IMPORTANT POINT
The impugned judgment setting aside complaint under Section 482 Cr.P.C. for an offence under Section 138 Negotiable Instruments Act, 1881 is not sustainable in law.

Headnote:(i) Negotiable Instruments Act, 1881-Sections 138, 141, 142(a)-Dishonour of cheques issued in favour of appellant Govt. Co. on ground "payment stopped by drawer"-Notice of demand not complied-Complaint filed in the name of Co. and on its behalf by Senior Manager-Who was later substituted by Deputy General Manager-Quashed on the ground that complaints were filed by unauthorised persons-Whether correct? (No)-Case law referred-Legal position explained about complaint by an incorporeal person (like company or corporation).
       Held : In our view the reasoning given above cannot be sustained. Section 142 of the Negotiable Instruments Act provides that a complaint under Section 138 can be made by the payee or the holder in due course of the said cheque. The two complaints, in question, are by the appellant Company who is the payee of the two cheques. (Para 10)
       It is held that when the complainant is a body corporate it is the de jure complainant, and it must necessarily associate a human being as de facto complaint to represent the former in court proceedings. It has further been held that no Magistrate shall insist that the particular person, whose statement was taken on oath at the first instance, alone can continue to represent the company till the end of the proceedings. It has been held that there may be occasions when different persons can represent the company. It has been held that it is open to the de jure complainant company to seek permission of the court for sending any other person to represent the company in the court. Thus, even presuming, that initially there was no authority, still the Company can, at any stage, rectify that defect. At a subsequent stage the Company can send a person who is competent to represent the company. The complaints could thus not have been quashed on this ground. (Para 12)
       (ii) Negotiable Instruments Act, 1881-Section 138-Dishonour of cheques-Memo of understanding between parties-Two cheques issued -Dishonoured on ground "payment stopped by drawer" issued-Complaint-Quashed on ground that cheques were issued as security and not for any debt or liability-Whether can be done under inherent powers under Section 482 Cr.P.C.? (No)-Negotiable Instruments Act, 1881-Section 139-Whether attracted? (Yes).
       Held : The learned Judge has next gone into facts and arrived at a conclusion that the cheques were issued as security and not for any debt or liability existing on the date they were issued. In so doing the learned Judge has ignored well settled law that the power of quashing criminal proceedings should be exercised very stringently and with circumspection. It is settled law that at this stage the Court is not justified in embarking upon an enquiry as to the reliability or genuineness or otherwise of the allegations made in the complaint. The inherent powers do not confer an arbitrary jurisdiction on the court to act according to its whim or caprice. At this stage the Court could not have gone into merits and/or come to a conclusion that there was no existing debt or liability. (Para 13)
       Held further : In the case of Maruti Udyog Ltd. v. Narender reported in (1999) 1 SCC 113, this Court has held that, by virtue of Section 139 of the Negotiable Instruments Act the Court has to draw a presumption that the holder of the cheque received the cheque for discharge of a debt or liability until the contrary is proved. This Court has held that at the initial stage of the proceedings the High Court was not justified in entertaining and accepting a plea that there was no debt or liability and thereby quashing the complaint. (Para 15)
       Held consequently : There is therefore no requirement that the Complainant must specifically allege in the complaint that there was a subsisting liability. The burden of proving that there was no existing debt or liability was on the respondents. This they have to discharge in the trial. At this stage, merely on basis of averments in the Petitions filed by them the High Court could not have concluded that there was no existing debt or liability. (Para 17)
       (iii) Negotiable Instruments Act, 1881-Section 138-Dishonour of cheque on ground "payment stopped by drawer"-When an offence?-Complaint whether can be quashed on the ground that cheque is not returned for insufficient funds or exceeded arrangement (No)-Appeal allowed-Case remanded-Appeal disposed of accordingly.
       Held : Just such a contention has been negatived by this Court has, in the case of Modi Cements Ltd. v. Kuchil Kumar Nandi reported in (1998) 3 SCC 249. It has been held that even though the cheque is dishonoured by reason of stop payment instruction an offence under Section 138 could still be made out. It is held that the presumption under Section 139 is attracted in such a case also. The authority shows that even when the cheque is dishonoured by reason of stop payment instructions by virtue of Section 139 the Court has to presume that the cheque was received by the holder for the discharge, in whole or in part, of any debt or liability. Of course this is a rebuttable presumption. The accused can thus show that the "stop payment" instructions were not issued because of insufficiency or paucity of funds. If the accused shows that in his account there was sufficient funds to clear the amount of the cheque at the time of presentation of the cheque for encashment at the drawer bank and that the stop payment notice had been issued because of other valid causes including that there was no existing debt or liability at the time of presentation of cheque for encashment, then offence under Section 138 would not be made out. The important thing is that the burden of so proving would be on the accused. Thus a Court cannot quash a complaint on this ground. (Para 19)
       Held consequently : In this view of the matter, the impugned judgment cannot be sustained and is set aside. The learned VII Metropolitan Magistrate, G.T. Chennai is directed to proceed with the complaints against respondents 1 and 3 in accordance with law. It is made clear that the setting aside of the impugned Order will not tantamount to preventing the respondents from taking, at the trial, please available to them including those taken herein. The Appeals stand disposed of accordingly. There will be no order as to costs. (Paras 20 and 21)

