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Jayaram (RETD. Education officer)     29 July 2008

138 NI act is misused by money lenders

Respected Advocates,

 I am jayaram member of this forum. I have given cheque to a money lender for my family expences  I borrowed money for the exhorbitant interest rates he has obtained 3 blank signed cheques from me for security.. In the mean time I paid 2 times of the principal amount  as interest. Then I stopped paying interest. In the mean time I requested the money lender who is not having any registration under the govt to do lending money. He is lending money to lot of people. I REQUESTED THE LENDER I AM NOT ABLE TO PAY INTEREST HEREAFTER. He said that he will use the security cheque which I have given 2 years before which are blank cheques. He has bounced a  cheque by filling the huge amount. And the cheque was bounced  as insufficient funds. The blank cheque was given two years before signed by me. He has issued vakkil notice that I borrowed money for home expenses and he has filled the date and amount himself. The handwritten is different from my signature. I issued the cheque  2 years before. But he bounced cheque a week before only.

Meanwhile  I smelled his tendency  what he is going to do against me  a month before the cheque bounced I approached district judge filed a petition against the money lender that I have paid fullmoney what ever I obtained from the lender. The district Honble Principal Judge forwarded my application with his covering letter stating that legal action to be taken against the respondents of the petitioner to the Dist.Supt. of Police. I approached Dist Collector and CM cell IG,DIG,DGP etc., ALL OF THEM FORWARDED MY PETTION TO SP of police for necessary action. The SP never registered even a Fir against the  enemies. I requested the district judge that my blank cheque may please be recovered from the money lender. Neither fIR is  filed nor the  cheque is returned. Immdly I approached Madurai High Court praying the high court judge action to be taken against the money lender.

Now my question is whether I will be come under 138 NI act or not?

Becz.., I already make complaint against the money lender before the district judge and Ihave valid  Dist Judge’s order on my hand. Now I want to clarify that supposing the money lender approaches the JMM court to file 138 act case against me. I have all the papers copy of the petitions I have given already a month befor he bounce my cheque. Mean time I have approached Madurai high court before the cheque is bounced.

Shall I produce all the pettions before the JMM court when I get summon?

What step I should take now?

jayaram



Learning

 10 Replies

K.C.Suresh (Advocate)     29 July 2008

You have a good case. The party must prove that you have some debt to discharge. If you have no such a debt 138 will be of no use. You have a case and you already give the details to another judicial forum. So you have acted in time as i understand for your querry.

K.C.Suresh (Advocate)     30 July 2008

 


 

Dear Jayaram,
 

Dear Jayaram, I will clarify your doubt about blank cheques. Still you are welcome for clarifications.

In Prabhakar v. Surendra V. Pai (2006 (4) KLT SN 37 (C.No. 50) Bom.) Hon'ble Mr. Justice N. Britto in Crl. M.A. No.216 of 2005 on 24.3.2006 held that the when a Drawer issuing a blank cheque duly signed by him, there is tacit or implied consent by drawer to fill up details of amount and date. There is preponderance of judicial opinion in favour of the proposition that when a cheque is issued duly signed by the drawer and the holder completes the same in other respects namely as regards the amount due and the date, the presumption would still be available to the complainant/holder unless the accused shows that the said particulars were filled in without the consent of the accused/drawer. The said legal position is based on the principle that in such cases there is a tacit or implied consent by the drawer to fill in the details of the amount and date of the cheque. Negotiable Instruments Act 1881, S.138 Court relied on 2003 (3) KLT 721 & 1999 (3) KLT 440 also.  

In Bhaskaran Nair v. Abdul Kareem (2006 (4) KLT   48) Hon'ble Mr. Justice R. Basant in Crl. R.P. No.2519 of 2006 on 25th July, 2006 held that

Burden rest heavily on the account holder to claim absolution from culpable liability while he Issue signed blank cheque by an account holder. The defence that a signed bank cheque was handed over by an account holder is inherently a suspicious one and must be approached with great care and caution. If the laudable commercial morality which the legislature wants to usher in by introduction of S.138 of the N.I.Act in the statute book were to prevail among the polity such an irresponsible, casual and indifferent approach by account holders deserves to be discouraged. No account holder is expected to deal with the cheques in such a casual, careless, irresponsible and indifferent manner. Such a defence may still not be impossible in a prosecution under S.138 of the N.I.Act. But the burden must certainly rest heavily on the shoulders of such an indictee who wants to attribute such an irresponsible conduct to himself to claim absolution from culpable liability.                               (para. 5) - Negotiable Instruments Act 1881, Ss.138 & 139 In Moideen v. Johny (2006 (3) KLT SN 62 (C.No. 85)) Hon'ble Mr. Justice K.A. Abdul Gafoor in Crl. A. No.516 of 2001 on 30.5.2006 held that even if a blank cheque is issued as a security, person in possession of the blank cheque can enter the amount of liability and present it to bank. It is trite, that the liability in terms of S.138 of the Act cannot be avoided in the event of the cheque being returned by the banker unpaid for whatever reasons the cheque had been issued to the complainant. The Apex Court has held that the legislature has been careful enough to record not only discharge in whole or in part of any debt, but the same includes other liability as well. Even if a blank cheque is issued as a security, the person in possession of the blank cheque can enter the amount of the liability and present it to the bank. When a blank cheque is issued by one to another, it gives an authority on the person, to whom it is issued, to fill it up at the appropriate stage with the necessary entries regarding the liability and to present it to the bank. In the light of this, the accused cannot be absolved of the liability. Court reffered 2002 (3) KLT 218                                     

In General Auto Sales v. Vijayalakshmi (2005 (1) KLT 478) Hon'ble Mr.Justice K.A. Abdul Gafoor in CrI.A.No.67 of 1998.on  4th August, 2004

held that even if a blank cheque has been given towards liability or even as security, when liability is assessed and quantified, if cheque is filled up and presented to bank, person who had drawn the cheque cannot avoid criminal liability under S.138. Even if a blank cheque has been given towards liability or even as security, when the liability is assessed and quantified, if the cheque is filled up and presented to the bank, the person who had drawn the cheque cannot avoid the criminal liability arising out of S. 138 of the N.I. Act.                  (para. 8)

 

 

sanjay kumar patibandla (advocate)     31 August 2008

Generally money lendes won't file cases on their names. They often file cases with the help of benami persons before the courts. Before giving blank cheques we must think twice.


But in this case yopu hve good grounds. Consult your lawyer.  With out verification of papers I can not give replay in proper manner. You approached High court before cheque bounce is a good ground. But we should know the grounds of complaint. I f they claimed that you have issued a post dated cheque than you will be in trouble to prove your contenction.For giving proper replay please know me the contentions of the complainant.


 


 


 

Pankaj Rai (Lawyer)     07 September 2008

If a blank cheque has been given towards liability or even as a security.The person who had drawn the cheque cannot avoid the criminal liability arising out of s.138 of the N.I.Act.

Anil Agrawal (Retired)     13 February 2009

 Blank cheque? Has it any value without its execution? Please read this judgement:



KERALA HIGH COURT


J U D G M E N T CRL A No. 668 of 2000(A)


 G.Gopan         :         Petitioner


Vs


 Tonny Varghese   :     Respondent


 


V.K.Mohanan, J


  


          The appellant herein is the complainant in  C.C.No.297 of 1996 on the files of the Judicial First Class Magistrate Court-II, Aluva which is a case instituted upon a private complaint for an offence under Section 138 of the Negotiable Instruments Act (hereinafter referred to for short as 'the N.I.Act' only). As per the judgment dated


19.9.1998 in C.C.No.297 of 1996 of the trial court, the accused was found guilty under Section 138 of the N.I.Act and he was sentenced to undergo simple imprisonment for  six months. Challenging the above conviction and sentence, the accused preferred an appeal as Crl.Appeal No.5 of 1999 (originally it was numbered as  Crl.A.No.387/98 of the Sessions Court, Ernakulam). As per the judgment dated 1.6.2000 in Crl.Appeal No.5 of 1999, the Additional Sessions Judge, North Paravur  allowed the appeal setting aside the conviction and sentence of the trial court. Challenging the above order of the lower Appellate Court, the complainant initially filed  Crl.M.C.No.4122 of 2000 for leave of this Court which was granted on 11.8.2000 and thus, this appeal is preferred against the judgment of the lower Appellate Court.


 


      2.     The case of the appellant/complainant is that the accused borrowed a sum of Rs.2 lakhs from the complainant promising to repay the same amount on demand for which Ext.P1 cheque dated 10.11.1995 was issued. The cheque was drawn from the account maintained by the accused in the Angamaly Branch of Federal Bank Limited. On presentation of the cheque for encashment, the same was returned on 12.12.1995


 for the reason 'funds insufficient'. Consequently, the complainant had caused to send a lawyer notice on 22.12.1995 which was received by the accused. Then the accused sent a reply denying the transaction and according to the complainant, it was only false allegation and contention. Thus, according to the complainant, though a statutory notice was issued, no payment was effected within the statutory period and hence the accused has committed the offence punishable under Section 138 of the N.I.Act. Therefore, he approached the trial court by filing complaint under Section 138 of  the N.I.Act.


 


      3.     During trial, Pws.1 to 3 were examined as prosecution witnesses and Exts.P1 to P7 were marked as documentary evidence on the side of the complainant. On the side of defence, Dws.1 and 2 were examined and Exts. D1 and D2 were marked as documentary evidence. After appreciation of the evidence and materials on records, the trial court was of the opinion that Ext.P1 cheque was issued in discharge of the debt, but the same was returned for want of sufficient fund and the complainant had complied with all legal formalities and therefore, it was found that the accused is guilty of the  offence under Section 138 of the N.I.Act.


