High Court

Legal Reasoning

12296.2021APPLN.odtIN THE HIGH COURT OF JUDICATURE AT BOMBAY,BENCH AT AURANGABAD.CRIMINAL APPLICATION NO. 2296 OF 20211.Narayan S/o Chhaganlal Gadodia Age : 70 years, Occ : Business, R/o Hans Cotton Compound, Khamgaon, Dist. Buldhana. 2.Vijay S/o Ramniwas Gadodia Age : 64 years, Occ : Business, R/o 36/3, Shnehalataganj, Indore 3.Meena W/o Rajendra Gadodia Age : 57 years, Occ : Housewife, R/o Hans Catton Compound, Khamgaon, Dist. Buldhana. 4.Seema W/o Santosh Gadodia Age : 52 years, Occ : Housewife,R/o Hans Cotton Compound, Khamgaon, Dist. Buldhana. ..APPLICANTS-VERSUS-1.The State of MaharashtraThrough Police Inspector, Vedant Nagar Police Station, Aurangabad. 2.Suresh Zumbarlal Gandhi Age : 54 years, Occ : Business, R/o Flat No.D-4, plot No.3, Ashtavinayak Enclave, Station Road, Aurangabad. ..RESPONDENTS...Mr. Rajendra Deshmukh, Senior Advocate a/w Mr.Rahul Joshi i/bMr.Devang R. Deshumukh, Advocate for applicants. APP for Respondent- State : Mr. A.M. Phule Advocate for respondent No.2 : Mr. Devdatta P. Palodkar… 22296.2021APPLN.odtCORAM :SMT. VIBHA KANKANWADI ANDROHIT W. JOSHI, JJ.RESERVED ON : 15th JANUARY, 2025.PRONOUNCED ON : 10th FEBRUARY, 2025. JUDGMENT (PER ROHIT W. JOSHI, J.) :.Respondent No.2 in the present application has lodged FIRagainst the applicants with Police Station Vedantnagar, AurangabadCity on 18.08.2021, vide FIR No.229/2021, for the offences punishableunder Sections 406, 420 read with Section 34 of the Indian Penal Codeand Sections 3 and 4 of the Maharashtra Protection of Interest ofDepositors (In Financial Establishments) Act, 1999 (Hereinafterreferred to as “IPC” and “MPID” respectively for brevity). 2.Respondent No.2 – Informant has lodged the FIR on behalfof two business entities i.e. Kisan Agro Industries and Anand CotginPvt. Ltd. He states that the partners of Kisan Agro Industries, namely,Annasaheb Mane Patil and Sharad Gandhi have authorized him to lookafter the affairs of the said firm, vide registered power of attorneydated 05.06.2008. He further states that he and his son are Directors ofthe other entity Anand Cotgin Pvt. Ltd. The aforesaid two businessentities are engaged in business of sale and purchase of cotton yarn. 32296.2021APPLN.odtRespondent No.2 has stated that applicant no.1 had approached theaforesaid two business entities through a broker from Indore namedArpit Jain for purchasing cotton yarn. Applicant No.1 had a meetingwith informant in the office of Anand Cotgin Pvt. Ltd. wherediscussions and deliberations were held with respect to quality and rateof yarn. He states that applicant no.1 had agreed to make paymentwithin a period of 8 days from the delivery of consignment. He thenstates that M.C.G. Spinners, partnership firm of the applicants hadpurchased cotton yarn from the aforesaid two business undertakings,the details whereof are as under :-Kisan Agro to M.C.G. Spinners :-Sr.No.DateBillWeightAmount Date ofreceiveDepositedBalance 1.15.10.202055136.0826,56,77623/10/202026,56,776---2.23/10/20205690.7218,11,221------18,11,2213.24/10/20205767.7314,07,89724/10/202014,07,897---4.24/10/20205868.3414,20,46824/10/202014,20,468---5.16/11/202081136.0828,56,964------28,56,964Total46,68,185Anand Cotgin to M.C.G. Spinners :-Sr.No.DateBillWeight Amount Date ofreceiveDepositedBalance 1.09/10/2020157136.0825,47,62122/10/202025,47,621---2.22/10/2020159136.0827,97,668------27,97,668Total27,97,668 42296.2021APPLN.odt3.Out of seven consignments, payments have been receivedfor four consignments only. A sum of Rs.46,68,185/- is not paid toKisan Agro Industries for two consignments of cotton yarn and a sum ofRs.27,97,668/- is not paid to Kisan Agro Industries for oneconsignment. Respondent No.2 states that applicant no.1 had expressedinability to make immediate payment of the outstanding amount andrequested for some time to make a payment stating that some propertywas put up for sale and accordingly, the amount will be arranged. Hefurther states that applicant nos.1 and 2 had discussion with AnnasahebMane, partner of Kisan Agro Industries and himself with respect torepayment of amount. He states that applicant nos.1 and 2 suggestedthat outstanding amount should be treated as a deposit made byaforesaid two undertakings with M.C.G. Spinners, firm of theapplicants, and that, the said amount would be refunded within aperiod of two months with interest at the rate of 2% p.a. Accordingly,two documents titled as “Thevpatra/Deposit Receipt” dated 16.03.2021were executed by