Precisely enough, following legal position emerges from the rulings cited by the respective counsel :
(1) It is open to a person to sign and deliver a blank or incomplete cheque and is equally open for the holder to fill up blanks and specify the amount therein. This does not amount to any alteration in the cheque if the cheque was not initially signed and issued for any different specified sum which was changed. When a drawer of a cheque delivers a signed cheque, he gives an implied authority to the holder to put a date of his choice.
(2) Liability of the guarantor is co-extensive with the borrower and if the cheque issued by a guarantor is bounced, proceeding under
Section 138 of the Negotiable Instruments Act vis-a-vis a guarantor is maintainable.
(3) If the cheque is handed over representing that at the eventuality of failure to repay loan within the stipulated period it could be encashed, it cannot be said that the cheque was issued representing security and not liability.
(4) Presumption mandated by Section 139 of Negotiable Instruments Act includes a presumption that there exists a legally enforceable debt or liability. However, such presumption is rebuttable in nature. When an accused has to rebut the presumption under Section 139, the standard of proof for doing so is that of "preponderance of probabilities". Therefore, if the accused is able to raise a probable defence which creates doubts about the existence of a legally enforceable debt or liability, the prosecution can fail.
(5) Silence on the part of the accused in not replying to the statutory notice is a strong circumstance which may reflect the falsity of the case of the accused.
(6) If all presentations of cheque were within validity period of six months, condition precedent as stipulated in proviso clause (a) of Section 138 of the Act is satisfied. There is no prohibition on the number of times the cheque is presented within six months.
(7) If there is dishonour of a cheque issued by way of security and 8
not issued towards discharge of legally enforceable debt or other liability, such dishonour would not come within the purview of Section 138 of the Act.
(8) As far as appeal against acquittal under Section 138 of the Act is concerned, Appellate Court examining the findings of a trial Court, should indeed be slow to disturb a finding of fact though it may be necessary for an appellate court to find out as to what facts are established and whether on the basis of such facts, any presumption gets attracted or rebutted in order to draw appropriate inferences in the facts and circumstances of given case.
Bombay High Court
Nagpur Bench : Nagpur vs Deshmukh, Resident Of ... on 6 July, 2012
Bench: A.P. Bhangale
1. This appeal is directed against the acquittal of respondents by the Judicial Magistrate, FC (Special Judge under Section 138 of the Negotiable Instruments Act) for an offence punishable under Section 138 of the Negotiable Instruments Act (for short, the "Act") vide judgment & order dated 22nd December 2008 rendered in Criminal Complaint Case No. 4872 of 2005.
2. The facts are as under.
Appellant-The Maharashtra State Seeds Corporation is a Company registered under the Companies Act, 1956 while respondent no. 1 is Chairman of Kuhi Taluka Shetki Kharedi Vikri Sahakari Sanstha and respondent no. 2 is the Manager of said Sanstha. Parties hereinafter shall be referred to as per their original status in the complaint. There were business transactions between the parties and according to the complainant as on 31.8.2004 an amount of Rs. 4,91,445/- stood outstanding against the accused and for payment of dues, they issued cheque bearing no. 110467 dated 17.11.2004 drawn on Nagpur District Central Cooperative Bank Limited, Nagpur for Rs. 4,91,445/-. Complainant presented the said cheque for realisation with its bankers viz. Bank of Maharashtra, Hanuman Nagar Branch, Nagpur. However, the cheque was returned dishonoured by the bankers of accused owing to 3
insufficiency of funds in the account of accused. Complainant issued notice dated 1.12.2004 calling upon the accused to pay the amount of cheque within fifteen days from the receipt thereof. Accused received notice on 13.12.2004. However, they failed to make payment within the stipulated period and, therefore, complainant filed complaint under Section 138 of the Act against the accused on 28.12.2004 before the Special Court. Verification Statement on behalf of complainant was recorded on 22.2.2005 and on 20.9.2005, learned Special Judge issued process under Section 138 of the Act against the accused. On 20.9.2005, complainant had filed application for permission to lead secondary evidence which came to be allowed by the learned Special Judge. A detailed reference of this event would be made in the later part of this judgment.
3. In response to the notice, respondents appeared. Particulars of the offence were explained to them and accused pleaded not guilty and claimed to be tried.
