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2011 DIGILAW 113 (ORI)

Kailash Chandra Mishra v. Ajitsinh Ulhasrao Babar

2011-02-22

B.N.MAHAPATRA, V.GOPALA GOWDA

body2011
ORDER 22.2.2011 - The petitioner is before this Court seeking for issuance of a writ of certiorari and to quash the Criminal Case No. 83/2004 pending before the Chief Judicial Magistrate, Daman in the State of Uttaranchal and further issuance of a direction upon the opposite party No. 1 not to take any action against the petitioner so far as the business transaction with the opposite party No. 2 is concerned with reference to the cheque which has been given to the opposite party towards security. 2. The facts of the case in brief are that the petitioner is a proprietor of M/s. Premier Distributors situated at Plot No. N/4, 169, IRC Village, Nayapalli, Bhubaneswar, dealing with materials including plastic goods in the Districts of Cuttack, Balasore and Jagatsinghpur by opening different branches in the above places. He is doing business since long by establishing its firm. During the business transaction, petitioner and the opposite party-company entered into an agreement with the terms that the opposite party-company will supply the goods to the petitioner on credit with security of Bank cheque without giving date and amount and payment of cost of goods will be paid by installments basis after its sale in the market. Accordingly opposite party-company supplied the goods to the petitioner since January, 2003 from its plant at Januganj, Balasore, Orissa by issuing invoices and bills and payment was made time to time by draft and cheque and also cash to the authorized representative of the opposite party No. 2 till 31st December, 2003. It is stated that during the transaction between the petitioner and the opposite party No. 2, payment has been made through Bank drafts, cheques against cost of the goods supplied to the petitioner. Opposite party No. 2 has also issued acknowledgment of acceptance of cheques and drafts and also cash from time to time. When the petitioner hard pressed to supply the reconciliation statement for finalization of accounts, the opposite party No. 2 intimated the petitioner that in future all the payment should be made through bank drafts to meet the immediate requirement of the establishment. When the petitioner hard pressed to supply the reconciliation statement for finalization of accounts, the opposite party No. 2 intimated the petitioner that in future all the payment should be made through bank drafts to meet the immediate requirement of the establishment. On the demand of the petitioner, the opposite party No. 2 did not submit the reconcile statement adjusting the defective goods received back by them and tried to avoid it with a mala fide intention to cheat the petitioner and to avoid to receive the defective goods and also to face the customers grievances. Thereafter the petitioner immediately told them not to use the cheque, which has been deposited with the opposite party No. 2 as security in future without reconciling the account statement. As opposite party No. 2 did not reply to the petitioner, he immediately wrote another letter confirming that if no reconciliation statement of accounts will be received within 7 days of receipt of the letter, he will not be responsible for any other liabilities and will take legal action against them. All of a sudden, after lapse of one and half years, the petitioner received a notice from the learned Chief Judicial Magistrate First Class, Daman through the District Superintendent of Police, Bhubaneswar along with copy of Criminal Case No. 83 of 2004 to appear before the learned Magistrate on 6.4.2005. On a perusal of the Criminal case, it came to the knowledge of the petitioner that opposite party No. 1 styling himself as Power of Attorney Holder of opposite party No. 2 has preferred the complaint petition before the learned Chief Judicial Magistrate First Class, Daman alleging that the petitioner has committed offence under Section 138 of the Negotiable Instruments Act, 1881 read with Section 142 of the Cr.P.C. for having dishonoured the cheque. The same is produced along with the notice. It is indicated in the complaint petition that opposite party No. 1 has utilized the cheque which was submitted to the opposite party No. 2 at the time of business transaction as security of supply of goods giving date and an amount of Rs. 11,27,087/- and had presented it at the bank at Bhubaneswar, which has been returned back to them due to "insufficient funds". 