# Nirmal Singh v. State of U.P. & Ors

- **Citation:** (2024) 3 ILRA 2038
- **Court:** High Court of Judicature at Allahabad
- **Decided:** 2024-02-29
- **Case number:** Writ -C No. 41110 of 2019
- **Bench:** Mahesh Chandra Tripathi, Prashant Kumar
- **Source:** https://unisonlegal.in/judgment/allahabad-high-court/nirmal-singh-v-state-of-u-p-ors-51616
- **Pages:** 37

## Headnote

Civil Law - Constitution of India,1950Article 226-HPPL was allotted 67,941.95
square meters of land in Noida for the
Lotus
300
residential
project-The
company collected Rs. 636 crores from
homebuyers but diverted Rs.190 crores
and sold a portion of the project land for
Rs. 236 crores without approvals-The
project
was
delayed
incomplete
and
riddled
with
violations
including
increasing
numbers
of
flats
beyond
sanctioned plan-HPPL defaulted on dues
3 All. Nirmal Singh Vs. State of U.P. & Ors.
2039
owed to the Noida Authority-Promoters
resigned
as
directors
but
allegedly
retained control through proxies-Multiple
FIRs were lodged against the promoters
for
fraud,
leading
to
arrests
and
subsequent bail conditioned upon an MoU
to complete the project which they failed
to honor-The court held that the corporate
veil can be pierced in cases of fraud and to
identify the individuals responsible for
siphoning
funds
and
defrauding
stakeholders-Promoters
can
be
held
personally liable for their actions-While
insolvency proceedings under Insolvency
and Bankruptcy Code place a moratorium
on recovery against the corporate debtor,
they do not bar actions against individuals
for fraudulent acts-The court directed the
Noida Authority to expedite necessary
approvals for homebuyers and initiate
actions to recover diverted funds from the
promoters.(Para 1 to 118)

The writ petition is disposed of. .(E-6)

List of Cited Cases-

## Text

_Characters 0–39,698 of 120,419. This is a partial read: ask again with offset=39698 for what follows._

2038 INDIAN LAW REPORTS ALLAHABAD SERIES
invited attention to the recent judgment
passed by Hon'ble the Apex Court in M/s
India Glycols Limited and Another v.
Micro and Small Enterprises Facilitation
Council, Medchal - Malkajgiri and
Others, Civil Appeal No 7491 of 2023
(Arising out of SLP (C) No 9899 of 2023),
wherein Hon'ble the Apex Court had held
that the High Court has no jurisdiction to
entertain the writ petition against the award
passed by the Facilitation Council under
the MSMED Act.

40. Learned Senior Counsel appearing
for the petitioner repelled the said argument
and submitted that the impugned order is
not an award, inasmuch as the Facilitation
Council has refused to exercise its
jurisdiction under the Act and as such the
impugned order does not amount to be an
award. Therefore, the writ petition is
maintainable.

41. Considering the rival submissions
qua the third issue, we find that the order
impugned,
whereby
the
Facilitation
Council had refused to entertain the matter
under MSMED Act, as the same was not an
award, therefore, the same is amenable
under Art.226 of the Constitution of India.
Accordingly, against the order impugned,
the writ petition is maintainable.

Conclusion

42. In view of the foregoing
discussion, once the alleged financial
services rendered by the petitioner was not
registered at the time of disbursement of
the loan under the MSMED Act, then
certainly the Facilitation Council, which is
established under the MSMED Act, will
not be having jurisdiction to entertain any
such dispute arising out of any service not
registered
under
the
MSMED
Act.
Therefore, there is no infirmity or illegality
in the order impugned so as to warrant
interference
under
Art.226
of
the
Constitution of India.

43. In view of above, all the issues are
decided accordingly. The writ petition sans
merit and is dismissed.
----------
(2024) 3 ILRA 2038
ORIGINAL JURISDICTION
CIVIL SIDE
DATED: ALLAHABAD 29.02.2024

BEFORE

THE HON'BLE MAHESH CHANDRA
TRIPATHI, J.
THE HON'BLE PRASHANT KUMAR , J.

Writ -C No. 41110 of 2019
With
Writ C Nos 4532 of 2019 & 20251 of 2021

Nirmal Singh ...Petitioner
Versus
State of U.P. & Ors. ...Respondents

Counsel for the Petitioner:
Sri Pankaj Dubey, Neha Singh, Sri Prateek Sinha,
Sri Rishu Mishra, Sri Shashi Nandan (Sr.
Advocate), Sri Anupam Lal Das (Sr. Advocate)

Counsel for the Respondent:
C.S.C., Sri Kartikeya Saran, Sri Kaushalendra
Nath Singh, Sri Shivam Yadav, Sri Amit Saxena
(Sr. Advocate)

