JUDGMENT
S.K. Keshote, J.
1. All these 9 Special Criminal Applications arise from
9 criminal complaints filed by the respondent No. 2
against the petitioners. The facts and parties are
common in all 9 criminal complaints filed by respondent
No. 2 for conviction and sentence of the petitioners under
Section 138 of the Negotiable Instruments Act, 1881
(hereinafter referred to as “Act, 1881”) and as said
earlier the same proceed on identical facts. In fact the
separate criminal complaints are to be filed for
dishonour of different cheques. The parties are common
and identical prayer has been made in these matters. The
grounds raised for quashing and setting aside of the
criminal complaints are identical and the matters are
taken up for hearing together and are being decided by
this common order.
2. The facts of the case are taken from the Special
Criminal Application No. 132 of 2000. The first
petitioner is a company incorporated under the Companies
Act, 1956 having its registered office at 2121-DI, 2nd
Phase, Peenya Industrial Area, Bangalore – 560 058 and
having office at Bombay at the address mentioned in the
cause title of the petition. The petitioner No. 2 to 6
are directors of the company. The respondent No. 1 is
State of Gujarat and respondent No. 2 is the company
registered under Companies Act having main objects of
financier and carrying on his business from the address
mentioned in the cause title of the petition.
3. The respondent No. 2 on or about August, 1995 at the
request made by the petitioners have financed for
purchase of machinery and entered into a Hire Purchase
Agreement with the second respondent on 24.8.1995. The
respondent No. 2 after deducting first/initial Hire
purchase rental and fee amount to be paid by the
petitioners have disbursed a sum of Rs. 1,93,99,109/=
(Rupees One crore ninety three lac ninety nine thousand
one hundred and nine only). As per the agreement of
24.8.1995 the sum advanced by the respondents have to be
paid by the petitioners in 36 monthly installments of
Rs. 7,72,156/= commencing from 24.8.1995 and ending on
24.7.1998. The petitioners pursuant to the agreement
dated 24.8.1995 have handed over to the respondent No. 2
in all 15 cheques of Rs. 7,81,343/= each aggregating to
Rs. 1,17,20,395/- as and by way of collateral security for
repayment of 36 installments as per the agreement
aforestated. It is the case of the petitioners that all
those 15 cheques have been signed by the petitioner No. 4.
There were the post dated cheques as and by way of
collateral security. The petitioners No. 2 and 4 have
also given personal guarantee for this sum advanced to
the petitioners by the respondent No. 2 The respondent
No. 2 has also given the bill discounting facility to the
petitioners. The petitioners have discounted bills with
the respondent No. 2 The petitioners have also given the
post dated cheques as and by way of collateral security
to the respondent No. 2. The respondent No. 2 has
deposited all the above post dated cheques with their
bankers viz. Allahabad Bank, Nanpura Branch for
clearance on 1.7.1998. All the post dated cheques so
deposited were returned/dishonoured by the petitioners’
banker viz. Canara Bank, Colaba Branch, on 2.7.1998.
The petitioners’ bankers on the said day informed the
respondent No. 2’s banker viz. Allahabad Bank, Nanpura
Branch by their written memo dated 2.7.1998. The
petitioners submit that as per the agreement dated
24.8.1995 the respondent No. 2 had no authority whatsoever
to deposit the said post dated cheques issued by the
petitioners in favour of the respondent No. 2 by way of
collateral security. The grievance of the petitioner is
that the respondent No. 2 could not have deposited the
said post dated cheques given as and by way of security
without intimating the petitioners. After bounced of the
cheques aforesaid it is not in dispute that the
respondent No. 2 issued statutory notice under Section 138
of the Act, 1881 on 23.7.1998 through its advocate to all
the petitioners at their addresses. Those legal notices
have been received by the petitioners on 25.7.1998. It
is also not in dispute that the respondent No. 2 has filed
complaints under Section 138 of the Act, 1881 in the
court of Judicial Magistrate, Fist Class, 3rd court,
Surat being Criminal Complaints No. 6479 of 1998 to 6482
of 1998 and 6486 of 1998 to 6490 1998 against the
petitioners. The petitioners state that one M/s. Times
Guarantee Limited having its registered office at Ground
Floor, Times of India building, Dr. D.N. Road,
Mumbai-400001 has filed winding up petition under Section
433(e) and 434 of the Companies Act, 1956 (hereinafter
referred to as “Act, 1956”) in Karnataka High Court on
11.2.1999 which was registered as Company Petition No. 40
of 1999 against the first petitioner company. In the
winding up petition what it is averred by the petitioners
that the petitioner therein M/s. Times Guarantee Limited,
has taken out the company Application No. 74 of 1999 for
appointment of provisional Liquidator. Further prayer
has also been made in that application for injunction
restraining the petitioners, their servants and agents
from selling, transferring, alienating or encumbering any
of the company’s assets. The petitioners stated that
there are other company petitions which are filed in
Karnataka High Court, Bangalore against the petitioner
No. 1 company of winding up thereof under Act, 1956.
