Delhi High Court - Orders
Re-M/S Jvg Finance Ltd vs Unknown on 22 February, 2024
Author: Prathiba M. Singh
Bench: Prathiba M. Singh
$~C1
* IN THE HIGH COURT OF DELHI AT NEW DELHI
+ CO.PET. 265/1998, CO. APPLs. 925/2014, 427/2018, 617/2020,
522/2021, 618/2023, 630/2023, 226/2024, OLR 29/2023
RE-M/S JVG FINANCE LTD.
..... Petitioner
Through:
versus
....
..... Respondent
Through: Mr. Kunal Sharma & Mr. Subhendu
Bhattacharya, Adv. for OL. (M:
9910200911)
Mr. Dheeraj Gupta Adv. and Mrs.
Aneeta Sharma A/R for the Ex
Management. (M: 7210670704)
Mr. Ramesh Babu with Ms. Manisha
Singh, Ms. Jagriti Bharti and Ms.
Tanya Chowdhary, Advs. for RBI.
(M: 9873922734)
Mr. Ankur Mittal & Mr. Devesh
Matta, Advs. R-4 in CO.APPL.
522/2021; and Applicant in
CO.APPL. 630/2023 (M:
7905165447)
Mr. Anil Karnwal, Mr. Ranjan
Mukherjee, Advs. for R-2. (M:
9810044429)
Mr. P D Gupta, Sr. Adv. with Mr.
Atul Gupta, Adv, for Dr. Sushil
Kumar Gupta in in CA 427/18 (M:
9810862405)
Mr. Raja Chatterjee, Mr. Dilip Mehra,
Mr. Piyush Sachdev, Ms. Riya Dutta
& Ms. Anupama Gupta, Advs. (M:
8800919326)
Mr Vinayak Marwah, Adv. for D-3
CO.PET. 265/1998 Page 1 of 10
This is a digitally signed order.
The authenticity of the order can be re-verified from Delhi High Court Order Portal by scanning the QR code shown above.
The Order is downloaded from the DHC Server on 29/02/2024 at 20:31:01
to 7. (M: 9810522185)
CORAM:
JUSTICE PRATHIBA M. SINGH
ORDER
% 22.02.2024
1. This hearing has been done through hybrid mode. Gurgaon Land CO.APPL. 925/2014 & CO.APPL. 522/2021 in CO.PET.-265/1998
2. The present is an application filed by the ex-management of the company in liquidation seeking cancellation of all the sale deeds executed by Mr. Dinesh Goyal, power of attorney holder of the JVG companies and for directing the OL to take possession of the various lands in Gurgaon, which are stated to be lands belonging to the company in liquidation.
3. The submission of Mr. Dheeraj Gupta, ld. Counsel appearing for the Ex-Management of JVG Finance is that as per order dated 7th August, 2020 the company M/s. Tirupati Cylinders Ltd. (hereinafter 'TCL') cannot be given permission to sell assets belonging to JVG Hotels Ltd., JVG Housing Finance Ltd., JVG Foods Ltd., JVG Farm Fresh Ltd. and JVG Steels India Ltd. of lands located in District and Tehsil Gurgaon, Haryana and located at Village Sidhrawali and Village Bhora Khurd. Ld. Counsel also submits that this judgment was upheld by the Division Bench on 29th August, 2023 which came to the conclusion that the documents executed by Mr. V. K. Sharma in favour of Mr. Dinesh Goyal in turn in favour of TCL were fraudulent and were merely a tool to deprive the depositors and defraud them.
4. Further it has been submitted that the said order of the Division Bench dated 29th August, 2023 in Company Appeal 3/2021 titled M/s. Tirupati CO.PET. 265/1998 Page 2 of 10 This is a digitally signed order.
The authenticity of the order can be re-verified from Delhi High Court Order Portal by scanning the QR code shown above. The Order is downloaded from the DHC Server on 29/02/2024 at 20:31:01 Cylinders Ltd. v. M/s J.V.G. Finance Ltd. has been upheld by the Supreme Court on 29th January, 2024 in SLP No. 28425/2023 titled M/s. Tirupati Cylinders Ltd. v. M/s J.V.G. Finance Ltd.
