Present:
Mr. Justice Mohammad Bazlur Rahman
and
Mr. Justice Md. Moinul Islam Chowdhury
Criminal Miscellaneous Case No.10739 of 2010
M.A. Matin………….Petitioner
-Versus-
The State
……….Opposite Party
Mr. Md. Habibul Islam Bhuiyan with Mr. Masud Ahmed Sayeed
….For the Petitioner
Mr. Sk Md Morshed with
Mrs. Selina Akter Chowdhury
……For the Complainant/Opposite Party No.2
with
Criminal Miscellaneous Case No. 21567 of 2010
Nuru Jaman……………..Petitioner
versus
The State
Opposite Party
Mr. MG Mahmud (Shaheed)
……….For the Petitioner
Mr Zafor Alim Khan
……For the Complainant/Opposite Party No.2
Mr. Md. Aminur Rahman Chowdhury, AAG with Mr Md. Mamunur Rashid, AAG
………For the State
(In both the Rules)
Heard on 08.03.2011 and 09.03.2011
And Judgment on 13.03.2011
Mohammad Bazlur Rahman, J:
These two Rules, on separate applications under Section 561A of the Code of Criminal Procedure, are disposed of together by this common judgment. In these Rules a common question of law, relating to the prosecution under Section 138 of the Negotiable Instrument Act, 1881 (Shortly the Act, 1881) with regard to dishonor of bank cheques crossed with account payee, has been raised. Subsidiary questions argued, in one of the matters, will be dealt with individually, after answering the main contention.
Rule in Criminal Miscellaneous Case No. 10739 of 2010 has been issued on 10-02-2010 for quashing of the proceeding being CR Case No. 6395 of 2009, initiated against the petitioner and two others now pending before the Court of Chief Metropolitan Magistrate, Dhaka under Sections 138/140 of the Act, 1881. The rule in Criminal Miscellaneous Case No. 21567 of 2010 is against the proceedings of Metropolitan Sessions Case. No. 2860 of 2009 (arising out of CR Case No. 6169 of 2009) now pending before Metropolitan Joint Sessions Judge, Fourth Court, Dhaka under Section 138 of the Act, 1881.
The complainant-second opposite party, Tanvir Hasan Zoha, initiated the proceeding of Cr Case No 6395 of 2009 by filing a complaint petition, on 06.12.2009, before the Chief Metropolitan Magistrate, Dhaka against a company as first accused, its Chairman as second accused and its Managing Director, the present petitioner, as third accused alleging inter alia that the complainant had worked as computer programmer in the office of the accused company and as such owed taka 1,49,00,000/00 to the company. To discharge the liability of the accused company, Dr. Nazrul Islam, second accused, being its chairman issued cheque No. 0730968 dated 29.09.2007 crossed with ‘account payee only’ drawn on an account maintained by the accused company with Standard Chartered Bank Limited. Dhanmondi Branch, Dhaka for the amount of taka 1,41,00,000/00 in favour of the complainant on 01.10.2009, the complainant presented the said cheque for encashment through his bank account. It was returned unpaid with endorsement insufficient fund. The complainant through his lawyer’s notice dated 18.10.2009 made a demand in writing through registered post to the first and second accused with the addresses of the accused company. They received but did not make payment within the stipulated period and as such the complainant on 06.12.2009 brought the proceeding under challenge. The petitioner MA Matin, Managing Director of the accused-company, who was made third accused, voluntarily surrendered, on 10.12.2009, before the learned Magistrate and obtained bail and on 10.02.2010 obtained the present Rule taking grounds, amongst others, that he did not issue the cheque, that Demand Notice has not been issued on him and that since the cheque in question, being crossed with account payee only, lost its character of negotiability, and as such the impugned proceeding cannot be maintained.
