Rajender Pahwa vs Hi Tech Carbon on 6 May, 2008

[Cites 10, Cited by 0]

Delhi District Court

Rajender Pahwa vs Hi Tech Carbon on 6 May, 2008

                                  1

             IN THE COURT OF MS. I.K. KOCHHAR, ASJ,
                            NEW DELHI

CR NO. 67/08

M/S Ralson Carbon Black,
Jitwal Kalan, Tehsil Malerkotla,
Distt. Sangrur, Punjab.

Rajender Pahwa
M/S Ralson Carbon Black
Managing Director,
808 Bhandari House,
Nehru Place, New Delhi
                                            ...Petitioner

             Vs.

HI Tech Carbon,
910 Kailash Building,
KG Marg, New Delhi.
                                            ...Respondent

06.5.08

ORDER

This revision petition is directed against the impugned order dated 01.12.07 passed by the court of Sh. J.P. Nahar ld. MM, New Delhi whereby the application of the petitioner dated 09.10.07 seeking dismissal of the complaint had been dismissed and the matter had been fixed for the complainant's evidence for 13.3.08. This order is now impugned before me.

Trial court record has been requisitioned; the same has been perused.

In the body of the revision petition it is stated that the complainant/respondent Hi Tech Carbon had filed a complaint against the present petitioner i.e Ralson Carbon Black under Section 138 of the Negotiable Instruments Act 2 for dishonour of a cheque dated 08.02.05 for Rs.3,35,630/- which had been returned unpaid vide return memo dated 20.5.05 with the remarks "Exceeds Arrangements"; statutory notice dated 27.5.05 had thereafter been issued. It is stated that on 09.10.07 i.e. the date fixed for framing of notice under Section 251 Cr.P.C, the petitioner had appeared before the Trial Court and moved an application praying for dismissal of the complaint on the ground that the same is not maintainable on account of the petitioner company having been declared sick under the provisions of the Sick Industrial Companies Act (SICA) 1985 vide order dated 30.7.03 and in view of the provisions under Section 22 (1) of the said Act the complaint was not maintainable. The petitioner had relied upon the ratio of the law laid down in the case of M/S Kusum Ingots & Alloys Ltd Vs. Pennar Securities Ltd & Others reported in 2001 (1) JCC SC 170 as also another judgment of the Hon'ble High Court reported in the case of Ajit Sarin & Anr. Vs. M/S Auto Tension Ltd & Anr 2002 (2) JCC 480 (Delhi) to support his submissions. It is stated that the application of the petitioner dated 09.10.07 was not decided on the said date and the court instead proceeded to frame notice under Section 251 Cr.P.C against the petitioner illegally and against the procedure by not deciding the application of the petitioner in the first instance and adjourned the hearing of the application to 01.12.07 on which date the impugned order was passed. 3

                    It is stated that          the impugned order is

illegal and arbitrary           as the petitioner had infact never

relied upon the judgment of the Hon'ble Apex Court reported in the case of Subramanian Seturaman Vs. State of Maharashtra 2004 Cr. L.J 4609 as has been stated in this impugned order (dated 01.12.07) and infact this judgment had been relied upon by the complainant/non applicant. It is stated that the ld. Trial Court has failed to appreciate the ratio of the law laid down stated Supra in the judgments relied upon by the petitioner wherein it has clearly been held that if a company has been declared sick under the provisions of the SICA 1985, under Section 22(1) of the said Act, no proceeding can proceed against such a sick company; ld. Trial court has failed to appreciate the distinction between "discharge of an accused" and the "dismissal of a criminal complaint" and reliance upon the judgment reported in the case of Adalat Parsad Vs. Rooplal Jindal & Others (2004) 7 SCC 338 was not a correct appreciation of the law as that was a case relating to the discharge of the accused but in the present case the petitioner had sought dismissal of the complaint as being not maintainable. It is stated that for all the aforesaid reasons the impugned order dated 01.12.07 is liable to be set aside.

On behalf of the non applicant/respondent, it is stated that the order of the trial court calls for no interference and it is a reasoned order and ld. Trial Court 4 has correctly by applying the ratio of the law laid down in the cases of Adalat Parsad Vs. Rooplal Jindal & Others (2004) 7 SCC 338 and Subramanian Seturaman Vs. State of Maharashtra 2004 Cr. L.J 4609 had held that the trial court cannot recall its summoning order being an interlocutory order and neither is the accused entitled to a discharge in a summons case. Ld. counsel has also placed reliance upon a judgment of the Hon'ble High Court of Delhi reported in the case of Asia Metal Corporation Vs. State & Anr. 130 (2006) DLT 545 to support his submission that the provisions of Chapter XX of the Cr.P.C do not speak of discharge and there is infact no provision for discharge at the stage of Section 251 Cr.P.C. To support his alternate submission as to whether proceedings can continue against a sick company if an order has been passed by the BIFR under the provisions of the SICA 1985; for this proposition reliance has been placed upon a judgment of the Hon'ble High Court of Delhi of Hon'ble Mr. Justice R.S. Sodhi dated 23.02.04 in the matter of M/S Copham Organic Ltd Vs. DCM Financial Services Ltd as also another judgment of the Hon'ble High Court in the case of Krystal Poly Fab Ltd & Ors Vs. Indo Rama Synthetics India Ltd 143 (2007) DLT 523 passed by Hon'ble Mr. Justice Pradeep Nandrajog as also another judgment of the Hon'ble High Court passed by Hon'ble Mr. Justice V.B. Gupta in the case titled M/S Hindustan Cables Ltd. & Others Vs. The State Crl. MC No. 3633/2007.

Arguments have been heard. Record has been perused.

The present complaint had been filed under Section 138 of the Negotiable Instruments Act by M/S Hi Tech Carbon against M/S Ralson Carbon Black for dishonour of a cheque dated 08.02.05 of Rs.3,35,630/-; notice had been framed against the accused on 09.10.07 on which date an application had also been filed by the petitioner seeking dismissal of the complaint for which notice had been issued for 01.12.07 on which date consequent to the reply filed by the complainant the said application had also been dismissed vide the said impugned order which is the subject matter of the present revision petition.

In the body of the application dated 09.10.07 it has been stated that the accused company had been declared sick under the provisions of the Sick Industrial Companies Act 1985 vide order dated 30.7.03 and under Section 22 (1) of the said Act proceedings under Section 138 of the Negotiable Instruments Act are not maintainable on the cheque which had been returned unpaid on 20.5.05 and as such prayer had been made for dismissal of the complaint. The reply filed by the complainant to the said application dated 01.12.07 has also been perused wherein it is stated that Section 22 (1) of the Sick Industrial Companies Act 1985 only deals with the proceedings for recovery of money and does not apply to the 6 criminal proceedings and there was no legal impediment for proceeding with the present case and in terms of the order of the BIFR dated 30.7.03 it had been held that in case the company was running the current assets could be drawn down to the extent required for day to day operations, proper accounts of which would be maintained and furnished to the leader of consortium of banks which was extending the working capital and infact a Memorandum of Understanding dated 12.12.05 had also been entered to the said effect. After considering the rival contentions of the parties this impugned order dated 01.12.07 was passed.

In my view, there is no infirmity in the impugned order of the ld. Trial Court. In the judgment of the Hon'ble High Court of Delhi reported in the case of Asia Metal Corporation Vs. State & Anr. 130 (2006) DLT 545, the Hon'ble High Court while relying upon the ratio of the law laid down by the Hon'ble Apex Court in the case of Subramaniam Seturaman (2004) CCR 32 Volume IV had held that there is no question of discharge under Chapter XX of the Cr.P.C in so far as summons case which has been instituted upon a complaint is concerned; the issuance of summons for attendance marks the end of the pre summoning stage and the case then has to be dealt with under Chapter XX which deals with trial of summons cases by Magistrates; at this stage the Magistrate is not required to further apply his mind as to whether the case has to be proceeded with or not against 7 the accused and what is required under Section 251 of the Cr.P.C is that the substance of the accusation is to be stated and the accused is to be asked whether he pleads guilty or has any defence and it is also not necessary to frame a formal charge and none of the provisions of Chapter XX speak of any possibility of discharge. The Hon'ble High Court has further noted that the question of the discharge amounting to an acquittal is of no consequence because discharge itself is not permissible under the law and therefore the consideration of the interpretation of Section 258 of the Cr.P.C would also not be necessary.

