Janak Gandhi Vs. Mohan Mandelia and Two ors. - Court Judgment

Excerpt:
banking - issuance of notice - sections 94 and 138 of negotiable instrument act, 1881 - petitioner was managing director of company - agreement entered into between parties -petitioner had to pay amount with regard to agreement - petitioner drawn cheque in favour of respondent - cheque was dishonored - respondent filed complaint under section 138 of act after issued notice - court taken cognizance - allegation of petitioner was that before taking cognizance, mandatory provision of section 94 of act was not complied with - hence, present petition - whether mandatory provision under section 94 of act was fulfilled or not before taking cognizance? - held, requirement of section 94 of act was that notice must be issued by post to petitioner - in instant case notice issued on correct address of petitioner - it is nowhere mentioned in section 94 of act that post must be registered - so, if notice is not received petitioner due to any reason is not held that mandatory provision under section 94 of act is not fulfilled - notice served or not can be decided only after recording of evidences - criminal proceedings under section 138 of act is not liable to quashed - hence, petition dismissed - motor vehicles act, 1988 [c.a. no. 59/1988]section 147; [a.k. patnaik, cj, s.s. jha & a.m. sapre, jj] liability of insurer - third party insurance held, the insured who is a party to the insurance is not a third party for the purpose of chapter xi of the act, particularly section 147 thereof. thus, any person other than the insurer and the insured who are parties to the insurance policy is a third party. the insurer, however, would not be liable for any bodily injury or death of a third party in an accident unless the liability is fastened on the insurer under the provisions of section 147 of the act or under the terms and conditions of the policy of insurance. hence, the mere fact that a passenger is a third party would not fasten liability on the insurer unless such liability arises under section 147 of the act or under the terms and conditions of the insurance policy. an employee is a third party inasmuch as he is not a party to the insurance policy. but merely because an employee is a third party, the insurance company would not be liable to compensate in case such employee suffers bodily injury or dies in an accident in which the motor vehicle is involved unless section 147 of the act fixes such liability on the insured or unless the terms and conditions of the contract of insurance fixes liability on the insurer. section 147 (1)(b) of the act provides that in order to comply with the requirements of chapter xi of the act, a policy of insurance must be a policy which insures the person or classes of persons specified in the policy to the extent specified in sub-section (2) against the liabilities mentioned in clauses (i) and (ii) thereunder. even if an employee is a passenger or a person travelling in a motor vehicle which is insured as per the requirements of sub-section (1) of section 147 of the act, the insurer will not be liable to cover any liability in respect of death or bodily injury of such employee unless such employee falls in one of the categories mentioned in sub-clauses (a), (b) and (c)of clause (i) of the proviso to sub-section (1)of section 147 of the act and further in cases where such employees fall under categories mentioned in sub-clauses (a), (b) and (c) of clause (i) of the proviso to sub-section (1`) of section 147 of the act, the insurer is liable only for the liability under the workmens compensation act, 1923. [national insurance co. ltd. v sarvanlal, 2004 (4) mpht 404 (d.b) overruled]. sections 147 & 96 & m.p. m.v. rules, 1994, rule 97; [a.k. patnaik, cj, s.s. jha & a.m. sapre, jj] control of transport vehicles m.p. rules relate to provisions of control of transport vehicles and it cannot be adopted for interpreting sections 147 and 145 of the m.v. act to hold the insurer liable for death or bodily injury suffered by passenger. [national insurance co. ltd. v sarvanlal, 2004 (4) mpht 404 (d.b) overruled]. - , (2002) 7 scc 655. that case is clearly distinguishable. 6. section 141 of the negotiable instruments act provides that if a cheque is issued on behalf of a company, every person who, at the time of the offence was committed, was in charge of, and was responsible to the company for the conduct of the business of the company, as well as the company, shall be deemed to be guilty of the offence and shall be liable to be proceeded against and punished accordingly.ordersubhash samvatsar, j.1. disposal of this petition shall also govern the disposal of connected case, misc. cri. case no. 3915 of 2004, janak gandhi v. mohan mandelia and two ors.,.2. the brief facts of the case are that the present petitioner, who is managing director of a company, namely, m/s. o.t.g. global finance company ltd., has filed the present petition under section 482, cr.pc challenging an order dated 3-8-2004 passed in case no. 900/2004 whereby cognizance is taken against the present petitioner and other accused for committing offence under section 138 of the negotiable instruments act.3. the brief facts of the case are that the respondent no. 1 filed a complaint under section 138 of the negotiable instruments act on 11-6-2004 against the present petitioner and other co-accused. it is alleged that respondent no. 1, the company is owner of g.n.t. television. it is further alleged that there was an agreement between respondent no. 1 and respondent nos. 2 and 3 and the petitioner for carrying on cable television network in the city of gwalior. the present petitioner carries on business of cable television network at indore. a memorandum of undertaking was also entered into between the parties. as per the said agreement respondent no. 1 invested rs. 42.46 lakhs while the petitioner invested rs. 17.03 lakhs in the said business. there was some dispute between the parties and it was agreed upon that a sum of rs. 31.96 lakhs will be paid to the petitioner by respondent no. 1. towards this payment a cheque for rs. 20 lakhs bearing cheque no. 532357, dated 16-3-2004 was issued against state bank of india, branch guna, was delivered to respondent no. 1. the said cheque was deposited for collection by respondent no. 1 in his bank account. the said cheque was returned on 2-5-2004 