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B.N. Mahapatra, J.—This Writ Petition has been filed with a prayer to protect the deposits, investments made by members of the Petitioner-Trust and similarly situated other investors and to issue a writ of mandamus and/or any other appropriate writ/order/direction to opposite parties 2 to 7 Banks to give refund and recovery of the investments/deposits made by the public investors on due production of their receipts. Petitioners'' case in a nutshell is that petitioner No. 1 in the writ petition is a registered Trust of duped and gullible thousands and thousands of investors of Karnataka, Tamil Nadu and Andhra Pradesh, who have invested their money with M/s. Fine Indisales Pvt. Ltd. through opposite party-Banks, i.e., ICICI Bank, Axis Bank, HDFC Bank, YES Bank and IDBI Bank (opposite parties 2 to 6). Petitioner No. 2 is the President of petitioner No. 1-Trust. Members of the Trust, who are the investors, are poor people of the society working as rickshaw pullers, taxi drivers, shopkeepers, Class-IV employees of private companies, hotels and other establishments, tea-shop owners, cabin holders etc., who invested their life savings with a hope of getting effective and speedy return from the Company. The deposits made by these umpteen number of investors with opposite party Nos. 2 to 6-Banks were defreezed by the statutory orders u/s 102 of the Code of Criminal Procedure by the Crimes Department of the State of Odisha and presently the investments/deposits of these investors are in the lawful custody of learned S.D.J.M., Balasore. Opposite party No. 7-M/s. Fine Indisales Pvt. Ltd. (for short ''the Company''), a Company registered under the Companies Act, promoted a multi-level marketing business and floated the Scheme/Project on the Website without obtaining any permission from the Reserve Bank of India. The said Company is a non-banking financial Company. The Company represented on the Website that its registered office is in Uttar Pradesh and Corporate office in Mumbai. Members of the Trust being enamoured by the brochures and prospectus published on the website applied for distributorship/membership of the said Company and each one deposited/subscribed Rs. 10,000/- to Rs. 2,50,000/- for purchase of the purported product as published on the website in opposite parties 2 to 6-Banks in the name of opposite party No. 7-Company. The deposits were multiples of Rs. 10,000/-, Rs. 20,000/-, Rs. 40,000/-, Rs. 50,000/-, Rs. 80,000/- and Rs. 1,70,000. Opposite party No. 7-Company failed to comply with the terms of the Scheme and contract till the date of filing of writ petition while accepting such deposit. The Company also failed to send any product or benefits to its members and other similarly situated investors/depositors. The Company also entered into an agreement of distributorship with the members/distributors/investors. The amount deposited and/or invested by the Trust and its members is more than Rs. 100.00 crores and the petitioners understand which they verily believe to be true that all over India such deposits are more than thousands of crores. Agreement of the said Company amounts to a scam involving lakhs of gullible depositors all over India. The Reserve Bank of India on or about 01.08.2009 issued Circular to all scheduled Commercial Banks that opposite party No. 7 Company and six other Companies are not non-Banking financial organization as defined u/s 45 of the Reserve Bank of India Act and none of these Companies had been issued with a certificate to conduct non-banking financial activity.
One Niranjan Sahoo of Balasore district of the State of Odisha being aggrieved by the malicious and fraudulent conduct of the said Company lodged an F.I.R. on 17.07.2009 in Sahadev Khunta Police Station in the district of Balasore, which has been registered as P.S. Case No. 118 dated 17.07.2009 under Sections 406/402/468/471/34, IPC and Sections, 4, 5 and 6 of Prize Chits and Money Circulation Scheme (Banning) Act, 1978 (for short ''the Act, 1978''), which has been turned to CBPS Case No. 17 of 2009. The matter was investigated by the Crime Branch of the State, Criminal Investigation Department, which unearthed a magnitude of total loss and money squandered away by the said Company. The Criminal Investigation Department frizzed the accounts of opposite party No. 7-Company. So far investments/deposits by the investors, all the concerned Banks hold such deposits as trustees, with the investors as beneficiaries. Insofar as such fiduciary relationship is concerned, the said Trustee-Bank remains liable to refund the money on appropriate direction by this Court. Despite execution of the agreement and fabulous deposits by thousands and thousands of investors, the said opposite party No. 7-Company willfully failed to comply with the requirements of the assurances and stipulations of the contract within last 2� years. Under such strange circumstances, there was panic among the investors and they expressed and demanded refund of their life savings from the said Company. As the Company purported to act on-line through its website, the investors demanded refund of their money as per the agreement of the contract on the website of the said Company. In contravention of all assurances, representations and stipulations contained in the agreement, the Company on its website published that refund option has been suspended awaiting results from the appropriate Company Court and the matter pending before this Court and kept watching this website for latest updates. Hence, the Writ Petition.
