Gujarat High Court
M/S.Dilipkumar Nalinkant Gandhi vs State Of Gujarat & ... on 27 July, 2015
Author: Harsha Devani
Bench: Harsha Devani
R/CR.A/1719/2005 JUDGMENT
IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
CRIMINAL APPEAL NO. 1719 of 2005
FOR APPROVAL AND SIGNATURE:
HONOURABLE MS.JUSTICE HARSHA DEVANI
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1 Whether Reporters of Local Papers may be allowed Yes
to see the judgment ?
2 To be referred to the Reporter or not ? Yes
3 Whether their Lordships wish to see the fair copy of No
the judgment ?
4 Whether this case involves a substantial question of No
law as to the interpretation of the Constitution of
India or any order made thereunder ?
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M/S.DILIPKUMAR NALINKANT GANDHI....Appellant(s)
Versus
STATE OF GUJARAT & 2....Opponent(s)/Respondent(s)
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Appearance:
MR. BHARGAV N. BHATT, ADVOCATE for the Appellant
DILIPKUMAR R SHAH, ADVOCATE for the Respondent No. 3
MR GIRISH M DAS, ADVOCATE for the Respondent No. 2 - 3
MS MOXA THAKKAR, ADDL. PUBLIC PROSECUTOR for Respondent No. 1
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CORAM: HONOURABLE MS.JUSTICE HARSHA DEVANI
Date : 27/07/2015
ORAL JUDGMENT
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1. This appeal under section 378(4) of the Code of Criminal Procedure, 1973 (hereinafter referred to as "the Code") at the instance of the original complainant is directed against the judgment and order of acquittal dated 7th February, 2005 passed by the learned Second Judicial Magistrate First Class, Himmatnagar, Sabarkantha in Criminal Case No.380 of 1998 whereby the respondents No.2 and 3 have been acquitted for the offence under section 138 of the Negotiable Instruments Act, 1881 (hereinafter referred to as "the N.I. Act").
2. The appellant - complainant lodged a complaint in the Court of the learned Chief Judicial Magistrate, Himmatnagar, alleging that the complainant is engaged, inter alia, in the business of cheque discounting. The accused No.1 is carrying on the business as Proprietor of Riddhi Graphics, Himmatnagar, at Somabhai Chambers and the accused No.2 is the father of the accused No.1. The accused No.1 needed funds for his personal work and had opened his account with the complainant - partnership firm and the accused No.2 had stood as a guarantor for a sum of Rs.15,00,000/- (rupees fifteen lacs) and accordingly, the accused No.1 had obtained loan from the complainant firm. At the time when the accused No.1 availed of the loan from the complainant firm, he had completed all formalities for obtaining loan like issuing cheques, writings, etc. The accused No.1 after duly understanding, applying his mind, voluntarily and willingly put necessary signatures, etc. on the cheques and writings. The accused No.1 had time and again made withdrawals from the accounts maintained by him with the firm.
2.1 At the time when the accused No.1 took the loan, it was Page 2 of 80 HC-NIC Page 2 of 80 Created On Wed Sep 16 01:14:32 IST 2015 R/CR.A/1719/2005 JUDGMENT decided that he would pay monthly interest @ 1.5% and 0.5% per month by way of service charges. The accused No.1 had issued a cheque bearing No.131106 on the account maintained by him with the Himmatnagar Nagrik Sahakari Bank Ltd., Himmatnagar to the complainant firm. It was agreed between the parties that the said cheque was to be presented and encashed if any amount was payable along with interest and service charges at the time of taking accounts of the firm. Both the accused had assured him that at the time when the cheque is presented, it would be honoured and only because of such assurance the complainant firm had advanced loan to the accused No.1. If such assurance had not been given, the complainant firm would not have advanced any loan to the accused No.1.
2.2 It was further alleged that on 08.01.1998, at the time of mutually settling the accounts of the accused No.1 with the complainant firm, it was found that an amount of Rs.14,72,587.52 ps. was payable by the accused to the complainant firm. Accordingly, the complainant filled up the said amount in the cheque and as told by the accused, the cheque dated 08.01.1998 was presented to the bank for acceptance; however, the cheque was not accepted and came to be returned with the endorsement "funds insufficient". In this regard, despite orally informing the accused and their advocate about the same, none of them paid the amount and gave false promises and were whiling away the time.
2.3 It was, accordingly, alleged that in the above background, the accused, in connivance with each other, have abetted each other and given totally false assurance, promise, to the Page 3 of 80 HC-NIC Page 3 of 80 Created On Wed Sep 16 01:14:32 IST 2015 R/CR.A/1719/2005 JUDGMENT complainant firm, despite the fact that the funds were not sufficient for honouring the cheque, without making any arrangement, had given a false cheque and for the purpose of their personal gain, obtained a huge loan from the complainant firm and with mala fide and criminal intention caused huge financial loss to the complainant firm and thereby, committed the offence punishable under section 420 of the Indian Penal Code and section 138 of the Negotiable Instruments Act, 1881.
2.4 It was further stated that in the aforesaid facts and circumstances, the complainant firm, through its advocate, issued a notice dated 15.01.1998 to the accused by way of Registered A. D. Post as well as U.P.C. The U.P.C. notices have been served upon the accused, whereas in respect of the notices sent by Registered A. D. Post, despite the fact that the postman had intimated the accused on 16.01.1998, they had not got the notices released. Despite the above, neither of the two accused have given any reply to the notice, nor have they paid any part thereof. In the aforesaid background, the appellant lodged the above referred complaint alleging the commission of the offences punishable under section 138 of the N.I. Act and section 420 of the Indian Penal Code.
3 Upon issuance of summons, the accused appeared before the trial court and pleaded not guilty to the charge. During the course of the trial, on behalf of the complainant two witnesses came to be examined viz. the appellant - complainant at Exhibit-15 and witness Rakeshbhai Babubhai Choksi at Exhibit-
94. The appellant had along with the complaint produced certain documentary evidence on record and during the course of trial, at the time of recording of the testimonies of the Page 4 of 80 HC-NIC Page 4 of 80 Created On Wed Sep 16 01:14:32 IST 2015 R/CR.A/1719/2005 JUDGMENT witnesses, had produced other documentary evidence on record. The respondent No.2 accused had also made an application for production of documents, pursuant to which the appellant had produced certain other documents on record.
4 The trial court after appreciating the evidence on record, found that the cheque in question had been issued in the year 1995, whereas the cheque was presented before the bank on 08.01.1998, beyond a period of six months, and hence, the cheque had been presented beyond the validity period and accordingly, held that the prosecution had failed to prove the charge against the accused and acquitted them.
5. Mr. Bhargav Bhatt, learned advocate for the appellant at the outset submitted that he does not press the appeal qua the accused No.2 Shri Hareshkumar Manilal Trivedi. Therefore, the challenge in the present appeal is restricted to the acquittal of the accused No.1, viz. the respondent No.2 in the present appeal. Since the respondent No.1 State of Gujarat is merely a formal party, the respondent No.2-accused shall hereinafter for the sake of convenience be referred to as "the respondent".
6. Assailing the impugned judgment and order, Mr. Bhatt submitted that the trial court has failed to appreciate the evidence in proper perspective while acquitting the accused. It was submitted that the main ground on which the accused have been acquitted is that the cheque which was given in the year 1995, ought to have been filled in and presented within a period of six months from 29th March, 1995, that is, the date on which the cheque was given to the complainant. It was submitted that the said finding of the trial court is based on an Page 5 of 80 HC-NIC Page 5 of 80 Created On Wed Sep 16 01:14:32 IST 2015 R/CR.A/1719/2005 JUDGMENT erroneous interpretation of the provisions of the N. I. Act, inasmuch as, the period of six months would commence from the date of the cheque and not from the date on which the cheque was given to the complainant. It was submitted that the cheque in question was dated 08.01.1998 and was presented within the validity period and therefore, the main ground for acquitting the accused is itself without any basis.
6.1 The attention of the court was invited to the documents executed by and between the complainant and the accused at the time when the account of the accused No.1 was opened with the complainant firm. Referring to Exhibit-17, it was pointed out that the said document is the same document pursuant to which the cheque in question was given. Referring to the said document, it was pointed out that the accused No.1 had agreed therein that every year, on the 25th of March and September, the accounts are to be settled and after calculating the principal, interest, adat, vatav, the total amount is to be paid by the accused and that in this regard, for the sake of convenience, the accused has given an undated cheque drawn on the Himmatnagar Nagrik Sahakari Bank Ltd. bearing No.131106. It was pointed out that the accused has categorically agreed that if they did not pay the amount in time, the complainant shall be entitled to fill the outstanding amount and date and encash the cheque. It was submitted that the loan amount sanctioned in the case of the respondent was to the extent of Rs.15,00,000/- and the cheque in question had been issued for covering the future liability to the extent of Rs.15,00,000/-. It was submitted that the terms of the contract suggest the purpose for which the cheque was given and that the document, Exhibit-17 has to be read in conjunction with Page 6 of 80 HC-NIC Page 6 of 80 Created On Wed Sep 16 01:14:32 IST 2015 R/CR.A/1719/2005 JUDGMENT the words "every year". It was submitted that there was an express consent to fill the amount and date in the cheque and express agreement between the parties to that effect. The attention of the court was further invited to the letter, Exhibit- 54 issued by the accused No.1, to submit that there is no challenge to the said document, nor is there any challenge to the accompanying cheque with list which amounts to admission of debt under the Indian Evidence Act. It was submitted that it is not the case of the accused that the letter is not written by him, nor is there any suggestion that the cheque is not given towards the discharge of liability. Thus, there is no challenge to the document, Exhibit-54, which shows that there is a relation between the complainant and the accused, where the accused have admitted their financial liability to the tune of Rs.12,50,000/-. It was submitted that unless the factum is seriously challenged or rebutted, the accused cannot be heard to say that there exists no liability or legally enforceable debt. It was also submitted that the fact that the debt is legally recoverable has, in fact, been admitted by the accused.
6.2 In support of his submissions, the learned counsel placed reliance upon the decision of the Supreme Court in the case of M.M.T.C. Limited v. Medchl Chemicals and Pharma Private Limited, (2002) 1 SCC 234, for the proposition that there is no requirement that the complainant must specifically allege in the complaint that there was a subsisting liability. The burden of proving that there was no existing debt or liability was on the respondents, which they have to discharge in the trial. Reference was also made to the decision of the Supreme Court in the case of I.C.D.S. Ltd. v. Beena Shabeer and Page 7 of 80 HC-NIC Page 7 of 80 Created On Wed Sep 16 01:14:32 IST 2015 R/CR.A/1719/2005 JUDGMENT another, 2002 (3) GLH 241, wherein it has been held thus :
"10. The language, however, has been rather specific as regards the intent of the legislature. The commencement of the Section stands with the words "Where any cheque".
The above noted three words are of extreme significance, in particular, by reason of the user of the word "any" the first three words suggest that in fact for whatever reason if a cheque is drawn on an account maintained by him with a banker in favour of another person for the discharge of any debt or other liability, the highlighted words if read with the first three words at the commencement of Section 138, leave no manner of doubt that for whatever reason it may be, the liability under this provision cannot be avoided in the event the same stands returned by the banker unpaid. The legislature has been careful enough to record not only discharge in whole or in part of any debt but the same includes other liability as well. This aspect of the matter has not been appreciated by the High Court, neither been dealt with or even referred to in the impugned judgment.
11. The issue as regards the co-extensive liability of the guarantor and the principal debtor, in our view, is totally out of the purview of Section 138 of the Act, neither the same calls for any discussion therein. The language of the Statute depicts the intent of the law-makers to the effect that wherever there is a default on the part of one in favour of another and in the event a cheque is issued in discharge of any debt or other liability there cannot be any restriction or embargo in the matter of application of the provisions of Section 138 of the Act: 'Any cheque' and 'other liability' are the two key expressions which stands as clarifying the legislative intent so as to bring the factual context within the ambit of the provisions of the Statute. Any contra interpretation would defeat the intent of the legislature. The High Court, it seems, got carried away by the issue of guarantee and guarantor's liability and thus has overlooked the true intent and purport of Section 138 of the Act. The judgments recorded in the order of the High Court do not have any relevance in the contextual facts and the same thus does not lend any assistance to the contentions raised by the respondents."
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6.3 Strong reliance was placed upon the decision of this court in the case of Hitenbhai Parekh, Proprietor - Parekh Enterprises v. State of Gujarat and another, 2009 (3) GLH 742, for the proposition that when a cheque bearing only signature of the drawer is delivered and received by a payee for the discharge, in whole or in part, of any debt or liability, there is an implied authority for the person receiving such cheque to complete it by filling the blanks and the amount having been filled up under such implied authority would be the amount intended by him to be paid thereunder. The focus in such cases would shift to the aspect of such amount being for the discharge, in whole or in part, of any legally enforceable debt or other liability. It was submitted that in the facts of the present case, under the agreement, Exhibit-17, upon the accounts being settled, the complainant was duly authorized to fill up the blanks in the cheque, including the date and amount and that the complainant had duly proved the legally enforceable debt by producing the documentary evidence in the nature of statements of account, the letter, Exhibit-54 issued by the accused admitting the liability of Rs.12,50,000/- etc. It was submitted that the cheque in question at the relevant time when the same was given to the complainant, was in the nature of a bill of exchange and that the same became a cheque only when the blanks were filled up by writing the amount as well as the date on the cheque. It was submitted that on the date of the cheque, there was a legally enforceable debt recoverable from the accused and hence, the trial court was not justified in holding that the cheque in question had been misused and presented beyond the prescribed period of limitation. Reliance was also placed upon the decision of this court in the case of (M/s.) United India Page 9 of 80 HC-NIC Page 9 of 80 Created On Wed Sep 16 01:14:32 IST 2015 R/CR.A/1719/2005 JUDGMENT Phosferous Ltd. and others v. Shri Vinodbhai Mohanbhai Patel and another, 1997 (1) GLH 881. The decision of this court in the case of S. R. Apparels Private Limited v. State of Gujarat,2012 JX(Guj) 129, was cited wherein, a contention had been raised on behalf of the applicants therein that at the relevant time when the cheque was given in the year 2005, it was not for an ascertained amount and it was a blank cheque and therefore, it cannot be said to be a cheque or bill of exchange and therefore, for dishonour of such incomplete and/or inchoate cheque, the applicants therein cannot be held liable for the offence under section 138 of the N. I. Act. The court took note of the fact that at the relevant time when the cheque was issued, it may have been incomplete and/or blank, but considering section 20 of the N. I. Act, it gives implied authority to the holder of the cheque or instrument to fill the blanks and make it complete. Therefore, what is required to be considered is whether on the date on which the cheque is deposited, the same is complete or not. It was urged that ordinarily, an order of acquittal is not disturbed, but in the facts of the present case, the acquittal is on an incorrect ground and hence, the appeal deserves to be allowed and the accused is required to be convicted and compensation to the extent of the cheque amount is required to be ordered to be paid to the complainant.
