Delhi District Court
Ms. Vandana Goyal vs State on 4 January, 2016
IN THE COURT OF SHRI RAMESH KUMAR: ASJ/SPECIAL JUDGE
(PC ACT) (CBI) SOUTH DISTRICT: SAKET DISTRICT COURTS
NEW DELHI
Criminal Revision Number : 06/15
Unique ID No. 02406R0032642015
1. Ms. Vandana Goyal
Wife of Shri Tarun Goyal
Resident of 60/1, 3rd Floor
Old Rajender Nagar
New Delhi
2. Anil Goyal
Son of Shri Giri Raj Goyal,
Resident of Baroda Road,
Gohana, Sonepat, Haryana.
3. Ritu Saxena
Daughter of Shri S.K. Saxena
Resident of B-1118, Shastri Nagar
New Delhi
...........................Revisionists
versus
State
. ......................................Respondent
Date of institution of Revision : 29/01/2015
Date of Allocation : 30/01/2015
Date of conclusion of arguments : 22/12/2015
Date of Judgment : 04/01/2016
Criminal Revision No. 06/15 Vandana Goyal and ors Vs State Page 1 of 13
Particulars related to impugned order:
FIR No. : 894/97
PS : Defence Colony (CB)
u/s : 409/120B of IPC
Date of impugned order : 08.12.2014
Name of learned Trial Court : Shri Vivek Kumar Gulia
Chief Metropolitan Magistrate
(South), New Delhi
Memo of Appearance
Sh Ramesh Gupta, learned Senior counsel for Revisionist.
Learned Addl. PP for State/respondent.
Sh Jayant Mehta, Ld Counsel for the Complainant.
JUDGMENT
1. The present is a judicial verdict on a revision petition filed against the order, dated 08/12/2014, passed by the Ld Trial Court.
2 Present revision has been filed by the revisionists, namely, Ms Vandana Goyal, Sh Anil Goyal and Ms Ritu Saxena, against the order, dated 08/12/2014, vide which Ld Trial Court had ordered for framing of Charge against all the revisionists u/s 120B of IPC and u/s 409 of IPC and charge was framed against the revisionists on 13/12/2014.
3 Trial court record has been summoned and perused.
4 Brief facts of the case are that complainant i.e. National Stock Exchange of India Limited (hereinafter referred as NSEIL) made a complaint against M/s Maxwell Securities Private Limited and others to the effect that for trades executed in the settlement period between 26.2.1997 Criminal Revision No. 06/15 Vandana Goyal and ors Vs State Page 2 of 13 and 4.3.97, M/s Maxwell Securities Limited (hereinafter referred as MSL) was required to pay an amount of Rs. 51,88,002.97 on 11.03.1997 but the said company failed to meet the obligation and vide letter NSCC/BNK/7885 dated March 14th, 1997, M/s Maxwell Securities was advised that due to non payment of the above amount, shares purchased by the company were being withheld and were not being delivered to it. National Securities Clearing Corporation Ltd (hereinafter referred as NSCCL), is a fully owned subsidiary by NSEIL. NSCCL further called upon the company to bring in the outstanding dues before 2.30 pm, on March 17, 1997 failing which NSCCL would be constrained to sell these shares at its discretion and appropriate the proceeds from the sale towards outstanding dues, or transfer these shares in its name as it may deem fit, without any further notice. Despite this, MSL failed to obey the directions of NSCCL and action, as per letter dated March 14, 1997, was initiated. MSL was also advised, vide letter NSCC/BNK/7892, dated March 17, 1997, to clear the dues, which were Rs. 69,17,439/-. MSL was also directed by NSCCL, vide letter dated March 21, 1997, to affix its stamp on transfer deeds attached to the shares sold as above, this was necessary to deliver these shares to members who had purchased them when NSCCL sold them on behalf of the company. It is further alleged, in the complaint, that MSL while preparing the deliveries as per clearing corporation letter dated March 21, 1997, committed some minor omissions in filling up the transfer deeds. Consequently, these share deliveries were reported as defective by purchasing members. As per procedure, MSL was required to take those shares in its possession, rectify the discrepancy and deliver them back to NSCCL. Accordingly, these shares were handed over to Mr Manish Jain, the AR of the company at Mumbai on 31/03/97. At the time of handing over of the said shares deliveries, they were the property of the NSCCL and were handed over, as aforesaid, in trust, with a clear understanding that they were to be rectified and delivered back to Criminal Revision No. 06/15 Vandana Goyal and ors Vs State Page 3 of 13 NSCCL by 12 noon on April 2, 1997. It has been further alleged that the company failed to rectify and deliver back these shares for delivery to purchasing members. Thereafter, efforts were made to contact MSL, its Directors and the authorized signatory at the registered office of the company but no person was found available there and, thereafter, employees of NSEIL proceeded to the residence of Traun Goyal and Vandana Goyal, situated at 60/1, III Floor, Old Rajinder Nagar, New Delhi but Mr Tarun Goyal, turned them away. It has been further alleged that representative of the company Mr Manish Jain was also contacted in Mumbai on April 3, 1997, who stated that while he had commenced the process of rectification, Mr Tarun Goyal, husband of Mrs Vandana Goyal and an authorized Signatory of