JUDGMENT
1. This appeal is preferred against the judgment and order dated 3-8-1994 passed by the XI Metropolitan Magistrate at Secunderabad on his file in C.C. No. 409 of 1992. By the impugned order the accused Nos. 1 and 2 have been acquitted. The appellant M/s. Swastik Coaters Private Limited is the original complainant and M/s. Deepak Brothers is the accused No. 1 and M/s. Deepak Thakkar, a partner of accused No. 1 is accused No. 2. The complaint is filed under Section 138 of the Negotiable Instruments Act alleging that the accused have issued a cheque dated 20-12-1991 vide Ex. P-2 which has bounced back with the endorsement of the Bank ‘exceeds arrangement’. The complainant accordingly received the dishonoured cheque along with the cheque returned memo dated 29-4-1992 from the bankers on 13-5-1992. Thereafter a legal notice dated 15-5-1992 was issued to the accused calling upon him to make the payment of a sum of Rs. 2,64,000/- together with interest at the rate of 18% p.a. from the date of the cheque till the date of the payment within 15 days from the date of receipt of the legal notice and the said legal notice was received by the accused on 18-5-1992. There-after accused vide their letter dated 30-5-1992 sent a Demand Draft for an amount of Rs. 20,000/- to the complainant asking the complainant to credit the same in their account as part payment. Thereafter the complainant has by its legal notice dated 6-6-1992 intimated the accused that they have received the Demand Draft for an amount of Rs. 20,000/- on 1-6-1992 and the accused are liable to pay them a sum of Rs. 2,64,000/- together with interest at the rate of 18% p.a. from the date of the cheque i.e. from 20-12-1992 to 31-5-1992 amounting to Rs. 21,221.26 and the amount of Rs. 20,000/- sent by the accused has been appropriated towards the interest, without prejudice to their right to recover the principal amount of Rupees 2,64,000/- along with interest. The said legal notice also called upon the accused to pay the amount of Rs. 2,64,000/- together with interest and Rs. 2,500/- towards the cost of issuing legal notice dated 15-5-1992 and 6-6-1992. It is stated that the said legal notice was issued by the accused on 8-6-1992 but the accused have not made the payment nor did he reply. In those circumstances the present complaint was filed for the offences under Section 138 of the Negotiable Instruments Act as amended in the year 1988 with a request to the Court to punish the accused. The appellant examined himself as P.W. 1 and got marked Ex. P-1 to P-16. The accused examined himself as D.W. 1 and produced one document Ex. 1. On appreciation of the entire evidence on record the Court below has acquitted the accused persons. It is under these circumstances the present appeal is preferred.
2. The learned counsel appearing for the appellant submitted that the entire approach of the Court below is not correct and accordingly the impugned judgment and order are liable to be set aside. On the other hand the learned counsel for the respondents supported the judgment not only for the reasons urged in the impugned order but also on the ground that the complaint itself was not maintainable being filed by one of the Directors for and on behalf of the company without any authority. He also submitted that on the date of issuing the cheque there was no existing liability and as such offence under Section 138 of the Negotiable Instruments Act is not constituted. He also stated that the goods supplied by the company subsequent to the issuing of the cheque was substandard and the jail authorities for whose sake the goods were purchased, had rejected the major portion of the goods, and as such a bona fide dispute has arisen regarding the transaction, even before the alleged dishonouring of the cheque. He submitted that if these contentions are upheld it is not even necessary to go into the merits of the case. He submitted even otherwise the reasons assigned by the Court below in acquitting the accused do not call for interference in this appeal.