with a memo of insufficient fund. respondent no. 1 alleged that a notice dated 9-5-2004 was issued to the petitioner and respondent nos. 2 and 3 about the dishonour of the cheque and a demand was raised for the said amount. thereafter, a complaint under section 138 of the negotiable instruments act was filed. the court below took cognizance of the said offence. hence, this petition.4. the main contention raised by the counsel for the petitioner is that as per the allegations made in the complaint the offence under section 138 of the negotiable instruments act is not made out and, therefore, the said proceedings should be quashed as even if the allegations in the complaint are taken to be true the present petitioner can not be convicted for committing the said offence. the second contention raised by the counsel for the petitioner is that the cheque is not signed by him but it is signed by respondent no. 3 on behalf of respondent no. 2. counsel for the petitioner submits that as he has not signed the cheque he is not liable to be prosecuted for committing the said offence. from the perusal of cheque, it appears that the cheque is issued on behalf of respondent no. 2 m/s. o.t.g. global finance company ltd. present petitioner is managing director of the said company. the contention raised by the counsel for the petitioner is that complainant has no where averred in his complaint that the present petitioner is responsible for the payment of the said amount.5. counsel for the petitioner relied upon by the counsel for the petitioner is in the case of katta sujatha (smt.) v. fertilizers & chemicals travancore ltd. and anr., (2002) 7 scc 655. that case is clearly distinguishable. in that case complaint was filed against all the persons of the firm without making any allegation that accused in that case was responsible for business of the firm. but in the present case the situation is different. the petitioner is a managing director in the company and from the documents particularly, the agreement between the parties it is clear that he is responsible for carrying out the conduct of the company.6. section 141 of the negotiable instruments act provides that if a cheque is issued on behalf of a company, every person who, at the time of the offence was committed, was in charge of, and was responsible to the company for the conduct of the business of the company, as well as the company, shall be deemed to be guilty of the offence and shall be liable to be proceeded against and punished accordingly. counsel for the petitioner could not deny the fact that the present petitioner is managing director of the company. the managing director is responsible for conduct of the business of the company and therefore, in view of section 141 of the negotiable instruments act is liable for the offence committed on behalf of the company.7. moreover, the agreement entered into between the parties is on record. the said agreement was entered into on 19th december, 2000 and clause 16 of the said agreement provides that 'any problem arising in the joint venture in dealing with otg and gnt v. staff shall be referred to shri janak gandhi, managing director, otg and his decision in the matter shall be final. this clause itself shows that the present petitioner was responsible for conducting the business of the company and, therefore, he can not escape from his liability on this count.8. the next contention raised by the counsel for the petitioner is that the notice was served on the respondent nos. 2 and 3 by speed-post while the notice was sent to the present petitioner by upc. there is no acknowledgment on record. he denies the fact of receipt of notice. he further submits that so long the date of notice is not there on record, cause of action does not accrue for filing of complaint against this respondent.9. this argument is also without any merits. in the complaint it is alleged that notice was sent to the present petition by way of upc on a proper address. thus, the presumption is that the said notice is served. moreover, whether a notice is served or not is a question of fact which could be decided on recording of evidence but not after taking cognizance of the offence.10. counsel for the petitioner submits that in absence of notice by registered post the proceedings under section 138 of the negotiable instruments act can not continue against him. for this purpose counsel for the petitioner relied upon a decision of bombay high court in the case of baroda ferro alloys and industries ltd. and ors. v. span overseas pvt. ltd. and anr., (2000 dcr 331). in that case, bombay high court has held that service of notice by fax is not sufficient to constitute demand under section 138 of the negotiable instruments act and the demand must be in writing and by registered post. however, while deciding the aforesaid case bombay high court has not considered the effect of section 94 of the negotiable instruments act. section 138 of the negotiable instruments act nowhere provides the mode of service. mode of service is provided in section 94 of the act. section 94 of the act provides that notice of dishonour may be given to a duly authorized agent of the person to whom it is required to be given, or, where he has died, to his legal representative, or, where he has been declared an insolvent, to his assignee; may be oral or written; may, if written, be sent by post, and may be in any form; but it must inform the party to whom it is given, either in express terms or by reasonable intendment that the instrument has been dishonoured, and in what way, and that he will be held liable thereon; and it must be given within a reasonable time after dishonour. thus, as per this section it is not required that the notice must be given by registered post. the bombay high court has not considered impact of section 94 of the act, the said judgment as per incuriam and docs not help the present petitioner.11. as regards the date of service of notice is concerned, the notice is issued on the correct address of the drawee. in such circumstances a presumption can be drawn about the service of notice and the question whether notice is served or not can be decided only after recording of evidence and, therefore, the criminal proceedings can not be quashed under section 482, cr. pc at the stage of taking cognizance of the offence.12. in the result, this petition fails and is dismissed.

