Rajesh Meena vs State Of Haryana And Others

S.No,Complaint Nos.,Cheque No.,Date,Amount

1.,"NACT/5698-

2017","005108

005109","27.06.2017/

27.07.2017","Rs.59,227/-

Rs.65,507/-

2.,"NACT/5703-

2017",005110,25.08.2017,"Rs.90,447/-

3.,"NACT/5172-

2017",005106,25.05.2017,"Rs.7,4024/-

4.,NACT/5173-17,005097,26.08.2017,"Rs.3,88964/-

Act do contemplate that the penal provisions would be attracted in case the cheque in question is dishonoured on account of “insufficient fundsâ€,,,,

or “the amount exceeds the arrangementâ€, but these provisions have been interpreted on number of occasions by this Court as well as by the",,,,

Hon'ble Supreme Court, wherein it was held that in cases where the account is “closed†or “payment was stopped†by drawer even then",,,,

complaint under Section 138 NI Act would be maintainable.,,,,

It is vehemently argued that on the same analogy, the complaint is maintainable as it is not disputed by the accused that the blocked account belongs to",,,,

it which resulted in dishonour of the cheques. According to the respondent, the trial Court has passed the summoning order carefully after examining",,,,

the material on record and therefore, the petition deserves to be dismissed.",,,,

At this stage, before adverting to the merits of this case, it would be appropriate to have a glance at Section 138 NI Act which is extracted below:-",,,,

138 Dishonour of cheque for insufficiency, etc., of funds in the account. â€"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 19 [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 unlessâ€",,,,

(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, 20[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.",,,,

The above provision has been dealt with in detail by the Hon'ble Supreme Court on number of occasions. In M/s Kusum Ingots & Alloys Ltd. Vs. M/s,,,,

Pennar Peterson Securities Ltd. and others etc, 2000(2) SCC 745), the necessary ingredients required to constitute the offence punishable under the",,,,

above provision were highlighted which read as under:-,,,,

(i) a person must have drawn a cheque on an account maintained by him in a bank for payment of a certain amount of money to another person from,,,,

out of that account for the discharge of any debt or other liability;,,,,

(ii) that 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;,,,,

(iii) that cheque is returned by the bank unpaid. either because of the amount of money standing to the credit of the 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 the bank;,,,,

(iv) the payee or the holder in due course of the cheque 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 15 days of the receipt of information by him from the bank regarding the return of the cheque as unpaid;",,,,

(v) the drawer of such cheque fails to make payment of the said amount of money to the payee or the holder in due course of the cheque within 15,,,,

days of the receipt of the said notice.,,,,

Here it would be appropriate to deal with the argument of the learned counsel for the petitioner that the offence would be made out only in case if the,,,,

cheque is dishonoured on account of “insufficient fundsâ€​ or when “the amount exceeds the arrangement with the Bankâ€​.,,,,

In NEPC Micon Ltd. Vs. Magma Leasing Ltd. 1999 (2) R.C.R.(Criminal) 648, the Hon'ble Supreme Court had examined the applicability of Section",,,,

138 NI Act in respect of the cheque, which was dishonoured as the account was closed. The relevant observations are reproduced:-",,,,

“Further, the offence will be complete only when the conditions in the proviso (a), (b) and (c) are complied with. Hence, the question is, in a case",,,,

where cheque is returned by the bank unpaid on the ground that the account is closed, would it mean that cheque is returned as unpaid on the ground",,,,

that the amount of money standing to the credit of that account is insufficient to honour the cheque. In our view, the answer would obviously be in the",,,,

affirmative because cheque is dishonoured as the amount of money standing to the credit of that account was nil at the relevant time apart from it,,,,

being closed. Closure of the account would be an eventuality after the entire amount in the account is withdrawn. It means that there was no amount,,,,

in the credit of that account on the relevant date when the cheque was presented for honouring the same. The expression the amount of money,,,,

standing to the credit of that account is insufficient to honour the cheque is a genus of which the expression that account being closed is specie. After,,,,

issuing the cheque drawn on an account maintained, a person, if he closes that account apart from the fact that it may amount to another offence, it",,,,

would certainly be an offence under Section 138 as there was insufficient or no fund to honour the cheque in that account; Further, cheque is to be",,,,

drawn by a person for payment of any amount of money due to him on an account maintained by him with a banker and only on that account cheque,,,,

should be drawn. This would be clear by reading the Section along with provisos (a), (b) & (c ).â€​",,,,

