IMPORTANT POINT
Inference drawn by the complainant from bank endorsement "Refer to Drawer" while returning the cheque that cheque was issued without necessary funds in the account is wrong & complaint under section 138 of Negotiable Instruments Act is bad and not maintainable.

Eswara Prasad, J. - The petitioners are accused in C.C. No. 110/90 on the file of the VII Additional Judicial First Class Magistrate, Vijayawada for the offences punishable' under sections 138 and 142 of the Negotiable Instruments Act. The first petitioner is the company and the second petitioner is the Director. According to the complainant a cheque was issued by the second petitioner for Rs. 19,000/- on 8.6.1990 in favour of the first respondent and the said cheque was presented on 19.6.1990 and was returned by the bank on 20.6.1990 with an endorsement "Refer to Drawer". Presuming that the said endorsement made that the said cheque was issued without necessary funds in the account of the petitioners, the first respondent laid the complaint stating herein he issued a registered notice dated 23.6.1990 calling upon the petitioner to pay the said amount and the petitioners have failed to pay the amount.

2. The learned counsel for the petitioners submits that blank cheques were kept in the custody of the Branch Manager of the Company; on their being misused by the said Branch Manager, a complaint was launched with the police and F.I.R. dated" 24.6. 1990 was issued. He further submits that no offence is made out under section 138 of the Negotiable Instruments Act, in as much as the cheque was not returned with the endorsement that "it was returned because of insufficiency of the funds" standing in the name of the petitioners in their bank account as required by section 138 of the Act."

3. A reading of the complaint shows that the cheque was returned with the endorsement "Refer to Drawer". From this, the complainant inferred that the cheque was issued without necessary funds in the account of the petitioners and the 'cheque was returned on account of the insufficiency of funds in their account. Such an inference cannot be drawn. The cheque might have been returned for various reasons. Under similar circumstances the Punjab and Haryana High Court in Abdul Samad v. Satya Narayana Mahawar1, held that there is no justification to let the proceedings continue. To the same effect is the decision of the Karnataka High Court reported in Hunasikattimath v. State of Karnataka2.

4. In view of the averments in the complaint stating that the cheque was returned for being referred to the drawer, the offence under section 138 of the Negotiable Instruments Act, is not made out in the complaint. The proceedings in C.C. No. 110 of 1990 on the file of the VII, Additional Judicial First Class Magistrate, Vijayawada, are accordingly quashed.

5. The Criminal Petition is allowed.

Petition allowed.

1. 1990(2) Bank C.I.R. 416 (P & H HC).

2. 1991 (I) KLT 37 (Kar. H.C.)