Financial advisor gets 2-year RI, fined in breach of trust case

A Thane court has sentenced a financial advisor to two years' rigorous imprisonment in a case of criminal breach of trust filed by a woman and imposed a fine of Rs 30 lakh on him.

Special court judge G T Pawar, however, cleared the accused, Mateshwar Rajpat Giri, of charges of cheating under the IPC, as well as stringent provisions of the Banning of Unregulated Deposit Schemes (BUDS) Act, noting the legislation came into effect after the offence occurred.

The court, in the judgment passed on Saturday, ordered that the entire fine amount of Rs 30 lakh, once recovered, be paid as compensation to the woman, a resident of Thane in Maharashtra.

According to the prosecution, the woman, who lost her husband and brother in a road accident, had invested her entire compensation money and proceeds of Rs 51.5 lakh from selling a commercial shop with Giri between July 2017 and April 2018.

Giri, who operated a firm at Bandra in Mumbai, had promised her an average annual return of 12 per cent through mutual funds.

He paid regular dividends till January 2021, but stopped thereafter and failed to return the principal amount, eventually defaulting on the remaining balance of Rs 32.46 lakh, as per the prosecution.

Following a court order during the bail process, Giri deposited Rs 13.86 lakh, leaving an outstanding default of Rs 18.6 lakh. While evaluating the intersection of cheating and criminal breach of trust charges under the Indian Penal Code, Judge Pawar observed that in order to prove the offence under IPC Section 420 (cheating), it must be established that since inception, the accused had a dishonest intention.

“But in the present case, in the evidence of the prosecution witness, it has come on record that initially, i.e., from 2017 to 2020, the accused paid dividend to her, which shows that there was no dishonest intention of the accused since inception,” he said.

From the proved facts, the offence of criminal breach of trust, under IPC Section 406, is made out. Hence, the accused cannot be held guilty for the offence of cheating, the court said.

The accused admitted to receiving the funds, but failed to provide any proof of actual investment, it noted.

Thus, the “dishonest intention of the accused to misappropriate the informant’s amount is established from his inducement and conduct,” the court said.

Addressing why charges under the BUDS Act, 2019, did not survive, Judge Pawar invoked Article 20(1) of the Constitution, which safeguards citizens against ex-post-facto laws. 

A person cannot be convicted for any offence except for the violation of the law in force at the time of commission of the offence, he pointed out.

In the present case, the alleged offence of receipt of investment occurred from July 28, 2017, to April 6, 2018, whereas the BUDS Act was brought into force on February 21, 2019. Thus, the said charge does not survive, the judge said.

The court convicted the accused under Section 406 of the IPC and said that in default of payment of fine, he shall further undergo rigorous imprisonment for three months.