Delhi District Court
M/S. Whitefields Overseas Ltd vs M/S Diat Agro Holding Pvt. Ltd on 7 July, 2022
IN THE COURT OF SH. SANJAY SHARMA-II : ADDL. SESSIONS JUDGE-03,
(CENTRAL): TIS HAZARI COURTS, DELHI
Criminal Revision No. 286/2022
CNR No.: DLCT01-008096-2022
1. M/s. Whitefields Overseas Ltd.
Through its: Managing Director
505, Pinnacle Business Tower
Shooting Range Road, Suraj Kund
Faridabad, Haryana-121 009
Reg. Office: F-7/10, Vasant Vihar
New Delhi-110057
2. Mr. Vijay Kumar Saluja (Age 85 years)
D-5/5, Vasant Vihar, New Delhi-110057
3. Mr. Sumeet Saluja (Age 45 years)
S/o Sh. Vijay Kumar Saluja
F-7/10, Vasant Vihar, New Delhi-110057
4. Smt. Rupa Saluja
M/s. Whitefields Overseas Ltd.
F-7/10, Vasant Vihar, New Delhi-110057
..... Petitioners
VERSUS
M/s DIAT Agro Holding Pvt. Ltd.
Through its Director: Mr. Badri Prasad Sultania
Regd. Office: 2633-36, Balaji Palace
Naya Bazar, Delhi-110006
..... Respondent
Date of Institution : 24.05.2022
Date of Arguments : 04.07.2022
Date of Judgment : 07.07.2022
JUDGMENT
Crl. Revision No. 286/2022
M/s. Whitefields Overseas Ltd. & Ors. vs. M/s. DIAT Agro Holding Pvt. Ltd. Page 1 of 11
1. The criminal revision petition under Section 397 of 'The Code of Criminal Procedure, 1973' (Hereinafter referred to as 'Cr.P.C.') is directed against order dated 28.01.2022 (In short 'the impugned order') arising from complaint case under Section 138 of 'The Negotiable Instruments Act, 1881' (In short 'NI Act') vide CC No. 2352/2021 titled as 'DIAT Agro Holding Pvt. Ltd. vs. Whitefields Overseas Ltd. & Ors.' whereby Ld. MM (NI Act) Digital Court-02, Central, Tis Hazari Courts, Delhi (In short 'the trial Court') summoned the petitioners.
2. The respondent (Hereinafter referred to as 'the complainant') instituted aforesaid complaint case under Section 138 NI Act against the petitioners on averments that the complainant supplied consignments of rice to the petitioner No. 1 w.e.f. 26.06.2020 to 03.10.2020 vide invoices. The petitioner No. 1 issued 11 cheques in the sum of Rs. 85,26,520.39/- drawn on 'Woori Bank, 1st Floor, A-Block, Salcon Platina Building, DLF, Phase-I, Sikanderpur, M.G. Road, Sector-28, Haryana-122 001' in favour of the complainant. On presentation, the said cheques returned unpaid. On being contacted, the petitioner No. 3 assured to make payment of cheque amount as well as balance amount alongwith interest. However, the petitioner No. 1 failed to make payment of cheque amount. The complainant sent demand notice dated 06.01.2021 to the petitioner No. 1. The petitioners denied their liability vide letters dated 04.01.2021 and 15.01.2021. The petitioners disputed supply as well as quality of rice.
Crl. Revision No. 286/2022 M/s. Whitefields Overseas Ltd. & Ors. vs. M/s. DIAT Agro Holding Pvt. Ltd. Page 2 of 113. The complainant replied the said letter vide reply dated 14.02.2021. Thereafter, the complainant instituted complaint case under Section 138 NI Act.
