ELECTREX INDIA LIMITED Vs. STATE OF GUJARAT

JUDGEMENT

(1.) All these 9 Special Criminal Applications arise from 9 criminal complaints filed by the respondent No.2 against the petitioners. The facts and parties are common in all 9 criminal complaints filed by respondent No.2 for conviction and sentence of the petitioners under Section 138 of the Negotiable Instruments Act, 1881 (hereinafter referred to as "Act, 1881") and as said earlier the same proceed on identical facts. In fact the separate criminal complaints are to be filed for dishonour of different cheques. The parties are common and identical prayer has been made in these matters. The grounds raised for quashing and setting aside of the criminal complaints are identical and the matters are taken up for hearing together and are being decided by this common order.

(2.) The facts of the case are taken from the Special Criminal Application No.132 of 2000. The first petitioner is a company incorporated under the Companies Act, 1956 having its registered office at 2121-DI, 2nd Phase, Peenya Industrial Area, Bangalore - 560 058 and having office at Bombay at the address mentioned in the cause title of the petition. The petitioner No.2 to 6 are directors of the company. The respondent No.1 is State of Gujarat and respondent No.2 is the company registered under Companies Act having main objects of financier and carrying on his business from the address mentioned in the cause title of the petition.

(3.) The respondent No.2 on or about August, 1995 at the request made by the petitioners have financed for purchase of machinery and entered into a Hire Purchase Agreement with the second respondent on 24.8.1995. The respondent No.2 after deducting first/initial Hire purchase rental and fee amount to be paid by the petitioners have disbursed a sum of Rs.1,93,99,109/= (Rupees One crore ninety three lac ninety nine thousand one hundred and nine only). As per the agreement of 24.8.1995 the sum advanced by the respondents have to be paid by the petitioners in 36 monthly installments of Rs.7,72,156/= commencing from 24.8.1995 and ending on 24.7.1998. The petitioners pursuant to the agreement dated 24.8.1995 have handed over to the respondent No.2 in all 15 cheques of Rs.7,81,343/= each aggregating to Rs.1,17,20,395.00 as and by way of collateral security for repayment of 36 installments as per the agreement aforestated. It is the case of the petitioners that all those 15 cheques have been signed by the petitioner No.4. There were the post dated cheques as and by way of collateral security. The petitioners No.2 and 4 have also given personal guarantee for this sum advanced to the petitioners by the respondent No.2 The respondent No.2 has also given the bill discounting facility to the petitioners. The petitioners have discounted bills with the respondent No.2 The petitioners have also given the post dated cheques as and by way of collateral security to the respondent No.2. The respondent No.2 has deposited all the above post dated cheques with their bankers viz. Allahabad Bank, Nanpura Branch for clearance on 1.7.1998. All the post dated cheques so deposited were returned / dishonoured by the petitioners' banker viz. Canara Bank, Colaba Branch, on 2.7.1998. The petitioners' bankers on the said day informed the respondent No.2's banker viz. Allahabad Bank, Nanpura Branch by their written memo dated 2.7.1998. The petitioners submit that as per the agreement dated 24.8.1995 the respondent No.2 had no authority whatsoever to deposit the said post dated cheques issued by the petitioners in favour of the respondent No.2 by way of collateral security. The grievance of the petitioner is that the respondent No.2 could not have deposited the said post dated cheques given as and by way of security without intimating the petitioners. After bounced of the cheques aforesaid it is not in dispute that the respondent No.2 issued statutory notice under Section 138 of the Act, 1881 on 23.7.1998 through its advocate to all the petitioners at their addresses. Those legal notices have been received by the petitioners on 25.7.1998. It is also not in dispute that the respondent No.2 has filed complaints under Section 138 of the Act, 1881 in the court of Judicial Magistrate, Fist Class, 3rd court, Surat being Criminal Complaints No. 6479 of 1998 to 6482 of 1998 and 6486 of 1998 to 6490 1998 against the petitioners. The petitioners state that one M/s.Times Guarantee Limited having its registered office at Ground Floor, Times of India building, Dr.D.N.Road, Mumbai-400001 has filed winding up petition under Section 433(e) and 434 of the Companies Act, 1956 (hereinafter referred to as "Act, 1956") in Karnataka High Court on 11.2.1999 which was registered as Company Petition No.40 of 1999 against the first petitioner company. In the winding up petition what it is averred by the petitioners that the petitioner therein M/s.Times Guarantee Limited, has taken out the company Application No.74 of 1999 for appointment of provisional Liquidator. Further prayer has also been made in that application for injunction restraining the petitioners, their servants and agents from selling, transferring, alienating or encumbering any of the company's assets. The petitioners stated that there are other company petitions which are filed in Karnataka High Court, Bangalore against the petitioner No.1 company of winding up thereof under Act, 1956. Those petitions are stated to have been accepted and the winding up court issued a show cause notice to the petitioner No.1 company. The petitioners submit that some of the creditors have also issued statutory notices under Sections 433 and 434 of the Act, 1956 calling upon the petitioner No.1 to show cause as to why company should not be wound up. The petitioners submit that in view of winding up petitions field and pending in the Karnataka High Court under Sections 433 and 434 of the Act, 1956, the provisions of Section 536 of the said act become applicable. It is the say of the petitioners that there is no enforceable debt or other liabilities within the meaning of section 138 of the Act, 1881. The petitioners said that in view of the Section 536(2) read with Section 441 of the Act, 1956 the proceedings under Section 138 of the Act, 1881 is not maintainable. The petitioners further submit that there is a legal bar to disposition of the property by the company or its directors and, therefore, the company cannot make payment after the winding up proceedings have been initiated. This legal bar as what it is averred is more particularly stated under Section 536(2) read with Section 441 of the Act, 1956.