Case: Rama Gupta Vs. Bakemans Home Products

1. This petition under S.432 of the Code of Criminal Procedure, 1973 (hereinafter referred to as the Code) relates to quashment of impugned complaint Annexure P/2 filed by the complainant-respondent against the present petitioner under S.138 of the Negotiable Instruments Act 1881 (as amended upto date) read with S.420 of the Indian Penal Code and consequent proceedings including the summoning order Annexure P/1. 2. In brief facts relevant for the disposal of this petition as emerged from the complaint Annexure P.2 are that the complainant, a limited Company is engaged in manufacture of biscuits and confectionery and selling the same in different parts of the country through its Distributors and dealers. The accused are its authorised Distributors and dealers; that as per orders received from the accused from time to time the complainant had been supplying goods to the accused; that on 26th August, 1989 the accused agreed to clear the outstanding amount of the complainant against the goods received by the accused through cheques of Rs. 10,000/- every month. Accordingly Cheque No.097680 dated 30th June, 1990 for Rs.10,000/- was issued by the accused in favour of the complainant as part payment against the outstanding amount due from the accused. The said cheque drawn on the Banares State Bank Ltd. Mathura (U.P.) was presented by the complainant to its Bankers State Bank of Patiala at Patiala. The latter sent it for encashment to the Banares State Bank Ltd., Mathura where the accused are maintaining their account. The said cheque, however, was returned by the Banares Bank with the remarks stop payment. The cheque was subsequently returned by the State Bank of Patiala to the complainant on 20th July 1990. The complainant served upon the accused the notice dated 23rd July, 1990 sending them intimation that the cheque had been dishonoured and they should make the payment to the complainant but after receipt of the notice the accused instead of making any payment were making one excuse or the other, to avoid payment. 3. The petitioners in their petition have specifically pleaded that there was no paucity of funds available for encashment of the cheque issued as per certificate of the Bank. It was, further emphasised that a settlement was arrived at under which thirteen post dated cheques were issued to the complainant. Six out of them were encashed. In the mean time the complainant not only established direct contracts with some concerns but also withheld most unexpectedly payments of amount due to the petitioners in the ordinary course of business which were without any dispute. A detailed letter dated 3rd March, 1990 copy whereof is Annexure P.3 was sent to the complainant and the information that the payment in respect of the cheque in question has been stopped by the drawer (the accused) was sent to the complainant about three months prior to 30th June, 1990 when the payment of the said cheque became due. 4. In spite of the fact that several opportunities were granted to the complainant no return or affidavit has been filed on behalf of the complainant to rebut the allegations made in the petition. 5. The learned counsel for the parties were heard. 6. The learned counsel for the petitioners contended that the cheque in question was not returned by the Bank unpaid either because of the amount of money standing to the credit was insufficient to honour the cheque or that it exceeds the amount arranged made with that Bank. It was further submitted that as per certificate of the Manager of the Banares State Bank Ltd. at Mathura Annexure P.8 the cheque in question was only returned to drawee because the payment had been stopped by the drawer under the instructions of account holder M/s Adarsh Agencies, Mathura. It is specifically mentioned in the aforesaid Bank certificate that the cheque was returned on 10-7-1990. The balance was sufficient on that date and the cheque in question would have been encashed by us (by the Bankers) had there not been instructions from the drawer to stop payment. 7. Reliance in this respect has rightly been placed by the counsel for the petitioners on Single Bench authority of this Court in Abdul Samad v. Satya Narayan Mahwar, 1990 (2) RCR 335=1991 ISJ (Banking) 134,. wherein it was observed that the parliament in its wisdom has confined the offence referred to in S.138 only to bouncing of cheque on the ground of inadequate balance in the account concerned. Where the cheque is returned unpaid for other grounds, the same has not been made an offence. 8. Faced with this situation, the learned counsel for the respondent contended that he may be given an opportunity to rebut the certificate of the Bank, Annexure P.8, in order to prove that there was not sufficient balance in the bank account of the accused firm and that the cheque was dishonoured because of insufficiency of amount in the account of the accused firm. Reliance in this respect was placed on Single Bench authority of this Court in Nirmal Singh v. Jyoti Sarup Prop. M/s. Verma and Brothers, 1991 (2) RCR 535 , wherein it was observed that the complainant is entitled to prove the various ingredients of the offence and the certificate of the bank as to the reason why payment of the cheque was not being made is evidently not conclusive. It is open to the complainant to show that the cheque was returned by the bank unpaid because the amount of money standing to the credit of that account was insufficient to honour the cheque. In other words, prima facie it cannot be said that an essential ingredient of the offence being absent, there is no justification for the proceedings to go on according to law. 9. The facts of the aforecited authority in Nirmal Singhs case were entirely different. In that particular case the cheque in question was issued on 16th March, 1990 for Rs.1,16,643/-. It was presented to the bank several times. Ultimately it was returned on 21st of May, 1990 with the remarks that the payment thereof had been stopped by the drawer. On 19th March, 1990 the account of the petitioner showed balance of Rs.37,091.33 which was evidently insufficient to make payment of the cheque of Rs.1,16,643/-. On April 17,1990 the petitioner closed the account and there was no question of payment of cheque from the account of the petitioner. The aforesaid observations made by the Single Bench were made in view of the facts and circumstances of the case referred to above. 