Gujarat High Court
Anchor Capitals Of India Ltd. And Anr. vs State Of Gujarat And Anr. on 22 April, 1998
Equivalent citations: 1998(2)ALD(CRI)840, [1999]96COMPCAS481(GUJ), (1998)3GLR1973
JUDGMENT M.H. Kadri, J.
1. The petitioners have filed this application under section 482 of the Code of Criminal Procedure, 1973 (to be referred to as "the Code"), to quash the complaint which is registered as Criminal Case No. 2793 of 1996 before the Metropolitan Magistrate Court No. 16, Ahmedabad, for the offences punishable under section 138 of the Negotiable Instruments Act, 1881 (to be referred to as "the Act").
2. Petitioner No. 1, Anchor Capitals of India Limited, is doing business of financing and ancillary activities and in furtherance of the said activity, the company had to appoint various agents to conduct the business of the company, with limited authority and power. In the month of October, 1996, it came to the notice of the present petitioner-company that various agents have played fraud with the company and have misused the cheques given to them. A newspaper item was published in the daily newspaper Lokdesh on February 5, 1997, with regard to the fraud committed by the agents of the company by misusing the cheques given to them. Respondent No. 2 had transactions with the agents of the company at Ahmedabad, and had obtained cheques written in the name of Mahesh Label Company. Respondent No. 2, who is the sole proprietor of Mahesh Label Co., had given the said cheques received by her from various parties of Ichalkaranjee District, Kolhapur, Maharashtra State, and delivered the said cheques to the petitioner-company. That the petitioners after taking their commission had in turn issued these cheques in favour of respondent No. 2. The details of the said cheques are as under :
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Sl. Name of the bank Cheque Amount Date of No. No. (Rs.) cheque
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1. Siddhi Co-op. Bank, 014772 18,731 10-10-96 Dhan Laxmi Market, Revdi Bazar.
2. -do- 014771 20,979 09-10-96
3. -do- 014762 12,038 06-10-96
4. -do- 014751 6,560 10-10-96
5. -do- 014778 15,545 10-10-96.
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3. The said cheques were deposited by respondent No. 2 in the bank on October 10, 1996, which came to be dishonoured on October 22, 1996. Respondent No. 2, thereafter, through her advocate served statutory notice under section 138(b) of the Act to the petitioners which was received by the petitioners on October 24, 1996. The petitioners gave reply to the said notice on November 2, 1996. As the petitioners did not comply with the statutory notice and did not make the payment of the dishonoured cheques, on November 20, 1996, a complaint came to be filed against the petitioners in the Court of the Metropolitan Magistrate, Ahmedabad, for the offence punishable under section 138 of the Act.
4. The said complaint was registered as Criminal Case No. 2793 of 1996. The learned Metropolitan Magistrate Court No. 16, Ahmedabad, examined the complainant on oath and after satisfying himself with regard to the allegations made in the complaint, took cognizance as the complaint disclosed ingredients of the offence under section 138 of the Act. After taking cognizance of the offence under section 138 of the Act, the learned Metropolitan Magistrate issued process against the petitioners for the said offence, which has been challenged by the petitioners by filing this miscellaneous criminal application.
5. Learned counsel for the petitioners, Y. F. Mehta, has submitted that prima facie the complaint does not disclose the ingredients of the offence punishable under section 138 of the Act. It is submitted that the necessary ingredients that the petitioners had issued cheques towards the discharge of debt or other liability is found missing in the complaint, and, therefore, the complaint requires to be quashed. Learned counsel for the petitioners has also submitted that the cheques in question were not issued towards the debt or any other liability, and, therefore, the ingredients under section 138 of the Act were not attracted and, hence, the complaint also requires to be quashed. It is further submitted by learned counsel for the petitioners that the complaint is not filed by the authorised person of Mahesh Label Company, and on that ground also the complaint requires to be quashed. It is further submitted by learned counsel for the petitioner that while issuing practice, the learned magistrate failed to appreciate that even if the averments made in the complaint be taken at their face value, no offence under section 138 of the Act was made out. Hence, the complaint is liable to be quashed. It is further submitted by learned counsel for the petitioners that in view of the fraud played by the agents with the petitioners, a public notice in the daily newspaper was published on October 9, 1996, October 14, 1996, and October 22, 1996, and the parties to whom the cheques were issued were instructed not to deposit the cheques for encashment and in spite of the instructions the cheques were deposited, and, therefore, the provisions of section 138 of the Act will not be attracted.
