M/S Bbf Industries Ltd & Ors vs Krishan Gupta on 30 March, 2022

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Delhi High Court - Orders

M/S Bbf Industries Ltd & Ors vs Krishan Gupta on 30 March, 2022

1. The instant petition under Section 482 of the Code of Criminal Procedure, 1973, has been filed on behalf of the petitioners seeking quashing of the Complaint Case No. 1327/1/16 (presently numbered as CC No. 510234/16), pending before the Court of learned Metropolitan Magistrate, Tis Hazari Courts, Delhi, and the summoning order dated 6 th June, 2016 passed by the learned Magistrate along with the proceedings initiated in pursuance thereto.

2. Learned counsel appearing on behalf of petitioners submitted that the petitioner no. l, M/s BBF Industries Ltd., is a company registered under the Companies Act, 1965 having registered office at Village Bhamian kalah, Tajpur Road, Ludhiana, Punjab and it is involved in packaging of goods. The petitioner no.2 and 3 are the Directors of the petitioner no. 1/Company.

Signature Not Verified Digitally Signed By:GAURAV SHARMA CRL.M.C. 4323/2017 Page 1 of 10 Signing Date:02.04.2022 17:05:19

The Respondent herein, i.e. the complainant is a paper merchant and is doing business under the name & style of M/s Har Lal & Sons at 414, Chitla Gate, 1st floor, Chawri Bazar, Delhi-110006.

3. It is submitted that as per the averments made by the complainant/respondent in the complaint under Section 138 read with Section 141 of the Negotiable Instruments Act, 1881 (hereinafter "NI Act"), filed in the Court of Metropolitan Magistrate, Tis Hazari Courts, Delhi, alleging that the petitioner no. 1/Company purchased goods from the respondent from time to time vide Bill no. CS. 170 dated 21st December, 2013 for Rs. 6,28,139/-, Bill no. CS. 171 dated 23rd December, 2013 for Rs. 7,16,159/-, Bill no. CSA. 184 dated 15th January, 2014 for Rs. 9,01,954/-, Bill no. CS. 188 dated 20th January, 2014 for Rs. 5,24,917/- and Bill no. CS. 191 dated 20th January, 2014 for Rs. 5,36,930/-. It is further submitted that the total amount of all the bills mentioned in the complaint herein above totalled to Rs.1,69,97,746/- which amount was not paid by the petitioners. It is also alleged in the complaint that in discharge of part liability, the accused issued a cheque for Rs. 1,00,00,000/- bearing no. 000353, dated 1st April, 2014 drawn on HDFC Bank, Noida which got dishonoured on presentation and the said amount was not paid by the accused, despite the complainant issuing of the statutory notice of demand to the accused persons.

4. It is submitted that the evidence by way of affidavit filed by the complainant also alleged that the petitioner no. l purchased goods from the Respondent from time to time and as per the evidence filed by way of affidavit, the total amount of bills as alleged amounts to Rs. 37,68,872/-. It is vehemently submitted that the total of these bills is Rs 1,69,97,746/-, as placed on record, is incorrect.

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5. Learned counsel appearing on behalf of petitioners submitted that it is crystal clear from the aforesaid facts and bills of the purchase that the liabilities of the petitioners are made only for maximum Rs. 37,68,872/-. Therefore, it is settled that there are no liabilities of Rs. 1,00,00,000/- or more than that as stated in the complaint.

6. It is vehemently submitted that therefore, issuance of the cheque of the amount of Rs. 1,00,00,000/- did not arise as the said cheque was stolen and the complainant has himself filled up the cheque amounts on the cheque and deposited the same to the bank. It is submitted that the petitioners have already reported the theft/misappropriation of the said cheque to the Police Authorities vide DD No. 9 dated 17th February, 2014.

7. It is further submitted that as per the Section 138 of NI Act, where any cheque is drawn for payment of any amount of money for the discharge in whole or any part of any debt or other liability and the same is dishonoured by the Bank, the person who drew the cheque shall be punished. Therefore, it is the essence of the section that the cheque drawn should be towards the discharge of either the whole debt or part of the debt. The Section is thus, not applicable to cases where the dishonoured cheque amount is allegedly more than the alleged debt or liability.

