Delhi District Court
Satyanarayan Jhunjhunwala And Ors vs T.R. Chaddha And Company And Ors on 15 December, 2025
IN THE COURT OF SH. AASHISH GUPTA, DISTRICT JUDGE-01,
NORTH EAST, KARKARDOOMA COURTS: DELHI
CS No. 113/21
CNR No. DLNE01-001669-2021
In the matter of :-
1. Satyanarayan Jhunjhunwala
S/o Dinanath Jhunjhunwala
House No. K 67/85-2,
Jhunjhunwala Bhawan Nati Imli,
Varanasi-221001.
2. Dinanath Jhunjhunwala
S/o late Hanuman Das Jhunjhunwala
House No. K 67/85-2,
Jhunjhunwala Bhawan Nati Imli,
Varanasi-221001. .....Plaintiffs
Versus
1. M/S T.R. Chaddha & Co. LLP
Through Partner
Mr. Hitesh Garg
B-30, Connaught Place, Kuthiala Building
New Delhi-110001
2. Bank of Baroda
Through Branch Head.
2, Mukhiya Market,
Near Post Office, Karawal Nagar,
Delhi-110094
Also at: Digitally
signed by
Corporate Office AASHISH
Baroda Corporate Centre, AASHISH GUPTA
GUPTA Date:
Plot No. C-26, Block G, 2025.12.15
Bandra Kurla Complex, Banda (East), 05:23:30
+0530
Mumbai 400051 ...... Defendants
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Date of institution : 05.04.2021
Arguments heard on : 06.09.2025
Date of Judgment : 15.12.2025
JUDGMENT
1. P-1 and P-2 are former Managing Director and Director of JVL Agro Industries Ltd. ('JVL') respectively.
2. The said company is in liquidation and a resolution professional was appointed qua the said company w.e.f. 25.07.2018 by National Company Law Tribunal, Allahabad.
3. The said company had taken various loan facilities from various banks including Bank of Baroda/D-2.
4. D-2 appointed D-1 to carry out a forensic audit of the accounts of the said company vide letter dated 27.11.2017. This was initially for a period beginning from 01.04.2014 to 31.12.2017; which was eventually extended to period 31.03.2018.
5. Based on the said appointment, D-1 gave a forensic audit report dated 27.02.2019 ('FAR').
6. Plaintiffs are before this court challenging the said FAR and has sought the following reliefs from this court:
a) Pass a decree of Cancellation of the Forensic Audit Report dated 27.02.2019 of the Defendant No. 1 as void ab-initio;
b) Pass a decree of Declaration to the effect that the Forensic Audit Report dated 27.02.2019 of Defendant No. 1 and all consequential actions thereafter are invalid, void, non-est, illegal and not binding on the Plaintiff(s) and all other concerns;
c) Pass an order of Injunction in favour of the Plaintiff(s) and against the Defendant No. 2, restraining it and its agents, employees, representatives etc. from taking any action against the Plaintiff(s) on the basis of the Impugned Report dated 27.02.2019 which has been prepared/submitted by Defendant No. 1;
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d) Pass an order of Permanent & Mandatory Injunction in favour of the Plaintiff(s) and against the Defendant No. 2, commanding it and its agents, employees, representatives etc. to take back all actions against the Plaintiff(s) on the basis of the Impugned Report dated 27.02.2019 which has been prepared/submitted by Defendant No. 1;
e) Award Damages [as indicated in Paragraph 25] in favour of the Plaintiffs and against the Defendants.
7. It is the case of plaintiffs that the said FAR is a motivated, illegal/arbitrary/one sided document which was prepared by D-1 by acting on the dictates of D-2 to give a wrong picture of the financial dealings of JVL.
8. They have challenged FAR on various grounds detailed in para 1 of the plaint which reads as under:
1. Plaintiffs are aggrieved by the illegal acts of the Defendants, whereby, the Defendant No. 2 ['BOB' for short] using Defendant No. 1 [TRC for short] got issued a motivated.
illegal/arbitrary/one-sided document titled as Forensic Report'. The said document is signed and prepared by TRC, acting on the dictates and dotted lines of BOB, with sole objective to give wrong picture with regard to the financial dealings of 'JVL Agro Industries Ltd' ['Company under CIRP/Liquidation']. Impugned Report is prepared by the officers of BOB to save their skin, rather, avoid any adverse comments from their superiors, while dealing with the account of JVL.
Apart from various points which are raised and highlighted in the body of Suit-Plaint, the report suffers from material illegality - I. On face of record, Impugned Report couldn't have concluded/made/prepared on 27.02.2019 for the reasons that- a. Vide order dated 25.07.2018, asked by NCLT Allahabad, JVL was brought under CIRP process. attracting moratorium in terms of Section 14 of IBC 2016;
b. Impugned Report without obtaining necessary record from the office of RP [controlling the affairs of JVL.. by excluding all others] couldn't have been framed;
c. At Pg. 10 of Impugned Report, clear finding is returned by TRC that they are unable to give firm finding on various points due to non-availability of available data, therefore Impugned Report couldn't have been issued for want of the 'data sought'; d. Concept of 'drawing adverse inference doesn't apply to Reports prepared by Auditors. Approach of TRC is grossly flawed on this front:
e. As per observation made in Paragraph 1.1, some "Draft Report' CS No. 113/21 Satyanarayan Jhunjhunwala & ors. Vs. T.R. Chaddha & Company & Ors. Page No. 3 of 39 dated 18.09.2018 is submitted to BOB [Not to JVL/other effected parties] and this so-called Draft Report' is worked upon in clandestine manner by BOB along-with TRC.
II. At Pg. 2, Para 1.1 [second last sub-paragraph] of the Impugned Report, it mentions that the report is non-conclusive and different findings could've been given by TRC.
III. Complete copy of the Report is not even shared till date by TRC/BOB despite various reminders, what is produced is received from pleadings filed by State Bank of India in an ancillary proceeding. It is not clear as to who has signed the report name of TRC. Further, the qualification/experience of signing authority is not known.
IV. Faulty 'scope of work' prepared by BOB for TRC. It was agreed that TRC would look into the extant of Foreign Exchange Loss [Forex Loss] amounting to Rs. 858 Cr. due to the devaluation of INR in comparison to USD, for FY 12-13 to 15-
16. However, sans the said scope, unilateral pointers were made by BOB involving un-related areas and gave such faulty scope to TRC, without taking anyone into confidence, including the other banks.
Impugned Report at Internal Pg. 7 starts with large number of caveats ranging from non-availability of updated software version/data to non-availability of bank account, statement etc. V. The approach of TRC while undertaking the process is half- hearted, lame and is not at all pro-active, in as much as, various limitations are sighted for that data also, which is obviously available with everyone [including the lender banks]. Here it is relevant to note, each and every data is available with lender Bank which is collected as a matter of due diligence before/during the life-cycle of loan. To allege that such basic data is not available demonstrates that, TRC was not-at-all interested to execute fair job, but was interested to find irrelevant faults in working of JVL. It is for this reason, a 'qualification' is added by TRC at Sr. 20 [Internal Pg. 12] that in event of non-payment of fees to TRC. Impugned Report would be considered as void. Impugned Report is nothing but a tool to fleece money without doing a proper job and it is to cover fees, such a clause is added. Instead of, adopting a scientific approach based on data, TRC has chosen to apply 'thumb rule' as is evident from the heading, "Section 4: Audit Approach and Examination Method'. So-called, self-created test of reasonableness', which otherwise doesn't exist in scientific forensic process is applied.
Relevant data in form of books/registers/excel sheet etc., though provided has been suppressed by TRC. The entire report is based on selective data and thus, is legally non-sustainable. Attention is drawn to internal Pg. 10 [Paragraph 5], where TRC is itself qualifying its report to be not in accordance with the Auditing standards followed by ICAI.
VI. It is not the case of TRC/BOB that JVL was maintaining separate set of books, while carrying out operations. All the data, was duly supplied over a period of time by virtue of quarterly CS No. 113/21 Satyanarayan Jhunjhunwala & ors. Vs. T.R. Chaddha & Company & Ors. Page No. 4 of 39 statements to lender Banks, which was time-to-time audited. If on one hand, reporting was fairly done by JVL and accepted by BOB by its conduct [i.e. remaining in relationship of lender-borrower], how the same can be questioned by using TRC.
VII. Vague conclusions are made by TRC As a matter of sample, attention is drawn to internal Pg. 17 [6.1.2.2 (conclusion)), where it is mentioned that as there cannot be a verification, therefore the conclusion is against JVL. This kind of vague finding cannot be treated a report by an Auditor but failure of an auditor to reach conclusion'. Impugned Report is filled with such conclusions and hence needs to be set-aside. VIII. TRC's report is made in a haphazard manner without providing any clear finding on each item of 'alleged scope of work as detailed in Section 2 of the report. Being a confused document, the impugned report deserves to be set-aside. IX. The observations made in the impugned Report are result of abdication of function' by TRC, non-application of mind in respect of business of JVL Agro, violation of natural justice/audi alteram partem, non-consideration of material supplied to TRC. X. TRC in the Impugned Report at Internal Pg. 10 categorically admits that the Report has been prepared without any consultation with the due employees/management of JVL Agro. Such an admission amounts to not only a violation of the principles of natural justice but also strikes at the very heart/core of the Impugned Report rendering it liable to be declared void and non- est by this Hon'ble Court."
