Ms Noddy Auto PVT LTD Through Its Managing Director Dharamveer Singh vs. The State Of Jharkhand

Facts

These nine criminal miscellaneous petitions were filed by M/s Noddy Auto Pvt. Ltd. (Petitioner No. 1) and its directors, Dharamveer Singh (Petitioner No. 2) and Jagjeet Kaur (Petitioner No. 3), challenging the orders taking cognizance and issuing summons in multiple cases filed under Section 138 of the Negotiable Instruments Act, 1881. The complainant, M/s K.R. Enterprises (Opposite Party No. 2), had initiated these proceedings after several cheques issued by Petitioner No. 1 to Opposite Party No. 2 were dishonoured. The petitioners argued that there was no proof of notice service under Section 138 read with Section 141 of the Act, and that the cheques were not issued for legally enforceable dues due to a monetary claim the petitioners had against the complainant. They also contended that there were no specific allegations against Petitioners No. 2 and 3 regarding their roles in the alleged offence.

Held

The Court held that the averments in paragraph 3 of the complaint petitions, stating that accused No. 2 and 3 were directors responsible for and looking after the day-to-day affairs of the business, discharged the complainant's onus under Section 141 of the Negotiable Instruments Act. The burden then shifts to the accused to rebut this with cogent evidence, which the petitioners failed to provide at this stage. The Court found that Petitioner No. 2, being the signatory and issuer of the cheques, was rightly summoned. Regarding Petitioner No. 3, the Court stated that her contention of not being responsible or looking after the company's affairs needed to be proven with evidence before the lower court, and this could not be decided at the cognizance stage. The issue of whether the dues were legally payable was also deemed not adjudicable at this stage, as the dishonour of cheques issued by the company, whose payment was stopped, prima facie attracted Section 138. The Court concluded that since cheques were issued, notices were deemed served, and payment was stopped, a prima facie offence was made out, and no illegality was found in the impugned orders. The petitions were dismissed.

Key Issues

1. Whether the Court below erred in taking cognizance and issuing summons without proof of service of notice under Section 138 of the Negotiable Instruments Act, 1881, read with Section 141 of the Act, and whether a presumption of service is permissible? (Petitioner's contention: No presumption can be made; specific averment of service date is required. Revenue's contention: Section 27 of the General Clauses Act applies, and non-denial of receipt presumes service). 2. Whether the cheques were issued for legally enforceable dues, considering the petitioners had a monetary claim against the complainant arising from a GST penalty? (Petitioner's contention: No legal debt exists as the amount is recoverable from the complainant. Revenue's contention: The claim against the complainant is a separate issue and cannot be merged with the dishonoured cheques). 3. Whether there were sufficient specific allegations against Petitioners No. 2 and 3 to justify summoning them as directors responsible for the company's affairs under Section 141 of the Negotiable Instruments Act, 1881? (Petitioner's contention: General statements are insufficient, especially for Petitioner No. 3 who is a 'sleeping partner'. Revenue's contention: Directors responsible for day-to-day affairs are liable, and the averment in the complaint is sufficient at the cognizance stage).