AJINDRA KUMAR PURI Vs. STATE

JUDGEMENT

(1.) By way of above-captioned petitions filed under Sec. 482 of Code of Criminal Procedure, 1973 ('Cr.P.C.') read with Article 227 of the Constitution of India, the petitioners seek setting aside of order dtd. 3/6/2004, passed by the learned Metropolitan Magistrate, New Delhi, and for quashing of FIR No. 326/2004, registered at Police Station Connaught Place, Delhi under Ss. 406/409/420/424/120B of the Indian Penal Code, 1860 ('IPC'), pursuant to order dtd. 3/6/2004.

(2.) These petitions, having similar facts and contentions and common issues for consideration, were heard together and are being decided by this common judgment.

(3.) The facts of the case, in brief, are that a complaint was filed by the complainant, M/s Sunair Hotels Limited, against the petitioners herein, who were the former/current directors of VLS Finance Ltd., a Non-Banking Finance Company (NBFC) engaged in leasing and finance. It was alleged by the complainant that in 1994-95, VLS Finance Ltd. had projected itself as a well-established, diversified NBFC with prominent figures from the financial sector on its Board, creating a false impression of secure investment opportunities. The accused had leveraged this image to lure inexperienced investors and companies seeking financial consultancy. As alleged, the complainant company, which had been working on a five-star deluxe hotel project at Bangla Sahib Marg, New Delhi, was approached by the directors of VLS Finance Ltd., who had expressed interest in arranging finances and investing in the project. Trusting the representations and assurances of the accused persons, the complainant company had entered into a Memorandum of Understanding ('MOU') with VLS Finance Ltd., on 11/3/1995. The MOU stipulated that VLS Finance Ltd. would provide a forfeitable security deposit of Rs.10.00 crores, arrange Rs.85.00 crores in loans, cover any shortfall with personal resources, and facilitate a public issue of shares at a significant premium. Considering the promises made by the accused persons, the promoters of the complainant company had renounced 70 lakh shares, at a par value of Rs.10.00 per share, out of the right issue dtd. 11/3/1995, despite the market value as per the own assessment of the accused (vide letter dtd. 13/2/1995) was Rs.60.00 to 70/- per share. It is alleged that the complainant company had been induced to part with these shares on the basis of the assurances of the accused persons to fulfill their obligations under the MOU. However, the malafide intentions of the accused persons had soon become apparent, and their real objective was to take over the hotel project under the guise of equity investment. As alleged, they had acquired the complainant's valuable shares at nominal rates while failing to fulfill their financial obligations, thereby jeopardizing the hotel project. The accused persons had then had begun to project the complainant company as non-compliant with the MOU, despite their own deliberate failures, as part of a larger criminal conspiracy aimed at cheating and defrauding the complainant. The complainant had later realized the oblique motives of the accused, which had become evident through various documents, and especially after an income tax raid in the year 1998 which had revealed that VLS Finance Ltd. had artificially inflated its share prices through illegal insider trading and manipulation, which had exposed their fraudulent scheme. It was also alleged by the complainant that the accused persons had also deceived the complainant company by inserting a stipulation in the MOU, contrary to SEBI guidelines, that falsely suggested the complainant could issue shares at a premium. Knowing full well that the complainant did not meet the required profit record for such an issue, the accused had concealed this fact and induced the complainant to sign the MOU. The subsequent actions of the accused persons, including their failure to pay the full security deposit, refusal to arrange the promised funds, and attempts to undermine the hotel project through negative communications with financial institutions, had clearly shown their intent to defraud. Allegedly, the accused persons had even written to ACCOR to dissuade investment in the project and influenced IFCI to cancel a sanctioned loan for the project. The accused had further made substantial wrongful gains by misappropriating profits from the shares they had acquired from the complainant. Their misconduct extended to implicating the complainant in false civil and criminal cases, and their attempts to take over the hotel project were rejected by various forums, including the Company Law Board (CLB), which had observed their actions were prejudicial and motivated by an illegal desire to gain control of the hotel project. Despite the CLB's observations, the accused persons had continued with their attempts to take over the hotel project by lodging multiple FIRs against the complainant on the basis of same baseless allegations which had been rejected by the CLB. It was also alleged that the accused persons had a history of defrauding investors and innocent companies, as evidenced by complaints from other shareholders against their financial irregularities. Thus, it was alleged that the accused persons had committed offences under Ss. 406, 409, 420, 424, and 120B of the IPC.