E.V. Satyanarayana vs Gujarat Heavy Chemicals Limited

S.M. Ali Mohamed, J.—The above three petitions are filed u/s 482 of Code of Criminal Procedure to quash the proceedings, pending on

the file of XIV Metropolitan Magistrate, Egmore, Madras. Crl.O.P. Nos. 3040, 3041 and 3042 of 1992 are pertaining to C.C. Nos. 3370, 3371

and 3372 of 1992 respectively. The Respondent herein Gujarat Heavy Chemicals Limited, represented by its Accounts Manager, filed three

complaints before the XIV Metropolitan Magistrate, u/s 138 of the Negotiable Instruments Act. It was averred in the complaint filed in C.C. No.

3370/92 as follows:

The complainant submits that in respect of the goods received from the complainant as consignee agent and haying sold the same, the accused are

due to the complainant various amounts and in respect of the due, the accused issued two cheques in favour of the complainant bearing cheque leaf

No. 399007 for Rs. 7,00,000/- and cheque leaf No. 399008 for Rs. 5,00,000/- both dated 15.9.1991 and 13.2.1991 respectively. The

abovesaid cheques on presentation on 17.2.1992 in the complainant bankers, State Bank of India, Nungambakkam Branch, Madras-6, the

cheques were returned unpaid by the accused bankers for reason ''Insufficient Funds'' and the same was intimated to the complainant on

14.3.1992.

In the other two complaints except for the different cheques which bounced, the averments are the same. The Petitioner reiterated the same

averments for quashing the criminal proceedings.

The learned Counsel for the Petitioner, Mr. S. Sampath Kumar at the outset was fair in his contention that as far as the civil liability of the

Petitioner to pay the amounts covered by the bounced cheques are concerned in the above three cases, the Petitioner is bound to pay the same.

However, as far as the criminal liability of an offence u/s 138 of the Negotiable Instruments Act is concerned, he submitted that no case has been

made out and as such, the entire proceedings in the above petitions ought to be quashed by this Court. He also contended that Section 20 of the

Negotiable Instruments Act does not apply to cheques as cheques do not require any stamp as per Section 20 of the Negotiable Instruments Act.

He referred to Record Note of discussion held on 10th August 1991 at Hyderabad which was included in the type set of papers by the

Petitioner/accused which is as follows:

Record Note of discussions held on 10th August 1991 at Hyderabad.

Present: Shri S.K. Mahendru, General Manager, GHCL

Shri B. Arunachalam, Corporate Office

Shri R.N. Sayee Krishna, Deputy G.M..GHCL

Shri E.V. Satyanarayana, Eli Agencies.

Outstanding position was discussed. According to GHCL outstanding amount from Eli Agencies comes to Rs. 35.5 lacs as of date. However, Eli

Agencies desires that the account be reconciled once again as there appears to be some discrepancies. GHCL agreed to have the same reconciled

at Madras once again and Eli Agencies agreed to meet the R.M. at Madras at the earliest for this purpose.

Irrespective of above, since Eli Agencies feels responsible to collect dues from parties to whom sales were made on consignment basis, the

following payment schedule has been agreed to by giving post-dated cheques:

Cheque for Rs. 5 lacs dated 31.8.1991

Cheque for Rs. 7 lacs dated 15.9.1991

Cheque for Rs. 16 lacs-Undated but presentable by GHCL latest by 25th September, 91.

In view of the good relationship that has been maintained by Eli Agencies GHCL has agreed to despatch 100M.T. of Soda Ash (Light)

immediately against DO. which will be issued immediately by RM, Madras. For the above supply Eli Agencies has to issue undated cheques for

Rs. 5 lacs, these cheques will be presented by GHCL after 15 days of actual sales as per report by Eli Agencies.

Sd/- x x x

Sd/- x x x

Sd/- x x x

On the basis of the Record Note of discussions, the learned Counsel for the Petitioner submitted that only undated cheques as referred to in the

Record Note of discussions were given to the complainant/Respondent herein and not as mentioned in the complaint. He submitted that undated

cheque issued by the drawer which is later filled up by the payee, will not come under the penal provisions of Section 138 of the Negotiable

Instruments Act. Therefore, the entire proceedings have to be quashed. In support of the above contention, the learned Counsel for the Petitioner

cited the following rulings.

