Uday Pratap Singh vs The State Trading Corporation Of India ... on 20 January, 2014

[Cites 26, Cited by 0]

Delhi District Court

Uday Pratap Singh vs The State Trading Corporation Of India ... on 20 January, 2014

IN THE COURT OF SH. DHARMESH SHARMA,
ASJ01, NEW DELHI DISTRICT, PATIALA HOUSE COURTS,
NEW DELHI.

In Re:
CR No. 175/13

Uday Pratap Singh
1st Floor, Murdoch House,
North Shore Road, Ramsay, Isle of Man
IM 3DY. ..... Petitioner

Versus

The State Trading Corporation of India Ltd.
Having registered office at:
Jawahar Vyapar Bhawan
Tolstoy Marg, New Delhi
Through Authorised Representative
Mr. Sameer Kapoor, GM (Marketing) ..... Respondent

In Re:
CR No. 174/13
Uday Pratap Singh
M/s Global Steel Phillippines (SPVAMC) Inc. GSPI
Registered office Suarexlligan City 9200
Phillippines
..... Petitioner

Versus

M/s Global Steel Philippines Inc. v. State Trading Corp India Page 1 of 27
2

In Re:

CR No. 173/13
Uday Pratap Singh
1st Floor, Murdoch House,
North Shore Road, Ramsay, Isle of Man
IM 3DY. ..... Petitioner

Versus

In Re:

CR No. 106/13
Pankaj Kumar Aggarwal
1st Floor, Flat No. 11,
Building No. 31,
The Gaedens, Jebel All Gardens
Behind IBN Batuta Mall,
Dubai, UAE ..... Petitioner

Versus

The State Trading Corporation of India Ltd.
Having registered office at:
Jawahar Vyapar Bhawan
Tolstoy Marg, New Delhi ..... Respondent

M/s Global Steel Philippines Inc. v. State Trading Corp India Page 1 of 27
3

In Re:

CR No. 103/13
Vinod Mittal
43, Grosvenor Street,
London, W1K 3 HL ..... Petitioner

Versus

The State Trading Corporation of India Ltd.
Having registered office at:
Jawahar Vyapar Bhawan
Tolstoy Marg, New Delhi ..... Respondent

In Re:

CR No. 181/13
M/s Global Steel Phillippines (SPVAMC) Inc. GSPI
Registered office Suarexlligan City 9200
Phillippines .... Petitioner

Versus

In Re:
CR No. 182/13
M/s Global Steel Phillippines (SPVAMC) Inc. GSPI
Registered office Suarexlligan City 9200
Phillippines .... Petitioner

M/s Global Steel Philippines Inc. v. State Trading Corp India Page 1 of 27
4

Versus

APPEARANCES

Present : Mr. Vijay Aggarwal, Ld. Counsel for the petitioners/
revisionists.
Mr. Ramesh Gupta, Ld. Senior Counsel along with Mr. Ayush,
Ld. counsel for the respondents.

20.01.2014
ORDER

1. This common order shall decide the above noted seven Criminal Revision petitions filed u/s 397 of Cr.P.C. between the same parties whereby the petitioners/ revisionists are assailing the impugned order dated 19.01.2013 passed by the Court of Sh. Arul Verma, Ld. MM, Patiala House Courts, New Delhi, vide which on taking of cognizance u/s 138 of the Negotiable Instruments Act (hereinafter referred as N. I. Act) summons have been ordered to be issued against them to face the trial.

2. It may be stated that the seven Criminal Revision petitions have been segregated on request of Shri Vijay Aggarwal Ld. Counsel for the petitioners since he stated at the Bar that M/s Global Steel Philippines Inc. v. State Trading Corp India Page 1 of 27 5 these revisions raise common question of law and facts and can be conveniently disposed of together. For the purpose of disposal, the CR No. 175/13 arising out of CC No. 32/1 is taken up as the main test case and the decision rendered therein shall apply mutatis mutandi for disposal of other six revision petitions.