Cr Case No 6169 of 2009 has been initiated on 20.11.2009 by its complaint Mobarak Hossain by filing a petition before the Chief Metropolitan Magistrate, Dhaka against the petitioner Nuru Jaman as sole accused, describing him as proprietor of Zaman Food Products, alleging inter alia that the accused petitioner issued cheque No. CAB No. 9214077 dated 03.08.2008 on his current account No 01801146 maintained with Basic Bank Limited, Moulvibazar Branch, Dhaka for an amount of taka 7,48,920/00 to discharge his liability in favour of the complainant. The complainant, lastly on 07.08.2008, presented the cheque for encashment through his account maintained with Bangladesh Commercial Bank Limited, Moulvibazar Branch, Dhaka but the same was returned unpaid with endorsement insufficient fund. The complainant through his lawyer’s letter dated 31.08.2008 has made a demand in writing on the accused petitioner through registered post. On receipt on 04.09.2008 thereof, the accused petitioner on 05.09.2008 telephonically and by his lawyer’s reply dated 22.09.2008 refused to pay the cheque amount denying the issuance of the cheque in favour of the complaint. In the circumstances, the complainant filed aforesaid complaint and the learned Chief Metropolitan Magistrate took cognizance of offence against the petitioner. In response to the process, the accused petitioner voluntarily surrendered before the Chief Metropolitan Magistrate and obtained bail. On receipt of the case record, as the case is triable by the Court of Sessions, the learned Metropolitan Joint Sessions Judge, Fourth Court. Dhaka took cognizance and framed charge under Section 138 of the Act, 1881 against the petitioner rejecting his application made under Section 2650 of the Code of Criminal Procedure on the claim that the petitioner never issued the cheque in question but the same was misplaced from his custody. Being aggrieved, the petitioner moved this Division obtained this later Rule on 20.07.2010.
In Criminal Miscellaneous Case No.10739 of 2010, Mr. Habibul Islam Bhuiyan with Mr. Masud Ahmed Sayeed, learned advocates, appeared for the petitioners while Mr. Sheikh Mohammad Morshed with Ms. Selina Akter, learned advocates, appeared for the complainant opposite party. Mr. M. G. Mahmud, learned advocate, appeared for the petitioner and Mr. Zafor Alim Khan, learned advocate, appearing for the complainant-opposite party opposed the Rule in Criminal Miscellaneous Case No. 21567 of 2010.
The learned Advocates appearing in support of both the Rules submitted that the cheques in question being crossed with ‘account payee only’ mark had lost its character of negotiability within the scope of section 123A of the Act, 1881 and as such, the impugned proceeding for offence under Section 138 of the Act. 1881 is not valid in law and therefore cannot be maintained against the petitioner. However, according to the learned advocates for the complainants though an account payee cheque lost its character of negotiability but it cannot be said that the same became invalid for the proceeding for the offence under Section 138 of the Act, 1881. Mr. Md. Aminur Rahman Chowdhury, learned Assistant Attorney General, appearing for the State also adopting the submissions made by both the learned advocates of the complainants, relying on an unreported decision dated 12.03.2010 in the case of Maya Biswas -Vs-The State and another passed in Criminal Miscellaneous Case No 11749 of 2009 of this Division and another case of Md. Shahabuddin -Vs- The State and another reported in 15 MLR 467, further added that though an account payee cheque is not negotiable with any body like ordinary cheque but it can only be encashed through a particular bank account of the payee. In these Rules the negotiability of the cheque, one of the negotiable instruments recognized by the Act 1881, is the centre point in the question raised.
In business and other monetary transactions instead of passing of cash, which was found a real handicap and not practicable to carry the bulk of currency, the transactions through instruments symbolizing the amount of money have been created which carried a commitment on the part of certain person to pay a certain amount of money. Therefore, a negotiable instrument is a signed document guaranteeing the payment of a specific amount of money, either on demand, or at a set time. Some of these documents are subsequently emerged as negotiable instruments. Its transfer from hand to hand deemed to have been taken actual payment to its holder. The possessor of the negotiable instrument is presumed to be the owner of the property contained therein. A negotiable instrument does not merely give possession of the instrument but right to property also. The property in a negotiable instrument can be transferred. There are so many types of negotiable instruments recognized by usages and customs in the commercial world but the Act, 1881 recognized three types of negotiable instruments such as, a promissory note, bill of exchange and cheque is payable either to order or to bearer (Section 13). The object of the Act 1881, amongst others, to legalise the systems by which instruments, as contemplated by it, could pass from hand to hand by negotiation like any other goods. Negotiable means the ability to be transferred to another. The negotiation of an instrument may take place on its transfer to another. The transferee of negotiable instrument is known as holder in due course (Section-9). A negotiable instrument can be transferred any number of times till it is at maturity. The negotiation of an instrument, as stipulated in Sections 46-48 of the Act, may take place in two ways delivery thereof, if it is a bearer instrument or by endorsement thereon, if it is an instrumet payable to order. In the case of a bearer instrument, mere delivery to the transferee is enough but for an order instrument, endorsement and delivery are required. However, negotiability of an instrument can be destroyed if it is marked ‘not negotiable’. When a negotiable instrument like promissory note, bill of exchange or a cheque is transferred to another person, constituting that person as holder therefore, the same is said to be negotiated (Section 14).
