2017 (12) TMI 845 - HC - Indian Laws

Default to issue distress warrant - dishonor of cheque - The prosecution case, as alleged, against the petitioners is to the effect that one Shrivardhan Kalyani filed a petition of complaint through his authorized attorney, Md. Turban Ansari against M/s. Chakraborty Consultancy Services, a partnership firm and its partners, that is the petitioners herein, alleging that the petitioner nos.2 and 3 were in charge of and responsible to the firm for the running of its day-to-day business and were involved in sale and purchase of equity shares on behalf of the firm. Held that - The petitioners had sought to discharge their onus under Section 139 of the Negotiable Instruments Act by leading evidence through D.W.1 to the effect that immovable property had been conveyed in favour of opposite party no.2 in discharge of their liability towards the opposite party no.2 - Certified copy of the sale deed had been exhibited as Exhibit A. There is nothing in the recitals of the sale deed that the transfer of such property was in discharge of the liability of the petitioners firm towards the opposite party no.2. Evidence had also been led to show that the cheque on presentation was dishonoured due to insufficient funds and in spite of receipt of notice of dishonour no payments were made. There is also evidence on record that the petitioners were in charge of and responsible to the partnership firm for the running of its day-to-day business at the time of commission of the offence. In fact the petitioners had signed the dishonoured cheque in question - the conviction of the petitioners was rightly recorded. Revision petition disposed off.

Issues involved:
1. Validity of prosecution instituted by a power of attorney holder instead of the payee.
2. Discharge of debt towards the complainant through conveyance of immovable property.
3. Compliance with Section 139 of the Negotiable Instruments Act.
4. Conviction of the petitioners under Section 138 of the Negotiable Instruments Act.
5. Sentence imposed on the petitioners and the possibility of setting it aside upon payment of the fine.

Analysis:
1. The petition challenges the validity of the prosecution on the grounds that it was initiated by a power of attorney holder and not the payee. However, the court finds no infirmity in the institution of the proceeding as the payee was examined as a witness, and the power of attorney was duly exhibited.

2. The petitioners claimed that the debt towards the complainant was discharged by conveying immovable property. The court examines a sale deed exhibited as evidence but finds no indication that the property transfer was in discharge of the liabilities towards the complainant. Therefore, the court rejects this claim.

3. The petitioners attempted to discharge their burden under Section 139 of the Negotiable Instruments Act by presenting evidence that the property transfer settled their liability. However, since the sale deed did not support this assertion, the court concludes that there was a legally enforceable debt against which the dishonored cheque was issued.

4. The court upholds the conviction of the petitioners under Section 138 of the Negotiable Instruments Act based on evidence that the cheque was dishonored due to insufficient funds, and the petitioners were responsible for the firm's day-to-day business, including signing the dishonored cheque.

5. Regarding the sentence, the court notes a partial deposit made by the petitioners and sets a deadline for the remaining fine payment. If the outstanding amount is paid within the specified time, the substantive sentence may be set aside; otherwise, the sentence will remain in force, and steps will be taken to execute it. The complainant is entitled to withdraw the deposited fine as compensation. The revision petition is disposed of with these modifications.

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