9911796707
TMI Blog2020 (6) TMI 272X X X X Extracts X X X X X X X X Extracts X X X X ..... December 2001 pursuant to an order passed by the Special Court on 27th November, 2001. The petitioner-Custodian sought an order and decree against respondent no.1 directing him to pay to the Custodian on behalf of respondent no.2 a sum of Rs. 3, 44, 12, 538/- and interest thereon @ 24% p.a. from 5th August, 1992 or such earlier date when the said sum was believed to have been received by respondent no.1 from respondent no.2. Subsequently, post amendments and impleading respondent no.4, similar prayer clauses were directed against respondent no.3 and respondent no.4 jointly and severally. These reliefs are sought in the event the Court comes to the conclusion that respondent no.1 is not liable to pay the amounts claimed by the Custodian. 3. Having briefly dealt with the nature of the Petition, it will be appropriate to narrate the facts as set out by the Custodian. According to the Custodian, respondent no.1 is a debtor of respondent no.2. Respondent no.2 was notified under the Act on 5th August, 1992. Upon such notification, all his properties are deemed to be attached. The Custodian had filed Misc. Application no.86 of 1993 against respondent no.2 in which the Custodian sought di ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... me to the Custodian. It is appropriate to mention that according to respondent no.1, the amounts received were not by way of loan and therefore there is no question of repaying the loan. In this behalf, it is the case of the Custodian that even assuming the contentions of the respondent no.1 were correct, the transfers and the discounting facility would have been illegal and would amount to fraudulent diversion of funds and therefore respondent no.1 would not get a valid discharge. 5. The Custodian has further contended that large amounts have been diverted from banks and financial institutions by respondent nos.2 and 3 through respondent no.4 and even assuming respondent no.1 is treated as discharged, respondent nos.3 and 4 must be jointly held to be liable to pay the said sum of Rs. 3, 44, 12, 538/- and interest thereon. It is also contended that respondent no.3 was at all material times the Managing Director of respondent no.2 and therefore respondent no.2 owes monies to notified parties which have been so diverted by respondent no.2 in collusion with respondent nos.1 & 3. As a consequence, the Custodian seeks the following reliefs; 6. Firstly a decree in sum of Rs. 3, 44, 12, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... affidavit proceeds to deny that monies were withdrawn in cash or paid in cash to Jajoo. According to the deponent, 1st respondent/Vakil is trying to avoid liability and 1st respondent will not get the valid discharge since in any event the dealings as contended by the 1st respondent would be illegal. The deponent further states that the 1st respondent is liable to pay over the amounts to the respondentno.2. 8. One Rajen C. Vakil who claims to be the proprietor of T.H. Vakil has filed an affidavit dated 3rd March, 1999. The contentions in the affidavit are as follows: (i) The application is not maintainable. (ii) In Misc. Petition no.64 of 1994 the 1st respondent had reiterated that cheque discounting business had been carried out and that the deponent had received funds from these cheques and had paid over the same in cash to respondent nos.2 and 3 through respondent no.4. (iii) In Misc. Petition no.64 of 1994 respondent no.2 alleged that sum of Rs. 3.44 crores was paid to respondent no.1 at the instance of one Manubhai Maneklal. According to Vakil he had sufficient funds of his own. He had not borrowed any funds from respondent no.2 or 3. According to him, respondent no.2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Jajoo is believed to have deposed that cash was paid over to respondent no.3 at his residence and at his office. The deponent has further stated that the 2nd respondent and 3rd respondent were subjected to an enquiry by the Enforcement Directorate as well. Summons was issued to Vakil on 23rd March, 1993. He attended the offices of the Enforcement Directorate in response to the summons and his statement has been recorded by the authorities. He however contends that thereafter no action has been taken against him. 11. Vakil's affidavit further states that after receiving the summons from the Income Tax Authorities which was also dated 23rd March 1993 he attended the office of the Dy. Commissioner of Income Tax (Special Range) (Central Bombay) and a statement under section 133 of the Act was recorded. The enquiry pertained to allegations against respondent nos.2 and 3. According to him vide a letter dated 21st March, 1995 these facts were conveyed to the Dy. Commissioner of Income Tax. According to the deponent, Jajoo has admitted having acted as agent of respondent nos.2 & 3 in his statement to the income tax authorities. 