* IN THE HIGH COURT OF DELHI AT NEW DELHI + CRL.M.C. 3010/2004 Decided on 25.01.2011 IN THE MATTER OF : V.K.JAIN Petitioner Through: Mr. [ENTITY], Advocate versus M/S RANBAXY LABORATORIES LTD. Respondent Through: Ms. [ENTITY], Advocate CORAM * HON'BLE MS.JUSTICE [ENTITY] 1. Whether Reporters of Local papers may be allowed to see the Judgment? 2. To be referred to the Reporter or not? 3. Whether the judgment should be reported in the Digest? [ENTITY], J. (Oral)
1. The present petition is filed by the petitioner under [SECTION] of the [ACT], impugning the summoning order dated 06.11.2000 passed by the learned Metropolitan Magistrate in [CASE NUMBER] filed by the respondent under [SECTION] of the [ACT].
2. Briefly stated, the admitted facts of the case are that on 31.03.1998, M/s Dee Pharma Ltd., accused No.1 issued five cheques for `4,24,832/-, out of which four cheques were for `1 lac each and the fifth cheque was for `24,832/-. It is the case of the respondent/complainant that when the aforesaid cheques were presented to its banker on 25.08.1998 for realization, they were dishonoured and returned to the complainant alongwith a memo dated 27.08.1998 with the remarks "Exceeds Arrangement". As per the complainant, it served a notice dated 15.09.1998 upon accused No.1 and the petitioner/accused No.2, the Managing Director of accused No.1/company under [SECTION] of the [ACT]. The said notice is stated to have been sent through Regd. AD Post. As per the complainant, even after receipt of the aforesaid notice, neither accused No.1/company nor accused No.2/petitioner replied to the said notice or made any payment. As a result, the complainant filed the aforesaid complaint on 31.10.1998.
3. It is the contention of the counsel for the petitioner/accused No.2 that he had filed an application under [SECTION] of the [ACT] before the learned Metropolitan Magistrate stating inter alia that the complaint filed by the respondent was not maintainable, in view of the embargo placed by the Board for Industrial and Financial Reconstruction (BIFR), in terms of its order dated 11.09.1998 in [CASE NUMBER] in respect of M/s Dee Pharma Ltd. He submits that despite the aforesaid position, the application of the petitioner was dismissed as not maintainable and the matter was directed to be proceeded with further. In support of his submission that the application filed by the petitioner under [SECTION] of the [ACT] ought to have been allowed, counsel for the petitioner relies on an order dated 11.09.1998 passed by the BIFR, as per which, inter alia accused No.1/company was declared to be a sick industrial company in terms of [SECTION] of [ACT]. According to him, as accused No.1/company and its promoters had been directed under [SECTION] of the [ACT] not to dispose of any fixed or current assets of the company without the consent of the BIFR, the petitioner could not have been called upon to make payment of the four cheques to the respondent/complainant, as such payments were beyond its control and authority.
4. On the other hand, counsel for the respondent/complainant opposes the present petition and submits that at the time of passing of the summoning order, the learned Metropolitan Magistrate is only required to examine the complaint as filed, and the order dated 06.11.2000 was passed by the learned Metropolitan Magistrate after perusing the said complaint and on being satisfied that a prima facie case was made out against the accused under [SECTION] of the [ACT]. She submits that the petitioner, having failed to reply to the legal notice issued by the respondent, demanding payment of the five cheques issued by accused No.1/company, cannot now seek quashing of the summoning order by approaching this Court directly. She further states that if the petitioner proposes to rely on the winding up order passed by the BIFR on 11.09.1998, it is for him to prove before the trial court the same in accordance with law and he is entitled to rely on the said order only in his defence before the learned Metropolitan Magistrate but the present petition seeking quashing of the summoning order is not maintainable.
