IN THE HIGH COURT OF GUJARAT AT AHMEDABAD SPECIAL CRIMINAL APPLICATION No. 90 of 2008 For Approval and Signature:
HONOURABLE MR.JUSTICE M.R. SHAH ========================================================= 1 Whether Reporters of Local Papers may be allowed to see the judgment ?
2 To be referred to the Reporter or not ?
3 Whether their Lordships wish to see the fair copy of the judgment ?
4 Whether this case involves a substantial question of law as to the interpretation of the constitution of India, 1950 or any order made thereunder ?
5 Whether it is to be circulated to the civil judge ?
========================================================= M/S.COMPAGNIE COMMERCIALE INDOFRANCIASE, & 2 - Applicant(s) Versus ICICI BANK LIMITED,NOTICE TO BE SERVED THROUGH MANAGER, & 1 - Respondent(s) =========================================================
Appearance :
MR YN RAVANI for Applicant(s) : 1 - 3. MR TV SHAH for Respondent(s) : 1, MR L.B. DABHI ADDL.PUBLIC PROSECUTOR for Respondent(s) : 2, ========================================================= CORAM : HONOURABLE MR.JUSTICE M.R. SHAH C.A.V. JUDGMENT Date : 19/04/2012 1.00. Present petition under Article 227 of the Constitution of India, read with section 482 of the Code of Criminal Procedure, has been preferred by the petitioners herein – original accused to quash and set aside the impugned order passed by the learned Additional Sessions Judge, Court No.10, Ahmedabad, dtd.11/7/2007 in Criminal Revision Application No.473 of 2006 as well as order dtd.16/11/2006 passed by the learned Metropolitan Magistrate, Court No.21, Ahmedabad in Criminal Case No. 4960 of 2006 and consequently to discharge the petitioners from Criminal Case No. 4960 of 2006 pending in the court of learned Metropolitan Magistrate, Court No.21, Ahmedabad. At the outset, it is required to be noted that initially the petitioners challenged vires of section 138 of Negotiable Instruments Act, 1881 as ultra vires to Articles 14, 19 and 21 of the Constitution of India. However, subsequently the petitioners have not pressed challenge to vires of provisions of section 138 of the Negotiable Instruments Act and therefore, this Court is required to deal with the petitioners' prayer for quashing the proceedings against the petitioners and for connected prayers referred to hereinabove.
2.00. That the respondent No.1 herein – original complainant has filed the impugned complaint being Criminal Case No. 4322 of 1995 against the petitioners – original accused in the court of learned Metropolitan Magistrate, Ahmedabad for the offence under section 138 of the Negotiable Instruments Act for dishonour of cheque bearing 839096 dtd.5/8/2005 for an amount of Rs.68,76,551.48 ps. issued by the petitioner Nos.1 and 3 drawn on Tamilnadu Mercantile Bank Limited. That the petitioner No.2 herein is joined as accused as partner of the petitioner No.1 – original accused No.1 Partnership firm who has issued the cheque. That the learned trial court directed to issue Summons upon the petitioners - original accused for the offence under section 138 of the Negotiable Instruments Act. It appears that initially, the petitioners preferred Special Criminal Application No.353 of 2006 for quashing and setting aside the impugned complaint, however, the learned Single Judge disposed of the said Special Criminal Application as withdrawn with a liberty in favour of the petitioners to raise all contentions and defences before the learned trial court which has issued the process.
It appears that thereafter the petitioners submitted an application before the concerned Magistrate to discharge them and/or to drop the proceedings mainly on the ground that the cheque was taken by the complainant way of security and a false complaint has been filed as there was no legal debt or liability of the accused at the time when the cheque was issued. That the proceedings before the DRT were pending. It was also submitted that so far as the accused Nos.2 and 3 are concerned, there are no specific averments and allegations in the complaint that they were partners of the original accused No.1 Partnership Firm and that they were in day-to-day affairs and management of the said Partnership Firm. That the learned trial court by order dtd.16/11/2006 dismissed the said application submitted by the petitioners to discharge them by holding that once process has been issued, he has no jurisdiction and/or authority to discharge the accused. Feeling dissatisfied with the said order passed by the learned trial court in dismissing the discharge application submitted by the petitioners - the original accused, the petitioners - original accused preferred Criminal Revision Application No. 473 of 2006 before the learned City Sessions Court, Ahmedabad and the learned Additional City Sessions Judge, Court No.10, Ahmedabad by the impugned judgement and order dtd.11/7/2007 has dismissed the said Criminal Revision Application confirming the order passed by the learned trial court dismissing the discharge application submitted by the petitioners - original accused. Feeling dissatisfied with the impugned orders passed by both the courts below in dismissing the discharge application submitted by the petitioners - original accused, petitioners - original accused have preferred the present petition under Article 227 of the Constitution of India read with section 482 of the Code of Criminal Procedure.
