Back
In The High Court Of Karnataka At Bangalore
Mohan Shantanagoudar, J.
Dinesh Harakchand Sankla
V.
Kurlon Limited, Bangalore And Others
Criminal Petition Nos. 1579 to 1585 of 2005.
27th September, 2005
Cases Referred: 1999 AIR SCW 881. Distinguished: 2005 SCR (Cri) 567; AIR 1999 Supreme Court 1952; 1998(4) ALL MR 287; 2002 (4) Crimes 289; 2001 (2) Crimes 273; 1998 Company Cases page-549- Vol. 94; 1993 Company Cases Page -797 Vol. 78; 1999 Company Cases Page -13- Vol. 97 Relied: AIR 2002 Supreme Court 182.
Indian Penal Code, 1860 -Trial of dishonour of cheque -Section 420 -Trial for dishonour of cheque -Cheque was returned for alteration in date and difference in signature -If such alterations are intentionally made and if the case is in the preliminary stage and charges are yet to be framed, it is always open for the Court to frame charge for an offence under Section 420. [Mohan Shanthana Goudar, J]: The cheque may also come within the purview of Section 420 of IPC in these cases as he would be committing the offence of cheating, if he intentionally issued the cheques in question. As the criminal cases are still in the preliminary stage and charges are yet to be framed, it is always open for the Court below to frame charge for the offence under Section 420 of IPC, if the material on record at that stage of the proceedings disclose such offence. It is to be noted that the first information or complaint is not an encyclopedia to contain all the particulars and the sections under which the offences are committed. Mere omission to mention any or more penal Sections in FIR would not ipso facto deter the concerned Court to proceed further for the concerned offences. It is always open to the Court to frame charges for different offences, other than and in addition to the offences which are mentioned in the FIR, if ultimately the material on investigation discloses such offences. Thus the criminal proceedings cannot be scuttled, on that technical score, at this initial stage. If the process is stopped at this stage, it may lead to travesty of justice. The substance of the allegations found in the first information or complaint is relevant and not mere format or the sections, for the purposes of proceeding further. In view of the same, there is no bar for the Court below to proceed further as the complaint also discloses the offence punishable under Section, 420 of Indian Penal Code along with the offence under Section 138 of the Negotiable Instruments Act.
Cases Referred: 1999 AIR SCW 881. Distinguished: 2005 SCR (Cri) 567; AIR 1999 Supreme Court 1952; 1998(4) ALL MR 287; 2002 (4) Crimes 289; 2001 (2) Crimes 273; 1998 Company Cases page-549- Vol. 94; 1993 Company Cases Page -797 Vol. 78; 1999 Company Cases Page -13- Vol. 97 Relied: AIR 2002 Supreme Court 182.
Cases Referred: 1999 AIR SCW 881. Distinguished: 2005 SCR (Cri) 567; AIR 1999 Supreme Court 1952; 1998(4) ALL MR 287; 2002 (4) Crimes 289; 2001 (2) Crimes 273; 1998 Company Cases page-549- Vol. 94; 1993 Company Cases Page -797 Vol. 78; 1999 Company Cases Page -13- Vol. 97 Relied: AIR 2002 Supreme Court 182.
Criminal Procedure Code, 1973 -Interference with complaint -Section 482 -Interference with complaint -Active participation of partner (accused) -Whether the accused was actively participating in the business of the firm at the relevant point of time or not, has to be ascertained during the course of trial and not in a petition under Section 482,.
Cases Referred: 1999 AIR SCW 881. Distinguished: 2005 SCR (Cri) 567; AIR 1999 Supreme Court 1952; 1998(4) ALL MR 287; 2002 (4) Crimes 289; 2001 (2) Crimes 273; 1998 Company Cases page-549- Vol. 94; 1993 Company Cases Page -797 Vol. 78; 1999 Company Cases Page -13- Vol. 97 Relied: AIR 2002 Supreme Court 182.
