Thane Court Convicts Financial Adviser For Criminal Breach Of Trust, Acquits Him Under BUDS Act

Thane, May 18: A special court under the Banning of Unregulated Deposit Schemes (BUDS) Act in Thane has convicted a Mumbai-based financial adviser for criminal breach of trust after he failed to return investment money worth over Rs 18 lakh to a widow who had entrusted him with her savings for mutual fund investments.

Court awards jail term and compensation

The court of Designated Judge G.T. Pawar convicted accused Mateshwar Rajpat Giri under Section 406 of the Indian Penal Code and sentenced him to two years of rigorous imprisonment along with a fine of Rs 30 lakh.

The court directed that the fine amount be paid to the complainant as compensation under Section 357 of the CrPC after the appeal period.

However, the accused was acquitted of offences under the BUDS Act. The court observed that the alleged transactions took place between July 2017 and April 2018, while the BUDS Act came into force only on February 21, 2019.

“It is clear that a person cannot be convicted for any offence except for violation of law in force at the time of commission of offence. But in present case, the alleged offence of receipt of investment occurred from 28.07.2017 to 06.04.2018 whereas BUDS Act has been brought into force on 21.02.2019. Thus, said charge does not survive,” the court held.

Court cites Karnataka High Court ruling

The court further referred to a Karnataka High Court ruling in the case of Srijith vs State, observing that cognizance under Section 4 of the BUDS Act cannot be taken without a complaint from the regulator.

The court concluded that the provisions of the BUDS Act were not applicable in the present case, though the accused was liable for criminal breach of trust under Section 406 IPC.

According to the prosecution, complainant Savitri Vinod Koyari had invested Rs 51.50 lakh with the accused between July 2017 and April 2018 after he allegedly promised annual returns of 12 per cent through investments in mutual funds and equity shares.

The complainant stated that the accused operated a firm named “One Time All Solutions” and induced her to invest compensation money received after the death of her husband in a road accident.

Court rejects defence argument

The court noted that Rs 32.90 lakh was transferred through bank transactions, while Rs 18.60 lakh was allegedly paid in cash.

The complainant claimed that although the accused initially paid returns till January 2021, he later stopped payments and failed to provide any documents showing that the money had actually been invested in mutual funds.

During the trial, the accused admitted receiving the entire amount from the complainant and also admitted executing a notarised memorandum of understanding acknowledging the dues.

However, he contended that he had repaid substantial amounts and argued that the default occurred due to a slowdown in business during the Covid-19 pandemic.

Rejecting the defence, the court held that the prosecution had successfully established criminal breach of trust as the accused failed to produce any evidence showing that the complainant’s funds were invested in mutual funds.

“Inference can be drawn that he has utilized that amount for his own use,” the court observed.

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At the same time, the court acquitted the accused of cheating charges under Section 420 IPC, observing that the complainant had admittedly received dividends from 2017 to 2020, indicating that there was no dishonest intention at the inception of the transaction.

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