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Synopsis

In a case against Shine City Infra Projects Pvt. Ltd for allegedly siphoning crores from investors in Uttar Pradesh, Allahabad High Court recently criticized the Enforcement Directorate (ED), the Serious Fraud Investigation Office (SFIO), and the Economic Offences Wing (EOW) for their "failure to carry out the investigation properly".

The bench of Justices Prashant Kumar and Siddharth said that the entire investigation had been carried out in the most lackadaisical manner. 

Court was hearing a petition filed by Shriram Ram, an investor in the company. The petitioners alleged that till now, the ED has investigated only 28 companies mentioned in an earlier court order and apart from that, no effort has been made to find out or to investigate about other companies.

Court also noted that the petitioners had been sending information to the investigating agencies regarding a list of 60 other companies owned by the accused, but neither any action was taken nor did they even bother to look into it.

It is a shocking state of affairs where the investors and the lawyers on their own are providing information to the investigating agencies and still after getting the same, none of the investigating agencies has acted upon it, court said.

Court further pointed out that when the Investigating Officer/Assistant Director, ED was asked as to how much money/moeny trail had been collected till date, his reply was zero.

Therefore, taking a strict view, court ordered the investigating agencies to carry out a proper investigation against the accused and the companies and further put sincere efforts to find out the trail of all the money and file a status report showing the progress of the investigation by the next date of listing. 

Court also directed the Ministry of External Affairs, Government of India to file an affidavit showing the day-to-day progress of the extradition of the fugitive accused.

Court posted the matter for further hearing on July 1, 2024. 

The Scam

Shine City Infra Project Private Limited, a real estate firm operating in Uttar Pradesh, enticed investors with promises of various projects but failed to deliver on their commitments. When investors raised concerns with the company's directors, they were provided with cheques that ultimately bounced, exacerbating the situation and leading to the filing of approximately 284 FIRs involving 1647 investors. The total amount involved in those FIRs was Rs. 237 crores.

It was alleged that the main accused Rashid Naseem and the Shine City Group of Companies allegedly made a web of more companies which operated unauthorized schemes, collecting approximately Rs. 800-1000 crores from the public under the guise of investments, constituting fraud.

The matter was referred to the Enforcement Directorate in January 2021. However, it was only after filing of writ petitions and intervention of the high court that a few of the accused were arrested, but the main accused Rashid Naseem, who was arrested in Nepal for identical activities, managed to slip out of the country and fled to Dubai where is currently staying comfortably.

Case Title: Shriram Ram v. State of U.P. And 7 Others