Unique Infoways Pvt. Ltd. & Ors. v. M/s MPS Telecom Private Limited

14. That after muchpersuasion andfollow up bycomplainant Company, the accusedpersons had agreed to pay the above noted legal enforceable amount against the invoices raised by complainant Company.

15. That the accused no. 1 under the signatures ofaddressee no. 2 and upon the instructions ofaddressee no. 3 towards the outstanding balance payment of the above mentioned amount, issuedseveral cheques to the tune ofRs. 97,75,000/- (Rupees Ninety Seven Lacs Seventy Five Thousand only) all drawn on HDFC Bank, 89, Hemkunt Chamber, Nehru Place, New Delhi - 110019 towards discharge of your existing legal liability. Details ofthe cheques are as under: Sr. Cheque Date Amount No. No. (Rs.)

1. 017015 12.2.2015 25,60,119/-

2. 017016 13.2.2015 25,60,119/-

3. 017017 14.2.2015 25,60,119/-

4. 017018 13.2.2015 6,98,214/-

5. 017019 15.2.2015 6,98,214/-

6. 017020 14.2.2015 6,98,214/- Total 97,75,000/- Crl.M.C.4672/2015

16. That accused no. 2 on behalf of accused no. 1 while issuing the aforesaid cheques, assured and promised to complainant Company that the above said cheques would be duly honoured upon itspresentation andfurther guaranteed to make the payments of legal debts and dues payable to complainant Company.

17. That the cheques mentioned in para 15 at si. nos. 1 to 6, when presentedfor clearance by complainant Company to its banker. State Bank ofIndia, SouthExt. Part-I, NewDelhi - 110049, within the statutory period; was returned back unpaid containing the remark "Payment Stopped By Drawer".

18. It is evident that the accused persons never harboured any intention to pay the complainant Company and have dishonestly and intentionally withheld the dues in order to achieve their otherwise malafide intention and deceitful designs. That the said dishonor of the cheques were under the knowledge ofthe accusedpersons and thesame was also informedbycomplainant Company to the accusedpersons.

19. Thatyou the accused nos. 2 and 3 on behalfofaccused no. 1, again given the assurance and promise that the accused have madeproper arrangements ofthefunds in the bank account and requested complainant Company to present the cheques in question for the second time for clearance. On the request and instructions of the accused persons, the complainant Company has presented the said cheques inquestion to its bankernamelyStateBankofIndia, South Ext. Part-I, New Delhi - 110049,for clearancefor the second time but, to the utter shock and surprise, the said cheques got bounced/returned back unpaidfor the second time also despite the specific assurance and promise made Crl.M.C.4672/2015 by the accused persons containing the same remark "Payment Stopped By Drawer". Detailsfor the Date ofReturning Memo are as under: Sr. Cheque Date Amount Retuming No. No. (Rs.) memo Date

1. 017015 12.2.2015 25,60,119/- 25.3.2015

2. 017016 13.2.2015 25,60,119/- 20.3.2015

3. 017017 14.2.2015 25,60,119/- 25.3.2015

4. 017018 13.2.2015 6,98,214/- 20.3.2015

5. 017019 15.2.2015 6,98,214/- 20.3.2015

6. 017020 14.2.2015 6,98,214/- 25.3.2015 Total 97,75,000/-

20. That the accused persons might not be having the sufficientfunds in their account maintained with its banker namedabove andwith malqfide intention to defeat the lawful claim of the complainant Company, the accused no. 2 on behalfofthe accused no. 1, had deliberately issued the said cheques in question, knowingly that thesaidcheques willnot be honoured upon presentation as the accused no. 2 on behalf of the accused no. 1 issued the said stop payment instructions to its banker and effected the dishonor of the above said cheques.

21. That the accusedpersons with malqfide intentions issued the aforesaid chequesfor the above amount payable to the complainant Company. The said cheques were issued towards the discharge ofthe debt and legal liability owed by the accused persons towards the complainant Company. Since the said cheques were returned back dishonoured and unpaid for the reasons and grounds stated above, the accused persons in those circumstances committed an offence as contemplated under Chapter XVII ofthe N.I. Act, 1881, as amended from time to time and therefore, held yourselfliable to action in that behalf.

