Jauss Polymers Ltd. And Anr. vs Sawhney Brothers
2002 Latest Caselaw 1598 Del

JUDGMENT

Mahmood Ali Khan, J.

1. Failing in its all previous attempts in scuttling the criminal proceedings launched by the respondent for prosecution of the petitioner under Section 138 of the Negotiable Instruments Act (the Act) the petitioners in this criminal revision have now sought quashing of the notice served by the trial court upon them on 3.5.2002 under Section 251 of the Cr.PC.

2. Briefly stated that facts are that the respondent has filed a criminal complaint against the petitioner on the averment, in short, that the petitioner No.1 in the course of its business had taken a loan of Rs. 25 lakhs from the respondent No.1 bearing interest at the rate of 14% per annum and the petitioner No.1 company in discharge of its debts had issued two cheques one dated 20.2.1996 for Rs. 25 lakhs and the other dated 8.11.1995 for Rs. 89,753/-. The first cheque was towards repayment of the principal amount. The second cheque was towards the amount of interest at the rate of 14% per annum accruing on the principal sum up to 20.2.1996. Both these cheques were post dated. The petitioner company allowed the encashment of the cheque of Rs. 89,753/- which was towards interest but did not allow encashment of the cheque of Rs. 25 lakhs which was towards the repayment of the principal sum. The respondent No.1 has filed a winding up petition against the petitioner No.1 company. Within the prescribed period of 15 days from the date of bouncing of the cheque of Rs. 25 lakhs notice of demand dated 18.3.1996 was served upon the petitioner No.1 which has failed to make the payment within 15 days from the date of the receipt of the notice. The respondent complaint alleged that the petitioner had committed an offence under Section 138 and should be punished for it.

3. The petitioner challenged the order of summoning before this court which petition was dismissed by order dated 11.8.2000. It was pursued in an SLP which was also dismissed by the Supreme Court on 13.9.2000. The petitioner moved another application before the Additional Sessions Judge who was trying the case for dismissing the complaint on the ground that on the date of bouncing of the cheque there was no existing debt or liability against the accused and this ground was not taken in the earlier petition, therefore, the summoning order must be recalled. The application was dismissed. The notice under Section 251 Cr. PC has now been framed and served on the respondent on 3.5.2002. The petitioner has challenged this notice as well in the instant proceedings.

4. The contentions in this petition are two fold. Firstly that an agreement-cum-pledge was executed between the petitioner and the complaint in pursuance to which short term loan facility of Rs. 25 lakhs was granted to the petitioner on certain terms and conditions. Paragraphs 5, 6, & 7 of that agreement clearly show that the petitioner company had deposited certain security with the respondent complainant and in terms of that agreement the respondent was authorised to dispose of those securities and adjust the money realised towards the satisfaction of the loan outstanding against the petitioner. It is argued that in view of this agreement the respondent complainant had the discretion to sell and realise any or all the securities for any loss or damage or diminution in value sustained by him. Therefore, the criminal complaint under Section 138 of the Negotiable Instruments Act is an abuse of the process of the court and the notice in question should be set aside. The second contention of the petitioner is that the petitioner had always been ready and willing to pay the amount in Installment and had in fact paid two cheques of Rs. 1 lakhs each during the pendency of the winding up petition which the respondent No.1 had encashed in compliance to the order of the court. It was further submitted that thereafter the petitioner had paid Rs. 22 lakhs more and as such out of Rs. 25 lakhs a sum of Rs. 24 lakhs in all has already been paid to the respondent but the respondent wanted to coerce the petitioner to pay interest at the rate of 75% per annum.

5. The counsel for the petitioner has fairly conceded that mere payment of the amount of the cheque during the pendency of the criminal complaint will not absolve the petitioner of the offence which has been committed by him as drawer of the cheque. He has however, challenged the service of the notice under Section 251 Cr.PC upon the petitioner firstly on the ground that in terms of the agreement-cum-pledge executed between the parties the petitioner No. 1 had pledged certain securities with the complainant and the complainant had a right to sell and dispose of those securities, realise the amount and adjust the net proceeds towards the satisfaction of the loan amount outstanding against the petitioner. It is argued that in the presence of such an agreement between the parties the respondent had no right to file a criminal complaint against t he petitioner under Section 138 of the Act. The respondent had right to dispose of the securities and adjust and amount received against the outstanding dues from the petitioner. Since this has not been done the criminal complaint is not maintainable in law and the notice served in it is liable to be set aside.

6. The argument of the counsel for the petitioner is unsustained in law. The proceedings pending against the petitioner are not of civil nature. Section 138 of the Act has made the bouncing of the cheque issued by a drawer of a cheque on his own account for insufficiency of funds etc an offence. To be precise Section 138 is as under:-

"138:- Where any cheque drawn by a person on a 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 bee 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 cheques 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."

7. It is clear from this provision that the drawer of the cheque will be guilty of the offence in terms of the cheque is not issued for discharging a debt or liability e.g. as a gift, present or by way of security and not otherwise.

8. The only question which calls for consideration in the criminal proceedings is whether the offence as embodied in Section 138 of the Act is made out or not. If all the requirement of the ingredients of this Section are fulfillled and satisfied the offence is complete and trial and punishment of the accused will be perfectly legal. The payment of the amount of cheque after the institution of the criminal complaint would not wipe of the offence. For instance if the amount of the cheque has not been paid by the drawer of the cheque within 15 days from the date of the receipt of the notice of demand from the payee offence is complete even if it was paid on 16th day. It is a different question as to what punishment the court will deem proper to be awarded for small abrasion with the requirement of law or in certain other mitigating circumstances. Therefore, existence of an agreement between the parties by which certain securities were given by the borrower to the lender which could be disposed of by the borrower for Realizing its outstanding amount of debt would not deprive the payee of the cheque from taking resort to the provision of Section 138 simply because he has other remedies or mode available for recovery of the debt. The provision of Section 138 is specifically enacted to give sanctity to the cheques issued for payment of debts and liabilities. In a proceeding under Section 138 what the court is required to satisfy itself is the existence of all the necessary ingredients which constitute the offence. There is presumption in law under Section 139 of the Act that the cheque has been drawn by its drawer for discharging a legal debt or liability. This presumption is rebuttable and the drawer of the cheque is at liberty to prove at the trial that the cheque is without consideration. Consequently neither existence of agreement between the parties giving right to the respondent to recover the amount due by sale of security etc nor payment of the amount of cheque during the pendency of criminal compliant will absolve the petitioner of criminal liability under Section 138 of the Act. No other defect or infirmity has been pointed out in the notice which is impugned in this revision petition.

9. Having regard to the above discussion it must be held that the petitioner has failed to show that the notice dated 3.5.2001 served by the trial court on the petitioner in the criminal proceedings under Section 138 of the Act suffer from any illegality or impropriety which could warrant interference by this court to prevent abuse of the process of the court and miscarriage of justice. Petition has no merit. It is, therefore, dismissed.