NINA NAGPAL Vs. JUDICIAL MAGISTRATE I MEERUT

JUDGEMENT

(1.) OVER The Counter Exchange of India (hereinafter referred to as 'the OTCEF). New Delhi a company incorporated under the Companies Act, 1956 is a recognized Stock Exchange within the meaning of Section 4 of the Security Contracts (Regulation) Act. It has been promoted by premier Government financial institutions like Unit Trust of India, Industrial Development Bank of India, Life Insurance Corporation of India and others. The OTCEI through advertisement invited applications for selection of dealers with stipulation that the applicant shall meet the requirement as laid down in clause (8) of the Securities Contracts (Regulation) Rules, 1957. It was further stated that the applicant should be required to pay application fee of rupees one lakh adjustable against one time non- refundable admission fee of rupee six lakhs for the successful applicant. In case of an unsuccessful applicant, application fee would be refunded to him after deduction of rupees five thousand towards processing fee etc. Accordingly respondent no. 2 applied for the dealership and paid application fee of rupees one lac and appeared for computer based examination and on the basis of his performance in the examination, he was requested to appear for interview vide letter dated 12th June, 1995. Thereafter, the OTCEI informed him of his being selected as a dealer and requested him to comply with the formalities as mentioned in the letter dated 24th August, 1995. The case of the petitioner is that respondent no. 2 agreeing to have dealership deposited one time non-refundable admission fee in addition to rupees one lac which was deposited along with the application. He also submitted an undertaking to comply with the OTCEI's rules and regulations. On acceptance of his dealership, the OTCEI processed the documents and forwarded the same to the Securities and Exchange Board of India (in short 'the SEBI') to register him as a dealer. The letter however, returned the same asking the OTCEI to resubmit along with the documents with regard to age and qualification of respondent no. 2. The OTCEI in turn vide its letter dated 11th March, 1996 sought the documents from respondent no. 2 in support of his age and experience as required by the SEBI. While the application of respondent no. 2 was under consideration of the SEBI Respondent no. 2 addressed a letter dated 22nd August, 1996 to the OTCEI stating therein the he had come to know from reliable source that he was not entitled to dealership on account of his having crossed the age of sixty five years and, therefore, the admission fee deposited by him be refunded to him. In response thereto, the OTCEI informed him that upon acceptance of the dealership, it processed his documents and forwarded to the SEBI for registration of his name as a dealer. But upon review of the documents, SEBI sought for certain additional information with regard to his age and experience and in the meanwhile, he asked for refund of admission fee and therefore, the fee being non-refundable the OTCEI cannot refund the same. In the above backdrop, respondent no. 2, it is alleged, moved the Delhi High Court by filing a writ petition being civil misc. writ petition no. 1970 of 1997 seeking issuance of a writ of mandamus for release of the fees deposited with the OTCEI together with compensation. While the said writ petition was pending adjudication, respondent no.2 moved a criminal complaint before the Judicial Magistrate, 1st Class, Meerut arraying the petitioner and another as accused.

(2.) IN short, the allegation of respondent no. 2 is that in response to the advertisement for appointment of dealership, he made an application fulfilling all the conditions. Both petitioner and the co-accused had assured him that within three months he would get the letter of appointment of dealership. On their assurance he deposited huge amount but in fact they had no power of appointment of dealership on behalf of the SEBI. It is further alleged that both petitioner and co-accused hatched a conspiracy to cheat respondent no.2 by making a false promise that he would be appointed as a dealer and consequently, defrauded him of lacs of rupees.

(3.) SHRI G.S. Chaturvedi, learned Senior Counsel appearing for the petitioner contended that on the basis of the advertisement by the OTCEI published in the newspapers inviting applications for dealership in different cities, respondent no. 2 and, therefore, the former cannot be attributed with any criminal liability as alleged by respondent no. 2. he further urged that the prosecution allegation in entirety even if taken on its face value as alleged in the complaint, does not make out any offence under Section 406/420 I.P.C. and in that view of the matter the court, in order to secure ends of justice, should interfere with the said order and quash the same in exercise of inherent power.