Delhi District Court
865 : 2007(4) Raj 163 : [(2007)5 Scc 264 vs Vipin Lalchand on 20 November, 2010
Page 1 of 27
IN THE COURT OF Ms. VEENA RANI : COMMERCIAL CIVIL
JUDGE PATIALA HOUSE COURTS , NEW DELHI.
IN RE : CC No:5541/1 (Date of Institution :2782004)
Sh. Jagdish Kumar S/o Sh. Masih Charan
R/o C2/45, Tilak Lane, Tilak Marg,
New Delhi
V.
Sh. Ram Naresh Verma S/o Sh. Sheetal Prasad
R/o 302/3B, Chelmsford Road,
Railway Officers Quarter, Connaught
Place, New Delhi
Complaint u/s 138 r/w s. 141 N.I. Act
Date of Final argument :21102010
Date of final Judgment :20112010
THE JUDGMENT.
i.As per the complaint the complainant had given a friendly
loan of Rs.1,70,000/ (Rupees One Lakh Seventy
Thousand) to the respondentaccused. The Loan Agreement
and the promissory note were also executed at the time of the said friendly loan. The loan amount was paid in cash by the complainant to the respondentaccused on 01.05.2004. COMMERCIAL CIVIL JUDGE: NEW DELHI/20112010 Page 2 of 27 For the sake of security the respondentaccused was made to issue the following two cheques :
Cheque No. 841829 dated 06.07.2004 for Rs. 1,00,000/) drawn on Bank of India , Conought Place Branch, New Delhi;
Cheques No. 841830(for Rs.70,000/). Dated 09.07.2004 drawn on Bank of India , Conought Place Branch, New Delhi;
ii.The complainant herein presented the two cheques to his banker Punjab National Bank Lodhi Road, New Delhi. However, the two cheques issued by the respondent accused were dishonored vide memo dated 08.07.2004 and 10.07.2004. These cheques were dishonored due to ''insufficient funds''. This dishonoring of the cheques was informed to the accused who refused to own the responsibility. Subsequently a legal notice was issued on 22.07.2004. The said legal notice was sent through BLAZE FLAH COURIERS on 22.07.2004. The accused did not pay despite the said legal notice hence the present complaint. iii.The accused has stated under the Statement of the Accused u/s 313 Cr.P.C. that it is incorrect that he had given two COMMERCIAL CIVIL JUDGE: NEW DELHI/20112010 Page 3 of 27 cheques to the complainant. As far as the other aspects of the legal notice etc. are concerned the accused stated that he knew nothing. It was also stated that the accused was a poor person and that he has been falsely implicated in the present case. The accused opted to lead the DE. iv.Section 138 casts criminal liability punishable with imprisonment or fine or with both on a person who issues a cheque towards discharge of a debt or liability as a whole or in part and the cheque is dishonoured by the Bank on presentation. Section 141 extends such criminal liability in case of a Company to every person who at the time of the offence, was incharge of, and was responsible for the conduct of the business of the Company. By a deeming provision contained in Section 141 of the Act, such a person is vicariously liable to be held guilty for the offence under Section 138 and punished accordingly. Section 138 is the charging section creating criminal liability in case of dishonour of a cheque and its main ingredients are:
(i) Issuance of a cheque;
(ii) Presentation of the cheque;
(iii) Dishonour of the cheque;
COMMERCIAL CIVIL JUDGE: NEW DELHI/20112010 Page 4 of 27 (iv) Service of statutory notice on the person sought to be made liable, and;
(v) Noncompliance or nonpayment in pursuance of the notice within statutory period of the receipt of the notice.
v.S.141. of the Negotiable Instruments Act deals with the Offences by companies. If the person committing an offence under section 138 is a company, every person who, at the time the offence was committed, was in charge of, and was responsible to, the company for the conduct of the business of the company, as well as the company, shall be deemed to be guilty of the offence and shall be liable to be proceeded against and punished accordingly : Provided that nothing contained in this subsection shall render any person liable to punishment if he proves that the offence was committed without his knowledge, or that he had exercised all due diligence to prevent the commission of such offence. Provided further that where a person is nominated as a Director of a company by virtue of his holding any office or employment in the Central Government or State Government or a financial corporation owned or controlled by the Central Government or the State Government, as the COMMERCIAL CIVIL JUDGE: NEW DELHI/20112010 Page 5 of 27 case may be, he shall not be liable forprosecution under this Chapter."
