crossed cheque to the bank asking the bank to deduct money
from his account into bank’s own account for the purpose of
buying banking products like drafts, pay orders, fixed deposit
receipts or for depositing money into other accounts held by
him like recurring deposits and loan accounts.
In the present case, the drawee is bank as the cheques were
drawn by mentioning ‘Yourself’. As per clause (b) to proviso of Section 138
of the Act, the demand for the payment or dishonour of cheque was to be
made either by payee or the ‘holder in due course’ of the cheque. As per
submissions made by learned counsel for the petitioner, complainant respondent
No.1 was neither the payee nor the 'holder in due course' of the
cheques in dispute as the cheques were not issued in favour of the
complainant. It is also the argument of learned counsel for the petitioner
that the provisions of Sections 118 and 139 of the Act are not applicable as
the complainant is neither 'payee' nor the ‘holder in due course’ and
dishonour of cheques in such situation does not amount to penal offence
under Section 138 of the Act. The stand of respondent No.1 is that since
the cheques in dispute were accompanied by RTGS forms with a clearcut
instruction to transfer the amount of cheques in dispute in the account of
respondent No.1, therefore, the provisions of Section 138 of the Act are
attracted. Learned counsel for respondent No.1 has also brought to the
notice of this Court the photocopies of the cheques, which shows that there
was a clear cut instruction on the back side of the cheque that the amount
was to be transferred to the account of respondent No.1. The name of the
transferee was clearly mentioned on cheque. In the present case, undisputedly the Bank is holder of the
cheques but as per endorsement as well as the fact that cheques were
accompanied by RTGS forms for transfer of the amount in the account of
respondent No.1, it is respondent No.1 only who was to collect the amount.
Respondent No.1 is the payee in an indirect manner as the amount was to
be transferred in its account through cheques as per clearcut instructions
given in RTGS form and, therefore, it cannot be said that complainant was
having no authority to file the complaint. A mere holder or endorsee
without consideration cannot come within the purview of word ‘another
person’. Accordingly, respondent No.1-complainant can safely be said to
be payee or holder or holder in due course. The bank in the present case
is merely a holder but without consideration the endorsement was meant
for respondent No.1 to collect the amount. Accordingly, respondent No. 1
became payee of the cheques and on bouncing of same, the complaint
was filed by him. This view has also been taken by Andhra Pradesh High
Court in Nageshwara Rao's case(supra), wherein, it was held as under:-
“At the first sight, the submission is quite feasible. But there is
a twist in this case. The complainant is not a mere holder. It is
true that he is the endorsee without consideration. But the
endorsement here is “to collect”. That endorsement clothes
the complainant with the authority to issue notice and realise
the amount by filing a civil suit and also a criminal complaint.
Therefore, the ratio of the Bench judgment cannot squarely be
applied to the facts of this case. In pursuance of the authority
given to the complainant “to collect”, he issued the notice and
the cheques were given in the name of complainant.
Therefore, he became the payee under the cheques. When
the cheques bounced, certainly he can file the complaint to
enforce his duty “to collect” the amount under the instrument.
Such a step is taken by the complainant in this case.
Therefore, it cannot be said that the complainant has no
authority to file the complaint. I hold accordingly.”
Moreover, the offence under Section 138 of the Act is technical
in nature and defence to be taken by the accused is inbuilt as the cheques
were given without consideration but the onus of proving the defence is
upon the accused alone as provided under Section 106 of the Evidence
Act. In a case under Section 138 of the Act, the trial is conducted in a
summary manner and the evidence is given by the complainant by way of
an affidavit, which is sufficient to prove the offence. The evidence is not
required to be given again in terms of Section 145 (1) of the Act and same
has to be read during trial. The witnesses or the complainant can be
recalled only when accused makes an application and only in
circumstances when some reasonable ground is there to recall the
witnesses. The offence under Section 138 of the Act is not like the offence
under IPC. The offence under Section 138 of the Act is an offence of
personal nature of the complainant and it is an offence, which is made
under Negotiable Instrument Act so that the trust in commercial
transactions is not destroyed because of dishonour of cheque. When it is
within the knowledge of the accused as to why he is not to face the trial
under Section 138 of the Act, he is to take the plea of defence and burden
cannot be shifted upon the complainant. No presumption, therefore, can
be drawn that even if the accused has failed to bring out his defence, he is
still to be considered as an innocent. In case the accused has a defence
against dishonour of cheque in dispute, it is he alone who knows the
defence and is responsible to spell it out to the Court and to prove it.
Once the complainant has brought forward his case by giving his affidavit
about issuance of cheques, dishonour of cheques, issuance of demand
notice etc., he can be cross-examined only if the accused makes an
application to the Court as to on what point he wants to cross-examine the
witness.
IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH
Crl. Misc. No. M-37492 of 2012
Nitin Chadha V M/s Swastik Vegetable Products Pvt. Ltd. & Anr.
DATE OF DECISION: 10.2.2015
BEFORE:- HON'BLE MRS. JUSTICE DAYA CHAUDHARY
Citation; 2015 ALLMR(CRI)Journal 623
By this judgment, three petitions bearing
37492, 38472 and 37522 of 2012 shall stand disposed of as common
question of law and facts are involved in all the three cases. However, for
the sake of convenience, the facts are being extracted from Crl. Misc. No.
M-37492 of 2012.
The present petition has been filed under Section 482 Cr.P.C.
for quashing of complaint No. 14727 of 2012 dated 20.7.2012 as well as
summoning order dated 8.8.2012 passed by JMIC, Ludhiana and all
subsequent proceedings arising therefrom.
Briefly, the facts of the case as made out in the petition are that
the petitioner took a loan of ` 15 lacs from respondent No.1-company in
three instalments and he, thereafter, issued three post dated cheques
dated 29.5.2012 of ` 5 lac each, towards repayment of the loan by
mentioning ‘yourself’. As per case of the petitioner, a Real Time Gross
Settlement Fund Application Form (RTGS) was filled by him along with
each cheque. On presentation of cheques along with RTGS forms for
transfer of ` 15 lacs from the petitioner's account to the account of
respondent No.1, the same were returned with the remarks ‘funds
insufficient’. A legal notice was served upon the petitioner on 14.6.2012 by
respondent No.1 calling upon him to make payment of ` 15 lacs within 15
days from the date of receipt of the notice but the petitioner failed to do so.
After expiry of aforesaid period of 15 days, respondent No.1 filed three
complaints under Section 138 of the Negotiable Instruments Act
(hereinafter referred to as ‘the Act’) before JMIC, Ludhiana on 20.7.2012
and the petitioner was summoned to face trial vide order dated 8.8.2012.
The said complaints as well as summoning orders are subject
matter of challenge in the present three petitions filed by petitioner-Nitin
Chadha.
Learned counsel for the petitioner contends that cheques were
drawn by mentioning ‘Yourself’ which means 'drawn in favour of the Bank'
and no offence is made out under Section 138 of the Act. Learned counsel
further contends that the cheque drawn as ‘Yourself’ was not in favour of
anybody and it was not to be encashed by the complainant-respondent
No.1. As per clause (b) to the proviso of Section 138 of the Act, the
demand for payment or dishonour of the cheque was to be made either by
the payee or by the ‘holder in due course’ of the cheque but it does not
include ‘holder’ as has been defined under Section 8 of the Act. Learned
counsel also contends that the complainant was neither the 'payee' nor the
‘holder' in due course of the cheques in dispute and the same were not
issued in favour of the complainant. It is also the argument of learned
counsel that the complainant has not given any details of advancement of
loan and it cannot be said the cheques in dispute were issued in discharge
of any liability. Learned counsel has also relied upon Division Bench
judgment of this Court in Punjab National Bank Vs. Himgiri Traders and
another 2003 (4) RCR (Criminal) 876, Single Bench judgment of this Court
in V.K. Gupta Vs. Manjit Kaur 2008 (3) RCR (Criminal) 430, of Madras
High Court in Poppys Spinning Mills (P) Ltd. Vs. C. Visalakshi and
another 2006 (1) DCR 16 and of Gauhati High Court in Dr. Jiten
Barkakoti Vs. Subrata Patangia and another 2006 (1) DCR 278, in
support of his contentions.
Learned counsel for respondent No.1 submits that the
petitioner has not denied the fact regarding issuance of three cheques of `
15 lacs along with RTGS forms duly filled in by him. The petitioner has
deliberately concealed the fact that he has issued RTGS forms for transfer
of money to the account of respondent No.1. The cheques were drawn in
favour of ‘Yourself’ means that the cheques were drawn in favour of the
Bank with the instruction given in RTGS forms for transfer of money directly
to the account of respondent No.1. Learned counsel further contends that
when the cheques in favour of ‘Yourself’ were accompanied by some
instructions to the Bank then the Bank was to comply with those
instructions and hence the provisions of Section 138 of the Act are
attracted. Learned counsel also contends that a well reasoned summoning
order has been passed after recording preliminary evidence of the
complainant and all the facts and allegations are matter of evidence, which
could be examined during the trial only. Thus, no interference is required
for at this stage and the present petition for quashing of the complaint and
summoning order is not maintainable. Learned counsel has also relied
upon the judgments of Delhi High Court in Rajesh Agarwal Vs. State and
another 2010 (94) AIC 431 and of Andhra Pradesh High Court in
Nageshwara Rao Vs. B.V. Subbaiah and another 2000 (1) Comp Cas
526, in support of his contentions.
