Sanjay Choubey v. Ms. Sindhu Araga

1. Whether the Reporters of local papers may be allowed to see the judgment?

2. To be referred to Reporter or not?

3. Whether the judgment should be reported in the Digest? SUNIL GAUR, J. Criminal M.A. Nos. 14884, 14886, 14888 & 14890 of 2009

1. Exemption allowed, subject to all just exceptions.

2. Applications stand disposed of. Criminal M.C. Nos. 4340, 4341, 4342 & 4343 of 2009 & Crl.

M. A. Nos. 14883,14885,14887,14889 of 2009

1. A common question raised in these four petitions is whether dishonoring of cheques with remarks “stop payment”, would be an offence under Section 138 of the Negotiable Instruments Act, 1881 (hereinafter referred to as the N.I. Act).

2. Respondents are the share-holders of M/s. Empathy Digital Media Private Limited, which was purchased by the petitioner and in terms of the Memorandum of Understanding of 25th June, 2008, with the Directors of the aforesaid Private Limited Company, four cheques were issued by the petitioner on 15th March, 2009, in discharge of legal liability in terms of the aforesaid Memorandum of Crl. M.C. Nos. 4340, 4341, 4342, 4343 of 2009 Page 3 Understanding in favour of the respondents, who belong to one family. The Total amount of these four cheques was Rs.65,16,557/-. On presentation, these four cheques were dishonoured with the remarks “stop payment”, which led to filing of four different complaints under Section 138 of the N. I. Act, against the petitioner, who is common in all these four petitions. He has been summoned as an accused in these four complaints under Section 138 of the N. I. Act, quashing of which is sought in these four petitions.

3. Learned Counsel for the petitioner states that the question involved in these four petition filed by him is common one and therefore, these four petitions can be heard together. The crux of the arguments advanced on behalf of the petitioner is that return of cheques with remarks “stop payment” would not be an offence under Section 138 of the N.I. Act. To state so, learned Counsel for the petitioner relies upon three decisions of the Apex Court and those are “Electronics Trade & Technology Development Corpn. Ltd. Secundrabad v. Indian Technologies & Engineers (Electronics) (P) Ltd. and Another” (1996) 2 SCC 739; “K.K. Sidharthan v. T.P. Praveena Chandran And Another” (1996) 6 SCC 369, and “Modi Cements Ltd. v. Kuchil Kumar Nandi” (1998) 3 SCC 249.

4. After having heard learned Counsel for the petitioner for quite some time, this Court finds that the two decisions of the Apex Court in Electronics Trade (Supra) & Sidharthan (Supra) have been reconsidered by a larger Bench of three Judges in Modi Cement Crl. M.C. Nos. 4340, 4341, 4342, 4343 of 2009 Page 4 (Supra) and it has been declared by the Apex Court in no uncertain terms that they do not lay down the law correctly. The observations made by the Apex Court in Modi Cement (Supra) needs to be taken note of and are as under:- “The aforesaid propositions in both these reported judgments, in our considered view, with great respect are contrary to the spirit and object of Sections 138 and 139 of the Act. If we are to accept this proposition it will make Section 138 a dead letter, for, by giving instructions to the bank to stop payment immediately after issuing a cheque against a debt or liability the drawer can easily get rid of the penal consequences notwithstanding the fact that a deemed offence was committed.”

5. The ratio of ruling in aforesaid “Modi Cement” (Supra) is that the drawer of the cheque undoubtedly gets an opportunity under Section 139 of the N.I. Act to rebut the statutory presumption attached to the issuance of a cheque, which is dishonoured. Otherwise too, bare reading of Section 138 of the N. I. Act makes it clear that the dishonor of the cheque for insufficiency etc. would attract its applicability. The reason for stopping the payment of the cheques in question is a matter of fact which is not required to be gone into in these proceedings. It would be open to the petitioner to rebut the statutory presumption at trial while relying upon the reply to the legal Notice issued by the respondents prior to the filing of the complaints in question. The stand taken by the petitioner herein Crl. M.C. Nos. 4340, 4341, 4342, 4343 of 2009 Page 5 in these petitions is also required to be considered by the trial court at appropriate stage. It would be premature for this Court to do so now. Prima Facie case under Section 138 of the N.I. Act is made out against the petitioner. Impugned order summoning the petitioner as an accused in these proceedings under Section 138 of N.I. Act, cannot be faulted. No case for quashing of the complaints in question and the summoning order is made out.

6. These petitions are dismissed in limini with the observation that anything said herein shall have no bearing on merits at trial.

7. These petitions and pending applications are accordingly disposed of. Sunil Gaur, J. January 21, 2010 rs