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M.J.R. College of Engineering & Technology, Rep., by its Principal, G.V. Ramu & Another v/s State of Andhra Pradesh and Corporation Bank, Damalacheruvu Rep., by its Branch Manager, Sudhir Kumar Dubey


Company & Directors' Information:- PRINCIPAL ENGINEERING & TECHNOLOGY PRIVATE LIMITED [Strike Off] CIN = U74900TN2011PTC082701

Company & Directors' Information:- IN ENGINEERING PRIVATE LIMITED [Active] CIN = U74210DL2011PTC212284

Company & Directors' Information:- A N D ENGINEERING PRIVATE LIMITED [Strike Off] CIN = U51502DL2012PTC242516

Company & Directors' Information:- THE ENGINEERING CORPORATION PRIVATE LIMITED [Strike Off] CIN = U99999KA1951PTC000699

    Crl.P. Nos. 4035 , 4036 & 4040 of 2019

    Decided On, 31 July 2019

    At, High Court of Andhra Pradesh

    By, THE HONOURABLE MR. JUSTICE D.V.S.S. SOMAYAJULU

    For the Petitioners: V.R. Reddy Kovvuri, Advocate. For the Respondent: Learned Public Prosecutor.



Judgment Text


Common Order

1. These matters were heard together since common questions of fact and law arise. Three cheques were dishonoured leading to filing of the three complaints and an application was filed in each of the cases to discharge the petitioner under Section 258 Cr.P.C. As the said application in each of the three matters was dismissed, three criminal petitions have been filed.

2. This Court has heard Sri V.R.Reddy Kovvuri, learned counsel for the petitioner and learned Public Prosecutor appearing for the State.

Crl.P.No.4035 of 2019: This criminal petition is filed under Section 482 Cr.P.C. to call for the records and to discharge the petitioner from CC.No.61 of 2018 on the file of the Judicial Magistrate of First Class, Pakala, Chittoor District. This C.C. was filed under the NI Act with regard to the bouncing of cheque No.309710 dated 03.042.017 for Rs.50 lakhs. A discharge application was filed and was dismissed.

Crl.P.No.4036 of 2019: This application is filed under Section 482 Cr.P.C. in similar circumstances to call for the records and to discharge the petitioner from CC.No.62 of 2018, which pertains to cheque No.30971 dated 30.05.2017 for Rs.40 lakhs.

Crl.P.No.4040 of 2019: This application is filed to discharge the petitioner from CC.No.122 of 2018 in relation to cheque No.309707 dated 06.05.2017 for Rs.35 lakhs.

3. The petitioner is an Engineering College, which is run by the 2nd petitioner-society. They have borrowed money from the Corporation Bank, which is the 2nd respondent in all these matters. Three cheques issued by the accused/petitioner for Rs.50 lakhs, Rs.40 lakhs and Rs.35 lakhs were dishonoured. Three complaints were filed after the statutory notice was issued. Three applications were filed under Section 258 Cr.P.C. to discharge the petitioners in each of the cases. The same were negatived. Challenging the same; the present criminal petitions.

4. The primary contention of the learned counsel for the petitioner is that there is no enforceable debt. He submits that the amount covered by the three cheques were discharged and paid and therefore, he argues that there is no debt surviving. He relies upon the account copy that he has filed as an additional paper. He points out to the entries in the said account and argues that in the period 12.05.2017 to 30.06.2019 the debt has been cleared. In addition, he submits that the lower Court committed a mistake in holding that Section 258 Cr.P.C. does not apply.

5. In reply to this, learned Public Prosecutor submits that the debt is not at all discharged. He strongly opposes the applications. He states that Section 258 Cr.P.C. is not at all applicable and that the criminal petitions should be dismissed in limine. He also states that the petitioner is only trying to take advantage of the regular repayments towards the debt to contend that the loan has been discharged. He submits that the petitioner owe a huge debt running into crores of rupees to the Corporation Bank and for the purpose of servicing the said loan, they have been paying the installment and interest. He, therefore, submits that mere fact that there are three payments into the account cannot lead to an irresistible conclusion that there is no enforceable debt. He points out that the power under Section 482 Cr.P.C. should not be used in a case like this.

