TMI Blog2010 (7) TMI 280X X X X Extracts X X X X X X X X Extracts X X X X ..... other fora, but it would not be sufficient to attract the provisions of section 138 of the 1881 Act. The appellant-company and its directors cannot be made liable under section 138 of the 1881 Act for a default committed by the respondent No. 11. - CRL. APPEAL NO. 1357 OF 2010 - - - Dated:- 28-7-2010 - ALTAMAS KABIR AND DR. MUKUNDAKAM SHARMA, JJ. Sidhartha Dave and Senthil Jagadeesan for the Appellant. Sudarsh Menon for the Respondent. JUDGMENT Altamas Kabir, J. - Leave granted. 2. The appellant No. 1 herein is an agro-based company having varied interests in providing feed supplements, vaccines, etc. The appellant Nos. 2 and 3 are the managing director and chairperson of the appellant No. 1-company, which ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hankar Reddy and its concerned employees. 3. Subsequently, however, the appellant and the pro forma-respondents received a notice dated 13-12-2002, from the respondent No. 1-company purporting to be a notice under section 138 of the Negotiable Instruments Act, 1881, ( the 1881 Act ), wherein it was stated that a cheque issued by K. Balashankar Reddy on 25-11-2002, drawn on the State Bank of Hyderabad, Nellore Branch, had been returned dishonoured with the endorsement "Account closed". The notice also demanded repayment of the cheque amount from the appellants. 4. On receiving the said notice, the appellants replied to the same on 26-12-2002, stating that they never had any account with the State Bank of Hyderabad and the cheque in q ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed under section 138 of the 1881 Act. The said order of the High Court dismissing the appellants petition has been challenged in the instant appeal essentially on the ground that the High Court had erred in allowing the complaint proceedings to continue although the same were not maintainable against the appellants and the pro forma-respondents who were not the drawers of the cheque, nor was the cheque issued from any of their banks. 5. Appearing for the appellants, Mr. Siddharth Dave, learned advocate, submitted that both the learned Magistrate as well as the High Court had failed to consider in their proper perspective the provisions of section 138 of the Negotiable Instruments Act, 1881. It was pointed out by Mr. Dave that in order ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ons of section 138 of the 1881 Act against the appellant No. 1-company and its directors. It was urged that since the cheque had been issued by the respondent No. 11 to liquidate the dues of the appellant-company and its directors, the High Court had quite justifiably refused to quash the complaint filed by the respondent No. 1-company. 7. From the submissions made on behalf of the respective parties, it is quite apparent that the short point for decision in this appeal is whether a complaint under section 138 of the 1881 Act would be maintainable against a person who was not the drawer of the cheque from an account maintained by him, which ultimately came to be dishonoured on presentation. 8. Since the provisions of section 138 of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... paid ; and ( c )the drawer of such cheque fails to make the payment of the said amount of money to the payee or, as the case may be, to the holder in due course of the cheque, within fifteen days of the receipt of the said notice. Explanation - For the purposes of this section, "debt or other liability" means a legally enforceable debt or other liability." 9. From a reading of the said section, it is very clear that in order to attract the provisions thereof a cheque which is dishonoured will have to be drawn by a person on an account maintained by him with the banker for payment of any amount of money to another person from out of that account for the discharge, in whole or in part of any debt or other liability. It is only such ..... X X X X Extracts X X X X X X X X Extracts X X X X
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