9. The perusal of the aforesaid grounds would show that plaintiffs are setting up a case against FAR for following reasons:
(a) The said report is bad as it was prepared on the basis of incomplete data/record. Since 25.07.2018, the records/accounts of JVL were in the custody of resolution professional and therefore, D-1 should have asked for any such records/accounts from the resolution professional. If the said resolution professional has failed to provide any data, no report could have been prepared by D-1 on the basis of incomplete data.
(b) FAR itself claims that it is non-conclusive and if data was given by resolution professional, findings of FAR would have varied.
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(c) Complete FAR has not been shared with the plaintiffs and therefore, by necessary implication, they have been condemned unheard.
(d) The data purportedly not given to D-1 was actually available with all lender banks including D-2 and therefore, an incomplete report based on incomplete data could not have been prepared by D-1.
(e) The scope of work assigned by D-2 to D-1 was faulty.
(f) FAR is a vague document.
10. It is pertinent to note herein that it is the plaintiffs' specific case that based on FAR, D-2 eventually declared the plaintiffs as willful defaulter. This as per the documents filed with the plaint was done vide letter dated 03.06.2020 by D-2.
11. As per plaintiffs, this declaration has serious consequences for the plaintiffs which are detailed in para 24 of the plaint.
12. Thus, plaintiffs are before this court seeking the above reliefs.
Case of D-1
13. It is admitted by D-1 that it was appointed as a forensic auditor by D-2 vide letter dated 27.11.2017.
14. It is their case that they have no privity of contract with the plaintiffs or JVL. It is their claim that they were engaged to do professional audit work by D-2 and their report is in the nature of an expert opinion made on the basis of data made available to CS No. 113/21 Satyanarayan Jhunjhunwala & ors. Vs. T.R. Chaddha & Company & Ors. Page No. 6 of 39 them.
15. They claim that right after their appointment vide letter dated 27.11.2017, they consistently sought various data points from JVL, its directors and the lender banks. Thereafter, whatever data was supplied to them, they prepared their report based on their professional expertise.
16. They claim that once they had submitted FAR dated 27.02.2019 to D-2, their contract came to an end and they cannot be sued by the plaintiffs for doing their professional duty.
17. The details of the communications made to the directors/officials of JVL and also with the lender banks and resolution professionals are detailed in para 7 to 11 of the written statement of D-1 under the heading 'Preliminary Submissions' and it reads as under:
"7. The Answering Defendant, based on the available data, submitted a draft report on 18.09.2018 to the Defendant No. 2 No information was made available by JVL and its erstwhile management to the Answering Defendant after 18.09.2018. The Answering Defendant was invited to discuss the draft report with all the lenders in their meeting dated 07.01.2019. In the said meeting, the Answering Defendant was advised by the lenders to contact the Resolution Professional (RP) of the subject company, i.e. JVL, Mr. Supriyo Chaudhary, for obtaining the pending information/ data, not provided by JVL, including access to the Accounting Software for the period prior to 01.07.2015.
8. Accordingly, the Answering Defendant shared the list of pending information with the lenders as well as the RP of JVL on 10.01.2019. However, no further details were received in response. As further advised, the officials of the Answering Defendant visited the head office of JVL, located at Varanasi, from 05.02.2019 till 08.02.2019. No data/ information was made available to the Answering Defendant during their visit, except the copy of audited financial statements for the year ending 31.03.2018. The same was duly informed to the lenders of JVL during the said visit to Varanasi.
9. The Answering Defendant exercised due diligence and CS No. 113/21 Satyanarayan Jhunjhunwala & ors. Vs. T.R. Chaddha & Company & Ors. Page No. 7 of 39 undertook all necessary steps to obtain the requisite information and analyse all available records and prepared its report with the limited information as made available by JVL. However, it is a matter of record that JVL did not co-operate and provide the requisite critical information to the Answering Defendant, including but not limited to:
(a) Unrestricted access to the accounting software for the period 1st July 2015 to 31st March 2018 and lack of access to the books of accounts for the audit period 1st April 2014 to 30th June 2015.
(b) Purchase register as extracted from the accounting software for the audit period.
(c) Complete details and documents with respect to forex losses of Rs. 858 crores, claimed to be incurred by JVL on payment LCs during FY 2012-13 to FY 2015-16.
(d) Assets wise/vendor wise/ invoice wise details of complete fixed assets additions during the audit period.
(e) Reconciliation of the consumption of raw material (Crude Oil) with the production during the audit period.
(f) Party wise details of receivable and creditors as on 31st March 2014 and 31st March 2015, etc.
10. A list of dates and particulars showing the relevant correspondence exchanged between the Answering Defendant and the parties are detailed herein below:
Date Particulars
08.03.2018 Email issued by the Answering Defendant ("TRC") to Mr. R.C. Garg i.e. Chief Financial
Officer (CFO) of JVL, following up on the initial data as listed therein. The said email was copied to the lenders of JVL, including the Defendant No. 2.
14.03.2018 Reminder email issued by TRC to JVL to provide the pending data as TRC's team was sitting idle since last 10 days at JVL's office.
19.03.2018 Reminder email issued by TRC to JVL regarding non- receipt of pending data (copied to the lenders of JVL).
22.03.2018 Email issued by JVL to TRC confirming providing of some information and further stating that the balance will be provided in the first week of April, 2018, as JVL's accounts team is busy in annual closing.
30.03.2018 Email issued by TRC to JVL giving a list of information to be submitted with a request to provide specific timelines to enable TRC's team to schedule their visit at the Varanasi office of JVL to restart audit.
05.04.2018 Email issued by TRC to JVL requesting for the pending information as per its last email dated 30.03.2018 and timeline for restarting audit. 18.04.2018 Email issued by TRC to the lenders of JVL (copied to JVL), informing them though some data was received from JVL, substantial crucial data out of initial data request list with respect to the audit was still pending.
21.04.2018 Email issued by TRC to JVL and lenders of JVL giving an update regarding the status of the pending critical data from JVL.
26.04.2018 Email issued by TRC to JVL and lenders of JVL giving an update regarding the status of the pending critical data from JVL.
03.05.2018 Email issued by TRC to JVL and lenders of JVL giving an update regarding the status of the pending critical data from JVL.
07.05.2018 Email issued by TRC to JVL and lenders of JVL giving an update regarding the status of the pending critical data from JVL.
21.05.2018 Email issued by TRC to the lenders of JVL giving an update regarding the status of the pending critical data from JVL, stating that the same is pending since last three months.
CS No. 113/21 Satyanarayan Jhunjhunwala & ors. Vs. T.R. Chaddha & Company & Ors. Page No. 8 of 39 02.06.2018 Email issued by TRC to the lenders of JVL, informing them that substantial crucial data out of initial data request list with respect to the audit was still pending. 05.06.2018 Email issued by TRC to JVL (copied to lenders of JVL) requesting for unrestricted access to the accounting software (SAP) to carry out the audit and access to the earlier accounting software system maintained by JVL for the period 01.04.2014 to 30.06.2015. 11.06.2018 Email issued by TRC to JVL and lenders of JVL, enclosing the updated list of pending information and documents out of the initial data request list with respect to the audit list. This included lack of access to JVL's accounting software. 26.06.2018 Email issued by TRC to JVL regarding non-receipt of ledgers and manual registers from JVL with respect to inventory of JVL.
27.06.2018 Email issued by TRC to JVL and lenders of JVL enclosing the updated list of pending information and documents out of the initial data request list with respect to the audit list. 03.07.2018 Email issued by TRC to JVL and lenders of JVL, enclosing the updated list of pending information and documents out of the initial data request list with respect to the audit list. 20.07.2018 Email issued by TRC to JVL and lenders of JVL, enclosing the updated list of pending information and documents out of the initial data request list with respect to the audit list. 02.08.2018 Email issued by TRC to JVL and lenders of JVL. enclosing the updated list of pending information and documents out of the initial data request list with respect to the audit list. 08.08.2018 Email issued by TRC to JVL and lenders of JVL, enclosing the updated list of pending information and documents out of the initial data request list with respect to the audit list. It was informed by TRC that forensic audit and report would be closed by them based on the available information till 05.08.2018 as directed in the meeting of lenders. 10.01.2019 Email issued by TRC to the lenders of JVL, circulating a list of major pending items to be sought from the RP of JVL.
16.01.2019 Email issued by Defendant No. 2 to the RP of JVL, requesting the RP to co-operate with the forensic auditor (TRC) and provide the pending information to enable TRC to complete the forensic audit.
01.02.2019 Reminder email issued by TRC to the RP of JVL requesting him to provide the pending information to close the report at the earliest.
