RELIANCE BEACH INN LTD Vs. MARGARET MASCARENHAS

JUDGEMENT

(1.) A private criminal complaint as No. 21/oa/1994/d was filed in the Court of the judicial magistrate, First Class, Panaji, by the first respondent against the petitioners in this criminal miscellaneous application under section 138 of the Negotiable Instruments Act, 1881 (hereinafter called "the Act" ). In the complaint filed before the magistrate, the first respondent has stated that the first petitioner is a company and the second petitioner is the director of that company, in charge and responsible for the company and the third petitioner is the financial adviser to the company. It is further alleged in the complaint that the first petitioner had executed an agreement dated December 2, 1993, for sale of certain property described in the agreement there to whereby petitioner No. 1 was represented by the second petitioner. In pursuance of the agreement between the parties, it is alleged that the first petitioner-company paid Rs. 1,00,000 through cheque bearing No. 22697 drawn on the Goa Urban Co-operative Bank Ltd. , St. Inez, panaji, dated December 31, 1993, signed by petitioner No. 3 as financial adviser of petitioner no. 1 for valid consideration. It is further alleged that the cheque was dishonoured with a remark that "payment stopped by the drawer". A statutory notice was issued as required under section 138 of the Act by the first respondent to the petitioners but no reply was sent by them. Ultimately, the first respondent has filed the aforesaid complaint against the petitioners. The magistrate, after taking the statement of the first respondent, took cognizance of the complaint and issued process to the petitioners. The petitioners have approached this court under section 482 of the Criminal Procedure Code, 1973, to challenge the action of the magistrate having taken cognizance of the offence against them.

(2.) MR. Ramani, learned counsel appearing for the petitioners, submits that the necessary ingredients required for taking cognizance of the offence under section 138 of the Act have not been made out warranting issuance of process against the petitioners. He elaborated his argument by submitting that merely "payment stopped by the drawer" will not give a cause of action to the first respondent to maintain a complaint under section 138 of the Negotiable Instruments Act, 1881. He submits that in order to take cognizance of the offence, as per the provisions of section 138 of the Negotiable Instruments Act, essentially there must be pleadings to the effect that the cheque was dishonoured for insufficient funds and materials prima facie to support those pleadings. Unless these two essential ingredients, namely, the pleadings and the material to support the pleadings, are before the magistrate, the magistrate cannot take cognizance of the complaint under section 138. He submits that neither the complaint nor any materials including the complainant's statement taken before the magistrate disclose these two materials warranting the issue of process to the petitioners under section 138 of the Negotiable Instruments Act. In support of his contention, he cited two decisions of the Kerala High Court. In Ashok v. Vasudevan Moosad [1993] 2 BC 143; [1995] 82 Comp Cas 665, the learned judge of the Kerala high Court has held that the ingredients of the offence under section 138 will not be proved unless there is an allegation of insufficient funds. Mere endorsement to stop payment will not give the magistrate the power to issue process under section 138 of the Negotiable Instruments act. In another decision of Mohammed Rasheed v. State of Kerala [1994] 2 BC 30, a Division bench of the Kerala High Court has held on more or less the same lines. It is held in para 9 as follows :

(3.) MRS. Agni, learned counsel appearing for the respondents, on the other hand, submitted that a breach of section 138 is a technical offence. It is sufficient if the complainant shows the court that a cheque has been issued which was dishonoured by the bank for whatever reason and a notice is followed as required under section 138, then the magistrate will get jurisdiction to entertain that complaint under section 138 of the Negotiable Instruments Act to issue process against the accused. She emphasised that the ground on which the cheque was dishonoured is immaterial. The only concern of the magistrate at the time of taking cognizance of the offence is whether there are materials to show that the cheque has been issued and whether it has been dishonoured. To fortify her argument, she cited the decision of Rakesh Nemkumar Porwal v. Narayan Dhondu Joglekar [1993] 78 Comp Cas 822; [1994] 3 Bom CR 355. Para. 18 of the judgment is relevant for the purpose of our case. It reads as follows (at page 835 of 78 Comp cas) :