Those petitions are stated to have been accepted and the
winding up court issued a show cause notice to the
petitioner No. 1 company. The petitioners submit that
some of the creditors have also issued statutory notices
under Sections 433 and 434 of the Act, 1956 calling upon
the petitioner No. 1 to show cause as to why company
should not be wound up. The petitioners submit that in
view of winding up petitions field and pending in the
Karnataka High Court under Sections 433 and 434 of the
Act, 1956, the provisions of Section 536 of the said act
become applicable. It is the say of the petitioners that
there is no enforceable debt or other liabilities within
the meaning of section 138 of the Act, 1881. The
petitioners said that in view of the Section 536(2) read
with Section 441 of the Act, 1956 the proceedings under
Section 138 of the Act, 1881 is not maintainable. The
petitioners further submit that there is a legal bar to
disposition of the property by the company or its
directors and, therefore, the company cannot make payment
after the winding up proceedings have been initiated.
This legal bar as what it is averred is more particularly
stated under Section 536(2) read with Section 441 of the
Act, 1956.
4. The petitioners further submit that there can be no
offence under section 138 of Act, 1881 in the event of
the petition of winding up of the company is presented in
view of the clear provision of section 536(2) of the Act,
1956. By presenting company petition for winding up the
operation of section 536(2) read with section 441(2) of
the Act, 1956 will come into effect and because of the
same the company is not able to pay the said amount to
any creditor as the said payment would be void in the
light of sections 536(2) and 441 of the Act, 1956 will
come into effect and because of the same the company is
not able to pay the said amount to any creditor as the
said payment would be void in the light of the aforesaid
provisions.
5. The petitioner submitted that the petitioner No. 1
company has filed reference before BIFR under SIC (SP)
Act, 1985 (hereinafter referred to as Act, 1985″) and the
Board has registered the reference under section 15(1) of
the Act, 1985 being the reference No. 49 of 2000. In
view of the reference filed by The petitioners under
Section 15(1) of the Act, 1985, all the proceedings filed
under the provisions of the Act, 1881 are suspended
unless and until the Board finally decides the reference.
6. Making reference to the provisions as contained in
Sections 16 and 22 of the Act, 1985 the petitioners
submit that the proceedings initiated by respondent No. 2
under Section 138 of the Act, 1881 stand suspended. It
is averred that complaint filed by the respondent No. 2
will also not survive on the ground that the parties have
arrived at a stand and agreed to accept payment in
installments and have accordingly executed a consent
terms which is to be filed in the court of Judicial
Magistrate, First Class, 3rd Court, Surat. The
petitioners in view of the said consent terms have handed
over fresh 10 post dated cheques to the respondent No. 2.
The consent terms are dated 9.9.98. In view of the
consent terms and in view of 10 postdated cheques,
earlier cheques which are issued by the petitioner stand
cancelled. The petitioner also made reference to the
suit filed by respondent No.2 being Suit No. 5823/98 in
the High Court of Judicature at Bombay. It is stated
that the said suit has been filed by respondent No. 2 for
recovery of hire charges and also handing over the
possession of the machinery on which the amount was
advanced by the respondent No. 2. In the said suit a
decree was passed on the consent terms which were made by
the petitioners by executing consent terms dated
9.9.1998. The Bombay High Court what it is stated on the
basis of the admissions and acknowledges made by the
petitioners by executing the consent terms dated 9.9.98
was pleased to pass decree on 6.4.1999 in the suit
aforestated. It is the say of the petitioners that the
respondent No. 2 has also agreed to extent time to make
payment in installments commencing from 30.4.1999 to
30.3.2000. In view of the decree of the High Court dated
6.4.1999 the complaints which are pending before the
Judicial Magistrate, First Class, 3rd Court, Surat are
liable to be quashed and set aside. Reference has also
been made that as per the decree dated 6.4.1999 a
provision is made for the appointment of the court
receiver and court receiver is appointed who has visited
the factory premises of the petitioners. The reference
has also been made to the summary Suit No. 261 of 1998
filed by respondent No. 2 to recover the amount advanced
to the petitioner under the bill discounting facility.