07.02.2019 Email issued by TRC to the lenders of JVL informing that its team was at the Varanasi office of JVL since the last two days, however, no further information was provided from the pending data list except audited financial statements for FY 2017-18.
11. As can be seen from the details of the correspondence herein above, despite the best efforts of the Answering Defendant, and after repeated reminders to the subject company, i.e. JVL (through Mr. Adarsh Jhunjhunwala) as also the RP of JVL, the requisite and critical information as requisitioned by the Answering Defendant was not made available by JVL."
(emphasis supplied).
18. Thus, in sum and substance, as per D-1, D-1 does not have any privity of contract with the plaintiffs or with JVL; they made their report based on a contract with D-2; once the said contract came to an end, they have nothing to do with the plaintiffs or D-2.
19. They categorically state in para 12 of their written statement under the heading 'Preliminary Submissions' that eventually on 13.02.2019 they were advised at the lender meeting to issue the CS No. 113/21 Satyanarayan Jhunjhunwala & ors. Vs. T.R. Chaddha & Company & Ors. Page No. 9 of 39 final report based on the available data and thus, they prepared FAR dated 27.02.2019. The same was subject to limitations as detailed in FAR in section 3 of FAR.
20. Additionally, it is also their claim that FAR is not an instrument within the meaning of section 31 of Specific Relief Act, 1963 and therefore, it cannot be cancelled.
21. It is also their plea that since the plaintiffs have failed to challenge the willful defaulter declaration dated 03.06.2020 made by D-2 (which essentially was a necessary consequential relief), therefore, even the relief of declaration qua FAR cannot be granted to the plaintiffs against them. They have pleaded section 34 of Specific Relief Act, 1963 in this regard.
Case of D-2
22. D-2 has taken a preliminary objection qua the territorial jurisdiction of this court. They plead that the loan in question given by D-2 to JVL; the forensic audit carried out qua the accounts of JVL; the FAR prepared on the basis of the said audit etc are all causes which did not accrue within the territorial jurisdiction of this court and therefore, this court does not have jurisdiction to adjudicate the present suit.
23. Additionally, it is their case that the report of an expert can be challenged by another expert. In this case, as per D-2, plaintiffs have not filed any independent expert opinion to show that the conclusions drawn in FAR are incorrect and therefore, only because plaintiffs think that the said report is incorrect, it shall CS No. 113/21 Satyanarayan Jhunjhunwala & ors. Vs. T.R. Chaddha & Company & Ors. Page No. 10 of 39 not make the report wrong.
24. It is their case that they have ordered the forensic audit of the accounts of JVL considering the factors which came to their notice in terms of various RBI guidelines. Thereafter, inter alia on the basis of FAR and also on account of various other grounds, plaintiffs were declared as willful defaulters. It is contended that plaintiffs are not challenging their declaration as willful defaulters in this case; which is the basic premise which has been set up as the ground of grievance of the plaintiffs. It is the case of D-2 that without the plaintiffs challenging the same, a mere expert opinion cannot be challenged before a court of law by the plaintiffs.
Admission/Denial of Documents
25. At the stage of admission/denial of documents, various documents were admitted by the parties which were eventually given as exhibit Ex.P-1 to P-12.
26. Based on pleadings of the parties, following issues were framed vide order dated 06.07.2024, which read as under:-
1. Whether the plaintiffs are entitled to a decree for cancellation of forensic audit report dated
27.02.2019, as prayed for in prayer (a)? OPP
2. Whether the plaintiffs are entitled to a decree of declaration as prayed for in prayer (b)?
OPP
3. Whether the plaintiffs are entitled to a decree of injunction as prayed for in prayer (c) and if CS No. 113/21 Satyanarayan Jhunjhunwala & ors. Vs. T.R. Chaddha & Company & Ors. Page No. 11 of 39 yes, the consequence thereof? OPP
4. Whether the plaintiffs are entitled to a decree of damages to the tune of Rs. 5 lac? OPP
5. Whether this Court has the necessary territorial jurisdiction to adjudicate this case? Onus of proof on both defendants.
6. Whether the suit is bad for want of cause of action qua defendants as there was no privity of contract between plaintiffs and the defendants? OPD
7. Relief
27. To prove their case, plaintiffs led their evidence detailed below:-
Particulars of witness Nature of witness PW-1/Sh. Satyanarayan He is P-1 in this case. He tendered his evidence by way of affidavit Ex. Jhunjhunwala. PW1/A whereby he reiterated the contents of the plaint.
He relied upon the following documents:-
1. RBI circular dated 01.07.2015 (Ex.P-1).
2. RBI circular dated 13.06.2015 (Ex.P-2).
3. RBI circular dated 12.02.2018 (Ex.P-3).
4. Order passed by NCLT, Allahabad dated 25.07.2018 in Standard Chartered Bank vs. JVL Agro (Ex.P-4).
5. Order passed by NCLT, Allahabad dated 10.09.2018 in Standard Chartered Bank vs. JVL Agro (Ex.P-5).
6. Copy of Writ Petition [WP(C) 4050/2020 titled as S.N. Jhunjhunwala & Ors. vs. Reserve Bank of India & Ors. (Ex.P-6).
7. Copy of the Transactional-Cum-Forensic Audit Report dated 27.02.2019 prepared/submitted by D-1 (Ex.P7).
8. Copy of FIR bearing no. RC006/2019/A/0016 dated 04.11.2019 (Ex.P-8).
9. RBI master Directions on Frauds dated 03.07.2017 (Ex.P-9).
10. Order passed by Delhi High Court dated 09.02.2021 in WP(C) 4050/2020 (Ex.P-10).
11. Copy of order dated 09.07.2020 in WP(C) 4050/2020 (Ex.P-11).
12. Copy of counter-affidavit in WP(C) 4050/2020 on behalf of D-2/Bank of Baroda (Ex.P-12 colly).
13. Joint Lenders Minutes of Meeting dated 06.05.2016 (Ex.PW1/13).
14. Joint Lenders Minutes of Meeting dated 07.11.2017 (Ex.PW1/14).
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15. Joint Lenders Minutes of Meeting dated 12.01.2018 (Ex.PW1/15).
16. Joint Lenders Minutes of Meeting dated 17.03.2018 (Ex.PW1/16).
17. Joint Lenders Minutes of Meeting dated 20.04.2018 (Ex.PW1/17).
18. COC Minutes of Meeting dated 06.09.2018 (Ex.PW1/18).
19. COC Minutes of Meeting dated 25.10.2018 (Ex.PW1/19).
20. COC Minutes of Meeting dated 08.03.2019 (Ex.PW1/20).
21. Notice declaring 'Willful Defaulter' dated 03.06.2020 (Ex.PW1/21).
28. PW-1 was duly cross-examined by Ld. Counsel for defendants.
Plaintiffs did not examine any other witness and thus, PE was closed.
29. Thereafter, defendants led their evidence detailed below:-
S. No. Particulars of witness Nature of witness
1. D1W1/Sh. Hitesh Garg. He supported the case of D-1 by tendering his evidence by way
of affidavit Ex. D1W1/A whereby he reiterated the contents of the written statement.
He relied upon the following documents:-
1. Copy of appointment letter dated 27.11.2017 issued by D-2 appointing D-1 as the Forensic Auditor (Ex.DW1/1).
2. Copy of letter dated 09.03.2018 issued by D-2 with respect to the scope of Forensic Audit (Ex.DW1/2).
3. True copy of the email trail comprising of emails dated 17.01.2018 and 06.01.2018 issued by the Defendant No. 1 to JVL Agro requesting for information to start the Forensic Audit (as forwarded by email dated 22.09.2021) [Ex.DW-1/3 (Colly)].
4. True copy of the email trail comprising of emails dated 05.04.2018, 30.03.2018, 22.03.2018, 20.03.2018, 19.03.2018, 14.03.2018, 08.03.2018 exchanged between the Defendant No. 1, JVL Agro and the lender Banks [Ex.DW-1/4 (Colly).
5. True copy of the email trail comprising emails dated 18.04.2018 exchanged between the Defendant No. 1, JVL Agro and the lender banks (Ex.DW-1/5).
6. True copy of the email trail comprising emails dated 07.05.2018, 03.05.2018, 26.04.2018, 21.04.2018 and 18.04.2018 exchanged between the Defendant No. 1, JVL Agro and the lender banks is exhibited [Ex.DW-1/6 (Colly)].
7. True copy of the email dated 26.06.2018 issued by the Defendant No. 1 to JVL Agro is exhibited (Ex.DW-1/7).
8. True copy of the email trail comprising emails dated 27.06.2018, 11.06.2018, 02.06.2018, 21.05.2018, 26.04.2018, 21.04.2018 and 18.04.2018 exchanged CS No. 113/21 Satyanarayan Jhunjhunwala & ors. Vs. T.R. Chaddha & Company & Ors. Page No. 13 of 39 between the Defendant No. 1, JVL Agro and the lender banks [Ex.DW-1/8 (Colly)].
