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TMI Blog2019 (6) TMI 1619X X X X Extracts X X X X X X X X Extracts X X X X ..... ainant not having obtained captive power plant status and the letter of credit having been furnished by the company and where the same was, according to the required format of the bankers of respondent or where there was any other difficulty in getting the same negotiated are some of the questions, which are being disputed questions of facts and also being essentially the defence of the petitioner, shall need to go before the trial Court for it to adjudicate in accordance with law. In such circumstances to prevent the abuse of process of law, the Court can step in and indulge. However, where the complaint filed is genuine, the High Court as per this decision is not to travel beyond the prescribed limit and sometimes on the very same set of facts, civil and criminal both proceedings are maintainable. - R/SPECIAL CRIMINAL APPLICATION NO. 351 of 2018 With R/SPECIAL CRIMINAL APPLICATION NO. 9753 of 2017 With R/SPECIAL CRIMINAL APPLICATION NO. 9754 of 2017 - - - Dated:- 24-6-2019 - HONOURABLE MS JUSTICE SONIA GOKANI MR SV RAJU, SR.ADV. with ROHAN LAVKUMAR (9248) for the Applicant(s)No. 1 MR SHALIN MEHTA, SR.ADV. with PARITOSH R GUPTA(7583) for the Respondent(s) No. 2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... respect to the power supply agreement. 7. On 29.04.2016, respondent No. 2 stated that payment security would be given by cheques, however, monthly payments would be made by letter of credit. On 30.04.2016 a representative of the Company confirmed that a post dated cheque would be issued just to show to the Bank and not for use. This email was discussed with the Managing Director of the Company, one Mr. Arvind Gupta. It is thus evident that the cheques issued to respondent No. 2 were solely for the purpose of security and not as deposits. On 30.06.2016 the Company addressed a letter to respondent No. 2 stating therein that cheques were issued only as security deposit and were to be deposited after getting confirmation only. The said letter was acknowledged by respondent No. 2. On 04.07.2016 the petitioner No. 6 Company addressed a letter to Karur Vyasya Bank to stop payment of cheque Numbers No. 13286 and 13287. These cheques were conditional and were to be deposited after confirmation and were only meant for security purpose. These cheques, thus, were given initially as security and subsequently substituted by letter of credit to be issued under the power supply agreement. It i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Court of learned Judicial Magistrate First Class, Mundra Kutch against the company and its Directors asking the petitioner to appear before the learned Judicial Magistrate First Class, Mundra Kutch on 26.11.2017. The Court took cognizance of the case and proceeded to issue summons, which according to the petitioner, is erroneous. 9.1. Respondent No. 2 initiated the proceedings under the Insolvency and Bankruptcy Code, 2016 against the Company. Dispute was raised regarding respondent No. 2's claim in the insolvency Application which clearly stated that the cheques were given as security and not as a payment contrary to what has been stated in the complaint. The Company does not dispute the claim but asserts that respondent No. 2 owns the Company huge amount. The Company has also initiated the legal proceedings against respondent No. 2 by preferring Regular Civil Suit No. 4590 of 2017, which is pending before the Court at Aurangabad. The Company also received the supplementary bill after receiving the summons of the criminal complaint issued by Maharashtra State Electricity Distribution Company Limited. 9.2. According to the petitioner, the entire issue has arisen on ac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 13286 had been issued. The cheque had been sent to Gandhidham Branch for CTS clearance. However, the cheque was returned by memo with an endorsement of payment stopped by drawer, which was received by respondent on 31.08.2017. 11. The present respondent had initiated criminal proceedings against the petitioner under section 200 read with section 138 of the N.I. Act. All other aspects averred in the petition with regard to the cheque having been given towards security only, have been emphatically denied. 12. Affidavit-in-rejoinder is also filed by respective petitioners reiterating the earlier version and also further stating that the petitioners were forced to make payment towards gross surcharge for non-compliance of the status of captive power plant, steps for which respondent No. 2 is solely responsible. The cheques were in standard form as per the latest format of Uniform Customs and Practice for Documentary Credits Rules (UCP 600) and is applicable to the Banks. Clause 2.6 states the validation of letter of credit shall be the responsibility of the petitioner. Respondent No. 2 has given frequent reminders. It is respondent No. 2, which has not chosen to negotiate. If res ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... structive liability. Firstly we are not concerned with such a hypothetical case. Secondly, as noticed by this Court in Rangachari's case (supra) that a person normally having business or commercial dealings with a company, would satisfy himself about its creditworthiness and reliability by looking at its promoters and Board of Directors and the nature and extent of its business and its memorandum or articles of association. 