1 IN THE HIGH COURT OF JUDICATURE AT BOMBAY CRIMINAL APPELLATE JURISDICTION CRIMINAL WRIT PETITION NO. 1154 OF 2001 M/s. Viplav Trading Ltd. Through its Authorised Representative Shri Kashinath M.Bhatt. ... Petitioners (Org. accused) Vs. State of Maharashtra & Anr. ... Respondents Mr. Shrish Gupte a/w Mr Subodh Desai, Ayaz Bilawala and Rajiv Ravi i/b. M/s. Bilawala & Co. Advocates, for the petitioners. Ms. S.V.Gajare, APP, for the respondent No.1 - State. Mr. Benny Joseph, a/w Ms. Pallavi Dedhia, i/b. M/s. Sanjay Udeshi & Co.,Advocates for respondent No.2. CORAM: J.H.BHATIA, J. DATE : 15th June, 2010. P.C. 1. The petitioner,who is the original accused No.1 in Criminal Case No. 2263/SS of 1999 pending before the Metropolitan Magistrate, 33rd Court at Ballard Pier, Mumbai, has by this petition taken exception to the issuance of process under Section 138 read with Section 142 of the Negotiable Instruments Act on the complaint filed by respondent No.2 - Janata Sahakari Bank Ltd. 2. To state in brief, it is the contention of the complainant/respondent 2 No.2 that accused No.1/petitioner is a limited company incorporated under the Companies Act,1956 and is engaged in the business of exports having the status of export house. Accused Nos. 2 to 4 are its directors. On the request of the accused, the complainant opened three Inland Irrevocable Letters of Credit Nos. 189, 190 and 191 for the sum of Rs.1 crore each on 29.9.1998 in favour of M/s. Splendor Electricals Pvt.Ltd. In the above Letters of Credit, three bills of exchange for Rs.1 crore each were drawn by M/s. Splendor Electricals Pvt.Ltd. and they were duly accepted by the accused No.1 company. The said bills of exchange were discounted by three different banks. Inspite of various requests, the accused failed to make payment of the Letters of Credit amount to the complainant-Bank. Therefore, the complainant-Bank was required to make payment of the Bills of Exchange amount to discounting Bank as per the provisions made by Reserve Bank of India. Having made the payment, the complainant was required to treat the same as forced loan. The accused by their letter dated 30.3.1999 issued two cheques,one for Rs.3crore and another for Rs.15,87,945/- against Bank of Baroda, Sir P.M.Road, Mumbai Branch in discharge of the accused's debt or liability towards the principal amount of forced loan of Rs.3 crore and interest thereon. It was also assured that the said cheques would be honoured on 15.4.1999. According to the complainant, the cheques were presented for clearance. On 20.5.1999, the cheques were dishonored with the endorsement "Full Cover Not 3 Received". The intimation was received by the complainant on the same day. The complainant issued notice dated 24.5.1999 to the accused calling upon the accused to make payment of the dishonoured cheques within 15 days of the receipt of the notice. The notice was received by the accused persons on 26.5.1999 but they failed to make payment . Hence, complaint under Sec. 138 read with Sec. 142 of Negotiable Instruments Act was filed. 3. Though several contentions were raised in the petition challenging the issuance of process, the learned Senior Counsel urged only one ground. The learned Counsel contended that both the cheques were drawn by accused No.1 against its account in Bank of Baroda for payment to Janata Sahakari Bank Ltd. and the cheques were crossed. The learned Senior Counsel contended that both the cheques clearly indicated that the amount was to be transferred from the account of accused No.1 with Bank of Baroda to its account with Janata Sahakari Bank Ltd. As the cheques were only issued for transfer of the money from their account with one Bank to their account with the complainant Bank, the cheques could not be treated to have been issued in discharge of their debt or liability towards the complainant Bank. The learned Senior Counsel contended that when the two names of the payee are to be found on the cheque, it is to be seen as to who is the real recipient of that amount. He contended that in view of 4 the name of the payee on the cheques, it is clear that the real payee was the accused No.1 company itself and that the cheques were issued by accused No.1 in its own favour . Thus the drawer as well as the payee are same person and therefore, the complainant does not get any right to make any complaint under Section 138. The learned Senior Counsel placed reliance upon M/s. Credential Finance Ltd. & Ors. v s. State of Maharashtra & another 2000(5) Bom.C.R. 527 in support of his contention. 4. The learned Counsel for the complainant vehemently contended that the said authority has no application to the facts of the present case. He pointed out that both the cheques were simply sent by the accused No.1 to the complainant Bank for presentation to the Bank of Baroda for encashment and then to credit the amount to its loan account. The two cheques were sent to the Bank with a covering letter dated 30.3.1999, wherein it was clearly admitted that accused No.1 company was indebted to the Bank on account of the amount paid by them to the discounting bank against the Letters of Credit facility opened by the complainant Bank on the request of the accused No.1. There is a clear reference to that letter in para 7 of the complaint. Copy of that letter was also annexed to the complaint. 