LAXMI DYECHEM Vs. STATE OF GUJARAT

JUDGEMENT

(1.) Leave granted.

(2.) These appeals are directed against orders dated 19th April, 2010 and 27th August, 2010 passed by the High Court of Gujarat at Ahmedabad whereby the High Court has quashed 40 different complaints under Section 138 of the Negotiable Instruments Act, 1881 filed by the appellant against the respondents. Relying upon the decision of this Court in Vinod Tanna & Anr. v. Zaher Siddiqui & Ors., 2002 7 SCC 541, the High Court has taken the view that dishonour of a cheque on the ground that the signatures of the drawer of the cheque do not match the specimen signatures available with the bank, would not attract the penal provisions of Section 138 of the Negotiable Instruments Act. According to the High Court, the provisions of Section 138 are attracted only in cases where a cheque is dishonoured either because the amount of money standing to the credit to the account maintained by the drawer is insufficient to pay the cheque amount or the cheque amount exceeds the amount arranged to be paid from account maintained by the drawer by an agreement made with the bank. Dishonour of a cheque on the ground that the signatures of the drawer do not match the specimen signatures available with the bank does not, according to the High Court, fall in either of these two contingencies, thereby rendering the prosecution of the respondents legally impermissible. Before we advert to the merits of the contentions urged at the Bar by the learned counsels for the parties, we may briefly set out the factual backdrop in which the controversy arises.

(3.) The appellant is a proprietorship firm engaged in the sale of chemicals. It has over the past few years supplied Naphthalene Chemicals to the respondent-company against various invoices and bills issued in that regard. The appellant's case is that a running account was opened in the books of account of the appellant in the name of the respondent-company in which the value of the goods supplied was debited from time to time as per the standard accounting practice. A sum of Rs.4,91,91,035/- (Rupees Four Crore Ninety One Lac Ninety One Thousand Thirty Five only) was according to the appellant outstanding against the respondent-company in the former's books of accounts towards the supplies made to the latter. The appellant's further case is that the respondent-company issued under the signatures of its authorised signatories several post dated cheques towards the payment of the amount aforementioned. Several of these cheques (one hundred and seventeen to be precise) when presented were dishonoured by the bank on which the same were drawn, on the ground that the drawers' signatures were incomplete or that no image was found or that the signatures did not match. The appellant informed the respondents about the dishonour in terms of a statutory notice sent under Section 138 and called upon them to pay the amount covered by the cheques. It is common ground that the amount covered by the cheques was not paid by the respondents although according to the respondents the company had by a letter dated 30.12.2008, informed the appellant about the change of the mandate and requested the appellant to return the cheques in exchange of fresh cheques. It is also not in dispute that fresh cheques signed by the authorised signatories, according to the new mandate to the Bank, were never issued to the appellant ostensibly because the offer to issue such cheques was subject to settlement of accounts, which had according to the respondent been bungled by the outgoing authorised signatories. The long and short of the matter is that the cheques remained unpaid despite notice served upon the respondents that culminated in the filing of forty different complaints against the respondents under Section 138 of the Negotiable Instruments Act before the learned trial court who took cognizance of the offence and directed issue of summons to the respondents for their appearance. It was at this stage that Special Criminal Applications No.2118 to 2143 of 2009 were filed by Shri Mustafa Surka accused No.5 who happened to be one of the signatories to the cheques in question. The principal contention urged before the High Court in support of the prayer for quashing of the proceedings against the signatory to the cheques was that the dishonour of cheques on account of the signatures 'not being complete' or 'no image found' was not a dishonour that could constitute an offence under Section 138 of the Negotiable Instrument Act.