Ch Ramesh Babu

1

IN THE COURT OF PRINCIPAL SPECIAL JUDGE FOR CBI CASES,

HYDERABAD

Dated: Tuesday, the 30th day of April, 2024.

Present:Sri Ch. Ramesh Babu

Principal Special Judge for CBI

Cases, Hyderabad

Crl.M.P.No.250/2022

In

S.C.No.1/2019

Between:

M/s. Emaar Hills Township Private Limited, through its Representative V. Ravinder, Having its office at Boulder Hills Golf Country Club, Opp: ISB, Manikonda Village,

Gachibowli, Hyderabad-500 032.….. Petitioner/Accused No.1

AND

Directorate of Enforcement, Represented by its Assistant Director, Government of India, Ministry of Finance, Department of Revenue, 3rd floor, Shakar Bhavan, Fateh Maidan Road,

Hyderabad-500 004.….. Respondent/Complainant

This petition coming before me on 08.06.2023 for final hearing in the presence of Sri H.Sudhakar Rao, Counsel for the Petitioner/ Accused No.1 and of Sri T.V.Subba Rao, Special Public Prosecutor for the Respondent/Complainant and after hearing the arguments and perusing the material on record, and the matter having been stood over for consideration till this day, this Court made the following:

2 Crl.M.P.No.250/2022

O R D E R

1.The petitioner/Accused No.1 filed petition u/s. 227 Cr.P.C. on 07.01.2022 praying the Court to discharge the petitioner from the prosecution case.

2. The petitioner averred in the petition that one P. Shankar

Rao, MLA, Secunderabad Cantonment, wrote a letter dated:

22.11.2010 to the Hon'ble Chief Justice Andhra Pradesh High Court, in which it was alleged that the MD of M/s. Andhra Pradesh Industrial

Infrastructure Corporation (APIIC) and its officials in criminal conspiracy with the Private Firms M/s. Emaar Properties PJSC, Dubai (EPJSC) and its sister concerns, viz M/s. Emaar Hills Township Pvt. Ltd.

(EHTPL) and M/s. Emaar MGF Land Ltd. and caused them undue favours and corresponding wrongful loss to APIIC.

2.1.The petitioner further averred that the said letter of

P. Shanker Rao was taken up as a Writ Petition by the Hon'ble High

Court vide W.P. No. 29358 of 2010 on 23.11.2010. The Hon'ble High

Court of Andhra Pradesh, on 10-8-2011 directed CBI to register a

Crime and investigate into the alleged misappropriation of Public

Property relating to the Integrated Project at Manikonda and transfer of property including all other aspects relevant thereto and take the investigation to its logical end in accordance with the law.

3 Crl.M.P.No.250/2022

Accordingly, CBI, Hyderabad registered a Regular Case vide RC No.35-

A-2011-0018 dated: 17.08.2011 and after investigation filed a Charge sheet and two supplementary charge sheets which are now pending as C.C No. 6 of 2012 before this Hon'ble Court.

2.2.The petitioner further averred that basing on the investigation and the Final report of CBI considering the allegations, present case was registered by Enforcement Directorate and after completion of investigation filed Charge sheet for the alleged violation of Section 3 punishable U/s. 4 of the Prevention of Money Laundering

Act, 2002, against the Petitioner & others alleging that in the CBI Final

Reports dated 01.02.2012 and 23.04.2012, the Accused persons received pecuniary gains amounting to Rs.167,29,00,000/-(Rupees

One Hundred and Sixty Seven Core and Twenty Nine Lac Only), which are proceeds of crime and falls within the meaning of 'Property" as defined under section 2(1)(v) of the Prevention of Money Laundering

Act, 2002.

2.3.The petitioner further averred that it was further alleged

Petitioner/Accused No.1 was incorporated on 20.08.2003 to implement the township project with Villas, Apartments and IT Park at

Hyderabad as per G.O.Ms.No.359 dated 04.09.2002, G.O.Ms.No.14

dated 11.01.2005 and G.O.Ms.No.22 dated 27.01.2005 with

4 Crl.M.P.No.250/2022 investment ratio of 74:26 and APIIC made their investment for its share of 26% in the form of land of 285Acres for development of multiuse development including Villas and commercial complex at

Manikonda, Hyderabad.

2.4.The petitioner further averred that it was further alleged that Petitioner/Accused No.1 has conducted a board meeting on 21.09.2006, in which it was decided that Emaar MGF would act as co- developer in the integrated project. Later Emaar MGF and

Petitioner/Accused No.1 entered into Development Agreement on 03.11.2006 pursuant to Petitioner/ Accused No.1's Board resolution

dated 21.09.2006 with the ratio of 75:25 thereby causing reduction of

APIIC share to 6.5% from 26% which is in violation of above G.O 2.5.The petitioner further averred that it was further alleged that Petitioner/Accused No.1 & Emaar MGF have not made any considerable investment on the development of villa plots and construction of villas and they started selling only villa plots instead of selling developed/constructed villas. Such sale was done even much the land was transferred to Petitioner/Accused No.1 from APIIC vide conveyance deed dated 28.12.2005.

2.6.The petitioner further averred that it was further alleged that the agreement was to construct and sell the villas on the said 5 Crl.M.P.No.250/2022 land but contrary to the agreement they are without constructing the villas are selling the villa plots and also at higher rate and further

Emaar MGF Agreement entered by M/s. Emaar Hills Township Pvt. Ltd.

(EHTPL) on 03.11.2006 is without the knowledge of APIIC causing reduction of APIIC's share to 6.5% from 26%, which is violation of above G.O's 2.7.The petitioner further averred that the petitioner is falsely implicated in this case and there is no legally acceptable and reliable material to show the complicity of the Petitioner in the alleged offence. There is no legally sustainable material to show that the petitioner herein has committed the alleged offence of violation of

Section 3 punishable U/s. 4 of the Prevention of Money Laundering

Act, 2002 and the allegations even taken at face value do not attract the offences as alleged against the Petitioner. Further, there is no evidence that the Petitioner/Accused No.1 directly or indirectly attempted to indulge or knowingly assisted or knowingly was a party or was actually involved in any process or activity connected with the proceeds of crime and projecting it as untainted property.

2.8.The petitioner further averred that in the entire statement of T. Ranga Rao, there is no allegation of any alleged cash having been collected on the written instructions of the Petitioner/Accused 6 Crl.M.P.No.250/2022

No.1 or any alleged cash having been given to Petitioner/Accused

No.1. Further, in the entire statement of T. Ranga Rao and statements of other witnesses there is no whisper of Petitioner/Accused No.1 having any knowledge of the alleged collected cash having given to

K Rajendra Prasad /N Sunil Reddy. So, neither the proceeds of crime were ever received by the Petitioner/Accused No.1 nor the

Petitioner/Accused No.1 was having any knowledge of the same. As per the statement given by K Rajendra Prasad under Section 50(2)(3) of the Act, it is stated that the information of selling of villa plots in excess of amount of 25,000/- (Rupees Five Thousand Only) per Square

Yard by T. Ranga Rao of Stylish Holmes was never brought to the knowledge of the Petitioner/Accused No. 1's board.

2.9.The petitioner further averred that even as per the investigation by the Enforcement Directorate, it is stated that as per the Agency Agreement dated 29.01.2005, first 100 plots were to be sold at the price of Rs.5,000/- (Rupees Five Thousand Only) per

Square Yard, whereas K Rajendra Prasad fixed higher price ranging from Rs.4,000/- (Rupees Four Thousand Only) per Square Yard to

Rs.15,000/- (Rupees Fifteen Thousand Only) per Square Yard and instructed T. Ranga Rao of Stylish Holmes to collect excess sale consideration from villa plot buyers in cash. As per the instructions,

T. Ranga Rao has collected the excess amount of Rs.96,01,00,000/- 7 Crl.M.P.No.250/2022 (Rupees Ninety Six Crore and One Lac Only) from 82 villa plot buyers, in cash over and above the documented price of Rs.5,000/- (Rupees

Five Thousand Only) per Square Yard, during 2005-10, which was confirmed by T. Ranga Rao and by his accountant/manager Srinivas

Rao.

2.10.The petitioner further averred thatas per the investigation by the Enforcement Directorate, it is stated that the excess amount of Rs. 96,01,00,000/- (Rupees Ninety Six Crore and

One Lac Only) collected/ received by K Rajendra Prasad and N Sunil

Reddy from T Ranga Rao and his accountant/manager Sh. Srinivas

Rao, has not been presented for accounting in the books of

Petitioner/Accused No.1 or M/s Stylish Holmes or EMGF Land;

K Rajendra Prasad had denied of receiving any amount in cash from sale proceeds of villa plots from T. Ranga Rao of Stylish Holmes and has also denied his association with Stylish Holmes. However, the contention does not hold good, as it is on record that he agreed to his acquaintance with T. Ranga Rao since long. With regard to the entire findings by the Enforcement Directorate, no allegation has been attributed to the Petitioner/Accused No.1.

2.11.The petitioner further averred thatas per the investigation by the Enforcement Directorate, it is stated that 8 Crl.M.P.No.250/2022

Rs.6,86,00,000/- (Rupees Six Crore Eighty Six Lac Only) of cash component collected by Emaar MGF Land got dissolved in their group companies, but no allegation has been attributed to the

Petitioner/Accused No.1 for any attempt, knowledge, involvement or assistance, which shows the commission of the offence under act by the Petitioner/Accused No.1. Further, there is no finding by the

Enforcement Directorate that the Petitioner dealt with the alleged cash amount of Rs. 6.85 crores allegedly collected by G Vijay Raghav, in any manner at all.

2.12.The petitioner further averred that as per the statement of witness S Madhusudana Rao under Section 50(2)(3) of the Act, it is stated that the Petitioner/Accused No.1 Company became aware of collection of cash by T Ranga Rao only after CBI charge sheet and that no cash was received by Petitioner/Accused No.1.

2.13.The petitioner further averred that the profit before tax (PBT) was shown for the financial years from 2006 to 2011. It is pertinent to state that out of the said amount of Rs.64.41 crores,

Rs.26.74 Crores is reflected in the books of the accounts of the

Petitioner and the balance Rs.37.67 Crores is shown as revenue recognised in the chart. In this regard, it is submitted that as per accounting standards, applicable revenue recognition policies, the 9 Crl.M.P.No.250/2022 calculation shown by the respondent/complainant is wrong as revenue recognized based on % of project completion and not based on the amount received from customers. Therefore the presumption of revenue of Rs.37.61 Crores is incorrect on the part of the complainant/respondent. The petitioner further averred that the arrangement for financial returns between the parties was in the form of sharing of dividends. In addition, APIIC was also entitled to receive interest on debentures.

2.14.The petitioner further averred that the allegation made by the respondent/complainant that the development agreement of the petitioner/Accused No.1 with Emaar MGF dated 03.11.2006 which was cancelled and replaced by with Development Agreement cum GPA

dated 25.07.2007 has been entered without the knowledge of APIIC is

baseless allegation and in-fact, the then managing Director

Mr. B.P. Acharya who was representing as a Nominee Director of APIIC was present in the meeting of Board of Directors of the Petitioner company held on 21.09.2006, when the decision was taken for bringing on boarding Emaar MGF as a co-developer. In fact, the respondent/complainant categorically stated in page No.64 & 65

Clause f (ii) Volume I that the said B.P. Acharya attended the said meeting. It is further pertinent to note that the percentage of shareholding of APIIC was not reduced at any point of time and it still 10 Crl.M.P.No.250/2022 holds 26% in the equity share capital of the Petitioner. The assumption of reduction of shareholding of APIIC is incorrect and contrary to record.

2.15.The petitioner further averred that even APIIC vide their letter No. 81/APIIC/Projects/ICCC/2001, dated: 28.05.2007 issued a letter to Secretary to Government, Information Technology and communications department stating that it has no objection for including Emaar MGF as Co-Developer. Further in the Board meetings held on 16.09.2008, 11.09.2009 and 16.07.2012 of the Petitioner wherein the Board (including the nominee director of APIIC) have approved the balance sheets as on 31.03.2008, 31.03.2009 and 31.03.2010. In the said balance sheet, the notes were also annexed which clearly records the fact of execution of Development

Agreement cum GPA with Emaar MGF and sharing of gross revenue.

Therefore, the allegation that execution of Development Agreement cum GPA with Emaar MGF was without knowledge of APIIC is false and baseless.

2.16.The petitioner further averred that the properties which were attached by the respondent are properties which were conveyed by the APIIC to the petitioner vide Registered Conveyance deed dated 28.12.2005 pursuant to International tendering process through 11 Crl.M.P.No.250/2022 legally executed agreements and payment of due consideration to

APIC. It is further submitted that no criminal activities of what so ever can be attributed to the Properties of the Petitioner herein. Further the attached properties were neither derived nor obtained as a result of any criminal activity.

2.17.The petitioner further averred that the evidence if any against the petitioner is not legal and flooded with inconsistencies and contradictions making the story inherently improbable, highly unbelievable and far from the truth and for the framing of the charges it needs prima facie evidence which is lacking in this case. Therefore, prayed to discharge the petitioner from the prosecution case.

3.The Respondenthas filed counter denying the allegations made by the petitioner in the petition. The respondent submitted that the present case has been registered against the petitioner/Accused

No.1 and other accused for the offence under Section 3 punishable under Section 4 of the Prevention of Money Laundering Act, 2002 basing on the investigation and final report of CBI case registered vide its RC.No.35-A-2011-0018, dt.17-08-2011 and after investigation by

CBI agency have filed charge sheet.

3.1.The Respondent further submitted that the facts of case are that the then Govt. of A.P issued G.O.Ms.No.359, Dt;04/09/2002 12 Crl.M.P.No.250/2022 for development of an integrated projects including multi use development at Manikonda, R.R. Dist. in 535 acres and further the

Govt. of A.P. issued G.O.Ms.No.14, Dt:11/01/2005 amended by

G.O.Ms.No.22, Dt: 27/01/2005 for development of township project at

Manikonda by Accused no.1 with equity structure of 74:26 to the

Developer and APIIC respectively. The Development Agreement was executed between Accused No. 1 and Accused No.2, Dt:03/11/2006 to undertake development, for which Accused no.2 was entitled 75% of gross revenue in total through sale or lease proceeds and subsequently a Development Agreement cum General Power of

Attorney and an Addendum to Development Agreement & GPA,

Dt:23/07/2008 was executed between accused for Sale of villa plots.

3.2.The Respondent further submitted that an Agency

Agreement, Dt:29/01/2005 was entered between Accused No.1 and

Accused No.3 under which 100 plots are to be sold for Rs.5000/- per

Sq.yard and remaining villa plots were to be sold at prevailing market rates and it is responsibility of Accused No.1; and APIIC conveyed 258.36 acres of land in favour of Accused No.1 vide Conveyance

Deed, Dt:28/12/2005 and the Accused No.1 executed Development

Agreement Dt:03/11/2006 with Accused No.2 by inducting as a co-developer. But Accused No.1 and Accused No.3 booked as many 43 13 Crl.M.P.No.250/2022 villa plots till Dt:27/12/2005 i.e, even before execution of Conveyance

Deed, Dt;28/12/2005 by APIIC in favour of Accused No.1.

3.3.The Respondent further submitted that as per the instructions of Accused No.2 rep. by its Director that 10 different companies were floated and booked 18 villas plots @ Rs.5000/ per

Sq.yard. So that the same could be sold at premium rates in future and the funds were transferred to block the villa plots in the name of these 10 companies during the year 2010 by paying 10% of Sale

Consideration of Rs.5000/- per Sq.yard and other villa plots were being sold to other buyers at Rs.50,000/- per Sq.yard.

3.4.The Respondent further submitted that as per revenue sharing agreement and books of account that the accused are required to pass on 25% of Gross Annual Revenue. However, it was never transferred into books of accounts of APIIC and thus the accused misappropriated the revenue from the integrated project. As per G.O's issued by the Govt. of A.P., the Accused No.1 was required to develop the project land which includes constructing villas and apartments. It was never intended by Govt. of A.P to sell villa plots and however the agency agreement, Dt:29/01/2005 executed on behalf of the Accused No.1 was nothing but clandestine arrangement in furtherance of the criminal conspiracy to dispose of the project land 14 Crl.M.P.No.250/2022 without developing the same and thereby APIIC deprives its legitimate revenue share from the developed villas.

3.5.The Respondent further submitted that 13 villa plots including three model villas were sold by Accused No.1 & 2 directly to buyers and during investigation one of the above said villa/plot buyer confirmed having paid excess amount of Rs.2,80,40,000/- in cash over and above documented price of Rs.5,000/- per Sq.yard and the said amount was sent by him to the office of Accused No.1 as per the instructions of Accused No. 9 and further it is pertinent to mention that two villa plots buyers who purchased villa plots during same period have also confirmed to have paid excess amount of

Rs.20,000/- per Sq.yard in cash over the document price.

3.6.The Respondent further submitted that the existence of criminal conspiracy on part of accused to deprive APIIC lawful revenue share by booking villa plots @ Rs.5,000/- per Sq.yards and the criminal intent of accused is also evident from the transactions and fact that villa plots were sold at higher price and however in furtherance of the conspiracy the amounts of Rs.2,80,40,000/- and also Rs.4,05,20,000/- totaling to Rs.6,85,60,000/- was collected from two villas plots in cash for sale consideration.

15 Crl.M.P.No.250/2022 3.7.The Respondent further submitted that accused no.12 s/o. accused no.7 carrying business in Dubai received an amount of

USD. 2,50,000/- into his personal from Sri. P.S. Parthasarathy, the buyer of plot villa in EHTPL, who has stated that he purchased a plot at cost of Rs.50,0001- per Sq yard out of which he has paid an amount of Rs.5,000/ per Sq.yard through cheque and balance amount of Rs.45,0001- per Sq yard amounting to Rs.5,13,00,000/ in cash and he has paid an amount of Rs.4,08,00,000/- to accused no.10 at the residence of accused no.7. Similarly, accused no.12 has received USD 1,40,0001- an amount equivalent to Rs.65 lakhs from Sri Challa

Suresh, who purchased villa plot in EHTPL.

3.8.The Respondent further submitted that it is also revealed during investigation that accused no.9 collected an amount of

Rs.6,85,60,000/- from sale of three villa plots over the above document price Rs.5,000/ per Sqyard and the investigations by CBI revealed that during 2006-07 to Aug-2011 the total realization from villas plots is to extent of Rs.73.19 crores and from villa Rs.21.36 crores totaling to Rs. 94.56 crores. That EMGF also realized amounts from the buyers of apartments to extent of Rs.248.33 crores and the accused no.4 company established by accused no.11 had received funds from several companies, but the whereabouts of Directors of said companies could not be ascertained and the so called companies 16 Crl.M.P.No.250/2022 did not exist physically during relevant period and no trade license was issued in favour of many companies including accused no.4 by

GHMC, Hyd., which clearly shows that the said companies were floated only for purpose of transferring funds.

3.9.The Respondent further submitted that as per Agency

Agreement, Dt:2/01/2005 plots beyond 100 were to be sold at prevailing market rates to be decided by accused no.1, however in criminal conspiracy that the accused no.9, 8, Sri. Shravan Gupta, MD of accused no.2 company did not revise rates in tune with prevalent market rates and out of 136 villa plots, 105 were sold through accused no.3 and remaining 31 were sold directly by accused no.2 during 2009-2010, out of these 31 plots sale of 13 villa plots was finalized by accused no.9 and Sri. Shravan Gupta, MD of accused no.2 company has blocked/booked 18 villa plots in the names of other companies at Rs.5,000/- per Sq yard to sell them at higher rates at later date to obtain undue pecuniary gain.

3.10.The Respondent further submitted that an amount of

Rs.96.01 crores collected by accused no.10 and Rs.6.85 crores collected by accused no.9 for accused no.2 over and above documented price, which should have gone to APIIC @ 26% revenue share in profit worked out in all, which was never transferred to APIIC.

17 Crl.M.P.No.250/2022

Hence accused no.9 in conspiracy with accused no.8 and Sri. Shravan

Gupta deliberately did not share any revenue, which finally deprive

APIIC of its legitimate revenue share and caused wrongful loss to a tune of Rs.43.50 crores and at the same time EMGF and EPJSC obtained undue pecuniary benefit of Rs. 167.29 crores.

3.11.The Respondent further submitted that on receiving documents from CBI, during course of investigation made enquires and having found that there is prima facie case under PMLA 2002 against all the accused including the accused herein.

3.12.In support of the contentions, the Respondent relied on the judgment of Hon’ble Supreme Court reported in 2020 (1) ALT (Crl.) 330 SC, wherein the Hon’ble Supreme Court held that:

“Procedure in framing of charges - At the time of framing of the charges, the probative value of the material on record cannot be gone into, and the material brought on record by the prosecution has to be accepted as true" "Framing of Charges - The defence of the accused is not to be looked into at the stage when the accused seeks to be discharged Under Section 227 of Cr.P.C." 3.13.The Respondent also relied on the judgment of Hon’ble

Supreme Court reported in 2020 (1) ALT (Crl.) 129, the Hon’ble

Supreme Court held that:

18 Crl.M.P.No.250/2022 "Framing of Charges - At the stage of framing of charges, the Court is not obligated to appreciate the evidence or make a roving enquiry as to whether the evidence collected by the prosecution during the course of investigation and the material collected would lead to a conviction.” 3.14.The Respondent further submitted that PML Act, 2002 being a special statute postulates reverse burden on the accused. As per Sec 24 of PML Act, 2002, this Hon'ble shall presume unless contrary is proved, that proceeds of crime are involved in money laundering and as such it is crystal clear that burden is on the accused to prove that proceeds of crime is not involved in money laundering. The said burden cannot be discharged at this juncture and can be elicited only after appreciation of oral and documentary evidences, and on this score alone the petition is liable to be dismissed. Hence, prayed to dismiss the petition.

4.Heard both sides. Perused the record.

5.Now the point for determination is:

-Whether the petitioner/Accused No.1 can be discharged under Section 227 of Cr.P.C. in S.C.No. 01 of 2019?

POINT:

6.The counsel for the petitioner/A-1 contended that before

Conveyance Deed, the petitioner/A1 booked the plots and the entire 19 Crl.M.P.No.250/2022 statement of approver T. Ranga Rao never referred the name of the petitioner/A-1; and A2 has floated the company and the petitioner entered into Development Agreement-cum-General Power of Attorney dt.25.07.2007 by cancelling a development agreement is within the knowledge of Sri B.P. Acharya and the petitioner/A-1 has nothing to do with the offence. The counsel for the petitioner/A-1 relied on the following judgments:

(i)In case of Tech Mahindra Limited and another Vs. Joint

Director and Others reported in 2014 SCC Online Hyd 1575, wherein the Hon’ble High Court of Judicature at Hyderabad held at Para Nos.63 and 70 as follows:

63.Record of this writ petition would disclose that the persons who were at the helm of affairs of the SCSL during the relevant period laid down a carefully maneuvered plan to give rosy picture of the company, sold their shares at a very high premium, surruptiously brought money into the company. The Board was not taken into confidence. The flow of funds was not known to the company and except those who hatched such plan, no other person of the company was having knowledge of the issue. In the complaint filed before the XXI Additional Chief Metropolitan Magistrate's Court cum Special Sessions Court, Hyderabad, while dealing with the role of SCSL, it is alleged that as admitted by Ramalinga Raju in his confession dated 07.01.2009, the amount of Rs. 822 crores being proceeds of crime still subsists in M/s. SCSL and the same fact is also acknowledged by the new Management in their annual report during the financial year 2010-2011. It is further alleged that these proceeds of crime was concealed in SCSL by accused nos. 2 and 3 i.e., B. Ramalinga Raju and B. Rama Raju, respectively. Thus, it is alleged that SCSL is actually involved in the offence of Money Laundering by possessing proceeds of crime and projecting them as untainted and act of possession amounts to involvement and it is therefore guilty of offence of Money Laundering. As discussed above, there was no 20 Crl.M.P.No.250/2022 knowledge to the petitioner company about the nature of funds that were flown into petitioner company. While praying for attachment of properties in the claim filed before the adjudicating authority, the Enforcement Directorate recorded in para 12 that the transactions which resulted in Rs. 822.00 crores coming into the petitioner company were not reflected in the books of accounts and financial statements and Board of SCSL was never informed of about these transactions. These transactions were reflected as if they were receipts from sale proceeds. The record of the writ petition would disclose that Rs. 822 crores were obtained by pledging inflated shares of SCSL held by SRSR Holdings Private Limited transferred by front companies and their Directors to SCSL. The Enforcement Directorate narrates in the complaint that the receipts into the SCSL were in the form of loans from the front companies. Thus, in the facts of this case, it cannot be ascribed to SCSL as a company about the nature of funds infused into the company. SCSL and petitioner company as successor company cannot be fastened with criminal liability for the illegalities committed by the persons who were at the helm of affairs of SCSL at the relevant time. It cannot be said that the company had knowledge of source of funds and projected the said funds as untainted.

70.It is settled principle of law that no person can be prosecuted on the allegation which occurred earlier by applying the provision of law which has come into force after the alleged incident. In other words, there can be no retrospective application of criminal liability for the incident occurred prior to introduction of such liability in the statute book.”

(ii)In case of Nikesh Tarachand Shah Vs Union of India (UOI) and others reported in (2018) 11 SCC 1, wherein the Hon’ble

Supreme Court held at para No.7 as follows:

“7.Having heard learned counsel for both sides, it is important to first understand what constitutes the offence of money laundering. Under Section 3 of the Act, the kind of persons responsible for money laundering is extremely wide. Words such as “whosoever”, “directly or indirectly” and “attempts to indulge” would show that all persons who are even remotely involved in this offence are sought to be roped in. An important ingredient of the offence is that these persons must be knowingly or actually involved in any process or activity connected with proceeds of crime and “proceeds of 21 Crl.M.P.No.250/2022 crime” is defined under the Act, by Section 2 (u) thereof, to mean any property derived or obtained directly or indirectly, by any person as a result of criminal activity relating to a scheduled offence (which is referred to in our judgment as the predicate offence). Thus, whosoever is involved as aforesaid, in a process or activity connected with “proceeds of crime” as defined, which would include concealing, possessing, acquiring or using such property, would be guilty of the offence, provided such persons also project or claim such property as untainted property. Section 3, therefore, contains all the aforesaid ingredients, and before somebody can be adjudged as guilty under the said provision, the said person must not only be involved in any process or activity connected with proceeds of crime, but must also project or claim it as being untainted property. Under Section 4 of the Act, the offence of money laundering is punishable with rigorous imprisonment for a minimum period of three years which may extend to 7 years and fine. Also, under the proviso, where the proceeds of crime involved in money laundering relate to a predicate offence under paragraph 2 of Part A of the Schedule, the sentence then gets extended from 7 years to 10 years.

(iii)In case of H.M. Malthesh and Ors. Vs The Director of

Enforcement and Ors. reported in MANU/KA/4850/2020, wherein the Hon’ble High Court of Karnataka held at para Nos.10 to 12 as follows:

“10.Coming to the proceedings initiated against the petitioners-accused Nos.1 to 3 in Criminal Petition No.9373/2016 are concerned, a reading of the averments made therein would go to show that the properties sought to be attached are the family properties of accused No.1. There is no material to show that the said properties were acquired out of the "proceeds of crime" or in any way related to alleged "proceeds of crime". As per the definition in Section 2(1)(u) of the PML Act, only the tainted properties could be termed as "proceeds of crime." In other words, all and every property which are derived or obtained directly or indirectly as a result of criminal activity relating to scheduled offence can be termed as "proceeds of crime."

11. The respondents appear to have proceeded to attach the ancestral properties of the petitioners on the assumption that 'any such property' means any property held by the 22 Crl.M.P.No.250/2022 offenders which could be appropriated towards the value of "proceeds of crime". The expression 'any such property', in my view, could only relate to such property which is tainted by "proceeds of crime". A property which is in no way connected to "proceeds of crime" cannot fall within the ambit of Section 2(1)

(u) of the Act. The expression, 'any such property' used in the definition cannot be given such a wider meaning, so as to confer right on the adjudicating authority to proceed against all and every assets standing in the name of the alleged offenders.

12. A reading of the provisions of Section 5 of the PML Act makes it clear that a Director or any other Officer not below the rank of Deputy Director authorized by the Director could proceed to attach the property only when he has a reason to believe that any person is in possession of any "proceeds of crime" and not otherwise. Therefore, the only meaning that could be ascribed to 'any such property' employed in Section 2(1)(u) of the PML Act is that it should necessarily relate to tainted properties or the properties derived or obtained by the result of criminal activity. In the instant case, there being no material to show that the ancestral properties held by the petitioners were tainted as "proceeds of crime", in my view, the power under Section 5 of the Act cannot be resorted to by the respondent in respect of the attached properties.”

(iv)In case of Jafar Mohammed Hasanfatta and Ors. Vs.

Deputy Director and Ors. reported in MANU/GJ/0219/2017, wherein the Hon’ble High Court of Gujarat held at para No.54 as follows:

“54.The same test is applicable in the facts of the Instant case. By the Impugned order dated 18.7.2014, the Special Court for PMLA mechanically took 'cognizance' of the alleged offence punishable under Section 4 of PMLA qua each of the accused petitioner, without even prima facie material showing existence of any 'mens rea' or culpable knowledge with all or any of them, of the subject Scheduled Offence investigated separately by Crime Branch, Surat in FIR Nos. 1-16/2014 dated 11.04.2014 and 1-7/2014 dated: 13.4.2014, or of any 'proceeds of crime emanating from the said scheduled offences. Neither there is any tangible evidence, nor even any circumstantial material to impute culpable knowledge on the petitioners and to even prima facie conclude that they were either aware of the 23 Crl.M.P.No.250/2022 commission of the Schedule Offence or the generation of the alleged proceeds of crime by or out of such Schedule Offence. As per the material adduced, it cannot be even prima facie held that the petitioners had any reason to even have any reasonable doubt regarding commission of alleged schedule offence and generation of any proceeds of crime in relation thereto. The same is also fortified by the fact that none of the petitioners were made an accused in the scheduled offence. Even though the accused petitioners received in their bank accounts certain amounts at the instance of or from their close relative Shri Afroz Hasanfatta, the statements if taken on their face value, do not satisfy even on prima facie basis the pre- requisite for trying any person on allegation of money laundering i.e. 'mens rea or culpable 'knowledge of the 'Scheduled Offence' and 'Proceeds of Crime' derived therefrom, and projection of such proceeds of crime as untainted. Even on prima facie basis no offence is made out against any of the accused petitioners. Therefore, I find merit in the submissions made on behalf of the accused Petitioners and I have no hesitation in holding that the impugned Order was passed mechanically and deserves to be set aside.”

7.The counsel for the petitioner/A-1 further contended that the petitioner has no knowledge about the alleged cash collected by

T. Ranga Rao and handing over the same to K Rajendra Prasad and

N Sunil Reddy. The counsel for the petitioner/A-1 further contended that prosecution failed to take into consideration that the arrangement for financial returns between APIIC and Emaar MGF was in the form of sharing of dividends, hence the question of depriving

APIIC does not arise.

8.The counsel for the petitioner/A-1 further contended that percentage of shareholding of APIIC was not reduced at any point of time and it still holds 26% in the equity share capital of the petitioner 24 Crl.M.P.No.250/2022 and he relied on the orders passed by the Income Tax Authorities and other judgments:

(i)In case of Ghulam Hassam Beigh Vs. Mohammad Maqbool

Magrey and others reported in (2022) 12 SCC 657, wherein the

Hon’ble Supreme Court held at para Nos.15 to 20, 22 and 23 as

under:

15.Section 226 of the CrPC corresponds to sub-section (1) of the old Section 286 with verbal changes owing to the abolition of the jury. Section 286 of the 1898 Code reads as under:- “286. Opening case for prosecution. - (1) In a case triable by jury, when the jurors have been in chosen or, in any other case, when the Judge is ready to hear the case, the prosecutor shall open his case by reading from the Indian Penal or other law the description of the offence charged, and stating shortly by what evidence he expects to prove the guilt of the accused. (2) The prosecutor shall then examine his witnesses.”

Section 226 of the 1973 Code reads thus:

“226. Opening case for prosecution.─ When the accused appears or is brought before the Court in pursuance of a commitment of the case under Section 209, the prosecutor shall open his case by describing the charge brought against the accused and stating by what evidence he proposes to prove the guilt of the accused.”

Section 226 of the CrPC permits the prosecution to make the first impression as regards a case, one which might be difficult to dispel. In not insisting upon its right under Section 226 of the CrPC, the prosecution would be doing itself a disfavour. If the accused is to contend that the case against him has not been explained owing to the non-compliance with Section 226 of the CrPC, the answer would be that the Section 173(2) of the CrPC report in the case would give a fair idea thereof, and that the stage of framing of charges under Section 228 of the CrPC is reached after crossing the stage of Section 227 of the CrPC, 25 Crl.M.P.No.250/2022 which affords both the prosecution and accused a fair opportunity to put forward their rival contentions.

16. Section 227 of the CrPC reads thus:

“227. Discharge.─ If, upon consideration of the record of the case and the documents submitted therewith, and after hearing the submissions of the accused and the prosecution in this behalf, the Judge considers that there is not sufficient ground for proceeding against the accused, he shall discharge the accused and record his reasons for so doing.” 17. Section 228 of the CrPC reads thus:

“228. Framing of charge: (1) If, after such consideration and hearing as aforesaid, the Judge is of opinion that there is ground for presuming that the accused has committed an offence which -

(a) is not exclusively triable by the Court of Session, he may frame a charge against the accused and, by order, transfer the case for trial to the Chief Judicial Magistrate, or any other

Judicial Magistrate of the first class and direct the accused to

appear before the Chief Judicial Magistrate, or as the case may be, the Judicial Magistrate of the first class, on such date as he deems fit, and thereupon such Magistrate shall try the offence in accordance with the procedure for the trial of warrant - cases instituted on a police report;

(b) is exclusively triable by the Court, he shall frame in writing a charge against the accused.

(2) Where the Judge frames any charge under clause (b) of sub- section (1), the charge shall be read and explained to the accused and the accused shall be asked whether he pleads guilty of the offence charged or claims to be tried.” 18. The purpose of framing a charge is to intimate to the accused the clear, unambiguous and precise nature of accusation that the accused is called upon to meet in the course of a trial.

19. The case may be a sessions case, a warrant case, or a summons case, the point is that a prima facie case must be made out before a charge can be framed. Basically, there are three pairs of sections in the Cr.P.C. Those are Sections 227 and 228 relating to the sessions trial; Section 239 and 240 relatable 26 Crl.M.P.No.250/2022 to trial of warrant cases, and Sections 245(1) and (2) with respect to trial of summons case.

20. Section 226 of the CrPC, over a period of time has gone, in oblivion. Our understanding of the provision of Section 226 of the CrPC is that before the Court proceeds to frame the charge against the accused, the Public Prosecutor owes a duty to give a fair idea to the Court as regards the case of the prosecution.

22. There are several other judgments of this Court delineating the scope of Court’s powers in respect of the framing of charges in a criminal case, one of those being Dipakbhai Jagdishchandra Patel Vs State of Gujarat, wherein the law relating to the framing of charge and discharge is discussed elaborately in paragraphs 15 and 23 resply and the same are reproduced as under:

“15. We may profitably, in this regard, refer to the judgment of this Court in State of Bihar Vs. Ramesh Singh wherein this Court has laid down the principles relating to framing of charge and discharge as follows: (SCC pp.41-42, para 4) “4….. Reading Sections 227 and 228 together in juxtaposition, as they have got to be, it would be clear that at the beginning and initial stage of the trial the truth, veracity and effect of the evidence which the prosecutor proposes to adduce are not to be meticulously judged. Nor is any weight to be attached to the probable defence of the accused. It is not obligatory for the Judge at that stage of the trial to consider in any detail and weigh in a sensitive balance whether the facts, if proved, would be incompatible with the innocence of the accused or not. The standard of test and judgment which is to be finally applied before recording a finding regarding the guilt or otherwise of the accused is not exactly to be applied at the stage of deciding the matter under Section 227 and Section 228 of the Code. At that stage the Court is not to see whether there is sufficient ground for conviction of the accused or whether the trial is sure to end in his conviction. Strong suspicion against the accused, if the matter remains in the region of suspicion, cannot take the place of proof of his guilt at the conclusion of the trial. But at the initial stage if there is a strong suspicion which leads the Court to think that there is ground for presuming that the accused has committed an offence then it is not open to the Court to say that there is no sufficient ground for proceeding against the accused. The presumption of the guilt of the accused which is to be drawn 27 Crl.M.P.No.250/2022 at the initial stage is not in the sense of the law governing the trial of criminal cases in France where the accused is presumed to be guilty unless the contrary is proved. But it is only for the purpose of deciding prima facie whether the court should proceed with the trial or not. If the evidence which the prosecutor proposes to adduce to prove the guilt of the accused even if fully accepted before it is challenged in cross examination or rebutted by the defence evidence, if any, cannot show that the accused committed the offence, then there will be no sufficient ground for proceeding with the trial….If the scales of pan as to the guilt or innocence of the accused are something like even at the conclusion of the trial, then, on the theory of benefit of doubt the case is to end in his acquittal. But if, on the other hand, it is so at the initial stage of making an order under Section 227 or Section 228, then in such a situation ordinarily and generally the order which will have to be made will be one under Section 228 and not under Section 227.” “23. At the stage of framing the charge in accordance with the principles which have been laid down by this Court, what the Court is expected to do is, it does not act as a mere post office. The Court must indeed sift the material before it. The material to be sifted would be the material which is produced and relied upon by the prosecution. The sifting is not to be meticulous in the sense that the Court dons the mantle of the Trial Judge hearing arguments after the entire evidence has been adduced after a full-fledged trial and the question is not whether the prosecution has made out the case for the conviction of the accused. All that is required is, the Court must be satisfied that with the materials available, a case is made out for the accused to stand trial. A strong suspicion suffices. However, a strong suspicion must be founded on some material. The material must be such as can be translated into evidence at the stage of trial. The strong suspicion cannot be the pure subjective satisfaction based on the moral notions of the Judge that here is a case where it is possible that accused has committed the offence. Strong suspicion must be the suspicion which is premised on some material which commends itself to the court as sufficient to entertain the prima facie view that the accused has committed the offence.”

23. In sajjan Kumar v. CBI [(2010) 9 SCC 368), this Court had an occasion to consider the scope of Sections 227 and 228 Cr.P.C. The principles which emerged therefrom have been taken note of in para 21 as under:

28 Crl.M.P.No.250/2022 “21. On consideration of the authorities about the scope of Sections 227 and 228 of the Code, the following principles emerge:

(i) The Judge while considering the question of framing the charges under Section 227 CrPC has the undoubted power to sift and weigh the evidence for the limited purpose of finding out whether or not a prima facie case against the accused has been made out. The test to determine prima facie case would depend upon the facts of each case.

(ii) Where the materials placed before the court disclose grave suspicion against the accused which has not been properly explained, the court will be fully justified in framing a charge and proceeding with the trial.

(iii) The court cannot act merely as a post office or a mouthpiece of the prosecution but has to consider the broad probabilities of the case, the total effect of the evidence and the documents produced before the court, any basic infirmities, etc. However, at this stage, there cannot be a roving enquiry into the pros and cons of the matter and weigh the evidence as if he was conducting a trial.

(iv) If on the basis of the material on record, the court could form an opinion that the accused might have committed offence, it can frame the charge, though for conviction the conclusion is required to be proved beyond reasonable doubt that the accused has committed the offence.

(v) At the time of framing of the charges, the probative value of the material on record cannot be gone into but

before framing a charge the court must apply its judicial

mind on the material placed on record and must be satisfied that the commission of offence by the accused was possible.

(vi) At the stage of Sections 227 and 228, the court is required to evaluate the material and documents on record with a view to find out if the facts emerging therefrom taken at their face value disclose the existence of all the ingredients constituting the alleged offence. For this limited purpose, sift the evidence as it cannot be expected even at that initial stage to accept all that the 29 Crl.M.P.No.250/2022 prosecution states as gospel truth even if it is opposed to common sense or the broad probabilities of the case.

(vii) If two views are possible and one of them gives rise to suspicion only, as distinguished from grave suspicion, the trial Judge will be empowered to discharge the accused and at this stage, he is not to see whether the trial will end in conviction or acquittal.”

(ii)In case of J. Sekhar alias Sekhar Reddy Vs. Directorate of

Enforcement reported in (2022) 7 SCC 370, wherein the Hon’ble

Supreme Court held at para Nos.11, 19 and 21 as under:

“11.So far as the investigation made by the IT Department on the basis of search is concerned, the same is closed. The appellant sought information from the IT Department vide communication dated: 11.5.2019. In respect to the same, the IT Department vide letter dated: 16.5.2019 provided the details of seizure made by it from the appellant. It is apparent that the new currency notes of denomination of Rs. 2000 belonged to M/s SRS Mining which is recorded in its cash book. Those currency notes seized are from the proceeds of the sand sales by M/s SRS Mining. The details of the tax, paid before or after self-assessment for Financial Year 2016-17 satisfied the Authority that money so seized was accounted money or tax paid.

19.On the basis of the intimation given by the IT Department and registration of the FIR by the CBI which was closed, the Directorate of ED registered ECIR/CEZO/19/2016 under Sections 3, 4 & 8(5) of PMLA. After the said FIR, Deputy Director (ED) passed an order under Section 5(1) of PMLA on 1.6.2017 attaching the property. For confirmation of attachment, OC No. 785 of 2017 was filed by the Department which is rejected by the Adjudicating Authority while exercising the power under Section 5(5) of PMLA. The Adjudicating Authority observed as thus:

“It is pertinent to note that about two years have lapsed since passing of the said bail order dated 17.03.2017, and over two years have passed after filing of FIR, however till date no Final Report is filed by the concerned Investigating Officer investigating the scheduled offences. Most material is the fact that so far no bank or bank officers are identified, either by the 30 Crl.M.P.No.250/2022 officer investigating the schedule offences or even the Enforcement Directorate, Chennai. In view of the absence of any bank or bank officers having been identified, it was necessary for the Deputy Director to consider the absence and/ or non-identification of any bank or bank officers. Nothing is adduced or available on record as to which banks and which bank officers are involved, who have unauthorizedly converted demonetized old currency into new currency. The reasonable belief as is formed by the Deputy Director reveals that the vital aspect concerning the fact that no such bank or bank officers are existing or found is not considered by the Deputy Director at all. The Reasonable Belief is thus impaired. The Reasonable Belief formed by the Deputy Director inter alia is that the accused persons have laundered their unaccounted money in conspiring with the bank officials of various banks who helped them laundering the unaccounted money. There is nothing on record which reveals the name of even single bank, much less, the various banks as stated by the Deputy Director. Similarly not a single bank official is identified or named and there is nothing on record which reveals any such detail. Consequently the Reasonable Belief becomes baseless and is mere speculation of the Deputy Director. Such a belief cannot be justified and sustained. The aspect concerning non- identification and/ or non-availability of any bank and bank officials, goes to the root of the formation of the entire Reasonable Belief. The Additional Director/Joint Director/ Deputy Director ought to have directed the Enforcement Directorate Officers to investigate or cause to be investigated the aspect concerning the bank or bank officers. The Deputy Director ought to have deliberated on the issue and proceeded, which is not done. In the absence of such basic material the Reasonable Belief entertained by the Deputy Director specifically forming the Reasonable Belief that the accused laundered their unaccounted money in conspiring with the bank officials of various banks who helped them in laundering the unaccounted money, cannot be legally tenable.

The Reasonable Belief of the Deputy Director further upon it’s analysis indicates that the Deputy Director has entertained the Reasonable Belief as stated in para 21, 26 & 27 of the Provisional Attachment Order, only in respect of a part of the seized amount of Rs. 33,47,92,000/-, without specifying as to what quantum and as to what part of the seized amount of Rs. 33,47,92,000/- in the form of movable properties is related to the schedule offences.

31 Crl.M.P.No.250/2022

The formation of the Reasonable Belief only for part of the seized amount and yet proceeding to attach the entire seized amount vitiates the entire Reasonable Belief and renders it as illegal. It is seen from the Reasonable Belief that such an exercise was not carried out by the Deputy Director.

The reasonable belief formed by the Deputy Director that the new currency, which were seized by the Income Tax Authorities are nothing but the currency received in lieu of exchange of old currency notes (demonetized currency) inclusive of commission for such exchange received by S/ Shri J. Sekar Reddy, M. Premkumar, S. Srinivaslu, S. Ramachandran & K. Rethinam, is neither based on any specified material nor is justified.

It is therefore, concluded that the reasonable belief formed by the Deputy Director in this regard cannot be sustained, the same having been not based on any specifically material and the same is merely surmises, conjectures and speculation.

Considering the material in O.C., the written replies/

additional written reply/ submissions of the Defendants and the

arguments above referred, I find that the property provisionally attached by PAO No. 14/2017 dated 12.06.2017, i.e. 49,480 kgs of gold valued of Rs. 13,96,88,246 mentioned in para 22 of PAO (para 1 of this order) is not involved in money laundering. ”

21.In view of the aforesaid legal position and on analysing the report of IT Department and the reasoning given by CBI while submitting the final closure report in RC MA1 2016 A0040 and the order passed by the Adjudicating Authority, it is clear that for proceeds of crime, as defined under Section 2(1)

(u) of PMLA, the property seized would be relevant and its possession with recovery and claim thereto must be innocent. In the present case, the schedule offence has not been made out because of lack of evidence. The Adjudicating Authority, at the time of refusing to continue the order of attachment under PMLA, was of the opinion that the record regarding banks and its officials who may be involved, is not on record. Therefore, for lack of identity of the source of collected money, it could not be reasonably believed by the Deputy Director (ED) that the unaccounted money is connected with the commission of offence under PMLA. Simultaneously, the letter of the IT Department dated: 16.5.2019 and the details as mentioned, makes it clear that for the currency seized, the tax is already paid, therefore, it is not the quantum earned and used for money laundering. In our opinion, even in cases of PMLA, the 32 Crl.M.P.No.250/2022

Court cannot proceed on the basis of preponderance of probabilities. On perusal of the statement of Objects and Reasons specified in PMLA, it is the stringent law brought by Parliament to check money laundering. Thus, the allegation must be proved beyond reasonable doubt in the Court. Even otherwise, it is incumbent upon the Court to look into the allegation and the material collected in support thereto and to find out whether the prima facie offence is made out. Unless the allegations are substantiated by the authorities and proved against a person in the court of law, the person is innocent. In the said backdrop, the ratio of the judgment of Radheshyam Kejriwal in paragraph 38 (vi) and (vii) are aptly applicable in the facts of the present case.

(iii)In case of Union of India Vs Prafulla Kumar Samal and another reported in (1979) 3 SCC 4, wherein the Hon’ble

Supreme Court held at para No.10 as under:

10.Thus, on a consideration of the authorities mentioned above, the following principles emerge:

"(1) That the Judge while considering the question of framing the charges under Section 227 of the Code has the undoubted power to sift and weigh the evidence for the limited purpose of finding out whether or not a prima facie case against the accused has been made out.

(2) Where the materials placed before the Court disclose grave suspicion against the accused which has not been properly explained the Court will be fully justified in framing a charge and proceeding with the trial.

(3) The test to determine a prima facie case would naturally depend upon the facts of each case and it is difficult to lay down a rule of universal application. By and large however if two views are equally possible and the Judge is satisfied that the evidence produced before him while giving rise to some suspicion but not grave suspicion against the accused, he will be fully within his right to discharge the accused.

(4) That in exercising his jurisdiction under Section 227 of the Code the Judge which under the present Code is a senior and experienced court cannot act merely as a Post Office or a 33 Crl.M.P.No.250/2022 mouthpiece of the prosecution, but has to consider the broad probabilities of the case, the total effect of the evidence and the documents produced before the Court, any basic infirmities appearing in the case and so on. This however does not mean that the Judge should make a roving enquiry into the pros and cons of the matter and weigh the evidence as if he was conducting a trial."

(iv)In case of Vikaramjit Kakati Vs The State of Assam reported in AIR 2022 SC 3597, wherein the Hon’ble Supreme

Court held at para Nos.14 to 16 as under:

14. So far as the conspiracy, as alleged, is concerned, some evidence ought to have emerged or the prosecution could have brought on record some prima facie material whereby the appellant along with the accused persons had prior meeting of mind to execute the alleged offence and in the given facts and circumstances, there is no justification for the appellant to undergo the agony of facing trial, to which the appellant is not even prima facie connected. Still the prosecution filed charge- sheet on 30th August, 2011 for offence implicating the appellant under Sections 302/120-B/201 IPC along with the wife of deceased (A-1) and mother of wife of the deceased (A-3).

15. There is no iota of evidence which, in any manner, connect the present appellant with the commission of crime and neither the trial Court nor the High Court has even taken pains to look into the record as to whether there is any oral/documentary evidence which in any manner connect the appellant with the alleged incident of crime and, in our considered view, in the absence of even a prima facie material, oral/documentary, being placed by the prosecution in the charge-sheet, the trial Court as well as the High Court have committed serious error in framing charge against the appellant. Even the complainant also in the complaint has not named the appellant as the perpetrator of the offence, rather she stated that she suspects foul play.

16. In the given facts and circumstances, we are of the view that the appeal deserves to be allowed. The order impugned passed by the High Court of Gauhati dated 3rd December, 2021 as well as the order dated 21st June, 2012 passed by the

Additional Sessions Judge (Fast Track Court), Sivasagar, in

34 Crl.M.P.No.250/2022

Sessions Case No.57(S-S) of 2012 are quashed and set aside

and the appellant stands discharged from the charges framed against him.

(v)In case of State of U.P. through Central Bureau of

Investigation Vs. Dr. Sanjay Singh and another reported in 1994

Supp (2) Supreme Court Cases, wherein the Hon’ble Supreme

Court held at para Nos.9 to 12 and 19 to 21 as under:

9. These two respondents challenging the prosecution approached the trial court for discharging them under Section 228 of the Code of Criminal Procedure. The trial court after scrutinising the entire documents, placed on record has concluded in paragraph 110 of its judgment pertaining to the case of second respondent as follows:

"The material on record does not, prima facie, establish any physical manifestation on the part of A-2 in any part of the conspiracy or its execution. Consequently, it may be said that there is no sufficient ground to put A-2 on trial, in connection with the murder of Syed Modi. She is, therefore, liable to be discharged."

Thereafter the trial court has held thus:

"It has already been found in para 101 above, that the prosecution has failed to make out a prima facie case of motive on the part of A-1 and A-2, or either of them to liquidate Modi."

10. With regard to the case of the first respondent, the trial court found thus:

"Mere association among A-1, A-2 and A-3 is not adequate to prove conspiracy among them. There ought to be material on record to indicate tacit understanding among them as to what had to be done. In this connection, it may be pertinent to observe that relative acts or conduct of A-1 and A-2 do not appear to be conscientious and clear to mark their concurrence with regard to the liquidation of Syed Modi. Such concurrence could not be inferred by a group of innocuous circumstances, artfully arranged, so as to give an appearance of coherence, …. On a broad view of the entire facts, circumstances and the material placed before this Court, it does not appear that A-1 can, reasonably, be 35 Crl.M.P.No.250/2022 connected with the crime in question. Accordingly, A-1 is also liable to be discharged.”

11. The result was the trial court discharged both the respondents.

12. The State on being aggrieved by the order of the trial court preferred a revision before the High Court. The High Court by its well-considered judgment has affirmed the order of discharge of Respondents 1 and 2 observing thus:

"In view of the above discussion, it will be apparent that the learned Sessions Judge has considered every aspect of the case in his order while discharging two opposite parties. In doing so he has not committed any illegality or irregularity and the finding of the learned Sessions Judge cannot be said to be perverse or against the weight of evidence on record. Therefore, in the revisional jurisdiction this Court cannot appraise the evidence again. As the finding of the learned Sessions Judge is based on the evidence available on the record the same does not deserve to be set aside. The result is that the revision petitions deserve to be dismissed."

19. When we scrutinise the entire material placed on record, even if unrebutted or totally accepted, we are of the view that they do not make out a case for conviction and the mere suspicion of motive cannot serve as a sufficient ground for framing the charges in the absence of any material, prima facie showing that the particular motive has passed into action and that the accused is connected with that action in question.

20. This Court in Century Spinning & Manufacturing Co. Ltd. v. State of Maharashtra while examining the scope of Section 251(A) sub-sections (2) and (3) of the old Code corresponding to Sections 239 and 240 of the new Code. has made the following observation: (SCC p. 291, para 17: AIR p. 552, para 16) "... If on this material, the Court comes to the conclusion that there is no ground for presuming that the accused has committed an offence, then it can appropriately consider the charge to be groundless and discharge the accused. The argument that the Court at the stage of framing the charges has not to apply its judicial mind for considering whether or not there is a ground for presuming the commission of the offence by the accused is not supportable either on the plain language of the section or on its judicial interpretation or on any other recognised principle of law. The order framing the charges does substantially affect the person's liberty and it is not possible to 36 Crl.M.P.No.250/2022 countenance the view that the Court must automatically frame the charge merely because the prosecution authorities, by relying on the documents referred to in Section 173, consider it proper to institute the case. The responsibility of framing the charges is that of the Court and it has to judicially consider the question of doing so. Without fully adverting to the material on the record it must not blindly adopt the decision of the prosecution."

21. Y.V. Chandrachud, J. (as the learned Chief Justice then was) speaking for the three-Judge Bench in State of Karnataka v. L. Muniswamy in which the State challenged the order of discharge made by the trial court in exercise of its powers under Section 227 of the Code of Criminal Procedure, 1973 has ruled thus: (AIR p. 1492, para 7) "This section is contained in Chapter XVIII called 'Trial before a Court of Sessions'. It is clear from the provision that the

Sessions Court has the power to discharge an accused if after

perusing the record and hearing the parties he comes to the conclusion, for reason to be recorded that there is not sufficient ground for proceeding against the accused. The object of the provision which requires the Sessions Judge to record his reasons is to enable the superior court to examine the correctness of the reasons for which the Sessions Judge has held that there is or is not sufficient ground for proceeding against the accused."

(vi)In case of Krishna Lal Chawla and others Vs State of Uttar

Pradesh and another reported in (2021) 5 SCC 435, wherein the

Hon’ble Supreme Court held at para Nos.16 to 18 and 21 as

under:

16. We find it imperative to observe that this is a case that should not have been allowed to reach as far as this Court. The justice dispensation machinery in India is plagued with backlogs, with 70% of the pendency before the subordinate courts being on the criminal side. A significant factor in this backlog is the vast mass of frivolous litigation instituted year after year by litigants with an intent to use the courts of justice for their own mischievous ends. Curtailing such vexatious litigation is, thus, a crucial step towards a more effective justice system – a step that 37 Crl.M.P.No.250/2022 cannot be taken without the active involvement of the lower judiciary, especially in criminal proceedings.

17. Immediately after the criminal justice system is set in motion, its course is almost entirely dependent on the judicial application of mind by the Magistrate. When a police complaint is filed on the commission of a cognizable offence under Section 154 CrPC, the

Magistrate decides if the charge against the accused person is

made out before the trial begins. Separate procedure is prescribed if the complaint under Section 200 CrPC is filed. The aforesaid provisions make it abundantly clear that the Magistrate carries the stream of criminal proceeding forward after it is set in motion by the informant/complainant. Consequently, and automatically, the Magistrate also carries the responsibility for ensuring this stream does not carry forward in cases where it should not.

18. The aforesaid powers bestowed on the Magistrate have grave repercussions on individual citizens’ life and liberty. Thus, these powers also confer great responsibility on the shoulders of the Magistrate – and must be exercised with great caution, and after suitable judicial application of mind. Observations in a similar vein were made by this Court in Pepsi Foods Ltd. V Special

Judicial Magistrate, (1998) 5 SCC 749:

“28. Summoning of an accused in a criminal case is a serious matter. Criminal law cannot be set into motion as a matter of course. It is not that the complainant has to bring only two witnesses to support his allegations in the complaint to have the criminal law set into motion. The order of the Magistrate summoning the accused must reflect that he has applied his mind to the facts of the case and the law applicable thereto. He has to examine the nature of allegations made in the complaint and the evidence both oral and documentary in support thereof and would that be sufficient for the complainant to succeed in bringing charge home to the accused. It is not that the Magistrate is a silent spectator at the time of recording of preliminary evidence

before summoning of the accused. The Magistrate has to carefully

scrutinise the evidence brought on record and may even himself put questions to the complainant and his witnesses to elicit answers to find out the truthfulness of the allegations or otherwise and then examine if any offence is prima facie committed by all or any of the accused.”

This Court, thus, clearly emphasised that the power to issue a summoning order is a matter of grave importance, and that the 38 Crl.M.P.No.250/2022

Magistrate must only allow criminal law to take its course after

satisfying himself that there is a real case to be made.

21.All of this leads to one inescapable conclusion. That the Trial Judge has a duty under the Constitution and the CrPC, to identify and dispose of frivolous litigation at an early stage by exercising, substantially and to the fullest extent, the powers conferred on him. This Court has earlier emphasised on the high degree of responsibility shouldered by the trial Judges in All India

Judges’ Association v. Union of India, (1992) 1 SCC 119.

Ranganath Misra CJ (as he was then) writing for himself and two others stated: (SCC p.134, para 42) “42. The trial Judge is the kingpin in the hierarchical system of administration of justice. He directly comes in contact with the litigant during the proceedings in Court. On him lies the responsibility of building up of the case appropriately and on his understanding of the matter the cause of justice is first answered. The personality, knowledge, judicial restraint, capacity to maintain dignity are the additional aspects which go into making the Court's functioning successful.”

9.Learned Special Public Prosecutor has relied on the following decisions:

(i)In case of Komaram Balu vs. State of Telangana through

Sub-Inspector of Police, Adilabad District reported in 2020 (1) ALT (Crl.) 129 (T.S.), wherein the Hon’ble High Court for the State of

Telangana at Hyderabad held as follows:

“At the stage of framing charges under Section 239 Cr.P.C., what all the Court has to see is as to whether any prima facie case is made out for the purpose of framing of charge, and to proceed with the matter. At the stage of framing charges, the Court is not obligated to appreciate the evidence or make a roving enquiry as to whether the evidence collected by the prosecution during the course of investigation, and the material collected, would lead to a conviction.” 39 Crl.M.P.No.250/2022

(ii)In case of M.E. Shivalingamurthy vs. Central Bureau of

Investigation, Bengaluru reported in 2020 (1) ALT (Crl.) 330 (SC), wherein the Hon’ble Supreme Court held as follows:

“At the time of framing of the charges, the probative value of the material on record cannot be gone into, and the material brought on record by the prosecution, has to be accepted as true. The defence of the accused is not to be looked into at the stage when the accused seeks to be discharged under Section 227 of the Cr.P.C.”

10.The prosecution has relied on the investigation done by the

CBI, which is as follows:

(i)The prosecution filed charge-sheet alleging that prior to year 2000, Andhra Pradesh Industrial Infrastructure Corporation (APIIC) had called for Expression of Interest (EOI) for the Convention

Centre/Golf Course project on 2/3 occasions but could not find any suitable developer. The APIIC again called EOI for the said project during the month of March, 2000 under the Public Private Partnership (PPP) mode. The proposals received against the said EOI were evaluated and two companies viz. M/s. ITC Ltd., and M/s. EIH Ltd., were shortlised. The Request for proposal (RFP) were sent to those two shortlisted companies, out of which only M/s. ITC Ltd., had responded. The proposal of M/s. ITC Ltd., had been evaluated and it was principally agreed by the Government in the State Tourism 40 Crl.M.P.No.250/2022

Promotion Board (STPB) meeting held on 26.12.2000. The proposal of

M/s. ITC Ltd., was preferred on two locations i.e., at Manikonda Village land and Hussainsagar Land. Since the Hussainsagar Land was covered under PIL WP No.26378/2000, the Government of AP took a decision on 14.05.2001 to take up all the project components at

Manikonda Village only without linking it to Hussainsagar area lands.

Accordingly, the Government sent letter to M/s. ITC Ltd. The

Government was also exploring the possibilities of finding an alternative developer in case M/s. ITC Ltd., was not agreeable to the above suggestion of the Government. M/s. ITC Ltd., did not respond to the offer of the Government and they requested to revisit other alternate sites. The matter was taken up with the Government and after taking approval from the Government suitable communication was made to M/s. ITC Ltd., on 02.07.2001 returning their Bank

Guarantee informing them that the project will be notified again.

(ii)It is further mentioned in the charge-sheet that the

Government of A.P. decided to issue fresh advertisements calling for

EOI from developers for the location of Manikonda lands. APIIC had proposed 250 acres of land for the said project. After the proposal was approved by the Board of APIIC, the advertisements were issued on 41 Crl.M.P.No.250/2022 26.07.2001. In response to advertisement issued, EOIs were received from the following five companies:

1. Emaar Properties Public Joint Stock Company (PJSC), Dubai

2. IOI Corporation, Berhard Malaysia

3. L & T Limited, Chennai

4. Shapoorji & Palonji Company Limited, Mumbai

5. Som Asia Ltd., Hong Kong (consultancy services)

(iii)The above EOIs were evaluated on 15.09.2001 by a

Committee constituted by APIIC and the following three developers were found suitable for the issuance of Request for proposal (RFP).

1. Emaar Properties Public Joint Stock Company (PJSC), Dubai

2. IOI Corporation, Berhard Malaysia

3. L & T Limited, Chennai

(iv)The above referred Request for proposal (RFP) were cleared by the then Chief Minister on 26.09.2001 envisaged that the project would comprise inter-alia of:

Convention Centre: The Convention Centre with a plenary hall capacity of 3000- 5000 with facilities for hospitality, accommodation, parking lots, breakaway rooms and seating flexibility, state-of-the-art audio-visual and other sophisticated 42 Crl.M.P.No.250/2022 equipment, Secretarial facilities, ample exhibition facilities, food courts, cafeterias, restaurants and other comprehensive support services.

Hotel: The state-of-the-art Hotel(s) that would be perfect rendezvous to mix business with pleasure.

Golf Course:An 18 hole International Professional

Championship Golf Course with fully equipped Club House and supporting services.

Villas: Villas and residential facilities, any other additional component, which will result in value addition to the

Integrated Project, subject to the sponsor's (APIIC) right to accept such additional components which are seen in the overall interest of the project.

(v)It is further case of the prosecution that in the draft RFP approved by the then CM, it was also mentioned that the bidders shall quote land price on per acre basis for outright sale and lease option.

Further, the minimum land price of Rs.29 lakhs per acre at Manikonda on gross undeveloped basis was indicated and it was also mentioned that the proposal would remain valid for 12 months after the closing date of the submission of proposals. The pre-proposal meeting of the shortlisted Developers was held on 25.10.2001 and all the above said three developers participated in the meeting. During the meeting the 43 Crl.M.P.No.250/2022 companies/ developers requested APIIC for extending the time upto 15.12.2001 for submitting the proposals. Finally, till last date only one proposal of M/s. Emaar Properties PJSC, Dubai was received and the same was opened in the presence of its representative. The price quoted by M/s. Emaar Properties PJSC, Dubai for land on outright sale was Rs.29,00,000/- per acre as per the price bid submitted by them.

The proposal was placed before the Board of APIIC. A draft MOU to be executed with M/s. Emaar Properties PJSC, Dubai was prepared with the help of M/s. IL&FS, Consultants, in pursuance to the discussions held with M/s. Emaar Properties PJSC, Dubai. The said proposal was submitted to the GOAP by APIIC through the Department of Industries and Commerce and was placed before the Council of Ministers on 20.08.2002. Subsequent to the Council resolution No.215(3)/202, the

Government of AP issued GO.Ms. No.359 dated 04.09.2002.

(vi)It is further case of the prosecution that the integrated project was given the status of a Tourism project, as such the related eligible incentives were to be given to the project. The Government authorized APIIC to take further necessary action to implement the project and it was the responsibility of APIIC to closely monitor the implementation of the project with reference to the milestones for 44 Crl.M.P.No.250/2022 various components of the project. Accordingly, a MOU was executed between APIIC and M/s. Emaar Properties PJSC, Dubai, on 06-11-2002.

(vii)It is further case of the prosecution that a Collaboration

Agreement dt.19.08.2003 was executed between APIIC and

M/s. Emaar Properties PJSC, Dubai. Only certain issues relating to the

Collaboration Agreement were approved by the Cabinet Committee on 28.06.2003. The Board of Directors of APIIC approved the

Collaboration Agreement dt.19.08.2003 between APIIC and M/s.

Emaar Properties PJSC in its 151st Meeting held on 12.03.2004.

(viii) It is further case of the prosecution that during the year 2004 after the general elections, when the new Government came into power, the Government of Andhra Pradesh constituted a Group of

Ministers (GoM) to review all decisions taken after 1st January, 2003 on

(i) all mega projects, (ii) infrastructure projects, (iii) allotment of land of more than 5 acres and (iv) on matters which attracted large scale public criticism. The Group of Ministers met on eight occasions and the Group of Ministers deferred the file relating to the Integrated

Convention Centre Complex and Golf Course.

(ix)It is further case of the prosecution that on 06.09.2004, the then Chief Minister and the then Minister for Major Industries discussed with the Chairman, M/s. Emaar Properties PJSC, Dubai and it 45 Crl.M.P.No.250/2022 was suggested that APIIC should limit its equity in all the three SPVs to 26% and thereby, proportionately increasing the equity of M/s.

Emaar Properties in the entire project. Subsequently, Shri AJ

Jaganathan, CEO of M/s. Emaar Properties PJSC, Dubai giving reference of the discussion of the representatives of M/s. Emaar properties PJSC, Dubai with Shri LV Subrahmanyam, VC & MD, submitted fresh proposals dt.23.09.2004 and 24.09.2004 changing the implementation structure of the integrated project. As per the revised proposal, it was proposed to execute the integrated project through three SPVs instead of two SPVs as envisaged in the

Collaboration Agreement dt.19.08.2003. As desired by the

Government of AP, M/s. Emaar Properties PJSC, Dubai had agreed to reduce the equity of Government of AP in the Convention Centre

Project from 49% to 26% and thereby increasing the equity of M/s.

Emaar properties PJSC, Dubai from 51% to 74%. In lieu of the said change in equity/ownership in Convention Centre Project, M/s. Emaar

Properties PJSC, Dubai requested the Government of AP to compensate for the increase in equity by transferring additional one hundred acres of land. The said proposal of M/s. Emaar Properties

PJSC, Dubai was processed in a single file.

46 Crl.M.P.No.250/2022

(x)It is further case of the prosecution that a Price Fixation

Committee (PFC) was constituted and they submitted the report, which is as follows:-

Year/PeriodAreaRates FixedRates valid till 2002-03Hi-Tech CityRs.83.29 Lacs to 31.03.2003 Rs.122.35 Lacs per acre 2003-04ManikondaRs.22.50 Lacs per acre31.03.2004 2004-05Nanakramguda and Rs.35 Lacs per acre31.03.2005 Manikonda Villages 2005-06Nanakramguda and Rs.84.98 Lacs per acre31.03.2006 Manikonda Villages

(xi) It is further case of the prosecution that on 23.11.2004,

GoM meeting was held and the file relating to the Integrated

Convention Centre Complex and Golf Course was cleared.

Subsequently, on 11-01-2005, the Government of A.P. issued

G.O.Ms.No.14, containing all the decisions taken during the meeting held on 06.09.2004 attended by the then CM, the then Minister for

Major Industries and Shri Mohamed Ali Alabbar, Chairman, M/s. Emaar

Properties PJSC, Dubai.

47 Crl.M.P.No.250/2022

(xii) It is further case of the prosecution that as per

G.O.Ms.No.14, a draft supplementary agreement to be executed by

APIIC with M/s. Emaar Properties PJSC, Dubai, which was also forwarded by the VC & MD, APIIC to the Principal Secretary, I & C

Department. The Government after careful examination decided to consider the improvement into the Integrated Project and approved the Draft supplementary agreement to be executed between the

APIIC and M/s. Emaar Properties, PJSC, Dubai. The VC & MD, APIIC was authorized by the GoAP to enter into a Supplementary Agreement. In

G.O.Ms.14, it was also mentioned that all other features of the project notified in the G.O.Ms.No.359 Industries & Commerce (INF)

Department dated: 04.09.2002 remained un-altered.

(xiii)It is further case of the prosecution that on perusal of

G.O.Ms.No.14 dated: 11.01.2005 along with draft supplementary agreement, Shri AJ Jaganathan, CEO of M/s. Emaar Properties PJSC,

Dubai addressed a letter dt.16.01.2005 to the Government mentioning that the GO and the draft supplementary agreement did not conform to the discussions held by M/s. Emaar Properties PJSC,

Dubai in the Minister’s Chamber during November, 2004. He suggested that clause 2(d) of GO.Ms.No.14 should be replaced by “The lease rentals of land given for the Golf Course of 235 acres at 48 Crl.M.P.No.250/2022

Manikonda is fixed at 2% of the gross annual revenue on all Golf

Course components for a period of 33 years. The gross annual revenue generated by SPV-2 does not include Life Membership and other long term and academy memberships. The net profit generated by SPV-2, excluding profit generated by the Boutique Resort Hotel, will be treated in its entirely within the said company in the form of reserves. These reserves shall be utilized solely for improvements of the facilities and maintenance of Golf Course facilities (including the club house)”. He also suggested that clause 2(e) of GO.Ms.No.14

dated:11.01.2005 may be replaced by “On expiry of 66 years lease

period of the land of 235 acres, all structures, buildings on land whether permanent or semi-permanent, constructed by or belonging to the BHPL or their sub-contractors, sub-lessees and assignees developed on leasehold land only (and hence excluding all structures developed on freehold land) shall revert in favour of Government of

Andhra Pradesh free from all encumbrances and liabilities. Access to the site will remain restricted and controlled even after acquisition of the site by GoAP until such time a mutually acceptable solution is agreed between the GoAP and the housing Associations comprising residents of the proposed Boulder Hills community.” 49 Crl.M.P.No.250/2022

(xiv) It is further case of the prosecution that basing on the suggestions made by Sri AJ Jaganathan, CEO, VC & MD APIIC addressed a letter to the Principal Secretary and Commissioner for

Industrial Promotion vide Lr.No.81/APIIC/Projects/ICCC/2001, dated:

19.01.2005 along with a draft modification order. In response to the proposals of APIIC, the then Principal Secretary, Government of AP,

Industries and Commerce (Industrial Promotion Department), by modifying GO Ms.No.14, dated: 11.01.2005 and issued a fresh GO

Ms.No.22 dated: 27.01.2005 incorporating the suggestions made by

Sri AJ Jaganathan, CEO.

(xv)It is further case of the prosecution that after perusing the

G.O.Ms.22, the Minister for Major Industries found that the GO 22 was not in conformity with the orders dated: 11.01.2005 in the file and vide his note dated: 07.02.2005, remarked as under:

1.The file could have been circulated before issue of GO.

The reasons for urgency for issue may be explained.

2.Earlier the file was circulated to CM and orders were issued on 11.01.2005. The reasons for amendment on 27.01.2005 and the differences between orders of 11.01.2005 and 27.01.2005 may be summarized along with financial and other long term implications.

50 Crl.M.P.No.250/2022

3.Increase of lease rentals to 3% (from Golf Course) for further period of 33 years, have been deleted. This increase was mentioned on the file at the time of obtaining orders of CM.

4.The Boutique Hotel was shifted from SPV2 to SPV1.

Reasons for this and the implications were not mentioned.

5.New clauses regarding access rights have been incorporated, but the reasons for this were not mentioned.

(xvi) It is further case of the prosecution that a meeting with then CM on 02.03.2005, which was attended by the then Minister of

Major Industries; Principal Secretary, Industries & Commerce;

Secretary MA & UD; VC & MD, APIIC and other officers of GoAP and discussed about exemption of conversion charges and the then CM directed VC, HUDA that since it was a Government Project, conversion charges as already agreed in the Agreement should be exempted for 15 acres site at Izzatnagar for Convention Centre Complex and 520 acres site at Manikonda for Integrated Township Project and Golf

Course. But the issue pertaining to lease rentals from the golf course remained unresolved. Subsequently, the then Minister for Major

Industries moved a secret note dated: 17.03.2005 to the then CM clarifying the issues that were required to be covered while issuing 51 Crl.M.P.No.250/2022 the GO Ms.No.22, dated: 27.01.2005 and the note made by the then

Minister is as follows:

1.As regards the increase in lease rentals from 2% to 3% for the balance period after 33 years, though the issue was not discussed in the meeting, in view of the orders obtained in circulation earlier, a clear clarificatory memo may be issued asking APIIC to incorporate a specific and clear clause on increased lease amounts of 3% for balance period of 33 years after lease of 2% for first 33 years.

2.Issue relating to representations made by a few people adversely affected by acquisition of patta land and requesting for deletion, was also discussed. It was decided that to avoid legal and other complications, a uniform approach would be adopted while dealing with all such requests. It was therefore decided that either the land involving such requests in the area shall be acquired or alternatively they be deleted from acquisition without any discrimination.

(xvii)It is further case of the prosecution that basing on the secret note dated: 17.03.2005 submitted by the then Minister of Major

Industries, revision of lease rentals in respect of Golf Course from 2% to 3% on expiry of initial period of 33 years was approved by the then 52 Crl.M.P.No.250/2022

CM. Subsequently, the supplementary agreement was executed on 19.04.2005 between APIIC and M/s. Emaar Properties PJSC, Dubai.

(xviii)It is further case of the prosecution that Chairman,

M/s. Emaar Properties PJSC, Dubai addressed a letter dated:

02.05.2005 to Shri LV Subrahmanyam, VC & MD for bringing in

M/s. Fairbridge Holdings Ltd., a Cyprus based company as a shareholder in M/s. Emaar Holdings, Mauritius, such that M/s. Emaar

Properties PJSC, Dubai would dilute its ownership from the current 100% to 54.05% with Fairbridge owning the balance 45.95%, which would lead to net ownership in the integrated project in the ratio of

Emaar (40%), Fairbridge (34%) and APIIC (26%). Basing on the letter

Shri LV Subrahmanyam, VC & MD made a remarks that “We can request for credentials as deemed necessary for out response. So also to see how the new entity will bind itself to project commitments”. A copy of the letter issued by Chairman, M/s. Emaar Properties PJSC,

Dubai was also received in the office of the Principal Secretary,

Industries and Commerce, Government of AP by post on 13.05.2005.

On this copy Shri KV Rao, Principal Secretary, Industries and

Commerce remarked “Till the project is fully implemented it may not be correct to change the equity structure.” and marked the letter to

MD, APIIC, which was received on 16.05.2005 by Shri LV 53 Crl.M.P.No.250/2022

Subrahmanyam, VC & MD. The said issue was discussed on review meeting convened on 13.05.2005 and decided to continue with the existing arrangements till the project is completed. However, Shri LV

Subrahmanyam in violation of the instructions of the Principal

Secretary and the decision taken in the review meeting dated:

13.05.2005 addressed a letter dated: 13.05.2005 to M/s. Emaar

Properties PJSC, Dubai, which was dispatched on 18.05.2005, seeking the detailed information about M/s. Fairbridge Holdings Limited,

Cyprus, to process their request for bringing in Fairbridge Holdings as a partner for strategic resource.

(xix) It is further case of the prosecution that in pursuance of the agreement, the Government initiated the proceedings for acquiring 92.19 acres of land in Nanakramaguda Village. Since the owners of 11.26 acres of patta land has represented against acquisition of said land, a proposal was approved by the District

Collect, RR District to acquire 80.35 acres of land. After the notification was published in the newspapers and the Gazette of AP, the aggrieved parties challenged the actions of the Special Deputy

Collect, Land Acquisition (Industries) before the Hon’ble High Court of

AP by filing WP No.21712/2002, dated: 31.10.2002, wherein the

Hon’ble High Court vide orders dated: 25.04.2003 granted stay on the

54 Crl.M.P.No.250/2022 land acquisition proceedings and directed the District Collector, RR

District to issue notice for an enquiry under Section 5(A) of Land

Acquisition Act to the persons whose lands were to be acquired including the petitioners and to take appropriate further steps after such enquiry. In compliance to the orders of the Hon’ble High Court of

AP notices were issued to the aggrieved persons for conducting enquiry under Section 5(A) of Land Acquisition Act on 17.03.2004.

(xx)It is further case of the prosecution that the District

Collector RR District after examining the objections of the interested parties, rejected their objections on the ground that the objections raised by them were devoid of any merit and decided to issue proceedings for 80.35 acres of land, which includes 3.36 acres of land belonging to Smt. G. Vijaya Nirmala, W/o. Shri GSR Krishna, Shri

Jayadev Galla, S/o. Shri Galla Ramachandra and Smt. G. Rama Devi,

W/o. Shri GVRK Prasad. The Land Acquisition Officer passed an award under Section 11(A) of Land Acquisition Act for acquisition of 77.02 acres of land excluding the land of 3.33 acres. Since there was an urgency in handing over the land by APIIC to Developer, 77.05 Acres of patta land at Sy.No.4 to 26, 27/4 to 35, 41 to 46, 48 & 49 of

Nanakramaguda Village was handed over by Deputy Tahsildar to the

Assistant Zonal Manager, Cyberabad Zone of APIIC. Again the 55 Crl.M.P.No.250/2022 aggrieved persons approached the Hon’ble High Court of AP challenging the purpose of acquisition of 77.02 acres of land for APIIC.

The Hon’ble High Court of AP dismissed the Writ Petitions filed by the aggrieved persons and the same was challenged before the Hon’ble

Supreme Court and the Hon’ble Supreme Court confirmed the orders passed by the Hon’ble High Court of AP and dismissed the SLPs.

(xxi) It is further case of the prosecution that APIIC had handed over 454.93 Acres of Government land at Sy.No.203P, 210P & 211P of Manikonda Village, Sy.No.91P of Gachibowli Village and

Sy.No.36 to 40, 42 & 47 of Nanakramguda Village to Shri Vijaya

Menon, representative of M/s. Emaar Properties, PJSC Dubai vide possession certificate dated: 18.06.2005. The patta land of 77.05 acres was handed over by the APIIC to Shri Vijay Menon, representative of M/s. Emaar Hills Township Pvt. Ltd. And M/s. Boulder

Hills Leisure Pvt. Ltd., vide possession certificate dated: 29.11.2005.

In total 531.98 acres of land was handed over to M/s. Emaar

Properties PJSC, Dubai and its joint venture companies for developing the Integrated Project i.e., Golf Course and Township Project.

(xxii) It is further case of the prosecution that APIIC moved the following proposals for waiver of conversion and development charges in respect of 15 acres of land for Convention Centre and 56 Crl.M.P.No.250/2022

Business Hotel and 520 acres of land for Golf Course and Township

Project.

S.No.Date of Subject matter of Amount involvedGO through Proposalproposalwhich Exemption was granted 113.02.2004Exemption of Rs.2,65,43,707/-GO Ms.No.894 conversion chargesMA dated: in respect of 520 of02.11.2005 acres for golf course and township project 211.03.2004Exemption of Rs.12,34,019/-GO Ms. No.390 conversion chargesdated: in respect of 15 10.05.2005 acres of land for Convention Centre and Business Hotel 319.11.2005Exemption of Rs.1,35,57,246/-GO Ms. No.990 development dated: charges in respect 31.12.2005 of 15 acres of land for Convention Centre and Business Hotel 408.08.2007Exemption of Rs.24,73,28,163/-GO Ms. No.879 conversion chargesdated: in respect of 520 of05.12.2007 acres for golf course and township project 57 Crl.M.P.No.250/2022

(xxiii) It is further case of the prosecution that the Cyberabad

Development Authority as well as the MA & UD Department has raised objection for exemption of above said charges in respect of the

Integrated Project, as this was the only source of revenue for CDA and such exemption was not provided in AP Urban Areas Development

Act, 1975. However, the then CM overruling all the objections granted exemption from payment of conversion/development charges to the tune of Rs.28,86,63,135/-.

(xxiv) It is further case of the prosecution that APIIC executed the following documents with M/s. Emaar Properties PJSC, Dubai and the SPVs viz., M/s. EHTPL, M/s. BHLPL and M/s. CCCPL in respect of the

Integrated Project on 28.12.2005.

S.No.Nature of document

1.Conveyance Deed in respect of 258.36 acres (226.95 acres of Government land and 31.41 acres of patta land) of land executed in favour of M/s. EHTPL for development of Township Project. This land was conveyed for a total consideration of Rs.75,92,44,000/- @ Rs.29,00,000/- per acre. This was registered vide document No.20560 dated: 12.10.2006 with District Registrar, RR District.

2.Share Subscription Agreement executed with M/s. EHTPL for allotment of 17,00,307 shares with face value of Rs.1,70,03,070/- in favour of APIIC in the equity proportion of 26%

3.Shareholders’ agreement with M/s. EHTPL vide which APIIC was allotted 17,00,307 shares by M/s. EHTPL in the equity proportion of 26%

4.Lease Deed in respect of 235 acres (195.98 acres of Government land 58 Crl.M.P.No.250/2022 and 39.02 acres of patta land) of land executed with M/s. BHLPL for development of Golf Course, with provision for an amount of Rs.3,40,75,000/- to be paid by M/s. BHLPL @ Rs.1,45,000/- per acre towards non-refundable deposit to APIIC. This was registered vide document No.20562 dated: 12.10.2006 with District Registrar, RR District.

5.Conveyance Deed in respect of 17 acres of land executed by M/s. BHLPL for development of Boutique Resort Hotel. The land was conveyed for a total consideration of Rs.4,93,00,000/- @ Rs.29,00,000/- per acre, which was adjusted towards part of 26% equity of APIIC in M/s. BHLPL. This was registered vide document No.20561 dated: 12.10.2006 with District Registrar, RR District.

6.Share Subscription Agreement executed with M/s. BHLPL for allotment of 1,19,44,709 shares with face value of Rs.11,94,47,090/- in favour of APIIC in the equity proportion of 26%

7.Shareholders’ agreement with M/s. BHLPL vide which APIIC was allotted 1,19,44,709 shares by M/s. EHTPL in the equity proportion of 26%

8.Lease Deed in respect of 15.139 acres of land executed with M/s. CCCPL for development of Convention Centre and Business Hotel. This was registered vide document No.20563 dated: 12.10.2006 with District Registrar, RR District.

9.Share Subscription Agreement executed with M/s. CCCPL for allotment of 1,86,20,970 shares with face value of Rs.18,62,09,695/- in favour of APIIC in the equity proportion of 26%

10.Shareholders’ agreement with M/s. CCCPL vide which APIIC was allotted 1,86,20,970 shares by M/s. CCCPL in the equity proportion of 26%

11.Debenture Deed executed between APIIC and M/s. EHTPL vide which APIIC was allotted 5,09,95,915 debentures by M/s. EHTPL against the surplus amount of Rs.50,99,59,150

12.Escrow Agreement executed between APIIC and M/s. EHTPL regarding opening of an escrow account with Andhra Bank, Hi-Tech City Branch, 59 Crl.M.P.No.250/2022

Hyderabad in respect of Debentures held by APIIC.

(xxv) It is further case of the prosecution that the record shows that M/s. Emaar Properties PJSC, Dubai initially entered into an

MOU on 06.11.2002 in pursuance of the decision taken by the council of Ministers on 20.08.2002 and the G.O.Ms.No.359, dt.04.09.2002. As per the MOU, two SPVs (Special Purpose Vehicles) has to be implemented and 235 acres of land was allotted for Golf Course; 285 acres of land was allotted for Multi-use and 15 acres of land was allotted to water bodies, in total 535 acres of land was required for integrated project, out of 535 acres of land, APIIC was having 445-455 acres of its own and balance 80-90 acres of land was required to acquired. SPV-1 consisting of Pro-championship 18 hole Golf Course (along with Golf Club, Club House and Country Club) and Multi-use

Development including Villas and Commercial Complexes at

Manikonda. SPV-2 consisting of Convention Centre and Business Hotel to be implemented at NAC grounds. The equity structure of the SPVs is as follows:

SPV1:APIIC26% Emaar Properties74%

SPV2:APIIC49% Emaar Properties51% 60 Crl.M.P.No.250/2022

(xxvi) It is further case of the prosecution that the lease payment for the land leased for a period of 66 years by SPV1 for the

Golf Course shall be equal to two percent of all annual revenue earned by the Golf Course, except life membership and other long term club and academy membership income.

(xxvii) It is further case of the prosecution that the MOU was followed by a Collaboration Agreement dt.19.08.2003 executed between APIIC and M/s. Emaar Properties PJSC, Dubai. Only certain issues relating to the Collaboration Agreement were approved by the

Cabinet Sub-Committee on 28.06.2003. The Board of Directors of

APIIC approved the Collaboration Agreement dt.19.08.2003 between

APIIC and Emaar Properties PJSC in its 151st Meeting held on 12.03.2004.

(xxviii) It is further case of the prosecution that in the year 2004, new Government came into power and the Government of

Andhra Pradesh constituted a Group of Ministers to review all decisions taken after 1st January, 2003. The group of Ministers has reviewed the several decisions taken by the earlier Government, but in respect of integrated Convention Centre Complex and Golf Course was deferred in the meeting held on 03.09.2004. Thereafter, discussions took place in the Government on 06.09.2004 and it was 61 Crl.M.P.No.250/2022 suggested that APIIC should limit its equity in all the three SPVs to 26% and thereby, proportionately increasing the equity of M/s. Emaar

Properties in the entire project. It is to be noted that the earlier there are only two SPVs, now it was divided into three SPVs, which are as follows:

SPV-1M/s. Emaar Hills Township Pvt. Ltd. (M/s. EHTPL) for development of Township Project with Villas, Apartments and IT Park at Manikonda

SPV-2M/s. Boulder Hills Leisure Pvt. Ltd. (M/s. BHLPL) for development of Golf Course and Boutique Resort Hotel at Manikonda

SPV-3M/s. Cyberabad Convention Centre Pvt. Ltd. (M/s. CCCPL) for development of Convention Centre and Business Hotel at NAC grounds.

(xxxi) It is further case of the prosecution that in view of the decision of the Government in all three SPVs, the equity of the

Government of Andhra Pradesh was reduced to 26% and the equity of

M/s. Emaar Properties PJSC, Dubai was enhanced from 51% to 74%.

(xxx) The record reveals that Sri K.V. Rao, Principal Secretary vide his note dt.05.11.2004 noted that the lease rental from Golf

Course may be negotiated with the developer for 2% of the Gross

Annual revenue for 33 years and 3% for further 33 years. He also 62 Crl.M.P.No.250/2022 pointed out that the asset which was fully developed would revert to

Government after 66 years.

(xxxi) The record also shows that the Price Fixation Committee proposes the enhancement of the land value from Rs.29,00,000/- to

Rs.40,00,000/- per acre, but the officials ignoring the same, only mentioned the land price at Rs.29,00,000/- per acre.

(xxxii) The case of the prosecution that they have increased the equity of M/s. Emaar Properties PJSC, Dubai, at the same time, they have completely ignored the enhanced value of the land even though the cost of the project was revised from Rs.430 crores to

Rs.630 crores, but the appreciation in land cost was ignored. The

Government has isued G.O.Ms.No.14 on 11.01.2005 mentioning the share value as 74% for Emaar Properties and 26% for APIIC in all three SPVs and all equity from APIIC was on land value basis alone @

Rs.29 lakhs per acre and also mentioned about the lease rentals for 235 acres of land at Manikonda land given for the Golf Course was fixed @ 2% of the Gross Annual Revenue on all golf Course components for period of 33 years and @3% for further period of 33 years. Basing on the G.O.Ms.No.14, dt.11.01.2005, a draft supplementary agreement was made available. VC & MD, APIIC addressed a letter to the Principal Secretary ignoring the 63 Crl.M.P.No.250/2022 enhancement of 3% after expiry of 33 years and Sri KV Rao, the then

Principal Secretary, Government of AP, Industries and Commerce

remained silent as he was allotted Plot No.B-55 admeasuring 1239 sq.yds. in Sy.No.211(P) of Manikonda Jagir Village, Rajendranagar

Mandal, Ranga Reddy District @ Rs.5000/- per sq.yd. when the prevalent market rate was Rs.10,000/- per sq.yd.

(xxxiii) It is further case of the prosecution that the documents reveals that Sri KV Rao, Principal Secretary (Industries & Commerce) though the then Minister for Major Industries was very much available, he has not circulated the file and only after issuance of

G.O.Ms.No.22, dt.27.01.2005 it was brought to the notice of the

Minister for Major Industries. After pursuance of the file, the Minister for Major Industries found that the G.O.22 was not in conformity with the orders dt.11.01.2005 in the file and made some remarks and directed the Principal Secretary, Industries & Commerce to prepare a comprehensive note duly incorporating information on all the issues and circulate the same to him for apprising the Minister for Finance and CM and also instructed the Principal Secretary to keep the

G.O.Ms.No.22 in abeyance till approval of CM. But it was not resolved in the meeting dt.02.03.2005, only matter pertaining to exemption of conversion charges was discussed. Subsequently, the then Minister 64 Crl.M.P.No.250/2022 for Major Industries moved a secret note dt.17.03.2005 to the then

CM clarifying the issues that were required to be covered while issued the G.O.Ms.No.22, dt.27.01.2005. Subsequently the supplementary agreement was executed on 19.04.2005 between APIIC and M/s.

Emaar Properties PJSC, Dubai.

(xxxiv)It is further case of the prosecution that Sri

LV Subrahmanyam contrary to the instruction of the Principal

Secretary and the decision taken in the review meeting dt.13.05.2005, addressed a letter dt.13.05.2005 to M/s. Emaar

Properties PJSC, Dubai seeking the detailed information about M/s.

Fairbridge Holdings Limited, Cyprus to process their request for bringing in Fairbridge Holdings as a partner for strategic resource. The documents also shows that

(xxxv)It is further case of the prosecution that M/s. Emaar

MGF Land Ltd., has allowed Sri Jayadev Galla and Smt. G. Ramadevi to encroach 2.20 acres of land and they constructed multi-storied buildings on the said land. In pursuance of the agreement, the

Government initiated the proceedings for acquiring 92.19 acres of land in Nanakramaguda Village. Since the owners of 11.26 acres of patta land has represented against acquisition of said land, a proposal was approved by the District Collect, RR District to acquire 80.35 65 Crl.M.P.No.250/2022 acres of land. After the notification was published in the newspapers and the Gazette of AP, the aggrieved parties challenged the actions of the Special Deputy Collect, Land Acquisition (Industries) before the

Hon’ble High Court of AP by filing WP No.21712/2002, dated:

31.10.2002, wherein the Hon’ble High Court vide orders dated:

25.04.2003 granted stay on the land acquisition proceedings and directed the District Collector, RR District to issue notice for an enquiry under Section 5(A) of Land Acquisition Act to the persons whose lands were to be acquired including the petitioners and to take appropriate further steps after such enquiry. In compliance to the orders of the Hon’ble High Court of AP notices were issued to the aggrieved persons for conducting enquiry under Section 5(A) of Land

Acquisition Act on 17.03.2004.

(xxxvi)It is further case of the prosecution that the District

Collect RR District after examining the objections of the interested parties rejected them on the ground that the objections raised by them were devoid of any merit. Out of 80.35 acres of land, extend of 3.36 acres of land at Survey Number 27/4 belonging to Smt. G. Vijaya

Nirmala, W/o. Shri GSR Krishna, Shri Jayadev Galla and Smt. G. Rama

Devi and they also raised objections. Surprisingly, an award under 66 Crl.M.P.No.250/2022

Section 11(A) of Land Acquisition Act for acquisition of 77.02 acres of land excluding the land of 3.33 acres was passed.

(xxxvii)It is further case of the prosecution that APIIC had handed over 454.93 Acres of Government land at Sy.No.203P, 210P & 211P of Manikonda Village, Sy.No.91P of Gachibowli Village and

Sy.No.36 to 40, 42 & 47 of Nanakramguda Village to Shri Vijaya

Menon, representative of M/s. Emaar Properties, PJSC Dubai vide possession certificate dated: 18.06.2005. The patta land of 77.05 acres was handed over by the APIIC to Shri Vijay Menon, representative of M/s. Emaar Hills Township Pvt. Ltd. And M/s. Boulder

Hills Leisure Pvt. Ltd., vide possession certificate dated: 29.11.2005.

In total 531.98 acres of land was handed over to M/s. Emaar

Properties PJSC, Dubai and its joint venture companies for developing the Integrated Project i.e., Golf Course and Township Project.

