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TMI Blog2024 (4) TMI 556X X X X Extracts X X X X X X X X Extracts X X X X ..... ndent No. 1 and that too on an account standing in Bank s record in the name of Respondent No. 1. It is not in dispute that notice is not issued to the Company and Respondent No. 2 as Director of Respondent No. 1. There is a liability in between the complainant and Accused No. 1. But he has not issued the cheques in his personal capacity on an account maintained by him in his person but he has chosen to draw the cheques on a Bank account maintained by his Company. The complainant has failed to issue notice to Company and Respondent No. 1 as Director. The provisions of clause (b) of Section 138 are mandatory. When the consequences of a particular Act are deterrent, the provisions have to be followed and interpreted strictly. The complainant has failed to adhere to the provisions of the proviso (b) of Section 138 of the NI Act. So even though I have given finding in favour of the complainant on the other aspect, the contention of learned Advocate Shri Khanchandani cannot be accepted. Respondent No. 2 is a Director in Respondent No. 1 Company but law recognizes both these entities as separate. The judgment of acquittal need no interference - appeal dismissed. - S. M. MODAK, J. For t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ave made an attempt to correct those mistakes however my endevour was not enough to convert judgement of acquittal into judgement of conviction. Because there was basic flaw in the requirement of issuance of notice to drawer. Though the cheque was signed by accused/respondent no. 2, it was as director of accused/respondent No. 1 company. Judgment of Trial Court 5. On this background, I have heard learned Advocate Shri Vikas Khanchandani for the Appellant Complainant and Advocate Muruga Seelan Perumal for the Respondents and learned APP Shri Dedhia. Learned Magistrate acquitted the Respondent Nos. 2 mainly on the following reasons:- (i) The complainant is a housewife and she has failed to file Income-Tax returns. (para 7) (ii) There are improvements in the averments in the complaint on one hand and averments in the notice on the other hand (paragraph No. 9). It is on the point of role of Accused No. 2 and the background in which accused demanded the amount of Rs. 5 Lakhs. (iii) There are defects in the notice. So to say the status of Accused No. 1 was not mentioned and role of Accused No. 2 is not mentioned (para 7). (iv) Failure of the complainant to prove the existence of legally ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uance of those memos on behalf of the Federal Bank, however, the Bank witness denied the said suggestion (page 84). The complainant was put to certain questions during cross-examination about her knowledge of closure of the account (para 9). She has expressed ignorance that account was closed by the accused in the year 2007. Except this suggestion, accused has not adduced any evidence. If he want to suggest that account was closed much earlier to issuance of the cheque, it was for him to prove it. This evidence is sufficient to believe reason for dishonour is account closed . Statutory notice 12. The complainant adduced evidence about issuance of a statutory notice. The notice is dated 31st October 2014 (page 44). The main dispute about this notice is: it was not given to the drawer of the cheque in the sense the cheque was drawn by one Rajendra Rajan Accused No. 2 not in his individual capacity but as a Director of Accused No. 1 Company and as such, it was mandatory to issue notice to him as a Director and to Accused No. 1 also . There is also contention that there is no reference in the notice about the involvement of Accused No. 2. The admission given by the complainant during c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aspect before the trial court. 18. After hearing both the sides and going through the evidence and findings, what I find is the learned Magistrate has not given findings on certain issues. (which I have referred) 19. Even though there is a denial by the Accused on all aspects, their main thrust on argument is of non-compliance of the provisions of proviso (b) to Section 138 of the Negotiable Instruments Act. Factual aspect are as follows:- (i) Issuance of notice by payee or holder in due course (no doubt in this case, the complainant is a payee). (ii) There has to be specific demand for payment of the amount of money by giving a written notice (in this case, it is given but to wrong person according to the accused) and further contention is about not mentioning of the facts pleaded in the complaint in the statutory notice. (iii) Notice has to be given to the drawer of the cheque (in this case cheques are drawn on behalf of the Respondent No. 1- Company and signed by Respondent No. 2). (iv) It has to be given within 30 days from the knowledge of this order. 20. It is true that in entire chain of events:- a) there are few facts which need to be proved prior to issuance of a notice a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... through L.Rs. (Criminal Appeal No. 1978 of 2013). (ii) Rajesh Jain Vs. Ajay Singh AIR 2023 SC 5018. Whereas, the Respondents relied upon the following judgments:-- (ii) Baslingappa Vs. Mudibasappa (Criminal Appeal No.636 of 2019). (iii) S. Murugan Vs. M.K. Karunagaran (Criminal Appeal No.--- of 2023) (arising out of SLP (Crl.) 7618/2023). (iv) C. Antony Vs. K. G. Raghavan Nair (Criminal Appeal No. 1748 of 1996). 