Scholar Publishing House Pvt. ... vs Govt. Of Nct Of Delhi & Anr.
2008 Latest Caselaw 1982 Del

                  Reportable
*     HIGH COURT OF DELHI AT NEW DELHI


+            Crl. M. C. No. 3002/2007 & Crl. M.A.
             Nos. 10779/2007 & 14275/2007

                          Judgment reserved on : 19.08.2008
                              Date of decision : 07.11.2008


#     SCHOLAR PUBLISHING HOUSE P. LTD. & ANR.
                                               ...... Petitioners

!                   Through : Mr. Jayant Bhushan, Sr. Adv.
                               Mr. Anurag Dubey, Adv.
                               Mr. Sarvendra Singh, Adv.
                               Ms. Meenesh Dubey, Adv.


                          Versus


$     GOVT. OF NCT OF DELHI & ANR.
                                             ..... Respondents
^                   Through : Mr. O.P. Saxena, APP
                              Mr. Samrat Nigam, Adv. with
                              Mr. Raghu Tandon, Adv.
                              Mr. Sanjeev Mahajan, Adv.
                              for R-2.
%
      CORAM:
      HON'BLE MS. JUSTICE ARUNA SURESH

     (1) Whether reporters of local paper may be
         allowed to see the judgment?

     (2) To be referred to the reporter or not?              Yes

     (3) Whether the judgment should be reported
         in the Digest ?                                     Yes




Crl. M.C. No. 3002/2007                                 Page 1 of 17
                            JUDGMENT

ARUNA SURESH, J.

1. Petitioner No. 1 Scholar Publishing House Private

Ltd. is a publishing house engaged in the business of

publication of educational books and petitioner No. 2

is one of its directors. Respondent No. 2 M/s Khanna

traders is the sole proprietorship firm carrying on the

business of supplying printing papers to various

publishing houses.

2. There were business dealings between the parties.

Towards payment of the due amount a cheque bearing

No. 276965 for Rs. 4 lacs dated 30.5.2006

(hereinafter as the impugned cheque) drawn on State

Bank of India was issued in favour of respondent No.

2 by the petitioners. This cheque on presentation by

respondent No. 2 to its bankers Indian Overseas Bank

was dishonoured on 31.5.2006 with the remarks

"payment stopped by drawer". Thereafter on

5.6.2006 petitioners issued another cheque bearing

No. 278007 dated 5.6.2006 in favour of respondent

No. 2 for a sum of Rs. 2 lacs. One more cheque

bearing No. 214111 dated 19.6.2006 for Rs. 2 lacs

was also issued by the petitioners in favour of

respondent No. 2/complainant. These two cheques

on presentation were honoured. On 13.6.2006

respondent No. 2 sent a legal notice to the petitioners

informing them of the dishonourement of cheque No.

276965 and calling upon them to make the payment

of the said amount within fifteen days of receipt of

this notice. Since petitioners did not make the

payment as demanded within the stipulated period,

respondent No. 2 filed the impugned complaint dated

28.7.2006 under Sections 138/141 of the Negotiable

Instruments Act (hereinafter referred to as NI Act).

3. The learned trial court on the basis of prima facie

evidence placed on record by the complainant/

respondent No. 2 vide its order dated 31.7.2006 took

cognizance of the offences under Section 138/141 of

the N.I. Act and issued summons for appearance

against the petitioners. Impugning the said order of

the learned trial court dated 31.7.2006, the present

petition has been filed by the petitioners.

4. Mr. Jayant Bhushan, counsel appearing on behalf of

the petitioners has assailed the summoning order of

the trial court and has submitted that in lieu of the

dishonoured cheque No. 276965 dated 30.5.2006 for

Rs. 4 lacs, petitioners had issued two cheques bearing

No. 278007 and 214111 for a sum of Rs. 2 lacs each

which on presentation were duly encashed on

6.6.2006 and 19.6.2006 and therefore, the payment

stood made on encashment of the subsequent two

cheques. Both the cheques had an endorsement on

their back that the said cheques were issued in lieu of

the impugned cheque. It is submitted by the learned

counsel for the petitioners that due to certain

unavoidable payments which were required to be

made to third parties the petitioners were unable to

make proper arrangements with their bankers to

ensure the encashment of the impugned cheque and

this fact was brought to the notice of respondent No.

2. Despite request respondent No. 2 presented the

cheque for clearance to its bankers on 30.5.2006 and

naturally it was dishonoured. To ensure payment, the

petitioners had subsequently issued the other two

cheques in favour of respondent No. 2 and on

encashment of the said cheques petitioners are

absolved of their liability to pay the impugned cheque

amount to respondent No. 2. Despite having received

the due payment respondent No. 2 issued legal notice

for payment which under the circumstances was not

proper as the due sum had already been received by

respondent No. 2. It is also argued by the learned

counsel for the petitioners that despite demand for

return of the dishonoured cheque, respondent No. 2

instead of returning it back to the petitioners filed a

complaint on the basis of the impugned cheque with a

view to unduly harass and pressurize the petitioners

to accede to its extortionary demands. It is submitted

by the learned counsel for the petitioners that under

the circumstances, the complaint and the order of

summoning dated 31.7.2006 deserve to be quashed as

no offence under Section 138 of NI Act has been

made out against the petitioners.

