ORDER :

Heard learned counsel for petitioner and learned counsel for respondent.

This petition is filed seeking to quash the complaint in C.C.No.764/2014 pending on the file of Judicial Magistrate, First Class (V Court), Mangaluru.

2. The respondent – State Bank of India filed a complaint under section 200 Cr.P.C., seeking action under section 138 of the Negotiable Instruments Act, 1881 (“N.I. Act” for short) for dishonour of the cheque issued by the petitioner herein for a sum of Rs.2,50,00,000/- (Rupees Two Crores Fifty Lakhs) drawn on Karnataka Bank Limited, Kadri Road, Pumpwell, Mangalore. According to the complainant, AZTEC Digitals Pvt. Ltd., borrowed a loan from State Bank of India, SME Branch. Towards the discharge of portion of the loan amount, as Director, the petitioner herein/accused issued the aforesaid cheque. The said cheque when presented for collection through Cheque Truncation System, the same was dishonoured on the ground of insufficient fund. Learned Magistrate took cognizance of the above offence and issued summons to the petitioner.

3. Petitioner has approached this court seeking quashment of the proceedings on the ground that averments made in the complaint are bald and vague. The loan facility was availed by the Company and not by the petitioner/ accused. The complainant has no locus standi to file the complaint inasmuch as the cheque in question was issued by the petitioner/accused in favour of the Company. The Company was the “holder in due course” of the said cheque and therefore, the complainant had no right over the cheque in question. There was no transaction between the petitioner/accused and the respondent/complainant and hence, there was no liability in respect of which the cheque could have been issued by the petitioner. In the absence of any indorsement by the Company, the complainant did not answer the description of “payee” or “holder in due course” of this cheque. As such, the complainant did not have any right to demand payment of the aforesaid cheque in view of provisions of section 138(b) of the N.I. Act.

4. Learned counsel for petitioner argued in line with the contentions urged in the petition and by placing reliance on the decision of this Court in KITTUR RANI CHENNAMMA URBAN COOP. CREDIT SOCIETY vs. MALLIKARJUN GANGADHAR PASALKAR, LAWS (KAR) 2018 (3) 341, in Criminal Revision Petition No.2321/2010 decided on 01.03.2018, with reference to paras 9 to 13 thereof, emphasized that the cheque in question having been crossed, the same was not negotiable and it was not a bearer cheque and therefore, the complainant was not entitled to initiate proceedings under section 138 of N.I. Act. It is contended that the Learned Magistrate has erred in taking cognizance of the alleged offence and issuing summons to the petitioner.

5. To counter the above argument, learned counsel for respondent has drawn my attention to the tenor of the cheque and pointed out that the word “bearer” in the cheque is not scored off, as a result, the cheque has remained a bearer cheque. The crossing of the cheque either generally or specially does not affect negotiation. It only mandates the banker to pay the proceeds to any banker if it is crossed generally and to particular banker if it is crossed specially, therefore, the contention urged by learned counsel for petitioner that respondent/complainant is not entitled to sue the drawer of the cheque is not a sound proposition of law. Further, referring to the averments made in the complaint that the cheque in question was issued by the petitioner towards discharge of the loan borrowed by the Company, of which the petitioner was the Director, there was subsisting liability in respect of which the cheque in question was issued by the petitioner. In the light of the said averments and in view of the specific provision contained in section 9 of the N.I. Act, respondent falls within the definition of “holder in due course” and under the said circumstance, respondent/complainant was