Delhi High Court - Orders
Strategic Engineering Private Limited ... vs Technology Information Forecasting ... on 24 January, 2024
Author: Jyoti Singh
Bench: Jyoti Singh
$~39
* IN THE HIGH COURT OF DELHI AT NEW DELHI
+ CRL.M.C. 556/2024
STRATEGIC ENGINEERING PRIVATE LIMITED & ANR
..... Petitioners
Through: Mr. M. Aravind Subramaniom, Senior
Advocate with Mr. Upamanyu Sharma, Advocate
versus
TECHNOLOGY INFORMATION FORECASTING AND
ASSESSMENT COUNCIL ..... Respondent
Through: None.
CORAM:
HON'BLE MS. JUSTICE JYOTI SINGH
ORDER
% 24.01.2024 CRL.M.A. 2272/2024 (exemption)
1. Allowed, subject to all just exceptions.
2. Application stands disposed of.
CRL.M.C. 556/2024 & CRL.M.A. 2271/2024 (stay)
3. This petition has been filed under Section 482 Cr.P.C. seeking quashing of complaint case being CC No.11431/2017 titled 'TIFAC v. Strategic Engineering (P) Ltd. & Ors.', pending before learned MM (NI Act)-03/NDD/PHC/New Delhi.
4. Petitioner No. 1 is a company engaged in the business of manufacturing of Glass Reinforced Polymer pipes, rail forced plastic, ERP Pipe fittings etc. having its registered office in Chennai and Petitioner No. 2 is the Director of Petitioner No. 1. Respondent is a registered society under CRL.M.C. 556/2024 Page 1 of 5 This is a digitally signed order.
The authenticity of the order can be re-verified from Delhi High Court Order Portal by scanning the QR code shown above. The Order is downloaded from the DHC Server on 16/02/2024 at 20:53:31 the Department of Science & Technology which assesses the state of art technology and sets directions for future technological developments in India and in important socio-economic sectors. Petitioner company entered into Technology Development Assistance Agreement ('TDA Agreement') dated 22.12.1999 with the Respondent for the project titled 'Design and Development of Composite Refill Cylinder for Compressed Natural Gas'. In lieu of the TDA Agreement, a project proposal was made by the Petitioner No. 1 Company in collaboration with Department of National Aeronautical Engineering, Madras Institute of Technology. The estimated cost of the project was Rs.5,78,00,000/- out of which Respondent was to contribute Rs.2,80,00,000/-, and Petitioner Company was to contribute Rs.2,98,00,000/-. Petitioner Company was expected to pay back the Respondent the committed amount plus an additional amount of Rs.56,00,000/-. On 22.12.1999, a deed of hypothecation was executed and all moveables including stocks were hypothecated to the Respondent. Respondent disbursed Rs.2,80,00,000/- to the Petitioner Company for the projects by UBI cheques.
5. It is the case of the Petitioner Company as argued by the learned Senior Counsel that after the Respondent paid Rs.1,85,000/- for procurement of the 3-Axis Filament Winding Machine. Petitioner Company placed an order for procurement on M/s. Entech USA. Due to reasons beyond the control of the Petitioner Company, the machine was taken back by the US Custom Authorities, due to sanctions on India imposed by the US Government as a result of the Pokhran Nuclear test. Petitioner Company had to pursue litigation in the US Court and after a prolonged battle, the machine was finally released in August, 2003. However, only a 2-Axis Filament CRL.M.C. 556/2024 Page 2 of 5 This is a digitally signed order.
The authenticity of the order can be re-verified from Delhi High Court Order Portal by scanning the QR code shown above. The Order is downloaded from the DHC Server on 16/02/2024 at 20:53:31 Winding Machine was received by the Petitioner Company and the project could not be successfully completed. In good faith and in bona fide interest, Petitioner Company issued 12 post-dated cheques on the assurance of the Respondent that the same would only be for audit records and will not be presented for seeking payment, however, the Respondent with mala fide intention presented the cheques, which were returned along with return memos by the Bank. The dispute was referred to arbitration on 24.09.2008 where Respondent filed a claim of Rs.3,36,00,000/- along with interest and finally, an award was passed on 14.12.2019 where the Arbitrator held inter alia that the Petitioner Company need not contribute funds to the Respondent as per TDA Agreement, however, it is logical that Respondent recovers a part of the investment on the project by selling/auctioning the plant and machineries acquired under the project and distributing the proceeds as per the TDA and hypothecation agreements. The award has been challenged by the Petitioner under Section 34 of the Arbitration and Conciliation Act, 1996 before this Court in O.M.P. (COMM.) 128/2021 and is pending.
