IN THE HIGH COURT OF KERALA AT ERNAKULAM
Crl.Rev.Pet.No. 1188 of 2005()
1. S.DEVAN, CINE ARTIST, NO.IV,
... Petitioner
Vs
1. C.KRISHNA MENON, 'SOWPARNIKA',
... Respondent
2. STATE OF KERALA REP. BY PUBLIC
For Petitioner :SRI.G.JANARDHANA KURUP (SR.)
For Respondent :SRI.K.RAMAKUMAR (SR.)
The Hon'ble MR. Justice R.BASANT
The Hon'ble MRS. Justice M.C.HARI RANI
Dated :09/04/2010
O R D E R
R.BASANT & M.C. HARI RANI,JJ
==============================
CRL.R.P.NOS.1186, 1187,1188 & 1197 OF 2005
============================
DATED THIS THE 9TH DAY OF APRIL 2010
ORDER
Basant,J.
i)Does a cheque cease to be a cheque merely because
the drawer raises a dispute about the execution of
the cheque and the genuineness of the signature in
the cheque?
ii) Does it cease to be a cheque when a banker
constrained to dishonour the cheque of a valued
customer instead of returning it with the
endorsement that there is no sufficient funds
includes the reason that the signature differs?
iii) Is an obliging banker making such an
CRRP.1186/2005 &
connected cases -2-
endorsement to be reckoned as the final arbiter of
culpability in a prosecution for the offence under
Section 138 of the Negotiable Instruments Act.
iv) Does not the court have jurisdictional
competence in a prosecution under Section 138 of
the Negotiable Instruments Act to ascertain the real
reason for the dishonour of the cheque
notwithstanding the purported reasons stated by the
Banker ?
v) Does the decision in Thomas Varghese v.
P.Jerome [1992 CRI.L.J.380] require or warrant
reconsideration?
vi) Is there a conflict between the decision in
Rejikumar v. Sukumaran [2002 KHC 409] and
the decision in M.I. Kumaran v. Abdul Karim
and another, [2006(1)K.L.D.(Cri)811].
2. These interesting questions arise for consideration in
this revision petition which has come up before us on a
reference by a learned single Judge, who appears to have
CRRP.1186/2005 &
connected cases -3-
doubted the correctness of the decision in Thomas Varghese
(Supra).
3. We have heard the senior Counsel Sri. G Janardhana
Kurup for the revision petitioner/accused and Ms.Saritha David
Chungath for the respondent/complainant. The parties shall be
referred to in this order as accused and complainant
respectively for the sake of easy reference.
4. The facts scenario which is not in dispute can be
summarised as follows:
5. Four cheques each for Rs.5.5 lakhs marked as Ext.P1
respectively in the four cases which have been disposed of by a
common judgment are the subject matter of these prosecutions.
A monetary transaction between the parties is admitted and is
not disputed. That there is an undischarged liability for the
accused to pay amounts to the complainant is admitted. That
the cheques in question are drawn on cheque leaves issued by
the Banker of the accused to the accused to operate his Bank
account is again admitted. That the complainant is an affluent
businessman and the accused is an educated cine artist is also
CRRP.1186/2005 &
connected cases -4-
accepted and conceded. That there was correspondence
between them about the discharge of the liability and time
required for discharge of the liability is also admitted. That the
cheques were successively presented for encashment and were
dishonoured is admitted. That the cheques were finally
presented for encashment and were dishonoured on 08/03/1999
is also admitted. That all the four cheques were dishonoured on
08/03/1999 on the twin grounds – “signature differs and funds
insufficient” is again admitted. That the statutory time table has
been scrupulously followed after that last dishonour is also
conceded. That there was no funds available in the account to
honour the cheque on the date of dishonour (8/3/1999) is also
not disputed. That the accused had come to know of the earlier
attempts for presentation of the cheque and dishonour of the
same prior to its final presentation is also conceded. That the
accused had not taken any steps after coming to know of such
earlier instances of presentation and dishonour is also not
disputed. Till now, no action has been taken against the
complainant by the accused for alleged misuse of the cheques
CRRP.1186/2005 &
connected cases -5-
and that is also not disputed.
