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Madhya Pradesh High Court · body

2008 DIGILAW 758 (MP)

Manish Bajaj v. Maza Construction Pvt. Ltd.

2008-06-24

S.K.KOCHAR

body2008
Judgment S.K. Kochar, J. : The appellant herein filed a criminal complaint under Section 138 of the Negotiable Instruments Act (for short the N.I. Act), 1881 before the learned Additional Chief Judicial Magistrate, Indore, His case was that he was doing business in the name and style of Manish Bajaj, Bajaj Construction Pvt. Ltd, fordoing fitting of PVC pipes. The respondent No. 1 is a registered company and respondent Nos. 2 and 3 are the Directors. From the firm of the appellant respondent Nos. 1,2 and 3 purchased PVC pipes fitting and other articles and towards payment, respondent Nos. 2 and 3 issued cheque of Rs. 1,20,000/- of State Bank of Indore Branch, Y.N. Road, Indore. The said cheque was produced in the Bank by the appellant on 5.4.1997 for encashment, but same was returned back by the Bank with a note that the respondents had stopped the payment. Learned Magistrate registered the complaint and issued notices to the respondent Nos. 1, 2 and 3. Respondents appeared before the Court and denied the charges. Their case was that goods supplied to them were not as per sample shown to them, therefore, they stopped the payment and they were ready to return the goods (PVC pipes fitting). 2. Before the Trial Court following were the admitted facts : Cheque Ex. P/l was issued on 5.4.1997 of Rs. 1,20,000/- by respondent Nos. 1,2 and 3 on behalf of respondent No. 1 M/s. Maza Construction Pvt. Ltd., in favour of the appellant and same was returned back by the State Rank of Indore with memo Ex. P/4 that drawer of the cheque stopped the payment. The appellant issued notice on 14.4.1997 to the respondent Nos. 1, 2 and 3 vide Ex. P/5, which was replied by these respondents, through reply Ex. P/6 dated 26.4.1997, thereafter complaint was filed on 23.5.1997, which was within time. 3. The main defence of the respondent Nos. 1, 2 and 3 that appellant did not supply the goods as per specification and sample shown to them and supplied goods were of inferior quality. This defence was denied by the appellant/complainant Manish Bajaj when he was cross-examined by the Counsel for the respondent Nos. 1, 2 and 3 specifically. These respondents examined four witnesses including: respondent Nos. 1, 2 and 3 that appellant did not supply the goods as per specification and sample shown to them and supplied goods were of inferior quality. This defence was denied by the appellant/complainant Manish Bajaj when he was cross-examined by the Counsel for the respondent Nos. 1, 2 and 3 specifically. These respondents examined four witnesses including: respondent Nos. 2 and 3 and they all have stated; that appellant had not supplied the goods according to sample shown to them at the time of making order and this fact had conveyed in reply Ex. P/6 to the notice issued to them by the appellant. In this reply they have also complained about excess price in comparison to market price of the supplied goods and demanded amount of Rs. 2,88,055/- with interest of 2 per cent per month as well as Rs. 4,000/- rental charges for keeping the goods in their godown. They have also contended that on the date of return of cheque there was sufficient funds in their account and cheque was not dishonoured because of insufficiency of fund. The learned trial Court, after hearing both the parties finding the case of the appellant proved against the respondent Nos. 1, 2 and 3, convicted them under Section 138 of the Negotiable Instruments Act, sentenced to R.I. for six months to respondent Nos. 2 and 3 and fine of Rs. 1,00,000/- to these respondents, in default of payment of fine they shall suffer additional S.I. for one month and also granted compensation out of fine amount, as per provision under Section 117 of the Negotiable Instruments Act and Section 357 of the Criminal Procedure Code to the appellant/complainant of Rs. 1,60,000/- in total. Against this judgment, the respondent Nos. 1, 2 and 3 preferred an appeal and the learned lower Appellate Court by the impugned judgment set aside the judgment and order passed by the learned A.C.J.M. Indore and acquitted the respondent Nos. 1, 2 and 3 from the charges. Hence this appeal by the appellant. 4. 1,60,000/- in total. Against this judgment, the respondent Nos. 1, 2 and 3 preferred an appeal and the learned lower Appellate Court by the impugned judgment set aside the judgment and order passed by the learned A.C.J.M. Indore and acquitted the respondent Nos. 1, 2 and 3 from the charges. Hence this appeal by the appellant. 4. Learned Counsel for the appellant has submitted that the learned lower Appellate Court has found all the facts proved regarding transaction, issuance of cheque, dishonour of cheque, service of statutory notice and its reply, but set aside the judgment of the trial Court only on the ground that on the date of presentation of cheque by the appellant in the Bank there was sufficient fund in the account of the respondent Nos. 1, 2 and 3 and cheque was not dishonoured, because of insufficiency of the fund, therefore, the offence punishable under Section 138 of the Negotiable Instruments Act is not made out against the respondent Nos. 1,2 and 3. The learned lower Appellate Court has not believed the explanation given by the respondent Nos. 1,2 and 3 that goods supplied by the appellant were not of the same foods, which was shown in a sample to them. The learned Courts below has given specific finding on this count that if goods were not of the specific specification as agreed between the appellant and respondent Nos. 1,2 and 3, the respondents could have complained this fact before issuance of cheque as well as before presentation of cheque by the appellant in the Bank instead of making stop payment. The Court below have given specific finding that the defence taken by the respondent Nos. 1, 2 and 3 was after thougnt. The learned Counsel for the appellant has placed reliance on a judgment rendered by Supreme Court in Goa Plast Pvt. Ltd. v. Chico Ursula D'Souza, AIR 2004 SC 408, and submitted that if the cheque was issued in discharge of debt or other liability, which is legally enforceable and if same is dishonoured, because of stop payment or insufficient fund or some other reason, the drawer of the cheque would be liable for commission of offence under Section 138 of the Negotiable Instruments Act. 5. On the other hand, learned Counsel for the respondent Nos. 1, 2 and 3 has supported the judgment and finding arrived at by the learned lower Appellate Court. 