In support of his contention, he cited the case reported in AIR 1937 816 (Lahore) wherein it was held that Section 20 of the Negotiable

Instruments Act does not apply to cheques as the cheques do not require any stamp.

He also referred to a case in Jayantilal Goel Vs. Zubeda Khanum, which deals with the material alteration, where the learned Judge upon the

facts held that the ink that had been used for body of instrument, was a subsequent insertion would amount to ''Material Alteration. Material

Alteration takes in not only a case where certain thing which is already written has been altered or erased but also a new insertion.

He also cited a ruling reported in Sesharlal Bajna v. V.C. Subramanian (96 L.W. 482) in which the point for consideration was whether the

Plaintiff was entitled to fill up the blanks in promissory note long after the filing of the suit. It was held that unless the drawee''s name is inserted

before the filing of the suit, the instrument is not a promissory note in the eye of the law.

On the other hand, Mr. N.T. Vanamamalai, Senior Counsel appearing on behalf of the Respondent contended that in proceedings u/s 482 of

the Criminal Procedure Code, this Court has to peruse only the complaint and the enclosed document thereto and it is not open to the Petitioner to

refer to any other document which is not referred to in the complaint and as such, the Petitioner should not be allowed to refer to the alleged

Record Note of discussions held on 10th August 1991 at Hyderabad. In support of the above contention, Mr. N.T. Vanamamalai, referred to the

following rulings of the Supreme Court:

(1) In Smt. Chand Dhawan Vs. Jawahar Lal and others, it was held that,

The High Court can exercise its inherent jurisdiction of quashing a criminal proceeding only when the allegations made in the complaint do not

constitute an offence or that the exercise of the power is necessary either to prevent the abuse of the process of the court or otherwise to secure

the ends of justice. No inflexible guidelines or rigid formula can be set out and it depends upon the facts and circumstances of each case wherein

such power should be exercised. When the allegations in the complaint prima facie constitute the offence against any or all of the accused in the

absence of materials on record to show that the continuance of the proceedings would be an abuse of the process of the court or would defeat the

ends of justice, the High Court would not be justified in quashing the complaint.

It was also held that the High Court was not justified in reaching a conclusion that the proceedings were liable to be quashed on the basis of

additional materials produced by the accused as those were required to be proved, when those materials were not accepted by the complainant.

(2) In State of Bihar and Another Vs. P.P. Sharma, IAS and Another, ) it was held as follows:

It is thus obvious that ''the annexures were neither part of the police-reports nor were relied upon by the investigating officer. These documents

were produced by the Respondents before the High Court along with the writ petitions. By treating ''the annexures'' and affidavits as evidence and

by converting itself into a trial court, the High Court pronounced the Respondents to be innocent and quashed the proceedings. The least we can

say is that this was not at all a case where High Court should have interfered in the exercise of its inherent jurisdiction. This Court has repeatedly

held that the appreciation of evidence is the function of the criminal courts. The High Court, under the circumstances, could not have assumed

jurisdiction and put an end to the process of investigation and trial provided under the law.

(3) Rakesh Nemkumar Porwal Vs. Narayan Dhondu Joglekar, wherein the Division Bench of the Bombay High Court has held as follows:

A clear reading of Section 138 leaves no doubt in our mind that the circumstances under which such dishonour takes place are required to be

totally ignored. In this case, the law only takes note of the fact that the payment has not been forthcoming and it matters little that any of the

manifold reasons may have caused that situation. If, for instance, the closure of an account or the stoppage of payment of any other of the

commonplace reasons for dishonour were to be justifiable, then, the legislature would have set these out in the section as exceptions not

constituting an offence. No such intention can be read into Section 138, as none exists. The solitary exception made by the Legislature is with

regard to the drawer being offered a final opportunity of paying up the amount within 15 days from the receipt of notice which in other words,

provides a last opportunity to prove one''s bona fides. It is obvious, that having regard to the wide-spread practice of issuing cheques which are

dishonoured and the many ingenious methods of avoiding payment that are practised, that the legislature has opted for a nonsense situation. The

possibility has not been overlooked whereby an account may inadvertently be overdrawn or a dishonour maybe for technical reasons or where a

genuine mistake has occurred and the grace period provided for by the legislature after service of notice on the drawer is in order to afford an

opportunity to the drawer to rectify these. Undoubtedly, even when the dishonour has taken place due to the dishonesty of the depositor, the

drawer is still given a last chance to act otherwise. Consequently, the reasons for dishonour even if they be very valid as was sought to be pointed

out in this case, should not and cannot be taken into account by a Magistrate when such a complaint is presented.

