Kerala High Court
Abdulla vs Abdul Aziz on 23 October, 2017
Author: Alexander Thomas
Bench: Alexander Thomas
IN THE HIGH COURT OF KERALA AT ERNAKULAM
PRESENT:
THE HONOURABLE MR. JUSTICE ALEXANDER THOMAS
MONDAY, THE 23RD DAYOF OCTOBER 2017/1ST KARTHIKA, 1939
Crl.Rev.Pet.No. 1216 of 2017 ()
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CRA.NO. 86/2010 of ADDITIONAL SESSIONS COURT, IRINJALAKUDA.
CC.NO. 994/2008 of JUDICIAL FIRST CLASS MAGISTRATE COURT,
KODUNGALLUR.
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PETITIONER(S)/APPELLANT/ACCUSED:
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ABDULLA,
S/O.ASSAINAR, PUYHIYA VEETTIL HOUSE, THALIKKULAM,
THRISSUR.
BY ADV. SRI.K.I.SAGEER
RESPONDENT(S)/RESPONDENTS/STATE & COMPLAINANT:
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1. ABDUL AZIZ,
S/O.MOHAMMED, PUTHIYAVEETIL HOUSE, KAIPAMANGALAM,
THRISSUR, PIN-680681.
2. STATE OF KERALA,
REPRESENTED BY THE PUBLIC PROSECUTOR,
HIGH COURT OF KERALA, ERNAKULAM,PIN-682031.
R2 BY PUBLIC PROSECUTOR SRI.JESTIN MATHEW
THIS CRIMINAL REVISION PETITION HAVING COME UP FOR ADMISSION
ON 23-10-2017, THE COURT ON THE SAME DAY PASSED THE
FOLLOWING:
TS
ALEXANDER THOMAS, J.
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Crl.RP No.1216 of 2017
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Dated this the 23rd day of October, 2017.
O R D E R
The petitioner has been arrayed as an accused for offence punishable under Section 138 of the Negotiable Instruments Act in CC No.994/2008 on the file of the Court of Judicial Magistrate of I Class, Kodungallur instituted on the basis of a complaint filed by the 1st respondent herein. Exts.P1, P4 and P7 cheques dated 12.8.2008 are for Rs.2 lakhs, Rs.1 lakh and Rs.1 lakh respectively, thus totaling to Rs.4 lakhs. The trial court as per the impugned judgment rendered on 18.12.2009 has convicted the petitioner for the aforesaid offence and has sentenced to undergo simple imprisonment till rising of the court and to pay compensation of Rs.4 lakhs to the complainant under Section 357(3) of the Code of Criminal Procedure, and in default thereof to undergo simple imprisonment for a period of two months. Aggrieved thereby, the petitioner has preferred criminal appeal No.86/2010 before the Appellate Sessions Court concerned (Court of Additional Sessions Judge, Irinjalakkuda). The Appellate Court as per the impugned judgment rendered on 18.7.2016 has dismissed the appeal and has thereby confirmed the impugned conviction and sentence in this case. It is challenging the concurrent verdicts of the courts below that the Crl.RP 1216/17 -2- petitioner (accused) has preferred the instant revision petition.
2. Heard Sri.K.I.Sageer Ibrahim, learned counsel appearing for the revision petitioner (accused) and Sri.Jestin Mathew, learned Prosecutor appearing for R-2 (State). In the nature of the orders proposed to be passed in this criminal revision petition, notice to the R-1 (complainant) stands dispensed with.
3. The brief of the case of the complainant is to the effect that the accused is running a jewellery by name Mugal jewellery and that both the accused and the complainant were friends and that the accused had borrowed from the complainant Rs.2 lakhs, Rs.1 lakh and Rs.1 lakh on different occasions as borne out from Exts.P14 to P16 agreements dated 14.10.2002, 14.7.2004 and 7.4.2007, respectively. At the time of those transactions, the petitioner (accused) had given Exts.P1, P4 and P7 cheques for Rs.2 lakhs, Rs.1 lakh and Rs.1 lakh respectively to the complainant. Those three cheques were issued by the accused with signature and written entries, but without bearing any dates. Later, when the complainant had demanded for repayment, the accused had specifically instructed the complainant that the latter may put the dates on those three cheques as 12.8.2008 and present the said cheques for collection. On this basis, the complainant had put the date 12.8.2008 on Exts.P1, P4 and P7 cheques and presented those for collection, which Crl.RP 1216/17 -3- resulted in dishonour as per Exts.P2, P5 and P8 memos, on the ground of insufficiency of funds. Thereupon, the complainant had forced to send Ext.P10 statutory demand notice under Section 138 proviso (b) of the NI Act calling upon the accused to pay off the said amount covered by those three cheques within the stipulated time. The said notice sent by registered post was duly served on the accused as per Exts.P11 and P12. The accused had sent Ext.P13 reply notice denying the liability to pay the amounts covered by the cheques. Since the amount was not paid, the complainant after adhearing to the requisite formalities in that regard has instituted the present complaint, which resulted in the trial. During the trial, the complainant was examined as PW1 and marked Exts.P1 to P16 documents. The defence has not adduced any oral or documentary evidence.