applicant nos.1 and 2 as partners of M.C.G. Spinners,are in favour of partners of Kisan Agro Industries namely AnnasahebMane Patil and Sharad Gandhi and another in favour of respondentno.2 – Suresh Gandhi, Director of Anand Cotgin Pvt. Ltd. The chequesissued by the applicants for payment as per terms of deposit receiptswere dishonoured. In these circumstances, the aforesaid FIR has been 52296.2021APPLN.odtlodged for the offence punishable under Sections 406, 420 read withSection 34 of the IPC and under Sections 3 and 4 of the MPID. 4.Based on the said FIR, respondent no.1 startedinvestigation and after completion of the same filed FinalReport/Charge-Sheet under Section 173 of the Code of CriminalProcedure on 08.07.2023, vide Charge-Sheet No.52/2023, pursuant towhich, Special Case No.239/2023 came to be registered against thepresent applicants and the said case is pending on the file of thelearned Special Judge under MPID at Aurangabad. 5.It will be pertinent to mention here that the businessConcern of the applicants M.C.G. Spinners is referred as a company andas also a partnership firm in the FIR. However, in the documents dated16.03.2021, the names of applicant nos.1 and 2 are mentioned aspartners of M.C.G. Spinners. Learned Senior Counsel Shri RajendraDeshmukh appearing on behalf of the applicants also confirmed thatM.C.G. Spinners is a partnership firm. 6.Learned Senior Counsel Shri Rajendra Deshmukhappearing for the applicants initially contended that applicant nos.3and 4 had tendered resignation as partners of the firm on 21.01.2020, 62296.2021APPLN.odtvide deed of retirement dated 21.01.2020 with effect from said date.He states that the transactions are subsequent to the date of retirementof applicant nos.3 and 4, and therefore, the prosecution againstapplicant nos.3 and 4 needs to be quashed. Having regard to the scopeof present proceeding, which is filed under Section 482 of the Cr.P.C.,we are afraid, such disputed questions of facts will be beyond ourprovince while entertaining application for quashing of FIR under thesaid provision. The said contention is therefore rejected. 7.As regards merits, learned Senior Counsel contends thatout of seven consignments payment is made with respect to fourconsignments. He states that due to genuine financial difficultiespayment for three consignments could not be made. He refers to theFIR to demonstrate that applicant no.1 had himself approachedrespondent no.2 and one of the partners of Kisan Agro Industries todiscuss the modalities for payments. He contends that the conduct ofthe applicants will demonstrate that there was absolutely no mens reato attract offence under Sections 406 and 420 of the IPC. As regardsMPID, his contention is that the provisions of the said Act are notattracted. He states that the two documents dated 16.10.2021 cannotbe treated to be deposits within the meaning of Section 2(c) of theMPID. He further contends that the partnership firm of the applicants 72296.2021APPLN.odtalso does not fall within the definition of term “FinancialEstablishment” as defined under Section 2(d) of MPID. His contentionis that the provisions of MPID will not be attracted in case of regularbusiness transaction between a buyer and seller. He states that since theapplicants could not make payment of sale consideration of the goodspurchased by them, they had requested the seller to grant furtheraccommodation on the condition that they will pay interest on theoutstanding amount of sale consideration. Such amount according tohim will not be covered under definition of deposit under Section 2(c)of MPID and having regard to the nature of transaction, the provisionsof MPID shall not be attracted. Learned Senior Counsel further arguedthat the agreements titled as deposit receipts are in fact in the nature ofagreements for extension of margin/time frame granted by seller to thepurchaser, subject to payment of interest. According to him, the saiddocuments only demonstrate that he parties had agreed upondeferment of payment due and payable by the firm of the applicants(purchaser)to Kisan Agro Industries and Anand Cotgin Pvt. Ltd. (sellersof cotton yarn). He argues that such transaction cannot be said to becovered by the provisions of MPID. Shri Rajendra Deshmukh, learnedSenior Counsel also further submitted that in view of dishonour ofcheques, the holders of the cheques could have filed civil suit forrecovery of amount or could have initiated criminal prosecution as 82296.2021APPLN.odtcontemplated under Section 138 of the Negotiable Instruments Act. Heargues that filing of FIR alleging offence under Sections 406, 420 of theIPC and Section 3 of the MPID is not permissible. 