M SREERAMULU REDDY Vs. N C RAMASAMY

JUDGEMENT

(1.) THE petitioner, M. Sreeramulu Reddy, is the sole accused in C, C. No. 21104 of 1989 pending on the file of Xth Metropolitan Magistrate, Egmore , Madras . On a private complaint instituted by the respondent, he is being prosecuted for alleged commission of an offence punishable under section 138 of the Negotiable instruments Act. THE allegations made in the complaint disclose that the petitioner had approached the respondent for tenancy of the first floor of the premises concerned, in or about April, 1989, and agreed to pay Rs. 30, 000 as advance. THE petitioner occupied the premises on April 7, 1989. THE petitioner paid Rs. 12, 500 in cash, representing a portion of the amount to be paid as advance and further handed over a cheque dated April 7, 1989, for the balance of Rs. 17, 500 drawn on Karnataka Bank limited, Anna Nagar. THE complaint further states that, as requested by the petitioner, the cheque was presented through hisbanker, Indian Overseas Bank, Anna Nagar , Madras. But it was dishonoured on May 31, 1989, "for want of funds in the account of the petitioner". On being questioned by the respondent, the petitioner is alleged to have stated that he was unable to arrange for funds. This representation was on July 21, 1989. THE cheque was presented over again and for a second time the instrument was returned with an endorsement "refer to the drawer". THE complainant alleges that the cheque was presented for a second time on the specific advice of the petitioner. THE respondent issued a notice dated July 31, 1989, through his lawyer calling upon the petitioner to pay Rs. 17, 500. A reply was duly sent. THE complainant, however, states that notwithstanding the reply notice, the petitioner requested the respondent to present the cheque over again, expressing regret for its not having been honoured , on two earlier occasions. THE cheque was presented again on October 11, 1989, and returned as in the past "for want of funds in the account of the petitioner". THE respondent issued a lawyer's notice on October 14, 1989, which was received by the petitioner on October 21, 1989. THE petitioner sent a reply dated October 23, 1989, denying his liability to pay. THEreafter, the complaint was filed on November 10, 1989. THE trial magistrate took cognizance and issued process to the petitioner. THE petitioner appeared before the trial Magistrate, on a few occasions and on March 12, 1990, the respondent was examined in chief, in the trial court. This petition was admitted by this court on March 13, 1990, only after the respondent was examined before the Magistrate. In this petition preferred under section 482 of the Criminal Procedure Code, to call for the records and quash the pending prosecution as not maintainable and an abuse of process of court, Mr. G. Appavoo , learned counsel appearing on behalf of the petitioner, contended, that there was no liability to pay and hence the ingredients of section 138 of the Act will not stand attracted. To substantiate this contention, he submitted that the understanding between the parties was that the petitioner should pay in cash Rs. 17, 500 and take return of the cheque , which should not be presented at all by the respondent to the bank. He then submitted , that the liability contemplated under the Act was only future liability and not past, even if it were to be held that the cheque was issued on the basis of liability. THE next contention was, that the complaint ought to have been filed within the statutory period contemplated under section 142 of the Act read with section 138 of the Act, after the issue of the first notice in July, 1989, and not after the cheque was returned for a third time in october, 1989. He further argued that the return by the bank with an endorsement "refer to the drawer" will not include the two contemplated categories, viz. , 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 an agreement made with that bank and if that be so a prosecution under section 138 of the Act was misconceived and hence it should not be allowed to survive any longer. On these circumstances, I have heard Mr. K. S. Rajagopalan , learned counsel appearing on behalf of the respondent. He contended that the questions canvassed by the petitioner related to factual details which may have to be placed before the trial Magistrate for appreciation. He brought to my notice the judgment of Janarthana m J. in Sivasankar v. Santhakumari [1991] 1 LW ( Crl.) 481, wherein the learned judge has taken the view that on successive dishonour of cheques on different occasions, when presented within its period of validity, separate causes of action for initiation of prosecution will arise and that failure to file prosecution on the dishonour of cheque on the first occasion was not a bar to initiation of prosecution subsequently. He further brought to my notice the view expressed by me in M. Harinarayanan v. Nina M. Lulla [1990] LW ( Crl.) 143, wherein, under similar circumstances, I have held that the validity of the notice served and reckoning of limitation will be one for appreciation of evidence, and not for a decision at the stage of invoking of inherent powers. In reply, Mr. G. Appavoo placed for my