 


      4.     On appeal, at the instance of the accused, the lower Appellate Court had found that the complainant had miserably failed to prove the passing of consideration and merely because of the admission of signature in the cheque, it could not be said that the execution of cheque was proved. Relying upon certain decisions, the lower Appellate Court had held that though the accused had admitted his signature in the cheque, in all other respect it was a blank cheque, and what was admitted was the signature alone and thus, that would amount to denial of execution of cheque.   In  


support of the above conclusion, the lower Appellate Court had relied upon certain materials which are available on record. On analysis and application of Section 118(a) of the N.I.Act, in the facts and circumstances of the case, the lower Appellate Court had come to a conclusion that the appellant/complainant had failed to discharge the initial burden regarding the execution of the cheque and therefore, the presumption under Section 118(a) of the N.I.Act was not available to him. Further, on an appreciation of the evidence and on the basis of materials on record, the lower Appellate Court had held that since the very execution of the cheque was denied by the accused, the complainant could not seek the aid of presumption available under Section 139 of the N.I.Act. It was also found by the court below that the complainant/appellant would not come within the meaning of 'holder' of promissory note, bill of exchange or cheque as two conditions mentioned   in Section 8 of the N.I.Act had not been satisfied conjunctively. The lower   Appellate  Court   had specifically found that there was no evidence that the said cheque was issued for payment of any amount to the complainant in discharge of any debt or liability. Therefore, it was found that Ext.P1 cannot be termed as a cheque of the nature referred to under Section 138 of the N.I.Act. Hence, according to the court below, the complainant is not entitled to the presumption available under Section 139 of the N.I.Act. The lower Appellate Court had also found that the dishonour of Ext.P1 cheque for want of sufficient funds in the account on which it was drawn, issuance of notice demanding payment of Ext.P1 cheque, non-payment of the amount even after receipt of notice by the accused etc. did not assume any importance in the light of the earlier findings of the court. Thus, the lower Appellate Court had specifically found that the complainant had failed to  make out a case punishable under Section 138 of the N.I. Act and accordingly, the conviction and sentence imposed against the accused had been set aside. Aggrieved by the above findings, appellant/complainant has filed this appeal.


 


      5.     I have heard the learned counsel for the appellant, the learned counsel for the first respondent as also the learned Public Prosecutor.


 


      6.     Learned counsel appearing for the appellant strenuously submits that the lower Appellate Court erred in acquitting the accused on the basis of the decisions which were referred to in the judgment since those judgments were pertaining to the period before the amendment brought to the N.I.Act. According to counsel, Chapter XVII is newly introduced, incorporating penal provision and therefore, all the decisions referred to by the lower court are not useful as those decisions were prior to the newly introduced chapter mentioned above. Going by the memorandum of Appeal also, it appears that the main ground is ground No.(B) which says that the lower Appellate Court went wrong in finding that Ext.P1 cheque is not properly executed and it is further stated that the court came to such conclusion relying on decision prior to the amendment of N.I.Act incorporating penal provisions to punish for issuing cheque without keeping the sufficient funds. All other grounds in the memorandum of appeal are general. The appellant's counsel further submits that the statutory presumption under Section 118(a) and 139are in favour of the complainant/appellant and those presumptions were not rebutted by the accused by cogent evidence. Hence, it is argued that on the failure of the accused to rebut the presumption, as rightly done by the trial court, the lower Appellate Court ought to have confirmed the conviction and the sentence instead of acquitting him. In support of the above contentions, the counsel for the appellant placed reliance on various decisions.


 


      7.     After an elaborate consideration of the entire materials available on record, the Sessions Court had held that the benefits of presumption available under Section 118(a) and 139 were not available to the complainant, simply for the reason that Ext.P1 cheque contained the signature of the accused, especially when the complainant failed to establish the execution of the cheque and also the passing of consideration. The lower Appellate Court also held that the complainant could not be termed as a holder. Thus the lower Appellate Court came to a conclusion that no offence under Section 138 of the N.I.Act is established against the accused and therefore, the order of conviction and sentence passed by the trial court were set aside and the accused was accordingly acquitted.


 


      8.     It is the above order of acquittal challenged in this appeal and it is argued that the above order of acquittal shall be set aside and the order of conviction and sentence passed by the trial court shall be confirmed.


 


      9.     Before going into the above legal question, it would be beneficial to examine the facts involved in the case so as to appreciate the legal question in its correct perspective. 


 


      10. The only case put forwarded by the complainant in his complaint is that the accused had borrowed a sum of Rs.2 lakhs from the complainant for his business purpose with a promise that the amount would be repaid on demand by the complainant and thus, the cheque in question was issued, which was dishonoured when presented for encashment for the reason that 'funds insufficient'. Thus according to the complainant, statutory notice was sent, which was also not honoured and no amount was paid within the stipulated time and therefore, he approached the trial court by filing the complaint. During his chief examination, nothing more was stated and he had strictly deposed only in accordance with the versions contained in the complaint. During the cross- examination, he had made certain improvements and stated that he had acquaintance with the accused for 4 to 5 years through one Viswan at Angamaly and they were in good relations. On further cross-examination, he had deposed that the accused had started a company viz., New India Credit Capitals Investment Private Limited. On a pointed question as to whether the complainant was the Director of the company, he answered positively. The company was started as Manchiyam company. To several questions regarding the company, the complainant had answered that the company is not working at present and it is in a standstill. They have decided to give back the share to the share holders. To the specific question as to whether the company has sufficient asset for repaying the share value to the share holders, the answer was 'not known'. To another question as to whether a motorbike was pledged for Rs.5000/- for the company purpose, he stated, he did not know.


 


      11. The specific case put forwarded by the accused is that he was the Managing Director of the above company and the complainant was one of the Directors. In order to meet the monetary need of the company, they have decided to pledge a motor bike in a financial institution at Perumbavoor for Rs.5000/- and towards the security for the said transaction, the accused had entrusted a blank cheque i.e., Ext.P1 with the complainant, which is referred to in the above complaint. From the above facts, it is crystal clear that both the complainant as well as accused are not strangers or they are not belonging to rival business groups, but they were having much acquaintance with each other and they were together in a company of which the complainant is one of the Directors and the accused was the Managing Director of the same company. The entire transaction alleged in the complaint has to be examined in the above factual background. It is pertinent to note that the complainant did not mention any of those facts in the complaint and even during his chief examination. The case of the complainant is that Ext.P1 cheque, bearing the signature of the accused, was dishonoured when it was presented for encashment and no amount was paid within the statutory period though a formal demand was made and therefore, the accused has committed the offence under Section 138 of the N.I.Act.    


  


12. It is true that when the cheque in question contained the signature of the account holder, it is for the accused to explain the same, but merely because Ext.P1 cheque contained the signature of the account holder or the accused, it cannot be said that the same was executed by him. In this case, it is relevant to note that the accused has specifically denied the execution of the cheque and the case advanced by him is that Ext.P1 cheque was entrusted with the complainant and the  cheque contained nothing more than his signature. So, on the basis of the above admission, counsel for the appellant/complainant submits that the complainant is entitled to get the benefit of presumption envisaged by Sections 118(a) and 139 of the N.I.Act. On the other


hand, counsel for the respondent/accused submitted that the presumption regarding consideration can be drawn under Section 118(a) only when the execution is proved


and therefore, it is clear that passing of consideration and the existence of debt are not proved by the complainant. No doubt, it is the duty of the complainant to establish all that ingredients of Section 138 of the N.I.Act in order to canvass a conviction against the accused. Section 138 contained in Chapter XVII of the N.I.Act reads thus:-


 


"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, to 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.]


 


Going by Section 138 of the N.I.Act, it can be seen that 'a drawing of cheque' by a person on an account maintained by him with the 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'  are two important ingredients, especially in the background of this case. In the decision reported in Ch.Birbal Singh v. Harphool 


Khan (AIR 1976 Allahabad 23), it was held that execution of documents consists of signing of the document written out, read over and understood and does not consist of merely signing of a blank paper.  In another decision reported in Thakurlal v. Ramadhar (1968 ALJ 480), it had been held that mere admission of putting of signature and thumb mark on a blank sheet of paper is not admission of execution of the document. In the present case, the accused did not dispute the signature in                         Ext.P1  cheque, but his specific case is that he had entrusted with the complainant Ext.P1 blank cheque which contained his signature. It is brought out through evidence that the complainant does not remember that when Ext.P1cheque was given to the accused. According to him, the amount and the date shown in the cheque might have been written by any member of the family of the accused


 


or his friend. The complainant is also not aware as in whose handwriting, the cheque was written. Therefore, it is crystal clear that the complainant is not aware of the execution of Ext.P1 cheque. When the execution of the cheque is denied by the accused, it is for the complainant to establish the same. In the absence of any positive evidence regarding the execution of the cheque by the accused, it is to be held that the accused had issued only blank cheque and the same was not executed by him. Simply because the cheque contained the signature of the accused, it cannot be said that the  


cheque was drawn by the accused as contemplated by Section 138 of the N.I.Act.


 


         13.    The contentions of the appellant that the decisions referred to and relied on by the court below are of prior to the amendment to the N.I.Act and hence the court below has committed a wrong, are not legally correct and not acceptable. It is beyond the scope of debate that the mode of execution of an instrument and its legal validity and sanctity including the presumption under Section 118 of the N.I.Act are same, whether it is executed before or after the introduction of the new Chapter, namely Chapter XVII into the N.I.Act.


 


         14. It is also relevant to note that the complainant has miserably failed to prove the passing of any consideration and also any legally enforceable debt or liability.


