Madhya Pradesh High Court
Anil Das Bairagi vs Smt. Nidhi Jain on 20 August, 2019
Author: Rajeev Kumar Dubey
Bench: Rajeev Kumar Dubey, Vishal Dhagat
1
HIGH COURT OF MADHYA PRADESH
PRINCIPAL SEAT AT JABALPUR
Misc. Criminal Case No.982/2019
Anil Das Bairagi
V.s
Smt. Nidhi Jain and two others
Misc. Criminal Case No.987/2019
Anil Das Bairagi
V.s
Smt. Nidhi Jain and two others
Misc. Criminal Case No.991/2019
Anil Das Bairagi
V.s
Smt. Nidhi Jain and two others
Misc. Criminal Case No.994/2019
Anil Das Bairagi
V.s
Smt. Nidhi Jain and two others
Misc. Criminal Case No.1000/2019
Anil Das Bairagi
V.s
Smt. Nidhi Jain and two others
Digitally signed by RANJEET
AHIRWAL
Date: 24/08/2019 12:04:34
2
Misc. Criminal Case No.1026/2019
Anil Das Bairagi
V.s
Smt. Nidhi Jain and two others
Misc. Criminal Case No.1028/2019
Anil Das Bairagi
V.s
Smt. Nidhi Jain and two others
&
Misc. Criminal Case No.1031/2019
Anil Das Bairagi
V.s
Smt. Nidhi Jain and two others
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Shri Ankit Saxena, Advocate for the applicant.
Shri Brahmdatt Singh, Shri Akshay Namdeo, Shri Amitabh Bharti, Advocates
for the respondents.
=============================================================
PRESENT:
HON'BLE SHRI JUSTICE RAJEEV KUMAR DUBEY &
HON'BLE SHRI JUSTICE VISHAL DHAGAT
ORDER
(20/08/2019) As per :- Rajeev Kumar Dubey, J.
These references are made by the learned Single Judge vide order Digitally signed by RANJEET AHIRWAL Date: 24/08/2019 12:04:34 3 dated 30.04.2019 passed in M.Cr.C.Nos.982/2019, 987/2019, 991/2019, 994/2019, 1000/2019, 1026/2019, 1028/2019 & 1031/2019 on the following common points:-
i) Whether the Single Bench judgment of this Court in the case of Kishore Goyal (supra) laid down the correct law on the point of capability or eligibility of the legal representatives to file complaint under section 138 read with section 142 of the Act ?
ii) Whether any legal representative or all legal representatives of the deceased payee can file a complaint under section 138 read with section 142 of the Act without having succession certificate, letters of administration or probate under the Indian Succession Act ? If not, then,
iii) What would be the effect of delay in obtaining the aforesaid authorities, which would frustrate the cause of action to file complaint under section 138 of the Act on account of not taking steps within time, as required under proviso (a) and (b) of section 138 of the Act as the aforesaid delay cannot be condoned under section 142(1)(b) of the Act ?
2. In all the above mentioned cases the points of reference are the same so this common order shall govern the disposal of all the above mentioned references.
3. Brief facts of the cases which are relevant for the disposal of the reference are that the complainants who claim to be the legal heirs of the deceased late Narendra Kumar Jain (Smt.Nidhi Jain wife, Nidhish Jain son and Ku.Nirushi Jain daughter) filed eight complaints in the court of JMFC Bhopal under Section 138 of the Negotiable Instruments Act, 1881 (hereinafter referred to as 'the Act') against the applicant Anil Das Bairagi regarding dishonour of eight cheques given by the applicant to late Narendra Kumar Jain. On that learned Judicial Magistrate First Class took cognizance against the applicant for the offence punishable under Section Digitally signed by RANJEET AHIRWAL Date: 24/08/2019 12:04:34 4 138 of the Act and registered eight criminal cases. Being aggrieved from these orders applicant filed eight petitions as mentioned above and challenged the order of cognizance and also raised the objection that the complainants cannot file such complaints as they are not the payee or holder in due course..
4. Before considering the aforesaid point, it would be better to examine the appropriate provisions of law.
Section 138 of the Act reads as under:-
"138. Dishonour of cheque for insufficiency, etc., of funds in the account.--Where any cheque drawn by a person on an account maintained by him with a banker for payment of any amount of money to another person from out of that account for the discharge, in whole or in part, of any debt or other liability, is returned by the bank unpaid, either because of the amount of money standing to the credit of that account is insufficient to honour the cheque or that it exceeds the amount arranged to be paid from that account by an agreement made with that bank, such person shall be deemed to have committed an offence and shall, without prejudice to any other provision of this Act, be punished with imprisonment for a term which may be extended to two years'], or with fine which may extend to twice the amount of the cheque, or with both:
Provided that nothing contained in this section shall apply unless:--
(a) the cheque has been 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;
(b) the payee or the holder in due course of the cheque, as the case may be, makes a demand for the 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;
and
(c) the drawer of such cheque fails to make the payment of the said amount of money to the payee or, as the case may be, to the holder in due course of the cheque, within fifteen days of the receipt of the said notice.
