Section 138 - negotiable instruments act
Mahadeo Chirania
(Querist) 17 March 2015
This query is : Resolved
Please help me defend a peculiar case under Sec. 138 of NI Act. Had worked with a firm for about 15 years and due to variety of reasons quit. During my service, I was advanced some amount thru cheque for buying of a property with an understanding that part will be repaid by me and part will be adjusted against yearly sales incentive and gratuity. However, no written agreement was made. After quitting, half of the original advance stood to the debit of my name and firm owner started pastering me & presurising me by visiting forcibly to my residence for repayment of entire amount rather than fulfilling earlier reached understanding. To avoid a mess, I repaid partial amount. Subsequent to this, he filed a frivolous & baseless complaint with police authorities for realisation of balance amount. Thereafter, an understanding was reached (though not out of my free will & volition) and a formal MOU was prepared under which 4 post dated cheques for the balance amount were given. But, an essential clause of the MOU was that upon honouring of 1st cheque, payee will withdraw the complaint. Therefore, upon honoring of 1st cheque, I informally demanded proof of the same but never got any. On trust, I honoured another two cheques also. But before the last cheque was to become due, I again demanded proof of complaint withdrawal but still did not get any. Hence, I did not fund my account and cheque got dishonured. Therefore, firm served me with Statutory Notice demanding payment within 15 days. In return, my counsel replied stating that firm did not fulfill its obligation under the MOU which resulted into reciprocal action and also a conditional liability or unenforceable debt. My counsel further stated that I am still ready to pay balance amount if the firm still fulfilled its obligation. However, firm went ahead and filed a case Sec. 138 of NI Act, representing itself thru one of its employee, under a Simple Authorisation on Firm's Letterhead but no Power of Attorney. Now, I need your generous help to understand following:-
a. Can an employee of the company represent under a Simple Authorisation on Firm's Letterhead & file a case without POA ?
b. How strong is my case when firm has obviously violated the MOU clause and did not provide me with proof of compliance ?
c. When MOU is reciting advance of only partial amount, can I, at this stage, forcefully say that this was not a debt as certain adjustments of yearly sales incentive and gratuity were due to me ?
d. How the court will view my counsel's reply asking the payee to comply with the MOU clause and realise the amount ?
e. During the trial, can I pay & ask the court to compound the case considering the merit of violation of MOU by the payee, if the court considers the amount as an enforceable debt ?
f. Can you cite few court cases where violation of MOU clause by the payee went in favour of the accused ?
g. What should me my best strategy to defend ?
Thanks in advance.
Devajyoti Barman
(Expert) 17 March 2015
a. No, POA is required.
b. You have good merit.
c.yes, you can take that plea.
d.Take this in your argument . Make it clear in your evidence as well.
e. You can ask but unless the other party is ready once sided compounding is not possible.
f.FIGHT ON MERIT
Dr J C Vashista
(Expert) 18 March 2015
I agree with the expert advise of Mr. Devajyoti Barman with some additions,
Registered POA along with resolution of the company in favour of the employee authorised i.e., as AR.
DEFENSE ADVOCATE.-firmaction@g
(Expert) 18 March 2015
The cheque bounce case is document based summons case and it does not run like other criminal or civil cases.
Law has provided for cheque bounce in it self as offense with the rider that the accused can prove that there was no legal liability.
Partial liability or conditional liability is no defense at all. Apex court has rejected all such arguments in recent cases.
We as a defense advocates win all cheque bounce cases but not on such lousy defense but attacking on basic technical mistakes.
SAINATH DEVALLA
(Expert) 18 March 2015
U R biggest mistake was to honour 2nd and 3rd cheques,when they deviated from the MOU.Ur counsel has given a correct reply to the notice given by the payee.They should have replied and then they should have proceeded legally.What kind of an MOU is it?If it on a piece of paper it has no legal validity in the court of law.U may not have consulted an advocate at the time of drafting the MOU.Don't panic, problem lies when U don't reply to the statutory notice at the first instance.I find some merits on UR behalf, but UR advocate should act wisely at the time of arguments.
Mahadeo Chirania
(Querist) 18 March 2015
My sincere thanks to all of you for guiding me with so much valuable information & encouragement. Yes, the MOU is executed on a Rs.100/- Non-Judicial Stamp Paper with two witnesses' signature on it with two original copies - one kept by complainant and one by me. This MOU is not registered. Moreover, firm is a PROPRIETORY concern and case is filed by an employee on plain authorisation to act/plead on behalf of firm and this authorisation is on a merely firm's letterhead. To my clear knowledge, there is no execution of Power of Attorney in favour of the employee. At least - in the bunch of documents provided by the court to me - I found only plain firm's letterhead based authorisation. Please suggest - if this is a serious technical flaw from the complainant's side. Thank all of you again.
DEFENSE ADVOCATE.-firmaction@g
(Expert) 18 March 2015
If you want to win the case do not confuse with MOU and all that.
Instead your advocate must use brains for cross., since in most such cases the defense just do the reverse and do not get results.
Who has filed the complaint is technical point and can move out the case from root.
However the complaint can be filed by any body on behalf of the company but in cross the credibility can be assailed.
The cross should be specific , to the point and should not deviate or confuse.
Get a good advocate who can perform this and it is sure recipe to win the case.
SAINATH DEVALLA
(Expert) 18 March 2015
Legal technicalities always exist in every case right from the notice that is given by the complainant. The above expert is correct and U have to fight on merits.Don't get panicked, and do as per the advice of UR advocate.
Guest
(Expert) 18 March 2015
You have the need to discuss your case in detail with some local expert by showing the related documents, if any with you for appropriate analysis vis-a-vis the legal provisions.
SAINATH DEVALLA
(Expert) 18 March 2015
This is the best advice U will get in the forum.Better act fast and contact an intelligent lawyer well versed in NI ACT.
T. Kalaiselvan, Advocate
(Expert) 20 March 2015
The first mistake is that your advocate admitted the existence of the legally liable debt indirectly by quoting the clauses of MOU violated etc.
A company can be represented by its employee on an authorisation letter given in the company's letter head too.
You may adopt the technical ideas/tips given by advocate defense during trial to get out free or as decided you may tell before the court that you are ready to settle the matter by paying the cheque amount, which generally court will accept and direct the complainant to agree.
Parthasarathi Loganathan
(Expert) 22 October 2015