vi.Sections 138 and 141 of the Act form part of Chapter XVII introduced in the Act by way of an amendment carried out by virtue of Act 66 of 1988 effective from 1st April, 1989. These provisions were introduced with a view to encourage the culture of use of cheques and enhancing the credibility of the instruments. The legislature has sought to inculcate faith in the efficacy of banking operations and use of negotiable instruments in business transactions. The penal provision is meant to discourage people from not honouring their commitments by way of payment through cheques. Section 139, occurring in the same Chapter of the Act creates a presumption that the holder of a cheque receives the cheque in discharge, in whole or in part, of any debt or other liability.
vii.The complainant has examined himself as CW1 and has exhibited the loan agreement dated 01.05.2004 as CW1/1. The promissory note dated 01.05.2004 has been exhibited as CW1/2. The Cheque No. 841829 dated 06.07.2004 for Rs.1,00,000/) drawn on Bank of India , Connaught Place COMMERCIAL CIVIL JUDGE: NEW DELHI/20112010 Page 6 of 27 Branch, New Delhi has been exhibited as CW1/3. The Cheque No. 841830(for Rs.70,000/). Dated 09.07.2004 drawn on Bank of India, Conought Place Branch, New Delhi has been exhibited as CW1/4.
viii.The complainant herein presented the two cheques to his banker Punjab National Bank Lodhi Road, New Delhi. However, the two cheques issued by the respondent accused were dishonored vide memo dated 08.07.2004(Ex. CW1/5) and 10.07.2004 (Ex. CW1/6) with the remarks ''nsufficient funds''. This dishonoring of the cheques was informed to the accused who refused to own the responsibility. Subsequently a legal notice was issued on 22.07.2004 (Mark CW1). The said legal notice was sent through BLAZE FLAH COURIERS on 22.07.2004 on two addresses. The two vouchers have been marked as Ex.
CW1/7 & Ex. CW1/8. The accused did not pay despite the said legal notice hence the present complaint. WHETHER THE PRESUMPTION IS RAISED UNDER S.139 OF THE NEGOTIABLE INSTRUMENTS ACT, 1882.
ix.In the present case the accused has come up with the defense that the said two cheques were not issued by the COMMERCIAL CIVIL JUDGE: NEW DELHI/20112010 Page 7 of 27 accused and the same stolen by the complainant. The said version has been narrated by two defense witnesses DW1 and DW2. Both the said witnesses have narrated that the complainant used to frequently visit the house of the accused and that the two cheques were stolen from the house of the accused. The DW1 has also mentioned that at the alleged time of the issuance of the cheques the accused had a poor eyesight and that the accused undergone eye treatment. It was reiterated by the DW1 that the accused was not in position to see properly and he could not have therefore issued the cheques. x.Section 139 applies only if it is established that the cheque is of the nature stated to in S. 138. Such a cheque must, necessarily be, one which satisfies the definition of 'cheque' under S. 6 read with S. 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 S. 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 S. 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 COMMERCIAL CIVIL JUDGE: NEW DELHI/20112010 Page 8 of 27 definition under the Act. 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 probabalised, as in a defence case. The degree of proof certainly differs. xi.There is no presumption under S. 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 S. 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. S. 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.
COMMERCIAL CIVIL JUDGE: NEW DELHI/20112010 Page 9 of 27 xii.Section 139 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 S. 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 provides 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 S. 139, any expression like 'issued' thereby meaning, 'executed' which is not there in the provision. The Court cannot insert, substitute, add, subtract or squeeze in, any word, term or 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 S. 139, by the expressions such as, 'issued' or 'executed' to give a wholly different meaning to the provision, may even amount to an COMMERCIAL CIVIL JUDGE: NEW DELHI/20112010 Page 10 of 27 assault on the legislation, leading to unintended results. Such precedential legislation is not warranted or recognized by our system. 'Issuance/execution/drawing' of a cheque is the most relevant factor to be proved in an offence under S.
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 S. 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. The only fact which can be presumed under S. 139 is the 'purpose' for which the cheque is received by the complainant. The Court can presume under S. 139 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. xiii.An accused in any criminal prosecution is ordinarily COMMERCIAL CIVIL JUDGE: NEW DELHI/20112010 Page 11 of 27 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. In Mohanan v. Bibukumar, 2003 (2) KLT 825, it was held that 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. (2007 CRI. L. J. 3124 "Kamalammal v. C. K. Mohanan").
