Judgment:
R.K. Dash, J.
1. This petition under Section 482, Criminal Procedure Code, is filed invoking the inherent power of the court to quash the proceeding in Complaint Case No. 17 of 1993, on the file of the learned Judicial Magistrate, First Class, Bhubaneswar.
2. Suryo Udyog Limited, a public limited company, registered under the Companies Act, 1956, is having its registered office at Sahid Nagar, Bhubaneswar. Shradha Foundation (P.) Ltd. is a private limited company of which Shri S. P. Jaiswal is the director. Both Shradha Foundation and Shri S. P. Jaiswal (hereinafter referred to as 'the accused persons') are petitioners and Suryo Udyog Ltd. (hereinafter referred to as 'the complainant') is the opposite party No. 1 in the present proceeding. The complainant filed the aforesaid complaint under Section 138 of the Negotiable Instruments Act, 1881, (for short, 'the Act') alleging, inter alia, that the accused persons for satisfaction of the outstanding dues had issued an account payee cheque dated July 24, 1992, for a sum of Rs. 77,000 drawn on the State Bank of India, Howrah Branch. The said cheque was presented for encashment, but returned unpaid with the endorsement 'payment stopped by the drawer'. Thereafter, the complainant issued a notice to the accused persons intimating the fact of return of the cheque and demanded payment of the amount within 15 days of receipt of the said notice. Despite that when they did not pay the amount, the complainant filed the case alleging that in order to defraud the creditor they had issued the cheque which was returned unpaid for want of sufficient funds in their account and, therefore, they are liable for punishment under Section 138 of the Negotiable Instruments Act, 1881.
3. Cognizance of the offence having been taken the accused persons were noticed to appear. In response to the notice, they entered appearance through their counsel under Section 205, Criminal Procedure Code, 1973, and filed a petition to recall/rescind the impugned order, whereby cognizance of the offence was taken, and to drop the proceeding. It was urged that a case could be maintained if the cheque was returned either because the amount of money standing to the credit of the account of the drawer was insufficient to honour the cheque or it exceeded the amount arranged to be paid from that account by an agreement with the bank. In the present case, the grievance of the complainant being that the cheque was returned with the endorsement 'payment stopped by the drawer' and not that the drawer had insufficient funds in the account, the impugned order of taking cognizance under Section 138 of the Act is bad in law. Upon hearing, the learned Magistrate did not feel inclined to rescind or recall the impugned order and, consequently, rejected the petition.
4. Learned counsel for the accused persons while not disputing the factual aspect of the case with regard to issuance of cheque to the complainant, contended that it would appear from the debit voucher, annexure-2, that it was agreed between the parties that the complainant will present the cheque for encashment only after obtaining written consent from the accused persons. But without doing so when it presented the cheque to his banker, namely, United Bank of India, Bhubaneswar, for collection. on the instruction of the accused persons, State Bank of India, Howrah Branch, returned the same with the endorsement 'payment stopped by the drawer'. It was further submitted that the cheque bounced not because the amount of money standing to the credit of the account of the accused persons was insufficient to honour the same, but for the reason that the accused persons instructed their banker to stop payment and in that view of the matter the provisions of Section 138 of the Act having no application to the facts and circumstances of the case, the court in order to prevent abuse of the process of the court should quash the whole proceeding.
5. Controverting the aforesaid submission, counsel for the complainant would urge that the factual position as projected by the accused persons that there was mutual understanding that the cheque would be presented with their written consent is false and imaginary and such a plea for the first time has been taken in this court keeping in view the recent decision of the Supreme Court in Electronics Trade and Technology Development Corporation Ltd. v. Indian Technologists and Engineers (Electronics) Pvt Ltd. [1996] 86 Comp Cas 30 ; (1996) 2 SCC 739 and K, K. Sidharthan v. T.P. Praveena Chandran [1996] 87 Comp Cas 685 ; [1996] 6 SCC 369. So, when the complainant seriously disputes the defence plea as aforesaid, this court should be slow to interfere with the impugned order of takingcognizance leaving the whole matter to be decided by the trial court on the basis of the evidence to be adduced by the parties.
6. Dishonour of cheque for insufficiency of funds was previously not a penal offence. It was, however, made so by Amendement Act 66 of 1988, The Objects and Reasons for introduction of such a provision in the Act which find mention in Clause (xi) of the Bill have been couched in the following terms :
'(xi) to enhance the acceptability of cheques in settlement of liabilities by making the drawer liable for penalties in case of bouncing of cheques due to insufficiency of funds in the accounts or for the reason that it exceeds the arrangements made by the drawer, with adequate safeguards to prevent harassment of honest drawers.'
