'Where Is The Money?': Supreme Court Cancels Bail To MD Of Heera Gold On Failure To Raise Rs.580 Crores To Settle Claims

The Supreme Court today (October 18) cancelled the bail granted to Nowhera Shaikh, the Managing Director of Heera Gold Exim Private Limited, on the failure to raise 580 crores to settle the claims of investors despite repeated chances given by the Court to do so.

The Court ordered Shaikh to surrender within 2 weeks and all FIRs registered against Shaikh in different States shall now be proceeded in accordance with law. It clarified that the present order shall not come in way of the respondent-accused to apply for bail afresh.

For context, Heera Gold Exim Private Limited, a company dealing in gold, collected huge deposits from the public with a promise to pay a 36% dividend on the invested amount. When the company failed to pay dividends and maturity amounts, investors across states lodged complaints, inter alia, alleging cheating and fraud.

In the light of the same, Nowhera Shaikh was arrested and the matter was investigated by the Serious Fraud Investigation Office (SFIO). On January 19, 2021, the Supreme Court granted her interim bail on the condition that she would settle the claims of the investors. The interim bail order stated: "It is towards the aforesaid endeavour that we are willing to enlarge the petitioner on interim bail as a probation period for her to show her bona fides to settle the claims of the investors making it clear that lack of strict compliance will take her to the four corners of the custody once again with little chance of getting out thereafter."

The interim bail was extended from time to time and eventually on August 5, 2021, it was made absolute. In May, 2022, when the SFIO had approached the Court seeking cancellation of her bail, the Supreme Court dismissed SFIOs plea reckoning that in cases pertaining to economic offences, the primary focus of the investigating agency should be to disburse money to the defrauded investors, rather than to put in all their efforts to ensure the accused persons are put behind bars.

As per the last order dated August 23, Shaikh was to raise to the tune of Rs 580 crore to settle claims with investors. It also asked for the list of those immovable properties free of all encumbrances and also those properties where some claims have been put forward.

The specific part of the order in this regard stated: "Therefore, today we have made ourselves very clear that failure on the part of the accused to raise the necessary finance may entail the following consequences: (i) The petition filed under Article 32 of the Constitution for clubbing of all the FIRs may be liable to be dismissed; (ii) The SFIO may be asked to proceed further in accordance with law; (iii) The bail granted by this Court may be liable to be cancelled; (iv) We may ask each State where the FIRs have been registered to investigate them in accordance with law; and (v) We may also ask the Enforcement Directorate to proceed in accordance with law."

However, the bench of Justices J.B. Pardiwala and Manoj Misra noted that despite the order seeking strict compliance, no positive statement was by today by the senior advocate DP Singh (for the accused) to raise the money. In such circumstances, the Court cancelled the bail and granted 2 weeks for the respondent to surrender.

Singh, at the outset, informed the Court that as per the last order, "Rs.504 crores" have been arranged with notarised MoUs but Rs.240 crores of unnotarised are in the process of being notarised. While he had just begun speaking, Justice Pardiwala interjected and asked: "Where is the money?"

Singh informed the Court that the money can be given, to the account of the Supreme Court directly but added that the same cannot be done within six weeks. Singh however provided with a list of immovable properties as sought by the Court in its last order.

ASG S.V. Raju opposed the list provided by Singh and stated that the same is not a "complete list".

Justice Pardiwala again sought a positive answer from Singh as to when Rs.580 crores would be deposited. However, when Singh could not give a specific date, the Court decided to pass an order for cancellation of bail.

Justice Pardiwala orally remarked: "Where is the money? Show us the colour of the money, Counsel!"

The Court dictated order: "By our earlier order, we had made ourselves very abundantly clear that if the respondent accused is unable to raise the amount to the tune of Rs.580 crores, then we would dismiss the petition filed for clubbing of all the FIRs, invoking article 32 of the Constitution, and the bail granted by this Court would also liable be cancelled. Today when the matter was taken up for hearing, learned counsel for the respondent was not able to make any positive statement as regards to the amount referred to. There seems to be no progress in the matter. In such circumstances, Article 32 petition seeking clubbing of all the FIRs is hereby ordered to be dismissed. SFIO shall proceed in accordance with law. The bail granted by this court stands cancelled."

The Court also clarified that only those offences related to Company Law shall be investigated by SFIO and other offences shall be investigated by the respective police station.

Case Details: THE STATE OF TELANGANA REPBY SPECIAL OFFICER VANDHANA AND ORS. v. M/S HEERA GOLD EXIM PRIVATE LIMITED AND ORS.,Crl.A. No. 761-762/2021

Appearances: Senior Advocate DP Singh (petitioner accused), ASG SV Raju (for Serious Fraud Investigation Office & ED), Senior Advocate Saurabh Kirpal assisted by Advocate Pradeep Patil and AoR Abhikalp Pratap Singh (for investors)