FACTUAL BACKGROUND

3. The complainant is an Indian Public Sector Company and has filed the complaint through Sh. Sameer Kapoor, General Manager (Marketing) in terms of authorization vide Resolution of Board of Directors dated 23.08.1989. Accused no. 2 M/s Global Steel Phillippines (SPVAMC) Inc. (GSPI) is stated to be a limited company incorporated in Phillippines that was earlier known as M/s Global Steel International Inc. (GSWII); and accused no. 1 M/s Global Steel Holdings Ltd. (GSHL) is a limited liability company incorporated under the laws of Isle of Man( Channel Isle Land)and accused no. 1 company M/s GSHL is stated to be the holding company of accused no. 2 GSPI providing investment, management, guidance, corporate planning and structural advices to the its Group Companies. Accused no. 3 Pramod Mittal is stated to be the Chairman of both accused no. 1 and 2 companies; accused no. 4 M. L. Mittal, M/s Global Steel Philippines Inc. v. State Trading Corp India Page 1 of 27 6 accused no. 5 Ashok Kumar Agarwal, accused no. 6 Samuel Onyeabor Nwabuokel, accused no. 9 Rajib Das are stated to be Directors of accused no. 1 Company GSHL while accused no. 8 Udai Pratap Singh and accused No.11 Pankaj Kumar Aggarwal are stated to be authorized signatory of accused no. 2 GSPI. Accused no. 10 Debashish Ganguly is stated to be Company Secretary of accused no. 1 GSHL and accused no. 7 Vinod Mittal is stated to be the Director of accused no. 2 GSPI . The case of the complainant company is that accused no. 3 to 11 are Principal officers of accused no. 1 and 2 companies are in charge as well as responsible for the conduct of its business and for its day to day affairs and management.

4. Suffice to state that the complainant and accused no. 1 and 2 companies entered into a Tripartite "Purchase Sale Agreement" dated 04.04.2005 whereby complainant agreed to arrangement for supply of Steel Slabs/ hot rolled coils or and other items required as raw materials in steel industry from Indian and/or from third countries to Phillippines apart from supply of finished goods like cold rolled coils etc. ; that accused no. 1 stood as guarantor for accused no. 2 and in terms of agreement complainant was to charge 1.25% net of all expenses whatsoever of L/C value as markup for the supplies. It is the case M/s Global Steel Philippines Inc. v. State Trading Corp India Page 1 of 27 7 of the complainant company that in the course of execution of the bilateral agreement a substantial amount became due to the complainant from accused no. 2 company (GSPI) and lot of correspondence ensued between the complainant and the accused persons from one hand to the other; that at the instance of the complainant conciliation proceedings were initiated in terms of Arbitration and Conciliation Act 1996 and it is the case of the complainant that finally a settlement agreement dated 15.11.2011 was arrived at with the knowledge as well as with active consent of its Principal officers whereby it was agreed that accused shall pay USD 38 million within 90 days from the date of agreement and the remaining balance of USD 347,737,209 within 180 days of the agreement; that pursuant to the said settlement, the complainant paid the first installment of USD 38.47 million and for remaining balance of USD 347.27 million payable on or before 13.05.2012, they issued 06 post dated cheques but with some ulterior motives closed their accounts in collusion with its banker.

5. It is the case of the complainant party that accused no. 3 Pramod Mittal vide letter dated 08.05.2012 requested the complainant company for extension of 180 days for making payment of second installment of USD 347.27 million and M/s Global Steel Philippines Inc. v. State Trading Corp India Page 1 of 27 8 during negotiations a reference was made for Second Conciliation in terms of Arbitration and Conciliation Act 1996 and the same Bench of Conciliators brought about a settlement agreement dated 17.05.2012 between the complainant and the accused no. 1 and 2 companies again with the knowledge of all Principal officers/ accused persons apart from their consent and in terms of agreement dated 17.05.2012 accused persons undertook to pay USD 100 million within 90 days from 13.05.2012. Further, undertaking was given by the accused persons to pay remaining balance of USD 271,693,467 on or before 180 days from 13.05.2012.