Negotiable Instrument Act, 1881 -Trial of offence under IPC -Section 138 -Trial of offence under IPC -Cheque was returned for alteration in date and difference in signature -If such alterations are intentionally made and if the case is in the preliminary stage and charges are yet to be framed, it is always open for the Court to frame charge for an offence under Section 420, IPC. [Mohan Shanthana Goudar, J]: The cheque may also come within the purview of Section 420 of IPC in these cases as he would be committing the offence of cheating, if he intentionally issued the cheques in question. As the criminal cases are still in the preliminary stage and charges are yet to be framed, it is always open for the Court below to frame charge for the offence under Section 420 of IPC, if the material on record at that stage of the proceedings disclose such offence. It is to be noted that the first information or complaint is not an encyclopedia to contain all the particulars and the sections under which the offences are committed. Mere omission to mention any or more penal Sections in FIR would not ipso facto deter the concerned Court to proceed further for the concerned offences. It is always open to the Court to frame charges for different offences, other than and in addition to the offences which are mentioned in the FIR, if ultimately the material on investigation discloses such offences. Thus the criminal proceedings cannot be scuttled, on that technical score, at this initial stage. If the process is stopped at this stage, it may lead to travesty of justice. The substance of the allegations found in the first information or complaint is relevant and not mere format or the sections, for the purposes of proceeding further. In view of the same, there is no bar for the Court below to proceed further as the complaint also discloses the offence punishable under Section, 420 of Indian Penal Code along with the offence under Section 138 of the Negotiable Instruments Act.
Cases Referred: 1999 AIR SCW 881. Distinguished: 2005 SCR (Cri) 567; AIR 1999 Supreme Court 1952; 1998(4) ALL MR 287; 2002 (4) Crimes 289; 2001 (2) Crimes 273; 1998 Company Cases page-549- Vol. 94; 1993 Company Cases Page -797 Vol. 78; 1999 Company Cases Page -13- Vol. 97 Relied: AIR 2002 Supreme Court 182.
Negotiable Instruments Act, 1881 -Legal presumption under -Section 139- Legal presumption under -Can Court draw a presumption in favour of holder when the cheque is returned with an endorsement that "Alteration in date and drawer s signature differs"? Yes. [Mohan Shanthana Goudar, J]: Even when the cheque is dishonoured by the reason of "alteration in date and drawer s signature differs", the Court has to presume by virtue of Section 139 of the Negotiable Instruments Act that the cheques are 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 alone can show to the Court that the alteration in signature and date were not made because of insufficiency or paucity of funds. The accused can show that the alteration in dates or signatures are made not because of insufficiency or paucity of funds. If the accused shows that in his account there was sufficient funds to clear the amount of cheques at the time of presentation of cheques for encashment at the drawer s bank and that the cheques are returned for the valid cause, then the offence under Section 138 of the Act would not be made out. The important thing is that the burden of so proving would be on the accused. Thus, the Court cannot quash the complaint on this ground.
Cases Referred: 1999 AIR SCW 881. Distinguished: 2005 SCR (Cri) 567; AIR 1999 Supreme Court 1952; 1998(4) ALL MR 287; 2002 (4) Crimes 289; 2001 (2) Crimes 273; 1998 Company Cases page-549- Vol. 94; 1993 Company Cases Page -797 Vol. 78; 1999 Company Cases Page -13- Vol. 97 Relied: AIR 2002 Supreme Court 182.
Negotiable Instruments Act, 1881 -Object and interpretation -Section 138 -Object and interpretation -Object of the provision is to promote efficacy of banking and to maintain credibility of claque -The provision should be interpreted in consistency with legislative intent and purpose so as to suppress the mischief and advance the remedy.
Cases Referred: 1999 AIR SCW 881. Distinguished: 2005 SCR (Cri) 567; AIR 1999 Supreme Court 1952; 1998(4) ALL MR 287; 2002 (4) Crimes 289; 2001 (2) Crimes 273; 1998 Company Cases page-549- Vol. 94; 1993 Company Cases Page -797 Vol. 78; 1999 Company Cases Page -13- Vol. 97 Relied: AIR 2002 Supreme Court 182.
Negotiable Instruments Act, 1881 -Offence under -Section 138 -Offence under -Cheque returned with an endorsement that, "Alteration in date and drawer s signature differs" -A presumption can be drawn that the cheque was issued for discharge, in whole or in part, of any debt or liability and an offence can still be made out. [Mohan Shanthana Goudar, J]: It is no doubt true that Section 138 of the N.I. Act, if read plainly, would disclose that the drawer of the cheque would be responsible to be proceeded with for the offence under Section 138 of the N.I. Act if the cheque is returned with an endorsement of insufficient funds or the amount involved in the cheque exceeds the amount arranged to be paid from that account by an agreement made with that bank. To overcome the said provision in a circuitous way, the drawer of the cheque may find various ways of getting the cheques bounced or returned with the sole purpose of defeating the encashment of the cheques. In such a situation, the question is as to whether the Courts can shut their eyes? The answer would be obviously in the negative If the drawer intentionally tampers the cheque or issues the cheque with difference in signature etc., the cheques will be definitely returned. Even after service of statutory notice, if the amounts involved in the cheque are not paid by the drawer of the cheque, then his intentions are prima facie clear, to the effect that he would be tampering with the cheques only with an oblique motive. If, in such case, the person in whose favour the cheques are issued is not allowed to prosecute the matter under Section 138 of the Negotiable Instruments Act, the very purpose of enacting Section 138 of the N.I. Act would be frustrated. The drawer of the cheque will have to take abundant precaution while issuing the cheques so that the cheques should be honoured and contractual obligations are fulfilled. In case, if the drawer issues cheques as in the case on hand, he will be doing so in circuitous manner in order to save his skin, only to take advantage of the absence of specific words under Section 138 of the Negotiable Instruments Act.
