C482/277/2008 of S. SURENDRA Vs PUNEET GARG

IN THE HIGH COURT OF UTTARAKHAND AT NAINITAL

CRIMINAL MISCELLANEOUS APPLICATION No. 217/2008

(Under Section 482 of the CrPC)

H.N. Gautam

…….Applicant

Versus

Puneet Garg

……Respondent

Ms. Menka Tripathi, Advocate, for the applicants. Mr. Neeraj Garg, Advocate, for the private respondent no. 2.

With

CRIMINAL MISCELLANEOUS APPLICATION No. 277/2008

(Under Section 482 of the CrPC)

S. Srendra

…….Applicant

Versus

Puneet Garg

……Respondent

Ms. Menka Tripathi, Advocate, for the applicants. Mr. Neeraj Garg, Advocate, for the respondent.

Hon’ble Servesh Kumar Gupta, J.

Since the challenge made in both the aforetitled petitions is to the same cognizance order dated 16.2.2008, passed by the Special Judicial Magistrate, Rishikesh, District Dehradun in Complaint Case No. 892/2007, Puneet Garg v. M/s Coastal Projects Pvt. Ltd. And 5 Others, hence, both these petitions are being decided by this common judgment and order. By the said cognizance order, the learned Magistrate has summoned M/s Coastal Prjects Pvt, Ltd., S. Srendra, H.K. Singh & H.N. Gautam to face the trial for the offence of Section 138 of the Negotiable Instruments Act (for short, the Act) and one punishable under Section 420 IPC. By the same cognizance order, the learned Magistrate has also summoned two other accused persons, namely, Jitander Singh and Swarup Mitra to stand trial for the offence of Section 420 IPC. However, only two accused H.N. Gautam, by way of petition

no. 217/2008, and S. Srendra, by way of petition no. 277/2008, have assailed the said cognizance order.

2. Heard learned Counsel for the parties and perused the papers available on record.

3. The background facts, qua controversy, which deserve mention at the very outset, are that Mr. S. Srendra is the Managing Director of M/s Coastal Projects Pvt. Ltd (hereinafter referred to as ‘the company’), through whom the company has been summoned. Mr. Srendra has also been impleaded in person as accused no. 2. Other accused persons are H.K. Singh (Additional General Manager), Jitander Singh (Deputy General Manager), H.N. Gautam (Executive Director) and Swarup Mitra (Dy. Manager Accounts). As stated above, only two accused have come before this Court challenging the said cognizance order.

4. The company undertook work of construction of some hydroelectricity project located in the remote hills of Uttarkashi. H.K. Singh (accused no. 3), occupying the position of Additional General Manager, was entrusted with the task of advancement of the said project by the company through Power of Attorney executed in his favour by the Board of Directors on 17.8.2006. Vide resolution dated 9.4.2007, passed by the Board of Directors, H.K. Singh was also authorized to operate the account of the company in connection with the said project. Mr. H.K. Singh, accordingly, proceeded with the work assigned to him, and obviously, for the said purpose, also started operating the account of the company for making various payments such as to labourers, for construction materials, etc. which was inevitable.

5. Lateron, it appears that some differences cropped up between him and the other superiors of the company. So,

the Board of Directors passed another resolution on 27.4.2007 and thereby withdrew all his powers including the authorization to operate the bank account. In the said resolution, it was also decided to close the bank account held by the company in the State Bank of India at Bhatwari branch, Uttarkashi. Information was, accordingly, sent to the bank. The information was received by the bank on 4.5.2007, which also entailed that the remaining funds from the said account be transferred to another account held by the company with State Bank of India at Uttarkashi. This resolution was served upon H.K. Singh on 3.5.2007 through messenger. On receiving this information, H.K. Singh too resigned from his position and sent his resignation to the company. On 3.10.2007, the company also wrote letter to S.H.O., Police Station Bhatwari regarding the alleged misdeeds of H.K. Singh including his malafides and unlawfully issuing of two cheques bearing no. 548718 for ` 32,42,721/- and cheque no. 548719 for ` 77,000/- in favour of M/s Aggarwal Enterprises, Haridwar Road, Rishikesh towards the consideration of materials supplied by M/s Aggarwal Enterprises to the company, whereas the said materials were found to be substandard and no payment was to be released to the said Enterprises for want of purchase order itself.

6. Before tendering his resignation from his position, Mr. H.K. Singh issued certificate dated 3.5.2007, thereby certifying that M/s Aggarwal Enterprises had supplied goods of boomer spares, drilling tools, electrical goods and general consumable items worth ` 32,42,721/- between the period 16.2.2007 to 3.5.2007. He also certified that nothing out of the said amount was paid to M/s Aggarwal Enterprises till that date, and the whole amount was due and payable proportionately as and when the funds become available with the company. The learned Counsel for the petitioners has raised the question on the integrity of Mr. H.K. Singh by

