2021 (10) TMI 758 - HC - Indian Laws

Dishonor of Cheque - direct contractual or business relationship or transaction necessitating issuance of a cheque or not - Section 138 of Negotiable Instruments Act - HELD THAT - In the instant case, the petitioner had not issued the cheque from an account in her name. She had issued the cheque from the account in the name of V.N. Krishnaswamy Naidu College of Arts and Science for Women, Mettupalayam. That institution has not been made as a party. The constitution of said institution is not known, but, still the cheque had been instituted by the petitioner in her capacity as Correspondent/Secretary of that institution. She had not issued the cheque in her personal capacity. The petitioner had not issued the cheque. She had signed the cheque only in her capacity as Correspondent/Secretary of a named college. The cheque had, obviously, been issued from the bank account of the said college. The said college had no transaction with the respondent - Instituting a criminal complaint against the petitioner herein does, indeed, reflect a mala fide intention on the part of the respondent. The complaint had been lodged by naming the petitioner as accused in her personal capacity, when she had not issued any cheque in her personal capacity. It is an arm twisting move to ensure that the amount mentioned in the cheque issued by V.N.K. Textiles and Paper Mills Limited is repaid to the respondent. The complaint does not withstand judicial scrutiny viewed from any angle. The respondent can pursue his complaint against V.N.K. Textiles and Paper Mills Limited in manner known to law. But, the complaint alleged against the present petitioner will necessarily have to be interfered and quashed for the simple reason that the petitioner had not issued the cheque from her bank account for any loan which she had with the respondent. Moreover, the cheque had only been issued in her capacity as Correspondent/Secretary of the college from the bank account of the college and said institution had not been shown as accused. The present petition is allowed.

Summary

Issues:
1. Quashing of criminal proceedings under Section 482 of the Code of Criminal Procedure.
2. Interpretation of Section 138 of the Negotiable Instruments Act regarding dishonored cheques.
3. Determination of legal enforceability of debt in relation to issuance of cheques.
4. Examination of the relationship between the petitioner, the college, and the respondent in the context of the cheque issuance.
5. Consideration of mala fide intentions in lodging a criminal complaint.

Analysis:
1. The petition seeks to quash criminal proceedings in C.C. No. 14 of 2015 under Section 482 of the Code of Criminal Procedure. The respondent alleged that the petitioner issued a cheque for ?10,00,000, which was dishonored, leading to a complaint under Section 138 of the Negotiable Instruments Act.

2. Section 138 of the Negotiable Instruments Act states that a cheque must be drawn by a person on their account for payment to another person to discharge a debt or liability. In this case, the petitioner issued the cheque from the college's account, not her personal account, indicating a lack of personal debt or liability.

3. The petitioner, acting as Correspondent/Secretary of the college, issued the cheque, and the institution was not made a party in the proceedings. The respondent failed to establish any personal debt of the petitioner towards them, further weakening the case.

4. The complaint targeted the petitioner personally, despite the cheque being issued on behalf of the college, which had no business relationship with the respondent. This discrepancy raises doubts about the validity of the complaint and suggests mala fide intentions on the respondent's part.

5. The judgment concludes that the complaint lacks judicial merit as the petitioner did not issue the cheque from her personal account for any debt owed to the respondent. The petitioner's role as Correspondent/Secretary of the college further disconnects her from the alleged transaction, leading to the quashing of the criminal proceedings in C.C. No. 14 of 2015.

Conclusion:
The High Court of Madras allowed the Criminal Original Petition, quashing C.C. No. 14 of 2015, as the complaint against the petitioner did not withstand judicial scrutiny. The judgment highlighted the absence of a personal debt, the institutional nature of the cheque issuance, and the respondent's failure to establish a valid claim against the petitioner.