Cases Referred: 1999 AIR SCW 881. Distinguished: 2005 SCR (Cri) 567; AIR 1999 Supreme Court 1952; 1998(4) ALL MR 287; 2002 (4) Crimes 289; 2001 (2) Crimes 273; 1998 Company Cases page-549- Vol. 94; 1993 Company Cases Page -797 Vol. 78; 1999 Company Cases Page -13- Vol. 97 Relied: AIR 2002 Supreme Court 182.
Petitioner being accused 2 in C.C. Nos. 26054, 26072, 26053, 26056, 26055, 26073 and 26071 of 2004, pending on the file of 14th Additional Chief Metropolitan Magistrate, Bangalore, has sought for quashing the said proceedings.
2. Based on the complaints lodged by respondent herein against the petitioner and two others alleging offence under Section 138 of the Negotiable Instruments Act, 1881, the present proceedings are initiated. The complaints disclose that the cheques issued by the accused for repayment of the legally recoverable debts due to the complainant's company, were on presentation, returned by the concerned Bank with an endorsement of "Alteration in date and drawer's signature differs". The statutory notices issued by the complainant to the petitioner herein returned with an endorsement of "not claimed". As the amounts involved in the cheques were not paid by the accused, complaints came to be filed. The principle contentions raised by the learned Counsel for the petitioner are as under:
(a) Petitioner is not the partner of the 1st accused firm and that he is not involved in day-to-day affairs of the firm;
(b) As the cheques are returned with an endorsement of "Alteration in date and drawer's signature differs", the petitioner cannot be prosecuted for the offence under Section 138 of the Negotiable Instruments Act.
3. Elaborating his contentions, Sri V.P. Shintre, learned Counsel appearing on behalf of the petitioner contends that, no where in the complaints and in the sworn statements it is disclosed that the petitioner is a partner and that he is actively involved in day-to-day affairs of the partnership firm.
The said contention of the learned Counsel for the petitioner cannot be accepted, inasmuch as, paragraph 4 of the complaint discloses that the petitioner herein is the partner of the 1st accused-firm. The complaint further discloses that the accused had purchased materials from the complainant's company, and towards clearance of part payment of the outstanding balance amount, the accused had issued account payee cheques. Thus, the complaint prima facie discloses that the petitioner is a partner and is involved in day-to-day affairs of the business of the firm. Added to it, the question as to whether the petitioner is actively involved in the affairs of the firm or not, is a pure question of fact, which cannot be decided in this petition filed under Section 482 of the Cr. P.C. The said question shall have to be decided based on the material to be collected during the course of the trial. The aforesaid view of mine is supported by the judgment of the Apex Court in the case of S.V. Muzumdar and Others v. Gujarat State Fertilizer Company Limited and Another, wherein it is observed thus:
"Para 8. We find that the prayers before the Courts below essentially were to drop the proceedings on the ground that the allegations would not constitute a foundation for action in terms of Section 141 of the Act. These questions have to be adjudicated at the trial. Whether a person is in charge of or is responsible to the Company for conduct of the business is to be adjudicated on the basis of materials to be placed by the parties. Sub-section (2) of Section 141 is a deeming provision which as noted supra operates in certain specified circumstances. Whether the requirements for the application of the deeming provision exist or not is again a matter for adjudication during trial. Similarly, whether the allegations contained are sufficient to attract culpability is a matter for adjudication at the trial.
Para 9. Under scheme of the Act, if the person committing an offence under Section 138 of the Act is a company, by application of Section 141 it is deemed that every person who is in charge of and responsible to the company for conduct of the business of the company as well as the company are guilty of the offence. A person who proves that the offence was committed without his knowledge or that he had exercised all due dil
An indispensable Tool for Legal Professionals, Endorsed by Various High Court and Judicial Officers
Please visit our Training & Support
Center or Contact Us for assistance
Scan Me!
India’s Legal research and Law Firm App, Download now!
For Daily Legal Updates, Join us on :
Back to top