22. When post dated cheques are issued and the same are accepted, although it may be presumed that the money will be made available in the bank when the same is presented for encashment, but for that purpose, the harsh provision of constructive liability may not be available except when an appropriate case in that behalf is made out. 23. Section 140 of the Act cannot be said to have any application whatsoever. Reason to believe on the part of a drawer that the cheque would not be dishonoured cannot be a defence. But, then one must issue the cheque with full knowledge as to when the same would be presented. It appears to be a case where the appellant has taken undue advantage of the post dated cheques given on behalf of the company. The statute do ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d that the cheque had not been issued for discharge of liability but as advance for the purchase order which was cancelled. Keeping in mind this fine but real distinction, the said judgment cannot be applied to a case of present nature where the cheque was for repayment of loan installment which had fallen due though such deposit of cheques towards repayment of installments was also described as security in the loan agreement. In applying the judgment in Indus Airways (supra), one cannot lose sight of the difference between a transaction of purchase order which is cancelled and that of a loan transaction where loan has actually been advanced and its repayment is due on the date of the cheque. 12. The crucial question to determine applicability of Section 138 of the Act is whether the cheque represents discharge of existing enforceable debt or liability or whether it represents advance payment without there being subsisting debt or liability. While approving the views of different High Courts noted earlier, this is the underlying principle as can be discerned from discussion of the said cases in the judgment of this Court. 13. In Balaji Seafoods (supra), the High Court not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing its jurisdiction under Section 482 of the Code of Criminal Procedure is now well settled. Although it is of wide amplitude, a great deal of caution is also required in its exercise. What is required is application of the well-known legal principles involved in the matter. *** 22. Ordinarily, a defence of an accused although appears to be plausible should not be taken into consideration for exercise of the said jurisdiction. Yet again, the High Court at that stage would not ordinarily enter into a disputed question of fact. It, however, does not mean that documents of unimpeachable character should not be taken into consideration at any cost for the purpose of finding out as to whether continuance of the criminal proceedings would amount to an abuse of process of court or that the complaint petition is filed for causing mere harassment to the accused. While we are not oblivious of the fact that although a large number of disputes should ordinarily be determined only by the civil courts, but criminal cases are filed only for achieving the ultimate goal, namely, to force the accused to pay the amount due to the complainant immediately. The courts on the one hand should not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ced, she replied falsely alleging that her father and son-in-law had taken the loan from appellant and his brother and respondent stood only as surety therefor and sought quashing of appellant's complaint case alleging mortgage of her house to appellant and fraudulent execution of sale deed. The Court held that such type of dispute factual defences neither admitted by the complainant nor apparent on face of record could have been appreciated only by the trial Court, after parties had led their evidence. Therefore, it held that the High court committed grave error of law in examining the allegations and counter-allegations, which are disputed and factual in nature in proceeding under section 482 of the Code of Criminal Procedure. The relevant paragraphs are as under:- 5. The above defence of the respondent (the accused) before the High Court, in the petition filed under Section 482 of the Code, is nothing but absolutely factual in nature, which is neither admitted by the complainant, nor apparent on the face of the record. Such type of disputed factual defences could have been appreciated only by the trial court, after the parties led their evidence. In our opinion, the Hig ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r stay of the proceedings as the law envisaged such an eventuality when it expressly refrains from making the decision of one court binding on the other, or even relevant, except for certain limited purposes, such as sentence or damages. Embarrassment or prejudice to the accused is considered to be a relevant aspect and special considerations obtaining in any particular case might make some other course more expedient and just Relevant paragraphs of the said decision are reproduced hereunder:- 17. In K.G. Premshanker, the effect of the above provisions (Sections40 to 43 of the Evidence Act) has been broadly noted thus: if the criminal case and civil proceedings are for the same cause, judgment of the civil court would be relevant if conditions of any of Sections 40 to 43 are satisfied but it cannot be said that the same would be conclusive except as provided in Section 41. Section 41 provides which judgment would be conclusive proof of what is stated therein. Moreover, the judgment, order or decree passed in previous civil proceedings, if relevant, as provided under Sections 40 and 42 or other provisions of the Evidence Act then in each case the Court has to decide to what ext ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ll the plot took place in July 2002 and on the other hand, he has alleged that he started paying the consideration amount for the purchase of the plot between 15-7-2000 and 15-12-2002. The version of the complainant is self-contradictory and, therefore, no prima facie case is made out against the appellant involving them in the commission of the alleged offences. 