liable for dishonour of a cheque, drawn by him/her, for want of funds in the
account, if the cheque bears a date subsequent to his/her attaining
majority and further the dishonour takes place after he/she attained
majority? For this question also, the answer can only be in the negative.
Indisputable proposition is that a cheque defined under Section 6 NI Act is
also a bill of exchange, but it is drawn on a banker and it is payable on
demand. It is, thus, obvious that even though a bill of exchange is drawn
on a banker, if it is not payable on demand, it is not a cheque. A postdated
cheque is only a bill of exchange when it is written or drawn and it becomes
a cheque when it is payable on demand. A postdated cheque is not
payable till the date, which is shown on the face of the document. (see
Ashok Yeshwant Badeve v. Surendra Madhavrao Nighojakar and
another (2001 Cri.L.J. 1674 (SC)) and Shri Ishar Alloys Steels Ltd. v.
Jayaswals NECO Ltd.(2001 Cri.L.J. 1250 (SC)). In the normal course,
dishonour of a postdated cheque, after it has become a cheque in the eye
of law, would have attracted the offence under Section 138 NI Act.
Nevertheless, the law pronounced distinctly in Section 26 NI Act makes it
clear that though a minor can draw, indorse, deliver and negotiate a
promissory note, cheque, etc. so as to bind all parties, it excludes the
minor's capacity to bind himself. In other words, the said provision
insulates the minor from binding himself from the consequences of
drawing, indorsing, delivering and negotiating a negotiable instrument. On
recapitulating the principles discussed above, I arrive at the following
findings:
A minor, who had drawn a cheque, which is dishonoured for
want of funds in the account after his/her attaining majority, is exempted
from prosecution because the cheque is one without consideration.
Besides, the minor at the time when the cheque was drawn was incapable
of incurring any debt or liability, which could have been legally enforced
against him/her, in spite of the fact that he/she attained majority on the date
of dishonour of the cheque.
IN THE HIGH COURT OF KERALAAT ERNAKULAM
PRESENT:
MR. JUSTICE A.HARIPRASAD
2ND DAY OF SEPTEMBER 2014
Crl.MC.No. 3805 of 2012 ()
ANAGHA PRASAD,
Vs
M.C.ABU, MACHINCHERY HOUSE,
Citation;2016 CRLJ(NOC)86 Kerala
Common questions of fact and law arise in these three cases.
Hence, they are heard together and disposed by this common order.
2. Legal puzzles arising herein for determination are as follows:
i. Whether dishonour of a cheque, drawn by a person
during minority for discharging a debt or liability towards another, will invite
an offence under Section 138 of the Negotiable Instruments Act, 1881?
ii. Does it make any difference if the cheque was a post-
dated one and its dishonour takes place after the quondam minor attained
majority?
3. In order to find out answers to these questions, we shall
consider the skeletal facts in these cases. Petitioner in these cases are the
accused in three different private complaints filed by the 1st respondent
before the learned Judicial First Class Magistrate, Nilambur. In all the three
complaints, the offence alleged against the petitioner is one under Section
138 of the Negotiable Instruments Act, 1881 (in short, "the NI Act"). 1st
respondent/complainant is the Managing Partner of a firm, conducting a
business by name Persian Jewellery, Nilambur. Petitioner's mother was an
employee in the said firm. While so, the petitioner, her mother and brother
approached the 1st respondent seeking financial help for the petitioner to
pursue study in an engineering college in Tamil Nadu. They required about
`2,50,000/- as fees for admission to the college and the hostel. 1st
respondent paid `1,50,000/- to the petitioner for meeting the initial
expenses. Thereafter, on 08.08.2010, the petitioner again approached the
1st respondent and requested to lend `1,00,000/- more for her study.
