Amount withdrawn from a deceased account after his death.

Freelance

It is observed that the deceased depositor who left a savings bank account with a good balance with a nomination in the name of his grandson (Grandson of the deceased eldest brother, who is also deceased)  Unfortunately four days after his death the deceased elder brother (the other living elder brother) transferred most of the amount of the account to his personal account, as he could get grip of all the deceased securities.

Under the circumstances, what should be the recourse against the incident?

 
Reply   
 

If there are claimants they can sue for their separate share.

 
Reply   
 



Hi ! All

How is about following judgment of GUJARAT HIGH COURT :

2009 (3) G.L.H. 742
D.H.WAGHELA, J.

Hitenbhai Parekh Proprietor-Parekh Enterprises ... Appellant

Versus

State of Gujarat and Anr.....Respondents

Criminal Appeal No. 1189 of 2009
An Appeal challenging the judgment and order dated 12.01.2009 in Criminal Appeal No.48 of 2008 whereby learned Additional Sessions Judge set aside the judgment and order dated 09.01.2008 of learned Chief Judicial Magistrate, Ahmedabad in Criminal Case No.3243 of 2004 and acquitted the respondent of the offence under Section 138 of the Negotiable Instruments Act, 1881.
D/-06.10.2009

[A] CRIMINAL LAWS DISHONOUR OF CHEQUE - Negotiable Instruments Act, 1881 - S. 118, S.138, and S.139 - Complainant and the accused had business transactions - Cheque issued by the accused dishonoured - Magistrate recorded conviction and awarded sentence - On the appeal, Sessions Court set aside the conviction on the ground that complainant did not produce books of account, income-tax returns, etc. so as to prove legally enforceable debt - On a challenge to the acquittal by the complainant - Held, documents like original invoice, debit notes and ledger produced and exhibited clearly showed debit balance - Though there is no presumption as regards any debt or liability being "legally enforceable", once a debt or other liability is presumed and not properly rebutted, it would be legally enforceable, unless and until it is shown to be legally unenforceable - On facts, held, complainant produced total proof of debit balance and liability of the cheque amount - Accused only disputed the liability by showing that the goods were returned after 75 days - Legal presumptions in favour of complainant which the accused could not rebut and disprove the same by any credible preponderance of probabilities -Conviction recorded - However, as the accused was a lady, instead of sentence of imprisonment, fine of double the amount of cheque imposed - Acquittal appeal allowed.

It was clear from perusal of the original record and proceedings which were called for, and fairly conceded by learned Counsel appearing on both sides, that the documents produced by the complainant at the instance of the accused and exhibited in evidence included the original invoice (Exh.38), with the condition that the material sold by the bill will not be taken back after seven days and that interest will be charged @24% per annum after due date; the debit notes for the amounts of Rs.750/- and Rs.58,656/-(Exhs.16/4 and 16/3) as also the other debit notes exchanged between the parties. The important documents so exhibited at Exh.23/i, being copies of ledger for the period from 01.4.2002 to 31.3.2003, 01.4.2003 to 31.3.2004 and 01.4.2004 and 31.4.2004, clearly showed in the account of the respondent the debit balance of Rs.2,08,074/- with the details of all the financial transactions taking place between the parties during that period. Therefore, it appears to be absolutely incorrect and perverse for the appellate Court to conclude that the complainant had miserably failed to produce cogent proof, such as books of account, income-tax return/report etc., to prove that there was legally enforceable debt. (Para 4.1)

Consequently, in all given fact-situations, the Court is required to examine whether the presumptions regarding consideration and there being any debt or other liability are rebutted by the accused person by preponderance of probabilities and whether the complainant has proved that the debt or other liability, presumed or proved by overwhelming evidence, was legally enforceable. Although there is no presumption as regards any debt or other liability being legally enforceable, it would be found that once a debt or other liability is presumed and not properly rebutted, it would be legally enforceable, unless and until it is shown to be legally unenforceable. Such scheme of the provisions of law clearly indicates the object of serving the purpose of realization of the promise apparently contained in a negotiable instrument, which is that the amount for payment of which the bill of exchange was intended to be made will be paid to the payee or the holder in due course. (Para 9)

Thus, as against the proof of total debit balance and liability of the cheque amount, the respondent-accused person had only disputed liability by stating and proving that the goods sold by the aforesaid invoice was sought to be returned after nearly 75 days. Therefore, on the one hand, the complainant had adduced sufficient evidence proving legally enforceable debt in terms of the amount due on sale of goods, with express stipulations, the debit notes issued and the accounts maintained in the regular course of business and, on the other hand, the accused person had only proved an attempt to return the goods. Thus, the legal presumptions in favour of the complainant and the proof of legal liability of the accused were not rebutted or disproved by any credible preponderance of probabilities. Under such circumstances, not only all the ingredients and circumstances for constituting the offence of dishonour of. cheque were fulfilled, but the accused person appeared to have relied upon irrelevant facts for setting up a dishonest defence by denying any liability. Therefore, it is a fit case for convicting the respondent for the offence punishable under Section 138 of the Act and sentencing her to proper punishment.(Para 11)

[B] CRIMINAL LAWS DISHONOUR OF CHEQUE - Negotiable Instruments Act, 1881 - S.5, S.6, S.20, S.87, S.118 and S.139 -Accused taking a defence that the cheque was "blank" when it was delivered and the complainant filled in the amount, etc. subsequently - Further defence that a "blank cheque" is not a "cheque" and no penal proceedings can be initiated due to its dishonor - Held, bills of exchange in general and cheques in particular represent money with the characteristics of contract in the form of either an order or promise to pay money - If its is made, drawn, accepted, indorsed or transferred without consideration or for a consideration which fails, it creates no obligation - Payee is not entitled to recover to the extent of which the consideration has failed or is absent, but in case of partial absence or failure of consideration, if such part is not ascertainable in money, it will be no bar for recovery of the whole amount -Harmonious reading of the provisions indicate that a cheque could be drawn, delivered and received by the payee or the holder in due course could be legally completed and until contrary is proved, such an instrument would be presumed to be drawn for consideration - Legally permissible completion of an inchohate instrument cannot be construed as material alteration - Thus, when a cheque bearing signature of the drawer is delivered, there is an implied authority for the person receiving such cheque to complete it by filling the blanks -Whether the amount in cheque was not mentioned at the time of drawing or the blanks being filled in later on becomes immaterial - Contentions of the accused negative - Case law discussed.

