THE HONOURABLE SRI JUSTICE J. SREENIVAS RAO CRIMINAL PETITION No. 7469 of 2023

ORDER

This criminal petition has been filed by the petitioner/accused seeking to quash the proceedings in STC.N.I.No.80 of 2022 on the file of the Judicial First Class Magistrate at Adilabad for the offence punishable under Section 138 of the Negotiable Instruments Act, 1989 (for short, ‘the N.I. Act’)

2. The brief facts of the case are that respondent No.2 filed a private complaint before the Judicial First Class Magistrate at Adilabad invoking the provision of Section 200 of the Cr.P.C. stating that Smt. Ambika Gulavath, who is one of the partners in respondent No.2 Company, entered into an agreement on 09.07.2021 with the petitioner for construction of houses in Survey No.163/A, Jankapur Village and Mandal, Komurambheem Asifabad District, whereby, the petitioner undertook to pay an amount of Rs.82,56,000/- (Rupees Eighty-Two Lakhs Fifty-Six Thousand only) to it. The said agreement was executed in the presence of witnesses. In pursuance of the said undertaking, the petitioner issued two cheques in favour of respondent No. 2 constructions and Smt. Ambika Gulavath, both dated 01.11.2021, for an amount of Rs.35,00,000/- and Rs.40,00,000/- respectively, drawn on Indian Overseas Bank, Mancherial Branch, towards discharge of legally enforceable debt arising under the agreement dated 09.07.2021. When respondent No. 2 presented the said cheques on 18.11.2021 for encashment, both cheques were returned unpaid on 22.11.2021 with the endorsement “Funds Insufficient”. Thereafter, respondent No.2 issued a legal notice on 03.12.2021 through their advocate calling upon the petitioner to make payment of the cheque amounts within 15 days from the date of receipt. The notice was duly served on 06.12.2021 as evidenced by the postal acknowledgment and online tracking report. The petitioner, instead of making payment, issued a reply on 15.12.2021 containing false statements and without denying issuance of the cheques. Since the petitioner failed to make payment even after expiry of the statutory period on 21.12.2021, respondent No.2 was constrained to file the present complaint under Section 138 of the Negotiable Instruments Act within the prescribed limitation period.

3. Heard Mr. K. Mallikarjun, learned counsel for the petitioner, Mr. K. Ajay Kumar, learned counsel for respondent No.2, and Mr. M. Vivekananda Reddy, learned Assistant Public Prosecutor appearing for respondent No.1 State.

4. Learned counsel for the petitioner submitted that the petitioner has not issued any cheques to respondent No.2 and that he has issued post-dated cheques in favour of Ambika Guglavath, pursuant to the undertaking dated 09.07.2021 towards security for an amount of Rs.82,56,000/- and there is no privity of contract between respondent No.2 and the petitioner. Hence, the offence under Section 138 of the NI Act is not attracted, in view of Sections 58 and 118 of the NI Act. He further submitted that in the sworn statement, Ambika Guglavath specifically stated that the cheques were issued pursuant to the undertaking dated 09.07.2021, however, respondent No.2 Constructions filed a private complaint against the petitioner, though the ingredients of Section 138 of the NI Act do not attract. There is no legally enforceable debt between the petitioner and respondent No.2. Hence, the continuation of the proceedings against the petitioner is a clear abuse of the process of law.

4.1. In support of his contention, he relied upon the judgment of the Hon’ble Supreme Court in Ashok Yeshwant Badeve v. Surendra Madhavarao Nighojakar and another, AIR 2001 SC 1315

5. Per contra, learned counsel for respondent No.2 submitted that Ambika Guglavath is a partner of M/s.AB Constructions. The petitioner had issued the cheques in the name of the M/s.AB Constructions for legally enforceable debt only. Respondent No.2, after following the statutory procedure as prescribed under the provisions of the NI Act, lodged th