6. To the controversy now. The complainant alleged
that the cheques were issued to him for the due discharge of a
legally enforceable debt/liability. According to the complainant,
the accused owed an amount of Rs.20 lakhs. It was not repaid in
time. For return of the said amount of Rs.20 lakhs along with
interest which was fixed at Rs.2 lakhs, four cheques each for
Rs.5.5 lakhs (total Rs. 22 lakhs) were allegedly issued by the
accused to the complainant. Those cheques are marked as
Ext.P1 (four cheques) in this prosecution. When the
complainant presented the same and it was returned on the
twin grounds referred above, the complainant suspected that the
accused had fraudulently affixed a different signature with
malicious intent to defraud him. The complainant contended
that notwithstanding the obliging additional reason shown by
the banker that “the signature differs” the real reason for
dishonour was insufficiency of funds. The accused, on the
contrary, took up a stand towards the fag end of the trial that
the cheques were not issued by him to the complainant for the
CRRP.1186/2005 &
connected cases -6-
due discharge of any legally enforceable debt/liability. He took
a stand during cross examination of PW1 and during 313
examination that the cheque leaves were fraudulently and
clandestinely obtained, his signatures were forged in those
cheques and those cheques were misused and presented for
encashment before the Banker by the complainant.
7. Separate trials commenced. The complainant was
examined in all the four cases and documents were marked
separately. At that juncture, it appears, joint trial was ordered.
The trial continued. The complainant was cross examined in
one case after the cases were consolidated. Exts.P1 to P4 were
marked in all the four cases. They are the cheques, memo of
dishonour, copy of notice and reply notice respectively. Exts.P5,
P5(a) and P6 were marked in common after the cases were
consolidated and the consolidated trial proceeded. Exts.D1 to
D18 were marked by the accused. No oral evidence was
adduced by the defence.
8. The courts below – the trial court and the appellate
court, concurrently held that the complainant has succeeded in
CRRP.1186/2005 &
connected cases -7-
establishing that the cheques in question were issued by the
accused to the complainant for the due discharge of a legally
enforceable debt/liability. The courts came to the positive
conclusion that the cheques were signed executed and handed
over by the accused to the complainant. The courts further
found that notwithstanding the further reason shown that the
signature in the cheques differ, the real reason was insufficiency
of funds. The courts further held that the statutory time table has
been scrupulously followed by the complainant. In these
circumstances, the courts proceeded to hold that the
complainant has succeeded in establishing all ingredients of the
offence under Section 138 of the Negotiable Instruments Act in
all the four cases. Accordingly, the courts below proceeded to
pass the impugned judgments.
9. Before us, the concurrent verdict of guilty, conviction
and sentence are assailed on various grounds. We may, at the
outset, attempt to specify the grounds of challenge. They are:
1.The finding of fact that the cheques were written,
CRRP.1186/2005 &
connected cases -8-
signed and handed over by the accused to the
complainant warrants interference invoking
revisional jurisdiction of superintendence and
correction.
2.The courts below erred in invoking the power
under Section 73 of the Evidence Act to compare
the signatures in Ext.P1 cheques with other
admitted signatures.
3. The courts below erred in coming to the conclusion
that the cheques were issued for the due discharge of a
legally enforceable debt/liability.
4. The courts below ought to have held that when
dishonour by the banker was not on one of the two
grounds referred to in Section 138 of the
Negotiable Instruments Act, no prosecution
whatsoever can lie against the drawer of the
cheque.
5. The complainant having chosen to make
allegations of the offence punishable under Section
CRRP.1186/2005 &
connected cases -9-420 I.P.C. in the complaint against the accused,
this prosecution under Section 138 of the
Negotiable Instruments Act is legally not
maintainable.
6. The courts below should have held that the
prosecution is barred by limitation inasmuch as notice of
demand had not been issued within the period
stipulated from the date of first dishonour on the
ground, inter alia that the signature in the cheques
differed.
7.The sentence imposed is excessive.
10. We have been taken through the oral and
documentary evidence available in the case in detail. We have
been taken through the complaint, answers given by the accused
in 313 examination and all other relevant matters. We have
been taken through the order of reference by the learned single
Judge also meticulously and in detail.