12. It is the case of the 1st respondent that in Misc. Peti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... th. 14. Without prejudice to these contentions, Vakil states that the claim against the 1st respondent's firm is barred by the law of limitation because respondent nos.2 & 3 were notified on 5th August, 1992. The petition was filed only on 1st February, 1996. Misc. Petition no.64 of 1994 came to be filed on 5th August, 1992 and even on that date substantial part of the claim as against respondent no.1 and in relation and to the allegedly due to respondent no.2 or 3 were barred by the law of limitation. 15. I may make specific reference to Exhibit A to the affidavit of Vakil which is an order dated 5th October, 1996 passed by the Special Court. This order records that the 2nd respondent has provided information to the Custodian as a result of which the petition came to be filed. The onus of producing evidence is fixed on the 2nd respondent in view of the defence taken it is stated that T.B Ruia, 3rd respondent would have to step into the box and that he may have also prove the claim if it is true his knowledge. That apart any other evidence that respondent no.2 DMPL may want to lead will also be required to prove the claim. This having been said the matter was adjourned on 17th Oc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dvanced short term finances against security of shares, debentures bonds and other commercial papers during the year 1991 through the aforesaid Maneklal. In order to facilitate these transactions, the deponent claims that at respondent no.2 granted a special power of attorney to various persons including one to Suresh Jajoo. He reiterates that respondent no.2 had lent an advance a sum of Rs. 3.44 crores to the 1st respondent at the instance of Maneklal and as set out in MP-64. He reiterates that the respondent no.1 was desirous of borrowing these funds and denies the contentions of respondent no.1 that he had sufficient bank balances lying with him and that there was no need to borrow any amount. The deponent Dangarwala denies that Suresh Jajoo had carried out any other transaction for and on behalf of respondent no.2 and reiterates that during 11th June, 1991 to 6th December, 1991 diverse amounts aggregating to Rs. 3.44 crores were lent an advanced by the respondent no.2 to respondent no.1 at 24% interest and that the amounts were advanced at the instance and request of the said Maneklal who had guaranteed repayment of the amount with interest. It is denied that cheques were given ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Ruia states that he has no claim against the 1st respondent-Vakil in his individual capacity. The rest of the affidavit is a repetition of the stand taken by the 3rd respondent in his earlier affidavit. However, certain additional averments are to the effect that Jajoo was not his agent. Respondent no.3 had not advanced any monies to Jajoo or his family members. That respondent no.2 had granted special power of attorney to various persons including Jajoo to enable the dealings in shares securities and commercial papers through Manubhai Maneklal. According to the respondent no.3, Jajoo had no other connection with him. It is further stated that at the instance of Maneklal the 2nd respondent company advanced the said sum of Rs. 3.44 crores to Vakil. He denies having engaged in any cheque discounting business. The deponent further states that he has sought inspection of the statements recorded before the Income Tax Authorities by Jajoo but the same were not forthcoming. He states that he was not given an opportunity to cross examine Jajoo before the Income Tax Authorities. He denies having received any amounts in cash from Vakil, Suresh Shah or V. Krishnakant through Jajoo or anyone ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t sought to recover any money from Jajoo. He submits that there is no cause of action against him. Jajoo is neither the payee of the cheques and nor the recipient of the monies said to have been withdrawn after the cheques were encashed. The petitioner's case is that Jajoo was only the agent of respondent no.3 does not make respondent no.4 "a beneficiary of the cheques". 22. Respondent no.4 does not admit that Vakil has obtained a valid discharge in the manner set out in the pleadings. In any event he denies liability to reimburse the petitioners or respondent no.2. The record indicates that apart from the written statement, Jajoo has filed an Affidavit of documents dated 11th October, 2005. In the schedule to that affidavit, he relies upon only two documents; one is a certified copy of MP-64 of 1994 and the orders passed therein and copy of an affidavit of N.C. Dangarwala filed on behalf of respondent no.2-DMPL dated 8th November, 1995 in the aforesaid MP-64 of 1994. The record also indicates that Rajen Vakil who at the material time was a proprietor of the 1st respondent-T.H.Vakil has filed an affidavit of evidence. In that affidavit of evidence, he states that cheques amounting ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ount to respondent no.1 against pledge of shares as alleged in paragraph 7 of the affidavit of respondent no.2 dated 2.6.2000? (4) Whether respondent no.1 proves that respondent no.1 was doing business of discounting cheques with respondent nos.2 and/or 3 as alleged in paragraph 5(o) of the affidavit of respondents nos.1 dated 3.3.1999? (5) Whether respondent no.1 proves that respondent no.4 was the agent of respondent nos.2 and/or 3 as alleged in the affidavit-in-reply of respondent no.1 dated 3.3.1999? (6) Whether respondent no.1 proves that respondent no.4 issued a writing acknowledging receipt of the cash amounts paid by respondent no.1 as alleged in paragraph 5(i) of the affidavit of respondent no.1 dated 3.3.1999? (7) Whether the petitioner proves that respondent no.1 illegally or fraudulently diverted moneys from respondent no.2 and paid them over to respondent no.2 and/or 3 and if so, whether such illegal transaction would not give a valid discharge to respondent of his liability to respondent no.2 as alleged in paragraph 6 of the petition? (8) Whether the petitioner is entitled to recover any amount from respondent no.1 and if so, what amount? (9) Whether respo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (22) Whether the petitioner is entitled to any relief, and if so, what relief? 25. Submissions of counsel were very brief. The learned counsel for the Custodian Mr. Chandran took me through the facts and submitted that since Rajen Vakil has filed an affidavit of evidence the ratio in the case of Banganga Co-op Hsg. Society Lts V/s Vasanti Gajanan Nerurkar 2015(5) Bom CR 813 can be pressed into service and the admissions therein could be relied upon. Being unable to gather any evidence on account of the reluctance of respondent 2 to support the claim by evidence in support, Mr. Chandran submitted to the orders of the court. 26. On behalf of respondent no.2/DMPL Mr. Gaonkar the learned counsel who appeared at the material time placed reliance on an order dated 23rd October 2001 in M.A. 133 of 2000 in the above petition directing Suresh Jajoo to be impleaded in this and the companion petitions. He also placed before the court photocopies of (i) a two page extract Ledger account of DMPL /Respondent no.2 for the period 1991-1992, (ii) Extracts of the Cash Book DMPL for the same period (iii) a few bank statements of State Bank of India said to be of an account held by DMPL and (iv) a s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tomobiles v/s. Indian Inc [(2009) 17 SCC 657] which held that in the absence of contract of the contrary as agent cannot be sued by the respondent specially when the principal had been disclosed. Dealing with the provisions of Order 47 Rule 1 and the order passed in review relying upon the decision of the Supreme Court in Sushil Kumar Sen v/s. State of Bihar [1975 (1) SCC 774] Mr. Mehta submitted that allowing of an application for review of a decree would mean that the decree stood vacated and that the decree subsequently passed under review whether it is modified, reversed or confirmed, the decree originally passed, is the new decree superseding the original one. It must be borne in mind that it is Respondent no.4 who had filed a Review Petition which resulted in the above Petition being restored for trial. No Civil Appeal was filed by any party questioning the order in the Review. Reiterating the effect in law of an order on review Mr. Mehta submitted that the original order which was reviewed ceased to be operative and that once a Court is satisfied that the order under review was erroneous, on the face of it, the Court is not precluded from allowing the review petition and set ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h on 18th December, 1995. DMPL had used Maneklal for trading in shares that apart their other business dealings. Respondent no.3/Ruia also had other business dealings with Maneklal and Ruia was controlling DMPL signing cheques on behalf of DMPL as well. Respondent no.4 Jajoo is said to be a close confidante of Ruia and also an authorized signatory of respondent nos.2 & 3. The deponent repeats the statements made by him in his earlier affidavits and as regards involvement of Suresh N. Shah as to how Suresh N. Shah who is his brother-in-law along with Vidyut K. Shah and other partners of M/s. V. Krishnakant, share brokers were also engaged in the cheque discounting business. Suresh Shah is said to have dealings with respondent no.4 and had informed Vakil that respondent no.4/Jajoo, Suresh Shah through Jajoo would hand over the cheques to Vakil on the understanding that Vakil should encash the cheques, retain 1% of the value of the cheque towards his commission and handover the balance in cash to Jajoo. He has deposed that he received several cheques and between 11th June, 1991 to 16th December, 1991 these were all encashed through the two current accounts in Federal Bank Ltd. to whi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ding