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Andhra High Court · body

2007 DIGILAW 235 (AP)

Maganti Ganta Avadhani v. Kopuri Sreenivasa Rao

2007-03-06

G.YETHIRAJULU

body2007
Judgment :- (Petition under Section 482 of Cr.P.C. praying that in the circumstances stated in the Affidavit filed therewith, the High Court will be pleased to quash the Criminal Proceedings in C.C.No.157/2004 on the file of the Additional. Judicial First Class Magistrate Court, Gudivada.) This Criminal Petition has been filed by the accused under Section 482 of Cr.P.C. to quash the proceedings in C.C.No.157 of 2004 on the file of the Additional Judicial Magistrate of First Class, Gudivada, Krishna District. 2) A private complaint was filed by the first respondent/complainant for the offence punishable under Section 138 of the Negotiable Instruments Act (for short ‘the Act’). It is alleged in the complaint that the accused borrowed an amount of Rs.4,20,000/- from the complainant on 17.03.2000 for the purpose of business and discharge of sundry debts. The accused executed three different promissory notes agreeing to pay the said amount with interest at the rate of 24% per annum. The complainant made several demands, but the accused failed to repay the entire amount and ultimately issued a cheque on 14.08.2003 for an amount of Rs.4,32,000/- towards part payment of the debt due under the promissory notes. On 16.08.2003 the accused paid an amount of Rs.5,000/- towards part payments of the said three promissory notes and the same were endorsed on the promissory notes separately. The complainant presented the cheque issued by the accused on 09.01.2004 for collection. The cheque was bounced on the ground that there are no funds in the account. He got issued a notice through registered post and under certificate of posting on 28.01.2004 informing the accused about dishonour of the cheque and demanded to repay the cheque amount within 15 days from the date of receipt of the notice. The accused received the said notice and gave reply with false allegations, but failed to repay the amount. Therefore, he committed the offence under Section 138 of the Act. 3) After completing the examination of PW.1-complainant, the petitioner filed the present Criminal Petition contending that the cheque is materially altered and it was endorsed on the cheque—‘sans recourse’ i.e., without recourse and the cheque was obtained by the complainant in due course with a specific understanding that the complainant will not have the recourse. Therefore, the complainant is not entitled to file a complaint and the trial Court ought to have rejected the same. Therefore, the complainant is not entitled to file a complaint and the trial Court ought to have rejected the same. It is further contended that as the cheque itself speaks that the payee will not have recourse to file the complaint, taking cognizance of the complaint is barred. Therefore, the proceedings against the accused in C.C.No.157 of 2004 are liable to be quashed. 4) The learned counsel for the complainant submitted that the cheque was issued in the name of the complainant and it is a crossed cheque. It is an undisputed fact that the cheque was issued towards discharge of the part of the debt and the cheque presented by the complainant to the bank was dishonoured with an endorsement ‘insufficient funds’. The petitioner did not dispute the factum of dishonour of the cheque and issuing of legal notice by the complainant. He further submitted that though the petitioner gave a reply notice, he did not mention about the endorsement—‘sans recourse’ on the cheque and as the complainant is not an educated person, he does not know what was the endorsement made on the cheque. Therefore, it cannot be said that there is any alteration in the contents of the cheque or the complainant has no remedy, in view of the endorsement made by the accused. 5) On the above facts, it is relevant to extract the Section 138 of the Act, which reads as under: “138. Dishonour of cheque for insufficiency, etc., of funds in the account. 5) On the above facts, it is relevant to extract the Section 138 of the Act, which reads as under: “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 of 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 two years or with fine which may extend to twice the amount of the cheque, or with both: Provided that nothing contained in this section shall apply unless – (a) 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 the payment of the said amount of money by giving a notice, in writing, to the drawer of the cheque within thirty 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 the said notice.” 6) The above section clearly provides in the event of dishonour of cheque, the author of the cheque is liable to be punished under Section 138 of the Act. 7) The learned counsel for the complainant further submitted that Sections 15, 42 and 123 of the Act clarifies the position regarding the effect of the endorsement in between the two lines made across the cheque and irrespective of the words between the two lines, it can be treated only as a crossed cheque and it cannot be directly encashed without remitting the amount into the account of the complainant. 8) For proper appreciation, it is appropriate to extract the relevant Sections 15, 52 and 123 of the Act covering this aspect, which read as under respectively: “15. Indorsement.- When the maker or holder of a negotiable instrument signs the same, otherwise than as such maker, for the purpose of negotiation, on the back or face thereof or on a slip of paper annexed thereto, or so signs for the same purpose a stamped paper intended to be completed as a negotiable instrument, he is said to indorse the same, and is called the ‘indorser’.” “52. Indorser who excludes his own liability or make it conditional.- The indorser of a negotiable instrument may, by express words in the indorsement, exclude his own liability thereon, or make such liability or the right of the indorsee to receive the amount due thereon depend upon the happening of a specified event, although such event may never happen. Where an indorser so excludes his liability and afterwards becomes the holder of the instrument all intermediate indorsers are liable to him.” “123. Cheque crossed generally.- Where a cheque bears across its face an addition of the words ‘and company’ or any abbreviation thereof, between two parallel transverse lines, or of two parallel transverse lines simply, either with or without the words ‘not negotiable’, that addition shall be deemed a crossing, and the cheque shall be deemed to be cross generally.” 9) From the above provisions, it can be said that by making some endorsement by the accused himself on the cheques does not exonerate him from the penal provision under the statute. 10) The illustration (b) of Section 52 of the Act makes the position very clear, which reads as under: “A is the payee and holder of a negotiable instrument. 10) The illustration (b) of Section 52 of the Act makes the position very clear, which reads as under: “A is the payee and holder of a negotiable instrument. Excluding personal liability by an endorsement ‘without recourse’, he transfers the instrument to B, and B indorses it to C, who indorses it to A. A is not only reinstated in his former rights, but has the rights of an indorsee against B and C.” 11). When once the cheque is dishounoured, the endorsement on the cheque which was made by the accused without knowledge of the complainant and in the absence of mentioning the said fact in reply notice given by the accused to the complainant, the prosecution cannot be quashed exonerating the petitioner from the liability under Section 138 of the Act. The object of the Act is to prevent debtors from issuing of cheques without sufficient money to their accounts and making the creditors to believe that they have money in the accounts. In such a case, the accused having given the cheque in favour of the complainant for discharge of the part of the debt cannot escape from the liability under Section 138 of the Act. Whether there is any enforceable debt, whether the accused gave the cheque for discharge of such debt and whether there was any material alteration in the cheque are the questions to be considered during the course of trial of the case. After going through the entire material, I am of the view that there are no grounds to quash the impugned proceedings. 12) In the result, the Criminal Petition is dismissed.