Judgment reserved on: 19.7.2019. Judgment delivered on: 28.08.2019.
Court No. - 65
Case :- APPLICATION U/S 482 No. - 12854 of 2013
Applicant :- Smt. Veena Singhal
Opposite Party :- State Of U.P. And Another
Counsel for Applicant :- U.K. Saxena
Counsel for Opposite Party :- Govt.Advocate,Amit Saxena,S.B. Yadav,Vikram
D. Chauhan
Hon'ble Dinesh Kumar Singh-I,J.
1. Heard Sri U.K. Saxena, learned Senior Advocate assisted by Sri Anshul Saxena, learned counsel for the applicant, Sri D.K. Shukla, Advocate holding brief of Sri Vikram D. Chauhan, learned counsel for the O.P. No. 2 and Sri G.P. Singh, learned A.G.A. for the State.
2. This application u/s 482 Cr.P.C. has been preferred against the summoning order dated 20.2.2012 passed in Complaint Case No. 42 of 2012 (Sanjay Kumar Gupta Vs. Smt. Veena Singhal) praying that the said summoning order be quashed.
3. As per the complaint, the facts of the case are that opposite party no. 2, Sanjay Kumar Gupta (partner M/s Archna Traders) is an Income-tax payee and is partner in M/s. Archna Traders, which deals in sale of spare part of the crusher. The accused-applicant has a crusher situated in Gora Machhiya by the name Gangotri Granite. The accused-applicant and her husband have been purchasing spare parts of crusher from the Company of opposite party no. 2 and had good business relationship. On 7.12.2012, accused-applicant had purchased few spare parts of the crusher comprising of a total amount of Rs. 36,67,028/- and the accused-applicant had assured that payment would be made within one or two days. The accused-applicant being old acquintance, the opposite party no. 2 agreed to sell those articles on credit and the accused-applicant went away after taking the spare parts. On 12.12.2012, applicant came to the Office of Archna Traders and provided a Cheque No. 323113 bearing Account No. 10657584358 of the amount of Rs. 36,67,028/- which was issued in the name of M/s. Archna Traders and then she went away. The opposite party no. 2 presented the said cheque in his SBI Bank, Medical College Branch, Jhansi, which was returned without making payment on 14.12.2012 disclosing reasons in column no. 16 "insufficient funds", thus the said cheque got dishonoured, whereafter opposite party no. 2 sent a registered notice through his counsel on correct address of the applicant on 22.12.2012, 24.12.2012, 26.12.2012, 27.12.2012 and lastly it was refused from being taken on 28.12.2012. Thereafter, accused-applicant told opposite party no. 2 on phone-call as to why notice was sent and that demand would soon be met. It was mentioned in the said notice that if cheque amount was not paid within fifteen days, the opposite party no. 2 would be at liberty to file case in competent court. Due to non payment of the said amount within the prescribed time, the present complaint has been moved.
4. From the side of the accused-applicant, it has been stated in the affidavit that the person, who had filled the cheque, wanted to write 36,000/- and had written the word "Thous" and, thereafter, made a cutting over the said word and wrote “Lacs”, which rendered the said cheque void as the same cannot be encashed in view of the directions issued by the Reserved Bank of India in Circular dated 6.10.2010, copy of which is annexed as annexure 3.