MSL, took the same in his possession on April 1, 1997 and stated that he shall take them away to Delhi as there were certain differences between the MSL and NSEIL. In accordance, with Bye-laws, regulations and circulars issued from time to time, NSCCL was constrained to buy shares from the market to honour delivery commitments of MSL. Consequently, the liability of MSL increased, which as on May 8, 1997, stood at Rs. 3,27,95,083 (Rs. 3.27 crores) to NSCCL and Rs. 3,08,912 (Rs. 3.08 Lacs) to NSEIL. Thereafter, various efforts were made by the NSCCL by sending notices and letters through registered post, to Mr Tarun Goyal for either to surrender the shares or to pay off the dues but all in vain. Thereafter, this complaint was made by the complainant to the Crime Branch.
5 After investigation, chargesheet was filed by the IO of the case and after hearing, on the point of Charge, Ld Trial Court passed the impugned order, dated 08.12.2014, and charges were framed u/s 120B of IPC and 409 of IPC against the accused persons on 13/12/2014.
6. Aggrieved from the said order, revisionists have challenged the Criminal Revision No. 06/15 Vandana Goyal and ors Vs State Page 4 of 13 impugned order of Ld Trial Court on various grounds. It has been contended by Ld Counsel for revisionists that the impugned order is without jurisdiction and is wholly illegal, incorrect and improper and should be set aside by this Court in exercise of Revisional Jurisdiction. It has further been contended that ld Trial Court failed to appreciate and apply the law laid down by the Hon'ble Supreme Court of India in the case of State of Bihar Vs Ramesh Singh and it has further been contended that if the said test was applied in the present case, then the Ld Trial Court could not have framed any charges against the present revisionists. Ld counsel has further contended that if the test laid down in case of Union of India Vs Prafulla Samal (Reported in 1979(3) SCC 4), had been applied, in the present case, the present petitioners ought to have been discharged by the Learned Trial Court. It has further been contended that the Learned Trial Court erred in law as it is failed to appreciate that there was no entrustment by the complainant or NSCCL to M/s Maxwell Securities Pvt Ltd. and in the absence of entrustment, the framing of charges by the Learned Trial Court is unwarranted and wholly without jurisdiction. It has further been contended that offence u/s 409 of IPC can only be said to have been committed, if the evidence, sought to be led by the prosecution, clearly establishes entrustment and in the absence of such facts, the framing of charges u/s 409 of IPC is illegal, improper and incorrect. It has further been contended that the impugned order dated, 08/12/2014, proceeds on the basis that there was entrustment in favour of M/s Maxwell Securities Pvt Ltd., by the complainant of 81,100 equity shares of State Bank of India as well as 1,100 equity shares of Reliance Industries Limited and it has further been contended that the said assertion is contrary to the facts and the said finding arrived by the Ld Trial Court is wholly illegal, perverse and contrary to the statutory regulation. It has further been contended that the National Securities clearing Corporation Limited had no title or ownership in the said Shares, hence, there could be no entrustment of shares, in Criminal Revision No. 06/15 Vandana Goyal and ors Vs State Page 5 of 13 question. It has further been contended that the offence u/s 409 of IPC is made out only if a person is a merchant, banker, public servant or an agent, whereas in this case, the transaction of shares is based on 'Principal to Principal' and not covered under section 409 of IPC, hence charge cannot be made out clearly. It has further been contended that there is no evidence or basis to show that the Complainant as well as NSCCL was the owner of the said shares or had right, title or interest in the same. It has further been contended that the accused company had done nothing contrary to the rules and regulations and, therefore, the criminal prosecution against the Petitioners is wholly unwarranted. It has further been contended that Ld Trial Court did not appreciate while framing charges against the Petitioners, that present was only a Civil Dispute and no criminal liability can be attached against the revisionists. It has further been contended that the complainant had debited the account of M/s Maxwell Securities Pvt Ltd and to recover the said amount had en-cashed Bank guarantee and deposit of an amount of Rs.1 crore 9 lakhs by way of 2 separate transfer memos both dated 19/06/1997. Apart from that, the complainant had also refused to make a payment for 6000 equity shares of State Bank of India, which was in their possession and have been sold by them. In the present matter, the parties are already litigating in a Civil suit and there was no. prima facie, material before the Ld Trial Court to frame the charges against the petitioners, and the impugned order is wholly, illegal, improper and is based on surmises and conjectures and it ought to be set aside.
