2007 Supreme(SC) 478

2007(3) Supreme 699
SUPREME COURT OF INDIA
(From Delhi High Court)
S.B. Sinha and Markandey Katju, JJ.
Everest Advertising Pvt. Ltd. — Appellant
versus
State, Govt. of NCT of Delhi & Ors. — Respondents
Criminal Appeal No. 520 of 2007
(Arising out of SLP (Crl.) Nos. 6204-6205 of 2005)
Decided on 10-4-2007
Counsel for the Parties :
For the Appellant : Aloke Kumar Sengupta, Suraj Prakash and Dr. Kailash Chand, Advocates.
For the Respondents : K.T.S. Tulsi, Sr. Advocate, Aman Leekha, Umesh Kumar Khaitan, Ashu Kansal, Samir Ali Khan and Mrs. Anil Katiyar, Advocates.

IMPORTANT POINT
Where not only cheques were issued having regard to the huge amount payable by the accused company but also as a result of fall out of non-payment thereof, negotiations were held between the parties wherein Chairman and Managing Director of the company, accused 2 and 3 took part, there cannot be any doubt that the ingredients of the provisions of Section 141 of the Negotiable Instruments Act stand satisfied and they could not plead ignorance of the entire transaction.

Headnote:(i) Negotiable Instruments Act, 1881 — Sections 138 & 141 — Dishonour of cheque issued by a company — Complaint filed against Chairman and Managing Director of the company — Sustainability — Complainant company engaged in the business of advertising and publicity allegedly carried out various jobs and releases and raised bills to the extent of Rs. 2,59,21,053.37 for the work executed — Accused company issued various post dated cheques which on presentation were dishonoured — Complaint petitions filed against accused 1 to 5 i.e. Chairman, Vice Chairman, Director, Executive Director and Senior General Manager of the accused company — Summons issued against accused 2 and 3, Chairman and Managing Director of the accused company challenged — In the complaint petition, it has categorically been averred that payments were made after meetings held by and between the representative of the complainant company and accused 1 to 5 including Chairman and Managing Director of the accused company — Whether having regard to the position held by these two accused in the company, they could plead ignorance of the entire transaction — (No) — Ingredients of Section 141 of the Act stand satisfied.

       Held : The law operating in this behalf is, therefore, no longer res integra. What is, therefore, necessary is the application of law. Necessary ingredients of Section 141 have been stated in the complaint petition at more than one place. Whether the same satisfies the requirements of law or not is the question. (Para 20)

       A Chairman of a large Company may or may not be aware of the actual transaction. If in a given situation, cheques are issued in ordinary course of business. The Managing Director or a Deputy Managing Director, in view of S.M.S. Pharmaceuticals Ltd. (supra) would be deemed to be aware thereof. A Chairman or a Director of a Company need not be. But, without going into the finer question raised by Mr. Tulsi, we may notice that allegations have not only been made in terms of the wordings of section but also at more than one place, it has categorically been averred that the payments were made after the meetings held by and between the representative of the Company and Accused Nos. 1 to 5 which would include Respondent Nos. 2 and 3. (Para 21)

       It is, therefore, not a case where having regard to the position held by the said respondents in the Company, they could plead ignorance of the entire transaction. (Para 22)

       Not only cheques were issued having regard to the huge amount payable by Accused No. 6 to the Company but also as a result of fall out of non-payment thereof, negotiations were held between the parties wherein Respondent Nos. 2 and 3 took part, and, thus, in our opinion, there cannot be any doubt that the ingredients of the provisions of Section 141 of the Act stand satisfied. (Para 23)

       (ii) Criminal Procedure Code, 1973 — Sections 200, 204 — Recalling order issuing summons — A Magistrate does not have and, thus, cannot exercise any such inherent jurisdiction — Complaint filed for offence u/s 138 Negotiable Instruments Act — Upon recording initial deposition of the complainant and its witnesses u/s 200 Cr.P.C., processes were directed to be issued by the Magistrate against the accused persons in terms of Section 204 of the Code of Criminal Procedure — An application was filed for recalling the processes so issued — Allowing the application, the Magistrate recalled the said order issuing summons against respondents 2 and 3 — High Court upheld the order holding that the Magistrate has not committed any mistake indeclining to summon the two accused — Whether the Magistrate had any jurisdiction to recall its order whereby the accused persons were summoned — (No) — Adalat Prasad v. Rooplal Jindal, (2004) 7 SCC 338; Subramanium, JT 2004(8) SC 220; N.K. Sharma, (2005) 13 SCC 213 : Relied on.

       Held : Summons were issued by the learned Magistrate by reason of an order dated 24.07.1999. He recalled the said order. He did not have any jurisdiction in that behalf. A Magistrate does not have and, thus, cannot exercise any inherent jurisdiction. (Para 10)

       Unfortunately, this aspect of the matter was not considered by the High Court despite the aforementioned binding precedents. The High Court, however, for all intent and purport upheld the order passed by the learned Magistrate on the premise that allegations made in the complaint petition do not satisfy the requirements of Section 141 of the Negotiable Instruments Act. (Para 13)