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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 ..... tion 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 himself from the penal consequences of Section 138 of the NI Act. In fact, the Supreme Court goes on to hold that 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 NI Act, cannot contend that there was no proper service of notice as required under Section 138 of the NI Act. The cheques in question are signed by the petitioner no. 2 for and on behalf of the petitioner no. 1. Petitioner no. 2 is stated to be the Chairman of not only the petitioner no. 1-Company, but also of the Group of Companies, including IBooks. The cheques in question are claimed to have been issued in discharge of one common liability, where not only the cheques of petitioner no. 1 but also IBooks were issued by the petitioner no. 2 - In spite of service of the notice, the petitioner no. 2, instead of making the payment of the cheque amount, raised a dispute on the liability to pay the same and also stated that the cheques were not issued by IBooks, the addressee no. 1 in the notic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... /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 respondent resigned from the Directorship of the Companies on 21.06.2020. Post his resignation, the petitioner no. 2 took over the shares of the respondent and agreed to pay a sum of Rs. 13,48,449/- as consideration thereof, in full and final settlement of all claims of the respondent. The petitioner no. 2 in this regard issued 19 post-dated cheques of its group companies against the aforementioned liability owed to the respondent. The cheques in question in the Complaints were also issued and signed by the petitioner no. 2 as part of the settlement. 6. It has been alleged that initially some of cheques were encashed and credited into the account of the respondent, but thereafter there came to be a delay in making of the payments. It is stated that one of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... litan 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 therefore, the pre-condition for filing of the complaint was met, and proceeded to issue summons to the petitioners, vide its order dated 05.01.2021. 13. Aggrieved of the above, the petitioners have filed the present petitions seeking quashing of the said Complaints. Submissions of the learned counsel for the petitioners 14. The learned counsel for the petitioners, placing reliance on the judgments of the Supreme Court in Aneeta Hada v. M/s Godfather Travels Tours Pvt. Ltd., (2012) 5 SCC 661; Anil Gupta v. Star India Pvt. Ltd. Anr., (2014) 10 SCC 373; N. Harihara Krishnan v. J. Thomas, (2018) 13 SCC 663; Himanshu v. B. Shivamurthy Anr., (2019) 3 SCC 797; and Hindustan Unilever Limited v. The State of Madhya Pradesh, (2020) 10 SCC 751, and of the High Court of Madhya Prade ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er 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 of demand was served only on the director of the accused company and not on the accused company itself. 20. Section 138 of the NI Act reads as under: 138. Dishonour of cheque for insufficiency, etc., of funds in the account.- Where any cheque drawn by a person on an account maintained by him with a banker for payment of any amount of money to another person from out of that account for the discharge, in whole or in part, of any debt or other liability, is returned by the bank unpaid, either because of the amount of money standing to the credit of that account is insufficient to honour the cheque or that it exceeds the amount arranged to be paid from that account by an agreement made with that bank, such person shall be deemed to have committed an offence and shall, without prejudice to any other pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urse 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 complaint may be filed against him. As noted above, the object of the proviso is to avoid unnecessary hardship to an honest drawer. Therefore, the observance of stipulations in quoted Clause (b) and its aftermath in Clause (c) being a precondition for invoking Section 138 of the Act, giving a notice to the drawer before filing complaint under Section 138 of the Act is a mandatory requirement. xxxx 16. As noticed above, the entire purpose of requiring a notice is to give an opportunity to the drawer to pay the cheque amount within 15 days of service of notice and thereby free himself from the penal consequences of Section 138. In D. Vinod Shivappa v. Nanda Belliappa, (2006) 6 SCC 456, this Court observed: (SCC p. 462, para 13) One can also conceive of cases where a well-intentioned drawer may have inadvertently missed to mak ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 himself from the penal consequences of Section 138 of the NI Act. In fact, the Supreme Court goes on to hold that 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 NI Act, cannot contend that there was no proper service of notice as required under Section 138 of the NI Act. 24. As far as the specific issue raised in the present petitions is concerned, in Bilakchand Gyanchand Co. (supra), the Supreme Court had set aside the order of the High Court which had held that as the notice of demand was addressed to the Director of the Company and not to the Company, the Complaint was not maintainable. The Supreme Court observed as under: 3. The respondent moved an application before the Magistrate asking him to recall the process. Having failed in this att ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ld 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 issued notice to said Shri Amit J. Bhalla, Director of M/s Bhalla Techtran Industries Limited. Notwithstanding the service of the notice, the amount in question was not paid. The object of issuing notice indicating the factum of dishonour of the cheques is to give an opportunity to the drawer to make the payment within 15 days, so that it will not be necessary for the payee to proceed against in any criminal action, even though the bank dishonoured the cheques. It is Amit Bhalla, who had signed the cheques as the Director of M/s Bhalla Techtran Industries Ltd. When the notice was issued to said Shri Amit Bhalla, Director of M/s Bhalla Techtran Industries Ltd., it was incumbent upon Shri Bhalla to see that the payments are made within the stipulated period of 15 days. It is not disputed (sic alleged) that Shri Bhalla has not signed the cheques, nor is it di ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ot 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 revisional court for purposes of examining as to whether the Metropolitan Magistrate could have exercised the jurisdiction under Section 319 Cr. P.C. was apparently mis-directed. It examined the case from the perspective of its maintainability against the third respondent which was not a correct approach. It ignored the settled principle that notice to director of the company was sufficient notice to the company. [see Bilakchand Gyanchand Co. v. A. Chinnaswami, (1999) 5 SCC 693 ]. In the present case, as already noticed, this is how both the third respondent and the second respondent understood and construed the demand notice to which reply was sent on 19.11.2007 by the second respondent. 27. The above judgment of this court in Sarabjit Singh (supra) has been upheld by the Supreme Court in M Tech Developers (P) Ltd. v. State (NCT of Delhi) Ors., (2019) 14 SCC 806 . ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 repeatedly cautioned that the powers under Section 482 of the Cr.P.C. cannot be used to scuttle a complaint or an FIR at an initial stage, especially where a disputed question of fact is involved. The power is to be exercised sparingly and only in the rarest of the rare cases. Reference in this regard may be had to the judgment of the Supreme Court in Rathish Babu Unnikrishnan v. State (NCT of Delhi) Anr., 2022 SCC OnLine SC 513 , wherein the Supreme Court held as under: 16. The proposition of law as set out above makes it abundantly clear that the Court should be slow to grant the relief of quashing a complaint at a pre-trial stage, when the factual controversy is in the realm of possibility particularly because of the legal presumption, as in this matter. What is also of note is that the factual defence without having to adduce any evidence need to be of an unimpeachable ..... X X X X Extracts X X X X X X X X Extracts X X X X
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