7. On the other hand, it has been contended by Ld Counsel for the Complainant that after the settlement, the defective shares/bad deliveries shares were handed over to M/s Maxwell Securities Pvt Ltd for the purpose of rectification. It has further been contended that there was entrustment on the part of the complainant to M/s Maxwell Securities Pvt Ltd of the defective Criminal Revision No. 06/15 Vandana Goyal and ors Vs State Page 6 of 13 shares or the bad deliveries shares. Ld counsel for the complainant has further contended that property in the present matter had passed to the complainant and M/s Maxwell Securities Pvt Ltd had nothing to do with the said shares. Ld Counsel for the complainant has further contended that the said bad delivery shares were never returned back. Hence, he had to purchase same from open market and hand over the same to the prospective buyers.
8. I have given my thoughtful consideration to the contentions of Ld Counsel for all the revisionists and rival contentions of the Counsel for the complainant and have carefully perused the entire trial court record, including the FIR and various other documents.
9. Ld Trial Court had framed the charges against all the revisionists/accused persons under Section 120B and u/s 409 of IPC, to the effect that they all, on 31/03/1997 and afterwards, at registered office of MSPL at 13/34th, 4th floor, Geefcee House, Arya Samaj Road, WEA, Karol Bagh, New Delhi 110005 and other places, agreed to commit criminal breach of trust with complainant National Stock Exchange of India Limited by misappropriating 81,100 of SBI and 1100 shares of Reliance Industries Limited by manipulating the records of the accused company with the help of different companies, namely, Sadgur Finman Pvt. Ltd, Monika Consultants Pvt Ltd, Aries Crafts Pvt Ltd, Rohini Petro-chem Pvt, Ltd and Sungrow Finance & Investment Co. Pvt Ltd functioning under their control and thereby committed an offence punishable u/s 120B of IPC and within the cognizance of this court;
Secondly, they all in the capacity of broker/agent, were entrusted with aforesaid shares by complainant through AR of MSPL, Sh Manish Jain for the purpose of rectification of minor discrepancies but Criminal Revision No. 06/15 Vandana Goyal and ors Vs State Page 7 of 13 instead of delivering the shares back to the complainant, after doing the needful, they misappropriated the shares and sold them, in the open market for personal benefits, thereby causing loss to the complainant and thereby committed an offence punishable u/s 409 of IPC.
10 Ld Trial Court while passing the impugned order dated 08/12/2014 observed that, "At this stage of charge, Court is only required to analyze as to whether evidence collected during the investigation, if proved unrebutted during the trial, would lead to conviction of accused or raises grave suspicion indicating role of accused in alleged offences. In view of this Court, the answer to this question, in the present case, is in affirmative."
11 Section 409 of IPC is reproduced herein below for ready reference:-
409. Criminal breach of trust by public servant, or by banker, merchant or agent,- Whoever, being in any manner entrusted with property, or with any dominion over property, in his capacity of a public servant or in the way of his business as a banker, merchant, factor, broker, attorney or agent, commits criminal breach of trust in respect of that property, shall be punished with imprisonment of life, or with imprisonment of either description for a term which may extend to ten years, and shall also be liable to fine.