25. After reading them what is relevant is the principles laid down in those judgments. They can be culled out as follows :- (a) If drawer of cheque admits the execution, the presumption under Section 139 of NI Act comes into picture. (b) The onus is on accused to rebut it. The test is not of proof beyond reasonable doubt but preponderance of probabilities . (c) During that exercise accused may rely upon the materials submitted by the complainant or may rely upon independent material. It is not necessary for the accused to enter into witness box. 26. Both the learned Advocates tried to differentiate the facts of the respective judgments from the facts of the present Appeal. It is true that the entire facts may not be true in two cases. The interpretation of law on the basis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssuance of cheque for discharge of legally enforceable debt. What is important is whether the debt in between the complainant and the accused is proved or not. For ascertaining this issue, I do not think that Court should inquire whether the complainant is having sufficient income or not and whether it is reflected in the accounts or not because in a given situation, it may happen that the person may not have accounted the income but still he is having documents and evidence to show the creation of liability in between the complainant and the accused. In that case what is relevant for prosecution under Section 138 of the NI Act is the evidence on the point of liability. The Court need not do the exercise of ascertaining from where the complainant has raised money. 29. If we consider various judgments given by the Hon ble Supreme Court we may find that the view taken is in favour of fulfilling the intention of the legislature behind incorporating Section 138 of the NI Act as an offence and any interpretation which advances the mischief sought to be curtailed for making it as an offence is not to be favoured . So I disagree with the trial Court that Income-Tax returns are necessary f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... yment of the amount of money within the time limit, the offence is committed. It indicates that the drawer of the cheque should be aware how much amount he has to pay and it should be in writing. What are the basic requirements of notice:- a) Cheque details should be there. b) The amount demanded should be there and c) There should be period mentioned for the payment. 35. These basic requirements are satisfied in the statutory notice. There is a mention about how liability was accrued. It is by way of friendly loan. What is not there is when both of them met each other and interacted about giving hand-loan, how the complainant has raised that money. Even if those details are pleaded subsequently, I do not think that notice becomes defective. Issuance of notice to wrong person 36. This is material issue for deciding this Appeal. The outcome of this Appeal will depend upon the findings on this issue. Though not expressively but implicitly the trial Court has emphasized on absence of averments on certain particulars in the notice. Learned advocate for the appellant invited my attention to one circumstance. It is signatures put on the form of plea. Accused No. 2 appeared before the tri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by the Company. However, the Respondent issued cheques in his personal capacity. All the Courts below have acquitted the accused however, it is reversed by the Hon ble Supreme Court. What is important is complaint is filed against the drawer of the cheque irrespective of the fact the liability is with third person. In that case, liability was of the Company and in a personal capacity cheques were issued. It was held maintainable (para 10 and 11). (C) Bilakchand Gyanchand Co. Vs. A. Chinnaswami (1999) 5 SCC 693. In that case Managing Director of the Company issued cheques which were dishonoured. The individual was made as a accused without Company. The proceedings were quashed. It was confirmed by Hon ble Supreme Court. (D) Aneeta Hada Vs. M/s. Godfather Travels Tours Pvt. Ltd. AIR 2012 SC 2795 with connected matters. Wherein the Hon ble Supreme Court dealt with the issue whether Company needs to be joined as Accused when the cheques are issued on behalf of the Company. It was held in the affirmative. 40. According to Mr. Khanchandani, the judgment in the case of Bilakchand Gyanchand Co. (supra) is confirmed by the Hon ble Supreme Court, in para 12 (iv) of Aneeta Hada. It cannot be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... issue in Aneeta Hada s case is slightly different. It is on the point of necessity of joining Company when the cheques are drawn on an account maintained by the Company. The Company has to be joined. 44. In this case, Company is joined as an Accused along with the signatory who is its Director. The issue is different. The issue is about issuance of a notice to proper person. The proviso (b) contemplates issuance of a notice to a drawer. In this case, cheques are drawn by Respondent No. 2 as a Director of Respondent No. 1 and that too on an account standing in Bank s record in the name of Respondent No. 1. It is not in dispute that notice is not issued to the Company and Respondent No. 2 as Director of Respondent No. 1. 45. I have concluded that there is a liability in between the complainant and Accused No. 1. But he has not issued the cheques in his personal capacity on an account maintained by him in his person but he has chosen to draw the cheques on a Bank account maintained by his Company. The complainant has failed to issue notice to Company and Respondent No. 1 as Director. The provisions of clause (b) of Section 138 are mandatory. When the consequences of a particular Act a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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