M/S. Opts Marketing Pvt. Ltd. & Ors. v. State Of A.P & Anr.

The Order of the Court was delivered by

C.Y Somayajulu, J.:— One Mr. Eashwar M. Sajanani filed a private complaint against OPTS Marketing Pvt. Ltd., and its Managing Director and the Chief Executive, alleging that on 3.7.1997 the Managing Director and the Chief Executives of OPTS Marketing Private Limited, had approached him for a hand loan of Rs. 30,000/- for their urgent needs, representing that they had means to repay the amount, and dishonestly and deceptively induced him to part with Rs. 30,000/- against two postdated cheques for Rs. 15,000/- each, drawn on State Bank of India, Lalaguda Branch, Secunderabad, and when those cheques were presented for encashment, they were dishonoured. Inspite of notice demanding payment of the amount covered by the cheques, they have not repaid the amount and hence are liable for punishment under Sec. 420 read with Sec. 34 IPC. On 5-1-1999 the learned Magistrate referred the said complaint to Ramgopalpet Police Station, under Sec. 156(3) Cr. P.C, and directed the police to submit a report by 5.2.1999, on the basis of which a case in Cr. No. 24 of 1999 was registered by the Ramgopalpet Police. On 3.2.1999 the three named accused in that Crime filed Cri. P. No. 556 of 1999, under Sec. 482 Cr. P.C, for quashing the proceedings in Cr. No. 24 of 1999 of Ramgopalpet Police Station, placing reliance on some judgments of this Court including that of a Division Bench in D. Prakash v. State of A.P (1) Crl. P. No. 6180 of 1995 dated 15.10.1996 When the case came up for admission before one of us (Bilal Nazki, J.) he doubted the correctness of the decision of the Division Bench in D. Prakash's case (1 supra). He, observing that as per the practice that has grown up in this Court of a single judge, while not finding himself in agreement with law laid down by a Division Bench, referring the matters to a Full Bench, felt that the correctness of such procedure also deserves to be decided by a Full Bench along with the correctness of the above mentioned decision of the Division Bench, and formulated two questions for reference to the Full Bench, and directed the matter to be placed before My Lord The Chief Justice for appropriate orders. As per the directions of My Lord the Chief Justice, the following two points formulated by my learned brother Bilal Nazki, J. are referred to this Full Bench:

1. Whether a Single judge can differ with the law laid down by a Division Bench and refer it to Full Bench or is he bound to follow the Division Bench?

2. Whether the law laid down by the Division Bench in Crl. P. No. 6180 of 1995 is good law?

2. Point No. 1: For a decision on this point Rules 1, 2, 5 and 6 of the Rules of the High Court of Judicature, Andhra Pradesh, Hyderabad in its Appellate Jurisdiction (‘Appellate Side Rules’ for brevity) would be of useful assistance. As per Rule 5 of the Appellate side Rules, a “Full Bench” shall be a “Bench of any number not less than three of the Judges for the time being present as judges of the Court”. Rule 1 of the Appellate Side Rules, which relates to the matters to be heard and determined by a Single Judge, provides for the Single Judge, before whom the matter is posted for hearing, adjourning the case for hearing and determination by a Bench of two Judges. Rule 2 of the Appellate Side rules, which relates to matters which are to be heard and determined by a Bench of two judges, provides for the case, posted before it for hearing, being referred to a Full Bench if both Judges hearing the case agree that its determination involves a question of law, and thereby they may refer either the question of law or the matter itself being decided by a Full Bench. Notwithstanding the said provisions contained in Rules 1 and 2 of the Appellate Side Rules, Rule 6 of the Appellate side Rules, empower the Chief Justice absolutely to direct a case being posted before a Full Bench for hearing. So the Appellate Side Rules contemplate a single Judge, before whom a matter is posted for hearing, directing the matter being posted before a Bench of two Judges, and does not authorize or empower him to directly refer the case to a Full Bench. It is only a Bench of two judges that can refer the matter to a Full Bench either for determination of a question of law, or the case itself. In respect of proceedings under Art. 226 of the Constitution of India, Rule 14(a) of the Writ Proceedings Rules, 1977, lays down the type of petitions which have to be heard by a Bench of Two Judges, and sub-rule (b) there of lays down that all other petitions, i.e, other than those mentioned in Sub-Rule (a) shall be posted before a Single Judge, and it also authorizes or empowers the Single Judge referring the case to a Bench of Two Judges. Rule 24 of the Writ Proceedings Rules, 1977 provides, inter alia, for application of the Appellate Side Rules to writ petitions and writ appeals.