3. In order to appreciate the rival contentions of the parties it is necessary to note few admitted facts of the case. It is an admitted fact that the complainant had supplied 125 bales of binding cloth vide bill No. 1401, dated 27-11-91 vide Ex. P-1 worth Rupees 3,62,900/- and bank charges of Rs. 1,100/- are paid. A sum of Rs. 1,00,000/- by way of a Demand Draft was paid and for the balance amount of Rs. 2,64,000/- a cheque dated 20-12-91 was issued by the accused marked in the case as Ex. P-2. The said cheque on its presentation bounced back with an endorsement of the Bank dated 28-12-91, vide P-3, as “exceeds arrangement”. Again the cheque has been presented for the second time and for the second time also it was returned with the bankers memo dated 18-3-92, vide Ex. P-5. It appears that the complainant have presented once again for the third time the cheque and the same was returned vide bankers Memo dated 29-5-1992, vide Ex. P-7, stating that “exceeds arrangement” and after the said memo the complainant issued a notice to the accused demanding the payment of the amount mentioned in the cheque within 15 days vide notice dated 15-5-92 filed in the case at Ex. P-9. On failure on the part of the accused the present complaint was filed and Ex. P-10 is the postal receipt and Ex. P-11 and 12 are the postal acknowledgments. Meanwhile the accused sent Rs. 20,000/- (vide Ex. P-13) vide letter dated 30-5-92 along with a Demand Draft for the said amount of Rs. 20,000/- filed in the case at Ex. P-13. On verification I found that the present complaint was filed through one of the Directors of the Company. The complaint does not disclose that either a resolution of the company is filed or there is any authorisation letter authorising the Director to file the said complaint. It is also not in dispute that the said 125 bales of binding cloth was supplied by the complaint on the basis of the quotation issued by the complainant vide Ex. D-1 and the said material was directly sent to Yerrwada Central Prison for which the material was purchased by the accused. It is also not in dispute that the material was sent subsequent to the issuing of the cheque. According to the complainant the said material was sent the next day of issuing of the cheque and according to the accused it was sent two days thereafter. In his evidence P.W. 1 stated that :
“Accused issued D.D. for Rs. 1,00,000 one day before the date of despatch. For the balance amount accused issued post dated cheque dated 20-12-91.”
In this case it is the specific defence of the accused that the cheque that was issued was post dated cheque and on the date of the issuing of the cheque the materials were not supplied and the accused placed an order for Grade-I cloth but what has been supplied is only Grade-II cloth. Precisely on this count only the jail authorities received only a part of the cloth which was up to the prescribed standards and rejected the balance cloth which was substandard. The moment the jail authorities rejected the sub-standard cloth, accused has intimated the same to the complainant and thereafter for the third time the cheque was presented in spite of receiving the letter from the accused intimating the rejection of the material. On the basis of this evidence the Court below held that as on the date of the cheque there was no existing debt or liability the cheque being a post dated cheque. Therefore, its rejection does not constitute an offence under Section 138 of the Negotiable Instruments Act. I do not think that there is any infirmity in this reasoning of the Court below. Explanation to Section 138 of the Negotiable Instruments Act clearly makes it clear that the cheque shall be relateable to an enforceable liability or debt and as on the date of the issuing of the cheque there was no existing liability in the sense that the title in the property had not passed on to the accused since the goods were not delivered. It is the case of the accused in this context that by taking undue advantage of receiving the entire amount of Rupees 1,00,000/- by way of a Demand Draft and the balance amount by way of a post dated cheque the complainant with a dishonest intention has supplied the substandard material, to be supplied to the Yerrawada Central Prison. In the evidence also P.W. 1 had admitted that :
“I came to know that the jail authorities rejected the material supplied by me to the accused, through accused’s letter. I do not know where the said material is lying now most probably the material is lying at Yerrawada Central Jail, Poona. We asked for return of the material or to pay its cost.”
From this admission also it is clear that the complainant himself knew about the rejection of the material by the jail authorities. However, he contended that the material that was supplied was having regard to the revised rate. But, this argument the Court below rightly did not accept because the alleged revised rate was not part of the contract. From the quotation at Ex. D-1 the price and the grade are mentioned vide Item No. 7 of the quotation. I am extracting the said Item No. 7 as under :
“7. PRICE : (1) Rs. 7.15 per metre inclusive of duties for I Grade.
