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1992 (6) TMI 183

..... . Sreedharan, J. 1. This is a petition filed under Section 482 of the Code of Criminal Procedure, 1973, for quashing the complaint in C. C. No. 468 of 1990 on the file of the Judicial First Class Magistrate's Court, Punalur. Learned counsel representing the petitioner canvassed the correctness of the decision in Calcutta Sanitary Wares v. Jacob [1991] 1 KLT 269 ; [1993] 76 Comp Cas 347 . Consequently, a learned single judge referred the petition to a Division Bench for disposal. 2. Before dealing with the question of law raised, we consider it advantageous to refer to the averments made by the complainant before the court below. They are in the following terms : The accused entered into an agreement for sale of his property with the complainant on March 21, 1989. In pursuance of that agreement, the accused received ₹ 21,001 in three instalments. Since the contract fell through, he issued a cheque dated December 8, 1989, bearing No. 787656 drawn on the Cheppad branch of the Lord Krishna Bank for repayment of the amount. Thereafter, with the intention of cheating the complainant and to make unlawful enrichment to himself, the accused caused the issuance of a lawyer's no .....

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..... r is earlier ; (b) the payee or the holder in due course of the cheque, as the case may be, makes a demand for the payment of the said amount of money by giving a notice, in writing, to the drawer of the cheque, within fifteen days of the receipt of information by him from the bank regarding the return of the cheque as unpaid ; 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. " 4. This shows that the drawer of the cheque should have drawn the same on an account maintained by him with the banker. That cheque must have been drawn for payment of any amount of money to another from out of that account. The money so drawn must have been for the discharge of the whole or part of any debt or other liability. The said cheque must be returned by the bank unpaid. The return of the cheque must be either because the amount of money standing to the credit of that account is insufficient .....

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..... account by an agreement made with the bank. In other words, it is contended that if the endorsement given by the bank while returning the cheque is anything other than the above, the complaint must be thrown out at the threshold. According to counsel, the penal provision contained in Section 138 of the Act should be construed liberally in favour of the person who would be liable to the penalty. 7. From the argument advanced by learned counsel representing the petitioner, it would appear that an offence under Section 138 of the Act should depend on the endorsement made by the banker while returning the cheque unpaid, i.e., only when the banker makes an endorsement that the amount of money standing to the credit of the account of the drawer is insufficient to honour the cheque or that it exceeds the amount arranged to be paid from that account by an agreement made with that bank, can an offence under Section 138 of the Act be made out. According to us. such an approach will defeat the very purpose of the enactment. 8. The offence under the section cannot depend on the endorsement made by the banker while returning the cheque. Irrespective of the endorsement made by the banker, if it .....

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..... nacted by the Legislature to enhance the acceptability of cheques. The drawer of the cheque was sought to be made liable in case of bouncing of cheques due to insufficiency of funds in the account or for the reason that it exceeds the arrangement made by the drawer with the bank. If the cheque has bounced on account of insufficiency of funds in the account of the drawer or for the reason that it exceeds the arrangement made by the drawer, then the drawer must be liable. It cannot solely depend on the endorsement made by the banker. An endorsement by the banker that a cheque is returned due to insufficiency of funds standing in the name of the drawer will tell upon the financial soundness of the drawer. Such an endorsement may adversely affect the reputation of the drawer. Sometimes a banker may be slow to use the words such as " no sufficient funds in the account", etc., because it may have adverse implications on the financial soundness of the drawer of the cheque and consequently affect his reputation also. So if the banker refrains from making such a derogatory endorsement, should the object of the legislation be defeated ? 11. The rule of strict interpretation of pena .....

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..... nder Section 138 of the Act. In Calcutta Sanitary Wares v, Jacob [1993] 76 Comp Cas 347 , a learned judge of this court observed (at page 348) : " The issuance of cheques and their dishonour followed by notices of demand and failure to pay, are not matters which had been challenged. That payment was countermanded by a stop memo is of no consequence. That hardly affects the right of the respondent to initiate proceedings under the Act. It has the same effect as closure of the account as far as he is concerned. The object of the provision cannot be allowed to be defeated by such ingenuous action." 13. According to us, the above observations were made with reference to the facts before him. However, we are of the view that the learned judge was right in observing that countermanding of a cheque by a stop memo hardly affects the rights of the complainant to initiate proceedings under the Act. It is not necessary for us to consider the effect of the other observations made by the learned single judge in the above-quoted passage on the facts before us. 14. In the complaint filed before the court below the complainant had specifically stated that the accused had no amount in his .....

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