NEPC MICON LIMITED Vs. MAGMA LEASING LIMITED

JUDGEMENT

(1.) Leave granted.

(2.) NEPC Micon Limited, Appellant No. 1 and its directors approached the High Court for quashing the proceedings in Case No. C-494 of 1997 pending on the file of the Metropolitan Magistrate, Calcutta, initiated by Magma Leasing Limited, Respondent-Company under Section 138 of the Negotiable Instruments Act, 1881 (hereinafter referred to as "the Act"). It was alleged by the complainant that in discharge of its existing liability, the appellant-Company had given five cheques dated 1st January, 1997 for various amounts totalling to Rs. 58,25,980/- drawn on Canara Bank, Broadway Branch, Madras, in favour of the Respondent-Company. Those cheques were duly tendered to the bankers, Punjab National Bank, Calcutta for encashment, but were returned by the banker of the accused persons, that is, Canara Bank, Madras with the remark "account closed". Appellants have also challenged before the High Court the order dated 10-12-1997 passed by the Metropolitan Magistrate rejecting their application under Section 258, Criminal Procedure Code for dropping the proceedings. In that application before the Metropolitan Magistrate, appellants have stated that before closing the account on behalf of appellant No. 1, a letter dated 3rd August 1996 was sent by the second accused to the Chief Manager, Canara Bank, Madras informing them to close their group company's accounts; in case, any of the cheque by mistake comes to the Canara Bank, Madras, then the same be sent back with the note "account closed - payment stopped". That Revision Application under Section 482, Criminal Procedure Code was rejected by High Court by its judgment and order dated 15th June, 1998. Against that Order, the present appeal is filed by special leave in which this Court issued notice on 26th March, 1999 for final disposal.

(3.) At the time of hearing of this matter, learned Counsel for the appellants submitted that complaint, on the face of it, does not make out any offence punishable under Section 138 of the Negotiable Instruments Act and, therefore, it deserves to be quashed. He submitted that cheques were returned by the bank with an endorsement "account closed" which is not covered by the section. He submitted that Section 138 envisages only two situations, which would fall within its purview, namely,