3. Though not very relevant for a decision of the point for determination, I am tempted to make a reference to the decision of a Full Bench of this Court in Coramandal Fertilisers Ltd. v. P. Venkatarami Reedy (2) 1997 (3) APLJ 312 (FB), where the question whether matters which are contemplated to be posted before a Single Judge under Rule 14(b) of the Writ Proceedings Rules, 1977, can directly be ordered to be posted before a Bench of Two Judges by the Chief Justice. It was held by the Full Bench that the Chief Justice has the power to direct the posting of matters, contemplated to be heard by a Single Judge by the Writ Proceeding Rules, 1977, before a Bench of two Judges, notwithstanding Sub Rule (b) of Rules 14 of the Writ Proceedings Rules, 1977.

4. A similar question like the one now referred to this Full Bench came up for consideration before the Andhra High court in M. Subbarayudu v. State (3) AIR 1955 Andhra 87, where K. Subba Rao, Chief Justice, while reiterating the observations made by him in K.C Nambiar v. State of Madras, (4) AIR 1953 Madras 351 observed.

“Even a single Judge shall not differ from the judgment of another Single Judge of the same Court. If he does not agree the proper course for him is to refer the case to a Bench of two Judges. If this procedure is followed from the beginning, there will not be any confusion created by conflict of decisions. The public will know their rights and the subordinate courts will be in a position to administer the settled law without any difficulty”.

5. Bhimasankaram, J. who was also a party to the said Full Bench, while speaking for another Full Bench in Eswaramma v. Seethamma (5), AIR 1995 Andhra 221 while making a reference to the order of reference made by the Single Judge to a Division Bench, without referring the case directly to a Full Bench, by referring to the observations of K. Subba Rao, C.J, in M. Subbarayudu's case (3 supra), observed that as per the practice obtaining in the Madras High Court, a Single Judge could have directly referred the matter to a Full Bench, without the necessity of its being posted before a Division Bench. In a subsequent case, where two conflicting judgments were cited before him, Uma Maheswaram, J., pointing out that as per the observations in K.C Nambiar's case (4 supra) if there is a conflict of Bench decisions a Single Judge should refer the case to a Bench of two judges, who will refer it to a Full Bench, directed the matter to be placed before a Division Bench. Subba Rao, C.J, speaking for the Division Bench of himself and Uma Maheswaram, J. before referring the case to a Full Bench, made a reference to the observations of Bhimasankaram, J. in Eswaramma's case (5 supra) that a Single Judge could have referred the case directly to a Full Bench without the necessity of referring it to a Division Bench, observed that as per the Full Bench decision in M. Subbarayudu's case (3 supra) a single Judge cannot directly refer the matter to a Full bench, and that the above said observations of Bhimasankaram, J. were made on the basis of the practice in Madras High court, and that irrespective of the practice in Madras, the procedure laid down by the Full Bench in Subbarayudu's case (3 supra) should be followed. Thus, the practice in Andhra High Court was that a single Judge can refer the case, posted before him for hearing, only to a Division Bench, but not to a Full Bench directly. It is only a Division Bench that can refer the case to a Full Bench.