4. The main defence taken up by the accused was to the effect that he had discharged the entire liability covered by the three cheques and that therefore, the offence under Section 138 of the NI Act will not lie etc. Both the courts below have found that the evidence given by PW1 are broadly credible and believable. Exts.P14, P15 and P16 dated 14.10.2002, 14.7.2004 and 7.4.2007, respectively, are the three agreements for the three transactions, whereby the complainant had advanced personal loan of Rs.2 lakhs, Rs.1 lakh and Rs.1 lakh Crl.RP 1216/17 -4- respectively, thus totaling to Rs.4 lakhs, to the accused. There is no serious challenge as against the said transactions. It is the case of the complainant that at the time of those respective transactions, the accused had given Exts.P1, P4 and P7 cheques wherein he had put his signature and made all entries, except dates. When the amounts were not repaid by the accused, the complainant had demanded the said payment, upon which the accused had specifically instructed the complainant that the complainant may put the date as 12.8.2008 in all the three cheques and present the same for collection etc. Both the courts below have held that the said transactions are broadly proved and that the accused has given authorisation to the complainant to fill up the date in the said three cheques.
5. In this context, the legal principles laid down by this Court in various decisions in this regard need to be considered. In the judgment in Asoo Hajee v. Abdul Latheef, reported in 2004 (3) KLT 387, this Court dealt with a case where a blank signed cheque was issued pursuant to an agreement whereunder the said cheque was to be used towards the liability that may fall due from the drawer of the cheque and the arrears were found due and cheque was filled up and presented and the dishonor of such a cheque would attract offence under Section 138 of NI Act. It will be profitable to refer Paragraph Nos.9, 11 and 12 of the Crl.RP 1216/17 -5- decision in Asoo Hajee's case (supra) which reads as follows:-
"9. It is submitted by the counsel for the appellant that as revealed in Ext.P6 agreement, the cheque has been issued as security for repayment of the amount that may become due. Later, when the respondent committed default, accounts were verified in the presence of the representative of the respondent and the respondent thereupon filled the cheque with the amount and date and the cheques was thereupon presented to the bank. The date of the cheque was 19.08.93. Though the cheque leaf was signed and given to the appellant earlier, the cheque got its life from 19.08.93, when the accounts were verified and the respondent filled up the cheque. This reveals that the accused accepted that much liability. This clothes the appellant with the presumption under S.139 in his favour. Necessarily, the finding contained in the impugned judgment has to be reversed, as the respondent did not rebut that presumption available on the cheque in question, Ext.P1.
xxxxxx xxxxxx xxxxxx
11. As rightly pointed out by the counsel for the respondent, there is no guarantee arrangement in this case. But Ext.P1 is an agreement undertaken by the respondent which refers to the cheque in question styling it as a blank cheque and the purpose of giving such blank cheque in terms of Ext.P6 agreement was that, in case any liability arises, it can be duly met by the cheque in question.
12. Then the crucial point is whether there was a verification of accounts as suggested by the appellant. PW1 is the complainant himself. He had deposed that representatives of the respondent had examined the accounts and mentioned the amount in Ext.P1 cheque endorsing the date thereon. It was further deposed that when the accounts was so examined, the son of the respondent was also present. There was no cross examination on this point on behalf of the respondent. That means this version of the complainant that the entries including the date were made in Ext.P1 by the representative of the respondent in the presence of his son after verifying the accounts remains unchallenged. That being the evidence on record, it is clear that the cheque had been drawn really on 19.08.93 when the necessary entries were made therein after verifying the accounts on behalf of the respondent with respect to the outstanding liability. It became a cheque only on 19.8.93 when the liability was acknowledged and entered in the cheque. Necessarily, there is evidence to show that the appellant has proved a liability outstanding from the respondent."Crl.RP 1216/17 -6-
6. This Court in General Auto Sales v. Vijayalakshmi, reported in 2005 (1) KLT 478, has held in Paragraph No.8 thereof, that even if a blank signed cheque has been given towards liability or even as security, then the liability subsists and quantified, if the cheque is filled up and presented to the Bank, the person who had drawn the cheque, cannot avoid the criminal liability under Section 138 of NI Act. Paragraph No.8 of the said judgment reads as follows:-
"Even if a blank signed cheque has been given towards liability or even as security, then the liability assessed and quantified, if the cheque is filled up and presented to the Bank, the person who had drawn the cheque, cannot avoid the criminal liability arising out of Section 138 of NI Act."