22. The above dishonor of the said cheques is in direct contravention of the promises and assurances made by the accused persons to the complainant Company assuring due encashment ofthe aforesaid cheques upon presentationfor the second time also.

23. That withina period of30 (thirty) days ofthe receipt ofinformationfrom its banker that thesaid chequeshave been returned unpaid due to above mentioned remarks, the complainant Company sent a legal Notice dated 17.4.2015 through registered post on 17.4.2015 at the aforementioned address of the accused persons demandingpayment of the dishonoured cheques within 15 (fifteen) days ofthe receiptofthe notice. Thatthesaid notice was sufficiently stamped Registered AD and sent at the last known correct addresses of the accused persons and same is duly served upon the accused persons.

24. That despite the service of the legal notice as aforesaid, theaccusedpersons havenotmadepaymentof the cheques-in-question to the complainant Company till date. 2 5 2 6 2 7 2 8

4. Through the present petition, the petitioners contend that:

I. That a single complaint filed for the dishonour of six cheques could not have been considered by the learned Trial Court in terms of Section 219 of the CrPC;

II. That there was no case alleged by the respondent in relation to anyinsufficiency of funds inthe accounts ofthe petitioners herein in as much as vide para 17 of theplaint Crl.M.C, 4672/2015 it had been stated that the cheques on presentation for clearance by the plaintiff company to its banker within a statutoryperiod were returned back unpaid containing the remarks " payment stopped by the drawer"-,

III. That the respondent had put up the case in relation to dishonour of cheques in question when the dishonour was for the second time and no notice for the dishonor made the second time had been issued;

IV. Thatthepetitioner No.3 hadbeenimplicated by invocation of Section 141 of the Negotiable Instruments Act, 1881, despite there being no allegation or material on record to connect her with the commission ofany offence.

5. Through the reply to the petition, the respondent has contended that the petition is frivolous and vexatious. The respondent has placed reliance on the verdict of the Hon'ble Supreme Court in State of Haryana v. Bhajan Lai, 1992 Supp (1) SCC 335 to state that the specific observation in para 102 thereofto the effect: " 102. In the backdrop of the interpretation of the various relevant provisions of the Code under ChapterXIV and oftheprinciples oflaw enunciated by this Court in a series ofdecisions relating to the exercise of the extra-ordinarypower under Article 226 or the inherentpowers Under Section 482 ofthe Code which we have extracted and reproduced above, we give thefollowing categories of cases by way of illustration wherein such power could be exercisedeither topreventabuse oftheprocess ofany Court or otherwise to secure the ends ofjustice, Crl.M.C. 4672/2015 Page 10of24 though it maynot bepossible to lay down anyprecise, clearly defined and sufficiently channelised and inflexibleguidelines or rigidformulae and to give an exhaustive list ofmyriad kinds ofcases wherein such power should be exercised.

1. Where the allegations made in the First Information Report or the complaint, even ifthey are taken at theirface value andaccepted in their entirety do notprima-facie constitute any offence or make out a case against the accused.

2. Where the allegations in the First Information Report and other materials, ifany, accompanying the F.I.R. do not disclose a cognizable offence, justifying an investigation by police officers Under Section 156(1) of the Code except under an order of a Magistrate within thepurview ofSection 155(2) ofthe Code.

3. Where the uncontroverted allegations made in the FIR or complaint and the evidence collected in support ofthe same do not disclose the commission of any offence and make out a case against the accused.

4. Where, the allegations in the F.I.R. do not constitute a cognizable offence but constitute only a non-cognizable offence, no investigation is permitted by a police officer without an order ofa Magistrate as contemplated Under Section 155(2) ofthe Code.

5. Where the allegations made in the FIR or complaint are so absurd and inherently improbable on the basis of which no prudent person can ever reach a just conclusion that there is sufficient ground for proceeding against the accused.

6. Where there is an express legal bar engrafted in any oftheprovisions ofthe Code or the concernedAct (under which a criminal proceeding is instituted) to the institution and continuance of the proceedings and/or where there is a specificprovision in the Code or the concerned Act, providing efficacious redress for the grievance ofthe aggrievedparty.

7. Where a criminal proceeding is manifestly attended with malafide and/or where theproceeding is maliciously instituted with an ulterior motivefor wreaking vengeance on the accused and with a view to spite himdue toprivate andpersonal grudge. and it has thus been contended by the respondent that none of the parameters laid down by the Hon'ble Supreme Court in State of Haryana (Supra) are applicable in the instant case.

