IMPORTANT POINT
A share broker cannot be prosecuted under IPC for disputes arising from investment transactions, which should be addressed under the SEBI Act.

JUDGMENT :

Hon'ble Anish Kumar Gupta, J.

1. Heard Sri Hitesh Pachori, learned counsel for the applicant, Sri Manish Trivedi, learned counsel for the opposite party no.2 and learned Sri Rajeev Kumar Singh, A.G.A. for the State.

2. The instant application under Section 482 Cr.P.C. has been filed seeking quashing of charge-sheet dated 06.09.2018 and cognizance order dated 12.04.2019 as well as the entire criminal proceedings in Case No. 21416 of 2019 (State of U.P. Vs. Jitendra Kumar Keshwani), arising out of Case Crime No. 160 of 2018, under Sections 420, 409 of the India Penal Code (hereinafter referred to as, 'I.P.C.'), Police Station- Hariparvat, District- Agra, pending in the court of Chief Judicial Magistrate, Agra.

3. The brief facts of the instant case are that the opposite party no.2 has lodged an F.I.R. being Case Crime No. 160 of 2018 under Section 420 and 406 I.P.C. alleging therein that the applicant herein is the Director/proprietor of M/s LDK Share and Securities Pvt. Ltd., who was the licensed share broker. In the F.I.R. it has been alleged that the opposite party no. 2 and his younger brother Ram Kumar Sharma were having Demat Accounts with the Stock Holding Corporation of the applicant, where the equity shares of different it companies were deposited by the opposite party no. 2 and his brother. The opposite party no. 2 and his brother used to trade in share equity shares through the applicant, who was the licensed share broker. It is alleged that the applicant herein had contacted the opposite party no. 2 and his brother and asked them to invest and trade in shares through the applicant, whereby he will provide various facilities. On such assurance, the opposite party no. 2 and his brother had invested in equity shares and also subsequently sold the aforesaid shares. When the money of shares sold was asked by the opposite party no.2 from the applicant, he assured that the payment shall be made after sometime. Therefore, the aforesaid amount of shares sold by the opposite party no. 2 was an amount kept in the entrustment of the applicant herein and despite repeated demands made by the opposite party no. 2 the applicant has failed to make the payment of shares amounting Rs. 9,69,450/-. When the said payment was not made by the applicant herein, a legal notice dated 30.11.2017 was given to the applicant. Despite the said notice the applicant had not paid the amount, therefore, it is alleged that the applicant has committed the breach of trust and misappropriation of the amount of the opposite party no.2.

4. It has been further prayed in the F.I.R. that after registering the F.I.R. and initiating the legal proceedings against the applicant, the amount of the opposite party no. 2 be recovered. The matter was investigated by the police and the charge sheet dated 06.09.2018 was filed, on which cognizance was taken by the Chief Judicial Magistrate concerned on 12.04.2019, against which the instant application has been filed by the applicant herein.

5. Learned counsel for the applicant relying upon the judgement of the Apex Court dated 06.02.2024 passed in Criminal Appeal arising out of SLP (Crl.) No. 13485 of 2023 (Lalit Chaturvedi & Others vs. State of U.P. and Another), submits that from the allegations made in the F.I.R. no offence whatsoever under Sections 420 and 409 I.P.C. can be said to have been made out against the applicant herein.

6. Learned counsel for the applicant further submits that the applicant is a broker appointed under the provisions of the Securities and Exchange Board of India Act, 1992 (hereinafter referred to as 'the SEBI Act') and opposite party no.2 herein, is an investor and the dispute between the parties with regard to investment made by opposite party no.2 in the shares, which were ultimately sold by opposite party no.2 and the amount of the same has been misappropriated by the broker. He submits that the aforesaid offence is covered under Section 15-F of SEBI Act. Therefore, he relies upon the S