Against the above backdrop of facts, the respondent, accused person, appears to have taken shifting stands in defence to contend firstly that the cheque was misused, then that enforceable debt was not proved and, then before this Court, that a "blank cheque" was not a "cheque" at all. Issues regarding the burden of proving enforceable debt or other liability, the application of presumptions and the definition of "cheque" having been raised in this appeal, (Para 5)

The plain and simple statutory language of the age-old law, as applied in myriad different factual situations, would clearly indicate that bills of exchange in general and cheques in particular represent money with the characteristics of contract in the form of either an order or a promise to pay money. The paper on which it is written possesses the quality of being negotiable. The Negotiable Instruments Act in most respects is a modification of the Common Law on the subject and its provisions are in many respects declaratory of the Common Law.(Para 8)

No contract gives rise to any liability, unless the transaction is supported by consideration. However, an important distinction in the case of negotiable instruments is to be noticed. These instruments being mercantile instruments intended for free circulation like cash, the Law Merchant lays down restrictions as to the defence of want of consideration. If a negotiable instrument is made, drawn, accepted, indorsed ortransferred without consideration or for a consideration which fails, it creates no obligation between the parties to the transaction. Partial absence or partial failure of consideration consisting of money stands on the same footing as its total absence or failure. Hence, the payee is not entitled to recover to the extent to which the consideration has failed or is absent, but in case of partial absence or failure of consideration not consisting of money, such part of the consideration must be ascertainable in money without collateral Inquiry; otherwise rt will not bar the recovery of the whole amount. (Para 8.1)

The presumption under Section 139 is mandatory but rebuttable by proof of facts contrary to the receipt of cheque for discharge of any debt or other liability. The initial burden, however, of proving that the cheque was drawn by the drawee for payment of any amount of money and it being returned by the bank unpaid remains with the complainant. The presumptions under Section 118 are also mandatory but rebuttable and could be availed only until the contrary is proved. Even as a bill of exchange, by definition, requires signature of the maker as also direction to pay a certain sum of money only to or to the order of a certain person or to the bearer of the instrument, the provisions of Section 20 permits signature and delivery of an incomplete negotiable instrument and provides that the maker thereby gives prima facie authority to the holder thereof to make or complete it into a negotiable instrument and makes the signatory of such instrument liable to any holder in due course to the extent of the amount intended to be paid thereunder. Therefore, harmonious reading of the provisions of Sections 5, 6, 20, 118 and 139 would clearly indicate that a cheque could be drawn, delivered and received by the payee or holder in due course and could legally be completed under a legal authority and when such inchoate instrument is completed to make it a negotiable instrument, it would fall within the definition of "bill of exchange" and would render the signatory liable upon such instrument to the extent the amount mentioned therein is intended by him to be paid thereunder. Unless and until contrary is proved, such negotiable instrument would be presumed to be made or drawn for Consideration and receipt thereof would be presumed to be for discharge, in whole or in part, of any debt or other liability. However, such debt or other liability is not by any legal presumption presumed to be a legally enforceable debt or other liability. (Para 9)

Any material alteration of a negotiable instrument, however, lenders it void as against any one who is a party thereto at the time of making such alteration and does not consent thereto, unless the alteration was made in order to carry out the common intention' of the original parties. The provision to that effect contained in Section 87 has to be read in harmony with Section 20 which permits and authorizes the holder of a negotiable instrument to complete the instrument for any amount and renders the drawer liable to the holder in due course to the extent of the amount intended by the drawer to be paid under such instrument. It is clear from plain reading of provisions of Section 20 and 87 that the injunction, under the pain of invalidating a negotiable instrument, against alteration operates only after an inchoate instrument is completed or a complete instrument falls within the definition of "negotiable instrument". Therefore, the legally permissible completion of an inchoate instrument cannot be construed as material alteration of a negotiable instrument.(Para 9.1)

The above analysis of the statutory provisions leads to the conclusion that, when a cheque bearing only signature of the drawer is delivered and received by a payee for the discharge, in whole or in pan, of any debt or liability, there is an implied authority for the person receiving such cheque to complete it by filling the blanks and the amount having been filled up under such implied authority would be the amount intended by him to be paid thereunder. The focus in such cases would shift to the aspect of such amount being for the discharge, in whole or in part, of any legally enforceable debt or other liability. Therefore, even with the props of legal presumptions, the onus of proving legally enforceable debt or other liability for the discharge of which a cheque must have been drawn has to be discharged by the prosecution for bringing home the charge of dishonour of cheque. It may, however, be facetious to hold that a blank cheque, drawn by a person on an account maintained by him with a banker, for payment of any amount of money to another person, by merely putting his signature on it, would not be a "cheque" in the first place, because of not being a "bill of exchange" as it did not contain direction to a certain person to pay a certain sum of money to or to the order of a certain person or to the bearer of the instrument. When the Negotiable Instruments Act expressly permits and authorizes by a substantive provision the completion of an inchoate instrument by Section 20 with the safeguard provided in Section 87, provisions of Sections 5 and 6 defining "bill of exchange" and "cheque" have to be harmoniously read to mean that an instrument which was initially not a "cheque" falling within the definition of Section 6 would become a "cheque" when it was completed by filling the blanks and its dishonour shall have all the legal consequences of dishonour of a cheque proper. (Para 10)

