7#
* HIGH COURT OF DELHI AT NEW DELHI
+ Crl.M.C. No. 2814/2007
Date of decision: 5.12.2008
# WORLD TEX LIMITED & ORS ..... PETITIONERS
! Through : Mr. Rajnish Kumar Gaind, Adv.
Versus
$ K.C.FIBRES LIMITED & ORS. .......RESPONDENTS
^ Through : Mr. Viney Sharma, Adv.
Mr. O.P. Saxena, APP
%
CORAM:
HON'BLE MS. JUSTICE ARUNA SURESH
(1) Whether reporters of local paper may be
allowed to see the judgment?
(2) To be referred to the reporter or not?
(3) Whether the judgment should be reported
in the Digest ?
ARUNA SURESH, J. (Oral)
1. This petition under Section 482 Cr.P.C. has been filed by the petitioners seeking quashing of complaint case No. 1321/01 dated 6.7.2002 titled as M/s K.C. Fibres Limited v. M/s World Tex Limited filed by the respondents under Sections 138/141 of Negotiable Instruments Act (hereinafter Crl.M.C. No.2814/2007 Page 1 of 10 referred to as NI Act) which is pending adjudication in the court of learned MM, Rohini.
2. There have been business dealings between the complainant/respondents and the petitioners/ accused persons, petitioners had been purchasing yarn from the respondent company on credit as well as on cash basis. A running account was maintained by the respondent company regarding the sale of yarn to the petitioners and also the payments received from the petitioners against the said supply from time to time. As per the statement of accounts a sum of Rs. 63,67,527.20p. was found due and payable by the petitioners to the respondent company. Petitioners accordingly issued three post-dated cheques bearing Nos. 301559 dated 9.5.2002 for an amount of Rs. 5,12,165/-, 301560 dated 9.5.2002 for an amount of Rs. 5,45,574.60p and 301561 dated 9.5.2002 all drawn on Global Trust Bank for an amount of Rs. 2,58,792/- in favour of the respondent company towards payment of the due amount. However, all the three cheques on presentation were Crl.M.C. No.2814/2007 Page 2 of 10 dishonoured with the remarks 'insufficient funds' vide banker's memo dated 10.5.2002. A legal notice for demand dated 22.5.2002 was served upon the petitioners but no payment was made despite receipt of the notice. This resulted into filing of a complaint under Sections 138/141 NI Act being Criminal complaint No. 212/2002.
3. Petitioners suffered reverses in its working due to external circumstances which were specific and they led to complete erosion of its net worth. Consequently petitioners filed a reference before the BIFR on 4.10.1999 and the BIFR declared the petitioner company sick in terms of Section 3(1)(o) of the Sick Industrial Companies Act vide order dated 31.3.2000. On recommendations of the BIFR, the petitioner company was wound up as no viable revival/rehabilitation proposal could be advanced.
4. During the pendency of the complaint, since the petitioner company was declared a sick company parties entered into a settlement after having resolved their disputes and differences on Crl.M.C. No.2814/2007 Page 3 of 10 14.10.2002 pertaining to the subject matter of the impugned complaint. It was mutually agreed between the parties that petitioner No. 1 would pay a sum of Rs. 18 lacs to respondent company towards full and final satisfaction of all its dues/claims till date including interest, cost and expenses etc. This amount of Rs. 18 lacs was agreed to be paid in monthly installments of banks' cheque/drafts in favour of respondent No. 1 commencing from October 2002 as follows:
(a) Rs. 2 lakhs on 14th October, 2002;
(b) Rs. 2 lakhs by 7th December, 2002;
(c) Rs. 2 lakhs by 7th January, 2003;
(d) Rs. 2 lakhs by 7th February, 2003;
(e) Rs. 2 lakhs by 7th March, 2003;
(f) Rs. 2 lakhs by 7th April, 2003;
(g) Rs. 2 lakhs by 7th May, 2003;
(h) Rs. 2 lakhs by 7th June, 2003; and
(i) Rs. 2 lakhs by 7th July, 2003.
5. It was also agreed that any delay beyond seven days in payment of any of the said installments would make the agreement null and void and respondent company would be free to take legal action, as it might deem fit, to claim the original Crl.M.C. No.2814/2007 Page 4 of 10 outstanding amount. Respondent company also agreed that in case Rs 18 lacs as detailed above were received, it would not be entitled to enforce any dues/claims/charges against petitioner company or its directors, officers, officials and the liability of the petitioner company towards respondent company would stand fully discharged.
