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Form No.J(1)
IN THE HIGH COURT AT CALCUTTA
Criminal Revisional Jurisdiction
Present:
The Hon’ble Justice Madhumati Mitra
C.R.R. 3616 of 2017
M/s. Capital First Limited and Ors.
-Versus-
M/s. Shree Shyam Pulses Private Limited.
Advocate for the Petitioners : Mr. Sandipan Ganguly,Sr.Adv.
Mr. Navnil De
Mr. Sourav Ghosh
Mr. Soumen Ghosh
Ms. Farnaz Nasim
Advocate for the Opposite Party : Mr. Sabir Ahmed
Mrs. Baisali Basu
Heard on
: 26.07.2019
Judgment on : 22.08.2019
Madhumati Mitra, J. :
Petitioner no.1 is a company incorporated under the provision of
SectionCompanies Act and petitioner no.2 is the Regional Legal Manager,
Petitioner nos. 3,4,5,7 and 11 are the Independent Directors of the
petitioner no.1, petitioner no.6 is the Chairman and Managing Director of
petitioner no.1 and petitioner nos. 8 and 9 are the Executive Directors of
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petitioner no.1 and petitioner no.10 is the Executive Director of petitioner
no.1.
Petitioners have approached for quashing of the criminal
proceedings initiated on the basis of complaint filed by the opposite party
i.e. C.Case no.588 of 2017 under Section 406/Section465/Section468/Section469/Section471 read
with Section 34 and Section120B of the Indian Penal Code pending before the
Learned Metropolitan Magistrate, 19th Court, Calcutta.
Before dealing with the rival submissions of the parties, it would be
appropriate to set out the facts briefly.
Complainant took loan of Rs.10,00,000/- from petitioner no.1
company and agreed to repay the same along with interest by way of 24
equal monthly instalments of Rs.50,896/- each. Complainant executed
loan agreement and ECS debit mandate in favour of petitioner no.1 for the
amount of 24 EMI to be debited from HDFC Bank, Kolkata for repayment
of the said loan along with interest and on demand of the said company
also entrusted or parted 8 blank Banking Instruments being cheque nos.
688577 to 688584 of HDFC Bank duly signed as security deposit at the
time of execution of loan agreement with encashment of seven ECS, the
complainant made repayment of Rs.3,56,272/- to the petitioner no.1.
Complainant decided to foreclose the loan account after realizing that the
rate of interest was unjust. On 07.05.2014, the complainant expressed
the intention to foreclose the loan account. On 13.05.2014, the petitioner
company demanded a sum of Rs.8,38,333/- along with penal interest,
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overdue interest, pre-closure charges. Complainant protested and asked
to waive the interest of 17 months. Petitioner company refused to reduce
the amount. It has been alleged by the complainant that at the time of
execution of the loan agreement the opposite party/complainant had
protested regarding the rate of interest which was at the rate of 20% per
annum and also against the policy of Reserve Bank of India. It has been
claimed by the complainant that assurance was given to the complainant
that the rate of interest would be considered after payment of first 6
instalments on time. Complainant demanded 8 blank banking
instruments, but the complainant was threatened by the petitioners.
Complainant sent a notice dated 21.03.2014 to the petitioner company for
return of the blank banking instruments and also requested not to misuse
the same. On 23.05.2014, petitioner company gave a reply stating that
the said instruments were issued by the complainant voluntarily in
discharge of legal liabilities. Thereafter, the complainant received notices
dated 11.08.2014, 25.06.2015, 13.10.2015, 02.09.2016 under Section
138(b) of the Negotiable Instruments Act for Rs.3,05,376/- each as the
aforesaid cheques were returned unpaid to the petitioners with remark
‘payment stopped by the drawer’. Complainant gave reply to the aforesaid
notices. Thereafter, the petitioner company on the basis of the aforesaid
notices initiated four separate proceedings viz. complaint cases under
Section 138 of the Negotiable Instruments Act. It has been alleged by the
complainant that the accused company refused to return the blank
cheques with a view to make the complainant defaulter and ultimately
converted the same into valuable documents and used the same as
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genuine for illegal purpose knowing very well that the same were forged
and got the same dishonoured before initiating the aforesaid four criminal
proceedings against the complainant.
