Bombay High Court
Ramesh Deshpande vs Punjab & Sindh Bank & Ors. on 3 April, 2000
Equivalent citations: 2001BOMCR(CRI)~, (2000)2BOMLR300
Author: T. K. Chandrashekhara Das
Bench: T.K. Chandrashekhara Das
JUDGMENT
T. K. Chandrashekhara Das. J.
Rule. Returnable forthwith. Heard both sides.
1. This writ petition arises out of a complaint filed by the Respondent before the Metropolitan Magistrate's Court at Bsplanade, in Criminal Case No. 158/S/99) against the petitioner. The first respondent's case in short before the Metropolitan Magistrate is that the respondent No.2 (accused No. 1) has drawn a pay order dated 18.12.1992 for and on behalf of M/s. Poise Leasing and Finance Co. Ltd. payable to the respondent No. 1 for an amount of Rs. 48,40,000/-. According to the complainant the aforesaid pay order was issued by respondent No. 2 in discharge of the liability of M/s. Poise Leasing and Finance Co. Ltd.
2. On receipt of the pay order the Punjab & Sindh Bank debited the amount covered by it to the account of M/s. Poise Leasing & Finance Co. Subsequently when the cheque was presented to the accused No. 1, it was not honoured. A Notice under section 138 has been sent to the accused, and even after 15 days of the receipt of the notice the payment has not been made. It is in these circumstances that the first respondent filed the above complaint before the Magistrate's Court.
3. The writ petitioner (accused No. 4) filed this petition for quashing the proceeding on the ground that the complaint filed by the first respondent is not maintainable, as no offence has been disclosed under section 138 of N.I. Act. Petitioner's contentions are two fold.
(i) If the document in question i.e. the pay order is treated as such as its nomenclature indicates, and not a cheque, then, the complaint is not maintainable because 138 of the N.I. Act only envisaged cheques, not the pay order; and
(ii) Even if the document is treated as a cheque, according to the petitioner, actual payee is M/s. Poise Leasing & Finance Company and in order to maintain the complaint under section 138. it is only at the instance of payee such a complaint could be maintainable and not by any other persons. Admittedly the complaint was filed by Punjab & Sindh Bank. Since they are not the payee, complaint is not maintainable.
4. In order to examine the contention of the petitioner, we have to see the definition of a cheque in N.I. Act. Under section 6 a 'cheque' is defined as a bill of exchange drawn on a specified banker. Therefore we will have to rely on the definition of bill of exchange, as occurred in sectfon 5, which reads as follows :
'Bill of Exchange' : A bill of exchange is an instrument in writing containing an unconditional order, signed by the maker, directing a certain person to pay a certain sum of money only to, or to the order of a certain person or to the bearer of the instrument.
Section 7 deals with the respective roles to be played by a drawer, drawee, and acceptor. Going by this definition it is clear, in order to make bill of exchange, essentially there must be three persons. Obviously therefore in order to call a document a cheque there must be a drawer, drawee and payee. In the pay order in question there is a drawer and a payee only; as the drawer and the drawee Bank is one and the same, the respondent No. 2. (accused No. 1). However, in payee's column there are two persons; M/s. Punjab & Sindh Bank and Poise Leasing & Finance Company Ltd. Normally a cheque in ajoint name of two persons, is not contemplated under Law. Going by the definition as laid down by statute, the documents in question therefore cannot be termed as a cheque. Section 138 of the N.I. Act does not talk of a default in making payment under a pay order. Therefore as contended by the petitioner the complaint under section 138 is not maintainable. I find substance in this contention and I have to uphold that a pay order is not a cheque.