(xxxviii)It is further case of the prosecution that the

Cyberabad Development Authority as well as the MA & UD

Department has raised objection for exemption of conversion charges and development charges in respect of the Integrated Project, as this was the only source of revenue for CDA and such exemption was not provided in AP Urban Areas Development Act, 1975. However, the then CM overruling all the objections granted exemption from 67 Crl.M.P.No.250/2022 payment of conversion/development charges to the tune of

Rs.28,86,63,135/-.

(xxxix)It is further case of the prosecution that the APIIC executed the documents with M/s. Emaar Properties PJSC, Dubai and the SPVs viz., M/s. EHTPL, M/s. BHLPL and M/s. CCCPL in respect of the

Integrated project on 28.12.2005.

(xl)It is further case of the prosecution that Sri BP Acharya, the then VC & MD, APIIC has received an agenda from M/s. EHTPL on 14.09.2006 for discussing the proposal to bring in M/s. Emaar MGF

Land Ltd., as a co-developer to develop the township project as well as Golf Course project, to be discussed in the Board Meeting dt.21.09.2006of M/s. EHTPL and M/s. BHLPL. As per the agenda, M/s.

Emaar MGF Land Ltd. was proposed to pass on 25% of the total revenue from the project to M/s. EHTPL, which would affect the revenue sharing of APIIC in the integrated project. Sri BP Acharya did not discuss such an important issue in the board of APIIC.

(xli)It is further case of the prosecution that in the board meeting dt.21.09.2006, the development strategy for the Integrated

Township Project was discussed. Shri BP Acharya, the then VC & MD,

APIIC, Shri Vijay Menon & Shri Koneru Prasad, both Directors of M/s.

EHTPL and Shri Srikant Joshi, CEO-South, M/s. Emaar MGF Land Ltd., 68 Crl.M.P.No.250/2022 attend the said board meeting and it was discussed that the proposals were received from M/s. Emaar MGF Land Limited for the development and construction of the projects in SPV-1 (M/s. EHTPl) and SPV-2 (M/s. BHLPL) and the same were placed before the board.

M/s. EHTPL never brought to the notice of APIIC that there was fund crunch for the development of the project. Sri BP Acharya, who was present in the board meeting did not object to invoking of clause 6(v) from the MOU as the MOU had expired and the Collaboration

Agreement dt.19.08.2003 was in place. The board authorized Shri

Vijay Menon to execute the Development Agreement, Lease Deed and

Assignment Deed on behalf of the company with M/s. Emaar MGF

Land Ltd. In the board meeting dt.21.09.2006, the board suggested for entering into a Development Agreement for development of

Boutique Resort Hotel and Golf Course, which were to be developed by M/s. BHLPL (SPV-2), there was no mention of M/s. EHTPL (SPV-1) entering into a Development Agreement with M/s. Emaar MGF Land

Limited for development of Integrated Township Project. Shri BP

Acharya did not object for those irregularities.

(xlii) It is further case of the prosecution that the prosecution contended that clause 8 of G.O.Ms.No.359, dt.04.09.2002; clause 6(v) of MOU dt.06.11.2002; clause 2.4(v), 2.4(x), 3.1(c)(iii) of Collaboration 69 Crl.M.P.No.250/2022

Agreement dt.19.08.2003; clause 8 of supplementary agreement dt.19.04.2005; clause 9.1(H) of shareholder’s agreement dt.28.12.2005 reveals that rights towards development, management and operations of the integrated project could have been assigned by the developer with the principle approval from APIIC. Whereas in this case, no proposal was moved by M/s. Emaar Properties, PJSC, Dubai to

APIIC for obtaining the approval of APIIC; and Collaboration

Agreement and Supplementary Agreement contemplates that the integrated project through M/s. Emaar Holdings and covenants that the representations, obligations, warranties and commitments made by it should be duly complied with, as such M/s. Emaar Properties cannot absolve itself from its responsibility to complete the project through M/s. Emaar Holdings and M/s. EHTPL.

(xliii) It is further case of the prosecution that as per the

Collaboration Agreement and Shareholder’s Agreement, it was the responsibility of M/s. EHTPL to approach both the shareholders i.e.

APIIC and M/s. Emaar Properties PJSC, Dubai to obtain their affirmative approval and as per the provisions of MOU and collaboration agreement only developer i.e., M/s. Emaar Properties, PJSC, Dubai could have assigned these rights to third party and not M/s. EHTPL.

Sri BP Acharya representing APIIC in the board of M/s. EHTPL has not 70 Crl.M.P.No.250/2022 raised any objection for the resolution of M/s. EHTPL entering into a

Development Agreement with M/s. Emaar MGF Land Ltd.

(xliv) The prosecution contended that as per clause 4.1 of the

Collaboration Agreement, approval of the Board of Directors of APIIC was compulsory as per the terms and conditions of the Collaboration

Agreement that was executed on 19.08.2003. As per clause 9.1H of the Shareholder’s Agreement executed between APIIC and

M/s. EHTPL, for the declaration or payment of any dividend or distribution of profits or passing of any resolution to retain or allocate profits, affirmative approval should be obtained by M/s. EHTPL from both M/s. APIIC and M/s. Emaar Properties PJSC, Dubai.

(xlv) It is further case of the prosecution that M/s. Emaar MGF

Land Pvt. Ltd., represented by its Chief Executive Officer Shri Srikant

Joshi, submitted an application dt.23.04.2007 to the Chief Secretary,

Government of AP requesting for notifying M/s. Emaar MGF Land Pvt.

Ltd., as a co-developer for designing, developing, operating and maintaining the area of 10.33 acres of land and structures thereon at

Manikonda Village. M/s. EHTPL vide letter dt.24.04.2007 submitted the proposal for including additional area of 7.77 acres of land for the purpose of developing additional facilities in the said SEZ notified vide notification No.SO 548(E) dt.10.04.2007. The Chief Secretary decided 71 Crl.M.P.No.250/2022 to seek comments from APIIC and Sri B.P. Acharya recommended for consideration of request of M/s. EHTPL for including additional 7.77 acres of land and no objection for including M/s. Emaar MGF as co- developer for development of IT/ITES SEZ. After obtaining sanction from APIIC, the Government of AP has processed the file to

Government of India and the Government of India conveyed the approval for including M/s. Emaar MGF Pvt. Ltd., as a co-developer.

(xlvi) It is further case of the prosecution that M/s. Emaar MGF

Land Pvt. Ltd., was incorporated on 18.02.2005 and was registered with ROC, New Delhi and the name of the company was changed to

M/s. Emaar MGF Land Limited from Emaar MGF Private Land Limited on 13.08.2007. Shri Shravan Gupta and Shri Siddharth Gupta were the initial two Directors of the company; Shri Mohamed Ali Alabbar,

Shri Sale Bin Rashid Ali Mohannadi and Ms. Low Ping were appointed as Directors of the company on 07.11.2005. Shri Shravan Gupta is the

Managing Director of the company and Shri Mohamed Ali Alabbar is the Chairman.

(xlvii) It is further case of the prosecution that pursuant to the resolution passed by the Board of M/s. EHTPL on 21.09.2006, a development agreement was executed between M/s. EHTPL and

M/s. Emaar MGF Land Limited on 03.11.2006 i.e., before changing the 72 Crl.M.P.No.250/2022 name. The said agreement was executed by Shri Vijay Menon on behalf of M/s. EHTPL and Shri Srikant Joshi, CEO (South) on behalf of

M/s. Emaar MGF Land Limited.

(xlviii) It is further case of the prosecution that in the board meeting dt.26.03.2007, Shri Vijay Menon and Dr. Nader Mohammed resigned as Directors of M/s. EHTPL and in their place Shri Vinod

Kumar Gomber and Shri Ahmed Thani Rashed Almatrooshi were appointed as Directors of the company. Shri Vijay Menon was retained as Manager of the company and was authorised to sign the necessary documents on behalf of the company. In the board meeting dt.26.09.2007, it was discussed that the development agreement executed between M/s. EHTPL and M/s. Emaar MGF Land Limited based on the board resolution dt.21.09.2006 was required to be confirmed by APIIC. Subsequently, a Development Agreement-cum-

General Power of Attorney (GPA) was executed between M/s. EHTPL and M/s. Emaar MGF Land Limited on 25.07.2007. As per the

Development Agreement-cum-GPA, the Development Agreement dt.03.11.2006 was cancelled and was replaced with the Development

Agreement-cum-GPA dt.25.07.2007. The said Development

Agreement-cum-GPA was signed by Shri Vijay Menon on behalf of

M/s.EHTPL and Shri Srikant Joshi on behalf of M/s. Emaar MGF Land 73 Crl.M.P.No.250/2022

Ltd. In the board meeting dt.10.07.2008, Shri Amit Jain and Shri

Srikant Joshi, CEO were appointed as alternate Directors. Shri

Pardhasaradhi Rao was appointed as Second Nominee Director of

APIIC.

(xlix) It is to be noted that M/s. Emaar MGF Land Ltd., applied for term loan of Rs.150 crores by Axis Bank by offering 14.01 acres of land out of 258.36 acres owned by M/s. Emaar MGF Land Ltd., and subsequently the said loan was reduced to Rs.90 crores. M/s. Emaar

MGF Land Ltd., has cleared all the dues against the term loan in

February, 2011, as such the security i.e., the title deed in respect of 14.01 acres of land was released by the Bank.

(l)It is further case of the prosecution that on 23.07.2008

Shri Vijay Raghav on behalf of M/s. EHTPL and Sri Srikant Joshi on behalf of M/s. Emaar MGF Land Ltd. executed addendum to

Development Agreement-cum-GPA deciding the percentage share in the revenue of M/s. Emaar MGF Land Ltd. The Development

Agreement-cum-GPA dt.25.07.2007 and Addendum to the

Development Agreement-cum-GPA dt.23.07.2008 executed between

M/s. EHTPL and M/s. Emaar MGF Land Limited were never discussed in the board of M/s. EHTPL. As per the Development Agreement, the gross revenue was to be shared between M/s. Emaar MGF Land Pvt.

74 Crl.M.P.No.250/2022

Ltd. and M/s. EHTPL in the ratio of 75% : 25% on both the sale and lease proceeds. In the addendum to the Development-cum-GPA the revenue sharing pattern of lease proceeds was revised from 75% :

25% to 95% : 5%. The same was accepted in the board meeting dt.15.06.2007, which is detrimental to the interest of APIIC. In case of revenue from Operations and Maintenance and advertisements in

Common Areas, the sharing was in the ratio of 75% : 25% on the profits derived there from and not on revenues, as mentioned in the addendum to the Development Agreement-cum-GPA, the said aspect was not discussed in the board meetings of M/s. EHTPL. Due to amendments of the share pattern, the APIIC has sustained loss of

Rs.4,92,10,000/- from 2008-09 to 2010-11.

(li)It is further case of the prosecution that M/s. BHLPL and

M/s. Emaar MGF entered into a Development Agreement, Deed of

Assignment, Lease Deed as applicable to the development of

Boutique Resort Hotel and Golf Course Multi use Project. But no development agreement was executed between M/s. BHLPL and M/s.

Emaar MGF Land Ltd., and only Lease Deed and Assignment Deed were executed on 03.11.2006. Those two deeds empowered M/s.

BHLPL to sell villa plots.

75 Crl.M.P.No.250/2022 (lii)It is further case of the prosecution that M/s. EHTPL entered into Agency Agreement with M/s. Stylish Holmes Real Estate

Pvt. Ltd. represented by its Director Shri T. Ranga Rao on 29.01.2005 and appointed M/s. Stylish Holmes Real Estates Pvt. Ltd., as its sole

Agent for the purpose of marketing the Plots and Residential units and the said Agency Agreement was executed on 29.01.2005 at Dubai and the M/s. Stylish Holmes Real Estate Pvt. Ltd. had started booking villa plots in the integrated township in the month of March, 2005 though the land had not been transferred to M/s. EHTPL.

(liii)It is further case of the prosecution that as per the provisions of G.Os issued by Government of Andhra Pradesh;

Collaboration Agreement and Supplementary Agreement executed between APIIC and M/s. Emaar Properties PJSC, Dubai, M/s. EHTPL was required to develop the project land by way of constructing Villas and

Apartments and sell the same after finalizing the rates in its board.

Hence the agency agreement dt.29.01.2005 executed by the

Chairman, M/s. Emaar Properties PJSC, Dubai on behalf of M/s. EHTPL agreeing to sell the plots @ Rs.5,000/- per sq.yd for a period of 5 years is nothing but clandestine arrangement in furtherance of the criminal conspiracy by the developer to dispose off the project land without developing the same, which caused loss of revenue to APIIC.

76 Crl.M.P.No.250/2022 (liv)It is further case of the prosecution that M/s. Stylish

Holmes Real Estates Pvt. Ltd. started booking villa plots from March, 2005 itself and it booked 43 villa plots till 27.12.2005 i.e., prior to execution of Conveyance Deed dt. 28.12.2005 by APIIC in favour of

M/s. EHTPL. During the period 28.12.2005 to 02.11.2006, M/s. EHTPL and M/s. Stylish Holmes Real Estates Pvt. Ltd., booked 25 villa plots, whereas M/s. EHTPL executed a Development Agreement dt.03.11.2006 with M/s. Emaar MGF Land ltd. Even after execution of

Development Agreement dt.03.11.2006 in favour of M/s. Emaar MGF

Land Ltd., M/s. Stylish Holmes Real Estates Pvt. Ltd., continued to book villa plots as per the Agency Agreement dt.29.01.2005 and booked 37 plots in between 03.11.2006 to 20.08.2008.

(lv)It is further case of the prosecution that 31 villa plots were sold by M/s. EHTPL and M/s. Emaar MGF Land Ltd., at the documented rate of Rs.5,000/- per sq.yd. though the prevalent market rates were much higher. As per the Agency Agreement dt.29.01.2005, plots over and above 100 were to be sold at the prevailing market rates as decided by M/s. EHTPL, M/s. Stylish Holmes Real Estates Pvt. Ltd.

(lvi)It is further case of the prosecution that villa plot buyers has paid first and second installments in favour of M/s. EHTPL, whereas third and final installments, which accounted for 85% of the 77 Crl.M.P.No.250/2022 sale consideration @ Rs.5,000/- per sq.yd was paid in favour of M/s.

Emaar MGF Land Ltd., though the booking had been made by M/s.

EHTPL through M/s. Stylish Holmes Real Estates Pvt. Ltd., as such without making any investment M/s. Emaar MGF Land Ltd., received bulk of revenue from sale of villas/plots.

(lvii)It is further case of the prosecution that as per the instructions of Shri Koneru Rajendra Prasad, Shri T. Ranga Rao,

Director, M/s. Stylish Holmes Real Estates Pvt. Ltd., sold 82 villa plots by collecting excess amounts from the buyers ranging from Rs.4,000/- per sq.yd to Rs.45,000/- per sq.yd. over and above the rate of

Rs.5,000/- per sq.yd. The excess money was collected by

Shri T. Ranga Rao from the buyers in cash only except from

Shri P.S. Parthasarathy Rao and Shri Challa Suresh, who had deposited

US $ 250,000 and US $ 140,000 respectively towards part of excess payment in the bank accounts of Shri Madhu Koneru, S/o. Shri Koneru

Rajendra Prasad maintained at Dubai. From the 82 villa plot buyers, an amount of Rs.96,01,75,000/- was collected over and above the documented price of Rs.5,000/- per sq.yd. and it was supported by

Shri T. Ranga Rao, Shri P.S. Parthasarathy and Shri Y.V. Prasad statements recorded under Section 164 Cr.P.C. It is further case of the prosecution that Shri T. Ranga Rao handed over the cash to Shri Sunil 78 Crl.M.P.No.250/2022

Reddy on the instructions of Shri Koneru Rajendra Prasad and also sometimes directly to Shri Koneru Rajendra Prasad.

(lviii) It is further case of the prosecution that 23 villa plots were allotted at the rate of Rs.5,000/- per sq.yd to the relatives of Shri

Koneru Prasad and family members of VIPs (Politicians in higher positions). It is further case of the prosecution that the Investigating

Agency has recovered two laptops from the office of M/s. EHTPL and

M/s. Emaar MGF Land Ltd., at Hyderabad. Out of those two laptops, one belongs to Shri Vijay Raghav and the laptops were sent to CFSL analysis and it reveals that the buyers has paid the more than the documented price.

(lix)It is further case of the prosecution that Shri Vijay Raghav,

Shri Srikant Joshi and Shri Shravan Gupta asked Shri Rajeev Gupta, Sr.

Vice President, M/s. Emaar MGF Land Ltd., to incorporate 10 companies with the employees of M/s. MGF Ltd., and other group companies as Directors/Shareholders of these companies.

Accordingly, seven companies were floated at New Delhi and three companies were floated at Ernakulam and the money was transferred and 18 villa plots were booked in the name of ten companies, later it was cancelled.

79 Crl.M.P.No.250/2022 (lx)It is further case of the prosecution that M/s. EHTPL and

M/s. Emaar MGF Land Ltd., sold about 206 apartments, out of which

Shri Srikant Joshi, the then CEO, M/s. Emaar MGF Land Pvt. Ltd.

purchased an apartment in his name at Rs.3,268/- per sq.ft, whereas the apartments were sold to the other buyers between Rs.4,800/- and

Rs.9,000/- per sq.ft.

(lxi)It is further case of the prosecution that APIIC has not received any revenue from M/s. EHTPL on account of its equity in the

Township Project and M/s. Emaar MGF Land Ltd., balance sheet shows that Rs.194,13,13,396/- was earned from sale of villas, villa plots and apartments, out of which the revenue share of Rs.48,53,28,349/- is shown payable to M/s. EHTPL towards its 25% share, but the said amount was not paid.

(lxii) It is further case of the prosecution that on the instruction of Shri Koneru Prasad, Shri T. Ranga Rao and his Manager collected an amount of Rs.96,01,75,000/- from sale of villa plots over and above the documented price @ Rs.5,000/- per sq.yd. during the period between 2005-2010. Similarly, Shri GV Vijay Raghav, Finance

Head-South, M/s. Emaar MGF Land Ltd., collected an amount of

Rs.6,85,60,000/- from sale of three villa plots over and above the documented price @ Rs.5,000/- per sq.yd. But those amounts were 80 Crl.M.P.No.250/2022 not reflected in the books of account of M/s. EHTPL. It is further case of the prosecution that APIIC has not received even a single rupee from Township Project, which amounts to loss of Rs.43.50 crores. At the same time, M/s. Emaar MGF Land Ltd. and M/s. Emaar Properties

PJSC, Dubai obtained undue pecuniary advantage of Rs.167.29 crores.

(lxiii) It is further case of the prosecution that a team was constituted for implementation of integrated project, utilization of funds with respect to agreements entered into between APIIC and

M/s. Emaar Properties, PJSC Dubai. The said team consisting of Shri C.

Subba Rao and Shri B V Bhaskar Rao visited the office of M/s. EHTPL on 04.05.2009 and 05.05.2009 and inspected the records and pointed the irregularities.

(lxiv) It is further case of the prosecution that after inducting

Shri BR Meena as VC & MD on 24.12.2009, he has noticed several irregularities and same were placed before the board of APIIC in its board meeting dt.10.08.2010 and the board took a decision to take comprehensive and independent expert opinion on the all the issues relating to the implementation of the project.

(lxv) It is further case of the prosecution that after receiving the reports of the consortium and legal opinion, the matter was 81 Crl.M.P.No.250/2022 referred to the then Ld. Solicitor General of India by APIIC and in his opinion dt.18.09.2010, the then Ld. Solicitor General of India had suggested the following course of action:

(a)APIIC should terminate the collaboration agreement and initiate arbitration proceedings with Emaar. It may then seek an injunction against M/s. Emaar MGF on the ground that the Corporate veil must be lifted in this case.

(b)APIIC as a minority shareholder in EHTPL should initiate appropriate proceedings in the company law board for oppression/mismanagement, and try and get control of

EHTPL after which the development agreement with M/s.

Emaar MGF could be rescinded by M/s. EHTPL.

(c)APIIC and GoAP should jointly file a suit for permanent injunction in an appropriate Civil Court, seeking to restrain Emaar MGF from proceeding with any works or engaging in any sale relating to the project land.

(d)APIIC should request GoAP to issue necessary instructions to the competent registration authorities not to register any sale deeds executed by Emaar MGF in favour of buyers. Where such sale deeds have been executed and registered, options may be explored as to how such registrations can be cancelled.

(e)APIIC may consider initiating appropriate criminal proceedings against persons involved in the actions that resulted in the depletion in the value of EHTPL. If necessary, 82 Crl.M.P.No.250/2022 recourse may be taken to Section 235 of Companies Act, 1956.

(lxvi) It is further case of the prosecution that as per the suggestions of Ld. Solicitor General of India, APIIC issued termination notice to M/s. Emaar Properties PJSC, Dubai and M/s. Emaar Holdings,

Mauritius on 29.10.2010 under Clause 5.3(a) of the Collaboration

Agreement.

(lxvii) It is further case of the prosecution that Shri N Sunil

Reddy (A-7) along with his father Shri N Sangi Reddy floated a company which was incorporated on 10.05.2005 in the name and style of M/s. Sunil Projects and Foundations Pvt. Ltd. and both Shri N

Sunil Reddy (A-7) and his father Shri N Sangi Reddy were the promoter directors of the said company and Shri N Sunil Reddy (A-7) was nominated as the Managing Director of the company. Later,

Narapa Manohar Reddy and his wife Smt. Narapa Saradha Reddy were appointed as Directors w.e.f. 10.10.2009. Subsequently, on 25.01.2010, the name of the company was changed to M/s. Southend

Projects & Foundations Pvt. Ltd. and A-7 and his father resigned from the company w.e.f. 01.10.2010. M/s. Southend Projects & Foundations

Pvt. Ltd. has received the funds during the period 2009-2010 from various companies but those companies existences is in question.

83 Crl.M.P.No.250/2022 (lxviii)It is further case of the prosecution that as far as land acquisition is concerned, the revenue officials has played dual role and they wanted to held some persons i.e., G. Krishna and G.

Vijaya Nirmala and Smt. Laxmamma. The officials and the Chairman of APIIC has used different yardsticks to acquire the lands of cinema actor i.e., G. Krishna and his family members and at the same time applied another yardstick to acquire properties of others.

(lxix) It is further case of the prosecution that the request made by Smt. Galla Aruna Kumari for exempting an extent of Acs.2-20 gts at Sy.No.27/4 from acquisition was rejected. The GHMC authorities favoured the family members of Sri G. Krishna and Sri Galla Jayadev.

Who encroached upon the Government land.

(lxx) It is further case of the prosecution that the excess amount collected from villa plot buyers was benefited by Shri Koneru

Rajendra Prasad and Shri N. Sunil Reddy and the said transactions were held at Syndicate Bank, New Nallakunta Branch, Hyderabad;

Karur Vysya Bank, Nallakunta Branch, Hyderabad and Dena Bank and

Ramakrishna Mutt Branch, Hyderabad.

11.As per the investigation conducted by the Enforcement

Directorate, they relied on the statements of accused as well as 84 Crl.M.P.No.250/2022 witnesses recorded under Section 50 of PMLA. The prosecution has relied on the statement of Sri Tummala Ranga Rao recorded under

Section 50(2) and (3) of PMLA, 2002 in addition to the 164 Cr.P.C.

statement made by him before the Magistrate, wherein he stated that he has received Rs.96.01 crores in cash from the buyers of villa plots as identified by CBI and those amounts were given to Sri Koneru

Rajendra Prasad and to Sri N. Sunil Reddy as directed by Sri Koneru

Rajendra Prasad; he further stated that he made payments to EMGF of Rs.1.44 crores on account of advance payments for booking of plots as per the instruction of Sri Koneru Rajendra Prasad and those amounts paid are partly from 4% commission received by them or from loan taken from third parties. He further stated that he received

Rs.1.75 crores from United Port Services and Rs.1.50 Crores from

Maheswari Brothers in the form of loan partly towards advance for booking of plots to meet the targets fixed by M/s. Emaar Properties

PJSC and the amounts are yet to be repaid and Sri Koneru Rajendra

Prasad has helped him in getting those finances. He further stated that he gave an amount of Rs.2.50 crores for purchase of land situated at Bikal & Mallikharjunagiri Villages, Marpalli Mandal, Ranga

Reddy District, Telangana State for Sri Koneru Rajendra Prasad and his family members with his assistance and he has paid the said amount from the sale proceeds received from the villa plot buyers to the 85 Crl.M.P.No.250/2022 brokers of the land as per the instructions of Sri Koneru Rajendra

Prasad and an amount of Rs.2.50 crores was paid to the land owners from the extra amount collected from villa plot buyers i.e., from

Rs.96.01 crores. He further stated that an amount of Rs.2.40 crores (approx) might have been received by M/s. Stylish Holmes from buyers of villa plots as 4% commission. He further stated that the land to an extent of 2057 Sq.Yd. situated in Manikonda Jagir Village,

Rajendra Nagar Mandal, Ranga Reddy District is held in the name of

M/s. Stylish Holmes purchased with an investment of

Rs.1,11,20,450/-.

12.The prosecution also relied on the statement of Sri B.P.

Acharya, recorded under Section 50(2) and (3) of PMLA, 2002, wherein he stated that he has attended the board of EHTPL on 20.12.2005. The prosecution also relied on the statement of Sri G.V.

Vijay Raghav, recorded under Section 50(2) and (3) of PMLA, 2002, wherein he stated that as there was a need for funds into the projects, deed was entered into with EMGF and accordingly EMGF started investing into the integrated project and that the total investment in

Golf Course and township projects was Rs.400 Crores (approx.). He further stated that he is the authorised signatory of EMGF and EHTPL as per board resolutions and that he was reporting to Mr. Srikant Joshi, 86 Crl.M.P.No.250/2022

CEO. He further stated that EHTPL entered into Agency agreement for sale of plots in January 2005 with M/s. Stylish Holmes Pvt. Ltd. and

EHTPL entered into Development agreement for development of

Township Project in November 2006 with EMGF. No written approval from APIIC was taken by EHTPL for the agreements entered with EMGF or M/s. Stylish Holmes. He further stated that as per the Development

Agreement-cum-GPA entered into between EHTPL and EMGF, the consideration for the development of township project was revenue share and EHTPL to get 25% on gross revenue of the project and balance 75% of gross revenue to EMGF. The revenue share mentioned as Rs.45 Crores (approx.) as on 31.03.2011 as per balance sheet, however no amount has been transferred by EMGF to EHTPL upto 31.03.2011. APIIC was also not paid dividends as the balance sheets were not finalized due to APIIC non-approval. He further stated that he was transferred to EMGF in March 2007 and worked as

Finance Head (South) of EMGF. He further stated that the interested parties approached Mr. Srikant Joshi, CEO of EMGF and based on his instructions, they issued allotment letters or MOU to such allotted parties.

13.The prosecution also relied on the statement of Sri Koneru

Rajendra Prasad, recorded under Section 50(2) and (3) of PMLA, 2002, wherein he stated that he was invited by Emaar, Dubai to be a 87 Crl.M.P.No.250/2022 nominee Director in EHTPL towards end of 2004, which he accepted and continued to be a Director till 2010. He further stated that the price of Rs.5000/- per sq.yd. was fixed by Emaar Properties, Dubai being the majority shareholder in EHTPL and was approved by board of EHTPL and he has signed the balance sheets of EHTPL for the years 2005-06 and 2006-07 under Company Law as legal formality. He further stated that selling of villa plots in excess of Rs.5000/- per

Sq.Yd. by Sri Tummala Ranga Rao of M/s. Stylish Holmes was never brought to the knowledge of EHTPL Board; that Sri Tummala Ranga

Rao has never paid any amount to him in cash or cheque and he is not aware of any transactions between Sri N. Sunil Reddy and

Sri Tummala Ranga Rao and he is not aware of the fact that

Sri Tummala Ranga Rao has collected Rs.96.01 crores excess of cash from villa plot buyers over and above the agreed price of Rs.5000/- per Sq.Yd. except during the investigation proceedings by CBI. He further stated that he has never advised Sri Tummala Ranga Rao to establish M/s. Stylish Holmes or to collect extra amount from villa plot buyers; and that he has not instructed Sri Tummala Ranga Rao to pay

Rs.2.5 crores to farmers from excess amount collected; that his family members have purchased some lands in Medak District.

88 Crl.M.P.No.250/2022

14.The prosecution also relied on the statement of Sri Srikanth P

Joshi, recorded under Section 50(2) and (3) of PMLA, 2002, wherein he stated that he joined EMGF in April 2006 as CEO (South) and from

April, 2009 he worked as CEO of EMGF and he attended the board meeting dt.21.09.2006. He know about the past agreements entered by Emaar and APIIC including agreement dt.29.01.2005. He further stated that EMGF has redesigned the integrated project where the plots were reduced from 350 to 135 and apartments were increased from 1000 to 3500. He further stated that the plots were sold through

M/s. Stylish Holmes and originally cheques were received by EHTPL and after the Development Agreement, they were received by EMGF as per the agreement. He further stated that Sri Tummala Ranga Rao and Sri K. Rajendra Prasad are the persons having control on the sale of villa plots; and Mr. T. Ranga Rao was the main person responsible for sales and collections.

15.The prosecution also relied on the statement of Sri Rakshit

Jain, recorded under Section 50(2) and (3) of PMLA, 2002, wherein he stated that the entire development of Boulder Hills Project of EHTPL was transferred in the name of EMGF vide Joint Development

Agreement dt.03.11.2006 and subsequent agreements. The plots cancelled after sale, on 04.10.2010 were in possession and ownership 89 Crl.M.P.No.250/2022 of EHTPL. As per the Development Agreement dt.03.11.2006, the sale of plots after 03.11.2006 was still on behalf of EHTPL and not EMGF.

Out of 134 plots, 91 plots were sold by M/s. Stylish Holmes, 9 plots by

EMGF and remaining 34 plots were unsold and are with EHTPL. EMGF has collected Rs.67.87 Crores and total collection is Rs.73.20 Crores including EMGF and EHTPL from sale of villa plots. He further stated that 3 completed villas were sold by EMGF for Rs.21.36 crores.

16.The prosecution also relied on the statement of Sri Challa

Suresh, recorded under Section 50(2) and (3) of PMLA, 2002, wherein he stated that he purchased villa plot No.A-28 of 1449 Sq.Yds. at the rate of Rs.5000 per Sq.Yd. in Boulder Hills, Hyderabad in the name of

M/s. Serenity Homes Pvt. Ltd. from EHTPL. Rs.5000/- per Sq.Yd. is paper rate and whereas Sri Koneru Rajendra Prasad and Sri T. Ranga

Rao of M/s. Stylish Holmes asked for excess amount of Rs.9000 per

Sq.Yd. over and above the documented price which works out at

Rs.72,50,000/-. He further stated that Sri Koneru Rajendra Prasad has invested USD 140,000 in Dubai property market with Mr. Madhu

Koneru.

17.The prosecution also relied on the statement of Sri Koneru

Madhu, recorded under Section 50(2) and (3) of PMLA, 2002, wherein he stated that he is an NRI, residing in Dubai since 1992 and engaged 90 Crl.M.P.No.250/2022 in the business of real estate, trading and mining. In 2011 one Mr.

Parthasarathy, an NRI, who wanted to invest in UAE real estate market has sent an amount of USD 2,50,000 approx. to his foreign currency account in India in 2011, however, later he withdrawn that amount and hence it was returned. He further stated that Sri Challa

Suresh, a resident of USA, has invested a sum of USD 1,40,000 approx. in 2005 and the same is still under investment at his end.

18.The prosecution also relied on the statement of Sri Kesava

Shenoy, recorded under Section 50(2) and (3) of PMLA, 2002, wherein he stated that he wanted to purchase property in Kerala, but the plots were allotted by EHTPL. He further stated that he has not applied for any money or for any loan to M/s. Braggat Vyapar Pvt. Ltd. and he do not know why Braggat Vyapar has deposited such amount into their account.

19.The prosecution also relied on the statement of Sri N. Sunil

Reddy, recorded under Section 50(2) and (3) of PMLA, 2002, wherein he stated that M/s. Southend Projects (formerly known as M/s. Sunil

Projects) was incorporated by him and his father as Directors during 2005 and later they sold out the company in 2009 to Sri Narapa

Manohar Reddy. He further stated that he do not know about the investments of Rs.45.21 Crores received by M/s. Southend Projects 91 Crl.M.P.No.250/2022 during 2009 and 2010 as he sold out the company to Sri Narapa

Manohar Reddy. He further stated that he does not have any association either with Sri Tummala Ranga Rao or with Sri Koneru

Rajendra Prasad and that he had not received any amounts from them.

20.The prosecution also relied on the statement of

Sri S. Madhusudhan Rao, recorded under Section 50(2) and (3) of

PMLA, 2002, wherein he stated that 15 unsold plots were available with EHTPL were allotted to 15 persons and later the agreements were cancelled.

21.The prosecution also relied on the statement of Sri V. Vijay

Sai Reddy, who has given statement on behalf of Sri N. Manohar

Reddy under Section 50(2) and (3) of PMLA, 2002, wherein he stated that Sri Narapa Manohar Reddy has acquired M/s. Southend Projects,

Hyderabad, by investing an amount of Rs.8,98,20,000/- for acquiring

Rs.55,20,000/- worth of shares from Sri N. Sunil Reddy and his family members in October 2010. He further stated that the bank account in the name of M/s. Southend Projects in Axis Bank, vide A/c.

No.909020036183180 was opened by the original promoters i.e. Sri

N. Sunil Reddy and he is the authorized signatory for the account; even after taking over the company by Narapa Manohar Reddy, he did 92 Crl.M.P.No.250/2022 not replace Sri N. Sunil Reddy from being authorized signatory and hence all the transactions subsequent to his taking over, i.e., from

October 2009, have been done by Sri N. Sunil Reddy under the instructions of Sri Narapa Manohar Reddy. He further stated that the account with OBC, Jubilee Hills vide A/c. No.11101010029260 of M/s.

Southend Projects was opened and being operated by Sri Narapa

Manohar Reddy and those two accounts are not active at present, Sri

Narapa Manohar Reddy has opened an account in Andhra Bank, Jaya

Nagar, Bangalore bearing A/c. No.027311100002467; and for the purpose of land acquisitions, Sri Narapa Manohar Reddy mobilized

Rs.45.21 crores funds from various investors. He further stated that there are transactions of transfer of amounts between Shri Sunil

Reddy through his personal account and Bloomery Steel Industries

Pvt. Ltd., M/s. Bluesky Enterprises Pvt. Ltd., M/s. Megallam Enterprises

Pvt. Ltd., M/s. Amydale Info Tech Pvt. Ltd. and M/s. Aramid Textiles

Pvt. Ltd. An amount of Rs.45.21 crores received by M/s. Southend

Projects and Foundations Pvt. Ltd. from various companies as equity investment in M/s. Southend Projects and the shares have been allotted to the respective investors on premium and hence the refund of above said amount cannot be made as per the Companies Act, 1956 and the parties are at liberty to sell the shares to any third party.

He further stated that M/s. Southend Projects has given an advance of 93 Crl.M.P.No.250/2022

Rs.36.82 Crores to M/s. Asara Theme Projects Pvt. Ltd., between

December 2009 and March 2010 towards purchase of land in

Hyderabad; that the sale of land did not take place and the said amount was also not returned to them. Neither M/s. Southend Projects nor Sri Narapa Manohar Reddy has complained to any authorities regarding non-return of advance amount of Rs.36.82 crores; and that an amount of Rs.20 crores was reflected in the statement of Assets &

Liabilities of M/s. Southend Projects is lying in the form of Fixed

Deposits in Andhra Bank, Bangalore.

22.The prosecution also relied on the statement of Sri Indukuri

Syam Prasad Reddy, recorded under Section 50(2) and (3) of PMLA, 2002, wherein he stated that M/s. Walden Properties Pvt. Ltd., a

Hyderabad based real-estate company promoted by him and his wife, intended to buy 4 Acres 01 Guntas of land at Rayadurg, Ranga Reddy

District and paid advances to the land owners and registered the said property in the name of M/s. Asara Theme Projects Pvt. Ltd.

M/s. Southend Projects represented by Sri Narapa Manohar Reddy, wanted to buy the land parcel of 04 Acres 01 Guntas at Rayadurg,

Hyderabad owned by M/s. Asara Theme Projects Pvt. Ltd., at the rate of Rs.16 Crores per Acre and had paid an advance of Rs.36.82 Crores via RTGS during December-2009 to March-2010. He further stated 94 Crl.M.P.No.250/2022 that M/s. Southend Projects could not pay the balance amount even after 2 years of MoU due to downfall in real estate market in

Hyderabad, they were forced to sell the said property to M/s. Sandhya

Hotels Pvt. Ltd. during 2011-12 for lesser consideration of Rs.36.15 crores, for which M/s. Asara Theme Projects Pvt. Ltd. had to suffer a loss of Rs.19.82 crores. He further stated that he does not have any association or acquaintance with Sri N. Sunil Reddy, but as per the advice of Sri Narapa Manohar Reddy of M/s. Southend Projects and

Foundations Pvt. Ltd., they have paid Rs.1.5 crores to Sri N. Sunil

Reddy on 03.02.2012 from bank account of M/s. Asara Theme

Projects’ current Account No.860920110000198 of Bank of India.

3,62,06,155 Nos. of shares held by him in his personal capacity in

M/s. Indu Projects Ltd.

23.The prosecution also relied on the statement of Sri Koneru

Pradeep, recorded under Section 50(2) and (3) of PMLA, 2002, wherein he stated that he is having a land parcel of 36.14 acres of land at Bilkal & Mallikharjunagiri Villages, Marpalli Mandal, Ranga

Reddy District, Telangana State and the same was purchased with an investment of Rs.14,09,865/- from the source of his salary savings/ rent/sale of shares/gifts etc.

95 Crl.M.P.No.250/2022

24.The prosecution also relied on the statement of Sri Shravan

Gupta, recorded under Section 50(2) and (3) of PMLA, 2002, wherein he stated that he was the Director and Promoter of MGF group and he was the Managing Director of M/s. Emaar MGF Land Ltd. from 2005 to 2015. In the year 2006, EHTPL came with a proposal of investing some amount into the integrated project and Sri Srikanth Joshi, CEO,

EMGF made presentation to EMGF board and board authorized him to negotiate and enter into a Development Agreement with EHTPL; that the Development Agreement dt.03.11.2006, Development

Agreement-cum-GPA dt.25.07.2007 and addendum dt.23.07.2008 were entered between EMGF and EHTPL. He further stated that he has no knowledge that there was any stipulation to maintain the share of

APIIC at 26% at all times and he stated that he does not have any knowledge about 18 no’s plots blocked by EMGF, which were cancelled at a later date. He further stated that he is not aware of the facts about numbers regarding the amounts collected by EMGF from the sale of villas and villa plots. He further stated that an amount of

Rs.67.87 crores collected by EMGF is mentioned in the balance sheet of EMGF and that he was not aware that an amount of Rs.96.01 crores has been collected by M/s. Stylish Holmes from villa plot buyers in addition to the documented price of Rs.5,000/- and he is also not aware that an amount of Rs.6.86 crores has been collected by Sri GV 96 Crl.M.P.No.250/2022

Vijay Raghav from villa plot buyers in addition to the documented price.

25.The investigation revealed that in pursuance of the conspiracy among the accused, they have violated the conditions stipulated in the various development agreements with a view to deceive the share of APIIC and inducted several persons for selling the villa plots etc. and collected extra amount other than the rate fixed by EHTPL. As per the statement of Tummala Ranga Rao, excess amount of Rs.96.01 crores were collected and out of which, he handed over some amount to Sri N. Sunil Reddy and remaining to Sri

Koneru Rajendra Prasad and an amount of USD 1,40,000 has been received by Sri Madhu Koneru in Dubai from one of the villa plot buyers namely Sri Challa Suresh and Sri Challa Suresh has confirmed the same in his statement given under Section 50 of PMLA 2000.

Another amount of USD 2,50,000 has been received by Sri Koneru

Madhu from another villa plot buyer namely Sri PS Parthasarathy on 09.08.2007, however the same was returned to Sri PS Parthasarathy on 14.10.2011 mentioning as ‘repayment of loan’. The investigation further revealed that Sri Tummala Ranga Rao has collected Rs.2.50 crores out of proceeds of crime i.e. Rs.96.01 crores and purchased the land in the name of Sri Koneru Pradeep.

97 Crl.M.P.No.250/2022

26.The prosecution further contended that Sri N. Sunil Reddy along with his father floated a company by name M/s. Sunil Projects and Foundations Pvt. Ltd. on 10.05.2006 and w.e.f. 10.10.2009, Sri

Narapa Manohar Reddy and his wife Smt. Narapa Sarada Reddy were appointed as Directors. The name of the company was changed to

M/s. Southend Projects and Foundations Pvt. Ltd. from 25.01.2010 and that Sri N. Sunil Reddy and his father have resigned from the company w.e.f. 01.10.2010. M/s. Southend Projects and Foundations

Pvt. Ltd. has received funds of Rs.45.21 crores from 11 Companies.

The investigation conducted by the CBI revealed that existence of 11

Companies was in questions and those companies were floated only for the purpose of transfer of funds and though Sri N. Sunil Reddy contended that he sold the company to Sri N. Manohar Reddy during 2009, he continued to transact bank accounts.

27.The prosecution contended that the total benefit accrued by

EHTPL, EMGF on account of criminal conspiracy is Rs.167.29 crores, out of which Rs.96.01 crores cash component collected by M/s. Stylish

Holmes, Rs.64.41 crores in the form of Profit Before Tax (PBT) as per the books of account of EMGF and Rs.6.86 crores as cash component collected by EMGF, totaling to Rs.71.27 crores, since the said amount is proceeds of crime.

98 Crl.M.P.No.250/2022

28.The investigation also revealed that 11 companies do not have any other dealing except with M/s. Southend Projects other than making such investment. An amount of Rs.1.50 crores was transferred to Sri N. Sunil Reddy on 03.02.2012 from the account of M/s. Asara

Theme Projects Pvt. Ltd. An amount of Rs.36.82 crores was transferred from M/s. Southend Projects to M/s. Asara Theme Projects

Pvt. Ltd. for purchase of land, however, no land was registered in the name of M/s. Southend Projects. The prosecution contended that a sum of Rs.20 crores as reflected in the statement of Assets and

Liabilities of M/s. Southend Projects is lying in the form of Fixed

Deposits as proceeds of crime and Rs.25.21 crores valued shares were held in the name of Sri Indukuri Syam Prasad Reddy as investment in M/s. Indu Projects Ltd. As per the prosecution, an amount of Rs.45.21 is with Sri N. Sunil Reddy of M/s. Southend

Projects and Foundations Pvt. Ltd. and the balance amount of proceeds of crime of Rs.50.80 crores received by Shri Koneru

Rajendra Prasad.

29.The prosecution contended that as per available record Sri

BP Acharya, EHTPL, Shri Koneru Rajendra Prasad, EMGF, M/s. Stylish

Holmes, Shri Tummala Ranga Rao, Sri Koneru Madhu, M/s. Southend

Projects, Sri N. Sunil Reddy, M/s. Asara Theme Projects, Sri Koneru 99 Crl.M.P.No.250/2022

Pradeep, Sri GV Vijay Raghav and Sri Srikanth P Joshi are involved in the scheduled offence punishable under Section 120-B and 420 of IPC.

30.M/s Southend Projects & Foundations Pvt. Ltd./A-4 has received funds of Rs.45.21 crore from the following 11 companies, for which date of incorporation and dates of transfer of funds are detailed below:

Sl.Date ofDate of ReceiptAmount Company Name No.Incorporationof fundsreceived 10.11.20092,30,00,000 M/s. Amygdale Info Tech

1.16.10.2009 Private Limited20.11.200925,00,000 23.12.200950,00,000 09.11.200975,00,000 12.11.20091,50,00,000 17.11.200975,00,000 M/s. Aramid Textiles Private19.11.200970,00,000

2.14.10.2009 Limited 25.11.20091,00,00,000 27.11.200950,00,000 10.12.200940,00,000 23.12.200915,00,000 16.01.20101,75,00,000 M/s. Bloomery Steel

3.27.10.2009 Industries Private Limited20.01.20101,25,00,000 21.01.201040,00,000 09.11.20091,50,00,000 M/s. Bluesky Enterprises

4.20.10.2009 Private Limited19.11.20091,10,00,000 27.11.20091,00,00,000 M/s. Chakri Industries 07.12.200955,00,000

5.25.06.2003 Private Limited 10.12.200960,00,000

6.M/s. Invar Steels Private 22.10.200926.12.200950,00,000 100 Crl.M.P.No.250/2022 24.12.200940,00,000 11.10.201050,00,000 Limited 11.10.201054,00,000 12.10.201056,00,000 13.10.200975,00,000 14.10.200975,00,000 15.10.20092,00,00,000 21.10.20091,10,00,000 M/s. Megallan Enterprises Not registered 7. Private Limitedwith ROC22.10.20092,40,00,000 22.10.20091,50,00,000 05.12.20091,90,00,000 16.12.20091,00,00,000 21.12.200950,00,000 25.11.200975,00,000 09.11.200975,00,000 17.11.20092,80,00,000 M/s. Pashmina Textiles 19.11.200965,00,000

8.21.10.2009 Private Limited 25.11.200975,00,000 21.12.200915,00,000 23.12.200950,00,000 16.01.201050,00,000 10.11.200920,00,000 M/s. Punarvasu Enterprises

9.12.10.2009 Private Limited20.11.20091,05,00,000 16.01.201030,00,000 23.12.20091,00,00,000 M/s. Scanner Systems &

10.27.10.2009 Technology Private Limited06.10.201050,00,000 06.10.201096,00,000

11.M/s. Etread.Com Private 10.05.200013.10.20093,00,00,000 Limited Total45,21,00,000 101 Crl.M.P.No.250/2022

31.Letter dt.16.01.2014 received from Oriental Bank of Commerce,

Jubilee Hills Branch, providing the bank KYC documents and account statement of A/c No.11101010029260 of M/s Southend Projects &

Foundations Pvt. Ltd. revealed that the above said amounts of

Rs.45.21 crore has been received into M/s Southend Projects on respective dates. As per the CBI charge sheets dt.01.02.2012 and 23.04.2012, Rs.96.01 crore was collected by Sri Tummala Ranga Rao of M/s. Stylish Holmes. Sri Tummala Ranga Rao in his depositions made under Section 164 of Cr.P.C. and also under Section 50 of PMLA, 2002 stated that he has handed over the total amount either to Sri

N.Sunil Reddy/A-11 or to Sri Koneru Rajendra Prasad/A-7 and the ratio of amounts are not known to him. The charge sheets further revealed that Mr. N.Sunil Reddy/A-11 has received Rs.45.21 crore and invested the same through 11 different companies into M/s Southend

Projects/A-4 during 2009-10.

32.CBI investigation did not reveal the whereabouts of the 11 companies, which invested Rs.45.21 crore in M/s Southend Projects/

A-4, as these companies did not exist at the given addresses during the relevant period. During the investigation under PMLA, 2002 also no traces of these companies at the given addresses are noticed. To ascertain the source of funds and reasons for the investment in M/s 102 Crl.M.P.No.250/2022

Southend Projects/A-4, summons were issued to the authorized persons of these 11 companies which invested in M/s Southend

Projects/A-4, at the addresses available on record as per Ministry of

Corporate Affairs and also from the KYC documents received from the concerned banks. Investigation under PMLA, 2002 also revealed that most of these companies were incorporated with nominal amount of

Share Capital just a few days prior to the dates of their investments into M/s. Southend Projects/A-4. From the data retrieved from

Registrar of Companies, Ministry of Corporate Affairs and scrutiny of the certificates of incorporation of these 11 companies revealed that some Directors are common in 3-4 companies.

33.Scrutiny of the bank account statements and other documents of these 11 companies revealed that the following companies have some money transactions with Sri N. Sunil Reddy/A-11 as under.

Name of theBank Account No & BankAmount paid byAmount companySri N.Sunilreceived by Sri ReddyN.Sunil Reddy (Rs.)(Rs.) M/s Aramid Textiles A/c No. 909020038292893 03,50,00,000 Pvt. Ltd.of Axis Bank, Banjara Hills. M/s Bluesky A/c No. 909020038789151 5,72,00,00070,00,000 Enterprises Pvt. of Axis Bank, Banjara Hills. Ltd. M/s Megallan A/c No. 33420001000399011,50,00,0001,50,00,000 Enterprises Pvt. of Karnataka Bank, Raj Ltd.Bhavan Road. M/s Amygdale A/c No. 04921200000213 of1,92,00,0000 103 Crl.M.P.No.250/2022

Infotech Pvt. Ltd.DCB Bank, Madhapur.

All these transactions confirm that Sri N.Sunil Reddy/A-11 has dealings with these companies in his personal capacity in addition to their investments in M/s Southend Projects/A-4. These 11 companies do not have any other dealings with M/s Southend Projects/A-4 other than making such investment. Later these investments of Rs.45.21 crore were converted into Share Capital amount with high premium as against the paid up capital of Rs.10.73 crore. Sri V.Vijay Sai Reddy, authorized representative of M/s Southend Projects/A-4, in his statement dt.12.08.2014, stated that the shareholders have no right to seek refund of their Investment of Rs.45.21 crore and they can only transfer their shares. These transactions revealed that Sri N. Sunil

Reddy/A-11 had received Rs.45.21 crore in cash from Sri Tummala

Ranga Rao and invested the same in M/s Southend Projects/A-4 through these 11 companies floated for the said purpose.

34.M/s Southend Projects/A-4 received Rs.45.21 crore from Sri

Tummala Ranga Rao through 11 dummy companies. From the said amount, M/s Southend Projects/A-4 further transferred Rs.36.82 crore to M/s Asara Theme Projects Pvt. Ltd./A-5 said to be advance for purchase of land. However, no land was registered In the name of M/s

Southend Projects/A-4.

104 Crl.M.P.No.250/2022

35.Thus, the following properties are identified in relation to the above said proceeds of crime/such value of proceeds of crime received by Sri N.Sunil Reddy/A-11 totaling to Rs.45.21 crore in terms of Section 2(1)(u) of PMLA, 2002.

i. Rs.20,00,00,000/- of FD's with Andhra Bank, Bangalore, pertaining to M/s Southend Projects & Foundations Pvt. Ltd. as Proceeds of Crime.

ii.Rs.25,21,00,000/- valued Shares of Sri Indukuri Syam Prasad Reddy (who is also Director in M/s Asara Theme Projects Pvt. Ltd.) invested in M/s Indu Projects Ltd. vide ISIN No. INE367101018 as value of any such property as defined under Section 2(1)(u) of PMLA, 2002.

36.Investigation under PMLA, 2002 revealed that part of excess amount collected from villa plot buyers has flown into EHTPL/A-1 itself by way of advance for booking plots and also by other means, through Sri Koneru Rajendra Prasad/A-7, for the development of the project. Thus it is evident that the project is benefited with excess amount collected and EHTPL/A-1 and EMGF/A-2 are the ultimate beneficiaries of the excess amount collected from the Villa Plot buyers, which was not shown in the books of accounts of EHTPL/A-1 and hence cheated APIIC by depriving its due share in the sale of villa plots. Hence the unsold Villa Plots available with EHTPL/A-1 and also 105 Crl.M.P.No.250/2022

Open land of EHTPL/A-1 is considered as Proceeds of Crime for attachment as specified below:

i. 14 unsold Villa Plots available with EHTPL admeasuring 14624 Sq. Yds. Valued at Rs.36,56,00,000/-.

ii. Open land of 4.80 Acres in EHTPL valued at Rs.58,08,00,000/- (attachments to the extent value of Rs.13,09,07,000/- as value of any such property as defined under Section 2(1)(u) of PMLA, 2002.

37.M/s Stylish Holmes/A-3 was floated for the benefit of EHTPL/A-1 with a sole intention of depriving the share of APIIC and player key role in collection and distribution of Rs.96.01 crore. Therefore the following property held by M/s Stylish Holmes/A-3 is considered as

Proceeds of Crime.

i. Plot measuring 2057 Sq.Yd. in the name of M/s Stylish Holmes valued at Rs.1,02,85,000/- as value of any such property as defined under Section 2(1)(u) of PMLA, 2002.

38.Sri Tummala Ranga Rao (A-10) has paid Rs.2.50 crore for purchase of 36.14 Acres of lands in Bilkal and Mallikarjunagiri Villages, in the name of Sri Koneru Pradeep/A-13, S/o Koneru Rajendra Prasad, out of the amount of Rs.96.01 crore. Therefore, the said property is also considered as Proceeds of Crime and attached.

i. Land of 36.14 Acres situated at Bilkal and Mallikarjunagiri Villages, Marpalle Mandal, Ranga Reddy District, held in 106 Crl.M.P.No.250/2022 the name of Pradeep Koneru valued at Rs.12,83,000/- as Proceeds of Crime

39.The complainant found that the properties mentioned above valued at Rs.167.29 crore are proceeds of crime in the form of movable and immovable properties. The Immovable properties of

Proceeds of Crime and in the form of villa plots and land are meant for sale to third parties. Some part of the said Proceeds of Crime of

Rs.96.01 crore was initially collected in cash and concealed without reflecting in the books of accounts of EHTPL/EMGF, subsequently shared partly by Sri Koneru Rajendra Prasad/A-7 who further invested in purchase of land and also in booking of Villa Plots in EHTPL/A-1.

Part of these Proceeds of Crime was shared to Sri N.Sunil Reddy/A-11, who is not at all connected to the activities of EHTPL/EMGF, who further invested the same into his own company M/s Southend

Projects/A-4 through 11 dummy companies and such transfer of amounts was reflected as share application money with premium amount. Further these amounts are transferred to M/s Asara Theme

Projects Pvt. Ltd./A-5 stating for 'purchase of land' and no land purchase was done. Sri N.Sunil Reddy/A-11 also received Rs.1.50 crore from M/s Asara Theme Projects/A-5 to his personal account, which evidences that the Proceeds of Crime earned by Sri N.Sunil

Reddy/A-11 has been subjected to many transfers. Thus it is evident 107 Crl.M.P.No.250/2022 that, the total proceeds of crime have been subjected to many transfers and dealings to project them as untainted property.

40.The complainant apart from the investigation conducted by CBI, they have also mentioned that the CBI investigation did not reveal the whereabouts of 11 companies, which invested Rs.45.21 crore in M/s.

Southend Projects/A-4, as these companies did not exist at the given addresses during the relevant period. The complainant investigated the said aspect which was left over by the CBI and issued summons to the 11 companies which invested in M/s. Southend Projects/A-4 at the addresses available on record as per Ministry of Corporate Affairs and also from the KYC documents received from the concerned banks.

41.The investigation conducted by the complainant revealed that most of those companies were incorporated with nominal amount of share capital just a few days prior to the dates of their investments into M/s Southend Projects/A-4. From the data retrieved from

Registrar of Companies, Ministry of Corporate Affairs and scrutiny of the certificates of incorporation of these 11 companies revealed that some Directors are common in 3 to 4 companies and the investigating officer has collected bank account statements of those companies.

108 Crl.M.P.No.250/2022

42.The record shows that the petitioner/A-1 was established on 20.08.2003 to implement the township project with Villas, Apartments and IT Park at Hyderabad, as per G.O.Ms.No.359 dt.04.09.2002,

G.O.Ms.No.14 dt.11.01.2005 and G.O.Ms.No.22 dt.27.01.2005 with investment ratio of 74:26 and APIIC made their investment for its share of 26% in the form of land of 285 Acres for development of multiuse development including Villas and commercial complex at

Manikonda, Hyderabad. Document No.49, Conveyance Deed, shows the transfer of property.

43.Later Accused Nos.1 & 2 entered into a Development

Agreement dt.03.11.2006 pursuant to the petitioner/A-1's Board

Resolution dt.21.09.2006 with the ration of 75:25 thereby causing reduction of APIIC's share to 6.5% from 26%, which is in violation of above GOs. The document relied by the prosecution clearly shows that the petitioner/A-1 in its Board Meeting on 15.06.2007, resolved that 25% of Gross Annual Revenue would be of the petitioner/A-1 and 75% to EMGF/A-2. Accordingly, a Development Agreement-cum-GPA was executed on 25.07.2007 between the petitioner/A-1 and EMGF/

A-2. Later an addendum to Development Agreement-cum-GPA was executed on 23.07.2008 between the petitioner/A-1 and Accused No.2 to include a clause wherein revenue and profit was to be distributed 109 Crl.M.P.No.250/2022 only after completion of audit and its adoption by Board of Accused

No.2, for which APIIC sustained loss.

44.The activities between the petitioner/A-1 and Accused No.2 shos that they generated Rs.71.27 crore. The document relied by the complainant also shows that the petitioner/A-1 through M/s. Emaar

PJSC, appointed Accused No.3, whose Director Sri T.Ranga Rao is a close associate of Sri K.Rajendra Prasad/A-7, Director of the petitioner/A-1 and they entered into Agency Agreement dt.29.01.2005 and price was fixed for Rs.5,000/- per sq.yd. and they sold the Villa

Plots and collected Rs.96.01 crore, which was neither accounted in their books of accounts nor in the books of accounts of the petitioner/A-1 and Accused No.2.

45.The complainant relied on the statement of Accused Nos.10 and 3, who were granted Tender of Pardon. Basing on their statement, the excess amounts were not tendered for account purpose and the petitioner/A-1 has not parted with APIIC of its revenue of Rs.43.50 crore out of Rs.64.41 crore. The complainant relied on the documents and concluded that due to deviation from the Agreements entered with APIIC, the petitioner/A-1 has gained to a tune of Rs.167.29 crore in total.

110 Crl.M.P.No.250/2022

46.Apart from thousands of documents, the complainant has also relied on 62 documents in addition to the documents relied by the

CBI. The documents relied by the complainant, more particularly, are from statements of account from the bank and the documents obtained from the Registrar of Companies.

47.The documents relied by the complainant/Enforcement

Directorate and the documents relied by the CBI and the statements recorded by the complainant/ED under Section 50(2)&(3) of PMLA, 2002, and also the statements made by the approver i.e. Accused

Nos.3 and 10 clearly shows that the complainant/ED had a prima facie case. The statement of the approver appears to be corroborating with the documents relied by the complainant as well as CBI.

48.It is to be noted that judgment of the Hon'ble Supreme Court in

Vijay Madanlal Choudhary and others v. Union of India and others [2022 SCC OnLine SC 929], wherein the Hon'ble Supreme Court held the validity of the statement recorded by the prosecution under

Section 50(2) & (3) of PMLA and also gave detailed guidelines about

Section 24 of PMLA, as under:

(i) The question as to whether some of the amendments to the Prevention of Money-laundering Act, 2002 could not have been enacted by the Parliament by way of a Finance Act has not been examined in this judgment. The same is left open for being examined along with or after the decision of the Larger Bench (seven Judges) of this Court in the case of Rojer Mathew [(2020) 6 SCC 1].

111 Crl.M.P.No.250/2022

(ii) The expression “proceedings” occurring in Clause (na) of Section 2(1) of the 2002 Act is contextual and is required to be given expansive meaning to include inquiry procedure followed by the Authorities of ED, the Adjudicating Authority, and the Special Court.

(iii) The expression “investigation” in Clause (na) of Section 2(1) of the 2002 Act does not limit itself to the matter of investigation concerning the offence under the Act and is interchangeable with the function of “inquiry” to be undertaken by the Authorities under the Act.

(iv) The Explanation inserted to Clause (u) of Section 2(1) of the 2002 Act does not travel beyond the main provision predicating tracking and reaching upto the property derived or obtained directly or indirectly as a result of criminal activity relating to a scheduled offence.

(v) (a) Section 3 of the 2002 Act has a wider reach and captures every process and activity, direct or indirect, in dealing with the proceeds of crime and is not limited to the happening of the final act of integration of tainted property in the formal economy. The Explanation inserted to Section 3 by way of amendment of 2019 does not expand the purport of Section 3 but is only clarificatory in nature. It clarifies the word “and” preceding the expression projecting or claiming as “or”; and being a clarificatory amendment, it would make no difference even if it is introduced by way of Finance Act or otherwise.

(b) Independent of the above, we are clearly of the view that the expression “and” occurring in Section 3 has to be construed as “or”, to give full play to the said provision so as to include “every” process or activity indulged into by anyone. Projecting or claiming the property as untainted property would constitute an offence of money-laundering on its own, being an independent process or activity.

(c) The interpretation suggested by the petitioners, that only upon projecting or claiming the property in question as untainted property that the offence of Section 3 would be complete, stands rejected.

(d) The offence under Section 3 of the 2002 Act is dependent on illegal gain of property as a result of criminal activity relating to a scheduled offence. It is concerning the process or activity connected with such property, which constitutes the offence of money-laundering. The Authorities under the 2002 Act cannot prosecute any person on notional basis or on the assumption that a scheduled offence has been committed, unless it is so registered with the jurisdictional 112 Crl.M.P.No.250/2022 police and/or pending enquiry/trial including by way of criminal complaint before the competent forum. If the person is finally discharged/acquitted of the scheduled offence or the criminal case against him is quashed by the Court of competent jurisdiction, there can be no offence of money-laundering against him or any one claiming such property being the property linked to stated scheduled offence through him.

(vi) Section 5 of the 2002 Act is constitutionally valid. It provides for a balancing arrangement to secure the interests of the person as also ensures that the proceeds of crime remain available to be dealt with in the manner provided by the 2002 Act. The procedural safeguards as delineated by us hereinabove are effective measures to protect the interests of person concerned.

(vii) The challenge to the validity of sub-section (4) of Section 8 of the 2002 Act is also rejected subject to Section 8 being invoked and operated in accordance with the meaning assigned to it hereinabove.

(viii) The challenge to deletion of proviso to sub-section (1) of Section 17 of the 2002 Act stands rejected. There are stringent safeguards provided in Section 17 and Rules framed thereunder. Moreover, the pre-condition in the proviso to Rule 3(2) of the 2005 Rules cannot be read into Section 17 after its amendment. The Central Government may take necessary corrective steps to obviate confusion caused in that regard.

(ix) The challenge to deletion of proviso to sub-section (1) of Section 18 of the 2002 Act also stands rejected. There are similar safeguards provided in Section 18. We hold that the amended provision does not suffer from the vice of arbitrariness.

(x) The challenge to the constitutional validity of Section 19 of the 2002 Act is also rejected. There are stringent safeguards provided in Section 19. The provision does not suffer from the vice of arbitrariness.

(xi) Section 24 of the 2002 Act has reasonable nexus with the purposes and objects sought to be achieved by the 2002 Act and cannot be regarded as manifestly arbitrary or unconstitutional.

(xii) (a) The proviso in Clause (a) of sub-section (1) of Section 44 of the 2002 Act is to be regarded as directory in nature and this provision is also read down to mean that the Special Court may exercise judicial discretion on case-to-case basis.

113 Crl.M.P.No.250/2022

(b) We do not find merit in the challenge to Section 44 being arbitrary or unconstitutional. However, the eventualities referred to in this section shall be dealt with by the Court concerned and by the Authority concerned in accordance with the interpretation given in this judgment.

(xiii) (a) The reasons which weighed with this Court in Nikesh Tarachand Shah [(2018) 11 SCC 1] for declaring the twin conditions in Section 45(1) of the 2002 Act, as it stood at the relevant time, as unconstitutional in no way obliterated the provision from the statute book; and it was open to the Parliament to cure the defect noted by this Court so as to revive the same provision in the existing form.

(b) We are unable to agree with the observations in Nikesh Tarachand Shah [(2018) 11 SCC 1] distinguishing the enunciation of the Constitution Bench decision in Kartar Singh [(1994) 3 SCC 569]; and other observations suggestive of doubting the perception of Parliament in regard to the seriousness of the offence of money-laundering, including about it posing serious threat to the sovereignty and integrity of the country.

(c) The provision in the form of Section 45 of the 2002 Act, as applicable post amendment of 2018, is reasonable and has direct nexus with the purposes and objects sought to be achieved by the 2002 Act and does not suffer from the vice of arbitrariness or unreasonableness.

(d) As regards the prayer for grant of bail, irrespective of the nature of proceedings, including those under Section 438 of the 1973 Code or even upon invoking the jurisdiction of Constitutional Courts, the underlying principles and rigours of Section 45 may apply.

(xiv) The beneficial provision of Section 436A of the 1973 Code could be invoked by the accused arrested for offence punishable under the 2002 Act.

(xv) (a) The process envisaged by Section 50 of the 2002 Act is in the nature of an inquiry against the proceeds of crime and is not “investigation” in strict sense of the term for initiating prosecution; and the Authorities under the 2002 Act (referred to in Section 48), are not police officers as such.

(b) The statements recorded by the Authorities under the 2002 Act are not hit by Article 20(3) or Article 21 of the Constitution of India.

(xvi) Section 63 of the 2002 Act providing for punishment regarding false information or failure to give information does not suffer from any vice of arbitrariness.

114 Crl.M.P.No.250/2022

(xvii) The inclusion or exclusion of any particular offence in the Schedule to the 2002 Act is a matter of legislative policy; and the nature or class of any predicate offence has no bearing on the validity of the Schedule or any prescription thereunder.

(xviii) (a) In view of special mechanism envisaged by the 2002 Act, ECIR cannot be equated with an FIR under the 1973 Code. ECIR is an internal document of the ED and the fact that FIR in respect of scheduled offence has not been recorded does not come in the way of the Authorities referred to in Section 48 to commence inquiry/investigation for initiating “civil action” of “provisional attachment” of property being proceeds of crime.

(b) Supply of a copy of ECIR in every case to the person concerned is not mandatory, it is enough if ED at the time of arrest, discloses the grounds of such arrest.

(c) However, when the arrested person is produced

before the Special Court, it is open to the Special Court to look

into the relevant records presented by the authorised representative of ED for answering the issue of need for his/her continued detention in connection with the offence of money- laundering.

(xix) Even when ED manual is not to be published being an internal departmental document issued for the guidance of the Authorities (ED officials), the department ought to explore the desirability of placing information on its website which may broadly outline the scope of the authority of the functionaries under the Act and measures to be adopted by them as also the options/remedies available to the person concerned before the Authority and before the Special Court.

(xx) The petitioners are justified in expressing serious concern bordering on causing injustice owing to the vacancies in the Appellate Tribunal. We deem it necessary to impress upon the executive to take corrective measures in this regard expeditiously.

(xxi) The argument about proportionality of punishment with reference to the nature of scheduled offence is wholly unfounded and stands rejected.

The Hon'ble Supreme Court has categorically held in Vijay

Madanlal Choudhary's case that when the allegations made in the predicate offence were held to be valid, hence the offence under 115 Crl.M.P.No.250/2022

PMLA has to be disposed simultaneously, and if the predicate offence is not proved, the allegation should not be made under PMLA. In this case, in the predicate offence prima facie has been proved. Hence, the allegations made by the complainant against the accused under

PMLA, 2002 also having a prima facie case.

49.The counsel for the petitioner/A-1 relied on the concept of alter ego of the company as held by the Hon'ble Supreme Court in Sunil

Bharti Mittal case reported in 2015 AIR SC 923.

50.It is to be noted that as per the case of the prosecution, there are money transactions between Accused Nos.7, 8 and 9 and revenue sharing arrangement between Accused Nos.3 and 4 was totally revised in the Addendum dt.23.07.2008 and he had conspiracy with

Accused No.2 in preparing Development Agreement dt.03.11.2006 between Accused Nos.3 and 4 and also having a role in replacing with the Development Agreement-cum-GPA executed on 25.07.2007 and

Addendum dt.23.07.2008. It is also contended that the petitioner/A-1 had colluded with Accused Nos.15 and 8 and in pursuance of criminal conspiracy they floated companies and blocked 18 Villa Plots in the name of those 10 companies and he himself purchased a Villa Plot

No.A-49 in the name of his wife and the acts of the petitioner/A-1 were resulting to further loss of amount to APIIC. These facts clearly 116 Crl.M.P.No.250/2022 shows that the guidelines referred in Sunil Bharti Mittal case are not applicable to this case on facts.

51.The petitioner/A-1 also relied on various judgments showing the guidelines on discharge of the accused in a criminal case. In this context it is relevant to refer the guidelines enunciated by the Hon’ble

Supreme Court in Selvi’s case has to follow:

i.The Judge while considering the question of framing the charges under Section 227 CrPC has the undoubted power to sift and weigh the evidence for the limited purpose of finding out whether or not a prima facie case against the accused has been made out. The test to determine prima facie case would depend upon the facts of each case.

ii.Where the materials placed before the court disclose grave suspicion against the accused which has not been properly explained, the court will be fully justified in framing a charge and proceeding with the trial.

iii.The court cannot act merely as a post office or a mouthpiece of the prosecution but has to consider the broad probabilities of the case, the total effect of the evidence and the documents produced before the court, any basic infirmities, etc. However, at this stage, there cannot be a roving enquiry into the pros and cons of the matter and weigh the evidence as if he was conducting a trial.

iv.If on the basis of the material on record, the court could form an opinion that the accused might have committed offence, it can frame the charge, though for conviction the conclusion is required to be proved beyond reasonable doubt that the accused has committed the offence.

v.At the time of framing of the charges, the probative value of the material on record cannot be gone into but before framing a charge the court must apply its judicial mind on the material placed on record and must be satisfied that the commission of offence by the accused was possible.

117 Crl.M.P.No.250/2022 vi.At the stage of Sections 227 and 228, the court is required to evaluate the material and documents on record with a view to find out if the facts emerging therefrom taken at their face value disclose the existence of all the ingredients constituting the alleged offence. For this limited purpose, sift the evidence as it cannot be expected even at that initial stage to accept all that the prosecution states as gospel truth even if it is opposed to common sense or the broad probabilities of the case.

vii.If two views are possible and one of them gives rise to suspicion only, as distinguished from grave suspicion, the trial Judge will be empowered to discharge the accused and at this stage, he is not to see whether the trial will end in conviction or acquittal.”

52.And also it is prudent principles laid down by the Hon’ble

Supreme Court that at the stage of framing of charge roving and fishing enquiry is impermissible. If the contention of the accused is accepted, there would be a mini trial at the stage of framing of charge. That would defeat the object of the Code. It is well settled that at the stage of framing of charge the defence of the accused cannot be put forth. At the stage of framing of charge hearing the submissions of the accused has to be confined to the material produced by the police and “court is required to evaluate the material and documents on record with a view to find out if the facts emerging therefrom taken at their face value disclose the existence of all the ingredients constituting the alleged offence.”

53.It is also to be noted that the Hon’ble Supreme Court of India in

Stree Atyachar Virodhi Parishad v. Dilip N.Chardia reported in 1989 (1) 118 Crl.M.P.No.250/2022

SCC 715 held that “The ground in the context is not a ground for conviction but a ground for putting the accused on trial. It is in the trial, the guilt or the innocence of the accused will be determined and not at the time of framing of charge. The court therefore, need not under taken an elaborate enquiry in sifting and weighing the material.

Nor it is necessary to delve deep into various aspect. All that court has to consider is whether the evidentiary material on record if generally accepted, would reasonably connect the accused with the crime. No more need be enquired into”.

54.In view of the guidelines enunciated by the Hon’ble Supreme

Court in various judgments, the moto is that Judge while considering the question of framing charges, he has to find out whether there is prima-facie case against the accused has been made out and the test to determine a prima-facie case would naturally depend upon the facts of each case and also it cannot be expected even at that initial stage to accept all that the prosecution states as gospel truth even if it is opposed to common sense or the broad probabilities of the case and also consider the distinction between suspicion and grave suspicion. Apart from that trial judge has to see that the material and the contention of the prosecution is sufficient to end in conviction or acquittal.

119 Crl.M.P.No.250/2022

55.Apart from that, one of the Accused i.e. Tummala Ranga Rao (A-10) and M/s. Stylish Holmes Real Estates Pvt. Ltd. (A-3) were granted Tender of Pardon and their evidence is crucial in view of the corroboration of various anomalies in the documents executed between APIIC and Emaar Properties/A-2 and money transaction among the accused.

56.In view of the above discussions, the complainant/ED not only relied on the documents and the investigation conducted by CBI, they also conducted further investigation in all aspects and also relied on the documents i.e. bank statements of the alleged non-existing 11 companies. The admissibility of Section 50(2)&(3) of PMLA and

Section 24 of PMLA as guided by the Hon'ble Supreme Court, clearly emphasises the prima facie case of the prosecution. Hence, unless a detailed trial is conducted, truth will not come to light. Hence, the petition deserves to be dismissed.

57.In the result, the petition is dismissed.

Typed to my dictation, corrected and pronounced by me in the open Court on this the 30th day of April, 2024.

Sd/-

PRINCIPAL SPECIAL JUDGE FOR

CBI CASES, HYDERABAD.

1

IN THE COURT OF PRINCIPAL SPECIAL JUDGE FOR CBI CASES,

HYDERABAD

Dated: Tuesday, the 30th day of April, 2024.

Present:Sri Ch. Ramesh Babu

Principal Special Judge for CBI

Cases, Hyderabad.

Crl.M.P.No.391/2022

In

S.C.No.1/2019

Between:

G.V. Vijaya Raghav, S/o. Late Hara Gopal Krishna, Aged: 55 yrs, Occ: Ex. Finance Head-South, M/s. Emaar MGF Land Ltd. Boulder Hills Golf & Country Club, Opp. International Business School, Gachibowli, Hyderabad-500032, R/o. Flat No.202, B-Block, Neharika Inter Lake, Khazaguda, Chitrapuri Colony, Near Delhi Public School, Manikonda,

Hyderabad-500089.….. Petitioner/Accused No.9

AND

The Directorate of Enforcement, Represented by its Assistant Director, Government of India, Ministry of Finance, Department of Revenue, 3rd floor, Shakar Bhavan, Fateh Maidan Road,

Hyderabad-500004.….. Respondent/Complainant

2 Crl.M.P.No.391/2022

This petition coming before me on 13.07.2023 for final hearing in the presence of Sri Bujjibabu Davuluri, Counsel for the Petitioner/ Accused No.9 and of Sri T.V.Subba Rao, Special Public Prosecutor for the Respondent/Complainant and after hearing the arguments and perusing the material on record, and the matter having been stood over for consideration till this day, this Court made the following:

O R D E R

1.The petitioner/Accused No.9 filed petition u/s. 227 Cr.P.C. on 12.01.2022 praying the Court to discharge the petitioner from the prosecution case.

2. The petitioner averred in the petition that the petitioner has been arrayed as Accused No.9 in this case and the same is coming up for framing of charges and the Directorate of Enforcement Hyderabad, have filed charge sheet for the alleged violation of Section 3 punishable under Section 4 of the Prevention of Money Laundering

Act, 2002, against the petitioner.

2.1.The petitioner further averred that he worked as Finance

Controller (South) and then worked as a Finance Head (South) and hence a salaried employee of accused No. 1 & 2 companies, was reporting directly to the Ex-CEO/accused No.8, who was entrusted by the Board for the day to day running of the Hyderabad project and all actions were taken in good faith. A bare reading of the charges leveled against the petitioner by the respondent/complainant clearly 3 Crl.M.P.No.391/2022 shows that the petitioner was acted in representative capacity. So, it clearly shows that there is a master and servant relationship between the company and the petitioner.

2.2.The petitioner further averred that he is falsely implicated in this case and there is no legally acceptable and reliable material to show the complicity of the Petitioner in the alleged offence. There is no legally sustainable material to show that the petitioner herein has committed the alleged offence of violation of Section 3 punishable

U/s. 4 of the Prevention of Money Laundering Act, 2002 and the allegations even taken at face value do not attract the offences as alleged against the Petitioner. There is no evidence that the

Petitioner/Accused No.9 directly or indirectly attempted to indulge or knowingly assisted or knowingly was a party or was actually involved in any process or activity connected with the proceeds of crime and projecting it as untainted property.

2.3.The petitioner further averred that the charge sheet is based on the investigation conducted by CBI and their final report.

From a reading of the Police Report and the material sent therein, it is very clear that the charges against the Petitioner/Accused No.9 are groundless and for reasons more than one the Petitioner/Accused is entitled to be discharge u/sec. 227 of Criminal Procedure Code. There 4 Crl.M.P.No.391/2022 is no evidence provided regarding the cash component of Rs. 6.86 crores allegedly received by the petitioner. Trail proceeds alleged in the Charge Sheet do not connect anywhere and the term used in the charge sheet is "dissolved" and that the prosecution failed to establish the money trail, thereby removing the component of "GRAVE

SUSPICION" as required against the Petitioner/Accused No.9 and that the Petitioner/Accused No.9 has to be discharged. The complaint doesn't disclose any of the offences alleged and there is no scope for conviction of the petitioner/accused.

2.4.The petitioner further averred that he is only an employee therefore involving Petitioner/Accused No.9 in the present case is not justified as it is causing harassment to the Petitioner/Accused No.9 resulting in grave injustice. Even as per the prosecution, the duty of the petitioner is to raise finance for the project.

2.5.The petitioner further averred that 18 villas allegedly booked by EMGF is false at the very outset. The trail of proceeds connects the companies to Sri Shravan Gupta, Managing Director of

EMGF ("MD") and his wife and it is stated that Sri Shravan Gupta is the director who was responsible for the day to day affairs of the company and was also the majority shareholder of the EMGF company. The employee cannot be vicariously held liable for the acts 5 Crl.M.P.No.391/2022 of the company in this case. The first 100 villas plots were to be sold at Rs. 5000/- per Sq. Yard as per the Agency Agreement dated 29.01.2005 between EPPJSC and M/s. Stylish Holmes Real Estates Pvt.

Ltd. Thereby, the act of sale of 100 villa plots at Rs. 5,000/- Sq. yard and not the market price is accurate and justified.

2.6.The petitioner further averred that the respondent/ complainant failed to make out a case for conviction and the mere suspicion of motive cannot serve as a sufficient ground for framing the charges in the absence of any material, prima facie showing that the particular motive has passed into action and that the accused is connected with that action in question. The evidence if any against the petitioner is not legal and flooded with inconsistencies and contradictions making the story inherently improbable, highly unbelievable and far from the truth and for the framing of the charges it needs prima facie evidence which is lacking in this case due to which the petitioner herein need to be discharged. Therefore, the petitioner prayed to discharge him from the prosecution case.

3.The Respondenthas filed counter denying the allegations made by the petitioner in the petition. The respondent submitted that the present case has been registered against the petitioner/Accused

No.9 and other accused for the offence under Section 3 punishable 6 Crl.M.P.No.391/2022 under Section 4 of the Prevention of Money Laundering Act, 2002 basing on the investigation and final report of CBI case registered vide its RC.No.35-A-2011-0018, dt.17-08-2011 and after investigation by

CBI agency have filed charge sheet.

3.1.The Respondent further submitted that the facts of case are that the then Govt. of A.P issued G.O.Ms.No.359, Dt;04/09/2002 for development of an integrated projects including multi use development at Manikonda, R.R. Dist. in 535 acres and further the

Govt. of A.P. issued G.O.Ms.No.14, Dt:11/01/2005 amended by

G.O.Ms.No.22, Dt: 27/01/2005 for development of township project at

Manikonda by Accused no.1 with equity structure of 74:26 to the

Developer and APIIC respectively. The Development Agreement was executed between Accused No. 1 and Accused No.2, Dt:03/11/2006 to undertake development, for which Accused no.2 was entitled 75% of gross revenue in total through sale or lease proceeds and subsequently a Development Agreement cum General Power of

Attorney and an Addendum to Development Agreement & GPA,

Dt:23/07/2008 was executed between accused for Sale of villa plots.

3.2.The Respondent further submitted that an Agency

Agreement, Dt:29/01/2005 was entered between Accused No.1 and

Accused No.3 under which 100 plots are to be sold for Rs.5000/- per 7 Crl.M.P.No.391/2022

Sq.yard and remaining villa plots were to be sold at prevailing market rates and it is responsibility of Accused No.1; and APIIC conveyed 258.36 acres of land in favour of Accused No.1 vide Conveyance

Deed, Dt:28/12/2005 and the Accused No.1 executed Development

Agreement Dt:03/11/2006 with Accused No.2 by inducting as a co-developer. But Accused No.1 and Accused No.3 booked as many 43 villa plots till Dt:27/12/2005 i.e, even before execution of Conveyance

Deed, Dt;28/12/2005 by APIIC in favour of Accused No.1.

3.3.The Respondent further submitted that as per the instructions of Accused No.2 rep. by its Director that 10 different companies were floated and booked 18 villas plots @ Rs.5000/ per

Sq.yard. So that the same could be sold at premium rates in future and the funds were transferred to block the villa plots in the name of these 10 companies during the year 2010 by paying 10% of Sale

Consideration of Rs.5000/- per Sq.yard and other villa plots were being sold to other buyers at Rs.50,000/- per Sq.yard.

3.4.The Respondent further submitted that as per revenue sharing agreement and books of account that the accused are required to pass on 25% of Gross Annual Revenue. However, it was never transferred into books of accounts of APIIC and thus the accused misappropriated the revenue from the integrated project. As 8 Crl.M.P.No.391/2022 per G.O's issued by the Govt. of A.P., the Accused No.1 was required to develop the project land which includes constructing villas and apartments. It was never intended by Govt. of A.P to sell villa plots and however the agency agreement, Dt:29/01/2005 executed on behalf of the Accused No.1 was nothing but clandestine arrangement in furtherance of the criminal conspiracy to dispose of the project land without developing the same and thereby APIIC deprives its legitimate revenue share from the developed villas.

3.5.The Respondent further submitted that 13 villa plots including three model villas were sold by Accused No.1 & 2 directly to buyers and during investigation one of the above said villa/plot buyer confirmed having paid excess amount of Rs.2,80,40,000/- in cash over and above documented price of Rs.5,000/- per Sq.yard and the said amount was sent by him to the office of Accused No.1 as per the instructions of Accused No. 9 and further it is pertinent to mention that two villa plots buyers who purchased villa plots during same period have also confirmed to have paid excess amount of

Rs.20,000/- per Sq.yard in cash over the document price.

3.6.The Respondent further submitted that the existence of criminal conspiracy on part of accused to deprive APIIC lawful revenue share by booking villa plots @ Rs.5,000/- per Sq.yards and the 9 Crl.M.P.No.391/2022 criminal intent of accused is also evident from the transactions and fact that villa plots were sold at higher price and however in furtherance of the conspiracy the amounts of Rs.2,80,40,000/- and also Rs.4,05,20,000/- totaling to Rs.6,85,60,000/- was collected from two villas plots in cash for sale consideration.

3.7.The Respondent further submitted that accused no.12 s/o. accused no.7 carrying business in Dubai received an amount of

USD. 2,50,000/- into his personal from Sri. P.S. Parthasarathy, the buyer of plot villa in EHTPL, who has stated that he purchased a plot at cost of Rs.50,0001- per Sq yard out of which he has paid an amount of Rs.5,000/ per Sq.yard through cheque and balance amount of Rs.45,0001- per Sq yard amounting to Rs.5,13,00,000/ in cash and he has paid an amount of Rs.4,08,00,000/- to accused no.10 at the residence of accused no.7. Similarly, accused no.12 has received USD 1,40,0001- an amount equivalent to Rs.65 lakhs from Sri Challa

Suresh, who purchased villa plot in EHTPL.

3.8.The Respondent further submitted that it is also revealed during investigation that accused no.9 collected an amount of

Rs.6,85,60,000/- from sale of three villa plots over the above document price Rs.5,000/ per Sqyard and the investigations by CBI revealed that during 2006-07 to Aug-2011 the total realization from 10 Crl.M.P.No.391/2022 villas plots is to extent of Rs.73.19 crores and from villa Rs.21.36 crores totaling to Rs. 94.56 crores. That EMGF also realized amounts from the buyers of apartments to extent of Rs.248.33 crores and the accused no.4 company established by accused no.11 had received funds from several companies, but the whereabouts of Directors of said companies could not be ascertained and the so called companies did not exist physically during relevant period and no trade license was issued in favour of many companies including accused no.4 by

GHMC, Hyd., which clearly shows that the said companies were floated only for purpose of transferring funds.

3.9.The Respondent further submitted that as per Agency

Agreement, Dt:2/01/2005 plots beyond 100 were to be sold at prevailing market rates to be decided by accused no.1, however in criminal conspiracy that the accused no.9, 8, Sri. Shravan Gupta, MD of accused no.2 company did not revise rates in tune with prevalent market rates and out of 136 villa plots, 105 were sold through accused no.3 and remaining 31 were sold directly by accused no.2 during 2009-2010, out of these 31 plots sale of 13 villa plots was finalized by accused no.9 and Sri. Shravan Gupta, MD of accused no.2 company has blocked/booked 18 villa plots in the names of other companies at Rs.5,000/- per Sq yard to sell them at higher rates at later date to obtain undue pecuniary gain.

11 Crl.M.P.No.391/2022 3.10.The Respondent further submitted that an amount of

Rs.96.01 crores collected by accused no.10 and Rs.6.85 crores collected by accused no.9 for accused no.2 over and above documented price, which should have gone to APIIC @ 26% revenue share in profit worked out in all, which was never transferred to APIIC.

Hence accused no.9 in conspiracy with accused no.8 and Sri Shravan

Gupta deliberately did not share any revenue, which finally deprive

APIIC of its legitimate revenue share and caused wrongful loss to a tune of Rs.43.50 crores and at the same time EMGF and EPJSC obtained undue pecuniary benefit of Rs. 167.29 crores.

3.11.The Respondent further submitted that on receiving documents from CBI, during course of investigation made enquires and having found that there is prima facie case under PMLA 2002 against all the accused including the accused herein and further in course of investigation summons were issued under Section 50 of

PMLA 2002 to several accused, also others persons who were associated with transactions and recorded their voluntary statements, obtained financial accounts and Bank statements respectively.

3.12.The Respondent further submitted that as per the investigation done so far and documents collected by the investigation officer, the statements of the accused recorded U/Sec.50 12 Crl.M.P.No.391/2022 of PMLA 2002 categorically establishes prima facie case against petitioner/accused no.9 and therefore the petition filed by the petitioner/accused no.9 is not maintainable and liable to be dismissed. The contentions raised by the petitioner/accused No.9 in filing the present petition for discharge cannot be looked into at this stage and can only be decided after commencement of trial and after completing full fledge trial.

3.13.In support of the contentions, the Respondent relied on the judgment of Hon’ble Supreme Courtreported in 2020 (1) ALT (Crl.) 330 SC, wherein the Hon’ble Supreme Court held that:

“Procedure in framing of charges - At the time of framing of the charges, the probative value of the material on record cannot be gone into, and the material brought on record by the prosecution has to be accepted as true" "Framing of Charges - The defence of the accused is not to be looked into at the stage when the accused seeks to be discharged Under Section 227 of Cr.P.C." 3.14.The Respondent also relied on the judgment of Hon’ble

Supreme Courtreported in 2020 (1) ALT (Crl.) 129, the Hon’ble

Supreme Court held that:

"Framing of Charges - At the stage of framing of charges, the Court is not obligated to appreciate the evidence or make a roving enquiry as to whether the evidence collected by the prosecution during the course of investigation and the material collected would lead to a conviction.” 13 Crl.M.P.No.391/2022 3.15.The Respondent further submitted that PML Act, 2002 being a special statute postulates reverse burden on the accused. As per Sec 24 of PML Act, 2002, this Hon'ble shall presume unless contrary is proved, that proceeds of crime are involved in money laundering and as such it is crystal clear that burden is on the accused to prove that proceeds of crime is not involved in money laundering. The said burden cannot be discharged at this juncture and can be elicited only after appreciation of oral and documentary evidences, and on this score alone the petition is liable to be dismissed. Hence, prayed to dismiss the petition.

4.Heard both sides. Perused the record.

5.Now the point for determination is:

-Whether the petitioner/Accused No.9 can be discharged under Section 227 of Cr.P.C. in S.C.No. 01 of 2019?

POINT:

6.The counsel for the petitioner averred that the petitioner/A-9 is only a salaried employee of A1 and A-2 Companies, hence he cannot be figured as accused and he relied on following judgments:

14 Crl.M.P.No.391/2022

(i)In case of K.K. Ahuja Vs V.K. Vora and another reported in (2009) 10 SCC 48, wherein the Hon’ble Supreme Court held at para Nos.15, 17 to 21, 24 and 30 as follows:

“15.The prevailing trend appears to require the complainant to state how a Director who is sought to be made an accused, was in charge of the business of the company, as every director need not be and is not in charge of the business of the company. If that is the position in regard to a director, it is needless to emphasise that in the case of non-director officers, there is all the more the need to state what his part is with regard to conduct of business of the company and how and in what manner he is liable.

17.The criminal liability for the offence by a company under Section 138, is fastened vicariously on the persons referred to in sub-section (1) of Section 141 by virtue of a legal fiction. Penal statutes are to be construed strictly. Penal statutes providing constructive vicarious liability should be construed much more strictly. When conditions are prescribed for extending such constructive criminal liability to others, courts will insist upon strict literal compliance. There is no question of inferential or implied compliance. Therefore, a specific averment complying with the requirements of Section 141 is imperative. As pointed out in K. Srikanth Singh vs. North East Securities Ltd., the mere fact that at some point of time, an officer of a company had played some role in the financial affairs of the company, will not be sufficient to attract the constructive liability under Section 141 of the Act.

18.Sub-section (2) of Section 141 provides that a Director, Manager, Secretary or other officer, though not in charge of the conduct of the business of the company will be liable if the offence had been committed with his consent or connivance or if the offence was a result of any negligence on his part. The liability of persons mentioned in sub-section (2) is not on account of any legal fiction but on account of the specific part played - consent and connivance or negligence. If a person is to be made liable under sub-section (2) of Section 141, then it is necessary to aver consent and connivance, or negligence on his part.

19.This takes us to the next question under sub-section (1) of Section 141, as to: (i) who are the persons who are 15 Crl.M.P.No.391/2022 responsible to the company for the conduct of the business of the company, and (ii) who could be said to be in charge and was responsible to the company for the conduct of the business of the company. The words "every person who, at the time of the offence was committed, was in charge of, and was responsible for the conduct of the business of the company" occurs not only in Section 141 (1) of the Act but in several enactments dealing with offences by companies, to mention a few – Section 278-B of the Income Tax Act, 1961, Section 22-C of Minimum Wages Act, 1948, Section 86-A of the Employees State Insurance Act, 1948, Section 14-A of Employee’s Provident Funds and Miscellaneous Provisions Act, 1952, Section 29 of Payment of Bonus Act, 1965, Section 40 of The Air (Prevention and Control of Pollution) Act, 1981 and Section 47 of Water (Prevention and Control of Pollution) Act, 1974. But neither Section 141(1) of the Act, nor the pari materia provisions in other enactments give any indication as to who are the persons responsible to the company, for the conduct of the business of the company. Therefore, we will have to fall back upon the provisions of Companies Act, 1956 which is the law relating to and regulating companies.

20.Section 291 of the Companies Act, 1956 provides that subject to the provisions of that Act, the Board of Directors of a company shall be entitled to exercise all such powers, and to do all such acts and things, as the company is authorised to exercise and do. A company though a legal entity can act only through its Board of Directors. The settled position is that a Managing Director is prima facie in charge of and responsible for the company's business and affairs and can be prosecuted for offences by the company. But insofar as other directors are concerned, they can be prosecuted only if they were in charge of and responsible for the conduct of the company's business.

21.A combined reading of Section 5 and 291 of Companies Act, 1956 with the definitions in clauses (24), (26), (30), (31), (45) of Section 2 of that Act would show that the following persons are considered to be the persons who are responsible to the company for the conduct of the business of the company :

(a) the Managing Director/s;

(b) the Whole-time Director/s;

(c) the manager;

(d) the secretary; 16 Crl.M.P.No.391/2022

(e) any person in accordance with whose directions or instructions the Board of directors of the company is accustomed to act;

(f) any person charged by the Board with the responsibility of complying with that provision (and who has given his consent in that behalf to the Board); and

(g) where any company does not have any of the officers specified in clauses (a) to (c), any Director or Directors who may be specified by the Board in this behalf or where no director is so specified, all the directors. It follows that other employees of the company, cannot be said to be persons who are responsible to the company, for the conduct of the business of the company.