That suit has also been stated to have been decreed. The
petitioner submit that the criminal complaints filed by
respondent No. 2 also required to be quashed and set aside
on the ground that cheques which are issued by the
petitioner in favour of respondent No. 2 as and by way of
collateral security are not legally enforceable under
Section 138 of the Act, 1881.
7. The petitioners have formulated the pointed to be
urged in the matter, which are as under :-
“(a) The complaint filed by the respondent
no. 2 requires to be quashed in view of
sec. 536(2) and 441(2), 442 & 531 of the
Companies Act, The said compliant is also
required to be quashed in view of the
fact that the reference filed by the
petitioner under the provision of SIC
(SP) Act, 1985. The said reference is
duly registered by the board and inquiry
u/s 16 is pending.
(b) The complaint is also required to be
quashed and set aside in view of the fact
that the consent term was arrived and
duly signed by the parties to the
proceedings on 9.9.1998, as per the said
consent term, the earlier cheques stand
discharge / invalid by issuing 10 fresh
cheques by the petitioner to the
respondent.
(c) The compliant is required to be quashed
on the ground of decree passed by High
Court.
(d) The complaint is not maintainable in view
of Arbitration Clause in the agreement
dated 24.8.1995″.
8. In this petition, notice was issued on 16.2.2000 and
the interim relief in terms of para 20(b) is granted
which continues till date. The respondent No. 2 has not
filed any reply to the Special Criminal Application. So
far as respondent No. 1 is concerned he has also not filed
reply to the Special Criminal Application.
9. Shri A.D. Shah, learned counsel for the respondents
made oral submissions in these matters. He placed
reliance on the following decisions in support of his
contentions :-
(1) Anil Hegde Vs. Indian Acrylics Limited AIR 2000
SC 145.
(2) Pankaj Mehra and Anr. Vs. State of Maharashtra
& Ors. JT 2000(2) SC 113.
(3) M/s. BSI Ltd. & Anr. Etc. vs. Gift Holdings
Pvt. Ltd. & Anr. JT 2000(2) SC 127.
10. I have given my thoughtful considerations to the
submissions made by the learned counsel for the
respondent No. 2.
11. In this Special Criminal Applications the petitioner
prayed for quashing of aforesaid all 9 complaints. But
it appears from the facts of these cases to avoid any
technical objection which may come against the
petitioners of misjoinder of causes of action separate
petitions have been filed. In all these Special Criminal
Applications, the State of Gujarat has been made a party.
The State of Gujarat is neither necessary nor proper
party to these petitions. These petitions arise from
proceedings initiated by respondent No. 2 against the
petitioners for their convictions and sentences for the
offences under Section 138 of the Act, 1881. These are
the private complaint filed by respondent No. 2. The
State of Gujarat is not a prosecutor. Despite of this
clear position the State of Gujarat has been impleaded as
party in all these 9 matters. When State of Gujarat has
been impleaded as party in these matters and the court
has issued notice to it, it has no option except to
instruct its advocate to appear in these matters.