6. The grievance of the complainant company is that cheque no. 110130 dated 10.11.2012 for USD 271,693,467.21 drawn on Barclays Mayfair, London was issued and signed by accused no. 3 from the account of accused no. 1 company M/s GSHL towards discharge of the liabilities of accused no. 2 company but the same on presentation was dishonored with the remarks "Payment Stopped" as informed to the complainant by its banker vis. Bank of Baroda, International Business Branch at Parliament Street, New Delhi on 23.11.2012 by email; that the complainant received Advice of Debit for an unpaid International Cheque dated 26.11.2012 from the Barclays Bank, M/s Global Steel Philippines Inc. v. State Trading Corp India Page 1 of 27 9 as also advice of unpaid cheque collection dated 28.11.2012 from J. P. Morgan Chase Bank and they served demand notice upon the accused persons on 06.12.2012 for making payment of the amount under dishonored cheque that went uncomplied with and thus was filed complaint u/s 138 of the N. I. Act.

7. In presummoning evidence, Mr. Sameer Kapoor, was examined who tendered his evidence by way of affidavit Ex. CW1/A relying therein upon documents which are Ex. CW 1/1 to Ex. CW 1/77 besides documents that are marked A & E for identification, and the complaint was marked EX CW1/X Needless to state finding a prima facie case Ld. MM vide impugned order dated 19.01.2013 took cognizance u/s 138 of the N. I. Act and directed to issue process/ summons against the accused persons.

8. Crl. Revision No. 175/13, 173/13, 174/13 have been preferred by accused Udai Pratap Singh while Criminal Revision no. 06/13 has been preferred by accused Pankaj Kumar Aggarwal ; Crl. No. 181/13 and 182/13 have been preferred by accused no. 1 company M/s Global Steel Holdings Ltd. (GSHL) while Criminal Revision no. 103/13 has been preferred by accused Vinod Mittal.

M/s Global Steel Philippines Inc. v. State Trading Corp India Page 1 of 27 10

9. At the cost of repetition, the grounds for challenging the summoning order are ditto in the seven Criminal Revision petitions. The impugned order is assailed submitting that the same is per se illegal and has been passed in total disregard to settled principles of law and established procedure inter alia on the following grounds:

i). Petitioner is not the drawer of the cheque and he cannot be prosecuted. The cheque was issued from the account of accused no. 1 company M/s GSHL and, therefore, accused no. 2 company M/s GSPI besides accused no. 8 and 11 authorized signatories cannot be prosecuted; and

ii). That no vicarious liability can be attributed or fastened upon any of the petitioners when the cheque in question has been issued from the account of accused no. 1 company GSHL; and

iii). Ld. MM did not conduct mandatory inquiry u/s 202 of Cr.P.C before issuing of process as the petitioners are resident of a place beyond the jurisdiction of this Court; and

iv) That the impugned order has been passed in a mechanical manner in as much as all the accused persons have been summoned en masse without considering the role of each and everyone; and

v). Presummoning evidence is illegal as the same is in contravention of Section 65B in regard to electronic evidence has not be met in the case;

vi) That all the witnesses have not been examined as indicated in the list of witnesses before issuing summoning order.

10. Sh. Vijay Aggarwal, Ld. Counsel for the petitioners made a brief submission to the effect reiterating that the pleadings that since the cheques has been issued on account of M/s Global Steel Philippines Inc. v. State Trading Corp India Page 1 of 27 11 accused no. 1 GSHL, accused no. 2 GSPI and accused no. 8 Udai Pratap, accused no. 11 Pankaj Kumar Aggarwal have nothing to do with the present case and they have been wrongly summoned. Mr. Aggarwal, Ld. Counsel referring to the provision of Section 138 and Section 141 of the N. I. Act urged that the petitioners are not the 'drawer' of the cheques and, therefore, sought setting aside of the impugned order against them relying on decisions in Geeta Srivastava v. Bhanu Sharma 2003 CrI. L. J. 801 Delhi High Court; Pratap Singh Yadav & Anr. v. Atal Behari Pandey 2003 Crl. L. J. 705; Dulichand Laxminarayan v. Commr. Of Income Tax Nagpur, 1956 SC 354 (S) AIR V. 43C. 62 ; Raghu Lukshminarayanan v. M/s Fine Tubes 2007 (2) JCC (NI) 137; Gita Berry v. Genesis Educational Foundation, 2008 (2) JCC (NI) 153; Girish Sexena v. Praveen Kumar & Ors., 141 (2007) Delhi Law times 8, Delhi High Court; Harinder Dhingra v. State & Anr 137 (2007) Delhi Law Times 231; Smt. Kamana Gupta v. N. C. T. of Delhi & Anr. 2001 (2) JCC (Delhi) 61; Sanjay Banaik v. State & Anr. 2008 (4) JCC (NI) 371; Aneeta Hadav v. Godfather Travels & Tours Pvt. Ltd Crl. Appeal No. 838 of 2008 arising out of SLP Crl. no. 2094 of 2007; P. K. Sharma & Ors v. State & Anr. 2009 (2) JCC (NI) 127; Sanjay Kumar Aggarwal v. State of Jharkhand & Anr., Crl. MP No. 747 of 2005 of High M/s Global Steel Philippines Inc. v. State Trading Corp India Page 1 of 27 12 Court of Jharkhand at Ranchi; Jugesh Sehgal v. Shamsher Singh Gogi 2009 (3) JCC (NI) 210; M/s Gujrat Oleo Chem.Ltd. & Ors. v. State & Anr., (2010) 1 JCC (NI) 84; P. J. Agro Tech Limited & Ors.. v. Water Base Limited Crl. Appeal no. 1357 of 2010 arising out of Special Leave Petition Crl. No. 1361 of 2007 of Supreme Court of India; M/s Rushi International v. The State (NCT of Delhi) & Ors Crl. M. N. No. 2257/2007 by High Court of Delhi ; Mrs. Aparna A. Shah v. Ms Sheth Developers P. Ltd. & Anr. Crl. Appeal no. 813/2013 arising out of SLP Crl. no. 9794 of 2010 of Supreme Court of India.

