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2013 DIGILAW 408 (JK)

Rattan Lal v. Raman Sharma

2013-07-18

ALI MOHAMMAD MAGREY

body2013
JUDGMENT : Ali Mohd. Magrey, J. 1. In the instant petition filed under Section 561-A. Cr.P.C., petitioner seeks quashment of order passed by the learned Sub-Judge (Special Railway Magistrate), Jammu, dated 26.7.2010 by virtue of which learned trial magistrate has issued process against the petitioner under Section 138 of Negotiable Instruments Act as also seeking quashment of proceedings pending before the trial court. Facts which have arisen for disposal of this petition are detailed out as under: Complainant/respondent filed complaint under Section 138 of Negotiable Instruments Act, alleging therein that an amount of Rs. 9 lac stood outstanding against the petitioner and in order to liquidate the said liability, the petitioner herein issued cheque bearing No. 243739, dated 31.12.2009 in favour of the respondent and on presenting the cheque, the same stood returned by the bank of the petitioner with memo having remarks "Funds Insufficient". It is further submitted that complainant/respondent served notice on the petitioner and in-spite of receipt of notice, the petitioner failed to pay amount of cheque i.e. Rs. 9 lacs to the respondent, therefore, complaint. After recording preliminary statement of the petitioner, the learned trial magistrate in terms of order passed on 26.7.2010 took cognizance of the complaint under Section 138 of Negotiable Instruments Act holding that there is sufficient material on record to proceed against the petitioner. Petitioner has challenged order of the trial magistrate regarding issuance of process and also taking of cognizance in the matter on the grounds detailed out as under: "That the order taking cognizance is bad and is abuse of the process of the court as no offence is made out on the complaint as no cheque has been issued in favour of the complainant/respondent. That the learned trial magistrate failed to take into consideration whether the complainant/respondent is "holder in due course" or is the "payee" of the cheque as such the complaint is filed by a person who is having no locus standi to file present complaint. The learned trial magistrate ignored this aspect and took cognizance without appreciating the law as applicable in the present set of circumstances, as such, the proceedings initiated in the complaint by the learned trial magistrate are nothing but an abuse of the process of the courts and law. The learned trial magistrate ignored this aspect and took cognizance without appreciating the law as applicable in the present set of circumstances, as such, the proceedings initiated in the complaint by the learned trial magistrate are nothing but an abuse of the process of the courts and law. That the Hon'ble Court is vested with ample power to quash the proceedings in the complaint under inherent power to prevent the abuse of the process of the court and to secure the ends of justice." 2. On notice, respondent appeared and represented by counsel. 3. Heard learned counsel for the parties and perused the set of fact, grounds urged and material on record. 4. Petitioner's main ground for declaring the complaint as invalid, as also seeking quashment of the cognizance taken and process issued are mainly to the extent that respondent has no locus standi to file the complaint being neither "holder in due course" nor is "payee" of the cheque elaborating his grounds of challenge, the petitioner has further submitted that cheque has been issued in favour of M/s. Shivani Traders, as such, only M/s. Shivani Traders could have filed the complaint being "payee" or "holder in due course" and respondent has no locus standi to file complaint. 5. Petitioner's contention is that the learned trial magistrate has taken cognizance of the complaint without being satisfied about the fact that the complainant is not a person in whose favour cheque was issued or complainant is not having any authority to file complaint. This contention has reference to Sections 138 and 142 of the Negotiable Instruments Act 1881 and it will be useful to reproduce both these sections of the Act as under: "138. Dishonour of cheque for insufficiency etc. This contention has reference to Sections 138 and 142 of the Negotiable Instruments Act 1881 and it will be useful to reproduce both these sections of the Act as under: "138. Dishonour of cheque for insufficiency etc. of funds in the account-Where any cheque drawn by a person on an account maintained by him with a 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 or other liability, is returned by the bank unpaid, 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 and shall, without prejudice to any other provisions of this Act, be punished with imprisonment for a term which may be extended to two years or with fine which may extend to twice the amount of the cheque or with both. Provided that nothing contained in this section shall apply unless: (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. Explanation-For the purposes of this section "debt or other liability" means a legally enforceable debt or other liability. 142. Explanation-For the purposes of this section "debt or other liability" means a legally enforceable debt or other liability. 142. Cognizance of offences--Notwithstanding anything contained in the Code of Criminal Procedure 1973 (2 of 1974) (a) 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 (b) such complaint is made within one month of the date on which the cause-of-action arises under clause (c) of the proviso to Section 138. Provided that the cognizance of a complaint may be taken by the Court after the prescribed period, if the complainant satisfies the Court that he had sufficient cause for not making a complaint within such period. (c) No court inferior to that of a Metropolitan Magistrate or a Judicial Magistrate of the first class shall try any offence punishable under Section 138." 