Tag: #cheque

-Report by Harshit Yadav

This judgement concerns a petition filed by M/s InterarchBuilding Products Pvt. Ltd. seeking to quash an order passed by the learned MM (NI Act, Patiala House Courts, New Delhi) in Criminal Complaint bearing number 10567/2020. The complaint was filed by the respondent, alleging that M/s Swift Construction Expert (the accused firm) had approached the respondent in January 2019 for the design, engineering, fabrication, supply, and erection of a pre-engineered steel building. The petitioner is seeking quashing of the complaint and the order taking cognizance of an offence under Section 138 of the Negotiable Instrument Act.

FACTS:

A complaint was filed by M/s Interarch Building Products Pvt.Ltd. against M/s Swift Construction Expert, a partnership firm, for dishonour of two cheques issued towards payment of outstanding dues.

The complainant alleged that after the acceptance of the proposal, the accused firm had issued a revised purchase order and further bills and invoices were raised.

The accused firm released a part payment of Rs. 50,00,000/- through RTGS and asked the complainant to present two post-dated cheques for the balance payment of Rs. 61,00,000/-. However, both cheques were dishonoured.

The complaint was filed under Section 138 of the Negotiable Instrument Act against the accused firm and its partners, including the petitioner, Ridhima Jain, who was shown as Accused No. 3.

Issues:

Whether the petitioner, who is the wife of Accused No. 2 and not a signatory to the cheques, can be made accused and held liable for the dishonour of cheques only for accompanying her husband on a few occasions.

Whether the person who is not a signatory to the cheque can be held liable for its dishonour under Section 138 of the Negotiable Instrument Act.

Whether the petitioner, who actively participated in the execution of the purchase/works order and acted on behalf of the accused firm, can be held liable for the dishonour of cheques.

Whether the petitioner is a partner in the accused firm and responsible for the conduct of its business and can be proceeded against under Section 141 of the Negotiable Instrument Act.

Petitioner’s Contentions:

Petitioner (Ridhima Jain) is not the signatory of the impugned cheques and is not a partner in the accused firm. The account from which cheques were issued was not a joint account.

Petitioner cannot be made accused and liable for the dishonour of cheque only for the reason that she used to accompany her husband on a few occasions.Section 138 of the Negotiable Instrument Act, the person who is not signatory to the cheque cannot be held liable for its dishonour. Even in terms of Section 141 of the Negotiable Instrument Act, it is only the person in charge and responsible for the conduct of the business of the company who shall be deemed to be guilty of the offence and is liable to be proceeded against.

RESPONDENT’S CONTENTIONS:

Arguments raised are a matter of trial and should be addressed before the learned Trial Court.

The petitioner has actively participated in the execution of the purchase/works order, communicated with the respondent company through e-mails, and acted on behalf of the accused firm.

The petitioner is a partner in the accused firm.

The petitioner, having actively participated in the execution of the purchase/work order, was also responsible for the conduct of the business of the firm.

JUDGEMENT:

The petitioner has filed a petition seeking to quash the order passed by the learned Magistrate (NI Act, Patiala House Courts, New Delhi) in a criminal complaint filed by the respondent under Section 138 of the Negotiable Instrument Act. The complaint alleged that the accused firm had issued two cheques which were dishonoured, and the petitioner, who is one of the accused, is also responsible for the same.

The petitioner has submitted that he cannot be held liable for the dishonour of the cheques as he is not a signatory to them. He further submitted that under Section 141 of the Negotiable Instrument Act, only the person in charge and responsible for the conduct of the business of the company can be held liable.

The respondent argued that the petitioner actively participated in the execution of the purchase order, communicated with the respondent company, and acted on behalf of the accused firm. The respondent further denied the fact that the petitioner is not a partner in the accused firm.

The court held that the petitioner’s arguments are matter of trial and should be addressed before the learned Trial Court. The court further noted that the petitioner actively participated in the execution of the purchase order, and was responsible for the conduct of the business of the accused firm. The court also noted that the learned Trial Court had found the petitioner to be a partner in the accused firm.

Therefore, the court rejected the petitioner’s petition seeking to quash the order passed by the learned Magistrate, and held that the matter should be addressed before the learned Trial Court.

READ FULL JUDGMENT: https://bit.ly/3F6vdvN

The exercise instructions dated 21st June 2021 that got here into pressure with instantaneous impact said that the Magistrates having jurisdiction to attempt offenses below the Negotiable Instruments Act, 1881 “shall document cogent and enough reasons” earlier than changing a grievance below sec. 138 of the N.I. Act from precis trial to summons trial in exercising of energy below the second one proviso of sec. 143 of N.I.Act.

“Due care and a warning will be exercised in this regard and the conversion of precise trial to summons trial shall now no longer be in a mechanical manner.” It stated.

Furthermore, it stated: “While engaging in the sort of inquiry below Section 202 Cr.P.C., the proof of witnesses on behalf of the complainant will be authorized to be taken on affidavit. In appropriate cases, the Magistrate might also additionally limit the inquiry to the exam of files for pleasure as to the sufficiency of grounds for proceeding below the stated provision.”

Other instructions issued are as follows:

• Trial Court shall deal with the provider of summons in a single grievance below Section 138 N.I. Act forming a part of a transaction, as a deemed provider in admiration of all proceedings filed before the equal Court relating to dishonor of cheques issued as a part of the equal transaction.
• Section 258 of Cr.P.C. has no applicability to proceedings below Section 138 of N.I.Act. The words “as a long way as might also additionally be” in Section 143 are used most effectively in admire of applicability of Sections 262 to 265 of the Code and the precise manner to be observed for trials below the stated Code
• Trial Courts don’t have any inherent energy to check or take into account the problem of summons on the subject of the grievance filed below Section 138 of N.I. Act. However, the equal shall now no longer affect the energy of the Trial Court below Section 322 of Cr. P.C to revisit the order of difficulty of the system in case it’s far added to the court’s observation appropriate that it lacks jurisdiction to attempt the grievance 
• The Appellate Courts earlier than which appeals in opposition to the judgments in grievance below Section 138 of N.I. Acts are pending and are directed to take some time to settle the dispute via mediation.

Report by – Manaswa Sharma