 


         15.    It is pertinent to note that going by the provision namely, Section 138 of the N.I.Act, it can be seen that the legislature has employed certain words cautiously and not without any meaning. The word employed in Section 138 viz., drawn’,  'discharge of any debt or other liability' are conveying the message of the legislature, through which we can understand the intention of the legislature. So while interpreting the provisions or the word, the court has to give effect the intention of legislature. At any stretch of imagination, it cannot be said that putting signature on the blank cheque is equivalent to the word 'drawn' used in Section 138 of the N.I.Act. Therefore, the word 'drawn' used in Section 138 has to be understood as 'execution' of  cheque. In a decision reported in Johnson Scaria v. State of Kerala (2006(4) KLT 290), this Court has held "the burden is always on the prosecution to prove the offence


against an indictee in all prosecutions and a prosecution u/s. 138 of the N.I.Act is no exception to that general rule. Execution and issue of the cheque have to be proved to draw the presumption under S.139 and S.139 does not shift the burden to prove execution and issue of the cheque." In the same decision, it is further held that "admission of  signature in a cheque goes a long way to prove due execution.


 


Possession of the cheque by the complainant similarly goes a long way to prove issue of the cheque. The burden rests on the complainant to prove execution and issue.  But, under S.114 of the Evidence Act , appropriate inferences and presumptions can be drawn in each case on the question of execution and issue of the cheque depending on the evidence available and explanations offered." In the present case, on an appreciation of entire factual situation and the materials on record, it cannot be said that the complainant has discharged his burden in proving the execution of Ext.P1 cheque and therefore, I am fully endorsing the reason given by the lower appellate court for coming to the conclusion that the complainant has failed to prove the execution of Ext.P1 cheque.


 


         16.    Another point argued by counsel for the appellant is that he is entitled to get the benefit of presumption envisaged by Section 118 of the N.I.Act. Stressing on the admission at the side of the defence regarding the signature on Ext.P1 cheque, the counsel argued that under Section 118(a) of the N.I.Act, it is to be presumed that consideration has passed during the transaction and therefore, the reasoning given by the court below is unacceptable and liable to be rejected. In the present case, PW-1  himself was not aware of the actual transaction. He does not know who filled up the  


blank cheque. He does not know the author of the hand writing appeared in Ext.P1 cheque. He does not know when Ext.P1 cheque was issued. Only in the cross


examination, he has stated regarding the payment made  by 2,3 instalments. Neither in the complaint nor during chief examination, the complainant has got a case that


the consideration was passed by way of instalments. On the basis of the above materials on evidence, we have to examine the execution of the cheque as stated earlier, PW-1 complainant has miserably failed to prove the execution of the cheque itself and therefore, the presumption under Section 118(a) of the N.I.Act regarding the consideration is not available to the appellant/complainant.  On the basis of the decision reported in General Auto Sales v. Vijayalakshmi (2005(1) KLT 478), the counsel for the appellant argued that even if a blank cheque has been given towards the liability or even as security, when liability is assessed and quantified, if cheque is filled up and presented to Bank, the person who had drawn cheque cannot avoid


 the criminal liability arising out of Section 138 of the N.I.Act.


 


         17.    The facts involved in the above case is entirely different from the present one. In that case, it is relevant to note that there was a settlement between the


complainant and the accused and the cheque was drawn for a fixed amount towards the amount due as found in the settlement. Here the transaction itself is denied and  


the case set up by the accused is that the cheque was given for security for availing loan by pledging a bike of the company. Therefore, the above decision is not


 helpful for the appellant. Another decision relied on by the counsel for the petitioner is  reported in R.Sivaraman v. The State of Kerala and Others (2006(3) KLJ 92) wherein this Court has held "the Court has to presume that the cheque had been issued for a debt or liability. It is also held in the very decision that the presumption is rebuttable, the burden of proving that the cheque had not been issued in discharge of a debt or liability is on the accused. In the present case, first of all, the execution of the cheque was not proved and therefore, the presumption under Section 139 is not available in favour of the complainant/appellant. The materials available on records are not sufficient to show  the   discharge of  the initial burden on the  complainant / appellant to establish a presumption under Section 139. The burden of rebutting the presumption will be shifted to the accused only when the complainant / appellant has discharged his initial burden. A decision reported in Johnson Scaria v. State of Kerala (2006(4) KLT 290) is cited by the appellant for canvassing the proposition that law does not mandate proof of original transaction or existence of original consideration and the Courts are not bound to adjudicate on the liability under the cheque in dispute. It is true that the court is not bound to adjudicate on the liability under the cheque in dispute, but when the court is confronted with the question regarding the penal liability arising under Section 138 of the N.I.Act, especially when the execution of the cheque itself is disputed and not proved, the court has to consider the transaction for arriving at a safe conclusion. In the present case, the execution itself is not proved by the complainant and therefore, the presumption under Section 139 is not available to him. Even if the initial burden is discharged by the complainant, the accused can rebut the presumption either by adducing direct evidence or even by relying on broad improbabilities of the prosecution case including the improbable evidence of the      prosecution. Therefore, all the factual circumstances involved in a particular case could have relied on by the accused to discharge his burden. The Apex Court, in a decision reported in Kamala.S. v. Vidhydharan.M.J. and another [(2007) 5 SCC 264], has held that presumption under Sections 139 and 118 (a) is rebuttable and further held that burden on accused to rebut the presumption can be discharged by preponderance of probabilities and Court can draw inference from material brought on record as well as circumstances relied upon by the accused. In the present case, going by the materials and evidence on record and particularly the facts involved in the case,  I am    of the view that the  appellant/complainant has miserably failed to establish his case beyond doubt.


 


         18.    As I stated earlier, this is an appeal preferred against the order of acquittal of the lower Appellate court. This Court while exercising the appellate jurisdiction cannot merely substitute a view unless there is sufficient reason to improbablise the


 finding of the lower Appellate Court or any patent illegality. In the facts and circumstances involved in the present case and the materials and findings on record, I


have no hesitation to hold that the reasoning assigned by the lower Appellate Court for acquitting the accused is perfectly legal and valid and I find no reason to  


interfere with such order of acquittal. In this case, it is relevant to note that the parties were having prior acquaintance and they were part and parcel of one establishment  and it cannot be ruled out, the possibilities of vexatious litigation due to personal animosity. I am constrained to draw such a presumption  on the fact that though in the complaint, the allegation was for non-payment of Rs.2 lakhs and though the trial court has awarded only imprisonment as a sentence, the appellant / complainant has not chosen to prefer appeal against the insufficiency of sentence, in other words, there was no move from his side for realising the amount by way of fine or compensation by filing an appeal.


 


         In the light of the above facts and circumstances, there is no merit in the appeal and accordingly, the appeal is dismissed.






KERALA HIGH COURT


Before :- K. Hema, J.


Crl.A. No. 275 of 2001. D/d. 18.7.2006


18.7. 2006


Kamalammal - Appellant


Versus


C.K. Mohanan & Anr. - Respondents


For the Appellant :- C.P. Udayabhanu, Advocate.


For the Respondent :- C.K. Vidyasagar and P. Chandy Joseph, Advocates.


IMPORTANT


Blank cheque duly signed given by drawer - It cannot be presumed that an implied authority is given to the holder of the cheque to fill it up towards the discharge of a debt etc.


IMPORTANT


Dishonour of cheque - There is no presumption that a cheque (whether it be blank one or not), is executed for discharge of debt. or liability.


A. Negotiable Instruments Act, Sections 138 and 141 - Blank cheque duly signed given by drawer - It cannot be presumed that an implied authority is given to the holder of the cheque to fill it up towards the discharge of a debt etc. - It cannot be presumed chat cheque was issued for discharge of debt. or liability - In the complaint there must be allegation and evidence that blank cheque was issued with implied authority to holder to fill up the same.


[Paras 42, 33, 41, 13 and 15]


B. Negotiable Instruments Act, Sections 138 and 139 - Dishonour of cheque - There is no presumption that a cheque (whether it be blank one or not), is executed for discharge of debt. or liability - In Section 139 word "received" has been used and the word "issued" or executed - Holder of cheque has to establish the basis for drawing presumption under Section 139 - Further held :-


The only fact which can be presumed under Section 139 is the `PURPOSE' for which the cheque is received by the complainant - The Court can presume under Section 139 of the Act that the purpose for which the cheque is received by the holder is, "for discharge of a debt or liability" - But the court cannot presume that the cheque is "issued/executed/drawn" by the accused.


[Paras 13, 15, 16, 18, 19, 23, 25 and 22]


C. Negotiable Instruments Act, Sections 139 and 138 - There is no presumption under Section 139 that cheque was issued in discharge of debt or liability - Before drawing presumption under Section 139 of Negotiable Instruments Act, Court must be satisfied :-


(1) That the person who seeks the benefit of the presumption in Section 139 is the "holder" as defined under Section 8 of the Act.


(2) That such person is entitled in his own name to the possession of the cheque and also to receive the amount due from the parties thereto.


(3) It must be established that such a person is in possession of same by way of entitlement.


(4) There must be evidence at least for the fact that he "received" the cheque as of right and did not obtain it by any other mode.


(5) If the court is satisfied that he is the "holder" of the cheque of the nature stated in Section 138 and that he "received" the same, the court can safely draw the presumption under Section 139 of the Act.


[Paras 45 and 51]


D. Evidence Act, Sections 3 and 4 - Presumption in law - Meaning - Presumptions in law are of two kinds : (i) presumption of law (ii) presumption of fact - The former is drawn in cases where the statute uses the words like "shall be presumed" and the other is drawn in cases where it used the words like "may be presumed" - The court may, in certain other circumstances also, make certain assumptions, presumptions or inferences, while evaluating the evidence and other materials placed before the court, as against normal human conduct etc., to decide whether a fact is proved or not under Section 3 of the Evidence Act.