Section 120B of IPC is reproduced herein below for ready reference:-
120B. Punishment of criminal conspiracy.-(1) Whoever is a party to a criminal conspiracy to commit an offence punishable with death, imprisonment for life or rigorous imprisonment for a term of two years or upwards, shall, where no express provision is made in this Code for the punishment of such a conspiracy, be punished in the same manner as if he had abetted such offence.
(2) Whoever is a party to a criminal conspiracy other than a criminal Criminal Revision No. 06/15 Vandana Goyal and ors Vs State Page 8 of 13 conspiracy to commit an offence punishable as aforesaid shall be punished with imprisonment to commit an offence punishable as aforesaid shall be punished with imprisonment of either description for a term not exceeding six months, or with fine or with both.
12. In the present matter, it may be mentioned that, Section 409 of IPC is applicable in cases of offence having been committed by public servant or by banker, merchant, factor, broker, attorney or agent. Property, in the present matter, had not passed on to the complainant as no money was paid to them regarding shares i.e. 81,100 equity shares of State Bank of India as well as 1,100 equity shares of Reliance Industries Limited. Since no property had passed to the complainant, M/s Maxwell Securities Pvt Ltd cannot be said to have been alleged to have been entrusted with the property or any dominion over the property in the above mentioned shares i.e. 81,100 equity shares of State Bank of India as well as 1,100 equity shares of Reliance Industries Limited, by the complainant. In the case in hand, disputed shares are still lying with the complainant and have been freezed. It may further be mentioned that provisions of section 120B of IPC are also not applicable to the facts and circumstances of the present case, as there was no agreement with culpable intention between the revisionists, as M/s Maxwell Securities Pvt Ltd continued to be the owner after the shares were returned to it, for the purpose of rectification. Further complainant had debited the account of M/s Maxwell Securities Pvt Ltd regarding the value of alleged entrusted shares.
13 In the present matter, complainant had purchased the shares Criminal Revision No. 06/15 Vandana Goyal and ors Vs State Page 9 of 13 from the open market and had handed over to the buyer. It is further clear from the record file that the account of M/s Maxwell Securities Pvt Ltd had been debited with the said amount by the complainant. The fact that a 'debit entry' had been made by the complainant, in the account of accused, company shows that there were business transactions between the complainant and the accused M/s Maxwell Securities . As per practice as well as rules, it is clear that the bad deliveries of shares could be substituted or they could be rectified. In the present matter, the complainant had purchased the shares from the open market and had handed over it to the buyer. Thereafter, account of the accused company, namely, M/s Maxwell Securities Pvt Ltd, had been debited with the said amount. There is nothing on the record file to show that there was any, prima facie, case to come to the conclusion that M/s Maxwell Securities Pvt Ltd through its Director, namely, Traun Goyal, alongwith other accused persons, namely, Ms Vandana Goyal, Anil Goyal and Ritu Saxena, intended to commit the offence of criminal breach of trust. Further, there is nothing on record file to show that the complainant was working in the capacity of public servant, so as to, prima facie, attract the offence u/s 409 of IPC. There is nothing on the record file to show that there was any agreement or criminal conspiracy between the accused persons as required u/s 120B IPC. In the absence of the same, Prima facie, there is nothing on the record file to show that the accused persons had, at any point of time, agreed to commit the offence of criminal breach of trust with complainant National Stock Exchange of India Limited by misappropriating 81,100 of SBI and 1100 shares of Reliance Industries Limited by manipulating the records of the accused company with the help of different companies, namely, Sadguru Finman Pvt Ltd, Monika Consultants Pvt Ltd., Aries Crafts Pvt Ltd, Rohini Petro-Chem Pvt Ltd and Sungrow Finance & Investment Co. Pvt Ltd.
14 In view of the observations made by Hon'ble Supreme Court in Criminal Revision No. 06/15 Vandana Goyal and ors Vs State Page 10 of 13 Union of India vs. Prafulla Kumar Samal & Ors AIR 1979 3 Supreme Court Cases 4, it is clear that if there is, Prima facie, sufficient material to frame the charge against the accused, then, charge can be framed against him. If, however, if there is not, Prima Facie, sufficient material to incriminate the accused with the allegations, which he is alleged to have committed, the accused should be discharged.
