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Judgment
M.L. Singhal, J.—Crl. Misc. No. 29135-M 1997 seeks the quashing of complaint Annexure P8 tilled Punjab State Cooperative Supply & Marketing Federation (MARKFED) Chandigarh through OSD Cotton Markfed Bhatinda v. M/s Orissa Cooperative Spinning Mills Federation and others Tiled u/s 138 of the Negotiable Instruments Act (in short the Act) and the order Annexure P-9 passed by Judicial Magistrate First Class, Bhatinda dated 22.5.1995 summoning the accused for their trial thereunder.
As prayer for quashing rests on facts which are common to all these complaints, facts arc taken from the complaint (ibid).
Punjab State Cooperative Supply and Marketing Federation Ltd (hereinafter to be referred as Markfed) through OSD (Cotton) Markfed. Bhatinda instituted complaint u/s 138 of the Negotiable Instruments Act. 1881 (in short the Act) as amended upto date against M/s Orissa State Cooperative Spinning Mills Federation Limited and others on the allegations that complainant'' is a Federation registered under the Punjab Cooperative Societies Act. 1961 It deals in the purchase of cotton. Narma wheal etc. from the market Accused M/s Orissa State Spinning Mills Federation Ltd. is a cooperative federation, accused no 2 is one of its subsidiaries in the State of Orissa. entire business of respondent No. 2 is conducted through accused No. 1 and further by its Secret an and General Manager. Accused No. 3 and 4 arc authorised signatories of accused No. 2. Accused No. 2 maintains an account with State Bank of India. Industrial Estate. Bhuvneshwar. Account is being operated upon by accused No. 3 and 4 jointly On 4.12.91, accused No. 1 though telephone desired to purchase cotton bales of different qualities and the deal was struck on telephone. A free period of 35 days front the date of bargain was given and thereafter charges of 2.5% per month were agreed to be payable by the accused and other terms and conditions were settled as per the previous year The complainant confirmed the said sale vide letter dated 26/31.12.91 Accused No. 2, on the basis of aforesaid bargain dated 4.12.91 vide their separate letter dated 25.12.91 desired the purchase of 500 cotton bales of F-414-S/G "A" including 200 cotton bales of the said quality of lot No. 109 and 110. 100 cotton bales each bearing Sr. No. 4751 to 4850 and 4951 to 5050 respectively from Muktsar station and also handed over post dated cheques No. 172944 dated 23.1.93. 172945 dated 25.1.93 and 172946 dated 27.1.93 for Rs. 3 lacs each to the complainant at Bhatinda. The complaint issued sale letter for 200 cotton bales bearing lot No. 109 and 110 of F-414-S/G A" having serial No. 4751 to 4850 and 4851 to 5050 from Muktsar station at Rs. 12.000/- per candy and also issued bill No. 68 dated 2.12.92 for an amount of Rs. 14.59,527,90. Delivery was to be taken by the accused from Muktsar and payment was to be made at Bhatinda and the sale was also transacted at Bhatinda as per terms and conditions of the bargain. Accused took the delivery of 200 cotton bales from Muktsar against the above 3 post dated cheques No. 172944 dated 23.1.93. No. 172945 dated 25.1.93 and No. 172946 dated 27.1.93 for Rs. 3 lacs each drawn on State Bank of India. Industrial Estate. Bhuvneshwar which was handed over to the complainant at Bhatinda. The complainant maintained its account with the State Bank of India at Bhatinda and the aforesaid cheques for Rs. 3 lacs each were presented for encashment and realization to the State Bank of India. Bhatinda branch. These were payees account cheques. These cheques were sent to the drawer bank thorough clearing house. State Bank of India. Bhuvneshwar branch vide their memo dated 27.4.93 dishonored the said cheques with the endorsement "effects vet not learned, please present again. Aforesaid cheques were bounced/returned unpaid because amount standing to the credit of that account was not sufficient enough to honor the cheques. Complainant received intimation regarding the return of cheques as unpaid vide memo dated 16.4.93 of the banker of complainant along with the endorsement slip and dishonored cheques. Complainant got issued registered AD notices dated 3.5.93 u/s 138-B of the Negotiable Instruments Act. 1881 through its counsel and made demand of Rs. 3 lacs each with regard to all three cheques along with interest thereon and called upon the accused to make payment within 15 days of the receipt of the notices. Those notices were duly received by the accused. Accused failed to make payment of the amount of cheques amounting to Rs. 9 lacs i.e. Rs. 3 lacs each As per complainant, accused 1 to 4 issued cheques in favour of the complainant in lieu of the discharge of their debt/liability and those cheques were bounced/returned unpaid by the bank with the endorsement "Effects yet not cleared, please present again" and accused thus failed to make payment of the cheques within 15 days from the dale of receipt of notices as said offence u/s 138 of the Negotiable Instruments act was committed by them. Prayer for quashing of this complaint and the order summoning the accused is based on the following facts set up by the accused.