11. At the very outset, we must remind ourselves of the
nature, quality and contours of the jurisdiction of a revisional
CRRP.1186/2005 &
connected cases -10-court. The jurisdiction of revision is essentially the power and
the duty of superintendence and correction. In an appropriate
case where the concurrent findings of fact are grossly incorrect
and perverse, nothing can stop this court from invoking the
revisional jurisdiction of superintendence and correction to
interfere with such grossly erroneous or perverse findings of
fact. It is unnecessary to refer to precedents which have been
copiously cited at the bar and in the order of reference to
support the above proposition. The crucial question is whether
the findings of fact rendered are so grossly erroneous or
perverse as to warrant revisional interference. While considering
this question, no court of revision can afford to ignore the fact
that normally respect and regard must be given to the findings of
fact concurrently affirmed by two courts. The trial court has
the advantage of seeing the witnesses perform in the witness
stand before it and that evident advantage which a trial Judge
has, in the matter of appreciation of evidence, cannot be lost
sight of.
CRRP.1186/2005 & connected cases -11-12. Having thus reminded ourselves of the nature, quality
and contours of the revisional jurisdiction and of the power
which undoubtedly is available with the revisional court to
interfere with the finding of fact which are grossly erroneous or
perverse, we shall now consider the challenge raised on grounds
1 to 3.
13. It is again unnecessary to advert to precedents, it is
by now trite and well established that the burden is on the
complainant in a prosecution under Section 138 of the N.I.Act to
prove his case beyond doubt as is expected in every
prosecution for a criminal indictment. In the instant case, we
have the oral evidence of PWs.1 and 2 about the execution of
the cheques. The learned counsel for the accused contends that
the oral evidence of PWs.1 and 2 do not deserve to be accepted
at all. The counsel argues that PW2 was just a casual witness
who allegedly happened to be present with the complainant
when the cheques were allegedly handed over by the accused.
Primarily, we have the oral evidence of PW1. His oral evidence
is eminently supported by his ability to produce Ext.P1 cheques
CRRP.1186/2005 &
connected cases -12-(four in number) which are admittedly drawn on cheque leaves
issued to the accused by his banker to operate his account. The
oral evidence of PW1 gets further support and assurance from
the admitted circumstance that there was a financial
transaction between the accused and the complainant. Ext.P5
as well as Exts.D1 to D17 eloquently declare that the oral
evidence of PW1 that there was monetary transaction between
the parties and that some amount remained to be paid by the
accused to the complainant is correct. To crown all other
circumstances is the crucial circumstance that the accused,
even after admittedly coming to know that cheques were
presented before his Banker and attempt was made to collect
amounts by presentation of such cheques remained silent, mute
and inactive. Admittedly, even after coming to know that
Ext.P1 cheques had been presented once or twice and were
returned, dishonoured the accused did not take any steps to
instruct his Banker to stop payment. He did not choose to call
upon the complainant not to present the cheques. Even after
coming to know that the cheques had been presented, accused
CRRP.1186/2005 &
connected cases -13-had not raised a little finger against the complainant. According
to the accused now, the cheques were stolen from his premises.
His inaction, even after coming to know that the stolen cheques
were being used to withdraw the amounts from his account, is
eloquent. All these are circumstances which must weigh with a
prudent mind while attempting to decide whether the oral
evidence of PW1 can be accepted or not.
14. Of course, there is the evidence of PW2 also. The courts
below did not find any reason to reject and discard the evidence
of PW2. The question certainly is not whether, we, sitting as an
original court for appreciation of facts would have chosen to
place reliance on the oral evidence of PW2 or not. The question
is whether the revisional powers of superintendence and
correction deserve to be invoked to interfere with the findings of
fact concurrently recorded by the two courts. The courts below
have chosen to accept and act upon the oral evidence of PW1
which is entirely supported by the oral evidence of PW2 and we
find that the courts below have not committed any error
warranting revisional interference in accepting the testimony
CRRP.1186/2005 &
connected cases -14-and recording such findings of fact. Even if the oral evidence of
PW2 were eschewed the court below cannot be said to have
committed any error warranting revisional interference in
choosing to accept and act upon the testimony of PW1, the
complainant.
15. The unsubstantiated version of the accused also does
go a long way to assure the court about the acceptability of the
oral evidence of PW1. According to the accused, there was a
business transaction . He does not dispute that he had a liability
to discharge to the complainant. This is evident from the fact
that Ext.P5 is not disputed. Exts.D1 to D17 also confirm that
fact.
