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2005(1) Bankmann 473
ALLAHABAD HIGH COURT
Amar Saran, J.
Jagmohan and etc. — Applicants
Versus
State of U.P. and another — Opposite Parties
Cri. Misc. Application Nos. 3013 and 2958 of 1998
Decided on 10-11-2004
IMPORTANT POINT
Even when complainant did not allege existence of liability debt or liability against which the cheque was issued, burden of proving non existence of any debt or liability would be on accused which could be only at trial.
Headnote:(i) Negotiable Instruments Act, 1881—Section 138—Prosecution for dishonour of cheque—Petition to quash proceedings on plea that complainant had given an undertaking before State Industrial and Development corporation and thus amount for which cheque had been issued was not enforceable liability—Applicant themselves admitted that they had obtained loan from complainant—Burden of proving non-existence of any debt or liability was on accused which could only be discharged at trial. (Paras 3 & 4)
(ii) Negotiable Instruments Act, 1881—Section 138—Prosecution for dishonour of cheque—Petition to quash proceedings on plea that company had not been impleaded as accused and applicants were only Directors of company—Simply because company was not impleaded, accused could not escape personal liability—Specific allegations against both accused for not discharging the liability—Prosecution could not be quashed. (Para 5)
(iii) Negotiable Instruments Act, 1881—Section 138—Dishonour of cheque—Service of demand notice—Where notice was dispatched by post at correct address, notice shall be deemed to have been served on sendee unless he proved that it was not really served and that he was not responsible for such non-service. (Para 6)
Result: Petition dismissed.
Amar Saran J.—Heard Sri P.C. Srivastava, learned counsel for the applicant and Sri Dharmendra Singhal, learned counsel for the complainant and perused the materials on record. These connected applications under Section 482, Cr.P.C. have been filed for quashing the proceedings against the applicants – Jagmohan Singhal in the first application and Smt. Kamlesh Singhal in the second application, in Criminal Case No. 1590/9 of 1997 Km. Laxmi Garg v. Jagmohan Singhal under Section 138 of the Negotiable Instruments Act.
2. A complaint was filed by the opposite party No. 2 alleging that different cheques to the tune of Rs. 4,37,000/- have been issued on or between 12-7-1994 and 5-4-1995 by way of a loan. However, on non-payment of Rs. 3 lacs, the applicant and his wife co-accused Smt. Kamlesh Singhal gave a cheque of Rs. 3 lacs bearing Cheque No.117511 drawn on Nainital Bank Ltd., Muzaffar Nagar.The applicant- Jagmohan Singhal is said to have signed all the cheques, however, when the complainant went to present the cheque to the Bank on 18-2-1997, both the applicants are said to have told him that as they did not have sufficient funds on that date, the cheque should be presented subsequently. However, on 10-7-1997 when the cheque was again presented, the same was returned to the complainant with the bank’s endorsements that the payment was being refused as there was an instruction to “stop payment by drawer” and due to “insufficient funds.” The complainant sent notice on the permanent address of the applicants with a copy to the office address of the applicants-firm by registered post on 16-7-1997 and 19-7-1997, While the notices sent at their residence address were not taken by the .applicants, however, the registered A.Ds, of the notices sent at the firm’s address were received back by the complainant, which were annexed with the complaint. As the payments were not made despite the notices under Section 137 of the Negotiable Instruments Act, hence the complaint was filed on
20-8-1997. After examining the complainant and Witnesses under Sections 200 and 202, Cr.P.C. and perusing the other records, the learned A.C.J.M. Ist, Muzaffar Nagar has summoned the applicants under Section 138 of the Negotiable 1nstrumens Act. After the summoning Order, the objections filed by the applicants were also dismissed by the Order passed by the 1st Additional C.J.M., Muzaffar Nagar on 16- 5-1998 and the Criminal Revision No. 58 of 1998 against the aforesaid Order was also dismissed by the learned Sessions Judge, Muzaffar Nagar on 20-7-1997.
3. It has been contended by the learned counsel for the applicants that the complainant was not entitled to receive the money, as she had given an undertaking before the Rajasthan State Industrial Development and Investment Corporation Ltd. (RIICO) to enable the applicants’ company to obtain a loan of Rs. 150 lacs. Under this undertaking she was not entitled to withdraw Rs. 4,37,000/-, which she had advanced to the applicants’ firm as an unsecured loan from getting the aforesaid advance from the RIICO. The applicants have even filed certain documents executed by the complainant to this effect.
4. In this connection, Section 138 of the Negotiable Instruments Act provides that a person is liable for prosecution, if any cheque issued for the discharge, in whole or in part, of any debt or other liability , is returned by the bank unpaid, or the credit of that account is insufficient or it exceeds the amount arranged .for and “debt or other liability” under the Explanation to the aforesaid Section means a legally enforceable debt or other liability. “The applicants themselves admit that they have obtained a loan from Smt. Laxmi Garg, the complainant. However, they have stated that in view of the complainant’s undertaking before the RIICO, there was no enforceable liability on the applicants to pay the aforesaid amount. It is notable that the explanation mentions enforceable debt or other liability Furthermore, i