Civil Law - Constitution of India,1950Article 226-HPPL was allotted 67,941.95
square meters of land in Noida for the
Lotus
300
residential
project-The
company collected Rs. 636 crores from
homebuyers but diverted Rs.190 crores
and sold a portion of the project land for
Rs. 236 crores without approvals-The
project
was
delayed
incomplete
and
riddled
with
violations
including
increasing
numbers
of
flats
beyond
sanctioned plan-HPPL defaulted on dues
3 All. Nirmal Singh Vs. State of U.P. & Ors.
2039
owed to the Noida Authority-Promoters
resigned
as
directors
but
allegedly
retained control through proxies-Multiple
FIRs were lodged against the promoters
for
fraud,
leading
to
arrests
and
subsequent bail conditioned upon an MoU
to complete the project which they failed
to honor-The court held that the corporate
veil can be pierced in cases of fraud and to
identify the individuals responsible for
siphoning
funds
and
defrauding
stakeholders-Promoters
can
be
held
personally liable for their actions-While
insolvency proceedings under Insolvency
and Bankruptcy Code place a moratorium
on recovery against the corporate debtor,
they do not bar actions against individuals
for fraudulent acts-The court directed the
Noida Authority to expedite necessary
approvals for homebuyers and initiate
actions to recover diverted funds from the
promoters.(Para 1 to 118)

The writ petition is disposed of. .(E-6)

List of Cited Cases-

1. Rakesh Mahajan Vs St. of U.P. & ors.(2020) 2
All LJ 51

2. Ben Hashem Vs Ali Shayif (2008) EWHC 2380

3. Ajay Kumar Radheshyam Goenka Vs Tourism
Fin. Crop. of India Ltd.(2023)10 SCC 545

4. Bikam Chatterji & ors. Vs U.O.I. & ors.(2019)
19 SCC 161

5. Delhi Airport Metro Express Pvt. Ltd. Vs Delhi
Metro Rail Corpn Ltd.(2023) SCC OnLine
Del.1619

6. Salomon Vs Salomon & Co. Ltd. (1897) AC 22

7. Littlewoods Stores Vs I.R.C.(1969)1 WLR
1241

8. St. of U.P. Vs Renusagar Power Co.(1988) 4
SCC 59

9. Balwant Rai Saluja Vs Air India Ltd.(2014) 9
SCC 407

10. St. of Raj. & ors. Vs Gotan Lime Stone
Khanij Udyog Pvt Ltd. & anr.(2016) 4 SCC 469

11. St. of Kar. Vs J. Jayalalita & ors.(2017) 6
SCC 263

12. Arcelormittal India Pvt. Ltd. Vs Satish Kumar
Gupta & ors.(2019) 2 SCC 1

13. Jagvir Singh Vs St. of U.P.(2012) 50 NTN
236

14. Subhra Mukharjee & anr. Vs Bharat Cooking
Coal Ltd & anr. (2003) 3 SCC 312;

15. Calcutta Chromotype Ltd. Vs Collector of
Central Excise Kolkata (1998)AIR SC 1631,

16. New Horizon Ltd. & anr. Vs U.O.I. & ors.
(1967)AIR SC 819

17. CIT Vs. Meenakshi Mills Ltd. Madura (1967)
AIR SC 819

18. Telco & ors. Vs St. of Bih.(1965)AIR SC 40
Juggilal Kamlapal Vs (1969)AIR SC 932

(Delivered by Hon'ble Prashant Kumar, J.)

1. Heard Sri Shashi Nandan, learned
Senior Advocate and Sri Anupam Lal Das,
learned Senior Advocate assisted by Sri
Prateek Sinha, learned counsel for the
petitioner in (Writ-C No.41110 of 2019, Sri
Anurag Khanna, learned Senior Advocate
assisted by Sri Raghav Dev Garg, learned
counsel for the petitioner in (Writ-C
No.4532 of 2020), Sri Vinayak Mithal,
learned counsel for the petitioner in (WritC No.40693 of 2019 ), Sri Rahul Agarwal,
learned counsel for the petitioners in (WritC No.20251 of 2021), Sri Kartikeya Saran,
learned counsel for Home Buyers, Sri Amit
Saxena, learned Senior Advocate assisted
by Sri Shivam Yadav and Sri Kaushlendra
Nath Singh, learned counsel for Noida
Authority, Sri Ambrish Shukla, Ms. Uttara
Bahuguna,
learned
Additional
Chief
2040 INDIAN LAW REPORTS ALLAHABAD SERIES
Standing
Counsels
for
the
State
respondents.

2. Since all the four petitions are
arising out of the same issue relating to the
same project therefore, all of them are
clubbed and heard together.

PROLOGUE

3. This is a classic case of conning,
as to how the promoters without investing
any amount gets huge tracts of prime land
allotted, launches a project and collects
Rs.636 crores from the home buyers, out of
which they again syphon off almost Rs.190
crores (then sell off a portion of land to a
3rd company, pocket and then syphon the
entire sale proceeds (Rs.236 crores), and
pay a pittance to Noida Authority, towards
the cost of land/premium for land and lease
rent, which they were supposed to pay, and
defrauded
the
home
buyers,
Noida
Authority, Banks and other creditors. Not
only this but they have also defrauded
hundreds of other home buyers in various
other projects similarly launched by them
with different names. As a part of that
conning scheme, after launching a project,
they collected money, diverted it to
different other companies and then resigned
from directorship of the company, and push
the company into insolvency and get over
with all civil or criminal liabilities.
Surprisingly, even after conning everyone
they have been going scot free, neither the
State nor the authorities are in a position to
recover the said amount.