11. Per contra, Mr. Ramesh Gupta, Ld. Senior Counsel for the respondent/ STC took me though voluminous documents on the record and urged that the agreement in the two conciliation proceedings had been arrived at with the knowledge and consent of all the directors and ld senior counsel strenuously urged that the impugned cheque had been issued in discharge of admitted liability. To canvass the point that accused no. 2 is also liable to be prosecuted, Ld. Senior counsel relied on decisions in Anil Sachar and Anr. v. Shree Nath Spinners Pvt. Ltd., (2011) 13 SCC 148 at page 153

12. I have given my thoughtful consideration to the submissions made by Ld. Counsel for the parties. I have also M/s Global Steel Philippines Inc. v. State Trading Corp India Page 1 of 27 13 perused the relevant record of the case including the Trial Court Record.

13. At the outset, prima facie there is no merit in the plea of Mr. Aggarwal ld counsel for the petitioners/revisionists that they have been made party to the proceedings for being directors of the company. Section 139 and 141 of the NI Act provide as under:

139. Presumption in favour of holder It shall be presumed, unless the contrary is proved, that the holder of a cheque received the cheque of the nature referred to in Section 138 for discharge, in whole or in part, of any debt or other liability.

141. Offences by companies - (1) If the person committing an offene under section 138 is a company, every person who, at the time the offence was committed, was in charge of, and was responsible to the company for the conduct of the business of the company, as well as the company, shall be deemed to be guilty of the offence and shall be liable to be proceeded against and punished accordingly;

Provided that nothing contained in this subsection shall render any person liable to punishment if he proves that the offence was committed without his knowledge, or that he had exercised all due diligence to prevent the commission of such offence:

Provided further that where a person is nominated as a Director of a company by virtue of his holding any office or employment in the Central Government or State Government or a financial corporation owned or controlled by the Central Government or the State Government as the case may be, he shall not be liable for prosecution under this Chapter.

(2) Notwithstanding anything contained in subsection (1), where any offence under this act has been committed by a company and it is proved that attributable to, any neglect on the part of, any director, manager, secretary or other officer shall also be deemed to be guilty of that offene and shall be liable to be proceeded against and punished accordingly.

Explanation: For the purposes of this Section

(a) "company" means any body corporate and includes a firm or other association of individuals; and

(b) "director", in relation to a firm, means a partner in the firm.