In the above case, before the Hon'ble Supreme Court where the proceedings were challenged on the same ground, i.e. maintainability of complaint as",,,,

the cheque was dishonoured because account stood closed.,,,,

Relying upon various other judgments on the issue, the Hon'ble Supreme Court held that the provisions of Section 138 NI Act cannot be interpreted",,,,

narrowly because if argument of the drawer is accepted, it would defeat the legislative intent.",,,,

Similarly, where the drawer had stopped the payment and the cheque in question was dishonoured, whether it would be punishable under Section 138",,,,

NI Act was another question posed before the Hon'ble Supreme Court, in M.M.T.C Ltd. and Anr Vs. Medchl Chemicals and Pharma (P) Ltd. and",,,,

Anr, 2001 (1) SCC 234, wherein following observations were made:-",,,,

“It has been held that even though the cheque is dishonoured by reason of 'stop payment' instruction an offence under Section 138 could still be,,,,

made out. It is held that the presumption under Section 139 is attracted in such a case also. The authority shows that even when the cheuqe 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 was 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 an 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.â€​,,,,

This Court does not find any merit in the argument of learned counsel for the petitioner that only either of the two grounds i.e. “insufficient fundsâ€,,,,

or “the amount exceeds the arrangementâ€​ must exist as a reason for dishonour of cheque in order to launch prosecution against the accused.,,,,

Resultantly, the said argument is rejected.",,,,

A careful analysis of Section 138 NI Act reveals that the first and foremost requirement to maintain the complaint under Section 138 NI Act is that,,,,

the cheque issued by the account holder must be from the account maintained by account holder with the drawer-Bank for discharge in whole or in,,,,

part of any debt or other liability.,,,,

The expression ""account maintained by him"" as appearing in Section 138 of NI Act carries great significance and meaning. The dictionary meaning of",,,,

“Maintain†(as contained in Oxford Dictionary) is defined as:-the act of making the state or situation continue. Therefore, the said expression",,,,

“account maintained by him†cannot be construed narrowly to mean that if the account belongs to the accused, the necessary ingredient would be",,,,

complete. This expression “account maintained by him†must necessarily include that the said account is not only alive and operative, but the",,,,

account holder is capable of executing command to govern the financial transactions which include the clearance of cheques etc. The authority and,,,,

control of the account holder upon the account must exist on the effective date i.e. when the cheque becomes valid for presentation in the bank. It is,,,,

settled law that mere issuance of a cheque is not an offence, but it becomes punishable when the said cheque is dishonoured. Mere fact that the",,,,

record of the drawer bank shows a particular name as account holder would not be sufficient to establish that account is being maintained by the,,,,

account holder, unless the said account holder holds the authority and control over the said account. In other words, if an account holder is deprived",,,,

off his authority, control and dominion over the bank account, it cannot be said that the account is being maintained by the said account holder.",,,,

Now while adverting to the facts of this case, it is evident that the proceedings against the company were initiated under the provisions of IB Code",,,,

2016 and the order in terms of Section 14 of IB Code was passed on 21.07.2017. The provisions of IB Code 2016 makes it absolutely clear that,,,,

whenever a corporate debtor is facing the proceedings before the adjudicating authority (NCLT), then the control and management of the said",,,,

corporate debtor can be vested with the Interim Resolution Professional.,,,,

It is also not disputed by learned counsel for the parties that Sh. Virender Singh already stands appointed as Interim Resolution Professional who is,,,,

seized of the management and operation of the corporate debtor (accused No.1). Admittedly, the post dated cheques were given containing the dates",,,,

as 27.06.2017 and 27.07.2017, but prior to the effective dates the said account was blocked, which cannot at all be attributed to the account holder, as",,,,

it was a result of the order passed by NCLT, New Delhi and therefore, by virtue of the said order, the authority and control of the account holder over",,,,

the account ceased to exist.,,,,

At this stage, it will be necessary to note the pleadings in the impugned complaint relating to the legal notice served by the complainant and the reply",,,,

sent by the accused. The relevant pleadings of the complaint reads as under:-,,,,

