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Issues Involved:
1. Liability under Section 138 of the Negotiable Instruments Act. 2. Requirement of notice under Section 138(b) to the drawer of the cheque. 3. Applicability of Section 141 of the Negotiable Instruments Act to company directors. Issue-wise Detailed Analysis: 1. Liability under Section 138 of the Negotiable Instruments Act: The petitioner, accused No. 2, sought to quash the proceedings under Section 138 of the Negotiable Instruments Act, 1881, arguing that the dishonour of the cheque did not constitute an offence due to the alleged rejection of goods. The court observed that the cheque in question was dishonoured due to "insufficiency of funds" as per the bank's endorsement "exceeds arrangement." The court noted that the complaint alleged the goods were not of sub-standard quality and no complaint was made within thirty days of receipt. The cheque was issued for payment of goods supplied, and its dishonour prima facie brought the case within the purview of Section 138. The court concluded that the opposite party had provided sufficient prima facie material to issue the process, and the contention that the company had no liability could not be determined without proper evidence. 2. Requirement of notice under Section 138(b) to the drawer of the cheque: The petitioner contended that no notice of demand was served upon him, which is a prerequisite under Section 138(b). The court examined the requirement of notice under the proviso to Section 138, which mandates that the payee must give a notice in writing to the drawer of the cheque within fifteen days of the cheque being dishonoured. The petitioner argued that as he signed the cheque, he was the drawer and should have been served notice. However, the court clarified that the liability to make the payment was that of the company, and the company was the drawer of the cheque. The petitioner, as a director, signed the cheque on behalf of the company, making the company the maker of the cheque. Therefore, notice served on the company sufficed. 3. Applicability of Section 141 of the Negotiable Instruments Act to company directors: The court addressed the applicability of Section 141, which holds every person in charge of and responsible to the company for its business liable for offences committed by the company under Section 138. The court noted that the petitioner was being prosecuted as a director in charge of the company under Section 141, along with the company. The court held that no separate notice was required for the director under Section 138(b) when the company had been duly served. The court concluded that the prosecution against the petitioner was maintainable under Section 138 read with Section 141, and there was no ground to quash the proceedings. Conclusion: The court dismissed the revision petition, affirming that the prosecution under Section 138 of the Negotiable Instruments Act was maintainable against both the company and the petitioner as a director. The court found no infirmity in the proceedings and upheld the issuance of process based on the prima facie evidence presented. The judgment emphasized the sufficiency of notice to the company and the applicability of Section 141 to hold directors accountable for offences committed by the company.
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