IN THE HIGH COURT OF GUJARAT AT AHMEDABAD CRIMINAL MISC.APPLICATION No 4056 of 2002 For Approval and Signature: HON'BLE MR.JUSTICE A.M.KAPADIA ============================================================ 1. Whether Reporters of Local Papers may be allowed : YES to see the judgements? 2. To be referred to the Reporter or not? : YES 3. Whether Their Lordships wish to see the fair copy : NO of the judgement? 4. Whether this case involves a substantial question : NO of law as to the interpretation of the Constitution of India, 1950 of any Order made thereunder? 5. Whether it is to be circulated to the concerned : NO Magistrate/Magistrates,Judge/Judges,Tribunal/Tribunals? -------------------------------------------------------------- M S RAGHUNATHAN Versus RAEJSH SHAH & CO -------------------------------------------------------------- Appearance: 1. Criminal Misc.Application No. 4056 of 2002 MR JITENDRA MALKAN for Petitioner No. 1 MR PM THAKKAR SR. ADVOCATE WITH MR JIGAR P RAVAL for Respondent No. 1 MS. MITA PANCHAL APP for Respondent No. 2 - State. -------------------------------------------------------------- CORAM : HON'BLE MR.JUSTICE A.M.KAPADIA Date of decision: 03/09/2004 ORAL JUDGEMENT 1. By means of filing instant petition under Section 482 of the Code of Criminal Procedure ('the Code' for short), the petitioner against whom Criminal Case bearing No.324 of 2001 is filed in the Court of learned Chief Judicial Magistrate, Vadodara for alleged commission of offence under Section 138 of the Negotiable Instruments Act, 1981 ('the Act' for short) in which process has been issued, has prayed to quash and set aside the complaint and the process issued thereunder, on the grounds stated in the petition. 2. The petitioner is the original accused No.7 whereas respondent No.1, a Proprietary Concern, is the original complainant in the above referred to Criminal Case. Therefore, for the sake of convenience and brevity, the petitioner is referred to as "accused No.7" whereas respondent No.1 is referred to as "the complainant" hereinafter in this judgment. 3. As per the averments made in the complaint bearing Criminal Case No.324 of 2001 filed in the Court of learned Chief Judicial Magistrate, Vadodara, the complainant is a proprietary concern running in the name and style of Rajesh Shah & Co, dealing in the business of purchase and sale of shares as per oral or telephonic instructions issued from its customers. Brijlaxmi Leasing & Finance Limited, a company registered under the Companies Act, is accused No.1 ('accused company' in short) in the said complaint whereas accused Nos.2 to 6 are the Directors of the said Company and accused No.7 (the present petitioner) is the Manager and authorised signatory to sign cheque on behalf of the Company). Accused Nos.2 to 7 are engaged themselves as full time Directors and Manager and running the administration of the company jointly. All the accused are customers of the complainant and they used to sell and purchase shares through the complainant company. 4. As per the further averments made in the complaint, there was an outstanding amount of Rs.94,50,852.75 Ps. due and payable by the accused company to the complainant as on 30.5.2000. In part of the discharge of the said payment, the accused had given cheque bearing No.085685 dated 30.5.2000 for an amount of Rs.4,61,875/- drawn on Centurion Bank Limited, Alkapuri, Vadodara in favour of the complainant. On presentation of the said cheque with HDFC Bank where the complainant is having an account, it returned the same on 31.5.2000 with an endorsement that there was no sufficient fund in the account of the accused. The said intimation was received by the complainant on 1.6.2000. Since there was good relations between the complainant and the accused company and still there was outstanding dues of the accused company payable to the complainant to the tune of Rs.89,50,852.75 it was agreed between them to present the said cheque at any time again. Thereafter the transaction was continued between both of them. The complainant again presented the cheque on 30.11.2000. The said cheque was returned on 1.12.2000 with the endorsement that there was no sufficient fund in the account of the accused company. Therefore, as per the averments made in the complaint, the amount of Rs.4,61,875/- is outstanding from the accused company payable to the complainant and the cheque issued in favour of the complainant was dishonoured, all the accused have committed offence under section 138 of the Act. 5. In order to comply with the provisions of section 138 of the Act, the complainant has issued notice on 12.12.2000 which was served upon the accused company on 13.12.2000 to which the accused company and all other accused through their advocate have given evasive and false reply on 25.12.2000. Therefore, the complainant was compelled to file the complaint against all the accused for alleged commission of offence under section 138 of the Act after complying with the requisite provisions of the Act. 6. On presentation of the said complaint, on 25.1.2001 the learned Chief Judicial Magistrate, Vadodara recorded verification of the complainant and thereafter issued summons which has given rise to the present petition at the instance of the original accused No.7. 