Karnataka High Court
M/S Times Innovative Media Ltd vs Serve And Volley Outdoor Advertising ... on 29 October, 2018
Author: H.B.Prabhakara Sastry
Bench: H.B.Prabhakara Sastry
IN THE HIGH COURT OF KARNATAKA AT BENGALURU
DATED THIS THE 29TH DAY OF OCTOBER, 2018
BEFORE
THE HON'BLE Dr.JUSTICE H.B.PRABHAKARA SASTRY
CRIMINAL PETITION No.6613 OF 2011
BETWEEN:
1. M/s. Times Innovative Media Ltd.,
4th Floor, 'A' Wing, Matulya Centre,
Lower Parel (W),
Mumbai-400013.
Represented by its Power
of Attorney holder
Mr. Channamallikarjun B.
2. Mr. Sunder Hemrajani
Managing Director,
M/s. Times Innovative Media Ltd.,
4th Floor, 'A' Wing, Matulya Centre,
Lower Parel (W),
Mumbai-400013.
3. Mr. N. Shekhar
Chief Financial Officer,
M/s. Times Innovative Media Ltd.,
4th Floor, 'A' Wing, Matulya Centre,
Lower Parel (W),
Mumbai-400013. ...Petitioners
(By Sri. Adithya Sondhi, Senior Advocate along with
Sri. Maneesha Kongovi, Advocate)
Crl.P.No.6613/2011
2
AND:
Serve and Volley Outdoor
Advertising Pvt. Ltd.,
No.110, 1st Floor,
Andrews Building, M.G. Road,
Bengaluru-560001.
Represented by its
authorized representative
Mr. Raghuvir B.T. ...Respondent
(By Sri. Mounesh Advocate for
Sri. Vijeetha R. Naik, Advocate)
This Criminal Petition is filed under Section 482 of
Cr.P.C praying to quash the criminal proceedings in
C.C.No.49937/2010 against the petitioners pending before
the VIII ACMM, Bengaluru (Annexure-A) and grant such
other and further relief as this court may be deem fit.
This Criminal Petition having been heard and reserved
for orders on 22.10.2018, this day the Court made the
following:
ORDER
The present petitioners who are the accused in C.C.No.49937/2010, filed by the present respondent as complainant and pending before the learned VIII Additional Chief Metropolitan Magistrate, Bengaluru (hereinafter referred to as the 'Court below' for the sake Crl.P.No.6613/2011 3 of brevity) have sought for quashing the criminal proceedings.
2. The summary of the case of the complainant in the Court below who has filed a complaint under Section 200 of Cr.P.C. against the present petitioners is that, the complainant had entered into an Exclusive Marketing Services Agreement (hereinafter referred to as the "EMS Agreement" for the sake of brevity) with the present petitioner No.1(accused No.1) on 25.06.2008 for display of advertisements and recovery of collection revenue from advertisers in 21 metro stations of Delhi Metro and that the complainant- Company had given a security cheque for a sum of `5,51,64,837/-. The said cheque being an undated cheque, was issued only as a security in lieu for the similar amount deposited by the accused with the complainant-Company, who inturn had deposited the Crl.P.No.6613/2011 4 said amount with the Delhi Metro Rail Corporation (hereinafter referred to as the 'DMRC' for the sake of brevity). Due to the defaults committed by the accused- Company by nonpayment of the agreed amount on monthly basis, the same resulted in inability on the part of the complainant-Company to pay the amount to the DMRC. The same has resulted in DMRC terminating the agreement with the complainant-Company, who inturn had to terminate the agreement with the accused- Company.
3. The default on the part of the accused to honour the payments resulted in losses accruing to the complainant-Company to the tune of `21,32,51,969/- in which regard the complainant-Company sent a legal notice dated 03.05.2010 seeking compensation to it from the accused. The accused-Company also sent a legal notice dated 04.06.2010 to it, admitting its liability Crl.P.No.6613/2011 5 to an amount of `1,33,10,911/-. The accused in criminal conspiracy with one another, had without any lawful authority, dishonestly and fraudulently altered the security cheque given to it by the complainant-Company for a sum of `5,51,65,837/- by adding a date of June 22, 2010 to it and presented the same for payment to the bank. Thus, the accused have committed offence of forgery.
