Sec.138 of N.I. Act - Stop Payment - Non-discloser of reply notice in the complaint - High court quashed the complaint on the above said two grounds - Apex court held that it is a settled law already decided in M.M.T.C. Ltd. and Modi Cements - stop payment also attracts as offence - non-discloser of reply notice in complaint is immaterial whether amount paid or not is to be proved by way of defence but not way of reply notice - High court erred totally and hence set aside the order of the High court =
The High Court further held that the cheque in question was returned on
account of “stop payment” instructions given by the accused vide letter
dated 13/07/2006 in view of the fact that the complainant had failed to
discharge its obligations as per the agreement by not repairing/replacing
the damaged UPS system. The High Court further observed that the
complainant had not disclosed complete facts as required under provisos (b)
and (c) of Section 138 of the NI Act. The High Court concluded that the
complaint did not disclose offence contemplated under Section 138 of the NI
Act. The High Court, in the circumstances, quashed the complaint.
10. The High Court, in our opinion, fell into a grave error when it
proceeded to quash the complaint. Even “stop payment” instructions issued
to the bank are held to make a person liable for offence punishable under
Section 138 of the NI Act in case cheque is dishonoured on that count. In
Modi Cements v. Kuchil Kumar Nandi[1] this Court made it clear that even
if a cheque is dishonoured because of “stop payment” instructions given to
the bank, Section 138 of the NI Act would get attracted. This Court
further observed that once the cheque is issued by the drawer a presumption
under Section 139 must follow and merely because the drawer issues a notice
to the drawee or to the bank for stoppage of the payment it will not
preclude an action under Section 138 of the NI Act by the drawee or the
holder of the cheques in due course.
We find that the High Court has relied on M.M.T.C. Ltd. and Modi
Cements and yet drawn a wrong conclusion that inasmuch as cheque was
dishonoured because of “stop payment” instructions, offence punishable
under Section 138 of the NI Act is not made out.
The High Court observed
that “stop payment” instructions were given because the complainant had
failed to discharge its obligations as per agreement by not
repairing/replacing the damaged UPS system.
Whether complainant had failed
to discharge its obligations or not could not have been decided by the High
Court conclusively at this stage.
The High Court was dealing with a
petition filed under Section 482 of the Code for quashing the complaint.
On factual issue, as to whether the complainant had discharged its
obligations or not, the High Court could not have given its final verdict
at this stage. It is matter of evidence.
This is exactly what this Court said in M.M.T.C. Ltd.
Though the High Court referred to M.M.T.C. Ltd., it failed to note the most vital caution sounded therein.
14. The High Court also erred in quashing the complaint on the ground
that the contents of the reply sent by the accused were not disclosed in
the complaint. Whether any money is paid by the accused to the complainant
is a matter of evidence. The accused has ample opportunity to probabilis
his defence. On that count, in the facts of this case, complaint cannot be
quashed.
15. In view of the above, we set aside the impugned order dated
08/09/2011 passed by the Gujarat High Court in Criminal Misc. Application
No. 1757 of 2007 with Criminal Misc. Application No. 9158 of 2007.
2014 - Aug. Part - http://judis.nic.in/supremecourt/filename=41838
NON-REPORTABLE
IN THE SUPREME COURT OF INDIA
CRIMINAL APPELLATE JURISDICTION
CRIMINAL APPEAL NO. 1808 OF 2014
[Arising out of Special Leave Petition (Crl.) No.9901 of 2011]
Pulsive Technologies P. Ltd. … Appellant
Vs.
State of Gujarat & Ors. … Respondents
WITH
CRIMINAL APPEAL NO.1807 OF 2014
[Arising out of Special Leave Petition (Crl.) No.9915 of 2011]
J U D G M E N T
(SMT.) RANJANA PRAKASH DESAI, J.
1. Leave granted.
2. These appeals are directed against the judgment and order dated
08/09/2011 passed by the High Court of Gujarat in Criminal Misc.
Application No.1757 of 2007 and Criminal Misc. Application No.9158 of 2007
whereby the High Court of Gujarat quashed the criminal complaint filed by
the appellant being Criminal Case No.6076 of 2006 pending on the file of
the Chief Judicial Magistrate of Vadodara for offences punishable under
Section 138 and 142 of the Negotiable Instruments Act (‘the NI Act’).
Brief facts of the appellant-Company’s case.
3. The appellant in both the appeals is the original complainant. It is
a private limited company. Contesting respondent no. 2 in appeal arising
out of SLP No. 9915 of 2011 is the accused company and contesting
respondent nos. 2 to 4 in appeal arising out of SLP No. 9901 of 2011 are
its directors.
