Delhi High Court - Orders
Abhipra Capital Limited & Ots vs State & Anr on 24 August, 2020
Author: Vibhu Bakhru
Bench: Vibhu Bakhru
$~8
* IN THE HIGH COURT OF DELHI AT NEW DELHI
+ CRL.M.C. 953/2019 & CRL. M.A. 3801/2019,
CRL.M.A.43024/2019, CRL. M.A. 43025/2019,
CRL. M.A.10846/2020
ABHIPRA CAPITAL LIMITED & OTS. ..... Petitioners
Through Mr Rahul Gupta, Advocate with
Mr Shekhjar Gupta & Mohd Shahbaz,
Mr Shourya Gupta, Advocates.
versus
STATE & ANR. ..... Respondents
Through Mr Amit Gupta, APP for State.
Mr Sachin Jain, Advocate for R2 to R4 with R2 to
4 in person.
CORAM:
HON'BLE MR. JUSTICE VIBHU BAKHRU
ORDER
% 24.08.2020 [Hearing held through videoconferencing]
1. The petitioners have filed the present petition, inter alia, praying that FIR No. 12/2018 under Section 409/420/467/468/471/477-A/120-B of the IPC registered with PS Economic Offences Wing, Delhi and all proceedings emanating therefrom be quashed.
2. The said FIR was registered at the instance of respondent no.4. He had made certain allegations regarding fake transactions being executed in the name of his daughters (respondent nos. 2 and 3) in their share trading account with petitioner no.1 company (hereafter ACL). He stated that his daughters maintained a trading account with ACL. He alleged that Chairman, Directors and employees of ACL had indulged in fraudulent activities and had cheated his daughters. He stated that his daughters were allotted unique client codes and had started dealings with ACL. He further asserted that Contract Notes in respect of transactions from April, 2004 to January, 2005 were available with him ( his daughters - respondent nos. 2 and 3 herein). He further claimed that he had sent a letter to the National Stock Excahnege Limited (NSE) seeking the details and Contract Notes for transactions pertaining to his daughters and after considerable resistance NSE had sent the same. He alleged that he had found that a number of bogus and unauthorized trades. He also found that Dabaa Trades had been done in both accounts (i.e, accounts of respondent nos. 2 and 3). He also alleged that the transactions did not conform to the Contract Notes forwarded by ACL and ACL, its direcors and other officers are guilty of fraud, cheating and forgery. He also alleged that the Contract Notes fabricated by the ACL reflected STT which was not as per the rate applicable at the material time time and this also established that the same were fabricated.
3. It is stated that as a pre-emptive measure, ACL filed arbitration claims against respondent nos. 2 and 3 and the same have fructified into arbitral awards.
4. The present petition is premised on a settlement entered into between the ACL and the respondents on 12.02.2019. The parties have resolved all their disputes in terms of the said settlement and the respondents have agreed to accept a sum of ₹20 lakhs in full and final settlement of all their claims. In addition, the ACL has also given up its rights and claims under the arbitration awards in its favour.
5. Petitions under Section 34 of the Arbitration and Conciliation Act, 1996 (CS(DJ) 328/2017 and Arbitration Case No. 6137/2016 both captioned as Satish Kumar Jain v. Abhipra Capital Limited) challenging the arbiral awards against respondent nos 2 and 3 are pending in the Court of learned ADJ, North, District Courts, Rohini, Delhi.
6. Respondent no.4 has joined the proceedings. He is identified by his counsel. He states that he is duly authorized to make statements on behalf of his daughters respondent nos. 2 and 3. He confirms that they have since resolved all their disputes and differences with the petitioners in terms of the settlement agreement dated 12.02.2019 and joins the petitioners in praying that the FIR in question be quashed.
7. Mr Amit Gupta, learned APP has referred to the charge sheet, which indicates that extensive investigations were carried out and the said investigation confirmed that the ACL had reflected several trades and transactions which were unauthorized and as illegal. These included synchronised sale and and purchase transactions (Dabba trades), which were essentially fictious trades executed pursuant to the sale and purchase orders that were placed simultaneously in differrent accounts. In addition, it was found that transactions executed had been shifted from one account to another account. He also stated that on investigating two of those accounts it was found that one of them was fictitious and the account holder of the other account could not be traced.
8. Mr Gupta earnestly contended that the investigations clearly establish that the petitioners are guilty of forging of records, cheating and fraud. He submitted that the FIR contained the allegations of a commission of offences punishable under Sections 420, 467,468,471 of the IPC and such allegations have wider ramifications. He submitted that executing fraudlent trades on a nationalized platform has a highly adverse effect on the securities market affecting general public at large and cannot be viewed with the prisim of a private dispute. Therefore, the FIR in this case ought not to be quashed.
9. He has also referred to the decisions of the Supreme Court in Central Bureau of Investigation v. Hari Singh Ranka and Others : (2019) 16 SCC 687 and Mr Parbatbhai Aahir @ Parbatbhai Bhimsinbhai Karrmurand Ors. v. State of Gujarat and Anr. : 2017 SCC OnLine SC 1189 in support of his contention that notwithstanding any civil implications regarding such transactions, the FIR containing allegations of widespread fraud affecting the economic and financial system of the country cannot be quashed.
10. The allegations made against the petitioners are serious and it does appear that the extensive investigation conducted by the investigation agency supports the allegations made in the chargesheet. However, it is not disputed that the allegations made in the FIR were subject matter of the proceedings instituted before the arbitral tribunal(s). ACL has prevaled in those proceedings and secured an arbitral awards against respondent nos 2 and 3 Mr Gupta's contention that an offence of the nature as set out in the charge sheet necessarily has wider ramifications, is merited. But the extent of such effect is limited. It is undeniable that the said dispute is largely of a private nature, where the petitioners who were acting as brokers for respondent nos 2 and 3 have allegedly cheated and caused wrongful loss to respondent nos 2 and 3 and a corresponding gain to themselves.
11. The decisions of the Supreme Court rendered in Central Bureau of Investigation v. Hari Singh Ranka and Others : (2019) 16 SCC 687 and Mr Parbatbhai Aahir @ Parbatbhai Bhimsinbhai Karrmurand Ors. v. State of Gujarat and Anr. : 2017 SCC OnLine SC 1189 may not be strictly applicable. In those cases, the allegations related to defrauding banks who are dealing in public money. Undeniably, frauds of such a nature have an adverse effect on the economy and financial system. Loss sufferred by banks and financial institutions have casscading effect. In the present case, the adverse effect is somewhat contained and largely borne by respondent nos 2 and 3. No public funds are involved in tese cases.
12. The petitioners have also joined the present proceedings. They are identified by their learned counsel, Mr Rahul Gupta. They have also volunteered to undertake to this Court that they shall deposit a sum of ₹5 lakhs with Delhi Police Martyrs Fund and ₹5 lakhs with the Delhi High Court Legal Services Committee within a period of two weeks from today as their voluntary contribution.
13. In view of the above statements and the undertakings given to this Court, this Court considers it apposite to allow the present petition. Accordingly, FIR No. 12/2018 under Section 409/420/467/468/471/477- A/120-B of the IPC registered with PS EOW, Delhi and all proceedings emanating therefrom are quashed. This is subject to the Petitioners complying with the undertaking and filing the proof of payments, as undertaken by them, with the Registry of this court within the aforesaid period of three weeks from date.
14. All pending applications are also disposed of.
VIBHU BAKHRU, J AUGUST 24, 2020/pkv