{"id":138856,"date":"2001-05-02T00:00:00","date_gmt":"2001-05-01T18:30:00","guid":{"rendered":"https:\/\/www.legalindia.com\/judgments\/electrex-india-ltd-vs-state-of-gujarat-on-2-may-2001"},"modified":"2015-06-04T02:01:52","modified_gmt":"2015-06-03T20:31:52","slug":"electrex-india-ltd-vs-state-of-gujarat-on-2-may-2001","status":"publish","type":"post","link":"https:\/\/www.legalindia.com\/judgments\/electrex-india-ltd-vs-state-of-gujarat-on-2-may-2001","title":{"rendered":"Electrex (India) Ltd. vs State Of Gujarat on 2 May, 2001"},"content":{"rendered":"
Gujarat High Court<\/div>\n
Electrex (India) Ltd. vs State Of Gujarat on 2 May, 2001<\/div>\n
Equivalent citations: (2002) 4 GLR 3331<\/div>\n
Author: S Keshote<\/div>\n
Bench: S Keshote<\/div>\n<\/p>\n
<\/pre>\n
JUDGMENT<\/p>\n
S.K. Keshote, J.<\/p>\n
1. All these 9 Special Criminal Applications arise from
\n9 criminal complaints filed by the respondent No. 2
\nagainst the petitioners. The facts and parties are
\ncommon in all 9 criminal complaints filed by respondent
\nNo. 2 for conviction and sentence of the petitioners under
\nSection 138 of the Negotiable Instruments Act, 1881
\n(hereinafter referred to as “Act, 1881”) and as said
\nearlier the same proceed on identical facts. In fact the
\nseparate criminal complaints are to be filed for
\ndishonour of different cheques. The parties are common
\nand identical prayer has been made in these matters. The
\ngrounds raised for quashing and setting aside of the
\ncriminal complaints are identical and the matters are
\ntaken up for hearing together and are being decided by
\nthis common order.\n<\/p>\n
2. The facts of the case are taken from the Special
\nCriminal Application No. 132 of 2000. The first
\npetitioner is a company incorporated under the Companies
\nAct, 1956 having its registered office at 2121-DI, 2nd
\nPhase, Peenya Industrial Area, Bangalore – 560 058 and
\nhaving office at Bombay at the address mentioned in the
\ncause title of the petition. The petitioner No. 2 to 6
\nare directors of the company. The respondent No. 1 is
\nState of Gujarat and respondent No. 2 is the company
\nregistered under Companies Act having main objects of
\nfinancier and carrying on his business from the address
\nmentioned in the cause title of the petition.\n<\/p>\n
3. The respondent No. 2 on or about August, 1995 at the
\nrequest made by the petitioners have financed for
\npurchase of machinery and entered into a Hire Purchase
\nAgreement with the second respondent on 24.8.1995. The
\nrespondent No. 2 after deducting first\/initial Hire
\npurchase rental and fee amount to be paid by the
\npetitioners have disbursed a sum of Rs. 1,93,99,109\/=
\n(Rupees One crore ninety three lac ninety nine thousand
\none hundred and nine only). As per the agreement of
\n24.8.1995 the sum advanced by the respondents have to be
\npaid by the petitioners in 36 monthly installments of
\nRs. 7,72,156\/= commencing from 24.8.1995 and ending on
\n24.7.1998. The petitioners pursuant to the agreement
\ndated 24.8.1995 have handed over to the respondent No. 2
\nin all 15 cheques of Rs. 7,81,343\/= each aggregating to
\nRs. 1,17,20,395\/- as and by way of collateral security for
\nrepayment of 36 installments as per the agreement
\naforestated. It is the case of the petitioners that all
\nthose 15 cheques have been signed by the petitioner No. 4.
\nThere were the post dated cheques as and by way of
\ncollateral security. The petitioners No. 2 and 4 have
\nalso given personal guarantee for this sum advanced to
\nthe petitioners by the respondent No. 2 The respondent
\nNo. 2 has also given the bill discounting facility to the
\npetitioners. The petitioners have discounted bills with
\nthe respondent No. 2 The petitioners have also given the
\npost dated cheques as and by way of collateral security
\nto the respondent No. 2. The respondent No. 2 has
\ndeposited all the above post dated cheques with their
\nbankers viz. Allahabad Bank, Nanpura Branch for
\nclearance on 1.7.1998. All the post dated cheques so
\ndeposited were returned\/dishonoured by the petitioners’
\nbanker viz. Canara Bank, Colaba Branch, on 2.7.1998.