4. Vide impugned order, the trial Court summoned the petitioners, as under:
"The present case has been filed against 11 cheques, however, on perusal of complaint online, cheques no. i.e. 22671, 22673, 22674, 23603 are outdated and present case does not lie against these cheques and is limited to 7 other cheques against accused No. 1 is a company and accused No. 2, 3 and 4 are Directors of the company. The Court shall not proceed with the summons against remaining accused persons. Record of the file perused. All the statutory requirements under NI Act are complied with. The present complaint case is filed within limitation. After perusal of the entire record, this Court is of the considered opinion that prima facie case punishable u/s 138 of NI Act is made out against the accused. I take cognizance of the said offence. Arguments heard on the point of summoning. Following the law laid down in A.C. Narayanan vs. State of Maharashtra & Anr., (2014) 11 SCC 790, complaint, affidavit of evidence and documents considered. In view of complaint, documents produced and verification in the form of affidavit of evidence, there are sufficient grounds for proceeding further against the accused persons for offence punishable under Section 138 NI Act. Let summons be issued to the accused for being the drawer of the cheque on filing of PF/RC/AD/speed post as well as through all permissible modes returnable on 01.04.2022.Summons be issued to the accused No. 1, 2, 3 & 4
as per the address mentioned in the complaint. Service is directed to be effected on the physical address as well as virtual address of the accused No. 1, 2, 3 & 4."Crl. Revision No. 286/2022 M/s. Whitefields Overseas Ltd. & Ors. vs. M/s. DIAT Agro Holding Pvt. Ltd. Page 3 of 11
5. Feeling aggrieved with the impugned order, the petitioners have preferred the criminal revision petition on the following grounds:
(a) The complaint case under Section 138 NI Act is an arm-twisting exercise and there is no prima facie case against the petitioners;
(b) The complainant has also filed a case under NI Act against the petitioners in respect of the liability in question;
(c) The complainant has also filed a complaint case under Section 120B/406/420/424/468/471/504/506 IPC against the petitioners;
(d) The trial Court did not take note that cheque No. 22672 was also an outdated cheque;
(e) The complainant has already filed a complaint under Section 138 NI Act vide CC No. 3553/2021 against the petitioners on the same cause of action and the present case is a misuse of process of law;
(f) The impugned order is a cryptic order and was passed without application of judicial wisdom;
(g) There are business dispute between the complainant and the petitioners and Section 138 NI Act cannot be invoked;
(h) The cheques were issued before commencement of business relation and supply of rice;
(i) There was no business between the complainant and the petitioners when the cheques were presented for encashment;
(j) The complainant supplied inferior quality of rice to the petitioner No. 1 who is a ISO certified company and Government recognized two star export house;
(k) The dispute between the parties is civil in nature and there is no criminality;Crl. Revision No. 286/2022 M/s. Whitefields Overseas Ltd. & Ors. vs. M/s. DIAT Agro Holding Pvt. Ltd. Page 4 of 11
(l) The petitioner No. 2 is around 85 years old and he is not involved in day to day affairs of the petitioner No. 1;
(m) The petitioner No. 4 is wife of the petitioner No. 3 and she is not involved in day to day affairs of the petitioner No. 1;
(n) Cheque No. 22675 and 22676 were paid on 23.09.2020 and cheque No. 23603 was paid on 17.12.2020; and
(o) The petitioner No. 1 stopped encashment of the said cheques as the complainant failed to return the said cheques pursuant to notice dated 04.01.2021.
6. I have heard Ms. Prapti Singh, Advocate with Ms. Parthvi Ahuja, Advocate for the petitioners and Mr. R.K. Tarun, Advocate for the complainant and examined trial Court record.
7. Primarily, Ld. Counsel for the petitioners contended that the complainant has already instituted a complaint case under Section 138 NI Act on the basis of same invoices and therefore, the complainant cannot file the present complaint case under Section 138 NI Act on same cause of action. She contended that the said complaint case was filed on the same invoices and same liability. Secondly, she contended that the complainant supplied inferior quality of rice and thereby caused loss to the extent of 12 crores to the petitioners. Thirdly, she contended that the petitioner No. 2 and 4 are not involved in day to day business of the petitioner No. 1 and they cannot be made vicariously liable for dishonour of the said cheques.
