Rajasthan High Court - Jaipur
Peary Lal Rajendra Kumar Private Ltd. ... vs State Of Rajasthan And Anr. on 21 January, 1993
Equivalent citations: 1993WLN(UC)65
JUDGMENT Mohini Kapur, J.
1. The non petitioner No. 2 had filed a complaint in the Court of Munsif & Judicial Magistrate, Nawalgarh for offence under Section 138 of the Negotiable Instruments Act, 1889 (hereinafter referred to as 'the Act') and Section 420 I.P.C. On this Complaint, the learned Magistrate took cognizance for the offence under Section 138 of the Act on 28.9.92 and directed that the accused be summoned. The five petitioners who were the accused in the complaint, have approached this Court under Section 482 Cr.P.C. for quashing the complaint as well as the order of the Magistrate taking cognizance on the complaint.
2. The facts will be given briefly so that the legal points which have been raised by the parties can be appreciated. The non petitioners No. 2 is a Cement Manufacturing Company having its factory at Sitapur, Tehsil Nawalgarh. The petitioner No. 1 is a company having its registered office at Bulandshahar U.P. and is primarily marketing cement, fertilizers, scooters etc. The petitioner No. 2 is the Managing Director of the Company, while the petitioner No. 3, 4 and 5 and its Directors.
3. The dealings between the parties started in June, 1991. The petition No. 2 Company purchased cement from the complainant and the cement was to be despatched to the dealers in the name of the petitioner. The payment for the cement was to be made by the petitioner. After May, 1992 dispute arose between the parties.
4. According to the complainant petitioner No. 2 gave a cheque for a sum of Rs. 8,50,000/- on account of the amount due as cost of the cement supplied by the complainant, and this cheque when submitted for collection in the Bank, was dishonoured as there was no sufficient funds in the account of the petitioner. The Bank returned the cheque with the endorsement that payment had been stopped by the Drawer. According to the petitioner, blank signed cheques on behalf of the company were given to the complainant for drawing money to the extent of value of the cement despatched by the complainant on account of petitioner company. Cement supply was not of a standard quality as such, the petitioner wrote to the Bank to stop payment of the cheque which may be presented against the supply of the sub-standard cement. According to the petitioner the complainant wrote on 14.5.1992, that sum of Rs. 4,29,380.50 was due but the bank cheques were misused by entering the amount Rs. 8,50,000/- and the payment of the same was also stopped because of the dispute between the parties.
5. According to the complainant, the petitioner did not have sufficient amount in balance and for this a clerk of the Bank was examined before the/Magistrate, and the offence under Section 138 of the Act was made out and petitioners had committed an offence.
6. The learned Counsel for the petitioner has contended that the complaint does not make a case for the offence under Section 138 of the Act, as the cheque was not dishonoured because of insufficiency of funds but payments had been stopped. On account of this, ingredient of Section 138 of the Act would not be made out. According to him the morality of an Act will not make an offence but it is the ingredient of an offence which has to be proved. It has been contended hat notice Annexure 3 dated 13.6.1992 and the reply been exchanged between the parties before the cheque, which is the subject matter of the offence, was presented before the Bank on 11.7.1992 and no offence is made out of the misusing of cheque and when the amount was not due to it. It is argued that the circumstances in which the cheque has been dishonoured have to be considered and that an ingredient of Section 138 of the Act would not be made out when the payment has been stopped due to the dispute of payment of amount due.
7. The second contention of the learned Counsel for the petitioner is that the petitioners No. 3, 4, and 5 are Directors of the Company and there is no allegation as to what was their act in the whole business, and without disclosing their act, they cannot be made liable.
8. It is contended that there is no allegation as to who is responsible for the conduct of the business of the company. Another objection is that the cheque was issued at Delhi and not at Jhunjhunu or Nawalgarh and as such, the Court at Nawalgarh could have jurisdiction in the matter and in support of this contention the reliance has been placed on Crime 1992(i) page 973 (Landmark Finance and Investment Co. Pvt. Ltd. and Anr. v. The learned Metropolitan Magistrate 28th Court and Ors.)
9. As against this, the learned Counsel for the non petitioner No. 2 has contended that this is the stage of taking cognizance and whatever objection the petitioner wants to raise, can be raised before the trial court itself. According to him the complainant has made out a prima facie case that a cheque was dishonoured and that there were no sufficient funds in the account of the petitioner and when a prima facie case is made out then the cognizance taken by the Magistrate is correct. It is contended by virtue of Section 141 of the Act if the person committing an offence under Section 138 of the Act is a company, every person who, at the time offence was committed, was in charge of, and was responsible to, the company, as well as the company, shall be deemed to be guilty of the offence and shall be liable. It is contended that petitioner No. 3, 4, and 5 are Directors of the company and as such, they are also liable. Referring to Section 139 of the Act it is contended that it shall be presumed, unless the contrary is proved, that the holder of a cheque received the cheque of the nature referred to in Section 138 or the discharge, in whole or in part, of any debt or other liability. Section 138 of the Act raises presumption that the Negotiable Instrument was drawn for consideration.