In my view, in view of the ratio of law laid down cited Supra the first contention of the petitioner is answered in the negative and the Magistrate at the stage of framing of notice under Section 251 Cr.P.C has no other option but to state the substance of the accusation and thereafter ask the accused whether he pleads guilty or has any defence to make and may not even frame a formal charge either. Chapter XX does not speak of any possibility of a discharge except under Section 258 of the Cr.P.C which applies to summons cases instituted otherwise than on a complaint. Further the question of discharge amounting to an acquittal would be of no consequence because discharge itself is not permissible under the law and that is why the consideration of the interpretation of Section 258 of the Cr.P.C is also not necessary.

The body of the revision petition further states that after the rival submissions of the parties had been considered and only after reply had been filed by the complainant was the impugned order dated 01.12.07 passed; the submission of the ld. counsel for the petitioner before this court that he was not heard on his legal submissions is thus not correct; (sub para L of the revision petition); what can be gathered from these submissions is that the grievance of the petitioner is that the impugned order had been passed on the same day on which date the arguments had been concluded.

The legal submissions i.e as to whether a complaint under Section 138 of the Negotiable Instruments Act would be maintainable in view of the order of the BIFR dated 30.7.03, has also been considered by the ld. Trial Court as is evident from the impugned order dated 01.12.07. The law on this subject is also very clear and the judgments relied upon by ld. counsel for the non applicant come to his aid. In the judgment of the Hon'ble High Court of Delhi reported in the case of Krystal Poly Fab Ltd & Ors Vs. Indo Rama Synthetics India Ltd 143 (2007) DLT 523, while detailing the order of BIFR in that case and which had permitted the company to rotate its current assets in the normal course of business had held that since the company was permitted to carry out its business transactions, there was no embargo on the company or its Director to deal with 9 the movable assets of the company or to deal with the funds lying to the credit of the company and as such the petitioners could not evade their liability in respect of cheques issued by them. The Hon'ble Court had distinguished the case of Kusum Ingots & Alloys VS. Pennar Peterson Securities Ltd 1 (2000) CCR 260 wherein the Hon'ble Apex Court had held that if order under Section 22 A of the SICA restrained the company from dealing with its assets, it is only then the company nor its directors are liable to be prosecuted under Section 138 of the Negotiable Instruments Act.

In the instant case the order of the BIFR dated 30.7.03 interalia states as under:

"The company/promoters are directed under Section 22 A of the Act not to dispose of any fixed or current assets of the company without the consent of the secured creditor and the BIFR. In case the company is running, the current assets can be drawn down to the extent required for day to day operations, proper accounts of which would be maintained and furnished to the leader of the consortium of banks which is extending working capital to the company."

This order of the BIFR clearly recites that in case the company is running, its current assets could be drawn down to the extent required for day to day operations subject to the condition that proper accounts can be maintained and furnished to the leader of consortium of banks which is extending the working capital and it was in 10 this context that this cheque dated 08.02.05 had been issued and as such the provisions of Section 22 of the SICA would not come to the aid of the petitioner. It is also not in dispute that a Memorandum of Understanding dated 12.12.05 had also been signed between the parties; there was thus no embargo on the company not to carry out its day to day business transactions and deal with its current assets/funds lying to the credit of the company; there was thus no impediment for instituting and proceeding with the criminal case on the allegations of an offence under Section 138 Negotiable Instruments Act.

In my view, in view of the above discussion, there is no infirmity in the impugned order which calls for no interference. Revision petition is without any merit. The same is dismissed.

Trial court record be sent back alongwith copy of this order.

Revision file be consigned to record room. Announced in the open court 06.5.08 (INDERMEET K. KOCHHAR) ADDL. SESSIONS JUDGE, NEW DELHI 11 IN THE COURT OF MS. I.K. KOCHHAR, ASJ, NEW DELHI CR NO. 66/08 M/S Ralson Carbon Black, Jitwal Kalan, Tehsil Malerkotla, Distt. Sangrur, Punjab.

Rajender Pahwa M/S Ralson Carbon Black Managing Director, 808 Bhandari House, Nehru Place, New Delhi ...Petitioner Vs. HI Tech Carbon, 910 Kailash Building, KG Marg, New Delhi.

...Respondent 06.5.08 ORDER This revision petition is directed against the impugned order dated 01.12.07 passed by the court of Sh. J.P. Nahar ld. MM, New Delhi whereby the application of the petitioner dated 09.10.07 seeking dismissal of the complaint had been dismissed and the matter had been fixed for the complainant's evidence for 13.3.08. This order is now impugned before me.

Trial court record has been requisitioned; the same has been perused.

In the body of the revision petition it is stated that the complainant/respondent Hi Tech Carbon had filed a complaint against the present petitioner i.e Ralson Carbon Black under Section 138 of the Negotiable Instruments Act 12 for dishonour of a cheque dated 01.02.05 for Rs.3,35,630/- which had been returned unpaid vide return memo dated 20.5.05 with the remarks "Exceeds Arrangements"; statutory notice dated 27.5.05 had thereafter been issued. It is stated that on 09.10.07 i.e. the date fixed for framing of notice under Section 251 Cr.P.C, the petitioner had appeared before the Trial Court and moved an application praying for dismissal of the complaint on the ground that the same is not maintainable on account of the petitioner company having been declared sick under the provisions of the Sick Industrial Companies Act (SICA) 1985 vide order dated 30.7.03 and in view of the provisions under Section 22 (1) of the said Act the complaint was not maintainable. The petitioner had relied upon the ratio of the law laid down in the case of M/S Kusum Ingots & Alloys Ltd Vs. Pennar Securities Ltd & Others reported in 2001 (1) JCC SC 170 as also another judgment of the Hon'ble High Court reported in the case of Ajit Sarin & Anr. Vs. M/S Auto Tension Ltd & Anr 2002 (2) JCC 480 (Delhi) to support his submissions. It is stated that the application of the petitioner dated 09.10.07 was not decided on the said date and the court instead proceeded to frame notice under Section 251 Cr.P.C against the petitioner illegally and against the procedure by not deciding the application of the petitioner in the first instance and adjourned the hearing of the application to 01.12.07 on which date the impugned order was passed. 13

                    It is stated that          the impugned order is

illegal and arbitrary           as the petitioner had infact never

On behalf of the non applicant/respondent, it is stated that the order of the trial court calls for no interference and it is a reasoned order and ld. Trial Court 14 has correctly by applying the ratio of the law laid down in the cases of Adalat Parsad Vs. Rooplal Jindal & Others (2004) 7 SCC 338 and Subramanian Seturaman Vs. State of Maharashtra 2004 Cr. L.J 4609 had held that the trial court cannot recall its summoning order being an interlocutory order and neither is the accused entitled to a discharge in a summons case. Ld. counsel has also placed reliance upon a judgment of the Hon'ble High Court of Delhi reported in the case of Asia Metal Corporation Vs. State & Anr. 130 (2006) DLT 545 to support his submission that the provisions of Chapter XX of the Cr.P.C do not speak of discharge and there is infact no provision for discharge at the stage of Section 251 Cr.P.C. To support his alternate submission as to whether proceedings can continue against a sick company if an order has been passed by the BIFR under the provisions of the SICA 1985; for this proposition reliance has been placed upon a judgment of the Hon'ble High Court of Delhi of Hon'ble Mr. Justice R.S. Sodhi dated 23.02.04 in the matter of M/S Copham Organic Ltd Vs. DCM Financial Services Ltd as also another judgment of the Hon'ble High Court in the case of Krystal Poly Fab Ltd & Ors Vs. Indo Rama Synthetics India Ltd 143 (2007) DLT 523 passed by Hon'ble Mr. Justice Pradeep Nandrajog as also another judgment of the Hon'ble High Court passed by Hon'ble Mr. Justice V.B. Gupta in the case titled M/S Hindustan Cables Ltd. & Others Vs. The State Crl. MC No. 3633/2007.

Arguments have been heard. Record has been perused.

The present complaint had been filed under Section 138 of the Negotiable Instruments Act by M/S Hi Tech Carbon against M/S Ralson Carbon Black for dishonour of a cheque dated 01.02.05 of Rs.3,35,630/-; notice had been framed against the accused on 09.10.07 on which date an application had also been filed by the petitioner seeking dismissal of the complaint for which notice had been issued for 01.12.07 on which date consequent to the reply filed by the complainant the said application had also been dismissed vide the said impugned order which is the subject matter of the present revision petition.

