Delhi High Court
Mukesh Bhargava vs Official Liquidator & Ors. on 24 November, 2015
* IN THE HIGH COURT OF DELHI AT NEW DELHI
+ CO.APP. 3/2014
% Date of decision : 24th November, 2015
MUKESH BHARGAVA ..... Appellant
Through: Mr. Jayant K. Sood, Mr. Pranshu
Dhingra and Mr. Honey Khanna,
Advs.
versus
OFFICIAL LIQUIDATOR & ORS. ..... Respondent
Through: Mr. Rajiv Bahl, SC for R-1
Mr. P.D. Gupta, Adv. for R-2
+ CO.APP. 9/2014 & CM Nos.3266, 3267/2014, 5251/2015
ANIL BHARGAVA & ANR. ..... Appellant
Through: Mr. Ravinder Singh and
Mr. Atul Sahi, Advs.
versus
SMT. SUDESH MADHOK & ORS. ..... Respondent
Through: Mr. P.D. Gupta, Adv. for R-1
Mr. Rajiv Bahl, SC for Official
Liquidator
CORAM:
HON'BLE MS. JUSTICE GITA MITTAL
HON'BLE MR. JUSTICE I.S.MEHTA
JUDGMENT (ORAL)
GITA MITTAL, J
1. The appellants in these two cases assail the order dated 20th
November, 2013 passed in Co.Pet.No.100/1999, Co.
App.No.1015/2004 and Report No. 857/2013 filed by the Official
Liquidator.
2. It appears that winding up proceedings were initiated at the
instance of Smt. Sudesh Madhok in respect of affairs of M/s Pushkar
Trading Co. Ltd., inter alia on the grievance that it had failed to return
admitted dues of Rs.70 lakhs which had been advanced as a loan.
During the course of these proceedings, allegations surfaced that
Pushkar Trading Co. Ltd. had transferred the said amount to M/s
Paam Pharmaceuticals (Delhi) Ltd. The appellants in these two
appeals are stated to be directors of M/s Paam Pharmaceuticals
(Delhi) Ltd. (since wound up by orders of the Rajasthan High Court).
With regard to the grievance made by the petitioning creditor, an
investigation to be conducted into the transactions complained of by
the Serious Fraud Investigation Office ('SFIO' hereafter) was ordered
by the Company judge vide order dated 24th February, 2012.
3. The SFIO filed a report dated 19th November, 2012 rejecting
the explanation and the contentions of the appellants and
recommending that the appellants had committed the offence of
criminal breach of trust rendering them liable to be punished under
Section 405 of the IPC punishable under Section 406 thereof with
Section 120B of the Indian Penal Code amongst other actions.
4. The appellants were furnished copies of the report and were
granted time to respond to the same. The appellants in both these
appeals filed objections in writing before the learned Company Judge.
5. The report of the SFIO as well as these objections were listed
before the court on 20th November, 2013 when the learned Single
Judge was of the opinion that there could not be two trials with regard
to the same allegations and therefore, if the objections were decided
on merits in the winding up proceedings and the case referred to trial,
observations of the court would cause prejudice to the accused
persons i.e. appellants herein. The court consequently refrained from
adjudicating upon the objections. Liberty was given to the appellants-
formal directors of the company to place their case before the criminal
courts who would decide the same on its own merits without being
influenced by the observations of the court. The order dated 20th
November, 2013 has been assailed before us.
6. We find that prior to making these observations in the
impugned order, the learned Company Judge has noted paras 9, 10
and 11 of the report of the SFIO. Thereafter, in view of the findings
of the SFIO in these paragraphs, granted permission to the Official
Liquidator to file an FIR. Therefore, the later observations that the
court was not adjudicating upon the merits of the recommendations,
lost significance in view of the approval having been granted by the
learned Single Judge to the findings of the Supreme Court as recorded
in paras 9, 10 and 11 of the aforesaid noticed report.
7. Before us, Mr. Jayant Sood, learned counsel for the appellants
in Co.App.No. 3/2014 and Mr. Ravinder Singh, learned counsel
appearing for the appellant in Co.App.No.9/2014 have contended that
their objections not only relate to the merits of the observations and
findings in the report of the SFIO but also raised jurisdictional
objections to the maintainability of the criminal prosecutions. It was
contended that the entire thrust of the transactions as noted by the
SFIO also shows that it was a pure and simple loan transaction and
therefore, no criminality could be attached for any breach or violation
thereof. Learned counsel for the appellants have submitted that
though they had been directors at some point or the other of the
companies, however, they were not concerned with the management
and in any case, there was no material at all to show their involvement
with the transaction which was the subject matter of the investigation.
Learned counsels have also contended that there was no material at all
available on record to show that ingredients of Sections 405 and 406
as well as Section 120B of the IPC were satisfied which could
indicate implication of the appellants for commission of such offences
in a criminal prosecution. It is urged that consequently, the entire
recommendations of the SFIO were without any basis and the
direction to register the FIR was not warranted.
8. The appellants would also contend that the recommendations
regarding implication for commission of the stated offences as well as
for prosecution of the appellants had been effected by the SFIO in a
mechanical manner without application of mind.
9. It is necessary to bear in mind that registration of the FIR as
well as implication for commission of criminal offences would have
serious consequences. Any proceedings, prior to the trial before a
court of competent jurisdiction, would obviously be taking a prima
facie view only. In as much as, the appellants were urging
jurisdictional issues which go to the root of the matter and had
actually sought adjudication thereof before the learned Company
Judge, no prejudice would have resulted if these aspects of the matter
especially those relating to the law which applied, whether civil or
criminal, amongst others, could have been gone into without
imperilling the defence of the appellants. The rights of the appellants
qua the criminal prosecution could have been protected by noting that
the observations were of a prima facie nature.
10. Before us also, the appellants contend that they are entitled to
consideration of the objections without prejudice to their defence in
the criminal trial.
11. It is further contended by Mr. Ravinder Singh, learned counsel
for the appellant that the petitioning creditor had prosecuted only the
appellants in Co.App.No.9/2014 for commission of offences under
Section 138 of the Negotiable Instruments Act and that pursuant to a
settlement reached therein, the agreed amounts stand paid to the
creditor.
12. It may be noted that Mr. Rajiv Bahl, learned Standing Counsel
on behalf of the Official Liquidator and Mr. P.D. Gupta, learned
counsel who represents the petitioning creditor in the winding up
proceedings submit that they dispute the merit of the objections raised
by the appellants. We are of the view that the appellants are entitled
to a consideration of their objections to the report of the SFIO before
a view is taken thereon and direction made. These objections to the
report of the SFIO deserve to be considered by the learned Company
Judge at the first instance. We are refraining from opining on the
conduct of the appellant.
13. In view of the above, it is directed as follows :-
(i) The orders dated 20th November, 2013, impugned in these
appeals, are hereby set aside.
(ii) The parties shall appear before the learned Company Judge on
7th December, 2015 for fixation of a date when the objections
of the appellants to the report of the SFIO would be taken up
for consideration.
(iii) We make it clear that nothing herein contained is an expression
of opinion on the merits of either the observations and
recommendation in the SFIO's report or the objections of the
appellants thereto.
Co. Appeal Nos. 3/2014 and 9/2014 are allowed in the above
terms. CM Nos. 3266, 3267/2014 and 5251/2015 are consequently
disposed of.
GITA MITTAL, J
I.S.MEHTA, J
NOVEMBER 24, 2015
kr
