RESERVE BANK OF INDIA Vs. JVG FINANCE LTD

JUDGEMENT

(1.) THE applicant is Anup Rawla; his submission is that he is in legal possession of 40 Indira Vikas Patras (IVPs) No.58 C 036541 to 036580 valued at Rs.5,000/- each; these IVPs had been given to him by M/s Hoffland Finance Ltd. as a security for a loan which had been advanced C.A. No.425/2007 Page 1 of 5 by the applicant to M/s Hoffland Finance Ltd.; the loan advanced by him to M/s Hoffland Finance Ltd. was Rs.1,70,000/-; this was on 12.7.1997. Submission is that pursuant to an advertisement issued on 12.6.1997 by M/s Hoffland Finance Ltd. he had given a loan of Rs.1,70,000/- to the said company. Receipt of the aforenoted amount by M/s Hoffland Finance Ltd. dated 12.6.1997 is on record; this amount is also reflected in the bank account of the applicant showing that a sum of Rs.1,70,000/- has been paid to M/s Hoffland Finance Ltd. Cheque issued by M/s Hoffland Finance Ltd. in the sum of Rs.30,600/- dated 12.9.1998 as part payment stood dishonoured. THE 40 IVPs in physical possession of the applicant in the denomination of Rs.5000/- each are also on record. Submission of the applicant that he is entitled to get these IVPs encashed and the objections raised by the Official Liquidator has no merit in view of the fact that the applicant was a bonafide holder of this negotiable instrument; the rules and procedure for encashment of an IVP's clearly show that whoever is the holder of the IVP is entitled to the amount contained therein. At the time when this transaction took place between the applicant and the M/s Hoffland Finance Ltd. which was in April 1997 there was no proceedings for the winding up of M/s Hoffland Finance Ltd.

(2.) THE objections raised by the Official Liquidator in his reply have been perused. Submission is that in terms of the report of the SFIO it has been noted that these IVPs have been purchased out of the fund of JVG Finance Limited which is a company in liquidation; the Managing Director of JVG Finance is Mr.V.K.Sharma who is none other but brother of Mr.B.B.Sharma who is Managing Director of M/s Hoffland Finance Ltd. Mr.B.B.Sharma has no authority to deal with the IPVs which had been purchased out of the fund of the JVG Finance Ltd.