Kalpesh Bhanudas Vaishnv and Ors. Vs Dilipsinha… — Consumer Protection | Bombay HC (2009)

Kalpesh Bhanudas Vaishnv and Ors. Vs Dilipsinha… — Consumer Protection | Bombay HC (2009)

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IN THE HIGH COURT OF JUDICATURE OF BOMBAY BENCH AT AURANGABAD

CRIMINAL APPLICATION NO.1017 OF 2009.

1)Kalpesh s/o Bhanudas Vaishanav
Age: 29 Yrs., occu. Service.
UNICON Securities Pvt.Ltd.
187, Polan Peth, 2nd Floor,
Jalgaon, Dist. Jalgaon.

2)Shri Trinadha Kiran V.
Age: 34 Yrs., occu. Service
Sovereign NV Securities Pvt.Ltd.,
45/90, Cannought Circus,
New Delhi.

3)Gajendra Nagpal
Age: 40 Yrs., occu. Service.
Chief Executive Officer,
UNICON Securities Pvt. Ltd.,
2nd Floor, Regal Building,
Cannought Circus,
New Delhi.

4)Smt. Anjali Mukhija
Age: 40 Yrs., occu. Service.
UNICON Financial Intermedias
Pvt.Ltd., 69, 2nd Floor,
Regal Building,

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Cannought Circus,New Delhi.

5) Sanjay Kumar Dube Age: Yrs., occu. Service, UNICON SECURITIES PVT. lTD., 2ND floor, Regal Building, Cannought Circus, New Delhi.

6) Smt. Gurvindar Kaur Age: 40 Yrs., occu. Service, UNICON Securities Pvt. Ltd., 2^nd Floor, Regal Building, Cannought Circus, New Delhi.

7)Shri Dinesh Sheravat,
Age: Yrs., occ. Service,
Compliance and Legal Officer,
UNICON Securities Pvt. Ltd.,
2nd Floor, Regal Building,
Cannought circus, New Delhi.

8)Nilesh Vyavahare
Age: 38 Yrs., occu. Service,
UNICON Securities Pvt. Ltd.
Patil Plaza, 2nd Floor,
Canada Corner, Nashik.

9) Virender Rajender Mishra Age: 31 Yrs., occu. Service,

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UNICON Securities Pvt. Ltd.,
187, Polan Peth, 2nd Floor,
Jalgaon.- PETITIONERS

 VERSUS

1)Dilipsinha Narayanrao Patil
Age: 79 Yrs., occu. Pensioner,
r/o Roopganga Colony,
Ganeshwadi, Jalgaon,
Tq. & Dist.Jalgaon.

2)Chairman,
Sovereign NV Securities Pvt.Ltd.
69, 2nd Floor, Regal Building,
Cannought Place, New Delhi.

3)Managing Director,
Sovereign NV Securities Pvt.Ltd.,
69, 2nd Floor, Regal Building,
Cannought Place, New Delhi.

4)Chairman,
UNICON Securities Pvt. Ltd.,
69, 2nd Floor, Regal Building,
Cannought Place, New Delhi.

5) Managing Director, UNICON Securities Pvt. Ltd., 69, 2^nd Floor, Regal Building,

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Cannought Place, New Delhi.
6)Abhay Suryawanshi,
UNICON Securities Pvt. Ltd.
187, Polan Peth, 2nd Floor,
Jalgaon, Tq. and District
Jalgaon.
7)Chairman,
Globe Capital Market Ltd.
609, Anasal Bhavan, 16,
K.G.Marg, Cannought Place,
New Delhi.
8)Managing Director,
Globe Capital Market Ltd.
609, Anasal Bhavan, 16,
K.G.Marg, Cannought Place,
New Delhi.- RESPONDENTS
*****
Mr.CK Shinde and Mr.Abhik Kumar, Advocates for
Petitioners;

Mr.AH Kapadia, Mr.VN Damale, Mr.AS Jondhale &
Mr.Hemant Pawar, Advocates for Respondent No.1.

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WITH

CRIMINAL APPLICATION NO. 1185 OF 2009.

1) The Chairman,

Globe Capital Market Ltd.

2) The Managing Director, Globe Capital Market Ltd.,

Applicant Nos. 1 and 2
r/o C/o Globe Capital Market Ltd.
609, Ansal Bhavan, 16, KG Marg,
Cannought Place, New Delhi
11001.

Through Mr.Mahesh Shriniwas Dagdiya
B 12, First Floor, Shri Gajanan
Vaibhav Complex, Cannought Place,
CIDCO, Aurangabad...APPLICANTS
 (orig. accused nos.
7 and 8 )

VERSUS

1)The State of Maharashtra
Through Police Inspector,
Zilla Peth Police Station,
Jalgaon.

