Delhi District Court
Additional Sessions Judge vs M/S Magnum Aviation Pvt Ltd on 2 September, 2008
1
IN THE COURT OF SHRI S. K. SARVARIA
ADDITIONAL SESSIONS JUDGE
NEW DELHI
Criminal Revision No. 101/07
M/s. Indus Airways Pvt Ltd.
Acting through its Directors
Having office at 003, Plot No.3
RBCACGHS, Sector 10, Dwarka
New Delhi110075
2. Mr Krishan Gopal Beri
Director, M/s Indus Airways Pvt Ltd
003, Plot No. 3 EBCACGHS, sector 10
Dwarka, New Delhi110075
3. Mr Deep Beri
003, Plot No. 3, RBCACGHS, sector 10
Dwarka, New Delhi110075
Petitioners
Versus
M/s Magnum Aviation Pvt Ltd
Acting through its Directors/Authorised Representative
E36, Sector 8, Noida201301 (UP)
Respondent
Date of institution : 30.08.2007
2
Date when the arguments
were heard : 07.08.2008
Date of judgment : 02.09.2008
ORDER
This revision petition is filed by the petitioners against the order dated 22.5.07 passed by learned Metropolitan Magistrate for summoning the petitioners/accused persons to face trial for the offence punishable under section 138 Negotiable Instrument Act in the complaint filed by the respondent with regard to two dishonoured cheques issued by the petitioners company.
I have heard the learned counsels for the parties and have gone through the trial court record and relevant provisions of law and the authorities produced on behalf of the parties.
The contention on behalf of the petitioners are that the complaint against petitioner no.3 is not maintainable as petitioner no. 3 is a government servant and was employed as Pilot in Border Security Force since 1993 under Ministry of Home and the cheque is alleged to be issued by petitioner no.2. It is argued that the order of issuance of summons passed by the learned Metropolitan Magistrate is liable to be challanged by filing revision petition by the accused persons.
It is also argued that the name of petitioners/accused no.3 has not given in the Memorandum of Articles of Association Ex.CW1/A of petitioner company nor the contract is signed by petitioner no.3 so he should not have been 3 summoned in this case. Reliance is placed upon the authorities Ashok Newatia Vs. State & Anr 142 (2007) Delhi Law Times 148 Delhi High court, Lilly Hire Purchase Pvt. ltd Vs. Darshan Lal JDC 1377 Punjab and Haryana High Court, Swastick Coaters Vs Deepak Brothers JDC 845 A.P., Sriniwas Mulchand Ladniya Vs Laxminarayan Jainarayan Rathi and others 2004(1) Bankmann 39 (Bombay High court), Shanku Concretes Pvt Ltd and others Vs. State of Gujarat and another 2000 (3) Crimes 602 Gujarat High Court, Anoop Jhalani Vs. State and Anr 144 (2007) Delhi Law Times 858 Delhi High Court, while the date of alleged dishonour of cheque is of Feb 07.
It is further argued that the transaction did not take place at all although order in question for supply of spare parts was placed by the petitioner company upon the respondent/complainant but the respondent failed to adhere to the terms and conditions for providing specific spare parts and did not deliver the said spare parts, so at no point of time any consideration or liability ever occurred and so no cause of action arose. It is argued that since the spare parts were not supplied by the respondent/complainant within agreed time frame the contract become null and no liability of the petitioner no.1 and petitioner no.2 accrued. It is further argued that one of the employees of the petitioner company influenced petitioner no.1 and 2 to issue the post dated cheques for the spare parts to be delivered at cheapest rate and also to be supplied within specific time period as agreed upon by the parties. But the respondent did not supply any spare parts within the time frame and the petitioner company came to know that the respondent/complainant company was making them fool and actually was 4 trying to cause huge financial loss running into lacs of rupees, so the complainant was requested to return the cheques lying with them. Therefore, the order of summoning petitioners is liable to be set aside and complaint filed by the respondent/complainant against the petitioners is liable to be dismissed.
The arguments on behalf of the respondent are that the petitioner/accused persons agreed to make advance payment for procuring the spare parts in question through respondent/complainant company. The complainant has procured the goods and purchased the same from Overseas Buyer but the advance cheques given by the petitioners on presentation to the bank were dishonoured. The specific allegations are made against petitioner no. 3 also who was managing the affairs of the petitioner company so he was also rightly summoned by the learned trial court and the revision petition is liable to be dismissed.
Reliance is placed upon the authority Anugrag Modi Vs MSTC Ltd 95 (2002) Delhi Law Times 203 Delhi High Court and Sunil Sareen Vs Govt of NCT of Delhi & Anr 83 (2000) Delhi Law Times 380 Delhi High Court.