Crl. Revision No. 286/2022 M/s. Whitefields Overseas Ltd. & Ors. vs. M/s. DIAT Agro Holding Pvt. Ltd. Page 5 of 118. Ld. Counsel for the complainant contended that CC No. 3553/2021 under Section 138 NI Act was in respect of cheques which are subject matter of the said case. He contended that the cheques issued for discharge of any liability when not paid after issuance of demand notice give rise to a cause of action to institute a case under Section 138 NI Act. He contended that filing of a complaint case under Section 120B/406/420/424/468/471/504/506 IPC cannot be a bar to institution of complaint case under Section 138 NI Act. He contended that the complainant may avail appropriate legal remedies available under law. He contended that issue of quality of rice cannot be gone into at the stage of summoning of the petitioners. He contended that such issue can only be decided after taking evidence during trial of the case. He contended that the petitioner No. 2 and 4 are actively involved in day to day business of the petitioner No. 1 and proceedings against them cannot be quashed.
9. Admittedly, the petitioner No. 3 is Managing Director of the petitioner No. 1. He is authorized signatory of the petitioner No. 1. The petitioner No. 2 and 4 are directors of the petitioner No. 1.
10. In SMS Pharmaceuticals Ltd. vs. Neeta Bhalla & Anr., (2005) 8 SCC 89, Hon'ble Supreme Court of India held as under:
"19. In view of the above discussion, our answers to the questions posed in the reference are as under:-Crl. Revision No. 286/2022 M/s. Whitefields Overseas Ltd. & Ors. vs. M/s. DIAT Agro Holding Pvt. Ltd. Page 6 of 11
"(a) It is necessary to specifically aver in a complaint under Section 141 that at the time the offence was committed, the person accused was in charge of, and responsible for the conduct of business of the company. This averment is an essential requirement of Section 141 and has to be made in a complaint.
Without this averment being made in a complaint, the requirements of Section 141 cannot be said to be satisfied.
(b) The answer to the question posed in sub-para (b) has to be in the negative. Merely being a director of a company is not sufficient to make the person liable under Section 141 of the Act. A director in a company cannot be deemed to be in charge of and responsible to the company for the conduct of its business. The requirement of Section 141 is that the person sought to be made liable should be in charge of and responsible for the conduct of the business of the company at the relevant time. This has to be averred as a fact as there is no deemed liability of a director in such cases.
(c) The answer to Question (c) has to be in the affirmative. The question notes that the managing director or joint managing director would be admittedly in charge of the company and responsible to the company for the conduct of its business. When that is so, holders of such positions in a company become liable under Section 141 of the Act. By virtue of the office they hold as managing director or joint managing director, these persons are in charge of and responsible for the conduct of business of the company. Therefore, they get covered under Section
141. So far as the signatory of a cheque which is dishonoured is concerned, he is clearly responsible for the incriminating act and will be covered under sub-section (2) of Section 141."
11. There must be averment that the person accused was in charge of, and was responsible to the company for the conduct of the business of the company, as well as the company. This is basic requirement under Section 141 NI Act.
Crl. Revision No. 286/2022 M/s. Whitefields Overseas Ltd. & Ors. vs. M/s. DIAT Agro Holding Pvt. Ltd. Page 7 of 1112. In the case at hand, the complainant has not averred that the petitioner No. 2 and 4 were in charge of, and responsible to the petitioner No. 1 for conduct of its business.
13. In that regard, relevant para of the complaint is as under:
"3. Accused No. 1 is a company registered under the Companies Act, 1956 which deals in sale, purchase, import and export of rice and other goods. Accused No. 3 i.e. Mr. Sumeet Saluja is the Managing Director of accused No. 1 company, and the complainant affirms that to the best of the complainant's knowledge, accused No. 3 is in charge and responsible for the day-to-day affairs, management and financial decision making of accused No. 1 company at the relevant time as well as at present and therefore have been impleaded in the present complaint. Accused No. 2 i.e. Mr. Vijay Kumar Saluja and accused No. 4 i.e. Mrs. Rupa Saluja are the promoters and directors of accused No. 1 company and therefore have been impleaded in the present complaint......"
14. On holistic reading of the complaint, it is evident that the petitioner No. 3 placed orders for consignments of rice. He made assurance for timely payment of invoiced amount. The complainant contacted him regarding payment of outstanding amount. The complainant sent demand notice to the petitioner No. 1 through the petitioner No. 3. The petitioner No. 2 and 4 were not in charge of, and responsible to the company for the conduct of its business. They are not vicariously liable for non- payment of the said cheques issued by the petitioner No. 3 towards discharge of liability of the petitioner No. 1. Summoning order qua the petitioner No. 2 and 4 deserves to be set-aside.