6. Petitioner has referred to and relied upon judgment of the Hon'ble Supreme Court reported as AIR 2011 Supreme Court 1588 titled Milind Shripad Chandurkar v. Kalim M. Khan & Anr. whereby it has been held that complainant cannot maintain a complaint being neither a "payee" nor "holder in due course of cheque". It is submitted that respondent in the complaint has no where stated that he is proprietor of firm M/s. Shivani Traders or he is authorized to file a complaint and also respondent, while deposing before the trial magistrate under Section 200 Cr.P.C., has not stated about his status as proprietor of firm or in any way connected with M/s. Shivani Trader. 7. Perusal of the judgment of Hon'ble Supreme Court referred above reveals that Hon'ble Supreme Court while dealing with the case held that (i) by the proprietor of the proprietary concern describing himself as the sole proprietor of the "payee" (ii) the proprietary concern describing itself as the sole proprietary concern represented by its proprietor and (iii) the proprietor or the proprietor concern represented by the Attorney Holder under the power of attorney executed by the sole proprietor. However, it shall not be permissible for an Attorney Holder to file the complaint in his own name as if he was the complainant. He can initiate criminal proceedings on behalf of the principal. 8. However, it shall not be permissible for an Attorney Holder to file the complaint in his own name as if he was the complainant. He can initiate criminal proceedings on behalf of the principal. 8. In a case of this nature where the "payee" is a company or a sole proprietary concern such issue cannot be adjudicated upon taking any guidance from Section 142 of the Act 1881 but the case shall be governed by the general law i.e. the Companies Act, 1956 or by civil law where an individual carries on business in the name or style other than his own name. In such a situation he can sue in his own name and not in trading name, though others can sue him in the trading name. So far as Section 142 is concerned, a complaint shall be maintainable in the name of "payee" proprietary concern itself or in the name of the proprietor of the said concern. 9. Contention of the petitioner that the present case is squarely covered by the judgment of Hon'ble Supreme Court cannot be accepted as in this case the trial magistrate has only taken cognizance and issued process subject to proof to the extent that the respondent is proprietor of the firm in whose favour the petitioner has issued cheque. It is not a case which stands decided by the trial magistrate against the petitioner without having established the fact to the extent of respondent being "payee" or "holder of the cheque". The trial magistrate has to adjudicate upon this issue by providing opportunity to the respondent to prove that he is proprietor of the firm or having any connection with the said firm so as to establish that he is "payee" or "holder of the cheque". In case the respondent fails to establish this fact on evidence, the trial magistrate has to follow the judgment of the Hon'ble Supreme Court referred to above in letter and spirit but at this stage cognizance taken by the trial magistrate or process issued cannot be held impermissible, therefore, contention of the petitioner has no relevance, at this stage. 10. Respondent in rebuttal of the contention raised by the petitioner has submitted that he is proprietor of the company, however, inadvertently he has failed to plead such fact in the complaint which cannot form ground for declaring the complaint as invalid and rejecting his complaint. 10. Respondent in rebuttal of the contention raised by the petitioner has submitted that he is proprietor of the company, however, inadvertently he has failed to plead such fact in the complaint which cannot form ground for declaring the complaint as invalid and rejecting his complaint. Respondent has referred to and relied upon judgment of the Hon'ble Supreme Court reported as AIR 2013 Supreme Court 426 case titled Indra Kumar Patodia and Anr. v. Reliance Industries Ltd. and Ors. In para 11 of the judgment, the Hon'ble Supreme court has observed as under: 11. It is also relevant to refer a decision of this Court in M.M.T.C. Ltd. and another v. Medchl Chemicals and Pharma (P) Ltd. and another (2002) 1 SCC 234 : ( AIR 2002 SC 182 : 2001 AIR SCW 4793). The question in that decision was whether a complaint filed in the name and on behalf of the company by its employee without necessary authorization is maintainable. After analyzing the relevant provisions and language used in Section 138 and 142(a) of the Act, this Court held that such complaint is maintainable and held that want of authorization can be rectified even at a subsequent stage. This Court further clarified that the only eligibility criteria prescribed by Section 142 is that the complaint must be by the payee or the holder is due course. This Court held that this criteria is satisfied as the complaint is in the name and on behalf of the appellant-Company. It was further held that even presuming, that initially there was no authority, still the company can, at any stage, rectify the defect. It was further held that at a subsequent stage the company can send a person who is competent to represent the company and concluded that the complaint could thus not have been quashed on this ground: 11. In view of the above position of law it can safely be concluded that any defect in the complaint can be rectified at the subsequent stage in the interest of justice. 12. In the given circumstance, the trial magistrate shall ensure to have the fact established regarding locus standi of the respondent/complainant before proceeding further. Thus, this petition is disposed of in the following manner: (i) cognizance taken and process issued by the trial magistrate shall remain subject to the decision on the issue regarding locus standi of the respondent/complainant. 12. In the given circumstance, the trial magistrate shall ensure to have the fact established regarding locus standi of the respondent/complainant before proceeding further. Thus, this petition is disposed of in the following manner: (i) cognizance taken and process issued by the trial magistrate shall remain subject to the decision on the issue regarding locus standi of the respondent/complainant. (ii) In case respondent/complainant establish locus standi to file complaint, the trial magistrate shall proceed in the matter further in accordance with law. Registry to send down copy of this order to the trial magistrate for further proceeding in the matter. Disposed of.