[Paras 36 to 40]


E. Negotiable Instruments Act, Sections 138 and 139 - Criminal trial - An accused in any criminal prosecution is ordinarily presumed to be innocent, unless otherwise expressly provided by any statute or law - A prosecution under Section 138 is not an exception to this - No provision in the Act rebuts such presumption of his innocence - Not even, Section 139 of the Act.


[Para 18]


Cases referred :


1. Hiten P. Dalal v. Bratindranath Banerjee, 2001(3) RCR(Criminal) 460 : ((2001)6 SCC 16).


2. K.N. Beena v. Muniyappan, 2001(4) RCR(Criminal) 545 : (2001)8 SCC 458.


3. Mohanan v. Bibu Kumar, 2003(4) RCR(Criminal) 6 : (2003(2) KLT 825).


4. General Auto Sales v. Vijayalakshmi, 2005(2) RCR(Criminal) 97 : (2005(1) KLT 478).


5. State of Madras v. Vaidynanatha Iyer, 1958 SCR 580.


6. M. Narsinga Rao v. State of A.P., 2001(1) RCR(Criminal) 95 : (2001)2 SCC 691.


7. T. Shankar Prasad v. State of A.P., 2004(1) RCR(Criminal) 784 : 2004(2) Apex Criminal 384 : (2004)3 SCC 753.


8. State of A.P. v. V. Vasudeva Rao, 2003(4) RCR(Criminal) 917 : 2004(1) Apex Criminal 648 : (2004)9 SCC 319.


JUDGMENT


K. Hema, J. - Can it be presumed under section 139 of the Negotiable Instruments Act ('the Act', for short) that the cheque is drawn/executed by the accused for the discharge of a debt or liability ? What exactly is the `fact' which can be presumed by the court under section 139 of the Act ? Under what circumstance the presumption under section 139 can be drawn ? What are the basic requirements for drawing the presumption under section 139 of the Act ? On whom does the burden lie to establish those pre-requisites ? These are some of the important questions which I would ponder upon, for the purpose of disposal of this appeal.


2. A complaint was tiled by the complainant-appellant through PW1, the power- of-attorney holder against the first respondent alleging offence under Section 138 of the Negotiable Instruments Act (the Act, for short). As per the allegations in the complaint, complainant and accused are friends and distant relatives. The accused allegedly borrowed a sum of Rs. 2,00,000/- from the complainant at PW1's house, agreeing to repay the amount with interest in three months. But, he failed to do so. Hence, on repeated demands, Ext.P2 was issued by him for discharge of the debt from the house of PW1. But, the cheque, on presentation to the bank, was returned unpaid for "insufficient funds" along with memo, Exhibit P3. A lawyer notice (the copy is Exhibit P5) was sent to the accused. Still, he did not repay the amount, and hence, after complying with the legal formalities, a complaint was filed against him.


3. To prove the complaint, PWs 1 to 3 were examined, Exhibits P1 to P8 and Exhibit X1 were marked. The accused did not adduce any oral evidence, but marked Exhibits D1 and D2. According to accused, he never borrowed any amount from the complainant nor did he issue any cheque to the complainant. He does not even know the complainant. This case is falsely foisted against him by the power-of-attorney holder of the complainant who is on inimical terms with him, on account of another transaction.


4. The accused set up a plea that he borrowed Rs. 25000/- from PW1, the `so- called power-of-attorney holder' of the complainant and handed over two blank cheques to her as security. He discharged a part of that liability but, PW1 was not satisfied. She demanded for more money and went to the accused's house with her husband and made unjustifiable demands. Following this, there was a quarrel between them from the accused's house which ended up in an assault. The accused was injured in the incident and a case was registered by the police on his complaint against PW1 and her husband. Thereafter. PW1 misused the blank cheques given to her and filed two complaints against the accused. One was filed by PW1 herself as the complainant; the other was filed by her, allegedly on behalf of her sister-in-law, as the power-of-attorney holder.


5. The court below, after considering the evidence and other materials, found that the complainant did not have the financial capacity to pay Rs. 2,00,000/- to the accused. It was also held that it is probable that the accused issued two signed blankcheques as security to PW1, when he borrowed Rs. 25,000/- from her. But, PW1 falsely typed complainant's name and other particulars in the cheque and presented it in the bank. The accused was acquitted of offence under Section 138 of the Act. The trial court also found that this is a false and vexatious case, and issued summons to the complainant to show cause why she should not pay compensation to the accused, invoking Section 250 of the Code of Criminal Procedure (the Code, for short).


6. On a perusal of the records, I find that the definite case of the accused is that he did not issue any cheque in favour of the complainant and he had absolutely no transaction with her. They are not even known to each other. PW1 admitted that the complainant and accused were not known to each other. It was also brought out from PW1's evidence that the accused has some liability towards PW1 and there was some quarrel on account of this from the house of the accused and he was assaulted at his house. PW1 also admitted that a complaint was lodged by the accused before the police alleging that PW1 and her husband trespassed into the accused's house, demanded money and he was assaulted, following a quarrel etc.


7. It was also brought out from PW1's evidence that she had filed two complaints against the accused, alleging offence under Section 138 of the Act. It is also in evidence that one such complaint was filed by PW1 on her own behalf and the other one, in the alleged capacity as power-of-attorney holder of her sister-in-law. PW1 also deposed that complainant is a widow having two children having 20 to 24 years old and that she has no independent source of income. PW1 gave evidence that the complainant's husband was a gold smith who expired as early as in 1982, leaving behind his widow and two children who are still dependent on complainant.


8. It is also brought out from the cross-examination of PW1 that the complainant's husband's sole property was sold as early as in 1982 for Rs. 1,50,000/-, and it was this money that she gave to the accused. According to PW1 the said sale proceeds were kept intact by her, even without depositing it in any Bank. PW1 wants the court to believe that the said amount, was kept by her for fifteen long years, from 1982 till 1997 to be given to the accused. PW1 further deposed that the complainant even sold out her gold ornaments to raise the amount to be given to the accused.


9. It has also come out from the evidence of PW1 that the request for money was made by the accused to the complainant's power of attorney holder and not directly to the complainant. On the immediate next day of the request, the complainant who is residing far away at Nilambur came all the way to Kumaramangalam in another District, carrying the huge amount of Rs. 2 lakhs in cash.


10. All these commendable gestures were shown by complainant to oblige the accused, who is an absolute stranger to her. It is to be borne in mind that the accused did not even make any request to her for money. The complainant did not even take a day's break to hand over the most precious possession of Rs. 2,00,000/- to a stranger like the accused. May be, `truth is stranger than fiction' at times. But, a court while assessing the worth of the evidence or merit of the case, can only go by normal human conduct and natural course of events, which will be digestible to a reasonable man. The court cannot evaluate the evidence on the scale of any fiction or miracle, though it is also likely to occur once in blue moon.


11. Any way, for the purpose of this appeal, I am not going to make any conclusions on facts, at this juncture. I have only narrated the relevant evidence, facts and circumstances which appear to have weighed with the mind of the trial court in acquitting the accused. But, I have to decide some other important questions of law for the disposal of this appeal. But, while doing so, I also find it worthy to bear in mind, the facts which are narrated above.


12. The main contention raised by the appellant in this appeal is that there is a presumption under Section 139 of the Act that the cheque is "issued/executed/drawn" for the discharge of a debt or liability, especially since the cheque is admittedly signed by the accused. Hence the finding of the trial court that the cheque was a blank cheque etc., is not at all justified. In short, it appears from the argument that there is a presumption under section 139 in respect of "issuance" i.e., "execution" of the cheque, especially in cases where the signature in the cheque is admitted by the accused. According to appellant, the concept of issuance of a blank cheque does not arise in a complaint under Section 138 of the Act and such a plea cannot be raised since it can be presumed that a blank cheque is issued with the implied authority to fill up the same, for the discharge of a debt or liability under section 139 of the Act.


13. I cannot accept any of these arguments. Reasons are plenty. In my view, there is no presumption under section 139, that the cheque is "issued", in the sense that it is "executed" by the accused, even if the signature in the cheque is admitted by the accused. There is also 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. On a close reading of the relevant provisions and the precedents (which I would discuss in detail later), I could not come across with any proposition of law being laid down in any of those decisions in the above lines of argument. Section 139 does not permit the court to presume that a cheque, (whether it be a blank one or not), is "executed" for discharge of a debt or liability.


14. To justify the view expressed by me, a detailed consideration of the relevant provision is necessary. Section 139 of the Act reads as follows :


"Section 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."


15. Section 139 of the Act lays down that it shall be presumed, unless the contrary is proved that the holder of the cheque "received" the cheque of the nature stated in section 138 for the discharge of a debt or liability. Even on a plain reading of the provision, it is clear that the section does not provide for a presumption in respect of "issuance/execution" of a cheque. Neither of the expressions, "issued" nor "executed" is used in the section. Both are significantly absent in the provision. The court cannot therefore, introduce into section 139, any expression like "issued" thereby meaning, "executed" which is not there in the provision.


16. The court cannot insert, substitute, add, subtract or squeeze in, any word, term of expression in a provision so as to alter the very nature of the presumption that can be drawn under the provision. The court cannot incorporate any new word into the section, whereby the fact which can be presumed under the provision becomes a totally different one. The court cannot introduce any crucial expression into the provision which will run contrary to the intention of the legislature which is reflected in the language of the provision itself. Any attempt made to substitute the word "received" in section 139, by the expressions such as, "issued" or "executed" to give a wholly different meaning to the provision, in my humble view, may even amount to an assault on the legislation, leading to unintended results. Such precedential legislation is not warranted or recognised by our system.


