The Allahabad High Court while dismissing an application said that a cheque is returned unpaid by a Bank with an endorsement “Account Closed”, it would amount to returning the cheque unpaid because the amount standing to the credit of such account is insufficient to honour the cheque as envisaged in Section 138 of the Negotiable Instruments Act.
A Single Bench of Justice Anish Kumar Gupta passed this order while hearing an application under section 482 filed by Jatan Kumar Singh.
The application under Section 482 Cr.P.C has been filed seeking quashing of the summoning/cognizance order dated 19.10.2020 in Complaint Case under Section 138 of the Negotiable Instruments Act, P.S- Cantt, District- Varanasi, pending in the court of the Additional Chief Judicial Magistrate, Varanasi.
The facts of the case are that the aforesaid FIR has been lodged by the opposite party no 2 with the allegation that he was having commercial relations with the applicant herein and in relation to the business the applicant has issued cheque in his favour for an amount of Rs 29,07,254/- drawn on ICICI Bank Branch Pahadiya District Varanasi dated 21.5.2020.
It is also alleged that on presenting the cheque in question on 15.6.2020 before the Bank concerned it was returned on 17.6.2020 with the remark that “Kindly contact Drawer/Drawee Bank.
It is also alleged that on the assurance of the applicant again the cheque was presented to the Bank on 19.6.2020 but it was returned by the Bank on 20.6.2020 with the remark “Account Closed”.
It is further alleged that the demand notice dated 23.6.2020 was issued to the applicant which was received by him on 26.6.2020 but he failed to pay the cheque amount. Therefore, the complaint has been filed by the opposite party no 2 against the applicant under section 138 N.I Act.
Senior Counsel for the applicant submitted that in the case cheque has been dishonoured by the Bank with the remark “Account Closed”.
Senior Counsel further submitted that the dishonour of cheque for the reason Account closed is not covered within the two conditions laid down in Section 138 of the N.I Act i.e, firstly, the amount of money standing to the credit of the account is insufficient to honour the cheque and secondly, it exceeds the amount arranged to be paid from the account by an agreement made with the Bank.
Senior Counsel also submitted that since the cheque has not been dishonoured for the aforesaid two reasons, therefore, the complaint under Section 138 of the N.I Act, is not maintainable.
Senior Counsel for the applicant has further raised two contrary submissions, firstly, the cheque was issued during the course of business and not for the discharge in whole or in part of any debt or liability and secondly the said cheques have been stolen or lost.
Per contra, counsel for the opposite party no 2 submitted that after issuing the cheque it was the duty of the drawer of the cheque to maintain the said account and make the arrangements for honor of the cheque. If the drawer of the cheque fails to maintain that account and fails to maintain the sufficient funds with the Bank to honour the cheque, the offence under Section 138 of the N.I Act, is made out.
“It is crystal clear that when a cheque is returned unpaid by a Bank with an endorsement “Account Closed”, it would amount to returning the cheque unpaid because the amount standing to the credit of such account is insufficient to honour the cheque as envisaged in Section 138 of the N.I Act. The return of the cheque by the drawee Bank alone constitutes the commission of offence under section 138 of the N.I Act.
The other contentions raised by the applicant that the said cheque was issued during the course of business and not for discharge, in whole or in part, of any debt or liability is concerned, the applicant has relied upon the judgement of the Madras High Court in the case of K Kumar vs M/s Bapsons Foot Wear.
In the considered opinion of the Court, the said judgement, has been passed by the Madras High Court in ignorance of presumption provided under Section 139 of the N.I Act and in view of the presumption under Section 139 of the N.I Act, it will be presumed that the said cheque was issued in discharge of a legally enforceable debt or liability.
So far as the other contradictory contentions raised by the counsel for the applicant that the said cheque was stolen, that is a defence of the applicant, which is required to be established by the applicant during trial and the same cannot be considered while exercising the powers under Section 482 Cr.P.C, for quashing of the proceedings”, the Court observed while dismissing the petition.