Complaint was registered as Complaint Case No.588 of 2017 by the
Learned Additional Chief Metropolitan Magistrate, Calcutta and thereafter
the complaint case was transferred to the Court of Metropolitan
Magistrate 19th Court for disposal. On 13.09.2017, Learned Metropolitan
Magistrate 19th Court after examining the complainant and his witness
under Section 200 of the Code of Criminal Procedure issued process
against the present petitioners to face trial for commission of alleged
offences punishable under Sections 406/Section465/Section468/Section469/Section471/Section34/Section120B of
the Indian Penal Code.
Before proceeding further in the matter, it would be better to
mention the admitted facts which have been reflected from the various
documents furnished by the parties as well as from the submissions
advanced by the Learned Counsel in the course of hearing. Those facts
are as under:-
(a) Complainant had approached for loan to the petitioner no.1 and
accordingly a loan agreement vide loan Agreement No.1295067,
dated 29.06.2013 was entered into and Rs.10,00,000/- was
disbursed to the complainant as loan on condition that the
complainant would repay the same along with interest by way of 24
monthly instalments as well as delayed payment charges and
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foreclosure charges, etc. Pursuant to the said loan agreement, the
complainant issued cheques in question towards repayment of the
said loan as well as security of the loan.
(b) Opposite party/complainant paid seven instalments i.e.
Rs.3,56,272/- in total towards repayment and thereafter, failed to
pay the instalments in terms of agreement. Complainant expressed
the intention to foreclose the loan and accordingly the petitioner
company furnished the statement of the said loan account to the
complainant.
(c) The complainant issued a letter dated 21.03.2014 to the petitioner
company not to present the cheques bearing nos.688577 to 688584
and complainant instructed its banker to ‘stop payment’. In the
meantime, the cheques in question were presented for encashment
by the petitioner company on different dates and all the cheques
were returned unpaid with remark ‘stop payment’ by the drawer.
Petitioner company sent separate four notices for dishonour of four
cheques under Section 138(b) of the Negotiable Instruments Act,
demanding the amount covered by the cheques.
(d) Complainant sent replies to the said notices under Section 138(b) of
the Negotiable Instruments Act and denied to make payment and
informed the petitioner company regarding institution of Title Suit
No.768 of 2014, before the City Civil Court, VIIIth Bench, Calcutta
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praying for a declaration that the said demand notice dated
13.05.2014 was not binding on the complainant/opposite party.
Ultimately that title suit was dismissed for default.
(e) Petitioner company started four complaint cases against the
complainant as it failed to make payment in terms of the demand
notices under Section 138(b) of the N.I.Act.
Mr. Sandipan Ganguly, Learned Senior Counsel appearing for
the petitioners in support of his contention for quashing of the criminal
proceeding has categorically contended that continuance of the
complaint Case No.588 of 2017 under Sections 406,Section465,Section468 and
Section469,Section471 read with Sections 34 and Section120B of the Indian Penal Code
pending before the Learned Metropolitan Magistrate 19th Court would
be an abuse of the process of the Court and the proceedings are liable
to be quashed.
He has vigorously argued that the cheques in questions were
duly signed by the authorized representative of the complainant and
the allegation of forgery does not arise at all. He has further submitted
that the factum of taking loan from the petitioner company by the
complainant is an admitted fact and it is also admitted that the
complainant executed a loan agreement and agreed to repay the loan
amount along with interest by way of instalments. During the course
of hearing Learned Counsel has invited the attention of the Court to
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the loan agreement at Annexure-B, i.e. pages 49 to 63 and contended
that the cheques in question were executed by the complainant in
favour of the petitioner company in terms of the loan agreement. He
has further drawn the attention of the Court to the several clauses of
the loan agreement particularly Clauses
4,6,6.1,8,10.7,10.8,10.9,10.10,11,21 and 27. According to his
contention, as per the terms of Clause 10.9 of the loan agreement the
borrower has given undertaking not to instruct his bankers to stop
payments of the cheques and not to instruct the depositing of the
cheques. He has also submitted that the borrower entered into the
loan transaction after knowing fully well the contents of the agreement
as reflected in Clause 27 of the agreement. He has forcefully
contended that the proceedings pending against the petitioners before
the Learned Magistrate has been initiated maliciously with ulterior
motive to avoid the payment of the loan amount along with interest.
In support of this contention, Learned Counsel has strongly placed
reliance on several documents annexed to the application and the
documents submitted by the petitioners by way of supplementary
affidavit.
Learned Counsel for the petitioner has cited the following decisions
to strengthen his contention for quashing of the criminal proceedings
pending against the petitioners.
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The decisions cited by the Learned Counsel for the petitioners as
under:-
1.