24.Therefore, the averment in a complaint that an accused is a director and that he is in charge of and is responsible to the company for the conduct of the business of the company, duly affirmed in the sworn statement, may be sufficient for the purpose of issuing summons to him. But if the accused is not one of the persons who falls under the category of 'persons who are responsible to the company for the conduct of the business of the company' (listed in para 21 above), then merely by stating that 'he was in charge of the business of the company' or by stating that 'he was in charge of the day to day management of the company' or by stating that “he was in charge of, and was responsible to the company for the conduct of the business of the company”, he cannot be made vicariously liable under Section 141(1) of the Act.

30.A Deputy General Manager is not a person who is responsible to the company for the conduct of the business of the company. He does not fall under any of the categories (a) to

(g) listed in Section 5 of the Companies Act (extracted in para 21 above). Therefore the question whether he was in charge of the business of the company or not, is irrelevant. He cannot be made vicariously liable under Section 141 (1) of the Act. If he has to be made liable under Section 141(2), the necessary averments relating to consent/connivance/ negligence should have been made. In this case, no such averment is made. Hence the first respondent, who was the Deputy General Manger, could not be prosecuted either under sub-section (1) or under sub- section (2) of Section 141 of the Act.

17 Crl.M.P.No.391/2022

(ii)In case of State of NCT of Delhi vs. Rajiv Khurana reported in (2010) 11 SCC 469, wherein the Hon’ble Supreme

Court held at para No.20 as follows:

20.The legal position which emerges from a series of judgments is clear and consistent that it is imperative to specifically aver in the complaint that the accused was in charge of and was responsible for the conduct of the business of the company. Unless clear averments are specifically incorporated in the complaint, the respondent cannot be compelled to face the rigmarole of a criminal trial.”

(iii)In case of GHCL Employees Stock Option Trust vs India

Infoline Limited and others reported in (2013) 4 SCC 505, wherein the Hon’ble Supreme Court held at para Nos.17 and 18 as follows:

17. In Maksud Saiyed v. State of Gujarat, this Court while discussing vicarious liability observed as under :- (SCC p. 674, para 13) “13. Where a jurisdiction is exercised on a complaint petition filed in terms of Section 156(3) or Section 200 of the Code of Criminal Procedure, the Magistrate is required to apply his mind. The Penal Code does not contain any provision for attaching vicarious liability on the part of the Managing Director or the Directors of the Company when the accused is the Company. The learned Magistrate failed to pose unto himself the correct question viz., as to whether the complaint petition, even if given face value and taken to be correct in its entirety, would lead to the conclusion that the respondents herein were personally liable for any offence. The Bank is a body corporate. Vicarious liability of the Managing Director and Director would arise provided any provision exists in that behalf in the statute. Statutes indisputably must contain provision fixing such vicarious liabilities. Even for the said purpose, it is obligatory on the part of the complainant to make requisite allegations which would attract the provisions constituting vicarious liability.” 18 Crl.M.P.No.391/2022

18.From a bare perusal of the order passed by the

Magistrate, it reveals that two witnesses including one of the

trustees were examined by the complainant but none of them specifically stated as to which of the accused committed breach of trust or cheated the complainant except general and bald allegations made therein. While ordering issuance of summons, the learned Magistrate concluded as under:

“The complainant has submitted that Accused 2 to 6 are the Directors of the company and Accused 7 is the Secretary of the Company and were looking after the day-to-day affairs of the Company and were also responsible for conduct and business of Accused No.1 and sometime or the other have interacted with the complainant.

I have heard arguments on behalf of the complainant and perused the record. From the allegations raised, documents placed on record and the evidence led by the witnesses, prima facie an offence under Sections 415,409/34/120-B is made out. Let all the accused hence be summoned to face trial under the aforesaid sections on PF/RC/Speed Post/courier for 2-12-2008”

(iv)In case of Sunil Bharti Mittal Vs. Central Bureau of

Investigation reported in (2015) 4 SCC 609, wherein the Hon’ble

Supreme Court held at para Nos.42 to 44 as follows:

“42.No doubt, a corporate entity is an artificial person which acts through its officers, directors, managing director, chairman etc. If such a company commits an offence involving mens rea, it would normally be the intent and action of that individual who would act on behalf of the company. It would be more so, when the criminal act is that of conspiracy. However, at the same time, it is the cardinal principle of criminal jurisprudence that there is no vicarious liability unless the statute specifically provides so.

43.Thus, an individual who has perpetrated the commission of an offence on behalf of a company can be made accused, along with the company, if there is sufficient evidence of his active role coupled with criminal intent. Second situation in which he can be implicated is in those cases where the statutory regime itself attracts the doctrine of vicarious liability, by specifically incorporating such a provision.

19 Crl.M.P.No.391/2022

44.When the company is the offender, vicarious liability of the Directors cannot be imputed automatically, in the absence of any statutory provision to this effect. One such example is Section 141 of the Negotiable Instruments Act, 1881. In Aneeta Hada, the Court noted that if a group of persons that guide the business of the company have the criminal intent, that would be imputed to the body corporate and it is in this backdrop, Section 141 of the Negotiable Instruments Act has to be understood. Such a position is, therefore, because of statutory intendment making it a deeming fiction. Here also, the principle of "alter ego", was applied only in one direction namely where a group of persons that guide the business had criminal intent, that is to be imputed to the body corporate and not the vice versa. Otherwise, there has to be a specific act attributed to the Director or any other person allegedly in control and management of the company, to the effect that such a person was responsible for the acts committed by or on behalf of the company.”

(v)In case of Standard Chartered Bank Vs State of

Maharashtra and Others reported in (2016) 6 SCC 62 , wherein the Hon’ble Supreme Court held at para Nos.20 & 21 as follows:

20.Thereafter the Court referred to the authority in Saroj Kumar Poddar v. State (NCT of Delhi) and noted the observations which we think it apt to reproduce:- “25……….’14. Apart from the Company and the appellant, as noticed hereinbefore, the Managing Director and all other Directors were also made accused. The appellant did not issue any cheque. He, as noticed hereinbefore, had resigned from the directorship of the Company. It may be true that as to exactly on what date the said resignation was accepted by the Company is not known, but, even otherwise, there is no averment in the complaint petitions as to how and in what manner the appellant was responsible for the conduct of the business of the Company or otherwise responsible to it in regard to its functioning. He had not issued any cheque. How he is responsible for dishonour of the cheque has not been stated. The allegations made in para 3, thus, in our opinion do not satisfy the requirements of Section 141 of the Act.”

21. The said observations were clarified by stating that:- 20 Crl.M.P.No.391/2022 “26. A faint suggestion was made that this Court in Saroj Kumar Poddar has laid down the law that the complaint petition not only must contain averments satisfying the requirements of Section 141 of the Act but must also show as to how and in what manner the appellant was responsible for the conduct of the business of the company or otherwise responsible to it in regard to its functioning. A plain reading of the said judgment would show that no such general law was laid down therein. The observations were made in the context of the said case as it was dealing with a contention that although no direct averment was made as against the appellant of the said case fulfilling the requirements of Section 141 of the Act but there were other averments which would show that the appellant therein was liable therefor.”

(vi)In case of Sushil Sethi and another Vs. State of Arunachal

Pradesh and others reported in (2020) 3 SCC 240, wherein the

Hon’ble Supreme Court held at para Nos.8 & 9 as follows:

8.Applying the law laid down by this Court in the aforesaid decisions to the facts of the case on hand, we are of the opinion that this is a fit case to exercise powers under Section 482 Cr.P.C. and to quash the impugned criminal proceedings.

8.1. As observed hereinabove, the charge-sheet has been filed against the appellants for the offences under Section 420 read with Section 120-B of the IPC. However, it is required to be noted that there are no specific allegations and averments in the FIR and/or even in the charge-sheet that fraudulent and dishonest intention of the accused was from the very beginning of the transaction. It is also required to be noted that contract between M/s. SPML Infra Limited and the Government was for supply and commissioning of the Nurang Hydel Power Project including three power generating units. The appellants purchased the turbines for the project from another manufacturer. The company used the said turbines in the power project. The contract was in the year 1993. Thereafter in the year 1996 the project was commissioned. In the year 1997, the Department of Power issued a certificate certifying satisfaction over the execution of the project. Even the defect liability period ended/expired in January, 1998. In the year 2000, there was some defect found with respect to three turbines. Immediately, the turbines were replaced. The power 21 Crl.M.P.No.391/2022 project started functioning right from the very beginning – 1996 onwards. If the intention of the company/appellants was to cheat the Government of Arunachal Pradesh, they would not have replaced the turbines which were found to be defective. In any case, there are no specific allegations and averments in the complaint that the accused had fraudulent or dishonest intention at the time of entering into the contract. Therefore, applying the law laid down by this Court in the aforesaid decisions, it cannot be said that even a prima facie case for the offence under Section 420 IPC has been made out.

8.2. It is also required to be noted that the main allegations can be said to be against the company. The company has not been made a party. The allegations are restricted to the Managing Director and the Director of the company respectively. There are no specific allegations against the Managing Director or even the Director. There are no allegations to constitute the vicarious liability. In Maksud Saiyed v. State of Gujarat [(2008) 5 SCC 668], it is observed and held by this Court that the penal code does not contain any provision for attaching vicarious liability on the part of the Managing Director or the Directors of the company when the accused is the company. It is further observed and held that the vicarious liability of the Managing Director and Director would arise provided any provision exists in that behalf in the statute. It is further observed that statute indisputably must contain provision fixing such vicarious liabilities. It is further observed that even for the said purpose, it is obligatory on the part of the complainant to make requisite allegations which would attract the provisions constituting vicarious liability. In the present case, there are no such specific allegations against the appellants being Managing Director or the Director of the company respectively. Under the circumstances also, the impugned criminal proceedings are required to be quashed and set aside.

8.3 At this stage, it is required to be noted that though the FIR was filed in the year 2000 and the charge-sheet was submitted/filed as far back as on 28.5.2004, the appellants were served with the summons only in the year 2017, i.e., after a period of approximately 13 years from the date of filing the charge-sheet. Under the circumstances, the High Court has committed a grave error in not quashing and setting aside the impugned criminal proceedings and has erred in not exercising the jurisdiction vested in it under Section 482 Cr.P.C.

9. In view of the above and for the reasons stated above, we are of the firm opinion that this is a fit case to exercise the 22 Crl.M.P.No.391/2022 powers under Section 482 Cr.P.C. and to quash the criminal proceedings against the appellants for the offence under Section 420 read with Section 120B of the IPC. To continue the criminal proceedings against the appellants would be undue harassment to them. As observed hereinabove, no prima facie case for the offence under Section 420 of the IPC is made out.

(vii)In case of Shafiya Khan Alias Shakuntala Prajapati Vs

State of Uttar Pradesh reported in (2022) 4 SCC 549, wherein the

Hon’ble Supreme Court held at para Nos.14 to 16, 18 and 19 as

follows:

14.The exposition of law on the subject relating to the exercise of the extra-ordinary power under Article 226 of the Constitution or the inherent power under Section 482 Cr.PC is well settled and to the possible extent, this Court has defined sufficiently channelized guidelines, to give an exhaustive list of myriad kinds of cases wherein such power should be exercised. This Court has held in para 102 in State of Haryana v. Bhajan Lal as under :

“102. In the backdrop of the interpretation of the various relevant provisions of the Code under Chapter XIV and of the principles of law enunciated by this Court in a series of decisions relating to the exercise of the extraordinary power under Article 226 or the inherent powers under Section 482 of the Code which we have extracted and reproduced above, we give the following categories of cases by way of illustration wherein such power could be exercised either to prevent abuse of the process of any court or otherwise to secure the ends of justice, though it may not be possible to lay down any precise, clearly defined and sufficiently channelised and inflexible guidelines or rigid formulate and to give an exhaustive list of myriad kinds of cases wherein such power should be exercised.

(1) Where the allegations made in the First Information Report or the complaint, even if they are taken at their face value and accepted in their entirety do not prima facie constitute any offence or make out a case against the accused.

23 Crl.M.P.No.391/2022 (2) Where the allegations in the First Information Report and other materials, if any, accompanying the FIR do not disclose a cognizable offence, justifying an investigation by police officers under Section 156(1) of the Code except under an order of a

Magistrate within the purview of Section 155(2) of the Code.

(3) Where the uncontroverted allegations made in the FIR or complaint and the evidence collected in support of the same do not disclose the commission of any offence and make out a case against the accused.

(4) Where the allegations in the FIR do not constitute a cognizable offence but constitute only a non-cognizable offence, no investigation is permitted by a police officer without an order of a Magistrate as contemplated under Section 155(2) of the Code.

(5) Where the allegations made in the FIR or complaint are so absurd and inherently improbable on the basis of which no prudent person can ever reach a just conclusion that there is sufficient ground for proceeding against the accused.

(6) Where there is an express legal bar engrafted in any of the provisions of the Code or the concerned Act (under which a criminal proceeding is instituted) to the institution and continuance of the proceedings and/or where there is a specific provision in the Code or the concerned Act, providing efficacious redress for the grievance of the aggrieved party.

(7) Where a criminal proceeding is manifestly attended with malafide and/or where the proceeding is maliciously instituted with an ulterior motive for wreaking vengeance on the accused and with a view to spite him due to private and personal grudge

15.The principles laid down by this Court have consistently been followed, as well as in the recent judgment of three Judge judgment of this Court in Neeharika Infrastructure Pvt. Ltd. v. State of Maharashtra and Others [(2021) 19 SCC 401].

16.It is no doubt true that the power of quashing of criminal proceedings should be exercised very sparingly and with circumspection and that too in rarest of the rare cases and it was not justified for the Court in embarking upon an enquiry as to the reliability or genuineness or otherwise of the allegations made in the FIR or the complaint and that the 24 Crl.M.P.No.391/2022 inherent powers do not confer any arbitrary jurisdiction on the Court to act according to its whims and fancies.

18.Although it is true that it was not open for the Court to embark upon any enquiry as to the reliability or genuineness of the allegations made in the FIR, but at least there has to be some factual supporting material for what has been alleged in the FIR which is completely missing in the present case and documentary evidence on record clearly supports that her Nikah Nama was duly registered and issued by competent authority and even the charge sheet filed against her does not prima facie discloses how the marriage certificate was forged.

19. In the given circumstances and going through the complaint on the basis of which FIR was registered and other material placed on record, we are of the considered view that no offence of any kind as has been alleged in the FIR, has been made out against the appellant and if we allow the criminal proceedings to continue, it will be nothing but a clear abuse of the process of law and will be a mental trauma to the appellant which has been completely overlooked by the High Court while dismissing the petition filed at her instance under Section 482 Cr.PC.

(viii)In case of Rekha Jain and another vs State of Uttar

Pradesh and others reported in (2022) 3 SCC 497, wherein the

Hon’ble Supreme Court held at para Nos.6 and 7 as follows:

6.Having heard the learned counsel appearing on behalf of the respective parties and having perused the allegations in the complaint/FIR, it can be seen that the main allegations are against the other co-accused – Arun Kumar Maheshwari and others. The only allegation against the appellants is that they have purchased the property in question, which was attached in the year 1998-1999 against the amounts due and payable to the depositors, who had deposited in Kuber Mutual Benefits Ltd. between 1998-1999. It is to be noted that the property has been purchased by the appellants in the year 2019. Nothing is brought on record that at the time when the property was purchased by the appellants, the attachment was continued and/or any attachment was registered. There are no allegations that the appellants are related to the other co-accused Arun Kumar Maheshwari and others. Even from the averments and the allegations in the F.I.R., it cannot be said that there is any 25 Crl.M.P.No.391/2022 prima facie case made out against the appellants for the offences under Sections 406, 420, 467, 468, 471 and 120-B IPC. The main allegations are against other co-accused. Therefore, to continue the criminal proceedings against the appellants would be an abuse of process of law and the Court and unnecessary harassment to the appellants, who seem to be the purchasers of the property on payment of sale consideration. In the above facts and circumstances of the case, the High Court ought to have exercised its powers and discretion under Section 482 Cr.P.C. and ought to have quashed the criminal proceedings against the appellants.

7. In view of the above and for the reasons stated above, the present appeal succeeds. The impugned judgment and order passed by the High Court is hereby quashed and set aside. The criminal proceedings arising out of Case Crime No. 48 of 2019 for the offences under Sections 406, 420, 467, 468, 471 and 120-B IPC, P.S. Hapur Nagar, District Hapur including the charge sheet are hereby quashed and set aside in so far as the appellants herein – Smt. Rekha Jain and Smt. Minakshi Jain are concerned. The present appeal is accordingly allowed.”

7.The counsel for the petitioner further averred that the entire case is based on civil crimes and therefore, the case is in civil nature and he relied on the following decisions:

(i)In case of M.A.A. Annamalai vs. State of Karnataka and another reported in (2010) 8 SCC 524, wherein the Hon’ble

Supreme Court held at para No. 38 as follows:

“38.The inherent power should not be exercised to stifle the legitimate prosecution but at the same time no person be compelled to face criminal prosecution if basic ingredients of the offence alleged against him are altogether absent.” 26 Crl.M.P.No.391/2022

(ii)In case of Vesa Holdings Private Limited and another vs.

State of Kerala and others reported in (2015) 8 SCC 293, wherein the Hon’ble Supreme Court held at para Nos.12 & 13 as follows:

12.From the decisions cited by the appellant, the settled proposition of law is that every breach of contract would not give rise to an offence of cheating and only in those cases breach of contract would amount to cheating where there was any deception played at the very inception. If the intention to cheat has developed later on, the same cannot amount to cheating. In other words for the purpose of constituting an offence of cheating, the complainant is required to show that the accused had fraudulent or dishonest intention at the time of making promise or representation. Even in a case where allegations are made in regard to failure on the part of the accused to keep his promise, in the absence of a culpable intention at the time of making initial promise being absent, no offence under Section 420 of the Indian Penal Code can be said to have been made out.

13.It is true that a given set of facts may make out a civil wrong as also a criminal offence and only because a civil remedy may be available to the complainant that itself cannot be a ground to quash a criminal proceeding. The real test is whether the allegations in the complaint disclose the criminal offence of cheating or not. In the present case there is nothing to show that at the very inception there was any intention on behalf of the accused persons to cheat which is a condition precedent for an offence under Section 420 IPC. In our view the complaint does not disclose any criminal offence at all. The criminal proceedings should not be encouraged when it is found to be malafide or otherwise an abuse of the process of the court. The superior courts while exercising this power should also strive to serve the ends of justice. In our opinion, in view of these facts allowing the police investigation to continue would amount to an abuse of the process of court and the High Court committed an error in refusing to exercise the power under Section 482 Criminal Procedure Code to quash the proceedings.

(iii)In case of Chandran Ratnaswami and others vs. K.C.

Palanisamy and others reported in (2013) 6 SCC 740, wherein the

Hon’ble Supreme Court held at para No.60 as follows:

27 Crl.M.P.No.391/2022 “60.We are of the definite opinion that the complainant has manipulated and misused the process of Court so as to deprive the appellants from their basic right to move free anywhere inside or outside the country. Moreover, it would be unfair if the appellants are to be tried in such criminal proceedings arising out of alleged breach of a Joint Venture Agreement specially when such disputes have been finally resolved by the Court of competent jurisdiction. Hence, allowing the criminal proceedings arising out of FIR No.7 of 2007 to continue would be an abuse of the process of the Court and, therefore, for the ends of justice such proceedings ought to be quashed. Since the High Court failed to look into this aspect of the matter while passing the impugned order, in our opinion, the same could not be sustained in law.”

(iv)In case of Birla Corporation Limited and others vs. Adentz

Investments and Holdings Limited and others reported in (2019) 16 SCC 610, wherein the Hon’ble Supreme Court held at para

Nos.83 to 87 as follows:

83.Exercise of power under Section 482 Cr.P.C. envisages three circumstances in which the inherent jurisdiction may be exercised namely:-

(i) to give effect to an order under the Code;

(ii) to prevent abuse of the process of court; and

(iii) to otherwise secure the ends of justice.

Inherent jurisdiction under Section 482 Cr.P.C. though wide has to be exercised sparingly, carefully and with caution.

84. It is well settled that the inherent jurisdiction under Section 482 Cr.P.C. is designed to achieve a salutary purpose and that the criminal proceedings ought not to be permitted to degenerate into a weapon of harassment. When the Court is satisfied that the criminal proceedings amount to an abuse of process of law or that it amounts to bringing pressure upon the accused, in exercise of the inherent powers, such proceedings can be quashed. In Nagawwa v. Veeranna Shivalingappa Konjalgi [(1976) 3 SCC 736], the Supreme Court reviewed the 28 Crl.M.P.No.391/2022 earlier decisions and summarised the principles as to when the issue of process can be quashed and held as under:- “5. … Once the Magistrate has exercised his discretion it is not for the High Court, or even this Court, to substitute its own discretion for that of the Magistrate or to examine the case on merits with a view to find out whether or not the allegations in the complaint, if proved, would ultimately end in conviction of the accused. These considerations, in our opinion, are totally foreign to the scope and ambit of an inquiry under Section 202 of the Code of Criminal Procedure which culminates into an order under Section 204 of the Code. Thus it may be safely held that in the following cases an order of the Magistrate issuing process against the accused can be quashed or set aside:

(1) where the allegations made in the complaint or the statements of the witnesses recorded in support of the same taken at their face value make out absolutely no case against the accused or the complaint does not disclose the essential ingredients of an offence which is alleged against the accused; (2) where the allegations made in the complaint are patently absurd and inherently improbable so that no prudent person can ever reach a conclusion that there is sufficient ground for proceeding against the accused; (3) where the discretion exercised by the Magistrate in issuing process is capricious and arbitrary having been based either on no evidence or on materials which are wholly irrelevant or inadmissible; and (4) where the complaint suffers from fundamental legal defects, such as, want of sanction, or absence of a complaint by legally competent authority and the like.

The cases mentioned by us are purely illustrative and provide sufficient guidelines to indicate contingencies where the High Court can quash proceedings.”

84. In State of Haryana v. Bhajan Lal [1992 Supp (1) SCC 335], the Supreme Court considered the scope of inherent powers of the Court and after referring to earlier decisions, the Supreme Court enumerated categories of cases by way of illustration where the extraordinary jurisdiction under Article 226 of the Constitution of India can be exercised by the High Court to 29 Crl.M.P.No.391/2022 prevent abuse of process of Court or otherwise to secure ends of justice. It was held that:

“102…...(3) where the uncontroverted allegations made in the FIR or complaint and the evidence collected in support of the same do not disclose the commission of any offence and make out a case against the accused.”

85. In the present case, it is one thing to say that the documents have not been secured in accordance with the law and no value could be attached to them. But merely because documents have been produced from one source or other, it cannot be said that documents have been dishonestly removed to obtain “wrongful gain” to the respondents and cause “wrongful loss” to the appellant. Where it appears that the criminal complaint has been filed to bring pressure upon the respondents who are shown as accused in the criminal case, the complaint is to be quashed.

86. In Indian Oil Corpn. v. NEPC (India) Ltd., the Supreme Court after observing that there is a growing tendency in business circles to convert powerful civil disputes in criminal cases held as under:- “14. While no one with a legitimate cause or grievance should be prevented from seeking remedies available in criminal law, a complainant who initiates or persists with a prosecution, being fully aware that the criminal proceedings are unwarranted and his remedy lies only in civil law, should himself be made accountable, at the end of such misconceived criminal proceedings, in accordance with law. One positive step that can be taken by the courts, to curb unnecessary prosecutions and harassment of innocent parties, is to exercise their power under Section 250 CrPC more frequently, where they discern malice or frivolousness or ulterior motives on the part of the complainant. Be that as it may.”

8.The counsel for the petitioner further averred that A-9’s employer has not made any complaint against the petitioner/A-9 and therefore, the principal is responsible if any irregularities has committed.

30 Crl.M.P.No.391/2022

9.Learned Special Public Prosecutor has relied on the following decisions:

(i)In case of Komaram Balu vs. State of Telangana through

Sub-Inspector of Police, Adilabad District reported in 2020 (1) ALT (Crl.) 129 (T.S.), wherein the Hon’ble High Court for the State of

Telangana at Hyderabad held as follows:

“At the stage of framing charges under Section 239 Cr.P.C., what all the Court has to see is as to whether any prima facie case is made out for the purpose of framing of charge, and to proceed with the matter. At the stage of framing charges, the Court is not obligated to appreciate the evidence or make a roving enquiry as to whether the evidence collected by the prosecution during the course of investigation, and the material collected, would lead to a conviction.”

(ii)In case of M.E. Shivalingamurthy vs. Central Bureau of

Investigation, Bengaluru reported in 2020 (1) ALT (Crl.) 330 (SC), wherein the Hon’ble Supreme Court held as follows:

“At the time of framing of the charges, the probative value of the material on record cannot be gone into, and the material brought on record by the prosecution, has to be accepted as true. The defence of the accused is not to be looked into at the stage when the accused seeks to be discharged under Section 227 of the Cr.P.C.”

10.The prosecution has relied on the investigation done by the

CBI, which is as follows:

31 Crl.M.P.No.391/2022

(i)The prosecution filed charge-sheet alleging that prior to year 2000, Andhra Pradesh Industrial Infrastructure Corporation (APIIC) had called for Expression of Interest (EOI) for the Convention

Centre/Golf Course project on 2/3 occasions but could not find any suitable developer. The APIIC again called EOI for the said project during the month of March, 2000 under the Public Private Partnership (PPP) mode. The proposals received against the said EOI were evaluated and two companies viz. M/s. ITC Ltd., and M/s. EIH Ltd., were shortlised. The Request for proposal (RFP) were sent to those two shortlisted companies, out of which only M/s. ITC Ltd., had responded. The proposal of M/s. ITC Ltd., had been evaluated and it was principally agreed by the Government in the State Tourism

Promotion Board (STPB) meeting held on 26.12.2000. The proposal of

M/s. ITC Ltd., was preferred on two locations i.e., at Manikonda Village land and Hussainsagar Land. Since the Hussainsagar Land was covered under PIL WP No.26378/2000, the Government of AP took a decision on 14.05.2001 to take up all the project components at

Manikonda Village only without linking it to Hussainsagar area lands.

Accordingly, the Government sent letter to M/s. ITC Ltd. The

Government was also exploring the possibilities of finding an alternative developer in case M/s. ITC Ltd., was not agreeable to the above suggestion of the Government. M/s. ITC Ltd., did not respond to 32 Crl.M.P.No.391/2022 the offer of the Government and they requested to revisit other alternate sites. The matter was taken up with the Government and after taking approval from the Government suitable communication was made to M/s. ITC Ltd., on 02.07.2001 returning their Bank

Guarantee informing them that the project will be notified again.

(ii)It is further mentioned in the charge-sheet that the

Government of A.P. decided to issue fresh advertisements calling for

EOI from developers for the location of Manikonda lands. APIIC had proposed 250 acres of land for the said project. After the proposal was approved by the Board of APIIC, the advertisements were issued on 26.07.2001. In response to advertisement issued, EOIs were received from the following five companies:

1. Emaar Properties Public Joint Stock Company (PJSC), Dubai

2. IOI Corporation, Berhard Malaysia

3. L & T Limited, Chennai

4. Shapoorji & Palonji Company Limited, Mumbai

5. Som Asia Ltd., Hong Kong (consultancy services)

(iii)The above EOIs were evaluated on 15.09.2001 by a

Committee constituted by APIIC and the following three developers were found suitable for the issuance of Request for proposal (RFP).

33 Crl.M.P.No.391/2022

1. Emaar Properties Public Joint Stock Company (PJSC), Dubai

2. IOI Corporation, Berhard Malaysia

3. L & T Limited, Chennai

(iv)The above referred Request for proposal (RFP) were cleared by the then Chief Minister on 26.09.2001 envisaged that the project would comprise inter-alia of:

Convention Centre: The Convention Centre with a plenary hall capacity of 3000- 5000 with facilities for hospitality, accommodation, parking lots, breakaway rooms and seating flexibility, state-of-the-art audio-visual and other sophisticated equipment, Secretarial facilities, ample exhibition facilities, food courts, cafeterias, restaurants and other comprehensive support services.

Hotel: The state-of-the-art Hotel(s) that would be perfect rendezvous to mix business with pleasure.

Golf Course:An 18 hole International Professional

Championship Golf Course with fully equipped Club House and supporting services.

Villas: Villas and residential facilities, any other additional component, which will result in value addition to the

Integrated Project, subject to the sponsor's (APIIC) right to 34 Crl.M.P.No.391/2022 accept such additional components which are seen in the overall interest of the project.

(v)It is further case of the prosecution that in the draft RFP approved by the then CM, it was also mentioned that the bidders shall quote land price on per acre basis for outright sale and lease option.

Further, the minimum land price of Rs.29 lakhs per acre at Manikonda on gross undeveloped basis was indicated and it was also mentioned that the proposal would remain valid for 12 months after the closing date of the submission of proposals. The pre-proposal meeting of the shortlisted Developers was held on 25.10.2001 and all the above said three developers participated in the meeting. During the meeting the companies/ developers requested APIIC for extending the time upto 15.12.2001 for submitting the proposals. Finally, till last date only one proposal of M/s. Emaar Properties PJSC, Dubai was received and the same was opened in the presence of its representative. The price quoted by M/s. Emaar Properties PJSC, Dubai for land on outright sale was Rs.29,00,000/- per acre as per the price bid submitted by them.

The proposal was placed before the Board of APIIC. A draft MOU to be executed with M/s. Emaar Properties PJSC, Dubai was prepared with the help of M/s. IL&FS, Consultants, in pursuance to the discussions held with M/s. Emaar Properties PJSC, Dubai. The said proposal was submitted to the GOAP by APIIC through the Department of Industries 35 Crl.M.P.No.391/2022 and Commerce and was placed before the Council of Ministers on 20.08.2002. Subsequent to the Council resolution No.215(3)/202, the

Government of AP issued GO.Ms. No.359 dated 04.09.2002.

(vi)It is further case of the prosecution that the integrated project was given the status of a Tourism project, as such the related eligible incentives were to be given to the project. The Government authorized APIIC to take further necessary action to implement the project and it was the responsibility of APIIC to closely monitor the implementation of the project with reference to the milestones for various components of the project. Accordingly, a MOU was executed between APIIC and M/s. Emaar Properties PJSC, Dubai, on 06-11-2002.

(vii)It is further case of the prosecution that a Collaboration

Agreement dt.19.08.2003 was executed between APIIC and

M/s. Emaar Properties PJSC, Dubai. Only certain issues relating to the

Collaboration Agreement were approved by the Cabinet Committee on 28.06.2003. The Board of Directors of APIIC approved the

Collaboration Agreement dt.19.08.2003 between APIIC and M/s.

Emaar Properties PJSC in its 151st Meeting held on 12.03.2004.

(viii) It is further case of the prosecution that during the year 2004 after the general elections, when the new Government came 36 Crl.M.P.No.391/2022 into power, the Government of Andhra Pradesh constituted a Group of

Ministers (GoM) to review all decisions taken after 1st January, 2003 on

(i) all mega projects, (ii) infrastructure projects, (iii) allotment of land of more than 5 acres and (iv) on matters which attracted large scale public criticism. The Group of Ministers met on eight occasions and the Group of Ministers deferred the file relating to the Integrated

Convention Centre Complex and Golf Course.

(ix)It is further case of the prosecution that on 06.09.2004, the then Chief Minister and the then Minister for Major Industries discussed with the Chairman, M/s. Emaar Properties PJSC, Dubai and it was suggested that APIIC should limit its equity in all the three SPVs to 26% and thereby, proportionately increasing the equity of M/s.

Emaar Properties in the entire project. Subsequently, Shri AJ

Jaganathan, CEO of M/s. Emaar Properties PJSC, Dubai giving reference of the discussion of the representatives of M/s. Emaar properties PJSC, Dubai with Shri LV Subrahmanyam, VC & MD, submitted fresh proposals dt.23.09.2004 and 24.09.2004 changing the implementation structure of the integrated project. As per the revised proposal, it was proposed to execute the integrated project through three SPVs instead of two SPVs as envisaged in the

Collaboration Agreement dt.19.08.2003. As desired by the 37 Crl.M.P.No.391/2022

Government of AP, M/s. Emaar Properties PJSC, Dubai had agreed to reduce the equity of Government of AP in the Convention Centre

Project from 49% to 26% and thereby increasing the equity of M/s.

Emaar properties PJSC, Dubai from 51% to 74%. In lieu of the said change in equity/ownership in Convention Centre Project, M/s. Emaar

Properties PJSC, Dubai requested the Government of AP to compensate for the increase in equity by transferring additional one hundred acres of land. The said proposal of M/s. Emaar Properties

PJSC, Dubai was processed in a single file.

(x)It is further case of the prosecution that a Price Fixation

Committee (PFC) was constituted and they submitted the report, which is as follows:-

Year/PeriodAreaRates FixedRates valid till 2002-03Hi-Tech CityRs.83.29 Lacs to 31.03.2003 Rs.122.35 Lacs per acre 2003-04ManikondaRs.22.50 Lacs per acre31.03.2004 2004-05Nanakramguda and Rs.35 Lacs per acre31.03.2005 Manikonda Villages 2005-06Nanakramguda and Rs.84.98 Lacs per acre31.03.2006 Manikonda Villages 38 Crl.M.P.No.391/2022

(xi) It is further case of the prosecution that on 23.11.2004,

GoM meeting was held and the file relating to the Integrated

Convention Centre Complex and Golf Course was cleared.

Subsequently, on 11-01-2005, the Government of A.P. issued

G.O.Ms.No.14, containing all the decisions taken during the meeting held on 06.09.2004 attended by the then CM, the then Minister for

Major Industries and Shri Mohamed Ali Alabbar, Chairman, M/s. Emaar

Properties PJSC, Dubai.

(xii) It is further case of the prosecution that as per

G.O.Ms.No.14, a draft supplementary agreement to be executed by

APIIC with M/s. Emaar Properties PJSC, Dubai, which was also forwarded by the VC & MD, APIIC to the Principal Secretary, I & C

Department. The Government after careful examination decided to consider the improvement into the Integrated Project and approved the Draft supplementary agreement to be executed between the

APIIC and M/s. Emaar Properties, PJSC, Dubai. The VC & MD, APIIC was authorized by the GoAP to enter into a Supplementary Agreement. In

G.O.Ms.14, it was also mentioned that all other features of the project notified in the G.O.Ms.No.359 Industries & Commerce (INF)

Department dated: 04.09.2002 remained un-altered.

39 Crl.M.P.No.391/2022

(xiii) It is further case of the prosecution that on perusal of

G.O.Ms.No.14 dated: 11.01.2005 along with draft supplementary agreement, Shri AJ Jaganathan, CEO of M/s. Emaar Properties PJSC,

Dubai addressed a letter dt.16.01.2005 to the Government mentioning that the GO and the draft supplementary agreement did not conform to the discussions held by M/s. Emaar Properties PJSC,

Dubai in the Minister’s Chamber during November, 2004. He suggested that clause 2(d) of GO.Ms.No.14 should be replaced by “The lease rentals of land given for the Golf Course of 235 acres at

Manikonda is fixed at 2% of the gross annual revenue on all Golf

Course components for a period of 33 years. The gross annual revenue generated by SPV-2 does not include Life Membership and other long term and academy memberships. The net profit generated by SPV-2, excluding profit generated by the Boutique Resort Hotel, will be treated in its entirely within the said company in the form of reserves. These reserves shall be utilized solely for improvements of the facilities and maintenance of Golf Course facilities (including the club house)”. He also suggested that clause 2(e) of GO.Ms.No.14

dated:11.01.2005 may be replaced by “On expiry of 66 years lease

period of the land of 235 acres, all structures, buildings on land whether permanent or semi-permanent, constructed by or belonging to the BHPL or their sub-contractors, sub-lessees and assignees 40 Crl.M.P.No.391/2022 developed on leasehold land only (and hence excluding all structures developed on freehold land) shall revert in favour of Government of

Andhra Pradesh free from all encumbrances and liabilities. Access to the site will remain restricted and controlled even after acquisition of the site by GoAP until such time a mutually acceptable solution is agreed between the GoAP and the housing Associations comprising residents of the proposed Boulder Hills community.”

(xiv) It is further case of the prosecution that basing on the suggestions made by Sri AJ Jaganathan, CEO, VC & MD APIIC addressed a letter to the Principal Secretary and Commissioner for

Industrial Promotion vide Lr.No.81/APIIC/Projects/ICCC/2001, dated:

19.01.2005 along with a draft modification order. In response to the proposals of APIIC, the then Principal Secretary, Government of AP,

Industries and Commerce (Industrial Promotion Department), by modifying GO Ms.No.14, dated: 11.01.2005 and issued a fresh GO

Ms.No.22 dated: 27.01.2005 incorporating the suggestions made by

Sri AJ Jaganathan, CEO.

(xv)It is further case of the prosecution that after perusing the

G.O.Ms.22, the Minister for Major Industries found that the GO 22 was not in conformity with the orders dated: 11.01.2005 in the file and vide his note dated: 07.02.2005, remarked as under:

41 Crl.M.P.No.391/2022

1.The file could have been circulated before issue of GO.

The reasons for urgency for issue may be explained.

2.Earlier the file was circulated to CM and orders were issued on 11.01.2005. The reasons for amendment on 27.01.2005 and the differences between orders of 11.01.2005 and 27.01.2005 may be summarized along with financial and other long term implications.

3.Increase of lease rentals to 3% (from Golf Course) for further period of 33 years, have been deleted. This increase was mentioned on the file at the time of obtaining orders of CM.

4.The Boutique Hotel was shifted from SPV2 to SPV1.

Reasons for this and the implications were not mentioned.

5.New clauses regarding access rights have been incorporated, but the reasons for this were not mentioned.

(xvi) It is further case of the prosecution that a meeting with then CM on 02.03.2005, which was attended by the then Minister of

Major Industries; Principal Secretary, Industries & Commerce;

Secretary MA & UD; VC & MD, APIIC and other officers of GoAP and discussed about exemption of conversion charges and the then CM directed VC, HUDA that since it was a Government Project, conversion charges as already agreed in the Agreement should be exempted for 42 Crl.M.P.No.391/2022 15 acres site at Izzatnagar for Convention Centre Complex and 520 acres site at Manikonda for Integrated Township Project and Golf

Course. But the issue pertaining to lease rentals from the golf course remained unresolved. Subsequently, the then Minister for Major

Industries moved a secret note dated: 17.03.2005 to the then CM clarifying the issues that were required to be covered while issuing the GO Ms.No.22, dated: 27.01.2005 and the note made by the then

Minister is as follows:

1.As regards the increase in lease rentals from 2% to 3% for the balance period after 33 years, though the issue was not discussed in the meeting, in view of the orders obtained in circulation earlier, a clear clarificatory memo may be issued asking APIIC to incorporate a specific and clear clause on increased lease amounts of 3% for balance period of 33 years after lease of 2% for first 33 years.

2.Issue relating to representations made by a few people adversely affected by acquisition of patta land and requesting for deletion, was also discussed. It was decided that to avoid legal and other complications, a uniform approach would be adopted while dealing with all such requests. It was therefore decided that either the land involving such requests in the area shall be 43 Crl.M.P.No.391/2022 acquired or alternatively they be deleted from acquisition without any discrimination.

(xvii)It is further case of the prosecution that basing on the secret note dated: 17.03.2005 submitted by the then Minister of Major

Industries, revision of lease rentals in respect of Golf Course from 2% to 3% on expiry of initial period of 33 years was approved by the then

CM. Subsequently, the supplementary agreement was executed on 19.04.2005 between APIIC and M/s. Emaar Properties PJSC, Dubai.

(xviii)It is further case of the prosecution that Chairman,

M/s. Emaar Properties PJSC, Dubai addressed a letter dated:

02.05.2005 to Shri LV Subrahmanyam, VC & MD for bringing in

M/s. Fairbridge Holdings Ltd., a Cyprus based company as a shareholder in M/s. Emaar Holdings, Mauritius, such that M/s. Emaar

Properties PJSC, Dubai would dilute its ownership from the current 100% to 54.05% with Fairbridge owning the balance 45.95%, which would lead to net ownership in the integrated project in the ratio of

Emaar (40%), Fairbridge (34%) and APIIC (26%). Basing on the letter

Shri LV Subrahmanyam, VC & MD made a remarks that “We can request for credentials as deemed necessary for out response. So also to see how the new entity will bind itself to project commitments”. A copy of the letter issued by Chairman, M/s. Emaar Properties PJSC, 44 Crl.M.P.No.391/2022

Dubai was also received in the office of the Principal Secretary,

Industries and Commerce, Government of AP by post on 13.05.2005.

On this copy Shri KV Rao, Principal Secretary, Industries and

Commerce remarked “Till the project is fully implemented it may not be correct to change the equity structure.” and marked the letter to

MD, APIIC, which was received on 16.05.2005 by Shri LV

Subrahmanyam, VC & MD. The said issue was discussed on review meeting convened on 13.05.2005 and decided to continue with the existing arrangements till the project is completed. However, Shri LV

Subrahmanyam in violation of the instructions of the Principal

Secretary and the decision taken in the review meeting dated:

13.05.2005 addressed a letter dated: 13.05.2005 to M/s. Emaar

Properties PJSC, Dubai, which was dispatched on 18.05.2005, seeking the detailed information about M/s. Fairbridge Holdings Limited,

Cyprus, to process their request for bringing in Fairbridge Holdings as a partner for strategic resource.

(xix) It is further case of the prosecution that in pursuance of the agreement, the Government initiated the proceedings for acquiring 92.19 acres of land in Nanakramaguda Village. Since the owners of 11.26 acres of patta land has represented against acquisition of said land, a proposal was approved by the District 45 Crl.M.P.No.391/2022

Collect, RR District to acquire 80.35 acres of land. After the notification was published in the newspapers and the Gazette of AP, the aggrieved parties challenged the actions of the Special Deputy

Collect, Land Acquisition (Industries) before the Hon’ble High Court of

AP by filing WP No.21712/2002, dated: 31.10.2002, wherein the

Hon’ble High Court vide orders dated: 25.04.2003 granted stay on the

land acquisition proceedings and directed the District Collector, RR

District to issue notice for an enquiry under Section 5(A) of Land

Acquisition Act to the persons whose lands were to be acquired including the petitioners and to take appropriate further steps after such enquiry. In compliance to the orders of the Hon’ble High Court of

AP notices were issued to the aggrieved persons for conducting enquiry under Section 5(A) of Land Acquisition Act on 17.03.2004.

(xx)It is further case of the prosecution that the District

Collector RR District after examining the objections of the interested parties, rejected their objections on the ground that the objections raised by them were devoid of any merit and decided to issue proceedings for 80.35 acres of land, which includes 3.36 acres of land belonging to Smt. G. Vijaya Nirmala, W/o. Shri GSR Krishna, Shri

Jayadev Galla, S/o. Shri Galla Ramachandra and Smt. G. Rama Devi,

W/o. Shri GVRK Prasad. The Land Acquisition Officer passed an award 46 Crl.M.P.No.391/2022 under Section 11(A) of Land Acquisition Act for acquisition of 77.02 acres of land excluding the land of 3.33 acres. Since there was an urgency in handing over the land by APIIC to Developer, 77.05 Acres of patta land at Sy.No.4 to 26, 27/4 to 35, 41 to 46, 48 & 49 of

Nanakramaguda Village was handed over by Deputy Tahsildar to the

Assistant Zonal Manager, Cyberabad Zone of APIIC. Again the aggrieved persons approached the Hon’ble High Court of AP challenging the purpose of acquisition of 77.02 acres of land for APIIC.

The Hon’ble High Court of AP dismissed the Writ Petitions filed by the aggrieved persons and the same was challenged before the Hon’ble

Supreme Court and the Hon’ble Supreme Court confirmed the orders passed by the Hon’ble High Court of AP and dismissed the SLPs.

(xxi) It is further case of the prosecution that APIIC had handed over 454.93 Acres of Government land at Sy.No.203P, 210P & 211P of

Manikonda Village, Sy.No.91P of Gachibowli Village and Sy.No.36 to 40, 42 & 47 of Nanakramguda Village to Shri Vijaya Menon, representative of M/s. Emaar Properties, PJSC Dubai vide possession certificate dated: 18.06.2005. The patta land of 77.05 acres was handed over by the APIIC to Shri Vijay Menon, representative of M/s.

Emaar Hills Township Pvt. Ltd. And M/s. Boulder Hills Leisure Pvt. Ltd., vide possession certificate dated: 29.11.2005. In total 531.98 acres of 47 Crl.M.P.No.391/2022 land was handed over to M/s. Emaar Properties PJSC, Dubai and its joint venture companies for developing the Integrated Project i.e., Golf

Course and Township Project.

(xxii) It is further case of the prosecution that APIIC moved the following proposals for waiver of conversion and development charges in respect of 15 acres of land for Convention Centre and

Business Hotel and 520 acres of land for Golf Course and Township

Project.

S.No.Date of Subject matter of Amount involvedGO through Proposalproposalwhich Exemption was granted 113.02.2004Exemption of Rs.2,65,43,707/-GO Ms.No.894 conversion chargesMA dated: in respect of 520 of02.11.2005 acres for golf course and township project 211.03.2004Exemption of Rs.12,34,019/-GO Ms. No.390 conversion chargesdated: in respect of 15 10.05.2005 acres of land for Convention Centre and Business Hotel 319.11.2005Exemption of Rs.1,35,57,246/-GO Ms. No.990 development dated: charges in respect 31.12.2005 of 15 acres of land for Convention Centre and 48 Crl.M.P.No.391/2022

Business Hotel 408.08.2007Exemption of Rs.24,73,28,163/-GO Ms. No.879 conversion chargesdated: in respect of 520 of05.12.2007 acres for golf course and township project

(xxiii) It is further case of the prosecution that the Cyberabad

Development Authority as well as the MA & UD Department has raised objection for exemption of above said charges in respect of the

Integrated Project, as this was the only source of revenue for CDA and such exemption was not provided in AP Urban Areas Development

Act, 1975. However, the then CM overruling all the objections granted exemption from payment of conversion/development charges to the tune of Rs.28,86,63,135/-.

(xxiv) It is further case of the prosecution that APIIC executed the following documents with M/s. Emaar Properties PJSC, Dubai and the SPVs viz., M/s. EHTPL, M/s. BHLPL and M/s. CCCPL in respect of the

Integrated Project on 28.12.2005.

S.No.Nature of document

1.Conveyance Deed in respect of 258.36 acres (226.95 acres of Government land and 31.41 acres of patta land) of land executed in favour of M/s. EHTPL for development of Township Project. This land was conveyed for a total consideration of Rs.75,92,44,000/- @ Rs.29,00,000/- 49 Crl.M.P.No.391/2022 per acre. This was registered vide document No.20560 dated: 12.10.2006 with District Registrar, RR District.

2.Share Subscription Agreement executed with M/s. EHTPL for allotment of 17,00,307 shares with face value of Rs.1,70,03,070/- in favour of APIIC in the equity proportion of 26%

3.Shareholders’ agreement with M/s. EHTPL vide which APIIC was allotted 17,00,307 shares by M/s. EHTPL in the equity proportion of 26%

4.Lease Deed in respect of 235 acres (195.98 acres of Government land and 39.02 acres of patta land) of land executed with M/s. BHLPL for development of Golf Course, with provision for an amount of Rs.3,40,75,000/- to be paid by M/s. BHLPL @ Rs.1,45,000/- per acre towards non-refundable deposit to APIIC. This was registered vide document No.20562 dated: 12.10.2006 with District Registrar, RR District.

5.Conveyance Deed in respect of 17 acres of land executed by M/s. BHLPL for development of Boutique Resort Hotel. The land was conveyed for a total consideration of Rs.4,93,00,000/- @ Rs.29,00,000/- per acre, which was adjusted towards part of 26% equity of APIIC in M/s. BHLPL. This was registered vide document No.20561 dated: 12.10.2006 with District Registrar, RR District.

6.Share Subscription Agreement executed with M/s. BHLPL for allotment of 1,19,44,709 shares with face value of Rs.11,94,47,090/- in favour of APIIC in the equity proportion of 26%

7.Shareholders’ agreement with M/s. BHLPL vide which APIIC was allotted 1,19,44,709 shares by M/s. EHTPL in the equity proportion of 26%

8.Lease Deed in respect of 15.139 acres of land executed with M/s. CCCPL for development of Convention Centre and Business Hotel. This was registered vide document No.20563 dated: 12.10.2006 with District Registrar, RR District.

9.Share Subscription Agreement executed with M/s. CCCPL for allotment of 1,86,20,970 shares with face value of Rs.18,62,09,695/- in favour of 50 Crl.M.P.No.391/2022

APIIC in the equity proportion of 26%

10.Shareholders’ agreement with M/s. CCCPL vide which APIIC was allotted 1,86,20,970 shares by M/s. CCCPL in the equity proportion of 26%

11.Debenture Deed executed between APIIC and M/s. EHTPL vide which APIIC was allotted 5,09,95,915 debentures by M/s. EHTPL against the surplus amount of Rs.50,99,59,150

12.Escrow Agreement executed between APIIC and M/s. EHTPL regarding opening of an escrow account with Andhra Bank, Hi-Tech City Branch, Hyderabad in respect of Debentures held by APIIC.

(xxv) It is further case of the prosecution that the record shows that M/s. Emaar Properties PJSC, Dubai initially entered into an MOU on 06.11.2002 in pursuance of the decision taken by the council of

Ministers on 20.08.2002 and the G.O.Ms.No.359, dt.04.09.2002. As per the MOU, two SPVs (Special Purpose Vehicles) has to be implemented and 235 acres of land was allotted for Golf Course; 285 acres of land was allotted for Multi-use and 15 acres of land was allotted to water bodies, in total 535 acres of land was required for integrated project, out of 535 acres of land, APIIC was having 445-455 acres of its own and balance 80-90 acres of land was required to acquired. SPV-1 consisting of Pro-championship 18 hole Golf Course (along with Golf Club, Club House and Country Club) and Multi-use

Development including Villas and Commercial Complexes at

Manikonda. SPV-2 consisting of Convention Centre and Business Hotel 51 Crl.M.P.No.391/2022 to be implemented at NAC grounds. The equity structure of the SPVs is as follows:

SPV1:APIIC26% Emaar Properties74%

SPV2:APIIC49% Emaar Properties51%

(xxvi) It is further case of the prosecution that the lease payment for the land leased for a period of 66 years by SPV1 for the

Golf Course shall be equal to two percent of all annual revenue earned by the Golf Course, except life membership and other long term club and academy membership income.

(xxvii) It is further case of the prosecution that the MOU was followed by a Collaboration Agreement dt.19.08.2003 executed between APIIC and M/s. Emaar Properties PJSC, Dubai. Only certain issues relating to the Collaboration Agreement were approved by the

Cabinet Sub-Committee on 28.06.2003. The Board of Directors of

APIIC approved the Collaboration Agreement dt.19.08.2003 between

APIIC and Emaar Properties PJSC in its 151st Meeting held on 12.03.2004.

(xxviii) It is further case of the prosecution that in the year 2004, new Government came into power and the Government of

Andhra Pradesh constituted a Group of Ministers to review all 52 Crl.M.P.No.391/2022 decisions taken after 1st January, 2003. The group of Ministers has reviewed the several decisions taken by the earlier Government, but in respect of integrated Convention Centre Complex and Golf Course was deferred in the meeting held on 03.09.2004. Thereafter, discussions took place in the Government on 06.09.2004 and it was suggested that APIIC should limit its equity in all the three SPVs to 26% and thereby, proportionately increasing the equity of M/s. Emaar

Properties in the entire project. It is to be noted that the earlier there are only two SPVs, now it was divided into three SPVs, which are as follows:

SPV-1M/s. Emaar Hills Township Pvt. Ltd. (M/s. EHTPL) for development of Township Project with Villas, Apartments and IT Park at Manikonda

SPV-2M/s. Boulder Hills Leisure Pvt. Ltd. (M/s. BHLPL) for development of Golf Course and Boutique Resort Hotel at Manikonda

SPV-3M/s. Cyberabad Convention Centre Pvt. Ltd. (M/s. CCCPL) for development of Convention Centre and Business Hotel at NAC grounds.

(xxxi) It is further case of the prosecution that in view of the decision of the Government in all three SPVs, the equity of the

Government of Andhra Pradesh was reduced to 26% and the equity of

M/s. Emaar Properties PJSC, Dubai was enhanced from 51% to 74%.

53 Crl.M.P.No.391/2022

(xxx) The record reveals that Sri K.V. Rao, Principal Secretary vide his note dt.05.11.2004 noted that the lease rental from Golf

Course may be negotiated with the developer for 2% of the Gross

Annual revenue for 33 years and 3% for further 33 years. He also pointed out that the asset which was fully developed would revert to

Government after 66 years.

(xxxi) The record also shows that the Price Fixation Committee proposes the enhancement of the land value from Rs.29,00,000/- to

Rs.40,00,000/- per acre, but the officials ignoring the same, only mentioned the land price at Rs.29,00,000/- per acre.

(xxxii) The case of the prosecution that they have increased the equity of M/s. Emaar Properties PJSC, Dubai, at the same time, they have completely ignored the enhanced value of the land even though the cost of the project was revised from Rs.430 crores to

Rs.630 crores, but the appreciation in land cost was ignored. The

Government has isued G.O.Ms.No.14 on 11.01.2005 mentioning the share value as 74% for Emaar Properties and 26% for APIIC in all three SPVs and all equity from APIIC was on land value basis alone @

Rs.29 lakhs per acre and also mentioned about the lease rentals for 235 acres of land at Manikonda land given for the Golf Course was 54 Crl.M.P.No.391/2022 fixed @ 2% of the Gross Annual Revenue on all golf Course components for period of 33 years and @3% for further period of 33 years. Basing on the G.O.Ms.No.14, dt.11.01.2005, a draft supplementary agreement was made available. VC & MD, APIIC addressed a letter to the Principal Secretary ignoring the enhancement of 3% after expiry of 33 years and Sri KV Rao, the then

Principal Secretary, Government of AP, Industries and Commerce

remained silent as he was allotted Plot No.B-55 admeasuring 1239 sq.yds. in Sy.No.211(P) of Manikonda Jagir Village, Rajendranagar

Mandal, Ranga Reddy District @ Rs.5000/- per sq.yd. when the prevalent market rate was Rs.10,000/- per sq.yd.

(xxxiii) It is further case of the prosecution that the documents reveals that Sri KV Rao, Principal Secretary (Industries & Commerce) though the then Minister for Major Industries was very much available, he has not circulated the file and only after issuance of

G.O.Ms.No.22, dt.27.01.2005 it was brought to the notice of the

Minister for Major Industries. After pursuance of the file, the Minister for Major Industries found that the G.O.22 was not in conformity with the orders dt.11.01.2005 in the file and made some remarks and directed the Principal Secretary, Industries & Commerce to prepare a comprehensive note duly incorporating information on all the issues 55 Crl.M.P.No.391/2022 and circulate the same to him for apprising the Minister for Finance and CM and also instructed the Principal Secretary to keep the

G.O.Ms.No.22 in abeyance till approval of CM. But it was not resolved in the meeting dt.02.03.2005, only matter pertaining to exemption of conversion charges was discussed. Subsequently, the then Minister for Major Industries moved a secret note dt.17.03.2005 to the then

CM clarifying the issues that were required to be covered while issued the G.O.Ms.No.22, dt.27.01.2005. Subsequently the supplementary agreement was executed on 19.04.2005 between APIIC and M/s.

Emaar Properties PJSC, Dubai.

(xxxiv)It is further case of the prosecution that Sri

LV Subrahmanyam contrary to the instruction of the Principal

Secretary and the decision taken in the review meeting dt.13.05.2005, addressed a letter dt.13.05.2005 to M/s. Emaar

Properties PJSC, Dubai seeking the detailed information about M/s.

Fairbridge Holdings Limited, Cyprus to process their request for bringing in Fairbridge Holdings as a partner for strategic resource. The documents also shows that

(xxxv)It is further case of the prosecution that M/s. Emaar

MGF Land Ltd., has allowed Sri Jayadev Galla and Smt. G. Ramadevi to encroach 2.20 acres of land and they constructed multi-storied 56 Crl.M.P.No.391/2022 buildings on the said land. In pursuance of the agreement, the

Government initiated the proceedings for acquiring 92.19 acres of land in Nanakramaguda Village. Since the owners of 11.26 acres of patta land has represented against acquisition of said land, a proposal was approved by the District Collect, RR District to acquire 80.35 acres of land. After the notification was published in the newspapers and the Gazette of AP, the aggrieved parties challenged the actions of the Special Deputy Collect, Land Acquisition (Industries) before the

Hon’ble High Court of AP by filing WP No.21712/2002, dated:

31.10.2002, wherein the Hon’ble High Court vide orders dated:

25.04.2003 granted stay on the land acquisition proceedings and directed the District Collector, RR District to issue notice for an enquiry under Section 5(A) of Land Acquisition Act to the persons whose lands were to be acquired including the petitioners and to take appropriate further steps after such enquiry. In compliance to the orders of the Hon’ble High Court of AP notices were issued to the aggrieved persons for conducting enquiry under Section 5(A) of Land

Acquisition Act on 17.03.2004.

(xxxvi)It is further case of the prosecution that the District

Collect RR District after examining the objections of the interested parties rejected them on the ground that the objections raised by 57 Crl.M.P.No.391/2022 them were devoid of any merit. Out of 80.35 acres of land, extend of 3.36 acres of land at Survey Number 27/4 belonging to Smt. G. Vijaya

Nirmala, W/o. Shri GSR Krishna, Shri Jayadev Galla and Smt. G. Rama

Devi and they also raised objections. Surprisingly, an award under

Section 11(A) of Land Acquisition Act for acquisition of 77.02 acres of land excluding the land of 3.33 acres was passed.

(xxxvii)It is further case of the prosecution that APIIC had handed over 454.93 Acres of Government land at Sy.No.203P, 210P & 211P of Manikonda Village, Sy.No.91P of Gachibowli Village and

Sy.No.36 to 40, 42 & 47 of Nanakramguda Village to Shri Vijaya

Menon, representative of M/s. Emaar Properties, PJSC Dubai vide possession certificate dated: 18.06.2005. The patta land of 77.05 acres was handed over by the APIIC to Shri Vijay Menon, representative of M/s. Emaar Hills Township Pvt. Ltd. And M/s. Boulder

Hills Leisure Pvt. Ltd., vide possession certificate dated: 29.11.2005.

In total 531.98 acres of land was handed over to M/s. Emaar

Properties PJSC, Dubai and its joint venture companies for developing the Integrated Project i.e., Golf Course and Township Project.

(xxxviii)It is further case of the prosecution that the

Cyberabad Development Authority as well as the MA & UD

Department has raised objection for exemption of conversion 58 Crl.M.P.No.391/2022 charges and development charges in respect of the Integrated

Project, as this was the only source of revenue for CDA and such exemption was not provided in AP Urban Areas Development Act, 1975. However, the then CM overruling all the objections granted exemption from payment of conversion/development charges to the tune of Rs.28,86,63,135/-.

(xxxix)It is further case of the prosecution that the APIIC executed the documents with M/s. Emaar Properties PJSC, Dubai and the SPVs viz., M/s. EHTPL, M/s. BHLPL and M/s. CCCPL in respect of the

Integrated project on 28.12.2005.

(xl)It is further case of the prosecution that Sri BP Acharya, the then VC & MD, APIIC has received an agenda from M/s. EHTPL on 14.09.2006 for discussing the proposal to bring in M/s. Emaar MGF

Land Ltd., as a co-developer to develop the township project as well as Golf Course project, to be discussed in the Board Meeting dt.21.09.2006of M/s. EHTPL and M/s. BHLPL. As per the agenda, M/s.

Emaar MGF Land Ltd. was proposed to pass on 25% of the total revenue from the project to M/s. EHTPL, which would affect the revenue sharing of APIIC in the integrated project. Sri BP Acharya did not discuss such an important issue in the board of APIIC.

59 Crl.M.P.No.391/2022 (xli)It is further case of the prosecution that in the board meeting dt.21.09.2006, the development strategy for the Integrated

Township Project was discussed. Shri BP Acharya, the then VC & MD,

APIIC, Shri Vijay Menon & Shri Koneru Prasad, both Directors of M/s.

EHTPL and Shri Srikant Joshi, CEO-South, M/s. Emaar MGF Land Ltd., attend the said board meeting and it was discussed that the proposals were received from M/s. Emaar MGF Land Limited for the development and construction of the projects in SPV-1 (M/s. EHTPl) and SPV-2 (M/s. BHLPL) and the same were placed before the board.

M/s. EHTPL never brought to the notice of APIIC that there was fund crunch for the development of the project. Sri BP Acharya, who was present in the board meeting did not object to invoking of clause 6(v) from the MOU as the MOU had expired and the Collaboration

Agreement dt.19.08.2003 was in place. The board authorized Shri

Vijay Menon to execute the Development Agreement, Lease Deed and

Assignment Deed on behalf of the company with M/s. Emaar MGF

Land Ltd. In the board meeting dt.21.09.2006, the board suggested for entering into a Development Agreement for development of

Boutique Resort Hotel and Golf Course, which were to be developed by M/s. BHLPL (SPV-2), there was no mention of M/s. EHTPL (SPV-1) entering into a Development Agreement with M/s. Emaar MGF Land 60 Crl.M.P.No.391/2022

Limited for development of Integrated Township Project. Shri BP

Acharya did not object for those irregularities.

(xlii) It is further case of the prosecution that the prosecution contended that clause 8 of G.O.Ms.No.359, dt.04.09.2002; clause 6(v) of MOU dt.06.11.2002; clause 2.4(v), 2.4(x), 3.1(c)(iii) of Collaboration

Agreement dt.19.08.2003; clause 8 of supplementary agreement dt.19.04.2005; clause 9.1(H) of shareholder’s agreement dt.28.12.2005 reveals that rights towards development, management and operations of the integrated project could have been assigned by the developer with the principle approval from APIIC. Whereas in this case, no proposal was moved by M/s. Emaar Properties, PJSC, Dubai to

APIIC for obtaining the approval of APIIC; and Collaboration

Agreement and Supplementary Agreement contemplates that the integrated project through M/s. Emaar Holdings and covenants that the representations, obligations, warranties and commitments made by it should be duly complied with, as such M/s. Emaar Properties cannot absolve itself from its responsibility to complete the project through M/s. Emaar Holdings and M/s. EHTPL.

(xliii) It is further case of the prosecution that as per the

Collaboration Agreement and Shareholder’s Agreement, it was the responsibility of M/s. EHTPL to approach both the shareholders i.e.

61 Crl.M.P.No.391/2022

APIIC and M/s. Emaar Properties PJSC, Dubai to obtain their affirmative approval and as per the provisions of MOU and collaboration agreement only developer i.e., M/s. Emaar Properties, PJSC, Dubai could have assigned these rights to third party and not M/s. EHTPL.

Sri BP Acharya representing APIIC in the board of M/s. EHTPL has not raised any objection for the resolution of M/s. EHTPL entering into a

Development Agreement with M/s. Emaar MGF Land Ltd.

(xliv) The prosecution contended that as per clause 4.1 of the

Collaboration Agreement, approval of the Board of Directors of APIIC was compulsory as per the terms and conditions of the Collaboration

Agreement that was executed on 19.08.2003. As per clause 9.1H of the Shareholder’s Agreement executed between APIIC and

M/s. EHTPL, for the declaration or payment of any dividend or distribution of profits or passing of any resolution to retain or allocate profits, affirmative approval should be obtained by M/s. EHTPL from both M/s. APIIC and M/s. Emaar Properties PJSC, Dubai.

(xlv) It is further case of the prosecution that M/s. Emaar MGF

Land Pvt. Ltd., represented by its Chief Executive Officer Shri Srikant

Joshi, submitted an application dt.23.04.2007 to the Chief Secretary,

Government of AP requesting for notifying M/s. Emaar MGF Land Pvt.

Ltd., as a co-developer for designing, developing, operating and 62 Crl.M.P.No.391/2022 maintaining the area of 10.33 acres of land and structures thereon at

Manikonda Village. M/s. EHTPL vide letter dt.24.04.2007 submitted the proposal for including additional area of 7.77 acres of land for the purpose of developing additional facilities in the said SEZ notified vide notification No.SO 548(E) dt.10.04.2007. The Chief Secretary decided to seek comments from APIIC and Sri B.P. Acharya recommended for consideration of request of M/s. EHTPL for including additional 7.77 acres of land and no objection for including M/s. Emaar MGF as co- developer for development of IT/ITES SEZ. After obtaining sanction from APIIC, the Government of AP has processed the file to

Government of India and the Government of India conveyed the approval for including M/s. Emaar MGF Pvt. Ltd., as a co-developer.

(xlvi) It is further case of the prosecution that M/s. Emaar MGF

Land Pvt. Ltd., was incorporated on 18.02.2005 and was registered with ROC, New Delhi and the name of the company was changed to

M/s. Emaar MGF Land Limited from Emaar MGF Private Land Limited on 13.08.2007. Shri Shravan Gupta and Shri Siddharth Gupta were the initial two Directors of the company; Shri Mohamed Ali Alabbar,

Shri Sale Bin Rashid Ali Mohannadi and Ms. Low Ping were appointed as Directors of the company on 07.11.2005. Shri Shravan Gupta is the 63 Crl.M.P.No.391/2022

Managing Director of the company and Shri Mohamed Ali Alabbar is the Chairman.

(xlvii) It is further case of the prosecution that pursuant to the resolution passed by the Board of M/s. EHTPL on 21.09.2006, a development agreement was executed between M/s. EHTPL and

M/s. Emaar MGF Land Limited on 03.11.2006 i.e., before changing the name. The said agreement was executed by Shri Vijay Menon on behalf of M/s. EHTPL and Shri Srikant Joshi, CEO (South) on behalf of

M/s. Emaar MGF Land Limited.

(xlviii) It is further case of the prosecution that in the board meeting dt.26.03.2007, Shri Vijay Menon and Dr. Nader Mohammed resigned as Directors of M/s. EHTPL and in their place Shri Vinod

Kumar Gomber and Shri Ahmed Thani Rashed Almatrooshi were appointed as Directors of the company. Shri Vijay Menon was retained as Manager of the company and was authorised to sign the necessary documents on behalf of the company. In the board meeting dt.26.09.2007, it was discussed that the development agreement executed between M/s. EHTPL and M/s. Emaar MGF Land Limited based on the board resolution dt.21.09.2006 was required to be confirmed by APIIC. Subsequently, a Development Agreement-cum-

General Power of Attorney (GPA) was executed between M/s. EHTPL 64 Crl.M.P.No.391/2022 and M/s. Emaar MGF Land Limited on 25.07.2007. As per the

Development Agreement-cum-GPA, the Development Agreement dt.03.11.2006 was cancelled and was replaced with the Development

Agreement-cum-GPA dt.25.07.2007. The said Development

Agreement-cum-GPA was signed by Shri Vijay Menon on behalf of

M/s.EHTPL and Shri Srikant Joshi on behalf of M/s. Emaar MGF Land

Ltd. In the board meeting dt.10.07.2008, Shri Amit Jain and Shri

Srikant Joshi, CEO were appointed as alternate Directors. Shri

Pardhasaradhi Rao was appointed as Second Nominee Director of

APIIC.

(xlix) It is to be noted that M/s. Emaar MGF Land Ltd., applied for term loan of Rs.150 crores by Axis Bank by offering 14.01 acres of land out of 258.36 acres owned by M/s. Emaar MGF Land Ltd., and subsequently the said loan was reduced to Rs.90 crores. M/s. Emaar

MGF Land Ltd., has cleared all the dues against the term loan in

February, 2011, as such the security i.e., the title deed in respect of 14.01 acres of land was released by the Bank.

(l)It is further case of the prosecution that on 23.07.2008

Shri Vijay Raghav on behalf of M/s. EHTPL and Sri Srikant Joshi on behalf of M/s. Emaar MGF Land Ltd. executed addendum to

Development Agreement-cum-GPA deciding the percentage share in 65 Crl.M.P.No.391/2022 the revenue of M/s. Emaar MGF Land Ltd. The Development

Agreement-cum-GPA dt.25.07.2007 and Addendum to the

Development Agreement-cum-GPA dt.23.07.2008 executed between

M/s. EHTPL and M/s. Emaar MGF Land Limited were never discussed in the board of M/s. EHTPL. As per the Development Agreement, the gross revenue was to be shared between M/s. Emaar MGF Land Pvt.

Ltd. and M/s. EHTPL in the ratio of 75% : 25% on both the sale and lease proceeds. In the addendum to the Development-cum-GPA the revenue sharing pattern of lease proceeds was revised from 75% :

25% to 95% : 5%. The same was accepted in the board meeting dt.15.06.2007, which is detrimental to the interest of APIIC. In case of revenue from Operations and Maintenance and advertisements in

Common Areas, the sharing was in the ratio of 75% : 25% on the profits derived there from and not on revenues, as mentioned in the addendum to the Development Agreement-cum-GPA, the said aspect was not discussed in the board meetings of M/s. EHTPL. Due to amendments of the share pattern, the APIIC has sustained loss of

Rs.4,92,10,000/- from 2008-09 to 2010-11.

(li)It is further case of the prosecution that M/s. BHLPL and

M/s. Emaar MGF entered into a Development Agreement, Deed of

Assignment, Lease Deed as applicable to the development of 66 Crl.M.P.No.391/2022

Boutique Resort Hotel and Golf Course Multi use Project. But no development agreement was executed between M/s. BHLPL and M/s.

Emaar MGF Land Ltd., and only Lease Deed and Assignment Deed were executed on 03.11.2006. Those two deeds empowered M/s.

BHLPL to sell villa plots.

(lii)It is further case of the prosecution that M/s. EHTPL entered into Agency Agreement with M/s. Stylish Holmes Real Estate

Pvt. Ltd. represented by its Director Shri T. Ranga Rao on 29.01.2005 and appointed M/s. Stylish Holmes Real Estates Pvt. Ltd., as its sole

Agent for the purpose of marketing the Plots and Residential units and the said Agency Agreement was executed on 29.01.2005 at Dubai and the M/s. Stylish Holmes Real Estate Pvt. Ltd. had started booking villa plots in the integrated township in the month of March, 2005 though the land had not been transferred to M/s. EHTPL.

(liii)It is further case of the prosecution that as per the provisions of G.Os issued by Government of Andhra Pradesh;

Collaboration Agreement and Supplementary Agreement executed between APIIC and M/s. Emaar Properties PJSC, Dubai, M/s. EHTPL was required to develop the project land by way of constructing Villas and

Apartments and sell the same after finalizing the rates in its board.

Hence the agency agreement dt.29.01.2005 executed by the 67 Crl.M.P.No.391/2022

Chairman, M/s. Emaar Properties PJSC, Dubai on behalf of M/s. EHTPL agreeing to sell the plots @ Rs.5,000/- per sq.yd for a period of 5 years is nothing but clandestine arrangement in furtherance of the criminal conspiracy by the developer to dispose off the project land without developing the same, which caused loss of revenue to APIIC.

(liv)It is further case of the prosecution that M/s. Stylish

Holmes Real Estates Pvt. Ltd. started booking villa plots from March, 2005 itself and it booked 43 villa plots till 27.12.2005 i.e., prior to execution of Conveyance Deed dt. 28.12.2005 by APIIC in favour of

M/s. EHTPL. During the period 28.12.2005 to 02.11.2006, M/s. EHTPL and M/s. Stylish Holmes Real Estates Pvt. Ltd., booked 25 villa plots, whereas M/s. EHTPL executed a Development Agreement dt.03.11.2006 with M/s. Emaar MGF Land ltd. Even after execution of

Development Agreement dt.03.11.2006 in favour of M/s. Emaar MGF

Land Ltd., M/s. Stylish Holmes Real Estates Pvt. Ltd., continued to book villa plots as per the Agency Agreement dt.29.01.2005 and booked 37 plots in between 03.11.2006 to 20.08.2008.

(lv)It is further case of the prosecution that 31 villa plots were sold by M/s. EHTPL and M/s. Emaar MGF Land Ltd., at the documented rate of Rs.5,000/- per sq.yd. though the prevalent market rates were much higher. As per the Agency Agreement dt.29.01.2005, plots over 68 Crl.M.P.No.391/2022 and above 100 were to be sold at the prevailing market rates as decided by M/s. EHTPL, M/s. Stylish Holmes Real Estates Pvt. Ltd.

(lvi)It is further case of the prosecution that villa plot buyers has paid first and second installments in favour of M/s. EHTPL, whereas third and final installments, which accounted for 85% of the sale consideration @ Rs.5,000/- per sq.yd was paid in favour of M/s.

Emaar MGF Land Ltd., though the booking had been made by M/s.

EHTPL through M/s. Stylish Holmes Real Estates Pvt. Ltd., as such without making any investment M/s. Emaar MGF Land Ltd., received bulk of revenue from sale of villas/plots.

(lvii) It is further case of the prosecution that as per the instructions of Shri Koneru Rajendra Prasad, Shri T. Ranga Rao,

Director, M/s. Stylish Holmes Real Estates Pvt. Ltd., sold 82 villa plots by collecting excess amounts from the buyers ranging from Rs.4,000/- per sq.yd to Rs.45,000/- per sq.yd. over and above the rate of

Rs.5,000/- per sq.yd. The excess money was collected by

Shri T. Ranga Rao from the buyers in cash only except from

Shri P.S. Parthasarathy Rao and Shri Challa Suresh, who had deposited

US $ 250,000 and US $ 140,000 respectively towards part of excess payment in the bank accounts of Shri Madhu Koneru, S/o. Shri Koneru

Rajendra Prasad maintained at Dubai. From the 82 villa plot buyers, 69 Crl.M.P.No.391/2022 an amount of Rs.96,01,75,000/- was collected over and above the documented price of Rs.5,000/- per sq.yd. and it was supported by

Shri T. Ranga Rao, Shri P.S. Parthasarathy and Shri Y.V. Prasad statements recorded under Section 164 Cr.P.C. It is further case of the prosecution that Shri T. Ranga Rao handed over the cash to Shri Sunil

Reddy on the instructions of Shri Koneru Rajendra Prasad and also sometimes directly to Shri Koneru Rajendra Prasad.

(lviii) It is further case of the prosecution that 23 villa plots were allotted at the rate of Rs.5,000/- per sq.yd to the relatives of Shri

Koneru Prasad and family members of VIPs (Politicians in higher positions). It is further case of the prosecution that the Investigating

Agency has recovered two laptops from the office of M/s. EHTPL and

M/s. Emaar MGF Land Ltd., at Hyderabad. Out of those two laptops, one belongs to Shri Vijay Raghav and the laptops were sent to CFSL analysis and it reveals that the buyers has paid the more than the documented price.

(lix)It is further case of the prosecution that Shri Vijay Raghav,

Shri Srikant Joshi and Shri Shravan Gupta asked Shri Rajeev Gupta, Sr.

Vice President, M/s. Emaar MGF Land Ltd., to incorporate 10 companies with the employees of M/s. MGF Ltd., and other group companies as Directors/Shareholders of these companies.

70 Crl.M.P.No.391/2022

Accordingly, seven companies were floated at New Delhi and three companies were floated at Ernakulam and the money was transferred and 18 villa plots were booked in the name of ten companies, later it was cancelled.

(lx)It is further case of the prosecution that M/s. EHTPL and

M/s. Emaar MGF Land Ltd., sold about 206 apartments, out of which

Shri Srikant Joshi, the then CEO, M/s. Emaar MGF Land Pvt. Ltd.

purchased an apartment in his name at Rs.3,268/- per sq.ft, whereas the apartments were sold to the other buyers between Rs.4,800/- and

Rs.9,000/- per sq.ft.

(lxi)It is further case of the prosecution that APIIC has not received any revenue from M/s. EHTPL on account of its equity in the

Township Project and M/s. Emaar MGF Land Ltd., balance sheet shows that Rs.194,13,13,396/- was earned from sale of villas, villa plots and apartments, out of which the revenue share of Rs.48,53,28,349/- is shown payable to M/s. EHTPL towards its 25% share, but the said amount was not paid.

(lxii) It is further case of the prosecution that on the instruction of Shri Koneru Prasad, Shri T. Ranga Rao and his Manager collected an amount of Rs.96,01,75,000/- from sale of villa plots over and above 71 Crl.M.P.No.391/2022 the documented price @ Rs.5,000/- per sq.yd. during the period between 2005-2010. Similarly, Shri GV Vijay Raghav, Finance Head-

South, M/s. Emaar MGF Land Ltd., collected an amount of

Rs.6,85,60,000/- from sale of three villa plots over and above the documented price @ Rs.5,000/- per sq.yd. But those amounts were not reflected in the books of account of M/s. EHTPL. It is further case of the prosecution that APIIC has not received even a single rupee from Township Project, which amounts to loss of Rs.43.50 crores. At the same time, M/s. Emaar MGF Land Ltd. and M/s. Emaar Properties

PJSC, Dubai obtained undue pecuniary advantage of Rs.167.29 crores.

(lxiii) It is further case of the prosecution that a team was constituted for implementation of integrated project, utilization of funds with respect to agreements entered into between APIIC and

M/s. Emaar Properties, PJSC Dubai. The said team consisting of Shri C.

Subba Rao and Shri B V Bhaskar Rao visited the office of M/s. EHTPL on 04.05.2009 and 05.05.2009 and inspected the records and pointed the irregularities.

(lxiv) It is further case of the prosecution that after inducting

Shri BR Meena as VC & MD on 24.12.2009, he has noticed several irregularities and same were placed before the board of APIIC in its board meeting dt.10.08.2010 and the board took a decision to take 72 Crl.M.P.No.391/2022 comprehensive and independent expert opinion on the all the issues relating to the implementation of the project.

(lxv) It is further case of the prosecution that after receiving the reports of the consortium and legal opinion, the matter was referred to the then Ld. Solicitor General of India by APIIC and in his opinion dt.18.09.2010, the then Ld. Solicitor General of India had suggested the following course of action:

(a)APIIC should terminate the collaboration agreement and initiate arbitration proceedings with Emaar. It may then seek an injunction against M/s. Emaar MGF on the ground that the Corporate veil must be lifted in this case.

(b)APIIC as a minority shareholder in EHTPL should initiate appropriate proceedings in the company law board for oppression/mismanagement, and try and get control of

EHTPL after which the development agreement with M/s.

Emaar MGF could be rescinded by M/s. EHTPL.

(c)APIIC and GoAP should jointly file a suit for permanent injunction in an appropriate Civil Court, seeking to restrain Emaar MGF from proceeding with any works or engaging in any sale relating to the project land.

(d)APIIC should request GoAP to issue necessary instructions to the competent registration authorities not to register any sale deeds executed by Emaar MGF in favour of buyers. Where such sale deeds have been executed and 73 Crl.M.P.No.391/2022 registered, options may be explored as to how such registrations can be cancelled.

(e)APIIC may consider initiating appropriate criminal proceedings against persons involved in the actions that resulted in the depletion in the value of EHTPL. If necessary, recourse may be taken to Section 235 of Companies Act, 1956.

(lxvi) It is further case of the prosecution that as per the suggestions of Ld. Solicitor General of India, APIIC issued termination notice to M/s. Emaar Properties PJSC, Dubai and M/s. Emaar Holdings,

Mauritius on 29.10.2010 under Clause 5.3(a) of the Collaboration

Agreement.

(lxvii) It is further case of the prosecution that Shri N Sunil

Reddy (A-7) along with his father Shri N Sangi Reddy floated a company which was incorporated on 10.05.2005 in the name and style of M/s. Sunil Projects and Foundations Pvt. Ltd. and both Shri N

Sunil Reddy (A-7) and his father Shri N Sangi Reddy were the promoter directors of the said company and Shri N Sunil Reddy (A-7) was nominated as the Managing Director of the company. Later,

Narapa Manohar Reddy and his wife Smt. Narapa Saradha Reddy were appointed as Directors w.e.f. 10.10.2009. Subsequently, on 25.01.2010, the name of the company was changed to M/s. Southend 74 Crl.M.P.No.391/2022

Projects & Foundations Pvt. Ltd. and A-7 and his father resigned from the company w.e.f. 01.10.2010. M/s. Southend Projects & Foundations

Pvt. Ltd. has received the funds during the period 2009-2010 from various companies but those companies existences is in question.

(lxviii)It is further case of the prosecution that as far as land acquisition is concerned, the revenue officials has played dual role and they wanted to held some persons i.e., G. Krishna and G.

Vijaya Nirmala and Smt. Laxmamma. The officials and the Chairman of APIIC has used different yardsticks to acquire the lands of cinema actor i.e., G. Krishna and his family members and at the same time applied another yardstick to acquire properties of others.

(lxix) It is further case of the prosecution that the request made by Smt. Galla Aruna Kumari for exempting an extent of Acs.2- 20 gts at Sy.No.27/4 from acquisition was rejected. The GHMC authorities favoured the family members of Sri G. Krishna and Sri

Galla Jayadev. Who encroached upon the Government land.

(lxx) It is further case of the prosecution that the excess amount collected from villa plot buyers was benefited by Shri Koneru

Rajendra Prasad and Shri N. Sunil Reddy and the said transactions were held at Syndicate Bank, New Nallakunta Branch, Hyderabad; 75 Crl.M.P.No.391/2022

Karur Vysya Bank, Nallakunta Branch, Hyderabad and Dena Bank and

Ramakrishna Mutt Branch, Hyderabad.

11.As per the investigation conducted by the Enforcement

Directorate, they relied on the statements of accused as well as witnesses recorded under Section 50 of PMLA. The prosecution has relied on the statement of Sri Tummala Ranga Rao recorded under

Section 50(2) and (3) of PMLA, 2002 in addition to the 164 Cr.P.C.

statement made by him before the Magistrate, wherein he stated that he has received Rs.96.01 crores in cash from the buyers of villa plots as identified by CBI and those amounts were given to Sri Koneru

Rajendra Prasad and to Sri N. Sunil Reddy as directed by Sri Koneru

Rajendra Prasad; he further stated that he made payments to EMGF of Rs.1.44 crores on account of advance payments for booking of plots as per the instruction of Sri Koneru Rajendra Prasad and those amounts paid are partly from 4% commission received by them or from loan taken from third parties. He further stated that he received

Rs.1.75 crores from United Port Services and Rs.1.50 Crores from

Maheswari Brothers in the form of loan partly towards advance for booking of plots to meet the targets fixed by M/s. Emaar Properties

PJSC and the amounts are yet to be repaid and Sri Koneru Rajendra

Prasad has helped him in getting those finances. He further stated 76 Crl.M.P.No.391/2022 that he gave an amount of Rs.2.50 crores for purchase of land situated at Bikal & Mallikharjunagiri Villages, Marpalli Mandal, Ranga

Reddy District, Telangana State for Sri Koneru Rajendra Prasad and his family members with his assistance and he has paid the said amount from the sale proceeds received from the villa plot buyers to the brokers of the land as per the instructions of Sri Koneru Rajendra

Prasad and an amount of Rs.2.50 crores was paid to the land owners from the extra amount collected from villa plot buyers i.e., from

Rs.96.01 crores. He further stated that an amount of Rs.2.40 crores (approx) might have been received by M/s. Stylish Holmes from buyers of villa plots as 4% commission. He further stated that the land to an extent of 2057 Sq.Yd. situated in Manikonda Jagir Village,

Rajendra Nagar Mandal, Ranga Reddy District is held in the name of

M/s. Stylish Holmes purchased with an investment of

Rs.1,11,20,450/-.

12.The prosecution also relied on the statement of

Sri B.P. Acharya, recorded under Section 50(2) and (3) of PMLA, 2002, wherein he stated that he has attended the board of EHTPL on 20.12.2005. The prosecution also relied on the statement of Sri G.V.

Vijay Raghav, recorded under Section 50(2) and (3) of PMLA, 2002, wherein he stated that as there was a need for funds into the projects, 77 Crl.M.P.No.391/2022 deed was entered into with EMGF and accordingly EMGF started investing into the integrated project and that the total investment in

Golf Course and township projects was Rs.400 Crores (approx.). He further stated that he is the authorised signatory of EMGF and EHTPL as per board resolutions and that he was reporting to Mr. Srikant Joshi,

CEO. He further stated that EHTPL entered into Agency agreement for sale of plots in January 2005 with M/s. Stylish Holmes Pvt. Ltd. and

EHTPL entered into Development agreement for development of

Township Project in November 2006 with EMGF. No written approval from APIIC was taken by EHTPL for the agreements entered with EMGF or M/s. Stylish Holmes. He further stated that as per the Development

Agreement-cum-GPA entered into between EHTPL and EMGF, the consideration for the development of township project was revenue share and EHTPL to get 25% on gross revenue of the project and balance 75% of gross revenue to EMGF. The revenue share mentioned as Rs.45 Crores (approx.) as on 31.03.2011 as per balance sheet, however no amount has been transferred by EMGF to EHTPL upto 31.03.2011. APIIC was also not paid dividends as the balance sheets were not finalized due to APIIC non-approval. He further stated that he was transferred to EMGF in March 2007 and worked as

Finance Head (South) of EMGF. He further stated that the interested parties approached Mr. Srikant Joshi, CEO of EMGF and based on his 78 Crl.M.P.No.391/2022 instructions, they issued allotment letters or MOU to such allotted parties.

13.The prosecution also relied on the statement of Sri Koneru

Rajendra Prasad, recorded under Section 50(2) and (3) of PMLA, 2002, wherein he stated that he was invited by Emaar, Dubai to be a nominee Director in EHTPL towards end of 2004, which he accepted and continued to be a Director till 2010. He further stated that the price of Rs.5000/- per sq.yd. was fixed by Emaar Properties, Dubai being the majority shareholder in EHTPL and was approved by board of EHTPL and he has signed the balance sheets of EHTPL for the years 2005-06 and 2006-07 under Company Law as legal formality. He further stated that selling of villa plots in excess of Rs.5000/- per

Sq.Yd. by Sri Tummala Ranga Rao of M/s. Stylish Holmes was never brought to the knowledge of EHTPL Board; that Sri Tummala Ranga

Rao has never paid any amount to him in cash or cheque and he is not aware of any transactions between Sri N. Sunil Reddy and

Sri Tummala Ranga Rao and he is not aware of the fact that

Sri Tummala Ranga Rao has collected Rs.96.01 crores excess of cash from villa plot buyers over and above the agreed price of Rs.5000/- per Sq.Yd. except during the investigation proceedings by CBI. He further stated that he has never advised Sri Tummala Ranga Rao to 79 Crl.M.P.No.391/2022 establish M/s. Stylish Holmes or to collect extra amount from villa plot buyers; and that he has not instructed Sri Tummala Ranga Rao to pay

Rs.2.5 crores to farmers from excess amount collected; that his family members have purchased some lands in Medak District.

14.The prosecution also relied on the statement of Sri Srikanth P

Joshi, recorded under Section 50(2) and (3) of PMLA, 2002, wherein he stated that he joined EMGF in April 2006 as CEO (South) and from

April, 2009 he worked as CEO of EMGF and he attended the board meeting dt.21.09.2006. He know about the past agreements entered by Emaar and APIIC including agreement dt.29.01.2005. He further stated that EMGF has redesigned the integrated project where the plots were reduced from 350 to 135 and apartments were increased from 1000 to 3500. He further stated that the plots were sold through

M/s. Stylish Holmes and originally cheques were received by EHTPL and after the Development Agreement, they were received by EMGF as per the agreement. He further stated that Sri Tummala Ranga Rao and Sri K. Rajendra Prasad are the persons having control on the sale of villa plots; and Mr. T. Ranga Rao was the main person responsible for sales and collections.

15.The prosecution also relied on the statement of Sri Rakshit

Jain, recorded under Section 50(2) and (3) of PMLA, 2002, wherein he 80 Crl.M.P.No.391/2022 stated that the entire development of Boulder Hills Project of EHTPL was transferred in the name of EMGF vide Joint Development

Agreement dt.03.11.2006 and subsequent agreements. The plots cancelled after sale, on 04.10.2010 were in possession and ownership of EHTPL. As per the Development Agreement dt.03.11.2006, the sale of plots after 03.11.2006 was still on behalf of EHTPL and not EMGF.

Out of 134 plots, 91 plots were sold by M/s. Stylish Holmes, 9 plots by

EMGF and remaining 34 plots were unsold and are with EHTPL. EMGF has collected Rs.67.87 Crores and total collection is Rs.73.20 Crores including EMGF and EHTPL from sale of villa plots. He further stated that 3 completed villas were sold by EMGF for Rs.21.36 crores.

16.The prosecution also relied on the statement of Sri Challa

Suresh, recorded under Section 50(2) and (3) of PMLA, 2002, wherein he stated that he purchased villa plot No.A-28 of 1449 Sq.Yds. at the rate of Rs.5000 per Sq.Yd. in Boulder Hills, Hyderabad in the name of

M/s. Serenity Homes Pvt. Ltd. from EHTPL. Rs.5000/- per Sq.Yd. is paper rate and whereas Sri Koneru Rajendra Prasad and Sri T. Ranga

Rao of M/s. Stylish Holmes asked for excess amount of Rs.9000 per

Sq.Yd. over and above the documented price which works out at

Rs.72,50,000/-. He further stated that Sri Koneru Rajendra Prasad has 81 Crl.M.P.No.391/2022 invested USD 140,000 in Dubai property market with Mr. Madhu

Koneru.

17.The prosecution also relied on the statement of Sri Koneru

Madhu, recorded under Section 50(2) and (3) of PMLA, 2002, wherein he stated that he is an NRI, residing in Dubai since 1992 and engaged in the business of real estate, trading and mining. In 2011 one Mr.

Parthasarathy, an NRI, who wanted to invest in UAE real estate market has sent an amount of USD 2,50,000 approx. to his foreign currency account in India in 2011, however, later he withdrawn that amount and hence it was returned. He further stated that Sri Challa

Suresh, a resident of USA, has invested a sum of USD 1,40,000 approx. in 2005 and the same is still under investment at his end.

18.The prosecution also relied on the statement of Sri Kesava

Shenoy, recorded under Section 50(2) and (3) of PMLA, 2002, wherein he stated that he wanted to purchase property in Kerala, but the plots were allotted by EHTPL. He further stated that he has not applied for any money or for any loan to M/s. Braggat Vyapar Pvt. Ltd. and he do not know why Braggat Vyapar has deposited such amount into their account.

19.The prosecution also relied on the statement of Sri N. Sunil

Reddy, recorded under Section 50(2) and (3) of PMLA, 2002, wherein 82 Crl.M.P.No.391/2022 he stated that M/s. Southend Projects (formerly known as M/s. Sunil

Projects) was incorporated by him and his father as Directors during 2005 and later they sold out the company in 2009 to Sri Narapa

Manohar Reddy. He further stated that he do not know about the investments of Rs.45.21 Crores received by M/s. Southend Projects during 2009 and 2010 as he sold out the company to Sri Narapa

Manohar Reddy. He further stated that he does not have any association either with Sri Tummala Ranga Rao or with Sri Koneru

Rajendra Prasad and that he had not received any amounts from them.

20.The prosecution also relied on the statement of

Sri S. Madhusudhan Rao, recorded under Section 50(2) and (3) of

PMLA, 2002, wherein he stated that 15 unsold plots were available with EHTPL were allotted to 15 persons and later the agreements were cancelled.

21.The prosecution also relied on the statement of Sri V. Vijay

Sai Reddy, who has given statement on behalf of Sri N. Manohar

Reddy under Section 50(2) and (3) of PMLA, 2002, wherein he stated that Sri Narapa Manohar Reddy has acquired M/s. Southend Projects,

Hyderabad, by investing an amount of Rs.8,98,20,000/- for acquiring

Rs.55,20,000/- worth of shares from Sri N. Sunil Reddy and his family 83 Crl.M.P.No.391/2022 members in October 2010. He further stated that the bank account in the name of M/s. Southend Projects in Axis Bank, vide A/c.

No.909020036183180 was opened by the original promoters i.e. Sri

N. Sunil Reddy and he is the authorized signatory for the account; even after taking over the company by Narapa Manohar Reddy, he did not replace Sri N. Sunil Reddy from being authorized signatory and hence all the transactions subsequent to his taking over, i.e., from

October 2009, have been done by Sri N. Sunil Reddy under the instructions of Sri Narapa Manohar Reddy. He further stated that the account with OBC, Jubilee Hills vide A/c. No.11101010029260 of M/s.