6. The Supreme Court in Shri Bhagwan v. Ram Chand (6) AIR 1965 S.C 1767 held that if a Single Judge of a High Court inclines to differ from the view taken by an earlier Division Bench or a Single Judge of that High Court, he should refer the matter to a larger Bench, or place the papers before the Chief Justice to enable him to constitute a larger Bench. The said decision was referred to in Tribhovandas v. Ratilal (7) AIR 1968 S.C 372 and it was thus held at page 376:

“When it appears to a Single Judge or a Division bench that there are conflicting decisions of the same Court, or there are decisions of other High Courts in India which are strongly persuasive, and take a different view from the view which prevails in his or their High Court, or that a question of law of importance arises in the trial of a case, the Judge or the bench passes an order that the papers be placed before the Chief Justice of the High Court, with a request to form a special or Full Bench, to hear and dispose of the case or the questions raised in the case. For making such a request to the Chief Justice, no authority of the Constitution or of the Charter of the High Court is needed, and by making such a request a Judge does not assume to himself the powers of the Chief Justice. A Single Judge does not by himself refer the matter to the Full Bench: he only requests the Chief Justice to constitute a Full Bench for hearing the matter. Such a Bench is constituted by the Chief Justice. The Chief Justice of a Court may as a rule, out of deference to the views expressed by his colleague, refer to the case; that does not I mean, however, that the source of the authority is in the order of reference”.

7. In the order of reference in this case, Bilal Nazki, J. by a reasoned order directed that the papers be placed before My Lord the Chief Justice for appropriate orders. He did not himself refer the case to a Full Bench directly. My Lord the Chief Justice constituted the Full Bench, obviously by virtue of the power in him vested by Rule 6 of the Appellate Rules. So, the order of Reference and the constitution of the Full Bench by My Lord the Chief Justice is perfectly in accordance with the Rules and the dicta of the Supreme Court above referred to.

8. In Oriental Mercantile Agency v. Presiding Officer (8) (1973) 1 SCC 287 : AIR 1973 S.C 1143 and State of U.P v. Sheo Nandan (9) 1995 Supp (2) SCC 63 : AIR 1994 S.C 1183 the Supreme Court held that a Single Judge of High Court is bound to follow the decision of a Division Bench. Very recently the Supreme Court in District Manager, APSRTC v. K. Sivaji (10) 2000 AIR SCW 4272 held the decision of a Division Bench is binding on the single judge, and that he has to follow the said decision and cannot take a different view on specious ground that the decision was based on facts.

9. In view of the pronouncement cited above, we hold that a Single Judge is bound to follow the law laid down by a Division Bench, unless a Full Bench or the Supreme Court specifically overruled that decision, or laid down a different law on the same point. In cases where a single Judge feels that there are strong persuasive decisions of other High Court, contrary to the view expressed by the Division Bench of the same Court, he can only refer the case to a Bench of two Judges, but cannot directly make a reference to the Full Bench. It is only a Division Bench that can refer a case to a Full Bench. The Chief Justice always has the power to constitute a Full Bench for deciding any point or case. The point is answered accordingly.

10. Point No. 2: Since the division Bench in D. Prakash's case (1 supra) quashed the proceedings under Sec. 420 IPC initiated for dishonour of a cheque issued to the complainant, the circumstances in which the Court can quash proceedings under Sec. 482 Cr. P.C in respect of proceedings initiated under Sec. 420 IPC for dishonour of the cheques given to the complainant has to be seen. Sec. 415 IPC defines cheating. Sec. 420 IPC deals with certain specific types of cheating, i.e, cases where the deceived person is dishonestly induced (i) to deliver any property to any person, or (ii) to make, alter or destroy (a) the whole or any part of a valuable security, or (b) anything which is signed or sealed, and which is capable of being converted into a valuable security. Fraudulent or dishonest inducement of a person whereby another person is caused, or is likely to cause danger to body, mind, reputation or property, is the essential ingredient of cheating. Therefore, unless the report or charge sheet contains the necessary averments that there was a dishonest intention on the part of the person who induced the person that parted with or altered or destroyed property, valuable security, etc., and thereby suffered, or is likely suffer danger to body, mind, reputation or property, investigation or enquiry into the case would not be warranted.

