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Andhra Pradesh High Court
Judges : G.RADHA KRISHNA RAO, I.P.RAO
Syed Rasool and Sons - Appellant
Versus
Aildas and Company - Respondent
Decided On : 09-30-92
NEGOTIABLE INSTRUMENTS ACT, 1881 - SECTION 138 - DISHONOUR OF CHEQUE FOR INSUFFICIENCY OF FUNDS - "REFER TO DRAWER" ENDORSEMENT - INTERPRETATION - CAUSE OF ACTION - SECOND PRESENTATION OF CHEQUE - LIMITATION - JURISDICTION OF COURT - INHERENT POWERS UNDER SECTION 482 OF THE CRIMINAL PROCEDURE CODE.
Fact of the Case:
Two criminal petitions were filed under Section 482 of the Criminal Procedure Code for quashing two calendar cases filed under Section 138 read with Section 142 of the Negotiable Instruments Act, 1881 (the Act). The issue in both cases was whether the endorsement "refer to drawer" on a dishonored cheque necessarily meant insufficiency of funds in the drawer's account.
Finding of the Court:
The court held that the endorsement "refer to drawer" necessarily means, as per banking custom, that the cheque has been returned for want of funds in the account of the drawer of the cheque. The court further held that there can be only one cause of action on a cheque and that the limitation period for filing a complaint under Section 138 of the Act begins from the date of the last dishonor of the cheque. The court also held that the inherent powers under Section 482 of the Criminal Procedure Code can be used as a shield to prevent the abuse of the process of the court but not as a sword or weapon to pre-empt or abort the proceedings initiated on a complaint which requires due enquiry and trial.
Issues: 1. Whether the endorsement "refer to drawer" on a dishonored cheque necessarily means insufficiency of funds in the drawer's account? 2. Whether there can be more than one cause of action on a cheque? 3. When does the limitation period for filing a complaint under Section 138 of the Act begin? 4. Can the inherent powers under Section 482 of the Criminal Procedure Code be used to quash proceedings initiated on a complaint which requires due enquiry and trial?
Ratio Decidendi: 1. The court held that the endorsement "refer to drawer" necessarily means, as per banking custom, that the cheque has been returned for want of funds in the account of the drawer of the cheque. The court relied on the following factors: - The scheme of the Act, which provides for a specific procedure for filing a complaint under Section 138 in cases of dishonor of cheques due to insufficiency of funds or exceeding the arranged amount. - The banking parlance, which uses the term "refer to drawer" to indicate that a cheque has been returned for want of funds. - The intention of the Legislature, which is to prevent the abuse of the process of law by allowing multiple prosecutions and convictions on the strength of one cheque. 2. The court held that there can be only one cause of action on a cheque. The court relied on the following factors: - The scheme of the Act, which provides for a specific procedure for filing a complaint under Section 138 in cases of dishonor of cheques due to insufficiency of funds or exceeding the arranged amount. - The intention of the Legislature, which is to prevent the abuse of the process of law by allowing multiple prosecutions and convictions on the strength of one cheque. 3. The court held that the limitation period for filing a complaint under Section 138 of the Act begins from the date of the last dishonor of the cheque. The court relied on the following factors: - The scheme of the Act, which provides for a specific procedure for filing a complaint under Section 138 in cases of dishonor of cheques due to insufficiency of funds or exceeding the arranged amount. - The intention of the Legislature, which is to prevent the abuse of the process of law by allowing multiple prosecutions and convictions on the strength of one cheque. 4. The court held that the inherent powers under Section 482 of the Criminal Procedure Code can be used as a shield to prevent the abuse of the process of the court but not as a sword or weapon to pre-empt or abort the proceedings initiated on a complaint which requires due enquiry and trial.
Final Decision: The court dismissed both criminal petitions.
( 1 ) THESE two criminal petitions are filed under section 482 of the Criminal Procedure Code for quashing C. C. No. 143 of 1992, on the file of XI Metropolitan Magistrate, Secunderabad, and C. C. No. 481 of 1991, on the file of the II Additional Munsif-Magistrate, Tirupathi.
( 2 ) THE accused in C. C. No. 143 of 1992, on the file of the XI Metropolitan Magistrate, Secunderabad, are the petitioners in Criminal Petition No. 689 of 1992, while the accused in C. C. No. 481 of 1991, on the file of the II Additional Munsif-Magistrate, Tirupathi, is the petitioner in Criminal Petition No. 967 of 1992. Respondent No. 1 in both the criminal petitions are the complaints in C. C. No. 143 of 1992 and C. C. No. 481 of 1991, respectively.
( 3 ) THESE petitions have come up for hearing before this Bench on a reference made by our learned brother, Iyyapu Panduranga Rao J. , in Criminal Petition No. 967 of 1992, and by one of us (i. e. , G. Radhakrishna Rao J.) in Criminal Petition No. 689 of 1992.
( 4 ) THE complaints, in both the calendar cases, have been filed under section 138 read with section 142 of the Negotiable Instruments Act, 1881 (Act No. 26 of 1881), hereinafter referred to as "the Act".
( 5 ) AS the point of law involved in both the criminal petitions is one and the same, they have been heard together and a common order is being passed.
( 6 ) A brief reference to the facts on both the petitions is necessary for deciding the points of law involved therein.
( 7 ) THE case set up by the first respondent in Criminal Petition No. 967 of 1992 (who is the complainant in C. C. No. 481 of 1991), is briefly as follows : The petitioner (accused) issued a cheque, bearing No. 2271604, for Rs. 33,750, on 23/10/1990, in favour of the first respondent on M. G. Road Branch of Indian bank, Bangalore. The said cheque was presented for collection but the same bounced. Consequently, the first respondent (complainant) contacted the petitioner on telephone, whereupon he was advised to represent the said cheque on or after 25/02/1991. Accordingly, the first respondent represented the cheque on 28/02/1991, but, once again, the same bounced with the endorsement "refer to drawer" and the same was accordingly intimated to the first respondent on 11/03/1991, by registered post. Thereupon, the first respondent issued a notice on 14/03/1991, calling upon the petitioner to pay the amount covered by the cheque in question. Since there was no reply from the petitioner, the first respondent filed C. C. No. 481 of 1991, under section 138 of the Negotiable Instruments Act and section 420 of the Indian Penal Code against the petitioner-accused.
( 8 ) AS already stated, Criminal Petition No. 967 of 1992, has been filed by the petitioner-accused under section 482 of the Criminal Procedure Code alleging that even if taking all the allegations at their face value as true, they do not constitute an offence within the meaning of section 138 of the Act. It is contended on behalf of the petitioner that the endorsement "refer to drawer" does not necessarily indicate insufficiency of funds alone and in such circumstances it cannot be said that an offence under section 138 of the Act has been made out by the first respondent. Reliance was placed on the decisions in Union Road Ways (P.) Ltd. v. Shah Ramanlal Ritesh Kumar [1992] 1 An WR 372; [1993] 76 Comp Cas 315 (AP) and Hunasikattimath (G. F.) v. State of Karnataka [1991] 1 Crimes 226; [1993] 76 Comp Cas 278 (Kar ).
( 9 ) IT is further contended that when once the cheque was not honoured, there cannot be a second cause of action relating to the same cheque and the proceedings under section 138 of the Act, on the endorsement "refer to drawer" are not sustainable. It is next contended that the forwarding of the complaint under section 156 (3) of the Criminal Procedure Code to the police is illegal and without jurisdiction for the reason that the payee has to file a private complaint only under section 20
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