to the deponent, from June 1991 Suresh Shah informed Maneklal on telephone of every occasion when the amount of cash was handed over by him to Jajoo and Maneklal would in turn inform Suresh Shah telephonically that Ruia had confirmed to Maneklal of the fact that he had received the amount in cash from Jajoo on that day. Soon after Shah received such confirmation, Shah has reportedly informed Vakil of the same. Vakil has further deposed that discounting transactions of DMPL with Vakil's firm and that of V. Krishnakant and Suresh Shah aggregated to more than 6 crores and an equivalent amount of cash had been handed over to Suresh Jajoo on behalf of DMPL. He deposed that Suresh Shah obtained acknowledgments of Jajoo in respect of these amounts and that a copy of one acknowledgment is sought to be brought on record at item 6 in Annexure A under Vol.I. 32. The witness further deposed that in the course of investigation by the Income Tax Authorities against DMPL and T.B. Ruia, enquires were made under Section 131 of the Income Tax Act regarding the cheques for Rs. 3.44 crores received by Vakil from DMPL. The deponent's statement was recorded on oath on 25th January. He has produced ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ons of the said report on the fact that several persons deposed before the Joint Parliamentary Committee which included representatives of the Central Bureau of Investigation, Central Board of Direct Taxes and the Enforcement Directorate. The deponent states that Ruia also deposed before the Joint Parliamentary Committee. He relies upon the statement made before the Joint Parliamentary Committee by the aforesaid persons. I may observe here that the Supreme Court has since taken a view that the Joint Parliamentary Committee report cannot be treated as evidence and being bound by that view I do not propose to deal with the aforesaid disclosures made by the deponent as the same will not be treated as evidence. 34. The deponent then goes on to state that auditors of DMPL made remarks in the annual accounts for the period ended 31st March, 1992 that large amounts had been paid by DMPL without any documentation. Certified copies of the balance sheet and profit and loss account of DMPL for the year ended 31st March 1992 along with auditor's report is annexed at item 36. It is further contended that neither DMPL nor T.B. Ruia or any other person on behalf of the DMPL has made any claim or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t notice to admit documents dated 23rd August, 2005 was served by his attorneys upon the attorneys for DMPL who had responded to the team with the same. A second notice to admit documents dated 23rd August, 2005 was also served by Vakil's attorneys upon the attorneys for Suresh Jajoo but no reply has been received. A third notice to admit documents dated 1st September, 2005 was also served upon the Custodian but has met with no response. The deponent further states that T.B.Ruia (respondent no.3) had in his affidavit dated 18th January, 1996 in MP-4 of 1996 admitted that he was in control of the affairs of DMPL and aware of the transactions between his firm and DMPL in relation to the discounting of cheques. Copy of the affidavit of 18th January is also sought to be filed as an annexure to Vol.II and the documents sought to be tendered along with the affidavit. In conclusion, the deponent states that the cheques in question were issued by DMPL in favour of his firm M/s. T.H.Vakil, in favour of M/s. V. Krishnakant and in favour of M/s. Suresh N.Shah by way of loans. He denies that his firm or those of V. Krishnakant or Suresh Shah were liable to pay interest @ 24% p.a. and he denies ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vidence was once again extended. That order is passed in the above petition. On 11th December, 2015 the matter was listed before the Court. When court observed that the above misc. petition had been pending since almost 20 years and that respondent no.1 had acknowledged having receiving the amounts and that these amounts paid over in cash to respondent no.4. The Court concluded thus; "In my view there is no reason to disbelieve the statement made by respondent no.1. The claim against respondent no.1 is waived. The Custodian may take such steps to recover the amount from respondent nos.3 or 4. No further time will be granted since the matter has remained pending before this Court for almost 2 decades. Hence, MP is dismissed." 