5. To controvert the submissions of learned counsel for

the petitioners, Mr. Samrat Nigam, counsel

appearing for respondent No. 2, has argued that the

said two cheques for Rs. 2 lacs each were issued by

the petitioners in discharge of their liabilities in due

course of business as the petitioners are indebted

towards respondent No. 2 for Rs. 3,17,04,615/- and

these two cheques were never paid in lieu of the

impugned cheque. The alleged endorsement on the

back of the cheques was not available when the

cheques were handed over to respondent No. 2 and

when they were presented for encashment and

probably the said endorsements have been made by

the petitioners by committing a forgery in connivance

with the bankers. It is urged that the complaint as

filed by respondent No. 2 under Section 138 of NI Act

against the petitioners was rightly filed and the trial

court has rightly passed the impugned order.

Petition, according to him, under the circumstances is

liable to be dismissed.

6. To make out a case under Section 138 of the NI Act

following ingredients are required to be satisfied:

(a) A person must have drawn a cheque on an

account maintained by him in a bank for

payment of a certain amount of money to

another person from out of that account for

the discharge of any debt or other liability.

(b) The said 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.

(c) The cheque is returned by the bank unpaid,

either because the amount of money standing

to the credit of the account is insufficient to

honour the cheque or it exceeds the amount

arranged to be paid from that account by an

agreement made with the bank.

(d) The payee or the holder in due course of the

cheque 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 information received by

him from the bank regarding the return of the

cheque as unpaid.

(e) The drawer of such cheque fails to make

payment of the said amount of money to the

payee or the holder in due course of the

cheque within fifteen days of the receipt of

the said notice. (See Kusum Ingots &

Alloys Ltd. v. Pennar Peterson Securities

Ltd. - (2000) 2 SCC 745)

7. The admitted facts in the present case are:

i. Petitioners and respondent No. 2 had business

dealings with each other regarding supply of paper

for printing of books.

ii. During the business dealings certain amount was

found due from the petitioners payable to

respondent No. 2.

iii. Petitioners issued cheque No. 276965 dated

30.5.2006 for Rs. 4 lacs drawn on State Bank of

India in favour of respondent No. 2 to discharge

their liability.

iv. This cheque on presentation by respondent No. 2

with its bankers Indian Overseas Bank on

30.5.2006 was dishonoured on 31.5.2006 and was

returned back to respondent No. 2 with the

remarks "payment stopped by drawer" on

1.6.2006.

v. Two cheques for Rs. 2 lacs each bearing cheque

No. 278007 dated 5.6.2006 and cheque No. 214111

dated 19.6.2006 were issued by the petitioners in

favour of respondent No. 2. These two cheques on

presentation were honoured by the concerned

banker.

vi. A legal notice dated 13.6.2006 was duly served

upon the petitioners demanding the payment of the

impugned cheque within the statutory period of

fifteen days.

vii. A reply was duly sent by the petitioners on

19.6.2006 requesting the respondent to get the same

cheques encashed and return the dishonoured

cheque.

8. The dispute inter se the parties, therefore, has

narrowed down and the issue to be considered is as to

whether the said two cheques for Rs. 2 lacs each were

paid against the dishonoured cheque or the two

cheques were issued by the petitioners for payment of

other amount in due course of business in discharge

of their liability towards respondent No.2.

9. As per para 4 of the complaint, a sum of Rs.

3,51,04,615/- was due from the petitioners to

respondent No. 2 as on 31.3.2006 and the said two

cheques were issued towards part payment of the said

amount. The endorsements appearing on the back of

the said two cheques read:

"paid towards clearing the liability of dishonoured cheque No. 276965 dated 30.5.2006"

10. These endorsements on the back of the cheques

bear the seal of State Bank of India, Jama Masjid,

Delhi. According to respondent No. 2, at the time

when the cheques were handed over by the

petitioners, these endorsements on the cheques did

not appear and they have been subsequently forged.

Whereas according to the petitioners, the cheques

when issued to respondent No. 2 were duly endorsed

on their back with the above said endorsement.

Whether these endorsements appeared on the back of

the cheques when they were handed over to

respondent No. 2 or whether these cheques were

issued to clear the liability of impugned cheque No.

276965 dated 30.5.2006 is an issue which can only be

settled by the trial court after the trial of the case is

complete. Petitioners have to put their defences

before the trial court and it is for the trial court after

conclusion of evidence to ascertain the fact whether

these endorsements appeared at the time when the

cheques were issued and these cheques were issued

by the petitioners to clear their liability of Rs. 4 lacs

towards the repayment in lieu of the dishonoured

cheque. Defences cannot be looked into by this Court

in the present proceedings. Again it is for the trial

court to ascertain whether these two cheques were

issued by the petitioners towards discharge of their

liability existing in the due course of business apart

from the liability to pay the amount of the impugned

cheque. The facts and averments of the petition are

in the nature of defence and are to be produced at the

stage of trial before the trial court.

