Sandeep Thapar Vs State of U.P. and Another

AFR

Court No. - 34

Case :- APPLICATION U/S 482 No. - 7594 of 2005

Applicant :- Sandeep Thapar Opposite Party :- State of U.P. and Another Counsel for Applicant :- Manu Khare Counsel for Opposite Party :- Govt. Advocate

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Hon'ble Sudhir Agarwal,J.

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Heard Sri Jahangir Haidar, Advocate, holding brief of Sri Manu Khare, learned counsel for applicant and learned A.G.A. for State.

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This application under Section 482 Cr.P.C. has been filed praying to quash order dated 19.02.2005 passed by Additional Chief Judicial Magistrate, Room No.46, Agra whereby objection of Accused-Applicant has been rejected. Applicant has also prayed to quash further proceedings in Complaint Case No.87 of 1999, Nandu Agarwal vs. Sandeep Thapar, under Section 138 Negotiable Instruments Act, 1881 (hereinafter referred to as “Act, 1881”) pending in the Court of XIII Additional Chief Judicial Magistrate, Agra.

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One Nandu Agarwal son of Sri Suresh Chandra Agarwal i.e. opposite party 2 (hereinafter referred to as “Complainant”) filed Complaint No.87 of 1999 in the Court of Additional Chief Judicial Magistrate, Agra, against Accused-Applicant Sandeep Thapar alleging that he has committed offence under Section 138 of Act, 1881 and he should be tried and punished therefor.

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The facts in brief stated in complaint are that Complainant is Managing Director of Chandrakanta Dairy and running business of supply of milk. Accused-applicant purchased milk between March to May 1997 and issued Cheques No.537419 to 537429 towards payment of price of milk worth Rs.5,50,000/-. Accused-Applicant instructed Complainant to submit cheques for encashment in January,

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Two Cheques No.537425 and 537426 dated 15.10.1998 and 21.10.1998 were for Rs.50,000/- each and were deposited by Complainant for collection on 02.01.1999 in his Bank Jamuna Gramin Bank, Branch Agra. Accused-Applicant's bank State Bank of Patiyala dishonoured cheques on 06.01.1999 on the ground of 'insufficient fund'. Thereafter, demand notice under Section 138 of Act, 1881 was served upon Accused-Applicant by Complainant by registered post on 12.01.1999. Since no payment was made within 15 days thereafter, a complaint was filed vide complaint dated 12.02.1999. Magistrate issued summons on 21.08.1999 whereagainst Accused-Applicant filed an objection dated 27.05.2002 whereon Magistrate passed an order dated 03.10.2002 observing that first Accused-Applicant appear and submit application for bail, only thereafter his objections can be considered.

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Challenging aforesaid order, Accused-Applicant came to this Court in Application under Section 482 Cr.P.C. No.5383 of 2003, which was disposed of vide judgment dated 10.7.2003 directing Court concerned to decide Accused-Applicant's objection. The same was rejected by Additional Chief Judicial Magistrate, Court No.46, Agra vide order dated 19.02.2005. On 28.04.2005, Magistrate has issued Non-bailable warrant to Accused-Applicant hence this application.

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Accused-Applicant has taken a ground that he is Executive Director of M/s Mehar Dairy Industries Ltd. (formerly known as Thapar Milk Products Ltd.). The name of Company was changed to M/s Mehar Dairy Industries Ltd. (hereinafter referred to as “Company”) on 17.02.1997. Company became sick, AccusedApplicant approached Board for Industrial and Financial Reconstruction (hereinafter referred to as "BIFR") under Section 15 of Sick Industrial Companies (Special Provision) Act, 1985

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(hereinafter referred to as “Act, 1985”) and the case was registered as Case No.228 of 1998. BIFR, vide order dated 14.12.1998 has declared Company as Sick in terms of Section 3(1)(o) of Act, 1985 and proceeded further.

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Accused-Applicant contended that since Company fell 'Sick', it could not make payment. It is further submitted that Section 22 of Act, 1985 restrain any coercive proceedings against property of Sick Company and proceedings under Section 138 of Act, 1881 also amounts to coercive proceedings hence were not maintainable in view of Section 22 of Act, 1985. In other words, it is submitted on behalf of applicant that once Company has been declared sick by BIFR and matter is pending before it for rehabilitation, no criminal proceedings alleging offence committed under Section 138 of Act, 1881 can be initiated unless permission of BIFR is obtained under Section 22 of Act, 1985 and proceedings in question are illegal and liable to be set aside.