4. In the course of its business, the accused received bulk orders from
Gujarat Informatics Limited (“GIL”), a Government of Gujarat Company for
supply of desktop computers, printers, UPS and other products. The
complainant being one of the approved vendors on the list of the GIL, the
accused, placed various purchase orders with the complainant and the
complainant sold and supplied the same as per the demand and
specifications. During the course of business, the accused made part
payments regularly. For the remaining outstanding legitimate dues of the
complainant, the accused handed over a post-dated cheque bearing No.387176
dated 15/07/2006 for Rs.11,80,670/- drawn on HSBC Bank, Bangalore in
favour of the complainant.
5. The complainant presented the cheque twice for collection through
its bankers viz. Bank of Baroda, Jetalpur Branch. It was returned unpaid
on 3/10/2006 for the reason “Payment stopped by drawer”. The complainant on
13/10/2006 sent a demand notice to the accused asking them to pay the
cheque amount within a period of 15 days from the date of the receipt of
the notice. The accused failed to pay the amount to the complainant.
6. On 15/11/2006 the complainant filed a complaint being Criminal
Complaint No.6076/06 in the Court of Chief Judicial Magistrate, Vadodara,
Gujarat against the accused under Sections 138/142 of the NI Act. The
Chief Judicial Magistrate, Vadodara, by order dated 15/11/2006 issued
summons to all the accused.
7. The accused filed applications before the High Court under Section
482 of the Code Criminal Procedure for quashing of the said complaint case.
The High Court by the impugned order dated 8/9/2011 allowed the petition
and quashed the said complaint. Being aggrieved by the said order the
complainant has approached this Court.
8. We have heard Mr. D.N. Ray, learned counsel for the complainant and
Mr. Giriraj Subramanium, learned counsel for the accused. Counsel for the
complainant submitted that the High Court erred in coming to the conclusion
that the complaint does not disclose offence punishable under Section 138
of the NI Act. Counsel submitted that the High Court was wrong in holding
that “stop payment” instructions are not covered by Section 138 of the NI
Act. The High Court failed to notice authoritative pronouncements of this
Court which state that if a cheque bounces because of “stop payment”
instructions it would constitute an offence under Section 138 of the NI
Act. Counsel urged that impugned order must, therefore, be set aside.
Counsel for the accused, on the other hand, supported the impugned order.
9. The High Court held that provisions of Section 138 of the NI Act are
attracted where a cheque is returned by the bank on the ground that there
is insufficient amount or that the amount of cheque exceeds the amount
arranged to be paid from that account by an agreement made with the bank.
The High Court further held that the cheque in question was returned on
account of “stop payment” instructions given by the accused vide letter
dated 13/07/2006 in view of the fact that the complainant had failed to
discharge its obligations as per the agreement by not repairing/replacing
the damaged UPS system. The High Court further observed that the
complainant had not disclosed complete facts as required under provisos (b)
and (c) of Section 138 of the NI Act. The High Court concluded that the
complaint did not disclose offence contemplated under Section 138 of the NI
Act. The High Court, in the circumstances, quashed the complaint.
10. The High Court, in our opinion, fell into a grave error when it
proceeded to quash the complaint. Even “stop payment” instructions issued
to the bank are held to make a person liable for offence punishable under
Section 138 of the NI Act in case cheque is dishonoured on that count. In
Modi Cements v. Kuchil Kumar Nandi[1] this Court made it clear that even
if a cheque is dishonoured because of “stop payment” instructions given to
the bank, Section 138 of the NI Act would get attracted. This Court
further observed that once the cheque is issued by the drawer a presumption
under Section 139 must follow and merely because the drawer issues a notice
to the drawee or to the bank for stoppage of the payment it will not
preclude an action under Section 138 of the NI Act by the drawee or the
holder of the cheques in due course.
11. Again in M.M.T.C. Ltd. and anr. v. Medchl Chemicals and Pharma
(P) Ltd. and anr.[2] this Court reiterated the same view. What is more
important is the fact that this Court declared that the complaint cannot be
quashed on this ground. Relevant observations of this Court read as under:
“… … …Even when the cheque is dishonoured by reason of stop-payment
instructions by virtue of Section 139 the court has to presume that the
cheque was received by the holder for the discharge, in whole or in part,
of any debt or liability. Of course this is a rebuttable presumption. The
accused can thus show that the “stop-payment” instructions were not issued
because of insufficiency or paucity of funds. If the accused shows that in
his account there were sufficient funds to clear the amount of the cheque
at the time of presentation of the cheque for encashment at the drawer bank
and that the stop-payment notice had been issued because of other valid
causes including that there was no existing debt or liability at the time
of presentation of cheque for encashment, then offence under Section 138
would not be made out. The important thing is that the burden of so proving
would be on the accused. Thus a court cannot quash a complaint on this
ground.”
