Karnataka High Court
Umaswamy vs K.N. Ramanath on 1 June, 2006
Equivalent citations: III(2007)BC211, AIR 2006 (NOC) 1420 (KAR), 2006 CRI. L. J. 3760, 2007 (1) AJHAR (NOC) 197 (KAR.) = 2006 (5) AIR KAR R 171, 2006 (5) AIR KANT HCR 171, 2006 ALL MR(CRI) 243 JS, (2006) 6 KANT LJ 217, (2007) 1 ALLCRILR 267, (2007) 3 BANKCAS 211, (2007) 1 ICC 570, (2007) 1 NIJ 45, (2007) 2 CIVILCOURTC 96, (2007) 3 CIVLJ 223
Author: K. Sreedhar Rao
Bench: K. Sreedhar Rao
JUDGMENT K. Sreedhar Rao, J.
1. The accused is manufacturer of condiments and sweet meats. The complainant was taking supplies from the accused and had given caution deposit. The contract was terminated. The accused issued cheque Ex.P.1 for Rs. 2,37,411.78 towards repayment of caution deposit. On presentation cheque is dishonoured. The intimation of dishonour is received on 23.3.1996 as per Ex.P.2. The complainant issued statutory notice and thereafter filed a private complaint.
2. Per contra, the accused contends that the accounts between the complainant-accused is not settled, cheque was issued tentatively with a clear mutual understanding that the cheque should be presented only after settlement of accounts. The cheque is issued only as a security and not towards discharge of the debt or other legal liability. It is further contended that the cheque is a blank cheque and in breach of the terms, the complainant has made premature presentation of the cheque. Therefore, argued that the accused cannot be held guilty of the offence punishable under Section 138 of the N.I. Act.
3. Ex.D.2 is relied on by the accused to contend that the accounts arc yet to be settled and the cheque was issued conditionally as stated above. The husband of complainant has made endorsement and received the cheque agreeing to the terms mentioned in Ex.D.2. The contents of Ex.D.2 states that the accounts to be settled on or before 6.3.1999. The Ex.D.7 is the endorsement showing settlement of amounts and it permits the complainant to present the cheque for encashment. Ex.D.7, dated 18.3.1999 bears the seal and signature of the manager of the accused. The cheque is presented on 20.3.1999. Even according to the terms in Ex.D.2 the cheque is presented after 6.3.1999 and in accordance with terms of Ex.D.2. The Ex.D.7 discloses the liability is assessed after taking accounts and it is exactly equivalent to the amount in the cheque. It is admitted that a signed cheque has been validly delivered to the complainant. In the evidence also it is not established that the liability shown in the cheque is incorrect and falsely inflated.
4. The contention that the cheque was issued only as security is preposterous. The cheque whether issued for payment of debt or as security makes no distinction in law. The cheque is a negotiable instrument, it may be that some times the cheque is issued with a request on the part of the drawer to defer the presentation of the cheque for some time to enable the drawer to make payment by cash and take back the cheque or allow time to arrange funds for encashment of cheque. When the amount is not paid as per oral understanding the payee is well justified to present the cheque for encashment. The cheque even if it is issued as a security for payment, it is negotiable instrument and encashable security at the hands of payee. Therefore, merely because the drawer contends that it is issued as security is not a ground to exonerate the penal liability under Section 138 of the N.I. Act.
5. It is argued that cheque was presented despite issuance of notice as per Ex.D.6 on 16.3.1999. But the postal cover pertaining to Ex. D.6 marked at Ex.D.7 shows that Ex.D-6 is posted on 22.3.1999, and they are posted after dishonour of the cheque.
6. In view of the reasons and discussions made above, the order of acquittal is bad in law and same is set aside. The accused is convicted for the offence punishable under Section 138 of the N.I. Act and sentenced to pay a fine of Rs. 4.74.825/- and in default to suffer S.I. for a period of one year.
7. Out of the fine amount, the complainant shall be paid compensation of Rs. 4,30.000/-.