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TMI Blog2012 (4) TMI 760X X X X Extracts X X X X X X X X Extracts X X X X ..... uidator, Mr. Shailendra Singh, Advocate for Mr. Vijay Kumar Sharma, ex-Director, Mr. J.S. Bakshi, Advocate with Mr. A.S. Bakshi, Advocate for respondent No. 12/Mr. D.K. Kapur, Mr. Praveen Kumar Saini, Advocate for respondent No. 21, in Co. Appl. 867/2011 in Co. Pet. 265/1998 MANMOHAN, J (ORAL): 1. On 05th June, 1998, this Court while issuing notice in the winding up petition at the instance of the Reserve Bank of India had appointed a Provisional Liquidator in respect of M/s. JVG Finance CCP(Co.) 17/2007& Co. Appl.867/2011 in Co. Pet. 265/1998 Page 3 of 23 Limited, M/s. JVG Leasing Limited and M/s. JVG Securities Limited. Later on, a Provisional Liquidator was appointed on 08th March, 2001 with respect to M/s. JVG Departmental Stores Limited. 2. On a report submitted by the Registrar of Companies, Delhi and Haryana, New Delhi, under Section 234 of the Companies Act, 1956 (for short "Act‟), the Central Government, Ministry of Corporate Affairs had ordered an investigation into the affairs of JVG Finance Limited under Section 235 of the Act by order dated 30th July, 2007. The investigation had been ordered by the Central Government in order to facilitate filing of misfeasan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... such persons who were parties to such fraudulent activities, personally liable, without any limitation of liability, for all or any of the debts and liabilities of the Company". Section 542(2) provides that the Court may give such further direction as it thinks proper for giving effect to that declaration. 10. This Court in the case of Col. M.R. Bhakshi vs. Fintra Systems Ltd & Anr., 2008 (106) DRJ 166 invoked Section 542 to attach the personal properties of the ex-Director and his wife after relying upon a CBI report which prima facie revealed misappropriation of the funds of the Company in liquidation by the persons involved. The following interpretation of Section 542 of the Act and the reasons, namely, to safeguard the interests of the creditors were laid down in the abovesaid case with which this Court respectfully agrees: "10. Having considered the respective submissions I am, as at present advised, inclined to agree with the submissions of Mr. Rajiv Shakdher, Sr. Advocate the learned Amicus Curiae. Keeping in view the purpose for which Section 542 has been enacted, and the fact that timely action is of the essence, not only to prevent the presentation of a fiat accompli ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uct of Mr. & Mrs. Shakt shows that their actions were focused on collecting funds in the company from the public by promising huge returns, and then siphoning them out in one way or another. That seems to have been the true "business activity" of the promoter Directors and Managers of the company. No other business appears to have been conducted by the company with a view to earn profits for the company, its shareholders and creditors. In the aforesaid process, the entity of the company has been misused and exploited. 12. From the aforesaid reports of the CBI, prima facie it appears to me that this is a fit case for holding the Directors of the company in liquidation personally liable, without any limitation of liability. Section 542 is an exception to the general rule that in a limited liability company, the liability of the shareholders and Directors is limited. The purpose and object of Section 542 is to catch up with the fraudulent Directors and other persons responsible for defrauding the creditors and shareholders of the company, who deliberately conduct the affairs of the company in a manner as to rob the company of its resources and allow it to bleed. Conduct, which does ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dra Singh, learned counsel for Mr. Vijay Kumar Sharma, ex-Director, admits the factum of purchase of the aforesaid lands in the name of other companies through the funds of M/s. JVG Finance Limited. He, however, states that the said lands had been CCP(Co.) 17/2007& Co. Appl.867/2011 in Co. Pet. 265/1998 Page 10 of 23 purchased in the name of other JVG Group of Companies due to the land ceiling Laws. 14. In view of the aforesaid admission, this Court directs the attachment of the land mentioned in the aforesaid chart. The Official Liquidator is also directed to forthwith take possession of the said lands. For this purpose, the local police is directed to render all assistance to the Official Liquidator. To secure possession, the Official Liquidator would also be entitled to appoint Security Guards. However, it is clarified that for the time being land in possession of M/s. Tirupati Cylinders shall neither be taken over nor attached as SFIO has stated in its report that its promoter Mr. Dinesh Goyal had paid consideration to Mr. Vijay Kumar Sharma, ex-Director of JVG Finance Limited. 