Crl. Revision No. 286/2022 M/s. Whitefields Overseas Ltd. & Ors. vs. M/s. DIAT Agro Holding Pvt. Ltd. Page 8 of 1115. As regards contention pertaining to supply of inferior quality of rice and consequent loss to the petitioner No. 1, it can be stated that such issue pertain to realm of evidence and they cannot be adjudicated at nascent stage of summoning.
16. As regards contention that the complaint case is an abuse of process of law as the complainant filed a complaint case under Section 120B/406/420/424/468/471/504/ 506 IPC, it can be stated that the complainant may avail legal remedies available under law and for that reason, the complaint case under Section 138 NI Act cannot be considered as a misuse of process of law.
17. As regards contention that the complainant has already filed a complaint case under Section 138 NI Act, vide CC No. 3553/2021, on same invoices in respect of same liability against the petitioners and the present complaint under Section 138 NI Act is not maintainable, it can be stated that cause of action for filing of a complaint case under Section 138 NI Act arises when cheque amount is not paid within 15 days from the date of receipt of demand notice. In MSR Leathers vs. S. Palaniappan and Another, (2013) 1 SCC 177, Hon'ble Supreme Court of India held, as under:
"14. A careful reading of the above provisions makes it manifest that a complaint under Section 138 can be filed only after cause of action to do so has accrued in terms of clause (c) of the proviso to Section 138 which, as noticed earlier, happens no sooner than when the drawer of the cheque fails to make the Crl. Revision No. 286/2022 M/s. Whitefields Overseas Ltd. & Ors. vs. M/s. DIAT Agro Holding Pvt. Ltd. Page 9 of 11 payment of the cheque amount to the payee or the holder of the cheque within 15 days of the receipt of the notice required to be sent in terms of clause (b) of the proviso to Section 138 of the Act."
18. In the present case, the complainant filed the complaint case after non-payment of cheque amount within 15 days from the date of receipt of demand notice. Therefore, the complainant had a valid cause of action to institute the complaint case in respect of 7 cheques, as noted in the impugned order. Accordingly, criminal revision petition filed by the petitioners is partly allowed. Criminal revision petition in respect of the petitioner No. 1 and 3 is dismissed. Criminal revision petition in respect of the petitioner No. 2 and 4 is allowed and summoning order against them is set-aside. A copy of judgment alongwith trial Court record be sent back. The revision file be consigned to record room.
Digitally signed by SANJAY SANJAY SHARMA
SHARMA Date:
2022.07.08
15:31:52 +0530
Announced in the open Court SANJAY SHARMA-II
on this 07th July, 2022 Addl. Sessions Judge-03 (Central)
Tis Hazari Courts, Delhi
Crl. Revision No. 286/2022
M/s. Whitefields Overseas Ltd. & Ors. vs. M/s. DIAT Agro Holding Pvt. Ltd. Page 10 of 11
M/s. Whitefields Overseas Ltd. & Ors. vs. M/s. DIAT Agro Holding Pvt. Ltd.
CNR No.: DLCT010080962022 Crl. Revision No. 286/2022 07.07.2022 Present : Ms. Prapti Singh, Advocate with Ms. Parthvi Ahuja, Advocate for the petitioners.
Mr. Abhay Solanki, Proxy Advocate (Mob. No. 9811225854) for Mr. R.K. Tarun, Advocate for the respondent.
Vide separate judgment, criminal revision petition filed by the petitioners is partly allowed. Criminal revision petition in respect of the petitioner No. 1 and 3 is dismissed. Criminal revision petition in respect of the petitioner No. 2 and 4 is allowed and summoning order against them is setaside. The revision file be consigned to record room. Digitally signed by SANJAY SANJAY SHARMA SHARMA Date:
2022.07.08 15:32:10 +0530 Sanjay SharmaII ASJ03, Central District, Tis Hazari Courts, Delhi NK 07.07.2022 Crl. Revision No. 286/2022 M/s. Whitefields Overseas Ltd. & Ors. vs. M/s. DIAT Agro Holding Pvt. Ltd. Page 11 of 11