Cri. M. C. No. 3820 of 1997

28th June, 2000

Petitioner Counsel: Mr. A. MOHAMMED MUSTAQUE
Respondent Counsel: Mr. M. RAMESH CHANDER, Mr. GRASHIOUS KURIAKOSE

Cases Cited:
L. C. Goyal Vs. Suresh Joshi (Mrs.) & Ors., (1999) 3 SCC 376 [Para 4]
Ashok Vs. Vasudevan Moosad, 1993 (1) KLT 671 [Para 5]
Modi Cements Ltd Vs. K. K. Nandi, 1998(2) ALL MR 433 (S.C.)=1998 (1) KLT 582 (SC) [Para 5]

JUDGMENT

JUDGMENT :- This Criminal Miscellaneous Case has been directed against C.C. No. 993/94 on the file of the Judicial First Class Magistrate Court-I, Kannur dated 5-12-1994.

2. The respondent filed a complaint against the petitioner under Section 138 of the Negotiable Instruments Act, 1881 (hereinafter referred to as 'the Act'). This petition is filed to quash the complaint and to acquit the petitioner.

3. The complaint is that the accused issued cheque bearing No. NSEAG 120458 dated 21-7-1994 for Rs. 1,20,000/- payable at Canara Bank, South Bazar, Kannur towards the debt due to the complainant. It is alleged in the complaint that the cheque was presented for encashment, but the same was returned with an endorsement "cheque reported stolen". It is also alleged in the complaint that he has issued a lawyer notice intimating the accused that the cheque has been dishonoured. He had called upon the accused to pay the said amount. The accused did not respond to the notice. The learned Magistrate has taken cognizance of the offence under Section 138 of the Act. The petitioner seeks an order quashing the complaint.

4. The learned Counsel for the petitioner, Mr. Mohammed Mustaque, submitted that the learned Magistrate has not applied his mind while taking cognizance of the complaint. According to him, it does not contain the necessary allegation to constitute an offence under Section 138 of the Act. He invited my attention to the decision of the Apex Court reported in L.C. Goyal v. Suresh Joshi (Mrs.) and Ors. (1993) 3 SCC 376. It was a case where the appellant denied his signature in the cheque, as according to him his signature was forged by the complainant. The cheque was bounced not on account of the fact that the signature on the cheque was not tallying with the specimen signature of the appellant kept with the bank, but on account of insufficient funds. Therefore, the Court held that the statement that the cheque was forged is not correct. That decision has no bearing on the present facts of the case.

5. This Court in the decision reported in Ashok v. Vasudevan Moosad 1993 (1) KLT 671, held that unless cheque 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. It was also held that 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. The Apex Court in the decision reported in Modi Cements Ltd. v. K.K. Nandi 1998 (1) KLT 582 (SC) : (1998(2) ALL MR 433 (S.C.)), held that Section 138 of the Act does not draw presumption of dishonesty against drawer of the cheque if he issues cheque without sufficient funds to his credit in his bank account maintained by him. It was also held that 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 honour the cheque or that it exceeds the amount arranged to be paid from that account by the agreement made with that bank, such person shall be deemed to have committed an offence. Section 138 is attracted when cheque is dishonoured. The Court taking cognizance of the complaint under Section 138 of the Act is required to be satisfied as to whether, a prima facie case is made out under the said provision. Once the cheque is issued by the drawer, a presumption under Section 139 must follow and merely because the drawer issues a notice to the drawee or to the Bank for stoppage of the payment it will not preclude an action under Section 138 of the Act by the drawee or the holder of a cheque in due course.

6. Here, in this case, the cheque was presented for encashment. But it was returned with an endorsement 'cheque reported stolen'. When it is reported that the cheque is stolen the intention of the drawer is clear. He wants either to stop payment or dishonour of the cheque. Even though it is not endorsed in the cheque, the intention to stop payment is implied. Only after examination of parties that the Court can come to the conclusion that the cheque was returned unpaid due to insufficiency of funds as pleaded in the complaint. Therefore, the complaint cannot be quashed. The Court below is directed to dispose of the case as expeditiously as possible after taking evidence, in accordance with law and in the light of the observations made above.

In the result, this petition is dismissed.

Petition dismissed.