Criminal Misc. No.A-778-MA of 2007 -1-
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IN THE HIGH COURT OF PUNJAB AND HARYANA
AT CHANDIGARH
1. Criminal Misc. No.A-778-MA of 2007
Date of decision : 17.12.2008
Haryana Agro-Industries Corporation Ltd. .....Appellant
Versus
K.L.Jindal and others ...Respondents
2. Criminal Misc. No.A-779-MA of 2007
Haryana Agro-Industries Corporation Ltd. .....Appellant
Versus
K.L.Jindal and others ...Respondents
3. Criminal Misc. No.A-780-MA of 2007
Haryana Agro-Industries Corporation Ltd. .....Appellant
Versus
K.L.Jindal and others ...Respondents
4. Criminal Misc. No.A-781-MA of 2007
Haryana Agro-Industries Corporation Ltd. .....Appellant
Versus
K.L.Jindal and others ...Respondents
5. Criminal Misc. No.A-782-MA of 2007
Haryana Agro-Industries Corporation Ltd. .....Appellant
Versus
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K.L.Jindal and others ...Respondents
CORAM : HON'BLE MR. JUSTICE S. D. ANAND
Present: Mr.Pankaj Gupta, Advocate for the appellant
Mr. Arun Sharma, Advocate for the respondent No.1.
Mr. Hari Om Sharma, Advocate for respondent no.4.
S. D. ANAND, J.
The appellant- complainant- Haryana Agro-Industries
Corporation Ltd. has filed a plea under Section 378 (4) of the Code of
Criminal Procedure to obtain leave to appeal against the order dated
13.9.2007 vide which the learned Trial Court had dismissed the complaint
filed by the appellant-complainant under Section 138 of the Negotiable
Instruments Act against the respondents/accused and acquitted the latter
i.e. respondents/accused.
Before proceeding to undertake the adjudicatory exercise, it
would be appropriate to notice, at the very outset, that the learned
counsel for the parties agreed that the appellant/applicant had already
invoked the arbitration clause as between it and three promoters and even
an award has been passed by the Arbitrator in favour of the
appellant/applicant and against the three promoters.
It is common ground that two promoters i.e. S.K.Kansal and
T.N.Singla had already been ordered to be discharged by this Court. This
fact, even otherwise, is noticed in the order under challenge itself.
The appellant is a Public Sector Undertaking of the
Government of Haryana and has been incorporated as a Government
company. In terms of an ‘Assisted Sector Agreement’ dated 26.4.1995,
executed between the appellant and the three promoters (K.L.Jindal,
S.K.Kansal and T.N.Singla, out of which two promoters S.K.Kansal and
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T.N.Singla have already been discharged by this Court) agreed to
collaborate with each other “for the profitable implementation and setting
up of the project for the production of the refined oil, vanaspati ghee and
distilled oil through a company already got incorporated by the private
promoters under the name and style of Shivaka Industries Ltd. at Barwala
(Distt. Ambala).” The equity share holding of the appellant therein was to
the extent of Rs. 34 lacs. Clause 24(b) of the said Agreement provided
that the private promoters i.e. the accused No.1 to 3 “shall be bound to
purchase the said equity share-holding of the complainant Corporation in
the company after the expiry of the period of three years from the date of
commencement of commercial production by the company or at the expiry
of a period of five years from its incorporation, whichever is earlier.” The
appellant having been incorporated on 29.6.1992 and the commercial
production by it having commenced with effect from 7.12.1995, “the buy-
back of the equity share-holding of the complainant Corporation became
due on 28.06.1997 against the consideration of Rs.48,20,356/-,
determined as per the Clause 24(c) of the Agreement ibid.” The
promoters expressed inability to discharge the liability in the context of buy-
back aforementioned at one go and requested for being allowed to pay the
due amount in instalment. After discussion, the promoters agreed to
make initial payment of Rs. 10 lacs in the month of October, 1997 and the
balance amount in monthly instalments of Rs.5.00 lacs each. This buy-
back arrangement was accepted by M/s Golden Land Development (India)
Ltd., which is the accused No.4, on behalf of the private promoters being
the sister concern of M/s Shivaka Industries Ltd. The said private
promoters (accused No.1 to 3) and M/s Golden Land Development (India)
Ltd. (accused No.4) were, however, required to execute a supplementary
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tripartite agreement with the complainant Corporation in which a clause of
penal interest @ 3% p.a. Over and above the documentary rate of interest
from the date of default committed by the private promoters of M/s Shivaka
Industries Ltd. was to be stipulated.