Southend Projects was opened and being operated by Sri Narapa

Manohar Reddy and those two accounts are not active at present, Sri

Narapa Manohar Reddy has opened an account in Andhra Bank, Jaya

Nagar, Bangalore bearing A/c. No.027311100002467; and for the purpose of land acquisitions, Sri Narapa Manohar Reddy mobilized

Rs.45.21 crores funds from various investors. He further stated that there are transactions of transfer of amounts between Shri Sunil

Reddy through his personal account and Bloomery Steel Industries

Pvt. Ltd., M/s. Bluesky Enterprises Pvt. Ltd., M/s. Megallam Enterprises

Pvt. Ltd., M/s. Amydale Info Tech Pvt. Ltd. and M/s. Aramid Textiles

Pvt. Ltd. An amount of Rs.45.21 crores received by M/s. Southend

Projects and Foundations Pvt. Ltd. from various companies as equity 84 Crl.M.P.No.391/2022 investment in M/s. Southend Projects and the shares have been allotted to the respective investors on premium and hence the refund of above said amount cannot be made as per the Companies Act, 1956 and the parties are at liberty to sell the shares to any third party.

He further stated that M/s. Southend Projects has given an advance of

Rs.36.82 Crores to M/s. Asara Theme Projects Pvt. Ltd., between

December 2009 and March 2010 towards purchase of land in

Hyderabad; that the sale of land did not take place and the said amount was also not returned to them. Neither M/s. Southend Projects nor Sri Narapa Manohar Reddy has complained to any authorities regarding non-return of advance amount of Rs.36.82 crores; and that an amount of Rs.20 crores was reflected in the statement of Assets &

Liabilities of M/s. Southend Projects is lying in the form of Fixed

Deposits in Andhra Bank, Bangalore.

22.The prosecution also relied on the statement of Sri Indukuri

Syam Prasad Reddy, recorded under Section 50(2) and (3) of PMLA, 2002, wherein he stated that M/s. Walden Properties Pvt. Ltd., a

Hyderabad based real-estate company promoted by him and his wife, intended to buy 4 Acres 01 Guntas of land at Rayadurg, Ranga Reddy

District and paid advances to the land owners and registered the said property in the name of M/s. Asara Theme Projects Pvt. Ltd.

85 Crl.M.P.No.391/2022

M/s. Southend Projects represented by Sri Narapa Manohar Reddy, wanted to buy the land parcel of 04 Acres 01 Guntas at Rayadurg,

Hyderabad owned by M/s. Asara Theme Projects Pvt. Ltd., at the rate of Rs.16 Crores per Acre and had paid an advance of Rs.36.82 Crores via RTGS during December-2009 to March-2010. He further stated that M/s. Southend Projects could not pay the balance amount even after 2 years of MoU due to downfall in real estate market in

Hyderabad, they were forced to sell the said property to M/s. Sandhya

Hotels Pvt. Ltd. during 2011-12 for lesser consideration of Rs.36.15 crores, for which M/s. Asara Theme Projects Pvt. Ltd. had to suffer a loss of Rs.19.82 crores. He further stated that he does not have any association or acquaintance with Sri N. Sunil Reddy, but as per the advice of Sri Narapa Manohar Reddy of M/s. Southend Projects and

Foundations Pvt. Ltd., they have paid Rs.1.5 crores to Sri N. Sunil

Reddy on 03.02.2012 from bank account of M/s. Asara Theme

Projects’ current Account No.860920110000198 of Bank of India.

3,62,06,155 Nos. of shares held by him in his personal capacity in

M/s. Indu Projects Ltd.

23.The prosecution also relied on the statement of Sri Koneru

Pradeep, recorded under Section 50(2) and (3) of PMLA, 2002, wherein he stated that he is having a land parcel of 36.14 acres of 86 Crl.M.P.No.391/2022 land at Bilkal & Mallikharjunagiri Villages, Marpalli Mandal, Ranga

Reddy District, Telangana State and the same was purchased with an investment of Rs.14,09,865/- from the source of his salary savings/ rent/sale of shares/gifts etc.

24.The prosecution also relied on the statement of Sri Shravan

Gupta, recorded under Section 50(2) and (3) of PMLA, 2002, wherein he stated that he was the Director and Promoter of MGF group and he was the Managing Director of M/s. Emaar MGF Land Ltd. from 2005 to 2015. In the year 2006, EHTPL came with a proposal of investing some amount into the integrated project and Sri Srikanth Joshi, CEO,

EMGF made presentation to EMGF board and board authorized him to negotiate and enter into a Development Agreement with EHTPL; that the Development Agreement dt.03.11.2006, Development

Agreement-cum-GPA dt.25.07.2007 and addendum dt.23.07.2008 were entered between EMGF and EHTPL. He further stated that he has no knowledge that there was any stipulation to maintain the share of

APIIC at 26% at all times and he stated that he does not have any knowledge about 18 no’s plots blocked by EMGF, which were cancelled at a later date. He further stated that he is not aware of the facts about numbers regarding the amounts collected by EMGF from the sale of villas and villa plots. He further stated that an amount of 87 Crl.M.P.No.391/2022

Rs.67.87 crores collected by EMGF is mentioned in the balance sheet of EMGF and that he was not aware that an amount of Rs.96.01 crores has been collected by M/s. Stylish Holmes from villa plot buyers in addition to the documented price of Rs.5,000/- and he is also not aware that an amount of Rs.6.86 crores has been collected by Sri GV

Vijay Raghav from villa plot buyers in addition to the documented price.

25.The investigation revealed that in pursuance of the conspiracy among the accused, they have violated the conditions stipulated in the various development agreements with a view to deceive the share of APIIC and inducted several persons for selling the villa plots etc. and collected extra amount other than the rate fixed by EHTPL. As per the statement of Tummala Ranga Rao, excess amount of Rs.96.01 crores were collected and out of which, he handed over some amount to Sri N. Sunil Reddy and remaining to Sri

Koneru Rajendra Prasad and an amount of USD 1,40,000 has been received by Sri Madhu Koneru in Dubai from one of the villa plot buyers namely Sri Challa Suresh and Sri Challa Suresh has confirmed the same in his statement given under Section 50 of PMLA 2000.

Another amount of USD 2,50,000 has been received by Sri Koneru

Madhu from another villa plot buyer namely Sri PS Parthasarathy on 88 Crl.M.P.No.391/2022 09.08.2007, however the same was returned to Sri PS Parthasarathy on 14.10.2011 mentioning as ‘repayment of loan’. The investigation further revealed that Sri Tummala Ranga Rao has collected Rs.2.50 crores out of proceeds of crime i.e. Rs.96.01 crores and purchased the land in the name of Sri Koneru Pradeep.

26.The prosecution further contended that Sri N. Sunil Reddy along with his father floated a company by name M/s. Sunil Projects and Foundations Pvt. Ltd. on 10.05.2006 and w.e.f. 10.10.2009, Sri

Narapa Manohar Reddy and his wife Smt. Narapa Sarada Reddy were appointed as Directors. The name of the company was changed to

M/s. Southend Projects and Foundations Pvt. Ltd. from 25.01.2010 and that Sri N. Sunil Reddy and his father have resigned from the company w.e.f. 01.10.2010. M/s. Southend Projects and Foundations

Pvt. Ltd. has received funds of Rs.45.21 crores from 11 Companies.

The investigation conducted by the CBI revealed that existence of 11

Companies was in questions and those companies were floated only for the purpose of transfer of funds and though Sri N. Sunil Reddy contended that he sold the company to Sri N. Manohar Reddy during 2009, he continued to transact bank accounts.

27.The prosecution contended that the total benefit accrued by

EHTPL, EMGF on account of criminal conspiracy is Rs.167.29 crores, 89 Crl.M.P.No.391/2022 out of which Rs.96.01 crores cash component collected by M/s. Stylish

Holmes, Rs.64.41 crores in the form of Profit Before Tax (PBT) as per the books of account of EMGF and Rs.6.86 crores as cash component collected by EMGF, totaling to Rs.71.27 crores, since the said amount is proceeds of crime.

28.The investigation also revealed that 11 companies do not have any other dealing except with M/s. Southend Projects other than making such investment. An amount of Rs.1.50 crores was transferred to Sri N. Sunil Reddy on 03.02.2012 from the account of M/s. Asara

Theme Projects Pvt. Ltd. An amount of Rs.36.82 crores was transferred from M/s. Southend Projects to M/s. Asara Theme Projects

Pvt. Ltd. for purchase of land, however, no land was registered in the name of M/s. Southend Projects. The prosecution contended that a sum of Rs.20 crores as reflected in the statement of Assets and

Liabilities of M/s. Southend Projects is lying in the form of Fixed

Deposits as proceeds of crime and Rs.25.21 crores valued shares were held in the name of Sri Indukuri Syam Prasad Reddy as investment in M/s. Indu Projects Ltd. As per the prosecution, an amount of Rs.45.21 is with Sri N. Sunil Reddy of M/s. Southend

Projects and Foundations Pvt. Ltd. and the balance amount of 90 Crl.M.P.No.391/2022 proceeds of crime of Rs.50.80 crores received by Shri Koneru

Rajendra Prasad.

29.The prosecution contended that as per available record Sri

BP Acharya, EHTPL, Shri Koneru Rajendra Prasad, EMGF, M/s. Stylish

Holmes, Shri Tummala Ranga Rao, Sri Koneru Madhu, M/s. Southend

Projects, Sri N. Sunil Reddy, M/s. Asara Theme Projects, Sri Koneru

Pradeep, Sri GV Vijay Raghav and Sri Srikanth P Joshi are involved in the scheduled offence punishable under Section 120-B and 420 of IPC.

30.M/s Southend Projects & Foundations Pvt. Ltd./A-4 has received funds of Rs.45.21 crore from the following 11 companies, for which date of incorporation and dates of transfer of funds are detailed below:

Sl.Date ofDate of ReceiptAmount Company Name No.Incorporationof fundsreceived 10.11.20092,30,00,000 M/s. Amygdale Info Tech

1.16.10.2009 Private Limited20.11.200925,00,000 23.12.200950,00,000 09.11.200975,00,000 12.11.20091,50,00,000 17.11.200975,00,000 M/s. Aramid Textiles Private19.11.200970,00,000

2.14.10.2009 Limited 25.11.20091,00,00,000 27.11.200950,00,000 10.12.200940,00,000 23.12.200915,00,000 91 Crl.M.P.No.391/2022 16.01.20101,75,00,000 M/s. Bloomery Steel

3.27.10.2009 Industries Private Limited20.01.20101,25,00,000 21.01.201040,00,000 09.11.20091,50,00,000 M/s. Bluesky Enterprises

4.20.10.2009 Private Limited19.11.20091,10,00,000 27.11.20091,00,00,000 M/s. Chakri Industries 07.12.200955,00,000

5.25.06.2003 Private Limited 10.12.200960,00,000 26.12.200950,00,000 24.12.200940,00,000 M/s. Invar Steels Private

6.22.10.2009 Limited11.10.201050,00,000 11.10.201054,00,000 12.10.201056,00,000 13.10.200975,00,000 14.10.200975,00,000 15.10.20092,00,00,000 21.10.20091,10,00,000 M/s. Megallan Enterprises Not registered 7. Private Limitedwith ROC22.10.20092,40,00,000 22.10.20091,50,00,000 05.12.20091,90,00,000 16.12.20091,00,00,000 21.12.200950,00,000 25.11.200975,00,000 09.11.200975,00,000 17.11.20092,80,00,000 M/s. Pashmina Textiles 19.11.200965,00,000

8.21.10.2009 Private Limited 25.11.200975,00,000 21.12.200915,00,000 23.12.200950,00,000 16.01.201050,00,000

9.M/s. Punarvasu Enterprises 12.10.200910.11.200920,00,000 92 Crl.M.P.No.391/2022 20.11.20091,05,00,000 Private Limited 16.01.201030,00,000 23.12.20091,00,00,000 M/s. Scanner Systems &

10.27.10.2009 Technology Private Limited06.10.201050,00,000 06.10.201096,00,000

11.M/s. Etread.Com Private 10.05.200013.10.20093,00,00,000 Limited Total45,21,00,000

31.Letter dt.16.01.2014 received from Oriental Bank of Commerce,

Jubilee Hills Branch, providing the bank KYC documents and account statement of A/c No.11101010029260 of M/s Southend Projects &

Foundations Pvt. Ltd. revealed that the above said amounts of

Rs.45.21 crore has been received into M/s Southend Projects on respective dates. As per the CBI charge sheets dt.01.02.2012 and 23.04.2012, Rs.96.01 crore was collected by Sri Tummala Ranga Rao of M/s. Stylish Holmes. Sri Tummala Ranga Rao in his depositions made under Section 164 of Cr.P.C. and also under Section 50 of PMLA, 2002 stated that he has handed over the total amount either to Sri

N.Sunil Reddy/A-11 or to Sri Koneru Rajendra Prasad/A-7 and the ratio of amounts are not known to him. The charge sheets further revealed that Mr. N.Sunil Reddy/A-11 has received Rs.45.21 crore and invested the same through 11 different companies into M/s Southend

Projects/A-4 during 2009-10.

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32.CBI investigation did not reveal the whereabouts of the 11 companies, which invested Rs.45.21 crore in M/s Southend Projects/

A-4, as these companies did not exist at the given addresses during the relevant period. During the investigation under PMLA, 2002 also no traces of these companies at the given addresses are noticed. To ascertain the source of funds and reasons for the investment in M/s

Southend Projects/A-4, summons were issued to the authorized persons of these 11 companies which invested in M/s Southend

Projects/A-4, at the addresses available on record as per Ministry of

Corporate Affairs and also from the KYC documents received from the concerned banks. Investigation under PMLA, 2002 also revealed that most of these companies were incorporated with nominal amount of

Share Capital just a few days prior to the dates of their investments into M/s. Southend Projects/A-4. From the data retrieved from

Registrar of Companies, Ministry of Corporate Affairs and scrutiny of the certificates of incorporation of these 11 companies revealed that some Directors are common in 3-4 companies.

33.Scrutiny of the bank account statements and other documents of these 11 companies revealed that the following companies have some money transactions with Sri N. Sunil Reddy/A-11 as under:

94 Crl.M.P.No.391/2022

Name of theBank Account No & BankAmount paid byAmount companySri N.Sunilreceived by Sri ReddyN.Sunil Reddy (Rs.)(Rs.) M/s Aramid Textiles A/c No. 909020038292893 03,50,00,000 Pvt. Ltd.of Axis Bank, Banjara Hills. M/s Bluesky A/c No. 909020038789151 5,72,00,00070,00,000 Enterprises Pvt. of Axis Bank, Banjara Hills. Ltd. M/s Megallan A/c No. 33420001000399011,50,00,0001,50,00,000 Enterprises Pvt. of Karnataka Bank, Raj Ltd.Bhavan Road. M/s Amygdale A/c No. 04921200000213 of1,92,00,0000 Infotech Pvt. Ltd.DCB Bank, Madhapur.

All these transactions confirm that Sri N.Sunil Reddy/A-11 has dealings with these companies in his personal capacity in addition to their investments in M/s Southend Projects/A-4. These 11 companies do not have any other dealings with M/s Southend Projects/A-4 other than making such investment. Later these investments of Rs.45.21 crore were converted into Share Capital amount with high premium as against the paid up capital of Rs.10.73 crore. Sri V.Vijay Sai Reddy, authorized representative of M/s Southend Projects/A-4, in his statement dt.12.08.2014, stated that the shareholders have no right to seek refund of their Investment of Rs.45.21 crore and they can only transfer their shares. These transactions revealed that Sri N. Sunil

Reddy/A-11 had received Rs.45.21 crore in cash from Sri Tummala 95 Crl.M.P.No.391/2022

Ranga Rao and invested the same in M/s Southend Projects/A-4 through these 11 companies floated for the said purpose.

34.M/s Southend Projects/A-4 received Rs.45.21 crore from Sri

Tummala Ranga Rao through 11 dummy companies. From the said amount, M/s Southend Projects/A-4 further transferred Rs.36.82 crore to M/s Asara Theme Projects Pvt. Ltd./A-5 said to be advance for purchase of land. However, no land was registered In the name of M/s

Southend Projects/A-4.

35.Thus, the following properties are identified in relation to the above said proceeds of crime/such value of proceeds of crime received by Sri N.Sunil Reddy/A-11 totaling to Rs.45.21 crore in terms of Section 2(1)(u) of PMLA, 2002.

i. Rs.20,00,00,000/- of FD's with Andhra Bank, Bangalore, pertaining to M/s Southend Projects & Foundations Pvt. Ltd. as Proceeds of Crime.

ii.Rs.25,21,00,000/- valued Shares of Sri Indukuri Syam Prasad Reddy (who is also Director in M/s Asara Theme Projects Pvt. Ltd.) invested in M/s Indu Projects Ltd. vide ISIN No. INE367101018 as value of any such property as defined under Section 2(1)(u) of PMLA, 2002.

36.Investigation under PMLA, 2002 revealed that part of excess amount collected from villa plot buyers has flown into EHTPL/A-1 itself by way of advance for booking plots and also by other means, 96 Crl.M.P.No.391/2022 through Sri Koneru Rajendra Prasad/A-7, for the development of the project. Thus it is evident that the project is benefited with excess amount collected and EHTPL/A-1 and EMGF/A-2 are the ultimate beneficiaries of the excess amount collected from the Villa Plot buyers, which was not shown in the books of accounts of EHTPL/A-1 and hence cheated APIIC by depriving its due share in the sale of villa plots. Hence the unsold Villa Plots available with EHTPL/A-1 and also

Open land of EHTPL/A-1 is considered as Proceeds of Crime for attachment as specified below:

i. 14 unsold Villa Plots available with EHTPL admeasuring 14624 Sq. Yds. Valued at Rs.36,56,00,000/-.

ii. Open land of 4.80 Acres in EHTPL valued at Rs.58,08,00,000/- (attachments to the extent value of Rs.13,09,07,000/- as value of any such property as defined under Section 2(1)(u) of PMLA, 2002.

37.M/s Stylish Holmes/A-3 was floated for the benefit of EHTPL/A-1 with a sole intention of depriving the share of APIIC and player key role in collection and distribution of Rs.96.01 crore. Therefore the following property held by M/s Stylish Holmes/A-3 is considered as

Proceeds of Crime.

i. Plot measuring 2057 Sq.Yd. in the name of M/s Stylish Holmes valued at Rs.1,02,85,000/- as value of any such property as defined under Section 2(1)(u) of PMLA, 2002.

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38.Sri Tummala Ranga Rao (A-10) has paid Rs.2.50 crore for purchase of 36.14 Acres of lands in Bilkal and Mallikarjunagiri Villages, in the name of Sri Koneru Pradeep/A-13, S/o Koneru Rajendra Prasad, out of the amount of Rs.96.01 crore. Therefore, the said property is also considered as Proceeds of Crime and attached.

i. Land of 36.14 Acres situated at Bilkal and Mallikarjunagiri Villages, Marpalle Mandal, Ranga Reddy District, held in the name of Pradeep Koneru valued at Rs.12,83,000/- as Proceeds of Crime

39.The complainant found that the properties mentioned above valued at Rs.167.29 crore are proceeds of crime in the form of movable and immovable properties. The Immovable properties of

Proceeds of Crime and in the form of villa plots and land are meant for sale to third parties. Some part of the said Proceeds of Crime of

Rs.96.01 crore was initially collected in cash and concealed without reflecting in the books of accounts of EHTPL/EMGF, subsequently shared partly by Sri Koneru Rajendra Prasad/A-7 who further invested in purchase of land and also in booking of Villa Plots in EHTPL/A-1.

Part of these Proceeds of Crime was shared to Sri N.Sunil Reddy/A-11, who is not at all connected to the activities of EHTPL/EMGF, who further invested the same into his own company M/s Southend

Projects/A-4 through 11 dummy companies and such transfer of amounts was reflected as share application money with premium 98 Crl.M.P.No.391/2022 amount. Further these amounts are transferred to M/s Asara Theme

Projects Pvt. Ltd./A-5 stating for 'purchase of land' and no land purchase was done. Sri N.Sunil Reddy/A-11 also received Rs.1.50 crore from M/s Asara Theme Projects/A-5 to his personal account, which evidences that the Proceeds of Crime earned by Sri N.Sunil

Reddy/A-11 has been subjected to many transfers. Thus it is evident that, the total proceeds of crime have been subjected to many transfers and dealings to project them as untainted property.

40.The complainant apart from the investigation conducted by CBI, they have also mentioned that the CBI investigation did not reveal the whereabouts of 11 companies, which invested Rs.45.21 crore in M/s.

Southend Projects/A-4, as these companies did not exist at the given addresses during the relevant period. The complainant investigated the said aspect which was left over by the CBI and issued summons to the 11 companies which invested in M/s. Southend Projects/A-4 at the addresses available on record as per Ministry of Corporate Affairs and also from the KYC documents received from the concerned banks.

41.The investigation conducted by the complainant revealed that most of those companies were incorporated with nominal amount of share capital just a few days prior to the dates of their investments into M/s Southend Projects/A-4. From the data retrieved from 99 Crl.M.P.No.391/2022

Registrar of Companies, Ministry of Corporate Affairs and scrutiny of the certificates of incorporation of these 11 companies revealed that some Directors are common in 3 to 4 companies and the investigating officer has collected bank account statements of those companies.

42.The documents filed by the complainant/ED shows that the petitioner/A-9 worked as a Financial Controller in Accused No.1 company from March, 2005 and as Finance Head in Accused No.2 from March, 2007 and he is having full knowledge about the

Development Agreement entered between Accused Nos.1 and 2 and also the Agency Agreement entered by Accused No.1 with Accused

No.3.

43.As per the documents, the petitioner/A-9 was authorised signatory of Accused No.2 company and executed the sale documents and he has sold the Villa Plots and collected huge amounts to a tune of Rs.6.86 crore, and the complainant relied on the documents seized by CBI i.e. Laptop from the petitioner/A-9. The complainant also relied on the statement of Sri T.Ranga Rao/A-10 and the relevant documents i.e. bank account statement and the statements of the Villa Plots owners, who have purchased the Villa Plots from Accused No.3, which clearly shows that the petitioner/A-9 in criminal conspiracy with Sri

Srikanth Joshi/A-8, CEO of Accused No.2 company and Sri Shravan 100 Crl.M.P.No.391/2022

Gupta, MD of Accused No.2 company booked 18 Villa Plots and paid 10% of the sale consideration at Rs.5,000/- per sq.yd. even though the market rate was much higher.

44.The complainant is relying on the statements recorded by them under Section 50(2) & (3) of PMLA and also the documents relied by the CBI more particularly on the statement of Sri T.Ranga Rao/A-10 (Approver).

45.The documents relied by the complainant/Enforcement

Directorate and the documents relied by the CBI and the statements recorded by the complainant/ED under Section 50(2)&(3) of PMLA, 2002, and also the statements made by the approver i.e. Accused

Nos.3 and 10 clearly shows that the complainant/ED had a prima facie case. The statement of the approver appears to be corroborating with the documents relied by the complainant as well as CBI.

46.It is to be noted that judgment of the Hon'ble Supreme Court in

Vijay Madanlal Choudhary and others v. Union of India and others [2022 SCC OnLine SC 929], wherein the Hon'ble Supreme Court held the validity of the statement recorded by the prosecution under

Section 50(2) & (3) of PMLA and also gave detailed guidelines about

Section 24 of PMLA, as under:

101 Crl.M.P.No.391/2022

(i) The question as to whether some of the amendments to the Prevention of Money-laundering Act, 2002 could not have been enacted by the Parliament by way of a Finance Act has not been examined in this judgment. The same is left open for being examined along with or after the decision of the Larger Bench (seven Judges) of this Court in the case of Rojer Mathew [(2020) 6 SCC 1].

(ii) The expression “proceedings” occurring in Clause (na) of Section 2(1) of the 2002 Act is contextual and is required to be given expansive meaning to include inquiry procedure followed by the Authorities of ED, the Adjudicating Authority, and the Special Court.

(iii) The expression “investigation” in Clause (na) of Section 2(1) of the 2002 Act does not limit itself to the matter of investigation concerning the offence under the Act and is interchangeable with the function of “inquiry” to be undertaken by the Authorities under the Act.

(iv) The Explanation inserted to Clause (u) of Section 2(1) of the 2002 Act does not travel beyond the main provision predicating tracking and reaching upto the property derived or obtained directly or indirectly as a result of criminal activity relating to a scheduled offence.

(v) (a) Section 3 of the 2002 Act has a wider reach and captures every process and activity, direct or indirect, in dealing with the proceeds of crime and is not limited to the happening of the final act of integration of tainted property in the formal economy. The Explanation inserted to Section 3 by way of amendment of 2019 does not expand the purport of Section 3 but is only clarificatory in nature. It clarifies the word “and” preceding the expression projecting or claiming as “or”; and being a clarificatory amendment, it would make no difference even if it is introduced by way of Finance Act or otherwise.

(b) Independent of the above, we are clearly of the view that the expression “and” occurring in Section 3 has to be construed as “or”, to give full play to the said provision so as to include “every” process or activity indulged into by anyone. Projecting or claiming the property as untainted property would constitute an offence of money-laundering on its own, being an independent process or activity.

(c) The interpretation suggested by the petitioners, that only upon projecting or claiming the property in question as untainted property that the offence of Section 3 would be complete, stands rejected.

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(d) The offence under Section 3 of the 2002 Act is dependent on illegal gain of property as a result of criminal activity relating to a scheduled offence. It is concerning the process or activity connected with such property, which constitutes the offence of money-laundering. The Authorities under the 2002 Act cannot prosecute any person on notional basis or on the assumption that a scheduled offence has been committed, unless it is so registered with the jurisdictional police and/or pending enquiry/trial including by way of criminal complaint before the competent forum. If the person is finally discharged/acquitted of the scheduled offence or the criminal case against him is quashed by the Court of competent jurisdiction, there can be no offence of money-laundering against him or any one claiming such property being the property linked to stated scheduled offence through him.

(vi) Section 5 of the 2002 Act is constitutionally valid. It provides for a balancing arrangement to secure the interests of the person as also ensures that the proceeds of crime remain available to be dealt with in the manner provided by the 2002 Act. The procedural safeguards as delineated by us hereinabove are effective measures to protect the interests of person concerned.

(vii) The challenge to the validity of sub-section (4) of Section 8 of the 2002 Act is also rejected subject to Section 8 being invoked and operated in accordance with the meaning assigned to it hereinabove.

(viii) The challenge to deletion of proviso to sub-section (1) of Section 17 of the 2002 Act stands rejected. There are stringent safeguards provided in Section 17 and Rules framed thereunder. Moreover, the pre-condition in the proviso to Rule 3(2) of the 2005 Rules cannot be read into Section 17 after its amendment. The Central Government may take necessary corrective steps to obviate confusion caused in that regard.

(ix) The challenge to deletion of proviso to sub-section (1) of Section 18 of the 2002 Act also stands rejected. There are similar safeguards provided in Section 18. We hold that the amended provision does not suffer from the vice of arbitrariness.

(x) The challenge to the constitutional validity of Section 19 of the 2002 Act is also rejected. There are stringent safeguards provided in Section 19. The provision does not suffer from the vice of arbitrariness.

(xi) Section 24 of the 2002 Act has reasonable nexus with the purposes and objects sought to be achieved by the 2002 Act and cannot be regarded as manifestly arbitrary or unconstitutional.

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(xii) (a) The proviso in Clause (a) of sub-section (1) of Section 44 of the 2002 Act is to be regarded as directory in nature and this provision is also read down to mean that the Special Court may exercise judicial discretion on case-to-case basis.

(b) We do not find merit in the challenge to Section 44 being arbitrary or unconstitutional. However, the eventualities referred to in this section shall be dealt with by the Court concerned and by the Authority concerned in accordance with the interpretation given in this judgment.

(xiii) (a) The reasons which weighed with this Court in Nikesh Tarachand Shah [(2018) 11 SCC 1] for declaring the twin conditions in Section 45(1) of the 2002 Act, as it stood at the relevant time, as unconstitutional in no way obliterated the provision from the statute book; and it was open to the Parliament to cure the defect noted by this Court so as to revive the same provision in the existing form.

(b) We are unable to agree with the observations in Nikesh Tarachand Shah [(2018) 11 SCC 1] distinguishing the enunciation of the Constitution Bench decision in Kartar Singh [(1994) 3 SCC 569]; and other observations suggestive of doubting the perception of Parliament in regard to the seriousness of the offence of money-laundering, including about it posing serious threat to the sovereignty and integrity of the country.

(c) The provision in the form of Section 45 of the 2002 Act, as applicable post amendment of 2018, is reasonable and has direct nexus with the purposes and objects sought to be achieved by the 2002 Act and does not suffer from the vice of arbitrariness or unreasonableness.

(d) As regards the prayer for grant of bail, irrespective of the nature of proceedings, including those under Section 438 of the 1973 Code or even upon invoking the jurisdiction of Constitutional Courts, the underlying principles and rigours of Section 45 may apply.

(xiv) The beneficial provision of Section 436A of the 1973 Code could be invoked by the accused arrested for offence punishable under the 2002 Act.

(xv) (a) The process envisaged by Section 50 of the 2002 Act is in the nature of an inquiry against the proceeds of crime and is not “investigation” in strict sense of the term for initiating prosecution; and the Authorities under the 2002 Act (referred to in Section 48), are not police officers as such.

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(b) The statements recorded by the Authorities under the 2002 Act are not hit by Article 20(3) or Article 21 of the Constitution of India.

(xvi) Section 63 of the 2002 Act providing for punishment regarding false information or failure to give information does not suffer from any vice of arbitrariness.

(xvii) The inclusion or exclusion of any particular offence in the Schedule to the 2002 Act is a matter of legislative policy; and the nature or class of any predicate offence has no bearing on the validity of the Schedule or any prescription thereunder.

(xviii) (a) In view of special mechanism envisaged by the 2002 Act, ECIR cannot be equated with an FIR under the 1973 Code. ECIR is an internal document of the ED and the fact that FIR in respect of scheduled offence has not been recorded does not come in the way of the Authorities referred to in Section 48 to commence inquiry/investigation for initiating “civil action” of “provisional attachment” of property being proceeds of crime.

(b) Supply of a copy of ECIR in every case to the person concerned is not mandatory, it is enough if ED at the time of arrest, discloses the grounds of such arrest.

(c) However, when the arrested person is produced

before the Special Court, it is open to the Special Court to look

into the relevant records presented by the authorised representative of ED for answering the issue of need for his/her continued detention in connection with the offence of money- laundering.

(xix) Even when ED manual is not to be published being an internal departmental document issued for the guidance of the Authorities (ED officials), the department ought to explore the desirability of placing information on its website which may broadly outline the scope of the authority of the functionaries under the Act and measures to be adopted by them as also the options/remedies available to the person concerned before the Authority and before the Special Court.

(xx) The petitioners are justified in expressing serious concern bordering on causing injustice owing to the vacancies in the Appellate Tribunal. We deem it necessary to impress upon the executive to take corrective measures in this regard expeditiously.

(xxi) The argument about proportionality of punishment with reference to the nature of scheduled offence is wholly unfounded and stands rejected.

105 Crl.M.P.No.391/2022

The Hon'ble Supreme Court has categorically held in Vijay

Madanlal Choudhary's case that when the allegations made in the predicate offence were held to be valid, hence the offence under

PMLA has to be disposed simultaneously, and if the predicate offence is not proved, the allegation should not be made under PMLA. In this case, in the predicate offence prima facie has been proved. Hence, the allegations made by the complainant against the accused under

PMLA, 2002 also having a prima facie case.

47.The counsel for the petitioner/A-9 relied on the concept of alter ego of the company as held by the Hon'ble Supreme Court in Sunil

Bharti Mittal case reported in 2015 AIR SC 923.

48.It is to be noted that as per the case of the prosecution, there are money transactions between Accused Nos.7, 8 and 9 and revenue sharing arrangement between Accused Nos.3 and 4 was totally revised in the Addendum dt.23.07.2008 and he had conspiracy with

Accused No.2 in preparing Development Agreement dt.03.11.2006 between Accused Nos.3 and 4 and also having a role in replacing with the Development Agreement-cum-GPA executed on 25.07.2007 and

Addendum dt.23.07.2008. It is also contended that the petitioner/A-9 had colluded with Accused Nos.15 and 8 and in pursuance of criminal conspiracy they floated companies and blocked 18 Villa Plots in the 106 Crl.M.P.No.391/2022 name of those 10 companies and he himself purchased a Villa Plot

No.A-49 in the name of his wife and the acts of the petitioner/A-8 were resulting to further loss of amount to APIIC. These facts clearly shows that the guidelines referred in Sunil Bharti Mittal case are not applicable to this case on facts.

49.The petitioner/A-9 also relied on various judgments showing the guidelines on discharge of the accused in a criminal case. In this context it is relevant to refer the guidelines enunciated by the Hon’ble

Supreme Court in Selvi’s case has to follow:

i.The Judge while considering the question of framing the charges under Section 227 CrPC has the undoubted power to sift and weigh the evidence for the limited purpose of finding out whether or not a prima facie case against the accused has been made out. The test to determine prima facie case would depend upon the facts of each case.

ii.Where the materials placed before the court disclose grave suspicion against the accused which has not been properly explained, the court will be fully justified in framing a charge and proceeding with the trial.

iii.The court cannot act merely as a post office or a mouthpiece of the prosecution but has to consider the broad probabilities of the case, the total effect of the evidence and the documents produced before the court, any basic infirmities, etc. However, at this stage, there cannot be a roving enquiry into the pros and cons of the matter and weigh the evidence as if he was conducting a trial.

iv.If on the basis of the material on record, the court could form an opinion that the accused might have committed offence, it can frame the charge, though for conviction the conclusion is required to be proved beyond reasonable doubt that the accused has committed the offence.

107 Crl.M.P.No.391/2022 v.At the time of framing of the charges, the probative value of the material on record cannot be gone into but before framing a charge the court must apply its judicial mind on the material placed on record and must be satisfied that the commission of offence by the accused was possible.

vi.At the stage of Sections 227 and 228, the court is required to evaluate the material and documents on record with a view to find out if the facts emerging therefrom taken at their face value disclose the existence of all the ingredients constituting the alleged offence. For this limited purpose, sift the evidence as it cannot be expected even at that initial stage to accept all that the prosecution states as gospel truth even if it is opposed to common sense or the broad probabilities of the case.

vii.If two views are possible and one of them gives rise to suspicion only, as distinguished from grave suspicion, the trial Judge will be empowered to discharge the accused and at this stage, he is not to see whether the trial will end in conviction or acquittal.”

50.And also it is prudent principles laid down by the Hon’ble

Supreme Court that at the stage of framing of charge roving and fishing enquiry is impermissible. If the contention of the accused is accepted, there would be a mini trial at the stage of framing of charge. That would defeat the object of the Code. It is well settled that at the stage of framing of charge the defence of the accused cannot be put forth. At the stage of framing of charge hearing the submissions of the accused has to be confined to the material produced by the police and “court is required to evaluate the material and documents on record with a view to find out if the facts emerging therefrom taken at their face value disclose the existence of all the ingredients constituting the alleged offence.” 108 Crl.M.P.No.391/2022

51.It is also to be noted that the Hon’ble Supreme Court of India in

Stree Atyachar Virodhi Parishad v. Dilip N.Chardia reported in 1989 (1)

SCC 715 held that “The ground in the context is not a ground for conviction but a ground for putting the accused on trial. It is in the trial, the guilt or the innocence of the accused will be determined and not at the time of framing of charge. The court therefore, need not under taken an elaborate enquiry in sifting and weighing the material.

Nor it is necessary to delve deep into various aspect. All that court has to consider is whether the evidentiary material on record if generally accepted, would reasonably connect the accused with the crime. No more need be enquired into”.

52.In view of the guidelines enunciated by the Hon’ble Supreme

Court in various judgments, the moto is that Judge while considering the question of framing charges, he has to find out whether there is prima-facie case against the accused has been made out and the test to determine a prima-facie case would naturally depend upon the facts of each case and also it cannot be expected even at that initial stage to accept all that the prosecution states as gospel truth even if it is opposed to common sense or the broad probabilities of the case and also consider the distinction between suspicion and grave suspicion. Apart from that trial judge has to see that the material and 109 Crl.M.P.No.391/2022 the contention of the prosecution is sufficient to end in conviction or acquittal.

53.Apart from that, one of the Accused i.e. Tummala Ranga Rao (A-10) and M/s. Stylish Holmes Real Estates Pvt. Ltd. (A-3) were granted Tender of Pardon and their evidence is crucial in view of the corroboration of various anomalies in the documents executed between APIIC and Emaar Properties/A-2 and money transaction among the accused.

54.In view of the above discussions, the complainant/ED not only relied on the documents and the investigation conducted by CBI, they also conducted further investigation in all aspects and also relied on the documents i.e. bank statements of the alleged non-existing 11 companies. The admissibility of Section 50(2)&(3) of PMLA and

Section 24 of PMLA as guided by the Hon'ble Supreme Court, clearly emphasises the prima facie case of the prosecution. Hence, unless a detailed trial is conducted, truth will not come to light. Hence, the petition deserves to be dismissed.

55.In the result, the petition is dismissed.

Typed to my dictation, corrected and pronounced by me in the open Court on this the 30th day of April, 2024.

Sd/-

PRINCIPAL SPECIAL JUDGE FOR

CBI CASES, HYDERABAD.

1

IN THE COURT OF PRINCIPAL SPECIAL JUDGE FOR CBI CASES,

HYDERABAD

Dated: Tuesday, the 30th day of April, 2024.

Present:Sri Ch. Ramesh Babu

Principal Special Judge for CBI

Cases, Hyderabad.

Crl.M.P.No.390/2022

In

S.C.No.1/2019

Between:

Srikanth P. Joshi, S/o. Late P.R. Joshi, Age: 63 yrs, Occ: The then C.E.O., M/s. Emaar MGF Land Ltd., Presently Chief Executive M/s. L & T Realty Pvt. Ltd., 8th Floor, ANM Tower gate No.3, JVLR Road, Powai, Mumbai- 400072, R/o. Flat No.201, Vista 3, Opp. R City Mall, LBS Marg, Ghatkopar West Mumbai-

400086.….. Petitioner/Accused No.8

AND

The Directorate of Enforcement, Represented by its Assistant Director, Government of India, Ministry of Finance, Department of Revenue, 3rd floor, Shakar Bhavan, Fateh Maidan Road,

Hyderabad-500004.….. Respondent/Complainant

This petition coming before me on 13.07.2023 for final hearing in the presence of Sri Bujjibabu Davuluri, Counsel for the Petitioner/ 2 Crl.M.P.No.390/2022

Accused No.8 and of Sri T.V.Subba Rao, Special Public Prosecutor for the Respondent/Complainant and after hearing the arguments and perusing the material on record, and the matter having been stood over for consideration till this day, this Court made the following:

O R D E R

1.The petitioner/Accused No.8 filed petition u/s. 227 Cr.P.C. on 12.01.2022 praying the Court to discharge the petitioner from the prosecution case.

2. The petitioner averred in the petition that the petitioner has been arrayed as Accused No.8 in this case and the same is coming up for framing of charges and the Directorate of Enforcement Hyderabad, have filed charge sheet for the alleged violation of Section 3 punishable under Section 4 of the Prevention of Money Laundering

Act, 2002, against the petitioner.

2.1.The petitioner further averred that he was initially the

Chief Executive Officer (South) of Accused No.2 Company from April, 2006 to December, 2008 and thereafter Chief Executive Officer from

April, 2009 to May, 2011. During his period of employment he was inter alia entrusted by the Board of Accused No.2 company for the day to day running of the Hyderabad project, and hence a salaried employee and all actions were taken in good faith. Further it is submitted that to carry out his functions and duties petitioner was 3 Crl.M.P.No.390/2022 assisted by the Chief Finance Officer (South)/Accused No.9 who was reporting directly to him. All the allegations leveled against him in the charge sheet are prima facie groundless. All actions carried out by him/on his directions, were done in the utmost good faith, in a bonafide manner in the normal course of business, on behalf of the company as per authority conferred on him by the board, to whom he was reporting directly. A bare reading of the charges leveled against the petitioner by the respondent/complainant clearly shows that the petitioner was acted in representative capacity.

2.2.The petitioner further averred that he is falsely implicated in this case and there is no legally acceptable and reliable material to show the complicity of the Petitioner in the alleged offence. There is no legally sustainable material to show that the petitioner herein has committed the alleged offence of violation of Section 3 punishable

U/s. 4 of the Prevention of Money Laundering Act, 2002 and the allegations even taken at face value do not attract the offences as alleged against the Petitioner. There is no evidence that the

Petitioner/Accused No.8 directly or indirectly attempted to indulge or knowingly assisted or knowingly was a party or was actually involved in any process or activity connected with the proceeds of crime and projecting it as untainted property.

4 Crl.M.P.No.390/2022 2.3.The petitioner further averred that the charge sheet is based on the investigation conducted by CBI and their final report.

From a reading of the Police Report and the material sent therein, it is very clear that the charges against the Petitioner/Accused No.8 are groundless and for reasons more than one the Petitioner/Accused is entitled to be discharge u/sec. 227 of Criminal Procedure Code. There is no evidence to prove that he is instrumental in depriving the share of APIIC, as such the complaint does not disclose any of the offences alleged and there is no scope for conviction of the petitioner/accused.

2.4.The petitioner further averred that he is only an employee during the relevant period, therefore involving Petitioner/Accused

No.8 in the present case is not justified as it is causing harassment to the Petitioner/Accused No.8 resulting in grave injustice. Even as per the prosecution, the duty of the petitioner is to look after project executions, sales and recruitments and he is reporting to the Board.

2.5.The petitioner further averred that the respondent/ complainant failed to make out a case for conviction and the mere suspicion of motive cannot serve as a sufficient ground for framing the charges in the absence of any material, prima facie showing that the particular motive has passed into action and that the accused is connected with that action in question. The evidence if any against 5 Crl.M.P.No.390/2022 the petitioner is not legal and flooded with inconsistencies and contradictions making the story inherently improbable, highly unbelievable and far from the truth and for the framing of the charges it needs prima facie evidence which is lacking in this case due to which the petitioner herein need to be discharged.

2.6.The petitioner further averred that investigation agency failed to see the main agreements between the companies wherein they have every right to assign the work to the other parties. The petitioner being a CEO/employee/alternative Director prima-facie has no knowledge about the intensions of the companies, unless and until the Board reveals the same. The investigating agency failed to note that the petitioner being the CEO/alternative director has to follow the instructions of the board. There is no whisper/allegation that the petitioner has accepted any cash from any of the villa owners or that any such amount has been recovered from him and the petitioner is nothing to do with the activities of the other individuals. Therefore, the petitioner prayed to discharge him from the prosecution case.

3.The Respondenthas filed counter denying the allegations made by the petitioner in the petition. The respondent submitted that the present case has been registered against the petitioner/Accused

No.8 and other accused for the offence under Section 3 punishable 6 Crl.M.P.No.390/2022 under Section 4 of the Prevention of Money Laundering Act, 2002 basing on the investigation and final report of CBI case registered vide its RC.No.35-A-2011-0018, dt.17-08-2011 and after investigation by

CBI agency have filed charge sheet.

3.1.The Respondent further submitted that the facts of case are that the then Govt. of A.P issued G.O.Ms.No.359, Dt;04/09/2002 for development of an integrated projects including multi use development at Manikonda, R.R. Dist. in 535 acres and further the

Govt. of A.P. issued G.O.Ms.No.14, Dt:11/01/2005 amended by

G.O.Ms.No.22, Dt: 27/01/2005 for development of township project at

Manikonda by Accused no.1 with equity structure of 74:26 to the

Developer and APIIC respectively. The Development Agreement was executed between Accused No. 1 and Accused No.2, Dt:03/11/2006 to undertake development, for which Accused no.2 was entitled 75% of gross revenue in total through sale or lease proceeds and subsequently a Development Agreement cum General Power of

Attorney and an Addendum to Development Agreement & GPA,

Dt:23/07/2008 was executed between accused for Sale of villa plots.

3.2.The Respondent further submitted that an Agency

Agreement, Dt:29/01/2005 was entered between Accused No.1 and

Accused No.3 under which 100 plots are to be sold for Rs.5000/- per 7 Crl.M.P.No.390/2022

Sq.yard and remaining villa plots were to be sold at prevailing market rates and it is responsibility of Accused No.1; and APIIC conveyed 258.36 acres of land in favour of Accused No.1 vide Conveyance

Deed, Dt:28/12/2005 and the Accused No.1 executed Development

Agreement Dt:03/11/2006 with Accused No.2 by inducting as a co-developer. But Accused No.1 and Accused No.3 booked as many 43 villa plots till Dt:27/12/2005 i.e, even before execution of Conveyance

Deed, Dt;28/12/2005 by APIIC in favour of Accused No.1.

3.3.The Respondent further submitted that as per the instructions of Accused No.2 rep. by its Director that 10 different companies were floated and booked 18 villas plots @ Rs.5000/ per

Sq.yard. So that the same could be sold at premium rates in future and the funds were transferred to block the villa plots in the name of these 10 companies during the year 2010 by paying 10% of Sale

Consideration of Rs.5000/- per Sq.yard and other villa plots were being sold to other buyers at Rs.50,000/- per Sq.yard.

3.4.The Respondent further submitted that as per revenue sharing agreement and books of account that the accused are required to pass on 25% of Gross Annual Revenue. However, it was never transferred into books of accounts of APIIC and thus the accused misappropriated the revenue from the integrated project. As 8 Crl.M.P.No.390/2022 per G.O's issued by the Govt. of A.P., the Accused No.1 was required to develop the project land which includes constructing villas and apartments. It was never intended by Govt. of A.P to sell villa plots and however the agency agreement, Dt:29/01/2005 executed on behalf of the Accused No.1 was nothing but clandestine arrangement in furtherance of the criminal conspiracy to dispose of the project land without developing the same and thereby APIIC deprives its legitimate revenue share from the developed villas.

3.5.The Respondent further submitted that 13 villa plots including three model villas were sold by Accused No.1 & 2 directly to buyers and during investigation one of the above said villa/plot buyer confirmed having paid excess amount of Rs.2,80,40,000/- in cash over and above documented price of Rs.5,000/- per Sq.yard and the said amount was sent by him to the office of Accused No.1 as per the instructions of Accused No. 9 and further it is pertinent to mention that two villa plots buyers who purchased villa plots during same period have also confirmed to have paid excess amount of

Rs.20,000/- per Sq.yard in cash over the document price.

3.6.The Respondent further submitted that the existence of criminal conspiracy on part of accused to deprive APIIC lawful revenue share by booking villa plots @ Rs.5,000/- per Sq.yards and the 9 Crl.M.P.No.390/2022 criminal intent of accused is also evident from the transactions and fact that villa plots were sold at higher price and however in furtherance of the conspiracy the amounts of Rs.2,80,40,000/- and also Rs.4,05,20,000/- totaling to Rs.6,85,60,000/- was collected from two villas plots in cash for sale consideration.

3.7.The Respondent further submitted that accused no.12 s/o. accused no.7 carrying business in Dubai received an amount of

USD. 2,50,000/- into his personal from Sri. P.S. Parthasarathy, the buyer of plot villa in EHTPL, who has stated that he purchased a plot at cost of Rs.50,0001- per Sq yard out of which he has paid an amount of Rs.5,000/ per Sq.yard through cheque and balance amount of Rs.45,0001- per Sq yard amounting to Rs.5,13,00,000/ in cash and he has paid an amount of Rs.4,08,00,000/- to accused no.10 at the residence of accused no.7. Similarly, accused no.12 has received USD 1,40,0001- an amount equivalent to Rs.65 lakhs from Sri Challa

Suresh, who purchased villa plot in EHTPL.

3.8.The Respondent further submitted that it is also revealed during investigation that accused no.9 collected an amount of

Rs.6,85,60,000/- from sale of three villa plots over the above document price Rs.5,000/ per Sqyard and the investigations by CBI revealed that during 2006-07 to Aug-2011 the total realization from 10 Crl.M.P.No.390/2022 villas plots is to extent of Rs.73.19 crores and from villa Rs.21.36 crores totaling to Rs. 94.56 crores. That EMGF also realized amounts from the buyers of apartments to extent of Rs.248.33 crores and the accused no.4 company established by accused no.11 had received funds from several companies, but the whereabouts of Directors of said companies could not be ascertained and the so called companies did not exist physically during relevant period and no trade license was issued in favour of many companies including accused no.4 by

GHMC, Hyd., which clearly shows that the said companies were floated only for purpose of transferring funds.

3.9.The Respondent further submitted that as per Agency

Agreement, Dt:2/01/2005 plots beyond 100 were to be sold at prevailing market rates to be decided by accused no.1, however in criminal conspiracy that the accused no.9, 8, Sri. Shravan Gupta, MD of accused no.2 company did not revise rates in tune with prevalent market rates and out of 136 villa plots, 105 were sold through accused no.3 and remaining 31 were sold directly by accused no.2 during 2009-2010, out of these 31 plots sale of 13 villa plots was finalized by accused no.9 and Sri. Shravan Gupta, MD of accused no.2 company has blocked/booked 18 villa plots in the names of other companies at Rs.5,000/- per Sq yard to sell them at higher rates at later date to obtain undue pecuniary gain.

11 Crl.M.P.No.390/2022 3.10.The Respondent further submitted that an amount of

Rs.96.01 crores collected by accused no.10 and Rs.6.85 crores collected by accused no.9 for accused no.2 over and above documented price, which should have gone to APIIC @ 26% revenue share in profit worked out in all, which was never transferred to APIIC.

Hence accused no.9 in conspiracy with accused no.8 and Sri Shravan

Gupta deliberately did not share any revenue, which finally deprive

APIIC of its legitimate revenue share and caused wrongful loss to a tune of Rs.43.50 crores and at the same time EMGF and EPJSC obtained undue pecuniary benefit of Rs. 167.29 crores.

3.11.The Respondent further submitted that on receiving documents from CBI, during course of investigation made enquires and having found that there is prima facie case under PMLA 2002 against all the accused including the accused herein and further in course of investigation summons were issued under Section 50 of

PMLA 2002 to several accused, also others persons who were associated with transactions and recorded their voluntary statements, obtained financial accounts and Bank statements respectively.

3.12.The Respondent further submitted that as per the investigation done so far and documents collected by the investigation officer, the statements of the accused recorded U/Sec.50 12 Crl.M.P.No.390/2022 of PMLA 2002 categorically establishes prima facie case against petitioner/accused no.8 and therefore the petition filed by the petitioner/accused no.8 is not maintainable and liable to be dismissed. The contentions raised by the petitioner/accused No.8 in filing the present petition for discharge cannot be looked into at this stage and can only be decided after commencement of trial and after completing full fledge trial.

3.13.In support of the contentions, the Respondent relied on the judgment of Hon’ble Supreme Court reported in 2020 (1) ALT (Crl.) 330 SC, wherein the Hon’ble Supreme Court held that:

“Procedure in framing of charges - At the time of framing of the charges, the probative value of the material on record cannot be gone into, and the material brought on record by the prosecution has to be accepted as true" "Framing of Charges - The defence of the accused is not to be looked into at the stage when the accused seeks to be discharged Under Section 227 of Cr.P.C." 3.14.The Respondent also relied on the judgment of Hon’ble

Supreme Court reported in 2020 (1) ALT (Crl.) 129, the Hon’ble

Supreme Court held that:

"Framing of Charges - At the stage of framing of charges, the Court is not obligated to appreciate the evidence or make a roving enquiry as to whether the evidence collected by the prosecution during the course of investigation and the material collected would lead to a conviction.” 13 Crl.M.P.No.390/2022 3.15.The Respondent further submitted that PML Act, 2002 being a special statute postulates reverse burden on the accused. As per Sec 24 of PML Act, 2002, this Hon'ble shall presume unless contrary is proved, that proceeds of crime are involved in money laundering and as such it is crystal clear that burden is on the accused to prove that proceeds of crime is not involved in money laundering. The said burden cannot be discharged at this juncture and can be elicited only after appreciation of oral and documentary evidences, and on this score alone the petition is liable to be dismissed. Hence, prayed to dismiss the petition.

4.Heard both sides. Perused the record.

5.Now the point for determination is:

-Whether the petitioner/Accused No.8 can be discharged under Section 227 of Cr.P.C. in S.C.No. 01 of 2019?

POINT:

6.The counsel for the petitioner averred that the petitioner/A-8 is only an authorized signatory, hence he cannot be figured as accused and he relied on following judgments:

14 Crl.M.P.No.390/2022

(i)In case of K.K. Ahuja Vs V.K. Vora and another reported in (2009) 10 SCC 48, wherein the Hon’ble Supreme Court held at para Nos.15, 17 to 21, 24 and 30 as follows:

“15.The prevailing trend appears to require the complainant to state how a Director who is sought to be made an accused, was in charge of the business of the company, as every director need not be and is not in charge of the business of the company. If that is the position in regard to a director, it is needless to emphasise that in the case of non-director officers, there is all the more the need to state what his part is with regard to conduct of business of the company and how and in what manner he is liable.

17.The criminal liability for the offence by a company under Section 138, is fastened vicariously on the persons referred to in sub-section (1) of Section 141 by virtue of a legal fiction. Penal statutes are to be construed strictly. Penal statutes providing constructive vicarious liability should be construed much more strictly. When conditions are prescribed for extending such constructive criminal liability to others, courts will insist upon strict literal compliance. There is no question of inferential or implied compliance. Therefore, a specific averment complying with the requirements of Section 141 is imperative. As pointed out in K. Srikanth Singh vs. North East Securities Ltd., the mere fact that at some point of time, an officer of a company had played some role in the financial affairs of the company, will not be sufficient to attract the constructive liability under Section 141 of the Act.

18.Sub-section (2) of Section 141 provides that a Director, Manager, Secretary or other officer, though not in charge of the conduct of the business of the company will be liable if the offence had been committed with his consent or connivance or if the offence was a result of any negligence on his part. The liability of persons mentioned in sub-section (2) is not on account of any legal fiction but on account of the specific part played - consent and connivance or negligence. If a person is to be made liable under sub-section (2) of Section 141, then it is necessary to aver consent and connivance, or negligence on his part.

19.This takes us to the next question under sub-section (1) of Section 141, as to: (i) who are the persons who are 15 Crl.M.P.No.390/2022 responsible to the company for the conduct of the business of the company, and (ii) who could be said to be in charge and was responsible to the company for the conduct of the business of the company. The words "every person who, at the time of the offence was committed, was in charge of, and was responsible for the conduct of the business of the company" occurs not only in Section 141 (1) of the Act but in several enactments dealing with offences by companies, to mention a few – Section 278-B of the Income Tax Act, 1961, Section 22-C of Minimum Wages Act, 1948, Section 86-A of the Employees State Insurance Act, 1948, Section 14-A of Employee’s Provident Funds and Miscellaneous Provisions Act, 1952, Section 29 of Payment of Bonus Act, 1965, Section 40 of The Air (Prevention and Control of Pollution) Act, 1981 and Section 47 of Water (Prevention and Control of Pollution) Act, 1974. But neither Section 141(1) of the Act, nor the pari materia provisions in other enactments give any indication as to who are the persons responsible to the company, for the conduct of the business of the company. Therefore, we will have to fall back upon the provisions of Companies Act, 1956 which is the law relating to and regulating companies.

20.Section 291 of the Companies Act, 1956 provides that subject to the provisions of that Act, the Board of Directors of a company shall be entitled to exercise all such powers, and to do all such acts and things, as the company is authorised to exercise and do. A company though a legal entity can act only through its Board of Directors. The settled position is that a Managing Director is prima facie in charge of and responsible for the company's business and affairs and can be prosecuted for offences by the company. But insofar as other directors are concerned, they can be prosecuted only if they were in charge of and responsible for the conduct of the company's business.

21.A combined reading of Section 5 and 291 of Companies Act, 1956 with the definitions in clauses (24), (26), (30), (31), (45) of Section 2 of that Act would show that the following persons are considered to be the persons who are responsible to the company for the conduct of the business of the company :

(a) the Managing Director/s;

(b) the Whole-time Director/s;

(c) the manager;

(d) the secretary; 16 Crl.M.P.No.390/2022

(e) any person in accordance with whose directions or instructions the Board of directors of the company is accustomed to act;

(f) any person charged by the Board with the responsibility of complying with that provision (and who has given his consent in that behalf to the Board); and

(g) where any company does not have any of the officers specified in clauses (a) to (c), any Director or Directors who may be specified by the Board in this behalf or where no director is so specified, all the directors. It follows that other employees of the company, cannot be said to be persons who are responsible to the company, for the conduct of the business of the company.

24.Therefore, the averment in a complaint that an accused is a director and that he is in charge of and is responsible to the company for the conduct of the business of the company, duly affirmed in the sworn statement, may be sufficient for the purpose of issuing summons to him. But if the accused is not one of the persons who falls under the category of 'persons who are responsible to the company for the conduct of the business of the company' (listed in para 21 above), then merely by stating that 'he was in charge of the business of the company' or by stating that 'he was in charge of the day to day management of the company' or by stating that “he was in charge of, and was responsible to the company for the conduct of the business of the company”, he cannot be made vicariously liable under Section 141(1) of the Act.

30.A Deputy General Manager is not a person who is responsible to the company for the conduct of the business of the company. He does not fall under any of the categories (a) to

(g) listed in Section 5 of the Companies Act (extracted in para 21 above). Therefore the question whether he was in charge of the business of the company or not, is irrelevant. He cannot be made vicariously liable under Section 141 (1) of the Act. If he has to be made liable under Section 141(2), the necessary averments relating to consent/connivance/ negligence should have been made. In this case, no such averment is made. Hence the first respondent, who was the Deputy General Manger, could not be prosecuted either under sub-section (1) or under sub- section (2) of Section 141 of the Act.

17 Crl.M.P.No.390/2022

(ii)In case of State of NCT of Delhi vs. Rajiv Khurana reported in (2010) 11 SCC 469, wherein the Hon’ble Supreme

Court held at para No.20 as follows:

20.The legal position which emerges from a series of judgments is clear and consistent that it is imperative to specifically aver in the complaint that the accused was in charge of and was responsible for the conduct of the business of the company. Unless clear averments are specifically incorporated in the complaint, the respondent cannot be compelled to face the rigmarole of a criminal trial.”

(iii)In case of GHCL Employees Stock Option Trust vs India

Infoline Limited and others reported in (2013) 4 SCC 505, wherein the Hon’ble Supreme Court held at para Nos.17 and 18 as follows:

17. In Maksud Saiyed v. State of Gujarat, this Court while discussing vicarious liability observed as under :- (SCC p. 674, para 13) “13. Where a jurisdiction is exercised on a complaint petition filed in terms of Section 156(3) or Section 200 of the Code of Criminal Procedure, the Magistrate is required to apply his mind. The Penal Code does not contain any provision for attaching vicarious liability on the part of the Managing Director or the Directors of the Company when the accused is the Company. The learned Magistrate failed to pose unto himself the correct question viz., as to whether the complaint petition, even if given face value and taken to be correct in its entirety, would lead to the conclusion that the respondents herein were personally liable for any offence. The Bank is a body corporate. Vicarious liability of the Managing Director and Director would arise provided any provision exists in that behalf in the statute. Statutes indisputably must contain provision fixing such vicarious liabilities. Even for the said purpose, it is obligatory on the part of the complainant to make requisite allegations which would attract the provisions constituting vicarious liability.” 18 Crl.M.P.No.390/2022

18.From a bare perusal of the order passed by the

Magistrate, it reveals that two witnesses including one of the

trustees were examined by the complainant but none of them specifically stated as to which of the accused committed breach of trust or cheated the complainant except general and bald allegations made therein. While ordering issuance of summons, the learned Magistrate concluded as under:

“The complainant has submitted that Accused 2 to 6 are the Directors of the company and Accused 7 is the Secretary of the Company and were looking after the day-to-day affairs of the Company and were also responsible for conduct and business of Accused No.1 and sometime or the other have interacted with the complainant.

I have heard arguments on behalf of the complainant and perused the record. From the allegations raised, documents placed on record and the evidence led by the witnesses, prima facie an offence under Sections 415,409/34/120-B is made out. Let all the accused hence be summoned to face trial under the aforesaid sections on PF/RC/Speed Post/courier for 2-12-2008”

(iv)In case of Sunil Bharti Mittal Vs. Central Bureau of

Investigation reported in (2015) 4 SCC 609, wherein the Hon’ble

Supreme Court held at para Nos.42 to 44 as follows:

“42.No doubt, a corporate entity is an artificial person which acts through its officers, directors, managing director, chairman etc. If such a company commits an offence involving mens rea, it would normally be the intent and action of that individual who would act on behalf of the company. It would be more so, when the criminal act is that of conspiracy. However, at the same time, it is the cardinal principle of criminal jurisprudence that there is no vicarious liability unless the statute specifically provides so.

43.Thus, an individual who has perpetrated the commission of an offence on behalf of a company can be made accused, along with the company, if there is sufficient evidence of his active role coupled with criminal intent. Second situation in which he can be implicated is in those cases where the statutory regime itself attracts the doctrine of vicarious liability, by specifically incorporating such a provision.

19 Crl.M.P.No.390/2022

44.When the company is the offender, vicarious liability of the Directors cannot be imputed automatically, in the absence of any statutory provision to this effect. One such example is Section 141 of the Negotiable Instruments Act, 1881. In Aneeta Hada, the Court noted that if a group of persons that guide the business of the company have the criminal intent, that would be imputed to the body corporate and it is in this backdrop, Section 141 of the Negotiable Instruments Act has to be understood. Such a position is, therefore, because of statutory intendment making it a deeming fiction. Here also, the principle of "alter ego", was applied only in one direction namely where a group of persons that guide the business had criminal intent, that is to be imputed to the body corporate and not the vice versa. Otherwise, there has to be a specific act attributed to the Director or any other person allegedly in control and management of the company, to the effect that such a person was responsible for the acts committed by or on behalf of the company.”

(v)In case of Standard Chartered Bank Vs State of

Maharashtra and Others reported in (2016) 6 SCC 62 , wherein the Hon’ble Supreme Court held at para Nos.20 & 21 as follows:

20.Thereafter the Court referred to the authority in Saroj Kumar Poddar v. State (NCT of Delhi) and noted the observations which we think it apt to reproduce:- “25……….’14. Apart from the Company and the appellant, as noticed hereinbefore, the Managing Director and all other Directors were also made accused. The appellant did not issue any cheque. He, as noticed hereinbefore, had resigned from the directorship of the Company. It may be true that as to exactly on what date the said resignation was accepted by the Company is not known, but, even otherwise, there is no averment in the complaint petitions as to how and in what manner the appellant was responsible for the conduct of the business of the Company or otherwise responsible to it in regard to its functioning. He had not issued any cheque. How he is responsible for dishonour of the cheque has not been stated. The allegations made in para 3, thus, in our opinion do not satisfy the requirements of Section 141 of the Act.”

21. The said observations were clarified by stating that:- 20 Crl.M.P.No.390/2022 “26. A faint suggestion was made that this Court in Saroj Kumar Poddar has laid down the law that the complaint petition not only must contain averments satisfying the requirements of Section 141 of the Act but must also show as to how and in what manner the appellant was responsible for the conduct of the business of the company or otherwise responsible to it in regard to its functioning. A plain reading of the said judgment would show that no such general law was laid down therein. The observations were made in the context of the said case as it was dealing with a contention that although no direct averment was made as against the appellant of the said case fulfilling the requirements of Section 141 of the Act but there were other averments which would show that the appellant therein was liable therefor.”

(vi)In case of Sushil Sethi and another Vs. State of Arunachal

Pradesh and others reported in (2020) 3 SCC 240, wherein the

Hon’ble Supreme Court held at para Nos.8 & 9 as follows:

8.Applying the law laid down by this Court in the aforesaid decisions to the facts of the case on hand, we are of the opinion that this is a fit case to exercise powers under Section 482 Cr.P.C. and to quash the impugned criminal proceedings.

8.1. As observed hereinabove, the charge-sheet has been filed against the appellants for the offences under Section 420 read with Section 120-B of the IPC. However, it is required to be noted that there are no specific allegations and averments in the FIR and/or even in the charge-sheet that fraudulent and dishonest intention of the accused was from the very beginning of the transaction. It is also required to be noted that contract between M/s. SPML Infra Limited and the Government was for supply and commissioning of the Nurang Hydel Power Project including three power generating units. The appellants purchased the turbines for the project from another manufacturer. The company used the said turbines in the power project. The contract was in the year 1993. Thereafter in the year 1996 the project was commissioned. In the year 1997, the Department of Power issued a certificate certifying satisfaction over the execution of the project. Even the defect liability period ended/expired in January, 1998. In the year 2000, there was some defect found with respect to three turbines. Immediately, the turbines were replaced. The power 21 Crl.M.P.No.390/2022 project started functioning right from the very beginning – 1996 onwards. If the intention of the company/appellants was to cheat the Government of Arunachal Pradesh, they would not have replaced the turbines which were found to be defective. In any case, there are no specific allegations and averments in the complaint that the accused had fraudulent or dishonest intention at the time of entering into the contract. Therefore, applying the law laid down by this Court in the aforesaid decisions, it cannot be said that even a prima facie case for the offence under Section 420 IPC has been made out.

8.2. It is also required to be noted that the main allegations can be said to be against the company. The company has not been made a party. The allegations are restricted to the Managing Director and the Director of the company respectively. There are no specific allegations against the Managing Director or even the Director. There are no allegations to constitute the vicarious liability. In Maksud Saiyed v. State of Gujarat [(2008) 5 SCC 668], it is observed and held by this Court that the penal code does not contain any provision for attaching vicarious liability on the part of the Managing Director or the Directors of the company when the accused is the company. It is further observed and held that the vicarious liability of the Managing Director and Director would arise provided any provision exists in that behalf in the statute. It is further observed that statute indisputably must contain provision fixing such vicarious liabilities. It is further observed that even for the said purpose, it is obligatory on the part of the complainant to make requisite allegations which would attract the provisions constituting vicarious liability. In the present case, there are no such specific allegations against the appellants being Managing Director or the Director of the company respectively. Under the circumstances also, the impugned criminal proceedings are required to be quashed and set aside.

8.3 At this stage, it is required to be noted that though the FIR was filed in the year 2000 and the charge-sheet was submitted/filed as far back as on 28.5.2004, the appellants were served with the summons only in the year 2017, i.e., after a period of approximately 13 years from the date of filing the charge-sheet. Under the circumstances, the High Court has committed a grave error in not quashing and setting aside the impugned criminal proceedings and has erred in not exercising the jurisdiction vested in it under Section 482 Cr.P.C.

9. In view of the above and for the reasons stated above, we are of the firm opinion that this is a fit case to exercise the 22 Crl.M.P.No.390/2022 powers under Section 482 Cr.P.C. and to quash the criminal proceedings against the appellants for the offence under Section 420 read with Section 120B of the IPC. To continue the criminal proceedings against the appellants would be undue harassment to them. As observed hereinabove, no prima facie case for the offence under Section 420 of the IPC is made out.

(vii)In case of Shafiya Khan Alias Shakuntala Prajapati Vs

State of Uttar Pradesh reported in (2022) 4 SCC 549, wherein the

Hon’ble Supreme Court held at para Nos.14 to 16, 18 and 19 as

follows:

14.The exposition of law on the subject relating to the exercise of the extra-ordinary power under Article 226 of the Constitution or the inherent power under Section 482 Cr.PC is well settled and to the possible extent, this Court has defined sufficiently channelized guidelines, to give an exhaustive list of myriad kinds of cases wherein such power should be exercised. This Court has held in para 102 in State of Haryana v. Bhajan Lal as under :

“102. In the backdrop of the interpretation of the various relevant provisions of the Code under Chapter XIV and of the principles of law enunciated by this Court in a series of decisions relating to the exercise of the extraordinary power under Article 226 or the inherent powers under Section 482 of the Code which we have extracted and reproduced above, we give the following categories of cases by way of illustration wherein such power could be exercised either to prevent abuse of the process of any court or otherwise to secure the ends of justice, though it may not be possible to lay down any precise, clearly defined and sufficiently channelised and inflexible guidelines or rigid formulate and to give an exhaustive list of myriad kinds of cases wherein such power should be exercised.

(1) Where the allegations made in the First Information Report or the complaint, even if they are taken at their face value and accepted in their entirety do not prima facie constitute any offence or make out a case against the accused.

23 Crl.M.P.No.390/2022 (2) Where the allegations in the First Information Report and other materials, if any, accompanying the FIR do not disclose a cognizable offence, justifying an investigation by police officers under Section 156(1) of the Code except under an order of a

Magistrate within the purview of Section 155(2) of the Code.

(3) Where the uncontroverted allegations made in the FIR or complaint and the evidence collected in support of the same do not disclose the commission of any offence and make out a case against the accused.

(4) Where the allegations in the FIR do not constitute a cognizable offence but constitute only a non-cognizable offence, no investigation is permitted by a police officer without an order of a Magistrate as contemplated under Section 155(2) of the Code.

(5) Where the allegations made in the FIR or complaint are so absurd and inherently improbable on the basis of which no prudent person can ever reach a just conclusion that there is sufficient ground for proceeding against the accused.

(6) Where there is an express legal bar engrafted in any of the provisions of the Code or the concerned Act (under which a criminal proceeding is instituted) to the institution and continuance of the proceedings and/or where there is a specific provision in the Code or the concerned Act, providing efficacious redress for the grievance of the aggrieved party.

(7) Where a criminal proceeding is manifestly attended with malafide and/or where the proceeding is maliciously instituted with an ulterior motive for wreaking vengeance on the accused and with a view to spite him due to private and personal grudge

15.The principles laid down by this Court have consistently been followed, as well as in the recent judgment of three Judge judgment of this Court in Neeharika Infrastructure Pvt. Ltd. v. State of Maharashtra and Others [(2021) 19 SCC 401].

16.It is no doubt true that the power of quashing of criminal proceedings should be exercised very sparingly and with circumspection and that too in rarest of the rare cases and it was not justified for the Court in embarking upon an enquiry as to the reliability or genuineness or otherwise of the allegations made in the FIR or the complaint and that the 24 Crl.M.P.No.390/2022 inherent powers do not confer any arbitrary jurisdiction on the Court to act according to its whims and fancies.

18.Although it is true that it was not open for the Court to embark upon any enquiry as to the reliability or genuineness of the allegations made in the FIR, but at least there has to be some factual supporting material for what has been alleged in the FIR which is completely missing in the present case and documentary evidence on record clearly supports that her Nikah Nama was duly registered and issued by competent authority and even the charge sheet filed against her does not prima facie discloses how the marriage certificate was forged.

19. In the given circumstances and going through the complaint on the basis of which FIR was registered and other material placed on record, we are of the considered view that no offence of any kind as has been alleged in the FIR, has been made out against the appellant and if we allow the criminal proceedings to continue, it will be nothing but a clear abuse of the process of law and will be a mental trauma to the appellant which has been completely overlooked by the High Court while dismissing the petition filed at her instance under Section 482 Cr.PC.

(viii)In case of Rekha Jain and another vs State of Uttar

Pradesh and others reported in (2022) 3 SCC 497, wherein the

Hon’ble Supreme Court held at para Nos.6 and 7 as follows:

6.Having heard the learned counsel appearing on behalf of the respective parties and having perused the allegations in the complaint/FIR, it can be seen that the main allegations are against the other co-accused – Arun Kumar Maheshwari and others. The only allegation against the appellants is that they have purchased the property in question, which was attached in the year 1998-1999 against the amounts due and payable to the depositors, who had deposited in Kuber Mutual Benefits Ltd. between 1998-1999. It is to be noted that the property has been purchased by the appellants in the year 2019. Nothing is brought on record that at the time when the property was purchased by the appellants, the attachment was continued and/or any attachment was registered. There are no allegations that the appellants are related to the other co-accused Arun Kumar Maheshwari and others. Even from the averments and the allegations in the F.I.R., it cannot be said that there is any 25 Crl.M.P.No.390/2022 prima facie case made out against the appellants for the offences under Sections 406, 420, 467, 468, 471 and 120-B IPC. The main allegations are against other co-accused. Therefore, to continue the criminal proceedings against the appellants would be an abuse of process of law and the Court and unnecessary harassment to the appellants, who seem to be the purchasers of the property on payment of sale consideration. In the above facts and circumstances of the case, the High Court ought to have exercised its powers and discretion under Section 482 Cr.P.C. and ought to have quashed the criminal proceedings against the appellants.

7. In view of the above and for the reasons stated above, the present appeal succeeds. The impugned judgment and order passed by the High Court is hereby quashed and set aside. The criminal proceedings arising out of Case Crime No. 48 of 2019 for the offences under Sections 406, 420, 467, 468, 471 and 120-B IPC, P.S. Hapur Nagar, District Hapur including the charge sheet are hereby quashed and set aside in so far as the appellants herein – Smt. Rekha Jain and Smt. Minakshi Jain are concerned. The present appeal is accordingly allowed.”

7.The counsel for the petitioner further averred that the entire case is based on civil crimes and therefore, the case is in civil nature and he relied on the following decisions:

(i)In case of M.A.A. Annamalai vs. State of Karnataka and another reported in (2010) 8 SCC 524, wherein the Hon’ble

Supreme Court held at para No. 38 as follows:

“38.The inherent power should not be exercised to stifle the legitimate prosecution but at the same time no person be compelled to face criminal prosecution if basic ingredients of the offence alleged against him are altogether absent.” 26 Crl.M.P.No.390/2022

(ii)In case of Vesa Holdings Private Limited and another vs.

State of Kerala and others reported in (2015) 8 SCC 293, wherein the Hon’ble Supreme Court held at para Nos.12 & 13 as follows:

12.From the decisions cited by the appellant, the settled proposition of law is that every breach of contract would not give rise to an offence of cheating and only in those cases breach of contract would amount to cheating where there was any deception played at the very inception. If the intention to cheat has developed later on, the same cannot amount to cheating. In other words for the purpose of constituting an offence of cheating, the complainant is required to show that the accused had fraudulent or dishonest intention at the time of making promise or representation. Even in a case where allegations are made in regard to failure on the part of the accused to keep his promise, in the absence of a culpable intention at the time of making initial promise being absent, no offence under Section 420 of the Indian Penal Code can be said to have been made out.

13.It is true that a given set of facts may make out a civil wrong as also a criminal offence and only because a civil remedy may be available to the complainant that itself cannot be a ground to quash a criminal proceeding. The real test is whether the allegations in the complaint disclose the criminal offence of cheating or not. In the present case there is nothing to show that at the very inception there was any intention on behalf of the accused persons to cheat which is a condition precedent for an offence under Section 420 IPC. In our view the complaint does not disclose any criminal offence at all. The criminal proceedings should not be encouraged when it is found to be malafide or otherwise an abuse of the process of the court. The superior courts while exercising this power should also strive to serve the ends of justice. In our opinion, in view of these facts allowing the police investigation to continue would amount to an abuse of the process of court and the High Court committed an error in refusing to exercise the power under Section 482 Criminal Procedure Code to quash the proceedings.

(iii)In case of Chandran Ratnaswami and others vs. K.C.

Palanisamy and others reported in (2013) 6 SCC 740, wherein the

Hon’ble Supreme Court held at para No.60 as follows:

27 Crl.M.P.No.390/2022 “60.We are of the definite opinion that the complainant has manipulated and misused the process of Court so as to deprive the appellants from their basic right to move free anywhere inside or outside the country. Moreover, it would be unfair if the appellants are to be tried in such criminal proceedings arising out of alleged breach of a Joint Venture Agreement specially when such disputes have been finally resolved by the Court of competent jurisdiction. Hence, allowing the criminal proceedings arising out of FIR No.7 of 2007 to continue would be an abuse of the process of the Court and, therefore, for the ends of justice such proceedings ought to be quashed. Since the High Court failed to look into this aspect of the matter while passing the impugned order, in our opinion, the same could not be sustained in law.”

(iv)In case of Birla Corporation Limited and others vs. Adentz

Investments and Holdings Limited and others reported in (2019) 16 SCC 610, wherein the Hon’ble Supreme Court held at para

Nos.83 to 87 as follows:

83.Exercise of power under Section 482 Cr.P.C. envisages three circumstances in which the inherent jurisdiction may be exercised namely:-

(i) to give effect to an order under the Code;

(ii) to prevent abuse of the process of court; and

(iii) to otherwise secure the ends of justice.

Inherent jurisdiction under Section 482 Cr.P.C. though wide has to be exercised sparingly, carefully and with caution.

84. It is well settled that the inherent jurisdiction under Section 482 Cr.P.C. is designed to achieve a salutary purpose and that the criminal proceedings ought not to be permitted to degenerate into a weapon of harassment. When the Court is satisfied that the criminal proceedings amount to an abuse of process of law or that it amounts to bringing pressure upon the accused, in exercise of the inherent powers, such proceedings can be quashed. In Nagawwa v. Veeranna Shivalingappa Konjalgi [(1976) 3 SCC 736], the Supreme Court reviewed the 28 Crl.M.P.No.390/2022 earlier decisions and summarised the principles as to when the issue of process can be quashed and held as under:- “5. … Once the Magistrate has exercised his discretion it is not for the High Court, or even this Court, to substitute its own discretion for that of the Magistrate or to examine the case on merits with a view to find out whether or not the allegations in the complaint, if proved, would ultimately end in conviction of the accused. These considerations, in our opinion, are totally foreign to the scope and ambit of an inquiry under Section 202 of the Code of Criminal Procedure which culminates into an order under Section 204 of the Code. Thus it may be safely held that in the following cases an order of the Magistrate issuing process against the accused can be quashed or set aside:

(1) where the allegations made in the complaint or the statements of the witnesses recorded in support of the same taken at their face value make out absolutely no case against the accused or the complaint does not disclose the essential ingredients of an offence which is alleged against the accused; (2) where the allegations made in the complaint are patently absurd and inherently improbable so that no prudent person can ever reach a conclusion that there is sufficient ground for proceeding against the accused; (3) where the discretion exercised by the Magistrate in issuing process is capricious and arbitrary having been based either on no evidence or on materials which are wholly irrelevant or inadmissible; and (4) where the complaint suffers from fundamental legal defects, such as, want of sanction, or absence of a complaint by legally competent authority and the like.

The cases mentioned by us are purely illustrative and provide sufficient guidelines to indicate contingencies where the High Court can quash proceedings.”

84. In State of Haryana v. Bhajan Lal [1992 Supp (1) SCC 335], the Supreme Court considered the scope of inherent powers of the Court and after referring to earlier decisions, the Supreme Court enumerated categories of cases by way of illustration where the extraordinary jurisdiction under Article 226 of the Constitution of India can be exercised by the High Court to 29 Crl.M.P.No.390/2022 prevent abuse of process of Court or otherwise to secure ends of justice. It was held that:

“102…...(3) where the uncontroverted allegations made in the FIR or complaint and the evidence collected in support of the same do not disclose the commission of any offence and make out a case against the accused.”

85. In the present case, it is one thing to say that the documents have not been secured in accordance with the law and no value could be attached to them. But merely because documents have been produced from one source or other, it cannot be said that documents have been dishonestly removed to obtain “wrongful gain” to the respondents and cause “wrongful loss” to the appellant. Where it appears that the criminal complaint has been filed to bring pressure upon the respondents who are shown as accused in the criminal case, the complaint is to be quashed.

86. In Indian Oil Corpn. v. NEPC (India) Ltd., the Supreme Court after observing that there is a growing tendency in business circles to convert powerful civil disputes in criminal cases held as under:- “14. While no one with a legitimate cause or grievance should be prevented from seeking remedies available in criminal law, a complainant who initiates or persists with a prosecution, being fully aware that the criminal proceedings are unwarranted and his remedy lies only in civil law, should himself be made accountable, at the end of such misconceived criminal proceedings, in accordance with law. One positive step that can be taken by the courts, to curb unnecessary prosecutions and harassment of innocent parties, is to exercise their power under Section 250 CrPC more frequently, where they discern malice or frivolousness or ulterior motives on the part of the complainant. Be that as it may.”

8.The counsel for the petitioner further averred that A-8’s employer has not made any complaint against the petitioner/A-8 and therefore, the principal is responsible if any irregularities has committed.

30 Crl.M.P.No.390/2022

9.Learned Special Public Prosecutor has relied on the following decisions:

(i)In case of Komaram Balu vs. State of Telangana through

Sub-Inspector of Police, Adilabad District reported in 2020 (1) ALT (Crl.) 129 (T.S.), wherein the Hon’ble High Court for the State of

Telangana at Hyderabad held as follows:

“At the stage of framing charges under Section 239 Cr.P.C., what all the Court has to see is as to whether any prima facie case is made out for the purpose of framing of charge, and to proceed with the matter. At the stage of framing charges, the Court is not obligated to appreciate the evidence or make a roving enquiry as to whether the evidence collected by the prosecution during the course of investigation, and the material collected, would lead to a conviction.”

(ii)In case of M.E. Shivalingamurthy vs. Central Bureau of

Investigation, Bengaluru reported in 2020 (1) ALT (Crl.) 330 (SC), wherein the Hon’ble Supreme Court held as follows:

“At the time of framing of the charges, the probative value of the material on record cannot be gone into, and the material brought on record by the prosecution, has to be accepted as true. The defence of the accused is not to be looked into at the stage when the accused seeks to be discharged under Section 227 of the Cr.P.C.”

10.The prosecution has relied on the investigation done by the

CBI, which is as follows:

31 Crl.M.P.No.390/2022

(i)The prosecution filed charge-sheet alleging that prior to year 2000, Andhra Pradesh Industrial Infrastructure Corporation (APIIC) had called for Expression of Interest (EOI) for the Convention

Centre/Golf Course project on 2/3 occasions but could not find any suitable developer. The APIIC again called EOI for the said project during the month of March, 2000 under the Public Private Partnership (PPP) mode. The proposals received against the said EOI were evaluated and two companies viz. M/s. ITC Ltd., and M/s. EIH Ltd., were shortlised. The Request for proposal (RFP) were sent to those two shortlisted companies, out of which only M/s. ITC Ltd., had responded. The proposal of M/s. ITC Ltd., had been evaluated and it was principally agreed by the Government in the State Tourism

Promotion Board (STPB) meeting held on 26.12.2000. The proposal of

M/s. ITC Ltd., was preferred on two locations i.e., at Manikonda Village land and Hussainsagar Land. Since the Hussainsagar Land was covered under PIL WP No.26378/2000, the Government of AP took a decision on 14.05.2001 to take up all the project components at

Manikonda Village only without linking it to Hussainsagar area lands.

Accordingly, the Government sent letter to M/s. ITC Ltd. The

Government was also exploring the possibilities of finding an alternative developer in case M/s. ITC Ltd., was not agreeable to the above suggestion of the Government. M/s. ITC Ltd., did not respond to 32 Crl.M.P.No.390/2022 the offer of the Government and they requested to revisit other alternate sites. The matter was taken up with the Government and after taking approval from the Government suitable communication was made to M/s. ITC Ltd., on 02.07.2001 returning their Bank

Guarantee informing them that the project will be notified again.

(ii)It is further mentioned in the charge-sheet that the

Government of A.P. decided to issue fresh advertisements calling for

EOI from developers for the location of Manikonda lands. APIIC had proposed 250 acres of land for the said project. After the proposal was approved by the Board of APIIC, the advertisements were issued on 26.07.2001. In response to advertisement issued, EOIs were received from the following five companies:

1. Emaar Properties Public Joint Stock Company (PJSC), Dubai

2. IOI Corporation, Berhard Malaysia

3. L & T Limited, Chennai

4. Shapoorji & Palonji Company Limited, Mumbai

5. Som Asia Ltd., Hong Kong (consultancy services)

(iii)The above EOIs were evaluated on 15.09.2001 by a

Committee constituted by APIIC and the following three developers were found suitable for the issuance of Request for proposal (RFP).

33 Crl.M.P.No.390/2022

1. Emaar Properties Public Joint Stock Company (PJSC), Dubai

2. IOI Corporation, Berhard Malaysia

3. L & T Limited, Chennai

(iv)The above referred Request for proposal (RFP) were cleared by the then Chief Minister on 26.09.2001 envisaged that the project would comprise inter-alia of:

Convention Centre: The Convention Centre with a plenary hall capacity of 3000- 5000 with facilities for hospitality, accommodation, parking lots, breakaway rooms and seating flexibility, state-of-the-art audio-visual and other sophisticated equipment, Secretarial facilities, ample exhibition facilities, food courts, cafeterias, restaurants and other comprehensive support services.

Hotel: The state-of-the-art Hotel(s) that would be perfect rendezvous to mix business with pleasure.

Golf Course:An 18 hole International Professional

Championship Golf Course with fully equipped Club House and supporting services.

Villas: Villas and residential facilities, any other additional component, which will result in value addition to the

Integrated Project, subject to the sponsor's (APIIC) right to 34 Crl.M.P.No.390/2022 accept such additional components which are seen in the overall interest of the project.

(v)It is further case of the prosecution that in the draft RFP approved by the then CM, it was also mentioned that the bidders shall quote land price on per acre basis for outright sale and lease option.

Further, the minimum land price of Rs.29 lakhs per acre at Manikonda on gross undeveloped basis was indicated and it was also mentioned that the proposal would remain valid for 12 months after the closing date of the submission of proposals. The pre-proposal meeting of the shortlisted Developers was held on 25.10.2001 and all the above said three developers participated in the meeting. During the meeting the companies/ developers requested APIIC for extending the time upto 15.12.2001 for submitting the proposals. Finally, till last date only one proposal of M/s. Emaar Properties PJSC, Dubai was received and the same was opened in the presence of its representative. The price quoted by M/s. Emaar Properties PJSC, Dubai for land on outright sale was Rs.29,00,000/- per acre as per the price bid submitted by them.

The proposal was placed before the Board of APIIC. A draft MOU to be executed with M/s. Emaar Properties PJSC, Dubai was prepared with the help of M/s. IL&FS, Consultants, in pursuance to the discussions held with M/s. Emaar Properties PJSC, Dubai. The said proposal was submitted to the GOAP by APIIC through the Department of Industries 35 Crl.M.P.No.390/2022 and Commerce and was placed before the Council of Ministers on 20.08.2002. Subsequent to the Council resolution No.215(3)/202, the

Government of AP issued GO.Ms. No.359 dated 04.09.2002.

(vi)It is further case of the prosecution that the integrated project was given the status of a Tourism project, as such the related eligible incentives were to be given to the project. The Government authorized APIIC to take further necessary action to implement the project and it was the responsibility of APIIC to closely monitor the implementation of the project with reference to the milestones for various components of the project. Accordingly, a MOU was executed between APIIC and M/s. Emaar Properties PJSC, Dubai, on 06-11-2002.

(vii)It is further case of the prosecution that a Collaboration

Agreement dt.19.08.2003 was executed between APIIC and

M/s. Emaar Properties PJSC, Dubai. Only certain issues relating to the

Collaboration Agreement were approved by the Cabinet Committee on 28.06.2003. The Board of Directors of APIIC approved the

Collaboration Agreement dt.19.08.2003 between APIIC and M/s.

Emaar Properties PJSC in its 151st Meeting held on 12.03.2004.

(viii) It is further case of the prosecution that during the year 2004 after the general elections, when the new Government came 36 Crl.M.P.No.390/2022 into power, the Government of Andhra Pradesh constituted a Group of

Ministers (GoM) to review all decisions taken after 1st January, 2003 on

(i) all mega projects, (ii) infrastructure projects, (iii) allotment of land of more than 5 acres and (iv) on matters which attracted large scale public criticism. The Group of Ministers met on eight occasions and the Group of Ministers deferred the file relating to the Integrated

Convention Centre Complex and Golf Course.

(ix)It is further case of the prosecution that on 06.09.2004, the then Chief Minister and the then Minister for Major Industries discussed with the Chairman, M/s. Emaar Properties PJSC, Dubai and it was suggested that APIIC should limit its equity in all the three SPVs to 26% and thereby, proportionately increasing the equity of M/s.

Emaar Properties in the entire project. Subsequently, Shri AJ

Jaganathan, CEO of M/s. Emaar Properties PJSC, Dubai giving reference of the discussion of the representatives of M/s. Emaar properties PJSC, Dubai with Shri LV Subrahmanyam, VC & MD, submitted fresh proposals dt.23.09.2004 and 24.09.2004 changing the implementation structure of the integrated project. As per the revised proposal, it was proposed to execute the integrated project through three SPVs instead of two SPVs as envisaged in the

Collaboration Agreement dt.19.08.2003. As desired by the 37 Crl.M.P.No.390/2022

Government of AP, M/s. Emaar Properties PJSC, Dubai had agreed to reduce the equity of Government of AP in the Convention Centre

Project from 49% to 26% and thereby increasing the equity of M/s.

Emaar properties PJSC, Dubai from 51% to 74%. In lieu of the said change in equity/ownership in Convention Centre Project, M/s. Emaar

Properties PJSC, Dubai requested the Government of AP to compensate for the increase in equity by transferring additional one hundred acres of land. The said proposal of M/s. Emaar Properties

PJSC, Dubai was processed in a single file.

(x)It is further case of the prosecution that a Price Fixation

Committee (PFC) was constituted and they submitted the report, which is as follows:-

Year/PeriodAreaRates FixedRates valid till 2002-03Hi-Tech CityRs.83.29 Lacs to 31.03.2003 Rs.122.35 Lacs per acre 2003-04ManikondaRs.22.50 Lacs per acre31.03.2004 2004-05Nanakramguda and Rs.35 Lacs per acre31.03.2005 Manikonda Villages 2005-06Nanakramguda and Rs.84.98 Lacs per acre31.03.2006 Manikonda Villages 38 Crl.M.P.No.390/2022

(xi) It is further case of the prosecution that on 23.11.2004,

GoM meeting was held and the file relating to the Integrated

Convention Centre Complex and Golf Course was cleared.

Subsequently, on 11-01-2005, the Government of A.P. issued

G.O.Ms.No.14, containing all the decisions taken during the meeting held on 06.09.2004 attended by the then CM, the then Minister for

Major Industries and Shri Mohamed Ali Alabbar, Chairman, M/s. Emaar

Properties PJSC, Dubai.

(xii) It is further case of the prosecution that as per

G.O.Ms.No.14, a draft supplementary agreement to be executed by

APIIC with M/s. Emaar Properties PJSC, Dubai, which was also forwarded by the VC & MD, APIIC to the Principal Secretary, I & C

Department. The Government after careful examination decided to consider the improvement into the Integrated Project and approved the Draft supplementary agreement to be executed between the

APIIC and M/s. Emaar Properties, PJSC, Dubai. The VC & MD, APIIC was authorized by the GoAP to enter into a Supplementary Agreement. In

G.O.Ms.14, it was also mentioned that all other features of the project notified in the G.O.Ms.No.359 Industries & Commerce (INF)

Department dated: 04.09.2002 remained un-altered.

39 Crl.M.P.No.390/2022

(xiii) It is further case of the prosecution that on perusal of

G.O.Ms.No.14 dated: 11.01.2005 along with draft supplementary agreement, Shri AJ Jaganathan, CEO of M/s. Emaar Properties PJSC,

Dubai addressed a letter dt.16.01.2005 to the Government mentioning that the GO and the draft supplementary agreement did not conform to the discussions held by M/s. Emaar Properties PJSC,

Dubai in the Minister’s Chamber during November, 2004. He suggested that clause 2(d) of GO.Ms.No.14 should be replaced by “The lease rentals of land given for the Golf Course of 235 acres at

Manikonda is fixed at 2% of the gross annual revenue on all Golf

Course components for a period of 33 years. The gross annual revenue generated by SPV-2 does not include Life Membership and other long term and academy memberships. The net profit generated by SPV-2, excluding profit generated by the Boutique Resort Hotel, will be treated in its entirely within the said company in the form of reserves. These reserves shall be utilized solely for improvements of the facilities and maintenance of Golf Course facilities (including the club house)”. He also suggested that clause 2(e) of GO.Ms.No.14

dated:11.01.2005 may be replaced by “On expiry of 66 years lease

period of the land of 235 acres, all structures, buildings on land whether permanent or semi-permanent, constructed by or belonging to the BHPL or their sub-contractors, sub-lessees and assignees 40 Crl.M.P.No.390/2022 developed on leasehold land only (and hence excluding all structures developed on freehold land) shall revert in favour of Government of

Andhra Pradesh free from all encumbrances and liabilities. Access to the site will remain restricted and controlled even after acquisition of the site by GoAP until such time a mutually acceptable solution is agreed between the GoAP and the housing Associations comprising residents of the proposed Boulder Hills community.”

