Vikas Gupta vs. Wiley India Private Limited & Ors.

$~76
* IN THE HIGH COURT OF DELHI AT NEW DELHI

Date of decision: 13.05.2024

+ CRL.M.C. 3686/2022 & CRL.M.A. 15439/2022
VIKAS GUPTA ..... Petitioner
Through: Mr.Ankur Singh, Ms.Krutika
Gaur, Mr.Abhijeet Singh, Advs.
versus

WILEY INDIA PRIVATE LIMITED & ORS. ..... Respondents
Through: Mr.Anil Kumar Mishra,
Mr.Mrinal Bharti, Mr.Manish
Kumar Shekhari, Ms.Sanjana
Srivastava, Mr.Supantha Sinha,
Advs. for R-1.
CORAM:
HON’BLE MR. JUSTICE NAVIN CHAWLA

NAVIN CHAWLA, J. (ORAL)

1. This petition has been filed under Section 482 of the Code of
Criminal Procedure, 1973 (in short, „Cr.P.C.‟) praying for quashing of
the Complaint Case No.2537/2022 titled Wiley India Private Limited
v. Miles Education Private Limited & Ors., pending before the Court
of learned Metropolitan Magistrate (NI Act)-03, Central District, Tis
Hazari Courts, Delhi.
Facts in brief
2. The above complaint has been filed by the respondent no.1
against the petitioner and the respondent nos.2 to 5, alleging therein
that the respondent no.1 is engaged in the business of developing
educational/literary contents and publishing books and journals. The
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respondent no.2 is engaged in the business of upskilling students and
professionals in new technologies and emerging skill areas.
3. The petitioner has been arrayed as accused no.5 in the said
complaint, with the allegations that he alongwith others was in-charge
of and responsible for the conduct of day-to-day functioning,
management and business affairs of the accused no.1 Company at the
time of the commission of the offence by the accused no.1.
4. The complaint further states that the respondent no.1 had
entered into a CMA Exam Review Agreement dated 29.09.2021 with
the respondent no.2, to market, promote, re-sell and distribute its
product viz. „ Wiley CMA Exam Review ‟ („CMA Product/CMA Guide
Books‟) on a non-exclusive basis in India. In terms of clause (2) of the
said Agreement, the respondent no.2 agreed to purchase 5,000 set of
CMA product from the respondent no.1 each year on a fixed price of
INR 9,375/- per set. It is further alleged that the respondent no.2
placed an order of 1500 sets of CMA Guide Books vide email dated
16.09.2021 for a total sum of Rs.1,39,62,000/-, for which an invoice
dated 09.10.2021 was raised. In terms of Clause 1 (d) of Annexure-A
to the Agreement, the said invoice was to be paid in advance, that is,
before the delivery of goods, however, in spite of non-payment of the
said invoice, the respondent no.1 in good faith and considering the
past relationship with respondent no.2, delivered 1,500 sets of CMA
Guide Books to the respondent no.2 which was duly acknowledged by
the respondent no.2 vide email dated 21.10.2021. It is further stated
that in terms of Clause 11 of the Agreement, the cheques lying with
the respondent no. 1 could be encashed for any payment due from
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the respondent no.2. In view thereof, the respondent no.1 presented
three cheques dated 30.09.2021, 31.10.2021 and 30.11.2021 for
payment, however, they were returned unpaid with the remarks “ Stop
Payment ” vide Returning Memo dated 05.01.2022. The respondent
no.1 thereafter issued a Statutory Demand Notice dated 02.02.2022 to
the petitioner and the respondent nos.2 to 5. A reply dated 16.02.2022
was given by the petitioner and the respondent nos.2 to 5, however,
payment was not made. Rejoinder notice dated 25.02.2022 was,
thereafter, issued by the respondent no.1, however, as no payment was
still made, the subject complaint was filed.
5. Aggrieved of the same the petitioner/accused no.5 has filed the
present petition.
Submissions by the learned counsel for the petitioner
6. The learned counsel for the petitioner submits that in fact, the
transactions between the parties started from an invoice dated
20.10.2020, when the petitioner was the Managing Director of the
respondent no.1/complainant. He submits that as a security for the
liability owed against the said invoice, 12 post dated cheques were
handed over by the respondent no.2 to the respondent no.1, including
the three cheques in question. He submits that full payment towards
the said invoice was made by the respondent no.1 to the respondent
no.2 between 05.02.2021 to 22.09.2021. He submits that therefore,
these cheques were no longer valid for presentation.
7. He submits that thereafter the respondent no.1 and the
respondent no.2 entered into the abovementioned Agreement on
29.09.2021. Though Clause 11 of the said Agreement refers to certain
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cheques handed over by the respondent no.2 to the respondent no. 1,
no details thereof are mentioned in the Agreement. He further submits
that it is only on 01.11.2021, that the petitioner was appointed as a
Director of the respondent no.2. He submits that therefore, the
petitioner was neither a Director of the respondent no.2 when the
cheques in question were issued nor is a signatory to any of those
cheques. He submits that therefore, the petitioner cannot be made
liable for the dishonour of those cheques.
8. He submits that the complaint is in fact filed with mala fide
intent only to take vengeance against the petitioner for him having left
the services of the respondent no.1 and joined the respondent no.2 as a
Director. He submits that there is a misuse of the cheques that were
given pursuant to the arrangement that was made between the parties
with respect to the invoice dated 20.10.2020.
Submissions by the learned counsel for the respondent
9. On the other hand, the learned counsel for the respondent no.1
submits that the petitioner has not refuted that he was the Director of
the respondent no.2 company on the date of the presentation and
dishonour of the cheques and had also received a legal notice of
demand. In the reply issued to the said legal notice also, the petitioner
does not dispute his position of being in-charge of the conduct of the
business of the respondent no.2 company, that is the main accused. He
submits that therefore, the petitioner cannot escape his liability under
Section 141 of the Negotiable Instruments Act, 1881 (in short, „NI
Act‟) and seek quashing of the complaint filed by the petitioner which,
in any case, is towards the final stages of adjudication. He submits that
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at least two cheques were issued when the petitioner was the Director.
Analysis & Findings
10. I have considered the submissions of the learned counsels for
the parties.