8. Learned counsel appearing on behalf of petitioners vehemently submitted that the alleged cheque amount is admittedly more than the alleged liability as stated above. It is also submitted that while issuing the summoning order dated 6th June, 2016, the Court below has failed to consider the aforesaid facts and specifically has not considered the fact that the amount of the dishonoured cheque is more than the alleged debt or liability. Therefore, Section 138 of NI Act cannot be attracted. It is further Signature Not Verified Digitally Signed By:GAURAV SHARMA CRL.M.C. 4323/2017 Page 3 of 10 Signing Date:02.04.2022 17:05:19 submitted that in the evidence filed by the way of affidavit, the debt amount was mentioned much lesser than the amount of the dishonoured cheque. Therefore, the entire criminal proceedings under Section 138 of NI Act initiated by the complainant is nothing but a gross misuse of process of law and the aforesaid criminal proceedings have been initiated only to create a pressure on the petitioners. The learned Metropolitan Magistrate, while issuing the summoning order dated 6th June, 2016, has not recorded any reasons or not dealt with the complaint or the evidence which has been filed by the petitioners in the right prospective. Therefore, the summoning order is bad in law and is liable to be quashed.

9. Per contra, learned counsel appearing on behalf of respondent vehemently opposed the instant petition and submitted that the arguments advanced by the learned counsel for the petitioners cannot be dealt with in the instant proceeding as that is the question of facts which can be dealt only at the stage of the trial. It is submitted that while considering the entirety of the matter as well as the contentions made in the complaint and also after considering the evidence on the record which has been filed by the complainant by way of affidavit, the impugned summoning order was issued by the Court below. It is further submitted that the petitioners have issued the cheque for payment of the part liability or debt as stated in the complainant specially in Paragraph 2 and 3 of the complaint. It is also submitted that the complainant presented the aforesaid cheque in his Bank i.e. Indian Overseas Bank, Daryaganj, New Delhi, but the same was returned/dishonoured/uncashed with the remarks „payment stopped by the drawer‟ vide returning memo dated 27th June, 2014.

10. Learned counsel appearing on behalf of the respondent submitted that Signature Not Verified Digitally Signed By:GAURAV SHARMA CRL.M.C. 4323/2017 Page 4 of 10 Signing Date:02.04.2022 17:05:19 the aforesaid cheque has been issued by the petitioner no. 1 under the signatures of the petitioner no. 2 towards the admitted and acknowledged payment and in discharge of admitted and acknowledged liability. It was the duty and responsibility of the petitioner no. 2 to ensure that the payment of the aforesaid cheque is honoured, being the issuer, and signatory of the cheque. It is submitted that the present petition is devoid by any merit and is to be dismissed.

11. Heard learned counsel for the parties and perused the record including the impugned order dated 6th June, 2016. The summon order dated 6th June 2016 is reproduced herein below for proper adjudication of the instant case:

"Present: Complainant in person alongwith Ld. Counsel. To show that accused no. 2 and 3 are the Directors of accused no. 1, complainant has filed the form 32 of the accused no. 1 company, downloaded from ROC website as well as signatory details downloaded from website MCA 21.

Also, accused no. 2 is the signatory of the cheque in question.

Pre-summoning evidence byway of affidavit has been tendered. Arguments have been heard upon the point of summoning of the accused. After going through the complaint, documents attached with it and testimony of the complainant, I am of the view that prima facie offence U/s. 138 of Negotiable Instruments Act is made out. All the statutory requirements have been complied with. Case filed is within the period of limitation. Let the accused be summoned on filing of PF, RC and Speed Post. Accused be served through affixation also in terms of section 65 Cr. P.C. Now, to come up on 16.09.2016.

Steps to be taken within two weeks from today.

Complainant is at liberty to accompany with the process server for service of the summons."