consideration the decision of a Division Bench of this court in Suhanraj Khimraja v. N. Rajagopalan [1989] 1 LW 401, wherein, while considering as to who the holder in due course was, under section 9 of the Negotiable instruments Act, the Division Bench took the view, that the cheque therein was not negotiable, after being dishonoured. I have carefully considered the rival submissions placed before me by the opposing counsel. It is very clear that the documents, which have been filed along with the complaint, are the chequ e and memos issued by the bank on three different occasions, lawyer's notice issued by the respondent to the petitioner on October 16, 1989, acknowledgment dated October 21, 1989, and reply dated October 23, 1989, issued by the petitioner. No other document has accompanied the complaint. If that be so, the petitioner will have to bring those documents on record before the trial magistrate, and afford an opportunity to the respondent to challenge the same. Further, the respondent may have to be cross-examined, if it is the contention of the petitioner, that there was an agreement between the parties, that the chequ e should not be presented for encashment and should be kept only as a security for the later payment of advance by the petitioner. Again, it will be a question of fact as to which of the notices issued by the respondent could be deemed to be one under section 138 (b) of the Act. On the averments made in the complaint, at this stage, it is not possible to conclude that the notice dated October 16, 1989, cannot be deemed to be a notice under section 138 (b) of the Act. However, it will be open to the petitioner to challenge the effect of such notice, before the trial Magistrate, after sufficient evidence is brought on record. Further, in view of the law laid down by Janarthanam J. in Sivasankar's case [1991] LW ( Crl.) 481, it may not be possible to go into the question at this stage, whether successive dishonour of cheques would bar a complaint being instituted under section 138 of the Act, if the complaint satisfies that the presentation of the cheque was within the period of its validity. On the facts, it will be open to the petitioner, to challenge the validity of the notice or notices for a finding being rendered by the Magistrate, on appreciation of the facts. It is not possible for me to agree that the liability contemplated under the Act should only be a future liability. If it is the case of the petitioner that no liability has accrued, then again it relates to the realm of facts, which may have to be placed before the trial magistrate for appreciation. Without evidence having come on record, it will not be appropriate for the petitioner to invoke the inherent powers of this court and seek to halt the proceedings pending before the trial Magistrate. On the contention that the words "refer to drawer" will not take in "insufficiency of funds" or "the amount shown in the cheque exceeded the arrangement", this court had occasion to consider this very question in V. S. Krishnan v. V. S. Narayanan [1990] LW ( Cr l.) 66 and the following observations were made : "in banking parlance the reason'refer to drawer' when cheques are returned unpaid is used generally for returning the cheques for want of funds in the drawer's account or because of service of garnishee order. This again is a matter of evidence. THE bank would be able to justify before the court the reasons for which the cheque was returned. If the banking parlance'refer to drawer'is used for the purpose aforementioned, the ingredients of the section would be attracted. If the words'refer to drawer' cannot take in its fold the two contingencies contemplated in the section, the offence cannot be stated to have been established. " THE aforestated observations make it apparent that even on this question, appreciation of evidence to be placed before the trial Magistrate, would be the sole criterion. THE ruling of the Division Bench cited by the petitioner's counsel cannot enure in his favour. In a Letters Patent Appeal, the Division Bench of this court, while referring to section 9 of the Negotiable Instruments Act, wherein the meaning of "holder in due course" has been indicated, held that after the cheque in that case was dishonoured , the payee M endorsed it to R for valuable consideration. R, the plaintiff in that case who was the brother of M, was fully aware that the cheque had been dishonoured and the endorsement in his favour was only after it was returned by the bank. THErefore, exhibit A-1 (the cheque concerned) had lost its negotiability. THErefore, R cannot be a holder in due course. THE essential characteristic having not been comprehended and more so when the cheque had never been thereafter presented to the bank for encashment, it was held, that the suit as laid could not have been declared at all. Holding that R cannot be a holder in due course, the suit was dismissed. THE point involved in this petition is so different that the petitioner cannot usefully urge that the judgment of the Division Bench would be sufficient to quash the pending prosecution. All the grounds having been negatived , this petition deserves dismissal at this stage. Accordingly, this petition shall stand dismissed. .