1. The accused in C.C No. 894 of 1991 on the file of IX Metropolitan Magistrate, Saidapet, Madras has filed this petition, under Section 482 Criminal Procedure Code, praying to call for the records in the aforesaid C.C No. 894/91 and quash the same.

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

The accused wanted certain amount as hand loan. The complainant agreed and gave hand loan. The accused promised to return the borrowed amount in stages and parted with post dated cheques. One of the cheques, dated 24.12.1990, issued by the accused for Rs. 36,250/- was presented for encashment on 11.1.1991 It was returned with an endorsement ‘account closed’ with a bank memo, dated 18.1.1991 The complainant sent notice through lawyer on 19.1.1991 to the accused by registered post with acknowledgment due. It was returned with an endorsement ‘not found’ at delivery time. The accused had deliberately evaded receipt of the registered notice. Hence the complaint.

3. The petitioner seeks to quash this complaint.

4. Mr. A. Ramesh, the 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 Negotiable Instruments Act are not satisfied and offence is not made out.

(ii) Notice sent by the complainant 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. Ravichandra Babu, the 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.

5. For appreciating the rival contentions, regarding first ground, the first portion of section 138 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, or 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 supplied)

A plain reading of section 138 Negotiable Instruments Act would show that only if the cheque which was returned by the bank unpaid because of the above two contingencies, offence under Section 138 of the Negotiable Instruments Act is made out. In the instant case, the cheque was returned unpaid with endorsement ‘account closed’. Hence this case does not fall within the ambit of Section 138 of Negotiable Instruments Act. In this regard, the learned Counsel for the petitioner relied upon the ruling reported in (1991 (1) Crimes 226) G.F Hunasikattimath v. State Of Karnataka*. 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 under section 138 Negotiable Instruments Act. Aggrieved by that order, the complainant took up the matter to the High Court under Section 482 Criminal Procedure Code. It was held that Section 138 of Negotiable Instruments Act provides for punishment only in case cheque was returned unpaid due to

(i) insufficiency of the amount 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.

6. The second ground urged by the 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 the 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.

7. In view of the above, on the first ground, the petition is allowed and the proceedings in C.C 894/91 on the file of IX Metropolitan Magistrate, Saidapet are hereby quashed.