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12. This Court has also perused the contentions made in the complaint filed by the complainant. The relevant paragraphs are reproduced as under:

"2. That admittedly the accused has purchased goods from the Complainant from time to time on credit basis against the bills No. CS. 170 dated 21.12.13 for Rs. 6,28,139/-, Bill No. CS. 171 dated 23.12.13 for Rs. 7,16,159/-, Bill No. CSA 184 dated 15.1.14 for Rs. 9,01,954/-, Bill No. CS 188 dated 20.01.14 for Rs. 5,24,917/- and bill No. CS 191 dated 20.01.14 for Rs. 5,36,930/-. The total amount of all bills mentioned herein above comes to Rs. l,69,97,746/- which the accused have not paid on due dates and the same is lying due against the accused.

3. That in discharge of part liability, the accused issued a Cheque to the complainant bearing cheque No. 000353 dated 01.04.2014 for Rs. 1,00,00,000/- drawn on HDFC Bank, Noida Payable at Par with the assurance that the cheque would be encashed on its presentation on due date.

5. That the above mentioned cheque had been issued by the accused under the signatures of accused no, 2 towards the admitted and acknowledged payment and in discharge of admitted and acknowledged liability and it was the duty and responsibility of the accused to ensure the payment of the aforesaid cheque being the issuer, signatory of the cheque.

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8. That the complainant having left with no other alternative sent a legal notice dated 24.7.2014 through his Advocate Shri V.C. Sharma, under Regd. Speed post and E-mail to the accused. The complainant by means of the said notice called upon the accused to make the payment of the cheque amount within the stipulated period from the date of receipt of the said notice. The accused was further informed that the complainant would take necessary legal action in the event of his failure to comply the same. The said notice was duly served upon the accused. The vague and evasive Signature Not Verified Digitally Signed By:GAURAV SHARMA CRL.M.C. 4323/2017 Page 6 of 10 Signing Date:02.04.2022 17:05:19 false reply was received by the counsel for the complainant from the counsel of the accused persons but the accused failed to pay the cheque amount within the stipulated period.

9. That inspite of the said notice having been served on the accused, the accused persons have failed/neglected to make the entire payment of the aforesaid cheque amount and also have not responded to the said legal notice, hence the necessity to file the present complaint. The complaint is being filed within the stipulated period as provided under the law."

13. This Court has also perused the contents of the reply which has been given by the petitioners of the notice under Section 138 of NI Act.

14. The objectives of proceeding Section 138 of NI Act are that the cheque should not be used by a person as a tool of dishonesty and when cheque is issued by a person, it must be honoured, and if it is dishonoured, the person is given an opportunity to pay the cheque amount by issuance of a notice and if he still does not pay, he must face the criminal trial and the consequences.

15. Section 138 of the Negotiable Instruments Act, 1881, is given below for easy reference:

"138. Dishonour of cheque for insufficiency, etc., of funds in the account.--Where any cheque drawn by a person on an account maintained by him with a banker for payment of any amount of money to another person from out of that account for the discharge, in whole or in part, of any debt or other liability, is returned by the bank unpaid, either because of the amount of money standing to the credit of that account is insufficient to honour the cheque or that it exceeds the amount arranged to be paid from that account by an agreement made with that bank, such person shall be deemed to have committed an offence and shall, without prejudice to any other provision of this Act, be punished with imprisonment for a term which may extend to one Signature Not Verified Digitally Signed By:GAURAV SHARMA CRL.M.C. 4323/2017 Page 7 of 10 Signing Date:02.04.2022 17:05:19 year, or with fine which may extend to twice the amount of the cheque, or with both:

Provided that nothing contained in this section shall apply unless--

(a) the cheque has been presented to the bank within a period of six months from the date on which it is drawn or within the period of its validity, whichever is earlier;

(b) the payee or the holder in due course of the cheque, as the case may be, makes a demand for the payment of the said amount of money by giving a notice in writing, to the drawer of the cheque, within fifteen days of the receipt of information by him from the bank regarding the return of the cheque as unpaid; and

(c) the drawer of such cheque fails to make the payment of the said amount of money to the payee or, as the case may be, to the holder in due course of the cheque, within fifteen days of the receipt of the said notice.

Explanation.--For the purposes of this section, „debt or other liability‟ means a legally enforceable debt or other liability."