Digitally signed by RANJEET AHIRWAL Date: 24/08/2019 12:04:34 5Explanation.--For the purposes of this section, "debt of other liability" means a legally enforceable debt or other liability."
The Section 142 (1) of the Act reads as under:-
"142. Cognizance of offences.--
(1) Notwithstanding anything contained in the Code of Criminal Procedure, 1973 (2 of 1974),--
(a) no court shall take cognizance of any offence punishable under section 138 except upon a complaint, in writing, made by the payee or, as the case may be, the holder in due course of the cheque;
(b) such complaint is made within one month of the date on which the cause of action arises under clause (c) of the proviso to section 138:
Provided that the cognizance of a complaint may be taken by the Court after the prescribed period, if the complainant satisfies the Court that he had sufficient cause for not making a complaint within such period;
(c) no court inferior to that of a Metropolitan Magistrate or a Judicial Magistrate of the first class shall try any offence punishable under section 138.
On the conjoint reading of both these provisions of the act, it is apparent that in the case of dishonour of cheque complaint can be filed only by the payee or by the holder in due course.
Section 7 of the Act defines "Payee" as thus :-
"Payee".--The person named in the instrument, to whom or to whose order the money is by the instrument directed to be paid, is called the "Payee".
Section 9 of the Act defines 'holder in due course' which reads as under:-
"9. "Holder in due course".--"Holder in due course" means any person who for consideration became the possessor of a promissory note, bill of exchange or cheque if payable to bearer, or the payee or indorsee thereof, if payable to order, before the amount mentioned in it became payable, and without having sufficient cause to believe that any defect existed in the title of the person from whom he derived his title."Digitally signed by RANJEET AHIRWAL Date: 24/08/2019 12:04:34 6
5. Learned counsel for the applicant submitted that according to Section 142 (1) of the Act, the complaint can only be filed by the payee or the holder in due course of the cheque while the complainants of the case who are allegedly the legal heirs of the payee are neither the payee nor the holder in due course. Because the complainants (legal heirs of payee) are not the person named in the instrument to whom or to whose order money by the instrument (cheque) is directed to be paid and they are also not the person who for consideration became the possessor of the cheque and there is no endorsement on the cheque by the deceased payee in favour of the respondents/complainants. So, they are not competent to file complaint against applicant regarding dishonour of cheques which were allegedly issued by the applicant in favour of late Anil Kumar Jain.
6. In this regard, learned counsel of the applicant placed reliance on the Gujarat High Court judgment passed in Jyotindra v. State of Gujrat reported in 2018 ACD 253. In that case Single Bench of Gujarat High Court has held "The claimed capacity of heir, legatee or right to inheritance by themselves would not attract or invest the person in possession of the instrument with the capacity "as holder in due course" under the N.I. Act. Therefore upon death of the payee, heir of legatee thereof does not step into the shoes of the deceased payee merely because he happens to be an heir or a relative or a legatee. Such person unless is in possession of the instrument and unless such possession is for consideration, cannot file complaint posing himself or herself as legal heir. He further placed reliance on Kerala High Court judgment passed in P.K. Koya v. G. Hariharan reported in 1996 SCC Online Kerala 13, In that case complainant was filed by the son averring that he was an executor under the will of his father and so he is entitled to collect the proceeds of the cheque. The court held that the executor of the bill cannot be treated as the holder in due course. So he is not competent to file the complaint. And the judgement passed in Anil Kumar v. Ramkrishna reported in 2009 SCC Online Kerala 6472 In that case Complaint filed the complaint claiming that for consideration he received Digitally signed by RANJEET AHIRWAL Date: 24/08/2019 12:04:34 7 the cheque from the brother of the payee as the payee was out of India. The court held that mere delivery of the cheque alone is not sufficient to make complainant holder in due course and endorsement is mandatory in order to make a person other than the payee holder in due course of a cheque.
7. He also placed reliance on Apex Court judgment passed in U. Ponnappa v. Catholic reported in AIR 1991 SC 441 in which Apex Court held that the definition of holder in due course makes it clear that to be a 'holder in due course' a person must be a holder for consideration and the instrument must have been transferred to him before it becomes overdue and he must be a transferee 'in good faith and another important condition is that the transferee namely the person who for consideration became the possessor of the cheque should not have any reason to believe that there was any defect in the title of the transferor. He also placed reliance on this court judgement passed in Kishore Goyal v. Hanif Patel reported in 2010 SCC Online MP 607.