Petitioner made the 1st respondent believe that the entire amount borrowed
from him would be repaid before 10.01.2011 as she was sure of getting
the education loan applied for. On 12.07.2010, the petitioner, her brother
and mother again approached the 1st respondent and requested for
advancing money. As agreed earlier, an agreement was executed between
the parties. As per the terms of the agreement the total amount of
`2,50,000/- demanded and received by the petitioner, including `1,00,000/-
later received by her, should be repaid on or before 10.01.2011. It was
further agreed that if the petitioner did not repay the money, a portion of the
property belonging to them should be conveyed to the 1st respondent. On
that assurance, on 08.08.2010, 1st respondent advanced to the petitioner a
further sum of `1,00,000/-, thereby she got the entire amount of `2,50,000/-
from the 1st respondent. However, the petitioner did not fulfil her promise to
pay back money promptly. Later, on 14.01.2011, the petitioner with her
brother and mother again approached the 1st respondent and the petitioner
acknowledged her liability. It was represented by the petitioner that she got
the education loan sanctioned. Petitioner paid `10,000/- to the 1st
respondent on the said date. Thereafter three cheques were issued for the
remaining liability of `2,40,000/- on 14.01.2011 by the petitioner to the 1st
respondent. One cheque was for `1,50,000/. Another one was for
`80,000/- and yet another one for `10,000/-. All of them were drawn on
14.01.2011 with a post date 31.01.2011. When the cheques were
presented for collection, they were dishonoured due to insufficiency of
funds in the account of the petitioner. 1st respondent caused to issue the
statutory notices. Even after receiving notices, the amounts were not paid.
Hence, three prosecutions were launched.
4. Main contention raised by the petitioner is that the complaints
are not legally maintainable, because the petitioner, being a minor on the
date of drawal of the cheques, cannot be prosecuted as she was
incompetent to bind herself at that time by virtue of Section 26 NI Act.
5. It is seen from the records that the petitioner filed applications
before the trial court in all the cases claiming the benefit of Section 7 of the
Juvenile Justice (Care and Protection of Children) Act, 2000 contending
that she was a minor on the date of the alleged commission of offence.
Those applications were considered by the learned Magistrate, but all of
them were dismissed. Now she challenges the maintainability of the
complaints on other legal grounds.
6. Heard Shri P.Venugopal, learned counsel for the petitioner
and Shri P.Samsudin, learned counsel for the 1st respondent. Learned
Public Prosecutor is also heard.
7. According to Shri Venugopal, the prosecution is a
misconceived legal action. Section 26 NI Act, though permits a minor to
draw, endorse, deliver and negotiate a promissory note, bill of exchange or
cheque, makes it clear that such instrument shall never bind the minor. For
clarity, Section 26 NI Act is reproduced hereunder:
"Capacity to make, etc., promissory
notes, etc.- Every person capable of contracting,
according to the law to which he is subject, may
bind himself and be bound by the making, drawing,
acceptance, indorsement, delivery and negotiation
of a promissory note, bill of exchange or cheque.
Minor.- A minor may draw, indorse, deliver
and negotiate such instruments so as to bind all
parties except himself.
Nothing herein contained shall be deemed
to empower a corporation to make, indorse or
accept such instruments except in cases in which,
under the law for the time being in force, they are
so empowered."
8. Section 11 of the Indian Contract Act, 1872 specifies the
persons competent to contract. One of the main requirements therein is
that the contracting party must be of the age of majority according to the
law to which he is subject. It is provided by Section 3 of the Indian
Majority Act, 1875 that all persons domiciled in India shall attain the age of
majority on his completing the age of eighteen years and not before. It
can legitimately be presumed that the framers of the NI Act must not have
perceived the possibility of incorporating a provision like Section 138 in the
statute in future, creating a statutory offence for the dishonour of a cheque.
Stated differently, dishonour of a cheque was conceived as a civil wrong at
the time when the NI Act was enacted. Later, Section 138 and other
affiliated provisions were inserted in the NI Act by the Banking, Public
Financial Institutions and Negotiable Instruments Laws (Amendment) Act,
1988 with effect from 01.04.1989. Now it becomes, therefore, a necessity
to find out whether there is any material change in law in case a cheque
drawn by a minor is dishonoured for want of funds in his account and also
whether he can be held liable for the offence under Section 138 NI Act in
such a situation. Very pertinent aspect to be noted here is that what is
made punishable under Section 138 NI Act is the dishonour of a cheque
drawn by a person in the name of another for the discharge, in whole or in
part, of any debt or other liability(underline supplied for emphasis). Then
the quintessential question will be whether a minor is capable of incurring
any debt or liability?
