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* IN THE HIGH COURT OF DELHI AT NEW DELHI

+ W.P.(CRL) 1979/2020
DHARMENDERA KUMAR ARORA ..... Petitioner
Through Mr Abhi Kumar, Advocate

versus

THE STATE, GOVT. OF NCT OF DELHI & ANR...... Respondents

Through Mr R.S. Kundu, ASC for State with
SI Ranveer PS Subdarjang Enclave.
Ms Kaadambari, Advocate with Ms Mansi Sinha,
Advocates for R2 with R2 in person.

CORAM:
HON'BLE MR. JUSTICE VIBHU BAKHRU
ORDER
% 01.12.2020

[Hearing held through videoconferencing]

CRL.M.A. 16555/2020

1. Allowed, subject to all just exceptions.

W.P.(CRL) 1979/2020
2. Issue notice. Mr Kundu, learned ASC accepts notice.
3. The petitioner has filed the present petition, inter alia, praying that the
FIR No. 0344/2020 under Section 420/406/120-B of the IPC registered with
PS Safdarjung Enclave and all proceedings emanating therefrom be
quashed.
4. Mr Kumar, learned counsel appearing for the petitioner submits that
the said FIR in question ought to be quashed, essentially, on three grounds.

Signature Not Verified

digitally signed
by:DUSHYANT
RAWAL
 First, he submits that the FIR does not disclose any cognizable offence. He
submits that there is no allegation in the FIR that the petitioner had entered
into transactions with the complainant (respondent no.2) with the intention
of cheating him. He states that the transactions relate to a DEMAT Account
which was opened in 2016 and it is admitted in the FIR that the complainant
had been receiving regular dividends and assured returns, which were in
terms of their understanding. He submits that in this regard it is apparent that
there was no dispute for a period of over three years. He contends that since
there was no allegation that the petitioner had intended to cheat the
complainant from the inception, the FIR ought to be quashed.
5. Second, he submits that the complainant has also made a complaint
with the Securities and Exchange Board of India (SEBI) and the said
complaint is being investigated. He submits that a close examination of the
FIR also indicates that the complainant has relied upon the limited
investigation carried out by SEBI. He contends that SEBI is duly
empowered to take necessary steps with regard to the grievances of the
complainant including return of securities if it is found that the same had
been misappropriated.
6. Third, he submits that the disputes arise out of the commercial
transactions and are essentially civil in nature.
7. At this stage, it would be necessary to examine the allegations made
in the FIR. The complainant has alleged that The Modex International
Securities Limited (hereinafter ‘Modex International’) had approached the
complainant in the year 2016 through a sales team member Mr Sandeep
Kher. It is alleged that he introduced himself as an Investment and Stock
Broker in Modex International. Thereafter, he organized a meeting with the

Signature Not Verified

digitally signed
by:DUSHYANT
RAWAL
 petitioner herein. The complainant alleged that the petitioner had offered
that if the complainant opens a DEMAT Account and transfers his securities
in that account, a brokerage fee of 0.1% would be charged on the sale and
purchase of securities as per recorded instructions in accordance to National
Stock Exchange (NSE) rules. In addition, Modex International also agreed
to pay 6.7% per annum as monthly payments on the securities held in the
DEMAT Account. It is also alleged that all appreciation in asset value and
dividends on securities would also be transferred to the complainant as and
when the securities are sold. According to him, it was also represented by
Modex International and its Directors that the securities would be kept safe
in the DEMAT Account and the complainant would not be liable for any
losses. According to the complainant, it was agreed that all losses would be
borne by the said company (Modex International).
8. The complainant continued to receive regular dividends as well as
assured returns and there was no dispute till November, 2019. However,
several news items reporting a scam relating to Karvy International, were
published and this made the complainant feel insecure. He decided to
withdraw his securities from Modex International and accordingly,
requested that his securities be transferred to his another DEMAT Account
with J M Financials. The complainant alleges that the petitioner promised
that the securities would be transferred, however, failed and neglected to do
so. The complainant made repeated requests for the same but his requests
remained unheeded. He states that the petitioner told him that Modex
International was being audited by the National Stock Exchange (NSE) and
the securities would be transferred once the audit is over. But that was not
done.

Signature Not Verified

digitally signed
by:DUSHYANT
RAWAL
 9. The complainant alleges that the Directors of Modex International
have hatched a conspiracy by illegally forging and misappropriating his
securities by making adjustments in their books. He also alleges that these
securities have illegally been sold without his authorization with the object
and intent to defraud him.
10. Clearly, a plain reading of the FIR indicates that it does disclose
cognizable offences. Thus, the contention that the FIR is liable to be
quashed as not disclosing any cognizable offence, is clearly unmerited.
11. The contention that the FIR is required to be quashed as SEBI is also
investigating a similar compliant, is also unmerited. SEBI’s jurisdiction
extends to investigate complaints and take appropriate action for violation of
Securities and Exchange Board of India Act, 1992 (SEBI Act) and the Rules
and Regulations made thereunder. It does not extend to prosecuting offences
under the IPC. The fact that SEBI is investigating or prosecuting the
petitioner for offences under the SEBI Act, or the relevant regulations made
thereunder does not in any manner warrant quashing of the present FIR. It
also does not preclude the investigating agency from investigating the
allegations regarding offences punishable under the Indian Penal Code,
1860.
12. The petition is, accordingly, dismissed.

VIBHU BAKHRU, J
DECEMBER 1, 2020/pkv

Signature Not Verified

digitally signed
by:DUSHYANT
RAWAL