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2002 DIGILAW 340 (AP)

H. N. D. MULLA FEROZE v. K. V. D. PRASAD RAO

2002-02-28

C.Y.SOMAYAJULU

body2002
C. Y. SOMAYAJULU, J. ( 1 ) 1st respondent filed a private complaint under Section 138 of the negotiable Instruments Act (the Act) against the petitioner and another in connection with the bouncing of a cheque for Rs. 25,00,000/- issued on behalf of Bhagyanagar Castings limited (the Company) which was registered as CC No. 294 of 1998 on the file of the court of the V Metropolitan Magistrate, hyderabad. ( 2 ) PETITIONER herein, who is A2 in the above CC filed a petition to discharge him, which was dismissed by the learned magistrate and was confirmed in revision by the learned I Additional Metropolitan sessions Judge. This petition is filed questioning the dismissal of the revision. ( 3 ) THE contention of the learned Counsel for the petitioner is that since the petitioner is neither a director nor a person-in-charge of the Company and is in no way connected with the affairs of the Company and had neither opened nor is operating the bank account of the Company and had not issued the cheque which was dishonoured, petitioner cannot be said to have committed the offence under Section 138 of the Act and contended that in any event since notice of dishonour of cheque was not served on the petitioner, he is entitled to seek quashing of the proceedings against him. He relied on m/s. Shakti Travel and Tours v. State of bihar and another, 2000 (4) Crimes 150 (SC), Sridhar MA. v. Metalloy N. Steel corporation, (2000) 1 SCC 397, A. Sudershan v. Sri Mannen (Shabir) and another, 1997 (1) ALT (Crl.) 785 (A. P), central Bank of India and another v. Saxons farms and others, 2001 -II DCLR-250. Kalyani Refineries Limited and another v. Banaras State Bank Limited and another, 1999 (2) ALD (Crl.) 938 (AP), Surya prabhavathi v. N. Subrahmanyeswara Rao and another, 1998 (2) ALT (Crl) 109 (AP), kitex Garments Limited v. Ajay Koushik, 1 (2002) CCR 99, Shri Ishar Alloy Steels limited v. Jayaswals Neco Limited, 2001 (1) crimes 284 (SC), D. Chandra Reddy v. Ghourisetti Prabhakar and another, 2000 (2) ALT (Crl.) 17 (A. P.), and K. P. G. Nair v. Ms. Jindal Methol India Limited, 2001 (2) crimes 132 (SC), in support of the various contentions raised by him. Jindal Methol India Limited, 2001 (2) crimes 132 (SC), in support of the various contentions raised by him. ( 4 ) THE contention of the learned Counsel for the 1st respondent is that since there is prima facie case against the petitioner and since the trial Court took cognizance of the offence against the petitioner and since the petition for discharge filed by the petitioner was dismissed by the learned Magistrate and was confirmed in revision by the Sessions Court, this petition, which is in the nature of a sound revision, is not maintainable. It is his contention that since it is the petitioner that received two cheques, for Rs. 20,00,000/- and for rs. 5,00,000/- from 1st respondent as loan and since the cheque in connection with whose bouncing the CC, was filed by the 1st respondent was in fact issued for repayment of the said loan petitioner is also liable to be prosecuted under Section 138 of the Act and since the learned Sessions judge, by a well reasoned order, dismissed the revision filed by the petitioner and confirmed the order of the Magistrate refusing to discharge the petitioner, petitioner is not entitled to any relief in this petition. ( 5 ) THE case, in brief, of the 1st respondent is that petitioner who is the owner of Aashiana Investments borrowed rs. 25,00,000/- on behalf of the Company and when he sought repayment of the said amount, petitioner sent the cheque, which is the subject-matter of the case, in discharge of the said loan and so the petitioner and the drawer of the cheque also are liable to punishment under Section 138 of the Act. The petitioner is sought to be made liable on the strength of the letter dated 3-6-1997 sent to the 1st respondent herein wherein he mentioned that he is sending the cheque drawn by the Company. ( 6 ) IN his sworn statement 1st respondent stated that the petitioner borrowed rs. 25,00,000/- from him in two instalments and passed receipts in his favour, and that on demand, the petitioner issued a cheque for Rs. ( 6 ) IN his sworn statement 1st respondent stated that the petitioner borrowed rs. 25,00,000/- from him in two instalments and passed receipts in his favour, and that on demand, the petitioner issued a cheque for Rs. 25,00,000/- on 30-6-1997 but on presentation for payment the same was dishonoured, and at the request of the petitioner, he presented the cheque for payment for the second time and since it was dishonoured again, he issued a statutory notice calling upon both the accused to pay the amount covered by the bounced cheque but they did not pay the amount. ( 7 ) BEFORE considering the contentions raised by the learned Counsel for the parties, the decisions cited can be looked into. In M/s. Shakti Travel and Tours case (supra) the Supreme Court held that complaint under Section 138 of the Act is not maintainable, if it does not mention or disclose that the demand notice was served on the accused. In Sridhar M. A case (supra) it is held that the presumption of deemed service will have to be decided in the facts and circumstances of each case. In a. Sudershan case (supra) it is held that service of statutory notice is a condition precedent for maintenance of the complaint under Section 138 of the Act. In Central bank of India case (supra) it is held that a cheque can be presented any number of times within its validity period and statutory notice under Section 138 (b) of the Act, for which no form is prescribed, must be issued within fifteen days of receipt of information and