Case: Anil Sachar  Vs. M/S Shree Nath Spinners P.Ltd.&amp; Ors.Etc

two chequesin favourof the complainant through their sister concern M/S A.T. Overseas Ltd. i.e. Accused No. 1 and the chequeswere duly signed by Mr. MunishJain one of its directors” 15. The trial court materially erred while coming to a conclusion that in criminal law no presumption can be raised with regard to consideration as no goods had been supplied by the complainants to M/s. A.T. Overseas Ltd..The trial court ought to have considered provisions of Section 139 of the Act, which reads as under:- “139. Presumption in favourof holder - It shall be presumed, unless the contrary is proved, that the holder of a chequereceived the chequeof the nature referred to in Section 138 for the discharge, in whole or in part, of any debt or other liability.” 16. According to the provisions of the aforestatedsection, there is a presumption with regard to consideration when a chequehas been paid by the drawer of the cheque. In the instant case, M/s. A.T. Overseas Ltd. paid the chequewhich had been duly signed by one of its Directors, namely, MunishJain. MunishJain is also a Director in M/s. ShreeNathSpinners Pvt. Ltd..As stated hereinabove, both are sister concerns having common Directors. Extracts of books of accounts had been produced before the trial court so as to show that both the companies were having several transactions and the companies used to pay on behalf of each other to other parties or their creditors. The above fact strengthens the presumption to the effect that M/s. A.T. Overseas Ltd. had paid the chequesto the complainants, which had been signed by MunishJain, in consideration of goods supplies to M/s ShreeNathSpinners Pvt. Ltd. Of course, the presumption referred to in Section 139 is rebuttable. In the instant case, no effort was made by MunishJain or any of the Directors of M/s. A.T. Overseas Ltd. for rebuttal of the aforestatedpresumption and, therefore, the presumption must go in favourof the holder of the cheques. Unfortunately, the trial court did not consider the above facts and came to the conclusion that there was no consideration for the chequeswhich had been given by M/s. A.T. Overseas Ltd. to the complainants.17. It is true that a limited company is a separate legal entity and its directors are different legal persons. In spite of the aforestatedlegal position, in view of the provisions of Section 139 of the Act and the understanding which had been arrived at among the complainants and the accused, one can safely come to a conclusion that the chequessigned by MunishJain had been given by M/s. A.T. Overseas Ltd. to the complainants in discharge of a debt or a liability, which had been incurred by M/s ShreeNathSpinners Pvt. Ltd.18. We may also refer to the judgment delivered by this Court in the case of ICDS Ltd. (supra). In the said judgment this Court has referred to the nature of liability which is incurred by the one who is a drawer of the cheque. If the chequeis given towards any liability or debt which might have been incurred even by someone else, the person who is a drawer of the chequecan be made liable under Section 138 of the Act. The relevant observation made in the aforestatedjudgment is as under: “ Thewords “any cheque” and “other liability” occurring in Section 138 are the two key expressions which stand as clarifying the legislative intent so as to bring the factual context within the ambit of the provisions of the statute. These expressions leave no manner of doubt that for whatever reason it may be, the liability under Section 138 cannot be avoided in the event the chequestands returned by the banker unpaid. Any contra-interpretation would defeat the intent of the legislature. The High Court got carried away by the issue of guarantee and guarantors liability and thus has overlooked the true intent and purport of Section 138 of the Act.…….The language, however, has been rather specific as regard the intent of the legislature. The commencement of the section stands with the words “where any cheque”. The above noted three words are of extreme significance, in particular, by reason of the user of the word “any” - the first three words suggest that in fact for whatever reason if a chequeis drawn on an account maintained by him with a banker in favourof another person for the discharge of any debt or other liability, the highlighted words if read with the first three words at the commencement of Section 138, leave no manner of doubt that for whatever reason it may be, the liability under this provision cannot be avoided in the event the same stands returned by the banker unpaid. The legislature has been careful enough to record not only discharge in whole or in part of any debt but the same includes other liability as well. This aspect of the matter has not been appreciated by the High Court, neither been dealt with or even referred to in the impugned judgment.” 19. Looking to the facts of the case and law on the subject, we are of the view that all the four chequesreferred to in both the complaints are presumed to have been given for consideration. The presumption under Section 139 of the Act has not been rebutted by the accused and, therefore, we are of the view that the trial court wrongly acquitted the accused by taking a view that there was no consideration for which the chequeswere given by MunishJain to the complainants. The aforesaid incorrect view was wrongly confirmed by the High Court. We, therefore, set aside the acquittal order and convict accused MunishJain under Section 138 of the Act.20. In view of the aforestatedfacts and legal position, in our opinion, the accused ought to have been held guilty, especially accused no. 4, MunishJain who had signed all the chequesfor M/s A.T. Overseas Ltd. We, therefore, hold MunishJain, accused no. 4 and respondent no. 4 herein, in both the cases guilty of the offence under Section 138 of the Act.