10. I have considered the contentions raised on behalf of both the sides. In Abul Samad v. Stya Narayan Mahawar; II (1990) D.C. 305. (P&H). The cheque was returned unpaid by the Bank with the remarks "Payment stopped by the Drawer." Considering that the ingredient that the Cheque is returned unpaid because the amount available in that account is insufficient for making the payment of the cheque, is missing, the complaint was quashed. The complaint did not contain the allegation that the cheque bounced and returned unpaid for want of adequate credit in the petitioner account. When the legislature has confined the provision of Section 138 of the Act, only bouncing of cheque on the ground of inadequate balance, then the prosecution cannot continue when the cheque had been returned unpaid for some other reason. In view of this, the complaint as well as the order summoning the accused were quashed.
11. Learned Counsel for the non petitioner has placed reliance on Crimes 1992(ii) page 919 (K.T. Thomas and Sredharan J.J., Thomas Varghese v. P. Jerome.) which is the decision of the Kerala High Court. In this case the cheque had been returned unpaid with the remarks that 'Payment stopped by the drawer.' The complainant made a specific allegation in the complaint that the accused had no amount in his account for honouring the cheque that he mischievously and maliciously issued a direction to the Bank to stop payment. The decision of the Punjab & Harayana High Court in Abdul Samad v. Satya Narayan's case was considered and was distinguished on the ground that in that case there was no allegation that the cheque was returned unpaid due to insufficient amount available in the account of the petitioner when in the Kerala High Court's case there was specific allegation that the amount in the account of the accused was not sufficient and that a direction to the Bank to stop payment was issued mischievously and maliciously. The petition under Section 482 for quashing the complaint was dismissed.
12. Another decision relied upon is Crimes 1992(i), page 1233 (Dilip Kumar Jaiswal v. Debapriya Banerjee) in which it was held that when the accused challenged the prosecution for the offence under Section 138 of the Act on the ground that goods supplied by complainant were defective and having been rejected there could be no liability to pay. Without proper evidence at the stage of accused being summoned, it could not be said that the accused company did not have the liability for which cheque was issued.
13. On consideration of the contention urged before me and the decisions which have been cited it can be said that there is a presumption which can be raised as has been provided in Section 118 and Section 139 of the Act but there can not be a similar presumption about the remarks made by the Bank at the time of returning the cheque unpaid. It is for the complainant to make out the ingredient of Section 138 of the Act and it is open to him to raise a plea that the real reasons for the return of unpaid cheque was insufficiency of funds. When in the complaint such a plea has been raised, then at the time of taking cognizance of the offence, the Magistrate cannot be expected to go into the niceties of case which would be set up by the accused without their appearance before the court. What is to be seen is whether the allegation made in the complaint prima facie disclosed on offence and if so who was the person who can be said to be liable for the same, When the facts are such, in the present, case, it can be said that it is only after evidence of both the parties that it can be determined as to what was real reason for dishonouring of the cheque this court cannot quash the proceedings before the Magistrate as it is only the availability of all material on record which would make the court take a decision in the matter.
14. Hence in the facts and circumstances the complaint and the order taking cognizance cannot be quashed merely because the cheque was dishonoured with the remarks that the payment has been slopped.
15. The plea of the petitioner as regards the jurisdiction of the Court at Nawalgarh to entertain the complaint has been based in the decision of the Calcutta High Court, Crimes 1992(i) 973 (Landmark Finance and Investment Co. Pvt. Ltd. and Anr. v. The learned Metropolitan Magistrate 28th Court and Ors.) In this case according the loan agreement entered between the petitioner and respondent No. 2 Loan was to be advanced to the respondent No. 3. The cheques of the petitioner were drawn on a Bank in Calcutta and were sent to Bombay. The cheques were produced in Calcutta and they were dishonoured. It was held that if offence was committed it was committed in Calcutta and the Calcutta High Court is competent to try the offence in a writ petition before Calcutta High Court. The proceedings pending in the Bombay Court were quashed.
16. As far as, the jurisdiction of the Court is concerned, it can be said that facts of the present case are somewhat different from that of the Calcutta case. In the present case there were dealings between the parties about the supply of goods and payment for the same. It is not a case of pure and simple ban. It would depend upon the facts of the case as to the place, case should proceed and defendant may take any objection in this respect. The objection regarding jurisdiction can be raised in the trial court itself.
17. It has been pointed out by the learned Counsel for the petitioner that a case for dishonouring of the cheque in the sum of Rs. 8,50,000/- is pending before Criminal Court at Delhi and for similar account the case is pending at Nawalgarh. These circumstances have been pointed out only to show that blank signed cheques were left with the respondent No. 2 and a cheque for Rs. 8,50,000/- was not issued by the complainant himself. It may be again stated that the Magistrate while taking cognizance has to look into the question whether the ingredients of an offence have been made out or not and it would be too early to comment upon the pleas which are raised by the accused petitioner at this stage. The case is one which is to be appreciated on the basis of the evidence and any observations at this stage could prejudice either party as it is proper not to pass any continent.
18. So far as the prosecution of the Directors, who have not signed the cheques, the non petitioner No. 2 is relying on the presumption available as well as presumption under Section 118 of the Act. The prosecution and the concerned accused can such substantiate the objection which can be raised before it.
19. In the present case when the complainant has contended the allegations which construed the ingredients of the offence under Section 138 of the Act there is no reason to quash the complaint under order taking cognizance. This petition, therefore, fails and is dismissed.