KISHAN KUMAR 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. 1/7/2005, passed by the learned Metropolitan Magistrate, New Delhi, and for quashing of FIR No. 380/2005, registered at Police Station Defence Colony, Delhi under Ss. 420/120B/34 of the Indian Penal Code, 1860 ('IPC'), pursuant to order dtd. 1/7/2005.

(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, which had been allotted a prime plot of land at Bangla Sahib Road, New Delhi, intended for the construction and operation of a hotel, which had been considered a highly profitable venture requiring substantial investment. It is alleged that the accused persons, Mr. M.P. Mehrotra, Mr. Somesh Mehrotra, Mr. Harsh Alagh, Mr. Anurag Bhatnagar, Mr. K.K. Soni, and Mr. Pankaj Shrimali, who were directors and senior officers of VLS Finance Ltd., a non-banking finance company, upon learning about the hotel project, had approached the complainant, representing themselves as part of a multi-crore finance company with abundant funds. The accused persons had expressed their desire to join the project as financial consultants, valuing the complainant's shares at Rs.60.00 per share, and had promised to bring a public issue at a price of not less than Rs.100.00 per share, with a public offering of 10 lakh equity shares at a premium. The accused persons had allegedly assured the complainant of their expertise by showcasing their previous successes, including a public issue of their own company shares, at a premium of Rs.390.00 per share in December, 1994. Convinced by these representations, the complainant had entered into a Memorandum of Understanding ('MOU') with the accused persons on 11/3/1995, agreeing to allot 10 lakh shares at par value, i.e., Rs.10.00 per share, despite the accused having valued them at Rs.60.00 per share. Allegedly, this had resulted in a clear profit to the accused of at least Rs.35.00 crores. However, the complainant had thereafter discovered that the accused's promise to issue shares at Rs.100.00 per share was legally impossible due to guidelines of SEBI, which required a company to have a three-year track record of consistent profitability to freely price and list its securities. The complainant, being a new venture, could not have met this criterion, and the accused, being experienced in merchant banking, had been well aware of this fact when they had entered into the MOU with the complainant. The accused persons had deliberately concealed this information from the complainant to fraudulently gain control of the complainant's shares. It was further stated that the accused had made several other misrepresentations, leading to the registration of FIR No. 326/2004 against various accused at P.S. Connaught Place. It was alleged that the complainant had realized that the accused persons never intended to bring out a public issue at a premium and had instead conspired to cheat and cause wrongful loss to the complainant while securing wrongful gains for themselves. The complainant, having received no relief from the police, had filed the present complaint alleging that the accused had committed offences under Ss. 420, 120B, and 34 of the IPC by conspiring to cheat the complainant.