The main legal point established in the judgment is that the criminal liability under Section 138 of the Negotiable Instruments Act applies to the person who draws the cheque, and the cheque must be issued in the name of the accused or under the accused's signatures to sustain the prosecution.

ORDER

R.L. Anand, J. - Present petition under Section 482 Criminal Procedure Code filed by Sh. P.K. Natrajan, for joint Managing Director of M/s. K.P. Yarns Private Limited has been directed against the filing of the complaint Annexure P.3 and against the summoning order dated 3.3.1997 vide which the petitioner was summoned as an accused in the proceedings under section 138 of the Negotiable Instruments Act.

2. Though M/s. Goyal Trading Company respondent No. 1 issued bales of cotton, M/s. K.P.V. Yarns Private Limited, respondent No. 3 but the fact remains that the cheque in dispute amounting to Rs. 8 lacs was issued by M/s Oswal Cotton Company. the quashment is being sought by the petitioner on the plea that the cheque admittedly has been issued by M/s Oswal Cotton Company and not by M/s. K.P.V. Yarns Private Limited of which he was a former Managing Director and moreover he had already resigned from the Directorship of M/s. K.P.V. Yarns Limited and, therefore, he could not be prosecuted in the complaint under section 138 of the Negotiable Instruments Act.

3. The stand which has been taken by respondent No. 1 is that as per agreement between respondents No. 2 and 3 M/s. Oswal Cotton Company issued a cheque in the sum of Rs. 8 lacs dated 7.6.1996 payable at Narwana as part payment on the asking of M/s. K.P.V. Yarns Private Limited with whom there was privity of contract. In there circumstances, the liability of M/s. K.P.V. Yarns Pvt. Limited will be there alongwith M/s. Oswal Cotton Company. It has further been argued by the learned counsel appearing on behalf of respondent No. 1 M/s. Goel Trading Company that it was represented by M/s. K.P.V. Yarns Private Limited that an agreement was arrived between it and that of Oswal Cotton Company relating to the business for conversion of cotton into yarn and that payment of the goods will be made by M/s Oswal Cotton Company. In these circumstances the cheque in question has been issued by M/s. Oswal Cotton Company. Mr. Mann has also submitted that since it is a question of evidence with regard to the liability of M/s. K.P.V. Yarns Pvt. Limited and its Joint Managing Director i.e. petitioner P.K. Natrajan, therefore, the complaint and the summoning order cannot be quashed against the petitioner.

4. I have considered the submissions made by the learned counsel for the respondent and am of the view that complaint under Section 138 filed by M/s Goel Trading Company against the present petitioner is an abuse of the process of law. Section 138 of the Negotiable Instruments Act is a special provision and the reading of the same would show that it is the criminal liability of a person who draws the cheque and such person alone can be convicted and sentenced in these proceedings. The cheque in question was not issued either in the name of M/s. K.P.V. Yarns or under the signatures of the present petitioner. In these circumstances, the prosecution of the petitioner cannot be sustained in the eyes of law. If a criminal liability is there of M/s K.P.V. Yarns Private Limited or that of Oswal Cotton Company under the general law, it is always open to respondent No. 1 Goel Trading company to file criminal complaint or to lodge a complaint with the police for the registration of the case under section 420 Indian Penal Code read with Section 120-B of the Indian Penal Code. It was still be open to respondent No.1 to file a civil suit for the determination of the liability of M/s K.P.V. Yarns Pvt. Limited. In this view of the matter, the present petition of P.K. Natrajan, is hereby allowed and the complaint and the summoning order which relates to Shri P.K. Natrajan is hereby quashed. Petition is partly allowed. Any observations made above shall not affect with regard of M/s Oswal Cotton Company.

Petition partly allowed.