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TMI Blog2021 (2) TMI 1393X X X X Extracts X X X X X X X X Extracts X X X X ..... e that the regulatory authorities frown upon the promise of a fixed return on the investment, at an unbelievably high rate as it is fraught with the risk of default and susceptible to fraud. Nor is it the case that the defendant had invited the public deposits. In contrast, the claim of the plaintiffs that the deposits were invited through M/s. Crefin India Management Private Limited is found to be unsustainable. The fact that the defendant had raised the grounds of absence of privity of contract and that no amount was deposited by the plaintiffs with the defendant in its reply to the demand notice, dated 4th September 2019, assumes significance. The subsequent developments in the nature of the scrutiny of the accounts of the defendant to ascertain whether the amounts have, in fact, been credited into the account of the defendant, indicate that there is substance in the defence of the defendant that no amount has been deposited into its account directly. A useful reference in this context can be made to a judgment of the Supreme Court in the case of State Bank of Hyderabad Vs. Rabo Bank [ 2015 (10) TMI 2707 - SUPREME COURT] , wherein in the backdrop of the defence that the drawer a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ok the obligation to pay interest @ 2 percent per month from the date of investment, with a lock-in period of six months. The said letters captioned, "Welcome Letters" incorporate the contract to repay the principal amount and the interest thereon. (c) Initially, the defendant did pay interest, at the agreed rate, through banking channels. In the month of January 2019, the plaintiffs were in pressing need of the funds. Hence, the plaintiffs sought refund of the principal amount. Despite a refund request having been lodged with the defendant, the latter not only committed default in refunding the invested amount but also stopped the payment of interest, which fell due. The plaintiffs, thus, addressed a legal notice on 10th August 2019, and called upon the defendant to repay the principal sum along with accrued interest in terms of the contract. (d) Despite service of the legal notice, the defendant neither paid the amount nor gave reply. Hence, the plaintiffs were constrained to institute the suit for recovery of the outstanding amount along with interest. 3. The defendant appeared in response to the service of the writ of summons. The defendant filed an affidavit in reply and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tween the defendant and the said Mr. Ameet Savant. The defendant joined the issue by filing an affidavit in sur-rejoinder. 8. In the wake of the aforesaid pleadings, I have heard Mr. Karl Tamboly, the learned counsel for the plaintiffs and Mr. Simil Purohit, the learned counsel for the defendant at some length. 9. Mr. Tamboly, the learned counsel for the plaintiffs, laying emphasis on the fact that the plaintiffs had not only invested the principal sum of Rs. 5,80,00,000/- with "Ventura" but had also received the interest, as agreed under the terms of the contract, urged that the defendant is trying to take up an illusory defence of lack of privity of contract to wriggle out of the liability. To this end, Mr. Tamboly invited the attention of the Court to the extracts of accounts (Exh. '5' to Exh. '8') which evidence the credit of the amount to, and from, the account of "Ventura". 10. Mr. Purohit, the learned counsel for the defendant submitted with tenacity that none of the said entries pertains to the account of the defendant. As a categorical statement was made on behalf of the defendant that not a single rupee was deposited in the account of the defendant nor any amount was p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . Vs. Union of India & Ors. 2017 SCC OnLine Del.7021. In the said case, in the context of liability of the "franchisee" to pay service tax, the Division Bench expounded the nature of the franchisee agreement in the following words : "58 A representational right would mean that a right is available with the franchisee to represent the franchisor. When the franchisee represents the franchisor, for all practical purposes, the franchisee loses its individual identity and would be know by the identity of the franchisor. The individual identity of the franchisee is subsumed in the identity of the franchisor. In the case of a franchise, anyone dealing with the franchisee would get an impression as if he were dealing with the franchisor." 