Puran Chand vs Lakhina Furnishing (P) Ltd.

Kanwaljit Singh Ahluwalia, J.—Present revision petition has been preferred by Puran Chand, who was prosecuted in a complaint filed by Lakhina Furnishing (P) Ltd. through its Director Jagdish Lakhina. Seven cheques issued by the petitioner had bounced and for this the trial Court held the petitioner guilty vide judgment and order dated 05.09.2001 of an offence punishable u/s 138 of the Negotiable Instruments Act, 1881 (hereinafter referred to as, ''the Act'') and sentenced him to undergo rigorous imprisonment for a period of one year. Petitioner was also fastened with a compensation of Rs. 4.00 lacs to be paid to the complainant u/s 357 Cr.P.C.

Aggrieved against the same, petitioner had filed an appeal. The appellate Court finding no merit, dismissed the appeal, upheld the conviction and maintained the sentence of the petitioner.

Brief facts of the case can be gathered from the complaint preferred by the respondent-Company, in which it was stated that the complainant-Company was in the business of manufacturing and sale of handloom products at Panipat. The accused petitioner was also dealing with the Company and was purchasing the goods. An on-going account was maintained by the accused petitioner with the complainant Company. The payment of the goods purchased on credit was used to be made against the bills. In discharge of his liability, the accused petitioner had issued certain cheques to the complainant Company. All the cheques were duly signed by the accused petitioner. The particulars of the cheques can be noticed from the following portion of para 3 of the complaint:

...Accused issued cheque No. 093422 dt. 15.11.1998 for Rs. 50,000/- of S.B.P Bilaspur, Cheque No. 093423 for Rs. 50,000/- dt. 15/12/1998 of S.B.P. Bilaspur and Cheque No. 093424 for Rs. 50,000/- of S.B.P. Bilaspur dt. 15-1-1999 and cheque No. 093425 dt. 15/2/1999 of S.B.P. Bilaspur for Rs. 50,000/- to the complainant from his account No. 497. Similarly, the accused issued 03 cheques from his account No. 26193 of Union Bank Of India Panipat bearing cheque No. 0870085 dt. 15/3/1999 for Rs. 25,000/-, cheque No. 0870086 dt. 22/3/1999 for Rs. 25,000/- and cheque No. 0870087 dt. 29/3/1999 for Rs. 50,000/- all of UNION BANK OF INDIA, PANIPAT. At the time of issuing of cheques the accused gave assurance to the complainant that he will keep sufficient amount in his bank account for payment of the above referred 07 cheques.

All the cheques issued by the accused petitioner had bounced with remarks that there were insufficient funds in the account of the accused petitioner. The cheques were exhibited as Ex.P3 to Ex.P5 and Ex.P7 to Ex.P10. Statement of accounts maintained by the complainant Company was exhibited as Ex.P2 and the memos issued by the Union Bank of India were proved as Ex.P6 and Ex.P11. After the cheques had bounced, a statutory notice Ex.P14 was duly served upon the accused petitioner.

Rajender Singh Walia, Godown Keeper from State Bank of India, G.T. Road, Panipat was examined as PW-1. S.K. Sachdeva from Union Bank of India appeared as PW-2; Ishwar Kumar Khurana, Record Keeper from Punjab National Bank, Panipat Branch as PW-3 and Jagdish Lakhina Director of the complainant Company as PW-5.

Thereafter, statement of the accused petitioner u/s 313 Cr.P.C. was recorded and all incriminating circumstances were put to him. He stated that Lakhina Furnishing (P) Ltd. before commencing business with the petitioner-firm had demanded certain cheques from him as security and thus, those cheques were issued as a security.

Both the Courts below have held that the complainant Company has proved to the hilt that the accused petitioner had committed offence punishable u/s 138 of the Act.

Mr. Gurdev Singh, Advocate appearing for the petitioner, has made following three submissions:

(a) Firstly, it is submitted that the notice Ex.P14 issued on behalf of the complainant Company was invalid. It is submitted that from a perusal of para 1 of the complaint it is evident that the resolution was passed by the complainant Company to prosecute the accused petitioner on 2nd May, 1999, whereas the notice was issued much prior thereto, i.e. on 12th February, 1999 and as such on that day there was no resolution empowering Jagdish Lakhina to issue the notice.