11. The Supreme Court in State of Himachal Pradesh v. Preeth Chand (11) (1996) 2 SCC 37 considering the power of the High Court while acting under Sec. 482 Cr. P.C in quashing the FIR/charge sheet/complaint at its inception, observed:

“It is thus settled law that the exercise of inherent power of the High Court is an exceptional one. Great care should be taken by the High Court before embarking to scrutinize the FIR/Charge-sheet/complaint. In deciding whether the case is rarest of rare cases to scuttle the prosecution in its inception, it first has to get into the grip of the matter whether the allegations constitute the offence”.

(Emphasis supplied)

12. In Nagapur Steel & Alloys Pvt. Ltd. v. D. Radha Krishnan (12) 1997 SCC (Cri) 1073 a complaint laid under Sec. 420 IPC alleging that the cheque accepted by the complainant on an unequivocal assurance given by the accused, for supply of material was dishonoured, was forwarded by the magistrate to the Police for investigation. After receipt of report from the police, the Magistrate issued process. On a petition filed by the accused under Sec. 482 Cr. P.C the High Court quashed the proceedings, primarily on the basis that it was a commercial transaction, and the breach alleged is that of a contractual liability. On appeal, the Supreme Court, while setting aside the order of the High Court quashing he proceedings, observed:

“We have perused the complaint carefully. In our opinion it cannot be said that the complaint did not disclose the commission of an offence. Merely because the offence was committed during the course of a commercial transaction, would not be sufficient to hold that the complaint did not warrant a trial. Whether or not the allegations in the complaint were true was to be decided on the basis of evidence to be led at the trial in the complaint case. It certainly was not a case in which the criminal trial should have been cut short. The quashing of the complaint has resulted in grave miscarriage of justice”.

13. In Trisuns Chemical Industry v. Rajesh Agarwal (13) (1999) 8 SCC 686 the Supreme Court held that power of the High Court to quash FIR or Complaint in exercise of its inherent powers should be limited to very extreme exceptions and that the investigating agency should have a freedom to go into the whole gamut of the allegations to reach a conclusion of its own, and preemption of such investigation would be justified only in very extreme cases. In Rajesh Bajaj v. State NCT Delhi (14) (1999) 3 SCC 259 the Supreme Court held that if the averments in the complaint prima facie make out a case for investigation, High Court cannot quash the complaint merely because one or two ingredients of the offence have not been stated in detail, since many a cheating is committed in the course of commercial or monetary transactions, and while making a reference to illustration (1) to Sec. 415 IPC, held:

“The crux is the intention of the person who induces the victim of his representation and the nature of the transaction, and if the averments prima facie make out a case for investigation, the complaint cannot be quashed”.

14. From the above decisions of the Supreme Court, it is clear that when the allegations in the complaint or FIR prima facie disclose the ingredients of the offence alleged, the investigating agency has to have the liberty to investigate into the case, and the FIR or the private complaint cannot be quashed by the High Court by invoking its power under Sec. 482 Cr. P.C The same principle applies to cases where a Magistrate refers a private complaint for investigation by police under Sec. 156(3) Cr. P.C

15. Now let us examine what a person, who draws a cheque and gives it to another, expressly or by implication represents to the payee. In Queen v. Hazelton (15) 1874 LR (2) CCR 134 it was held that a person who gives a cheque on a Bank as payment for goods or in payment of a debt, makes a representation (i) that he has authority to draw on the bank for that amount (ii) that the cheque is a good and valid order for the payment of its amount and that the cheque will be paid, i.e, the existing state of facts is such that, in the ordinary course, the cheque will be met. The said decision was referred to in P. Eswara Reedy v. State of A.P (16) 1986 Crl. L.J 207, in which the learned Judge referred to the observation in Kenny's Outline of Criminal Law (19th Edition 1966 at page 359) that drawing a cheque represents (i) that the drawer has an account with the bank (ii) that he has the authority to draw on it for that amount, and (iii) that the cheque, as drawn, is valid order for the payment of that amount (i.e,) the present state of affairs is such that, in the ordinary course of events, the cheque will, on its future presentation, be duly honoured. He also made a reference to the observations in REG v. Gilmartin (17) 1983 (2) W.L.R 547 and REG v. Charles (18) 1977 A.C 177, in which the observation in Hazelton's case (15 supra) that giving a cheque amounts to an implied representation that “the existing state of facts is such that in ordinary course the cheque will be met” was approved, and that the same principle also applies to a postdated cheque.

