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Judgment
R. Mala, J.—The Petitioner has come forward with this petition seeking for a direction to call for the records relating to the case in S.T.C.
No. 596 of 2008 on the file of the Hon''ble Judicial Magistrate, Sathankulam and quash the same.
Learned Counsel appearing for the Petitioner would submit that the Respondent is the complainant and he preferred a complaint against the
Petitioner u/s 138 read with 142 of the Negotiable Instruments Act and the same was pending before the learned Judicial Magistrate, Sathankulam
in S.T.C. No. 596 of 2008.
The case of the Respondent is that the Petitioner has borrowed a sum of Rs. 1,17,000/- from the Respondent on 30.10.2007, and issued a
cheque dated 30.11.2007, for repayment of the said amount and that has been presented on 12.12.2007, and the same was returned on
22.01.2008. He has issued statutory notice on 07.02.2008, that has been received and reply has been issued. Now, he has come forward with
this application to quash the case in S.T.C. No. 596 of 2008 on the following grounds:
(i) The cheque has been obtained by threat as the Respondent has spent money for getting an employment with Assistants of the Petitioner.
(ii) The statutory notice is not in accordance with law.
(iii) Since the cheque was returned with an endorsement refer to drawer, so it will not attracted Section 138 of the Negotiable Instruments Act.
(iv) The Respondents have not sources to lend Rs. 1,17,000/- and hence, prayed for the quash of the case in S.T.C. No. 596 of 2008.
To substantiate his argument, learned Counsel for the Petitioner has relied upon the judgment of Apex Court and judgment of various High
Court.
Per contra, learned Counsel for the Respondent has repudiating the same by stating that:
(i) whether the cheque has been obtained by threat to be only a question of fact, it can be decided only after letting of oral and documentary
evidence;
(ii) the argument of the learned Counsel for the Petitioner that the statutory notice is not in accordance with law, is not correct because the returned
endorsement, dated 22.01.2008, notice has been issued on 07.02.2008 within 30 days from the date of return of the cheque. Hence, the argument
of the learned Counsel for the Petitioner is not correct.
(iii) The cheque was returned with an endorsement refer to drawer is also attracted the ingredients of Section 138 of the Negotiable Instruments
Act. To substantiate the same, he also replied upon the decision of this Court and the Apex Court.
(iv) Whether the Respondent has sources to lend money for a sum of Rs. 1,17,000/- can be decided only after letting of oral and documentary
evidence, since it is a question of fact.
Hence, he prayed for the dismissal of this application.
Heard both sides.
The Respondent is the complainant and he preferred a complaint against the Petitioner u/s 138 read with 142 of the Negotiable Instruments Act,
stating that the Petitioner has borrowed a sum of Rs. 1,17,000/- from the Respondent on 30.10.2007, and issued a cheque dated 30.11.2007 for
repayment of the said amount and that has been presented to Pandian Grama Bank on 12.12.2007, and the same was returned on 22.01.2008,
for insufficient fund and he has sent a notice on 07.02.2008, that has been received by the Petitioner, but he has not repay the said amount. Hence,
he preferred a complaint.
POINT No. I
Now, the first point to be decided is whether the cheque has been obtained by threat? In paragraph 3 of the Petition, the Petitioner has averred
that the cheque has been obtained by threat as the Respondent has spent money for getting an employment with Assistants of the Petitioner, but
failed to do the same. It is only a question of fact that to be decided by the Trial Court after letting oral and documentary evidence. So, the
argument advanced by the learned Counsel for the Petitioner that the cheque has been obtained by threat does not a ground for quash.
POINT No. II
As already stated, the cheque has been issued, on 30.11.2007, which was presented on 12.12.2007, and the same was returned on 22.01.2008.