16. In the case of Electronics Trade & Technology Development Corpn. Ltd. v. Indian Technologists & Engineers (Electronics) (P) Ltd., (1996) 2 SCC 739, the Hon'ble Supreme Court held as follows:

"6. ... The object of bringing Section 138 on statute appears to be to inculcate faith in the efficacy of banking operations and credibility in transacting business on negotiable instruments. Despite civil remedy, Section 138 intended to prevent dishonesty on the part of the drawer of negotiable instrument to draw a cheque without sufficient funds in his account maintained by him in a bank and induce the payee or holder in due course to act upon it. Section 138 draws presumption that one commits the offence if he issues the cheque dishonestly. It is seen that once the cheque has been drawn and issued to the payee and the payee has Signature Not Verified Digitally Signed By:GAURAV SHARMA CRL.M.C. 4323/2017 Page 8 of 10 Signing Date:02.04.2022 17:05:19 presented the cheque and thereafter, if any instructions are issued to the bank for non-payment and the cheque is returned to the payee with such an endorsement, it amounts to dishonour of cheque and it comes within the meaning of Section 138."

17. In Goa Plast (P) Ltd. v. Chico Ursula D'Souza, (2004) 2 SCC 235, Hon'ble Supreme Court while dealing with the objects and ingredients of Sections 138 and 139 of the Act, observed as follows:

"26. ... The object and the ingredients under the provisions, in particular, Sections 138 and 139 of the Act cannot be ignored. Proper and smooth functioning of all business transactions, particularly, of cheques as instruments, primarily depends upon the integrity and honesty of the parties. In our country, in a large number of commercial transactions, it was noted that the cheques were issued even merely as a device not only to stall but even to defraud the creditors. The sanctity and credibility of issuance of cheques in commercial transactions was eroded to a large extent. Undoubtedly, dishonour of a cheque by the bank causes incalculable loss, injury and inconvenience to the payee and the entire credibility of the business transactions within and outside the country suffers a serious setback. Parliament, in order to restore the credibility of cheques as a trustworthy substitute for cash payment enacted the aforesaid provisions. The remedy available in a civil court is a long-drawn matter and an unscrupulous drawer normally takes various pleas to defeat the genuine claim of the payee."

18. This Court, in the instant case, is concerned only with the question as to whether on a legality of the complaint, notice under Section 138 of NI Act and reply of the said notice, prime facie, case is made out or not to issue process by the Magistrate.

19. The law as regards issuance of process in criminal cases is well settled. At the complaint stage, the Magistrate is merely concerned with the allegations made out in the complaint and has only to prime facie satisfy Signature Not Verified Digitally Signed By:GAURAV SHARMA CRL.M.C. 4323/2017 Page 9 of 10 Signing Date:02.04.2022 17:05:19 whether there are sufficient grounds to proceed against the accused and it is not the province of the Magistrate to enquire into the detailed discussions on the merits or demerits of the case. After perusal of the complaint and the evidence filed by way of affidavit, discloses sufficient materials leading to the offence under Section 138 of NI Act. The Magistrate, at the stage of issuance of summoning order only the material is required for prime facie satisfaction of the Magistrate. This Court is also of the view that all other facts and arguments advanced by the learned counsel appearing on behalf of petitioners before this Court is totally question of facts and it cannot be dealt with at this stage.

20. This Court has already extracted the relevant portion of the complaint. If they are so read in the above legal instincts, in the view of this Court, a prime facie case has been made out for initiating proceedings for the offence alleged under Section 138 of NI Act. In such circumstances, this Court does not find any error or illegality in the summoning order and reason for interfering in the summoning order by way of invoking the extra jurisdiction power under Section 482 of the Cr.P.C. for quashing/setting aside the summoning order.

21. Accordingly, the petition stands dismissed.

CHANDRA DHARI SINGH, J MARCH 30, 2022 Dy/ct Signature Not Verified Digitally Signed By:GAURAV SHARMA CRL.M.C. 4323/2017 Page 10 of 10 Signing Date:02.04.2022 17:05:19

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Delhi High Court - Orders