ALLAHABAD HIGH COURT
Vijay Prakash Pathak, J.
Vijay Kumar Upadhyay —Applicant
versus
State of U.P. and Anr. —Opposite Parties
Criminal Miscellaneous Application No. 27216 of 2010
Decided on 01.10.2012

IMPORTANT POINT
The issuance of security cheques is not covered under the aforesaid Section 138 of the Act.

Headnote:Negotiable Instruments Act, 1881—Section 138—Petition for quashing of prosecution for offence on ground that condition imposed by proviso (b) and (c) to Section 138 of Act were not complied with—Legal notice was sent to applicant-accused in 07-12-2009 and it was returned with endorsement of postman dt.15.12.2009 that addressee was out of station—Complaint was filed on 23.12.2009—Whether complaint was pre-mature 7—Complaint averment that notice sent by UPC on 7-12-2009 was served upon appellant on 8.12.2009—It was disputed question of fact when legal notice was served and it could be decided only during trial.

       Held: According to allegations in the complainant, the notice sent by opposite party No.2 on 07.12.2009 was served upon the accused applicant on 08.12.2009 and the notice sent through registered post A.D. was returned back. A perusal of record shows that on the registered A.D. there is endorsement of the postman to the effect that the receiver was not met and his family members informed that he was out of station. The said endorsement was made on 15.12.2009. The said question of receiving of notice or refusal of notice or the endorsement of the postman are disputed question of facts, which can be considered only after perusing the evidence of both the parties during trial and the same cannot be adjudicated upon at this stage by this Court under its extra-ordinary jurisdiction under Section 482 of Cr.P.C.

       Learned counsel for the opposite party No.2 has also relied upon a judgment of the Hon’ble Apex Court given in Narsingh Das Tapadia v. Goverdhan Das Partani and another, AIR 2000 SC 2946. In the said verdict the Hon’ble Apex Court has been pleased to observe that the complaint filed before expiry of notice period contemplated by Section 138(c) of the Act cannot be dismissed as premature as taking cognizance and filing of complaint are distinct things.

       In the present matter, the contention on behalf of the applicant is that notice sent on 07.12.2009 was returned back with the endorsement dated 15.12.2009 of the postman that the applicant was out of station and the complaint was filed on 23.12.2009, hence, it was premature but learned counsel for the complainant has averred that the notice sent by UPC was served on 08.12.2009, hence the complaint filed on 23.12.2009 was not premature and even if it was found premature, it cannot be dismissed on this ground as has been held by the Hon’ble Apex Court in the aforesaid verdict Narsingh Das Tapadia v. Goverdhan Das Partani and another (supra). It has already been observed above that the matter of service of notice or refusal or endorsement of the postman are question of facts, which can be adjudicated only after perusing the evidence of the parties during trial, hence, this Court cannot adjudicate the said aspects at this stage. (Para 11 to 13)

       (ii) Negotiable Instruments Act, 1881—Section 138—Petition for quashing complaint and summoning order for offence on plea that cheque was issued as security and not for discharge of debtor liability—Complainant averments were that accused borrowed a sum of Rs.1,75,000/- from complainant to set up a brick-kiln and issued cheque for said amount as security and towards repayment of said amount —Facts showing that cheque was given by accused as security—Security cheque issued for any amount is not covered under Provision of section 138 of the Act—Proceedings were liable to be quashed.

       Held: The main contention which has been raised by learned counsel for the applicant is that the alleged cheque was issued as a security cheque which is not covered under Section 138 of the Act. In support of his contention, he has cited a verdict of the Hon’ble Apex Court given in Sudhir Kumar Bhalla v. Jagdish Chand and Others, 2009(64) ACC 209. In the said verdict the Hon’ble Apex Court has been pleased to observe that the High Court has not addressed itself on the legal question raised before it by the appellant that the criminal liability of appellant under the provisions of Section 138 of the Act are attracted only on account of dishonour of cheque issued in discharge of liability or debt but not on account of issuance of security cheques. Hence, the matter was remitted to the High Court.

       In the present matter, the money was advanced on 30.06.2009 and the cheque was issued by the applicant

       In counter affidavit filed on behalf of the complaint opposite party No. 2, it has specifically been stated in para 5 that the said cheque was given by the accused-applicant to the opposite party No. 2 as security, which was presented for encashment and the same was dishonoured.

       In view of the said facts, it is apparent that the said cheque was issued as a security cheque and in view of Section 138 of the Act, if the cheque issued for 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, the same shall be deemed to the considered an offence. The security cheques issued for any amount is not covered in the said Section.

       From a bare reading of Section 138 of the Act, it is clear that the provision of the said Section are attracted only on account of dishonour of cheque issued in discharge of liability or debt and not on account of issuance of security cheques. Hence, the issuance of security cheques is not covered under the aforesaid Section 138 of the Act. As the security cheques are not covered under the said Section, so in the present matter the bouncing of cheque, which was issued as a security cheque, is not punishable under Section 138 of the Act, hence, the criminal proceeding against the accused applicant for dishonour of cheque cannot go on and accordingly the filing of complaint under Section 138 of the Act in the present matter and summoning order passed by the learned Magistrate and further proceedings in pursuance thereof are nothing but an abuse of process of the Court, which are liable to be quashed. (Para 14 to 18)

       Result: Petition allowed.