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2023 Supreme(Bom) 2293
IN THE HIGH COURT OF BOMBAY
Sarang V. Kotwal, J.
Shree Nagani Silk Mills Pvt. Ltd. - Appellant
Versus
I. D. Textile Industries Ltd. & Ors. - Respondents
Criminal Writ Petition No. 777 of 2005
Decided On : 05-10-2023
Mr. Anilkumar Patil a/w. Manish Khadakban a/w. Sachin Bhavar for Petitioner in all W.Ps. Mr. Rishi Bhuta a/w. Neha Patil, Manish Bohra, Gunjan Thakkar, Mamta Singh, Saakshi Jha, Omer Farooq, Risha Rathod, Prateek Dutta and Parth Govilkar for Respondent Nos. 1 to 5. Mr. Arfan Sait, APP for State/Respondent No.6.
IMPORTANT POINT
A restraint order under Section 22A of the Sick Industrial Companies Act can preclude liability under Section 138 of the N.I. Act if the order was in effect before the cheque was issued.
Headnote:
N.I. Act - Negotiable Instruments Act, 1881 - Sections 138, 141; Sick Industrial Companies (Special Provisions) Act, 1985, Sections 18, 22A - The court discussed the provisions of the N.I. Act concerning dishonored cheques and the implications of the Sick Industrial Companies Act, particularly the restraint orders under Section 22A. It interpreted that if a restraint order was in place before the cheque was drawn, the liability under Section 138 of the N.I. Act could not be established, as the dishonor was beyond the control of the accused. This interpretation influenced the court's decision to uphold the discharge of the accused.
Fact of the Case:
The petitioner challenged the order discharging the accused from a complaint filed under Section 138 of the N.I. Act for dishonored cheques. The accused argued that their liability was precluded by a restraint order from the B.I.F.R. under the Sick Industrial Companies Act, which was in effect before the cheque was issued.
Finding of the Court:
The court found that the restraint order under Section 22A of the Sick Industrial Companies Act was applicable, and since the cheque was issued after this order, the dishonor of the cheque could not be attributed to the accused. The court upheld the decision of the Additional Sessions Judge discharging the accused.
Issues: Whether the dishonor of the cheque under Section 138 of the N.I. Act could be enforced against the accused given the prior restraint order under the Sick Industrial Companies Act.
Ratio Decidendi: The court held that if a restraint order under Section 22A was in place before the cheque was drawn, the offense under Section 138 of the N.I. Act could not be considered complete, as the failure to honor the cheque was beyond the control of the accused.
Final Decision: The petition was dismissed, and the order discharging the accused was upheld.
JUDGMENT
1. The Petitioner has challenged the order dated 15.01.2005 passed by the learned Additional Sessions Judge, Greater Mumbai, in Criminal Revision Application No.152 of 2003.
The petitioner is the original complainant in Criminal Case No.1168/S/2001 before the court of the Metropolitan Magistrate, 33rd Court, Ballard Pier, Mumbai. The Respondent Nos.1 to 5 are 2 of 15 205-WP-777-05 (J) the original accused before the learned Magistrate in these proceedings. The complaint was filed U/s.138 r/w. 141 of the Negotiable Instruments Act (hereinafter referred to as 'N.I.Act').
2. The accused preferred an application for recalling of the process and discharging them from the case before the learned Magistrate. The learned Magistrate rejected that application. The accused thereafter preferred Criminal Revision application before the Additional Sessions Judge, Greater Mumbai which was allowed by the impugned order thereby discharging the accused from the said case. The complainant/petitioner being aggrieved by that order has preferred the present writ petition.
3. Heard Mr. Anilkumar Patil, learned counsel for the Petitioner, Mr. Rishi Bhuta, learned counsel for the Respondent Nos.1 to 5 and Mr. Arfan Sait, learned APP for the State/Respondent No.6.
4. The complaint was filed by the petitioner by mentioning that the accused Nos.2 to 5 were in-charge of day to day affairs of the accused No.1 company. The accused Nos.2 to 5 were residing 3 of 15 205-WP-777-05 (J) at Mumbai. It is mentioned in the complaint that, pursuant to the orders placed by the accused with the complainant company at Mumbai, the complainant sold and supplied the goods to the accused at the agreed rates. In part payment of the price of those goods, the accused issued one cheque of Rs.20 lakhs in favour of the complainant i.e. Cheque No.948362 dated 25.04.2001 drawn on the Karnataka Bank Ltd., Fort Branch, Mumbai. On presentation, that cheque was dishonoured. Thereafter, statutory notice was sent to the accused, but the payment was not made.
Therefore, the complaint was filed.
5. The accused made an application before the trial Court for their discharge or for recalling of process issued against them.
The learned Magistrate referred to the Judgment of the Hon'ble Supreme Court in the case of M/s. Kusum Ingots & Alloys Ltd. V. M/s. Pennar Peterson Securities Ltd. and others1. He also referred to the order passed by the B.I.F.R. i.e. The Board for Industrial and Financial Reconstruction; referred to under Section 3(1)(b) of the Sick Industrial Companies (Special Provisions) Act, 1985 1 2000 AIR SCW 609 4 of 15 205-WP-777-05 (J) (hereinafter referred to as the 'said Act'). The order was passed U/s.22A of the said Act. It was observed that, from the allegation in the complaint, the company was still running it's business after passing of the order by the B.I.F.R. on 21.08.2000. The accused placed order for the goods and had issued cheque for the cost of the goods. The trial Court observed that, ultimately all these facts could be established only during trial and, therefore, declined to recall the order of issuance of process and to discharge the accused.
6. Learned Additional Sessions Judge, on the other hand, observed that the trial Court ought to have considered that the liability of the accused dated back to March 31, 1999 which was clear from the invoices of the complainant and by the letter dated 16.07.2001. He further observed that the trial Court had failed to appreciate that the liability of the accused was a past liability as on 31.03.1999 for which there was ban by the B.I.F.R. There was no current liability. On this basis the contention of the accused was upheld and their revision application was allowed and they were discharged from those proceedings.
7. Learned counsel for the petitioner submitted that the order passed U/s.22A of the said Act permitted running of the business. The order passed by the board mentioned that, in case the company was running, the cur
