Jammu & Kashmir High Court - Srinagar Bench
Ghulam Mohiuddin Sheikh vs Haji Bashir Ahmad Dar on 27 June, 2022
Author: Sanjay Dhar
Bench: Sanjay Dhar
S. No.01
Regular List
HIGH COURT OF JAMMU & KASHMIR AND LADAKH
AT SRINAGAR
CRM(M) No.204/2022
CrlM No.662/2022
Ghulam Mohiuddin Sheikh
.....Petitioner(s)
Through: Mr. R.A Bhat, Advocate
V/s
Haji Bashir Ahmad Dar
..... Respondent(s)
Through: None
CORAM:
HON'BLE MR. JUSTICE SANJAY DHAR, JUDGE
ORDER
27.06.2022
1. The petitioner has challenged complaint filed by the respondent against him for offence under Section 138 of Negotiable Instruments Act (hereafter for short "the NI Act") which is pending before the Court of Chief Judicial Magistrate Shopian. Challenge has also been thrown to the order whereby the learned Magistrate has taken cognizance of the offence and issued process against the petitioner.
2. The only ground urged by the petitioner in this petition is that the cheque which is subject matter of the complaint, was dishonoured by the banker not on account of insufficiency of funds but because of the reason of closure of the account. According to the learned counsel for the petitioner, as per the provisions contained in Section 138 of the NI Act, it is only if a cheque is dishonoured due to insufficiency of funds that the offence is made out against the drawer. It is contended that in SARVEEDA NISSAR 2022.06.29 13:22 I attest to the accuracy and integrity of this document 2 CRM(M) No.204/2022 CrlM No.662/2022 no other case offence under Section 138 of the NI Act can be stated to have been made out against the drawer of a cheque. In this regard learned counsel for the petitioner has relied upon the judgment of Karnataka High Court in the case of Deepa Finance Corporation v. A.K.Mohammad 2001 CRL.L.J 3582.
3. I have heard learned counsel for the petitioner and perused the record.
4. Admittedly the cheque which is subject matter of the impugned complaint has been dishonoured due to the reason of closure of the account and not due to insufficiency of funds. The question arises whether offence under Section 138 of the NI Act is made out against the drawer of a cheque when it is found that the cheque has been dishonoured due to closure of the account.
5. The Supreme Court in the case of Laxmi Dyechem vs. State of Gujarat and Ors (2012) 13 SCC 375, while dealing with a case where the cheque was dishonoured on account of mismatch of signatures of the drawer of the cheque, held that even in the circumstances where there is mismatch of signatures of the drawer or the account is closed by the drawer, dishonour of the cheque would be an offence under Section 138 of the NI Act. In this regard it would be profitable to refer to the observations of the Court made in para 16.1 and 16.2 of the judgment which are reproduced as under:-
"16.1 This Court has in the decisions referred to above taken note of situations and contingencies arising out of deliberate acts of omission or commission on the part of the drawers of the cheques which would inevitably result in the dishonour of the cheque issued by them. For instance, this Court has held that if after issue of the cheque the drawer closes the account it must be presumed SARVEEDA NISSAR 2022.06.29 13:22 I attest to the accuracy and integrity of this document 3 CRM(M) No.204/2022 CrlM No.662/2022 that the amount in the account was nil hence insufficient to meet the demand of the cheque. A similar result can be brought about by the drawer changing his specimen signature given to the bank or in the case of a company by the company changing the mandate of those authorised to sign the cheques on its behalf. Such changes or alteration in the mandate may be dishonest or fraudulent and that would inevitably result in dishonour of all cheques signed by the previously authorised signatories. There is in our view no qualitative difference between a situation where the dishonour takes place on account of the substitution by a new set of authorised signatories resulting in the dishonour of the cheques already issued and another situation in which the drawer of the cheque changes his own signatures or closes the account or issues instructions to the bank not to make the payment. So long as the change is brought about with a view to preventing the cheque being honoured the dishonour would become an offence under Section 138 subject to other conditions prescribed being satisfied.
16.2 There may indeed be situations where a mismatch between the signatories on the cheque drawn by the drawer and the specimen available with the bank may result in dishonour of the cheque even when the drawer never intended to invite such a dishonour. We are also conscious of the fact that an authorised signatory may in the ordinary course of business be replaced by a new signatory ending the earlier mandate to the bank. Dishonour on account of such changes that may occur in the course of ordinary business of a company, partnership or an individual may not constitute an offence by itself because such a dishonour in order to qualify for prosecution under Section 138 shall have to be preceded by a statutory notice where the drawer is called upon and has the opportunity to arrange the payment of the amount covered by the cheque. It is only when the drawer despite receipt of such a notice and despite the opportunity to make the payment within the time stipulated under the statute does not pay the amount that the dishonour would be considered a dishonour constituting an offence, hence punishable. Even in such cases, the question whether or not there was a lawfully recoverable debt or liability for discharge whereof the cheque was issued would be a matter that the trial Court will examine having regard to the evidence adduced before it and keeping in view the statutory presumption that unless rebutted the cheque is presumed to have been issued for a valid consideration."SARVEEDA NISSAR 2022.06.29 13:22 I attest to the accuracy and integrity of this document 4 CRM(M) No.204/2022 CrlM No.662/2022
6. Again this Court has, in the case of Dev Raj Bhasin v. Parveen Kumar Kandhari 2007 (3) JKJ 395 while considering the question whether offence under Section 138 of the NI Act is made out against the drawer who has closed the account after referring to the various judgments of the Supreme Court, held that dishonor of a cheque on account of closure of an account would be an offence within the meaning of Section 138 of the NI Act.
7. In view of the aforesaid settled position of law, I do not find any merit in this petition. The same is accordingly dismissed.
8. Copy of this order be sent to the trial Magistrate.
(SANJAY DHAR) JUDGE SRINAGAR 27.06.2022 Sarveeda Nissar SARVEEDA NISSAR 2022.06.29 13:22 I attest to the accuracy and integrity of this document