9. I shall deal with the liability of a minor, in case a cheque drawn
by him is dishonoured, as per the law stated in Section 26 NI Act. On a
reading of Section 26 NI Act, it is crystal clear that a minor, like any other
person capable of contracting, may draw, indorse, deliver and negotiate a
promissory note, bill of exchange or cheque. Such instrument so drawn,
indorsed, delivered and negotiated by the minor is capable of binding all
parties, except the minor himself. It gives a protection or an insulation to
the minor from binding himself when he is drawing, indorsing or delivering
or negotiating a negotiable instrument. Privy Council considered an appeal
from a decree of a Bench of three Honourable Judges of the High Court of
Calcutta in Mohori Bibee v. Dharmodas Ghose (Vol.XXX ILR Calcutta
539). Facts in the case in brief are that on 20.07.1895, the respondent
Dharmodas Ghose executed a mortgage in favour of Brahmo Dutt, a
money lender to secure repayment of `20,000/- with interest. At that time,
the respondent Dharmodas Ghose was an infant (as described in the
decision for a minor). On 10.09.1895, the respondent through his mother
as next friend commenced an action against Brahmo Dutt stating that he
was under aged when he executed the mortgage and prayed for a
declaration that it was void and inoperative and should be delivered upon
to be cancelled. The defendant Brahmo Dutt put in a defence that the
respondent was of full age when he executed the mortgage, that even if he
was a minor, the declaration of his age was fraudulently made to deceive
the defendant and, therefore, he was disentitled to claim any relief.
Considering all the issues, the Privy Council held thus:
"On the true construction of the Contract Act (IX
of 1872) a person, who by reason of infancy is
incompetent to contract, cannot make a contract
within the meaning of the Act. A mortgage, therefore,
made by a minor is void; and a money-lender who
has advanced money to a minor on the security of the
mortgage is not entitled to repayment of the money on
a decree being made declaring the mortgage invalid;
sections 64 and 65 of the Contract Act being based
on there being a contract between competent parties,
and being inapplicable to a case where there is not,
and could not have been, any contract at all."
10. Whether the immunity provided by Section 26 NI Act excludes
the obligation of a minor to restitute the benefit derived by him in the
transaction from the other party was contested in many cases. Although
the question was argued before the Judicial Committee in Mohori Bibee`s
case (supra), their Lordships did not give any decision on it. In another
decision, viz., Nawab Sadiq v. Jai Kishori (55 MLJ 88 (PC)), their
Lordships unequivocally held that a contract entered into by a minor is a
nullity. Regarding the right of restitution, there is one view that it can arise
only if the person entering into the transaction was not aware of the fact of
minority and there was some representation by the minor as to his age with
a view to deceive the other party. (see Hari Mohan v. Dulu Miya - AIR
1935 Calcutta 198). Yet another view expressed by courts is that even in
such a situation, the minor is not liable to restitute. The decision in
Gokeda Lateharao v. Viswanadham Bhimayya (AIR 1956 Andra
Pradesh 182) is of relevance in this context. The appellant therein
executed two promissory notes during his minority. It is alleged that he
made a fraudulent representation to the respondent that he was a major.
When the suit was filed to recover money, the appellant, inter alia,
contended that the promissory notes were not supported by consideration
and they were not enforceable as he was a minor on the date of their
execution. Subba Rao, C.J. summarised the law as follows:
"43. The law may be briefly summarised. A
contract entered into with a minor is a nullity for want
of legal competency. Except otherwise provided by
statute, it is not enforceable and it does not give rise
to any rights or liabilities.
44. It is non est. It follows from this legal
position that a person, who parted with his goods can
trace them into the hands of the quondam minor and
recover them back in specie, for he has not lost his
title to them. But he cannot seek to recover their price
or damages for, if allowed, he would be indirectly
asking for the enforcement of the contract and to
recover damages for the breach. Nor can a person
who lends money to such a minor, recover it. If
allowed to do so, the Court would be enforcing a
contract of loan. The English decisions graphically
describe this position as "restitution stops where
repayment begins". But, there is another principle of
equity, namely, that one who seeks equity must do
equity. If a quondam minor as plaintiff seeks relief
from a Court on the basis that the contract was void,
the Court could refuse that relief unless he has made
good his fraudulent representation. If he seeks to
recover through Court goods which he parted with
after receiving the consideration, the Court will not
help him except by imposing the condition of returning
the consideration amount. The principle is embodied
in Ss.39 and 41, Specific Relief Act. Apart from the
fact it statutorily recognises a well-settled principle of
equity, it is not open to extend the limits of the
operation of the provisions by stretching the language
or otherwise adding to its contents. When a statute
specifically provides for the case of a plaintiff seeking
to cancel a document, it is not permissible to invoke
other equitable principles, which would make the
provisions nugatory. Further, this will enable the
parties to circumvent the prohibition against dealing
with minors and by clever drafting of pleadings, help
them to indirectly enforce a contract which is a nullity.
