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Patna High Court declines CBI probe into alleged cheating by Bonanza Portfolio Ltd, directs petitioners to pursue remedies in trial court.
Patna High Court declines CBI probe into alleged cheating by Bonanza Portfolio Ltd, directs petitioners to pu…
This case involves petitioners who accused Bonanza Portfolio Limited of cheating people in Bihar by promising high returns on investments. They wanted the court to order a Central Bureau of Investigation (CBI) probe and action against the company. After reviewing the facts, the Patna High Court found that the authorities had already investigated, charge-sheets were filed against certain individuals, and the company itself was not found to be operating illegally. The court declined to order a CBI investigation and told the petitioners to pursue their grievances in the trial court instead.
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Case Name
Ashish Kumar Keshri & Ors. vs. The State of Bihar & Ors. (High Court of Patna)
Civil Writ Jurisdiction Case No. 348 of 2017
Date: 17th February 2021
Key Takeaways
- The court refused to order a CBI investigation into Bonanza Portfolio Ltd, as existing investigations had already led to charge-sheets against individuals.
- Bonanza Portfolio Ltd was found to be a SEBI-registered share broker, not a chit-fund or non-banking financial company (NBFC).
- The Reserve Bank of India (RBI) and Economic Offence Unit (EOU) found no evidence of illegal deposit-taking by the company.
- Petitioners were advised to pursue their cases in the trial court, as the matter was already sub judice (pending before the court).
- The case clarifies the regulatory roles of SEBI and RBI regarding share brokers and NBFCs.
Issue
Should the court direct a CBI investigation and government action against Bonanza Portfolio Ltd for allegedly cheating investors in Bihar by promising high returns?
Facts
- Petitioners: Three individuals from Rohtas district, Bihar, claimed Bonanza Portfolio Ltd and its officials cheated people by collecting money with promises of high returns.
- Respondents: Included the State of Bihar, Union of India, SEBI, RBI, Economic Offence Unit, and Bonanza Portfolio Ltd.
- Allegations: The company was accused of running a scheme promising to double investments in ten months.
- Police Cases: Petitioners filed FIRs and complaints under Sections 406, 420/34 of the Indian Penal Code (IPC) in 2015 and 2016.
- Investigation: Police found the allegations true against certain individuals (e.g., Daya Shankar Singh, Pradeep Kumar) and filed charge-sheets. Bonanza Portfolio Ltd was not named as an accused in the charge-sheets.
- Regulatory Findings: RBI and EOU inspections found Bonanza Portfolio Ltd to be a SEBI-registered share broker, not an NBFC or chit-fund company. The company did not accept deposits or promise fixed returns.
- SEBI Complaint: One petitioner withdrew their complaint before SEBI.
Arguments
Petitioners
- Sought a CBI probe and government action against Bonanza Portfolio Ltd for allegedly cheating investors.
- Claimed authorities had not taken sufficient action despite multiple complaints and FIRs.
Respondents
- Police & EOU: Investigations led to charge-sheets against individuals, not the company. EOU monitored cases and issued directions to district authorities.
- Bonanza Portfolio Ltd: Denied involvement in non-banking financial activities or offering fixed returns. Claimed to be a SEBI-registered share broker only.
- RBI: Inspected company offices, found no evidence of NBFC activity or illegal deposit-taking. Company registered with SEBI and Registrar of Companies.
- EOU: Confirmed company’s status as a share broker under SEBI regulation, not under RBI’s NBFC rules.
Key Legal Precedents
- Sections 406, 420/34 of the Indian Penal Code: Relate to criminal breach of trust and cheating.
- Section 45 IA of the Reserve Bank of India Act, 1934: Requires NBFCs to obtain registration from RBI. RBI found this did not apply to Bonanza Portfolio Ltd.
- Securities and Exchange Board of India Act, 1992: SEBI’s regulatory authority over share brokers was emphasized.
- Bihar Protection of Interest of Depositor’s Act, 2002: Invoked for district-level action against alleged deposit-taking schemes.
Note: The judgment does not cite any specific case law by name, but references the above statutes and regulatory frameworks.
Judgement
- The Patna High Court found that the authorities had already investigated the matter, and charge-sheets were filed against individuals based on the evidence.
- Bonanza Portfolio Ltd was not found to be operating as a chit-fund or NBFC, but as a SEBI-registered share broker.
- The court declined to order a CBI investigation or further government action.
- Petitioners were advised to pursue their cases in the trial court, where the matters were already pending.
- The writ application was disposed of accordingly.
FAQs
Q1: Did the court find Bonanza Portfolio Ltd guilty of cheating?
A: No, the court did not find the company guilty. Investigations found no evidence that the company was running a deposit scheme or promising fixed returns. Charge-sheets were filed against certain individuals, not the company itself.
Q2: Why didn’t the court order a CBI investigation?
A: The court found that the local authorities had already investigated, and the matter was pending before the trial court. There was no need for further investigation by the CBI.
Q3: What should the petitioners do now?
A: The court advised the petitioners to pursue their grievances in the trial court, where the cases are already pending.
Q4: What is the significance of SEBI and RBI in this case?
A: SEBI regulates share brokers like Bonanza Portfolio Ltd, while RBI regulates NBFCs. The company was found to be under SEBI’s jurisdiction, not RBI’s, and was not found to be taking deposits or promising fixed returns.
Q5: What legal provisions were involved?
A: The case involved Sections 406, 420/34 of the IPC, Section 45 IA of the RBI Act, 1934, and the SEBI Act, 1992.
