2021 (12) TMI 68 - HC - Indian Laws

Dishonor of Cheque - rejection of prayer for waiver of pre-deposit under Section 148 of the Negotiable Instruments Act, 1881 - power of Appellate Court to order payment pending appeal against conviction - Whether in the facts and circumstances, is it a fit case for making an exception for waiver of minimum pre-deposit of 20% of compensation awarded by the trial Court? - HELD THAT - It is settled law that general rule under Section 148 of the Act is of pre-deposit and waiver is only an exception for which special reasons need to be assigned - It would not be appropriate to pre-judge the appeal at the stage of deciding the waiver of pre-deposit. The petitioners have filed Criminal Miscellaneous Applications annexing their bank account statements and their concerns to support the contention that they are not financialy capable to make the pre-deposit. The trial Court considering the facts and appreciating the evidence adduced convicted petitioners under Section 138 of the Act. The difference in the amount of cheque and the figure mentioned by the petitioners was duly explained by the complainant. The defence raised that it is a case of misuse of cheque for security, was met by the complainant by producing documents. The contention raised on behalf of Sarabjeet Singh Wadhawan that he is neither a partner nor signatory to the cheque, does not enhance the case for waiver of pre-deposit. He stated that he was looking after the day-to-day affairs of firm. In cross-examination, he admitted his signatures on balance confirmation. The resignation of Simarpal Singh Wadhawan was found to be self-serving document. He deposed that after his resignation, Manjit Kaur and Sarabjeet Singh Wadhawan were partners whereas earlier Manjit Kaur and Simarpal Singh Wadhawan were partners - contention that conditions under Section 141 of the Act are not satisfied qua Simarpal Singh Wadhawan and Sarabjeet Singh Wadhawan was dealt with by the trial Court and would be subject matter of the appeal. It is not the stage to re-appreciate the evidence and to deal in detail with fulfilment of pre-requisites of Section 141 of the Act. SMS PHARMACEUTICALS LTD. VERSUS NEETA BHALLA 2005 (9) TMI 304 - SUPREME COURT is the case dealing with the liability of the Director of the company. It was held that mere holding designation is not enough. As per Section 141, the person should be incharge and responsible for conducting the business. In the present case, the trial Court has relied upon the evidence adduced which indicates participation of Simarpal Singh Wadhawan and Sarabjeet Singh Wadhawan in day-to-day working of the business. No case is made out for waiver of pre-deposit, criminal revision petitions are dismissed. However, time granted for making the pre-deposit is extended by thirty days.

Summary

Issues Involved:
1. Waiver of pre-deposit under Section 148 of the Negotiable Instruments Act, 1881.
2. Validity of the complaint under Section 138 of the Act due to the discrepancy between the cheque amount and the actual liability.
3. Rebuttal of presumption under Section 139 of the Act.
4. Financial incapacity due to COVID-19.
5. Applicability of Section 141 of the Act to individual petitioners.

Detailed Analysis:

1. Waiver of Pre-Deposit Under Section 148 of the Negotiable Instruments Act, 1881:
The petitioners sought waiver of the pre-deposit condition mandated under Section 148 of the Act. The court reiterated that the general rule under Section 148 is the requirement of a pre-deposit, and waiver is an exception that requires special reasons. The court cited the Supreme Court's decision in Surinder Singh Deswal's case, emphasizing that the appellate court "may" order the appellant to deposit a minimum of 20% of the fine or compensation, which is generally construed as "shall," making waiver an exception.

2. Validity of the Complaint Under Section 138 of the Act:
The petitioners argued that the complaint should be dismissed because the cheque amount exceeded the actual liability. The court noted that the trial court had already addressed this issue, and the difference in the amount was explained by the complainant. The court stated that this issue would be tested in the appeal and is not relevant at the stage of deciding the waiver of pre-deposit.

3. Rebuttal of Presumption Under Section 139 of the Act:
The petitioners contended that they had rebutted the presumption under Section 139, arguing that the cheque was given for security purposes and was misused. The court observed that the complainant had produced documents to counter this defense, and the trial court had convicted the petitioners based on the evidence. This issue, too, would be addressed in the appeal.

4. Financial Incapacity Due to COVID-19:
The petitioners claimed financial incapacity to make the pre-deposit due to the COVID-19 situation. The court examined the bank account statements and found no pleading that the firm had ceased its business. The court emphasized that mere balance in the bank account cannot be the basis for inability to pay, and it is the business prudence of an entrepreneur to manage affairs and fix priorities.

5. Applicability of Section 141 of the Act to Individual Petitioners:
- Simarpal Singh Wadhawan: He argued that he had resigned from the partnership before the cheque dishonor and was a sleeping partner. The court noted that the trial court found his resignation to be a self-serving document, and he had admitted his signatures on various documents. His involvement in the firm's day-to-day affairs was evident.
- Sarabjeet Singh Wadhawan: He contended that he was neither a partner nor a signatory to the cheque. The court noted his admission of managing the firm's day-to-day affairs and his signatures on balance confirmations. The trial court's findings indicated his participation in the firm's business.

The court dismissed the reliance on decisions in Monaben Ketanbhai Shah's case, S.M.S. Pharmaceuticals Ltd.'s case, Ranrajsingh's case, and A.K. Singhaniya's case, noting that these cases dealt with the liability of company directors and not partners in a firm. The trial court had relied on evidence showing the participation of the petitioners in the firm's business.

Conclusion:
The criminal revision petitions were dismissed, and the court extended the time for making the pre-deposit by thirty days. The court clarified that the observations made were only for deciding the issue of pre-deposit and should not be construed as an expression of opinion on the merits of the case.