(xiv) It is further case of the prosecution that basing on the suggestions made by Sri AJ Jaganathan, CEO, VC & MD APIIC addressed a letter to the Principal Secretary and Commissioner for

Industrial Promotion vide Lr.No.81/APIIC/Projects/ICCC/2001, dated:

19.01.2005 along with a draft modification order. In response to the proposals of APIIC, the then Principal Secretary, Government of AP,

Industries and Commerce (Industrial Promotion Department), by modifying GO Ms.No.14, dated: 11.01.2005 and issued a fresh GO

Ms.No.22 dated: 27.01.2005 incorporating the suggestions made by

Sri AJ Jaganathan, CEO.

(xv)It is further case of the prosecution that after perusing the

G.O.Ms.22, the Minister for Major Industries found that the GO 22 was not in conformity with the orders dated: 11.01.2005 in the file and vide his note dated: 07.02.2005, remarked as under:

41 Crl.M.P.No.390/2022

1.The file could have been circulated before issue of GO.

The reasons for urgency for issue may be explained.

2.Earlier the file was circulated to CM and orders were issued on 11.01.2005. The reasons for amendment on 27.01.2005 and the differences between orders of 11.01.2005 and 27.01.2005 may be summarized along with financial and other long term implications.

3.Increase of lease rentals to 3% (from Golf Course) for further period of 33 years, have been deleted. This increase was mentioned on the file at the time of obtaining orders of CM.

4.The Boutique Hotel was shifted from SPV2 to SPV1.

Reasons for this and the implications were not mentioned.

5.New clauses regarding access rights have been incorporated, but the reasons for this were not mentioned.

(xvi) It is further case of the prosecution that a meeting with then CM on 02.03.2005, which was attended by the then Minister of

Major Industries; Principal Secretary, Industries & Commerce;

Secretary MA & UD; VC & MD, APIIC and other officers of GoAP and discussed about exemption of conversion charges and the then CM directed VC, HUDA that since it was a Government Project, conversion charges as already agreed in the Agreement should be exempted for 42 Crl.M.P.No.390/2022 15 acres site at Izzatnagar for Convention Centre Complex and 520 acres site at Manikonda for Integrated Township Project and Golf

Course. But the issue pertaining to lease rentals from the golf course remained unresolved. Subsequently, the then Minister for Major

Industries moved a secret note dated: 17.03.2005 to the then CM clarifying the issues that were required to be covered while issuing the GO Ms.No.22, dated: 27.01.2005 and the note made by the then

Minister is as follows:

1.As regards the increase in lease rentals from 2% to 3% for the balance period after 33 years, though the issue was not discussed in the meeting, in view of the orders obtained in circulation earlier, a clear clarificatory memo may be issued asking APIIC to incorporate a specific and clear clause on increased lease amounts of 3% for balance period of 33 years after lease of 2% for first 33 years.

2.Issue relating to representations made by a few people adversely affected by acquisition of patta land and requesting for deletion, was also discussed. It was decided that to avoid legal and other complications, a uniform approach would be adopted while dealing with all such requests. It was therefore decided that either the land involving such requests in the area shall be 43 Crl.M.P.No.390/2022 acquired or alternatively they be deleted from acquisition without any discrimination.

(xvii)It is further case of the prosecution that basing on the secret note dated: 17.03.2005 submitted by the then Minister of Major

Industries, revision of lease rentals in respect of Golf Course from 2% to 3% on expiry of initial period of 33 years was approved by the then

CM. Subsequently, the supplementary agreement was executed on 19.04.2005 between APIIC and M/s. Emaar Properties PJSC, Dubai.

(xviii)It is further case of the prosecution that Chairman,

M/s. Emaar Properties PJSC, Dubai addressed a letter dated:

02.05.2005 to Shri LV Subrahmanyam, VC & MD for bringing in

M/s. Fairbridge Holdings Ltd., a Cyprus based company as a shareholder in M/s. Emaar Holdings, Mauritius, such that M/s. Emaar

Properties PJSC, Dubai would dilute its ownership from the current 100% to 54.05% with Fairbridge owning the balance 45.95%, which would lead to net ownership in the integrated project in the ratio of

Emaar (40%), Fairbridge (34%) and APIIC (26%). Basing on the letter

Shri LV Subrahmanyam, VC & MD made a remarks that “We can request for credentials as deemed necessary for out response. So also to see how the new entity will bind itself to project commitments”. A copy of the letter issued by Chairman, M/s. Emaar Properties PJSC, 44 Crl.M.P.No.390/2022

Dubai was also received in the office of the Principal Secretary,

Industries and Commerce, Government of AP by post on 13.05.2005.

On this copy Shri KV Rao, Principal Secretary, Industries and

Commerce remarked “Till the project is fully implemented it may not be correct to change the equity structure.” and marked the letter to

MD, APIIC, which was received on 16.05.2005 by Shri LV

Subrahmanyam, VC & MD. The said issue was discussed on review meeting convened on 13.05.2005 and decided to continue with the existing arrangements till the project is completed. However, Shri LV

Subrahmanyam in violation of the instructions of the Principal

Secretary and the decision taken in the review meeting dated:

13.05.2005 addressed a letter dated: 13.05.2005 to M/s. Emaar

Properties PJSC, Dubai, which was dispatched on 18.05.2005, seeking the detailed information about M/s. Fairbridge Holdings Limited,

Cyprus, to process their request for bringing in Fairbridge Holdings as a partner for strategic resource.

(xix) It is further case of the prosecution that in pursuance of the agreement, the Government initiated the proceedings for acquiring 92.19 acres of land in Nanakramaguda Village. Since the owners of 11.26 acres of patta land has represented against acquisition of said land, a proposal was approved by the District 45 Crl.M.P.No.390/2022

Collect, RR District to acquire 80.35 acres of land. After the notification was published in the newspapers and the Gazette of AP, the aggrieved parties challenged the actions of the Special Deputy

Collect, Land Acquisition (Industries) before the Hon’ble High Court of

AP by filing WP No.21712/2002, dated: 31.10.2002, wherein the

Hon’ble High Court vide orders dated: 25.04.2003 granted stay on the

land acquisition proceedings and directed the District Collector, RR

District to issue notice for an enquiry under Section 5(A) of Land

Acquisition Act to the persons whose lands were to be acquired including the petitioners and to take appropriate further steps after such enquiry. In compliance to the orders of the Hon’ble High Court of

AP notices were issued to the aggrieved persons for conducting enquiry under Section 5(A) of Land Acquisition Act on 17.03.2004.

(xx)It is further case of the prosecution that the District

Collector RR District after examining the objections of the interested parties, rejected their objections on the ground that the objections raised by them were devoid of any merit and decided to issue proceedings for 80.35 acres of land, which includes 3.36 acres of land belonging to Smt. G. Vijaya Nirmala, W/o. Shri GSR Krishna, Shri

Jayadev Galla, S/o. Shri Galla Ramachandra and Smt. G. Rama Devi,

W/o. Shri GVRK Prasad. The Land Acquisition Officer passed an award 46 Crl.M.P.No.390/2022 under Section 11(A) of Land Acquisition Act for acquisition of 77.02 acres of land excluding the land of 3.33 acres. Since there was an urgency in handing over the land by APIIC to Developer, 77.05 Acres of patta land at Sy.No.4 to 26, 27/4 to 35, 41 to 46, 48 & 49 of

Nanakramaguda Village was handed over by Deputy Tahsildar to the

Assistant Zonal Manager, Cyberabad Zone of APIIC. Again the aggrieved persons approached the Hon’ble High Court of AP challenging the purpose of acquisition of 77.02 acres of land for APIIC.

The Hon’ble High Court of AP dismissed the Writ Petitions filed by the aggrieved persons and the same was challenged before the Hon’ble

Supreme Court and the Hon’ble Supreme Court confirmed the orders passed by the Hon’ble High Court of AP and dismissed the SLPs.

(xxi) It is further case of the prosecution that APIIC had handed over 454.93 Acres of Government land at Sy.No.203P, 210P & 211P of

Manikonda Village, Sy.No.91P of Gachibowli Village and Sy.No.36 to 40, 42 & 47 of Nanakramguda Village to Shri Vijaya Menon, representative of M/s. Emaar Properties, PJSC Dubai vide possession certificate dated: 18.06.2005. The patta land of 77.05 acres was handed over by the APIIC to Shri Vijay Menon, representative of M/s.

Emaar Hills Township Pvt. Ltd. And M/s. Boulder Hills Leisure Pvt. Ltd., vide possession certificate dated: 29.11.2005. In total 531.98 acres of 47 Crl.M.P.No.390/2022 land was handed over to M/s. Emaar Properties PJSC, Dubai and its joint venture companies for developing the Integrated Project i.e., Golf

Course and Township Project.

(xxii) It is further case of the prosecution that APIIC moved the following proposals for waiver of conversion and development charges in respect of 15 acres of land for Convention Centre and

Business Hotel and 520 acres of land for Golf Course and Township

Project.

S.No.Date of Subject matter of Amount involvedGO through Proposalproposalwhich Exemption was granted 113.02.2004Exemption of Rs.2,65,43,707/-GO Ms.No.894 conversion chargesMA dated: in respect of 520 of02.11.2005 acres for golf course and township project 211.03.2004Exemption of Rs.12,34,019/-GO Ms. No.390 conversion chargesdated: in respect of 15 10.05.2005 acres of land for Convention Centre and Business Hotel 319.11.2005Exemption of Rs.1,35,57,246/-GO Ms. No.990 development dated: charges in respect 31.12.2005 of 15 acres of land for Convention Centre and 48 Crl.M.P.No.390/2022

Business Hotel 408.08.2007Exemption of Rs.24,73,28,163/-GO Ms. No.879 conversion chargesdated: in respect of 520 of05.12.2007 acres for golf course and township project

(xxiii) It is further case of the prosecution that the Cyberabad

Development Authority as well as the MA & UD Department has raised objection for exemption of above said charges in respect of the

Integrated Project, as this was the only source of revenue for CDA and such exemption was not provided in AP Urban Areas Development

Act, 1975. However, the then CM overruling all the objections granted exemption from payment of conversion/development charges to the tune of Rs.28,86,63,135/-.

(xxiv) It is further case of the prosecution that APIIC executed the following documents with M/s. Emaar Properties PJSC, Dubai and the SPVs viz., M/s. EHTPL, M/s. BHLPL and M/s. CCCPL in respect of the

Integrated Project on 28.12.2005.

S.No.Nature of document

1.Conveyance Deed in respect of 258.36 acres (226.95 acres of Government land and 31.41 acres of patta land) of land executed in favour of M/s. EHTPL for development of Township Project. This land was conveyed for a total consideration of Rs.75,92,44,000/- @ Rs.29,00,000/- 49 Crl.M.P.No.390/2022 per acre. This was registered vide document No.20560 dated: 12.10.2006 with District Registrar, RR District.

2.Share Subscription Agreement executed with M/s. EHTPL for allotment of 17,00,307 shares with face value of Rs.1,70,03,070/- in favour of APIIC in the equity proportion of 26%

3.Shareholders’ agreement with M/s. EHTPL vide which APIIC was allotted 17,00,307 shares by M/s. EHTPL in the equity proportion of 26%

4.Lease Deed in respect of 235 acres (195.98 acres of Government land and 39.02 acres of patta land) of land executed with M/s. BHLPL for development of Golf Course, with provision for an amount of Rs.3,40,75,000/- to be paid by M/s. BHLPL @ Rs.1,45,000/- per acre towards non-refundable deposit to APIIC. This was registered vide document No.20562 dated: 12.10.2006 with District Registrar, RR District.

5.Conveyance Deed in respect of 17 acres of land executed by M/s. BHLPL for development of Boutique Resort Hotel. The land was conveyed for a total consideration of Rs.4,93,00,000/- @ Rs.29,00,000/- per acre, which was adjusted towards part of 26% equity of APIIC in M/s. BHLPL. This was registered vide document No.20561 dated: 12.10.2006 with District Registrar, RR District.

6.Share Subscription Agreement executed with M/s. BHLPL for allotment of 1,19,44,709 shares with face value of Rs.11,94,47,090/- in favour of APIIC in the equity proportion of 26%

7.Shareholders’ agreement with M/s. BHLPL vide which APIIC was allotted 1,19,44,709 shares by M/s. EHTPL in the equity proportion of 26%

8.Lease Deed in respect of 15.139 acres of land executed with M/s. CCCPL for development of Convention Centre and Business Hotel. This was registered vide document No.20563 dated: 12.10.2006 with District Registrar, RR District.

9.Share Subscription Agreement executed with M/s. CCCPL for allotment of 1,86,20,970 shares with face value of Rs.18,62,09,695/- in favour of 50 Crl.M.P.No.390/2022

APIIC in the equity proportion of 26%

10.Shareholders’ agreement with M/s. CCCPL vide which APIIC was allotted 1,86,20,970 shares by M/s. CCCPL in the equity proportion of 26%

11.Debenture Deed executed between APIIC and M/s. EHTPL vide which APIIC was allotted 5,09,95,915 debentures by M/s. EHTPL against the surplus amount of Rs.50,99,59,150

12.Escrow Agreement executed between APIIC and M/s. EHTPL regarding opening of an escrow account with Andhra Bank, Hi-Tech City Branch, Hyderabad in respect of Debentures held by APIIC.

(xxv) It is further case of the prosecution that the record shows that M/s. Emaar Properties PJSC, Dubai initially entered into an MOU on 06.11.2002 in pursuance of the decision taken by the council of

Ministers on 20.08.2002 and the G.O.Ms.No.359, dt.04.09.2002. As per the MOU, two SPVs (Special Purpose Vehicles) has to be implemented and 235 acres of land was allotted for Golf Course; 285 acres of land was allotted for Multi-use and 15 acres of land was allotted to water bodies, in total 535 acres of land was required for integrated project, out of 535 acres of land, APIIC was having 445-455 acres of its own and balance 80-90 acres of land was required to acquired. SPV-1 consisting of Pro-championship 18 hole Golf Course (along with Golf Club, Club House and Country Club) and Multi-use

Development including Villas and Commercial Complexes at

Manikonda. SPV-2 consisting of Convention Centre and Business Hotel 51 Crl.M.P.No.390/2022 to be implemented at NAC grounds. The equity structure of the SPVs is as follows:

SPV1:APIIC26% Emaar Properties74%

SPV2:APIIC49% Emaar Properties51%

(xxvi) It is further case of the prosecution that the lease payment for the land leased for a period of 66 years by SPV1 for the

Golf Course shall be equal to two percent of all annual revenue earned by the Golf Course, except life membership and other long term club and academy membership income.

(xxvii) It is further case of the prosecution that the MOU was followed by a Collaboration Agreement dt.19.08.2003 executed between APIIC and M/s. Emaar Properties PJSC, Dubai. Only certain issues relating to the Collaboration Agreement were approved by the

Cabinet Sub-Committee on 28.06.2003. The Board of Directors of

APIIC approved the Collaboration Agreement dt.19.08.2003 between

APIIC and Emaar Properties PJSC in its 151st Meeting held on 12.03.2004.

(xxviii) It is further case of the prosecution that in the year 2004, new Government came into power and the Government of

Andhra Pradesh constituted a Group of Ministers to review all 52 Crl.M.P.No.390/2022 decisions taken after 1st January, 2003. The group of Ministers has reviewed the several decisions taken by the earlier Government, but in respect of integrated Convention Centre Complex and Golf Course was deferred in the meeting held on 03.09.2004. Thereafter, discussions took place in the Government on 06.09.2004 and it was suggested that APIIC should limit its equity in all the three SPVs to 26% and thereby, proportionately increasing the equity of M/s. Emaar

Properties in the entire project. It is to be noted that the earlier there are only two SPVs, now it was divided into three SPVs, which are as follows:

SPV-1M/s. Emaar Hills Township Pvt. Ltd. (M/s. EHTPL) for development of Township Project with Villas, Apartments and IT Park at Manikonda

SPV-2M/s. Boulder Hills Leisure Pvt. Ltd. (M/s. BHLPL) for development of Golf Course and Boutique Resort Hotel at Manikonda

SPV-3M/s. Cyberabad Convention Centre Pvt. Ltd. (M/s. CCCPL) for development of Convention Centre and Business Hotel at NAC grounds.

(xxxi) It is further case of the prosecution that in view of the decision of the Government in all three SPVs, the equity of the

Government of Andhra Pradesh was reduced to 26% and the equity of

M/s. Emaar Properties PJSC, Dubai was enhanced from 51% to 74%.

53 Crl.M.P.No.390/2022

(xxx) The record reveals that Sri K.V. Rao, Principal Secretary vide his note dt.05.11.2004 noted that the lease rental from Golf

Course may be negotiated with the developer for 2% of the Gross

Annual revenue for 33 years and 3% for further 33 years. He also pointed out that the asset which was fully developed would revert to

Government after 66 years.

(xxxi) The record also shows that the Price Fixation Committee proposes the enhancement of the land value from Rs.29,00,000/- to

Rs.40,00,000/- per acre, but the officials ignoring the same, only mentioned the land price at Rs.29,00,000/- per acre.

(xxxii) The case of the prosecution that they have increased the equity of M/s. Emaar Properties PJSC, Dubai, at the same time, they have completely ignored the enhanced value of the land even though the cost of the project was revised from Rs.430 crores to

Rs.630 crores, but the appreciation in land cost was ignored. The

Government has isued G.O.Ms.No.14 on 11.01.2005 mentioning the share value as 74% for Emaar Properties and 26% for APIIC in all three SPVs and all equity from APIIC was on land value basis alone @

Rs.29 lakhs per acre and also mentioned about the lease rentals for 235 acres of land at Manikonda land given for the Golf Course was 54 Crl.M.P.No.390/2022 fixed @ 2% of the Gross Annual Revenue on all golf Course components for period of 33 years and @3% for further period of 33 years. Basing on the G.O.Ms.No.14, dt.11.01.2005, a draft supplementary agreement was made available. VC & MD, APIIC addressed a letter to the Principal Secretary ignoring the enhancement of 3% after expiry of 33 years and Sri KV Rao, the then

Principal Secretary, Government of AP, Industries and Commerce

remained silent as he was allotted Plot No.B-55 admeasuring 1239 sq.yds. in Sy.No.211(P) of Manikonda Jagir Village, Rajendranagar

Mandal, Ranga Reddy District @ Rs.5000/- per sq.yd. when the prevalent market rate was Rs.10,000/- per sq.yd.

(xxxiii) It is further case of the prosecution that the documents reveals that Sri KV Rao, Principal Secretary (Industries & Commerce) though the then Minister for Major Industries was very much available, he has not circulated the file and only after issuance of

G.O.Ms.No.22, dt.27.01.2005 it was brought to the notice of the

Minister for Major Industries. After pursuance of the file, the Minister for Major Industries found that the G.O.22 was not in conformity with the orders dt.11.01.2005 in the file and made some remarks and directed the Principal Secretary, Industries & Commerce to prepare a comprehensive note duly incorporating information on all the issues 55 Crl.M.P.No.390/2022 and circulate the same to him for apprising the Minister for Finance and CM and also instructed the Principal Secretary to keep the

G.O.Ms.No.22 in abeyance till approval of CM. But it was not resolved in the meeting dt.02.03.2005, only matter pertaining to exemption of conversion charges was discussed. Subsequently, the then Minister for Major Industries moved a secret note dt.17.03.2005 to the then

CM clarifying the issues that were required to be covered while issued the G.O.Ms.No.22, dt.27.01.2005. Subsequently the supplementary agreement was executed on 19.04.2005 between APIIC and M/s.

Emaar Properties PJSC, Dubai.

(xxxiv)It is further case of the prosecution that Sri

LV Subrahmanyam contrary to the instruction of the Principal

Secretary and the decision taken in the review meeting dt.13.05.2005, addressed a letter dt.13.05.2005 to M/s. Emaar

Properties PJSC, Dubai seeking the detailed information about M/s.

Fairbridge Holdings Limited, Cyprus to process their request for bringing in Fairbridge Holdings as a partner for strategic resource. The documents also shows that

(xxxv)It is further case of the prosecution that M/s. Emaar

MGF Land Ltd., has allowed Sri Jayadev Galla and Smt. G. Ramadevi to encroach 2.20 acres of land and they constructed multi-storied 56 Crl.M.P.No.390/2022 buildings on the said land. In pursuance of the agreement, the

Government initiated the proceedings for acquiring 92.19 acres of land in Nanakramaguda Village. Since the owners of 11.26 acres of patta land has represented against acquisition of said land, a proposal was approved by the District Collect, RR District to acquire 80.35 acres of land. After the notification was published in the newspapers and the Gazette of AP, the aggrieved parties challenged the actions of the Special Deputy Collect, Land Acquisition (Industries) before the

Hon’ble High Court of AP by filing WP No.21712/2002, dated:

31.10.2002, wherein the Hon’ble High Court vide orders dated:

25.04.2003 granted stay on the land acquisition proceedings and directed the District Collector, RR District to issue notice for an enquiry under Section 5(A) of Land Acquisition Act to the persons whose lands were to be acquired including the petitioners and to take appropriate further steps after such enquiry. In compliance to the orders of the Hon’ble High Court of AP notices were issued to the aggrieved persons for conducting enquiry under Section 5(A) of Land

Acquisition Act on 17.03.2004.

(xxxvi)It is further case of the prosecution that the District

Collect RR District after examining the objections of the interested parties rejected them on the ground that the objections raised by 57 Crl.M.P.No.390/2022 them were devoid of any merit. Out of 80.35 acres of land, extend of 3.36 acres of land at Survey Number 27/4 belonging to Smt. G. Vijaya

Nirmala, W/o. Shri GSR Krishna, Shri Jayadev Galla and Smt. G. Rama

Devi and they also raised objections. Surprisingly, an award under

Section 11(A) of Land Acquisition Act for acquisition of 77.02 acres of land excluding the land of 3.33 acres was passed.

(xxxvii)It is further case of the prosecution that APIIC had handed over 454.93 Acres of Government land at Sy.No.203P, 210P & 211P of Manikonda Village, Sy.No.91P of Gachibowli Village and

Sy.No.36 to 40, 42 & 47 of Nanakramguda Village to Shri Vijaya

Menon, representative of M/s. Emaar Properties, PJSC Dubai vide possession certificate dated: 18.06.2005. The patta land of 77.05 acres was handed over by the APIIC to Shri Vijay Menon, representative of M/s. Emaar Hills Township Pvt. Ltd. And M/s. Boulder

Hills Leisure Pvt. Ltd., vide possession certificate dated: 29.11.2005.

In total 531.98 acres of land was handed over to M/s. Emaar

Properties PJSC, Dubai and its joint venture companies for developing the Integrated Project i.e., Golf Course and Township Project.

(xxxviii)It is further case of the prosecution that the

Cyberabad Development Authority as well as the MA & UD

Department has raised objection for exemption of conversion 58 Crl.M.P.No.390/2022 charges and development charges in respect of the Integrated

Project, as this was the only source of revenue for CDA and such exemption was not provided in AP Urban Areas Development Act, 1975. However, the then CM overruling all the objections granted exemption from payment of conversion/development charges to the tune of Rs.28,86,63,135/-.

(xxxix)It is further case of the prosecution that the APIIC executed the documents with M/s. Emaar Properties PJSC, Dubai and the SPVs viz., M/s. EHTPL, M/s. BHLPL and M/s. CCCPL in respect of the

Integrated project on 28.12.2005.

(xl)It is further case of the prosecution that Sri BP Acharya, the then VC & MD, APIIC has received an agenda from M/s. EHTPL on 14.09.2006 for discussing the proposal to bring in M/s. Emaar MGF

Land Ltd., as a co-developer to develop the township project as well as Golf Course project, to be discussed in the Board Meeting dt.21.09.2006of M/s. EHTPL and M/s. BHLPL. As per the agenda, M/s.

Emaar MGF Land Ltd. was proposed to pass on 25% of the total revenue from the project to M/s. EHTPL, which would affect the revenue sharing of APIIC in the integrated project. Sri BP Acharya did not discuss such an important issue in the board of APIIC.

59 Crl.M.P.No.390/2022 (xli)It is further case of the prosecution that in the board meeting dt.21.09.2006, the development strategy for the Integrated

Township Project was discussed. Shri BP Acharya, the then VC & MD,

APIIC, Shri Vijay Menon & Shri Koneru Prasad, both Directors of M/s.

EHTPL and Shri Srikant Joshi, CEO-South, M/s. Emaar MGF Land Ltd., attend the said board meeting and it was discussed that the proposals were received from M/s. Emaar MGF Land Limited for the development and construction of the projects in SPV-1 (M/s. EHTPl) and SPV-2 (M/s. BHLPL) and the same were placed before the board.

M/s. EHTPL never brought to the notice of APIIC that there was fund crunch for the development of the project. Sri BP Acharya, who was present in the board meeting did not object to invoking of clause 6(v) from the MOU as the MOU had expired and the Collaboration

Agreement dt.19.08.2003 was in place. The board authorized Shri

Vijay Menon to execute the Development Agreement, Lease Deed and

Assignment Deed on behalf of the company with M/s. Emaar MGF

Land Ltd. In the board meeting dt.21.09.2006, the board suggested for entering into a Development Agreement for development of

Boutique Resort Hotel and Golf Course, which were to be developed by M/s. BHLPL (SPV-2), there was no mention of M/s. EHTPL (SPV-1) entering into a Development Agreement with M/s. Emaar MGF Land 60 Crl.M.P.No.390/2022

Limited for development of Integrated Township Project. Shri BP

Acharya did not object for those irregularities.

(xlii) It is further case of the prosecution that the prosecution contended that clause 8 of G.O.Ms.No.359, dt.04.09.2002; clause 6(v) of MOU dt.06.11.2002; clause 2.4(v), 2.4(x), 3.1(c)(iii) of Collaboration

Agreement dt.19.08.2003; clause 8 of supplementary agreement dt.19.04.2005; clause 9.1(H) of shareholder’s agreement dt.28.12.2005 reveals that rights towards development, management and operations of the integrated project could have been assigned by the developer with the principle approval from APIIC. Whereas in this case, no proposal was moved by M/s. Emaar Properties, PJSC, Dubai to

APIIC for obtaining the approval of APIIC; and Collaboration

Agreement and Supplementary Agreement contemplates that the integrated project through M/s. Emaar Holdings and covenants that the representations, obligations, warranties and commitments made by it should be duly complied with, as such M/s. Emaar Properties cannot absolve itself from its responsibility to complete the project through M/s. Emaar Holdings and M/s. EHTPL.

(xliii) It is further case of the prosecution that as per the

Collaboration Agreement and Shareholder’s Agreement, it was the responsibility of M/s. EHTPL to approach both the shareholders i.e.

61 Crl.M.P.No.390/2022

APIIC and M/s. Emaar Properties PJSC, Dubai to obtain their affirmative approval and as per the provisions of MOU and collaboration agreement only developer i.e., M/s. Emaar Properties, PJSC, Dubai could have assigned these rights to third party and not M/s. EHTPL.

Sri BP Acharya representing APIIC in the board of M/s. EHTPL has not raised any objection for the resolution of M/s. EHTPL entering into a

Development Agreement with M/s. Emaar MGF Land Ltd.

(xliv) The prosecution contended that as per clause 4.1 of the

Collaboration Agreement, approval of the Board of Directors of APIIC was compulsory as per the terms and conditions of the Collaboration

Agreement that was executed on 19.08.2003. As per clause 9.1H of the Shareholder’s Agreement executed between APIIC and

M/s. EHTPL, for the declaration or payment of any dividend or distribution of profits or passing of any resolution to retain or allocate profits, affirmative approval should be obtained by M/s. EHTPL from both M/s. APIIC and M/s. Emaar Properties PJSC, Dubai.

(xlv) It is further case of the prosecution that M/s. Emaar MGF

Land Pvt. Ltd., represented by its Chief Executive Officer Shri Srikant

Joshi, submitted an application dt.23.04.2007 to the Chief Secretary,

Government of AP requesting for notifying M/s. Emaar MGF Land Pvt.

Ltd., as a co-developer for designing, developing, operating and 62 Crl.M.P.No.390/2022 maintaining the area of 10.33 acres of land and structures thereon at

Manikonda Village. M/s. EHTPL vide letter dt.24.04.2007 submitted the proposal for including additional area of 7.77 acres of land for the purpose of developing additional facilities in the said SEZ notified vide notification No.SO 548(E) dt.10.04.2007. The Chief Secretary decided to seek comments from APIIC and Sri B.P. Acharya recommended for consideration of request of M/s. EHTPL for including additional 7.77 acres of land and no objection for including M/s. Emaar MGF as co- developer for development of IT/ITES SEZ. After obtaining sanction from APIIC, the Government of AP has processed the file to

Government of India and the Government of India conveyed the approval for including M/s. Emaar MGF Pvt. Ltd., as a co-developer.

(xlvi) It is further case of the prosecution that M/s. Emaar MGF

Land Pvt. Ltd., was incorporated on 18.02.2005 and was registered with ROC, New Delhi and the name of the company was changed to

M/s. Emaar MGF Land Limited from Emaar MGF Private Land Limited on 13.08.2007. Shri Shravan Gupta and Shri Siddharth Gupta were the initial two Directors of the company; Shri Mohamed Ali Alabbar,

Shri Sale Bin Rashid Ali Mohannadi and Ms. Low Ping were appointed as Directors of the company on 07.11.2005. Shri Shravan Gupta is the 63 Crl.M.P.No.390/2022

Managing Director of the company and Shri Mohamed Ali Alabbar is the Chairman.

(xlvii) It is further case of the prosecution that pursuant to the resolution passed by the Board of M/s. EHTPL on 21.09.2006, a development agreement was executed between M/s. EHTPL and

M/s. Emaar MGF Land Limited on 03.11.2006 i.e., before changing the name. The said agreement was executed by Shri Vijay Menon on behalf of M/s. EHTPL and Shri Srikant Joshi, CEO (South) on behalf of

M/s. Emaar MGF Land Limited.

(xlviii) It is further case of the prosecution that in the board meeting dt.26.03.2007, Shri Vijay Menon and Dr. Nader Mohammed resigned as Directors of M/s. EHTPL and in their place Shri Vinod

Kumar Gomber and Shri Ahmed Thani Rashed Almatrooshi were appointed as Directors of the company. Shri Vijay Menon was retained as Manager of the company and was authorised to sign the necessary documents on behalf of the company. In the board meeting dt.26.09.2007, it was discussed that the development agreement executed between M/s. EHTPL and M/s. Emaar MGF Land Limited based on the board resolution dt.21.09.2006 was required to be confirmed by APIIC. Subsequently, a Development Agreement-cum-

General Power of Attorney (GPA) was executed between M/s. EHTPL 64 Crl.M.P.No.390/2022 and M/s. Emaar MGF Land Limited on 25.07.2007. As per the

Development Agreement-cum-GPA, the Development Agreement dt.03.11.2006 was cancelled and was replaced with the Development

Agreement-cum-GPA dt.25.07.2007. The said Development

Agreement-cum-GPA was signed by Shri Vijay Menon on behalf of

M/s.EHTPL and Shri Srikant Joshi on behalf of M/s. Emaar MGF Land

Ltd. In the board meeting dt.10.07.2008, Shri Amit Jain and Shri

Srikant Joshi, CEO were appointed as alternate Directors. Shri

Pardhasaradhi Rao was appointed as Second Nominee Director of

APIIC.

(xlix) It is to be noted that M/s. Emaar MGF Land Ltd., applied for term loan of Rs.150 crores by Axis Bank by offering 14.01 acres of land out of 258.36 acres owned by M/s. Emaar MGF Land Ltd., and subsequently the said loan was reduced to Rs.90 crores. M/s. Emaar

MGF Land Ltd., has cleared all the dues against the term loan in

February, 2011, as such the security i.e., the title deed in respect of 14.01 acres of land was released by the Bank.

(l)It is further case of the prosecution that on 23.07.2008

Shri Vijay Raghav on behalf of M/s. EHTPL and Sri Srikant Joshi on behalf of M/s. Emaar MGF Land Ltd. executed addendum to

Development Agreement-cum-GPA deciding the percentage share in 65 Crl.M.P.No.390/2022 the revenue of M/s. Emaar MGF Land Ltd. The Development

Agreement-cum-GPA dt.25.07.2007 and Addendum to the

Development Agreement-cum-GPA dt.23.07.2008 executed between

M/s. EHTPL and M/s. Emaar MGF Land Limited were never discussed in the board of M/s. EHTPL. As per the Development Agreement, the gross revenue was to be shared between M/s. Emaar MGF Land Pvt.

Ltd. and M/s. EHTPL in the ratio of 75% : 25% on both the sale and lease proceeds. In the addendum to the Development-cum-GPA the revenue sharing pattern of lease proceeds was revised from 75% :

25% to 95% : 5%. The same was accepted in the board meeting dt.15.06.2007, which is detrimental to the interest of APIIC. In case of revenue from Operations and Maintenance and advertisements in

Common Areas, the sharing was in the ratio of 75% : 25% on the profits derived there from and not on revenues, as mentioned in the addendum to the Development Agreement-cum-GPA, the said aspect was not discussed in the board meetings of M/s. EHTPL. Due to amendments of the share pattern, the APIIC has sustained loss of

Rs.4,92,10,000/- from 2008-09 to 2010-11.

(li)It is further case of the prosecution that M/s. BHLPL and

M/s. Emaar MGF entered into a Development Agreement, Deed of

Assignment, Lease Deed as applicable to the development of 66 Crl.M.P.No.390/2022

Boutique Resort Hotel and Golf Course Multi use Project. But no development agreement was executed between M/s. BHLPL and M/s.

Emaar MGF Land Ltd., and only Lease Deed and Assignment Deed were executed on 03.11.2006. Those two deeds empowered M/s.

BHLPL to sell villa plots.

(lii)It is further case of the prosecution that M/s. EHTPL entered into Agency Agreement with M/s. Stylish Holmes Real Estate

Pvt. Ltd. represented by its Director Shri T. Ranga Rao on 29.01.2005 and appointed M/s. Stylish Holmes Real Estates Pvt. Ltd., as its sole

Agent for the purpose of marketing the Plots and Residential units and the said Agency Agreement was executed on 29.01.2005 at Dubai and the M/s. Stylish Holmes Real Estate Pvt. Ltd. had started booking villa plots in the integrated township in the month of March, 2005 though the land had not been transferred to M/s. EHTPL.

(liii)It is further case of the prosecution that as per the provisions of G.Os issued by Government of Andhra Pradesh;

Collaboration Agreement and Supplementary Agreement executed between APIIC and M/s. Emaar Properties PJSC, Dubai, M/s. EHTPL was required to develop the project land by way of constructing Villas and

Apartments and sell the same after finalizing the rates in its board.

Hence the agency agreement dt.29.01.2005 executed by the 67 Crl.M.P.No.390/2022

Chairman, M/s. Emaar Properties PJSC, Dubai on behalf of M/s. EHTPL agreeing to sell the plots @ Rs.5,000/- per sq.yd for a period of 5 years is nothing but clandestine arrangement in furtherance of the criminal conspiracy by the developer to dispose off the project land without developing the same, which caused loss of revenue to APIIC.

(liv)It is further case of the prosecution that M/s. Stylish

Holmes Real Estates Pvt. Ltd. started booking villa plots from March, 2005 itself and it booked 43 villa plots till 27.12.2005 i.e., prior to execution of Conveyance Deed dt. 28.12.2005 by APIIC in favour of

M/s. EHTPL. During the period 28.12.2005 to 02.11.2006, M/s. EHTPL and M/s. Stylish Holmes Real Estates Pvt. Ltd., booked 25 villa plots, whereas M/s. EHTPL executed a Development Agreement dt.03.11.2006 with M/s. Emaar MGF Land ltd. Even after execution of

Development Agreement dt.03.11.2006 in favour of M/s. Emaar MGF

Land Ltd., M/s. Stylish Holmes Real Estates Pvt. Ltd., continued to book villa plots as per the Agency Agreement dt.29.01.2005 and booked 37 plots in between 03.11.2006 to 20.08.2008.

(lv)It is further case of the prosecution that 31 villa plots were sold by M/s. EHTPL and M/s. Emaar MGF Land Ltd., at the documented rate of Rs.5,000/- per sq.yd. though the prevalent market rates were much higher. As per the Agency Agreement dt.29.01.2005, plots over 68 Crl.M.P.No.390/2022 and above 100 were to be sold at the prevailing market rates as decided by M/s. EHTPL, M/s. Stylish Holmes Real Estates Pvt. Ltd.

(lvi)It is further case of the prosecution that villa plot buyers has paid first and second installments in favour of M/s. EHTPL, whereas third and final installments, which accounted for 85% of the sale consideration @ Rs.5,000/- per sq.yd was paid in favour of M/s.

Emaar MGF Land Ltd., though the booking had been made by M/s.

EHTPL through M/s. Stylish Holmes Real Estates Pvt. Ltd., as such without making any investment M/s. Emaar MGF Land Ltd., received bulk of revenue from sale of villas/plots.

(lvii) It is further case of the prosecution that as per the instructions of Shri Koneru Rajendra Prasad, Shri T. Ranga Rao,

Director, M/s. Stylish Holmes Real Estates Pvt. Ltd., sold 82 villa plots by collecting excess amounts from the buyers ranging from Rs.4,000/- per sq.yd to Rs.45,000/- per sq.yd. over and above the rate of

Rs.5,000/- per sq.yd. The excess money was collected by

Shri T. Ranga Rao from the buyers in cash only except from

Shri P.S. Parthasarathy Rao and Shri Challa Suresh, who had deposited

US $ 250,000 and US $ 140,000 respectively towards part of excess payment in the bank accounts of Shri Madhu Koneru, S/o. Shri Koneru

Rajendra Prasad maintained at Dubai. From the 82 villa plot buyers, 69 Crl.M.P.No.390/2022 an amount of Rs.96,01,75,000/- was collected over and above the documented price of Rs.5,000/- per sq.yd. and it was supported by

Shri T. Ranga Rao, Shri P.S. Parthasarathy and Shri Y.V. Prasad statements recorded under Section 164 Cr.P.C. It is further case of the prosecution that Shri T. Ranga Rao handed over the cash to Shri Sunil

Reddy on the instructions of Shri Koneru Rajendra Prasad and also sometimes directly to Shri Koneru Rajendra Prasad.

(lviii) It is further case of the prosecution that 23 villa plots were allotted at the rate of Rs.5,000/- per sq.yd to the relatives of Shri

Koneru Prasad and family members of VIPs (Politicians in higher positions). It is further case of the prosecution that the Investigating

Agency has recovered two laptops from the office of M/s. EHTPL and

M/s. Emaar MGF Land Ltd., at Hyderabad. Out of those two laptops, one belongs to Shri Vijay Raghav and the laptops were sent to CFSL analysis and it reveals that the buyers has paid the more than the documented price.

(lix)It is further case of the prosecution that Shri Vijay Raghav,

Shri Srikant Joshi and Shri Shravan Gupta asked Shri Rajeev Gupta, Sr.

Vice President, M/s. Emaar MGF Land Ltd., to incorporate 10 companies with the employees of M/s. MGF Ltd., and other group companies as Directors/Shareholders of these companies.

70 Crl.M.P.No.390/2022

Accordingly, seven companies were floated at New Delhi and three companies were floated at Ernakulam and the money was transferred and 18 villa plots were booked in the name of ten companies, later it was cancelled.

(lx)It is further case of the prosecution that M/s. EHTPL and

M/s. Emaar MGF Land Ltd., sold about 206 apartments, out of which

Shri Srikant Joshi, the then CEO, M/s. Emaar MGF Land Pvt. Ltd.

purchased an apartment in his name at Rs.3,268/- per sq.ft, whereas the apartments were sold to the other buyers between Rs.4,800/- and

Rs.9,000/- per sq.ft.

(lxi)It is further case of the prosecution that APIIC has not received any revenue from M/s. EHTPL on account of its equity in the

Township Project and M/s. Emaar MGF Land Ltd., balance sheet shows that Rs.194,13,13,396/- was earned from sale of villas, villa plots and apartments, out of which the revenue share of Rs.48,53,28,349/- is shown payable to M/s. EHTPL towards its 25% share, but the said amount was not paid.

(lxii) It is further case of the prosecution that on the instruction of Shri Koneru Prasad, Shri T. Ranga Rao and his Manager collected an amount of Rs.96,01,75,000/- from sale of villa plots over and above 71 Crl.M.P.No.390/2022 the documented price @ Rs.5,000/- per sq.yd. during the period between 2005-2010. Similarly, Shri GV Vijay Raghav, Finance Head-

South, M/s. Emaar MGF Land Ltd., collected an amount of

Rs.6,85,60,000/- from sale of three villa plots over and above the documented price @ Rs.5,000/- per sq.yd. But those amounts were not reflected in the books of account of M/s. EHTPL. It is further case of the prosecution that APIIC has not received even a single rupee from Township Project, which amounts to loss of Rs.43.50 crores. At the same time, M/s. Emaar MGF Land Ltd. and M/s. Emaar Properties

PJSC, Dubai obtained undue pecuniary advantage of Rs.167.29 crores.

(lxiii) It is further case of the prosecution that a team was constituted for implementation of integrated project, utilization of funds with respect to agreements entered into between APIIC and

M/s. Emaar Properties, PJSC Dubai. The said team consisting of Shri C.

Subba Rao and Shri B V Bhaskar Rao visited the office of M/s. EHTPL on 04.05.2009 and 05.05.2009 and inspected the records and pointed the irregularities.

(lxiv) It is further case of the prosecution that after inducting

Shri BR Meena as VC & MD on 24.12.2009, he has noticed several irregularities and same were placed before the board of APIIC in its board meeting dt.10.08.2010 and the board took a decision to take 72 Crl.M.P.No.390/2022 comprehensive and independent expert opinion on the all the issues relating to the implementation of the project.

(lxv) It is further case of the prosecution that after receiving the reports of the consortium and legal opinion, the matter was referred to the then Ld. Solicitor General of India by APIIC and in his opinion dt.18.09.2010, the then Ld. Solicitor General of India had suggested the following course of action:

(a)APIIC should terminate the collaboration agreement and initiate arbitration proceedings with Emaar. It may then seek an injunction against M/s. Emaar MGF on the ground that the Corporate veil must be lifted in this case.

(b)APIIC as a minority shareholder in EHTPL should initiate appropriate proceedings in the company law board for oppression/mismanagement, and try and get control of

EHTPL after which the development agreement with M/s.

Emaar MGF could be rescinded by M/s. EHTPL.

(c)APIIC and GoAP should jointly file a suit for permanent injunction in an appropriate Civil Court, seeking to restrain Emaar MGF from proceeding with any works or engaging in any sale relating to the project land.

(d)APIIC should request GoAP to issue necessary instructions to the competent registration authorities not to register any sale deeds executed by Emaar MGF in favour of buyers. Where such sale deeds have been executed and 73 Crl.M.P.No.390/2022 registered, options may be explored as to how such registrations can be cancelled.

(e)APIIC may consider initiating appropriate criminal proceedings against persons involved in the actions that resulted in the depletion in the value of EHTPL. If necessary, recourse may be taken to Section 235 of Companies Act, 1956.

(lxvi) It is further case of the prosecution that as per the suggestions of Ld. Solicitor General of India, APIIC issued termination notice to M/s. Emaar Properties PJSC, Dubai and M/s. Emaar Holdings,

Mauritius on 29.10.2010 under Clause 5.3(a) of the Collaboration

Agreement.

(lxvii) It is further case of the prosecution that Shri N Sunil

Reddy (A-7) along with his father Shri N Sangi Reddy floated a company which was incorporated on 10.05.2005 in the name and style of M/s. Sunil Projects and Foundations Pvt. Ltd. and both Shri N

Sunil Reddy (A-7) and his father Shri N Sangi Reddy were the promoter directors of the said company and Shri N Sunil Reddy (A-7) was nominated as the Managing Director of the company. Later,

Narapa Manohar Reddy and his wife Smt. Narapa Saradha Reddy were appointed as Directors w.e.f. 10.10.2009. Subsequently, on 25.01.2010, the name of the company was changed to M/s. Southend 74 Crl.M.P.No.390/2022

Projects & Foundations Pvt. Ltd. and A-7 and his father resigned from the company w.e.f. 01.10.2010. M/s. Southend Projects & Foundations

Pvt. Ltd. has received the funds during the period 2009-2010 from various companies but those companies existences is in question.

(lxviii)It is further case of the prosecution that as far as land acquisition is concerned, the revenue officials has played dual role and they wanted to held some persons i.e., G. Krishna and G.

Vijaya Nirmala and Smt. Laxmamma. The officials and the Chairman of APIIC has used different yardsticks to acquire the lands of cinema actor i.e., G. Krishna and his family members and at the same time applied another yardstick to acquire properties of others.

(lxix) It is further case of the prosecution that the request made by Smt. Galla Aruna Kumari for exempting an extent of Acs.2- 20 gts at Sy.No.27/4 from acquisition was rejected. The GHMC authorities favoured the family members of Sri G. Krishna and Sri

Galla Jayadev. Who encroached upon the Government land.

(lxx) It is further case of the prosecution that the excess amount collected from villa plot buyers was benefited by Shri Koneru

Rajendra Prasad and Shri N. Sunil Reddy and the said transactions were held at Syndicate Bank, New Nallakunta Branch, Hyderabad; 75 Crl.M.P.No.390/2022

Karur Vysya Bank, Nallakunta Branch, Hyderabad and Dena Bank and

Ramakrishna Mutt Branch, Hyderabad.

11.As per the investigation conducted by the Enforcement

Directorate, they relied on the statements of accused as well as witnesses recorded under Section 50 of PMLA. The prosecution has relied on the statement of Sri Tummala Ranga Rao recorded under

Section 50(2) and (3) of PMLA, 2002 in addition to the 164 Cr.P.C.

statement made by him before the Magistrate, wherein he stated that he has received Rs.96.01 crores in cash from the buyers of villa plots as identified by CBI and those amounts were given to Sri Koneru

Rajendra Prasad and to Sri N. Sunil Reddy as directed by Sri Koneru

Rajendra Prasad; he further stated that he made payments to EMGF of Rs.1.44 crores on account of advance payments for booking of plots as per the instruction of Sri Koneru Rajendra Prasad and those amounts paid are partly from 4% commission received by them or from loan taken from third parties. He further stated that he received

Rs.1.75 crores from United Port Services and Rs.1.50 Crores from

Maheswari Brothers in the form of loan partly towards advance for booking of plots to meet the targets fixed by M/s. Emaar Properties

PJSC and the amounts are yet to be repaid and Sri Koneru Rajendra

Prasad has helped him in getting those finances. He further stated 76 Crl.M.P.No.390/2022 that he gave an amount of Rs.2.50 crores for purchase of land situated at Bikal & Mallikharjunagiri Villages, Marpalli Mandal, Ranga

Reddy District, Telangana State for Sri Koneru Rajendra Prasad and his family members with his assistance and he has paid the said amount from the sale proceeds received from the villa plot buyers to the brokers of the land as per the instructions of Sri Koneru Rajendra

Prasad and an amount of Rs.2.50 crores was paid to the land owners from the extra amount collected from villa plot buyers i.e., from

Rs.96.01 crores. He further stated that an amount of Rs.2.40 crores (approx) might have been received by M/s. Stylish Holmes from buyers of villa plots as 4% commission. He further stated that the land to an extent of 2057 Sq.Yd. situated in Manikonda Jagir Village,

Rajendra Nagar Mandal, Ranga Reddy District is held in the name of

M/s. Stylish Holmes purchased with an investment of

Rs.1,11,20,450/-.

12.The prosecution also relied on the statement of Sri B.P.

Acharya, recorded under Section 50(2) and (3) of PMLA, 2002, wherein he stated that he has attended the board of EHTPL on 20.12.2005. The prosecution also relied on the statement of Sri G.V.

Vijay Raghav, recorded under Section 50(2) and (3) of PMLA, 2002, wherein he stated that as there was a need for funds into the projects, 77 Crl.M.P.No.390/2022 deed was entered into with EMGF and accordingly EMGF started investing into the integrated project and that the total investment in

Golf Course and township projects was Rs.400 Crores (approx.). He further stated that he is the authorised signatory of EMGF and EHTPL as per board resolutions and that he was reporting to Mr. Srikant Joshi,

CEO. He further stated that EHTPL entered into Agency agreement for sale of plots in January 2005 with M/s. Stylish Holmes Pvt. Ltd. and

EHTPL entered into Development agreement for development of

Township Project in November 2006 with EMGF. No written approval from APIIC was taken by EHTPL for the agreements entered with EMGF or M/s. Stylish Holmes. He further stated that as per the Development

Agreement-cum-GPA entered into between EHTPL and EMGF, the consideration for the development of township project was revenue share and EHTPL to get 25% on gross revenue of the project and balance 75% of gross revenue to EMGF. The revenue share mentioned as Rs.45 Crores (approx.) as on 31.03.2011 as per balance sheet, however no amount has been transferred by EMGF to EHTPL upto 31.03.2011. APIIC was also not paid dividends as the balance sheets were not finalized due to APIIC non-approval. He further stated that he was transferred to EMGF in March 2007 and worked as

Finance Head (South) of EMGF. He further stated that the interested parties approached Mr. Srikant Joshi, CEO of EMGF and based on his 78 Crl.M.P.No.390/2022 instructions, they issued allotment letters or MOU to such allotted parties.

13.The prosecution also relied on the statement of Sri Koneru

Rajendra Prasad, recorded under Section 50(2) and (3) of PMLA, 2002, wherein he stated that he was invited by Emaar, Dubai to be a nominee Director in EHTPL towards end of 2004, which he accepted and continued to be a Director till 2010. He further stated that the price of Rs.5000/- per sq.yd. was fixed by Emaar Properties, Dubai being the majority shareholder in EHTPL and was approved by board of EHTPL and he has signed the balance sheets of EHTPL for the years 2005-06 and 2006-07 under Company Law as legal formality. He further stated that selling of villa plots in excess of Rs.5000/- per

Sq.Yd. by Sri Tummala Ranga Rao of M/s. Stylish Holmes was never brought to the knowledge of EHTPL Board; that Sri Tummala Ranga

Rao has never paid any amount to him in cash or cheque and he is not aware of any transactions between Sri N. Sunil Reddy and

Sri Tummala Ranga Rao and he is not aware of the fact that

Sri Tummala Ranga Rao has collected Rs.96.01 crores excess of cash from villa plot buyers over and above the agreed price of Rs.5000/- per Sq.Yd. except during the investigation proceedings by CBI. He further stated that he has never advised Sri Tummala Ranga Rao to 79 Crl.M.P.No.390/2022 establish M/s. Stylish Holmes or to collect extra amount from villa plot buyers; and that he has not instructed Sri Tummala Ranga Rao to pay

Rs.2.5 crores to farmers from excess amount collected; that his family members have purchased some lands in Medak District.

14.The prosecution also relied on the statement of Sri Srikanth P

Joshi, recorded under Section 50(2) and (3) of PMLA, 2002, wherein he stated that he joined EMGF in April 2006 as CEO (South) and from

April, 2009 he worked as CEO of EMGF and he attended the board meeting dt.21.09.2006. He know about the past agreements entered by Emaar and APIIC including agreement dt.29.01.2005. He further stated that EMGF has redesigned the integrated project where the plots were reduced from 350 to 135 and apartments were increased from 1000 to 3500. He further stated that the plots were sold through

M/s. Stylish Holmes and originally cheques were received by EHTPL and after the Development Agreement, they were received by EMGF as per the agreement. He further stated that Sri Tummala Ranga Rao and Sri K. Rajendra Prasad are the persons having control on the sale of villa plots; and Mr. T. Ranga Rao was the main person responsible for sales and collections.

15.The prosecution also relied on the statement of Sri Rakshit

Jain, recorded under Section 50(2) and (3) of PMLA, 2002, wherein he 80 Crl.M.P.No.390/2022 stated that the entire development of Boulder Hills Project of EHTPL was transferred in the name of EMGF vide Joint Development

Agreement dt.03.11.2006 and subsequent agreements. The plots cancelled after sale, on 04.10.2010 were in possession and ownership of EHTPL. As per the Development Agreement dt.03.11.2006, the sale of plots after 03.11.2006 was still on behalf of EHTPL and not EMGF.

Out of 134 plots, 91 plots were sold by M/s. Stylish Holmes, 9 plots by

EMGF and remaining 34 plots were unsold and are with EHTPL. EMGF has collected Rs.67.87 Crores and total collection is Rs.73.20 Crores including EMGF and EHTPL from sale of villa plots. He further stated that 3 completed villas were sold by EMGF for Rs.21.36 crores.

16.The prosecution also relied on the statement of Sri Challa

Suresh, recorded under Section 50(2) and (3) of PMLA, 2002, wherein he stated that he purchased villa plot No.A-28 of 1449 Sq.Yds. at the rate of Rs.5000 per Sq.Yd. in Boulder Hills, Hyderabad in the name of

M/s. Serenity Homes Pvt. Ltd. from EHTPL. Rs.5000/- per Sq.Yd. is paper rate and whereas Sri Koneru Rajendra Prasad and Sri T. Ranga

Rao of M/s. Stylish Holmes asked for excess amount of Rs.9000 per

Sq.Yd. over and above the documented price which works out at

Rs.72,50,000/-. He further stated that Sri Koneru Rajendra Prasad has 81 Crl.M.P.No.390/2022 invested USD 140,000 in Dubai property market with Mr. Madhu

Koneru.

17.The prosecution also relied on the statement of Sri Koneru

Madhu, recorded under Section 50(2) and (3) of PMLA, 2002, wherein he stated that he is an NRI, residing in Dubai since 1992 and engaged in the business of real estate, trading and mining. In 2011 one Mr.

Parthasarathy, an NRI, who wanted to invest in UAE real estate market has sent an amount of USD 2,50,000 approx. to his foreign currency account in India in 2011, however, later he withdrawn that amount and hence it was returned. He further stated that Sri Challa

Suresh, a resident of USA, has invested a sum of USD 1,40,000 approx. in 2005 and the same is still under investment at his end.

18.The prosecution also relied on the statement of Sri Kesava

Shenoy, recorded under Section 50(2) and (3) of PMLA, 2002, wherein he stated that he wanted to purchase property in Kerala, but the plots were allotted by EHTPL. He further stated that he has not applied for any money or for any loan to M/s. Braggat Vyapar Pvt. Ltd. and he do not know why Braggat Vyapar has deposited such amount into their account.

19.The prosecution also relied on the statement of Sri N. Sunil

Reddy, recorded under Section 50(2) and (3) of PMLA, 2002, wherein 82 Crl.M.P.No.390/2022 he stated that M/s. Southend Projects (formerly known as M/s. Sunil

Projects) was incorporated by him and his father as Directors during 2005 and later they sold out the company in 2009 to Sri Narapa

Manohar Reddy. He further stated that he do not know about the investments of Rs.45.21 Crores received by M/s. Southend Projects during 2009 and 2010 as he sold out the company to Sri Narapa

Manohar Reddy. He further stated that he does not have any association either with Sri Tummala Ranga Rao or with Sri Koneru

Rajendra Prasad and that he had not received any amounts from them.

20.The prosecution also relied on the statement of

Sri S. Madhusudhan Rao, recorded under Section 50(2) and (3) of

PMLA, 2002, wherein he stated that 15 unsold plots were available with EHTPL were allotted to 15 persons and later the agreements were cancelled.

21.The prosecution also relied on the statement of Sri V. Vijay

Sai Reddy, who has given statement on behalf of Sri N. Manohar

Reddy under Section 50(2) and (3) of PMLA, 2002, wherein he stated that Sri Narapa Manohar Reddy has acquired M/s. Southend Projects,

Hyderabad, by investing an amount of Rs.8,98,20,000/- for acquiring

Rs.55,20,000/- worth of shares from Sri N. Sunil Reddy and his family 83 Crl.M.P.No.390/2022 members in October 2010. He further stated that the bank account in the name of M/s. Southend Projects in Axis Bank, vide A/c.

No.909020036183180 was opened by the original promoters i.e. Sri

N. Sunil Reddy and he is the authorized signatory for the account; even after taking over the company by Narapa Manohar Reddy, he did not replace Sri N. Sunil Reddy from being authorized signatory and hence all the transactions subsequent to his taking over, i.e., from

October 2009, have been done by Sri N. Sunil Reddy under the instructions of Sri Narapa Manohar Reddy. He further stated that the account with OBC, Jubilee Hills vide A/c. No.11101010029260 of M/s.

Southend Projects was opened and being operated by Sri Narapa

Manohar Reddy and those two accounts are not active at present, Sri

Narapa Manohar Reddy has opened an account in Andhra Bank, Jaya

Nagar, Bangalore bearing A/c. No.027311100002467; and for the purpose of land acquisitions, Sri Narapa Manohar Reddy mobilized

Rs.45.21 crores funds from various investors. He further stated that there are transactions of transfer of amounts between Shri Sunil

Reddy through his personal account and Bloomery Steel Industries

Pvt. Ltd., M/s. Bluesky Enterprises Pvt. Ltd., M/s. Megallam Enterprises

Pvt. Ltd., M/s. Amydale Info Tech Pvt. Ltd. and M/s. Aramid Textiles

Pvt. Ltd. An amount of Rs.45.21 crores received by M/s. Southend

Projects and Foundations Pvt. Ltd. from various companies as equity 84 Crl.M.P.No.390/2022 investment in M/s. Southend Projects and the shares have been allotted to the respective investors on premium and hence the refund of above said amount cannot be made as per the Companies Act, 1956 and the parties are at liberty to sell the shares to any third party.

He further stated that M/s. Southend Projects has given an advance of

Rs.36.82 Crores to M/s. Asara Theme Projects Pvt. Ltd., between

December 2009 and March 2010 towards purchase of land in

Hyderabad; that the sale of land did not take place and the said amount was also not returned to them. Neither M/s. Southend Projects nor Sri Narapa Manohar Reddy has complained to any authorities regarding non-return of advance amount of Rs.36.82 crores; and that an amount of Rs.20 crores was reflected in the statement of Assets &

Liabilities of M/s. Southend Projects is lying in the form of Fixed

Deposits in Andhra Bank, Bangalore.

22.The prosecution also relied on the statement of Sri Indukuri

Syam Prasad Reddy, recorded under Section 50(2) and (3) of PMLA, 2002, wherein he stated that M/s. Walden Properties Pvt. Ltd., a

Hyderabad based real-estate company promoted by him and his wife, intended to buy 4 Acres 01 Guntas of land at Rayadurg, Ranga Reddy

District and paid advances to the land owners and registered the said property in the name of M/s. Asara Theme Projects Pvt. Ltd.

85 Crl.M.P.No.390/2022

M/s. Southend Projects represented by Sri Narapa Manohar Reddy, wanted to buy the land parcel of 04 Acres 01 Guntas at Rayadurg,

Hyderabad owned by M/s. Asara Theme Projects Pvt. Ltd., at the rate of Rs.16 Crores per Acre and had paid an advance of Rs.36.82 Crores via RTGS during December-2009 to March-2010. He further stated that M/s. Southend Projects could not pay the balance amount even after 2 years of MoU due to downfall in real estate market in

Hyderabad, they were forced to sell the said property to M/s. Sandhya

Hotels Pvt. Ltd. during 2011-12 for lesser consideration of Rs.36.15 crores, for which M/s. Asara Theme Projects Pvt. Ltd. had to suffer a loss of Rs.19.82 crores. He further stated that he does not have any association or acquaintance with Sri N. Sunil Reddy, but as per the advice of Sri Narapa Manohar Reddy of M/s. Southend Projects and

Foundations Pvt. Ltd., they have paid Rs.1.5 crores to Sri N. Sunil

Reddy on 03.02.2012 from bank account of M/s. Asara Theme

Projects’ current Account No.860920110000198 of Bank of India.

3,62,06,155 Nos. of shares held by him in his personal capacity in

M/s. Indu Projects Ltd.

23.The prosecution also relied on the statement of Sri Koneru

Pradeep, recorded under Section 50(2) and (3) of PMLA, 2002, wherein he stated that he is having a land parcel of 36.14 acres of 86 Crl.M.P.No.390/2022 land at Bilkal & Mallikharjunagiri Villages, Marpalli Mandal, Ranga

Reddy District, Telangana State and the same was purchased with an investment of Rs.14,09,865/- from the source of his salary savings/ rent/sale of shares/gifts etc.

24.The prosecution also relied on the statement of Sri Shravan

Gupta, recorded under Section 50(2) and (3) of PMLA, 2002, wherein he stated that he was the Director and Promoter of MGF group and he was the Managing Director of M/s. Emaar MGF Land Ltd. from 2005 to 2015. In the year 2006, EHTPL came with a proposal of investing some amount into the integrated project and Sri Srikanth Joshi, CEO,

EMGF made presentation to EMGF board and board authorized him to negotiate and enter into a Development Agreement with EHTPL; that the Development Agreement dt.03.11.2006, Development

Agreement-cum-GPA dt.25.07.2007 and addendum dt.23.07.2008 were entered between EMGF and EHTPL. He further stated that he has no knowledge that there was any stipulation to maintain the share of

APIIC at 26% at all times and he stated that he does not have any knowledge about 18 no’s plots blocked by EMGF, which were cancelled at a later date. He further stated that he is not aware of the facts about numbers regarding the amounts collected by EMGF from the sale of villas and villa plots. He further stated that an amount of 87 Crl.M.P.No.390/2022

Rs.67.87 crores collected by EMGF is mentioned in the balance sheet of EMGF and that he was not aware that an amount of Rs.96.01 crores has been collected by M/s. Stylish Holmes from villa plot buyers in addition to the documented price of Rs.5,000/- and he is also not aware that an amount of Rs.6.86 crores has been collected by Sri GV

Vijay Raghav from villa plot buyers in addition to the documented price.

25.The investigation revealed that in pursuance of the conspiracy among the accused, they have violated the conditions stipulated in the various development agreements with a view to deceive the share of APIIC and inducted several persons for selling the villa plots etc. and collected extra amount other than the rate fixed by EHTPL. As per the statement of Tummala Ranga Rao, excess amount of Rs.96.01 crores were collected and out of which, he handed over some amount to Sri N. Sunil Reddy and remaining to Sri

Koneru Rajendra Prasad and an amount of USD 1,40,000 has been received by Sri Madhu Koneru in Dubai from one of the villa plot buyers namely Sri Challa Suresh and Sri Challa Suresh has confirmed the same in his statement given under Section 50 of PMLA 2000.

Another amount of USD 2,50,000 has been received by Sri Koneru

Madhu from another villa plot buyer namely Sri PS Parthasarathy on 88 Crl.M.P.No.390/2022 09.08.2007, however the same was returned to Sri PS Parthasarathy on 14.10.2011 mentioning as ‘repayment of loan’. The investigation further revealed that Sri Tummala Ranga Rao has collected Rs.2.50 crores out of proceeds of crime i.e. Rs.96.01 crores and purchased the land in the name of Sri Koneru Pradeep.

26.The prosecution further contended that Sri N. Sunil Reddy along with his father floated a company by name M/s. Sunil Projects and Foundations Pvt. Ltd. on 10.05.2006 and w.e.f. 10.10.2009, Sri

Narapa Manohar Reddy and his wife Smt. Narapa Sarada Reddy were appointed as Directors. The name of the company was changed to

M/s. Southend Projects and Foundations Pvt. Ltd. from 25.01.2010 and that Sri N. Sunil Reddy and his father have resigned from the company w.e.f. 01.10.2010. M/s. Southend Projects and Foundations

Pvt. Ltd. has received funds of Rs.45.21 crores from 11 Companies.

The investigation conducted by the CBI revealed that existence of 11

Companies was in questions and those companies were floated only for the purpose of transfer of funds and though Sri N. Sunil Reddy contended that he sold the company to Sri N. Manohar Reddy during 2009, he continued to transact bank accounts.

27.The prosecution contended that the total benefit accrued by

EHTPL, EMGF on account of criminal conspiracy is Rs.167.29 crores, 89 Crl.M.P.No.390/2022 out of which Rs.96.01 crores cash component collected by M/s. Stylish

Holmes, Rs.64.41 crores in the form of Profit Before Tax (PBT) as per the books of account of EMGF and Rs.6.86 crores as cash component collected by EMGF, totaling to Rs.71.27 crores, since the said amount is proceeds of crime.

28.The investigation also revealed that 11 companies do not have any other dealing except with M/s. Southend Projects other than making such investment. An amount of Rs.1.50 crores was transferred to Sri N. Sunil Reddy on 03.02.2012 from the account of M/s. Asara

Theme Projects Pvt. Ltd. An amount of Rs.36.82 crores was transferred from M/s. Southend Projects to M/s. Asara Theme Projects

Pvt. Ltd. for purchase of land, however, no land was registered in the name of M/s. Southend Projects. The prosecution contended that a sum of Rs.20 crores as reflected in the statement of Assets and

Liabilities of M/s. Southend Projects is lying in the form of Fixed

Deposits as proceeds of crime and Rs.25.21 crores valued shares were held in the name of Sri Indukuri Syam Prasad Reddy as investment in M/s. Indu Projects Ltd. As per the prosecution, an amount of Rs.45.21 is with Sri N. Sunil Reddy of M/s. Southend

Projects and Foundations Pvt. Ltd. and the balance amount of 90 Crl.M.P.No.390/2022 proceeds of crime of Rs.50.80 crores received by Shri Koneru

Rajendra Prasad.

29.The prosecution contended that as per available record Sri

BP Acharya, EHTPL, Shri Koneru Rajendra Prasad, EMGF, M/s. Stylish

Holmes, Shri Tummala Ranga Rao, Sri Koneru Madhu, M/s. Southend

Projects, Sri N. Sunil Reddy, M/s. Asara Theme Projects, Sri Koneru

Pradeep, Sri GV Vijay Raghav and Sri Srikanth P Joshi are involved in the scheduled offence punishable under Section 120-B and 420 of IPC.

30.M/s Southend Projects & Foundations Pvt. Ltd./A-4 has received funds of Rs.45.21 crore from the following 11 companies, for which date of incorporation and dates of transfer of funds are detailed below:

Sl.Date ofDate of ReceiptAmount Company Name No.Incorporationof fundsreceived 10.11.20092,30,00,000 M/s. Amygdale Info Tech

1.16.10.2009 Private Limited20.11.200925,00,000 23.12.200950,00,000 09.11.200975,00,000 12.11.20091,50,00,000 17.11.200975,00,000 M/s. Aramid Textiles Private19.11.200970,00,000

2.14.10.2009 Limited 25.11.20091,00,00,000 27.11.200950,00,000 10.12.200940,00,000 23.12.200915,00,000 91 Crl.M.P.No.390/2022 16.01.20101,75,00,000 M/s. Bloomery Steel

3.27.10.2009 Industries Private Limited20.01.20101,25,00,000 21.01.201040,00,000 09.11.20091,50,00,000 M/s. Bluesky Enterprises

4.20.10.2009 Private Limited19.11.20091,10,00,000 27.11.20091,00,00,000 M/s. Chakri Industries 07.12.200955,00,000

5.25.06.2003 Private Limited 10.12.200960,00,000 26.12.200950,00,000 24.12.200940,00,000 M/s. Invar Steels Private

6.22.10.2009 Limited11.10.201050,00,000 11.10.201054,00,000 12.10.201056,00,000 13.10.200975,00,000 14.10.200975,00,000 15.10.20092,00,00,000 21.10.20091,10,00,000 M/s. Megallan Enterprises Not registered 7. Private Limitedwith ROC22.10.20092,40,00,000 22.10.20091,50,00,000 05.12.20091,90,00,000 16.12.20091,00,00,000 21.12.200950,00,000 25.11.200975,00,000 09.11.200975,00,000 17.11.20092,80,00,000 M/s. Pashmina Textiles 19.11.200965,00,000

8.21.10.2009 Private Limited 25.11.200975,00,000 21.12.200915,00,000 23.12.200950,00,000 16.01.201050,00,000

9.M/s. Punarvasu Enterprises 12.10.200910.11.200920,00,000 92 Crl.M.P.No.390/2022 20.11.20091,05,00,000 Private Limited 16.01.201030,00,000 23.12.20091,00,00,000 M/s. Scanner Systems &

10.27.10.2009 Technology Private Limited06.10.201050,00,000 06.10.201096,00,000

11.M/s. Etread.Com Private 10.05.200013.10.20093,00,00,000 Limited Total45,21,00,000

31.Letter dt.16.01.2014 received from Oriental Bank of Commerce,

Jubilee Hills Branch, providing the bank KYC documents and account statement of A/c No.11101010029260 of M/s Southend Projects &

Foundations Pvt. Ltd. revealed that the above said amounts of

Rs.45.21 crore has been received into M/s Southend Projects on respective dates. As per the CBI charge sheets dt.01.02.2012 and 23.04.2012, Rs.96.01 crore was collected by Sri Tummala Ranga Rao of M/s. Stylish Holmes. Sri Tummala Ranga Rao in his depositions made under Section 164 of Cr.P.C. and also under Section 50 of PMLA, 2002 stated that he has handed over the total amount either to Sri

N.Sunil Reddy/A-11 or to Sri Koneru Rajendra Prasad/A-7 and the ratio of amounts are not known to him. The charge sheets further revealed that Mr. N.Sunil Reddy/A-11 has received Rs.45.21 crore and invested the same through 11 different companies into M/s Southend

Projects/A-4 during 2009-10.

93 Crl.M.P.No.390/2022

32.CBI investigation did not reveal the whereabouts of the 11 companies, which invested Rs.45.21 crore in M/s Southend Projects/

A-4, as these companies did not exist at the given addresses during the relevant period. During the investigation under PMLA, 2002 also no traces of these companies at the given addresses are noticed. To ascertain the source of funds and reasons for the investment in M/s

Southend Projects/A-4, summons were issued to the authorized persons of these 11 companies which invested in M/s Southend

Projects/A-4, at the addresses available on record as per Ministry of

Corporate Affairs and also from the KYC documents received from the concerned banks. Investigation under PMLA, 2002 also revealed that most of these companies were incorporated with nominal amount of

Share Capital just a few days prior to the dates of their investments into M/s. Southend Projects/A-4. From the data retrieved from

Registrar of Companies, Ministry of Corporate Affairs and scrutiny of the certificates of incorporation of these 11 companies revealed that some Directors are common in 3-4 companies.

33.Scrutiny of the bank account statements and other documents of these 11 companies revealed that the following companies have some money transactions with Sri N. Sunil Reddy/A-11 as under:

94 Crl.M.P.No.390/2022

Name of theBank Account No & BankAmount paid byAmount companySri N.Sunilreceived by Sri ReddyN.Sunil Reddy (Rs.)(Rs.) M/s Aramid Textiles A/c No. 909020038292893 03,50,00,000 Pvt. Ltd.of Axis Bank, Banjara Hills. M/s Bluesky A/c No. 909020038789151 5,72,00,00070,00,000 Enterprises Pvt. of Axis Bank, Banjara Hills. Ltd. M/s Megallan A/c No. 33420001000399011,50,00,0001,50,00,000 Enterprises Pvt. of Karnataka Bank, Raj Ltd.Bhavan Road. M/s Amygdale A/c No. 04921200000213 of1,92,00,0000 Infotech Pvt. Ltd.DCB Bank, Madhapur.

All these transactions confirm that Sri N.Sunil Reddy/A-11 has dealings with these companies in his personal capacity in addition to their investments in M/s Southend Projects/A-4. These 11 companies do not have any other dealings with M/s Southend Projects/A-4 other than making such investment. Later these investments of Rs.45.21 crore were converted into Share Capital amount with high premium as against the paid up capital of Rs.10.73 crore. Sri V.Vijay Sai Reddy, authorized representative of M/s Southend Projects/A-4, in his statement dt.12.08.2014, stated that the shareholders have no right to seek refund of their Investment of Rs.45.21 crore and they can only transfer their shares. These transactions revealed that Sri N. Sunil

Reddy/A-11 had received Rs.45.21 crore in cash from Sri Tummala 95 Crl.M.P.No.390/2022

Ranga Rao and invested the same in M/s Southend Projects/A-4 through these 11 companies floated for the said purpose.

34.M/s Southend Projects/A-4 received Rs.45.21 crore from Sri

Tummala Ranga Rao through 11 dummy companies. From the said amount, M/s Southend Projects/A-4 further transferred Rs.36.82 crore to M/s Asara Theme Projects Pvt. Ltd./A-5 said to be advance for purchase of land. However, no land was registered In the name of M/s

Southend Projects/A-4.

35.Thus, the following properties are identified in relation to the above said proceeds of crime/such value of proceeds of crime received by Sri N.Sunil Reddy/A-11 totaling to Rs.45.21 crore in terms of Section 2(1)(u) of PMLA, 2002.

i. Rs.20,00,00,000/- of FD's with Andhra Bank, Bangalore, pertaining to M/s Southend Projects & Foundations Pvt. Ltd. as Proceeds of Crime.

ii.Rs.25,21,00,000/- valued Shares of Sri Indukuri Syam Prasad Reddy (who is also Director in M/s Asara Theme Projects Pvt. Ltd.) invested in M/s Indu Projects Ltd. vide ISIN No. INE367101018 as value of any such property as defined under Section 2(1)(u) of PMLA, 2002.

36.Investigation under PMLA, 2002 revealed that part of excess amount collected from villa plot buyers has flown into EHTPL/A-1 itself by way of advance for booking plots and also by other means, 96 Crl.M.P.No.390/2022 through Sri Koneru Rajendra Prasad/A-7, for the development of the project. Thus it is evident that the project is benefited with excess amount collected and EHTPL/A-1 and EMGF/A-2 are the ultimate beneficiaries of the excess amount collected from the Villa Plot buyers, which was not shown in the books of accounts of EHTPL/A-1 and hence cheated APIIC by depriving its due share in the sale of villa plots. Hence the unsold Villa Plots available with EHTPL/A-1 and also

Open land of EHTPL/A-1 is considered as Proceeds of Crime for attachment as specified below:

i. 14 unsold Villa Plots available with EHTPL admeasuring 14624 Sq. Yds. Valued at Rs.36,56,00,000/-.

ii. Open land of 4.80 Acres in EHTPL valued at Rs.58,08,00,000/- (attachments to the extent value of Rs.13,09,07,000/- as value of any such property as defined under Section 2(1)(u) of PMLA, 2002.

37.M/s Stylish Holmes/A-3 was floated for the benefit of EHTPL/A-1 with a sole intention of depriving the share of APIIC and player key role in collection and distribution of Rs.96.01 crore. Therefore the following property held by M/s Stylish Holmes/A-3 is considered as

Proceeds of Crime.

i. Plot measuring 2057 Sq.Yd. in the name of M/s Stylish Holmes valued at Rs.1,02,85,000/- as value of any such property as defined under Section 2(1)(u) of PMLA, 2002.

97 Crl.M.P.No.390/2022

38.Sri Tummala Ranga Rao (A-10) has paid Rs.2.50 crore for purchase of 36.14 Acres of lands in Bilkal and Mallikarjunagiri Villages, in the name of Sri Koneru Pradeep/A-13, S/o Koneru Rajendra Prasad, out of the amount of Rs.96.01 crore. Therefore, the said property is also considered as Proceeds of Crime and attached.

i. Land of 36.14 Acres situated at Bilkal and Mallikarjunagiri Villages, Marpalle Mandal, Ranga Reddy District, held in the name of Pradeep Koneru valued at Rs.12,83,000/- as Proceeds of Crime

39.The complainant found that the properties mentioned above valued at Rs.167.29 crore are proceeds of crime in the form of movable and immovable properties. The Immovable properties of

Proceeds of Crime and in the form of villa plots and land are meant for sale to third parties. Some part of the said Proceeds of Crime of

Rs.96.01 crore was initially collected in cash and concealed without reflecting in the books of accounts of EHTPL/EMGF, subsequently shared partly by Sri Koneru Rajendra Prasad/A-7 who further invested in purchase of land and also in booking of Villa Plots in EHTPL/A-1.

Part of these Proceeds of Crime was shared to Sri N.Sunil Reddy/A-11, who is not at all connected to the activities of EHTPL/EMGF, who further invested the same into his own company M/s Southend

Projects/A-4 through 11 dummy companies and such transfer of amounts was reflected as share application money with premium 98 Crl.M.P.No.390/2022 amount. Further these amounts are transferred to M/s Asara Theme

Projects Pvt. Ltd./A-5 stating for 'purchase of land' and no land purchase was done. Sri N.Sunil Reddy/A-11 also received Rs.1.50 crore from M/s Asara Theme Projects/A-5 to his personal account, which evidences that the Proceeds of Crime earned by Sri N.Sunil

Reddy/A-11 has been subjected to many transfers. Thus it is evident that, the total proceeds of crime have been subjected to many transfers and dealings to project them as untainted property.

40.The complainant apart from the investigation conducted by CBI, they have also mentioned that the CBI investigation did not reveal the whereabouts of 11 companies, which invested Rs.45.21 crore in M/s.

Southend Projects/A-4, as these companies did not exist at the given addresses during the relevant period. The complainant investigated the said aspect which was left over by the CBI and issued summons to the 11 companies which invested in M/s. Southend Projects/A-4 at the addresses available on record as per Ministry of Corporate Affairs and also from the KYC documents received from the concerned banks.

41.The investigation conducted by the complainant revealed that most of those companies were incorporated with nominal amount of share capital just a few days prior to the dates of their investments into M/s Southend Projects/A-4. From the data retrieved from 99 Crl.M.P.No.390/2022

Registrar of Companies, Ministry of Corporate Affairs and scrutiny of the certificates of incorporation of these 11 companies revealed that some Directors are common in 3 to 4 companies and the investigating officer has collected bank account statements of those companies.

42.The documents relied by the complainant/ED shows that the petitioner/A-8 joined in Accused No.2 company in April, 2006 as CEO and he was also an alternate Director on the Board of 3 SPVs of

Accused No.1 company, BHLPL and CCCPL from May, 2008 to May, 2010 and Director from May, 2010 to September, 2011. He has signed in the execution of Development Agreement dt.03.11.2006 with Accused No.1 company on behalf of Accused No.2 company having knowledge about the stake of APIIC. The petitioner/A-8 has entered into an Agreement dt.29.01.2005 with M/s. Stylish Holmes/

A-3.

43.The documents and the statements relied by the complainant shows that the petitioner/A-8 had acquaintance with Sri T.Ranga

Rao/A-10 and K.Rajendra Prasad/A-7 and he is one of the kingpin for implementation of fraudulent transactions.

44.The documents relied by the complainant/Enforcement

Directorate and the documents relied by the CBI and the statements recorded by the complainant/ED under Section 50(2)&(3) of PMLA, 100 Crl.M.P.No.390/2022 2002, and also the statements made by the approver i.e. Accused

Nos.3 and 10 clearly shows that the complainant/ED had a prima facie case. The statement of the approver appears to be corroborating with the documents relied by the complainant as well as CBI.

45.It is to be noted that judgment of the Hon'ble Supreme Court in

Vijay Madanlal Choudhary and others v. Union of India and others [2022 SCC OnLine SC 929], wherein the Hon'ble Supreme Court held the validity of the statement recorded by the prosecution under

Section 50(2) & (3) of PMLA and also gave detailed guidelines about

Section 24 of PMLA, as under:

(i) The question as to whether some of the amendments to the Prevention of Money-laundering Act, 2002 could not have been enacted by the Parliament by way of a Finance Act has not been examined in this judgment. The same is left open for being examined along with or after the decision of the Larger Bench (seven Judges) of this Court in the case of Rojer Mathew [(2020) 6 SCC 1].

(ii) The expression “proceedings” occurring in Clause (na) of Section 2(1) of the 2002 Act is contextual and is required to be given expansive meaning to include inquiry procedure followed by the Authorities of ED, the Adjudicating Authority, and the Special Court.

(iii) The expression “investigation” in Clause (na) of Section 2(1) of the 2002 Act does not limit itself to the matter of investigation concerning the offence under the Act and is interchangeable with the function of “inquiry” to be undertaken by the Authorities under the Act.

(iv) The Explanation inserted to Clause (u) of Section 2(1) of the 2002 Act does not travel beyond the main provision predicating tracking and reaching upto the property derived or obtained directly or indirectly as a result of criminal activity relating to a scheduled offence.

101 Crl.M.P.No.390/2022

(v) (a) Section 3 of the 2002 Act has a wider reach and captures every process and activity, direct or indirect, in dealing with the proceeds of crime and is not limited to the happening of the final act of integration of tainted property in the formal economy. The Explanation inserted to Section 3 by way of amendment of 2019 does not expand the purport of Section 3 but is only clarificatory in nature. It clarifies the word “and” preceding the expression projecting or claiming as “or”; and being a clarificatory amendment, it would make no difference even if it is introduced by way of Finance Act or otherwise.

(b) Independent of the above, we are clearly of the view that the expression “and” occurring in Section 3 has to be construed as “or”, to give full play to the said provision so as to include “every” process or activity indulged into by anyone. Projecting or claiming the property as untainted property would constitute an offence of money-laundering on its own, being an independent process or activity.

(c) The interpretation suggested by the petitioners, that only upon projecting or claiming the property in question as untainted property that the offence of Section 3 would be complete, stands rejected.

(d) The offence under Section 3 of the 2002 Act is dependent on illegal gain of property as a result of criminal activity relating to a scheduled offence. It is concerning the process or activity connected with such property, which constitutes the offence of money-laundering. The Authorities under the 2002 Act cannot prosecute any person on notional basis or on the assumption that a scheduled offence has been committed, unless it is so registered with the jurisdictional police and/or pending enquiry/trial including by way of criminal complaint before the competent forum. If the person is finally discharged/acquitted of the scheduled offence or the criminal case against him is quashed by the Court of competent jurisdiction, there can be no offence of money-laundering against him or any one claiming such property being the property linked to stated scheduled offence through him.

(vi) Section 5 of the 2002 Act is constitutionally valid. It provides for a balancing arrangement to secure the interests of the person as also ensures that the proceeds of crime remain available to be dealt with in the manner provided by the 2002 Act. The procedural safeguards as delineated by us hereinabove are effective measures to protect the interests of person concerned.

(vii) The challenge to the validity of sub-section (4) of Section 8 of the 2002 Act is also rejected subject to Section 8 102 Crl.M.P.No.390/2022 being invoked and operated in accordance with the meaning assigned to it hereinabove.

(viii) The challenge to deletion of proviso to sub-section (1) of Section 17 of the 2002 Act stands rejected. There are stringent safeguards provided in Section 17 and Rules framed thereunder. Moreover, the pre-condition in the proviso to Rule 3(2) of the 2005 Rules cannot be read into Section 17 after its amendment. The Central Government may take necessary corrective steps to obviate confusion caused in that regard.

(ix) The challenge to deletion of proviso to sub-section (1) of Section 18 of the 2002 Act also stands rejected. There are similar safeguards provided in Section 18. We hold that the amended provision does not suffer from the vice of arbitrariness.

(x) The challenge to the constitutional validity of Section 19 of the 2002 Act is also rejected. There are stringent safeguards provided in Section 19. The provision does not suffer from the vice of arbitrariness.

(xi) Section 24 of the 2002 Act has reasonable nexus with the purposes and objects sought to be achieved by the 2002 Act and cannot be regarded as manifestly arbitrary or unconstitutional.

(xii) (a) The proviso in Clause (a) of sub-section (1) of Section 44 of the 2002 Act is to be regarded as directory in nature and this provision is also read down to mean that the Special Court may exercise judicial discretion on case-to-case basis.

(b) We do not find merit in the challenge to Section 44 being arbitrary or unconstitutional. However, the eventualities referred to in this section shall be dealt with by the Court concerned and by the Authority concerned in accordance with the interpretation given in this judgment.

(xiii) (a) The reasons which weighed with this Court in Nikesh Tarachand Shah [(2018) 11 SCC 1] for declaring the twin conditions in Section 45(1) of the 2002 Act, as it stood at the relevant time, as unconstitutional in no way obliterated the provision from the statute book; and it was open to the Parliament to cure the defect noted by this Court so as to revive the same provision in the existing form.

(b) We are unable to agree with the observations in Nikesh Tarachand Shah [(2018) 11 SCC 1] distinguishing the enunciation of the Constitution Bench decision in Kartar Singh [(1994) 3 SCC 569]; and other observations suggestive of doubting the perception of Parliament in regard to the 103 Crl.M.P.No.390/2022 seriousness of the offence of money-laundering, including about it posing serious threat to the sovereignty and integrity of the country.

(c) The provision in the form of Section 45 of the 2002 Act, as applicable post amendment of 2018, is reasonable and has direct nexus with the purposes and objects sought to be achieved by the 2002 Act and does not suffer from the vice of arbitrariness or unreasonableness.

(d) As regards the prayer for grant of bail, irrespective of the nature of proceedings, including those under Section 438 of the 1973 Code or even upon invoking the jurisdiction of Constitutional Courts, the underlying principles and rigours of Section 45 may apply.

(xiv) The beneficial provision of Section 436A of the 1973 Code could be invoked by the accused arrested for offence punishable under the 2002 Act.

(xv) (a) The process envisaged by Section 50 of the 2002 Act is in the nature of an inquiry against the proceeds of crime and is not “investigation” in strict sense of the term for initiating prosecution; and the Authorities under the 2002 Act (referred to in Section 48), are not police officers as such.

(b) The statements recorded by the Authorities under the 2002 Act are not hit by Article 20(3) or Article 21 of the Constitution of India.

(xvi) Section 63 of the 2002 Act providing for punishment regarding false information or failure to give information does not suffer from any vice of arbitrariness.

(xvii) The inclusion or exclusion of any particular offence in the Schedule to the 2002 Act is a matter of legislative policy; and the nature or class of any predicate offence has no bearing on the validity of the Schedule or any prescription thereunder.

(xviii) (a) In view of special mechanism envisaged by the 2002 Act, ECIR cannot be equated with an FIR under the 1973 Code. ECIR is an internal document of the ED and the fact that FIR in respect of scheduled offence has not been recorded does not come in the way of the Authorities referred to in Section 48 to commence inquiry/investigation for initiating “civil action” of “provisional attachment” of property being proceeds of crime.

(b) Supply of a copy of ECIR in every case to the person concerned is not mandatory, it is enough if ED at the time of arrest, discloses the grounds of such arrest.

104 Crl.M.P.No.390/2022

(c) However, when the arrested person is produced

before the Special Court, it is open to the Special Court to look

into the relevant records presented by the authorised representative of ED for answering the issue of need for his/her continued detention in connection with the offence of money- laundering.

(xix) Even when ED manual is not to be published being an internal departmental document issued for the guidance of the Authorities (ED officials), the department ought to explore the desirability of placing information on its website which may broadly outline the scope of the authority of the functionaries under the Act and measures to be adopted by them as also the options/remedies available to the person concerned before the Authority and before the Special Court.

(xx) The petitioners are justified in expressing serious concern bordering on causing injustice owing to the vacancies in the Appellate Tribunal. We deem it necessary to impress upon the executive to take corrective measures in this regard expeditiously.

(xxi) The argument about proportionality of punishment with reference to the nature of scheduled offence is wholly unfounded and stands rejected.

The Hon'ble Supreme Court has categorically held in Vijay

Madanlal Choudhary's case that when the allegations made in the predicate offence were held to be valid, hence the offence under

PMLA has to be disposed simultaneously, and if the predicate offence is not proved, the allegation should not be made under PMLA. In this case, in the predicate offence prima facie has been proved. Hence, the allegations made by the complainant against the accused under

PMLA, 2002 also having a prima facie case.

105 Crl.M.P.No.390/2022

46.The counsel for the petitioner/A-8 relied on the concept of alter ego of the company as held by the Hon'ble Supreme Court in Sunil

Bharti Mittal case reported in 2015 AIR SC 923.

47.It is to be noted that as per the case of the prosecution, there are money transactions between Accused Nos.7, 8 and 9 and revenue sharing arrangement between Accused Nos.3 and 4 was totally revised in the Addendum dt.23.07.2008 and he had conspiracy with

Accused No.2 in preparing Development Agreement dt.03.11.2006 between Accused Nos.3 and 4 and also having a role in replacing with the Development Agreement-cum-GPA executed on 25.07.2007 and

Addendum dt.23.07.2008. It is also contended that the petitioner/A-8 had colluded with Accused No.15 and in pursuance of criminal conspiracy they floated companies and blocked 18 Villa Plots in the name of those 10 companies and he himself purchased a Villa Plot

No.A-49 in the name of his wife and the acts of the petitioner/A-8 were resulting to further loss of amount to APIIC. These facts clearly shows that the guidelines referred in Sunil Bharti Mittal case are not applicable to this case on facts.

48.The petitioner/A-8 also relied on various judgments showing the guidelines on discharge of the accused in a criminal case. In this 106 Crl.M.P.No.390/2022 context it is relevant to refer the guidelines enunciated by the Hon’ble

Supreme Court in Selvi’s case has to follow:

i.The Judge while considering the question of framing the charges under Section 227 CrPC has the undoubted power to sift and weigh the evidence for the limited purpose of finding out whether or not a prima facie case against the accused has been made out. The test to determine prima facie case would depend upon the facts of each case.

ii.Where the materials placed before the court disclose grave suspicion against the accused which has not been properly explained, the court will be fully justified in framing a charge and proceeding with the trial.

iii.The court cannot act merely as a post office or a mouthpiece of the prosecution but has to consider the broad probabilities of the case, the total effect of the evidence and the documents produced before the court, any basic infirmities, etc. However, at this stage, there cannot be a roving enquiry into the pros and cons of the matter and weigh the evidence as if he was conducting a trial.

iv.If on the basis of the material on record, the court could form an opinion that the accused might have committed offence, it can frame the charge, though for conviction the conclusion is required to be proved beyond reasonable doubt that the accused has committed the offence.

v.At the time of framing of the charges, the probative value of the material on record cannot be gone into but before framing a charge the court must apply its judicial mind on the material placed on record and must be satisfied that the commission of offence by the accused was possible.

vi.At the stage of Sections 227 and 228, the court is required to evaluate the material and documents on record with a view to find out if the facts emerging therefrom taken at their face value disclose the existence of all the ingredients constituting the alleged offence. For this limited purpose, sift the evidence as it cannot be expected even at that initial stage to accept all that the prosecution states as gospel truth even if it is opposed to common sense or the broad probabilities of the case.

107 Crl.M.P.No.390/2022 vii.If two views are possible and one of them gives rise to suspicion only, as distinguished from grave suspicion, the trial Judge will be empowered to discharge the accused and at this stage, he is not to see whether the trial will end in conviction or acquittal.”

49.And also it is prudent principles laid down by the Hon’ble

Supreme Court that at the stage of framing of charge roving and fishing enquiry is impermissible. If the contention of the accused is accepted, there would be a mini trial at the stage of framing of charge. That would defeat the object of the Code. It is well settled that at the stage of framing of charge the defence of the accused cannot be put forth. At the stage of framing of charge hearing the submissions of the accused has to be confined to the material produced by the police and “court is required to evaluate the material and documents on record with a view to find out if the facts emerging therefrom taken at their face value disclose the existence of all the ingredients constituting the alleged offence.”

50.It is also to be noted that the Hon’ble Supreme Court of India in

Stree Atyachar Virodhi Parishad v. Dilip N.Chardia reported in 1989 (1)

SCC 715 held that “The ground in the context is not a ground for conviction but a ground for putting the accused on trial. It is in the trial, the guilt or the innocence of the accused will be determined and not at the time of framing of charge. The court therefore, need not 108 Crl.M.P.No.390/2022 under taken an elaborate enquiry in sifting and weighing the material.

Nor it is necessary to delve deep into various aspect. All that court has to consider is whether the evidentiary material on record if generally accepted, would reasonably connect the accused with the crime. No more need be enquired into”.

51.In view of the guidelines enunciated by the Hon’ble Supreme

Court in various judgments, the moto is that Judge while considering the question of framing charges, he has to find out whether there is prima-facie case against the accused has been made out and the test to determine a prima-facie case would naturally depend upon the facts of each case and also it cannot be expected even at that initial stage to accept all that the prosecution states as gospel truth even if it is opposed to common sense or the broad probabilities of the case and also consider the distinction between suspicion and grave suspicion. Apart from that trial judge has to see that the material and the contention of the prosecution is sufficient to end in conviction or acquittal.

52.Apart from that, one of the Accused i.e. Tummala Ranga Rao (A-10) and M/s. Stylish Holmes Real Estates Pvt. Ltd. (A-3) were granted Tender of Pardon and their evidence is crucial in view of the corroboration of various anomalies in the documents executed 109 Crl.M.P.No.390/2022 between APIIC and Emaar Properties/A-2 and money transaction among the accused.

