High Court · 2025

1. Heard Sri Bhuvnesh Kumar Singh, (AOR No.A/B 0177/12) holding brief of Sri Abhishek Tiwari, learned counsel for the applicant as well as Sri Moti Lal, learned AGA for the State/opposite party no.1.

2. This application under Section 528 of the B.N.S.S. has been filed by the applicant to quash the entire proceedings of Complaint Case No.05 of 2024, under Section 138 of the N.I. Act, Police Station Nandgram, District Ghaziabad pending before Additional Civil Judge (J.D.)/Judicial Magistrate, Court No.3, District Ghaziabad as well as summoning order dated 20.12.2024.

3. The case of the applicant is that a complaint was lodged on 1.1.2024, under Section 138 of the N.I. Act against the applicant with an allegation that with respect to discharge of a liability a cheque was drawn bearing no.050979 dated 9.10.2023 for Rs.19,10,500/-was drawn in favour the opposite party no.2 which on presentation at the first occasion was dishonoured on account of referred to drawer thereafter again the said cheque was presented by the opposite part no.2 in the bank which was dishonoured on 7.12.2023 on account of referred to the drawer. A statutory notice is stated to have been issued on 11.12.2023 and thereafter a complaint stood lodged on 1.1.2024. The applicant has been summoned under Section 138 of the N.I. Act in Complaint Case No.5 of 2024 by the court of Additional Civil Judge (J.D.)/Judicial Magistrate, Court No.3, District Ghaziabad. Questioning the summoning order, the applicant has filed the present application.

4. Learned counsel for the applicant has submitted that the summoning order cannot be sustained even for a single moment for more than one reason. Firstly the cheque was drawn from Oriental Bank of Commerce which is dated 9.10.2022 however the said bank stood amalgamated with the Punjab National Bank by virtue of a notification which is at page 60 dated 20.3.2020 thus the said cheque became invalid documents and thus 'refer to drawer' would not attract the provisions of Section 138 of the N.I. Act. Secondly, in para 12 of the complaint only this much has been alleged that on 11.12.2023 a statutory notice has been issued but there is no recital of the date on which the statutory notice came to be served upon the applicant. According to him this was one of the mandatory requirement which was fulfilled and once the compliance of the same has not been made that the complaint is bound to fall.

5. Learned AGA on the other hand submits that once a cheque stood drawn and finally got dishonoured then in these circumstances the presumption under Section 139 of the N.I. Act would always be there.

6. I have heard the submission so made across the bar and perused the record carefully. Apparently, a cheque is alleged to have been drawn by the applicant on 9.10.2023 bearing no. 050979 for an amount of Rs.19,10,500/-in favour of the applicant. As per the complaint and the return memo the cheque was initially presented on 19.10.2023 and the same was returned on 21.10.2023 with the remark "referred to drawer" thereafter, against the said cheque re- presented and the same was returned with the remark referred to drawer on 7.12.2023. The submission of learned counsel for the applicant is that since the bank stood amalgamated with Punjab National Bank on 20.3.2020, the cheque was returned on account the instrument being invalid in the opinion of the Court the written memo does not spell out that it is an invalid document however, on both the occasions the returned memo recited, "referred to the drawer". The issue as to whether the return of the cheque with the remark refer to drawer comes within the ambit of Section 138 of the N.I. Act has been a subject matter in the judgement of Hon'ble Apex Court in the case of M/s Laxmi Dyechem vs State Of Gujarat & Ors (2012) 13 SCC 375 in paragraph number 16 has observed as under:- "16. 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 d decision in Magma cases 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"

7. Yet in Lafarge Aggregates and Concrete India Private Limited vs. Sukarsh Azad and another (2014) 13 SCC 779 the following was observed Para 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 remedies, 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."

