TaxTMI 
TaxTMI 
2026 (7) TMI 224
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.... dated 30.11.2019 passed in the said proceedings, whereby the learned Trial Court closed the right of the petitioner M/s. Flywheel Logistics Pvt. Ltd. to cross examine the complainant witness; iii. order dated 31.01.2020 passed in the said proceedings, whereby the statement of the petitioner Anil Sayal was recorded under Section 281(1) read with Section 313 of the CrPC. 2. Shorn of unnecessary details, the brief facts of the case are as under: 2.1. The present dispute essentially relates to the subject complaint which was filed by Respondent Nos. 1 and 2 against the petitioners for the offence under Section 138 of the NI Act. Respondent No. 1/ complainant company is involved in business of international freight forwarders, transporters and logistics solution providers, and Respondent No. 2 is the director of Respondent No. 1. The petitioner M/s. Flywheel Logistics Pvt. Ltd. is Accused No. 1 in the complaint, which was availing the service of the complainant company, and the other two petitioners were the directors of the accused company. Prior to filing of complaint 2.2. As certain payments were due from the accused persons on account of various services taken ....
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...., on 08.11.2017, the subject complaint was filed. After filing of complaint 2.9. 3rd Settlement: On 01.05.2018, the complainant company and the accused company entered into consent terms wherein liability of the accused company was admitted to be Rs.3,36,16,641.20 (including interest). It was agreed that the consent terms shall remain valid for a period of 53 days from the date of execution (that is, 01.05.2018) till 23.06.2018. The terms indicate that the parties agreed that the proceedings under NI Act were to be put on hold after briefing the Court about the settlement and ensuing negotiations. The liability of the accused company to the tune of the consent admitted liability (that is, Rs.3,36,16,641.20) stood transferred to the books of M/s. Flywheel Logistics Solutions Private Limited ('FLSPL'), which is a sister concern of the accused company. It was agreed that the right of the complainant company against the accused company was not extinguished and in the event of default, the complainant company would have all the legal rights to claim the aforesaid amount from the accused company. It was also agreed that the complainant company shall have all rights to initiat....
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....uv and Anil, their counsel submitted before Court that payment could not be made and the matter may be proceeded further. Notice under Section 251 of the CrPC was directed to be served upon the accused. The said order is impugned by the accused Luv and Anil. 2.17. Order dated 30.11.2019 is impugned by the accused company as its right to cross-examine the complainant witness was closed therein. 2.18. Essentially aggrieved by the continuation of the proceedings emanating from the subject complaint and the aforesaid orders respectively, the petitioner accused preferred their separate petitions. Submissions 3. The learned counsel for the petitioners submitted that the dispute between the petitioners as well as Respondent No. 1 has amicably been settled, and consequently the complaint stood compounded. They submitted that on 03.08.2018, Respondent No. 1 and FLSPL entered into consent terms vide which FLSPL agreed to settle Respondent No. 1's claim from the accused company thereby acquiring liability on itself. 4. They submitted that the Consent terms settlement agreement was duly filed by Respondent No. 1 with the learned Trial Court on 04.08.2018 and consequently there w....
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....g the entire course of time, Respondent No. 1 never filed a claim with the Interim Resolution Professional/Resolution Professional or the Liquidator of the accused company thereby admitting that it had no claim from the accused company. 8. They submitted that Respondent No. 1, by agreement and conduct had accepted FLSPL as its debtor in line with the terms of the settlement agreement dated 03.08.2018. They submitted that at first Respondent No. 1 issued a demand notice to FLSPL under Section 8 of the Insolvency and Bankruptcy Code claiming to be the Operational Creditor of FLSPL. They submitted that Respondent No. 1 did not revoke the last settlement dated 03.08.2018 and pursued its remedy against FLSPL before NCLT on the basis of the last settlement dated 03.08.2018. They consequently submitted that there existed no liability of the petitioners or the accused company since the same had already been taken over by FLSPL by entering into agreement and issuing fresh cheques. They submitted that the same is evident from demand notice dated 12.12.2018 and the petition under Section 9 of the IBC as well as order dated 01.02.2019 passed by the NCLT in claim filed by Respondent No. 1 ag....