In the body of the application dated 09.10.07 it has been stated that the accused company had been declared sick under the provisions of the Sick Industrial Companies Act 1985 vide order dated 30.7.03 and under Section 22 (1) of the said Act proceedings under Section 138 of the Negotiable Instruments Act are not maintainable on the cheque which had been returned unpaid on 20.5.05 and as such prayer had been made for dismissal of the complaint. The reply filed by the complainant to the said application dated 01.12.07 has also been perused wherein it is stated that Section 22 (1) of the Sick Industrial Companies Act 1985 only deals with the proceedings for recovery of money and does not apply to the 16 criminal proceedings and there was no legal impediment for proceeding with the present case and in terms of the order of the BIFR dated 30.7.03 it had been held that in case the company was running the current assets could be drawn down to the extent required for day to day operations, proper accounts of which would be maintained and furnished to the leader of consortium of banks which was extending the working capital and infact a Memorandum of Understanding dated 12.12.05 had also been entered to the said effect. After considering the rival contentions of the parties this impugned order dated 01.12.07 was passed.

In my view, there is no infirmity in the impugned order of the ld. Trial Court. In the judgment of the Hon'ble High Court of Delhi reported in the case of Asia Metal Corporation Vs. State & Anr. 130 (2006) DLT 545, the Hon'ble High Court while relying upon the ratio of the law laid down by the Hon'ble Apex Court in the case of Subramaniam Seturaman (2004) CCR 32 Volume IV had held that there is no question of discharge under Chapter XX of the Cr.P.C in so far as summons case which has been instituted upon a complaint is concerned; the issuance of summons for attendance marks the end of the pre summoning stage and the case then has to be dealt with under Chapter XX which deals with trial of summons cases by Magistrates; at this stage the Magistrate is not required to further apply his mind as to whether the case has to be proceeded with or not against 17 the accused and what is required under Section 251 of the Cr.P.C is that the substance of the accusation is to be stated and the accused is to be asked whether he pleads guilty or has any defence and it is also not necessary to frame a formal charge and none of the provisions of Chapter XX speak of any possibility of discharge. The Hon'ble High Court has further noted that the question of the discharge amounting to an acquittal is of no consequence because discharge itself is not permissible under the law and therefore the consideration of the interpretation of Section 258 of the Cr.P.C would also not be necessary.

The legal submissions i.e as to whether a complaint under Section 138 of the Negotiable Instruments Act would be maintainable in view of the order of the BIFR dated 30.7.03, has also been considered by the ld. Trial Court as is evident from the impugned order dated 01.12.07. The law on this subject is also very clear and the judgments relied upon by ld. counsel for the non applicant come to his aid. In the judgment of the Hon'ble High Court of Delhi reported in the case of Krystal Poly Fab Ltd & Ors Vs. Indo Rama Synthetics India Ltd 143 (2007) DLT 523, while detailing the order of BIFR in that case and which had permitted the company to rotate its current assets in the normal course of business had held that since the company was permitted to carry out its business transactions, there was no embargo on the company or its Director to deal with 19 the movable assets of the company or to deal with the funds lying to the credit of the company and as such the petitioners could not evade their liability in respect of cheques issued by them. The Hon'ble Court had distinguished the case of Kusum Ingots & Alloys VS. Pennar Peterson Securities Ltd 1 (2000) CCR 260 wherein the Hon'ble Apex Court had held that if order under Section 22 A of the SICA restrained the company from dealing with its assets, it is only then the company nor its directors are liable to be prosecuted under Section 138 of the Negotiable Instruments Act.

In the instant case the order of the BIFR dated 30.7.03 interalia states as under:

"The company/promoters are directed under Section 22 A of the Act not to dispose of any fixed or current assets of the company without the consent of the secured creditor and the BIFR. In case the company is running, the current assets can be drawn down to the extent required for day to day operations, proper accounts of which would be maintained and furnished to the leader of the consortium of banks which is extending working capital to the company."

This order of the BIFR clearly recites that in case the company is running, its current assets could be drawn down to the extent required for day to day operations subject to the condition that proper accounts can be maintained and furnished to the leader of consortium of banks which is extending the working capital and it was in 20 this context that this cheque dated 01.02.05 had been issued and as such the provisions of Section 22 of the SICA would not come to the aid of the petitioner. It is also not in dispute that a Memorandum of Understanding dated 12.12.05 had also been signed between the parties; there was thus no embargo on the company not to carry out its day to day business transactions and deal with its current assets/funds lying to the credit of the company; there was thus no impediment for instituting and proceeding with the criminal case on the allegations of an offence under Section 138 Negotiable Instruments Act.

In my view, in view of the above discussion, there is no infirmity in the impugned order which calls for no interference. Revision petition is without any merit. The same is dismissed.

Trial court record be sent back alongwith copy of this order.

Revision file be consigned to record room. Announced in the open court 06.5.08 (INDERMEET K. KOCHHAR) ADDL. SESSIONS JUDGE, NEW DELHI 21 IN THE COURT OF MS. I.K. KOCHHAR, ASJ, NEW DELHI CR NO. 65/08 M/S Ralson Carbon Black, Jitwal Kalan, Tehsil Malerkotla, Distt. Sangrur, Punjab.

Rajender Pahwa M/S Ralson Carbon Black Managing Director, 808 Bhandari House, Nehru Place, New Delhi ...Petitioner Vs. HI Tech Carbon, 910 Kailash Building, KG Marg, New Delhi.

Trial court record has been requisitioned; the same has been perused.

In the body of the revision petition it is stated that the complainant/respondent Hi Tech Carbon had filed a complaint against the present petitioner i.e Ralson Carbon Black under Section 138 of the Negotiable Instruments Act 22 for dishonour of a cheque dated 02.4.05 for Rs.1,50,00,000/- which had been returned unpaid vide return memo dated 20.5.05 with the remarks "Exceeds Arrangements"; statutory notice dated 27.5.05 had thereafter been issued. It is stated that on 09.10.07 i.e. the date fixed for framing of notice under Section 251 Cr.P.C, the petitioner had appeared before the Trial Court and moved an application praying for dismissal of the complaint on the ground that the same is not maintainable on account of the petitioner company having been declared sick under the provisions of the Sick Industrial Companies Act (SICA) 1985 vide order dated 30.7.03 and in view of the provisions under Section 22 (1) of the said Act the complaint was not maintainable. The petitioner had relied upon the ratio of the law laid down in the case of M/S Kusum Ingots & Alloys Ltd Vs. Pennar Securities Ltd & Others reported in 2001 (1) JCC SC 170 as also another judgment of the Hon'ble High Court reported in the case of Ajit Sarin & Anr. Vs. M/S Auto Tension Ltd & Anr 2002 (2) JCC 480 (Delhi) to support his submissions. It is stated that the application of the petitioner dated 09.10.07 was not decided on the said date and the court instead proceeded to frame notice under Section 251 Cr.P.C against the petitioner illegally and against the procedure by not deciding the application of the petitioner in the first instance and adjourned the hearing of the application to 01.12.07 on which date the impugned order was passed. 23

                    It is stated that          the impugned order is

illegal and arbitrary           as the petitioner had infact never

On behalf of the non applicant/respondent, it is stated that the order of the trial court calls for no interference and it is a reasoned order and ld. Trial Court 24 has correctly by applying the ratio of the law laid down in the cases of Adalat Parsad Vs. Rooplal Jindal & Others (2004) 7 SCC 338 and Subramanian Seturaman Vs. State of Maharashtra 2004 Cr. L.J 4609 had held that the trial court cannot recall its summoning order being an interlocutory order and neither is the accused entitled to a discharge in a summons case. Ld. counsel has also placed reliance upon a judgment of the Hon'ble High Court of Delhi reported in the case of Asia Metal Corporation Vs. State & Anr. 130 (2006) DLT 545 to support his submission that the provisions of Chapter XX of the Cr.P.C do not speak of discharge and there is infact no provision for discharge at the stage of Section 251 Cr.P.C. To support his alternate submission as to whether proceedings can continue against a sick company if an order has been passed by the BIFR under the provisions of the SICA 1985; for this proposition reliance has been placed upon a judgment of the Hon'ble High Court of Delhi of Hon'ble Mr. Justice R.S. Sodhi dated 23.02.04 in the matter of M/S Copham Organic Ltd Vs. DCM Financial Services Ltd as also another judgment of the Hon'ble High Court in the case of Krystal Poly Fab Ltd & Ors Vs. Indo Rama Synthetics India Ltd 143 (2007) DLT 523 passed by Hon'ble Mr. Justice Pradeep Nandrajog as also another judgment of the Hon'ble High Court passed by Hon'ble Mr. Justice V.B. Gupta in the case titled M/S Hindustan Cables Ltd. & Others Vs. The State Crl. MC No. 3633/2007.