4. The entire proceedings in this
case as it gets unfurled, manifests the
intention of promoters for defrauding and
cheating everyone.

FACTUAL MATRIX
5. Facts of the case are that the
Noida Authority floated a scheme for
allotment of plots for group housing, being
scheme code GH2010 ID in pursuance
whereof a consortium of companies applied
for, and the Noida Authority found them
suitable for allotment of land in GH01
Sector107 Noida. As per the prevailing
commercial
practice,
the
allottee
consortium companies were supposed to
choose one of the consortium partner
company to be a lead partner, who would
be responsible for planning, construction
and completion of the project. However,
the consortium members would form a
special purpose company for the execution
of the project. Accordingly, in the instant
matter the consortium members floated a
special purpose company known as M/s
Hacienda Projects Private Limited (here-inafter for the sake of brevity has been
referred to as "HPPL"). This special
purpose
company
had
the
following
Stakeholders:-

Sl.No
.
Name
of
Member
Share
Holding
s
Status
1.
M/s Pebbles
Infosoftech
Pvt. Ltd.
27.73%
Lead
Member
2.
M/s
Three
Platinum
Softech Pvt.
Ltd.
13.36%
Relevan
t
Member
3.
M/s
Credence
Information
Technologie
s Pvt. Lt.
13.36%
Relevan
t
Member
4.
M/s Pebbles
Prolease
Pvt. Ltd.
17.82%
Relevan
t
Member
5.
M/s
Horizon
27.00%
Relevan
t
3 All. Nirmal Singh Vs. State of U.P. & Ors.
2041
Crest India
Real Estate
Member
6.
M/s Twilzon
Limited
0.73%
Relevan
t
Member

6. In the year 2010, Noida
authority
after
bifurcation
allotted
67,941.95 square meters of land to M/s
Hacienda Project Private Limited to build
and develop a residential project located in
Sector 107, Noida. The Noida Authority on
31.03.2010 executed a lease deed with M/s
Hacienda Projects Private Limited (HPPL)
for 67,941.45 square meters land to build a
housing project on it. At the time of signing
of the lease deed, Mr. Nirmal Singh, Mr.
Surpreet Singh Suri and Mr. Vidur
Bhardwaj were the Promoters/Directors of
the HPPL.

The relevant clauses of the lease
deed executed between the HPPL and the
Noida Authority are as follows:-

SCHEDULE OF PAYMENT
Sl.
No.
Due
Date
Instal
ment
(in
Rs.)
Interes
t
(in
Rs.)
Total
(in
Rs.)
1.
25.09.
2010
-
23103
4073
23103
4073
2.
25.03.
2011
-
23103
4073
23103
4073
3.
25.09.
2011
-
23103
4073
23103
4073
4.
25.03.
2012
-
23103
4073
23103
4073
5.
25.09.
2012
26253
8719
23103
4080
49357
2799
6.
25.03.
2013
26253
8719
21659
4450
47913
3169
7.
25.09.
2013
26253
8719
20215
4820
46469
3539
8.
25.03.
26253
18771
45025
2014
8719
5190
3909
9.
25.09.
2014
26253
8719
17327
5560
43581
4279
10.
25.03.
2015
26253
8719
15883
5930
42137
4649
11.
25.09.
2015
26253
8719
14439
6300
40693
5019
12.
25.03.
2016
26253
8719
12995
6670
39249
5389
13.
25.09.
2016
26253
8719
11551
7040
37805
5759
14.
25.03.
2017
26253
8719
10107
7410
36361
6129
15.
25.09.
2017
26253
8719
86637
780
34917
6499
16.
25.03.
2018
26253
8719
72198
150
33473
6869
17.
25.09.
2018
26253
8719
57758
520
32029
7239
18.
25.03.
2019
26253
8719
43318
890
30585
7609
19.
25.09.
2019
26253
8719
28879
260
29141
7979
20.
25.03.
2020
26253
8719
14439
630
27697
8349

SPECIAL TERMS AND
CONDITIONS OF ALLOTMENT:

K. INDEMNITY

The, Lessee/Sub-lessee (s) shall
execute an Indemnity bond, indemnifying
the NOIDA against all disputes arising out
of:
1. Non-completion of Project.

2. Quantity of construction.
3. Any legal dispute arising out of
allotment/lease/Sub-lease (s).

The Lessee shall wholly and solely
be responsible for implementation of the
2042 INDIAN LAW REPORTS ALLAHABAD SERIES
Project and also for ensuring quality,
development and subsequent maintenance
of building and services till such time,
alternate
agency
for
such
work/responsibility is identified legally by
the
Lessee.
Thereafter
the
agency
appointed by the Lessee will be responsible
to the NOIDA for the maintenance of the
service to the constructed flats/ building.

