Case: Kotak Mahindra Bank Limited Vs Prism Packaging and Ors.. Mumbai Debt Recovery Tribunals

JudgesK.J. Paratwar, Presiding Officer
IssueCriminal Procedure Code - Section 102; Recovery of Debts Due to Banks and Financial Institutions Act - Section 2(g)
CitationI (2007) BC 216
Judgement DateJuly 03, 2006
CourtMumbai Debt Recovery Tribunals


K.J. Paratwar, Presiding Officer

  1. This is an application for recovery from defendant Nos. 1/2 of Rs. 2,01,38,567.06 with interest @ 18% p.a. from the date of filing the Original Application till full realisation. From out of aforesaid amount, the sums lying with defendant Nos. 3 to 7 on account of defendant Nos. 1/2, 4 and Nos. 8 to 10 are sought to be recovered.

  2. On 26.12.2000, the applicant's predecessor (ICICI Bank Ltd.), on request by defendant Nos. 1/2, (defendant No. 2 being proprietor of defendant No. 1) had discounted 14 Hundis aggregating Rs. 1,35,71,440/- drawn on and accepted by Hindustan Lever Ltd. (HLL). The applicant disbursed Rs. 1,31,62,140.25 by sending the money by cheque to defendant No. 3 for crediting in the account of defendant No. 1. On the next date (27.12.2000) when the applicant contacted HLL, it was shocked to learn that defendant Nos. 1/2 had not made any supplies to HLL nor any Hundis were drawn chless accepted by HLL. Thus, the documents submitted by defendant Nos. 1/2 were forged and fabricated upon which the Bank filed FIR which is registered in Kherwadi Police Station as Case No. 452 of 2000.

  3. During the investigation, it was revealed that defendant Nos. 1/2 had issued 9 pay orders of varied amounts to different parties from amongst the monies paid issued by the applicant by discounting the bills. Some monies arc still lying in the account of defendant Nos. 1/2. Sr. Inspector of Police, Kherwadi Police Station issued order dated 28.12.2000 under Section 102 of Cr.P.C. to defendant Nos. 3 to 7 to stop payment. The applicant also filed an Application No. 15/N/2001 before the Additional Chief Metropolitan Magistrate, 19th Court, Esplanade, Mumbai under Section 457 of Cr.P.C. seeking return of the monies. The Bank's case is that it is entitled to the monies traced in the investigation since the money was released on misrepresentation, and fraud played by defendant Nos. 1/2. In view of the above, the Bank called upon defendant Nos. 1/2 to make payment but failed. Therefore this O.A. for recovery of amount, as above.

  4. The defendant No. 3 in written statement (Exh. 119) has contended that the defendant Nos. 1/2 has Banking relations with it since 19.3.1997 and had as such credited the cheque dated 26.12.2000 for Rs. 1,31,62,140.25 issued by the applicant in its favour, The said cheque was cleared on the same date. On the next date (27.12.2000), following 9 pay orders were issued by it (defendant No. 3) at the request of defendant No. 1.


                    Sr. Name of the Pay Order Amount (Rs.)
                    No.  beneficiary No.
                    1. Pedder Johnson 043718 9,71,443.00
                     Finance Ltd.

                    2. Gujarat State 043713 15,00,000:00
                     Services Ltd.
                     No. 10)

                    3. Trent Ltd. 043721 58,26,229.00
                     No. 8)

                    4.  Prism 043719 15,00,000.00
                     Packaging A/c
                     IDBI Bank
                     No. 4)

                    5. Chetna A. Shah 043720 9,63,970.00 
                     No. 9)

                    6. Surjeet Sehgal 146054 10,000.00

                    7. Shilpam 043715 4,40,000.00

                    8. Revati  043714 60,000.00
                     Organics Ltd.

                    9. Tabassum 043717 5,00,000.00


    On that date, the defendant No. 1 also withdrew sum in excess of Rs. 14 lakh by 3 self drawn cheques. Now a sum in excess of Rs. 28 lakh is lying in the account. Thereafter, the Bank has frozen the account as per the order of Sr. Inspector of Police. The prayer for interest @ 18% p.a. is strongly opposed on the ground that the money lies in the account and is not utilised and has not as such earned any interest.

  5. Vide written statement (Exh. 36), the defendant No. 4 contended that the defendant Nos. 1/2 had also availed of Bill Discounting Facility from it. The discounted Bills however were found to be fake. This defendant therefore called upon defendant Nos. 1/2 to make payment and also filed police complaint bill without use. This defendant therefore filed O.A. No. 92 of 2001 which is allowed by this Tribunal, It in mated tint en the date (29.12.2000) of receipt of order from Sr. Inspector of Police, there was balance of Rs. 11,961/ in the defendant Nos. 1/2's account.

  6. The defendant No. 6 filed written statement only after amendment in the O.A. in which it is contended that defendant No. 10 has account with it and that a sum of Rs. 15 lakh from said amount has been frozen as per the order of police. Said sum is transferred to security creditor's amount which tarries no interest, A sum of Rs. 14,430,01 is said to be balance in the current account.

  7. The defendant No. 8 in written statement (Exh. 121) at Exh. 21 has at the outset raised objection to this Tribunal's subject wise jurisdiction by contending that the claim against it does not constitute the debt. It is stated that even if it is assumed that fraud was committed, the amount in the hands of third party (like this defendant) cannot be claimed. This defendant has contended that it had also discounted 21 Hundis aggregating to Rs. 2,03,71,922/- purchased by HLL. The defendant has said that it has thus large claim against defendant Nos. 1/2 and that sum of Rs. 58,26,229/- was received towards that. The facts pertaining to this defendant's dispute with defendant Nos. 1/2 being unnecessary for this O.A. are not recounted. This defendant also filed application for cancellation of order passed by police under Section 102 of Cr.P.C. After the aforesaid prefatory facts, there are parawise replies in which it is stated that once the cheque of the applicant was deposited in the account of the defendant No. 1, said amount merged into global funds of defendant No. 3. As such, the amount of Rs. 58.26 lakh also merged into global funds of defendant No. 7. The defendant has pleaded ignorance about the fraud and has prayed for dismissal of the Original Application.

  8. The defendant No. 8 in written statement at Exh...

To continue reading

Request your trial

VLEX uses login cookies to provide you with a better browsing experience. If you click on 'Accept' or continue browsing this site we consider that you accept our cookie policy. ACCEPT