Applying the above construction of the relevant provisions in light of the overall scheme of the Act, it would appear that, in the facts of the present case, whether the amount in the cheque in question was not mentioned at the time of drawing it and whether it was filled up afterwards by the payee becomes immaterial and pales into insignificance. (Para 11)

    Cases Referred :

1. Nagisetty Nagaiah v. State of A.P. [2004 Cr.LJ. 4107] Relied (Para 3)
2. Capital Syndicate v. Jameela [2003 (2) Crimes 122] Relied (Para 6)
3. Joseph Sartho v. Gopinathan Nair [2009 (2) Crimes 463) Relied (Para 6)
4. Kumar Exports v. Sharma Carpets [(2009) 2 SCC 533] (Para 6)
5. Krishna Janardhan Bhat v. Datta raya G. Hegde [ 1 (2008) CCR 199] (Para 6)
6. M.S.Naranaya Menon v. State of Kerala [(2006) 6 SCC 39], (Para 6)
7. Shreyas Agro Services Pvt. Ltd. v. Chandrakumar S.B. [2006 Cr.LJ. 3140], (Para 6.1)
8. Uppinangady Grama Panchayath, Puttur v. P. Narayana Prabhu [[2006 CrX.J. 3141] (Para 6.1)
9. Keygien Global Ltd. v. Madhav Impex [2006 Cr.LJ. 3413] (Para 6.1)
10. Taher N. Khambati v. Vinayak Enterprises [Crimes (HC) 1995 (4) 204] (Para 6.1)
11. Kamalammal v. C.K.Mohanan [2007 Cr.LJ. 3124] (Para 6.1)
12. Kamala S. v. Vidhvadharan M.J. [2008 (1) GLR 423], (Para 6.2)
13. John K. John v. Tom Varghcse [(2007) 12 SCC 714] (Para 6.2)
14. Hiten P.Dalal v. Bratindranath Banerjee [(2001) 6 SCC 16], Relied (Para 7)
15. Lillykutty v. Lawrence [2003 (2) DCR 610] (Para 7)
16. Assoo Hajee v. K.I.Abdul Latheef [2005 Cr.L.J. 640] (Para 7)
17. Bhaskaran Chandrasekharan v. Radhakrishnan [1998 Cr.LJ. 3228(1)] (Para 7)
18. Bank of Baroda v. Punjab National Bank Ltd. [1944 PC 58], (Para 8)

    Appearance

:

Mr. Hriday Buch For-Appellant : 1,
Ms. Trusha Patel Addl. Public Prosecutor For Opponent : 1,
Mr. S.P.Majmudar For Opponent : 2,
Mr. P.P.Majmudar For Opponent : 2,

    PER : MR. D.H.WAGHELA, J.

:-

1.

The appellant has challenged the judgment and order dated 12.01.2009 in Criminal Appeal No.48 of 2008 whereby learned Additional Sessions Judge set aside the judgment and order dated 09.01.2008 of learned Chief Judicial Magistrate, Ahmedabad in Criminal Case No.3243 of 2004 and acquitted the respondent of the offence under Section 138 of the Negotiable Instruments Act, 1881 (for short, 'the Act') for which she was convicted by the trial Court.

2.

The indisputable facts emerging from the record are that the complainant, present appellant, and the accused person had business relations in which pharmaceutical raw materials was supplied by the appellant between 11.6.2003 and 23.01.2004 and a cheque dated 03.02.2004 was given by the respondent which was dishonoured by the bank for insufficient fund, on 06.02.2004. Therefore, notice under Section 138 of the Act was issued and served; and upon noncompliance with the demand, the complaint was lodged. The defence of the accused in reply to the statutory notice consisted of denial of issuance of the cheque and misuse of the cheque, besides the contention that the goods sold and supplied to her firm was returned and that there were other disputes. During the course of trial, even as no witness was examined in defence, the accused relied upon the delivery challan under which the goods was sent back through a transporter to the complainant. The accused also relied upon the statements made in cross-examination of the complainant and put up the defence that the complainant had failed to prove enforceable debt against her. The trial Court, relying upon the oral and documentary evidence produced by the complainant, came to the conclusion that the cheque was issued against the invoice for the supply of goods worth Rs.1,48,668/- to which other amounts debited to her account were added and the total amount of the cheque of Rs.2,08,074/ - was proved to be due by the invoice, debit notes and other charges. Thus, the trial Court recorded conviction and sentenced the respondent to two years of simple imprisonment and fine of Rs.25,000/-, in default, to two months of simple imprisonment.

3. Carrying the above judgment of the trial Court in appeal, the respondent, inter alia, contended that no amount was outstanding against her since the goods sold to her by the invoice, as aforesaid, was returned and the cheque which was given as advance towards settlement of account was misused. The appellate Court adopted the view that the complainant had totally failed in discharging the initial burden of proving that there was legally enforceable debt, by producing cogent proof, such as books of account, account note book, income-tax report, income-tax return, audit report, audit books etc. and, therefore, in absence of proof of legally enforceable debt on the part of the complainant, the accused could not be asked to discharge her burden of rebutting the presumptions arising under Section 139 of the Act. The appellate Court noted that the complainant had not examined any independent witness in support of his case and it relied upon judgment of Andhra Pradesh High Court in case of Nagisetty Nagaiah v. State of A.P. [2004 Cr.L.J. 4107]. The approach of the appellate Court is practically summarised in para 21 of the impugned judgment which reads as under:

"21. Here in this case, though the accused has not complied with the demands of the statutory notice of the complainant, the complainant has also miserably failed to produce cogent proof such as books of account, income-tax return/report, audit report etc. to prove that there was legally enforceable debt by the accused. It is also clear that the complainant has himself failed to discharged the initial burden that there was legally enforceable debt. Therefore, the complainant, respondent No. 1 herein, cannot seek the plea and take advantage merely on return of the cheque unpaid on the ground of insufficient funds. Even otherwise, he has not examined any independent witness in support of his case."

