HARI PRASAD NATHANI AND ANR. Vs. THE STATE OF BIHAR AND ANR.

JUDGEMENT

(1.) In this application these two petitioners have prayed for quashing the order dated 25.1.1983 whereby cognizance was taken against the petitioners under Ss. 406, 408, 420, 109and 120 B of the Indian Penal Code (in short 'Penal Code') including the entire criminal proceeding initiated on the basis of a petition of complaint filed by opposite party no. 2 against them and other accused persons named therein. The facts which led 10 the filing of this application, in short, are that 11 private limited company described as Shanker Glass Works Private Ltd. (hereinafter referred to as the Private Company) which carries on its business at Muzaffarpur applied for certain banking facilities to the Punjab National Bank (in short 'Bank') at its Muzaffarpur Branch. A deed of hypothecation was drawn up between the Bank and accused no. 1, private limited company. It appears that an agreement was entered into between the Bank and the aforesaid private company and its directors under which a cash credit limit of Rs. 10,00,000/ - (ten lacs), documentary issuance bills up to a limit of Rs. 2,50,000/ - (two lacs fifty thousand), demand draft purchase limit to the extent of Rs. 2,50,000/ - (two lacs fifty thousand) and letter of credit limit of Rs. 5,00,000/ - (five lacs) was sanctioned in favour of the loanee private company and first charge was created against hypothecation of the stocks in trade of the private company and the second charge against the fixed assets of the private company. Petitioner no. 1 was the director of the private company at the relevant time and petitioner no. 2 was the Chief Executive of the said private company.

(2.) From the statements made in the petition of complaint, it appears that a first charge against hypothecation of goods of the private company and second charge against the fixed assets of the private company was created by accused nos. 1 to 3. A Documentary Promissory Notes for a sum of Rs. 10,00,000/ - (ten lacs) with interest @ 6% over the Reserve Bank Rate with a minimum of 15% per annum with quarterly rests was also executed by accused nos. 1 to 3. One of the conditions as stipulated in the deed v/s. as that the borrower i.e. the private company shall not, except with the previous written consent of the Bank: sell or dispose of in any manner the hypothecated goods or any part thereof. It was further stipulated that the borrower private company would pay the value in advance of all such goods into the said Account of the Bank or substitute the same by other approved goods of at least equal value for the goods so sold or disposed of.

(3.) Opposite party no. 2, the Branch Manager of the Bank filed a petition of complaint alleging, inter alia, that in between the period of May, 1982 and August, 1982, the manufactured goods of the said private company worth rupees several lacs were disposed of by the private company and the sale proceeds thereof were not brought to the Account of the Bank and thus, these petitioners alongwith other accused persons have committed an offence punishable under the aforesaid Ss. of the Penal Code, it is also stated in the petition of complaint that the agreement between the private company and the Bank was entered into and executed by the directors of the private company and as such petitioner no. 1, who was one of the directors has been made accused no. 3 in the said petition of complaint and petitioner no. 2 has been, shown as the Chief Executive of the said private company.