15. Countering the submission, Mr. Purohit, the learned counsel for the defendant urged that the edifice of the submission now sought to be built up on behalf of the plaintiffs does not find support in the plaint. The plaintiffs have categorically averred in the plaint that the defendant had invited the deposits through M/s. Crefin India Management Private Limited. The plaintiffs have themselves disowned the self-stated case. In contrast, the defendan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... shall not receive or pay any money or securities in its own name or account. All receipts and payments of securities and funds shall be in the name or account of Trading Member. (e) The Authorized Person shall not to issue any documents like bill, confirmation memo, statement of funds/ securities to the clients in its own name. (f) The Authorized Person agrees that the Trading Member and NSEIL would be entitled to establish any other additional control that it desires to ensure safe and secure dealing of investors with the Authorized Person. (g) The Authorized Person shall permit the Trading Member and NSEIL to conduct the inspection of the branch where the terminals are located and records of the operations carried out by the Authorized Person. 3. RIGHTS, RESPONSIBILITIES/OBLIGATIONS OF THE TRADING MEMBER (a) The Trading Member shall be responsible for all acts of omission and commission of the Authorised Person and/or their employees, including liabilities arising there from. …………….." 17. Mr. Tamboly laid special emphasis on the conditions under the caption, "Scope and Activities" to the effect that all acts of omission and com ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ansaction assumes significance. The Welcome Letter, dated 8th July 2016 (Exh. 'A') reads as under : "We thank you for your investment of Rs. 1,30,00,000/- (One Crore Thirty Lakhs only) with VENTURA and we assure the performance of your investment with the following agreed terms : The Funds are invested in Index Option Funds and provides you a guarantee on the capital invested and also provides you a monthly return of 2%. The returns will be paid on or before 10th of every month after completing one month from date of investment. ………….. Kindly note that Fund will be invested with a lock in period of 6 months and subsequently will be open for partial and full withdrawal of principal invested with VENTURA. Returns will be paid on outstanding amount available with us. In case of any withdrawal required, request of the same has to be intimated at the beginning of the month post lock in period." 22. The nature of the transaction which can be discerned is that the amount was to be invested in Index Option Funds with a lock-in period of 6 months. It was open for the investor to withdraw, either fully or partially, invested amount after the said lock ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cord. It was submitted that a substantial part of the amount invested by the plaintiffs came to be eventually transferred to the account of the defendant. I am afraid to accede to this submission, at this stage, sans evidence. The question as to whether the amount which were transferred by Mr. Ameet Savant to the account of the defendant, represented the very money which the plaintiffs had invested with Mr. Ameet Savant, is essentially rooted in the facts and is a matter for trial. At this juncture, it would be hazardous to draw such an inference on the basis of the money trail which the plaintiffs want the Court to believe. 26. There is not much controversy over the fact that the prosecution is initiated against Mr. Ameet Savant. Whether the defendant is liable for the acts of the authorised person, in the backdrop of the allegations of fraud, raises a triable issue. The question of liability of the principal for the fraud committed by the agent, in the context of the nature of the defence and the material on record, would warrant consideration. It is not the law that the principal can be held liable for the fraudulent acts of the agent only when those acts are committed for the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Suit. The appellate side of the High Court ought to have taken into consideration the factual matrix of the case before recording its finding. Taking into consideration the totality of the facts and circumstances of the case, we are of the opinion that the defendant/appellant has made out a prima facie case of triable issues in the Suit which needs to be adjudicated. Therefore, the defendant is entitled to grant of unconditional leave to defend the Suit." 28. The reliance placed by the learned counsel for the defendant on the judgment of this Court in the case of Asmi Jewellery India Ltd. Vs. Godrej Consumer Products Ltd. 2016 (1) Mh. L.J. 395 and the judgment of the Supreme Court in the case of Sunil Enterprises and Ors. Vs. SBI Commercial and International Bank Ltd. (1998) 5 SCC 354 appears to be well founded. 29. The upshot of the aforesaid consideration is that the defence raised by the defendant at the first possible opportunity that there was no privity of contract between the plaintiffs, and no amount was invested by the plaintiffs with the defendant and the documents, which have been relied upon by the plaintiffs to buttress their case of the contract between the plaint ..... X X X X Extracts X X X X X X X X Extracts X X X X
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