4. Though, the said cheque is stated to have returned with the shara "payment stopped", however, the complainant have alleged that the act of the accused by filling the date in the said undated cheque and presenting it to the Bank, has resulted into an act punishable under Sections 420, 465, 467, 468, 471 and 120-B of the Indian Penal Code, 1860 (hereinafter referred to as the "IPC" for the sake of brevity). The Court below on 28.09.2010, directed to register the said Crl.P.No.6613/2011 6 case in register No.III against the accused for the offences punishable under Sections 468 and 471 read with Section 34 of the IPC and ordered for issuance of summons to all the accused. It is the said proceeding in C.C.No.49937/2010, the petitioners who are accused in the said criminal case have sought for quashing in this petition.
5. It is the contention of the petitioners in their petition as well the arguments of learned Senior counsel for the petitioners that filling of the date by holder of the instrument in a cheque is neither forgery nor the instrument be called as a forged document. The said insertion of the date in the cheque can only be a defence under Section 138 of the Negotiable Instruments Act, 1881 (hereinafter referred to as the "N.I. Act" for the sake of brevity) proceeding, but the same cannot be an independent cause of action for a criminal case for the Crl.P.No.6613/2011 7 offences punishable under Sections 468 and 471 of the IPC. Learned counsel also submitted that the alleged complaint, by its reading, clearly go to show that the alleged acts are the cause for a civil dispute and in the instant case, the dispute between the parties had already been decided by an Arbitral Tribunal, which award has been challenged before the competent Court of Law at Delhi. He also submitted that the respondents to pre-empt the proceedings under Section 138 of the N.I. Act, have filed a false complaint alleging forgery. In his support, learned counsel also relied upon some of the reported judgments of the Hon'ble Apex Court and other Courts, which would be referred to at the relevant places hereafterwards.
6. Learned counsel for the respondent in his arguments submitted that the signatories to the cheque were not holding the office on the date that was entered Crl.P.No.6613/2011 8 in the cheque by the petitioners/accused. Hence, the act of the petitioners/accused is a clear case of forgery. He also submitted that because of the breach committed by the petitioners/accused, the respondent/complainant has lost `5.51 Crores, which was deposited by them with DMRC, as such also there is forgery by the petitioners. He has also submitted that the Magistrate has applied his mind while passing the impugned order and has identified a prima facie case in the matter, as such, the same does not warrant any interference at the hands of this Court.
7. The offences alleged against the petitioners are punishable under Sections 468 and 471 read with Section 34 of the IPC. Sections 468 and 471 of the IPC read as below:
"468. Forgery for purpose of cheating.- Whoever commits forgery, intending that the document or electronic record forged shall be Crl.P.No.6613/2011 9 used for the purpose of cheating, shall be punished with imprisonment of either description for a term which may extend to seven years, and shall also be liable to fine.
471. Using as genuine a forged document or electronic record.- Whoever fraudulently or dishonestly uses as genuine any document or electronic record which he knows or has reason to believe to be a forged document or electronic record, shall be punished in the same manner as if he had forged such document or electronic record."
The essential ingredients of Section 468 of IPC are that the accused should have committed forgery and that he did so, intending that the documents or electronic record forged shall harm the reputation of any party or knowing that it is likely to be used for that purpose.
In order to constitute an offence punishable under Section 471 of IPC, it must be shown that there is a Crl.P.No.6613/2011 10 fraudulent or dishonest use of documents as genuine and the person using it must have the knowledge or reason to believe that the document is a forged one. It is keeping in mind these essentials of Sections 468 and 471 of IPC, it has to be seen, whether the impugned order passed by the trial Court is justifiable?