Notice has been issued on 07.02.2008, it is well within 30 days. So the statutory notice is valid under law as per Section 138(b) of the Negotiable
Instrument Act and it is also not for a ground to quash. Section 138(b) of the Negotiable Instrument Act reads as hereunder:
(b) the payee or the holder in due course of the cheque as the case may be, 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 thirty days) of the receipt of information by him from the bank regarding the return of
the cheque as unpaid;
The cheque has been presented on 12.12.2007, and the same was returned on 22.01.2008. Notice has been issued on 07.02.2008, it is well
within 30 days, as per Section 138(b) of the Negotiable Instrument Act.
POINT No. III
The cheque has been returned with an endorsement refer to drawer, learned Counsel for the Petitioner would mainly focusing upon this point, since
the endorsement not for insufficient funds but only refer to drawer, hence, Section 138 of the Negotiable Instrument Act, will not be attracted. At
this juncture, it is appropriate to incorporate Section 138 of the Negotiable Instrument Act:
Dishonour of cheque for insufficiency, etc., of funds in the account: 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 be
extended to two years), or with fine which may extend to twice the amount of the cheque, or with both:
Provided that nothing contained in this section shall apply unless-
(a) 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;
(b) the payee or the holder in due course of the cheque as the case may be, 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 thirty days) of the receipt of information by him from the bank regarding the return of
the cheque as unpaid; and
(c) the drawer of such cheque fails to make the payment of the said amount of money to the payee or as the case may be, to the holder in due
course of the cheque within fifteen days of the receipt of the said notice.
It is appropriate to consider the decision relied upon by both the counsels, in R. Jayalakshmi v. Rashida, dated 22.10.1991, in cases where the
cheque is returned unpaid with the endorsement ""refer to drawer"". In paragraph 7 of the judgment, this Court held that:
The endorsement ""refer to drawer"" is an euphemistic way of informing the payee that the drawer of the cheque has got no amount o his credit to
honour the cheque. Such is not the case herein. In all the complaints, the cheques were returned unpaid with the endorsement ""refer to drawer"" and
payment countermanded by the drawer"". So, the reason for ""referring to the drawer"" has been pinpointed in the endorsement itself, viz., that
payment was countermanded by the drawer. Such a case would not come within the ambit and scope of Section 138 of the Negotiable Instrument
Act.
Learned Counsel for the Respondent has also referred a decision in M/s. Electronics Trade and Technology Development Corpn. Ltd.,
Secunderabad Vs. M/s. Indian Technologists and Engineers (Electronics) Pvt. Ltd. and another, ; wherein paragraph 6 of the judgment reads as
hereunder:
It would thus be clear that when a cheque is drawn by a person on an account maintained by him with the banker for payment of any amount of
money to another person out of the account for the discharge of the debt in whole or in part or other liability is returned by the bank with the
endorsement like (1) in this case, ""I refer to the drawer"" (2) ""instructions for stoppage of payment"" and (3) ""stamp exceeds arrangement"", it
amounts to dishonour within the meaning of Section 138 of the Act. On issuance of the notice by the payee or the holder in due course after
dishonour, to the drawer demanding payment within 15 days from the date of the receipt of such a notice, if he does not pay the same, the
statutory presumption of dishonest intention, subject to any other liability, stands satisfied.
He also referred a decision in Modi Cements Ltd. v. Shri. Kuchil Kumar Nandi; wherein paragraphs 19 & 20 of the judgment reads as
hereunder:
Section 138 of the Act is a penal provision wherein if a person draws a cheque on an account maintained by him with the 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, on the ground either because of the amount of money standing to the credit of that account is insufficient to honor 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. The distinction between the deeming provision and the presumption is well discernible. To illustrate, if a person, draws a
cheque with no sufficient funds available to his credit on the date of issue, but makes the arrangement or deposited the amount thereafter before the
cheque is out in the bank by the drawer, and the cheque is honored, in such a situation drawing of presumption of dishonesty on the part of the
drawer u/s 138 would not be justified. Section 138 of the Act gets attracted only when the cheque is disnonored.
