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Jharkhand High Court · body

2012 DIGILAW 718 (JHR)

MAA BHAGWATI COKE v. State of Jharkhand

2012-05-07

R.R.PRASAD

body2012
JUDGMENT Both the matters since arising out of the same case, were heard together and are being disposed of by this common order. 2. Cr.M.P.No.1649 of 2011 has been filed on behalf of M/s. Maa Bhagwati Coke Pvt. Ltd. for quashing of the order dated 3.1.2009 passed by the Judicial Magistrate, Dhanbad in C.P. case no.1876 of 2008 whereby and where under cognizance of the offence under Section 138 of the Negotiable Instrument Act was taken against the petitioners whereas Cr. M. P. No.883 of 2009 has been filed on behalf of Sanjeev Kumar Agrawal, the Managing Director of said company for quashing of the order dated 2.4.2009 passed by the learned Sessions Judge, Dhanbad in Cr.Rev.No.85 of 2009 whereby learned Sessions Judge refused to set aside order taking cognizance. 3. The facts giving rise to the complaint petition are that under an agreement entered into in between the complainant company M/s. Balaji Coke Pvt. Ltd. and the State Trading Corporation of India Limited, New Delhi, the complainant company was to purchase Coking Coal of foreign origin. The complainant company having entered into such agreement also entered into High-Seas Sale agreement with the accused company whereas accused company agreed to purchase coal of foreign origin for a valuable consideration which is to be paid on submission of invoices and the delivery order was to be issued after receipt of the payment which payment is to be made to the State Trading Corporation of India Limited to be credited in the account of the complainant company. Subsequently, on 2.6.2007 M/s. Maa Bhagwati Coke Pvt. Ltd. (accused no.1) wrote a letter to the State Trading Corporation of India Limited to grant necessary permission to the complainant company for release of 1000 M.T of coal so that it on being supplied to accused company be converted into coke and be sold and the sale proceeds be deposited with the State Trading Corporation of India Limited for which M/s. Maa Bhagwati Coke Pvt. Ltd.(accused no.1) would be depositing 41 post dated cheques and as soon as the payment is made, one post dated cheque would be returned by the State Trading Corporation of India Limited and in case, the accused company fails to make payment, the said post dated cheques may be deposited for encashment. 4. 4. Further case of the complainant is that towards discharge of part of the liability of the complainant company, the accused company issued three cheques of Rs.20,00,000/-each in favour of the State Trading Corporation of India Limited which on its deposit got dishonoured on account of insufficient fund, information of which was given under memo dated 12.5.2008. Thereupon, the complainant in this regard spoke to accused no.2, Sanjeev Kumar Agrawalla (petitioner in Cr.M.P.No.883 of 2009) who made request to the complainant company to present the cheque again on 18.7.2008 so that it be honoured. Accordingly, it were again presented before H.D.F.C, Kolkata on 18.7.2008. The said cheques were sent before the accused banker, H.D.F.C, Dhanbad for clearance but again it got dishonoured, information of which was given to the State Trading Corporation of India Limited on 27.7.2008. Thereupon on 20.8.2008 legal notice was sent to accused company calling upon it to make payment but the accused persons vide its legal notice dated 29.8.2008 not only refused to make payment rather made counter claim and thereby they failed to make payment of the cheque amount. 5. On such allegation, a complaint case was filed on 25.9.2008 which was registered as C.P.Case No.1876 of 2008, upon which Chief Judicial Magistrate, Dhanbad after taking cognizance sent it before the Judicial Magistrate for enquiry. Learned Judicial Magistrate, Dhanbad having holding enquiry found prima facie case to be true issued summons to the accused persons, vide its order dated 3.1.2009 which is under challenge in one of the application whereas in other application (Cr.M.P.No.883 of 2009) the order dated 2.4.2009 under which revision was preferred against the order dated 3.1.2009 has been rejected is under challenge. 6. Mr. Pasari, learned counsel appearing for the petitioner submitted that under the agreement, the complainant company was supposed to purchase coal of foreign origin from the State Trading Corporation of India Limited which as per the agreement entered with the complainant company was to be purchased by the accused company and the payment, as per the understanding arrived at amongst three parties, was to be made to the State Trading Corporation of India Limited. In course of time, it was agreed in between the complainant company and the accused company that the complainant company M/s. Balaji Coke Industry Pvt. Ltd. will deliver 10000 M.T of coal so that it be converted into coke and be supplied to Antai Balaji Limited, a sister concern of M/s. Balaji Coke Industry Pvt. Ltd. but only 3135.380 M.T of coal was supplied whereas the petitioner’s company had supplied the coke to Antai Balaji Limited of much more amount and that complainant company was obliged to supply 6082 M.T of coal which it did not supply and therefore, on payment of certain amount post dated cheques deposited with State Trading Corporation of India Limited covering sum of Rs.8,24,86,500/-were taken back and post dated cheques for Rs.6, 79,12,695/-were given to State Trading Corporation of India Limited so that complainant company may discharge his part of obligation but when coal was not supplied, a request was made from the State Trading Corporation of India Limited, vide letter dated 23.4.2008 (Annexure 3 ) to return the post dated cheques. In stead of returning the same, it does appear that three cheques each wroth Rs.20,00,000/-drawn in favuor of the State Trading Corporation of India Limited by the accused company were sent to the complainant company M/s. Balaji Coke Industry Pvt. Ltd. for taking legal step. Thereupon, the complaint was lodged not by the State Trading Corporation of India Limited in whose favour the cheques had been drawn but by Balaji Coking Industry Pvt. Ltd who, in the facts and circumstances, can never be said to be ’holder in due course’ and as such, complaint case cannot be maintained. 