{"id":58670,"date":"2002-07-12T00:00:00","date_gmt":"2002-07-11T18:30:00","guid":{"rendered":"https:\/\/www.legalindia.com\/judgments\/lok-housing-constructions-ltd-vs-raghupati-leasing-finance-ltd-on-12-july-2002"},"modified":"2017-05-12T13:05:53","modified_gmt":"2017-05-12T07:35:53","slug":"lok-housing-constructions-ltd-vs-raghupati-leasing-finance-ltd-on-12-july-2002","status":"publish","type":"post","link":"https:\/\/www.legalindia.com\/judgments\/lok-housing-constructions-ltd-vs-raghupati-leasing-finance-ltd-on-12-july-2002","title":{"rendered":"Lok Housing &amp; Constructions Ltd. vs Raghupati Leasing &amp; Finance Ltd. &#8230; on 12 July, 2002"},"content":{"rendered":"<div class=\"docsource_main\">Delhi High Court<\/div>\n<div class=\"doc_title\">Lok Housing &amp; Constructions Ltd. vs Raghupati Leasing &amp; Finance Ltd. &#8230; on 12 July, 2002<\/div>\n<div class=\"doc_citations\">Equivalent citations: 2003 115 CompCas 957 Delhi, 100 (2002) DLT 38, 2002 (64) DRJ 332<\/div>\n<div class=\"doc_author\">Author: S Agarwal<\/div>\n<div class=\"doc_bench\">Bench: S Agarwal<\/div>\n<\/p>\n<pre><\/pre>\n<p>JUDGMENT<\/p>\n<p>  S.K. Agarwal, J.   <\/p>\n<p> 1. This petition under Section 397\/401 read with<br \/>\nSection 482 of Code of Criminal Procedure (for short<br \/>\n&#8216;Cr.P.C.&#8217;) is directed against the order dated 3rd July,<br \/>\n1999 passed by the court of Metropolitan Magistrate, New<br \/>\nDelhi dismissing application of the petitioners for<br \/>\nrecalling the order of summoning dated 25th July, 1998<br \/>\nunder Sections 138 read with Section 142 of Negotiable<br \/>\nInstruments Act (for short &#8216;N.I. Act&#8217;).\n<\/p>\n<p> 2. Facts in brief are that the respondent filed a<br \/>\ncomplaint under Section 138 of N.I. Act against the<br \/>\npetitioners alleging that the complainant company, during<br \/>\nthe course of its business of leasing and financing<br \/>\nprovided inter-corporate deposit of Rs. 50 lacs (fifty<br \/>\nlacs) to the petitioners; and they executed guarantee,<br \/>\npromissory note, receipt and other connected documents.<br \/>\nThe deposit was extended from time to time at their<br \/>\nrequest. It was lastly renewed for 90 days on 7.6.1997.<br \/>\nThe petitioners issued advance post dated cheque dated<br \/>\n30th September, 1997 drawn on Bank of India, Andheri<br \/>\n(East), Mumbai towards discharge of the principal amount.<br \/>\nThe cheque was sent for encashment by the complainant on<br \/>\n4th March, 1998 through its bankers ABN Amro Bank, at New<br \/>\nDelhi. It was returned un-paid by the bankers of the<br \/>\naccused company with the remarks &#8220;insufficient funds&#8221;<br \/>\nthrough memo dated 7th March, 1998. The information in<br \/>\nthis regard was given to the complainant vide return memo<br \/>\non 17th March, 1998. Thereafter, through notice dated<br \/>\n28th March, 1998 petitioners were called upon to pay the<br \/>\namount covering the said cheque. The accused failed to<br \/>\npay the amount despite notice. The complaint against the<br \/>\ncompany, its Chairman and Managing Director, who are<br \/>\nresponsible for the conduct of the business of the company<br \/>\nwas filed. After preliminary evidence, the petitioners<br \/>\nwere summoned under Section 138 read with Section 142 of<br \/>\nN.I. Act. They moved an application for recalling the<br \/>\norder of summoning. Complainant opposed the same.<br \/>\nLearned trial judge by order dated 3rd July, 1999<br \/>\ndismissed their application. This order is under<br \/>\nchallenge.