SUNIL KUMAR MEHROTRA Vs. STATE OF BIHAR

JUDGEMENT

(1.) THIS application has been preferred by the sole petitioner under Section 482 of the Code of Criminal Procedure for quashing of the order dated 28. 4. 2003 passed by the learned judicial Magistrate, 1st Class, Patna, taking cognizance against the petitioner in Complaint Case No. 2457 /2002 instituted under Section 420, ipc and Section 138 of the Negotiable Instrument Act, 1881.

(2.) OPPOSITE party No. 2 filed the aforesaid complaint case before the court of Chief Judicial Magistrate. Patna on 25. 11. 2002. The complaint petition stated M/s. Sunil Polyplast Limited, a company in which the petitioner herein was one of the Directors, applied for grant of financial assistance and term loan in the prescribed manner. The complainant corporation after appropriate inquiry/formalities sanctioned the term loan to the company M/s. Polyplast Ltd. in the year 1989 to the extent of Rs. 90 lakhs. Consequent to the failure of the company and its Directors to repay the dues proceedings were initiated against the company on 17. 1. 2002 under Section 29 of the State Finance Corporation Act. Proceedings under the Public Demand Recovery Act, 1914 were also initiated on 31. 3. 2002 to recover the dues; The petitioner, who is one of the Directors of the company, submitted a cheque of Rs. 1,28,42,000/-and later on the company further submitted five cheques of Rs. 1 lac each towards the aforesaid dues. The description of cheques relevant for purposes of the present case are given below : <FRM>JUDGEMENT_546_DCR2_2004Html1.htm</FRM> These cheques were presented for clearance on 10. 10. 2002 and 28. 10. 2002 but were returned with the endorsement "payment stopped by drawer". These cheques were postdated and were given towards satisfaction of dues. The complainant corporation presented the aforesaid three cheques on the due dates which were dishonoured and returned back with the endorsement "payment stopped by drawers". Despite issuance of legal notice under Section 138 of the N. I. Act the amounts were not paid in accordance with law and in the manner prescribed. The complainant corporation thus contended that the present accused in the complaint from the very beginning had the intention to cheat and issued the said cheques in pursuance thereof and that they never intended the said cheques to be honoured for payment of dues. Thus the present complaint was filed under Section 138 of the N. I. Act read with Section 420, IPC.

(3.) MR. Kali Das Chatterji appearing for the petitioner, one of the directors of the company, and accused No. 2 in the aforesaid complaint sought to assail the order of cognizance dated 28. 4. 2003 as also the entire criminal prosecution. Mr. Chatterji submitted that the corporation had already initiated regular proceedings for recovery of debts against the company of which the petitioner was one of the Directors. These proceedings were the subject-matter of the State Finance Corporation Act and the Public Demand Recovery Act. These proceedings would have culminated on their own merits with regard to the legal dues, debts and liabilities of the petitioner. It was submitted by Mr. Chatterji that pending these proceedings the opposite party corporation floated a one time settlement scheme (OTS ). The corporation under this scheme invited offers for the settlement of pending debts and liabilities. This was clearly a case of invitation to offer only. The petitioner, Managing Director of M/s. Sunil Polyplast Ltd. submitted certain post-dated cheques to the corporation in pursuance of this OTS scheme. This offer was conditional and the cheques were to be encashed and presented to the Bank subject to the corporation accepting the counter offer made by the company for settlement of its dues under the OTS scheme. Mr. Chatterji thus submitted that these post-dated cheques were, not instruments presented in due course but were conditional instruments. The conditions not having been fulfilled by the failure of the corporation to confirm acceptance of the conditions subject to which the cheques were given, the company M/s. Sunil Polyplast Ltd. were fully justified In communication to the corporation before the due date of the cheque that the conditions offered along with the payment tendered stood withdrawn. The Bank was also instructed accordingly under intimation to the complainant corporation before the due date to stop payment. Shri Chatterji thus contended that the post-dated cheques never became a valid tender till the date on which they became due. Since the company recalled the cheques before the due date's of maturity, Section 138 of the N. I. Act would have no applicability in the facts of the case. It was the contention of the petitioner that under Section 5 of the Contract Act the offer or can revoke his proposal at any time before acceptance. The cheques were not given in the discharge of any contractual debt, but were given under a settlement scheme subject to acceptability by the corporation of counter proposal made by the petitioner under the settlement scheme. It was thus contended that in the facts of the case Section 420, IPC would have no application at all and the cognizance thereunder was bad.