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Judgment
Akil Kureshi, J.—In this group of petitions, since common question of facts and law arises, they are, therefore, heard together and are being disposed of by this common judgment.
All the petitions are filed by the original accused Nos. 1, 2 and 3. They seek quashing of the respective complaints which are pending before the learned Metropolitan Magistrate, Ahmedabad. Petitioner No. 1 is company registered under the provisions of the Companies Act, 1956. Petitioner Nos. 2 and 3 are its Directors. Respondent No. 2 is original complainant. He has filed several cheque bouncing complaints before the learned Magistrate which are pending. Petitioners herein are shown to be accused No. 1, 2 and 3 in such complaints. It is an admitted position that the cheques in question were signed by the original accused No. 5. In other words, neither the petitioner No. 2, nor petitioner No. 3 are signatories to the cheques in question.
It appears that there were business dealings between the petitioners and respondent No. 2. Certain cheques were issued in favour of the respondent No. 2 for and on behalf of the petitioner No. 1 - company. Upon presentation, however, these cheques were returned by the bank with endorsement ''no image found'' or ''drawee''s signature incomplete/illegible''. Respondent No. 2, thereupon, issued statutory notices to all the accused including the present petitioners. Since no payment was made within the notice period, he filed separate complaints for cheque bouncing before learned Metropolitan Magistrate, Ahmedabad. Full details of the cheque amounts involved, date of return and the reasons for its dishonour as indicated in the petition, are given in the table below:
------------------------------------------------------------------------------------------ Sr. Slp. Criminal Criminal case Cheque Date Return Amount Total Endors- No. App. of 2010 No. of 2009 Number Date amount ement ------------------------------------------------------------------------------------------ 1. 896 6731 924350, 18.9.08 18.03.09 551983.0 631097.94 NIF * 925114 19.9.08 '' 40295.45 925115 20.9.08 '' 38819.49 ------------------------------------------------------------------------------------------ 2. 897 6732 924347 17.09.08 16.03.09 550550.00 960975.00 NIF * 924549 13.09.08 '' 410425.00 ------------------------------------------------------------------------------------------ 3. 898 6733 925108 13.09.08 18.03.09 30261.50 95677.56 NIF * 925109 14.09.08 ''DIS- 39893.89 925110 15.09.08 ILL 25522.17 ------------------------------------------------------------------------------------------ 4. 899 6734 924349 15.08 3.3.09 551900.00 1686893.00 DIS- 924357 2.9.08 4.3.09 536500.00 ILL * 924366 30.8.08 16.3.09 598493.00 ------------------------------------------------------------------------------------------ 5. 900 6735 923122 22.9.08 20.3.09 301782.13 946600.13 NIF * 924346 22.9.08 160918.00 924542 23.9.08 483900.00 ------------------------------------------------------------------------------------------ 6. 901 6736 925111 16.9.08 18.3.09 41372.79 124384.74 NIF * 925112 17.9.08 41774.33 925113 18.9.08 41237.62 ------------------------------------------------------------------------------------------ 7. 902 6737 924358 4.9.08 7.3.09 536500.00 1609500.00 DIS- 924359 6.9.08 536500.00 ILL * 924360 8.9.08 536500.00 ------------------------------------------------------------------------------------------ 8. 903 6738 924547 9.9.08 12.3.09 227220.00 1174120.00 NIF * 924361 10.9.08 536500.00 924539 11.9.08 410400.00 ------------------------------------------------------------------------------------------ 9. 904 6739 925105 10.9.08 18.3.09 30220.35 956320.74 NIF * 925106 11.9.08 30518.09 925107 12.9.08 34882.30 ------------------------------------------------------------------------------------------ 10. 905 6740 925102 7.9.08 18.3.09 35164.36 100757.70 NIF * 925103 8.9.08 35056.64 925104 9.9.08 30536.70 ------------------------------------------------------------------------------------------ 11. 906 6741 923340 5.8.08 5.2.09 467625.00 1402878.00 NIF * 923342 9.8.08 9.2.09 467625.00 923343 11.8.08 11.2.09 467628.00 ------------------------------------------------------------------------------------------ 12. 