38. It appears that thereafter Review petitions were filed by the Custodian being Review Petition nos.1 of 2016, 2 of 216 and 3 of 2016 in the above MP-3 & 4 of 1996 respectively. On 5th February, 2016 all these matters were tagged together and replies were directed to be filed. The matter was stood over to 11th March, 2016 for hearing. Thereafter it transpires that the review petitions were allowed. In the above petition, the respondents took no objection t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... le and purchase of the shares. To my mind, in the absence of any documents coming forth from the notified parties in support of their case that they had advanced a loan of Rs. 1.95 crores, the claim of the notified party remains unsubstantiated. Merely on the basis of entries in the books of accounts of the notified party, this Court cannot pass a decree against respondent no.1. As against the above, respondent no.1 has produced the bills which in turn indicate the various transactions which have taken place during the relevant period. They have also produced the assessment orders for Accounting Year 1991-92 and 1992-93 passed by the Income Tax Authorities which show trading in shares. There is no reference to monies borrowed by respondent no.1. In the circumstances, the petition fails." 40. The facts in the present case are also very similar inasmuch as respondent no.2 contends that amounts were advances of loan. Respondent no.1 states that the entries in the books of account are pertaining to purchase and sell of shares. The slight difference is that the business of cheque discounting does not form a feature of this application but the principle that the 2nd respondent / notifie ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for settlement of issues. It appears that thereafter the matter has been referred to the Commissioner for recording the evidence and these applications have been filed at the interlocutory stage. Hence, these Miscellaneous Application do not survive and are, accordingly, disposed of." Thus the application for consolidating the matter has not been allowed. 42. On 13th February, 2015, when this Court observed that cross examination of respondent no.1 was still underway, the reference being made was not to witness on behalf of M/s.T.H. Vakil but to the evidence of Suresh Nandlal Shah who was Respondent no. 1 in the companion petition. In the present case the respondentno.1 has not entered the witness box yet. He has only filed affidavit of evidence to which I have made reference above. On 7th October, 2016 counsel appearing for respondent no.1 sought time to obtain instructions as to whether they intend to lead any evidence. On 21st October, 2016 counsel appearing for the 1st respondent submitted that he had no instructions and sought leave to take discharge. On that date counsel for respondent no.1 in MP-3/96 stated that they would be leading evidence and that respondent no.1 ther ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... issue notice to respondent no.1 including at email addresses provided by the applicants, time was extended upto 22nd February, 2018. Thereafter on 22nd February, parties were given time to file affidavits of service. Respondent no.1 was however absent on call. The court recorded that respondent no.1 did not appear to be desirous of contesting the application although an Advocate had been engaged in the past. However, one more opportunity was granted to him by directing the registry to issue notice to respondent no.1 enclosing a copy of the order. The matter was then posted on 8th March. Advocates for all parties were also directed to address similar notices and filed affidavits of service. This procedure has been completed on 8th March, 2018. The respondent no.1 was absent on call. On behalf of the Custodian, it was submitted that email sent to addresses provided to them and believed to be that of respondent no.1 had been returned undelivered. This indicated that the notice had probably not been served. Time was once again extended and repeatedly to enable respondent no.1 to remain present. Finally the matter was taken up for hearing on 5th July, 2018 and has been regularly heard f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Range-4, pursuant to such notice, the Income Tax Department has expressed willingness to produce documents. They sought time. The learned counsel for the Income Tax Department thereafter appeared on 8th March, 2019 and submitted that ledger accounts for the period 1st April, 1991 to 31st March, 1993 were not traceable and they requested that the Income Tax Department be relieved from further appearance, that request was allowed. In the meantime, the registry was in a receipt of the letter from the State Bank of India dated 28th February, 2019 informing the registry that the records being maintained manually. Further time was required to submit these records as requested on behalf of the respondent no.2. Respondent no.3 having expired, respondent nos.3(a) to 3(e) were brought on record. Finally on 7th May, 2019 State Bank of India addressed a communication to the Officer on Special Duty in the registry informing the registry that the bank was unable to provide the statement for the account as requested for the period 1st April, 1991 to 31st January, 1992. On 14th June, 2019, the Court recorded that after hearing counsel that no further documents were expected from either SBI or the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stodian has no source of any evidence by himself. He is dependent upon the notified party to provide the requisite evidence. In support of the case, the Custodian is just what his title suggests, a person in custody of the assets and attached properties of notified parties. Respondent nos.2 & 3 have no doubt filed affidavits in reply to the petition and largely supporting the petition. However, there is no proof that has been provided in support of their contention that the amount of Rs. 3, 44, 12, 538/- was advanced as loans in different installments as set out in the Annexure to the demand letter dated 30th July, 1994 which we have already had occasion to consider above. 