K C INDUSTRIES Vs. PUNJAB NATIONAL BANK

JUDGEMENT

(1.) THE petitioners seek quashing of complaint dated 6.11.1989, Annexure P -1 and order dated 31.3.1990 passed by the Judicial Magistrate 1st Class, Annexure P -3 vide which they were summoned to stand their trial.

(2.) BRIEFLY stated, the facts are as under : A complaint was lodged by the Punjab National Bank against the petitioners alleging that accused No. 1 through its sole proprietor accused No. 2 moved an application before the bank for seeking cash credit facility to the tune of Rs. one Lac against the hypothecation of raw material in the shape of Copper and aluminum wires and rods etc. Cash credit facility was granted on 30.7.1988 through accused No. 2 to accused No. 1. The accused agreed to pay interest at the rate of 15.25% P.A. against the hypothecation of goods detailed in para 3 of the complaint and to this effect, the deed was executed on the same day. An agency was created between the complainant and accused Nos. 1 and 2 and they were obliged to submit the regular returns to the complainant bank indicating the increase and decrease of the value of the said goods. The accused used the cage (cash) credit limit in violation of the terms of the agreement. On the hypothecation of goods, an agency was created in between accused No. 1 and 2 on one hand and the complainant bank on the other hand of which agency accused No. 1 and 2 became agent of the complainant bank. The constructive possession of the hypothecated goods remained with the complainant bank whereas accused No. 1 and 2 held the physical possession of the said goods not in their own right as owners but as agency of the complainant bank. They were obliged to submit regular returns to the complainant bank indicating the increase -decrease of the value of the said goods to enable the bank from time to time to determine the drawing capacity of accused No. 1 through accused No. 2 with regard to it and further to deposit the sale proceeds of the business in hypothecation cash credit limit account. Accused Nos. 3 to 6 stood as guarantors in respect of the said facility and executed deed of guarantee dated 30.7.1988 in favour of the complainant bank, the terms of which they had agreed to abide by. The accused could not sell, dispose of the hypothecated goods or remove the same from the business premises of accused No. 1 or convert the same for personal use. The Manager of the bank visited the business premises of accused No. 1 and 2 on 16.4.1989 and 15.9.1989 and found that they had closed the business and hypothecated goods missing which shows that the accused had removed the goods and disposed of the same without the knowledge nor consent of the complainant bank. The complainant bank also served a legal notice dated 16.8.1989 and accused No. 1 to 6 were called upon to place the hypothecated goods of the value of outstanding balance before the complainant bank for inspection and hand over its possession thereof to the complainant bank but to no effect. Accordingly, complaint under Section 406/409 I.P.C. was filed. After recording the preliminary evidence, the learned Magistrate summoned the accused to stand their trial under Section 406 I.P.C.

(3.) I have heard learned counsel for the petitioner and the learned counsel for the respondent.