907 6742 923414 2.8.08 31.1.09 452391.00 1809562.00 NIF * 923416 6.8.08 6.2.09 452391.00 923417 8.8.08 10.2.09 452392.00 923418 10.8.08 10.2.09 452388.00 ------------------------------------------------------------------------------------------ 13. 908 6743 924917 15.10.08 10.4.09 383329.00 1087556.02 DIS- 924923 17.10.08 402444.00 ILL * 923424 13.10.08 301783.02 ------------------------------------------------------------------------------------------ 14. 909 6744 925026 16.10.08 11.4.09 364286.00 1092856.00 DIS- 925025 15.10.08 364285.00 ILL * 925024 14.10.08 364285.00 ------------------------------------------------------------------------------------------ 15. 910 6745 925017 9.10.08 11.4.09 360558.00 1055053.00 DIS- 925018 11.10.08 360258.00 ILL * 925023 13.10.08 333937.00 ------------------------------------------------------------------------------------------ 16. 911 6746 925020 21.10.08 20.4.09 346665.00 979330.00 DIS- 925021 22.10.08 346665.00 ILL * 926279 22.10.08 286000.00 ------------------------------------------------------------------------------------------ 17. 912 6747 924351 24.9.08 24.3.09 559575.00 1527375.00 DIS- 924543 24.9.08 483900.00 ILL * 924544 25.9.08 483900.00 ------------------------------------------------------------------------------------------ 18. 913 6748 926275 9.11.08 5.5.09 405000.00 1141935.00 DIS- 925879 14.11.08 341935.00 ILL* 926281 14.11.08 395000.00 ------------------------------------------------------------------------------------------ 19. 914 6749 924536 23.8.08 24.2.09 321450.00 914717.13 NIF & 923421 17.8.08 21.2.09 323421.00 Signature 924891 22.8.08 21.2.09 924891.00 differs * ------------------------------------------------------------------------------------------ 20. 915 6750 924915 1.10.08 30.3.09 387710.00 1016736.13 DIS- 924549 30.9.08 327244.00 ILL * 923423 30.9.08 301782.13 ------------------------------------------------------------------------------------------ 21. 916 6751 925089 29.10.08 29.4.09 359514.00 1085516.00 DIS- 925090 30.10.08 363001.00 ILL * 925091 31.10.08 363001.00 ------------------------------------------------------------------------------------------ 22. 917 6752 925085 25.10.08 24.4.09 332660.00 1051697.00 DIS- 925087 27.10.08 359514.00 ILL * 925088 28.10.08 359514.00 ------------------------------------------------------------------------------------------ 23. 918 6753 925022 23.10.08 23.4.09 346665.00 965624.00 DIS- 925085 24.10.08 332669.00 ILL * 926080 25.10.08 86290.00 ------------------------------------------------------------------------------------------ 24. 919 6754 925082 17.10.08 11.4.09 382166.00 1146499.00 DIS- 925083 18.10.08 382166.00 ILL * 925084 20.10.08 382167.00 ------------------------------------------------------------------------------------------ 25. 920 6755 924925 10.10.08 9.4.09 402440.00 1177329.00 DIS- 924914 12.10.08 387710.00 ILL * 924920 13.10.08 387175.00 ------------------------------------------------------------------------------------------ 26. 921 6756 924546 27.9.08 26.3.09 483916.00 1294966.00 DIS- 924545 26.9.08 483900.00 ILL * 924548 29.9.08 327150.00 ------------------------------------------------------------------------------------------ 27. 922 7392 925092 1.11.08 20.5.09 363002.00 1079690.00 DIS- 925093 3.11.08 358344.00 ILL* 925094 4.11.08 358344.00 ------------------------------------------------------------------------------------------ 28. 923 7393 925887 24.11.08 18.5.09 499617.00 1441434.00 DIS- 925881 25.11.08 499617.00 ILL * 925889 26.11.08 442200.00 ------------------------------------------------------------------------------------------ 29. 924 7394 926278 20.11.08 16.5.09 26911.94 1026145.91 DIS- 925885 21.11.08 499617.00 ILL * 925886 22.11.08 499617.00 ------------------------------------------------------------------------------------------ 30. 925 7395 925097 7.11.08 20.5.09 350152.00 687478.00 DIS- 925099 10.11.08 337326.00 ILL * ------------------------------------------------------------------------------------------ 31. 926 7396 925890 27.11.08 22.5.09 442200.00 1326600.00 DIS- 925891 28.11.08 442200.00 ILL * 925892 29.11.08 442200.00 ------------------------------------------------------------------------------------------ 32. 