\nThe petitioners’ bankers on the said day informed the
\nrespondent No. 2’s banker viz. Allahabad Bank, Nanpura
\nBranch by their written memo dated 2.7.1998. The
\npetitioners submit that as per the agreement dated
\n24.8.1995 the respondent No. 2 had no authority whatsoever
\nto deposit the said post dated cheques issued by the
\npetitioners in favour of the respondent No. 2 by way of
\ncollateral security. The grievance of the petitioner is
\nthat the respondent No. 2 could not have deposited the
\nsaid post dated cheques given as and by way of security
\nwithout intimating the petitioners. After bounced of the
\ncheques aforesaid it is not in dispute that the
\nrespondent No. 2 issued statutory notice under Section 138
\nof the Act, 1881 on 23.7.1998 through its advocate to all
\nthe petitioners at their addresses. Those legal notices
\nhave been received by the petitioners on 25.7.1998. It
\nis also not in dispute that the respondent No. 2 has filed
\ncomplaints under Section 138 of the Act, 1881 in the
\ncourt of Judicial Magistrate, Fist Class, 3rd court,
\nSurat being Criminal Complaints No. 6479 of 1998 to 6482
\nof 1998 and 6486 of 1998 to 6490 1998 against the
\npetitioners. The petitioners state that one M\/s. Times
\nGuarantee Limited having its registered office at Ground
\nFloor, Times of India building, Dr. D.N. Road,
\nMumbai-400001 has filed winding up petition under Section
\n433(e) and 434 of the Companies Act, 1956 (hereinafter
\nreferred to as “Act, 1956”) in Karnataka High Court on
\n11.2.1999 which was registered as Company Petition No. 40
\nof 1999 against the first petitioner company. In the
\nwinding up petition what it is averred by the petitioners
\nthat the petitioner therein M\/s. Times Guarantee Limited,
\nhas taken out the company Application No. 74 of 1999 for
\nappointment of provisional Liquidator. Further prayer
\nhas also been made in that application for injunction
\nrestraining the petitioners, their servants and agents
\nfrom selling, transferring, alienating or encumbering any
\nof the company’s assets. The petitioners stated that
\nthere are other company petitions which are filed in
\nKarnataka High Court, Bangalore against the petitioner
\nNo. 1 company of winding up thereof under Act, 1956.
\nThose petitions are stated to have been accepted and the
\nwinding up court issued a show cause notice to the
\npetitioner No. 1 company. The petitioners submit that
\nsome of the creditors have also issued statutory notices
\nunder Sections 433 and 434 of the Act, 1956 calling upon
\nthe petitioner No. 1 to show cause as to why company
\nshould not be wound up. The petitioners submit that in
\nview of winding up petitions field and pending in the
\nKarnataka High Court under Sections 433 and 434 of the
\nAct, 1956, the provisions of Section 536 of the said act
\nbecome applicable. It is the say of the petitioners that
\nthere is no enforceable debt or other liabilities within
\nthe meaning of section 138 of the Act, 1881. The
\npetitioners said that in view of the Section 536(2) read
\nwith Section 441 of the Act, 1956 the proceedings under
\nSection 138 of the Act, 1881 is not maintainable. The
\npetitioners further submit that there is a legal bar to
\ndisposition of the property by the company or its
\ndirectors and, therefore, the company cannot make payment
\nafter the winding up proceedings have been initiated.
\nThis legal bar as what it is averred is more particularly
\nstated under Section 536(2) read with Section 441 of the
\nAct, 1956.\n<\/p>\n
4. The petitioners further submit that there can be no
\noffence under section 138 of Act, 1881 in the event of
\nthe petition of winding up of the company is presented in
\nview of the clear provision of section 536(2) of the Act,
\n1956. By presenting company petition for winding up the
\noperation of section 536(2) read with section 441(2) of
\nthe Act, 1956 will come into effect and because of the
\nsame the company is not able to pay the said amount to
\nany creditor as the said payment would be void in the
\nlight of sections 536(2) and 441 of the Act, 1956 will
\ncome into effect and because of the same the company is
\nnot able to pay the said amount to any creditor as the
\nsaid payment would be void in the light of the aforesaid
\nprovisions.\n<\/p>\n
5. The petitioner submitted that the petitioner No. 1
\ncompany has filed reference before BIFR under SIC (SP)
\nAct, 1985 (hereinafter referred to as Act, 1985″) and the
\nBoard has registered the reference under section 15(1) of
\nthe Act, 1985 being the reference No. 49 of 2000. In
\nview of the reference filed by The petitioners under
\nSection 15(1) of the Act, 1985, all the proceedings filed
\nunder the provisions of the Act, 1881 are suspended
\nunless and until the Board finally decides the reference.\n<\/p>\n
6. Making reference to the provisions as contained in
\nSections 16 and 22 of the Act, 1985 the petitioners
\nsubmit that the proceedings initiated by respondent No. 2
\nunder Section 138 of the Act, 1881 stand suspended. It
\nis averred that complaint filed by the respondent No. 2
\nwill also not survive on the ground that the parties have
\narrived at a stand and agreed to accept payment in
\ninstallments and have accordingly executed a consent
\nterms which is to be filed in the court of Judicial
\nMagistrate, First Class, 3rd Court, Surat. The
\npetitioners in view of the said consent terms have handed
\nover fresh 10 post dated cheques to the respondent No. 2.