Heard the arguments advanced by learned counsel for the
parties and have also gone through the complaint as well as summoning
order, which are subject matter of challenge in the present petitions.
For resolving the controversy in dispute, Section 138 of the Act
is relevant, which is reproduced as under:-
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.]
Section 9 of the Act defines ‘holder in due course’, which is
reproduced as under:-
“Holder in due course”.- “Holder in due course” means any
person who for consideration became the possessor of a
promissory note, bill of exchange of cheque if payabale to
bearer, or the payee or indorsee thereof, if [payable to order],
before the amount mentioned in it became payable, and
without having sufficient cause to believe that any defect
existed in the title of the person from whom he derived his
title.”
Section 7 of the Act defines words ‘drawer and drawee’, which
is reproduced as under:-
“Drawer”, “drawee”. —The maker of a bill of exchange or
cheque is called the “drawer”; the person thereby directed to
pay is called the “drawee”.
“drawee in case of need”. —When in the bill or in any
indorsement thereon the name of any person is given in
addition to the drawee to be resorted to in case of need such
person is called a “drawee in case of need”.
“acceptor”. —After the drawee of a bill has signed his assent
upon the bill, or, if there are more parts thereof than one, upon
one of such parts, and delivered the same, or given notice of
such signing to the holder or to some person on his behalf, he
is called the “acceptor”.
“acceptor for honour”. — 2 [When a bill of exchange has
been noted or protested for non-acceptance or for better
security], and any person accepts it supra protest for honour of
the drawer or of any one of the indorsers, such person is
called an “acceptor for honour”.
“Payee”. —The person named in the instrument, to whom or
to whose order the money is by the instrument directed to be
paid, is called the “payee”.
The maker of a bill of exchange or cheque is called the drawer
and the person thereby directed to pay is called drawee.
In the present case, the drawee is bank as the cheques were
drawn by mentioning ‘Yourself’. As per clause (b) to proviso of Section 138
of the Act, the demand for the payment or dishonour of cheque was to be
made either by payee or the ‘holder in due course’ of the cheque. As per
submissions made by learned counsel for the petitioner, complainant respondent
No.1 was neither the payee nor the 'holder in due course' of the
cheques in dispute as the cheques were not issued in favour of the
complainant. It is also the argument of learned counsel for the petitioner
that the provisions of Sections 118 and 139 of the Act are not applicable as
the complainant is neither 'payee' nor the ‘holder in due course’ and
dishonour of cheques in such situation does not amount to penal offence
under Section 138 of the Act. The stand of respondent No.1 is that since
the cheques in dispute were accompanied by RTGS forms with a clearcut
instruction to transfer the amount of cheques in dispute in the account of
respondent No.1, therefore, the provisions of Section 138 of the Act are
attracted. Learned counsel for respondent No.1 has also brought to the
notice of this Court the photocopies of the cheques, which shows that there
was a clear cut instruction on the back side of the cheque that the amount
was to be transferred to the account of respondent No.1. The name of the
transferee was clearly mentioned on cheque. As per procedure adopted
by the Bank, different type of cheques are issued by adopting different
methods, which is reproduced as under:-
Open cheque or bearer cheque: The issuer of the cheque
would just fill the name of the person to whom the cheque is
issued, writes the amount and attaches his signature and
nothing else. This type of issuing a cheque is also called
bearer type cheque also known as open cheque or uncrossed
cheque. The cheque is negotiable from the date of issue toCrl. Misc. No. M-37492 of 2012 (8)
three months. The issued cheque turns stale after the
completion of three months. It has to be revalidated before
presenting to the bank.
A crossed cheque or an account payee cheque: It is written
in the same as that of bearer cheque but issuer specifically
specifies it as account payee on the left hand top corner or
simply crosses it twice with two paralled lines on the right hand
top corner. The bearer of the cheque presenting it to the bank
should have an account in the branch to which the written sum
is deposited. It is safest type of cheques.
A self Cheque: A self cheque is written by the account holder
as pay self to receive the money in the physical form from the
branch where he holds his account.
Pay yourself cheque: The account holder issues this type of
crossed cheque to the bank asking the bank to deduct money
from his account into bank’s own account for the purpose of
buying banking products like drafts, pay orders, fixed deposit
receipts or for depositing money into other accounts held by
him like recurring deposits and loan accounts.
Post dated cheque: (PDC): A PDC is a form of a crossed or
account payee bearer cheque but post dated to meet the said
financial obligation at a future date.
Various types of cheques based on their functionality:
Local cheque: A local cheque is a type of cheque which is
valid in the given city and a given branch in which the issuer
has an account and to which it is connected. The producer of
the cheque in whose name it is issued can directly go to the
designted bank and receive the money in the physical form. IfCrl. Misc. No. M-37492 of 2012 (9)
a given city’s local cheque is presented elsewhere it shall
attract some fixed banking charges. Although these type of
cheques are still prevalent, especially with nationalised banks.
