THE HON’BLE SRI JUSTICE K.C.BHANU CRIMINAL PETITION No. 2603 OF 2008 ORDER: 1. This Criminal Petition is filed under Section 482 of the Code of Criminal Procedure, 1973 (for short, ‘Cr.P.C.’) to quash the proceedings in C.C. No.2317 of 2003 on the file of the XI Metropolitan Magistrate, Secunderabad. 2. The petitioners herein are A.1 to A.3 respectively, and the second respondent herein is the complainant, in the C.C. 3. It is alleged in the complaint that the complainant firm is engaged in the business of Metal Packaging. During usual course of business dealings, the complainant sold and supplied 101.941 metric tones of Tinplates-Second/TFS to the accused for an amount of Rs.26,65,627/-. A.3 addressed letter dated 12.8.2002 to the complainant agreeing to give a demand draft for Rs.3,00,000/- on 19.8.2002 along with two cheques each for Rs.3,00,000/-; cheques for Rs.9,00,000/- and Rs.8,65,000/- on 19th August, 2002. Out of the outstanding amount, the complainant only received an amount of Rs.5,81,492/- leaving balance of Rs.20,84,135/- which was still due and payable by the accused. In a meeting held between the complainant and the accused, the latter issued a cheque bearing no.505534, dated 15.8.2003 drawn on Standard Chartered Bank, S.P. Road, Secunderabad, for an amount of Rs.3,00,000/- along with covering letter dated 26.6.2003 towards part payment of the amount, but, when the cheque was presented by the complainant bank, it was returned with endorsement ‘funds insufficient’. Thereafter, the complainant issued statutory notice dated 17.9.2003 calling upon the accused to pay the entire balance amount of Rs.20,84,135/- with interest @ 24% per annum. As the accused did not pay the said amount, the present complaint is lodged for the offence punishable under Section 138 read with 141 of the Negotiable Instruments Act, 1881. 4. Heard both sides. 5. The only contention raised by the learned counsel for the petitioners is that there was no specific demand in the statutory legal notice issued by the complainant with regard to the amount covered under the cheque returned unpaid as contemplated under Section 138 (b) of the Negotiable Instruments Act, 1881, and therefore, the impugned proceedings are liable to be quashed. 6. On the other hand, the learned counsel for the second respondent contended that in view of the fact that the cheque amount formed part of the outstanding amount, demanding the entire outstanding amount includes demand with regard to the amount covered under the returned unpaid cheque, and that, the said aspect can as well be decided by the trial Court after adducing necessary evidence, and so, the impugned proceedings cannot be quashed at this stage. 7. There cannot be any dispute that inherent powers under Section 482 Cr.P.C. can be exercised when there is an abuse of process of Court or to secure ends of justice or to give effect to any order under the Code. Section 138 of the Negotiable Instrument Act, 1881 reads that where any cheque drawn by a person on an account maintained by him with a banker for payment of any amount of money to another person from out of that account for the discharge, in whole or in part, of any debt or other liability, is returned by the bank unpaid, either because of the amount of money standing to the credit of that account is insufficient to honour the cheque or that it exceeds the amount arranged to be paid from that account by an agreement made with that bank, then such person shall be deemed to have committed the offence punishable. Section 138(b) of the Act contemplates that the payee or the holder in due course of the cheque, as the case may be, makes a demand for the payment of the said amount of money by giving a notice in writing, to the drawer of the cheque, within thirty days of the receipt of information by him from the bank regarding the return of the cheque as unpaid. The above provision makes it clear that following the dishonour of the cheque, a notice has to be issued in writing to the person who has issued the cheque inviting his attention that the cheque has been dishonoured and he is liable for penal consequences under Section 138 of the Act. Because of this notice, the drawer of the cheque has got an opportunity to know in advance before filing the complaint that the cheque was dishonoured for a particular reason. 8. In support of his contention, the learned counsel for the petitioners placed strong reliance on a decision in K.R.Indira v. Dr.G.Adinarayana[1], wherein it is held thus: “..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 noncompliance with such a demand only being the incriminating circumstance which expose the drawer for being proceeded against under section 138 of the Act…” The above decision is distinguishable on facts. That is a case where the demand was not made specifically with regard to amount covered by cheque, but was made only for the loan amount. Whereas, in the case on hand, the second respondent sent a letter dated 17.09.2003 stating inter alia that the petitioners herein promised to pay on instalment basis, however, as on the date of issuing the notice, the second respondent received only Rs.5,81,492/- leaving balance of Rs.20,84,135/- to be received, and that, against this outstanding amount, the petitioner company issued a cheque bearing no.505534, dated 15.08.2003 for Rs.3,00,000/- drawn on Standard Chartered Bank, Secunderabad, and when the cheque was presented, it was returned with endorsement ‘funds insufficient’, and therefore, the second respondent requested him to send demand draft for entire balance amount of Rs.20,84,135/- within 15 days from the date of receipt of the said letter. 9. No doubt, as rightly contended by the learned counsel for the petitioners, there was no specific demand with regard to the amount covered under the cheque dated 15.8.2003. But, if the contents of the entire notice are to be taken into consideration, it is clear that outstanding amount of Rs.20,84,135/- was to be payable by the petitioners to the second respondent herein as on the date of the letter viz. 17.9.2003, and to discharge a part of the said debt, the petitioners issued a cheque for Rs.3,00,000/- and that cheque was returned for insufficiency of funds. It is made clear in the notice that dishonour of cheque is an offence and the drawer of the cheque is liable for the offence under Section 138 of the Act. Therefore, the demand of entire amount includes the cheque amount also. Hence, it is a proper statutory notice within the meaning of Section 138 (b) of the Act, and on this ground, the complaint cannot be quashed at this stage. However, this finding is given only for the purpose of deciding the question whether a prima facie case is made out or not. Uninfluenced by any of the observations made in this order, the trial court shall dispose of the case in accordance with law. 10. The Criminal Petition is devoid of merit and is, accordingly, dismissed. ---------------- 29.7.2010 DRK THE HON’BLE SRI JUSTICE K.C.BHANU CRIMINAL PETITION No. 2603 OF 2008 Date: 29.7.2010 Between: M/s. Cobalt Packaging & others …Petitioners And The State of A.P. rep. by its Public Prosecutor, High Court of Andhra Pradesh, Hyderabad through Sanjeevareddy Nagar p.s. & another …Respondents THE HON’BLE SRI JUSTICE K.C.BHANU CRIMINAL PETITION No. 2603 of 2008 29.7.2010 [1] (2003) 8 Supreme Court Cases 300