17. Apart from all these, "issuance/execution/drawing" of the cheque is the most relevant factor to be proved in an offence under section 138. So, unless any provision specifically allows the court to draw a presumption in respect of execution/drawing of a cheque, the court shall not presume one of the ingredients of the offence under the provision. To draw a presumption under section 139 of the Act that the cheque is drawn/executed/issued, those expressions which are wholly alien to the provision will have to be consciously incorporated into the said section. But, such an exercise cannot be approved or legally recognised, since it will result even in exempting the prosecution from proving one of the most vital ingredients of the offence viz., drawing of the cheque by the accused.


18. An accused in any criminal prosecution is ordinarily presumed to be innocent, unless otherwise expressly provided by any statute or law. A prosecution under Section 138 is not an exception to this. No provision in the Act rebuts such presumption of his innocence. Not even, section 139 of the Act. The said provision does not absolve the prosecution from proving its entire case beyond reasonable doubt. Section 139 of the Act only allows the court to presume just one of the ingredients/conditions/factors which is essentially to be proved by the prosecution in an offence under section 138 of the Act. By virtue of section 139 of the Act, all what the prosecution is relieved of is, to prove just one limb of the ingredients/requirements of the offence under Section 138 of the Act, provided the holder of the cheque establishes the basis for drawing, the presumption under section 139 of the Act. But, such limb of the ingredients which can be presumed under section 139 is not the factum or element of "issuance, execution or drawing" of the cheque by the accused.


19. But then, what exactly is the fact which can be presumed under section 139 of the Act ? What specifically is the nature of presumption available under section 139 of the Act ? On a close reading of the section, I find that the only fact which can be presumed under section 139 is the `PURPOSE' for which the cheque is received by the complainant. The court can presume under section 139 of the Act that the purpose for which the cheque is received by the holder is, "for discharge of a debt or liability". But, the court cannot presume that the cheque is "issuanced/executed/drawn" by the accused.


20. Much clamour is often made and heard across the bar that the Supreme Court held that there is a presumption under section 139 of the Act that the cheque is "issued" for the discharge of a debt or liability. Two decisions are oft- quoted on this aspect. Those are in K.N. Beena v. Muniyappan, 2001(4) RCR(Criminal) 545 : (2001)8 SCC 458, and in Hiten P. Dalal v. Bratindranath Banerjee, 2001(3) RCR(Criminal) 460 : ((2001)6 SCC 16). But, in my view, neither of those decisions, the Supreme Court laid down any proposition of law that there is a presumption under Section 139 of the Act in respect of "issuance/execution/drawing" of a cheque. It is held in Beena's case, (referring to Hiten P. Dalal's case) as hereunder :


"Under Section 139 the court has to presume, unless the contrary was proved, that the holder of the cheque received the cheque for discharge, in whole or in part, of a debt or liability. Thus in complaints under Section 138, the court has to presume that the cheque had been issued for a debt or liability. This presumption is rebuttable. However the burden of proving that a cheque had not been issued for a debt or liability is on the accused. This Court in the case of Hiten P. Dalal v. Bratindranath Banerjee has also taken an identical view" (emphasis supplied).


21. The Supreme Court, in Beena's case held that the court has to presume. under Section 139, unless the contrary was proved, that the holder of the cheque "received" the cheque `for discharge, in whole or in part, of a debt or liability'. The Supreme Court also held that in complaints under section 138, the court has to presume that the cheque has been "issued" for a debt or liability. Significantly, both expressions, "received' and "issued" are used therein by the Supreme Court. But, it is clear on reading the entire decision that the Supreme Court was giving emphasis to the expression "discharge of a debt or liability" and not to the word, "received" used in section 139 because both the words "received" and "issued" are seen used simultaneously, in the relevant context. At any rate, it cannot be said that the Supreme Court applying both the expressions "received" and "issued" to mean the same act viz., execution/drawing of the cheque. It cannot be so.


22. The expression "received" is not synonymous with the expression "issued" meaning, "executed". Those carry totally different meanings. Both these expressions connote different acts by different persons and may be, at different places also, in the context of sections 138 and 139 of the Act. The person who "issues" (meaning, "executes") the cheque for the purpose of sections 138 and 139 is the accused/drawer of the cheque whereas, the person who "receives' the cheque is the complainant/holder of the cheque. So also, the act of "issuance" and "receipt" of cheque take place at different point of time. The "issuance" of the cheque by the accused is an act preceding the act of "receipt" by the complainant, after it is "issued" by the accused. Thus, the latter succeeds the former in point of time.


23. Depending upon the facts of each case, even the place at which the cheque is "issued" may vary from the place where the cheque is "received". The cheque could be "issued" by the accused at one particular place and it can be "received' by the complainant at a different place. Thus, the persons involved, the acts involved, the time involved and even the places involved are all different in the case of the two expressions, "received" and "issued". For all the above reasons and more, the expression "received" which is used in section 139 of the Act, in my view, cannot be equated with the expression "issued", meaning executed.


24. In such circumstances, it will be absurd to contend or even imagine that the Supreme Court was introducing the expression "issued" (to mean, `executed') into section 139 of the Act, which is otherwise absent therein. None can be heard to say that the Supreme Court was importing an expression "issued" into the provision so as to enable a court to presume a fact which is not provided by the section. I am most reluctant to hold that the Supreme Court was incorporating a new word into section 139, whereby the court is allowed to draw a presumption on a very crucial fact, viz., execution of the cheque. As long as the word "issued" or "executed" is not used in section 139, I am not, for a moment, prepared to accept any argument that the Supreme Court was declaring a law, which even the legislature did not intend, that too, in respect of a mandatory legal presumption.


25. In my humble view, in the decisions cited above, the Supreme Court was only highlighting the expression, "for the discharge of a debt or liability" in the relevant context to hold that there is a presumption in section 139 of the Act in respect of the purpose for which the cheque is allegedly "received" by the holder. 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 the discharge of a debt or liability. The presumption which the court can draw under section 139 confines only to the expression, "for the discharge of a debt or liability" and not to the factum of issuance, i.e., execution or drawing of the cheque. The court cannot therefore, draw any presumption that a cheque is "issued/executed" by virtue of section 139, even if the accused admits his signature in the cheque. The argument that an alleged blank signed cheque can be presumed to be "executed/issued" for the discharge of a debt etc., by virtue of section 139, under no stretch of imagination be accepted.


26. Learned counsel for appellant would also argue that in the decisions reported in Mohanan v. Bibu Kumar, 2003(4) RCR(Criminal) 6 : (2003(2) KLT 825) and General Auto Sales v. Vijayalakshmi, 2005(2) RCR(Criminal) 97 : (2005(1) KLT 478) it is held that there is a presumption under section 139 of the Act in respect of a blank cheque. If a blank cheque is handed over, the person so handing over a cheque must be presumed to have given implied authority to such person to whom the cheque is handed over to fill up the relevant details, and hence the cheque must be presumed to have been executed by the drawer. It is also argued that in the light of the above rulings, such a presumption under Section 139 is available to all cheques including a cheque which is not in the handwriting of the drawer. Therefore, in an offence under section 138 of the Act, the accused cannot wriggle out of the liability under section 138 of the Act, even if the cheque is filled up later, it is strongly argued.


27. The above arguments often reverberate in the court rooms, not only in this case but, in majority of other cases involving an offence under section 138 of the Act. So, the discussions in this judgment will not be complete, without considering the merit of the above important argument.


28. In Mohanan v. Bibukumar, 2003(2) KLT 825, it is held by a learned single judge of this court as follows :


"Normally, in the absence of compelling reasons, it has to be assumed that the cheque was not a blank cheque when it was handed over. A person so handing over a blank cheque must be assumed to have given implied authority to such person to whom the cheque is handed over to fill up the relevant details......... The presumption under Section 139 of the Negotiable Instruments Act is available to all cheques and not only to cheques in the handwriting of the drawer."


29. In General Auto Sales v. Vijayalakshmi (2005(1) KLT 478) also, it was held :


"even if a blank cheque has been given towards liability is assessed and quantified, if the cheque is filled up and presented to the bank, the person who had drawn the cheque cannot avoid the criminal liability arising out of Section 138 of the N.I. Act."


30. But, on a close reading of both the above decisions, I could not come across with any thing therein to indicate that there is a presumption under Section 139 of the Act in respect of blank cheques, as argued. In neither of those decisions, this court was referring to or dealing with the scope of any presumption under section 139, particularly in reference to a blankcheque. This court has also not referred to either in Mohanan's case or General Auto Sales' case cited above, any provision of the Act or other statute which permits or mandates the court to draw any specific presumption, in respect of a blankcheque, as argued. This court cannot be understood to lay down in either of the decisions referred above, any proposition of law that there is such a legal presumption under section 139 of the Act regarding issuance of blank cheques.


31. In Mohanan's case this court was testing the worth of the materials before court, in the light of section 3 of Evidence Act, as specifically referred to in that judgment itself, and it was not on the basis of any provision relating to a 'presumption of fact' or `presumption of law' under section 139 of the Act, or any other statute, to lay down any proposition of law in respect of any presumption in the case of a blank cheque. This court in the above case, made a reference to section 3 of Evidence Act and held that a fact is said to be proved when, after considering the matters before it, the Court either believes it to exist, or considers its existence so probable that a prudent man ought, under the circumstances of the particular case, to act upon the supposition that it exists. (emphasis supplied)


32. But, it is needless to say that such a belief referred to in section 3 of Evidence Act can be formed only on the basis of materials placed before the court in each case. Section 3 of the Evidence Act comes into operation when the court examines whether a particular fact is proved or not, on the basis of the evidence before the court. But, it cannot be said that in each and every case or in all cases where blank cheques are produced, the court shall presume that a blank cheque is handed over by the drawer with an implied authority to fill it up. All `assumptions' referred to in Mohanan's case, therefore, have to be understood to confine to the facts of that case, but those have no reference to any `presumption in law' which is permitted by any statute or law or more particularly under section 139 of the Act.


