Patna High Court
Nagendra Prasad Singh And Anr. vs State Of Bihar And Anr. on 6 February, 2006
Equivalent citations: I(2007)BC442
Author: Rekha Kumari
Bench: Rekha Kumari
ORDER Rekha Kumari, J.
1. This is an application under Section 482 of the Code of Criminal Procedure for quashing the order dated 17.8.2004 passed by the Addl. Sessions Judge XI, Patna in Cr. Revision No. 295/2004 and its consequential order dated 1.12.2004 passed by Mr. Manoj Kumar No. 1I, Judicial Magistrate, 1st Class, Patna in Complaint Case No. 2220(C) of 2003 where cognizance under Section 138 of the Negotiable Instruments Act (N.I. Act) and Section 420 IPC has been taken against the petitioners.
2. Heard.
3. The prosecution case in the complaint petition filed by the complainant (O.P. No. 2) in short is that the complaint Institute of Entrepreneurship Development (ED), Bihar is a registered society and dealing with the scheme of Computer Education, studies and its expansion among the young generation. Accused No. 1 M/s. Aryabhatt Computer is a registered society of which accused Nos. 2 and 3 (petitioner Nos. 1 and 2) are the Chairman and the Secretary respectively. They are engaged in computer education and providing computer studies. Accused No. 1 through accused Nos. 2 and 3 approached the complainant for joint certification of computer and information technology based programme for providing computer education and studies and represented themselves with having sound financial and good reputation in this field. On 12.11.2002 the accused persons (petitioners) contacted the executive officials of the complainant and gave an impressive assurance and belief of their experiences, workmanship and skill regarding computer education and requested to appoint their firm as master franchisee and gave a categorical assurance of generating income from the joint venture activities. The complainant believed on their assurance and a Memorandum of Undertaking (MOU) was executed on 18.11.2002. According to the MOU the complainant appointed many members of computer and information technology course and after consultation information technology course was prepared and for that the accused persons were to provide necessary support to participate the operation all over India directly or by appointing sub-franchisees by the accused and establish a network for the same. It was agreed between the parties that accused No. 1 would pay to the complainant the franchisee fee of Rs. 1 crore within a period of three years from 15.1.2003 and in first year the accused would pay Rs. 20 lacs, in second year 37 lacs and in third year 43 lacs and the annual fee was to be paid by way of 12 post-dated cheques. According to the terms of MOU non-interest bearing security money to the complainant was to be refunded on expiry of MOU. The security money, however, was to be fulfilled in case of premature exit of accused No. 1. Accused No. 1 was to share the revenue realised from the students by way of fee and other charges with the complainant and such share would he 10% of the fee and other charges. The fee from the students would be collected in terms of demand draft payable to the complainant as month to month basis.
4. The further case of the complainant is that the accused persons gave 12 postdated cheques for a sum of Rs. 20 lacs towards franchisee fees for the year 2003 and petitioner No. 1 assured the complainant that the cheques would be cleared timely. The cheques were of Rs. 1,67,000/- each. The first three cheques were dated 15.2.2003, 15.3.2003 and 15.4.2003 respectively. The remaining 9 cheques were dated 15.5.2003 to 15.1.2004. All the cheques were drawn under the joint signature of the petitioners on ICICI Bank. The first cheque was presented by the complainant to their Bankers, Bank of India, Patna Branch first in the month of March, 2003 and again on 15.4.2003 and was dishonoured both the times due to insufficiency of funds of M/s. Aryabhatt Computers with ICICI Bank. The petitioners were duly informed about dishonour of the cheque. Similarly the second cheque dated 15.3.2003 was presented on 15.4.2003 but was dishonoured on 16.4.2003 due to insufficiency of funds. The third cheque dated 15.4 2003 was presented on 15.4.2003 and dishonoured on 16.4.2003 due to insufficiency of fund.
5. It is further alleged that on inspection by a team of the company it was detected that the fees were being collected from the students in the name of IED and M/s. Aryabhatt Computers when according to the MOU the fees were to be collected in the name of the complainant only. It was also detected that the petitioners have been violating various other terms of the MOU. It was hence decided by the complainant to terminate the agreement with effect from 7.5.2003 whereby it was agreed by the petitioners that all the dues would be settled by 15.3.2003 but the petitioners did not bother to turn up for payment. Despite repeated assurance, the petitioners did not come to make payment of the above three cheques. The complainant, hence, presented the cheques again on 26.7.2003 through their Banker, Bank of India. On 30.7.2003 the Bank of India informed that all the three cheques were dishonoured upon presentation and returned on 29.7.2003. The notice dated 23.8.2003 was sent to M/s. Aryabhatt Computers at its Patna and Ranchi address. The notice sent to Ranchi was received and petitioner No. 1 through his letter dated 1.9.2003 received on 11.9.2003 informed that they had advised their Bank to stop payment and raised irrelevant excuses for stopping payment. The notices sent at Patna address on the petitioner were returned unserved. The petitioners failed to make payment of the cheques within 15 days of the receipt of the same.
