ANURAG MODI Vs. MSTC LIMITED

JUDGEMENT

(1.) This order Will govern the disposal of batch of abovenamed petitions filed under Section 482 Cr .P.C. The petitions arise out of six complaints filed by MSTC Ltd. against Kusum Ingots & Alloys Ltd. and its five directors. One of the complaints being case No.709/1/97 which is treated as a lead case, was filed alleging that complainant is a Government company within the definition of Section 617 of the Companies Act 1956. Kusum Ingots and Alloys Ltd., accused No.1 is a company also registered under the Companies Act. 'Bharat Kumar Modi, accused No.2 is the Chairman-cum-managing director while Ashish Modi, accused No.3, Anurag Modi, accused No.4, Mrs.Kusum Modi, accused No.5 and P.S.Santhankrishan, accused No.6 are the directors of accused No.1-company. All of them were/are incharge of and responsible for the day to day business of accused No.1-company. In the month of September/October 1995, the complainant had imported from USA Iron and Steel melting scrap for being sold in domestic market. It made an offer to the accused for sale of 2000 MTS of scrap @ Rs.7230.00 per MT which was calculated provisionally on the basis of one Dollar equal to Rs.35/-. Total provisional cost of '2OOO' MTS worked out to Rs .1,44,60,000/-. It is further alleged that although scrap was being sold by complainant company on letter of credit basis but on account of past business relationship with accused, said quantity of scrap was released in their favour against post dated cheques drawn on 15/02/1996 favouring the complainant as detailed below:-

(2.) These cheques were issued by accused in discharge of their liability/debt arising out of supply of scrap. Cheque No.841007 was presented for encashment on 15/11/1996 but it was received back unpaid, on the ground of insufficiency of funds on 27/11/1996. So, notice dated 5/12/1996 was sent by the counsel of complainant on 7/12/1996 calling upon the accused to pay the amount covered by the said cheque within a period of 15 days from the date, of receipt of notice However, despite service/accused failed to make payment of the cheque. It was prayed that accused be summoned and tried for the offence Under Section 138 of Negotiable Instruments Act 1881 (for short the 'Act'). Complaint case Nos.710/1/97. 711/1/97, 713/1/97, 714/1/97 and 712/1/97 based on aforesaid cheques No.841008, 841009, 841010, 841011 and 841012 respectively were filed by the complainant against accused No.1-company arid its five directors on dishonouring of cheques and non-payment of amounts thereof by them despite service of legal notices.