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to 28. xx xx xx
Discussing the facts, contention and submission held:
On the rival factual and legal contentions advanced by the parties, the following questions fall for consideration by this Court:
(i) Whether the writ petition is maintainable?
(ii) If answer to question No.(i) is in affirmative, whether the prayer made in the writ petition can be granted?
(iii) What order?
Question No. (i) is with regard to maintainability of the writ petition. It is not in dispute that a large number of gullible investors have invested their money in the scheme floated by opposite party No. 7-Company. The scheme provided deposits to the tune of Rs. 10,000/- and its multiple up to Rs. 2.5 lakhs. Under the Scheme, the Company promises to give not less than 10% monthly commission to investors. The investors are from Karnataka, Andhra Pradesh, Tamil Nadu and Kerala. The petitioners'' allegation is that opposite party No. 7 promoted money circulation scheme under the guise of sale of its products. Investments were against the product of Company on issuance of Payment Verification Code (PVC). Auditors'' report reveals that there is no transaction of purchase of goods and material or sale of goods or materials. As per the policy of the Company, the entire (100%) purchase amount is refundable, if the product vouchers has not been redeemed and the investor has not violated any clause mentioned in the agreement. On 17.07.2009 FIR was lodged against opposite party No. 7-Company at Sahadev Khunta Police Station vide P.S. Case No. 118 of 2009 in the district of Balasore. Investigation against opposite party No. 7 was initiated under Sections 406, 420, 468, 471 and 34 of I.P.C. read with Sections 4, 5 and 6 of the Act, 1978. The Investigating Officer in exercise of his powers u/s 102, Cr.P.C. freezed the bank accounts of opposite party No. 7-Company. On 20.07.2009, the Investigating Officer freezed the Company''s accounts in three banks, namely, HDFC Bank, IDBI Bank and AXIS Bank.
Immediately after freezing of accounts u/s 102, Cr.P.C. opposite party No. 7 moved High Court of Mumbai challenging the police action by filing Writ Petition No. 1443 of 2009 on 27.07.2009 assailing the F.I.R. and freezing dated 17.07.2009. None of the investors was made party and the said writ petition was withdrawn. Opposite Party No. 7 filed Criminal Misc. Writ Petition No. 16901 of 2009 before the Allahabad High Court and the Hon''ble Court vide judgment dated 19.08.2009 refused the prayer for quashing of the impugned F.I.R. with the following observation:
From the perusal of the F.I.R., it appears that on the basis of the allegations made therein prima facie cognizable offence is made out. There is no ground for interfering in the F.I.R. Therefore, the prayer for quashing the impugned F.I.R. is refused.
On dismissal of the writ petition, opposite party No. 7-Company filed Company Application No. 16 of 2009 on 29.10.2009 under Sections 391 to 394 of the Companies Act, 1956 for approval of a Scheme impleading four shareholders and thirteen unsecured creditors. None of the investors is shown as unsecured creditor. On 26.03.2010, order was passed in Company Petition No. 3 of 2010 approving the said Scheme.