7. Learned counsel in this respect submitted that according to the case of the complainant, State Trading Corporation of India Limited had transferred the cheque to the complainant company for taking legal action but it is never the case of the complainant company that it were transferred for any consideration and as such, complainant company can never be considered to be ‘holder in due course’ in terms of the definition given under Section 9 of the Negotiable Instrument Act. 8. 8. It was further submitted that before lodgment of the case, the accused company, vide its letter 23.4.2008 (Annexure 3) had asked State Trading Corporation of India Limited to return the post dated cheques but instead of returning it the same seems to have been transferred to the complainant company, upon which case was lodged and as such, in the circumstances stated above, when State Trading Corporation of India Limited transferor cannot maintain a complaint, the transferee in no way can maintain the complaint as under the circumstances, there was defect in the title of the transferor. Under this situation, the order taking cognizance is fit to be quashed. 9. The order taking cognizance is also being sought to be quashed as, according to learned counsel appearing for the petitioner, the complaint is barred by limitation as contemplated under Section 138 of the Negotiable Instrument Act. 10. In this regard it was submitted that cheques were dishonoured on 12.5.2008 whereas notice was given on 20.8.2008, reply of which was given on 29.8.2008 but the complaint was filed on 25.9.2008. 11. As against this, Mr. Kausik Sarkhel, learned counsel appearing for the opposite party no.2-complainant submitted that after the accused company entered into an agreement to purchase coal to be supplied through State Trading Corporation of India Limited, all the three parties came to understanding that coal on being supplied to the accused company, payment would be made to the State Trading Corporation of India Limited as the complainant company was owing money to the State Trading Corporation of India Limited so that it be credited in the account of the complainant company. Under such understanding, when the coal was supplied to the accused company, cheques were given towards supply of the coal in favour of the State Trading Corporation of India Limited but on its deposit, it got dishonoured and thereby those cheques were sent by the State Trading Corporation of India Limited, vide its letter dated 10.7.2008 (Annexure C) before the complainant company for taking legal recourse and thereupon, legal notice was given. In spite of that, payment was not made and then complaint was lodged by the complainant company in the capacity of ’holder in due course’ and as such, complaint lodged by the complainant company, in the circumstances stated above, can very well be maintained and hence, order taking cognizance never warrants to be quashed. 12. In spite of that, payment was not made and then complaint was lodged by the complainant company in the capacity of ’holder in due course’ and as such, complaint lodged by the complainant company, in the circumstances stated above, can very well be maintained and hence, order taking cognizance never warrants to be quashed. 12. Having heard leaned counsel appearing for the parties, the thrust of the submission of the counsel appearing for the petitioner is that the complainant company can never be considered to be ‘holder in due course’ and as such, complaint could never be maintained as the cheques drawn in favour of the State Trading Corporation of India Limited had never been transferred to complainant company for any consideration. However, this submission was refuted strongly on behalf of the complainant that the complainant company in the circumstances stated above can always be said to be ‘holder in due course’. 13. Under the circumstances, it is to be seen as to whether the complainant company can be said to be holder in due course, in other words, whether he was holder for consideration ? 14. For adjudication of the issue, one needs to take notice of the provision as contained in Section 9 of the Negotiable Instrument Act which reads as follows: “9. “Holder in due course’ means any person who for consideration became the possessor of a promissory note, bill of exchange or cheque if payable to bearer, or the payee or indorsee thereof, if payable to order before the amount mentioned in it became payable, and without having sufficient cause to believe that any defect existed in the title of the person from whom he derived his title.” 15. The definition makes it clear that to be a ‘holder in due course’ a person must be a holder for consideration and the instrument must have been transferred to him before it becomes overdue and he must be a transferee in good faith and another important condition is that the transferee namely the person who for consideration became the possessor of the cheque should not have any reason to believe that there was any defect in the title of the transferor.” 