Judicial Analysis Court Copy Headnote Facts Arguments Court observation

2022 Supreme(MP) 955

IN THE HIGH COURT OF MADHYA PRADESH
Sanjay Dwivedi, J.
Som Distilleries And Breweries Limited & Ors. – Appellants
Versus
Madhya Pradesh State Industrial Development Corporation & Ors. – Respondents
M.Cr.C. No. 55265 of 2021, M.Cr.C. No. 55138 of 2021, M.Cr.C. No. 55117 of 2021 and M.Cr.C. No. 55191 of 2021
Decided On : 30-03-2022

Advocates Appeared:
Shri. Sanjay Agrawal, Advocate and Shri. Rahul Diwaker, Advocate and Shri. Rahul Gupta, Advocate, for the Appellant; Shri. Sanjay K. Agrawal and Shri. Sarthak Nema, Advocate, for the Respondent.

The court emphasized that N.I.Act proceedings cannot be used as a means to recover outstanding amounts when no other recovery proceedings have been initiated, and that the offer made by the petitioners to adjust the amount lying with the respondent with the cheque amounts was reasonable and justified.

Headnote:
N.I.Act - Quashment of Complaint Cases - 138, 141, 142 - 454, 433, 434 of Companies Act, 1956 - [SUMMARY]
Fact of the Case:

The respondent sanctioned and disbursed multiple sums to the petitioners under the Inter Corporate Deposit ('ICD') scheme. The petitioners faced financial difficulties and implored the respondent to not pursue recovery. The respondent issued legal notices and filed a winding-up petition. The Supreme Court ordered the respondent to refund a deposited amount to the petitioners. Subsequently, the respondent filed complaint cases under Section 138 of N.I.Act for repayment of loan amounts.
Finding of the Court:

The court found that the respondent had not initiated any recovery proceedings for the loan amount and was using the N.I.Act as a means to recover the outstanding amount. The court also found that the petitioners' offer to adjust the amount lying with the respondent with the cheque amounts was reasonable and justified.
Issues: The essential ingredients of Section 141 of N.I. Act were missing, and the petitioners argued that the amount deposited by them was still with the respondent and had not been returned despite a Supreme Court order.
Ratio Decidendi: The court held that the N.I.Act proceedings cannot be used as a means to recover outstanding amounts when no other recovery proceedings have been initiated. The court also emphasized that the offer made by the petitioners to adjust the amount lying with the respondent with the cheque amounts was reasonable and justified.
Final Decision: The court allowed the petitions and quashed the complaint cases, directing the adjustment of the cheque amounts and additional compensation from the deposited amount lying with the respondent.

ORDER

1. This is an amalgam of seven congruent petitions filed under Section 482 of the Code of Criminal Procedure for seeking quashment of the complaint cases filed by the respondent against the petitioners under Sections 138, 141 and 142 of the Negotiable Instruments Act, 1881 (amended as Act of 1988) pending in the Court of Additional Chief Judicial Magistrate, Bhopal.

2. These batch of petitions are analogously decided as the issue involved therein is identical in nature and the petitions are between the indifferent parties. For the sake of convenience, the facts of M.Cr.C.55265/2021 are taken note of.

3. The facts encapsulated are that for providing financial assistance in the form of Inter Corporate Deposit ('ICD'), the respondent sanctioned and disbursed a sum of Rs.1 Crore to the petitioners (for brevity 'SDBL') by fixing a due date for repayment as 21.03.2001. Again, an amount of Rs.2 Crore was sanctioned and disbursed to SDBL by way of ICD fixing the due date of repayment as 06.02.2002. Thereafter, by way of third ICD, a sum of Rs.1 Crore was sanctioned and disbursed in favour of SDBL fixing a date of repayment as 13.08.2002 and finally by way of fourth ICD, a sum of Rs.3 Crore was sanctioned and disbursed by the respondent in favour of SDBL by fixing the date of its repayment as 30.10.2004.

On 28.03.2003, facing financially depleted circumstances, SDBl implored before respondent for not pursuing with the recovery proceeding. On 16.06.2003, the respondent issued a legal notice calling upon SDBL to make payments under the ICDs. On 24.04.2005, SDBL submitted a proposal for One Time Settlement ('OTS'). According to respondent, since the proposal was not in terms of the policy/guidelines of the Government of Madhya Pradesh, it was not accepted. On 02.12.2005 and 27.02.2006 SDBL informed the respondent that it had appointed Kotak Mahindra Bank for negotiating a settlement on its behalf. According to the respondent, nothing came out of it and it was simply a manoeuvre to gain time. Thereafter, the respondent sent a statutory notice on 30.11.2007 to SDBL under Sections 433 and 434 of the Companies Act, 1956 calling upon SDBL to make payments within a period of 21 days as on 31.12.2005, SDBL owed respondent Rs.26,26,62,000.

Thereafter, a company petition was filed under Section 439 r/w Section 433(e) and 434 of the Companies Act, 1956 seeking for winding-up of SDBL. In that petition, following directions were issued on 03.05.2013.

'31. The Directors of the SDBL are directed to strictly comply with the requirements of Section 454 of the Act and Rule 130 of the Rules and furnish to the OL a statement of affairs in the prescribed form verified by an affidavit within a period of 21 days from the date that this order become operative as indicated in para 32 below. They will also file affidavits, in this Court, with advance copies to the OL, within four weeks thereafter setting out the details of all the assets, both movable and immovable, of the SDBL company and enclose therewith the balance sheets, profit and loss accounts and copies of the statements of all the bank accounts for the last three years.

32. Given the history of this litigation, and the fact that SDBL claims that it is a profit making company that has the capacity to pay the admitted liability, the Court considers it appropriate to grant one more opportunity to SDBL to pay to MPSDIC the admitted liability as shown in its balance sheet as on 31st March 2010, minus the payments made by SDBL to MPSIDC thereafter, together with interest up-to-date within a period of six weeks from today. Accordingly this order is kept in abeyance for a period of six weeks from today. If the payment as directed above is made by SDBL to institute other appropriate proceedings in accordance with law to recover the balance amount claimed by it. If such payment is not made to MPSIDC within six weeks then this order, and in particular para 29 to 31 above, will become immediately operational. MPS