Nor can S.65 be invoked as it pre-supposes the
existence of a contract between persons with legal
competency."
Hence, it is clear that a contract in which one of the parties is a minor
cannot be enforced against him as it is void due to minor's lack of capacity
to contract.
11. Now, the question remaining is whether there is any difference
if a post dated cheque was drawn by a minor payable after the coming of
his age. Halsbury's Laws in India, Vol.IV is cited by the learned counsel
for the petitioner to contend a proposition that a post dated cheque drawn
by a minor payable after his coming of age is on the same footing as a
cheque drawn by the minor dated before his coming of age. Similarly, a bill
or note given by a person after attaining majority in renewal of a bill or note
executed by him during his minority is void, unless there is some new
consideration.
12. The High Court of Judicature, Allahabad in Suraj Narain v.
Sukhu Ahir and another (ILR Vol.LI Allahabad 164) considered a case
where a minor borrowed a sum of money executing a simple bond and
after attaining majority, he executed a second bond in respect of the loan
then existed plus the interest thereon. The question raised was whether
the consideration received by a person during his minority could be a good
consideration for a fresh promise after attaining majority. Per majority, it
was held that in consideration of the first advance made by the creditor, he
obtained a promissory note from the minor and thereafter there was no
longer any subsisting consideration, which would support a subsequent
promise to pay after attaining majority. Such a fresh promise, if no further
advance is taken, is totally without consideration and, therefore, void. The
same view was taken by the Madras High Court in Indran Ramaswami
Pandia Thalavar v. Anthappa Chettiar and others (Vol.XVI MLJ 422). It
is held that a promissory note executed by a person on attaining majority in
settlement of an earlier one executed by him while a minor, in consideration
of his having received from the obligee a certain sum of money when he
was a minor, is bad for want of consideration.
13. Learned counsel for the 1st respondent relying on Section 68
of the Contract Act, 1872 contended that the cheque is supported by
consideration and, therefore, by applying the principle of law in the said
Section, it should be seen that the petitioner issued the cheque in
discharge of a legally enforceable debt. Section 68 of the Indian Contract
Act is excerpted hereunder for clarity:
"Claim for necessaries supplied to person
incapable of contracting, or on his account.-If a
person, incapable of entering into a contract, or any
one whom he is legally bound to support, is supplied
by another person with necessaries suited to his
condition in life, the person who has furnished such
supplies is entitled to be reimbursed from the
property of such incapable person.
Illustrations
(a) A supplies B, a lunatic, with necessaries
suitable to his condition in life. A is entitled to be
reimbursed from B's property.
(b) A supplies the wife and children of B, a
lunatic, with necessaries suitable to their condition in
life. A is entitled to be reimbursed from B's property."
The principle underlying in the Section is that where a person incapable of
entering into a contract (it includes a minor also) or any other person whom
he is legally bound to support, is supplied by another person with
necessaries, the supplier is entitled to be reimbursed out of the property of
the incapable person. The liability here is not to pay the agreed price, but
to reimburse. In the case of a minor, he is not personally liable, but his
property will be liable. The Section applies to minors and also to persons
of unsound mind. That is evident from the illustrations given to the Section.
It is, therefore, clear that the Section will not apply where necessaries have
been supplied to someone, who is a person competent to contract. Even
though by virtue of the Section it can be contended that the petitioner's
liability to reimburse the 1st respondent may be enforced against her
property, the law in the above Section does not enable the 1st respondent
to seek prosecution of the erstwhile minor.
