Byford Leasing Ltd. vs Priya Pharmaceuticals Ltd.
1996 Latest Caselaw 750 Del

JUDGMENT

S.K. Mahajan, J.

(1) The respondent No. 1 had filed a complaint against the petitioners as well as respondent No. 2 on the allegations that for an amount which was due to respondent No. 1, the petitioner Company had issued a cheque for Rs.2 lacs. This cheque was signed by respondent No. 2 and one Mrs. Rita Mathur being authorised signatories of the petitioner-Company having been authorised by a resolution of the Company to sign the cheques. The said cheque, on presentation to the bank, was not honoured and inspite of notice, the amount of the cheque having not been paid to the complainant, a complaint under Section 138 of the Negotiable Instruments Act was filed against the petitioners as well as against respondent No. 2 and Mrs. Rita Mathur. Mrs. Rita Mathur has since died and there is no complaint against her. The Metropolitan Magistrate, after recording the evidence, being satisfied that a prima fade case had been made out, issued summons to the petitioners and respondent No. 2. Being dissatisfied with the issue of summons, the petitioners made an application before the Metropolitan Magistrate for recalling of summons. However, the said application was dismissed by the Court of the Metropolitan Magistrate by the impugned order dated 29th January, 1993. The petitioners have now filed this petition under Section 482 of the Code of Criminal Procedure for quashing the complaint.

(2) The contention of the learned Counsel for the petitioners is that petitioner No. 2 is not, in any manner, responsible for the issue of the cheque inasmuch as respondent No. 2 and Mrs. Rita Mathur were the authorised signatories of the cheque and they were authorised to issue cheques on behalf of the Company. In these circumstances, according to Mr. Khanna, petitioner No. 1 cannot be held responsible for issue of the cheque. According to him, under the provisions of ' Section 141 of the Act, in the case of companies, it is only the person who at the relevant time was in charge of and was responsible to the company for the conduct of the business of the Company, as well as the Company who shall be deemed to by guilty of the offence and shall be liable to be proceeded against and punished for having issued a cheque and as such, according to him, petitioner-No. 2 could not have been issued summons by the Court being not in any manner concerned with the issue of the cheque. It is also his contention that the cheque having been dishonoured for the first time on 19th November, 1991, the limitation will start to run from this date and any subsequent presentation to the bank and subsequent dishonour of the cheque by inc bank will not give fresh period of limitation to the complainant to file the complaint. Mr. Khanna has also relied upon a judgment reported as Sham Sundarb Ors. v. State of Haryana, Jt 1993 (3) Sc 522, to contend that it is only that person who is in-charge of the affairs of the business of the Company to whom summons can be issued.

(3) There is no dispute about the proposition that under Section 141 of the Negotiable Instruments Act, the person who is in-charge of the affairs of the Company and is responsible for its business, can be issued summons by the Court. There is definite averment made in the complaint by the complainant that it was at the instance of petitioner No. 2 that the cheques were issued and it is the said respondent who directed the cheque to be issued in the name of the complainant.

(4) In this view of the matter, I am afraid, I am not inclined to agree with Mr. Khanna that petitioner No. 2 was not, in any manner, associated with the issue of the cheque. It is only after evidence is produced before the Trial Court that any finding can be given as to whether the petitioner No. 2 was not the in-charge of the affairs of the Company and whether the cheque was not given at his instance. However, on the basis of the material on record, I am unable to agree with the contention of Mr. Khanna that petitioner No. 2 could not have been summoned or that he should be discharged.

(5) The next contention of Mr. Khanna is that subsequent presentation of the cheque will not give fresh period of limitation to the complainant to file the complaint and the limitation will start running from the first dishonouring of the cheque. To appreciate the contention of Mr. Khanna, it will be relevant to refer to the provisions of Section 138 of the Negotiable Instruments Act :

"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 at 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

(E)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."

(6) According to Clause (a) of Proviso to Section 138, the complainant must have presented the cheque to the bank within a period of six months from the date on which it was drawn or within the period of its validity, whichever is earlier, and in case the said cheque has been dishonoured, demand in writing should have been made to the drawer of the cheque for payment, within fifteen days of the receipt of information by him from the bank regarding the return of the cheque as unpaid and on the failure of the drawer of the cheque to make payment of the amount of money to the payee within a further period of 15 days from the date of receipt of the notice, a complaint can be lodged with the Metropolitan Magistrate by the complainant. The limitation will start running not from the date of the dishonour of the cheque but from the date notice has been given. Clause (a) of Proviso to Section 138 does not lay down as to how many or number of times a cheque can be presented to the bank and the cause of action to file complaint would arise only after the failure of the drawer to pay within the time prescribed by law after notice pursuant to the dishonour of the cheque has been given by the payee.

(7) Madan Mohan v. K.M.Meno & Ors., (1993)CCR155,this Court had occasion to deal with similar matter and it was held that as the cheque can be presented to the bank within a period of six months from the date of its issue the legislature never intended that on the first default itself the drawer of the cheque should be dragged to litigation. In the commercial transactions, circumstances may arise where the drawer, on his cheque being dishonoured, may request the drawee to present the cheque again and encash the same. Therefore, the argument that the Legislature intended that the cheque can be presented only once, my mind, is not correct. The outer limit for presentation of the cheque, however, even in such cases is six months or the period of its validity, whichever is earlier.

(8) In my view, therefore, there is no force in the arguments of Mr. Khanna that the complaint is beyond limitation.

(9) For the foregoing reasons, the petition is dismissed. However, it will be open to the petitioners to contend before the Metropolitan Magistrate that petitioner No. 2 was not in-charge of and was not, in any manner, responsible for the affairs of the Company at the relevant time under Section 141 of the Negotiable Instruments Act and the Magistrate on the basis of the evidence will consider the said objection of the petitioners.