Bombay High Court: In a case where the accused persons filed applications for quashment of FIR registered against them over Rs 50 crore investment fraud, on the ground that no prima facie case was made out against them, the Division Bench of Urmila Joshi-Phalke* and Nandesh S. Deshpande, JJ., held that for certain accused, compelling them to face trial would amount to an abuse of process of law, and hence the FIR against them was quashed. However, as far as one accused was concerned, the Court found prima facie material showing receipt of financial benefits from investors and therefore rejected his plea for quashing.
Background:
The dispute arose from allegations that in February 2022, a seminar was organized by the accused persons at Hotel Ratlam Lawn, Akola, where 300 to 400 people were present. The informant stated that he was introduced to the accused persons who had started a new business and were looking for investments. He was induced to deposit amounts in Indian currency with promises of receiving returns in dollars, including 2% daily, 60% monthly, and 720% annually. It was alleged that the total investment in the scheme exceeded Rs 50 crore. An FIR was registered against the five accused under Sections 406 and 420 read with Section 34 of the Penal Code, 1860 (‘IPC’). The prosecution contended that the accused persons played an active role in inducing the informant and other investors to invest in the scheme, thereby cheating them.
The accused persons contended that the FIR against them must be quashed under Section 482 of the Criminal Procedure Code, 1973 (‘CrPC’) on the ground that no prima facie case was made out against them. The allegations against four accused persons were limited to their presence in the seminar and general inducement, and no material was collected to show their direct involvement in the misappropriation of funds. However, for the last accused, though it was alleged that he had accepted the amount from the investors, but it was directly deposited in the account of the Company and therefore, no offence of misappropriation or cheating was made out.
However, the APP opposed the applications, emphasizing that the inducement itself was sufficient to establish their active involvement, given the magnitude of the investments and the number of investors duped.
Analysis and Decision:
Upon perusal of the FIR and other records, the Court observed that the allegations against most accused persons were limited to their presence in the seminar and guidance they gave to the investors to invest the amount stating that they could get the benefits for seven times, if they invested the money. Thus, compelling them to face trial would be unjustified.
The Court noted in the case of one accused that witness statements and account extracts revealed that he had obtained amounts in cash and withdrawn them which constituted prima facie material against him, making it inappropriate to quash the FIR in his case.
The Court relied on State of Karnataka v. L. Muniswamy, (1977) 2 SCC 699, where it was observed that the High Court in its inherent powers is designed to achieve a salutary public purpose which is that a court proceeding ought not to be permitted to degenerate into a weapon of harassment or persecution. The Court also relied on Rajiv Thapar v. Madan Lal Kapoor, (2013) 3 SCC 330, wherein it was held that while exercising the powers under Section 482 CrPC, the High Court is required to undertake step-wise enquiry as mentioned in Para 30 of the said decision and if the answer to all the steps is in the affirmative, the High Court would be justified in quashing the criminal proceedings.
Consequently, the Court while applying the guidelines laid down in State of Haryana v. Bhajan Lal, 1992 Supp (1) SCC 335, the Court allowed the applications of those against whom no prima facie case was made out, while rejecting the application of the accused found to have received financial benefits.
[Walmik v. State of Maharashtra, Criminal Application (Apl) No. 100 of 2024, decided on 17-12-2025]
*Judgment authored by: Justice Urmila Joshi-Phalke
Advocates who appeared in this case:
For the Accused Persons: Ashish Deep Verma, Senior Advocate assisted by Abhinav Vyas, Advocate.
For the Respondents: Sneha Dhote, Additional Public Prosecutor.
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