Suryalakshmi Cotton Mills Ltd vs Rajvir Industries Ltd. & Ors

They were closely related. It had two units. One was known as Mahaboobnagar Unit and the second was a sales depot at Tirupur. The Managing Director of the Company was Shri L.N. Agarwal. He was stationed at Hyderabad. Allegedly, pursuant to negotiations which took place between him on the one hand, and Shri U.K. Agarwal and Ritesh Kumar Agarwal (Accused Nos. 2 and 3) on the other, representations were made that as process for obtaining cheques from the Managing Director had been taking considerable time, it would be advisable that signed blank cheques be left in the hands of accused Nos. 2 and 3 for efficient management of Mahaboobnagar Unit and Tirupur Sales Depot.

4. A Company Petition was filed before the Andhra Pradesh High Court. A Scheme for arrangement submitted by the parties was approved, pursuant whereto Mahaboobnagar unit was transferred in favour of Rajvir Industries Limited (Accused No. 1) and Mahaboobnagar Unit to Shri L.N. Agarwal. For the said purpose, the units were demerged and vested in the respondent No. 1. Allegedly, the said Scheme was fully implemented and the respondent Nos. 2 and 3 by a letter dated 22.4.2005 stated out that they would not make demand of any payment in respect of the said Mahaboobnagar Unit.

5. L.N. Agarwal allegedly made oral requests to theaccused Nos. 2 and 3 to return the unused signed blank cheques, in his capacity as the Secretary of the appellant Company.

6. However, allegedly on the premise that Respondent Nos. 2 and 3 herein entered into a conspiracy to misuse the said cheques; an informal complaint was filed on 20.10.2006 and another complaint was filed on 30.10.2006 with Mahankali Police Station. An endorsement was made therein that there was no role for the police to play at that stage.

7. Respondents herein thereafter issued a letter dated 1.10.2004 as also a telegram dated 20.10.2004 stating that as the institutional liability of the respondent No. 1 had crossed 13.25 crores, with a view to repay a part of the said amount, a cheque of a sum of Rs. 6.28 crores had been drawn by the appellant in favour of the first respondent being the amount of difference which had been deposited for collection. In the telegram, it was stated; I HEREBY INFORM YOU THAT AFTER THE DEMERGER M/S. SURYALAKSHMI COTTON MILLS LIMITED AND M/S. RAJVIR INDUSTRIES LIMITED THE SHARES WERE TRANSFERRED FROM MY SIDE AND YOUR SIDE FOR THE DIFFERENCE OF SHARE TRANSFER AMOUNTS AND AS PER OUR PERSONAL UNDERSTANDING TO CLEAR THE DIFFERENCE AMOUNT OF MY FAMILY HOLDING SHARES YOU HAVE ISSUED TWO CHEQUES ONE FOR RS. 3,39,12,086.00 DATED 31.07.2006 VIDE CHEQUE BEARING NO. 444842 AND ANOTHER CHEQUES BEARING NO.

10. On a purported refusal by the Police Station to register a complaint on the basis thereof, the appellant filed a complaint petition in the Court of XI Additional Chief Metropolitan Magistrate, Secunderabad. Pursuant to the direction issued by the learned Magistrate, a First Information Report was lodged by the officer-in-charge of the Mahankali Police Station.

20. The High Court, in our opinion, should have further taken into consideration the fact that in the event, the defence of the appellant is accepted in the criminal case, it will have no remedy to prosecute the respondents again. To contend that the acquittal of the appellant would have been the springboard for filing a complaint will not be correct. Nobody knows when the criminal case would come to an end. In a given situation, even it may become barred by limitation. It must also be borne in mind that commercial expediencies may lead a person to issue blank cheques. The course of action in the aforementioned situation, in our opinion, which could be taken recourse to was to make an attempt to find out as to whether the complaint petition even if given face value and taken to be correct in its entirety constitutes an offence under Section 420, 406, 463 of the Indian Penal Code or not.

21. Ingredients of cheating are;

26. We hope and trust that the investigation shall be completed and a final report shall be filed before the appropriate court at an early date. In the event, any chargesheet is filed and the cognizance of the offence is taken, both the cases should be tried by the same Court, one after the other, and judgment in both the cases must be delivered at the same time.

27. This appeal is allowed to the aforementioned extent and with the aforementioned observations and directions.