M/s Global Steel Philippines Inc. v. State Trading Corp India Page 1 of 27 14

14. In the case of S.M.S. Pharmaceuticals Ltd. v. Neeta Bhalla , (2005) 8 SCC 89, an issue was framed whether a director of a company would be deemed to be in charge of, and responsible to, the company for the conduct of the business of the company and therefore, deemed to be guilty of the offence unless he proves to the contrary? Although the issue was answered in the negative, it would be significant to read what was observed by their lordships that:

..................What is required is that the persons who are sought to be made criminally liable under Section 141 should be, at the time the offence was committed, in charge of and responsible to the company for the conduct of the business of the company. Every person connected with the company shall not fall within the ambit of the provision. It is only those persons who were in charge of and responsible for the conduct of business of the company at the time of commission of an offence, who will be liable for criminal action. It follows from this that if a director of a company who was not in charge of and was not responsible for the conduct of the business of the company at the relevant time, will not be liable under the provision. The liability arises from being in charge of and responsible for the conduct of business of the company at the relevant time when the offence was committed and not on the basis of merely holding a designation or office in a company. Conversely, a person not holding any office or designation in a company may be liable if he satisfies the main requirement of being in charge of and responsible for the conduct of business of a company at the relevant time. Liability depends on the role one plays in the affairs of a company and not on designation or status. If being a director or manager or secretary was enough to cast criminal liability, the section would have said so. Instead of "every person" the section would have said "every director, manager or secretary in a company is liable"..., etc. The legislature is aware that it is a case of criminal liability which means serious consequences so far as the person sought to be made liable is concerned. Therefore, only persons who can be said to be connected with the commission of a crime at the relevant time have been subjected to action." (para 10).

15. It was observed in subsequent para that section 141(2) of the NI Act operates when in a trial it is proved that "the M/s Global Steel Philippines Inc. v. State Trading Corp India Page 1 of 27 15 offence has been committed with the consent or connivance or is attributable to neglect on the part of any of the holders of these offices in a company" and "such persons are to be held liable. Provision has been made for directors, managers, secretaries and other officers of a company to cover them in cases of their proved involvement." It was observed that the conclusion is inevitable that the liability arises on account of conduct, act or omission on the part of a person and not merely on account of holding an office or a position in a company and therefore, in order to bring a case within Section 141 of the Act the complaint must disclose the necessary facts which make a person liable.

16. The Apex Court cited with approval the observations in an earlier decision titled Monaben Ketanbhai Shah v. State of Gujarat [(2004) 7 SCC 15 : 2004 SCC (Cri) 1857, where in it was observed that 'If the substance of the allegations made in the complaint fulfil the requirements of Section 141, the complaint has to proceed and is required to be tried with; and that it is also true that in construing a complaint a hyper technical approach should not be adopted so as to quash the same and that the laudable object of preventing bouncing of cheques and sustaining the credibility of commercial transactions resulting in M/s Global Steel Philippines Inc. v. State Trading Corp India Page 1 of 27 16 enactment of Sections 138 and 141 has to be borne in mind and it was observed that "these provisions create a statutory presumption of dishonesty, exposing a person to criminal liability if payment is not made within the statutory period even after issue of notice".

17. To sum up, section 141 of the NI Act makes a departure from the rule in criminal law against vicarious liability and a clear case should be spelled out in the complaint against the person sought to be made liable. Their lordships of the Apex Court came to interpret the said ratio further in the subsequent case of N. Rangachari v. BSNL , (2007) 5 SCC 108, where their lordships discussed the practical aspects of business and commercial transactions entered into with companies. It was observed: "A person normally having business or commercial dealings with a company, would satisfy himself about its creditworthiness and reliability by looking at its promoters and Board of Directors and the nature and extent of its business and its memorandum or articles of association. Other than that, he may not be aware of the arrangements within the company in regard to its management, daily routine, etc. Therefore, when a cheque issued to him by the company is dishonoured, he is expected only to be aware generally of who are in charge of the affairs of the company. It is not reasonable to expect him to know whether the person who signed the cheque was instructed to do so or whether he has been deprived of his authority to do so when he actually signed the cheque. Those are matters peculiarly within the knowledge of the company and those in charge of it. So, all that a payee of a cheque that is dishonoured can be expected to allege is that the persons named in the complaint are in charge of its affairs. The Directors are prima facie in that position." (para ) M/s Global Steel Philippines Inc. v. State Trading Corp India Page 1 of 27 17

18. Having discussed such practical aspects, on matter procedure and proof, it was observed as under: ".............In fact, an advertence to Sections 138 and 141 of the Negotiable Instruments Act shows that on the other elements of an offence under Section 138 being satisfied, the burden is on the Board of Directors or the officers in charge of the affairs of the company to show that they are not liable to be convicted. Any restriction on their power or existence of any special circumstance that makes them not liable is something that is peculiarly within their knowledge and it is for them to establish at the trial such a restriction or to show that at the relevant time they were not in charge of the affairs of the Company. Reading the complaint as a whole, we are satisfied that it is a case where the contentions sought to be raised by the appellant can only be dealt with after the commencement of the trial.