The accused having thus succeeded in the first appeal, the complainant has approached this Court with the plea that legally enforceable debt was duly proved by sufficient evidence and the impugned judgment was perverse and illegal.

4. Before embarking upon re-appreciation of the evidence and application of relevant legal provisions and precedents, it may be pertinent to note the relevant dates and statements of the complainant in his cross-examination. The invoice for sale of goods worth Rs. 1,48,668/- was dated 05.07.2003. While the business transactions between the parties was continuing between 11.06.2003 to 23.01.2004, the cheque was dated 03.02.2004 for Rs.2,08,074/-. Before that, the goods was sought to be returned through a transporter on 24.09.2003 and it was lying with the transporter till 03.03.2004. The cheque was dishonoured by the bank on 06.02.2004. The complainant had, by producing documentary evidence at Exh.24, sought to prove and justify the other debit entires for Rs.750/- and Rs.58,656/- for which debit notes were issued. As against that, there was no evidence of receipt or acceptance by him of the goods sought to be returned by the accused. These facts lead to the conclusion that the amount in the cheque in question was filled up afterwards by the complainant and the dispute had arisen because the accused tried to return the goods after more than four months of the invoice therefor. It was categorically stated by the complainant in his deposition that there was no separate contract for recovering late payment charges, but the invoice contained a clause in that regard.

4.1 It was clear from perusal of the original record and proceedings which were called for, and fairly conceded by learned Counsel appearing on both sides, that the documents produced by the complainant at the instance of the accused and exhibited in evidence included the original invoice (Exh.38), with the condition that the material sold by the bill will not be taken back after seven days and that interest will be charged @24% per annum after due date; the debit notes for the amounts of Rs.750/- and Rs.58,656/- (Exhs.16/4 and 16/3) as also the other debit notes exchanged between the parties. The important documents so exhibited at Exh.23/1, being copies of ledger for the period from 01.4.2002 to 31.3.2003, 01.4.2003 to 31.3.2004 and 01.4.2004 and 31.4.2004. clearly showed in the account of the respondent the debit balance of Rs.2.08.074/- with the details of all the financial transactions taking place between the parties during that period. Therefore, it appears to be absolutely incorrect and perverse for the appellate Court to conclude that the complainant had miserably failed to produce cogent proof, such as books of account, income-tax return/report etc., to prove that there was legally enforceable debt.

5. Against the above backdrop of facts, the respondent, accused person, appears to have taken shifting stands in defence to contend firstly that the cheque was misused, then that enforceable debt was not proved and. then before this Court, that a "blank cheque" was not a "cheque" at all. Issues regarding the burden of proving enforceable debt or other liability, the application of presumptions and the definition of "cheque" having been raised in this appeal, it would be necessary to first set out, as under, the relevant statutory provisions:

"S.5 Bill of exchange -

A "bill of exchange" is an instrument in writing containing an unconditional order, signed by the maker, directing a certain person to pay a certain sum of money only to, or to the order of, a certain person or to the bearer of the instrument.

A promise or order to pay is not "conditional", within the meaning of this Section and Section 4, by reason of the time for payment of the amount or any installment thereof being expressed to be on the lapse of a certain period after the occurrence of a specified event which. according to the ordinary expectation of mankind, is certain to happen, although the time of its happening may be uncertain.

The sum payable may be "certain", within the meaning of this Section and Section 4, although it includes future interest or is payable at an indicated rate of exchange, or is according to the course of exchange, and although the instrument provides that, on default of payment of an installment, the balance unpaid shall become due.

The person to whom it is clear that the direction is given or that payment is to be made may be a "certain person", within the meaning of this Section and Section 4, although he is mis-named or designated by descripttion only.

S.6 "Cheque"-

A cheque is a bill of exchange drawn on a specified banker and not expressed to be payable otherwise than on demand and it includes the electronic image of a truncated cheque and a cheque in the electronic form.

Explanation I- For the purposes of this Section, the expressions-

(a) "a cheque in the electronic form" means........

(b) "a truncated cheque" means ..........

Explanation -II For the purposes of this Section, the expression "clearing house" means ........

S.13 "Negotiable instrument"-

(1)

A "negotiable instrument" means a promissory note, bill of exchange or cheque payable either to order or to bearer. S.20 Inchoate stamped instruments-

Where one person signs and delivers to another a paper stamped in accordance with the law relating to negotiable instruments then in force in India and either wholly blank or having written thereon an incomplete negotiable instrument, he thereby gives prima facie authority to the holder thereof to make or complete, as the ease may be, upon it a negotiable instrument, for any amount specified therein and not exceeding the amount covered by the stamp. The person so signing shall be liable upon such instrument, in the capacity in which he signed the same, to any holder in due course for such amount; provided that no person other than a holder in due course shall recover from the person delivering the instrument anything in excess of the amount intended by him to be paid thereunder.

S.87 Effect of material alteration-

Any material alteration of a negotiable instrument renders the same void as against any one who is a party thereto at the time of making such alteration and does not consent thereto, unless it was made in order to carry out the common intention of the original parties;

Alteration by indorsee

-

And any such alteration, if made by an indorsee, discharges his indorser from all liability to him in respect of the consideration thereof.