6. The case of the complainant, hence, is that the petitioners at all material times intended only to fraudulently and dishonestly induce the complainant to grant Master Franchisees and they never intended to honour the cheques. The complainant hence prayed for taking action against the petitioners under Sections 138/141 of the N.I. Act, Sections 406, 409 and 420, IPC.
7. Mr. Sanjay Kumar Singh, Judicial Magistrate, 1st Class in whose Court the case was made over by the learned Chief Judicial Magistrate took cognizance under Section 138, N.I. Act against the petitioner and issued summons against them. As cognizance was taken only under Section 138, N.I. Act without any speaking order regarding offences under the Indian Penal Code, the complainant preferred revision against the order of the learned Judicial Magistrate. The learned Sessions Judge by his order dated 17.8.2004 set aside the order of the learned Judicial Magistrate, and directed to pass a fresh order. The then Mr. Manoj Kumar, Judicial Magistrate after perusing the complaint petition and the evidence on record finds prima facie case under Section 138, N.I. Act and 420, IPC against all the three accused persons and issued summons to them for facing trial by the detailed impugned order.
8. Learned Counsel for the petitioners submitted that the complaint petition itself shows that three cheques were lastly presented for payment on 26.7.2003 which were dishonoured and the complainant received information regarding dishonour of cheques on 30.7.2003. Therefore, under Second Proviso of Section 138, N.I. Act it was mandatory for the complainant to send notice within 15 days from that date but he sent notices on 23.8.2003 i.e. after 25 days of the information received. The initiation of criminal proceeding under Section 138, N.I. Act is thus vitiated and no cognizance for the offence could be taken in this case.
9. He further submitted that the complaint petition also further shows that the agreement was terminated with effect from 7.5.2003 by mutual agreement and after termination of the agreement, the parties were to adjust their account by 15.5.2003. So instruction to stop payment was not given to the Banker for non-sufficiency of fund but for valid reasons as the agreement was terminated and business was closed; and for these reasons no offence under Section 420, IPC is also made out against the petitioners.
10. Learned Counsel for O.P. No. 2 defended the orders.
11. As regards the order of the learned Sessions Judge, as the complaint had been filed for prosecution under Section 420, IPC and other offences also and nothing was said in the order of the learned Magistrate dated 23.2.2004 in this regard. I think that the learned Additional Sessions Judge was not wrong in passing the impugned order. So, I do not interfere with the same.
12. As regards the first submission of the learned Counsel for the petitioners in respect of the subsequent order of the learned Magistrate, it may be mentioned that there has been amendment in 2003 in Negotiable Instruments Act and, the relevant time notice was to be sent within one month of the receipt of information from dishonour of the cheques and admittedly the notices were sent within one month of the receipt of dishonour of cheques by the Bank. Therefore there was no non-compliance of mandatory provision of Section 138, N.I. Act in this regard.
13. Regarding the second submission of the learned Counsel for the valid reason for stopping payment of the cheques, though the case of the petitioners is that as the agreement was terminated they had given instructions for stopping of payment, the case of the complainant is that in fact they did not have sufficient amount in the fund and it was agreed by the accused that they would settle the dues by 15.5.2003, they never turned up for payment.
14. As held by the Apex Court in the case of MMTC Limited v. Moohi Chemical and Pharms (P) Ltd. I , the burden of proving that the cheques were not dishonoured for insufficiency of fund and was dishonoured for valid reasons is on the accused and a Court cannot quash a complainant on this ground.
15. Thus, there is no ground to quash the impugned order with regard to offence under Section 138. N.I. Act. As regards offence under Section 420, IPC as the learned Magistrate after applying his mind has found a prima facie case, I do not want to express my opinion at this stage as the impugned order cannot be quashed in its entirety in view of prima facie case under Section 138, N.I. Act. The petitioners, would be at liberty to raise their objection in this regard during framing of charge.
16. In the result, this application stands dismissed.