Now come to the cheques, one of the negotiable instruments recognized by the Act 1881. All cheques are bills of exchange but all bills of exchange are not cheques. Therefore, primarily a cheque is a bill of exchange but should be drawn on a specified banker and not expressed to be payable, otherwise than demand (Section 6). A cheque may be an open cheque or a crossed cheque. Crossing of cheques is a universally adopted practice. Cheques are usually crossed as a measure of safety. An open cheque is one that can be paid by the paying banker across the counter while crossed cheque cannot be paid across the counter. Crossing on a cheque is a direction to the paying banbker that the payment shall not be made across the counter. The payment of a crossed cheque can be collected only through a banker. The Chapter XIV of the Act deals with the special provisions relating to cheques, in particular crossing-thereof. Crossing may be either (1) general or (2) special. Section 123 of the Act refers to general corssing. Where a cheque bears across its face two transverse lines with or without the words “and Co.” or any abbreviation thereof or the words ‘not negotiable’, the cheque is said to have been crossed generally. Special crossing implies the specifications of the name of the banker on the face of the cheque. The object of special crossing is to direct the drawee banker to pay the cheque only if it is presented through the particular bank mentioned. In the case of special crossing the addition of two parallel transverse lines is not essential though generally the name of the bank to which the cheque is crossed specially is written between the two parallel transverse line (Section 124). Where a cheque is crossed generally, the banker on whom it is drawn shall not pay it otherwise than to the banker and the payee may get the cheque collected through a bank of his choice. On the other hand a cheque is crossed specially, the banker on whom it is drawn shall not pay it otherwise than to the banker to whom it is crossed, or his agent for collection (Section 126). Of the crossed ‘account payee’ is another type of cheque which cannot be endorsed but be credited to account of the payee only. Earlier, cheques crossing with ‘account payee’ acts merely as a warning to the collecting bankers but the proceeds are to be credited into the account of the payee and these were a mere direction to the receiving or collecting banker which did not affect the paying banker who was under no duty to ascertain that the cheque in fact has been collected for the account of the person named as the payee and as such was not a restrictive endorsement so as to invalidate further negotation of the cheque by the endorsee. However, by inserting Section 123A in the Chapter XIV of the Act, by the Ordnance No XLIX of 1962 the negotiability of the ‘account payee’ cheques have been ceased. The section runs-
“123A Cheque crossed ‘account payee’ – (1) Where a cheque crossed generally bears across its face an addition of the words “account payee” between the two parallel transverse lines constituting the general crossing, the cheque, besides being crossed generally, is said to be crossed “account payee.”
(2) When a cheque is crossed “account payee”
(a) it shall cease to be negotiable ; and
(b) it shall be the duty of the banker collecting payment of the cheque to credit the proceeds thereof only to the account of the payee named in the cheque.
From the above it is clear that the crossing of the cheque with words ‘account payee’ follows two consequences – firstly, the cheque, as negotiable instrument, lost its character of negotiability, that is the payee of the cheque cannot transfer it by delivery or by endorsement, and secondly, the collecting bank is under an obligation to credit the proceeds of the cheque only to the account of the payee named in therein. In or about premises, we are of the view that though as per Section 123A of the Act, 1881 a crossed cheque lost its character of negotiability but it cannot be said that the same become invalid and if a valid cheque is returned unpaid for any of the grounds as stipulated under Section 138 of the Act, 1881, subject to making of the demand and failing to pay it, the proceeding for the offence under Section 138 thereof is very much permissible in law.