9. True copy of the email trail comprising emails dated 08.08.2018, 02.08.2018 and 26.07.2018 exchanged between the Defendant No. 1, JVL Agro and the lender banks [Ex.DW-1/9 (Colly)].
10. True copy of the email trail comprising emails dated 16.01.2019, 10.01.2019 and 03.01.2019 exchanged between the Defendant No. I and the lender banks (along with enclosures) [Ex.DW-1/10 (Colly)].
11. True copy of the email trail comprising nails dated 07.02.2019, 31.01.2019, 23.01.2019, 22.01.2019, 21.01.2019, 16.01.2019. 10.01.2019 and 03.01.2019 exchanged between the Defendant No. I and the lender banks [Ex.DW1/11 (colly.)].
12. Affidavit u/s 63 of Bharatiya Sakshya Adhiniyam, 2023 in support of aforesaid emails (Ex.DW1/B).
13. True copy of the orders dated 15.03.2023, 05.04.2023 passed by the Hon'ble High Court of Delhi in W.P. (C) No. 4050/2020 [Ex.DW-1/12 (Colly)].
2. DW2/1/Sh. Vishnu Kumar. He supported the case of D-2 by tendering his evidence by way of affidavit Ex. DW2/1A whereby he reiterated the contents of the written statement. He relied upon the order dated 05.04.2023 passed by Hon'ble High Court in WP(C) no. 4050 of 2020 (Ex.DW2/4) and Ex.P-6, Ex.P-11 and Ex.P-12.
30. The aforesaid witnesses were cross-examined by Ld. Counsel for plaintiffs. No other witness was examined on behalf of defendants and thus, DE was closed.
31. I have heard the arguments advanced by parties and have carefully perused the record.
32. Based on the evidence led before this court, the issue-wise finding in the matter is as under:
Issue No. 1, 2, 3 & 4
1. Whether the plaintiffs are entitled to a decree for cancellation of forensic audit report dated 27.02.2019, as prayed for in prayer (a)? OPP
2. Whether the plaintiffs are entitled to a decree of declaration as prayed for in prayer (b)?
OPP CS No. 113/21 Satyanarayan Jhunjhunwala & ors. Vs. T.R. Chaddha & Company & Ors. Page No. 14 of 39
3. Whether the plaintiffs are entitled to a decree of injunction as prayed for in prayer (c) and if yes, the consequence thereof? OPP
4. Whether the plaintiffs are entitled to a decree of damages to the tune of Rs. 5 lac? OPP
33. All the aforesaid issues are interconnected and therefore, I propose to deal with them together.
34. FAR dated 27.02.2019 is an admitted document between the parties and at the stage of admission/denial of documents, the same was exhibited as Ex.P-7. It is pertinent to note herein that the document exhibited as Ex.P-7 is not the complete FAR submitted by D-1 to D-2 and the same is only a portion thereof beginning from the opening sheet of FAR (having internal page no. 1; and placed at page no. 335 of the list of documents filed by the plaintiff) till page no. 45 (with page no. 45 being internal page number of FAR; and placed at page no. 379 of the list of documents filed by the plaintiff).
35. It is also pertinent to note that plaintiff was well aware that Ex.P-7 is only a portion of the complete FAR and not the whole document. In this regard, I may have reference to order dated 06.09.2025 passed during the proceedings of the present case. On the said date, P-1 had preferred an application u/O XI Rule 12 r/w Rule 14 r/w Rule 151 CPC seeking directions to D-1 to produce the complete forensic audit report dated 27.02.2019 with all annexures/attachments.
36. The said application came to be dismissed with a finding that no discovery of the entire audit report dated 27.02.2019 with CS No. 113/21 Satyanarayan Jhunjhunwala & ors. Vs. T.R. Chaddha & Company & Ors. Page No. 15 of 39 annexures can be permitted at that stage of the case because plaintiffs themselves were aware since last more than six years and never chose to bring the same on record till that date. The relevant portion of the said order dated 06.09.2025 reads as under:
"11. The present application has been moved after closing of evidence in the matter. A bare perusal of the plaint along with documents filed therewith would show that plaintiffs had earlier approached the Hon'ble High Court of Delhi vide Writ Petition (C) No. 4050/2020 wherein they themselves had made a prayer to the Hon'ble High Court of Delhi inter alia directing Bank of Baroda (who was R-5 therein and D-2 before this Court) to provide a copy of the forensic audit report dated 27.02.2019 prepared by D-1 with all its annexures. Thus, even on the date of filing of the said writ petition, plaintiffs were aware that the aforesaid report was not available in full, with plaintiffs.
12. This fact is even evident from para 19 of the plaint.
13. Further still, as per para 20 of the plaint, plaintiffs claim that they were in receipt of only partial copy of the said report. This means that even at the time of filing of the present suit on 05.04.2021, this fact was in the notice of the plaintiffs.
14. Admittedly, eventually, Writ Petition (C) No. 4050/2020 was withdrawn by the plaintiffs from the Hon'ble High Court of Delhi. This was on 05.04.2023.
15. The evidence in the matter was concluded on 24.07.2025 and the present application has been preferred on 06.08.2025.
16. The aforesaid sequence of dates would show that for the last 6 years or so, plaintiffs were aware about the fact that the audit report dated 27.02.2019 was not available in full with them. But, till 06.08.2025, they did nothing to seek discovery of the said document before this Court. It is only at the fag end of the matter that they have preferred to file the present application.
17. As correctly pointed out by the Counsel for D-1, the foundation of the present case is the audit report dated 27.02.2019. Plaintiffs are seeking a prayer of declaration with consequential reliefs qua the said document itself. They themselves have not woken up till today to seek the said report in full and have preferred to fight the present case on the basis of a partial report and have even led evidence on the basis of the same. Their argument that this Court should only direct filing of the complete report (with they not insisting for cross-examination of D-1's witness; who will be required CS No. 113/21 Satyanarayan Jhunjhunwala & ors. Vs. T.R. Chaddha & Company & Ors. Page No. 16 of 39 to produce the said report) is neither tenable nor does it make any logical sense.
18. If the said document is now ordered to be called, before the same can be read in evidence, it will be required to be led in evidence and would then essentially mean that the entire evidence of the parties would have to be opened again. Without the said document being led in evidence, how can the said document be read in evidence?
19. On Court query, Counsel for the plaintiffs submitted that if the said document is called and the plaintiffs succeed in their case and thus, the audit report dated 27.02.2019 is declared as a void document, it would mean that this Court is declaring the entire audit report sought to be discovered today is being so declared And Not the partial audit report Ex. P7 filed by the plaintiffs with their evidence.
20. This is an unknown procedure in law that a document discovered U/O XI Rule 12 r/w Rule 14 CPC would not be led in evidence but the Court would possibly declare the same as null and void without the same being led in evidence.
21. Suffice is to say that once the plaintiffs themselves have chosen a path to only place on record a partial document Ex. P7 and have not bothered to cause discovery of the same till the fag end of trial despite being aware of its existence and despite taking a specific prayer in this regard before the Hon'ble High Court of Delhi in Writ Petition (C) No. 4050/2020, they cannot now bring a document on record which they themselves chose to ignore to be brought on record. This is more so when the entire case of the plaintiffs revolve around the report dated 27.02.2019. If the very foundation of this case is the said document, it was incumbent upon them to have prayed for discovery of this document at the very inception and not at this fag end. No answer was given to this Court as to why the plaintiffs did not seek discovery of this document at the time of filing of the present suit or soon thereafter. It was simply claimed that once the witness of D-1 admitted that the said document was available with them, they can seek its recovery even at this stage. I am not inclined to accept the said argument because if the forensic report dated 27.02.2019 is the sole document which is the linchpin of this entire case, plaintiffs should have brought the same on record at the very inception of the suit and they cannot be allowed to go through the rigor of trial and then put the entire clock back by asking for its discovery without offering any reason, much less a cogent reason for failure to bring on record a document on the basis of which and for which the entire trial has been conducted. This clearly shows that plaintiffs application is with oblique motive to delay adjudication of the present case and nothing more.
22. Considering the above, in my humble opinion, no discovery of entire audit report dated 27.02.2019 with CS No. 113/21 Satyanarayan Jhunjhunwala & ors. Vs. T.R. Chaddha & Company & Ors. Page No. 17 of 39 annexures can be permitted at this stage. Application is misconceived. It is dismissed."
(emphasis supplied)
37. A bare perusal of the said order shows that plaintiffs themselves have chosen to file an incomplete report (led as document Ex.P-7) and wants this court to cancel the entire FAR with annexures dated 27.02.2019 or declare the entire FAR as nullity.
38. The default of plaintiffs in this regard is evident from the aforesaid order itself.
39. In my humble opinion, once the plaintiffs have chosen to file an incomplete document on record Ex.P-7 and despite being aware of its incompleteness since many years before institution of the present suit itself, they cannot seek cancellation of the entire document by only filing a part thereof. Only if the entire document was filed or got discovered by the plaintiffs and thereafter led in evidence, could the court then look into it and conclude about the requirement of its cancellation or consider whether it could be declared a nullity. Since the plaintiffs themselves have preferred to proceed with the matter on the basis of an incomplete document, in my humble opinion, the entire document cannot be cancelled or declared a nullity.
