2000 ALL MR (Cri) 150
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
R.P. DESAI, J.
Rajendra Vasantrao Khode Vs. Laxmikant Shantilal Choudhari & Another.
Criminal Writ Petition No. 709 of 1993
15th November, 1999
Petitioner Counsel: MR. K.S. PATIL i/b MR. P.H. JOSHI
Respondent Counsel: MS. R. DANDEKAR
(A) Negotiable Instruments Act (1881) S.138 - Dishonour of cheque on ground of "account closed" - It attracts S. 138. 1999 Cr. L.R. (SC) 336 foll. (Para 6)
(B) Penal Code (1860), S.420 - Negotiable Instruments Act (1881) S.138 - Intention to defraud - Cheque for payment of grapes returned with endorsement "account closed" despite assurance given that there was sufficient balance in the account and cheque will be encashed - Held prima facie case for complaint was made out and process issued was justified. (Para 8)
(C) Negotiable Instruments Act (1881) S.138 (C) - Limitation - Date of receipt of notice - Whether notice was within fifteen days or not - This aspect can only be examined at the trial and not in writ petition. (Para 10)
1992 Mah.L.J. 302 [Para 4]
Shivendra Sansguiri vs. M/s. Adineo, 1998 ALL MR (Cri) 880 [Para 4]
NEPC Micon Limited & Ors. vs. Magma Leasing Limited, 1999 ALL MR (Cri) 1837 (S.C.)=1999 Cr. L.R.(SC) 336 [Para 5]
NEPC Micon Limited & Ors. vs. Magma Leasing Limited, 1999(4) ALL MR 367 (S.C.)=1999 Cr. L.R.(SC) 336 [Para 5]
Radharaman Sahu v. Trilochan Nanda, 1991 Cri.L.J. 1603 [Para 8]
JUDGMENT :- This petition, filed under Article 227 of the Constitution of India, seeks quashing and setting aside of the judgment and order dated 10th March 1993 passed by the learned Sessions Judge, Nashik in Criminal Revision Application no.334 of 1992. By the impugned order, the learned Judge has quashed the order issuing process against respondent no.1 for the offences punishable under section 420 of the Indian Penal Code and section 138 of the Negotiable Instruments Act 1881. The learned Sessions Judge has dismissed the complaint.
2. The petitioner has filed a complaint being criminal case no.84 of 1992 in the Court of the Judicial Magistrate. First Class. Pimpalgaon Baswant, Nashik against respondent no.1 alleging that he has committed offences punishable under section 420 of the Indian Penal Code and section 138 of the Negotiable Instruments Act. It is stated in the complaint that the petitioner is a farmer. Respondent no.1 purchased grapes grown by the petitioner and gave him a post-dated cheque to the tune of Rs.32,000/- for the said purchase. He assured the petitioner that the remaining amount would be paid to him in cash. While giving him the Cheque, respondent no.1 assured the petitioner that there is sufficient amount in his bank account and the cheque would certainly be honoured. The petitioner believed him and gave him the grapes as agreed. The petitioner presented the cheque in the Pimpalgaon branch of the bank. However, the cheque was not honoured. The petitioner contends that with an intention to cause wrongful loss to the petitioner and gain to himself, though there were no sufficient funds in the bank, respondent no.1 gave a cheque to the complainant and deceived him. The petitioner sent a notice to respondent no.1 through his advocate on 29th July 1992 thereby called upon respondent no.1 to repay him the said amount. The said notice was not accepted by respondent no.1. On these allegations, the complaint came to be filed. The learned Judicial Magistrate, Class II, Pimpalgaon issued process on 19th August 1992.
3. Being aggrieved by the issuance of the process, respondent no.1 preferred Criminal Revision Petition no.334 of 1992 in the Sessions Court at Nashik. By judgment and order dated 10th March 1993, the learned Sessions Judge, Nashik allowed the revision petition. He quashed the order issuing process against respondent no.1 for the offences punishable under section 420 of the Indian Penal Code and section 138 of the Negotiable Instruments Act. While quashing the process and dismissing the complaint, the learned Sessions Judge held that in the facts of the case, the conduct of respondent no.1 may at the most amount to a breach of contract and will make him liable for damages, but it does not attract the criminal offence under section 420 of the Indian Penal Code. He also held that as per the provisions of section 138 of the Negotiable Instruments Act, the drawer of the cheque can be held liable for prosecution for the offence under section 138 of the Negotiable Instruments Act, if the cheque is returned by the bank unpaid either because the amount of money standing in the credit of the account holder 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. In the present case, the cheque is not dishonoured because of insufficient funds or because it exceeds amount arranged to be paid from that account. The cheque is dishonoured as the drawer of the cheque had closed his account before presentation of the cheque. The dishonour of a cheque, on such ground, is not covered by the provisions of section 138 of the Negotiable Instruments Act. In the view of the learned Sessions Judge, therefore, the learned Magistrate could not have taken cognizance of the alleged offence and issued process. On the question whether or not the complaint is premature, the learned Sessions judge held in favour of the petitioner.
