Delhi High Court

Ravi Kumar D. vs State Of Delhi & Anr. on 1 March, 2011

Author: Ajit Bharihoke

*      IN THE HIGH COURT OF DELHI AT NEW DELHI

                              Judgment delivered on: March 01, 2011

+      CRIMINAL M.C. No.4378/2009 & Crl.M.A. 14989/2009(stay)
       CRIMINAL M.C. No.78/2010 & Crl.M.A. 283/2010(stay)
       CRIMINAL M.C. No.79/2010 & Crl.M.A. 285/2010(stay)


       RAVI KUMAR D.                    ....PETITIONER
            Through: Mr. Wills Mathews, Advocate with Mr. T.P.
                     Sindhu, Advocate

                             Versus

       STATE OF DELHI & ANR               .....RESPONDENTS

Through: Ms. Fizani Husain, APP for respondent No.1 Mr. Sudhir Kumar Sangi, Advocate for respondent No.2.

CORAM:

HON'BLE MR. JUSTICE AJIT BHARIHOKE

1. Whether Reporters of local papers may be allowed to see the judgment?

2. To be referred to the Reporter or not ?

3. Whether the judgment should be reported in Digest ?

AJIT BHARIHOKE, J.(ORAL)

1. Ravi Kumar D., the petitioner in above referred petitions under

Section 482 Cr.P.C. in his respective petitions has sought quashing of

the complaints filed against him under Section 138 of the Negotiable

Instruments Act (for short `N.I. Act') by respondent No.2 M/s Iron

Cementics (India) Pvt. Ltd for dishonour of three cheques for `25 lakhs

each purportedly issued by him.

2. Briefly stated, facts relevant for disposal of these petitions are

that the petitioner is alleged to be the Managing Director of M/s.

Mother India Logistics & Minerals Pvt. Ltd. dealing in the business of

supply of machinery and spare parts.

3. Respondent No.2 company placed an order for supply of

machinery and spare parts on the company of petitioner and gave a

cheque of `90 lakhs towards advance payment. The company of the

petitioner, however, failed to deliver the machinery/spare parts and on

this, the Managing Director of petitioner company was approached. He

expressed his inability to supply the machinery/spare parts and

requested the representative of respondent No.2 company to treat `90

lakhs given as advance payment as loan. The petitioner also issued a

post-dated cheque dated 06.03.2006 for `70 lakhs in favour of

respondent No.2. The said cheque, on presentation, was dishonoured

by the drawee bank. On this, the petitioner was again approached,

who assured the representative of respondent No.2 that cheque be re-

presented for encashment and it would be encashed. In order to

assure respondent No.2, the petitioner also issued three cheques for

`25 lakhs each respectively dated 06.05.2006, 21.05.2006 and

06.06.2006 in favour of respondent No.2 as security and stated that in

the event of the cheque of `70 lakhs being dishonoured, respondent

No.2 may encash those three cheques given as security.

4. The cheque for `70 lakhs was again presented, but it was

dishonoured. On this, respondent No.2 served the company of the

petitioner as well as petitioner with a demand notice under Section 138

N.I. Act, but the petitioner failed to make the payment. Consequently,

respondent No.2 was constrained to file complaint under Section 138

read with 141 N.I. Act against the petitioner as well as the company.

5. Since the cheque of `70 lakhs was not honoured, respondent

No.2 also presented above three cheques of `25 lakhs each for

encashment. Those cheques were dishonoured by the drawee bank

with the remarks "Account Closed". Respondent No.2, therefore,

served the petitioner as well as his company with notices of demand

under Section 138 N.I. Act in respect of above three cheques, but the

petitioner and his company failed to make payment. This resulted in

the respondent No.2 filing three separate complaints on the basis of

above said three dishonoured cheques of `25 lakhs each being

complaint case No.1594/2009, 3633/2007 and 3622/2007. Learned

Metropolitan Magistrate, on consideration of the complaint and the

affidavit evidence of the complainant, summoned the petitioner for

undergoing trial in the aforesaid three complaints. Feeling aggrieved,

the petitioner has filed the above referred three revision petitions.

