Case: Rajneesh Aggarwal Vs. Amit J. Bhalla

2. The complainant is the appellant against the impugned orders dated 13th August, 1999 of a learned Single Judge of the Himachal Pradesh High Court in three criminal miscellaneous petitions filed under Section 482 of the Code of Criminal Procedure. By the impugned orders, the learned Judge quashed three criminal complaints filed under Section 138 read with Section 141 of the negotiable Instruments Act. Admittedly, three cheques had been given to the appellant, drawn on Bank of Baroda, Parliament Street, New Delhi, representing different amounts, amounting to Rs. 2,32,600/in all. these cheques were presented by the appellant for encashment, but the same were returned with the endorsement "Payment stopped by the drawer". The appellant, therefore, served notices on the respondent, calling upon him to pay the amount of cheques within 15 days of the receipt of the notice. Since the respondent failed to pay the amount, the complaints were filed in the Court of Chief Judicial Magistrate, Kullu. The learned Magistrate proceeded to hold inquiry under Section 202 of the Code of Criminal Procedure and thereafter took cognizance of the offence and directed issuance of process. The accused respondent challenged the order of the Magistrate, issuing process by filing application under Section 482 inter alia on the ground that the stoppage of payment by the drawer does not constitute an offence under Section 138 of the negotiable Instruments Act and service of notice, as contemplated under proviso (b) to Section 138 of the Act has not been proved. Those petitions however were dismissed by the High Court by order dated 25.3.1998. It was held by the High Court that in view of the judgment of the Supreme Court in M/s Modi Cements Limited v. Shri Kuchil Kumar Nandi, JT 1998(2) SC 198 : 1998(2) RCR (Crl.) 77 (SC), there is no merit in any of the petition and the same accordingly stand rejected. It was, however observed that the accused shall be at liberty to raise all such points, as may be available to him during the trial of the case before the trial Court. After dismissal of respondents application filed under Section 482 of the Code of Criminal Procedure, the respondent filed application before the Magistrate for recalling the issuance of process. The Magistrate however dismissed those applications. The accused, therefore, filed the petitions before the High Court again under Section 482. The High Court having allowed the application filed under Section 482 by the impugned orders dated 1.2.1999, the complainant has preferred these appeals against the same. Two contentions had been raised before the High Court by the accused :(1) Cheques had been issued in the capacity of the Director of the company to whom the watches were supplied, but the complaint has been filed without impleading the company as accused and as such the same is not maintainable; and(2) In the absence of notice, as contemplated by clause (b) of the proviso to Section 138 of the Negotiable Instruments Act, criminal proceedings cannot be proceeded with.The High Court rejected the first contention and held that the criminal prosecution would lie under Section 138 of the Negotiable Instruments Act, without impleading the company of which the accused is the Director as the party. But so far as the second contention is concerned, the High Court came to the conclusion that the notice that was issued by the complainant on account of dishonour of the cheques having been issued to the accused in his individual capacity and not having been issued to the drawer thereof, no offence can be said to have been committed by the company M/s. Bhalla Techtran Industries Limited, and, therefore, the criminal proceedings cannot be proceeded against by taking recourse to Section 141 of the Act. It is this conclusion of the High Court, which is the subject matter of challenge in these appeals.

Court's reasoning:
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.