5. Clause 9 of the said Circular provides that “no changes/ corrections should be carried out on cheque (other than for date validation purposes, if required). For any cheque in the payees' name, courtsey amount (amount in figure) and legal amount (amount in words), fresh cheque form should be used by the customers. This would help banks to identify and control fraudulent transactions”. It is further mentioned that applicant is a house wife, who has nothing to do with the affairs of the Company- Gangotri Granite Private Ltd.. Dinesh Chandra Singhal (husband of the applicant) and one Vikas Agarwal are Directors. The affairs of the said crusher is being managed by the husband of the applicant, who was introduced as Director in the said Company on 1.7.2007. After few days, two Directors namely, Rajesh Neekhra and Ajay Singh ( directors of Amar Nath Spat Private Ltd.) transferred their shares to the Alok Kankane (also director of Amar Nath Spat Pvt. Ltd.), who also wanted to withdraw from the said Company. The husband of the applicant had shown interest in taking over the said Company and purchasing the shares of the Company. The husband of the applicant and Alok Kankane being friends, were having business relations and were also on good terms. Alok Kankane desired to transfer his share, which applicant's husband wanted to purchase in the name of applicant and, hence the above mentioned blank cheque was given to Alok Kankane, as till that time the value of the share was not ascertained. Thereafter, the husband of the applicant decided to purchase some share in his own name and remaining shares were transferred to the above named, Vikas Agarwal. In view of the said transfer of shares, the above named Amarnath Spat Private Ltd. is rather named as Gangotri Granite Private Company. After transfer of the shares, husband of the applicant demanded the blank cheque but Alok Kankane with whom, serious differences arose during the transfer of shares, Company did not return the said cheque in order to harass the husband of the applicant and the applicant herself misused the same by filing aforesaid complaint in collusion with the opposite party no. 2, who is partner with him in the different Firm. After having come to know about the present complaint, the Department has also filed a criminal Complaint Case No. 203 of 2013 pending in the court of ACJM Ist, Court No. 6, Jhansi. The trial court has erroneously passed the impugned order as the complaint was not maintainable because cheque is not an instrument enforceable under law. It has failed to appreciate that the complainant/oppoiste party no. 2 has filed complaint on the ground that the cheque no. 313113 dated 12.12.2012 is shown to have been issued by the applicant for a sum of Rs. 36,67,028/- which was a void document and not enforceable instrument under the Act. From its perusal, it was apparent that the cutting made in the amount was not permissible under law and that cutting also does not bear any signature. The said cheque is alleged to have been issued by the applicant in the capacity of owner of crusher, which is run in the name and style Gangotri Granite, while in fact the said Company is Private Ltd. Company being registered under the provisions of Companies Act, which is having its two Directors, namely Dinesh Chandra Singhal and Vikas Agarwal. The applicant is neither an employee of the same nor has any concern with the said Company. The trial court has neither appreicated that applicant had no legally enforceable liability to pay the amount of cheque, hence the said proceedings of the complaint needs to be quashed.
6. Denying the pleas of applicant, from the side of opposite party no. 2, it has been stated by filing counter affidavit that the applicant has not come with clean hands before this Court as earlier a criminal revision was filed by him which was dismissed after certain arguments. The R.B.I. had clarified vide communication dated 22.6.2010 that prohibition of alteration/correction in cheques will be applicable only for cheques cleared under the image-based Cheque Truncation System (CTS) and the same is not applicable with respect to cheques, which are cleared under other clearing arrangement such as MICR clearing, non-MICR clearing over counter collection or direct collection of cheques outside the Clearing House Arrangement and citing the above clarification, has mentioned that in the present case the Bank in question i.e. State Bank of India, Jhansi Branch, did not have image-based Cheque Truncation System (CTS) and, therefore, under the said Circular, the cheque with alteration was perfectly legal and valid. Further it is mentioned that applicant has not denied her signatures on the cheque in question, who is wife of Dinesh Chandra Singhal, Director of Gangotri Granite Private Ltd. and it appears that in order to evade the Tax etc., the cheques are issued by the applicant for clearing the debt of the Company, for which the matter may be referred by this Court to appropriate Authorities. It is further stated that in the story narrated in paragraphs 10 to 13 of the affidavit, the same has been cooked up by the applicant in order to deny payment of the cheque in question and it is also mis-conceived that the present complaint is counter blast to the proceedings launched by opposite party no. 2 against the applicant. The present complaint has been filed against the signatory of the cheque and not against the Company and its Directors. The signatory had not denied her signatures on the impunged cheque and lastly it is stated that the pleas taken by the applicant could be seen only at the time of trial when defence is taken by the accused-applicant.