8. In view of aforesaid authoritative pronouncement "refer to drawer" is one of the species of dishonour of the cheque. Interestingly, the cheque was drawn on 9.10.2023 by the applicant in favour of the opposite party no.2 as per the allegation in the complaint and the bank stood merged on 20.3.2020, thus, whatever might be the circumstances or the import and the impact of the same they are subject matter of trials. With respect to the argument that there has been no recital of the date of the service of the statutory notice in the complaint suffice is to say that the complaint cannot be out-rightly rejected at the threshold as the issue as to whether there was actual service of the notice or not is a matter of trial as already been decided by the Hon'ble Apex Court in the case of Ajeet Seeds Ltd. vs. K. Gopala Krishnaiah 2014 (12) SCC 685 wherein in paragraph nos.10 and 11 which have been observed as under:- "10. It is thus clear that Section 114 of the Evidence Act enables the Court to presume that in the common course of natural events, the communication would have been delivered at the address of the addressee. Section 27 of the GC Act gives rise to a presumption that service of notice has been effected when it is sent to the correct address by registered post. It is not necessary to 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.

11. Applying the above conclusions to the facts of this case, it must be held that the High Court clearly erred in quashing the complaint on the ground that there was no recital in the complaint that the notice under Section 138 of the NI Act was served upon the accused. The High Court also erred in quashing the complaint on the ground that there was no proof either that the notice was served or it was returned unserved/unclaimed. That is a matter of evidence. We must mention that in C.C. Alavi Haji, this Court did not deviate from the view taken in Vinod Shivappa, but reiterated the view expressed therein with certain clarification. We have already quoted the relevant paragraphs from Vinod Shivappa where this Court has held that service of notice is a matter of evidence and proof and it would be premature at the stage of issuance of process to move the High Court for quashing of the proceeding under Section 482 of the Cr.P.C. These observations are squarely attracted to the present case. The High Court?s reliance on an order passed by a two-Judge Bench in Shakti Travel & Tours is misplaced. The order in Shakti Travel & Tours does not give any idea about the factual matrix of that case. It does not advert to rival submissions. It cannot be said therefore that it lays down any law. In any case in C.C. Alavi Haji, to which we have made a reference, the three- Judge Bench has conclusively decided the issue. In our opinion, the judgment of the two-Judge Bench in Shakti Travel & Tours does not hold the field any more."

9. Analysing the case from the four corners of law, no case is made out for interference. The application stands rejected. Order Date :- 19.5.2025 piyush PIYUSH KUMAR High Court of Judicature at Allahabad

1. Heard Sri Bhuvnesh Kumar Singh, (AOR No.A/B 0177/12) holding brief of Sri Abhishek Tiwari, learned counsel for the applicant as well as Sri Moti Lal, learned AGA for the State/opposite party no.1.

2. This application under Section 528 of the B.N.S.S. has been filed by the applicant to quash the entire proceedings of Complaint Case No.05 of 2024, under Section 138 of the N.I. Act, Police Station Nandgram, District Ghaziabad pending before Additional Civil Judge (J.D.)/Judicial Magistrate, Court No.3, District Ghaziabad as well as summoning order dated 20.12.2024.

3. The case of the applicant is that a complaint was lodged on 1.1.2024, under Section 138 of the N.I. Act against the applicant with an allegation that with respect to discharge of a liability a cheque was drawn bearing no.050979 dated 9.10.2023 for Rs.19,10,500/-was drawn in favour the opposite party no.2 which on presentation at the first occasion was dishonoured on account of referred to drawer thereafter again the said cheque was presented by the opposite part no.2 in the bank which was dishonoured on 7.12.2023 on account of referred to the drawer. A statutory notice is stated to have been issued on 11.12.2023 and thereafter a complaint stood lodged on 1.1.2024. The applicant has been summoned under Section 138 of the N.I. Act in Complaint Case No.5 of 2024 by the court of Additional Civil Judge (J.D.)/Judicial Magistrate, Court No.3, District Ghaziabad. Questioning the summoning order, the applicant has filed the present application.

4. Learned counsel for the applicant has submitted that the summoning order cannot be sustained even for a single moment for more than one reason. Firstly the cheque was drawn from Oriental Bank of Commerce which is dated 9.10.2022 however the said bank stood amalgamated with the Punjab National Bank by virtue of a notification which is at page 60 dated 20.3.2020 thus the said cheque became invalid documents and thus 'refer to drawer' would not attract the provisions of Section 138 of the N.I. Act. Secondly, in para 12 of the complaint only this much has been alleged that on 11.12.2023 a statutory notice has been issued but there is no recital of the date on which the statutory notice came to be served upon the applicant. According to him this was one of the mandatory requirement which was fulfilled and once the compliance of the same has not been made that the complaint is bound to fall.