8. In alternate he also submitted that at the time of considering the right of the heirs or legatees to recover the amount of debt and securities of the deceased, we must also recognize the right of the debtor and also consider whether the person holding security be in a position to give full discharge to the person who is to make the payment. So, if it is assumed that legal heirs of deceased are entitled to file complaint under Section 138 of the Act, it is necessary to them that they should get succession certificate, letters of administration or probate granted by the Court. Then they are entitled to call upon the drawer to pay the amount of dishonour cheque, by issuing notice under proviso (b) of Section 138 of the Act and they would be entitled to file complaint under Section 142 of the Act as they would be then really entering into the shoes of the deceased payee.
9. In this regard, he also placed reliance upon the judgment of Bombay High Court passed in Vishnupant v. Kailash reported in 2010 CrLJ 2166, held Digitally signed by RANJEET AHIRWAL Date: 24/08/2019 12:04:34 8 "By demise of payee itself it cannot be said that any of the heirs or legatees get right to issue notice under provision (b) of section 138 of "the act" and then lodge a complaint under section 142 (a) of "the act" as if he automatically enteres into the shoes of the deceased paye. and further held "Only a person who is authorised by succession certificate, letter of Administration or probate granted by the court, is entitled to call upon the drawer to pay the amount of dishonour cheque, by issuing notice under proviso (b) of Section 138 of "the act" and he would be entitled to file a complaint under section 142 of the act as he would be then really entering into the shoes of the deceased payee.
10. On the other hand, learned counsel for the respondent submitted that the legal heirs of the payee received the cheque on the death of the payee and after the death of the payee complainants who are in the possession of said cheque being the Legal representative of the deceased payee will be deemed as holder in due course so they are competent to file the complaint regarding dishonour of cheque. In this regard, he placed reliance on judgment passed by the Karnataka High Court in Bhagava v. Sri Kadasiddeshwara Trading Company and others reported in ILR 2004 Karnataka 367 in that case the court held that The person who claims as legal hair of the payee cannot be termed as holder in due course in the strict sense, but in the opinion of this court, on the death of the payee, his legal heir steps into the shoes of the payee for all practical purposes and such a person can also file and prosecute the complaint after completing the legal formalities. It is all necessary to mention that it would be incumbent upon the complainant to prove that the complainant is the legal representative of the deceased payee, in the event of accused disputing the same. He also placed reliance upon the Kerala High Court judgement passed in Rock & Chembaz v. Remani reported in 2003 SCC Online Kerala 428 in this case also the single judge of the Kerala High Court held In view of section 53 of "the Act" legal hair of the payee or holder in due course who holds the cheque after the death of the payee can maintain a Digitally signed by RANJEET AHIRWAL Date: 24/08/2019 12:04:34 9 complaint under section 138 of "the Act".
11. He further placed reliance on the judgment of Andhra Pradesh High Court passed in M/s. Sri Sai Mourya Estates & Projects Pvt. Ltd., & Others v. The State of A.P. & Ors. reported in 2019 (1) ALD (Cri.) 15 (AP) In that case also Single Bench of Andhra Pradesh High court after considering the provisions of section 53 and 78 of the acts has held that the legal representative of a payee who holds the cheque after the death of the payee in view of section 53 is the holder in due course and can get a full discharge. Thus under section 53 of the act, a legal representative/ heir of the payee or holder in due course can maintain a complaint under section 138 of the Act. He also placed reliance on the judgement of Bombay High Court passed in Anup Jagdish Agarwal v. Nilkunj Lalit Shah and others reported in MANU/MH/1790/2010 equivalent citation 2010 (3) Bom CR 167 Where the court held that a complaint can be filed by the legal representatives of the payee and merely because it is so filed, it cannot be held that it is not maintainable. Once, the complaint, can be held to be maintainable, then, any larger issue need not be gone into at this prima facie stage.
12. This court has gone through the arguments put forth by the learned counsels of both the parties. The single bench of this court in the case of Kishore Goyal v. Hanif Patel reported in 2010 SCC Online MP 607, has not held that the legal heirs of the deceased payee are not competent to file a complaint under Section 142 of the Act. In that case complaint was filed by the son of the deceased payee The Court quashed the complaint observing that "The cheque was in favour of deceased Kudrat Patel and in the complaint it was nowhere stated as to when Kudrat Patel had died. Similarly, except in title it had nowhere been stated by the respondent that how he was entitled for the cheque amount. It was also not mentioned in the complaint as who were the legal representatives of deceased/Kudrat Patel and whether any will was executed by the deceased prior to his death.