(4) In M.M. Malik and Others Vs. Prem Kumar Goyal, , it is held as follows:

All the three provisos to Section 138 must be complied with before the dishonouring of a cheque issued in order to discharge the liability and

dishonouring for want of funds can create an offence. Section 142(b) provides a clincher. The cause of action will be complete when the drawer of

the cheque fails to make the payment within 15 days of the receipt of notice contemplated by proviso (b). The offence shall be deemed to have

been committed only from the date when the notice period expired.

Mr. N.T. Vanamamalai, Senior Counsel for the Respondent contended that Section 20 of the Negotiable Instruments Act will not apply to the

facts and circumstances of the case, but only Section 118(b) of the Negotiable Instruments Act will apply to the facts and circumstances of the

case.

With regard to the contention of Mr. Sampathkumar that Section 20 of the Negotiable Instruments Act will not apply to transactions covered by

the cheques, Senior Counsel for the Respondent, Mr. N.T. Vanamamalai made reliance only on Section 118(b) of the Negotiable Instruments Act.

In view of the above stand taken by the counsel for Respondent, I am not considering the rulings referred to by Mr. Sampathkumar in this

connection and leave the question open. However, the ruling of Singarav(sic)u, J. has been overruled by the Division Bench of this Court in a

recent judgment.

Learned Counsel for the Respondent also referred to Section 118(b) of the Negotiable Instruments Act and submitted that until the contrary is

proved in the trial, there is a presumption that every negotiable instrument bearing a date was made or drawn on such date and it is not open to the

Petitioner to challenge the same as he has to let in evidence to rebut the prosecution case only at the stage of the trial and not in proceedings u/s

482 of the Criminal Procedure Code.

After carefully considering the rival submissions made by the respective counsel, I am of the view that the contention of the learned Counsel for

the Petitioner, Mr. S. Sampath Kumar is not sustainable in law. The Supreme Court has clearly held in the above ruling cited by the counsel for the

Respondent that in proceedings u/s 482 of Criminal Procedure Code, this Court has only to confine itself by perusing the complaint and enclosed

document thereto to find out whether a prima facie case has been made out and not other extraneous document should be referred to. A perusal of

the above three complaints clearly show that a prima facie offence u/s 138 of the Negotiable Instruments Act has been committed by the

Petitioner/accused and there are no infirmity in the complaint to quash the same. The contention of Mr. S. Sampath Kumar to the effect that the

Petitioner can refer to the Record Note of discussions held on 10th August, 1991 at Hyderabad in proceedings u/s 482 of Criminal Procedure

Code, to point out that the concerned cheques were undated, is not sustainable in view of the clear pronouncement of the Supreme Court in the

cases referred above and

On the other hand, there is force and substance in the contentions of Mr. N.T. Vanamamalai, the learned Counsel for the Respondent to the

effect that in proceedings u/s 482 of Criminal Procedure Code, this Court has to confine itself to a perusal of the complaint and the documents

enclosed thereto and not to refer any other extraneous matter. There is also force in the contention of the learned Counsel for the Respondent to

the effect that there is a presumption u/s 118(b) of the Negotiable Instruments Act with regard to the date written on every negotiable instrument.

Section 118(b) of the Negotiable Instruments Act is as follows:

Presumptions as to negotiable Instruments: Until the contrary is proved, the following presumptions shall be made:

a).....

b) as to date: that every negotiable instrument bearing a date was made or drawn on such date;

It is clear from the above provision that u/s 118(b) of the Negotiable Instruments Act the court shall presume as to the date written on the

negotiable instrument that every negotiable instrument bearing the date was made or drawn on such date. However it is open to the

Petitioner/accused to let in evidence before the trial court to rebut the presumption. In view of the above, the petitions are dismissed.