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.... complaint in the present case was neither compounded nor withdrawn. Reliance was placed on the case of Dayawati v. Yogesh Kumar Gosain : (2017) SCC OnLine Del 11032, where another Bench of this Court had opined that complaints under Section 138 of the NI Act are withdrawn/compounded only after receipt of the entire settlement amount. He submitted that while the settlement was brought to the notice of the Trial Court and multiple adjournments were sought on pretext of delayed payments, however, the trial court record indicates that no payment was ever made, which led to issuance of notice under Section 251 of the CrPC. ANALYSIS 16. At the outset, it is relevant to note that this Court can quash complaints under the NI Act at the pre-trial stage in the exercise of its inherent jurisdiction under Section 482 of the CrPC if such unimpeachable material is brought forth by the accused persons which indicates that they were not concerned with the issuance of the cheques or that no offence is made out from the admitted facts. The Hon'ble Apex Court in the case of Rathish Babu Unnikrishnan v. State (NCT of Delhi) : 2022 SCC OnLine SC 513 had discussed the scope of interference by the....
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....ourt to examine whether the factual defence is of such impeachable nature that the entire allegations made in the complaint is disproved. 18. In the present case, the petitioner accused have not sought quashing of the complaint by disputing that ex facie no case is made out against them from the complaint, but rather, they have asserted that quashing of the subject complaint is merited on the basis of the consent terms dated 01.05.2018 and 03.08.2018. It is their case that the debt was transferred to a sister concern of the accused company and having entered into settlements qua the liability, it was not open to the complainant to continue with the original complaint under Section 138 of the NI Act. 19. Before this Court can proceed to examine the merits of the said contentions, it is thus imperative to take note of the relevant excerpts of the consent terms. 20. The relevant portion of the consent terms dated 01.05.2018 are as under: "3)....That, this consent terms are valid for a period of 53 days from the date of execution i.e. from 01.05.2018 to till 23.06.2018 (the aforesaid shall hereinafter for the sake of brevity be referred to as "moratorium period"), and....
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....tative and Key managerial personnel and representing both corporate debtors is returned un-paid for any reason whatsoever - the same shall be considered as an "event of default" and be deemed default committed jointly and severally by the corporate debtors and Mr. Anil Syal- Authorised representative and Key managerial personnel and representing both corporate debtors 17. Legal Remedies a) Notwithstanding anything contained in any law; in the event of default i.e. in the event of return of cheque(s) mentioned in Annexure-5 totalling Rs. 3,36,16,641.20/- as un-paid for any reason whatsoever - the same shall, without any furtherance to parties, be considered as breach of the consent terms. Operational creditor or its assigns shall in such event have the absolute right and discretion to persue all such remedies available to operational creditor or its assigns as under law including but not limited to remedies for breach of the consent terms and/ or remedies under the Insolvency and Bankruptcy code, 2016 It is agreed by and between the parties that in the event of default; the operational creditor has all the legal rights to initiate the fresh proceedings aga....
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....porate debtor -1, a sum of Rs. 3,36,16,641.20/-along with Simple Interest rate @12% p.a. with monthly rests from 23.06.2018. The calculation of revised interest doesn't affect the validity of Demand notice in Form 3 issued to Corporate Debtors. The settlement consideration as set out in these consent terms shall in such event in no way be deemed a waiver of its claim(s) as set out specifically in Demand notice in Form 3 issued to Corporate Debtors. xxx 18. Full and Final Settlement of all the claims In the even the post dated cheques dated 23.06.2019 for Rs. 3,36,16,641.20/-, is honoured on its deposit by operational creditor and/or its assigns as contemplated between the parties; the operational creditor undertakes to withdraw all the complaints/ criminal cases or any application pending, if any, before the NCLT Delhi for the said claims." (emphasis supplied) 21. The relevant portion of the consent terms dated 03.08.2018 are as under: "2) That the present consent terms dated 03.08.2018 is part and parcel and is to be read with consent terms dated 01.05.2018. That, present consent terms dated 03.08.2018 are valid from the date of ....
