Senbo Engineering Ltd. & Others vs Ahlcon Ready Mix Concrete ...
2009 Latest Caselaw 471 Del

       IN THE HIGH COURT OF DELHI AT NEW DELHI

 CRL.M.C. 1753/2008 & CRL.M.A.Nos. 6333, 8984/2008, 479/2009

       SENBO ENGINEERING LTD. & ORS.            ..... Petitioners
                    Through Mr. Viplav Sharma with
                    Mr. Anurag Singh, Advocate.

                     versus

       AHLCON READY MIX CONCRETE DIVISION OF
       AHLUWALIA CONSTRACT INDIA LTD.        ..... Respondent
                   Through Mr. Rishi Kapoor with
                   Mr. Paras, Advocate.

       CORAM:
       HON'BLE DR. JUSTICE S. MURALIDHAR

       1. Whether Reporters of local papers may be
          allowed to see the judgment?                       No
       2. To be referred to the Reporter or not?             Yes
       3. Whether the judgment should be reported in Digest? Yes

                              ORDER

10.02.2009

1. This petition under Section 482 of the Code of Criminal Procedure,

1973 (CrPC) seeks the quashing of Complaint Case No. 1372/1 of

2007 titled "Ahlcon Ready Mix Concrete, Division of Ahluwalia

Contract (India) Ltd. v. Senbo Engineering Ltd." pending in the

Court of the Chief Metropolitan Magistrate (CMM), Delhi under

Section 138 read with Section 142 of the Negotiable Instruments Act,

1881 (NI Act).

2. The aforementioned complaint was filed in respect of the dishonour

of cheque No.694108 dated 10th July 2007 in the sum of Rs.

25,50,000/- drawn by Senbo Engineering Ltd., in favour of Ahlcon

Ready Mix Concrete. It is stated in the complaint that when the

cheque was presented for payment it was returned unpaid with remarks

"stopped payment" by the Bank‟s memo dated 10th July 2007.

3. Mr. Viplav Sharma, the learned counsel for the petitioner submits

that a cheque in respect of which stop payment instruction has been

issued is not a cheque at all. It ceases to remain payable on demand

and return of such a document is not a dishonour of cheque. He seeks

to place reliance on the decisions in Cohen v. Hale (1878) 3 QBD 371,

William Joseph Reade v. The Royal Bank (1922) 2 IrR 22, Wianholt

v. Spitta (1813) 3 Camp 377 and the decision of the Calcutta High

Court in Syed Mahommed Yaqub v. Imperial Bank of India AIR

1941 Cal 110. He refers to the endorsement in bold across the face of

the cheque by the Bank "payment stopped by the drawer" and such a

cheque cannot even be re-presented and therefore is not the kind of

cheque which is contemplated by Section 138 NI Act.

4. Mr.Sharma submits that under Section 146 of the NI Act, the

banker‟s slip or memo stating the reason for the dishonour has to be

presumed to be proof of such dishonour unless disproved. Building on

this argument, he submits that in terms of Section 138 (1) NI Act,

offence in terms of thereof is attracted only in two eventualities. One is

the dishonour on account of insufficiency of funds and other is when

the amount for which the cheque is drawn exceeds the arrangement

with the bank in respect of the account on which the cheque is drawn.

According to Mr.Sharma the maxim expressum facit cessare tacitum

would apply to exclude any other reason for dishonour like a stop

payment instruction from the purview of Section 138 NI Act.

According to him the Court cannot enlarge the scope of Section 138 NI

Act. The decisions in Union of India v. Tulsiram Patel (1985) 3 SCC

398, Padma Sundara Rao v. State of Tamil Nadu AIR 2002 SC 1334

and Mohan v. State of Maharashtra (2007) 9 SCC 431 are referred to

in support of this proposition. He refers to the Parliamentary debates

that preceded the amendment to the NI Act in 2002 which show that

the intention was not to bring the instance of dishonour on account of a

stop payment instruction within the mischief of Section 138 NI Act.

He seeks to distinguish the decisions of the Supreme Court in Modi

Cements v. Kuchil Kumar Nandi (1998) 3 SCC 249, MMTC Ltd. V.

Medchl Chemicals and Pharma Ltd. (2002) 1 SCC 234 and Goaplast

(P) Ltd. v. Chico Ursula D'Souza (2003) 3 SCC 235 which hold that

the dishonour of a cheque on account of a stop payment instruction

cannot be said to be outside the ambt of Section 138 NI act. According

to Mr.Sharma these decisions do not consider the true purport of

Section 138 read with 146 NI Act as submitted by him and are

therefore either per incuriam or sub silentio. He cites the decision in

Municipal Corporation of Delhi v. Gurnam Kaur (1989) 1 SCC 101

in support of this submission.

5. It is next submitted that Petitioner No.2 has been arrayed as an

accused only because he happens to be the Managing Director of

Petitioner No.1 and this is not sufficient compliance with the

requirement of Section 141 NI Act. On facts, Mr.Sharma submits that

the transaction in question was based on an invoice which simply talks

of "service charges" and therefore, there is no liability towards which

the payment was made. In fact the petitioners informed the

Respondent of the factum of issuing the stop payment instruction.

6. Appearing for the respondent Mr. Rishi Kapoor, learned Advocate

refers to the judgment in Modi Cements Ltd. v. Kuchil Kumar Nandi

(supra) which overruled the earlier judgment in K.K. Sidharthan v.