\nThe consent terms are dated 9.9.98. In view of the
\nconsent terms and in view of 10 postdated cheques,
\nearlier cheques which are issued by the petitioner stand
\ncancelled. The petitioner also made reference to the
\nsuit filed by respondent No.2 being Suit No. 5823\/98 in
\nthe High Court of Judicature at Bombay. It is stated
\nthat the said suit has been filed by respondent No. 2 for
\nrecovery of hire charges and also handing over the
\npossession of the machinery on which the amount was
\nadvanced by the respondent No. 2. In the said suit a
\ndecree was passed on the consent terms which were made by
\nthe petitioners by executing consent terms dated
\n9.9.1998. The Bombay High Court what it is stated on the
\nbasis of the admissions and acknowledges made by the
\npetitioners by executing the consent terms dated 9.9.98
\nwas pleased to pass decree on 6.4.1999 in the suit
\naforestated. It is the say of the petitioners that the
\nrespondent No. 2 has also agreed to extent time to make
\npayment in installments commencing from 30.4.1999 to
\n30.3.2000. In view of the decree of the High Court dated
\n6.4.1999 the complaints which are pending before the
\nJudicial Magistrate, First Class, 3rd Court, Surat are
\nliable to be quashed and set aside. Reference has also
\nbeen made that as per the decree dated 6.4.1999 a
\nprovision is made for the appointment of the court
\nreceiver and court receiver is appointed who has visited
\nthe factory premises of the petitioners. The reference
\nhas also been made to the summary Suit No. 261 of 1998
\nfiled by respondent No. 2 to recover the amount advanced
\nto the petitioner under the bill discounting facility.
\nThat suit has also been stated to have been decreed. The
\npetitioner submit that the criminal complaints filed by
\nrespondent No. 2 also required to be quashed and set aside
\non the ground that cheques which are issued by the
\npetitioner in favour of respondent No. 2 as and by way of
\ncollateral security are not legally enforceable under
\nSection 138 of the Act, 1881.\n<\/p>\n
7. The petitioners have formulated the pointed to be
\nurged in the matter, which are as under :-\n<\/p>\n
  “(a) The complaint filed by the respondent
\nno. 2 requires to be quashed in view of
\nsec. 536(2) and 441(2), 442 & 531 of the
\nCompanies Act, The said compliant is also
\nrequired to be quashed in view of the
\nfact that the reference filed by the
\npetitioner under the provision of SIC
\n(SP) Act, 1985. The said reference is
\nduly registered by the board and inquiry
\nu\/s 16 is pending.\n<\/p>\n
  (b) The complaint is also required to be
\nquashed and set aside in view of the fact
\nthat the consent term was arrived and
\nduly signed by the parties to the
\nproceedings on 9.9.1998, as per the said
\nconsent term, the earlier cheques stand
\ndischarge \/ invalid by issuing 10 fresh
\ncheques by the petitioner to the
\nrespondent.\n<\/p>\n
  (c) The compliant is required to be quashed
\non the ground of decree passed by High
\nCourt.\n<\/p>\n
  (d) The complaint is not maintainable in view
\nof Arbitration Clause in the agreement
\ndated 24.8.1995″.\n<\/p>\n
 8. In this petition, notice was issued on 16.2.2000 and
\nthe interim relief in terms of para 20(b) is granted
\nwhich continues till date. The respondent No. 2 has not
\nfiled any reply to the Special Criminal Application. So
\nfar as respondent No. 1 is concerned he has also not filed
\nreply to the Special Criminal Application.\n<\/p>\n
 9. Shri A.D. Shah, learned counsel for the respondents
\nmade oral submissions in these matters. He placed
\nreliance on the following decisions in support of his
\ncontentions :-\n<\/p>\n
(1) Anil Hegde Vs. Indian Acrylics Limited AIR 2000
\nSC 145.\n<\/p>\n
(2) Pankaj Mehra and Anr. Vs. State of Maharashtra
\n& Ors. JT 2000(2) SC 113.\n<\/p>\n
(3) M\/s. BSI Ltd. & Anr. Etc. vs. Gift Holdings
\nPvt. Ltd. & Anr. JT<\/a> 2000(2) SC 127.\n<\/p>\n
10. I have given my thoughtful considerations to the
\nsubmissions made by the learned counsel for the
\nrespondent No. 2.\n<\/p>\n
11. In this Special Criminal Applications the petitioner
\nprayed for quashing of aforesaid all 9 complaints. But
\nit appears from the facts of these cases to avoid any
\ntechnical objection which may come against the
\npetitioners of misjoinder of causes of action separate
\npetitions have been filed. In all these Special Criminal
\nApplications, the State of Gujarat has been made a party.
\nThe State of Gujarat is neither necessary nor proper
\nparty to these petitions. These petitions arise from
\nproceedings initiated by respondent No. 2 against the
\npetitioners for their convictions and sentences for the
\noffences under Section 138 of the Act, 1881. These are
\nthe private complaint filed by respondent No. 2. The
\nState of Gujarat is not a prosecutor. Despite of this
\nclear position the State of Gujarat has been impleaded as
\nparty in all these 9 matters. When State of Gujarat has
\nbeen impleaded as party in these matters and the court
\nhas issued notice to it, it has no option except to
\ninstruct its advocate to appear in these matters.
