IMPORTANT POINT
Where the cheque was issued in discharge of liability of a firm but it was drawn by manager of firm in his individual capacity and drawn on his personal account then firm and is partners could not be roped in as Section 141 Negotiable Instruments Act was not attracted.

C. Y. Somayajulu, J.—Private complaint filed by the first respondent against petitioners and M. S. Ramarao under Section 138 of the Negotiable Instruments Act, 1881 (the act) and Section 420 IPC was taken cognizance of only under Section 138 of the Act by the learned Magistrate, while referring the complaint under Section 420 IPC to police for investigation under Section 156(3) Cr. P.C. The Police, after investigation, filed a final report stating that no case under Section 420 IPC is made out. Protest petition in Crl. M. P. No. 1501 of 2003 filed by the first respondent seems to have been dismissed. This petition is filed by the petitioners to quash the proceedings under Section 138 of the Act against them.

2. The case in brief of the first respondent is that first petitioner firm is the Dealer of the products of Indo Burma Petroleum Company Limited, of which second petitioner is Managing Partner and M.S. Ramarao (A-3) is Manager. To meet its business requirements first petitioner borrowed amounts on various dates from him, and second petitioner and A-3 on behalf of the first petitioner, had on 6.11.2002 issued three post-dated cheques, for Rs. 1,05, 150 dated 29.4.2003 drawn on State Bank of Hyderabad, Mancherial branch, Rs. 3,25,000 and Rs. 4,00,000 dated 5.5.2003 drawn on State bank of Hyderabad, Garimella Branch. On 2.5.2003, second petitioner and M. S. Ramarao (A-3) informed him that due to some unexpected reasons they could not arrange funds and requested him to present the aforesaid cheques in the month of July, 2003 and so he presented those cheques on 8.7.2003 for payment. Cheque dated 29.4.2003 for Rs. 1, 05, 150 only was honoured and the remaining two cheques for Rs. 3,25,000 and Rs. 4,00,000 were bounced. So, he got issued a statutory notice dated 16.8.2003 to the petitioners and A-3 bringing to their notice about the dishonour of the aforesaid two cheques, and , demanding payment of the amount covered by those cheques for which petitioners gave a reply dated 3.9.2000 denying their liability to pay the amount, but M. S. Ramarao (A-3) did not give a reply. Since the amount covered by the two dishonoured cheques is not made by the petitioners and M. S. Ramarao (A-3), they are liable for punishment under Section 138 of the Act and 420 IPC.

3. The contention of the learned Counsel for petitioners is that since the dishonoured cheques were not drawn by or on behalf of the first petitioner, which is a firm, but were drawn by A-3, on an account maintained by him, neither the first petitioner, nor the second petitioner as partner of the first petitioner firm, are liable under Section 138 of the Act. The contention of the learned Counsel for the first respondent is since A-3 as Manager of the first petitioner firm, had issued the dishonoured cheques to the first respondent towards discharge of the amount due to him from the first petitioner, knowing that those cheques will not be honoured, there is prima facie case for an offence under Section 420 IPC, but the learned Magistrate was in error in rejecting the protest petition, and so there are no ground to quash the proceedings and the first respondent may be permitted to proceed against the petitioners for an offence under Section 420 IPC.

4. As rightly contended by the learned Counsel for the petitioners since the dishonoured cheques were drawn by M.S. Ramarao on an account maintained by him in the State bank of Hyderabad, Garimella Branch, Petitioners who are not the drawers of the dishonoured cheques cannot be made liable under Section 138 of the Act had the cheques been drawn by the second petitioner on behalf of the first petitioner on an account maintained by it, first petitioner as the drawer of the cheque and second petitioner as partner of the first petitioner, who drew the cheque on its behalf, would have been liable, by virtue of Section 141 of the Act. Since petitioners are not the drawers of the dishonoured cheques and since those cheques were also n