S. Prasanna vs R. Vijayalakshmi

S. Pratap Singh, J.—The accused in C. C. No. 894 on the file of the IX Metropolitan Magistrate, Saidapet, Madras, has filed this petition,

u/s 482, Criminal Procedure Code, praying to call for the records in the aforesaid C. C. No. 894 of 1991 and quash the same.

The respondent has filed a private complaint against the petitioner arraying him as the accused. The allegations in it are briefly as follows :

The accused wanted a certain amount as hand loan. The complainant agreed and gave a hand loan. The accused promised to return the borrowed

amount in stages and parted with post-dated cheques. One of the cheques, dated December 24, 1990, issued by the accused for Rs. 36,250 was

presented for encashment on January 11, 1991. It was returned with an endorsement ""account closed"" with a bank memo, dated January 18,

1991. The complainant sent a notice through a lawyer on January 19, 1991, to the accused by registered post with acknowledgment due. It was

returned with an endorsement ""not found"" at the delivery time. The accused had deliberately evaded receipt of the registered notice. Hence, the

complaint.

The petitioner seeks to quash this complaint.

Mr. A. Ramesh, learned counsel appearing for the petitioner, would contend.

(i) The cheque was returned with an endorsement ""account closed"" and hence the requirements of section 138 of the Negotiable Instruments Act

are not satisfied and the offence is not made out.

(ii) Notice sent by the complaint was not served on the accused and hence occasion to pay the amount within 15 days of service of notice does not

arise and on that ground also the offence is not complete.

Per contra, Mr. K. Ravinchandra Babu, learned counsel for the respondent, would contend that the accused had not intimated the complainant that

he had closed the account and while so, the return of the cheque with endorsement ""account closed"" would satisfy the requirements of the Act.

For appreciating the rival contentions regarding the first ground, the first portion of section 138 of the Negotiable Instruments Act needs

extraction. It reads as follows :

Where any cheque drawn by a person on an account maintained by him with a banker for payment of any amount of money to another person

from out of that account for the discharge, in whole or in part, of any debt or other liability, is returned by the bank unpaid, either because of the

amount of money standing to the credit of that 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 that bank, such person shall be deemed to have committed an offence and shall, without prejudice to any

other provision of this Act, be punished with imprisonment for a term which may extend to one year, or with fine which may extend to twice the

amount of the cheque or with both.

(emphasis Here printed in Italices. supplied)

A plain reading of section 138, Negotiable Instruments Act, would show that only if the cheque was returned by the bank unpaid because of the

above two contingencies, is an offence u/s 138 of the Negotiable Instruments Act made out. In the instant case, the cheque was returned unpaid

with the endorsement ""account closed"". Hence, this case does not fall within the ambit of section 138 of the Negotiable Instruments Act. In this

regard, learned counsel for the petitioner relied upon the ruling in G. F. Hunasikatimath v. State of Karnataka 1991 (1) Crimes 226 ; [1993] 76

Comp Cas 278. In that case, dishonour of the cheque was on the ground ""account closed"". The learned Magistrate had dismissed the private

complaint filed on such dishonour, for offence u/s 138, Negotiable Instruments Act. Aggrieved by that order, the complainant took up the matter to

the High Court u/s 482, Criminal Procedure Code. It was held that section 138 of the Negotiable Instruments Act provides for punishment only in

case the cheque was returned unpaid due to -

(i) insufficiency of amounts in the account of the drawer of the cheque to honour the cheque.

(ii) the amount covered by the cheque exceeded the arrangement to be paid to the account and not on any other ground.

I am in respectful agreement with the view of the Karnataka High Court. So, on this ground, the complaint is liable to be quashed.

The second ground urged by learned counsel for the petitioner is that the notice sent by the complainant to the accused, after dishonour of the

cheque, was not served on him but was returned. As per section 138, proviso (c), Negotiable Instruments Act, if the drawer of the cheque fails to

make payment of the said amount of money to the payee within 15 days of receipt of the said notice sent by the payee calling upon him to pay the

amount due under the dishonoured cheque, the cause of action arises. So learned counsel contended that there was no ""service of notice""'' in this

case, and hence the offence is not complete. In the complaint, it is stated that the accused deliberately evaded receipt of registered notice. This

would amount to his knowledge that such a notice was sent by the complainant and deliberate refusal of the same. That would clearly amount to

constructive service of notice. The very purpose of the Act cannot be thwarted by simply refusing the notice. I am clear that deliberate evasion of

receipt of registered notice would amount to constructive service of notice and so I do not accept this contention.

In view of the above, on the first ground, the petition is allowed and the proceedings in C. C. No. 894 of 1991 on the file of IX Metropolitan

Magistrate, Saidapet, are hereby quashed.