Case: Union Roadways (P) Ltd Vs. Shah Ramanlal

1. The petitioners are accused in C.C.No.110/90 on the file of the VII Additional Judicial First Class Magistrate, Vijayawada for the offences punishable under S.138 and 142 of the Negotiable Instruments Act. The first petitioner is the company and the second petitioner is the Director. According to the complainant a cheque was issued by the second petitioner for Rs. 19,000/- on 8-6-1990 in favour of the first respondent and the said cheque was presented on 19-6-1990 and was returned by the bank on 20-6-1990 with an endorsement Refer to Drawer. Presuming that the said endorsement made that the said cheque was issued without necessary funds in the account of the petitioners, the first respondent laid the complaint, stating herein he issued a registered notice dated 23-6-1990 calling upon the petitioner to pay the said amount and the petitioners have failed to pay the amount. 2. The learned counsel for the petitioners submits that blank cheques were kept in the custody of the Branch Manager of the Company; on their being misused by the said Branch Manager, a complaint was launthed with the police and F.I.R. dated 24-6-1990 was issued. He further submits that no offence is made out under S.138 of the Negotiable Instruments Act, in as much as the cheque was not returned with the. endorsement that it was returned because of insufficiency of the funds standing in the name of the petitioners in their bank account as required by S.138 of the Act. 3. A reading of the complaint shows that the cheque was returned with the endorsement Refer to Drawer. From this, the complainant inferred that the cheque was issued without necessary funds in the account of the petitioners and the cheque was returned oh account of the insufficiency of funds in their account. Such an inference cannot be drawn. The cheque might have been returned for various reasons. Under similar circumstances the Punjab and Haryana High Court in Abdul Samad v. Satya Narayana Mahawar (1990 (2) Bank CIR 416), held that there, is no justification to let the proceedings continue. To the same effect is the decision of the Karnataka High Court reported in Hunasikattimath v. State of Karnataka, (1991 (1) Kar.L.T. 37).

Decision reasoning: 1[ds]3. A reading of the complaint shows that the cheque was returned with the endorsement Refer to Drawer. From this, the complainant inferred that the cheque was issued without necessary funds in the account of the petitioners and the cheque was returned oh account of the insufficiency of funds in their account. Such an inference cannot be drawn. The cheque might have been returned for various reasons. Under similar circumstances the Punjab and Haryana High Court in Abdul Samad v. Satya Narayana Mahawar (1990 (2) Bank CIR 416), held that there, is no justification to let the proceedings continue. To the same effect is the decision of the Karnataka High Court reported in Hunasikattimath v. State of Karnataka, (1991 (1) Kar.L.T. 37).