5. Then let us examine the second contention of the learned counsel for the petitioner. Assuming that it is a cheque then as held by this Court the cheque in question (pay order) has to be treated as a one, crossed specially as envisaged under section 124 of the Negotiable Instruments Act. The legal implication of crossing a cheque specially is that, the banker (o whose favour the cheque was crossed, should collect the amount and remit it to the account of the payee shown as second name in the cheque. In othcrwords, Punjab and Sindh Bank is supposed to collect the amount and credit it to the account of M/s. Poise Leasing & Finance Company. This direction is inhered in the manner in which the cheque (pay order) was written. Therefore the Poise Leasing & Finance Company is shown as a payee and the Punjab & Sindh Bank has been specifically directed to encash the amount and credit to the account of Poise Leasing & Finance Company. The similar document has been interpreted by this Court and held that complaint filed under section 138 at the instance of the collecting bank i.e. to whose favour cheque was crossed specially, not maintainable as it has not been filed by the payee as contemplated under section 138 of the N.I. Act. It is so held in the judgment in Criminal Writ Petition No. 1541 of 1999 with Criminal Writ Petition No. 1542 of 1999 of this Court dated 1.3.2000. In that case also in the cheque at payee's column it was written as "Punjab & Sindh Bank A/c. Poise Leasing & Finance Company Ltd. or Bearer". After examining the relevant provisions of Chapter XIV about crossing of cheques in para 7 of that judgment it is held thus :
"The Section speaks about the extent of liability of the banker on which the cheque was crossed specially. However, It implies that the Banker on whom cheque specifically drawn has a duty to the customer. Explanation to section 131 makes it clear that the bankers receives payments of a crossed cheque for a cuslomer within the meaning of this section notwithstanding that he credits his customer's account with the amount of the cheque before receiving payment thereof. Therefore, if we look upon the cheque in the light of the above statutory provisions, it can be seen that the cheque was specially crossed on the respondent bank with implied directions to send the cheque for encashment and after encashment do credit the amount to the account of the customer. It is not disputed before me by both the parties that it is practice in the commercial world that writing of the chque as done in Exh 'A' in this case. Admitted facts of the case shows that legal implications arising out of crossing the cheque specially, has been complied with by the respondent bank ......
In para 8 it has been stated thus :
"Therefore, it is crystal clear that the cheque was drawn in all practical and legal sense in petitioners own name by the petitioner on Federal Bank to be deposited in the account of petitioner which he maintains in the respondent Bank. Therefore, by any stretch of imagination, the cheque cannot be treated as the cheque issued by the petitioner in favour of the respondent Bank. If the cheque is not issued by the petitioner in favour of the Respondent bank, the question whether that was issued for discharge of liability of the petitioner with the respondent bank or was it dishonoured for want of fund etc. became otiose."
6. In view of the above said decision I hold that the complaint filed before the Magistrate by Punjab & Sindh Bank is liable to be quashed as it was not filed by the payee. Before parting with this petition, I have to examine one more submission made by the learned counsel for the respondent. He submits that the cheque was endorsed in favour of Punjab & Sindh Bank and therefore a complaint under section 138 at the instance of an endorsee of the cheque is maintainable. According to him Punjab &. Sindh Bank is an endorse. True, a complaint under section 138 would be maintainable at the instance of endorsee in due-course who got endorsed the cheque on valid consideration. To fortify this contention the respondent No. 1 had to establish before the Metropolitan Magistrate that the cheque was duly endorsed in their favour for valuable consideration. The learned counsel for the respondent No. 1 tried to argue before me that the aforesaid cheque was purchased by them on valuable consideration and therefore complaint is maintainable. Assuming for the argument that it is so, in the absence of endorsement in the manner prescribed under section 50 of the Negotiable Instrument. Act this argument cannot be accepted. I find no endorsement made by the payee on the cheque as contemplated under the provisions of the N.I. Act. As I find earlier. Payee in this case is Poise Leasing & Finance Company and there was no endorsement on the cheque by the payee. Therefore the first respondent cannot be treated as endorsee in order to maintain the complaint.
7. In view of the above, I find no merit in the contention raised by the respondent No. 1. The complaint is not maintainable on the basis of the document produced before the Metropolitan Magistrate based on the so called pay order. Therefore the petitioner is entitled to succeed in the writ petition. In the result the writ petition is allowed. Rule is made absolute in terms of prayer clause (a) and (b). Prayer (a) :
That this Hon'ble court be pleased to call for the records and proceedings of case No. 158/S/1999 before the Addl. Metropolitan Magistrates Court at 19th Court at Esplanade. Mumbai, after considering the validity, legality, and propriety thereof be pleased to quash and set aside the said impugned order dated 29th January, 2000. Prayer [b) :
That this Hon'ble Court be pleased to call for the records and proceedings of Case No. 158/S/1999 before the Addl. Metropolitan Magistrates Court at 19th Court at Esplanade, Mumbai, after considering the validity, legality and property thereof be pleased to quash said proceedings against the petitioner.
Certified copy expedited.
P. A. to issue ordinary copy of this order authenticated by the Sheristedar of this Court.