11,27,087/- and had presented it at the bank at Bhubaneswar, which has been returned back to them due to "insufficient funds". It has also been indicated in the complaint petition that the registered letter was sent by opposite party No. 1 to the petitioner on 17.4.2004 and also a letter Under Certificate of Posting, but it has been returned back with remark that the petitioner was always absent and therefore the petitioner is liable to be punished under Section 138 of the Negotiable Instruments Act, 1881. It is the case of the petitioner that he never received any notice and letter from the said opposite party No. 1 indicating that M/s. Wim Plast Ltd. which presently functioning at Daman but not at Balasore and he has never made any business transaction with opposite party No. 1 nor has ever presented the cheque to the said opposite party No. 1. He had given the cheque without date and amount as the security as per the contract with opposite party No. 2 which is still functioning at Januganj, Balasore. Hence, it is submitted that the complaint petition filed by opposite party No. 1 under Section 138 of Negotiable Instruments Act, 1881 at Daman by utilizing the cheque is not maintainable in the eye of law. It is further stated that the opposite party No. 2 while dealing with the petitioner has clearly indicated that whatever differences will be made between them such differences will be dealt at Balasore. 3. On the basis of the complaint lodged by opposite party No. 1, learned Chief Judicial Magistrate First Class, Daman has taken cognizance under Section 138 of the N.I. Act, 1881 against the petitioner which is illegal and it is beyond its jurisdiction and against the settled principles of law. It is stated that the learned Chief Judicial Magistrate First Class, Daman has not considered and appreciated the mandatory requirement, on the part of the opposite party No. 2 to be complied with to take cognizance under Section 138 of the N.I. Act, 1881. Therefore, the criminal case referred to supra and the summons issued in the said case to the petitioner is not sustainable in the eye of law. 4. Therefore, the criminal case referred to supra and the summons issued in the said case to the petitioner is not sustainable in the eye of law. 4. It is also stated that opposite party No. 1 has filed the criminal case referred to supra by suppressing the material facts and settled principles of law ignoring the provisions of the Code of Criminal Procedure, 1973 (hereinafter referred to as 'Cr.P.C.'.) 5. With reference to the above said facts, Mr. Jagannath Patnaik, learned Senior Counsel has raised three legal points. 6. The first point is as to whether the opposite party No. 1 on the basis of Power of Attorney dated 2.6.2003 given by the Managing Director, Sri Pradeep Rathod, opposite party No. 2 in his favour appointing him as Power of Attorney Holder or on behalf of opposite party No. 2 can file criminal complaint including the complaint presented under Section 138 of the N.I. Act, 1881 against the petitioner and to engage the advocate to file and withdraw the complaints to settle the dispute? 7. Mr. J. Patnaik, learned Sr. Counsel placing strong reliance upon Section 292 of the Companies Act submitted that the Managing Director of the company, who is a Principal Officer of the Company and has been authorized by the Board of Directors to represent on behalf of the company in the Court, he has no authority to re-delegate his power by executing the Power of Attorney in favour of the opposite party No. 1 for filing the complaint under the N.I. Act. Therefore, the complaint petition filed under Section 138 of the N.I. Act is incompetent for the reason that Section 138 & Section 142(a) of the N.I. Act states that no Court shall take cognizance of any offence punishable under Section 138 except upon a complaint, in writing, made by the payee or, as the case may be, the holder in due course of the cheque. In the case in hand, the company is the payee and opposite party no. 1 is only the power of attorney holder of the Managing Director of the company-opposite party No. 2. Therefore, the complaint petition filed against the petitioner at Daman cannot be maintained. 8. The second ground urged is that the cheque which is issued was drawn at Bhubaneswar. The cause of action which has taken place at Bhubaneswar. 1 is only the power of attorney holder of the Managing Director of the company-opposite party No. 2. Therefore, the complaint petition filed against the petitioner at Daman cannot be maintained. 8. The second ground urged is that the cheque which is issued was drawn at Bhubaneswar. The cause of action which has taken place at Bhubaneswar. Further he has also drawn our attention to the documents which have been produced in the writ petition namely, Annexure-1 series along with the counter affidavit, stating that in the invoice-cum-challan, the jurisdiction of the Court as mentioned at SI. No. 4 subject to the Balasore Jurisdiction. Therefore, even assuming that the cheque was issued in the name of the payee and if it is dishonoured, the jurisdiction for institution of any complaint petition is either at Balasore or at Bhubaneswar. Therefore, the institution of the said complaint petition on the basis of dishonoured cheque at Daman against the petitioner by the opposite party for the reason that it has got Manufacturing Company at Uttaranchal could not have been invoked as no cause of action arose there. Therefore, complaint petition filed at Daman is not maintainable in law and this Court has the jurisdiction to examine the legality of the summons issued against the petitioner in view of the amendment to Article 226 of the Constitution to entertain the writ petition since the cause of action has occurred at Balasore and Bhubaneswar, though complaint petition is filed in the Court of Chief Judicial Magistrate First Class, Daman. In support of his submission, he has placed strong reliance upon the decision of the Supreme Court in the case of Harman Electronics Pvt. Ltd. & Anr. v. National Panasonic India Pvt. Ltd., reported in (2009) 1 SCC 720 , wherein the Apex Court placing reliance upon Section 138 and 141 of the N.I. Act, held that the writ petition is maintainable. 