53.In view of the above discussions, the complainant/ED not only relied on the documents and the investigation conducted by CBI, they also conducted further investigation in all aspects and also relied on the documents i.e. bank statements of the alleged non-existing 11 companies. The admissibility of Section 50(2)&(3) of PMLA and

Section 24 of PMLA as guided by the Hon'ble Supreme Court, clearly emphasises the prima facie case of the prosecution. Hence, unless a detailed trial is conducted, truth will not come to light. Hence, the petition deserves to be dismissed.

54.In the result, the petition is dismissed.

Typed to my dictation, corrected and pronounced by me in the open Court on this the 30th day of April, 2024.

Sd/-

PRINCIPAL SPECIAL JUDGE FOR

CBI CASES, HYDERABAD.

1

IN THE COURT OF PRINCIPAL SPECIAL JUDGE FOR CBI CASES,

HYDERABAD

Dated: Tuesday, the 30th day of April, 2024.

Present:Sri Ch. Ramesh Babu

Principal Special Judge for CBI

Cases, Hyderabad

Crl.M.P.No.306/2022

In

S.C.No.1/2019

Between:

M/s. Emaar India Limited, (formerly Emaar MGF Land Limited), through its representative Nerella Narsimhulu, 306-308, Square One, C2, District Centre Saket,

New Delhi-110017.….. Petitioner/Accused No.2

AND

Directorate of Enforcement, Represented by its Assistant Director, Government of India, Ministry of Finance, Department of Revenue, 3rd floor, Shakar Bhavan, Fateh Maidan Road,

Hyderabad-500 004.….. Respondent/Complainant

This petition coming before me on 16.06.2023 for final hearing in the presence of Sri V.T.Kalyan, Counsel for the Petitioner/Accused No.2 and of Sri T.V.Subba Rao, Special Public Prosecutor for the Respondent/Complainant and after hearing the arguments and perusing the material on record, and the matter having been stood over for consideration till this day, this Court made the following:

2 Crl.M.P.No.306/2022

O R D E R

1.The petitioner/Accused No.2 filed petition u/s. 227 Cr.P.C. on 12.01.2022 praying the Court to discharge the petitioner from the prosecution case.

2. The petitioner averred in the petition that the petitioner is arrayed as Accused No.2 in the present case; and on a true and fair construction of the charge sheet, the Prevention of Money Laundering

Act, 2002 ("PMLA") is neither applicable nor any case is made out under PMLA against the Petitioner/Accused No.2. Furthermore, offences u/sec. 120-B r/w Sec. 420, 409, 109, 468, 471 & 477-A of

India Penal Code is perpetrated against the Petitioner/Accused No.2 in a mechanical manner without any basis or without considering the mother documents, i.e; Memorandum of Understanding ("MOU") entered into between Andhra Pradesh Industrial Infrastructure

Corporation Private Limited ("APIIC") and Emaar Properties PJSC ("EPPJSC") dated 06.11.2002 vide G.O.Ms.No.359 dated 04.09.2002 wherein the developer was given the tender to develop Hyderabad

International Convention Centre ("HICC"), Golf course with allied recreation club facilities and housing and commercial facilities and the subsequent document entered by the aforementioned parties,i.e; 3 Crl.M.P.No.306/2022

Collaboration Agreement dated 19.08.2003 to launch Special Purpose

Vehicle ("SPV") for the Integrated Project.

2.1.The petitioner further averred that the present case is nothing but a political war within the political party (Indian National

Congress) after the demise of the then Hon'ble Chief Minister of

Andhra Pradesh, Dr. Y.S. Rajashekar Reddy, and in the milieu, the

Petitioner/Accused No.2 has been implicated without any basis despite the fact that this is a company which changed the face of

Hyderabad by building HICC which accommodates 6000 people and is the largest in Asia apart from the state-of-the art Novotel Hotel building and a Golf Course and in view of the sudden CBI action, for political reasons, the whole project got stalled and the huge buildings constructed as per the agreements stood still.

2.2.The petitioner further averred that the Petitioner/Accused

No.2 has diligently fulfilled its obligations in all the projects throughout India and there has been no iota of doubt in any of the other projects against the integrity of their business. The Petitioner

Company, Emaar MGF Pvt. Ltd. (EMGF") is a Joint venture between

Emaar PJSC that has a market capitalization of over US $14 Billion and

EMGF Limited. At the time of occurrence of these events i.e events in question MGF Limited was the majority shareholder of the joint 4 Crl.M.P.No.306/2022 venture Company (EMGF), and the operations of the Company were managed by Mr. Shravan Gupta who represented MGF.

2.3.The petitioner further averred that subsequent to the MoU and the Collaboration Agreement, the following projects were completed:

(a)Cyberabad Convention Centre Pvt. Ltd. SPV 2 was incorporated for the development of HICC and the same is completed.

(b)EHTPL- SPV 1 entered into a Development Agreement with

EMGF dated 03.11.2006.

(c)BHLPL (Boulder Hills Leisure Pvt Ltd) - SPV 3 formed for the development of Golf Course and Residential and Commercial

Buildings ("Integrated Project") out of which Golf Course has been developed.

2.4.The petitioner further averred that the investigating authorities failed to consider the very foundation of the entire project (MoU and Collaboration Agreement) wherein it is categorically stated that in Clause 6 (V) of the MOU which reads as "The Developer shall, at its discretion assign its rights towards development, management and operations of the Integrated Project to other parties through appropriate and suitable mechanism". Due to such a lapse in investigation, the investigation proceedings at the outset are void and 5 Crl.M.P.No.306/2022 charge sheet filed in response to it is baseless and violative of principles of natural justice.

2.5.The petitioner further averred that the trail of the

Proceeds of Crime does not establish a prima facie case against the

Petitioner/Accused No.2. The Petitioner/Accused No.2 have rightfully recorded the sale transactions of Rs. 64.41 crores in the book of accounts and were willing to realize the share ratio of EHTPL. The

Petitioner/Accused No.2 have invested huge amount towards the project and received revenue from the sale of villa plots and apartments. After the calculation of the same, an amount of Rs.97.61 crores was recorded by Petitioner/Accused No.2 to be realized to

EHTPL, but the Petitioner/Accused No.2 were never given a chance to do so. It is further submitted that the amount alleged to be collected was done by Sri Tummala Ranga Rao, which is an admitted fact and the same was not in the knowledge of the Petitioner/Accused No.2.

2.6.The petitioner further averred that there is no evidence provided regarding the cash component of Rs. 6.86 crores allegedly received by EMGF. Trail proceeds alleged in the Charge Sheet do not connect anywhere and the term used in the charge sheet is "dissolved" and that the prosecution failed to establish the money trail, thereby removing the component of "GRAVE SUSPICION" as 6 Crl.M.P.No.306/2022 required against the Petitioner/Accused No.2 and that the

Petitioner/Accused No.2 must be discharged. The complaint doesn't disclose any of the offences alleged and there is no scope for conviction of the Accused.

2.7.The petitioner further averred that Shri Tummala Ranga

Rao, in his statement admitted that he collected the amount of

Rs. 96.01 crores and gave it to Shri N. Sunil Reddy, the then Director of M/s Southend Projects & Foundations Pvt. Ltd. or to Shri Konneru

Rajendra Prasad, and none of the above mentioned people are employees of the Petitioner/Accused No.2. Therefore, these are the acts of individuals who have chosen to go stray and have committed in individual activity without the knowledge of the company, therefore involving Petitioner/Accused No.2 in the present case is not justified as it is causing harassment to the Petitioner/Accused No.2 resulting in grave injustice.

2.8.The petitioner further averred that the Development

Agreement between EHTPL and EMGF dated 03.11.2006 with the revenue sharing ratio of 75:25 was never objected by APIIC and the same cannot be used against the Petitioner/Accused No.2. It is pertinent to note that the formation of this agreement did not reduce the share of APIIC. APIIC is still eligible to 26% of the profits derived 7 Crl.M.P.No.306/2022 out the proceeds of EHTPL, as provided in their agreement. The

Development Agreement provides a wide scope to the Petitioner/

Accused No.2 regarding construction of residential complex. It does not in any way restrict the sale of Villa plots nor specifies construction of villa before its sale. The duty of the Petitioner/Accused No.2 was to construct an integrated project and the Petitioner has rightfully constructed the Golf course, apartments and villa plots, all within a span of 3 years after which the Integrated Project was paused due to the present proceedings.

2.9.The petitioner further averred that 18 villas allegedly booked by EMGF is false at the very outset. The trail of proceeds connects the companies to Sri Shravan Gupta, Managing Director of

EMGF and his wife and it is stated that Sri Shravan Gupta is the director who was responsible for the day to day affairs of the company and was also the majority shareholder of the EMGF company. The company cannot be vicariously held liable for the acts of the employee in this case. The act performed by the MD was not under the instructions of the company; neither did the company derive wrongful benefit out of it.

2.10.The petitioner further averred that the present company

Emaar India Ltd. is the resultant Company formed post demerger 8 Crl.M.P.No.306/2022 based on the scheme of the arrangement of demerger, the

Petitioner/Accused No.2 which is the current company states that it had no control over the errant and criminal acts of the then Managing

Director and majority shareholder, the acts done were in their individual capacity. Therefore, the act of the investigating authorities involving the Petitioner/Accused No.2 for the wrongful gains of an employee acting in excess of his duties is arbitrary and unfair.

2.11.The petitioner further averred that the first 100 villa plots were to be sold at Rs. 5000/- per Sq. Yard as per the Agency

Agreement dated 29.01.2005 between EPPJSC and M/s. Stylish

Holmes Real Estates Pvt. Ltd. Thereby, the act of sale of 100 villa plots at Rs. 5,000/- Sq. yard and not at the market price is accurate and justified.

2.12.The petitioner relied on the judgment in Rumi Dhar Vs.

State of W.B. reported in (2009) 6 SCC 364, wherein the Hon’ble

Supreme Court held at Para 17 as under:

“ At the stage of framing the charge, the appellant filed an application for discharge. One of the main accused is the husband of the appellant. The complicity of the accused persons was, thus, required to be taken into consideration for the purpose of determining the application for discharge upon taking a realistic view of the matter. While considering an application for discharge filed in terms of Section 239 of the Code, it was for the learned Judge to go into the details of the allegations made against each of the accused persons 9 Crl.M.P.No.306/2022 so as to form an opinion as to whether any case at all has been made out or not as a strong suspicion in regard thereto shall subserve the requirements of law”.

2.13.The petitioner also relied on the judgment in State of

U.P. v. Sanjay Singh (Dr) reported in 1994 Supp (2) SCC 707 , wherein the Hon’ble Supreme Court held at Para 19 as under:

“When we scrutinize the entire material placed on record, even if unrebutted or totally accepted, we are of the view that they do not make out a case for conviction and the mere suspicion of motive cannot serve as a sufficient ground for framing the charges in the absence of any material, prima facie showing that the particular motive has passed into action and that the accused is connected with that action in question.” 2.14.The petitioner also relied on the judgment in State of

Orissa v. Debendra Nath Padhi reported in (2005) 1 SCC 568, wherein the Hon’ble Supreme Court held as under:

"It is calculated to eliminate harassment to accused persons where evidential materials gathered after investigation fall short of minimum legal requirements.” 2.15.The petitioner further averred that the Respondent failed to establish prima facie case against the Petitioner/Accused No.2 for the alleged offence; there is no credible evidence for proceedings against the Petitioner/Accused No.2 thereby grave suspicion is not 10 Crl.M.P.No.306/2022 provided. Therefore, prayed to discharge the petitioner from the prosecution case.

3.The Respondenthas filed counter denying the allegations made by the petitioner in the petition. The respondent submitted that the present case has been registered against the petitioner/Accused

No.2 and other accused for the offence under Section 3 punishable under Section 4 of the Prevention of Money Laundering Act, 2002 basing on the investigation and final report of CBI case registered vide its RC.No.35-A-2011-0018, dt.17-08-2011 and after investigation by

CBI agency have filed charge sheet.

3.1.The Respondent further submitted that the facts of case are that the then Govt. of A.P issued G.O.Ms.No.359, Dt;04/09/2002 for development of an integrated projects including multi use development at Manikonda, R.R. Dist. in 535 acres and further the

Govt. of A.P. issued G.O.Ms.No.14, Dt:11/01/2005 amended by

G.O.Ms.No.22, Dt: 27/01/2005 for development of township project at

Manikonda by Accused no.1 with equity structure of 74:26 to the

Developer and APIIC respectively. The Development Agreement was executed between Accused No. 1 and Accused No.2, Dt:03/11/2006 to undertake development, for which Accused no.2 was entitled 75% of gross revenue in total through sale or lease proceeds and 11 Crl.M.P.No.306/2022 subsequently a Development Agreement cum General Power of

Attorney and an Addendum to Development Agreement & GPA,

Dt:23/07/2008 was executed between accused for Sale of villa plots.

3.2.The Respondent further submitted that an Agency

Agreement, Dt:29/01/2005 was entered between Accused No.1 and

Accused No.3 under which 100 plots are to be sold for Rs.5000/- per

Sq.yard and remaining villa plots were to be sold at prevailing market rates and it is responsibility of Accused No.1; and APIIC conveyed 258.36 acres of land in favour of Accused No.1 vide Conveyance

Deed, Dt:28/12/2005 and the Accused No.1 executed Development

Agreement Dt:03/11/2006 with Accused No.2 by inducting as a co-developer. But Accused No.1 and Accused No.3 booked as many 43 villa plots till Dt:27/12/2005 i.e, even before execution of Conveyance

Deed, Dt;28/12/2005 by APIIC in favour of Accused No.1.

3.3.The Respondent further submitted that as per the instructions of Accused No.2 rep. by its Director that 10 different companies were floated and booked 18 villas plots @ Rs.5000/ per

Sq.yard. So that the same could be sold at premium rates in future and the funds were transferred to block the villa plots in the name of these 10 companies during the year 2010 by paying 10% of Sale 12 Crl.M.P.No.306/2022

Consideration of Rs.5000/- per Sq.yard and other villa plots were being sold to other buyers at Rs.50,000/- per Sq.yard.

3.4.The Respondent further submitted that as per revenue sharing agreement and books of account that the accused are required to pass on 25% of Gross Annual Revenue. However, it was never transferred into books of accounts of APIIC and thus the accused misappropriated the revenue from the integrated project. As per G.O's issued by the Govt. of A.P., the Accused No.1 was required to develop the project land which includes constructing villas and apartments. It was never intended by Govt. of A.P to sell villa plots and however the agency agreement, Dt:29/01/2005 executed on behalf of the Accused No.1 was nothing but clandestine arrangement in furtherance of the criminal conspiracy to dispose of the project land without developing the same and thereby APIIC deprives its legitimate revenue share from the developed villas.

3.5.The Respondent further submitted that 13 villa plots including three model villas were sold by Accused No.1 & 2 directly to buyers and during investigation one of the above said villa/plot buyer confirmed having paid excess amount of Rs.2,80,40,000/- in cash over and above documented price of Rs.5,000/- per Sq.yard and the said amount was sent by him to the office of Accused No.1 as per the 13 Crl.M.P.No.306/2022 instructions of Accused No. 9 and further it is pertinent to mention that two villa plots buyers who purchased villa plots during same period have also confirmed to have paid excess amount of

Rs.20,000/- per Sq.yard in cash over the document price.

3.6.The Respondent further submitted that the existence of criminal conspiracy on part of accused to deprive APIIC lawful revenue share by booking villa plots @ Rs.5,000/- per Sq.yards and the criminal intent of accused is also evident from the transactions and fact that villa plots were sold at higher price and however in furtherance of the conspiracy the amounts of Rs.2,80,40,000/- and also Rs.4,05,20,000/- totaling to Rs.6,85,60,000/- was collected from two villas plots in cash for sale consideration.

3.7.The Respondent further submitted that accused no.12 s/o.

accused no.7 carrying business in Dubai received an amount of USD.

2,50,000/- into his personal from Sri. P.S. Parthasarathy, the buyer of plot villa in EHTPL, who has stated that he purchased a plot at cost of

Rs.50,0001- per Sq yard out of which he has paid an amount of

Rs.5,000/ per Sq.yard through cheque and balance amount of

Rs.45,0001- per Sq yard amounting to Rs.5,13,00,000/ in cash and he has paid an amount of Rs.4,08,00,000/- to accused no.10 at the residence of accused no.7. Similarly, accused no.12 has received USD 14 Crl.M.P.No.306/2022 1,40,0001- an amount equivalent to Rs.65 lakhs from Sri Challa

Suresh, who purchased villa plot in EHTPL.

3.8.The Respondent further submitted that it is also revealed during investigation that accused no.9 collected an amount of

Rs.6,85,60,000/- from sale of three villa plots over the above document price Rs.5,000/ per Sqyard and the investigations by CBI revealed that during 2006-07 to Aug-2011 the total realization from villas plots is to extent of Rs.73.19 crores and from villa Rs.21.36 crores totaling to Rs. 94.56 crores. That EMGF also realized amounts from the buyers of apartments to extent of Rs.248.33 crores and the accused no.4 company established by accused no.11 had received funds from several companies, but the whereabouts of Directors of said companies could not be ascertained and the so called companies did not exist physically during relevant period and no trade license was issued in favour of many companies including accused no.4 by

GHMC, Hyd., which clearly shows that the said companies were floated only for purpose of transferring funds.

3.9.The Respondent further submitted that as per Agency

Agreement, Dt:2/01/2005 plots beyond 100 were to be sold at prevailing market rates to be decided by accused no.1, however in criminal conspiracy that the accused no.9, 8, Sri. Shravan Gupta, MD 15 Crl.M.P.No.306/2022 of accused no.2 company did not revise rates in tune with prevalent market rates and out of 136 villa plots, 105 were sold through accused no.3 and remaining 31 were sold directly by accused no.2 during 2009-2010, out of these 31 plots sale of 13 villa plots was finalized by accused no.9 and Sri. Shravan Gupta, MD of accused no.2 company has blocked/booked 18 villa plots in the names of other companies at Rs.5,000/- per Sq yard to sell them at higher rates at later date to obtain undue pecuniary gain.

3.10.The Respondent further submitted that an amount of

Rs.96.01 crores collected by accused no.10 and Rs.6.85 crores collected by accused no.9 for accused no.2 over and above documented price, which should have gone to APIIC @ 26% revenue share in profit worked out in all, which was never transferred to APIIC.

Hence accused no.9 in conspiracy with accused no.8 and Sri Shravan

Gupta deliberately did not share any revenue, which finally deprive

APIIC of its legitimate revenue share and caused wrongful loss to a tune of Rs.43.50 crores and at the same time EMGF and EPJSC obtained undue pecuniary benefit of Rs. 167.29 crores.

3.11.The Respondent further submitted that on receiving documents from CBI, during course of investigation made enquires 16 Crl.M.P.No.306/2022 and having found that there is prima facie case under PMLA 2002 against all the accused including the accused herein.

3.12.In support of the contentions, the Respondent relied on the judgment of Hon’ble Supreme Court reported in 2020 (1) ALT (Crl.) 330 SC, wherein the Hon’ble Supreme Court held that:

“Procedure in framing of charges - At the time of framing of the charges, the probative value of the material on record cannot be gone into, and the material brought on record by the prosecution has to be accepted as true" "Framing of Charges - The defence of the accused is not to be looked into at the stage when the accused seeks to be discharged Under Section 227 of Cr.P.C." 3.13.The Respondent also relied on the judgment of Hon’ble

Supreme Court reported in 2020 (1) ALT (Crl.) 129, the Hon’ble

Supreme Court held that:

"Framing of Charges - At the stage of framing of charges, the Court is not obligated to appreciate the evidence or make a roving enquiry as to whether the evidence collected by the prosecution during the course of investigation and the material collected would lead to a conviction.” 3.14.The Respondent further submitted that PML Act, 2002 being a special statute postulates reverse burden on the accused. As per Sec 24 of PML Act, 2002, this Hon'ble shall presume unless contrary is proved, that proceeds of crime are involved in money laundering and as such it is crystal clear that burden is on the 17 Crl.M.P.No.306/2022 accused to prove that proceeds of crime is not involved in money laundering. The said burden cannot be discharged at this juncture and can be elicited only after appreciation of oral and documentary evidences, and on this score alone the petition is liable to be dismissed. Hence, prayed to dismiss the petition.

4.Heard both sides. Perused the record.

5.Now the point for determination is:

-Whether the petitioner/Accused No.2 can be discharged under Section 227 of Cr.P.C. in S.C.No. 01 of 2019?

POINT:

6.The counsel for the petitioner/A-2 contended that the petitioner/A-2 have rightfully recorded the sale transactions of

Rs.64.41 crores in the book of accounts and were willing to realize the share ratio of EHTPL. The petitioner/A-2 have invested huge amounts towards the project and received revenue from the sale of villa plots and apartments. After the calculation of the same, an amount of

Rs.97.61 crores was recorded by the petitioner/A-2 to be realized to

EHTPL, but the petitioner were never given a chance to do so.

7.The counsel for the petitioner/A-2 further contended that the

Development Agreement between EHTPL and EMGF dt.03.11.2006 18 Crl.M.P.No.306/2022 with the revenue sharing ratio of 75:25 was never objected by APIIC and therefore the petitioner/A-2 has to be discharged from the said allegations and the agreement is within the knowledge of Government of India and there is a arbitration clause in the agreement and therefore, criminal case cannot be filed and he relied on the following decisions:

(i)In case of Santosh Naik vs Dy. Director in Criminal

Revision Application Nos.1175, 1176 and 1177 of 2017, wherein the Hon’ble High Court of Gujarat held at para No.40 as follows:

“40.In view of the above facts and circumstance, it becomes clear that by the impugned order dated: 18.07.2014, the Special Court for PMLA mechanically took cognizance of the alleged offence punishable under Section 4 of PMLA qua each of the accused applicants, without even prima facie material showing existence of any mens rea or culpable knowledge with all or any of them, or of any proceeds of crime emanating from the said scheduled offences. Neither there is any tangible evidence, nor even any circumstantial material to impute culpable knowledge to the applicants and to even prima facie conclude that they were either aware of the commission of the Schedule Offence or the generation of the alleged proceeds of crime by or out of such Schedule Offence by main or other accused. As per the material produced, it cannot be even prima facie held that the applicants had any reason to even have any reasonable doubt regarding commission of alleged schedule offence and generation of any proceeds of crime in relation thereto. The same is also fortified by the fact that none of the applicants were made an accused in the scheduled offence. Even though the accused applicants received in their bank accounts certain amounts at the instance of or from Shri Afroz Hasanfatta, the statements if taken on their face value, do not satisfy even on prima facie basis the pre-requisite for trying any person on allegation of money laundering i.e., mens rea or culpable knowledge of the Scheduled Offence and Proceeds of Crime derived therefrom, and projection of such proceeds of crime as untainted. Even on prima facie basis no offence is made out against any of the accused applicants. Therefore, I 19 Crl.M.P.No.306/2022 find merit in the submissions made on behalf of the accused applicants and I have no hesitation in holding that the impugned Order was passed mechanically and deserves to be set aside.

(ii)In case of Dayle De’Souza Vs Government of India through

Deputy Chief Labour Commissioner (C) and another in SPL (Crl.)

No.3913 of 2020, wherein the Hon’ble Supreme Court held at para No.21 as follows:

21.Relying upon the reasoning in Sheoratan Agarwal and limiting the interpretation of C.V. Parekh, this Court in Anil Hada Vs Indian Acrylic Ltd. [(2000) 1 SCC 1] had held that:

“13. If the offence was committed by a company it can be punished only if the company is prosecuted. But instead of prosecuting the company if a payee opts to prosecute only the persons falling within the second or third category the payee can succeed in the case only if he succeeds in showing that the offence was actually committed by the company. In such a prosecution the accused can show that the company has not committed the offence, though such company is not made an accused, and hence the prosecuted accused is not liable to be punished. The provisions do not contain a condition that prosecution of the other persons who fall within the second and the third categories mentioned above. No doubt a finding that the offence was committed by the company is sine qua non for convicting those other persons. But if a company is not prosecuted due to any legal snag or otherwise, the other prosecuted persons cannot, on that score alone, escape from the penal liability created through the legal fiction envisaged in Section 141 of the Act.”

(iii)In case of State of U.P. Vs Dr. Sanjay Singh reported in 1994 SCC Spl. (2) 707, wherein the Hon’ble Supreme Court held at para Nos.9 to 12 and 19 as follows:

9. These two respondents challenging the prosecution approached the trial court for discharging them under Section 228 of the Code of Criminal Procedure. The trial court after scrutinising 20 Crl.M.P.No.306/2022 the entire documents, placed on record has concluded in paragraph 110 of its judgment pertaining to the case of second respondent as follows:

"The material on record does not, prima facie, establish any physical manifestation on the part of A-2 in any part of the conspiracy or its execution. Consequently, it may be said that there is no sufficient ground to put A-2 on trial, in connection with the murder of Syed Modi. She is, therefore, liable to be discharged."

Thereafter the trial court has held thus: "It has already been found in para 101 above, that the prosecution has failed to make out a prima facie case of motive on the part of A-1 and A- 2, or either of them to liquidate Modi."

10. With regard to the case of the first respondent, the trial court found thus:

"Mere association among A-1, A-2 and A-3 is not adequate to prove conspiracy among them. There ought to be material on record to indicate tacit understanding among them as to what had to be done. In this connection, it may be pertinent to observe that relative acts or conduct of A-1 and A-2 do not appear to be conscientious and clear to mark their concurrence with regard to the liquidation of Syed Modi. Such concurrence could not be inferred by a group of innocuous circumstances, artfully arranged, so as to give an appearance of coherence, …. On a broad view of the entire facts, circumstances and the material placed before this Court, it does not appear that A-1 can, reasonably, be connected with the crime in question. Accordingly, A-1 is also liable to be discharged.”

11. The result was the trial court discharged both the respondents.

12. The State on being aggrieved by the order of the trial court preferred a revision before the High Court. The High Court by its well-considered judgment has affirmed the order of discharge of Respondents 1 and 2 observing thus:

"In view of the above discussion, it will be apparent that the learned Sessions Judge has considered every aspect of the case in his order while discharging two opposite parties. In doing so he has not committed any illegality or irregularity and the finding of the learned Sessions Judge cannot be said to be perverse or against the weight of evidence on record. Therefore, in the 21 Crl.M.P.No.306/2022 revisional jurisdiction this Court cannot appraise the evidence again. As the finding of the learned Sessions Judge is based on the evidence available on the record the same does not deserve to be set aside. The result is that the revision petitions deserve to be dismissed."

19. When we scrutinise the entire material placed on record, even if unrebutted or totally accepted, we are of the view that they do not make out a case for conviction and the mere suspicion of motive cannot serve as a sufficient ground for framing the charges in the absence of any material, prima facie showing that the particular motive has passed into action and that the accused is connected with that action in question.

(iv)In case of Krishna Lal Chawla and others Vs State of Uttar

Pradesh and another reported in (2021) 5 SCC 435, wherein the

Hon’ble Supreme Court held at para Nos.16 to 18 and 21 as

follows:

16. We find it imperative to observe that this is a case that should not have been allowed to reach as far as this Court. The justice dispensation machinery in India is plagued with backlogs, with 70% of the pendency before the subordinate courts being on the criminal side. A significant factor in this backlog is the vast mass of frivolous litigation instituted year after year by litigants with an intent to use the courts of justice for their own mischievous ends. Curtailing such vexatious litigation is, thus, a crucial step towards a more effective justice system – a step that cannot be taken without the active involvement of the lower judiciary, especially in criminal proceedings.

17. Immediately after the criminal justice system is set in motion, its course is almost entirely dependent on the judicial application of mind by the Magistrate. When a police complaint is filed on the commission of a cognizable offence under Section 154 CrPC, the

Magistrate decides if the charge against the accused person is

made out before the trial begins. Separate procedure is prescribed if the complaint under Section 200 CrPC is filed. The aforesaid provisions make it abundantly clear that the Magistrate carries the stream of criminal proceeding forward after it is set in motion by the informant/complainant. Consequently, and automatically, the Magistrate also carries the responsibility for ensuring this stream does not carry forward in cases where it should not.

22 Crl.M.P.No.306/2022

18. The aforesaid powers bestowed on the Magistrate have grave repercussions on individual citizens’ life and liberty. Thus, these powers also confer great responsibility on the shoulders of the Magistrate – and must be exercised with great caution, and after suitable judicial application of mind. Observations in a similar vein were made by this Court in Pepsi Foods Ltd. V Special

Judicial Magistrate, (1998) 5 SCC 749:

“28. Summoning of an accused in a criminal case is a serious matter. Criminal law cannot be set into motion as a matter of course. It is not that the complainant has to bring only two witnesses to support his allegations in the complaint to have the criminal law set into motion. The order of the Magistrate summoning the accused must reflect that he has applied his mind to the facts of the case and the law applicable thereto. He has to examine the nature of allegations made in the complaint and the evidence both oral and documentary in support thereof and would that be sufficient for the complainant to succeed in bringing charge home to the accused. It is not that the Magistrate is a silent spectator at the time of recording of preliminary evidence

before summoning of the accused. The Magistrate has to carefully

scrutinise the evidence brought on record and may even himself put questions to the complainant and his witnesses to elicit answers to find out the truthfulness of the allegations or otherwise and then examine if any offence is prima facie committed by all or any of the accused.”

This Court, thus, clearly emphasised that the power to issue a summoning order is a matter of grave importance, and that the

Magistrate must only allow criminal law to take its course after

satisfying himself that there is a real case to be made.

21.All of this leads to one inescapable conclusion. That the Trial Judge has a duty under the Constitution and the CrPC, to identify and dispose of frivolous litigation at an early stage by exercising, substantially and to the fullest extent, the powers conferred on him. This Court has earlier emphasised on the high degree of responsibility shouldered by the trial Judges in All India

Judges’ Association v. Union of India, (1992) 1 SCC 119.

Ranganath Misra CJ (as he was then) writing for himself and two others stated: (SCC p.134, para 42) “42. The trial Judge is the kingpin in the hierarchical system of administration of justice. He directly comes in contact with the litigant during the proceedings in Court. On him lies the responsibility of building up of the case appropriately and on his 23 Crl.M.P.No.306/2022 understanding of the matter the cause of justice is first answered. The personality, knowledge, judicial restraint, capacity to maintain dignity are the additional aspects which go into making the Court's functioning successful.”

(v)In case of Hindustan Unilever Limited Vs State of Madhya

Pradesh reported in (2020) 10 SCC 751, wherein the Hon’ble

Supreme Court held at para Nos.20 and 22 as follows:

20.A three-Judge Bench of this Court in Aneeta Hada v Godfather Travels & Tours Private Limited MANU/SC/0335/2012: (2012) 5 SCC 661 considered the question of conviction of the Directors in the absence of the Company in proceedings under Section 138 of the Negotiable Instruments Act, 1881 as also in the proceedings under Information Technology Act, 2000. This Court held that Section 141 of the NI Act dealing with offences by companies contemplates that every person who at the time the offence was committed, was in charge of, and was responsible to the company for the conduct of the business of the company, as well as the company, shall be deemed to be guilty of the offence and shall be liable to be proceeded against and punished accordingly. This Court, considering the said provision, held as under:

…….58. Applying the doctrine of strict construction, we are of the considered opinion that commission of offence by the company is an express condition precedent to attract the vicarious liability of others. Thus, the words “as well as the company” appearing in the section make it absolutely unmistakably clear that when the company can be prosecuted, then only the persons mentioned in the other categories could be vicariously liable for the offence subject to the averments in the petition and proof thereof. One cannot be oblivious of the fact that the company is a juristic person and it has its own respectability. If a finding is recorded against it, it would create a concavity in its reputation. There can be situations when the corporate reputation is affected when a Director is indicted.

22. Clause (a) of Sub-Section (1) of Section 17 of the Act makes the person nominated to be in charge of and responsible to the company for the conduct of business and the company shall be guilty of the offences under clause (b) of Sub-Section (1) of Section 17 of the Act. Therefore, there is no material distinction between Section 141 of the NI Act and Section 17 of the Act 24 Crl.M.P.No.306/2022 which makes the Company as well as the Nominated Person to be held guilty of the offences and/or liable to be proceeded and punished accordingly. Clauses (a) and (b) are not in the alternative but conjoint. Therefore, in the absence of the Company, the Nominated Person cannot be convicted or vice versa. Since the Company was not convicted by the trial court, we find that the finding of the High Court to revisit the judgment will be unfair to the appellant/Nominated Person who has been facing trial for more than last 30 years. Therefore, the order of remand to the trial court to fill up the lacuna is not a fair option exercised by the High Court as the failure of the trial court to convict the Company renders the entire conviction of the Nominated Person as unsustainable.

(vi)In case of Provident Fund Inspector Vs Baptist Senior

Secondary School and Ors reported in MANU/PH/0978/2002, wherein the Hon’ble High Court of Punjab and Haryana at

Chandigarh held at para No.13 as follows:

“13.It cannot be perceived that the charge must always be framed merely because an allegation has been levelled in the complaint by the complainant. The requirement of prima facie evidence cannot be satisfied by a mere oral testimony. The prima facie requirement would require existence of such legally admissible evidence as would give rise to a presumption against the accused over and above than being a mere suspect. Such a presumption cannot be expressed from unsubstantiated and uncorroborated bald assertions especially when there is a statutory authority defined or prescribed and prosecution is based on documentary evidence and for violation of statutory obligation. It cannot be adhered that the agony had no means to determine who is responsible and liable to be prosecuted and that such liability on the part of prosecuting agency must give it liability to prosecute all and sundry. A statement of fact pertaining to a juristic entity and its office bearers is not a fact that can be presumed. The same has to be prima facie established by some material. The Court would not, at the stage of framing of charge, go into the probative valve of the said evidence, however, absence of any evidence cannot be discarded or be ignored. A complainant cannot be extended a leverage to an extent that all persons named by him should be prosecuted despite absence of any material to connect therewith the juristic entity liable to be prosecuted. Such a proposition, if accepted, would vest 25 Crl.M.P.No.306/2022 unbridled authority in a complainant to array any number of accused and to claim their prosecution irrespective of any material to link and establish their association with the establishment sought to be prosecuted.”

(vii)In case of Tech Mahindra Limited Vs. Joint Director and

Others reported in 2014 SCC Online Hyd 1575, wherein the

Hon’ble High Court of Judicature at Hyderabad held at Para No.81

as follows:

81.In the instant case, the alleged incidents occurred prior to June, 2009. Prior to June, 2009, the relevant provisions of Indian Penal code were not included in schedule appended to the Act 2002. These provisions were not listed as offences under the Act admittedly when the alleged incidents have taken place. The only provision that is invoked which was in the schedule to the Act is Section 467. The illegal activities committed by the persons in the helm of affairs cannot be attributed to petitioner company, more particularly the allegation of forgery as all those illegalities were committed by them behind the back and without the involvement of the petitioner company. Thus, if the allegations made are taken at their face value and accepted in their entirety, they do not prima facie constitute any offence or make out a case against the petitioner company. In accordance with the principles laid down by the Supreme Court in Bajan Lal, the petitioner company cannot be proceeded against under Section 3 of the Act, 2002. Thus, filing of complaint and taking cognizance thereof is unsustainable.”

(viii)In case of H.L. Bolton (Engineering) Co. Ltd Vs T.J. Graham and Sons Ltd (Matter No. M. 1678 OA 18), wherein the Queen’s

Bench Division held as follows:

“So here, the intention of the company can be derived from the intention of its officers and agents. Whether their intention is the company’s intention depends on the nature of the matter under consideration, the relative position of the officer or agent and the other relevant facts and circumstances of the case.

26 Crl.M.P.No.306/2022

Approaching the matter in that way, I think that, although there was no board meeting, nevertheless, having regard to the standing of these directors in control of the business of the company, having regard to the other facts and circumstances which we know, whereby plans had been prepared and much work done, the judge was entitled to infer that the intention of the company was to occupy the holding for their own purposes. I am of opinion, therefore, that the judge’s decision on this point was right.

8.The counsel for the petitioner/A-2 contended that Section 70 of the Prevention of Money-Laundering Act, 2002 defines the offences by companies, but any of the ingredients set out by the complainant is not applicable to the accused and he relied on the following judgments:

(i) In National Small Industries Corporation Limited vs

Harmeet Singh [2010 (3) SCC 330]

(ii) In Mona Ben Ketan Bai and another vs State of

Gujarat [2004 (7) SCC 15]

(iii) In SMS Pharmaceutical vs Neeta Balla [2005 (8) SCC 89]

9.The counsel for the petitioner/A-2 also contended that the petitioner was represented by its Managing Director Sri Shravan

Gupta i.e., A-15 in C.C.6 of 2015 and the Hon’ble High Court vide

Crl.P.Nos.5506 of 2016 and 9410 of 2021 quashed the proceedings against A-15, therefore, this Hon’ble Court has to consider the 27 Crl.M.P.No.306/2022 findings of the Hon’ble High Court in quash petition and discharge the petitioner/A-2.

10.The counsel for the petitioner/A-2 relied on the judgment in case of Vijay Madanlal Choudhary and others Vs Union of India and others reported in 2022 SCC Online SC 929, wherein the Hon’ble

Supreme Court held that when there is a dismissal of predicate offence, the question of continuation of offence under PMLA is not maintainable. The counsel for the petitioner also filed the copy of petition in Os No.655 of 2010 on the file of II Addl. Chief Judge, City

Civil Court, Hyderabad, filed by APIIC for rendition of account.

11.The counsel for the petitioner/A-2 further contended that by the year 2009, the offence under Section 420 of IPC was not included in PMLA, hence the petitioner may be discharged from the offence under Section 420 of IPC.

12.Learned Special Public Prosecutor has relied on the following decisions:

(i)In case of Komaram Balu vs. State of Telangana through

Sub-Inspector of Police, Adilabad District reported in 2020 (1) ALT (Crl.) 129 (T.S.), wherein the Hon’ble High Court for the State of

Telangana at Hyderabad held as follows:

28 Crl.M.P.No.306/2022 “At the stage of framing charges under Section 239 Cr.P.C., what all the Court has to see is as to whether any prima facie case is made out for the purpose of framing of charge, and to proceed with the matter. At the stage of framing charges, the Court is not obligated to appreciate the evidence or make a roving enquiry as to whether the evidence collected by the prosecution during the course of investigation, and the material collected, would lead to a conviction.”

(ii)In case of M.E. Shivalingamurthy vs. Central Bureau of

Investigation, Bengaluru reported in 2020 (1) ALT (Crl.) 330 (SC), wherein the Hon’ble Supreme Court held as follows:

“At the time of framing of the charges, the probative value of the material on record cannot be gone into, and the material brought on record by the prosecution, has to be accepted as true. The defence of the accused is not to be looked into at the stage when the accused seeks to be discharged under Section 227 of the Cr.P.C.”

13.The prosecution has relied on the investigation done by the

CBI, which is as follows:

(i)The prosecution filed charge-sheet alleging that prior to year 2000, Andhra Pradesh Industrial Infrastructure Corporation (APIIC) had called for Expression of Interest (EOI) for the Convention

Centre/Golf Course project on 2/3 occasions but could not find any suitable developer. The APIIC again called EOI for the said project during the month of March, 2000 under the Public Private Partnership (PPP) mode. The proposals received against the said EOI were evaluated and two companies viz. M/s. ITC Ltd., and M/s. EIH Ltd., 29 Crl.M.P.No.306/2022 were shortlised. The Request for proposal (RFP) were sent to those two shortlisted companies, out of which only M/s. ITC Ltd., had responded. The proposal of M/s. ITC Ltd., had been evaluated and it was principally agreed by the Government in the State Tourism

Promotion Board (STPB) meeting held on 26.12.2000. The proposal of

M/s. ITC Ltd., was preferred on two locations i.e., at Manikonda Village land and Hussainsagar Land. Since the Hussainsagar Land was covered under PIL WP No.26378/2000, the Government of AP took a decision on 14.05.2001 to take up all the project components at

Manikonda Village only without linking it to Hussainsagar area lands.

Accordingly, the Government sent letter to M/s. ITC Ltd. The

Government was also exploring the possibilities of finding an alternative developer in case M/s. ITC Ltd., was not agreeable to the above suggestion of the Government. M/s. ITC Ltd., did not respond to the offer of the Government and they requested to revisit other alternate sites. The matter was taken up with the Government and after taking approval from the Government suitable communication was made to M/s. ITC Ltd., on 02.07.2001 returning their Bank

Guarantee informing them that the project will be notified again.

(ii)It is further mentioned in the charge-sheet that the

Government of A.P. decided to issue fresh advertisements calling for 30 Crl.M.P.No.306/2022

EOI from developers for the location of Manikonda lands. APIIC had proposed 250 acres of land for the said project. After the proposal was approved by the Board of APIIC, the advertisements were issued on 26.07.2001. In response to advertisement issued, EOIs were received from the following five companies:

1. Emaar Properties Public Joint Stock Company (PJSC), Dubai

2. IOI Corporation, Berhard Malaysia

3. L & T Limited, Chennai

4. Shapoorji & Palonji Company Limited, Mumbai

5. Som Asia Ltd., Hong Kong (consultancy services)

(iii)The above EOIs were evaluated on 15.09.2001 by a

Committee constituted by APIIC and the following three developers were found suitable for the issuance of Request for proposal (RFP).

1. Emaar Properties Public Joint Stock Company (PJSC), Dubai

2. IOI Corporation, Berhard Malaysia

3. L & T Limited, Chennai

(iv)The above referred Request for proposal (RFP) were cleared by the then Chief Minister on 26.09.2001 envisaged that the project would comprise inter-alia of:

31 Crl.M.P.No.306/2022

Convention Centre: The Convention Centre with a plenary hall capacity of 3000- 5000 with facilities for hospitality, accommodation, parking lots, breakaway rooms and seating flexibility, state-of-the-art audio-visual and other sophisticated equipment, Secretarial facilities, ample exhibition facilities, food courts, cafeterias, restaurants and other comprehensive support services.

Hotel: The state-of-the-art Hotel(s) that would be perfect rendezvous to mix business with pleasure.

Golf Course:An 18 hole International Professional

Championship Golf Course with fully equipped Club House and supporting services.

Villas: Villas and residential facilities, any other additional component, which will result in value addition to the

Integrated Project, subject to the sponsor's (APIIC) right to accept such additional components which are seen in the overall interest of the project.

(v)It is further case of the prosecution that in the draft RFP approved by the then CM, it was also mentioned that the bidders shall quote land price on per acre basis for outright sale and lease option.

Further, the minimum land price of Rs.29 lakhs per acre at Manikonda on gross undeveloped basis was indicated and it was also mentioned that the proposal would remain valid for 12 months after the closing 32 Crl.M.P.No.306/2022 date of the submission of proposals. The pre-proposal meeting of the shortlisted Developers was held on 25.10.2001 and all the above said three developers participated in the meeting. During the meeting the companies/ developers requested APIIC for extending the time upto 15.12.2001 for submitting the proposals. Finally, till last date only one proposal of M/s. Emaar Properties PJSC, Dubai was received and the same was opened in the presence of its representative. The price quoted by M/s. Emaar Properties PJSC, Dubai for land on outright sale was Rs.29,00,000/- per acre as per the price bid submitted by them.

The proposal was placed before the Board of APIIC. A draft MOU to be executed with M/s. Emaar Properties PJSC, Dubai was prepared with the help of M/s. IL&FS, Consultants, in pursuance to the discussions held with M/s. Emaar Properties PJSC, Dubai. The said proposal was submitted to the GOAP by APIIC through the Department of Industries and Commerce and was placed before the Council of Ministers on 20.08.2002. Subsequent to the Council resolution No.215(3)/202, the

Government of AP issued GO.Ms. No.359 dated 04.09.2002.

(vi)It is further case of the prosecution that the integrated project was given the status of a Tourism project, as such the related eligible incentives were to be given to the project. The Government authorized APIIC to take further necessary action to implement the 33 Crl.M.P.No.306/2022 project and it was the responsibility of APIIC to closely monitor the implementation of the project with reference to the milestones for various components of the project. Accordingly, a MOU was executed between APIIC and M/s. Emaar Properties PJSC, Dubai, on 06-11-2002.

(vii)It is further case of the prosecution that a Collaboration

Agreement dt.19.08.2003 was executed between APIIC and

M/s. Emaar Properties PJSC, Dubai. Only certain issues relating to the

Collaboration Agreement were approved by the Cabinet Committee on 28.06.2003. The Board of Directors of APIIC approved the

Collaboration Agreement dt.19.08.2003 between APIIC and M/s.

Emaar Properties PJSC in its 151st Meeting held on 12.03.2004.

(viii) It is further case of the prosecution that during the year 2004 after the general elections, when the new Government came into power, the Government of Andhra Pradesh constituted a Group of

Ministers (GoM) to review all decisions taken after 1st January, 2003 on

(i) all mega projects, (ii) infrastructure projects, (iii) allotment of land of more than 5 acres and (iv) on matters which attracted large scale public criticism. The Group of Ministers met on eight occasions and the Group of Ministers deferred the file relating to the Integrated

Convention Centre Complex and Golf Course.

34 Crl.M.P.No.306/2022

(ix)It is further case of the prosecution that on 06.09.2004, the then Chief Minister and the then Minister for Major Industries discussed with the Chairman, M/s. Emaar Properties PJSC, Dubai and it was suggested that APIIC should limit its equity in all the three SPVs to 26% and thereby, proportionately increasing the equity of M/s.

Emaar Properties in the entire project. Subsequently, Shri AJ

Jaganathan, CEO of M/s. Emaar Properties PJSC, Dubai giving reference of the discussion of the representatives of M/s. Emaar properties PJSC, Dubai with Shri LV Subrahmanyam, VC & MD, submitted fresh proposals dt.23.09.2004 and 24.09.2004 changing the implementation structure of the integrated project. As per the revised proposal, it was proposed to execute the integrated project through three SPVs instead of two SPVs as envisaged in the

Collaboration Agreement dt.19.08.2003. As desired by the

Government of AP, M/s. Emaar Properties PJSC, Dubai had agreed to reduce the equity of Government of AP in the Convention Centre

Project from 49% to 26% and thereby increasing the equity of M/s.

Emaar properties PJSC, Dubai from 51% to 74%. In lieu of the said change in equity/ownership in Convention Centre Project, M/s. Emaar

Properties PJSC, Dubai requested the Government of AP to compensate for the increase in equity by transferring additional one 35 Crl.M.P.No.306/2022 hundred acres of land. The said proposal of M/s. Emaar Properties

PJSC, Dubai was processed in a single file.

(x)It is further case of the prosecution that a Price Fixation

Committee (PFC) was constituted and they submitted the report, which is as follows:-

Year/PeriodAreaRates FixedRates valid till 2002-03Hi-Tech CityRs.83.29 Lacs to 31.03.2003 Rs.122.35 Lacs per acre 2003-04ManikondaRs.22.50 Lacs per acre31.03.2004 2004-05Nanakramguda and Rs.35 Lacs per acre31.03.2005 Manikonda Villages 2005-06Nanakramguda and Rs.84.98 Lacs per acre31.03.2006 Manikonda Villages

(xi) It is further case of the prosecution that on 23.11.2004,

GoM meeting was held and the file relating to the Integrated

Convention Centre Complex and Golf Course was cleared.

Subsequently, on 11-01-2005, the Government of A.P. issued

G.O.Ms.No.14, containing all the decisions taken during the meeting held on 06.09.2004 attended by the then CM, the then Minister for

Major Industries and Shri Mohamed Ali Alabbar, Chairman, M/s. Emaar

Properties PJSC, Dubai.

36 Crl.M.P.No.306/2022

(xii) It is further case of the prosecution that as per

G.O.Ms.No.14, a draft supplementary agreement to be executed by

APIIC with M/s. Emaar Properties PJSC, Dubai, which was also forwarded by the VC & MD, APIIC to the Principal Secretary, I & C

Department. The Government after careful examination decided to consider the improvement into the Integrated Project and approved the Draft supplementary agreement to be executed between the

APIIC and M/s. Emaar Properties, PJSC, Dubai. The VC & MD, APIIC was authorized by the GoAP to enter into a Supplementary Agreement. In

G.O.Ms.14, it was also mentioned that all other features of the project notified in the G.O.Ms.No.359 Industries & Commerce (INF)

Department dated: 04.09.2002 remained un-altered.

(xiii) It is further case of the prosecution that on perusal of

G.O.Ms.No.14 dated: 11.01.2005 along with draft supplementary agreement, Shri AJ Jaganathan, CEO of M/s. Emaar Properties PJSC,

Dubai addressed a letter dt.16.01.2005 to the Government mentioning that the GO and the draft supplementary agreement did not conform to the discussions held by M/s. Emaar Properties PJSC,

Dubai in the Minister’s Chamber during November, 2004. He suggested that clause 2(d) of GO.Ms.No.14 should be replaced by “The lease rentals of land given for the Golf Course of 235 acres at 37 Crl.M.P.No.306/2022

Manikonda is fixed at 2% of the gross annual revenue on all Golf

Course components for a period of 33 years. The gross annual revenue generated by SPV-2 does not include Life Membership and other long term and academy memberships. The net profit generated by SPV-2, excluding profit generated by the Boutique Resort Hotel, will be treated in its entirely within the said company in the form of reserves. These reserves shall be utilized solely for improvements of the facilities and maintenance of Golf Course facilities (including the club house)”. He also suggested that clause 2(e) of GO.Ms.No.14

dated:11.01.2005 may be replaced by “On expiry of 66 years lease

period of the land of 235 acres, all structures, buildings on land whether permanent or semi-permanent, constructed by or belonging to the BHPL or their sub-contractors, sub-lessees and assignees developed on leasehold land only (and hence excluding all structures developed on freehold land) shall revert in favour of Government of

Andhra Pradesh free from all encumbrances and liabilities. Access to the site will remain restricted and controlled even after acquisition of the site by GoAP until such time a mutually acceptable solution is agreed between the GoAP and the housing Associations comprising residents of the proposed Boulder Hills community.” 38 Crl.M.P.No.306/2022

(xiv) It is further case of the prosecution that basing on the suggestions made by Sri AJ Jaganathan, CEO, VC & MD APIIC addressed a letter to the Principal Secretary and Commissioner for

Industrial Promotion vide Lr.No.81/APIIC/Projects/ICCC/2001, dated:

19.01.2005 along with a draft modification order. In response to the proposals of APIIC, the then Principal Secretary, Government of AP,

Industries and Commerce (Industrial Promotion Department), by modifying GO Ms.No.14, dated: 11.01.2005 and issued a fresh GO

Ms.No.22 dated: 27.01.2005 incorporating the suggestions made by

Sri AJ Jaganathan, CEO.

(xv)It is further case of the prosecution that after perusing the

G.O.Ms.22, the Minister for Major Industries found that the GO 22 was not in conformity with the orders dated: 11.01.2005 in the file and vide his note dated: 07.02.2005, remarked as under:

1.The file could have been circulated before issue of GO.

The reasons for urgency for issue may be explained.

2.Earlier the file was circulated to CM and orders were issued on 11.01.2005. The reasons for amendment on 27.01.2005 and the differences between orders of 11.01.2005 and 27.01.2005 may be summarized along with financial and other long term implications.

39 Crl.M.P.No.306/2022

3.Increase of lease rentals to 3% (from Golf Course) for further period of 33 years, have been deleted. This increase was mentioned on the file at the time of obtaining orders of CM.

4.The Boutique Hotel was shifted from SPV2 to SPV1.

Reasons for this and the implications were not mentioned.

5.New clauses regarding access rights have been incorporated, but the reasons for this were not mentioned.

(xvi) It is further case of the prosecution that a meeting with then CM on 02.03.2005, which was attended by the then Minister of

Major Industries; Principal Secretary, Industries & Commerce;

Secretary MA & UD; VC & MD, APIIC and other officers of GoAP and discussed about exemption of conversion charges and the then CM directed VC, HUDA that since it was a Government Project, conversion charges as already agreed in the Agreement should be exempted for 15 acres site at Izzatnagar for Convention Centre Complex and 520 acres site at Manikonda for Integrated Township Project and Golf

Course. But the issue pertaining to lease rentals from the golf course remained unresolved. Subsequently, the then Minister for Major

Industries moved a secret note dated: 17.03.2005 to the then CM clarifying the issues that were required to be covered while issuing 40 Crl.M.P.No.306/2022 the GO Ms.No.22, dated: 27.01.2005 and the note made by the then

Minister is as follows:

1.As regards the increase in lease rentals from 2% to 3% for the balance period after 33 years, though the issue was not discussed in the meeting, in view of the orders obtained in circulation earlier, a clear clarificatory memo may be issued asking APIIC to incorporate a specific and clear clause on increased lease amounts of 3% for balance period of 33 years after lease of 2% for first 33 years.

2.Issue relating to representations made by a few people adversely affected by acquisition of patta land and requesting for deletion, was also discussed. It was decided that to avoid legal and other complications, a uniform approach would be adopted while dealing with all such requests. It was therefore decided that either the land involving such requests in the area shall be acquired or alternatively they be deleted from acquisition without any discrimination.

(xvii)It is further case of the prosecution that basing on the secret note dated: 17.03.2005 submitted by the then Minister of Major

Industries, revision of lease rentals in respect of Golf Course from 2% to 3% on expiry of initial period of 33 years was approved by the then 41 Crl.M.P.No.306/2022

CM. Subsequently, the supplementary agreement was executed on 19.04.2005 between APIIC and M/s. Emaar Properties PJSC, Dubai.

(xviii)It is further case of the prosecution that Chairman,

M/s. Emaar Properties PJSC, Dubai addressed a letter dated:

02.05.2005 to Shri LV Subrahmanyam, VC & MD for bringing in

M/s. Fairbridge Holdings Ltd., a Cyprus based company as a shareholder in M/s. Emaar Holdings, Mauritius, such that M/s. Emaar

Properties PJSC, Dubai would dilute its ownership from the current 100% to 54.05% with Fairbridge owning the balance 45.95%, which would lead to net ownership in the integrated project in the ratio of

Emaar (40%), Fairbridge (34%) and APIIC (26%). Basing on the letter

Shri LV Subrahmanyam, VC & MD made a remarks that “We can request for credentials as deemed necessary for out response. So also to see how the new entity will bind itself to project commitments”. A copy of the letter issued by Chairman, M/s. Emaar Properties PJSC,

Dubai was also received in the office of the Principal Secretary,

Industries and Commerce, Government of AP by post on 13.05.2005.

On this copy Shri KV Rao, Principal Secretary, Industries and

Commerce remarked “Till the project is fully implemented it may not be correct to change the equity structure.” and marked the letter to

MD, APIIC, which was received on 16.05.2005 by Shri LV 42 Crl.M.P.No.306/2022

Subrahmanyam, VC & MD. The said issue was discussed on review meeting convened on 13.05.2005 and decided to continue with the existing arrangements till the project is completed. However, Shri LV

Subrahmanyam in violation of the instructions of the Principal

Secretary and the decision taken in the review meeting dated:

13.05.2005 addressed a letter dated: 13.05.2005 to M/s. Emaar

Properties PJSC, Dubai, which was dispatched on 18.05.2005, seeking the detailed information about M/s. Fairbridge Holdings Limited,

Cyprus, to process their request for bringing in Fairbridge Holdings as a partner for strategic resource.

(xix) It is further case of the prosecution that in pursuance of the agreement, the Government initiated the proceedings for acquiring 92.19 acres of land in Nanakramaguda Village. Since the owners of 11.26 acres of patta land has represented against acquisition of said land, a proposal was approved by the District

Collect, RR District to acquire 80.35 acres of land. After the notification was published in the newspapers and the Gazette of AP, the aggrieved parties challenged the actions of the Special Deputy

Collect, Land Acquisition (Industries) before the Hon’ble High Court of

AP by filing WP No.21712/2002, dated: 31.10.2002, wherein the

Hon’ble High Court vide orders dated: 25.04.2003 granted stay on the

43 Crl.M.P.No.306/2022 land acquisition proceedings and directed the District Collector, RR

District to issue notice for an enquiry under Section 5(A) of Land

Acquisition Act to the persons whose lands were to be acquired including the petitioners and to take appropriate further steps after such enquiry. In compliance to the orders of the Hon’ble High Court of

AP notices were issued to the aggrieved persons for conducting enquiry under Section 5(A) of Land Acquisition Act on 17.03.2004.

(xx)It is further case of the prosecution that the District

Collector RR District after examining the objections of the interested parties, rejected their objections on the ground that the objections raised by them were devoid of any merit and decided to issue proceedings for 80.35 acres of land, which includes 3.36 acres of land belonging to Smt. G. Vijaya Nirmala, W/o. Shri GSR Krishna, Shri

Jayadev Galla, S/o. Shri Galla Ramachandra and Smt. G. Rama Devi,

W/o. Shri GVRK Prasad. The Land Acquisition Officer passed an award under Section 11(A) of Land Acquisition Act for acquisition of 77.02 acres of land excluding the land of 3.33 acres. Since there was an urgency in handing over the land by APIIC to Developer, 77.05 Acres of patta land at Sy.No.4 to 26, 27/4 to 35, 41 to 46, 48 & 49 of

Nanakramaguda Village was handed over by Deputy Tahsildar to the

Assistant Zonal Manager, Cyberabad Zone of APIIC. Again the 44 Crl.M.P.No.306/2022 aggrieved persons approached the Hon’ble High Court of AP challenging the purpose of acquisition of 77.02 acres of land for APIIC.

The Hon’ble High Court of AP dismissed the Writ Petitions filed by the aggrieved persons and the same was challenged before the Hon’ble

Supreme Court and the Hon’ble Supreme Court confirmed the orders passed by the Hon’ble High Court of AP and dismissed the SLPs.

(xxi) It is further case of the prosecution that APIIC had handed over 454.93 Acres of Government land at Sy.No.203P, 210P & 211P of

Manikonda Village, Sy.No.91P of Gachibowli Village and Sy.No.36 to 40, 42 & 47 of Nanakramguda Village to Shri Vijaya Menon, representative of M/s. Emaar Properties, PJSC Dubai vide possession certificate dated: 18.06.2005. The patta land of 77.05 acres was handed over by the APIIC to Shri Vijay Menon, representative of M/s.

Emaar Hills Township Pvt. Ltd. And M/s. Boulder Hills Leisure Pvt. Ltd., vide possession certificate dated: 29.11.2005. In total 531.98 acres of land was handed over to M/s. Emaar Properties PJSC, Dubai and its joint venture companies for developing the Integrated Project i.e., Golf

Course and Township Project.

(xxii) It is further case of the prosecution that APIIC moved the following proposals for waiver of conversion and development charges in respect of 15 acres of land for Convention Centre and 45 Crl.M.P.No.306/2022

Business Hotel and 520 acres of land for Golf Course and Township

Project.

S.No.Date of Subject matter of Amount involvedGO through which ProposalproposalExemption was granted 113.02.2004Exemption of Rs.2,65,43,707/-GO Ms.No.894 MA conversion chargesdated: in respect of 520 of02.11.2005 acres for golf course and township project 211.03.2004Exemption of Rs.12,34,019/-GO Ms. No.390 conversion chargesdated: in respect of 15 10.05.2005 acres of land for Convention Centre and Business Hotel 319.11.2005Exemption of Rs.1,35,57,246/-GO Ms. No.990 development dated: charges in respect 31.12.2005 of 15 acres of land for Convention Centre and Business Hotel 408.08.2007Exemption of Rs.24,73,28,163/-GO Ms. No.879 conversion chargesdated: in respect of 520 of05.12.2007 acres for golf course and township project 46 Crl.M.P.No.306/2022

(xxiii) It is further case of the prosecution that the Cyberabad

Development Authority as well as the MA & UD Department has raised objection for exemption of above said charges in respect of the

Integrated Project, as this was the only source of revenue for CDA and such exemption was not provided in AP Urban Areas Development

Act, 1975. However, the then CM overruling all the objections granted exemption from payment of conversion/development charges to the tune of Rs.28,86,63,135/-.

(xxiv) It is further case of the prosecution that APIIC executed the following documents with M/s. Emaar Properties PJSC, Dubai and the SPVs viz., M/s. EHTPL, M/s. BHLPL and M/s. CCCPL in respect of the

Integrated Project on 28.12.2005.

S.No.Nature of document

1.Conveyance Deed in respect of 258.36 acres (226.95 acres of Government land and 31.41 acres of patta land) of land executed in favour of M/s. EHTPL for development of Township Project. This land was conveyed for a total consideration of Rs.75,92,44,000/- @ Rs.29,00,000/- per acre. This was registered vide document No.20560 dated: 12.10.2006 with District Registrar, RR District.

2.Share Subscription Agreement executed with M/s. EHTPL for allotment of 17,00,307 shares with face value of Rs.1,70,03,070/- in favour of APIIC in the equity proportion of 26%

3.Shareholders’ agreement with M/s. EHTPL vide which APIIC was allotted 17,00,307 shares by M/s. EHTPL in the equity proportion of 26%

4.Lease Deed in respect of 235 acres (195.98 acres of Government land 47 Crl.M.P.No.306/2022 and 39.02 acres of patta land) of land executed with M/s. BHLPL for development of Golf Course, with provision for an amount of Rs.3,40,75,000/- to be paid by M/s. BHLPL @ Rs.1,45,000/- per acre towards non-refundable deposit to APIIC. This was registered vide document No.20562 dated: 12.10.2006 with District Registrar, RR District.

5.Conveyance Deed in respect of 17 acres of land executed by M/s. BHLPL for development of Boutique Resort Hotel. The land was conveyed for a total consideration of Rs.4,93,00,000/- @ Rs.29,00,000/- per acre, which was adjusted towards part of 26% equity of APIIC in M/s. BHLPL. This was registered vide document No.20561 dated: 12.10.2006 with District Registrar, RR District.

6.Share Subscription Agreement executed with M/s. BHLPL for allotment of 1,19,44,709 shares with face value of Rs.11,94,47,090/- in favour of APIIC in the equity proportion of 26%

7.Shareholders’ agreement with M/s. BHLPL vide which APIIC was allotted 1,19,44,709 shares by M/s. EHTPL in the equity proportion of 26%

8.Lease Deed in respect of 15.139 acres of land executed with M/s. CCCPL for development of Convention Centre and Business Hotel. This was registered vide document No.20563 dated: 12.10.2006 with District Registrar, RR District.

9.Share Subscription Agreement executed with M/s. CCCPL for allotment of 1,86,20,970 shares with face value of Rs.18,62,09,695/- in favour of APIIC in the equity proportion of 26%

10.Shareholders’ agreement with M/s. CCCPL vide which APIIC was allotted 1,86,20,970 shares by M/s. CCCPL in the equity proportion of 26%

11.Debenture Deed executed between APIIC and M/s. EHTPL vide which APIIC was allotted 5,09,95,915 debentures by M/s. EHTPL against the surplus amount of Rs.50,99,59,150

12.Escrow Agreement executed between APIIC and M/s. EHTPL regarding opening of an escrow account with Andhra Bank, Hi-Tech City Branch, 48 Crl.M.P.No.306/2022

Hyderabad in respect of Debentures held by APIIC.

(xxv) It is further case of the prosecution that the record shows that M/s. Emaar Properties PJSC, Dubai initially entered into an MOU on 06.11.2002 in pursuance of the decision taken by the council of

Ministers on 20.08.2002 and the G.O.Ms.No.359, dt.04.09.2002. As per the MOU, two SPVs (Special Purpose Vehicles) has to be implemented and 235 acres of land was allotted for Golf Course; 285 acres of land was allotted for Multi-use and 15 acres of land was allotted to water bodies, in total 535 acres of land was required for integrated project, out of 535 acres of land, APIIC was having 445-455 acres of its own and balance 80-90 acres of land was required to acquired. SPV-1 consisting of Pro-championship 18 hole Golf Course (along with Golf Club, Club House and Country Club) and Multi-use

Development including Villas and Commercial Complexes at

Manikonda. SPV-2 consisting of Convention Centre and Business Hotel to be implemented at NAC grounds. The equity structure of the SPVs is as follows:

SPV1:APIIC26% Emaar Properties74%

SPV2:APIIC49% Emaar Properties51% 49 Crl.M.P.No.306/2022

(xxvi) It is further case of the prosecution that the lease payment for the land leased for a period of 66 years by SPV1 for the

Golf Course shall be equal to two percent of all annual revenue earned by the Golf Course, except life membership and other long term club and academy membership income.

(xxvii) It is further case of the prosecution that the MOU was followed by a Collaboration Agreement dt.19.08.2003 executed between APIIC and M/s. Emaar Properties PJSC, Dubai. Only certain issues relating to the Collaboration Agreement were approved by the

Cabinet Sub-Committee on 28.06.2003. The Board of Directors of

APIIC approved the Collaboration Agreement dt.19.08.2003 between

APIIC and Emaar Properties PJSC in its 151st Meeting held on 12.03.2004.

(xxviii) It is further case of the prosecution that in the year 2004, new Government came into power and the Government of

Andhra Pradesh constituted a Group of Ministers to review all decisions taken after 1st January, 2003. The group of Ministers has reviewed the several decisions taken by the earlier Government, but in respect of integrated Convention Centre Complex and Golf Course was deferred in the meeting held on 03.09.2004. Thereafter, discussions took place in the Government on 06.09.2004 and it was 50 Crl.M.P.No.306/2022 suggested that APIIC should limit its equity in all the three SPVs to 26% and thereby, proportionately increasing the equity of M/s. Emaar

Properties in the entire project. It is to be noted that the earlier there are only two SPVs, now it was divided into three SPVs, which are as follows:

SPV-1M/s. Emaar Hills Township Pvt. Ltd. (M/s. EHTPL) for development of Township Project with Villas, Apartments and IT Park at Manikonda

SPV-2M/s. Boulder Hills Leisure Pvt. Ltd. (M/s. BHLPL) for development of Golf Course and Boutique Resort Hotel at Manikonda

SPV-3M/s. Cyberabad Convention Centre Pvt. Ltd. (M/s. CCCPL) for development of Convention Centre and Business Hotel at NAC grounds.

(xxxi) It is further case of the prosecution that in view of the decision of the Government in all three SPVs, the equity of the

Government of Andhra Pradesh was reduced to 26% and the equity of

M/s. Emaar Properties PJSC, Dubai was enhanced from 51% to 74%.

(xxx) The record reveals that Sri K.V. Rao, Principal Secretary vide his note dt.05.11.2004 noted that the lease rental from Golf

Course may be negotiated with the developer for 2% of the Gross

Annual revenue for 33 years and 3% for further 33 years. He also 51 Crl.M.P.No.306/2022 pointed out that the asset which was fully developed would revert to

Government after 66 years.

(xxxi) The record also shows that the Price Fixation Committee proposes the enhancement of the land value from Rs.29,00,000/- to

Rs.40,00,000/- per acre, but the officials ignoring the same, only mentioned the land price at Rs.29,00,000/- per acre.

(xxxii) The case of the prosecution that they have increased the equity of M/s. Emaar Properties PJSC, Dubai, at the same time, they have completely ignored the enhanced value of the land even though the cost of the project was revised from Rs.430 crores to

Rs.630 crores, but the appreciation in land cost was ignored. The

Government has isued G.O.Ms.No.14 on 11.01.2005 mentioning the share value as 74% for Emaar Properties and 26% for APIIC in all three SPVs and all equity from APIIC was on land value basis alone @

Rs.29 lakhs per acre and also mentioned about the lease rentals for 235 acres of land at Manikonda land given for the Golf Course was fixed @ 2% of the Gross Annual Revenue on all golf Course components for period of 33 years and @3% for further period of 33 years. Basing on the G.O.Ms.No.14, dt.11.01.2005, a draft supplementary agreement was made available. VC & MD, APIIC addressed a letter to the Principal Secretary ignoring the 52 Crl.M.P.No.306/2022 enhancement of 3% after expiry of 33 years and Sri KV Rao, the then

Principal Secretary, Government of AP, Industries and Commerce

remained silent as he was allotted Plot No.B-55 admeasuring 1239 sq.yds. in Sy.No.211(P) of Manikonda Jagir Village, Rajendranagar

Mandal, Ranga Reddy District @ Rs.5000/- per sq.yd. when the prevalent market rate was Rs.10,000/- per sq.yd.

(xxxiii) It is further case of the prosecution that the documents reveals that Sri KV Rao, Principal Secretary (Industries & Commerce) though the then Minister for Major Industries was very much available, he has not circulated the file and only after issuance of

G.O.Ms.No.22, dt.27.01.2005 it was brought to the notice of the

Minister for Major Industries. After pursuance of the file, the Minister for Major Industries found that the G.O.22 was not in conformity with the orders dt.11.01.2005 in the file and made some remarks and directed the Principal Secretary, Industries & Commerce to prepare a comprehensive note duly incorporating information on all the issues and circulate the same to him for apprising the Minister for Finance and CM and also instructed the Principal Secretary to keep the

G.O.Ms.No.22 in abeyance till approval of CM. But it was not resolved in the meeting dt.02.03.2005, only matter pertaining to exemption of conversion charges was discussed. Subsequently, the then Minister 53 Crl.M.P.No.306/2022 for Major Industries moved a secret note dt.17.03.2005 to the then

CM clarifying the issues that were required to be covered while issued the G.O.Ms.No.22, dt.27.01.2005. Subsequently the supplementary agreement was executed on 19.04.2005 between APIIC and M/s.

Emaar Properties PJSC, Dubai.

(xxxiv)It is further case of the prosecution that Sri

LV Subrahmanyam contrary to the instruction of the Principal

Secretary and the decision taken in the review meeting dt.13.05.2005, addressed a letter dt.13.05.2005 to M/s. Emaar

Properties PJSC, Dubai seeking the detailed information about M/s.

Fairbridge Holdings Limited, Cyprus to process their request for bringing in Fairbridge Holdings as a partner for strategic resource. The documents also shows that

(xxxv)It is further case of the prosecution that M/s. Emaar

MGF Land Ltd., has allowed Sri Jayadev Galla and Smt. G. Ramadevi to encroach 2.20 acres of land and they constructed multi-storied buildings on the said land. In pursuance of the agreement, the

Government initiated the proceedings for acquiring 92.19 acres of land in Nanakramaguda Village. Since the owners of 11.26 acres of patta land has represented against acquisition of said land, a proposal was approved by the District Collect, RR District to acquire 80.35 54 Crl.M.P.No.306/2022 acres of land. After the notification was published in the newspapers and the Gazette of AP, the aggrieved parties challenged the actions of the Special Deputy Collect, Land Acquisition (Industries) before the

Hon’ble High Court of AP by filing WP No.21712/2002, dated:

31.10.2002, wherein the Hon’ble High Court vide orders dated:

25.04.2003 granted stay on the land acquisition proceedings and directed the District Collector, RR District to issue notice for an enquiry under Section 5(A) of Land Acquisition Act to the persons whose lands were to be acquired including the petitioners and to take appropriate further steps after such enquiry. In compliance to the orders of the Hon’ble High Court of AP notices were issued to the aggrieved persons for conducting enquiry under Section 5(A) of Land

Acquisition Act on 17.03.2004.

(xxxvi)It is further case of the prosecution that the District

Collect RR District after examining the objections of the interested parties rejected them on the ground that the objections raised by them were devoid of any merit. Out of 80.35 acres of land, extend of 3.36 acres of land at Survey Number 27/4 belonging to Smt. G. Vijaya

Nirmala, W/o. Shri GSR Krishna, Shri Jayadev Galla and Smt. G. Rama

Devi and they also raised objections. Surprisingly, an award under 55 Crl.M.P.No.306/2022

Section 11(A) of Land Acquisition Act for acquisition of 77.02 acres of land excluding the land of 3.33 acres was passed.

(xxxvii)It is further case of the prosecution that APIIC had handed over 454.93 Acres of Government land at Sy.No.203P, 210P & 211P of Manikonda Village, Sy.No.91P of Gachibowli Village and

Sy.No.36 to 40, 42 & 47 of Nanakramguda Village to Shri Vijaya

Menon, representative of M/s. Emaar Properties, PJSC Dubai vide possession certificate dated: 18.06.2005. The patta land of 77.05 acres was handed over by the APIIC to Shri Vijay Menon, representative of M/s. Emaar Hills Township Pvt. Ltd. And M/s. Boulder

Hills Leisure Pvt. Ltd., vide possession certificate dated: 29.11.2005.

In total 531.98 acres of land was handed over to M/s. Emaar

Properties PJSC, Dubai and its joint venture companies for developing the Integrated Project i.e., Golf Course and Township Project.

(xxxviii)It is further case of the prosecution that the

Cyberabad Development Authority as well as the MA & UD

Department has raised objection for exemption of conversion charges and development charges in respect of the Integrated

Project, as this was the only source of revenue for CDA and such exemption was not provided in AP Urban Areas Development Act, 1975. However, the then CM overruling all the objections granted 56 Crl.M.P.No.306/2022 exemption from payment of conversion/development charges to the tune of Rs.28,86,63,135/-.

(xxxix)It is further case of the prosecution that the APIIC executed the documents with M/s. Emaar Properties PJSC, Dubai and the SPVs viz., M/s. EHTPL, M/s. BHLPL and M/s. CCCPL in respect of the

Integrated project on 28.12.2005.

(xl)It is further case of the prosecution that Sri BP Acharya, the then VC & MD, APIIC has received an agenda from M/s. EHTPL on 14.09.2006 for discussing the proposal to bring in M/s. Emaar MGF

Land Ltd., as a co-developer to develop the township project as well as Golf Course project, to be discussed in the Board Meeting dt.21.09.2006of M/s. EHTPL and M/s. BHLPL. As per the agenda, M/s.

Emaar MGF Land Ltd. was proposed to pass on 25% of the total revenue from the project to M/s. EHTPL, which would affect the revenue sharing of APIIC in the integrated project. Sri BP Acharya did not discuss such an important issue in the board of APIIC.

(xli)It is further case of the prosecution that in the board meeting dt.21.09.2006, the development strategy for the Integrated

Township Project was discussed. Shri BP Acharya, the then VC & MD,

APIIC, Shri Vijay Menon & Shri Koneru Prasad, both Directors of M/s.

EHTPL and Shri Srikant Joshi, CEO-South, M/s. Emaar MGF Land Ltd., 57 Crl.M.P.No.306/2022 attend the said board meeting and it was discussed that the proposals were received from M/s. Emaar MGF Land Limited for the development and construction of the projects in SPV-1 (M/s. EHTPl) and SPV-2 (M/s. BHLPL) and the same were placed before the board.

M/s. EHTPL never brought to the notice of APIIC that there was fund crunch for the development of the project. Sri BP Acharya, who was present in the board meeting did not object to invoking of clause 6(v) from the MOU as the MOU had expired and the Collaboration

Agreement dt.19.08.2003 was in place. The board authorized Shri

Vijay Menon to execute the Development Agreement, Lease Deed and

Assignment Deed on behalf of the company with M/s. Emaar MGF

Land Ltd. In the board meeting dt.21.09.2006, the board suggested for entering into a Development Agreement for development of

Boutique Resort Hotel and Golf Course, which were to be developed by M/s. BHLPL (SPV-2), there was no mention of M/s. EHTPL (SPV-1) entering into a Development Agreement with M/s. Emaar MGF Land

Limited for development of Integrated Township Project. Shri BP

Acharya did not object for those irregularities.

(xlii) It is further case of the prosecution that the prosecution contended that clause 8 of G.O.Ms.No.359, dt.04.09.2002; clause 6(v) of MOU dt.06.11.2002; clause 2.4(v), 2.4(x), 3.1(c)(iii) of Collaboration 58 Crl.M.P.No.306/2022

Agreement dt.19.08.2003; clause 8 of supplementary agreement dt.19.04.2005; clause 9.1(H) of shareholder’s agreement dt.28.12.2005 reveals that rights towards development, management and operations of the integrated project could have been assigned by the developer with the principle approval from APIIC. Whereas in this case, no proposal was moved by M/s. Emaar Properties, PJSC, Dubai to

APIIC for obtaining the approval of APIIC; and Collaboration

Agreement and Supplementary Agreement contemplates that the integrated project through M/s. Emaar Holdings and covenants that the representations, obligations, warranties and commitments made by it should be duly complied with, as such M/s. Emaar Properties cannot absolve itself from its responsibility to complete the project through M/s. Emaar Holdings and M/s. EHTPL.

(xliii) It is further case of the prosecution that as per the

Collaboration Agreement and Shareholder’s Agreement, it was the responsibility of M/s. EHTPL to approach both the shareholders i.e.

APIIC and M/s. Emaar Properties PJSC, Dubai to obtain their affirmative approval and as per the provisions of MOU and collaboration agreement only developer i.e., M/s. Emaar Properties, PJSC, Dubai could have assigned these rights to third party and not M/s. EHTPL.

Sri BP Acharya representing APIIC in the board of M/s. EHTPL has not 59 Crl.M.P.No.306/2022 raised any objection for the resolution of M/s. EHTPL entering into a

Development Agreement with M/s. Emaar MGF Land Ltd.

(xliv) The prosecution contended that as per clause 4.1 of the

Collaboration Agreement, approval of the Board of Directors of APIIC was compulsory as per the terms and conditions of the Collaboration

Agreement that was executed on 19.08.2003. As per clause 9.1H of the Shareholder’s Agreement executed between APIIC and

M/s. EHTPL, for the declaration or payment of any dividend or distribution of profits or passing of any resolution to retain or allocate profits, affirmative approval should be obtained by M/s. EHTPL from both M/s. APIIC and M/s. Emaar Properties PJSC, Dubai.

(xlv) It is further case of the prosecution that M/s. Emaar MGF

Land Pvt. Ltd., represented by its Chief Executive Officer Shri Srikant

Joshi, submitted an application dt.23.04.2007 to the Chief Secretary,

Government of AP requesting for notifying M/s. Emaar MGF Land Pvt.

Ltd., as a co-developer for designing, developing, operating and maintaining the area of 10.33 acres of land and structures thereon at

Manikonda Village. M/s. EHTPL vide letter dt.24.04.2007 submitted the proposal for including additional area of 7.77 acres of land for the purpose of developing additional facilities in the said SEZ notified vide notification No.SO 548(E) dt.10.04.2007. The Chief Secretary decided 60 Crl.M.P.No.306/2022 to seek comments from APIIC and Sri B.P. Acharya recommended for consideration of request of M/s. EHTPL for including additional 7.77 acres of land and no objection for including M/s. Emaar MGF as co- developer for development of IT/ITES SEZ. After obtaining sanction from APIIC, the Government of AP has processed the file to

Government of India and the Government of India conveyed the approval for including M/s. Emaar MGF Pvt. Ltd., as a co-developer.

(xlvi) It is further case of the prosecution that M/s. Emaar MGF

Land Pvt. Ltd., was incorporated on 18.02.2005 and was registered with ROC, New Delhi and the name of the company was changed to

M/s. Emaar MGF Land Limited from Emaar MGF Private Land Limited on 13.08.2007. Shri Shravan Gupta and Shri Siddharth Gupta were the initial two Directors of the company; Shri Mohamed Ali Alabbar,

Shri Sale Bin Rashid Ali Mohannadi and Ms. Low Ping were appointed as Directors of the company on 07.11.2005. Shri Shravan Gupta is the

Managing Director of the company and Shri Mohamed Ali Alabbar is the Chairman.

(xlvii) It is further case of the prosecution that pursuant to the resolution passed by the Board of M/s. EHTPL on 21.09.2006, a development agreement was executed between M/s. EHTPL and

M/s. Emaar MGF Land Limited on 03.11.2006 i.e., before changing the 61 Crl.M.P.No.306/2022 name. The said agreement was executed by Shri Vijay Menon on behalf of M/s. EHTPL and Shri Srikant Joshi, CEO (South) on behalf of

M/s. Emaar MGF Land Limited.

(xlviii) It is further case of the prosecution that in the board meeting dt.26.03.2007, Shri Vijay Menon and Dr. Nader Mohammed resigned as Directors of M/s. EHTPL and in their place Shri Vinod

Kumar Gomber and Shri Ahmed Thani Rashed Almatrooshi were appointed as Directors of the company. Shri Vijay Menon was retained as Manager of the company and was authorised to sign the necessary documents on behalf of the company. In the board meeting dt.26.09.2007, it was discussed that the development agreement executed between M/s. EHTPL and M/s. Emaar MGF Land Limited based on the board resolution dt.21.09.2006 was required to be confirmed by APIIC. Subsequently, a Development Agreement-cum-

General Power of Attorney (GPA) was executed between M/s. EHTPL and M/s. Emaar MGF Land Limited on 25.07.2007. As per the

Development Agreement-cum-GPA, the Development Agreement dt.03.11.2006 was cancelled and was replaced with the Development

Agreement-cum-GPA dt.25.07.2007. The said Development

Agreement-cum-GPA was signed by Shri Vijay Menon on behalf of

M/s.EHTPL and Shri Srikant Joshi on behalf of M/s. Emaar MGF Land 62 Crl.M.P.No.306/2022

Ltd. In the board meeting dt.10.07.2008, Shri Amit Jain and Shri

Srikant Joshi, CEO were appointed as alternate Directors. Shri

Pardhasaradhi Rao was appointed as Second Nominee Director of

APIIC.

(xlix) It is to be noted that M/s. Emaar MGF Land Ltd., applied for term loan of Rs.150 crores by Axis Bank by offering 14.01 acres of land out of 258.36 acres owned by M/s. Emaar MGF Land Ltd., and subsequently the said loan was reduced to Rs.90 crores. M/s. Emaar

MGF Land Ltd., has cleared all the dues against the term loan in

February, 2011, as such the security i.e., the title deed in respect of 14.01 acres of land was released by the Bank.

(l)It is further case of the prosecution that on 23.07.2008

Shri Vijay Raghav on behalf of M/s. EHTPL and Sri Srikant Joshi on behalf of M/s. Emaar MGF Land Ltd. executed addendum to

Development Agreement-cum-GPA deciding the percentage share in the revenue of M/s. Emaar MGF Land Ltd. The Development

Agreement-cum-GPA dt.25.07.2007 and Addendum to the

Development Agreement-cum-GPA dt.23.07.2008 executed between

M/s. EHTPL and M/s. Emaar MGF Land Limited were never discussed in the board of M/s. EHTPL. As per the Development Agreement, the gross revenue was to be shared between M/s. Emaar MGF Land Pvt.

63 Crl.M.P.No.306/2022

Ltd. and M/s. EHTPL in the ratio of 75% : 25% on both the sale and lease proceeds. In the addendum to the Development-cum-GPA the revenue sharing pattern of lease proceeds was revised from 75% :

25% to 95% : 5%. The same was accepted in the board meeting dt.15.06.2007, which is detrimental to the interest of APIIC. In case of revenue from Operations and Maintenance and advertisements in

Common Areas, the sharing was in the ratio of 75% : 25% on the profits derived there from and not on revenues, as mentioned in the addendum to the Development Agreement-cum-GPA, the said aspect was not discussed in the board meetings of M/s. EHTPL. Due to amendments of the share pattern, the APIIC has sustained loss of

Rs.4,92,10,000/- from 2008-09 to 2010-11.

(li)It is further case of the prosecution that M/s. BHLPL and

M/s. Emaar MGF entered into a Development Agreement, Deed of

Assignment, Lease Deed as applicable to the development of

Boutique Resort Hotel and Golf Course Multi use Project. But no development agreement was executed between M/s. BHLPL and M/s.

Emaar MGF Land Ltd., and only Lease Deed and Assignment Deed were executed on 03.11.2006. Those two deeds empowered M/s.

BHLPL to sell villa plots.

64 Crl.M.P.No.306/2022 (lii)It is further case of the prosecution that M/s. EHTPL entered into Agency Agreement with M/s. Stylish Holmes Real Estate

Pvt. Ltd. represented by its Director Shri T. Ranga Rao on 29.01.2005 and appointed M/s. Stylish Holmes Real Estates Pvt. Ltd., as its sole

Agent for the purpose of marketing the Plots and Residential units and the said Agency Agreement was executed on 29.01.2005 at Dubai and the M/s. Stylish Holmes Real Estate Pvt. Ltd. had started booking villa plots in the integrated township in the month of March, 2005 though the land had not been transferred to M/s. EHTPL.

(liii)It is further case of the prosecution that as per the provisions of G.Os issued by Government of Andhra Pradesh;

Collaboration Agreement and Supplementary Agreement executed between APIIC and M/s. Emaar Properties PJSC, Dubai, M/s. EHTPL was required to develop the project land by way of constructing Villas and

Apartments and sell the same after finalizing the rates in its board.

Hence the agency agreement dt.29.01.2005 executed by the

Chairman, M/s. Emaar Properties PJSC, Dubai on behalf of M/s. EHTPL agreeing to sell the plots @ Rs.5,000/- per sq.yd for a period of 5 years is nothing but clandestine arrangement in furtherance of the criminal conspiracy by the developer to dispose off the project land without developing the same, which caused loss of revenue to APIIC.

65 Crl.M.P.No.306/2022 (liv)It is further case of the prosecution that M/s. Stylish

Holmes Real Estates Pvt. Ltd. started booking villa plots from March, 2005 itself and it booked 43 villa plots till 27.12.2005 i.e., prior to execution of Conveyance Deed dt. 28.12.2005 by APIIC in favour of

M/s. EHTPL. During the period 28.12.2005 to 02.11.2006, M/s. EHTPL and M/s. Stylish Holmes Real Estates Pvt. Ltd., booked 25 villa plots, whereas M/s. EHTPL executed a Development Agreement dt.03.11.2006 with M/s. Emaar MGF Land ltd. Even after execution of

Development Agreement dt.03.11.2006 in favour of M/s. Emaar MGF

Land Ltd., M/s. Stylish Holmes Real Estates Pvt. Ltd., continued to book villa plots as per the Agency Agreement dt.29.01.2005 and booked 37 plots in between 03.11.2006 to 20.08.2008.

(lv)It is further case of the prosecution that 31 villa plots were sold by M/s. EHTPL and M/s. Emaar MGF Land Ltd., at the documented rate of Rs.5,000/- per sq.yd. though the prevalent market rates were much higher. As per the Agency Agreement dt.29.01.2005, plots over and above 100 were to be sold at the prevailing market rates as decided by M/s. EHTPL, M/s. Stylish Holmes Real Estates Pvt. Ltd.

(lvi)It is further case of the prosecution that villa plot buyers has paid first and second installments in favour of M/s. EHTPL, whereas third and final installments, which accounted for 85% of the 66 Crl.M.P.No.306/2022 sale consideration @ Rs.5,000/- per sq.yd was paid in favour of M/s.

Emaar MGF Land Ltd., though the booking had been made by M/s.

EHTPL through M/s. Stylish Holmes Real Estates Pvt. Ltd., as such without making any investment M/s. Emaar MGF Land Ltd., received bulk of revenue from sale of villas/plots.

(lvii) It is further case of the prosecution that as per the instructions of Shri Koneru Rajendra Prasad, Shri T. Ranga Rao,

Director, M/s. Stylish Holmes Real Estates Pvt. Ltd., sold 82 villa plots by collecting excess amounts from the buyers ranging from Rs.4,000/- per sq.yd to Rs.45,000/- per sq.yd. over and above the rate of

Rs.5,000/- per sq.yd. The excess money was collected by

Shri T. Ranga Rao from the buyers in cash only except from

Shri P.S. Parthasarathy Rao and Shri Challa Suresh, who had deposited

US $ 250,000 and US $ 140,000 respectively towards part of excess payment in the bank accounts of Shri Madhu Koneru, S/o. Shri Koneru

Rajendra Prasad maintained at Dubai. From the 82 villa plot buyers, an amount of Rs.96,01,75,000/- was collected over and above the documented price of Rs.5,000/- per sq.yd. and it was supported by

Shri T. Ranga Rao, Shri P.S. Parthasarathy and Shri Y.V. Prasad statements recorded under Section 164 Cr.P.C. It is further case of the prosecution that Shri T. Ranga Rao handed over the cash to Shri Sunil 67 Crl.M.P.No.306/2022

Reddy on the instructions of Shri Koneru Rajendra Prasad and also sometimes directly to Shri Koneru Rajendra Prasad.

(lviii) It is further case of the prosecution that 23 villa plots were allotted at the rate of Rs.5,000/- per sq.yd to the relatives of Shri

Koneru Prasad and family members of VIPs (Politicians in higher positions). It is further case of the prosecution that the Investigating

Agency has recovered two laptops from the office of M/s. EHTPL and

M/s. Emaar MGF Land Ltd., at Hyderabad. Out of those two laptops, one belongs to Shri Vijay Raghav and the laptops were sent to CFSL analysis and it reveals that the buyers has paid the more than the documented price.

(lix)It is further case of the prosecution that Shri Vijay Raghav,

Shri Srikant Joshi and Shri Shravan Gupta asked Shri Rajeev Gupta, Sr.

Vice President, M/s. Emaar MGF Land Ltd., to incorporate 10 companies with the employees of M/s. MGF Ltd., and other group companies as Directors/Shareholders of these companies.

Accordingly, seven companies were floated at New Delhi and three companies were floated at Ernakulam and the money was transferred and 18 villa plots were booked in the name of ten companies, later it was cancelled.

68 Crl.M.P.No.306/2022 (lx)It is further case of the prosecution that M/s. EHTPL and

M/s. Emaar MGF Land Ltd., sold about 206 apartments, out of which

Shri Srikant Joshi, the then CEO, M/s. Emaar MGF Land Pvt. Ltd.

purchased an apartment in his name at Rs.3,268/- per sq.ft, whereas the apartments were sold to the other buyers between Rs.4,800/- and

Rs.9,000/- per sq.ft.

(lxi)It is further case of the prosecution that APIIC has not received any revenue from M/s. EHTPL on account of its equity in the

Township Project and M/s. Emaar MGF Land Ltd., balance sheet shows that Rs.194,13,13,396/- was earned from sale of villas, villa plots and apartments, out of which the revenue share of Rs.48,53,28,349/- is shown payable to M/s. EHTPL towards its 25% share, but the said amount was not paid.

(lxii) It is further case of the prosecution that on the instruction of Shri Koneru Prasad, Shri T. Ranga Rao and his Manager collected an amount of Rs.96,01,75,000/- from sale of villa plots over and above the documented price @ Rs.5,000/- per sq.yd. during the period between 2005-2010. Similarly, Shri GV Vijay Raghav, Finance Head-

South, M/s. Emaar MGF Land Ltd., collected an amount of

Rs.6,85,60,000/- from sale of three villa plots over and above the documented price @ Rs.5,000/- per sq.yd. But those amounts were 69 Crl.M.P.No.306/2022 not reflected in the books of account of M/s. EHTPL. It is further case of the prosecution that APIIC has not received even a single rupee from Township Project, which amounts to loss of Rs.43.50 crores. At the same time, M/s. Emaar MGF Land Ltd. and M/s. Emaar Properties

PJSC, Dubai obtained undue pecuniary advantage of Rs.167.29 crores.

(lxiii) It is further case of the prosecution that a team was constituted for implementation of integrated project, utilization of funds with respect to agreements entered into between APIIC and

M/s. Emaar Properties, PJSC Dubai. The said team consisting of Shri C.

Subba Rao and Shri B V Bhaskar Rao visited the office of M/s. EHTPL on 04.05.2009 and 05.05.2009 and inspected the records and pointed the irregularities.

(lxiv) It is further case of the prosecution that after inducting

Shri BR Meena as VC & MD on 24.12.2009, he has noticed several irregularities and same were placed before the board of APIIC in its board meeting dt.10.08.2010 and the board took a decision to take comprehensive and independent expert opinion on the all the issues relating to the implementation of the project.

(lxv) It is further case of the prosecution that after receiving the reports of the consortium and legal opinion, the matter was 70 Crl.M.P.No.306/2022 referred to the then Ld. Solicitor General of India by APIIC and in his opinion dt.18.09.2010, the then Ld. Solicitor General of India had suggested the following course of action:

(a)APIIC should terminate the collaboration agreement and initiate arbitration proceedings with Emaar. It may then seek an injunction against M/s. Emaar MGF on the ground that the Corporate veil must be lifted in this case.

(b)APIIC as a minority shareholder in EHTPL should initiate appropriate proceedings in the company law board for oppression/mismanagement, and try and get control of

EHTPL after which the development agreement with M/s.

Emaar MGF could be rescinded by M/s. EHTPL.

