ROM INDUSTRIES LTD Vs. STATE OF M P

JUDGEMENT

(1.) THE brief facts necessary for the disposal of this petition run thus :

(2.) THE petitioner No. 1 was originally incorporated as Roshan Lal Oil Mills Pvt. Ltd. in the year 1974, and its main business was manufacturing, processing the refining oils of all varieties and other oil containing media for human consumption and soap, perfumery and cosmetics. It is a public limited company and to meet out its capital expenditure it planned to raise funds through public issue. The funds were borrowed from inter corporate deposits at very high rates. Further, the petitioners' case is that due to heavy losses and failure of the public issue the net worth of the Company was totally eroded and it eventually became a sick Company after declaration of the BIFR on 30-7-1997 in terms of Section 3 (1) (o) of The Sick Industrial Companies (Special Provisions) Act, 1985 (hereinafter for short 'sica' ).

(3.) THE case of the petitioners is that on 31-7-93 the respondent No. 2 had given loan to it through loan-cum-guarantee agreement dated 10-4-96 for Rs. 25,00,000/-, and as per the market practice, the Company issued two cheques bearing No. 764977 dated 10-4-96 for Rs. 25,00,000/and another cheque bearing No. 764978 dated 10-4-96 for Rs. 94,932/- drawn on Bank of Patiala, Model Basti, New Delhi. But as the Company had incurred heavy losses and its net worth was totally eroded, it was unable to pay the aforesaid amount, and when the respondent No. 2 presented the cheques before the Bank, the same were returned unpaid on 27-8-96. On the above facts and circumstances, the respondent No. 2 filed criminal complaint No. 1721/97 dated 18-10-96 against the petitioners under Section 138 of the Negotiable Instruments Act in the Court of the Chief Judicial Magistrate, Gwalior, M. P. . The Chief Judicial Magistrate, Gwalior, issued summons against the petitioners, vide his order dated 27-1-1997 (Annexure P-4 ).