O. MORTGAGE

The mortgage permission shall be
granted (where the plot is not cancelled or
any show cause notice is not served) in
favour
of
a
scheduled
Bank/Got.
organization/financial institution approved
by the Reserve Bank of India for the
purpose
of
raising
resources,
for
construction on the allotted plot. The
Lessee/Sub-lessee (s) should have valid
time period for construction as per terms of
the lease deed/sub-lease deed or have
obtained valid extension of time for
construction and should have cleared upto-date dues of the plot premium and lease
rent.
The
Lessee/Sub-lessee
(s)
will
submit the following documents:

1. Sanction letter of the scheduled
Bank/Govt.
organization/financial
institution approved by the Government of
India.
2. An affidavit on non-judicial
stamp paper of Rs.10/- duly notarized
stating that there is no unauthorised
construction and commercial activities on
the Residential Area (Group Housing).
3. Clearance of upto date dues of
the NOIDA.

NOIDA shall have the first charge
on the plot towards payment of all dues of
NOIDA.
Provided that in the event of sale or
foreclosure
of
the
mortgaged/charged
property, the NOIDA shall be entitled to
claim and recover such percentage, as
decided by the NOIDA, of the unearned
increase in values of properties in respect
of the market value of the said land as first
charge, having priority over the said
mortgage charge. The decision of the
NOIDA in respect of the market value of
the said land shall be final and binding on
all the parties concerned.
The NOIDA's right to the recovery
of the unearned increase and the premptive
right to purchase the property as mentioned
herein before shall apply equally to
involunary shall or transfer, be it bid or
through execution of decree of insolvency
from a court of law.

U. CANCELLATION OF LEASE
AND SUB-LEASE DEED.

In addition to the other specific
clauses relating to the cancellation, the
NOIDA will be free to exercise its right of
cancellation of allotment/lease/sub-lease in
the case of:
1.
Allotment
being
obtained
through misrepresentation/suppression of
material facts, mis-statement and/or/fraud.
2. Any violation of the directions
issued or rules and regulations framed by
any Authority or by any statutory body.
3. Default on the part of the
Lessee/Sub-lessee for breach/violation of
the
terms
and
conditions
of
the
registration/allotment/lease/sub-lease
and/or
non-deposit
of
the
allotment
amount.
4. If at the same time of such
cancellation, the plot is occupied by the
Lessee/sub-lessee, the amount equivalent to
25% of the total premium of the plot shall
be forfeited and possession of the plot will
3 All. Nirmal Singh Vs. State of U.P. & Ors.
2043
be resumed by the NOIa with structure(s)
thereon, if any, and the Lessee/sub-lessee
will
have
no
right
to
claim
any
compensation thereof. The balance, if any,
shall be refunded without any interest and
no separate notice shall be given in this
regiard.
5. If the allotment is cancelled on
the ground mentioned in para U(1) above,
the entire amount deposited by the
Lessee/sub-lessee,
till
the
date
of
cancellation shall be forfeited by the
NOIDA and no claim whatsoever shall be
entertained in this regard.

OTHER CLAUSES.

1. The NOIDA/Lessor reserves the
right to make such additions/alternations
or
modifications
in
the
terms
and
conditions of allotment/lease deed/sublease deed from time to time, as may be
considered
just
and
expedient
and
approved by the NOIDA.
5. Any dispute between the NOIDA
and Lessee/Sub-Lessee(s) shall be subject
to the territorial jurisdiction of the Civil
Courts having jurisdiction over District
Gautam Budh Nagar or the Courts
designated by the Hon'ble High Court of
Judicature at Allahabad.

7. After allotment of the land, the
project was named as Lotus 300, the
advertisement given by the company stated
that only 300 apartments would be built on
an area of 67,941.95 square meters. A lot of
people got attracted to the vast openness in
the project and booked flats in this project.
Allotments were made by the HPPL in
favour of the respective buyers. The
Builder Buyers Agreement was executed in
the year 2011. This Builder Buyers
Agreement
had
unilateral
terms
and
conditions and the buyers were made to
sign
on
a
printed
agreement
and
whereunder the builder was supposed to
charge a fine at the rate of 18% per annum
on the delay of payment by an allottee.
Floor plan was sanctioned in the year 2011
with three hundred flats on the entire area.
Thereafter, the builders on 15.02.2012 sold
27,941.95 square meters of land from this
project to some other company for an
amount of Rs.236 crores. The effect of
selling of 27,941.95 square meters was that
the area on which 300 flats were to be built
have substantially been reduced without
taking flat buyers concurrence. Further 30
apartments were added in the project which
was far more than the sanctioned floor-plan
of 2011. The builder applied for a fresh
plan sanction in April, 2013 for these
additional 30 flats. All the 330 flats in six
towers of the project were sold and the
developer collected a whopping sum of
Rs.636 crores from the sale/booking of the
flats to the home-buyers. The project was to
be completed in 39 months, however, the
completion date for the project was revised
to July, 2017. The HPPL is said to have
completed four out of six towers and
handed over possession to the flat owners.