Arguments have been heard. Record has been perused.

The present complaint had been filed under Section 138 of the Negotiable Instruments Act by M/S Hi Tech Carbon against M/S Ralson Carbon Black for dishonour of a cheque dated 02.4.05 of Rs.1,50,00,000/-; notice had been framed against the accused on 09.10.07 on which date an application had also been filed by the petitioner seeking dismissal of the complaint for which notice had been issued for 01.12.07 on which date consequent to the reply filed by the complainant the said application had also been dismissed vide the said impugned order which is the subject matter of the present revision petition.

In the body of the application dated 09.10.07 it has been stated that the accused company had been declared sick under the provisions of the Sick Industrial Companies Act 1985 vide order dated 30.7.03 and under Section 22 (1) of the said Act proceedings under Section 138 of the Negotiable Instruments Act are not maintainable on the cheque which had been returned unpaid on 20.5.05 and as such prayer had been made for dismissal of the complaint. The reply filed by the complainant to the said application dated 01.12.07 has also been perused wherein it is stated that Section 22 (1) of the Sick Industrial Companies Act 1985 only deals with the proceedings for recovery of money and does not apply to the 26 criminal proceedings and there was no legal impediment for proceeding with the present case and in terms of the order of the BIFR dated 30.7.03 it had been held that in case the company was running the current assets could be drawn down to the extent required for day to day operations, proper accounts of which would be maintained and furnished to the leader of consortium of banks which was extending the working capital and infact a Memorandum of Understanding dated 12.12.05 had also been entered to the said effect. After considering the rival contentions of the parties this impugned order dated 01.12.07 was passed.

In my view, there is no infirmity in the impugned order of the ld. Trial Court. In the judgment of the Hon'ble High Court of Delhi reported in the case of Asia Metal Corporation Vs. State & Anr. 130 (2006) DLT 545, the Hon'ble High Court while relying upon the ratio of the law laid down by the Hon'ble Apex Court in the case of Subramaniam Seturaman (2004) CCR 32 Volume IV had held that there is no question of discharge under Chapter XX of the Cr.P.C in so far as summons case which has been instituted upon a complaint is concerned; the issuance of summons for attendance marks the end of the pre summoning stage and the case then has to be dealt with under Chapter XX which deals with trial of summons cases by Magistrates; at this stage the Magistrate is not required to further apply his mind as to whether the case has to be proceeded with or not against 27 the accused and what is required under Section 251 of the Cr.P.C is that the substance of the accusation is to be stated and the accused is to be asked whether he pleads guilty or has any defence and it is also not necessary to frame a formal charge and none of the provisions of Chapter XX speak of any possibility of discharge. The Hon'ble High Court has further noted that the question of the discharge amounting to an acquittal is of no consequence because discharge itself is not permissible under the law and therefore the consideration of the interpretation of Section 258 of the Cr.P.C would also not be necessary.

The legal submissions i.e as to whether a complaint under Section 138 of the Negotiable Instruments Act would be maintainable in view of the order of the BIFR dated 30.7.03, has also been considered by the ld. Trial Court as is evident from the impugned order dated 01.12.07. The law on this subject is also very clear and the judgments relied upon by ld. counsel for the non applicant come to his aid. In the judgment of the Hon'ble High Court of Delhi reported in the case of Krystal Poly Fab Ltd & Ors Vs. Indo Rama Synthetics India Ltd 143 (2007) DLT 523, while detailing the order of BIFR in that case and which had permitted the company to rotate its current assets in the normal course of business had held that since the company was permitted to carry out its business transactions, there was no embargo on the company or its Director to deal with 29 the movable assets of the company or to deal with the funds lying to the credit of the company and as such the petitioners could not evade their liability in respect of cheques issued by them. The Hon'ble Court had distinguished the case of Kusum Ingots & Alloys VS. Pennar Peterson Securities Ltd 1 (2000) CCR 260 wherein the Hon'ble Apex Court had held that if order under Section 22 A of the SICA restrained the company from dealing with its assets, it is only then the company nor its directors are liable to be prosecuted under Section 138 of the Negotiable Instruments Act.

In the instant case the order of the BIFR dated 30.7.03 interalia states as under:

"The company/promoters are directed under Section 22 A of the Act not to dispose of any fixed or current assets of the company without the consent of the secured creditor and the BIFR. In case the company is running, the current assets can be drawn down to the extent required for day to day operations, proper accounts of which would be maintained and furnished to the leader of the consortium of banks which is extending working capital to the company."

This order of the BIFR clearly recites that in case the company is running, its current assets could be drawn down to the extent required for day to day operations subject to the condition that proper accounts can be maintained and furnished to the leader of consortium of banks which is extending the working capital and it was in 30 this context that this cheque dated 02.4.05 had been issued and as such the provisions of Section 22 of the SICA would not come to the aid of the petitioner. It is also not in dispute that a Memorandum of Understanding dated 12.12.05 had also been signed between the parties; there was thus no embargo on the company not to carry out its day to day business transactions and deal with its current assets/funds lying to the credit of the company; there was thus no impediment for instituting and proceeding with the criminal case on the allegations of an offence under Section 138 Negotiable Instruments Act.

In my view, in view of the above discussion, there is no infirmity in the impugned order which calls for no interference. Revision petition is without any merit. The same is dismissed.

Trial court record be sent back alongwith copy of this order.

Revision file be consigned to record room. Announced in the open court 06.5.08 (INDERMEET K. KOCHHAR) ADDL. SESSIONS JUDGE, NEW DELHI 31 IN THE COURT OF MS. I.K. KOCHHAR, ASJ, NEW DELHI CR NO. 62/08 M/S Ralson Carbon Black, Jitwal Kalan, Tehsil Malerkotla, Distt. Sangrur, Punjab.

Rajender Pahwa M/S Ralson Carbon Black Managing Director, 808 Bhandari House, Nehru Place, New Delhi ...Petitioner Vs. HI Tech Carbon, 910 Kailash Building, KG Marg, New Delhi.

Trial court record has been requisitioned; the same has been perused.

In the body of the revision petition it is stated that the complainant/respondent Hi Tech Carbon had filed a complaint against the present petitioner i.e Ralson Carbon Black under Section 138 of the Negotiable Instruments Act 32 for dishonour of a cheque dated 02.4.05 for Rs.8,00,000/- which had been returned unpaid vide return memo dated 20.5.05 with the remarks "Exceeds Arrangements"; statutory notice dated 27.5.05 had thereafter been issued. It is stated that on 09.10.07 i.e. the date fixed for framing of notice under Section 251 Cr.P.C, the petitioner had appeared before the Trial Court and moved an application praying for dismissal of the complaint on the ground that the same is not maintainable on account of the petitioner company having been declared sick under the provisions of the Sick Industrial Companies Act (SICA) 1985 vide order dated 30.7.03 and in view of the provisions under Section 22 (1) of the said Act the complaint was not maintainable. The petitioner had relied upon the ratio of the law laid down in the case of M/S Kusum Ingots & Alloys Ltd Vs. Pennar Securities Ltd & Others reported in 2001 (1) JCC SC 170 as also another judgment of the Hon'ble High Court reported in the case of Ajit Sarin & Anr. Vs. M/S Auto Tension Ltd & Anr 2002 (2) JCC 480 (Delhi) to support his submissions. It is stated that the application of the petitioner dated 09.10.07 was not decided on the said date and the court instead proceeded to frame notice under Section 251 Cr.P.C against the petitioner illegally and against the procedure by not deciding the application of the petitioner in the first instance and adjourned the hearing of the application to 01.12.07 on which date the impugned order was passed. 33

                    It is stated that          the impugned order is

illegal and arbitrary           as the petitioner had infact never

On behalf of the non applicant/respondent, it is stated that the order of the trial court calls for no interference and it is a reasoned order and ld. Trial Court 34 has correctly by applying the ratio of the law laid down in the cases of Adalat Parsad Vs. Rooplal Jindal & Others (2004) 7 SCC 338 and Subramanian Seturaman Vs. State of Maharashtra 2004 Cr. L.J 4609 had held that the trial court cannot recall its summoning order being an interlocutory order and neither is the accused entitled to a discharge in a summons case. Ld. counsel has also placed reliance upon a judgment of the Hon'ble High Court of Delhi reported in the case of Asia Metal Corporation Vs. State & Anr. 130 (2006) DLT 545 to support his submission that the provisions of Chapter XX of the Cr.P.C do not speak of discharge and there is infact no provision for discharge at the stage of Section 251 Cr.P.C. To support his alternate submission as to whether proceedings can continue against a sick company if an order has been passed by the BIFR under the provisions of the SICA 1985; for this proposition reliance has been placed upon a judgment of the Hon'ble High Court of Delhi of Hon'ble Mr. Justice R.S. Sodhi dated 23.02.04 in the matter of M/S Copham Organic Ltd Vs. DCM Financial Services Ltd as also another judgment of the Hon'ble High Court in the case of Krystal Poly Fab Ltd & Ors Vs. Indo Rama Synthetics India Ltd 143 (2007) DLT 523 passed by Hon'ble Mr. Justice Pradeep Nandrajog as also another judgment of the Hon'ble High Court passed by Hon'ble Mr. Justice V.B. Gupta in the case titled M/S Hindustan Cables Ltd. & Others Vs. The State Crl. MC No. 3633/2007.

