SITA RAM SINGHANIA Vs. STATE OF GUJARAT

JUDGEMENT

(1.) THE petitioners of both these Revision Applications are the accused of Criminal Case Nos. 1947 and 1949 of 1995, pending in the Court of learned Judicial Magistrate, First Class (4th Court) at Vadodara. The respondent No. 2 Gujarat State Fertilisers Company Limited, Vadodara (hereinafter referred to as 'the GSFC) is the original complainant of the aforesaid criminal cases instituted for the offence punishable under Section 138 of the Negotiable Instruments Act, 1881 (hereinafter referred to as the Negotiable Instruments Act'). A criminal complaint came to be filed against four accused persons. However, as the accused No. 3 could not be served by the original complainant, he has been deleted from the complaint vide order dated 14th October, 2003, passed by the Court below Exh. 49 submitted by the original complainant. The ac cused No. 4 is Esslon Synthetics Ltd. and as per the say of the complainant GSFC, the accused No. 1 was the Managing Director of the said company and the accused No. 2 was the whole time Director. After service of summons, the petitioners accused Nos. 1 and 2 (hereinafter referred to as the accused Nos. 1 and 2) submitted one application on 12th February, 1996 at Exh. 19 to drop the proceedings alleging that the Court of learned Judicial Magistrate First Class at Vadodara, had no territorial jurisdiction to try the alleged offence. Hearing of the said application was fixed ini- tially on 31st January, 1997. The accused Nos. 1 and 2 had also submitted one more application referring Section 446(1) of the Companies Act, 1956 and prayed that the proceedings before the Court in respect of criminal cases may not be proceeded with in.view of the order of winding up dated 27th March, 1996 passed by the High Court of Allahabad and the appointment of Official Liquidator of the accused No. 4 Company.

(2.) TO appreciate the rival contentions and submissions placed before this Court, it is necessary to state facts in brief that has brought the controversy before this Court,, The accused No. 4 Esslon Synthetics Ltd. is situated at New Delhi and the registered office of the said Company is at Kanpur. The accused No. 2 was the whole time Director and the accused No. 1 was the Managing Director of the accused No. 4 Company. The ac cused No. 4 Company was the customer of the GSFC, and it was purchasing caprolactam, which is used for manufacturing synthetics. According to the complainant GSFC, normally the credit facility was being given to the accused No. 4 Company, and accordingly, the complainant had supplied caprolactam to the accused No. 4 Company during the period from March, 1995 to June 1995 as per the lifting schedule decided and order placed with the complainant. The complainant was dispatching the material to the accused No. 4 Company against the Post date cheques (for short PDCs) of specific amount on various dates. It is contended by the complainant that during the initial period of transaction with the accused No. 4 Company, the PDCs given by the accused Nos. 1 and 2 on behalf of the accused No. 4 Company were honoured on presentation. According to the complain- ant, the accused No. 4 had issued four PDCs for purchase of caprolactam to the tune of Rs. 98,82,172. The said cheques on supply of material were deposited by the complainant GSFC in its Bank account with the ANZ Grindlays Bank at Can naught Circle Branch, New Delhi for clearing but the said PDCs were returned unpaid by the State Bank of India at Kasturba Gandhi Road Branch, New Delhi, for the reason, "Insufficient Fund". The complainant received these cheques with the memo of the Bank on 10th July, 1995, and therefore, the complainant served a notice to the accused No. 4 Company at Kanpur and Director at New Delhi, through their Advocate on 24th July, 1995, calling upon them to pay the entire sum with in- terest till that date. This notice has been posed as a statutory notice contemplated under Section 138 of the Negotiable Instruments Act. This notice was responded vide reply dated 5th August, 1995, indicating that the accused No. 4 Company being a sick company has approached BIFR (Board for Industrial and Financial Reconstruction) and it was also indicated that the accused No. 4 Company was going through a severed financial crunch. It was also mentioned in the reply that there was no understanding between the accused No. 4 Company and the complainant GSFC as to presentation of the cheques on 3rd July, 4th July and 6th July, 1995 for realization and these cheques were not to be presented without the consent, andrit is alleged that the complainant was fully aware that the cheques on presentation would never be honoured because of insufficiency of funds. The allegation of the accused No. 4 Company in its reply to the notice is that significant changes in the credit policy of the complainant had disturbed the day-to-day functioning of the Company, and consequently, the same had affected the cash flow and none of these situations was anticipated by the accused No. 4 Company. On the contrary, discontinuance in supply of raw material has severely distressed the operation of the ac cused No. 4 Company and presentation of cheques for realization was contrary to the understanding and was inappropriate. It is averred further by the Advocate for the accused No. 4 Company in the said reply to the notice that, "I have instructions to say that active dialogue is still going on between the Companies on the question of supplies and the payment. The agreed arrangement of payment of 110 per cent for every supply is just and fair. In fact, about 100 M.T. of Caprolactam has been lifted under the above arrangement and the payment made for 110M.T. The excess has been adjusted by your clients, but it seems no instructions have been given to you to he said effect". It is not a matter of dispute that the transaction with the complainant has occurred at New Delhi and the complainant GSFC was having a Bank account with the ANZ Grindlays Bank, Cannaught Circle Branch, New Delhi. The accused No. 4 Company was also having a Bank ac count with State Bank of India, Kasturba Gandhi Road Branch, New Delhi.

(3.) WHEN both these Revision Applications were listed for admission hearing, the Court ordered for issuance of notice for final disposal and the same was made returnable on 4th April, 2004 and as the learned Counsel appearing for the parties have agreed to hear both these Revision Appli- cations finally, the Court issued Rule and the same has been waived by the other side; and as the learned Counsel appearing for the parties have agreed to make their submissions in both these Revision Applications simultaneously, having similar set of facts and the law points involved, these Revision Applications on consent are heard simultaneously, and they are being disposed of by this common judgment.