12. In Laxmi Dyechem v. State of Gujarat and ors[3] this Court
reiterated the above view.
13. We find that the High Court has relied on M.M.T.C. Ltd. and Modi
Cements and yet drawn a wrong conclusion that inasmuch as cheque was
dishonoured because of “stop payment” instructions, offence punishable
under Section 138 of the NI Act is not made out. The High Court observed
that “stop payment” instructions were given because the complainant had
failed to discharge its obligations as per agreement by not
repairing/replacing the damaged UPS system. Whether complainant had failed
to discharge its obligations or not could not have been decided by the High
Court conclusively at this stage. The High Court was dealing with a
petition filed under Section 482 of the Code for quashing the complaint.
On factual issue, as to whether the complainant had discharged its
obligations or not, the High Court could not have given its final verdict
at this stage. It is matter of evidence. This is exactly what this Court
said in M.M.T.C. Ltd. Though the High Court referred to M.M.T.C. Ltd., it
failed to note the most vital caution sounded therein.
14. The High Court also erred in quashing the complaint on the ground
that the contents of the reply sent by the accused were not disclosed in
the complaint. Whether any money is paid by the accused to the complainant
is a matter of evidence. The accused has ample opportunity to probabilis
his defence. On that count, in the facts of this case, complaint cannot be
quashed.
15. In view of the above, we set aside the impugned order dated
08/09/2011 passed by the Gujarat High Court in Criminal Misc. Application
No. 1757 of 2007 with Criminal Misc. Application No. 9158 of 2007. We
direct the Chief Judicial Metropolitan Magistrate, Vadodara to dispose of
the Criminal Complaint No.6076 of 2006 as expeditiously as possible and, in
any event, within a period of one year from the date of receipt of this
order.
16. The appeals are disposed of in the afore-stated terms.
……………………………………………..J.
(RANJANA PRAKASH DESAI)
……………………………………………..J.
(N.V. RAMANA)
NEW DELHI,
August 22, 2014.
-----------------------
[1] (1998) 3 SCC 249
[2] (2002)1 SCC 234
[3] (2012) 13 SCC 375
-----------------------
9
The High Court further held that the cheque in question was returned on
account of “stop payment” instructions given by the accused vide letter
dated 13/07/2006 in view of the fact that the complainant had failed to
discharge its obligations as per the agreement by not repairing/replacing
the damaged UPS system. The High Court further observed that the
complainant had not disclosed complete facts as required under provisos (b)
and (c) of Section 138 of the NI Act. The High Court concluded that the
complaint did not disclose offence contemplated under Section 138 of the NI
Act. The High Court, in the circumstances, quashed the complaint.
10. The High Court, in our opinion, fell into a grave error when it
proceeded to quash the complaint. Even “stop payment” instructions issued
to the bank are held to make a person liable for offence punishable under
Section 138 of the NI Act in case cheque is dishonoured on that count. In
Modi Cements v. Kuchil Kumar Nandi[1] this Court made it clear that even
if a cheque is dishonoured because of “stop payment” instructions given to
the bank, Section 138 of the NI Act would get attracted. This Court
further observed that once the cheque is issued by the drawer a presumption
under Section 139 must follow and merely because the drawer issues a notice
to the drawee or to the bank for stoppage of the payment it will not
preclude an action under Section 138 of the NI Act by the drawee or the
holder of the cheques in due course.
We find that the High Court has relied on M.M.T.C. Ltd. and Modi
Cements and yet drawn a wrong conclusion that inasmuch as cheque was
dishonoured because of “stop payment” instructions, offence punishable
under Section 138 of the NI Act is not made out.
The High Court observed
that “stop payment” instructions were given because the complainant had
failed to discharge its obligations as per agreement by not
repairing/replacing the damaged UPS system.
Whether complainant had failed
to discharge its obligations or not could not have been decided by the High
Court conclusively at this stage.
The High Court was dealing with a
petition filed under Section 482 of the Code for quashing the complaint.
On factual issue, as to whether the complainant had discharged its
obligations or not, the High Court could not have given its final verdict
at this stage. It is matter of evidence.
This is exactly what this Court said in M.M.T.C. Ltd.