7. Opposing the appeal, Mr. Girish Das, learned advocate for the respondent accused supported the impugned judgment and order of acquittal. It was submitted that the trial court after duly and properly appreciating the evidence on record, has found that the prosecution has not established the charge against the accused beyond reasonable doubt and has Page 10 of 80 HC-NIC Page 10 of 80 Created On Wed Sep 16 01:14:32 IST 2015 R/CR.A/1719/2005 JUDGMENT acquitted the accused. It was submitted that it is settled legal position that an order of acquittal is ordinarily not to be disturbed in the absence of any perversity in the findings recorded by the trial court. In the facts of the present case, it is an admitted position that the cheque in question was given in the year 1995 and was presented before the bank in the year 1998, much beyond the period of six months and hence, the trial court was wholly justified in holding that the cheque in question had been misused and had been presented for encashment beyond its validity period.
7.1 As regards the agreement, Exhibit-17, executed by the accused No.1, it was submitted that the said agreement dated 29.03.1995 was not executed with utmost consciousness of the consequences. Reference was made to the document, Exhibit- 54, namely, the letter issued by the accused No.1 to the complainant and the list annexed thereto which shows that in all eleven cheques had been issued therewith, to submit that when in respect of the transactions, the cheques had been issued in the year 1997, there was no necessity for the complainant to use the cheque issued in the year 1995. It was submitted that insofar as the cheque in question is concerned, it is an admitted position that the same was a blank cheque bearing the signature of the accused. Reference was made to the provisions of section 20 of the N. I. Act, which defines "Inchoate stamped instruments", to submit that the same provides that where one person signs and delivers to another a paper stamped in accordance with the law relating to negotiable instruments and either wholly blank or having written thereon an incomplete negotiable instrument, he thereby gives prima facie authority to the holder thereof to Page 11 of 80 HC-NIC Page 11 of 80 Created On Wed Sep 16 01:14:32 IST 2015 R/CR.A/1719/2005 JUDGMENT make or complete, as the case may be, upon it a negotiable instrument, for any amount specified therein and not exceeding the amount covered by the stamp; and that 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. It was submitted that therefore, the cheque in question should bear the amount specified therein and the person signing shall be liable only for such amount. It was submitted that in the facts of the present case, the cheque in question being a blank cheque without any figure having been stated thereon, the same cannot be stated to be an inchoate stamped instrument as contemplated under section 20 of the N. I. Act. Reference was made to the cross- examination of the complainant wherein, the complainant has denied that the cheque in question was given by way of guarantee and that the same was not towards the loan amount.
7.2 The next contention raised by the learned advocate was that in the notice, there must be specific figure stating specific principal amount, interest, adat and vatav. Referring to the impugned notice, it was submitted that there is no such bifurcation in the notice. Reliance was placed upon the decision of this court in the case of Yakub Musabhai Shafi v. Lalit H. Gandhi, 2012 (2) GLH 9, wherein it has been held that it is well settled principle of law that the notice has to be read as a whole. In the notice, demand has to be made for the "said amount" that is, the cheque amount. If no such demand Page 12 of 80 HC-NIC Page 12 of 80 Created On Wed Sep 16 01:14:32 IST 2015 R/CR.A/1719/2005 JUDGMENT is made, the notice no doubt would fall short of its legal requirement. Where in addition to "said amount" there is also a claim by way of interest, cost etc., whether the notice is bad would depend on the language of the notice. If in a notice while giving the breakup of the claim the cheque amount, interest, damages, etc. are separately specified, other such claims for interest, cost, etc. would be superfluous and these additional claims would be severable and will not invalidate the notice. If, however, in the notice, an omnibus demand is made without specifying what was due under the dishonoured cheque, notice might well fail to meet the legal requirement and may be regarded as bad. It was submitted that in the facts of the present case, the notice does not state the breakup of the principal amount, the interest etc. and hence, in the light of the law laid down in the above decision, the notice fails to meet with the legal requirement and has to be regarded as bad.
7.3 Next, it was contended that the notice has not been duly served upon the accused and that the service of notice is defective. It was argued that it is mandatory upon the complainant to serve the party and to put some sincere efforts to serve a party. It was contended that service of notice is a two edged sword, viz., a person liable to pay can avoid service of notice and in the same manner, the person intending to misuse the cheque or for any other mala fide reason, can give a wrong address. The attention of the court was invited to the address of the accused as stated in the documents executed at the time of opening the account, to submit that the address stated therein and the address at which the notice is stated to have been served are different. It was further submitted that Page 13 of 80 HC-NIC Page 13 of 80 Created On Wed Sep 16 01:14:32 IST 2015 R/CR.A/1719/2005 JUDGMENT insofar as service of the registered A. D. notice is concerned, the envelope bears the endorsement "intimation has been given". It was submitted that thus, there is no proper service of notice under section 138 of the N.I. Act and hence, the requirements of section 138 are not satisfied in the present case. It was submitted that even if the service of notice is accepted, there is no specific averment regarding the amount due which goes to the root of the matter. It was argued that to come under the purview of section 138 of the N. I. Act, the party should be vigilant of his rights. It was submitted that in the present case, the requirements of section 138 of the N. I. Act are clearly not made out.
7.4 Next it was submitted that in the present case, the cheque was of the year 1995, the figure was put without the consent of the accused and without any proper verification. It was submitted that under section 138 of the N.I. Act, a party cannot club all the nine cheques and seek to recover the total amount of all the nine cheques by covering it with one cheque and instead of filing nine complaints, file only one complaint. Referring to the document, Exhibit-17, it was submitted that the same was executed in the year 1995 and therefore, the cheque in question was relatable to the said period only and could not have been utilized for the purpose of any dues in respect of the later years. It was submitted that even as per the deposition of the complainant, as per the procedure of opening the account, a blank cheque was taken and therefore, a blank cheque has been misused and a blank cheque cannot be the basis for a complaint under section 138 of the N. I. Act. It was contended that the conduct of the complainant is not normal and is tricky. It was vehemently argued that pursuant to Page 14 of 80 HC-NIC Page 14 of 80 Created On Wed Sep 16 01:14:32 IST 2015 R/CR.A/1719/2005 JUDGMENT the application made by the accused for production of documents, the complainant has produced only the xerox copies of the ten cheques and that in fact, the accused had paid the cheque amount in cash and the originals were returned to the accused No.1 and therefore, are in his custody. It was submitted that it is for this reason, that the complainant has produced the xerox copies of the cheques and not the original.
7.5 Next, it was emphatically submitted that no evidence has been produced to the effect that in fact, the cheque in question was presented for encashment before the bank. It was submitted that initially, the certificate issued by the bank and counter foil were not produced by the complainant and that subsequently, a concocted counter foil and got up certificate have been produced to establish that the cheque had been presented before the bank. It was also submitted that the cheque return memo does not bear any signature. Referring to the deposition of Rakesh Babulal, who has been examined at Exhibit-94, it was submitted that the said employee of the bank is not the concerned person who had signed the relevant document and that he has admitted that he has no personal knowledge in respect of the dishonour of the cheque. It was pointed out that only xerox copies of cheques are produced, vouchers are not produced and the officer of the bank who is actually acquainted with the facts has not been examined, and that the certificate and counterfoil have not been proved. It was submitted that thus, overwhelming evidence to prove the existence of a legally enforceable debt has not been produced by the complainant.
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7.6 Mr. Das, next invited the attention of the court to the provisions of section 87 of the N. I. Act, to submit that if a blank cheque is given, section 87 mandates in unequivocal terms that prior to putting a figure, the consent of the drawer has to be obtained and there should be mutual understanding and knowledge of both the parties with regard to date and the amount. Reliance was placed upon the decision of the Supreme Court in the case of John K. Abraham v. Simon C. Abraham and another, (2014) 2 SCC 236 and more particularly to the defects which have been noted by the learned Chief Judicial Magistrate as reproduced therein wherein, inter alia, he had also noted it was not the case of the respondent that the writing in the cheque and filling up of the figures were with the consent of the appellant accused. It was pointed out that the Supreme Court has, in the light of the various defects in the evidence of the respondent as noted by the trial court, observed that such a serious lacuna in the evidence of the respondent, which strikes at the root of a complaint under section 138, having been noted by the learned trial Judge, reversal of the judgement of the trial court by the High Court was vitiated. Mr. Das pointed out that thus, the Supreme Court has approved of the findings recorded by the trial court that it was not the case of the respondent that writing in the cheque and filling up of the figures were with the consent of the appellant accused. It was submitted that therefore, in case of a blank cheque, the same could be validated by filling up figures only if the same were with the consent of the drawer. In support of such submission, the learned counsel placed reliance upon the decision of the Andhra Pradesh High Court in the case of Avon Organics Limited v. Pioneer Products Limited, LAWS(APH)-2003-7-143, for the proposition that Page 16 of 80 HC-NIC Page 16 of 80 Created On Wed Sep 16 01:14:32 IST 2015 R/CR.A/1719/2005 JUDGMENT whenever blank cheques are filled up and presented, a presumption can be drawn under section 139 of the Act. It is a rebuttable presumption. The court held that where the accused has not given consent to fill up the cheque for a particular amount in figures and words and the date portion, it constitutes alteration of the cheque. It cannot be done without the consent of the party who issued the cheque. The court was of the view that the cheque issued without mentioning the amount for which it was drawn, is not a cheque at all. It is not a bill of exchange at all as it is not drawn for a certain amount. Special reference was made to the findings recorded by the court that the appellant therein had put the date as 15.01.1991, written his own name in the space intentioned for the payee and also mentioned amount as Rs.1,18,337=00 and presented the cheque, even at the time when he presented the cheque, he would not have expected that the cheque would be honoured. He was presenting a cheque only with a view to get an endorsement, which would enable him to proceed under section 138 of the Act. If this sort of practice is allowed, every creditor should abuse the provisions of section 138 of the Act by obtaining blank cheques and putting the debtors in the fear of presentation insist on discharge of the debts at any time. The court was of the view that, that would not have been the intention of the Legislature while incorporating section 138 in the Negotiable Instruments Act. Reverting to the facts of the present case, Mr. Das submitted that, the complainant has not filled the figure with the consent of the accused and therefore, the instrument is neither a cheque nor a bill of exchange. According to the learned counsel, consent is a must at the time when the cheque is filled up and that filling up of a blank cheque without the consent of the drawer also amounts to Page 17 of 80 HC-NIC Page 17 of 80 Created On Wed Sep 16 01:14:32 IST 2015 R/CR.A/1719/2005 JUDGMENT material alteration. It was submitted that the complainant has not filled the figure with the consent of the accused and hence, the instrument in question is neither a cheque nor a bill of exchange, under the circumstances, the provisions of section 138 of the N.I. Act would not be attracted.
7.7 Reference was made to the decision of this court in the case of Hitenbhai Parekh, Proprietor Parekh Enterprise v. State of Gujarat (supra), wherein the learned counsel for the respondent accused relied upon the judgement of the Kerala High Court in Capital Syndicate v. Jameela, 2003 (2) Crimes 122, and the observations that a cheque to be valid, should certainly specify the amount and details regarding payee. If at the time of issue, amount is not specified and payee is uncertain, then cheque does not become a valid negotiable instrument as defined in the Act. Though the subsequent putting of the date in an undated cheque would not always amount to material alteration rendering the instrument void under section 87 of the Act, the subsequent insertion of the amount and the name of the payee without the consent of the drawer would amount to material alteration rendering the instrument void under section 87 of the Act. Reference was also made to paragraph 6.1 thereof wherein, the court has referred to the decision of the Karnataka High Court in the case of Shreyas Agro Services Pvt. Ltd. v. Chandrakumar S. B., 2006 Cr.L.J. 3140, for the proposition that if the drawee were to dishonestly fill up any excess liability and if the extent of liability becomes a bona fide matter of civil dispute, the drawer has no obligation to facilitate the encashment of cheque. It was submitted that in the present case, the complainant has not filled the figure in the cheque with the Page 18 of 80 HC-NIC Page 18 of 80 Created On Wed Sep 16 01:14:32 IST 2015 R/CR.A/1719/2005 JUDGMENT consent of the respondent and hence, in view of the provisions of section 87 of the Act, the instrument is neither a cheque nor a bill of exchange. The learned counsel has further submitted that on a plain reading of section 20 of the N. I. Act, it emerges that the instrument should be for any amount specified therein. It was submitted that a harmonious interpretation of section 20 reading it with section 87 of the Act would go to show that even in case where the amount is not specified under section 20 of the Act, having regard to the provisions of section 87 of the N. I. Act, if there is a consent of the drawer, such figure can be filled in, in which case, the instrument can be a valid one. However, in case where no figure is specified in the instrument and such figure is filled in without the requisite consent, such instrument cannot be said to be inchoate instrument. It was also submitted that though section 20 of the N. I. Act permits the holder in due course to complete the inchoate negotiable instrument in terms of section 87 of the Act, if material alteration is made by the endorsee, then he discharges the endorser from all liabilities of the consideration thereof.
7.8 Mr. Das submitted that in the facts of the case before this Court in the case of Hitenbhai Parekh, Proprietor - Parekh Enterprises v. State of Gujarat and another (supra), the party had taken shifting stand, whereas in the facts of the present case, the respondent accused has taken a consistent stand. The learned counsel submitted that this Court in the case of Hitenbhai Parekh, Proprietor - Parekh Enterprises v. State of Gujarat and another (supra), has not interpreted the provisions of sections 20 and 87 of the Act word to word and, therefore, this court, in the interest of justice, may examine the Page 19 of 80 HC-NIC Page 19 of 80 Created On Wed Sep 16 01:14:32 IST 2015 R/CR.A/1719/2005 JUDGMENT provisions of sections 20 and 87 of the Act minutely, keeping in view the intention of the legislature, both of which are mandatory in nature insofar as the provision of section 138 of the N. I. Act is concerned.
7.9 The learned counsel pointed out that in Hitenbhai Parekh, Proprietor Parekh Enterprise v. State of Gujarat (supra), the court has held that the presumption under section 139 is mandatory but rebuttable by proof of facts contrary to the receipt of cheque for discharge of any debt or other liability. The initial burden, however, of proving that the cheque was drawn by the drawee for payment of any amount of money and it being returned by the bank unpaid remains with the complainant. The presumptions under section 118 are also mandatory but rebuttable and could be availed only until the contrary is proved. Reference was made to page 4 of the document at Exhibit-17 to submit that the same is an agreement between the parties and that all the documents comprising Exhibit-17 are in relation to the procedure established by the appellant for opening the account in the firm. For opening an account, all these forms have been filled up, therefore, the document at page-4 dated 29.03.1995 whereby, the cheque in question had been given to the appellant is only a part of the agreement and has to be read as a whole and that certain portion cannot be highlighted for making out an offence under section 138 of the Act. It was submitted that in any case, the appellant has not discharged the initial burden of showing that the cheque had been presented before the bank and had been returned by the bank.
