Case Summary:
In Crl.O.P.No.21268 of 2024, the Madras High Court, presided over by Hon’ble Dr. Justice G. Jayachandran, dismissed a quash petition filed by M/s Challani Ranka Jewellery and its partners against a complaint under Section 138 of the Negotiable Instruments Act, 1881. The petitioners challenged the maintainability of a single complaint involving 36 cheques and argued that the cheques were dishonoured due to their bank account being blocked by enforcement agencies, not due to insufficiency of funds.
Key Facts:
- The respondent, Ashok Kumar Jain, a silver bullion dealer, supplied goods worth ₹1.10 crore to the petitioners on 14.08.2020.
- 36 cheques were issued in part-discharge of this liability, amounting to ₹1.05 crore.
- Initially, 10 cheques were presented and dishonoured. Later, all 36 were returned with the remark “Account Blocked – Situation Covered in 2125.”
- A legal notice was issued on 29.10.2020, but no payment was made.
Petitioners’ Grounds for Quash:
- Filing one complaint for 36 cheques violates Section 219 Cr.P.C. (limiting joinder of more than 3 offences in one trial).
- The cheques were dishonoured due to the bank account being blocked by the Income Tax Department/ED—not due to insufficiency of funds.
- The cheques were allegedly issued for prior transactions (2019), not the alleged transaction on 14.08.2020.
Court’s Observations & Findings:
- Relying on precedents such as Manjula v. Colgate Palmolive and Suryakant V. Kankia v. Muthukumaran, the Court held that multiple cheques can be part of the same transaction if they are presented and dishonoured together and followed by a common legal notice.
- The Court clarified that “account blocked” is a species of the broader genus under Section 138 NI Act and can attract prosecution if dishonour occurs due to insufficient funds or lack of arrangement.
- The petitioners’ claim that the account had ₹10 crores was disproved. The account was in debit and declared NPA.
- The issue of whether the third petitioner was a partner or not is a matter of evidence and cannot be decided at the quash stage.
Conclusion:
The High Court held that the complaint under Section 138 NI Act was valid and maintainable. The issuance of 36 cheques in one transaction, their simultaneous dishonour, and a single notice justified a single complaint. The Court dismissed the petition and allowed the criminal trial to proceed.
Final Order Date: 17.10.2024
Bench: Hon’ble Dr. Justice G. Jayachandran
Citation: Neutral Citation Not Provided in File