11. This Court has only to assess prima facie the

contents of the complaint and examine the documents

and other evidence produced and placed on record in

the complaint to adjudicate if the complaint falls

within the ambit of Section 138 of NI Act. Prima facie

the complaint does not suffer from any infirmity or

illegality and technical scrutinization of the evidence

at this stage is not apposite.

12. As aforesaid the complaint does carry in it all the

requirements of section 138 of NI Act. It is admitted

that the impugned cheque was issued by the

petitioners in discharge of their liability and debt

existing towards respondent No. 2. It is also admitted

that the cheque was dishonoured as payment was

stopped by the petitioners admittedly, though the

reasons maybe manifold. Petitioners were given an

opportunity to repay the amount under dishonoured

cheque within fifteen days so that criminal action

might not be initiated. However, the petitioners did

not make the payment when it was incumbent upon

him to do so within the stipulated period of fifteen

days. Respondent No. 2 had full right to file a

complaint. Admittedly petitioners did not even reply

to the statutory notice demanding the payment.

13. In Indian Oil Corporation v. NEPC India Ltd. -

(2006) 6 SCC 736, the principles relating to exercise

of jurisdiction under Section 482 of Cr.P.C. to quash

complaints and criminal proceedings have been laid

down. The relevant principles for our purpose are:

"12. .......................................

      (i)    A complaint can be quashed where
             the    allegations   made     in   the

complaint, even if they are taken at their face value and accepted in their entirety, do not prima facie constitute any offence or make out the case alleged against the accused. For this purpose, the complaint has to be examined as a whole, but without examining the merits of the allegations. Neither a detailed inquiry nor a meticulous analysis of the material nor an assessment of the reliability or genuineness of the allegations in the complaint, is warranted while examining prayer for quashing of a complaint.

(ii) A complaint may also be quashed where it is a clear abuse of the process of the court, as when the criminal proceeding is found to have been initiated with mala fides/malice for wreaking vengeance or to cause harm, or where the allegations are absurd and inherently improbable.

(iii) The power to quash shall not,

however, be used to stifle or scuttle a legitimate prosecution. The power should be used sparingly and with abundant caution.

(iv) The complaint is not required to verbatim reproduce the legal ingredients of the offence alleged. If the necessary factual foundation is laid in the complaint, merely on the ground that a few ingredients have not been stated in detail, the proceedings should not be quashed.

Quashing of the complaint is warranted only where the complaint is so bereft of even the basic facts which are absolutely necessary for making out the offence.

(v) A given set of facts may make out:

(a) purely a civil wrong; or (b) purely a criminal offence; or (c) a civil wrong as also a criminal offence. A commercial transaction or a contractual dispute, apart from furnishing a cause of action for seeking remedy in civil law, may also involve a criminal offence. As the nature and scope of a civil proceeding are different from a criminal proceeding, the mere fact that the complaint relates to a commercial transaction or breach of contract, for which a civil remedy is available or has been availed, is not by itself a ground to quash the criminal proceedings. The test is whether the allegations in the complaint disclose a criminal offence or not."

14. The complaint and the material on record do not

also give out any event by which injustice is caused or

the process of the court is misused or duress is

caused to the petitioners by such complaint. The

inherent powers conferred on the court under section

482 Cr.P.C. have to be exercised stringently and with

great circumspection and it would not be justified if

an inquiry is embarked on the allegations in the

complaint or the evidence produced by either of the

parties. At this stage merits of the case cannot be

examined, only a prima facie glimpse into the matter

is required. Moreover, the petition would have been

tenable when no offence prima facie was made out in

the complaint which is not the case herein.

15. While considering this petition, the Court cannot

ignore or overlook the provisions contained in

Sections 138 and 139 of NI Act as they were enacted

with a view to ensure proper and smooth functioning

of business transactions particularly of cheques as

instruments which primarily depends upon the

integrity and honesty of the parties. Sanctity and

credibility of issuance of cheques in commercial

transactions was required to be maintained with a

view to avoid defrauding of the creditors by

scrupulous debtors. Dishonourement of cheque by a

bank does cause incalculable loss, injury and

inconvenience to the payee and the entire credibility

of the business transactions within and outside the

country suffers setback. The remedy available in the

civil court in such like circumstances is a long drawn

matter and many a times unscrupulous drawer

indulges into taking various pleas to defeat the

genuine claim of the payee. (Reference is made to

Goa Plast (P) Ltd. v. Chico Ursula D'Souza -

(2004) 2 SCC 235)

16. Hence, in the light of the discussion as above and

the facts and circumstances of the case, I find no

infirmity or illegality in the order of the trial court

dated 31.7.2006 whereby it was pleased to summon

the petitioners to face trial in the complaint case No.

63673/2006 filed by respondent No. 2 against them.

Petition being without merits is hereby dismissed.

17. Attested copy of the order be sent to the trial court.

ARUNA SURESH (JUDGE) November 07, 2008 jk