Thereafter, M/s Golden Land Development (India) Ltd.
(hereinafter referred to as “M/s Golden Land”) issued post dated cheques
under reference which were payable during the month of May, 1998.
Those cheques were issued on behalf of the promoters. However, those
cheques bounced on account of ‘stop payment instruction’ by the drawer.
The appellant issued a registered statutory notice to the M/s Golden
Land. That notice was received undelivered thereby giving rise the
presumption that it had been duly delivered because it had been issued on
the last indicated address of the M/s Golden Land.
On appraisal of the evidence adduced at the trial, the learned
Trial Magistrate dismissed the complaint on a finding that appellant had
failed to prove the ingredients of offence under Section 138 of the
Negotiable Instruments Act. For recording that finding, learned Trial
Magistrate noticed that no contract at all could be infer to have been
effectuated as between the appellant and M/s Golden Land. In the
absence of tripartite agreement which both the parties were required to
sign in pursuance of the offer made by the M/s Golden Land (Annexure A-
1) and the acceptance thereof by the appellant vide Annexure A-2. In that
context, the following relevant observations were made by the learned Trial
Magistrate:-
“33. Before filing the present complaint, the complainant
had served a legal notice, which is statutory, Ex.C6 upon the
accused persons. Perusal of the same is very much relevant
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for fastening any kind of liability upon the accused No.4. It is
pertinent to mention here that the present proceedings are not
regarding any criminal liability of the accused for not honouring
the buy-back agreement as also admitted by CW1 but
regarding the criminal liability regarding the dishonouring the
cheque in question, Ex.C4. The cheque in question was
issued by the accused No.4, so at the maximum there will be
criminal liability of the accused No.4 only, if the other
ingredients of Section 138 of the Negotiable Instruments Act
are proved. On the basis of dishonouring of the cheque in
question, no criminal liability can be fastened upon the
accused No.1 to 3 and admittedly, the accused No.2 & 3 who
had approached the Hon’ble High Court had been discharged.
34. Now resuming with the legal notice, Ex.C6, it has been
recited therein that there was a liability of the three promoters
of M/s Shivaka Industries i.e. accused No.1 to 3 under the buy-
back agreement that was worked out as Rs.48,20,356/-,
Accused No.4 had given a offer to the complainant vide letter
(Ex.C3) for purchasing the shares of M/s Shivaka Indusries as
per the terms and conditions contained in FAC, on behalf of
the promoters of M/s Shivaka Industries. That offer was
accepted by HAIC (Complainant Corporation) with a express
condition that the promoters had to sign a tripartite agreement
and that agreement was not signed till the date of notice and
admittedly, till date. The Complainant Corporation had
accepted the cheques of the accused No.4 subject to the
condition that the promoters had to sign a tripartite agreement
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within a week. There would have been liability of the accused
No.4 only when the tripartite agreement would have been
signed.
35. The learned counsel for the complainant has argued that
the accused No.4 had made the offer vide Ex.C3, which was
accompanied with the cheques and it was accepted by the
Complainant Corporation vide its resolution Ex.C-11, so the
cheque in question was issued against the legal liability. But
this court does not find merit in such arguments. Admittedly,
the accused No.4 had made an offer to the Complainant
Corporation vide Ex.C3 to purchase shares of M/s Shivaka
Industries on behalf of the promoters on the same terms and
conditions as agreed between the promoters of M/s Shivaka
Industries and the Complainant Corporation. In response to
that offer, the Complainant Corporation passed resolution
Ex.C11. The accused No.4 was allowed to purchase the
shareholding of the Complainant Corporation on behalf of the
promoters as per the revised terms as indicated in the agenda
placed before the Board of Directors before the meeting in
which the said resolution was passed. No such agenda has
been produced or proved in the present proceedings. But one
thing is clear that the offer of the accused No.4 was not
accepted as givne in the letter Ex.C3. Certain new terms and
conditions were imposed.