3.00. Mr.Y.N. Ravani, learned advocate appearing on behalf of the petitioners – original accused has as such reiterated what was submitted while submitting application for discharge and while preferring Revision Application. Mr.Ravani, learned advocate appearing on behalf of the petitioners has vehemently submitted that the cheque in question which was dishonoured was given to the complainant towards the security and it was a blank signed cheque towards security. Relying upon sections 5 and 6 of the Negotiable Instruments Act, it is submitted by Mr.Ravani, learned advocate appearing on behalf of the petitioners that at the relevant time when the cheque in question was received by the complainant, it was only a blank signed cheque without any particulars in the same and therefore, it was an incomplete cheque / instrument. It is submitted that therefore, the said instrument cannot be said to be a cheque as defined under section 6 of the Negotiable Instruments Act and therefore, for dishonour of the said incomplete cheque / instrument, it cannot be said that the petitioners have committed any offence under section 138 of the Negotiable Instruments Act.
3.01. It is submitted by Mr.Ravani, learned advocate appearing on behalf of the petitioners that as per section 5 of the Negotiable Instruments Act “Bill of Exchange” means an instrument in writing contending an unconditional order signed by the maker directing a certain person to a certain amount of money only to or to the order of a certain person or to the bearer of the instrument. Therefore, it is mandatory that the instrument should contain a direction to pay certain sum of money.
3.02. Mr.Ravani, learned advocate appearing on behalf of the petitioners has further submitted that as per section 6 of the Negotiable Instruments Act “cheque” is also a “Bill of Exchange” and therefore, requirement of section 5 are required to be satisfied in respect of the cheque also. Therefore, it is submitted that cheque being blank it does not satisfy the requirement of sections 5 and 6 of the Act and it does not direct to pay a certain amount of money. Therefore, it is submitted that in the aforesaid circumstances, impugned complaint under section 138 of the Negotiable Instruments Act is not maintainable.
3.03. Mr.Ravani, learned advocate appearing on behalf of the petitioners has further submitted that even otherwise in view of the fact that accused Nos.2 and 3 are arraigned as accused as Partners and as there are no specific averments and allegations in the complaint that they were in day-to-day affairs and management of the accused No.1 – Partnership Firm, they cannot be held vicariously liable under section 141 of the Negotiable Instruments Act for the dishonour of the cheque issued by the original accused No.1 Partnership Firm. Therefore, relying upon the decisions of the Hon'ble Supreme Court in the case of Sudhir Kumar Bhalla Versus Jagdish Chand reported in (2008) 7 SCC 137 as well as decision in the case of Katta Sujatha (SMT) Versus Fertilizers & Chemicals Travancore Ltrd and another, reported in (2002) 7 SCC 655 and in the case of M.S. Narayana Menon alias Mani Versus State of Kerala and another, reported in (2006) 6 SCC 39, it is requested to quash and set aside the impugned complaint so far as the original accused Nos.2 and 3 are concerned.
By making above submissions and relying upon above decisions, it is requested to allow the present petition.