927 7397 925116 11.11.08 20.5.09 337327.00 674654.00 DIS- 925117 12.11.08 337327.00 ILL * ------------------------------------------------------------------------------------------ 33. 928 7398 925003 6.12.08 26.5.09 497024.00 1382011.00 DIS- 925896 4.12.08 442200.00 ILL * 926901 5.12.08 442787.00 ------------------------------------------------------------------------------------------ 34. 929 7399 925906 10.12.08 26.5.09 497026.00 1491074.00 DIS- 925905 9.12.08 497024.00 ILL * 925904 8.12.08 497024.00 ------------------------------------------------------------------------------------------ 35. 930 7400 925907 11.12.08 3.6.09 240351.00 1032591.00 DIS- 925908 12.12.08 396120.00 ILL * 925909 13.12.08 396120.00 ------------------------------------------------------------------------------------------ 36. 931 7401 926276 14.11.08 8.5.09 405000.00 1153935.91 DIS- 925880 15.11.08 341935.91 ILL * 925881 17.11.08 407000.00 ------------------------------------------------------------------------------------------ 37. 932 7402 925895 3.12.08 26.5.09 442200.00 1326600.00 DIS- 925894 2.12.08 442200.00 ILL * 925893 1.12.08 442200.00 ------------------------------------------------------------------------------------------ 38. 933 7403 926282 17.11.08 9.5.09 395000.00 1206042.00 DIS- 925882 18.11.08 407000.00 ILL * 926277 19.11.08 404042.00 ------------------------------------------------------------------------------------------ 39. 934 7404 925884 20.11.08 14.5.09 407667.04 1210472.04 DIS- 925883 19.11.08 407000.00 ILL * 926283 19.11.08 395505.00 ------------------------------------------------------------------------------------------ 40. 935 7405 925095 5.11.08 20.5.09 358343.00 1058648.00 DIS- 925096 6.11.08 350152.00 ILL * 925098 8.11.08 350153.00 ------------------------------------------------------------------------------------------ No Image found - Signature (NIF) Drawee signature incomplete - illegible - ILL ------------------------------------------------------------------------------------------ It is the contention of the petitioners that no case is made out against them. All complaints, therefore, need to be quashed.
On the other hand, respondent No. 2 has opposed the petitions by filing detailed affidavit contending inter alia that cheques were issued on behalf of the company for payment of the goods received. Previously, cheques were signed by the same signatory were honoured. Petitioners with malafide intention and to defraud the complainant changed the authorised signatory. Cheques were signed on behalf of the company and the company can not, therefore, be exonerated. It is further contended that the petitioner is run and managed by one person i.e. Cyrus M. Bahadurji (petitioner No. 2). He cannot shift his responsibility on some one else.
I have heard learned Counsel appearing for the parties. Counsel for the petitioners contended that;
(1) Signatory of the cheques - original accused No. 5 had filed individual quashing petitions before this Court. All these petitions came to be allowed by order dated 19.04.2010 passed in Special Criminal Application No. 2118 to 2143 of 2009 and connected matters.
(2) That the reasons stated for dishonour of the cheques were ''no image found'' or ''drawnee''s signature is incomplete or illegible''. The reasons are not sufficient to make out a case u/s 138 of the Negotiable Instruments Act. Reliance was placed on the decision of the Apex Court in the case (I) Vinod Tanna and Another Vs. Zaheer Siddiqui and Others, and decision of the learned Single Judge of the Bombay High Court in the case of Mustafa Surka v. Jay Ambe Enterprise and Anr. 2010 (1) Bom.C.R. (Cri.) 758.
(3) It was contended that neither the petitioner No. 2 nor the petitioner No. 3 were signatories to the cheques. Respondent No. 2 had failed to demonstrate how they were involved in the day to day functioning of the company and responsible to the working of the company. Under the circumstances, question of their vicarious liability would not arise.
On the other hand, learned Counsel Mr. M.B. Gohil relied upon the affidavit-in-reply of the respondent No. 2 and contended that the cheques were issued for repayment of the legal dues. Complainant company had provided the goods to the petitioners. In the past, such cheques were cleared. With malafide intention, authorization with the bank was changed.
