In a detailed order, Judge N.G. Shukla of the Special Maharashtra Protection of Interest of Depositors (MPID) Court held that Jitendra Shah and Kirti Shah, who purchased an Andheri West office property from two of the primary accused, Amit and Prakash Masalia, cannot be treated as co-accused in the financial fraud.
The judge noted that even if the Shahs acted on instructions from the accused and paid the amount directly to 34 investors, they did not have any managerial or operational role in Cosmo Investment or Athena Investment—the two firms at the center of the fraud.
“They are not directors of the firms. They are not persons responsible for the business or management. Even if considered agents, they cannot be added as accused,” the court observed.
The ruling comes in response to an application filed by Arvind Solanki (67), one of the 42 investors allegedly defrauded in the ₹22.37 crore scam, who sought to include the property purchasers as accused in the case.
Cosmo-Athena Fraud: ₹22 Crore Lost, ₹2.6 Crore Paid to Selected Investors
The Cosmo and Athena Investment fraud case dates back to 2018, when multiple investors filed complaints after the firms failed to return their investments along with promised high returns and benefits. The Masalias—Amit, Prakash, Dina, and Payal—along with Mayank Doshi were named in the chargesheet as key individuals involved in the fraud.
Following the filing of an FIR under the MPID Act, an office property owned by the accused in Andheri West was attached during the investigation. However, the property was later released during anticipatory bail proceedings after the accused repaid the complainant and her family.
Shortly thereafter, Amit and Prakash sold the office unit for ₹2.75 crore, of which ₹2.6 crore was paid directly by the buyers to 34 investors, allegedly under instruction from the sellers. Solanki contended this transfer was mala fide, designed to selectively settle dues while bypassing the asset freeze intended to benefit all victims.
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Legal Argument and Court’s Observations
Solanki’s advocate argued that the buyers acted as agents of the accused and facilitated the evasion of asset attachment, violating the intent of the MPID Act. The complaint also questioned why some of the recipients of the ₹2.6 crore payout were not named in the original chargesheet.
However, the defense countered that the transaction was legitimate, the sale was executed at fair market value, and the funds were distributed to investors as directed by the sellers. The court ultimately sided with the defense, emphasizing that ownership transfer and third-party payment do not equate to criminal liability, particularly when the buyers held no control over the financial operations of the accused firms.
The ruling has clarified the scope of the MPID Act, particularly in cases where third-party transactions are involved in post-fraud recovery or settlements.