\nConsequently, heavy financial burden falls on the State
\nof Gujarat to pay the amount of fees for the services to
\nbe rendered to it by the Government Advocate in these
\nmatters. Though the State of Gujarat is not necessary
\nparty in these matters and the petitioners also not
\npraying any relief against it still for this impleadment
\nof it in these matters it has to shoulder this heavy
\nfinancial burden of litigation expenses. Whatever amount
\nis spent by the State of Gujarat in defending the
\npetitions which are filed against it is a peoples money
\nand it is concern to the litigants to see that the party
\nwho is neither necessary nor proper in the matter may not
\nbe impleaded. It is not the case where the petitioners
\nare laymen. The petitioners have filed these petitions
\nthrough the advocate and he has to take all the care that
\na person who is neither necessary nor proper party to the
\nlis is not joined. This act on the part of the
\npetitioners results in causing heavy financial burden to
\nthe State of Gujarat in these matters therein it is
\nneither necessary nor proper party. It is a case where
\nGovernment Advocate at the most will appear as guest
\nartist that is what to say not to play any role. I have
\nalready taken the view in such matters the State of
\nGujarat is neither necessary nor proper party. In the
\nHigh Court of Gujarat Rules, 1993 I do not find any
\nprovision where any obligation is there on the litigant
\nin such matters that the State of Gujarat has to be
\nimpleaded as party as a rule. It is only a practice
\nprevalent in the court that in all criminal matters the
\nState of Gujarat has to be impleaded as party
\nirrespective of the fact whether it is necessary or
\nproper or not and further despite of the fact that
\nagainst it no relief is prayed for. This practice
\nresults in putting unnecessary heavy financial burden on
\nthe State of Gujarat deserves to be discontinued so that
\nthe peoples’ money may not be wasted in the litigation in
\nwhich the State of Gujarat has no interest and the
\nlitigants have no lis whatsoever with the State of
\nGujarat.\n<\/p>\n
 Re: Point No. 1.\n<\/p>\n
It is an admitted fact the criminal complaints
\nunder section 138 of the Act, 1881, have been filed by
\nthe respondent No. 2 in the Court of Judicial Magistrate
\nFirst Class, 3rd Court, Surat on 8-9-1998. M\/s. Times
\nGuaranty Ltd., as per the petitioners’ own case, issued
\nstatutory notice under section 434 of the Act, 1956 to
\nthe petitioner-company which has been received by it on
\n29-9-98. The notice is dated 21-9-98. In these facts,
\nthe winding up petition being Company Petition No. 40\/99
\ncould not have been presented by Time Guaranty Ltd. in
\nthe Karnataka High Court at Bangalore before three weeks
\nof 22-9-98, the date on which statutory notice under
\nsection 434 of the Act, 1956 has been received by the
\npetitioners. Reference, here, may have to sub-clause (a)
\nof subsection (1) of section 434 of the Act, 1956, which
\nreads as under:\n<\/p>\n
 434(1) A company shall be deemed to be unable to
\npay its debts-\n<\/p>\n
  (a) if a creditor, by assignment or
\notherwise, to whom the company is
\nindebted in a sum exceeding five hundred
\nrupees then due, has served on the
\ncompany, by causing it to be delivered at
\nits registered office, by registered post
\nor otherwise, a demand under his hand
\nrequiring the company to pay the sum so
\ndue and the company has for three weeks
\nthereafter neglected to pay the sum, or
\nto secure or compound for it to the
\nreasonable satisfaction of the creditor;\n<\/p>\n
 Leaving apart this legal position and factual aspect,
\nfrom the document annexure `E’ at page No. 76 of the
\nspecial criminal application, i.e. the copy of the
\npetition under sections 433, 434 and 439 of the Companies
\nAct, of the M\/s. Times Guaranty Finance Ltd. filed
\nagainst the petitioners in Karnataka High Court at
\nBangalore, it is clear that this petition for winding-up
\ncould not have been presented on or before 11-1-99. From
\nthe affidavit of S.R. Ramesh Babu, duly constituted
\nattorney of the petitioner – compnay i.e. Times Guaranty
\nFinance Ltd., it is clear that this petition could not
\nhave been filed on or before 11-2-99 i.e. the date on
\nwhich this affidavit has been sworn in support of the
\npetition. From these facts, which are borne out from the
\ncopies of documents filed by the petitioners themselves
\nin this petition, there remains no doubt whatsoever that
\nthis winding-up petition being Company Petition No. 40\/99
\nhas been filed in the Karnataka High Court at Bangalore
\nby Times Guaranty Finance Ltd. on or after 11-2-99.
\nThis petition is of the year 1999 and it is filed in the
\nyear 1999. The order restraining the petitioner No. 1
\ncompany herein from alienating or encumbering any of the
\nits assets until further orders has been made by the
\nKarnataka High Court at Bangalore in Company Petition
\nNo. 40\/99 with Company Application No. 74\/99 on 24-3-99.
\nThe criminal complaints under section 138 of the Act,
\n1881 were filed by the respondent No. 2 in this matter
\nmuch before the presentation of the first winding up
\npetition in the Karnataka High Court at Bangalore against
\nthe petitioners. The case of the respondent No. 2 is on
\nmuch higher pedestal than the case which was there before
\nthe Hon’ble Supreme Court in the case of Pankaj Mehra &
\nOrs. vs. State of Maharashtra & Ors. (supra). This
\nmatter is squarely covered by decision in that matter of
\nthe Apex Court so far as the first part of this point
\nNo. 1 raised by the petitioners is concerned.\n<\/p>\n
12. In the case of Pankaj Mehra & Ors. vs. State of
\nMaharashtra (supra), their Lordships of the Hon’ble
\nSupreme Court held as under:\n<\/p>\n
 29. The words “the drawer of such cheque
\nfails to make the payment” are ostensibly
\ndifferent from saying “the drawer refuses to make
\npayment”. Failure to make payment can be due to
\nthe reasons beyond the control of the drawer. An
\nillustrative case is, if the drawer is not a
\ncompany but individual who has become so pauper
\nor so sick as he cannot raise the money to pay
\nthe demanded sum, can he contend that since
\nfailure to make payment was on account of such
\nconditions he is entitled to be acquitted? the
\nanswer cannot be in the affirmative though the
\naforesaid conditions can be put forth while
\nconsidering the question of sentence.\n<\/p>\n
 “30. We therefore feel that legislature has
\nthoughtfully used the word “fails” instead of
\nother expressions as failure can be due to
\nvariety of reasons including his disability to
\npay. But the offence would be complete when the
\ndrawer “fails” to make payment within the
\nstipulated time, whatever be the cause of such
\nfailure.”\n<\/p>\n
 In view of this decision of the Apex Court, the
\ncontention of the petitioners that as a winding-up
\npetition was pending against the petitioner No. 1\n<\/p>\n
-company, the complaints filed by the respondent No. 2
\nunder sec. 138 of the Act, 1881, has to be quashed and
\nset aside, is devoid of any merits and substance.\n<\/p>\n
  So far as the second part of this first point
\nraised by the petitioners is concerned, it is suffice to
\nsay that it is also of little help to the petitioners.