M/s Orissa State Cooperative Spinning Mills Federation Limited (petitioner No.) has been purchasing cotton bales from the respondent Markfed for the last many years. It has been a regular customer for the purchase of cotton. Petitioner No. I purchased 500 cotton bales from the respondent Markfed in December 1992 Petitioner issued 10 advance cheques of Rs. 3 lacs each against the purchase of cotton bales Respondent was to send goods and get demand draft against the cheques. Respondent Markfed despatched the goods and issued 3 bills No. 767. 768 and 769 dated 1.12.92, 1.12.93 and 3.12.93 respectively for the amount of Rs. 14.92,197,37 Rs. 14.59,927,90 and Rs. 7.75,933,26 respectively. Petitioner made payment against cheque no. 172937 to 182940 and respondent Markfed returned the cheques to the petitioner. Annexure P1 is copy, of letter dated 1.3.93 showing the return of the cheques by the respondent Markfed to the petitioner. Thereafter, the respondent Markfed inquired the petitioners whether cheques for Rs. 18 lacs should be presented or the petitioners are sending drafts against the balance amount of Rs. 18 lacs. Petitioner telephonically conveyed to the pendent Markfed that they arc sending the payments by way of drafts and required not to present cheques in the bank. Annexure P2 is the letter dated 17.3.93 issued by the respondent Markfed. Respondent Markfed without waiting for the drafts presented the cheques in the bank for collection and thereafter got the same dishonored and issued legal notice to the petitioners. Petitioners as per promise, released a sum of Rs. 2.99.350 on 17.5.93 and a sum of Rs. 4.98.752 on 26.5.93 and the principals of the petitioners i.e. M/s Orissa State Cooperative Spinning Mills Federation Limited released a sum Rs. 15.73,000 on 16.11.93 and a sum of Rs. 3,57,000 on 3.1.94. In this manner, entire a mount to the tune of Rs. 39,75,622/- was paid against the billed amount of Rs. 37,09,058,532P stood paid. Respondent duly received the payment and acknowledged the payment. It is further alleged that the respondent had also agreed to withdraw the cases from the court which they had filed against the dishonoured cheques. There is letter Annexure P3 written by the respondent to the petitioner where through they agreed to withdraw the cases if the interest amount against the bounced cheques was paid to them. In reply to the letter dated 1.6.93 issued by the respondent, the petitioners had given the details of the payment and had clarified the detail of payment made against the cheques. Annexures P4 and P5 are letters dated 8.6.93 and 1.12.93 to this effect. Parent body of the petitioners i.e. Orissa State Cooperative Spinning Mills Federation Limited had released payment to the tune of Rs. 15,73,000 and Rs. 3,57,000 on 8.12.93 and 5.1.94 to the respondents against the supply of cotton bales vide their bills No. 767,768 and 769. Annexure P6 and P7 arc copies of the letters issued by the Orissa State Cooperative Spinning Mills Federation Limited. Despite the receipt of the entire payments by the respondent against the cheque amounts and billed amounts, the respondent did not withdraw the complaint as per their letter dated 1.6.93 Annexure P3. Petitioners filed revision in the court of Sessions Judge. Bhatinda Annexure P10 against the summoning order Sessions Judge. Bhatinda dismissed the revision. It is alleged that cheques were not dishonoured for the reason "insufficiency of funds but were returned with the remark that Effects yet not cleared present again". No offence u/s 138 of the negotiable Instruments Act can be said to have been made out if this is the position If the face value of the cheque has been paid. Proceedings u/s 138 of the Negotiable Instruments Act cannot be continued, continuation of proceedings u/s 138 of the act will be an abuse of the process of law.
