Allahabad High Court
India Mega Agro Anaj Ltd And 3 Others vs State Of U.P.And Another on 30 May, 2024
HIGH COURT OF JUDICATURE AT ALLAHABAD
Neutral Citation No. - 2024:AHC:100587
Court No. - 91
Case :- APPLICATION U/S 482 No. - 11809 of 2023
Applicant :- India Mega Agro Anaj Ltd And 3 Others
Opposite Party :- State Of U.P.And Another
Counsel for Applicant :- Mohit Singh,Shikhar Neelkanth
Counsel for Opposite Party :- Amit Singh,G.A.
Hon'ble Prashant Kumar,J.
1. Heard Sri V.P. Srivastava, learned Senior Counsel assisted by Sri Mohit Singh, learned counsel for the applicants, Sri Anil Kumar Tripathi, learned counsel for the first informant and learned A.G.A. for the State.
2. Sri V.P. Srivastava, learned Senior Counsel assisted by Sri Mohit Singh appearing for the applicants submits that a complaint was lodged against the applicants on 18.02.2022 in which it is alleged that applicant No.1, Company purchased wheat from the complainant/opposite party No. 2 and thereafter the applicant failed to pay the money. On number of occasions requests were made by the complainant but the applicant did not pay the said money. Thereafter the complainant filed a complaint under Sections 420 and 406 I.P.C. Thereafter the statement of the complainant was recorded and the applicants were summoned under Sections 406 and 420 IPC vide order dated 4.11.2022. The learned counsel for the applicants submits that the applicants have challenged the summoning order as well as the entire proceedings by means of this application.
3. The counsel for the applicant futher submits that prima facie no offence against the applicants is made out. The dispute, if any, is of non-payment of money and the same is purely a civil dispute. He further submits that the applicants have not denied the liability which shows their bonafide. He further submits that wheat supplied by opposite party No.2 was not upto the mark, hence the payment was not made and the negotiations was going on between the parties, in the mean time the applicant no.2, who was the main Managing Director of the opposite party no.1 was sent to jail by the Enforcement Directorate (E.D.), therefore, he could not pay the amount. He further submits that during pendency of the complaint the company has gone into insolvency under the Insolvency and Bankruptcy Code, 2016. Since the company is under insolvency, hence any due of the company would be paid through the Insolvency Proceedings. Further since the moratorium as prescribed under I.B. Code has kicked in, so no creditor can ask for any outstanding dues as long as the insolvency proceedings are pending.
4. Learned counsel for the applicant placed reliance on the judgment passed by the Hon'ble Supreme Court in the matter of Lalit Chaturvedi and others vs. State of Uttar Pradesh and another 2024 SCC OnLine SC 27 and in matter of Vir Prakash Sharma Vs. Anil Kumar Agarawal and another (2007) 7 SCC 373.
5. Per contra, Mr. Anil Kumar Tripathi, Advocate appearing on behalf of opposite party no.2/complainant submits that the applicant after taking the supply of the wheat has refused to pay the money. Repeated requests were made but instead of paying the money, the applicant just to avoid the payment raised the dispute about the quality of the wheat supplied. He further submits that if the applicants were not satisfied with the quality of the wheat, they ought to have returned the wheat. The applicant neither returned the wheat nor paid the money. The opposite party no.2 felt cheated and, therefore, he lodged a complaint under Sections 420 and 406 IPC before the Additional Chief Judicial Magistrate-Ist, Jhansi. He further submits that right from the day one, the intention of the applicant was not clear and they wanted to cheat the opposite party no. 2. The complaint lodged by him clearly shows that prima facie a case is made out against the applicant.
6. In response to the argument raised by the learned counsel for the applicant that the company has gone into insolvency and all the dues of company are now to be raised before the I.R.P. In response to it the counsel for opposite party no.2 submits that the civil proceedings of payment of outstanding dues is separate and the criminal proceedings wherein the applicants have cheated the opposite party no.2 is absolutely different. He further submits that the applicant cannot not take benefit of its own fault. Moreover, it is a clear case of cheating where the applicants have taken supply of the wheat and did not pay the amount.
7. To buttress the argument, the counsel for opposite party no.2 specifically relied upon the judgment passed by the Hon'ble Supreme Court in the matter of Manish Kumar Versus Union of India reported in (2021) 5 SCC page no.1.
8. Heard the counsel for the parties and perused the record.
9. It is not disputed that the opposite party no.2 had supplied wheat to the applicants, for which the applicant did not pay the amount and at a later stage to avoid payment they raised a issue about the quality of the wheat. Apparently, it is case of heating.
