TaxTMI 
TaxTMI 
1991 (2) TMI 426
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....rtner, Jagal Singh, petitioner No. 3 for quashing of the complaint dated December 22, 1989, annexure P-1 under Section 138 of the Negotiable Instruments Act, 1881 (for short "the Act"), and Section 406/ 420 of the Indian Penal Code, the subsequent proceedings and the impugned orders, annexures P-2 and P-3. 2. The impugned complaint was brought by Kapoor Brothers Roller Flour Mills, Panchkula ("respondent-firm" herein), under Section 138 of the Act, read with Section 406/420 of the Indian Penal Code, The respondent-firm pleaded therein that it was a registered partnership firm carrying on the business of running a flour mill. It supplies flour mill products. In December, 1988, petitioner No. 2 approached the respondent-firm for the supply....
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.... Baljinder Singh, petitioner No. 2. In spite of this service of notice, the payment in question was not made and, as such, the offence under Section 138 of the Act, was committed. From the very beginning, the intention of the petitioners was dishonest and, as such, offences under Section 406/ 420 of the Indian Penal Code had also been committed. 3. The learned Magistrate issued process under Section 138 of the Act. A revision was then preferred to the Court of Session which was heard by the Additional Sessions Judge, Ambala, who, vide order dated July 14, 1990, dismissed the same. 4. The petitioner-firm challenges the orders of the Magistrate and of the Additional Sessions Judge on the ground that the court at Ambala had no territoria....
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....other provision of this Act, be punished with imprisonment for a term which may extend to one year, or with fine which may extend to twice the amount of the cheque, or with both : Provided that nothing contained in this section shall apply unless-- (a) the cheque has been presented to the bank within a period of six months from the date on which it is drawn or within the period of its validity, whichever is earlier ; (b) the payee or the holder in due course of the cheque, as the case may be, makes a demand for the payment of the said amount of money by giving a notice, in writing, to the drawer of the cheque, within fifteen days of the receipt of information by him from the bank regarding the return of the cheque as unpaid ; and ....
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....ence that is deemed to have been committed under the provisions of Section 138 shall be a complete offence only if the three conditions specified in the provisos to the section also exist. The dishonouring of the cheque must be for the cause that the amount of money standing to the credit of the drawer is not sufficient to honour the cheque or that it exceeds the financial arrangement made with the bank. In the complaint, the respondent-firm has given all the facts on the basis of which it claims the commission of the offence under Section 138. The term "refer to drawer" is a courteous way adopted by a bank to show its inability to honour the cheque for want of funds. The petitioner-firm has not been able to show that the term "refer to dra....
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.... action arises under Clause (c) of the proviso to Section 138'. Normally a cause of action does not arise until the commission of the offence. When Section 142(b) says that the cause of action is the one which arises under Clause (c) of the proviso, such cause of action is the omission to make payment within fifteen days of the receipt of the notice." Thus, there is no force in the contention of learned counsel that no offence under Section 138 of the Act had been committed. 7. Coming to the question of jurisdiction, it is to be considered that the issuance of the cheques and their dishonouring are only a part of the cause of action and that the offence was complete only when the petitioners failed to discharge their liability to ....
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....ector, manager, secretary or other officer shall also be deemed to be guilty of that offence and shall be liable to be proceeded against and punished accordingly. Explanation.--For the purposes of this section,-- (a) 'company' means any body corporate and includes a firm or other association of individuals ; and (b) 'director' in relation to a firm, means a partner in the firm." 9. Petitioner No. 1 is the firm and petitioners Nos. 2 and 3 are its partners. It was Baljinder Singh who, acting as the managing partner, issued the cheques. A similar provision is contained in Section 278B of the Income Tax Act and in the two judgments referred to as Puran Devi v. Z.S. Klar, ITO [1988] 169 ITR 608 and Basal Tool Co. v. ....