8. It is not in dispute that the complainant is engaged in the business of outdoor advertisement and the petitioners/accused are out of home media company providing outdoor advertising services in India. They had entered into an agreement on 25.06.2008 called EMS Agreement, under which petitioner No.1 paid a sum of `5,51,65,837/- to the complainant which the complainant calls as a security deposit. However, due to non-compliance of other terms of agreement by the accused, the complainant started suffering losses with regard to its obligation towards DMRC, which resulted in Crl.P.No.6613/2011 11 DMRC canceling its contract with the complainant- Company. Consequently, the agreement between the complainant-Company and the accused-Company came to be cancelled. On 25.06.2008, in addition to the EMS Agreement that was executed between the complainant and accused No.1, an undated cheque bearing No.518073 drawn on Corporation Bank, M.G. Road Branch, Bengaluru for a sum of `5,51,65,837/- was issued by the complainant-Company to accused No.1. Apart from issuance of cheque, the complainant had also written a "side letter" of even date (25.06.2008) and delivered it to accused No.1-Company, a copy of which letter is at Annexure-C to the petition. The relevant portion of the said "side letter", and as marked as point No.2.3 reads as below:
"2.3 To secure the repayment of the Times Security Deposit within the specified time, SVO advertising hereby hands over to Times and Times accepts the receipt of a duly signed Crl.P.No.6613/2011 12 undated cheque No.518073 drawn on Corporation Bank, M.G. Road Branch, Bangalore for Rs.5,51,65,837/- (Rupees Five Crores Fifty One Lakhs Sixty Five Thousand Eight Thirty Seven only). Further, SVO advertising undertakes, where the Times Security Deposit is increased under the terms of the Agreement, SVO Advertising shall furnish additional, duly signed undated cheques of such incremental amount as a pre-condition to Times making the payment of such additional Times Security Deposit. In the event of failure of SVO Advertising to refund the Times Security Deposit as per the terms of the Agreement, Times shall be legally entitled, to date and deposit the cheque(s) for collection with its banker. SVO Advertising also undertakes that it shall, at all times, ensure that the signatories of the cheques handed over to Times, continue to be the authorised signatories in records of Corporation Bank, M.G. Road, Bangalore."
A reading of the above point mentioned in the "side letter", clearly go to show that accused No.1-Company was entitled to fill the date and Crl.P.No.6613/2011 13 deposit the cheque(s) for collection with its banker, in the event of failure of the complainant-Company to refund the security deposit paid by accused No.1- Company. It is in the light of the said power given to accused No.1-Company, which was the holder of the cheque, petitioner No.1/accused No.1-Company has filled the date as 22.06.2010 in the cheque, a photo copy of which is at Annexure-G. The undisputed document at Annexure-E go to show that petitioner No.1/accused No.1 before filling the date in the cheque at Annexure-G, had issued a legal notice dated 04.06.2010 to the complainant/respondent-Company bringing to its notice that the complainant-Company is liable to pay to them an amount of `12 Crores within fifteen business days from the date of the said legal notice, failing which, petitioner No.1/accused No.1- Company shall deposit the cheque of `5,51,65,837/- and also proceed to enforce the corporate guarantee. It is Crl.P.No.6613/2011 14 only thereafter, petitioner No.1/accused No.1-Company proceeded to fill the date in the instrument and present it for realisation, which came to be dishonored with the reason "payment stopped by drawer" when presented for realisation on 01.07.2010. It is thereafter, issuing a legal notice as required under Section 138 of the N.I. Act on 20.07.2010, petitioner No.1/accused No.1- Company proceeded to file a private complaint under Section 200 of the Code of Criminal Procedure Code, 1973 (hereinafter referred to as the "Cr.P.C." for the sake of brevity) against the present respondent and two other accused for the offence punishable under Section 138 of the N.I. Act. Thus, the writing of date and completing the cheque was made by petitioner No.1/accused No.1-Company.
9. Section 20 of the N.I. Act reads as below:
"20. Inchoate stamped instruments. - Where one person signs and delivers to another a paper Crl.P.No.6613/2011 15 stamped in accordance with the law relating to negotiable instruments then in force in India, and either wholly blank or having written thereon an incomplete negotiable instrument, he thereby gives prima facie authority to the holder thereof to make or complete, as the case may be, upon it a negotiable instrument, for any amount specified therein and not exceeding the amount covered by the stamp. The person so signing shall be liable upon such instrument, in the capacity in which he signed the same, to any holder in due course for such amount; provided that no person other than a holder in due course shall recover from the person delivering the instrument anything in excess of the amount intended by him to be paid thereunder."
10. According to the petitioners, petitioner No.1-Company being the holder of the cheque and having been empowered to fill the date by virtue of the "side letter" dated 25.06.2008 (Annexure-C), have completed the instrument by filling up the date and presenting it for realisation. In his support, learned Crl.P.No.6613/2011 16 Senior counsel for the petitioners has relied upon three judgments. In the first judgment i.e., in the case of Suryalakshmi Cotton Mills Limited Vs. Rajvir Industries Limited and Others reported in (2008) 13 Supreme Court Cases 678, wherein also in a dispute between two companies, date in an undated cheque was filled by the holder of the instrument, the Hon'ble Apex Court at para No.29 of the judgment was pleased to hold that filling up of the blanks in a cheque would not amount to forgery.