8. The builders had collected
Rs.636 crores from the booking of flats.
Out of which the promoters of HPPL had
syphoned away almost Rs.190 crores,
which was supposed to be utilised for
construction/development of the project.
Instead of developing the project, money
was diverted from the company and
interest-free loans were given to other
companies of the promoters, where these
three
promoters
themselves
were
promoters/directors/shareholders
or
had
other business interest. This diversion was
substantiated by the balance sheet of the
HPPL company.
2044 INDIAN LAW REPORTS ALLAHABAD SERIES
9. The petitioner, Mr. Nirmal
Singh claims to be the promoter/director in
HPPL up to 15.07.2014 and also in M/s
Pebbles Infosoftec Private Limited which
was the lead member of the consortium to
whom the land was allotted and also 50%
shareholder of HPPL. According to the
petitioner the resignation as directors of
HPPL was tendered as follows:-

I. Nirmal Singh 15.07.2014
II.Vidur Bhardwaj 03.03.2015
III. Surpreet Singh Suri 03.03.2015

10. Towers 1 to 4 were completed
and possession was handed over, but in
spite of the fact that the flat owners of
tower no.5 and 6 had paid the entire
amount, the builder/HPPL did not complete
the project, neither provided the other
amenities, which was promised by the
builder at the time of booking. The builder
went to the extent of conveying the flat
owners to take the possession of the
incomplete/unfurnished flat as it is. The
situation for the buyers was 'take it or leave
it'. The flat owners, who had no choice
took possession of the incomplete flat out
of desperation. They continued asking the
company and the promoters to complete the
project but for the reasons best known to
them they chose not to complete it.

11. The flat owners after paying
the entire amount, were left high and dry
and were cheated, so the home buyers on
24.03.2018 lodged an FIR, under Sections
420, 409 and 120B IPC, with the Economic
Offence Wing, Delhi. Thereafter, detailed
investigation was carried by the Economic
Offences Wing. A charge-sheet was filed in
which it was found that the builder had
diverted huge amount of money out of the
amount collected from the allottees to its
subsidiary companies as interest free intercorporate loan. Apart from it, the builders
had started selling basement car parking for
Rs. 3 lakhs. The accused persons had
jointly conspired with dishonest intentions
of cheating the complainants. The accused
had committed offence of cheating and
committed wrongful gain to themselves and
loss to the flat-owners.

12 In pursuance of the F.I.R.
lodged by the flat owners of HPPL, all the
three directors were arrested on 30.11.2018.

13. Immediately upon their arrest,
they expressed their willingness to pay up
60 crore rupees which was required to
complete the project, and to avoid arrest,
they entered into an MOU, where they
agreed to arrange for the required fund and
to complete the project in a particular time
frame
and
obtain
a
'Completion
Certificate'.
This
MOU
was
signed
between HPPL as a first party and Home
Buyers Association as a second party.
However, the confirming parties were
Nirmal Singh, Vidur Bharadwaj and
Surpreet Singh Suri, who had signed on
behalf of the company HPPL. This MOU
was a personal guarantee given by them to
the home buyers to infuse funds to
complete the project and pay the dues of
Noida Authority.

14. In Clause 2 of the MOU, the
HPPL and the promoters, who were the
confirming parties agreed that they will
complete
the
project
in
9
months
commencing from 15.12.2018 and further
agreed that the balance cost of construction
of the project which was Rs.60 crores
would be paid by the first party that is
HPPL and the confirming party was the
three promoters (petitioners herein) Nirmal
Singh, Surpreet Singh Suri and Vidur
Bhardwaj who would arrange another 25
3 All. Nirmal Singh Vs. State of U.P. & Ors.
2045
crores and infuse the same in the
designated
escrow
accounts
in
the
following manner- (a) 5 crores would be
handed over to the second party on
04.12.2018, (b) another 5 crores would be
infused on 15.01.2019 (c) 10 crores would
be arranged by way of sale of plot no.16,
Sector 127 Noida by the first party and the
confirming party (d) a further sum of 5
crores
would
be
infused
before
03.02.2019.The first party will ensure M/s
Udishi Constructions Private Limited to
infuse 12 crores for the construction of
unsold inventory. The first party HPPL has
entered
into
agreement
with
Udishi
Constructions Pvt. Ltd. wherein Udishi
Constructions would infuse Rs.12 crores
for construction against security of his
unsolved inventory. Further, in addition to
the above, any deficit amount after
realizing
the
receivables
from
the
allottees/buyer and after arranging funds as
above shall be arranged by the first party
and the confirming party by way of placing
additional asset as collateral to ensure
completion of the project.

15. In clause 10 of this MOU, it
was further admitted that the first party,
HPPL and the confirming party, which are
the three promoters will arrange the funds
and pay the dues of the Noida Authority.