14. The conclusion that can be drawn from the above discussion is
that a contract entered into with a minor, being a void contract, cannot be
enforced against him and that a minor at any rate cannot be personally
held liable under civil law for the dishonour of a cheque drawn, indorsed,
delivered or negotiated by him.
15. Now, we shall consider whether the minor can be held
criminally liable for the statutory offence under Section 138 of the NI Act.
Celebrated commentaries on the Negotiable Instruments Act by learned
authors Bhashyam and Adiga (18th Edition - Page No.743) shows the
salient features and ingredients of Section 138 NI Act as follows:
"Ingredients of the offence.-To constitute an
offence under section 138 of Negotiable Instruments
Act the following ingredients need to be fulfilled:
1. Cheque should have been issued for the
discharge, in whole or part, of any debt or other
liability.
2. The cheque should have been presented
within the period of six months or within the period of
its validity, whichever is earlier.
Note.-The cheque may be presented any
number of times for collection within its validity.
3. The payee or the holder in due course
should have issued a notice in writing to the drawer
within thirty (fifteen prior to 2002 amendments) days
of the receipt of information by him from the bank
regarding the return of the cheque as unpaid.
4. After the receipt of the said notice by the
payee or the holder in due course, the drawer should
have failed to pay the cheque amount within fifteen
days of the receipt of the said notice.
Note.- Notice of dishonour is
unnecessary when the party entitled to notice cannot
after due search be found (See section 98, Negotiable
Instruments Act).
5. On non-payment of the amount due on
the dishonoured cheque within fifteen days of the
receipt of the notice by the drawer, the complaint
should have been filed within one month from the date
of expiry of the grace time of fifteen days, before the
Metropolitan Magistrate or not below the rank of a
Judicial Magistrate of the first class. The cognizance
of a complaint may be taken by the Court after the
prescribed period, if the complaint satisfies the Court
that he had sufficient cause for not making a
complaint within such period.
6. The offence under this Act is
compoundable (inserted by the 2002 Amendment
Act)."
It can only be presumed that the legislature was fully conscious of the
existence of Section 26 in the NI Act when it incorporated Chapter XVII in
the statute containing new provisions, particularly Section 138. Hence,
going by the rule of interpretation of statutes, definitely it has to be seen
that both Section 26 and Section 138 of the NI Act must be construed
harmoniously. Even the location and placement of Section 138 NI Act
assume importance.
16. Before going into other legal aspects, it will be beneficial to
restate the relevant dates. The cheques in all the cases were drawn on
14.01.2011. Admittedly all the three cheques bore the date 31.01.2011 on
their face. The orders passed by the learned Magistrate would show that
there was a dispute regarding the date of birth of the petitioner. Her school
records showed the date of birth as 08.07.1993, whereas the birth
certificate issued by the concerned Grama Panchayat indicated that the
petitioner was born on 22.01.1993.
17. Section 35 of the Evidence Act deals with the relevancy of
entry in public record or an electronic record made in performance of duty.
Interpreting that provision, a Constitution Bench of the Supreme Court in
Brij Mohan Singh v. Priya Brat Narain Sinha (AIR 1965 SC 282) ruled on
the evidentiary value of entries relating to date of birth in school admission
register in the following words:
"In actual life it often happens that persons
give false age of the boy at the time of his admission
to a school so that later in life he would have an
advantage when seeking public service for which a
minimum age for eligibility is often prescribed. The
Court of fact cannot ignore this fact while assessing
the value of the entry and it would be improper for
the court to base any conclusion on the basis of the
entry, when it is alleged that the entry was made
upon false information supplied with the above
motive."
The principle laid down by the Apex Court in Birad Mal Singhvi v. Anand
Purohit (AIR 1988 SC 1796) reads as follows:
"To render a document admissible under
S.35, three conditions must be satisfied, firstly, entry
that is relied on must be one in a public or other
official book, register or record, secondly, it must be
an entry stating a fact in issue or relevant fact, and
thirdly, it must be made by a public servant in
discharge of his official duty, or any other person in
performance of a duty specially enjoined by law. An
entry relating to date of birth made in the school
register is relevant and admissible under S. 35 of
the Act but the entry regarding to the age of a
person in a school register is of not much
evidentiary value to prove the age of the person in
the absence of the material on which the age was
recorded."