Consequently, heavy financial burden falls on the State
of Gujarat to pay the amount of fees for the services to
be rendered to it by the Government Advocate in these
matters. Though the State of Gujarat is not necessary
party in these matters and the petitioners also not
praying any relief against it still for this impleadment
of it in these matters it has to shoulder this heavy
financial burden of litigation expenses. Whatever amount
is spent by the State of Gujarat in defending the
petitions which are filed against it is a peoples money
and it is concern to the litigants to see that the party
who is neither necessary nor proper in the matter may not
be impleaded. It is not the case where the petitioners
are laymen. The petitioners have filed these petitions
through the advocate and he has to take all the care that
a person who is neither necessary nor proper party to the
lis is not joined. This act on the part of the
petitioners results in causing heavy financial burden to
the State of Gujarat in these matters therein it is
neither necessary nor proper party. It is a case where
Government Advocate at the most will appear as guest
artist that is what to say not to play any role. I have
already taken the view in such matters the State of
Gujarat is neither necessary nor proper party. In the
High Court of Gujarat Rules, 1993 I do not find any
provision where any obligation is there on the litigant
in such matters that the State of Gujarat has to be
impleaded as party as a rule. It is only a practice
prevalent in the court that in all criminal matters the
State of Gujarat has to be impleaded as party
irrespective of the fact whether it is necessary or
proper or not and further despite of the fact that
against it no relief is prayed for. This practice
results in putting unnecessary heavy financial burden on
the State of Gujarat deserves to be discontinued so that
the peoples’ money may not be wasted in the litigation in
which the State of Gujarat has no interest and the
litigants have no lis whatsoever with the State of
Gujarat.
Re: Point No. 1.
It is an admitted fact the criminal complaints
under section 138 of the Act, 1881, have been filed by
the respondent No. 2 in the Court of Judicial Magistrate
First Class, 3rd Court, Surat on 8-9-1998. M/s. Times
Guaranty Ltd., as per the petitioners’ own case, issued
statutory notice under section 434 of the Act, 1956 to
the petitioner-company which has been received by it on
29-9-98. The notice is dated 21-9-98. In these facts,
the winding up petition being Company Petition No. 40/99
could not have been presented by Time Guaranty Ltd. in
the Karnataka High Court at Bangalore before three weeks
of 22-9-98, the date on which statutory notice under
section 434 of the Act, 1956 has been received by the
petitioners. Reference, here, may have to sub-clause (a)
of subsection (1) of section 434 of the Act, 1956, which
reads as under:
434(1) A company shall be deemed to be unable to
pay its debts-
(a) if a creditor, by assignment or
otherwise, to whom the company is
indebted in a sum exceeding five hundred
rupees then due, has served on the
company, by causing it to be delivered at
its registered office, by registered post
or otherwise, a demand under his hand
requiring the company to pay the sum so
due and the company has for three weeks
thereafter neglected to pay the sum, or
to secure or compound for it to the
reasonable satisfaction of the creditor;
Leaving apart this legal position and factual aspect,
from the document annexure `E’ at page No. 76 of the
special criminal application, i.e. the copy of the
petition under sections 433, 434 and 439 of the Companies
Act, of the M/s. Times Guaranty Finance Ltd. filed
against the petitioners in Karnataka High Court at
Bangalore, it is clear that this petition for winding-up
could not have been presented on or before 11-1-99. From
the affidavit of S.R. Ramesh Babu, duly constituted
attorney of the petitioner – compnay i.e. Times Guaranty
Finance Ltd., it is clear that this petition could not
have been filed on or before 11-2-99 i.e. the date on
which this affidavit has been sworn in support of the
petition. From these facts, which are borne out from the
copies of documents filed by the petitioners themselves
in this petition, there remains no doubt whatsoever that
this winding-up petition being Company Petition No. 40/99
has been filed in the Karnataka High Court at Bangalore
by Times Guaranty Finance Ltd. on or after 11-2-99.
This petition is of the year 1999 and it is filed in the
year 1999. The order restraining the petitioner No. 1
company herein from alienating or encumbering any of the
its assets until further orders has been made by the
Karnataka High Court at Bangalore in Company Petition
No. 40/99 with Company Application No. 74/99 on 24-3-99.
The criminal complaints under section 138 of the Act,
1881 were filed by the respondent No. 2 in this matter
much before the presentation of the first winding up
petition in the Karnataka High Court at Bangalore against
the petitioners. The case of the respondent No. 2 is on
much higher pedestal than the case which was there before
the Hon’ble Supreme Court in the case of Pankaj Mehra &
Ors. vs. State of Maharashtra & Ors. (supra). This
matter is squarely covered by decision in that matter of
the Apex Court so far as the first part of this point
No. 1 raised by the petitioners is concerned.