7.10 Mr. Das also placed reliance upon the decision of the Page 20 of 80 HC-NIC Page 20 of 80 Created On Wed Sep 16 01:14:32 IST 2015 R/CR.A/1719/2005 JUDGMENT Bombay High Court in the case of Kashinath Balu Gaonkar v. Sunita Krishnajirao Desai and others, Laws (Bom)- 2015-2-96, wherein the court has referred to the decision in the case of Avon Organics Ltd. v. Pioneer Products Limited and others (supra) and has, on facts, found that the said decision does not apply. The decision of the Bombay High Court in the case of Manjit Singh Obhan v. State of Maharashtra, Laws (Bom)-2007-4-216 was relied upon wherein, the court had refused to grant leave to appeal to the applicant therein in view of the fact that the applicant had obtained blank cheques without even mentioning the amount or the date and the learned Magistrate came to the conclusion that the cheques were not issued for valuable consideration and the offence under section 138 of the Negotiable Instruments Act was not committed. In the facts of the said case, the complainant had admitted that he had obtained the disputed cheques in blank condition with the intervention of the Police Inspector, Shinde. Mr. Das submitted that the court was satisfied that since it was a blank cheque, the court should not read the transaction as a legally enforceable debt between the parties, as is the case in the case at hand. It was submitted that in the facts of the said case, it is presumed that the court would be aware of the provisions of section 20 of the N. I. Act despite which, the court has held that when a blank cheque is issued, the transaction cannot be said to be a legally enforceable debt between the parties. The decision of the Kerala High Court in the case of Bindu v. Sreekantan Nair, Laws (Ker)-2006-12-136, was cited wherein, the court has held that admission of signature may in an appropriate case persuade the court to draw permissive presumptions of fact under section 114 of the Evidence Act. But certainly the right of the accused to contend Page 21 of 80 HC-NIC Page 21 of 80 Created On Wed Sep 16 01:14:32 IST 2015 R/CR.A/1719/2005 JUDGMENT that a blank signed cheque was mis-utilized by the payee cannot be taken away by such mere admission of signature. Ultimately when the evidence is appreciated, the court shall have to consider whether admission of signature coupled with the other circumstances is sufficient to prove execution. It was, accordingly, urged that merely because the signature is accepted, all the other factors do not come into play and section 138 of N. I. Act cannot be invoked.
7.11 The learned counsel for the respondent further placed reliance upon the decision of this court in the case of Bharuch Nagrik Sahakari Bank Limited v. Kiritbhai Meghajibhai Patel, Laws (GJH)-2012-4-174, wherein the court had found that though the accused did not dispute the signature on the cheques, the accused by cross-examining the complainant, were able to raise probable defence that blank cheques were in custody of the complainant bank and those cheques were misused. The court held that it is true that the accused did not lead any evidence to prove non-existence of debt but it is settled proposition that there cannot be negative evidence. It was submitted that in the facts of the present case also, it is the categorical case of the respondents accused that the blank cheque which was given by way of security at the time of opening of the account has been misused by the complainant. Reliance was placed upon the decision of the Supreme Court in the case of Raj Kumar Khurana v. State (NCT of Delhi), (2009) 6 SCC 72 wherein the court with reference to section 138 of the N. I. Act, has held that a bare perusal of the said provision would clearly go to show that by reason thereof, a legal fiction has been created. A legal fiction, as is well known, although is required to be given full effect, has its own Page 22 of 80 HC-NIC Page 22 of 80 Created On Wed Sep 16 01:14:32 IST 2015 R/CR.A/1719/2005 JUDGMENT limitations. It cannot be taken recourse to for any purpose other than the one mentioned in the statute itself. Section 138 of the Act moreover provides for a penal provision. A penal provision created by reason of a legal fiction must receive strict construction. Such a penal provision, enacted in terms of the legal fiction drawn would be attracted when a cheque is returned by the bank unpaid. Such non-payment may either be: (i) because of the amount of money standing to the credit of that account is insufficient to honour the cheque, or (ii) it exceeds the amount arranged to be paid from that account by an agreement made with that bank. Before a proceeding thereunder is initiated, all the legal requirements therefor must be complied with. The court must be satisfied that all the ingredients of commission of an offence under the said provision have been complied with. It was submitted that the burden lies upon the complainant to prove all the ingredients of section 138 of the N. I. Act and that the complainant having failed to do so, there is no infirmity in the impugned order of acquittal passed by the trial court so as to warrant interference in exercise of powers under section 378 of the Code.
7.12 The learned counsel further placed reliance upon the decision of the Supreme Court in the case of C. Antony v. K. G. Raghavan Nair, Laws (SC)-2002-11-82, for the proposition that while sitting in appeal against the judgment of acquittal passed by the trial court, there is an obligation on the part of the High Court to come to a definite conclusion that the findings of the trial court are either perverse or the same are contrary to the material on record because the High Court cannot substitute its finding merely because another contrary opinion is possible based on material on record. It is the duty of Page 23 of 80 HC-NIC Page 23 of 80 Created On Wed Sep 16 01:14:32 IST 2015 R/CR.A/1719/2005 JUDGMENT the High Court to first come to the conclusion that the conclusions arrived at by the trial court for good reasons are either unreasonable or contrary to the material on record. In the absence of any such finding, the High Court cannot take a contrary view merely because another view is possible on the material on record. Mr. Das submitted that therefore, while sitting in appeal against an order of acquittal, this court cannot reverse the findings recorded by the trial court unless it comes to the conclusion that the findings are perverse and contrary to the material on record.
7.13 In conclusion, it was submitted that in the present case, the notice under section 138 of the N. I. Act does not bifurcate the principal amount and the interest and only reference is made to the disputed amount without break up and therefore, the notice itself is bad. The cheque return memo has not been duly proved as the complainant was required to examine the officer from the bank to prove that the cheque had been dishonoured. In the present case, the officer who was examined had no personal knowledge and hence, the very basis for invoking section 138, namely, that the cheque has been returned, has not been proved. It was submitted that subsequently, a got up counterfoil and a certificate have been produced and that the certificate does not bear an outward number and is, therefore, doubtful. It was submitted that therefore, the dishonour of the cheque itself is not proved and even remotely, it cannot be said that the case has been proved beyond reasonable doubt.
8. In rejoinder, Mr. Bhargav Bhatt, learned counsel for the appellant invited the attention of the court to the findings Page 24 of 80 HC-NIC Page 24 of 80 Created On Wed Sep 16 01:14:32 IST 2015 R/CR.A/1719/2005 JUDGMENT recorded by the trial court to point out that the trial court has placed reliance upon the decision of this court in the case of Shankus Concrete Pvt. Ltd. v. State of Gujarat, 2000 (2) GLR 1705 and has held that the said decision would be applicable to the facts of the present case. It was pointed out that in the case of Shankus Concrete Pvt. Ltd. v. State of Gujarat (supra), this court had held that the intention of the parties was clear from the agreement between the parties that the cheques were issued as collateral security for the due performance of the contract, by which the company and the director bound themselves to repay the said amount. It is, therefore, clear that the cheques were not issued to discharge any existing debt. It was pointed out that the said decision was carried before the Supreme Court in the case of Balbhadurasinh Indrasinhji Zala v. Shankus Concrete (Pvt.) Ltd. and others, 2005 (3) GLH 685, wherein the Supreme Court has observed that the facts of the case showed that the second respondent therein, on behalf of the Company, issued the cheque and that he had received Rs.15,00,000/- from the complainant. Therefore, it appears that the cheque was supported by consideration and if any other agreement was entered into between the parties to defer the payment that will not make the cheque unsupported by consideration. The court held that the learned single Judge was not right in holding that the cheque was issued as collateral security and therefore, it lacked consideration.
8.1 Insofar as the contention that the cheque was issued by way of security and hence, it cannot be said that it was issued towards legally enforceable debt, the learned advocate also placed reliance upon the decision of this court in the case of Page 25 of 80 HC-NIC Page 25 of 80 Created On Wed Sep 16 01:14:32 IST 2015 R/CR.A/1719/2005 JUDGMENT Machine Product Tradelink Pvt. Ltd. and another v. Utpal Bhupendra Raiji and another, 2012 (1) GLH 218, wherein this court after taking into consideration the decision of the Supreme Court in the case of M. S. Narayana Menon @ Mani v. State of Kerala and another, AIR 2006 SC 3366 as well as the decision in the case of Sudhir-Kumar Bhalla v. Jagdish Chand and others, AIR 2008 SC 2407, has held that in the said decision, there was no absolute proposition of law laid down by the Supreme Court that even in case where the post-dated cheque is given by way of security for ascertained amount and on settlement of the account and the said cheque is dishonoured, the case under section 138 of the N. I. Act is not made out.
8.2 Lastly, the learned counsel placed reliance upon the decision of the Supreme Court in the case of Rangappa v. Sri Mohan, (2010) 11 SCC 441, wherein the legal question before the Supreme Court pertained to the proper interpretation of section 139 of the Act which shifts the burden of proof on to the accused in respect of cheque bouncing cases. The court had specifically been asked to clarify the manner in which this statutory presumption can be rebutted. The court after referring to various decisions of the Supreme Court, agreed with the respondent claimant that the presumption mandated by section 139 of the Act does indeed include the existence of a legally enforceable debt or liability. This is, of course, in the nature of a rebuttable presumption and it is open to the accused to raise a defence wherein the existence of a legally enforceable debt or liability can be contested. However, there can be no doubt that there is an initial presumption which favours the complainant. Section 139 of the Act is an example Page 26 of 80 HC-NIC Page 26 of 80 Created On Wed Sep 16 01:14:32 IST 2015 R/CR.A/1719/2005 JUDGMENT of a reverse onus clause that has been included in furtherance of the legislative objective of improving the credibility of negotiable instruments. While section 138 of the Act specifies a strong criminal remedy in relation to the dishonour of cheques, the rebuttable presumption under section 139 is a device to prevent undue delay in the course of litigation. Mr. Bhatt submitted that therefore, there is a presumption in favour of the complainant as regards the existence of a legally enforceable debt or liability. Apart from that, the complainant has by producing voluminous evidence, established the existence of a debt. On the other hand, the respondent accused apart from raising a probable defence, has not been able to contest the existence of a legally enforceable debt or liability. It was submitted that therefore, the appeal deserves to be allowed and the impugned judgment and order of acquittal is required to be reversed.
9. Before adverting to the merits of the rival contentions, it may be germane to refer to the evidence which has been adduced on record by the respective parties. It may be noted that the trial court in the impugned judgment and order, after appreciating to the evidence on record, was of the view that the cheque in question ought to have been filled in and presented within a period of six months from 29.03.1995, the date on which the cheque was given to the complainant. The trial court was also of the view that the complainant had misused the blank cheque by putting the date 08.01.1998 and hence, it was but natural that there would not be sufficient balance in the account of the accused. That the cheque had been presented after a long time of about three years, under the circumstances, no presumption can be made under section Page 27 of 80 HC-NIC Page 27 of 80 Created On Wed Sep 16 01:14:32 IST 2015 R/CR.A/1719/2005 JUDGMENT 118 of the Act. That from the facts as emerging from the record, it was apparent that the cheque had been given on 29.03.1995. According to the trial court, the blank cheque issued by the accused could not be said to be a bill of exchange and it could not be said that the same was issued by the accused No.1 voluntarily towards a legal debt. Besides, under section 138 of the N.I. Act, a blank cheque cannot be used towards outstanding amount by merely filling in the details. It was noted that it was an undisputed position that the loan of Rs.15,00,000/- was taken on 29.03.1995, in respect of which, a blank cheque was taken and the amount written in the cheque included other than the principal, interest and service charges. Accordingly, the complainant firm was not entitled to legally recover together with costs the loan amount. Thus, there was a breach of section 138 of the N. I. Act. The trial court observed that the object of section 138 is to curb illegalities in the business. Any person cannot take a blank cheque and present the same at any time. Thus, the complainant had misused the cheque given by the accused and despite the cheques at Exhibit-54 being in the possession of the complainant firm, the same had not been deposited and the important facts had been suppressed. The trial court referred to the decision of this court in the case of (M/s.) United India Phosferous Ltd. and others v. Shri Vinodbhai Mohanbhai Patel and another, 1997 (1) GLH 881, and observed that a person who has a cheque in his possession can fill in the name and amount in terms of section 20 of the N. I. Act; however, in the present case, the complainant has filled in the details after a period of six months and hence, the said decision does not come to the aid of prosecution. The trial court after referring to the decision of Page 28 of 80 HC-NIC Page 28 of 80 Created On Wed Sep 16 01:14:32 IST 2015 R/CR.A/1719/2005 JUDGMENT the Supreme Court in the case of Hiten P. Dalal v. Bratindranath Banerjee, AIR 2001 SC 3897, observed that under section 138 of the N. I. Act, the presumption that the cheque was drawn towards discharge of the liability of the drawer is a rebuttable presumption. In the present case, the accused have rebutted the presumption under section 138 and 139 of the N. I. Act and therefore, the said decision of the Supreme Court does not come to the aid of the complainant. Insofar as the contention with regard to the notice not having been duly served upon the accused is concerned, the court has referred to the decision of the Supreme Court in the case of K. Bhaskaran v. Sankaran Vaidhyan Balan and another, AIR 1999 SC 3762, and observed that in the present case, the notice was sent to the accused by Registered A. D. Post as well as by U.P.C., hence, there is no reason to believe that it was not served. The trial court also placed upon the decision of this court in the case of Shankus Concrete Pvt. Ltd. v. State of Gujarat, (supra) and observed that the said decision would be applicable to the present case because in terms of the agreement, the blank cheque Exhibit-19 was given on 29.03.1995 and for the sake of convenience; the complainant had deposited the same on 08.01.1998. The trial court ultimately held that in terms of the agreement Exhibit-17, the blank cheque Exhibit-19 had been given by the accused to the complainant, which the complainant has accepted was given for the sake of convenience on 29.03.1995 and that the complainant had filled in the same on 09.01.1998 and presented the same. The trial court held that the complainant had failed to prove the ingredients of section 138 of the Act.
10. From the findings recorded by the trial court, it is evident Page 29 of 80 HC-NIC Page 29 of 80 Created On Wed Sep 16 01:14:32 IST 2015 R/CR.A/1719/2005 JUDGMENT that the trial court has acquitted the accused mainly on the ground that the blank cheque had been issued by the accused in favour of the complainant firm on 29.03.1995 as stated in Exhibit-17 and that having regard to the provisions of section 138 of the N. I. Act, the cheque, Exhibit-19, has not been presented before the bank within a period of six months. Moreover, on 01.04.1997, no outstanding dues of the accused No.1 were pending with the complainant firm, which is established by documentary evidence on record. In the light of the above findings recorded by it, the trial court has acquitted the accused.
