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Judgment
I. David Christian, J.—C.C.No.2412 of 1998 was filed by the complainant Cholamandalam Investments & Finance Company Limited,
represented by its Law Officer Sai Venkatesan against the accused (1)Triveni Alloys Limited, represented by its Managing director and (2)Ashok
Kumar Goel, the Managing Director of the first accused before VII Metropolitan Magistrate. George Town, Madras. The complaint was filed
under Sections 138 & 141 of the Negotiable Instruments act alleging that the complainant company is a non-banking financial company
incorporated under the Companies Act. that they have entered into a lease agreement with Sri Rama Machinery Corporation Limited on
30.9.1993 that as per the agreement the machineries belonging to the complainant have been given in possession to Sri Rama Machinery
Corporation limited on lease basis, that the said Sri Rama Machinery Corporation is to pay lease or rentals as stipulated in the agreement, that for
discharge of liability arising under the lease agreement, the first accused issued two cheques dated 14.6.1997 and 1.10.1997 respectively, that one
is for Rs.1.00.000/-and/another is for Rs.3.08.364/- that the cheque were signed by the second accused on behalf of the first accused and drawn
on State Bank of Bikaneer and Jaipur, Ashok Nagar, Chennai-83, that when the said cheques were presented by the complainant through their
bank State Bank of India. Commercial Branch, Chennai for encashment, the same were not honoured and returned by the bank on 28.11.1997
with an endorsement ""Exceeds Arrangement'', that the complainant received the intimation on 29.11.1997. that the complainant issued a notice to
the accused on 10.12.1997 calling upon them to pay the value of the cheques, that even after receipt of the notice, the accused have failed to pay
the amount, that the accused are therefore liable to be punished for the offences under Sections 138 and 142 of the Negotiable Instruments Act
and that therefore the complaint has been ledged before the competent court.
On the Sworn statement of the complainant, the complaint as taken on file u/s 200 Cr.P.C. for the above stated offences and the accused
appeared on receipt of summons. Accused filed Crl. M.P No 5439 of 1998 stating that even in the complaint it is alleged that the liability incurred
was by Sri Rama Machinery Corporation Limited as an accused, are only guarantors for due repayment of lease amount or rentals by the said
Corporation, that the complaint leaving the principal borrower and impleading only the guarantor is not maintainable, that the liability is only in
respect of lease agreement entered between the complainant and Sri Ram Machinery Corporation Limited, that moreover the complaint is barred
by limitation because it is not preferred within the time fixed in the Negotiable Instruments Act and that therefore the complaint must be thrown out
and the accused must be discharged. The complainant who was the respondent in the Crl. M.P. filed a counter countering the averments made by
the petitioners.
After considering the submissions made by the accused and the complainant in respect"" of Crl.M.P.No.5439 of 1998. the learned Magistrate
by the impugned order dated 3.9.1998 held that since the cheques have been issued only by the first and second accused and since they were
dishonoured and since proper notice has been served and since there was no compliance of the demand made in the statutory notice, the complaint
preferred against the accused is maintainable and therefore dismissed the petition for discharge filed by the accused.
The point for consideration is as to whether the accused are entitled for discharge for all or any of the reasons submitted by them and whether
the Revision is to be allowed?
The Point:-
The complainant has filed this complaint against Triveni alloys limited, and the Managing Director of the said company alleging that the accused
issued two cheques in respect of their liability to the complainant M/s. Cholamandalam Investment and Finance Company limited and since those
cheques have been dishonoured and inspite of the notice, the accused have not paid the amount, being the value of the cheques, and therefore they
are liable to be punished for the offences under Sections 138 and 142 of the Negotiable Instruments Act. The main contention on which the
accused would state that the complaint is not maintainable against them is that the cheques have been issued not because of any liability on their
part but only in discharge of the liability due to the complainant by one Sri Ram Machinery Corporation Limited. First of all Triveni Alloys Limited,
the accused in this case, is a sister concern of Sri Ram Machinery Corporation Limited. Moreover, it is not disputed even now by the present
accused that an agreement of lease has been entered into between M/s. Cholamandalam Investment and Finance Company Limited and Sri Ram
Machinery Corporation Limited and by that the machineries belonging to the former have been given in possession to the latter for which the latter
is liable to pay lease or rental charges every month. Agreement between the complainant company and Sri Ram Machinery Corporation Limited is
guaranteed by the present accused Triveni Alloys limited and the terms of the agreement would make it very clear that the liability of the guarantor,
namely the accused is co-existence with the principal borrower. The guarantor/accused is jointly and separately liable as per the agreement entered
between the complainant and the accused companies. It is not as if that the guarantee agreement executed by the accused provides that only after
exhausting all the remedies against the principal borrower, namely Sri Ram Machinery Corporation Limited, the complainant company must
proceed against the guarantor, namely the present accused.