(2) Rs. 6.65 per metre inclusive of duties for II Grade.
From this quotation, it is clear that the rate prescribed for Grade-I material was Rs. 7.15 paise and for Grade II it was Rs. 6.65 paise. From the bill vide Ex. P-1 the complainant stated that the material as Grade II, and the quantity at 14000 metres and the price at Rs. 7.15 paise i.e. the price of Grade-I material. In these circumstances, the complainant could not have described the entire material as Grade-II. Moreover as per the quotation the rate of Grade-II material was Rs. 6.65 paise whereas the bill vide Ex. P-1 mentions that 36,000 square metres of cloth was supplied at the rate of Rs. 7.30 paise per metre i.e. a rate more than what is prescribed for Grade-I material. From this bill it is clear that the accused has paid a rate either at Rs. 7.15 paise per metre or at Rs. 7.30 paise per metre, and the rate as per the quotation (vide Ex. D-1) at Rs. 7.15 paise is the rate for Grade-I. In these circumstances, the contention of the complainant that what was agreed to be supplied was Grade-II is not correct. From these circumstances, the finding recorded by the Court below that the complainant taking undue advantage of the situation that he has received the entire amount either by way of a cheque or a Demand Draft has sent the substandard material. This finding also being as per the evidence on record cannot be said to be improper. Having regard to these findings the conclusion arrived at by the Court below that ultimately it is a matter of Civil dispute and no offence is constituted under Section 138 of the Negotiable Instruments Act is quite reasonable. At any rate, as I have already noted above the cheque was a post dated cheque and as on the date of the issuing of the cheque there was no existing enforceable debt or liability and having regard to these circumstances no offence is constituted under Section 138 of the Negotiable Instruments Act.
4. The second contention urged on behalf of the accused is that the complaint as filed by the Director of the Company was not maintainable. There is substance in this argument also. According to the cheque, the drawee is the Company itself and it is the company who is the holder in due course and cause of action arises necessarily in favour of the Company. A Director of the Company cannot be said to be a holder in due course since the company by itself is a legal person. Of course one of the Directors can present a complaint if there is a proper authorisation in favour of such a Director. P.W. 1 in his cross-examination admitted as under :
“I have not filed either a Memorandum of Understanding or Articles of Association. I do not know whether we filed any authorisation authorising me to appear before this Court in this case.”
From this evidence it is clear that it is admitted on behalf of the complainant that no authorisation letter or any resolution was filed in this case authorising the present Director to institute the present proceedings. Company being by itself a legal person and it is the company which is the holder in due course and that company alone could file the complaint under Section 142(A) of the Negotiable Instruments Act. As per Section 142(A) of the Negotiable Instruments Act no Court shall take cognizance of any offence punishable under Section 138 of the Negotiable Instruments Act except upon a complaint in writing made by the payee or the holder in due course of the cheque. According to me one of the Directors of the company cannot be said to be a payee or holder in due course in terms of Section 142(A) of the Negotiable Instruments Act. However, it does not mean that there cannot be authorisation to file a complaint. He can be authorised to file a complaint. Such power or authorisation to file a complaint could also be conferred by Memorandum of Association or Articles of Association. In the instant case no such authorisation is proved. In similar circumstances, I have held in “M/s. Satish and Co. v. S.R. Traders” vide my judgment and order dated 28-11-1996 in Criminal Appeal No. 180/95 that without such an authorisation a Director or any person similarly situated cannot maintain a complaint under Section 142 of the Negotiable Instruments Act. In this view of the matter, I am of the opinion that the Court below is correct in negativing the contention of the complainant in this behalf also.
5. For the above reasons, I do not find any merits in this appeal and accordingly this appeal is dismissed.
6. Appeal dismissed.