TaxTMI 
TaxTMI 
2026 (3) TMI 583
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....zance Order dated 06.06.2024 passed by learned M.M. Further, Quashing of the Order dated 22.04.2025 of learned ASJ in Criminal Revision Petitions, which upheld the Order of Ld. MM, has also been sought, by way of the present Petitions. 2. The aforesaid four Petitions had been filed by the Complainant under Section 138 Act read with Section 420 IPC in regard to the dishonour of Cheque dated 20.02.2024 amounting to Rs. 70,00,000/- each and also to challenge the Order of Cognizance dated 29.06.2024. 3. It is explained that Kotak Mahindra Bank Ltd./the Complainant had granted financial assistance of Rs. 40,00,00,000/- to KRPM Infrastructure Pvt. Ltd., in which the Petitioners Ritu Gupta, Manisha Gupta, and Kunj Gupta had stood as Guarantors while Pooja Gupta was the Director. The Term Loan was for a period of 7 years. Two undated Cheques drawn in favour of the Bank superscribing "Amount not exceeding 40 crores" were handed over as security. 4. The Complainant deposited these undated and blank cheques given by the Petitioners as Security for the Term Loan, without raising any demand for any sum of money and without giving any intimation to the Petitioners. 5. It is submitted....
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.... was the Account classified as NPA and as on date, there is no Outstanding Debt, in the Loan Account. The EMIs have been paid on monthly basis, by KRPM Infrastructure Pvt. Limited. 13. In case of Loan transactions, the liability of the Guarantor arises when the Borrower is unable to or defaults in paying the Loan Amount. There is no outstanding debt in the Loan Account, as the EMIs have been paid regularly. The substantial amount of Rs. 2,68,15,181/- has been paid from 20.02.2024 to 03.06.2024, in discharge of the Liability. 14. These material facts have been suppressed and not brought to the notice of the Learned M.M. who took Cognizance on the Complaint on 29.06.2024. Such concealment of post-dated payments, amounts to gross abuse of Judicial process, for which reliance is placed on Pioneer Drip Systems Pvt. Ltd. vs. Jain Irrigation Systems Ltd., 2009 SCC OnLine Bom. 2046. 15. The Master Facility Agreement dated 24.03.2023 clearly stipulated the limited purpose of the Undated Security Cheques and its purpose was to serve as a mechanism to secure repayment of the Loan in its entirety and not piecemeal, towards individual instalments. The cheque was neither linked to a def....
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....h is well beyond the statutory six months validity. Even if the Cheques were undated at the time when they were issued, the date would be reckoned on 24.03.2023 i.e. the date on which the Loan Agreement was executed and the Cheques were handed over to the Complainant Bank. There was no timeline agreed upon between the parties and there was no Recall Notice and the Cheque was presented after expiry of six months period; therefore, the condition laid down in Clause (a) proviso to Section 138 NI Act, were not met. 22. It is further contended that the impugned Cheques were Security Cheques and not for the entire Loan and not against any specific repayment transaction. Reliance is placed on Sampelly Satyanarayana Rao vs. India Renewable Energy Development Agency Ltd., (2016) 10 SCC 458, wherein it was clarified that though the word "Security" is used in Clause 3.1(iii) of the Agreement, it refers to the Cheques being towards payment of instalments, which is not so in the present case. There were no subsisting outstanding dues on the date of presentation of the Cheques, as the EMIs were being paid regularly and the Account was not classified as NPA. 23. It is further contended that....
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....ed by the Complainant Bank which has in a manifestly, arbitrarily and prejudicial manner, circumvented its own Agreement and hastily proceeded to present the undated Security Cheques, without first invoking any preconditions for Default or Recovery. 28. The Guarantor by the very nature of their role, is not in a position to ascertain real time defaults by the borrower, unless the demand is raised by the Bank. In the instant case, no such demand has been made by the Bank. It has completely bypassed its own contractual protocol, effectively short- circuiting both the Primary Loan Arrangement and the Guarantee Contract, rendering the initiation of Criminal Proceedings against the Petitioners, unsustainable in law. 29. Moreover, the Charge under Section 420 IPC, is a misnomer. It is imperative that there must be a mens rea from the very inception, to constitute an offence of Cheating. Mere Civil wrong or infringement of a Civil Right, does not give rise to any Criminal Prosecution. Reliance is placed on Suryalakshmi Cotton Mills Limited vs. Rajvir Industries Limited and Ors., (2008) 13 SCC 678 and Rekha Jain vs. State of Karnataka and Anr., (2022) 18 SCC 174. 30. In the end, i....
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....e Transaction Documents including the Facility Letter. Clause 1.1.20 "Guarantor" shall mean the person(s) {If any} who have issued/may be required to issue, guarantee(s) in favour of the Bank, inter alia, guaranteeing the performance of the obligations of the Borrower to the Bank under an pursuant to the Agreement. Clause 1.1.23 "Outstanding Balance(s)" shall mean collectively the Facilities, interest, compound interest, Additional Interest, any other charges, dues and monies payable, costs and expenses reimbursable, as outstanding from time to time and whether any of them are due or not for the time being and whether under this Agreement and/or any of the Transaction document(s)." 37. Further, Article 8 provided for Security as per Facility Letter, for Individual Facility. It provided that Borrower shall secure the due payment, repayments, etc. of the entire outstanding balance to the Bank, which shall provide a Security, who shall furnish at its/his own cost such additional Security of such value and in such manner, as may be required by the Bank from time to time. It further provided that the entire Security shall be a continuing Security, till the final Set....
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.... or waiving all or any right of the creditors generally, against the Borrower (or the security provider and/or the guarantor) or in respect of any contract or agreement concerning the Borrower (or the security provider and/or the guarantor); XIX..... Clause 9.2 If any Event of Default or any event which, after the notice or lapse of time or both would constitute an Event of Default shall have happened, the Borrower shall forthwith given the Bank notice thereof in writing clarifying such Event of Default, or such event." 42. In terms of the Master Facility Agreement, the Petitioners had signed Deed of Guarantee dated 24.03.2023. The following Clauses of Deed of Guarantee are pertinent and reproduced as under: "Clause 2. The Guarantor hereby guarantees as primary obligator and not merely as surety, the discharge of the Secured Obligations by the Borrower and hereby irrevocably, unconditionally and unequivocally undertakes to the Bank that, the Guarantor shall, on each demand by the bank from time to time, forthwith unconditionally and irrevocably pay to the Bank and make good all amounts demanded in respect of the Secured Obligations, without any counter....
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.... powers reserved to the Bank under the Master Facility Agreement, to enforce or forbear to enforce payment of any amounts due to the Bank under the Master Facility Agreement or any of the remedies or securities available to the Bank, to enter into any composition or compound with or to grant time or any other indulgence to the Borrower and the Guarantor shall not be released by the exercise by the Ban of its liberty in regard to the matters referred to above or by any act or omission on the part of the Bank or by any other matter or thing whatsoever which under the law relating to sureties would but for this provision have the effect of so releasing the Guarantor and the Guarantor hereby wives in favour of the Bank so far as may be necessary to give effect to any of the provisions of this Deed, all the suretyship and other rights which the Guarantor might otherwise be entitled to under Applicable law. The guarantor also agrees that he/it will not be entitled to the benefit of subrogation vis-a-vis securities or otherwise until the Secured Obligations have been discharged in full. In particular, the Guarantor hereby waives all the rights available to sureties under Sections....