7. At the time of argument, learned counsle for the applicant has mainly emphasised three points that the cheque in question is not a legally enforceable instrument in the light of guidelines issued by the R.B.I. dated 6.10.2010, clause 9 of which prohibits changes/corrections in the cheque. The said guidelines have been affirmed in Central Bank of India Vs. Ravindra and other, (2002) 1 SCC 367 and also in Fragrant Leasing & Finance Company Ltd. & Anr. Vs. Jagdish Katuriya & Anr., 2007 Cri.L.J. 3880.
8. Clause 9 of the said guidelines is as follows:-
“R.B.I. has made specific provision under the power conferred to them in Payment & Settlement System Act, 2007 which reads as:- “No changes/correctins should be carried out on cheque (other than for date validation purposes, if required). For any cheqe in the payee's name, courtsey amount (amount in figure) and legal amount (amount in words), fresh cheque form should be used by customers. This would help banks to identify and control fraudulent transactions.””
9. In rebuttal of this argument, learned counsel for the opposite party no. 2 has drawn attention to the paragraph 10 of the same guidelines in which Sub- clause 10 (iii)(iv) stipulates as follows:-
(iii) Will be applicable only for cheques cleared under the image-based Cheque Truncation System (CTS). Collecting banks should ensure, ab-initio, that such cheques are not accepted for presentment in CTS.
(iv) Is not applicable to cheques cleared under other clearing arrangements such as MICR clearing, non-MICR clearing, over the counter collection (for cash payment) or direct collection of cheques outside the Clearing House arrangement.”
10. In Central Bank of India (supra), the Hon'ble Apex Court has held that R.B.I. Circulars have statutory force and it is on this interpretation that the learned counsel for the applicant has relied upon that this would make the guidelines mentioned above to be binding and any violation of the same would render the impugned cheque to be not a valid instrument.
11. The facts of the above citation are that it involved interpretation of phrases “ the principal sum adjudged” and “such principal sum”, occurring in Section 34 of the CPC, 1908 as amended by Act 66 of 1956. It was held by the Hon'ble Supreme Court that it is a long established banking practise of charging interest at a reasonable rates on periodical rests and capitalising the same on remaining unpaid. This practise is permissible, legal and has been judicially upheld except when superseded by legislation. The facts of the present case are that there is a cutting found in the impugned cheque, which cutting was also not found signatured by the person, who had issued the same.
12. The reply of the argument of learned counsel for the applicant that the said guideline no. 9, on which, applicant is relying upon to state that the said cheque has become invalid only on account of said cutting is that the said kind of cutting is impermissible only in respect of cheques cleared under the Cheque Truncation System (CTS) and not for those cheques which are cleared under other clearing arrangement such as MICR clearing, Non-MICR clearing, over the counter collection (for cash payment) or direct collection of cheques outside the Clearing House Arrangement”, but, I find no force in the argument of learned counsel for the opposite party no. 2 because the established practise of Bank is that any alteration in original state of a cheque such as date, amount, payee's name, changing word “order” to bearer appearing after payee's name or in endorsement is called material alteration. All material alteration must have drawer's approval with his full signature (not initials) where the alteration are made. One of the mandatory features of the CTS-2010 cheque format prescribed by R.B.I. is that no changes/corrections should be carried out on the cheques (other than for date validation purposes, if required) for any change in the payee's name, courtsey amount (amount in figure) or legal amount (amount in words) etc., the fresh cheque forms should be used by the customers. In the present case, when cheque of such a huge amount was drawn in favour of opposit party no. 2 and it was found to have cutting, which was not signatured in full by the accused-applicant, the opposite party no. 2 should have objected to taking the said cheque at the very outset, more so, in condition when the amount in question was huge.