5. It is the submission of Mr. Gupta, therefore, that CA 925/2014 deserves to be allowed. According to ld. Counsel, in the said company application, Respondent Nos. 3 to 8 are purchasers who have claimed to have paid consideration for purchase of these lands to TCL/Mr. Dinesh Goyal, and that they have no legitimate stand to object to the cancellation of the sale deeds. In addition, CA 522/2021 has also been filed by certain purchasers who also oppose the prayer in CA 925/2014.
6. Heard ld. Counsel for the parties present in Court. It appears clearly to the Court, at this stage, that the findings of the judgement of the ld. Division Bench are that the documents executed in favour of TCL were merely a device to siphon off funds of JVG, and the transactions were deemed fraudulent. The ld. Division Bench has also held that funds were diverted for purchasing lands in the names of five JVG Group companies without requisite authorization. In doing so, the ld. Division Bench upheld the actions taken by the Company Court to trace and preserve the assets for winding up of the company in liquidation, i.e., JVG Finance Ltd. Consequently, TCL's appeal for the conveyance of the lands was dismissed, reinforcing the decision to treat the disputed assets as belonging to JVG Finance Ltd. for the purpose of winding up. The relevant findings of the Division Bench are set out below:
"Reasons and Conclusion
33. Before proceeding to briefly address the contentions advanced by the learned counsel for TCL, it is relevant to note that there are certain facts which CO.PET. 265/1998 Page 3 of 10 This is a digitally signed order.
The authenticity of the order can be re-verified from Delhi High Court Order Portal by scanning the QR code shown above. The Order is downloaded from the DHC Server on 29/02/2024 at 20:31:02 are beyond any pale of any dispute. The facts discernable from the record, whether on the basis of the documents produced or the lack of it, clearly establish the same. First of all, there is no credible dispute that the funds for purchasing the lands had been diverted from JVG Finance Ltd. The Thareja Committee had examined Mr. Sushil Kumar Gupta. He had admitted that he was entrusted with the sum of ₹22.80 crores for purchasing the said lands. It was found that he had deposited the amount in his bank account with Indian Overseas Bank, Punjabi Bagh, West Delhi. It was established that these funds were received from the accounts with Vijaya Bank, Corporation Bank and Bank of America. The accounts of JVG Finance Ltd. maintained with those banks had established that a sum of ₹22 crores was transferred from the accounts of JVG Finance Ltd. Notwithstanding, that the consideration for the purchase of the subject lands was paid by JVG Finance Ltd., the subject lands have been purchased in the name of five JVG Group of Companies (namely, JVG Goods Ltd., JVG Housing Finance Ltd., JVG Farm Fresh Ltd., JVG Hotels Ltd. and JVG Steels India Ltd.). As noted above, Mr. Sushil Kumar Gupta had submitted a list of the said lands purchased in the name of the companies belonging to JVG Group of Companies including the aforementioned five companies. There is no doubt that the said lands in respect of which TCL seeks execution of the Conveyance Deeds, were a part of the lands purchased by Sh. Sushil Kumar Gupta from the funds of JVG Finance Ltd.
34. There is no material on record which would establish that JVG Finance Ltd. had permitted the purchase of any property in the name of the other companies from its own funds. There is no justification whatsoever for using the funds of JVG Finance Ltd. for the purchase of the lands in the CO.PET. 265/1998 Page 4 of 10 This is a digitally signed order.
The authenticity of the order can be re-verified from Delhi High Court Order Portal by scanning the QR code shown above. The Order is downloaded from the DHC Server on 29/02/2024 at 20:31:02 name of any other companies.
35. The inescapable conclusion is that purchasing property in the name of other entities amounted to siphoning of JVG Finance Ltd.'s assets to those companies. The five group of companies were under the same management and thus, were clearly accountable for the assets of JVG Finance Ltd. albeit, acquired in their name.
36. The second material fact in respect of which there is no credible challenge is that the copy of the resolution on the basis of which the Agreements to Sell and the GPAs had been executed is not recorded in the Minute Books of JVG Group of Companies. Thus, there was no resolution passed in favour of Sh. V.K. Sharma or any other person for the sale of the subject lands in favour of TCL.
37. TCL claims that it had paid the entire consideration in cash. TCL had relied on the SFIO's report to the limited extent that it acknowledged that Sh. V.K. Sharma had received the cash. However, there is no justification whatsoever for TCL to have paid the consideration in cash. According to TCL, it had withdrawn the funds from the bank on the day before, to make the said payments but there is no explanation as to why TCL found it necessary to pay the consideration in cash. It is obvious that TCL was aware that the transaction was a device to siphon the funds.