49. The 2nd respondent is a limited company, the affidavits on behalf of the 2nd respondent have been filed by one Narendra Dangarwala who is said to have been the Secretary of the Company. It was obligatory for the 2nd respondent to lead evidence and establish the claim against the 1st respondent. No such effort has been made save and except to state that the amounts had been advanced by loan and to file affidavits in reply through their Advocates. Copies of certain records seized by the Income Tax Department e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to be found under that heading. Between August 12 to August 14 after the opening balances are set out, warehouse charges are referred to, several other payees' names are mentioned and once again the heading of "Int. on loan receivable" describes debit notes issued to a third party. There is no reference to either T.H Vakil or any of the other respondents. For the same period, the cash book does contain reference to T.H Vakil's account and a cheque no.284 dated 12th August, 1991 issued to him for Rs. 25 lakhs and drawn on State Bank of Hyderabad but nothing in the entry discloses this to be a loan. Between 9th to 23rd August, 1991, a cheque for Rs. 15 lakhs seen to be issued to T.H Vakil. Reference is also made to one cheque issued to A.D Narottam another Notified party but none of these are shown as loans. Between 26 to 31st August, 3 further cheques dated 26th August are seen to be issued to T.H Vakil. First 2 cheques for Rs. 20 lakhs each and the 3rd cheque of Rs. 15 lakhs. Thus, a total of Rs. 55 lakhs is believed to be paid by cheque. Between October 21 and October 26, a cheque for Rs. 15 lakhs is seen to be issued under the heading T.H Vakil's Account bearing cheque no.820 da ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the Review and that is how this petition was set back on the rails for final hearing. It was incumbent upon the 2nd respondent DMPL to lead evidence. The 1st respondent Vakil did file an affidavit of evidence purporting to be his examination in chief but he not offered himself for cross examination. The question therefore to be considered is; whether mere filing of the affidavit of evidence could constitute proof of the facts that the 1st respondent's witness has deposed to ?. In this respect the Custodian through his counsel Mr. Chandran relied upon Banganga Co-op. Hsg. Soc. Ltd. and others v/s. Vasanti Gajanand Nerulkar and Others (2015 (5) BCR 813). In that judgment this Court has considered in detail the provisions of Order 6 order 9 Order 8, 18, Section 151 of the CPC as also Section 114 of the Evidence Act. Question that arose is whether it was permissible for a court to order expunging or reduction of any part of an affidavit of evidence filed as examination in chief under Order 18 Rule 4 of the CPC. The court held that needless material in an affidavit of evidence would not constitute evidence and if any portion of the affidavit did not confirm to be exact requirements, i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ect of Mr. Chandran's argument. 53. The affidavit of Rajen Chandrakant Vakil by way of examination in chief is dated 14th November, 2006. The deposition of Rajen Vakil reveals that that he is a sole proprietor of respondent no.1. M/s. T.H Vakil and he has been carrying on business in the said name and style as a share broker since 1985. Respondent no.2 DMPL was also respondent no.2 in other MP- 3 and 4 and T.B Ruia respondent no.3 was a respondent in all these petitions as well. He was a Director of DMPL. Respondent no.4 Jajoo is also described as a member of the Bombay Stock Exchange. The affidavit goes on to describe the other parties allegedly engaged in cheque discounting business viz. Vidyut Shah partner of V Krishnakant, Suresh N Shah, share broker who is also said to be the brother- in-law of Rajen Vakil. The affidavit makes reference to certain documents annexed to the MP and documents filed along with evidence by way of examination in chief dated 21st September, 2005 filed by Suresh N Shah in MP-4 of 1996. The deposition is to the effect that one Manubhai Shah of M/s. Manubhai Maneklal carrying on business as sole proprietor of the said firm had dealings with respondent n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... wledging receipt of amounts in cash said to have been paid by 1st respondent -Vakil as stated in the 1st respondent's affidavit dated 3rd March, 1999. There is absolutely no evidence on this aspect. The 1st respondent not having proved the document, it is not possible to accept this plea or come to any conclusion. The 1st respondent has not presented himself for cross examination. A bald statement to the effect that respondent no.4 had issued an acknowledgement would have to be tested by the 1st respondent being made available for cross examined by respondent no.4. This not having occasioned. It is not possible to hold in favour of the 1st respondent on this issue. Issue no.6 must and therefore is answered in the negative. 