6. The respondent has further submitted that as the petitioners had issued sixcheques forthesingle andsame transaction between thesame parties, the respondent had issued a consolidated legal notice for all the six dishonoured cheques and thus one single causeof actionaroseafter the expiry ofthe period of 15 days.

7. It was also submitted on behalf ofthe respondent that the series of acts alleged against the petitioners are so interlinked and interconnected that they form the same transaction. It has also been submitted on behalf of the respondent that every dishonour ofa cheque of transaction amounts to an independent default against the issuer of the cheque and the holderof the cheque can choose to file a complaint underSection 138oftheNegotiable Instruments Act, 1881, foranysuch default and thus it cannot be contended as sought to be contended by the petitioner that Section 138 would have no application to a cheque presented for the second time ifthe same had already been dishonoured Crl.M.C. 4672/2015 Page 12 of24 once inasmuch as, itwas a continuing obHgation ofthedrawer tomake the chequegood by either arranging funds into its accounton whichthe cheque was drawn or liquidating the liability otherwise.

8. Inter alia, it was submitted on behalf of the respondents that in the case ofdirectors or the officer ofthe company who signs the cheque onbehalfofthecompany there is no need to make a specific averment that he was in-charge of and was responsible for the conduct of the business ofthe company ortomake any specific allegation and that the mere fact that the dishonoured cheque was signed by the respondent No.2 on behalf of the company would give rise to the responsibilities under Section 141(2) of the Negotiable Instruments Act, 1881.

9. It was also submitted on behalf of the respondent that the averments in the complaint that the Directors, other than the director who signed the cheque in question on behalf of the plaintiffi.e. the petitioner No.l company, would be liable to face the prosecution without an averment being made in a complaint that such director was in-charge and was responsible to the company for the conduct of the business of the company would suffice aspetitioners No.2 and[3] inthe present petition are in any event Directors of the petitioner No.l since 1986 till date and as also indicated from the website ofthe Ministry of Corporate Affairs.

10. Itwas also submitted onbehalfoftherespondent thattheissue in respect to the involvement ofthe petitioner No.3 has been erroneously raised in as much as the issue in relation to the issuance ofcheques and the dishonor of cheques was a disputed question of fact which needs to be adjudicated upon by the learned Trial Court on the basis ofevidence. Crl.M.C. 4672/2015 Page 13of24

11. Through the written synopsis on behalf of the petitioner and on behalfofthe respondents similar submissions were made.

12. Reliance was placed on behalf of the petitioner on a catena of verdicts: a. K.K.Ahuja V. V.K. Vora &Another; (2009) 10 SCC 48 b. Standard Chartered Bank v. State of Maharashtra and Others; c. Gunmala Sales Private Ltd. V. Anu Mehta & Ors.; AIR 2015 SCI 072 to contend that the vicarious liability cannot be imposed against a person in terms of Section 141(1) of the Negotiable Instruments Act, 1881 without specific averment as to the role in the issue of the dishonoured cheque.

13. Reliance was also placed on behalf of the respondents on the following verdicts: /. Indian Bank Association and Ors. vs. UOI (2014) 5 SCC 590 a. K.K.Ahuja vs. V.K. Vora andAm. (2009) 10 SCC 48 Hi. Standard Chartered Bank v. State of Maharashtra & Ors.

V. CharsashniKumar Talwani vs. Malhotra Poultries, (2013) SCC

Online P & H 26656 vi. Sharma Contracts (India) Pvt. Ltd. vs. State & Anr. 2013 SCConline P&H 26656 vii. MSR Leathers vs. S. Palaniappan andAnr. (2013) 1 SCC 177

14. Placed on record along with the reply of the respondent as annexure R-2 is the Company Master Data ofthe petitioner No.1which shows the names of the petitioners no. 2 and the petitioner 3 as the directors of the petitioner No.l with their date of commencement as directors being 19.8.1996 for both of them and there is no 'end' date that has been shown for the respondents No.1 and 2 i.e. the petitioners No.2 and 3 herein.

15. The contents ofthe complaint as already adverted to herein above are categorical in relation to the allegations against the petitioners herein.