5. Learned AGA on the other hand submits that once a cheque stood drawn and finally got dishonoured then in these circumstances the presumption under Section 139 of the N.I. Act would always be there.

6. I have heard the submission so made across the bar and perused the record carefully. Apparently, a cheque is alleged to have been drawn by the applicant on 9.10.2023 bearing no. 050979 for an amount of Rs.19,10,500/-in favour of the applicant. As per the complaint and the return memo the cheque was initially presented on 19.10.2023 and the same was returned on 21.10.2023 with the remark "referred to drawer" thereafter, against the said cheque re- presented and the same was returned with the remark referred to drawer on 7.12.2023. The submission of learned counsel for the applicant is that since the bank stood amalgamated with Punjab National Bank on 20.3.2020, the cheque was returned on account the instrument being invalid in the opinion of the Court the written memo does not spell out that it is an invalid document however, on both the occasions the returned memo recited, "referred to the drawer". The issue as to whether the return of the cheque with the remark refer to drawer comes within the ambit of Section 138 of the N.I. Act has been a subject matter in the judgement of Hon'ble Apex Court in the case of M/s Laxmi Dyechem vs State Of Gujarat & Ors (2012) 13 SCC 375 in paragraph number 16 has observed as under:- "16. 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 d decision in Magma cases 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"

7. Yet in Lafarge Aggregates and Concrete India Private Limited vs. Sukarsh Azad and another (2014) 13 SCC 779 the following was observed Para 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 remedies, 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."

8. In view of aforesaid authoritative pronouncement "refer to drawer" is one of the species of dishonour of the cheque. Interestingly, the cheque was drawn on 9.10.2023 by the applicant in favour of the opposite party no.2 as per the allegation in the complaint and the bank stood merged on 20.3.2020, thus, whatever might be the circumstances or the import and the impact of the same they are subject matter of trials. With respect to the argument that there has been no recital of the date of the service of the statutory notice in the complaint suffice is to say that the complaint cannot be out-rightly rejected at the threshold as the issue as to whether there was actual service of the notice or not is a matter of trial as already been decided by the Hon'ble Apex Court in the case of Ajeet Seeds Ltd. vs. K. Gopala Krishnaiah 2014 (12) SCC 685 wherein in paragraph nos.10 and 11 which have been observed as under:- "10. It is thus clear that Section 114 of the Evidence Act enables the Court to presume that in the common course of natural events, the communication would have been delivered at the address of the addressee. Section 27 of the GC Act gives rise to a presumption that service of notice has been effected when it is sent to the correct address by registered post. It is not necessary to 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.

11. Applying the above conclusions to the facts of this case, it must be held that the High Court clearly erred in quashing the complaint on the ground that there was no recital in the complaint that the notice under Section 138 of the NI Act was served upon the accused. The High Court also erred in quashing the complaint on the ground that there was no proof either that the notice was served or it was returned unserved/unclaimed. That is a matter of evidence. We must mention that in C.C. Alavi Haji, this Court did not deviate from the view taken in Vinod Shivappa, but reiterated the view expressed therein with certain clarification. We have already quoted the relevant paragraphs from Vinod Shivappa where this Court has held that service of notice is a matter of evidence and proof and it would be premature at the stage of issuance of process to move the High Court for quashing of the proceeding under Section 482 of the Cr.P.C. These observations are squarely attracted to the present case. The High Court?s reliance on an order passed by a two-Judge Bench in Shakti Travel & Tours is misplaced. The order in Shakti Travel & Tours does not give any idea about the factual matrix of that case. It does not advert to rival submissions. It cannot be said therefore that it lays down any law. In any case in C.C. Alavi Haji, to which we have made a reference, the three- Judge Bench has conclusively decided the issue. In our opinion, the judgment of the two-Judge Bench in Shakti Travel & Tours does not hold the field any more."

9. Analysing the case from the four corners of law, no case is made out for interference. The application stands rejected. Order Date :- 19.5.2025 piyush PIYUSH KUMAR High Court of Judicature at Allahabad