11. For the purpose of appreciating the controversy in issue, it would be necessary to consider the evidence which has been adduced on record by the respective parties in detail.
12. On behalf of the complainant, PW-1 Kiranbhai Ramjibhai Patel, Power of Attorney of the complainant firm has been examined at Exhibit 15. He has, inter alia, deposed that at the time of opening the account of the accused No.1, a blank cheque signed by the account holder was taken. The cheque given by the account holder was bearing No.131106. It was further stated that the cheque which was obtained by the firm was for the purpose that at the end of the year if any amount along with interest and service charge remains outstanding, such amount was to be filled in the cheque and recovered. The cheque in question had been obtained for recovering the outstanding amount at the end of the year. The said witness has further deposed that the firm carries on the accounting of the firm at the end of the year after the account has been Page 30 of 80 HC-NIC Page 30 of 80 Created On Wed Sep 16 01:14:32 IST 2015 R/CR.A/1719/2005 JUDGMENT opened. On 31.12.1997, a huge amount was outstanding in the account of the accused No.1 and hence, they had informed the party on the 3rd day of January that the amount is outstanding in his account and that he should come for settling the account and the accused No.1 after verifying the account, had given a cheque dated 08.01.1998 for the outstanding amount. When he had given this cheque, he had assured them that if the cheque is presented on 8th January, the same would be honoured and hence, he had written a cheque of that date. At that time, the accused had said that there would be sufficient balance in his account. The cheque was with him and hence, he had presented the same on 8th January, which was returned on the ground of "insufficient funds". The complainant has identified the signature of the bank officer on the cheque return memo and produced it, which has been given a tentative Exhibit-21. The complainant has also produced the notice dated 15.01.1998 at Exhibit-22 as well as the Registered A. D. slips at Exhibits 23 and 24. In his cross- examination at the instance of the learned advocate for the respondents/accused, the complainant has admitted that the accounts are settled twice a year. He has admitted that at the time of settling accounts, decision regarding loan is taken considering the party and at that time, new documents are not taken. Accounts are settled on 25th March and 25th September. He has further admitted that in case the outstanding amount is not paid, they take cheque by way of security. The complainant is shown Exhibit-17, whereupon he has stated that as per page 4 of that document, the loan has been given on 29.03.1995. He has admitted that in terms of the form, after 29.03.1995 the accounts are to be settled on 25th September, 1995. He is not in a position to orally say as to what amount was Page 31 of 80 HC-NIC Page 31 of 80 Created On Wed Sep 16 01:14:32 IST 2015 R/CR.A/1719/2005 JUDGMENT outstanding on 25th September, 1995. He has admitted that the cheque No.131106 put in the form is the cheque in question. He has denied that the cheque was given for the amount payable on 25th September. He has admitted that on the cheque, in place of Pay on, a stamp of Messrs Dilipkumar Nalinkant Gandhi has been affixed and that the figures and words of the amount have been filled in by him. The complainant has further admitted that on 31.03.1996, the accounts had been squared off. He has also admitted that no evidence has been produced of any loan advanced after 31.3.1996. He has denied that after the accounts were cleared, no other amount has been advanced and that there is no outstanding amount. He has further stated that he cannot produce the list of debtors as on 31.03.1996 which is submitted with the income-tax return. He clarifies that the list of debtors is confidential and hence, cannot be produced. He has admitted that for the assessment year 1996-97 relatable to accounting year 31.03.1996, there is no amount outstanding in the account of the accused. He has denied that the cheque was taken for March, 1995. [It may be noted that subsequently, the complainant has produced the statement of accounts, including the list of debtors as well as the statement of accounts of the respondent No.1 accused].
12.1 In his cross-examination, the complainant has further accepted that the handwritings on the cheque are his and that he is not in a position to name the officer who has signed the cheque return memo. He has admitted that the return memo has not been written in his presence and that the officer has not signed it in his presence. He has deposed that the cheque is presented with the counterfoil at the bank and half of it Page 32 of 80 HC-NIC Page 32 of 80 Created On Wed Sep 16 01:14:32 IST 2015 R/CR.A/1719/2005 JUDGMENT remains with the person who presents the cheque and the other goes to the bank. When the cheque is returned, then along with the cheque, the cheque return memo is given. He has admitted that there is no proof that the cheque was presented on 8th. The cheque return memo is produced but counterfoil has not been produced. [However subsequently, the counterfoil of the cheque has been produced on record along with a certificate issued by the bank to the effect that the cheque had been presented on 8th January, 1998, which is alleged to be fabricated and concocted by the learned advocate for the respondents.] 12.2 The complainant has further admitted that there is no stamp of clearing or transfer on the cheque, Exhibit-19. He has admitted that there is no stamp of the bank even on the reverse side of the cheque. The complainant has admitted that they give advance towards cheques. He has also admitted that in case where there is a running account, the amount is not advanced towards cheques. He has denied that the accused had taken loan on cheque. He is shown a cheque which he says is in his name. He has admitted that the cheque has been returned as refused. He has denied that after the amount under the cheque was paid, he had returned the cheque to the accused. He has denied that the accused had given him the cheque amount of Rs.2,50,000/- and hence, he had returned the cheque to the accused. He has denied that in respect of those cheques where the accused had paid the amount, he had returned the cheques. He has stated that the reason why the cheques which are shown to him are with the accused is that the accused has an account with them and these cheques were presented in respect thereof, but were not passed by the Page 33 of 80 HC-NIC Page 33 of 80 Created On Wed Sep 16 01:14:32 IST 2015 R/CR.A/1719/2005 JUDGMENT bank and hence, a return entry was made in the account and the cheques were returned to the party. He has admitted that the cheques which have been returned are of the year 1997. He has denied that the accused had closed the account and had given the amount in cash and taken back the cheques. He has denied that he had been given the amount in cash which he had not deposited and was, therefore, using the cheque which was given in the year 1995. He has stated that in the cheque which is shown to him, the signature of the accused is in Gujarati, whereas in the cheque, Exhibit-19, the signature is in English. He has admitted that the account number of both the cheques is the same. He has also admitted that at the time when the account was opened, the address of Navabazar, Himmatnagar had been given. He has admitted that in the form, the address given is Dr. Gandhi Road, Himmatnagar. He has voluntarily stated that both these places are in the same area. He has admitted that Dr. Gandhi Road and the Bagicha area are different. He has admitted that notice has not been issued to the accused at the registered/noted address. He has stated that when the notice was issued, the address had changed. He has admitted that the accused at present also lives in the Bagicha area and at the time when the account was opened also, they were in that area. He has denied that the fact regarding the address having changed is not correct. He has stated that there is no evidence in existence as regards service by UPC. He has stated that he is not in a position to say as to through whom the postman gave intimation.
12.3 In his cross-examination, he has further admitted that in the notice, Exhibit-26, over and above the cheque amount, interest, service charge and expenses in respect of notice have Page 34 of 80 HC-NIC Page 34 of 80 Created On Wed Sep 16 01:14:32 IST 2015 R/CR.A/1719/2005 JUDGMENT been demanded. He has admitted that when they enter into transactions, they also take promissory notes and that in respect of the cheque, Exhibit-19, there is no promissory note. He has clarified that the promissory note has not been taken because the transactions have taken place in respect of any account in connection with which they do not take promissory notes. He has admitted that no documentary evidence has been produced before the court showing that the accused have withdrawn any amount. He has admitted that no civil suit has been instituted in connection with the cheque in question. He has stated that since they had faith in the accused that they would return the amount, civil suit was not filed. He has denied that the cheque was not presented on the day when he says it was presented. He has denied that the blank cheque which was lying since three years has been misused.
12.4 At this stage, the learned advocate for the complainant sought permission to re-examine him to put questions as to whether he was ready to furnish proof of the cheque having been presented before the bank. The complainant, thereafter, during the course of re-examination, has shown willingness to produce proof of the cheque having been presented before the bank. He has produced a list Mark 37/1. He has produced the counterfoil of presentation of the cheque, which is dated 8.1.1998 and bears the stamp of the bank. He has stated that the handwriting is of his office's employee - Chandubhai P. Barot. He has produced a certificate Mark 37/2 of the bank regarding the cheque having been presented and has stated that it is issued by the accountant of the bank Shri Ramanbhai C. Modi and it bears his signature. Both the documents are admitted in evidence at Exhibit 42 and 43. In his cross-
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examination, the witness has denied that they get the cheque presentation chitthis bound. He has denied that they are bound but today he is lying. He has denied that the voucher, Exhibit- 41, was not with him and hence, was not produced along with the complaint. He has admitted that when a cheque is presented before the bank, the clerk accepts the cheque and the presentation chit and puts stamps and signs the same. He has stated that they attach it with a pin along with the voucher. They do not file them but get them tied. That is to say, all the vouchers of each day are tied together. He has denied that the vouchers are stitched with string and thereafter, they are arranged date wise. He has stated that he does not know whether such practice is followed by the bank. He has admitted that if they are tied, it has to be removed from the string. He has admitted that Exhibit-41 does not have any hole formed on account of tying the string and the document is also not torn. He has admitted that Exhibit-41 does not bear the signature of any person of the bank.
12.5 In his cross-examination, the witness has further admitted that in the form Exhibit-17, it is stated that the cheque in question bearing No.131106 was given to the complainant on 29.03.1995. Condition in Exhibit-17 was that the accounts have to be squared off each year by the 25th of March and September and after taking accounts, the amount of principal, interest, vatav and adat which is outstanding, all has to be fully paid and for the purpose of facilitating the same, they had given an undated cheque bearing No.131106 drawn on the Himmatnagar Nagrik Sahakari Bank Ltd. He has admitted that the account of the accused which was opened on 29.03.1995, its accounting year ended in one year, that is, Page 36 of 80 HC-NIC Page 36 of 80 Created On Wed Sep 16 01:14:32 IST 2015 R/CR.A/1719/2005 JUDGMENT on 31.03.1996. He was put a query as to what amount was outstanding in the account of the accused as on 01.04.1996, to which he replied that no amount was outstanding. He has denied the suggestion that in terms of the conditions contained in the form, the cheque was to be presented in the concerned financial year and that the cheque was not to be presented on 08.01.1998. He has denied that the cheque was presented in contravention of conditions of Exhibits 17 and 18. The complainant was shown the letter, Exhibit-54, which was written by the proprietor of Riddhi Graphics in respect of the outstanding amount in the account, which is dated 31.03.1997. He has admitted that Riddhi Graphics had only one account and that the amount due from 01.04.1996 to 31.03.1997 was reflected in the letter Exhibit-54. The complainant was shown Exhibit-84, that is, the cheques issued in the year 1997, he has stated that the cheque dated 30.04.1997 for a sum of Rs.1,00,000/- was returned and in respect thereof, no complaint had been filed, nor had any civil suit been instituted. He was asked as to whether the cheques, in all nine, produced vide Exhibit-84, were not presented before the bank, to which he answers that as per the oral instructions of the party, the cheques had not been presented. He has also admitted that while taking accounts of the year 1997, no amount was outstanding. He has further denied that under the agreement, the cheque in question was by way of guarantee and that the cheque was not in respect of any outstanding dues.
12.6 At this stage, the learned advocate for the complainant sought permission to re-examine the complainant. Upon such permission being granted, the complainant was asked as to why the record is destroyed, to which he has stated that Page 37 of 80 HC-NIC Page 37 of 80 Created On Wed Sep 16 01:14:32 IST 2015 R/CR.A/1719/2005 JUDGMENT because there was no sufficient space to keep it. He was asked as to why the accused's account was extended and he has answered that because he kept promising that he would pay the amount. He has denied that the fact regarding the documents having been destroyed is false and further denied that this was done only with a view to see that the accounts are not scrutinized.
13. The complainant has also examined one Rakeshbhai Babulal Chokshi, Assistant Accountant in the Head Office of the Himmatnagar Nagrik Sahakari Bank Ltd., who has deposed that he is discharging the duties as an Assistant Accountant in the bank since the last twenty years and that he is conversant with the entire management and administration of the bank. He has deposed that he has brought with him three documents. Firstly, a copy of the form for obtaining specimen signature while opening the account of Shri Riddhi Graphics bearing the seal of the bank. He has, inter alia, deposed that the current account of Shri Riddhi Graphics opened with their bank is bearing No.2474. That the bank maintains the accounts of the account holder and that he has brought a copy of the accounts of Shri Riddhi Graphics from 01.01.1997 to 31.03.1999. The said documents have been exhibited at Exhibits 95, 96 and 97. He is shown the document Mark 21, which he states is a return memo dated 08.01.1998 of the Himmatnagar Nagrik Sahakari Bank Ltd., Head Office whereby, the cheque No.131106 for a sum of Rs.14,72,587=52 has been returned. He has further stated that the return memo bears the signature of the Assistant Accountant Shri C. G. Shah, which he has identified. That the memo is addressed to M/s Dilipkumar Nalinkumar Gandhi. He is shown Exhibit-96 which Page 38 of 80 HC-NIC Page 38 of 80 Created On Wed Sep 16 01:14:32 IST 2015 R/CR.A/1719/2005 JUDGMENT he says is the cheque return memo showing that the cheque has been returned on account of "insufficient funds". He is shown Exhibit-97 on the basis of which he says that on 09.01.1998, there was a balance of Rs.1,594=38 in the account of Shri Riddhi Graphics.
13.1 In his cross-examination at the instance of the learned counsel for the accused, he has stated that he is serving with the bank since the last twenty years. He has admitted that it is true that the cheque return register is maintained for a period of ten years. He has admitted that on the day when the cheque of the account holder (the accused) came for clearance, at that time the signature was compared with the specimen signature of the accused. He has further admitted that the specimen signature card was produced with Exhibit-21 and the designation of the officer who signed it and his designation are different. He has admitted that the cheque return memo Exhibit-21 bears the signature of the officer J. C. Shah. The documents produced by him vide Exhibit-93, that is, Exhibit-95, 96 and 97 bear the signature of Sudhirbhai F. Shah, an officer of the bank. He has admitted that Sudhirbhai Shah is serving with their bank since the last twenty years. He has further admitted that the cheque return memo does not bear his signature. He has also admitted that he was not discharging duties at the table on which the cheque of the account holder had been returned. He has also admitted that he has no personal knowledge regarding the cheque return memo.
14. Reference may now be made to the documentary evidence on record. The agreement executed by the Page 39 of 80 HC-NIC Page 39 of 80 Created On Wed Sep 16 01:14:32 IST 2015 R/CR.A/1719/2005 JUDGMENT respondent No.1 accused at the time of opening his account with the complainant has been produced at Exhibit-17. The receipts showing notices having been issued and endorsement of the postman that intimation has been given, have also been produced on the record. The cheque in question bearing No.131106 drawn on the Himmatnagar Nagrik Sahakari Bank Ltd., Himmatnagar has been produced at Exhibit-19. The cheque return memo is produced at Exhibit-21. The statutory notice under section 138 of the N. I. Act calling upon the accused to pay the cheque amount of Rs.14,72,587=52 has been produced at Exhibit-22. The postal slips have been produced at Exhibit-23 and the UPC receipts are produced at Exhibit-25. Exhibit-35 is the list of documents whereby, cheque No.72222 dated 15.03.1997, cheque No.41083 dated 27.01.1997 and return memo dated 15.03.1997 are sought to be produced. Exhibit-37 is the list of documents whereby, the original counterfoil dated 08.01.1998, certificate issued by the bank dated 10.08.2000, letter written by the accused to the complainant dated 31.03.1997, computer copy of the account statement of the accused from 01.04.1996 to 31.03.1998 are brought on record pursuant to the order of the High Court as Exhibits 42, 43, 54 and 55.