The first question raised is about maintainability of the revision petition challenging the summoning order passed by the learned Metropolitan Magistrate.In Rajendra Kumar Sitaram Pande v. Uttam AIR 1999 SC 1028, it was observed as follows:
"5. The very object of conferring revisional jurisdiction upon the superior criminal Courts is to correct miscarriage of justice arising from misconception of law or irregularity of procedure.5
6. Discretion in the exercise of revisional jurisdiction should, therefore, be exercised within the four corners of Section 397, whenever there has been miscarriage of justice in whatever manner. Under subsection (2) of Section 397, there is a prohibition to exercise revisional jurisdiction against any interlocutory order so that inquiry or trial may proceed without any delay. But the expression 'interlocutory order' has not been defined in the Code. In Amar Nath v. State of Haryana (1978) 1 SCR 222 : (AIR 1977 SC 2185), this Court has held that the expression 'interlocutory order' in Section 397(2) has been used in a restricted sense and not in a broad or artistic sense and merely denotes orders of purely interim or temporary nature which do not decide or touch the important rights or liabilities of the parties and any order which substantially affects the right of the parties cannot be said to be an 'interlocutory order,' In Madhu Limaye v. State of Maharashtra (1978) 1 SCR 749 : (AIR 1978 SC 47), a three Judge Bench of this Court has held an order rejecting the plea of the accused on a point which when accepted will conclude the particular proceeding cannot be held to be an interlocutory order. In V. C. Shukla v. State (1980) 2 SCR 380 : (AIR 1980 SC 962), this Court has held that the term 'interlocutory order' used in the Code of Criminal Procedure has to be given a very liberal construction in favour of the accused in order to ensure complete fairness of the trial and the revisional power of the High Court or the Sessions Judge could be attracted if the order was not purely interlocutory but intermediate or quasi final. This being the position of law, it would not be appropriate to hold that an order directing issuance of process is purely interlocutory and, therefore, the bar under subsection (2) of Section 6 397 would apply. On the other hand, it must be held to be intermediate or quasi final and, therefore, the revisional jurisdiction under Section 397 could be exercised against the same. The High Court, therefore, was not justified in coming to the conclusion that the Sessions Judge had no jurisdiction to interfere with the order in view of the bar under subsection (2) of Section 397 of the Code."
In Madhu Limaye v. State of Maharashtra AIR 1978 SC 47, it was observed as follows:
"8. Under Section 435 of the 1898 Code the High Court had the power to "call for and examine the record of any proceeding before any inferior Criminal Court situate within the local limits of its jurisdiction for the purpose of satisfying itself as to the correctness, legality or propriety of any finding, sentence or order record or passed, and as to the regularity of any proceedings of such inferior Court", and then to pass the necessary orders in accordance with the law engrafted in any of the sections following Section 435. Apart form the revisional power, the High Court possessed and possesses the inherent powers to be exercised ex debito justitiae to do the real and the substantial justice for the administration of which alone Courts exist. In express language this power was recognized and saved in Section 561A of the old Code. Under Section 397 (1) of the 1973 Code, revisional power has been conferred on the High Court in terms which are identical to those found is Section 435 of the 1898 Code. Similar is the position apropos the inherent powers of the High Court. We may read the language of Section 482 (corresponding to Section 561A of the old Code) of 7 the 1973 Code. It says: "Nothing in this Code shall be deemed to limit or effect the inherent powers of the High Court to make such orders as may be necessary to give effect to any order under this Code, or to prevent abuse of the process of any Court or otherwise to secure the ends of justice."
At the outset the following principles may be noticed in relation to the exercise of the inherent power of the High Court which have been followed ordinarily and generally, almost invariably, barring a few exceptions: (1) That the power is not to be resorted to if there is a specific provision in the Code for the redress of the grievance of the aggrieved party;
(2) That it should be exercised very sparingly to prevent abuse of process of any Court or otherwise to secure the ends of justice;
(3) That it should not be exercised as against the express bar of law engrafted in any other provision of the Code.
9. In most of the cases decided during several decades the inherent power of the High Court has been invoked for quashing of a criminal proceeding on one ground or the other. Sometimes the revisional jurisdiction of the High Court has also been resorted to for the same kind of relief by challenging the order taking cognizance or issuing processes or framing charge on the grounds that the Court had no jurisdiction to take cognizance and proceed with the trial, that the issuance of process was wholly illegal 8 or void, or that no charge could be framed as no offence was made out on the allegations made or the evidence adduced in Court. In the background aforesaid, we proceed to examine as to what is the correct position of law after the introduction of a provision like subsection (2) of Section 397 in the 1973 Code.
