kharghar Police Station. The complaint was filed by another lawyer, Sachin Baliram Jadhav, who had entered into a law firm partnership with the male applicant.

According to the prosecution, the applicants convinced the complainant to invest Rs. 30 lakhs in cash for intraday share trading, assuring him of guaranteed monthly returns between 10% and 15%. After an initial payment of Rs. 4 lakhs as profit, the payments stopped. The ensuing dispute led to the dissolution of their law partnership and the filing of a criminal complaint.

Arguments from Both Sides

• Applicants' Defence: The counsel for the applicants argued that the dispute was purely civil, stemming from professional rivalries in their dissolved law firm. They claimed there was no proof of the Rs. 30 lakh payment and, in fact, they had paid a larger sum of Rs. 36.32 lakhs to the complainant for other reasons. They contended that any investment in the stock market is made with knowledge of the risks, negating any dishonest intention from the outset.

• Complainant's and Prosecution's Stance: The complainant's lawyer, supported by the Additional Public Prosecutor (APP), argued that the applicants had a clear dishonest intention from the beginning. They presented WhatsApp transcripts and a draft Memorandum of Understanding (MOU) where the applicants allegedly admitted to receiving the money for trading. The prosecution further revealed that four other victims had filed similar complaints against the couple, involving amounts up to Rs. 49 lakhs, indicating a larger fraudulent scheme. The APP emphasized that the promise of such high, guaranteed returns was itself proof of a fraudulent inducement.

Court's Rationale: Unrealistic Promises as an Indicator of Fraud

Justice Borkar's judgment drew a sharp line between a civil breach of contract and a criminal act of cheating. The court held that the nature of the promise made to the investor was the key determining factor.

"The promise of 10% to 15% profit every month is, on the face of it, highly unrealistic and impractical in the share market. No genuine business activity can yield such assured and astronomical returns. Such an inducement, therefore, prima facie reflects a dishonest intention at the inception."

The court reasoned that when an inducement is coupled with an assurance that is "inherently impossible to fulfill," the offence of cheating is established. It rejected the applicants' plea that the matter was a civil dispute, stating that the promise of abnormal returns tainted the entire transaction with criminality.

Professional Misconduct and 'Liaisoning Work'

The judgment took a particularly stern view of the professional conduct of the parties, both of whom are practicing advocates. A startling admission emerged from a notice sent by the male applicant to the complainant, stating that a sum of Rs. 26.32 lakhs had been paid for "liaisoning work" at the office of the Revenue Commissioner and before the Revenue Minister.

The court highlighted this as a significant factor aggravating the seriousness of the case:

"When advocates, who are officers of the Court, enter into transactions involving 'liaisoning work' with government authorities or ministers, it directly reflects upon their professional conduct... Engaging in acts of influence peddling or liaisoning with public authorities for monetary consideration is not only unethical but may amount to professional misconduct."

Justice Borkar noted that this admission demolished the applicants' claim of a purely civil dispute and strengthened the prosecution's case that they were misusing their professional status for illicit monetary gain.

Final Decision

Citing the magnitude of the amounts involved, the presence of multiple victims, the prima facie evidence of dishonest intent, and the need for custodial interrogation to trace the invested funds, the High Court concluded that there was no merit in the application.

The application for anticipatory bail was rejected, and a request to continue interim protection was also turned down.