Digitally signed by RANJEET AHIRWAL Date: 24/08/2019 12:04:34 10Since, the complaint had been filed by a person in whose favour no cheque was issued by the petitioner, therefore, in the opinion of this Court no cognizance could have been taken against the petitioner for an offence alleged to have been committed by the petitioner keeping in view sub- section (1) of Section 142 of the N.I. Act". This clearly shows that learned Single Bench quashed the complaint on the basis that complainant did not averre in his complaint that on what basis complainant comes under the category of payee or holder in due course because in view of the sub- section (1) of Section 142 of the N.I. Act" only payee or holder in due course are competent to file the complaint for the dishonour of cheque. The court has not held in this judgment that the legal heirs of deceased are not competent to file complaint. So on the basis of that judgment it cannot be said that Single Bench of this Court in the case of Kishore Goyal v. Hanif Patel held that the legal heirs of payee are not competent to file complaint.
13. The facts of the cases U. Ponnappa v. Catholic (Supra) and Anil Kumar v. Ramkrishna (supra) relied by the learned counsel of the applicant also do not match with the present case. In both the cases complainants who filed the complaints were not the legal heir of the payee and payee did not endorse the cheque to them while in the instant case respondents, who are the legal representatives of the deceased (payee) filed the complaint. So that judgments also do not assist the applicant.
14. The point whether the legal heirs of the payee can file the complaint came in to consideration before Apex Court in Criminal Appeal No.485 of 2002, Shankar Lal v. Sanyogita Devi (Dead) through Lrs., judgement dated 28.10.2009 the apex court answered as under:-
"A plain reading of the provisions of 142 of "the Act" makes it abundantly clear that the Court shall not take cognizance of any offence punishable under Section 138 of the Act except upon a complaint, in writing, made by the payee or, as the case may be, the holder in due course of the cheque. The expression 'payee' is defined under Section 7 of the Act which says "the person named in the instrument, to whom or to Digitally signed by RANJEET AHIRWAL Date: 24/08/2019 12:04:34 11 whose order the money is by the instrument directed to be paid, is called the 'payee' ". Section 9 defines the expression 'holder in due course' which reads as under :
"Holder in due course' means any person who for consideration became the possessor of a promissory note, bill of exchange or cheque if payable to bearer, or the payee or endorsee thereof, if payable to bearer, or the payee or endorsee thereof, if payable to order, before the amount mentioned in it became payable, and without having sufficient cause to believe that any defect existed in the title of the person from whom he derived his title."
A complaint under Section 138 of the Act can be filed by the payee or, as the case may be, the holder in due course of the cheque.
Can it be said that the respondent wife (since deceased) is not the 'holder in due course' of the cheque ? In Muthuveeran Chetty Vs. Govindan Chettyl a Full Bench of the Madras High Court observed that a person to whom the property in the negotiable instrument stands transferred by operation of law is entitled to sue on the note as such. It was held that the property in the promissory note can devolve upon the legal heirs of the deceased payees on the operation of law and that the absence of any endorsement or assignment did not affect the claim of the person suing. The Madras High Court rightly declared the law and held:
"It is clear that in so far as the modes of transfer of negotiable instruments are concerned, the Negotiable Instruments Act is not exhaustive and does not prevent the passing of property in the note by operation of law....the property in the notes descended from father to son by operation of law and the son was, held entitled to sue on the notes."
It was further held that "it is not necessary for the person suing on the promissory note to rely only on an endorsement or such other mode as is provided for in the Negotiable Instruments Act and the suit by a person on whom the right devolves by operation of law cannot be defeated by absence of the endorsement."
The law applicable in respect of a promissory note would be equally applicable to a cheque as both of them are negotiable instruments within the meaning of the provisions of Digitally signed by RANJEET AHIRWAL Date: 24/08/2019 12:04:34 12 the said Act. It is clear from the definition of 'holder in due course' that 'holder in due course' means any person, who for consideration became the possessor of a promissory note, bill of exchange or cheque if payable to bearer. The deceased Dhairyasheel Rao Deshmukh was undoubtedly the holder in due course of the cheque. The respondent, being the legal heir of the deceased, stepped into the shoes of her husband and has become the holder of the cheque in due course. All the rights possessed by the original holder of the cheque devolve upon the legal heirs by operation of law. There is no provision in Negotiable Instruments Act prohibiting the legal heirs to file the complaint under Section 138 of the Act. The legal heirs of the holder in due course of the cheque are clearly entitled to rely upon the instrument and there is no provision in the Act which stands in the way of legal heirs initiating proper and appropriate proceedings as they step into the shoes of the original holder in due course of the cheque.
