w w w . L a w y e r S e r v i c e s . i n



M.M.T.C. Limited, rep. by its Senior Manager v/s S.Mohammed Gani, Proprietor, Fine Food Packers Ms.21


Company & Directors' Information:- MMTC LIMITED [Active] CIN = L51909DL1963GOI004033

Company & Directors' Information:- L C PACKERS PRIVATE LIMITED [Active] CIN = U25202DL2012PTC241798

Company & Directors' Information:- K M D PACKERS PRIVATE LIMITED [Active] CIN = U74950DL2000PTC104742

Company & Directors' Information:- PACKERS INDIA PVT LTD [Active] CIN = U99999MH1985PTC038391

Company & Directors' Information:- Q E D PACKERS PRIVATE LIMITED [Active] CIN = U74950DL2001PTC110725

Company & Directors' Information:- S S A S PACKERS PRIVATE LIMITED [Active] CIN = U21029WB2012PTC179508

Company & Directors' Information:- J. S. PACKERS PRIVATE LIMITED [Active] CIN = U36991UP1995PTC018211

Company & Directors' Information:- PACKERS (INDIA) PRIVATE LIMITED [Strike Off] CIN = U14102KA1999PTC024636

Company & Directors' Information:- PACKERS PRIVATE LIMITED [Active] CIN = U21010MH1968PTC014058

Company & Directors' Information:- K B S PACKERS PVT LTD [Strike Off] CIN = U99999UP1972PTC003540

Company & Directors' Information:- A & A PACKERS PRIVATE LIMITED [Active] CIN = U63090UP2011PTC047868

Company & Directors' Information:- S H K PACKERS PRIVATE LIMITED [Strike Off] CIN = U21000HP2013PTC000458

    Crl.R.C.No.374 of 1995, Crl.P.R. No.373 of 1985

    Decided On, 17 June 1996

    At, High Court of Judicature at Madras

    By, THE HONOURABLE MR. JUSTICE N. ARUMUGAM

    K.Ravi Advocate for the Petitioner. R. Karunakaran Advocate for the Respondent.



Judgment Text

1. In ordering notice of motion of the present revision case filed by the complainant/petitioner who lost the case before the trial court viz., VII Metropolitan Magistrate, George Town, Madras in Crl.MP.No. 1910 of 1995 in CC.No.4166/94 dated 21.4.1995 which application was filed for the discharged of the respondent/accused under section 239, Cr.P.C. for the offence under Section 138 of the Negotiable Instruments Act (hereinafter referred to as ?the Act?), I have heard both parties on merits and as consented to by them I have disposed this revision on merits.


2. The petitioner has alleged in the complaint before the court below that the respondent being the accused has availed the financial assistance from the petitioner company for the export of marine products and have been doing the business and that in the due course of the same for the sums due and payable in part a cheque drawn by him for a sum of Rs. 10, 00, 000 on 25.4.1994 in favour of the complainant was given which, when presented for encashment, was bounced with an endorsement ?inadequate funds? and that therefore having caused the due notice of demand and failing compliance of the said demand by the accused and basing the case on the said cause of action, a private complaint under Section 138 of the Act was filed before the court below.


3. On receipt of the summons by the accused, he entered his appearance, however, a petition under Section 239, Cr.P.C. was filed praying for the discharge of the accused by contending inter alia that the cheque issued by him was only in token of a promise or security to pay which was evident from the fact that it was a post-dated one on the date of issue and that therefore, the said instrument is not a negotiable instrument to give the cause of action for filing any complaint for the offence alleged. The notice of demand was duly replied and that in fact the notice issued by and behalf of the accused to the complainant not to present the cheque for encashment due to inability of arranging funds clinchingly would go to show that there was no cause of action for the legal action above referred and that therefore, the discharge was asked for.


4. Considering the claim and counter claim of the respective parties on merits, the learned VII Metropolitan Magistrate, George Town, Madras has held that the bounced cheque given by the respondent is not a negotiable instrument, but the post-dated cheque does not within the purview of the Act, but part of an agreement and that too the facts of the instant case are hit by the doctrine of promissory estoppel and that therefore, for the various reasonings given by the accused that he is not entitled to be proceeded against for the offence alleged, discharged him as prayed for by passing the impugned order. Aggrieved at this, the complainant has come forward with the present revision challenging the impugned order for want of its legality and propriety.


5. The trial court while passing the impugned order has observed the reasonings in the following words:


?7. The accused alleged that the post-dated cheque was given on 31.3.1994, but there is no whisper about the factum of issue of post-dated cheque either in the complaint or in the sworn statement. However, the letter dt.25.5.1994 (but bearing the signature of the author as Dt.12.5.94) at page three categorically admits that a post-dated cheque was issued. Further the said letter makes it clear that there was a business agreement dated 5.4.93 between the parties and the complainant is keeping in mind the business relationship. Therefore, it is clear indication on behalf of the complainant that the cheque in question is issued during the business transactions and not meant for presentation without the advice of date of presentation of the cheque from the accused.