7. By filing instant petition, accused No.7 has inter alia stated that the complaint in question is an abuse of the process of the Court as the learned Chief Judicial Magistrate has no jurisdiction, authority or competence to take cognizance against accused No.7 as the complainant has never served upon accused No.7 the notice, which is a condition precedent before taking cognizance of an offence punishable under Section 138 of the Act. It is further stated that facts of the present case do not attract provisions of section 138 of the Act. It is stated by accused No.7 that on hearing of the returning of the cheque in question, BrijLaxmi Leasing & Finance Limited, a company incorporated under the Companies Act, had immediately drawn a fresh cheque of the same amount with a covering letter stating that a fresh cheque is being remitted for payment of the amount of the cheque returned by the bankers and the complainant has already received the subsequent cheque issued by the accused company and that the accused company have already paid the amount of the cheque so returned. The cheque in question is therefore not for the discharge in whole or part of any debt or other liability. Therefore it is stated that since the complaint is an abuse of process of law, deserves to be quashed by allowing the petition. It is therefore urged to allow the petition. 8. The petition is hotly contested by the complainant by filing reply affidavit inter alia stating that on a clear reading of the complaint which is impugned in this petition, it clearly discloses commission of the penal offence and therefore it is not a fit case for exercise of powers under section 482 of the Code. It is also stated that the matter is at the stage of recording evidence and therefore at this stage it will not be proper for the complainant to state anything on facts since it is likely to be misutilised during the trial proceedings by the accused. So far as the contention with respect to non-service of notice is concerned, it is stated that once the company has been served with a notice, on correct interpretation of the provisions of the Act, accused No.7 becomes automatically answerable for the offence committed by the company by virtue of the fact that he was the manager and an authorised signatory to the cheque which has been returned. It is also stated that there are sufficient averments made in the complaint to make him answerable for the said offence when offence is committed by the company and once the company has been served with the notice, no separate notice is required to be served upon accused No.7. With regard to the second contention of accused No.7 that "on hearing of the returning of the cheque in question, Brij Laxmi Leasing & Finance Limited, had immediately drawn a fresh cheque of the same amount with a covering letter stating that a fresh cheque is being remitted for payment of the amount of the cheque returned by the Bankers. It is denied that the complainant has already received the subsequent cheque issued by the accused company and since the complainant has been already paid the amount of the cheque so returned, the cheque in question is therefore not for the discharge in whole or part of any debt or other liability. It is further submitted that the contentions made in para 5 of the petition to the above effect are denied as they are absolutely false and incorrect. It is also stated that no elaborate reply is made since this contention is in the nature of defence of the accused No.7 against the charges levelled against him in Criminal Case No.324 of 2001 which is pending for adjudication and trial before the learned Chief Judicial Magistrate, Vadodara. It is submitted that it is for accused No.7 to lead his defence before the learned Chief Judicial Magistrate, Vadodara to adjudicate upon the said defence when accused No.7 chooses to lead the same before the said Magistrate. It is also submitted that such defence cannot be led before this Court in a quashing petition. It is also stated that as and when accused No.7 chooses to lead such defence, the same will be dealt with in accordance with law to point out that the defence is wholly wrong and imaginary. It is also reiterated that it is not open for accused No.7 to lead his defence in this quashing petition. It is not open for accused No.7 to dispute the facts alleged in the complaint in a quashing petition. Lastly it is submitted that the petition lacks merits and deserves to be dismissed with cost and it is therefore urged to dismiss the petition. 