12. In the case of Pankaj Mehra & Ors. vs. State of
Maharashtra (supra), their Lordships of the Hon’ble
Supreme Court held as under:
29. The words “the drawer of such cheque
fails to make the payment” are ostensibly
different from saying “the drawer refuses to make
payment”. Failure to make payment can be due to
the reasons beyond the control of the drawer. An
illustrative case is, if the drawer is not a
company but individual who has become so pauper
or so sick as he cannot raise the money to pay
the demanded sum, can he contend that since
failure to make payment was on account of such
conditions he is entitled to be acquitted? the
answer cannot be in the affirmative though the
aforesaid conditions can be put forth while
considering the question of sentence.
“30. We therefore feel that legislature has
thoughtfully used the word “fails” instead of
other expressions as failure can be due to
variety of reasons including his disability to
pay. But the offence would be complete when the
drawer “fails” to make payment within the
stipulated time, whatever be the cause of such
failure.”
In view of this decision of the Apex Court, the
contention of the petitioners that as a winding-up
petition was pending against the petitioner No. 1
-company, the complaints filed by the respondent No. 2
under sec. 138 of the Act, 1881, has to be quashed and
set aside, is devoid of any merits and substance.
So far as the second part of this first point
raised by the petitioners is concerned, it is suffice to
say that it is also of little help to the petitioners.
This point is also squarely covered by the decision of
the Apex Court in the case of M/s. BSI Ltd. & Anr.
Etc. vs. Gift Holdings Pvt. Ltd. & Anr. (supra).
The petitioners made a reference under sec. 15 of the
Act, 1985 before the BIFR on 10-1-2000. This reference
made by the petitioners has been registered by BIFR on
21.01.2000 which is borne out from the document, annexure
`I’ at page No. 95 of the petition. I cannot do better
than to reproduce herein the relevant portion of the
judgment aforesaid of Hon’ble Supreme Court:
12. We do not think it necessary to labour on
the scope of Section 22A of SICA in the present
batch of appeals as the BIFR did not pass any
order against any company involved herein until
the expiry of the period of 15 days from the
receipt of notice contemplated in clause (c) of
the proviso to Section 138 of the NI Act. So
none of the companies was interdicted by any such
order envisaged in Section 22A during the above
period of 15 days. Hence, we are unable to find
any help from the said provision which could
salvage the appellants from the prosecution
proceedings against them.
13. Switching back to sub-section (1) of
Section 22 of SICA, we may point out that its
operation commence in respect of the companies
involved in this batch of appeals only after the
expiry of the period of 15 days envisaged in
clause (c) of the proviso to Section 138 of the
NI Act within which the companies did not pay the
amount covered by the cheques. the ban imposed,
as per Section 22(1) of the SICA, is against
maintainability of the following legal actions:
(1) Proceedings for the winding up of the
company;
(2) Proceedings for execution, distress or
the likes against any of the properties of the
company;
(3) Proceedings fro the appointment of a
receiver in respect of such properties;
(4) Suits for recovery of money or for
enforcement of any security against the company
or guarantee in respect of any loan or advance
granted to the company.
14. Some of the learned counsel pointed out
that when a company is convicted under Section
138 of the NI Act the court can only impose a
fine as the sentence since a juristic person like
the company cannot possibly be sent to prison.
On its premise, learned counsel contended that
recovery of the fine covered by such sentence
would be impractical on account of the ban
envisaged in Section 22(1) of SICA against
proceedings for execution, distress or the likes
as against any of the properties of the company.
As a corollary, it was submitted that prosecution
against the company cannot be maintained since a
court would not be able to effectively impose a
sentence on a company after convicting it of the
offence under Section 138 of NI Act.
15. The fallacy of the above contention is
two-fold. First is that maintainability of a
prosecution proceeding is not to be tested on the
touchstone of any practical hurdle in enforcing
the sentence which might be imposed on a company
after conviction. Second is, there is no
insurmountable hurdle for recovery of the fine
covered by the sentence even from a sick
industrial company because the ban contained in
Section 22(1) is only conditional as could be
discerned from the last limb thereof which reads
thus; “Except with the consent of the Board or,
as the case may be, the Appellate Authority.” It
means that with such consent the court would be
in a position to resort to proceedings for
distress against the properties of the sick
industrial company. Hence the aforesaid
contention has no merit at all.
————————————————-
16. The said contention is also devoid of
merits. The word “suit” envisaged in Section 22(1) cannot be stretched to criminal prosecutions.
