This Criminal Original Petition is filed to quash the complaint in CC.No.2311/2003 pending on the file of the VIII Metropolitan Magistrate, George Town, Chennai.
2. The respondent had lodged the said complaint against petitioner for the offence under Section 138 of the Negotiable Instruments Act, arraying the petitioner as A2 and two others, Sankar as A1 and Viravan as A3.
3. According to the respondent, all the accused executed a letter of undertaking on 13.6.2002 and agreed to pay a sum of Rs.2 lakhs by way of four cheques for the amount due and payable by A2 and A3. In pursuance of the said undertaking, A1 had paid a sum of Rs.97,000/- covered by two cheques and issued two other cheques for a sum of Rs.51,000/- and Rs.52,000/-. The complainant presented the above mentioned two cheques on 17.12.2002 for encasement, but the same were returned dishonoured by the State Bank of India, Sidco Industrial Estate, Ambattur, Chennai 600098 on 18.12.2002 with an endorsement insufficient funds and the same was communicated to the complainant by her Bank M/s.Lakshmi Vilas Bank Limited on 19.12.2002. The complainant issued a statutory notice to the accused on 31.12.2002 through RPAD and in spite of service of notice, all the accused failed to pay the cheque amounts. Therefore, the present complaint has been filed.
4. Mr.M.Prabhakar, the learned counsel for the petitioner has submitted that the petitioner, who is arrayed as A2, is neither the drawer of the cheque on an account maintained by him with a Bank nor would there be presumption of any collusion between him and the drawer of the cheque, A1 in the absence of any specific averment to that effect in the complaint. Therefore, he would contend that even if it is presumed that A1 drew the cheque on behalf of or at the behest of the petitioner, there can be no vicarious liability and the petitioner cannot be said to have committed an offence under Section 138 of the Negotiable Instruments Act.
5. On the other hand, Mr.R.Sivakumar the learned counsel for the respondent drew the attention of this court to the discharge petition filed by the petitioner, in which the respondent has filed a counter, reiterating the liability of the petitioner to pay the cheque amount. The learned counsel would contend that having filed a discharge petition, the petitioner is not permitted to invoke the jurisdiction of this court under
Section 482 of Code of Criminal Procedure and the amounts were due and payable by A2 and A3 and under the letter of undertaking executed by all the three accused, A1 agreed to pay the amount and issued cheques drawn by him, which were presented and returned dishonored.
6. At the outset, the discharge petition has not been disposed of by the court below. The High Court can exercise its inherent jurisdiction in quashing a criminal proceedings when the allegations made in the complaint do not constitute an offence and also exercise of power is necessary either to prevent the abuse of process of law otherwise to secure the ends of justice. Merely because, the discharge petition is filed by the petitioner before the trial court, it cannot prevent the petitioner from invoking the power under
Section 482 of Code of Criminal Procedure, if the requirements of that section are satisfied.
7. In the instant case, the petitioner is not the drawer of the cheque and the cheque was drawn only by A1, who is said to have been managing the account with the Bank and as per the case of the petitioner no account is maintained by the petitioner in respect of said two cheques. Necessary ingredients of Section 138 of the Negotiable Instruments Act have been spelt by the Honourable Supreme Court in the decision rendered in the case M/s.Kusum Ingots & Alloys Limited Vs. M/s.Pennar Peterson Securities Ltd and others [AIR-2000-SC-954] and they are:-
(i) a person must have drawn a cheque on an account maintained by him in the Bank for payment of a certain amount of money to another person from out of that account for the discharge of any debt or other liability,
(ii) 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,
(iii) the cheque is returned by the bank unpaid either because of the amount of money standing to the credit of the 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 the Bank,
(iv) the payee or the holder in due course of the cheque 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 15 days of the receipt of information by him from the bank regarding the return of the cheque as unpaid and
(v) the drawer of such cheque fails to make payment of the said amount of money to the payee or the holder in due course of the cheque within 15 days of the receipt of the said notice.
The above position of law is again reiterated by the Honourable Supreme Court in the case of Indira (K.R) Vs. Adinarayana [AIR-2003-SC-4689. In the case of P.Ramakrishnan and another Vs. Bagnar Finance Co. [1995-83-Company Cases-769-Madras], involving a case where two petitioners had entered into an agreement with the respondent and obtained a loan and the 1st petitioner issued two cheques in favour of the respondent, it was held that since the 2nd petitioner was not the drawer of the cheque in question, the prosecution instituted against him was not sustainable.
8. Likewise, in another decision rendered in the case of Sudesh Kumar Sharma Vs. K.S.Selvamani and others [1995-84-Company Cases-806-Madras], the 1st petitioner was the Proprietor of the Concern, for whose liability the 2nd petitioner, his son issued a cheque. It was held in the said decision that the 1st petitioner could not be made criminally liable for the offence under Section 138 of the Negotiable Instruments Act in any of the complaints.
9. From a plain reading of Section 138 of the Negotiable Instruments Act, it is clear that the offence under the said section can be committed by the drawer of the cheque on an account maintained by him with a Bank, but not by any other person. In the instant case, merely because the petitioner along with other accused executed the letter of undertaking, under which A1 agreed to pay a total sum of Rs.2 lakhs by way of 4 cheques and issued cheques, there can be no vicarious liability for the petitioner, as in terms of Section 138 of the Negotiable Instruments Act, when a cheque is bounced, the person, who issues it become liable for prosecution for the offence under the said provision. In such circumstances, whether the cheque is issued by A1 at the behest of the petitioner or not, the person who had drawn the cheque is liable under Section 138 of the Act, for the purpose of Section 138 of the Act. It is not necessary that a debt for which the cheque is issued, should be the liability of the drawer himself.
10. In the case of Ramachandra Reddy Vs Abid Ali and another [2007-Crl.LJ-641-AP], it is held that the object of the Legislature being to enhance the credibility or acceptability of the cheque and in view of the wordings under Section 138 of the Negotiable Instruments Act, it is immaterial whether the cheque was issued for discharge of his own debt or liability. The cheque issued for the discharge of another man's debt or liability would also come within the scope of Section 138 of the Negotiable Instruments Act.
11. That apart, it is prerequisite of the offence under Section 138 of the Act that a cheque drawn by a person must be on an account maintained by him with the banker and if such a cheque has been dishonoured, the drawer of the said cheque will be liable for the said offence. None of the above ingredients are attracted in the instant case and no criminal liability can be fastened on the petitioner.
12. In view of the reasons stated above, the criminal prosecution against the petitioner cannot be allowed to continue and hence, the impugned complaint is quashed in so far as the petitioner is concerned. Accordingly, this Criminal Original Petition is allowed. Consequently, the connected MPs are closed.
Srcm To:
1.The VIII Metropolitan Magistrate, George Town, Chennai
2.The Public Prosecutor, High Court, Madras