G. Hanumantha Rao Bros. and Another vs Gaddam Lingaiah and Another

C.Y. Somayajulu, J.—The private complaint filed by the first respondent against the petitioners and M. S. Ramarao u/s 138 of the Negotiable Instruments Act, 1881 (the Act) and section 420 of the Indian Penal Code was taken cognizance of only u/s 138 of the Act by the learned Magistrate, while referring the complaint u/s 420 of the Indian Penal Code, 1860, to police for investigation u/s 156(3) of the Criminal Procedure Code, 1973. The police, after investigation, filed a final report stating that no case u/s 420 of the Indian Penal Code is made out. A protest petition in Crl. M. P. No. 1501 of 2003 filed by the first respondent seems to have been dismissed. This petition is filed by the petitioners to quash the proceedings u/s 138 of the Act against them.

The case in brief of the first respondent is that the first petitioner firm is the dealer of the products of Indo Burma Petroleum Company Ltd., of which the second petitioner is the managing partner and M. S. Ramarao (A3) is the manager. To meet its business requirements the first petitioner borrowed amounts on various dates from him, and the second petitioner and A3 on behalf of the first petitioner, had on November 6, 2002, issued three post-dated cheques, for Rs. 1,05,150 dated April 29, 2003, drawn on State Bank of Hyderabad, Mancherial branch, Rs. 3,25,000 and Rs. 4,00,000 dated May 5, 2003, drawn on State Bank of Hyderabad, Garimella branch. On May 2, 2003, the second petitioner and M. S. Ramarao (A3) informed him that due to some unexpected reasons they could not arrange for funds and requested him to present the aforesaid cheques in the month of July, 2003, and so he presented those cheques on July 8, 2003 for payment. Cheque dated April 29, 2003, for Rs. 1,05,150 only was honoured and the remaining two cheques for Rs. 3,25,000 and Rs. 4,00,000 bounced. So, he got issued a statutory notice dated August 16, 2003, to the petitioners and A3 bringing to their notice about the dishonour of the aforesaid two cheques, and demanding payment of the amount covered by those cheques for which the petitioners gave a reply dated September 3, 2000, denying their liability to pay the amount, but M. S. Ramarao (A3) did not give a reply. Since the amount covered by the two dishonoured cheques is not made by the petitioners and M. S. Ramarao (A3), they are liable for punishment u/s 138 of the Act and section 420 of the Indian Penal Code.

The contention of learned counsel for the petitioners is that since the dishonoured cheques were not drawn by or on behalf of the first petitioner, which is a firm, but were drawn by A3, on an account maintained by him, neither the first petitioner, nor the second petitioner as partner of the first petitioner firm, are liable u/s 138 of the Act. The contention of learned counsel for the first respondent is since A3, as manager of the first petitioner firm, had issued the dishonoured cheques to the first respondent towards discharge of the amount due to him from the first petitioner, knowing that those cheques will not be honoured, there is prima facie case for an offence u/s 420 of the Indian Penal Code, but the learned magistrate was in error in rejecting the protest petition, and so there are no grounds to quash the proceedings and the first respondent may be permitted to proceed against the petitioners for an offence u/s 420 of the Indian Penal Code.

As rightly contended by learned counsel for the petitioners since the dishonoured cheques were drawn by M. S. Ramarao on an account maintained by him in the State Bank of Hyderabad, Garimella Branch, the petitioners who are not the account holders and who are not the drawers of the dishonoured cheques cannot be made liable u/s 138 of the Act. Had the cheques been drawn by the second petitioner on behalf of the first petitioner on an account maintained by it, the first petitioner as the drawer of the cheque and the second petitioner as partner of the first petitioner, who drew the cheque on its behalf, would have been liable, by virtue of section 141 of the Act. Since the petitioners are not the drawers of the dishonoured cheques and since those cheques were also not drawn on any account maintained by them, they cannot be said to have committed an offence u/s 138 of the Act, and so the proceedings u/s 138 of the Act against the petitioners are liable to be and hence are quashed.

In re the contention of learned counsel for the first respondent, relating to offence u/s 420 of the Indian Penal Code, the first respondent did not, admittedly, take steps to question the order of dismissal in Crl. M. P. No. 1501 of 2003 in appropriate proceedings. For that reason and for the reason that this is a petition filed by the petitioners who are accused in a complaint filed by the first respondent, no order in favour of the first respondent against the petitioners can be passed. If so advised, the first respondent is at liberty to take such proceedings as he may deem fit against the petitioners separately, but he is not entitled to any relief in this petition.

Petition is accordingly allowed.