Sec 138 NI AND Section 415 read with Section 420 of the Indian Penal Code
Querist :
Anonymous
(Querist) 28 October 2010
This query is : Resolved
A is working for a company B in capacity of Executive director but being paid as a Consultant against submission of montly bills, since March 2008.
Only proof that he is treated as employee is that his presence is recorded along with other staff / workmen.
Company grants Loan - repayable in 30 months - by equal 30 monthly installments.
Due to availability of funds 6 cheques (last 6 cheques) given as security revalidated, for current dates, in February 2010.
Revision of compensation amount requested and agreed. But written agreement not made.
Directors going out of India handover security cheques to A - with MOM that salary of A will be increased and revised schedule of payments will be made for issue of revised Cheque for payment + PDC cheques as security.
A gets hospitalised. Not able to pay two monthly installments.
Company B stops his all due payments demanding refund of full loan.
MOU arrived.
Company B issued cheques to A - in lieu of PAYMENT of his services / hospital bills / other dues.
A issued one cheque equivalent to 6 months installment for payment of loan with the understanding that same will be encashed by Company B after A received credit of cheques issued by company B.
A also issued 11 PDC as a security for refund of balance loan with the understanding that Company B will continue to keep him employed.
Company B fradulantly stopped the payments of cheques handed over to A.
Company also encashed current cheque received from A - going back on verbal promise.
A stopped the payments of security cheques - all 11 cheques - before 15 days from date of 1st cheque becoming due.
A initiated the procedure for Sec 138 NI Act. for bounced cheque.
Questions are:
1. How much timewill be taken - if case is filed within next 30 days?
2. Can case u/s 415 read with 420 if PI filed along with case u/s 138 of NI by A - as the comapny B had malafide intention at the inception - proved by the fact that COMAPNY B encashed the cheque received from A and also stopped payments of cheques issued to A - within 16 hours from time of transaction (EXCHANGE OFCHEQUES)?
3. As A has done stop payments of 11 pdc SECURITY cheques - each per month - whether Company B is entitled too file cases agains A u/s 138 - when payment is stopped for valid reasons - as these payments were not legally enforceable due to non receipt (stop payments of cheques issued by B) of his due payments?
adv. rajeev ( rajoo )
(Expert) 29 October 2010
Even stop payment NI Act case can be filed. Before filing a case notice is mandatory, if co., issues a notice then reply with the reasons for what reason stop payment request was given to bank.
Whether while requesting the bank for stop payment of cheque, the same was informed in writing to the co., or not?
If same is given to the bank it is good to defend in the case if co., files the case.
Advocate. Arunagiri
(Expert) 29 October 2010
1. Cheque bounce case is not possible.
The cheque has to be bounced for insufficiency of funds.
2. Cheating case is maintainable.
There is a dishonest intention.
s.subramanian
(Expert) 29 October 2010
Yes. I agree with Mr.Arunagiri.
pawan sharma
(Expert) 29 October 2010
i concur with Mr.Arunagiri.
Querist :
Anonymous
(Querist) 29 October 2010
Thank you all.
I request all of you to review the situation once again in light of CRIMINAL WRIT PETITION NO. 1767 OF 2007 of Shri Sharan P Khanna vs ONGC
'A' insisted for release of his due payments FROM 'B'- before he handover custody of movable property (Security Cheque for loan instalmments - with 1st instalmments payable after 4 months) to 'B'.
Knowing that 'A' will not handover the security cheques and 'B' being also aware that recovery of loan is not possible even by Civil case - as 'A' will defend and demand his dues and demand by 'A' can't be rebutted during trial by 'B'
Knowing fully well that 'A' has intention to refund his due loan to 'B' - 'B' made a plan
'B' dishonetly induced 'A' to handover movable property on receipt of cheques in lieu of his due payments.
'A' agreed to give custody of movable property - (Security Cheque for loan instalmments with dates advanced feeling happythat long drawn dispute is comming to end and this proves his honety)
Cheating is established by the fact that
Had 'A' known this plan - would never given him the possession / custody of security cheques.
Intention to cheat from inception is established by the fact that 'B' had already planned to stop payments.
The Plan of 'B' can be proved by the fact that 'A' and 'B' exchanged cheques previous day at 8.00 PM and very next day early morning 'B' going to Bank before 'A' could reach Bank - 'B' getting encashed of the cheque received from A and 'B' issue stop payment instruction at 10.41 AM for the cheques issued by 'B' when Bank opened at 10.30 in the morning.
From the opening time of Bank / Stop payment time it is very clear that Intention of CHEATING was right from inception.
The above circumstances will prove the guilt of 'B' not only for Sec 138 NI act (It will be impossible for B to rebut the debt / liability), but also u/s 415 read with 420.
All experts are hereby once again requested to review their views in light of restated fact / circumstances and give comments.
Querist :
Anonymous
(Querist) 29 October 2010
I agree with the views of Advocate Rajoo
SEC 138 NI is applicable for Stopped payment also - unless Accused successfully rebuts the leagal dues / laibilities.
Other honourable members are requested to refer recent SC judgments which clearly establish that now Ingeneous debtors can't use this option - as was being used earlier - to drag on / defeat the justice.
Please review / comment
Advocate. Arunagiri
(Expert) 06 November 2010
The stop payment order by the drawer of the cheque will be entertained by the banker, only when he is having sufficient funds in the account. If the funds are available to honor the cheque, but being returned by the stop payment order of the drawer, the question of offense u/s 138 does not arise at all. All cheque returns are not offenses. Only when the cheque returns for insufficient funds and non payment of the money even after the notice period, the offense is made out. The Apex court in many cases had clarified this.
