IMPORTANT POINT
When the cheque has been returned unpaid the endorsement "accounts closed the case does not fall them the ambit of section 138 of the Negotiable Instruments Act.

Pratap Singh, J. - The accused in C.C. No. 894 of 1991 on the file of IX Metropolitan Magistrate, Said a pet, Madras has filed this petition, under section 482, Cr. P.C., praying to call for the records in the aforesaid C.C. No. 894/91 and quash the same.

2. The respondent has filed the private complaint against the petitioner arraying him as the accused. The allegations in it are briefly as follows:

The accused wanted certain amount as hand loan. The complainant agreed and gave hand loan. The accused promised to return the borrowed amount in stages and parted the postdated cheques. One of the cheques, dated 24th December, 1990, issued by the accused for Rs. 36,250 was presented for encashment on 11th January, 1991. It. was returned the an endorsement 'account closed' the a bank memo, dated 18th January, 1991. The complainant sent notice through lawyer on 19th January, 1991 to the accused by registered post the acknowledgment due. It was returned the an endorsement 'not found' at delivery time. The accused had deliberately evaded receipt of the registered notice. Hence the complaint.

3. The petitioner seeks to quash this complaint.

4. Mr. A. Ramesh, the learned counsel appearing for the petitioner would contend:

(i) The cheque was returned the an endorsement account closed and hence the requirement of section 138 of Negotiable Instruments Act are not satisfied and offence is not made out.

(ii) Notice sent by the complainant was not served on the accused and hence occasion to pay the amount them 15 days of service of notice does not arise and on that ground also the offence is not complete.

Per contra, Mr. K. Ravichandra Babu, the learned counsel for the respondent would contend that the accused had not intimated the complainant that he had closed the account and while so, the return of the cheque the endorsement account closed would satisfy the requirements of the Act.

5. For appreciating the rival contentions, regarding first ground, the first portion of section 138 Negotiable Instruments Act needs extraction. It reads as follows:

"Where any cheque drawn by a person on account maintained by him the a banker for payment of any amount of money to another person from out of that account for the discharge, in whole or in part, of any debt or other liability, is returned by the bank unpaid, either because of the amount of money standing to the credit of that account is insufficient to honour the cheque or that it exceeds the amount arranged to be paid from that account by an agreement made the that bank, such person shall be deemed to have committed an offence and shall, the out prejudice to any other provision of this Act, be punished the imprisonment for a term which may extend to one year, or the fine which may extend to twice the amount of the cheque or the both." (empbasis supplied)

A plain reading of section 138 Negotiable Instruments Act would show that only if the cheque was returned by the bank unpaid because of the above two contingencies, offence under section 138 of the Negotiable Instrument Act is made out. In the instant case, the cheque was returned unpaid the endorsement 'account closed'. Hence this case docs not fall them the ambit of section 138 of Negotiable Instruments Act. In this regard, the learned counsel for the petitioner relied upon the ruling reported in G.F. Hunasikathimathi v. State of Karnataka1. In that case, dishonour of the cheque was on the ground account closed. The learned Magistrate had dismissed the private complaint filed on such dishonour, for offence under section 138 Negotiable Instruments Act. Aggrieved by that order, the complainant took up the matter to the High Court under section 482, Criminal Procedure Code. It was held that section 138 of Negotiable Instruments Act provides for punishment only in case cheque was returned unpaid due to:

(i) insufficiency of the amount in the account of the drawer of the cheque to honour the cheque;

(ii) the amount covered by the ch