38. In view of the above, it is established that the funds of JVG Finance Ltd. were siphoned off to purchase the assets (subject lands) which were attempted to be sold on the basis of authority that did not exist. In our view, the aforesaid facts sufficiently indicate a scheme to siphon off the assets of JVG Finance Ltd.
39. The contention that the Agreements to Sell and the GPAs relied upon by TCL are unimpeachable as they were registered with the concerned Sub-Registrar, is CO.PET. 265/1998 Page 5 of 10 This is a digitally signed order.
The authenticity of the order can be re-verified from Delhi High Court Order Portal by scanning the QR code shown above. The Order is downloaded from the DHC Server on 29/02/2024 at 20:31:02 unmerited. As noted above, Sh. V.K. Sharma has no authority to execute the Sale Deeds. No meeting of the Board of Directors of the concerned companies was held to pass the resolution on the basis of which the said documents were executed. Once it is accepted that the transactions for sale of the said lands were fraudulent and an exercise to defraud JVG Finance Ltd. and its depositors, the fact that the documents were registered with the concerned Sub-Registrar would be of little consequence.
40. TCL's primary contention that it is entitled to the subject lands, is premised on the basis that the five companies (namely, JVG Goods Ltd., JVG Housing Finance Ltd., JVG Farm Fresh Ltd., JVG Hotels Ltd. and JVG Steels India Ltd.) were not under liquidation at the material time and therefore, there was no impediment for the said companies to transfer their assets. The said contention is insubstantial. The petition for winding up JVG Finance Ltd. was filed in the year 1998. The learned Company Court had appointed the Official Liquidator as Provisional Liquidator of the said company on 05.06.1998. By a subsequent order dated 03.09.2002, the learned Company Court had concluded, after examining the structure of the group and the involvement of Sh. V.K. Sharma and his family members in the affairs of the company, that the corporate veil of the group companies was required to be lifted. The said order has not been impugned and has attained finality. If the corporate veil of JVG Group of Companies is lifted, it would follow that the date on which the Provisional Liquidator was appointed in respect of JVG Finance Ltd. would be relevant for unravelling the transactions entered into in the name of other companies as well. Lifting of the corporate veil of the companies would entitle the real transaction to be viewed sans the corporate façade. It is established that the funds of JVG Finance Ltd. were used for CO.PET. 265/1998 Page 6 of 10 This is a digitally signed order.
The authenticity of the order can be re-verified from Delhi High Court Order Portal by scanning the QR code shown above. The Order is downloaded from the DHC Server on 29/02/2024 at 20:31:02 purchasing the subject lands albeit in the name of the other group of companies. The said assets are required to be accounted for all practical purposes as assets of JVG Finance Ltd. The corporate identity is relevant only till the corporate veil is not lifted. Once a court decides that the corporate veil is to be pierced; the defence of a company being a separate juridical entity does not arise.
41. The orders passed by the learned Company Court after 05.06.1998 indicate that the endeavour of the learned Company Court was to trace and preserve the assets of JVG Finance Ltd. for winding up the said company. By the order dated 14.10.1999, the learned Company Court directed deposit of titled deeds of lands admeasuring 60 acres located at district Gurgaon, Haryana and exercise to find out details of properties and assets purchased from the funds of investors was under table. By an order dated 03.09.2002, the learned Company Court had expressly interdicted the sale of assets of JVG Group of Companies.
42. In the given facts, we find no infirmity with the view of the learned Company Court in rejecting the application seeking conveyance of the subject lands in its favour.
43. The appeal is accordingly dismissed."
7. Under such circumstances, this Court is concerned as to the precarious position in which these purchasers are being put into, due to these transactions executed between the ex-management and TCL/Mr. Dinesh Goyal. Before proceeding further, this Court deems it appropriate to direct the appearance of Mr. Dinesh Goyal resident of D-14, Preet Vihar, Delhi- 1992 for recording of his statement. In addition, let Court notice be also issued to Mr. Giriraj Subramanium, ld. Counsel, who was representing Mr. Dinesh Goyal in CCP(C) No.5/2006 in the present petition, i.e. CO.PET.
