Supreme Court Grants Bail To Bengali Film Producer Srikant Mohta Accused In 1400 Crore Chit Fund Scam

After rejection of three successive bail applications by the Orissa High Court, the Supreme Court on Monday granted bail to Bengali film producer Srikant Mohhta, who was arrested by CBI in January 2019 for his alleged complicity in a chit fund scam case.

The bench headed by Justice D. Y. Chandrachud was hearing Mohta's SLP against the December 1, 2020 decision of the High Court denying him bail for the third time for commission of offences punishable under sections 420, 409 read with section 120-B of the IPC and sections 4, 5 and 6 of the Prize Chits and Money Circulation Schemes (Banning) Act, 1978. Iterating that the "Liberty of an individual cannot outweigh the interest of the society. An economic offence has to be viewed from a serious perspective and no lenient view can be taken. A murderer takes away the life of a person but a person committing economic offence leaves a living person dead", the High Court had denied him bail.

On Monday, Mr Kapil Sibal, Senior Counsel appearing on behalf of the appellant, with Mr K V Viswanathan, Senior Counsel, submitted that it is an undisputed position that the appellant has suffered two brain strokes for which he was being treated initially at SCB Medical College and Hospital, Cuttack and thereafter, AIIMS Bhubaneswar.

Mr Tushar Mehta, Solicitor General of India, appearing on behalf of the respondent, stated that upon due verification of the medical condition of the appellant he has instructions to state that it appears correct that the appellant has undergone treatment for two brain strokes which have a bearing on his present medical condition.

"In view of the undisputed position as noted above, we accede to the prayer for the release of the appellant on bail on medical grounds. We accordingly order and direct that the appellant shall be released on bail, subject to such terms and conditions as may be imposed by the Special CJM (CBI)", said the bench.

The factual matrix of the prosecution case is that Rose Valley Group of Companies collected huge amount of money from public enticing them with false promise of paying higher rates of interest although Rose Valley was not having any authorisation from the Reserve Bank of India or the Securities and Exchange Board of India for carrying out such activities and therefore, the company cheated the public.

Investigation revealed that 'Rose Valley Resorts and Plantations Limited, Kolkata' was founded in the year 1997 and in the year 2002, SEBI imposed ban on the teak based investment schemes which the company was carrying out, for which the schemes floated were stopped. The company was renamed as 'Rose Valley Hotel and Entertainment Limited' in the year 1999. Two more companies in the name of 'Rose Valley Real Estates Constructions Limited' and 'Real Estate and Landbank India Ltd.' were founded subsequently in the year 1999 and 2001 which were registered with the Registrar of Companies. Rose Valley started expanding its spheres and a lot of new companies were formed in between 1997 to 2012. The accused persons, namely Gautam Kundu, Chairman of Rose Valley, Shibamoy Dutta, Managing Director, Ashok Kumar Saha and Ram Lal Goswami, Directors of Rose Valley in furtherance of criminal conspiracy by establishing branches of the companies in different parts of India, collected money from the public through multi-level agent network system. They cheated the investors/depositors by way of camouflaged schemes and false assurance about legal sanctity and false promise of higher rates of interest. The accused persons also cheated the depositors as well as the agents by making false assurance that the accused companies were legally empowered to collect money from the public. They were running ponzi schemes and circulating the money collected from the depositors which was not disclosed to the depositors and agents. The accused persons made false propaganda that Rose Valley is having a big business empire and diversified business. They fraudulently claimed that the money collected from the depositors would be invested in those businesses and with the help of high returns from those companies, they would be able to pay back to the depositors their invested money with interest on maturity. The accused persons deceived the depositors and deliberately induced them to invest their hard-earned money in the accused companies. It further revealed from the scrutiny of the balance sheet of all the companies of Rose Valley that almost all the companies were making loss and old depositors were paid by using money of the new depositors since there was no income generated by the companies from any source. It further revealed that the total business model of Rose Valley was commercially unrealistic/unviable and it was not in a position to pay to its depositors the promised higher rates of interest and therefore, it was just rotating the money. Rose Valley not only collected thousand of crores of rupees illegally from the depositors by cheating them but they did not utilize the same for the purpose for which the money was invested. The accused persons did not return the money of lakh of depositors and thereby committed criminal breach of trust. The total money collection of Rose Valley according to the database up to the financial year 2012- 13 was Rs.1471,18,81724/- (rupees fourteen hundred seventy one crores eighteen lakhs eighty one thousand seven hundred twenty four only).