16. In this regard, I may point it out that the case of the complainant as has been stated above that the coal is to be supplied to accused company under an agreement by the complainant company but the payment was to be made in favour of the State Trading Corporation of India Limited as the complainant company was owing some money to the State Trading Corporation of India Limited which the accused person had also agreed and thereby cheques and post dated cheques were issued in favour of the State Trading Corporation of India Limited. Thus, it has virtually been admitted that the complainant company was owing some money to the State Trading Corporation of India limited and therefore, the cheque when got dishonoured was sent by the State Trading Corporation of India Limited to the complainant company for taking legal recourse, the complainant can certainly be said to be holder for consideration. 17. Now the other question which has been raised is that in spite of accused company asking State Trading Corporation of India Limited before lodgment of the case to return the cheque, the cheque was not returned, rather cheque was transferred to the complainant company, upon which a complaint was filed and as such, it can be said that there was defect in the title of the transferor, i.e. State Trading Corporation of India Limited. 18. It be recorded that several courts have noticed that under the Indian law, a holder, to be a holder in due course, must not only have acquired the bill, note or cheque for valid consideration, but should have acquired the cheque without having sufficient cause to believe that any defect existed in the title of the person from whom he derived his title. 19. In a case of U. Ponnappa Moothan Sons, Palghat vs. Catholic Syrian Bank Ltd. and others [ (1991) 1 SCC 113 ) it has been held that the aforesaid condition requires that he should act in good faith and with reasonable caution. 20. The Hon’ble Court has gone further to hold that mere failure to prove bona fide or absence of negligence on his part would not negative his claim. 20. The Hon’ble Court has gone further to hold that mere failure to prove bona fide or absence of negligence on his part would not negative his claim. But in a given case it is left to the court to decide whether the negligence on part of the holder is to gross and extraordinary as to presume that he had sufficient cause to believe that such title was defective. 21. Under the circumstances, this fact can only be looked into during trial and not at this stage. Moreover, from the case of the accused persons, it does appear that the accused company had deposited certain post dated cheques with the State Trading Corporation of India Limited but according to the case of the complainant, the case never seems to have related with post dated cheques rather three cheques upon which the case has been lodged seems to be different than post dated cheques. Even if it is assumed that it related to those post dated cheques, at this stage it could not be decided as to whether the complainant does have or not the knowledge of the letter of the complainant. Accordingly, I do not find any merit in this submission. 22. So far last submission regarding complaint being barred by limitation is concerned that also seems to be devoid of any merit. In this respect, it was placed before me that cheque was dishonoured on 12.5.2008 whereas notice was given on 20.8.2008 which was replied on 29.8.2008 but the complaint was filed on 25.9.2008 and under the circumstances, plea was taken that complaint cannot be maintained in terms of Section 138 of the Negotiable Instrument Act, as the complainant has never seems to have given notice to the accused within a month demanding payment of the money from the date when information was given about the cheque being dishonoured. 23. It is true that it is a case of the complainant that for the first time, cheque got dishonoured on 12.5.2008, information of which when was given to the accused company, a request was made to represent the same and accordingly, when it was again presented before the Bank, it got dishonoured and information of which was given on 27.7.2008. Thereupon, on 20.8.2008, legal notice was given and when accused company denied its payment, complaint was filed on 25.9.2008. 24. Thereupon, on 20.8.2008, legal notice was given and when accused company denied its payment, complaint was filed on 25.9.2008. 24. Thus, it appears that within 30 days of receiving of the information regarding cheque being dishonoured for the second time on 27.7.2008, a notice was given within a month. 25. In this respect, it be stated that the cause of action in terms of clause (c) of proviso to Section 138 arises only when legal notice is given calling upon drawer to make payment on account of cheque being dishonoured. In the instant case cheques though had earlier been dishonoured but no legal notice, according to the case of the complainant calling upon him, had ever given to the accused and thereby this in view of the ratio laid down in a case of Prem Chand Vijay Kumar vs. Yashpal Singh and another [ (2005) 4 SCC 417 ] will not give any cause of action to the petitioner in terms of clause (c) of proviso to Section 138 of the Negotiable Instrument Act, rather cause of action accrues when one refuses on receipt of notice to make payment. Here in the instant case, notice was given on 20.8.2008 and upon denial, complaint was lodged on 25.9.2008 and thereby complaint petition can never be said to be barred by limitation either under proviso to Section 138(c) or under section 142 of the Negotiable Instrument Act. 26. Thus, I do not find any merit in these applications. Accordingly, both the applications are dismissed.