CO.PET. 265/1998 Page 7 of 10This is a digitally signed order.
The authenticity of the order can be re-verified from Delhi High Court Order Portal by scanning the QR code shown above. The Order is downloaded from the DHC Server on 29/02/2024 at 20:31:02 No. 265/1998.
8. In addition, the notice shall be served through the SHO of the concerned area who shall trace Mr. Dinesh Goyal and serve the notice upon him.
9. Let this notice be given to Ms. Hetu Arora Sethi, ld. ASC for GNCTD for service upon Mr. Dinesh Goyal.
10. Interim order to continue in these applications.
11. List on 1st May, 2024.
CO.APPL. 617/2020 in CO.PET.-265/1998
12. Parties are permitted to file additional documents in respect of the Gurgaon land, if so advised.
13. Interim order to continue in this application. OL to file a reply to this application.
14. List on 1st May, 2024.
CO.APPL. 630/2023 in CO.PET.-265/1998
15. This is an application seeking modification of the order dated 1st August, 2023 which reads as under:
"1. This hearing has been done through hybrid mode.
2. The Applicant in CO.APPL. 925/2014 and CO.APPL. 522/2021 seeks cancellation of various sales deed executed by one Mr. Dinesh Goyal in favour of other purchasers. Mr. Anil Karnwal, ld. Counsel appears for Mr. Dinesh Goyal and submits that he has been engaged only this morning and instructed to appear in CO.APPL. 925/2014 and CO.APPL. 522/2021. Accordingly, Mr. Karnwal, ld. Counsel, seeks an adjournment on the said ground.
3. The Court has perused the records and it has been revealed that, in fact, Mr. Dinesh Goyal has CO.PET. 265/1998 Page 8 of 10 This is a digitally signed order.
The authenticity of the order can be re-verified from Delhi High Court Order Portal by scanning the QR code shown above. The Order is downloaded from the DHC Server on 29/02/2024 at 20:31:02 already filed a reply to these applications. Thus, the Court does not see any justification for granting an adjournment. However, in the interest of justice, last opportunity is granted to the non-Applicant- Mr. Dinesh Goyal to appear and argue in this matter subject to payment of Rs.50,000/- as costs to the Official Liquidator. The same shall be deposited in the Official Liquidator's Common Pool Fund. The cost shall be paid within two weeks.
4. Non-Applicants, who are in possession of the lands which are the subject of the present application shall ensure that the lands are properly fenced and no encroachment or trespass takes place. A representative of the OL shall visit the land in question and shall ensure that the fencing is done properly and photographs/video footage shall also be placed before this Court on the next date.
5. Parties are permitted to obtain the copies of the electronic record of the Court in order to enable to assist the Court.
6. List for hearing on 31st August, 2023. "
16. Mr. Ankur Mittal, ld. Counsel appearing for the Applicant submits that in terms of the said order, directions were issued that no encroachment ought to be permitted to take place and proper fencing shall be done. He submits that the photographs would show that the land in which fencing was directed, falls within a property which is already fenced. He relies upon the image at page 24 in the compilation handed over by ld. Counsel. He further submits that, in addition, he has also filed the same photographs and the same are on record.
17. Accordingly, it is directed that the Applicant who is stated to be in possession of this land shall ensure that there is no trespass or encroachment. If for any reason at any future point fencing would be required, he would CO.PET. 265/1998 Page 9 of 10 This is a digitally signed order.
The authenticity of the order can be re-verified from Delhi High Court Order Portal by scanning the QR code shown above. The Order is downloaded from the DHC Server on 29/02/2024 at 20:31:02 undertake to do so.
18. In view of the above application and the undertaking given by the ld. Counsel for the Applicant on behalf of the Applicant, for the time being fencing is exempted.
19. Application is disposed of.
CO.PET. 265/1998, CO. APPLs. 427/2018, 617/2020, 618/2023, 226/2024, OLR 29/2023
20. List on 1st May, 2024.
PRATHIBA M. SINGH, J.
FEBRUARY 22, 2024 dj/am (corrected & released on 29th February, 2024) CO.PET. 265/1998 Page 10 of 10 This is a digitally signed order.
The authenticity of the order can be re-verified from Delhi High Court Order Portal by scanning the QR code shown above. The Order is downloaded from the DHC Server on 29/02/2024 at 20:31:02