33. Of course, there is an observation in Mohanan's case, that "the presumption under Section 139 of the Negotiable Instruments Act is available to all cheques and not only to cheques in the handwriting of the drawer". This proposition of law cannot be doubted for a moment. A close reading of the decision shows that this court only held that the presumption under section 139 of the Act applied to all cheques of the nature stated in section 138 of the Act, whether the cheque is in the handwriting of the drawer or not. If a particular cheque is proved to be of the nature stated in section 138, whether the handwriting in the cheque is of the drawer or not, presumption under section 139 will certainly apply, if the basis for drawing such presumption exists. But, it cannot be further understood to mean that there is a presumption under section 139 of the Act or any other provision in the Act or other statute that a blank cheque is given with an authority whether implied or express etc., to fill up the cheque as long as there is no provision therein allowing any presumption of law or fact to that extent.


34. In fact. Section 139 applies only if it is established that the cheque is of the nature stated to in Section 138 of the Act. Such a cheque must, necessarily be, one which satisfies the definition of "cheque" under section 6 read with section 5 of the Act. It must contain an order in writing to pay to a certain person a certain sum of money only etc. etc., as defined in the Act. There is nothing in section 139 to show that the prosecution is exonerated from proving that the cheque falls within the definition of the cheque under the Act. The cheques produced in all the cases under section 138, ordinarily contain an order in writing. But, that does not mean that the court shall immediately come to a conclusion that such cheques satisfy the definition under the Act.


35. In cases where the accused raises a plea that the cheque was a blank signed one when it was handed over or received by another person, the court will have to scan through the evidence and materials placed before it and decide whether the complainant "proved" that the accused has drawn a cheque of the nature defined under the Act or, whether it was only a signed blank cheque, which does not satisfy the definition of a cheque under the Act, when it was handed over. The former has to be proved by the prosecution, just as in any criminal prosecution whereas, the latter need only be probabilised, as in a defence case. The degree of proof certainly differs.


36. The court must also bear in mind, the legal import of the "presumption in law" and other type of inferences or presumptions which the court may make under section 3 of the Evidence Act. 'Presumptions in law' are of two kinds : i) presumption of law ii) presumption of fact. The former is drawn in cases where the statute uses the words like "shall be presumed" and the other is drawn in cases where it used the words like "may be presumed". The court may, in certain other circumstances also, make certain assumptions, presumptions or inferences, while evaluating the evidence and other materials placed before the court, as against normal human conduct etc. to decide whether a fact is proved or not under section 3 of the Evidence Act.


37. But, such assumptions drawn under section 3 of the Evidence Act cannot strictly be construed as either "factual presumptions" or "legal presumptions". Those presumptions are only inferences which do not get the hue and life of the "presumption in law", which the court "may" or "shall" draw, by virtue of the specific expressions contained in the statute as "may presume" or "shall presume". Any presumptions drawn by the court, in the absence of such specific expressions are not `presumptions in law' but those are only assumptions/presumptions/inferences made on the facts of that case and those will confine only to the facts of that case.


38. In a decision rendered by 3 learned judges of the Supreme Court, in State of Madras v. Vaidynanatha Iyer, 1958 SCR 580, 589, His Lordship, L.J. Kapur, J., held thus :


"It may here be mentioned that the legislature has chosen to use the words "shall presume" and not "may presume", the former a presumption of law and latter of fact. Both these phrases have been defined in the Indian Evidence Act."


39. In M. Narsinga Rao v. State of A.P., 2001(1) RCR(Criminal) 95 : (2001)2 SCC 691, His Lordship, K.T. Thomas, J., speaking for another three-judges Bench held as follows :


"Before proceeding further, we may point out that the expressions "may presume" and "shall presume" are defined in Section 4 of the Evidence Act. The presumptions falling under the former category are compendiously known as "factual presumptions" or "discretionary presumptions" and those falling under the latter as "legal presumptions" or "compulsory presumptions".


40. Later, in two of the decisions of the Supreme Court in T. Shankar Prasad v. State of A.P., 2004(1) RCR(Criminal) 784 : 2004(2) Apex Criminal 384 : (2004)3 SCC 753 and State of A.P. v. V. Vasudeva Rao, 2003(4) RCR(Criminal) 917 : 2004(1) Apex Criminal 648 : (2004)9 SCC 319 also, His Lordship Justice Arajit Pasayat also held thus :


"Before proceeding further, we may point out that the expressions "may presume" and "shall presume" are defined in Section 4 of the Evidence Act. The presumptions falling under the former category are compendiously known as "factual presumptions" or "discretionary presumptions" and those falling under the latter as "legal presumptions" or "compulsory presumptions".


41. In the above circumstances, in my humble view, none of the observations made in either of the decisions in Mohanan's case or General Auto Sales' case can be interpreted as a `presumption of law' or `presumption of fact' or much less, any presumption drawn under section 139 of the Act purportedly, in respect of a blank cheque. The relevant `assumptions' made in Mohanan's case are only inferences made by the court under section 3 of the Evidence Act, for the purpose of that case, on the basis of materials placed before the court.


42. In such circumstances, the observations made in Mohanan's case about blank cheque cannot be applied to the facts of this case, to draw a presumption under Section 139 that the blank cheque allegedly issued in this case was given with an authority to fill up the same etc. This is specially so, since no such allegations are made either in the complaint or in evidence or in any of the materials placed before me, allowing this court to draw such an inference of implied authority etc. In the absence of any specific allegation to that effect, I am not inclined to work on any hypothesis as argued, since those surmises do not gain support from the records, except by the colourful fancies of learned counsel for the appellant.


43. Now I shall revert hack to another important question of law which deserves serious consideration, on the facts and circumstances of this case. The question is, under what circumstances, the court shall draw a presumption under section 139 of the Act ? What are the pre-requisites to be established before a court draws the presumption under section 139 of the Act ?


44. Before proceeding with the above task, I shall profitably bear in mind that the presumption which the court is bound to draw only under specified circumstances. In view of the mandatory nature of the provision, a court must be extremely careful in drawing such presumption. The court must, at least be aware of the circumstances under which such presumption be drawn, before drawing the presumption under section 139 of the Act.


45. A reading of section 139 of the Act shows that a presumption in respect of a debt or liability can be drawn, if the following facts are established viz., i) that the person in whose favour the presumption is drawn is the holder of the cheque ii) that the cheque is of the nature stated in section 138 of the Act iii) that such cheques is "received" by the holder. Only if the above three conditions are satisfied, the court can draw a presumption under section 139 of the Act. But then, on whom does the burden lie to establish the above facts ?


46. The presumption under section 139 of the Act, as revealed from the title to section itself, is in favour of the "holder" of the cheque. Such presumption is drawn against an accused who, as in any other criminal prosecution, is presumed to be innocent. So, if the holder has to avail of the benefit of the presumption under section 139 of the Act, the burden is on him to establish all the pre-requisites for drawing such presumption. Only if the holder establishes the basis for raising a presumption under section 139 of the Act, the court shall draw such presumption. But, once the basis of presumption exists, the court is left with no other option than to draw such presumption under section 139 of the Act.


47. It is so held by the Supreme Court in Hiten P. Dalal's case cited above thus :


"In other words, provided the fact required to form the basis of a presumption of law exists, no discretion is left with the court to draw the statutory conclusion."


(emphasis supplied)


48. So, a court shall draw the presumption under section 139 of the Act, only if all the requirements for drawing the presumption under section 139 of the Act are established by the `holder' of the cheque. Such pre-requisites under section 139 are, i) that the person in whose favour the presumption is drawn is the holder of the cheque ii) that the cheque is of the nature stated in section 138 of the Act iii) that such cheque is `received' by the holder.


49. In a case where the pre-requisites under section 139 of the Act are not established or the basis for drawing the presumption does not exist, the court shall not presume that the cheque was drawn for the purpose of discharging a debt or liability under section 139 of the Act. In such a case, the prosecution has to independently prove all ingredients of section 138 including the alleged purpose for which the cheque is drawn i.e., it is for the discharge of a debt or liability. It also follows in such cases that no burden is cast on the accused to rebut any presumption under section 139, since no presumption arises at all. The accused cannot then be called upon to prove that the cheque was not drawn for the discharge of a debt or liability. The burden will be entirely upon the complainant to prove all ingredients of section 138 of the Act.


50. I have already held that one of the requirements for drawing the presumption under section 139 of the Act is that the cheque is "received" by the holder. The cheque can reach the hands of a person in many ways. It can be, as handed over by the drawer, for the discharge of a debt or liability. It could be as a finder of a lost or misplaced cheque. It could be as taken away by force. It could be by committing theft. It could have been procured by the alleged holder in a number of ways. But, for drawing a presumption under section 139 of the Act, the court must be satisfied that the holder of the cheque "received" the cheque by entitlement and that he did not procure it by any other means.


51. Before drawing presumption under section 139, the court must be satisfied that the person who seeks the benefit of the presumption in section 139 is the "holder" as defined under section 8 of the Act. That is, such person is entitled in his own name to the possession of the cheque and also to receive the amount due from the parties thereto. It must be established that such a person is in possession of same by way of entitlement. So, there must be evidence at least for the fact that he "received" the cheque as of right and did not obtain it by any other mode the court is satisfied that he is the "holder" of the cheque of the nature stated in section 138 and that he "received" the same, the court can safely draw the presumption under section 139 of the Act.


52. But, on the facts of this case, there is no evidence to show that the holder/complainant "received" the cheque. The receipt of cheque by the complainant is a very crucial factor in the peculiar facts and circumstances of this case. The accused has a definite case that a blank signed cheque was handed over to PW1 (the power-of-attorney-holder), in connection with another transaction which is misused by her to file the present complaint. But, he does not even know the complainant and he did not also give the cheque Exhibit P2 to her.