Reserve Bank of India on due investigation issued circular in respect of 7 numbers of Company including opp. party No. 7-Company and has observed that opp. party No. 7-Company posing itself as Multi Level Marketing agency for consumer goods and services have been actually mobilizing large amount of deposit from the public with promises of high return. Opposite party No. 7 filed W.P. (Crl.) No. 267 of 2010 before this Court for quashing of the F.I.R. which still remains pending disposal. When the investors learnt about freezing of accounts, they demanded 100% refund pursuant to policy of the Company as uploaded on the website and stipulated in the agreement as well, but on the website Company refused to make payment indicating that refund option has been suspended awaiting results from the appropriate Company Court and pendency of the matter before this Court. The Investors at Karnataka, Andhra Pradesh and Tamil Nadu being harassed, prejudiced and defrauded of their life savings registered a deed of trust for taking steps for refund of the amount deposited by them. On 04.02.2011 in W.P. (Crl.) No. 207 of 2010 this Court directed the petitioners to initiate appropriate legal action before jurisdictional Court. On 25.03.2011, the Trust filed a writ petition seeking refund of the deposited amount. On 15.04.2011, this Court issued notice directing that there shall not be any disbursement without leave of the Court. On 02.01.2012, this Court directed to keep the amount in fixed deposit. On 08.02.2012, this Court further directed opposite party No. 7 to disclose as to what happened to the balance amount deposited. On 09.05.2011, the learned S.D.J.M., Balasore rejected the application u/s 457 of Cr.P.C. On 11.07.2011, CRLREV No. 533 of 2011 was filed before this Court.
The Auditors specifically found that the Company has not maintained proper records. This fact is evident from the Audit report of the Company. No transaction of purchase and sale of goods and materials and service was made in pursuance of the contract. Sessions 58-A and 98-AA of the Companies Act, 1956 have been violated and the Company has no internal audit system.
Status report submitted by the Crime Branch reveals as follows:
(1) Neither the memorandum nor the articles of association of the Company reflects that the Company is engaged in the business of multilevel marketing. (Para-5).
(2) Company has cited A-101A, Sterling Centre, Andheri West, Mumbai as its administrative Office in the writ application filed before Hon''ble Bombay High Court. After due verification by Mumbai Police it was found that no such location is available in Mumbai. (Para-6)
(3) Company had filed these applications:
(a) Before the Hon''ble Mumbai High Court, W.P. (C) No. 1443 of 2009 for defreezing of its account with regard to ICICI Bank only. The application has been dismissed as withdrawn. (Para-6)
(b) Before Hon''ble Allahabad High Court vide Criminal Misc. Writ Petition No. 16901 of 2009, the same has been disposed of with observation that F.I.R. reveals a prima-facie case and did not quash the F.I.R. (Para-7)
(4) On perusal and verification of I.O. and reply from the Kanpur Municipality, it is found that the address furnished in the website by the Company is a tannery. (Para-11)
(5) As per the letter of Asst. Commissioner Commercial Tax, Kanpur the Company has not submitted returns from 2007-08 to 2009-10 (from 2007 to 2010) about their selling and trading of cloth. (Para-14)
(6) Around 2,43,356 depositors have deposited their money and enrolled in the scheme of the Company. (Para-29)
(7) Company has raised Rs. 578,22,17,252/- (Rs. 578.23 Crores) from the depositors. And has paid Rs. 67,32,54,190/- towards the commission to the depositors. (Para-29)
(8) The Investigating Agency state that there are reliable indication that major part of the money has been used for funding questionable purposes. (Para-33)
(9) Warning letter by Home Department bearing No. 44555 dtd. 08.10.2009 named the Company indulging in money circulations. (Para-34)
On the above backdrop, it is felt necessary to refer to the following decision of Hon''ble Supreme Court.
In the case of T.K. Rangarajan Vs. Government of Tamil Nadu and Others, , the Hon''ble Supreme Court held as under:-
At the outset, it is to be reiterated that under Article 226 of the Constitution, the High Court is empowered to exercise its extraordinary jurisdiction to meet unprecedented extraordinary situation having no parallel. It is equally true that extraordinary powers are required to be sparingly used. The facts of the present case reveal that this was most extraordinary case, which called for interference by the High Court, as the State Government had dismissed about two lakh employees for going on strike.
