THE HON'BLE SRI JUSTICE S. RAVI KUMAR CRIMINAL PETITION No.6625 of 2012 Date:01.07.2014 Between:
Bavanam Siva Reddy . Petitioner.
AND The State of A.P., rep by its Public Prosecutor, High Court of A.P., Hyderabad and another.
. Respondents.
The Court made the following :
THE HON'BLE SRI JUSTICE S. RAVI KUMAR CRIMINAL PETITION No.6625 of 2012 ORDER:
This petition is filed to quash proceedings in C.C.No.37/2012 on the file XVI Additional Special Metropolitan Magistrate, Erramanzil, Hyderabad.
2. Brief facts leading to filing of this petition are as follows:- Second respondent filed a complaint before the Magistrate alleging that the petitioner entered into a contract with the second respondent as per which the petitioner has to pay Rs.40,00,000/- to the complainant towards sale consideration and that he promised to pay the same and as part payment, he issued a cheque for Rs.8,00,000/- drawn on Andhra Bank, ASN Degree College Branch, Tenali and when the said cheque was deposited in S.B.I, Vidyanagar Branch, Hyderabad for collection, it was returned with an endorsement “funds insufficient” and thereafter, complainant issued a legal notice and that the petitioner committed offence punishable under Section 138 of the Negotiable Instruments Act (hereinafter referred to as ‘N.I Act’).
3. When this Court ordered notice to the complainant- second respondent, the petitioner, having received the same, did not appear either personally or through an Advocate and remained exparte. Advocate for petitioner submitted that to prosecute a person for the offence under Section 138 of N.I Act, the complainant must make a demand for the cheque amount, within 15 days from the date of return of cheque and that there should be statutory notice under Section 138 (b) of N.I Act, but the complainant failed to comply the same, therefore, the proceedings are liable to be quashed for non-compliance of Section 138 (b) of N.I Act. He submitted that the complainant issued notice on 12-01-2012, but the same cannot be treated as a notice under Section 138 (b) of N.I Act as the demand in the said notice was for payment of Rs.40,00,000/- as per the terms and conditions of the agreement, but it is not for demand of the amount covered by cheque. He submitted that as per the settled principles of law, a notice under Section 138 (b) of N.I Act is to be given for the cheque amount giving 15 days time, but the second respondent has not complied the same therefore, the proceedings are liable to be quashed.
4. Now the point that would arise for my consideration in this petition is whether the proceedings in C.C.No.37/2012 are liable to be quashed or not?
5. The main contention of Advocate for the petitioner is that the notice dated 12-01-2012 is not in accordance with the provisions of Section 138 (a) of N.I Act, therefore, the complaint without following the mandatory provisions under Section 138 (b) are liable to be quashed.
The petitioner has filed notice dated 12-01-2012 and it is stated in the said notice that the petitioner herein has issued a cheque bearing No.990011, dated 31-12-2011 for an amount of Rs.8,00,000/- and the said cheque was dishonoured on 04-01-2012, but the demand made under the said notice was to pay Rs.40,00,000/- within 15 days from the date of receipt of the legal notice, which is the amount covered by agreement.
6. Advocate for petitioner contended that this notice is not in compliance of Section 138 (b) of N.I Act, therefore, the proceedings have to be quashed. To support his argument, he placed reliance on the judgment of this Court in Yankay Drugs and Pharmaceuticals Limited, Hyderabad v. Citi
[1]
Bank, Madras and another , wherein it is held that notice of dishonour issued for a different amount, prosecution is not valid and complaint is liable to be quashed. In that case, the amount covered by cheque was Rs.9,972/-, but in the notice issued under Section 138 (b), the complainant therein failed to make any demand for payment of the said amount and on the other hand, demand in that notice was for a lesser amount. Considering those aspects, this Court held that the notice clearly fell short of the statutory requirement under Section 138 (b) of the N.I Act.
7. I n K. R Indira vs. Dr. G. Adinarayana
[2]
, Hon’ble Supreme Court held that in the absence of specific demand for the cheque amount, such notice is to be held as invalid. Hon’ble Supreme Court in that decision held as follows:-
“In the present case, not only the cheque amounts were different from the alleged loan amounts but also the demand was made not of the cheque amounts but of the loan amounts only. What is necessary is making of a demand for the amount covered by the bounced cheque which is conspicuously absent in the notice issued in this case. The notice in question is imperfect in this case not because it had any further or additional claims as well but it did not specifically contain any demand for the payment of the cheque amount, the non-compliance with such a demand only being the incriminating circumstance which exposes the drawer for being proceeded against under Section 138 of the Act.”
8. The facts of above referred decision are almost similar to the facts of this case. The notice dated 12-01-2012 is a consolidated notice, and still there is no specific demand for payment of the amount covered by the dishonoured cheque. In similar circumstances, the Hon’ble Supreme Court held that such notice is not in accordance with 138 of N.I Act and it would amounts to non-compliance of the said provision. From the principles formulated in the above two decisions, it is clear that there must be a specific demand in the statutory notice to comply requirement under Section 138 (b) of N.I Act. Here, apparently, in the notice dated 12-01-2012, there is no specific demand for the dishonoured cheque amount, on the other hand, the demand was for the amount covered by the agreement though the notice was issued with the heading that it is issued under Section 138 of N.I Act, therefore, relying on the principles envisaged in the above two decisions and considering the provisions of Section 138 (b) of N.I Act, I am of the view that the notice dated 12-01-2012 is not in accordance with the mandatory provisions of Section 138 (b) as the amount demanded under the said notice is Rs.40,00,000/-, whereas the amount covered by dishonoured cheque is only Rs.8,00,000/-, therefore, the said notice fell short of statutory requirement as such the proceedings are liable to be quashed.
10. For these reasons, petition is allowed and the proceedings in C.C.No.37/2012 on the file of XVI Additional Special Metropolitan Magistrate, Erramanzil, Hyderabad are hereby quashed.
11. As a sequel, miscellaneous petitions, if any, pending in this criminal petition, shall stand disposed of.
Date:01.07.2014 mrb
JUSTICE S. RAVI KUMAR
[1]
2001 (3) ALD 830
[2] (2003) 8 Supreme Court Cases 300