Kerala High Court
Gopi vs Sudarsanan on 5 June, 2002
Equivalent citations: 2002CRILJ4194
Author: M.R. Hariharan Nair
Bench: M.R. Hariharan Nair
ORDER M.R. Hariharan Nair, J.
1. The petitioner is the accused in C.C. No. 326 of 1992 of the Judicial First Class Magistrate Court-I, Attingal and the appellant in Crl. Appeal No. 330 of 1993 of the Additional Sessions Court, Thiruvananthapuram. He challenges the concurrent findings of the said two courts that he is guilty of the offence under Section 138 of the Negotiable instruments Act as also the sentence of R.I. for one year and fine of Rs. 5000/- (in default R.I. for three months) imposed therefor.
2. In his complaint the present first respondent alleged that he is a financier; that the petitioner borrowed a sum of Rs. 2,70,000/- in two instalments of Rs. 2,05,000/-and Rs. 65,000/- on 11.3.1991 and 15.3.1991 respectively; that towards repayment of the said amount Ext. P1 cheque was issued based on an assurance contained in an agreement that the cheque would be returned in case the amount was repaid before 31.3.1992; that on presentment the cheque was dishonoured for want of funds on 24.4.1992 and that inspite of Ext. P6 notice served on the petitioner the amount remained unpaid.
3. During trial, the petitioner conceded that Ext. P1 cheque was given to the complainant, but took the stand that it was devoid of consideration. According to him, what actually happened was that one Sivadasan Chandran received some amount from the complainant and when he failed to repay the same the petitioner intervened and gave his own cheque. The aforesaid Chandran subsequently repaid the amount and thereupon return of Ext. P1 cheque was sought for. This was not complied with and the case is filed in this background.
4. The learned counsel for the petitioner submitted that there is nothing to show that the petitioner got any amount from the complainant or that the cheque was issued to cover a legal liability. Actually it was given only as security for the transaction between the complainant and Chandran. This fact is admitted in Ext. P6 notice also. Case law was relied on to show that in case a cheque is issued by way of security no criminal liability could arise from the dishonour of such cheque.
5. It is conceded in Ext. P6 that the complainant had agreed with the petitioner that no action would be taken based on Ext. P1 cheque in case the amount due was paid on or before 31.3.1992 and that a separate agreement was executed. The question is whether the execution of such an agreement (not produced in this case) would affect the criminal liability of the petitioner. Yet another aspect to be gone into is whether the contention that there was no legally enforceable debt due from the petitioner on the date of execution of Ext. P1 and whether the allegation that actually the petitioner, as a mediator, issued the cheque to cover up the liability of Chahdran exculpates him from liability.
6. It may be mentioned here that even though the contention taken is that Chandran had repaid the amount due to the complainant, no evidence whatsoever is adduced on the point.
7. Point: Section 138 of the Negotiable Instruments Act reads as follows:
"138. Dishonour of cheque for insufficiency, etc., of funds in the account. Where any cheque drawn by aperson 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 extend to one year, 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 fifteen 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.
Explanation.- For the purposes of this section, "debt or other liability" means legally enforceable debt or other liability".
This section does not in any way debar a person from taking up another person's liability or insist that the cheque should be one drawn to discharge the liability of the drawer. Under Section 139 of the Act there is a presumption, unless the contrary is proved, that the holder of a cheque received the cheque for the discharge in whole or in part of any debt or other liability. 'Any debt' would cover the liability of another person as well. Here the accused's own case is that the cheque was executed with the intention that it should cover the liability of another person. Even if his said contention is accepted, Ext. PI cheque is one issued to cover a legal liability.
8. Alexander v. Joseph Chacko (1993 (2) KLT 326) considered the question whether for the purpose of Section 138 of the N.I, Act it is necessary that a debt for which the cheque is executed should be the liability of the drawer himself. It was found that the section does not say that the cheque should have been drawn for the discharge of any debt or other liability of the drawer towards the payee. If the intention of the Parliament was otherwise the words "of any debt or other liability" appearing in Section 138 of the Act would have been further qualified by adding the words "of the drawer". The object of the Legislature being to enhance the credibility or acceptability of the cheque and in view of the wording in Section 138 of the N.I. Act as available now, it is immaterial whether the cheque was issued for the discharge of his own debt or liability. It was specifically found that the cheque issued for discharge of another man's debt or liability could also come within the scope of Section 138 of the N.I. Act.
9. In view of the said decision and in the absence of anything to show that Chandran, whose debt the petitioner allegedly took up, has cleared the same by paying the amount to the complainant, I am of the view that the courts below were right in holding that Ext. PI is capable of maintaining a cause of action in favour of the complainant.
10. During hearing reliance was placed on the decision of the High Court in Taker N. Khambath v. Vinayak Enterprises, 1995 (1) KLT SN 5 (Case No. 7), and Sreenivasan v. State of Kerala, 1999 (3) KLT 849. In fact, the latter decision was based entirely on the former. Here the cheque was not issued by way of security. The alleged agreement was only that if money was paid within a specified time the cheque would be returned. The cheque was the only instrument given to cover the debt and the understanding alleged also enabled the payee to collect the cheque unless payment was made before 31.3.1992. There is nothing to show that any such payment was made. Hence the cheque has to be taken as one issued in discharge of the legal liability.
11. Krishna Bai v. Arti Press, 1992 (2) KLT 40 relied on by the revision petitioner is also a.case of different facts. That was a case where for the liability of an individual the company's cheque was issued. The facts being not identical, the said decision also cannot apply, to the present case.
12. The issuance of cheque to cover a legal liability, though of another person; the dishonour of the same for want of funds and also failure to pay the amount inspite of Ext. P6 notice stand proved. The courts below were therefore right in concluding that the petitioner has committed the offence under Section 138 of the N.I. Act. In the circumstances, the conviction entered against the petitioner and the substantive term of imprisonment imposed therefor do not warrant any interference. I am of the view that the imposition of fine of Rs. 5000/- in the case does not meet the ends of justice. It is set aside and the petitioner-accused is directed to pay compensation of Rs. 2.9 lakhs to the complainant. In case he fails to pay the said amount within three months from today, the trial court will enforce payment thereof in accordance with law.
With this modification the revision is disposed of.