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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 ..... 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 misfeasance applicatio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r any contributory, the Court can declare 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 essenc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... undertaken in desperation. The pattern that emerges from the conduct 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... JVG Hotels Ltd. 14 02 00 1,41,09,867 -do- 5. JVG Steels Ltd. 16 03 15 2,09,99,790 -do- 6. JVG Petrochemicals Ltd. 17 07 11 2,29,05,740 -do- 7. JVG Overseas Ltd. 26 02 10 2,82,44,937 -do- 8. JVG Financing Services Ltd. 06 13 46,64,790 -do- 9. JVG Publications Ltd. 00 03 14 19,42,500 -do- 10. JVG Industries Ltd. 00 03 14 19,42,500 -do- 11. Goga Foods Ltd. 06 02 08 72,45,239 12. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Mr. Deepak Sharma 4,10,205.00 Mr. Divesh 34,756.64 Ms. Divya Sharma 3,90,195.00 Ms. Meenakshi Sharma 1,32,42,600.00 Mr. Prem Prakash Basudava 19,75,000.00 Mr. Rajesh Sharma 32,62,064.00 Ms. Ritu Sharma 45,65,957.00 Mr. S.P. Sharma 53,50,421.64 Ms. Seema Rani 55,55,035.00 Ms. Sushila Sharma 53,30,476.64 Ms. Urmila Sharma 48,03,575.00 Mr. V.K. Sharma 37,33,070.92 Mr. V.K. Sharma (HUF) 14,44,000.00 Ms. Veena Sharma 3,20,52,430.64 Ms. Veena Sharma Others ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Mr. Vishal Sharma are attached to the extent of loans and advances mentioned against their names in the aforesaid chart. 21. The said individuals are also directed to file affidavits disclosing details of their bank accounts held either singly or jointly as well as a list of all of their personal assets. Property Bearing No. A-24, Okhla Industrial Area, Phase-I, New Delhi. 22. Further, the SFIO in its report has found that M/s. Yusuf Engineering Company Pvt. Ltd. owning property bearing No. A-24, Okhla Industrial Area, Phase-I, New Delhi, had been purchased from the funds of JVG Finance Limited. The amount of money transferred by JVG Finance Limited to Yusuf Engineering Pvt. Ltd. as well as to its ex-Directors is reproduced hereinbelow:- S. No. Cheque No. Date Amount (Rs.) In Favor Of 1. 254321 27/12/95 3,00,000 Yusuf Engg. Pvt. Ltd. 2. 254381 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rt 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 Delhi. 27. The SFIO in its report has also stated that property bearing No. A-302, Block-1 (area measuring 397.40 sq. yards) situated at Meera Bagh, New Delhi-110041 had been purchased from the funds of JVG Finance Limited in the year, 1996-1997. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ance 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e entitled to take assistance of an approved jeweller/valuer from the Income Tax Department. Property bearing No.Flat No. 38, Second Floor, Jevan Anand Cooperative Group Housing Society, Pitam Pura, New Delhi. 39. Since the SFIO in its report has stated that Flat No.38, second floor, Jeevan Anand Cooperative Group Housing Society Ltd., Pitam Pura, New Delhi was purchased out of the funds of JVG Finance Limited and the said property had been fraudulently sold by Mr. Satinder Dutta, brother-in-law of Mr. Vijay Kumar Sharma and the sale proceeds had not been deposited with the JVG Finance Limited, the personal bank account of Mr. Satinder Dutta is attached to the extent of ₹ 3.40 lakhs with compound interest @ 12% per annum. 40. Mr. Satinder Dutta is directed to file an affidavit disclosing his bank accounts as well as all other assets owned by him. He is also directed to furnish his income tax returns for the last seven years within a period of four weeks. Sainik Farm Property 41. The SFIO has also stated in its report that the entire purchase consideration of ₹ 72 lakhs for properties bearing Khasra Nos. 13/5, 13/ ..... X X X X Extracts X X X X X X X X Extracts X X X X
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