40. The two issues i.e. Issue no. 1 and Issue no. 2 under consideration are thus liable to be decided against the plaintiffs on this short ground itself. If Issue no. 1 and 2 are decided against the plaintiffs, there is no question of granting any consequential injunctions [as prayed in prayer (c) and (d)] or damages [as prayed in prayer (e)] to the plaintiffs. This would CS No. 113/21 Satyanarayan Jhunjhunwala & ors. Vs. T.R. Chaddha & Company & Ors. Page No. 18 of 39 mean that even issue no. 3 and 4 under consideration are liable to be decided against the plaintiffs.
41. Matter can be looked at from another angle.
42. Issue no. 1 corresponds to the prayer (a) made in the plaint. In this prayer, plaintiffs want a decree of cancellation of the forensic audit report dated 27.02.2019 as void-ab-initio.
43. As per record, D-1 is the author of FAR. It was prepared at the instance of D-2. Thus, plaintiffs are neither the author or the executant of FAR.
44. It is settled law that a decree of cancellation of a document can only be passed at the instance of a party to an instrument. Even if it is presumed, for the sake of argument, that the FAR dated 27.02.2019 (the incomplete FAR led in evidence as Ex.P-7) is an written instrument within the meaning of Section 31 of Specific Relief Act, 1963, still, since plaintiffs are not the parties to the said instrument or its executants, therefore, no decree of cancellation of Ex.P-7 can be passed in their favour. In this regard, I may fruitfully place reliance on the judgment of Suhrid Singh Alias Sardool Singh vs. Randhir Singh & Others (2010) 12 SCC 112. In the said judgment, the Hon'ble Supreme Court speaking through Justice Raveendran (as his Lordship was then) has held that where the executant of a deed wants it to be annulled, he has to seek cancellation of the deed. But, if a non- executant seeks annulment of a deed, he has to seek a declaration that the deed is invalid, or non-est, or illegal or that it is not binding on him.
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45. Since the plaintiffs are not the executants of Ex.P-7, they cannot maintain a prayer of cancellation qua the said document as prayed in prayer (a). On this count also, issue no. 1 is liable to be decided against the plaintiffs.
46. As far as the prayer of declaration [as prayed for in prayer (b)] is concerned, in my humble opinion, the same cannot be granted to the plaintiffs.
47. The primary contention of the plaintiffs is that on 25.07.2018, the management of JVL and all its records were handed over to an insolvency resolution professional as on that date, NCLT, Allahabad had appointed the said professional. It is their case that since that date, neither JVL nor its management had possession of the relevant books and thus could not provide any information to the auditors/officials of D-1 for the purposes of forensic audit.
48. The said contention of the plaintiffs is incorrect and is falsified by the various emails proved on record by D-1.
49. I may note that as per the plaint itself, it is evident that JVL acting through its Directors had consented to the carrying out of forensic audit of their accounts. In this regard, reference can be had to para 8 of the plaint which reads as under:
"8. In the JLF dated 07.11.2017, the Plaintiffs presented a proposal for restructuring of JVL Agro. The JLF, however, proposed for completion of the various compliances required by the banks to accept the restructuring proposal. Hence, the plaintiffs agreed for a TEV study and forensic audit of the accounts of JVL Agro."
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50. Thus, as per plaintiffs' own case, they consented to the conduct of forensic audit of the accounts of JVL on 07.11.2017 itself.
51. Thereafter, as per the various emails detailed in para 10 of the written statement of D-1 (quoted in the body of the judgment above), inter alia the CFO of JVL namely Mr. R.C. Garg and Mr. Adarsh Jhunjhunwala (the other Director of JVL) were written multiple emails asking them to provide various documents/inputs/books etc so that a proper audit report could be prepared by D-1. The various emails were exhibited as Ex.DW1/3 to Ex.DW1/11. The earliest email filed on record is dated 06.01.2018 written by official of D-1 namely Vikas Kumar to D-2 and the same is copied to Mr. R.C. Garg also. A bare perusal of the various emails would show that beginning from 06.01.2018 till 03.01.2019, the officials of JVL including the CFO R.C. Garg and its Director Adarsh Jhunjhunwala were kept in the loop about everything qua the audit being conducted by D-1.
52. Even if it is presumed, for the sake of argument, that after appointment of resolution professional on 25.07.2018, the records/documents of JVL were not in the possession of JVL or its management, still, beginning from 07.01.2017 (when plaintiffs admittedly agreed to forensic audit as per para 8 of plaint) till 24.07.2018, JVL and its officials including the plaintiffs were aware about the requirement of forensic audit; appointment of D-1 as auditor (see Ex.DW1/1 dated 27.11.2017 vide which D-1 was appointed as auditor); the revised scope of work of the auditor (see Ex.DW1/2 dated 09.03.2018 vide which CS No. 113/21 Satyanarayan Jhunjhunwala & ors. Vs. T.R. Chaddha & Company & Ors. Page No. 21 of 39 the scope of work of the auditor was revised) and also about the fact that auditors/D-1 and its officials were writing various emails to JVL and its management for providing documents required for the audit.
53. In this regard special reference can be had of Ex.DW1/8 (colly.) which is one of the many emails written by D1W1/Hitesh Garg (official of D-1) on 27.06.2018. On this email, Adarsh Jhunjhunwala and R.C. Garg (both admittedly being directors and CFO respectively of JVL) were copied and various pending informations stated therein were asked from JVL and its officials.
54. This email is before the eventual appointment of resolution professional by order of NCLT, Allahabad on 25.07.2018.
55. Other emails exhibited as Ex.DW1/3 to Ex.DW1/7 are also prior to the said date which also show that multiple communications were sent by the officials of D-1 to provide the data.
56. Thus, it is apparent from the record that the claim of plaintiffs that FAR Ex.P-7 was prepared on the basis of incomplete data is incorrect. It appears from the record that the officials of JVL/its management themselves turned a deaf ear to the requests of D-1 and they never supplied the requisite information. Once they themselves did not supply the requisite information, today they cannot turn back and cry horse or argue that the report prepared by D-1 is based on incomplete data.
57. The plaintiffs, JVL and its officials namely Adarsh Jhunjhunwala and R.C. Garg appeared to have been well aware CS No. 113/21 Satyanarayan Jhunjhunwala & ors. Vs. T.R. Chaddha & Company & Ors. Page No. 22 of 39 about the ongoing forensic audit and also about the documents/date required from their end. They themselves appeared to have withheld the said data and now want to dispute the report alleging that the report is based on incomplete data. Plaintiffs cannot approbate and reprobate at the same time.
58. Thus, once the plaintiffs themselves did not supply or cause supply of the requisite documents/data to D-1 and D-1 was asked to give its final report based on available data, it does not lie in the mouth of plaintiffs to challenge the said report on said count. Thus, on the ground of alleged insufficiency of data forming the basis of FAR, the said FAR cannot be declared as invalid, void, non-est, illegal or not binding on the plaintiffs.
59. The other contentions of the plaintiffs as enumerated in para 9 of the judgment against the FAR in question are also misconceived on merits.
60. D-1 has specifically stated in section 3 of Ex.P-7 that the said document is subject to the limitations enumerated in the said document. In the said section, D-1 has specifically stated that various documents/information enlisted in the said section were not provided to D-1 and therefore, the report should be read while keeping the said fact in mind. Thus, D-1 was categorical and clear about the limitations under which the complete FAR dated 27.09.2019 (of which Ex.P-7 is only a part) was prepared.
61. This does not make the said document non-conclusive because once plaintiffs/JVL/its officials hide data from the auditors, the auditors would obviously give a final report based on available CS No. 113/21 Satyanarayan Jhunjhunwala & ors. Vs. T.R. Chaddha & Company & Ors. Page No. 23 of 39 data. The limitations of the said report once noted and mentioned shall have to be considered while reading the report. But, if, despite the said limitations, the concerned bank/D-2 reaches a conclusion that some action, in law, is still made out against the plaintiffs or against JVL, the report which forms one of the basis of reaching the said conclusion cannot be faulted with.
62. The other contention of the plaintiffs against Ex.P-7/FAR was that they were never supplied a complete copy of the same. As already noted above, plaintiffs themselves are guilty of not demanding the said document despite being aware that the said Ex.P-7 is not the complete FAR. In any case, their argument, made by implication that the non-supply of complete FAR has led them to be condemned unheard is incorrect in as much as they were asked to represent their case before a committed of creditors and only after giving them a hearing were plaintiffs declared as willful defaulters. This was on 03.06.2020.
63. A bare perusal of letter dated 03.06.2020 Ex.PW1/21 shows that both the plaintiffs herein were issued a show cause notice on 03.08.2019 while considering the proposal of declaring them as willful defaulters. In fact, a written representation against the same was also made with P-1 physically appearing before the committee on 11.10.2019.