11. In the case of Bhaskaran Chandrasekharan Vs. V. Radhakrishnan reported in 2000 Company Cases, Volume.101, Page No.15, the Division Bench of the Kerala High Court, while rejecting the argument of learned counsel for the defendant before it, that putting the date on the cheque by the plaintiff would amount to material alteration of Crl.P.No.6613/2011 17 the instrument, as such it becomes void under Section 87 of the N.I. Act, was pleased to observe a general rule at page No.20 as below:
"The general rule is that a material alteration renders the negotiable instrument void. However, if an alteration is made with the consent of the drawer of the cheque, it may not amount to material alteration, because the holder of the undated cheque has got the implied authority to put the date on the cheque. Once the date is shown on the cheque, the burden is on the drawer of the cheque to prove that the payee had no authority to do so.
There is no provision in the Act which makes a cheque or any of the negotiable instruments void, if it is not dated. However in England, under the Bill of Exchange Act, a bill of exchange is not valid on the reason that it is not dated. In India the position is different. In India the legal position is that an undated cheque may be invalid, but not void. Banks may also not bounce the cheque if it is not dated. There may be cases where the bank may honour the undated cheque, Crl.P.No.6613/2011 18 considering the standing of the parties and other surrounding circumstances.
When a cheque is issued for valid
consideration, with no dispute regarding the
signature, amount and name, it cannot be said that putting a date on the cheque by the payee who is the holder of the cheque in due course would amount to material alteration rendering the instrument void. In fact, there is no material alteration. When a cheque is admittedly issued with a blank date, and when the payee has no objection with regard to the name, amount and signature, it can be presumed that there is an implied consent for putting the date as and when required by the beneficiary, and get it encashed. In other words, when the date is put by the payee or the drawer on the cheque the presumptions under Section 118 of the Act would arise."
12. In the case of HitenBhai Parekh Proprietor-Parekh Enterprises Vs. State of Gujarat and Another reported in Manu/GJ/0508/2009, the Gujarath High Court referring to Bhaskaran Crl.P.No.6613/2011 19 Chandrasekharan's case (supra) was pleased to hold at para No.10 of the judgment that when a cheque bearing only signature of the drawer is delivered and received by a payee for the discharge, in whole or in part, of any debt or liability, there is an implied authority for the person receiving such cheque to complete it by filling the blanks and the amount having been filled up under such implied authority would be the amount intended by him to be paid thereunder.
13. In the instant case also it is not in dispute that petitioner No.1/accused No.1-Company had paid a sum of `5,51,65,837/- to the complainant-Company at the time of entering into EMS Agreement dated 25.06.2008, it is on the very same day along with the "side letter" at Annexure-C, the complainant/respondent-Company had issued the cheque in question for the same amount to Crl.P.No.6613/2011 20 petitioner No.1/accused No.1-Company, however, keeping the date in the cheque open. In the light of the above referred judgments of the Hon'ble Apex Court and the Hon'ble Kerala and Gujarath High Courts and more particularly, in the light of point No.2.3 of the "side letter" at Annexure-C, the act of the complainant who has filled the date in the cheque only after issuing a legal notice to the complainant/respondent-Company, as per Annexure-E, dated 04.06.2010, cannot be called as an act of forgery attributing any act of malafide intention or intention to commit fraud on the part of petitioner No.1/accused No.1-Company.
14. In another case relied upon by learned Senior counsel for the petitioners i.e., in the case of United India Phosferous Ltd. and Others Vs. Vinodbhai Mohanbhai Patel and Another reported in 1997 Company Cases, Volume.89, Page No.764, wherein Crl.P.No.6613/2011 21 also the drawer of a cheque had filed a complaint against the payee for fraud on the ground that the cheques were blank and payee fraudulently filled in name and amount, the Gujarath High Court observing that the accused/petitioners had filed a criminal case under Section 138 of the N.I. Act against the complainant, was pleased to hold that the contention which the complainant had raised that the cheque was forged will have to be raised in that criminal case under Section 138 of the N.I. Act and that there could not be a separate prosecution for the complainant's alleged contention for the alleged commission of the offence. With the said observation, it has also held that that the prosecution in question was a clear abuse of the process of law.