6.1 He relied upon the decision in the case of S.M.S. Pharmaceuticals Ltd. Vs. Neeta Bhalla and Another, wherein the Apex Court has discussed the question of liability of the Directors of a company for dishonour of the cheque issued for and on behalf of the company.
Having heard, thus, learned Counsel for the parties, I find that previous bench in the judgment dated 19.04.2010 relying upon the decision in the case Vinod Tanna (Supra) and the learned Single Judge of the Bombay High Court in the case of Mustafa Surka v. Jay Ambe Enterprise and Anr. (Supra) had quashed the complaints qua the original accused No. 5. It may be noted that the said accused was signatory to the cheques. Learned Judge concluded the issue in the following manner:
In the instant case, there is no dispute about the endorsement that "drawers signature differs from the specimen supplied" and/or "no image found-signature" and/or "incomplete signature/illegible" and for return/dishonour of cheque on the above endorsement will not attract ingredients of Section 138 of the Act and insufficient fund as a ground for dishonouring cheque cannot be extended so as to cover the endorsement "signature differed from the specimen supplied" or likewise. If the cheque is returned/bounced/dishonoured on the endorsement of "drawers signature differs from the specimen supplied" and/or "no image found-signature" and/or "incomplete signature/illegible", the complaint filed u/s 138 of the Act is not maintainable. Hence, a case is made out to exercise powers u/s 482 of the Code of Criminal Procedure, 1973 in favour of the petitioner.
Considering the above and on perusal of the record of the case and the law laid down by the learned Judge of the High Court of Judicature at Bombay and decision of the Apex Court in the case of Vinod Tanna (supra) and plain reading of Section 138 of the Act, I am in complete agreement with the reasoning and grounds advanced by the learned Judge of the High Court of Judicature at Bombay in a well considered decision. Therefore, I am inclined to allow all these petitions by quashing and setting aside the impugned process issued by the learned Magistrate pursuant to filing of Criminal cases arising out of dishonour of cheques on the ground of "drawers signature differs from the specimen supplied" and/or "no image found-signature" and/or "incomplete signature/illegible".
In view of the above discussion, all these petitions succeed and same are allowed and the impugned process issued by the learned Metropolitan Magistrate, Negotiable Instrument Act, Court No. 7 at Ahmedabad and further proceedings of the complaints impugned in all these petitions qua the petitioner are quashed and set aside.
Though from the said decision, it appears that, the petitioner therein - original accused No. 5 had resigned as Director of the company before the dishonour of the cheques, this was not the ground on which the complaints were quashed. In view of the said decision, in the present cases also, all the complaints deserve to be quashed. In the case of Vinod Tanna (Supra), the Apex Court held and observed as under:
Mr. Bobde, learned Senior Counsel appearing for the appellants contends that the High Court has failed to appreciate the ratio of the judgment of this Court in Modi Cements case inasmuch as Paragraph 11of the said judgment, the Court had recorded a conclusion that it is in complete agreement with the legal proposition enunciated in Electronics Trade & Technology Development Corporation Ltd. v. Indian Technologists & Engineers (Electronics) (P) Ltd. as well as K.K. Sidharthan v. T.P. Praveena Chandran. In these two cases, the cheque in question had been dishonoured because of insufficiency of funds or the amount exceeded the arrangement made with the bank and in Electronics Trade & Technology Development Corporation Ltd. the cheque had not been honoured because of the direction from the drawer regarding stop-payment. In fact, a plain reading of Section 138 of the Act makes it crystal clear that unless the conditions precedent mentioned therein are satisfied, the said penal provision cannot be attracted. In this view of the matter and on the admitted facts, as referred to in paragraph 5 of the impugned judgment, we have no hesitation in coming to the conclusion that the High Court committed error in relying upon the judgment of this Court in Modi Cements and refusing to quash the criminal proceedings. We accordingly set aside the impugned judgment of the High Court, quash the criminal proceedings and allow the criminal appeal.
In the result, all the petitions are allowed. Respective complaints of cheque bouncing pending, details of which are available in the chart contained in this judgment, before the Court of learned Metropolitan Magistrate, Ahmedabad are quashed qua the present petitioners also.