14.1 The accused No.1 made an application, Exhibit-58 for production of documents during the course of cross- examination of the complainant, whereby he has sought production of all the accounts from the year 1995 to 1998 and has also sought production of the ten cheques referred to in Exhibit-54 dated 18.12.2001. The trial court by an order dated 25.10.2002 directed the complainant to produce certified copies of the documents mentioned in paragraph 1 to 7 of the Page 40 of 80 HC-NIC Page 40 of 80 Created On Wed Sep 16 01:14:32 IST 2015 R/CR.A/1719/2005 JUDGMENT application. It was further observed that if such documents are not in his possession, an affidavit to that effect was ordered to be produced. Pursuant to the said order, the complainant filed an affidavit at Exhibit-64 wherein, it is stated that the documents found pursuant to the order are produced with a separate list. It was further requested that since the documents are produced at the instance of the accused, they may be exhibited. It is stated that the documents sought for vide items No.1, 4 and 5 are one and the same and the documents are produced by a separate list. As regards the request to produce cheque counterfoil and cheque issue register, it is stated that every year, the firm issues cheques in thousands and the quantity of counterfoils is very large and there is limited space for keeping old record in the office and after one year, the counterfoils and cheque issue registers are not needed and at the end of each year, the counterfoils and the cheque issue registers are destroyed and they are not stored. Similarly, Hundi issue registers are also destroyed at the end of the year. It was further stated therein that the accused has asked for production of, in all, ten cheques out of which, cheque No.072231 came to be returned by the bank without accepting the same and hence, the cheque was returned to the accused. Whereas certified copies of the remaining nine cheques bearing No.072232 to 072240 are produced.
14.2 The list of documents produced at Exhibit-65 is comprised of :
(i) Rojmel in all 64 pages which also contains the entries in respect of the accused from 08.06.1996 to 13.02.1998, Page 41 of 80 HC-NIC Page 41 of 80 Created On Wed Sep 16 01:14:32 IST 2015 R/CR.A/1719/2005 JUDGMENT which has been given Exhibit-81,
(ii) A true copy of the account of the accused from 01.04.1996 to 31.03.1998, which has been given Exhibit-82,
(iii) The hundies written by the accused on the complainant in all 24 dated 08.04.1996 to 04.03.1997 (Exhibit-83), and
(iv) Ten cheques issued by the accused, which has been given Exhibit-84.
15.3 Witness Rakeshbhai Babulal Choksi has produced at Exhibit-95 the specimen signature card of the accused; the extract of cheque return register for the period 07.01.1998 to 08.01.1998 is produced at Exhibit-96, wherein the second last entry relates to the cheque in question; the balance statement maintained by the bank in respect of the account of the accused is produced at Exhibit-97.
16. The rival contentions advanced by the learned counsel for the respective parties are required to be examined in the light of the above evidence which has come on record.
17. As can be seen from the findings recorded by the trial court, the trial court has found that the cheque which was issued on 29.03.1995 and was presented for acceptance on 08.01.1998 ought to have been filled in and presented within a period of six months from 29.03.1995. The trial court was of the view that, since the cheque has been presented after a long time of about three years, no presumption can be made under section 118 of the N. I. Act. On behalf of the respondent accused, it has been submitted that it is an admitted position that the cheque in question was given in the year 1995 and was presented before the bank in the year 1998, much beyond Page 42 of 80 HC-NIC Page 42 of 80 Created On Wed Sep 16 01:14:32 IST 2015 R/CR.A/1719/2005 JUDGMENT the period of six months and hence, the trial court was wholly justified in holding that the cheque in question had been misused and had been presented for encashment beyond its validity period.
18. In this regard, it may be germane to refer to the decision of the Supreme Court in the case of Shri Ishar Alloy Steels Ltd. v. Jayaswals Neco Ltd., (2001) 3 SCC 609, wherein the court has held that to make an offence under section 138 of the Act, it is mandatory that the cheque is 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. It is the cheque drawn which has to be presented to "the bank" within the period specified therein. When a post-dated cheque is written or drawn, it is only a bill of exchange. The post-dated cheque becomes a cheque under the Act on the date which is written on the said cheque and the six months' period has to be reckoned, for the purposes of section 138 of the Act, from the said date. In Anil Kumar Sawhney v. Gulshan Rai, (1993) 4 SCC 424, the Supreme Court held that sections 5 and 6 of the Act define "Bill of Exchange" and "Cheque". A "Bill of Exchange" is a negotiable instrument in writing containing an instruction to a third party to pay a stated sum of money at a designated future date or on demand. A "cheque" on the other hand is a bill of exchange drawn on a bank by the holder of an account payable on demand. Thus, a "cheque" under section 6 of the Act is also a bill of exchange but it is drawn on a banker and is payable on demand. It is thus obvious that a bill of exchange even though 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 Page 43 of 80 HC-NIC Page 43 of 80 Created On Wed Sep 16 01:14:32 IST 2015 R/CR.A/1719/2005 JUDGMENT it is written or drawn, it becomes a "cheque" when it is payable on demand. The postdated cheque is not payable till the date which is shown on the face of the said document. It will only become cheque on the date shown on it and prior to that, it remains a bill of exchange under section 5 of the Act. As a bill of exchange, a postdated cheque remains negotiable but it will not become a "cheque" till the date when it becomes "payable on demand". The court observed that for an offence to be made out under the substantive provisions of section 138 of the Act, it is mandatory that the cheque is 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. It is the cheque drawn which has to be presented to the bank within the period specified therein. When a postdated cheque is written or drawn, it is only a bill of exchange and as such, the provisions of section 138(a) are not applicable to the said instrument. The postdated cheque becomes a cheque under the Act on the date which is written on the said cheque and the six months period has to be reckoned for the purposes of section 138(a) from the said date. In Ashok Yeshwant Badave v. Surendra Madhavrao Nighojakar, (2001) 3 SCC 726, the Supreme Court held that for prosecuting a person for an offence under section 138 of the Act, it is inevitable that the cheque is presented to the banker within a period of six months from the date on which it is drawn or within the period of its validity, whichever is earlier. When a postdated cheque is written or drawn, it is only a bill of exchange and so long the same remains a bill of exchange, the provisions of section 138 are not applicable to the said instrument. The postdated cheque becomes a cheque within the meaning of section 138 of the Act on the date which is written thereon and the six Page 44 of 80 HC-NIC Page 44 of 80 Created On Wed Sep 16 01:14:32 IST 2015 R/CR.A/1719/2005 JUDGMENT months' period has to be reckoned for the purposes of proviso
(a) to section 138 of the Act from the said date. The court, accordingly, while agreeing with the law laid down in the case of Anil Kumar Sawhney v. Gulshan Rai (supra), held that six months' period shall be reckoned from the date mentioned on the face of the cheque and not any earlier date on which the cheque was made over by the drawer to the drawee.
19. Examining the facts of the present case in the light of the principles enunciated in the above decisions, in the present case, the undated cheque was made over by the drawer, namely, the respondent No.1 - accused on 29.03.1995, but subsequently when the cheque was presented before the bank, the date written on the cheque was 08.01.1998. Therefore, the period of six months is required to be reckoned from the date mentioned on the face of the cheque, that is, 08.01.1998 and not 29.03.1995, as has been held by the trial court. If the period of limitation is reckoned from 08.01.1998, viz., the date mentioned on the cheque, the presentation of the cheque on 08.01.1998 was well within the prescribed period of limitation. Under the circumstances, the finding recorded by the trial court that the complainant instead of filling in the details in the cheque within a period of six months filled in the details after a long time of about three years, and hence, there can be no presumption under sections 118 and 139 of the N. I. Act, is erroneous and cannot be sustained.
20. The trial court has also recorded a finding to the effect that a blank cheque issued by the accused cannot be said to be a bill of exchange and it cannot be said that the same has been issued by the accused No.1 voluntarily towards the legal Page 45 of 80 HC-NIC Page 45 of 80 Created On Wed Sep 16 01:14:32 IST 2015 R/CR.A/1719/2005 JUDGMENT debt. The trial court has further expressed the view that under section 138 of the Act, by obtaining a blank cheque towards future debt and by merely filling the date, the blank cheque cannot be used towards the outstanding amount. The trial court has held that it is an undisputed position that a loan of Rs.15,00,000/- was taken on 29.03.1995 in respect of which, the blank cheque was taken and the amount written in the cheque includes other than the principal, interest and service charges. Accordingly, the complainant firm is not entitled to legally recover with costs the loan amount. Thus, there is a breach of section 138 of the N. I. Act. The trial court has also held that the presumption that the cheque was drawn for discharge of a liability of the drawer under section 138 of the Act is a rebuttable presumption and that in the present case, the accused have rebutted the presumption under sections 138 and 139 of the N. I. Act.
21. The questions that arise for consideration in the light of the rival submissions advanced by the learned counsel for the respective parties as well as from the findings recorded by the trial court are :-
(i). Whether the complainant has proved that the cheque was presented for encashment on 08.01.1998 and that the same was returned on the ground of funds being insufficient?
(ii). Whether the complainant has proved that the statutory notice under section 138 of the Act has been duly served upon the accused and as to whether the same meets with the requirements of section 138 of the N. I. Act?Page 46 of 80
HC-NIC Page 46 of 80 Created On Wed Sep 16 01:14:32 IST 2015 R/CR.A/1719/2005 JUDGMENT
(iii). Whether the blank cheque issued by the accused can be said to be a bill of exchange or a cheque, and whether the same can be said to have been issued towards a legal debt?
22. Adverting to the first question, namely, as to whether the cheque has been presented for acceptance before the bank and has been duly returned, it has been vehemently argued on behalf of the respondent accused that no evidence has been produced to the effect that in fact, the cheque in question was presented for encashment before the bank. It has been submitted that initially, the certificate and counterfoil were not produced by the complainant and that subsequently, concocted counterfoil and got up certificate have been produced to establish that the cheque has been presented before the bank. It was submitted that the cheque return memo does not bear any signature and that the employee of the bank who had been examined on behalf of the complainant is not the concerned person, who had signed the relevant document and had no personal knowledge in respect of the dishonour of the cheque.
22.1 In the present case, to show that the cheque has been returned upon presentation before the concerned bank, the complainant has produced the cheque return memo at Exhibit-
21. At the relevant time when the complaint was filed, the complainant had not produced the counterfoil. However subsequently, the counterfoil has been produced at Exhibit-42. The complainant has also produced a certificate issued by the bank certifying that the cheque in question, upon presentation on 08.01.1998, came to be returned on the ground of insufficiency of funds. The said certificate has been exhibited Page 47 of 80 HC-NIC Page 47 of 80 Created On Wed Sep 16 01:14:32 IST 2015 R/CR.A/1719/2005 JUDGMENT at Exhibit-43. On behalf of the respondent accused, it has been contended that the said certificate does not bear an inward/outward number and hence, the same is not genuine. Suspicion has also been raised as regards the intention behind obtaining such certificate, when the cheque return memo was already on record.
22.2 The complainant has also examined one Rakesh Babulal Choksi, Assistant Accountant, Himmatnagar Nagarik Sahakari Bank Ltd., who has produced on record the extract of the cheque return register maintained by the bank, at Exhibit-96, which bears out the fact that the cheque in question was presented and was returned. The said witness has also identified the signature on the cheque return memo as being the signature of officer J. C. Shah. The said witness has also identified the signature of the officer of the bank on the extract of the cheque return register as being that of Shri Sudhirbhai S. Shah. On behalf of the respondent, it has been argued that the said witness does not have any personal knowledge with regard to the documents which have been produced on record and hence, the documents cannot be said to be proved. To counter such argument, the learned counsel for the complainant has drawn the attention of the court to section 4 of the Bankers' Books Evidence Act, 1891, which provides for mode of proof of entries in banker's books and lays down that subject to the provisions of that Act, a certified copy of any entry in a banker's books shall in all legal proceedings be received as prima facie evidence of the existence of such entry and shall be admitted as evidence of the matters, transactions and accounts therein recorded in every case where, and to the same extent, as the original entry itself is by law admissible Page 48 of 80 HC-NIC Page 48 of 80 Created On Wed Sep 16 01:14:32 IST 2015 R/CR.A/1719/2005 JUDGMENT but not further or otherwise. Whereas on behalf of the respondent accused, the learned counsel has placed reliance upon the provisions of section 67 of the Indian Evidence Act, 1872, which bears the heading "Proof of signature and handwriting of person alleged to have signed or written document produced" and lays down that if a document is alleged to be signed or to have been written wholly or in part by any person, the signature or the handwriting or so much of the document as is alleged to be in that person's handwriting must be proved to be in his handwriting. It was submitted that in the light of the provisions of section 67 of the Evidence Act, it is the person whose signature or handwriting is on the document who can prove his handwriting or signature and that in the facts of the present case, it is not the concerned person who has identified his signature, but an employee of the bank, which does not meet with the requirements of section 67 of the Evidence Act.