In the instant case also, as already observed above, when it is not in dispute that the cheque in Crl.P.No.6613/2011 22 question which was otherwise complete in all its contents including the name of the payee and the amount and execution was only completed by respondent No.1/accused No.1 by filling the date in it, for the act of which the petitioners/accused are relying upon the "side letter" dated 25.06.2008 (Annexure-C) and their legal notice dated 04.06.2010 (Annexure-E). Thus, it can only be held that the said insertion of date in the cheque can only be a defence in a proceeding initiated by the present petitioner No.1 under Section 138 of the N.I. Act against the present respondent- complainant and two other accused, as such, the initiation of separate criminal proceeding for the alleged offence punishable under Section 468 and 471 of the IPC against the present petitioners would be an abuse of process of law.
Crl.P.No.6613/201123
15. In the case of Sunil Kumar Vs. M/s.
Escorts Yamaha Motors Ltd. and others reported in AIR 2000 Supreme Court 27, wherein the decision of a Division Bench of Delhi High Court, quashing the FIR No.285/1998 at P.S. Rajouri Garden for the offence punishable under Sections 420, 460, 468 of IPC was challenged, the Hon'ble Apex Court was pleased to observe that in the facts of the case before it, wherein the parties had already resorted to civil remedy of adjudication by an Arbitrator and thereafter, the complainant had instituted a criminal complaint for the alleged offences, was pleased to hold that the arguments of learned counsel for the accused/respondents that necessary ingredients of the offence of cheating or criminal breach of trust have not been made out and on the other hand, the attendant circumstances indicate that the FIR was lodged to pre-empt the filing of the criminal complaint against the Crl.P.No.6613/2011 24 informant under Section 138 of the N.I. Act, has to be accepted. With the said observation, the appeal was dismissed.
16. In the instant case also, admittedly, the dispute between the parties were adjudicated by the Arbitral Tribunal which has passed an award, though confining the entitlement of the petitioners/accused for a sum of `18,36,164/-, however, much prior to the said arbitration award which is dated 24.07.2014, the present petitioner No.1-Company had already issued notice to the respondent-complainant as per Annexure-E on 04.06.2010, claiming a sum of `12 Crores and stated in the said notice that it has proceeded to fill the date in the cheque issued to it by the complainant-Company and present it for realisation, which came to be dishonoured on 02.07.2010. It is only thereafter the complainant has proceeded to initiate criminal Crl.P.No.6613/2011 25 prosecution against the petitioners for the alleged offences. Thus, the said act of the respondent/complainant can be called as an act of pre- empting the proceedings under Section 138 of the N.I. Act by petitioner No.1/accused No.1-Company.
17. In the case of Gurcharan Singh and Another Vs. Allied Motors Ltd. and Another reported in (2005) 10 Supreme Court Cases 626, in a similar circumstance, the Hon'ble Apex Court observing that, the complaint under Section 138 of the N.I. Act was filed before passing of the award by the Arbitral Tribunal, was pleased to observe that the making of the order may be a defence to such a complaint, but to what extent the defence would be valid, shall depend upon the facts and circumstances of each case. It was pleased to observe further that mere making of the award cannot be a Crl.P.No.6613/2011 26 ground to stall or stay the proceedings initiated under Section 138 of the N.I. Act.
In the instant case also merely because the Arbitral Tribunal is said to have passed an award, which is said to be under challenge under Section 34 of the Arbitration and conciliation Act, 1996, before the competent Court at Delhi, the same cannot be a ground to contend that the petitioner ought not to have presented the cheque, which was a past event, by the time the arbitral award was passed. If at all the complainant/respondent is contending that petitioner No.1/accused No.1/Company is not entitled for the entire amount shown in the cheque under dispute, the respondent-Company can take such defence in the proceeding under Section 138 of the N.I. Act, which is said to be pending between the parties, but presenting of the cheque by filling up the date by the present Crl.P.No.6613/2011 27 petitioners. In the facts and circumstances of the instant case and for the reasons shown above cannot be called as an act of forgery for the purpose of cheating or an act of using as genuine a forged document, which are punishable under Sections 468 and 471 of the IPC, as such, the criminal proceeding in C.C.No.49937/2010 pending in the Court below deserves to be quashed.
Accordingly, the Petition is allowed and the criminal proceedings in C.C.No.49937/2010 against the petitioners, pending before the learned VIII Additional Chief Metropolitan Magistrate, Bengaluru, is quashed.
Sd/-
JUDGE BMC