53. In such circumstances, the court must be satisfied that the complainant "received" Exhibit P2 cheque. But curiously, there is absolutely no material on record to show that the complainant received the cheque. The complaint is manifestly silent on this aspect. It is only stated in the complaint that the cheque was "issued" from PW1's house. But, there is no averment that the cheque was given to or received by the complainant or even by PW1. There is also no evidence to prove this crucial fact. While PW1 was examined in court, she did not state that the cheque was given to the complainant or that it was received by the complainant.


54. PW1 is the only person examined to prove the alleged transaction. But, she has no case that the cheque was received by the complainant. She did not say that she had seen the accused handing over the cheque to the complainant. No other person is examined to prove the relevant fact. The complainant did not mount the box. She did not even appear in court or give evidence. She is the best person to speak about the relevant fact. But, the complainant is held back without any explanation, despite all the allegations made against PW1 that she has forged the signed blank cheque given to her in connection with another transaction etc., to foist a false case against the accused. In the absence of the complainant, at least, some other person who could give direct evidence on the crucial fact ought to have been examined. That was also not done.


55. In the above circumstances, there is total lack of evidence to establish that the cheque is "received" by the complainant and hence the complainant failed to establish one of the pre-requisites for drawing a presumption under section 139 of the Act. She could not establish that she is the holder of the cheque as defined under section 8 of the Act. Therefore, the basis for drawing presumption does not exist in this case and hence no presumption arises in this case under section 139. The prosecution has also failed to establish that the cheque was drawn for the discharge of any debt or liability towards the complainant.


56. In the above circumstances, the accused cannot be called upon to prove that the cheque was not drawn for the purpose of discharging any debt or liability, as argued. The evidence, facts and circumstances which I have discussed in detail towards the beginning of this judgment reveal that the prosecution failed to prove that the accused committed the offence under section 138 of the Act. The trial court rightly acquitted the accused, even though it was on some other grounds.


On the facts of this case, I also do not find any reason to interfere with the order passed by the trial court for proceeding under Section 250 of the Code.


This appeal is dismissed.


Appeal dismissed.


 


Anil Agrawal (Retired)     18 March 2009

 I request my friends to read this judgement also about blank cheques:



 [in the andhra pradesh high court]


AVON ORGANICS LTD.


v. POINEER PRODUCTS LTD. AND OTHERS


 


ch. S. R. K. prasad J. July 4, 2003.


 


offences and prosecution—cheque—dishonour—cheque issued blank without mentioning amount for which it is drawn — not a valid cheque—application of section 138—does not arise even though issued for legally enforceable debt —blank signed cheque delivered to creditor to be used in case of default in pay­ment—creditor filling in date, name of payee and amount and presenting cheque —not a valid consent —negotiable instruments act, 1881, ss. 4/5. 7, 138, 139


cheque--bill of exchange—ingredients.


 


There is a difference between issuing of post-dated cheques and cheques without putting the date. If the cheque is not drawn for a specified amount it does not fall under the definition of a bill of exchange. The cheque is a kind of bill of exchange, which means the amount payable must be mentioned in the cheque. Otherwise, it cannot be called a cheque within the meaning of section 5 and section 7 of the Negotiable Instruments Act, 1881. The person who accepts a blank cheque takes it along with the risks to be faced under law. It is not open to him to complain subsequently when the amount has not been realised. The presumption under section 138 of the Act can be drawn in a case of issuance of blank cheque which is not denied by the drawer even though it was asserted by him that it was not issued with any dishonest intention. Whenever blank cheques are filled up and presented, a presumption can be drawn under section 139 of the Act. It is a rebuttable presumption. The respondent issued a blank cheque in favour of the appellant without mentioning the date and the amount therein, and sent it along with a letter dated August 7, 1997, stating that it could be presented after one month for payment, if he failed to pay the amount prior to September 7, 1997. He also requested fifteen days' time on August 22, 1997. Thereafter, after filling in the amount as Rs. 11, 19,206 and date as September 22, 1997, the appellant presented the cheque but it was dishonoured. After issuing notice the appel­lant invoked the provisions of section 138 of the Act. However, the trial court acquitted the accused. On appeal contending that the blank cheque was issued for a legally enforceable debt:


 


Held, dismissing the appeal, that the cheque had to be issued for the legally enforceable debt or for other liability. A blank cheque could not be enforced even though it was issued for a legal liability. What was stated in the letter sent by the respondent to the appellant was that the appellant could present the cheque after one month. In another letter he requested for further time of


fifteen days. These aspects could not amount to consent to putting the amount in the blank column and also the date. The letters did not make a spe­cific mention that the appellant could put the amount therein and draw the sum. At the time of issuing the cheque, the amount payable under the cheque was not mentioned. Consent was not given for the amount which was being drawn. The act of the appellant infilling up the amount portion in words and figures and the date as per his own choice was a material alteration. It could not be done without the consent of the party who issued the cheque. When it did not constitute a cheque and the same was filled up and presented to the bank, it could not be said that the respondent had committed an offence.


 


 Therefore, the question of invoking section 138 did not arise.


taher N. khambat v. vinayak enterprises [1995] Crl. LJ 560 ; [1996] 86 Comp Cas 471 (AP) followed.


 


kusum ingots and alloys ltd. v. pennar peterson securities ltd. [2000] 100 Comp Cas 755 ; AIR 2000 SC 954 relied on.


 


P.   srinivasulu  v.  nagaral   eraiah   shetty  alias  N.   chinna eranna setty and Sons [1994] 2 An WR 225 and ashok yeshwant badave v. surendra madhavrao nighojakar [2001] 105 Comp Cas 167 ; AIR 2001 SC 1315 referred to. Criminal Appeal No. 181 of 1999.


 


Ramesh Babu for the appellant.


 


K. Vijayender Reddy for respondents Nos. 1 and 2. Public Prosecutor for respondent No. 3.


 


JUDGMENT


ch. S. R. K. prasad J.— This criminal appeal is directed against the judg­ment in C. C. No. 858 of 1997 rendered by the 15th Metropolitan Magistrate, Hyderabad, in acquitting the accused for the offence under section 138 read with sections 141 and 142 of the Negotiable Instruments Act, 1881 (for short the "Act").


 


The facts that arise for consideration can be briefly stated as follows : The accused issued a blank cheque without mentioning the date and the amount to the appellant herein and sent it along with a letter dated August 7, 1997, stating that it could be presented after one month for payment, if he failed to pay the amount prior to September 7, 1997. He also requested fifteen days’ time on August 22, 1997. Thereafter, the cheque was presented after filling up the blanks found at the amount portion and the date and it was presented through the ICICI Banking Corporation after putting the amount as Rs. 11,19,206 and date as September 22,1997. As can be seen from exhibit P8, it was dishonoured. Thereupon, exhibit P10 notice was issued on October 3, 1997. The accused received the said notice on October 7, 1997. Exhibit P12 is the postal acknowledgment. The appellant invoked the provisions of section 138 of the Act by presenting the complaint for dishonouring of cheque and it was taken on file. The accused pleaded not guilty. Thereupon, the trial was conducted. The appellant alone was examined as PW1 and the dishonoured cheque was exhibit P7. Exhibit P8 is the cheque return memo dated September 25, 1997. Exhibit P9 is the cheque return intimation dated September 26, 1997. Exhibit P10 is the office copy of the notice. Exhibit PI is the certificate of incor­poration. Exhibit P2 is the certificate extract of the minutes of board of direc­tors dated November 5, 1997. Exhibits P3 and P5 are the delivery challan invoices. Exhibit P4 is the copy of consignment note. The learned Metro­politan Magistrate recorded a finding of not guilty and acquitted the accused. Thereupon, the appellant preferred this criminal appeal.


 


This appeal is presented against the acquittal order. This court can interfere only when it is shown that the judgment is perverse and there is no proper appraisal of the evidence, which led to miscarriage of justice. The powers vested in the appellate court have been adumbrated under section 386 of the Criminal Procedure Code, 1973. It is to be seen whether there is any perversity E in the judgment of the lower court.


 


The contention of learned counsel for the appellant is that the blank cheque was issued for a legally enforceable debt. It is necessary to have a look at sec­tion 138 of the Act, which reads as follows :


 


"138. Dishonour of cheque for insufficiency, etc., of funds in the accounts.—     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    g that it exceeds the amount arranged to be paid from that account by an agree­ment made with that bank, such person should 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 extend to one year, 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, to the drawer of the cheque, within fifteen 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."


 


It is clear that the cheque has to be issued for a legally enforceable debt or for other liability. In order to invoke section 138 of the Act it is also necessary to note whether a blank cheque issued can be called as a cheque within the meaning of section 6 of the Act. A cheque is defined under section 6 of the Negotiable Instruments Act as under :


 


"A 'cheque' is a bill of exchange drawn on a specified banker and not expressed to be payable otherwise than on demand."


 


As per section 5 of the Negotiable Instruments Act, 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. It is clear that a bill of exchange should contain in writing directing a certain person to pay a certain sum of money to the order of a certain person or to the bearer of the instrument. If a blank cheque is drawn and handed over to the party, will it come under the definition of section 5 of the Act ? Issuing of post-dated cheque and cheques without putting the dates is different. If the cheque is not drawn for a specified amount, it does not fall under the definition of bill of exchange. It cannot be called a cheque within the meaning of sections 5 and 6 of the Act. Section 138 contemplates drawing of cheque 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. If the said cheque is returned by the bank unpaid, either because the amount of money standing to the credit of that account is insufficient to honour the cheque or 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 provision of this Act, be punished with impri­sonment for a term which may extend to one year, or with fine which may extend to twice the amount of the cheque or with both. The accused has taken the plea of material alteration in this case. Section 87 of the Act reads as under :


 


"Effect of material alteration. —Any material alternation 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."