10. As pointed out in Amar Nath's case (AIR 1977 SC 2185) (supra) the purpose of putting a bar on the power of revision in relation to any interlocutory order passed in an appeal, inquiry, trial or other proceeding is to bring about expeditious disposal of the cases finally. More often than not, the revisional power of the High Court was resorted to in relation to interlocutory orders delaying the final disposal of the proceedings. The Legislature in its wisdom decided to check this delay by introducing subsection (2) in Section 397. On the one hand, a bar has been put in the way of the High Court (as also of the Sessions Judge) for exercise of the revisional power in relation to any interlocutory order, on the other, the power has been conferred in almost the same terms as it was in the 1898 Code. On a plain reading of Section 482, however, it would follow that nothing in the Code, which would include subsection (2) of Section 397 also, "shall be deemed to limit or affect the inherent powers of the High Court." But, if we were to say that the said bar is not to operate in the exercise of the inherent power at all, it will be setting at naught one of the limitations imposed upon the exercise of the revisional powers. In such a situation, what is the harmonious way out? In our opinion, a happy solution of this problem would be to say that the bar 9 provided in subsection (2) of Section 397 operates only in exercise of the revisional power of the High court, meaning thereby that the High Court will have no power of revision in relation to any interlocutory order. Then in accordance with one or the other principles enunciated above, the inherent power will come into play, there being no other provision in the Code for the redress of the grievance of the aggrieved party. But then if the order assailed is purely of an interlocutory character, which could be corrected in exercise of the revisional power of the High Court under the 1898 Code, the High Court will refuse to exercise its inherent power. But in case the impugned order clearly brings about a situation which is an abuse of the process of the Court or for the purpose of securing the ends of justice interference by the High Court is absolutely necessary, then nothing contained in Section 397 (2) can limit or affect the exercise of the inherent power by the High Court. But such cases would be few and far between. The High court must exercise the inherent power very sparingly. One such case would be the desirability of the quashing of a criminal proceeding initiated illegally, vexatiously or as being without jurisdiction. Take for example a case where a prosecution is launched under the Prevention of Corruption Act without a sanction, then the trial of the accused will be without jurisdiction and after his acquittal a second trial after proper sanction will not be barred on the doctrine of Autrefois Acquit. Even assuming, although we shall presently show that it is not so, that in such a case an order of the Court taking cognizance or issuing processes is an interlocutory order, does it stand to reason to say 10 that inherent power of the High Court cannot be exercised for stopping the criminal proceeding as early as possible, instead of harassing the accused upto the end? The answer is obvious that the bar will not operate to prevent the abuse of the process of the Court and/or to secure the ends of justice. The label of the petition filed by an aggrieved party is immaterial. The High Court can examine the matter in an appropriate case under its inherent powers. The present case undoubtedly falls for exercise of the power of the High Court in accordance with Section 482 of the 1973 Code, even assuming, although not accepting, that invoking the revisional power of the High Court is impermissible."
In Rajesh Bagga v State and anr 2006 (1) CC Cases (HC) 119 (Del) and Sunil Brado v Prem Kumar Gulati and anr 1998 (3) CC Cases (HC) 326 (Del), our Hon'ble High Court has held that against the order summoning the accused the revision petition lies. Similarly in Lilly Hire Purchase Pvt Ltd's case (supra), Shrinivas Mulchand's case (supra) relied upon by learned counsel for the petitioners, the same view was taken. Therefore, the legal position is well settled that the accused is entitled to file a revision petition challenging the order summoning him to face criminal proceedings.
The next question raised is with regard to summoning of petitioner/accused No.3 against whom there are specific allegations in the complaint filed before learned Metropolitan Magistrate that he along with the other accused conducted negotiations on the price of the spare parts and delivery terms in terms of payment with the complainant/respondent. It is also 11 alleged against him in the complaint that the revisionist/accused No.3 belongs to the family of the revisionist/ accused No.2 and is also designated as Finance Manager and he is also in charge of management and daytoday affairs of the revisionist/accused No.1 company. Although on behalf of the revisionists these averments made in the complaint filed by the respondent are challenged on the strength of the argument that the revisionist/accused No.3 is a government servant and is employed as Pilot in Border Security Force since 1993 under Ministry of Home and his name also does not figure in the Memorandum and Article of Association of the Petitioner Company so he should not be summoned. The contrary and contradictory position taken by the parties on this point has raised disputed questions of facts which can only be adjudicated after recording the respective evidence of the parties to know whether the revisionist/accused No.3 was rightly prosecuted or not in the light of Anurag Modi's case (supra) relied upon by learned counsel for the respondent. Anoop Jhalani's case (supra), Ashok Newatia's (supra) relied on behalf of the petitioners being related to the vicarious liability of the directors and so are not applicable to the present revision petition as it is not disputed nor alleged that the revisionist/accused No.3 was not a director of the revisionist company.
