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High Court of Delhi
MUKTA GUPTA, J.
Sampelly Satanarayana Rao
Versus
M/s. Indian Renewable Energy Development Agency Ltd.
W.P.(CRL) No. 1170 of 2011 & Crl. M.A. No. 9951 of 2011
Decided on : 08-05-2014
Negotiable Instruments Act - Loan Agreement - Section 138 - 3.1, 138 - The court discussed the loan agreement's Section 3.1, which secured the loan with post-dated cheques for repayment of principal and interest. The court referred to M/s. Collage Culture & Ors. to distinguish between cheques issued for an existing due and those issued as security. The court found that the cheques fell into the former category, thus rejecting the petition to quash the complaints.
Fact of the Case:
The petitioner sought to quash 18 complaints under Section 138 of the Negotiable Instruments Act, claiming that the cheques were given as security and no debt was due when they were issued. The respondent argued that the cheques were for repayment of a loan, and the liability was admitted by the petitioner.
Finding of the Court:
The court found that the loan agreement's Section 3.1 secured the loan with post-dated cheques for repayment of principal and interest. It rejected the petitioner's claim that no debt was due when the cheques were issued, citing M/s. Collage Culture & Ors. to distinguish between cheques issued for an existing due and those issued as security.
Issues: The issues revolved around the nature of the post-dated cheques - whether they were given as security or for repayment of a loan, and whether a debt was due when the cheques were issued.
Ratio Decidendi: The court's decision was influenced by the interpretation of the loan agreement's Section 3.1 and the distinction drawn in M/s. Collage Culture & Ors. between cheques issued for an existing due and those issued as security.
Final Decision: The petition to quash the complaints was dismissed by the court.
1. By this petition the Petitioner seeks quashing of 18 complaints pending before the Court of Ms. Charu Gupta, Ld. M.M. arising out of the following cheque numbers.
S.no. Cheque Date Amount Case No.
1. 177474177435 30.06.2002 30.06.2002 Rs.1333212/-
Rs. 4013973/- CC No.1010/1
2. 177436 30.09.2002 Rs.
40,58,082/- CC No.1011/1
3 177441 31.12.2003 Rs.
40,58,082/-
4 177443 30.06.2004 Rs. 4013973/- CC
No.8839/2009
5 177444177406 30.09.2004
30.09.2004 Rs.
40,58,082/-
Rs.
41,11,000/- CC
No.15153/2009
6 177445177407 31.12.200431.12.2004 Rs.
40,58,082/-
Rs.
41,07,000/- CC
No.33192/2005
7 177446177408 31.03.200531.03.2005 Rs.
40,58,082/-
Rs.
41,07,000/- CC
No.34601/2006
8 177447 30.06.2005 Rs.
35,83,779/- CC
No.58A/2009
177409 Rs.
41,07,000/-
9 177448177410 30.09.2005 Rs.
34,78,235/-
Rs.
41,07,000/-
10 177413 30.06.2006 Rs.
41,07,000/- CC
No.4361/2011
11 177414177452 30.09.2006 Rs.
41,07,000/-
Rs.
28,98529/- CC
No.34601/2006
12 177415177453 31.12.2006 Rs.
41,07,000/-
Rs. 2753603/- CC No.1012/1
13 177416 31.03.2007 Rs.
41,07,000/- CC
No.4057/2011
14 177417 30.06.2007 Rs.
41,07,000/- CC
No.15169/2009
15 177456177418 30.09.2007 Rs. 2318823/-
Rs.
41,07,000/- CC
No.12545/2009
16 177464177426 30.09.2009 Rs. 1159412/-
Rs.
41,07,000/- CC
No.600/1/2011
17 177427 31.12.2009 Rs.
41,07,000/- CC
No.184/1/2011
18 177469177431 31.12.2010 Rs. 4,34,779/-
Rs.
41,07,000/- CC
No.1654/2011
2. The case of the Petitioner is that admittedly the cheques were given as security for the loan and when the cheques were issued, no debt or liability was due, hence the complaints under Section 138 Negotiable Instruments Act are not maintainable. Even in the complaint filed by the Respondent it is admitted that the loan was, inter alia, secured by mortgage of immovable properties, hypothecation of movable assets, personal guarantee, post-dated cheques towards payment of installment of principal loan and post-dated cheques towards payment of installment of interest, loan etc. The SSPL Ltd. issued post-dated cheques which bounced and hence the complaint. Learned counsel for the Petitioner fairly does not press other contentions as the same can only be raised in trial. Thus the Petitioner confines the relief only on this ground. Reliance is placed on M.S. Narayana Menon @ Mani Vs. State of Kerala & Anr. 2006 JCC (NI) 198; M/s. Collage Culture & Ors. Vs. Apparel Export Promotion council & Anr. 2007 (4) JCC (NI) 388; Shanku Concretes Pvt. Ltd. & Ors. Vs. State of Gujarat & Anr. 2000 (3) Crimes 602; Balaji Seafoods Exports (India) Ltd. & Anr. Vs. Macindustries Ltd. II (1999) CCR 424; Jyoti Build-Tech Pvt. Ltd. & Ors. Vs. Mideast Pipeline Products 2011 (8) LRC 303 (Del).
3. Learned counsel for the Respondent on the other hand contends that the Petitioner in the petition has admitted that the Petitioner was Managing Director of the company when the cheques were issued. He admits signing the cheques. A total loan of Rs. 11.5 crores was sanctioned, however Rs. 6.94 crores was disbursed and thus a liability of Rs. 6.94 crores has been admitted. The loan agreement clearly notes that the borrower agrees to borrow from the Respondent and promises to repay back the loan with interest. Thus, the liability of the principal and interest are admitted. There is no material on record to show that when the cheques were issued, no debt was due and this issue can be adjudicated during the trial only, and thus this Court will not exercise jurisdiction under Article 226 read with Section 482 Cr.PC to quash the complaints and the proceedings pursuant thereto. Reliance is placed on Magnum Aviation (Pvt.) Ltd. Vs. State and Ors. 172 (2010) DLT 91; Krish International P. Ltd. & Ors. Vs. State and Anr. Crl.M.C. 905/2012 decided on 30th January, 2013; Rajat Pharmachem Ltd. & Ors. Vs. State Trading Corporation of India Ltd. Crl.M.C. 1951/2009 decided on 24th July, 2009; and Mekservers Pvt. Ltd & Anr. Vs. HCL Infosystems Ltd. 2012 (3) JCC 149.
4. Heard learned counsel for the parties. The complainant/ Responde
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