18. The birth certificate is issued in consonance with a register
kept by the officer concerned as per the prescription of a statute.
Therefore, in the absence of any reason to find that the date of birth of the
petitioner shown in the birth register is wrong, it gets precedence over the
entry in the school register. Certified copy of the entry in the birth register
mentioned by an official in discharge of his official duty is admissible under
Section 35 of the Evidence Act and it is not necessary to examine the
official (see - Harpal Singh v. State of H.P. - AIR 1981 SC 361) Hence, it
can be safely concluded that the date of birth of the petitioner is
22.01.1993.
19. As the date of birth of the petitioner is 22.01.1993, it can be
seen that she had attained majority on 22.01.2011. Therefore, on the date
of drawal of the three cheques, ie., on 14.01.2011, the petitioner was a
minor. Question that falls for decision is whether the petitioner was legally
competent to incur any liability on the date of drawal of the said cheques?
The answer can only be an emphatic negative. From the discussion above
made, it is evident that a minor is incompetent to bind himself/herself in any
way if he/she draws, indorses, delivers or negotiates a cheque. Further, the
offence under Section 138 NI Act will be attracted only on dishonour of a
cheque drawn by a person on an account maintained by him with the
banker for payment of any amount of money to another person to
discharge, in whole or in part, any debt or liability. It is unchallengeable
that during minority the petitioner could not have incurred any debt or
liability so as to bind herself. Therefore, the essential ingredient to attract
the offence is lacking in the fact situation. For that primary reason, it can be
held that the petitioner cannot be prosecuted for an offence under Section
138 NI Act.
20. Next question is, whether the quondam minor can be held
liable for dishonour of a cheque, drawn by him/her, for want of funds in the
account, if the cheque bears a date subsequent to his/her attaining
majority and further the dishonour takes place after he/she attained
majority? For this question also, the answer can only be in the negative.
Indisputable proposition is that a cheque defined under Section 6 NI Act is
also a bill of exchange, but it is drawn on a banker and it is payable on
demand. It is, thus, obvious that even though a bill of exchange is drawn
on a banker, if it is not payable on demand, it is not a cheque. A postdated
cheque is only a bill of exchange when it is written or drawn and it becomes
a cheque when it is payable on demand. A postdated cheque is not
payable till the date, which is shown on the face of the document. (see
Ashok Yeshwant Badeve v. Surendra Madhavrao Nighojakar and
another (2001 Cri.L.J. 1674 (SC)) and Shri Ishar Alloys Steels Ltd. v.
Jayaswals NECO Ltd.(2001 Cri.L.J. 1250 (SC)). In the normal course,
dishonour of a postdated cheque, after it has become a cheque in the eye
of law, would have attracted the offence under Section 138 NI Act.
Nevertheless, the law pronounced distinctly in Section 26 NI Act makes it
clear that though a minor can draw, indorse, deliver and negotiate a
promissory note, cheque, etc. so as to bind all parties, it excludes the
minor's capacity to bind himself. In other words, the said provision
insulates the minor from binding himself from the consequences of
drawing, indorsing, delivering and negotiating a negotiable instrument. On
recapitulating the principles discussed above, I arrive at the following
findings:
A minor, who had drawn a cheque, which is dishonoured for
want of funds in the account after his/her attaining majority, is exempted
from prosecution because the cheque is one without consideration.
Besides, the minor at the time when the cheque was drawn was incapable
of incurring any debt or liability, which could have been legally enforced
against him/her, in spite of the fact that he/she attained majority on the date
of dishonour of the cheque. The essential requirement in Section 138 NI
Act that the dishonoured cheque must be one issued for discharge of a
debt or liability is also not satisfied in such cases. I also find that the
quondam minor becoming a major on the date of dishonour of cheque is of
no consequence, if the subject matter is a cheque drawn by him during
his/her minority. Hence, I find that the prosecution has to fail on each
count.
In the result, all the petitions are allowed. The complaints in
S.T.Nos.806, 807 and 808 of 2011 pending before the Judicial First Class
Magistrate Court, Nilambur are hereby quashed.
All pending interlocutory applications will stand dismissed.
A. HARIPRASAD, JUDGE.
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