contending that there was no propriety for H.K. Singh to issue such certificate to M/s Aggarwal Enterprises. It reflects his collusion with Puneet Garg, the proprietor of M/s Aggarwal Enterprises. This Court is unable to agree with this contention for the reason that it was the pious duty and humble obligation of Mr. H.K. Singh, who was holding all the charges of carrying on the project work at the spot, to order, purchase and ensure the supply of necessary goods for the advancement of the project undertaken by the company. These goods were purchased in that connection and had already been supplied by M/s Aggarwal Enterprises between the period 16.2.2007 to 3.5.2007. It is undisputed that Mr. H.K. Singh was entrusted with all the powers to carry on the project work vide the Power of Attorney executed by the Board of Directors in his favour on 17.8.2006, and that Power of Attorney existed in his favour until he resigned from his position, which was not yet revoked much less the revocation of the same in the resolution of the board meeting held on 27.4.2007. It was the date when all the powers of H.K. Singh were withdrawn on account of the alleged irregularities committed by him, and the concerned bank account of the company, which was being operated by H.K. Singh under valid authority issued to him on 9.4.2007, was resoluted to be closed. Albeit this resolution was served upon H.K. Singh on 3.5.2007, so it was incumbent upon him to clear the dues of any trader including M/s Aggarwal Enterprises before saying goodbye to the company. Since the concerned account did not have sufficient funds at that time, hence, H.K. Singh was not expected to restrain himself from issuing the disputed cheques because the respondent supplied the materials needed for advancement of the project on the orders placed by H.K. Singh, and for all practical purposes, H.K. Singh was the incharge of the project work and this fact was overt and apparent in the knowledge and eyes of all the persons, who were connected with the project work, may it be

the labourers or the traders including M/s Aggarwal Enterprises.

7. Learned Counsel for the petitioners also argued that no purchase order was placed by the company. Therefore, issuance of these cheques to M/s Aggarwal Enterprises by H.K. Singh, in connection with the supply orders made by him, was unlawful. This argument has also no leg to stand for the reason that Mr. H.K. Singh was not only entrusted with the construction work of the said project undertaken by the company, but he was also duly authorized to operate the bank account of the company in connection with the said work. Accordingly, Power of Attorney was made in favour of H.K. Singh after adopting the resolution by the Board of Directors of the company. As such, for placing the supply order in connection with the said project work, Mr. H.K. Singh was very much competent, and no meeting of Board of Directors for placing any such order was required. Rather, it was for the smooth completion of the said project that Mr. H.K. Singh was authorized to operate the bank account and the Power of Attorney was also executed in his favour. Hence, he rightly issued the said cheques.8. When the aforesaid cheques were presented by M/s Aggarwal Enterprises for encashment, those were returned by the bank vide its memo dated 26.9.2007/27.9.2007 with endorsement “insufficient funds”. Learned Counsel for the applicants petitioners has argued that the endorsement of the bank “insufficient funds” was wrong as the account, in fact, was closed on 4.5.2007 after receiving the instructions from the company and the balance amount which was existing in the Bhatwari Branch was directed to be transferred to the Uttarkashi branch of the said bank. This argument is also not tenable for the reason that Hon’ble Apex Court, while dealing with matter in similar eventuality in the case of NEPC Micon

Ltd. & Others v. Magma Leasing Ltd, (1999) 4 SCC 253, has held has under:

“The return of cheque by the bank unpaid on the ground that the “account is closed” would mean that the cheque is returned as unpaid on the ground “the amount of money standing to the credit of that account is insufficient to honour the cheque”. The reason is that the cheque was dishonoured as the amount of money standing to the credit of “that account” was “nil” at the relevant time apart from it being closed. The closure of the account would be an eventuality after the entire amount in the account is withdrawn. It means that there was no amount in the credit of “that account” on the relevant date when the cheque was presented for honouring the same. The expression “the amount of money…is insufficient to honour the cheque” is genus of which the expression “that account being closed” is specie. After issuing the cheque drawn on an account maintained, if the drawer closes “that account” apart from the fact that it may amount to another offence, it would certainly be an offence under Section 138. Further, in view of provisos (a), (b) and (c) to Section 138, the cheque is to be drawn by person for payment of any amount of money due to him “on an account maintained by him” with banker and only on “that account” the cheque should be drawn.”

9. The respondent Puneet Garg issued notice on dated 3.10.2007, which was prerequisite under Section 138(b) of the Act and this notice was well within the time of limitation prescribed under the Act. Reply of the said notice was given by the company on 17.10.2007 mentioning all the

facts, as stated above, and claiming its exoneration from the liability of making the payment demanded for vide the said notice. Puneet Garg also sent notice through his Counsel on 27.12.2007 under Section 433, 434 of the Companies Act, but that too could not yield any result towards the payment of consideration for the goods supplied to the company, and mere words reply dated 9.1.2008 was sent by the company to him. So, it was but natural for M/s Aggarwal Enterprises to file complaint through its Director Puneet Garg, and the same was done on 2.11.2007, and that complaint is also well within the period of limitation, which is to be reckoned since 3.10.2007, when he issued demand notice under Section 138(b) of the Act.

10. For the reasons stated above, this Court is of the opinion that there is no merit in these petitions and the same are liable to be dismissed. Accordingly, both the petitions are hereby dismissed. However, before parting with the judgment, it can be observed that cognizance order was passed on 16.2.2008. More than three and half years have elapsed thereafter. considerable amount of capital of moderate businessman is held up because of internal turmoil and mismanagement in the company. It matters very much to such businessman, who has been forced to remain deprived from his considerable amount of capital, which he requires for running his further day-to-day business. Hence, the learned Magistrate is directed to decide the controversy as early as possible, preferably within period of six months, as has been prescribed under Section 143(3) of the Act.

11. Registry is directed to inform the court concerned accordingly.

(Servesh Kumar Gupta, J.)