7. Further this Court has extensively considered the issues arising out of liability in respect of blank signed cheques in the decision in Purushothaman Nair P. v. Sreekantan Nair, reported in 2013 (3) KHC 628=2013 (4) KLT 256. Before dealing with the facts of the case, it will be relevant to note the following provisions in the NI Act:
Section 6 of the NI Act defines :
"1[6."Cheque".-A "cheque" is 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 (the explanations under Section 6 are not extracted herein above)"
Section 5 of NI Act defines :
"5."Bill of exchange".-A "bill of exchange" is an instrument in writing containing an unconditional order, signed by the maker, directing a certain person to pay a certain sum of money only to, or to the order of, a certain person or to the bearer of the instrument. A promise or order to pay is not Crl.RP 1216/17 -7- "conditional", within the meaning of this section and section 4, by reason of the time for payment of the amount or any instalment thereof being expressed to be on the lapse of a certain period after the occurrence of a specified event which, according to the ordinary expectation of mankind, is certain to happen, although the time of its happening may be uncertain. The sum payable may be "certain", within the meaning of this section and section 4, although it includes future interest or is payable at an indicated rate of exchange, or is according to the course of exchange, and although the instrument provides that, on default of payment of an instalment, the balance unpaid shall become due. The person to whom it is clear that the direction is given or that payment is to be made may be a "certain person", within the meaning of this section and section 4, although he is mis-named or designated by description only."
Section 13 of NI Act defines :
"13."Negotiable instrument".-3[(1) A "negotiable instrument" means a promissory note, bill of exchange or cheque payable either to order or to bearer.
Explanation (i).-A promissory note, bill of exchange or cheque is payable to order which is expressed to be so payable or which is expressed to be payable to a particular person, and does not contain words prohibiting transfer or indicating an intention that it shall not be transferable.
Explanation (ii).-A promissory note, bill of exchange or cheque is payable to bearer which is expressed to be so payable or on which the only or last indorsement is an indorsement in blank.
Explanation (iii).-Where a promissory note, bill of exchange or cheque, either originally or by indorsement, is expressed to be payable to the order of a specified person, and not to him or his order, it is nevertheless payable to him or his order at his option] 1[(2) A negotiable instrument may be made payable to two or more payees jointly, or it may be made payable in the alternative to one of two, or one or some of several payees.]"
Section 20 of NI Act defines :
"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 4[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 Crl.RP 1216/17 -8- 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."
Section 87 of NI Act deals with effect of material alteration and the said provision reads as follows:
"87.Effect of material alteration.-Any material alteration of a negotiable instrument renders the same void as against any one 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;
Alteration by indorsee.-And any such alteration, if made by an indorsee, discharges his indorser from all liability to him in respect of the consideration thereof.
The provisions of this section are subject to those of sections 20, 49, 86 and 125."
8. A reading of Sections 5 and 6 makes it clear that the instrument would be a cheque only if it contains the particulars as mentioned in those two sections and if the payee's name is not written in the instrument, that instrument cannot be termed to be a bill of exchange. So if the instrument is only a signed blank cheque, it cannot be said to be a cheque within the limit of Section 6 of NI Act. Dealing with these provisions, this Court in Purushothaman Nair's case (supra) has held that only if the instrument is a negotiable instrument within the meaning of Section 13 of NI Act, Section 87 would have any application. If it was only a signed blank cheque leaf, it cannot be termed Crl.RP 1216/17 -9- as a 'negotiable instrument', and if so, the question of effecting material alteration of the paper (signed blank cheque), does not arise at all and that the filling up of signed blank cheque leaf will not attract the provisions of Section 87 of NI Act, as there was no complete of negotiable instrument within the meaning of Sections 5, 6 and 7 of NI Act in the case of blank signed cheque. It was held by a Division Bench of this Court in Joseph C.T. v. I.V.Philip and others, reported in 2001 (1) KLJ 654 = AIR 2001 KER 300 = 2001 KHC 29, that as far as Section 20 of the NI act is concerned, it does not apply to cheques since Section 20 applies only with respect to inchoate stamped instruments and as far as cheques are concerned they do not require any stamp under the Stamp Act in force. Therefore, it was held that the provisions contained in Section 20 of NI Act will not have any application in the case of cheque. Further this Court held in Paragraph No.39 of Purushothaman Nair's case (supra) that with regard to the instruments other than a cheque, an implied authority is given to the holder at the time of entrusting it to fill up the same and there may be instances where an implied authority is given to the person, at the time of entrusting a signed blank cheque containing signature of the drawer of the cheque, to fill the columns therein.
