G.S Chahal, J.:— This criminal miscellaneous under Section 482 of the Code of Criminal Procedure has been brought by M/s. Ess Bee Food Specialities, Village Saidpura (near Dera Bassi), District Patiala Petitioner-through its Managing Partner Baljinder Singh, Petitioner-2 and partner Jagpal Singh, Petitioner 3 for quashing of the complaint dated 22-12-1989. Annexure P 1 under Section 138 of the Negotiable Instruments Act (for short ‘the Act’) and Section 406/470, IPC, the subsequent proceedings and the impugned orders, Annexures P. 2 and P. 3.

2. The impugned complaint was brought by M/s. Kapoor Brothers Roller Flour Mills, Panchkula (respondent firm, herein) under Section 138 of the Act, read with Sections 406/420, Indian Penal Code. The respondent-firm pleaded therein that it was a registered partnership-firm, carrying on business of running a flour mill. It supplies flour mill products. In December 1988 petitioner-2 approached the respondent-firm for the supply of Maida on regular basis, on credit, and this offer was accepted. It was agreed that the payment shall be made within 10 days of the date of supply of the Maida as per the bill. Interest at the rate of 23% per annum was to be charged if the payment was not made within the stipulated period of 10 days, The supplies were then made. The transactions were entered in the daily sales register and the Ledger Book maintained. A running account was opened and payments were made though irregularly. As per the account books, a balance of Rs. 1,24,640/- stood due to the respondent firm from the petitioner firm. Some of the cheques issued were dishonoured and ultimately, a registered notice was issued on 24-10-1989, but in site of the same, and the information being delivered of dishonouring of the cheques, the payment was not made. A meeting was then arranged, Bajinder Singh, petitioner-2 issued two cheques, one dated 2-11-1989 for Rupees 15,900/- and the second dated 9-11-1989 for Rs. 11,000/- as part payment. These cheques were drawn on Punjab National Bank, Sector 17-B, Chandigarh with the assurance that the same would be encashed on presentation to the Bank. These cheques were then presented, but were received back with the endorsement “refer to drawer”. After receiving the information of the dishonouring of the cheques, a legal notice dated 25-11-1989 was issued. Two of the notices were received back undelivered, while one was delivered to Baljinder Singh petitioner-2. In spite of this service of notice, payment in question was not made and as such, the offence under Section 138 of the Act was committed. From the very beginning, the intentions of the petitioners were dishonest and as such, offences under Sections 406/420, Indian Penal Code had also been committed.

3. The learned Magistrate issued process under Section 138 of the the Act. A revision was then preferred to the Court of Session which was heard by the Addl. Sessions Judge, Ambala who, vide order dated 14-7-90, dismissed the same.

4. The petitioner firm challenges the orders of the Magistrate and of the Addl. Sessions Judge on the ground that the Court at Ambala had no territorial jurisdiction to try the case since the cheques were issued and dishonoured at Chandigarh. The petitioners are carrying on their business at Chandigarh. If any offence was committed, it was within the jurisdiction of the Chandigarh Court. Statutory notice under Section 138 of the Act had also not been served and as such, no complaint was maintainable and the criminal proceedings had been brought with the intention of harassment and humiliation to the petitioner firm.

5. To appreciate the arguments of the learned counsel, the following provisions of the Act may be quoted:

“Section 30. Liability of drawer. — The drawer of a bill of exchange or cheque is bound in case of dishonour by the drawee or acceptor thereof, to compensate the holder, provided due notice of dishonour has been given to, or received by, the drawer as hereinafter provided.

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Section 138. Dishonour of cheque for insufficiency, etc., of funds in the account. — Where any cheque drawn by a person on an account maintained by him with a banker for payment of any amount of money to another person from out of that account for the discharge, in whole or in part, of any debt or other liability, is returned by the bank unpaid, either because the amount of money standing to the credit of that account is insufficient to honour the cheque or that it exceeds the amount arranged to be paid from that account by an agreement made with that bank, such person shall be deemed to have committed an offence and shall, without prejudice to any 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 trial nothing contained in this section shall apply unless—

(c) 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 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

(c) the drawer of such cheque fails to make the payment of the said amount of money to the payee or, as the case may be, to the holder in due course of the cheque, within fifteen days of the receipt of said notice.

Explanation : For purposes of this section, “debt or other liability” means a legally enforceable debt or other liability.

