TMI Blog2023 (5) TMI 594X X X X Extracts X X X X X X X X Extracts X X X X ..... ayee to the drawer of the cheque demanding payment within a period of 30 days from the date of the receipt of the information by the payee from the bank regarding the return of the cheque as unpaid. Fifthly, failure of the drawer to make such payment within a period of 15 days from the date of the receipt of the demand notice. It is noteworthy that noncompliance with any of the aforementioned imperative steps shall vitiate the very substratum of a prosecutorial cause of action , rendering it not maintainable and bad in law. Thus, compliance of the necessary ingredients is mandatory, in order to constitute an offence under section 138 NI Act. In Himanshu v. B. Shivamurthy [ 2019 (3) TMI 294 - SUPREME COURT ] , the Supreme Court while quashing the complaint and order of the High Court held that in the absence of the company being arraigned as an accused, a complaint against the appellant who was a Director of the said company was not maintainable. In the said case, the appellant had signed the cheque as a director of the company and for and on its behalf. It was held that section 141 postulates that if a person committing an offence u/s 138 is a company, then every person ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ates. JUDGMENT DINESH KUMAR SHARMA, J : Overview 1. Present petitions have been moved under section 482 Cr.P.C. on behalf of the petitioners, M/s HG Retail Solutions Pvt. Ltd. (company), Karan Tomar and Kusum Tanwar (directors of the erstwhile company namely M/s HG Retail Solutions Pvt. Ltd) seeking to set aside the order dated 01.04.2021 passed by the learned ASJ-5, South East, Saket Courts, New Delhi in Rev. Pet. Nos. 366/2017, 355/2017 and 365/2017. Vide the impugned order, the learned ASJ has dismissed the aforesaid revision petitions of the petitioner assailing the summoning order dated 23.02.2015 passed under Section 138 of NI Act, 1881, by the learned MM in CC No. 612890/2016. 2. The present case concerns a complaint under 138 NI Act pertaining to dishonour of a cheque for an amount of Rs. 40,00,000/-.The cheque was allegedly taken by the petitioners as a friendly loan from the respondent. The petitioners were summoned in the said case, against which they preferred the aforesaid revision petitions before the Sessions Court, which came to be dismissed vide the impugned order dated 01.04.2021. 3. The grievance of the Petitioners is threefold. Fir ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has been contended that the Ld. Trial Court and the Ld. Sessions Court have been misled by the Respondent with respect to particulars of the complaint, material at the time of issuance of summons. 5. Aggrieved, thus the present petitions have been preferred impugning the order of the learned ASJ dated 01.04.2021. Background Facts 6. The complainant respondent Rajiv Kumar Saxena is a Proprietor of Proprietorship concern namely M/s India Export Pvt. Ltd. The petitioner, H.G. Retail Solutions (P) Ltd., through its Director Mr. Karan Tomar approached the Respondent with the Board resolution dated 10.06.2014, authorizing the Directors to avail a friendly loan from the Respondent. 7. Subsequently, a loan agreement was entered into between petitioner company i.e. H.G. Retail Solutions (P) Ltd., represented by its Director Mr. Karan Tomar and the respondent on 17.06.2014. An amended loan agreement was also executed on 18.06.2014. Pursuant to these agreements the petitioner company represented by Mr. Karan Tomar, in need of money, availed a friendly loan of Rs. 40 lakhs from the respondent. According to the terms of agreement, the loan amount was to be repaid within one month ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... which was dismissed by the Ld. MM, South East, Saket Court vide order dated 24.05.2017. 14. Thereafter, the petitioner sought revision petitions assailing the summoning order dated 23.02.2015 which also came to be dismissed by the Ld. Sessions Court vide order dated 01.04.2021, which order has been challenged by way of the present petitions. 15. It has been submitted that suit for Recovery bearing C.S. No. 608/2017 against the Petitioners under the provisions of Order XXXVII, C.P.C, on the basis of the cheques issued by the Petitioners. It has been submitted that the Ld. ADJ-03, Saket Courts vide order dated 26.02.2019 held the respondent to be entitled to recover a sum of Rs. 42,50,000/- and interest @ 6% p.a. on the principal amount of Rs. 40 lakhs from 17.07.2014 till its realization along with granting cost of the suit. It has been submitted that the said order has attained finality. 16. The following salient legal propositions have been raised before this Court: I. On the issue: Legal Notice not served upon the Company Contentions on behalf of the Petitioners a. Ld. Counsel for the petitioners submit that the proviso to Section 138, NI Act, lays d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 4 as claimed by the respondent. b. Ld. Counsel asserts that prior to filing the complaint under Section 138 of the NI Act, the respondent served a demand notice on Shri Karan Tomar, Smt. Kusum Tanwar (the Directors of H.G. Retails), and two witnesses to the loan agreement, but failed to serve a legal demand notice on the company itself, H.G. Retails. c. Ld. Counsel maintains that the said notice was first delivered to Shri Karan Tomar at the company's office address on 04.10.2014, whereupon a refusal report was recorded. Ld. Counsel contends that the refusal report recorded on 04.10.2014 should be considered as deemed service as per Section 27 of General Clauses Act, in light of the various judicial pronouncements in C.C. Alavi Haji Vs. Palapetty Muhammed and Ors.