5. On the other hand, learned Counsel for the respondent Nos. 1, 2 and 3 has supported the judgment and finding arrived at by the learned lower Appellate Court. 6. Having heard the learned Counsel for the parties and after perusing the entire record carefully, this Court is of the considered view that the learned lower Appellate Court has failed to consider the several judgments cited by the Counsel for the appellant herein as mentioned in paragraph 12 of the impugned judgment i.e. K.I. Jorge v. Mohd. Master, II (1999) BC 716 = 1999 Cri.LJ. 3121; M/s. Modi Cements Ltd. v. Kuchil Kumar Nandi, AIR 1998 SC 1057 ; K. Bhaskaran v. Shankran Vaidyan, III (2005) BC 158 (SC) = 1999 Cri.LJ. 4606; MM. Malik v. Prem Kumar Goyal, 1991 Cri.LJ. 2594. In all these judgments, it is held specifically that after issuance of cheque if the cheque was dishonoured, because of stop payment by the drawer of the cheque, offence under Section 138 of the Negotiable Instruments Act would be made out whether, there was sufficient amount in the account of the drawer or not. The learned lower Appellate Court has distinguished all these judgments on the ground that these judgments were passed under the proceeding in which parties had filed the petition for quashing the proceeding pending in the Court. In view of this Court, this could hardly be a reason for distinguishing the ratio decided by the Supreme Court on question of law, which is binding upon all the Courts of our country as per provision under Article 141 of the Constitution of India. In the case of Goa Plast (supra) in paragraph 21, the Supreme Court has discussed the earlier judgment passed between same party and expressed its respectful agreement with the view taken in the case of M/s. Modi Cements Ltd. case, (supra) in the following words : “The said view is in consonance with the object of the legislation. On the faith of payment by way of a post-dated cheque, the payee alters his position by accepting the cheque. If stoppage of payment before the due date of the cheque is allowed to take the transaction out of the purview of Section 138 of the Act, it will shake the confidence which a cheque is otherwise intended to inspire regarding payment being available on the due date.” 7. If stoppage of payment before the due date of the cheque is allowed to take the transaction out of the purview of Section 138 of the Act, it will shake the confidence which a cheque is otherwise intended to inspire regarding payment being available on the due date.” 7. In the Modi case, three Judges Bench of the Supreme Court overruled the judgment passed in case of Electronic Trades and Technology Development Corporation Ltd., Sikandrabad v. Indian Technologist and Engineers (Electronics) Pvt. Ltd., 1996(2) SCC 739 , and in case of K.K. Siddharthan v. T.P. Pravina Chandran, 1996(6) SCC 369 and observed in paragraphs 18 and 19 as under : “18. 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. Further the following observations in para 6 in Electronics Trade and Technology Development Corporation Ltd., '...........…..........Section 138 of the Act intended to prevent dishonesty on the part of the drawer of negotiable instrument to draw a cheque without sufficient funds in his account maintained by him in a bank and induce the payee or holder in due course to act upon it. Section 138 draws presumption that one commits the offence if he issues the cheque dishonestly' in our opinion, do not also lay down the law correctly.” “19. Section 138 of the Act is a penal provision wherein if a person draws a cheque on an account maintained by him with the Banker for payment of any amount of money to another person from out of that account for the discharge, in whole or in part of any debt of other liability, is returned by the Bank unpaid, on the ground either because of the amount of money standing to the credit of that account is insufficient to honour the cheque or that it exceeds the amount arranged to be paid from that account by an agreement made with that bank, such person shall be deemed to have committed an offence. The distinction between the deeming provision and the presumption is well discernible. To illustrate if a person, draws a cheque with no sufficient funds available to his credit on the date of issue, but makes the arrangement or deposits the amount thereafter before the cheque is but in the bank by the drawee, and the cheque is honoured, in such a situation drawing of presumption of dishonesty on the part of the drawer under Section 138 would not be justified. Section 138 of the Act gets attracted only when the cheque is dishonoured.” In the case at hand, the cheque was dishonoured because of issuance of direction by respondent Nos.l, 2 and 3 to Bank to stop payment. In this situation also, the offence under Section 138 of the Negotiable Instruments Act would be made out against the respondent Nos. 1, 2 and 3. 8. In view of the foregoing discussion, this appeal is allowed. The impugned judgment passed by the learned First A.S.J. Indore is hereby set aside and judgment and order passed by the learned A.C.J.M, Indore is hereby restored. 9. Respondents No. 2 Satyanarayan and No. 3 Sanjay Jain are directed to appear before the trial Court on 22nd September, 2008 and the learned Trial Court is directed to send them to jail for serving out the jail sentence. They are also directed to deposit the final amount. On failure of respondents No. 2 Satyanarayan and No. 3 Sanjay Jain to appear before the trial Court on a given date, the Trial Court is directed to take suitable legal action against them under intimation to this Court. Office is directed to send a copy of this judgment along with the records of the courts below to the trial Court. Appeal allowed.