IMPORTANT POINT
For fastening criminal liability on accused under Section 138 of Negotiable Instruments Act cheque which was dishonoured must have been drawn on an account maintained by accused.

Vaman Rao, J. - These two petitions under Section 482. Cr. P.C. have been filed for quashing the proceedings in C.C. No. 99 of 1999 and C.C. No. 104 of 1999 on the file of Special Mobile Court, Kareemnagar.

2. The petitioner who is the accused in both the cases, has been prosecuted for offence under Section 138 of Negotiable Instruments Act (for short the 'Act') on the ground that it is the Managing Director of the Company who issued the cheque and petitioner did not issue any cheque in his personal capacity and as such the offence under Section 138 of the Act cannot be fastened to the petitioner.

3. The gist of the allegations in the complaint may be noted. The complainant has been running finance business under the name Omsai Securities and Investments Private Limited. The accused approached the complainant for finance and requested the plaintiff to pay Rs, 6,40,000/-. The complainant paid to the accused a sum of Rs. 6,00.000/- through a Demand Draft and Rs. 40,000/ - in cash on 22711-1996.

The accused executed a memorandum of understanding in favour of the complainant and as per the terms of agreements he was to pay interest @ 24% per annum quarterly. The accused agreed to pay entire amount within six months. The accused after receiving the amount had issued four blank cheques for Rs. 6,00.000/-. The accused also agreed to issue share certificates. The complainant after waiting for the agreed period of six months demanded the accused for payment of the amount. The accused issued two cheques for a sum of Rs. 1,00,000/- each, one cheque for Rs. 1.40.000/- and another cheque for Rs. 3,00,000/- towards discharge of his debt.

4. The complainant presented two cheques of Rs. 1,00,000/- each for collection in his Bank, namely, Syndicate Bank at Kareemnagar which were sent for collection of the amount to Andhra Bank, Masab Tank, Hyderabad on which they were drawn. The cheques were returned on 31-7-1998 with an endorsement that payment was stopped by the drawer. Accordingly, the Masab Tank Branch issued returned memo on 28- 7 -1998 with the a150ve endorsement. It is further stated in the complaint that within 15 days from the date of receipt of this information regarding the return of the cheques the complainant got issued a statutory notice through his Advocate to the accused on 14-8-1998 calling upon the accused to pay the amount of Rs. 2,00,000/- due on the dishonoured cheques within 15 days from the date of receipt of notice. The accused received the said notice and sent his reply notice through G. Anandam, Advocate on 31-8-1998 but did not pay the amount covered by the cheques. Thus, the allegation is that the accused issued the cheques to the complainant with an intention to deliberately dishonoured the cheques by issuing the stop payment direction to the Bank. Thus, the accused is said to have committed the offence under Section 138 of the Negotiable Instruments Act.

5. The contentions raised in this petition for quashing the proceedings are two fold. Firstly, it is contended by the learned Counsel for the petitioner that the cheque was issued by Vijaya Industrial Gas Limited by its Managing Director. There is no mention in the complaint that it was issued at the instance of the accused/petitioner herein. In the complaint, the said Company Vijaya Industrial Gas Limited has not been shown as accused and the petitioner is the solitary accused in that complaint and he cannot be liable for prosecution under Section 138 of the Negotiable Instruments Act.

6. The next contention canvassed by the learned Counsel for the petitioner is that it is not a case where the cheques were returned unpaid of the ground of insufficiency of funds, but the return of the cheques was on the ground of instructions to the Bank not to pay by the petitioner. Therefore, it is contended that such non-payment of cheques does not constitute an offence under Section 138 of the Act. But this question has been answered by three-Judge Bench of the Supreme Court