15. Moreover, in view of the admission made by Mr. Shailendra Singh, learned counsel for Mr. Vija ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted for a consideration of ₹ 10 crores to square off the loans. The consideration shown in this dubious transaction was evidently inflated. 19. Consequently, this Court is prima facie of the view that Plots No.1, 2 and 3, Ashoka Park, New Delhi were right from the beginning the property of the company in liquidation and that the transfer of said plots by Mr. Vijay Kumar Sharma and his family members was a sham and a fraudulent transaction. Therefore, this Court is of the opinion that loans and advances of ₹ 9.73 crores is still due and payable by Mr. Vijay Kumar Sharma and his family members to JVG Finance Limited. 20. Consequently, all the bank accounts and personal assets of the individuals mentioned at Annexure-62 of the report namely, Mr. Deepak Sharma, Mr. Divesh, Ms. Divya Sharma, Ms. Meenakshi Sharma, Mr. Prem Prakash Basudava, Mr. Rajesh Sharma, Ms. Ritu Sharma, Mr. S.P. Sharma, Ms. Seema Rani, Ms. Sushila Sharma, Ms. Urmila Sharma, Mr. Vijay Kumar Sharma, Mr. VK. Sharma (HUF), Ms. Veena Sharma, Ms.Veena Sharma & Others, Mr. Vijay Kumar Sharma, Mr. Vinay Sharma and Mr. Vishal Sharma are attached to the extent of loans and advances mentioned against their nam ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... am and fraudulent transaction, this Court was inclined to direct attachment of the property bearing No.A-24, Okhla Industrial Area, Phase-I, New Delhi. However, this Court has been shown a copy of judgment dated 02nd March, 2012 passed by a Coordinate Bench of this Court in E.A. No. 668-669/2011 and E.A. No. 5/2012 wherein the sale of this property has been confirmed in favour of the auction purchaser namely, Mr. Manish Katyal. In the judgment dated 02nd March, 2012, this Court has taken note of the SFIO report and its finding wherein it has been brought out that the said property was purchased from the funds of JVG Finance Limited. However, the judgment nowhere discloses that the attention of the said Court was invited towards Section 446 and other provisions of the Act which provide that the assets of the company in liquidation cannot be sold or disposed of without prior sanction of this Court. It also appears that no notice was issued to the Official Liquidator in those proceedings. Accordingly, Official Liquidator is directed to take immediate steps in accordance with law to protect the interest of the company in liquidation qua the said property. Property at Meera Bagh, New ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... intly as well as list of all their personal assets of movable and immovable nature. Jewellery and Silver Articles 34. The SFIO in its report has also stated that out of siphoned off funds of JVG Finance Limited, a large quantity of jewellery and silver articles had been purchased by Mr. Vijay Kumar Sharma and his wife Mrs.Veena Sharma. 35. For instance, one of the jewellers, M/s. Tribhovandas Bhimji Zaveri, has vide its letter dated 26th May, 2008 informed the SFIO as under:- "Kind Attention: Mr. N.K. Bhola-Additional Director & Inspector Dear Sirs, We refer to your above summons dated 13th May, 2008. In this regard, we have to state as under: We have had business dealing with M/s. JVG Finance Ltd. We have sold silver articles to them. The details of sales & payments received are as under:- SALES Bill No. Bill Date Quantity In grams Amount 571 08/11/1996 690.000 6,645.00 684 12/11/1996 13855.000 1,26,012.00 800 05/12/1996 396763.000 35,45,925.00 833 18/12/1996 98385.000 8,63,231.00 Total Sales 45,41,813.00 PAYMENTS Date of Payment Amount Received Payment Details 08/11/1996 6,645.00 Cash Received 26/10/1996 10,00, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Farms, New Delhi, has been paid from the bank account of JVG Finance Limited. 42. Since out of the 6000 sq.yds., 3000 sq. yds. is still in the possession of Mr. Vijay Kumar Sharma and his wife Mrs. Veena Sharma, the Official Liquidator is directed to attach the aforesaid property and immediately take possession of the same. 43. The Official Liquidator shall be entitled to obtain police aid for the same, if necessary. 44. To facilitate the implementation and execution of this order, the Official Liquidator shall be entitled to take assistance of the SFIO officers who had conducted the investigation in the present case. Moreover, as implementation and execution of this order will take some time, all the parties against whom interim order has been passed today, are directed to maintain status quo with regard to the assets and accounts attached. Needless to say, this order is without prejudice to the rights and contentions of the parties that may be urged at the time of final hearing of the application. 45. List the matters on 18th May, 2012 at 2:15 p.m. for further hearing of the SFIO report with regard to immovable properties situated outside the National Capital Region of D ..... X X X X Extracts X X X X X X X X Extracts X X X X
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