2) Dilipsinha s/o Narayanrao Patil Age: 79 Yrs., occu. Pensioner, r/o 19, Rupganga Colony,

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Ganeshwadi, Jalgaon.

 (Resp.No.2 is orig
 complainant)

Mr.Swapnil S. Patil, Advocate for Applicants;
Mr.KM Suryawanshi, APP for Resp.No.1-State;
Mr.Mr.AH Kapadia, Mr.AS Jondhale & Mr.Hemant
Pawar, Advocates for Respondent No.2.

***

CORAM : K.U.CHANDIWAL, J.
DATE : 29th August, 2009.

ORAL JUDGMENT :

.Rule, Rule made returnable forthwith, by
consent of parties, matter is heard finally at
admission stage.

2)Issuance of process for an offence under
Sections 406, 408, 420, 471 r/w 34 of IPC, by
order dated 27.2.2009 by learned Chief Judicial
Magistrate, Jalgaon in Criminal Case No. 679/2008
is subject of challenge at the instance of the
original accused as they contend that the
proceedings are sheer abuse, it is a civil
contract between the parties, remedies to the

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complainant are before the Consumer Forum and
even before the National Stock Exchange. The
complainant has the forum of arbitration
available in terms of the agreement between the
parties and hence, to reiterate quashment.

FACTS:

3)The complainant is a retired senior

citizen, since 14-15 years he has entered into

the transaction of purchase and sale of shares.
The local representative of Unicon Securities
Pvt. Ltd. (accused herein), approached him in
August, 2007, represented that said company deals
in securities,like shares and company is Share
broker. The complainant believed and accepted the

rate of brokerage in respect of Future Option at
1 paisa for Rs.100/- and 10 paisa for Rs.100 in
respect of shares.

4)The complainant was informed that the
software of the company is complete in all
respects. There will be no impediment in entering
into the transactions, including placing orders
for Future Option as per the market rate.

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Purchase and sale at market rate could have been

placed with current market rate. The DEMAT
account of the complainant was opened with Glob
Capital Market Ltd. There was an agreement
entered into by the complainant with four
accused. It was a printed form and signed at
the residence of the complainant on 24.8.2008 and
there was another form for correspondence.
Signatures of the complainant were obtained on
Account Opening Form for DEMAT.

5)On 3.9.2007, Complainant received a

Welcome letter on Letter head of Unicon company.
However, it was purportedly signed by officers of
Sovereign NV Securities Pvt. Ltd. (hereinafter

referred to as Sovereign Securities). The
complainant asserts that he had the transaction
of purchase and sale with Unicon company and
based on their advise, he was dealing with them.

6)The complainant believed in the
representations made by the company and entered
into several transactions.

7)It is thus clear, there was an agreement

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dated 24.8.2007 by the complainant with Unicon

securities. It was based on the terms reduced in

writing to which naturally both the parties are

bound to abide. There was ID number issued in

favour of the complainant being ID No. JL76, it

was a duly signed contract note for both cash
markets and Future Option segments.

8)It was on 18.1.2008, the complainant

placed an order for purchase of lot of 50 shares
of ABAN OFFSHORE @ Rs.4,450/- per share and

accordingly his order of purchase came to be
executed. There was crash in the market.

Consequently, the complainant desired that the

shares, which he has purchased, should be
immediately sold, which request he has made at

3.12.56 hrs. on the very day. His
request/proposalcouldnotbe

effected/materialized as the computer indicated

remark “Exposure not available”. This made the
complainant to suffer financial losses. He feels,
he has been deceived.

9)The complainant approached the Police,

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he got negative answer. Then he approached the
District Consumer Forum, Jalgaon in December,
2008. He approached the Investor Service Cell on
3.2.2009. The Investor Services Redressal Cell
attended the report/grievance of the complainant
and having regard to the nature of the grievance,

informed him, to pursue his matter to the
arbitration,ifhesodesiresby

letter/communication dated 10.2.2009.

SUBMISSIONS:

10)There was deception initially as the

agreement form was of Sovereign Securities while
the transaction is alleged to have been entered
into with Unicon Securities. The change in the

status of the company was dated 11.5.2007.
However, the agreement dated 24.8.2007 referred
to Sovereign securities.

11) The company has placed on record, at
Exhibit-F, page 66, the Change in its name and
issuance of fresh Certificate of Incorporation,

consequent upon the change of name of the
Corporate identity. Mr. Shinde informs, there

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is no controversy of any liability, even in

between Sovereign Securities and Unicorn

securities, the Directors are the same, the

office address is the same.

