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TMI Blog2024 (7) TMI 296X X X X Extracts X X X X X X X X Extracts X X X X ..... hi (hereinafter collectively referred to as 'Trial Courts') filed under Section 138 read with Section 142 of the Negotiable Instruments Act, 1881 (in short, 'NI Act'). 2. As common issue arises for the consideration of this Court, the petitions are being considered and adjudicated upon by this common judgment. Factual Background 3. The above complaints have been filed by the respondent, inter alia, alleging therein that the respondent was associated with the petitioner no. 1 company and also other companies forming a part of the group of companies controlled by the petitioner no. 2, thereby providing services to the petitioners. 4. In the complaints, it has been averred by the respondent that the petitioner no. 2 is the Chairman of the petitioner no. 1/accused no. 1 company and is engaged in managing the day-to-day affairs of the petitioner no. 1 company. It is further stated that the respondent was also one of the Directors of the above Company and was having approximately 3% shares in the group of companies that are being controlled by the petitioner no. 2. The respondent stated that he was also receiving remuneration from the said company. 5. It is further stated that the r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... him." 10. As the payment was not made by the petitioners, the respondent proceeded to file the above complaints. 11. It is to be noted that even after the assertion made by the petitioner no. 2, in his reply dated 05.11.2020, that the Legal Notice dated 21.10.2020 was addressed to IBooks Institute, who was not the drawer of the cheques, and not to petitioner no. 1 herein, who was the actual drawer of the cheque, the respondent took no steps to send another notice or issue a corrigendum notice to the petitioners before filing of the Complaints. However, in the Complaints, the petitioner no. 1 and not IBooks Institute was impleaded as the accused no. 1. Proceedings before the learned Trial Court: 12. It appears that while in CC NI Act No. 275/2020, the learned Metropolitan Magistrate did not notice this discrepancy and issued summons to the petitioners vide its order dated 21.12.2020 in the said Complaint, in CC NI Act No. 300/2020, the learned Metropolitan Magistrate noticed this discrepancy and was satisfied with the explanation tendered by the respondent that as the petitioner no. 2 is the Director of the petitioner no. 1, notice to the Director is notice to the Company and th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nsidered an adequate service of notice in terms of Proviso (b) to Section 138 of the NI Act to the drawer of the cheques, that is, petitioner no. 1 company. 17. He further submits that the cheques in question were issued by the petitioner no. 1 company and signed by petitioner no. 2. The said cheques also categorically mention that the said cheques have been issued by the petitioners for purchase of shares of respondent in IBooks, thereby acknowledging the liability of the petitioners. He submits that the petitioner no. 2, intentionally, issued cheques of his group companies in discharge of his liability. The petitioner no. 2, therefore, cannot take benefit of an inadvertent mistake in the notice in as much as it was issued to IBooks instead of in the name of the petitioner no. 1. The petitioner no. 2 was fully aware of the liability of the petitioners towards the said cheques. Analysis and Findings 18. I have considered the submissions made by the learned counsels for the parties. 19. The short question for consideration arising in the present petitions is whether the service of notice of demand under Section 138 of the NI Act will be deemed to be complete if the said notice o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... i (supra), while examining the object of the proviso, has opined as under: "6. As noted hereinbefore, Section 138 of the Act was enacted to punish unscrupulous drawers of cheques who, though purport to discharge their liability by issuing cheque, have no intention of really doing so. Apart from civil liability, criminal liability is sought to be imposed by the said provision on such unscrupulous drawers of cheques. However, with a view to avert unnecessary prosecution of an honest drawer of the cheque and with a view to give an opportunity to him to make amends, the prosecution under Section 138 of the Act has been made subject to certain conditions. These conditions are stipulated in the proviso to Section 138 of the Act, extracted above. Under Clause (b) of the proviso, the payee or the holder of the cheque in due course is required to give a written notice to the drawer of the cheque within a period of thirty days from the date of receipt of information from the bank regarding the return of the cheque as unpaid. Under Clause (c), the drawer is given fifteen days' time from the date of receipt of the notice to make the payment and only if he fails to make the payment, a com ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ons) and, therefore, the complaint is liable to be rejected. A person who does not pay within 15 days of receipt of the summons from the court along with the copy of the complaint under Section 138 of the Act, cannot obviously contend that there was no proper service of notice as required under Section 138, by ignoring statutory presumption to the contrary under Section 27 of the GC Act and Section 114 of the Evidence Act. In our view, any other interpretation of the proviso would defeat the very object of the legislation. As observed in K. Bhaskaran v. Sankaran Vaidhyan Balan & Anr., (1999) 7 SCC 510, if the "giving of notice" in the context of Clause (b) of the proviso was the same as the "receipt of notice" a trickster cheque drawer would get the premium to avoid receiving the notice by adopting different strategies and escape from legal consequences of Section 138 of the Act." (Emphasis Supplied) 23. The above discussion makes it abundantly clear that the objective of serving a demand notice to the person accused of an offence under Section 138 of the NI Act is to give an opportunity to the drawer to pay the cheque amount within 15 days of service of notice and thereby free h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... our consideration: (1) Was the High Court justified in coming to the conclusion that the drawer has not been duly served with notice for payment? (2) xxxxxx So far as the first question is concerned, it is no doubt true that all the three requirements under clauses (a), (b) and (c) must be complied with before the offence under Section 138 of the Negotiable Instruments Act can be said to have been committed and Section 141 indicates as to who would be the persons, liable in the event the offence is committed by a company. The High Court itself on facts, has recorded the findings that Conditions (a) and (b) under Section 138 having been duly complied with and, therefore, the only question is whether the conclusion of the High Court that Condition (c) has not been complied with, can be said to be in accordance with law. Mere dishonour of a cheque would not raise to a cause of action unless the payee makes a demand in writing to the drawer of the cheque for the payment and the drawer fails to make the payment of the said amount of money to the payee. The cheques had been issued by M/s Bhalla Techtran Industries Limited, through its Director Shri Amit Bhalla. The appellant had i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... represented by the three cheques being of the said company, the said cheques having been issued against its account. After the said cheques had been returned unpaid, the complainant had sent a legal notice of demand on 01.11.2007. It does appear that the said notice of demand was addressed to the third respondent. But then, it is also clear that the third respondent was not called upon by the said demand notice to be accountable for any personal liability. Reference was made to the three cheques, which concededly had been issued against the account of the company. The notice thus was addressed to the third respondent in his capacity as the director of the company accused, calling him upon to pay against the cheques which had been returned dishonoured. That the notice of demand was directed against the company is how the said notice of demand was understood not only by the third respondent but also by the second respondent. This is reflected by the fact that the reply dated 19.11.2007 to the demand notice was sent not by the third respondent but for and on behalf of the company i.e. the second accused by its authorized representative. xxxx 7. The scrutiny of the case by the rev ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ead of the petitioner no. 1, therefore, cannot come to the aid of the petitioners, especially where the complaints in question are rightly filed making the petitioner no. 1-company as an accused. 29. In Aneeta Handa (supra), the Supreme Court has held that an authorised signatory of a company becomes a drawer as he has been authorised to do so in respect of the account maintained by the Company. Therefore, even testing on this standard, the notice was duly addressed to the drawer of the cheques in question. 30. As far as the judgments cited by the learned counsel for the petitioners are concerned, they all deal with a situation where the Company against whose account the cheques had been drawn, had not been made an accused in the complaint filed under Section 138 read with Section 141 of the NI Act. The Supreme Court held that in absence of the Company, a Complaint only against the Director of the said Company is not maintainable. In the present case, however, the Company, that is the petitioner no. 1, has also been the accused. Therefore, the said judgments will not come to the aid of the petitioners. 31. At this point, I must also remind myself that the Supreme Court has repea ..... X X X X Extracts X X X X X X X X Extracts X X X X
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