15 In the facts of the present case, there is nothing on record file to show that M/s Maxwell Securities Pvt Ltd had been paid at the time of settlement of shares. Further there were simple business transactions between the parties and in the absence of passing of the property, there is nothing on record file to show that the complainant company had entrusted the shares to M/s Maxwell Securities pvt Ltd when the property had not passed to the complainant regarding the alleged deliveries. Further the fact that the debit entry had been made in the account of M/s Maxwell Securities Pvt Ltd regarding the value of the alleged shares goes to show that there were simple business transactions and no culpability could be found in these types of transactions.
16 Reference in this connection can be made to the Regulations and Rules of the National Securities Clearing Corporation Limited. The relevant rules are reproduced below for ready reference. 7.13.5 Delivery when not completed If the disputed documents are held to be defective under Regulation 7.13.2 or under Regulation 7.13.3, as the case may be, then the delivery shall not be complete. The delivering member shall remove the defect or in the alternative deliver to the receiving member other regular, genuine and valid documents in place of the defective documents within two working days of the decision under Regulation 7.13.2 or under Regulation 7.13.3 or within such further period or periods as may from time to time be allowed by the relevant authority.
Criminal Revision No. 06/15 Vandana Goyal and ors Vs State Page 11 of 137.14 Closing Out By Buying-In If the delivering member fails to remove the defect or in the alternative deliver to the receiving member other regular, genuine and valid documents in place the defective documents within the period prescribed above, the Clearing Corporation shall be entitled to buy-in such securities against the delivering member in accordance with the Bye Laws and Regulations relating to closing-out.
7.15 Delivering Member Debited Without prejudice to the provisions contained elsewhere in this regard, the Clearing Corporation shall be entitled to debit the delivering member responsible for the documents which are not good delivery or are disputed documents by an amount equivalent to the said securities, valued at valuation price as may be prescribed by relevant authority from time to time.
7.16 Penalty For Bad Delivery The relevant authority may impose on a delivering member responsible for the documents which are not good delivery such penalty and other charges as it may prescribe from time to time in this regard. Such penalty and other charges shall be in addition to any loss such member may suffer on account of closing-out and shall be in addition to the commission chargeable in that behalf.
17 Thus, it is clear from the above regulations that if the disputed documents are found to be defective, the delivery member had to remove the defect or in the alternative has to deliver to the receiving member other regular, genuine and valid documents in place of the defective documents within two working days of the decision under Regulation 7.13.2 or under Regulation 7.13.3 or within such further period or periods as may from time to time be allowed by the relevant Criminal Revision No. 06/15 Vandana Goyal and ors Vs State Page 12 of 13 authority. Further, there is provision for penalties for bad deliveries. There is nothing in the Rules to show that any criminal prosecution can be launched in case of bad deliveries, if they are not re-delivered after removal of defect. At the best, the Corporation can impose penalty under Rule 7.16 which provides for penalty for bad deliveries.
18 Reference, in this connection can be made to the decision of the Supreme Court in Indian Oil Corpn, Vs NEPC India Ltd and others 2006 (6) SCC 736, wherein it has been held that " a complainant who initiates or persists with a prosecution, being fully aware that the criminal proceedings are unwarranted and his remedy lies only in civil law, should himself be made accountable, at the end of such misconceived criminal proceedings, in accordance with law. One positive step that can be taken by the courts, to curb unnecessary prosecutions and harassment of innocent parties, is to exercise their power under Section 250 Cr.PC more frequently, where they discern malice or frivolousness or ulterior motives on the part of the complainant."
19 In view of these circumstances, I am of the considered view, that, prima facie, there was not sufficient material, before Ld Trial Court to frame the charges, against all the revisionists/accused persons Under Section 120B and u/s 409 of IPC . Accordingly, the order of ld Trial Court, dated 08/12/2014, is hereby set aside.
20 In view of my foregoing discussions, Revision Petition filed by the accused persons is allowed.
21 A copy of this judgment be sent to learned Trial Court along with the trial court record.
22 File related to the present Revision Petition be consigned to the Record Room.
Announced in the open court ( Ramesh Kumar)
On 4th of January, 2016 ASJ/Special Judge (PC Act)(CBI)
South Distt: Saket Courts:
New Delhi
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