TEJ BHAN 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 quashing of the complaint titled as 'Smt. Sudesh Kohli vs. Shri T.B. Gupta and Ors' and the order dtd. 30/6/2005 passed under Sec. 156(3) of Cr.P.C., by the Metropolitan Magistrate, New Delhi alongwith the FIR No. 381/2005 registered at Police Station Defence Colony, Delhi and all proceedings emanating therefrom.

(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 Smt. Sudesh Kohli, who stated that she had invested her life savings in VLS Finance Ltd., a company engaged in financial services, and controlled by the accused persons/ petitioners, who were its directors and senior officers. The accused persons had allegedly projected VLS Finance Ltd. as a highly profitable and stable company and had promised substantial returns on investments, by highlighting the company's strong earnings per share (EPS) and boasting that the company's board included distinguished retired civil servants and financial experts, such as a former finance secretary to the Government of India and a former deputy governor of the Reserve Bank of India. Based on these representations, the complainant had been induced to purchase 100 fully paid shares at Rs.400.00 per share in 1993-94, alongside her son, Sh. Sanjay Mehta, who had also made a similar investment. The accused persons had allegedly collected a premium of Rs.390.00 per share on a face value of Rs.10,.00 amassing approximately Rs.127.00 crores from the public during the company's public issue. The complainant had been assured that the value of these shares would rise significantly, with projections indicating that the share price could reach Rs.1000.00 to Rs.1200.00 by 1999-2000. However, it is alleged that the market value of the shares had plummeted to Rs.2.00 per share by March 2003, causing significant financial loss to the complainant and other investors. As alleged, the complainant had later learnt that the accused persons had misappropriated the funds raised from investors. They had manipulated the company's accounts, with the assistance of auditors and chartered accountants, by falsifying transactions and inflating the value of assets, thereby converting the public investments into their personal gains. The accused had allegedly engaged in insider trading, artificially inflating the share prices before the public issue, and then siphoning off the funds to their personal accounts and subsidiary companies. The fraudulent activities included the bogus purchase of cinematographic films at grossly inflated prices, which were shown in the company's accounts to claim false depreciation. It is further alleged that in 1998, the Income Tax Department had conducted a raid on the offices of VLS Finance Ltd. and the premises of the directors. The subsequent appraisal report had revealed the extent of the financial irregularities, including the siphoning off of approximately Rs.198.00 crores. The report had detailed how the accused persons had manipulated the share prices, engaged in insider trading, and conducted fictitious transactions to misappropriate funds. It had been noted that the company had over-assessed the value of assets, such as cinematographic films, by 1000 times their actual value to claim false depreciation, thus defrauding both investors and the tax authorities. The complainant, concerned about the mismanagement and fraudulent activities, had attended the Annual General Meeting of VLS Finance Ltd. on 25/9/2003 at Shri Satya Sai International Centre Auditorium, Delhi, accompanied by her younger son, Sh. Deepak Mehta, who had acted as a proxy for her elder son. During the meeting, the investors, including the complainant, had raised concerns about the financial mismanagement and the drastic decline in the value of their investments. However, the accused had deployed 40-50 private security guards inside the hall and 2-3 police constables outside, who had prevented the investors from voicing their grievances. The accused had further threatened and intimidated the investors, with some being physically manhandled. The complainant had been shocked by the behavior of the accused, who had openly declared that they had misappropriated the investors' money, and had dismissed the meeting without addressing any of the investors' concerns. Following these events, the complainant had lodged several complaints with the police, but no FIR had been registered, and no action had been taken against the accused. The Complainant had also received threats over the phone, warning her and her family of dire consequences if they continued to pursue the matter. The accused had used abusive language and had threatened the complainant to withdraw her complaints. It was alleged that the accused persons had committed multiple cognizable offences, including criminal breach of trust, cheating, forgery, and conspiracy, under Ss. 406, 409, 420, 421, 422, 467, 468, 471, 477(a), 506(ii), and 120B of IPC. The complainant had sought the registration of an FIR, a thorough investigation into the matter, and the prosecution of the accused for their criminal activities.