\nThis point is also squarely covered by the decision of
\nthe Apex Court in the case of M\/s. BSI Ltd. & Anr.
\nEtc. vs. Gift Holdings Pvt. Ltd. & Anr.<\/a> (supra).
\nThe petitioners made a reference under sec. 15 of the
\nAct, 1985 before the BIFR on 10-1-2000. This reference
\nmade by the petitioners has been registered by BIFR on
\n21.01.2000 which is borne out from the document, annexure
\n`I’ at page No. 95 of the petition. I cannot do better
\nthan to reproduce herein the relevant portion of the
\njudgment aforesaid of Hon’ble Supreme Court:\n<\/p>\n
 12. We do not think it necessary to labour on
\nthe scope of Section 22A of SICA in the present
\nbatch of appeals as the BIFR did not pass any
\norder against any company involved herein until
\nthe expiry of the period of 15 days from the
\nreceipt of notice contemplated in clause (c) of
\nthe proviso to Section 138 of the NI Act. So
\nnone of the companies was interdicted by any such
\norder envisaged in Section 22A during the above
\nperiod of 15 days. Hence, we are unable to find
\nany help from the said provision which could
\nsalvage the appellants from the prosecution
\nproceedings against them.\n<\/p>\n
 13. Switching back to sub-section (1) of
\nSection 22 of SICA, we may point out that its
\noperation commence in respect of the companies
\ninvolved in this batch of appeals only after the
\nexpiry of the period of 15 days envisaged in
\nclause (c) of the proviso to Section 138 of the
\nNI Act within which the companies did not pay the
\namount covered by the cheques. the ban imposed,
\nas per Section 22(1) of the SICA, is against
\nmaintainability of the following legal actions:\n<\/p>\n
  (1) Proceedings for the winding up of the
\ncompany;\n<\/p>\n
 (2) Proceedings for execution, distress or
\nthe likes against any of the properties of the
\ncompany;\n<\/p>\n
 (3) Proceedings fro the appointment of a
\nreceiver in respect of such properties;\n<\/p>\n
 (4) Suits for recovery of money or for
\nenforcement of any security against the company
\nor guarantee in respect of any loan or advance
\ngranted to the company.\n<\/p>\n
 14. Some of the learned counsel pointed out
\nthat when a company is convicted under Section
\n138 of the NI Act the court can only impose a
\nfine as the sentence since a juristic person like
\nthe company cannot possibly be sent to prison.
\nOn its premise, learned counsel contended that
\nrecovery of the fine covered by such sentence
\nwould be impractical on account of the ban
\nenvisaged in Section 22(1) of SICA against
\nproceedings for execution, distress or the likes
\nas against any of the properties of the company.
\nAs a corollary, it was submitted that prosecution
\nagainst the company cannot be maintained since a
\ncourt would not be able to effectively impose a
\nsentence on a company after convicting it of the
\noffence under Section 138 of NI Act.\n<\/p>\n
 15. The fallacy of the above contention is
\ntwo-fold. First is that maintainability of a
\nprosecution proceeding is not to be tested on the
\ntouchstone of any practical hurdle in enforcing
\nthe sentence which might be imposed on a company
\nafter conviction. Second is, there is no
\ninsurmountable hurdle for recovery of the fine
\ncovered by the sentence even from a sick
\nindustrial company because the ban contained in
\nSection 22(1) is only conditional as could be
\ndiscerned from the last limb thereof which reads
\nthus; “Except with the consent of the Board or,
\nas the case may be, the Appellate Authority.” It
\nmeans that with such consent the court would be
\nin a position to resort to proceedings for
\ndistress against the properties of the sick
\nindustrial company. Hence the aforesaid
\ncontention has no merit at all.\n<\/p>\n
  ————————————————-\n<\/p>\n
 16. The said contention is also devoid of
\nmerits. The word “suit” envisaged in Section 22(1) cannot be stretched to criminal prosecutions.
\nThe suit mentioned therein is restricted to
\n“recovery of money or for enforcement of any
\nsecurity against the industrial company or of any
\nguarantee in respect of any loans or advance
\ngranted to the industrial company. As the suit
\nis clearly delineated in the provision itself,
\nthe context would not admit of any other
\nstretching process.\n<\/p>\n
 17. A criminal prosecution is neither for
\nrecovery of money nor for enforcement of any
\nsecurity etc. Section 138 of the NI Act is a
\npenal provision the commission of which offence
\nentails a conviction and sentence on proof of the
\nguilt in a duly conducted criminal proceedings.