Though the High Court referred to M.M.T.C. Ltd., it failed to note the most vital caution sounded therein.
14. The High Court also erred in quashing the complaint on the ground
that the contents of the reply sent by the accused were not disclosed in
the complaint. Whether any money is paid by the accused to the complainant
is a matter of evidence. The accused has ample opportunity to probabilis
his defence. On that count, in the facts of this case, complaint cannot be
quashed.
15. In view of the above, we set aside the impugned order dated
08/09/2011 passed by the Gujarat High Court in Criminal Misc. Application
No. 1757 of 2007 with Criminal Misc. Application No. 9158 of 2007.
2014 - Aug. Part - http://judis.nic.in/supremecourt/filename=41838
NON-REPORTABLE
IN THE SUPREME COURT OF INDIA
CRIMINAL APPELLATE JURISDICTION
CRIMINAL APPEAL NO. 1808 OF 2014
[Arising out of Special Leave Petition (Crl.) No.9901 of 2011]
Pulsive Technologies P. Ltd. … Appellant
Vs.
State of Gujarat & Ors. … Respondents
WITH
CRIMINAL APPEAL NO.1807 OF 2014
[Arising out of Special Leave Petition (Crl.) No.9915 of 2011]
J U D G M E N T
(SMT.) RANJANA PRAKASH DESAI, J.
1. Leave granted.
2. These appeals are directed against the judgment and order dated
08/09/2011 passed by the High Court of Gujarat in Criminal Misc.
Application No.1757 of 2007 and Criminal Misc. Application No.9158 of 2007
whereby the High Court of Gujarat quashed the criminal complaint filed by
the appellant being Criminal Case No.6076 of 2006 pending on the file of
the Chief Judicial Magistrate of Vadodara for offences punishable under
Section 138 and 142 of the Negotiable Instruments Act (‘the NI Act’).
Brief facts of the appellant-Company’s case.
3. The appellant in both the appeals is the original complainant. It is
a private limited company. Contesting respondent no. 2 in appeal arising
out of SLP No. 9915 of 2011 is the accused company and contesting
respondent nos. 2 to 4 in appeal arising out of SLP No. 9901 of 2011 are
its directors.
4. In the course of its business, the accused received bulk orders from
Gujarat Informatics Limited (“GIL”), a Government of Gujarat Company for
supply of desktop computers, printers, UPS and other products. The
complainant being one of the approved vendors on the list of the GIL, the
accused, placed various purchase orders with the complainant and the
complainant sold and supplied the same as per the demand and
specifications. During the course of business, the accused made part
payments regularly. For the remaining outstanding legitimate dues of the
complainant, the accused handed over a post-dated cheque bearing No.387176
dated 15/07/2006 for Rs.11,80,670/- drawn on HSBC Bank, Bangalore in
favour of the complainant.
5. The complainant presented the cheque twice for collection through
its bankers viz. Bank of Baroda, Jetalpur Branch. It was returned unpaid
on 3/10/2006 for the reason “Payment stopped by drawer”. The complainant on
13/10/2006 sent a demand notice to the accused asking them to pay the
cheque amount within a period of 15 days from the date of the receipt of
the notice. The accused failed to pay the amount to the complainant.
6. On 15/11/2006 the complainant filed a complaint being Criminal
Complaint No.6076/06 in the Court of Chief Judicial Magistrate, Vadodara,
Gujarat against the accused under Sections 138/142 of the NI Act. The
Chief Judicial Magistrate, Vadodara, by order dated 15/11/2006 issued
summons to all the accused.
7. The accused filed applications before the High Court under Section
482 of the Code Criminal Procedure for quashing of the said complaint case.
The High Court by the impugned order dated 8/9/2011 allowed the petition
and quashed the said complaint. Being aggrieved by the said order the
complainant has approached this Court.
8. We have heard Mr. D.N. Ray, learned counsel for the complainant and
Mr. Giriraj Subramanium, learned counsel for the accused. Counsel for the
complainant submitted that the High Court erred in coming to the conclusion
that the complaint does not disclose offence punishable under Section 138
of the NI Act. Counsel submitted that the High Court was wrong in holding
that “stop payment” instructions are not covered by Section 138 of the NI
Act. The High Court failed to notice authoritative pronouncements of this
Court which state that if a cheque bounces because of “stop payment”
instructions it would constitute an offence under Section 138 of the NI
Act. Counsel urged that impugned order must, therefore, be set aside.
Counsel for the accused, on the other hand, supported the impugned order.
