HON’BLE SRI JUSTICE RAJA ELANGO CRIMINAL PETITION No.8777 of 2009 ORDER: This Criminal Petition is filed by the petitioners-accused, under Section 482 of Cr.P.C., seeking to quash the proceedings initiated against them in C.C.No.829 of 2009 on the file of the XI Addl. Chief Metropolitan Magistrate, City Criminal Courts, Secunderabad. Briefly, the facts of the case are that the complainant, 1st respondent herein, filed a complaint against the accused, petitioners herein, in C.C.No.829 of 2009 on the file of the XI Addl. Chief Metropolitan Magistrate, City Criminal Courts, Secunderabad, for the offence punishable under Section 138 of the Negotiable Instruments Act 1881 (for short “the Act”). The averments of the complaint are as follows: The complainant is a Public Limited Company engaged in the business of manufacturing, marketing and selling of Solar Cells and Laminates. Accused Nos.3 and 4 on behalf of accused No.1 company has been placing orders for supply of solar Cells and Laminates to the complainant company and it has been supplying the same to accused No.1. Though accused No.1 company had regularly made payments with few exceptions of delay beyond the agreed period of 12 days, but subsequently, it held up the payments for the supplies made in June, 2008 and the total amount of the said invoices comes to Rs.4,38,25,947/-. In discharge of its liability, accused No.1 company had issued a cheque bearing No.784261, dated 31.5.2008, for Rs.3,21,53,903/- drawn on M/s. Dena bank, R.P. Road Branch, Secunderabad, stating that it was short of funds and requested not to present the said cheque without informing them. The accused did not inform the complainant about the date of presentation of cheque on which it should present the cheque and, instead, raised certain disputes regarding the supplies made by it. After great efforts and follow-ups, the accused No.1 company agreed to honour the cheque by 10th October, 2008 and the net amount payable was reduced and finally settled at Rs.2,87,09,640/- and it was agreed and understood that the accused would honour the cheque and the excess amount in the cheque over and above the settled/agreed due amount would be adjusted in future supplies. Subsequently, as the accused were having an evasive attitude and the validity date of the cheque was going to expire, the complainant presented the said cheque with its bankers M/s. HDFC Bank, Lakdi Ka Pul, Hyderabd on 28.11.2008. To the surprise of the complainant, the said cheque was returned with the remarks “Funds Insufficient”. The accused No.1 company had issued the cheque in discharge of its liability incurred on account of supply of goods and because of dishonour of the cheque, all the accused have made themselves liable for prosecution under Section 138 of the Act. The complainant got issued a legal notice dated 18.12.2008 to the accused demanding payment of the due amount of Rs.2,87,09,640/-. Thereafter, on 19.12.2008 a small payment of Rs.20,00,000/- was made by the accused No.1 company by way of wire-transfer through RTGS and the said amount was received by the complainant. Making of the said small payment does not absolve any of the accused persons from the criminal liability for commission of the said offence. The complainant had also received two different replies from the accused to the legal notice dated 18.12.2008 got issued by it. The accused persons failed to make the payment of the due amount of Rs.2,87,09,640/- despite expiry of 15 days statutory period after service of legal notice upon them. Thus, all the accused are liable for punishment under Section 138 of the Act. The said complaint is under challenge in this criminal petition. Learned counsel for the accused has mainly contended that as the demand made by the complainant is only to the extent of Rs.2,87,09,640/- and the cheque amount being Rs.3,21,53,903/- more than the admitted debt or liability, the provisions of Section 138 of the Act are not applicable to the case on hand and the cheque would not come within the purview of Section 138 of the Act. Therefore, the entire proceedings in the complaint are liable to quashed. In contra, learned counsel for the complainant has submitted that the complainant approached the Court with clean hands and even though the demand is made only for a lesser amount, it does not mean that no offence is made out to attract the provisions of Section 138 of the Act. To decide the issue, it is necessary to reproduce Section 138 of the Act as under: “Dishonour of cheque for insufficiency, etc., of funds in the accounts:- 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 the bank, such person shall be deemed to have committed an offence and shall without prejudice to any other provisions of this Act, be punished with imprisonment for a term which may be extended to two years or with fine which may extend to twice the amount of the cheque or with both: PROVIDED that nothing contained in this section shall apply unless – a) The cheque has been presented to the bank within a period of six months from the date on which it is drawn or within the period of its validity, whichever is earlier. b) 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 cheque (within thirty days) of the receipt of information by him from the bank regarding the return of the cheque as unpaid, and c) The drawer of such cheque fails to make the payment of the said amount of money to the payee or, as the case may be, to the holder in due course of the cheque, within fifteen days of the receipt of the said notice. Explanation: For the purpose of this section, “debt or other liability” means a legally enforceable debt or other liability.” In the present case, the legally enforceable debt comes to Rs.2,87,09,640/-, whereas the cheque amount comes to Rs.3,21,53,903/-. The moment when the complainant and the accused have entered into a Memorandum of Understanding and reduced the legally enforceable debt to a tune of Rs.2,87,09,640/-, the instrument, which is in question, given by the accused towards the earlier legally enforceable debt of Rs.3,21,53,903/- cannot be termed as instrument issued towards the legally enforceable debt of Rs.2,87,09,640/- and it becomes invalid. Further, as per Section 138 (c) of the Act out of the words “fails to make the payment of the said amount of money to the payee”, the words “said amount” clearly indicate the legally enforceable debt. In the absence of a statutory notice in respect of the instrument which has to satisfy the requirement of legally enforceable debt, the notice issued earlier cannot be termed as a statutory notice as provided under the Act. It is true that the complainant has filed the complaint by informing the Court regarding the earlier transaction. The learned counsel for the complainant submitted that for which, the complainant should not be suffered. But in interpreting the provisions of the Criminal Law, the Court has no jurisdiction to expand its scope or to substitute anything, which the legislature not intends to incorporate. So, the demand made by the complainant to a tune of Rs.2,87,09,640/- , when the instrument is for an amount of Rs.3,21,53,903/-, will not attract the offence under Section 138 of the Act. Hence, this Court is of the view that the present complaint is liable to be quashed. Accordingly, the Criminal Petition is allowed and the proceedings initiated against the petitioners-accused in C.C.No.829 of 2009 on the file of the XI Addl. Chief Metropolitan Magistrate, City Criminal Courts, Secunderabad, are hereby quashed. Further, the complainant-1st respondent is at liberty to recover the debt of Rs.2,87,09,640/- from the petitioners-accused by approaching the civil Court. Miscellaneous petitions, if any, filed along with the criminal petition shall stand closed. __________________ RAJA ELANGO, J 12th October, 2011 cbs HON’BLE SRI JUSTICE RAJA ELANGO CRIMINAL PETITION No.8777 of 2009 12th October, 2011 cbs