4. Complainant examined its Manager Sanjay Raut and two employees of the Banks, one from the Bank of Maharashtra and the other from the Nagpur District Central Cooperative Bank. Statements of accused were recorded under Section 313 Cr. P. C. Their defence was that cheque in question did not bear their signature and a false case was filed against 4
them.
5. Learned Special Judge, on the basis of oral and documentary evidence adduced on record and after hearing the parties, dismissed the complaint and acquitted the accused of the offence punishable under Section 138 of the Act.
6. I have heard learned counsel for the respective parties. Learned counsel for the complainant strenuously argued that defence of the accused was that they did not sign the cheque and cheque was given for security purpose. He submits that since the trial Court has not accepted the defence of the accused and inferred their signature on the cheque in question. Hence, accused ought to have been convicted for an offence punishable under Section 138 of the Act. He contends that impugned judgment & order deserves to be set aside and appeal deserves to be allowed.
7. Learned counsel for the accused supported the impugned judgment and order of acquittal. He submits that Manager of complainant Seeds Corporation admitted the circular dated 3.5.2003 issued by its District In-charge and reply given thereto by the accused and those documents were exhibited during the course of his cross-examination at exhibits 52 and 53. According to him, since there is documentary proof to 5
hold that the cheque in question was issued by way of security, learned Special Judge has rightly dismissed the complaint. He further submits that merely because in their statement recorded under Section 313 Cr. P C. .
accused did not take defence, in express words, that cheque was issued by way of security, the Court can very well consider the defence of accused as disclosed from the cross-examination and that they had denied the case as false and also denied their signature on the cheque. He submits that appeal is liable to be dismissed.
8. Learned counsel for the appellant has placed reliance on the following case laws in support of his submissions : (1) 2007 (1) Mh.L.J. 210
Purushottam Gandhi v. Manohar Deshmukh & anr
(2) (2002) 6 SCC 426
ICDS Ltd v. Beena & anr
(3) 2005 (2) Crimes 47
M. A. Mohana Pai v. V. A. Jabbar & anr
(4) 2007 Cri. L.J. 2643
K. P. Rathikumar v. N. K. Santhamma & anr
(5) (2010) 11 SCC 441
Rangappa v. Sri Mohan
(6) 2008 (1) Mh.L.J. 505\
Hemant Pavel v. Socorro Santan
(7) 2010 (2) Bom. C. R. (Cri) 822
Nitin Mankar v. Vyankatesh Housing & anr
(8) 2010 (5) Mh. L.J. 129
6
Matoshri Cashew Nuts v. Mohammad Kadar
(9) (2009) 1 SCC (Cri) 558
S.L. Constructions & anr v. Alapati Rao & anr
(10) (2009) 1 SCC (Cri) 823
Kumar Exports v. Sharma Carpets
while learned counsel for the respondents pressed into service the following case laws :
(1) AIR 2008 SC 166
Hariom Agrawal v. Prakash Chand Malviya
(2) 2011 Cri.L.J. 531
Joseph Vilangadan v. Phenomenal Health & anr
(3) 2006 (5) Mh.L.J. 676
M. S. Narayana Menon v. State of Kerala & anr
9. Precisely enough, following legal position emerges from the rulings cited by the respective counsel :
(1) It is open to a person to sign and deliver a blank or incomplete cheque and is equally open for the holder to fill up blanks and specify the amount therein. This does not amount to any alteration in the cheque if the cheque was not initially signed and issued for any different specified sum which was changed. When a drawer of a cheque delivers a signed cheque, he gives an implied authority to the holder to put a date of his choice.
(2) Liability of the guarantor is co-extensive with the borrower and if the cheque issued by a guarantor is bounced, proceeding under 7
Section 138 of the Negotiable Instruments Act vis-a-vis a guarantor is maintainable.
(3) If the cheque is handed over representing that at the eventuality of failure to repay loan within the stipulated period it could be encashed, it cannot be said that the cheque was issued representing security and not liability.
(4) Presumption mandated by Section 139 of Negotiable Instruments Act includes a presumption that there exists a legally enforceable debt or liability. However, such presumption is rebuttable in nature. When an accused has to rebut the presumption under Section 139, the standard of proof for doing so is that of "preponderance of probabilities". Therefore, if the accused is able to raise a probable defence which creates doubts about the existence of a legally enforceable debt or liability, the prosecution can fail.