Decision (1 = appeal accepted, 0 = rejected): 1

Explanation:
1[ds]14. Upon perusal of the record, we find that the complainants had established before the trial court that there was an understanding among the complainants and the accused that in consideration of supply of goods to M/s. ShreeNathSpinners Pvt. Ltd., M/s. A.T. Overseas Ltd. was to make the payment. The aforestatedunderstanding was on account of the fact that directors in both the aforestatedcompanies were common and the aforestatedcompanies were sister concerns. In the circumstances, it can be very well said and it has been proved that in consideration of supply of goods to M/s. ShreeNathSpinners Pvt. Ltd., M/s. A.T. Overseas Ltd. had made the payment. In view of the above fact, in our opinion, the trial court was not right when it came to the conclusion that there was no reason for M/s. A.T. Overseas Ltd. to give the chequesto the complainants. The aforestatedfacts are very well reflected in the statement made in the complaint and in the evidence by the complainant whichhave not been controverted. Paras2 and 3 of the complaint are reproduced hereinThat the accused had business dealings with the complainant and supply of the goods which duly supplied by my client vide separate bills from time to time which was duly acknowledged by the accused no. 5 VarunJain director of the accused no. 1.3. That in order to discharge the liability of making the payment, the accused issued following two chequesin favourof the complainant through their sister concern M/S A.T. Overseas Ltd. i.e. Accused No. 1 and the chequeswere duly signed by Mr. MunishJain one of itsThe trial court materially erred while coming to a conclusion that in criminal law no presumption can be raised with regard to consideration as no goods had been supplied by the complainants to M/s. A.T. Overseas Ltd..The trial court ought to have considered provisions of Section 139 of the Act, which reads asPresumption in favourof holder - It shall be presumed, unless the contrary is proved, that the holder of a chequereceived the chequeof the nature referred to in Section 138 for the discharge, in whole or in part, of any debt or other liability.According to the provisions of the aforestatedsection, there is a presumption with regard to consideration when a chequehas been paid by the drawer of the cheque. In the instant case, M/s. A.T. Overseas Ltd. paid the chequewhich had been duly signed by one of its Directors, namely, MunishJain. MunishJain is also a Director in M/s. ShreeNathSpinners Pvt. Ltd..As stated hereinabove, both are sister concerns having common Directors. Extracts of books of accounts had been produced before the trial court so as to show that both the companies were having several transactions and the companies used to pay on behalf of each other to other parties or their creditors. The above fact strengthens the presumption to the effect that M/s. A.T. Overseas Ltd. had paid the chequesto the complainants, which had been signed by MunishJain, in consideration of goods supplies to M/s ShreeNathSpinners Pvt. Ltd. Of course, the presumption referred to in Section 139 is rebuttable. In the instant case, no effort was made by MunishJain or any of the Directors of M/s. A.T. Overseas Ltd. for rebuttal of the aforestatedpresumption and, therefore, the presumption must go in favourof the holder of the cheques. Unfortunately, the trial court did not consider the above facts and came to the conclusion that there was no consideration for the chequeswhich had been given by M/s. A.T. Overseas Ltd. to the complainants.17. It is true that a limited company is a separate legal entity and its directors are different legal persons. In spite of the aforestatedlegal position, in view of the provisions of Section 139 of the Act and the understanding which had been arrived at among the complainants and the accused, one can safely come to a conclusion that the chequessigned by MunishJain had been given by M/s. A.T. Overseas Ltd. to the complainants in discharge of a debt or a liability, which had been incurred by M/s ShreeNathSpinners Pvt. Ltd.18. We may also refer to the judgment delivered by this Court in the case of ICDS Ltd. (supra). In the said judgment this Court has referred to the nature of liability which is incurred by the one who is a drawer of the cheque. If the chequeis given towards any liability or debt which might have been incurred even by someone else, the person who is a drawer of the chequecan be made liable under Section 138 of the Act. The relevant observation made in the aforestatedjudgment is asoccurring in Section 138 are the two key expressions which stand as clarifying the legislative intent so as to bring the factual context within the ambit of the provisions of the statute. These expressions leave no manner of doubt that for whatever reason it may be, the liability under Section 138 cannot be avoided in the event the chequestands returned by the banker unpaid. Any contra-interpretation would defeat the intent of the legislature. The High Court got carried away by the issue of guarantee and guarantors liability and thus has overlooked the true intent and purport of Section 138 of the Act.…….The language, however, has been rather specific as regard the intent of the legislature. The commencement of the section stands with the wordsThe above noted three words are of extreme significance, in particular, by reason of the user of the word- the first three words suggest that in fact for whatever reason if a chequeis drawn on an account maintained by him with a banker in favourof another person for the discharge of any debt or other liability, the highlighted words if read with the first three words at the commencement of Section 138, leave no manner of doubt that for whatever reason it may be, the liability under this provision cannot be avoided in the event the same stands returned by the banker unpaid. The legislature has been careful enough to record not only discharge in whole or in part of any debt but the same includes other liability as well. This aspect of the matter has not been appreciated by the High Court, neither been dealt with or even referred to in the impugned judgment.Looking to the facts of the case and law on the subject, we are of the view that all the four chequesreferred to in both the complaints are presumed to have been given for consideration. The presumption under Section 139 of the Act has not been rebutted by the accused and, therefore, we are of the view that the trial court wrongly acquitted the accused by taking a view that there was no consideration for which the chequeswere given by MunishJain to the complainants. The aforesaid incorrect view was wrongly confirmed by the High Court. We, therefore, set aside the acquittal order and convict accused MunishJain under Section 138 of the Act.20. In view of the aforestatedfacts and legal position, in our opinion, the accused ought to have been held guilty, especially accused no. 4, MunishJain who had signed all the chequesfor M/s A.T. Overseas Ltd. We, therefore, hold MunishJain, accused no. 4 and respondent no. 4 herein, in both the cases guilty of the offence under Section 138 of the Act.