64. If one reads the said document, it shall be evident that not only FAR was the basis of declaring plaintiffs as willful defaulters, inter alia nine other grounds were listed in the said letter.
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65. For easy reference, Ex.PW1/21 is quoted hereinbelow:
बैंक ऑफ बड़ौदा Bank of Baroda
Date: 03.06.2020
BOB/ZOSARB/RECY/2020-21/28
1. Ms.JVL Agro Industries Ltd
a) Village Tilmapur, Ghazipur Road, Ashapur, Varanasi-221007
b) K 67/85-2, Jhunjhunwala Bhawan, Plot No 2, Nati Imli, Varanasi, UP-221 001
c) Naupur Unit. Village Naupur, PO Thanagaddihe, Kerakat. Jaunpur District (UP)
d) JVL Agro Foods (Alwar Unit), 207 MIA, Alwar, Rajasthan 301001
e) JVL Oil & Foods, Village Chakia. PO Pahleja, District Rohtas, Bihar-821307
f) JVL Oil Refinery, JL, 149, Mouza-Debhog. PS- Bhabanipur, Purba Medinipur, Haldia-712057
g) JVL Rice Mill, Sasaram Akhorigola Road, Jorawarpur. District Rohtas, Bihar
2. Mr.Dinanath Jhunjhunwala Director & Guarantor K67/85-2, Jhunjhunwala Bhawan, Plot No 2, Nati Imil, Varanasi, UP-221001
3. Mr. Satya Narayan Jhunjhunwala MD & Guarantor K67/85-2, Jhunjhunwala Bhawan, Plot No 2. Nati Imli. Varanasi, UP-221 001
4. Mr. Adarsh Jhunjhunwala - Director & Guarantor K 67/85-2, Jhunjhunwala Bhawan, Plot No 2, Nati Imli, Varanasi, UP-221 001
5. Mrs Anju Jhunjhunwala - Guarantor K67/85-2, Jhunjhunwala Bhawan, Plot No 2, Nati Imli, Varanasi, UP-221 001
6. M/s Jhunjhunwala Gases Pvt Ltd Vill- Tilmapur, P.O.-Ashapur, Distt. Varanasi-221007 Dear Sir, Re: Declaration of account M/s.JVL Agro Industries Ltd and its directors/guarantors as wilful defaulters We refer to our show cause notice no. BOB/INTVAR/ADV/2019-20/23/JVL dated 05-08-2019 for declaring M/s JVL Agro Industries Ltd and its Directors and Guarantors Mr. Dinanath Jhunjhunwala, Mr. Adarsh Jhunjhunwala, Mr. Satya Narayan Jhujhunwala and guarantors Mrs. Anju Jhunjhunwala & Mis Jhunjhunwala Gases Pvt Ltd as wilful defaulters on the following grounds:
1. On review of the financial statements for FY 2017-18, it was observed that debtors of Rs. 120.03 cr.
creditors (receivable balances) of Rs.439.49 cr and inventory of Rs.527.93 or were written off. No supporting documentation has been provided to the Auditors
2. Rs 4.96 or paid to M/s. Griffin Creative Services Pvt Ltd (Griffin), Rs.6.19 cr paid to M/s. Roselife Sales Pvt Ltd (Roselife) and Rs.6.82 cr paid to M/s. Dalson Impex Pvt Ltd (Dalson) over a short duration in May, 2018. There is no clarity on what exactly was procured from these vendors Further Griffin and Roselife has similar registered address and that address is a residential address and entities does not exist at that address. Griffin and Roselife have common directors It was noted from the website of Ministry of Company Affair (MCA) Griffin and Rose Life had no operations and assets as per their fillings for FY 2016-17 and FY 2017-18 and Dalson was incorporated in Jan, 18
3. The receivables of the company as on 31.07.2018, as per books are Rs. 168 42 cr. 65% of debtors are prior to 01.04.2016 Majority of the parties were not traceable in public demine.
4. Rs.49.53 or outflow of funds observed to related parties. Rs.34.65 cr paid to M/s Sati Poly Plast Pvt Ltd for purchase of packing material. No lorry receipts produced and majority of material procured continued to show in stock raising concern on rational of purchase.
5. Rs 13. 94 or of capital advance carried forwarded from the period prior to 01.04.2016. This advance pertains to purchase of Rohtas Property of Ac 500 66 land for Rs 18.26 cr. This property was still not capitalized Further out of these 500.00 acres 00.76 acres was transferred to M/s JVL Mega Food Park Ltd for Rs.6.48 cr. The documentation suggests that the land was registered in the name of Mis JVL, Agro Industries itd and then transferred to Mis JVL Mega Food Park These entries were not reflected in the books of the company and sales has not resulted in receipts of any consideration.
6. The company maintains accounts with two Bank namely ICICI Bank (2 accounts) and HDFC Bank (10 accounts), which were out of consortium Rs.4812 er have been routed through these account from 01.07.2015 to 31.03.2018.
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7. Rs. 8.75 or have been paid to 'Grand Bazar Developer during FY 2017-18 and is lying as advance as on 31.03.2018. The amount has been paid back through ICICI Bank, HDFC Bank accounts, which are non-consortium Banks it was informed that JVL has agreed to purchase land at cuttack for Rs 30.00 cr Considering the financial position of the company, giving such huge advance without prior permission of the lenders, seems that the company's funds have been used for other purposes.
8. Rs 1.50 cr pald in Aug, 18 from HDFC Bank account and Rs 4.80 cr paid in June, 16 from ICICI Bank account to M/s Bloom Town Planners Pvt Ltd, which is a real estate company and related party Though the money received back, no interest has been charged.
9. As on 31.03.2018, Rs.41.00 or have been given as advances to 17 parties No documents/information provided to substantiate that these advances were given for business purpose.
10. There was massive fall in security in form of stock & book debts as per stock statements submitted by company in Jan 18 and now submitted by RP for Dec 18 as under.
Unit name Value of stock and book debts net off Value of stock and book debts net creditors as per CA certified stock statement off creditors as per stock for Dec 17 submitted by company (Rs. In crs) statement for Dec 18 submitted by resolution professional (Rs. In crs) Naupur unit 561.40 80.96 Alwar unit 60.39 4.90 Rice mill 19.47 0.07 641.26 85.93 In the Final Forensic Audit Report dated 27.02.2019, the auditor observed that inventory at Rs.84.00 crore on physical verification (during June July 2018) as against inventory of Rs.745.00 crore disclosed in unaudited financial as of 31.03.2018 (Rs. 377.78 crore in Audited Balance Sheet as of 31.03.2018) The auditor observed that there is no such inflow of funds into the banking system by way of monetization of this inventory The same is also evident that outstanding has not reduced proportionately with our bank looking to steep fall in inventory level from March 2018 to July 2018.
The forensic auditor has observed that it is clearly evident that such high level of inventory as disclosed in the audited financials of the Company at each balance sheet date during the Audit Penod (01.04.2014 to 31.03.2018) was significantly inflated and the Company had concealed the facts and misrepresented higher level of inventory resulting in reflection of higher assets and profitability.
As you are aware that our branch had sent the show cause notice referred above by speed post on 06-08-2019, which you have received on 07-08-2019/08-08-2019/10-08-2019/13-08-2019. In response to your representation dated 21-08-2019, opportunity for personal hearing before the committee has been given on 11-10-2019. Mr. Satya Narayan Jhunjhunwala, Director and Guarantor of the Company appeared before the COE on 11-10-2019. However, he could not give any proper/satisfactory reply/justification for the points mentioned in SCN.
In the light of the aforesaid facts and circumstances, after hearing the borrower and perusing the documents on record the Committee of Executives on Wilful Defaulters (COE) of bank has decided to declare M/s JVL Agro Industries Ltd and Its Director & guarantor Mr Dinanath Jhunjhunwala, Mr Adarsh Jhunjhunwala, Mr. Satya Narayan Jhunjhunwala and guarantors Mrs. Anju Jhunjhunwala & M/s Jhunjhunwala Gases Pvt Ltd as Wilful Defaulters' on the grounds mentioned in the show cause notice, after concluding that the Company has defaulted in meeting its payment repayment obligations to the lender and has not utilised the finance from the lender for the specific purposes for which finance was availed of but has siphoned off the funds for other purposes and the funds are not available with the Company.
The decision of COE was conveyed vide our letter No. BOB/INTVAR/ADV/2019-20/30/JVI. dated 18.10.2019 with an opportunity for submission of further representation, if any, for consideration by the Review Committee on Wilful Defaulters, in terms of RBI guidelines and to comply principles of natural justice The representation dated 01.11.2019 and 11.11.2019 received in response to the decision of COE was place before the Review Committee.