The provisions of this Section are subject to those of Sections 20, 49, 86 and 125.

S.118 Presumptions as to negotiable instruments-

Until the contrary is proved, the following presumptions shall be made:-

(a) of consideration - that every negotiable instrument was made or drawn for consideration, and that every such instrument, when it has been accepted. indorsed, negotiated or transferred, was accepted, indorsed, negotiated or transferred for consideration;

(b) as to date - that every negotiable instrument bearing a dale was made or drawn on such date;

(c) as to time of acceptance - that every accepted bill of exchange was accepted within a reasonable time after its date and before its maturity;

(d) as to time of transfer - that every transfer of a negotiable instrument was made before its maturity;

(e) as to order of indorsements - that the indorsements appearing upon a negotiable instrument were made in the order in which they appear thereon;

(f) as to stamps - that a lost promissory note, bill or exchange or cheque was duly stamped;

(g) that holder is a holder in due course - that the holder of a negotiable instrument is a holder in due course: provided that, where the instrument has been obtained from its lawful owner, or from any person in lawful custody thereof, by means of an offence or fraud, or has been obtained from the maker or acceptor thereof by means of an offence or fraud, or for unlawful consideration, the burden of proving that the holder is a holder in due course lies upon him.

S.138 Dishonour of cheque for insufficiency etc. of funds in the account-

Where any cheque drawn by a person on an account maintained by him with a banker for payment of any amount of money to another person from out of that account for the discharge, in whole or in part, of any debt or other liability, is returned by the bank unpaid, either because of the amount of money standing to the credit of that account is insufficient to honour the cheque or that it exceeds the amount arranged to be paid from that account by an agreement made with that bank, such person shall be deemed to have committed an offence and shall, without prejudice to any other provisions of this Act, be punished with imprisonment for a term which may be extended to two years, or with fine which may extend to twice the amount of the cheque, or with both:

Provided that nothing contained in this Section shall apply unless-

(a) the cheque has been presented to the bank within a period of six months from the date on which it is drawn or within the period of its validity, whichever is earlier;

(b) the payee or the holder in due course of the cheque, as the case may be, makes a demand for the payment of the said amount of money by giving a notice in writing, lo the drawer of the cheque, within thirty days of the receipt of information by him from the bank regarding the return of the cheque as unpaid; and

(c) the drawer of such cheque fails to make the payment of the said amount of money to the payee or. as the case may be to the holder in due course of the cheque, within fifteen days of the receipt of the said notice

Explanation- For the purposes of this Section, "debt or other liability" means a legally enforceable debt or other liability.

S.139 Presumption in favour of holder-

It shall be presumed, unless the contrary is proved, that the holder of a cheque received the cheque of the nature referred to in Section 138 for the discharge, in whole or in part, of any debt or other liability".

6. Learned Counsel for the respondent-accused relied upon judgment of Kerala High Court in Capital Syndicate v. Jameela [2003 (2) Crimes 122] and the observations that cheque to be valid, should certainly specify the amount and details regarding payee. If at the time of issue, amount is not specified and payee is uncertain, then cheque does not become a valid negotiable instrument as defined in the Act. Though the subsequent putting of the date in an undated cheque would not always amount to material alteration rendering the instrument void under Section 87 of the Act, the subsequent insertion of the amount and the name ofthe payee without the consent of the drawer would amount lo material alteration rendering the instrument void under Section 87 of the Act. Another judgment of Kerala High Court in Joseph Sartho v. Gopinathan Nair [2009 (2) Crimes 463] was relied upon for the proposition that, when cheque did not represent the amount or part of the amount due. the accused cannot be made liable for dishonour of such cheque. In Kumar Exports v. Sharma Carpets [(2009) 2 SCC 513] where the defence that blank cheques were obtained as advance payment was found to be probable, it was held by the Supreme Court that the burden of proof would shift on the complainant; and since the complainant did not produce any books of account or stock register maintained by him in the course of his regular business to establish as a matter of fact that the goods were sold by him, presumptions were held to have been rebutted. It was observed that, a presumption is not in itself evidence, but only makes a prima facie case for a party for whose benefit it exists. When a presumption is rebuttable, it only points out that the party on whom lies the duty of going forward with evidence on the fact presumed, and when that party has produced evidence fairly and reasonably tending to show that the real fact is not as presumed, the purpose of the presumption is over. It is also observed by the Supreme Court in Krishna Janardhan Bhat v. Datta raya G. Hegde [ 1 (2008) CCR 199] that existence of legally recoverable debt is not a matter of presumption under Section 139 of the Act, It merely raises a presumption in favour of the holder of a cheque that the same has been issued for discharge of any debt or other liability. The Court went on to observe in para 34 that the statute mandates raising of presumption but it stops at that. It does not say how presumption drawn should be held to have been rebutted. Other important principles of legal jurisprudence, namely presumption of innocence as a human right and the doctrine of reverse burden introduced by Section 139 should be delicately balanced. Such balancing acts, indisputably would largely depend upon the. factual matrix of each case, the materials brought on record and having regard to legal principles Governing the same. In M. S. Naranaya Menon v. State of Kerala [(2006) 6 SCC 39], the Supreme Court observed that, for rebutting the presumption of consideration, what is needed is to raise a probable defence. Even for that purpose, the evidence adduced on behalf of the complainant could be relied upon. It is not necessary for the Defendant to disprove the existence of consideration by way of direct evidence. The standard or proof evidently is preponderance of probabilities. Inference of preponderance of probabilities can be drawn not only from the materials on record but also by reference to the circumstances upon which the accused relies. The accused need not disprove the prosecution case in its entirety. Moreover, the onus on an accused is not as heavy as that of the prosecution. It may be compared with that on a Defendant in a civil proceeding.