6. Learned counsel for respondent No. 2 has contended that the complaint and its accompaniments do disclose the ingredients of the offence punishable under section 138 of the Act that petitioner No. 1-company, had accepted the cheques issued by various businessmen of Ichalkaranjee and after deducting commission, petitioner No. 1-company had issued the cheques towards the amount which they had received. It is contended by learned counsel for the respondents that the petitioners gave reply to the notice and had accepted their liability to pay the amount of dishonoured cheques and the said reply to the notice was annexed with the complaint. It is further contended by learned counsel for respondent No. 2 that the learned magistrate after satisfying himself as to the averments made in the complaint and the documents annexed with the complaint had issued process against the petitioners. It is further submitted by learned counsel for respondent No. 2 that as per the decision of the Supreme Court in Modi Garments Ltd. v. Kuchil Kumar Nandi [1998] 92 Comp Cas 88, the stoppage of payment could not exonerate the petitioners from attracting the provisions of section 138 of the Act.
7. Learned counsel for the petitioner in support of his submission that the complaint does not disclose the ingredients of section 138 of the Act and hence the complaint and the process issued by the learned Magistrate require to be quashed has placed reliance on the following decisions :
(1) Keshub Mahindra v. State of M. P. [1996] SCC (Crl) 1124.
(2) P. S. Rajya v. State of Bihar [1996] SCC (Crl) 897.
(3) State of Haryana v. Ch. Bhajan Lal, AIR 1992 SC 604.
(4) Trilok Singh v. Satya Deo Tripathi, AIR 1979 SC 850.
(5) Madhavrao Jiwaji Rao Scindia v. Sambhajirao Chandrojirao Angre, AIR 1988 SC 709.
8. In Keshub Mahindra's case [1996] SCC (Crl) 1124, the Supreme Court by exercising powers under sections 482 and 397 of the Code and under articles 142, 136, 227 and 228 of the Code quashed and set aside the charges framed against the accused as the offences alleged found to have not been prima facie made out. However, the Supreme Court directed the trial court to frame charge for another offence which though not found place in the charge-sheet, but whereunder the case was initially registered.
9. In P. S. Rajya's case [1996] SCC (Crl) 897, the Supreme Court had quashed the prosecution of the appellant under section 5(2) read with section 5(1)(e) of the Prevention of Corruption Act, 1947, on the ground that the Central Vigilance Commission in its report had exonerated the appellant of all the charges for which the prosecution was launched. The Supreme Court held that :
". . . the standard of proof required to establish the guilt in a criminal case is far higher than the standard of proof required to establish the guilt in the departmental proceedings. In the instant case, the charge in the departmental proceedings and in the criminal proceedings is one and the same. If the charge which is identical could not be established in departmental proceedings and in view of the admitted discrepancies in the reports submitted by the valuers one wonders what is there further to proceed against the appellant in criminal proceedings."
10. On these facts, the Supreme Court quashed the criminal proceedings launched against the appellant.
11. In the case of State of Haryana v. Ch. Bhajan Lal, AIR 1992 SC 604, the Supreme Court laid down seven categories in which in exercise of powers under article 226 of the Constitution of India or under section 482 of the Code of Criminal Procedure, the High Court may interfere with any proceeding relating to cognisable offences to prevent abuse of the process of any court or otherwise to secure the ends of justice. However, the Supreme Court held that these powers should be exercised sparingly and that too in the rarest of rare cases.
12. In Trilok Singh's case, AIR 1979 SC 850, the Supreme Court quashed the issuance of process to prevent the abuse of the process of the court on the ground that the dispute raised was purely of a civil nature and the criminal proceeding initiated was an abuse of the process of the court and deserves to be quashed.
13. In Madhavrao Jiwaji Rao Scindia's case, AIR 1988 SC 709, the Supreme Court quashed the criminal proceeding in respect of two persons, but they were allowed to continue against the rest on the ground that alleged breach of trust constituted only a civil wrong. The Supreme Court quashed the criminal prosecution against the two persons also on the ground that the ingredients of the offence under sections 406 and 467 were wanting with respect to two persons, and, therefore, the criminal proceedings were quashed with respect to two persons. In the said decision, the Supreme Court further observed that the process of the court cannot be utilised for any oblique purpose and where in the opinion of the court chances of an ultimate conviction are bleak, and, therefore, no useful purpose is likely to be served by allowing a criminal prosecution to continue, the court may while taking into consideration the special facts of the particular case also quash the proceeding even though it was at a premature stage.