4. I have heard at some length Shri. K. S. Patil i/b Mr. P.M. Joshi for the petitioner, Shri P.B. Shah for respondent no.1 and Ms. R. Dandekar for the State of Maharashtra. Shri Patil has assailed the impugned judgment and order on various grounds. He firstly contended that the learned Sessions Judge has fallen into a serious error in coming to a conclusion that dishonour of the cheque on the ground that the drawer of the cheque has closed his account before presentation of the cheque, is not covered by the provisions of section 138 of the Negotiable Instruments Act. He contended that reliance placed by the learned Sessions Judge on the judgment of this court reported in 1992 Mah.L.J. 302 is totally misplaced. In the said case, this court has taken a view that section 138 of the Negotiable Instruments Act makes dishonour of cheque penal only when the dishonour is effected either because of insufficiency of amount to honour the cheque or because it exceeds the amount arranged to be paid from that account. Only two contingencies mentioned above are contemplated. Where a cheque is dishonoured on the ground of 'account closed', it cannot be construed as dishonour for 'insufficiency of funds' or 'exceeding the arrangements' as laid down in section 138 of the Negotiable Instruments Act. The penal provision of section 138 of the Negotiable Instruments Act is not attracted when the cheque is returned on the ground that the account is closed. Mr. Patil drew my attention to judgment of Panaji Bench of this court in Shivendra Sansguiri vs. M/s. Adineo & Anr. 1998 ALL MR (Cri.) 880. In that case the Panaji Bench was examining the consequence of dishonour of cheque on account of closure of account. The Court examined the liability of the bank as well as that of the drawee in the light of the Banking Regulation Act and the Negotiable Instruments Act. The relevant observations of the Panaji Bench are as under :
"When a customer of the Bank draws a cheque in discharge of his debt, the Banker steps into the shoes of the customer or drawer to pay the money shown in the cheque to the payee of the cheque. Law, therefore, does not taken cognizance of a situation to issuance of a cheque without an account in the Bank. If any customer closes an account with the Bank, it is the legal responsibility of the Banker to see that all unused cheque leaves are surrendered to the Bank and see that the cheque issued by the customer before closure of account is honoured. If any banker does not observe this obligation it is liable not only under the Banking Regulation Act but also liable for damages to the person in whose favour the cheque was issued. However, this obligation of the Banker does not absolve the drawer from the liability in the event of the cheque being dishonoured, under Section 138 of the Negotiable Instruments Act. If he closes the account before or after the issuance of the cheque because when cheque is drawn in discharge of a pecuniary liability, it can be always presumed that there exists an account in the Bank in the name of a drawer. This presumption, however, cannot be displaced by misusing cheque facility after closing the account. In such circumstances the drawer of the cheque is not only liable under section 138 of the Negotiable Instruments Act, but also under Banking Regulation Act. At any stretch of reasoning, it cannot be said that such misuser of cheque is not liable under Section 138 of the Negotiable Instruments Act. To hold otherwise will render the whole object of the legislation infructous."
5. In my opinion, there is no need to ponder over this issue any more. The judgment of the Supreme Court in NEPC Micon Limited & Ors. vs. Magma Leasing Limited 1999 Cr.L.R.(SC) 336 : 1999 ALL MR (Cri) 1837 (S.C.) : 1999(4) ALL MR 367 (S.C.) has settled the law on the point. The Supreme Court has observed that section 138 of the Negotiable Instruments Act will have to be interpreted, taking into consideration the legislative intent and purpose, so as to suppress the mischief and advance the remedy and therefore when the cheque is returned by a bank with an endorsement 'account closed' it would attract section 138 of the Negotiable Instruments Act. The relevant observations of the Supreme Court are as under :
"15. In view of the aforesaid discussion we are of the opinion that even though Sec. 138 is a penal statute, it is the duty of the Court to interpret it consistent with the legislative intent and purpose so as to suppress the mischief and advance the remedy. As stated above Sec.138 of the Act has created a contractual breach as an offence and the legislative purpose is to promote efficacy of banking and of ensuring that in commercial or contractual transactions cheques are not dishonoured and credibility in transacting business through cheques is maintained. The above interpretation would be in accordance with the principle of interpretation quoted above 'brush away the cobweb varnish, and show the transactions in their true light' (Wilmot C.J.) or (by Maxwell) "to carry out effectively the breach of the statute, it must be so construed as to defeat all attempts to do, or avoid doing, to an indirect or circultous manner that it has prohibited". Hence, when the cheque is returned by a bank with an endorsement 'account closed', it would amount to returning the cheque unpaid because 'the amount of money standing to the credit of that account is insufficient to honour the cheque" as envisaged in Sec. 138 of the Act."
6. In view of this, I am of the clear opinion that the learned Sessions Judge grossly erred when he came to a conclusion that section 138 of the Negotiable Instruments Act was not attracted because the drawer has closed his account.