(c)APIIC and GoAP should jointly file a suit for permanent injunction in an appropriate Civil Court, seeking to restrain Emaar MGF from proceeding with any works or engaging in any sale relating to the project land.

(d)APIIC should request GoAP to issue necessary instructions to the competent registration authorities not to register any sale deeds executed by Emaar MGF in favour of buyers. Where such sale deeds have been executed and registered, options may be explored as to how such registrations can be cancelled.

(e)APIIC may consider initiating appropriate criminal proceedings against persons involved in the actions that resulted in the depletion in the value of EHTPL. If necessary, 71 Crl.M.P.No.306/2022 recourse may be taken to Section 235 of Companies Act, 1956.

(lxvi) It is further case of the prosecution that as per the suggestions of Ld. Solicitor General of India, APIIC issued termination notice to M/s. Emaar Properties PJSC, Dubai and M/s. Emaar Holdings,

Mauritius on 29.10.2010 under Clause 5.3(a) of the Collaboration

Agreement.

(lxvii) It is further case of the prosecution that Shri N Sunil

Reddy (A-7) along with his father Shri N Sangi Reddy floated a company which was incorporated on 10.05.2005 in the name and style of M/s. Sunil Projects and Foundations Pvt. Ltd. and both Shri N

Sunil Reddy (A-7) and his father Shri N Sangi Reddy were the promoter directors of the said company and Shri N Sunil Reddy (A-7) was nominated as the Managing Director of the company. Later,

Narapa Manohar Reddy and his wife Smt. Narapa Saradha Reddy were appointed as Directors w.e.f. 10.10.2009. Subsequently, on 25.01.2010, the name of the company was changed to M/s. Southend

Projects & Foundations Pvt. Ltd. and A-7 and his father resigned from the company w.e.f. 01.10.2010. M/s. Southend Projects & Foundations

Pvt. Ltd. has received the funds during the period 2009-2010 from various companies but those companies existences is in question.

72 Crl.M.P.No.306/2022 (lxviii)It is further case of the prosecution that as far as land acquisition is concerned, the revenue officials has played dual role and they wanted to held some persons i.e., G. Krishna and G.

Vijaya Nirmala and Smt. Laxmamma. The officials and the Chairman of APIIC has used different yardsticks to acquire the lands of cinema actor i.e., G. Krishna and his family members and at the same time applied another yardstick to acquire properties of others.

(lxix) It is further case of the prosecution that the request made by Smt. Galla Aruna Kumari for exempting an extent of Acs.2- 20 gts at Sy.No.27/4 from acquisition was rejected. The GHMC authorities favoured the family members of Sri G. Krishna and Sri

Galla Jayadev. Who encroached upon the Government land.

(lxx) It is further case of the prosecution that the excess amount collected from villa plot buyers was benefited by Shri Koneru

Rajendra Prasad and Shri N. Sunil Reddy and the said transactions were held at Syndicate Bank, New Nallakunta Branch, Hyderabad;

Karur Vysya Bank, Nallakunta Branch, Hyderabad and Dena Bank and

Ramakrishna Mutt Branch, Hyderabad.

14.As per the investigation conducted by the Enforcement

Directorate, they relied on the statements of accused as well as 73 Crl.M.P.No.306/2022 witnesses recorded under Section 50 of PMLA. The prosecution has relied on the statement of Sri Tummala Ranga Rao recorded under

Section 50(2) and (3) of PMLA, 2002 in addition to the 164 Cr.P.C.

statement made by him before the Magistrate, wherein he stated that he has received Rs.96.01 crores in cash from the buyers of villa plots as identified by CBI and those amounts were given to Sri Koneru

Rajendra Prasad and to Sri N. Sunil Reddy as directed by Sri Koneru

Rajendra Prasad; he further stated that he made payments to EMGF of Rs.1.44 crores on account of advance payments for booking of plots as per the instruction of Sri Koneru Rajendra Prasad and those amounts paid are partly from 4% commission received by them or from loan taken from third parties. He further stated that he received

Rs.1.75 crores from United Port Services and Rs.1.50 Crores from

Maheswari Brothers in the form of loan partly towards advance for booking of plots to meet the targets fixed by M/s. Emaar Properties

PJSC and the amounts are yet to be repaid and Sri Koneru Rajendra

Prasad has helped him in getting those finances. He further stated that he gave an amount of Rs.2.50 crores for purchase of land situated at Bikal & Mallikharjunagiri Villages, Marpalli Mandal, Ranga

Reddy District, Telangana State for Sri Koneru Rajendra Prasad and his family members with his assistance and he has paid the said amount from the sale proceeds received from the villa plot buyers to the 74 Crl.M.P.No.306/2022 brokers of the land as per the instructions of Sri Koneru Rajendra

Prasad and an amount of Rs.2.50 crores was paid to the land owners from the extra amount collected from villa plot buyers i.e., from

Rs.96.01 crores. He further stated that an amount of Rs.2.40 crores (approx) might have been received by M/s. Stylish Holmes from buyers of villa plots as 4% commission. He further stated that the land to an extent of 2057 Sq.Yd. situated in Manikonda Jagir Village,

Rajendra Nagar Mandal, Ranga Reddy District is held in the name of

M/s. Stylish Holmes purchased with an investment of

Rs.1,11,20,450/-.

15.The prosecution also relied on the statement of Sri B.P.

Acharya, recorded under Section 50(2) and (3) of PMLA, 2002, wherein he stated that he has attended the board of EHTPL on 20.12.2005. The prosecution also relied on the statement of Sri G.V.

Vijay Raghav, recorded under Section 50(2) and (3) of PMLA, 2002, wherein he stated that as there was a need for funds into the projects, deed was entered into with EMGF and accordingly EMGF started investing into the integrated project and that the total investment in

Golf Course and township projects was Rs.400 Crores (approx.). He further stated that he is the authorised signatory of EMGF and EHTPL as per board resolutions and that he was reporting to Mr. Srikant Joshi, 75 Crl.M.P.No.306/2022

CEO. He further stated that EHTPL entered into Agency agreement for sale of plots in January 2005 with M/s. Stylish Holmes Pvt. Ltd. and

EHTPL entered into Development agreement for development of

Township Project in November 2006 with EMGF. No written approval from APIIC was taken by EHTPL for the agreements entered with EMGF or M/s. Stylish Holmes. He further stated that as per the Development

Agreement-cum-GPA entered into between EHTPL and EMGF, the consideration for the development of township project was revenue share and EHTPL to get 25% on gross revenue of the project and balance 75% of gross revenue to EMGF. The revenue share mentioned as Rs.45 Crores (approx.) as on 31.03.2011 as per balance sheet, however no amount has been transferred by EMGF to EHTPL upto 31.03.2011. APIIC was also not paid dividends as the balance sheets were not finalized due to APIIC non-approval. He further stated that he was transferred to EMGF in March 2007 and worked as

Finance Head (South) of EMGF. He further stated that the interested parties approached Mr. Srikant Joshi, CEO of EMGF and based on his instructions, they issued allotment letters or MOU to such allotted parties.

16.The prosecution also relied on the statement of Sri Koneru

Rajendra Prasad, recorded under Section 50(2) and (3) of PMLA, 2002, 76 Crl.M.P.No.306/2022 wherein he stated that he was invited by Emaar, Dubai to be a nominee Director in EHTPL towards end of 2004, which he accepted and continued to be a Director till 2010. He further stated that the price of Rs.5000/- per sq.yd. was fixed by Emaar Properties, Dubai being the majority shareholder in EHTPL and was approved by board of EHTPL and he has signed the balance sheets of EHTPL for the years 2005-06 and 2006-07 under Company Law as legal formality. He further stated that selling of villa plots in excess of Rs.5000/- per

Sq.Yd. by Sri Tummala Ranga Rao of M/s. Stylish Holmes was never brought to the knowledge of EHTPL Board; that Sri Tummala Ranga

Rao has never paid any amount to him in cash or cheque and he is not aware of any transactions between Sri N. Sunil Reddy and

Sri Tummala Ranga Rao and he is not aware of the fact that

Sri Tummala Ranga Rao has collected Rs.96.01 crores excess of cash from villa plot buyers over and above the agreed price of Rs.5000/- per Sq.Yd. except during the investigation proceedings by CBI. He further stated that he has never advised Sri Tummala Ranga Rao to establish M/s. Stylish Holmes or to collect extra amount from villa plot buyers; and that he has not instructed Sri Tummala Ranga Rao to pay

Rs.2.5 crores to farmers from excess amount collected; that his family members have purchased some lands in Medak District.

77 Crl.M.P.No.306/2022

17.The prosecution also relied on the statement of Sri Srikanth P

Joshi, recorded under Section 50(2) and (3) of PMLA, 2002, wherein he stated that he joined EMGF in April 2006 as CEO (South) and from

April, 2009 he worked as CEO of EMGF and he attended the board meeting dt.21.09.2006. He know about the past agreements entered by Emaar and APIIC including agreement dt.29.01.2005. He further stated that EMGF has redesigned the integrated project where the plots were reduced from 350 to 135 and apartments were increased from 1000 to 3500. He further stated that the plots were sold through

M/s. Stylish Holmes and originally cheques were received by EHTPL and after the Development Agreement, they were received by EMGF as per the agreement. He further stated that Sri Tummala Ranga Rao and Sri K. Rajendra Prasad are the persons having control on the sale of villa plots; and Mr. T. Ranga Rao was the main person responsible for sales and collections.

18.The prosecution also relied on the statement of Sri Rakshit

Jain, recorded under Section 50(2) and (3) of PMLA, 2002, wherein he stated that the entire development of Boulder Hills Project of EHTPL was transferred in the name of EMGF vide Joint Development

Agreement dt.03.11.2006 and subsequent agreements. The plots cancelled after sale, on 04.10.2010 were in possession and ownership 78 Crl.M.P.No.306/2022 of EHTPL. As per the Development Agreement dt.03.11.2006, the sale of plots after 03.11.2006 was still on behalf of EHTPL and not EMGF.

Out of 134 plots, 91 plots were sold by M/s. Stylish Holmes, 9 plots by

EMGF and remaining 34 plots were unsold and are with EHTPL. EMGF has collected Rs.67.87 Crores and total collection is Rs.73.20 Crores including EMGF and EHTPL from sale of villa plots. He further stated that 3 completed villas were sold by EMGF for Rs.21.36 crores.

19.The prosecution also relied on the statement of Sri Challa

Suresh, recorded under Section 50(2) and (3) of PMLA, 2002, wherein he stated that he purchased villa plot No.A-28 of 1449 Sq.Yds. at the rate of Rs.5000 per Sq.Yd. in Boulder Hills, Hyderabad in the name of

M/s. Serenity Homes Pvt. Ltd. from EHTPL. Rs.5000/- per Sq.Yd. is paper rate and whereas Sri Koneru Rajendra Prasad and Sri T. Ranga

Rao of M/s. Stylish Holmes asked for excess amount of Rs.9000 per

Sq.Yd. over and above the documented price which works out at

Rs.72,50,000/-. He further stated that Sri Koneru Rajendra Prasad has invested USD 140,000 in Dubai property market with Mr. Madhu

Koneru.

20.The prosecution also relied on the statement of Sri Koneru

Madhu, recorded under Section 50(2) and (3) of PMLA, 2002, wherein he stated that he is an NRI, residing in Dubai since 1992 and engaged 79 Crl.M.P.No.306/2022 in the business of real estate, trading and mining. In 2011 one Mr.

Parthasarathy, an NRI, who wanted to invest in UAE real estate market has sent an amount of USD 2,50,000 approx. to his foreign currency account in India in 2011, however, later he withdrawn that amount and hence it was returned. He further stated that Sri Challa

Suresh, a resident of USA, has invested a sum of USD 1,40,000 approx. in 2005 and the same is still under investment at his end.

21.The prosecution also relied on the statement of Sri Kesava

Shenoy, recorded under Section 50(2) and (3) of PMLA, 2002, wherein he stated that he wanted to purchase property in Kerala, but the plots were allotted by EHTPL. He further stated that he has not applied for any money or for any loan to M/s. Braggat Vyapar Pvt. Ltd. and he do not know why Braggat Vyapar has deposited such amount into their account.

22.The prosecution also relied on the statement of Sri N. Sunil

Reddy, recorded under Section 50(2) and (3) of PMLA, 2002, wherein he stated that M/s. Southend Projects (formerly known as M/s. Sunil

Projects) was incorporated by him and his father as Directors during 2005 and later they sold out the company in 2009 to Sri Narapa

Manohar Reddy. He further stated that he do not know about the investments of Rs.45.21 Crores received by M/s. Southend Projects 80 Crl.M.P.No.306/2022 during 2009 and 2010 as he sold out the company to Sri Narapa

Manohar Reddy. He further stated that he does not have any association either with Sri Tummala Ranga Rao or with Sri Koneru

Rajendra Prasad and that he had not received any amounts from them.

23.The prosecution also relied on the statement of

Sri S. Madhusudhan Rao, recorded under Section 50(2) and (3) of

PMLA, 2002, wherein he stated that 15 unsold plots were available with EHTPL were allotted to 15 persons and later the agreements were cancelled.

24.The prosecution also relied on the statement of Sri V. Vijay

Sai Reddy, who has given statement on behalf of Sri N. Manohar

Reddy under Section 50(2) and (3) of PMLA, 2002, wherein he stated that Sri Narapa Manohar Reddy has acquired M/s. Southend Projects,

Hyderabad, by investing an amount of Rs.8,98,20,000/- for acquiring

Rs.55,20,000/- worth of shares from Sri N. Sunil Reddy and his family members in October 2010. He further stated that the bank account in the name of M/s. Southend Projects in Axis Bank, vide A/c.

No.909020036183180 was opened by the original promoters i.e. Sri

N. Sunil Reddy and he is the authorized signatory for the account; even after taking over the company by Narapa Manohar Reddy, he did 81 Crl.M.P.No.306/2022 not replace Sri N. Sunil Reddy from being authorized signatory and hence all the transactions subsequent to his taking over, i.e., from

October 2009, have been done by Sri N. Sunil Reddy under the instructions of Sri Narapa Manohar Reddy. He further stated that the account with OBC, Jubilee Hills vide A/c. No.11101010029260 of M/s.

Southend Projects was opened and being operated by Sri Narapa

Manohar Reddy and those two accounts are not active at present, Sri

Narapa Manohar Reddy has opened an account in Andhra Bank, Jaya

Nagar, Bangalore bearing A/c. No.027311100002467; and for the purpose of land acquisitions, Sri Narapa Manohar Reddy mobilized

Rs.45.21 crores funds from various investors. He further stated that there are transactions of transfer of amounts between Shri Sunil

Reddy through his personal account and Bloomery Steel Industries

Pvt. Ltd., M/s. Bluesky Enterprises Pvt. Ltd., M/s. Megallam Enterprises

Pvt. Ltd., M/s. Amydale Info Tech Pvt. Ltd. and M/s. Aramid Textiles

Pvt. Ltd. An amount of Rs.45.21 crores received by M/s. Southend

Projects and Foundations Pvt. Ltd. from various companies as equity investment in M/s. Southend Projects and the shares have been allotted to the respective investors on premium and hence the refund of above said amount cannot be made as per the Companies Act, 1956 and the parties are at liberty to sell the shares to any third party.

He further stated that M/s. Southend Projects has given an advance of 82 Crl.M.P.No.306/2022

Rs.36.82 Crores to M/s. Asara Theme Projects Pvt. Ltd., between

December 2009 and March 2010 towards purchase of land in

Hyderabad; that the sale of land did not take place and the said amount was also not returned to them. Neither M/s. Southend Projects nor Sri Narapa Manohar Reddy has complained to any authorities regarding non-return of advance amount of Rs.36.82 crores; and that an amount of Rs.20 crores was reflected in the statement of Assets &

Liabilities of M/s. Southend Projects is lying in the form of Fixed

Deposits in Andhra Bank, Bangalore.

25.The prosecution also relied on the statement of Sri Indukuri

Syam Prasad Reddy, recorded under Section 50(2) and (3) of PMLA, 2002, wherein he stated that M/s. Walden Properties Pvt. Ltd., a

Hyderabad based real-estate company promoted by him and his wife, intended to buy 4 Acres 01 Guntas of land at Rayadurg, Ranga Reddy

District and paid advances to the land owners and registered the said property in the name of M/s. Asara Theme Projects Pvt. Ltd.

M/s. Southend Projects represented by Sri Narapa Manohar Reddy, wanted to buy the land parcel of 04 Acres 01 Guntas at Rayadurg,

Hyderabad owned by M/s. Asara Theme Projects Pvt. Ltd., at the rate of Rs.16 Crores per Acre and had paid an advance of Rs.36.82 Crores via RTGS during December-2009 to March-2010. He further stated 83 Crl.M.P.No.306/2022 that M/s. Southend Projects could not pay the balance amount even after 2 years of MoU due to downfall in real estate market in

Hyderabad, they were forced to sell the said property to M/s. Sandhya

Hotels Pvt. Ltd. during 2011-12 for lesser consideration of Rs.36.15 crores, for which M/s. Asara Theme Projects Pvt. Ltd. had to suffer a loss of Rs.19.82 crores. He further stated that he does not have any association or acquaintance with Sri N. Sunil Reddy, but as per the advice of Sri Narapa Manohar Reddy of M/s. Southend Projects and

Foundations Pvt. Ltd., they have paid Rs.1.5 crores to Sri N. Sunil

Reddy on 03.02.2012 from bank account of M/s. Asara Theme

Projects’ current Account No.860920110000198 of Bank of India.

3,62,06,155 Nos. of shares held by him in his personal capacity in

M/s. Indu Projects Ltd.

26.The prosecution also relied on the statement of Sri Koneru

Pradeep, recorded under Section 50(2) and (3) of PMLA, 2002, wherein he stated that he is having a land parcel of 36.14 acres of land at Bilkal & Mallikharjunagiri Villages, Marpalli Mandal, Ranga

Reddy District, Telangana State and the same was purchased with an investment of Rs.14,09,865/- from the source of his salary savings/ rent/sale of shares/gifts etc.

84 Crl.M.P.No.306/2022

27.The prosecution also relied on the statement of Sri Shravan

Gupta, recorded under Section 50(2) and (3) of PMLA, 2002, wherein he stated that he was the Director and Promoter of MGF group and he was the Managing Director of M/s. Emaar MGF Land Ltd. from 2005 to 2015. In the year 2006, EHTPL came with a proposal of investing some amount into the integrated project and Sri Srikanth Joshi, CEO,

EMGF made presentation to EMGF board and board authorized him to negotiate and enter into a Development Agreement with EHTPL; that the Development Agreement dt.03.11.2006, Development

Agreement-cum-GPA dt.25.07.2007 and addendum dt.23.07.2008 were entered between EMGF and EHTPL. He further stated that he has no knowledge that there was any stipulation to maintain the share of

APIIC at 26% at all times and he stated that he does not have any knowledge about 18 no’s plots blocked by EMGF, which were cancelled at a later date. He further stated that he is not aware of the facts about numbers regarding the amounts collected by EMGF from the sale of villas and villa plots. He further stated that an amount of

Rs.67.87 crores collected by EMGF is mentioned in the balance sheet of EMGF and that he was not aware that an amount of Rs.96.01 crores has been collected by M/s. Stylish Holmes from villa plot buyers in addition to the documented price of Rs.5,000/- and he is also not aware that an amount of Rs.6.86 crores has been collected by Sri GV 85 Crl.M.P.No.306/2022

Vijay Raghav from villa plot buyers in addition to the documented price.

28.The investigation revealed that in pursuance of the conspiracy among the accused, they have violated the conditions stipulated in the various development agreements with a view to deceive the share of APIIC and inducted several persons for selling the villa plots etc. and collected extra amount other than the rate fixed by EHTPL. As per the statement of Tummala Ranga Rao, excess amount of Rs.96.01 crores were collected and out of which, he handed over some amount to Sri N. Sunil Reddy and remaining to

Sri Koneru Rajendra Prasad and an amount of USD 1,40,000 has been received by Sri Madhu Koneru in Dubai from one of the villa plot buyers namely Sri Challa Suresh and Sri Challa Suresh has confirmed the same in his statement given under Section 50 of PMLA 2000.

Another amount of USD 2,50,000 has been received by Sri Koneru

Madhu from another villa plot buyer namely Sri PS Parthasarathy on 09.08.2007, however the same was returned to Sri PS Parthasarathy on 14.10.2011 mentioning as ‘repayment of loan’. The investigation further revealed that Sri Tummala Ranga Rao has collected Rs.2.50 crores out of proceeds of crime i.e. Rs.96.01 crores and purchased the land in the name of Sri Koneru Pradeep.

86 Crl.M.P.No.306/2022

29.The prosecution further contended that Sri N. Sunil Reddy along with his father floated a company by name M/s. Sunil Projects and Foundations Pvt. Ltd. on 10.05.2006 and w.e.f. 10.10.2009, Sri

Narapa Manohar Reddy and his wife Smt. Narapa Sarada Reddy were appointed as Directors. The name of the company was changed to

M/s. Southend Projects and Foundations Pvt. Ltd. from 25.01.2010 and that Sri N. Sunil Reddy and his father have resigned from the company w.e.f. 01.10.2010. M/s. Southend Projects and Foundations

Pvt. Ltd. has received funds of Rs.45.21 crores from 11 Companies.

The investigation conducted by the CBI revealed that existence of 11

Companies was in questions and those companies were floated only for the purpose of transfer of funds and though Sri N. Sunil Reddy contended that he sold the company to Sri N. Manohar Reddy during 2009, he continued to transact bank accounts.

30.The prosecution contended that the total benefit accrued by

EHTPL, EMGF on account of criminal conspiracy is Rs.167.29 crores, out of which Rs.96.01 crores cash component collected by M/s. Stylish

Holmes, Rs.64.41 crores in the form of Profit Before Tax (PBT) as per the books of account of EMGF and Rs.6.86 crores as cash component collected by EMGF, totaling to Rs.71.27 crores, since the said amount is proceeds of crime.

87 Crl.M.P.No.306/2022

31.The investigation also revealed that 11 companies do not have any other dealing except with M/s. Southend Projects other than making such investment. An amount of Rs.1.50 crores was transferred to Sri N. Sunil Reddy on 03.02.2012 from the account of M/s. Asara

Theme Projects Pvt. Ltd. An amount of Rs.36.82 crores was transferred from M/s. Southend Projects to M/s. Asara Theme Projects

Pvt. Ltd. for purchase of land, however, no land was registered in the name of M/s. Southend Projects. The prosecution contended that a sum of Rs.20 crores as reflected in the statement of Assets and

Liabilities of M/s. Southend Projects is lying in the form of Fixed

Deposits as proceeds of crime and Rs.25.21 crores valued shares were held in the name of Sri Indukuri Syam Prasad Reddy as investment in M/s. Indu Projects Ltd. As per the prosecution, an amount of Rs.45.21 is with Sri N. Sunil Reddy of M/s. Southend

Projects and Foundations Pvt. Ltd. and the balance amount of proceeds of crime of Rs.50.80 crores received by Shri Koneru

Rajendra Prasad.

32.The prosecution contended that as per available record Sri

BP Acharya, EHTPL, Shri Koneru Rajendra Prasad, EMGF, M/s. Stylish

Holmes, Shri Tummala Ranga Rao, Sri Koneru Madhu, M/s. Southend

Projects, Sri N. Sunil Reddy, M/s. Asara Theme Projects, Sri Koneru 88 Crl.M.P.No.306/2022

Pradeep, Sri GV Vijay Raghav and Sri Srikanth P Joshi are involved in the scheduled offence punishable under Section 120-B and 420 of IPC.

33.M/s Southend Projects & Foundations Pvt. Ltd./A-4 has received funds of Rs.45.21 crore from the following 11 companies, for which date of incorporation and dates of transfer of funds are detailed below:

Sl.Date ofDate of ReceiptAmount Company Name No.Incorporationof fundsreceived 10.11.20092,30,00,000 M/s. Amygdale Info Tech

1.16.10.2009 Private Limited20.11.200925,00,000 23.12.200950,00,000 09.11.200975,00,000 12.11.20091,50,00,000 17.11.200975,00,000 M/s. Aramid Textiles Private19.11.200970,00,000

2.14.10.2009 Limited 25.11.20091,00,00,000 27.11.200950,00,000 10.12.200940,00,000 23.12.200915,00,000 16.01.20101,75,00,000 M/s. Bloomery Steel

3.27.10.2009 Industries Private Limited20.01.20101,25,00,000 21.01.201040,00,000 09.11.20091,50,00,000 M/s. Bluesky Enterprises

4.20.10.2009 Private Limited19.11.20091,10,00,000 27.11.20091,00,00,000 M/s. Chakri Industries 07.12.200955,00,000

5.25.06.2003 Private Limited 10.12.200960,00,000

6.M/s. Invar Steels Private 22.10.200926.12.200950,00,000 89 Crl.M.P.No.306/2022 24.12.200940,00,000 11.10.201050,00,000 Limited 11.10.201054,00,000 12.10.201056,00,000 13.10.200975,00,000 14.10.200975,00,000 15.10.20092,00,00,000 21.10.20091,10,00,000 M/s. Megallan Enterprises Not registered 7. Private Limitedwith ROC22.10.20092,40,00,000 22.10.20091,50,00,000 05.12.20091,90,00,000 16.12.20091,00,00,000 21.12.200950,00,000 25.11.200975,00,000 09.11.200975,00,000 17.11.20092,80,00,000 M/s. Pashmina Textiles 19.11.200965,00,000

8.21.10.2009 Private Limited 25.11.200975,00,000 21.12.200915,00,000 23.12.200950,00,000 16.01.201050,00,000 10.11.200920,00,000 M/s. Punarvasu Enterprises

9.12.10.2009 Private Limited20.11.20091,05,00,000 16.01.201030,00,000 23.12.20091,00,00,000 M/s. Scanner Systems &

10.27.10.2009 Technology Private Limited06.10.201050,00,000 06.10.201096,00,000

11.M/s. Etread.Com Private 10.05.200013.10.20093,00,00,000 Limited Total45,21,00,000 90 Crl.M.P.No.306/2022

34.Letter dt.16.01.2014 received from Oriental Bank of Commerce,

Jubilee Hills Branch, providing the bank KYC documents and account statement of A/c No.11101010029260 of M/s Southend Projects &

Foundations Pvt. Ltd. revealed that the above said amounts of

Rs.45.21 crore has been received into M/s Southend Projects on respective dates. As per the CBI charge sheets dt.01.02.2012 and 23.04.2012, Rs.96.01 crore was collected by Sri Tummala Ranga Rao of M/s. Stylish Holmes. Sri Tummala Ranga Rao in his depositions made under Section 164 of Cr.P.C. and also under Section 50 of PMLA, 2002 stated that he has handed over the total amount either to Sri

N.Sunil Reddy/A-11 or to Sri Koneru Rajendra Prasad/A-7 and the ratio of amounts are not known to him. The charge sheets further revealed that Mr. N.Sunil Reddy/A-11 has received Rs.45.21 crore and invested the same through 11 different companies into M/s Southend

Projects/A-4 during 2009-10.

35.CBI investigation did not reveal the whereabouts of the 11 companies, which invested Rs.45.21 crore in M/s Southend Projects/

A-4, as these companies did not exist at the given addresses during the relevant period. During the investigation under PMLA, 2002 also no traces of these companies at the given addresses are noticed. To ascertain the source of funds and reasons for the investment in M/s 91 Crl.M.P.No.306/2022

Southend Projects/A-4, summons were issued to the authorized persons of these 11 companies which invested in M/s Southend

Projects/A-4, at the addresses available on record as per Ministry of

Corporate Affairs and also from the KYC documents received from the concerned banks. Investigation under PMLA, 2002 also revealed that most of these companies were incorporated with nominal amount of

Share Capital just a few days prior to the dates of their investments into M/s. Southend Projects/A-4. From the data retrieved from

Registrar of Companies, Ministry of Corporate Affairs and scrutiny of the certificates of incorporation of these 11 companies revealed that some Directors are common in 3-4 companies.

36.Scrutiny of the bank account statements and other documents of these 11 companies revealed that the following companies have some money transactions with Sri N. Sunil Reddy/A-11 as under.

Name of theBank Account No & BankAmount paid byAmount companySri N.Sunilreceived by Sri ReddyN.Sunil Reddy (Rs.)(Rs.) M/s Aramid Textiles A/c No. 909020038292893 03,50,00,000 Pvt. Ltd.of Axis Bank, Banjara Hills. M/s Bluesky A/c No. 909020038789151 5,72,00,00070,00,000 Enterprises Pvt. of Axis Bank, Banjara Hills. Ltd. M/s Megallan A/c No. 33420001000399011,50,00,0001,50,00,000 Enterprises Pvt. of Karnataka Bank, Raj Ltd.Bhavan Road. M/s Amygdale A/c No. 04921200000213 of1,92,00,0000 92 Crl.M.P.No.306/2022

Infotech Pvt. Ltd.DCB Bank, Madhapur.

All these transactions confirm that Sri N.Sunil Reddy/A-11 has dealings with these companies in his personal capacity in addition to their investments in M/s Southend Projects/A-4. These 11 companies do not have any other dealings with M/s Southend Projects/A-4 other than making such investment. Later these investments of Rs.45.21 crore were converted into Share Capital amount with high premium as against the paid up capital of Rs.10.73 crore. Sri V.Vijay Sai Reddy, authorized representative of M/s Southend Projects/A-4, in his statement dt.12.08.2014, stated that the shareholders have no right to seek refund of their Investment of Rs.45.21 crore and they can only transfer their shares. These transactions revealed that Sri N. Sunil

Reddy/A-11 had received Rs.45.21 crore in cash from Sri Tummala

Ranga Rao and invested the same in M/s Southend Projects/A-4 through these 11 companies floated for the said purpose.

37.M/s Southend Projects/A-4 received Rs.45.21 crore from Sri

Tummala Ranga Rao through 11 dummy companies. From the said amount, M/s Southend Projects/A-4 further transferred Rs.36.82 crore to M/s Asara Theme Projects Pvt. Ltd./A-5 said to be advance for purchase of land. However, no land was registered In the name of M/s

Southend Projects/A-4.

93 Crl.M.P.No.306/2022

38.Thus, the following properties are identified in relation to the above said proceeds of crime/such value of proceeds of crime received by Sri N.Sunil Reddy/A-11 totaling to Rs.45.21 crore in terms of Section 2(1)(u) of PMLA, 2002.

i. Rs.20,00,00,000/- of FD's with Andhra Bank, Bangalore, pertaining to M/s Southend Projects & Foundations Pvt. Ltd. as Proceeds of Crime.

ii.Rs.25,21,00,000/- valued Shares of Sri Indukuri Syam Prasad Reddy (who is also Director in M/s Asara Theme Projects Pvt. Ltd.) invested in M/s Indu Projects Ltd. vide ISIN No. INE367101018 as value of any such property as defined under Section 2(1)(u) of PMLA, 2002.

39.Investigation under PMLA, 2002 revealed that part of excess amount collected from villa plot buyers has flown into EHTPL/A-1 itself by way of advance for booking plots and also by other means, through Sri Koneru Rajendra Prasad/A-7, for the development of the project. Thus it is evident that the project is benefited with excess amount collected and EHTPL/A-1 and EMGF/A-2 are the ultimate beneficiaries of the excess amount collected from the Villa Plot buyers, which was not shown in the books of accounts of EHTPL/A-1 and hence cheated APIIC by depriving its due share in the sale of villa plots. Hence the unsold Villa Plots available with EHTPL/A-1 and also 94 Crl.M.P.No.306/2022

Open land of EHTPL/A-1 is considered as Proceeds of Crime for attachment as specified below:

i. 14 unsold Villa Plots available with EHTPL admeasuring 14624 Sq. Yds. Valued at Rs.36,56,00,000/-.

ii. Open land of 4.80 Acres in EHTPL valued at Rs.58,08,00,000/- (attachments to the extent value of Rs.13,09,07,000/- as value of any such property as defined under Section 2(1)(u) of PMLA, 2002.

40.M/s Stylish Holmes/A-3 was floated for the benefit of EHTPL/A-1 with a sole intention of depriving the share of APIIC and player key role in collection and distribution of Rs.96.01 crore. Therefore the following property held by M/s Stylish Holmes/A-3 is considered as

Proceeds of Crime.

i. Plot measuring 2057 Sq.Yd. in the name of M/s Stylish Holmes valued at Rs.1,02,85,000/- as value of any such property as defined under Section 2(1)(u) of PMLA, 2002.

41.Sri Tummala Ranga Rao (A-10) has paid Rs.2.50 crore for purchase of 36.14 Acres of lands in Bilkal and Mallikarjunagiri Villages, in the name of Sri Koneru Pradeep/A-13, S/o Koneru Rajendra Prasad, out of the amount of Rs.96.01 crore. Therefore, the said property is also considered as Proceeds of Crime and attached.

i. Land of 36.14 Acres situated at Bilkal and Mallikarjunagiri Villages, Marpalle Mandal, Ranga Reddy District, held in 95 Crl.M.P.No.306/2022 the name of Pradeep Koneru valued at Rs.12,83,000/- as Proceeds of Crime

42.The complainant found that the properties mentioned above valued at Rs.167.29 crore are proceeds of crime in the form of movable and immovable properties. The Immovable properties of

Proceeds of Crime and in the form of villa plots and land are meant for sale to third parties. Some part of the said Proceeds of Crime of

Rs.96.01 crore was initially collected in cash and concealed without reflecting in the books of accounts of EHTPL/EMGF, subsequently shared partly by Sri Koneru Rajendra Prasad/A-7 who further invested in purchase of land and also in booking of Villa Plots in EHTPL/A-1.

Part of these Proceeds of Crime was shared to Sri N.Sunil Reddy/A-11, who is not at all connected to the activities of EHTPL/EMGF, who further invested the same into his own company M/s Southend

Projects/A-4 through 11 dummy companies and such transfer of amounts was reflected as share application money with premium amount. Further these amounts are transferred to M/s Asara Theme

Projects Pvt. Ltd./A-5 stating for 'purchase of land' and no land purchase was done. Sri N.Sunil Reddy/A-11 also received Rs.1.50 crore from M/s Asara Theme Projects/A-5 to his personal account, which evidences that the Proceeds of Crime earned by Sri N.Sunil

Reddy/A-11 has been subjected to many transfers. Thus it is evident 96 Crl.M.P.No.306/2022 that, the total proceeds of crime have been subjected to many transfers and dealings to project them as untainted property.

43.The complainant apart from the investigation conducted by CBI, they have also mentioned that the CBI investigation did not reveal the whereabouts of 11 companies, which invested Rs.45.21 crore in M/s.

Southend Projects/A-4, as these companies did not exist at the given addresses during the relevant period. The complainant investigated the said aspect which was left over by the CBI and issued summons to the 11 companies which invested in M/s. Southend Projects/A-4 at the addresses available on record as per Ministry of Corporate Affairs and also from the KYC documents received from the concerned banks.

44.The investigation conducted by the complainant revealed that most of those companies were incorporated with nominal amount of share capital just a few days prior to the dates of their investments into M/s Southend Projects/A-4. From the data retrieved from

Registrar of Companies, Ministry of Corporate Affairs and scrutiny of the certificates of incorporation of these 11 companies revealed that some Directors are common in 3 to 4 companies and the investigating officer has collected bank account statements of those companies.

97 Crl.M.P.No.306/2022

45.The documents relied by the complainant/ED shows that a

Development Agreement dt.03.11.2006 was entered between the petitioner/A-2 and Accused No.1 pursuant to the petitioner/A-1's

Board Resolution dt.21.09.2006 with revenue sharing ratio of 75:25 for development of villa projects in Accused No.1 which resulted into reduction of APIIC's share to 6.5% from 26%. The petitioner/A-2 neither developed villa project nor constructed any villas and the petitioner/A-2 has booked 18 Villa Plots in the names of 10 companies at Rs.5,000/- per sq.yd., with an intention of selling them at higher price at a later date.

46.The complainant/ED contended that the prevailing market rate is Rs.50,000/- per sq.yd. The petitioner/A-2 has sold 16 Villa Plots at much higher rate during 2009-10 without any document and collected an amount of Rs.6.86 crore from two of the buyers. The petitioner/A-2 also collected Rs.71.27 crore from sale of Villa Plots. The acts of the petitioner/A-2 resulted in loss of Rs.43.50 crore to APIIC.

47.The documents relied by the complainant/Enforcement

Directorate and the documents relied by the CBI and the statements recorded by the complainant/ED under Section 50(2)&(3) of PMLA, 2002, and also the statements made by the approver i.e. Accused

Nos.3 and 10 clearly shows that the complainant/ED had a prima facie 98 Crl.M.P.No.306/2022 case. The statement of the approver appears to be corroborating with the documents relied by the complainant as well as CBI.

48.It is to be noted that judgment of the Hon'ble Supreme Court in

Vijay Madanlal Choudhary and others v. Union of India and others [2022 SCC OnLine SC 929], wherein the Hon'ble Supreme Court held the validity of the statement recorded by the prosecution under

Section 50(2) & (3) of PMLA and also gave detailed guidelines about

Section 24 of PMLA, as under:

(i) The question as to whether some of the amendments to the Prevention of Money-laundering Act, 2002 could not have been enacted by the Parliament by way of a Finance Act has not been examined in this judgment. The same is left open for being examined along with or after the decision of the Larger Bench (seven Judges) of this Court in the case of Rojer Mathew [(2020) 6 SCC 1].

(ii) The expression “proceedings” occurring in Clause (na) of Section 2(1) of the 2002 Act is contextual and is required to be given expansive meaning to include inquiry procedure followed by the Authorities of ED, the Adjudicating Authority, and the Special Court.

(iii) The expression “investigation” in Clause (na) of Section 2(1) of the 2002 Act does not limit itself to the matter of investigation concerning the offence under the Act and is interchangeable with the function of “inquiry” to be undertaken by the Authorities under the Act.

(iv) The Explanation inserted to Clause (u) of Section 2(1) of the 2002 Act does not travel beyond the main provision predicating tracking and reaching upto the property derived or obtained directly or indirectly as a result of criminal activity relating to a scheduled offence.

(v) (a) Section 3 of the 2002 Act has a wider reach and captures every process and activity, direct or indirect, in dealing with the proceeds of crime and is not limited to the happening of the final act of integration of tainted property in the formal economy. The Explanation inserted to Section 3 by way of amendment of 2019 does not expand the purport of 99 Crl.M.P.No.306/2022

Section 3 but is only clarificatory in nature. It clarifies the word “and” preceding the expression projecting or claiming as “or”; and being a clarificatory amendment, it would make no difference even if it is introduced by way of Finance Act or otherwise.

(b) Independent of the above, we are clearly of the view that the expression “and” occurring in Section 3 has to be construed as “or”, to give full play to the said provision so as to include “every” process or activity indulged into by anyone. Projecting or claiming the property as untainted property would constitute an offence of money-laundering on its own, being an independent process or activity.

(c) The interpretation suggested by the petitioners, that only upon projecting or claiming the property in question as untainted property that the offence of Section 3 would be complete, stands rejected.

(d) The offence under Section 3 of the 2002 Act is dependent on illegal gain of property as a result of criminal activity relating to a scheduled offence. It is concerning the process or activity connected with such property, which constitutes the offence of money-laundering. The Authorities under the 2002 Act cannot prosecute any person on notional basis or on the assumption that a scheduled offence has been committed, unless it is so registered with the jurisdictional police and/or pending enquiry/trial including by way of criminal complaint before the competent forum. If the person is finally discharged/acquitted of the scheduled offence or the criminal case against him is quashed by the Court of competent jurisdiction, there can be no offence of money-laundering against him or any one claiming such property being the property linked to stated scheduled offence through him.

(vi) Section 5 of the 2002 Act is constitutionally valid. It provides for a balancing arrangement to secure the interests of the person as also ensures that the proceeds of crime remain available to be dealt with in the manner provided by the 2002 Act. The procedural safeguards as delineated by us hereinabove are effective measures to protect the interests of person concerned.

(vii) The challenge to the validity of sub-section (4) of Section 8 of the 2002 Act is also rejected subject to Section 8 being invoked and operated in accordance with the meaning assigned to it hereinabove.

(viii) The challenge to deletion of proviso to sub-section (1) of Section 17 of the 2002 Act stands rejected. There are stringent safeguards provided in Section 17 and Rules framed thereunder. Moreover, the pre-condition in the proviso to Rule 100 Crl.M.P.No.306/2022 3(2) of the 2005 Rules cannot be read into Section 17 after its amendment. The Central Government may take necessary corrective steps to obviate confusion caused in that regard.

(ix) The challenge to deletion of proviso to sub-section (1) of Section 18 of the 2002 Act also stands rejected. There are similar safeguards provided in Section 18. We hold that the amended provision does not suffer from the vice of arbitrariness.

(x) The challenge to the constitutional validity of Section 19 of the 2002 Act is also rejected. There are stringent safeguards provided in Section 19. The provision does not suffer from the vice of arbitrariness.

(xi) Section 24 of the 2002 Act has reasonable nexus with the purposes and objects sought to be achieved by the 2002 Act and cannot be regarded as manifestly arbitrary or unconstitutional.

(xii) (a) The proviso in Clause (a) of sub-section (1) of Section 44 of the 2002 Act is to be regarded as directory in nature and this provision is also read down to mean that the Special Court may exercise judicial discretion on case-to-case basis.

(b) We do not find merit in the challenge to Section 44 being arbitrary or unconstitutional. However, the eventualities referred to in this section shall be dealt with by the Court concerned and by the Authority concerned in accordance with the interpretation given in this judgment.

(xiii) (a) The reasons which weighed with this Court in Nikesh Tarachand Shah [(2018) 11 SCC 1] for declaring the twin conditions in Section 45(1) of the 2002 Act, as it stood at the relevant time, as unconstitutional in no way obliterated the provision from the statute book; and it was open to the Parliament to cure the defect noted by this Court so as to revive the same provision in the existing form.

(b) We are unable to agree with the observations in Nikesh Tarachand Shah [(2018) 11 SCC 1] distinguishing the enunciation of the Constitution Bench decision in Kartar Singh [(1994) 3 SCC 569]; and other observations suggestive of doubting the perception of Parliament in regard to the seriousness of the offence of money-laundering, including about it posing serious threat to the sovereignty and integrity of the country.

(c) The provision in the form of Section 45 of the 2002 Act, as applicable post amendment of 2018, is reasonable and has direct nexus with the purposes and objects sought to be 101 Crl.M.P.No.306/2022 achieved by the 2002 Act and does not suffer from the vice of arbitrariness or unreasonableness.

(d) As regards the prayer for grant of bail, irrespective of the nature of proceedings, including those under Section 438 of the 1973 Code or even upon invoking the jurisdiction of Constitutional Courts, the underlying principles and rigours of Section 45 may apply.

(xiv) The beneficial provision of Section 436A of the 1973 Code could be invoked by the accused arrested for offence punishable under the 2002 Act.

(xv) (a) The process envisaged by Section 50 of the 2002 Act is in the nature of an inquiry against the proceeds of crime and is not “investigation” in strict sense of the term for initiating prosecution; and the Authorities under the 2002 Act (referred to in Section 48), are not police officers as such.

(b) The statements recorded by the Authorities under the 2002 Act are not hit by Article 20(3) or Article 21 of the Constitution of India.

(xvi) Section 63 of the 2002 Act providing for punishment regarding false information or failure to give information does not suffer from any vice of arbitrariness.

(xvii) The inclusion or exclusion of any particular offence in the Schedule to the 2002 Act is a matter of legislative policy; and the nature or class of any predicate offence has no bearing on the validity of the Schedule or any prescription thereunder.

(xviii) (a) In view of special mechanism envisaged by the 2002 Act, ECIR cannot be equated with an FIR under the 1973 Code. ECIR is an internal document of the ED and the fact that FIR in respect of scheduled offence has not been recorded does not come in the way of the Authorities referred to in Section 48 to commence inquiry/investigation for initiating “civil action” of “provisional attachment” of property being proceeds of crime.

(b) Supply of a copy of ECIR in every case to the person concerned is not mandatory, it is enough if ED at the time of arrest, discloses the grounds of such arrest.

(c) However, when the arrested person is produced

before the Special Court, it is open to the Special Court to look

into the relevant records presented by the authorised representative of ED for answering the issue of need for his/her continued detention in connection with the offence of money- laundering.

102 Crl.M.P.No.306/2022

(xix) Even when ED manual is not to be published being an internal departmental document issued for the guidance of the Authorities (ED officials), the department ought to explore the desirability of placing information on its website which may broadly outline the scope of the authority of the functionaries under the Act and measures to be adopted by them as also the options/remedies available to the person concerned before the Authority and before the Special Court.

(xx) The petitioners are justified in expressing serious concern bordering on causing injustice owing to the vacancies in the Appellate Tribunal. We deem it necessary to impress upon the executive to take corrective measures in this regard expeditiously.

(xxi) The argument about proportionality of punishment with reference to the nature of scheduled offence is wholly unfounded and stands rejected.

The Hon'ble Supreme Court has categorically held in Vijay

Madanlal Choudhary's case that when the allegations made in the predicate offence were held to be valid, hence the offence under

PMLA has to be disposed simultaneously, and if the predicate offence is not proved, the allegation should not be made under PMLA. In this case, in the predicate offence prima facie has been proved. Hence, the allegations made by the complainant against the accused under

PMLA, 2002 also having a prima facie case.

49.The counsel for the petitioner/A-2 relied on the concept of alter ego of the company as held by the Hon'ble Supreme Court in Sunil

Bharti Mittal case reported in 2015 AIR SC 923.

103 Crl.M.P.No.306/2022

50.It is to be noted that as per the case of the prosecution, there are money transactions between Accused Nos.7, 8 and 9 and revenue sharing arrangement between Accused Nos.3 and 4 was totally revised in the Addendum dt.23.07.2008 and he had conspiracy with

Accused No.2 in preparing Development Agreement dt.03.11.2006 between Accused Nos.3 and 4 and also having a role in replacing with the Development Agreement-cum-GPA executed on 25.07.2007 and

Addendum dt.23.07.2008. It is also contended that the petitioner/A-2 had colluded with Accused Nos.15 and 8 and in pursuance of criminal conspiracy they floated companies and blocked 18 Villa Plots in the name of those 10 companies and he himself purchased a Villa Plot

No.A-49 in the name of his wife and the acts of the petitioner/A-2 were resulting to further loss of amount to APIIC. These facts clearly shows that the guidelines referred in Sunil Bharti Mittal case are not applicable to this case on facts.

51.The petitioner/A-2 also relied on various judgments showing the guidelines on discharge of the accused in a criminal case. In this context it is relevant to refer the guidelines enunciated by the Hon’ble

Supreme Court in Selvi’s case has to follow:

i.The Judge while considering the question of framing the charges under Section 227 CrPC has the undoubted power to sift and weigh the evidence for the limited purpose of finding out whether or not a prima facie case against the accused has been made out. The test to 104 Crl.M.P.No.306/2022 determine prima facie case would depend upon the facts of each case.

ii.Where the materials placed before the court disclose grave suspicion against the accused which has not been properly explained, the court will be fully justified in framing a charge and proceeding with the trial.

iii.The court cannot act merely as a post office or a mouthpiece of the prosecution but has to consider the broad probabilities of the case, the total effect of the evidence and the documents produced before the court, any basic infirmities, etc. However, at this stage, there cannot be a roving enquiry into the pros and cons of the matter and weigh the evidence as if he was conducting a trial.

iv.If on the basis of the material on record, the court could form an opinion that the accused might have committed offence, it can frame the charge, though for conviction the conclusion is required to be proved beyond reasonable doubt that the accused has committed the offence.

v.At the time of framing of the charges, the probative value of the material on record cannot be gone into but before framing a charge the court must apply its judicial mind on the material placed on record and must be satisfied that the commission of offence by the accused was possible.

vi.At the stage of Sections 227 and 228, the court is required to evaluate the material and documents on record with a view to find out if the facts emerging therefrom taken at their face value disclose the existence of all the ingredients constituting the alleged offence. For this limited purpose, sift the evidence as it cannot be expected even at that initial stage to accept all that the prosecution states as gospel truth even if it is opposed to common sense or the broad probabilities of the case.

vii.If two views are possible and one of them gives rise to suspicion only, as distinguished from grave suspicion, the trial Judge will be empowered to discharge the accused and at this stage, he is not to see whether the trial will end in conviction or acquittal.”

52.And also it is prudent principles laid down by the Hon’ble

Supreme Court that at the stage of framing of charge roving and 105 Crl.M.P.No.306/2022 fishing enquiry is impermissible. If the contention of the accused is accepted, there would be a mini trial at the stage of framing of charge. That would defeat the object of the Code. It is well settled that at the stage of framing of charge the defence of the accused cannot be put forth. At the stage of framing of charge hearing the submissions of the accused has to be confined to the material produced by the police and “court is required to evaluate the material and documents on record with a view to find out if the facts emerging therefrom taken at their face value disclose the existence of all the ingredients constituting the alleged offence.”

53.It is also to be noted that the Hon’ble Supreme Court of India in

Stree Atyachar Virodhi Parishad v. Dilip N.Chardia reported in 1989 (1)

SCC 715 held that “The ground in the context is not a ground for conviction but a ground for putting the accused on trial. It is in the trial, the guilt or the innocence of the accused will be determined and not at the time of framing of charge. The court therefore, need not under taken an elaborate enquiry in sifting and weighing the material.

Nor it is necessary to delve deep into various aspect. All that court has to consider is whether the evidentiary material on record if generally accepted, would reasonably connect the accused with the crime. No more need be enquired into”.

106 Crl.M.P.No.306/2022

54.In view of the guidelines enunciated by the Hon’ble Supreme

Court in various judgments, the moto is that Judge while considering the question of framing charges, he has to find out whether there is prima-facie case against the accused has been made out and the test to determine a prima-facie case would naturally depend upon the facts of each case and also it cannot be expected even at that initial stage to accept all that the prosecution states as gospel truth even if it is opposed to common sense or the broad probabilities of the case and also consider the distinction between suspicion and grave suspicion. Apart from that trial judge has to see that the material and the contention of the prosecution is sufficient to end in conviction or acquittal.

55.Apart from that, one of the Accused i.e. Tummala Ranga Rao (A-10) and M/s. Stylish Holmes Real Estates Pvt. Ltd. (A-3) were granted Tender of Pardon and their evidence is crucial in view of the corroboration of various anomalies in the documents executed between APIIC and Emaar Properties/A-2 and money transaction among the accused.

56.In view of the above discussions, the complainant/ED not only relied on the documents and the investigation conducted by CBI, they 107 Crl.M.P.No.306/2022 also conducted further investigation in all aspects and also relied on the documents i.e. bank statements of the alleged non-existing 11 companies. The admissibility of Section 50(2)&(3) of PMLA and

Section 24 of PMLA as guided by the Hon'ble Supreme Court in

Madanlal Choudhary's case, clearly emphasises the prima facie case of the prosecution. Hence, unless a detailed trial is conducted, truth will not come to light. Hence, the petition deserves to be dismissed.

57.In the result, the petition is dismissed.

Typed to my dictation, corrected and pronounced by me in the open Court on this the 30th day of April, 2024.

Sd/-

PRINCIPAL SPECIAL JUDGE FOR

CBI CASES, HYDERABAD.

1

IN THE COURT OF PRINCIPAL SPECIAL JUDGE FOR CBI CASES,

HYDERABAD

Dated: Tuesday, the 30th day of April, 2024.

Present:Sri Ch.Ramesh Babu

Principal Special Judge for CBI

Cases, Hyderabad

Crl.M.P.No.352/2013

In

C.C.No.6/2012

Between:

M/s. Emaar MGF Land Ltd.,

Represented by Mr. N. Suresh….. Petitioner/Accused No.4

AND

State through CBI ….. Respondent/ Complainant

This petition coming before me on 26.06.2023 for final hearing in the presence of Sri V.T.Kalyan, Counsel for the Petitioner/Accused No.4 and of Sri Inderjeet Santoshi and Sri Pinkeshwar Gangwar, Public Prosecutors for the Respondent/Complainant and after hearing the arguments and perusing the material on record, and the matter having been stood over for consideration till this day, this Court made the following:

O R D E R

1.The petitioner/Accused No.4 filed petition u/s. 239 Cr.P.C. on 13.03.2013 praying the Court to discharge the petitioner from the prosecution case.

2.The petitioner averred in the petition that at the stage of taking cognizance the court only looks at the charge sheet and 2 Crl.M.P.No.352/2013 accompanying material with a view to arrive at a prima facie finding that offences have been committed. However, at the stage of framing of charges the Court is mandated to satisfy itself whether the accused is connected with the offences, for which a three pronged approach is ordinarily adopted. Firstly, ascertain whether ingredients of the offences are prima facie made out in the factual conspectus, secondly, whether these are supported by prima facie creditable evidence or evidence is totally unworthy of credit and thirdly whether amalgamation of these constitute circumstances which evoke “grave suspicion” of the Court as contra distinguished from “suspicion” that accused has prima facie committed the offences. Even then, charges can be framed only if the accused has not properly explained the same.

2.1.Thepetitionerfurtheraverredthatno material/circumstances have been put forth to the petitioner, which disclose grave suspicion of this Hon'ble Court that the petitioner has committed the offences for which charged. In the absence of this, opportunity to properly explain the same, as mandated afforded u/s 239 Cr.P.C., would not only not qualify to be "fair, just and reasonable", as mandated by Art. 21, but would, in essence, be violative of the Doctrine of Audi alteram partem and in support of his 3 Crl.M.P.No.352/2013 contention the petitioner relied on the decision in Sajjan Kumar v. CBI reported in (2010) 9 SCC 368.

2.2.The petitioner further averred that non observance of natural justice is itself proof of prejudice and proof of prejudice independent of proof of denial of natural justice is unnecessary. An order passed in violation of fundamental rights or breach of principles of natural justice, would be a nullity (AR Antulay case) and in support of his contention the petitioner relied on the decision in Jayendra

Vishnu Thakur v. State of Maharashtra & Anr. Reported in (2009) 7

SCC 104(1).

2.3.The petitioner further averred that it is held that perception of prejudice is for the accused to develop and if the same is founded on a reasonable basis, it is the duty of the court as well as the prosecution to ensure that the same is addressed. Reasonable basis of perception of prejudice harbored by the petitioner is elucidated and succinctly and in support of his contention the petitioner relied on the decision in VK Sasikala v. State reported in (2012) 9 SCC 771.

2.4.The petitioner further averred that the petitioner company is being arrayed as an accused through Accused No.9, as he being the

Chief Executive Officer was entrusted by the Board to take care of the 4 Crl.M.P.No.352/2013 day to day running of the affairs at they Hyderabad project and was reporting directly to the Board for the same. Per contra Accused

No.15 is entrusted by the Board to take care of the macro level management of the company, wherein, he does not play any role in any micro level functioning of any of the projects of the company spread around nearly 30 cities in India including the Hyderabad project. In the charge sheet, there is no specific role attributed to

Accused No.15 qua Accused No.4, which is backed by any prima facie creditable evidence to justify the same, except it being based on mere suspicion and speculation. As such arraigning Accused No.15, in the factual conspectus, is neither fair, just nor reasonable and

Accused No.15 is ex-facie entitled to being discharged qua Accused

No.4.

2.5.The petitioner further averred that the test to determine prima facie case, though difficult to lay down as a rule of universal application, is that by & large if two views are equally possible &

Magistrate is satisfied that the evidence produced before him, while

giving rise to some suspicion but not "grave" suspicion, he will be fully within his right to discharge accused and in this regard, reliance is placed on the decision of Satish Mehra v. Delhi Administration & anr reported in (1996) 9 SCC 766.

5 Crl.M.P.No.352/2013 2.6.The petitioner further averred that the evidence, which the prosecution proposes to adduce, to prove the guilt of the petitioner company, even if fully accepted before it is challenged in cross or rebutted by defence, neither shows that it has committed the offences for which charged nor discloses the existence of ingredients of the offences. Thus, the petitioner company is entitled to being discharged. It is trite that suspicion alone, without there being anything more, cannot form the basis or be sufficient for framing of charge and in this regard, reliance is placed on the decisions of

P Vijayan V. State of Kerala reported in (2010) 2 SCC 398 and in

Sajjan Kumar v. CBI reported in (2010) 9 SCC 368.

2.7.The petitioner further averred that the Vigilance &

Enforcement Authorities had seized two laptops from the office of petitioner on 02.11.2010, without panchnama and without ascertaining of "hash value of the hard drive of the computer at the time of seizure. On 10-01-2011, before the Hon'ble High Court, they referred to the purported document as having been recovered from the lap top of Mr. Dinesh Menon, another employee of the petitioner company. Further, on referral of said laptop to CFSL by the CBI, the

CFSL report dt. 14.10.2011 merely confirmed that the said document has been retrieved from the laptop of Accused No.8. This alleged document has been used as the fulcrum by the prosecution to show 6 Crl.M.P.No.352/2013 that Rs 6.8 cr has been collected in cash, by the petitioner company, from two plot owners. However, even if the CFSL report is taken to be true, at face value, said document has been modified/doctored several times in the period when it was in the custody of the Vigilance authorities, with the last modification having been carried out on 14.07.2011. Hence, it is rendered totally unworthy of credit. Apart from the factum that statements of the two plot owners u/s 161

Cr.P.C. do not constitute evidence, they do not even corroborate the purported document.

2.8.The petitioner further averred that as per prosecution case in the supplementary charge sheet dated: 15.09.2012, the second evidentiary leg is the purported recovery of the aforesaid money by the Enforcement Directorate in December 2009 from

Mr. Dinesh Jain and petitioner company, through Accused No.15.

However, a bare perusal of the balance sheet of M/s. VMR Promoters

Pvt. Ltd., which were filed with the ROC prior to registration of the instant FIR shows that the money recovered as above was reflected in the Books of account as imprest advance out of the existing cash in hand. The said balance sheets/documents were handed over to the agency during investigation but have neither been considered nor enclosed with the charge sheet.

7 Crl.M.P.No.352/2013 2.9.The petitioner further averred that whether the

Development Agreement is legal or not can only be decided by a civil court, of competent jurisdiction, in a declaratory suit. In the absence of the same, ipso facto assumption by the prosecution of the

Development Agreement being void ab initio and proceeding on that basis is erroneous & untenable. It is on the basis of this very agreement, that petitioner has spent over Rs 400 cr in the project, with approximately Rs 66 crore being spent on the golf course itself, which added significant value of the project. Furthermore, it is as per the provisions of the said Agreement, itself, that since June 2008, petitioner is suffering a recurring, average monthly loss of 40 lakhs on the maintenance/running of the Golf Course. It is an investigative finding that Development Agreement cum GPA & Addendum, though not separately approved, were approved in the Board meetings of

EHTPL dt. 21.09.2006, 21.12.2006 & 15.06.2007. There is irrefutable documentary evidence to show that the Development Agreement stands referred to in the Board meeting dt. 16.09.2008 & balance sheet along with approved minutes were also forwarded to the APIIC on 22.12.2008 2.10.The petitioner further averred that vide Par No.7.10 of the

Shareholders Agreement dated 28.12.2005, it is categorically stipulated that copies of all financial statements & auditors reports 8 Crl.M.P.No.352/2013 shall be furnished to each Director & to shareholders within 30 days of conclusion of audit operations. Notwithstanding the fact that Audited balance sheet, duly approved by the Board of EHTPL, was forwarded to Mr. Parthasaradhi Rao, Nominee director of APIIC (who is not an accused) vide letter dt. 08.09.2008, copies of all audit reports have been submitted to APIIC also, both of which lucidly mentioned the signing of the Development & other Agreements, along with the revenue sharing model. Till June 2010, no whisper was there from the

APIIC of the Development Agreement being illegal, it being not approved by its Board. As such, such insinuations, essentially civil in nature, raised for the first time by Mr BR Meena, the then Chairman cum MD of APIIC, after more than 3 years, is in the teeth of Doctrine of Estoppel and borne out of oblique motive of Mr Meena, for which an

FIR is lodged and criminal investigation is pending.

2.11.The petitioner further averred that audited balance sheets of the petitioner bear testimony to the factum while the petitioner company has made total collections of Rs 342 crs from the project, it has incurred an expenditure of more than 400 cr. Out of these collections, Rs 192 crs has been recognized as revenue, as of now, out of which Rs 48.05 cr has accrued to EHTPL as its revenue share.

The same could not be paid due to APIIC impeding the adoption of accounts by EHTPL. As per "earlier business" model, revenue of APIIC 9 Crl.M.P.No.352/2013 was to be based on 26% of the dividend declared on net profit, as per the later model of "revenue sharing", EHTPL was to receive 25% of the gross sales revenues. This was to be further shared by EPJSC and

APIIC in percentages of their respective share holding, with all project expenses to be incurred by petitioner only.

2.12.The petitioner further averred that as per the prosecution case, Rs 167.29 cr has been taken to be the gross revenue of petitioner, out of which 26% share of APIIC has been pegged at

Rs 43.5 cr. In light of the above, the prosecution case is incredulous to say the least as it runs with the hares and hunts with the hounds. It takes the percentage of revenues for EHTPL as 26%, as per the earlier model but conveniently, applies it on the later business model on gross revenues, Furthermore, a bare perusal of the calculation of

Rs 167.29 cr, in the charge sheet would ex facie show that to arrive at the purported share of APIIC, prosecution has taken Rs 26.74 cr, which is the Profit Before Tax of EHTPL, as reflected in their audited balance sheets, and put it as a gross revenue of the petitioner, which is absurd. Moreover, Rs 48.05 cr, being shown as payable to EHTPL in the balance sheets of petitioner, is being construed as a wrongful loss to EHTPL, which is unreasonable.

10 Crl.M.P.No.352/2013 2.13.The petitioner further averred that a bare perusal of the balance sheets of petitioner would show that it continues to pay all tax liability of EHTPL, having paid Rs 12.88 cr so far. As such, out of

Rs 48.05 cr due to EHTPL, the figure now stands reduced to

Rs.35.37 cr. Furthermore, Rs 37.37 cr, shown in the charge sheet as being due to EHTPL from petitioner, is out of the total collections of

Rs.342 cr from Hyderabad project, which could not be taken into books of the petitioner as revenue, based on the accepted Accounting

Standards wherein such collections are recognized as revenue only after 30% of planned expenditure has been incurred on the project.

Be it as it may, though it stands reflected as collections received, it would eventually have been reflected as revenues and EHTPL would have been entitled to its share.

2.14.The petitioner further averred that it is clear luminous luminaire that the liability accruing to EHTPL has the trappings of a civil matter simpliciter, which are sought to be given a cloak of criminality. Moreover, it is prosecution's own case that the cash collected by M/s. Stylish Holmes was given to Accused Nos.6 and 7 by

T Ranga Rao. However, 26% of this alleged collection of Rs.96 cr, taken as the wrongful loss to APIIC, has surprisingly also been put as a liability of the petitioner. The prosecution case a fortiori is that the petitioner was aware of the factum that the plots were being sold at a 11 Crl.M.P.No.352/2013 premium by Stylish Holmes and they too similarly sold two plots, collecting a premium of Rs 6.8 cr in cash, not reflecting it in the books of EMGF, whereby, EHTPL lost 26% i.e. Rs 1.8 cr & correspondingly

APIIC lost 46.8 lakhs.

2.15.The petitioner further averred that as per the

Development Agreement, 75% of this alleged money collected by

Stylish Holmes was the share of petitioner i.e. Rs 72 cr. So, the prosecution case, even if taken at face value, is incredulous wherein, on one hand, in sales of villas/plots by petitioner company, APIIC lost and petitioner allegedly gained Rs 46.8 lakhs, while a fortiori the petitioner company shut its eyes to wrongful gain of nearly Rs 96.02 cr by Stylish Holmes, wherein it allowed itself to suffer a wrongful loss

Rs. 72.015 cr. Thus, when viewed through the prism of reasonableness, the prosecution case is unreasonable as petitioner company would not have allowed itself to be subjected to a loss of

Rs. 72 cr so as to unlawfully gain Rs 46.8 lakhs on account of APIIC and this circumstance prima facie shows that petitioner was not aware that the plots are being sold by Stylish Holmes at a rate higher than the documented rate.

2.16.The petitioner further averred that unfortunate victims, who have made an investment of over Rs 400 cr in the project and 12 Crl.M.P.No.352/2013 have themselves lost Rs 72 cr to actions of Stylish Holmes are sought to be given a cloak of perpetrators and persecuted for allegedly causing a loss of Rs 46.8 lakhs to APIIC. And the other species of unfortunate sufferers are the apartment owners who having paid substantial payments for the flats, are burdened with payment of huge EMI's for the housing loans but are suffering the consequences of disputes with regard to sale of villas.

2.17.The petitioner further averred that if the accused succeeds in producing any reliable material at that stage which might fatally affect even the very sustainability of the case, it is unjust to suggest that no such material shall be looked into by the court at that stage. As such, the petitioner would seek leave of this Hon'ble Court to produce reliable material which would fatally effect the sustainability of the case at the time of the hearing. Here 'ground' may be any valid ground including 'insufficiency' of evidence to prove the charge. In this regard, reliance is placed on the decision of Satish

Mehra v. Delhi Administration & Anr reported in (1996) 9 SCC 766.

2.18.The petitioner further averred that if the Magistrate finds that there is no evidence or evidence placed is totally unworthy of credit, it is his duty to discharge the accused at once, as this provision was introduced in the Code to avoid wastage of public time and to 13 Crl.M.P.No.352/2013 save the accused from unavoidable harassment and expenditure. In this regard, reliance is placed on the decision of CBI, Hyderabad v.

K Narayana Rao reported in (2012) 9 SCC 512.

2.19.The petitioner further averred that the investigation is gathering of evidence. Statements u/s 161 Cr.P.C., recorded during the course of the investigation, do not constitute legal evidence but is only an investigative tool to ferret out the truth, which is what the evidence points at. Similarly, result of investigation does not constitute to be legal evidence. In this regard, reliance is placed on the decision of MC Mehta (Taj Corridor Scam) reported in (2007) 1 SCC 110 2.20.The petitioner further averred that there is not even a whisper that there was any meeting of mind between officials of petitioner company and Accused No.2 prior to signing the

Development Agreement in November, 2006. No prima facie evidence to show that act of signing of Development Agreement was an illegal act or done illegally. In fact, the circumstance that Addendum was not approved by the Board of A4 shows that at the highest, there was purported negligence of concerned officials with regard to documentation, but that cannot be given a mantle of criminality.

There is no whisper that at the time of signing of the Development 14 Crl.M.P.No.352/2013

Agreement, there was any proposal for a SEZ. Thus cosmetic changes in revenue sharing in the Addendum could be reasonably explained to the advent of SEZ in April, 2007. Hereto the Development Agreement- cum-GPA addressed revenue sharing only on “sales”, whereas

Addendum dealt with “leases” on account of proposed SEZ, as approved by Board resolution dt.15-06-2007.

2.21.The petitioner further averred that in SEZ, cost-benefit risk ratio is high with lesser returns spread over a longer period of time. Hence, incorporation of SEZ projects necessitated revenue sharing of “leases” in the business model in the ratio of 95:5, which collection was projected to be only a minuscule portion of the total revenues. Be it as it may, this allegation is merely academic as SEZ project remained on paper. Merely because Development Agreement was not independently ratified by the APIIC Board, could at best be a purported irregularity not an illegality, with this plea being hit by

Doctrine of estoppel as it was raised after more than 3 years, after petitioner company had pumped in more than Rs.400 cr in the project.

2.22.The petitioner further averred that no whisper that there was any dishonest or fraudulent intention to cheat at the very inception i.e., on 03-11-2006, when the Development Agreement was 15 Crl.M.P.No.352/2013 signed. In fact, the petitioner company reduced the number of villa plots from 350 to 100 and increased the number of apartments from 1000 to 3500. Even if it be accepted for the sake of argument, though stoutly denying the same, that the intention to cheat developed later i.e., on or around December 2009, it would not amount to offence u/s.

420 IPC. No circumstance to show that the petitioner was aware of

Stylish Holmes collecting more than Rs.5000 per sq.yd in cash.

2.23.The petitioner further averred that it is alleged that the petitioner deliberately did not fix the rates of the plots as per market rates is unreasonable when viewed in the backdrop of losses of petitioner being many times more as compared to APIIC as a result of merely following the Agency Agreement. It is the admitted position of

Accused No.8 and 9 that due to acute VIP pressure for the plots & its negative impact on sale of flats, which was the mainstay of the revenue sharing model, Accused No.8 recommended and Accused

No.9 instructed that 18 plots be blocked. It was in the implementation of the said instructions that Sr.VP (Finance) of the petitioner company acquired/incorporated 10 companies. Accused No.15 was neither aware, nor consulted, nor was there any need for doing so as Accused

No.9 was completely empowered to take all such decisions and was reporting directly to the Board. The intention of blocking the plots so that these could be sold at a premium in the future is a conjecture of 16 Crl.M.P.No.352/2013 a high order, divorced from the factual conspectus. No such intention is discrenable given the factum that only MOU was signed. No ownership rights accrued from MOU. In fact, only on signing of the

Registered Agreement to sale that one hand the locus to get building plan approved. Only after the villa is built could one get the plot transferred on to his name and thereafter enjoy transferable title. No sale of plot is permissible on MOU or even registered Agreement to sale. If the petitioner had any dishonest intention, then it would have taken steps to acquire transferable title to be able to sell in the future.

In fact, cancellation of the same in the wake of notification of GO

No.1279 dt.08-10-2010, prohibiting registry of the plots, shows that once the blocking outlived its purpose, it was immediately cancelled.

Thus, the ingredients of Section 420 of IPC are ex facie not attracted.

2.24.The petitioner further averred that no prima facie creditable evidence is there to show that there has been any dishonest misappropriation or any cash has been collected in the said sale by the petitioner, whereby the ingredients of Section 405 of IPC are not satisfied. As per development agreement, all payments for sale of villa plots were to be made/realised in the name of petitioner company. As per the case set up by the prosecution, alleged amount of Rs.6.8 cr, should have been reflected in the books of account of petitioner and this was not done. Non reflection of the same has 17 Crl.M.P.No.352/2013 caused such revenue to be not recognized wherein loss has incurred to APIIC of 26% i.e., Rs.46.8 lakhs. Even if it be taken to be true for the sake of argument, though stoutly denying the same, that Rs.6.8 cr has been collected and not reflected in the books of account of petitioner, at the highest, prima facie offence would be purportedly made out under Section 408 of IPC, accused officials being servants of petitioner not under Section 409 of IPC. In this regard reliance is placed on the following passage from IPC 11th Edn. Dr. Hari Singh Gaur @ 4053:

“where the functions and duties of an agent are not defined, it would not, perhaps, be easy to prove if an act was in the way of his business. And even if it was, there still remains the question was he an agent, or only a clerk or servant within the meaning of the last section”.

2.25.The petitioner further averred that it is axiomatic that on one hand Section 409 is being fastened on the company, in the capacity of an agent/broker/factor and on the other, Section 477-A is sought to be fastened in capacity of being a clerk, officer or servant.

Be it as it may, document purportedly recovered from the lap top of

Accused No.8 is unworthy of credit and purported statements of villa owners under Section 161 Cr.P.C., which would have constituted evidence. No act has been prima facie shown to have been done 18 Crl.M.P.No.352/2013 willfully, with an intention to defraud, whereby main ingredient of

Section 477A is not satisfied.

2.26.The petitioner further averred that it is trite that the court cannot act merely as a post office or a mouth piece of the prosecution, but has to consider broad probabilities of case, total effect of evidence & documents produced, any basic infirmities appearing in case & so on, prior to framing the charges. A cumulative consideration of the same, in the given factual conspectus, lends further credence to this being a fit case for discharge. In this regard, reliance is placed on the decision in Sajjan Kumar Vs CBI reported in (2010) 9 SCC 368.

2.27.The petitioner further averred that the order framing the charges does substantially affect the person’s life and liberty and it is not possible to countenance the view, which has been canvassed by the prosecution in Crl.M.P.No.1913 of 2012 before this Hon’ble Court that the Court must automatically frame the charge merely because the prosecution authorities, by relying on the documents referred to in

Section 173 of Cr.P.C., consider it proper to institute the case. Without fully adverting to material on record, the Court must not blindly adopt the decision of the prosecution. In this regard, reliance is placed on 19 Crl.M.P.No.352/2013 the decision in State of UP vs Dr. Sanjay Singh reported in 1994 Supp (2) SCC 707.

2.28.The petitioner further averred that there is no prima facie case against the petitioner to frame charges. Therefore, prayed to discharge the petitioner from the prosecution case.

3.The respondent/CBI has filed counter denying the contentions of the petitioner and reiterated the contents of the charge-sheet. The respondent/CBI submitted that Shri Shravan Gupta (A-15) is the Managing Director of M/s Emaar MGF Land Ltd. (A-4). As far as the implementation of the Hyderabad Project is concerned, all development rights in respect of the Township Project and Golf Course

Project were assigned by M/s EHTPL (A-3) and M/s BHLPL (A-10) in favour of M/s Emaar MGF Land Ltd (A-4). Further, as per the Agency

Agreement dt.29.01.2005, which was adopted by M/s Emaar MGF

Land Ltd (A-4) at the time of taking over the development rights from

M/s EHTPL (A-3), the villa plots over and above 100 were to be sold at prevailing market rates. However, M/s Emaar MGF Land Limited (A-4) did not take any initiative or pass any resolution in the board of the company to fix the rates for selling plots in tune with the prevailing market rates. The Hyderabad project being the only project where in the equity of GoAP through M/s.APIIC is involved; it cannot be 20 Crl.M.P.No.352/2013 compared with other projects being developed by M/s Emaar MGF

Land Limited (A-4). Further fixation of rates for selling the villa plots in tune with the market rates was an important decision, as it involved sharing of revenue with M/s EHTPL (A-3) and finally with M/s APIIC, it was the responsibility of Sri Shravan Gupta (A-15) to take up such an important issue before the board of the company. Further, the funds for incorporation of ten companies and blocking 18 plots in the

Hyderabad project in the name of these ten companies were provided by Sri Shravan Gupta (A-15). Therefore the contention of the

Petitioner/Accused Company that arraigning Shri Shravan Gupta (A-15) is neither fair nor just/reasonable does not have any substance.

Further, the instant petition has been filed for discharge of M/s Emaar

MGF Land Limited (A-4), as such the averments made in para A, are nothing but an attempt of misleading and misrepresentation by the

Petitioner/Accused Company before this Hon'ble Court.

3.1.The respondent/CBI further submitted that the evidence available on record establishes that the Petitioner/Accused company in conspiracy with other accused persons misappropriated government properties worth crores of rupees and caused wrongful loss to APIIC to the extent of Rs.43.50 crores. Thus, the offences attributed to the Petitioner/Accused Company are not on mere 21 Crl.M.P.No.352/2013 suspicion, but are based on well established facts and therefore are grave in nature.

3.2.The respondent/CBI further submitted that though the document recovered from the laptop seized by the Vigilance &

Enforcement Officers was lastly accessed/modified on 14.07.2011, the fact remains that the same document was submitted before the

Hon'ble High court of Andhra Pradesh by the Director General,

Vigilance and Enforcement Department, Govt. of A.P. on 10.01.2011.

There is no difference between the document submitted before the

Hon'ble High Court of A.P. and the document retrieved by the expert

of CFSL from the laptop of Sri G.Vijay Raghav (A-8). Further the facts mentioned in the document retrieved from the laptop of Sri G. Vijay

Raghav (A-8) showing collection of excess money from buyers of villa plots, are circumstantial in nature and the respondent is not relying only on this document to prove its case. There are statements of villa plots buyers, who have confirmed to have paid excess money over and above the rate of Rs.5,000/- per sq.yard for purchasing villa plots.

Further, it is quite evident from the statement LW-99 that Sri G. Vijay

Raghav (A-8) initially offered a villa plot to him for Rs.35,000/- per sq.yard, which was finally negotiated at Rs.23,198/- per sq.yard. Thus the contention of the Petitioner/Accused Company that the statements of plot owners do not constitute evidence, is totally 22 Crl.M.P.No.352/2013 unfounded and misleading. It is further submitted that, the

Enforcement Directorate had recovered an amount of Rs.6.89 crores from Sri Dinesh Jain and Rs.1.19 crores from Sri Shravan Gupta (A-15) on 03.12.2009, when M/s Emaar MGF Land Limited (A-4) was selling villa plots to the buyers by collecting excess payment in cash. As per the statement of bank account (LD- 2251) maintained by M/s VMR

Promoters Pvt. Ltd., with Bank of India, Asaf Ali Road, New Delhi, the transactions do not match with the claim of the company. Further the alleged balance sheet is filed by the company subsequent to seizure of cash amount by Enforcement Directorate and thus the claim of the

Petitioner/Accused Company is nothing but an afterthought.

3.3.The respondent/CBI further submitted that M/s EHTPL (A-

3) was prohibited from assigning development rights to any other party without in principle of approval from APIIC. The fact remains that, M/s EHTPL (A-3) in conspiracy with M/s Emaar properties PJSC

Dubai (A-2) and M/s Emaar MGF Land Limited (A-4) fraudulently transferred all the rights in respect of Township land in favour of M/s

Emaar MGF Land Limited (A-4) without consulting APIIC, though it had 26% equity in the project. The Development Agreement has been executed as part of the continuing criminal conspiracy, as such the contention of Petitioner/ Accused company that it is a civil matter is totally unfounded.

23 Crl.M.P.No.352/2013 3.4.The respondent/CBI further submitted that the development agreement-cum-GPA was executed on 25.07.2007, the claim of the Petitioner/Accused Company that it was referred to in the board meeting dated: 16.09.2008, does not mean that it was approved by the board. Since Sri B.P.Acharya (A-1) who was nominee

Director of APIIC in the board of M/s EHTPL (A-3) and M/s BHLPL (A-10) till December 2009, has been arraigned as one of the conspirators and an accused person in the charge sheet filed before this Hon'ble

Court, the Petitioner/Accused company cannot derive any benefit from the fact that this issue was not raised by APIIC till June 2010, as Sri

B.R. Meena (LW- 16) who succeeded Sri B.P.Acharya (A-1) raised this issue in his very first board meeting.

3.5.The respondent/CBI further submitted that as far as the component of loss caused to M/s APIIC is concerned, it is submitted that the total profit of M/s EHTPL (A-3) for the period from 2006-07 to 2010-11 worked out to be Rs.64.41 Crores. Further, as established during investigation, an amount of Rs.102.88 Crores was collected from villa plot buyers over and above the rate of Rs.5000/- per sq.yard and this amount was not accounted for in the books of accounts. Since the basic developments with respect to villa plots was done by M/s EHTPL (A-3) only, the revenue from sale of villa plots should have gone into the accounts of M/s EHTPL (A-3) only. Thus, the 24 Crl.M.P.No.352/2013 total profit of M/s EHTPL (A-3) for the above said period is found to be

Rs.167.29 crores and the revenue share of M/s APIIC in proportion of its equity (26%) is found to be Rs.43.50 Crores. As per the development agreement, the Petitioner/Accused Company was required to pass on 25% of gross earnings from the township project in favour of M/s EHTPL (A-3) irrespective of the amount spent by the

Petitioner/Accused company towards development of the project. As established in investigation, the Petitioner/ Accused company earned gross revenue of Rs.342.88 Crores from the township project during the period from 03.11.2006 to 31.8.2011, which included 85% of the cost of villa plots booked by M/s EHTPL (A-3) on account of third installment, though the expenditure for laying the basic infrastructure was incurred by M/s EHTPL (A-3). The fact remains that the Petitioner/

Accused Company has not transferred even a single rupee in favour of

M/s EHTPL (A-3) on account of revenue share from the project till date.

The contention that an amount of Rs.48.05 Crores is shown payable to M/s EHTPL (A-3) in the balance sheets of M/s Emaar MGF Land Ltd, (A-4) is of no avail. Further the fact that the Petitioner/Accused company continues to pay all tax liability on behalf of M/s EHTPL (A-3) without transferring the actual revenue shows the existence of a criminal conspiracy among the Petitioner/ Accused company,

M/s Emaar Properties PJSC, Dubai (A-2), M/s EHTPL (A-3) and others 25 Crl.M.P.No.352/2013 with sole objective to misappropriate government properties and cheat M/s APIIC. There was no impediment on the part of the

M/s APIIC till December 2009 to adopt the accounts of M/s EHTPL (A-3), as Sri B.P. Acharya (A-1) was the nominee Director, as such the contention of the Petitioner/Accused Company does not have any substance.

3.6.The respondent/CBI further submitted that there is plethora of evidence to sustain the charges against the Petitioner/

Accused Company. The respondent has no objection if the Petitioner /

Accused Company produce valid grounds to disprove the charges against him. Even at the time of filing of this petition, the Petitioner /

Accused Company have not submitted any evidence to support his claim. As the respondent had found sufficient evidence in the form of oral and documentary evidence indicating prima facie case against the Petitioner/Accused company vis-à-vis other co-conspirators, final report (s) U/s 173 Cr.PC were filed before this Hon'ble Court for taking cognizance and conducting trial in accordance with law. It is for this

Hon'ble Court to decide whether the evidence put forth is legal or

otherwise. At the stage of framing of charge, it would be sufficient if the Hon'ble Court finds that the material placed on record is prima facie sufficient to make out a case.

26 Crl.M.P.No.352/2013 3.7.The respondent/CBI further submitted that the Petitioner/

Accused company (a joint venture company of M/s Emaar properties

PJSC Dubai (A-2) and M/s MGF Limited New Delhi) was incorporated on 18.02.2005 and there were a series of board meetings wherein the representatives of M/s Emaar Properties PJSC Dubai (A-2) also participated in the capacity of Directors of the Petitioner/ Accused company prior to execution of development agreement on 03.11.2006. As submitted supra, the act of execution of development agreement dated 03.11.2006, development agreement-cum-GPA

dated 25.07.2007 and addendum to development agreement cum

GPA dated 23.07.2008 without the knowledge and approval of APIIC, were totally in-contravention of the collaboration agreement and supplementary agreement and thereby against the interest of APIIC and hence the Govt. of A.P. Even on behalf of M/s EHTPL (A-3), these agreements have been executed by the officials of the Petitioner/

Accused Company. The criminal conspiracy to obtain undue pecuniary advantage from the project, existed since beginning which is evident from the fact that M/s Emaar Properties PJSC Dubai (A-2) executed agency agreement dated: 29.01.2005 without the knowledge of

M/s APIIC, much prior to the date of leasing/ conveying land by APIIC in favour of the respective SPVs for executing the project. Further the lease deed dated: 28.12.2005 executed by M/s APIIC in favour of 27 Crl.M.P.No.352/2013

M/s BHLPL (A-10), the revenue from short term golf membership was also excluded. The Petitioner/Accused Company joined the criminal conspiracy during the year 2006, when it was fraudulently inducted as a co-developer in the integrated project. In view of the evidence available on record, the contention of the Petitioner/Accused company that there is not even a whisper that there was any meeting of mind between officials of Petitioner/Accused company and accused No.2 prior to signing of development agreement in November 2006, is found to be factually incorrect.

3.8.The respondent/CBI further submitted that the agency agreement dated 29.01.2005 was adopted by the Petitioner/ Accused company at the time of signing development agreement dated 03.11.2006. As per the agency agreement, the villa plots beyond 100 were to be sold at the prevailing market rates. The fact remains that the Petitioner/Accused company deliberately did not take any initiative to fix the rates for selling the remaining villa plots, rather it sold the plots at higher rates, but accounted for the sale consideration @ Rs.5000/- per Sq.Yard in its books of accounts. It is pertinent to mention here that, at the time of approving the master plan of the integrated project, the Cyberabad Development Authority had approved only 125 plots for Villas; 6 plots for high rise buildings and 5 plots for commercial development. The fact remains that 105 villa 28 Crl.M.P.No.352/2013 plots were sold by M/s EHTPL (A-3) and subsequently 31 villa plots were sold by the Petitioner/Accused company. Instead of fixing the rates in line with the market rates, 10 different companies (7 at New

Delhi and 3 at Ernakulam) were incorporated/acquired with employees of MGF Group of companies as their Directors/shareholders and their bank accounts were opened with different banks. Funds were transferred from the account of M/s Discovery Estates Pvt. Ltd., in which Shri Shravan Gupta (A-15) and his wife are holding 99% shares. Subsequently as per the instructions of Shri Shravan Gupta (A-15), M/s Braggart Vyaapar Pvt. Ltd., was acquired and funds to the tune of Rs.9.50 crores were transferred into its Current Account with

Bank of India, Asaf Ali Road Branch, New Delhi on 18.02.2010 from the account of M/s Braggart Vyaapar Pvt. Ltd., maintained with Axis

Bank, Dalhousie Branch, Kolkatta. Subsequently funds transferred from the accounts of M/s Braggart Vyaapar Pvt Ltd to the accounts of 10 companies for blocking villa plots in the name of these 10 companies. Later 18 Villa Plots were blocked in the name of these 10 companies @ Rs.5000/- sq. yd. during the year 2010, without even obtaining any formal applications from these companies, when the prevailing market rates were Rs.50,000/- per sq. yd, in order to sell these plots at premium at opportune point of time. At this time the

Villa Plots were being sold to other buyers in this project @ 29 Crl.M.P.No.352/2013

Rs.50,000/- per sq. yd. An amount equivalent to 10% of the sale consideration was paid from the accounts of the above said 10 companies in favour of M/s Emaar MGF Land Ltd., (A-4). The misdeeds of the Petitioner/Accused Company came to light immediately after executing the MoUs in respect of these 18 plots and Vigilance and

Enforcement Department started enquiry into the matter. As such, the

Petitioner/Accused Company did not get sufficient time to transfer the title in respect of these plots in favour of the said ten companies.

3.9.The respondent/CBI further submitted that the remaining 13 villa plots were sold by the Petitioner/Accused company by collecting excess payment over and above the documented rate of

Rs.5,000/- per sq.yard, but accounted for the amount @ Rs.5,000/- per sq.yard only in its books of accounts. Here also there were, no formal application from any of the buyers. Further the Petitioner/

Accused company started manipulating the records pertaining to allotment of villa plots by issuing antedated letters for cancellation of villa plots in order to create an impression as if, they did not sell more than 100 plots (since above 100 were to be sold at prevailing market rate as per the agency agreement dated 29.01.2005). In fact none of the alleged cancelled allottees had received any refund so far. Both

Sri G. Vijay Raghav (A-8) and Sri Srikant Joshi (A-9) were the employees of the petitioner/accused company and the rates for 30 Crl.M.P.No.352/2013 selling the villa plots were negotiated by Sri G. Vijay Raghav (A-8). It is pertinent to mention that Sri Srikant Joshi (A-9) himself booked Villa

Plot A-49 in the name of his wife Smt. Jyotsna Joshi @ Rs.5000/- per sq. yd. during the year 2010, though the market rate was around

Rs.50,000/- per sq. yd. He also booked an apartment in his name @

Rs.3000/- sq. ft. though the apartments to the other buyers were being sold above the rate Rs.6000/- per sq. ft. The contention that due to acute VIP pressure for plots and its negative impact on sale of flats 18 plots were blocked on the recommendation of A-8, is nothing but their figment of imagination and an afterthought. The intention of a person does not have any physical dimension and it has to be inferred from the acts of the person. In the instant case, the acts of the Petitioner/Accused Company clearly establish that their only objective was to extract maximum pecuniary advantage from the project and deprive M/s APIIC from its legitimate revenue share from the project. Further, the acts of the Petitioner/Accused Company and other accused persons has caused wrongful loss to the tune of

Rs.43.50 crores and thereby cheated M/s APIIC.

3.10.The respondent/CBI further submitted that M/s EHTPL (A-3) had transferred all the rights in respect of 258.36 acres of land belonging to township project in favour of the Petitioner/Accused

Company vide development agreement dated: 03.11.2006. Similarly 31 Crl.M.P.No.352/2013

M/s BHLPL (A-10) transferred all the rights in respect of 17 acres of land for boutique resort hotel in favour of the Petitioner/Accused

Company vide lease deed dated: 03.11.2006. Thus the Petitioner/

Accused Company were entrusted with the above said land and it was having dominion over the same. As per the terms of agreements, the

Petitioner/Accused Company was required to develop and sell the said land keeping in view the benefit of all the stake holders including

M/s APIIC. However, the fact remains that, the Petitioner/ Accused

Company fraudulently converted part of the township project land for its own use by blocking 18 villa plots in the name of 10 companies @

Rs. 5,000/- per sq.yard in violation of the terms and conditions of agency agreement dated 29.01.2005. Further, the Petitioner/ Accused

Company had sold part of the project land to 13 villa plot buyers by collecting excess payments over and above the documented rate of

Rs.5,000/- per sq.yard, without accounting for the excess sale consideration in its books of accounts. As such, the excess amount collected from the villa plot buyers was misappropriated by the

Petitioner/Accused Company. It is also mentioned here that, the

Petitioner/Accused Company allowed encroachment upon 2.20 acres of Govt. land in Sy.No.27/4 of Nanakramguda village and thereby disposed the said piece of land without the knowledge of APIIC/Govt.

of AP. Since the Petitioner/Accused Company was inducted as a 32 Crl.M.P.No.352/2013 co-developer for developing the township project and golf course project on behalf of M/s EHTPL (A-3) and M/s BHLPL (A-10), it was developing the project as an agent and thereby the provisions of

Sec.409 IPC are attracted for its misdeeds.

3.11.The respondent/CBI further submitted that the excess sale consideration over and above the documented rate of Rs. 5,000/- per sq.yard, collected by the Petitioner/Accused Company from buyers of villa plots, was not accounted for in its books of accounts. Further, investigation revealed that Shri G Vijay Raghav (A-8) in furtherance of the criminal conspiracy with others, prepared cancellation letters

dated 04.10.2010 in respect of the above said 18 Villa Plots. However,

the reverse entries in respect of these 18 Villa Plots were made in the books of accounts of M/s Emaar MGF Land Ltd. (A-4) only on 13.11.2010 without refunding the amount received from the respective allottees. Similarly, Shri G Vijay Raghav (A-8) got prepared the antedated cancellation letters dated 11.10.2010 in respect of the 16 Villa Plots. Further, Shri G Vijay Raghav (A-8) vide his email dated 21.06.2011, sent the details of 34 Villa Plots, allotment of which was purportedly cancelled on 04.10.2010 and 11.10.2010 respectively, to the Auditors of M/s Emaar MGF Land Ltd., (A-4). On the basis of this e- mail the entries pertaining to the purported cancellation of 16 Villa

Plots were posted in the books of accounts of M/s Emaar MGF Land 33 Crl.M.P.No.352/2013

Ltd., (A-4) in the month of June, 2011 with retrospective effect from 31.03.2011.

3.12.The respondent/CBI further submitted that the

Petitioner/Accused Company being a person within the scope of Sec.3 (42) of General Clauses Act, 1897 and under Section 11 of IPC.

Therefore, is capable of committing the offences U/s 409 and 477-A

IPC. As regards the contention of the Petitioner/Accused company that

Sec. 409 is fastened in the capacity of an agent and Sec. 477-A is sought to be fastened in the capacity of Clerk, Officer or Servant, it is submitted that there is no bar to charge the Petitioner/Accused company for committing the offences U/s 477-A as an agent. The duty enjoined on the Petitioner/Accused Company is to maintain proper accounts for the transactions conducted by it as an agent. Therefore, the duty enjoined on the agent includes maintenance of proper books of accounts and falsification of the same entails it to be prosecuted

U/s 477-A IPC and that no immunity, as pleaded by the petitioner/accused company can be extended. For the aforesaid reasons, the petition filed by the petitioner/accused company is devoid of any merit and hence, liable to be dismissed in limine.

4.Heard both sides. Perused the record.

34 Crl.M.P.No.352/2013

5.Now the point for determination is:

-Whether the petitioner/Accused No.4 can be discharged under Section 239 of Cr.P.C. in C.C.No. 6 of 2012?

POINT:

6.The brief facts which are lead to filing this petition are as follows:

6.1.A Public Interest Litigation Petition owes its origin to a letter dated: 22-11-2010 of one Shri P. Shankar Rao, a Member of the

LegislativeAssembly(MLA),SecunderabadCantonment,

Constituency, Andhra Pradesh, seeking a direction for enquiry by the

Central Bureau of Investigation into the alleged misappropriation of public property and criminal conspiracy, consideration whereof resulted in a direction dated: 23-11-2010. The letter of the MLA was registered as “Taken-up Writ Petition No.29358 of 2010. Initially in the said Writ Petition there are 13 respondents. The respondents questioned the maintainability of the writ petition on the ground that it is politically motivated and is filed to settle the political scores. The objection was turned down by the Hon’ble High Court, against which a

Special Leave Petition was filed before the Hon’ble Supreme Court but of no avail to the respondents. A Review Petition was also filed before the Hon’ble High Court, which was also dismissed.

