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TMI Blog2008 (5) TMI 429X X X X Extracts X X X X X X X X Extracts X X X X ..... tered and incorporated under the Companies Act, 1956. It had two directors, viz., Shri Ashish Narula and Shri Manish Arora. The Company took loan for a sum of Rs. 5,00,000/-. Two cheques bearing Nos. 0989637 dated 30.11.1999 and 0989638 dated 10.12.1999 for Rs. 3,00,000/- and Rs. 2,00,000/- respectively were drawn on Vijaya Bank, Navyug Market, Ghaziabad in favour of the respondent No. 1. On presentation, they were returned unpaid with the remarks "insufficient fund". 4. A complaint petition was thereafter filed by the respondent No. 2 (complainant) against Shri Manish Arora and Shri Ashish Narula under Section 138 of the Act and Section 420 of the Indian Penal Code. 5. Appellants were not signatories to the cheques. Appellant No. 1 becam ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... behalf of the appellants, urged that the second complaint petition is not maintainable. 10. Mr. Brij Bhusan, learned counsel appearing on behalf of the respondents, however, supported the impugned judgment. 11. Section 138 of the Act reads, thus: "138 - Dishonour of cheque for insufficiency, etc., of funds in the account 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 pa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a, Manish Arora, on the one hand, and the complainant, on the other, as a result whereof the said cheque for a sum of Rs. 5,02,050/- was issued and bounced; the complaint petition had not been withdrawn. By a judgment and order 16.01.2006, Ashish Narula and Manish Arora had been found guilty for commission of the offence under Section 138 of the Act. They were sentenced to undergo one year's R.I. with fine of Rs. 20,000/- each and in default thereof to undergo three months' simple imprisonment. They were also directed to make payment of rupees nine lakhs as compensation to the complainant within a period of one month of the orders under Section 357 of the Code of Criminal Procedure. 13. The feet that Manish Arora issued the second ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rsons have been equally involved in the dealing of giving and receiving the cheque." 15. Evidently, therefore, the second cheque was issued in terms of the compromise. It did not create a new liability. As the compromise did not fructify, the same cannot be said to have been issued towards payment of debt. 16. Ingredients of Section 138 of the Act are as under: (i)that there is a legally enforceable debt; (ii)that the cheque was drawn from the account of bank for discharge in whole or in part of any debt or other liability which presupposes a legally enforceable debt; and (iii)that the cheque so issued had been returned due to insufficiency of funds. 17. Thus, the second cheque was issued by Manish Arora for the purpose of arriving at ..... X X X X Extracts X X X X X X X X Extracts X X X X
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