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142. Cognizance of offences:— Notwithstanding anything contained in the Code of Criminal Procedure, 1973 (2 of 1974:—

(a) No court shall take cognizance of any offence punishable under Section 138 except upon a complaint, in writing made by the payee or as the case may be, the holder in due course of the cheque;

(b) such complaint is made within one month of the date on which the cause of action arises under clause (c) of the proviso to Section 138;

(c) no court inferior to that of a Metropolitan Magistrate or a Judicial Magistrate of the first class shall try any offences punishable under Section 138.

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6. Section 30 deals with civil liability in case of dishonouring of the cheque and the same provides that the drawer has to compensate the holder of the cheque. The Legislature has by means of the Banking Public Financial Institutions and Negotiable Instruments Laws (Amendment) Act, 1988 inserted Sections 138 and 142 to make out the dishonouring of a cheque to be an offence if the same is dishonoured for want of funds and after service of notice, the amount is not paid within the period prescribed. The offence 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 10 the section also exist. The dishoncuring 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 offences 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 drawer” in the present case conveyed a different meaning. Section 142(b) provides the clincher. The cause of action will be complete only when the payee fails to make the payment of the amount of the cheque with in 15 days of the receipt of the notice, provided by the proviso (b) to Section 138. The offence will, thus, be complete only when the period of notice expires and the payment is not made. In support of my above observations, I derive support from the following observations made by their Lordships in Paramjit Singh v. Job, 1989 HAP 461 (Kerala):—

“When the main body of the section is read along with the proviso, it is clear that the offence will be deemed to have been committed only if the drawer of the cheque failed to make payment within fifteen days of receipt of the notice. An “offence” as defined in Section 2(n) of the Code includes not only the doing of a positive act but by omitting to do something as well. Here the relevant provision says that the offence is the omission to make payment within fifteen days of receipt of notice Drawing the cheque is not the act by which the offence is deemed to have been committed. When the drawer fails to make the payment within the period specified in Clause (c) of the proviso, the offence is complete. This aspect is made further clear in Section 142(b) of the Act. Under the said clause no court shall take cognizance of any offence punishable under Section 138 unless “such complaint is made within one month of the date on which the cause of action arises under Clause (c) of the proviso to Section 138”. Normally cause of action does not arise until the commission of the offence. When Section 142(e) says that the cause of action is the one which arises under Clauses (c) of the proviso, such cause of action is the omission to make payment within fifteen days of the receipt of the notice.”

7. Thus, there is no force in the contention of the learned counsel that no offence under Section 138 of the Act had been committed.

8. 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 cause of action, the offence was complete only when the petitioners failed to discharge their liability to the respondent-firm. For discharging a debt, it is the debtor who has to find out his creditor and since in the present case, the respondent, who is the creditor, has its office at Pancbkula, the Court at Ambala had the territorial jurisdiction to try the offence complained of.

9. There is force in the contention of the learned counsel that so far as Jagpal Singh petitioner is concerned, the allegations made in the complaint do not make out a case against him. Sect on 141 of the Act provides as follows:

“'141. Offences by companies:— (1) If the person committing an offence under Section 138 is a company, every person who at the time the offence was committed, was incharge of, and was responsible to the company for 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:

Provided that nothing contained in this sub-section shall render any person liable to punishment if he proves that the offence was committed without his knowledge, or that he had exercised all due diligence to prevent the commission of such offence.

(2) Notwithstanding anything contained in sub-section (1), where any offence under this Act has been committed by a company and it is proved that the offence has been committed with the consent or connivance of, or is attributable to any neglect on the part of, any director, manager, secretary or other officer of the company, such director, manager, secretary or other officer shall also be deemed to be guilty of the 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……………….”

10. Petitioner-1 is the company and petitioners-2 and 3 are its partners. It was Baljindcr Singh, who, acting as the managing partner, issued the cheques. A similar provision is contained in Section 278-B of the Income-tax Act and in the two judgments, referred to as Puran Devi v. Z.S Kiar, income tax Officer, 1988 ITO 608 (P&H) (sic) and Bansal Tool Co. v. Income-tax Officer, District-II (I), Patiala, (1987) 167 ITR 24, it has been interpreted that only the person who is in charge of the affairs or was responsible to the company and the company are liable for the offence. Seeking guidance from the above quoted authorities, 1 hold that to make Jagpal Singh petitioner liable, the respondent-firm had to allege that he was in charge of the affairs of the company or liable to the company. No such averment has been made and for that reason, no offence is alleged to have been committed by him.

11. I hereby allow the criminal miscellaneous qua Jagpal Singh, petitioner only and quash the impugned complaint and all the subsequent proceedings against him. The criminal miscellaneous qua the petitioner firm and Baljindcr Singh petitioner-2 is hereby dismissed.