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41. In the instant case, the offer of the accused No.4
vide Ex.C3 was not accepted as it is but certain conditions
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were imposed, meaning thereby the offer was accepted with a
variance, so it amounted to counter proposal offer, which was
not accepted by the accused, so there was no contract
between the Complainant Corporation and the accused No.4
to buy the shares of M/s Shivaka Industries. When there was
no contract, the question of any legal liability of the accused
No.4 to issue the cheque in question and also on the date
when the cheque was presented by the complainant
Corporation for encashment, does not arise at all. When there
was no liability on the part of the accused No.4 to issue the
cheque, it rightly instructed its banker to stop the payment and
accordingly, the main ingredient of the offence under Section
138 of the Negotiable Instruments Act i.e. the cheque has to
be issued in discharge of any debt or liability, is not proved.”
Learned counsel appearing on behalf of the appellant argues
that the impugned order deserves outright invalidation in view of the fact
that there was a presumption of existence of liability in terms of the
provisions of Section 139 of the Negotiable Instruments Act which
(presumption) had not rebutted by the M/s Golden Land by adducing any
evidence to that effect.
Learned counsel for the appellant otherwise is not in a position
to contest the factual finding by the learned Trial Court that no tripartite
agreement between the appellant and M/s Golden Land came to be
executed.
It may be noticed that M/s Golden Land had otherwise nothing
at all to do with the contract between the appellant and the promoters. It is
only in the event of inability on the part of the promoters to comply with the
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buy-back clause that M/s Golden Land are averred to have agreed to buy-
back the equity shares of SIL held by HAIC. M/s Golden Land had agreed
to do so in pursuance of arrangement which it had with the promoters.
That matter came up for consideration before the Board of Directorsat its
meeting held on 17.11.1997 wherein the Managing Director of the
corporation was authorised “to enter into a supplementary agreement with
private promoters in such cases where the private promoters fail to buy
back the shareholding of the Corporation on due dates as per the Financial
Collaboration Agreement entered into with them for setting up project
under the assisted/joint sector scheme.” The resolution further resolved
that “the Managing Director of the Corporation is authorized to impose
penalty @ 3% from the date of default over and above the interest rate
being charged at the time of release of equity in the project by other
Development Financial Institutions for term loans or the prevailing rate of
interest being charged by Development Financial Institutions for terms loan
of 5 years tenure on the date of default, which ever is higher. In case of
further default penal interest @ 3% over and above the agreed interest be
charged besides retaining the option of proceeding against the promoters
and the company as per the original FCA.” The resolution further provided
that “M/s Golden Land Development India Limited is allowed to buy back
the shareholding of HAIC on behalf of the promoters as per the revised
terms as indicated in the agenda placed before the meeting.”
It is, thus, apparent that appellant and M/s Golden Land had
to enter into supplementary which would have governed the agreement
between them. As already noticed, no such agreement came to be
executed between them at all. It cannot, thus, be said that M/s Golden
Land had undertaken any liability on behalf of promoters which (liability)
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could be enforced by a resort to provisions of Section 138 of the
Negotiable Instruments Act. Though there can be no dispute with the
provisions of law that a non party to the contract can issued a cheque in
respect of debt incurred by another and the non honouring of that cheque
(on account of insufficiency of funds) would render that party liable to
prosecution under Section 138 of the Negotiable Instruments Act, it is
evident in the present case no legal agreement came to be executed as
between the appellant and M/s Golden Land.
In the light of the above discussion, the petitions are held to be
denuded of merits and are ordered to be dismissed.
December 17, 2008 (S.D. ANAND) Pka JUDGE