In the instant case, huge number of depositors have invested their hard-earned money/life savings with opposite party No. 7-Company and it is practically impossible for those small investors to move individually before the procedural Court for redressal of their grievances.
In the case of The Newabganj Sugar Mills Co. Ltd. and Others Vs. The Union of India (UOI) and Others, , the Hon''ble Supreme Court observed as follows:-
... Who is to start? Against whom? How is he to meet the huge litigative costs and how long (O, Lord, bow long !) he to wait with long-drawn-out trial procedures, appeal, second appeal, special appeal, and Supreme Court appeal? For, on the other side is the similar with the millions to be coughed up !
And
...The difficulty we face here cannot force us to abandon the inherent powers of the Court to do. The inherent power has its roots in necessity and its breadth is coextensive with the necessity. xxx
...If there is to be relief, we must construct it hereby by simple legal engineering.
The petitioners and interveners belong to the lower section of the society and it is not practicable for them to fight against the mighty opp. party No. 7-Company in a long legal battle.
In the case of Union of India (UOI) and Others Vs. Tantia Construction Pvt. Ltd., the Hon''ble Supreme Court held as under:
... the constitutional powers vested in the High Court or the Supreme Court cannot be fettered by any alternative remedy available to the authorities. In justice, whenever and wherever it takes place, has to be struck down as an anathema to the rule of law and the provisions of the Constitution.
In the case of S.P. Gupta Vs. President of India and Others, the Hon''ble Supreme Court held as under:
It may therefore now be taken as well established that where a legal wrong or a legal injury is caused to a person or to a determinate class of persons by reason of violation of any constitutional or legal right or any burden is imposed in contravention of any constitutional or legal provision or without authority of law or any such legal wrong or legal injury or illegal burden is threatened and such person or determinate class of persons is by reason of poverty, helplessness or disability or socially or economically disadvantaged position, unable to approach the Court for relief, any member of the public can maintain an application for an appropriate direction, order or writ in the High Court under Art. 226 and in case of breach of any fundamental right of such person or determinate class of persons, in this Court under Art. 32 seeking judicial redress for the legal wrong or injury caused to such person or determinate class of persons.
In the case of The Mumbai Kamgar Sabha, Bombay Vs. Abdulbhai Faizullabhai and Others, at page 1458 Justice Krishna Iyer emphasized:
Article 226 viewed in wider perspective may be amenable to ventilation of collective of common grievances xx xx xx Public interest is promoted by a spacious construction of locus standi in our socio economic circumstances.
The investors belong to lower strata of the society. They are house-wives, rickshaw pullers, taxi drivers, small shopkeepers, Class-IV employees of Private Companies, hotels and other establishments, tea shop owners, cabin-holders, retired persons and unemployed youth etc, who have invested their life savings with opposite party No. 7-Company. Since the company invited deposits of Rs. 10,000/- and its multiple up to Rs. 2.5 lakhs, no individual can be able to sue the Company in case of any injury caused to him. The gullible investors were tempted to make investments in the Company because of high return not less than 10% per month and 100% of refund of their deposited amount was assured, to them. Accordingly, the investors were spread over throughout the country.
In view of the above facts and case laws cited above, we are of the view that the writ petition''s maintainable.
Question Nos. (ii) and (iii) being interlinked, they are dealt with together.
Undisputedly, the criminal investigation is pending against opposite party No. 7-Company. The exact number of investors and exact amount invested by each small depositor are yet to be ascertained although the Crime Branch Department in their status report stated as follows:
Mr. Tulsi, learned Senior Advocate submitted that since the Directors of opposite party No. 7-Company are already accused in the criminal case pending investigation, they are entitled to be protected by this Court of their constitutional rights guaranteed under Article 20(3) of the Constitution. It is further submitted that a person accused in a criminal case can neither be compelled to make a statement on oath nor he can be compelled to produce documents. These principles, which have been held to be of most precious values of the Constitution, can never be allowed to be diluted in any proceedings, and directions which are found to be violative of Article 20(3) of the Constitution are liable to be treated as void.