In the aforesaid circumstances, after perusal of documents on record and representation received, Bank's Review Committee on Wilful Defaulters in its meeting held on 28.05.2020 confirmed the decision of the Committee of Executives on Wilful Defaulters (COE) CS No. 113/21 Satyanarayan Jhunjhunwala & ors. Vs. T.R. Chaddha & Company & Ors. Page No. 26 of 39 Thus after following the due procedure, it has been decided to declare M/s JVL Agro Industries Ltd and its Directors and guarantors Mr Dinanath Jhunjhunwala, Mr.Adarsh Jhunjhunwala, Mr.Satya Narayan Jhunjhunwala and guarantors Mrs Anju Jhunjhunwala & M/s Jhunjhunwala Gases Pvt Ltd as wilful defaulter. Bank reserves the Right to publish the name and photograph of Wilful Defaulter in News Paper and will initiate the necessary recovery action as per extant guidelines issued by Reserve Bank of India This communication is issued as per the directions of the Review Committee on Wilful Defaulters.
This is for your information.
Yours faithfully, (P.K. Sahu) Assistant General Manager
66. Thus, the contention that the plaintiffs were condemned unheard as they were never supplied the copy of complete FAR is incorrect because not only did the plaintiffs themselves omit to seek a copy before this court till conclusion of evidence, but also it is evident from the record that they had complete opportunity to seek the same on various stages beginning from 2019 when they were served with show cause notice referred in Ex.PW1/21.
67. Another argument against the FAR is that the concerned bank and the resolution professional could have provided the data/documents to the auditors and if such data was given, a complete report could have been filed.
68. In my humble opinion, the said assertion is only a ploy to evade the consequences of law and nothing more. Plaintiffs/officials of JVL/JVL were aware about the documents/data and they themselves did not supply it to the auditors. It is always possible that some of the documents/data may not be readily available with lending institutions/banks or the access thereof may not have been given to the resolution professional.
69. A perusal of Ex.DW1/2 dated 09.03.2018 would show that the concerned banks including D-2 wanted to ascertain money trail CS No. 113/21 Satyanarayan Jhunjhunwala & ors. Vs. T.R. Chaddha & Company & Ors. Page No. 27 of 39 and end use of funds disbursed to JVL; to find out about siphoning of funds and fraudulent documentation including misrepresentation of financial information submitted to various banks; verifying revenue from operations; verifying receivables; verification of purchases etc. These facts were essentially in the special knowledge of JVL/its management and therefore, it cannot be said that the data sought to be audited was already available with the banks or the resolution professionals and could have been accessed by D-1.
70. Yet again, the allegation of scope of work assigned by D-2 to D-1 being faulty is misconceived in as much as D-2 being an admitted lender to JVL was within its rights to seek a forensic audit of the books of JVL. As already noted, plaintiffs consented to the said audit and therefore, they cannot now question the scope of work assigned to D-1 after the report has turned out to be against them.
71. Nothing has been elicited from the evidence of plaintiffs to show that the report in question suffers from any material irregularity. I am in agreement with the argument raised by counsel for D-2 that FAR dated 27.02.2019 is an expert opinion given by a Chartered Accountant and if plaintiffs want to dispute the same, the same can only be done by producing another expert of the field. Plaintiffs have not bothered to produce any other expert who can pin-point the mistakes/deficiencies in Ex.P-7/FAR.
72. Plaintiffs have only produced P-1/former Managing Director of JVL who has made bald and omnibus claims about the CS No. 113/21 Satyanarayan Jhunjhunwala & ors. Vs. T.R. Chaddha & Company & Ors. Page No. 28 of 39 authenticity of FAR. He does not claim to be an accounting expert. Even otherwise, save and except making bald and omnibus statements about FAR, he does not pin-point any specific mistake, irregularity, deficiency in the report so that the same be declared as non-est or void etc.
73. The onus for the declaration sought was for the plaintiffs to discharge. They did not produce any expert to show how and why the said report should be so declared. If that be the case, there is no question of throwing out an expert opinion only on the asking of the plaintiffs.
74. As already noted, D-2 was a lending bank for JVL and had extended crores of rupees to the said company. The said bank in its wisdom, for cogent reasons as inter alia recorded in the revised scope of work detailed in Ex.DW1/2 wanted an audit to be done by D-1. Plaintiffs consented to it. Plaintiffs did not supply the data despite demand. The report given by D-1 was based on available data. Based on report and based on other cogent reasons (as detailed in Ex.PW1/21), plaintiffs were declared willful defaulters.
75. Now, without any evidence of any material irregularity in FAR;
without plaintiffs bothering to even place on record the complete FAR to allow this court to peruse it, plaintiffs want that not only the entire report but all consequential actions against them (which possibly shall include civil and criminal actions initiated against the plaintiffs) to be taken back and defendants be restrained from taking any further action.
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76. In my humble opinion, no such omnibus injunction as prayed in prayer (c) or prayer (d) can be granted to the plaintiffs. In my humble opinion, the forensic audit report placed on record by the plaintiffs Ex.P-7 was prepared by D-1 on the basis of available record. There is no evidence on record to show any material irregularity in the said document and therefore for the said reasons and for the reasons already recorded, the said report cannot be declared as invalid, void, non-est, illegal or not binding on the plaintiffs or on other persons.
77. Similarly, the consequential reliefs as prayed in prayer (c) and
(d) cannot be granted to the plaintiffs because neither the impugned FAR can be declared invalid on merits nor the omnibus injunctions sought (which would mean nullifying all civil and criminal actions) can be granted to the plaintiffs.
78. There is another ground which leans against the plaintiffs. In my humble opinion, Ex.P-7 is essentially an expert opinion given by D-1 at the instance of D-2. It is not an instrument within the meaning of Section 31 of Specific Relief Act, 1963. An instrument, in law, is understood to mean formal legal writing by which any right or liability is created, transferred, limited, extended, extinguished or recorded (see Jagjivan Rai & others vs. Harikulwar Rai & others 1974 SCC Online All 262). The impugned FAR Ex.P-7 is not a formal legal writing creating any right or liability for and against the plaintiffs. It is merely a report prepared at the instance of lender banks including D-2 to find out some facts. It is essentially in the nature of an expert inquiry carried out at the instance of lenders who want to then CS No. 113/21 Satyanarayan Jhunjhunwala & ors. Vs. T.R. Chaddha & Company & Ors. Page No. 30 of 39 take a decision about the money granted to JVL. This document itself does not create any right or liability against the plaintiffs per se. If that be the case, there is no question of treating this report as an instrument which can be cancelled or declared as a nullity.
79. Yet again, in my humble opinion, no declaration against the said document can be granted u/s 34 of the Specific Relief Act, 1963 also. It is a settled law that a forensic audit report is merely an opinion of an expert and is not a conclusive proof of fact. Thus, the said document cannot affect, by itself any legal character or right to any property of the plaintiffs.
80. As already noted, plaintiffs have only challenged FAR Ex.P-7 before this court and have not challenged the eventual declaration of the plaintiffs as willful defaulter vide letter dated 03.06.2020 Ex.PW1/21. Possibly the declaration of the plaintiffs as willful defaulter may be taken as affecting the rights of the plaintiffs. But, a mere expert opinion which itself is not conclusive, cannot be taken to affect any right to property of the plaintiffs or their legal character and therefore, once the plaintiffs themselves have chosen not to challenged their declaration as willful defaulter, no declaration qua the report can be given in their favour because they have failed to seek the consequential relief.
81. In this regard, reference can be had to the proviso of Section 34 of Specific Relief Act, 1963 which specifically bars the court from making any such declaration where the plaintiff, being able CS No. 113/21 Satyanarayan Jhunjhunwala & ors. Vs. T.R. Chaddha & Company & Ors. Page No. 31 of 39 to seek further relief than mere declaration of title, omits to do so.
82. In the present case, in my humble opinion, the report in question does not affect any legal character or right of the plaintiffs and therefore, no declaration can be granted against the said report.
83. But, even if, for the sake of argument, it is taken that the said report Ex.P-7 does affect some legal character or right of the plaintiffs, since the plaintiffs have not sought the consequential reliefs emanating from the said report, therefore, the relief of declaration is otherwise barred in law.
84. I have already quoted the letter Ex.PW1/21 above whereby the plaintiffs, amongst others, were declared as willful defaulters. It appears that instead of directly challenging the said letter, they are doing so indirectly. If one reads prayer (b) made in the plaint, plaintiffs not only ask the declaration against FAR, they go on to ask for declaration of all consequential actions thereafter as invalid, void, non-est, illegal and not bindings on the plaintiffs and all other concerned. Then they have also prayed in prayer (c) and (d) restraining D-2 from taking any action against the plaintiffs on the basis of the said report. They further pray in prayer (d) that D-2 should take back all actions taken against plaintiffs.
85. Plaintiffs are trying to indirectly ask for unspecified consequential reliefs without naming it including, but not limited to the letter dated 03.06.2020 Ex.PW1/21. What the plaintiffs cannot do directly, they cannot be permitted to do CS No. 113/21 Satyanarayan Jhunjhunwala & ors. Vs. T.R. Chaddha & Company & Ors. Page No. 32 of 39 indirectly.