16. On the basis of this MOU, a
bail application was moved in the Court of
Chief Metropolitan Magistrate, South Saket
Court, Delhi wherein the Court of CMM
passed the following order on 04.12.2018:-

"FIR No.74/18
PS:EOW
U/s:409/420/120B IPC
State Vs. (i) Supreet Singh Suri (ii)
Vidur Bhardwaj (iii) Nirmal Singh
04.12.2018
Present: Ld Substitute APP for the
State
The reply to the bail application
moved on behalf of accused Nirmal Singh
has been filed by the IO.
At this stage, it is submitted by Ld.
Counsel for accused Vidur Bhardwaj and
Spurpreet
Singh
Suri
that
the
bail
applications moved on behalf of accused
Vidur Bhardeaj and Surpreet Singh Suri are
also listed for today and the aforesaid
applications may also be considered.
At this stage, IO submits that the
role of all the accused persons are similar
to the effect that they all were the
Promoters of Hcienda Projects Pvt. Ltd.
At this stage, the copy of MOU
dated 03.12.2018 between the accused
company M/s Hacienda Projects Pvt. Ltd.
and M/s Lotus 300 Buyers Association has
been filed stating therein that a settlement
agreement amongst the parties of this case
has been entered into and there is going to
be a general body meeting on 16.12.2018
in which every stakeholder would take part
for retification of the MOU arrived between
the parties.
Ld. Counsels for the accused
persons submit that the prime concern of
the flat buyers is to ensure that they get the
delivery of the flats within stipulated time
frame as mentioned in the abovesaid MOU
and the interest of the flat buyers
association
has
been
taken
into
consideration and the demand draft for the
amount of Rs.5 crores would be deposited
in the escrow account, which is already
opened, to ensure the compliance of the
MOU as well as to ensure the construction
work so that the flats may be delivered to
the flat buyers who are the aggrieved
parties herein.
At this stage, the demand draft
bearing
no.344504
dated
03.12.2018
drawn on Kotak Mahindra Bank, Sector-
2046 INDIAN LAW REPORTS ALLAHABAD SERIES
18, Noida branch, UP for 1 crore and
demand draft bearing no.037735 dated
03.12.2018 drawn on Federal Bank, Nehru
Place branch, New Delhi for Rs.4 Crore
have been handed over to Sh. Pankaj Jolly.
President of Lotus 300 Buyers Association
who submits that he would deposit the
aforesaid demand drafts into the escrow
account by tomorrow.
At this stage, the MOU dated
03.12.2018 has been signed by the accused
persons who are present today and
produced from police custody.
Considering
the
facts
and
circumstances, submissions made and the
MOU dated 03.12.2018, accused persons
namely Nirmal Singh, Vidur Bhardwaj and
Surpreet Singh Suri are hereby admitted to
interim bail till 20.12.2018 on furnishing
personal bond in the sum of Rs.5 lacs each
with one surety each in the like amount. It
is made clear that the interim bail has been
granted to accused persons without going
into merits of this case and subject to strict
compliance of MOU dated 03.12.2018
failing which the interim bail granted to
accused Nirmal Singh, Vidur Bhardwaj and
Surpreet Singh Suri would be cancelled.
Futher, the accused persons shall not leave
the country without permission of the Court
and that they shall cooperate the IO in the
investigation of this case. Bail bonds
furnished and accepted till 19.12.1018 and
bail bonds be put with the bail applications
on 20.12.2018.
At request, put up for arguments on
the bail applications on 20.12.2018 at
12.30 pm.

17. The interim bail was granted
on a condition that there should be strict
compliance of the MOU. The petitioners
herein flouted the terms of the MOU,
thereafter, an application was moved by the
home buyers for cancellation of bail.
Surprisingly, rather shockingly, the learned
Court vide its order dated 21.05.2019
confirmed the interim bail and held as
under:-

