IMPORTANT POINTS
Legal fiction created in a statute is required to be given full effect, but it cannot be taken recourse to for any other purpose than the one mentioned in the statute itself.
A penal provision created by legal fiction must be construed strictly.
Section 138 of the NI Act, 1881 would apply if either the amount of money standing to the credit of that account being insufficient to honour the cheque, or, the amount of cheque it exceeds the amount arranged to be paid from that account by an agreement made with that bank.
Court taking cognizance u/s 138 is entitled to consider the allegations in the complaint and the evidence of the complainant and his witnesses only, nothing else.

Judgment :-

S.B. SINHA, J.

1. Leave granted.

2. Whether return of a cheque by the bank on the ground that it was reported lost by the drawer would attract the penal provisions contained in Section 138 of the Negotiable Instruments Act, 1881 (for short "the Act") is the question involved in this appeal. It arises out of a judgment and order dated 18.09.2007 passed by the High Court of Delhi in Criminal M.C. No. 2890 of 2007.

3. The said question arises in the following factual matrix.

Appellant kept two blank cheques in his office along with some stamp papers. They were said to have been stolen from his office. Information as regards missing of the said cheques was also given to the bank. He lodged a First Information Report with regard thereto, stating:

"...On my return to Digras, I found that the cheques and the stamp worth Rs. 50 bearing only my signatures had been stolen, therefore, to prevent any misuse of my cheques, I sent a written information to State Bank, Branch Digras and subsequently on 21-04-01 I filed a complaint in Police Station Digras...."

The blank cheques were allegedly filled up on 24.06.2001. They were presented before the bank but the same were returned dishonoured with the remarks "said cheque reported lost by the drawer". Respondent No. 2 thereafter upon issuance of notices in terms of the proviso appended to Section 138 of the Act filed a complaint petition in the Court of Chief Metropolitan Magistrate, Delhi, inter alia, alleging:

"5. That the above said cheque in question was presented by the complainant for encashment through its bearers, namely State Bank of India, Azadpur Branch, Delhi 33, but the same was returned as dishonoured with the remarks "SAID CHEQUE REPORTED LOST BY THE DRAWER". This intimation was received by the complainant from the bankers on 27.7.2001 and accordingly a notice dt. 3.8.2001 was sent to the accused requesting the accused to make payment of the above said cheque amount and on 17.8.2001 the accused sent reply through his Advocate denying his liability falsely taking the plea that the cheque in question was lost as stolen by the complainant...

6. That the accused has taken the above said false pleas knowing it fully well that he does not intend to make payment of the said cheque amount, and the complainant is thus compelled to file this complaint.

7. That the issuance of the cheque by the accused and informing wrongly his own bankers about the loss/ theft of the cheque, with no intention to make payment thereof, rather showing that right from the time he issued the cheque, he had intention to cheat and defraud the complainant by making false representations and thus the accused has willfully committed an offence punishable under Sections 138 and 142 of the Negotiable Instruments Act read with Section 420 IPC and is liable to be punished accordingly."

4. It is not in dispute that the Superintendent of Police, Digras has issued a certificate showing that FIR No. 57 of 2003 arising out of the First Information Report filed by the appellant before the Station House Officer, Digras had been closed. It is furthermore not in dispute that the appellant in the meanwhile filed a complaint petition under Section 380 read with Sections 34, 467, 468 and 471 as also Sections 420 and 120B of the Indian Penal Code in the Court of Judicial Magistrate First Class and the same is pending adjudication.

Admittedly, the appellant had lodged a First Information Report under Sections 369, 495, 498, 420 and 34 of the Indian Penal Code with the Police Station Digras against the respondent No. 2 and his brother, wherein also a closer report has been submitted.

Appellant has filed another criminal complaint against the respondent No. 2 under Section 409 of the Indian Penal Code which has also been dismissed on the ground that the dispute is of civil nature.

5. Appellant has moreover filed a suit for recovery of a sum of Rs.31,40,131.43 in the Court of Civil Judge, Sr. Division, Darwha, Madhya Prade