Dinesh Gupta vs. The State of Uttar Pradesh

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Introduction:

In the case of Dinesh Gupta vs. The State of Uttar Pradesh, the Hon’ble Supreme Court gave its judgment with utter astonishment after it came to conclusion on a few substantive facts regarding this case which weren’t disclosed in front of it or in front of the previous courts as well. In the present case, the matter is regarding the non-payment of loan in crores value given by the complainant to the accused persons. It was a highlighted factor that could be seen from this case that unethical litigants if found guilty for misleading the court with frivolous facts and claims shouldn’t be left scot-free, whereas strict terms and conditions including penalties should be imposed on them. This case also advocated the need of the hour to check the litigations which are initiated on the pretext of falsehood, concealment of facts and forum hunting to be thoroughly checked with firmness.

Facts of the Case:

1. The complaint Karan Gambhir, who owns DD Global Capital Pvt. Ltd filed an FIR against Baljeet Singh, Rajesh Gupta, Dinesh Gupta, Sushil Gupta & others.There were three private limited companies namely Verma Buildtech & Gulab Buildtech, BDR whereas the promoters of these three aforementioned companies were Dinesh Gupta, Rajesh Gupta, Sushil Gupta.
2. The complainant Karan Gambhir alleged that his company extended a short term loan of Rs 11,29,50,000/- Verma Buildtech and also Rs 5,16,00,000/-  to Gulab Buildtech accordingly. However, later the loan was converted into debt equity as allegedly promised to the complainant under the pretext of high returns from the business of real estate.
3. A shareholding of 21% was acquired by the complainant in Verma Buildtech, followed by an acquisition in Gulab Buildtech which amounted to 4.53% .
4. An amalgamation scheme was initiated by Gulab Buildtech & Verma Buildtech to merge with BDR.The share certificates were never physically handed over to the complainant.
5. As per the allegations, when the complainant further asked for repayment of loan, initially time was sought by the accused stating that there was a slump in the real estate market further to which eventually the accused started ignoring the complainant.
6. Further a complaint was instituted by the complainant against the accused under the case of cheating and forgery. While filing the said complaint, the address provided by the complainant was ‘C/o A&A Earth Movers, D-9, Sector-2, Noida sector-20, Gautam Budh Nagar, UP.’ 
7. After thorough investigation it was found that a case was instituted against the accused by the complainant under the ambit of section 467,420 and 120-B of IPC.On 29.12.2020 a charge sheet was filed.Consequently, as per vide order dated 15.02.2021 the Chief Judicial Magistrate, Gautam Budh Nagar issued summons to the accused by taking cognizance.
8. The appellants consequently filed petitions under the ambit of section 482 of the Cr.P.C. in the Hon’ble High Court while seeking the quashing of the summoning order which was dated on 15.02.2021 and the FIR.By the composite order passed these petitions were dismissed by the Hon’ble High Court and the same are challenged by the appellants in the present appeals. 

Issues Raised:

1. Whether the Hon’ble High Court’s decision needs a revision and the FIR to be quashed?
2. Whether civil proceedings should be instituted in this case instead of criminal proceedings?
3. Whether the Hon’ble High Court’s decision should be upheld?

Contentions of the Appellant:

1. The senior counsels Mr Kabil Sibal, Ms Anjana Prakash, Mr Nakul Dewan appearing on behalf of the appellants, submitted that a sum of Rs 11,29,50,000/-  invested in Verma Buildtech  and Rs 5,16,00,000/- invested in Gulab Buildtech by the complainant’s company took place by acquiring equity shares thereof.
2. Before the investment, a resolution was passed in the Board of Directors meeting of the company which was dated on 26.08.2011, the investment in equity shares of Gulab Buildtech was approved which amounted to Rs 5,16,00,000/- and similarly resolution was passed by the company which was approved in its Board of Directors meeting dated 25.03.2011 for investment in equity shares of Verma Buildtech which amounted for Rs 11,29,50,000/- as well.Henceforth, the complainant’s claim that it was a short term credit given by the company was totally contrary as per the record as a clear concious decison was made by the company to invest in the equity shares of Verma Buildtech and Gulab Buildtech.
3. A letter dated 08.03.2013 was written by Gulab Buildtech and Verma Buildtech regarding the context to surrender the original share certificates of Verma Buildtech and Gulab Buildtech in order to facilitate the issuance of new share certificates.
4. Approximately after one year of amalgamation, the complainant’s company filed an application seeking a recall of the order of amalgamation before the Hon’ble Delhi High Court which was further dismissed on 15.03.2015.
5. After more than two years of filing this application’s dismissal, a complaint was filed at Gautam Budh Nagar, police station.
6. It was contended by the appellants that a dispute of civil nature in the context of monetary transactions between the corporates was being implicated as a criminal case.
7. Further, it was also majorly argued that even though the company doesn’t has any connection none whatsoever with Gautam Budh Nagar, and all the transactions between the parties were held at New Delhi, yet the complaint was filed at Gautam Budh Nagar.    