19. To sum up, the decision referred above also lay down that the directors or others officers can show during the trial that they were not in charge of, and responsible for the conduct of the business of the company due to lack of any powers or restrictions or that they were only concerned with policy matters of the company, so and so forth.

20. Coming to the instant case, perusal of the Trial Court Record prima facie brings out that the Tripartite Agreement labelled as "Purchase and Sale agreement" dated 04.04.2005 had been executed involving both accused no. 1 company GSHL and accused no. 2 company GSPI. At the cost of repetition, the case of the complainant company as exhaustively detailed in the pleading is that accused persons were in the know of things all M/s Global Steel Philippines Inc. v. State Trading Corp India Page 1 of 27 18 along and they also participated in the Arbitration and Conciliation proceedings. In this regard, complainant has relied upon extract of minutes of the proceedings of the meeting of the Board of Directors of accused no. 1 GSHL dated 10.10.2011 which is marked 'D' whereby accused no. 3 Pramod Mittal, accused no. 8 Udai Pratap Singh and accused no. 11 Pankaj Kumar Aggarwal were authorized to attend the arbitration proceedings and to do all such acts, deeds and things necessary in connection with, or incidental thereto including signing, submission of documents and papers representing GSHL etc.

21. In pursuance of the said Resolution, certificates were issued in favour of the accused no. 7 Udai Pratap and accused no. 11 Pankaj Kumar Aggarwal which documents are also marked 'D' & 'E' respectively. It is then also prima facie bought out that both accused no. 1 GSHL and accused no. 2 GSPI companies were parties and signatories to the agreement / settlement arrived at u/s 73 of the Indian Arbitration & Conciliation Act on 15.11.2011 Ex. CW 1/ 2. Similarly, the subsequent Settlement Agreement arrived at u/s 73 of the Indian Arbitration Act on 17.05.2012 Ex. CW 1 /3 was executed by both the accused companies signed by accused no. 3 Pramod Mittal, in the capacity of Chairman of both the accused M/s Global Steel Philippines Inc. v. State Trading Corp India Page 1 of 27 19 companies.

22. The sum result of the above discussion is that plea by Mr. Vijay Aggarwal, Ld. Counsel that besides accused no. 2 GSPI, accused no. 8 Udai Pratap Singh and accused no. 11 Pankaj Kumar Aggarwal have been wrongly summoned, cannot be sustained. The Chairman and the Directors in both the accused company were common which were sister companies. The very fact that representative of both companies had participated in the conciliation proceedings demonstrate that there was a clear understanding of assumption of joint liabilities in respect of the outstanding dues in favour of the complainant company. Indeed a limited company is a separate legal entity and its directors are different legal persons, in the light of Section 139 of the Act and the understanding which have been arrived amongst the complainant and the concerned officials of both the accused companies, it can be safely concluded that cheques that were signed by accused no. 3 Pramod Mittal from the account of accused no. 1 GSHL had been issued in discharge of a debt or liability which had been incurred by accused no. 2 GSPI. In the case of Anil Sachar v. Shree Nath Spinners (P) Ltd.(Supra) relied upon by the ld senior counsel it was observed that: M/s Global Steel Philippines Inc. v. State Trading Corp India Page 1 of 27 20

20. We may also refer to the judgment delivered by this Court in ICDS Ltd. [(2002) 6 SCC 426 : 2002 SCC (Cri) 1342] In the said judgment this Court has referred to the nature of liability which is incurred by the one who is a drawer of the cheque. If the cheque is given towards any liability or debt which might have been incurred even by someone else, the person who is the drawer of the cheque can be made liable under Section 138 of the Act. The relevant observation made in the aforestated judgment is as under:

"The words 'any cheque' and 'other liability' occurring in Section 138 are the two key expressions which stand as clarifying the legislative intent so as to bring the factual context within the ambit of the provisions of the statute. These expressions leave no manner of doubt that for whatever reason it may be, the liability under Section 138 cannot be avoided in the event the cheque stands returned by the banker unpaid. Any contrainterpretation would defeat the intent of the legislature. The High Court got carried away by the issue of guarantee and guarantor's liability and thus has overlooked the true intent and purport of Section 138 of the Act.

