ORDER: The petitioners who are accused 1 to 10 (in Crl.O.P.No.2983 of 1998) and 1 to 11 (in Crl.O.P.No.2984 of 1998) have filed these petitions under Sec.482, Crl.P.C. to quash the proceedings in C.C.Nos.7080 and 7081 of 1997 respectively on the file of the XVIII Metropolitan Magistrate, Saidapet, Chennai.

2. The 1st petitioner represented by the 2nd petitioner had availed a grant of an Inter Corporate Deposit on short term basis to the tune of Rs.two crores on 3.3.1997 and the 1st petitioner executed two promissory notes dated 3.3.1997 each of Rs.1 crore understanding to repay the said sum with interest at the rate of 20% per annum within 60 days i.e., by 2.5.1997. The 1st accused also issued cheques dated 2.5.1997 for the said sum. As the amount was not paid in time, the 1st petitioner requested for extension of time and issued cheques bearing Nos.138822 and 138934, dated 31.7.1997 for the said sum. The 2nd petitioner executed a personal guarantee and security of shares worth Rs.two crores. On the basis of those documents, the respondent extended the period of loans till 31.7.1997. On 24.7.1997, the 1st accused sent a letter requesting the complainant not to present the cheques on 31.7.1997, despite which the cheques had been presented by the complainant on 31.7.1997 in the Bank of Baroda, Alwarpet, Chennai and the cheques were returned on 1.8.1997 with the endorsement “payment stopped by drawer”. The complainant issued a notice dated 5.8.1997 and the same has been returned unserved with the endorsement “refused” on 12.8.1997. Thereafter the complainant has preferred these complaints under Sec.138 of the Negotiable Instruments Act, which were taken in C.C.Nos.7080 and 7081 of 1997 by the learned XVIII Metropolitan Magistrate, Saidapet, Chennai.

3. The petitioners have raised five grounds for quashing the said proceedings.

4. The respondent/complainant has filed counter refuting those grounds.

5. The major grounds of challenge are:

(i) By letter dated 24.7.1997 the petitioners requested the respondent not to present the cheques on 31.7.1997 and they had given instruction to the bank to “stop payment” and inspite of it when the complainant presented the cheques for collection, it was returned with the endorsement "Payment stopped by drawer" and therefore the petitioners are not liable under Sec.138, Negotiable Instruments Act.

(ii) There are no sufficient allegations in respect of the petitioners 2 to 10 and 2 to 11 made in the complaints except that they are directors of the 1st petitioner company responsible for the day to day management of the affairs of the company and no specific allegation has been raised against them.

(iii) The complaints were filed by one Mr.K.G.Sampath, Manager, Finance, of the complainant company on 24.7.1997 and the said person has no authorisation from the complainant company to sign or file the criminal complaint for and on behalf of the said company.

(iv) The cheques were given only as security towards the loan amount and the accused had also given security of shares worth Rs.2 crores to the complainant company, that the complainant/respondent has encashed cheques for Rs.2,67,396 and Rs.3,87,124 respectively towards the interest on the said loan amounts for the period 1.8.1997 to 30.9.1997 and they extended the period of loan by three months from 30.7.1997.

(v) The petitioners 2 to 10 and 2 to 11 in Crl.O.P.Nos.2983 and 2984 of 1998 respectively, have their office in Worli, Mumbai, whereas the notices were sought to be served in their address at Jaipur, and returned as "refused" which cannot amount to constructive service of notice and the same vitiates the proceedings.

6. In support of the first contention that in spite of the petitioners’ notice not to present the cheque for encashment, yet the payee presented the cheque to the Bank for payment and when it is returned the petitioners are not liable. To substantiate his contention, the petitioner has relied on two decisions of the Supreme Court of India.

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