(2007) 6 SCC 555; Ashwani Kumar Julka v. Parthojit Choudhary, 2007 (93) DRJ 185 and Datta S. Nadkarni Vs. Salvador Fernandes and Ors., Crl. A 46/2013 decided on 16.07.2015. Additionally on 04.10.2014 , the notices were also served at the residential addresses of the petitioner directors but were undelivered and returned with the postal endorsement Door Locked. However, the postal department preferred to se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g. Ld. Counsel argues that the Respondent wrongly submitted that 15 days should be counted only from 07.10.2014, the date when the other legal notices sent by registered post were received, and thus the cause of action would have (allegedly) arisen only on 21.11.2014 and the complaint dated 21.11.2014 was wrongly construed to be within time. Ld. Counsel submits that as per Clause (c) of the proviso to Section 138 of the N.I. Act, the liability of the drawer and the period of one month for filing the complaint under Section 142 should be reckoned accordingly. It is emphasized that a combined reading of the aforementioned sections of the Act leaves no room for doubt that the cause of action, within the meaning of Section 142(c), can arise only when the notice was first served upon the drawer of the cheque, which in the present case is 04.10.2014. Reliance has been placed on Sil Import, USA Vs. Exim Aides Silk Exporters, Bangalore AIR 1999 SC 16091 to support this contention. h. Ld. Counsel submits that the issue of limitation goes to the roots of the matter and has to be adjudicated first. However, the Revision Court, in the impugned order, considered it to be a mi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s without properly appreciating the questions of law which ought to be decided at the very threshold. It is argued that in cases where a person is a non-signatory to the cheque, non-signatory to the loan agreement, not responsible for the day-to-day conduct of the company's affairs, and no specific role has been attributed to them, they should not be proceeded against and should be discharged at the threshold. d. Reliance has been placed on the judgment of the Hon'ble Supreme Court in Sunita Palita Ors. v. M/s Panchami Stone Quarry (AIR 2022 SC 3548) whereby the proceedings against non-executive director, who was not even signatory to the cheque and in the absence of specific averment except bald endorsement of the language of Section 141 of NI Act was quashed. Learned counsel submits that in light of the same, the proceedings against the Petitioner/ accused Smt. Kusum Tanwar ought to be quashed Contentions on behalf of the Respondent/Complainant a. Ld. Counsel for the respondent submits that the complaint contained specific averments regarding the role of the petitioners. Ld. Counsel points out that in the complaint u/s 138 NIA the description of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t of money by giving a notice; in writing, to the drawer of the cheque, [within thirty days] of the receipt of information by him from the bank regarding the return of the cheque as unpaid; and (c) the drawer of such cheque fails to make the payment of the said amount of money to the payee or, as the case may be, to the holder in due course of the cheque, within fifteen days of the receipt of the said notice. Explanation : For the purposes of this Section, debt or other liability means a legally enforceable debt or other liability. 19. Section 141, NI Act reads as under: 141. Offences by companies. ( 1) If the person committing an offence under section 138 is a company, every person who, at the time the offence was committed, was in charge of, and was responsible to, the company for the conduct of the business of the company, as well as the company, shall be deemed to be guilty of the offence and shall be liable to be proceeded against and punished accordingly: Provided that nothing contained in this sub-section shall render any person liable to punishment if he proves that the offence was committed without his knowledge, or that he had exercised al ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ll vitiate the very substratum of a prosecutorial cause of action , rendering it not maintainable and bad in law. Thus, compliance of the necessary ingredients is mandatory, in order to constitute an offence under section 138 NI Act. 22. In Himanshu v. B. Shivamurthy AIR 2019 SC 3052 , the Supreme Court while quashing the complaint and order of the High Court held that in the absence of the company being arraigned as an accused, a complaint against the appellant who was a Director of the said company was not maintainable. In the said case, the appellant had signed the cheque as a director of the company and for and on its behalf. It was held that section 141 postulates that if a person committing an offence u/s 138 is a company, then every person who at the time when the offence was committed was in charge of or was responsible to the company for the conduct of the business of the company as well as the company will be deemed guilty of the offence. In the absence of the company being arraigned as an accused, a complaint against the appellant who was a Director of the said company was not maintainable. It was held that in the absence of a notice of demand being served on the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ory steps contained in section 138 NI Act. Section 138 NI Act mandates that demand notice be sent to the drawer of the cheque. In the present case the cheque was drawn by the director Karan Tomar for and on behalf of the company HG Retail. Thus the company ought to have been served the demand notice, as in the absence of serving any demand notice to the company, the essential and mandatory step of serving a demand notice to the drawer of the cheque fails. 25. In the present case, admittedly no demand notice was ever sent to the company i.e. the principal accused. There cannot be a prosecution without prosecuting the principal accused. The demand notice was only sent to the directors of the company. The company was made a party in the complaint u/s 138 NI Act, however the ingredient of section 138 NI Act which postulates that a demand notice be sent to the drawer of the cheque, stands unfulfilled. The loan agreement was also between the petitioner company HG Retail and the respondent. The director was merely acting on behalf of the company. Thus if the default or non-payment is done at the behest of the company, the company ought to have been sent a demand notice. Even though the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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