10. The facts of the case in hand are entirely different. In the present case cheque is comparatively of smaller amount. The fact remains that according to the positive assertions in the petition which have not been rebutted by the complainant, there was sufficient amount in the account of the accused firm in the State Bank of Benares at Mathura as is prima facie made out from the Bankers at certificate copy whereof is Annexure P.B. Thus no offence under S.138 of the Negotiable Instruments Act, 1881 as amended by Banking Public Financial Institutions and Negotiable Instruments Law (Amendment) Act, 1988 has been made out against the accused. 11. The second contention made on behalf of the accused-petitioners is that the cheque in question was issued on behalf of the accused firm to discharge its preexisting liability and was certainly not issued against delivery of goods by the complainant and as such no offence of cheating under S.420 of the Indian Penal Code has been made out, and, at best the dishonour of the cheque amounts to breach of promise which is a civil liability. From careful perusal of the complaint, it is apparent that there is no allegation, or, assertion that the cheque in question was given on behalf of the accused firm to the complainant against the delivery of the goods. Rather it is specifically pleaded in para.No.4 of the complaint that the cheque in question was issued by the accused in favour of the complainant as part payment against the outstanding amount due from the accused. It is thus quite evident that there are no specific allegations in the impugned complaint that the accused petitioners had fraudulently or dishonestly induced the complainant to deliver any property against cheque issued by them which was subsequently dishonoured. I find support in my view from the Single Bench authority of this Court in Chhote Lal Aggarwal v. The State of Punjab, 1987 (2) RCR 263 wherein it was held that the cheques were not issued against the delivery of goods but were drawn in order to discharge a pre-existing liability. The dishonouring of the cheques, therefore amounted only to breach of promise which is a civil liability and not criminal offence under S.420, Indian Penal Code. 12. The learned counsel for the respondent relied upon Single Bench authority of this Court in Tilak Raj Bakshi v. Prem Chand, 1984 (2) CLR 496, wherein the bank account was closed on 25-5-1979, i.e. 31/2 months earlier to the issuance of the cheque.

Decision reasoning: 1[ds]10. The facts of the case in hand are entirely different. In the present case cheque is comparatively of smaller amount. The fact remains that according to the positive assertions in the petition which have not been rebutted by the complainant, there was sufficient amount in the account of the accused firm in the State Bank of Benares at Mathura as is prima facie made out from the Bankers at certificate copy whereof is Annexure P.B. Thus no offence under S.138 of the Negotiable Instruments Act, 1881 as amended by Banking Public Financial Institutions and Negotiable Instruments Law (Amendment) Act, 1988 has been made out against the accusedFrom careful perusal of the complaint, it is apparent that there is no allegation, or, assertion that the cheque in question was given on behalf of the accused firm to the complainant against the delivery of the goods. Rather it is specifically pleaded in para.No.4 of the complaint that the cheque in question was issued by the accused in favour of the complainant as part payment against the outstanding amount due from the accused. It is thus quite evident that there are no specific allegations in the impugned complaint that the accused petitioners had fraudulently or dishonestly induced the complainant to deliver any property against cheque issued by them which was subsequently dishonoured. I find support in my view from the Single Bench authority of this Court in Chhote Lal Aggarwal v. The State of Punjab, 1987 (2) RCR 263 wherein it was held that the cheques were not issued against the delivery of goods but were drawn in order to discharge aliability. The dishonouring of the cheques, therefore amounted only to breach of promise which is a civil liability and not criminal offence under S.420, Indian Penal Code13. The facts of the Tilak Raj Aggarwals case (supra) are entirely different from the facts of the case in hand. As already discussed earlier there was sufficient amount in the account of the accused firm for honouring the cheque issued in favour of the complainant. The said post dated cheque could not be encashed merely because its payment was stopped by the drawer, intimation in respect whereof had already been sent to the complainant about three months prior to the date when the payment of the cheque became due. The authority in Tilak Raj Aggarwal case is not applicable to the facts and circumstances of the present case and is clearly distinguishable. which could make out a prima facie case either under S.138 of the Negotiable Instruments Act or under S.420 of the Indian Penal Code against the petitioners.