IN THE COURT OF JUDICIAL MAGISTRATE 1ST

CLASS, RAIPUR (C.G.)

COMPLAINT CASE/697/2013
IN
MR. SHANTILAL BARADIA … COMPLAINANT

V/S.

RAJIV AGARWAL & OTHER … ACCUSED

MEMORANDUM OF WRITTEN
ARGUMENTS ON BEHALF OF THE
ACCUSED RAJIV AGARWAL U/S.
314 OF CR.P.C.

MAY IT PLEASE YOUR HONOUR:

On behalf of the Accused above named it is most respectfully submitted

as under:-

1) The Complainant has filed the aforesaid complaint for an

alleged offence u/s. 138 of the Negotiable Instruments Act. The
alleged offence is non-cognizable, bailable and summons triable
in nature. The Accused has pleaded not guilty to the charge.

2) That, the accused no.2 has been falsely implicated by the

complainant since he was only the power of attorney holder of
the bank account of the proprietorship firm/accused no.1.

3) That, the cheque in the instant matter pertained to the

proprietorship firm whose sole proprietor was Rakesh
Agarwal/accused no.1.

4) That honourble Supreme Court & various High Courts have

held in plethora of judgements that, where a cheque has been
drawn by a proprietorship firm, only the proprietor and none
else is culpable under Section 138 of the NI Act.

5) That, the complainant has intentionally failed to identify the

actual proprietor of the firm though he had ample opportunity
to conduct the evidence of Bank Officials in order to figure out
the proprietor of the firm.
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6) That proprietorship firm can have only one proprietor and it’s a
trade name given to the proprietorship, whereas in the instant
matter complainant has made both the parties as accused
without any investigation before filling the case and without any
diligence in finding the truth by proper evidence after the
commencement of trial.

7) That, the mandate holder is not the drawer in the real sense for
the purpose of Section 138 of the Act and it is also a settled
position of law, that the mandate holder is not the account
holder, though he is the authorised signatory on behalf of the
account holder.

8) That the complainant has failed to prove the signature of the

accused in the disputed cheque.

9) That complainant deliberately did not state as to in which

capacity the accused no.2 had been serving the said business
concern.

10) .That, it has been held by Honrable Supreme Court in Raghu

Lakshminarayanan vs M/S. Fine TubesAppeal (crl.) 485 of 2007 “ A
juristic person can be a Company within the meaning of the
provisions of the Companies Act, 1956 or a partnership within
the meaning of the provisions of the Indian Partnership Act,
1932 or an association of persons which ordinarily would mean
a body of persons which is not incorporated under any statute.
A proprietary concern, however, stands absolutely on a
different footing. A person may carry on business in the
name of a business concern, but he being proprietor
thereof, would be solely responsible for conduct of its
affairs. A proprietary concern is not a Company” (Copy of
judgement is annexed along with this written submission.

11) That, the mandate/power of attrorney holder is a contract by

which a lawful business is committed to the management of
another, and by him undertaken to be performed without
reward and the role of the mandate holder is limited. The
accused in the instant had signed in the cheque as mandate
holder and therefore, as such, he cannot be held responsible for
the non-payment or the amount.
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12) That the mandate holder is not the account holder, though he is
the authorized signatory on behalf of the account holder and
under Section 135 of the NI Act, the mandate holder is not the
drawer for the purpose of Section 138 of the Act.

13) That, the Honrable Madras High Court has observed in Ravi
Chandran vs Subramanian, Equivalent citations: IV (2006) BC
54 that

“Section 138 of the Act is clear that the person liable to answer this penal
provision is only the person, who had drawn the cheque, which could be
seen from the opening words "where any cheque drawn by a person on an
account maintained by him....." thereby indicating, the person liable to be
dealt with under Section 138 of the Negotiable Instruments Act or the
person answerable under Section 138 of the Act must be the person, who
had drawn the cheque and who is having the account, in which account the
cheque was drawn and not others. In this case, as seen from the materials
available on record, the cheque was drawn by M/s Southern Biologicals. The
account holder is M/s. Southern Biologicals. The accused respondent is only
a mandate holder, who was competent and authorised to sign on behalf of
the account holder or on behalf of the drawer. Therefore, the mandate
holder certainly will not come within the meaning of a person "cheque
drawn by a person" or "on an account maintained by him". This being the
position, the complaint ought to have been filed against the owner, or
proprietor of M/s. Southern Bilogicals, who was maintaining the account,
who had drawn the cheque, though it was signed by the mandate holder. In
this context, we have to further see, who is the mandate holder, what is his
duty”. Copy of judgement is annexed along with written submission.

14) Honrable High Court of Allahbad has observed in Kalpana

Singh & another vs State of UP & another, 23929 of 2016 that
“So far position of authorized signatory (applicant no.-2 Ajay Singh) is
concerned, this contention of learned counsel for the applicants is
apparently acceptable that signing a cheque as authorized signatory, on
behalf of proprietor of Firm under his/her direction may be act of obedient,
subordinate servant or agent.”
“Facts of the case in hand are that in discharge of liability of payment of
applicant no.-1, the cheque in question was signed and issued on behalf of
applicant no.-2. Apart from it, this section provides that cheque should be
issued on an account maintained by account holder with the banker. In
present matter cheque was issued from the account of applicant no.-1 Smt.
Kalpana Singh, which was maintained for her with the bank. The liability of
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payment is said to be that of applicant no.-1 and not of applicant no.-2.

Thus, there is prima facie evidence that cheque in question relating to bank
account of applicant no.-1 was issued by her, through her authorized
signatory (applicant no.-2) in favour of OP No.-2 (complainant) for
discharge of debt or liability, and said cheque was returned by bank unpaid.
Apparently, there are sufficient grounds for prosecuting applicant no.-1
Smt. Kalpana Singh for offence under section 138 N.I. Act. The order of
cognizance for her is not erroneous. But there appears no debt or liability of
applicant no.-2, and cheque in question was not concerning his bank
account, so his prosecution cannot be had under section 138 N.I. Act” Copy
of judgement is annexed along with the judgement.

15) Honrable High Court of Delhi has observed in M M Lal vs State

Nct Of Delhi & Anr CRL.L.P. 290/2010 that
“In my view, "Letter of Mandate" issued by the sole proprietor in favour of
respondent no. 2 will not make him personally liable to pay the debts of the
firm. A perusal of Mandate clearly indicates that the respondent no.2 was
only given authority to draw bills, cheques etc. in the said account but any
liability on that count was to be that of sole proprietor. The clause to this
effect reads thus "This mandate if not revoked in my/own life time shall be
binding upon my/own estate and effects and any leagal respresentatives
unless a written notice of my/own death is given to you". That apart
mandate binds the parties to the letter of Mandate, that is bank and the sole
proprietor and not the outsiders”. Copy of judgement is annexed along with
the judgement.

16) That, the complainant has miserably failed to produce any proof
of transaction between him and the accused and also it is no
where mentioned in the complaint of complainant that when did
he gave loan to the accused.
.

Under the circumstances, the Accused no-2 most respectfully prays

that this Hon’ble Court be pleased to dismiss the complaint in the
above case and acquit the Accused of a charge u/s. 138 of the
Negotiable Instruments Act.

Dated this 16TH day of May 2019

Raipur (C.G) VIRAT VERMA
ADVOCATE FOR ACCUSED