9. It may also be noted that accused No.7 has also filed affidavit in rejoinder wherein pronouncements of the Supreme Court on the statutory provisions contained in the Act have been reproduced and, therefore, it is not required to be mentioned here at this stage to burden this judgment. 10. Mr. Malkan, learned advocate of accused No.7 has raised following three contentions: (i) That accused No.7 has not been served with notice under section 138 of the Act which is a statutory requirement to file complaint against him and, therefore, the complaint is bad for non-issuance of the notice to accused No.7. (ii) On returning of the cheque bearing No.085685 for an amount of Rs.4,61,875/- on account of not having sufficient fund in the account of the accused-company, it immediately sent a fresh cheque No.069609 dated 1.6.2000 for Rs.4,61,875/= drawn on State Bank of India, Sayajigunj Branch, Vadodara in lieu of the earlier cheque No. 085685 dated 31.5.2000 for Rs.4,61,875/- with a request to accept the fresh cheque and return earlier cheque with a covering letter dated 1.6.2000 and since the complainant has accepted the fresh cheque, as per the contents of the letter, the complainant ought to have returned the earlier cheque No.085685 dated 31.5.2000 but the complainant did not return the said cheque and it again presented the same cheque for encashment after expiry of period of six months and, therefore, there was no existing debts or liability at the time of presentation of the cheque. This is a matter of document and therefore no evidence is required to be led in this connection. On this ground also filing of the complaint by the complainant is sheer abuse of process of Court. (iii) As per the statutory provisions contained in Section 138 of the Act, a cheque must have been presented within a period of six months. However, in instant case, the cheque was drawn on 30.5.2000 which was for the second time presented for encashment in the bank on 30.11.2000. Therefore, since the cheque was presented after expiry of six months, by virtue of clause (a) of Section 138, the complaint filed against accused-company is time barred. 11. To bring home the aforesaid submissions, Mr. Malkan, learned advocate of accused No.7 has placed reliance on statutory provisions contained in the Act as well as following reported decisions: (i) Bharatbhai K. Patel v. C.L. Verma (Since Decd.) through P.O.A. Surjit Singh Macker and another, 2002 (2) GLR 1713; (ii) Shri Ishar Alloys Steels Ltd., v. Jayaswals NECO Ltd., AIR 2001 SC 1161. 12. On aforesaid premises, it is urged that this petition is required to be allowed by quashing and setting aside the criminal complaint being Criminal Case No.324 of 2001 and the process issued thereunder by the learned Chief Judicial Magistrate, Vadodara and it is prayed to allow the petition. 13. In counter submission, Mr. P.M. Thakkar, learned Senior Advocate appearing for the complainant has contended that in view of the statutory provisions contained in the Act as well as the principles enunciated by the Supreme Court and this Court, no individual notice is required to be given to all the partners, directors and authorised signatories of the drawer company. Notice to the company would amount to service of notice to all the partners, directors and authorised signatories of the company. In instant case, notice dated 12.12.2000 under Section 138 of the Act has been served by the complainant through its advocate on the accused company which has also been replied by the accused company and other accused and, therefore, it is wrong to contend that accused No.7 was not served with notice under section 138 of the Act. 13 (i) So far as the legal submission with respect to presenting the cheque within six months as envisaged under sub-clause (a) of section 138 of the Act is concerned, Mr. Thakkar has submitted that it is settled principle of law that the date on which the cheque was presented has to be excluded as per the mode of computation provided in General Clauses Act, 1897 and therefore admittedly in the present case, the cheque which was drawn on 30.5.2000, was presented for the second time on 30.11.2000 and thus it is clear that the cheque was presented within the period of six months as envisaged under sub-clause (a) of Section 138 of the Act. 13 (ii) Lastly it is contended that so far as issuance of fresh cheque in lieu of the earlier cheque bearing No.085685 is concerned, it is a false statement made by accused No.7 because he has neither produced any proof with regard to sending a letter dated 1.6.2000 enclosing fresh cheque No.069609 drawn on State Bank of India, Sayajigunj Branch, Vadodara in lieu of the earlier cheque bearing No.085685 which was returned requesting to return the cheque No.085685 and it is a matter of appreciation of evidence by way of defence. It is settled principle of law that in quashing petition, defence raised by the petitioner by way of annexures annexed with the petition cannot be considered and it is for the trial court to decided the said defence. 