16. In terms of Section 141 ofthe Negotiable Instruments Act, 1881 every person who at the time of the commission of offence under Section138oftheNegotiable Instruments Act, 1881, whowasincharge of, and was responsible to the company for the conduct ofthe business of the company as well as the company and such a director of the company would be liable to be prosecuted and punished. The proviso thereto to Section 141 of the Negotiable Instruments Act, 1881, however lays down that no person would be rendered liable to be punished if he proves that the offence was committed without his knowledge or that he had exercised all due diligence to prevent the to commission of such offence.

17. As laid down by the Hon'ble Supreme Court in K.K.Ahuja (supra) while summarizing the Section 141 of Negotiable Instruments Act, 1881 it has been observed to the effect:

20. The position under section 141 of the Act can be summarized thus:

(i) If the accused is the Managing Director or a Joint

Managing Director, it is not necessary to make an averment in the complaint that he is in charge of, and is responsible to the company, for the conduct of the business ofthe company. It is sufficient ifan averment is made that the accused was theManaging Director or Joint Managing Director at the relevant time. This is because the prefix ^Managing' to the word ^Director' makes it clear that they were in charge of and are responsible to the company, for the conduct of the business ofthe company. (ii)Inthe case ofa director or an officer ofthecompany who signed the cheque on behalfofthe company, there is no need to make a specific averment that he was in charge ofand was responsible to the company, for the conduct of the business of the company or make any specific allegation about consent, connivance or negligence. The veryfact that the dishonouredcheque wassigned byhim on behalfofthecompany, wouldgive rise to responsibility under sub-section (2) ofSection

141. (Hi) In the case ofa Director, Secretary or Manager (as definedinSec. 2(24) ofthe Companies Act) or aperson referred to in clauses (e) and (f) ofsection 5 of Companies Act, an averment in the complaint that he was in charge of, and was responsible to the company, for the conduct of the business of the company is necessary to bring the case under section 141(1). No further averment would be necessary in the complaint, though some particulars will be desirable. They can also be made liable undersection 141(2) by making necessary averments relating to consent and connivance or negligence, in the complaint, to bring the matter under that sub-section. (iv)Other Officers ofa company cannot be made liable undersub-section (1) ofsection 141. Other officers ofa company can be made liable only under sub-section (2) ofSection 141, be averring in the complaint their position and duties in the company and their role in regard to the issue and dishonour of the cheque, disclosing consent, connivance or negligence. "

18. The averments in the complaint are categorical tothe effect that the petitioner No.2 was the signatory of the cheques which have been issued on behalfofthe petitioner No.1company to the respondent.

19. As regards the petitioner No.3 it is apparent that she falls in the category of director in terms of Section 2 (24) ofthe Companies Act and thus in terms of the verdict of the Hon'ble Supreme Court in K.K.Ahuja (Supra) para 27(iv), adverted to elsewhere herein above, it is apparent that the petitioner No.3 has also rightly been arrayed as an accused in the instant case. Though the aspect ofthe respondent No.3 having not been in control and in charge ofthe petitionerNo. 1company can always be put forth by the petitioner No.3 after putting her defence and can be so contended before the learned Trial Court at the stage of analysis of evidence that is ledbyeitherside.

20. Presently in view of the averments that have been made in the plaint coupled with the factum that thepetitioner No.3 continues to be a director of the petitioner No.l, it cannot be held that there is an unimpeachable evidence or acceptable circumstances which canlead to the conclusion that the petitioner No.3 could not have been in charge or responsible for the conduct ofthe business at the relevant time and that making her stand the trial would bean abuse ofthe process ofCourt as no offence was made out against her. The same undoubtedly is amatter of evidence and the petitioner No.3 can undoubtedly lead her defence in relation thereto.

