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K.S.Kannan Vs Lekha Sankar — Cheque Dishonour | Madras HC (2025)

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Madras HC
2025
K.S.Kannan Vs Lekha SankarK.S.Kannan v. Lekha Sankar

Allowed¶35

K.S.Kannan v. Lekha Sankar

Negotiable Instruments Act, S.138 – Quashing

Madras HC29 Apr 2025CRL OP/31878/2024

Case brief

AI extract

What is this about?

Madras High Court, Crl.O.P.No.31878 of 2024 (connected CRL.MP.No.18159 of 2023 as printed), decided 29.04.2025 by G.K. Ilanthiraiyan, J. Petitioner K.S. Kannan, represented by Mr.J.Umacharan, sought quashing under Section 482 Code of Criminal Procedure of respondent Lekha Sankar's STC.No.2758 of 2022 (Section 138 Negotiable Instruments Act complaint; respondent did not appear, notice returned 'unclaimed'). Held: return endorsement 'Kindly Contact Drawer/Drawee' is not a ground attracting S.138 and does not conclusively show insufficiency of funds; ten-year gap between the 11.04.2011 Investors Agreement and the 2021 cheques makes the complaint an abuse of process. Proceedings quashed; petition allowed. Keywords: S.138 NI Act; return memo endorsement; insufficient funds; abuse of process; quashing; Fast Track Court-IV George Town Chennai.

What did the court decide?

Proceedings in STC.No.2758 of 2022 on the file of Fast Track Court-IV George Town, Chennai quashed; Criminal Original Petition allowed and connected Miscellaneous Petition (CRL.MP.No.18159 of 2023) closed.

Why is it important?

The reasons stated in the return memo (endorsement 'Kindly Contact Drawer/Drawee') are not reasons that would attract the provisions of Section 138 of the Negotiable Instruments Act. ¶28

What the court decided

AI extract

Outcome

Proceedings in STC.No.2758 of 2022 on the file of Fast Track Court-IV George Town, Chennai quashed; Criminal Original Petition allowed and connected Miscellaneous Petition (CRL.MP.No.18159 of 2023) closed.

Issue for consideration

Whether the return endorsement 'Kindly Contact Drawer/Drawee' and the reasons in the return memo attract Section 138 of the Negotiable Instruments Act, i.e., whether they conclusively indicate dishonour for insufficiency of funds. +1 more

Court's answer

The reasons stated in the return memo (endorsement 'Kindly Contact Drawer/Drawee') are not reasons that would attract the provisions of Section 138 of the Negotiable Instruments Act.

Ratio / Principle

The endorsement does not conclusively indicate that the cheques were returned for 'insufficient funds' or any other reason contemplated under Section 138 of the Negotiable Instruments Act.

Key takeaways

Since the respondent herself averred that the Investors Agreement was entered into on 11.04.2011 while cheques were issued for the first time only in 2021, the complaint is a clear abuse of process of law, cannot be sustained against the petitioner, and is liable to be quashed.ratio¶33

Detailed headnote1 paragraphs

Negotiable Instruments Act, S.138 - Quashing - Dishonour endorsement 'Kindly Contact Drawer/Drawee' does not attract S.138, as it does not conclusively indicate that the cheques were returned for 'insufficient funds' or any other reason contemplated by that section - Cheques of Rs.3,30,000/- and Rs.10,00,000/- dated 15.07.2021 were issued for the first time in 2021 although, on the complainant's own showing, the Investors Agreement was of 11.04.2011 - Complaint in STC.No.2758 of 2022 (Fast Track Court-IV, George Town, Chennai) held to be a clear abuse of process of law and quashed under Section 482 CrPC; Crl.O.P. allowed, connected Crl.M.P. closed. (G.K. Ilanthiraiyan, J., Madras High Court, 29.04.2025)

A

Crl.OP.No.31878 of 2024

IN THE HIGH COURT OF JUDICATURE AT MADRAS

DATED : 29.04.2025

CORAM:

THE HONOURABLE MR. JUSTICE G.K.ILANTHIRAIYAN

Crl.O.P.No.31878 of 2024

and CRL.MP.Nos.18159 of 2023

K.S.Kannan ... Petitioner Vs.

Lekha Sankar ... Respondent

PRAYER: Criminal Original Petition is filed under Section 482 of the Code of Criminal Procedure, to call for the records in connection with STC.No.2758 of 2022 pending on the file of Fast Track Court-IV George Town, Chennai and quash the same.

For Petitioners : Mr.J.Umacharan

For Respondent : No Appearance

O R D E R

This Criminal Original Petition is filed to quash the proceedings

in STC.No.2758 of 2022 pending on the file of Fast Track Court-IV,

George Town, Chennai.

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Crl.OP.No.31878 of 2024

2. The respondent filed a complaint for the offence punishable under Sections 138 of Negotiable Instruments Act as against the petitioner alleging that the petitioner had borrowed a sum of Rs.15,00,000/- as financial assistance for his pharmacy business and both are entered into an investor agreement dated 11.04.2011. After the demise of the respondent's husband, she demanded to repay the principal amount and arrears of profit i.e., Rs.23,30,000/-, hence the petitioner has issued two cheques for an amount of Rs.3,30,000/- dated 15.07.2021 and another cheque for a sum of Rs.10,00,000/- dated 15.07.2021 towards part payment. The respondent has presented both cheques on 13.08.2021 and the same were returned on 17.08.2021 with an endorsement, '' Kindly Contact Drawer/Drawee''. It is also alleged that there was no sufficient funds in your account to honour the above said cheques and the returned cheques were received by her on 19.08.2021. After issuing legal notice to the petitioner, the respondent has lodged complaint against the petitioner.