The next question raised is whether the cheques issued by the revisionist/accused persons can be said to be for the discharge, in whole or in part, of any debt or the other liability? Anurag Modi's case (supra) and Sunil Sareen's case (supra) relied on behalf of the respondent do not touch this question and so are distinguishable on facts.In Shreyas Agro Services Pvt. 12 Ltd., M/s. v. Chandrakumar S. B. 2006 Cr LJ 3140 (Kant), it was observed as follows:
"3..........The words "for discharge of any debt or other liability" in Sec. 138 of N.I. Act should be interpreted to mean current existing or past ascertained liabilities. The cheque issued in respect of future liabilities not in existence as on the date of cheque would not attract prosecution u/S. 138 of N. I. Act."
In Swastik Coaters Pvt. Ltd., M/s. v. M/s. Deepak Brothers 1997 Cr LJ 1942 (AP), it was observed as follows:
"In this case it is the specific defence of the accused that the cheque that was issued was post dated cheque and on the date of the issuing of the cheque the materials were not supplied and the accused placed an order for GradeI cloth but what has been supplied is only GradeII cloth. Precisely on this count only the jail authorities received only a part of the cloth which was substandard. The moment the jail authorities rejected the substandard cloth, accused has intimated the same to the complainant and thereafter for the third time the cheque was presented in spite of receiving the letter from the accused intimating the rejection of the material. On the basis of this evidence the Court below held that as on the date of the cheque there was no existing debt or liability the cheque being a post dated cheque. Therefore, its rejection does not constitute an offence under Section 138 of 13 the Negotiable Instruments Act. I do not think that there is any infirmity in this reasoning of the Court below. Explanation to Section 138 of the Negotiable Instruments Act clearly makes it clear that the cheque shall be relateable to an enforceable liability in the sense that the title in the property had not passed on to the accused since the goods were not delivered. It is the case of the accused in this context that by taking undue advantage of receiving the entire amount of Rupees 1,00,000/ by way of a Demand Draft and the balance amount by way of a post dated cheque the complainant with a dishonest intention has supplied the substandard material, to be supplied to the Yerrawada Central Prison."
In Shanku Concretes Pvt. Ltd. v. State of Gujarat 2000 Cr LJ 1988 (Guj), it was observed as follows:
"11. The crux of the matter, therefore, would be whether there was any existing liability on the part of the present petitioners, which required due discharge within the meaning of Section 138 of the Negotiable Instruments Act, and that whether the cheques which were bounced were issued to discharge such existing liability?
12. Considering the facts and circumstances of this case, the answer to the above question must be in the negative because as per the agreement executed between the parties, liability which was to be discharged within the meaning of Section 138 of 14 the Negotiable Instruments Act, was still to be arisen only on 5121995 i.e. after the six months of the execution of the contract. This clearly denotes that when the cheques were delivered, there was no liability on the part of the accused to discharge any debt.
13. The above view further strengthen from the agreement executed between the parties. It is amply clear in the agreement that accused shall repay the amount after six months of the execution of agreement and it is also made clear that for due performance of the contract. The intention of the parties is clear from this averments that the cheques were issued as the collateral security for the due performance (Vernacular matter is omitted) of the contract, by which the Company and the Director i.e. accused No. 2 bound themselves to repay the said amount. It is, therefore, clear that cheques were not issued to discharge any existing debt.
It was also held as follows:
14. "... Therefore, the transaction from its very nature or from the intention of the parties, as reflected in the agreement executed between the parties, is purely of a civil nature, for which a civil suit has already been filed. The every fact that the payment was agreed to some future date and there was no debt or liability on the date of delivery of the cheques, will take the case out of the purview of the Section 138 of the Negotiable Instruments Act."