\n<\/p>\n<p> 3. I have heard the learned counsel for the parties<br \/>\nand have been taken through the record.\n<\/p>\n<p> 4. Learned counsel for the petitioners firstly<br \/>\nargued that the transaction had taken place at Mumbai;<br \/>\nthe cheque was drawn on &#8220;the bank&#8221; at Mumbai; it was to<br \/>\nbe encashed at Mumbai and the cheque was dishonoured at<br \/>\nMumbai, therefore, courts in Delhi have no territorial<br \/>\njurisdiction to entertain the complaint; and that the<br \/>\ncomplaint was instituted at Delhi with an intent to harass<br \/>\nthem. The strength to support this argument was sought to<br \/>\nbe drawn from the observations made by the Supreme Court<br \/>\nin  <a href=\"\/doc\/499876\/\">Shri Ishar Alloy Steels Ltd. v. Jayaswals Neco Ltd.<\/a><br \/>\n2001 CRI.L.J. 1250. The complainant&#8217;s case is that one<br \/>\nof its office is in Delhi; the cheque in question was<br \/>\ndeposited by them with their bank at Delhi; the<br \/>\ncomplainant came to know of the dishonouring of the cheque<br \/>\nat Delhi; notice was issued from Delhi, therefore, part<br \/>\nof cause action had arisen in Delhi.\n<\/p>\n<p> 5. Law in this regard is settled by the Supreme<br \/>\nCourt in  <a href=\"\/doc\/529907\/\">K. Bhaskaran v. Sankaran Vaidhyan Balan and<br \/>\nAnr.<\/a> 1999 (6) Scale 272. The Supreme Court has observed<br \/>\nthat the offence under Section 138 of N.I. Act is<br \/>\ncomplete only on the concatenation of five acts which are<br \/>\ncomponents of the offence. These are drawing of cheque,<br \/>\npresentation of cheque, returning of the cheque un-paid by<br \/>\nthe drawee bank, giving notice in writing to the darwer<br \/>\ndemanding payment of the cheque and failure of the drawer<br \/>\nto make payment within 15 days of the receipt of the<br \/>\nnotice. It was further noticed that it is not necessary<br \/>\nthat all five acts should happen in the same locality;<br \/>\nand it is possible that all five acts may have been done<br \/>\nat five different localities. It was held that under<br \/>\nSub-clause (d) of Section 178 of Cr.P.C. which provides<br \/>\nthat where the offence consists of several acts done in<br \/>\ndifferent local areas, it may be enquired into or tried by<br \/>\na court having jurisdiction over any such local area. It<br \/>\nwas held:\n<\/p>\n<p> &#8220;14. The offence under Section 138<br \/>\nof the Act can be completed only with the<br \/>\nconcatenation of a number of acts.\n<\/p>\n<p>Following are the acts which are<br \/>\ncomponents of the said offence : (1)<br \/>\nDrawing of the cheque, (2) Presentation<br \/>\nof the cheque to the bank, (3) Returning<br \/>\nthe cheque unpaid by the drawee bank, (4)<br \/>\nGiving notice in writing to the drawer of<br \/>\nthe cheque demanding payment of the<br \/>\ncheque amount, (5) failure of the drawer<br \/>\nto make payment within 15 days of the<br \/>\nreceipt of the notice.\n<\/p>\n<p> 15. It is not necessary that all<br \/>\nthe above five acts should have been<br \/>\nperpetrated at the same locality. It is<br \/>\npossible that each of those five acts<br \/>\ncould be done at 5 different localities.<br \/>\nBut concatenation of all the above five<br \/>\nis a sine qua non for the completion of<br \/>\nthe offence under Section 138 of the<br \/>\nCode. In this context a reference to<br \/>\nSection 178(d) of the Code is useful. It<br \/>\nis extracted below:\n<\/p>\n<p>  &#8220;Where the offence consists of<br \/>\nseveral acts done in different<br \/>\nlocal areas, it may be inquired<br \/>\ninto or tied by a court having<br \/>\njurisdiction over any such<br \/>\nlocal area&#8221;.