VIKASH T CHUDIWALA Vs. J&K BANK LTD

JUDGEMENT

(1.) THROUGH the medium of this petition under Section 561 -A Cr. P.C read with Article 227 of the Constitution of India and Section 104 of the Jammu and Kashmir Constitution, the petitioners have sought indulgence of this court for quashing Criminal complaint for offences under Section 406/409 read with section 120 -B, RPC, inter alia on the ground that the allegations set forth in the complaint by the respondent against the accused do not constitute any offence much less the offence under Sections 406 and 409 read with Section 120 -B of RPC.

(2.) IT appears that Jammu and Kashmir Bank which is a registered banking company through its power of attorney holder Shri Vinod Sharma, Manager, Law Divisional Office, Railhead Complex Jammu, came to institute a complaint for offences under Section 406/409 read with section 120 -B RPC against the petitioners alleging therein that petitioner No.1 who is the Managing Director, petitioner No.2 who is the Director and petitioner No.3 who is the Chairman of the company styled as Kushal Confectionery and Pharma Ltd. Whose registered office is at 154/6, Mittal towers B -Wing 210 Nariman Point, Mumbai and manufacturing unit at Jammu, besides administering the company stood surety in different loan transactions facilities allowed by the complainant to the said company to the tune of Rs.81 Lacs under certain terms and conditions which were incorporated in various documents duly executed by them at different times while obtaining the facility or at the time of enhancement thereof and lastly on 19.1.1995. that the accused were holding hypothecation goods including book debts on trust and as agents of the complainant. The conditions of the Hypothecation Deed read as under: - Condition No. 2: "that the Hypothecated goods and all sales realisation and insurance proceeds thereof shall be held as the Banks exclusive property specially appropriated to this security and the borrowers will not create and mortgage, charge or lien or encumbrance affecting the same or any part thereof nor do anything which would prejudice this security and the borrowers shall not part with the hypothecated goods, save by way of sale in the ordinary course of the borrowers business and as hereinafter provided nor shall any sale be made after prohibition in writing from the Bank against selling." Condition No. 3. "that the borrowers shall with the previous consent of the Bank be at liberty from time to time to sell or dispute of in any manner the hypothecated goods or any part thereof provided the advanced value of such goods is paid into the said account or goods of a similar nature to those mentioned in the schedule hereto or any of the same and of atleast equal value, are substituted for the goods so sold or disposed of after approval of the Bank obtained in writing."

(3.) THAT on their companys account becoming sticky and the unit at Jammu remaining unfunctional inspite of the undertaking of all the accused to make it functional a suit for recovery of Rs.1,48,27,931.38 was filed against the accused and their company during the last year which is pending disposal in the court of Additional District Judge, Bank Cases, Jammu; that in the civil suit the property hypothecated to the bank detailed in Schedule -I of the Hypothecation Deed an application for its attachment was made by the complainant which was allowed by the civil court but on spot the hypothecation goods in the form of stocks of raw -material, consumable stocks, semi -finished and finished goods hypothecated with the complainant were missing. That there was nothing on spot except the machinery; that all the accused who are members of the same family and were managing the affairs of their company have by criminal conspiracy sold all the stocks of hypothecated goods valuing several lac rupees, standing in the name of their company and have also mis -appropriated the hypothecated book debts and other outstanding moneys receivable claims, bills, rights etc, without the consent or even of the knowledge of the complainant; that all the stocks of goods comprising of raw material, consumable stocks and semi -finished and finished goods and the book debt, etc. enlisted in the schedule appended to the Hypothecation Deed P1 to P3 were lying with company of the accused and the accused was trustee thereof; that all the accused have by criminal conspiracy intentionally committed criminal breach of trust in disposing of the stocks of hypothecated goods and realising book debts etc. but not depositing the sale proceeds and the book debts etc. amounts with the bank in terms of the provisions of the hypothecation Deed Annexures P1, P2 and P3.