On a careful reading of Section 138 of the Act, we are unable to subscribe to the view that Section 138 of the Act draws presumption of
dishonesty against drawer of the cheque if he without sufficient funds to his credit in his bank account to honor the cheque issues the same and
therefore, amounts to an offence u/s 138 of the Act. For the persons stated hereinabove, we are unable to share the view expressed by this Court
in the above two cases and we respectfully differ with the same regarding interpretation of Section 138 of the Act of the limited extent as indicated
above.
But here, the above citations are not applicable. In these citations, it has been stated that the cheque has been returned with an endorsement
refer to drawer. Even in that case, the Apex Court has held that it is needless to decided once the Court taking cognizance of the complaint u/s
138 of the Act is required to be satisfied as to whether the prima facie case is made out under the said provision. The drawer of the cheque
undoubtedly gets an opportunity u/s 139 of the Act to rebut the presumption at the trial. So, the quash application has been dismissed.
Learned Counsel for the Petitioner relied on a decision in M. Subramaniam Vs. P. Rathinakumar, , at paragraph No. 5 of the judgment reads
as hereunder:
In banking parlance the reason ''Refer to drawer'' when the cheques are returned unpaid is used generally for returning the cheques for want of
funds in the drawer''s account or because of service of garnishee order. This again is a matter of evidence. The bank would be able to justify
before the Court the reasons for which the cheque was returned. If in banking parlance ''refer to drawer'' is used for the purpose aforementioned,
the ingredients of the section would be attracted.
Considering the above citation along with the decision relied on by the learned Counsel for the Petitioner in M. Subramaniam Vs. P.
Rathinakumar, and as per the dictum laid down in M/s. Electronics Trade and Technology Development Corpn. Ltd., Secunderabad Vs. M/s.
Indian Technologists and Engineers (Electronics) Pvt. Ltd. and another, , if the cheque has been returned with an endorsement refer to drawer is
attracted Section 138 of the Negotiable Instrument Act, so the argument advanced by the learned Counsel for the Petitioner does not merit
acceptance and it is not a ground for quash.
POINT No. IV
The Petitioner counsel, even though, he raised the plea that the Respondent has no financial status to lend Rs. 1,17,000/- and he prayed to
quash the case in S.T.C. No. 596 of 2008. But during the argument, he has not advanced any argument. However, that is only a question of fact
that to be decided at the time of trial. So it is not the ground for quash.
At this juncture, the learned Counsel for the Respondent would rely upon the decision of the Apex Court in Central Bureau of Investigation v.
A. Ravishankar Prasad and Ors. reported in (2009) 2 SCC 1063, already PWs-1 and 2 were examined. Now it is a parted stage since because
he has filed this application to quash the case, is yet to be disposed of. The case is of the year 2008 and hence, he prayed for the dismissal of this
application. As per the decision, at paragraph Nos. 44 and 48 reads as hereunder:
In four cases, 92 witnesses have already been examined. The trial of the case was at the advanced stage. At this stage, the High Court has
seriously erred in quashing the charges against Respondents 1 and 2. Quashing the proceedings at that stage was clearly an abuse of the process of
the Court. The Court neither considered the entire material nor appreciated the legal position in proper perspective.
In this view of the fact, in the interest of justice we direct that the trial be now completed as expeditiously as possible. The trial Court is directed to
conduct the trial on day-to-day basis and parties are directed to co-operate with the trial Court. The trial Court shall ensure that unnecessary
adjournments be avoided and the trial be concluded as expeditiously as possible.
So, the case is in parted stage. I do not find any merits to quash in addition to the reasoning already granted. Since, the case is narrated above,
the statutory notice is valid under law, whether the cheque has been obtained by fraud and whether the Respondent having the financial status to
lend money, it is only a question of fact that can be decided only after letting oral and documentary evidence during trial. Furthermore, once the
cheque has been returned with an endorsement ''refer to drawer'', which will attract Section 138 of the Act and as per the dictum laid down by the
Apex Court, I do not merit in this application. Hence, this Petition is deserves to be dismissed.
Accordingly, the Criminal Original Petition is dismissed. Consequently, connected Miscellaneous Petitions are also dismissed.