Andhra Pradesh High Court: A petition was filed under Section 482 of Criminal Procedure Code (CrPC) by the petitioner/accused, seeking to quash the proceedings before Additional Metropolitan Magistrate for the offence punishable under Section 138 read with 142 of the Negotiable Instruments Act, 1881. Venkata Jyothirmai Pratapa, J., quashed the proceedings since the cheque was invalid because it was drawn on the State Bank of Hyderabad, which ceased to exist after merging with the State Bank of India.
The dispute originates from a financial transaction between the petitioner and respondent 2 (complainant). On 20-11-2018, the petitioner borrowed ₹25,00,000 from the complainant, executing a promissory note agreeing to repay the amount with 24% annual interest. Following repeated demands for repayment, the petitioner issued a cheque dated 20-09-2021, for ₹42,00,000, drawn on the State Bank of Hyderabad (SBH), upon presentation at ICICI Bank, Vijayawada, the cheque was dishonored on 22-09-2021, with the endorsement “Invalid Cheque (SBH).”
Subsequently, the complainant issued a legal notice on 30-09-2021. The petitioner responded on 07-10-2021, requesting copies of the promissory note and cheque. After receiving a rejoinder on 16-10-2021, the petitioner issued another reply on 19-10-2021, denying the allegations and failing to make any payment. Consequently, the complainant initiated proceedings under Section 138 NI Act, prompting the petitioner to seek quashment of the case.
The Court noted that on perusal of Section 138(a) of NI Act, if any invalid cheque is presented before the Bank and the same is dishonored, it can be said that there is no liability under Section 138 of NI Act. In the instant case, the subject cheque was issued on 20-09-2021 and the same was drawn on State Bank of Hyderabad. By that date, State Bank of Hyderabad was merged with State Bank of India and the cheques of the said bank were valid till 31-03-2018 only. As per proviso (a) of Section 138, if the cheque itself is invalid, the Bank is bound to dishonor the same. As such, on presentation of the said cheque before 6 ICICI Bank, the same was returned on 22-09-2021 with an endorsement “Invalid cheque (SBH)”. Therefore, it can be presumed that the cheque in question was invalid on the date of presentation before the ICICI Bank.
The Court concluded that the subject cheque, which was issued from the account maintained in erstwhile State Bank of Hyderabad after its merger with State Bank of India, was not a valid cheque on the date of its presentation before the ICICI Bank as required by proviso (a) of Section 138. Hence, dishonoring the same will not attract liability under Section 138 of NI Act. Therefore, it is a fit case to exercise the jurisdiction under Section 482 CrPC for quashing the proceedings against the petitioner.
Thus, the petition was allowed and the proceedings against the petitioner for the offence punishable under Section 138 read with 142 of the Negotiable Instruments Act, 1881 were quashed.
[Ganta Kavitha Devi v. State of AP, 2024 SCC OnLine AP 5115, decided on 25-10-2024]
Advocates who appeared in this case :
Counsel for the Petitioner/accused: Varun Byreddy
Counsel for the Respondent/complainant(S): Public Prosecutor
Buy Code of Criminal Procedure, 1973 HERE