(b) It is submitted that the complaint had not been filed by an authorized person. In support of this contention, learned Counsel has urged that the resolution Ex.P1 had not been proved. Though, Jagdish Lakhina in his evidence has stated that the Company had passed a resolution in his favour, the original resolution was not brought before the Court. Neither the same was annexed with the complaint nor was tendered into evidence. It is stated that Ex.P1 is a copy of the resolution, which is signed by one Director, whereas there are two Directors of the Company and the second Director, namely Vikas Lakhina had not signed the same.

To fortify this submission, learned Counsel has placed reliance upon a judgment rendered by Hon''ble Apex Court in ''L.I.C. of India and Anr. v. Ram Pal Singh Bisen'' 2010 (2) SCR 217 to say that the document must be proved as per the procedure prescribed. A reference has been made to the following portion of the judgment rendered in Ram Pal Singh Bisen''s case (supra):

Under the Law of Evidence also, it is necessary that contents of documents are required to be proved either by primary or by secondary evidence. At the most, admission of documents may amount to admission of contents but not its truth. Documents having not been produced and marked as required under the Evidence Act cannot be relied upon by the Court. Contents of the document cannot be proved by merely filing in a Court.

(c) Thirdly, it is stated that no presumption u/s 139 of the Act can be drawn against the petitioner. Learned Counsel has referred to the cross examination of Jagdish Lakhina, wherein he had stated that the cheques were in round figures and they were paid in advance for delivery of the goods. It is submitted that as such, the payment made in advance is to be treated as security and when the cheques were issued, there was no existing debt or liability.

In support of this argument, reliance has been placed upon a judgment rendered by Bombay High Court in ''Goa Handicrafts, Rural and Small Scale Industries Development Corporation Ltd. v. Samudra Ropes Pvt. Ltd. and Ors.'' 2005 (4) RCC 684; a judgment rendered by Hon''ble the Apex Court in ''Krishna Janardhan Bhat v. Dattatraya G. Hegde'' 2008 (1) RCC 577 and another judgment of Hon''ble the Apex Court rendered in ''Kumar Exports v. Sharma Carpets'' 2009 (1) RCC 678.

I am not impressed with all these arguments.

In the complaint, it is stated that on 2nd May, 1999, the resolution was passed authorizing its Director, Jagdish Lakhina to file a complaint. Nowhere in the cross examination, it had been asked that at the time of issuing notice, was there any resolution in favour of the Director to look after and manage the legal affairs of the Company. A resolution, which empowers a Director of the Company to defend or initiate prosecution or issue a notice, existed at the time when the notice was issued, need not be proved by the Director until a specific challenge is made to such an empowerment.

So far as second submission is concerned, the Director while appearing in the evidence, had specifically stated that the resolution was passed in his favour. Much emphasis has been laid on the following portion of his cross examination. The same, when translated into English, reads as under:

Neither I have brought the original resolution Ex.P1 nor when my examination in-chief was made I had brought the same. We have got two Directors of the Firm, one is Jagdish Lakhina and another is Vikas Lakhina. On the resolution there is no date. Ex.P1 bears my signatures. There are no signatures of the other Director.

Ex.P1 is a copy of the resolution. The resolution in fact is passed in the proceedings-book of the Company, which was not summoned in defence. Nor any application was filed when the cross examination of the witness had to commence that he should bring the record pertaining to the resolution.

The third submission relates to an on-going account of the parties. The goods were delivered and the cheques were issued. Even if, a stray line from the cross examination says that the cheques were issued in advance, it has nowhere been stated that in pursuance of the cheques, no goods were delivered to the petitioner. The case of the petitioner in cross-examination is that the goods were returned, however, in his statement recorded u/s 313 Cr.P.C. the accused had stated that these cheques were issued towards security. Therefore, the judgments relied upon in support of this argument are not attracted.

Can it be said that if the cheques are paid in advance and goods are delivered later-on, the petitioner is not bound to make the payment of such cheques. An analogy can be drawn, say, where a tenant issues a cheque for monthly payment of rent in advance and after the end of month if the cheque gets bounced, as to whether the payment made in advance is to be treated towards existing debt or liability or not?

When the cheque was presented, a liability was existing. Therefore, I find no reason to disturb the findings of guilt recorded by both the courts below.

In the present case, cheques were issued in the months of December 1998, February 1999 and March 1999. A period of about eleven years is going to elapse. The petitioner has suffered mental pain and agony of a protracted trial. The trial Court had awarded compensation of Rs.4.00 lacs, which was not stayed by this Court. In these circumstances, this Court is of the opinion that ends of justice will be fully met in case the sentence awarded to the petitioner is reduced from one year to six months rigorous imprisonment.

With the observations made above, present revision petition is disposed of.