14. This court is in entire agreement with the principles laid down in the decisions referred to above. The exercise of the powers conferred by articles 226 and 227 of the Constitution of India or under section 482 on the Code would depend upon the facts and circumstances of each case, but with the sole purpose to prevent the abuse of the process of any court or otherwise to secure the ends of justice. In the light of the principles laid down by the decisions referred to above, let us examine the contentions raised by learned counsel for the petitioner as to whether the complaint and documents annexed with it prima facie establish the ingredients of section 138 of the Act. Section 138 of the Act reads as under :
"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 he 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 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 purpose of this section, debt or other liability means a legally enforceable debt or other liability."
15. Section 142 of the Act provides the conditions under which the court may take cognizance of offences under the Act. Section 142 reads as under :
"142. Cognizance of offences. Notwithstanding anything contained in the Code of Criminal Procedure, 1973 (2 of 1974),
(a) no court shall take cognizance of any offence punishable under section 138 except upon a complaint, in writing, made by the payee or, as the case may be, the holder in due course of the cheque;
(b) such complaint is made within one month of the date on which the cause of action arises under clause (c) of the proviso to section 138;
(c) no court inferior to that of a Metropolitan Magistrate or a judicial Magistrate of the first class shall try any offence punishable under section 138."
16. It is an admitted fact that petitioner No. 2 is the director of the petitioner, Anchor Capitals of India Limited, and is carrying on the business of financing and ancillary activities. That in furtherance of the said activities, petitioner No. 1-company had to appoint various agents to conduct the business of the company with limited authority and powers. Somewhere in the month of October, 1996, it came to the notice of the present petitioners that various agents had played fraud with the company and had misused the cheques given to them by various businessmen. It is also an admitted fact that respondent No. 2 had transacted with the agents of the company at Ahmedabad and had obtained cheques as mentioned in the complaint. The said cheques Were issued in the name of Mahesh Label Company of which respondent No. 2 is the sole proprietor. It is also an admitted position that when the said cheques were deposited by respondent No. 2, they were dishonoured.
17. In paragraph 2 of the complaint, it is averred that accused No. 1 is the company, accused No. 2 is the managing director, whereas accused No. 3 (not before this court) is the director and the authorised signatory of petitioner No. 1-company. That petitioner No. 1 company is having 24 branches all over India situated in different cities. That as per the practice of petitioner No. 1-company, different branches of petitioner No. 1-company receive cheques from businessmen and after deducting their commission, they issue cheques to the parties where the said party is having its office or business. That the said cheques are issued at the instruction of petitioner No. 2 after deducting the commission of the company.
18. In paragraph 3 of the complaint, it is alleged that respondent No. 2 (complainant) is the sole proprietor of Mahesh Label Company of Ahmedabad. Various businessmen of Ichalkaranjee had issued cheques in the name of Mahesh Label Company which were handed over to petitioner No. 1-company. That on the instruction of respondent No. 2, accused No. 3 (not before this court) had issued five cheques of the total amount of Rs. 73,853 to the complainant after deducting the company's commission. Reference to the said cheques is made in the earlier part of this judgment. It is alleged that all these five cheques when deposited in the bank, were dishonoured with an endorsement "stop payment". It is further alleged that on October 22, 1996, respondent No. 2 gave statutory notice under section 138(b) of the Act to petitioner No. 1-company, which was received by petitioner No. 1-company on October 24, 1996. It is alleged that petitioner No. 1-company through its advocate had replied to the notice on November 2, 1996. That the said reply was given on the instruction of the managing director of the company, i.e., petitioner No. 2. It is also alleged that after the said statutory notice, the petitioners had failed to pay the amount of cheques as demanded, and, therefore, respondent No. 2 was constrained to file the complaint.
19. Along with the complaint, the documents, namely, xerox copies of the cheques, notice sent to the petitioners dated October 22, 1996, and the reply sent by the petitioners dated November 2, 1996, were annexed.
20. To constitute an offence under section 138 of the Act, the following ingredients need to be fulfilled :
(i) Cheque should have been issued for the discharge, in whole or part, of any debt or other Liability.
(ii) The cheque should have been presented within the period of six months or within the period of its validity, whichever is earlier.
(iii) The payee or the holder in due course should have issued a notice in writing to the drawer within fifteen days of the receipt of information by him from the bank regarding the return of the cheque as unpaid.
(iv) After the receipt of the said notice by the payee or the holder in due course, the drawer should have failed to pay the cheque amount within fifteen days of the receipt of the said notice.