(3.) In aforementioned complaints, the accused were summoned to face trial for the offence under said Section 138. Applications) jointly filed by accused Nos.1 to 5 dated 8/07/1997 and also filed by accused No.6 separately seeking their discharge/release and dismissal of six complaints were dismissed by the Metropolitan Magistrate by the order dated 2/09/1998. Crl.R.Petition No.75/98 filed by one of the accused against that order was dismissed by the order dated 6th March, 2000 by an Addl Sessions Judge. Crl R Petition Nos.111, 112, 113, 114 of 1999, 18, 19, 20, 21, 22, 23, 24, 35, 36, 37, 39, 40, 41 & 42 of 2000 filed by four accused against said order dated 2/09/1998 were also dismissed by the order dated 29/07/2000 by the same Addl. Sessions Judge. In this batch of petitions, the petitioners seek setting aside of said orders together with summoning order and quashment of complaints pending against them. Contention advanced by Sh.A.S. Chandhiok for petitioners/accused was that post dated cheque Nos.841007 to 841012 were Bills of Exchange and they became cheques on the dates written on them. Mrs. Kusum Modi, accused resigned as director of accused No.1 company on 20/05/1996 while Anurag Modi, accused on 1/10/1996. Since both of them had ceased to be the directors of company much before 15/11/1996 on which date first cheque N6.841007 became payable, they cannot be held vicariously liable for the offence arising out of non-payment of any of.the .said cheques. In support of submission, my attention was invited to the decisions in Anil Kumar Sawhney Vs. GUI shah Rai. (1993) 4 SCC 424 and Ashok Muthanna & Ors. Vs. Wipro Finance Ltd.. 2001 Vol.105 Company Cases 203 as also photostats of certified copies of Form-32 pertaining to both the accused-petitioners. In Anil Kumar Sawhhey's case, it as held that when a post dated cheque is written or drawn, it is only a bill of exchange and it becomes cheque Under the Act on the date which is written oh it and six months' limitation is to be reckoned for the purpose of Section 138(a) from the date written on the cheque. In view of this ratio, liability qua both the said accused for the offence under Section 138 of the Act would not arise if they had ceased to be the directors of accused No.1-company on 20/05/1996/lst October, 1996. But the question is as to when this aspect of the matter can be gone into by the.Court? It is admitted case of parties that application seeking discharge/release was filed jointly by accused Nos.1 to 5 on 8/07/1997. In para No.2 of this application, it is alleged that accused Nos.2 to 5 resigned as directors of accused No.1-company w.e.f. March 1997 which fact is specifically denied in the reply filed by the complainant. Accused Nos.2 to 5 filed another application on 18/04/1998 raising additional grounds. In para No.2 of this application, it is stated that in the absence of proper instructions, the specific dates of resignation of directors were not mentioned in the previous application. Mrs. Kusum Modi resigned as director of company on 20/05/1996 while Anurag Modi on 1/10/1996. Bharat Kumar Modi and Ashish Kumar Modi resigned on 31/03/1997. Date of deposit of Form-32 with the Registrar of Companies in respect of Mrs.Kusum Modi was disclosed as 14/10/1996 while in regard to Anurag Modi as 29/11/1996. 20th May, 1997 had been shown as date of deposit of Form-32 pertaining to Bharat Kumar Modi and Ashish Kumar Modi. Alongwith application, photostats 'of certified copies of Form-32 were also filed. In the reply to the application, it is pleaded that Board resolutions accepting resignations of said accused have not been placed on record; alleged submissions of Form-32 with Registrar of Companies is nothing but manufacturing of documents in back date with a view to avoid prosecution. To be noted that latter application was filed after more than 9 months of the filing of former application. Sh.V.K.Shall appearing for complainant relied upon certain authorities on the issue on hand which I propose to refer hereinafter. In B.C.Sharma Vs. M/s.Shree Bhagwati Enterprises, 1999 VI AD (Delhi) 521, the ground taken by petitioner for dropping proceeding under Sections 138/141' of the Act was that he had resigned from the post of director of company on 19/01/1991 and he had no concern with the company on the date of issue of offending cheque dated 2/06/1995. In support of the ground, two Form No.32 issued by Registrar of Companies - One showing the petitioner as having resigned w.e.f. 19/01/1991 and other showing him as director upto 9/07/1997 were filed. Taking note of inconsistency in the entries in two forms, it was held that date of resignation of petitioner as director was a disputed fact which could not be decided in proceeding under Section 482 Cr.P.C. In the decision in Smt.Daviader Kaur and Anr. Vs. Small Scale Industries Development Bank of India & Anr., 1999 (2) All India Banking Law Judgements 97, two directors of accused/respondent No.1-company claimed that they had ceased to be the directors by the date the offending cheque on behalf of company came to be issued, while dismissing the petition, it was held by Andhra Pradesh High Court that the claim of petitioners to the said effect could be looked into by the trial court and no investigation is supposed to be done by the i High Court in proceeding under Section 482 Cr.P.C. Yet another decision in Bharat Kumar Modi & Ors. Vs. M/s.Pennar,Peterson Securities Ltd., 2000 (2) All India Banking Law Judgements 542, would reveal that on dishonour of cheques issued by Kusum Ingots' and Alloys Ltd., accused No.1, six complaints under Section 138 of the Act were filed before XV Metropolitan Magistrate Hyderabad. While seeking setting aside of summoning, order, the plea taken by Mrs. Kusum Modi accused No.3 was that she had resigned as director of company w.e.f. 20th May, 1996. Anurag Modi accused No.6 also claimed to have resigned as director w.e.f. 1/10/1996. In support of plea of resignations, Form-32 and other documents were filed. While dismissing the revision petitions against the order of summoning, it was held by Andhra Pradesh High Court that the fact that accused had resigned from respective dates was not known to the complainant and that exercise could be done only during trial. It may only be noticed that these very Form -No.32 have been made the basis by Mrs.Kusum Modi and Anurag Modi in the present proceedings. Considering the stand taken in the replies to applications dated 8/07/1997 and 1 8/04/1998 as also the ratio in said three decisions, assertion about Mrs.Kusum Modi having resigned as director of company w.e.f. 20/05/1996 and Anurag Modi on 1/10/1996 being disputed facts, can be examined by the concerned Metropolitan Magistrate during trial and not in these proceedings under Section 482 Code of Criminal Procedure, 1973. Ashok Muthanna's case (supra) is distinguishable as genuineness of Form No.32 therein was not disputed by the counsel of respondent-complainant.