(SCC p. 426 eg)***

10. The language, however, has been rather specific as regards the intent of the legislature. The commencement of the section stands with the words 'Where any cheque'. The abovenoted three words are of extreme significance, in particular, by reason of the user of the word 'any'--the first three words suggest that in fact for whatever reason if a cheque is drawn on an account maintained by him with a banker in favour of another person for the discharge of any debt or other liability, the highlighted words if read with the first three words at the commencement of Section 138, leave no manner of doubt that for whatever reason it may be, the liability under this provision cannot be avoided in the event the same stands returned by the banker unpaid. The legislature has been careful enough to record not only discharge in whole or in part of any debt but the same includes other liability as well. This aspect of the matter has not been appreciated by the High Court, neither been dealt with or even referred to in the impugned judgment." (SCC pp.

42930, para 10) (emphasis in original)

23. Before parting with this revision petition, I may point out that the case law relied upon by Mr. Vijay Aggarwal, Ld. Counsel for the petitioners/ revisionists have no bearing on the matters in issue. It is well settled that no proposition of law enunciated by the Superior Courts can be read divorced from the contextual facts and circumstances of the case before it. The M/s Global Steel Philippines Inc. v. State Trading Corp India Page 1 of 27 21 case of Geeta Srivasata (Supra) is a distinguishable as it was a case where the primarily liability was that of main accused husband who was drawer of the cheque and it was held that his wife cannot be saddled with any liability merely for accompanying her husband at the time of issuance of cheque.

24. The case of Gita Berry (Supra) was one where the cheque had been drawn and issued by the husband of the petitioner and wife was sought to be made liable for being a joint account holder with her husband. In the absence of any specific averment that petitioner was herself involved in the issuance of cheque that got dishonored, the case against the petitioner wife was quashed.

25. Similarly, Girish Saxena (Supra) was a case where cheque was issued by the drawer in the capacity of sole proprietor of a firm that later converted itself into the partnership firm and the case was quashed against the summoning of the other partners of the firm. Smt. Kamana Gupta (Supra) was a case where drawer had issued cheque in his individual capacity and the case against the company was quashed since the cheque had not been issued on behalf of company.

M/s Global Steel Philippines Inc. v. State Trading Corp India Page 1 of 27 22

26. During the course of arguments, Mr. Aggarwal, Ld. Counsel for the petitioners placed much emphasis on the decision in the case of Gujrat Oleo Chem. Ltd. & Ors. (Supra). I am afraid to my mind, the ratio propounded in that case is distinguishable in as much as it was a case where signatory of the cheque had drawn it in his individual capacity from an individual account and in the said scenario it was held that no vicarious responsibility can be fastened on the company and its Directors and, therefore, the case against them was quashed.

27. The ratio in the case of P. J. Agro Tech Ltd. & Ors.

(Supra) is also respectfully submitted distinguishable as it was a case where the appellant company had sold its business to the complainant company further assigning its legally recoverable dues from its customers to the complainant and in order to facilitate the complainant company to recover outstanding dues from its customers, one of its General Manager had been authorized to collect bills from the customers and deliver the recoveries to the complainant company. In the said factual background it was held that appellant company cannot be fastened liability in regard to cheque that had been issued by the General Manager in favour of the complainant company. M/s Global Steel Philippines Inc. v. State Trading Corp India Page 1 of 27 23

