TaxTMI 
TaxTMI 
2020 (6) TMI 272
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.... 3. Respondent no.4 has been impleaded in 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 resp....
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....ipt of funds, it was liable to make good the amount and therefore pay over the same 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 C....
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....that the 1st respondent had paid over these amounts to the 2nd respondent. Dangarwala's 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....
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.... cheques for respondent no.2. Jajoo is said to have admitted collecting cash from Suresh Shah and V. Krishnakant as well. 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 respon....
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....r alia, he contends that Suresh Jajoo is a necessary party. Respondent nos.2 & 3 are stated to have made false statements on oath. 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 respon....
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....spondent no.2 had also purchased and sold and otherwise dealt in shares and debentures quoted on the stock exchanges in India and had advanced 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 i....
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....d have been done in the petitions filed by the Custodian. 19. In paragraph 4 of his affidavit dated 11th July, 2000 Respondent no.3 T.B. 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 t....
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....petitioner could not have filed the present petition. Jajoo states in his defence that it is corroborated by respondent nos.2 and 3 who have not 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....
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....it dated 19.1.1996 on behalf of respondent no.2? (3) Whether the petitioner and/or respondents nos.2 and 3 prove that respondent nos.2 and 3 advanced the said amount 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 l....
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....judicata or constructive res- judicata? (21) Notwithstanding the respondent no.2 never having claimed a sum of Rs. 3, 44, 12, 538/- as being outstanding and receivable by respondent no.2 from respondent no.4 whether the petitioner can still claim the said amount from respondent no.4? (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 compani....
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....t the 4th respondent because no party has contended that the respondent no.4 had retained the money for himself. 29. Mr.Mehta further submitted that by virtue of Section 230, the respondent no.4 cannot be held liable and in support of his contention he relied upon the decision of the Supreme Court in Vivek Automobiles 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 th....
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...., he did not offer himself for cross examination. Nevertheless I shall briefly deal with the statements therein since some statements may be relevant for considering the factual matrix. Vakil has deposed that Manubhai Maneklal was in the share business and had dealt in voluminous quantities of shares till his death 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 Va....
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....nal knowledge of what had transpired. He has deposed that Maneklal had told Suresh Shah that Shah should inform Maneklal on telephone of every occasion that cash was handed over by him to Suresh Jajoo and that Mankelal would contact Ruia to seek confirmation from Ruia that Jajoo had handed over the amount in cash. According 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 wit....
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....im in the return. He also claims to have filed a Kar Vivadh Samadhan Scheme Declaration on 30th December, 1998 and having paid the requisite tax. The deponent makes reference to the case of Harshad S.Mehta which was discussed in Parliament and the constitution of the Joint Parliamentary Committee. Reference is made to portions 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 h....
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....ther deposes that the attorneys of DMPL have vide a letter dated 27th June, 1995 had also admitted that there were no badla bills or invoices issued to T.H.Vakil or M/s. V. Krishnakant or M/s Suresh Shah. A copy of the letter dated 27th June, 1995 is at item 18 of Annexure B filed along with the affidavit. The deponent states that 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 affida....
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....nakant and Suresh Shah. It appears that the observation that recording of evidence in the above matter had commenced was erroneous. The incorrect recording was not brought to the notice of the Court at the material time and all parties continued to act upon the earlier orders. On 11th September, 2015 time to complete recording of evidence 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 21....
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.... in respect of the transactions of purchase and sale of shares and that no amount was advanced as loan by the notified party to respondent no.1. In support of their contention, respondent no.1 has relied upon 7 bills indicating purchase and sale of shares during various settlement periods from 16th March, 1991 to 21st June, 1991. Respondent no.1 is a broker. The bills reflect sale 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 ....
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....he above MP) seeking an order that the MP 2/96, 3/96 and 4/96 be consolidated and heard together and that upon consolidation in the three petitions, issues be settled therein. On 25th October, 2013, the MA no.318 of 2006 came to be disposed by passing the following order: "In the present case, the applicants are seeking direction that MP-4/96, MP-3/96 and MP-2/96 may be heard together 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 ....
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....ord. On 25th January, this Court once again observed that Rajen C. Vakil having filed an affidavit dated 14th November, 2006, it would be appropriate that he presents himself for cross examination. In order to enable him to do so, notice was directed to be issued to remain present in person and /or through Advocates. 43. At the request of parties made on mentioning, on 30th January, 2018 time to 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 be....
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....ments. No evidence was led by the Respondents. In the meantime, Ruia expired. Meanwhile Mr. Pandya appearing on behalf of respondent no.2 had made a grievance that certain documents were available with the State Bank of Hyderabad/State Bank of India which bank had not provided the copies sought. The Court was constrained to issue notice to the said bank and the Asst. Commissioner of Income Tax, Central 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 recor....
