HC: Contrary to the public policy to induce public officer for money or other valuable consideration, to use their position/office and influence to procure benefit

  

The Single Bench of the Bombay High Court consisting of Justice Sandeep K. Shinde while hearing an application, under Section 482 of the Code of Criminal Procedure, 1973 (‘Cr.P.C.’ for short) to quash the criminal case instituted under Section 138 of the Negotiable Instruments Act, 1881 (‘NIA’ for short), opined that when ‘Consideration’ or ‘Object’ of the agreement is unlawful, if it is forbidden by law or would defeat the provisions of law or would involve injury to any person or property of another or the Court considers it, as immoral, or opposed to public policy.

Facts

The complainant, a Chartered Accountant, was a financial creditor of M/s. Aryavart Chemicals Pvt. Ltd. (Corporate debtor) within the meaning of Insolvency and Bankruptcy Code, 2016. The National Company Law Tribunal (‘NCLT’ for short) in a petition filed by M/s. Panama Petrochem Limited (Operational Creditor) appointed Mr. Sandip Mehta as the ‘Resolution Applicant (RA) and appointed three members ‘Committee of Creditors (‘COC’). The complainant was a member of the ‘COC’. Resolution plan submitted by the RA was approved by two members except the complainant. It appeared that the complainant was not satisfied as being financial creditor, he would receive just Rs.98,000/- as per the resolution plan, as against Rs.13 Lakhs, then due. The applicant-accused approached and persuaded him for not filing an appeal against the order of the NCLT before the National Company Law Appellate Tribunal (‘NCLAT’ for short) and offered him to pay Rs.2,02,000/-. It appears, the complainant had accepted the offer and did not file appeal. In consideration of this omission, accused drew a cheque in favour of the complainant for Rs.2,02,000/-. Cheque in question was returned “Unpaid”; whereafter, complaint, in question was filed.

 

Procedural History

The learned Judicial Magistrate, First Class, Thane issued the summons to the applicant, which is assailed in this application.

 Contentions made

The learned counsel for the applicant submitted that, ‘cheque amount’ in question would not constitute ‘legally enforceable liability or debt’ within the meaning of Explanation to Section 138 of NIA. It was submitted that in this case, ‘Object’ of the agreement between the complainant and the accused was not lawful in-as-much as cheque was drawn in complainant’s favour, to dissuade him from, preferring an appeal against the order of the NCLT. Therefore, the ‘Object’ of the agreement and ‘Consideration’ payable thereunder, was unlawful. Thus, argued, that agreement between the parties, being immoral and opposed to public policy, within the meaning of Section 23 of the Indian Contracts Act, 1872, agreement was void. Therefore, it was urged that the complaint and ‘Issue Process’, order passed thereunder be quashed and set aside.

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The learned counsel for the complainant, on the other hand, supported the complaint and the order ‘Issue Process’.

Observations of the Court and Judgment

The Single Bench, while rejecting the Revision Application, observed that:

“The statement of witness recorded under Section 164 of the Code, is not substantive evidence and though it can be used only to corroborate or contradict that witness, the fact remains that, applicant is owner of Ahmedabad Express Newspapers. Undisputedly, Mr. Bhil was his employee. If that be so, it is inconceivable that, Mr. Bhil would open two Bank accounts, one in the name of Ahmedabad Sales Corporation and another, Hindustan Enterprises and would receive lacs and crore of rupees, soon after, the accounts were opened. Therefore, in view of the facts of the case and attendant circumstances, there is no reason to discard and disbelieve the statement of Mr. Bhil, which indeed discloses, applicant’s complicity in the crime.”

Case Name: Advance Oleochem Pvt Ltd Through Its Director Ashok Kumar Harilal Shah vs Manoj Agarwal & Anr

Citation: CRIMINAL APPLICATION NO.562 OF 2021

Bench: Justice Sandeep K. Shinde

Decided on: 6^th December 2021

 

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