Ram Richhpal Gupta vs Dcm Shriram Consolidated Ltd.
1995 Latest Caselaw 369 Del

JUDGMENT

Vijender Jain, J.

(1) This revision petition is directed against the order of the Additional Sessions Judge remanding the complaint to the Metropolitan Magistrate. Mr. Gupta, learned Counsel for the petitioner, has argued that Section 138 of the Negotiable Instruments Act, 1881 (in short "Act") is attracted only when the amount of money standing to the credit of that account is insufficient to honour the cheque or it exceeds the amount arranged to be paid pursuant to some agreement with the Bank. In no other contingency according to Mr. Gupta, a complaint under Section 138 of the Act can be filed. He, in view of the facts and circumstances of the case, has argued that the cheque when returned on account of stop payment, the provisions of Section 138 of the Act will not beapplicable. In support of his contentions, he has cited a .judgment of Kerala High Court in Bhageerathy v. eena, Ii (1992) Banking Cases 520, a judgment of Madras High Court in Mrs. R. Jayalkshmi v. Mrs. Rashida, I (1992) Banking Cases 259 and a decision of Punjab & Haryana High Court in Abdul Samad v. Satya Narayan Mahawar, Ii (1990) Banking Cases 305.

(2) Another contention of the learned Counsel for the petitioner is that there was delay in filing the complaint. According to him on 2.4.1991 cheque, which was drawn by the petitioner in favor of the respondent, was presented by the respondent and the same was returned with the endorsement 'refer to drawer' on 2.4.1991. The cheque was again presented on 5.4.1991, which was returned after the endorsement 'payment stopped'. The notice under Section 138 of the Act was issued on account of the first dishonourment dated 2.4.1991,on 11.4.1991 and on 20.4.1991, another notice was issued covering the dishonourment on account of endorsement payment stopped. On 21.5.1991 complaint was filed. It is the case of the petitioner that on 19.10.1991 the complaint was returned for want of jurisdiction and it was refiled on 28.10.1991 and reading together the provisions of Section 138 of the Act, the complaint was filed beyond the period of limitation as prescribed under the Act. Learned Counsel for the petitioner has also contended that though an application was moved by the respondent on 22.10.1992 for condensation of delay under the provisions of Sections 470 and 473 of the Code of Criminal Procedure (in short "Cr.P.C.") but the provisions of Cr.P.C. would not be applicable in the present case for the purposes of condoning the delay and hence the complaint was beyond the period of limitation. Learned Counsel for the petitioner has also contended that as there was delay in filing the complaint, the petitioner-accused could not have been summoned and in support of his arguments, he has cited Ghansham Dass v. Sham Sundar Lal, 1982 Cr.L.J. 1717 and Panney Singh & Ors. v. State of Rajasthan, 1980 Cr.L.J. 339.

(3) Another arguments advanced by the learned Counsel for the petitioner is that the notice of such dishonour as envisaged in Sub-clause (B) of the proviso of Section 138 of the Act postulates that such notice could be issued by payee or holder in due course only. Mr. Gupta has contended that in this case the holder in due course was respondent- M/s. Dcm Shriram Consolidated Ltd. and notice purported to have been issued by an officer of the respondent-Company was no, notice in the eyes of law. Mr. Gupta has further contended that original cheque ought to have been filed with the complaint and in support of his arguments, he has cited Richard S.Sherrat v. State of A.P. & Anr., I (1993) Banking Cases 23. The last arguments advanced by the learned Counsel for the petitioner is that if a cheque is presented by the holder in due course and the same is dishonoured and the cheque is again presented to the Bank for encashment then the first presentation is waived by the holder in due course. In support of his contentions, the learned Counsel for the petitioner has cited the case of Sekhar Gupta & Ors. v. Subhas Chandra Mondal, 1992 (73) Company Cases 590, M/s. Chahal Engg. & Construction v. M/s. Verma Plywood Co., 1994 (1) Crimes 845, a single Bench decision of Punjab & Haryana High Court.

(4) On the other hand, Mr. Malhotra, learned Counsel for the respondent, has argued that the authorities cited by the learned Counsel for the petitioner, do not lay down the correct position of law, different High Courts in the country have taken different view, a Division Bench of Bombay High Court in the case of Rakesh Nemkumar Porwal v. Narayan Dhondhu Joglekar, Ii (1992) Banking Cases 402 (DB) has held that :-

"This, to our mind, is too narrow a construction of the section and fails to take into account the objects and reasons behind the amendment. The wording and the endorsement from the Bank or the circumstances under which a cheque is returned are not the guiding criterion but the fact that on presentation of the cheque, the payment was not made. These could be a host of reasons for this but the bottom line of the situation is that the payment could not be made by the Banker and the mechanics of the reasons apart, the irresistible conclusion that had the funds been available, the payment would have been made leads back to the position that dishonors therefore, implies insufficiency of funds. We are reinforced in this view by the definition of a cheque as appears in Section 6 of the Negotiable Instruments Act which defines it as a bill of exchange drawn on a specified Banker. A bill of exchange is defined in Section 5 which reads as follows: "A bill of exchange is an instrument in writing containing an unconditional order signed by the maker directing a certain person to pay a certain sum of money only to, or to the order of, a certain person or to bearer of the instrument."

