Delhi High Court
Wg. Cdr. R.R.J. Dass (Retd.) vs Smt. Satya Bhama Lal on 26 July, 2002
Equivalent citations: [2003]115COMPCAS878(DELHI), 100(2002)DLT105, 2002(64)DRJ503
JUDGMENT S.K. Agarwal, J.
1. This revision petition under Sections 397/401of the Code of Criminal Procedure (for short,"Cr.P.C."), 1973, is directed against the order dated4.6.2001, passed by the court of MetropolitanMagistrate, New Delhi, dismissing the application of the petitioner for recalling the order of summoning, on thecomplaint filed by the respondent under Section 138 ofthe Negotiable Instruments Act (for short, NI Act),1881.
2. The facts in brief necessary for disposal ofthis petition are that respondent filed complaint under sections 138 and 141 of NI Act, against M/s. InstallmentCorporation Limited & Ors. and its directors, includingpetitioner, alleging therein that under the agreementdated 15.7.94, complaint deposited with the companyof petitioner a sum of Rs. 5,00,000/- for a period of 24months. The agreement was signed by the petitioner onbehalf of the company, in his capacity as thevice-president and the director. There was a breach ofthe agreement and in discharge of their liabilitypetitioner issued a cheque of Rs. 4,00,000/- on 1.8.97,drawn on Punjab National Bank, Bhikaji Cama Palace, newDelhi in favor of the respondent. Complainantpresented the cheque in Indian Overseas Bank, Noida forrealisation on 4.8.97, and the same was dishonoured withthe remark "insufficient fund". On receipt ofinformation a legal notice through the counsel ofcomplainant was served on the company of petitioner on13.4.97, calling upon them to pay to the complainantRs. 4,00,000/-, within the period of 15 days from thereceipt of the said legal notice. The amount was notpaid despite service of notice. The petitioner Along with the two others mentioned in the complaint wasstated to be responsible for the running of theday-to-day affairs of the company as envisaged under section 141 of the NI Act. On the basis of the materialproduced, the accused persons were summoned in the abovecomplaint. On 17.9.99, petitioner moved an applicationfor recalling the order of summoning before the trialcourt, the same was dismissed vide order dated 4.6.2001.This order is under challenge.
3. It may be mentioned here that the perusal ofthe trial court record revealed that petitioner's pleafor stay of criminal proceedings before the trial Court, on the ground that his company was under liquidation,was rejected vide order dated 3.2.2001. Petitioner'searlier petitioner (Crl.M.(M).No. 3017/2001) was declinedby Hon'ble Mr. Justice K.S. Gupta on 6.11.2001 observing:-
"In view of decision in D.K. Kapur v.Reserve Bank of India and Ors., , this petition deserves to bedismissed being without any merit."
The above revision petition was filed on31.8.2001, against another order dated 1.6.2001, passedby the trial court in the same case holding that therewas valid service of notice. I have heard learnedcounsel for parties and have been taken through therecord.
4. Learned counsel for petitioner argued thatbefore offence under Section 138 of NI Act, can be saidto have been committed, statutory notice to the drawerin terms of Clause (b) of proviso of Section 138 of NIAct is necessary; that only on failure of the drawer tomake the payment within 15 days of the receipt of thestatutory notice, as envisaged by Clause (c) of theproviso, liability of the drawer for being prosecutedunder Section 138 N.I. Act can arise; that thecomplainant had given notice only to the company, atSafdurjung Enclave, New Delhi, whereas registered officeof the company was at Dehradoon and that Delhi office ofthe company was at 5, Bhikaji Cama Palace. Learnedcounsel argued that there was no valid legal noticeserved by the complainant on the company an no noticewas served on the petitioner, who was the director ofthe accused company, therefore, provisions of Sections138 and 141 of NI Act do not apply. Learned counsel forrespondent argued to the contrary.