Now the subsidiary question as argued on behalf of the petitioner in Criminal Miscellaneous Case No. 10739 of 2010. Mr. Habibul Islam Bhuiyan, submits that since the petitioner M A Matin was neither drawer of the cheque nor any statutory demand has been made on him, making him as an accused, initiation of the impugned proceeding, taking cognizance and continuation thereof against him are unwarranted and as such is nothing but abuse of process of Court and therefore liable to be quashed. He further submits, in absence of making written demand to the petitioner for the cheque amount which is the condition precedent for having a proceeding initiated under Section 138 of the Act and as such it cannot be justified to say that the petitioner failed to pay the cheque amount. Mr. Sheikh Muhammad Morshed, the learned advocate for the complainant in the earlier Rule submits that since the cheque in question has been issued by the accused company, the notice of demand has been served on the company and payment has not been made within the stipulated period, the initiation of the proceeding against the company including the present petitioner, who as admittedly the Managing Director of the accused company, was in accordance with law and as such there is no reason to interfere with the impugned proceeding.
It is disclosed in the complaint petition that the cheque in question was drawn by the second accused, being its chairman, on an account maintained by the accused company with Standard Chartered Bank Limited in favour of the complainant. The complaint indicates the petitioner as Managing Director of the accused company. According to the provisions of Section 140 of the Act, 1881 in case of offence relating to dishonour of cheque, as alleged, committed by the company, every persons who, as the time of offence committed, was in charge of and was responsible to the company for conduct of its business shall deemed to be guilty of the offence. Further, it also disclosed that the demand in writing has been made to the accused company. However, the involvement of the petitioner in the commission of the offence as alleged is a matter to be seen in trial where the petitioner can discharge his onus to prove his absence of knowledge as to commission of offence as provided in proviso to subsection (1) of Section 140 of the Act, 1881.
With the discussions as above, we see no merit in both the Rules.
In the result, both the Rules are discharged, orders of stay granted at the time of issuance of respective Rules stand vacated.
Md. Moinul Islam Chowdhury, J.
I agree.
Mr. Justice Mohammad Bazlur Rahman
and
Mr. Justice Md. Moinul Islam Chowdhury
Criminal Miscellaneous Case No.10739 of 2010
M.A. Matin………….Petitioner
-Versus-
The State
……….Opposite Party
Mr. Md. Habibul Islam Bhuiyan with Mr. Masud Ahmed Sayeed
….For the Petitioner
Mr. Sk Md Morshed with
Mrs. Selina Akter Chowdhury
……For the Complainant/Opposite Party No.2
with
Criminal Miscellaneous Case No. 21567 of 2010
Nuru Jaman……………..Petitioner
versus
The State
Opposite Party
Mr. MG Mahmud (Shaheed)
……….For the Petitioner
Mr Zafor Alim Khan
……For the Complainant/Opposite Party No.2
Mr. Md. Aminur Rahman Chowdhury, AAG with Mr Md. Mamunur Rashid, AAG
………For the State
(In both the Rules)
Heard on 08.03.2011 and 09.03.2011
And Judgment on 13.03.2011
Mohammad Bazlur Rahman, J:
These two Rules, on separate applications under Section 561A of the Code of Criminal Procedure, are disposed of together by this common judgment. In these Rules a common question of law, relating to the prosecution under Section 138 of the Negotiable Instrument Act, 1881 (Shortly the Act, 1881) with regard to dishonor of bank cheques crossed with account payee, has been raised. Subsidiary questions argued, in one of the matters, will be dealt with individually, after answering the main contention.
Rule in Criminal Miscellaneous Case No. 10739 of 2010 has been issued on 10-02-2010 for quashing of the proceeding being CR Case No. 6395 of 2009, initiated against the petitioner and two others now pending before the Court of Chief Metropolitan Magistrate, Dhaka under Sections 138/140 of the Act, 1881. The rule in Criminal Miscellaneous Case No. 21567 of 2010 is against the proceedings of Metropolitan Sessions Case. No. 2860 of 2009 (arising out of CR Case No. 6169 of 2009) now pending before Metropolitan Joint Sessions Judge, Fourth Court, Dhaka under Section 138 of the Act, 1881.