OBSERVATIONS:

12)If one reads the complaint, there is no

grievance about the status of Sovereign
Securities or Unicon securities, resulting in any
misunderstanding or deception or cheating to the
complainant.

13)The matter revolves to the agreement
dated 24.8.2007. Both the parties are bound to
act in terms of the agreement and in the
agreement, in unequivocal terms, the liabilities

of the complainant and the risk factors involved,
are spelt out.

14)Clause 13 conceive, - “The client and

the stock broker agree to refer any claims and/or
disputes to arbitrator as per the Rules, bylaws
and Regulations of the Exchange and Circulars
issued thereunder, as may be in force from time
to time.”

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15)The grievance of the complainant is sale

was not allowed to operate on 18.1.2008 when it

was intra-day transaction of purchase and sale,
it was rightly not done as complainant was not
authorized for direct dealing of sale and
consequently, the computer indicated - “Exposure
not available”. I find from the record that it is

not for the first time that on 18.1.2008 the
complainant got such indication, but it was even
in December, 2007 when he acted in similar manner
contrary to the terms of the agreement, he was
faced with the same brunt. Thus, Complainant’s
grievance of non-providing direct access was not
shocking as he knew his limits of operation. The
contention of the complainant that not allowing

him to sell the shares on that particular day by
itself amount to cheating, in the fact situation,
is a eyewash to pursue criminal prosecution to
create pressure and cloak for civil liability.

16)The complainant, as stated earlier, has
approached to Securities Exchange Board of India
(for short, SEBI) by his letter dated 21.4.2008.

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The matter has been dealt with at the level of
National Stock Exchange (NSE), who by their
letter dated 7.8.2008, on hearing both sides
informed, to pursue arbitration mechanism, which
is quasi-judicial process for redressal of
complaint between Investor and the Trading member
or the sub-broker. The complainant was advised to
opt for such mechanism. But the complainant did
not adhere to that system.

17)Reading the complaint as a whole, I find
that no such eventuality is carved out by the
complainant, enabling him and the learned Chief
Judicial Magistrate to issue process against the
Directors of the Company.

Sections 406, 408, 420, 471 are as under -

“406. Punishment for criminal
breach of trust - Whoever
commits criminal breach of
trust shall be punished with

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imprisonmentofeither
description for a term which
may extend to three years, or
with fine, or with both. ”

“408. Criminal breach of trust
by clerk or servant - Whoever,
being clerk or servant or
employed as a clerk or servant,
and being in any manner
entrusted in such capacity with
property, or with any dominion
over property, commits criminal
breach of trust in respect of
thatproperty,shallbe
punished with imprisonment of
either description for a term
which may extend to seven
years, and shall also be liable
to fine. ”

“420. Cheating and dishonestly
inducing delivery of property -
Whoever cheats and thereby
dishonestly induces the person
deceivedtodeliverany
property to any person, or to
make, alter or destroy the
whole or any part of a valuable
security, or anything which is
signed or sealed, and which is

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capable of being converted into
a valuable security, shall be
punished with imprisonment of
either description for a term
which may extend to seven
years, and shall also be liable
to fine. ”

“471. Using as genuine a forged
document -Whoever fraudulently
or dishonestly uses as genuine
any document which he knows or
has reason to believe to be a
forged document, shall be
punished in the same manner as
if he had forged such document.
”

19)One of the contentions raised was about

selling the shares without any authority or
reason. However, this is no so. That, in-built
agreement at clause 9 thereof permits the share
broker to liquidate the shares or securities for

recovery. Consequently, such liquidation, at the
behest of the company, like Glob Capital Market
Ltd., will not by itself be contrary to the terms
or will not attract penal provisions.

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20)One of the submissions canvassed was of

suppression of facts as the petitioner in
Criminal Application No.1185/2009, had approached

the learned Chief Judicial Magistrate on 2nd
April, 2009, for discharge by application and

present petition is tendered on 8.4.2009.
Paragraph 6 of the petition solemnly indicates
that there is no such identical petition pending
or filed. I quite see that the discharge
application is subsequently not pressed by
endorsing on it on 16.4.2009. However, the fact

remains there was such discharge application
moved though not signed by accused no.7, or 8,

but the power was signed by accused no.8 alone.

This discharge application by virtue of
subsequent development was withdrawn.

