HARSH CONSUL Vs. STATE

JUDGEMENT

(1.) By way of present petition filed under Sec. 482 of Code of Criminal Procedure, 1973 ('Cr.P.C.') read with Article 227 of the Constitution of India, the petitioner seeks quashing of FIR No. 456/2005, registered at P.S. Moti Nagar, Delhi for offences under Ss. 420/465/467/471/120B/34 of the Indian Penal Code, 1860 ('IPC'), pursuant to order dtd. 3/10/2005 passed under Sec. 156(3) of Cr.P.C. by the learned Metropolitan Magistrate, Tis Hazari, Delhi.

(2.) The facts of the case, in brief, are that a complaint was filed by the complainant, Mr. Prateek Puri, who claimed that he was a small investor, who had made investments in shares after analyzing the financial statements of companies. In 2005, the complainant had examined the balance sheet of M/s VLS Finance Ltd., a company where the accused persons, including Mr. T.B. Gupta (Managing Director), Mr. Somesh Mehrotra (Director), and Mr. Harsh Consul (Company Secretary), held key positions. The balance sheet of the said company indicated that it was holding shares in various companies, classifying them as long-term investments and shares held as stock in trade. One significant disclosure had shown that VLS Finance Ltd. was holding shares of M/s Sunair Hotels Ltd., valued at Rs.23.59 crores, which had been described as a long-term investment on a cost basis. Given that Sunair Hotels Ltd. was operating a five-star hotel, Hotel Metropolitan, this investment had appeared as highly profitable to the complainant. It is alleged that this information, along with other similar representations, had induced the complainant to invest in VLS Finance Ltd., believing it to be a secure and lucrative opportunity. However, the complainant had later discovered that VLS Finance Ltd. was involved in fraudulent activities. The accused persons had allegedly cheated investors by making false disclosures in their prospectus during a public issue in 1994, and this deception had been further confirmed during income tax raids conducted on 22/6/1998, and the findings had been detailed in an appraisal report by the Income Tax Department. Shocked by these revelations, the complainant had contacted M/s Sunair Hotels Ltd. directly to verify the actual value of the shares. Their response had revealed that the shares had been sold at par value, i.e., Rs.9.59 crores, contrary to the inflated valuation shown in the balance sheet of VLS Finance Ltd. It is thus alleged that accused persons had deliberately misrepresented the value of the shares, falsely inflating them to Rs.23.59 crores. This had been allegedly achieved through fraudulent accounting practices, likely involving false entries routed through directors or associated companies. It was alleged that the accused had committed multiple offences, including forgery, as they had created and used false documents in their books of accounting. The fraudulent entries had been made with the intent to deceive investors and to gain wrongful financial benefits. The false information presented in the balance sheet had caused the complainant and other investors to suffer significant financial losses, while the accused had unlawfully enriched themselves. It was alleged that despite lodging a complaint with the P.S. Moti Nagar, no action had been taken by the police. The complainant had thus been compelled to file a complaint, alleging that the accused persons had committed cognizable offences under Ss. 420, 465, 467, 468, 471, 120B, and 34 of IPC.

(3.) On the basis of this complaint, an order dtd. 3/10/2005 was passed by the learned Metropolitan Magistrate, New Delhi ('learned Magistrate') directing the SHO, P.S. Moti Nagar, New Delhi to register an FIR against the accused persons and investigate the matter. Thereafter, in compliance with the order dtd. 3/10/2005 passed by learned Magistrate, the FIR No. 456/2005 was registered, inter alia, against the petitioner herein.