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2004 Supreme(Online)(Guj) 1

GUJARAT HIGH COURT
N. B. Patel, J
Urban Cooperative Credit Society v. State
Criminal Revision Application No. 304 of 2001 | Criminal Revision Application No. 305 of 2001



Advocates:
For the Appellants/Petitioners: D.C. Sejpal
For the Respondents: T.S. Nanavati, S.J. Dave, Mihir Thakore, Singhi & Company

The issuance of a cheque that is later dishonored due to the closure of the account on which it was drawn does not constitute an offence under Section 138 of the Negotiable Instruments Act.

Headnote:(A) Criminal Procedure Code, 1973 - Sections 397 and 401 - Negotiable Instruments Act, 1881 - Section 138 - Petitioner challenged the discharge of respondents in a cheque bounce case - The cheque was issued as collateral security and the account had closed prior to issuance, leading to acquittal - Court held that the cheque was not drawn on an active account, hence no offence under Section 138 existed. (Paras 3-20)

(B) Interpretation of Section 138 - The court stressed that an offence under Section 138 can only be said to occur when a cheque is drawn against an active bank account - The requirement of 'account maintained' is imperative. (Paras 10-20)

Facts of the case:
The petitioner filed a complaint under Section 138 after the cheque was dishonored due to the account closure. The Trial Court allowed the dismissal applications claiming non-liability.

Findings of Court:
The Trial Court found that since the cheque was issued as collateral and the account closed, no offence under Section 138 was established.

Issues: Whether the cheque was validly issued and whether the respondents could be held liable under Section 138.

Ratio Decidendi: The cheque could not be deemed issued under Section 138 as the account was closed prior to the cheque's issuance, failing to meet the statutory requirement.

Result: Both revision applications dismissed.

1 The petitioner - original complainant in Criminal Case No. 1316 of 1999 before the learned Judicial Magistrate, First Class at Borsad in Kheda district, has preferred these two criminal revisions under S.397 read with S.401 of the Criminal Procedure Code, 1973 (for short, 'the Code'), in order to challenge a common and consolidated order recorded by the said Court on 27-4-2001 in the aforesaid criminal case below applications Exhs. 22 and 25 filed by different set of accused persons facing the said criminal case.

2 Out of these two revisions, Criminal Revision Application No. 304 of 2001 has been filed against the said order passed by the said Court on an application of respondent No. 2 who was accused No. 5 in the said criminal case whereas Revision Application No. 305 of 2001 has been filed by the petitioner against the discharge of other accused persons who were facing the said criminal case before the said Court.

3 The facts of the case of the present petitioner - original complaint before the Trial Court in the aforesaid criminal case may be briefly stated as follows :
The present petitioner - original complainant had filed Criminal Case No. 1316 of 1999 before the aforesaid Court for an offence punishable under S.138 of the Negotiable Instruments Act, 1881 . Therein, it was stated by the present petitioner, that on account of a contract of security, the contesting respondents in both the revision applications had issued a cheque in favour of the petitioner - original complainant on 10-11-1998 which was delivered to the petitioner on 11-11-1998. The said cheque contained dated 22-3-1999. It appears that the said cheque was presented for payment to the Bank and the Bank refused to honour the said cheque on the ground that the account was not operating and it was closed and it was transferred in the name of another institution. In fact, the endorsement was that the signature "differs". However, the fact remains that as per the admitted position, the second respondent of Revision Application No. 304 of 2001, Mr. D.D. Mehta had signed the cheque. But, it also remains a fact that the company on behalf of which the said cheque was signed by Mr. D.D. Mehta, who was originally accused No. 5 in the said criminal case, has stopped functioning another company was established, and therefore, the account of the said company was closed and the money was transferred in the name of the new company. In the meantime, the said respondent - D.D. Mehta had resigned from his position. His resignation was accepted and that fact was conveyed to the Registrar of Companies and there the fact was recorded in the records of the Registrar of Companies, Therefore, the endorsement of the bank was that the "signature differs". However, it is an admitted position that it was not a mere incomplete or irregular signature of D.D. Mehta. But the fact is that D.D. Mehta ceased to be an Officer of the said company and even the bank account of the said company was closed and the money was transferred in the name of the newly constituted company.

4 Any way, on account of the dishonour of the cheque, the present petitioner issued notice as per the provisions of the Negotiable Instruments Act, 1881 (for short, 'the Act'). Since, the notice was not complied with and the amount stated in the cheque was not paid by the contesting respondents in both the revisions, the petitioner filed the aforesaid complaint against the contesting respondents of both the revision applications. During the pendency of the said criminal case, the contesting respondents submitted applications Exhs. 22 and 25 before the Trial Court. Out of them, D.D. Mehta being accused No. 5 in the said case, had filed application Exh. 22 whereas rest of the respondents in the cognate revision had filed application Exh. 25 before the Trial Court. In application Exh. 22, respondent No. 2 in the first revision application and accused No. 5 in original complaint contended that though the cheque was signe














































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