\nOnce the offence under Section 138 is completed
\nthe prosecution proceedings can be initiated not
\nfor recovery of the amount covered by the cheque
\nbut for bringing the offender to the penal
\nliability. What was considered in Maharashtra
\nTubes Ltd. (supra) is whether the remedy
\nprovided in Section 29 or 31 of the State Finance
\nCorporation Act, 1951 could be pursued
\nnotwithstanding the ban contained in Section 22
\nof the SICA. Hence the legal principle
\nadumbrated in the said decision is of no avail to
\nthe appellants.\n<\/p>\n
  ————————————————\n<\/p>\n
 18. The conclusion which we have to draw is
\nthat if commission of the offence under Section
\n138 of the NI Act was completed before the
\ncommencement of proceedings under Section 22(1)
\nof SICA there is no hurdle in any of the
\nprovisions of SICA against the maintainability
\nand prosecution of a criminal complaint duly
\ninstituted under Section 142 of the NI Act. The
\ndecisions rendered by the High Courts, which are
\nassailed before us in this batch of appeals, are
\ntherefore not liable to be interfered with.
\nAppeals are accordingly dismissed. Special Leave
\nPetitions heard along with the above appeals are
\nalso hence dismissed.\n<\/p>\n
 This matter is squarely covered by this decision of the
\nHon’ble Supreme Court on the second part of the first
\npoint raised, no further discussion needs to be made on
\nthis contention. The prayer made for quashing and
\nsetting aside of the complaint filed by the respondent
\nNo. 2 under sec. 138 of the Act, 1881, on this ground
\ncannot be granted.\n<\/p>\n
 Re.: Point No. 2  <\/span><\/p>\n
 19. In support of this point, reliance has been placed
\nby the petitioners on the decision of the Andhra Pradesh
\nHigh Court in the case of Voruganti C. Gopaiah vs.
\nGodavari Fertilizers & Chemicals Ltd. &<\/a> another reported
\nin 2000 DoCh. 1007. On the earlier occasion, at one
\npoint of time when Mr. Tanna argued the matter, zerox
\ncopy of the decision was given to the Court, which is
\nlying in the file. The Andhra Pradesh High court in that
\ncase held that the liability under a dishonoured cheque
\nissued towards the outstanding amount on a given date got
\nwiped out where on issue thereof it was agreed by the
\npayee to accept the payment in installments. A decision
\ngiven by the court, leaving apart the fact that decision
\nmay not be binding on the court, has to be read in the
\ncontext of the facts thereof. The ratio of the decision
\nis on the facts of that case and I have no hesitation to
\nsay that this decision is clearly distinguishable on the
\nfacts of the case. The agreement to pay liability under
\ndishonoured cheque between the parties was after the date
\non which the criminal complaints were filed by the
\nrespondent No. 2 under section 138 of the Act, 1881,
\nagainst the drawer in the Court. Otherwise also, this
\npoint has no merits and substance. The agreement is
\ndated 9-9-1998, a copy of which is there on the record
\nfiled by the petitioners as annexure J’ at page No. 107.
\nThis is captioned as “Consent Terms”. It is not the case
\nof either of the parties whether the same is presented in
\nthe Criminal Court or not. Be that as it may. To
\nconsider this point further, I consider it to be
\nappropriate to reproduce that agreement “Consent Terms”
\nin this judgment, which reads as under:\n<\/p>\n
 CONSENT TERMS<\/p>\n
MAY IT PLEASE YOU WORSHIP:-\n<\/p>\n
  We, the complainant and Accused beg to
\nsubmit and pray as under:-\n<\/p>\n
1. The accused for themselves and undertake
\nto the Hon’ble court to pay to the Complaint a
\nsum of Rs. 2,89,10,100\/- (Rupees Two Crores Eighty
\nNine Lakhs Ten Thousand Only) in 10 monthly
\ninstallments on the last day of each month
\nbeginning from 30th September, 1998 and ending on
\n30th June, 1999.\n<\/p>\n
 2. The accused confirms having an
\nUndertaking (hereto annexed ) in favour of the
\ncomplainant on 9th September, 1998 and also
\nconfirms having handed over to the Complainant 10
\npost dated cheques in discharge of their total
\nliability, as per details mentioned hereinunder:-
\n  ______________________________________________________________________
\nSr.  Cheque  Date           Amount        Name of Bank
\nNo.\n<\/p>\n
______________________________________________________________________\n<\/p>\n
1. 269767 30.9.98           20,00,000    Global Trust Bank Ltd.\n<\/p>\n
2. 269768 31.10.98           -do-              -do-\n3. 269769 30.11.98           -do-              -do-\n4. 269770  31.12.98           -do-              -do-\n5. 269771 31.1.99           34,85,000          -do-\n6. 269772 28.2.99            -do-              -do-\n7. 269773 31.3.99            -do-              -do-\n8. 269774 30.4.99            -do-              -do-\n9. 269775 31.5.99            -do-              -do-\n10. 269776  30.6.99            -do-              -do-\n<\/pre>\n
______________________________________________________________________<\/p>\n
 3. The Accused agrees undertakes and
\nguarantees that the said postdated cheques shall
