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2006(1)Bankmann 158
ANDHRA PRADESH HIGH COURT
C.Y. Somayajulu, J.
S. Sultan and Co. Hyderabad
and another — Appellants
versus
Cement Corporation of India Ltd., Hyderabad & Anr. — Respondents
Crl. P.No. 126 of 2004
Decided on 29.10.2004
IMPORTANT POINTS
A. If a director or the partner of a company or firm issues a cheque in his individual capacity and if that cheque is dishonoured, the company or firm of which is a director or partner cannot be made liable under Section 138 of Act by invoking Section 141 of N.I Act.
B. Even though prosecution launched against accused for offence under Sections 420 and 407 IPC has ended in acquittal, it is of no consequence for deciding petition u/s. 138 of NI Act, as cause of action for launching prosecution u/s. 138 is different from that of offences under sections 420 and 407 IPC. .
Headnote:(i) Negotiable Instruments Act, 1881—Sections 138,141,142—Dishonour of cheque —Cheques issued by person in charge in his individual capacity and not for and on behalf of firm/company—Proceedings against firm/company—Whether maintainable)—(No”)—If a director of a company or firm issues a cheque in his individual capacity, and if that cheque is dishonoured, company or firm cannot be made liable u/s. 138 by invoking section 141—Since cheque issued by director in his own name whether complainant recognized changed name of erstwhile firm or not was immaterial—Proceedings against company were liable to be quashed. (Para 4)
(ii) Negotiable instruments Act, 1881—Sections 138,139—Complaint alleging Dishonour of cheque—Cheque issued by director in his own name—Petition for quashment of proceedings against director on plea that he not owed any money to complainant in his individual capacity—Validity—For the drawer to become liable, it is not necessary that he should be debtor of payee or holder in due course thereof— Even when a person draws a cheque in respect of any debt or liability of a third party he is liable to be proceeded against, if other conditions mentioned in section 138 are satisfied—Complaint against director not liable to be quashed. (Para 5)
(iii) Negotiable Instruments Act, 1881—Section 138—Dishonour of Cheque—Notice —Computation of limitation period—Petition for quashment of complaint on plea that statutory notice was served beyond period of limitation—Date of receipt of endorsement was 9-4-1994—Date of Preparation of endorsement by banker was 9-4-1994—Date of service of notice was 25-4-1994—Since date of preparation of endorsement by banker being 9-4-1994, it could not have been served on complainant on 9-4-1994 itself—Hence by excluding 9-4-1994, service of statutory notice on 25-4-1994 was well within, time. (Para 7)
(iv) Negotiable Instruments Act, 1881—Section 138—Indian Penal Code, 1860— Section 420, 407—Complaint alleging Dishonour of cheque—Petition for quashment of complaint on plea that prosecution launched by complainant against accused u/s 420 and 407 IPC had ended in acquittal—Validity—Cause of action for launching prosecution
u/s. 138 is different from that of offences u/s 420 and 407 IPC—Acquittal of accused for offences u/s 420 and 407 IPC is of no consequence for deciding petition u/s 138—Complaint not liable to be quashed. (Para 6)
Result: Petition Allowed in part.
C.Y. Somayajulu, J. —1st respondent filed a private complaint against the petitioners under Section 138 read with Section 142 of the Negotiable Instruments Act (hereinafter referred to as ‘the Act’) alleging that the 1st petitioner M/s. S. Sultan and company which subsequently changed its name as M/s Sultan Transport Private Limited, in settlement of the bills due to it, issued three cheques Bearing Nos. 0179828, 0179830 and 0179831 dated 14-1-1994 for Rs. 14,78,000/- each drawn on Vijaya bank, Vijaya Nagar Colony Branch, which when presented for payment were returned dishonoured with an endorsement dated 9-4-1994 “Exceeds arrangement” and so, a statutory notice dated 11-4-1994 was issued by it to the petitioners under registered post with acknowledgement due and also under certificate of posting.The registered notice was returned on 21-4-1994 with an endorsement “Premises locked”. It could succeed in service notice personally on the 2nd petitioner on 25-4-1994 but petitioners did not pay the amounts covered by the dishonoured cheques but got issued a reply notice dated 7 -5-1994 with false allegations, for which a rejoinder notice was issued on 19-5-1994. Hence the complaint, which was taken cognizance of as C.C No. 537 of 2000. This petition is filed to quash the said proceedings in the said C.C.
2. The contention of the learned Counsel for the petitioners is that since the 1st respondent clearly alleged in the complaint that it failed to recognize the change of name M/s. Sultan and Company as
M/s. Sultan Transport Private limited, it has no right to proceed against M/s Sultan Transport Private Limited, and in any event since 1st respondent had lodged a complaint under Sections 420 and 407 IPC, against the 2nd petitioner and others, which ended in acquittal after full trial, 1st respondent again initiating proceedings under Section 138 of the Act is but an abuse of process of law. It is his contention that in any event since there is no valid service of notice under Section 138 of the Act, on the 1st petitioner, as the allegations in the complaint show that the statutory notice sent to the 1st petitioner was returned unserved, and since the notice on the 2nd petitioner is said to have been served on 25-4-1994, which is beyond the period of limitation prescribed by Section 138 of the Act proceedings against the petitioners are liable to be quashed. There is no representation on behalf of 1st respondent, who appeared through a counsel.
3. I am unable to agree with the contention of the learned Counsel for the petitioners that the complaint against the 1st petitioner is not maintainable since the allegations in the complaint show that 1st respondent did not recognize the change in the constitution of the firm and the change of name, because as per section 138 of the Act, offence under that section is committed when a person, ‘who draws a cheque on an account maintained by him’ with a banker for payment of any amount of money to another person from out of the account for the discharge, in whole or in part, of any debt or other liability, is returned by the bank unpaid for the reasons stated in that section, subject to the condition that (i) the cheque should have been presented in the bank within the period of its validity or within six months from the date on which it is drawn, whichever is earlier, and (ii) the payee or the holder in due course of the cheque, must have made a demand for the payment of the amount of money covered by the dishonoured cheques by giving a notice in writing to the drawer of the cheque, within fifteen days from the date of receipt of the information by him from the Bank regarding the return of the cheque as unpaid. As per Section 141 of the Act if the person committing the offence under Section 138 of the Act is a company, every person who, at the time the offence was committed, was in charge of, and was responsible to the company for the conduct of its business as well as the company, would