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Crl.OP.No.31878 of 2024

3. The learned counsel appearing for the petitioner submits that there is no such legally enforceable debt/outstanding/due from the petitioner side and all the allegations stated against the petitioner in the above complaint are false, vexatious, frivolous and taking vengeance. Hence, the same has to be quashed.

4. Though notice was served on the respondent and her name also printed in the cause-list, it was returned as ''unclaimed''. It can be taken as sufficient service, even then the respondent did not appear before this

Court either in person or through counsel.

5. Heard the learned counsel appearing for the petitioner and perused the materials available on record.

6. A perusal of records revealed that in order to repay the loan amount, the petitioner had issued two cheques for a sum of Rs.3,30,000/- and Rs.10,00,000/- respectively. When both the cheques were presented for collection, the same were dishonoured and returned with an endorsement '' Kindly Contact the Drawer/Drawee'' . Therefore, the reasons stated in the return memo are not considered as reasons that would attract the provisions under Section 138 of Negotiable Instruments

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Crl.OP.No.31878 of 2024

Act. It does not conclusively indicate that the cheques were returned for any reason '' insufficient funds'' or any other reason as contemplated under Section 138 of Negotiable Instruments At.

7. That apart, even according to the respondent, she entered into the Investors Agreement on 11.04.2011. However, for the first time the petitioner has issued cheque to share the profits in the year 2021. In view of the above, the present complaint is a clear abuse of process of law and it cannot be sustained as against the petitioner and liable to be quashed.

8. Accordingly, the p roceedings in STC.No.2758 of 2022 on the

file of the learned on the file of Fast Track Court-IV George Town is hereby quashed and the Criminal Original Petition stands allowed. Consequently, connected Miscellaneous Petition is closed.

29.04.2025

Vv

To

1. The Fast Track Court-IV George Town, Chennai

2. The Public Prosecutor, High Court of Madras, Chennai.

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Crl.OP.No.31878 of 2024

G.K.ILANTHIRAIYAN, J.

Vv

Crl.O.P.No.31878 of 2024

29.04.2025

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Issues for consideration

2 issues framed by the court

AI extract

1.
Whether the return endorsement 'Kindly Contact Drawer/Drawee' and the reasons in the return memo attract Section 138 of the Negotiable Instruments Act, i.e., whether they conclusively indicate dishonour for insufficiency of funds.¶32
The court held
The reasons stated in the return memo (endorsement 'Kindly Contact Drawer/Drawee') are not reasons that would attract the provisions of Section 138 of the Negotiable Instruments Act.ratio¶28
2.
Whether the complaint, where the Investors Agreement dates back to 11.04.2011 but cheques were issued for the first time only in 2021, is an abuse of process of law liable to be quashed.¶33
The court held
Since the respondent herself averred that the Investors Agreement was entered into on 11.04.2011 while cheques were issued for the first time only in 2021, the complaint is a clear abuse of process of law, cannot be sustained against the petitioner, and is liable to be quashed.ratio¶33

Statutes considered

2 provisions across 2 enactments

AI extract

Code of Criminal Procedure482¶10
Negotiable Instruments Act138¶20

Procedural history

How this case reached the court

AI extract

Order under challenge
Criminal complaint in STC.No.2758 of 2022 for the offence punishable under Section 138 of the Negotiable Instruments Act, pending trial, sought to be quashed under Section 482 CrPC.¶10
Fast Track Court-IV George Town, Chennai
Prior proceeding
Respondent filed a complaint under Section 138 of the Negotiable Instruments Act against the petitioner.¶20
Prior proceeding
Complaint alleges the petitioner borrowed Rs.15,00,000/- for his pharmacy business and an investor agreement was entered into on 11.04.2011.¶20
Prior proceeding
Towards part payment, petitioner issued two cheques dated 15.07.2021 for Rs.3,30,000/- and Rs.10,00,000/-.¶20
Prior proceeding
Cheques presented on 13.08.2021 were returned on 17.08.2021 with endorsement 'Kindly Contact Drawer/Drawee' and received back on 19.08.2021.¶20
Prior proceeding
After issuing legal notice, the respondent lodged the complaint.¶20
Prior proceeding
Notice on the respondent was returned 'unclaimed'; treated as sufficient service; respondent did not appear before the High Court.¶25

Parties & counsel

AI extract

petitioner
K.S.Kannan¶8
Mr.J.Umacharan
respondent
Lekha Sankar¶9

Coram

AI extract

G.K.ILANTHIRAIYANauthor¶44

Case details

As recorded by the court registry

Court: Madras HC
Decided on: 29 Apr 2025 · April
Registered: 18 Dec 2024
Case no.: CRL OP/31878/2024
CNR: HCMA012302842024
Topic: Cheque Dishonour
Bench: G.k. Ilanthiraiyan
Disposal: ALLOWED
Case type: Crl.O.P.

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Cite this judgement

K.S.Kannan v. Lekha Sankar, CRL OP/31878/2024 (MAD), decided on 29 April 2025.

The Madras High Court publishes no neutral citation for this judgement — cite it by case number and date of decision.

Statutes2

Code of Criminal Procedure482
Negotiable Instruments Act138

View all statutes

Procedural history7

Criminal complaint in STC.No.2758 of 2022 for the offence punishable under Section 138 of the Negotiable Instruments Act, pending trial, sought to be quashed under Section 482 CrPC.Fast Track Court-IV George Town, Chennai
Respondent filed a complaint under Section 138 of the Negotiable Instruments Act against the petitioner.
Complaint alleges the petitioner borrowed Rs.15,00,000/- for his pharmacy business and an investor agreement was entered into on 11.04.2011.

View full history

Bench / Coram

G.K.ILANTHIRAIYAN

Parties & counsel