10. The learned Magistrate in his order has categorically stated that the perusal of the complaint would make it clear that there was a dispute in respect of sale and purchase of land between the parties. In our view even if the allegations made in the complaint are accepted to be true and correct, the appellants cannot be said to have committed any offence of cheating or criminal breach of trust. Neither can any guilty intention be attributed to them nor can there possibly be any intention on their part to deceive the complainant. No criminal case is made out by the complainant against the appellants in his complaint and in the statements of the complainant and his witnesses recorded by the Magistrate before taking of the cognizance of the allege offences. The averments of the complaint and the statement of the compla ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ently, the complaint filed by the complainant and subsequent order dated 8-8-2003 of the Judicial Magistrate, Gaya, in Complaint Case No. 298 of 2003 - TR No. 808 of 2003, whereby and whereunder cognizance of the offence under Sections 406, 419, 420 and 120-B IPC, has been taken against the appellants and summons have been ordered to be issued against them for facing trial for the abovesaid offences shall also stand quashed. 20. In the instant case not only completely self-contradictory stand has been taken, no offence had been made out which discloses the offence under section 420 of the Indian Penal Code. Learned Magistrate had taken cognizance off offence under sections 406, 419, 420 read with section 120B of the Indian Penal Code. 21. Here this Court is considering the existing liability of section 138 of the N.I. Act. The petitioner though does not dispute that liability, it has spoken of a litigant, which has travelled civil litigation, which is pending and also litigation which has travelled to NCLT. 22. For this, reliance is also placed on the written statement of the respondent OPGL power and RCS No. 15 of 2017, where the stand of the company is that the Maharash ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Debtor). The fact that the Appellant has claimed approximately ₹ 6 crore and there is a separate claim made by the Corporate Debtor which was approximately ₹ 7 crore towards damages which was subsequently raised to approximately ₹ 14 crore, in such situation, question raises as to whether the Respondent is liable to pay any amount to the Appellant or if both demands are accepted then the Operational Creditor is required to pay certain amount to the Corporate Debtor? 4. In such case there being a dispute about the debt, the question of default does not arise. For the reason aforesaid, we are not inclined to interfere with the impugned order. The appeal is dismissed with aforesaid observation. No costs. 24. Even while accepting that the cheques, which are accepted and said to have been dishonored, and endorsement on the back side of the same being given towards the security with no dispute with regard to non-payment of electricity charges for all the three months being July, 2016 to September, 2016 and the dispute with regard to respondent complainant not having obtained captive power plant status and the letter of credit having been furnished by the company ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ns are not entertained except for petitioner No. 5 of Special Criminal Application No. 9754 of 2017. 28. So far as request for quashment of complaint qua petitioner No. 5-Shilpa Vijaykumar Sharma in Special Criminal Application No. 9754 of 2017, pending before the Court of learned Judicial Magistrate First Class, Mundra, Kutch, concerned, the same is is acceded to. 28.1. She being a lady non-Executive Director as agreed by the other side and she not being in-charge of the day to day management of the Company, with the consent of the respondent complainant and considering the substantive material on record, the complaint qua her is quashed. 28.2. Thus, complaint qua her, being Criminal Complaint No. 1220 of 2017 pending before the Court of learned Judicial Magistrate First Class, Mundra, Kutch, is hereby quashed and set aside. All consequential proceedings arising out of the said complaint are also quashed and set aside. 28.3. For rest of the petitioners, the petitions are not entertained, without entering into the merits, leaving open all factual and legal defences for the petitioners to agitate before the trial Court for it to decide in accordance with law expeditiousl ..... X X X X Extracts X X X X X X X X Extracts X X X X
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