Fraud charges to be framed against real estate firm, MD

New Delhi: A Delhi court recently ordered the framing of charges for the offence of fraud against real estate company Supertech Limited, its managing director RK Arora, and two agents of the company.
Gaurav Vij, the complainant, alleged that he was promised returns on investment and invested Rs 11.8 lakh in 2013, but the funds were diverted to another project without his knowledge.Later, he was promised a refund that was subsequently cancelled by the company.
The court of judicial magistrate first class Yashdeep Chahal said that the act of diversion was a result of the direction of "Management".
"For all intents and purposes, the word ‘Management' needs to be understood in a certain context and not in a general sense. It is so because the management of the company essentially vests in the managing director of the company, unless proved otherwise," said the court.
The court, agreeing with the submissions of advocate Raajan Chawla, said that the counsel has rightly argued that in ordinary circumstances, the decisions of the company which are expressly attributable to the management of the company, essentially flow from the MD of the company, unless the company comes forward to show that the decision was taken by some other officer of the company.
In the present matter, the proof of criminality allegedly committed by Arora lies in the e-mail communications between the complainant and the company, the court noted.
Further saying that the e-mail communications categorically indicate that the case of the complainant was placed before "Management M/s. Supertech Limited", as made out from the e-mail dated July 19, 2014. At one stage, the complainant was informed on Oct 14, 2014 that his case had been processed for a refund.
Thereafter, no refund was given and on Nov 20, 2014, the complainant was informed that his case had been put up with "Management" and the mandate given by the management was not to give any refund but to transfer the funds of the complainant to some other project of the accused company. The material on record does not appear to be groundless in nature and it cannot be said that no case is made out if the material is accepted as unrebutted, the court stated.
Owing to the corporate veil enjoyed by a corporate entity, no outsider is expected to know meticulously about the internal affairs of a company and it would be unreasonable to expect the complainant, being an outsider/investor, to meticulously specify the acts and omissions attributable to the officer of the company, the court said.
"Although the complete picture has not been revealed yet, the material on record so far is certainly not inadequate to completely absolve the accused persons. Accordingly, the accused persons are liable to be charged for the commission of offence under Section 420 read with Section 34 of IPC," the court concluded.