Reading these provisions with the statement of objects and reasons of the Banking Supply Financial Institutions and Negotiable Instruments Laws (Amendment) Act, 1988 (66 of 1988) whereby Chapter 17 comprising of Sections 138 to 142 were inserted with effect from 1.4.1989, there can be little doubt that Section 138 was intended to be a provision to curb instances of dishonour. It will have to be presumed that the multifarious grounds on which a cheque would be dishonoured any common place and in not having made any exception for such situations, the legislative intent behind Section 138 was that cases of dishonour of a cheque would constitute a criminal offence unless the payment was forthcoming within the prescribed period. The reference to the term insufficiency of funds was obviously a qualifying clause which only reiterates the basic principle that an order to be Bank conveyed through a cheque to make a prescribed payment would only fail in a situation where the Bank could not implement that directive for want of the requisite funds. The circumstances that may contribute to the situation would, therefore, be irrelevant. The presumption in Section 139 heavily supports this view. It would be useful in this regard to refer to another decision of this Court reported in 1992 Cr.L.J., page 1619, in the case of Pawankumar v. Ashish Enterprises, where the cheque was returned with the endorsement "suit filed by Bank against account holder". The Court held that the reason apart, that the dishonour had been occasioned because of insufficiency of funds, and further that the criminal proceedings under Section 138 were justified regardless of the plea that civil action for recovery had been initiated. In our considered view, if the object of introducing Section 138 on the statute book is to be achieved, it will have to be meaningfully enforced, brushing aside technical and frivolous pleas."

(5) He has also cited in support of his contentions the case of Thomas Varghese v. P Jerome, 1992 Cr.L.J. 3080=II (1992) Ccr 2191, a Division Bench judgment of Kerala High Court, which held as follows:- "........ANendorsement by the banker that a cheque is returned due to insufficiency of funds standing in the name of the drawer will tell upon the financial soundness of the drawer. Such an endorsement may adversely affect the reputation of the drawer. Sometimes a Banker may be slow to use the words such as "no sufficient fund in the account" etc. because it may have adverse implication on the financial soundness of the drawer of the cheque and consequently affect his reputation also. So if the Banker refrains from making such a derogatory endorsement, should the object of the legislation be defeated?"

(6) He has also cited the case of M/s. Dada Silk Mills & Ors. v. Indian Overseas Bank & Banking Company, Surat & Anr., 1994 Cr.L.J. 2874 in which Gujarat High Court has also taken the similar view as that of Kerala High Court and Bombay High Court.

(7) Learned Counsel for the respondent has also argued that after the return of the complaint on account of jurisdiction by the Metropolitan Magistrate, the same was refiled within the period of limitation. He has also stated that the cheque was issued by the petitioner of the Bank having Branch at Lawrence Road, the respondent has presented the same for encashment through its Banker which is situated at Connaught Place Branch. In any event of the matter, the learned Counsel for the respondent has argued that on 19.10.1991 the complaint was returned by the learned Metropolitan Magistrate on account of lack of jurisdiction with the Court and to that effect endorsement on the file was made by the Trial Court on 23.10.1991, the complaint was re-filed on 25.10.1991 and, therefore, there was no delay in filing the complaint before the Court of appropriate jurisdiction. In any event of the matter, learned Counsel for the respondent has argued that if there was any delay, the same could be condoned pursuant to the provisions of Sections 469,470 and 473 of the Cr.P.C.

(8) Learned Counsel for the respondent has also argued that the contention of the petitioner that because the cheque was presented again by respondent on 5.4.1991 would constitute waiver of the first presentation, cannot be accepted. He has also contended that no such meaning can be read into language of Section 138 of the Act as from the language of Section 138 of the Act, it cannot be construed that on account of subsequent presentation the first presentation is waived. In support of his arguments he has cited Madan Mohan v. K. M. Menon, 1993 Rajdhani Law Reporter 119.

(9) Meeting the contention of the learned Counsel for the petitioner that the notice was not issued by payee or holder in due course, learned Counsel for the respondent has contended that respondent being a public limited company it has to act through its Officer, who was duly authorised to issue notice and the notice was issued by such an officer. In support of his contentions, he has cited the case of M/s. Ruby Leather Exports v. K. Venu, R. Ramakrishnan v. B. Lograj, Vasumathi Mills (Pvt) Ltd. v. M/s. Eastern Cotton Traders and R. Balasularamatrian & Ors. v. A. V. Arumugra Perumal, 1994 (1) All India Criminal Law Reporter 614.