6.1 In Shreyas Agro Services Pvt. Ltd. v. Chandrakumar S.B. [2006 Cr.L.J. 3140], the Karnataka High Court held that, if the drawee were to dishonestly fill up any excess liability and if the extent of liability becomes a bona fide matter of civil dispute, the drawer has no obligation to facilitate the encashment of cheque. And the same High Court also held in Uppinangady Grama Panchayath, Puttur v. P. Narayana Prabhu [2006 Cr.L.J. 3141] that, to warrant prosecution under Section 138 of the Act, it is necessary that the cheque should have been issued in respect of either past or current existing debt or other legal liability. Where the cheque was obviously not issued towards payment of damages, there was no legal obligation on part of the accused to effect clearance of the cheques issued towards the rental liabilities for the period during which he was not in occupation of the premises. Again the same High Court in Keygien Global Ltd. v. Madhav Impex [2006 Cr.L.J. 3413] held, where admittedly the accused had not appropriated the goods supplied by the complainant, that the complainant had no right to seek value of the rejected and returned goods and if the rejection of goods were illegal, the complainant had remedy to sue for damages. The Andhra Pradesh High Court in Taher N. Khambati v. Vinayak Enterprises [Crimes (HC) 1995 (4) 204] held that, where the complainant had obtained a blank signed cheque with a view to use it as a threat for realization of an amount, it could not be construed that the accused had issued the cheque voluntarily for discharge of any debt or legal liability as envisaged under Section 138 of the Act. In Kamalammal v. C.K.Mohanan [2007 Cr.LJ. 3124], the Kerala High Court held that there is no presumption under Section 139 or any other provision of the Act that if a blank cheque is issued, it can be presumed that an implied authority is given to the holder of the cheque to fill it up towards discharge of a debt etc. It further held that the presumption available in Section 139 is only in respect of the purpose for which the cheque is received by the holder-complainant, i.e. for discharge of a debt or liability. In the facts of that case, there was no evidence to show that the holder/ complainant "received the cheque". The receipt of cheque by the complainant was held to be a very crucial factor in the peculiar facts and circumstances where the accused had a definite case that a blank signed cheque was handed over to PW.I (the power of attorney-holder) in connection with another transaction and it was misused by her to file the complaint. In Joseph Sartho v. Gopinathan Nair [2009 (2) Crimes 463 (Ker.), it was held that, where the amount of cheque was larger than the amount of debt or liability, dishoner of the cheque would not amount to an offence under Section 138 of the Act. In Avon Organics Ltd. v. Pioneer Products Ltd. (2004 (1) Crimes 567), the Andhra Pradesh High Court held as under:

"6.......If the cheque is not drawn for a specified amount, it does not fall under the definition of a "Bill of Exchange". It cannot be called a "Cheque" within the meaning of Sections 5 and 6 of the Act...."

"7.......The cheque is a kind of bill of exchange, which means the amount payable must be mentioned in the cheque. At the time of issuing the cheque, the amount payable under the cheque is not mentioned. Consent is not given for which the amount was being drawn. It was virtually committed to alteration of the cheque, which is not permissible. The letters do not make a specific mention that they can put the amount therein and they can draw. The act of the complainant in filling up the amount portion in words and figures and put the date as per his own choice is certainly a material alteration. A blank cheque cannot be enforced even though it is issued for legal liability........"

"10......I am of considered view that the cheque issued without mentioning the amount for which it is drawn is not a cheque at all. It is not a bill of exchange at all as it is not drawn for a certain amount. When such is the thing, the question of invoking Section 138 of the Act does not arise. May be there is lacunae in Section 138 of the Act, it cannot be said that it covers invalid cheques also. Such an interpretation cannot be put on to it. It is for the Legislature to look at the lacunae found........"

6.2 In Kamala S. v. Vidhyadharan M.J. [2008 (1) GLR 423], the Supreme Court held it to be well-settled that when two views were possible, the High Court exercising its appellate power against a judgment of acquittal shall not ordinarily interfere. In John K. John v. Tom Varghese [(2007) 12 SCC 714], the Supreme Court held that the High Court was entitled to take notice of the conduct of the parties and draw its own conclusion. If, upon analysis of the evidence brought on record by the parties, a finding of fact has been arrived at that the cheque had not been issued by the respondent in discharge of any debt, it could not be said to be perverse.

7. As against the above judgments relied upon for the respondent-accused person, the appellant-complainant relied upon Three-Judge bench decision of the Supreme Court in Hiten P.Dalal v. Bratindranath Banerjee [(2001) 6 SCC 16], for the proposition that it is obligatory on the Court to raise the presumption under Section 139 in every case where the factual basis therefor had been established and it does not conflict with the presumption of innocence. It was necessary for the accused to show on the basis of acceptable evidence either that his explanation in the written statement was so probable that a prudent man ought to accept it or to establish that the effect of the material brought on the record, in its totality, rendered the existence of the fact presumed, improbable. A Division Bench of Kerala Kigh Court in Lillykutty v. Lawrence [2003 (2) OCR 610] held that by putting the amount and the name in the cheque, there is no material alteration under Section 87 of the Act. There is no rule in the banking business that payee's name as well as the amount should be written by the drawer himself. No law provides that, in case of cheques, the entire body of the cheque should be written by the drawer only. What is material is the signature of the drawer and not the body of instrument. In the facts of that case, apart from interested testimony of the drawer, no independent evidence was adduced to discharge the burden; and the story put up by the drawer that the cheques were stolen was not supported by any independent evidence. Again, the Kerala High Court in Assoo Hajee v. K.I.Abdul Latheef [2005 Cr.L.J.640] where entries in the cheque were made in presence of the son of the accused after verifying the accounts with respect to the outstanding liability, the Court held that it became a "cheque" when the liability was acknowledged and entries were made in the cheque. Again, a Division Bench of the Kerala High Court in Bhaskaran Chandrasekharan v. Radhakrishnan [1998 Cr.L.J. 3228(1)] wherein the accused had admitted issuance of a cheque and there was no dispute regarding signature, amount or the payee's name, but the cheque was issued in connection with another business, the Court held that merely because there was some transactions between the plaintiff and the Defendant, it could not lead to the conclusion that the cheque was not supported by consideration. In India, the legal position is that an undated cheque may be invalid but not void. When a cheque is issued for valid consideration, with no dispute regarding signature, amount and name, it cannot be said that putting a date on the cheque by the payee, who is the holder of cheque in due course, would amount to material alteration rendering the instrument void. When date was put by payee or drawer, on the cheque, presumptions under Section 118 of the Act would arise; and the burden would be on the drawer of the cheque to establish that the payee had no authority to put the date and encash the cheque.

