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Petro 6 Engineering & Construction Private Limited v/s New Laxmi Engineering & Trolley Works

    Criminal Miscellaneous (Petition) Nos. 5192 of 2019, 3019 of 2018

    Decided On, 13 January 2020

    At, High Court of Rajasthan

    By, THE HONOURABLE MR. JUSTICE SANDEEP MEHTA

    For the Appearing Parties: Vikash Balia, Sharad Kothari, Mahipal Bishnoi, C.S. Kotwani, Advocates.



Judgment Text

1. Heard learned counsel for the parties. Perused the material available on record.

2. The misc. petition 5192/2019 has been preferred by the petitioner accused Petro 6 Engineering And Construction Private Limited under Section 482 Cr.P.C. seeking quashing of the order dated 31.08.2019 passed by the Special Metropolitan Magistrate, (N.I. Act Cases) No.7, Jodhpur Metropolitan, Jodhpur whereby, the learned trial court rejected the application filed on behalf of the petitioner to keep the criminal proceedings under Section 138 of the N.I. Act in abeyance pending the so called determination by an Arbitrator of the existence of a legally enforceable debt against the petitioner. The misc. petition No.3019/2018 has been preferred by the petitioners seeking quashing of proceedings of the Criminal Complaint Case No.1971/2018 pending before the Special Metropolitan Magistrate, (N.I. Act Cases) No.7, Jodhpur Metropolitan, Jodhpur.

3. Since both the petitions arise out of the same complaint, the same are being decided together.

4. Shri Vikas Balia, Advocate representing the petitioners, vehemently and fervently contended that the complainant firm has failed to make out a prima facie case in the complaint so as to establish the existence of a legally enforceable debt against the petitioner Company. In this regard, his fervent contention was that the letter dated 21.04.2018 by the strength whereof the disputed cheque was handed over to the complainant, was as a matter of fact procured by threat, duress and coercion and as such, the petitioners were under no obligation to honour the cheque. As per Shri Balia, the petitioners were absolutely justified in issuing instruction of "stop payment" to the bank for the post dated cheque No.333873 dated 28.05.2018 for a sum of Rs.66,36,350/-. He urged that the complainant filed a civil suit for recovery of the very same cheque amount for which the complaint under the N.I. Act was filed against the petitioners and the proceedings of the said suit have been stayed by this Court in a writ petition filed by the petitioners. He further submits that the existence of a legally enforceable debt can only be decided either in the arbitration proceedings which the petitioners seek or in the civil suit if the same is permitted to be proceeded. Shri Balia further submitted that so far as the petitioner No.2 Shri Ranganathan in Misc. Petition No.3019/2018 is concerned, he is not even a signatory of the cheque in question and as such, he could not have been prosecuted as an accused in the complaint under Section 138 of the N.I. Act. In support of his contentions, Shri Balia placed reliance upon the following judgments:

(i) Virendra Singh vs. Laxmi Narain & Ors.,2006 2 ILR(Del) 1183;

(ii) Laxmi Dyechem vs. State of Gujarat & Ors., (2012) 13 SCC 375;

(iii) Sam Daniel Vs. S. John, (2005) 128 CompCas 17; and

(iv) Pramod Suryabhan Pawar vs. The State of Maharashtra & Anr., (Criminal Appeal No.1165/2019) arising out of SLP (Crl) No.2712 of 2019) decided on 21.08.2019.

He prayed that the proceedings of the impugned complaint deserves to be quashed while accepting these misc. petitions.

