Usha Rani Rustagi & Anr. vs State Nct Of Delhi & Anr.
2010 Latest Caselaw 4900 Del

                * IN THE HIGH COURT OF DELHI AT NEW DELHI

                                             Date of Reserve: September 27, 2010
                                                  Date of Order: 25th October, 2010
+ Crl.M.C.No. 2931/2009
%                                                                      25.10.2010

        Usha Rani Rustagi & Anr.                          ... Petitioners
                          Through: Ms. Deepti Kathpalia, Advocate
                          & Ms. Sima Gulati, Advocate

                Versus


        State NCT of Delhi & Anr.                          ... Respondent
                           Through: Mr. O.P.Saxena, APP for the State
                           Mr. Shashi Shankar, Advocate for R-2


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

By this petition, the petitioners have assailed order dated 19th

May, 2009 whereby on an appeal filed by the respondent no.2, the order

dated 4th February, 2008 passed by the learned ACMM discharging the

petitioners was set aside.

2. Brief facts relevant for the purpose of deciding this petition are

that the husband of petitioner no.1 was running a proprietorship firm in the

name of M/s V.S.Rustogi & Co. This firm was dealing in buying/selling of

securities and shares trading. The complainant/respondent no.2 had

purchased shares of ZeeTele and Satyam Computers through M/s

V.S.Rustogi & Co. These shares were still lying with the company when Mr.

Suniti Kr. Rustogi (husband of petitioner no.1) died on 8th January, 2002.

After his death Mrs. Usha Rustagi and Mr. Sushil Ratan Rustagi wife and son

of the deceased continued the same business in the name of M/s Usha Rani

Rustagi & Co., which was a pre-existing proprietorship firm of the wife of the

deceased. The allegations of the complainant/respondent against Mrs. Usha

Rani Rustagi and Mr. Sushil Ratan Rustagi are that he (complainant)

requested them to transfer his shares in his demat account but they did not

transfer these shares and took the plea that they had applied for succession

certificate of M/s V.S.Rustogi & Co. and would be able to transfer shares in

his demat account after obtaining succession certificate. Complainant

submitted that another company in the name of M/s Rustogi Securities

Limited issued him two slips dated 29th July, 2004 and 11th August, 2004

indicating that it had sold his shares. He alleged that he had not given

consent to sell his shares. He also had purchased 44 shares of Reliance

Industries Ltd. and had a credit balance of ` 70,796/-. Neither the shares nor

the money was paid to him in spite of repeated requests.

3. The respondent had also lodged another FIR No. 387/2004 PS

Anand Vihar against the petitioners and thereafter a compromise had taken

place between petitioners and respondent. A memorandum of settlement was

prepared between the parties and in terms of this settlement the, respondent

settled his accounts with the petitioners. After MoU FIR No. 387/2004 was

compounded however, the complainant in this case appeared before the

Court of MM and submitted that the compromise/memorandum of settlement

was not voluntary and the accused/petitioners had not only misappropriated

shares but did not pay the dividend and the interest. The learned MM

observed that during investigation investigating officer had collected evidence

about sale of shares and it was revealed that 44 shares of Reliance Industries

Ltd., 150 shares of Satyam Computers and 50 shares of ZeeTele were sold

for a total sum of ` 73,935.70 after deducting brokerage charges and other

charges. On 27th July, 2004 and on 10th August, 2004, 450 shares of ZeeTele

were sold for a sum of ` 59,500/- after deducting the brokerage charges. The

debit and credit balance of the firm/company in respect of respondent was

collected and it showed that after settlement of account a cheque of `

64,590.20 was handed over to the complainant and the complainant was also

informed that shares of HUL would be deposited in his demat account after

shares were transferred in the name of M/s Usha Rustagi & Co. on obtaining

succession certificate. The statement of account dated 4th May, 2002 showed

a credit balance of ` 22,77,835.27 in the account of complainant and

contained details of HUL shares worth ` 24,50,000/-. After adding the two

credit balance of ` 70796.23 and ` 22,77,835.27 and debit sum of `

24,50,000/- (in respect of HUL shares of ` 24,50,000/-), the final figure came

out to ` 1,01,819/- as debit balance.

4. The correspondence between the petitioner and respondent

showed that the petitioner had been maintaining proper accounts and had

been accounting for sale/purchase of the shares on behalf of the respondent.

In view of this evidence, the learned trial Court had come to the conclusion

that no case under Section 409 IPC was made out and therefore discharged

the accused. The learned ASJ observed that the shares were entrusted to

deceased Mr. Suniti Kr. Rustogi proprietor of M/s V.S.Rustogi & Co. but after

his death his firm was taken over by his successors and the name of the firm

was changed from M/s V.S.Rustogi & Co. to M/s Rustogi Securities Ltd. and

without obtaining consent of the appellant the new firm sold his shares, thus

the act of petitioner attracted not only the criminal liability under IPC but also

under provisions of Securities Exchange Board of India Act, 1992 and

Information of Technology Act, 2000. He therefore set aside the order of

learned ACMM.

5. A perusal of order of learned ASJ would show that learned ASJ

had not applied its mind to the facts of the case at all and had not dealt with

the analysis of the facts done by learned ACMM. It is surprising that the

learned Additional Sessions Judge had come to the conclusion that provisions

of SEBI Act and provisions of Information of Technology Act would also be

attracted but the order is conspicuously silent as to how these provisions are

attracted and which provisions of SEBI Act and Information of Technology Act

were attracted.

6. If it is presumed that the respondent had entrusted shares to

deceased Mr. Suniti Kumar Rustagi, it is clear that the respondent was buying

and selling shares through the firm of the deceased. It is his own case that

shares of HUL were bought by him, the firm of the deceased was only liable to

maintain account of purchase and sale of shares on behalf of respondent. No

doubt a firm dealing with the securities has to act on the advice of the client.

Merely because the respondent alleged that his shares were sold without his

directions cannot be a ground for invoking Section 409 IPC more so when the

respondent had entered into a compromise and had received the balance

amount lying in his account. Plea taken by the respondent that compromise

was not voluntary could not have been entertained because on the basis of

same compromise the respondent had compounded another FIR of similar

allegation. I, therefore consider that the learned ACMM had rightly come to

the conclusion that no charge under Section 409 IPC was made out and it

was a case of civil nature and in case there was any amount still due against

dividend and interest, the complainant was free to recover the same through

civil proceedings. No commission of the alleged offence was made out.

7. I, therefore allow this petition. The order dated 19th May, 2009

of learned ASJ is hereby set aside. The order dated 4th February, 2008 of

learned ACMM is restored.

October 25, 2010                   SHIV NARAYAN DHINGRA, J.
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