14. In support of the aforesaid contention, Mr. Thakkar has placed reliance on following decisions: (i) Bhavesh Bharatbhai Mehta and others v. State of Gujarat and another, 1999 (2) GLR 1323. (ii) M.M.T.C.Ltd. and another v. Medchl Chemicals and Pharma (P) Ltd., and another, (2002) 1 SCC 234. (iii) Saketh India Ltd., and others v. India Securities Ltd., (1999) 3 SCC 1. (iv) Jasbir Singh v. Lt. Governor, Delhi and another, (1999) 4 SCC 228. 15. On aforesaid premies, it is contended that accused No.7 has filed vexatious petition only with a view to delay the trial of the Criminal Case No. 324 of 2001 which is pending in the Court of learned Chief Judicial Magistrate, Vadodara, since 2001 and therefore the petition deserves to be dismissed. He has also urged that while rejecting this petition appropriate direction may be given to the learned Chief Judicial Magistrate, Vadodara to expedite the trial of the said case and dispose it of as early as possible. 16. Ms. Mita Panchal, learned APP appearing for respondent - State has supported the submissions advanced by Mr. PM Thakkar, learned Senior Advocate of the complainant. According to her, the petition lacks merit, therefore, deserves to be dismissed. She, therefore, urged to dismiss the petition. 17. This Court has considered the rival submissions advanced by the learned advocates appearing for the parties and statutory provisions contained under the Act and the decisions cited at the bar. 18. Before dealing with the submissions posed for consideration of this court, it would be worthwhile to notice the object and reason which prompted the Legislature to introduce section 138 in the Act. 19. The Act was amended by the Banking, Public Financial Institutions and Negotiable Instruments Laws (Amendment) Act, 1988 wherein a new Chapter XVII was incorporated for penalties in case of dishonour of cheque due to insufficiency of fund in the account of the drawer of the cheque. This provision was incorporated with a view to encourage the culture of use of cheques and enhancing the credibility of the instrument. 20. The Supreme Court has noticed the object of section 138 of the Act in Goaplast Pvt. Ltd. v. Shri Chico Ursula D'Souza and another, AIR 2003 SC 2035 and has held in para 3 of the reported decision as under: "...For appreciating the issue involved in the present case, it is necessary to refer to the object behind introduction of Chapter XVII containing Sections 138 to 142. This Chapter was introduced in the Act by the Banking, Public Financial Institutions and Negotiable Instruments Laws (Amendment) Act, 1988 (Act 66 of 1988) with the object of inculcating faith in the efficacy of banking operations and giving credibility to negotiable instruments in business transactions and in order to promote efficacy of banking operations. With the policy of liberalisation adopted by the country which brought about increase in international trade and commerce, it became necessary to inculcate faith in banking. World trade is carried through banking operations rather than cash transactions. The amendment was intended to create an atmosphere of faith and reliance on banking system. Therefore, while considering the question of applicability of Section 138 of the Act to a situation presented by the facts of the present case, it is necessary to keep the objects of the legislation in mind. If a party is allowed to use a cheque as a mode of deferred payment and the payee of the cheque on the faith that he will get his payment on the due date accepts such deferred payment by way of cheque, he should not normally suffer on account of non payment. The faith, which the legislature has desired that such instruments should inspire in commercial transactions would be completely lost if parties are as a matter of routine allowed to interdict payment by issuing instruction to banks to stop payment of cheques. In today's world where use of cash in day to day life is almost getting extinct and people are using negotiable instruments in commercial transactions and plastic money for their daily needs as consumers, it is all the more necessary that people's faith in such instruments should be strengthened rather than weakened. Provisions contained