9. The High Court held that provisions of Section 138 of the NI Act are
attracted where a cheque is returned by the bank on the ground that there
is insufficient amount or that the amount of cheque exceeds the amount
arranged to be paid from that account by an agreement made with the bank.
The High Court further held that the cheque in question was returned on
account of “stop payment” instructions given by the accused vide letter
dated 13/07/2006 in view of the fact that the complainant had failed to
discharge its obligations as per the agreement by not repairing/replacing
the damaged UPS system. The High Court further observed that the
complainant had not disclosed complete facts as required under provisos (b)
and (c) of Section 138 of the NI Act. The High Court concluded that the
complaint did not disclose offence contemplated under Section 138 of the NI
Act. The High Court, in the circumstances, quashed the complaint.
10. The High Court, in our opinion, fell into a grave error when it
proceeded to quash the complaint. Even “stop payment” instructions issued
to the bank are held to make a person liable for offence punishable under
Section 138 of the NI Act in case cheque is dishonoured on that count. In
Modi Cements v. Kuchil Kumar Nandi[1] this Court made it clear that even
if a cheque is dishonoured because of “stop payment” instructions given to
the bank, Section 138 of the NI Act would get attracted. This Court
further observed that once the cheque is issued by the drawer a presumption
under Section 139 must follow and merely because the drawer issues a notice
to the drawee or to the bank for stoppage of the payment it will not
preclude an action under Section 138 of the NI Act by the drawee or the
holder of the cheques in due course.
11. Again in M.M.T.C. Ltd. and anr. v. Medchl Chemicals and Pharma
(P) Ltd. and anr.[2] this Court reiterated the same view. What is more
important is the fact that this Court declared that the complaint cannot be
quashed on this ground. Relevant observations of this Court read as under:
“… … …Even when the cheque is dishonoured by reason of stop-payment
instructions by virtue of Section 139 the court has to presume that the
cheque was received by the holder for the discharge, in whole or in part,
of any debt or liability. Of course this is a rebuttable presumption. The
accused can thus show that the “stop-payment” instructions were not issued
because of insufficiency or paucity of funds. If the accused shows that in
his account there were sufficient funds to clear the amount of the cheque
at the time of presentation of the cheque for encashment at the drawer bank
and that the stop-payment notice had been issued because of other valid
causes including that there was no existing debt or liability at the time
of presentation of cheque for encashment, then offence under Section 138
would not be made out. The important thing is that the burden of so proving
would be on the accused. Thus a court cannot quash a complaint on this
ground.”
12. In Laxmi Dyechem v. State of Gujarat and ors[3] this Court
reiterated the above view.
13. We find that the High Court has relied on M.M.T.C. Ltd. and Modi
Cements and yet drawn a wrong conclusion that inasmuch as cheque was
dishonoured because of “stop payment” instructions, offence punishable
under Section 138 of the NI Act is not made out. The High Court observed
that “stop payment” instructions were given because the complainant had
failed to discharge its obligations as per agreement by not
repairing/replacing the damaged UPS system. Whether complainant had failed
to discharge its obligations or not could not have been decided by the High
Court conclusively at this stage. The High Court was dealing with a
petition filed under Section 482 of the Code for quashing the complaint.
On factual issue, as to whether the complainant had discharged its
obligations or not, the High Court could not have given its final verdict
at this stage. It is matter of evidence. This is exactly what this Court
said in M.M.T.C. Ltd. Though the High Court referred to M.M.T.C. Ltd., it
failed to note the most vital caution sounded therein.
14. The High Court also erred in quashing the complaint on the ground
that the contents of the reply sent by the accused were not disclosed in
the complaint. Whether any money is paid by the accused to the complainant
is a matter of evidence. The accused has ample opportunity to probabilis
his defence. On that count, in the facts of this case, complaint cannot be
quashed.
15. In view of the above, we set aside the impugned order dated
08/09/2011 passed by the Gujarat High Court in Criminal Misc. Application
No. 1757 of 2007 with Criminal Misc. Application No. 9158 of 2007. We
direct the Chief Judicial Metropolitan Magistrate, Vadodara to dispose of
the Criminal Complaint No.6076 of 2006 as expeditiously as possible and, in
any event, within a period of one year from the date of receipt of this
order.
16. The appeals are disposed of in the afore-stated terms.
……………………………………………..J.
(RANJANA PRAKASH DESAI)
……………………………………………..J.
(N.V. RAMANA)
NEW DELHI,
August 22, 2014.
-----------------------
[1] (1998) 3 SCC 249
[2] (2002)1 SCC 234
[3] (2012) 13 SCC 375
-----------------------
9