16. A Division Bench of Allahabad High Court in Ajodhya Prasad v. Chiranjilal (19) AIR 1957 Allahabad 246 held that a person who draws a Hundi or a cheque, thereby makes a representation to person in whose favour the hundi or the cheque is drawn that (i) he has the authority to draw the document for that amount, (ii) the cheque or the hundi is good or valid order for payment of its amount and (iii) the cheque or hundi would be paid when presented for payment.

17. In Keshavji Madhavji…Accused v. Emperor…Opposite Party. (20) AIR 1930 Bombay 179 a Division Bench of the Bombay High Court held that in case of prosecution launched under Sec. 420 IPC in respect of dishonour of cheques, prosecution has to establish facts which prima facie point to the conclusion that the failure to meet the cheque was not accidental but was a consequence expected and was intended by the accused, and then it is for the accused to establish facts in his favour which specifically are within his knowledge, relating to which the prosecution cannot be expected to have information.

18. The above decisions of Allahabad and Bombay High Courts in Ajodhya Prasad's case (19 supra) and Keshavji's case (20 supra) were referred to and followed in Bola Nath v. State (21) 1982 Cri. L.J 1482, a case where goods were sold against postdated cheques, which were dishonoured for want of funds. On a complaint given by the vendor of the goods, police, after investigation, filed a chargesheet under Sec. 420 IPC against the drawer of the cheque. Accused, i.e, drawer of the cheque, filed a petition seeking permission to adduce evidence before framing of charges, inter alia, questioning the jurisdiction of the Court to entertain the complaint. The said petition was dismissed by the Magistrate on the ground that the facts prima facie disclose an offence under Sec. 420 IPC. On revision, the High Court, after referring to Keshavji's case (20 supra) held that the material on record is sufficient for presuming that an offence under Sec. 420 IPC was committed, and dismissed the Revision.

19. In Ramprasad Chatterjee v. MD. Jakir Kureshi (22) 1987 Crl. L.J 1485 the accused issued a cheque and induced the complainant to pass a receipt therefor, knowing that the cheque would be dishonoured for want of funds. When the cheque was dishonoured, the complainant lodged a complaint against the accused for an offence under Sec. 420 IPC. When the Magistrate issued process, High Court refused to interfere with in the criminal proceedings, under Sec. 482 Cr. P.C

20. From the above decisions, it is clear that when a person issues a cheque, or postdated cheque, he impliedly represents to the payee that in the ordinary course of events, the cheque on its presentation to the bank on or after the date mentioned in the cheque would be met and the amount mentioned therein would be paid to the drawee or his agent.

21. In view of the language employed in Sec. 415 IPC, “intentionally induces the person so deceived to do or omit to do anything which he would not do or omit if he were not so deceived”, Madras High Court, Kerala High Court and this Court have been in M.M.S.T Chidambaram Chettiar… v. Shanmugham Pillai…. (23) AIR 1938 Madras 129, K. Surendran v. P. Ramachandran Nair (24) 1967 M.L.J (Crl.) 793 and P. Eswara Reddy's case (16 supra) respectively held that when a cheque is issued towards discharge of an antecedent debt or goods supplied earlier, the drawer of the cheque, in case of its dishonour, would not be guilty of an offence under Sec. 420 IPC because there was no change in position of the payee after taking the cheque and its dishonour. These decisions were considered in D. Raj Arora & Another… v. R. Viswanathan & Another… (25) 1988 (1) Crimes 812 and observing:

“The learned counsel's general submission that in all cases even if the cheque is dishonoured it does not amount to an offence cannot be universally accepted. It depends on the facts of each case. If there are allegations to the effect that the accused had dishonest intention not to pay even at the time of issuance of the cheque and the act of issuing a cheque which was dishonoured has caused damage to his mind, body or reputation it amounts to cheating”.

