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2000 DIGILAW 265 (AP)

D. Chandra Reddy v. Gowrisetti Prabhakar

2000-04-06

VAMAN RAO

body2000
VAMAN RAO, J. ( 1 ) THESE petitions under S. 482 of Cr. P. C. seek quashing of the proceedings in C. C. Nos. 6 and 210 of 1999 on the file of the Addl. Judicial First Class, Magistrate, Karimnagar in which the petitioner is sought to be prosecuted for the offence under S. 138 of the Negotiable Instruments Act. ( 2 ) ACCORDING to the allegations in the complaint the complainant has been running finance business at Karimnagar as M/s. Om Sai Securities and Investments Private Limited. The accused approached the complainant for finance and sought a loan of Rs. 6,40,000. 00. The complainant accordingly gave the amount and the accused executed the necessary agreement agreeing to pay interest at 24% per annum quarterly. The accused also agreed to repay the entire amount within six months from the date of the agreement. The accused after receiving the amount issued four blank cheques amounting to Rs. 4 lakhs and agreed to issue share certificates together with transfer deeds but the accused did not give any share certificate to the complainant as per the agreement. The complainant requested the accused for repayment of the loan amount after due period of six months and did not present the cheques for realization. The accused requested the complainant to wait for some time for repayment. Subsequently, on the demand of the complainant, the accused issued four cheques to clear the loan amount of Rs. 6,40,000. 00. One of the cheques was for Rs. 3 lakhs. This complaint in C. C. No. 6 of 1999 is in respect of this cheque for Rs. 3 lakhs which was presented for collection at the complainant s bank, namely, Andhra Bank, Masab Tank, Hyderabad and the cheque was returned on 19-11-1998 on the ground of insufficiency of funds in the account of the accused. The said bank issued a memo dated 10-12-1998 informing the complainant about the return of the cheque. The complainant got issued notice within 15 days through his advocate on 2-12-1998 calling upon him for payment of the loan amount covered by the cheque within 15 days from the date of receipt of the notice. The accused received the notice and got issued false reply on 19-12-1998. As the complainant did not receive the amount within 15 days, a complaint has been filed within 30 days after expiry of the 15 days period. The accused received the notice and got issued false reply on 19-12-1998. As the complainant did not receive the amount within 15 days, a complaint has been filed within 30 days after expiry of the 15 days period. ( 3 ) SIMILARLY, the accused gave a cheque for Rs. 1,40,000. 00 to the complainant and the same was returned on 11-1-1999 on the ground of insufficiency of funds and the Bank issued memo to that effect on 31-12-1998. On receipt of such memo, the complainant got issued legal notice on 22-1-99 through his advocate calling upon him for payment of the loan amount covered by the cheque within 15 days from the date of receipt of notice and the accused received the notice and got issued false reply on 7-2-1999 and later complainant has filed complaint in C. C. No. 210 of 1999 within the statutory period as the complainant did not receive the amount from the accused. ( 4 ) THE proceedings against the petitioner in the relative calendar cases are sought to be quashed mainly on the ground that the cheques in question. Photostat copies of which have been filed along with the petition have been issued by M/s. Vijaya Industrial Gasses Limited and was signed by the Managing Director. But, the complaint has been filed against the petitioner D. Chandra Reddy and not against the Vijaya Industrial Gasses Limited. It is however, not disputed that the petitioner is the Managing Director of the said Vijaya Industial Gasses Limited. The contention is that even assuming that the petitioner is the Managing Director of the company, he can be prosecuted only when the offence has been committed by the company. ( 5 ) THUS, it is contended that inasmuch as there is no averment in the complaint that the offence in question was committed by the company, the Managing Director of the Company cannot be prosecuted. ( 6 ) THE next contention is that the complaint discloses that the petitioner approached and obtained loan from M/s. Om Sai Securities and Investments Private Limited and as such it is that company which could file the complaint for the dishonour of the cheques in question. But, in this case, the complaint has been filed by one Gowrisetty Prabhakar. ( 6 ) THE next contention is that the complaint discloses that the petitioner approached and obtained loan from M/s. Om Sai Securities and Investments Private Limited and as such it is that company which could file the complaint for the dishonour of the cheques in question. But, in this case, the complaint has been filed by one Gowrisetty Prabhakar. ( 7 ) THE learned counsel for the respondent No. 1 on the other hand contends that inasmuch as the petitioner is the Managing Director of M/s. Vijaya Industrial Gasses Limited and inasmuch as the cheque in question has been signed by him, there is no bar to prosecute the petitioner for the dishonour of the cheque in question. ( 8 ) IN regard to the second contention, it is argued that the complaint discloses that the complainant was doing the finance business and that the accused approached the complainant for loan and that the complainant gave the loan and the cheque for discharging that loan was issued in favour of the complainant and there can be no bar in prosecuting the petitioner for the dishonour of that cheque. ( 9 ) IT may be mentioned that it is agreed that in connection with the loan transaction, an agreement was entered into between the parties, a copy of which was filed along with the