IN THE HIGH COURT OF JUDICATURE AT MADRAS DATED: 02.07.2008 CORM: THE HONOURABLE MR.JUSTICE K.MOHAN RAM Criminal Original Petition No.5339 of 2008 & M.P.Nos.1 and 2 of 2008 M.Chokkalingam, Secretary, M/s. Bharatha Seva Kendra D.No.2 Valluvar Nagar, New Quarters, Collectorate Post, Dharmapuri .. Petitioner -Vs.- The Branch Manager The Dharmapuri District Central Co-operative Bank Ltd., Avvai Nagar Branch, Collectorate Post, Dharmapuri .. Respondent Prayer : Criminal Original Petition filed under Section 482 of the Code of Criminal Procedure praying for a direction to call for the records relating to the private complaint in C.C.No.409 of 2003 on the file of the Judicial Magistrate No.I, Dharmapuri and quash the same. For Petitioner :: Mr. S.Doraisamy - - - O R D E R The above Criminal Original Petition has been filed by the accused / petitioner in C.C.No.408 of 2008 and facing trial for an offence under Section 138 of the Negotiable Instruments Act. 2. The contention of the petitioner is that the cheque in question was issued only as a security and not issued to discharge the debt or liability. According to the learned counsel for the petitioner, even if a cheque issued by the guarantor is dishonoured the guarantor cannot be prosecuted for the offence under Section 138 of the Negotiable Instruments Act. In support of his said contention the learned counsel relied upon a decision of this Court reported in 1999 (1) CTC 6 (M/s. Balaji Seafoods Exports (Indian) Ltd., v. Mac Industries Ltd.). In the said decision in paragraph 10 it is observed as under:- “10.Therefore, I am of the considered view that as an undated cheque having been given only as security, the provision of Section 138 of the Negotiable Instruments Act are not at all attracted and hence, the complaint against the accused under Section 138 of the https://hcservices.ecourts.gov.in/hcservices/ Negotiable Instruments Act cannot be maintained at all”. Learned counsel for the petitioner further based reliance on a decision of the Apex Court reported in 2006 (6) Scale 393 (M.S.Narayana Menon @ Mani vs. State of Kerala). 3. I have carefully considered the said submissions made by the learned counsel for the petitioner. 4. It is pertinent to point out that even in the decision reported in 2006 (6) Scale 393 (referred to supra) which is relied upon by the learned counsel for the petitioner in paragraph 56 the Apex Court has laid down as under:- “56. We in the facts and circumstances of this case need not go into the question as to whether even if the prosecution fails to prove that a large portion of the amount claimed to be a part of debt was not owing and due to the complaint by the accused and only because he has issued a cheque for a higher amount, he would be convicted if it is held that existence of debt in respect of large part of the said amount has not been proved. The Appellant clearly said that nothing is due and the cheque was issued by way of security. The said defence has been accepted as probable. If the defence is acceptable as probable the cheque therefor cannot be held to have been issued in discharge of the debt as, for example, if a cheque is issued for security or for any other purpose the same would not come within the purview of Section 138 of the Act.” But that judgment was rendered in a case in an appeal after conclusion of trial. As could be seen from the above extracted portion the appellant took a defence that the cheque was issued by way of a security and the said defence came to be accepted as probable and only in that context the Apex Court has further observed that the cheque therefor cannot be held to have been issued in discharge of the debt as, for example, if a cheque is issued for security or for any other purpose the same would not come within the purview of Section 138 of the Act. But even before the trial and even before such a defence has been established the contention put forth by the petitioner that the cheque was given as a guarantee and the petitioner only acted as a guarantor and hence the proceedings are liable to be quashed cannot be accepted at this stage. It is only the defence taken by the petitioner and it has to be proved by acceptable evidence before the trial court and therefore the said decision is not helpful to the petitioner. 5. It would be useful to refer to two other decisions of the Apex Court reported in 2002 Cri.L.J. 266 (M/s. M.M.T.C. Ltd. v. M/s. Medchi Chemicals & Pharma (P) Ltd.,) and 2002 Supreme Court Cases (Cri) 1342 (ICDS Ltd., v. Beena Shabeer and another). In the decision reported in 2002 Cri.L.J. 266 (referred to supra) in paragraphs 13 and 16 the Apex Court has laid down as under:- https://hcservices.ecourts.gov.in/hcservices/ “13. The learned Judge has next gone into facts and arrived at a conclusion that the cheques were issued as security and not for any debt or liability existing on the date they were issued. In so doing the learned Judge has ignored well settled law that the power of quashing criminal proceedings should be exercised very stringently and with circumspection. It is settled law that at this stage the Court is not justified