2021 (7) TMI 433 - HC - Indian Laws

Dishonor of Cheque - dues was against the company but the cheque was issued by the petitioner from his personal account - Legally enforceable debt or not - specific case of the complainant was that the accused procured the supply of railway tickets in his favour from the complainant dishonestly with fraudulent intention and did not intend to pay the same - section 138 of Negotiable Instruments Act, 1881 - HELD THAT - In the instant case, the cheque has been issued by the petitioner and the petitioner claims that the debt was legally enforceable against the company in which he was working and not against him as the petitioner was merely an employee of the company having office at Hyderabad. This Court finds that vide letter dated 25.11.2003 issued by the petitioner, the complainant was asked by the accused to hold the cheque for some time as it was likely that his company would issue appropriate cheque in discharge of the entire debt. The cheque was issued by the petitioner only to the extent of ₹ 88,355/- and the entire amount payable to the complainant-company was to the tune of 1,33,101/-. Thus, the cheque was certainly issued in discharge of the legally enforceable debt - The company having not cleared the dues of the complainant, the complainant presented the cheque which bounced twice. This Court finds that the presumption in connection with issuance of cheque that the same was issued against legally enforceable debt could not be rebutted by the petitioner and the only argument advanced by the petitioner is that there was no legally enforceable debt against the petitioner and the debt was only against his company - The present case is not related to any vicarious liability which arises when the cheque is issued by the company. In this case, the cheque is issued by the accused in his personal capacity and his specific case is that the debt was against the company and not against him. The petitioner would still be convicted even if he issues his personal cheque in discharge of the dues of the company. The learned appellate court has rightly held that petitioner being signatory of the bounced cheque is clearly responsible for non- payment of the amount to the complainant and rightly upheld the conviction of the petitioner for offence under Section 138 of the Negotiable Instruments Act, 1881. This Court does not find any irregularity, illegality or perversity in conviction of the petitioner for offence under Section 138 of the Negotiable Instrument Act, 1881 - the present revision petition is hereby dismissed.

Summary

Issues Involved:
1. Legality of convicting the petitioner under Section 138 of the Negotiable Instruments Act.
2. Personal liability of the petitioner versus the company's liability.
3. Applicability of vicarious liability under Section 141 of the Negotiable Instruments Act.

Issue-wise Detailed Analysis:

1. Legality of convicting the petitioner under Section 138 of the Negotiable Instruments Act:
The petitioner was convicted under Section 138 of the Negotiable Instruments Act by the Judicial Magistrate, 1st Class, Jamshedpur, which was upheld by the Sessions Judge. The petitioner argued that the cheque was issued from his personal account for a debt that was against the company he worked for, and thus, he should not be personally liable. However, the court found that the cheque was issued by the petitioner and was dishonored due to "insufficiency of funds." The court noted that the cheque was presented within the stipulated period, a legal notice was sent, and the case was filed within the required time frame. The court held that the presumption of the cheque being issued against a legally enforceable debt was not rebutted by the petitioner. Therefore, the conviction under Section 138 was upheld.

2. Personal liability of the petitioner versus the company's liability:
The petitioner contended that the debt was legally enforceable against the company, not him personally. The court found that the petitioner, acting as the Zonal Sales Manager, had induced the complainant to supply railway tickets on credit and had issued a personal cheque as part payment. The court noted that the petitioner had requested the complainant to hold the cheque, indicating that it should be encashed if the company did not clear the dues. The court concluded that there is no bar in issuing a cheque for the discharge of another person's legally enforceable debt. Thus, the petitioner was held personally liable for the dishonored cheque.

3. Applicability of vicarious liability under Section 141 of the Negotiable Instruments Act:
The petitioner relied on the Supreme Court judgment in "S.M.S. Pharmaceuticals Ltd. Vs. Neeta Bhalla and Another" to argue that he could not be vicariously liable for the company's debt. However, the court clarified that the present case did not involve vicarious liability under Section 141, which pertains to cheques issued by a company. Instead, the cheque was issued by the petitioner in his personal capacity. The court held that the petitioner could still be convicted for issuing a personal cheque to discharge the company's debt. The appellate court correctly held the petitioner responsible as the signatory of the bounced cheque.

Conclusion:
The High Court found no irregularity, illegality, or perversity in the conviction of the petitioner under Section 138 of the Negotiable Instruments Act. The revision petition was dismissed, and the interim order was vacated. The bail bond furnished by the petitioner was canceled, and the lower court records were ordered to be sent back immediately.