Heard Mr. Rajendra Shirodkar, learned counsel for the applicants.
2. All these criminal applications can be conveniently disposed of by this common order as the issues involved are identical.
3. These seven applications arise from the seven cases pending against the applicants in which the applicants are accused of having committed offences punishable under Section 138 of the Negotiable Instruments Act read with Section 141 of the said Act, on the basis of the complaints filed by respondent No.1 herein.
4. In all these cases, the applicants are challenging the order of 'issuance of process' against them on the ground that, prima facie, the ingredients of the alleged offences were not disclosed, from the material produced before the Magistrate. The applicants had challenged the order issuing process by filing revision applications before the Court of Sessions, but the Court of Sessions dismissed the revision applications. That is how the applicants are now before this court invoking its inherent powers.
5. Mr. Rajendra Shirodkar, learned counsel for the applicants submitted that the cheques in these cases have not been dishonoured on account of 'insufficiency of funds'. According to him, the cheques were dishonoured because the account of the applicants has been frozen under the orders passed by the Sale-tax authorities for recovery of tax. He, therefore, submits by relying on a decision in this case in Ashish Parikh v. State of Maharashtra & Anr., 2011 (5) LJSOFT 5 = 2011 ALL MR (Cri) 1489, that 'since the account was frozen by the Sales-tax authorities, and that is why the cheques were dishonoured, the applicants cannot be proceeded against for an offence punishable under Section 138 of the Negotiable Instruments Act'.
6. It is not in dispute that the cheques were dishonoured with the endorsement 'exceeds arrangement'. Thus, the memo received from the bank does not show that the dishonour of the cheques in question was due to the fact of the attachment or freezing of the account in question.
7. Mr. Shirodkar submitted that the bank has subsequently clarified the matter and to support this claim, he relied upon the copies of the letters issued by the bank, which have been annexed to the applications. Mr. Shirodkar pointed out a letter dated 27/3/2012, addressed to the applicants by their bankers, informing that the cheques were dishonoured with the endorsement 'exceeds arrangement' but that, actually, the account in question had been frozen by the Sale-tax Department, as per the attachment order No.JC/AC(1-B)/INV-335/11-12/INV-A/B-1258 dated 13/10/2011, which was served on the bankers on 17/10/2011. The bank has clarified in this letter, that the cheques should have been returned with a reason "Account Attached by Sales-tax".
8. Mr. Shirodkar has also drawn my attention to a certificate issued by the bank on 7/4/2012, stating that 'had the account not been freezed the cheques might have been honoured by the bank in the normal course of the business'. The certificate also shows, that it has been issued at the specific request of the applicants.
9. Mr. Ponda, learned advocate for the respondents in Criminal Application No.539 of 2012 has drawn my attention to the attachment order passed by the Jt. Commissioner of Sales-tax (Investigation) Mumbai, a copy of which has been annexed to the application. The order shows that an amount of Rs.6,05,22,545/- only has been attached by the Sales-tax authorities. Mr. Ponda also drew my attention to the provisions of Section 35 of the Maharashtra Value Added Tax Act, 2002 and submitted that such an attachment order must specify the amount of money to which such order would apply as provided in the 1st proviso to the said Section. It is clear that in accordance with the said provisions only an amount of Rs.6,05,22,545/- has been attached. The order issued by the Sales-tax authorities, therefore, cannot be said to be amounting to a total freezing of the account or not permitting any transactions out of the said account.
10. There is great substance in the contention advanced by Mr. Ponda, learned advocate for the respondents. As a matter of fact, Mr. Shirodkar, learned counsel for the applicants, while contending, that 'insufficiency of funds' is not the reason for the dishonour of cheques in question, contended that the bank had given him overdraft facility upto Rs.20 crores. If that is so, when the attachment of the account was only to the extent of Rs.6,05,22,545/- there was no reason for the bankers of the applicants to dishonour the cheques with the remarks "exceeds arrangement".
11. Undoubtedly the bankers of the applicants later on tried to suggest that 'insufficiency of funds' was not the reason behind the dishonour of the cheques, but the memo with which the cheques were dishonoured did indicate that reason itself; viz:- 'exceeds arrangement'. The subsequent stand taken by the bank vide the letter dated 27/3/2012 that the cheques ought to have been returned with the reason 'account attached by sales-tax' contradicts the said remark. However, even if it is accepted that the bank is now taking the stand that the cheques were not dishonoured for want of funds, or because the amounts mentioned therein exceeded the arrangement made by the applicants with them, still, the correctness of the stand would need examination which would be possible only during the trial. From this point of view also, the subsequent stand taken by the bankers will not be sufficient to justify the quashing of the process.
12. There has been no satisfactory explanation as to why and how the entire operation of the account have been frozen by the bankers of the applicant. In the course of arguments, when it was pointed out that the account has been attached only to the extent of Rs.6 crores and odd, Mr. Shirodkar contended that for whatever reasons, the bankers have decided to freeze the entire amount. Without going into the reasons for this stand of the bankers, it may be observed that these are the applicants' own bankers and their action cannot be a ground for exonerating the applicants with respect to the accusation of an offence punishable under Section 138 of the Negotiable Instruments Act.
13. The provisions of Section 140 of the Negotiable Instruments Act are also relevant in this context. Section 140 reads as under:
"140. Defence which may not be allowed in any prosecution under section 138 - It shall not be a defence in a prosecution for an offence under section 138 that the drawer had no reason to believe when he issued the cheque that the cheque may be dishonoured on presentment for the reasons stated in that section."
14. Thus the fact that the account of the applicants has been attached/frozen for an amount of Rs.6 Crores and odd, cannot be a ground for exonerating the applicants from their prosecution with respect to the offence punishable u/s 138 of the Negotiable Instruments Act. The defence sought to be raised by the applicants is similar to the one that Section 140 of the Negotiable Instruments Act specifically disapproves.
15. Mr. Shirodkar submitted that in view of the conflicting stand taken by the bankers, he be permitted to add his bankers as party respondent to the present applications and that notice be issued to them and they be heard. In my opinion, such a course cannot be adopted. The explanation of the conflicting stand, if any, taken by the bank, would be required to be offered during the trial itself and not at the time of hearing of the present applications.
16. Mr. Shirodkar, lastly, submitted that the applicants are ready to pay the entire amount of cheques and se
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ttle the matter provided his bankers permit him to operate the accounts in question. It would be for the applicants to adopt appropriate proceedings against their own bankers, if their case is that their bankers are wrongfully not permitting them to operate the account in question. 17. Even if the applicants really intend to settle the matter by making the payment, such a course would be open to them during the course of trial. That cannot be a reason for quashing the process that has been ordered to be issued against them. 18. In my opinion, no error was committed by the Magistrate by issuing process against the applicant. Consequently no error was committed by the Addl. Sessions Judge by dismissing revision applications challenging the order of issue of process. 19. I find no merit in these applications. The applications are dismissed.