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2009 DIGILAW 129 (KER)

Varghese v. State of Kerala

2009-02-12

M.N.KRISHNAN

body2009
JUDGMENT : 1. This petition is filed with a prayer to quash Annexure I complaint in C.C.No.331 of 2008 on the file of the Judicial First Class Magistrate Court-II, Aluva in the interests of justice. The petitioner is arrayed as the third accused in C.C.No.331 of 2008 on the file of the Judicial First Class Magistrate Court-II, Aluva. It is the case of the complainant that the first accused, namely the Chavakkad Urban Co-operative Bank Limited is represented by accused Nos.2 and 3. On the request of accused Nos.2 and 3 the complainant had made short term deposits and an amount of Rs.31 lakhs in short term deposits made by the complainant with accused No.1 covered by receipts duly issued by the third accused for and on behalf of the first accused remained unpaid on maturity. When demand was made for payment, accused No.2 personally guaranteed and undertook to pay to the complainant the deposit amount of Rs.31 lakhs aforesaid with interest and he issued a post dated personal cheque for Rs.31 lakhs which when presented for encashment returned with the endorsement of insufficiency of funds and thereafter the statutory notice was sent and complaint was initiated against the accused. It is also averred that the cheque is drawn by the second accused on behalf of the Bank, and it is issued towards the discharge of a legally enforceable debt. The second accused undertook to pay the deposit amount and issued the cheque for the discharge of the liability and, therefore, all the accused are arrayed jointly to be prosecuted. 2. The prayer in this petition is that the third accused has nothing to do with the issuance of the cheque and he has not executed or accepted any liability and if at all a proceeding is maintainable, it will be only against the drawer of the cheque and, therefore, action under S.138 of the Negotiable Instruments Act shall not lie against him. 3. The following points are to be noted for a proper consideration of the matter: There is a case for the complainant that he has deposited certain amount with the first accused Bank and the second accused when contacted personally issued a cheque for the discharge of the amount. 3. The following points are to be noted for a proper consideration of the matter: There is a case for the complainant that he has deposited certain amount with the first accused Bank and the second accused when contacted personally issued a cheque for the discharge of the amount. There is no case for the complainant that it was the first accused who issued the cheque in his official capacity or that the second accused had issued the cheque for the first accused towards the discharge of the liability. Or in other words, the long and short of it is that even as per the allegations the second accused had issued a personal cheque towards the discharge of the liability. When a personal cheque is issued by a person even if he is holding a post in the company of administration or responsibility where the company can be also taken into in such type of cases is the point that has to be considered. But in so far as this petition is filed by the third accused, I am not confining my discussion with respect to his contention alone. Admittedly, the cheque is not issued on behalf of the first accused by the representatives of the first accused in their official capacity. The second accused had issued a personal cheque for Rs.31 lakhs which had been dishonoured. Under S.138 of the Negotiable Instruments Act, action will lie against the drawer of the cheque when such a cheque is dishonoured or returned for the reasons stated in that section. S.141 of the Negotiable Instruments Act deals with the offence committed by the companies. The company cannot be punished and, therefore, the persons in charge of the company can be punished for the offence committed by the company. It has to be stated that since the cheque is not issued on behalf of the company, there cannot be any conviction of any person on the premise that the said person is the authorised person representing the company. The question who can all be proceeded with has been considered by the Madras High Court in two decisions. In the decision reported in Sudesh Kumar Sharma v. K.S.Selvamani & Ors. 1995 Com.Cases Vol.84, page 806) the Madras High Court had the opportunity to consider this question. The question who can all be proceeded with has been considered by the Madras High Court in two decisions. In the decision reported in Sudesh Kumar Sharma v. K.S.Selvamani & Ors. 1995 Com.Cases Vol.84, page 806) the Madras High Court had the opportunity to consider this question. It was a case where the first petitioner was the proprietor of a concern in the discharge of whose liability the second petitioner issued cheques in favour of certain concerns which got dishonoured. Complaints were filed. The court held that the drawer of the cheques was the second petitioner. The first petitioner was the proprietor of the concern for whose liability the second petitioner issued the cheques. The first petitioner could not be made criminally liable for an offence under S.138 of the Negotiable Instruments Act. In the decision reported in P.Ramakrishnan and Anr. v. Bagnar Finance Co. (1995 Com. Cases Vol.83, Page 769) where the two petitioners entered into an agreement with the respondent and obtained a loan, and the first petitioner issued two cheques in favour of the respondent, it was held that since the second petitioner was not the drawer of the cheques, prosecution cannot be permitted to be proceeded against him. So these two decisions make it clear that if one is not the drawer of the cheque he cannot be proceeded under S.138 of the Negotiable Instruments Act. 4. Learned counsel for the second respondent had placed before me a decision of the Apex Court reported in Rangachari v. B.S.N.L. ( 2007 (2) KLT 1030 (SC)). The facts of the case would reveal that cheques were issued on behalf of the company called Data Access (India) Limited. There the dispute was with respect to the competency of the person to issue the cheque. The Apex Court observed that complainant cannot be asked to run from pillar to post to know things and, therefore, held that commercial discipline requires that when the cheque is dishonoured one can proceed against the company. So far as the case on hand is concerned, there is no case even for the complainant that the cheque has been issued by the first respondent Bank or that the cheque has been issued on behalf of the Bank, but it has been issued personally for the discharge of the amount. So far as the case on hand is concerned, there is no case even for the complainant that the cheque has been issued by the first respondent Bank or that the cheque has been issued on behalf of the Bank, but it has been issued personally for the discharge of the amount. So, by any stretch of imagination one cannot hold that the present petitioner, namely the third accused, will become a drawer as contemplated under S.138 read with S.141 of the Negotiable Instruments Act. Therefore, the only conclusion possible is that no action will lie against the third accused who is the petitioner before me under S.138 of the Negotiable Instruments Act. 5. Therefore, the Criminal Miscellaneous Case is allowed and the prosecution proceedings as against the third accused in C.C.No.331 of 2008 on the file of the Judicial First Class Magistrate Court-II, Aluva is quashed. I make it clear that I have considered only the case of the third accused in this matter.