HARISH C CHADDA Vs. XS FINANCIAL SERVICES LIMITED

JUDGEMENT

(1.) THE petitioners are accused Nos. 5 and 8 respectively in C.C. No. 1826 of 1998 on the file of the learned 18th Metropolitan Magistrate, Saidapet, Chennai. THE respondent is the complainant. THE respondent in the complaint filed under sections 190(1)(a) and 200 of the Criminal Procedure Code, 1973, for an offence under sections 138, 141(1) and 142 of the Negotiable Instruments Act, 1881, and under section 420 of the Indian Penal Code has stated that the respondent is a limited company incorporated under the provisions of the Companies Act, 1956, having its registered office at No. 21/1, Crescent Park Street, Chennai-17. THE respondent had sanctioned a short-term loan for a sum of Rs. 9 lakhs to the first accused, namely Nubal (India) Limited, Chennai. THE said amount was disbursed to the first accused on January 3, 1996, and was repayable with interest at the rate of 36 per cent. per annum. Despite availing of the said facilities the first accused has not been regular in respect of the repayment of the said sum and as on January 31, 1997, a sum of Rs. 5, 15, 000 was due and payable by the first accused respondent/complainant. Towards part payment of the abovesaid amount, the first accused issued three cheques to the respondent/complainant dated February 18, 1997, each for a sum of Rs. 1 lakh, Rs. 2 lakhs and Rs. 2 lakhs respectively. THE respondent presented those cheques for payment through its bankers, namely ICICI Banking Corporation Limited, Chennai, on June 18, 1997. But the same were returned on June 20, 1997, with an endorsement "funds expected, present again". With bona fide intention the respondent/complainant re-presented the cheques on June 24, 1997. However, those cheques were again returned with an endorsement "payment stopped by drawer". THE cheques return memo dated June 25, 1997, was received by the respondent/complainant on June 26, 1997. THErefore, the respondent/complainant caused a lawyer's notice dated June 30, 1997, to all the accused calling upon them to pay a sum of Rs. 5 lakhs due under those cheques within 15 days from the date of receipt of the said notice. THE notices sent through registered post with acknowledgment due was received by the first and second accused on July 2, 1997, and the fourth and sixth accused on July 3, 1997. However, the notices issued to the third and fifth accused were returned unserved. Having waited for 15 days to enable the accused to make payment, and such payment has not been made by the accused, the respondent has preferred the complaint against the accused on the ground that all the accused are involved in the day-to-day affairs and conduct of the business of the company and are liable for prosecution.It is the above complaint that has been challenged by accused Nos. 5 and 8 in this petition. Mr. V. Vibhishanan, learned counsel appearing for the petitioners, would challenge the complaint on the ground that no notices were either issued or served on the petitioners who are arrayed as accused Nos. 5 and 8 respectively in the complaint. Inasmuch as no notices have been issued, the petitioners had no opportunity for making payment of the amount as demanded by the respondent/complainant in the notice. THErefore, the complaints against the petitioners is not sustainable and is liable to be rejected. In this connection, learned counsel would rely upon a judgment of this court made in Crl. O.P. No. 9530 of 1998, dated July 7, 1999, wherein this court quashed the complaint against the accused who were not served with the notices under section 138(b) of the Negotiable Instruments Act, hereinafter called "the Act". On the other hand, learned counsel appearing for the respondent would submit that as per section 138(b) of the Act, no individual notice is contemplated to be issued against all the directors. All that the section requires is only a notice to be issued to the drawer of the cheque. In case the offence is committed by the company, a notice shall be issued to the drawer of the cheque, namely, the person who actually issued the cheque on behalf of the company and to the company. THE said section does not mandate the complainant to issue the notice to all the directors. THErefore, it cannot be contended that merely because no notices had been issued to the petitioners who have been arrayed as accused Nos. 5 and 8 respectively, the complaint itself is not sustainable. In this connection, learned counsel would heavily rely upon the following judgments : (a) Oswal Ispat Udyog v. Salem Steel Suppliers 1991 2 MWN (Cr.) 177; (b) K. Pannir Selvam v. M.M.T.C. Ltd. (c) Jain Associates v. Deepak Chaudhary and Co. 2000 2 Crimes 374 (Delhi); (d) Anita v. Anil K. Mehra. THErefore, learned counsel seeks for the dismissal of the petition. In view of the rival submissions, the question that has to be decided is as to whether a notice as contemplated under section 138(b) of the Act is necessarily to be issued to all the directors when the offence is said to have been committed by the company and the petitioners who are the directors of the company can be prosecuted in the absence of such notices. In order to consider the above question, it would be relevant to extract section 138(b) of the Act which reads as follows :