The suit mentioned therein is restricted to
“recovery of money or for enforcement of any
security against the industrial company or of any
guarantee in respect of any loans or advance
granted to the industrial company. As the suit
is clearly delineated in the provision itself,
the context would not admit of any other
stretching process.
17. A criminal prosecution is neither for
recovery of money nor for enforcement of any
security etc. Section 138 of the NI Act is a
penal provision the commission of which offence
entails a conviction and sentence on proof of the
guilt in a duly conducted criminal proceedings.
Once the offence under Section 138 is completed
the prosecution proceedings can be initiated not
for recovery of the amount covered by the cheque
but for bringing the offender to the penal
liability. What was considered in Maharashtra
Tubes Ltd. (supra) is whether the remedy
provided in Section 29 or 31 of the State Finance
Corporation Act, 1951 could be pursued
notwithstanding the ban contained in Section 22
of the SICA. Hence the legal principle
adumbrated in the said decision is of no avail to
the appellants.
————————————————
18. The conclusion which we have to draw is
that if commission of the offence under Section
138 of the NI Act was completed before the
commencement of proceedings under Section 22(1)
of SICA there is no hurdle in any of the
provisions of SICA against the maintainability
and prosecution of a criminal complaint duly
instituted under Section 142 of the NI Act. The
decisions rendered by the High Courts, which are
assailed before us in this batch of appeals, are
therefore not liable to be interfered with.
Appeals are accordingly dismissed. Special Leave
Petitions heard along with the above appeals are
also hence dismissed.
This matter is squarely covered by this decision of the
Hon’ble Supreme Court on the second part of the first
point raised, no further discussion needs to be made on
this contention. The prayer made for quashing and
setting aside of the complaint filed by the respondent
No. 2 under sec. 138 of the Act, 1881, on this ground
cannot be granted.
Re.: Point No. 2
19. In support of this point, reliance has been placed
by the petitioners on the decision of the Andhra Pradesh
High Court in the case of Voruganti C. Gopaiah vs.
Godavari Fertilizers & Chemicals Ltd. & another reported
in 2000 DoCh. 1007. On the earlier occasion, at one
point of time when Mr. Tanna argued the matter, zerox
copy of the decision was given to the Court, which is
lying in the file. The Andhra Pradesh High court in that
case held that the liability under a dishonoured cheque
issued towards the outstanding amount on a given date got
wiped out where on issue thereof it was agreed by the
payee to accept the payment in installments. A decision
given by the court, leaving apart the fact that decision
may not be binding on the court, has to be read in the
context of the facts thereof. The ratio of the decision
is on the facts of that case and I have no hesitation to
say that this decision is clearly distinguishable on the
facts of the case. The agreement to pay liability under
dishonoured cheque between the parties was after the date
on which the criminal complaints were filed by the
respondent No. 2 under section 138 of the Act, 1881,
against the drawer in the Court. Otherwise also, this
point has no merits and substance. The agreement is
dated 9-9-1998, a copy of which is there on the record
filed by the petitioners as annexure J’ at page No. 107.
This is captioned as “Consent Terms”. It is not the case
of either of the parties whether the same is presented in
the Criminal Court or not. Be that as it may. To
consider this point further, I consider it to be
appropriate to reproduce that agreement “Consent Terms”
in this judgment, which reads as under:
CONSENT TERMS
MAY IT PLEASE YOU WORSHIP:-
We, the complainant and Accused beg to
submit and pray as under:-
1. The accused for themselves and undertake
to the Hon’ble court to pay to the Complaint a
sum of Rs. 2,89,10,100/- (Rupees Two Crores Eighty
Nine Lakhs Ten Thousand Only) in 10 monthly
installments on the last day of each month
beginning from 30th September, 1998 and ending on
30th June, 1999.
2. The accused confirms having an
Undertaking (hereto annexed ) in favour of the
complainant on 9th September, 1998 and also
confirms having handed over to the Complainant 10
post dated cheques in discharge of their total
liability, as per details mentioned hereinunder:-
______________________________________________________________________
Sr. Cheque Date Amount Name of Bank
No.
______________________________________________________________________
1. 269767 30.9.98 20,00,000 Global Trust Bank Ltd.