"Vide this common order I shall
decide the bail applications of applicant
Nirmal Singh, Surpreet Surri and Vidur
Bhardwaj.
It is stated in the applications that
the applicants are founder of '3C Group of
Companies' and are directors of M/s
Hacienda Project Pvt. Ltd and are involved
in the work of construction. It is further
stated that in the year 2011, the company
got approval for construction of a project
'Lotus 300' comprising of 300 apartments
but in the year 2014 on account of the
order of the National Green Tribunal, the
construction work got affected. It is further
stated that the land acquisition proceedings
were also got quashed by the Supreme
Court vide order dated 05.08.2013 in civil
appeal no.6353/13. It is further stated that
following the difficulties in the completion
of the project, complaints were filed by the
investors and the present FIR was lodged.
It is further stated that the applicants have
fully cooperated with the investigation and
no purpose will be served keeping them in
custody. It is further stated that there is no
apprehension that the applicants shall
tamper with the evidence or free from the
justice.
In his reply submitted by the IO, it
is stated that the applicants have got
changed the building plan from Noina and
enhanced a number of apartments from 300
to 336. It is further stated that applicants
collected huge amount of money from the
customers in the name of project and
diverted around Rs.140 crores to the
subsidiary companies. It is further stated
that there are more than 50 victims in the
present FIR and the alleged company has
3 All. Nirmal Singh Vs. State of U.P. & Ors.
2047
received amount to the tune of Rs.100
crores from the victims. It is further stated
that there are total 328 investors and the
company has received the amount to the
tune of Rs.636 crores out of which the
amount to the tune of Rs.219 crores has
been diverted by the company into the
subsidiary companies. It is further stated
that there are total 6 towers in the project
and all the towers have been erected and
out of 6 towers, two towers are on the verge
of completion. It is further stated that the
accused company has applied for part
completion
certificate
on
23.10.2018.
Further, an MOU has been signed with
association of buyers for completion of
project on 15.05.2018 and an escrow
account has been opened with one
signatory from buyer side and other
signatory from company side.
I have heard the arguments and
perused the record.
In the present case, as per the
report of the IO, all the six towers have
been constructed two of which are near the
completion. The applicants have also
deposited Rs.25 crores and they have been
complying with the conditions of the MOU
dated 15.05.2018. There is no complaint or
incident showing the involvement of the
applicants in tampering with any evidence
or intimidating any witness. The evidence
in the present case is documentary in
nature and all the documents have already
been seized by the IO. Investors have
requested that bail of the applicants may
not be regularized and they should be given
interim bail in accordance with the
compliance of the MOU. Request is not
tenable because the bail cannot be used as
a tool to pressurize the accused to part with
money. It's a criminal trial and the Court
cannot act as a recovery agent of the
investors and cannot keep handing the
sword of custody over the head of the
applicants in the name of compliance of the
MOU. Otherwise also, extending bail of the
applicants from time to time takes and
considered time of the Court and it is an
onerous
procedure
which
cannot
be
adopted.
The
applicants
have
been
enlarged on bail since a long time and
there is no instance of their making any
attempt to flee from the justice. There is no
possibility that the presence of the
applicants cannot be secured during the
trial.
Otherwise
also,
appropriate
conditions can be imposed in this respect.
Therefore,
applicant
Nirmal
Singh,
Surpreet Suri and Vidur Bhardwaj are
admitted to bail on furnishing personal
bond of Rs.5,00,000/- each with one surety
each in the like amount subject to condition
that applicants shall not leave the country
without taking permission from this Court,
they shall submit their passport in the
Court, they shall not try to tamper with the
evidence or intimidate any witness or
commit similar offence and they will join
the investigation as and when required.
Applications stands disposed of."

18. After getting the bail the
Promoters (petitioners herein), who had no
intention of honouring their commitment
given in the MOU, defaulted to pay the
entire agreed amount, and failed to
complete the project, they also did not pay
the Noida Authority their dues, once again
they cheated the home buyers.

19. In addition to the land
premium, HPPL was supposed to pay
additional compensation for the land,
which was supposed to be paid to the
farmers by the Noida Authority, since
HPPL failed to deposit Rs.54,50,51,626/-
towards
additional
compensation
and
Rs.9,15,00,000/- towards time extension
charge for the delayed project, hence, a
2048 INDIAN LAW REPORTS ALLAHABAD SERIES
recovery notice was issued to HPPL by
Noida Authority on 16.09.2019 for an
amount of Rs.63,65,55,626/- along with a
notice for recovery to the directors of M/s
Hacienda Projects Private Limited, Mr.
Nirmal Singh, Surpreet Singh Suri and
Vidur Bharadwaj.

20. Aggrieved by the recovery
notice issued to Mr. Nirmal Singh, he has
filed the instant writ petition (Writ-C No. -
41110 of 2019) seeking following reliefs:-

(a) To issue a writ, order or
direction in the nature of certiorari calling
for the record and quashing the impugned
recovery
certificate
dated
16.09.2019
issued by the Tehsildar, Dadri, District
Gautambudh Nagar.
(b) To issue a writ, order or
direction in the nature of mandamus
restraining the respondent no.2 and 3 from
taking any coercive action in pursuance of
impugned undated recovery certificate.
(c) To issue any other order or
direction which the Hon'ble Court may
deem fit and proper in the circumstances of
the case.
(d) To award the cost of the petition
to this petitioner.

21. Identical writ petitions were
also filed by other two directors, Mr. Vidur
Bhardwaj, Writ-C No.40693 of 2019 and
Mr. Surpreet Singh Suri, Writ-C No.4532
of 2020. All the matters were clubbed
together and this Court on 17.12.2019
proceeded to pass the following order:-

"Heard Sri Ravi Kant, learned
Senior Counsel assisted by Sri Pankaj
Dubey, learned Counsel for the petitioner,
learned
Standing
Counsel
and
Sri
Kaushalendra Nath Singh, learned Counsel
for respondenot no.4.
In order to recover the dues of
respondent no.5, a company incorporated
and registered under the Companies Act,
2013, the recovery is being pressed against
the petitioner.
The argument is that the petitioner
had ceased to be the Director of the said
company long before and that since
company is a separate juristic person, its
dues cannot be recovered from the personal
assets of the petitioner. In support reliance
has been placed upon the judgment and
order dated 4.12.2019 in Writ Petition
No.33100 of 2019 (Rakesh Mahajan Vs.
State of U.P. & 4 others).
Learned Standing Counsel and Sri
Kaushalendra Nath Singh are both directed
to file counter affidavit within a period of
three weeks. A week, thereafter, is granted
to the petitioner for filing rejoinder
affidavit.
Issue notice to respondent no.5.
List for admission/final disposal
after expiry of the above period.
Until further order of this Court,
the impugned recovery dated 16.9.2019
shall not be pressed against the petitioner,
though it will be open for the respondents
to release the outstanding dues from the
respondent no.5 provided the petitioner
surrenders his passport, if any, before the
respondent
no.2,
District
Magistrate,
Gautambuddha
Nagar
and
give
on
undertaking within a week to the District
Magistrate that he would not leave the
country without the permission of the
Court."