Sunil Kumar Vs. Escorts Yamaha Motors Ltd. Ors reported in
(1999) 8 SCC 468, (1999) SCC (Cri) 1466;
2. Mahindra Mahindra Financial Services Ltd. Anr. Vs. Rajiv
Dubey reported in (2009) 1 SCC 706, (2009) 1 SCC (Cri) 321;
3. Eicher Tractor Ltd. Ors. Vs. Harihar Singh Anr. reported
in (2008) 16 SCC 763, (2010) 4 SCC (Cri) 425;
4. Sunrise Sports India Pvt. Ltd. Anr. Vs. State of West Bengal
Anr. reported in (2008) SCC Online Cal 339, (2008) 4 CHN 400;
5. Nita Kanoi @ Bansal Vs. Paridhi Anr. reported in (2015) 2
CCr LR(Cal) 597;
5A. Sujit Kumar Pal Vs. State of West Bengal Anr. reported in
(2017)1 CCr LR (Cal) 97;
6. S.K. Alagh Vs. State of Uttar Pradesh Ors reported in (2008) 5
SCC 662, (2008) 2 SCC (Cri) 686;
7. Maharashtra State Electricity Distribution Company Ltd and
Anr. Vs. Datar Switchgear Ltd and Ors reported in (2010) 10 SCC
479, (2011) 1 SCC(Cri) 68;
8. Mohammed Ibrahim Ors Vs. State of Bihar Anr reported in
(2009) 3 SCC (Cri)929, (2009) 8 SCC 751.
The Learned Counsel for the opposite party/complainant, resisting
the submissions advanced by the Learned Counsel for the petitioner
has urged the following contentions:-
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(a) The petitioner company demanded unjustified rate of interest
over the principal amount which is against the policy of Reserve
Bank of India;
(b) Petitioner company demanded a sum of Rs.8,38,333/- along with
penal interest when the complainant intended to foreclose the
loan transaction and refused to waive the interest for rest 17
months and the penal interest etc;
(c) In spite of repeated requested the petitioner company did not
return the blank cheques to the complainant and converted the
same as valuable security and presented the same before the
Bank for encashment and got the same dishonoured by
committing forgery and practicing fraud;
(d) The petitioner no.1 being a legal entity, acts through its Directors
or other authorized officers and as such all the petitioners are
liable for the commission of alleged offences in respect of which
process was issued to face trial;
(e) Ingredients of the alleged offences are present in the complaint
petition against the present petitioner and as such no question of
quashing of the criminal proceeding arises in the present case.
In support of the above contention the Learned Counsel for the
opposite party has placed his reliance on the documents viz. letter issued
by the complainant regarding request of handing over the blank cheques to
the complainant and not to present the same for encashment. Learned
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Counsel has also laid stress on the proposal for forecloser of the loan
account and the high rate of interest on the loan amount.
Learned Counsel for the complainant has cited the following
decisions:-
1. State of Karnataka Vs. M. Devendrappa and Another reported in
(2002) 3 SCC 89;
2. Sonu Gupta Vs. Deepak Gupta and Others reported in (2015) 3 SCC
424;
3. State of Madhya Pradesh Vs. Surendra Kori reported in (2012) 10
SCC 155;
4. Sau. Kamal Shivaji Pokarnekar Vs. The State of Maharashtra and
Others reported in (2019) SCC Online SC 182.
The gravamen of the allegation in the complaint is that the
petitioners converted the blank banking instruments into valuable
documents and presented the same for encashment and got the same
dishonoured with male fide intention.
In the instant case, the factum of issuance of blank cheques by the
complainant is admitted. It is also admitted that cheques in question
were drawn on an account maintained by the complainant with the
banker. It is also an admitted fact that the complainant took loan of
Rs.10,00,000/- from the petitioner by executing a loan agreement on
several terms and conditions to repay the same by way of 24 monthly
instalment. It is also an admitted fact that the complainant made default
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in payment of loan i.e. there was existing debt or other liability to make
payment. From Clauses 10.07, 10.08, 10.09, 10.10 and Clause 27 of the
loan agreement and cheque submission form (CSF), it appears that
pursuant to the loan agreement cheques in question were drawn in favour
of Capital First Limited i.e. the petitioner no.1 and the authorized
representative Hemant Murarka signed on the cheques as authorized
representative of M/s. Shree Shyam Pulses Private Limited after knowing
the contents of the agreement.
