Scrutiny of facts revealed cheque issued without consideration as payment for investment occurred after cheque date, leading High Court to quash process issued under NI Act against all accused.
Writ petition allowed; order of Magistrate issuing process against all accused persons quashed.
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SNS
IN THE HIGH COURT OF JUDICATURE AT MUMBAI APPELLATE CRIMINAL JURISDICTION CRIMINAL WRIT PETITION NO.670 OF 2010
Mrs. Kanchan Sunil Mansingani Add: 18/4, Navjivan Society, Morie Road, Mahim, Mumbai-16 v/s. 1 Mrs. Sharmila Raj Thackery Add: Krishna Kunj, Flat No.11, M.B.Raut Marg, Shivaji Park, Dadar (W), Mumbai 400 008
...Petitioner.
2 The State of Maharashtra ...Respondents.
Mr. S.V.Marwadi a/w H.V.Kode ,advs. For the Petitioner. Mr. S.D.Nangare and R.M.Pawar, advs. For the Respondent No.1. Ms U.V.Kejriwal, APP for the R.No.2/State.
CORAM : J.H. BHATIA, J. DATED : MARCH 15, 2011.
ORAL JUDGMENT:
petitioner is the original accused no.2. It is the case of the complainant that accused no. 1 is company registered under the Companies Act, 1956.
Accused nos.2 and 3 are its directors. Complainant has been dealing with
the accused persons in respect of sale and purchase of shares and stocks.
On 1.8.2008, complainant made a payment of Rs.25 lac to the accused
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no.1 by a cheque drawn on the State Bank of India, Shivaji Park Branch,
Bombay. Cheque was encashed on 30.7.2008. Accused no.3 issued the cheque for and on behalf of the accused no.1 to the complainant towards the repayment of Rs.25 lac. Said cheque was drawn on Axis Bank Limited Bandra Branch in favour of the complainant. Cheque was presented on 20.11.2008 for encashment. However, it was returned dishonoured on 24.11.2008 with remarks ‘Funds Insufficient’. This intimation was received by the complainant on 4.12.2008. In spite of service of the notice, accused persons failed to make the payment within the stipulated period. Hence, complaint.
3 The learned Magistrate issued process under Section 138 r/w Section 141 of the Negotiable Instruments Act against all the three accused persons.
4 Accused no.2 filed a revision application before the Sessions Court challenging the issuance of process against her. However, that revision application was rejected. Hence, she has filed this writ petition to quash the proceedings against her.
5 The learned counsel for the petitioner raised two grounds in support of petition. Firstly, the cheque was allegedly issued by the accused no.3 for and on behalf of the accused no.1/company in favour of
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the complainant on 30th July, 2008 when there was no legally enforceable debt or liability to be discharged by the accused persons because according to the complainant herself, she had made payment of Rs.25 lac to the accused no.1 on 1.8.2008 for investment. Thus, the payment was allegedly made by the complainant to the accused for investment two days after the disputed cheque was issued by the accused no.3 in favour of the complainant. Second ground is that the accused no.2, i.e., the present petitioner had resigned from the post of director of the accused no.1 company with effect from 5.9.2008 and for that purpose form no.32
was filled and submitted to the Registrar of Companies and thus, with effect from 5.9.2008, she is not a director. The cause of action, if any, arose when the cheque was dishonoured and in spite of service of notice , payment was not made within the stipulated period. Notice was issued on 20.12.2008 and it was allegedly served on 24.12.2008. When the payment was not made within 15 days from that date, then only the offence under Section 138 committed. Infact since long before that date the petitioner was not director and, therefore, she could not be held guilty for the offences punishable under Sections 138 r/w section 141 of the Negotiable Instruments Act.
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contended that certified copy of the form 32 was not produced before the trial court but he admits that copy of form 32 was produced in the Sessions Court in the year 2009. According to him, genuineness of the same was disputed by the complainant. However, the learned counsel candidly admit that since then complainant had never made any attempt to approach the office of the Registrar of Companies to verify whether information given in Form 32 about resignation of the accused no.2 from the post of director of the accused no.1 with effect from 5.9.2008 was genuine or not. It shows that complainant never bothered to verify the correctness of this information. Petitioner has produced certified true copy of Form 32 before this Court. The learned counsel for the complainant contended that mere production of certified copy of the Form 32 is not sufficient. Truthfulness of the contents is required to be proved as held by Division Bench of this Court in Suhas Bhand v/s. State of Maharashtra and Another 2009 ALL MR Criminal 2614 . In view of the said authority, either complainant may be given time to verify from the office of the Registrar of Companies as to whether information given by the accused no.2 about the resignation in Form 32 is genuine or not or this matter may be remanded back to the concerned Magistrate to call upon the parties to lead evidence in respect of the
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limited issue as to whether accused no.2 had ceased to be a director of the accused no.1 Company with effect from 5.9.2008 or not. However, in the present case, in view of the facts disclosed by the complainant itself, I find that it is not necessary to go for any of these two options.
7 Complaint itself shows that the cheque, on the basis of which the complaint was filed, was issued on 30.7.2008. According to her, it was towards the repayment of Rs.25 lac but paragraph 3 of the complaint shows that complainant had allegedly made payment of Rs.25 lac to the accused no.1 by cheque dated 1.8.2008 for investment. From this it is clear that complainant made payment to the accused no. 1/company for the first time on 1.8.2008 and till that date, there was no debt or liability to be discharged by any of the accused persons. In paragraph 5 of the complaint also the complainant contended that cheque was issued by the accused no.3 for and on behalf of the accused no.1 in favour of the complainant on 30.7.2008 towards repayment of the liability. On 30.7.2008 there was no debt or liability to be discharged by the accused persons and, therefore, question of issuing cheque in discharge of debt or liability legally enforceable under the law would not arise. Therefore, when this cheque was issued, it was without any consideration and it was certainly not for discharge of any liability or
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debt enforceable under law. It appears that the learned Magistrate while issuing process had not noted this important aspect revealed from paragraphs 3 and 5 of the complaint. Not only this, the learned Sessions Court, while rejecting the revision application, also ignored these important facts. Had these facts been taken note of, process could not have been issued against the accused persons. This petition is filed only by the accused no.2 to quash the issuance of process against her. However, in view of the facts disclosed in paragraphs 3 and 5, no case is made out against any of the accused persons. Therefore, in my considered opinion, in the interest of justice, process issued against all the accused persons will have to be quashed.
8 In view of the above facts and circumstances, writ petition is allowed. The order passed by the Magistrate issuing process against the accused persons stands quashed.
Rule made absolute accordingly.
(J.H. BHATIA,J.)
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2 issues framed by the court
Whether issuance of process under Section 138 r/w Section 141 was maintainable when there was no legally enforceable debt at the time of cheque issuance.
Whether accused was liable as a director given the alleged resignation prior to dishonour.
Colour shows how this judgement treated each authority
Suhas Bhand v/s. State of Maharashtra and AnotherReferred¶27
Suhas Bhand v/s. State of Maharashtra and Another 2009 ALL MR Criminal 2614
2 provisions across 1 enactments
Mrs. Kanchan Sunil Mansingani
Mrs. Sharmila Raj Thackery
State of Maharashtra
J.H. BHATIA
As recorded by the court registry
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