Reserve Bank Of India vs M/S Jvg Finance Ltd
2012 Latest Caselaw 5470 Del

$~34
*    IN THE HIGH COURT OF DELHI AT NEW DELHI

%                           Date of Judgment:12.9.2012

+             CA No.425/2007 in C.P. No.265/1998


       RESERVE BANK OF INDIA       ...........Petitioner
                    Through: Mr.A.K.Babbar, Advocate for the
                             applicant.
                             Ms.Swati Setia, Advocate for the
                             RBI.

                   Versus

       M/S JVG FINANCE LTD.                 ...........Respondent
                     Through:         Mr.Rajiv Bahl, Advocate for the
                                      Official Liquidator.
                                      Mr.Shailendra Singh, Advocate
                                      for Mr.V.K.Sharma, Ex-Director
                                      of JVG Finance Ltd.
                                      Mr.V.K.Tandon, Advocate for
                                      EOW.

       CORAM:
       HON'BLE MS. JUSTICE INDERMEET KAUR

INDERMEET KAUR, J. (Oral)

1 The applicant is Anup Rawla; his submission is that he is in legal

possession of 40 Indira Vikas Patras (IVPs) No.58 C 036541 to 036580

valued at Rs.5,000/- each; these IVPs had been given to him by M/s

Hoffland Finance Ltd. as a security for a loan which had been advanced

by the applicant to M/s Hoffland Finance Ltd.; the loan advanced by

him to M/s Hoffland Finance Ltd. was Rs.1,70,000/-; this was on

12.7.1997. Submission is that pursuant to an advertisement issued on

12.6.1997 by M/s Hoffland Finance Ltd. he had given a loan of

Rs.1,70,000/- to the said company. Receipt of the aforenoted amount by

M/s Hoffland Finance Ltd. dated 12.6.1997 is on record; this amount is

also reflected in the bank account of the applicant showing that a sum of

Rs.1,70,000/- has been paid to M/s Hoffland Finance Ltd. Cheque

issued by M/s Hoffland Finance Ltd. in the sum of Rs.30,600/- dated

12.9.1998 as part payment stood dishonoured. The 40 IVPs in physical

possession of the applicant in the denomination of Rs.5000/- each are

also on record. Submission of the applicant that he is entitled to get

these IVPs encashed and the objections raised by the Official Liquidator

has no merit in view of the fact that the applicant was a bonafide holder

of this negotiable instrument; the rules and procedure for encashment of

an IVP's clearly show that whoever is the holder of the IVP is entitled to

the amount contained therein. At the time when this transaction took

place between the applicant and the M/s Hoffland Finance Ltd. which

was in April 1997 there was no proceedings for the winding up of M/s

Hoffland Finance Ltd.

2 The objections raised by the Official Liquidator in his reply have

been perused. Submission is that in terms of the report of the SFIO it

has been noted that these IVPs have been purchased out of the fund of

JVG Finance Limited which is a company in liquidation; the Managing

Director of JVG Finance is Mr.V.K.Sharma who is none other but

brother of Mr.B.B.Sharma who is Managing Director of M/s Hoffland

Finance Ltd. Mr.B.B.Sharma has no authority to deal with the IPVs

which had been purchased out of the fund of the JVG Finance Ltd.

3 The report of the SFIO is on record. In this report it has been

clearly been stated that the IVPs (subject matter of the present petition)

had been purchased out of the funds of M/s JVG Finance Ltd. There is

also no dispute to the factum that Mr.B.B.Sharma, Chairman of M/s

Hoffland Finance Ltd. is elder brother of Mr.V.K.Sharma who is

Managing Director of M/s JVG Finance Ltd. The report of the SFIO

goes on to state that since the financial position of M/s JVG Finance

Ltd. was not good it had passed on these IVPs to M/s Hoffland Finance

Ltd. and M/s Hoffland Agro who in turn collected the money against the

IPVs. M/s Hoffland Finance Ltd. was wound up on 03.4.2003.

Advertisement effected by M/s Hoffland Finance Ltd. on 12.6.1997

inviting investments from public is on record; pursuant thereto the

applicant had paid a sum of Rs.1,70,000/- to the company which was a

bonafide investment made by an innocent and bonafide person; he was

unaware of any interse clandestine dealings between the two brothers

i.e. Mr.V.K.Sharma, Managing Director of M/s JVG Finance Ltd. and

Mr.B.B.Sharma, Managing Director of M/s Hoffland Finance Ltd.. The

IPVs are in physical possession of the applicant. He is a "holder in due

course" in terms of Section 9 of the Negotiable Instruments Act.

"Holder in due course" means any person who for consideration became

the possessor of a promissory note, bills of exchange or cheque if

payable to bearer. In the instant case the applicant has become a holder

for consideration; these IVPs have been handed over to him by M/s

Hoffland Finance Ltd. for the loan of Rs.1,70,000/- which he had

advanced and which is evident from the documentary evidence filed by

him. The applicant had no reason to believe that there was any defect in

the title of these IVPs or that the person who was given these documents

to him was himself not a bonafide holder; the applicant has to be

protected.

4 Accordingly, the prayer made in the present application is

allowed. The application is permitted to encash his IVPs from the post

office Meerut.

5 At this stage, learned counsel for the Official Liquidator points

out that if this amount is permitted to be withdrawn by the applicant,

this being an act of misfeasance on the part of the director of M/s

J.V.G.Finance Ltd. and M/s Hoffland Finance Ltd., he be permitted to

incorporate this amount in the misfeasance proceedings which he had

filed against M/s J.V.G.Finance Ltd. The Official Liquidator is

permitted to incorporate this amount if so permitted by law.

6 With these directions this application is disposed of.

INDERMEET KAUR, J

SEPTEMBER 12, 2012 nandan