\n<\/p>\n<p> 16. Thus it is clear, if the five<br \/>\ndifferent acts were done in five<br \/>\ndifferent localities any one of the<br \/>\ncourts exercising jurisdiction in one of<br \/>\nthe five local areas can become the place<br \/>\nof trial for the offence under Section<br \/>\n138 of the Act. In other words, the<br \/>\ncomplainant can choose any one of those<br \/>\ncourts having jurisdiction over any one<br \/>\nof the local areas within the territorial<br \/>\nlimits of which any one of those five<br \/>\nacts was done. As the amplitude stands<br \/>\nso widened and so expansive it is an idle<br \/>\nexercise to raise jurisdictional question<br \/>\nregarding the offence under Section 138<br \/>\nof the Act&#8221;.\n<\/p>\n<p> 6. In this case, as noticed above, Branch office of<br \/>\nthe complainant company is in Delhi; the cheque in<br \/>\nquestion was presented to the bank in Delhi and it was<br \/>\nreturned un-paid in Delhi; the notice to the petitioners<br \/>\nwas given from Delhi; and the failure of the petitioners<br \/>\nto pay the amount was in Delhi. Therefore, I have no hesitation in holding that part of the cause of action had<br \/>\narisen at Delhi, and the courts in Delhi have jurisdiction<br \/>\nto try the complaint.\n<\/p>\n<p> 7. Learned counsel in support of the proposition<br \/>\nthat the courts in Delhi have no jurisdiction had also<br \/>\nplaced reliance on the decisions, in  R.K. Jain v. State<br \/>\nand Ors. 1998 (1) Crimes 514,  Canbank Finance Services Ltd.<br \/>\nv. Gitanjali Motors Ltd. 1995 CRI LJ 1222 and some<br \/>\ndecisions of the other High Courts. In my view, after<br \/>\nauthoritative pronouncement by the Supreme Court in<br \/>\n K. Bhaskaran (supra) reference to other decisions cited by<br \/>\nlearned counsel for petitioner is not necessary. Learned<br \/>\ncounsel heavily relied upon the observations made by<br \/>\nSupreme Court in  Shri Ishar Alloy Steels Ltd. (supra).<br \/>\nIn my view, the observations made therein do not answer<br \/>\nthe question involved here. In that case, Supreme Court<br \/>\nwas considering the question of presentation of the cheque<br \/>\nwithin six months from the date on which it was drawn on<br \/>\n&#8216;the drawee bank&#8217; either directly or otherwise. It is in<br \/>\nthat context that the Supreme Court considered the use of<br \/>\ndirect article &#8220;The in words &#8220;The bank&#8221;. It was held<br \/>\nthat the cheque must read &#8220;The bank&#8221; (the drawee bank)<br \/>\nwithin six months. The emphasis laid by the learned<br \/>\ncounsel on the words &#8216;a bank&#8217; and &#8216;the bank&#8217; used in<br \/>\nSection 138 of the NI Act, does not help the contention.<br \/>\nLearned counsel even argued that there is a typing error<br \/>\nin the Supreme Court judgment. There is no merit in this<br \/>\ncontention and the same is rejected.\n<\/p>\n<p> 8. Learned counsel for the petitioners next argued<br \/>\nthat except the directors arrayed as accused Nos. 2, 8, 9 and<br \/>\n10 in the complaint, remaining seven directors have no<br \/>\nconcern with the accused company. They did not enjoy any<br \/>\ncontrol over the day-to-day functioning of the company,<br \/>\nthat impleading of all directors of the company is an<br \/>\nabuse of the process of the court. Reliance was place on<br \/>\n Mahendra Pratap Singh Ratra and Anr. v. N.K.<br \/>\nMetals and Anr.  and  Vikas Pawha v.