The complainant-second opposite party, Tanvir Hasan Zoha, initiated the proceeding of Cr Case No 6395 of 2009 by filing a complaint petition, on 06.12.2009, before the Chief Metropolitan Magistrate, Dhaka against a company as first accused, its Chairman as second accused and its Managing Director, the present petitioner, as third accused alleging inter alia that the complainant had worked as computer programmer in the office of the accused company and as such owed taka 1,49,00,000/00 to the company. To discharge the liability of the accused company, Dr. Nazrul Islam, second accused, being its chairman issued cheque No. 0730968 dated 29.09.2007 crossed with ‘account payee only’ drawn on an account maintained by the accused company with Standard Chartered Bank Limited. Dhanmondi Branch, Dhaka for the amount of taka 1,41,00,000/00 in favour of the complainant on 01.10.2009, the complainant presented the said cheque for encashment through his bank account. It was returned unpaid with endorsement insufficient fund. The complainant through his lawyer’s notice dated 18.10.2009 made a demand in writing through registered post to the first and second accused with the addresses of the accused company. They received but did not make payment within the stipulated period and as such the complainant on 06.12.2009 brought the proceeding under challenge. The petitioner MA Matin, Managing Director of the accused-company, who was made third accused, voluntarily surrendered, on 10.12.2009, before the learned Magistrate and obtained bail and on 10.02.2010 obtained the present Rule taking grounds, amongst others, that he did not issue the cheque, that Demand Notice has not been issued on him and that since the cheque in question, being crossed with account payee only, lost its character of negotiability, and as such the impugned proceeding cannot be maintained.
Cr Case No 6169 of 2009 has been initiated on 20.11.2009 by its complaint Mobarak Hossain by filing a petition before the Chief Metropolitan Magistrate, Dhaka against the petitioner Nuru Jaman as sole accused, describing him as proprietor of Zaman Food Products, alleging inter alia that the accused petitioner issued cheque No. CAB No. 9214077 dated 03.08.2008 on his current account No 01801146 maintained with Basic Bank Limited, Moulvibazar Branch, Dhaka for an amount of taka 7,48,920/00 to discharge his liability in favour of the complainant. The complainant, lastly on 07.08.2008, presented the cheque for encashment through his account maintained with Bangladesh Commercial Bank Limited, Moulvibazar Branch, Dhaka but the same was returned unpaid with endorsement insufficient fund. The complainant through his lawyer’s letter dated 31.08.2008 has made a demand in writing on the accused petitioner through registered post. On receipt on 04.09.2008 thereof, the accused petitioner on 05.09.2008 telephonically and by his lawyer’s reply dated 22.09.2008 refused to pay the cheque amount denying the issuance of the cheque in favour of the complaint. In the circumstances, the complainant filed aforesaid complaint and the learned Chief Metropolitan Magistrate took cognizance of offence against the petitioner. In response to the process, the accused petitioner voluntarily surrendered before the Chief Metropolitan Magistrate and obtained bail. On receipt of the case record, as the case is triable by the Court of Sessions, the learned Metropolitan Joint Sessions Judge, Fourth Court. Dhaka took cognizance and framed charge under Section 138 of the Act, 1881 against the petitioner rejecting his application made under Section 2650 of the Code of Criminal Procedure on the claim that the petitioner never issued the cheque in question but the same was misplaced from his custody. Being aggrieved, the petitioner moved this Division obtained this later Rule on 20.07.2010.
In Criminal Miscellaneous Case No.10739 of 2010, Mr. Habibul Islam Bhuiyan with Mr. Masud Ahmed Sayeed, learned advocates, appeared for the petitioners while Mr. Sheikh Mohammad Morshed with Ms. Selina Akter, learned advocates, appeared for the complainant opposite party. Mr. M. G. Mahmud, learned advocate, appeared for the petitioner and Mr. Zafor Alim Khan, learned advocate, appearing for the complainant-opposite party opposed the Rule in Criminal Miscellaneous Case No. 21567 of 2010.
