A Delhi Court recently set aside an order passed by a magistrate court to discharge Indian cricket team coach Gautam Gambhir in a cheating case.

The cheating case was filed by homebuyers against three real estate companies over their failure to deliver possession of flats in a housing protect.

The three companies Rudra Buildwell Realty, HR Infracity and UM Architectures and Contractors had jointly promoted as well as advertised a housing project ‘Serra Bella’ in 2011.

Gambhir, besides being an additional director of Rudra, was also a brand ambassador for the project.

Special judge Vishal Gogne on October 29 said the discharge order passed by the magistrate court reflected an “inadequate expression of mind” in deciding the allegations against Gambhir, who was a Member of Parliament (MP).

The Court opined that the allegations against Gambhir merit further investigation as he was the only one "who in fact did have any direct interface with the investors, in his capacity as brand ambassador."

It also referred to Gambhir's role in Rudra and asked whether any amount of the investors' money had gone to him.

"Though the said accused came to be discharged, the impugned order made no reference to the huge amount of ₹6 crores paid by him to Rudra and the sum of ₹4,85,00,000 received back by him from the company. The charge sheet did not clarify whether the amounts paid back to him by Rudra had any nexus or were sourced from funds received from the investors in the project in question," the Court said.

It further observed that Gambhir apparently had financial transactions with the company beyond his role as a brand ambassador since he was an additional director of Rudra from June 2011 till October 2013.

"Yet, the impugned order generalised the findings against the named accused (Gautam Gambhir) by combining the findings against him with observations of the court regarding other accused (not named in the complaint),” the Court noted.

Pertinently, the judge also observed that since cheating is a scheduled offence under the Prevention of Money Laundering Act (PMLA), the matter may be required to be probed by the Enforcement Directorate (ED).

The Court was hearing three revision petitions filed against an order passed by Additional Chief Metropolitan Magistrate (ACMM/ trial court) of Rouse Avenue court on December 10, 2020.

The case began when the homebuyers found no progress in construction of flat despite booking flats in the project and paying money.

They later learnt that the project was not even approved and Allahabad High Court in 2014 had in fact stayed any sort of business transaction or other activity on the land.

This had led to registration of a cheating case against the accused. However, the trial court in 2020 found a prima facie case only against three persons and two companies. It discharged the rest including Gambhir.

The trial court found that prima facie case was made out against three individuals and two companies - Rudra Buildwell Realty, HR Infracity.

However, it discharged five other accused including Gambhir.

The homebuyers then filed revision petition challenging the order of trial court.

The special judge found that the trial court had failed to discuss the specific evidence available in the chargesheet against the five accused persons who were directed to be charged or against the other five accused who were discharged.

"The combined findings of the Ld. Trial Court regarding all accused who were discharged, therefore suffer from material infirmity in law on account of the lack of nuanced discussion qua each of them," the Court held.

The special judge thus termed trial court's order a “non speaking order”.

“Mere reproduction of the allegations made by the prosecution and stringing together assertions from the chargesheet does not evoke the mind of the judge. The order is expected to assign reasons for the finding it seeks to render. However, the impugned order failed to clarify the specific amounts received by each of the three companies or to specify the exact allegation of the prosecution against each of the first three accused,” it said.

The Court also observed that the police investigation was grossly inadequate, warranting the trial court to order further investigation. 

“The said non speaking order may have been occasioned by the glaring inadequacies in investigation highlighted in this order. The trial court ought to have taken recourse to its powers to direct further investigation prior to framing of charge on account of sparse investigation,” the court observed.

Therefore, it set aside the discharge order and remanded the matter back to the trial court for passing a detailed, fresh order on discharge specifying the allegations against each accused with respect to the particular offence or provision and the corresponding material cited by the prosecution with reference to the chargesheet.

"The trial court shall render specific findings qua each accused within the level of scrutiny required at the stage of charge. The prosecution shall duly make submissions in the above template to aid the trial court," the special judge further directed.

However, the Court clarified that prior to a fresh hearing on the aspect of charge, and in order to avoid uninformed or unsubstantiated findings, the trial court shall consider directions for further investigation.

Directions to ED

Besides setting aside the discharge order, the judge also observed that since cheating is a scheduled offence under PMLA, the matter may be required to be probed by the ED.

"The allegedly cheated amount of Rs. 3.5 crores, mentioned as the booking amount received from the investors, if it was indeed derived as a result of criminal activity of any of the accused persons (whether charged or discharged) may be required to be probed as “proceeds of crime” and any of the accused who were involved in activity connected to such possible “proceeds of crime” including by way of concealment, possession or acquisition may have to be investigated with reference to “money laundering”.

It thus ordered the ED to examine the allegations from the perspective of money laundering and file a status report on or before November 11.

However, the judge clarified that the ED was not being directed to register a case but only take an independent view of the allegations with reference to the offence of money laundering.

"Since this court shall be functus officio upon disposal of the present revision petitions and the trial court is not the special court for matters related to the PMLA either, the said status report shall be filed by the ED through the prescribed filing mechanism, for matters under the PMLA pertaining to MPs/MLAs, before the ld. Principal District and Sessions Judge, RADC, New Delhi," the Court added.

[Read order]