6. This Court after hearing both the learned counsel notices that the crux of the submission and the thrust of the argument is that the sum due under the three cheques has been cleared. The details of the dishonoured cheques are given below:

1. Cheque No.309710 dated 03.04.2017 for Rs.50 lakhs.

2. Cheque No.309711 dated 30.05.2017 for Rs.40 lakhs.

3. Cheque No.309707 dated 06.05.2017 for Rs.35 lakhs.

7. The total amount due under these cheques is Rs.1,25,00,000/-. All the three cheques have bounced. In this contemporaneous period a sum of Rs.12,48,500/-, Rs.1,38,000/- and Rs.86,85,000/- was paid. These are reflected in the account. The sum total of all these are Rs.1,00,71,500/-. This Court cannot accept that these payments are made specifically for the dishonoured cheques because (a) the amounts do not tally. The total of the amounts of the cheques dishonoured is 1,25,00,000/-, whereas the payment is made only for Rs.1,00,71,500/-. (b) In addition, no letter or document is shown to have been sent informing the 2nd respondent that the amounts that are being credited are specifically been given for discharge of the three cheques which have been dishonoured (c) after the cheques have been dishonoured, a statutory notice was given. No reply was given stating that these amounts are paid in discharge of the specific cheques. (d) lastly, the lower Court noticed that when the petitioners were examined under 251 Cr.P.C., they did not state that the dishonoured cheque amounts were cleared by the three payments referred to above.

8. In addition Section 60 of the Indian Contract Act is to the following effect:

Section 60 in The Indian Contract Act, 1872

60. Application of payment where debt to be discharged is not indicated.-Where the debtor has omitted to intimate, and there are no other circumstances indicating to which debt the payment is to be applied, the creditor may apply it at his discretion to any lawful debt actually due and payable to him from the debtor, whether its recovery is or is not barred by the law in force for the time being as to the limitations of suits.

9. Therefore, when the petitioner did not specify how and for what purpose the payment was to be appropriated, the Bank was at liberty to adjust the payment as it deemed fit. In cases of this nature where the dishonour of cheque can lead to prosecution; a greater duty was cast upon the petitioner to specify the manner in which the amount was to be appropriated/adjusted. That the petitioner did not do so is crystal clear.

10. In the absence of any such evidence, this Court is of the opinion that the main thrust of the petitioner's argument that the amount has been discharged has to necessarily fail.

11. Equally important is the finding of the lower Court with regard to Section 258 Cr.P.C. Section 258 Cr.P.C. is to the following effect:

Section 258 in The Code Of Criminal Procedure, 1973

258. Power to stop proceedings in certain cases. In any summons-case instituted otherwise than upon complaint, a Magistrate of the first class or, with the previous sanction of the Chief Judicial Magistrate, any other Judicial Magistrate, may, for reasons to be recorded by him, stop the proceedings at any stage without pronouncing any judgment and where such stoppage of proceedings is made after the evidence of the principal witnesses has been recorded, pronounce a judgment of acquittal, and in any other case, release the accused, and such release shall have the effect of discharge.

12. Therefore, it is clear that the procedure under Section 248 Cr.P.C. would not apply, as the present case is filed under Section 138 of the NI Act by a complaint under Section 200 Cr.P.C. Therefore, this Court is of the firm opinion that the

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application under Section 258 Cr.P.C. is not maintainable. The judgment of the Karnataka High Court in Manjunath C.Kammar v. M/s. A.Kanthilak and Company ILR 2003 KAR 2789 is directly on the point. The learned single Judge of Karnataka High Court clearly held in very similar circumstances that Section 258 Cr.P.C. is not applicable to the facts and circumstances of the case and to a complaint under Section 138 of the NI Act. 13. In that view of the matter, this Court holds that there are no merits whatsoever in the three applications that are filed. 14. Accordingly, the applications are dismissed. As the applications are dismissed, notice to 2nd respondent is not considered necessary. 15. As a sequel, the miscellaneous applications, if any pending, shall stand closed.
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