It is slowly stated to be removed with at par cheque type.
At par cheque: With the computerisation and networking of
bank branches with its headquarters, a variation to the local
cheque has become common place in the name of at par
cheque. At par cheuq is a cheque which is accepted at par at
all its branches across the country. Unlike local cheque it can
be presented across the country without attracting additional
banking charges.
Banker’s cheque. It is a kind of cheque issued by the bank
itself connected to its own funds. It is a kind of assurance
given by the issuer to the client to alley your fears. The
personal account connected cheques may bounce for want of
funds in his account. To avoid such hurdles, sometimes, the
receiver seeks banker’s cheque.
Travelers’ cheque: They are a kind of an open type bearer
cheque issued by the bank which can be used by the user for
withdrawal of money while touring. It is equivalent to carrying
cash but in a safe form without fear of losing it.
Gift cheque: This is another banking instrument introduced for
gifting money to the loved ones instead of hard cash.
In the present case, undisputedly the Bank is holder of the
cheques but as per endorsement as well as the fact that cheques were
accompanied by RTGS forms for transfer of the amount in the account of
respondent No.1, it is respondent No.1 only who was to collect the amount.
Respondent No.1 is the payee in an indirect manner as the amount was to
be transferred in its account through cheques as per clearcut instructions
given in RTGS form and, therefore, it cannot be said that complainant was
having no authority to file the complaint. A mere holder or endorsee
without consideration cannot come within the purview of word ‘another
person’. Accordingly, respondent No.1-complainant can safely be said to
be payee or holder or holder in due course. The bank in the present case
is merely a holder but without consideration the endorsement was meant
for respondent No.1 to collect the amount. Accordingly, respondent No. 1
became payee of the cheques and on bouncing of same, the complaint
was filed by him. This view has also been taken by Andhra Pradesh High
Court in Nageshwara Rao's case(supra), wherein, it was held as under:-
“At the first sight, the submission is quite feasible. But there is
a twist in this case. The complainant is not a mere holder. It is
true that he is the endorsee without consideration. But the
endorsement here is “to collect”. That endorsement clothes
the complainant with the authority to issue notice and realise
the amount by filing a civil suit and also a criminal complaint.
Therefore, the ratio of the Bench judgment cannot squarely be
applied to the facts of this case. In pursuance of the authority
given to the complainant “to collect”, he issued the notice and
the cheques were given in the name of complainant.
Therefore, he became the payee under the cheques. When
the cheques bounced, certainly he can file the complaint to
enforce his duty “to collect” the amount under the instrument.
Such a step is taken by the complainant in this case.
Therefore, it cannot be said that the complainant has no
authority to file the complaint. I hold accordingly.”
Moreover, the offence under Section 138 of the Act is technical
in nature and defence to be taken by the accused is inbuilt as the cheques
were given without consideration but the onus of proving the defence is
upon the accused alone as provided under Section 106 of the Evidence
Act. In a case under Section 138 of the Act, the trial is conducted in a
summary manner and the evidence is given by the complainant by way of
an affidavit, which is sufficient to prove the offence. The evidence is not
required to be given again in terms of Section 145 (1) of the Act and same
has to be read during trial. The witnesses or the complainant can be
recalled only when accused makes an application and only in
circumstances when some reasonable ground is there to recall the
witnesses. The offence under Section 138 of the Act is not like the offence
under IPC. The offence under Section 138 of the Act is an offence of
personal nature of the complainant and it is an offence, which is made
under Negotiable Instrument Act so that the trust in commercial
transactions is not destroyed because of dishonour of cheque. When it is
within the knowledge of the accused as to why he is not to face the trial
under Section 138 of the Act, he is to take the plea of defence and burden
cannot be shifted upon the complainant. No presumption, therefore, can
be drawn that even if the accused has failed to bring out his defence, he is
still to be considered as an innocent. In case the accused has a defence
against dishonour of cheque in dispute, it is he alone who knows the
defence and is responsible to spell it out to the Court and to prove it.
Once the complainant has brought forward his case by giving his affidavit
about issuance of cheques, dishonour of cheques, issuance of demand
notice etc., he can be cross-examined only if the accused makes an
application to the Court as to on what point he wants to cross-examine the
witness.
In view of facts as well as law position explained above, the
judgments cited by learned counsel for the petitioner are not applicable
keeping in view the facts of the present case and as such complaint as
well as summoning order cannot be quashed.
Accordingly, there is no merit in the petition and all the
petitions being devoid of any merit are hereby dismissed.
10.2.2015 (DAYA CHAUDHARY)
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