2005 Supreme(Cal) 200

High Court Of Calcutta
P. N. SINHA
FATEH CHAND BHANSALI - Appellant
Versus
HINDUSTHAN DEVELOPMENT CORPORATION LTD - Respondent
C. R. R. 1001 Of 1999
Decided On : 03/23/2005

Service of demand notice by registered post under Section 138 of the Negotiable Instruments Act is not mandatory and failure to serve notice by registered post does not invalidate the complaint.

Headnote:

NEGOTIABLE INSTRUMENTS ACT - SECTIONS 138, 141 - DISHONOUR OF CHEQUE - SERVICE OF NOTICE - MODE AND MANNER - SECTION 94 - INTERPRETATION - DEMAND NOTICE - SERVICE BY REGISTERED POST - NOT MANDATORY - FAILURE TO SERVE NOTICE BY REGISTERED POST - NOT A GROUND TO INVALIDATE COMPLAINT - SERVICE OF NOTICE - MATTER OF FACT - TO BE PROVED BY EVIDENCE - SUPPRESSION OF MATERIAL FACT IN FIR - STAY OF CRIMINAL PROCEEDINGS BY DELHI HIGH COURT - RESTRAINT ORDER BY RESERVE BANK OF INDIA - NOT A BAR TO LODGE CRIMINAL PROCEEDING - DIRECTORS OF COMPANY - CANNOT ESCAPE PENAL LIABILITY - RES JUDICATA - APPLICABILITY - RULE OF ESTOPPEL - REPEATED RAISING OF SAME POINTS IN DIFFERENT REVISIONAL APPLICATIONS - NOT PERMISSIBLE - PAYMENT OF INTEREST - NOT WITHIN PURVIEW OF DISCHARGE OF ANY LIABILITY - PENAL PROVISION UNDER SECTION 138 - NOT ATTRACTED - PARTNERS OF COMPANY - NOT ALL RESPONSIBLE FOR OFFENCE - ONLY PERSONS IN CHARGE OF COMPANY AND RESPONSIBLE TO FIRM CAN BE FASTENED WITH CRIMINAL LIABILITY - SLEEPING PARTNERS - NOT LIABLE TO BE PROSECUTED - COMPLAINT - MUST CONTAIN REQUIREMENTS OF SECTION 141 - INTENTION OF PARTIES - TO BE GATHERED FROM EVIDENCE IN TRIAL - PRESUMPTION UNDER SECTION 139 - IN FAVOUR OF HOLDER OF CHEQUE - ACCUSED PETITIONERS CAN REBUT PRESUMPTION BY ADDUCING EVIDENCE OF REBUTTAL - DEFENCE OF ACCUSED PETITIONERS - TO BE CONSIDERED IN TRIAL ON BASIS OF EVIDENCE - INHERENT POWER OF COURT UNDER SECTION 482 OF CR. P. C. - TO BE EXERCISED SPARINGLY AND WITH CIRCUMSPECTION - ONLY IN RAREST OF RARE CASES - ASSESSMENT OF EVIDENCE - NOT PERMITTED AT THIS STAGE - WARRANT OF ARREST - STAYED FOR THREE MONTHS - PETITIONERS TO PRESENT PROPER APPLICATIONS UNDER SECTION 205 OF CR. P. C. - LEARNED METROPOLITAN MAGISTRATE TO TAKE LENIENT VIEW AND PERMIT PETITIONERS TO BE REPRESENTED THROUGH AUTHORISED ADVOCATE - TRIAL TO BE CONCLUDED AT THE EARLIEST - OBSERVATIONS OF COURT - ONLY FOR PURPOSE OF REVISIONAL APPLICATIONS - LEARNED MAGISTRATE TO ACT IN ACCORDANCE WITH LAW ON BASIS OF EVIDENCE AND MATERIALS ON RECORD.