10. The Prevention of Money Laundering Act (in short 'PMLA Act") was enacted in 2002. For ready reference Sub-Clause (p), (u), (v), (y) and (za) of Clause 2 of Chapter I of the PMLA Act are quoted hereunder:- :-
(p) "money-laundering" has the meaning assigned to it in section 3;
(u) "proceeds of crime" means any property derived or obtained, directly or indirectly, by any person as a result of criminal activity relating to a scheduled offence or the value of any such property or where such property is taken or held outside the country, then the property equivalent in value held within the country or abroad;
Explanation.--For the removal of doubts, it is hereby clarified that "proceeds of crime" include property not only derived or obtained from the scheduled offence but also any property which may directly or indirectly be derived or obtained as a result of any criminal activity relatable to the scheduled offence.
(v) "property" means any property or assets of every description, whether corporeal or incorporeal, movable or immovable, tangible or intangible and includes deeds and instruments evidencing title to, or interest in, such property or assets, wherever located;
Explanation.--For the removal of doubts, it is hereby clarified that the term "property" includes property of any kind used in the commission of an offence under this Act or any of the scheduled offences;
(y) "scheduled offence" means--
(i) the offences specified under Part A of the Schedule; or
(ii) the offences specified under Part B of the Schedule if the total value involved in such offences is one crore rupees or more; or
(iii) the offences specified under Part C of the Schedule;
(za) "transfer" includes sale, purchase, mortgage, pledge, gift, loan or any other form of transfer of right, title, possession or lien;
The following provisions of IPC were included in Part A, Paragraph 1 of the Schedule. The Schedule :-
OFFENCES UNDER THE INDIA PENAL CODE (45 OF 1860)
Section Description of offence
120B Criminal conspiracy
............................
420 Cheating and dishonestly
including delivery of property
3. Offence of money-laundering.-Whosoever directly or indirectly attempts to indulge or knowingly assists or knowingly is a party or is actually involved in any process or activity connected with the proceeds of crime including its concealment, possession, acquisition or use and projecting or claiming it as untainted property shall be guilty of offence of money-laundering.
Explanation.--For the removal of doubts, it is hereby clarified that,--
(i) a person shall be guilty of offence of money-laundering if such person is found to have directly or indirectly attempted to indulge or knowingly assisted or knowingly is a party or is actually involved in one or more of the following processes or activities connected with proceeds of crime, namely:--
(a) concealment; or
(b) possession; or
(c) acquisition; or
(d) use; or
(e) projecting as untainted property; or
(f) claiming as untainted property,in any manner whatsoever;
(ii) the process or activity connected with proceeds of crime is a continuing activity and continues till such time a person is directly or indirectly enjoying the proceeds of crime by its concealment or possession or acquisition or use or projecting it as untainted property or claiming it as untainted property in any manner whatsoever.
11. After the amendment in PMLA Act the offences under Section 420 of IPC were included under the ambit of PMLA Act, 2002 and these offences would be a scheduled offence as per Section 2 (y) of PMLA Act. The entire business transaction falls within the ambit of PMLA Act and hence the appropriate agency is competent to look into and investigate into transaction.
12. As far as the effect of insolvency is concerned the applicant no.2 who is the Director of the applicant no.1 will not get any benefit of moratorium as the same is only applicable to the corporate debtor. The intention of the legislature was very clear that the criminal liability and prosecution of the directors for the fraud committed by them would continue and no benefit of the protection provided in the IB Code would be extended to them.
13. Section 32A of the IB Code is as follows:-
"32A. Liability for prior offences, etc.--(1) Notwithstanding anything to the contrary contained in this Code or any other law for the time being in force, the liability of a corporate debtor for an offence committed prior to the commencement of the corporate insolvency resolution process shall cease, and the corporate debtor shall not be prosecuted for such an offence from the date the resolution plan has been approved by the Adjudicating Authority under section 31, if the resolution plan results in the change in the management or control of the corporate debtor to a person who was not--
(a) a promoter or in the management or control of the corporate debtor ora related party of such a person; or
(b) a person with regard to whom the relevant investigating authority has, on the basis of material in its possession, reason to believe that he had abetted or conspired for the commission of the offence, and has submitted or filed a report or a complaint to the relevant statutory authority or court:
Provided that if a prosecution had been instituted during the corporate insolvency resolution process against such corporate debtor, it shall stand discharged from the date of approval of the resolution plan subject to requirements of this sub-section having been fulfilled:
Provided further that every person who was a "designated partner" as defined in clause (j) of section 2 of the Limited Liability Partnership Act, 2008 (6 of 2009), or an "officer who is in default", as defined in clause (60) of section 2 of the Companies Act, 2013 (18 of 2013), or was in any manner incharge of, or responsible to the corporate debtor for the conduct of its business or associated with the corporate debtor in any manner and who was directly or indirectly involved in the commission of such offence as per the report submitted or complaint filed by the investigating authority, shall continue to be liable to be prosecuted and punished for such an offence committed by the corporate debtor notwithstanding that the corporate debtor's liability has ceased under this sub-section."