2. 269768 31.10.98 -do- -do- 3. 269769 30.11.98 -do- -do- 4. 269770 31.12.98 -do- -do- 5. 269771 31.1.99 34,85,000 -do- 6. 269772 28.2.99 -do- -do- 7. 269773 31.3.99 -do- -do- 8. 269774 30.4.99 -do- -do- 9. 269775 31.5.99 -do- -do- 10. 269776 30.6.99 -do- -do-
______________________________________________________________________
3. The Accused agrees undertakes and
guarantees that the said postdated cheques shall
be honoured on first present of their respective
due dates and also irrevocably undertakes.
(iii) To honour the said cheques upon their
presentation for payment by the
complainant.
(iv) Not to intimate their bankers to stop
that payment on any of the cheques
delivered to the complainant.
(v) Not to close their bank account without
obtaining the complainant’s prior
permission in writing and
(vi) Not to give any notice requesting the
complainant not to present any of the
said cheques on their respective due
dates.
5. It is expressly understood between the
parties hereto that upon receipt of the final
instalment, as agreed, the complainant shall
withdraw the said Criminal complaints.
6. The Accused are aware that in the event
of any default in payment of any one of the
installments on the part of the accused to honour
its commitment, as per the above schedule, the
complainant shall be at liberty to proceed
against the accused in the concerned court and
press for appropriate reliefs in the said
criminal complaints.
Dated this 9th day of September, 1998.
For Electrex Ind. Ltd.
Sd/-
Anand V. Hedge,
Chairman and Managing
Director.
From the perusal of these “Consent Terms”, I find that it
is incorrectly stated by the petitioners that after this
agreement, the respondent No. 2 has to withdraw the
complaints. It is expressly agreed upon by the
petitioners that only after receipt of final installment,
the complainant shall withdraw the criminal complaints.
It is a case where the very first cheque given, as what
stated by the counsel for the respondent No. 2, has been
bounced. The agreement to withdraw the complaints could
have been pressed in service only where the last cheque
has been encashed. In para-6 of the agreement, the
accused in the complaints, the petitioners herein, agreed
that in the event of any default in payment of any one of
the installments on their part, the complainant shall be
at liberty to proceed against the accused in the Court
and press for appropriate relief in the criminal
complaints. This term of the “Consent Terms” clinches
the issue and in the eventuality of accused failed to
honour their commitments, as per the schedule in the
consent terms, the respondent No. 2 shall be free to
proceed with the criminal complaints and that what it has
been done in the present case. On first default in
payment of installments i.e. the dishonour of the
cheque, it is open to the respondent No. 2 to proceed
against the petitioners in complaints and rightly it has
proceeded. In the facts of this case, this agreement is
of no help to the petitioners in this case. This is
nothing but only a dishonest plea on the part of the
petitioners in this case. Learned Criminal court below
was perfectly legal and justified in its approach to take
cognizance in the complaint and issue summons for
securing their attendance in the Court to the
petitioners.
Re.: Point No.3:
20. Under section 138 of the Act, 1881, the drawers of
the dishonoured cheques are to be punished for their
criminal liability but the payee of the cheques will not
get the money. It is a criminal liability of the drawer
of the cheque. For the recovery of the amount, the payee
of the cheque has to file appropriate civil suit. It is
not the law nor it is the case of the petitioners that on
conviction or discharge of the drawer of the dishonoured
cheque, he is relieved of his liability to pay the debt.
That liability still continues and for the recovery of
that amount, the payee has to file a suit. This has to
be filed within limitation. In this case, the respondent
No. 2 has filed the civil suits in the Bombay High Court
and those suits have been decreed but therefrom it cannot
be taken that these criminal complaints could not have
been pressed by the payee and the Court has to go to the
extent of quashing and setting aside of the same.
Leaving apart this legal aspect, otherwise also, it is
not the case of the petitioners that the decreetal amount
has been paid by them to the respondent No. 2. This point
raised again is nothing but only a dishonest plea taken
by the petitioners and only on the basis of which no
relief can be granted to them in this case.
21. The last point raised regarding the maintainability
of the criminal complaint in view of the arbitration
clause in the agreement dated 24-8-95, it is suffice to
say that there is no such condition in that agreement,
and otherwise also, if such condition is there, I have my
own reservation whether it could have been pressed in
service to the extent to pray for quashing and setting
aside of the criminal complaints. Arbitration clause may
be of any help to the petitioners as a defence available
to them, in the suit filed for recovery of the debt.