21. As regards the contention raised onbehalfofthe petitioner herein that in relation to the six cheques adverted to herein above, there was only one criminal complaint that had been filed i.e. CC No. 1529/2015 out ofwhich the impugned order arises, in relation thereto it is essential to observe in as much as it was laid down by this Court in Sharma Contracts India Pvt. Ltd. V. State & Anr. (2012) SCC Online Delhi 310 vide para 11 to the effect "11. The purport of the above provision is that where a person is accused ofmore than one offence ofthesame kind committed within the space of twelve months he can be chargedand tried at one trialfor, any number of them not exceeding three. The stage for determining whether there shouldbemore thanonechargeandtherefore more thanone trial has not yet been reached. That will be decided at the appropriate stage by the learned trial court as and when charges are framed. This issue should therefore be appropriately addressed to that Court The mere reference in the complaint to 20 cheques as having been dishonoured cannot render the complaint bad in law or not maintainable. The order ofthe learnedMMissuing summons also doesnot get invalidated on that score. The second submission of learnedSenior counselfor the Petitioner isalso rejected. " and that of Bombay High Court inRajasthani Trading Co.v.Chemos International Limited \l (2001) BC 426 observing: "It is true that in the instant case petitioner has issued 27 cheques, 2 of which were dated 30.11.1996 while the remaining were dated 26.2.1997. Thus all the 27 cheques cameto be issuedto respondent No. 1, within a span ofless than 3 months. It is also true that dishonour in respect of each cheque wouldconstitute separate offence. However, it is to be borne in mindthat all the27 cheques werepresented to the Bank on one and the same date and they were dishonoured bythe Bank. The intimation ofdishonour ofthe cheques was given by the Bank to respondent No. 1 on one and thesamedate i.e. 10.3.1997. It mayfurther benotedthat a single notice dated 19.3.1997 in respect ofthe dishonour ofall the 27cheques was given tothepetitioners. The offence under Section 138 is deemed to have committed when the drawer ofthe chquesfails tomakepayment ofthe amount of money within 15 days of the receipt of the demand notice given under Section 138(b) of the Negotiable Instruments Act. It is also material to notethat all the 27 cheques issued bythepetitionerwere inconnection with a singletransaction enteredwith respondent No. 1. Therefore, theprovisions of Section 220(1) ofCr. P. Code permits the respondent No. 1 tofile one complaint against thepetitioners inrespect ofthe said transaction andthepetitioners canbe triedtogetherfor the dishonour of27 cheques which infact forms the same transactions. In this respect Mr. Sathyanarayanan referred to the decision in K. Govindaraj v.Ashwin Baral, I (1998) BC 581=1998 Crl.L.J22, which was a case in respect of 6 dishonoured cheques given to the complaint within a period of three months. The Madras High Court held that the cheques through given ondifferent dates, werepresentedon one particular date as requested by the accused, and, therefore, one offence must be deemed to have been committed in respectofthesingle transaction. It wasfurther heldthatactsofgiving the cheques were merged together to form thesame transaction. Therefore, theaccused should be chargedand tried at one trialfor such an offence. It was, however, heldthateven otherwise Section 220(1) ofthe Cr.

22. It is further essential to observe that it has been laid down by the Hon'ble Supreme Court in MSR Leathers v. Palaniappan and another (2013) 1 see 177 that a prosecution based on a second or successive default in payment of the cheque amount is not impermissible simply because no prosecution based on the first default which was followed by a statutory notice and a failure to pay and had not been launched. The observations in para 33 and para 34 of the said verdict which read to the effect: " 33. Applying the above rule of interpretation and the provisions ofSection 138, we have no hesitation in holding that a prosecution based on a second or successive default in payment of the cheque amount should not be impermissible simply because no prosecution based on the first default which was followed by a statutory notice and a failure to pay had not been launched. Ifthe entire purpose underlying Section 138 ofthe Negotiable Instruments Act is to compel the drawers to honour their commitments made in the course of their business or other affairs, there is no reason why a person who has issued a cheque which is dishonouredandwhofails to makepayment despite statutory notice served upon him should be immune to prosecution simply because the holder of the cheque has not rushed to the court with a complaint based on such default or simply because the drawer has made the holder defer prosecution promising to make arrangementsforfunds orfor any other similar reason. There is in our opinion no real or qualitative difference between a case where default is committed and prosecution immediately launched and another where the prosecution is deferred till the cheque presented again gets dishonouredfor the second or successive time.