The learned Advocates appearing in support of both the Rules submitted that the cheques in question being crossed with ‘account payee only’ mark had lost its character of negotiability within the scope of section 123A of the Act, 1881 and as such, the impugned proceeding for offence under Section 138 of the Act. 1881 is not valid in law and therefore cannot be maintained against the petitioner. However, according to the learned advocates for the complainants though an account payee cheque lost its character of negotiability but it cannot be said that the same became invalid for the proceeding for the offence under Section 138 of the Act, 1881. Mr. Md. Aminur Rahman Chowdhury, learned Assistant Attorney General, appearing for the State also adopting the submissions made by both the learned advocates of the complainants, relying on an unreported decision dated 12.03.2010 in the case of Maya Biswas -Vs-The State and another passed in Criminal Miscellaneous Case No 11749 of 2009 of this Division and another case of Md. Shahabuddin -Vs- The State and another reported in 15 MLR 467, further added that though an account payee cheque is not negotiable with any body like ordinary cheque but it can only be encashed through a particular bank account of the payee. In these Rules the negotiability of the cheque, one of the negotiable instruments recognized by the Act 1881, is the centre point in the question raised.
In business and other monetary transactions instead of passing of cash, which was found a real handicap and not practicable to carry the bulk of currency, the transactions through instruments symbolizing the amount of money have been created which carried a commitment on the part of certain person to pay a certain amount of money. Therefore, a negotiable instrument is a signed document guaranteeing the payment of a specific amount of money, either on demand, or at a set time. Some of these documents are subsequently emerged as negotiable instruments. Its transfer from hand to hand deemed to have been taken actual payment to its holder. The possessor of the negotiable instrument is presumed to be the owner of the property contained therein. A negotiable instrument does not merely give possession of the instrument but right to property also. The property in a negotiable instrument can be transferred. There are so many types of negotiable instruments recognized by usages and customs in the commercial world but the Act, 1881 recognized three types of negotiable instruments such as, a promissory note, bill of exchange and cheque is payable either to order or to bearer (Section 13). The object of the Act 1881, amongst others, to legalise the systems by which instruments, as contemplated by it, could pass from hand to hand by negotiation like any other goods. Negotiable means the ability to be transferred to another. The negotiation of an instrument may take place on its transfer to another. The transferee of negotiable instrument is known as holder in due course (Section-9). A negotiable instrument can be transferred any number of times till it is at maturity. The negotiation of an instrument, as stipulated in Sections 46-48 of the Act, may take place in two ways delivery thereof, if it is a bearer instrument or by endorsement thereon, if it is an instrumet payable to order. In the case of a bearer instrument, mere delivery to the transferee is enough but for an order instrument, endorsement and delivery are required. However, negotiability of an instrument can be destroyed if it is marked ‘not negotiable’. When a negotiable instrument like promissory note, bill of exchange or a cheque is transferred to another person, constituting that person as holder therefore, the same is said to be negotiated (Section 14).
Now come to the cheques, one of the negotiable instruments recognized by the Act 1881. All cheques are bills of exchange but all bills of exchange are not cheques. Therefore, primarily a cheque is a bill of exchange but should be drawn on a specified banker and not expressed to be payable, otherwise than demand (Section 6). A cheque may be an open cheque or a crossed cheque. Crossing of cheques is a universally adopted practice. Cheques are usually crossed as a measure of safety. An open cheque is one that can be paid by the paying banker across the counter while crossed cheque cannot be paid across the counter. Crossing on a cheque is a direction to the paying banbker that the payment shall not be made across the counter. The payment of a crossed cheque can be collected only through a banker. The Chapter XIV of the Act deals with the special provisions relating to cheques, in particular crossing-thereof. Crossing may be either (1) general or (2) special. Section 123 of the Act refers to general corssing. Where a cheque bears across its face two transverse lines with or without the words “and Co.” or any abbreviation thereof or the words ‘not negotiable’, the cheque is said to have been crossed generally. Special crossing implies the specifications of the name of the banker on the face of the cheque. The object of special crossing is to direct the drawee banker to pay the cheque only if it is presented through the particular bank mentioned. In the case of special crossing the addition of two parallel transverse lines is not essential though generally the name of the bank to which the cheque is crossed specially is written between the two parallel transverse line (Section 124). Where a cheque is crossed generally, the banker on whom it is drawn shall not pay it otherwise than to the banker and the payee may get the cheque collected through a bank of his choice. On the other hand a cheque is crossed specially, the banker on whom it is drawn shall not pay it otherwise than to the banker to whom it is crossed, or his agent for collection (Section 126). Of the crossed ‘account payee’ is another type of cheque which cannot be endorsed but be credited to account of the payee only. Earlier, cheques crossing with ‘account payee’ acts merely as a warning to the collecting bankers but the proceeds are to be credited into the account of the payee and these were a mere direction to the receiving or collecting banker which did not affect the paying banker who was under no duty to ascertain that the cheque in fact has been collected for the account of the person named as the payee and as such was not a restrictive endorsement so as to invalidate further negotation of the cheque by the endorsee. However, by inserting Section 123A in the Chapter XIV of the Act, by the Ordnance No XLIX of 1962 the negotiability of the ‘account payee’ cheques have been ceased. The section runs-
“123A Cheque crossed ‘account payee’ – (1) Where a cheque crossed generally bears across its face an addition of the words “account payee” between the two parallel transverse lines constituting the general crossing, the cheque, besides being crossed generally, is said to be crossed “account payee.”
