Subhiksha Trading Services Ltd. v. M/s HDFC Bank Ltd.

IN THE HIGH COURT OF JUDICATURE AT MADRASDATED 24.11.2011CORAMTHE HONOURABLE MR.JUSTICE A.ARUMUGHASWAMYCrl.O.P.Nos.30269 and 30270 of 2010andM.P.No.1+1 of 20101. Subhiksha Trading Services Ltd. Cabin A, 2nd Floor, Habib Complex, No.5,Durgabai Deshmukh Road, R.A.Puram, Chennai-600 028.2. R.Subramanian..PetitionersVsM/s HDFC Bank Ltd., Radhakrishna Towers,R.K.Salai, Mylapore, Chennai-600004,rep.by Mr.K.N.Prakash Narayanan, Senior Manager, Remedial Management Unit,No.320, Anna Salai, Padma Complex, Nandanam, Chennai-600 035...RespondentCriminal Original Petitions filed under section 482 of CriminalProcedure Code seeking to quash the proceedings in C.C.Nos.8620 and8621 of 2010, on the file of the XVIII Metropolitan Magistrate,Saidapet, Chennai.For Petitioners : Mr.N.Natarajan, S.C. for M/s. Prakash GoklaneyFor respondent : Mr.K.Rajeskaran ----COMMON ORDERPetitioners are accused in C.C.Nos.8620 and 8621 of 2010 on thefile of the XVIII Metropolitan Magistrate, Saidapet, Chennai and therespondent is the complainant. 2. The first petitioner is a registered company and the secondpetitioner is the Managing Director of the first petitioner company.The said company availed various credit facilities from therespondent/complainant commercial bank and availed loan. For the saidloan, the second petitioner had also executed a continuing guarantee https://hcservices.ecourts.gov.in/hcservices/ in favour of the complainant bank. As per the statement of accounts,the petitioners have to discharge their liability towards the debt dueto the complainant bank to the tune of Rs.1,75,96,40,269.35. Inpartial discharge of the said loan dues, the second petitioner issuedtwo cheques dated 1.2.2010 for for a sum of Rs.20.00 Crores andRs.10.00 Crores respectively on behalf of the firstpetitioner/company. The said cheques were presented for encashment on1.2.2010 in the account of the respondent. The said cheques weredishonoured by the petitioners' bank for want of sufficient funds tohonour the cheques. They were, therefore, returned to thepetitioners' banker who in turn returned to the complainant on3.2.2010 with a return memo. Therefore, the complainant issued astatutory notice on 9.2.2010 under Section 138 of the NegotiableInstruments Act, which was acknowledged by the Accused on 15.2.2010.However, the Accused did not pay the amount due under the dishonouredcheques, as demanded, neither did he send any reply. Hence, therespondent/complainant filed two complaints against both thepetitioners under Section 138 of the Negotiable Instruments Act forrecovery of a sum of Rs.20.00 Crores and 10.00 Crores respectively andthe same were taken cognizance of by the learned MetropolitanMagistrate in C.C.Nos.8620 and 8621 of 2010 respectively. On summons,the Accused have appeared before the learned Magistrate. 3. While so, these petitions have been filed to quash theproceedings against both the petitioners in C.C.Nos.8620 and 8621 of2010. Since the parties are same, the liability is the same, andgrounds are the same, both these petitions were heard together andthey are disposed of by this common order.4. The vehement contention of the learned counsel for thepetitioners/accused is that since date in the cheques have not beenfilled up by them and only the filling up of amount and signature hasbeen made by them and in such circumstances, the complainant is notentitled to file the complaints on the basis of the past considerationand it is a time barred one and hence he prayed that the complainantshave to be quashed. The learned counsel also relied on the judgmentin the case of M/s.Balaji Seafoods Exports vs. Mac Industries Ltd.,S.Pichalah reported in 1999(1) CTC 6 wherein the petitioner inpursuance of the agreement, gave an undated cheque for Rs.35 lakhs.The learned single Judge of this Court held that as an undated chequehaving been given only as security, the provision of Section 138 ofthe Negotiable Instruments Act are not at all attracted and hence, thecomplaint against the accused cannot be maintained at all andultimately quashed the proceedings against the petitioners. Theprinciple laid down in the said judgment is with regard to undatedcheque which was issued towards the security purpose for which lateron complaint cannot be filed. 5. The learned counsel appearing for the respondent/complainant https://hcservices.ecourts.gov.in/hcservices/ contended that no doubt the cheques belong to the Accused Company andfurther contended that the signature and the filling up of the amounthas been admitted by the accused whereas the date alone has beenfilled up by the respondent bank subsequently as per the agreement.Hence, he prayed that the petitions have to be dismissed. 