9. The third legal contention urged on behalf of the petitioner is that Section 138(b) and (c) provides service of notice upon the petitioner under the N.I. Act, to constitute an offence under Section 138 N.I. Act and the same shall be served upon the drawer of the cheque within thirty days of receipt of information by him from the bank regarding the return of the cheque as unpaid. In the instant case, our attention has been drawn to the photo copy of the cover which produced at Annexure-1 series, wherein the address is mentioned as "Shri Kailash Mishra, Plot No. N-A/169, IRC village, Nayapalli, Bhubaneswar". The same is sent on 19.4.2004 by registered post with A/D. The same has been returned as the addressee was absent and thereafter no steps were taken by the opposite parties to get the notice served upon the petitioner as required under the above provisions of the Act. 10. Mr. Manoj Mishra, learned counsel for the opposite party No. 1 rebutted the said contention contending that there is deemed service of notice upon the petitioner. Therefore, the question arose as to whether the notice sent by him was deemed service or not. Therefore, the matter is required to be gone into at the time of trial before the learned Chief Judicial Magistrate First Class Daman. Therefore, the contention urged in this regard on behalf of the petitioner cannot be accepted by this Court in this proceedings and grant relief. He further contends that the cheque which was issued in favour of opposite party No. 2 was presented at Uttaranchal and therefore, the cause of action had taken place there. No doubt, the cheque which was presented to the bank was dishonoured at Bhubaneswar till then the said Court has got jurisdiction. In support of his contention, he has also placed reliance upon the decision of the Supreme Court in the case of K. Bhaskaran v. Sankaran Vaidhyan Balan and another, reported in (1999) 7 SCC 510 . He has also placed reliance upon the decision of the Supreme Court in the case of C.C. Alavi Haji v. Palapetty Muhammed and another 2007 (II) OLR (SC) 384, reported in (2007) 38 OCR (SC) 58. He has also placed reliance upon the decision of the Supreme Court in the case of Shankar Finance and Investments v. State of Andhra Pradesh and others, reported in (2008) 8 SCC 536 in support of his contention that the Power of Attorney Holder is competent to file complaint petition on behalf of the Payee opposite party No. 2. He has also placed reliance upon the decision of the Supreme Court in the case of Shankar Finance and Investments v. State of Andhra Pradesh and others, reported in (2008) 8 SCC 536 in support of his contention that the Power of Attorney Holder is competent to file complaint petition on behalf of the Payee opposite party No. 2. Therefore, the contention urged by the learned Senior Counsel appearing for the petitioner that the complaint petition is not maintainable and is wholly unsustainable in the eye of law cannot be accepted, rather, the learned counsel on behalf of the opposite parties urged that, this writ petition is not maintainable. In support of the said contention, he has also placed reliance upon the decision of the Supreme Court in the case of M/s. M.M.T.C. Ltd., and another v. Medchl Chemicals and Pharma (P) Ltd. & Anr., reported in AIR 2002 SC 182 , wherein at Paragraph 10 , after interpreting Sections 138 and 142 of the N.I. Act the Supreme Court held that a complaint under Sec. 138 of the N.I. Act can be made by the Payee or the Holder in due course of the said cheque and therefore there is no ground to quash the complaint. 11. With reference to the aforesaid rival legal contentions, this Court required to examine the following points: (i) Whether the complaint could be maintained by the Power of Attorney Holder given by the Managing Director, Opposite party No. 2 and the complaint instituted is legal and valid. (ii) Whether the notice issued and returned unserved could constitute an offence under Sec. 138 of N.I. Act to take cognizance by the learned Magistrate as the mandatory requirement of service of notice as provided under Sec. 138(a) & (b) of the Act? (iii) Whether this Court has got jurisdiction to interfere with the institution of the complaint lodged by the complainant, opposite party No. 1. (iv) What order? 12. On the first point, we do not want to discuss in details for the reason that it is well settled in law that the Principal Officer of the company who has been delegated with the power by the Board of Directors cannot re-delegate his power to his subordinate to represent the company on his behalf. Further the other points are answered in favour of the petitioner as follows. Further the other points are answered in favour of the petitioner as follows. In so far as service of notice under Sec. 138(b) of the N.I. Act, to constitute an offence the notice must be served upon the addressee, it is very much necessary to extract the Section 138(b) & (c) of N.I. Act which reads as follows : "138(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 the information by him from the bank regarding the return of the cheque as unpaid; and 138 (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." 