9911796707
TMI Blog1997 (7) TMI 552X X X X Extracts X X X X X X X X Extracts X X X X ..... ioner No. 1 is a corporate body of which petitioner No. 2 is a director. The respondent No. 2 is also a company. As alleged, the petitioners borrowed some amount from the respondent No. 2 and in repayment thereof gave some cheques of different amounts and dates drawn on Standard Chartered Bank, Parliament Street, New Delhi. On deposit, the said cheques were returned dishonoured, therefore, the respondent No. 2 filed four different criminal complaints under section 138 of the Negotiable Instrument Act, 1881 ('the Act') in the Court of the learned Metropolitan Magistrate (Court No. 9), Ahmedabad. The learned magistrate was pleased to take cognisance and to issue process. Aggrieved by the institution and subsequently taking cognisance by the l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e petitioner to the respondent No. 2 towards discharge of liability. The said cheque was deposited on 10-6-1996. As the payment was stopped by the drawer on 15-6-1996, the same was returned on 19-6-1996 with an endorsement 'payment stopped by drawer'. Consequently, the respondent No. 2 filed Criminal Case No. 2542 of 1996. Misc. Criminal Application No. 2270 of 1997 - Cheque No. 473522, dated 6-3-1996 drawn on Standard Chartered Bank, Parliament Street, New Delhi, for Rs. 50 lakhs was issued by the petitioner to the respondent No. 2 towards discharge of liability. The said cheque was deposited on 10-6-1996. As the payment was stopped by the drawer on 15-6-1996 the same was returned on 19-6-1996 with an endorsement 'payment stopped by dr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s placed heavy reliance upon section 22 of the Sick Industrial Companies (Special Provisions) Act, 1985 ('SICA') stating that express legal bar is engrafted against institution and continuation. But, on mere perusal of said section it is clear that the provisions of the section apply only to winding up, execution, distress or like steps against any of the properties of sick industrial unit. By no stretch of imagination, criminal prosecution against the company can be taken within its sweep. Consequently, the institution and continuation of criminal proceeding is not vitiated or affected by any such alleged bar under section 22. My this view is fortified by a judgment of this Court in case of Vijay Mills Co. Ltd (supra). Thus, the submissi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , as held by the Supreme Court, once a cheque is drawn by a person on an account maintained by him for payment of any amount or discharge of liability or debt and is returned by the bank with endorsement like ( i ) refer to drawer, ( ii ) exceeds arrange-ment, ( iii ) instruction for stoppage of payment and like other usual endorsements, it amounts to dishonour within the meaning of section 138, therefore, even after issuance of notice if the payee or holder does not make the payment within stipulated period, the statutory presumption would be of dishonest intention exposing to criminal liability. In the instant case, two cheques have not been encashed because the amount of cheques exceeded the arrangements made, i.e., insufficient funds ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eque was given with dishonest intention to induce the payee to act on it and thus shall be deemed to have committed offence. 9 In the instant case, admittedly the advance intimation refers to protec- tion under section 22 of SICA and pendency of BIFR proceedings. As discussed above, this is not a legally tenable ground. This does not come in way of petitioners to fulfil the promises upon which have made other one (payee) to believe and act. It is also an admitted fact that despite giving cheques funds were not arranged. The act of not making arrangements for funds ipso facto reflects that drawer did not have intention to honouring the same and thus raising presumption about dishonest intention. The reasons contained in advance intimat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the bank. In Misc. Criminal Application No. 2270 of 1997 also the payment was stopped by drawer on account of inability to make sufficient funds in the account. As discussed above, an advance notice not to present cheque without making arrange-ments for sufficient funds does not take out the case from the ambit of section 138. Therefore, prima facie, the act amounts to an offence. The third contention has no force in law by virtue of section 141. In case of company and firm, director and partner is always primarily liable, of course, subject to effective participation, knowledge, etc. Ordinarily also a company as a legal entity, has no soul, mind or limb to work physically and has to discharge functions through some human agency. Such ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