21) In the matter of M/s Prestige Lights India Ltd. Vs. State Bank of India, reported in 2007 (8) SCC 449, in paragraph 33, thereof, the

Hon’ble Lordships have observed -

“33. It is thus clear that

though the appellant- Company
had approached the High Court

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under Article 226 of the
Constitution,ithadnot
candidly stated all the facts to
the Court. The High Court is
exercising discretionary and
extraordinary jurisdiction under
Article 226 of the Constitution.
Over and above, a Court of Law
is also a Court of Equity. It
is,therefore,ofutmost
necessity that when a party
approaches a High Court, he must
place all the facts before the
Court without any reservation.
If there is suppression of
material facts on the part of
the applicant or twisted facts
have been placed before the
Court, the Writ Court may refuse
to entertain the petition and
dismiss it without entering into
merits of the matter.”

22)As stated above, paragraph 6 of the

petition is as under -

“6.The respondent no.1 further
alleged that UNICON Sovereign
and Globe Capital Market Company
Office bearers have thus in

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collusion of each other and in
order to have wrongful gain
induced me to invest the money
in share deposits and thereby
committedtheoffenceof
criminal breach of trust,
cheating, forgery etc. The
respondent no.1 alleged that he
sustained loss of Rs.57,992.50
in sale of shares of ABAN
OFFSHORE as his order of sale of
share was not booked and
channelized by assigning false
and incorrect reason exhibited
on the computed as “Exposure not
available”. The respondent no.
1 further alleged that, he made
complaint to SEBI however, in
vain. A complaint was also made
to Zilla Peth Police Station,
however, the police failed to
take cognizance and hence the
above said private complaint
case is filed in the court of
learned CJM, Jalgaon with a
prayer to prosecute and deal
with the accused persons for the
above said offences.”

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23)Learned Counsel representing Global

Capital Market Ltd. (Applicants in Criminal
Application No. 1185/2009)/ original accused nos.
7 and 8, informs, that as the petition came to be
filed before this Court by Unicon Securities on
25th March, 2009, accused nos. 7 and 8 approached

the Counsel and consequently the petition was

drafted, verified by the local authority of
accused nos. 7 and 8 on 8.4.2009 and it came to
be filed. There was no reason for the

petitioners/applicants to suppress the fact of
filing of earlier application dated 2.4.2009 with

any oblique motives and having learnt of defect
inadvertently making such application in terms of

Section 245 (2) Cr.P.C., on instructions, the

advocate representing the accused, had not
pressed the application, consequent upon which

the learned CJM Jalgaon made an endorsement on

16.4.2009 that the application for discharge is
not pressed and it be disposed of.

24)Though filing application before CJM

and subsequent in this Court needs, to be

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deprecated, however, in the light of explanation
offered and there is no deliberate intention to

sway away with the proceedings or to take benefit
at two Forums. The application is not pressed on
16.4.2009, while the first order of this Court
came to be passed on 28th April, 2009. The
mistake, will not germinate to rout the present
petition. It is not a vilification for any
gains, after 16th April, 2009.

25)The Counsel for the complainant placed

reliance to the Judgment of the Apex court in the matter of Ravindra Kumar Madhanlal Goenka & Anr.

Vs. M/s Rugmini Ram Raghav Spinners P.Ltd., reported in 2009 AIR SCW 3211. ; to the judgment

in the matter of Mahesh Choudhary Vs. State of Rajasthan and Anr. reported in 2009 AIR SCW 2449 ; and to the judgment of the Apex Court in the

matter of State of Punjab & Ors. Vs. Inder Mohan

Chopra & Ors. reported in 2009 AIR SCW 1521. These authorities deal with the inherent powers of the Court in terms of Section 482 of Cr.P.C.

The powers under Section 482 Cr.P.C. are to be

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exercised only if the complaint does not disclose
any offence or is frivolous, vexatious or
oppressive.

26) In the matter of Mahesh Choudhary (cited supra), the Hon’ble Lordships have observed in paragraphs nos. 13 and 14 are under :

“13. The principle providing
for exercise of the power by a
High Court under Section 482 of
the Code of Criminal Procedure
to quash a criminal proceeding
is well known. The court shall
ordinarily exercise the said
jurisdiction, inter alia, in
the event the allegations
contained in the FIR or the
Complaint Petition even if on
face value are taken to be
correct in their entirety, does
not disclose commission of an
offence.

14. It is also well settled
that save and except very
exceptional circumstances, the
court would not look to any
document relied upon by the

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accused in support of his
defence. Although allegations
contained in the complaint
petition may disclose a civil
dispute, the same by itself may
not be a ground to hold that
the criminal proceedings should
not be allowed to continue. For
the purpose of exercising its
jurisdiction,thesuperior
courts are also required to
consider as to whether the
allegations made in the FIR.
or Complaint Petition fulfill
the ingredients of the offences
alleged against the accused.”