8. Having accepted the post-dated cheque and agreeing to present it only after hearing from the accused, as indicated by the interval between 21.4.94, the date on which the accused confirmed that he issued a post-dated cheque on 31.3.94 itself with a request to present it only on his confirmation; and 25.5.95, the date till which the complainant did wait as per the letter filed herewith; amounts to promissory estoppel so far as the presentation of the cheque in question is concerned without the confirmation from the accused. Further the said letter dt. 25.5.1994 did not put on notice the accused that the cheque held by them would be presented by a specific date, but only says action would be initiated for breach of agreement dt.6.4.93. Therefore though the action of the complainant in presenting the cheque may not be mala fide, in the given set of circumstances appears not bona fide.


9. The complainant being a Government of India enterprise which is expected to follow certain statutory rules and regulations in respect of receipts and payments as in the case of all Government institutions, it is not known as to how it accepted a post-dated cheque in March 94 and not receipted it till July 94, when alone it could have been presented for payment after bringing it to their accounts, thus keeping the cheque unaccounted as the events which are evidenced by the original correspondence before this court show.


10. In the circumstances the only inference that could be drawn by the Court as agitated by the accused is that the cheque related to this case was issued during the course of their business transactions for accounting purposes, and not towards the debt or liability which is evidenced by the letter of the complainant himself dt. 25.5.94 and in pursuance of an agreement between them.


11. In this connection it would be pertinent to note the findings of our Honourable High Court in K.Kumar v. Bagsons Festwarras, Crimes 1994 (1) page 529 and the spirit in which the Honourable Court upheld the contention of the accused to quash the proceedings. Therefore, the arguments advanced on behalf of both sides, and the documents produced confirm that the cheque relating to this case was issued during the course of business transactions for mutual convenience thereby in the light of the findings of Honourable High Court in K.Kumar v. Bagsons Festwaar, 1994 (1) page 529 cannot give rise to cause of action for prosecution u/s. 138 N.I. Act and the action of the complainant as evidenced by the correspondence give rise to promissory estoppel in presenting the cheque unless consented by the accused.


12. Further S.47 of N.I. Act says subject to provisions of Sec.58 a promissory note, bill of exchange or cheque payable to bearer is negotiable by delivery thereof with an exception that a promissory note, bill of exchange or cheque delivered on condition that it is not to take effect except in a certain event is not negotiable (except in the hands of a holder for value without notice of condition) unless such event happens.


13. This is a clear case wherein the holder accepted the post-dated cheque and put on notice not to present until he is advised to do so, and having waited for some time but without any notice to the drawer about the presentation, though he did not receive any advice from cheque has presented it. This action of presentation certainly lacks bonafide as agitated by the accused and evidenced by the correspondence because the presentation is qualified and preconditioned by the drawee.


6. I have heard Mr. K. Ravi, learned counsel appearing for the petitioner who strenuously contends before me that the impugned order passed by the learned Magistrate with the above observations cannot be a sound one to be accepted by any court of law for the very reasoning that the said observations were not based on any accepted legal norms and settled principles of law, and that the liability or the debt for which the cheque issued by the respondent/accused is apparent, when it was given to the complainant whether it is post-dated cheque or not, then it will attract the very explanation provided to in Section 138 of the Act and the court below had totally overlooked the abovesaid legal aspects. It was also contended by him that without marking the documents nor giving opportunity to either of the parties, basing reliance upon the documents filed on behalf of the accused alone would certainly deprive the right of the complainant and that even so, the reply given by and on behalf of the complainant was perfectly misread and misconceived by the trial court and if the true spirit of the same could be taken, then the impugned order cannot at all be sustained for any reasons. Controverting the same, Mr.Karunakaran on previous occasions placed reliance upon the notice or the letter given on behalf of the accused on 21.4.1994 in which the drawer of the cheque had requested the complainant not to present the same for encashment as it was found unable for him to get the adequate finance to honour the cheque and without the compliance of the said demand presenting the same for encashment would not at all give any cause of action for filing the present complaint. The learned counsel when pointed out about the serving of the reply letter to his client on 25.5.1994 by and on behalf of the complainant, he was not able to give any answer on behalf of the accused.


7. In the light of the rival contentions above referred to I have gone though the impugned order as well as the case records very carefully and meticulously. As was rightly contended by the Bar on behalf of the revision petitioner, it is noted that there is no document marked on behalf of either of the parties and having considered the impugned order in the above context, I felt it necessary to call for the explanation from the learned Magistrate to show cause as to why reliance was placed without marking the documents. The explanations was also received from the learned Magistrate to the effect that as the letter and reply letter, adverted to in the petition, praying for the discharge, was admitted in the counter statement, he placed reliance on them and consequently passed the impugned order. With great respect, I am totally unable to appreciate or accept the stand taken by the learned Magistrate. But at the same time, I have no hesitation to say that the very mode and approach, adopted by the learned Magistrate in placing reliance without giving any opportunity to the other side with regard to its proof or genuineness of the said documents is not correct one in law and that therefore, I am not inclined to accept the stand taken by him.