8.Per-contra, Shri Devdatta Palodkar, learned counsel forrespondent no.2 contends that the term deposit as defined underSection 2(c) of MPID is definition of a very wide connotation. He pointsout that the definition includes receipt of money in any form except thedeposits which are specifically excluded under clause (i) to (v) ofclause (c). He contends that the transaction between the parties is notcovered by any of the exceptions to clause 2(c), and therefore, theamount promised to be paid by the applicants falls within the definitionof deposit under Section 2(c) of the MPID. As regards section 2(d) hiscontention is that any person, who accepts any deposit, except aCorporation or Co-operative Society owned or controlled by the Stateor Central Government or Banking Company, is covered under thedefinition of financial establishment. He states that the applicants havefailed to keep their promise of making repayment of deposit as perterms and conditions recorded in two documents dated 16.03.2021,offence under Section 3 of the MPID is clearly made out. As regardsSections 406 and 420 of the IPC, his contention is that whether thefailure to pay is on account of genuine financial difficulty or a 92296.2021APPLN.odtdeliberate act can be decided only upon a full-dressed trial, andtherefore, the FIR should not be quashed with respect to the saidprovisions as well. 9.Shri. A.M. Phule, learned APP appearing for respondentno.1 has advanced submissions supporting the contentions raised byrespondent no.2. 10.The matter was heard on 15.01.2025 and was closed fororders. Thereafter, on 17.01.2025, learned counsel for respondent no.2sought leave to file judgment dated 10.12.2018 passed by this Court inCriminal Writ Petition No.1489/2018. This motion was made inpresence of learned counsel on record for the applicants, who hadassisted the learned Senior Counsel during the course of hearing. Copyof the judgment was also handed over to the learned counsel for theapplicants in our presence. However, learned counsel for the applicantsdid not make any request to advance further submissions on the saidjudgment. 11.As regards the provisions of MPID, the facts of the presentcase and those in Criminal Writ Petition No.1489/2018 bear a closeresemblance. The arguments advanced in the said matter with respect 102296.2021APPLN.odtto MPID were also similar in nature. This Court had then refused toquash the FIR expressing that registration of offence under MPID waspossible in the facts of that case. We may, however, immediatelyobserve that final opinion as regards applicability of MPID is notrecorded in the said judgment dated 10.12.2018. The observations inparagraph nos.10 and 11 of the judgment demonstrate that a tentativeopinion was formed that the provisions of MPID may be attracted inthe facts of that case, which has close resemblance with the facts of thepresent case. In view of the said judgment dated 10.12.2018, we arealso of the opinion that we should not interfere with this matter inexercise of our inherent jurisdiction under Section 482 of the Cr.P.C. toquash the FIR. The contention of learned counsel for respondent no.2 isthat the controversy in the matter is fully covered by the Division Benchjudgment relied upon by the petitioner. We are unable to agree with thesaid contention. Careful reading of the judgment indicates that it washeld that it is possible that the transaction may be covered under theMPID. However, the judgment does not deliver any final opinion viz-a-viz applicability of MPID to the transaction involved in the said matter.Transaction involved in the present proceeding is also similar in nature.We are of the opinion that the judgment does not foreclose thearguments of the learned Senior Counsel for the applicants that thetransaction is not covered by the provisions of MPID. We keep the point 112296.2021APPLN.odtopen. The parties may address learned trial Court on this aspect at theappropriate stage. 12.Since we have refrained in view of disputed questions offacts, basically from quashing the FIR with respect to offence under theMPID, we deem it appropriate not to show any indulgence with respectto offences under the IPC sections as well. 13.In the result, the criminal application stands rejected. [ROHIT W. JOSHI][ SMT. VIBHA KANKANWADI] JUDGEJUDGEsga/