56. Issue no.7 requires the petitioner -Custodian to prove that M/s. T.H Vakil illegally and fraudulently diverted monies from DMPL and paid them over to DMPL and or Ruia and whether that transaction if proved would give the 1st respondent a valid discharge. For reasons set out above, the petitioner is unable to establish the transaction as set out in paragraph 6 of the petition. It is for the 2nd respondent and/or the 3rd respondent to have provided the petitio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... discounting or as an advance/loan has not been established let alone liability to pay interest. Issue no.9 is therefore answered partly in the affirmative to the above extent and partly in the negative. 58. Issue no.10 requires the petitioner to establish that the respondent no.4 is an agent or representative of respondent no.2 and issue no.13 whether the respondent no.4 paid amounts alleged to have been received from respondent no.1 to respondent nos.2 or 3 in any capacity. As far as issue no.10 is concerned, there are admissions by respondent no.2 in his affidavit which indicates that respondent no.4 was a constituted attorney of the 2nd respondent. To the extent that he was an attorney there can be no doubt that respondent no.4 was indeed an agent to that extent. Furthermore, respondent no.4 has himself in his written statement stated thus in paragraph 3; "Without prejudice to the aforesaid, this respondent submits that on the facts as averred in the petition itself, it is the petitioners and respondent no.1's own case that this respondent was acting as an agent on behalf of a disclosed principal viz. respondent no.3. In the aforesaid circumstances, Ruia himself being a party ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... us dates. Such an attempt is seen from the evidence in MP-4 of 1994 but that by itself will not be of any assistance to T.H.Vakil in the present case. Simply put, the 1st respondent has not proved payment or repayment of the amounts, so also apart from his bare statement that the discounting commission at 1% was deducted by him, there is nothing to show what had actually transpired. This is not to suggest that 1st respondent is still holding on to these funds. There is no evidence of that either. Respondent no.2 or 3 have not led evidence or assisted the Custodian in this respect. In my view, issue no.11 is liable to be answered in the negative. In view of the answer to issue no.11, the answer to issue no.12 must necessarily be in the negative. Issue no.12 was accordingly answered in the negative. 61. Issue no.13 which requires proof that respondent no.4 paid the amounts allegedly received by him from respondent no.1 to respondent no.2 or respondent no.3 would require evidence on two aspects. Firstly, whether respondent no.4 did in fact receive the amounts which respondent no.1 alleges were paid to him. In this behalf, respondent no.1 has not led evidence to establish his positiv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in each of these matters which were different. Thus, in my view, the evidence of respondent no.1 Suresh Shah is of no assistance. 63. Issue no.14 requires a finding whether respondent no.1 is entitled to contend that it paid/repaid the respective amounts in cash in view of the prohibition contained in Section 269 T of the Income Tax Act which prohibits repayments in cash. In this respect, there is no evidence of such amounts being paid in cash. There being no factual basis the issue is rendered academic and hence Issue no.14 in my view does not fall for consideration on facts and hence in my view issue no.14 does not arise. 