14. The Hon'ble Supreme Court in the matter of Manish Kumar v. Union of India and Another reported in (2021) 5 SCC 1 has held that:-
"Section 32A of the IBC has been upheld by this Court in Manish Kumar v. Union of India reported in (2021) 5 SCC 1. This Court has held that the said section does not permit the wrong-doer to get away. Thus, if the argument of allowing the signatory/director to go scot-free after the approval of the resolution plan is accepted the same would run contrary to the legislative intent of Section 32A which has been upheld by this Court as under:
"326. We are of the clear view that no case whatsoever is made out to seek invalidation of Section 32-A. The boundaries of this Court's jurisdiction are clear. The wisdom of the legislation is not open to judicial review. Having regard to the object of the Code, the experience of the working of the Code, the interests of all stakeholders including most importantly the imperative need to attract resolution applicants who would not shy away from offering reasonable and fair value as part of the resolution plan if the legislature thought that immunity be granted to the corporate debtor as also its property, it hardly furnishes a ground for this Court to interfere. The provision is carefully thought out. It is not as if the wrongdoers are allowed to get away. They remain liable. The extinguishment of the criminal liability of the corporate debtor is apparently important to the new management to make a clean break with the past and start on a clean slate. We must also not overlook the principle that the impugned provision is part of an economic measure. The reverence courts justifiably hold such laws in cannot but be applicable in the instant case as well. The provision deals with reference to offences committed prior to the commencement of the CIRP. With the admission of the application the management of the corporate debtor passes into the hands of the interim resolution professional and thereafter into the hands of the resolution professional subject undoubtedly to the control by the Committee of Creditors. As far as protection afforded to the property is concerned there is clearly a rationale behind it. Having regard to the object of the statute we hardly see any manifest arbitrariness in the provision."
15. The Hon'ble Supreme Court in the matter of Ajay Kumar Radheyshyam Goenka vs. Tourism Finance Corporation of India Ltd. (supra) (Criminal Appeal No.170 of 2023) (paragraph 67b) has held that, a section has been introduced by an amendment into the IB Code which focuses on the liability of offences committed by the directors of the corporate debtor prior to commencement of the corporate insolvency resolution process. The Court further held that every person who was in any manner in charge of, or responsible of the corporate debtor for the conduct of its business or associated with the corporate debtor in any manner and who was directly or indirectly involved in the commission of such offence shall be proceeded with, in accordance with law. It is only the corporate debtor company (with the new management) will be safeguarded.
15. The Hon'ble Supreme Court in the matter of Ajay Kumar Radheyshyam Goenka vs. Tourism Finance Corporation of India Ltd. (supra) (Criminal Appeal No.170 of 2023) (paragraph 67b) has held that, a section has been introduced by an amendment into the IB Code which focuses on the liability of offences committed by the directors of the corporate debtor prior to commencement of the corporate insolvency resolution process. The Court further held that every person who was in any manner in charge of, or responsible of the corporate debtor for the conduct of its business or associated with the corporate debtor in any manner and who was directly or indirectly involved in the commission of such offence shall be proceeded with, in accordance with law. It is only the corporate debtor company (with the new management) will be safeguarded.
16. In view of the aforesaid facts and circumstances, apparently a prima facie case under Section 420 IPC is made out and hence this Court would not like to exercise inherent power under Section 482 Cr.P.C. and quash proceedings where there is enough material on record and prima facie case is made out. Further the applicant no.2 will also not get benefit and moratorium under Insolvency and Banking Code, 2016 and further the offence in this case would fall under the definition of Section 2(y) of the PMLA Act, 2002.
17. The instant application is devoid of merit and is accordingly dismissed.
Order Date :- 30.5.2024
Kumar Manish.
