The Designated Court under the Act (Maharashtra Protection of Interest of Depositors Act) in Mumbai has granted regular bail to Suresh Meghraj Shroff, a developer and director of M/s. S. V. K. Project LLP, in a high-profile economic offence case involving allegations of cheating and forgery in a housing project. The order, delivered on May 4, 2024, in Bail Application No. 964 of 2024, underscores the judiciary’s increasing willingness to consider private settlements and the majority interest of victims, even in severe cases investigated by the Economic Offences Wing (). The Court’s decision notably relied on the legal principle that a minority investor’s objection should not be allowed to derail a project settlement that benefits the majority.
The Fraud Allegations and Financial Magnitude
Suresh Meghraj Shroff was facing a multitude of serious charges under the Indian Penal Code (), including Sections 406 (Criminal breach of trust), (Criminal breach of trust by public servant, or by banker, merchant, or agent), (Cheating), and 465, 467, 468, 471 (Forgery-related offences), all read with Section 34. Additionally, charges were pressed under Sections 3, 4, 5, 8, and 13 of The Maharashtra Ownership Flats () Act, 1963. The case was registered as No. 83 of 2022 with the , Mumbai, stemming from an original at Juhu Police Station.
The prosecution alleged that since 2014, Shroff, through his company, had induced various investors to purchase flats in his “Splendour” project in Vile Parle, Mumbai. By presenting various government permits and plans, the developers won the trust of investors who collectively contributed a staggering amount of . The core of the complaint was that the developers abandoned the construction half-done, neither handing over the promised flats nor returning the invested funds, leading to the lodging of the police report.
Settlement with Majority Investors as a Decisive Factor
Ld. Advocate Abad Ponda, along with Ld. Advocate Chittesh M. Dalmia, representing the applicant, presented a powerful argument centered on the post-offence settlements. The defence informed the Court that the project involved a total of 19 flats, and out of the nine flat owners who initially lodged the police report, the applicant had already reached a settlement and executed consent terms with the original informant and eight other flat owners. These consent terms were formally recorded and filed before the Hon’ble High Court of Judicature at Bombay in Commercial Arbitration No. 144 of 2021, leading to the disposal of that petition.
Crucially, the informant and the majority of the original intervenors confirmed the settlement by filing an affidavit (Exhibit 10) expressing no objection to the grant of bail to the applicant. They had withdrawn their earlier intervention pleas in light of the executed consent terms. The defence further highlighted that even the primary objecting intervenor, Mrs. Reshma Rathod, whose husband was involved in a Crore transaction, was associated with a separate Malad project, and that a Memorandum of Understanding () had already been executed with her husband, Mr. Kiran Rathod, which had been acted upon.
Upholding the Majority Decision Against Minority Objection
The bail application faced strong resistance from Ld. SPP Seema Deshpande and Ld. Advocate Satyadev Joshi for the contesting intervenor, Mrs. Reshma Rathod, who argued that her interests were not secured and vehemently opposed the bail on the merits, citing concerns of forgery and cheating.
However, the Court, presided over by Judge Aditee Uday Kadam, prioritized the collective will of the majority of investors. The Court made a profitable reference to the judicial precedent set in Raj M. Ahuja and another Vs. Municipal Corporation of Mumbai, which established that “the interest of the minority occupants / tenants cannot be opposed to the interest of the majority occupants” and that a single non-consenting member should not be allowed to stall a project or rule over a majority decision aimed at the collective welfare. The Court concluded that withholding consent by only one member would negatively affect the rights and interests of the nine other members who had agreed to the settlement terms.
Furthermore, the Court considered that the applicant had been in custody since February 28, 2024, the charge-sheet had been filed, and thus, the investigation was “mostly complete.” A critical observation was that “if the applicant would remain behind bar, consent terms cannot be acted upon,” effectively accepting the argument that the applicant’s freedom was necessary to finalize the compensation and settlement agreed upon by the majority of the victims. Another partner/accused in the project had already been released on bail, reinforcing the decision.
Conditions Imposed for Liberty and Financial Security
Based on these compelling factors, the Court allowed the bail application. Suresh Meghraj Shroff was ordered to be released on a Personal Recognizance () bond of with one or more sureties in the like amount, with a three-month provision for a cash bail of the same amount.
The Court imposed strict conditions to secure the financial interests of the remaining investors and ensure cooperation: the applicant was mandated to surrender his passport within one week and was explicitly prohibited from alienating any movable or immovable property in his name, or in the name of his wife or children, without the prior permission of the Court. This crucial condition serves to protect the remaining assets that might be necessary to fulfill the terms of the settlement and to address the claims of the dissenting intervenor. The applicant was also required to cooperate with the Investigating Officer, attend trial dates, and not tamper with evidence. This balanced ruling allowed the developer liberty while simultaneously placing significant controls on his financial conduct and movements pending the conclusion of the legal proceedings.