 


PW1 has produced two letters exhibits P15 and F16 written by the accused. The cheque was sent along with exhibit P15. The appellant was also produced exhibits P4 and P6 which showed the consignment. I have perused the letters written by the accused. What is stated in the exhibit P15 letter is that he can present the cheque after one month. In exhibit P16 he requested for further time of 15 days. These aspects cannot amount to give consent to put the amount in the blank column and also the date. The Supreme Court in Kusum Ingots and Alloys Ltd. v. Pennar Peterson Securities Ltd. [2000] 100 Comp Cas 755 ; AIR 2000 SC 954, laid down the ingredients that have to be satisfied for making out a case under section 138 of the Act. It is clear from the first ingre­dient mentioned a person must draw a cheque on the account maintained by him in a bank for payment of certain amount of money. Hence, it is clear from the principles laid down by the Supreme Court that the amount for which the cheque was drawn must be for a certain amount of money. If a person delivers the cheque without putting the actual amount payable, does it constitute a cheque within the meaning of sections 5 and 6 of the Act ? I have already stated a bill of exchange contemplates mentioning of certain amount as pay­able. 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 amounted to alteration of the cheque, which is not permissible. The letters do not make 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 putting 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. It is stated in P. Srinivasulu v. Nagaral Eraiah Shetty alias N. Chinna Eranna Setty and Sons [1994] 2 An WR 225 that a presumption under section 138 of the Act can be drawn in case where issuance of blank cheque which is not denied by the accused even though it was asserted by him that it was not issued with any dishonest intention. It is further stated in the said decision at para. 3, which reads as follows :


 


"The lower court found that exhibit P1 does not contain the ingre­dients of a valid cheque so as to attract the provisions of section 139 of the Negotiable Instruments Act. In a case where a blank cheque has been issued, the issuance of which is not denied by the accused, even though it was asserted by him that it was not issued with any dishonest inten­tion, the presumption under section 139 of the Act can be drawn. The presumption under section 139 is a rebuttable presumption, and the               accused admitted the same and has not cross-examined the prosecution witnesses. Mere filling up of the figures in the cheque by the complain­ant will not be a ground for invalidating the cheque and preventing the party from taking steps under section 138 inserted by the Negotiable Instruments Laws (Amendment) Act, 1938, on the ground of insuffi­ciency of funds. This court has held that endorsement will not be a ground for throwing away the case under section 138. The Supreme Court has considered the issue regarding post-dated cheques in Ashok Yeshwant Badave v. Surendra Madhavrao Nighojakar [2001] 105 Comp Gas 167 ; AIR 2001 SC 1315. The relevant portion at para. 17 reads as follows (page 175) :


 


"From a bare perusal of sections 5 and 6 of the Act it would appear that a bill of exchange is a negotiable instrument in writing containing an instruction to a third party to pay a stated sum of money at a desig­nated future date or on demand. On the other hand, a 'cheque' is a bill of exchange drawn on a bank by the holder of an account payable on demand. Under section 6 of the Act, a 'cheque' is also a bill of exchange, but it is drawn on a banker and payable on demand. A bill of exchange even though drawn on a banker, if it is not payable on demand, it is not a cheque. A post-dated cheque is not payable till the date which is shown thereon arrives and will become a cheque on the said date and prior to that date the same remains a bill of exchange."


 


It is categorically stated that post-dated cheque is not payable till the date, which is shown thereon, arrives and will become cheque on the said date and prior to that date the same remains bill of exchange. That was a case dealt with in respect of post-dated cheque etc. This court in Taher N. Khambat v. c Vinayak Enterprises [1995] Crl. LJ 560 ; [1996] 86 Comp Cas 471 (AP) held in para. 10 as follows (page 476) :


 


"Section 138 of the Act is introduced with a view to avoid the malig­nant trade practice of indiscriminately issuing cheques without suffi­cient funds. The amendment is introduced with a view to curb instances of issuing such cheques indiscriminately. So, having regard to the pur­pose with which this provision is introduced, it is doubtful whether a case of this nature can be construed as attracting the provisions of sec­tion 138 of the Act. In the instant case, the appellant advanced some money to the respondents and obtained a pronote. It was stipulated that the respondents should pay interest every month. At the same time the appellant-creditor took a blank signed cheque from the respondents with the understanding that the complainant could fill the other columns in the cheque and present it if the respondents committed default in payment of interest. The respondents paid interest for about eight months and, thereafter, stopped payment of interest. Then the appellant put the date on January 15, 1991, wrote his own name in the space intended for the payee and also mentioned the amount as Rs. 1,18,337 and presented the cheque. Even at the time when he pre­sented the cheque, he would not have expected that the cheque would be honoured. He was presenting the cheque only with a view to get an endorsement which would enable him to proceed under section 138 of the Act. If this sort of practice is allowed, every creditor would abuse the provisions of section 138 of the Act by obtaining blank cheques and putting the debtors in fear of prosecution insist on discharge of the debts at any time. I do not think that would have been the intention of the Legislature while incorporating section 138 in the Negotiable Instru­ments Act. Though the appellant did not state the circumstances under which he obtained the pronote and the cheque in his complaint yet it is clear from the evidence the circumstances under which the complainant obtained a signed blank cheque from the respondent. So, the appellant has obtained this blank signed cheque with a view to make use of it, as a threat to the respondents for realisation of the amount. So, it cannot be construed that the respondent had issued the cheque voluntarily for dis­charge of any debt or legal liability as envisaged under section 138. I, therefore, find that the facts and circumstances of the case are not attracted by the provisions of section 138 of the Act and that the learned magistrate was justified in acquitting the accused. Hence, the criminal appeal is dismissed."


 


Whenever blank cheques are filled up and presented, a presumption can be drawn under section 139 of the Act. It is a rebuttable presumption. The ques­tion is whether the accused is able to rebut the presumption. I am of the consi­dered view that he has rebutted the presumption in this case as he has not  given consent to fill up the cheque for a particular amount in figures and words and the date portion. It constitutes alteration of the cheque. It cannot be done without the consent of the party who issued the cheque. I also state that it was issued for the legally enforceable liability, namely, towards the amount due under the invoices. But the instrument issued without mentioning the figures and words and date portion in the cheque do not amount a cheque or a bill of exchange at the time of its issuing. Subsequently, it can be altered only with the consent of the party, who has issued the cheque. Otherwise, it amounts to material alteration. When it does not constitute a cheque and the same is filled up and presented to the bank, it cannot be said that the accused has committed an offence. No doubt, morally the accused is not justified in issuing the cheque, when he is not having sufficient funds in the bank. But, the legality has to be judged in this case. The person who accepts the blank cheque certainly has to take it along with the risks to be faced under law. It is not open to him to complain subsequently when the amount has not been realised, etc. 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 lacuna 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 lacuna found. The lower court has elaborately discussed and ultimately come to the conclusion that the complainant failed to establish the relevant ingredients that are to be established under section 138 of the Act. The relevant ingredients that have to be established have already been men­tioned by the Supreme Court in the decision in Kusum Ingots and Alloys Ltd. v. Pennar Peterson Securities Ltd. [2000] 100 Comp Cas 755 ; AIR 2000 SC 954. If the facts are judged, I am of the considered view that the learned magistrate has rightly come to the conclusion that the ingredients under section 138 of the Act are not established. In that view of the matter, there is no perversity in the judgment under appeal. The judgment rendered by the learned magistrate in C. C. No. 858 of 1997 is liable to be confirmed and it is, accordingly, con­firmed.


 


The criminal appeal is, accordingly, dismissed.


 


 


 


Pankaj Rai (Lawyer)     18 March 2009

Dear Anil Agarwal ji, Kindly sugest An Advocate who is practising in Bangalore Distt.court ,deals cases 138N.I.Act only ,with Mob. No.

K.C.Suresh (Advocate)     19 March 2009

Thank you very much to all who supplied this valuble information to LCI fraternity.

c s pardeshi   18 October 2015

I have been acquitted in a cheque bouncing case as the complainant can not prove liability. He appealed in high court. Now during scrutiny we found following additional  points in our case
1) the account no in the  notice was 1155 but in official court  complaint it is 11155
2) the original power of attorney was not submitted to court at the time of filing of case by the power of attorney holder
3) the power of attorney do not have signature of power of attorney holder.

can we raise these points in high court and ask for dismissal of application for submission of case at initial stage.
C.S.Pardeshi

YOGESHWAR. (ADVOCATE HIGH COURT-criminal /civil -youract@gmail.com)     19 October 2015

मे हू एक वकील शब्दो का हे खेल मेरा 

साहूकार की भाषा मे जो हे गुनहगार , चेक देकर पैसे नही चुका पाते उनके हर केस जीतने की हे हिस्टरी मेरी. 

 

स्ट्रॉंग क़ानून हथियार अनेक परंतु मेरे पास ग़लतिया कॅप्चर करने के लिए गडरिए की गुलेल एक . 

 

बहुत दाव पेच के भरोसे बुद्दी हो जाती हे सुस्त. इस सुस्ती मे होती हे ग़लतिया . मे सर्च करता हू एक मिलती हे अनेक. 

 

ग़लती पर मेरी क़ानूनी गुलेल चलती हे अचूक . बात सीधी साफ होती हे सामनेवाले को जबाब सुज़ता नही माननी होती हे शिकस्त . 

 

यह हे तुम्हारी कामयाबी का भी राज . सक्सेस्स का फ़ॉर्मूला . जान ले पहचान ले सिख ले  

 


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