5. This Court has heard the counsels for the parties and considered their respective submissions. It is, indisputably, a settled legal position that while passing the summoning order, the Metropolitan Magistrate is required to take a prima facie view on the basis of the complaint filed by the complainant alongwith the documents, if any, placed on record. In the case of [PRECEDENT], the Supreme Court has held as under :
"6. [SECTION] of the Code empowers a Magistrate to dismiss a complaint without even issuing a process. It uses the words "after considering" and "the Magistrate is of opinion that there is no sufficient ground for proceeding". These words suggest that the Magistrate has to apply his mind to a complaint at the initial stage itself and see whether a case is made out against the accused persons before issuing process to them on the basis of the complaint. For applying his mind and forming an opinion as to whether there is sufficient ground for proceeding, a complaint must make out a prima facie case to proceed. This, in other words, means that a complaint must contain material to enable the Magistrate to make up his mind for issuing process. If this were not the requirement consequences could be far reaching. If a Magistrate had to issue process in every case, the burden of work before Magistrates as well as harassment caused to the respondents to whom process is issued would be tremendous. Even [SECTION] of the Code starts with the words "if in the opinion of the Magistrate taking cognizance of an offence there is sufficient ground for proceeding " The words "sufficient ground for proceeding" again suggest that ground should be made out in the complaint for proceeding against the respondent. It is settled law that at the time of issuing of the process the Magistrate is required to see only the allegations in the complaint and where allegations in the complaint or the chargesheet do not constitute an offence against a person, the complaint is liable to be dismissed." (emphasis added)
6. It is not the case of the petitioner that the complaint filed by the respondent under [SECTION] of the [ACT] does not make out a prima facie case. The stand of the petitioner is that the summoning order ought to be quashed in view of the embargo placed by the BIFR. Had the petitioner given a reply to the legal notice issued by the respondent dated 15.9.1998 on the aforesaid lines, he could have raised such a plea before this Court and vent his grievance of non-consideration thereof by the learned Metropolitan Magistrate at the time of issuance of summons. Such is not the case, in the absence of any reply to the legal notice.
7. Counsel for the petitioner has relied on the judgment in the case of [PRECEDENT]. In the aforesaid case, the Supreme Court held as below:-
"19. The question that remains to be considered is whether [SECTION] of [ACT] affects a criminal case for an offence under [SECTION] [ACT]. In the said section provision is made enabling the Board to make an order in writing to direct the sick industrial company not to dispose of, except with the consent of the Board, any of its assets - (a) during the period of preparation or consideration of the scheme under [SECTION]; and (b) during the period beginning with the recording of opinion by the Board for winding up of the company under [SECTION] and up to commencement of the proceedings relating to the winding up before the concerned High Court. This exercise of the power by the Board is conditioned by the prescription that the Board is of the opinion that such a direction is necessary in the interest of the sick industrial company or its creditors or shareholders or in the public interest. In a case in which the BIFR has submitted its report declaring a company as 'sick' and has also issued a direction under [SECTION] restraining the company or its directors not to dispose of any of its assets except with consent of the Board then the contention raised on behalf of the appellants that a criminal case or the alleged offence under [SECTION] [ACT] cannot be instituted during the period in which the restraint order passed by the BIFR remains operative cannot be rejected outright. Whether the contention can be accepted or not will depend on the facts and circumstances of the case. Take for instance, before the date on which the cheque was drawn or before expiry of the statutory period of 15 days after notice, a restraint order of the BIFR under [SECTION] was passed against the company then it cannot be said that the offence under [SECTION] [ACT] was completed. In such a case it may reasonably be said that the dishonouring of the cheque by the bank and failure to make payment of the amount by the company and/or its Directors is for reasons beyond the control of the accused. It may also be contended that the amount claimed by the complainant is not recoverable from the assets of the company in view of the ban order passed by the BIFR. In such circumstances it would be unjust and unfair and against the intent and purpose of the statute to hold that the Directors should be compelled to face trial in a criminal case.
20. Except in the circumstances noted above we do not find any good reason for accepting the contentions raised by the learned Counsel for the appellants in favour of the prayer for quashing the criminal proceedings or for keeping the proceedings in abeyance. It will be open to the appellants to place relevant materials in this regard before the learned Magistrate before whom the cases are pending and the learned Magistrate will examine the matter keeping in mind the discussions made in this judgment. We make it clear that we have not considered the question whether in the facts and circumstances of a particular case [SECTION] [ACT] is attracted or not, for that is a question to be considered by the Court at the appropriate stage of the case in the light of the evidence on record. The appeals are disposed of on the terms aforesaid."
8. It is apparent from the case of M/s [PRECEDENT] (supra), that the appellants therein were directed to place the relevant material before the Magistrate for the same to be examined in accordance with law. The said liberty is available to the petitioner in the present case as well. It is relevant to note that the petitioner has not placed on record a certified copy of the BIFR order dated 11.9.1998 on which he relies for quashing of summoning order. Only a photocopy of the said order has been filed. He shall be entitled to prove the aforesaid order in accordance with law and rely upon the same for the purpose of taking the defence that payment of amount is beyond his control on account of the said order. With the aforesaid observations, the present petition is disposed of.
9. Needless to state that the observations made hereinabove are only for the purpose of deciding the present petition. Both the parties shall be at liberty to take all the pleas that may be available to them in law, which shall be considered and decided by the learned Metropolitan Magistrate on merits, uninfluenced by the present order.
([ENTITY]) JANUARY 25, 2011 JUDGE rkb