(v) On nonpayment of the amount due on the dishonoured cheque within fifteen days of the receipt of the notice by the drawer, the complaint should have been filed within one month from the date of expiry of the grace time of fifteen days, before a Metropolitan Magistrate or not below the rank of a judicial Magistrate of the First Class.
21. It is a well settled principle of law that a Magistrate can take cognizance when the major ingredients of the section as referred to above and section 204 of the Criminal Procedure Code are complied with. So far as section 142 of the Act is concerned one can say that the section is independent of the provisions of the Code of Criminal Procedure, 1973. At the time of taking cognizance under section 142 of the Act, the court is not supposed to make a meticulous analysis and it should ensure that the ingredients of the section constituting the dishonour of the cheques as an offence have been made out at the time of taking cognizance. It is true that in complaint the very words of section 138 that the cheques were issued towards the discharge of the whole or any part of debt or any liability are absent, but that need not result into the complaint not filed under section 138 of the Act. In my view, one need not repeat the very words found in section 138 of the Act to constitute an offence. The complaint and the documents annexed with it are to be looked into. If the allegations in the complaint make out such a meaning that the cheques were issued towards the consideration received by the petitioner-company that would be sufficient to attract the provisions of section 138 of the Act. One need not necessarily extract and put the very words in the complaint to comply with the requirement of the section. There need not be any such ritualistic repetition in the complaint Hansa v. B. Muralidharan [1994] 81 Comp Cas 315; [1995] 1 BC 575 (Mad).
22. In the case of S. Mohan Singh v. Madan Lal [1996] Crl. LJ 333, an identical question arose before the Jammu and Kashmir High Court whether it is necessary to aver in the complaint the ingredients of section 138 of the Act. The High Court in deciding the above question referred to section 139 of the Act and held that section 139 creates a statutory presumption that a cheque issued in the nature referred to under section 138 of the Act, is always issued in discharge of a debt or other liability. In that context, it is observed that it is not necessary for the complainant to specifically plead that the cheque which was issued to him and dishonoured was in fact issued in the discharge of a debt or a liability. It is further observed that, however, it is for the accused to show that the cheque in question was not issued in discharge of any debt or other liability. The High Court, therefore, held that reading sections 138 and 139 of the Act together, it becomes abundantly clear that it is for the accused to show that the cheque issued by him and dishonoured by the bank was not in the discharge of any debt or liability.
23. In M. O. H. Iqbal v. Uthaman (M.) (1994] 2, Crimes 72; [1995] 82 Comp Cas 726, the Kerala High Court was answering the question, that is, is it imperative that all the ingredients of the offence as such should be specifically and expressly stated in the complaint ? Is it not sufficient that the court could make out such ingredients from the body of the complaint and the papers accompanying it ? Before the Kerala High Court it was argued by learned counsel for the petitioner that the complaint does not satisfy the ingredients of section 138 of the Act, and, therefore, it does not make out the offence. The High Court dealing with this contention raised by learned counsel for the petitioner, referred to section 2(d) of the Code which defines complaint and held that an oral complaint is not useful for the offence punishable under section 138 of the Act, since section 142 of the Act forbids the court from taking cognizance of the offence except upon a written complaint. Section 190 of the Code empowers the Magistrate to take cognizance upon receiving a complaint and the facts which constitute such offence, but the High Court in paragraphs 11 and 12 observed as under (page 730 of 82 Comp Cas) :
"A combined reading of the relevant provisions would amplify the position that if the facts set out in a complaint would constitute the offence alleged to have been committed by some person, the Magistrate has power to take cognizance of the offence under section 138 of the Act. It must be borne in mind that no form is prescribed for drafting a complaint. A meticulous scrutiny of the complaint may not be warranted at the initial stage to ascertain whether all the elements of the offence have expressly been categorised therein. It is enough that a pragmatic assessment is made after perusing the complaint to decide whether the complaint discloses the offence under section 138 of the Act. If the complaint is prepared, by., a layman one cannot expect skillful draftsmanship being reflected therein. It may be inartistically worded or clumsily prepared. Yet it may contain the allegations from which a Magistrate can see the offence disclosed. Dismissing such complaint on the premise that the elements of the offence have not been expressly categorised in the complaint may result in miscarriage of justice. Hence the court has a duty to peruse the complaint with a pragmatic perception.
Speaking for a Division Bench of this court Varadaraja Iyengar J. in Kunju Moideen v. Kandan, AIR 1959 Ker 146, 148, has pointed out that it is nowhere insisted that the complainant must categorise the elements of the offence sought to be charged against the accused. Hidayatullah, C.J. in Bhimappa v. Laxman, AIR 1970 SC 1153, 1156, has observed that no form is prescribed which the complaint must take. "It may only be said that there must be an allegation which prima facie discloses the commission of an offence from the necessary facts for the Magistrate to take action."