COMMERCIAL CIVIL JUDGE: NEW DELHI/20112010 Page 12 of 27 WHETHER A SIGNED CHEQUE WITHOUT MENTIONING ANY NAME OR DATE SATISFIES THE DEFINITION OF 'CHEQUE' UNDER S.6 OF THE N.I. ACT, 1881 xiv.In order to each a safe inference that the requirements of S.138 of the Negotiable Instruments Act, 1881 are fully satisfied it is essential to appreciate the legal consequence of the fact of the case in hand that the signatures of the accused appears in Hindi language whereas the date and the amount appears in English language. The said dates and the amounts appear to have put by two different persons in the English Language. The complainant is silent on the aspect that infact two blank (but signed) cheques were understood and issued by the accused. Here we ought not lose sight of the admitted fact on part of the complainant that he too had put his signatures in Hindi in some documents. We also ought not lose the sight of the admitted fact that in the present case the complainant as well as the accused are less educated. The said aspect becomes crucial on the issue whether the blank unsigned cheque (in the given circumstance) at all qualifies to be a cheque '' COMMERCIAL CIVIL JUDGE: NEW DELHI/20112010 Page 13 of 27 xv.According to S.6 of the Negotiable Instruments Act, 1881 a ''cheque''has been defined as :
''a bill of exchange drawn on a specified banker and not expressed to be payable otherwise than on demand and it includes the electronic image of a truncated cheque and a cheque in the electronic form.'' xvi.According to S. 5 of the 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.'' xvii.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.
COMMERCIAL CIVIL JUDGE: NEW DELHI/20112010 Page 14 of 27 xviii.A blank cheque such as the one in the case in hand, neither has any amount nor any date. The said uncertainty is not tolerated by S.5 or S.6 of the Negotiable Instruments Act, 1881. There ought to be a certain amount and a certain future date of maturity. In case the accused is less educated then the complainant must bring cogent evidence in order to establish that the accused understood the transaction but avoided to pay. In the present case the factual situation is compounded by the admitted position that even the complainant was less educated. Both the parties had signed in Hindi. It is obviously not to say that not knowing a foreign (English) language necessarily reflect less education but nothing stopped the parries from transacting in the language both knew well. The issue of implied authority has already been discussed earlier herein above. Such a cheque is not even a bill of exchange because of the fact that under S.5 of the Act, for an instrument to be a ''bill of exchange'', it has to have a ''certain sum'' of amount and a ''certain date'' written on it. In Ramdas Anant Naik v. Jacob Fernandes, (2006) 3 BC 271 (Bom.) it was observed that if a blank cheque is issued by any COMMERCIAL CIVIL JUDGE: NEW DELHI/20112010 Page 15 of 27 person and amount payable is not mentioned it does not constitute a cheque and, therefore, the penal provisions of Section 138 of the said Act are not attracted. xix.In G. Gopan v. Tonny Varghese, (Kerla) 2008(2) R.C.R.(Criminal) 225 : 2008(2) R.C.R.(Civil) 271 :
2008(2) AICLR 435 : 2008(1) ISJ (Banking) 460 it has been held :
''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 cheque contained the signature of the account holder or the accused, it cannot be said that the same was executed by him.
'' 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. '' 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 COMMERCIAL CIVIL JUDGE: NEW DELHI/20112010 Page 16 of 27 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.'' xx.In M/s Avon Organics v. Poineer Products Ltd., (A.P.) 2004(2) Cri.C.C. 335 : 2004(1) Crimes 567 : 2004(2) Comp Cas 18, it was held that the act of the complainant in filling up the amount portion in words and figures and put 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.
xxi.
xxii.In a decision reported in Johnson Scaria v. State of COMMERCIAL CIVIL JUDGE: NEW DELHI/20112010 Page 17 of 27 Kerala, 2007(1) RCR(Criminal) 637 : (2006(4) KLT 290), this Court has held that 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 COMMERCIAL CIVIL JUDGE: NEW DELHI/20112010 Page 18 of 27 execution of 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 cheque.'' xxiii.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. xxiv.The Apex Court, in a decision reported in Kamala S. v. Vidhydharan M.J. and another, 2007(3) RCR(Criminal) COMMERCIAL CIVIL JUDGE: NEW DELHI/20112010 Page 19 of 27 865 : 2007(4) RAJ 163 : [(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.