16. The accused surprisingly has not chosen to specify
what, if not Rs. 22 lakhs, is the amount, which he is legally
liable to pay to the complainant. The accused takes a vague and
evasive stand that there is unspecified liability to be discharged
but the cheques were not issued by the accused to the
complainant. The cheque leaves were stolen by the complainant
and misused in an attempt to siphon out funds of the accused.
CRRP.1186/2005 & connected cases -15- That is the plea.17. A careful reading of Ext.P3 notice of demand and Ext.P4
reply notice is in this context essential. Ext.P3 is a notice of
demand issued by the counsel for the complainant on behalf of
the complainant. Ext.P4 is reply issued by the accused himself to
the counsel. A total and careful reading of Ext.P4 is essential
and when so read, no prudent mind can be left with any
semblance of doubt that the accused did not choose to dispute
the genuineness of the signatures in Ext.P1 cheques or the fact
that they were handed over by the accused to the complainant.
Of course, vague and non specific denials are also raised in
Ext.P4. The document must and has to be read as a whole and
when so read crucial indications are available. The accused it is
crucial did not choose to deny the genuineness of the signatures
in Ext.P1 cheques. The purpose for which they were handed
over, was of course disputed, though the existence of some
liability was not disputed as such. The accused took up a
contention that he has an alias name also. Mohan and Devan are
two names in which he holds himself out to the world. He sign
CRRP.1186/2005 &
connected cases -16-in both names. In fact, Ext. P4 clearly shows that he receives
cheques and drafts in both names. He maintains this stand in
Ext.P4 and asserts that he has issued written instruction to his
bank that he signs as Devan also. In the four cheques (Ext.P1),
he has signed as Devan. The complainant in Ext.P3 in the wake
of dishonour on the ground of “signature differs” also had raised
an allegation that he had signed differently in the cheques
maliciously to defraud the complainant. It is in reply to that,
that the complainant had asserted in Ext.P4 that he used to sign
in both manner and bank has been informed of such course of
conduct adopted by him.
18. In Ext.P4, it is significant that the accused did not raise
a contention that the cheques were fraudulently, clandestinely
and in a malafide manner removed by the complainant from the
possession of the accused. But surprisingly in the course of the
trial, we find such a case being advanced. Less said about this
weired contention raised by the accused belatedly towards the
fag end of the trial, the better. A prudent person cannot for a
moment accept this bizarre contention advanced by the accused
CRRP.1186/2005 &
connected cases -17-towards the later stage of the trial. Ext.P4, to our mind,
eloquently conveys that this defence sought to be urged in the
course of the trial cannot stand scrutiny of a reasonable and
prudent mind.
19. The courts below, in an attempt to appreciate the
evidence of Pws.1 and 2 that the accused had signed the cheques
in their personal presence, did look into the admitted signatures
of the accused otherwise available and the signatures in Ext.P1
cheques. It is argued that the courts below totally erred in
resorting to this course. Precedents are relied on.
20. We find it unnecessary to refer specifically to Section
73 of the Evidence Act which undoubtedly clothes a court with
the requisite powers and the court below cannot be found fault
with at all for referring to and comparing the admitted
signatures and the signatures in Ext.P1 in an attempt to
ascertain whether the oral evidence of PWs.1 and 2 about the
execution of the cheques can be accepted. It is of course true
that when there is a serious dispute, courts should not arrogate
to themselves the power to decide and determine the
CRRP.1186/2005 &
connected cases -18-genuineness of signatures, handwritings and thump impressions
without expert opinion by its own naked eye comparison. The
court may be referred to as the expert of experts, but no finding
of a court should ordinarily rest solely on the comparison made
by the court under Section 73 of the Evidence Act in the absence
of evidence of any expert.
21. That is not the situation in the facts of the instant
case. The court did not choose to peruse the documents and
venture an opinion under Section 73 of the Evidence Act at all.
Forced to choose between the version of the complainant and
the stand taken by the accused, the court was obliged to decide
whether the oral evidence of PW1 and of course PW2 can be
accepted or not. It is for this purpose that the courts below
referred to the admitted and disputed signatures and came to
the conclusion that the oral evidence of PWs.1 and 2 can be
preferred to the belated stand/version taken by the accused in
the course of trial and which was not taken in Ext.P4 notice.