22.3 In the facts of the present case, the documents at Exhibits 95, 96 and 97 have been produced by Shri Rakeshbhai Babulal Choksi, Assistant Accountant, who has been examined as witness pursuant to the summons issued by the court to the bank calling upon the person concerned to appear and testify before the court. Though the said witness did not have any personal knowledge about the cheque return memo etc., he had been working in the bank for a period of twenty years and has identified the signatures of the concerned officers on the documents. Under section 4 of the Banker's Books Evidence Act, a certified copy of any entry in a banker's book shall in all legal proceedings be received as prima facie evidence of existence of such entry, and shall be admitted as evidence of Page 49 of 80 HC-NIC Page 49 of 80 Created On Wed Sep 16 01:14:32 IST 2015 R/CR.A/1719/2005 JUDGMENT the matters, transactions and accounts therein recorded in every case where, and to the same extent as, the original entry itself is now by law admissible, but not further or otherwise. Thus, in view of the said provision, the certified copy of the entries made in the banker's books shall be received as evidence of existence of such entry. Under section 67 of the Evidence Act, if a document is alleged to be signed or to have been written wholly or in part by any person, the signature or the handwriting of so much of the document as is alleged to be in that person's handwriting must be proved to be in his handwriting. Section 45 of the Evidence Act inter alia lays down that when the court has to form an opinion as to the identity of handwriting, the opinion upon that point of persons specially skilled in questions as to identity of handwritings are relevant facts. Section 47 of the Evidence Act, bears the heading "Opinion as to handwriting, when relevant" and lays down that when the court has to form an opinion as to the person by whom any document was written or signed, the opinion of any person acquainted with the handwriting of the person by whom it is supposed to be written or signed that it was or was not written or signed by that person, is a relevant fact. The Explanation to section 47 says that a person is said to be acquainted with the handwriting of another person when he has seen that person write, or when he has received documents purporting to be written by that person in answer to documents written by himself or under his authority and addressed to that person, or when, in the ordinary course of business, documents purporting to be written by that person have been habitually submitted to him. Therefore, in view of section 67 of the Evidence Act, the signature or handwriting of a person must be proved and sections 45 and 47 provide for Page 50 of 80 HC-NIC Page 50 of 80 Created On Wed Sep 16 01:14:32 IST 2015 R/CR.A/1719/2005 JUDGMENT the mode of such proof. In view of section 47 of the Evidence Act, a person to whom documents purporting to be written by that person are submitted in the ordinary course of business, can be said to be acquainted with his handwriting or signature and can prove the same. Adverting to the facts of the present case, witness Shri Rakeshbhai Babulal Choksi, is an Assistant Accountant with the bank and has been working for twenty years with the bank. The persons whose signatures he has identified are also stated to be working in the bank for a period of fifteen to twenty years. The said witness is, therefore, in the ordinary course of his business required to deal with documents bearing their signatures and is acquainted with their handwriting and signatures. He is, therefore, competent to prove their handwriting and signature in view of section 47 of the Evidence Act. The said documents have come from proper custody, namely, from the officer of the bank. Under the circumstances, there is no reason to disbelieve the testimony of the said witness or the documentary evidence which has been brought on record for the purpose of establishing that the cheque upon presentation had been returned.
22.4 At this juncture, reference may also be made to the provisions of section 146 of the N. I. Act, which bears the heading "Bank's slip prima facie evidence of certain facts" and lays down that the court shall, in respect of every proceeding under the Chapter, on production of bank's slip or memo having thereon the official mark denoting that the cheque has been dishonoured, presume the fact of dishonour of such cheque, unless and until such fact is disproved. In the present case, the complainant has produced the cheque return memo Page 51 of 80 HC-NIC Page 51 of 80 Created On Wed Sep 16 01:14:32 IST 2015 R/CR.A/1719/2005 JUDGMENT and has also examined the witness of the bank who has produced on record the extract of the cheque return register, which clearly reveals that the cheque in question had been dishonoured, as contended by the complainant. On behalf of the respondent accused, it has been contended that the cheque return memo as well as counterfoil are concocted and fabricated and that there was no reason for the complainant to obtain a certificate of the bank with regard to the cheque having been returned, which causes a suspicion with regard to the veracity of the submission of the complainant that the cheque in question had been returned upon presentation. In the opinion of this court, by merely contending that the documents in question are concocted and fabricated and raising a suspicion with regard to the motive of the complainant in obtaining the certificate in respect of return of the cheque, it cannot be said that the fact regarding dishonour of cheque has been disproved.
22.5 Insofar as the contention raised on behalf of the respondent that in view of the provisions of section 67 of the Evidence Act, it is the concerned person alone who can prove and certify the signature or the handwriting is concerned, on a plain reading of the said provision, there is nothing to indicate that the same mandates that the signature and handwriting of a person can be proved by that person alone. All that the said provision requires is that the signature of handwriting of such person must be proved to be in his handwriting. Besides as discussed hereinabove, section 47 of the Evidence Act provides that a person who is acquainted with the handwriting or signature of such person can prove the same. At the cost of repetition it may be stated that in the present case, the Page 52 of 80 HC-NIC Page 52 of 80 Created On Wed Sep 16 01:14:32 IST 2015 R/CR.A/1719/2005 JUDGMENT prosecution has examined an officer of the bank concerned, who was working with the bank for twenty years and was acquainted with the signatures of the persons who have signed the documents which have been produced, and he has identified the same. Under the circumstances, the documents which have been produced on record have been duly proved.
23. The next question which requires to be answered is as to whether the notice issued under section 138 of the N. I. Act meets with the requirements of a statutory notice under the said provision. On behalf of the accused, it was contended that in the notice, there must be a specific figure stating specific principal amount, interest, adat and vatav. It was submitted that in the impugned notice, there is no such bifurcation and hence, the notice does not meet with the requirements of section 138 of the N. I. Act. In this regard, reliance came to be placed on a decision of this court in the case of Yakub Musabhai Shafia v. Lalit H. Gandhi, Priprietor - Nakoda Auto Financer, LAWS (GJH)-2012-1-124. In the said decision, the court has held that it is well settled principle of law that the notice has to be read as a whole. In the notice, demand has to be made for the "said amount" i.e. cheque amount. If no such demand is made, the notice no doubt would fall short of its legal requirement. Where in addition to "said amount", there is also a claim by way of interest, cost, etc. whether the notice is bad would depend on the language of the notice. If in a notice while giving the breakup of the claim, the cheque amount, interest, damages etc. are separately specified, other such claims for interest, cost, etc. would be superfluous and these additional claims would be severable and will not invalidate the notice. If, however, in the notice an omnibus Page 53 of 80 HC-NIC Page 53 of 80 Created On Wed Sep 16 01:14:32 IST 2015 R/CR.A/1719/2005 JUDGMENT demand is made without specifying what was due under the dishonoured cheque, notice might well fail to meet the legal requirement and may be regarded as bad.
23.1 Examining the facts of the present case in the light of the above decision, a perusal of the notice issued by the respondent under section 138 of the Act (Exhibit-22) reveals that the complainant has called upon the accused to pay the cheque amount of Rs.14,72,587=52 together with the interest and service charges thereon as well as the cost of the notice. Thus, while the complainant has specified the cheque amount, he has not specified the amount of interest, service charges, costs, etc. However, since the demand for the cheque amount is specific, the additional claims which are clearly severable, inasmuch as, no amount is stated, would not invalidate the notice. Therefore, the said decision does not come to the aid of the respondent, inasmuch as, in the present case, in the notice, demand for an omnibus amount including the cheque amount and other additional amount in respect of the interest, service charges, etc. has not been made and in fact, the amount due under the different heads has been specified in the notice. Therefore, the ingredients of clause (b) of the proviso to section 138 of the N. I. Act, which requires the payee or the holder in due course of the cheque, as the case may be, to make a demand for 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, stands duly satisfied.
24. The next question that arises for consideration is as to Page 54 of 80 HC-NIC Page 54 of 80 Created On Wed Sep 16 01:14:32 IST 2015 R/CR.A/1719/2005 JUDGMENT whether the notice under section 138 of the N. I. Act has been duly served upon the accused. On behalf of the accused, it was contended that the notice has not been duly served upon the accused and that the service of notice is defective. It was submitted that the address of the accused, as stated in the documents executed at the time of opening of the account and the address stated in the notice, is different. Moreover, insofar as the Registered A.D. Notice is concerned, the envelope bears the endorsement "intimation has been given". Thus, there is no proper service of notice under section 138 of the N. I. Act and the requirements of section 138 of the N. I. Act are not satisfied. It has been contended that the service of notice is a two edged sword, namely, that a person liable to pay can avoid service of notice and in the same manner, the person intending to misuse the cheque or for any other mala fide reason, give a wrong address. It was pointed out that the address on which the notice has been issued is clearly different from the address stated in the documents which were submitted at the time when the account was opened. In this regard, it may be noted that the document, Exhibit-17, which had been executed at the time when the respondent No.1 accused opened his account with the complainant firm shows that the address stated on the first page is Riddhi Graphics, Dr. Gandhi Road, Himmatnagar. On the fourth page, the address stated is Riddhi Graphics, Bagicha Vistar, Himmatnagar. In the document, Exhibit-18, the address of the accused No.1 is shown as Nava Bazar, Himmatnagar and the address of the account holder is shown as Dr. Gandhi Road, Himmatnagar.
24.1 A perusal of the notice issued by the complainant shows the address of both the accused to be Bagicha Vistar, Near Page 55 of 80 HC-NIC Page 55 of 80 Created On Wed Sep 16 01:14:32 IST 2015 R/CR.A/1719/2005 JUDGMENT Mataji Ni Mandvi, Himmatnagar. The envelope in which the notice was sent as well as the U.P.C. Certificate shows the address as Bagicha Vistar, Near Mataji Ni Mandvi, Himmatnagar. The same address is also shown in the Registered A.D. Slip and the envelope bearing the notice sent by Registered A.D. Post, which also bears the same address.
24.2 In this regard, reference may be made to the deposition of the complainant. In the cross-examination of the said witness, he has stated that at the time when the account was opened, the address of Nava Bazar, Himmatnagar had been given. He has also admitted that in the form, the address given is Dr. Gandhi Road, Himmatnagar. He has, however, voluntarily stated that both these places are in the same area. He has admitted that Dr. Gandhi Road and the Bagicha area are different. He has admitted that the notice had not been issued to the accused at the registered/noted address, but has stated that at the time when the notice was issued, the address had changed. He has admitted that the accused at present also live in the Bagicha area and at the time when the account was opened also, they were in that area. A perusal of the cause title of the complaint shows the address of both the accused to be the same, as stated in the notice issued under section 138 of the N. I. Act. The cause title of the present appeal also bears the same address of the accused persons. It is also an admitted position that the acknowledgment receipt of the notice sent by Registered A.D. Post does not bear any signature of the recipient and that the envelope was returned with the endorsement that "intimation had been given".
24.3 The trial court, in the impugned order, has placed Page 56 of 80 HC-NIC Page 56 of 80 Created On Wed Sep 16 01:14:32 IST 2015 R/CR.A/1719/2005 JUDGMENT reliance upon the decision of the Supreme Court in the case of K. Bhaskaran v. Sankaran Vaidhyan Balan (supra), wherein it has been held that the context of section 138(b) of the Negotiable Instruments Act invites a liberal interpretation favouring the person who has the statutory obligation to give notice under the Act because he must be presumed to be the loser in the transaction, and provision itself has been made in his interest and if a strict interpretation is asked for, that would give a handle to the trickster cheque drawer. It is also well settled that once notice has been sent by registered post with acknowledgment due to a correct address, it must be presumed that the service has been made effective. In V. Raja Kumari v. P. Subbarama Naidu, (2004) 8 SCC 774, the Supreme Court reiterated the same principle and held that the statutory notice under sections 138 and 142 of the Negotiable Instruments Act, 1881 sent to the correct address of the drawer but returning with the endorsement must be presumed to be served on the drawer and the burden to show that the accused drawee had managed to get an incorrect postal endorsement letter on the complainant and affixed thereof have to be considered during trial on the background facts of the case. In the facts of the present case, the trial court after relying upon the decision of the Supreme Court in the case of K. Bhaskaran v. Sankaran Vaidhyan Balan (supra), was of the view that having regard to the provisions of sections 114 and 27 of the Indian Evidence Act, there is no reason to believe that the notice has not been served upon the accused. In the opinion of this court, having regard to the facts which have emerged from the cross-examination of the complainant, namely, that the address of the accused had changed subsequent to the opening of the account and having regard to Page 57 of 80 HC-NIC Page 57 of 80 Created On Wed Sep 16 01:14:32 IST 2015 R/CR.A/1719/2005 JUDGMENT the fact that the address of the accused both in the cause title of the complaint and in the cause title of the appeal is the same as in the notice issued under section 138 of the Act, it cannot be said that the finding recorded by the trial court that the notice under section 138 of the Act has been duly served upon the accused is in any manner contrary to the material on record or perverse so as to warrant interference.
25. The crucial question that needs to be answered in the present case is as to whether the cheque in question meets with the requirements of a cheque as contemplated under section 138 of the N. I. Act and as to whether the same can be said to have been issued in respect of a legally enforceable debt. It is an admitted position, as is also evident from the record of the case and the notice issued under section 138 of the Act as well as the averments made in the complaint, that the cheque in question bearing No.131106 had been made over to the complainant on 29.03.1995 at the time when he opened an account with the complainant firm. At the time of opening the account, the accused had executed a document at Exhibit-17. To appreciate the controversy in issue, it may be germane to refer to page 4 of the document, Exhibit-17, which as translated into English reads thus:
"We have opened our account with you and from the said account, we are time and again withdrawing amounts and also making deposits in the same. Every year on the 25th of March and September, our accounts are to be settled and after calculating the principal, interest, adat, vatav, the total amount is to be paid by us. In this regard for the sake of convenience, we have given you an undated cheque drawn on the Himmatnagar Nagrik Cooperative Bank, Himmatnagar Branch, bearing No.131106. Therefore, if we do not pay the amount in time, you shall be entitled to fill in Page 58 of 80 HC-NIC Page 58 of 80 Created On Wed Sep 16 01:14:32 IST 2015 R/CR.A/1719/2005 JUDGMENT the outstanding amount and date and encash the cheque. In this regard, we shall not be entitled to raise any dispute and if the cheque is returned, we shall be liable under section 138 of the N. I. Act and other provisions of law in this regard. We and all the partners of the firm shall be liable."
25.1 It is an admitted position that the cheque issued on 29.03.1995 was a blank signed cheque wherein neither the amount nor the date was mentioned but under the above referred document, the respondent No.1 accused had agreed that every year after the accounts are settled, after calculating the principal, interest, adat and vatav, the total amount is to be paid by them and that in case they do not pay the amount in time, the complainant firm would be entitled to fill in the details in the blank cheque and recover the same.
25.2 At this juncture, reference may be made to certain provisions of the N. I. Act. Section 5 of the N. I. Act defines "bill of exchange" to be 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. Section 6 of the N. I. Act defines "cheque" to be 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. Section 20 of the N. I. Act makes provision for "Inchoate stamped instruments" and reads thus :
"20. 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 Page 59 of 80 HC-NIC Page 59 of 80 Created On Wed Sep 16 01:14:32 IST 2015 R/CR.A/1719/2005 JUDGMENT 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 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."
