The issuance of a cheque as security and subsequent repayment can render proceedings under Section 138 of the Negotiable Instrument Act unsustainable.

JUDGMENT :

(Prayer: Criminal Original petition filed under Section 482 of Code of Criminal Procedure, to call for the records pertaining to the Criminal Proceedings bearing S.T.C.No.495 of 2020 pending on the file of the learned Judicial Magistrate No.1, Salem and quash the same.)

This petition has been filed to quash the proceedings in S.T.C.No.495 of 2020 pending on the file of the learned Judicial Magistrate No.1, Salem, thereby taken cognizance for the alleged offence punishable under Section 138 of Negotiable Instrument Act.

2. The respondent lodged a complaint for the offence punishable under Section 138 of Negotiable Instrument Act, alleging that the petitioner and the respondent are friends. Due to their friendship, the petitioner borrowed a sum of Rs.1,75,000/- for his urgent family and business expenses. As per the said request, the respondent arranged a loan in favour of the petitioner herein. In order to repay the said amount, the petitioner issued a cheque for a sum of Rs.1,75,000/- and the same was presented for collection on 05.08.2019. However, it was returned for the reasons -payment stopped by drawer- as per Memo dated 06.08.2019. After execution of statutory notice, the respondent lodged a complaint.

3. Though notice has been served on the respondent and his name is printed in the cause list, there is no representation for the respondent either in person or through counsel.

4. A perusal of the records reveals that the petitioner borrowed a sum of Rs.60,000/- from the respondent’s mother on 19.08.2018 to meet the school fees of the petitioner-s daughter. At the time of availing the loan, the petitioner had given two cheques including the impugned cheque in the present case as security purpose. The petitioner also executed a promissory note in favour of the respondent-s mother. The petitioner has been paying interest regularly to the respondent-s mother without any default. After payment of entire loan amount, the respondent-s mother failed to return the cheque, and as such the petitioner lodged a complaint on 04.08.2019, before the Inspector of Police, Ammapet Police Station. On receipt of the said complaint, the petitioner was issued CSR No.618 of 2019 and the Inspector of Police, Ammapet has been conducted enquiry with the respondent-s mother. Immediately, on 05.08.2019, the respondent filled a cheque in his name and presented it for collection.

5. In fact, even before that the petitioner issued a letter to his banker not to honour the cheque and stopped the payment. Accordingly, the petitioner-s banker returned the cheque by stopping the payment. On the strength of the returned cheque, the respondent caused statutory notice on 09.08.2019. In fact, on 09.08.2019, the petitioner caused legal notice to the respondent-s mother thereby calling upon her to return the original cheque viz., the impugned cheque, unfilled signed promissory note belonging to the petitioner and a letter of undertaking within a period of seven days from the date of receipt of that legal notice. It was also duly acknowledged by the respondent-s mother.

6. The petitioner also caused a reply notice on the statutory notice issued by the respondent on 18.08.2019. A perusal of the reply notice reveals as follows :

4. My client states that he never issued the cheque in your clients favour and the never promised to pay the interest after the settle the principal amount as averred in your notice does not give any meaning. It itself says there is no money transaction between your client and my client.

5. My client states that at a came look itself that the averments and allegation of your notice are reveals false and it speaks an ulterior motive of your client to cheat my client.

6. My client states that he never issued the cheque No.002386 drawn on ICICI Bank, duly dated 05.08.2019 for an amount of Rs.1,75,000/- (Rupees One Laksh Seventy Five Thousand only) in favour of your client.

7. My client states that the question of promise for honour the above che