8. The plain and simple statutory language of the age-old law. as applied in myriad different factual situations, would clearly indicate that bills of exchange in general and cheques in particular represent money with the characteristics of contract in the form of either an order or a promise to pay money. The paper on which it is written possesses the quality of being negotiable. The Negotiable Instruments Act in most respects is a modification of the Common Law on the subject and its provisions are in many respects declaratory of the Common Law. The Law Commission of India has, in its report dated 26.9.1958, suggested re-arrangement of the Sections as the Act is defective in some respects. There are ambiguous provisions relating to the right of recourse of the holder against the drawer on dishonour and omission to deal with the effect of forgery of negotiable instruments. In the judgment of the Judicial Committee in The Bank of Baroda v. Punjab National Bank Ltd. [1944 PC 58], Lord Wright said:

"There is no provision in the Negotiable Instruments Act as to a post-dated instrument such as there is in the English Bills of Exchange Act, 1882, Section 13 (2), which says that a bill is not invalid by reason only that it is ante-dated or post-dated.  There are certain differences between the English Act and the Indian Act which preceded the former by a year. But substantially the two Acts correspond. Both have been based on the law developed by the English Courts as a part of the Law Merchant, which the Common Law originally received on the basis of what was proved to the Court to be the custom of European businessmen in their dealings but which eventually, under the name of the Law Merchant, was integrated with and became a part of the Common Law. The law of negotiable instruments was peculiarly adapted to codification, because it was so largely precise and formal. Hence, the English Act was described as a codifying Act, and so was in fact the Indian Act. Both were based on the English decisions and hence these and later decisions of either country are commonly cited and relied upon. And in addition, decision from other common law jurisdiction are frequently cited as in the present case is done by the Chief Justice. But the Law Merchant is not a closed book nor is it fixed or stereotyped...."

Upon the authority of various judgments of the British Courts, it is culled out in Bhashyam & Adiga's "The Negotiable Instruments Act" 17th Edition at page 204, as under:

"The authority implied by a signature to a blank instrument is so wide that the party so signing is bound to a holder in due course even though the holder was authorized to fill for a certain amount, and he in fact inserts a greater amount; but it is necessary that the sum ought not to exceed the amount covered by the stamp. Swan v. North British Australasian Co. [(19863)2 H&C 175 Llyods Bank v. Cooke [(1907) 1 KB 794 Garrard v. Lewis [(11882) 10 QBD 30 Herdman v. Wheeleer [(1902) 1 KB 361."

8.1 No contract gives rise to any liability, unless the transaction is supported by consideration. However, an important distinction in the case of negotiable instruments is to be noticed. These instruments being mercantile instruments intended for free circulation like cash, the Law Merchant lays down restrictions as to the defence of want of consideration. If a negotiable instrument is made, drawn, accepted, indorsed or transferred without consideration or for a consideration which fails, it creates no obligation between the parties to the transaction. Partial absence or partial failure of consideration consisting of money stands on the same footing as its total absence or failure. Hence, the payee is not entitled to recover to the extent to which the consideration has failed or is absent, but in case of partial absence or failure of consideration not consisting of money, such part of the consideration must be ascertainable in money without collateral Inquiry; otherwise it will not bar the recovery of the whole amount. The general rules of evidence relating to negotiable instruments are those contained in the Indian Evidence Act, but some special presumptions arising out of the peculiar incidents attached to negotiable instrument are set out in the Act.

9. The presumption under Section 139 is mandatory but rebuttable by proof of facts contrary to the receipt of cheque for discharge of any debt or other liability. The initial burden, however, of proving that the cheque was drawn by the drawee for payment of any amount of money and it being returned by the bank unpaid remains with the complainant. The presumptions under Section 118 are also mandatory but rebuttable and could be availed only until the contrary is proved. Even as a bill of exchange, by definition, requires signature of the maker as also direction to pay a certain sum of money only to or to the order of a certain person or to the bearer of the instrument, the provisions of Section 20 permits signature and delivery of an incomplete negotiable instrument and provides that the maker thereby gives prima facie authority to the holder thereof to make or complete it into a negotiable instrument and makes the signatory of such instrument liable to any holder in due course to the extent of the amount intended to be paid thereunder. Therefore, harmonious reading of the provisions of Sections 5, 6, 20, 118 and 139 would clearly indicate that a cheque could be drawn, delivered and received by the payee or holder in due course and could legally be completed under a legal authority and when such inchoate instrument is completed to make it a negotiable instrument, it would fall within the definition of "bill of exchange" and would render the signatory liable upon such instrument to the extent the amount mentioned therein is intended by him to be paid thereunder. Unless and until contrary is proved, such negotiable instrument would be presumed to be made or drawn for consideration and receipt thereof would be presumed to be for discharge, in whole or in part, of any debt or other liability. However, such debt or other liability is not by any legal presumption presumed to be a legally enforceable debt or other liability. Therefore, the onus of proving that the presumed or proved debt or legal liability was legally enforceable remains with the Complainant. Consequently, in all given fact-situations, the Court is required to examine whether the presumptions regarding consideration and there being any debt or other liability are rebutted by the accused person by preponderance of probabilities and whether the complainant has proved that the debt or other liability, presumed or proved by overwhelming evidence, was legally enforceable. Although there is no presumption as regards any debt or other liability being legally enforceable, it would be found that once a debt or other liability is presumed and not properly rebutted, it would be legally enforceable, unless and until it is shown to be legally unenforceable. Such scheme of the provisions of law clearly indicates the object of serving the purpose of realization of the promise apparently contained in a negotiable instrument, which is that the amount for payment of which the bill of exchange was intended to be made will be paid to the payee or the holder in due course.