IMPLEADMENT
APPLICATION
OF
HOME
BUYERS

22. The home buyers filed an
impleadment application and also filed a
counter affidavit in which they brought on
3 All. Nirmal Singh Vs. State of U.P. & Ors.
2049
record
as
to
how
these
three
directors/petitioners after collecting the
money from the home buyers and after
selling the land, which was part of the
project,
together
had
siphoned
off
(Rs.190+236=426) crores from the HPPL
and invested the same in their other
companies, and chose not to pay the
authority the premium and the lease rent
and the Noida Authority for the reason best
known to it had made no efforts to get the
outstanding dues.

23. The learned counsel for the
home buyers submitted with vehemence
that the petitioners/promoters right from the
inception had the nefarious intentions to
cheat the flat owners, Noida authority and
the banks so they schemed out a fool proof
strategy to defraud people, syphon away
the money, and then go scot free.
Accordingly, they tendered the resignation
from the HPPL company (Nirmal Singh,
w.e.f. 15.07.2014, Vidur Bharadwaj and
Surpreet Singh Suri w.e.f. 03.03.2015) after
diverting the funds, and making a petty
employee as dummy director of the
company and as such still kept the full
control over the company.

24.

He
submitted
that
the
petitioners/promoters, who had cheated the
home buyers, so the home buyers had
lodged an FIR, in which after the
investigation a charge sheet was filed,
under Sections 409, 420 and 120B IPC.
Referring to the balance sheet of HPPL
with the impleadment application. He
submitted that it goes to show that almost
Rs.190 crores had been diverted from the
company and given to other companies,
which was directly or indirectly owned by
the promoters, or where they had business
interest. He invited attention to an order of
this Court, annexed with impleadment
application in which the present Director,
Anand Ram, who happens to be the Store
Keeper, appeared in the Court and said that
he is simply an employee of the company
and he has appeared before the Court on
the direction of Personal Secretary of one
of the Promoters, Vidur Bharadwaj, which
goes to show that the petitioners even after
resigning had full control of the company.

25. Learned counsel further
submitted that once the promoters after
their arrest had executed a MOU wherein
they had undertaken before the court to
comply
with
the
conditions
of
Memorandum of Understanding including
the payment of NOIDA dues, and had taken
joint and several responsibility to comply
with the said condition, hence, they cannot
say now that they will not pay the dues of
the Noida Authority. Therefore, the relief
prayed for in the present writ petitions is
not maintainable. The NOIDA dues, if
payable, are to be recovered from the
personal assets of the petitioners who have
already undertaken personal guarantee to
execute the project and pay the dues of the
Noida Authority.

26. He next submitted that when
the builder had abandoned the project and
the home buyers were forced to take
possession of incomplete flat under great
duress and it is this helplessness that is
being taken advantage of, by the builder to
represent, as if the said flats had been fully
constructed/developed. Amounts already
charged towards furnishing of flats and
providing other amenities, which were
promised but never provided as the funds
were diverted to some other companies.
Later, the home buyers further had to shell
out huge amount of money to make the
flats habitable. There was no permanent
electricity connection which was obtained
2050 INDIAN LAW REPORTS ALLAHABAD SERIES
by the home buyers themselves at their own
cost.

27. He further submitted that the
promoters had not denied anywhere in any
of their affidavit/supplementary affidavit
that out of Rs.636 crores collected from the
home buyers, Rs.190 crores were not
diverted from Hacienda's (HPPL) accounts.
This fund was to be utilized only for
construction/development of the project,
instead of utilizing for the same, the
promoters gave interest free loans to sister
concerns (where the three petitioners
themselves were directors or had business
interest), or utilized for servicing of loans
that were not related to the project. The
same conclusion has been arrived at by the
Economic Offences Wingh, Delhi Police, in
the charge sheet filed against the three
promoters/petitioners.
The
sale
of
27,941.95 square meter land and diversion
of the sale consideration has also been
established by Economic Offences Wing in
their charge-sheet.

28. To buttress his argument, the
learned counsel further submitted that
ownership structure of the group of these
companies clearly establishes how the three
promoters Nirmal Singh, Surpreet Singh
Suri and Vidur Bharadwaj, were in
complete
ownership
of
a
web
of
companies, including Hacienda. As far as
the applicant knew, these promoters have
around
60
companies.
These
three
promoters were common directors in all the
companies, where they had the same modus
operandi of siphoning off the funds and
then tender their resignation as directors of
the company to escape civil and criminal
liabilities and make their petty employee a
director of these companies and still have
full control of the companies. The order
dated 30.04.2019 passed by this Hon'ble
Court
in
Arbitration
&
Conciliation
Application No.39 of 2018 and the emails
brought on record goes to show that the
petitioners
were
the
actual
persons
controlling the affairs of HPPL even after
having purportedly resigned therefrom.

29.