1999 (11) TMI 859 - HC - Companies Law

Summary

Issues Involved:
1. Quashing of the criminal complaint u/s 138 of the Negotiable Instruments Act.
2. Quashing of the proceedings to implead petitioners No. 2 and 3 as accused.

Summary:

1. Quashing of the Criminal Complaint:
The petitioners filed an application u/s 482 of the Criminal Procedure Code to quash a criminal complaint under Section 138 of the Negotiable Instruments Act, 1881. The complaint was based on the dishonor of cheques issued by Shanku Concretes Pvt. Ltd. through its Managing Director, Mr. Jaidev Kotak, to repay an advance of Rs. 15 lacs obtained from the complainant. The cheques were issued as collateral security and not for the discharge of any existing debt or liability. The court held that since the liability to repay the amount was to arise only after six months from the date of the agreement, the cheques issued were not for the discharge of any existing debt. Therefore, the transaction was purely of a civil nature, and the complaint did not attract criminal liability under Section 138 of the Negotiable Instruments Act. The court relied on the decision of the High Court of Madras in BALAJI SEAFOODS EXPORTS (INDIA) LTD vs. MAC INDUSTRIES LTD, which held that undated cheques given as security would not attract the provisions of Section 138.

2. Quashing of Proceedings to Implead Petitioners No. 2 and 3:
The original complainant sought to implead Mr. Sandip Jaidev Kotak and Mr. Kunal Jaidev Kotak as accused in the criminal case. The petitioners argued that they were not in charge of the company at the relevant time and could not be made accused under Section 138 read with Section 141(1) of the Negotiable Instruments Act. The court noted that the complaint did not disclose any offence against the petitioners and that the cheques were issued as collateral security. Therefore, the proceedings to implead petitioners No. 2 and 3 were also quashed.

Conclusion:
The court allowed the Misc. Criminal Application, quashing the complaint and all proceedings in Criminal Case No. 132 of 1996. The petition succeeded, and the rule was made absolute accordingly.