S.420 IPC | Selling Property To Others Upon Suspicion Of Future Losses Cannot Save Such Assets, Can't Remain Rich "While Ruining Others": Rajasthan HC

Rajasthan High Court, while hearing an anticipatory bail application, observed that if a person speculates through someone else about incurring potential losses in future, and in consequence to that speculation disposes of his immovable property to near relative(s), then such properties cannot be saved later and the seller shall be responsible for the consequences since he cannot be allowed to remain rich while ruining others.

A bench of Justice Rajendra Prakash Soni was hearing petitions of anticipatory bail filed by family members who were booked for cheating under IPC.

The petitioners had opened six commodity trading accounts with the complainant company which was engaged in the business of facilitating exchange-related services as a broker to its customers on NCDEX and MCX.

The petitioners were incurring daily losses on their accounts and they were being repeatedly asked by the complainant to deposit the margin money in their trading accounts as required by the exchange platforms.

When the same was not done, the exchange platforms adjusted the losses incurred on the petitioners' accounts with the margin money of the complainant and its 120 other clients leading to huge monetary and reputational losses to the complainant.

It was alleged by the complainant that from the very beginning, the intention of the petitioners was to make profits only and not to make losses. The counsels for the complainant argued that the petitioners had dishonestly and fraudulently cheated the complainant and when they were asked to settle the liability, refused and started threatening the complainant.

The counsel also revealed that to evade their liability, the petitioners had also disposed of their immovable properties to near relatives.

On the argument of disposing of properties to near relatives, the counsel of the petitioners submitted that such transfer could not be considered a crime since the properties were not the subject matter of the dispute, and neither were those mortgaged with the complainant or the exchange platforms.

While rejecting the anticipatory bail application of the petitioners, the Court made an observation regarding this argument and held the following:

“No person can be allowed to become unjust rich and thrive upon the goodwill and reputation of others which is got established over a period of years. If a person has legally speculated through someone else, then he and his properties are responsible for the consequences and later he cannot save his properties and remained rich at the cost of others and by ruining them.”

The Court opined that the petitioners were aware that they were engaged in trading a high-risk commodity and might incur huge losses anytime. Therefore, owing to that fear, they made a family settlement regarding immovable assets long before in 2015 and when the right time came, i.e. in 2019, they gave effect to the settlement by disposing of their immovable properties to the near relatives. This was seen as clearly revealing petitioners' fraudulent, dishonest and deceptive intentions.

Hence, the Court ruled that such disposal of properties was not a natural transaction but had a direct nexus with the petitioners' business of trading commodities and its consequences.

Title: Kamla Devi & Ors. v State of Rajasthan

Citation: 2024 LiveLaw (Raj) 223

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