Ravish Kumar Singh (Owner) 13 November 2013

Can shares fraud be booked under 420

Hi,

I want to know whether police can register a case under 420 for the losses incurred due to inappropriate trading in stock by the broker/portfolio manager.

Please go through the following details:

1. In December 2012 I saw this advertisement in the local paper (see attachment) claiming 6% monthly return against investment in share market trading.

2. So I went to the given address, there I met the owner of Krishna Investments, Mr. Ajay Kumar Verma. At that time he was the franchisee of BMA Wealth Creators Ltd., Reliance Money and TATA Securities. He was also dealing with other financial services like Fixed Deposits etc.

3. After visiting 5-6 times and understanding the scheme properly I opened a Demat account with BMA Wealth Creators Ltd., through Mr. Ajay Kumar Verma.

4. On 04 Jan 2013 I invested Rs. 1,50,000/- through cheque in my Demat account.

5. The scheme was that I will get fixed 6% return per month on my investment and my invested amount will be safe.

6. Trading was to done by Mr. Ajay Kumar Verma, owner of Krishna Investments and for that a written agreement was made (see attachment)

7. I was getting my monthly return of 6% (Rs. 9000) till August 2013 i.e. for 8 months.

8. Didn’t get the agreed return from September 2013 so I went for the follow up on 04 October 2013, Mr. Ajay Kumar Verma told that I will getting it around 20 October 2013, but I didn’t got it and from 21 October 2013 Mr. Ajay Kumar Verma is on the run, his mobile is switched off and the office is closed.

9. Meanwhile I came to know that there are several other investors who have suffered the same fate, so we all went to the police.

Police is saying it is not a fraud or cheating it is just breach of the agreement and is a simple matter of give and take, so no case can be registered under 420.

My question is, why it is not a fraud as:

a. The person is on the run.

b. There are more than 20 investors who have suffered.

c. Some of the investors received payments through cheques which have bounced due to insufficient funds in Mr. Ajay Verma account.

d. Sebi also have regulations for unauthorized trading.

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2 Replies

Sudhir Kumar, Advocate (Advocate) 13 November 2013

you acted on the inducement of 6% return. without this inducement you would not have invested. your case fits in IPC.

Sudhir Kumar, Advocate (Advocate) 13 November 2013

read s/415

415. Cheating.-- Whoever, by deceiving any person, fraudulently or dishonestly induces the person so deceived to deliver any property to any person, or to consent that any person shall retain any property, or intentionally induces the person so deceived to do or omit to do anything which he would not do or omit if he were not so deceived, and which act or omission causes or is likely to cause damage or harm to that person in body, mind, reputation or property, is said to" cheat". Explanation.- A dishonest concealment of facts is a deception within the meaning of this section. Illustrations

(a) A, by falsely pretending to be in the Civil Service, intentionally deceives Z, and thus dishonestly induces Z to let him have on credit goods for which he does not mean to pay. A cheats.

1. The words" the" and" offence of" rep. by Act 12 of 1891, s. 2 and Sch. I and Act 8 of 1882, s. 9, respectively. 2. Ins. by Act 8 of 1882 s. 9. 3. Subs. by Act 3 of 1951, s. 3 and Sch., for" the States". 4. Subs. by Act 26 of 1955, s. 117 and Sch., for" transportation for life".

(b) A, by putting a counterfeit mark on an article, intentionally deceives Z into a belief that this article was made by a certain celebrated manufacturer, and thus dishonestly induces Z to buy and pay for the article. A cheats.

(c) A, by exhibiting to Z a false sample of an article intentionally deceives Z into believing that the article corresponds with the sample, and thereby dishonestly induces Z to buy and pay for the article. A cheats.

(d) A, by tendering in payment for an article a bill on a house with which A keeps no money, and by which A expects that the bill will be dishonoured, intentionally deceives Z, and thereby dishonestly induces Z to deliver the article, intending not to pay for it. A cheats

(e) A, by pledging as diamond articles which he knows are not diamonds, intentionally deceives Z, and thereby dishonestly induces Z to lend money. A cheats.

(f) A Intentionally deceives Z into a belief that A means to repay any money that Z may lend to him and thereby dishonestly induces Z to lend him money, A not intending to repay it. A cheats.

(g) A intentionally deceives Z into a belief that A means to deliver to Z a certain quantity of indigo plant which he does not intend to deliver, and thereby dishonestly induces Z to advance money upon the faith of such delivery. A cheats; but if A, at the time of obtaining the money, intends to deliver the indigo plant, and afterwards breaks his contract and does not deliver it, he does not cheat, but is liable only to a civil action for breach of contract.

(h) A intentionally deceives Z into a belief that A has performed A' s part of a contract made with Z, which he has not performed, and thereby dishonestly induces Z to pay money. A cheats.

(i) A sells and conveys an estate to B. A, knowing that in consequence of such sale he has no right to the property, sells or mortgages the same to Z, without disclosing the fact of the previous sale and conveyance to B, and receives the purchase or mortgage money from Z. A cheats.