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TMI Blog2024 (11) TMI 44X X X X Extracts X X X X X X X X Extracts X X X X ..... r Company, its Directors and others offered personal guarantee and agreed to repay the loan as per the schedule of payment along with interest and other charges. 3. There was default in repayment despite several remainders from the complainant Bank. To discharge the debt, the borrowing company through its directors issued a cheque dated 08/11/2019 drawn from the account maintained by the borrower company and signed by one of its director as its Authorised signatory ( the first and second petitioners herein) for a sum of Rs 1,72,85,072-33/-. At the time of issuing the cheque, the accused persons assured that the cheque will be honoured on its presentation. However on presentation for collection, the cheque was returned unpaid and dishonoured on 26/11/2019 with remarks " Account Freezed". There was no sufficient fund in that account and knowingly to cheat the complainant, the petitioner had issued the cheque. 4. Since the cheque being issued to discharge a legally enforceable debt, but without fund and knowing well that the account is freezed, the company and its Directors are liable for prosecution under Section 138 of Negotiable Instruments Act, 1881. Hence, after issuing the sta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e account. The bank who is the complainant cannot after freezing the account present the cheque given to it and initiated criminal prosecution. It being a clear abuse of process of law and malicious prosecution, same has to be quashed. 9. Per contra, the Learned Counsel for the respondent/complainant Bank submitted that the books of account reflects that as on 20/01/2020 , the due payable by the petitioner company is Rs 1,86,47,330.47. The subject cheque dated 08/11/2019, bearing No:000035 for Rs.1,72,85,072.33. The cheques alleged to have been given as security in the year 2015 has no relevance to the subject cheque. The freezing of the account will not exonerate the petitioner company from paying the cheque amount. Soon after it is brought to their knowledge through the statutory notice that the cheque given by them been dishonoured, they petitioners ( drawer) ought to have paid to the complainant (payee/drawee) the cheque amount within 15 days from the receipt of the notice. In this case, the petitioners failed to pay the cheque amount despite put to notice. Therefore, Section 138 of Negotiable Instruments Act, attracts. 10. Heard the arguments of the Learned Senior Counsels f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ined by the Supreme Court in Laxmi Dyechem v. State of Gujarat, [(2012) 13 SCC 375] as below by referring its earlier judgments:- "The question that falls for our determination is whether dishonour of a cheque would constitute an offence only in one of the two contingencies envisaged under Section 138 of the Act". From Section 138 of NI Act, it is manifest that a dishonour would constitute an offence only if the cheque is retuned by the bank "unpaid" either because the amount of money standing to the credit of the drawer's account is insufficient to honour the cheque or that the amount exceeds the amount arranged to be paid from that account by an agreement with that bank. The High Court was of the view and so was the submission made on behalf of the respondent before us that the dishonour would constitute an offence only in the two contingencies referred to in Section 138 and none else. The contention was that Section 138 being a penal provision has to be construed strictly. When so construed, the dishonour must necessarily be for one of the two reasons stipulated under Section 138 and none else. The argument no doubt sounds attractive on the first blush but does not surv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s insufficient to honour the cheque" appearing in Section 138 of the Act is a genus and dishonour for reasons such "as account closed", "payment stopped", "referred to the drawer" are only species of that genus. Just as dishonour of a cheque on the ground that the account has been closed is a dishonour falling in the first contingency referred to in Section 138, so also dishonour on the ground that the "signatures do not match" or that the "image is not found", which too implies that the specimen signatures do not match the signatures on the cheque would constitute a dishonour within the meaning of Section 138 of the Act: 16.1. This Court has in the decisions referred to above taken note of situations and contingencies arising out of deliberate acts of omission or commission on the part of the drawers of the cheques which would inevitably result in the dishonour of the cheque issued by them. For instance, this Court has held that if after issue of the cheque the drawer closes the account it must be presumed that the amount in the account was nil hence insufficient to meet the demand of the cheque. A similar result can be brought about by the drawer changing his specimen signatur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eque amount within 15 days from the date of receipt of the statutory notice. In this case, the petitioner company had disputed the liability and not paid the cheque amount. 16. Hence, the question whether the Bank which has freezed the account can initiate the complaint for dishonor of the cheque due to account freeze and the dispute regarding liability to discharge enforceable debt, it is necessary to consider the plea of the petitioners regarding the circumstances the subject cheque purportedly given to the complainant Bank. 17. According to the petitioners, the blank cheques bearing numbers 000010 and 000011 were given to the complainant bank as security at the time of sanctioning loan. Whereas the cheque which is subject matter of the criminal complaint bears No:000035 and it is dated 08/11/2019 drawn from the account maintained at Kotak Mahindra Bank Limited. Admittedly, the account from which the cheque drawn was freezed on 04/06/2016. It is an undisputed fact that the complaint bank freezed the petitioner's bank account about 3 years before the date of the complaint. While so, issuance of cheque and receipt of the cheque from the debit freezed account cannot be an unknown ..... X X X X Extracts X X X X X X X X Extracts X X X X
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