C.S.Agarwal vs State & Ors.
2010 Latest Caselaw 5129 Del

                    * IN THE HIGH COURT OF DELHI AT NEW DELHI

                                                 Date of Reserve: 27th September, 2010
                                                    Date of Order :11th November , 2010


+ W.P. (Crl.) No. 57 of 2010, Crl. M.A. No. 535/2010
%
                                                                               11.11.2010

C.S. AGARWAL                                                            ... Petitioner
                                 Through: Mr. Pinaki Mishra, Senior Advocate with
                                 Ms Ranjana Roy Gawai, Mr. Vijay Aggarwal and
                                 Mr Shailesh Suman, Advocates.
                  Versus

STATE & ORS.
                                                                      ... Respondents
                                 Through: Mr Ranjit Kapoor, ASC for the State with
                                 Mr. Vaibhav Sharma, Advocate,
                                 Mr. Ramesh Gupta, Sr. Advocate with
                                 Mr. Rajinder Singh, Advocate for complainant.

JUSTICE SHIV NARAYAN DHINGRA

1. Whether reporters of local papers may be allowed to see the judgment?

2. To be referred to the reporter or not?

3. Whether judgment should be reported in Digest?

                                            JUDGMENT

1. This petition has been filed for quashing of FIR No. 264/2009 dated 23rd

December, 2009, registered with Economic Offences Wing under Section

420/406/120-B IPC.

2. The petitioner in association with one Mr. D.K. Jain had formed a Company in

the name of M/s Rockman Projects Limited (hereinafter referred to as "RPL") and the

petitioner represented to respondent No. 3 that the petitioner controlled 250 acres of

land in Gurgaon on Delhi-Jaipur Highway in Village Sidhrawali and for this land

petitioner was having principal approval to develop a Special Economic Zone (SEZ).

The petitioner showed a map of 250 acres of land/site and the principal approval

letter received by the petitioner from Government of India for SEZ.

3. On the basis of this representation, the petitioner asked respondent No. 3 to

invest in the project and it represented to the respondent that it had full authority to

act on behalf of RPL and he had Board resolution in his favour to enter into a deal.

The petitioner induced respondent to buy 74 per cent share in his Special Purpose

Vehicle (SPV) for ` 185 crore and received an advance payment of ` 40.00 crore on

behalf of RPL. It was represented to respondent No. 3 that RPL would transfer 250

acres of land owned and controlled by the petitioner to SPV when final SEZ

notification from Government of India is received. A Memorandum of Understanding

(MoU) was signed on 18th June, 2007 and advance payment of ` 40.00 crore was

received by the petitioner in cheques. It was a condition that this advance payment

of ` 40.00 crore would be refunded back to respondent No. 3 in case no SEZ

notification was received by 31st December, 2008. A resolution signed by the

petitioner and other Director Mr. D.K. Jain and land map of 250 acres signed by the

petitioner was made part of the MoU. The petitioner received another amount of `

3.00 crore from the respondent No. 3 towards this MoU. On 19th February, 2008

RPL also signed Shareholders' Agreement with respondent No. 3 and an FDI

investor Xander with the condition that Shareholders Agreement will come into effect

only if the final SEZ notification was issued by 31st December, 2008. It was agreed

that in case no SEZ notification comes into force by 31st December, 2008, either the

amount of ` 43.00 crore invested by the respondent No. 3 would be refunded or the

land of 250 acres would be transferred in the name of respondent No. 3 on receiving

the balance amount of consideration as per MoU. However, not only that notification

was not received by 31st December, 2008, but, a public notice was issued by Mr.

D.K. Jain in the Times of India on 31st December, 2008 itself, i.e. the date for

refunding back the amount to respondent No. 3, revoking all authority given to

petitioner to act on behalf of RPL. In September, 2009, the petitioner had published

his own public notice that RPL had 99 years lease agreement with D.K. Jain's land

owing company for 250 acres of land and also had an Agreement to Sell in his favour

for the entire land which he claimed were signed much before entering into the deal

with the respondents. When respondent No. 3 demanded back his amount of `

43.00 crore, this was not given back. Thereafter respondent No. 3 learnt that the

petitioner had made a false statement to respondent No. 3 in respect of land itself in

order to cheat the petitioner and the petitioner had also mis-represented that amount

of ` 43.00 crore given by the respondent No. 3 shall be utilized for acquiring land.