The High Court having considered the matter in the right perspective came to the right conclusion that there is no provision under the Act which precludes the legal heir of the holder in due course of the cheque to file complaint under section 138 of the Act. In our opinion that a heir of the deceased holder in due course of the cheque can bring action on the basis of the cheque to recover the amount due thereon to the deceased holder by reason of the fact that he succeeds to the estate of the deceased holder by inheritance i.e. ; operational of law and if that be so there is no reason as to why the legal heirs cannot file complaint under Section 138 of the Act. There is, therefore, no reason on principle to hold that a complaint filed by a legal heir of the original holder in due course of the cheque cannot be taken cognizance by the court. In our considered view, neither the cause of action nor the right conferred upon the holder in due course of the cheque to proceed and file complaint under Section 142 of the Act for the offence under Section 138 of the said Act comes to an end after the death of the holder in due course of the cheque. The cause of action certainly survives as the legal heirs step into the shoes of the holder of the cheque in due course by operation of law and are entitled to prosecute and initiate the proceedings under Section 142 of the Act."
15. The Hon'ble Apex court in the case of A.C. Narayanan v. State of Maharashtra, (2014) 11 SCC 790 Where point before the apex court was whether the power of attorney holder of payee is competent to file a complaint under the act, also held "Keeping in mind various situations like Digitally signed by RANJEET AHIRWAL Date: 24/08/2019 12:04:34 13 inability as a result of sickness, old age or death or staying abroad of the payee or holder in due course to appear and depose before the court in order to prove the complaint, it is permissible for the power-of-attorney holder or for the legal representative(s) to file a complaint and/or continue with the pending criminal complaint for and on behalf of payee or holder in due course. However, it is expected that such power-of-attorney holder or legal representative(s) should have knowledge about the transaction in question so as to be able to bring on record the truth of the grievance/offence, otherwise, no criminal justice could be achieved in case payee or holder in due course, is unable to sign, appear or depose as complainant due to above quoted reasons.
16. So from the aforementioned Apex Court judgment particularly passed in Shankar Lal (supra), it is clear that the legal heir(s) of the deceased payee who is/are in possession of questioned cheques is/are treated as holder in due course by operation of law and is/are entitled to prosecute and initiate the proceedings under Section 138/142 of the Act.
17. Any legal representative or all legal representative of the deceased payee who holds the cheque after the death of the payee is/are the holder in due course by operation of law so there is no need for them to get succession certificate, letters of administration or probate under the Indian Succession Act before filing complaint. Even, no valid discharge could be given by the complainant (legal heir or heirs of the payee as the case may be) who holds the cheque after the death of the payee or he/ they is/are not being in a position to give a valid discharge, can be a defence of the accused but the same can not be considered at the stage of cognizance.
18. This court respectfully disagree with the view taken by the courts in Jyotindra v. State of Gujrat reported in 2018 ACD 253, P.K. Koya v. G. Hariharan reported in 1996 SCC Online Kerala 13 and Vishnupant v. Kailash reported in 2010 CrLJ 2166 because in these cases learned court did not consider the judgement of apex court passed in Shankar Lal (supra) .
Digitally signed by RANJEET AHIRWAL Date: 24/08/2019 12:04:34 14This court fully agrees with the view taken by the Andhra Pradesh High Court in the case of M/s. Sri Sai Mourya Estates & Projects Pvt. Ltd., & Others v. The State of A.P. & Ors. reported in 2019 (1) ALD (Cri.) 15 (AP) and Kerala High Court in the case of Rock & Chembaz v. Remani reported in 2003 SCC Online Kerala 428 which are in conformity with the view taken by the apex court in the case of Shankar Lal (supra).
19. So in the light of the above discussion we conclude that Single Bench of this Court in the case of Kishore Goyal v. Hanif Patel(Supra) has not held that the legal heirs of payee are not competent to file complaint. Any legal representative or all legal representatives of the deceased payee who hold the cheque after the death of the payee is/are the holder(s) in due course by operation of law and entitled to prosecute and initiate the proceedings under Section 138/142 of the Act. There is no need for him/them to get succession certificate, letters of administration or probate under the Indian Succession Act before filing complaint.
20. Hence the reference is answered accordingly.
21. The matter be placed before the Single Bench for further consideration.
(Rajeev Kumar Dubey) (Vishal Dhagat)
Judge Judge
(ra)
Digitally signed by RANJEET
AHIRWAL
Date: 24/08/2019 12:04:34