13. Attention may also be drawn to Section 87 of the N.I. Act which provides as under:-
“87. Effect of material alteration.—Any material alteration of a negotiable instrument renders the same void as against any one who is a party thereto at the time of making such alteration and does not consent thereto, unless it was made in order to carry out the common intention of the original parties; Alteration by indorsee.—And any such alteration, if made by an endorsee, discharges his indorser from all liability to him in respect of the consideration thereof. The provisions of this section are subject to those of sections 20, 49, 86 and 125.”
14. In view of above provision, I find that this would fall in the category of material alteration of the impunged cheque.
15. Learned counsel for the applicant has relied upon Fragrant Leasing & Finance Company Ltd. & Anr. Vs. Jagdish Katuriya & Anr., 2007 CRI.L.J. 3880. In this case, accused took loan of Rs. 11,00,000/- from complainant no. 1 and in order to repay the loan, issued two cheques of Rs. 6,00,000/- and 5,00,000/- respectively, (total 11 lacs), which were presented at the Central Bank of India in Varanasi but were returned with endorsement “exceeded arrangement”. Meaning thereby that the accused had issued cheque knowing well that there was no sufficient amount in his account and with dishonest intention deceived the complainant, hence the case was initiated under 138 of the N.I. Act. In paragraph 8 of this judgment, the court after consideration has held that material alteration was made in the cheques introducing the dates, hence cheques were void under Section 87 of the Act and it was also held in paragraph 22 of the judgment that it is a settled law that a person, who is in custody of document subsequent to its execution, has to discharge the burden of establishing that it was not altered, should there be any alteration.
16. Facts of the present case may be taken to be identical to the citation relied upon by the learned counsel for the accused-applicant because in the present case also cheque is stated to have been returned for insufficient amount and not for any alteration or cutting in the cheque but no explanation has come on record that why the impugned cheque was received by the opposite party no. 2 despite the said cheque having alteration in the amount in words without any signature of the executant of the cheque and why it was not insisted by him at that very moment that the said cheque was void under the provisions of Section 87 of the Act due to the said cutting particularly when the amount was so big. He would be treated to be in possession of the said cheque soon after the same was issued to him and when he came in possession of the same, if any alteration in the said cheque happened, the burden would lie only on him to explain as to under what circumstances the said cutting took place but in counter affidavit, no such disclosure has been made, which renders the impugned cheque to be a void instrument in the light of Section 87 of the Act.
17. Next argument raised by the learned counsel for the applicant is that the impugned cheque has not been issued in discharge of any legal debt, which burden was upon the complainant-opposite party no. 2 to prove as the same has not been discharged, hence the complaint is not maintainable. He has also drawn attention to the fact that the bills, which are stated to have been issued by Gangotri Granite Private Ltd., Firm of opposite party no. 2, with respect to articles sold, are not vaild bills. Moreover in second supplementary affidavit, it is mentioned that the two bills of amount of Rs. 3,18,630/- and of Rs. 31,88,950/- respectively, were not annexed with the compliant and to substantiate the same, a questionnaire issued by the District Court, Jhansi, has been annexed with the said second supplementary affidavit at page 8, in which it is mentioned that photo copy of the bill of Rs. 3,18,630/- was presented and no bill of amount of Rs. 33,59,398/- was presnted and it was argued that there was no legal debt due against the accused-applicant from the side of opposite party no. 2 regarding which cheque could have been issued in favour of opposite party no. 2.
18. It has been rebutted by the learned counsel for the opposite party no. 2 stating that it was clearly mentioned in the complaint filed from his side that two cheques, one of amount of Rs. 31,88,950/- and the other of Rs. 3,18,630/-, total amount of Rs. 36,67,028/- were issued and in discharge of the legal dues, the impunged cheque of Rs. 36,67,028/- was issued, which got dishonoured, photo copy of the said cheque is annexed at page 29.