In this connection, Learned Counsel appearing for the petitioners has
submitted that in view of Section 20 of the Negotiable Instruments Act the
person who has handed over a blank cheque to another person, gives him
authority to fill up the contents therein. It is his specific contention that
the allegations in the complaint that the petitioners converted the blank
cheques as valuable security, fraudulently has no basis at all.
In this connection, reliance may be placed on the decision of Sunil
Kumar Versus Escorts Yamaha Motors Ltd. and Others reported in
(1999) 8 Supreme Court Cases 468.
From paragraph 2 of the said judgment, it appears that the allegation
in the FIR was that certain cheques had been given to the respondents
“with the specific understanding that these cheques can be presented
against delivery of future vehicles and not for any past liability or dues, but
the respondents presented the same which of course could not be encashed
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in view of the directions given by the appellant drawer. However the
appellant had to sustain the loss of Rs 8982 as commission charges. The
respondents filed application in the Delhi High Court for quashing of the
FIR, inter alia, on the ground that the averments in the FIR do not make out
the offence of either Section 406 or Section 420 as the necessary ingredients
under Sections 405 and Section415 I.P.C. have not been indicated. The
respondents also took the ground that the criminal proceedings pursuant to
the FIR have been initiated with an ulterior motive and thereby there has
been a gross abuse of the process of law and as such FIR should be
quashed.”
Hon’ble Apex Court dismissed the appeal after observing that the High
Court was well within its power in quashing the FIR as otherwise, it would
tantamount to an abuse of the process of the Court.
Similar view was taken by the Hon’ble Apex Court in the decision of
Mahindra and Mahindra Financial Services Limited and Another Vs.
Rajib Dubey reported in (2009)1 Supreme Court Cases 706. Paragraph 18
of the said judgment runs as under:-
“18. It is interesting to note that the respondent does not dispute
issuance of cheques. Even a casual reading of the complaint does
not show that the ingredients of Section 406 I.P.C. are in any event
made out. It is also not understandable as to how Section 294 has
any application to the facts of the case much less Section 506 I.P.C.
In addition to this, perusal of the complaint apparently shows the
13ulterior motive. It is clear that the proceeding initiated by the
respondent clearly amounted to abuse of process of law.”
In paragraph 19 of the said judgment Hon’ble Court made reference to
the decision of State of Haryana Vs. Bhajan Lal and observed that the
case at hand falls under category 7. Category seven of the judgment of
State of Haryana Vs. Bhajan Lal is as under:-
“7. Where a criminal proceeding is manifestly attended with
mala fide and/or where the proceeding is maliciously
instituted with an ulterior motive for wreaking vengeance on
the accused and with a view to spite him due to private and
personal grudge.”
The factual scenario of the case at hand clearly indicated that the
impugned criminal proceedings have been started as a counter blast to
the proceedings initiated by the petitioners for dishonor of cheques issued
by the complainant.
In this connection, another decision of the Hon’ble Apex Court in
Eicher Tractor Limited and Others Vs. Harihar Singh and Another
may be mentioned.
In paragraph 14 of the said judgment the Hon’ble Apex Court was
pleased to observe as under:-
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“14. The case at hand squarely falls within the
parameters indicated in Category (7) of Bhajan Lal case.
The factual scenario as noted above clearly shows that the
proceedings were initiated as a counterblast to the
proceedings initiated by the appellants. Continuance of
such proceedings will be nothing but an abuse of the
process of law. Proceedings are accordingly quashed.”
The above discussions lead me to observe that in the case at hand,
the uncorroborated allegations made in the complaint do not prima facie
constitute the commission of the alleged offences and the impugned
criminal proceedings are the counterblast of the proceedings initiated
against the complainant under the provisions of SectionNegotiable Instruments
Act.
In my opinion, the case at hand comes within parameters (7) of the
decision of Hon’ble Supreme Court in State of Haryana and Others Vs.
Ch. Bhajan lal and others reported in AIR 1992 SC 664 and in other
subsequent cases regarding exercise of inherent power under Section 482
of the criminal procedure. The impugned criminal proceeding being
complaint case no. 588 of 2017 requires to be quashed against the
petitioners.
I am of the view that continuance of the criminal proceedings
pending against the present petitioner would amount to an abuse of the
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process of the Court. Criminal proceedings being C.No. 588 of 2017 is
hereby quashed.
Interim order stands vacated.
Urgent photostat certified copy of this order, if applied for, shall be
supplied expeditiously after complying with all necessary legal formalities.
(Madhumati Mitra, J.)