(5) Silence on the part of the accused in not replying to the statutory notice is a strong circumstance which may reflect the falsity of the case of the accused.
(6) If all presentations of cheque were within validity period of six months, condition precedent as stipulated in proviso clause (a) of Section 138 of the Act is satisfied. There is no prohibition on the number of times the cheque is presented within six months.
(7) If there is dishonour of a cheque issued by way of security and 8
not issued towards discharge of legally enforceable debt or other liability, such dishonour would not come within the purview of Section 138 of the Act.
(8) As far as appeal against acquittal under Section 138 of the Act is concerned, Appellate Court examining the findings of a trial Court, should indeed be slow to disturb a finding of fact though it may be necessary for an appellate court to find out as to what facts are established and whether on the basis of such facts, any presumption gets attracted or rebutted in order to draw appropriate inferences in the facts and circumstances of given case.
10. Coming back to the facts of present case, relevant part of the Circular dated 3.5.2012 issued by the District In-charge of complainant Corporation reads thus :
"...... In some cases, dispute for the payment arised and it gets very difficult for us to recover the amount in such cases. For overcoming from such situation, Mahabeej management had decided to have bank guarantee and two blank cheques in favour of M. S. S. C. Ltd., Nagpur from all dealers as security against seed supply.
Hence it is decided to have bank guarantee of Rs. 1 lac from dealers whose turnover is above 10 lacs and bank guarantee of Rs. 50 thousand from dealers whose turnover is below 10 lacs. So please cooperate us in this regards and 9
submit bank guarantee and two blank cheques to our District office before 20th May 2003.
Early and positive action in this regard is highly solicited."
Copy of circular dated 3rd May 2003 was marked to the accused no. 2. It is thus obvious that two blank cheques for the purpose of security along with bank guarantee were demanded by complainant Corporation. In response to the said circular, accused issued reply dated 20.4.2003 and along with the reply accused issued two cheques bearing nos. 110466 and 110467. Accused regretted their inability to furnish bank guarantee since they were not permitted to do so. Cheque used in this case is bearing number 110467. It has been held by the Apex Court in M. S. Narayana Menon v. State of Kerala & anr (supra) that If there is dishonour of a cheque issued by way of security and not issued towards discharge of legally enforceable debt or other liability, such dishonour would not come within the purview of Section 138 of the Act. Complaint of the complainant Corporation fails on this count alone.
11. On 20.9.2005 when the process was issued against the accused, complainant had made an application for permission to lead secondary evidence. Though the application is not happily worded, complainant wanted to state that original cheque was misplaced on the 10
way to office from court and that police report had been lodged as also an affidavit was sworn in to that effect. Said application was not supported by affidavit and it was signed by the counsel for complainant. Learned Special Judge very surprisingly allowed the application to lead secondary evidence by a single-word order "Granted". The secondary evidence can be permitted to be adduced only after non-production of primary evidence is satisfactorily accounted for. Secondary evidence may be given of the existence, condition or contents of a document, inter-alia, when the original has been destroyed or lost. It is settled position of law as pronounced by the Apex Court in State of Rajasthan v. Khemraj reported in AIR 2000 SC 1759 that application for the production of secondary evidence must give full details and must be supported by a proper affidavit. In the present case, application preferred by the complainant Corporation, purportedly under Section 65 of the Evidence Act, was not supported by affidavit; it did not give full particulars and was under the signature of a counsel appearing for complainant. Moreover, when learned Special Judge issued process against accused on the same day when the application was filed i.e. on 20.9.2005, he could have waited for appearance of the accused in order to afford them an opportunity to give say or contest the application instead of allowing the same hastily or ex- parte on the very day when the application was moved. Learned counsel for the complainant cannot be heard to say that since the accused did not 11
object the complainant leading secondary evidence, a clear-cut inference can be drawn that they had no objection for the complainant to do so. Merely because there was no objection raised by the accused in black and white, does not mean that the Court should have lost sight of the elementary principle of natural justice. The Court has to adhere to and give due observance to the principles of law of evidence, fairplay and justice. Be that as it may, the ultimate view taken by the trial Court is found proper in the facts and circumstances of the case and needs no interference.
12. In the result, appeal fails and is accordingly dismissed. A. P. BHANGALE, J
joshi
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