86. As already noted, Ex.PW1/21 gives at least 10 reasons for declaring the plaintiffs as willful defaulters. The FAR is only one of the said reasons. Even if, this court could have concluded that the FAR was liable to be set aside, still, the consequential declaration of plaintiffs as willful defaulter (which was based on other reasons enlisted in Ex.PW1/21) would still apply and therefore on this count also prayer of declaring the consequences from FAR as prayed in prayer (b) to (d) cannot be granted to the plaintiffs.
87. The aforesaid reasons shall also apply qua the prayer for damages. If the FAR stays, plaintiffs cannot be taken to have suffered any damage because of the said report.
88. In sum and substance, in my humble opinion, there is no ground for granting any of the prayers (a) to (e) made in the plaint. Plaintiffs have miserably failed to discharge the burden of proof placed on their shoulders qua each of the issues under consideration and thus, Issue no. 1 to Issue no. 4 are decided against the plaintiffs and in favour of the defendants.
Issue no. 5
5. Whether this Court has the necessary territorial jurisdiction to adjudicate this case? Onus of proof on both defendants.
89. Plaintiffs have pleaded territorial jurisdiction of this court on the ground that some unspecified meetings between them and bank CS No. 113/21 Satyanarayan Jhunjhunwala & ors. Vs. T.R. Chaddha & Company & Ors. Page No. 33 of 39 officials took place purportedly at Karawal Nagar branch of D-2/bank. As per record, the accounts of the company in question i.e. JVL were audited beyond the jurisdiction of this court; the account of JVL is being maintained at Allahabad and all proceedings qua JVL including the audit in question took place beyond the jurisdiction of this court. Even the branch which gave the loan to JVL is not located within the jurisdiction of this court.
90. The bald and omnibus claim of the plaintiffs that some purported meetings took place in Karawal Nagar branch of D-2 shall not give territorial jurisdiction to this court to adjudicate the suit. Plaintiffs have not led any evidence to show which meeting took place with which official of D-2 bank so that any part of cause of action may accrue to the plaintiffs in the jurisdiction of this court. The date of such meeting is also not specified. It does not appeal to logic that when the branch dealing with the loan in question was located in Allahabad, why would any official of the bank would meet any official of JVL or its management at Karawal Nagar. I am at loss to understand as to why the plaintiffs have chosen the jurisdiction of this court to sue the defendants. No evidence has been led by them to substantiate their plea that this court has territorial jurisdiction to adjudicate the present suit.
91. Thus, the present issue is decided against the plaintiffs and in favour of defendants.
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6. Whether the suit is bad for want of cause of action qua defendants as there was no privity of contract between plaintiffs and the defendants? OPD
92. It is the specific case of D-1 that they were contracted by D-2 to audit the accounts of JVL. Defendants admittedly had no privity of contract with the plaintiffs. I have already concluded while deciding issue no. 1 to 4 that the FAR prepared by D-1 was only in the nature of an expert opinion and this document solely did not form basis of the plaintiffs being declared as willful defaulters. As already noted, plaintiffs have directly not challenged the said declaration made vide Ex.PW1/21. JVL admittedly is a separate legal entity and only the accounts of JVL were audited by D-1. If that be the case, plaintiffs did not have any locus to sue D-1 for accounts which pertained to a separate legal entity. Again, D-2 was within its rights to get the accounts of JVL audited as a lender bank. This fact is not disputed before this court. Even otherwise, as already noted, plaintiffs themselves agreed to the said audit. Now once, they themselves agreed to the audit, there was no cause for them to sue D-2 also. Even otherwise, it was the accounts of JVL (a separate legal entity) which were got audited by D-2. There was absolutely no privity of the plaintiffs with either D-1 or D-2 and thus, they, in their individual capacity had no cause to sue them.
93. If that be the case, in my humble opinion, plaintiffs have unnecessarily sued the defendants in this case without there being any cause against them. The issue under consideration is CS No. 113/21 Satyanarayan Jhunjhunwala & ors. Vs. T.R. Chaddha & Company & Ors. Page No. 35 of 39 accordingly decided against the plaintiffs and in favour of defendants.
Conclusion
94. In consequence, the suit of the plaintiffs fail. It is dismissed.
95. It is settled law that consequences shall follow an event. In this case, plaintiffs have preferred a luxury litigation without any cause against the defendants. They filed an incomplete document based on which no declaration or cancellation could be granted by any court of law as it was a mere opinion. The main consequence of the said document was never challenged. Despite being aware of the incompleteness of the document Ex.P-7, plaintiffs leisurely continued with the case only to waste judicial time.
96. In this case, it transpires that on the very first date of hearing i.e. on 07.04.2021, plaintiffs managed to obtain 'status quo' order with respect to report dated 27.02.2019. They thereafter never pressed their interim application before the court and continued to enjoy the said order.
97. There cannot be any second thought about the right of a citizen to seek judicial redressal of his grievances by instituting a suit or defending a claim but at the same time the right to litigate cannot be reduced into an exercise in wager or an activity of amusement. The menace of frivolous and luxurious litigation is damaging public cause on twin counts. On the one hand, a CS No. 113/21 Satyanarayan Jhunjhunwala & ors. Vs. T.R. Chaddha & Company & Ors. Page No. 36 of 39 casual litigant, by raising false and hollow defences, holds the entire judicial machinery to ransom and it tantamounts to a direct onslaught upon the fundamental rights of the litigants (including the aggrieved party and other litigants who are asked to wait in line) to seek speedy and effective justice. Such false and bogus pleas unnecessarily over burden the dockets and directly impinges upon the sacrosanct judicial time.
98. False and hollow pleas are taken by unscrupulous litigants knowing fully well that in the end, they have nothing to loose in the gamble, as at stake, at best, is a nominal court fees/costs or something which in law they were bound to give to the other side. Litigations are not rolls of dice and court rooms are not gambling dens. Judges of this country owes a duty to the citizens to purge their court rooms of this chicanery.
99. Furthermore, a deviation from the conventional approach of simple dismissal and decreeing of the suit is required on one more count. Delay in civil litigation is pandemic in nature. The phrase that the civil litigation moves at a snail pace jeers at the entire machinery involved in the administration of justice. No amount of hard work in expeditious disposal of the cases shall bring down the number of mounting arrears unless a strict vigil is kept at the entry gates itself so that the frivolous or specious pleas do not enter the main stream and unnecessarily impedes the unsullied flow of justice. The menace of luxurious and frivolous litigation is choking the entire system and effective steps needs to be taken to cure the malady.
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100. The Hon'ble Apex court in the matter of Ram Rameshwari Devi and others Vs. Nirmala Devi and others (2011) 8 SCC 249 has reminded the trial courts of its duties to check the evil of luxurious and frivolous litigation and impose realistic cost. Hon'ble Apex Court has once again expressed its concern about the menace of luxurious and frivolous litigation and has reiterated that the trial courts needs to impose appropriate and realistic cost in the matter of Maria Margarida Sequeria Fernandes and Ors. Vs. Erasmo Jack De Sequeria (Dead) through L.Rs., (2012) 5 SCC 370.
101. In the case at hand, plaintiffs had succeeded in taking a status quo order in their favour on the very first date and thereafter,had not bothered to press their said application. Admittedly, JVL had taken crores of rupees in loans from various public sector banks including D-2 and plaintiffs have succeeded in enjoying a status quo order so that the consequences emanating from their willful default qua the loan may be stalled. They brought a hopeless case on the basis of an incomplete document Ex.P-7 before a forum which had no territorial jurisdiction. They litigated for close to for over four years when the same time could have been used by this court for adjudicating other just causes.
102. Thus, guided by the mandate of Hon'ble Apex court in the matter of Maria Margarida Sequeria Fernandes (supra) and Ram Rameshwari Devi (supra) I am of the opinion that a nominal cost of Rs.200/ per day each ought to be imposed on both the plaintiffs in this case.
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103. Quantified in terms of number of days, as many as 1679 precious judicial days were wasted on account of the vexatious approach of plaintiffs herein. Consequently, a cost of Rs.3,35,800/- for each plaintiff (1679 X 200) is imposed on the plaintiffs for filing absolutely bogus and vexatious case. I am further of the opinion that not only the defendants but even the society needs to be recompensated for the losses sustained by it. Consequently, the said cost be proportionately divided between D-1, D-2 and DLSA (North-East). It is ordered accordingly.
104. I may note that D-2 had given a cost schedule after arugments were heard in the matter. Considering the costs, already imposed, the said costs sought shall be treated to be subsumed in the costs awarded. Digitally signed by AASHISH
105. Let a decree sheet be prepared accordingly. AASHISH GUPTA GUPTA Date:
2025.12.15 05:23:39 +0530 Aashish Gupta Announced in the open court District Judge-01, North-East on 15.12.2025 KKD Courts, Delhi CS No. 113/21 Satyanarayan Jhunjhunwala & ors. Vs. T.R. Chaddha & Company & Ors. Page No. 39 of 39