R. Regupathi, J. —The petitioners are accused for the offence punishable under Section 138 of the Negotiable Instruments Act in C.C. Nos. 4538/03, 7766/02, 16108/03, 806/03 and 10321 of 2002 respectively on the file of the learned XIV Metropolitan Magistrate, Egmore, Chennai.

2. As per the allegations and averments made in the Complaint, the petitioners have borrowed from the complainant, a Government of India undertaking, Rs.4,53,200 by way of Composite Term Loan. Initially a sum of Rs.92,384 has been paid by the accused. Repayment has been scheduled between the parties with a quarterly payment of Rs.27,104 to be paid for 20 instalments to complete the transaction. As per the agreement, the first instalment may have to commence on 1.6.2002. But on 9.7.2002, the accused have made payment of Rs.27,200 and subsequently, they paid a sum of Rs.8,000 on 11.4.2003. Apart from these two amounts, no other payments have been made, in spite of the demand. Therefore, five cheques for the five respective cases have been deposited for collection and after dishonour, after observing the formalities, the present complaints came to be filed by the complainant in the above said Crl. O.Ps. against the petitioners.

3. The learned counsel for the petitioners submits that on 15.10.2003, the complainant have broke upon the workshop and seizure of the machineries has been effected. The amount lent by the respondent/ complainant has been utilised only for the purpose of purchasing machineries and cheques have been entrusted with the complainant only as security. When the machineries themselves have been taken into custody by the complainant, debt or liability as mentioned in the Act does not arise at all. Under such circumstances, the offence under Section 138 of the Negotiable Instruments Act is not made out. The learned counsel for the petitioners, to substantiate his contention, relied on a Judgment reported in Sudha Devi v. State of Kerala and another1 wherein it has been held as follows:

“The owner has to take recourse to other legal remedies for recovery of the balance amount. If and when the vehicle is sold subsequently, the owner can recover the balance amount after adjusting the sale proceeds of the vehicle. Of course, in the post seizure scenario, it may be open to the parties to agree upon a new schedule of payment or restructuring of the hire transaction.”

Relying on the Judgment cited supra, the learned counsel for the petitioners submits that it has to be taken into consideration that the respondent/complainant has chosen to recover the machineries, for which, loan was extended. The value of those machineries may be over and above the amount mentioned in the cheque. Under such circumstances, there is no debt or liability and hence, the proceedings may have to be quashed.

4. Per contra, the learned counsel for the respondent/complainant submits that the seizure of the machineries was effected only on 15.10.2003. After the payments made on 9.7.2002 and on 11.4.2003, in spite of demand, the petitioners could not effect the payment of the quarterly instalments. That is the reason why five cheques have been deposited for collection, which has resulted in the dishonour. Those cheques have been deposited prior to the seizure of the machineries. After dishonour, notice has been issued to the petitioners, for which, no reply has been received by the respondent complainant. As per the provisions of the Negotiable Instruments Act, if payment not made, after receipt of notice, within a period of 15 days, cause of action arises and the respondent/complainant, after observing the formalities, filed the above said cases against the petitioners and cognizance of the offence has been taken by the learned Magistrate. All these exercises happened prior to the seizure of the machineries. Subsequent developments may have to be taken into account only during the course of the trial. The amount of Rs.4,53,200 was advanced, as per the agreement date