Allowed

B.Eswara Rao v. State of Ap

Andhra Pradesh HC9 Dec 2024CRLP/2258/2019

Case brief

AI extract

What is this about?

A partner accused of cheque dishonour sought quashing of a Section 138 NI Act complaint. The statutory demand notice had been sent to an incorrect address, differing from the partnership deed, so no presumption of receipt arose. The High Court held the pre-condition of notice was not met and quashed the proceedings.

What did the court decide?

Proceedings in C.C.No.140 of 2018 on file of I Special Magistrate Court, Vijayawada, Krishna District quashed.

B.Eswara Rao Vs State of Ap — Cheque Dishonour | Andhra Pradesh HC (2024)

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IN THE HIGH COURT OF ANDHRA PRADESH AT AMARAVATI

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TUESDAY, THE TENTH DAY OF DECEMBER TWO THOUSAND AND TWENTY FOUR

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PRESENT

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THE HONOURABLE SMT JUSTICE V.SUJATHA

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CRIMINAL PETITION NO: 2258 OF 2019

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Between:

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Boddu Eswara Rao, S/o Venkateswara Rao, Aged about³⁸ years, R/o Door No. 48-13-3/1, Sri Ramachandra Nagar, Vijayawada, Krishna District.

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... Petitioner / Accused 3

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AND

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State of Andhra Pradesh, Rep. by its Public Prosecutor, High Court at Amaravati.

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Chillapalli Venakta Naga Mohan Rao, S/o Nageswara Rao, Aged about 51 years, Occ; Business, R/o Door No. 8-630, Near Vegetable Market, Mangalagiri - 522 003 Guntur District.

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...Respondent/Complainant

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Petition under Section 482 of Cr.P.C praying that in the circumstances stated in the Memorandum of Grounds of Criminal Petition, the High Court may be pleased to stay of all further proceedings including appearance of the petitioner (Accused) herein C.C. No. 140/2018 on the file of the I Special Magistrate Court at Vijayawada, Krishna District.

I.A. NO: 1 OF 2niQ

I.A. NO: 2 OF 2019

Petition under Section 482 of Cr.P.C praying that in the circumstances stated in the Memorandum of Grounds of Criminal Petition, the High Court may be pleased to stay all further proceedings including appearing of the petitioner in CC No. 140 of 2018 on the file of I Special Maigstrate Court at Vijayawada, Krishna District in CrI.P. No. 2258 of 2019. This Petition coming on for hearing, upon perusing the Memorandum of Grounds of Criminal Petition and upon hearing the arguments of Sri Challa Ajay Kumar, Advocate for the Petitioner and the Public Prosecutor on behalf of the Respondent No.1 and Sri Goli Narasimha Rao Advocate for the Respondent No.2.

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The Court made the following Order:

APHC010109132019

IN THE HIGH COURT OF ANDHRA PRADESH AT AMARAVATI

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(Special Original Jurisdiction)

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[3333]

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TUESDAY ,THE TENTH DAY OF DECEMBER TWO THOUSAND AND TWENTY FOUR

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PRESENT

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THE HONOURABLE SMT JUSTICE V.SUJATHA

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CRIMINAL PETITION NO: 2258/2019

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Between:

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B.eswara Rao

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...PETITIONER/ACCUSED

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AND

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State Of Ap and Others

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...RESPONDENT/COMPLAINANT(S)

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Counsel for the Petitioner/accused:

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1.CHALLA AJAY KUMAR

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Counsel for the Respondent/complainant(S):

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1.G NARASIMHA RAO

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PUBLIC PROSECUTOR (AP)

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The Court made the following:

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ORDER:

This criminal petition is filed under Section 482 of Criminal Procedure Code (for short “Cr.P.C.”) to quash the proceedings^{inC.C.No.140of2018} on the file of I Special Magistrate Court, Vijayawada,^{KrishnaDistrict.}

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The petitioner herein is accused No.3 and the 2^^^ respondent is the defacto complainant. The 2"'^ respondent has submitted a complaint under Section 190 and 200 of the Cr.P.C., in the Court of I Special Magistrate Court, Vijayawada, Krishna District stating that the 2"'^ respondent is a partner in Adhunik Builders and Developers-accused No.1 and is having 5% of share and that the accused Nos.2, 3 (petitioner herein) and 5 others are the remaining partners in the said firm. It is stated that the 2"^^ respondent is entitled to get an amount of Rs.60,00,000/- from the 1®' accused firm towards refund of his share capital in the firm due to its closure. Though the share capital amounts of the other partners of the 1®* accused firm were refunded, the share capital amount of the 2"'* respondent herein was not paid. When the 2"'^ respondent has demanded for refund of his share capital, the accused Nos.2 and 3 jointly issued a cheque dated 27.12.2017. in favour of the 2'"'^ respondent for Rs.8,59,610/-, towards part payment and assuring that the balance share capital of the 2"'‘ respondent would be paid in short period with nominal interest of 12% per annum. When the 2""^ respondent has presented the aforesaid cheque in the bank, the same was bounced vide memo dated 29.12.2017 with an endorsement ‘Drawers Signature Differs’. Subsequently, when the 2"'^ respondent has approached the accused Nos.2 and 3 for issuing a dishonoured cheque, he was informed that there are no differences in signatures; as such the 2^*^ respondent, believing the accused, has once again presented the cheque before the bank, however, vide memo dated 20.01.2018 the cheque was once again bounced with the same endorsement as earlier. Aggrieved by the same, the 2""^ respondent got issued legal notice to the accused on 19.02.2018, which was received by^the2 nd accused on