Learned counsel for the petitioners submitted that the respondent issued 10 advance cheques of Rs. 3 lacs each against the purchase of cotton bales. Respondent was to send goods and thereafter the Markfed was to return the cheques and get the demand drafts against cheques. Respondent despatched the goods and issued 3 bills No. 767,768 and 769 dated 1.12.92, 2.12.92 and 3.12.92 respectively for an amount of Rs. 14,92,197,37. Rs. 14,59,927,90 and Rs. 7,57,933,26. Petitioner made payment against the cheques No. 172,937 to 172940 and the respondent returned the cheques to the petitioner There is a letter Annexure P1 issued by the respondent to the petitioner acknowledging the receipt of the demand draft No. 134571 dated 26.2.93 for Rs. 3.97 lacs. It was thereafter that respondent required from the petitioner whether cheque for Rs. 18 lacs should be presented or that the petitioners were sending the drafts against the balance amount of Rs. 18 lacs. Petitioners telephonically conveyed to the respondent that they are sending the payments by way of drafts and not to present the cheques in the bank There is letter dated 17.7.93 issued by the respondent to this effect Annexure P2. It was submitted that respondent without waiting for the drafts, presented the cheques in the bank for collection and after getting the same dishonoured issued legal notice to the petitioners. Petitioners as per terms released a sum of Rs. 2.99.250/- on 17.5.93 a sum of Rs. 4.98. 752/- on 26.4.93 and the petitioners i.e. M/s Orissa State Cooperative Spinning Mills Federation Ltd. released a sum of Rs. 15.73.00(1/- on 16.11.93 and a sum of Rs. 3.57.000/- on 3.1. 94 entire amount of Rs. 39.75.629/- was thus paid against the billed amount of Rs. 37.09.058.53. It was submitted that the respondents duly received the payments and acknowledged the payments and also agreed to withdraw the cases from the court which they have filed against the dishonoured cheques. There is letter Annexure P3 to this effect issued by the respondent to the petitioner in letter Annexure P3 the respondent wrote to the petitioner that they had received total amount of Rs. 7.98.000/- through demand draft Respondent called upon the petitioner to mention the number of cheques against which this amount was to be adjusted. Respondent also requested the petitioner to send them the interest amount against the bounced cheques. Petitioner in reply gave details of the payment made against cheques. Annexures P4 and P5 are the details of payments against bounced cheques. Orissa State Cooperative Spinning Mills Federation Ltd which is the parent body of the petitioners released payment to the tune of Rs. 15.73 lacs and Rs. 3.57 lacs on 8.12.93 and 5.1.94 to the respondent against the supply of cotton bales vide their bills No. 767. 768 and 769 Annexures P6 and P7 arc the letters issued by the Federation in this behalf. It was submitted by the learned counsel for the petitioner that despite the receipt of entire payment by the respondent against the cheque amount and bill amount, the respondent did not withdraw the complaint as undertaken by them vide their letter Annexure P3. It was submitted that cheques were not dishonoured for insufficiency of Funds "but were unpaid by the bank with the endorsement" Effects yet not cleared, present again. It was submitted that once face value of the cheques had been paid by the petitioner the continuation of criminal proceedings u/s 138 of the Act in the court would be nothing but an abuse of process of law. Learned counsel for the petitioner submitted that the payment of Rs. 39.75.690/- had been released against the chequeamout and the bill amount of Rs. 37.09.058.53. Learned counsel for the petitioner submitted that no offence u/s 138 of the Act would be made out if prior to the presentation of the cheque, the drawer of the cheque had issued notice to the payee not to present cheque to the bank for encashment and the payee still presents the cheque and the cheque is dishonoured by the bank, no offence u/s 1.38 of the Act would be made out. It was submitted that the petitioners (drawer of the cheque) had telephonically conveyed to the respondents that they were sending the payment by way of drafts and requested not to present the cheques in the bank. There is letter Annexure P2 issued by the respondents to the petitioners where through the respondents had told that cheques worth Rs. 18 lacs were lying with them and which were in due in January for presentation to the bank. Petitioners were requested to send the payment through DD for Rs. 18 lacs or to advise them (respondent) whether they should present the cheques in the bank. In Crl. appeal No. 124 of 1996 arising out of SLP (Crl.) No. 2959 of 1992 other criminal appeal No. 128-132 of 1996 arising out of SLP (Crl.) No. 3009-13 of 1992. Electronics Trade and Technical Development corporation Ltd. Sekundrabad petitioner v. Indian Technology & Engineers Private Ltd. respondents. 