Judgment:
ORDER

Subhash Samvatsar, J.

1. Disposal of this petition shall also govern the disposal of connected case, Misc. Cri. Case No. 3915 of 2004, Janak Gandhi v. Mohan Mandelia and two Ors.,.

2. The brief facts of the case are that the present petitioner, who is Managing Director of a company, namely, M/s. O.T.G. Global Finance Company Ltd., has filed the present petition under Section 482, Cr.PC challenging an order dated 3-8-2004 passed in Case No. 900/2004 whereby cognizance is taken against the present petitioner and other accused for committing offence under Section 138 of the Negotiable Instruments Act.

3. The brief facts of the case are that the respondent No. 1 filed a complaint under Section 138 of the Negotiable Instruments Act on 11-6-2004 against the present petitioner and other co-accused. It is alleged that respondent No. 1, the Company is owner of G.N.T. Television. It is further alleged that there was an agreement between respondent No. 1 and respondent Nos. 2 and 3 and the petitioner for carrying on cable television network in the city of Gwalior. The present petitioner carries on business of cable television network at Indore. A memorandum of undertaking was also entered into between the parties. As per the said agreement respondent No. 1 invested Rs. 42.46 lakhs while the petitioner invested Rs. 17.03 lakhs in the said business. There was some dispute between the parties and it was agreed upon that a sum of Rs. 31.96 lakhs will be paid to the petitioner by respondent No. 1. Towards this payment a cheque for Rs. 20 lakhs bearing Cheque No. 532357, dated 16-3-2004 was issued against State Bank of India, Branch Guna, was delivered to respondent No. 1. The said cheque was deposited for collection by respondent No. 1 in his bank account. The said cheque was returned on 2-5-2004 with a memo of insufficient fund. Respondent No. 1 alleged that a notice dated 9-5-2004 was issued to the petitioner and respondent Nos. 2 and 3 about the dishonour of the cheque and a demand was raised for the said amount. Thereafter, a complaint under Section 138 of the Negotiable Instruments Act was filed. The Court below took cognizance of the said offence. Hence, this petition.

4. The main contention raised by the Counsel for the petitioner is that as per the allegations made in the complaint the offence under Section 138 of the Negotiable Instruments Act is not made out and, therefore, the said proceedings should be quashed as even if the allegations in the complaint are taken to be true the present petitioner can not be convicted for committing the said offence. The second contention raised by the Counsel for the petitioner is that the cheque is not signed by him but it is signed by respondent No. 3 on behalf of respondent No. 2. Counsel for the petitioner submits that as he has not signed the cheque he is not liable to be prosecuted for committing the said offence. From the perusal of cheque, it appears that the cheque is issued on behalf of respondent No. 2 M/s. O.T.G. Global Finance Company Ltd. Present petitioner is Managing Director of the said Company. The contention raised by the Counsel for the petitioner is that complainant has no where averred in his complaint that the present petitioner is responsible for the payment of the said amount.