22. The petition to quash the proceedings was dismissed. This view appears to be correct, as even in case of an antecedent debt or an earlier transaction on credit basis, if when, a cheque is issued towards payment of the said debt, or price due under the earlier credit transaction, there is a possibility of the payee suffering damage to his mind, body or reputation. Whether the complainant, i.e, payee suffered damage to his mind, body or reputation has to be decided on the basis of the evidence adduced by him. If the complainant alleges, and proves that the accused had a dishonest intention not to pay the amount due to him even at the time of issuance of the cheque, and that such issuance of the cheque, which was dishonoured, had caused damage to his mind, body or reputation, the ingredients of Sec. 420 IPC can be said to have been established, and in such an event, the drawer can be convicted for an offence under Sec. 420 IPC. If there is no such reliable or acceptable evidence, the accused is entitled to be acquitted. But the complaint should show that the drawer of the cheque had a dishonest intention even at the time of issuing the cheque. With this background the correctness or otherwise of the pronouncement of the Division Bench in D. Prakash's case (1 supra) has to be considered.

23. In D. Prakash's case (1 supra) the complainant advanced an amount of Rs. 1,12,000/- to the accused as hand loan against two post dated cheques for Rs. 50,000/- and Rs. 35,000/- and a promise to give another postdated cneque for the balance amount. The accused neither gave a cheque for Rs. 27,000/- nor repaid the amount. Both the cheques issued earlier, when presented for payment on 5.12.1990, were dishonoured. Therefore, complainant filed a private complaint under Sec. 420 IPC against the accused and the same was referred to the police for investigation by the Magistrate. The Police, after investigation, filed a chargesheet against the accused. Contending that the remedy of the complainant in case of dishonour of cheque is only under the provisions of the Negotiable Instruments Act but not under Sec. 420 IPC, accused filed a petition in this Court under Sec. 482 Cr. P.C for quashing the chargesheet. The Division Bench, relying on Meena Vasavani v. State of A.P (26) Crl. P. No. 3731 of 1994 dated 11.12.1995 and B.G Gopal v. State of A.P (27) 1992 APLJ (Crl.) 386 held that since the complainant does not show dishonest intention on the part of the accused “not to pay the amount to the de facto complainant on knowledge of non-availability of funds to his credit and since dishonour of cheques, at the most, amounts to breach of promise only making himself liable for damages”, quashed the proceedings against the accused. In view of the presumption that arises on issuance of a cheque or a postdated cheque, the above observation about the accused's knowledge about non-availability of funds is unnecessary to be pleaded or proved. The only pleading requires is about the dishonest intention on the part of the drawer of the cheque.

24. In Meena Vasavani's case (26 supra) relied on by the Division Bench the accused drawer of the cheque took a hand loan of Rs. 20,000/- by issuing a postdated cheque for the said amount, which, when presented for payment was returned with an endorsement “stop payment”. When a complaint was filed under Sec. 420 IPC against the drawer of the cheque, he filed a petition under Sec. 482 Cr. P.C in this Court to quash the proceedings against him. A learned Single Judge quashed the proceedings against the accused, holding that giving a postdated cheque would not amount to deception, and that after introduction of Chapter XVII in the Negotiable Instruments Act, proceedings against the drawer of a cheque, in case of its dishonour, can be initiated only under Sec. 138 of the Negotiable Instruments Act, but not under Sec. 420 IPC.

25. B.G Gopal's case (27 supra) referred to and relied on by the above Division Bench (D. Prakash's case) is a case where the accused, who was running a liquor shop in the name and style of Laxmi Wines, had some dealings with Srinivasa Wines at Nellore, a distributor of Mc. Dowel liquors. In connection with business transactions between those two concerns, accused filed a suit against Srinivasa Wines. Subsequently, in connection with a business transaction of 1985-1986 for supply of goods, accused issued ten postdated cheques to Srinivasa Wines, which were dishonoured on presentation to the Bank. On a complaint given, Police, after investigation, filed a chargesheet against the accused in C.C No. 400 of 1988 under Sec. 406 and 420 IPC. Alleging that no amount was due from him to Srinivasa Wines, and that Srinivasa Wines has to refund more than four lakh rupees to him, the accused filed O.S No. 114/89 in the Court of Subordinate Judge for recovery of four lakh rupees, and a petition in this Court under Sec. 482 Cr. P.C for quashing the proceeding in CC. No. 400 of 1998 against him. The learned Judge, observing that the charge-sheet does not indicate that accused has issued the post dated cheques with an intention to defraud the complainant, and since the post dated cheques were issued long after the goods were supplied and since the parties were litigating their respective liability in Civil Court, relying on Chidambaram Chettiar's case (23 supra), Chary v. Martin (28) 1983 Cri. L.J 106 and P. Eswara Reddy's case (16 supra) quashed the proceedings in CC. No. 400 of 1988 against the accused.