25.3 This court in Hitenbhai Parekh, Proprietor - Parekh Enterprises v. State of Gujarat (supra), has held that even as a bill of exchange, by definition, requires signature of the maker as also direction to pay a certain sum of money only to or to the order of a certain person or to the bearer of the instrument, the provisions of section 20 permit signature and delivery of an incomplete negotiable instrument and provide that the maker thereby gives prima facie authority to the holder thereof to make or complete it into a negotiable instrument and makes the signatory of such instrument liable to any holder in due course to the extent of the amount intended to be paid thereunder. Therefore, harmonious reading of the provisions of sections 5, 6, 20, 118 and 139 would clearly indicate that a cheque could be drawn, delivered and received by the payee or holder in due course and could legally be completed under a legal authority and when such inchoate instrument is completed to make it a negotiable instrument, it would fall within the definition of bill of exchange and would render the signatory liable upon such instrument to the extent the amount mentioned therein is intended by him to be paid thereunder. Unless and until contrary is proved, such negotiable instrument would be presumed to be made or Page 60 of 80 HC-NIC Page 60 of 80 Created On Wed Sep 16 01:14:32 IST 2015 R/CR.A/1719/2005 JUDGMENT drawn for consideration and receipt thereof would be presumed to be for discharge, in whole or in part, of any debt or other liability. However, such debt or other liability is not by any legal presumption presumed to be a legally enforceable debt or other liability. Therefore, the onus of proving that the presumed or proved debt or legal liability was legally enforceable remains with the complainant. Consequently, in all given fact-situations, the court is required to examine whether the presumptions regarding consideration and there being any debt or other liability are rebutted by the accused person by preponderance of probabilities and whether the complainant has proved that the debt or other liability, presumed or proved by overwhelming evidence, was legally enforceable. The court further held that an analysis of the statutory provisions leads to the conclusion that, when a cheque bearing only signature of the drawer is delivered and received by a payee for the discharge, in whole or in part, of any debt or liability, there is an implied authority for the person receiving such cheque to complete it by filling the blanks and the amount having been filled up under such implied authority would be the amount intended by him to be paid thereunder. The focus in such cases would shift to the aspect of such amount being for the discharge, in whole or in part, of any legally enforceable debt or other liability.
25.4 In Ashok Yeshwant Badave v. Surendra Madhavrao Nighojakar (supra), the Supreme Court held that from a bare perusal of sections 5 and 6 of the Act, it would appear that a bill of exchange is a negotiable instrument in writing containing an instruction to a third party to pay a stated sum of money at a designated future date or on demand. On the other hand, a Page 61 of 80 HC-NIC Page 61 of 80 Created On Wed Sep 16 01:14:32 IST 2015 R/CR.A/1719/2005 JUDGMENT "cheque" is a bill of exchange drawn on a bank by the holder of an account payable on demand. Under section 6 of the Act, a "cheque" is also a bill of exchange but it is drawn on a banker and payable on demand. A bill of exchange even though drawn on a banker, if it is not payable on demand, it is not a cheque. A "post-dated cheque" is not payable till the date which is shown thereon arrives and will become cheque on the said date and prior to that date, the same remains a bill of exchange.
25.5 The question that, therefore, arises for consideration is as to whether the cheque in question was drawn, delivered and received for payment of any amount to the payee for the discharge, in whole or in part, of any legally enforceable debt or other liability?
25.6 From the admitted facts which have come on record, the cheque in question was a blank cheque which did not mention either the amount or the date. A bill of exchange has been defined to be 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. Therefore, of the purpose of falling within the ambit of "bill of exchange" as defined under section 5 of the N. I. Act, the instrument should contain a direction to a certain person to pay a certain sum of money. In the present case, the cheque in question does not mention any amount payable to a certain person. Therefore, the cheque in question evidently does not meet with the requirements of a bill of exchange as defined Page 62 of 80 HC-NIC Page 62 of 80 Created On Wed Sep 16 01:14:32 IST 2015 R/CR.A/1719/2005 JUDGMENT under section 5 of the N. I. Act. However, section 20 of the N. I. Act provides that 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 exceeding the amount covered by the stamp. Therefore, at the time when the cheque was issued to the complainant, it was in the nature of an inchoate instrument without the amount or date having been written thereon and was an incomplete negotiable instrument bearing the signature of the accused. However, along with such inchoate instrument, the accused also executed the document, Exhibit-17, by virtue of which he gave express authority to the complainant to fill in the date as well as the amount upon the accounts being settled every year on the 25th day of March or September, in case such amount remained unpaid. As noted hereinabove, the cheque in question had been issued on 29.03.1995 with the express authority to the complainant to fill in the outstanding amount after the accounts are settled at the end of each year as well as the date and encash the cheque.
25.7 On behalf of the accused, by placing reliance upon various decisions of different High Courts, it has been contended that unless the details are filled up in the blank cheque with the consent of the drawer, the same would be in breach of section 87 of the N. I. Act, which provides for effect of material alteration and lays down that any material alteration of a negotiable instrument renders the same void as Page 63 of 80 HC-NIC Page 63 of 80 Created On Wed Sep 16 01:14:32 IST 2015 R/CR.A/1719/2005 JUDGMENT against anyone who is a party thereto at the time of making such alteration and does not consent thereto, unless it was made in order to carry out the common intention of the original parties. It was submitted that the figures mentioned in the cheque had not been filled in with the consent of the accused and hence, the mentioning of the amount in the blank cheque, amounts to a material alteration as contemplated under section 87 of the Act. It may be noted that section 20 of the Act provides for inchoate stamped instruments and lays down that 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 exceeding the amount covered by the stamp. Thus, section 20 expressly permits a person who has been given a blank negotiable instrument to make or complete, upon it the negotiable instrument, for any amount specified therein and not exceeding the amount covered by the stamp whereas section 87 of the Act says that any material alteration of a negotiable instrument against anyone who is a party thereto at the time of making such alteration and does not consent thereto, unless it was made in order to carry out the common intention of the original parties, would render the instrument void.
25.8 Section 87 of the N. I. Act provides that any material alteration of a negotiable instrument renders the same void as against anyone who is a party thereto at the time of making Page 64 of 80 HC-NIC Page 64 of 80 Created On Wed Sep 16 01:14:32 IST 2015 R/CR.A/1719/2005 JUDGMENT such alteration and does not consent thereto, unless it was made in order to carry out the common intention of the original parties. The section further provides that the provisions of that section are subject to the provisions of sections 20, 49, 86 and 125 of the Act. A perusal of the provisions of sections 20, 49, 86 and 125 of the Act show that all the sections contain provisions which permit the holder of a negotiable instrument to fill the blanks or make changes in the instrument. Therefore, when any blank is filled in or an uncrossed cheque is crossed or an endorsement in blank is converted into an endorsement in full, these are all permitted under the above provisions and the provisions of section 87 of the Act are subject to the said provisions. The words "subject to" have been subject matter of interpretation in a catena of decisions of the Supreme Court. In Union of India v. Brigadier P. S. Gill, (2012) 4 SCC 463, the Supreme Court after referring to various decisions in this regard, held thus:
"17. Each word used in the enactment must be allowed to play its role howsoever significant or insignificant the same may be in achieving the legislative intent and promoting legislative object. Although it is unnecessary to refer to any decisions on the subject, we may briefly re-count some of the pronouncements of this Court in which the expression "subject to" has been interpreted.
18. In K.R.C.S. Balakrishna Chetty & Sons & Co. v. State of Madras (1961) 2 SCR 736, this Court was interpreting Section 5 of the Madras General Sales Tax Act, 1939 in which the words "subject to" were used by the legislature. This Court held that the use of words "subject to" had reference to effectuating the intention of law and the correct meaning of the expression was "conditional upon". To the same effect is the decision of this Court in South India Corporation (P) Ltd. v. The Secretary, Board of Revenue (1964) 4 SCR 280 where this Court held that the expression "subject to"Page 65 of 80
HC-NIC Page 65 of 80 Created On Wed Sep 16 01:14:32 IST 2015 R/CR.A/1719/2005 JUDGMENT conveyed the idea of a provision yielding place to another provision or other provisions to which it is made subject.
19. In State of Bihar v. Bal Mukund Sah (2000) 4 SCC 640, this Court once again reiterated that the words "subject to the provisions of this Constitution" used in Article 309, necessarily means that if in the Constitution there is any other provision specifically dealing with the topics mentioned in the said Article 309, then Article 309 will be subject to those provisions of the Constitution. In B.S. Vadera v. Union of India (1968) 3 SCR 575, this Court interpreted the words "subject to the provisions of any Act", appearing in proviso to Article 309 and observed:
"24. It is also significant to note the proviso to Article 309, clearly lays down that 'any rules so made shall have effect, subject to the provisions of any such Act'. The clear and unambiguous expression, used in the Constitution, must be given their full and unrestricted meaning, unless hedged in, by any limitations. The rules, which have to be 'subject to the provisions of the Constitution', shall have effect, 'subject to the provisions of any such Act'. That is, if the appropriate Legislature has passed an Act, under Article 309, the rules, framed under the proviso, will have effect, subject to that Act; but, in the absence of any Act, of the appropriate legislature, on the matter, in our opinion, the rules, made by the President, or by such person as he may direct, are to have full effect, both prospectively and, retrospectively."
21. In Chandavarkar S.R. Rao v. Ashalata S. Guram (1986) 4 SCC 447, this Court declared that the words "notwithstanding" is in contradistinction to the phrase 'subject to' the latter conveying the idea of a provision yielding place to another provision or other provisions to which it is made subject.
22. There is in the light of the above decisions no gainsaying that Section 30 of the Act is by reason of the use of the words "subject to the provisions of Section 31" made subordinate to the provisions of Section 31. The question whether an appeal would lie and if so in what circumstances cannot, therefore, be answered without looking into Section 31 and giving it primacy Page 66 of 80 HC-NIC Page 66 of 80 Created On Wed Sep 16 01:14:32 IST 2015 R/CR.A/1719/2005 JUDGMENT over the provisions of Section 30. That is precisely the object which the expression "subject to the provisions of Section 31" appearing in Section 30(1) intends to achieve. We have, therefore, no hesitation in rejecting the submission of Mr. Tankha that the expression "subject to the provisions of Section 31" are either ornamental or inconsequential nor do we have any hesitation in holding that right of appeal under Section 30 can be exercised only in the manner and to the extent it is provided for in Section 31 to which the said right is made subject."
25.9 Thus, the provisions of section 87 of the N. I. Act are subordinate to the provisions of section 20 of the said Act and hence, when the provisions of section 20 expressly permit the holder to complete an inchoate negotiable instrument, the provisions of section 87 of the N. I. Act would not be applicable as the same are subject to the provisions of section 20 of the said Act.
25.10 A signed blank cheque in terms of the decision of the Supreme Court referred to above as well as the decision of this Court in the case of Hitenbhai Parekh, Proprietor - Parekh Enterprises v. State of Gujarat and another (supra), is an inchoate negotiable instrument and so long as it remains inchoate, the provisions of section 138 of the N. I. Act would not be applicable to such instrument. In the case on hand, the cheque was signed on 29.03.1995 and made over to the complainant on the same day, but it did not mention the amount or the date. However, the blank cheque was made over with the agreement Exhibit-17 which is a stamped document wherein, the accused has accepted the liability to the tune of Rs.15,00,000/- in respect of the amount outstanding in his account upon the accounts being settled Page 67 of 80 HC-NIC Page 67 of 80 Created On Wed Sep 16 01:14:32 IST 2015 R/CR.A/1719/2005 JUDGMENT every year, the contents whereof have been reproduced hereinabove whereby the complainant has been given the authority to fill in the details if upon settling accounts every year, the amount outstanding is not paid by the account holder in time. Therefore, the intention of the parties was that the details should be filled in by mentioning the outstanding amount as per the accounts and the date. At the time when the cheque was issued, the exact amount was not stated, but the amount to be filled in was the amount outstanding to the extent of Rs.15,00,000/- at the time of settling accounts every year. Accordingly, once the accounts are settled and the outstanding amount is not paid in time, the complainant in view of Exhibit-17 derived the authority to fill the blanks and complete the inchoate instrument. The consent of the accused is deemed to have been obtained on the basis of the recitals contained in the agreement. Therefore, even if the submission advanced by the learned counsel for the respondent that filling in the amount and the date would amount to material alteration within the meaning of such expression as envisaged in section 87 of the Act and that unless such alteration is made with the consent of the drawer, it would render the instrument void, were to be accepted, in the light of the agreement Exhibit-17, such alteration has been made to carry out the common intention of the original parties.
25.11 The learned counsel for the respondent has placed reliance on the decision of the Andhra Pradesh High Court in the case of Avon Organics Ltd. v. Pioneer Products Limited (supra) for the proposition that if the cheque is not drawn for a specified amount, it does not fall under the definition of bill of exchange and cannot be called a cheque Page 68 of 80 HC-NIC Page 68 of 80 Created On Wed Sep 16 01:14:32 IST 2015 R/CR.A/1719/2005 JUDGMENT within the meaning of section 5 and 6 of the NI Act. For the reasons recorded hereinabove, the said decision would not come to the aid of the respondent. As regards the decision of the Bombay High Court in Manjit Singh Obhan v. State of Maharashtra (supra) on which reliance has been placed on behalf of the respondent, the said decision was rendered in the peculiar facts of the said case wherein it was admitted by the complainant that the disputed cheques had been obtained in blank condition with intervention of the police inspector, and would have no applicability to the facts of the present case. In Bindu v. Sreekantan Nair (supra), the Kerala High Court was dealing with a case where the interim order refusing the prayer to send the cheque for the opinion of the handwriting expert was under challenge. The court observed that the right of the accused to contend that a blank signed cheque was misutilised by the payee cannot be taken away by such mere admission of signature. Ultimately when the evidence is appreciated the court shall have to consider whether admission of signature coupled with the other circumstances is sufficient to prove execution. In Bharuch Nagrik Sahakari Bank Limited v. Kiritbhai Meghjibhai Patel (supra), this court was considering a case where blank signed cheques were issued by the accused. The original agreements were not produced on record of the case and the accused had alleged misuse of the cheques. The accused in the cross examination were able to bring on record the facts and circumstances that blank cheques were in custody of the complainant bank and were misused. The court was of the view that therefore, the burden shifter on the complainant to prove that the cheques were given towards discharge of legally recoverable debt or liability. It was, therefore, on the facts of the case that the court found Page 69 of 80 HC-NIC Page 69 of 80 Created On Wed Sep 16 01:14:32 IST 2015 R/CR.A/1719/2005 JUDGMENT that the prosecution had failed to prove the outstanding amount and that the cheques were given towards discharge of such liability.
25.12 It may be noted that before the trial court, on behalf of the appellant, reliance had been placed upon the decision of this court in the case of (M/s.) United India Phosferous Ltd. and others v. Shri Vinodbhai Mohanbhai Patel (supra) wherein, the court had recorded that in the facts of the said case, there was no dispute of the fact that the complainant was owing the amount mentioned or inserted in the cheque, then section 20 of the N. I. Act empowers and authorizes the petitioner to write the name of the payee and the amount. The trial court, in the context of the above decision, observed that a person, who has the cheque in his possession, can fill in the name and the amount in terms of section 20 of the N. I. Act. However, in the present case, the complainant has filled the details after a period of six months and hence the decision does not come to the aid of the prosecution. The trial court has held that the decision of this court in the case of Shankus Concrete Pvt. Ltd. v. State of Gujarat (supra) would be applicable to the facts of the present case. It may be pertinent to note that the decision of this court in Shankus Concrete Pvt. Ltd. v. State of Gujarat (supra) was carried before the Supreme Court in Balbhadurasinh Indrasinhji Zala v. Shanku Concrete (Pvt.) Ltd. (supra) wherein, the Supreme Court observed that it appears that the cheque was supported by consideration and, if any, other agreement is entered into between the parties to defer the payment, that will not make the cheque unsupported by consideration. The court held that the learned Single Judge was Page 70 of 80 HC-NIC Page 70 of 80 Created On Wed Sep 16 01:14:32 IST 2015 R/CR.A/1719/2005 JUDGMENT not right in holding that the cheque was issued as collateral security and therefore, it lacked consideration. Therefore, the decision on which the trial court has placed reliance has subsequently been reversed by the Supreme Court.
