Back
2025 Supreme(Online)(Tel) 69181
IN THE HIGH COURT FOR THE STATE OF TELANGANA AT HYDERABAD
J. Sreenivas Rao, J
Vijaya Laxmi Agarwal – Appellant
Versus
SBPL Infrastructure Limited – Respondent
CRIMINAL PETITION No.3615 of 2019
For the Appellants/Petitioners: Peri Prabhakar, Vedula Venkata Ramana
For the Respondents: U.Venkat Prasad
Section 138 of the Negotiable Instruments Act, 1881 applies to any cheque issued to discharge a legally enforceable debt or liability, including that of a guarantor or surety. Disputed facts regarding notice service are to be determined during trial and are not grounds for quashing.
Headnote:(A) Negotiable Instruments Act, 1881 - Sections 138 and 139 - Code of Criminal Procedure, 1973 - Section 482 - Evidence Act - Section 114 - Cheque bounce - Liability of a surety - Whether a person who issued a cheque as a surety for a loan taken by another is liable under Section 138 - Section 138 applies to any cheque issued in discharge of any debt or other liability without restriction, including the liability of a guarantor or surety (Paras 10 and 11).
(B) Service of Statutory Notice - When a notice is returned with the endorsement "no such addressee" but the accused receives court summons at the same address, the correctness of the address and the receipt of notice become disputed questions of fact to be determined during trial and cannot be grounds for quashing proceedings in a criminal petition (Paras 7, 8 and 9).
Facts of the case:
The petitioner sought to quash proceedings under Section 138 of the N.I. Act after a cheque she issued as a surety for her husband's loan of Rs. 1 Crore was returned for insufficient funds. The petitioner contended that she was not the principal borrower, there was no legally enforceable debt, the statutory notice was sent to the wrong address, and a separate recovery suit was pending for the same amount.
Findings of Court:
The court found that the address used for the legal notice was the same as that used for the court summons, which the petitioner had received. Furthermore, the legal position is that a surety's liability for a cheque issued to discharge a debt falls squarely within the ambit of Section 138 of the N.I. Act.
Issues: Whether the proceedings under Section 138 of the NI Act can be quashed on the grounds that the accused was a surety rather than the principal borrower and that the statutory notice was not served.
Ratio Decidendi: The court ruled that Section 138 of the N.I. Act broadly covers any cheque issued for the discharge of any debt or liability, specifically including those of a guarantor. Additionally, disputes regarding the service of notice and the correctness of the address are questions of fact that must be adjudicated during the trial process.
Result: Criminal Petition is dismissed.
ORDER:
This Criminal Petition has been filed under Section 482 of the Code of Criminal Procedure, 1973 (for short, 'Cr.P.C.') by the petitioner/accused seeking to quash the proceedings in C.C. No.142 of 2019 on the file of the XIX Special Magistrate, Erramanzil at Hyderabad, for the offence punishable under Section 138 of the Negotiable Instruments Act, 1881 (hereinafter referred to as 'the N.I. Act').
2. Brief facts of the case:
2.1 Respondent No.1 is SBPL Infrastructure Limited, being represented by its Managing Director Mr.Gowri Shanker Gupta, filed a complaint against the petitioner stating that in the first week of March 2017, Mr. Satyajit Agarwal, who is none other than the husband of the petitioner, approached the respondent No.1 and requested a loan of Rupees One Crore to meet his financial needs. Accordingly, the respondent No.1 has given the above said amount to Mr. Satyajit Agarwal through RTGS on 28.03.2017 and in turn he had executed a promissory note in favour of the respondent No.1 agreeing to repay the same with an interest at 2% per month. The petitioner stood as surety for the said amount. In spite of several demands made by the respondent No.1, the husband of the petitioner failed to repay the loan amount along with accrued interest, and therefore, the petitioner, being the surety, issued cheque bearing No.000050 dated 06.11.2018 for Rupees One Crore drawn on HDFC Bank, Rikab Gunj, Hyderabad, in favour of the respondent No.1 towards part payment of the outstanding loan amount of Rs.1,38,72,877/- as on 06.11.2018. The respondent No.1 presented the said cheque for collection through his banker, ICICI Bank, but it was returned unpaid vide cheque return memo, dated 09.11.2018, stating 'insufficient funds'."
2.2 It is further averred that the respondent No.1 had issued notice dated 08.12.2018 to the petitioner calling her to pay the cheque amount, but the said notice was returned back to the respondent No.1 with an endorsement 'no such addressee'. Accordingly, respondent No.1 filed the complaint against the petitioner for the offence under Section 138 of the N.I. Act. The petitioner filed the present criminal petition seeking to quash the proceedings in C.C. No.142 of 2019.
3. Heard Sri Vedula Venkata Ramana, learned Senior Counsel, representing M/s. Bharadwaj Associates appearing on behalf of the petitioner and Sri U.Venkat Prasad, learned counsel for respondent No.1.
4. Submissions of the learned Counsel for the petitioner:
4.1 Learned Senior Counsel submitted that the petitioner has not committed the alleged offence. Even according to the complaint, the husband of the petitioner, Satyajit Agarwal, has borrowed the amount from the respondent No.1 and he executed a promissory note on 28.03.2017 to that effect and the petitioner has not received any amount from the respondent No.1 and the cheque dated 06.11.2018 is also not issued in respect of the alleged promissory note dated 28.03.2017 and there is no legal enforceable debt between the petitioner and the respondent No.1. Hence the ingredients of Section 138 of the N.I. Act do not attract against the petitioner. Hence, the initiation of the proceedings against the petitioner for the offence under Section 138 of the N.I. Act is clear abuse of the process of law.
4.2 He further submitted that even in the alleged promissory note, which was filed along with the complaint, the petitioner has not stood as surety and the surety column is kept blank. Hence, the allegations made by the respondent No.1 that the petitioner stood as surety to the amount taken by her husband through promissory note dated 28.03.2017 and the petitioner issued cheque dated 06.11.2018 in respect of part payment of the outstanding loan amount, are absolutely not true and correct.
4.3 He also submitted that the respondent No.1 filed complaint without complying the statutory requirement of sending legal notice to the petitioner to her correct address as required under the provisions of Section 138