in Sections 138 to 142 of the Act are intended to discourage people from not honouring their commitments by way of payment through cheques. It is desirable that the Court should ban in favour of an interpretation which serves the object of the statute. The penal provisions contained in Sections 138 to 142 of the Act are intended to ensure that obligations undertaken by issuing cheques as a mode of payment are honoured. A post-dated cheque will lose its credibility and acceptability if its payment can be stopped routinely. A cheque is a well recognised mode of payment and post-dated cheques are often used in various transactions in daily life. The purpose of a post-dated cheque is to provide some accommodation to the drawer of the cheque. Therefore, it is all the more necessary that the drawer of the cheque should not be allowed to abuse the accommodation given to him by a creditor by way of acceptance of post-dated cheque. If stoppage of payment of a post-dated cheque is permitted to take the case out of the purview of S.138 of the Act, it will amount to allowing the party to take advantage of his own wrong. 21. In light of the objects of the legislation, the question posed for consideration will have to be answered. 22. The object of the legislature is to enhance credibility of the instrument as well as to inculcate faith in the efficacy in banking operation. The negotiable instrument should inspire faith in commercial transaction. This faith would stand destroyed if parties to the negotiable instrument are permitted to play fraud. It is common knowledge that people are using the instrument in commercial transaction postdated cheques and therefore provisions of section 138 of the Act should be interpreted in a manner which discourages people from not honouring the commitment by way of payment through cheque. 23. In aforesaid backdrop of the object of introducing Section 138 in the Act as canvassed by the Supreme Court in above referred to judgment, now let us examine the settled principles enunciated by the Supreme Court on the law of quashment of complaint in a petition filed under section 482 of the Code or under Article 226 of the Constitution of India. 24. It is settled principle of law that exercise of power under Section 482 of the Code is the exception and not the rule. The Section does not confer any new powers on the High Court. It only saves the inherent power with the Court possessed before the enactment of the Code. It envisages three circumstances under which the inherent jurisdiction may be exercised, namely, (i) to give effect to an order under the Code, (ii) to prevent abuse of the process of Court, and (iii) to otherwise secure the ends of justice. It is neither possible nor desirable to lay down any inflexible rule which would govern the exercise of inherent jurisdiction. No legislative enactment dealing with procedure can provide for all cases that may possibly arise. Courts, therefore, have inherent powers apart from express provisions of law which are necessary for proper discharge of functions and duties imposed upon them by law. That is the doctrine which finds expression in the Section which merely recognizes and preserves inherent powers of the High Courts. All Courts, whether civil or criminal possess, in the absence of any express provision, as inherent in their constitution, all such powers as are necessary to do the right and to undo a wrong in course of administration of justice on the principle quando lex aliquid alique concedit, conceditur et id sine quo res ipsa esse non potest (when the law gives a person anything it gives him that without which it cannot exist). While exercising powers under the Section, the Court does not function as a Court of appeal or revision. Inherent jurisdiction under the Section though wide has to be exercised sparingly, carefully and with caution and only when such exercise is justified by the tests specifically laid down in the Section itself. It is to be exercised ex debito justitiae to do real and substantial justice for the administration of which alone Courts exist. Authority of the Court exists for advancement of justice and if any attempt is made to abuse that authority so as to produce injustice, the Court has power to prevent such abuse. It would be an abuse of process of the Court to allow any action which would result in injustice and prevent promotion of justice. In exercises of the powers Court would be justified to quash any proceeding if it finds that initiation or continuance of it amounts to abuse of the process of Court or quashing of these proceedings would otherwise serve the ends of justice. When no offence is disclosed by the complaint, the Court may examine the question of fact. When a complaint is sought to be quashed, it