LexM/S. M.M.T.C. LTD. AND ANR. versus M/S. MEDCHL CHEMICALS AND PHARMA (P) LTD. AND ANR.
Open in Lexace · Ask the AI about this caseJudgment (excerpt)
-
MIS. M.M.T.C. LTD. AND ANR.
v.
MIS. MEDCHL CHEMICALS AND PHARMA (P) LTD. AND ANR.
NOVEMBER 19, 2001
[K.T. THOMAS AND S.N. VARIAVA, JJ.]
Negotiable Instruments Act, 1881 :
Sections 138, 139 and 142-Dishonour of cheque for insufficiency of
funds-Complaint-Filing of-Held, must be by the payee or the holder of the
cheque in due course-Complaint filed in the name and on behalf of a
company by its enzployee without necessary authorisation-Held, nzaintain-
able since at a subsequent stage the company can send a competent person to
represent it.
A
B
c
Section 138-Dishonour qf cheque-Complaint-Maintainability of-
D
Denial of existing debt or liability-Held, burden qf proof lies on the accused
and it has to be discharged at the trial siage-At the complaint stage merely
on the basis of avennents High Court could not conclude that there was no
existing debt or liability.
Sections 138 and I 39-Dishonour qf cheque due to "stop payment"
E
instructions-Offence under section 138-Presumption of-Held, Offence un-
der section 138 could still be made out on the presuntption that the dishonour
was due to insufficiency o.f.funds~Burden qf proof regarding s~{ficiency of
funds lies on the accused.
Appellant -Company and the First Respondent Company entered
into a Memorandum of Understanding and in pursuance thereof two
cheques were issued by the first Respondent in favour of the appellant.
Both the cheques when presented for payment were returned with the
endorsement "payment stopped by drawer". After issuing notices,
F
the appellant filed complaints under Section 138 of the Negotiable Instru-
G
ments Act, 1881 through its Regional Manager. The respondent filed
petitions for quashing of the said complaints on the grounds that the
complaints filed by the Regional Manager were not maintainable and that
the cheques were not issued against any existing debt or liability. High
Court quashed _the complaints. Hence, this appeal.
H
265
A
B
266
SUPREME COURT REPORTS
[2001] SUPP. 5 S.C.R.
Disposing of the appeals, the Court
HELD : I. The only eligibility criteria prescribed by Section 142 of
the Negotiable Instruments Act, 1881 for maintaining a complaint under
Section 138 of the Act is that the complaint must be by the payee or the
holder of the cheque in due course. In the instant case the two complaints
were in the name and on behalf of the appellant company who is the payee
of the two cheques. Even presuming that initially there was no authority,
still the company can, at any stage, rectify that defect. At a subsequent stage
the company can send a person who is competent to represent the company.
Thus, High Court was not justified in quashing the complaint on the grounds
C
that it was not filed by a competent person. [270-C-G; 269-H]
Vishwa Mitrer v. O.P. Poddar, [1983) 4 SCC 701 and Associated Cement
Co. v. Keshvanand, [1998] l SCC 687, relied on.
2. There is, no requirement that the complaint must specifically
D
allege in the complaint that there was a subsisting liability. The burden of
proving that there was no existing debt or liability was on the respondents.
This they have to discharge in the trial. Merely on the basis of averments in
the Petitions the High Court could not have concluded that there was no
existing debt or liability. The power of quashing criminal proceedings
E
F
should be exercised very stringently and with circumspection. High Court
was not justified in embarking upon an enquiry as to the reliability or
genuineness or otherwise of the allegations made in the complaint. The
inherent powers do not confer an arbitrary jurisdiction on the Court to act
according to its whim or caprice. [[271-F-G; A; 270-H]
Maruti Udyog Ltd. v. Narender, [1999) 1 SCC 113 and K.N. Beena v.
Muniyappan, [2001] 7 SCALE 331, relied on.
3. Even when the cheque is dishonoured by reason of "stop pay-
ment" instructions, an offence under s.138 could still be made out. By
virtue of Section 139, Court has to presume that the chque was received
G
by the holder for the discharge, in whole or in part, of any debt or
liability. Of course this is a rebuttable presumption. The accused can thus
show that the "stop payment" instructions were not issued because of
insufficiency or paucity of funds. If the accused shows that in his account
there was sufficient funds to clear the amount of the cheque at the time of
H
presentation of the cheque for encashment at the drawer bank and thaExcerpt shown. Read the full judgment & AI analysis in Lexace.