27)The law, relating to exercise of powers

and scope of Section 482 Cr.P.C. is indicated in the Judgment of State of Haryana & Ors. Vs. Ch. Bhajan Lal & Ors. reported in AIR 1992 SC 604.

The seven categories incorporated therein read as
under -

“(a) where the allegations made
in the First Information Report
or the complaint, even if they
are taken at their face value

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and accepted in their entirety
do not prima facie constitute
any offence or make out a case
against the accused;
(b) where the allegations in the
First Information Report and
othermaterials,ifany,
accompanying the F.I.R.do not
disclose a cognizable offence,
justifying an investi- gation by
police officers under Section
156(1) of the Code except under
an order of a Magistrate within
the purview of Section 155(2) of
the Code;
(c) where the uncontroverted
allegations made in the FIR or
'complaint and the evidence
collected in support of the same
do not disclose 265 the
commission of any offence and
make out a case against the
accused;

(d) where the allegations in the
FIR do not constitute a
cognizableoffencebut
constitute only a non-cognizable
offence, no investigation is
permitted by a police officer

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without an order of a Magistrate
as contemplated under Section
155(2) of the Code;

(e) where the allegations made
in the FIR or complaint are so
absurd and inherently improbable
on the basis of which no prudent
person can ever reach a just
conclusionthatthereis

sufficient ground for proceeding
against the accused;

(f) where there is an express
legal bar engrafted in any of
the provisions of the Code or
the concerned Act (under which a
criminalproceedingis
instituted) to the institution
andcontinuanceofthe
proceedings and/or where there
is a specific provision in the
Code or the concerned Act,
providing efficacious redress
for the grievance of the
aggrieved party;

(g) where a criminal proceeding
is manifestly attended with mala
fide and/or where the proceeding
is maliciously instituted with

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an ulterior motive for wreaking
vengeance on the accused and
with a view to spite him due to
private and personal grudge.
[305D-H; 306A-E] 8.2. In the
instant case, the allegations
made in the complaint, do
clearly constitute a cognizable
offence justi- ï7 3 on and this
case does not call for the
exercise of extraordinary or
inherent powers of the High
Court to quash the F.I.R.
itself.”

28)Section 482 Cr.P.C. demonstrate, it is

acceleration of exercise in the following three
situations, viz.

(i) To give effect to an order under the Code;

(ii) To prevent abuse of process of Court;

(iii)To otherwise secure the ends of justice.
29)It is well settled, as indicated above,

inherent jurisdiction of this court though wide,
has to be exercised sparingly, carefully with
caution. The Court should not allow the criminal

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prosecution to be used as an instrument of

harassment and humiliation and oppression.

30)In this case, interse agreement between

the complainant and the accused provide a
specific mechanism of arbitration. There is no
element in the transaction, which could attract
infraction of penal provisions. The care is taken
by the competent authority under SEBI Act, 1992.

The member-client agreement makes out several
situations in terms of clauses 5, 29 and 34, as

under :

“5.Without prejudice to the stock
broker’s other rights (including the
right to refer a matter to
arbitration), the stock broker shall
be entitled to liquidate/close out
all or any of the client’s positions
for non-payment of margins or other
amounts, outstanding debts, etc. and

adjust the proceeds of such
liquidation/close out, if any,
againsttheclient’s

liabilities/obligations. any and all
losses and financial charges on
account of such liquidation/closing-
out shall be charged to and borne by

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the client.”

“29.The CLIENT agrees that the
MEMBER shall not be liable or
responsible for non-execution of the
orders of the CLIENT due to any
link/systemfailureatthe
CLIENT/MEMBERS/EXCHANGE end.”

“34.The Member may at its sole
discretion prescribed the payment of
Margin in the form of cash instead of
securities. The Client accepts to
comply with the Member’s requirement
of payment of Margin in the form of
cash immediately failing which the
member may sell, dispose, transfer or
deal in any other manner the
securities already placed with it as
margin or square off all or some of
the positions of the Client as it
deems fit in its discretion without
further reference to the client and
any resultant or associated losses
that may occur due to such square
off/sale shall be borne by the
Client, and the Member is hereby
fully indemnified and held harmless
by the Client in this behalf.”

31) The complainant, as indicated above

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indeed , has resorted his remedies with three
Forums and the prima facie impression generated

is having failed as he desired, to make good his
loss, he has filed the complaint before the CJM.
This appears to be a persecution than legitimate

prosecution. The proceedings against the
accused/applicants before the CJM, Jalgaon in
Criminal Case No. 679/2008 are quashed and set
aside. Rule is made absolute in above terms

( K.U.CHANDIWAL ) JUDGE

bdv/cran1017.09