6. The contention raised on behalf of the Petitioners is that there is no legally enforceable debt against the Petitioners since the claim of the Respondent stands rejected by the arbitral award and further in OMP. (ENF.) (COMM.) 44/2023, this Court vide order dated 16.10.2023 has directed to comply with the directions in the arbitral award. In this view of the matter, it is not open to the Respondent to pursue the criminal complaints against the Petitioners as the matter stands decided in the Alternate Dispute Resolution mechanism between the parties. The Supreme Court in Gian Singh v. State of Punjab (2012) 10 SCC 303, has held that CRL.M.C. 556/2024 Page 3 of 5 This is a digitally signed order.
The authenticity of the order can be re-verified from Delhi High Court Order Portal by scanning the QR code shown above. The Order is downloaded from the DHC Server on 16/02/2024 at 20:53:31 this Court is empowered to quash criminal proceedings under Section 482 Cr.P.C. if they arise from commercial, financial and civil transactions where disputes are overwhelmingly and predominantly civil in nature. Learned Senior Counsel also places reliance on the judgment of the Supreme Court in Dashrathbhai Trikambhai Patel v. Hitesh Mahendrabhai Patel & Anr., (2023) 1 SCC 578, in the context of Section 56 of NI Act, relevant paragraph of which reads as follows:-
"33. Under Section 56 read with Section 15 of the Act, an endorsement may be made by recording the part-payment of the debt in the cheque or in a note appended to the cheque. When such an endorsement is made, the instrument could still be used to negotiate the balance amount. If the endorsed cheque when presented for encashment of the balance amount is dishonoured, then the drawee can take recourse to the provisions of Section 138. Thus, when a part-payment of the debt is made after the cheque was drawn but before the cheque is encashed, such payment must be endorsed on the cheque under Section 56 of the Act. The cheque cannot be presented for encashment without recording the part-payment. If the unendorsed cheque is dishonoured on presentation, the offence under Section 138 would not be attracted since the cheque does not represent a legally enforceable debt at the time of encashment.
34. In view of the discussion above, we summarise our findings below:
34.1. For the commission of an offence under Section 138, the cheque that is dishonoured must represent a legally enforceable debt on the date of maturity or presentation.
34.2. If the drawer of the cheque pays a part or whole of the sum between the period when the cheque is drawn and when it is encashed upon maturity, then the legally enforceable debt on the date of maturity would not be the sum represented on the cheque.
34.3. When a part or whole of the sum represented on the cheque is paid by the drawer of the cheque, it must be endorsed on the cheque as prescribed in Section 56 of the Act. The cheque endorsed with the payment made may be used to negotiate the balance, if any. If the cheque that is endorsed is dishonoured when it is sought to be encashed upon maturity, then the offence under Section 138 will stand attracted. 34.4. The first respondent has made part-payments after the debt was incurred and before the cheque was encashed upon maturity. The sum of rupees twenty lakhs represented on the cheque was not the "legally CRL.M.C. 556/2024 Page 4 of 5 This is a digitally signed order.
The authenticity of the order can be re-verified from Delhi High Court Order Portal by scanning the QR code shown above. The Order is downloaded from the DHC Server on 16/02/2024 at 20:53:31 enforceable debt" on the date of maturity. Thus, the first respondent cannot be deemed to have committed an offence under Section 138 of the Act when the cheque was dishonoured for insufficient funds. 34.5. The notice demanding the payment of the "said amount of money"
has been interpreted by judgments of this Court to mean the cheque amount. The conditions stipulated in the provisos to Section 138 need to be fulfilled in addition to the ingredients in the substantive part of Section 138. Since in this case, the first respondent has not committed an offence under Section 138, the validity of the form of the notice need not be decided."
7. Learned Senior Counsel also strenuously urges that the complaint under Section 138 of NI Act has been pending for nearly 14 years and even the trial has not started. The order sheets would reveal that complainants are not appearing before the Trial Court and the matter is being adjourned for no reason.
8. In my view, the issues raised in the present petition require consideration.
9. Issue notice to Respondent, through all permissible modes, on the Petitioners taking requisite steps in the matter, returnable on 29.02.2024.
JYOTI SINGH, J JANUARY 24, 2024/kks/shivam CRL.M.C. 556/2024 Page 5 of 5 This is a digitally signed order.
The authenticity of the order can be re-verified from Delhi High Court Order Portal by scanning the QR code shown above. The Order is downloaded from the DHC Server on 16/02/2024 at 20:53:31