26. The next question that needs to be addressed is as to whether the complainant has succeeded in proving that there was a legally enforceable debt in respect of which the cheque in question had been issued. Before adverting to the merits of the case, it may be germane to refer to the certain decisions of the Supreme Court in the context of section 138 of the NI Act. In Indus Airways (P) Ltd. v. Magnum Aviation (P) Ltd., (2014) 12 SCC 539, the Supreme Court has held that the explanation appended to section 138 explains the meaning of the expression "debt or other liability" for the purpose of section 138. This expression means a legally enforceable debt or other liability. Section 138 treats dishonoured cheque as an offence, if the cheque has been issued in discharge of any debt or other liability. The explanation leaves no manner of doubt that to attract an offence under section 138, there should be a legally enforceable debt or other liability subsisting on the date of drawal of the cheque. In other words, drawal of the cheque in discharge of an existing or past adjudicated liability is sine qua non for bringing an offence under section 138. It was held that for a criminal liability to be made out under section 138 there should be legally enforceable debt or other liability subsisting on the date of drawal of the cheque. In Rangappa v. Sri Mohan, (2010) 11 SCC 441, on which reliance has been placed by the learned counsel for the appellant, the Supreme Court after referring to its earlier decisions, has agreed with the respondent claimant that the presumption mandated by Page 71 of 80 HC-NIC Page 71 of 80 Created On Wed Sep 16 01:14:32 IST 2015 R/CR.A/1719/2005 JUDGMENT section 139 of the Act does indeed include the existence of a legally enforceable debt or liability. The court held that section 139 of the Act is an example of a reverse onus clause that has been included in furtherance of the legislative objective of improving the credibility of negotiable instruments. While section 138 of the Act specifies a strong criminal remedy in relation to the dishonour of cheques, the rebuttable presumption under section 139 is a device to prevent undue delay in the course of litigation. The court further held that it is a settled position that when an accused has to rebut the presumption under section 139, the standard of proof for doing so is that of "preponderance of probabilities". Therefore, if the accused is able to raise a probable defence which creates doubts about the existence of a legally enforceable debt or liability, the prosecution can fail.
26.1 It may be noted that the complainant has vide Exhibit- 54 produced a letter dated 31st March, 1997 issued by the accused No.1 wherein, he has stated that he had obtained funds from the appellant firm and as per the customs of the firm, every year as per the account upto 20th March, he has not been able to pay the outstanding amount and that he is obliged to the complainant for taking into consideration his difficulties and providing him facility and he assures that the cheques shall be accepted on due date and that he accepts full responsibility in that regard. Along with letter Exhibit-54, the respondent No.1 accused had enclosed a list of eleven cheques for a total amount of Rs.12,50,000/- dated 30.04.1997 to 30.09.1997. Though the complainant has been cross-examined at length, there is no cross-examination in this regard and hence, the letter Exhibit-54 stands admitted. As rightly Page 72 of 80 HC-NIC Page 72 of 80 Created On Wed Sep 16 01:14:32 IST 2015 R/CR.A/1719/2005 JUDGMENT submitted by the learned counsel for the appellant, so far as the document Exhibit-54 is concerned, there is no challenge to that document, nor is there any challenge to the accompanying cheque with list, which amounts to admission of debt under Indian Evidence Act. It is not the case of the accused that the letter is not written by him, nor is there any suggestion that the cheques were not given towards discharge of liability. Therefore, the existence of a debt has been duly established. The fact that there is no challenge to the document Exh.54 clearly shows that there exists a relation between the complainant and the accused, whereby the accused has admitted his financial liability to the tune of Rs.12,50,000/-. Unless the factum is seriously challenged or rebutted, the accused cannot be heard to say that there exists no liability or a legally enforceable debt. It appears that out of the cheques which were issued to the complainant, two cheques had been returned upon presentation and insofar as the other cheques are concerned, the same were not presented in view of the instructions of the accused not to deposit the same.
26.2 At this juncture, reference may be made to the decision of the Supreme Court in the case of I.C.D.S. Ltd. v. Beena Shabeer and another (supra), on which reliance had been placed by the learned counsel for the appellant, wherein the Supreme Court observed that the Kerala High Court in Sreenivasan v. State of Kerala, 1999 (3) K.L.T. 849, had observed as under :
"3. A comparative reading of the principle laid down by the Andhra Pradesh High Court and the mandatory Page 73 of 80 HC-NIC Page 73 of 80 Created On Wed Sep 16 01:14:32 IST 2015 R/CR.A/1719/2005 JUDGMENT provisions laid down in section 138 of the Negotiable Instruments Act is crystal clear that when a cheque has been issued as a security, no complaint will lie under section 138 of the Negotiable Instruments Act."
The court observed that after having noted the interpretation of the High Court as regards section 138 of the Act, time has thus now come to assess the acceptability of such wisdom. The court held thus:
"10. The language, however, has been rather specific as regards the intent of the legislature. The commencement of the Section stands with the words "Where any cheque". The above noted three words are of extreme significance, in particular, by reason of the user of the word "any" the first three words suggest that in fact for whatever reason if a cheque is drawn on an account maintained by him with a banker in favour of another person for the discharge of any debt or other liability, the highlighted words if read with the first three words at the commencement of Section 138, leave no manner of doubt that for whatever reason it may be, the liability under this provision cannot be avoided in the event the same stands returned by the banker unpaid. The legislature has been careful enough to record not only discharge in whole or in part of any debt but the same includes other liability as well. This aspect of the matter has not been appreciated by the High Court, neither been dealt with or even referred to in the impugned judgment.
26.3 In the facts of the present case, the cheque in question had been issued on 29.03.1995, at the time of opening the account of the respondent No.1 accused with an understanding that when the accounts are settled, the amount along with interest and service charges shall be filled in and the complainant firm may get the cheque encashed. On 08.01.1998, the accounts were settled and an amount of Rs.14,72,587=52 was found to be due and payable. Hence, the amount was filled up and the cheque was presented before the Page 74 of 80 HC-NIC Page 74 of 80 Created On Wed Sep 16 01:14:32 IST 2015 R/CR.A/1719/2005 JUDGMENT bank on 08.01.1998 and was returned with the endorsement "funds insufficient". It is an admitted position that the cheque issued to the complainant was a blank signed cheque. Therefore, reference is required to be made to the agreement executed by the accused at the time of opening the account at Exhibit-17 wherein, it has been accepted that every year on the 25th of March and September, the accounts are to be settled and after calculating the principal, interest, adat and vatav, total amount is to be paid by the accused. In this regard, for the sake of convenience, the accused has given undated cheque drawn on the Himmatnagar Nagrik Sahakari Bank Ltd. bearing No.131106. In case the accused does not pay the amount in time, the complainant shall be entitled to fill the outstanding amount and date and present the cheque. Thus, by the agreement executed at the time of opening the account, the cheque was to be encashed after filling in the amount due upon settling the accounts as well as the date. Therefore, an inchoate instrument was given to the complainant with an authority to complete the same by filling in the blanks. As on the date when the cheque was given, there was no enforceable debt. But on the date when it was filled up, there was a legal debt which has been proved by producing the account statements maintained by the complainant. It may be noted that the account statements have been produced at the instance of the accused, so also the certified copies of the cheques referred to in the list enclosed with Exhibit-54. It has been contended that only certified copies of the cheques have been produced and the original have not been produced and that the original are lying with the accused as the amount under the cheques had been paid in cash and the cheques had been returned. In this regard, it may Page 75 of 80 HC-NIC Page 75 of 80 Created On Wed Sep 16 01:14:32 IST 2015 R/CR.A/1719/2005 JUDGMENT be noted that by the order passed on the application made by the applicant for production of documents, the trial court has directed the complainant to produce certified copies of the documents enumerated therein and not the original. Besides, if the original cheques were lying with the accused, there was no reason for him to call upon the complainant to produce the same. In fact, in his defence, he could have produced them. Significantly the account statements have not been disputed by the accused by cross-examining the complainant and in fact, the account statements support the case of the complainant because as per the account statements, in March, 1997, an amount of Rs.12 lacs and odd was payable by the accused which stands admitted by the document Exhibit-54 and subsequent accounts show the total outstanding as on 08.01.1998 was Rs.14,72,587=52, namely, the cheque amount. Therefore, the complainant has duly proved that as on the date of the cheque, there was a legally enforceable debt qua the cheque amount.
27. In the backdrop of the above facts and circumstances, what ultimately emerges is that the respondent No.1 accused has issued a blank signed cheque on 29.03.1995 along with the agreement Exhibit-17, which is a stamped document permitting the complainant to fill in the amount that remains outstanding at the time of settling accounts every year subject to a maximum of Rs.15,00,000/- if the amount is not paid in time. Thus, the blank cheque which was made over to the complainant on 29.03.1995 was an inchoate instrument as contemplated under section 20 of the N. I. Act. The respondent accused No.1 had also given the authority to the complainant to fill it up in terms of the agreement, Exhibit-17. Therefore, Page 76 of 80 HC-NIC Page 76 of 80 Created On Wed Sep 16 01:14:32 IST 2015 R/CR.A/1719/2005 JUDGMENT there is a deemed consent of the accused for filling up the cheque. The complainant, in terms of the agreement at Exhibit-17, filled up the blanks in the cheque by putting in the amount as well as the date, that is, 08.01.1998, whereupon the inchoate instrument became a cheque. The cheque was presented before the bank and came to be returned with the endorsement of insufficient funds. The complainant issued notice under section 138 of the N. I. Act, which was duly served upon the accused. The accused neither gave any reply, nor did he pay the cheque amount within fifteen days of service of notice. The complainant, therefore, filed the complaint within the prescribed period of limitation. Before the trial court, the complainant produced the cheque return memo, the counterfoil as well as a certificate issued by the bank that the cheque had been dishonoured. The complainant also examined an officer of the bank who produced the extract from the cheque return register wherein, the cheque in question finds mention. Thus, the complainant by leading overwhelming evidence in this regard, has proved the return of the cheque.
28. As regards the question as to whether there was a legally enforceable debt, the complainant has produced the agreement at Exhibit-17 which shows that at the time of giving the blank cheque, the accused had given express authority to the complainant to fill it up in terms thereof, viz., the outstanding amount found at the time of settling accounts every year, if the same is not paid in time, to the extent of Rs.15,00,000/-. The complainant at the instance of the accused, had produced on record the daily account register maintained by the firm (Rojmel) as well as the statement of Page 77 of 80 HC-NIC Page 77 of 80 Created On Wed Sep 16 01:14:32 IST 2015 R/CR.A/1719/2005 JUDGMENT accounts of the accused which clearly reveal that as on 31 st March, 1997, an amount of Rs.12,85,664=29 was outstanding. The complainant has also produced the letter Exhibit-54 dated 31.03.1997 of the accused, which shows that the accused has acknowledged that on 20th of March of each year, the accounts are settled and that for the purpose of payment of the amount, he has issued the cheques enclosed therewith. The respondent No.1 accused has, accordingly, issued eleven cheques in all for a sum of Rs.12,50,000/- in favour of the complainant. Therefore, there is a clear acknowledgment of debt by the accused. The complainant has also led evidence to show that upon depositing two cheques, the same were returned and that at the instance of the accused, the remaining cheques were not presented before the bank. The bank employee has also produced the balance statement of the accused; wherein the cheques issued vide Exhibit-54 do not find reference. Clearly therefore, the cheques have not been encashed, nor it is the case of the accused that the same have been encashed. The certified copies of the cheques have been produced pursuant to the application made by the accused for production of documents. While it has been contended that the amount was paid in cash, whereupon the cheques were returned to the accused, however, the accused instead of producing such cheques in support of his say, has on the contrary, called upon the complainant to produce the same. Therefore, the accused even on a preponderance of probabilities, has failed to establish that the amount under the cheques issued vide Exhibit-54 has been paid by him. The account statement produced by the complainant clearly shows that as on 08.01.1998, an amount of Rs.14,72,587=52 paise was outstanding in the account of the accused. There is no Page 78 of 80 HC-NIC Page 78 of 80 Created On Wed Sep 16 01:14:32 IST 2015 R/CR.A/1719/2005 JUDGMENT reason to disbelieve the account statement, inasmuch as, it was at the instance of the respondent accused that the complainant has produced the daily account register of the complainant firm which records the complete accounts maintained by the firm. Accordingly, after settling the accounts, such amount of Rs.14,72,587=52 came to be filled up and the date was also inserted in the cheque and the cheque was presented before the bank, which came to be returned on the grounds of insufficient funds. The offence under section 138 of the NI Act, therefore, stands clearly established. The trial court, in the impugned judgment, has failed to take into consideration the relevant facts and has failed to appreciate the evidence on record in proper perspective.
29. As noticed earlier, the trial court has, on an erroneous interpretation of the provisions of section 138 of the N. I. Act, come to the conclusion that the cheque which was issued on 29.03.1995 was presented on 08.01.1998 and was, therefore, beyond the prescribed period of limitation, which finding is contrary to the law laid down by the Supreme Court as discussed hereinabove. Hence, the appeal deserves to be allowed by setting aside the acquittal of the accused No.1.
30. The appeal, therefore, partly succeeds and is hereby allowed to the following extent:
While maintaining the judgment and order of acquittal dated 7th February, 2005 passed by the learned Judicial Magistrate First Class, Himmatnagar, Sabarkantha in Criminal Case No.380 of 1998 qua the accused - Hareshkumar Manilal Page 79 of 80 HC-NIC Page 79 of 80 Created On Wed Sep 16 01:14:32 IST 2015 R/CR.A/1719/2005 JUDGMENT Trivedi, the same is hereby set aside qua the accused - Jignesh Hareshkumar Trivedi. Accused - Jignesh Hareshkumar Trivedi is hereby held guilty of the offence punishable under section 138 of the Negotiable Instruments Act, 1881.
31. This court would now be required to give an opportunity to the respondent No.2 accused, viz., Jignesh Hareshkumar Trivedi, of being heard on the question of sentence. The case is, therefore, adjourned to 10th August, 2015 at 02:30 p.m. for hearing the respondent No.2 - accused on the question of sentence. If on that date, he fails to appear before this Court, the learned advocate for the accused shall be heard on the question of sentence.
(HARSHA DEVANI, J.) parmar* Page 80 of 80 HC-NIC Page 80 of 80 Created On Wed Sep 16 01:14:32 IST 2015