5 5. On perusal of that letter, it appears that subject of that letter was "Forced Loan Payment of letter of Credit". Para 1 of this letter shows that the accused No.1 had availed of Letter of Credit Facility of Rs.3 crore but could not retire the bills which had fallen due and therefore they were converted into Forced Loan account. Second para of the letter clearly shows that the accused no.1 company had issued two cheques of Rs.3 crore and Rs.15,87,945/- dated 30.3.1999 against the payment of the forced loan. In the same para, the Bank was requested to present the said cheques on 15.4.1999 to liquidate that forced loan account. None of these facts have been disputed on behalf of the accused No.1. The case of the accused No.1 is that accused No.1 had an account with the complainant and the amount of those cheques was expected to be transferred to that account of accused No.1. On perusal of the Judgment in M/s. Credential Finance Ltd. & Ors. (supra), it appears that similar cheque was issued and in the payee's column, it was mentioned "Indusind Bank Limted A/c. Credential Finance Limited or Bearer". In that case, the cheque was dishonoured and the Indusind Bank filed complaint under Section 138. The order to issue process was challenged before the High Court by filing a Writ Petition. The Court held that there can be only one payee as per the provisions of Section 7 of the Negotiable Instruments Act. As there were two names of payee i.e. Indusind Bank Limited and Credential Finance Limited, it was held that it indicated that the amount was 6 to be transferred from the account of the accused M/s. Credential Finance Limited with Federal Bank Ltd. to their account with Indusind Bank Ltd. and thus it was a case to transfer money from the account of the accused with Bank of Baroda to its account with another Bank and thus the accused itself was drawer of the cheque as well as payee. Since the Bank was required to credit that amount in the account of the accused maintained by it after the cheque was encashed, Indusind Bank Ltd. could not be treated as payee and therefore Sec.138 of the Negotiable Instruments act could not be invoked. In my considered opinion, the facts of the present case are totally different. In the present case, even though the name of the payee was shown as "Janata Sahakari Bank Ltd.", A/c. M/s. Viplav Trading Ltd." the covering letter accompanying the cheques clearly indicated that the said cheques were drawn by accused No.1 to discharge the liability to pay the debt of the complainant Bank. In view of these facts, it is difficult to accept the contention of the learned Counsel for the accused that these two cheques were issued only for transfer of money of the accused No.1 from its account in one Bank to its own account with complainant Bank. These cheque were clearly issued towards discharge of the liability of the complainant. Therefore, I find no substance in the challenge. 6. It is now well-settled that to maintain a complaint under section `138, 7 five main factors have to be established by the complainant. They are :- "(i) The cheque in question should have been issued in discharge of wholeor in part of a debt or liability. (ii) The cheque in question should be presented for payment within six months or its specific validity period, whichever is earlieer. (iii) The Payee or holder should give notice of demand within 15 days of receiving information of dishonour which may be due to insufficient funds or the amount payable excess the arrangement. (iv) The drawer gets 15 days time after receipt of the notice to make the payment and only if he fails to pay, he is liable to be prosecuted. (v) Complaint can be made only by payee or the holder in due course within one month of the arising of the cause of action." In view of the allegations made in the complaint supported by the letter dated 30.3.1999,it is clear that the cheques in question were issued in discharge of whole of the debt or liability which the accused No.1 had incurred, because on its behalf, the complainant had made payment against the discounted bills of exchange. There is no dispute that the cheques were presented, they were dishonoured,notice was issued and inspite of receipt of notice no payment was made and that the complaint was made within the stipulated period. Therefore there is no illegality or irregularity in issuance of process. 7. For the aforesaid reasons, the Writ Petition stands dismissed with 8 costs of Rs.20,000/- (Rupees twenty thousand only) to be paid to the respondent No.2 - Bank. 8. The trial Court shall expedite the hearing of the Criminal Case and decide it as early as possible. 9. At this stage, the learned Counsel for the petitioner seeks stay of this order. The petition is already pending for last 8 years. The accused are avoiding payment to the Bank for all these years which is public money. Therefore, the request is turned down. (J.H.BHATIA,J.)