22. It is then contended that an application filed by the
accused to send the cheques to the expert before the appellate
CRRP.1186/2005 &
connected cases -19-court was not allowed. The appellate court should have invoked
its power under Section 391 Cr.P.C. to forward the cheques to
the expert and secure expert opinion, it is contended. One of
the easiest ways to secure protraction of trial is to make a
request to send the cheques to the expert. Every such request
will not be automatically and ritualistically be accepted and
allowed by a Judge. Sufficient and satisfactory reasons must be
shown to exist to justify such reference to an expert. In the
instant case the accused had not made any such request before
the trial judge. The totality of the circumstances to which we
have already referred, particularly the fact that there is no
specific denial of the genuineness of the signatures in Ext.P1 in
Ext.P4 – nay there is a veiled admission also, does show
convincingly that the request to forward the cheques to the
expert at the appellate stage was not bona fide or acceptable.
We are unable to agree that the lower (appellate) court has
committed any error in not forwarding the cheques to the expert.
That would have been an unnecessary and meaningless
exercise, according to us. The mere fact that the Banker had
CRRP.1186/2005 &
connected cases -20-included the reason that the signatures differed (not even that
the signatures do not appear to be genuine) is, according to us,
too feeble and unacceptable a reason to persuade us to find
fault with the appellate court for not invoking such powers under
Section 391 Cr.P.C.
23. It is next contended that at any rate it has not
been established that the cheques had been issued for the due
discharge of a legally enforceable debt/liability. We have
already concurred with the conclusions of the courts below that
the cheques were signed, executed and handed over by the
accused to the complainant. It is not the law at all that in a
prosecution under Section 138 of the Negotiable Instruments
Act, the complainant must establish the original cause of action
in meticulous details. That is precisely why the presumption
under Section 139 of the Negotiable Instruments Act has been
incorporated in addition to the presumption under Section 118 of
the Evidence Act which was already there. It is unnecessary
to refer to the various precedents that have been cited at the
Bar. We need only reiterate that once the signature, execution
CRRP.1186/2005 &
connected cases -21-and handing over of the cheque is satisfactorily proved by the
evidence by the complainant, presumption under Section 139 of
the N.I. Act comes into play and the same holds the field until
the accused discharges the burden on him at least by the
inferior standard of preponderance of possibilities and
probabilities as applicable in a civil case.
24. Exts.D1 to D17 produced by the complainant
themselves show that there has been a monetary transaction
between the parties and there was liability for the accused to the
complainant. Last trace of doubt, if any on this aspect is sought
to be set at rest by the complainant by the proof of Ext.P5
which is not disputed at all. This, therefore, is an eminently fit
case where the presumption under Section 139 of the N.I. Act
must come into play . The onus must switch to the accused to
discharge his burden.
25. The learned counsel for the accused laboriously
contends that there has been an inconsistency/incongruity
between the precise nature of the liability averred in the
complaint and the nature of liability which was sought to be
CRRP.1186/2005 &
connected cases -22-proved by evidence in the course of trial. In the notice and in
the complaint, it was averred that an amount of Rs.20 lakhs had
been borrowed by the accused from the complainant as a loan.
But Exts.D1 to D17 as also the evidence tendered in the case
show that it was not a pure and simple transaction of borrowal of
money.
26. This must persuade this Court to throw overboard the
entire case of the complainant, it is contended.
27. It is true that the averments in the notice and the
complaint did not advert to the details. But the case of the
complainant is clear. There was a proposal to make a film by
name Bhadram. This project was sought to be undertaken by the
parties. The project did not come through. There was an
agreement that for a total amount of Rs.20 lakhs, the project
shall be taken over by the accused. It is for discharge of this
liability that this amount of Rs.20 lakhs was agreed to be paid.
This included the amounts which the complainant had already
paid to various persons. The nature of the transaction is now
clear from the evidence of the complainant (PW1) and
CRRP.1186/2005 &
connected cases -23-Exts.D1 to D17. In any view of the matter, notwithstanding the
innocuous inconsistency between the real nature of the
transactions and the pleadings in the complaint and the notice,
we are unable to agree that the burden on the accused under
Section 139 of the N.I. Act has been discharged.