Arguments have been heard. Record has been perused.

The present complaint had been filed under Section 138 of the Negotiable Instruments Act by M/S Hi Tech Carbon against M/S Ralson Carbon Black for dishonour of a cheque dated 02.4.05 of Rs.8,00,000/-; notice had been framed against the accused on 09.10.07 on which date an application had also been filed by the petitioner seeking dismissal of the complaint for which notice had been issued for 01.12.07 on which date consequent to the reply filed by the complainant the said application had also been dismissed vide the said impugned order which is the subject matter of the present revision petition.

In the body of the application dated 09.10.07 it has been stated that the accused company had been declared sick under the provisions of the Sick Industrial Companies Act 1985 vide order dated 30.7.03 and under Section 22 (1) of the said Act proceedings under Section 138 of the Negotiable Instruments Act are not maintainable on the cheque which had been returned unpaid on 20.5.05 and as such prayer had been made for dismissal of the complaint. The reply filed by the complainant to the said application dated 01.12.07 has also been perused wherein it is stated that Section 22 (1) of the Sick Industrial Companies Act 1985 only deals with the proceedings for recovery of money and does not apply to the 36 criminal proceedings and there was no legal impediment for proceeding with the present case and in terms of the order of the BIFR dated 30.7.03 it had been held that in case the company was running the current assets could be drawn down to the extent required for day to day operations, proper accounts of which would be maintained and furnished to the leader of consortium of banks which was extending the working capital and infact a Memorandum of Understanding dated 12.12.05 had also been entered to the said effect. After considering the rival contentions of the parties this impugned order dated 01.12.07 was passed.

In my view, there is no infirmity in the impugned order of the ld. Trial Court. In the judgment of the Hon'ble High Court of Delhi reported in the case of Asia Metal Corporation Vs. State & Anr. 130 (2006) DLT 545, the Hon'ble High Court while relying upon the ratio of the law laid down by the Hon'ble Apex Court in the case of Subramaniam Seturaman (2004) CCR 32 Volume IV had held that there is no question of discharge under Chapter XX of the Cr.P.C in so far as summons case which has been instituted upon a complaint is concerned; the issuance of summons for attendance marks the end of the pre summoning stage and the case then has to be dealt with under Chapter XX which deals with trial of summons cases by Magistrates; at this stage the Magistrate is not required to further apply his mind as to whether the case has to be proceeded with or not against 37 the accused and what is required under Section 251 of the Cr.P.C is that the substance of the accusation is to be stated and the accused is to be asked whether he pleads guilty or has any defence and it is also not necessary to frame a formal charge and none of the provisions of Chapter XX speak of any possibility of discharge. The Hon'ble High Court has further noted that the question of the discharge amounting to an acquittal is of no consequence because discharge itself is not permissible under the law and therefore the consideration of the interpretation of Section 258 of the Cr.P.C would also not be necessary.

The legal submissions i.e as to whether a complaint under Section 138 of the Negotiable Instruments Act would be maintainable in view of the order of the BIFR dated 30.7.03, has also been considered by the ld. Trial Court as is evident from the impugned order dated 01.12.07. The law on this subject is also very clear and the judgments relied upon by ld. counsel for the non applicant come to his aid. In the judgment of the Hon'ble High Court of Delhi reported in the case of Krystal Poly Fab Ltd & Ors Vs. Indo Rama Synthetics India Ltd 143 (2007) DLT 523, while detailing the order of BIFR in that case and which had permitted the company to rotate its current assets in the normal course of business had held that since the company was permitted to carry out its business transactions, there was no embargo on the company or its Director to deal with 39 the movable assets of the company or to deal with the funds lying to the credit of the company and as such the petitioners could not evade their liability in respect of cheques issued by them. The Hon'ble Court had distinguished the case of Kusum Ingots & Alloys VS. Pennar Peterson Securities Ltd 1 (2000) CCR 260 wherein the Hon'ble Apex Court had held that if order under Section 22 A of the SICA restrained the company from dealing with its assets, it is only then the company nor its directors are liable to be prosecuted under Section 138 of the Negotiable Instruments Act.

In the instant case the order of the BIFR dated 30.7.03 interalia states as under:

"The company/promoters are directed under Section 22 A of the Act not to dispose of any fixed or current assets of the company without the consent of the secured creditor and the BIFR. In case the company is running, the current assets can be drawn down to the extent required for day to day operations, proper accounts of which would be maintained and furnished to the leader of the consortium of banks which is extending working capital to the company."

This order of the BIFR clearly recites that in case the company is running, its current assets could be drawn down to the extent required for day to day operations subject to the condition that proper accounts can be maintained and furnished to the leader of consortium of banks which is extending the working capital and it was in 40 this context that this cheque dated 02.4.05 had been issued and as such the provisions of Section 22 of the SICA would not come to the aid of the petitioner. It is also not in dispute that a Memorandum of Understanding dated 12.12.05 had also been signed between the parties; there was thus no embargo on the company not to carry out its day to day business transactions and deal with its current assets/funds lying to the credit of the company; there was thus no impediment for instituting and proceeding with the criminal case on the allegations of an offence under Section 138 Negotiable Instruments Act.

In my view, in view of the above discussion, there is no infirmity in the impugned order which calls for no interference. Revision petition is without any merit. The same is dismissed.

Trial court record be sent back alongwith copy of this order.

Revision file be consigned to record room. Announced in the open court 06.5.08 (INDERMEET K. KOCHHAR) ADDL. SESSIONS JUDGE, NEW DELHI 41 IN THE COURT OF MS. I.K. KOCHHAR, ASJ, NEW DELHI CR NO. 64/08 M/S Ralson Carbon Black, Jitwal Kalan, Tehsil Malerkotla, Distt. Sangrur, Punjab.

Rajender Pahwa M/S Ralson Carbon Black Managing Director, 808 Bhandari House, Nehru Place, New Delhi ...Petitioner Vs. HI Tech Carbon, 910 Kailash Building, KG Marg, New Delhi.

Trial court record has been requisitioned; the same has been perused.

In the body of the revision petition it is stated that the complainant/respondent Hi Tech Carbon had filed a complaint against the present petitioner i.e Ralson Carbon Black under Section 138 of the Negotiable Instruments Act 42 for dishonour of a cheque dated 02.2.05 for Rs.3,35,630/- which had been returned unpaid vide return memo dated 20.5.05 with the remarks "Exceeds Arrangements"; statutory notice dated 27.5.05 had thereafter been issued. It is stated that on 09.10.07 i.e. the date fixed for framing of notice under Section 251 Cr.P.C, the petitioner had appeared before the Trial Court and moved an application praying for dismissal of the complaint on the ground that the same is not maintainable on account of the petitioner company having been declared sick under the provisions of the Sick Industrial Companies Act (SICA) 1985 vide order dated 30.7.03 and in view of the provisions under Section 22 (1) of the said Act the complaint was not maintainable. The petitioner had relied upon the ratio of the law laid down in the case of M/S Kusum Ingots & Alloys Ltd Vs. Pennar Securities Ltd & Others reported in 2001 (1) JCC SC 170 as also another judgment of the Hon'ble High Court reported in the case of Ajit Sarin & Anr. Vs. M/S Auto Tension Ltd & Anr 2002 (2) JCC 480 (Delhi) to support his submissions. It is stated that the application of the petitioner dated 09.10.07 was not decided on the said date and the court instead proceeded to frame notice under Section 251 Cr.P.C against the petitioner illegally and against the procedure by not deciding the application of the petitioner in the first instance and adjourned the hearing of the application to 01.12.07 on which date the impugned order was passed. 43

