A cheque returned with the endorsement 'Refer to Drawer' due to it being non-CTS does not attract the offence under Section 138 of the Negotiable Instruments Act if it was not issued for a legally enforceable debt.

ORDER

This criminal original petition is filed to quash the proceedings in STC.No.3479 of 2022, on the file of the learned Judicial Magistrate, Magistrate Level, Tiruppur.

2. The petitioner is an accused in the complaint lodged by the respondent under Section 138 and 142 of Negotiable Instruments (Amendment) Act, 2002 and under Section 200 of Code of Criminal Procedure. It is alleged that the accused while carrying on business and being a customer of the complainant, used to borrow money and repay the loan amount. While so, on 06.05.2021, the petitioner/accused had borrowed a sum of Rs.25,00,000/- for his business and family needs. He assured repayment within a period of three months with interest at the rate of 18% p.a. The accused also executed a promissory note in favour of the complainant. On various demand made by the complainant, the accused issued a cheque for a sum of Rs.25,00,000/- dated 06.10.2021. When presented for collection, the cheque was returned dishonoured with the endorsement ‘Refer to Drawer”. Therefore, the complainant lodged a complaint, and the same was taken on the file of the learned Judicial Magistrate, Tiruppur. The accused raised the sole ground that, upon receipt of statutory notice, he sent a reply notice stating that the cheque was not issued for any legally enforceable debt. Moreover, the cheque was a non-CTS cheque. Hence, it was returned dishonoured with the endorsement ‘Refer to Drawer’. It is further contended that, at the time of issuance, the cheque was not valid, as non-CTS cheque were not in use after the year 2010.

3. The learned Counsel for the respondent submitted that the cheque was not returned on the ground that it was not a non-CTS cheque. Therefore, the ground raised by the petitioner/accused cannot be sustained. Since the cheque was returned with the endorsement ‘Refer to Drawer’, the offence under Section 138 of N.I. Act is clearly attracted as against the accused. In support of this contention, the learned Counsel relied upon the judgment of this Court made in Crl.O.P.No.7037 of 2020 dated 25.08.2020 in the case of M/s.Land Marvel Homes & Ors. Vs. D.Ashok Kumar. In this case, this Court held that the cheque was not returned on the ground that it is a non-CTS cheque and the same was returned for the reason ‘funds insufficient’. Therefore, the offence under Section

138 of NI Act is clearly made out.

4. On perusal of material records, it is seen that the accused issued a cheque for a sum of Rs.25,00,000/- towards repayment of the loan amount. The cheque, dated 06.10.2021, was drawn on ICICI Bank, Annanagar Branch, Chennai. It was returned with the endorsement ‘Refer to Drawer’ as the cheque was a non-CTS cheque and, therefore, it was not valid for encashment. Therefore, the offence under Section 138 of NI Act is not attracted as against the petitioner/accused. It is also seen that the cheque leaf had been issued prior to 2010 and the same was presented for collection. Hence, according to the petitioner, the cheque was not issued towards any legally enforceable debts. In fact, after receipt of the statutory notice, the accused issued a reply notice dated

14.11.2021. The relevant portion of the said notice is as follows:

“

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