5. In this case, notice was served on the companyat the address on which it had been corresponding withthe complainant. This fact is not denied by thecompany. Giving statutory notice under Section 138(b) of NI Act is pre-condition of filing the complaint, butthe notice is required to be given only to the drawer ofthe cheque. There is no requirement of law that noticeshould also be given to the directors or/and officerin-charge of the affairs of the company. Maker of thecheque in question is the accused company- M/s. InstallmentCorporation Limited. The petitioner signed the chequeon behalf of the company, which was dishonoured, but thethe cheque was issued by the company. The cheque wassigned by the petitioner, but this would not make himdrawer or the maker of the cheque. Thus the requirementof service of statutory notice on the accused companyunder Section 138(b) of NI Act, stands fully compliedwith. There is no legal requirement to give individualnotices to directors or the officers in-charge of thecompany. The directors become liable to be prosecutedand punishable by virtue of Section 141 of NI Act, whichdoes not talk of any separate notice. This findssupport from the observations made by Apex Court in AnilHada v. Indian Acrylic Ltd. , whereinit was held:
"The offender in Section 138 of the NegotiableInstruments Act, 1881 is the drawer of thecheque. He alone would have been the offenderthere under if the Act did not contain otherprovisions. It is because of Section 141 ofthe Act that penal liability under Section 138 is cast on other persons connected with thecompany."
In view of the above discussion, I find nomerit in this contention and the same is rejected.
6. Learned counsel for petitioner next arguedthat the essential ingredients of the offence under section 138 of NI Act are not fulfillled, as the chequein question was not issued for the discharge, in wholeor in part of any debt or liability. He argued that the accused company was engaged in the business of investingthe amount of its clients in shares/securities/debentureson their behalf; that the complainant hadgiven Rs. 4,00,000/- to the accused company for investingin share/securities; and that the issuance of thecheque in the course of business does not satisfyrequirements of Section 138 of NI Act, I am unable toagree. As per the averments made in the complaint,cheque in question was handed over to the complainanttowards repayment of the amount which the company wasliable to pay. There is a presumption under Section 139 of NI Act in favor of the drawer. This issue standssettled by several authoritative pronouncements of theSupreme Court. In M.M.T.C. Ltd. v. Medchl Chemicals & Pharma (P) Ltd., , itwas held:
"15. A similar view has been taken bythis Court in the case of K.N. Beena v.Muniyappan reported in 2001(7) Scale 331,wherein again it has been held that under section 139 of the Negotiable InstrumentsAct the Court has to presume, in a complaint under Section 138, that thecheque had been issued for a debt orliability.
16. There is therefore no requirementthat the Complainant must specificallyallege in the complaint that there was asubsisting liability. The burden ofproving that there was no existing debtor liability was on the respondents.This they have to discharge in the trial.At this stage, merely on basis ofaverments in the Petitions filed by themthe High Court could not have concludedthat there was no existing debt orliability."
7. The Apex Court rejected similar contentionalso in A.V. Murthy v. B.S. Nagabasavanna, , and it was held:
"This is not a case where the cheque wasdrawn in the respect of a debt or liability,which was completely barred from beingenforced under law. If for example, thecheque was drawn in respect of a debt orliability payable under a wageringcontract, it could have been said thatthat debt or liability is not legallyenforceable as it is a claim, which isprohibited under law. This case is not acase of that type. But we are certainthat at this stage of the proceedings, tosay that the cheque drawn by therespondent was in respect of a debt orliability, which was not legallyenforceable, was clearly illegal anderroneous."
(emphasis supplied) In view of the above, the contention that thecheque was not issued towards discharge of any liability,is liable to be rejected.
8. Learned counsel for petitioner next argued thatthe cheque in question was post dated cheque and sixmonths" period mentioned in 138 NI Act should not becalculated from the date mentioned on the cheque, but from the date when the cheque was actually drawn and given tothe drawee. I am unable to agree. The post dated chequewhen given, it is only a bill of exchange and as long asthe cheque remains bill of exchange, provisions of Section 138 of NI Act are not applicable. The post dated chequebecomes a cheque under Section 138 of NI Act, on the datewritten on the cheque and the period of six months has tobe reckoned under proviso (a) to Section 138 of the Actfrom the date written on the cheque. This issue is alsosettled by the Supreme Court in Ashok Yeshwant Badave v.Surendra Madhav Rao Neghojakar, . Noother point was argued.
For the foregoing reasons, I find no merit inthe petition and the same is di23;Hsmissed. Any observationmade herein would not affect merits of the case. Trialcourt record be sent back.