Delhi High Court
Reserve Bank Of India vs M/S Jvg Finance Ltd on 12 September, 2012
Author: Indermeet Kaur
Bench: Indermeet Kaur
$~34
* IN THE HIGH COURT OF DELHI AT NEW DELHI
% Date of Judgment:12.9.2012
+ CA No.425/2007 in C.P. No.265/1998
RESERVE BANK OF INDIA ...........Petitioner
Through: Mr.A.K.Babbar, Advocate for the
applicant.
Ms.Swati Setia, Advocate for the
RBI.
Versus
M/S JVG FINANCE LTD. ...........Respondent
Through: Mr.Rajiv Bahl, Advocate for the
Official Liquidator.
Mr.Shailendra Singh, Advocate
for Mr.V.K.Sharma, Ex-Director
of JVG Finance Ltd.
Mr.V.K.Tandon, Advocate for
EOW.
CORAM:
HON'BLE MS. JUSTICE INDERMEET KAUR
INDERMEET KAUR, J. (Oral)
1 The applicant is Anup Rawla; his submission is that he is in legal possession of 40 Indira Vikas Patras (IVPs) No.58 C 036541 to 036580 valued at Rs.5,000/- each; these IVPs had been given to him by M/s Hoffland Finance Ltd. as a security for a loan which had been advanced C.A. No.425/2007 Page 1 of 5 by the applicant to M/s Hoffland Finance Ltd.; the loan advanced by him to M/s Hoffland Finance Ltd. was Rs.1,70,000/-; this was on 12.7.1997. Submission is that pursuant to an advertisement issued on 12.6.1997 by M/s Hoffland Finance Ltd. he had given a loan of Rs.1,70,000/- to the said company. Receipt of the aforenoted amount by M/s Hoffland Finance Ltd. dated 12.6.1997 is on record; this amount is also reflected in the bank account of the applicant showing that a sum of Rs.1,70,000/- has been paid to M/s Hoffland Finance Ltd. Cheque issued by M/s Hoffland Finance Ltd. in the sum of Rs.30,600/- dated 12.9.1998 as part payment stood dishonoured. The 40 IVPs in physical possession of the applicant in the denomination of Rs.5000/- each are also on record. Submission of the applicant that he is entitled to get these IVPs encashed and the objections raised by the Official Liquidator has no merit in view of the fact that the applicant was a bonafide holder of this negotiable instrument; the rules and procedure for encashment of an IVP's clearly show that whoever is the holder of the IVP is entitled to the amount contained therein. At the time when this transaction took place between the applicant and the M/s Hoffland Finance Ltd. which was in April 1997 there was no proceedings for the winding up of M/s C.A. No.425/2007 Page 2 of 5 Hoffland Finance Ltd.
2 The objections raised by the Official Liquidator in his reply have been perused. Submission is that in terms of the report of the SFIO it has been noted that these IVPs have been purchased out of the fund of JVG Finance Limited which is a company in liquidation; the Managing Director of JVG Finance is Mr.V.K.Sharma who is none other but brother of Mr.B.B.Sharma who is Managing Director of M/s Hoffland Finance Ltd. Mr.B.B.Sharma has no authority to deal with the IPVs which had been purchased out of the fund of the JVG Finance Ltd. 3 The report of the SFIO is on record. In this report it has been clearly been stated that the IVPs (subject matter of the present petition) had been purchased out of the funds of M/s JVG Finance Ltd. There is also no dispute to the factum that Mr.B.B.Sharma, Chairman of M/s Hoffland Finance Ltd. is elder brother of Mr.V.K.Sharma who is Managing Director of M/s JVG Finance Ltd. The report of the SFIO goes on to state that since the financial position of M/s JVG Finance Ltd. was not good it had passed on these IVPs to M/s Hoffland Finance Ltd. and M/s Hoffland Agro who in turn collected the money against the IPVs. M/s Hoffland Finance Ltd. was wound up on 03.4.2003. C.A. No.425/2007 Page 3 of 5 Advertisement effected by M/s Hoffland Finance Ltd. on 12.6.1997 inviting investments from public is on record; pursuant thereto the applicant had paid a sum of Rs.1,70,000/- to the company which was a bonafide investment made by an innocent and bonafide person; he was unaware of any interse clandestine dealings between the two brothers i.e. Mr.V.K.Sharma, Managing Director of M/s JVG Finance Ltd. and Mr.B.B.Sharma, Managing Director of M/s Hoffland Finance Ltd.. The IPVs are in physical possession of the applicant. He is a "holder in due course" in terms of Section 9 of the Negotiable Instruments Act.
"Holder in due course" means any person who for consideration became the possessor of a promissory note, bills of exchange or cheque if payable to bearer. In the instant case the applicant has become a holder for consideration; these IVPs have been handed over to him by M/s Hoffland Finance Ltd. for the loan of Rs.1,70,000/- which he had advanced and which is evident from the documentary evidence filed by him. The applicant had no reason to believe that there was any defect in the title of these IVPs or that the person who was given these documents to him was himself not a bonafide holder; the applicant has to be protected.C.A. No.425/2007 Page 4 of 5
4 Accordingly, the prayer made in the present application is allowed. The application is permitted to encash his IVPs from the post office Meerut.
5 At this stage, learned counsel for the Official Liquidator points out that if this amount is permitted to be withdrawn by the applicant, this being an act of misfeasance on the part of the director of M/s J.V.G.Finance Ltd. and M/s Hoffland Finance Ltd., he be permitted to incorporate this amount in the misfeasance proceedings which he had filed against M/s J.V.G.Finance Ltd. The Official Liquidator is permitted to incorporate this amount if so permitted by law. 6 With these directions this application is disposed of.
INDERMEET KAUR, J SEPTEMBER 12, 2012 nandan C.A. No.425/2007 Page 5 of 5