19. The addition of the two bills stands at Rs. 35,07,580/- and not Rs. 36,60,728/-, moreover it is also apparent from the questionnaire issued by the concerned District Court that the originals bills were not annexed regarding payment of which cheques are alleged to have been issued, which was also a flaw in the present case of the opposite party no. 2, which were necessary documents to be filed. Although these are subject matter of disputes, which could be looked into at the time of final trial but as regards the cheque being void, the other grounds raised by the applicant lose significance.
20. Learned counsel for the opposite party no. 2 further argued that bills were genuine and they did contain Tin Number so that admissibility cannot be disputed.
21. It is also argued on behalf of the applicant that Company of the husband of the accused-applicant has not been impleaded despite the fact that it was a deal with the said Company which took place between the opposite party no. 2 and the said Company, hence the said Company ought to have been impleaded as an accused through its Director. The applicant had nothing to do with the said Company, who is only wife of one of Directors of the said Company i.e. Sri Dinesh Chandra Singhal, and hence she could not have been made accused in this case, to this argument, learned counsel for the opposite party no. 2 has rebutted by saying that the cheque in question has been issued by the accused-applicant and not by her husband. It is likely that she might have issued said cheque in order to clear the debt of the Company in order to evade the tax, which is a separate offence, which matter this Court may refer to the Appropriate Authorities.
22. Reliance is placed by the learned counsel for the opposite party no. 2 on K.N. Beena Vs. Muniyappan and another, (2001) 8 SCC 458. In this case, it is held by the Apex Court that the High Court appears to have proceeded on the basis that the denial/averments in respondent's reply to the legal notice were sufficient to shift the burden of proof on to the appellant-complainant to prove that the cheque was issued for a debt or liability. This is entirely erroneous approach. The accused had to prove in the trial, while leading cogent evidence that there was no debt or liability. The respondent accused not having discharged the burden of proving that the said cheque was not issued for the debt or liability the conviction as awarded by the Magistrate was correct and the High Court has erroneously set-aside that conviction.
23. The other case that has been relied upon by the learned counsel for the opposite party no. 2 in MMTC Ltd. And another Vs. Medchl Chemicals and Pharma (P) Ltd. and another, (2002) 1 SCC 234. In this case, it is held that a complaint can be filed in the name and on behalf of the Company by its employee without necessary authorization. Such a complaint is maintenable. Want of authorization can be rectified even at subsequent stage. It was further held in this case that the interference by the High Court in exercise of its inherent powers cannot be made while complaint is pending before the trial court and at this stage the High Court could not examine the merits of the complaint merely because the complaint did not contain specific allegation to the contrary and hold that the cheques were not issued for any debt or existing liability. The onus to prove non existence of a debt or liability lay on the drawer and had to be discharged at the trial.
24. In M.M.T.C. Ltd. And another (supra) the facts were different from the facts of the present case because in the present case, the cheque in question is stated to have been issued by wife of the Director of the Company and the signatures on the said cheque are not denied. The bills regarding payment of which cheque is stated to have been issued by the accused-applicant in favour of opposite party no. 2, signature is not denied thereon by her, therefore, it could be seen at the stage of trial as to whether the said cheque was issued in discharge of any legal liability or not, and not at the stage of proceedings under Section 482 Cr.P.C.
25. There is no quarrel with the principle laid down above as I am fully in agreement with the view that whether or not cheque was issued for discharging a debt or liability can be seen at the time of trial and not in proceeding before this Court under Section 482 Cr.P.C. but the question remains in the present case that the impugned cheque itself appears to be void on account of there being cuttting, which renders the said cheque to be void under the provisions of Section 87 of the N.I. Act, as has been discussed by me above and hence, the subsequent proceedings in opinion of this Court would not serve any purpose, hence in view of this peculiar situation in this case, I consider it appropriate to quash the impugned order.
26. Accordingly, the impugned order dated is quashed.
27. The opposite party no. 2 would have alternative remedy to approach the civil court claiming the due amount from the accused-applicant, if so advised.
Order date: 28.08.2019.
A.P. Pandey