A notice under Section 138 of the Negotiable Instruments Act must demand payment from the cheque drawer to the payee and not a third party, or it is deemed invalid.

ORDER :

M.I. ARUN, J.

1. The aforementioned criminal petitions are filed with the following prayers:

(a) The prayers in Crl.P.No.4086/2019 read as under:

"(A) To quash the order dated 05.11.2018, passed by the Court of XXVII ACMM, Bangalore, taking cognizance against the petitioners herein for the offences punishable under Section 138 of NI Act and issuing summons to the petitioners herein by registering the case in CC No.30012/2018, in the interest of justice and equity.

(B) To quash the proceedings in CC NO.30012/2018, on the file of Court of XXVII ACMM, Bangalore, in the interest of justice and equity.

(C) To pass such other orders/directions deem fit in the facts and circumstances of the case, in the interest of justice and equity.”

(b) The prayers in Crl.P.No.3273/2019 read as under:

"(A) To quash the order dated 26.12.2016 passed by the Court of XXVII ACMM, Bangalore, taking cognizance against the petitioners herein for the offences punishable under Section 138 of NI Act and issuing summons to the petitioners herein by registering the case in CC No.28465/2016, in the interest of justice and equity.

(B) To quash the proceedings in CC NO.28465/2016, on the file of Court of XXVII ACMM, Bangalore, in the interest of justice and equity.

(C) To pass such other orders/directions deem fit in the facts and circumstances of the case, in the interest of justice and equity."

2. Both the criminal petitions are taken up together for consideration as both pertain to the same transaction.

3. An agreement regarding Debenture Trust Deed has been created between M/s. IL&FS Trust Company Limited, which is the Debenture Trustee, which is now succeeded to by the respondent herein and M/s. BCIL Realty Private Limited, which is the Debenture Issuer and Dr. Chandrashekhar Hariharan & Mrs. Kanchan Kaur, who are the promoters & petitioner nos.2 and 3 herein and M/s. Biodiversity Conservation India Private Limited, who is the Guarantor and petitioner no.1 herein. As per the terms of the agreement, an escrow account was created in the name and style of M/s. BCIL Realty Private Limited escrow account bearing No.00410350000182 and the respondent was authorized to handle the said account. As per the terms, petitioner no.1-Guarantor issued the following four cheques in favour of M/s. BCIL Realty Private Limited, the details of which are as follows:

1. Cheque bearing No.000417 dated 13.06.2017 for a sum of Rs.5,82,00,000/-.

2. Cheque bearing No.000418 dated 19.06.2017 for a sum of Rs.5,82,00,000/-.

3. Cheque bearing No.000415 dated 27.06.2017 for a sum of Rs.3,90,00,000/-.

4. Cheque bearing No.000412 dated 22.08.2016 for a sum of Rs.2,60,00,000/-

4. The respondent, who was authorized to operate the account, deposited the same for realisation. However, they have been dishonoured for insufficiency of funds.

5. As per the terms of the agreement, the respondent was required to realise the said cheques and pay the same in turn to the debenture holder, which is M/s. Bennett Property Holdings Company Limited ('BPHCL' for short).

6. As contemplated under Section 138 of the Negotiable Instruments Act, 1881 ('the Act' for short), the respondent/payee issued a notice dated 24.08.2017 in respect of three cheques bearing Nos.000417, 000418 and 000415 to petitioner no.1 and its Directors (petitioner Nos.2 to 4) demanding payment of the amounts mentioned in the said cheques. However, while demanding the said payment, the respondent has demanded that the amounts be paid to BPHCL. The relevant paragraph in the notice reads as under:

"7. In