IMPORTANT POINT
Memorandum of understanding between parties providing for arbitration of any dispute or a civil recovery suit filed on basis of dishonoured cheque would not be a bar for prosecution of drawer of cheque for offence under Section 138 Negotiable Instruments Act.

V.K. Chaturvedi, J.—Harbhajan Singh and six others have filed this application under section 482 Cr. P.C. on 13.4.2001, with the prayer to quash entire proceedings in Criminal Complaint No. 2263 of 1995 between Steel Authority of India (opposite party No. 2) v. Harbhajan Singh and others (petitioners), under Sections 138-142 of Negotiable Instruments Act pending in the Court of Addl. Chief Judicial Magistrate, Ghaziabad. Further prayer made is that the proceedings in the abovenoted case be also stayed.

2. By an interim Order dated 30.4.2001. the proceedings were stayed.

3. Heard Sri Viresh Mishra, Senior Counsel assisted by Sri R.P. Singh for the petitioners and Sri G.S. Chaturvedi, Senior Counsel assisted by Sri Shashank Shekhar for opposite party No. 2 and learned A.G.A.

4. Counter-affidavit and rejoinder affidavit have been exchanged between the parties and I have perused the entire materials on record.

5. It is contended by Sri Misra, Counsel for the petitioners that it was incumbent upon the opposite party No. 2, Steel Authority of India (here-in-after referred to as SAIL) to inform the petitioners before presentation of the cheque in bank for encashment. It is also contended that as per the provisions contained in Section 141, Companies Act, 142, Negotiable Instruments Act and 305, Cr. P.C., the persons who are the signatories, are to be prosecuted and not the other partners and directors. The Memorandum of Understanding provided arbitration clause in case of any dispute between the parties. It is next contended that the petitioners company under the pressure of official of SAIL had handed over certain blank cheques to the said officials of SAIL prior to 1.3.1995 purportedly as a manner of security. These cheques were signed but no amount was written on them, as such this was not a Bill of exchange. It is lastly contended that a civil suit is pending between the parties, hence criminal proceedings is not maintainable.

6. Learned Counsel for the opposite party No. 2 and State contended that the allegations are to be rebutted, and in the absence of any rebuttal, strong presumption is in favour of the complainant and the cheques were issued after November, 1994.

7. Brief facts of the case are as follows:—

Opposite party No. 2 SAIL is a Government of India Enterprise and a company registered under Section 617 of the Companies Act and its registered office is at Ispat Bhawan, Lodi Road, New Delhi having its branch Sales Office at 69.70, Navyug Market, Ghaziabad.

8. The opposite party No. 2-SAIL filed a criminal complaint being Complaint No. 2263 of 1995 before Additional Chief Judicial Magistrate, Ghaziabad against 1- Harbhajan Singh, 2-Deepak Singh, 3-Mohinder Singh, 4-S.K. Bansal, 5-S.K. Agrawal, 6-Narendra Agrawal and 7-M/s Atma Steels Ltd., a company registered under the Companies Act, under Section 138 read with Section 142 of Negotiable Instruments Act, alleging that it supplied steel material to M/s. Atma Steel Ltd. worth Rs. 16,68,71,100.00 (Rupees sixteen crores, sixty eight lacs, seventy one thousand and one hundred only). Against this amount, only a sum of Rs. 12,95,00,297.00 (Rupees twelve crores, Ninety five lacs, two hundred ninety seven only) had been paid and despite repeated requests and reminders, accused No. 7 did not arrange the payment of the balance amount of Rs. 3,73,69,003.00 (Rupees three crores, seventy three lacs, sixty nine thousand and three only) to the complainant.

9. Sri Abhijit Bose who filed the complaint on behalf of the complainant, is the Branch Manager of SAIL’s Branch Sales Office at Ghaziabad and is a person duly authorized by the complainant by General Power of Attorney dated 19.7.1994 to institute, act, file and plead etc. on behalf of the complainant company.

10. Accused No. 1 Harbhajan Singh is the Chairman-cum-Managing Director of M/s. Atma Steels Ltd. (accused No. 7 herein) having its registered office at C-138-142, Industrial Area No. 1, Bulandshahr Road, P.S. Kavinagar,