IMPORTANT POINT
Dishonour of cheque with remark “account closed" is no bar on Magistrate to take cognizance of offence u/s 138 of Negotiable Instruments Act.

D. Reddeppa Reddi, J - These three petitions have been filed under Section 482 of the Code of Criminal Procedure, 1973 (for short 'the Code ') to quash the proceedings in Calender Case Nos. 101, 505 and 100 of 1993 on the file of the V Metropolitan Magistrate, Hyderabad, which have been taken cognizance under Section 142 of the Negotiable Instruments Act, 1881 (for short 'the Act').

2. The petitioner is a company registered under the Companies Act, 1956 and it is being prosecuted for an offence punishable under Section 138 of the Act on a complaint filed by the respondent, viz., Messrs. Nagarjuna Investment Trust Ltd When these petitions came up for admission, while ordering notice to the respondent before admission, interim stay was granted on 19-10-1994. On receipt of the notice, the respondent-entered appearance and filed a petition in each case to vacate the interim stay dated 19-10-1994. When they came up for consideration before me, the learned Counsel appearing on either side agreed to have the main petitions disposed of It is, accordingly done.

3. The undisputed facts are: The petitioner issued the cheques each for Rs. 404, 593-20ps., in favour of the respondent and they were dishonoured when presented by the respondent for realisation with the remark "account closed". Notice was issued by the respondent to the petitioner as contemplated under Section 138 of the Act before filing the complaint in each case. It is admitted that complaint has been filed in each case within the period of limitation prescribed under Section 142 of the Act.

4. The principal submissions of Sri P. Venugopal, learned Counsel for the petitioner, are:

(a) The provisions of the Act are not attracted when the cheques are dishonoured due to closure of account.

(b) The closure of the account on which the cheques were issued was as per the instructions of the State Bank of Indore, the principal financier of the petitioner and therefore the petitioner is not liable to be prosecuted.

(c) The provisions of Section 138 being penal in nature should receive strict construction.

5. In opposition, it is contended by Sri A.T.M. Rangaramanujam, learned Counsel for the respondent that the points raised in the petitions are squarely covered against the petitioner by series of judicial pronouncements of various High Courts and the petitions are liable to be dismissed.

6. Learned Counsel for the petitioner, in order of sustain his first submission, contends that Section 138 of the Act provides for punishment only under two eventualities, viz., (i) in-sufficiency of the amount in the account of the drawer of the cheque to honour the cheque;

(ii) the amount covered by the cheque exceeded the arrangement to be paid to the account and not on any other ground.

In support thereof, he places strong reliance on the decision of K. Ramachandraiah J, of Karnataka High Court in G.F. Hanasikathimath vs. State of Karnataka & others1, which has been followed by Pratap Singh J, of Madras High Court in S. Prasanna v. R. Vijayalakshm2. True, it has been held in these two cases that the prosecution under Section 138 of the Act could be sustained only under the two eventualities mentioned above and not on any either ground. In G.F. Hanasiathimath’s case (supra), the learned Judge referred to the following observation of a Division Bench of that Court in T.E.C.H. Society Ltd. v. S.C.S.T.M.T & Backward Classes Improvement Centre3.

"(1) The Court will not extend the law beyond its meaning to take care of a broader legislative purpose. Here "strict" means merely that the Court will refrain from exercising its creative function to apply the rule announced in the statute to situations not covered by it, even though such an extension would help to advance the manifest ulterior purpose of the statute. Here, strictness relates not to the meaning of the statute but to using the statute as a basis for judicial law making by analogy with it".

With great respect to the learned Judges, I cannot p