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....January, 1996 filed on behalf of DMPL. The petitioner and respondent nos.2 and 3 are also required to prove that respondent nos.2 and 3 advanced the amounts to Vakil against pledge of shares as set out in an affidavit dated 2nd June, 2005 filed by DMPL. Both these issues in my view are liable to be answered in the negative. 48. The respondent nos.2 & 3 have not led any evidence. The petitioner being the Custodian 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 f....
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....was issued to Jajoo in a sum of Rs. 5, 50, 000/-. Around the same date i.e. 5 to 7th August, the sum of Rs. 15 lakhs is seen to be issued in T.H Vakil's account. Around the same period, one of the headings on the cash book mentions the caption "Int. on loans receivable". There is no mention of either T.H Vakil or Rajen Vakil or any of the respondents in the above Misc. Petition or companion Misc.Petition nos. 3 or 4 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 ....
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....by Suresh Shah in MP-4 of 1996 and several orders of preliminary nature and procedural nature passed jointly in MP nos.2, 3 and 4 referred to recording of evidence of respondent no.1 continuing over a long period of time from 2007 till 2015 when the petition eventually came to be dismissed only to be restored by recalling that order in the review petitions. The respondent no.1 in the present case has not challenged the order in 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....
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....nt of the witness' presence is liable to be ignored. This decision holds the field as on date but it is not really helpful for the Custodian inasmuch as it is only admissions which the respondents may take advantage of that are to be read in evidence and not otherwise. The admissions in the affidavit of evidence to the extent it concerns, the respondents' case will need to be identified. I therefore propose to consider this aspect 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 broke....
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....nefits of his deposition and to that extent his evidence must be ignored. In that view of the matter, issues no.4 & 5 wherein the burden of proof is cast upon the 1st respondent must be answered in the negative since in my view respondent no.1 has failed to discharge this burden. Issue nos. 4 and 5 are answered in the negative. 55. Issue no.6 requires the respondent no.1 Vakil to prove that respondent no.4 Jajoo issued a writing acknowledging 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....
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....encashment of the cheques is not in dispute. That being the case the deposition and the affidavit to the extent of such admission can be read in evidence in view of what I have observed above, however, the fact whether the amount was received for discounting or as an advance/ loan repayable with interest at 24% p.a. has not been established. It is only receipt of Rs. 3, 44, 12, 538/- that has been established. Whether this was for the purpose of 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 in....
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...., beyond such evidence in the form of an admission, the 1st respondent had not established payment of these amounts. It may be that the 1st respondent was anticipating the trial of Misc. Petition no.4 of 1994 wherein Suresh Nandlal Shah appears to be supportive of the case pleaded by T.H.Vakil. Suresh Shah has attempted to establish that various amounts encashed by the respondent no.1 in its current accounts in Federal Bank had been withdrawn on various 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 t....
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....istance to the 1st respondent in the present case. Tagging of MP-nos.2 and 3 with MP- nos.4 of 1996 was purely for administrative purposes and to ensure that the trial in these matters proceeds together in view of several issues being similar but affecting different brokers. Probably the scope of the trial would have been curtailed by virtue of such tagging specifically since the petitioners and respondent nos.2, 3 and 4 were common. It is only the 1st respondent 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....
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....and is accordingly answered. 66. Issue no.17 requires proof that the disputed transactions are fraudulent and a mode of diverting monies from the 2nd respondent to the 3rd respondent. Absent any evidence on behalf of 1st respondent and or on behalf of respondent nos.2 & 3 there is no occasion to come to the conclusion that the disputed transactions were fraudulent and for diverting monies. The entire scheme of operations does allude to a plan which has not been fleshed 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 mad....
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....st recipient of these funds. The fact that Jajoo himself has denied the transaction is of no consequence. Pleadings do point to the possible involvement of Suresh Jajoo and hence, in my view issue no.18 must be and is answered in the affirmative. 69. Issue no.19 invites a finding on whether the petitioner or respondent no.2 are entitled to sue for the monies claimed in the petition on the basis that the transactions were illegal. If the transactions were illegal, respondent 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....
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....certain monies to the 2nd respondent since these amounts were advanced as a loan by 2nd respondent to the 1st respondent, there was no mention of the 4th respondent at that stage. However, in the course of proceedings, it transpires that the name of the 4th respondent surfaced and allegations were made against him to the extent that the entire process of collection of cheques and collection of cash and payment of cash to respondent nos.2 and 3 has been attributed to respondent no.4. 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 i....
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.... the basis that evidence would be common evidence in the three petitions. Evidence led in MP-4 of 1996 is certainly not in common being led as common in these petitions. The evidence of Suresh Nandlal Shah which has since concluded commenced with the filing of an affidavit of evidence dated 21st September, 2005 it refers to the involvement of T.H Vakil who is proprietor was the brother-in-law of Suresh Shah. It also refers to the involvement of Manubhai Maneklal and V. Krishnakant. References 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....