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2026 (1) TMI 315
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....el to challenge to challenge the summoning Order dated 12.07.2017 in the CC No. 621809/2016 under Sections 409, 465, 467, 468, 471, 109, 120-B, and 34 of the Indian Penal Code, 1860 (hereinafter referred to as "IPC") and the Order dated 01.12.2017 whereby Non-Bailable Warrants (NBWs) were issued against them. 2. The Complaint Case under Sections 409, 465, 467, 468, 471, 109, 120-B, and 34 IPC along with an Application under Section 156(3) of the Code of Criminal Procedure, 1973 (hereinafter referred to as "CrPC") was filed by Arun Jain, Ex-Director of M/s Lilliput Kidswear Limited (hereinafter referred to as "M/s LKL") ("the Complainant"), against the Petitioner Company i.e. M/s CTBC (Accused No.1), its senior officials and Managers/Director of this Bank and other unknown persons who may have been involved in committing the alleged cognizable offences. 3. It was stated in the Complaint that during March 2011, representatives of the Accused Bank approached the Company with proposals for business expansion and offered to provide loan facilities at concessional rates, emphasizing lucrative benefits if the loan was secured before the conclusion of that financial year. 4. As pe....
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....by the Company's directors which included a Working Capital Demand Loan Agreement dated 06.04.2011 for Rs. 15 crores; Demand Promissory Note dated 06.04.2011 for Rs. 15 crores; a Letter of Continuity dated 06.04.2011, and a Letter of Set-off dated 06.04.2011, and a Cheque No. 026402 for Rs. 15,00,00,000/- in the name of M/s CTBC, in discharge of its liability toward the finance facilities. 10. Clause 16 of the Working Capital Demand Loan Agreement specifically stated that in case of default in repaying the loan amount, including principal or interest, M/s CTBC would be entitled to enforce the securities provided by the Company. 11. Vide Letter dated 20.05.2011; the Company undertook to include the Bank in its multiple banking arrangement with existing bankers. The Company also committed that if it failed to do so within six months, it would repay the entire facility. However, the Company failed to induct the Bank into the multiple banking arrangements. 12. Consequently, the Petitioner No.1, M/s CTBC issued a Legal Notice dated 20.10.2011, recalling the entire facility and demanded payment of Rs. 15 crores along with future interest at 13.50% per annum from 01.10.2011, ....
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....rious other bank officers, alleging offences under Sections 409, 465, 467, 468, 471, 109, 120-B, and 34 IPC before Ld. MM, Saket Court, New Delhi. 21. The Petitioners assert that the Complaint has been filed by the Respondent No.2 as retaliation and to unnecessarily harass the Petitioners. Ld. MM dismissed the Respondent No.2's Application under Section 156(3) vide Order dated 11.02.2015, and directed him to lead evidence. Aggrieved by Order dated 11.02.2015, the Respondent No.2 Crl Rev. Pet. No. 180/2015 before Ld. ASJ, Saket Court. Ld. ASJ dismissed the Revision vide Order dated 26.04.2016 with a cost of Rs. 50,000. 22. Respondent No.2 then led his pre-summoning evidence and examined two witnesses, namely himself as CW-1 and CW-2 Mr. Sanjeev Narula. Respondent No.2 had reiterated in his testimony, the allegations made in the Complaint that M/s LKL was approached by M/s CTBC for sanction of credit facility amounting to Rs.15 crores. He deposed that the bank officials and confirmed that the undated cheques will not be banked and that it was just a formality. 23. Mr. Sanjeev Narula as CW-2 deposed along the same lines as CW-1. 24. Ld. MM on appreciation of the eviden....
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....the Respondent No.2. 30. Moreover, Section 20 NI Act provides that when an incomplete but signed cheque is handed to the payee or holder in due course, the drawer prima facie gives authority to fill in particulars such as date and amount and present it for payment. 31. Ld. MM has failed to appreciate that documents filed by the Complainant itself shows that credit facilities were enjoyed by the Respondent No.2. A bare reading of these documents reflects that no payments were made by the Respondent No.2 until the filing of the Section 138 Complaint. 32. The averments in the impugned Complaint directly contradict the Respondent's stand. In Company Petition No. 66/2012, the Respondent Company had categorically admitted the Petitioner bank's dues. Since it failed to honour its undertakings given in the Court to repay the Petitioner bank, the winding up of the Respondent Company was allowed and the official liquidator was appointed, by this Court in the Company Petition. Notably, the present Complaint was filed after the winding up Order was passed against the Respondent, indicating that it is an afterthought. 33. The averments made in the impugned Complaint, is enti....