Fact of the Case:

The complainant, M/s. Hindusthan Development Corporation Limited, filed a petition of complaint in the Court of the learned Chief Metropolitan Magistrate (CMM), Calcutta, which was transferred to the Court of the learned Metropolitan Magistrate, 17th Court, Calcutta, against nine accused persons, including the petitioners, for offences under Sections 138 and 141 of the Negotiable Instruments Act (NI Act). The accused Nos. 2 and 3 were the Chairman and Vice-Chairman respectively of accused No. 1 company and both were in charge of day to day conduct of business affairs, the administration and running of accused No. 1 company. Accused No. 4 is the father of accused No. 2 and father-in- law of accused No. 5 and was in charge of the day to day conduct of business affairs, administration and running of accused No. 1 and was responsible to accused No. 1 of the day to day conduct of the business. Accused Nos. 5 to 9 were all Directors of the said accused No. 1 company and at all material times when the offence was committed they were also in charge of the day to day conduct of the business affairs of accused No. 1 and were responsible to accused No. 1 for the day to day conduct of business No. 1.

Finding of the Court:

The Court held that the complaint was not vague and did not contain any averment against the petitioners or that there was only bald statement against the petitioners. The complaint disclosed that the petitioners were Vice-Chairman and Directors respectively of the accused No. 1 company and were responsible to the accused No. 1 company for the day to day conduct of business of the company. Accordingly, it cannot be accepted that the complaint was vague and did not contain any averment against the petitioners or that there was only bald statement against the petitioners.

Issues: 1. Whether the service of demand notice by registered post is mandatory under Section 138 of the NI Act? 2. Whether the failure to serve demand notice by registered post invalidates the complaint? 3. Whether the stay of criminal proceedings by the Delhi High Court and the restraint order by the Reserve Bank of India are bars to lodge criminal proceedings against the petitioners? 4. Whether the Directors of a company can escape penal liability under Sections 138 and 141 of the NI Act? 5. Whether the rule of res judicata and estoppel are applicable in the present case? 6. Whether the payment of interest is within the purview of discharge of any liability under Section 138 of the NI Act? 7. Whether all partners of a company are responsible for the offence under Sections 138 and 141 of the NI Act? 8. Whether the complaint must contain the requirements of Section 141 of the NI Act? 9. How the intention of the parties is to be gathered? 10. Whether the defence of the accused petitioners can be considered at this stage?

Ratio Decidendi: 1. Section 94 of the NI Act makes it clear that notice of dishonour may be given to a duly authorised agent of the person to whom it is required to be given, or where he has died, to his legal representative, or, where he has been declared an insolvent, to his assignee; may be oral or written; may, if written, be sent by post; and may be in any form; but it must inform the party to whom it is given, either in express terms or by reasonable intendment, that the instrument has been dishonoured, and in what way, and that he will be held liable thereon; and it must be given within a reasonable time after dishonour, at the place of business or (in case such party has no place of business) at the residence of the party for whom it is intended. If the notice is duly directed and sent by post and miscarries, such miscarriage does not render the notice invalid. 2. Failure of the complaint to serve demand notice by registered post would not invalidate the complaint at the threshold. Service of notice is a matter of fact which depends upon proving the said fact in the trial on the basis of evidence. 3. The stay of criminal proceedings by the Delhi High Court and the restraint order by the Reserve Bank of India are not bars to lodge criminal proceedings against the petitioners. 4. The Directors of a company cannot escape penal liability under Sections 138 and 141 of the NI Act. 5. The rule of res judicata and estoppel are applicable in the present case. 6. The payment of interest is not within the purview of discharge of any liability under Section 138 of the NI Act. 7. Not all partners of a company are responsible for the offence under Sections 138 and 141 of the NI Act. Only the persons in charge of the company and responsible to the firm can be fastened with criminal liability. 8. The complaint must contain the requirements of Section 141 of the NI Act. 9. The intention of the parties is to be gathered from evidence in the trial. 10. The defence of the accused petitioners cannot be considered at this stage.

Final Decision: The Court dismissed all the revisional applications and directed the learned Metropolitan Magistrate to proceed with the trial as expeditiously as possible and to conclude the same at the earliest without granting any undue adjournment to either of the parties.