MAIKAAL FIBRES LTD. Vs. RAJRANI EXPORTS PVT. LTD.

JUDGEMENT

(1.) M /s. Rajrani Exports Pvt. Ltd. has filed complaint under Section 138 of the Negotiable Instruments Act (in short the 'NI Act') against four persons. Accused Nos. 1 and 2 are two companies, namely, M/s. Maikaal Boire India Ltd. and M/s.Maikaal Fibres Ltd. Accused No.3 Sh. Mrigendra Jalan is shown as the Managing Director of M/s.Maikaal Fibres Ltd. and Sh. Shyam Sunder Kejriwal (accused No.4) is described as the Director of M/s.Maikaal Fibres Ltd. As per the averments made in the complaint, the two companies, namely, accused Nos. 1 and 2 are group companies of M/s. Maikaal Group of Companies. Both the companies are having their factory/manufacturing units as well as registered office at Village Bheel Gaon, Tehsil Kesarwad, District Khargone, MP and also having several common Directors. Accused No.3 is Director in both the companies. It is alleged that accused Nos. 3 and 4 approached the complainant through one common person in the month of October, 2002 and held several meetings with the complainant company. They approached M/s. Maikaal Fibres Ltd. (accused No.l) with magnified financial credentials and allured the complainant to provide some finance to their cotton yarn export business on the pretext that the accused No.2 was having in hand a huge order for cotton yarn to be exported to M/s.Remie AG, Switzerland. On their representation, the complainant financed a sum of Rs.50 lakhs to M/s. Maikaal Fibres Ltd. (accused No.2) as a short-term loan against a Letter of Credit (in short the 'LoC'). This LoC was transferred in the name of the complainant as a collateral security, which was opened by M/s. Remie AG, Switzerland in favour of accused No.2. To ensure repayment of loan, the accused Nos. 3 and 4 also issued and handed over four cheques, all dated 30.11.2002 for Rs.12.5 lakhs each from Current A/c No.283 maintained with Bank of India, Ballygunge, Kolkata Branch. At the time of handing over the cheques they also stated that the complainant may deposit these cheques one by one, although they were bearing the same date. This was agreed on the request of accused No. 1 to make the repayment convenient. The LoC, which was transferred in favour of the complainant, was got encashed and the complainant adjusted the amount of loan and returned the excess amount to accused No.2. Thereafter, on 15.1.2003 accused No.2 again approached through its authorised representative Sh. Arun Garodia and requested for further loan. Memorandum of Understanding dated 15.1.2003 was executed between the complainant and the accused No. 1 on the same terms and conditions on which the complainant had provided finance to the accused as mentioned above. Accused No. 2 stood as guarantor for repayment of loan and the complainant gave loan of Rs.25 lakhs to accused No.l against the LoC vide cheque No.236659 dated 17.1.2003. However, the accused Nos.l and 3 failed to transfer the letter of credit in favour of the complainant and, therefore, in terms of the said Memorandum of Understanding, the complainant did not provide further finance. In May 2003, it demanded repayment of its amount financed to accused No.l, who failed to return the payment. In these circumstances, the complainant called upon accused No.2. which was guarantor, to make the payment. Accused No.2 requested the complainant to present the cheques which it had given. These cheques were accordingly presented on the assurance of the accused No.2 but were returned unpaid along with the memo dated 29.5.2003 with the remarks "funds insufficient." The demand notice dated 3.7.2003 was accordingly served upon the accused Nos. 1 to 3 calling upon them to pay the said amount of Rs.25 lakhs. However, needful was not done which forced the complainant to file complaint under Section 138 of the NI Act. It may also be mentioned that in this complaint it is further averred that the complaint is within limitation as per the averments made in para-18, which reads as under :--

(2.) AFTER recording the pre-summoning evidence, the learned MM took cognizance of the matter and issued summons to the accused persons. Notice was thereafter framed on 11.4.2005. It was, inter alia, argued that the complaint was barred by limitation. This plea of the accused persons was rejected. On behalf of accused Nos.3 and 4 it was also submitted that they were not in charge and responsible for the affairs of the accused No. 1 company. This plea was also rejected on the ground that these are disputed questions of fact and have to be gone into at the time of trial. Not satisfied with this order the accused No.2 company as well as accused Nos. 3 and 4 have filed this petition under Section 482 of the Code of Criminal Procedure for quashing of the order dated 11.4.2005 and all proceedings in the said complaint case.

(3.) IN order to appreciate the other contentions, we will have to look into the nature of the complaint and the allegations on which it is founded. As mentioned above, case of the complainant is that loan of Rs.25 lakhs was given to the accused No.l on the request of the accused No.2 company. Not only this, a Memorandum of Understanding dated 15.1.2003 was signed between the complainant and the accused.No.2. Thus, it is because of this MOU between the complainant and the ac cused No.2 that the complainant agreed to provide finance to the ac cused No.l. Further, the accused No.2 even stood guarantor for repayment of the loan. When this loan could not be paid, accused No. 2, as per the complaint, through the accused Nos. 3 and 4 represented that the cheques in question may be presented to recover the amount. The possibility of making such a representation cannot be ruled out an accused No.2 was the guarantor. In these circumstances, when the cheques drawn by accused No.2 are dishonoured, the complaint can be filed against accused No.2 company. Accused No.3 is the Managing Director of accused No.2 and, therefore, he would be covered by the provisions of Section 141 of the NI Act as per the judgment of the Supreme Court in the case of SMS Pharmaceutical v. Neeta Bhalla, 2005 (3) JCC [NI] 203 : 2005 (8) SCC 89.