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The submission is thoroughly misconceived. In the present case Section 22 of Act, 1985 has no application. This issue has already been considered by Supreme Court in BSI Ltd. and Ors. vs. Gift Holdings Pvt. Ltd. and Ors. (2000) 2 SCC 737. Therein complaints were filed for committing offence under Section 138 and 141 of Act, 1881 whereafter Company approached BIFR and sought declaration that those Companies have become sick under Act, 1985. When proceedings were pending before BIFR, an objection with regard to maintainability of criminal proceedings was taken that such proceedings cannot continue in view of Section 22 of Act, 1985. The objection was rejected by Trial Court, Revisional Court as also High Court. Thereafter matter went to Supreme Court. After referring to scheme of Act, 1985 and in particular Section 22(1) of Act, 1985, Court held that ban imposed under Section 22 of Act, 1985 is against

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maintainability of following legal actions :

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“(1) Proceedings for the winding up of the company;

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(2) Proceedings for execution, distress or the likes against any of the properties of the company;

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(3) Proceedings for the appointment of a receiver in respect of such properties;

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(4) Suits for recovery of money or for enforcement of any security against the company or guarantee in respect of any loan or advance granted to the company.”

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Thereafter, rejecting argument that Court trying offence under Section 138 of Act, 1881 would not be entitled to effectively impose sentence on the company after convicting it of the offence under Section 138(1) of Act, 1881, Court said that argument is fallacious and gave reasons as under :

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“15. The fallacy of the above contention is two-fold. First is that maintainability of a prosecution proceeding is not to be tested on the touchstone of any practical hurdle in enforcing the sentence which might be imposed on a company after conviction. Second is, there is no insurmountable hurdle for recovery of the fine covered by the sentence even from a sick industrial company because the ban contained in Section 22(1) is only conditional as could be discerned from the last limb thereof which reads thus: "Except with the consent of the Board or, as the case may be, the Appellate Authority." It means that with such consent the court would be in a position to resort to proceedings for distress against the properties of the sick industrial company. Hence the aforesaid contention has no merit at all. ”

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Another argument was advanced that ban against maintainability of a suit for recovery of money would encompass prosecution proceeding also. Rejecting it, Court said in paras 19 and 20 of judgment as under :

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“19. The said contention is also devoid of merits. The word "suit" envisaged in Section 22(1) cannot be stretched to

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criminal prosecutions. The suit mentioned therein is restricted to "recovery of money or for enforcement of any security against the industrial company or of any guarantee in respect of any loans or advance granted to the industrial company. As the suit is clearly delineated in the provision itself, the context would not admit of any other stretching process.

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20. A criminal prosecution is neither for recovery of money nor for enforcement of any security etc. Section 138 of the NI Act is a penal provision the commission of which offence entails a conviction and sentence on proof of the guilt in a duly conducted criminal proceedings. Once the offence under Section 138 is completed the prosecution proceedings can be initiated not for recovery of the amount covered by the cheque but for bringing the offender to the penal liability. What was considered in Maharashtra Tubes Ltd. (supra) is whether the remedy provided in Section 29 or 31 of the State Finance Corporation Act, 1951 could be pursued notwithstanding the ban contained in Section 22 of the SICA. Hence the legal principal adumbrated in the said decision is of no avail to the appellants.

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Further Court held that even otherwise legislative scheme also supports the view that Section 22 of Act, 1985 has no application to criminal proceedings instituted for trying an offence committed under Section 138 of Act, 1881. In paras 21 and 22, Court said as under :

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“21. In the above context it is pertinent to point out that Section 138 of NI Act was introduced in 1988 when SICA was already in vogue. Even when the amplitude of the word "company" mentioned in Section 141 of the NI Act was widened through the Explanation added to the section, Parliament did not think it necessary to exclude companies falling under Section 22 of SICA from the operation thereof. If Parliament intended to exempt sick companies from prosecution proceeding, necessary provision would have been included in Section 141 of the NI Act. More significantly, when Section 22(1) of SICA was amended in 1994 by inserting the words ["and no suit for the recovery of money or for enforcement of any security against industrial company or of any guarantee in

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respect of any loans or advance granted to industrial company"] Parliament did not specifically include prosecution proceedings within the ambit of the said ban.

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22. The conclusion which we have to draw is that if commission of the offence under Section 138 of the NI Act was completed before the commencement of proceedings under Section 22(1) of SICA there is no hurdle in any of the provisions of SICA against the maintainability and prosecution of a criminal complaint duly instituted under Section 142 of the NI Act. The decisions rendered by the High Courts, which are assailed before us in this batch of appeals, are therefore not liable to be interfered with. Appeals are accordingly dismissed. Special Leave Petitions heard along with the above appeals are also hence dismissed. ”

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In view of above, since argument advanced before this Court stands concluded by above authority of Supreme Court, hence it has to be rejected.

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No other point has been argued.

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The application lacks merit and is accordingly dismissed.

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Interim order, if any, stands vacated.

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Order Date :- 17.1.2020 KA

Sandeep Thapar v. State of U.P. and Another

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