28. We are in ready agreement that the accused is not
bound to adduce any defence evidence. Under Section 315
Cr.P.C, the non-examination of the accused cannot even be
commented by the adjudicator. But the burden rests squarely on
the shoulders of the accused. Once the presumption under
Section 139 comes into play, that burden, we must hold, has to
be discharged by the accused. The alleged innocuous
incongruity pointed out between the pleadings and the precise
nature of the transaction proved is not sufficient to discharge the
burden. We do, in these circumstances, come to the conclusion
that the finding of the court below that the cheques were signed,
executed and handed over by the accused to the complainant,
that they were issued for the due discharge of a legally
enforceable debt/liability and that the presumption under
CRRP.1186/2005 &
connected cases -24-Section 139 of the Negotiable Instruments Act has not been
rebutted by the accused are eminently correct and the same do
not warrant interference. The challenge on grounds 1 to 3 is
thus rejected.
29. We now come to the question of law raised. That is
the 4th ground of challenge. The learned counsel contends that
the banker having chosen to dishonour the cheques on the twin
grounds, i.e. “signatures differ and funds insufficient”, section
138 of the Negotiable Instruments Act can have no application
at all. According to the learned counsel, the Banker’s
endorsement is of crucial relevance. The cheques having been
returned for the reason that the signatures differ, the cheques
cannot be reckoned as cheques at all. In order to be a cheque,
the instrument must be a Bill of Exchange. In order to be a Bill
of Exchange, it must bear the signature of the drawer. Inasmuch
as the Bank has returned the cheques with the endorsement
that the signature of the drawer differs, the cheques cannot be
reckoned as cheques and the consequent dishonour is not
dishonour of a cheque. At any rate it is not the dishonour for
CRRP.1186/2005 &
connected cases -25-the reasons contemplated under Section 138 of the Negotiable
Instruments Act. Counsel contends that in these circumstances
the dishonour of the cheques for the reason that the signatures
differ also cannot attract culpability under Section 138 of the
Negotiable Instruments Act.
30. We think that the question has already been concluded
by binding decisions of courts. The Supreme Court in the
decisions in Goaplast Pvt.Ltd. v. Chico Ursula D’Souza,
[2003(2)K.L.T.16(SC) and N.E.P.C.Micon Ltd. v. Magma
Leasing Ltd.,A.I.R.1999 S.C.1952. has taken the view that
notwithstanding the fact that where cheques were dishonoured
for the reasons “stop payment” and “account closed”, it is open
to the court to come to a finding that the real reason was
insufficiency of funds and consequently conviction can be
entered under Section 138 of the Negotiable Instruments Act.
A Division Bench of this Court in Thomas Varghese (supra)
has proceeded to observe as follows in paragraph 6:
” 6 From the argument advanced by
the learned counsel representing the
CRRP.1186/2005 &
connected cases -26-petitioner, it would appear that an
offence under S.138 of the Act should
depend on the endorsement made by
the banker while returning the cheque
unpaid, i.e.only when the banker
makes an endorsement that the
amount of money standing to the
credit of the account of the drawer 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 can an
offence under S.138 of the Act be
made out. According to us, such an
approach will defeat the very purpose
of the enactment. The offence under
the Section cannot depend on the
endorsement made by the banker
while returning the cheque.
CRRP.1186/2005 &
connected cases -27-Irrespective of the endorsement made
by the banker, if it is established that
in fact the cheque was returned unpaid
either because the amount of the
money standing to the credit of the
account of the drawer 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, the offence will be
established. The endorsement made by
the banker while returning the cheque
cannot be the decisive factor.”
(emphasis supplied)
31. Though the law has been so stated clearly in this
decision, the learned counsel for the petitioner contends that
this does not represent the correct law. According to the
learned counsel, when the Banker returns the cheques for the
reason that the signatures differ, these principles cannot apply
CRRP.1186/2005 &
connected cases -28-and the cheques must be held to be not cheques and culpability
under Section 138 of the Negotiable Instruments Act cannot be
attracted. It is contended that in Thomas Varghese (supra),
the Division Bench had not considered the question as to what
would happen when the cheques are not cheques at all for the
reason that the signatures appearing on the cheques are not that
of the accused.