4.00. Present petition is opposed by Mr.Tarun Shah, learned advocate appearing on behalf of the respondent No.1 – original complainant. It is submitted that the cheque in question which has been dishonoured, was issued by the original accused Nos.1 and 3 and at the relevant time when the cheque was deposited and dishonoured, a total sum of Rs.68,76,551.48 ps. was due and payable. It is submitted that merely because at the relevant time cheque was given by way of collateral security / security, it cannot be said that for dishonour of the said cheque complaint for the offence under section 138 of the Negotiable Instruments Act is not maintainable. So far as the contention on behalf of the petitioners that it was a blank signed cheque and therefore, it was an incomplete bill of exchange / cheque and therefore, the complaint under section 138 of the Negotiable Instruments Act is not maintainable is concerned, it is submitted by Mr.Tarun Shah, learned advocate appearing on behalf of the original complainant that when signature on the cheque is admitted and even the issuance of the cheque is also admitted, so far as payee and/or holder in due course of the cheque, there is an implied authority in favour of the original complainant to fill in the blanks and in support of the said submission, he has relied upon the decision of the learned Single Judge of this Court in the case of Hitenbhai Parekh, Proprietor – Parekh Enterprises, reported in 2009 (3) G.L.H. 742 as well as recent decision of this Court rendered in Special Criminal Application No. 1749 of 2011; decision of the Patna High Court in the case of Bhagwati Prasad Bhagat and others Versus Mt. Pahil Sundari and others, reported in AIR 1969 Patna 215 as well as decision of the Delhi High Court in the case of Punjab and Sind Bank Versus Ram Prakash Jagdish Chander and another, reported in 1991 Volume 70 Company Cases 20; decision of the Patna High Court in the case of Hridaysingh Versus Kailash Singh and others, reported in AIR 1940 Patna 377.
4.01. Mr.Tarun Shah, learned advocate appearing on behalf of the original complainant has also relied upon sections 16 and 20 of the Negotiable Instruments Act read with provisions of General Clauses Act. Therefore, it is submitted that on the aforesaid ground, the impugned complaint / criminal proceedings are not required to be quashed and set aside.
4.02. Now, so far as the maintainability of the complaint for the offence punishable under section 138 of the Negotiable Instruments Act for dishonour of the cheque which was given by way of security and/or collateral security is concerned, Mr.Shah, learned advocate appearing on behalf of the original complainant has relied upon the decisions of the Hon'ble Supreme Court as well as various decisions of various High Courts including this Court more particularly decision of the Hon'ble Supreme Court in the case of Balbhadurasinh Indrasinhji Zala Versus Shanku Concrete (Pvt.) Ltd. and others, reported in 2005 (3) GLH 685 (S.C.) decision of the Kerala High Court in the case of Assoo Hajee Versus K.I. Abdul Latheef and another, reported in 2005 Criminal Law Journal 640; decision of the Kerala High Court in the case of M/s.General Auto Sales Versus Vijayalakshmi D., reported in 2005 Criminal Law Journal 1454; decision of the Karnataka High Court in the case of L. Mohan Versus V. Mohan Naidu, reported in 2004 Criminal Law Journal 3177; decision of the Karnataka High Court in the case of Latha K. Nair Versus M/s. Gold Mohar Foods & feeds Ltd., reported in 2008 Criminal Law Journal 1542, decision of the Allahabad High Court in the case of M/s.Jai Durga Enterprises and another Versus State of U.P. and another, reported in 2006 Criminal Law Journal 3312; decision of the Orissa High Court in the case of Anand Kumar Suraj Ratan Mohatta Versus M/s.S.L. Agrawal & Co. and another, reported in 2003 Criminal Law Journal 4159 as well as decision of the Karnataka High Court in the case of Dr.Sampathkumar B.V. Versus Ms. Dr. K.G.V. Lakshmi, reported in 2006 Criminal Law Journal 2267, decision of Allahabad High Court in the case of Harbhajan Singh and others Versus State of U.P. And another, reported in 2005 Criminal Law Journal 3029.
4.03. Relying upon the above decisions and sections 118 and 139 of the Negotiable Instruments Act it is requested to dismiss the present petition by holding that even if the cheque has been issued and and given by way of collateral security / security and when said cheque has been dishonoured, complaint for the offence under section 138 of the Negotiable Instruments Act is maintainable.
