HON’BLE SRI JUSTICE SAMUDRALA GOVINDARAJULU CRL.PETITION NO.4568 OF 2008 Date: .04.2010 Between: Kotha Gopi …..Petitioner And: State of AP, rep. by PP and another …..Respondents. HON’BLE SRI JUSTICE SAMUDRALA GOVINDARAJULU CRL.PETITION NO.4568 OF 2008 ORDER: 1. The petitioner is accused of offence punishable under Section 138 of the Negotiable Instruments Act (in short, the Act). He seeks quashing of proceedings in C.C.No.163 of 2008 on the file of IV Additional Chief Metropolitan Magistrate, Vijayawada filed by the 2nd respondent/complainant against the petitioner. 2. The 2nd respondent is Karvy Stock Broking Limited. The accused is stated to have opened a trading account with the complainant and indulged in sale and purchase of shares. It is alleged that the accused became liable to pay Rs.2,84,111.41 ps to the complainant under that account and that in partial discharge of the said debt, the accused gave cheque for Rs.60,000/- to the complainant and that the said cheque when presented to the banker, was dishonoured. Subsequent to dishonour, there is no dispute that the complainant company itself sent statutory notice dated 19.6.2006 under Section 138 (b) of the Act. 3. The only point urged by the petitioner’s counsel in this petition is that the above notice issued by the complainant to the accused after dishonour of cheque, is not in accordance with legal requirements, inasmuch as the notice did not demand payment of exact dishonoured cheque amount of Rs.16,000/-, but demanded total sum due under the account to the extent of Rs.2,82,988.26 ps. The petitioner’s counsel placed reliance on Rahul Builders v. Harihant Fertilisers and Chemicals[1], of the Supreme Court on this aspect. It was observed therein: “Service of a notice, it is trite, is imperative in character for maintaining a complaint. It creates a legal fiction. Operation of Section 138 of the Act is limited by the proviso. When the proviso applies, the main section would not. Unless a notice is served in conformity with Proviso (b)appended to Section 138 of the Act, the complaint petition would not be maintainable. The Parliament while enacting the said provision consciously imposed certain conditions. One of the conditions was service of a notice making demand of the payment of the amount of cheque as is evident from the use of the phraseology "payment of the said amount of money". Such a notice has to be issued within a period of 30 days from the date of receipt of information from the bank in regard to the return of the cheque as unpaid. The statute envisages application of the penal provisions. A penal provision should be construed strictly; the condition precedent wherefor is service of notice. It is one thing to say that the demand may not only represent the unpaid amount under cheque but also other incidental expenses like costs and interests, but the same would not mean that the notice would be vague and capable of two interpretations. An omnibus notice without specifying as to what was the amount due under the dishonoured cheque would not sub serve the requirement of law. Respondent No. 1 was not called upon to pay the amount which was payable under the cheque issued by it. The amount which it was called upon to pay was the outstanding amounts of bills, i.e. Rs. 8,72,409/-. The notice was to respond to the said demand. Pursuant thereto, it was to offer the entire sum of Rs. 8,72,409/ -. No demand was made upon it to pay the said sum of Rs. 1,00,000/- which was tendered to the complainant by cheque dated 30. 04. 2000. What was, therefore, demanded was the entire sum and not a part of it.” 4. On the other hand, the 2nd respondent’s counsel placed reliance on K. R. Indira v. Dr.G. Adinaryana[2] of the Supreme Court and contended that since factum of issue of cheque for Rs.60,000/- and dishonour of the same was specifically mentioned in the notice, even though total debt amount is demanded, which amount covers dishonoured cheque amount of Rs.16,000/-, the notice is not bad in law and is in accordance with Section 138(b) of the Act. It was observed therein: “In a given case if the consolidated notice is found to provide sufficient information envisaged by the statutory provision and there was a specific demand for the payment of the sum covered by the cheque dishonoured, mere fact that it was a consolidated notice, and/ or that further demands in addition to the statutorily envisaged demand was also found to have been made may not invalidate the same. This position could not be disputed by learned counsel for the respondent. However, according to the respondent, the notice in question is not separable in that way and that there was no specific demand made for payment of the amount covered by the cheque. We have perused the contents of the notice. Significantly, not only the cheque amounts were different from the alleged loan amounts but the demand was made not of the cheque amounts but only the loan amount as though it is a demand for the loan amount and not the demand for payment of the cheque amount; nor could it be said that it was a demand for payment of the cheque amount and in addition thereto made further demands as well. What is necessary is making of a demand for the amount covered by the bounced cheque which is conspicuously absent in the notice issued in this case. The notice in question is imperfect in this case not because it had any further or additional claims as well but it did not specifically contain any demand for the payment of the cheque amount, the non- compliance with such a demand only being the incriminating circumstance which expose the drawer for being proceeded against under Section 138 of the Act.” 5. If notice in the case on hand is examined in the light of above decisions, I am of the opinion that demand made therein is not in accordance with Section 138(b) of the Act. Relevant portion of the demand notice is as follows: “Therefore, as required under Section 138(b) of the Negotiable Instrument Act, 1881, we hereby call upon you to pay the amount of Rs.2,82,988.26 (Rupees two lakhs eighty two thousand nine hundred eighty eight and paise twenty six only) due and payable on the said cheque within a period of 15 days from the date of receipt of this notice by you, failing which we shall be constrained to proceed against you for the criminal offence committed by you under the various provisions of the Negotiable Instrument Act, 1881, holding you liable to all the costs and consequences thereof.” 6. Since the statutory notice under Section 138(b) is imperfect and is not in accordance with law, the respondent/complainant cannot maintain the complaint in the lower court. 7. In the result, the petition is allowed quashing proceedings in C.C.No.163 of 2008 on the file of IV Additional Chief Metropolitan Magistrate, Vijayawada. ____________________________________ SAMUDRALA GOVINDARAJULU,J. Date: .04.2010. Gk. HON’BLE SRI JUSTICE SAMUDRALA GOVINDARAJULU CRL.P.NO.4568 of 2008 Date: .04.2010 Gk. [1] (2008) 2 Supreme Court Cases, 321 [2] AIR 2003 Supreme Court 4689