\n<\/p>\n<p>State 1996(4) Crimes 520. Factual situation in these<br \/>\ncases was different. In this case there is a clear<br \/>\naverment to the effect that the accused 2 to 12 were<br \/>\nofficers were in-charge and responsible to the company for<br \/>\nthe conduct of day-to-day business at the time of<br \/>\ncommission of offence. The Annual Report of the company<br \/>\nshowing that all accused persons were active directors was<br \/>\nalso filed along with the complaint. (mark &#8220;C&#8221;). It is<br \/>\nessentially a question of fact, which can be decided only<br \/>\nafter the parties lead their respective evidence and not<br \/>\nat this stage. By virtue of Section 141 of the N.I. Act,<br \/>\nthe onus to prove that some of the accused persons were<br \/>\nnot responsible for the conduct of the business would be<br \/>\non them. There is no merit in the above contention and<br \/>\nthe same is rejected.\n<\/p>\n<p> 9. Learned counsel for the petitioners next argued<br \/>\nthat cheque in question had become stale, as after the<br \/>\nissuance of the cheque, the accused company made part<br \/>\npayment which was accepted by the complainant. Reliance<br \/>\nwas place on the letter dated 9th April, 1997 written by<br \/>\nthe petitioners to the complainant company by which they<br \/>\nhad sent a proposal stating that if the proposal was<br \/>\nacceptable, duplicate copy of the same be signed and sent<br \/>\nback. He argued that along with the proposal they had<br \/>\nalso sent a cheque of Rs. 3,62,866\/-, to the complainant<br \/>\nwhich was encashed, therefore, the cause of action did not<br \/>\nsurvive. I am unable to agree. In this case the cheque<br \/>\ndated 30.9.1997 is for Rs. 50.0 lacs (Rupees fifty lacs<br \/>\nonly). It was dishonoured on 17th March, 1998. The<br \/>\npetitioners failed to pay the amount despite notice dated<br \/>\n28th March, 1998. The payment of Rs. 3,62,866\/- sent vide<br \/>\ncheque dated 29th December, 1997 was accepted subject to a<br \/>\nfresh cheque for re-payment of the principal amount being<br \/>\nissued by the petitioners. That having not been done, it<br \/>\ndid not wash away the offence committed on the basis of<br \/>\nprevious cheque. In any case, what is the effect of such<br \/>\na payment can be appreciated only after trial.\n<\/p>\n<p> 10. Learned counsel for the petitioners also argued<br \/>\nthat the cheque in question was not given for discharge,<br \/>\nin the whole or in part of any debt or other liability.<br \/>\nIt was given as collateral security, and on the basis of<br \/>\nsuch a dishonoured cheque, proceedings under Section 138<br \/>\nof N.I. Act are not maintainable. In support of his<br \/>\nsubmission, reliance was placed on the decision of the<br \/>\nGujarat High Court in  Om Prakash v. Gurucharan Singh<br \/>\n1997 (3) Crimes 433. The answer to my mind is simple.<br \/>\nSection 139 of N.I. Act states that it shall be presumed<br \/>\nunless contrary is proved that the holder of a cheque<br \/>\nreceived the cheque of the nature referred to in the<br \/>\nSection 138 of the discharge in whole or in part of any<br \/>\ndebt or other liability. The Section raises presumption<br \/>\nthat cheque was drawn for consideration. This issue was<br \/>\nalso settled by several authoritative pronouncements of<br \/>\nthe Supreme Court in  <a href=\"\/doc\/74914\/\">Maruti Udyog Ltd. v. Narender and<br \/>\nOrs. JT<\/a> 1998 (9) SC 411, and  <a href=\"\/doc\/1438532\/\">M.M.T.C. Ltd. v.