9.1 Any material alteration of a negotiable instrument, however, renders it void as against any one who is a party thereto at the time of making such alteration and does not consent thereto, unless the alteration was made in order to carry out the common intention of the original parties. The provision to that effect contained in Section 87 has to be read in harmony with Section 20 which permits and authorizes the holder of a negotiable instrument to complete the instrument for any amount and renders the drawer liable to the holder in due course to the extent of the amount intended by the drawer to be paid under such instrument. It is clear from plain reading of provisions of Section 20 and 87 that the injunction, under the pain of invalidating a negotiable instrument, against alteration operates only after an inchoate instrument is completed or a complete instrument falls within the definition of "negotiable instrument". Therefore, the legally permissible completion of an inchoate instrument cannot be construed as material alteration of a negotiable instrument.

10. The above analysis of the statutory provisions leads to the conclusion that, when a cheque bearing only signature of the drawer is delivered and received by a payee for the discharge, in whole or in part, of any debt or liability, there is an implied authority for the person receiving such cheque to complete it by filling the blanks and the amount having been filled up under such implied authority would be the amount intended by him to be paid thereunder. The focus in such cases would shift to the aspect of such amount being for the discharge, in whole or in part, of any legally enforceable debt or other liability. Therefore, even with the props of legal presumptions, the onus of proving legally enforceable debt or other liability for the discharge of which a cheque must have been drawn has to be discharged by the prosecution for bringing home the charge of dishonour of cheque. It may, however, be facetious to hold that a blank cheque, drawn by a person on an account maintained by him with a banker, for payment of any amount of money to another person, by merely putting his signature on it, would not be a "cheque" in the first place, because of not being a "bill of exchange" as it did not contain direction to a certain person to pay a certain sum of money to or to the order of a certain person or to the bearer of the instrument. When the Negotiable Instruments Act expressly permits and authorizes by a substantive provision the completion of an inchoate instrument by Section 20 with the safeguard provided in Section 87, provisions of Sections 5 and 6 defining "bill of exchange" and "cheque" have to be harmoniously read to mean that an instrument which was initially not a "cheque" falling within the definition of Section 6 would become a "cheque" when it was completed by filling the blanks and its dishonour shall have all the legal consequences of dishonour of a cheque proper.

11. Applying the above construction of the relevant provisions in light of the overall scheme of the Act, it would appear that, in the facts of the present case, whether the amount in the cheque in question was not mentioned at the time of drawing it and whether it was filled up afterwards by the payee becomes immaterial and pales into insignificance. Therefore, the sole issue requiring consideration in this appeal is as to whether the cheque was drawn, delivered and received for payment of any amount to the payee for the discharge, in whole or in part, of any legally enforceable debt or other liability. As seen earlier, the complainant, appellant herein, had proved by oral and documentary evidence that there was sale of goods worth Rs. 1,48,668/- as per the invoice dated 05.7.2003 containing conditions stipulating return of goods within seven days and payment of interest @ 24% per annum after due dale and the statement of accounts for the financial years 2002-2003 and 2003-2004 and debit notes proved the debt. Thus, as against the proof of total debit balance and liability of the cheque amount, the respondent-accused person had only disputed liability by stating and proving that the goods sold by the aforesaid invoice was sought to be returned after nearly 75 days. Therefore, on the one hand, the complainant had adduced sufficient evidence proving legally enforceable debt in terms of the amount due on sale of goods, with express stipulations, the debit notes issued and the accounts maintained in the regular course of business and. on the other hand, the accused person had only proved an attempt to return the goods. Thus, the legal presumptions in favour of the complainant and the proof of legal liability of the accused were not rebutted or disproved by any credible preponderance of probabilities. Under such circumstances, not only all the ingredients and circumstances for constituting the offence of dishonour of cheque were fulfilled, but the accused person appeared to have relied upon irrelevant facts for setting up a dishonest defence by denying any liability. Therefore, it is a fit case for convicting the respondent for the offence punishable under Section 138 of the Act and sentencing her to proper punishment.

12. In view of the submissions made on behalf of the respondent that she was a woman in whose name the actual business might have been carried by other persons, it is deemed proper that the punishment is restricted to fine. Accordingly, the appeal is allowed, the impugned judgment dated 12.01.2009 in Criminal Appeal No.48 of 2008 of learned Sessions Judge, is set aside and convicting the accused and modifying the punishment, she is sentenced to pay fine of Rs.4,15,000/- and, in case of default in making payment thereof within one month, she shall undergo simple imprisonment for two years. In case the fine is paid as aforesaid, the amount of Rs.4.00,000 therefrom shall be paid to the appellant under the provisions of Section 357 of Cr.P.C.

(MCB)(Appeal allowed)

 
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