35 Crl.M.P.No.352/2013 6.2.The Hon’ble High Court disposed of Writ Petition

No.29358/2010 vide its order dated: 10-08-2011 directing the CBI to register a crime and investigate into the alleged misappropriation of public property relating to the integrated project at Manikonda and transfer of property including all other aspects relevant thereto and take the investigation to its logical end in accordance with law.

6.3.In pursuance of the directions of the Hon’ble High Court in

W.P.No.29358 of 2010, CBI registered a case in Crime No.RC.0035 2011A 0018 (RC.18(A)/2011-CBI/Hyd) on 17-08-2011 for the offences under Section 120-B r/w 420, 409 and 477-A of IPC and Section 13(2) r/w 13(1)(c) & (d) of Prevention of Corruption Act, 1988 against the following:-

(i) Shri B.P. Acharya; IAS the then Chairman & Managing

Director, M/s. APIIC

(ii) M/s. EMAAR properties PJSC, Dubai represented by its

Director (s);

(iii) M/s. EMAAR Hills Township Private Ltd.; Hyderabad represented by its Director (s);

(iv)M/s. EMAAR MGF Land Pvt. Ltd., Hyderabad represented by its Director (s);

(v)M/s. Stylish Holmes Real Estates Pvt. Limited, Hyderabad represented by its Director (s);

(vi) Unknown officials of Government of Andhra Pradesh &

(vii) Unknown others 36 Crl.M.P.No.352/2013 6.4.After investigation, the CBI of Police filed charge sheet on 03.12.2011 against twelve accused i.e. A1 to A6 and A9 to A14 and mentioned that investigation in respect of Sri Shravan Gupta (A-7) and Sri Vijay Raghav (A-8) was in progress and supplementary charge sheet will be filed against them.

6.5.On 16-03-2021, this Court took cognizance for the offence u/s. 120-B r/w 420, 409 and 477-A IPC against A2 to A6, A9 and A14; for the offence u/s. 120-B r/w 420, 409 of IPC against A-10; for the offence u/s. 120-B of IPC and Section 13(2) r/w 13(1)(d) and Section 15 of PC Act, 1988 against A12; for the offence u/s. 120-B r/w 420, 109, 409 of IPC against A-13. This Court did not take cognizance against A1 and A11 for want of sanction under Section 19 of P.C. Act, 1988.

6.6.The prosecution filed a supplementary charge sheet against A-7, A-8 and A-15 on 23.04.2012. On 31.05.2012, this Court took cognizance against A7, A8 and A15 for the offence under Section 120-B, 420, 409, 468, 471 and 477-A of IPC.

6.7.Subsequently, on 02-06-2012, in view of the order dt.01-06-2012 in IW No.391 of 2012 in RC No.18(A)/2011, this Court 37 Crl.M.P.No.352/2013 took cognizance for the offence u/s. 120-B and 409 of IPC against A1 and for the offence u/s. 120-B of IPC against A11.

6.8.The prosecution filed second supplementary charge sheet on 15-09-2012 regarding additional witnesses and documents.

7.Accused No.4 filed the present petition u/s. 239 Cr.P.C. which was numbered as Crl.M.P.No. 352 of 2013.

8.The counsel for the petitioner/A-4 contended that on 03-11-2006 the development agreement was executed by A-3 in favour of A-4 and according to the development agreement, the agreement was fulfilled only, ED and CBI intervened. The counsel for the petitioner further argued that M/s. Emaar Hill Township Private

Limited/A-3 and M/s. Emaar MGF Land Ltd. are different entitled and if any fault MD of M/s. Emaar MGF Land Ltd. is liable.

9.The counsel for the petitioner further contended that the allegations made against M/s. Vanpic Projects Private Limited and the petitioner are similar and the Hon’ble High Court of Telangana has quashed the case against M/s. Vanpic Projects Private Limited. Apart from that the allegations made against A-11 L.V. Subrahmanyan is also quashed by the Hon’ble High Court. Therefore, the petitioner can be discharged. The counsel for the petitioner relied on the judgment 38 Crl.M.P.No.352/2013 in case of Vanpic Projects Pvt. Ltd. Vs State reported in MANU/TL/ 1292/2022, wherein the Hon’ble High Court of State of Telangana held at para 30 (4.4) as under:

“30 (4.4) When the company is the offender, vicarious liability of the Directors cannot be imputed automatically, in the absence of any statutory provision to this effect. One such example is Section 141 of the Negotiable Instruments Act, 1881. In Aneeta Hada, the Court noted that if a group of persons that guide the business of the company have the criminal intent, that would be imputed to the body corporate and it is in this backdrop, Section 141 of the Negotiable Instruments Act has to be understood. Such a position is, therefore, because of statutory intendment making it a deeming fiction. Here also, the principle of “alter ego”, was applied only in one direction namely where a group of persons that guide the business had criminal intent, that is to be imputed to the body corporate and not the vice versa. Otherwise, there has to be a specific act attributed to the Director or any other person allegedly in control and management of the company, to the effect that such a person was responsible for the acts committed by or on behalf of the company.

10.The counsel for the petitioner further contended that basing on the material available in the laptop, so seized from A-8, the petitioner was involved in this case. But there is no mention that as per the instructions of petitioner/A-4, excess cash was collected. The counsel for the petitioner relied on various documents and contended that those documents clearly emphasis that the petitioner/A-4 never conspired with any other accused and he has not collected any excess amount as narrated by the prosecution. The counsel for the petitioner relied on the judgment in case of State of U.P. through

Central Bureau of Investigation Vs Dr. Sanjay Singh and another 39 Crl.M.P.No.352/2013 reported in 1994 Supp (2) SCC 707, wherein the Hon’ble Supreme

Court held at para No.22 as under:

22. Thereafter referring the decision of Century Spinning & Manufacturing Co. Ltd. V State of Maharashtra, the learned

Judge has observed:

“For the purpose of determining whether there is sufficient ground for proceeding against an accused the Court possesses a comparatively wider discretion in the exercise of which it can determine the question whether the material on the record, if unrebutted, is such on basis of which a conviction can be said reasonably to be possible.”

11.The counsel for the petitioner further contended that the representative of A4 Company was quashed by the Hon’ble High

Court vide Crl.P.Nos.5506 of 2016 and 9410 of 2021, dt.21.04.2023 and when the representative of the company was discharged as an individual, the question of continuing the proceedings against the company does not arise. The petitioner also filed the copy of plaint in O.S.No.655 of 2010 on the file of II Additional Chief Judge, City

Civil Court, Hyderabad for rendition of account, which was pending.

The counsel for the petitioner further contended that the company cannot be attributed any criminal liability in the absence of any specific overacts and relied on orders on the Hon’ble High Court for the State of Telangana passed in Criminal Petition No.12989 of 2016, dt.21-10-2022.

40 Crl.M.P.No.352/2013

12.The counsel for the petitioner also relied on the judgment in case of Hindustan Unilever Limited Vs State of Madhya Pradesh reported in (2020) 10 SCC 751, wherein the Hon’ble Supreme Court held at 21 (38) and 22 as under:

21………..38. From the aforesaid pronouncements, the principle that can be culled out is that it is the bounden duty of the court to ascertain for what purpose the legal fiction has been created. It is also the duty of the court to imagine the fiction with all real consequences and instances unless prohibited from doing so. That apart, the use of the term “deemed” has to be read in its context and further, the fullest logical purpose and import are to be understood. It is because in modern legislation, the term “deemed” has been used for manifold purposes. The object of the legislature has to be kept in mind.

22. Section 17 of the Act reads as under:

“17. Offences by companies—(1) Where an offence under this Act has been committed by a company—

(a)(i) the person, if any, who has been nominated under sub- section (2) to be in charge of, and responsible to, the company for the conduct of the business of the company (hereinafter in this section referred to as the person responsible), or

(ii) where no person has been so nominated, every person who at the time the offence was committed was in charge of, and was responsible to, the company for the conduct of the business of the company; and

(b) the company, shall be deemed to be guilty of the offence and shall be liable to be proceeded against and punished accordingly:

Provided that nothing contained in this sub-section shall render any such person liable to any punishment provided in this Act if he proves that the offence was committed without his knowledge and that he exercised all due diligence to prevent the commission of such offence.”

13.The prosecution filed charge-sheet alleging that prior to year 2000, Andhra Pradesh Industrial Infrastructure Corporation (APIIC) had 41 Crl.M.P.No.352/2013 called for Expression of Interest (EOI) for the Convention Centre/Golf

Course project on 2/3 occasions but could not find any suitable developer. The APIIC again called EOI for the said project during the month of March, 2000 under the Public Private Partnership (PPP) mode. The proposals received against the said EOI were evaluated and two companies viz. M/s. ITC Ltd., and M/s. EIH Ltd., were shortlised. The Request for proposal (RFP) were sent to those two shortlisted companies, out of which only M/s. ITC Ltd., had responded.

The proposal of M/s. ITC Ltd., had been evaluated and it was

principally agreed by the Government in the State Tourism Promotion

Board (STPB) meeting held on 26.12.2000. The proposal of M/s. ITC

Ltd., was preferred on two locations i.e., at Manikonda Village land and Hussainsagar Land. Since the Hussainsagar Land was covered under PIL WP No.26378/2000, the Government of AP took a decision on 14.05.2001 to take up all the project components at Manikonda

Village only without linking it to Hussainsagar area lands. Accordingly, the Government sent letter to M/s. ITC Ltd. The Government was also exploring the possibilities of finding an alternative developer in case

M/s. ITC Ltd., was not agreeable to the above suggestion of the

Government. M/s. ITC Ltd., did not respond to the offer of the

Government and they requested to revisit other alternate sites. The matter was taken up with the Government and after taking approval 42 Crl.M.P.No.352/2013 from the Government suitable communication was made to M/s. ITC

Ltd., on 02.07.2001 returning their Bank Guarantee informing them that the project will be notified again.

14.It is further mentioned in the charge-sheet that the

Government of A.P. decided to issue fresh advertisements calling for

EOI from developers for the location of Manikonda lands. APIIC had proposed 250 acres of land for the said project. After the proposal was approved by the Board of APIIC, the advertisements were issued on 26.07.2001. In response to advertisement issued, EOIs were received from the following five companies:

1. Emaar Properties Public Joint Stock Company (PJSC), Dubai

2. IOI Corporation, Berhard Malaysia

3. L & T Limited, Chennai

4. Shapoorji & Palonji Company Limited, Mumbai

5. Som Asia Ltd., Hong Kong (consultancy services)

15.It is further case of the prosecution that the above EOIs were evaluated on 15.09.2001 by a Committee constituted by APIIC and the following three developers were found suitable for the issuance of

Request for proposal (RFP).

1. Emaar Properties Public Joint Stock Company (PJSC), Dubai 43 Crl.M.P.No.352/2013

2. IOI Corporation, Berhard Malaysia

3. L & T Limited, Chennai

16.It is further case of the prosecution that the above referred

Request for proposal (RFP) were cleared by the then Chief Minister on 26.09.2001 envisaged that the project would comprise inter-alia of:

Convention Centre: The Convention Centre with a plenary hall capacity of 3000- 5000 with facilities for hospitality, accommodation, parking lots, breakaway rooms and seating flexibility,state-of-the-artaudio-visualandother sophisticated equipment, Secretarial facilities, ample exhibition facilities, food courts, cafeterias, restaurants and other comprehensive support services.

Hotel: The state-of-the-art Hotel(s) that would be perfect rendezvous to mix business with pleasure.

Golf Course: An 18 hole International Professional Championship

Golf Course with fully equipped Club House and supporting services.

Villas:Villas and residential facilities, any other additional component, which will result in value addition to the Integrated

Project, subject to the sponsor's (APIIC) right to accept such additional components which are seen in the overall interest of the project.

17.It is further case of the prosecution that in the draft RFP approved by the then CM, it was also mentioned that the bidders shall 44 Crl.M.P.No.352/2013 quote land price on per acre basis for outright sale and lease option.

Further, the minimum land price of Rs.29 lakhs per acre at Manikonda on gross undeveloped basis was indicated and it was also mentioned that the proposal would remain valid for 12 months after the closing date of the submission of proposals. The pre-proposal meeting of the shortlisted Developers was held on 25.10.2001 and all the above said three developers participated in the meeting. During the meeting the companies/ developers requested APIIC for extending the time upto 15.12.2001 for submitting the proposals. Finally, till last date only one proposal of M/s. Emaar Properties PJSC, Dubai was received and the same was opened in the presence of its representative. The price quoted by M/s. Emaar Properties PJSC, Dubai for land on outright sale was Rs.29,00,000/- per acre as per the price bid submitted by them.

The proposal was placed before the Board of APIIC. A draft MOU to be executed with M/s. Emaar Properties PJSC, Dubai was prepared with the help of M/s. IL&FS, Consultants, in pursuance to the discussions held with M/s. Emaar Properties PJSC, Dubai. The said proposal was submitted to the GOAP by APIIC through the Department of Industries and Commerce and was placed before the Council of Ministers on 20.08.2002. Subsequent to the Council resolution No.215(3)/202, the

Government of AP issued GO.Ms. No.359 dated 04.09.2002.

45 Crl.M.P.No.352/2013

18.It is further case of the prosecution that the integrated project was given the status of a Tourism project, as such the related eligible incentives were to be given to the project. The Government authorized APIIC to take further necessary action to implement the project and it was the responsibility of APIIC to closely monitor the implementation of the project with reference to the milestones for various components of the project. Accordingly, a MOU was executed between APIIC and M/s. Emaar Properties PJSC, Dubai, on 06-11-2002.

19.It is further case of the prosecution that a Collaboration

Agreement dt.19.08.2003 was executed between APIIC and M/s.

Emaar Properties PJSC, Dubai. Only certain issues relating to the

Collaboration Agreement were approved by the Cabinet Committee on 28.06.2003. The Board of Directors of APIIC approved the

Collaboration Agreement dt.19.08.2003 between APIIC and M/s.

Emaar Properties PJSC in its 151st Meeting held on 12.03.2004.

20.It is further case of the prosecution that during the year 2004 after the general elections, when the new Government came into power, the Government of Andhra Pradesh constituted a Group of

Ministers (GoM) to review all decisions taken after 1st January, 2003 on

(i) all mega projects, (ii) infrastructure projects, (iii) allotment of land of more than 5 acres and (iv) on matters which attracted large scale 46 Crl.M.P.No.352/2013 public criticism. The Group of Ministers met on eight occasions and the Group of Ministers deferred the file relating to the Integrated

Convention Centre Complex and Golf Course.

21.It is further case of the prosecution that on 06.09.2004, the then Chief Minister and the then Minister for Major Industries discussed with the Chairman, M/s. Emaar Properties PJSC, Dubai and it was suggested that APIIC should limit its equity in all the three SPVs to 26% and thereby, proportionately increasing the equity of M/s.

Emaar Properties in the entire project. Subsequently, Shri AJ

Jaganathan, CEO of M/s. Emaar Properties PJSC, Dubai giving reference of the discussion of the representatives of M/s. Emaar properties PJSC, Dubai with Shri LV Subrahmanyam, VC & MD, submitted fresh proposals dt.23.09.2004 and 24.09.2004 changing the implementation structure of the integrated project. As per the revised proposal, it was proposed to execute the integrated project through three SPVs instead of two SPVs as envisaged in the

Collaboration Agreement dt.19.08.2003. As desired by the

Government of AP, M/s. Emaar Properties PJSC, Dubai had agreed to reduce the equity of Government of AP in the Convention Centre

Project from 49% to 26% and thereby increasing the equity of M/s.

Emaar properties PJSC, Dubai from 51% to 74%. In lieu of the said 47 Crl.M.P.No.352/2013 change in equity/ownership in Convention Centre Project, M/s. Emaar

Properties PJSC, Dubai requested the Government of AP to compensate for the increase in equity by transferring additional one hundred acres of land. The said proposal of M/s. Emaar Properties

PJSC, Dubai was processed in a single file.

22.It is further case of the prosecution that a Price Fixation

Committee (PFC) was constituted and they submitted the report, which is as follows:-

Year/PeriodAreaRates FixedRates valid till 2002-03Hi-Tech CityRs.83.29 Lacs to 31.03.2003 Rs.122.35 Lacs per acre 2003-04ManikondaRs.22.50 Lacs per acre31.03.2004 2004-05Nanakramguda and Rs.35 Lacs per acre31.03.2005 Manikonda Villages 2005-06Nanakramguda and Rs.84.98 Lacs per acre31.03.2006 Manikonda Villages

23.It is further case of the prosecution that on 23.11.2004, GoM meeting was held and the file relating to the Integrated Convention

Centre Complex and Golf Course was cleared. Subsequently, on 11-01-2005, the Government of A.P. issued G.O.Ms.No.14, containing all the decisions taken during the meeting held on 06.09.2004 48 Crl.M.P.No.352/2013 attended by the then CM, the then Minister for Major Industries and

Shri Mohamed Ali Alabbar, Chairman, M/s. Emaar Properties PJSC,

Dubai.

24.It is further case of the prosecution that as per G.O.Ms.No.14, a draft supplementary agreement to be executed by APIIC with M/s.

Emaar Properties PJSC, Dubai, which was also forwarded by the VC &

MD, APIIC to the Principal Secretary, I & C Department. The

Government after careful examination decided toconsider the improvement into the Integrated Project and approved the Draft supplementary agreement to be executed between the APIIC and M/s.

Emaar Properties, PJSC, Dubai. The VC & MD, APIIC was authorized by the GoAP to enter into a Supplementary Agreement. In G.O.Ms.14, it was also mentioned that all other features of the project notified in the G.O.Ms.No.359 Industries & Commerce (INF) Department dated:

04.09.2002 remained un-altered.

25.It is further case of the prosecution that on perusal of

G.O.Ms.No.14 dated: 11.01.2005 along with draft supplementary agreement, Shri AJ Jaganathan, CEO of M/s. Emaar Properties PJSC,

Dubai addressed a letter dt.16.01.2005 to the Government mentioning that the GO and the draft supplementary agreement did not conform to the discussions held by M/s. Emaar Properties PJSC, 49 Crl.M.P.No.352/2013

Dubai in the Minister’s Chamber during November, 2004. He suggested that clause 2(d) of GO.Ms.No.14 should be replaced by “The lease rentals of land given for the Golf Course of 235 acres at

Manikonda is fixed at 2% of the gross annual revenue on all Golf

Course components for a period of 33 years. The gross annual revenue generated by SPV-2 does not include Life Membership and other long term and academy memberships. The net profit generated by SPV-2, excluding profit generated by the Boutique Resort Hotel, will be treated in its entirely within the said company in the form of reserves. These reserves shall be utilized solely for improvements of the facilities and maintenance of Golf Course facilities (including the club house)”. He also suggested that clause 2(e) of GO.Ms.No.14

dated:11.01.2005 may be replaced by “On expiry of 66 years lease

period of the land of 235 acres, all structures, buildings on land whether permanent or semi-permanent, constructed by or belonging to the BHPL or their sub-contractors, sub-lessees and assignees developed on leasehold land only (and hence excluding all structures developed on freehold land) shall revert in favour of Government of

Andhra Pradesh free from all encumbrances and liabilities. Access to the site will remain restricted and controlled even after acquisition of the site by GoAP until such time a mutually acceptable solution is 50 Crl.M.P.No.352/2013 agreed between the GoAP and the housing Associations comprising residents of the proposed Boulder Hills community.”

26.It is further case of the prosecution that basing on the suggestions made by Sri AJ Jaganathan, CEO, VC & MD APIIC addressed a letter to the Principal Secretary and Commissioner for

Industrial Promotion vide Lr.No.81/APIIC/Projects/ICCC/2001, dated:

19.01.2005 along with a draft modification order. In response to the proposals of APIIC, the then Principal Secretary, Government of AP,

Industries and Commerce (Industrial Promotion Department), by modifying GO Ms.No.14, dated: 11.01.2005 and issued a fresh GO

Ms.No.22 dated: 27.01.2005 incorporating the suggestions made by

Sri AJ Jaganathan, CEO.

27.It is further case of the prosecution that after perusing the

G.O.Ms.22, the Minister for Major Industries found that the GO 22 was not in conformity with the orders dated: 11.01.2005 in the file and vide his note dated: 07.02.2005, remarked as under:

1.The file could have been circulated before issue of GO.

The reasons for urgency for issue may be explained.

2.Earlier the file was circulated to CM and orders were issued on 11.01.2005. The reasons for amendment on 27.01.2005 and the differences between orders of 11.01.2005 51 Crl.M.P.No.352/2013 and 27.01.2005 may be summarized along with financial and other long term implications.

3.Increase of lease rentals to 3% (from Golf Course) for further period of 33 years, have been deleted. This increase was mentioned on the file at the time of obtaining orders of CM.

4.The Boutique Hotel was shifted from SPV2 to SPV1.

Reasons for this and the implications were not mentioned.

5.New clauses regarding access rights have been incorporated, but the reasons for this were not mentioned.

28.It is further case of the prosecution that a meeting with then

CM on 02.03.2005, which was attended by the then Minister of Major

Industries; Principal Secretary, Industries & Commerce; Secretary MA & UD; VC & MD, APIIC and other officers of GoAP and discussed about exemption of conversion charges and the then CM directed VC, HUDA that since it was a Government Project, conversion charges as already agreed in the Agreement should be exempted for 15 acres site at

Izzatnagar for Convention Centre Complex and 520 acres site at

Manikonda for Integrated Township Project and Golf Course. But the issue pertaining to lease rentals from the golf course remained unresolved. Subsequently, the then Minister for Major Industries moved a secret note dated: 17.03.2005 to the then CM clarifying the 52 Crl.M.P.No.352/2013 issues that were required to be covered while issuing the GO

Ms.No.22, dated: 27.01.2005 and the note made by the then Minister is as follows:

1.As regards the increase in lease rentals from 2% to 3% for the balance period after 33 years, though the issue was not discussed in the meeting, in view of the orders obtained in circulation earlier, a clear clarificatory memo may be issued asking APIIC to incorporate a specific and clear clause on increased lease amounts of 3% for balance period of 33 years after lease of 2% for first 33 years.

2.Issue relating to representations made by a few people adversely affected by acquisition of patta land and requesting for deletion, was also discussed. It was decided that to avoid legal and other complications, a uniform approach would be adopted while dealing with all such requests. It was therefore decided that either the land involving such requests in the area shall be acquired or alternatively they be deleted from acquisition without any discrimination.

29.It is further case of the prosecution that basing on the secret note dated: 17.03.2005 submitted by the then Minister of Major

Industries, revision of lease rentals in respect of Golf Course from 2% 53 Crl.M.P.No.352/2013 to 3% on expiry of initial period of 33 years was approved by the then

CM. Subsequently, the supplementary agreement was executed on 19.04.2005 between APIIC and M/s. Emaar Properties PJSC, Dubai.

30.It is further case of the prosecution that Chairman,

M/s. Emaar Properties PJSC, Dubai addressed a letter dated:

02.05.2005 to Shri LV Subrahmanyam, VC & MD for bringing in

M/s. Fairbridge Holdings Ltd., a Cyprus based company as a shareholder in M/s. Emaar Holdings, Mauritius, such that M/s. Emaar

Properties PJSC, Dubai would dilute its ownership from the current 100% to 54.05% with Fairbridge owning the balance 45.95%, which would lead to net ownership in the integrated project in the ratio of

Emaar (40%), Fairbridge (34%) and APIIC (26%). Basing on the letter

Shri LV Subrahmanyam, VC & MD made a remarks that “We can request for credentials as deemed necessary for out response. So also to see how the new entity will bind itself to project commitments”. A copy of the letter issued by Chairman, M/s. Emaar Properties PJSC,

Dubai was also received in the office of the Principal Secretary,

Industries and Commerce, Government of AP by post on 13.05.2005.

On this copy Shri KV Rao, Principal Secretary, Industries and

Commerce remarked “Till the project is fully implemented it may not be correct to change the equity structure.” and marked the letter to 54 Crl.M.P.No.352/2013

MD, APIIC, which was received on 16.05.2005 by Shri LV

Subrahmanyam, VC & MD. The said issue was discussed on review meeting convened on 13.05.2005 and decided to continue with the existing arrangements till the project is completed. However, Shri LV

Subrahmanyam in violation of the instructions of the Principal

Secretary and the decision taken in the review meeting dated:

13.05.2005 addressed a letter dated: 13.05.2005 to M/s. Emaar

Properties PJSC, Dubai, which was dispatched on 18.05.2005, seeking the detailed information about M/s. Fairbridge Holdings Limited,

Cyprus, to process their request for bringing in Fairbridge Holdings as a partner for strategic resource.

31.It is further case of the prosecution that in pursuance of the agreement, the Government initiated the proceedings for acquiring 92.19 acres of land in Nanakramaguda Village. Since the owners of 11.26 acres of patta land has represented against acquisition of said land, a proposal was approved by the District Collect, RR District to acquire 80.35 acres of land. After the notification was published in the newspapers and the Gazette of AP, the aggrieved parties challenged the actions of the Special Deputy Collect, Land Acquisition (Industries)

before the Hon’ble High Court of AP by filing WP No.21712/2002,

dated: 31.10.2002, wherein the Hon’ble High Court vide orders dated:

55 Crl.M.P.No.352/2013 25.04.2003 granted stay on the land acquisition proceedings and directed the District Collector, RR District to issue notice for an enquiry under Section 5(A) of Land Acquisition Act to the persons whose lands were to be acquired including the petitioners and to take appropriate further steps after such enquiry. In compliance to the orders of the Hon’ble High Court of AP notices were issued to the aggrieved persons for conducting enquiry under Section 5(A) of Land

Acquisition Act on 17.03.2004.

32.It is further case of the prosecution that the District Collector

RR District after examining the objections of the interested parties, rejected their objections on the ground that the objections raised by them were devoid of any merit and decided to issue proceedings for 80.35 acres of land, which includes 3.36 acres of land belonging to

Smt. G. Vijaya Nirmala, W/o. Shri GSR Krishna, Shri Jayadev Galla, S/o.

Shri Galla Ramachandra and Smt. G. Rama Devi, W/o. Shri GVRK

Prasad. The Land Acquisition Officer passed an award under Section 11(A) of Land Acquisition Act for acquisition of 77.02 acres of land excluding the land of 3.33 acres. Since there was an urgency in handing over the land by APIIC to Developer, 77.05 Acres of patta land at Sy.No.4 to 26, 27/4 to 35, 41 to 46, 48 & 49 of

Nanakramaguda Village was handed over by Deputy Tahsildar to the 56 Crl.M.P.No.352/2013

Assistant Zonal Manager, Cyberabad Zone of APIIC. Again the aggrieved persons approached the Hon’ble High Court of AP challenging the purpose of acquisition of 77.02 acres of land for APIIC.

The Hon’ble High Court of AP dismissed the Writ Petitions filed by the aggrieved persons and the same was challenged before the Hon’ble

Supreme Court and the Hon’ble Supreme Court confirmed the orders passed by the Hon’ble High Court of AP and dismissed the SLPs.

33.It is further case of the prosecution that APIIC had handed over 454.93 Acres of Government land at Sy.No.203P, 210P & 211P of

Manikonda Village, Sy.No.91P of Gachibowli Village and Sy.No.36 to 40, 42 & 47 of Nanakramguda Village to Shri Vijaya Menon, representative of M/s. Emaar Properties, PJSC Dubai vide possession certificate dated: 18.06.2005. The patta land of 77.05 acres was handed over by the APIIC to Shri Vijay Menon, representative of M/s.

Emaar Hills Township Pvt. Ltd. And M/s. Boulder Hills Leisure Pvt. Ltd., vide possession certificate dated: 29.11.2005. In total 531.98 acres of land was handed over to M/s. Emaar Properties PJSC, Dubai and its joint venture companies for developing the Integrated Project i.e., Golf

Course and Township Project.

34.It is further case of the prosecution that APIIC moved the following proposals for waiver of conversion and development charges 57 Crl.M.P.No.352/2013 in respect of 15 acres of land for Convention Centre and Business

Hotel and 520 acres of land for Golf Course and Township Project.

S.No.Date of Subject matter of Amount involvedGO through Proposalproposalwhich Exemption was granted 113.02.2004Exemption of Rs.2,65,43,707/-GO conversion chargesMs.No.894 in respect of 520 ofMA dated: acres for golf 02.11.2005 course and township project 211.03.2004Exemption of Rs.12,34,019/-GO Ms. conversion chargesNo.390 in respect of 15 dated: acres of land for 10.05.2005 Convention Centre and Business Hotel 319.11.2005Exemption of Rs.1,35,57,246/-GO Ms. development No.990 charges in respect dated: of 15 acres of land 31.12.2005 for Convention Centre and Business Hotel 408.08.2007Exemption of Rs.24,73,28,163/-GO Ms. conversion chargesNo.879 in respect of 520 ofdated: acres for golf 05.12.2007 course and township project 58 Crl.M.P.No.352/2013

35.It is further case of the prosecution that the Cyberabad

Development Authority as well as the MA & UD Department has raised objection for exemption of above said charges in respect of the

Integrated Project, as this was the only source of revenue for CDA and such exemption was not provided in AP Urban Areas Development

Act, 1975. However, the then CM overruling all the objections granted exemption from payment of conversion/development charges to the tune of Rs.28,86,63,135/-.

36.It is further case of the prosecution that APIIC executed the following documents with M/s. Emaar Properties PJSC, Dubai and the

SPVs viz., M/s. EHTPL, M/s. BHLPL and M/s. CCCPL in respect of the

Integrated Project on 28.12.2005.

Sl.No.Nature of documents 1Conveyance Deed in respect of 258.36 acres (226.95 acres of Government land and 31.41 acres of patta land) of land executed in favour of M/s. EHTPL for development of Township Project. This land was conveyed for a total consideration of Rs.75,92,44,000/- @ Rs.29,00,000/- per acre. This was registered vide document No.20560 dated: 12.10.2006 with District Registrar, RR District.

2Share Subscription Agreement executed with M/s. EHTPL for allotment of 17,00,307 shares with face value of Rs.1,70,03,070/- in favour of APIIC in the equity proportion of 26% 3Shareholders’ agreement with M/s. EHTPL vide which APIIC was allotted 17,00,307 shares by M/s. EHTPL in the equity proportion of 26% 59 Crl.M.P.No.352/2013 4Lease Deed in respect of 235 acres (195.98 acres of Government land and 39.02 acres of patta land) of land executed with M/s. BHLPL for development of Golf Course, with provision for an amount of Rs.3,40,75,000/- to be paid by M/s. BHLPL @ Rs.1,45,000/- per acre towards non-refundable deposit to APIIC. This was registered vide document No.20562 dated: 12.10.2006 with District Registrar, RR District.

5Conveyance Deed in respect of 17 acres of land executed by M/s. BHLPL for development of Boutique Resort Hotel. The land was conveyed for a total consideration of Rs.4,93,00,000/- @ Rs.29,00,000/- per acre, which was adjusted towards part of 26% equity of APIIC in M/s. BHLPL. This was registered vide document No.20561 dated: 12.10.2006 with District Registrar, RR District.

6Share Subscription Agreement executed with M/s. BHLPL for allotment of 1,19,44,709 shares with face value of Rs.11,94,47,090/- in favour of APIIC in the equity proportion of 26% 7Shareholders’ agreement with M/s. BHLPL vide which APIIC was allotted 1,19,44,709 shares by M/s. EHTPL in the equity proportion of 26% 8Lease Deed in respect of 15.139 acres of land executed with M/s. CCCPL for development of Convention Centre and Business Hotel. This was registered vide document No.20563 dated: 12.10.2006 with District Registrar, RR District.

9Share Subscription Agreement executed with M/s. CCCPL for allotment of 1,86,20,970 shares with face value of Rs.18,62,09,695/- in favour of APIIC in the equity proportion of 26% 10Shareholders’ agreement with M/s. CCCPL vide which APIIC was allotted 1,86,20,970 shares by M/s. CCCPL in the equity proportion of 26% 11Debenture Deed executed between APIIC and M/s. EHTPL vide which APIIC was allotted 5,09,95,915 debentures by M/s. EHTPL against the surplus amount of Rs.50,99,59,150 60 Crl.M.P.No.352/2013 12Escrow Agreement executed between APIIC and M/s. EHTPL regarding opening of an escrow account with Andhra Bank, Hi-Tech City Branch, Hyderabad in respect of Debentures held by APIIC.

37.It is further case of the prosecution that the record shows that M/s. Emaar Properties PJSC, Dubai initially entered into an MOU on 06.11.2002 in pursuance of the decision taken by the council of

Ministers on 20.08.2002 and the G.O.Ms.No.359, dt.04.09.2002. As per the MOU, two SPVs (Special Purpose Vehicles) has to be implemented and 235 acres of land was allotted for Golf Course; 285 acres of land was allotted for Multi-use and 15 acres of land was allotted to water bodies, in total 535 acres of land was required for integrated project, out of 535 acres of land, APIIC was having 445-455 acres of its own and balance 80-90 acres of land was required to acquired. SPV-1 consisting of Pro-championship 18 hole Golf Course (along with Golf Club, Club House and Country Club) and Multi-use

Development including Villas and Commercial Complexes at

Manikonda. SPV-2 consisting of Convention Centre and Business Hotel to be implemented at NAC grounds. The equity structure of the SPVs is as follows:

SPV1:APIIC26% Emaar Properties74%

SPV2:APIIC49% 61 Crl.M.P.No.352/2013

Emaar Properties51%

38.It is further case of the prosecution that the lease payment for the land leased for a period of 66 years by SPV1 for the Golf

Course shall be equal to two percent of all annual revenue earned by the Golf Course, except life membership and other long term club and academy membership income.

39.It is further case of the prosecution that the MOU was followed by a Collaboration Agreement dt.19.08.2003 executed between APIIC and M/s. Emaar Properties PJSC, Dubai. Only certain issues relating to the Collaboration Agreement were approved by the

Cabinet Sub-Committee on 28.06.2003. The Board of Directors of

APIIC approved the Collaboration Agreement dt.19.08.2003 between

APIIC and Emaar Properties PJSC in its 151st Meeting held on 12.03.2004.

40.It is further case of the prosecution that in the year 2004, new Government came into power and the Government of Andhra

Pradesh constituted a Group of Ministers to review all decisions taken after 1st January, 2003. The group of Ministers has reviewed the several decisions taken by the earlier Government, but in respect of integrated Convention Centre Complex and Golf Course was deferred in the meeting held on 03.09.2004. Thereafter, discussions took place 62 Crl.M.P.No.352/2013 in the Government on 06.09.2004 and it was suggested that APIIC should limit its equity in all the three SPVs to 26% and thereby, proportionately increasing the equity of M/s. Emaar Properties in the entire project. It is to be noted that the earlier there are only two

SPVs, now it was divided into three SPVs, which are as follows:

SPV-1M/s. Emaar Hills Township Pvt. Ltd. (M/s. EHTPL) for development of Township Project with Villas, Apartments and IT Park at Manikonda

SPV-2M/s. Boulder Hills Leisure Pvt. Ltd. (M/s. BHLPL) for development of Golf Course and Boutique Resort Hotel at Manikonda

SPV-3M/s. Cyberabad Convention Centre Pvt. Ltd. (M/s. CCCPL) for development of Convention Centre and Business Hotel at NAC grounds.

41.It is further case of the prosecution that in view of the decision of the Government in all three SPVs, the equity of the

Government of Andhra Pradesh was reduced to 26% and the equity of

M/s. Emaar Properties PJSC, Dubai was enhanced from 51% to 74%.

42.The record reveals that Sri K.V. Rao, Principal Secretary vide his note dt.05.11.2004 noted that the lease rental from Golf Course may be negotiated with the developer for 2% of the Gross Annual revenue for 33 years and 3% for further 33 years. He also pointed out 63 Crl.M.P.No.352/2013 that the asset which was fully developed would revert to Government after 66 years.

43.The record also shows that the Price Fixation Committee proposes the enhancement of the land value from Rs.29,00,000/- to

Rs.40,00,000/- per acre, but the officials ignoring the same, only mentioned the land price at Rs.29,00,000/- per acre.

44.The case of the prosecution that they have increased the equity of M/s. Emaar Properties PJSC, Dubai, at the same time, they have completely ignored the enhanced value of the land even though the cost of the project was revised from Rs.430 crores to Rs.630 crores, but the appreciation in land cost was ignored. The Government has isued G.O.Ms.No.14 on 11.01.2005 mentioning the share value as 74% for Emaar Properties and 26% for APIIC in all three SPVs and all equity from APIIC was on land value basis alone @ Rs.29 lakhs per acre and also mentioned about the lease rentals for 235 acres of land at Manikonda land given for the Golf Course was fixed @ 2% of the

Gross Annual Revenue on all golf Course components for period of 33 years and @3% for further period of 33 years. Basing on the

G.O.Ms.No.14, dt.11.01.2005, a draft supplementary agreement was made available. VC & MD, APIIC addressed a letter to the Principal

Secretary ignoring the enhancement of 3% after expiry of 33 years 64 Crl.M.P.No.352/2013 and Sri KV Rao, the then Principal Secretary, Government of AP,

Industries and Commerce remained silent as he was allotted Plot

No.B-55 admeasuring 1239 sq.yds. in Sy.No.211(P) of Manikonda Jagir

Village, Rajendranagar Mandal, Ranga Reddy District @ Rs.5000/- per sq.yd. when the prevalent market rate was Rs.10,000/- per sq.yd.

45.It is further case of the prosecution that the documents reveals that Sri KV Rao, Principal Secretary (Industries & Commerce) though the then Minister for Major Industries was very much available, he has not circulated the file and only after issuance of

G.O.Ms.No.22, dt.27.01.2005 it was brought to the notice of the

Minister for Major Industries. After pursuance of the file, the Minister for Major Industries found that the G.O.22 was not in conformity with the orders dt.11.01.2005 in the file and made some remarks and directed the Principal Secretary, Industries & Commerce to prepare a comprehensive note duly incorporating information on all the issues and circulate the same to him for apprising the Minister for Finance and CM and also instructed the Principal Secretary to keep the

G.O.Ms.No.22 in abeyance till approval of CM. But it was not resolved in the meeting dt.02.03.2005, only matter pertaining to exemption of conversion charges was discussed. Subsequently, the then Minister for Major Industries moved a secret note dt.17.03.2005 to the then 65 Crl.M.P.No.352/2013

CM clarifying the issues that were required to be covered while issued the G.O.Ms.No.22, dt.27.01.2005. Subsequently the supplementary agreement was executed on 19.04.2005 between APIIC and M/s.

Emaar Properties PJSC, Dubai.

46.It is further case of the prosecution that Sri

LV Subrahmanyam contrary to the instruction of the Principal

Secretary and the decision taken in the review meeting dt.13.05.2005, addressed a letter dt.13.05.2005 to M/s. Emaar

Properties PJSC, Dubai seeking the detailed information about M/s.

Fairbridge Holdings Limited, Cyprus to process their request for bringing in Fairbridge Holdings as a partner for strategic resource. The documents also shows that

47.It is further case of the prosecution that M/s. Emaar MGF

Land Ltd., has allowed Sri Jayadev Galla and Smt. G. Ramadevi to encroach 2.20 acres of land and they constructed multi-storied buildings on the said land. In pursuance of the agreement, the

Government initiated the proceedings for acquiring 92.19 acres of land in Nanakramaguda Village. Since the owners of 11.26 acres of patta land has represented against acquisition of said land, a proposal was approved by the District Collect, RR District to acquire 80.35 acres of land. After the notification was published in the newspapers 66 Crl.M.P.No.352/2013 and the Gazette of AP, the aggrieved parties challenged the actions of the Special Deputy Collect, Land Acquisition (Industries) before the

Hon’ble High Court of AP by filing WP No.21712/2002, dated:

31.10.2002, wherein the Hon’ble High Court vide orders dated:

25.04.2003 granted stay on the land acquisition proceedings and directed the District Collector, RR District to issue notice for an enquiry under Section 5(A) of Land Acquisition Act to the persons whose lands were to be acquired including the petitioners and to take appropriate further steps after such enquiry. In compliance to the orders of the Hon’ble High Court of AP notices were issued to the aggrieved persons for conducting enquiry under Section 5(A) of Land

Acquisition Act on 17.03.2004.

48.It is further case of the prosecution that the District Collect

RR District after examining the objections of the interested parties rejected them on the ground that the objections raised by them were devoid of any merit. Out of 80.35 acres of land, extend of 3.36 acres of land at Survey Number 27/4 belonging to Smt. G. Vijaya Nirmala,

W/o. Shri GSR Krishna, Shri Jayadev Galla and Smt. G. Rama Devi and they also raised objections. Surprisingly, an award under Section 11(A) of Land Acquisition Act for acquisition of 77.02 acres of land excluding the land of 3.33 acres was passed.

67 Crl.M.P.No.352/2013

49.It is further case of the prosecution that APIIC had handed over 454.93 Acres of Government land at Sy.No.203P, 210P & 211P of

Manikonda Village, Sy.No.91P of Gachibowli Village and Sy.No.36 to 40, 42 & 47 of Nanakramguda Village to Shri Vijaya Menon, representative of M/s. Emaar Properties, PJSC Dubai vide possession certificate dated: 18.06.2005. The patta land of 77.05 acres was handed over by the APIIC to Shri Vijay Menon, representative of M/s.

Emaar Hills Township Pvt. Ltd. And M/s. Boulder Hills Leisure Pvt. Ltd., vide possession certificate dated: 29.11.2005. In total 531.98 acres of land was handed over to M/s. Emaar Properties PJSC, Dubai and its joint venture companies for developing the Integrated Project i.e., Golf

Course and Township Project.

50.It is further case of the prosecution that the Cyberabad

Development Authority as well as the MA & UD Department has raised objection for exemption of conversion charges and development charges in respect of the Integrated Project, as this was the only source of revenue for CDA and such exemption was not provided in AP Urban Areas Development Act, 1975. However, the then CM overruling all the objections granted exemption from payment of conversion/development charges to the tune of

Rs.28,86,63,135/-.

68 Crl.M.P.No.352/2013

51.It is further case of the prosecution that the APIIC executed the documents with M/s. Emaar Properties PJSC, Dubai and the SPVs viz., M/s. EHTPL, M/s. BHLPL and M/s. CCCPL in respect of the

Integrated project on 28.12.2005.

52.It is further case of the prosecution that Sri BP Acharya, the then VC & MD, APIIC has received an agenda from M/s. EHTPL on 14.09.2006 for discussing the proposal to bring in M/s. Emaar MGF

Land Ltd., as a co-developer to develop the township project as well as Golf Course project, to be discussed in the Board Meeting dt.21.09.2006of M/s. EHTPL and M/s. BHLPL. As per the agenda, M/s.

Emaar MGF Land Ltd. was proposed to pass on 25% of the total revenue from the project to M/s. EHTPL, which would affect the revenue sharing of APIIC in the integrated project. Sri BP Acharya did not discuss such an important issue in the board of APIIC.

53.It is further case of the prosecution that in the board meeting dt.21.09.2006, the development strategy for the Integrated Township

Project was discussed. Shri BP Acharya, the then VC & MD, APIIC, Shri

Vijay Menon & Shri Koneru Prasad, both Directors of M/s. EHTPL and

Shri Srikant Joshi, CEO-South, M/s. Emaar MGF Land Ltd., attend the said board meeting and it was discussed that the proposals were received from M/s. Emaar MGF Land Limited for the development and 69 Crl.M.P.No.352/2013 construction of the projects in SPV-1 (M/s. EHTPl) and SPV-2 (M/s.

BHLPL) and the same were placed before the board. M/s. EHTPL never brought to the notice of APIIC that there was fund crunch for the development of the project. Sri BP Acharya, who was present in the board meeting did not object to invoking of clause 6(v) from the MOU as the MOU had expired and the Collaboration Agreement dt.19.08.2003 was in place. The board authorized Shri Vijay Menon to execute the Development Agreement, Lease Deed and Assignment

Deed on behalf of the company with M/s. Emaar MGF Land Ltd. In the board meeting dt.21.09.2006, the board suggested for entering into a

Development Agreement for development of Boutique Resort Hotel and Golf Course, which were to be developed by M/s. BHLPL (SPV-2), there was no mention of M/s. EHTPL (SPV-1) entering into a

Development Agreement with M/s. Emaar MGF Land Limited for development of Integrated Township Project. Shri BP Acharya did not object for those irregularities.

54.It is further case of the prosecution that the prosecution contended that clause 8 of G.O.Ms.No.359, dt.04.09.2002; clause 6(v) of MOU dt.06.11.2002; clause 2.4(v), 2.4(x), 3.1(c)(iii) of Collaboration

Agreement dt.19.08.2003; clause 8 of supplementary agreement dt.19.04.2005; clause 9.1(H) of shareholder’s agreement 70 Crl.M.P.No.352/2013 dt.28.12.2005 reveals that rights towards development, management and operations of the integrated project could have been assigned by the developer with the principle approval from APIIC. Whereas in this case, no proposal was moved by M/s. Emaar Properties, PJSC, Dubai to

APIIC for obtaining the approval of APIIC; and Collaboration

Agreement and Supplementary Agreement contemplates that the integrated project through M/s. Emaar Holdings and covenants that the representations, obligations, warranties and commitments made by it should be duly complied with, as such M/s. Emaar Properties cannot absolve itself from its responsibility to complete the project through M/s. Emaar Holdings and M/s. EHTPL.

55.It is further case of the prosecution that as per the

Collaboration Agreement and Shareholder’s Agreement, it was the responsibility of M/s. EHTPL to approach both the shareholders i.e.

APIIC and M/s. Emaar Properties PJSC, Dubai to obtain their affirmative approval and as per the provisions of MOU and collaboration agreement only developer i.e., M/s. Emaar Properties, PJSC, Dubai could have assigned these rights to third party and not M/s. EHTPL.

Sri BP Acharya representing APIIC in the board of M/s. EHTPL has not raised any objection for the resolution of M/s. EHTPL entering into a

Development Agreement with M/s. Emaar MGF Land Ltd.

71 Crl.M.P.No.352/2013

56.The prosecution contended that as per clause 4.1 of the

Collaboration Agreement, approval of the Board of Directors of APIIC was compulsory as per the terms and conditions of the Collaboration

Agreement that was executed on 19.08.2003. As per clause 9.1H of the Shareholder’s Agreement executed between APIIC and M/s.

EHTPL, for the declaration or payment of any dividend or distribution of profits or passing of any resolution to retain or allocate profits, affirmative approval should be obtained by M/s. EHTPL from both

M/s. APIIC and M/s. Emaar Properties PJSC, Dubai.

57.It is further case of the prosecution that M/s. Emaar MGF

Land Pvt. Ltd., represented by its Chief Executive Officer Shri Srikant

Joshi, submitted an application dt.23.04.2007 to the Chief Secretary,

Government of AP requesting for notifying M/s. Emaar MGF Land Pvt.

Ltd., as a co-developer for designing, developing, operating and maintaining the area of 10.33 acres of land and structures thereon at

Manikonda Village. M/s. EHTPL vide letter dt.24.04.2007 submitted the proposal for including additional area of 7.77 acres of land for the purpose of developing additional facilities in the said SEZ notified vide notification No.SO 548(E) dt.10.04.2007. The Chief Secretary decided to seek comments from APIIC and Sri B.P. Acharya recommended for consideration of request of M/s. EHTPL for including additional 7.77 72 Crl.M.P.No.352/2013 acres of land and no objection for including M/s. Emaar MGF as co- developer for development of IT/ITES SEZ. After obtaining sanction from APIIC, the Government of AP has processed the file to

Government of India and the Government of India conveyed the approval for including M/s. Emaar MGF Pvt. Ltd., as a co-developer.

58.It is further case of the prosecution that M/s. Emaar MGF

Land Pvt. Ltd., was incorporated on 18.02.2005 and was registered with ROC, New Delhi and the name of the company was changed to

M/s. Emaar MGF Land Limited from Emaar MGF Private Land Limited on 13.08.2007. Shri Shravan Gupta and Shri Siddharth Gupta were the initial two Directors of the company; Shri Mohamed Ali Alabbar,

Shri Sale Bin Rashid Ali Mohannadi and Ms. Low Ping were appointed as Directors of the company on 07.11.2005. Shri Shravan Gupta is the

Managing Director of the company and Shri Mohamed Ali Alabbar is the Chairman.

59.It is further case of the prosecution that pursuant to the resolution passed by the Board of M/s. EHTPL on 21.09.2006, a development agreement was executed between M/s. EHTPL and

M/s. Emaar MGF Land Limited on 03.11.2006 i.e., before changing the name. The said agreement was executed by Shri Vijay Menon on 73 Crl.M.P.No.352/2013 behalf of M/s. EHTPL and Shri Srikant Joshi, CEO (South) on behalf of

M/s. Emaar MGF Land Limited.

60.It is further case of the prosecution that in the board meeting dt.26.03.2007, Shri Vijay Menon and Dr. Nader Mohammed resigned as Directors of M/s. EHTPL and in their place Shri Vinod Kumar

Gomber and Shri Ahmed Thani Rashed Almatrooshi were appointed as

Directors of the company. Shri Vijay Menon was retained as Manager of the company and was authorised to sign the necessary documents on behalf of the company. In the board meeting dt.26.09.2007, it was discussed that the development agreement executed between M/s.

EHTPL and M/s. Emaar MGF Land Limited based on the board resolution dt.21.09.2006 was required to be confirmed by APIIC.

Subsequently, a Development Agreement-cum-General Power of

Attorney (GPA) was executed between M/s. EHTPL and M/s. Emaar

MGF Land Limited on 25.07.2007. As per the Development

Agreement-cum-GPA, the Development Agreement dt.03.11.2006 was cancelled and was replaced with the Development Agreement-cum-

GPA dt.25.07.2007. The said Development Agreement-cum-GPA was signed by Shri Vijay Menon on behalf of M/s.EHTPL and Shri Srikant

Joshi on behalf of M/s. Emaar MGF Land Ltd. In the board meeting dt.10.07.2008, Shri Amit Jain and Shri Srikant Joshi, CEO were 74 Crl.M.P.No.352/2013 appointed as alternate Directors. Shri Pardhasaradhi Rao was appointed as Second Nominee Director of APIIC.

61.It is to be noted that M/s. Emaar MGF Land Ltd., applied for term loan of Rs.150 crores by Axis Bank by offering 14.01 acres of land out of 258.36 acres owned by M/s. Emaar MGF Land Ltd., and subsequently the said loan was reduced to Rs.90 crores. M/s. Emaar

MGF Land Ltd., has cleared all the dues against the term loan in

February, 2011, as such the security i.e., the title deed in respect of 14.01 acres of land was released by the Bank.

62.It is further case of the prosecution that on 23.07.2008 Shri

Vijay Raghav on behalf of M/s. EHTPL and Sri Srikant Joshi on behalf of

M/s. Emaar MGF Land Ltd. executed addendum to Development

Agreement-cum-GPA deciding the percentage share in the revenue of

M/s. Emaar MGF Land Ltd. The Development Agreement-cum-GPA dt.25.07.2007 and Addendum to the Development Agreement-cum-

GPA dt.23.07.2008 executed between M/s. EHTPL and M/s. Emaar MGF

Land Limited were never discussed in the board of M/s. EHTPL. As per the Development Agreement, the gross revenue was to be shared between M/s. Emaar MGF Land Pvt. Ltd. and M/s. EHTPL in the ratio of 75% : 25% on both the sale and lease proceeds. In the addendum to the Development-cum-GPA the revenue sharing pattern of lease 75 Crl.M.P.No.352/2013 proceeds was revised from 75% : 25% to 95% : 5%. The same was accepted in the board meeting dt.15.06.2007, which is detrimental to the interest of APIIC. In case of revenue from Operations and

Maintenance and advertisements in Common Areas, the sharing was in the ratio of 75% : 25% on the profits derived there from and not on revenues, as mentioned in the addendum to the Development

Agreement-cum-GPA, the said aspect was not discussed in the board meetings of M/s. EHTPL. Due to amendments of the share pattern, the

APIIC has sustained loss of Rs.4,92,10,000/- from 2008-09 to 2010-11.

63.It is further case of the prosecution that M/s. BHLPL and

M/s. Emaar MGF entered into a Development Agreement, Deed of

Assignment, Lease Deed as applicable to the development of

Boutique Resort Hotel and Golf Course Multi use Project. But no development agreement was executed between M/s. BHLPL and M/s.

Emaar MGF Land Ltd., and only Lease Deed and Assignment Deed were executed on 03.11.2006. Those two deeds empowered M/s.

BHLPL to sell villa plots.

64.It is further case of the prosecution that M/s. EHTPL entered into Agency Agreement with M/s. Stylish Holmes Real Estate Pvt. Ltd.

represented by its Director Shri T. Ranga Rao on 29.01.2005 and appointed M/s. Stylish Holmes Real Estates Pvt. Ltd., as its sole Agent 76 Crl.M.P.No.352/2013 for the purpose of marketing the Plots and Residential units and the said Agency Agreement was executed on 29.01.2005 at Dubai and the M/s. Stylish Holmes Real Estate Pvt. Ltd. had started booking villa plots in the integrated township in the month of March, 2005 though the land had not been transferred to M/s. EHTPL.

65.It is further case of the prosecution that as per the provisions of G.Os issued by Government of Andhra Pradesh; Collaboration

Agreement and Supplementary Agreement executed between APIIC and M/s. Emaar Properties PJSC, Dubai, M/s. EHTPL was required to develop the project land by way of constructing Villas and Apartments and sell the same after finalizing the rates in its board. Hence the agency agreement dt.29.01.2005 executed by the Chairman,

M/s. Emaar Properties PJSC, Dubai on behalf of M/s. EHTPL agreeing to sell the plots @ Rs.5,000/- per sq.yd for a period of 5 years is nothing but clandestine arrangement in furtherance of the criminal conspiracy by the developer to dispose off the project land without developing the same, which caused loss of revenue to APIIC.

66.It is further case of the prosecution that M/s. Stylish Holmes

Real Estates Pvt. Ltd. started booking villa plots from March, 2005 itself and it booked 43 villa plots till 27.12.2005 i.e., prior to execution of Conveyance Deed dt. 28.12.2005 by APIIC in favour of M/s. EHTPL.

77 Crl.M.P.No.352/2013

During the period 28.12.2005 to 02.11.2006, M/s. EHTPL and M/s.

Stylish Holmes Real Estates Pvt. Ltd., booked 25 villa plots, whereas

M/s. EHTPL executed a Development Agreement dt.03.11.2006 with

M/s. Emaar MGF Land ltd. Even after execution of Development

Agreement dt.03.11.2006 in favour of M/s. Emaar MGF Land Ltd., M/s.

Stylish Holmes Real Estates Pvt. Ltd., continued to book villa plots as per the Agency Agreement dt.29.01.2005 and booked 37 plots in between 03.11.2006 to 20.08.2008.

67.It is further case of the prosecution that 31 villa plots were sold by M/s. EHTPL and M/s. Emaar MGF Land Ltd., at the documented rate of Rs.5,000/- per sq.yd. though the prevalent market rates were much higher. As per the Agency Agreement dt.29.01.2005, plots over and above 100 were to be sold at the prevailing market rates as decided by M/s. EHTPL, M/s. Stylish Holmes Real Estates Pvt. Ltd.

68.It is further case of the prosecution that villa plot buyers has paid first and second installments in favour of M/s. EHTPL, whereas third and final installments, which accounted for 85% of the sale consideration @ Rs.5,000/- per sq.yd was paid in favour of M/s. Emaar

MGF Land Ltd., though the booking had been made by M/s. EHTPL through M/s. Stylish Holmes Real Estates Pvt. Ltd., as such without 78 Crl.M.P.No.352/2013 making any investment M/s. Emaar MGF Land Ltd., received bulk of revenue from sale of villas/plots.

69.It is further case of the prosecution that as per the instructions of Shri Koneru Rajendra Prasad, Shri T. Ranga Rao,

Director, M/s. Stylish Holmes Real Estates Pvt. Ltd., sold 82 villa plots by collecting excess amounts from the buyers ranging from Rs.4,000/- per sq.yd to Rs.45,000/- per sq.yd. over and above the rate of

Rs.5,000/- per sq.yd. The excess money was collected by

Shri T. Ranga Rao from the buyers in cash only except from

Shri P.S. Parthasarathy Rao and Shri Challa Suresh, who had deposited

US $ 250,000 and US $ 140,000 respectively towards part of excess payment in the bank accounts of Shri Madhu Koneru, S/o. Shri Koneru

Rajendra Prasad maintained at Dubai. From the 82 villa plot buyers, an amount of Rs.96,01,75,000/- was collected over and above the documented price of Rs.5,000/- per sq.yd. and it was supported by

Shri T. Ranga Rao, Shri P.S. Parthasarathy and Shri Y.V. Prasad statements recorded under Section 164 Cr.P.C. It is further case of the prosecution that Shri T. Ranga Rao handed over the cash to Shri Sunil

Reddy on the instructions of Shri Koneru Rajendra Prasad and also sometimes directly to Shri Koneru Rajendra Prasad.

79 Crl.M.P.No.352/2013

70.It is further case of the prosecution that 23 villa plots were allotted at the rate of Rs.5,000/- per sq.yd to the relatives of Shri

Koneru Prasad and family members of VIPs (Politicians in higher positions). It is further case of the prosecution that the Investigating

Agency has recovered two laptops from the office of M/s. EHTPL and

M/s. Emaar MGF Land Ltd., at Hyderabad. Out of those two laptops, one belongs to Shri Vijay Raghav and the laptops were sent to CFSL analysis and it reveals that the buyers has paid the more than the documented price.

71.It is further case of the prosecution that Shri Vijay Raghav,

Shri Srikant Joshi and Shri Shravan Gupta asked Shri Rajeev Gupta,

Sr. Vice President, M/s. Emaar MGF Land Ltd., to incorporate 10 companies with the employees of M/s. MGF Ltd., and other group companies as Directors/Shareholders of these companies.

Accordingly, seven companies were floated at New Delhi and three companies were floated at Ernakulam and the money was transferred and 18 villa plots were booked in the name of ten companies, later it was cancelled.

72.It is further case of the prosecution that M/s. EHTPL and M/s.

Emaar MGF Land Ltd., sold about 206 apartments, out of which Shri

Srikant Joshi, the then CEO, M/s. Emaar MGF Land Pvt. Ltd. purchased 80 Crl.M.P.No.352/2013 an apartment in his name at Rs.3,268/- per sq.ft, whereas the apartments were sold to the other buyers between Rs.4,800/- and

Rs.9,000/- per sq.ft.

73.It is further case of the prosecution that APIIC has not received any revenue from M/s. EHTPL on account of its equity in the

Township Project and M/s. Emaar MGF Land Ltd., balance sheet shows that Rs.194,13,13,396/- was earned from sale of villas, villa plots and apartments, out of which the revenue share of Rs.48,53,28,349/- is shown payable to M/s. EHTPL towards its 25% share, but the said amount was not paid.

74.It is further case of the prosecution that on the instruction of

Shri Koneru Prasad, Shri T. Ranga Rao and his Manager collected an amount of Rs.96,01,75,000/- from sale of villa plots over and above the documented price @ Rs.5,000/- per sq.yd. during the period between 2005-2010. Similarly, Shri GV Vijay Raghav, Finance Head-

South, M/s. Emaar MGF Land Ltd., collected an amount of

Rs.6,85,60,000/- from sale of three villa plots over and above the documented price @ Rs.5,000/- per sq.yd. But those amounts were not reflected in the books of account of M/s. EHTPL. It is further case of the prosecution that APIIC has not received even a single rupee from Township Project, which amounts to loss of Rs.43.50 crores. At 81 Crl.M.P.No.352/2013 the same time, M/s. Emaar MGF Land Ltd. and M/s. Emaar Properties

PJSC, Dubai obtained undue pecuniary advantage of Rs.167.29 crores.

75.It is further case of the prosecution that a team was constituted for implementation of integrated project, utilization of funds with respect to agreements entered into between APIIC and

M/s. Emaar Properties, PJSC Dubai. The said team consisting of Shri C.

Subba Rao and Shri B V Bhaskar Rao visited the office of M/s. EHTPL on 04.05.2009 and 05.05.2009 and inspected the records and pointed the irregularities.

76.It is further case of the prosecution that after inducting Shri

BR Meena as VC & MD on 24.12.2009, he has noticed several irregularities and same were placed before the board of APIIC in its board meeting dt.10.08.2010 and the board took a decision to take comprehensive and independent expert opinion on the all the issues relating to the implementation of the project.

77.It is further case of the prosecution that after receiving the reports of the consortium and legal opinion, the matter was referred to the then Ld. Solicitor General of India by APIIC and in his opinion dt.18.09.2010, the then Ld. Solicitor General of India had suggested the following course of action:

82 Crl.M.P.No.352/2013

(a)APIIC should terminate the collaboration agreement and initiate arbitration proceedings with Emaar. It may then seek an injunction against M/s. Emaar MGF on the ground that the

Corporate veil must be lifted in this case.

(b)APIIC as a minority shareholder in EHTPL should initiate appropriate proceedings in the company law board for oppression/mismanagement, and try and get control of EHTPL after which the development agreement with M/s. Emaar MGF could be rescinded by M/s. EHTPL.

(c)APIIC and GoAP should jointly file a suit for permanent injunction in an appropriate Civil Court, seeking to restrain Emaar

MGF from proceeding with any works or engaging in any sale relating to the project land.

(d)APIIC should request GoAP to issue necessary instructions to the competent registration authorities not to register any sale deeds executed by Emaar MGF in favour of buyers. Where such sale deeds have been executed and registered, options may be explored as to how such registrations can be cancelled.

(e)APIIC may consider initiating appropriate criminal proceedings against persons involved in the actions that resulted in the depletion in the value of EHTPL. If necessary, recourse may be taken to Section 235 of Companies Act, 1956.

78.It is further case of the prosecution that as per the suggestions of Ld. Solicitor General of India, APIIC issued termination notice to M/s. Emaar Properties PJSC, Dubai and M/s. Emaar Holdings, 83 Crl.M.P.No.352/2013

Mauritius on 29.10.2010 under Clause 5.3(a) of the Collaboration

Agreement.

79.It is further case of the prosecution that Shri N Sunil Reddy (A-7) along with his father Shri N Sangi Reddy floated a company which was incorporated on 10.05.2005 in the name and style of M/s.

Sunil Projects and Foundations Pvt. Ltd. and both Shri N Sunil Reddy (A-7) and his father Shri N Sangi Reddy were the promoter directors of the said company and Shri N Sunil Reddy (A-7) was nominated as the

Managing Director of the company. Later, Narapa Manohar Reddy and his wife Smt. Narapa Saradha Reddy were appointed as Directors w.e.f. 10.10.2009. Subsequently, on 25.01.2010, the name of the company was changed to M/s. Southend Projects & Foundations Pvt.

Ltd. and A-7 and his father resigned from the company w.e.f.

01.10.2010. M/s. Southend Projects & Foundations Pvt. Ltd. has received the funds during the period 2009-2010 from various companies but those companies existences is in question.

80.It is further case of the prosecution that as far as land acquisition is concerned, the revenue officials has played dual role and they wanted to held some persons i.e., G. Krishna and G. Vijaya

Nirmala and Smt. Laxmamma. The officials and the Chairman of APIIC has used different yardsticks to acquire the lands of cinema actor i.e., 84 Crl.M.P.No.352/2013

G. Krishna and his family members and at the same time applied another yardstick to acquire properties of others.

81.It is further case of the prosecution that the request made by

Smt. Galla Aruna Kumari for exempting an extent of Acs.2-20 gts at

Sy.No.27/4 from acquisition was rejected. The GHMC authorities favoured the family members of Sri G. Krishna and Sri Galla Jayadev.

Who encroached upon the Government land.

82.It is further case of the prosecution that the excess amount collected from villa plot buyers was benefited by Shri Koneru Rajendra

Prasad and Shri N. Sunil Reddy and the said transactions were held at

Syndicate Bank, New Nallakunta Branch, Hyderabad; Karur Vysya

Bank, Nallakunta Branch, Hyderabad and Dena Bank and

Ramakrishna Mutt Branch, Hyderabad.

83.It is the case of the prosecution that that M/s. Emaar MGF

Land Ltd. (A-4) is a joint venture company of M/s. Emaar Properties

PJSC, Dubai (A-2) and Motor General Finance Ltd., New Delhi. Sri

Shravan Gupta is the Managing Director of the company since the date of its inception and there are 9 Directors in the company i.e., 3 from M/s. Emaar Properties, 3 from MGF Group and 3 independent

Directors and Sri Srikant Joshi (A-8) was the CEO of the company during the relevant period. The development agreement dated:

85 Crl.M.P.No.352/2013 03.11.2006 between M/s. EHTPL (A-3) and M/s. Emaar MGF Land Ltd.

(A-4) was executed by Sri Vijay Menon and Sri Srikant Joshi (A-9), CEO on behalf of M/s EHTPL (A-3) and M/s. Emaar MGF Land Ltd. (A-4).

Subsequently, the said agreement was cancelled and a new development agreement-cum-GPA was executed on 25.07.2007 by

Sri Vijay Menon and Sri Srikant Joshi (A-9) on behalf of M/s. EHTPL (A-3) and M/s. Emaar MGF Land Ltd. (A-4), where it is mentioned that both Sri Vijay Menon and Sri Srikant Joshi (A-9) were the employees of

M/s. Emaar MGF Land Ltd. (A-4) since March, 2007. At the time of executing the development agreement-cum-GPA the revenue sharing arrangement which was agreed in the development agreement dated 03.11.2006 was proposed to be revised, but that was not finalized.

Subsequently, the development agreement-cum-GPA was also revised by executing an addendum to the Development Agreement-cum-GPA on 23.07.2008, where it is mentioned that the addendum was not approved by the Board of M/s. Emaar MGF Land Ltd (A-4).

84.It is further case of the prosecution that the revenue sharing arrangement between M/s. EHTPL (A-3) and M/s Emaar MGF Land Ltd.

(A-4) was totally revised in the addendum dated: 23.07.2008 by incorporating new revenue components viz., operations &

Maintenance and advertisement in common area, which were never 86 Crl.M.P.No.352/2013 discussed on any earlier occasions and the revenue from leases including commercial leases was reduced to 5% from 25%. These sequence of events clearly establishes that there was a criminal conspiracy on the part of M/s. Emaar Properties PJSC, Dubal (A-2) to hijack the entire project and this was facilitated through its joint venture company M/s. Emaar MGF Land Ltd. (A-4). As per the agency agreement dated: 29.01.2005, though its applicability was questionable as it was executed without the knowledge of APIIC, the remaining Villa Plots (beyond 100) were to be sold at the prevailing market rates and it was the responsibility of M/s. Emaar MGF Land

Ltd., (A-4) to fix the rates in tune with market rates, but A-4 deliberately did not take any action.

85.It is further case of the prosecution that as per the records collected from Registrar of Companies, concerned banks and

M/s. MGF Ltd, instead of fixing the rates in line with the market rates, as per the instructions of Shri Shravan Gupta, 10 different companies (7 at New Delhi and 3 at Ernakulam) with its employees as Directors/

Shareholders of these companies were acquired/incorporated, with an intention to block Villa Plots in the name of these companies, so that the same could be sold at premium rates in future. The funds for incorporating/acquiring these companies were transferred from the 87 Crl.M.P.No.352/2013 account of M/s. Discovery Estates Pvt. Ltd., in which Shri Shravan

Gupta and his wife are having 99% shares. 18 Villa Plots were blocked in the name of these 10 companies @ Rs.5000/- sq. yd. during the year 2010 when the prevailing market rates were Rs.50,000/- per sq.

yd. and Villa Plots were being sold to other buyers in that project @

Rs.50,000/- per sq. yd. The remaining 16 Villa Plots (out of 136) were also sold by A-4 at much higher rates during the period 2009-10, but only the amount @ Rs.5000/- was accounted for in the Books of

Accounts and the balance amount collected in cash was misappropriated by A-4. Even the third installment (which accounted for 85% of the total sale consideration) @ Rs.5,000/- per Sq. Yd., in respect of 102 villa plots which were booked by M/s. EHTPL (A-3) through M/s Stylish Holmes Real Estates Ltd. (A-5) was received in the account of A-4 and the same was misappropriated by it.

86.It is further case of the prosecution that as per the revenue sharing agreement between M/s. EHTPL (A-3) and M/s. Emaar MGF

Land Ltd. (A-4), A-4 was required to pass on 25% of the Gross Annual

Revenue to A-3 for further revenue sharing between A-3 and APIIC. As per the books of account of A-4, an amount of Rs.48 crores was payable to A-3 on account of its revenue annual revenue of A-4, but it never shared from the gross to deprive APIIC from its due revenue 88 Crl.M.P.No.352/2013 share. A-3 was being managed by the staff of A-4 company and thus,

A-3 was reduced to a shell company with sole objective to deprive

APIIC from its due revenue share and misappropriate the revenues from the integrated project.

87.It is further case of the prosecution that Sri Srikant Joshi (A-9), CEO himself purchased Villa Plot A-49 in the name of his wife

Smt. Jyotsna Joshi @ Rs.5000/- per sq. yd. during the year 2010, though the market rate was around Rs.50,000/- per sq. yd. and during the said period, he also booked an apartment on his name @

Rs.3000/- sq. ft. though the apartment to the other buyers were being sold above the rate Rs.6000/- per sq. ft.

88.It is further case of the prosecution that A-3 assigned 258.36 acres of land in favour of A-4 vide Development Agreement cum GPA dt.25-07-2007 without the consent of APIIC, though it had 26% equity in the said land and the said land was disposed off by A-4 by collecting excess payments from the villa buyers and accounted only the consideration at Rs.5,000/- per Sq. Yd and therefore, A-4 committed the offences of criminal breach of trust and misappropriated the excess money collected from the sale of villas/plots and thus, A-4 committed the offence punishable under

Section 120-B r/w 420, 409 and 477-A of IPC.

89 Crl.M.P.No.352/2013

89.The prosecution has relied on several office notes in Document

Nos.30, 31, 53, 10, 29, which shows that Accused No.1 has verified the office notes and the allegations made by the prosecution are in consonance with the notings in those documents.

90. It is to be noted that Accused No.1 was nominated by the

Government of Andhra Pradesh as the nominee Director from APIIC on the Boards of three SPVs. Accordingly, Accused No.1 was formally inducted as a Director on the Boards of the three SPVs on 19.12.2005, and for the first time he participated in the meeting held on 20.12.2005 in all the three SPVs, and he is having full knowledge about the Memorandum and Articles of Association SPVs. The

Accused No.1 is also having knowledge of the document i.e. MoU dt.06.11.2002 (Document No.11), Collaboration Agreement dt.19.08.2003 (Document No.19) and Supplementary Agreement dt.19.04.2005 (Document No.32). Those three documents were executed prior to appointment of Accused No.1 as VC&MD of APIIC.

91.The Share Subscription Agreement dt.28.12.2005 (Document

No.51), Shareholders Agreement dt.28.12.2005 (Document No.52),

Lease Deed dt.28.12.2005 (Document No.56), Deed of Conveyance dt.28.12.2005 (Document No.57), Share Subscription Agreement 90 Crl.M.P.No.352/2013 dt.28.12.2005 (Document No.58), Shareholders Agreement dt.28.12.2005 (Document No.59), Lease Deed dt.28.12.2005 (Document No.60), Share Subscription Agreement dt.28.12.2005 (Document No.61), Shareholders Agreement dt.28.12.2005 (Document No.62), Debenture Deed dt.28.12.2005 (Document No.54) and Escrow Agreement dt.28.12.2005 (Document No.55). The contents of those documents are prepared only after approval of

Accused No.1.

92.The documents filed by the prosecution i.e. Resolution passed by Board of M/s. Emaar Hills Township Private Ltd./A-3, a Development

Agreement was executed between Accused No.3 and the petitioner/

A-4 on 03.11.2006 and in violation of the MoU and Collaboration

Agreement, clauses in the Agreement dt.03.11.2006 were incorporated and later on 21.12.2006 further action plan was prepared. Subsequently, a Development Agreement-cum-GPA was executed between the petitioner/A-4 and Accused No.5 on 25.07.2007. Those are also not in consonance with the clauses in the previous documents and Addendum to Development Agreement &

GPA dt.23.07.208 was executed further causing loss to the share of

APIIC in violation of the clauses of MoU and Collaboration Agreement.

These facts clearly shows that Accused No.1 having on the Board of 91 Crl.M.P.No.352/2013

Accused No.3 since 19.12.2005 he allowed Development Agreement- cum-GPA dt.25.07.2005 to cause benefit to the others by causing loss to APIIC. In this context, it is relevant to refer the inconsistencies in various Agreements which are as follows:

Collaboration G.O.Ms.No.359, Memorandum of

Agreement dt.04.09.2002 Understanding

dt.19.08.2023 dt.06.11.2002

As per clause 2.4(v):Clause 8:Clause 6(v):

The Developer shall at itsEmaar Properties PJSCThe Developer should at its discretion assign its rightsDubai shall form the SPVsdiscretion assign its rights towardsdevelopment,and also establish atowardsdevelopment, managementandmanagement team undermanagementand operationsoftheits direct management foroperationsofthe integrated project to otherthe overall project andIntegrated Project to other partiesthroughwould remain liable forparties through appropriate appropriate and suitableoperationsandand suitable mechanism. mechanism.managementoftheThough the MOU was also integrated project for thereferred to the GoAP while term of concession. SPVsissuing the GO, the GoAP could assign operatorhad instructed that the rights to reputed firms atMOUshouldbein the behest of Emaarconformity with the GO. Properties.

As per clause 2.4(vii):

theDevelopershall design, develop, finance, operate and manage the integrated project with facilitation from APIIC, Indianfinancial institutions and all other statutoryandor regulatory authorities.

As per clause 2.4(ix):

theDevelopershall undertake the project developmentincluding design,project management,finance, 92 Crl.M.P.No.352/2013 implementationand operationsofthe integrated project

As per clause 2.4(x) the Developer shall at its discretion assign its rights towardsdevelopment, managementand operationsofthe integrated project to other partiesthrough appropriate and suitable mechanism with an in- principle approval by APIICnottobe unreasonably withheld.

As per clause 2.4(xii)

The Developer shall carry out the implementation of the Integrated Project as perinternational standardsandwill operate and maintain the Integrated Project with the provisions of the Agreement,Applicable Laws and Applicable Permits and shall comply with lawful directives givenbystatutory authorities. As per clause 2.6(i):

The Developer will pay to APIIC for the Residential & Commercial Development Lands at Rs. 29,00,000 (Rupees Twenty Nine Lakhs only) per acre (barring unusable land of rock formations and lake area) for approximately 195 acres of land that has already been acquired by APIIC. The Developer will purchase the balance 90 acres of land, at market 93 Crl.M.P.No.352/2013 value, which will be transferred to SPV1 at the value of Rs. 29,00,000 (Rupees Twenty Nine Lakhs). As per clause 2.5.1:

An Independent Engineer (IE) and an Independent Auditor (IA) shall be appointedforthe Integrated Project. For the selection of the IE and the IA, the Developer shall, within a period of thirty (30) days from the executionofthis Agreement propose a list of three(3) competent firms. APIIC shall, within a period of fourteen (14) days from the receipt of the said list communicate to the Developer the name of the firm to be appointed. The cost of the IE and IA shall be borne by the SPVs and this cost shall be subject to consultation with the Developer. As per clause 3.1(c)(i):

Nopre-incorporation contract, agreement or arrangement, other than this Agreement, shall be entered into or negotiated in relation to or on behalf of JVCos save and except thoserelatingto incorporation of JVCos or those agreed in writing by the Parties. As per clause 3.1(c)(ii)(c):

The Memorandum and Articles of Association of JVCos shall be adopted, which shall reflect and incorporate the terms of 94 Crl.M.P.No.352/2013 this Agreement and the ShareSubscription Agreement entered into between the Parties. The Articles of Association so adopted shall state that the respective JVCos have been incorporated to give effect to the terms and conditionsofthis Agreement.

As per clause 3.1(c)(iii):

JVCos shall not carry out any operation or business or otherwise enter into anyagreementor arrangement with any Person or incur any liability, which may have material bearing on the financial of the concerned JVCo without the prior written consent of the Parties. As per clause 3.4:

The authorised share capital of SPV-1 shall be Rs. 0.500 million divided into 50,000 equity shares of Rs. 10/- each and ranking pari passu in all respects. The initial issued and paid up equity share capital of SPV-1 shall be Rs. 0.100 million divided into 10,000 equity shares of Rs.10/-each and ranking pari passu in all respects. The authorised share capital of SPV-2 shall be Rs. 0.500 million divided into 50,000 equity shares of Rs. 10/- each and ranking pari passu in all respects. The initial issued and paid up equity share capital of SPV-2 shall be Rs.0.100 million 95 Crl.M.P.No.352/2013 divided into 10.00 equity shares of Rs. 10/- each and ranking pari passu in all respects. As per clause 6.3:

Ifanydisputeor difference or controversy or claim of any kind whatsoever shall arise betweentheParties hereto in connection with or arising out of this Agreement (and whether

before or after the

termination or breach of thisAgreement)the Partiesheretoshall promptly and in good faith negotiate with a view to its amicable resolution and settlement. In the event no amicable resolution or settlement is reached within a period of thirty (30) days from the date on which the dispute ordifferenceor controversy or claim arose, such dispute or differenceshallbe referred to and settled by arbitration in accordance with the Arbitration and Conciliation Act, 1996 by an arbitral tribunal. Each party shall have the right to appoint one arbitrator. The venue of arbitration shall be at Hyderabad, India and the arbitral proceedings shall be conducted in accordance with the Arbitration and Conciliation Act, 1996. As per clause 6.11:

Neither Party shall assign or transfer its rights or obligations.

96 Crl.M.P.No.352/2013

Table -II:

Supplementary Shareholder’s Lease Deed

Agreement Agreement dt.03.11.2006

dt.19.04.2005 dt.28.12.2005

Clause 8:Clause 9.1 H:As per clause 2.3.1:

M/s.EHTPLwasThe Joint Venture CompanyThe term of lease was for a supposed to develop thei.e. M/s. EHTPL shall upon period of 99 years. township project fromthe affirmative approval of the internal accrualsboth the shareholders take only. It is pertinent toaction on declaration or mention here that thepayment of any dividend or Supplementarydistribution of profits of the Agreementwaspassing of any resolution to executed subsequent toretain or allocate profits. theCollaboration Agreement by amending the clause relevant to development of project, as such it has got precedence over the Collaboration Agreement.

As per clause 2.3.2:

The time required for obtaining the requisite Statutory approvals by the parties was to be treated as rent free period. The rent free period also included the construction period inclusive of fit out period of three (3) years or any mutually agreed extension after three (3) years for the project.

As per clause 2.4.1:

M/s. Emaar MGF Land Limited(Lessee)was required to pay lease rental @ 5% of the gross annual revenue in favour of M/s.

97 Crl.M.P.No.352/2013

BHLPL (Lessor), during the lease period.

As per clause 3.2.3:

The lessor (M/s. BHLPL) was required to deposit the title deed of the Lease Land (Sale Deed dt.28.12.2005, registered as Document No.20561/2006, in the office of the sub-registrar, Moosapet, RR District) to anyLender/Financial Institution, on creation of charge on the Lease Land by the Lessee (M/s. Emaar MGF Land Ltd.)

As per clause 3.2.4:

The Lessee was entitled during the Lease period to assign, sub-lease, license, given on Lease and license, sublet or underlet the Lease Land together with the project or any part or portion thereof independent of the other portion or portions or any interest therein to separate parties and for the purpose the lessor was required to assist the Lessee in demarcation of the portion or portions of the Lease Land.

As per clause 3.5.1:

The Lessor, during the term of the Lease period or upon the expiry, in the event it proposes to sell the Lease Land or a part of the Lease Land, Lessor was required to first offer the same to the Lessee and/or its nominees at the prevailing market rate. The Lessee should 98 Crl.M.P.No.352/2013 have the first right of refusal to purchase the Lease Land with the superstructure or part thereof by giving a letter of acceptance within three (3) months. Only in the event of refusal by the Lessee in writing to the offer or no response,lessorwas entitled to sell the same to any third party on the same terms, no better than those offered by Lessor to the Lessee. However such a sale in favour of third party during the subsistence of this Lease Deed should be subjected to the rights of Lessee as undertaken by the Lessor.

TABLE-III

Development Addendum to Assignment Deed

Agreement Development dt.03.11.2006

dt.03.11.2006 Agreement & GPA

dt.23.07.2008

As per clause 2.5.2:As per clause 5:As per clause 1.1.10:

Both the parties agreedThe revenue/profit shareGrossAnnualRevenue that the construction ofwas to be distributed after(GAR) should consist of the villas,townhouses,revenue generated by the completion of audit and apartments, commercialAssignee from the various adoptionofaudited buildings, IT SEZ etc.,Golf Course components accounts by the Board of shall commence on(Including the club-house), Directors of the owner and marketdemand,but excluding the revenue profitably and otherthe Developer cum Generalgenerated from sale of enablingcommercialPower of Attorney.membership (s) and other considerations for thelong terms revenue in every mutual benefit of theaccounting year as reflected parties. The partiesin profit and loss account acknowledged that theduly certified by the development scheduleStatutory Auditor of the will undergo changeAssignee company. prior to submission of final project plans to the 99 Crl.M.P.No.352/2013 competentauthority. The owner M/s. EHTPL acknowledged that the developer M/s. Emaar MGF was free to decide on the timing of launch and the sale of project from time to time. This particular clause shows that there was no urgency in appointing M/s. Emaar MGF as a developerforthe township project, which is contrary to the deliberations made in the board of M/s. EHTPL on 21.09.2006 that the implementation of the project was at crucial stage.

As per clause 2.8.1:As per clause 2.3.1:

The Developer i.e., M/s.The term of assignment of EmaarMGFLandthe project land of 235 acres Limited was required towas for a period of 66 years undertake the entirebeginning from the date of development and bearexecution of the assignment all the cost of thedeed i.e., 03.11.2006. project,forwhich developer was entitled to 75% of the gross revenue in the total covered and uncovered built up area, including common areas and common facilities in each type of building and structure proposed to be constructed on the said project land either through the sale and/or lease proceeds. The ownersconsideration i.e., M/s. EHTPL share was covered in the remaining 25% gross revenue and the total covered and uncovered built up area including 100 Crl.M.P.No.352/2013 common areas and common facilities in each type of building and structure proposed to be constructed on the said project land either through sale/or lease proceeds.

As per clause 2.9:As per clause 2.3.2:

The owner agreed thatThe Assignor agreed to the Developer was freeprovide the Assignee with to raise external debt for‘cost free development and projectfinancebyconstruction period’, which means of mortgagingincluded the time required the project land. Thefor obtaining the requisite owneragreedtoStatutory Approvals by the executenecessaryAssignor and three years documentationtoconstruction period inclusive effectuate the mortgageof fit out period from the in favourof thedate of obtaining all Developer and providerequisitestatutory for deposit of theapprovals. original title deeds. The Developer guaranteed that the project finance raised by the project land and project would not be diverted or channeledbythe Developer under any circumstances.

As per clause 2.11.2:As per clause 2.4.1:

The Developer from theThe Assignee was required day after the executionto pay to the Assignor an oftheagreementAssignment cost calculated agreed to develop the@ 5% of the Gross Annual project at its own costRevenue during the first 33 and expenses by meansyears and @ 6% of Gross of its own resources orAnnual Revenue for the throughdebt.Allremaining 33 years term expenses involved ingenerated in the project and for obtaining projectwhich included the Lease Building Plan approvals,Rent payable by the permits, plans, licenses,Assignor to APIIC with permissions or sanctionsreference to clause 4.1 of from the concernedtheLeaseDeed authorities should bedt.28.12.2005 executed by 101 Crl.M.P.No.352/2013 incurred and paid by theAPIICinfavourof Developer.ItalsoM/s. BHLPL. included all payments of external development charges, licenses fees, renewal of licenses, internaldevelopment charges, all expenses payable for sanctioning of plans and completion etc.

As per clause 2.23:As per clause 2.6:

The developer wasThe Assignee should launch required to pay to thethe project campaign for owner a total interestmembership in the Golf free refundable securityCourseandshould deposit of Rs.10 croresundertake the publicity, i.e., Rs.5 crores at thepromotionalevents, time of signing of thebrochure, advertisements in Developmentnewspapers, hoardings after Agreement and balancethe receipt of project Rs.5 crores on obtainingapproval/license from the project building planscompetent authority. approvals. The interest free refundable security depositshouldbe adjusted upfront from the owners share of 25% in the gross revenue.

As per clause 10.3:As per clause 3.2.2:

All the contracts, sub-The Assignee at its option contracts, deeds etc.withwritten consent/intimation of the executed by the owner Assignor was entitled to withrespectto create charge on the lease developmentof hold rights on the project township project on lands in favour of any 258.36 acres of landfinancial institutions/banks should be assigned tofor the purpose of project the developer and thisfinance. The assignor was prohibited from creating any included the agency charge on the lease hold agreement rights over project land dt.29.01.2005 entered duringthetermof into by the owner with AssignmentTerm.The M/s. Stylish Holmes RealAssignor acknowledged that Estates Pvt. Ltd.the Assignee was free to 102 Crl.M.P.No.352/2013 raisefinance,pledge, mortgage, create charge, on the golf course and club house without any written intimation to the Assignor.

As per clause 2.7:As per clause 3.2.3:

BoththepartiesThe Assignor agreed to deposit the Lease Deed of mutually agreed for the the Project Land (Lease maximum permissible Deeddt.28.12.2005, Floor Space Index (FSI). registeredasD.No. 2056/2006, in the office of the Sub-Registrar Moosapet, Ranga Reddy) for creation of charge on the lease hold rights over the project land by the Assignee.

As per clause 3.2.1:As per clause 3.2.4:

The owner M/s. EHTPLThe Assignee should be entitledduringthe represented that they Assignment Term, to assign, were the exclusive sub-lease, license, give on owners of the land and leave and license, sublet or none else other than underlet the project land. them had any interest, right, title thereto.

As per clause 3.2.7:

A contiguous portion of patta land to the extent of 39.02 acres in Survey Nos.4 to 49 of Nanakramguda Village, morefully was a matter of sub-judice before the Supreme Court of India. The part project land as on the date of assignment deed was outside the scope of development. Both the assignor and the assignee agreed that the part project Land would be automatically included as project Land under the Assignment deed, as and when the part project Land ceased to be a matter 103 Crl.M.P.No.352/2013 of sub-judice. Upon the event, the part project land should automatically be includedwithinthe definition of the Project Land.

93.The manner in which the induction of the petitioner/A-4 and entering into Agreement between Accused No.3 (M/s. Emaar Hills

Township Pvt. Ltd.) and the petitioner/A-4 (M/s. Emaar MGF Land Ltd.) and entering into the Development Agreement-cum-GPA contrary to the MoU and Collaboration Agreement, and changing those lease deeds from time to time conveniently, clearly evident that with a fraudulent intention to defeat the interest of APIIC they have inducted several new things to benefit them and at the same time, they deviated the clauses mentioned in MoU and Collaboration Agreement.

94.Apart from that, one of the Accused i.e. Tummala Ranga Rao (A-14) and M/s. Stylish Holmes Real Estates Pvt. Ltd. (A-5) were granted Tender of Pardon and their evidence is crucial in view of the corroboration of various anomalies in the documents executed between APIIC and Emaar Properties/A-2 and money transaction among the accused.

104 Crl.M.P.No.352/2013

95.The petitioner’s contention is that while considering petition under Sections 227 and 239 Cr.P.C., the guidelines enunciated by the

Hon’ble Supreme Court in Selvi’s case has to follow:

i.The Judge while considering the question of framing the charges under Section 227 CrPC has the undoubted power to sift and weigh the evidence for the limited purpose of finding out whether or not a prima facie case against the accused has been made out. The test to determine prima facie case would depend upon the facts of each case. ii.Where the materials placed before the court disclose grave suspicion against the accused which has not been properly explained, the court will be fully justified in framing a charge and proceeding with the trial. iii.The court cannot act merely as a post office or a mouthpiece of the prosecution but has to consider the broad probabilities of the case, the total effect of the evidence and the documents produced before the court, any basic infirmities, etc. However, at this stage, there cannot be a roving enquiry into the pros and cons of the matter and weigh the evidence as if he was conducting a trial. iv.If on the basis of the material on record, the court could form an opinion that the accused might have committed offence, it can frame the charge, though for conviction the conclusion is required to be proved beyond reasonable doubt that the accused has committed the offence. v.At the time of framing of the charges, the probative value of the material on record cannot be gone into but before framing a charge the court must apply its judicial mind on the material placed on record and must be satisfied that the commission of offence by the accused was possible. vi.At the stage of Sections 227 and 228, the court is required to evaluate the material and documents on record with a view to find out if the facts emerging therefrom taken at their face value disclose the existence of all the ingredients constituting the alleged offence. For this limited purpose, sift the evidence as it cannot be expected even at that initial stage to accept all that the prosecution states as gospel truth even if it is opposed to common sense or the broad probabilities of the case. vii.If two views are possible and one of them gives rise to suspicion only, as distinguished from grave suspicion, the trial Judge will be empowered to discharge the accused and at this stage, he is not to see whether the trial will end in conviction or acquittal.” 105 Crl.M.P.No.352/2013

96.And also it is prudent principles laid down by the Hon’ble

Supreme Court that at the stage of framing of charge roving and fishing enquiry is impermissible. If the contention of the accused is accepted, there would be a mini trial at the stage of framing of charge. That would defeat the object of the Code. It is well settled that at the stage of framing of charge the defence of the accused cannot be put forth. At the stage of framing of charge hearing the submissions of the accused has to be confined to the material produced by the police and “court is required to evaluate the material and documents on record with a view to find out if the facts emerging therefrom taken at their face value disclose the existence of all the ingredients constituting the alleged offence.”

97.It is also to be noted that the Hon’ble Supreme Court of India in

Stree Atyachar Virodhi Parishad v. Dilip N.Chardia reported in 1989 (1)

SCC 715 held that “The ground in the context is not a ground for conviction but a ground for putting the accused on trial. It is in the trial, the guilt or the innocence of the accused will be determined and not at the time of framing of charge. The court therefore, need not under taken an elaborate enquiry in sifting and weighing the material.

Nor it is necessary to delve deep into various aspect. All that court has to consider is whether the evidentiary material on record if 106 Crl.M.P.No.352/2013 generally accepted, would reasonably connect the accused with the crime. No more need be enquired into”.

98.In view of the guidelines enunciated by the Hon’ble Supreme

Court in various judgments, the moto is that Judge while considering the question of framing charges, he has to find out whether there is prima-facie case against the accused has been made out and the test to determine a prima-facie case would naturally depend upon the facts of each case and also it cannot be expected even at that initial stage to accept all that the prosecution states as gospel truth even if it is opposed to common sense or the broad probabilities of the case and also consider the distinction between suspicion and grave suspicion. Apart from that trial judge has to see that the material and the contention of the prosecution is sufficient to end in conviction or acquittal.

99.The counsel for the petitioner/A-4 relied on the judgment rendered by the Hon'ble High Court in Vanpic case stating that criminality cannot be fastened on the company and Shravan Guptha is MD and he was not referred as accused. The case on hand, the company was floated to create fraud. Hence, Vanpic judgment is not applicable to this case.

107 Crl.M.P.No.352/2013

100. In view of the above discussions, it appears that Accused No.3 has inducted the petitioner/A-4 and delegated powers in violation of conditions stipulated in MoU and Collaboration Agreement and also conveniently framed several clauses by creating documents among themselves. These facts clearly supports the case of the prosecution.

These facts shows unless a detailed trial is conducted, truth will not come to light. Hence, the petition deserves to be dismissed.

101. In the result, the petition is dismissed.

Typed to my dictation, corrected and pronounced by me in the open Court on this the 30th day ofApril, 2024.

Sd/-

PRINCIPAL SPECIAL JUDGE FOR

CBI CASES, HYDERABAD.