                    It is stated that          the impugned order is

illegal and arbitrary           as the petitioner had infact never

On behalf of the non applicant/respondent, it is stated that the order of the trial court calls for no interference and it is a reasoned order and ld. Trial Court 44 has correctly by applying the ratio of the law laid down in the cases of Adalat Parsad Vs. Rooplal Jindal & Others (2004) 7 SCC 338 and Subramanian Seturaman Vs. State of Maharashtra 2004 Cr. L.J 4609 had held that the trial court cannot recall its summoning order being an interlocutory order and neither is the accused entitled to a discharge in a summons case. Ld. counsel has also placed reliance upon a judgment of the Hon'ble High Court of Delhi reported in the case of Asia Metal Corporation Vs. State & Anr. 130 (2006) DLT 545 to support his submission that the provisions of Chapter XX of the Cr.P.C do not speak of discharge and there is infact no provision for discharge at the stage of Section 251 Cr.P.C. To support his alternate submission as to whether proceedings can continue against a sick company if an order has been passed by the BIFR under the provisions of the SICA 1985; for this proposition reliance has been placed upon a judgment of the Hon'ble High Court of Delhi of Hon'ble Mr. Justice R.S. Sodhi dated 23.02.04 in the matter of M/S Copham Organic Ltd Vs. DCM Financial Services Ltd as also another judgment of the Hon'ble High Court in the case of Krystal Poly Fab Ltd & Ors Vs. Indo Rama Synthetics India Ltd 143 (2007) DLT 523 passed by Hon'ble Mr. Justice Pradeep Nandrajog as also another judgment of the Hon'ble High Court passed by Hon'ble Mr. Justice V.B. Gupta in the case titled M/S Hindustan Cables Ltd. & Others Vs. The State Crl. MC No. 3633/2007.

Arguments have been heard. Record has been perused.

The present complaint had been filed under Section 138 of the Negotiable Instruments Act by M/S Hi Tech Carbon against M/S Ralson Carbon Black for dishonour of a cheque dated 02.2.05 of Rs.3,35,630/-; notice had been framed against the accused on 09.10.07 on which date an application had also been filed by the petitioner seeking dismissal of the complaint for which notice had been issued for 01.12.07 on which date consequent to the reply filed by the complainant the said application had also been dismissed vide the said impugned order which is the subject matter of the present revision petition.

In the body of the application dated 09.10.07 it has been stated that the accused company had been declared sick under the provisions of the Sick Industrial Companies Act 1985 vide order dated 30.7.03 and under Section 22 (1) of the said Act proceedings under Section 138 of the Negotiable Instruments Act are not maintainable on the cheque which had been returned unpaid on 20.5.05 and as such prayer had been made for dismissal of the complaint. The reply filed by the complainant to the said application dated 01.12.07 has also been perused wherein it is stated that Section 22 (1) of the Sick Industrial Companies Act 1985 only deals with the proceedings for recovery of money and does not apply to the 46 criminal proceedings and there was no legal impediment for proceeding with the present case and in terms of the order of the BIFR dated 30.7.03 it had been held that in case the company was running the current assets could be drawn down to the extent required for day to day operations, proper accounts of which would be maintained and furnished to the leader of consortium of banks which was extending the working capital and infact a Memorandum of Understanding dated 12.12.05 had also been entered to the said effect. After considering the rival contentions of the parties this impugned order dated 01.12.07 was passed.

In my view, there is no infirmity in the impugned order of the ld. Trial Court. In the judgment of the Hon'ble High Court of Delhi reported in the case of Asia Metal Corporation Vs. State & Anr. 130 (2006) DLT 545, the Hon'ble High Court while relying upon the ratio of the law laid down by the Hon'ble Apex Court in the case of Subramaniam Seturaman (2004) CCR 32 Volume IV had held that there is no question of discharge under Chapter XX of the Cr.P.C in so far as summons case which has been instituted upon a complaint is concerned; the issuance of summons for attendance marks the end of the pre summoning stage and the case then has to be dealt with under Chapter XX which deals with trial of summons cases by Magistrates; at this stage the Magistrate is not required to further apply his mind as to whether the case has to be proceeded with or not against 47 the accused and what is required under Section 251 of the Cr.P.C is that the substance of the accusation is to be stated and the accused is to be asked whether he pleads guilty or has any defence and it is also not necessary to frame a formal charge and none of the provisions of Chapter XX speak of any possibility of discharge. The Hon'ble High Court has further noted that the question of the discharge amounting to an acquittal is of no consequence because discharge itself is not permissible under the law and therefore the consideration of the interpretation of Section 258 of the Cr.P.C would also not be necessary.

The legal submissions i.e as to whether a complaint under Section 138 of the Negotiable Instruments Act would be maintainable in view of the order of the BIFR dated 30.7.03, has also been considered by the ld. Trial Court as is evident from the impugned order dated 01.12.07. The law on this subject is also very clear and the judgments relied upon by ld. counsel for the non applicant come to his aid. In the judgment of the Hon'ble High Court of Delhi reported in the case of Krystal Poly Fab Ltd & Ors Vs. Indo Rama Synthetics India Ltd 143 (2007) DLT 523, while detailing the order of BIFR in that case and which had permitted the company to rotate its current assets in the normal course of business had held that since the company was permitted to carry out its business transactions, there was no embargo on the company or its Director to deal with 49 the movable assets of the company or to deal with the funds lying to the credit of the company and as such the petitioners could not evade their liability in respect of cheques issued by them. The Hon'ble Court had distinguished the case of Kusum Ingots & Alloys VS. Pennar Peterson Securities Ltd 1 (2000) CCR 260 wherein the Hon'ble Apex Court had held that if order under Section 22 A of the SICA restrained the company from dealing with its assets, it is only then the company nor its directors are liable to be prosecuted under Section 138 of the Negotiable Instruments Act.

In the instant case the order of the BIFR dated 30.7.03 interalia states as under:

"The company/promoters are directed under Section 22 A of the Act not to dispose of any fixed or current assets of the company without the consent of the secured creditor and the BIFR. In case the company is running, the current assets can be drawn down to the extent required for day to day operations, proper accounts of which would be maintained and furnished to the leader of the consortium of banks which is extending working capital to the company."

This order of the BIFR clearly recites that in case the company is running, its current assets could be drawn down to the extent required for day to day operations subject to the condition that proper accounts can be maintained and furnished to the leader of consortium of banks which is extending the working capital and it was in 50 this context that this cheque dated 02.2.05 had been issued and as such the provisions of Section 22 of the SICA would not come to the aid of the petitioner. It is also not in dispute that a Memorandum of Understanding dated 12.12.05 had also been signed between the parties; there was thus no embargo on the company not to carry out its day to day business transactions and deal with its current assets/funds lying to the credit of the company; there was thus no impediment for instituting and proceeding with the criminal case on the allegations of an offence under Section 138 Negotiable Instruments Act.

In my view, in view of the above discussion, there is no infirmity in the impugned order which calls for no interference. Revision petition is without any merit. The same is dismissed.

Trial court record be sent back alongwith copy of this order.

Revision file be consigned to record room. Announced in the open court 06.5.08 (INDERMEET K. KOCHHAR) ADDL. SESSIONS JUDGE, NEW DELHI 51 52 IN THE COURT OF MS. I.K. KOCHHAR, ASJ, NEW DELHI CR NO. 63/08 M/S Ralson Carbon Black, Jitwal Kalan, Tehsil Malerkotla, Distt. Sangrur, Punjab.

Rajender Pahwa M/S Ralson Carbon Black Managing Director, 808 Bhandari House, Nehru Place, New Delhi ...Petitioner Vs. HI Tech Carbon, 910 Kailash Building, KG Marg, New Delhi.

Trial court record has been requisitioned; the same has been perused.

