Madhu Singh v. Ashish Tripathi, under section

2. Heard Sri Pankaj Sharma, learned counsel for the applicants and Sri Indrajeet Singh Yadav, learned A.G.A.

3. This is an application under Section 528 of BNSS preferred by the applicant for quashing the entire proceedings of complaint case No. 01 of 2022, Madhu Singh Vs. Ashish Tripathi, under section 138 of Negotiable Instrument Act, Police Station Colonelganj, District Prayagraj pending in the court of Special Judge N.I. Act IInd, Allahabad as well as summoning order dated 17.2.2022 passed by Additional Chief Judicial Magistrate, Court no.18, Allahabad.

4. Learned counsel for the applicant has submitted that on 24.12.2021, a complaint was lodged by O.P. No.2 against the applicant with an allegation that the applicant had drawn three cheques bearing number (a) "186668" of Rs.2,00,000/- dated 17.08.2021, (b) "713372" of Rs.1,00,0000/- dated 20.08.2021 and (c) "404156" of Rs.1,00,000/- dated 28.08.2021. Allegation is that the said three cheques were presented in the Bank and stood dishonoured on 07.10.2021; (a) "186668" with remark 'funds insufficient', (b) "713372" 'cheque not entd.' and (c) "404156" 'funds insufficient'. On the assurance of the applicant, again the said cheques were presented in the Bank on 01.09.2021, which were dishonoured with remark (a) "186668" 'funds insufficient', (b) "713372" 'kindly contact drawer bank and please present again' and (c) "404156" 'funds insufficient'. Again on the assurance of the applicant, the cheques were presented in the Bank, which came to be dishonoured on 15.11.2021 with remark (a) "186668" 'funds insufficient', (b) "713372" 'kindly contact drawer/drawee bank and please present again' and (c) "404156" 'funds insufficient'. Thereafter a statutory notice was issued on 29.11.2021, which was returned back with the remark that the applicant is not traceable on 03.11.2021, 01.12.2021 and 02.12.2021 followed by the complaint on 24.12.2021. Thereafter, the court below on 17.02.2022 summoned the applicant under Section 138 of N.I. Act. Learned counsel for the applicant has submitted that so far as the cheque no.713372 is concerned, the same was returned with the endorsement 'kindly contact drawer/drawee bank and please present again', which does not come within the ambit of Section 138 of N.I. Act, so as to term it to be an offence with relation to dishonour. Submission is that all the three cheques of the drawee bank, Allahabad Bank, Oriental Bank of India had been merged in Punjab National Bank and they have become invalid since 01.10.2021. It is thus contended that the court while summoning the applicant had not adverted to the core and fundamental issue that offences under Section 138 of N.I. Act would not stand attracted in the present case.

5. Learned A.G.A. on the other hand submits that once a cheque stood drawn, then presumption under Section 139 of N.I. Act is in favour of holder.

6. I have heard the submissions so made across the Bar and perused the record carefully.

7. Apparently, the three cheques stood drawn by the applicant, two of them being '186668' and '404156' stood dishonoured on account of insufficient funds. Section 138 of N.I. Act itself covers the contingency when the cheque stands dishonoured on account of insufficient funds. Thus offences are made out against the applicant. As regards the third cheque bearing number '713372' as per the return memo shows 'kindly contact drawer/drawee bank and please present again', the question would be whether the said remark so mentioned in the return memo would amount to offence or not. The Hon'ble Apex Court in Laxmi Dyechem vs. State of Gujarat and others, (2012) 13 SCC 375 had the occasion to consider the said aspect of the matter and in para-16, the following was observed: - " The above line of decisions leaves no room for holding that the two contingencies envisaged under Section 138 of the Act must be interpreted strictly or literally. We find ourselves in respectful agreement with the decision in NEPC Micon Ltd. (supra) that the expression “amount of money ... is insufficient” 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."

8. Further the Hon'ble Apex Court in Lafarge Aggregates and Concrete India Private Limited vs. Sukarsh Azad and another, (2014) 13 SCC 779, in paragraph-8 has observed as under: - "8. The object of bringing Sections 138 to 142 of the Negotiable Instruments Act on statute appears to be to inculcate faith in the efficacy of banking operations and credibility in transacting business of negotiable instruments. Despite several remedy, Section 138 of the Act is intended to prevent dishonesty on the part of the drawer of negotiable instrument to draw a cheque without sufficient funds in his account maintained by him in a bank and induces the payee or holder in due course to act upon it. Therefore, once a cheque is drawn by a person of an account maintained by him for payment of any amount or discharge of liability or debt or is returned by a bank with endorsement like (I) refer to drawer (ii) exceeds arrangements and (iii) instruction for stop payment and like other usual endorsement, it amounts to dishonour within the meaning of Section 138 of the Act. Therefore, even after issuance of notice if the payee or holder does not make the payment within the stipulated period, the statutory presumption would be of dishonest intention exposing to criminal liability."

