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2014 (10) TMI 1069 - HC - Indian LawsDishonor of Cheque - validity of legal notice - Security cheque - legally enforceable debt or not - Fine or compensation as per section 138 of NI Act - authority to institute the complaint - HELD THAT - A bald suggestion was given to this witness that he was in fact not authorized to file the present complaint. However these submissions do not detract from the veracity of the document which is the authorization dated 26.9.1995 (Ex. PW-3/A) which specifically states that PW-3 namely Deepak Rai Srivastava was authorized by the company through resolution circulated in the 136th Board Meeting held on 09.06.1992 (as referred in Ex PW3/B) to file the present complaint. The power of attorney Ex. PW-3/B executed by the company in March 1999 authorized him to institute and pursue all cases on behalf of the complainant company. There is no attack on these documents; they are authentic and valid. The authorization letter (Ex. PW-3/A) validly authorized PW-3 to institute and pursue the complaint. Section 142 of the Act provides that a complaint under Section 138 of the Act can be made by the payee or the holder in due course. This complaint has admittedly been filed in the name of and on behalf of the company - In the case of Associated Cement Co. Ltd. Vs. Keshvanand 1997 (12) TMI 629 - SUPREME COURT the Court had held that the complainant has to be a corporeal person who is capable of making a physical appearance in the Court. There may also be occasions that different persons would represent the company. It is open to the de jure complainant to seek permission of the Court for sending any other person to represent the company in the Court. In that case the Court had held that even presuming that initially there was no authority still the company can at any stage rectify that defect. Validity of the legal notice - HELD THAT - No suggestion had been given to witness that the notice had not been received by the company or that they had not filed their reply Ex. PW-3/E. It was only in the statement of the petitioners under Section 313 Cr.P.C. that under legal advice a false defence has been sought to be set up that no such legal notice had been received by this Court. If this was the position this fact should have been disputed by the petitioners right from the inception i.e. during the course of cross-examination of PW-3. No such defence having been propagated it is a clear case where the defence has now been set up as an afterthought. The complaint discloses the date of legal notice as 12.8.1996. The fact finding of the Court below i.e. the Court of the Magistrate has rightly noted that this can only be a typographical error as the date in Ex. PW-3/C is 16.8.1995. Reply to this legal notice Ex. PW-3/E had acknowledged the liability qua the complainant company and in part payment sum of Rs. 5, 00, 000/- had been sent vide their communication dated 29.8.1995. This letter has also not been challenged in the cross-examination of PW-3 when he had proved this document - This Court also notes that it is an admitted fact that as per the complainant a common legal notice had been sent qua all the transactions between the parties; there were seven transactions and in the reply by the petitioner company on 29.8.1995 it had enclosed a cheque of a part payment of Rs. 5 lac. This argument has also dealt with by both the fact finding Courts below and had been answered in favour of the complainant. Security Cheques or not - legal debt or liability by the petitioner to the complainant or not - HELD THAT - In the instant case since the payment was not made against all the supplied goods the security cheques got converted into normal cheques against consideration of the goods supplied and therefore they were not to be considered as security cheques. This was explained in the complaint. PW-3 on oath has also reiterated this position. He deposed that after the supply of the goods the accused had not given a separate cheque. The cheque in question was presented to the bank which was returned along with the returning memo after having been dishonoured for the reason Exceeds Arrangement . Marks DA and DB which is a letter and fax message exchanged between the parties only sought expedition of the dispatch of the goods. Neither of these communications state that the goods had not been supplied by the complainant company and as such the payment was not due to the complainant company. The fact finding courts after the scrutiny of these documents had also noted that these documents had not been proved and could not really be read in evidence as they were only photocopies of the original; even otherwise they did not advance the version of the petitioners that the goods had not been supplied by the complainant company - The presumption under Section 118 of the N.I. Act did not stand rebutted. The cheque had been issued for valid legal consideration. Fine or compensation as per section 138 of NI Act - HELD THAT - Under sub-section 3 where a fine has not been imposed the Court may order the payment of compensation. A reading of Section 357(4) Cr.P.C. makes it clear that under this sub-section an order of compensation can be passed by the appellate Court; the High Court or by the Court of Sessions in revision. The power of the Court to award compensation is not ancillary to other sentences but is in addition thereto. This power under this Section has a message i.e. a measure of responding properly to the crime as also reconciling the victim with the offender - An amount of compensation can be directed to be recovered as a fine but a legal fiction is raised in relation to recovery of fine and in that sense a fine stands on a higher footing than the compensation awarded by the Court. Although after the amendment in the said Act (by the Amendment Act 2002) a Magistrate of the first class can also impose a sentence of fine exceeding Rs. 5000/-. The object of fine and compensation is the same i.e. to compensate the victim. The purpose of fine and compensation being the same; i.e. to assuage the grievance of the complainant the sentence imposed by the Sessions Judge of a compensation of Rs. 50 lac (noting the cheque was to the tune of Rs. 1, 19, 80, 800/-) suffers from no infirmity. Petition dismissed.
Issues Involved:
1. Authorization to file the complaint. 2. Validity of the legal notice. 3. Nature of the cheques as security cheques. 4. Awarding of compensation under Section 357 of the Cr.P.C. Issue-wise Detailed Analysis: 1. Authorization to File the Complaint: The petitioners argued that the complaint filed in September 1995 was unauthorized as the authorization letter dated 26.9.1995 did not accompany a resolution and the power of attorney was from 1999. However, the court noted that this argument was not raised before the Magistrate or Sessions Judge. PW-3 testified that he was authorized by a resolution from the 136th Board Meeting held on 09.06.1992 to file the complaint. The authorization letter (Ex. PW-3/A) and the power of attorney (Ex. PW-3/B) were found to be valid and authentic, thus the complaint was validly instituted. 2. Validity of the Legal Notice: The petitioners contended that there was no postal receipt to prove service of the legal notice dated 16.8.1995, and the reply dated 29.8.1995 referred to a notice dated 12.8.1995. The court found that PW-3's testimony confirmed the legal notice (Ex. PW-3/C) was sent and received, with the AD Card as proof (Ex. PW-3/D). The reply (Ex. PW-3/E) acknowledged the liability and included a part payment. The discrepancy in dates was deemed a typographical error, and the argument against the notice's validity was rejected. 3. Nature of the Cheques as Security Cheques: The petitioners claimed the cheques were security cheques, not for discharging any liability. They argued that fresh cheques were issued upon receipt of goods, and no invoices were provided by the complainant. The court noted that the cheques were converted into normal cheques due to non-payment for supplied goods. PW-3's testimony and the dishonored cheques supported this. The documents (Marks DA and DB) were not proved and did not support the petitioners' claim. The Supreme Court in I.C.D.S. Ltd. Vs. Beena Shabeer held that security cheques fall under Section 138 of the Act, thus the argument was dismissed. 4. Awarding of Compensation under Section 357 of the Cr.P.C.: The petitioners argued that compensation could only be paid from the fine and that the Magistrate's fine of Rs. 5000/- was the limit under Section 138 of the Act. The Sessions Judge enhanced the sentence to Rs. 50 lacs compensation, which the petitioners contested. The court clarified that under Section 357(3) Cr.P.C., compensation can be ordered even without a fine. The compensation of Rs. 50 lacs was justified given the cheque amount of Rs. 1,19,80,800/-. The court found no illegality or perversity in the Sessions Judge's order, thus upholding the compensation. Conclusion: The revision petitions were dismissed as the court found no merit in the arguments presented by the petitioners. The concurrent findings of the Magistrate and Sessions Judge were upheld, ensuring substantial justice was done.
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