34. The controversy, in our opinion, can be seen from another angle also. If the decision in Sadanandan case [(1998) 6 SCC 514: 1998 SCC (Cri) 1471] is correct, there is no option for the holder to defer institution of judicial proceedings even when he may like to do so for so simple and innocuous a reason as to extend certain accommodation to the drawer to arrange the payment ofthe amount. Apart from the fact that an interpretation which curtails the right of the parties to negotiate a possible settlement without prejudice to the right ofholder to institute proceedings within the outer period oflimitation stipulated by law should be avoided we see no reason why the parties should, by a process of interpretation, be forced to launch complaints where they can or may like to defer such action for good and valid reasons. After all, neither the courts nor the parties stand to gain by institution ofproceedings which may become unnecessary if cheque amount is paid by the drawer. The Magistracy in this country is overburdened by an avalanche ofcases under Section 138 ofthe Negotiable Instruments Act. Ifthefirst default itselfmust in terms ofthe decision in Sadanandan case [(1998) 6 SCC 514: 1998 SCC (Cri) 1471] result in filing of prosecution, avoidable litigation would become an inevitable bane ofthe legislation that was intended only to bring solemnity to cheques without forcing the parties to resort to proceedings in the courts of law. While there is no empirical data to suggest that the problems ofoverburdenedMagistracy andjudicial system at 3tv '7,V the district level is entirely because of the compulsions arising out of the decisions in Sadanandan case [(1998) 6 see 514: 1998 SCC (Cri) 1471], it is difficult to say that the law declared in that decision has not added to court congestion. ", are thus germane and relevant.

23. Further more, the verdict of the Hon'ble Supreme Court in Criminal Appeal Nos. 403 and 405 of 2019 in A.R. Radha Krishna v. Dasari Deepthi & Ors. Dated 28.2.2019, lays down to the effect: "9 In a case pertaining to an offence under S. 138 andS. 141 ofthe Act, the law requires that the complaint must contain a specific averment that the Director was in charge of and responsiblefor, the conduct ofthe company's business at the time when the offence was committed. The High Court, in deciding a quashing petition under S. 482, Cr.P.C., must consider whether the averment made in the complaint is sufficient or ifsome unimpeachable evidence has been brought on record which leads to the conclusion that the Director could never have been in charge of and responsible for the conduct ofthe business ofthe company at the relevant time. While the role of a Director in a company is ultimately a question offact, and no fixed formula can be fixed for the same, the High Court must exercise its power under S. 482, Cr.P.C. when it is convinced, from the material on record, that allowing the proceedings to continue would be an abuse ofprocess ofthe Court. [See Gunamala Sales Private Limited v. Anu Mehta and Ors., (2015) 1 SCC 103].

10. Aperusal ofthe record in the present case indicates that the appellant has specifically averred in his complaint that the respondent nos. 1 and 2 were actively participating in the day today affairs of the accused no.l - company. Further, the accused nos. 2 to 4 (including the respondent nos. 1 and 2 herein) are alleged to befrom the samefamily and running the accused no.l - company together. The complaint also specificies that all the accused, in active connivance, mischievously and intentionally issued the cheques in favor of the appellant and later issued instructions to the Bank to "Stop Payment". No evidence of unimpeachable quality has been brought on record by the respondent nos. 1 and 2 to indicate that allowing the proceedings to continue would be an abuse ofprocess ofthe court. "

24. As regards the contention raised on behalf of the petitioner that there is nothing in the complaint to indicate that there was any insufficiency of fiinds in the accounts of the petitioners and thus the ingredients of Section 138 ofthe Negotiable Instruments Act, 1881 are not brought forth, it is essential to observe that it has also been laid down by the Hon'ble Supreme Court in HMT Watches Ltd. vs. M.A. Abida andAnr. (2015) 11 SCC 776, vide para 14 thereofto the effect:

punishable under Section 138 of the NI Act gets attracted, " observing thus that in Modi Cement V. Kuchil Kumar Nandi (1998) 3 see 249, the Hon'ble Supreme Court has already clarified that if the cheque is dishonoured for 'stop payment' even then the offence punishable under Section 138 of the Negotiable Instruments Act, 1881 gets attracted.

25. In the circumstances, it is not considered appropriate to exercise jurisdiction under Section 482 of the CrPC, in as much as there is no infirmity in the impugned order dated 1.6.2015 of the learned Trial Court, MM (N.I.Act) South-East, Saket in CC no. 1529/2015

26. The petition and the accompanying applications are thus dismissed. However, nothing stated herein shall amount to any expression on the merits of the case pending before the learned Trial Court which shall adjudicate the matter on its own merits uninfluenced by any of the observations made herein. ANU MALHOTRA, J. MARCH 14, 2019