This amount was siphoned off by the petitioner and Mr. D.K. Jain together.

4. Respondent No. 3 did investigation of the facts at its own and came to know

that the petitioner did not have 250 acres of land at its disposal as was stated at the

first instance and the actual land at the disposal of the petitioner was only 170 acres.

However, approval letter from the authority was obtained by mis-representing that the

petitioner had at its disposal 250 acres of land. The minimum requirement for

Industrial SEZ was 250 acres of land and the petitioner had an intention to cheat right

from the beginning when it mis-represented to the respondent that it had 250 acres of

land at its disposal while actually it was having only 170 acres of land. The petitioner

then represented to respondent No. 3 that it had made a payment of ` 32.5 crore to

M/s R.C. Developers in Delhi to buy additional land in Gurgaon to complete 250

acres of land. This representation was also found false by Economic Offence Wing

(EOW) and M/s. R.C. Developers denied that it ever received ` 32.5 crore from the

petitioner or RPL.

5. The investigation done by the EOW shows that the petitioner had, from the

very beginning, a dishonest intention. It had mis-represented that it had 250 acres of

land. ` 43.00 crore taken from respondent No. 3 was diverted to the pocket

companies of Mr. D.K. Jain and petitioner and was mis-appropriated. This amount

was not utilized towards purchase of land. The petitioner had entered into a MoU

with a company at Bombay called M/s Pan Card Club for same SEZ and it had taken

` 30.00 crore advance from them also. It was also revealed that part of the same

250 acres of land was given as collateral security by one of D.K. Jain's controlled

companies for obtaining ` 22.00 crore loan from State Bank of Mysore contrary to

Memorandum of Understanding.

6. It is argued by counsel for the petitioner that the petitioner had a 99 years

lease agreement in respect of 250 acres of land. When counsel for the petitioner

was asked to show 99 years lease agreement, it was found that lease agreement

was a junk of paper, since the lease agreement was not registered and an

unregistered lease agreement confers no title and does not create any lease. It was

admitted by counsel for the petitioner that though MOU mentioned 250 acres of land

but actual land available at the disposal of the petitioner was only 170 acres of land

and not 250 acres of land. It was stated by petitioner that Mr. D.K. Jain, the other

Director of the company had mis-represented to petitioner about the land holding and

the petitioner was not aware that only 170 acres of land was available.

7. It is submitted that entire transaction was of civil nature. These transactions

were entered by the complainant/respondent No. 3 with open eyes and equal

bargaining power. There was no default on the part of the petitioner. The

transaction had gone sour merely because the transaction could not go through and

it does not amount to a criminal act.

8. It is an admitted fact that the company of Mr. D.K. Jain and petitioner made

deliberate false representations. While the land available with the petitioner was not

250 acres, it was falsely represented to the Government, for taking approval in

principal for establishing SEZ, that it had 250 acres of land available. It is not denied

that petitioner entered into an Memorandum of Understanding with M/s Pan Card

Club, Bombay. It has also not been denied that part of this land was mortgaged by

one of the companies of Mr. D.K. Jain to raise loan. It has also not been denied that

despite receiving Rs. 43.00 crore from the respondent No. 3, no amount was utilized

for purchasing the land as per Memorandum of Understanding and no documents of

purchase of land were even prepared. It is not denied that amount of Rs. 43.00 crore

was transferred to companies/firms of D.K. Jain and that of petitioner and the amount

was not returned to Respondent No. 3 despite no notification of SEZ was received by

31st December, 2008 nor an offer of return of amount was made to respondent No. 3.

It seems that a false fight was put up by the petitioner and D.K. Jain in order to play

fraud to respondent No. 3. It is not a case where only civil action was warranted. It is

a case where partners/Directors had fraudulent intention from the very beginning. I

find no reason to quash this FIR. The petition is dismissed.

November 11, 2010                                    SHIV NARAYAN DHINGRA, J.
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