there must be a demand for payment of the cheque amount in the notice. In Kalyani Refineries Limited case (supra) it is held that for constituting an offence under Section 138 of the Act the cheque, which was dishonoured should have been drawn on an account maintained by the drawer having a legally enforceable liability in favour of the payee. In Surya prabhavathi case (supra) it is held that the wife of the person who issues a cheque in discharge of a loan cannot be made liable for an offence under Section 138 of the Act. In Kitex Garments Limited case (supra) it is held that if an employee of a company has to individually discharge the liability, the company cannot be prosecuted. In Kitex Garments Limited case (supra) it is held that if an employee of a company has to individually discharge the liability, the company cannot be prosecuted. In Shri ishar Alloy Steels Limited case (supra) it is held that the Bank referred to in Section 138 of the Act means the Bank of the drawer, and if the cheque is not presented in time before the drawer s bank, criminal Court has no jurisdiction to process the proceeding against the drawer of the cheque, and the remedy is only by way of a civil suit. In d. Chandra Reddy case (supra) it is held that in order to constitute an offence under section 138 of the Act the cheque must have been drawn by a person on an account maintained by him. In that case the accused had drawn the cheque on the account of a Company which was not a party to the proceedings, but not on the account maintained by him in his individual capacity and so it was held that the requirement under Section 138 of the Act was not satisfied. In K. P. G. Nair case (supra) it is held that if the allegations in the complaint do not show that the accused is in-charge of the affairs and is responsible for running of the business of a Company, proceedings against him are liable to be quashed. ( 8 ) THE specific case of the 1st respondent is that the petitioner, in order to provide financial assistance to Al took a loan of Rs. 25,00,000/- from him and issued stamped receipts, and since the cheque for rs. 25,00,000/- drawn by Al in discharge of the loan due to him, taken through the petitioner, was dishonoured both Al and petitioner are liable for punishment under section 138 of the Act. The cheque which was dishonoured in this case was not drawn by the petitioner, but was drawn on an account maintained by the Company. It is not the case of the 1st respondent that petitioner is a Director or a person-in-charge of the affairs of the Company, and takes care of its day-to-day affairs and/or business. The cheque which was dishonoured in this case was not drawn by the petitioner, but was drawn on an account maintained by the Company. It is not the case of the 1st respondent that petitioner is a Director or a person-in-charge of the affairs of the Company, and takes care of its day-to-day affairs and/or business. Even assuming that petitioner is the debtor of the 1st respondent, and that he gave the cheque in question in discharge of the debt due from him to the 1st respondent, petitioner cannot be said to have committed an offence under Section 138 of the Act because he did not draw the cheque in question on an account maintained by him in a bank. A plain reading of Section 138 of the Act shows that the drawer of the cheque would be liable for punishment for dishonour of the cheque drawn on an account maintained by him in the bank, if such cheque is drawn for a legally enforceable debt or liability. Even assuming that Section 138 of the Act covers cases where a cheque is issued in connection with discharge of a legally enforceable debt or liability of a person other than the drawer of the cheque, the debtor of the drawee is not made liable for the offence under section 138 of the Act. Therefore even if the petitioner has a legal liability to return or refund the amount of Rs. 25,00,000/- to the 1st respondent, since he (petitioner) is not the drawer of the cheque that was dishonoured and since the cheque was also not drawn on the account maintained by the petitioner in the bank on which the cheque is drawn, he cannot be said to have committed the offence under section 138 of the Act more so because he is not a Director, or the person-in-charge of the affairs of the Company on whose account the cheque that was dishonoured was drawn. Therefore, even assuming what all 1st respondent has stated in his complaint against the petitioner is true, he would not be caught in the net of Section 138 of the act. In view thereof, the question as to whether 1st respondent issued a valid statutory notice to the petitioner, and if there is deemed service of such statutory notice on the petitioner, pales into insignificance and would have no relevance for a decision in this petition. In view thereof, the question as to whether 1st respondent issued a valid statutory notice to the petitioner, and if there is deemed service of such statutory notice on the petitioner, pales into insignificance and would have no relevance for a decision in this petition. ( 9 ) SINCE this Court in its supervisory jurisdiction can, under Section 482 Cr. PC even suo motu correct the errors of Courts subordinate to it, the fact that the Courts below had concurrently found that the complaint is maintainable, by itself, is not a ground for rejecting this petition, because in the facts and circumstances stated even if all the averments in the complaint are taken to be true, the petitioner cannot be said to have committed the offence under section 138 of the Act. The remedy, if any, of the 1st respondent is to proceed against the petitioner in a civil Court. ( 10 ) FOR the above reasons, the petition is allowed and the proceedings against the petitioner in CC No. 294 of 1998 are quashed.