7. Negotiable instruments were devised by the mercantile community to discharge pecuniary liabilities and as a substitute for cash payment. For smooth working of the system such instruments are primarily dependent on the honesty and integrity of the parties. Experience, however, shows that in the mercantile community of India a number of cheques are dishonoured apparently on the ground of insufficiency of funds with the bankers in the account of the drawers. Previously when a cheque was dishonoured, the payee had to approach the civil court to get back his money. Since the civil proceeding was dilatory in nature, in order to ensure promptitude in remedy against the defaulter the amendment in the Act was brought in by providing a criminal liability and, therefore, Sections 138, 139, 140, 141 and 142, were brought in the statute book. Section 138, which is relevant for the present case, reads as under :
'138. Dishonour of cheque for insufficiency, etc., of funds in the account.--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, such person shall be deemed to have committed an offence and shall, without prejudice to any other provision of this Act, be punished with imprisonment for a term. . . .'
8. This shows that the drawer of the cheque should have drawn the same on an account maintained by him with the banker, that the cheque must have been drawn for payment of any amount of money to another from out of that account, that the money so drawn must have been for the discharge of the whole or in part of any debt or other liability, that the said cheque must have been returned by the bank unpaid, that thereturn of the cheque must have been because of the amount of money standing to the credit of that account to be insufficient to honour the cheque or that it exceeds the amount arranged to be paid from that account by an arrangement made with the bank. On satisfying these conditions the drawer of the cheque will be deemed to have committed an offence under the section, subject to the provisions contained in the proviso with which we are not concerned in the present case since there is no dispute about the factual position by the parties.
9. Now, the question arises, as argued by learned counsel for the accused persons, whether the endorsement of the bank 'payment stopped by the drawer' would attract the provision of Section 138. Initially, an argument was advanced by Shri Ray that on happening of two contingencies, namely, where the amount of money standing to the credit of the account of the drawer is insufficient to honour the cheque or it exceeds the amount arranged to be paid from that account by agreement with the bank, the drawer will be liable for punishment as provided in the section and not for any other reason, more particularly the cheque having been returned on the instruction of the drawer to stop payment. There are some judicial pronouncements which support his argument, but the same are no longer good law in view of the recent decision of the Supreme Court in Electronics Trade and Technology Development Corporation Ltd. v. Indian Technologists and Engineers (Electronics) Pvt. Ltd. [1996] 86 Comp Cas 30 ; [1996] 2 SCC 739, where the court held (page 33) :
'. .. once the cheque has been drawn and issued to the payee and the payee has presented the cheque and thereafter, if any instructions are issued to the bank for non-payment and the cheque is returned to the payee with such an endorsement, it amounts to dishonour of cheque and it comes within the meaning of Section 138.'
10. The aforesaid view has been followed in a later decision in the case of K.K. Sidharthan v. T.P. Praveena Chandran [1996] 87 Comp Cas 685; (1996) 6 SCC 369. In view of the aforesaid authoritative pronouncements, Shri Ray did not press his argument on this point.
11. Shri Ray, however, contended that in view of the stipulation contained in annexure-2, the debit voucher, the accused persons cannot be attributed with any criminal intention in intimating the bank to stop payment, since no written consent as agreed to between the parties was obtained by the complainant before presenting the cheque. In support of such submission he referred to the observation of the apex court in Electronics Trade and Technology Development Corporation Ltd. v. Indian Technologists and Engineers (Electronics) Pvt. Ltd. [1996] 86 Comp Cas 30; [1996] 2 SCC 739, where in paragraph 7 it was held (page 34) :
'. . . after the cheque is issued to the payee or to the holder in due course and before it is presented for encashment, notice is issued to himnot to present the same for encashment and yet the payee or the holder in due course presents the cheque to the bank for payment and it is returned on instructions, Section 138 does not get attracted.'
12. The factual position of the case as submitted by Shri Ray has been seriously disputed by Shri B. P, Das, learned counsel for the complainant. He contended that annexure-2 is a xerox copy and the writings that 'cheque would be presented after written consent from our company' were initially not there in the original and the same were inserted subsequently with a view to creating a defence plea in the light of the Supreme Court decision in the aforementioned case. To buttress his submission he brought to my notice the petition filed before the court below where such a plea was not taken while seeking to recall/rescind the order of taking cognizance of the offence. To appreciate the contentions made at the Bar, I directed the accused persons to produce the original of annexure-2, but they did not. Consensus of judicial opinion in the matter of quashing a criminal proceeding in exercise of inherent power is that such power should be exercised very sparingly and with circumspection and that too in the rarest of rare cases and the court will not be justified in embarking upon an enquiry as to the reliability of the allegations made in the first information report or complaint. It is not permissible for the court to look into the documents placed on record by the accused in support of his defence plea. In that view of the matter, the genuineness or otherwise of the contents of annexure-2 cannot be gone into at this stage and the impugned order taking cognizance of the offence cannot be quashed.
13. In the result, the criminal miscellaneous case fails and the same is dismissed.