5. Counsel for the petitioner relied upon by the Counsel for the petitioner is in the case of Katta Sujatha (Smt.) v. Fertilizers & Chemicals Travancore Ltd. and Anr., (2002) 7 SCC 655. That case is clearly distinguishable. In that case complaint was filed against all the persons of the firm without making any allegation that accused in that case was responsible for business of the firm. But in the present case the situation is different. The petitioner is a Managing Director in the Company and from the documents particularly, the agreement between the parties it is clear that he is responsible for carrying out the conduct of the company.

6. Section 141 of the Negotiable Instruments Act provides that if a cheque is issued on behalf of a company, every person who, at the time of the offence was committed, was in charge of, and was responsible to the company for the conduct of the business of the company, as well as the company, shall be deemed to be guilty of the offence and shall be liable to be proceeded against and punished accordingly. Counsel for the petitioner could not deny the fact that the present petitioner is Managing Director of the Company. The Managing Director is responsible for conduct of the business of the company and therefore, in view of Section 141 of the Negotiable Instruments Act is liable for the offence committed on behalf of the company.

7. Moreover, the agreement entered into between the parties is on record. The said agreement was entered into on 19th December, 2000 and Clause 16 of the said agreement provides that 'Any problem arising in the Joint Venture in dealing with OTG and GNT v. Staff shall be referred to Shri Janak Gandhi, Managing Director, OTG and his decision in the matter shall be final. This clause itself shows that the present petitioner was responsible for conducting the business of the company and, therefore, he can not escape from his liability on this count.

8. The next contention raised by the Counsel for the petitioner is that the notice was served on the respondent Nos. 2 and 3 by speed-post while the notice was sent to the present petitioner by UPC. There is no acknowledgment on record. He denies the fact of receipt of notice. He further submits that so long the date of notice is not there on record, cause of action does not accrue for filing of complaint against this respondent.

9. This argument is also without any merits. In the complaint it is alleged that notice was sent to the present petition by way of UPC on a proper address. Thus, the presumption is that the said notice is served. Moreover, whether a notice is served or not is a question of fact which could be decided on recording of evidence but not after taking cognizance of the offence.

10. Counsel for the petitioner submits that in absence of notice by registered post the proceedings under Section 138 of the Negotiable Instruments Act can not continue against him. For this purpose Counsel for the petitioner relied upon a decision of Bombay High Court in the case of Baroda Ferro Alloys and Industries Ltd. and Ors. v. Span Overseas Pvt. Ltd. and Anr., (2000 DCR 331). In that case, Bombay High Court has held that service of notice by FAX is not sufficient to constitute demand under Section 138 of the Negotiable Instruments Act and the demand must be in writing and by registered post. However, while deciding the aforesaid case Bombay High Court has not considered the effect of Section 94 of the Negotiable Instruments Act. Section 138 of the Negotiable Instruments Act nowhere provides the mode of service. Mode of service is provided in Section 94 of the Act. Section 94 of the Act provides that notice of dishonour may be given to a duly authorized agent of the person to whom it is required to be given, or, where he has died, to his legal representative, or, where he has been declared an insolvent, to his assignee; may be oral or written; may, if written, be sent by post, and may be in any form; but it must inform the party to whom it is given, either in express terms or by reasonable intendment that the instrument has been dishonoured, and in what way, and that he will be held liable thereon; and it must be given within a reasonable time after dishonour. Thus, as per this section it is not required that the notice must be given by registered post. The Bombay High Court has not considered impact of Section 94 of the Act, the said judgment as per incuriam and docs not help the present petitioner.

11. As regards the date of service of notice is concerned, the notice is issued on the correct address of the drawee. In such circumstances a presumption can be drawn about the service of notice and the question whether notice is served or not can be decided only after recording of evidence and, therefore, the criminal proceedings can not be quashed under Section 482, Cr. PC at the stage of taking cognizance of the offence.

12. In the result, this petition fails and is dismissed.