M/S A.K. Real Estate And Others vs M/S Sewani Builders And Others

Ajay Kumar Nirankari, J

This petition has been preferred by the petitioner under Section 528 of Bharatiya Nagarik Suraksha Sanhita, 2023 for quashment of criminal proceeding of RCT No.7128/2022 registered on the basis of private complaint filed by the respondents for the offence punishable under Section 138 of N.I. Act pending before the JMFC (Fast Track Court) Bhopal (M.P.)

Brief facts for proper adjudication in the matter are that the respondent filed a private complaint under Section 200 of Cr.P.C. for initiating criminal proceeding under Section 138/142 of Negotiable Instruments Act, 1881 read with Section 420 of IPC with the allegations that there is a transaction between the petitioner and respondent and the petitioner issued a cheque No.798066 amounting to Rs.39,75,000/- dated 01.03.2021 to the respondents of Dena Bank, Branch Arera Colony, Bhopal with the assurance that on submitting the said cheque in his respective account, the amount would be credited. The said cheque was presented by respondent on 18.03.2021 in his account in the Bank of Baroda, Branch Habibganj, Bhopal (M.P.) and the same was dishonoured with the note of "funds insufficient". Thereafter, the respondent sent demand notice through his counsel by registered mode. The petitioner while replying the said demand notice defended themselves on the ground that the cheque was issued only for security purpose and the cheque which was issued of his current account was freezed by Commercial Tax Department. Thereafter, the trial Court registered case against the petitioners and while taking the cognizance also issued bailable warrant.

The petitioner being aggrieved by said proceedings of Magistrate in RCT No.7128/2020 preferred this petition.

Learned counsel for the petitioner had advanced argument that the petitioner is running a business and for smooth function of said business, he opened a current account in Bank of Baroda bearing account No.118411023775 present freezed account No.73170200000053. The said account was freezed by Commercial Tax Department on 02.02.2019. The petitioner in security purpose issued number of cheques to the respondent including the cheque in question and respondent even after having the said knowledge submitted the same for encashment. The petitioner's firm is a sick firm and against sick firm, criminal proceeding under Section 138 and 148 of Negotiable Instruments Act is not maintainable. In support of the contention, the petitioner has relied upon the judgment of Hon'ble Apex Court in the case of Kusum Ingots & Alloys Ltd. Vs Pennar Peterson Securities Ltd. and others reported in (2000) 2 SCC 745 wherein it is held that a criminal proceeding under Sections 138, 141 and 142 is not maintainable against the institutions declared by BIFR under SICA. Thus, he prayed for allowing the petition and quashing the pending private complaint before the JMFC, Bhopal.

Heard the learned counsel for the petitioner and perused the record.

On a bare perusal of record, it is clear that the petitioner has issued a cheque No.798066 amounting to Rs.39,75,000/- dated 01.03.2021 and the same cheque was dishonoured on 18.03.2021 with the note of insufficient funds. The contention of the petitioner is that the petitioners' firm is a sick firm and its account has already been freezed by Commercial Tax Department on 02.02.2019 which is evident from letter dated 23.03.2021 (Annexure-P/5) and the said cheque was issued for security purpose. The said contention of the petitioner is not acceptable because the cheque was issued by petitioner to the respondent on 01.03.2021 even having knowledge that the said account was freezed by Commercial Tax Department. The said cheque was dishonoured with the note of insufficient fund and not dishonoured on the ground of freezed of account. The petitioners have not filed any documents to show that petitioner's firm/institution/company is declared sick institution by any authority like BIFR under SICA as mentioned in the above cited case Kusum Ingots & Alloys (supra). The relevant portion of Section 19 is reproduced as under:-

"19. The question that remains to be considered is whether section 22 A of SICA affects a criminal case for an offence under section 138 NI Act. In the said section provision is made enabling the Board to make an order in writing to direct the sick industrial company not to dispose of, except with the consent of the Board, any of its assets - (a) during the period of preparation or consideration of the scheme under section 18; and (b) during the period beginning with the recording of opinion by the Board for winding up of the company under sub-section (1) of section 20 and up to commencement of the proceedings relating to the winding up before the concerned High Court. This exercise of the power by the Board is conditioned by the prescription that the Board is of the opinion that such a direction is necessary in the interest of the sick industrial company or its creditors or shareholders or in the public interest. In a case in which the BIFR has submitted its report declaring a company as 'sick' and has also issued a direction under section 22- A restraining the company or its directors not to dispose of any of its assets except with consent of the Board then the contention raised on behalf of the appellants that a criminal case for the alleged offence under Section 138 NI Act cannot be instituted during the period in which the restraint order passed by the BIFR remains operative cannot be rejected outright. Whether the contention can be accepted or not will depend on the facts and circumstances of the case. Take for instance, before the date on which the cheque was drawn or before expiry of the statutory period of 15 days after notice, a restraint order of the BIFR under Section 22-A was passed against the company then it cannot be said that the offence under section 138 NI Act was completed. In such a case it may reasonably be said that the dishonouring of the cheque by the bank and failure to make payment of the amount by the company and/or its Directors is for reasons beyond the control of the accused. It may also be contended that the amount claimed by the complainant is not recoverable from the assets of the company in view of the ban order passed by the BIFR. In such circumstances it would be unjust and unfair and against the intent and purpose of the statute to hold that the Directors should be compelled to face trial in a criminal case".

In the present scenario, the said citation is not helping the petitioner in any manner.

In view of the overall consideration, this Court reached to the conclusion that it is not a fit case for quashing the criminal proceeding of RCT No.7128/2022 pending before the JMFC (Fast Track Court), Bhopal under Section 138 of N.I. Act because the grounds raised before this Court cannot be dealt with at this stage and can only be decided after leading evidence by both the parties. Thus, the petition filed by the petitioner fails and is hereby dismissed.

Accordingly, this petition is dismissed.