S. Asok And Another v. Vasudevan Moosad

1. Petition under Section 482 Cr. P.C is to quash the complaint and the proceedings in S.T 47 of 1992 on the file of the Chief Judicial Magistrate's Court, Kozhikode. Annexure-5 complaint was filed by the respondent against the petitioners under Section 142 of the Negotiable Instruments Act (26 of 1881) (for short ‘the Act’) on the allegation that, against a loan availed by the first petitioner on 30-6-1991 he issued a cheque dated 4-7-1991 for an amount of Rs. 25,000/-, that the cheque when sent for collection was returned with the endorsement ‘stop payment’, that then only it was known that the respondent was cheated and that since inspite of a notice of dishonour the amount was not paid within the stipulated time, the petitioners have committed an offence punishable under Section 138 of the Act.

2. Petitioners contend that, the allegation that the respondent availed a loan on 30-6-1991 is false, according to the petitioners on the representation of the respondent that he would supply 20,000 gross of veneers within three days provided an advance of Rs. 25,000/- would be given, the cheque was issued. But since the respondent failed to supply the veneers within three days as agreed by him the second petitioner stopped the payment as per the cheque. It is also contenedd by the petitioners that, since there is no case that the cheque was returned without payment for want of sufficient amount in the account of the drawer, the complaint is not maintainable.

3. In support of their contention that, the cheque was issued as an advance for the supply of 20,000 gross of veneers and that the petitioners had sufficient funds in the bank, reliance was made on Annexures 1 to 4. Annexures 1 and 2 are relied on in support of their contention that they did not go over to Kozhikode as alleged by the respondent and reliance was placed on Annexure-4 in support of the allegation that the respondent was at Sivakasi at the relevant time. These Annexures are relied on by the petitioners in support of their contention that the plaint transaction is not as alleged in Annexure-5 complaint. It need hardly be said, that is a question of fact which cannot be gone into in a proceeding under Section 482 Cr. P.C

4. But the main contention urged to quash the complaint and the proceedings is that, the complaint being under Section 142 of the Act and cognizance was taken by the learned Magistrate under Section 138 of the Act; there being no allegation in Annexure-5 complaint to the effect that the cheque bounced on account of want of sufficient funds, the complaint is not maintianable and hence is liable to be quashed.

5. On the other hand, learned counsel for the respondent contended that, merely because the cheque was returned with the endorsement ‘stop payment’ that would not mean that the complaint is not maintainable; the question as to whether the cheque was returned on account of want of sufficient funds is a matter for evidence and therefore according to the learned counsel the complaint cannot be quashed on the ground that, there is no allegation that the cheque bounced on account of insufficiency of funds.

6. For constituting an offence under Section 138 of the Act the cheque ought to have been drawn for the, discharge of any debt or other liability, it should have been 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” Then notice of dishonour on receipt of intimation as to the dishonour and on receipt of the notice failure to pay the amount within the time specified in the Section are all necessary ingredients. As noticed the contention is since there is no allegation in Annexure-5 to the effect that the, cheque was returned either because the amount of money standing to the credit of the account of the drawer is insufficient to honour the cheque or it exceeds the amount arranged to be paid from the account the complaint is liable to be quashed. In the decision in Nagawwa v. Veeranna ((1976) 3 SCC 736 : AIR 1976 SC 1947) among the grounds on which a complaint can be quashed, it is stated:

“Where the allegations made in the complaint or the statement of the witnesses recorded in support of the same taken at their face value make out absolutely no case against the accused or the complaint does not disclose the essential ingredients of an offence which, is alleged against the accused.”

(Emphasis supplied)

7. In the decision in Dr Sharda Prasad Sinha v. State Of Bihar ((1977) 1 SCC 505 : AIR 1977 SC 1754) also it is stated:

“It is now settled law that where the allegations set out in the complaint or the charge - sheet do not constitute any offence, it is competent to the High Court exercising its inherent jurisdiction under S. 482 of the Code of Criminal Procedure to quash the order passed by the Magistrate taking cognizance of the offence.”

