Navrattan Jain vs Capital Leasing and Finance Company

M.L. Singhal, J.—This is a Criminal Misc. Petition filed by Navrattan Jain whereby he has sought the quashing of complainant Annexure P-3 and the order Annexure P-6, passed by the Judicial Magistrate First Class, Chandigarh, summoning him as an accused and the show cause notice, Annexure P-7, issued to him by the Magistrate, to show cause why he be not convicted u/s 138 of the Negotiable Instruments Act.

The facts which have given rise to this Criminal Misc. are as follows:

M/s. Capital Leasing and Finance Company instituted complaint u/s 138 of the Negotiable Instruments Act 1881 (as amended by Act No. 66 of 1988) against Navrattan Jain on the allegations that Navrattan Jain, issued cheque No. NMCT/E697469, dated 13.1.1993 for Rs. 1 lakh drawn on New Bank of India, Sector 26-D, Chandigarh to the complainant/M/s. Capital Leasing and Finance Company towards the repayment/discharge of his debt liability towards the complainant firm. The said cheque was duly presented to the bankers of Sh. Navrattan Jain by the complainant, through their bankers. The said cheque was returned unpaid by the bankers of Sh. Navrattan Jain with the remarks ''Insufficient funds'' as there were no sufficient funds available in the bank account of Sh. Navrattan Jain.

After the cheque had been returned dishonoured/as unpaid the complainant firm issued notice of demand to Sh. Navrattan Jain asking for the payment of the amount of Rs. 1 lakh being the value of the cheque not honoured. This notice of demand was sent to him through registered A.D. post as well as under postal certificate on 1.5.1993. So far as notice of the demand of amount of cheque and the return of the cheque unpaid is concerned, that was duly served on him on 5.5.1993. A period of 15 days was allowed to elapse since after the receipt of notice of demand by him. No payment was made upto 20.5.1993 and therefore, M/s. Capital Leasing and Finance Company filed complaint u/s 138 of the Negotiable Instruments Act against Navrattan Jain."

After recording preliminary evidence, Magistrate found that there were sufficient grounds to proceed against Navrattan Jain and, therefore, he passed an order summoning him for trial (Annexure P-6). On 17.8.1993, the Magistrate served upon him notice calling upon him to show cause why he be not punished u/s 138 of the Negotiable Instruments Act.

Navrattan Jain has sought the quashing of the complaint the order summoning him the show cause notice issued on the ground that there were business dealings between them and because of business dealings, he (Navrattan Jain) had issued the aforesaid cheque dated 18.1.1992. It was reported by M/s. Capital Leasing and Finance Company that due to cutting on the cheque the same could not be encashed and later on the same got misplaced somewhere. On being satisfied from the statement of the complainant firm that the cheque had been lost the firm requested Navrattan Jain that the account between them should be cleared. As a result, cheque No. NMCT/697473, dated 27.3.1993 for a sum of Rs. 40,000/- was given to the firm. What cheque was duly presented by the firm to its bankers and that cheque was passed in his account on 30.3.1993. Payment to the tune of a sum of Rs. 40000/- was made to the firm as certified by the Bank. On account of that payment certified vide certificate Annexure P-1 there was final settlement of account between them and he did not bother about the fate of cheque No. 697469.

It has been submitted by the Learned Counsel for the Petitioner that in the complaint there is no mention of the date when the cheque No. 697469 was presented !to the bank and when this cheque was dishonoured. In support of his submission, he was drawing my attention to Subhash Chander Goyal v. Siri Pal Jain, 1993 ISJ (Banking) 378 where it was held that when there is no mention as to on what date the cheque was dishonoured and on what date the required notice u/s 138 of the Negotiable Instruments Act was issued, it will not be fair to place the Petitioner on trial. In this case, there is written statement filed in reply to the application u/s 482 of the Code of Criminal Procedure averring that cheque was presented and returned dishonoured on 24.4.1993.

It has been next submitted that it is improbable that Cheque No. 697473 dated 27.3.1993 in favour of M/s. Capital Leasing and Finance Company was presented to the bank on 30.3.1993 and cheque No. 697469 dated 15.1.1993 was not presented to the bank till 27.3.1993. In the nature of things cheque No. 697469 dated 13.1.1993 would be counted earlier than cheque No. 697473 dated 27.3.1993. It has been further stated that in fact cheque No. 697469 was not presented to the Bank at all as they arrived at compromised and M/s. Capital Leasing and Finance Company agreed to receive a sum of Rs. 40,000/- in toto and they received cheque No. 697469 dated 27.3.1993 for Rs. 40,000/- and got that cheque encashed on 30.3.1993. There is certificate by the banker to this effect, Annexure P-1, that cheque No. 697473 dated 27.3.1993 favouring M/s. Capital Leasing and Finance Company for Rs. 40,000/- was presented on 30.3.1993 in clearing through Jammu and Kashmir Bank, Sector 17-C Chandigarh which was passed in the account of M/s. P.F. Financers. It is not coming forth as to how the Learned Counsel for the Petitioner has been able to build up this argument, so far there is no material on the record to sustain this argument.