9. It was also held in Paragraph No.40 thereof that if a Crl.RP 1216/17 -10- principal or employer deputes his agent or employee to purchase an article and if the dealer fills up that signed blank cheque leaf showing the exact amount covered by the bill showing the price of the article sold then it cannot be said that what was handed over by the drawer of the cheque is only a signed blank cheque leaf. In such cases an implied authority to the trader/seller of the article to fill up the cheque leaf can certainly be inferred and there may also be cases where at the time of settlement of accounts, a particular amount was found payable by the drawer of the cheque to the other party and if a signed blank cheque entrusted to be filled up later is filled up in tune with the accounts, showing the actual amount payable by the drawer of the cheque to the other party, then also it can be said that there was the implied authority to fill up the signed blank cheque leaf. Further that there may be such instances where the sum is ascertainable and the signed blank cheque leaf is given to fill up the same after ascertaining the same. It was held that in such cases there would be no difficulty to infer implied authority given by the drawer and simply because the cheque is seen filled up or written in the hand writing of another person, it cannot lead to a conclusion that only a signed blank cheque leaf was given and the person signed the cheque may have difficulty due to many reasons to write the cheque and it might have been filled up by the payee or by Crl.RP 1216/17 -11- another. In such cases it cannot be said that what was handed over was only a signed blank cheque leaf and in all such cases the ultimate conclusion may depend upon the proof of the transaction and execution of the instrument and it must also be held that when it is a case that only a signed blank cheque leaf was handed over by the drawer, then he must offer satisfactory explanation as to under what circumstances he had handed over the signed blank cheque to the other person. Considering the totality of the evidence and circumstances, it is for the court to draw the inference as to whether it was given with an implied authority to fill up the same showing the amount ascertained or ascertainable to discharge the debt or liability. Therefore, there may be cases that implied authority may be inferred and the contention that when a signed blank cheque leaf is handed over, it can never be filled up and that if it is filled up it would amount to a material alteration within the meaning of using Sec. 87 of the N.I. Act, does not stand to rhyme or reason. Similarly, it was also held that the contention that Sec. 20 of the N.I. Act is applicable to an unfilled or blank cheque leaf also is untenable. It will be pertinent to refer paragraph Nos.39 and 40 of the judgment rendered by this Court in Purushothaman Nair's case (supra), which read as follows:
"39. With regard to instruments other than a cheque, an implied authority is given to the holder at time of entrusting it to fill up the same. There may be instances where an implied authority is Crl.RP 1216/17 -12- given to the person, at the time of entrusting a signed blank cheque containing the signature of the drawer of the cheque, to fill the columns therein.
40. If a principal or employer deputes his agent or employee to purchase an article and if the dealer fills up that signed blank cheque leaf showing the exact amount covered by the bill showing the price of the article sold then it cannot be said that what was handed over by the drawer of the cheque is only a signed blank cheque leaf. In such cases an implied authority to the trader/seller of the article to fill up the cheque leaf can certainly be inferred. Similarly, there may also be cases where at the time of settlement of accounts, a particular amount was found payable by the drawer of the cheque to the other party and if a signed blank cheque entrusted to be filled up later is filled up in tune with the accounts, showing the actual amount payable by the drawer of the cheque to the other party, then also it can be said that there was the implied authority to fill up the signed blank cheque leaf. There may be such instances where the sum is ascertainable and the signed blank cheque leaf is given to fill up the same after ascertaining the same. In such cases there would be no difficulty to infer implied authority given by the drawer. Simply because the cheque is seen filled up or written in the hand writing of another person it can not lead to a conclusion that only a signed blank cheque leaf was given. The person signing the cheque may have difficulty due to many reasons to write the cheque and it might have been filled up by the payee or by another. In such cases it cannot be said that what was handed over was only a signed blank cheque leaf. In all such cases the ultimate conclusion may depend upon the proof of the transaction and execution of the instrument. It must also be held that when it is a case that only a signed blank leaf was handed over by the defendant, then he must offer satisfactory explanation as to the circumstance under which the signed blank cheque happened to be handed over. Considering the totality of the evidence and circumstances, it is for the court to draw the inference as to whether it was given with an implied authority to fill up the same showing the amount ascertained or ascertainable to discharge the debt or liability. Therefore, there may be such cases where implied authority can be inferred. But the contention that when a signed blank cheque leaf is handed over, it can never be filled up and that if it is filled up it would amount to a material alteration within the meaning of using Sec. 87 of the N.I. Act, does not stand to rhyme or reason. Similarly, the contention that Sec. 20 of the N.I.Act is applicable to an unfilled or blank cheque leaf also cannot be accepted. It would depend upon the facts of each case. Therefore, it is neither a case which attracts Sec. 87 of the Crl.RP 1216/17 -13- N.I.Act nor is it a case where the plaintiff can rely upon Sec.20 of the N.I.Act and contend that as a signed blank cheque leaf is given it gives an authority to fill up the same according to the whim and fancy of the payee."
