ADARSHA EDUCATIONAL SOCIETY, HANAMKONDA v. SHIRAM CHITS PVT. LTD. , FORMERLY KNOWN AS SHRIRAM CHITS LTD.
2006-12-27
K.C.BHANU
body2006
DigiLaw.ai
( 1 ) THIS Criminal Petition is filed by the petitioner-A-2 under Section 482 Cr. P. C. to quash the proceedings in C. C. No. 8 of 2005 on the file of the I Additional Munsif Magistrate, warangal, which was filed for the offence punishable under Sections 138 and 141 of the negotiable Instruments Act, 1881 (for short 'the Act' ). ( 2 ) A-2 is a society registered with the registrar of Societies and it is running various educational institutions including 'adarsha junior College'-A-1 at Hanmakonda. A-2 is the subscriber of complainant in the chit transaction and became highest bidder in the auction conducted on 10-10-1999. A-2 has withdrawn the prized amount by furnishing sureties. Thereafter, A-2 paid 27 instalments and committed default from April, 2001. In spite of repeated demands and issuance of notice, the accused or his guarantors did not pay the amount. Therefore, the complainant filed a suit in O. S. No. 512 of 2002 on the file of the Principal Senior Civil Judge, Warangal for recovery of money against A-2 and its guarantors. While the things stood thus, A-1 through its principal which is one of its educational institution, issued acheque dated 30-11 -2004 for Rs. 1,55,000/- drawn on Vijaya bank Ltd. , AJC Extension Counter, hanmakonda and when it was presented, it was returned with an endorsement funds insufficient. Thereafter, the complainant got issued statutory legal notice calling upon the accused to pay the amount and the said notice was received by the accused, but failed to pay the amount. Hence the complaint. ( 3 ) LEARNED counsel for the petitioner contended that no prima facie case is made out under Section 138 of the Act against the present petitioner, that the petitioner has not issued any cheque and no notice was issued to A-2 as contemplated under Section 138 (b) of the Act and hence, he prays to quash the proceedings. ( 4 ) ON the other hand, learned counsel for the 1st respondent contended that the cheque was issued by A-1, that A-2 is running A-1 institution and therefore, notice to A-1 is substantial compliance of Section 138 (b) of the Act, that A-2 is in charge and responsible for the affairs of A-1 institution and therefore, he prays to dismiss the petition.
( 5 ) TO constitute an offence incorporated in the main enacting clause 138 of the Negotiable instrument Act, the following ingredients have to be established: " (a) the cheque has been presented to the bank within a period of six months from the date on which it is drawn or within the period of its validity, whichever is earlier. (b) The payee or the holder in due course of the cheque, as the case may be, makes a demand for the payment of the said amount of money by giving a notice, in writing, to the drawer of the cheque (within thirty days) of the receipt of information by him from the bank regarding the return of the cheque as unpaid, and (c) The drawer of such cheque fails to make the payment of the said amount of money to the payee or, as the case may be, to the holder in due course of the cheque, within fifteen days of the receipt of the said notice. " ( 6 ) THE explanation to Section says that expression 'debt or liability' occurring in the main exacting clause means a 'legally enforceable debt or other liability'. Section 139 of the Act incorporates a rule of presumption to the effect that unless contrary is proved the holder of a cheque received the cheque of the nature referred to in Section 138 of the Act for the discharge in whole or in part of any debt or liability. ( 7 ) LEARNED counsel forthe petitioner relied on a decision reported in Subhash Chandra sariya and another v. Amara Nagarjuna Cotton corporation and another, wherein it was held as follows: "what is required for holding a partner vicariously liable for the offence committed by a firm is the actual role played by him in the management and conduct of its business. Simply because it is alleged that the accused approached the 1st respondent for supply of cotton lints with a promise to pay for the same after receipt of cotton and believing that representation 1st respondent supplied cotton, the word 'accused' in the complaint, in my considered opinion, is not sufficient to make the 2nd petitioner- a-3 vicariously responsible. The vicarious liability of partners comes into question under Section 142 of the Act.
The vicarious liability of partners comes into question under Section 142 of the Act. The necessary ingredients of section 142 of the Act must be alleged in the complaint to make them liable for the offence under Section of the Act. Therefore, there must be clear, unambiguous and specific allegations against the persons who are impleaded as accused to show that they were responsible to the firm in the conduct of its business. " ( 8 ) ON the other hand, learned counsel for the 1st respondent relied on a decision reported in K. Pannir Selvam v. MMTC Limited and another, wherein it was held as follows: "as observed above, the requirement of section 138 (b) of the Act is that notice should be sent to the drawer of the cheque and not, to all the persons who can be deemed to be liable apart from the drawer of the cheque by virtue of the provision in Section 141 of the Act. " ( 9 ) IT is alleged in the complaint that A-1 issued the cheque, whereas A-2 is the subscriber of the chit transaction maintained by the complainant. A-2 is the highest bidder and he alleged to have received Rs. 2 lakhs. It is also alleged that the complainant filed a suit O. S. No. 512 of 2002 on the file of the principal Senior Civil Judge, Warangal, for recovery of money against A-2 only. Therefore, a person who issued the cheque is liable for prosecution. But however, any other person will be liable provided those persons liability comes within the four corners of Section 141 of the Act. To make a person liable for the offence under Section 141 of the Act, there must be a clear and specific allegation against the person who is impleaded as accused to show that he was in charge and responsible for the firm and company for the conduct of its business. The allegation is that A-2 is the educational society registered under the societies Registration Act. A-2 is also running various educational institutions including a-1 -Junior College. To discharge the debt contracted by A-2, A-1 issued a cheque. When the cheque was presented, it was returned with an endorsement funds insufficient.
The allegation is that A-2 is the educational society registered under the societies Registration Act. A-2 is also running various educational institutions including a-1 -Junior College. To discharge the debt contracted by A-2, A-1 issued a cheque. When the cheque was presented, it was returned with an endorsement funds insufficient. In view of the decision reported in Pannir selvam's case (2nd supra) a notice under section 138 (b) of the Act should be sent to the drawer of the cheque and not to all the persons who come under the purview of Section 141 of the Act. Since in this case, notice has been sent to A-1 though debt is contracted by A-2, still it is a valid notice under Section 138 (b) of the Act. Though A-1 has not obtained any loan or paid from the complainant, but it is a liability for A-1 in view of the fact that A-1 is being run by A-2, which is a registered society. Therefore, prima facie offence under Section 138 of the act is made out against both the accused. Hence, there are no grounds to quash the proceedings. ( 10 ) ACCORDINGLY, the Criminal Petition is dismissed. .