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

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. 19,000/0 in favour of the first respondent and the said cheque was presented on0 and was returned by the bank on0 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 dated0 calling upon the petitioner to pay the said amount and the petitioners have failed to pay the amount.

Court's reasoning:
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).