10. Therefore, it has been by now well established that where a signed blank cheque leaf is voluntarily given by the drawer/account holder to the other party, and whereby implied or explicit authority is given to other party to quantify the liability at the appropriate time and then fill up the same and present it for collection etc., then Sections 20 and 87 of NI Act will have no application to the fact of such a case. It will all depend upon the fact of the case whether blank signed cheque leaf was given voluntarily by the drawer/account holder to the proposed payee, and whether implicit or explicit authority has been given by the drawer to the other party to quantify the liability and to fill up the cheque at the appropriate time etc.
11. These aspects have already been dealt with in detail by this Court in the order dated 8.8.2017 in Crl.RP No.893/2017.
12. Accordingly, in the light of the aforesaid legal principles laid down in the aforementioned judgments of this Court, it is clear that the filling up of the date portion in the cheques by the complainant with the consent and authorisation of the accused, would amount to proper execution of the cheques based on such authority and that the dishonour of the said cheques would entail liability under Section 138 of the NI Act. Crl.RP 1216/17 -14- The main defence taken up by the accused is that he had discharged the liability of Rs.4 lakhs owed to the complainant. But, no credible material, whatsoever, has been brought in before the courts below to establish the said plea of discharge. Therefore, it is in the considered findings of facts that both the courts below have come to the concurrent finding that the accused is liable to be convicted for the offence under Section 138 of the NI Act. The said findings made by the trial court cannot be said to be illegal or perverse. In these circumstances, this Court is not in a position to interfere with the said findings regarding the conviction of the petitioner (accused) for the offence punishable under Section 138 of the NI Act. As regards the sentence, it is seen that the trial court has only imposed substantive sentence of imprisonment till rising of the court and a compensation amount of Rs.4 lakhs, which is same as the amount covered by the three cheques, with a default sentence clause of two months' simple imprisonment. The appellate court has confirmed those directions. The said sentence and direction to pay compensation cannot be said to be, in any manner, disproportionate or excessive. Therefore, this Court is not in a position to interfere with the directions regarding sentence and compensation.
13. Sri.K.I.Sageer Ibrahim, learned counsel appearing for the petitioner (accused) submits that in case this Court is so inclined to Crl.RP 1216/17 -15- confirm the conviction and sentence in this case, then this Court may grant at least 10 months time to the petitioner to pay the compensation amount of Rs.4 lakhs directly to the complainant. It is pointed out that the petitioner is now facing financial difficulties and he has the liability to pay compensation amounts in other similar cases as well. Having regard to these aspects, this Court is inclined to give time to the petitioner up to eight months.
14. Accordingly, the following orders and directions are issued:-
(i) The impugned conviction, substantive sentence of imprisonment till rising of the court and the direction to pay compensation for Rs.4 lakhs with default sentence clause of two months' simple imprisonment, etc., imposed in this case are confirmed.
(ii) The petitioner is given eight months' time from 1.11.2017 to pay off the compensation amount of Rs.4 lakhs directly to the complainant. Upon receipt of such payments, the complainant shall issue necessary receipts to enable the accused to present the same before the trial court to satisfy the said court about such payments.
(iii) The petitioner shall personally appear before the trial court at 11 a.m. on any date on or before on 7.7.2018 to receive the sentence of imprisonment till rising of the court and to satisfy the said court about payment of the compensation amount directly to the complainant. On default of the petitioner to pay the compensation as above, the petitioner will have to suffer simple imprisonment for two months.
(iv) Until 7.7.2018, all further coercive steps for execution of the impugned sentence in this case against the petitioner will stand deferred.
Registry will forward copies of this order to the trial court as well as to the R-1 (complainant) for information.
This criminal revision petition will stand finally disposed of.
(ALEXANDER THOMAS, JUDGE) jg