DECISION

28. In the instant case, Sameer Kapoor, Authorized Representative of the complainant company in his affidavit Ex. CW 1/A prima facie has made an averment on oath that all requests and remainders from the complainant company for full and final payments of legal dues fell on the deaf ears of accused companies and accused no. 8 & 11 who are Incharge and responsible to the respondent / accused company for the conduct of its affairs. It is specifically averred that the transactions in question had always been done to the knowledge of respondents/ accused persons who during the relevant time have known the status of their financial strength and status of their bank accounts and after issuance of cheques closed the bank account and after second settlement issued the impugned cheque afresh and called upon the complainant company to present the cheque for encashment despite knowing that there was no sufficient balance in their account. It is pertinent to mention that there is no denying the fact that legal notice dated 06.12.2012 were sent and served individually upon each of the petitioners. None of the accused persons cared to respond to put forth the point that anyone out of them is/was not in charge or responsible for the conduct of its business. M/s Global Steel Philippines Inc. v. State Trading Corp India Page 1 of 27 24

29. Before parting with this order, I may hasten to add that the plea that impugned order dated 19.01.2013 passed by the Ld. MM does not indicate reasons for summoning does not cut much ice. On perusal of the Trial Court record, such reasons can very well be culled out apart from the case of the petitioners/ accused persons that have put across in the revision so far. Ld MM was not enjoined to pass a detailed reasoned order at the stage of taking cognizance for which reference can be made to decision in Bhushan Kumar v. State(GNCTD), (2012) 5 SCC 424 and Ld. MM committed no illegality, impropriety or wrong in finding a prima facie case against the petitioners/accused persons based on material on record.

30. In the said view of the matter, I find no merit in the present revision petition. The same is hereby dismissed. The impugned order passed by the Ld. MM whereby the petitioners/ revisionists have been summoned is hereby upheld. The petitioners/ revisionists/ accused persons are directed to appear before the Ld. Trial Court on 28.02.2014 the date already fixed for further proceeding/ trial as per law.

31. A copy of this order be kept in CR No. 175/13 arising out of CC No. 32/1 and its signed copies be placed in other six criminal revisions.

M/s Global Steel Philippines Inc. v. State Trading Corp India Page 1 of 27 25

32. The Trial Court Record be sent back along with a copy of this order to the court concerned.

33. Revision files be consigned to Record Room.





ANNOUNCED IN THE OPEN COURT                                           (DHARMESH SHARMA)
TODAY  i.e 20.01.2014                                               ASJ01/PHC/NEW DELHI
                                                                                 20.01.2014
...




M/s Global Steel Philippines Inc. v. State Trading Corp India                        Page 1 of 27
                                                 26


In Re:
CR No. 175/13
Uday Pratap Singh               Versus  The State Trading Corporation of India Ltd.

CR No. 174/13
Uday Pratap Singh               Versus  The State Trading Corporation of India Ltd. 

CR No. 173/13
Uday Pratap Singh               Versus The State Trading Corporation of India Ltd.

CR No. 106/13

Pankaj Kumar Aggarwal Versus The State Trading Corporation of India Ltd. CR No. 103/13 Vinod MittalVersus The State Trading Corporation of India Ltd. CR No. 181/13 M/s Global Steel Phillippines (SPVAMC) Inc. GSPI Versus The State Trading Corporation of India Ltd.

CR No. 182/13 M/s Global Steel Phillippines (SPVAMC) Inc. GSPI Versus The State Trading Corporation of India Ltd.

20.01.2014 APPEARANCES Present : Mr. Vijay Aggarwal, Ld. Counsel for the petitioners/ revisionists.

Mr. Ramesh Gupta, Ld. Senior Counsel along with Mr. Ayush, Ld. counsel for the respondents.

Vide separate order of even date, I find no merit in the present revision petition. The same is hereby dismissed. The impugned order passed by the Ld. MM whereby the petitioners/ revisionists have been summoned is hereby upheld. The petitioners/ revisionists/ accused persons are directed to appear before the Ld. Trial Court on 28.02.2014 the date already fixed for further proceeding/ trial as per law.

A copy of this order be kept in CR No. 175/13 arising out of CC No. 32/1 and its signed copies be placed in other six criminal revisions. M/s Global Steel Philippines Inc. v. State Trading Corp India Page 1 of 27 27

The Trial Court Record be sent back along with a copy of this order to the court concerned.

Revision files be consigned to Record Room.

(DHARMESH SHARMA) ASJ01/PHC/NEW DELHI 20.01.2014 M/s Global Steel Philippines Inc. v. State Trading Corp India Page 1 of 27

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Delhi District Court

Uday Pratap Singh vs The State Trading Corporation Of India ... on 20 January, 2014