It has been further submitted that the Petitioner never received notice as envisaged by Section 138 of the Negotiable Instrument Act calling upon him to make payment of the dishonoured cheque within 15 days of the receipt of notice. If he had received any such notice he would have reiterated the aforesaid facts, in reply, to that notice. He came to know of the institution of the complaint u/s 138 of the Negotiable Instruments Act on the issuance of summons by the Court for his appearance. Suffice it to say as to whether notice served on the Petitioner was according to law or not is purely a question of fact. Evidence shall be led before the Magistrate on the point whether notice Annexure P-4 was served upon Navrattan Jain. If at the trial the complainant fails to produce evidence to show that notice Annexure P-4 was served upon Navrattan Jain, the complaint will fail.

It is true that to fasten criminal liability, it has to be shown that notice of demand was, served on the accused in Rajiv Kumar v. State of U.P 1992, I.S.J. (Banking) 144. It was held that in the absence of the service of notice u/s 138(b) of the Negotiable Instruments Act no prosecution and cognizance of offence is permitted. Section 138 of the Negotiable Instruments Act reads as follows:

Where any cheque drawn by a person on account maintained by him with a banker for payment of any amount of money to another person from out of that account for the discharge, in whole or in part, of any debt or other liability is returned by the Bank unpaid, either because of the amount of money standing to the credit of that account is insufficient to honour the cheque or that it exceeds the amount arranged to be paid from that account by an agreement made with that Bank. Such person shall be deemed to have committed an offence and shall, without prejudice to any other provision of this Act be punished with imprisonment for a term which extend to one year or fine which may extend to twice the amount of the cheque or with both.

Provided that nothing contained in this section shall apply unless:

(a) the cheque has been presented to the Bank within a period of six months from the date on which it is drawn or within the period of its validity whichever, is earlier;

(b) the payee or the holder in due course of the cheque, as the case may be makes a demand for the payment of the said amount of money by giving a notice, in writing to the drawer of the cheque within fifteen days of the receipt of information by him from the bank regarding the return of the cheque as unpaid; and (c) the drawer of such cheque fails to make the payment of the said amount of money to the payee or, as the case may be to the holder in due course of the cheque, within fifteen days of the receipt of the said notice.

Section 142 of the Negotiable Instrument Act reads as under:

Cognizance of offences (1) Notwithstanding anything contained in the Code of Criminal Procedure, 1973 (2 of 1974):

(a) no court shall take cognizance of any offence punishable u/s 138 except upon a complaint in writing made by the payee or, as the case may be, the holder in due course of the cheque;

(b) such complaint is made within one month of the date on which the cause of action arises under Clause (c) of the Proviso to Section 138;

(c) no court inferior to that of a Metropolitan Magistrate or a Judicial Magistrate of the first class shall try any offence punished u/s 138.

It is clear from the provisions of Section 142 of the Act that no court shall take cognizance of any offence punishable u/s 138 of the Negotiable Instruments Act except upon a complaint in writing made by the payee or as the case may be, the holder in due course of the cheque and if such a complaint is made within one month of the date on which the cause of action arises under Clause (c) of proviso to Section 138 of the Negotiable Instruments Act. Magistrate will be able to take cognizance of the offence punishable u/s 138 of the Negotiable Instrument Act if the of the cheque fails to make payment of the amount to the holder in due course of cheque within 15 days of the receipt of the said notice.

In this case however, it is a matter to be determined at the trial as to when the notice was dispatched and when the same was received by Navrattan Jain. Complaint would be competent, if Navrattan Jain is shown to have failed to make payment within 15 days of the receipt of that notice.

It has been further submitted that Sh. A.S. Bindra was authorised to institute the complaint as he is one of the, partners. Before the Magistrate, Harpreet Singh Narang appeared and made statement on 22.5.1993 (Annexure P-5).

Suffice it to show any of the partners could institute complaint when it was a partnership firm. If Harpreet Singh Narang was one of the partners, he could appear before the Magistrate and make statement as partner of the firm saddling Navrattan Jain with liability.

These question which are sought to be canvassed here cannot possibly be gone into while exercising inherent powers vesting in this Court u/s 482 of the Code of Criminal Procedure. These questions will be gone into by the Magistrate at the trial. In State of Haryana v. Bhajan Lal and Ors. 1992 (Suppl. (1) SCC 335, the Supreme Court has enumerated a few cases where powers vesting in this Court u/s 482 of the Code of Criminal Procedure shall be exercised namely wherein criminal proceedings as manifestly attended with mala fade and/or where the proceeding is maliciously instituted with an ulterior motive for wreaking vengeance on the accused and with a view to spite him due to private and personal grudge or wherein the allegations made in the RI.R. or complaint are so absurd and inherently improbable on the basis of which no prudent person can over reach a just conclusion that there is sufficient ground for proceeding against the accused and where the uncontroverted allegations made in the F.I.R. or complaint and the evidence collected in support of the same do not disclose the Commission of any offence and make out a case against the counsel.

In the present case, the allegations made in the complainant do clearly constitute a cognizable offence justifying the filing of this complaint. Facts do disclose some triable issues. As such, complaint cannot be thrown at the threshold. So this petition u/s 482 of the Code of Criminal Procedure is dismissed.