AMITA CHANDOK & ANR. v. INTEC SECURITIES LTD.

1. By the present petition under Section 482 CI.P.C, the Petitioners seek quashing of the order passed by the learned M.M. dated 27th May, 2004 issuing summons against the Petitioners for offence under Section 138 Negotiable Instruments Act,l881 (hereinafter referred to as "NI Act").

2. The facts of the case in a nutshell are that on 2g't'February, 2000 the Respondent and the Accused no.l in the Complaint case i.e. I\4/S J'S' Corporation which was represented by its proprietor Accused no.4 entered into a loan agreement for t 2,00,0001-. In terms of the said agreement, the Accused was to pay to the Respondent loan arnount by way of monthly CRL.M.C. 1667/2010 2011:DHC:9707:r I installments on the due date mentioned in a schedule attached with the said agreement. The Petitioners stood guarantors therein and executed guarantor's form and deeds in terms of which the guarantor guaranteed inter ahia, the repayment of all amounts payable by the Accused to the Respondent. The Petitioners along with the Accused no.l also executed a prornissory note in favour of the Respondent whereby they jointly, severally and unconditionally prornised to pay to the Respondent a sum of Rs. 2,00,000/- including interest till the date of payment of the loan taken by the Accused. Pursuant to and in terms of the said agreement, the Accused handed over 23 post dated cheques of t 1I,6501- each to the Respondent as monthly installment and fillher authorized him to present the cheques in the bank on every due date of the installment. The Respondent presented the cheques for encashment to its bankers however they were returned unpaid with the remark 'insufficient firnds' by the banker. This resulted in filing of the complaint under Section 138 N.I. Act by the Respondent.

3. After going through the complaint, the impugned order and the agreement entered into between the Accused and the Respondent herein, I find that the Petitioners have not committed the offence punishable under Section 138 N.I. Act. Merely by giving guarantee for the loans taken by the CRL.M.C. 1667/2010 \ Accused no.1, the Petitioners cannot be held liable for the alleged offence. It is the drawer of the cheque who is liable to be punished in the event the cheque given by him towards discharge of a debt or liability is dishonoured due to insufficiency of funds. There is no allegation in the complaint that the cheques were drawn by the Petitioners, rather in para 2 of the Complaint, it is admitted that the Petitioners only stood as the guarantors of the Accused for the repayment of the loan.

4. Section 138 of N.I. Act does not fasten any criminal liability on the guarantor of the loan secured or sought to be paid by way of a checlue, which, when presented to the bank for encashment is dishonoured for want of funds. Though, the guarantor incurs the civil liability to pay the debt guaranteed by him, but no criminal liability under Section 138 of N.I. Act can be fastened upon him.

5. Since no offence under Section 138 of N.I. Act is made out against the petitioners, the impugned order to the extent it pertains to the Petitioners is hereby quashed. However, the trial will continue as far as the other Accused a.re concerned. Wh^rL, MUKTA GUPTA, J. ARCH L0,20L1/dk