Contentions of the Respondent:

1. The learned senior counsel, Mr Vikas Singh, appearing on behalf of the respondent contended that the huge loan amount was advanced by the complainant solely on the basis of persuasion by the accused.
2. The shares which were alloted were handed over by the accused to the complainant.During the period of amalgamation process, no notice was issued to the complainant despite being a shareholder.Further due to this amalgamation process of Gulab Buildtech and Verma Buildtech merging with BDR, the percentage of the company considerably reduced.
3. The letter which conveyed that the company had committed its shares to Sushil Gupta indicates that there was forgery in certain documents.
4. The senior learned counsel also referred to the Balance Sheet of Verma Buildtech and Gulab Buildtech to prove that the amount which was advanced by the complainant was clearly shown in the ‘Current Liabilites’ column. Further the reference of Indian Accounting Standards was used to show the meaning of ‘Current Liabilities’ which is in form of short term loan. 
5. It was also contended by the learned senior counsel, that the accused persons colluded with each other and duped his client, the complainant, of crores of rupees under the pretext of making false promises of higher monetary returns. Henceforth, it was contended that the appeals should be dismissed.

Judgment:

The Hon’ble Supreme Court found the statement given regarding the address by the complainant in the FIR, as per details of the resolution passed by the complainant’s company DD Global, it was clearly evident that the registered office of DD Global is located at F-1/9, Okhla Industrial Area, Phase-I, New Delhi. Even during the time of the hearing it was undisputed that the complainant’s company DD Global is not pursuing any business activities, nor it has rented the place which mentioned above in Noida. Further it was noted by the court, that the application which was filed for the recall of amalgamation by the complainant, it was nowhere exclusively mentioned that the advanced loan given by the complainant initially was later converted into debt equity, it only mentioned that the complainant is a shareholder of the company.In the following case after thorough consideration of the facts and circumstances, The Hon’ble Supreme  Court imposed costs of Rs 25 lakhs upon the respondent Karan Gambhir which was to be deposited within four weeks with the Registry of the court.Upon the receival of the total amount it was directed to be transferred to the SCBA & SCAORA for the purpose of utilization of this amount for the benefit of their members and its development.

Analysis:

In the following case, there was appropriate use of section 482 Cr.P.C effectively utilized by the appellants and the court as well.In the following matter, the frivolous statements and claims of the respondent were uncovered at this last stage of appeal, where an ill-intention could be clearly observed to be made by the respondent to implicate a case with the nature of a civil proceeding into intentionally colouring it under a criminal case.In order to put weightage to their contentions the appellants further referred to the judgment of Hon’ble Supreme Court in the case of Randheer Singh vs. The State of Uttar Pradesh & Ors. The turning point in this case was when the complainant mentioned incomplete addresses of the accused namely Rajesh Gupta and Dinesh Gupta reflecting them to be residents of sector 20, Gautam Budh Nagar, Up also same in the case of Verma Buildtech and Gulab Buildtech yet here as well incomplete addresses were  deliberately mentioned showing them at the above address. Henceforth the idea of creating a false jurisdiction by the respondent was clearly evident.   

Conclusion:

In the case of Dinesh Gupta vs. The State of Uttar Pradesh, the powerful bench consisting of Justice Vikram Nath and Justice Rajesh Bindal who are well known for delivering bold decisions which can be clearly seen from cases such as in the case of Kusha Duruka vs. The State of Odisha where it imposed a cost of Rs 10000/- on the litigant for deceiving the court and interfering in administration of justice and dismissed the case.In the context of the present matter at hand, if a closer look at the actions of the respondent is taken, it equates to the fact that the inappropriate use of the jurisdiction was just a tip of the iceberg, as the main substantive issue of the matter, which involves agreements and financial transactions, clearly places the present case under the ambit of commercial and civil laws yet the respondent choose to abuse the criminal justice system probably, “with a motive to seek personal vendetta rather seeking ideal justice” as per the observation made by the court.Such a misuse of the Indian criminal justice system not only damages the image of legal system but also fails to uphold the ethos of  principles of natural justice.However, such a judgment that was given in this case  raises the trust of the citizens above the roof knowing that the Indian Legal System stands by the motto of  “by the people, for the people.”

References:

1. https://scourtapp.nic.in/supremecourt/2022/7498/7498_2022_8_1501_49396_Judgement_11-Jan-2024.pdf 
2. https://lawbeat.in/supreme-court-judgments/supreme-court-asks-high-court-ensure-details-bail-applications-mandatorily-mentioned 

~ This Article is written by Krishav Dwivedi, a student at Vivekanand Education Society’s College of Law; Intern at Legal Vidhiya.

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