8. In the decision in State of Haryana v. Bhajan Lal (1992 Supp (1) SCC 335 : AIR 1992 SC 604) also the said principle is reiterated. As noticed, here the offence alleged is one under Section 138 of the Act. So, the question is whether the allegations in the complaint would constitute the said offence. As per paragraph 8 of Annexure - 5 the respondent's case is that, the accused has committed an offence under Sec. 138 of the Negotiable Instruments Act. When such is the situation from the said decisions it is clear that unless the ingredients of the offence under Section 138 of the Act are pleaded, the complaint is liable to be quashed under Section 482 of the Cr. P.C

9. But the learned counsel for the respondent relying on the decision in Pappachan Joy (1993 (1) KLT 13) contended that the insufficiency of funds is a matter for evidence and therefore, it is not obligatory for the complainant to allege the said fact in the complaint. According to the learned counsel the same need be established at the trial. Reliance was also placed by the learned counsel-for the respondent on the decisions in Calcutta Sanitary Wares v. Jacob (1991 (1) KLT 269) and Thomas Varghese v. Jerome (1992 (1) KLT 812). On the other hand, learned counsel for the petitioners relied on the decision in Bhageerathy v. Beena (1992 (1) KLT 31) and also the decision in Crl. M.C No. 901 of 1992 to contend that the said fact unless? pleaded is fatal to the complaint. In the decision in Jacob's case (1991 (1) KLT 269) the learned Judge held that the fact that the payment was countermanded by a stop memo is of no consequence and the same would not affect the right to institute proceedings under the Act. The question whether the allegation that the cheque was returned on account of insufficiency of funds to honour the cheque was not considered in that decision. What was considered in that decision was the fact that the cheque was returned by stop memo whether would affect the right of the payee to institute the complaint under Section 138 of the Act. In Thomas Varghese's case (1992 (1) KLT 812) it is held that, the nature of the endorsement on the cheque when it returned, is not decisive as to whether the offence under Section 138 of the Act is made out. It is pointed out that “The offence under the Section cannot depend on the endorsement made by the banker while returning the cheque. Irrespective of the endorsement made by the banker, if it is established that in fact the cheque was returned unpaid either because the amount of the money standing to the credit of the account of the drawer 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, the offence will be established: As a matter of fact the question whether the said ingredients have to be alleged did not actually arise in that decision. It is stated in paragraph 2 of the judgment:

“The complainant proceeded on to state that the accused had no funds with his bank either on 8-12-1989 or on any subsequent date and so he issued stop memo to the bank.”

10. There was specific allegation that, the accused had no fund in the bank.

11. In Pappachan's case (1993 (1) KLT 13) it is observed:

“It is difficult to say that in all cases where payment is stopped by the drawer (as in this case), the offence will not arise. In every case of insufficiency of funds, it will be open to the drawer to stop payment and keep the statute at bay. That is not intended”.

12. In Bhageerathy's case (1992 (2) KLT 31) this court observed:

“In the complaint it is stated that the cheque was returned with the endorsement “Payment stopped by the drawer”. As the cheque was returned with the said endorsement and as there is no averment in the petition that the Bank dishonoured the cheque for want of adequate fund in the account of the drawer it is not possible to hold that S. 138 of the Act is attracted”.

13. In Crl. M.C 901 of 1991 also this court followed the decision in Bhageerathy's case (1992 (2) KLT 31). In understanding the decision in Pappachan's case (1993 (1) KLT 13) the decision in Crl. M.C 901 of 1992 has to-be kept; in view. In view of the declaration of law by the Supreme Court in Nagawwa's case ((1976) 3 SCC 736 : AIR 1976 SC 1947) Sharda Prasad's case ((1977) 1 SCC 505 : AIR 1977 SC 1754) and Chand Dhawan v. Jawahar Lal (AIR 1992 1379) as to the necessity of allegation concerning the ingredients of the offence it is clear that, unless charge or complaint contains the ingredients of the offence, the High Court in its inherent power under Section 482 Cr. P.C can quash the complaint, As noticed, to constitute the offence under Section 138 of the Act one of the ingredients is that, there was no sufficient fund in the account of the drawer to honour the cheque. That being the position, Annexure-5 complaint since does not contain an allegation to the said effect and the allegations there in since are not capable of bringing out a contention to the said effect even by necessary implication, Annexure-5 is liable to be quashed. Consequently the petition is allowed and Annexure-5 and the proceedings thereunder are quashed.