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IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
VIPUL M. PANCHOLI, J.
YARLAGADA SHIVARAMPRASAD – Appellant
Versus
STATE OF GUJARAT – Respondent
Special Criminal Application Nos. 770, 817, 819, 1055, 1190 of 2022
Decided On : 08-03-2022
Constitution of India,1950 - Article 226 - Code of Criminal Procedure, 1973 - Sections 482,320,200 and 357(1)(b) - Negotiable Instruments Act, 1881 - Sections 138 and 141 - Insolvency and Bankruptcy Code, 2016 - Section 33(1)(a) - SICA - Sections 22 and 22A - Recovery of the cheque - Dishonor of cheque - Article 226 of Constitution of India, read with Section 482 of the Code of Criminal Procedure, 1973 criminal complaint filed by Respondent No. 2 against present petitioners, being Criminal Complaint pending before learned JMFC for adjudication - Respondent No. 2-original complainant filed a complaint, being Criminal Complaint petitioner in Special Criminal Application others for offence punishable under Section 138 of Negotiable Instruments Act, 1881 - Respondent No. 2-original complainant to original accused No. 1-Company during period - Accused No. 1-Company issued three cheques in favour of Respondent No. 2-original complainant - Respondent No. 2-original complainant statutory notice to all accused persons, including present petitioners, as required under Section 138 of NI Act notice was duly served on accused persons - Original accused No. 1-Company did not accept said notice and same was returned with endorsement “Unclaimed – Held, Court are unable to accept line of argument on two grounds - First settlement agreement effaces original complaint and thus, it is not up to the parties, either complainant or accused, to simply reverse the effects of that agreement and re-litigate the original complaint relating to same underlying transaction under Section 138 of NI Act – Second breach of deed of compromise has arisen due to dishonour of the cheques which were issued by the accused towards discharge of remaining balance of Rs. 7 crores - Whether cheques were given as security or not, or whether there was outstanding liability or not is a question of fact which could have been determined only by trial court after recording evidence of the parties - High Court should not have expressed its view on disputed questions of fact in a petition under Section 482 of Code of Criminal Procedure, to come to a conclusion that offence is not made out - High Court has erred in law in going into factual aspects of the matter which were not admitted between the parties - Court do not find any merit in this submission - In event that compromise deed is found to be void ab initio on account of coercion, very basis for quashing of first complaint is removed since settlement agreement is deemed to have never existed and hence it had no effect on the liability subsisting under first complaint - Appellants may then approach the competent court for reinstatement of original complaint and trial can proceed on that basis. – Court’s are view that Single Judge was in error in quashing the complaint C.C. pending on the file of Seventh Metropolitan Magistrate - Judgment of Single Judge quashing complaint is set aside – Petitions are dismissed.
Key Points: - The judgment discusses maintainability of successive petitions under Section 482/Article 226 in light of liquidation under IB Code and whether natural persons can be continued to be prosecuted under NI Act after liquidation of corporate debtor (!) (!) (!) (!) (!) . - It addresses whether proceedings under Section 138 NI Act can be continued against erstwhile directors even after NCLT liquidation order, considering moratorium under IBC Section 14 and vicarious liability under Section 141 NI Act (!) (!) (!) (!) (!) . - It considers whether a compromise/liquidation events bar or do not bar continuation of criminal complaints under NI Act, including parallel proceedings and their quashing or reinstatement possibilities (!) (!) (!) (!) (!) .
JUDGMENT :
VIPUL M. PANCHOLI, J.
1. Heard, learned Advocate, Mr. Kabir Hathi, for learned Advocate, Mr. A.V. Nair, for the respective petitioner and learned APP, Mr. L.B. Dabhi, for Respondent No. 1-State.
2. Since, all these petitions involve identical question of law and facts, with the consent of the learned Advocates for the parties, they are taken-up for final hearing at the admission stage and being disposed of by this common judgment and order.
3. The present petitions are filed under Article 226 of the Constitution of India, read with Section 482 of the Code of Criminal Procedure, 1973 (in brief ‘the Code’) for quashing and setting aside the criminal complaint filed by Respondent No. 2 against the present petitioners, being Criminal Complaint Nos. 27831, 11055, 26300, 2499 and 8351 of 2016, which are pending before the learned JMFC, Vadodara, for adjudication.
4. For the sake of convenience, the facts are drawn from Special Criminal Application No. 1055 of 2022, which reads as under:
4.2 In the said complaint, it is alleged that certain goods were delivered by Respondent No. 2-original complainant to original accused No. 1-Company during the period between June, 2014 to October, 2014. Accused No. 1-Company, therefore, issued three cheques in favour of Respondent No. 2-original complainant, i.e. the cheques bearing No. 841284, Dated 14.01.2016, No. 841285, Dated 29.01.2016 and No. 841286, Dated 13.02.2016 for the amount of Rs. 5,00,000/- each, drawn on Indian Overseas Bank.
4.3 When the aforesaid three cheques were presented on 24.02.2016, the same were dishonored with the endorsement “Funds Insufficient.”
4.4 Respondent No. 2-original complainant, therefore, issued statutory notice to all the accused persons, including the present petitioners, as required under Section 138 of the NI Act on 14.03.2016. Said notice was duly served on the accused persons. Here, it may be noted that the original accused No. 1-Company did not accept the said notice and therefore, the same was returned with the endorsement “Unclaimed.”
4.5 It is averred that since the amounts of the cheques are not paid, Respondent No. 2- original complainant instituted the proceedings under Section 138 of the NI Act before the concerned Magisterial Court, where, the Court concerned issued the process to the accused persons.
4.6 It is, further, stated that Respondent Nos. 3/original accused No. 1-Company were sick industrial units and therefore, original accused No. 1-Company was registered with the Board for Industrial and Financial Reconstruction (hereinafter ‘BIFR’) as BIFR No. 107 of 2015 on 13.08.2015, where, the Registrar issued notice dated 13.08.2015, restraining original accused No. 1-Company from disposing of or alienating, in any manner, fixed assets of accused No. 1-Company without the permission of the BIFR.
4.7 It appears that original accused No. 1-Company and the petitioners, therein, then, preferred a petition under Section 482 of the Code, being Special Criminal Application No. 4344 of 2017, seeking to quash the impugned complaint. However, the Coordinate Bench of this Court (Coram: Mr. A.S. Supehia, J.) dismissed the said petition vide order dated 18.07.2019.
4.7.1 The petitioners challenged the order dated 18.07.2019 before the Hon’ble Apex Court, by filing Special Leave Petition (Criminal) No. 8993 of 2019. However, the Hon’ble Apex Court also dismissed the same vide order dated 04.10.2019.
4.8 It may be noted that in the meantime, an application under Section 33(1)(a) of the Insolvency and Bankruptcy Code, 2016 (hereinafter ‘IB Code’) for liquidation of original accused No. 1-Company was filed and consequently, the Nationa
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