The Bombay High Court recently ordered the formation of a special investigation team (SIT) to probe allegations of large-scale financial fraud and money laundering involving Jai Corp Ltd (Shoaib Richie Sequeira vs State of Maharashtra).
A Bench of Justices Revati Mohite Dere and PK Chavan passed the judgment after it expressed its disappointment with the economic offences wing (EOW) and the central bureau of investigation (CBI) for their failure to carry out an impartial investigation.
The Court directed the Joint Director of CBI's Anti-Corruption Bureau in Mumbai to supervise the investigation after noting that the Economic Offences Wing (EOW) and CBI had failed in their duty to investigate the case.
The Court while allowing the petition filed by a public rights activist Shoaib Sequeira, also criticized the reluctance of investigating agencies.
"We have no words to demonstrate the conduct of the Investigating Agencies viz: EOW as well as CBI. We may say, we are disappointed. We feel that there will be no fair and impartial investigation into the alleged crimes either by the EOW or by the Superintendent of Police, CBI, EOW and hence, a special team needs to be constituted by the Zonal Director CBI to ensure efficient investigation into the offences of such magnitude. The need to instill confidence in the investigations and consequently, in the administration of justice, is of utmost concern. The case in question, has national and international ramifications," the Bench observed in its judgment of January 31.
It said that it cannot remain a mute spectator when the investigating agencies pass the buck to each other.
"Looking to (sic) the conduct of both the EOW and CBI, we as a Constitutional Court cannot remain a mute spectator when it becomes apparent that the Agencies are passing the buck from each other," the judgment said.
Sequeira moved the Court alleging large-scale misappropriation of funds by Anand Jaikumar Jain, Director and Promoter of Jai Corp Ltd., and its subsidiaries.
He had filed two complaints with the EOW—first on December 22, 2021, and again on April 3, 2023—alleging that the company had misappropriated public funds, defrauded investors and laundered money through shell companies.
According to the petition, Jai Corp Ltd and its subsidiaries allegedly diverted 4,255 crore availed from financial institutions, 2,434 crore of investor money collected by Urban Infrastructure Opportunities Fund (UIOF), and 513.12 crore generated through fraudulent trading in Reliance Petrochemicals Ltd shares.
It further alleged the funneling of funds to Mauritius and Sharjah and the use of fictitious invoices for exports to Australia and the USA.
Sequeira's counsel argued that despite the complaints highlighting a fraud of over 8,000 crore with transnational links, no serious investigation was undertaken.
The EOW merely forwarded the complaints to SEBI while the CBI refused to take up the matter, stating it fell under the purview of SEBI and the Enforcement Directorate (ED), it was argued.
The petition emphasized that the alleged misappropriation of funds involved nationalized banks, foreign investments and regulatory violations that warranted a detailed probe by an independent agency.
In it verdict, the Court acknowledged the seriousness of the allegations and said that the case has an international dimension. It observed that the alleged offences involved significant financial transactions amounting to thousands of crores of rupees, spanning multiple jurisdictions. The issue also implicates nationalized banks, a Mauritius-based private equity fund, and cross-border dealings with the USA, Australia and the UAE.
Therefore, it underscored the importance of a fair and unbiased probe.
"Our justice system will acquire credibility only when the people at large will be convinced that justice is based on the foundation of truth, provided the investigation is carried out impartially, fairly, and in an unbiased manner."
The Court also reaffirmed the judiciary's role in ensuring accountability in high-stakes financial crimes.
"The superior courts are the protectors of civil liberties and have not only the power and jurisdiction but also an obligation to protect the fundamental rights, more particularly those guaranteed under Article 21 of the Constitution," it observed.
It stressed that the transfer of investigation is necessary when the credibility of law enforcement is at stake.
"The power to transfer the investigation can be used when it becomes necessary to provide credibility and instill confidence in the investigation or where the incident may have national and international ramifications or where such an order may be necessary for doing complete justice and enforcing the fundamental rights," the Court observed while directing a probe by SIT.
