Delhi Court Orders Charges Of Fraud Against Supertech

Delhi Court Orders Charges Of Fraud Against Supertech

Notes that the complainant’s funds were knowingly diverted to another project and the refund was cancelled

A Delhi court has ordered fraud charges against real estate developer Supertech Limited, managing director RK Arora, and two company agents. The court of judicial magistrate first-class Yashdeep Chahal said that the act was under the direction of the ‘management.’

He stated, “The ‘management' needs to be understood in a certain context and not in a general sense. That’s because the management of a company essentially vests in the managing director unless proven otherwise.”

The complainant, Gaurav Vij alleged that he was promised returns and invested Rs.11.8 lakh in the company in 2013. However, the funds were diverted to another project without his knowledge. Later, he was promised a refund that the company subsequently cancelled.

Agreeing with the submissions of advocate Raajan Chawla, the court noted that the counsel rightly argued that in ordinary circumstances, the decisions of the company, attributable to the management, flow from the MD, unless the company proved that the decision was taken by some other officer. The proof of criminality allegedly committed by Arora lies in the e-mail communications between the complainant and the company.

Also, the 19 July 2014 email was placed before Supertech’s management. On 14, October 2014, the complainant was informed that his case had been processed for a refund.

However, no refund was made. On 20 November 2014, the complainant was informed that the management discussed his case and was mandated not to refund but to transfer his funds to another project of the accused company.

The court added that as per the material on record, no case was made if it was accepted as unrebutted. Owing to the corporate veil enjoyed by an entity, no outsider is expected to know about the internal affairs of a company. It was unreasonable to expect the complainant, being an outsider/investor, to specify the acts and omissions attributable to the company’s officer.

The magistrate ruled, “Though the complete picture has not been revealed yet, the accused persons cannot be absolved. They are liable to be charged with offence under Section 420 read with Section 34 of IPC.”