‘Huge Scam And An Offence Against The Society’: Gujarat High Court Rejects Fugitive Businessman Mehul Choksi's Plea Seeking To Quash 2017 Cheating Case

The Gujarat High Court dismissed a petition by fugitive businessman Mehul Chinubhai Choksi, former chairman and managing director of Gitanjali Gems, seeking to quash a First Information Report (FIR) against him. The FIR alleged Choksi's involvement in duping a woman through a franchisee of his firm Gitanjali Jewellery.Justice Sandeep N Bhatt observed, “Due to such fraudulent act and closure of the showrooms, money invested by the investors is not refunded and it can be said that a huge scam is committed. Therefore, the ultimate liability can be fastened on the shoulders of the persons responsible for the affairs of Gitanjali Gems and present petitioners being the Directors and actively involved in the management of the company cannot shirk their responsibility.” “It is true that merely being Directors, they cannot be held responsible for the criminal act but looking to the nature of the allegations in the present case, as there is a large scale scam committed by Gitanjali Gems across the country, the petitioners cannot escape their liability at this stage,” Justice Bhatt added.The above ruling came in the petition filed by Choksi and Chetna Jayantilal Zhaveri, the Director of Gitanjali Group with a prayer to quash and set aside an impugned FIR registered with DCB Police Station, Ahmedabad, on 3.4.2017 for the offences punishable under Sections 406, 420 and 34 of the Indian Penal Code.As per the factual matrix of the case, the complainant and her husband visited M/s. Gitanjali Jewellers to make purchases. However, the bill given to them indicated M/s. Divyanirman Jewels, Ahmedabad. The showroom staff informed them about diamond/gold installment schemes where one installment would be covered by the company. The complainant agreed to invest Rs. 5000/- per month in the gold coin scheme for 12 months. They paid Rs. 10,000/- towards two schemes, with subsequent installments collected at their residence until May 25, 2014. In July 2014, Gitanjali Jewellers informed the complainant of the franchise termination. When they offered to pay the remaining installments for gold coins, they were told only diamonds were available. The complainant declined, requested gold coins or a refund, but received no response after reaching out to Gitanjali Group. The franchisee owner, Digvijaysinh Jadeja, was untraceable. The complainant alleged criminal breach of trust and cheating due to the unfulfilled investment promises. The accused included Digvijay Jadeja (franchisee owner of M/s. Divyanirman Jewellers), Mehul Choksi (Managing Director of Gitanjali Group), Aniyath Shivraman Nair (Director of Gitanjali Group), and Chetna Jayantilal Zhaveri (Director of Gitanjali Group). The accused argued that the investment was never transferred from M/s. Divyanirman Jewels to Gitanjali Jewellery Retail Limited (GJRL), and there were legal disputes between GJRL and M/s. Divyanirman Jewels regarding unreturned jewelry and pending sales proceeds. It was later revealed that the complainant settled with the accused, waving her claims and choosing not to pursue the criminal proceedings. Advocate Salil Thakore, representing the petitioners, argued that based on the contents of the impugned complaint, there was no clear indication of any offense committed by the present petitioners. He further contended that the essential elements required to establish the alleged offenses in the First Information Report (FIR) were not met by the present petitioners. Thakore emphasized that the accused individuals served as Directors of the company, and unless there was a specific role attributed to them, vicarious liability should not be imposed. He also argued that, considering the nature of the alleged offenses against the petitioners, the most that could be established was a breach of contract related to the sale of goods. Therefore, he asserted that there was no mens rea (guilty intent), and thus no offense could be attributed to the present petitioners.Since the petition was argued for quashing of the proceedings qua petitioner no.2, i.e., Chetna Jayantilal Zhaveri, before proceeding the Court referred to the observations of the Supreme Court in the case of State of Haryana Vs. Bhajan Lal reported in AIR 1992 SC 604 wherein the Apex had illustrated the cases wherein inherent powers under Section 482 of the Criminal Procedure Code could be exercised either to prevent abuse of the process of any court or otherwise to secure the ends of justice.The Court noted that Zhaveri, claimed to have been admitted as a Director in the company after the alleged incident, however, it was not denied that she is the Director of the company. The Court highlighted, “Now considering the scheme of the company giving various options of investment in gold and diamond, various persons have invested their money in such schemes. Since such schemes are closed suddenly and the deposited amount is not refunded to the persons who have invested their money, it is clear that such ...

‘Huge Scam And An Offence Against The Society’: Gujarat High Court Rejects Fugitive Businessman Mehul Choksi's Plea Seeking To Quash 2017 Cheating Case

Bhavya Singh

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