<br \/>\nMedchl Chemicals &amp; Pharma (P) Ltd.,<\/a> ,<br \/>\nwherein it was held:\n<\/p>\n<p> &#8220;15. A similar view has been taken by<br \/>\nthis Court in the case of  K.N. Beena v.\n<\/p>\n<p>Muniyappan reported in 2001(7) Scale 331,<br \/>\nwherein again it has been held that under<br \/>\nSection 139 of the Negotiable Instruments<br \/>\nAct the  Court has to presume, in<br \/>\ncomplaint under Section 138, that the<br \/>\ncheque had been  issued for a debt or<br \/>\nliability.\n<\/p>\n<p> 16. There is therefore no requirement<br \/>\nthat the Complainant must specifically<br \/>\nallege in the complaint that there was a<br \/>\nsubsisting liability. The burden of<br \/>\nproving that there was no existing debt<br \/>\nor liability was on the respondents.\n<\/p>\n<p>This they have to discharge in the trial.<br \/>\nAt this stage, merely on basis of<br \/>\naverments in the Petitions filed by them<br \/>\nthe High Court could not have concluded<br \/>\nthat there was no existing debt or<br \/>\nliability.&#8221;\n<\/p>\n<p> The Apex Court rejected the similar contention in recent<br \/>\ncase in  <a href=\"\/doc\/749742\/\">A.V. Murthy v. B.S. Nagabasayanna,  and<\/a> it was held:\n<\/p>\n<p>  &#8220;This is not a case where the cheque was<br \/>\ndrawn in respect of a debt or liability,<br \/>\nwhich was  completely barred from being<br \/>\nenforced under law. If for example, the<br \/>\ncheque was drawn in respect of a debt or<br \/>\nliability payable under a wagering<br \/>\ncontract, it could have been said that<br \/>\nthat debt or liability is not legally<br \/>\nenforceable as it is a claim, which is<br \/>\nprohibited under law. This case is not a<br \/>\ncase of that type. But we are certain<br \/>\nthat at this stage of the proceedings, to<br \/>\nsay that the cheque drawn by the<br \/>\nrespondent was in respect of a debt or<br \/>\nliability, which was not legally<br \/>\nenforceable, was clearly illegal and<br \/>\nerroneous.&#8221;\n<\/p>\n<p>(emphasis supplied) <\/p>\n<p> 11. In view of the settled proposition of law, this<br \/>\ncontention also stands rejected. No other point was<br \/>\nargued.\n<\/p>\n<p>  12. For the foregoing reasons, I find no merits in<br \/>\nthe petition and the same is dismissed. Trial court<br \/>\nrecord be sent back forthwith and trial court is directed<br \/>\nto expedite the trial.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Delhi High Court Lok Housing &amp; Constructions Ltd. vs Raghupati Leasing &amp; Finance Ltd. &#8230; on 12 July, 2002 Equivalent citations: 2003 115 CompCas 957 Delhi, 100 (2002) DLT 38, 2002 (64) DRJ 332 Author: S Agarwal Bench: S Agarwal JUDGMENT S.K. Agarwal, J. 1. This petition under Section 397\/401 read with Section 482 of [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_lmt_disableupdate":"","_lmt_disable":"","_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[14,8],"tags":[],"class_list":["post-58670","post","type-post","status-publish","format-standard","hentry","category-delhi-high-court","category-high-court"],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v27.3 - https:\/\/yoast.com\/product\/yoast-seo-wordpress\/ -->\n<title>Lok Housing &amp; Constructions Ltd. vs Raghupati Leasing &amp; Finance Ltd. ... on 12 July, 2002 - Free Judgements of Supreme Court &amp; High Court | Legal India<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.legalindia.com\/judgments\/lok-housing-constructions-ltd-vs-raghupati-leasing-finance-ltd-on-12-july-2002\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Lok Housing &amp; 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