(2) When a cheque is crossed “account payee”
(a) it shall cease to be negotiable ; and
(b) it shall be the duty of the banker collecting payment of the cheque to credit the proceeds thereof only to the account of the payee named in the cheque.
From the above it is clear that the crossing of the cheque with words ‘account payee’ follows two consequences – firstly, the cheque, as negotiable instrument, lost its character of negotiability, that is the payee of the cheque cannot transfer it by delivery or by endorsement, and secondly, the collecting bank is under an obligation to credit the proceeds of the cheque only to the account of the payee named in therein. In or about premises, we are of the view that though as per Section 123A of the Act, 1881 a crossed cheque lost its character of negotiability but it cannot be said that the same become invalid and if a valid cheque is returned unpaid for any of the grounds as stipulated under Section 138 of the Act, 1881, subject to making of the demand and failing to pay it, the proceeding for the offence under Section 138 thereof is very much permissible in law.
Now the subsidiary question as argued on behalf of the petitioner in Criminal Miscellaneous Case No. 10739 of 2010. Mr. Habibul Islam Bhuiyan, submits that since the petitioner M A Matin was neither drawer of the cheque nor any statutory demand has been made on him, making him as an accused, initiation of the impugned proceeding, taking cognizance and continuation thereof against him are unwarranted and as such is nothing but abuse of process of Court and therefore liable to be quashed. He further submits, in absence of making written demand to the petitioner for the cheque amount which is the condition precedent for having a proceeding initiated under Section 138 of the Act and as such it cannot be justified to say that the petitioner failed to pay the cheque amount. Mr. Sheikh Muhammad Morshed, the learned advocate for the complainant in the earlier Rule submits that since the cheque in question has been issued by the accused company, the notice of demand has been served on the company and payment has not been made within the stipulated period, the initiation of the proceeding against the company including the present petitioner, who as admittedly the Managing Director of the accused company, was in accordance with law and as such there is no reason to interfere with the impugned proceeding.
It is disclosed in the complaint petition that the cheque in question was drawn by the second accused, being its chairman, on an account maintained by the accused company with Standard Chartered Bank Limited in favour of the complainant. The complaint indicates the petitioner as Managing Director of the accused company. According to the provisions of Section 140 of the Act, 1881 in case of offence relating to dishonour of cheque, as alleged, committed by the company, every persons who, as the time of offence committed, was in charge of and was responsible to the company for conduct of its business shall deemed to be guilty of the offence. Further, it also disclosed that the demand in writing has been made to the accused company. However, the involvement of the petitioner in the commission of the offence as alleged is a matter to be seen in trial where the petitioner can discharge his onus to prove his absence of knowledge as to commission of offence as provided in proviso to subsection (1) of Section 140 of the Act, 1881.
With the discussions as above, we see no merit in both the Rules.
In the result, both the Rules are discharged, orders of stay granted at the time of issuance of respective Rules stand vacated.
Md. Moinul Islam Chowdhury, J.
I agree.