in embarking upon an enquiry as to the reliability or genuineness or otherwise of the allegations made in the complaint. The inherent powers do not confer an arbitrary jurisdiction on the Court to act according to its whim or caprice. At this stage the Court could not have gone into merits and / or come to a conclusion that there was no existing debt or liability. It is next held as follows:- “This is a special provision incorporated in the Negotiable Instruments Act. It is necessary to allege specifically in the complaint that there was a subsisting liability and an enforceable debt and to discharge the same the cheques were issued. But, we do not find any such allegation at all. The absence of such vital allegation, considerably impairs the maintainability“ 14. ... 15. .... 16. There is therefore no requirement that the complainant must specifically allege in the complaint that there was a subsisting liability. The burden of proving that there was no existing debt or liability was on the respondents. This they have to discharge in the trial. At this stage, merely on basis of averments in the Petitions filed by them the High Court could not have concluded that there was no existing debt or liability.” In the decision reported in 2002 Supreme Court Cases (Cri) 1342 (referred to supra) in paragraphs 10 and 11 the Apex Court has laid down as under:- “The language, however, has been rather specific as regards the intent of the legislature. The commencement of the section stands with the words “Where any cheque“. The abovenoted three words are of extreme significance, in particular, by reason of the user of the word “any“ – the first three words suggest that in fact for whatever reason if a cheque is drawn on an account maintained by him with a banker in favour of another person for the discharge of any debt or other liability, the highlighted words if read with the first three words at the commencement of Section 138, leave no manner of doubt that for whatever reason it may be, the liability under this provision cannot be avoided in the event the same stands returned by the banker unpaid. The legislature has been careful enough to https://hcservices.ecourts.gov.in/hcservices/ record not only discharge in whole or in part of any debt but the same includes other liability as well. This aspect of the matter has not been appreciated by the High Court, neither been dealt with or even referred to in the impugned judgment. 11. The issue as regards the coextensive liability of the guarantor and the principal debtor, in our view, is totally out of the purview of Section 138 of the Act, neither the same calls for any discussion therein. The language of the statute depicts the intent of the law-makers to the effect that wherever there is a default on the part of one in favour of another and in the event a cheque is issued in discharge of any debt or other liability there cannot be any restriction or embargo in the matter of application of the provisions of Section 138 of the Act. “Any cheque“ and “other liability“ are the two key expressions which stand as clarifying the legislative intent so as to bring the factual context within the ambit of the provisions of the statute. Any contra-interpretation would defeat the intent of the legislature. The High Court, it seems, got carried away by the issue of guarantee and guarantor‘s liability and thus has overlooked the true intent and purport of Section 138 of the Act. The judgments recorded in the order of the High Court do not have any relevance in the contextual facts and the same thus do not lead any assistance to the contentions raised by the respondents“. 6. Therefore the contention of the learned counsel for the petitioner that since the cheque in question was issued only as a security and was not issued towards discharge of a debt or liability, as such no offence is made out under Section 138 of the Negotiable Instruments Act cannot be accepted. Further at this stage this Court cannot embark upon an enquiry regarding the reliability or otherwise of the allegations made in the complaint. It has to be pointed out that by virtue of Section 139 of the Negotiable Instruments Act and 118 of the Negotiable Instruments Act the Court has to draw a presumption that the holder of the cheque received the cheque for discharge of a debt or liability until the contrary is proved. At the initial stage of the proceedings this Court is not justified in entertaining and accepting a plea that there was no debt or liability and the cheque was issued only as a guarantee. https://hcservices.ecourts.gov.in/hcservices/ 6. For the aforesaid reasons, I am unable to accept the contention of the learned counsel for the petitioner. Accordingly the above Criminal Original Petition fails and the same is dismissed. Consequently the connected MPs are closed. Sd/ Asst.Registrar /true copy/ Sub Asst.Registrar srk To 1. The Judicial Magistrate No.I, Dharmapuri 2.-do- thro The Chief Judicial Magistrate, Dharmapuri. +1cc to Mr.S.Doraisamy,Advocate Sr 34194 NTK (CO) km/17.7. Crl.O.P.No.5339 of 2008 & M.P.Nos.1 and 2 of 2008 https://hcservices.ecourts.gov.in/hcservices/