Case: Rajneesh Aggarwal Vs. Amit J. Bhalla

Act, and therefore, the conclusion of the High Court is unassailable. Mr. Sanghi further urged that the conclusion of the High Court to the effect that supply of watches made by the respondent to the company M/s Bhalla Techtran Industries Ltd. and cheques involved in the case were also issued by the said company through its Director that is the petitioner and in view of such admitted facts, the petitioner cannot be proceeded against for the offence under Section 138 of the Act in his individual capacity, is the only conclusion permissible under the facts and circumstances of the case and, therefore, the order quashing the criminal proceedings should not be interfered with. According to Mr. Sanghi, the complainant has been prosecuting the accused Amit Bhalla in his individual capacity, though categorically in the complaint petition, it has been stated that the cheques had been issued by M/s Bhalla Techtran Industries Ltd., through Mr. Amit J. Bhalla as a Director and consequently, so far as the company is concerned, who is the real drawer of the cheque, no notice can be said to have been issued, and, therefore, criminal proceeding has rightly been quashed. Mr. Sanghi urged that the respondent not being the drawer of the cheque, could not have been prosecuted in his individual capacity inasmuch as there is no vicarious liability of a Director in the criminal matters. Mr. Sanghi also contended that the ultimate decision of quashing of criminal proceeding can be supported on the further ground that the complaint is purely one of civil nature and the complainant has abused the process of law by initiating criminal prosecution as an armtwisting device and in this view of the matter, the case does not warrant interference by this Court in exercise of jurisdiction under Article 136 of the Constitution. Mr. Sanghi also urged that in course of the proceedings, the entire amount involved in the three cheques having been deposited, the criminal proceedings should be allowed to be continued and the order, quashing the criminal proceedings should not be interfered with.6. Having regard to the contentions raised by the counsel for the parties, two questions really arise for our consideration :(1) Was the High Court justified in coming to the conclusion that the drawer has not been duly served with notice for payment?(2) Whether deposit of the entire amount covered by three cheques, while the matter is pending in this Court, would make any difference? So far as the first question is concerned, it is no doubt true that all the three requirements under clauses (a),(b) and (c) must be complied with before the offence under Section 138 of the Negotiable Instruments Act, can be said to have been committed and Section 141 indicates as to who would be the persons, liable in the event the offence is committed by a company. The High Court itself on facts, has recorded the findings that conditions (a) and (b) under Section 138 having been duly complied with and, therefore, the only question is whether the conclusion of the High Court that condition (c) has not been complied with, can be said to be in accordance with law. Mere dishonour of a cheque would not raise to a cause of action unless the payee makes a demand in writing to the drawer of the cheque for the payment and the drawer fails to make the payment of the said amount of money to the payee. The cheques had been issued by M/s Bhalla Techtran Industries Limited, through its Director Shri Amit Bhalla. The appellant had issued notice to said Shri Amit J. Bhalla, Director of M/s Bhalla Techtran Industries Limited. Notwithstanding the service of the notice, the amount in question was not paid. The object of issuing notice indicating the factum of dishonour of the cheques is to give an opportunity to the drawer to make payment within 15 days, so that it will not be necessary for the payee to proceed against in any criminal action, even though the bank dishonoured the cheques. It is Amit Bhalla, who had signed the cheques as the Director of M/s Bhalla Techtran Industries Ltd. When the notice was issued to said Shri Amit Bhalla, Director of M/s Bhalla Techtran Industries Ltd., it was incumbent upon Shri Bhalla to see that the payments are made within the stipulated period of 15 days. It is not disputed that Shri Bhalla has not signed the cheques, nor is it disputed that Shri Bhalla was not the Director of the company. Bearing in mind the object of issuance of such notice, it must be held that the notices cannot be construed in a narrow technical way without examining the substance of the matter. We really fail to understand as to why the judgment of this Court in Bilakchand Gyanchand Co., 1999(5) SC 693, will have no application. In that case (sic) Court and it is in that connection, to prove the bona fide, the respondent deposited the amount covered under all the three cheques in the Court, but the complainants counsel insisted that if there is going to be a settlement, then all the pending cases between the parties should be settled, which was, however not agreed to by the respondent and, therefore, the matter could not be settled. So are as the criminal complaint is concerned, once the offence is committed, any payment made subsequent thereto will not absolve the accused of the liability of criminal offence, though in the matter of awarding of sentence, it may have some effect on the Court trying the offence. But by no stretch of imagination, a criminal proceeding could be quashed on account of deposit of money in the Court or that an order of quashing of criminal proceeding, which is otherwise unsustainable in law, could be sustained because of the deposit of money in this Court. In this view of the matter, the so-called deposit of money by the respondent in this Court is of no consequence.

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

Explanation:
1[ds]So far as the first question is concerned, it is no doubt true that all the three requirements under clauses (a),(b) and (c) must be complied with before the offence under Section 138 of the Negotiable Instruments Act, can be said to have been committed and Section 141 indicates as to who would be the persons, liable in the event the offence is committed by a company. The High Court itself on facts, has recorded the findings that conditions (a) and (b) under Section 138 having been duly complied with and, therefore, the only question is whether the conclusion of the High Court that condition (c) has not been complied with, can be said to be in accordance with law. Mere dishonour of a cheque would not raise to a cause of action unless the payee makes a demand in writing to the drawer of the cheque for the payment and the drawer fails to make the payment of the said amount of money to the payee. The cheques had been issued by M/s Bhalla Techtran Industries Limited, through its Director Shri Amit Bhalla. The appellant had issued notice to said Shri Amit J. Bhalla, Director of M/s Bhalla Techtran Industries Limited. Notwithstanding the service of the notice, the amount in question was not paid. The object of issuing notice indicating the factum of dishonour of the cheques is to give an opportunity to the drawer to make payment within 15 days, so that it will not be necessary for the payee to proceed against in any criminal action, even though the bank dishonoured the cheques. It is Amit Bhalla, who had signed the cheques as the Director of M/s Bhalla Techtran Industries Ltd. When the notice was issued to said Shri Amit Bhalla, Director of M/s Bhalla Techtran Industries Ltd., it was incumbent upon Shri Bhalla to see that the payments are made within the stipulated period of 15 days. It is not disputed that Shri Bhalla has not signed the cheques, nor is it disputed that Shri Bhalla was not the Director of the company. Bearing in mind the object of issuance of such notice, it must be held that the notices cannot be construed in a narrow technical way without examining the substance of the matter. We really fail to understand as to why the judgment of this Court in Bilakchand Gyanchand Co., 1999(5) SC 693, will have no application. In that case (sic) Court and it is in that connection, to prove the bona fide, the respondent deposited the amount covered under all the three cheques in the Court, but the complainants counsel insisted that if there is going to be a settlement, then all the pending cases between the parties should be settled, which was, however not agreed to by the respondent and, therefore, the matter could not be settled. So are as the criminal complaint is concerned, once the offence is committed, any payment made subsequent thereto will not absolve the accused of the liability of criminal offence, though in the matter of awarding of sentence, it may have some effect on the Court trying the offence. But by no stretch of imagination, a criminal proceeding could be quashed on account of deposit of money in the Court or that an order of quashing of criminal proceeding, which is otherwise unsustainable in law, could be sustained because of the deposit of money in this Court. In this view of the matter, thedeposit of money by the respondent in this Court is of no consequence.