Company Not Made An Accused, No Direct Allegations Against Directors: Jharkhand High Court Quashes FIR

The single judge bench of Justice Sanjay Kumar Dwivedi observed that criminal proceedings and civil proceedings can go on simultaneously if there are allegations of criminality and it is proved that both the cases can go simultaneously. However, it is well settled that if the criminality is not made out, the continuation of a criminal case will amount to an abuse of the process of law.

The FIR was lodged by the informant alleging that the informant and his wife opened two Demat Trading Accounts through franchisee agents in M/s Bonanza Portfolio Ltd., whose proprietors were S.K. Goyal, S.P. Goyal, V.K. Agarwal, Shiv Kumar Goyal, and Narendra Singh. The informant used to invest most of my money in Yes Bank Shares' future and delivery stock. There were two lots each. Bonanza Portfolio Limited sold the shares without giving information to the franchise broker, and committed a breach of trust at the historical lowest price of Rs. 4.95 even though, on that very day, there was a credit balance of Rs. 5,43,150.46.

The Bonanza company could have sold only those shares whose value equaled the short amount. However, instead of doing that, the company from its office in Delhi sold out all the shares from the informant's account and from the account of his wife, even when the trading work was done by a local broker. But neither the local broker was informed nor the informant was informed of the difference margin. On March 6, 2020, mighty share brokers, with the help of operators, caused the fall of Yes Bank shares by 85% for a few seconds, and sold off all shares of both accounts for making wrongful gains. Due to this act of the company, there is less than Rs. 41,78,307.67 in both the accounts. The informant emailed the company but no reply was sent from the company's end. The informant claimed that the five partners of Bonanza Portfolio, S.K. Goyal, S.P. Goyal, V.K. Agarwal, Shiv Kumar Goyal, and Narendra Singh, under a conspiracy, committed fraud, cheating, and breach of trust by selling all shares of Yes Bank.

The petitioner submitted that in the FIR it has been mentioned that two lots of Yes Bank Futures had been bought by the informant and his wife on a future contract through M/s Bonanza Portfolio Ltd. were allegedly sold at a price of Rs. 4.95 per share, causing a loss of nearly Rs. 41 lacs to the informant and his wife. There is no allegation against the petitioners and the entire story is a concocted one.

The court held that the company was not made an accused and that the petitioners were the directors of the company, and there was no direct allegation or any whisper against the directors of mala fide. The law is well settled that if a wrong has been done by a company, the representative of the wrongdoer can be proceeded with, where the company is made a party, which is lacking in the case at hand.

Case Title: S.K. Goel versus The State of Jharkhand

Case No: Cr.M.P. No. 750 of 2021

Citation: 2022 LiveLaw (Jha) 66 

Dated: 12.07.2022

Counsel For Petitioner: Sr. Advocate M.S. Mittal, Advocate Salona Mittal

Counsel For Respondent: Advocate Shailesh

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