13. In the instant case the complainant has placed reliance upon the notice, purported to have been sent to the addressee which is produced under Annexure-1 series, by the petitioner by registered post with A.D. as referred to in the earlier portion of the narration of facts. It is seriously disputed by the petitioner that the correct address was not given and therefore the notice was returned unserved with a postal endorsement stating that "the addressee was always found absent". Reliance has been placed by Mr. Mishra on the said endorsement contending that it is a deemed service upon the petitioner, is the decision of the Supreme Court referred to above which is noted in the narration of facts of this judgment and it is further submitted that the said endorsement is a deemed service or not is a question of fact which is required to be gone into by the Magistrate at the time of trial. Therefore, it is not possible for this Court to record a finding on this question. This submission is wholly untenable in law and cannot be accepted at all for the reason that notice must be served upon the addressee is the mandatory requirement to constitute an offence under Section 138 of the N.I. Act. Therefore, it is not possible for this Court to record a finding on this question. This submission is wholly untenable in law and cannot be accepted at all for the reason that notice must be served upon the addressee is the mandatory requirement to constitute an offence under Section 138 of the N.I. Act. Merely because of an endorsement on the unserved cover containing the noting that "the addressee was absent and the notice was returned unserved" cannot be 3 ground to constitute that there is a deemed service of notice upon the petitioner. In support of his contention explaining the same, prima facie there is no material produced to show that there is deemed service of the notice upon the petitioner. Reliance placed upon the decisions of the Supreme Court referred to supra by Mr. Mishra, learned counsel for the opposite party No. 1 are not applicable to the facts situation. It is further stated that notice was sent by registered post with A.D. and also under certificate of posting by the opposite party No. 1 cannot be accepted for one more reason that opposite party No. 1 has sent the notice by registered post with A.D. on 19.4.2004 and question of sending the said notice under certificate of posting is totally denied by the petitioner. Further the notice sent to the addressee is also denied for the reason that the same was not sent to correct address. 14. Mr. Mishra, learned counsel for the opposite party No. 1 made an effort to show that the address mentioned as plot No. "N/A" is like "N/4" and therefore, that is the correct address. That submission cannot be accepted. By careful reading of the address mentioned in the cover, the photocopy of which is annexed herewith, it appears that the submission made by the learned counsel for the opposite party No. 1 is not factually correct. That is not the address of the petitioner. Therefore, the contention urged by the petitioner that no notice is served on the petitioner as the same was sent in wrong address and has been returned with an endorsement, that the addressee was absent. Therefore, there is no compliance of Section 138(b) of the N.I. Act. The contention urged by the learned Senior Counsel appearing for the petitioner is well founded and the same must be accepted. Therefore, there is no compliance of Section 138(b) of the N.I. Act. The contention urged by the learned Senior Counsel appearing for the petitioner is well founded and the same must be accepted. Once it is accepted that there is no compliance of the provision of Section 138(b) of the Act which is mandatory one, the question of taking cognizance by the learned Chief Judicial Magistrate First Class, Daman without notice is bad in law. Therefore, the second point is answered in favour of the petitioner and against the opposite party No. 1. 15. In so far as the jurisdiction of this Court is concerned, since the cheque was issued by the petitioner at Balasore and the cheque was dishonoured at Bhubaneswar, cause of action had taken place in the State of Orissa. Therefore, institution of said complaint at Daman in the State of Uttaranchal is not maintainable. Further, though the complaint is lodged at Daman in the State of Uttaranchal, in view of the amendment to Article 226 of the Constitution of India the Writ Petition filed before this Court, questioning the correctness of the same and seeking to quash the proceedings initiated at Daman, is perfectly maintainable in view of the decision of the Supreme Court referred to supra upon which reliance has been placed by the learned Senior Counsel appearing for the petitioner. 16. For the reasons stated supra, the writ petition must succeed. Accordingly the writ petition is allowed and proceedings initiated by the opposite party No. 1 against the petitioner at Daman is hereby quashed. Urgent certified copy of this order be granted on proper application. Petition allowed.