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....um of Rs. 3,36,16,641.20/- or balance thereof as unpaid for any reason whatsoever the parties admit and agree that the operational creditor shall be entitle to receive and/or recover from, corporate debtor, jointly and severally payable as per the consent admitted liability, a sum of Rs. 3,75,00,00.00/- along with further Simple Interest rate @ 12% p.a. with monthly rests from the 10.09.2018. The calculation of revised interest doesn't affect the validity of Demand notice in Form 3 issued to Corporate Debtor 12. Full and Final settlement of all the claims In the event the post-dated cheques dated 23.06.2018 for Rs. 3,36,16,641.20/-, is honoured on its deposit by operational creditor and/or its assigns as contemplated between the parties; the operational creditor undertakes to withdraw all the complaints/ criminal cases or any application pending, if any, before the NCLT Delhi for the said claims." (emphasis supplied) 22. Even though there is a clause which provides for withdrawal of all complaints, perusal of the consent terms prima facie indicates that the parties had explicitly agreed that their legal rights and remedies were temporarily suspended su....
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....at arises for our consideration is whether once the settlement has been entered into, the complainant can be allowed to pursue the original complaint under Section 138 of the NI Act. xxx 41. When a complainant party enters into a compromise agreement with the accused, it may be for a multitude of reasons - higher compensation, faster recovery of money, uncertainty of trial and strength of the complaint, among others. A complainant enters into a settlement with open eyes and undertakes the risk of the accused failing to honour the cheques issued pursuant to the settlement, based on certain benefits that the settlement agreement postulates. Once parties have voluntarily entered into such an agreement and agree to abide by the consequences of non-compliance of the settlement agreement, they cannot be allowed to reverse the effects of the agreement by pursuing both the original complaint and the subsequent complaint arising from such non-compliance. The settlement agreement subsumes the original complaint. Non-compliance of the terms of the settlement agreement or dishonour of cheques issued subsequent to it, would then give rise to a fresh cause of action attracting ....
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....peditious Trial of Cases Under Section 138 of NI Act 1881, In re [Expeditious Trial of Cases Under Section 138 of NI Act 1881, In re, (2021) 16 SCC 116] has recognised multiplicity of complaints as one of the major reasons for delay in trial of cases under Section 138 of the NI Act and the consequent choking of the criminal justice system by a disproportionate number of Section 138 cases. While it is true that the trial in this case is before one court, that is not necessarily the ground reality in all cases. xxx C.2. Liability arising from the settlement agreement 49. Once a settlement agreement has been entered into between the parties, the parties are bound by the terms of the agreement and any violation of the same may result in consequential action in civil and criminal law. xxx 50.1. Since the proceedings under the NI Act for the dishonour of the first set of cheques was pending, the second set of cheques issued only on the basis of the deed of compromise could not be construed as being towards the discharge of a liability." (emphasis supplied) In Gimpex Pvt. Ltd. v. Manoj Goel (supra), the Hon'ble Apex Court had specifically....
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....complainant company did not treat the accused company as its creditor. It is also argued that pursuant to the said settlements, there is no legally recoverable debt against the petitioners, whereby, the subject complaint is no longer maintainable. 27. Pertinently, Respondent Nos. 1 and 2 have maintained that the cheques given in terms of the settlements were never presented for encashment due to repeated requests of the accused persons and the same were rendered stale as the counsel for the accused persons categorically submitted before the Trial Court that the matter may be proceeded further as no payments could be made. The record also reflects that multiple adjournments were sought by the parties from 30.05.2018 onwards where the accused persons sought more time for disbursing the settlement amount and to settle the matter. Furthermore, peculiarly, even after consent terms dated 01.05.2018 and 03.08.2018 were executed in the year 2018, none of the accused pressed for compounding of the matter either. Rather, perusal of order dated 29.11.2018 indicates that the counsel for the accused persons had made the submission on 29.11.2018 for proceeding further with proceedings in pres....
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....ntly engaged and he had not received a copy of the complaint, which request was opposed by counsel for complainant as it had apparently been made amply clear previously that the entire cross-examination would be conducted on that very day. It was noted that the said counsel had filed an MOA on behalf of the company on 01.11.2019 and the application for certified copies was only made one day before the date of hearing. It was further noted that despite multiple appearances on behalf of the accused company, no such objection was made previously, including on the previous date when the matter had already been fixed for cross-examination. Even so, the file was handed over to the counsel for perusal and the matter was passed over to 2:00 PM for cross-examination for the same day. It was at this juncture when another request for adjournment was made that the Court closed the right of the accused company. Though it is pleaded that vital right of the accused company was erroneously closed without appreciating that the counsel had only been engaged on 01.11.2019, this Court is not persuaded to interfere with the said order as it has been rightly noted that sufficient opportunities had been ....