KANKANI TEA TRADERS PRIVATE LIMITED Vs. VIJAYA BANK

JUDGEMENT

(1.) THE petitioners are the accused in T.R.C. No. 1456 of 1999 on the file of the learned Judicial Magistrate, Coonoor. THE first respondent is the complainant. According to the complaint preferred by the first respondent under section 138 of the Negotiable Instruments Act, 1881, against the second respondent as well as against the petitioners before the learned Judicial Magistrate, Coonoor, the second respondent M/s. Ranjith Commercial Company had business dealings with the petitioners in respect of which the petitioners issued a cheque No. 269274 dated October 26, 1998, in favour of the second respondent for Rs. 10 lakhs drawn on Global Trust Bank Limited, Coimbatore. THE first respondent purchased the said cheque from the second respondent for consideration. THEreafter, the first respondent presented the cheque for collection on March 20, 1999, in the capacity of the holder in due course. But the said cheque was returned uncleared on the same date with the endorsement "exceeds arrangements". THErefore, the first respondent has preferred the complaint against the petitioners. Challenging the above complaint, the petitioners who were arrayed as the second and third accused have preferred the above petition seeking to quash the complaint. Mr. Srinath Sridevan, learned counsel appearing for the petitioners submitted that the cheque was drawn by the second accused the petitioner herein in favour of M/s. Ranjith Commercial Company, namely, the second respondent and the first accused. It is not in dispute that the amount is maintained by the petitioners herein in Global Trust Bank Limited, Coimbatore. It is also not disputed that the drawer of the cheque is the petitioners and the payee of the cheque is the second respondent. THE first respondent, namely, the complainant is neither the payee nor indorsee of the cheque. It is also admitted that the cheque is crossed and also bears the words "account payee".

(2.) ON the admitted facts the payee of the cheque, namely, the second respondent cannot sell the cheque to the first respondent and the first respondent on such purchase of the cheque cannot be considered as a "holder in due course". Even though in the petition, the petitioners have raised number of grounds, learned counsel restricted the arguments only to the question as to whether the complainant, namely, the first respondent in this petition can be considered as a "holder in due course" as defined under section 9 of the Negotiable Instruments Act. Learned counsel would submit that section 9 of the Negotiable Instruments Act defines "holder in due course" as, "person who for consideration became the possessor of the cheque, if payable to bearer"and" payee or indorsee thereof, if payable to order" Learned counsel submitted that the Vijaya Bank is not an indorsee of the cheque and that it became only the possessor of the cheque for consideration. Learned counsel would further submit that the Vijaya Bank can only be the "holder in due course" if the cheque is payable to bearer. When the cheque is crossed with an endorsement "account payee only", the said cheque cannot be considered as a cheque payable to the bearer also. Learned counsel would further submit that under section 13 of the Negotiable Instruments Act, "a cheque is payable to order if it is payable to a particular person and a cheque is payable to bearer where it is expressed to be payable, or if the endorsement is left blank"

(3.) IN the absence of such a right on the second respondent, the first respondent namely the complainant cannot claim himself as a "holder in due course", because he has purchased the cheque from the second respondent. Per contra, learned counsel would contend that in the absence of scoring off of the word "bearer" in the cheque would presume that the drawee of the cheque is entitled to encash the same and the complainantion the strength of the purchase of the said cheque can be considered as a "holder in due course". It is the specific stand of the complainant that the circumstances in which the cheque was issued by the petitioners and the understanding between the petitioners and the second respondent while such cheque was issued is also relevant especially, when the petitioners have not scored off the word "bearer" in the cheque. These are all the matters which could be decided only after considering the evidence of both the parties. As submitted by learned counsel for the first respondent when there are disputed questions of fact, this court cannot embark upon the same and to decide on the merits. The apex court in fact in the judgment in Smt. Chand Dhawan v. Jawahar Lal, while considering the conviction and sentence has held that even after the magistrate has exercised his discretion, it is not for the High Court or even for the Supreme Court to substitute its own discretion for that of the magistrate or to examine the case on the merits with a view to find out whether or not the allegations in the complaint if proved would ultimately end in the conviction of the accused. While that be the case, this court should be more cautious when the petition to quash the complaint is being considered.