In a stunning con job, man sold shares of ghost firm for Rs 34.12 crore, accused refused bail

The accused claims it was the victim’s plan to show fake investment in shares to evade tax for money laundering purposes.

The Bombay high court last week refused anticipatory bail to a man from Mumbai who allegedly duped a businessman of crores of rupees by selling him 1,37,000 shares of a non-existent company for Rs 34.12 crore.

Bombay high court refused bail to the accused underlining the need for custodial interrogation of the accused involved in an elaborate financial fraud. (HT Photo)

Justice Sarang Kotwal refused pre-arrest protection to Shishir Agrawal after noticing that the matter was serious and his custodial interrogation was necessary for the purpose of investigation.

Agrawal was booked by the economic offences wing of the Mumbai police along with his father Ashokkumar, on the basis of a complaint lodged by Nirmal Kumar Gangwal, alleging that in year 2017, he was introduced to Ashokkumar by one Pawan Jain as a businessman running a firm named Intimate Fashions India Ltd and was later induced to part with crores of rupees under the guise of investment in shares of the public limited company, which had plans to establish a chain of shops across the country by opening 70 outlets.

Initially the complainant invested Rs 8.50 crore by purchasing 34,000 shares of the company. In October 2017, the complainant received a share certificate and the shares were transferred to his company, Brescon Advisors Private Ltd. Next month he purchased another 34,500 shares in the non-existent company by paying an additional amount of Rs 8.62 crore.

The complainant started enquiring about the company after Ashokkumar did not respond to his queries. When he started searching for the company, he realised that it did not exist. He found one Intimate Fashions (India) Limited listed with the Registrar of Companies, Chennai, but neither was Ashokkumar it’s chairman nor was the complainant nominated on its board of directors.

After persistent demands by the complainant, Ashokkumar repaid an amount of Rs 19.50 crore, leaving Rs 14.62 crore unpaid.

Shishir Agrawal conceded before HC that no such company by the name of ‘Intimate Fashions India Ltd.’ was ever in existence. He, however, claimed that it was a money lending transaction and the idea of showing it as an investment was floated by the complainant himself to evade taxes. The defendant also claimed that no misrepresentation was ever made to Gangwal and he being a chartered accountant would not have invested such a huge amount without making appropriate enquiry. Besides, he claimed, the entire transaction was carried out by his father, not by him.

Justice Kotwal, however, refused to accept the contentions. The judge noted from a statement of a witness that Agrawal himself, in 2012, got the annual report and balance-sheet of the non-existent company printed from the witness.

“Thus the Applicant (Agrawal) has actively participated in creating forged documents. The misappropriation is huge. The Applicant was involved in creating forged documents in respect of the same company whose name was repeatedly used to cheat the informant,” said justice Kotwal, while refusing to grant pre-arrest bail to him.

The judge also took note of the fact that Agrawal was part of the memorandum of understanding signed by his father with the complainant for refunding the outstanding amount of Rs. 14.62 crore.