T.P. Praveena Chandran (1996) 6 SCC 369 and categorically held

that even if a cheque is dishonoured because of a stop payment

instruction Section 138 NI Act would get attracted. It is submitted that

the judgment of the Calcutta High Court in Syed Mahommed Yaqub

was rendered at a time when the law had not been settled by the

Supreme Court. It is further submitted that the liability of a Managing

Director would automatically follow in terms of the judgments of the

Supreme Court in S.M.S Pharmaceuticals v. Neeta Bhalla (2005) 8

SCC 89 and Everest Advertising Pvt. Ltd. v. State (NCT of Delhi)

[(2007) 5 SCC 54]. As regards the merits of the complaint, it is

submitted that the points urged by the petitioners raise triable issues

which cannot be gone into in a petition under Section 482 CrPC.

7. Having considered the submissions of the learned counsel for the

parties, it appears to this Court that the point regarding dishonour on

account of stop payment instruction to the Bank by the drawer stands

covered by the decision of the Supreme Court in Modi Cements Ltd.

The Supreme Court accepted the submission made on behalf of the

drawee of the dishonoured cheque that the dishonour of a cheque on

account of a stop payment instruction did not preclude an action under

Section 138 NI Act and that a cheque that was validly drawn would

attract presumption of liability under Section 139 NI act. The Supreme

Court also accepted the submission that its earlier decision in

Electronics Trade & Technology Development Corpn. Ltd. v. Indian

Technologists & Engineers (Electronics) P Ltd. (1996) 2 SCC 739

was not correctly decided. Also, the decision in K.K. Sidharthan v.

T.P. Praveena Chandran was expressly overruled. In para 16 of Modi

Cements Ltd it was explained by the Supreme Court as under:

"16. We see great force in the above submission because once the cheque is issued by the drawer a presumption under Section 139 must follow and merely because the drawer issues a notice to the drawee or to the bank for stoppage of the payment it will not preclude an action under Section 138 of the Act by the drawee or the holder of a cheque in due course. The object of Chapter XVII, which is instituted as "OF PENALTIES IN CASE OF DISHONOUR OF CERTAIN CHEQUES FOR INSUFFICIENCY OF FUNDS IN THE ACCOUNTS" and contains Sections 138 to 142, is to promote the efficacy of banking operations and to ensure credibility in transacting business through cheques. It is for this reason we are of the considered view that the observations of this Court in Electronics Trade & Technology Development Corpn. Ltd. in para 6 to the effect "Suppose after the cheque is issued to the payee or to the holder in due course and before it is presented for encashment, notice is issued to him not to present the same for encashment and yet the payee or holder in due course presents the cheque to the bank for payment

and when it is returned on instructions, Section 138 does not get attracted", does not fit in with the object and purpose for which the above chapter has been brought on the statute book."

8. The aforementioned judgment was followed in the later decision in

MMTC Ltd. where it was held that (SCC, p.240):

"even when the cheque is dishonoured by reason of stop

payment instructions by virtue of Section 139 the court has to

presume that the cheque was received by holder for the

discharge, in whole or in part, of any debt or liability. Of course

this is a rebuttable presumption. The accused can thus show that

the „stop payment‟ instructions were not issued because of

insufficiency or paucity of funds...The important thing is that

the burden of so proving would be on the accused. The court

cannot quash a complaint on this ground."

(emphasis supplied)

9. In Goaplast Pvt. Ltd. (2003) 3 SCC 232 the judgment in Modi

Cements Ltd. was followed. It was observed (SCC, p.237-38): „If

stoppage of payment before the due date of the cheque is taken out of

the purview of Section 138 of the Act, it will shake the confidence

which the cheque is otherwise intended to inspire regarding payment

being available on the due date." The entire set of decisions was again

discussed and the law reiterated in Goa Plast (P) Ptd. v. Chico Ursula

D'Souza (2004) 2 SCC235

10. With the law having been so unambiguously stated in several

decisions of the Supreme Court, this Court is unable to accept the

submission that a cheque which is dishonoured for the reason of a stop

payment instruction is not a cheque within the meaning of Section 138

NI Act or that the offence thereunder is not attracted in such instance.

The decision of the Calcutta High Court in Syed Mahommed Yaqub v.

Imperial Bank of India and the earlier decisions in Cohen v. Hale,

William Joseph Reade v. The Royal Bank, Wianholt v. Spitta are

therefore to no avail in this regard. The submission that any or all of

the above judgments of the Supreme Court are per incuriam or sub

silentio does not impress this court. They in fact provide a complete

answer to the contentions of the learned counsel for the petitioner on

this issue.

11. There is no merit in the contention concerning the minimum

averment in the complaint as regards Petitioner No.2 who is the

Managing Director of Petitioner No.1 The decisions in S.M.S

Pharmaceuticals v. Neeta Bhalla and Everest Advertising Pvt. Ltd. v.

State (NCT of Delhi) answer the point against the petitioners. The

other contention on merits, that no liability existed, cannot obviously

be gone into at this stage and will have to await the conclusion of the

trial. The question that is required to be answered is whether when the

complaint in the instant case is read as a whole a prima facie case can

be said to be made out for proceeding against the petitioners for the

offence under Section 138 NI Act. The answer is unambiguously in the

affirmative. There is, therefore, no ground for this Court to interfere in

exercise of its powers under Section 482 CrPC to quash the criminal

complaint against the petitioners.

12. Any request made by the petitioner No.2 for exemption from

personal appearance will have to be made to the court concerned by an

appropriate application which will be considered on its merits by that

court.

13. With the above observations, the petition is dismissed. The interim

orders stand vacated. The applications are dismissed. A certified copy

of this order be sent to the learned MM concerned forthwith.

S. MURALIDHAR, J.

FEBRUARY 10, 2009 ak