1996 (1) CCC 309 (SC): 1996 ACJ 99 (SC): 1996 (1) RCR 593 it was held that where the drawer issuing cheque had subsequently issued notice to the payee not to present the cheque to the bank for enactment and the payee still presented the cheque for encashment and the cheque was dishonoured by the bank, no offence u/s 138 of the Act would be made out. In Gopal Krishan and another v. Rameshwar Dass. 1996(2) RCR 660, it was held that where the drawer had informed the drawer not to present the cheque as the funds were not sufficient in the bank and the drawee still presented the cheque and the cheque was dishonoured- section 138 of the Act would not be attracted in such a case. In Jai Gopal Khanna v. J.K. Engineering Works. 1994(3) RCR 355, the drawer of the cheque sent the amount wife through bank draft but was refused by the drawee and the drawee filed complaint against the drawer, it was held that complaint was filed to harass the drawer and complaint was quashed
Learned counsel for the respondent, on the other hand, submitted that once had been committed and was a complete offence, merely by making payment the offence will not be put an end to. In support of this submission, he drew my attention to M/s Compact Disc India Ltd. and another v...........1997 (1) ISJ (Ban) 17. It was submitted that it will be a question of fact whether payment was made after the cheques has been bounded. It will also be a question of fact whether the respondent without wailing for the drafts, presented the cheques in the bank for collection and after gelling the same dishonoured, issued legal notice to the petitioners. In support of this submission, he drew my attention to Krishna Sachdeva v. Modella Knitwear Ltd. 1995(2) ISJ (Ban) 25.
It is clear from letter Annexure P4 that the petitioner had deposited draft of Rs. 7.98.002/-against the payment of post dated cheques No. 172941. 172942 and 172943 and they were arranging to clear the balance dues against the following bounced cheques together with dues of Rs. 9 lacs:-
Cheque No. /Date Bank Amount
172941/17.1.93 SBI.IEB 3,00,000/-
172942/19.1.93 -do- 3.00.000/-
172943/21.1.93 -do- 3.00.000/-
Petitioners requested the respondents to return these cheques for audit purposes. Vide letter Annexure P5. petitioner informed the respondent that they had already deposited drafts No. 134729 dated 17.5.93 for Rs. 2,99.250/- No. 134738 dated 26.5.93 for Rs. 4.98.752/- totaling Rs. 7.98,002.50 (page 30 of paper book). This amount was deposited for the bounced cheques No. 172941, 172942 and 172943. It is a question of fact whether the payments were made through drafts after the cheques had been bounced. It is also a question of fact whether the petitioner had called upon the respondent not to present the cheques and still they presented the cheques it is not a case where complaint can be quashed at the outset petitioner may however move an application after appearance before the trial magistrate praying that no offence u/s 138 of the Act is made out saying they had made payment through drafts before the cheques had been bounced and also that the cheques had been presented despite the respondent having been called upon not to present the cheques, learned Magistrate will go into these questions at the outset i.e. before the issuance of notice as envisaged in Section 251 Cr. P.C. and decide the prayer of the petitioner.
Since M/s Orissa Spinning Mills is a federation and has it different subsidiaries in the State of Orissa including M/s Sarala Cooperative Spinning Mills Ltd., I think the petitioners should be granted exemption from appearance before the Magistrate. Petitioners may appear before the Magistrate through their counsel or some authorised agent.
This Crl. Misc. petition is disposed of with the above observations.