24. Bearing in mind the principles laid down in the aforesaid decisions, in my view, the complaint and its accompaniments in the present case, if read and understood from the above angle, one can listen therefrom with reasonable accuracy that the cheques in question were issued towards the discharge of debt and other liability. Petitioner No. 1-company had already received the consideration of the cheques which were handed over to it by respondent No. 2 of the businessmen of Ichalkaranjee. After receiving the cheques, petitioner No. 1-company had credited the same in its account and after deducting the commission of the said cheques, had issued fresh cheques to respondent No. 2 towards the amount received by the company. Therefore, it can be said that the cheques in question were issued towards the discharge of debt and other liability. In the reply dated November 2, 1996, also petitioner No. 1-company had admitted its liability to pay the amount of cheques to respondent No. 2 within 45 days. There-fore, in my considered view, the complaint prima facie does disclose the ingredients of section 138 of the Act.
25. It is contended by learned counsel for the petitioners that as the agents of the company played fraud and when the company realised about the. fraud, they had given a public notice in various daily newspapers on October 9, 1996, October 14, 1996, and October 22, 1996, and the parties to whom the cheques were issued by the petitioner No. 1-company were instructed not to deposit the cheques for encashment. According to the submission of learned counsel for the petitioners, as there were instructions of stop payment and in spite of those instructions, if the cheques were deposited and dishonoured, the provisions of section 138 of the Act are not attracted. In support of the contentions, learned counsel for the petitioner has placed reliance on the decision of the Supreme Court in K. K. Sidharthan v. T. P. Praveena Chandran [1996] 87 Comp Cas 685; [1996] 6 SCC 369. In my opinion, the submission of learned counsel for the petitioners deserves to be rejected. The Supreme Court in a later decision of a larger Bench in the case of Modi Cements Ltd. v. Kuchil Kumar Nandi [1998] 92 Comp Cas 88; [1998] 2 JT 19B, has ruled that once a cheque is issued by the drawer, the presumption under section 139 of the Act must follow and merely because the drawer issues a notice to the drawee or to the bank for stoppage of payment it will not preclude an action under section 138 of the Act by the drawee or the holder of a cheque in due course. It is also held by the larger Bench of the Supreme Court that (page 96 of 92 Comp Cas) :
"It is needless to emphasize that the court taking cognizance of the complaint under section 138 of the Act is required to be satisfied as to whether a prima facie case is made out under the said provision. The drawer of the cheque undoubtedly gets an opportunity under section 139 of the Act to rebut the presumption at the trial. It is for this reason we are of the considered opinion that the complaints of the appellant could not have been dismissed by the High Court at the threshold."
26. In view of the decision of the larger Bench of the Supreme Court in Modi Cements Ltd. v. Kuchil Kumar Nandi [1998] 92 Comp Cas 88, the public notice given by the petitioners to the various cheque holders not to deposit the cheques and instructing their bank to stop payment will not absolve them from the liability under section 138 of the Act.
27. The complaint and its accompaniments, prima facie disclose the offence under section 138 of the Act, the Metropolitan Magistrate, was justified in issuing the process against the petitioners. The submission of learned counsel for the petitioners that the process issued by the learned Magistrate is without application of mind as no offence under section 138 of the Act is made out is devoid of any merit.
28. In my view, the complaint and its accompaniments prima facie do show the ingredients of section 138 of the Act. Therefore, the complaint cannot be thrown out or quashed at the threshold. In my view, the complaint is not filed to abuse the process of court. The defences raised by the petitioners in this application can be decided when the parties go to the trial.
29. This is not rarest of rare cases wherein interference of this court is called for in the exercise of its inherent powers under section 482 of the Code to quash the complaint.
30. These were the only contentions raised by learned counsel for the petitioners and respondent No. 2.
31. As a result of the foregoing discussions, 1 do not find any merits in this application. Therefore, it is rejected. Rule discharged.
32. At this stage, Y. F. Mehta, learned advocate for the petitioners, has requested this court to extend the interim relief granted on January 19, 1998, for a period of six weeks so as to enable the petitioners to approach the higher forum. In my view, the request of learned counsel for the petitioners is reasonable and, hence, interim relief granted earlier is extended for a period of six weeks to enable the petitioners to approach the higher forum. Direct service permitted.