7. As regards the observations of the learned Judge that the conduct of respondent no.1 might amount to a breach of contract and may take him liable for damages, but does not attract the criminal offence under section 420 of Indian Penal Code, Mr. Patil has submitted that the intention of the accused, at the time when he gave the cheque, will be material for the purpose of ascertaining whether a criminal offence is made out or not. The account was closed by respondent no.1 with an oblique motive to make wrongful gain for himself and cause a wrongful loss to the petitioner. Mr. Patil submitted that in any event, whether or not, there is any intention to defraud the complainant is a matter which has to be decided at the time of trial of the case and this certainly is not a case where the complaint makes out no offence at all. He, therefore, submitted that no interference is called for with the issuance of process and the learned Judge had erred in quashing the process.
8. On the other hand, Mr. Shah, the learned counsel appearing for respondent no.1 submitted that the complaint is vague. He stated that in the complaint, no date is mentioned as to on which day the transaction was completed. There is no clear indication as to what were the terms of the contract. He submitted that no particulars of the transaction are given to make out a case of cheating. Relying on the judgment of the Orissa High Court in Radharaman Sahu v. Trilochan Nanda 1991 Cri.L.J. 1603, he urged that in the facts of the present case, it cannot be said that any deception or fraudulent or dishonest inducement was practised by respondent no.1. At the most it can be said that respondent no.1 made a promise to the complainant that he would be able to encash the cheque without any difficulty. The conduct of respondent no.1 may amount to breach of contract and will make him liable for damages and does not attract section 420 of the Indian Penal Code. I am unable to agree with the submissions of the learned counsel. In the facts of the case before the Orissa High Court, the petitioner was an old dealer of the company. Though the opposite party demanded payment in cash, the petitioner prevailed over the complainant to accept cheques, giving impression that he had sufficient funds in his account, which was later proved to be untrue when the cheques bounced. The Orissa High Court further observed that even assuming that sufficient fund is not available in his bank account for encashing the cheque, the petitioner might have intended to deposit money in the bank before the cheque was presented for encashment. The conduct of the petitioner might amount to a breach of contract and may make him liable for damages, but does not attract criminal offence under section 420 of the Indian Penal Code. In the present case, respondent no.1 not only assured the petitioner that there is money in his account and cheque will be honoured, but he closed the account. Closure of the account by respondent no.1 prima facie strengthens his intention to cheat. Prima facie it appears that respondent no.1 fraudulently or dishonestly by giving a cheque and making a false representation induced the petitioner to deliver grapes to him which has caused wrongful loss or damage to the petitioner on account of dishonour of the cheque. This can be conclusively proved only by leading evidence in the trial. Prima facie, the closure of the account smacks of suspicion. I have perused the complaint. I am unable to come to the conclusion that the complaint makes out no offence at all. Sufficient particulars, which can persuade a court to issue process been given. The complaint cannot be called a vague complaint. This submission of the learned counsel must, therefore, be rejected.
9. Mr. Shah also urged that the learned Magistrate could not have taken cognizance of the offence because the date on which respondent no.1 refused to accept the notice is not clear. He drew my attention to section 138(c) of the Negotiable Instruments Act, 1881. It reads as under :
"138(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 bolder in due course of the cheque, within fifteen days of the receipt of the said notice."
10. Mr. Shah submitted that in the instant case the bank returned the cheque on 28th July 1992. The complainant issued notice to the accused on 29th July 1992. The notice was returned to the complainant on 3rd August 1992 with an endorsement that the addressee had refused to accept. It is not clear as to on what date respondent no.1 refused to accept the notice. The complaint was filed on 10th August 1992 and therefore, the learned Magistrate, without examining as to whether the complaint was filed after 15 days of the receipt of the notice, has taken cognizance of the complaint and issued process. He submitted that the learned Magistrate has committed a grave error. It is significant to note that the complaint is filed on 10th August 1992. It is presented on 19th August 1992. The notice was returned to the petitioner on 3rd August 1992 with an endorsement that the addressee refused to accept. Taking 3rd August 1992 as the date of the service of the notice, the complaint can be said to have been presented 15 days after the date of receipt of the notice. However, assuming that it is not so, nothing prevented respondent no.1 from approaching the learned Magistrate for recalling process. Instead of doing that, respondent no.1 directly approached the Sessions Court. It is pertinent to note that on this point the Sessions Court has given a finding in favour of respondent no.1. The view taken by the learned Sessions Judge on the point of limitation is a possible view and whether or not the notice was received and refused on 3rd August 1992 will have to be decided also at the stage of trial. This aspect cannot be examined in writ jurisdiction. In this view of the matter I am of the opinion that the learned Sessions Judge was wrong in dismissing the complaint. The dismissal of the complaint, according to me, has resulted in a serious miscarriage of justice. Interest of justice demands that order passed by the learned Sessions Judge be quashed and set aside. In the result, following order is passed.
11. The impugned order dated 10th March 1993 passed by the Sessions Court, Nasik in criminal revision petition no.334 of 1992 is set aside. The complaint being criminal case no.84 of 1992 is restored to the file of the Judicial Magistrate, Class-II. Pimpalgaon. Parties to appear before the learned Magistrate on 17th January 2000. The learned Magistrate is directed to proceed in accordance with law.