(10) I have heard the learned Counsel for the parties at length. Taking into account the objects and reasons of incorporating Chapter-XVII of the Act, I am in respectful agreement with, the views expressed by the Division Bench of the Bombay High Court in Rakesh Nemkumar Porwal's case (supra), Division-Bench of Kerala High Court in Thonta" varghes's case (supra) and the judgment of Gujarat High Court in M/s. Dada Silk Mills & Ors' s case (supra)-

(11) I do not find any substance in the arguments of the learned Counsel for the petitioner that there was delay in filing of the complaint. The notice for dishonourment was issued on 11.4.1991 and on 20.4.1991 respectively for second dishonourment. As the cheque was dishonoured on 5.4.1991 on account of endorsement 'payment stopped', the notice of 20.4.1991 was within the statutory period. The time for filing the complaint is prescribed under the Act in terms of Sub-sections (b & c) of provisions to Section 138 of the Act and, therefore, it cannot be said that the complaint, which was filed on 21.5.1991, was beyond the period of limitation as prescribed under Section 138 of the Act.

(12) Another argument raised by the learned Counsel for the petitioner to support his argument that the complaint was filed beyond time', was that the complaint was returned for want of jurisdiction on 19.10.1991 and it was re-filed on 28.10.1991. As a matter of fact this argument has been advanced by the learned Counsel for the petitioner on the basis of order passed by the Magistrate declining to exercise the jurisdiction which vested in him to try the complaint. A cheque, which has been issued by a Bank, which is situated at Lawrence Road, and which has been dishonoured on presentation by Bank having the Branch at Connaught Place, the cause of action has accrued at Lawrence Road area as well as Connaught Place, therefore, the non-exercise of jurisdiction on the part of the Metropolitan Magistrate dealing with the Lawrence Road area was on a mis-conceived notion of law. Both the Courts one having jurisdiction over Lawrence Road area as well as at Connaught Place area had the jurisdiction to try the complaint, therefore, on this ground also it cannot be said that there was delay in filing the complaint by the complainant. In any event of the matter to argue that the provisions of Cr.P.C. will not be applicable for condensation of delay is too far fetched. The trial under the Act takes place under the provisions of Cr.P.C. The argument raised by the learned Counsel for the petitioner that Section 142 of the Act bars the application of Cr.P.C. is untenable in law. What has been specifically provided under Section 142 of the Act in relation to Sub-sections (a, b & c) deal with the provisions, which have been specifically provided under the Act and anything contrary to such provisions under Cr.P.C. is excluded but that does not mean that the applicability of Cr.P.C. is excluded by virtue of provisions of Section 142 of the Act.

(13) Another contention, which has been raised before me by the learned Counsel for the petitioner/regarding the issuance of the notice by an officer of the respondent, cannot be sustained. The company is a legal entity not having soul, mind, body and limbs to walk to the Court for filing a complaint for the alleged refraction or violation of provisions of Section 138 of the Act. The company as such has to be represented by some human agency, that means by some one who is connected with the affairs of the company, that person may be its Manager, Director, Managing Director or any other person so authorised by the company who can represent during the course of legal proceedings before the Court. If this definition is not given then it would be defeating the very purpose of the amendment in the Act qua the companies. Therefore, this argument of the petitioner is of no help to him.

(14) I do not see any force in the argument of the learned Counsel for the petitioner that once a cheque is presented, on the second presentation of the same cheque the first presentation is waived or that the original of the cheque has to be filed along with the complaint. The scheme of Sections 138 and 142 of the Act makes it clear that the cheque can be presented to the Bank within a period of six months from the date of its issuance or within the period of its validity, whichever is earlier. There is no restriction of presentation of cheque under Section 138 of the Act as it only deals with presentation of cheque within a period of six months or within the period of its validity. As a matter of fact in commercial transactions on the first presentation of cheque it happens that the parties may request the holder in due course to represent the cheque in order to keep cordial relations with the business transactions. For presentation there is no rider in the language of the Section 138 of the Act, therefore, to attribute a restrictive meaning, that once a cheque is presented again, the first presentation is waived, cannot be ascribed to the language of Section 138 of the Act.

(15) In the case before me there was statement from the Bank, which was filed before the Trial Court by the respondent showing that even the endorsement 'payment stopped' was a device to wriggle out from the rigours of Section 138 of the Act. There was no funds in the account of drawer and on second presentation also the cheque could not have been encashed. It is not un-common that the Banks as the agents of drawer manipulate endorsement on account of relationship between the Bankers and the drawer.

(17) For the reasons stated above, I do not find any merit in this revision petition and, therefore, the same is dismissed. However, nothing said above will be an expression of opinion on the merit of the case. The order of the learned Additional Sessions Judge remanding the case back to the Metropolitan Magistate is upheld and the Metropolitan Magistrate is directed to dispose of the complaint expeditiously. Parties to appear before the Metropolitan Magistrate on 11.7.1995 at 11.00 a.m.