11. From the above, it is evident that the petitioner does not dispute
his position as a Director of the respondent no.2, the main accused
Company, as on the date of the presentation of the cheques in
question, their dishonour, the demand notice having been issued and
received, and the reply given to that demand notice, however, no
payment being made. Therefore, as on the date when the ingredients
of the offence under Section 138 of the NI Act fructify, the petitioner
was admittedly the Director of the respondent no.2 Company and in-
charge of the affairs of the respondent no. 2. Therefore, prima facie he
is liable in terms of Section 141 of the NI Act.
12. The submission of the learned counsel for the petitioner that he
was not the Director of the respondent no.2 company as on the date of
the issuance of the cheques, is not relevant inasmuch as the Supreme
Court in S.P. Mani & Mohan Dairy v. Dr. Snehalatha Elangovan,
(2023) 10 SCC 685, has clarified that different persons can be in-
charge of the company when each of the series of acts of commission
and omission, essential to complete the commission of offence by the
company, that is, (i) the drawing of cheque, (ii) presentation of the
cheque to the bank for encashment, (iii) returning of the cheque
unpaid by the drawee bank, (iv) giving notice in writing to the drawer
of the cheque demanding payment of the cheque amount, and (v)
failure of the drawer to make payment within 15 days of the receipt of
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the notice, may have taken place. The purpose of the provisions of
Section 138 and Section 141 of the NI Act would advance if any or all
of them are permitted to be prosecuted. I may quote from the
judgment as under:-

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35. Different persons can be in-charge of the
company when each of the series of acts of
commission and omission essential to
complete the commission of offence by the
company were being committed. To take an
example, in the case of a company, “A” might
be in charge of the company at the time of
drawing the cheque, “B” might be in charge
of the company at the time of dishonour of
cheque and “C” might be in charge of the
company at the time of failure to pay within 15
days of the receipt of the demand notice. In
such a case, the permissibility of prosecution
of A, B and C, respectively, or any of them
would advance the purpose of the provision
and, if none can be prosecuted or punished, it
would frustrate the purpose of the provisions
of Section 138 as well as Section 141.
36. The key to this interpretation lies in the use
of the phrase:“every person shall be deemed
to be guilty of the offence and shall be liable to
be proceeded against and punished
accordingly” as it occurs in sub-section (1) of
Section 141 and the use of the phrase
“provided that nothing contained in this sub-
section shall render any person liable to
punishment if he proves…” that occurs in the
first proviso. Every person who was in charge
of and was responsible to the company for the
conduct of its business at the time any of the
components necessary for the commission of
the offence occurred may be “proceeded
against”, but may not be “punished” if he
succeeds in proving that the offence was
committed without his knowledge and despite
his due diligence; the burden of proving that
remaining on him.
37. Therefore, it also has to be held that the
time of commission of the offence of dishonour
of cheque cannot be on the stroke of a clock or
during 15 days after the demand notice has to
be construed as the time when each of the acts
of commission and omission essential to
constitute the offence was committed. The
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word “every” points to the possibility of
plurality of responsible persons at the same
point of time as also to the possibility of a
series of persons being in charge when the
sequence of events culminating into the
commission of offence by the company were
taking place.”

13. As far as the submission of the learned counsel for the
petitioner that the respondent no.1 has acted out of mala fide in
presenting the cheques, without commenting on whether this at all is
relevant for finding the accused guilty of the offence under Section
138 of the NI Act or not, in any case, this will be a matter of evidence
and cannot be decided in a proceeding under Section 482 of the
Cr.P.C., where disputed question on fact cannot be gone into.
14. The Supreme Court has repeatedly cautioned that the power
under Section 482 of the Cr.P.C. cannot be used to scuttle a complaint
or an FIR at an initial stage, especially where a disputed question of
fact is involved. The power is to be exercised sparingly and only in
the rarest of the rare cases. Reference in this regard may be had to the
judgement of the Supreme Court in Rathish Babu Unnikrishnan v.
State (Govt. of NCT of Delhi) & Anr., 2022 SCC OnLine SC 513.
Conclusion
15. I, therefore, find no merit in the present petition. The same is
dismissed. The pending application is also disposed of.
16. There shall be no order as to costs.

NAVIN CHAWLA, J
MAY 13, 2024/Arya/ RP
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