8. The letter dated 2 1. 4.1994 given by the respondent/accused to the petitioner herein and the reply given by the complainant to the respondent on 25.5.1994 have not been looked into in their proper legal perspective nor the contents thereof by the learned Magistrate while passing the impugned order. It is patent that the various reasonings given by the accused in his letter dated 21.4.1994 were seen to have been repudiated on behalf of the complainant/petitioner in his reply dated 25.5.1994. Under such circumstances, it is too much to say for the learned Magistrate that without getting any reply from the respondent herein, the main complaint ought not to have been presented. It is also noticed that the complaint under Section 200, Cr.P.C. was filed before the court below for the alleged offence under Section i 138 of the Act for having failed to pay the amount refened to in the cheque which was bounced already even after having given the legal notice as contemplated by law to pay the said amount. Therefore, it is noted that this remedy is always made available and open to the revision petitioner as provided by a statute. If that being so, the very observation of the learned Magistrate that this is a case of promissory estoppel cannot at all be accepted for the simple reasoning that there can be no promissory estoppel against statute provided by an enactment. Learned trial Magistrate has totally ignored the above law and observed so quite ignorantly. There cannot be any promissory estoppel to be operative against a statute provided therefor.


9. Section 138 of the Act runs as follows:


?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 inpart, 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 paid from t hat account by an agreement made with that bank, much person shall be deemed to have committed an offence and shall, without prejudice to any other provision of this Act, be punished with imprisonment for a term which may extend and to one year, or with fine which may extend to twice the amount of the cheque, or with both;


Provided that nothing contained in this section shall apply unless:-

(a) the cheque has been presented to the bank within a period of six months from the date on which it is drawn or within the period of its validity, whichever is earlier;

(b) the payee or the holder in due course of the cheque, as the case may be, makes a demand for the payment of the said amount of money by giving a notice, in writing, to the drawer of the cheque, within fifteen 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?.


Having read the provision of law above quoted, from a minimum understanding, it is quite apparent that a cheque drawn by the respondent towards the discharge of any liability or debt applying to the fact of the instant case is also a debt so a fully covered by the explanation provided thereto and that therefore, the cheque drawn by the respondent herein falls within the purview of Section 138 of the Act and for any reasoning there is an agreement entered into among the parties herein. Apart from the said instrument it is always open for the person, who sets up agreement, to prove the same by adducing oral and documentary evidence before the trial court during the time of trial only and that without recording any evidence placing reliance suo motu on certain unproved documents and that too, on total misconception of the same holding entire transactions are merely some independent transaction and the cheque issued and bounced was totally unconnected with the debt are not at all correct and highly bereftof any legal sanctity and as much the observations are liable to be set aside.



10. Having considered the gamut of the same, I am at every difficulty to understand as to how the learned Magistrate has arrived at a conclusion that the suit transactions are independent and totally different one then that of the cheque drawn and bounced without recording any evidence or marking any documents. Placing reliance upon the letter above referred to alone and passing the impuged order by the learned trial Magistrate is quite inappropriate and does not bear any legal sanctity or legal propriety. For all the said reasonings, I am totally enable to subscribe my view in support of the impugned order. On th

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e other hand, I entirely agree with the arguments advanced by Mr.K.Ravi on behalf of the petitioner and consequently I am constrained to hold that the impugned order lacks every legality and propriety and as such is liable to be set aside. However, the matter does not seem to have come to an end with this. Whether the transactions emerged out of the instant case comprises of several transactions and the issuance of the cheque and bouncing of the same is part and parcel of the same or an independent transaction is a matter to be gone into during the trial for which the parties are at every liberty to adduce the legal evidence thereon, and for the said reasoning, while setting aside the impugned order, I hereby remit the whole matter to the file of the trial court for trial afresh and to dispose of in accordance with law as expeditiously as possible. While holding so, I am constrained to set aside each and every one of the observations made by the trial court in the impugned order and I have not given any of my findings with regard to the merits and demerits of the legal evidence to be recorded and the finding to be given by the trial court after full trial. This would mean that the trial court shall dispose of the case purely on merits after giving full opportunity to both parties totally uninfluenced by any of the observations made by me in the course of this order. 11. In the result, the revision is admitted and consequently allowed. The impugned order passed by the learned VII Metropolitan Magistrate in Crl.M.P.No.1910 of 1995 in C.C.No.4165 of 1994 dated 21.4.1995 is hereby set aside and for the above directions, the matter is remitted back to the file of the trial court for fresh trial and disposal in accordance with law.
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