\nbe honoured on first present of their respective
\ndue dates and also irrevocably undertakes.\n<\/p>\n
  (iii) To honour the said cheques upon their
\npresentation for payment by the
\ncomplainant.\n<\/p>\n
  (iv) Not to intimate their bankers to stop
\nthat payment on any of the cheques
\ndelivered to the complainant.\n<\/p>\n
  (v) Not to close their bank account without
\nobtaining the complainant’s prior
\npermission in writing and  <\/p>\n
  (vi) Not to give any notice requesting the
\ncomplainant not to present any of the
\nsaid cheques on their respective due
\ndates.\n<\/p>\n
 5. It is expressly understood between the
\nparties hereto that upon receipt of the final
\ninstalment, as agreed, the complainant shall
\nwithdraw the said Criminal complaints.\n<\/p>\n
 6. The Accused are aware that in the event
\nof any default in payment of any one of the
\ninstallments on the part of the accused to honour
\nits commitment, as per the above schedule, the
\ncomplainant shall be at liberty to proceed
\nagainst the accused in the concerned court and
\npress for appropriate reliefs in the said
\ncriminal complaints.\n<\/p>\n
  Dated this 9th day of September, 1998.\n<\/p>\n
  For Electrex Ind. Ltd.\n<\/p>\n
     Sd\/-\n<\/p>\n
    Anand V. Hedge, <\/p>\n
    Chairman and Managing <\/p>\n
    Director.\n<\/p>\n
 From the perusal of these “Consent Terms”, I find that it
\nis incorrectly stated by the petitioners that after this
\nagreement, the respondent No. 2 has to withdraw the
\ncomplaints. It is expressly agreed upon by the
\npetitioners that only after receipt of final installment,
\nthe complainant shall withdraw the criminal complaints.
\nIt is a case where the very first cheque given, as what
\nstated by the counsel for the respondent No. 2, has been
\nbounced. The agreement to withdraw the complaints could
\nhave been pressed in service only where the last cheque
\nhas been encashed. In para-6 of the agreement, the
\naccused in the complaints, the petitioners herein, agreed
\nthat in the event of any default in payment of any one of
\nthe installments on their part, the complainant shall be
\nat liberty to proceed against the accused in the Court
\nand press for appropriate relief in the criminal
\ncomplaints. This term of the “Consent Terms” clinches
\nthe issue and in the eventuality of accused failed to
\nhonour their commitments, as per the schedule in the
\nconsent terms, the respondent No. 2 shall be free to
\nproceed with the criminal complaints and that what it has
\nbeen done in the present case. On first default in
\npayment of installments i.e. the dishonour of the
\ncheque, it is open to the respondent No. 2 to proceed
\nagainst the petitioners in complaints and rightly it has
\nproceeded. In the facts of this case, this agreement is
\nof no help to the petitioners in this case. This is
\nnothing but only a dishonest plea on the part of the
\npetitioners in this case. Learned Criminal court below
\nwas perfectly legal and justified in its approach to take
\ncognizance in the complaint and issue summons for
\nsecuring their attendance in the Court to the
\npetitioners.\n<\/p>\n
 Re.: Point No.3:\n<\/p>\n
20. Under section 138 of the Act, 1881, the drawers of
\nthe dishonoured cheques are to be punished for their
\ncriminal liability but the payee of the cheques will not
\nget the money. It is a criminal liability of the drawer
\nof the cheque. For the recovery of the amount, the payee
\nof the cheque has to file appropriate civil suit. It is
\nnot the law nor it is the case of the petitioners that on
\nconviction or discharge of the drawer of the dishonoured
\ncheque, he is relieved of his liability to pay the debt.
\nThat liability still continues and for the recovery of
\nthat amount, the payee has to file a suit. This has to
\nbe filed within limitation. In this case, the respondent
\nNo. 2 has filed the civil suits in the Bombay High Court
\nand those suits have been decreed but therefrom it cannot
\nbe taken that these criminal complaints could not have
\nbeen pressed by the payee and the Court has to go to the
\nextent of quashing and setting aside of the same.
\nLeaving apart this legal aspect, otherwise also, it is
\nnot the case of the petitioners that the decreetal amount
\nhas been paid by them to the respondent No. 2. This point
\nraised again is nothing but only a dishonest plea taken
\nby the petitioners and only on the basis of which no
\nrelief can be granted to them in this case.\n<\/p>\n
21. The last point raised regarding the maintainability
\nof the criminal complaint in view of the arbitration
\nclause in the agreement dated 24-8-95, it is suffice to
\nsay that there is no such condition in that agreement,
\nand otherwise also, if such condition is there, I have my
\nown reservation whether it could have been pressed in
\nservice to the extent to pray for quashing and setting
\naside of the criminal complaints. Arbitration clause may
\nbe of any help to the petitioners as a defence available
\nto them, in the suit filed for recovery of the debt.
