Back
2022 Supreme(Mad) 1363
IN THE HIGH COURT OF JUDICATURE AT MADRAS
G. CHANDRASEKHARAN, J.
Srinivasha Fashions Private Limited, Rep by its Managing Director, Coppa V. Raveendran & Others - Appellant
Versus
Nahar Industrial Enterprises Limited, Focal Point, Chennai - Respondent
CRL.O.P. Nos. 23507 & 23508 of 2016 & Crl.M.Ps. 11015 & 11017 of 2016
Decided On : 18-03-2022
For the Petitioners:Y. Kaja Navas, Advocate. For the Respondent:U. Chandramouli for M/s. King & partridge, Advocates.
The main legal point established in the judgment is the requirement of a legally enforceable debt or other liability subsisting on the date of drawal of the cheque for establishing criminal liability under Section 138 of the Negotiable Instruments Act 1881.
Headnote:
Negotiable Instruments Act - Dishonoured Cheques - Section 138, Section 141 - The court discussed the legal provisions of Section 138 and Section 141 of the Negotiable Instruments Act 1881. It highlighted the distinction between civil liability and criminal liability under Section 138 and emphasized the requirement of a legally enforceable debt or other liability subsisting on the date of drawal of the cheque. The court also considered the purpose of enacting Section 138 and the circumstances under which a cheque can be considered as drawn for an existing debt or liability.
Fact of the Case:
The petitioners issued cheques for the supply of goods, which were subsequently dishonoured. The respondent/complainant filed cases under Section 138 r/w Section 141 of the Negotiable Instruments Act 1881. The petitioners claimed that the cheques were issued as security for the supply of goods and that they had made payments to the respondent after the statutory notice was received.
Finding of the Court:
The court quashed the proceedings against the petitioners in one case (C.C.No.6543 of 2015) as the cheque amount was paid within the period specified in the legal notice. However, the court dismissed the petition in the other case (C.C.No.6544 of 2015) as the reasons for the issuance of the cheques and the alleged discharge of the liability were disputed facts that needed to be decided in the trial.
Issues: The main issue was whether the dishonoured cheques resulted in criminal liability under Section 138 of the Negotiable Instruments Act 1881, and whether the petitioners had valid reasons for the dishonour.
Ratio Decidendi: The court emphasized the requirement of a legally enforceable debt or other liability subsisting on the date of drawal of the cheque for establishing criminal liability under Section 138. It also highlighted the need to consider the purpose of enacting Section 138 and the circumstances under which a cheque can be considered as drawn for an existing debt or liability.
Final Decision: The court quashed the proceedings against the petitioners in one case and dismissed the petition in the other case, highlighting the need for a trial to decide the disputed facts regarding the issuance of the cheques and the alleged discharge of the liability.
JUDGMENT
(Common Prayer: Criminal Original Petition has been filed under Section 482 of the Code of Criminal Procedure, to call for the records connected with the C.C.Nos.6543 & 6544 of 2015 respectively on the file of the I Fast Track Court, Egmore, Chennai and quash the same.)
Common Order
1. These Criminal Original Petitions have been filed to call for the records connected with the C.C.Nos.6543 & 6544 of 2015 respectively, on the file of the I Fast Track Court, Egmore, Chennai and quash the same.
2. The respondent/complainant filed both the cases for the offences punishable under Section 138 r/w Section 141 of Negotiable Instruments Act 1881.
3. The allegations common to both complaints and separately, in brief, are as follows:
The respondent/complainant is a public limited company. The first petitioner is a private limited company. The second petitioner is its Managing Director, the third and the fourth petitioners are its Directors. The petitioners 2 to 4 are in control and management of the day today affairs of the first petitioner company. The respondent/complainant entered into a contract for supply of cotton fabric vide invoice No. NF 931140 dated 3.11.2014 for Rs.6,09,108/-, Invoice No.NF 931141 dated 3.11.2014 for Rs.2,90,343/-, Invoice No.NF 931142 dated 3.11.2014 for Rs.8,76,100/- Invoice No.NF 931438 dated 7.11.2014 for Rs.1,00,729/-, Invoice No.NF 937712 dated 28.1.2015 for Rs.4,12,750/-, Invoice No.NR 935005 dated 24.12.2014 for Rs.4,42,500/-, Invoice No. NR 934440 dated 16.12.2014 for Rs.2,00,432/- Invoice No.NF 932945 dated 27.11.2014 for Rs.28,350/- Invoice No.NF 932759/- dated 25.11.2014 for Rs.2,63,900/- Invoice No.NF 937032 dated 17.1.2015 for Rs.1,74,570/- with the first accused.
4. Pursuant to the supply of the cotton fabric vide the aforesaid invoices, the petitioners issued a cheque bearing No.798097, dated 20.12.2014 for Rs.20,91,858/- drawn on The Corporation Bank, Whites Road, Mount Road Branch, Chennai – 600 014 in C.C.No.6543 of 2015. In C.C.No.6544 of 2015, three cheques for a sum of Rs.10,50,870/- were issued as detailed below:
i. Cheque bearing No.804657 dated 10.03.2015 for Rs.4,07,938/- (Rupees Four Lakhs Seven Thousand Nine Hundred and Thirty Eight Only) drawn on the Corporation Bank, Whites Road, Mount Road Branch, Chennai – 600 014.
ii. Cheque bearing No.804584 dated 2.03.2015 for Rs.4,42,500/- (Rupees Four Lakhs Forty Two Thousand Five Hundred only) drawn on the Corporation Bank, Whites Road, Mount Road Branch, Chennai – 600 014.
iii. Cheque bearing No.804836 dated 26.01.2015 for Rs.2,00,432/- (Rupees Two Lakhs Four Hundred and Thirty Two only) drawn on the Corporation Bank, Whites Road, Mount Road Branch, Chennai – 600 014.
5. The cheque for Rs.20,91,858/- was presented for collection on 20.12.2014, through the Corporation Bank, Anna Salai, Chennai. It was returned by a return memo dated 20.12.2014 with an endorsement 'funds insufficient'. It was again represented on 6.3.2015 and returned.
6. The cheques for Rs.4,07,938/- Rs.4,42,500/- and Rs.2,00,432/- were presented for collection on 10.03.2015, 02.03.2015 and on 26.01.2015 respectively, through the Corporation Bank, Anna Salai, Chennai and were returned on 11.03.2015, 07.03.2015 and 07.03.2015 respectively, with an endorsement 'funds insufficient'.
7. A statutory notice was issued on 24.03.2015 demanding the payment of cheque amounts within a period of 15 days from the receipt of the notice. The notice was received by the petitioners. The petitioners have not paid the amount. Therefore the complaints.
8. The learned counsel for the petitioners submitted that after the receipt of notice in C.C.No.6543 of 2015, petitioners have paid the cheque amount within the period specified in the legal notice. In support of his submission, he produced the copy of the accounts statement of the respondent. It is seen from the accounts statement for the period from 03.04.2015 to 04.04.2015 that a sum of Rs.20,91,858/- was paid by the petitioners t