In the body of the revision petition it is stated that the complainant/respondent Hi Tech Carbon had filed a complaint against the present petitioner i.e Ralson Carbon Black under Section 138 of the Negotiable Instruments Act 53 for dishonour of a cheque dated 02.4.05 for Rs.8,00,000/- which had been returned unpaid vide return memo dated 20.5.05 with the remarks "Exceeds Arrangements"; statutory notice dated 27.5.05 had thereafter been issued. It is stated that on 09.10.07 i.e. the date fixed for framing of notice under Section 251 Cr.P.C, the petitioner had appeared before the Trial Court and moved an application praying for dismissal of the complaint on the ground that the same is not maintainable on account of the petitioner company having been declared sick under the provisions of the Sick Industrial Companies Act (SICA) 1985 vide order dated 30.7.03 and in view of the provisions under Section 22 (1) of the said Act the complaint was not maintainable. The petitioner had relied upon the ratio of the law laid down in the case of M/S Kusum Ingots & Alloys Ltd Vs. Pennar Securities Ltd & Others reported in 2001 (1) JCC SC 170 as also another judgment of the Hon'ble High Court reported in the case of Ajit Sarin & Anr. Vs. M/S Auto Tension Ltd & Anr 2002 (2) JCC 480 (Delhi) to support his submissions. It is stated that the application of the petitioner dated 09.10.07 was not decided on the said date and the court instead proceeded to frame notice under Section 251 Cr.P.C against the petitioner illegally and against the procedure by not deciding the application of the petitioner in the first instance and adjourned the hearing of the application to 01.12.07 on which date the impugned order was passed. 54

                    It is stated that          the impugned order is

illegal and arbitrary           as the petitioner had infact never

On behalf of the non applicant/respondent, it is stated that the order of the trial court calls for no interference and it is a reasoned order and ld. Trial Court 55 has correctly by applying the ratio of the law laid down in the cases of Adalat Parsad Vs. Rooplal Jindal & Others (2004) 7 SCC 338 and Subramanian Seturaman Vs. State of Maharashtra 2004 Cr. L.J 4609 had held that the trial court cannot recall its summoning order being an interlocutory order and neither is the accused entitled to a discharge in a summons case. Ld. counsel has also placed reliance upon a judgment of the Hon'ble High Court of Delhi reported in the case of Asia Metal Corporation Vs. State & Anr. 130 (2006) DLT 545 to support his submission that the provisions of Chapter XX of the Cr.P.C do not speak of discharge and there is infact no provision for discharge at the stage of Section 251 Cr.P.C. To support his alternate submission as to whether proceedings can continue against a sick company if an order has been passed by the BIFR under the provisions of the SICA 1985; for this proposition reliance has been placed upon a judgment of the Hon'ble High Court of Delhi of Hon'ble Mr. Justice R.S. Sodhi dated 23.02.04 in the matter of M/S Copham Organic Ltd Vs. DCM Financial Services Ltd as also another judgment of the Hon'ble High Court in the case of Krystal Poly Fab Ltd & Ors Vs. Indo Rama Synthetics India Ltd 143 (2007) DLT 523 passed by Hon'ble Mr. Justice Pradeep Nandrajog as also another judgment of the Hon'ble High Court passed by Hon'ble Mr. Justice V.B. Gupta in the case titled M/S Hindustan Cables Ltd. & Others Vs. The State Crl. MC No. 3633/2007.

Arguments have been heard. Record has been perused.

The present complaint had been filed under Section 138 of the Negotiable Instruments Act by M/S Hi Tech Carbon against M/S Ralson Carbon Black for dishonour of a cheque dated 02.4.05 of Rs.8,00,000/-; notice had been framed against the accused on 09.10.07 on which date an application had also been filed by the petitioner seeking dismissal of the complaint for which notice had been issued for 01.12.07 on which date consequent to the reply filed by the complainant the said application had also been dismissed vide the said impugned order which is the subject matter of the present revision petition.

In the body of the application dated 09.10.07 it has been stated that the accused company had been declared sick under the provisions of the Sick Industrial Companies Act 1985 vide order dated 30.7.03 and under Section 22 (1) of the said Act proceedings under Section 138 of the Negotiable Instruments Act are not maintainable on the cheque which had been returned unpaid on 20.5.05 and as such prayer had been made for dismissal of the complaint. The reply filed by the complainant to the said application dated 01.12.07 has also been perused wherein it is stated that Section 22 (1) of the Sick Industrial Companies Act 1985 only deals with the proceedings for recovery of money and does not apply to the 57 criminal proceedings and there was no legal impediment for proceeding with the present case and in terms of the order of the BIFR dated 30.7.03 it had been held that in case the company was running the current assets could be drawn down to the extent required for day to day operations, proper accounts of which would be maintained and furnished to the leader of consortium of banks which was extending the working capital and infact a Memorandum of Understanding dated 12.12.05 had also been entered to the said effect. After considering the rival contentions of the parties this impugned order dated 01.12.07 was passed.

In my view, there is no infirmity in the impugned order of the ld. Trial Court. In the judgment of the Hon'ble High Court of Delhi reported in the case of Asia Metal Corporation Vs. State & Anr. 130 (2006) DLT 545, the Hon'ble High Court while relying upon the ratio of the law laid down by the Hon'ble Apex Court in the case of Subramaniam Seturaman (2004) CCR 32 Volume IV had held that there is no question of discharge under Chapter XX of the Cr.P.C in so far as summons case which has been instituted upon a complaint is concerned; the issuance of summons for attendance marks the end of the pre summoning stage and the case then has to be dealt with under Chapter XX which deals with trial of summons cases by Magistrates; at this stage the Magistrate is not required to further apply his mind as to whether the case has to be proceeded with or not against 58 the accused and what is required under Section 251 of the Cr.P.C is that the substance of the accusation is to be stated and the accused is to be asked whether he pleads guilty or has any defence and it is also not necessary to frame a formal charge and none of the provisions of Chapter XX speak of any possibility of discharge. The Hon'ble High Court has further noted that the question of the discharge amounting to an acquittal is of no consequence because discharge itself is not permissible under the law and therefore the consideration of the interpretation of Section 258 of the Cr.P.C would also not be necessary.

The legal submissions i.e as to whether a complaint under Section 138 of the Negotiable Instruments Act would be maintainable in view of the order of the BIFR dated 30.7.03, has also been considered by the ld. Trial Court as is evident from the impugned order dated 01.12.07. The law on this subject is also very clear and the judgments relied upon by ld. counsel for the non applicant come to his aid. In the judgment of the Hon'ble High Court of Delhi reported in the case of Krystal Poly Fab Ltd & Ors Vs. Indo Rama Synthetics India Ltd 143 (2007) DLT 523, while detailing the order of BIFR in that case and which had permitted the company to rotate its current assets in the normal course of business had held that since the company was permitted to carry out its business transactions, there was no embargo on the company or its Director to deal with 60 the movable assets of the company or to deal with the funds lying to the credit of the company and as such the petitioners could not evade their liability in respect of cheques issued by them. The Hon'ble Court had distinguished the case of Kusum Ingots & Alloys VS. Pennar Peterson Securities Ltd 1 (2000) CCR 260 wherein the Hon'ble Apex Court had held that if order under Section 22 A of the SICA restrained the company from dealing with its assets, it is only then the company nor its directors are liable to be prosecuted under Section 138 of the Negotiable Instruments Act.

In the instant case the order of the BIFR dated 30.7.03 interalia states as under:

"The company/promoters are directed under Section 22 A of the Act not to dispose of any fixed or current assets of the company without the consent of the secured creditor and the BIFR. In case the company is running, the current assets can be drawn down to the extent required for day to day operations, proper accounts of which would be maintained and furnished to the leader of the consortium of banks which is extending working capital to the company."

This order of the BIFR clearly recites that in case the company is running, its current assets could be drawn down to the extent required for day to day operations subject to the condition that proper accounts can be maintained and furnished to the leader of consortium of banks which is extending the working capital and it was in 61 this context that this cheque dated 02.4.05 had been issued and as such the provisions of Section 22 of the SICA would not come to the aid of the petitioner. It is also not in dispute that a Memorandum of Understanding dated 12.12.05 had also been signed between the parties; there was thus no embargo on the company not to carry out its day to day business transactions and deal with its current assets/funds lying to the credit of the company; there was thus no impediment for instituting and proceeding with the criminal case on the allegations of an offence under Section 138 Negotiable Instruments Act.

In my view, in view of the above discussion, there is no infirmity in the impugned order which calls for no interference. Revision petition is without any merit. The same is dismissed.

Trial court record be sent back alongwith copy of this order.

Revision file be consigned to record room. Announced in the open court 06.5.08 (INDERMEET K. KOCHHAR) ADDL. SESSIONS JUDGE, NEW DELHI 62 63 IN THE COURT OF MS. I.K. KOCHHAR, ASJ, NEW DELHI CR NO. 64/08 M/S Ralson Carbon Black, Jitwal Kalan, Tehsil Malerkotla, Distt. Sangrur, Punjab.

Rajender Pahwa M/S Ralson Carbon Black Managing Director, 808 Bhandari House, Nehru Place, New Delhi ...Petitioner Vs. HI Tech Carbon, 910 Kailash Building, KG Marg, New Delhi.