\nFrom the facts of this case, I find that even this
\narbitration clause is not pressed by the petitioners in
\nthe suits filed by the respondent No. 2 for recovery of
\nthis amount in the Bombay High Court. The decrees have
\nbeen passed, may be on the basis of agreement i.e. dated
\n19-9-98. This point raised in these petitions has no
\nmerits. This is a criminal liability and on proof of the
\ningredients for the offence as provided under sec. 138
\nof the Act, 1881, the petitioners appropriately be
\nsentenced on conviction. This contention raised by the
\npetitioners is also devoid of any substance and merits.\n<\/p>\n
22. The approach of the petitioners to this court at
\nthis stage in a criminal complaint filed by respondent
\nNo. 2 in which cognizance has been taken and summons were
\nissued to the petitioners for their appearance in the
\ncourt is wholly misplaced. After issue of summons by
\nMagistrate in the criminal complaint, the accused have
\nample opportunity to present their case before the court
\nconcerned and it is no more res-integra that the court
\nhas all the power to discharge or acquit them of the
\noffence, if no offence is made out. At such a stage,
\nthis direct approach to this court by petitioners is
\ndifficult to appreciate. The petitioners in such matters
\nhave efficacious alternative remedy for redressal of
\ntheir grievances. The litigant should have permitted the
\nlaw to take its own course and any petition circumventing
\nthat course if filed directly before this court has to be
\ndiscouraged. Not only this that the petitioners have
\nefficacious alternative remedy to approach to the
\nMagistrate in this matter with their grievance, but
\nagainst the order, if it goes against them, they have
\nanother efficacious alternative remedy to go to the court
\nof Sessions under Section 397 of Cr.P.C. At this stage,
\neven revision application may not be competent before the
\nSessions Court and if that is the position then how far
\nit is justified for the petitioners to file this petition
\nin this court under Article 227 of the Constitution.
\nReference here may have to the decision of the Apex Court
\nin the case of Khacheru Singh v. State of U.P. and anr.
\nreported in AIR 1982 SSC 784(2), wherein, their Lordships
\nof Hon’ble Supreme Court held:\n<\/p>\n
 “Heard counsel. Special leave granted.\n<\/p>\n
 2. We do not see any justification though we
\nare not expressing any opinion on the merits of
\nthe case, for the order passed by the learned
\nAdditional Sessions Judge, Merut in Criminal
\nRevision No. 83 of 1979, which was affirmed by the
\nHigh Court of Allahabad by its order dated
\n7.5.80. All that the learned Magistrate had done
\nwas to issue a summons to respondent No. 2<\/span>
\nSatyavir Singh. If eventually, the learned
\nMagistrate comes to the conclusion that no
\noffence was made out against Satyavir Singh, it
\nwill be open to him to discharge or acquit him,
\nas the case may be. But it is difficult to
\nappreciate why the order issuing “summons” to the
\naccused should be quashed. We, therefore, set
\naside the orders passed by the Sessions Court and
\nthe High Court, restore that of the learned
\nSpecial Judicial Magistrate, First Class, Merut,
\ndated February 2, 1979 and remit the matter to
\nthe trial Court for disposal in accordance with
\nlaw.\n<\/p>\n
 3. The appeal shall stand disposed of in
\nterms of this order.\n<\/p>\n
    Order accordingly”\n<\/p>\n
23. The conduct of the petitioners that after filing of
\nthe criminal complaints they agreed to make the payment
\nof the amount in installments and postdated cheques were
\nissued but they could not stand to their commitment, and
\nnow by taking these technical points are praying for
\nquashing and setting aside of the complaints, is nothing
\nbut only a dishonest one. In the petition under Article
\n227 of the Constitution, the conduct of the litigant is
\nvery very relevant and important and where the Court is
\nsatisfied that it is dubious or it is nothing but only an
\nact on their part to abuse the process of the Court or to
\nmake all attempts not to pay the amount to the payee of
\nthe dishonoured cheque though debt is admitted, the
\npetitions can be dismissed without going on the merits of
\nthe matter. Here, this course has not been adopted but
\nfor this conduct as well as these are the matters where
\nthe petitioners have abused the process of the Court,
\nexemplary costs has to be awarded in favour of the
\nrespondent No. 2 and against the petitioners. The
\nrespondent No. 1 has also to be awarded costs in these
\nmatters as it is neither necessary nor proper party in
\nthe case.\n<\/p>\n
24. In the result, all these special criminal
\napplications are dismissed. Rule is discharged in each
\npetition. Interim relief, if any, granted stands vacated
\nin all these cases. The petitioners are directed to pay
\nRs. 10,000\/as costs of each petition to the respondent
\nNo. 2. The petitioners are further directed to pay
\nRs. 1000\/- as costs in each case to the respondent No. 1.<\/p>\n","protected":false},"excerpt":{"rendered":"
Gujarat High Court Electrex (India) Ltd. vs State Of Gujarat on 2 May, 2001 Equivalent citations: (2002) 4 GLR 3331 Author: S Keshote Bench: S Keshote 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 […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_lmt_disableupdate":"","_lmt_disable":"","_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[16,8],"tags":[],"class_list":["post-138856","post","type-post","status-publish","format-standard","hentry","category-gujarat-high-court","category-high-court"],"yoast_head":"\nElectrex (India) Ltd. vs State Of Gujarat on 2 May, 2001 - Free Judgements of Supreme Court & High Court | Legal India<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.legalindia.com\/judgments\/electrex-india-ltd-vs-state-of-gujarat-on-2-may-2001\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Electrex (India) Ltd. vs State Of Gujarat on 2 May, 2001 - 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