KERALA HIGH COURT

                                                 R. Sreenivasan

                                                         Vs

                                                 State of Kerala

                                              (S Marimuthu, C.J.)

                                                    11.10.1999

                                                  JUDGMENT

S. Marimuthu, J.

1. This case has been filed under Section 482 of the Criminal Procedure Code, 1973, to quash the
proceedings in C. C. No. 387 of 1998 on the file of the Judicial First Class Magistrate Court No.
1, Fort Cochin. The above-said criminal prosecution was launched by the second respondent-
complainant on the ground that the petitioner-accused herein borrowed a sum of Rs. 90,000 on
December 24, 1995, and another sum of Rs. 90,000 on June 30, 1996, agreeing to repay the
same on December 30, 1996, with 24 per cent. interest per annum and as a security for the
payment of the above principal amount, he issued two cheques and also a promissory note in
favour of the second respondent. Since the payment was not made as promised, the criminal
complaint was filed by the second respondent.

2. Learned counsel appearing for the petitioner would contend that the complaint itself is not in
accordance with the provisions laid down in Section 138 of the Negotiable Instruments Act.
According to learned counsel, the cheque on the basis of which the criminal complaint was filed
under Section 138 of the Negotiable Instruments Act ought to have been issued for the sole
purpose of discharge of any previous debt or liability. In the instant case, the complaint itself ex
facie discloses that only as a security, the cheque was issued for the promissory note alleged to
have been executed by the petitioner. For fortifying his contention, he also relies upon the
decision of the Andhra Pradesh High Court in Taher N. Khambat v. Vinayak Enterprises1 There
it is held as follows (page 476) :

        "In the instant case, the appellant advanced some money to the respondents and obtained
        a pronote. It was stipulated that the respondents should pay interest every month. At the
        same time the appellant-creditor took a blank signed cheque from the respondents with
        the understanding that the complainant could fill the other columns in the cheque and
        present it if the respondents committed default in payment of interest ... So, the appellant
        has obtained this blank signed cheque with a view to make use of it, as a threat to the
        respondents for realisation of the amount. So, it cannot be construed that the respondents
        had issued the cheque voluntarily for discharge of any debt or legal liability as envisaged
        under Section 138."

3. A comparative reading of the principle laid down by the Andhra Pradesh High Court and the
mandatory provisions laid down in Section 138 of the Negotiable Instruments Act is crystal dear
that when a cheque has been issued as a security, no complaint will lie under Section 138 of the
Negotiable Instruments Act. Yet another infirmity is found in this case, viz., that the averment in
the complaint would be that the. cheque was issued only by the petitioner. On the" other hand, a
notice issued by the second respondent to the petitioner, annexures II and III, would disclose that
the cheque was issued by the petitioner along with two other persons, viz., Ashok and Kamashi.
In these circumstances, as rightly pointed out by learned counsel, I find no merit on the side of
the second respondent to launch a complaint under Section 138 of the Negotiable Instruments
Act. Therefore, no purpose will be served by permitting the magistrate to proceed with the
criminal prosecution. Therefore, it can be rightly interfered with by this court under Section 482
of the Criminal Procedure Code.

4. In the result, the proceedings in C. C. No. 387 of 1998 on the file of the Judicial First Class
Magistrate Court No. 1, Fort Cochin, stand quashed. Criminal miscellaneous case is allowed.

Cases Referred.

1[1995] 1 KLJ 556 ; [1996] 86 Comp Cas 471