6. Learned counsel for the petitioner has contended that from the

factual matrix of the case, it is apparent that the cheques in question

were issued by the petitioner from his personal account only as

security and assurance to the effect that the cheque worth `70 lakhs

issued by the petitioner's company M/s. Mother India Logistics &

Minerals Pvt. Ltd. would be encashed on its presentation to the drawee

bank. Therefore, it cannot be said that the cheques in question were

issued in discharge of some existing liability, as such Section 138 N.I.

Act is not attracted in this case. Learned counsel further argued that

not only this, respondent No.2 has admittedly filed a complaint under

Section 138 N.I. Act for dishonour of the aforesaid cheque of `70 lakhs

issued by the company of the petitioner in the discharge of its existing

liability, meaning thereby that respondent No.2 has filed multifarious

complaints for the dishonour of cheque against one single liability,

which is not maintainable. In support of this, learned counsel for the

petitioner has relied upon the judgment of this court in the matter of

Collage Culture & Ors. Vs. Apparel Export Promotion Council,

2007 (99) DRJ 251 and Taruna Batra Vs. Shikha Batra, 147(2008),

Delhi Law Times 257.

7. Learned counsel for the respondent has admitted in the course of

argument that the cheques in question which are subject matter of the

instant revision petition were issued by the petitioner from his personal

account as security and assurance for encashment of the cheque of `

70 lakhs earlier issued by the petitioner's company and those three

cheques were supposed to be presented in the event of the dishonour

of cheque of `70 lakhs. Learned counsel contended that since the

cheque of `70 lakhs was dishonoured, the respondent had every right

to present the above three cheques for encashment as an assurance

by the petitioner and since those cheques were dishonoured, the

respondent was well within his right to file a complaint under Section

138 N.I. Act.

8. I have considered the rival contentions and perused the material

on record. Before adverting to the submissions made by the parties, it

would be appropriate to have a look on Section 138 N.I. Act, which

reads as under:

"138. Dishonour of cheque for insufficiency, etc., of funds in the accounts

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 provisions of this Act, be punished with imprisonment for 2["a term which may extend to two 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 induce 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, 3["within thirty 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.

Explanation: For the purpose of this section, "debt or other liability" means a legally enforceable debt or other liability]."

9. Plain reading of the above provision of law shows that criminal

liability under Section 138 N.I. Act is attracted only if the dishonoured

cheque was issued for the discharge in whole or in part of any existing

debt or liability. The Section does not apply to a cheque issued to

meet future liability which may arise on happening of some

contingency. Thus, it is clear that a post-dated cheque, if issued for

discharge of a debt due, in the event of dishonour, would attract

Section 138 of the N.I. Act but a cheque issued not for an existing

debt/liability but issued by way of security for meeting some future

contingency would not attract Section 138 of the N.I. Act.

10. In the matter of M.S. Narayana Menon @ Mani Vs. State of

Kerala & Anr., AIR 2006 (6) SCC 39, the Supreme Court while dealing

with the issue, inter alia, observed as under:

"52........If the defence is acceptable as probable the cheque therefore cannot be held to have been issued in discharge of the debt as, for example, if a cheque is issued for security or for any other purpose the same would not come within the purview of section 138 of the Act."

11. In the instant case also, admittedly the cheques in question were

issued by the petitioner from his personal account as a

guarantee/security for the encashment of the cheque of `70 lakhs

issued by M/s Mother India Logistics & Minerals Pvt. Ltd. in favour of

the respondent No.2 company. Those cheques were to be presented

for encashment only in the event of the banker of the petitioner's

company failing to honour the cheque of `70 lakhs issued by the

aforesaid company in favour of respondent No.2. Thus, it is clear that

the above referred three cheques of `25 lakhs each were issued by the

petitioner from his personal account only as a security, as such Section

138 N.I. Act is not attracted in respect of said three cheques.

12. Under the circumstances, the petitions must succeed. The