5. Per contra, Shri C.S. Kotwani, learned counsel representing the respondent complainant vehemently and fervently opposed the submissions of Shri Balia. He urged that the petitioner Company entered into a contract with the O.N.G.C. for supply of Bunk Houses. It engaged the complainant as a sub-contractor to manufacture and supply Bunk House Simulator Units. He urged that the petitioner company was lagging behind in achieving the targets on which, the complainant was asked to expedite the manufacture and supply. Both the parties (the petitioner company and the complainant firm), voluntarily agreed to alter the original terms of the Letter of Intent issued by the accused company to the complainant firm. The complainant sought confirmation from the accused firm by a letter dated 21.04.2018 that it would stand by its obligation to make payment towards the Bunk Houses to be supplied by the complainant. On receiving this letter, the accused company, vehemently replied to this letter on the very same day and handed over a Demand Draft for a sum of Rs.50,00,000/- to the complainant firm. The balance amount of Rs.66,36,350/- was agreed to be paid through a PDC of 35 days ahead of the date of dispatch of 19 Bunk Houses from Jodhpur. The post dated cheque No.333873 dated 28.05.2018 for a sum of Rs.66,36,350/- was also handed over to the complainant firm with this letter. The complainant rightfully presented the cheque in its account on the scheduled date but the same was dishonoured on account of the instruction given by the accused to its bank to stop payment. He urged that the existence of a legally enforceable debt is duly alleged by the complainant in the complaint. He fervently refuted the contention of Shri Balia that the letter dated 21.04.2018 proposing change in the terms of the Letter of Intent was procured under threat or duress exercised by the complainant. The contention of Shri Kotwani was that as a matter of fact, the accused company pressed the complainant firm to complete the order of the remaining Bunk Houses worth Rs.1,16,36,350 in one go. But it feigned that it was not in a position to make the complete payment to the petitioner on which, the complainant's authorised representative issued the letter dated 21.04.2018 asking the accused company to hand over a Demand Draft for a sum of Rs.50,00,000/- and a post dated cheque to cover the balance amount of Rs.66,36,350/-. In accordance with the terms agreed by the parties voluntarily. The accused company's representative issued the letter dated 21.04.2018 changing the terms of the Letter of Intent and handed over the Demand Draft of Rs.50,00,000/- to the complainant Company alongwith the PDC in question. He urged that the complainant firm duly performed its obligation under the contract by supplying the complete number of Bunk Houses but when the PDC issued by the accused towards payment of the goods supplier was put in the bank for clearing, the accused Company acted in a fraudulent manner and issued instruction of stop payment to the bank and as a consequence thereof, the proceedings under Section 138 of the N.I. Act were initiated. He further submitted that the petitioner No.2 Shri Ranganathan is the General Manager of the Company and there is a distinct allegation in the complaint that he is responsible for the day to day affairs of the Company and as such, he too cannot claim exoneration on the ground that he was not a signatory to the cheque. Shri Kotwani further submitted that mere pendency of a civil suit or an arbitration proceedings cannot entitle the accused to make a plea for deferring the proceedings of the complaint because both the remedies can be pursued simultaneously. Shri Kotwani relied upon the Supreme Court Judgment dated 17.10.2019 rendered in the case of Dr. Lakshman vs. The State of Karnataka & Ors Etc. (Criminal Appeal Nos.1573-1575 of 2019 arising out of S.L.P. (Crl.) Nos.6115-6117 of 2017), and craved dismissal of both the misc. petitions.

6. I have given my thoughtful consideration to the submissions advanced at bar and have gone through the material available on record.

7. Suffice it to say that the complainant has clearly alleged in its complaint that the Letter of Intent dated 21.04.2018 was duly issued by the accused annexing therewith a Demand Draft for a sum of Rs.50,00,000/- and the PDC for a sum of Rs.66,36,350/-. The plea of Shri Balia that the Letter of Intent dated 21.04.2018 was got issued under threat and duress is totally unsubstantiated because the alteration in the terms of the Letter of Intent was made on the agreed terms between accused company and the complainant firm who agreed to supply the 19 remaining Bunk Houses without pressing for upfront payment of the cost thereof. It was definitely an action intended to tide accused Company over the financial difficulties but rather than honouring its obligation, the accused got the cheque's payment stopped by giving instruction to the Bank even after receiving the entire order of Bunk Houses.

8. I have carefully perused the judgments cited by Shri Balia in support of his prayer for quashing of the complaint/ deferring of the proceedings and find that the ratio thereof is totally distinguishable on facts. In most of these judgments, there were serious disputes that the contract in furtherance whereof, the cheques were issued by the accused, were void or that the debt did not exist in the eyes of law. In the present case, I am duly satisfied that the complainant has placed ample material on record that the debt towards which the disputed cheque was issued, was indeed enforceable in law. The contention that the cheque was procured under threat and duress is ex-facie untenable considering the material available on record. The contention of Shri Balia that the petitioner No.2 Shri Ranganathan cannot be prosecuted because he is not a signatory of the cheque, is also untenable considering the language of Section 141(1) of the N.I. Act which reads as below:

"141 Offences by companies. - (1) If the person committing an offence under section 138 is a company, every person who, at the time the offence was committed, was in charge of, and was responsible to the company for the conduct of the business of the company, as well as the company, shall be deemed to be guilty of the offence and shall be liable to be proceeded against and punished accordingly:

Provided that nothing contained in this subsection shall render any person liable to punishment if he proves that the offence was commit

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ted without his knowledge, or that he had exercised all due diligence to prevent the commission of such offence: Provided further that where a person is nominated as a Director of a company by virtue of his holding any office or employment in the Central Government or State Government or a financial corporation owned or controlled by the Central Government or the State Government, as the case may be, he shall not be liable for prosecution under this Chapter." 9. It is a clear allegation of the complainant in the complaint that the petitioner No.2 Ranganathan, being the General Manager of the Company, was responsible for its day to day affairs. Thus, the burden would be on the accused to prove at the trial that he was not actually responsible for the affairs of the Company and then only, he can seek exoneration. 10. As an upshot of the discussion made herein above, I find no merit in the contentions advanced by Shri Balia. Hence, both the misc. petitions are dismissed as lacking in merit. 11. A copy of this order be placed in each file.
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