26. V.V.L.N Chary's case (28 supra), which was decided relying on Chidambaram Chettiar's case (23 supra), is a case where the accused, who is a business man at Bangalore, placed an order from a concern at Ernakulam for supply of certain goods by lorry, on condition that lorry freight would be paid when the goods are delivered at Bangalore, and payment for the goods would be made along with the additional copy of the invoice enclosed to the way bill. Cheques sent towards value of the goods were returned with an endorsement ‘refer to drawer’. When the supplier of the goods filed a complaint under Sec. 420 read with Sec. 34 IPC, accused filed a petition under Sec. 482 Cr. P.C in the High Court to quash the proceedings. Holding that issuance of a post dated cheque for payment of goods already delivered is only a promise to pay on a future day, and that if such a promise is broken the liability is only of a civil nature, and since there was no averment in the complaint that at the time when the cheque was issued accused were aware that there was no money in the bank to honour the cheque or that the accused did not intend to make sufficient funds available in their account by the time the cheque was to be presented for encashment, quashed the proceedings against the accused.

27. The correctness of the said decision in VVLN Chary's case (28 supra), in view of the recent pronouncement of the Supreme Court in Medchal Chemical & Pharma (P) Ltd. v. Biological E. Ltd. (29) (2000) 3 SCC 269 that only in cases where the ‘civil profile’ outweighs the ‘criminal outfit’ can a complaint be quashed, and in view of the presumption to be drawn against the drawer in cases of issuance of cheques or postdated cheques, referred to in paras 13 to 18 supra, is doubtful.

28. The finding of the learned Judge in Meena Vasavani's case (26 supra) that after introduction of Sec. 138 into the Negotiable Instruments Act, cases of dishonour of cheques can only be dealt with under that section but not under Section 420 IPC does not seem to be a correct view. Dishonour of cheque per se is made an offence under Sec. 138 of the Negotiable Instruments Act. There is nothing either in Chapter XVII of the Negotiable Instruments Act or in the Statement of Objects and Reasons of the Banking Public Financial Institutions and Negotiable Instruments Laws (Amendment) Act, 1988, under which Chapter XVII is incorporated in the Negotiable Instruments Act, to show that Sec. 138 of the Negotiable Instruments Act is introduced in lieu of Sec. 420 IPC in cases of dishonour of cheques. An act done by an individual can be an offence under more than one statute. If a cheque is issued with a view to cheat, in case of its dishonour and non-payment after notice of dishonour, it would be an offence not only under Sec. 138 of the Negotiable Instruments Act but under Sec. 420 IPC also. Complainant need not establish the intention to cheat on the part of the drawer for getting the drawer of the cheque convicted under Sec. 138 of the Negotiable Instruments Act. Therefore, intention to ‘cheat’ need not be established in respect of complaints filed under Sec. 138 of the Negotiable Instruments Act, which is a Sine Qua Non for establishing an offence under Sec. 420 IPC.