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....tioners of the impugned orders dated 25.10.2017 and 01.12.2017, whereby bailable warrants and thereafter non-bailable warrants were issued against them by the Ld. MM. 39. The Respondent in his Reply has vehemently opposed the present Petitions. It is contended that the Petitioners are seeking adjudication of their defence at the threshold, bypassing the procedure prescribed under the Code of Criminal Procedure. The pleas urged in the Petition, are matter of record which need to be tested and proved during the course of trial, to be faced by them. The plea of taking loan and consequential events, do not exonerate the Petitioners from their acts done in conflict of law of the land. The present petition, deserves to be dismissed. 40. Respondent No.2 has submitted that that the allegations of absence of entrustment and personal non-involvement are contrary to the contents of the Complaint, which specifically attribute specific roles to the Petitioners. The Petitioners have contended that they never dealt with the account of the Company in "Personal Capacity". However, is an implied admission of commission of act, but not in personal capacity. Further, leaving the services of bank....
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....h, 2011. Upon the Company/M/s LKL's default in repayment, M/s CTBC initiated Recovery proceedings before the Debt Recovery Tribunal, Winding-up proceedings, and also instituted a Complaint under Section 138 NI Act after the Cheque issued by the Company/M/s LKL towards discharge of its liability, was dishonoured. 50. During the pendency of the proceedings under Section 138 NI Act, Respondent No.2/Arun Jain, an ex-director of the Company/M/s LKL, instituted the present Complaint under Sections 409, 465, 467, 468, 471, 109, 120-B and 34 IPC, alleging that the Cheque in question was an undated security cheque which had been misappropriated and fraudulently presented by M/s CTBC and its officials. On the basis of the said Complaint, the Ld. MM passed the summoning Order dated 12.07.2017 under Section 409 IPC. Thereafter, on the non-appearance of the Petitioners, Bailable Warrants and Non-Bailable Warrants vide Order dated 01.12.2017. 51. The Petitioners, seek quashing of the Complaint filed by the Respondent and the Impugned Orders dated 12.07.2017 and 01.12.2017. 52. The Respondent No.2 though had filed the Complaint against the Petitioners under Sections 465/467/468/471 I....
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....auses of the Loan Agreement in regard to Security Cheque is as under: "The Borrower (Lilliput Kidswear Limited) agrees to borrow from the Bank and the Bank agrees to lend to the Borrower Working Capital Demand Loan up to the maximum extent of Rs. 150,000,000/- (Indian Rupees One Hundred Fifty Million Only) and in consideration of the Bank having agreed to grant/granted to the Borrower the said WCDL, the Borrower irrevocably agrees, undertakes and confirms to the Bank as follows: ... 6. The Borrower hereby specifically agrees, confirms and undertakes that: (i) this Agreement shall operate as a continuing security to the Bank, to be enforceable for me repayment of me ultimate balance and/or all sums remaining unpaid under me said WCDL now or hereafter, including all interest to become payable upon me said WCDL; and also all moneys lent, advanced, paid or incurred on the said WCDL or which may in future be advanced or incurred together with interest, discount, commission and other banking charges and all other costs, charges and expenses which may be or become payable in connection therewith; ... 10. The Borrower will execute necessary Demand Promis....
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....ntended to be used only if the issuer fails to meet the agreed obligation, thereby serving as a "safeguard" for the recipient. 59. Therefore, in the Loan Agreement, it was specifically agreed between the parties that this security cheque given in discharge of contractual obligation would be encashed as and when liability arises. On the amount due under the loan agreement becoming payable, in respect of which the Complaint had defaulted, the cheque was presented for encashment. 60. The Complainant has alleged commission of offences under Sections 409 IPC on the premise that the cheque was entrusted to the Petitioners for a limited purpose as security and was dishonestly misappropriated and used to cheat the Company. 61. The question is whether presentation of the Security Cheque for realization of alleged outstanding amount, would constitute an offence of criminal breach of trust by Agent, which is punishable under Section 409 IPC. 62. To appreciate whether the offence of Section 409 IPC is disclosed, it would be relevant to reproduce the Sections. 63. Sections 406 reads as under: "405. Criminal breach of trust :- Whoever, being in any manner entrust....
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....ionship between them. A mere transaction of sale cannot amount to an "entrustment". 66. Similarly, the Apex Court in Central Bureau of Investigation, SPE, SIU(X), New Delhi vs. Duncans Agro Industries Ltd., Calcutta, (1996) 5 SCC 591 held that the expression "entrusted with property" used in Section 405 of the IPC, connotes that the property in respect of which criminal breach of trust can be committed, must necessarily be the property of some person other than the accused or that the beneficial interest in or ownership thereof must be in the other person and the offender must hold such property in trust for such other person or for his benefit. 67. As observed in the case of N. Raghavender vs. State of Andhra Pradesh, CBI, Crl. Appeal No. 5/2010 decided on 13.12.2021, the entrustment of public property and dishonest misappropriation or use thereof in the manner provided under Section 405 IPC, are a sine qua non for making an offence punishable under Section 409 IPC. 68. In N. Raghavender, (supra), the requirement of Section 409 was explained. It was observed: "44. No sooner are the two fundamental ingredients of 'criminal breach of trust' within the meani....