WHETHER THE OFFENCE UNDER S.138 N.I. Act, 1881 IS ATTRACTED WHEN THE CHEQUES WERE ISSUED MERELY AS 'SECURITY':
xxv.In the present case the complainant has categorically admitted that the cheques were obtained as ''security'' from the accused. The complainantherein had also made the accused to sign the loan agreement (Ex.CW1) and the promissory note (Ex. CW2). It has been reiterated in numerous case that the object of the Negotiable Instruments Act, 1881 is not to provide effective and speedy remedy for recovery of loans. The lawmakers must not have intended or imagined that money lenders or banks would COMMERCIAL CIVIL JUDGE: NEW DELHI/20112010 Page 20 of 27 obtain blank or post dated cheques while sanctioning/disbursing loans as securities and would use them to make debtors/borrowers to repay loan under threat of prosecution and punishment under S. 138. xxvi.In a recent decision Ramkrishna Urban Cooperative Credit Society Ltd. v. Shri Rajendra Bhagchand Warma (CRIMINAL APPLICATION NO. 898 OF 2009: Decision pronounced on 16th Feb 2010 by P.R. BORKAR,J.) the Bombay High Court, taking a literal view of the statutory provisions, has declared that a person is not liable under the Negotiable Instruments Act for bouncing of cheques if the liability is alleged on account of postdated cheques given by such person. The High Court was dealing with the validity of the acquittal order passed by the Magistrate where it was alleged by the Cooperative society which had extended a loan that the person had given postdated cheques as security for the loan taken which had bounced for insufficiency of funds. The Bombay High Court, agreeing with the acquittal order passed by the Magistrate, observed as under:
''14. Thus the object of the amendment and introduction of COMMERCIAL CIVIL JUDGE: NEW DELHI/20112010 Page 21 of 27 Chapter XVII in the Negotiable Instruments Act by Act of 1988 was mainly to encourage all major transactions including commercial or business transactions through cheques and to enforce credibility and acceptability of cheques in settlement of liability in general. Encouragement of payment by cheques/credit cards/debit cards rather than by cash is necessary for healthy economy. That also brings in transparency in transactions and discourages creation of black or unaccounted money through evasion of taxes or other malpractices. So, provisions like Section 138 of Negotiable Instruments Act are salutary to give reliability, credibility and acceptability of negotiable instruments like cheques in daily life. However, the object was not to provide effective and speedy remedy for recovery of loans. Law makers must not have intended or imagined that money lenders or banks would obtain blank or post dated cheques while sanctioning/disbursing loans as securities and would use them to make debtors/borrowers to repay loan under threat of prosecution and punishment under Section 138 of the Negotiable Instruments Act. So, it is doubtful if COMMERCIAL CIVIL JUDGE: NEW DELHI/20112010 Page 22 of 27 provisions of Section 138 of the Negotiable Instruments Act would be attracted to a case in which a blank or post dated cheque is obtained by a bank or money lender before or while sanctioning or disbursing loan amount as security for the loan.'' xxvii.In the following cases bouncing of cheques which were given as security for loan amounts were held not to attract provisions of Section 138 of the Negotiable Instruments Act :
Exports India (M/s.) v. State, (Delhi) 2007(4) R.C.R.(Criminal) 300 : 2007(3) Civ.C.C.198;
Anand Urban Cooperative Credit Society V/s. Vipin Lalchand Mehta & Anr., 2008 (2) Bom.C.R. (Cri.) 65 : 2008 ALL M.R. (Cri) 2266;
Goa Handicrafts, Rural & Small Scale Industries Development Corporation Ltd., V/s. Samudra Ropes Pvt. Ltd. & Anr., 2005 ALL MR (Cri) 2643 : 2006 (1) Bom.C.R. (Cri) 157; Hanumant R. Naik V/s. Ajit Harmalkar, 2008 (1) Bom.C.R. (Cri) 432 : 2008 ALL MR (Cri) 486;
COMMERCIAL CIVIL JUDGE: NEW DELHI/20112010 Page 23 of 27 M.S. Narayana Menon Alias Mani V/s. State of Kerala and Anr., (2006) 6 SCC 39;
Karekar Finance Pvt. Ltd., V/s. Shri M.N. Bashyam & Anr., 2007 ALL MR (Cri) 3073 : 2008(3) B.C. 98.;
Jayantilal Parmar V/s. Vaishali Farne (2007) 2 Bom.C.R. (Cri)
403. Om Shri Finance & Investment Corporation V/s. Mohemmed Sheikh (2007) 11 LJSOFT (URC) 24.( 15 ) Exports India (M/s.) v. State, (Delhi) 2007(4) xxviii.In R.C.R.(Criminal) 300 : 2007(3) Civ.C.C. 198 a n accused took an agency for sale of products of complainant and issuing two blank cheques. The complainant therein filled up the amount and date and presented the cheque which goit dishonoured. It was held by the Hon'ble delhi High Court that no offence under Section 138 of Negotiable Instruments Act was made out as there was no debt or liability when the cheque was handed over to the drawee. xxix.In Anand Urban Cooperative Credit Society V/s. Vipin Mehta, 2008 (2) Bom.C.R. (Cri) 65, trial court held that 5 blank cheques were obtained towards security for repayment of loan as in this case. This Court refused to COMMERCIAL CIVIL JUDGE: NEW DELHI/20112010 Page 24 of 27 interfere with the order of acquittal.