9. In view of the authoritative pronouncement as culled out in the aforesaid decision "referred to the drawer" also amounts to dishonour attracting the Section 138 of N.I. Act. As regards the submission of learned counsel for the applicant that the cheque had become an invalid document on account of merger of the Banks is not liable to be accepted at the stage of summoning, particularly, when the reasons for dishonour do not indicate the same.

10. At this stage, learned counsel for the applicant has submitted that once in para-14 of the complaint dated 24.12.2021, it has been alleged that though the registered statutory notice was issued on 29.11.2021 and there is an endorsement of the postal authorities that the notice could not be served as the addressee was not traceable, thus there would be no presumption of service. In the opinion of the Court, once the notice has been sent on correct address, then there would be a presumption of service. In C.C. Alavi Haji Vs. Palapetti Muhammed and another, (2007) 6 SCC 555 the question which fell for consideration was whether the endorsement "not available in the house" would be termed to be deemed service, it was held as under:- "Section 27 gives rise to a presumption that service of notice has been effected when it is sent to the correct address by registered post. In view of the said presumption, when stating that a notice has been sent by registered post to the address of the drawer, it is unnecessary to further aver in the complaint that in spite of the return of the notice unserved, it is deemed to have been served or that the addressee is deemed to have knowledge of the notice. Unless and until the contrary is proved by the addressee, service of notice is deemed to have been effected at the time at which the letter would have been delivered in the ordinary course of business. This Court has already held that when a notice is sent by registered post and is returned with a postal endorsement refused or not available in the house or house locked or shop closed or addressee not in station, due service has to be presumed. .... It is, therefore, manifest that in view of the presumption available under Section 27 of the Act, it is not necessary to aver in the complaint under Section 138 of the Act that service of notice was evaded by the accused or that the accused had a role to play in the return of the notice unserved."

11. Whether the statutory notice has been served or not is a matter of trial, which cannot be adjudicated at the stage of summoning.

12. Moreover, in absence of pointing out of any jurisdictional error, this Court is not required to interfere in the instance of the applicant at this stage, particularly, when there is no jurisdictional error.

13. Accordingly, the application is rejected. Order Date :- 15.5.2025 N.S.Rathour (Vikas Budhwar, J)

2. Heard Sri Pankaj Sharma, learned counsel for the applicants and Sri Indrajeet Singh Yadav, learned A.G.A.

3. This is an application under Section 528 of BNSS preferred by the applicant for quashing the entire proceedings of complaint case No. 01 of 2022, Madhu Singh Vs. Ashish Tripathi, under section 138 of Negotiable Instrument Act, Police Station Colonelganj, District Prayagraj pending in the court of Special Judge N.I. Act IInd, Allahabad as well as summoning order dated 17.2.2022 passed by Additional Chief Judicial Magistrate, Court no.18, Allahabad.

4. Learned counsel for the applicant has submitted that on 24.12.2021, a complaint was lodged by O.P. No.2 against the applicant with an allegation that the applicant had drawn three cheques bearing number (a) "186668" of Rs.2,00,000/- dated 17.08.2021, (b) "713372" of Rs.1,00,0000/- dated 20.08.2021 and (c) "404156" of Rs.1,00,000/- dated 28.08.2021. Allegation is that the said three cheques were presented in the Bank and stood dishonoured on 07.10.2021; (a) "186668" with remark 'funds insufficient', (b) "713372" 'cheque not entd.' and (c) "404156" 'funds insufficient'. On the assurance of the applicant, again the said cheques were presented in the Bank on 01.09.2021, which were dishonoured with remark (a) "186668" 'funds insufficient', (b) "713372" 'kindly contact drawer bank and please present again' and (c) "404156" 'funds insufficient'. Again on the assurance of the applicant, the cheques were presented in the Bank, which came to be dishonoured on 15.11.2021 with remark (a) "186668" 'funds insufficient', (b) "713372" 'kindly contact drawer/drawee bank and please present again' and (c) "404156" 'funds insufficient'. Thereafter a statutory notice was issued on 29.11.2021, which was returned back with the remark that the applicant is not traceable on 03.11.2021, 01.12.2021 and 02.12.2021 followed by the complaint on 24.12.2021. Thereafter, the court below on 17.02.2022 summoned the applicant under Section 138 of N.I. Act. Learned counsel for the applicant has submitted that so far as the cheque no.713372 is concerned, the same was returned with the endorsement 'kindly contact drawer/drawee bank and please present again', which does not come within the ambit of Section 138 of N.I. Act, so as to term it to be an offence with relation to dishonour. Submission is that all the three cheques of the drawee bank, Allahabad Bank, Oriental Bank of India had been merged in Punjab National Bank and they have become invalid since 01.10.2021. It is thus contended that the court while summoning the applicant had not adverted to the core and fundamental issue that offences under Section 138 of N.I. Act would not stand attracted in the present case.