32. We have no hesitation to agree straight away that if it is
proved that the signatures are not genuine and there has been
no valid execution, the cheques will be no cheques at all and
consequently culpability under Section 138 of the Negotiable
Instruments Act will not be attracted. But the crucial question is
whether that contention can be accepted. The very important
question is whether that question can be decided by the court or
the court must reckon itself as a prisoner of the endorsement
made by the Banker.
33. In this context we feel that reference to paragraph 3 of
M/s.Dalmia Cement(Bharat) Ltd. v. M/s.Galaxy Traders and
Agencies Ltd., [A.I.R.2001 S.C.676]
CRRP.1186/2005 &
connected cases -29-“3. The act was enacted and section 138
hereof incorporated with a specified object of making
a special provision by incorporating a strict liability
so far as the cheque, a negotiable instrument, is
concerned. The law relating to negotiable
instrument is the law of commercial world legislated
to facilitate the activities in trade and commerce
making provision of giving sanctity to the
instruments of credit which could be deemed to be
convertible into money and easily passable from one
person to another. In the absence of such
instruments, including a cheque, the trade and
commerce activities, in the present day would, are
likely to be adversely affected as it is impracticable
for the trading community to carry on with it the bulk
of the currency in force. The negotiable instruments
are in fact the instruments of credit being convertible
on account of legality of being negotiated and are
easily passable from one hand to another. To achieve
CRRP.1186/2005 &
connected cases -30-the objectives of the act, the legislature has, in its
wisdom, thought it proper to make such provisions in
the act for conferring such privileges to the
mercantile instruments contemplated under it and
provide special penalties and procedure in case the
obligations under the instruments are not
discharged. The laws relating to the Act are,
therefore, required to be interpreted in the light of
the objects intended to be achieved by it despite
there being deviations from the general law and the
procedure provided for the redressal of the
grievances to the litigants. Efforts to defeat the
objectives of law by resorting to innovative measures
and methods are to be discouraged, lest it may affect
the commercial and mercantile activities in a smooth
and healthy manner, ultimately affecting the
economy of the country.”
CRRP.1186/2005 &
connected cases -31-
34. It is common knowledge that a Banker will be
interested in protecting a valued customer of his. The Banker
may not readily make an endorsement that the funds are
insufficient. Expressions “refer to drawer” etc. are skilfully
employed by the Banker to avoid inconvenience to a valued
customer even when funds are insufficient. Culpability under
Section 138 of the Negotiable Instruments Act cannot obviously
be left entirely to the Banker who makes the endorsement while
dishonouring the cheques. The court in order to effectively
implement the scheme under Section 138 of the Negotiable
Instruments Act must reserve for itself, the power to decide the
real reason that prompted the banker to dishonour the cheques.
The reason given by the banker may be relevant. But it is for
the court on the basis of the materials available before it come to
a definite conclusion as to what was the actual and the real
cause for dishonour. It is in this context that the courts will be
obliged, notwithstanding the nature of the endorsements made
by the banker, to go into the question and decide what the real
cause of dishonour is. We have already come to the conclusion
CRRP.1186/2005 &
connected cases -32-
while discussing grounds 1 to 3 that in this case the cheques
bear the genuine signatures of the accused. In these
circumstances, the mere fact that the obliging banker had added
one more convenient reason cannot be permitted to frustrate
and stultify the working of the legislative scheme under
Section 138 of the Negotiable Instruments Act. This contention
that the endorsement by the banker has to be treated as
sacrosanct and the court is bound to accept the same cannot be
accepted at all.
35. In the order of Reference, we find that the decision of a
learned single Judge in Rejikumar v. Sukumaran [2002 KHC
409] has been referred to. That was a case where the cheque
was dishonoured on the ground of insufficiency of funds.