No doubt Sri Ram Machinery Corporation Limited being the principal borrower is also definitely liable for any amount becoming due to the
complainant, but it is not as if that these accused have no contractual relationship with the complainant company. The accused do not question that
they have executed a guarantee agreement in favour of the complainant company guaranteeing due repayment of the monthly rentals by Sri Ram
Machinery Corporation limited. Since they are co-obligants and since the guarantor is also are jointly and severally liable for rentals due from Sri
Ram Machinery Corporation, it is open to the complainant company to proceed against ""Sri Ram machinery Corporation or against the accused
for the amount due to them. The liability of the guarantor is not dependent upon first proceeding against the principal borrower. It does not lie in the
mouth of the guarantor to point out to the creditor that he must proceed against the principal borrower and only after exhausting all the remedies
which he is entitled against the principal borrower, then only he can proceed against the guarantor. Moreover, the accused do not dispute the fact
that they stood guarantee for due repayment of rental charges of the complainant company due from Sri Ram Machinery Corporation Limited.
The Cheques in question have been issued by the first accused and the person who issued the cheque is the second accused who is the
Managing Director of the first accused company. The first accused company there-fore has entered into an agreement with the complainant and
therefore it cannot be stated that they are not liable or answerable to the claim of the complainant company under the lease agreement. Moreover,
the words used in the Negotiable Instruments act also would indicate that the cheque must have been issued in discharge of a lawful liability and
there is no words used in the section restricting this meaning to the effect that the liability must be that of the person who issued the cheque. The
person who issued the cheque need not necessarily be liable to the complainant. If the complainant company is entitled and if anybody is liable
even then the cheque issued by a third party for enforcing that lawful liability in favour of the complainant will be enough to constitute an offence, if
other ingredients are fulfilled.
So far as the present case is concerned, the first accused has stood guarantee for repayment of rental charges from Sri Ram Machinery
Corporation Limited to the complainant company. It is not the case of the guarantor, namely the accused that the liability has been discharged by
the principal borrower. So, when the principal borrower has committed default, he has become liable to the complainant to the extent of his default
in payment of monthly rentals. The cheques have been also issued only towards the liability of Sri Ram Machinery Corporation Limited. Moreover,
this accused himself is liable to be proceeded against for the amounts due from Sri Ram Machinery Corporation Limited by virtue of the guarantee
agreement entered between the complainant and the accused. Therefore, the learned Magistrate has correctly held that the cheques in question
have been issued for discharge of legally enforceable liability available to be complainant and therefore the complaint is perfectly maintainable.
So far as the question of limitation is concerned, dates mentioned in the petition with regard to issuance of notice, receipt of notice by the
accused are all not disputed. The period of one month provided in the Act as period of Limitation has to be calculated after expiry of fifteen days
from the date of notice because fifteen days time is given to the debtor to pay the value of the cheque and thereby he can validly avoid being
criminally prosecuted. Therefore, the complaint is presented in time and therefore there is no question of limitation. Therefore, on these two
accounts the accused/Revision petitioner cannot claim that the complaint is not maintainable or they must be discharged.
Cr.M.P.No.8747 of 1998 has been filed by the Revision petitioner/accused for interim stay of C.C.No.2412 of 1998 and interim stay was not
granted. Crl.M.P.No.60 of 2000 has been filed by the respondent in Crl.P.C. and the complainant in C.C. praying for vacation of interim stay. In
view of the Revision being dismissed, the stay is allowed. Crl.M.P.No.8747 is therefore dismissed and Crl.M.P.No.68 of 2000 is allowed.