6. In consonance with this agreement, issued nine cheques. Undisputedly, petitioner company issued nine cheques in terms of the settlement in favour of the respondent company and the payment against the said cheques was duly received by the respondent company. Consequently, respondent company withdrew four complaints in between 22.1.2003 and 3.2.2003. However, respondents did not withdraw complaint being C.C. No. 212/2002 (which on transfer to Rohini Court has been renumbered as C.C. No. 1321/1). Resultantly, petitioner moved an application under Section 294 Cr.P.C. seeking admission/denial of the settlement agreement dated 14.10.2002 by the respondents, which was dismissed by the trial court vide its Crl.M.C. No.2814/2007 Page 5 of 10 order dated 13.12.2006 with the observations that as per the statement of the authorized representative of the complainant that the compromise had not been arrived at in true spirit and all the terms and conditions had not been fulfilled and that the compromise was not arrived at towards full and final settlement.
7. Learned counsel for the petitioners has submitted that under the circumstances of the case, the complaint filed by the respondents is liable to be quashed as no debt is due to be paid to the respondents against the impugned cheques in the said complaint.
8. Learned counsel for respondent No. 1 has submitted that since now petitioner company is in a position to pay the balance due liability/amount, complaint is maintainable and complainant is within its rights to pursue the complaint. However, he does not dispute the correctness or genuineness of the settlement agreement executed inter se the parties on 14.10.2002 after the petitioner company was declared a sick unit by BIFR.
Crl.M.C. No.2814/2007 Page 6 of 10
9. After having received the payment as per the said settlement agreement, the respondents/ complainant cannot be allowed to reagitate its claim which was settled with the sick industry simply because petitioner company has revived its business. After receipt of the payment of the impugned cheques, it cannot be said that the said cheques were for part payment of the debt. Once the respondents by way of an agreement between the parties had accepted nine cheques during the subsistence of the complaint against the due amount of Rs. 63 lacs, as per the statement of accounts, it amounted to compounding the offence which has to result in acquittal on account of compounding of the offence, specially when the cheques issued subsequently in lieu of the liability of the impugned cheques giving rise to the original complaint had provided fresh cause of action.
10. Similar facts and circumstances were under consideration in Venkatesh Dutt v. M.S. Shoes East Limited - 2004 (72) DRJ 521. It was observed by this Court that the very fact that a Crl.M.C. No.2814/2007 Page 7 of 10 party entered into a compromise during the pendency of the complaint filed under Section 138 of the NI Act, showing the cause of action pertaining to the initial cheque, ceased to be available to the complainant as fresh cause of action would be available in respect of the cheques issued pursuant to the agreement between the parties in case those cheques or anyone of them was dishonoured on presentation.
11. Under no circumstance, complaint under Section 138 NI Act relating to several cheques given by a party to the complainant on account of the agreement between the parties towards liability against initial cheques leading to the filing of original complaint can be allowed to go simultaneously for the simple reason that Section 138 of the NI Act specifically refers only to that dishonoured cheque which is issued by a person towards the liability drawn on an account maintained by him with a banker for payment of money and no other cheque.
12. Once the parties settled their disputes by way of an Crl.M.C. No.2814/2007 Page 8 of 10 agreement during the pendency of a complaint under Section 138 of the NI Act or proceedings and complainant accepts the cheques given by the accused in lieu of the subject matter of the original complaint, every such new cheque gives rise to a fresh cause of action, if dishonoured on presentation, as in that case the original complaint becomes extinct. Two parallel proceedings under the circumstances cannot be allowed to continue, one emanating from the original cheque and other emanating from the terms and conditions of the agreement between the parties.
13. Since offence under Section 138 of the NI Act is compoundable, when the parties in this case had decided to settle and compound their disputes by way of settlement agreement and once the complainant accepted the cheques issued in pursuance of the agreement towards the liability of the petitioners during the pendency of the complaint and got them encashed, which amounted to compounding of the offence, it should result into acquittal as complainant had entered into an Crl.M.C. No.2814/2007 Page 9 of 10 agreement and accepted the cheques with open eyes and also keeping in mind the consequences of such agreement.
14. In view of the reasons discussed above, the petition is allowed. Complaint Case No. 1321/1 titled as M/s K.C. Fibres Limited v. M/s World Tex Limited filed by respondents under Section 138 of the NI Act against the petitioners for the cheques detailed therein and the proceedings arisen therefrom are hereby quashed. Petitioners are acquitted of the offences charged with.
15. Attested copy of the order be sent to the trial court.
(ARUNA SURESH) JUDGE December 05, 2008 jk Crl.M.C. No.2814/2007 Page 10 of 10