5. Learned A.G.A. on the other hand submits that once a cheque stood drawn, then presumption under Section 139 of N.I. Act is in favour of holder.

6. I have heard the submissions so made across the Bar and perused the record carefully.

7. Apparently, the three cheques stood drawn by the applicant, two of them being '186668' and '404156' stood dishonoured on account of insufficient funds. Section 138 of N.I. Act itself covers the contingency when the cheque stands dishonoured on account of insufficient funds. Thus offences are made out against the applicant. As regards the third cheque bearing number '713372' as per the return memo shows 'kindly contact drawer/drawee bank and please present again', the question would be whether the said remark so mentioned in the return memo would amount to offence or not. The Hon'ble Apex Court in Laxmi Dyechem vs. State of Gujarat and others, (2012) 13 SCC 375 had the occasion to consider the said aspect of the matter and in para-16, the following was observed: - " The above line of decisions leaves no room for holding that the two contingencies envisaged under Section 138 of the Act must be interpreted strictly or literally. We find ourselves in respectful agreement with the decision in NEPC Micon Ltd. (supra) that the expression “amount of money ... is insufficient” 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."

8. Further the Hon'ble Apex Court in Lafarge Aggregates and Concrete India Private Limited vs. Sukarsh Azad and another, (2014) 13 SCC 779, in paragraph-8 has observed as under: - "8. The object of bringing Sections 138 to 142 of the Negotiable Instruments Act on statute appears to be to inculcate faith in the efficacy of banking operations and credibility in transacting business of negotiable instruments. Despite several remedy, Section 138 of the Act is intended to prevent dishonesty on the part of the drawer of negotiable instrument to draw a cheque without sufficient funds in his account maintained by him in a bank and induces the payee or holder in due course to act upon it. Therefore, once a cheque is drawn by a person of an account maintained by him for payment of any amount or discharge of liability or debt or is returned by a bank with endorsement like (I) refer to drawer (ii) exceeds arrangements and (iii) instruction for stop payment and like other usual endorsement, it amounts to dishonour within the meaning of Section 138 of the Act. Therefore, even after issuance of notice if the payee or holder does not make the payment within the stipulated period, the statutory presumption would be of dishonest intention exposing to criminal liability."

9. In view of the authoritative pronouncement as culled out in the aforesaid decision "referred to the drawer" also amounts to dishonour attracting the Section 138 of N.I. Act. As regards the submission of learned counsel for the applicant that the cheque had become an invalid document on account of merger of the Banks is not liable to be accepted at the stage of summoning, particularly, when the reasons for dishonour do not indicate the same.

10. At this stage, learned counsel for the applicant has submitted that once in para-14 of the complaint dated 24.12.2021, it has been alleged that though the registered statutory notice was issued on 29.11.2021 and there is an endorsement of the postal authorities that the notice could not be served as the addressee was not traceable, thus there would be no presumption of service. In the opinion of the Court, once the notice has been sent on correct address, then there would be a presumption of service. In C.C. Alavi Haji Vs. Palapetti Muhammed and another, (2007) 6 SCC 555 the question which fell for consideration was whether the endorsement "not available in the house" would be termed to be deemed service, it was held as under:- "Section 27 gives rise to a presumption that service of notice has been effected when it is sent to the correct address by registered post. In view of the said presumption, when stating that a notice has been sent by registered post to the address of the drawer, it is unnecessary to further aver in the complaint that in spite of the return of the notice unserved, it is deemed to have been served or that the addressee is deemed to have knowledge of the notice. Unless and until the contrary is proved by the addressee, service of notice is deemed to have been effected at the time at which the letter would have been delivered in the ordinary course of business. This Court has already held that when a notice is sent by registered post and is returned with a postal endorsement refused or not available in the house or house locked or shop closed or addressee not in station, due service has to be presumed. .... It is, therefore, manifest that in view of the presumption available under Section 27 of the Act, it is not necessary to aver in the complaint under Section 138 of the Act that service of notice was evaded by the accused or that the accused had a role to play in the return of the notice unserved."

11. Whether the statutory notice has been served or not is a matter of trial, which cannot be adjudicated at the stage of summoning.

12. Moreover, in absence of pointing out of any jurisdictional error, this Court is not required to interfere in the instance of the applicant at this stage, particularly, when there is no jurisdictional error.

13. Accordingly, the application is rejected. Order Date :- 15.5.2025 N.S.Rathour (Vikas Budhwar, J)