Deepak Agarwal vs Shanti Swarup Jain and Another

O.P. Jain, J.—This is an application u/s 482 of the Criminal Procedure Code, 1973, for quashing the proceedings u/s 138 of the Negotiable Instruments Act, 1881.

The brief facts of the case leading to the application are that the accused, Deepak Agarwal, is the managing director of Sharp Carbon India (P.) Ltd. and the complainant, Shanti Swamp Jain, is a partner of Jain Paper Mart, Agar. The accused issued two cheques to the complainant-firm for a sum of Rs. 45,000 and Rs. 10,000, respectively. The cheques were sent for encashment through Union Bank of India but the cheque of Rs. 45,000 was returned by the bank with the remark "refer to drawer" and the cheque for Rs. 10,000 was returned with the remark "cheque is mutilated". On receipt of the information that the cheque has been dishonoured a notice was issued by the complainant under postal order as well as by registered post and when the accused failed to make payment within a period of fifteen days, the present complaint was filed. The application u/s 482 of the Criminal Procedure Code, 1973, has been filed for quashing the complaint.

I have heard learned counsel for the applicant and the learned A.G.A. for the State and Shri Rajesh Tandon for the respondent and have gone through the record.

It may be stated at the very outset that so far as the complaint relates to the dishonour of the cheque for Rs. 10,000, the petition u/s 482 of the Criminal Procedure Code, 1973, must be allowed because it is an admitted fact that the cheque for Rs. 10,000 was not dishonoured by the bank for want of funds in the account of the drawer. The cheque for Rs. 10,000 was returned with the remark that it is mutilated. Therefore, the petitioner is entitled to succeed so far as the cheque of Rs. 10,000 is concerned.

Coming to the cheque for Rs. 45,000, the contention on behalf of the accused-applicant is that it was a post-dated cheque and that its payment was stopped by the accused by addressing a letter to the bank on November 25, 1991. Therefore, according to learned counsel for the applicant, no offence is made out against the accused. In support of this contention, learned counsel for the applicant has cited Bhageerathy Vs. V. Beena and Another, .

Before discussing these cases cited on behalf of the applicant, the facts which are established from the affidavit filed by the applicant and the counter-affidavit filed by the respondent may be stated. It is not disputed that the cheque bearing the date November 30, 1991, was a postdated cheque. The controversy centres round the fact as to whether on the date on which the cheque was presented for encashment, there was or was not sufficient balance in the account of the drawer of the cheque. It is alleged in the complaint annexure-1 that the cheque for Rs. 45,000 was returned by the bank for want of funds in the account of the accused. In annexure-4 to the counter-affidavit the complainant has filed a copy of the letter received from the accused in which the following statement has been made by the accused :

"We have issued you a post-dated cheque No. 137344, dated November 30, 1991, for Rs. 45,000 with the presumption that the funds will be arranged within this period but it is regretted that funds are not available at present. You are, therefore, requested to kindly withhold presentation of the cheque and oblige."

In para No. 2 of C. A. 3 which is a letter from the accused to the complainant it is said "post-dated cheque No. 137344, dated November 30, 1991, for Rs. 45,000 was withheld due to non-availability of funds well before November 30, 1991".

Again, in annexure-2 to the counter-affidavit which is also a letter by the accused to the complainant it is said that "due to heavy blockade" of our funds with the Government department it is not possible at this moment to release your entire payment. However, on receipt of your confirmation of the account, cheques of the different dates will be issued to you.

It is not denied in the rejoinder affidavit that these letters were sent by the accused to the complainant. It is, therefore, clear from the above three letters that on the crucial date the balance in the account of the drawer of the cheque was not sufficient.

Learned counsel for the accused-applicant has drawn my attention to annexure-2 to the rejoinder affidavit which is a certificate issued by the State Bank of India certifying that the payment of cheque No. 137344, dated November 30, 1991, for Rs. 45,000 in favour of Jain Paper Mart, Agar, was stopped by the drawer of the cheque. The certificate further says that the cheque would have been paid had its payment not been stopped by the drawer. On the basis of this certificate it is argued that the balance was not insufficient and, therefore, no case u/s 138 of the Negotiable Instruments Act, 1881, is made out.

It is not necessary to express any definite opinion on the contentions raised on behalf of the accused or the complainant because that may prejudice the case of one party or the other. Neither the certificate issued by the bank is conclusive nor the admission made by the accused in the three letters quoted above are conclusive. It will be for the trial court to give a finding one way or the other regarding the sufficiency of funds on the relevant date.

It is sufficient to say that in view of the admission made by the accused himself no case is made out for quashing the criminal prosecution. It is open to the accused to establish by the evidence that the admission made by him was under misapprehension of facts and that the certificate issued by the bank is correct. Similarly, it is open to the complainant to rely on the admission made by the accused and to contend that the certificate issued by the bank is incorrect.

It was further argued on behalf of the accused applicant that the cheque bearing the date November 30, 1991, for a sum of Rs. 45,000 is admittedly a post-dated cheque and, therefore, no prosecution can be launched in respect of a post-dated cheque. In this contention Bhageerathy Vs. V. Beena and Another, has been cited. In that case, there was no averment in the complaint that the cheque was dishonoured for want of adequate funds. Under those circumstances, it was held that the return of the cheque with the endorsement that the payment has been stopped by the drawer makes out no offence u/s 138 of the Negotiable Instruments Act, 1881. In the case before me the complainant has averred from the very beginning that the cheque was dishonoured for want of adequate funds. Therefore, this ruling is not applicable.

Rome Gupta v. Bakeman''s Home Products Ltd. 2 [1992] CCR 1484 cited by learned counsel is also clearly distinguishable on facts. Paragraph 3 of the cited case shows that it was pleaded specifically by the petitioner that there was no paucity of funds. Paragraph 4 shows that this averment was not controverted by filing a counter-affidavit. A careful reading of the cited case shows that it is not sufficient for the accused to say that he had stopped payment of the cheque or that the cheque was a post-dated one. The accused has to establish that there Was sufficient balance in his account on the date on which the cheque was presented for payment and that the stoppage of payment was on account of some business dispute unconnected with inadequacy of funds.

If the contention raised on behalf of the accused were to be accepted as correct section 138 of the Negotiable Instruments Act, 1881, will become redundant because any person who has drawn a cheque knowing that he has not sufficient balance in his account will give a stop order to the bank and later claim that the payment was not made by the bank due to the stop order and not due to inadequacy of funds.

In view of the above discussion, I am of the opinion that the prosecution, in so far as it relates to the cheque of Rs. 45,000 cannot be quashed. It is for the trial court to decide as to the real cause for the non-payment of the cheque amount to the complainant. The trial court will not be influenced in any way by any observation which may have been made above.

The application u/s 482 of the Criminal Procedure Code, 1973, is, therefore, partly allowed and it is ordered that the trial on the complaint lodged by the respondent will be confined to the allegation regarding the cheque for Rs. 45,000. No further proceedings will be taken so far as the complaint relates to the cheque of Rs. 10,000.

With this direction the interim order passed on January 6, 1993, is vacated.