Some of the aspects of the case which draw attention of this Court as matter of concern are that one investor claiming refund of Rs. 10,000/- filed complaint against the Company at Sahadev Khunta Police Station, which was registered as Sahadev Khunta P. Case No. 118 of 2009 dated 17.07.2009 under Sections 406/420/468/- 71/34 of IPC and Sections 4, 5 and 6 of the Act, 1978, corresponding to CT Case No. 113/2009 in the file of S.D.J.M., Balasore.
The said case was transferred to the Investigating Agency and the Police Authorities directed the Bank Authorities to freeze the Bank account of the Company.
The Complainant at whose instance Sahadev Khunta PS Case No. 118 of 2009 dated 17.07.2009 was instituted, filed W.P. (Crl.) No. 503 of 2009 for quashing of the complaint filed by him on the ground that he was forced by Police to file such complaint. Opp. party No. 7-Company also filed another writ petition bearing W.P. (Crl.) No. 267 of 2010 for quashing of the F.I.R.
One more vital aspect of the case is that on 30.10.2009 Company Petition No. 16 of 2009 was filed under Sections 391 and 394 of the Companies Act, 1956 impleading 4, share holders and 13 unsecured creditors before the Company Judge, Allahabad High Court proposing a scheme of arrangement with a request for sanction of the same. In that Company case, 4 share holders of the Company had given their consent through affidavit and for 13 un-secured creditors a meeting was convened under the Chairmanship of Mr. S.C. Mishra, Advocate. Thus, the arrangement has been made between 4 share holders and 13 creditors of the Company. During continuation of he aforesaid proceeding, Company Petition No. 3 of 2010 was filed for confirming the compromise and arrangement. Allahabad High Court vide its order dated 26.03.2010 in the said Company petition sanctioned the said Scheme, according to which, policy for encashment of purchase vouchers and/or refund of the amount paid by the purchaser stands withdrawn and all the purchasers shall compulsorily take delivery of the materials purchased. Grievance of the petitioners is that the Company case was disposed of on 26.03.2010 by the Allahabad High Court without impleading all the affected parties more particularly the petitioners. None of the investors is shown as unsecured creditor. It is settled principle that no adverse order shall be passed having civil consequence without hearing the affected persons. Only seventeen persons cannot decide the fate of 2.5 lakh depositors. Depositors are the real owner of the funds and without hearing them no adverse order can be passed having civil consequence. It is also not possible on the part of the gullible small investors to spend money and contest the case at Allahabad.
We have perused the events including the above that have taken place, but we are refraining ourselves from entering upon the details thereof lest it may prejudice any party.
In the instant case, the ground realities cannot be lost sight of in the maze of technicalities. The investigation by the Crime Branch, Odisha will not be effective all over the country. Therefore, investigation by CBI would be more effective to unearth the truth for doing complete justice. The High Court does not lack jurisdiction to modulate the relief to give aid to people who have been wronged. Whenever any wrong is done to a citizen, the Court cannot become a silent spectator to such illegality and it becomes the solemn duty of the Court to see that the affected person must get justice.
The Hon''ble Supreme Court in the case of Shivajirao Nilangekar Patil Vs. Dr Mahesh Madhav Gosavi and Others, held as under:-
This Court cannot be oblivious that there has been a steady decline of public standards or public morals and public morale. It is necessary to cleanse public life in this country along with or even before cleaning the physical atmospheres. The pollution in our values and standards is an equally grave menace as the pollution of the environment. Where such situations cry out the Courts should not and cannot remain mute and dumb.
Needless to say that whenever there is a wrong, there is a remedy. In our view this is a classic case where Court should not close its eyes to the injustice alleged to have been perpetrated. For the reasons indicated above and in the interest of justice, we direct that the investigation be handed over to the CBI and the Crime Branch shall assist the CBI In the investigation. The CBI is directed to submit quarterly status report before this Court.
The prayer for refund of money shall be considered after receipt of periodical status reports(s).
List this matter after three months.
V. Gopala Gowda, C.J.
I agree.