4.04. Now, so far as the contention on behalf of the petitioners that as there are no specific averments and allegations in the complaint against the petitioner Nos.2 and 3 that they were in day-to-day management and affairs of the original accused No.1 Partnership Firm and therefore, they cannot be held vicariously liable under section 141 of the Negotiable Instruments Act and for that reliance placed upon the decision of the Hon'ble Supreme Court in the case of Sudhir Kumar Bhalla (supra), it is submitted by Mr.T.V. Shah, learned advocate appearing on behalf of the original complainant that whatever the observations are made by the Hon'ble Supreme Court, they are with respect to the offence by the Company and the vicarious liability of the Directors of the Company, may not be applicable to the offence committed by the Partnership Firm and its partners. It is submitted that there is distinction between a Director of the Company and a Partner of the Partnership Firm. It is submitted that under the provisions of the Partnership Act, for any act and/or omission on the part of the Partnership Firm, all the partners of the Partnership Firm are jointly liable and therefore, when the liability of the Partners is under the statute – Partnership Act, there need not be any specific averments in the complaint that the said partner was in day-to-day affairs and management of the Partnership Firm. Therefore, it is submitted that when the accused Nos.2 and 3 are Partners of the original accused No.1 Partnership Firm and they are statutorily liable for the acts of the Partnership Firm, the impugned complaint is not required to be quashed and set aside in exercise of the powers under Section 482 of the Code of Criminal Procedure. It is further submitted that even otherwise, so far as the petitioner No.3 – original accused No.3 is concerned, he is Partner who has issued the cheque and therefore, on the aforesaid ground, the impugned complaint is not required to be quashed and set aside so far as the petitioner No.3 – original accused No.3 is concerned.
By making above submissions and relying upon the above decisions, it is requested to dismiss the present petition.
5.00. Heard the learned advocates appearing on behalf of the respective parties at length.
5.01. At the outset, it is required to be noted that the impugned complaint / criminal proceedings are initiated against the petitioners for the offence under section 138 of the Negotiable Instruments Act and the same are sought to be quashed and set aside mainly on the ground that at the relevant time when the cheque in question was given to the complainant, it was a blank signed cheque given for security / collateral security and therefore, it was an incomplete Bill of Exchange / cheque and therefore, for dishonour of the said incomplete Bill of Exchange / Cheque, complaint under section 138 of the Negotiable Instruments Act is not maintainable and also on the ground that there are no specific averments and allegations in the complaint that the petitioner Nos.2 and 3 were in day-to-day affairs and management of the original accused No.1 Partnership Firm.
5.02. Now, so far as the contention on behalf of the petitioners that at the time when the cheque was given it was an incomplete cheque and it was a blank signed cheque and at that time when the cheque was issued, there was no legal debt or liability are concerned, it is required to be noted that what is required to be considered is debt or liability at the time when the cheque was deposited. Once signature on the cheque is admitted and even issuance of the cheque is also admitted by the petitioners - accused, in that case, as held by the Hon'ble Supreme Court in the case of Hitenbhai Parekh, Proprietor – Parekh Enterprise, (supra) as well as unreported decision of this Court rendered in Special Criminal Application No.1749 of 2011, payee or holder in due course has an implied authority to fill in the blanks and particulars. At this stage even sections 6 and 20 of the Negotiable Instruments Act are also required to be referred to and considered, which give an authority to payee and/or holder in due course of the Negotiable Instruments to fill in the blanks and/or make the instrument complete.
5.03. In the case of Hitenbhai Parekh, Proprietor – Parekh Enterprises (supra) as well as in unreported decision of this Court in Special Criminal Application No.1749 of 2011, it is observed and held by this Court that it will always be open for the holder of the cheque to fill in the blanks in his own handwriting and there is an implied authority for the person receiving such cheque to complete it by filling blanks. It is further observed and held that when a cheque has been issued and signed by the party, there is always a presumption with respect to legal debt as per Section 139 of the Negotiable Instruments Act, 1881. Of course, the same is rebuttable by leading evidence that at the relevant time when the cheque was deposited, there was no debt for the amount for which the cheque was issued.
Under the circumstances, the contention on behalf of the petitioners that at the time when the cheque in question was given it was incomplete cheque and therefore, for dishonour of the said cheque under section 138 of the Negotiable Instruments Act is not maintainable, cannot be accepted, however, the same can be only at the time of trial and on leading the evidence.
5.04. Now, so far as the contention on behalf of the petitioners that the cheque was given by way of collateral security / security and at the time when the cheque was given there was no legal debt or liability and therefore, the impugned complaint deserves to be quashed and set aside, is concerned, it is required to be noted that there is statutory presumption of legal debt or liability is rebuttable under sections 139 and 118 of the Negotiable Instruments Act, however, the same is rebuttable at the time of trial. Under the circumstances, on the aforesaid ground the impugned complaint / criminal proceedings are not required to be quashed and set aside in exercise of powers under Article 226/227 of the Constitution of India read with section 482 of the Code of Criminal Procedure.