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21.02.2018 and accordingly, a reply was also submitted by the 2^^^ accused on 06.03.2018. It is stated that the petitioner herein has managed the postal authorities and returned the said notices with an endorsement ‘No such Person in this address’. As such, the accused with a malafide intention to cause wrongful loss to the 2^^^ respondent have issued the dishonoured ctieque, for which they are liable to be prosecuted for the offence punishable under Section 138 of the Negotiable Instruments Act. Stating thus, the 2nd respondent has submitted the complaint before the Court concerned, which was numbered as C.C.No.140 of 2018 on the file of I Special Magistrate Court at Vijayawada, Krishna District. Seeking quashment of the said proceedings against the petitioner/accused No.3, the present petition^isfiled.

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During hearing, learned counsel for the petitioner^reiterated the contentions urged in the petition and contended that the petitioner herein is innocent and that Section 138 of the Negotiable Instruments^Actdoes not attract the present complaint in view of the fact that the cheque which was returned in the instant case is due to difference in signatures. He further contended that the statutory notice of demand has not^{beenservedonthe} petitioner, in as much as the address on which the respondent has dispatched the said notice is incorrect to the knowledge of the respondent. It is contended that the petitioner is a resident of Sri Ramachandra Nagar, Vijayawada, but, the notice of demand has been dispatched by the 2"^^ respondent on a wrong address at Kadiyala Rama Krishna Rao Street, Currency Nagar, Vijayawada. Without service of statutory notice of demand upon the petitioner, offence under Section 138 of the Nl Act, will not be made out against the petitioner. Further, learned counsel for the petitioner relied upon a judgment of the Apex Court in Harman Electronics Private Limited and another Vs. National Panasonic India Private Limited^ which will be referred to at an appropriate stage. Hence, requested to quash the proceedings in^{C.C.No.140of2018on} the file of I Special Magistrate Court, Vijayawada,^{KrishnaDistrict.}

(2009) 1 see 720

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Sri. Goli Narasimha Rao, learned counsel appearing^forthe2 nd respondent, while denying the grounds raised by learned^counsel for the petitioner, has contended that the law required the 2'"^ respondent only to give a notice of demand and service of notice is not necessary. In support of his contentions, learned counsel for the 2^^ respondent has relied upon the judgment of the Hon’ble Supreme Court in D. Vinod Shivappa^vs.Nanda Belliappa^, which will be referred at an appropriate stage. While concluding his arguments, learned counsel for the 2"'^ respondent has requested this Court to dismiss the present petition.

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When the petition came up for hearing on 09.04.2019,^thisCourt has granted interim stay of all further proceedings^{inC.C.No.140of2018on} the file of I Special Magistrate Court, Vijayawada,^{KrishnaDistrict.}

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Having heard the submissions made by the learned counsel representing both parties and on perusal of the material available on record, the point that arises for consideration is as follows:

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‘‘Whether the proceedings against the petitioners in in C.C.No.140 of 2018 on the file of I Special Magistrate Court, Vijayawada, Krishna District, are liable to be quashed by exercising Jurisdiction under Section 482 of Cr.P.C.?”

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Section 482 of Cr.P.C saves the inherent powers of the High Court to make such orders as may be necessary to give effect to any order under the Code or to prevent abuse of the process of any Court or otherwise to secure the ends of justice. It is an obvious proposition^{thatwhenaCourt} has authority to make an order, it must have also power to carry that order into effect. If an order can lawfully be made, it must be^{carriedout;otherwise} it would be useless to make it. The authority of the Court exists for the advancement of justice, and if any attempt is made to abuse that authority so as to produce injustice, the Court must have power to prevent that abuse. In

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^ 2006 0 Supreme(SC)539

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the absence of such power the administration of law^would fail to serve the purpose for which alone the Court exists, namely to promote justice and to prevent injustice. Section 482 of Cr.P.C confers no new powers but merely safeguards existing powers possessed by the High Court. Such power has to be exercised sparingly in exceptional cases and this power is external in nature to meet the ends of justice.