64. We now consider issue no.15 and 16. These pertain to the role of respondent no.4. Issue no.15 is required to consider whether respondent no.4 was appointed authorized signatory or agent of respondent nos.2 & 3 and that he had been engaged to collect cash amounts in respect of the said cheques that were encashed by the 1st respondent. Issue no.16 requires us to consider whether the cheques were received by respondent no.4 on behalf of respondent nos.2 & 3 for cheque discounting. In my view, absent any direct evidence that respondent no.4 had been engaged to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... out in evidence and in fact there is not even an attempt to establish the case that the transactions were fraudulent. No doubt the transactions were questionable and do not appear to be regular arms-length transactions. The receipt of cheques by respondent no.1 is admitted but thereafter the trail has gone cold. Respondent no.1 has failed to establish his case against respondent nos.2, 3 or 4 in this petition. Respondent nos.2 and 3 also have failed to establish their case against respondent no.1. It is the case of respondent no.2 that the Custodian is concerned about and in view of the fact that the respondent no. 2 appears to have distanced itself from the transaction and the initial claim and the disclosure made by them, it appears that the attempt to obfuscate operates across the board. However staying focused on the issue, I am of the view that the disputed transactions have not been established. Issue no.17 is answered in the negative. 67. Issue no.18 requires a finding on whether the petition discloses a cause of action against respondent no.4. This issue is liable to be answered in the affirmative in view of the numerous averments in relation to the role played by the 4th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... no.2 was very much party to the transaction. Respondent no.2 has however, failed to lead evidence and bring out the truth before the Court in these proceedings. Merely contending that a sum of Rs. 3.44 crores was repayable by respondent no.1 and that the said amount was a loan advanced at 24% is of no consequence. There is no documentary or oral evidence to support the 2nd respondent's claim. All that we have are admission that a certain number of cheques as disclosed in these proceedings were issued that these cheques were in favour of the 1st respondent . The 1st respondent encashed these cheques through current accounts maintained in his name. Beyond this there is no documentary or oral evidence to support that these amounts were paid over in cash to any other person. Withdrawal of these amounts is also seen to be part of the record however, the deponent on behalf of 1st respondent has not offered himself for cross examination. The affidavit of evidence to the extent it concerns admission in favour of the respondents or any of them can only be considered since the evidence affidavit has been filed in Court and having been taken on record forms part of the evidentiary record. How ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . The machinations of the concerned parties involved collection of the cheques through bank accounts in the name of the 1st respondent and the respondents in other similar matters. Respondent no.2 may not have admitted the role of respondent no.4. However if that were true, the amount could obviously be claimed from respondent no.4. In principle merely because respondent no.2 has not named the respondent no.4 as recipient of funds or being liable to repay these funds, if these funds belong to notified parties they stood attached in the hands of whosoever may have been on possession thereof. A specific role has been attributed to respondent no.4, however, in the absence of evidence, it is not possible to indict the 4th respondent in the facts of the present case. In the facts of the case no effective relief can be granted to the Custodian, on that basis for want of evidence. The issue is now academic and is answered in the affirmative for that limited purpose only. In view of the above I am of the view that the petitioner is not entitled to any relief. Issue no.22 therefore must be answered in the negative. 72. Before concluding, I may make reference to the deposition of Suresh Nan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ces to T.H. Vakil are to be found in numerous paragraphs alluding to the fact that TH Vakil agreed to carry on the business of cheque discounting at the instance of Suresh Shah and Manubhai Maneklal. Reference is made to the Current accounts held by M/s. T.H. Vakil in Federal Bank. The payment of Rs. 3.44 crores to Vakil and payment of other amounts in the case of V. Krishnakant and the transactions with that firm. References are also made to acknowledgments issued by Suresh Jajoo in favour of Vakil and Krishnakant. 74. In fact the evidence of Suresh Shah goes on in great length to make reference to the transaction involving T.H Vakil and respondent no.2 with references to the case of T.H Vakil. Suresh Shah seeks to draw a parallel on facts in an attempt to establish the cheque discounting transaction that have been referred to in these set of matters. Certain questions put to the witness Suresh N. Shah in cross examination are relevant. These are reproduced below for ease of reference: "Q.401. Was anybody from M/s. T.H.Vakil involved in any manner in respect of the cheque discounting transactions? A. No person from M/s. T.H Vakil was involved. Q.402. Was anybody from M/s. V ..... X X X X Extracts X X X X X X X X Extracts X X X X
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