From the facts of this case, I find that even this
arbitration clause is not pressed by the petitioners in
the suits filed by the respondent No. 2 for recovery of
this amount in the Bombay High Court. The decrees have
been passed, may be on the basis of agreement i.e. dated
19-9-98. This point raised in these petitions has no
merits. This is a criminal liability and on proof of the
ingredients for the offence as provided under sec. 138
of the Act, 1881, the petitioners appropriately be
sentenced on conviction. This contention raised by the
petitioners is also devoid of any substance and merits.
22. The approach of the petitioners to this court at
this stage in a criminal complaint filed by respondent
No. 2 in which cognizance has been taken and summons were
issued to the petitioners for their appearance in the
court is wholly misplaced. After issue of summons by
Magistrate in the criminal complaint, the accused have
ample opportunity to present their case before the court
concerned and it is no more res-integra that the court
has all the power to discharge or acquit them of the
offence, if no offence is made out. At such a stage,
this direct approach to this court by petitioners is
difficult to appreciate. The petitioners in such matters
have efficacious alternative remedy for redressal of
their grievances. The litigant should have permitted the
law to take its own course and any petition circumventing
that course if filed directly before this court has to be
discouraged. Not only this that the petitioners have
efficacious alternative remedy to approach to the
Magistrate in this matter with their grievance, but
against the order, if it goes against them, they have
another efficacious alternative remedy to go to the court
of Sessions under Section 397 of Cr.P.C. At this stage,
even revision application may not be competent before the
Sessions Court and if that is the position then how far
it is justified for the petitioners to file this petition
in this court under Article 227 of the Constitution.
Reference here may have to the decision of the Apex Court
in the case of Khacheru Singh v. State of U.P. and anr.
reported in AIR 1982 SSC 784(2), wherein, their Lordships
of Hon’ble Supreme Court held:
“Heard counsel. Special leave granted.
2. We do not see any justification though we
are not expressing any opinion on the merits of
the case, for the order passed by the learned
Additional Sessions Judge, Merut in Criminal
Revision No. 83 of 1979, which was affirmed by the
High Court of Allahabad by its order dated
7.5.80. All that the learned Magistrate had done
was to issue a summons to respondent No. 2
Satyavir Singh. If eventually, the learned
Magistrate comes to the conclusion that no
offence was made out against Satyavir Singh, it
will be open to him to discharge or acquit him,
as the case may be. But it is difficult to
appreciate why the order issuing “summons” to the
accused should be quashed. We, therefore, set
aside the orders passed by the Sessions Court and
the High Court, restore that of the learned
Special Judicial Magistrate, First Class, Merut,
dated February 2, 1979 and remit the matter to
the trial Court for disposal in accordance with
law.
3. The appeal shall stand disposed of in
terms of this order.
Order accordingly”
23. The conduct of the petitioners that after filing of
the criminal complaints they agreed to make the payment
of the amount in installments and postdated cheques were
issued but they could not stand to their commitment, and
now by taking these technical points are praying for
quashing and setting aside of the complaints, is nothing
but only a dishonest one. In the petition under Article
227 of the Constitution, the conduct of the litigant is
very very relevant and important and where the Court is
satisfied that it is dubious or it is nothing but only an
act on their part to abuse the process of the Court or to
make all attempts not to pay the amount to the payee of
the dishonoured cheque though debt is admitted, the
petitions can be dismissed without going on the merits of
the matter. Here, this course has not been adopted but
for this conduct as well as these are the matters where
the petitioners have abused the process of the Court,
exemplary costs has to be awarded in favour of the
respondent No. 2 and against the petitioners. The
respondent No. 1 has also to be awarded costs in these
matters as it is neither necessary nor proper party in
the case.
24. In the result, all these special criminal
applications are dismissed. Rule is discharged in each
petition. Interim relief, if any, granted stands vacated
in all these cases. The petitioners are directed to pay
Rs. 10,000/as costs of each petition to the respondent
No. 2. The petitioners are further directed to pay
Rs. 1000/- as costs in each case to the respondent No. 1.