complaints and Photostat copies of which are also filed along with these petitions. This agreement discloses that it was executed between D. Chandra Reddy, the petitioner herein and Mr. G. Prabhakar. It does not disclose that the agreement was between M/s. Vijaya Industrial Gasses Limited represented by D. Chandra Reddy the Managing Director and G. Prabhakar the Managing Director of Om Sai Securities and Investments Private Limited. It may be noted that the mention of Om Sai Securities and Investments Private Limited in the agreement is only by way of indicating the address of G. Prabhakar, the second party to the agreement who is the complainant. ( 10 ) AS seen from the Photostat copies of the cheques filed with the petitioners, which are not disputed to be the copies of the original cheques, the cheques are shown to have been issued on behalf of M/s. Vijaya Industrial Gas Private Limited and is shown to have been signed by its Managing Director on behalf of the said company. However, the complaint proceeds on the basis that the cheque was issued by the accused. It does not state that the accused had issued the cheque as Managing Director of the company. There is not even a mention that the accused is the Managing Director of the M/s. Vijaya Industrial Gasses Limited. It is one of the essential ingredients of S. 138 of the Negotiable Instruments Act that the cheques in respect of which allegation of offence is made must have been 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. In this case, the allegation in the complaint is that the accused has drawn the cheque in favour of the complainant which was returned for insufficiency of funds. But, as mentioned above, the cheque itself discloses that it was drawn by a company called Vijaya Industrial Gasses Limited and was signed on behalf of the company by the Managing Director of that company. It is obvious that the cheques were drawn on an account maintained by the company and not on the account maintained by the accused in his personal capacity. But the complaints disclose that the accused is sought to be prosecuted for the offence under S. 138 of the Negotiable Instruments Act not as Managing Director or any officer of the company but in his individual capacity. Inasmuch as there is nothing to show that the accused-petitioner herein issued the cheques on an account maintained by him personally, the requirement of S. 138 of the Negotiable Instruments Act that the cheque should have been drawn by the accused 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 discharging whole or in part of any debt or other liability is not satisfied. ( 11 ) A careful scanning of the complaints would disclose that there is no allegation that the offence under S. 138 of the Negotiable Instruments Act is alleged to have been committed by Vijaya Industrial Gasses Limited. ( 11 ) A careful scanning of the complaints would disclose that there is no allegation that the offence under S. 138 of the Negotiable Instruments Act is alleged to have been committed by Vijaya Industrial Gasses Limited. ( 12 ) IN these cases, the petitioner is sought to be prosecuted for the offence under S. 138 of the Negotiable Instruments Act in his personal capacity as seen from the complaints whereas the cheque in question which has been returned for insufficiency of funds was issued not by the petitioner herein but by the company through its Managing Director. Even assuming that the petitioner is the Managing Director of the Company and he signs the cheque in his capacity as such on behalf of the company, the petitioner cannot be mulcted with criminal liability on the basis of a cheque which has been drawn on an account of the company and not on the account of the accused. These are not the cases where the complaints disclose that the company mentioned above is stated to have issued the cheques as a proprietary firm of the accused and that in fact the cheques were drawn on an account which is maintained by the accused himself as a proprietor and gave them in the name of the said company. ( 13 ) SECTION 141 of the Negotiable Instruments Act contemplates that where the offence under Section 138 of the Negotiable Instruments Act is said to have been committed by a company every person, at the time the offence was committed who was in-charge of and was responsible to the company for the conduct of the business of the company as well as the company shall be deemed to be guilty of the offence. In this case, there is no allegation in the complaint that the offence under Section 138 of the Negotiable Instruments Act was committed by the company and that the petitioner is sought to be prosecuted by virtue of the provision under Section 141 of the NI Act in his capacity as an officer or the person in-charge of and responsible to for the conduct of the business of the company. ( 14 ) THUS, in view of this, it has to be held that one of the ingredients of Section 138 of the Negotiable Instruments Act, namely, the cheque in question should have been issued by the accused on an account maintained by him for payment of any money to another person from out of that account for discharging the legally enforceable liability is not satisfied. ( 15 ) THE other contention that the amount itself was payable to Om Sai Finance and Securities Limited and that only the company could have prosecuted the petitioners and not the respondent has no substance. It is apparent from the allegations in the complaint that it was the complainant who advanced the loans to the accused and that the name of the company was mentioned only for indicating the address of the complainant. ( 16 ) IN the result, these petitions are allowed and the criminal proceedings in C. C. Nos. 6 and 210 of 1999 on the file of the Addl. Judicial First Class Magistrate, Karimnagar are ordered to be quashed. Petitions allowed.