JUDGMENT

S.N. Variava, J.-Leave granted.

2. Heard parties.

3. These Appeals are against a judgment dated 18th December, 1998. By this common judgment two complaints, filed by the appellants, under Section 138 of the Negotiable Instruments Act have been quashed.

4. The appellant is a Government of India Company, incorporated under the Companies Act. The appellant has a Regional Office at Chennai. The 1st respondent is also a Company. The 2nd and 3rd respondents were/are the Directors of the 1st respondent Company. It is stated that 2nd respondent has now died.

5. The appellant and the 1st respondent entered into a Memorandum of Understanding dated 1st June, 1994. This Memorandum of Understanding was slightly altered on 19th September, 1994. Pursuant to the Memorandum of Understanding two cheques, one dated 31st October, 1994 in a sum of Rs. 20,26,995/- and another dated 10th November, 1994 in a sum of Rs. 22,10,156/-, were issued by the 1st respondent in favour of the appellant. Both the cheques when presented for payment were returned with the endorsement "payment stopped by drawer". Two notices were served by the appellant on the 1st respondent. As the amounts under the cheques were not paid the appellants lodged two complaints through one Lakshman Goel, the Manager of the Regional Office of the appellant.

6. Respondents filed two petitions for quashing of the complaints. By the impugned order both the complaints have been quashed.

7. At this stage it must be mentioned that respondents had also issued, to the appellants, four other cheques. Those cheques were also dishonoured when presented for payment. Four other complaints, under Section 138 of the Negotiable Instruments Act, had also been filed by the appellants. Those four complaints had also been lodged by the same Shri Lakshman Goel. In those four cases the respondents filed separate applications for discharge. Those discharge applications were on identical grounds as urged by the respondents in the two petitions for quashing the complaints. The Magistrate accepted the contention and discharged the respondents. The High Court allowed the Revision filed by the appellants and set aside the Order of discharge. The High Court held, as between the same parties, that the Magistrate had erred in holding that the complaints filed by Lakshman Goel were not maintainable. The High Court held that, at this stage, it was not possible to accept defence that complainant/appellants were not entitled to present the cheques as respondents had expected the goods. The High Court restored the four complaints and directed the Magistrate to proceed with the trial in accordance with law. The respondents filed SLPs before this Court which were summarily dismissed.

8. In this case the respondents have taken identical contentions in their petitions to quash the complaints viz. that the complaints filed by Mr. Lakshman Goel were not maintainable and that the cheques were not given for any debt or liability. It was pointed out to the learned Judge that, between the same parties and on identical facts, it had already been held that as case for discharge was made out. Yet the learned Judge chose to ignore those findings and proceeded to hold to the contrary.

9. In the impugned judgment it has been held that the complaints filed by Mr. Lakshman Goel were not maintainable. It was noticed that in those two complaints, at a subsequent stage, one Mr. Sampath Kumar, the Deputy General Manager of the appellant was allowed to represent the appellants. The High Court held that it is only an Executive Director of the Company who has the authority to institute legal proceedings. It is held that the complaint could only be filed by a person who is in charge of or was responsible to the Company. It is held that authorisation must be on the date when the complaint is filed and a subsequent authorisation does not validate the complaint. It is held that the absence of a complaint by a duly delegated authority is not a mere d

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2001 Supreme(SC) 1587

IMPORTANT POINTThe impugned judgment setting aside complaint under Section 482 Cr.P.C. for an offence under Section 138 Negotiable Instruments Act, 1881 is not sustainable in law.

Cases Referred (5)

IMPORTANT POINT
The impugned judgment setting aside complaint under Section 482 Cr.P.C. for an offence under Section 138 Negotiable Instruments Act, 1881 is not sustainable in law.