29. Since Sec. 142 of the Negotiable Instruments Act only prohibits courts inferior to that of a Judicial First Class Magistrate or Metropolitan Magistrate taking cognizance of a complaint under Sec. 138 of the Negotiable Instruments Act after the period of limitation prescribed therein, and prohibits them from taking cognizance of the offence except on a complaint in writing by the payee of the cheque dishonoured or its holder in due course, and does not prohibit or debar the Magistrates from taking cognizance of the cases of dishonour of cheques under Sec. 420 IPC in such cases, the observation and finding of the learned Single Judge in Meena Vasavani's case (26 supra) that in view of Sec. 142 of the Negotiable Instruments Act, cases of dishonour of cheques can be entertained only under Sec. 138 of the Negotiable Instruments Act but not under Sec. 420 IPC cannot be said to be a correct view. In fact, the observations of the Supreme Court in G. Sagar Suri v. State of U.P (30) (2000) 2 SCC 636 at page 645, reading:

“None of the respondents has been able to explain as to why offences under Secs. 406/420 IPC were not added in the complaint filed under Sec. 138 of the Negotiable Instruments Act”.

and the fact that a Division Bench of this Court in Upohar International Pvt. Ltd. v. State of A.P (31) 1997 (1) ALT (Crl.) 92 (DB) and a Division Bench of Kerala High Court in Thomas Varghese v. P. Jerome (32) 1992 Cri. L.J 3080 refused to quash proceedings initiated under Sec. 420 IPC and Sec. 138 of the Negotiable Instruments Act, indirectly support the view that even after introduction of Sec. 138 of the Negotiable Instruments Act, in case of dishonour of cheques, in appropriate cases criminal court can take cognizance, and try cases under Sec. 420 IPC also in respect of dishonour of cheques. In view thereof, we hold that D. Prakash's case (1 supra) and Meena Vasavani's case (26 supra) are not correctly decided and they stand overruled.

30. In the result, we hold that (i) even after introduction of Sec. 138 of the Negotiable Instruments Act, prosecution under Sec. 420 IPC is maintainable in case of dishonour of cheques or postdated cheques issued towards payment of price of the goods purchased or hand loan taken, or in discharge of an antecedent debt or towards payment of goods supplier earlier, if the charge sheet contains an allegation that the accused had dishonest intention not to pay even at the time of issuance of the cheque, and the act of issuing the cheque, which was dishonoured, caused damage to his mind, body or reputation, (ii) private complaint or FIR alleging offence under Sec. 420 IPC for dishonour of cheques or postdated cheques cannot be quashed under Sec. 482 Cr. P.C, if the averments in the complaint show that the accused had, with a dishonest intention and to cause damage to his mind, body or reputation, issued the cheque which was not honoured. Point No. 2 is answered accordingly.

31. Before parting with the case, appreciation for the assistance rendered by the learned Advocate General, Public Prosecutor, President of the Advocates' Association and Sri Milind G. Gokhale is placed on record. Thus the reference is answered as follows:

(i) A Single Judge is bound to follow the law laid down by a Division Bench unless a Full Bench or the Supreme Court specifically overruled that decision, or laid down a different law on the same point. In cases where a single Judge feels that there are strong persuasive decisions of other High Court, contrary to the view expressed by the Division Bench of the same Court, he can only refer the case to a Bench of two Judges, but cannot directly make a reference to the Full Bench. It is only a Division Bench that can refer a case to a Full Bench. The Chief justice always has the power to constitute a Full Bench for deciding any point or case.

(ii) Even after introduction of Sec. 138 of the Negotiable Instruments Act, prosecution under Sec. 420 IPC is maintainable in case of dishonour of cheques or postdated cheques issued towards payment of price of the goods purchased or hand loan taken, or in discharge of an antecedent debt or towards payment of goods supplier earlier, if the charge sheet contains an allegation that the accused had dishonest intention not to pay even at the time of issuance of the cheque, and the act of issuing the cheque, which was dishonoured, caused damage to his mind, body or reputation. Private complaint or FIR alleging offence under Sec. 420 IPC for dishonour of cheques or postdated cheques cannot be quashed under Sec. 482 Cr. P.C, if the averments in the complaint show that the accused had, with a dishonest intention and to cause damage to his mind, body or reputation, issued the cheque which was not honoured.

32. The papers be placed before My Lord the Chief Justice for orders regarding posting of Crl. P. No. 556 of 1999 before an appropriate Bench.