“10.That upon receipt of written intimation of dishonour of cheques of the aforesaid cheques from the banker of accused, the complainant got",,,,

served legal notice dated 04.10.2017 u/s 138, 141 and 142 of N.I.Act. Vide this notice, the accused persons were called upon to make payment of",,,,

above said dishonoured cheques to the complainant within a period of 15 days from the date of receipt of this notice. The said legal notice was,,,,

dispatched vide Registered A.D. Post dated 06.10.17 on last known and correct addresses of the accused persons. The said legal notice was duly,,,,

served upon the accused persons on 09.10.17 in the ordinary course of postal delivery. The accused persons instead making payment got issued false,,,,

and frivolous reply dated 16.10.2017 through their counsel. The alleged provision of law as cited in false and frivolous reply dated 16.10.2017 is not,,,,

applicable and false defence has been put forth to evade legitimate payment of the complainant.â€​,,,,

A perusal of the above makes it clear that the complainant did not disclose the contents of the reply dated 16.10.2017 and drew a veil over this,,,,

important aspect of the case.,,,,

The said reply dated 16.10.2017 (Annexure P-4) clearly revealed that because of prohibitory orders by NCLT New Delhi, the account in question",,,,

stood blocked and therefore, the request was made to the complainant to withdraw the legal notice. It was further requested that as and when the",,,,

accused would get the permission to operate the account of the company, the payment in respect of the cheques in question would be made to the",,,,

complainant. It is also relevant to note that the said reply also contains a specific averment that intervention by the Company-NCLT was conveyed to,,,,

the complainant even before the presentation of the cheque and request was made to the complainant to not to present the cheque. The reply dated,,,,

16.10.2017 (Anenxure P-4) is reproduced below:-,,,,

That para No.1 of your legal notice is admitted hence needs no reply.,,,,

That para No.2 of your legal notice is correct and admitted.,,,,

That para No.3 of your legal notice is correct and admitted.,,,,

That para No.4 of your legal notice is correct and admitted.,,,,

That para No.5 of your legal notice it is submitted that my client intimated you not to present the above said cheques because Hon'ble National,,,,

Company Law Tribunal, New Delhi vide order dated 21.07.2017 have blocked the account as well as moveable and immoveable properties of my",,,,

client under Section 7 of the Insolvency and Bankruptcy Code, 2016 read with Rule 4 of the Insolvency and Bankruptcy (application to adjudicating",,,,

Authority) Rule 2016. The copy of the order dated 21.7.2017 is attached herewith.,,,,

That in reply to para No.6 of your legal notice it is submitted that my client has replied above in detail in para No.5 of the reply.,,,,

That para No.7 of your legal notice is wrong and denied. My client had not guilty intention from the inception and my client dishonestly with a view,,,,

to cause wrongful loss to your client.,,,,

That para No.8 of your legal notice is matter of record.,,,,

I through this legal notice all upon you to advise your client to withdraw the above said legal notice because my client will pay the amount of cheques,,,,

as and when my client do the work and the Hon'ble National Company Law Tribunal, New Delhi give permission to operate the account of the",,,,

company.â€​,,,,

The above averment in the present petition is not refuted either by way of filing the reply or by way of oral arguments. The only stand adopted by the,,,,

respondent is that since the cheque is dishonoured, therefore, the prosecution of the petitioner accused is inevitable. In the given facts, this Court has",,,,

no hesitation in holding that on the date when the cheques were presented by the complainant to the drawee-Bank, the account holder was not",,,,

maintaining the said account. Resultantly, in the absence of this material condition it cannot be said that the offence punishable under Section 138 NI",,,,

Act would be made out.,,,,

It is true that in one of the cases i.e. CRM-M-15771-2018, the impugned complaint does not contain the pleading regarding reply to the legal notice but",,,,

at the same time, it is established that the cheque in the said complaint was for a date which was subsequent to the other cheques, and therefore, the",,,,

response of the accused was well within the knowledge of the complainant. Even otherwise, there is no conflict between the parties regarding the",,,,

material facts including the proceedings before the NCLT and its consequences.,,,,

In view of the above discussion, petitions are allowed and the criminal complaint(s) nos. NACT 5698-2017 dated 13.11.2017, NACT 5703-2017 dated",,,,

13.11.2017, NACT 5172 of 2017 dated nil and NACT 5173 of 2017, titled as “Narender Singh Vs. M/S Gallium Industries Ltd. and anotherâ€",,,,

under Sections 138, 141 and 142 of NI Act, the respective summoning orders (Annexure P-2) as well as proceedings arising out of it are quashed.",,,,