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Time and again, the scope of powers of this Court under^Section 482 of Cr.P.C. were highlighted by the Apex Court in long line of perspective pronouncements, which are as follows: In “R.P. Kapur v. State of Punjab^”, the Apex Court laid down the following principles:

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(i) Where Institution/continuance of criminal proceedings against an accused may amount to the abuse of the process of the court or that the quashing of the impugned proceedings would secure the ends of justice;

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(ii) where it manifestly appears that there is a legal bar against the institution or continuance of the said proceeding, e.g. want of sanction;

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(Hi) where the allegations in the First Information Report or the complaint taken at their face value and accepted in their entirety,^{donotconstitutethe} offence alleged; and

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(iv) where the allegations constitute an offence alleged^{butthereiseitherno} legal evidence adduced or evidence adduced clearly or manifestly fails to prove the charge.

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Section 482 of the Code of Criminal Procedure empowers^the High Court to exercise its inherent power to prevent abuse of the process of Court. In proceedings instituted on complaint exercise of the inherent power to quash the proceedings is called for only in cases where the complaint does not disclose any offence or is frivolous, vexatious or oppressive. If the allegations set out in the complaint do not constitute^theoffence of which cognizance is taken by the Magistrate it is open to the High Court to quash the ^AIR 1960 SC 866

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same in exercise of the inherent powers under Section 482. It is not, however, necessary that there should be a meticulous analysis of the case, before the trial to find out whether the case would end in conviction or not. The complaint has to be read as a whole. If it appears on a consideration of the allegations, in the light of the statement on oath of the complainant that ingredients of the offence/offences are disclosed, and there is no material to show that the complaint is mala fide, frivolous or vexatious. In that event there would be no justification for interference by the High Court as held by the Apex Court in “Mrs.Dhanalakshmiv. R.Prasanna Kumar^ ”

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Keeping in view the above principles, I would like^toexaminethe case on hand.

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On a perusal of the material available on record, it can be understood that the 2^^ respondent is entitled to receive Rs. 60,00,000/- from the 1®‘ accused firm towards his share capital due^{tothefirm'sclosure.While} the other partners were refunded, the 2'^'^ respondent was not. In response to his demand, accused Nos. 2 and 3 issued a cheque for Rs.8,59,610/- on 27.12.2017 as partial payment, promising to pay the balance with 12% interest. However, the cheque bounced on 29.12.2017^{withanendrosement} "Drawers Signature Differs." When the 2"^^ respondent re-presented the cheque, it bounced again on 20.01.2018 assigning the same reason. As such, the 2"'^ respondent issued a legal notice on 19.02.2018,^{whichwasreceived} by the 2^^ accused on 21.02.2018, and a reply was submitted^{on06.03.2018.} However, it is contended by learned counsel for the 2"*^ respondent that petitioner tampered with the postal authorities, returning^{thenoticewiththe} endorsement "No such Person at this address”. As such, the 2^^ respondent has filed complaint requesting to prosecute the petitioner for the offence punishable under Section 138 of the Negotiable Instruments^{Act.Forbetter} understanding of the case. Section 138 of the N.l.^{Actisextractedhereunder:}

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AIR 1990 SC 494

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“138. Dishonour of cheque for insufficiency, etc., of funds in account.—

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Where any cheque drawn by a person on an account maintained by him with a banker for payment of any amount of money^toanother person from out of that account for the discharge, in whole or in part, of any debt or other liability, is returned by the bank unpaid, either because of the amount of money standing to the credit of that account 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, such person shall be deemed to have committed an offence and shall, without prejudice to any other provisions of this Act, be punished with imprisonment for a term which may be extended to two years, or with fine which may extend to twice the amount of the cheque, or with both:

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Provided that nothing contained in this section shall apply unless—

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(a)the cheque has been presented to the bank within a period of six months from the date on which it is drawn or within the period of its validity, whichever is earlier;

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(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 thirty days of the receipt of information by him from the bank regarding the return of the cheque as unpaid; and

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(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. ”

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Proviso to Section 138 of the Nl Act stipulates that three conditions must be satisfied before dishonour of a cheque to constitute an offence and become punishable. The said three conditions reads as under;

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(i) The first condition is that the cheque ought to have been prf^sented before the bank withm a period of six

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months from the date on which it is drawn or within the period of its validity, whichever is earlier.

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(ii) The second condition is that the payee or the holder in due course of the cheque must make a demand for payment of the amount of money by giving a notice in writing to the drawer of the cheque within thirty days of the receipt of information by^him from the bank regarding return of the cheque as unpaid.

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(iii) The third condition is that the drawer of such^a cheque should have failed to make 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.