5.05. In the case of Balbhadurasinh Indrasinhji Zala (supra) the Hon'ble Supreme Court has specifically observed and held that only because the cheque was given as collateral security it would not lack consideration and therefore, section 138 of the Negotiable Instruments Act would be applicable. Different High Courts in different decisions, referred to hereinabove, have taken similar view that on the ground that bank cheque was drawn in favour of the complainant as security and the said cheque has been dishonoured, complaint under section 138 would be maintainable. Under the circumstances, on the aforesaid ground, the impugned criminal proceedings are not required to be quashed and set aside.
5.06. Now, so far as the contention on behalf of the petitioner Nos.2 and 3 that as there are no specific averments and allegations in the complaint that the accused Nos.2 and 3 were in day-to-day affairs and management of the accused No.1 Partnership Firm and therefore, they cannot be held vicariously liable under section 141 of the Negotiable Instruments Act is concerned, it is required to be noted that so far as the accused No.3 is concerned, he has issued cheque for and on behalf of the original accused No.1 Partnership Firm. Under the circumstances, when the accused No.3 has issued the cheque in question, there need not be any averments and allegations in the complaint that he was in day-to-day affairs and management of the original accused No.1 Partnership Firm.
5.07. So far as the petitioner No.2 is concerned, considering the averments and allegations in the complaint as there are no specific averments and allegations in the complaint that the petitioner No.2 – original accused No.2 was in day-to-day management and affairs of the original accused No.1 Partnership Firm and therefore, his case deserves to be considered in light of the decisions of the Hon'ble Supreme Court in the case of Sudhir Kumar Bhalla (supra) as well as in the case of Katta Sujatha (SMT) (supra).
5.08. Mr.T.V. Shah, learned advocate appearing on behalf of the original complainant has tried to distinguish the case of the Directors of the Company and Partners of the Partnership Firm by submitting that under the Partnership Act all partners are statutorily liable for the acts of Partnership Firm. However, it is required to be noted that in the case of Sudhir Kumar Bhalla (supra) and Katta Sujatha (SMT) (supra), the Hon'ble Supreme Court considered the case of the partners of a partnership firm who has issued cheque and the liability of the partners under section 141 of the Negotiable Instruments Act and it is held by the Hon'ble Supreme Court that even in the case of Partner of a Partnership Firm before holding him vicariously liable and before prosecuting the partner, there must be specific averments and allegations in the complaint that he/she was in day-to-day management and affairs of the Partnership Firm. Similar view has been expressed by the Hon'ble Supreme Court in the case of Monaben Ketanbhai Shah and another Versus State of Gujarat and other, reported in (2004) 7 SCC 15 wherein the Hon'ble Supreme Court has considered the case of a Partnership Firm. Under the circumstances, considering the the decisions of the Hon'ble Supreme Court in the case of Katta Sujatha (SMT) (supra) and in the case of Monaben Ketanbhai Shah and another (supra), the impugned criminal proceedings QUA petitioner No.2 – original accused No.2 deserves to be quashed and set aside.
6.00. In view of the above and for the reasons stated above, present petition succeeds in part. The impugned order passed by the learned Additional Sessions Judge, Court No.10, Ahmedabad, dtd.11/7/2007 in Criminal Revision Application No.473 of 2006 as well as order dtd.16/11/2006 passed by the learned Metropolitan Magistrate, Court No.21, Ahmedabad in Criminal Case No. 4960 of 2006 as well as the impugned Criminal Case No. 4960 of 2006 are hereby quashed and set aside so far as petitioner No.2 herein – original accused No.2 named Smt. Faheem Noore is concerned. Rule is made absolute so far as petitioner No.2 – original accused No.2 is concerned. However, the same shall be without prejudice to the rights and contentions of the original complainant / prosecution qua other accused persons and other accused persons shall be tried by the concerned court in accordance with law and on merits and without in any way being influenced by the present judgement and order quashing the impugned criminal proceedings qua petitioner No.2 – original accused No.2. Present petition is dismissed so far as the petitioner Nos.1 and 3 – original accused Nos.1 and 3 are concerned. Rule is discharged so far as the petitioner Nos.1 and 3 – original accused Nos.1 and 3 are concerned.
[M.R. SHAH, J.] rafik