xxx.In Karekar Finance Pvt. Ltd. V/s. Shri M.N. Bashyam & Anr., 2007 ALL MR (Cri) 3073, it is held that though the accused had taken loan from the complainant, he proved that the blank cheque was issued by him towards collateral security for loan and interest. It is held that the cheque cannot be said to be issued towards discharge of a debt and same would not come under purview of Section 138 of the Negotiable Instruments Act.
xxxi.Similarly, in the case of Jayantilal Parmar V/s. Vaishali Farne (2007) 2 Bom.C.R. (Cri) 403, three blank cheques were given as security for loan amount. Two cheques were encashed and third was bounced. The Single Bench of the Court refused to interfere with the order of acquittal. xxxii.In Om Shri Finance & Investment Corporation V/s. Mohemmed Sheikh (2007) 11 LJSOFT (URC) 24, also the Court declined to interfere with the order of acquittal.
((1996) xxxiii. In Taher N. Khambat v. Vinayak Enterprises 86 Comp Cases 471) , it was held that a blank signed cheque given as security would not attract S.138. It was categorically observed therein that such a cheque was not COMMERCIAL CIVIL JUDGE: NEW DELHI/20112010 Page 25 of 27 issued voluntarily in discharge of a debt or legal liability. The court held that if it holds otherwise, then every creditor would abuse the provisions of this section by obtaining blank cheques and putting the debtors in fear of prosecution and insist on discharge of the debts at any time.
WHETHER UNDER S.20 OF THE N.I. ACT, 1881 THERE IS AN IMPLIED AUTHOROTY TO FILL UP THE DATE AND THE AMOUNT IN THE CHEQUE:
xxxiv. Section 20 of the Negotiable Instruments Act reads as follows : "Inchoate stamped instruments Where one person signs and delivers to another a paper stamped in accordance with the law relating to negotiable instruments then in force in India, and either wholly blank or having written thereon an incomplete negotiable instrument, he thereby gives prima facie authority to the holder thereof to make or complete, as the case may be, upon it a negotiable instrument, for any amount specified therein and not COMMERCIAL CIVIL JUDGE: NEW DELHI/20112010 Page 26 of 27 exceeding the amount covered by the stamp. The person so signing shall be liable upon such instrument, in the capacity in which he signed the same, to any holder in due course for such amount provided that no person other than a holder in due course shall recover from the person delivering the instrument anything in excess of the amount intended by him to be paid thereunder." xxxv.The provision of S.20 has no application to the blank cheques issued after signing by the drawer. According to Gopal v. D. Balachandran, (Madras) 2008(2) R.C.R. (Criminal) 466 : 2008(2) R.C.R.(Civil) 581 : 2008(3) AICLR 387:
'' A bare reading of section 20 of the Negotiable Instruments act would go to show that it would apply to only a stamped instrument viz., pronote and bill of exchange and not to the cheques. As per section 20 of the Negotiable Instruments Act, the holder in due course has every authority to complete the blank pronote and bill of exchange delivered to him after properly signing therein by the maker of the instrument. But, section 20 will have no application to the blank cheques issued COMMERCIAL CIVIL JUDGE: NEW DELHI/20112010 Page 27 of 27 after signing by the drawer. '' xxxvi.The law on the subject of the cheques has developed over the last few years. Some aspects have undergone changes. After considering the facts and circumstances of the case and the various recent developments it emerges that culpability cannot be fastened on to the accused herein. Accordingly Sh. Ram Naresh Verma s/o Sh. Shri. Sheetal Prasad r/o 302/3B, Chelmsford Road, Railway Officer Quarter, Connaught Place, New Delhi is acquitted.
xxxvii.The file be consigned to the record room. Announced in the open Court on 20th Nov. 2010 (VEENA RANI) COMMERCIAL CIVIL JUDGE: NEW DELHI COMMERCIAL CIVIL JUDGE: NEW DELHI/20112010