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2019 (4) TMI 2 - HC - Indian LawsDishonor of Cheque - insufficiency of funds - Offences punishable under section 138 of Negotiable Instruments Act - petitioners arrayed as accused - summon of accused - invocation of Section 141 of the Negotiable Instruments Act, 1881. Held that - In terms of Section 141 of the Negotiable Instruments Act, 1881 every person who at the time of the commission of offence under Section 138 of the Negotiable Instruments Act, 1881, who was in charge of, and was responsible to the company for the conduct of the business of the company as well as the company and such a director of the company would be liable to be prosecuted and punished. The proviso thereto to Section 141 of the Negotiable Instruments Act, 1881, however lays down that no person would be rendered liable to be punished if he proves that the offence was committed without his knowledge or that he had exercised all due diligence to prevent the to commission of such offence. As regards the petitioner No.3 it is apparent that she falls in the category of director in terms of Section 2 (24) of the Companies Act and thus in terms of the verdict of the Hon ble Supreme Court in K.K.Ahuja (Supra) para 27(iv), adverted to elsewhere herein above, it is apparent that the petitioner No.3 has also rightly been arrayed as an accused in the instant case. Though the aspect of the respondent No.3 having not been in control and in charge of the petitioner No. 1 company can always be put forth by the petitioner No.3 after putting her defence and can be so contended before the learned Trial Court at the stage of analysis of evidence that is led by either side. It is further essential to observe that it has been laid down by the Hon ble Supreme Court in MSR Leathers v. Palaniappan and another 2012 (10) TMI 232 - SUPREME COURT that a prosecution based on a second or successive default in payment of the cheque amount is not impermissible simply because no prosecution based on the first default which was followed by a statutory notice and a failure to pay and had not been launched. It is not considered appropriate to exercise jurisdiction under Section 482 of the Cr.PC, in as much as there is no infirmity in the impugned order dated 1.6.2015 of the learned Trial Court, MM (N.I.Act) South-East, Saket in CC no. 1529/2015 - petition dismissed.
Issues Involved
1. Validity of a single complaint for multiple cheques under Section 219 of the CrPC. 2. Applicability of Section 138 of the Negotiable Instruments Act for cheques returned with the remark "payment stopped by drawer." 3. Necessity of issuing a notice for the second dishonor of cheques. 4. Liability of petitioner No. 3 under Section 141 of the Negotiable Instruments Act. Detailed Analysis 1. Validity of a Single Complaint for Multiple Cheques Under Section 219 of the CrPC The petitioners contended that a single complaint for the dishonor of six cheques could not be considered under Section 219 of the CrPC. The court referred to precedents, including Sharma Contracts India Pvt. Ltd. v. State & Anr. and Rajasthani Trading Co. v. Chemos International Limited, which allowed multiple cheques from a single transaction to be consolidated into one complaint. The court concluded that since all six cheques were related to the same transaction, Section 219 of the CrPC was not an impediment to summoning the accused. 2. Applicability of Section 138 of the Negotiable Instruments Act for Cheques Returned with "Payment Stopped by Drawer" The petitioners argued that Section 138 should not apply since the cheques were returned with the remark "payment stopped by drawer," not due to insufficient funds. The court cited HMT Watches Ltd. vs. M.A. Abida and Anr. and Modi Cements Ltd. v. Kuchil Kumar Nandi, which clarified that a stop payment instruction also attracts Section 138. Therefore, the court rejected the petitioners' contention and upheld the applicability of Section 138. 3. Necessity of Issuing a Notice for the Second Dishonor of Cheques The petitioners claimed that no notice was issued for the second dishonor of the cheques. The court referred to the Supreme Court's ruling in MSR Leathers v. Palaniappan, which allows for prosecution based on a second or successive default in payment of the cheque amount. The court found that the absence of a notice for the second dishonor did not invalidate the complaint. 4. Liability of Petitioner No. 3 Under Section 141 of the Negotiable Instruments Act The petitioners argued that petitioner No. 3 was wrongfully implicated under Section 141, as there was no material connecting her to the alleged offense. The court cited K.K. Ahuja v. V.K. Vora & Another, which specifies that directors can be held liable if they are in charge of and responsible for the conduct of the company's business. The court found that petitioner No. 3, being a director, was rightly arrayed as an accused. However, she could present her defense during the trial. Conclusion The court found no infirmity in the trial court's order summoning the accused under Section 138 of the Negotiable Instruments Act. The petition and accompanying applications were dismissed, with the trial court instructed to adjudicate the matter on its merits, uninfluenced by the observations made in this judgment.
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