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It is only upon the satisfaction of all the aforesaid^{threeconditionsthat} an offence under Section 138 can be said to have been committed by the person issuing the cheque. As such, giving notice of demand to the payee within the stipulated period after dishonour of a cheque^{isoneoftheessential} ingredients for making out the offence under Section^{138oftheNlAct.}

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In Harman Electronics Private Limited and another Vs. Nationai Panasonic India Private Limited (1 supra), relied upon by learned counsel for the petitioner, the Hon’ble Supreme Court^{hasheldasunder:} “13. It is one thing to say that sending of a notice is one of the ingredients for maintaining the complaint but it is another thing to say that dishonour of a cheque by itself constitutes an offence. For the purpose of proving its case that the accused had committed an offence under Section 138 of the Negotiable Instruments Act, the ingredients thereof are required to be proved. What would constitute an offence is stated in the main provision. The proviso appended thereto, however, imposes certain further^conditions which are required to be fulfilled before cognizance of the offence^canbetaken. If the

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ingredients for constitution of the offence laid down in provisos (a), (b) and (c) appended to Section 138 of the Negotiable Instruments^{Actareintendedto} be applied in favour of the accused, there cannot be any doubt that receipt of a notice would ultimately give rise to the cause of action for filing a complaint. /As it is only on receipt of the notice that the accused at his own peril may refuse to pay the amount. Clauses (b) and (c) of the proviso to Section 138 therefore must be read together. Issuance of notice would not by itself give rise to a cause of action but communication of the notice would."

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The Hon’ble Supreme Court further held that for constitution^ofan offence under Section 138 of the Act, the notice must be received by the accused. It further held that an inference of having received the notice by a drawer of a cheque can be raised only if the notice has been dispatched to his correct address. Such an inference cannot be drawn if the notice has been sent on the incorrect address of the drawer of the cheque.

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Per contra, learned counsel for the respondent relied upon a judgment in D. Vinod Shivappa vs. Nanda Belliappa,^{whereintheHon’ble} Supreme Court has thoroughly addressed situations where^{anoticecouldnot} be served on the addressee for various reasons, such^as the addressee’s unavailability at the time of delivery or the premises being locked due to the addressee’s absence. It further held that interpreting^{thelawtomeanthere} has been no service of notice in every such instance would completely undermine the very purpose of the Act. The Court noted that this interpretation could allow a dishonest cheque issuer to intentionally avoid service by disappearing for a period after issuing the cheque, thus preventing the statutory notice from being delivered and avoiding prosecution. The Court also observed that a person who can evade the postman for a month or two, or who can falsify an endorsement regarding their unavailability, could successfully escape prosecution. This is particularly concerning since the payee is required to issue a notice within 30 days of receiving information from the bank that the cheque was returned unpaid.

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It is an admitted fact that the petitioner herein along^withseven others which includes the 2'^^ respondent, has entered into a partnership deed executed on 10.12.2013 wherein the address of the petitioner is shown as ‘door No.48-13-3/1, Sri Ramachandra Nagar, Vijayawada. But, however, the 2"^^ respondent has sent the statutory notice of demand dated 19.02.2018 to door No.48-11-94, Kadiyala Rama Krishna Rao Street, Currency nagar, Vijayawada. Though the petitioner is a resident of door No.48-13-3/1, Sri Ramachandra Nagar, Vijayawada as can be seen from the partnership deed dated 10.12.2013, the 2"^ respondent has sent the demand notice dated 19.02.2018 to Door No.48-11-94, Kadiyala Rama Krishna Rao Street, Currency nagar, Vijayawada, by which it is clear that the 2"^^ respondent had mentioned wrong address of the petitioner in the statutory^{noticeofdemand} as well as in the complaint. As such, it can be stated that statutory notice of demand was sent by the 2'^' respondent to the petitioner on an address which was not correct and it lacks necessary details that would enable a postman to locate the address of the petitioner herein. As the statutory notice of demand itself was sent by the 2’^^ respondent on a wrong address, the presumption of receipt of notice by the petitioner does not arise and at the same time, the 2^^^ respondent cannot allege that the petitioner herein has managed the postal authorities. As such, the pre-condition of filing a complaint under Section 138 of the Nl Act of sending a statutory notice has not been satisfied as per the ingredients of Section 138 of Nl Act. Hence, no cause of action arose in favour of the 2"*^ respondent to file the complaint.

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In view of the above discussion, it is clear that the material on record does not disclose commission of offence under Section 138 of the Nl Act against the petitioner, as such, the impugned proceedings^inC.C.No.140 of 2018 on the file of I Special Magistrate Court, Vijayawada, Krishna District deserve to be quashed.

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in 18. Accordingly, this potition is allowod and tho procoedings C.C.No.140 of 2018 on the file of I Special Magistrate^{Court,Vijayawada,} Krishna District are hereby quashed.

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The miscellaneous petitions pending, if any, shall^{alsostandclosed.}

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//TRUE COPY//

Sd/- P VINOD KUMAR ASSISTANT REGI^^AR

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SE OFFICER

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