6. From the perusal of the typed set filed by the petitioners,it is seen that two cheques were issued for Rs.20.00 Cores andRs.10.00 Crores respectively. It is not in dispute that on the dateof issuance of the cheques the bank has advanced loan and the balanceis to the tune of Rs.175 Crores and the liability to pay the debt dueto the bank was in force is also not in dispute. Even at the time ofthe sanction of the loan itself the complainant bank insisted thepetitioners/accused for issuance of undated cheques. At page No.6 ofthe typed set it is seen that by a letter dated 29.1.2008 addressed tothe respondent bank, the petitioners themselves have specificallyadmitted that they delivered undated cheques drawn on HDFC BankLimited and that they authorised the HDFC Bank to complete the saidcheques and thereby unconditionally and irrevocably authorised andconfirmed the authority of the Bank to fill in the date and the amounton the said cheques and to present the same for payment. Further inthe said letter it has been specifically mentioned that:-"We agree and acknowledge that in accordance withthe provisions of Section 20 of the NegotiableInstruments Act the bank in the present case as theholder of the said cheques shall have the authority tocomplete the said cheques."Further in the said letter it has been specifically mentioned that:-"We agree and acknowledge that any dishonouringof the said cheques would make me/us liable includingunder the provisions of Section 138 of the NegotiableInstruments Act, 1881."7. The learned counsel for the respondent/complainant bank hasalso relied on a judgment reported in the case of M/s.M.M.T.C.Ltd.,and another v. M/s.Medchl Chemicals and Pharma (P) Ltd., and anotherreported in 2002 CRI.L.J. 266(1) wherein the Hon'ble Supreme Court hasheld that:" 13. The learned Judge has next gone into facts andarrived at a conclusion that the cheques were issued assecurity and not for any debt or liability existing on thedate they were issued. In so doing the learned Judge hasignored well settled law that the power of quashing criminalproceedings should be exercised very stringently and withcircumspection. It is settled law that at this stage the https://hcservices.ecourts.gov.in/hcservices/ Court is not justified in embarking upon an enquiry as tothe reliability or genuineness or otherwise of theallegations made in the complaint. The inherent powers donot confer an arbitrary jurisdiction on the Court to actaccording to its whim or caprice. At this stage the Courtcould not have gone into merits and/or come to a conclusionthat there was no existing debt or liability."8. The contention of the learned Senior Counsel appearing forthe petitioners/Accused is that once the cheque issued by thepetitioners/Accused is undated and it has been issued only for thesecurity purpose, even if the cheque has been returned for want ofsufficient funds, the complaint under Section 138 of the NegotiableInstruments Act cannot be filed. To substantiate his contention, thelearned Senior Counsel for the petitioners/Accused relied the case ofM/s.Balaji Seafoods Exports vs. Mac Industries Ltd., S.Pichalahreported in 1999(1) CTC 6 and some other judgments also in thisregard. 9. On the other hand the learned Counsel appearing for therespondent would contend that even if the cheque is undated and if itis given for security purpose even then it can be presented forencashment and if it is bounched complaint under Section 138 of theNegotiable Instruments Act can be filed and further the existingliability and other aspects has to be decided only on merits by way oftrial and hence the case cannot be quashed at this stage. Tosubstantiate his submissions, the learned Senior Counsel appearing forthe respondent relied on the decision in the case of M/s.M.M.T.C.Ltd.,and another v. M/s.Medchl Chemicals and Pharma (P) Ltd., and anotherreported in 2002 CRI.L.J. 266(1). 10. From the perusal of the records it is seen that thepetitioners/accused have availed loan for more than Rs.175 Crores andtowards the discharge of their partial liability two cheques have beengiven by the second petitioner on behalf of the first petitionercompany for Rs.30 Crores. Further, on the date of issuance of thecheques, subsisting debt was in force and knowing fully well, thepetitioners have given two cheques and at the time of issuance of thecheques they have also issued separate letter to the respondentinforming them that they will honour the cheques and in the event offailure the respondent can proceed against them under Section 138 ofthe Negotiable Instruments Act. Even though the learned counselappearing for the petitioners/Accused relied on the judgment reportedin 1999(1) CTC 6 (cited supra), the learned counsel appearing for therespondent relied on the judgment of the Apex Court reported in 2002CRI.L.J. 266(1) (cited supra) which is binding nature of this Courtunder Article 141 of the Constitution. Therefore, I am of the viewthe judgment reported in 2002 CRI.L.J. 266(1) alone is more relevant https://hcservices.ecourts.gov.in/hcservices/ to the facts and circumstances of the case and further in this caseit has been emphasized that these type of technicalities need not beconsidered at the initial stage and it has to be left open to thetrial Court to consider and decide on this aspect. Therefore, I am ofthe view that these petitions are not maintainable at this stage.Hence, the Criminal Original Petitions are dismissed. Consequently,M.P.Nos.1+1 of 2010 are closed. Sd/ Asst.Registrar /true copy/ Sub Asst.Registrargr.To1.The XVIII Metropolitan Magistrate, Saidapet, Chennai. 2.The Chief Metropolitan Magistrate, Egmore, Chennai.+2ccs to Mr.K.Rajasekaran, Advocate Sr 72200,72199+4ccs to M/s. Prakash Goklaney, SR 72511, 72513TRM(CO)km/1.2. Crl.O.P.Nos.30269 and 30270 of 2010