In Supply House, Represented by Managing Partner v Ullas 2006 Cr 15 LJ 4330 (Ker), it was observed as follows:
"4. Ext. D1 dated 921998 is the order that the accused had placed with the complainant. It disclosed that he was ordering 28 numbers of mixies and that he was enclosing there with Ext. P1 cheque for Rs. 58,520/ being the price amount for 28 number of mixies ordered. Order was placed on 921998 and the cheque is dated 2431998. It was thus a post dated cheque towards the price amount of the 28 number of mixies thus ordered. Ext. D4 is the stop memo that the accused had issued to his bankers directing the bank that, the cheque had been issued along with an order placed by the accused on the complainant who failed to supply the articles so ordered and therefore the amount as per the cheque shall not be paid. This was as early as on 1031998 even before the date of Ext. P1 cheque and far earlier than its presentation by the complainant in the bank. It is after that he intimated to the complainant in Ext. D3 letter dated 1631998 that he had not given the articles ordered and therefore the cheque shall not be presented to the bank. Of course, it contains a further request that settlement of the other transactions could be done later. Thus, even before the date of the cheque, the accused had informed the complainant that it shall not be presented to the bank because of the failure of the complainant himself in not supplying the items ordered as per Ext. D1, enclosing there with Ext. P1 post dated cheque. Thus it is clear that the accused had not incurred the liability for the amount covered by Ext. P1, a post dated cheque. The statement of account referred to in Ext. D3 in respect 16 of other transactions cannot found to be linked with Ext. P1 cheque. It was issued for a particular purpose. True, Ext. D3 and Ext. P8 indicate that accused owes some amount to the complainant, which has to be settled between the parties, as offered by the accused in the said letters. But what was the amount so due on settlement was not proved by the complainant. Whether it is in excess of the amount covered by Ext. P1 or whether it is less than the amount covered by Ext. P1 is a material aspect as regards the alleged liability on that count. In order to deem that one had committed offence under Section 138, the amount covered by the cheque shall be either in discharge of the liability incurred by the drawer, either in full or in part. It cannot in any way in excess of the liability incurred. Unless the complainant proves that the liability to be settled is to the tune of the amount covered by Ext. P1, he could not have made use of that cheque for such liability.
5. Therefore, Ext. P1 cheque cannot be stated to be one issued in discharge of the liability to the tune of the amount covered by it, which was really issued, as is revealed by Ext. D1, as the price amount for 28 numbers of mixies, which the complainant had not supplied. Therefore the acquittal of the accused cannot be stated to be unjustified to invite interference in the appeal."
One of the basic requirements for prosecution for the offence under section 138 of the Negotiation Instruments Act is that the cheque issued by the accused should be for the discharge, in whole or in part, of any debt and the said cheque on presentation to the bank was dishonoured. The explanation to the 17 section 138 explains that "debt or other liability" means a legally enforceable debt or other liability. The above case law makes it clear that the cheque issued must be with regard to the past or the current liability and not the future liability. In the present case it is not disputed that the post dated cheques were issued by the revisionist/accused company and the delivery of the goods for with the cheques were issued has not materialised. In the face of nondelivery of the goods /spare parts in question the cheques in question cannot be said to have been issued with regard to any current or passed liability with regard to any debt or other liability of the petitioners/the revisionists/accused persons towards the respondent/complainant company. The fact that the goods/spare parts in question were procured by the respondent company from overseas suppliers for delivery of the same to the revisionist/accused company is not prima facie established by any documentary evidence by the respondent/complainant before learned Metropolitan Magistrate. Even the name of the and particulars of the overseas suppliers are not given in the complaint or the affidavit in evidence in support of it. It has to be noted that the two cheques in question were issued for supply of spare parts/goods and not for compensating the respondent/complainant for the nonsupply of the same. Therefore, once the goods/spare parts in question were not supplied the two cheques in question cannot be said to have been issued by the revisionist company with regard to any debt or other liability which existed as on the date of issuance of the cheques. Therefore, the presumption envisaged under section 139 of the Negotiable Instruments Act stood rebutted in the given facts and circumstances 18 of the case, in the light of the before mentioned case law. Hence, it was not proper for the learned Metropolitan Magistrate to summon the accused persons without considering these aspects of the matter. The ingredients of Section 138 of the said Act are not attracted to the present case and no offence covered by the said provision of law, prima facie, can be said to have been made out against the revisionists/accused persons.
In the light of the of the above discussion the learned trial court committed the material irregularity/illegality in summoning the revision petitioners. The impugned order dated 22/5/2007 of learned trial court is set aside. The complaint filed by the respondent/complainant and pending before learned Metropolitan Magistrate is dismissed. The order be sent to the server (www delhidistrictcourts.nic.in). The trial court record be returned along with the copy of this order . The file of the revision petition be consigned to the record room. Announced in the open court on nd 2 day of September, 2008 ( S. K. SARVARIA) Additional Sessions Judge New Delhi