Trial court record has been requisitioned; the same has been perused.

In the body of the revision petition it is stated that the complainant/respondent Hi Tech Carbon had filed a complaint against the present petitioner i.e Ralson Carbon Black under Section 138 of the Negotiable Instruments Act 64 for dishonour of a cheque dated 02.2.05 for Rs.3,35,630/- which had been returned unpaid vide return memo dated 20.5.05 with the remarks "Exceeds Arrangements"; statutory notice dated 27.5.05 had thereafter been issued. It is stated that on 09.10.07 i.e. the date fixed for framing of notice under Section 251 Cr.P.C, the petitioner had appeared before the Trial Court and moved an application praying for dismissal of the complaint on the ground that the same is not maintainable on account of the petitioner company having been declared sick under the provisions of the Sick Industrial Companies Act (SICA) 1985 vide order dated 30.7.03 and in view of the provisions under Section 22 (1) of the said Act the complaint was not maintainable. The petitioner had relied upon the ratio of the law laid down in the case of M/S Kusum Ingots & Alloys Ltd Vs. Pennar Securities Ltd & Others reported in 2001 (1) JCC SC 170 as also another judgment of the Hon'ble High Court reported in the case of Ajit Sarin & Anr. Vs. M/S Auto Tension Ltd & Anr 2002 (2) JCC 480 (Delhi) to support his submissions. It is stated that the application of the petitioner dated 09.10.07 was not decided on the said date and the court instead proceeded to frame notice under Section 251 Cr.P.C against the petitioner illegally and against the procedure by not deciding the application of the petitioner in the first instance and adjourned the hearing of the application to 01.12.07 on which date the impugned order was passed. 65

                    It is stated that          the impugned order is

illegal and arbitrary           as the petitioner had infact never

On behalf of the non applicant/respondent, it is stated that the order of the trial court calls for no interference and it is a reasoned order and ld. Trial Court 66 has correctly by applying the ratio of the law laid down in the cases of Adalat Parsad Vs. Rooplal Jindal & Others (2004) 7 SCC 338 and Subramanian Seturaman Vs. State of Maharashtra 2004 Cr. L.J 4609 had held that the trial court cannot recall its summoning order being an interlocutory order and neither is the accused entitled to a discharge in a summons case. Ld. counsel has also placed reliance upon a judgment of the Hon'ble High Court of Delhi reported in the case of Asia Metal Corporation Vs. State & Anr. 130 (2006) DLT 545 to support his submission that the provisions of Chapter XX of the Cr.P.C do not speak of discharge and there is infact no provision for discharge at the stage of Section 251 Cr.P.C. To support his alternate submission as to whether proceedings can continue against a sick company if an order has been passed by the BIFR under the provisions of the SICA 1985; for this proposition reliance has been placed upon a judgment of the Hon'ble High Court of Delhi of Hon'ble Mr. Justice R.S. Sodhi dated 23.02.04 in the matter of M/S Copham Organic Ltd Vs. DCM Financial Services Ltd as also another judgment of the Hon'ble High Court in the case of Krystal Poly Fab Ltd & Ors Vs. Indo Rama Synthetics India Ltd 143 (2007) DLT 523 passed by Hon'ble Mr. Justice Pradeep Nandrajog as also another judgment of the Hon'ble High Court passed by Hon'ble Mr. Justice V.B. Gupta in the case titled M/S Hindustan Cables Ltd. & Others Vs. The State Crl. MC No. 3633/2007.

Arguments have been heard. Record has been perused.

In the body of the application dated 09.10.07 it has been stated that the accused company had been declared sick under the provisions of the Sick Industrial Companies Act 1985 vide order dated 30.7.03 and under Section 22 (1) of the said Act proceedings under Section 138 of the Negotiable Instruments Act are not maintainable on the cheque which had been returned unpaid on 20.5.05 and as such prayer had been made for dismissal of the complaint. The reply filed by the complainant to the said application dated 01.12.07 has also been perused wherein it is stated that Section 22 (1) of the Sick Industrial Companies Act 1985 only deals with the proceedings for recovery of money and does not apply to the 68 criminal proceedings and there was no legal impediment for proceeding with the present case and in terms of the order of the BIFR dated 30.7.03 it had been held that in case the company was running the current assets could be drawn down to the extent required for day to day operations, proper accounts of which would be maintained and furnished to the leader of consortium of banks which was extending the working capital and infact a Memorandum of Understanding dated 12.12.05 had also been entered to the said effect. After considering the rival contentions of the parties this impugned order dated 01.12.07 was passed.

In my view, there is no infirmity in the impugned order of the ld. Trial Court. In the judgment of the Hon'ble High Court of Delhi reported in the case of Asia Metal Corporation Vs. State & Anr. 130 (2006) DLT 545, the Hon'ble High Court while relying upon the ratio of the law laid down by the Hon'ble Apex Court in the case of Subramaniam Seturaman (2004) CCR 32 Volume IV had held that there is no question of discharge under Chapter XX of the Cr.P.C in so far as summons case which has been instituted upon a complaint is concerned; the issuance of summons for attendance marks the end of the pre summoning stage and the case then has to be dealt with under Chapter XX which deals with trial of summons cases by Magistrates; at this stage the Magistrate is not required to further apply his mind as to whether the case has to be proceeded with or not against 69 the accused and what is required under Section 251 of the Cr.P.C is that the substance of the accusation is to be stated and the accused is to be asked whether he pleads guilty or has any defence and it is also not necessary to frame a formal charge and none of the provisions of Chapter XX speak of any possibility of discharge. The Hon'ble High Court has further noted that the question of the discharge amounting to an acquittal is of no consequence because discharge itself is not permissible under the law and therefore the consideration of the interpretation of Section 258 of the Cr.P.C would also not be necessary.

The legal submissions i.e as to whether a complaint under Section 138 of the Negotiable Instruments Act would be maintainable in view of the order of the BIFR dated 30.7.03, has also been considered by the ld. Trial Court as is evident from the impugned order dated 01.12.07. The law on this subject is also very clear and the judgments relied upon by ld. counsel for the non applicant come to his aid. In the judgment of the Hon'ble High Court of Delhi reported in the case of Krystal Poly Fab Ltd & Ors Vs. Indo Rama Synthetics India Ltd 143 (2007) DLT 523, while detailing the order of BIFR in that case and which had permitted the company to rotate its current assets in the normal course of business had held that since the company was permitted to carry out its business transactions, there was no embargo on the company or its Director to deal with 71 the movable assets of the company or to deal with the funds lying to the credit of the company and as such the petitioners could not evade their liability in respect of cheques issued by them. The Hon'ble Court had distinguished the case of Kusum Ingots & Alloys VS. Pennar Peterson Securities Ltd 1 (2000) CCR 260 wherein the Hon'ble Apex Court had held that if order under Section 22 A of the SICA restrained the company from dealing with its assets, it is only then the company nor its directors are liable to be prosecuted under Section 138 of the Negotiable Instruments Act.

In the instant case the order of the BIFR dated 30.7.03 interalia states as under:

"The company/promoters are directed under Section 22 A of the Act not to dispose of any fixed or current assets of the company without the consent of the secured creditor and the BIFR. In case the company is running, the current assets can be drawn down to the extent required for day to day operations, proper accounts of which would be maintained and furnished to the leader of the consortium of banks which is extending working capital to the company."

This order of the BIFR clearly recites that in case the company is running, its current assets could be drawn down to the extent required for day to day operations subject to the condition that proper accounts can be maintained and furnished to the leader of consortium of banks which is extending the working capital and it was in 72 this context that this cheque dated 02.2.05 had been issued and as such the provisions of Section 22 of the SICA would not come to the aid of the petitioner. It is also not in dispute that a Memorandum of Understanding dated 12.12.05 had also been signed between the parties; there was thus no embargo on the company not to carry out its day to day business transactions and deal with its current assets/funds lying to the credit of the company; there was thus no impediment for instituting and proceeding with the criminal case on the allegations of an offence under Section 138 Negotiable Instruments Act.

In my view, in view of the above discussion, there is no infirmity in the impugned order which calls for no interference. Revision petition is without any merit. The same is dismissed.

Trial court record be sent back alongwith copy of this order.

Revision file be consigned to record room. Announced in the open court 06.5.08 (INDERMEET K. KOCHHAR) ADDL. SESSIONS JUDGE, NEW DELHI 73

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Delhi District Court

Rajender Pahwa vs Hi Tech Carbon on 6 May, 2008