Notwithstanding such dishonour and notwithstanding the fact
that notice of demand did not evoke any reply, the learned Judge
accepted the contention of the accused that the signature in the
cheque was not genuine or true. There was evidence in that
case to show that the signature was not genuine or true. It is in
that context the court observed that where the cheque was
CRRP.1186/2005 &
connected cases -33-
dishonoured on the ground that the signature differ (which
contention was found to be correct by the court) culpability
under Section 138 of the Negotiable Instruments Act will not be
attracted. That decision cannot and does not lay down any
proposition contrary to what has been laid down by the Division
Bench in Thomas Varghese (supra). We have already
extracted the relevant passage in Thomas Varghese (supra)
which shows that irrespective of the reasons assigned by the
banker, the real reason for the dishonour can be and has to be
ascertained by the court. That is what happened in Rejikumar
(supra). Notwithstanding the fact that the cheque was
dishonoured on the ground of insufficiency of funds, the court in
that case held that the real reason for the dishonour must be
held to be the non genuine signature. Rejikumar(supra)
cannot hence help the revision petitioner.
36. Our attention has also been drawn to the two decisions
of learned single Judges of this Court, Hon’ble Justice
K.R.Udayabhanu in M.I.Kumaran v. Abdul Karim and
another, 2006 (1)KLD 811 and Hon’ble Mr.Justice
CRRP.1186/2005 &
connected cases -34-
M.Sasidharan Nambiar in the unreported judgment in
Crl.A.No.483/1999 have held that the dishonour by the banker
with the endorsement “signature differs” cannot clinch the
issue. Both the learned Judges have chosen to follow the
decision of the Division Bench in Thomas Varghese (supra).
In Rejikumar(supra), no reference is seen made to the decision
in Thomas Varghese (supra) . In any view of the matter, we
are satisfied that the dictum in Thomas Varghese (supra)
covers the issue squarely. We are in complete agreement with
the said dictum and we find no reason to refer to the question
to a larger Bench.
37. We do in these circumstances reiterate the law thus. If
the signature in the cheque is proved to be not genuine, the
instrument cannot be reckoned as a cheque and the same
cannot attract culpability under Section 138 of the Negotiable
Instruments Act. But the decision as to whether the signature
is genuine and whether the execution is proved will have to be
taken by a court, the mere fact that the banker returns the
cheque for the reason that the signature differs is no reason for
CRRP.1186/2005 &
connected cases -35-
the court to mechanically swallow that reason. The courts are
obliged to consider whether the real reason for dishonour is
insufficiency of funds or not. We may at the risk of repetition
proceed to reiterate that if as a matter of fact the signatures are
not genuine and the court finds so, needless to say Section 138
of the N.I. Act would not apply. But the endorsement by the
banker is not conclusive. The court will have to ascertain the
real reason. The challenge on this ground is in these
circumstances, rejected.
Ground No.5.
38. It is contended that the complainant having already
alleged in the complaint that the accused had cheated him and
has committed an offence under Section 420 I.P.C. by signing
differently in Ext.P1 cheques, this prosecution under Section
138 of the Negotiable Instruments Act would not lie. We are
unable to accept this contention at all. In fact a careful reading
of the notice of demand and pleadings of the complainant clearly
show that the signatures were affixed by the accused in the
presence of the complainant. When the Banker returned the
CRRP.1186/2005 &
connected cases -36-
same with such endorsement that the signatures differ also, the
complainant apprehended that the accused must have signed
differently to defraud him. This in its crux is the allegation. It
will be totally incorrect to say that the complainant had admitted
that the signatures were not genuine. Such a specific pleading
is not available at all. In the facts and circumstance of this case,
the mere fact that in the notice and in the complaint, the
complainant alleged mala fides, fraud and an intention on the
part of the accused to cheat the complainant, cannot in any way
militate against the maintainability of the prosecution under
Section 138 of the Negotiable Instruments Act. The challenge
on the 5th ground also therefore fails.
Ground No.6.
39. It is contended with the help of the decision of the
Karnataka High Court in Nanjundappa v.
Hanumantharayappa [2008(2)K.L.T.851] that when the
dishonour is on the ground of “account closed” and “the
signature differs”, the period of limitation must start running
from the date of initial presentation. Subsequent presentation
CRRP.1186/2005 &
connected cases -37-
cannot give a renewed lease of life for the cause of action,
contends the learned counsel.
40. We have gone through the decision in Sadanandan
Bhadran v. Madhavan Sunil Kumar (1998(2) K.L.T. 765
(S.C) which has clearly held that successive presentation within
the permissible period of time is justified and can be resorted to.
The cause of action for prosecution can arise only when a notice
of demand is issued. Till then within the period permitted by
Section 138 of the Negotiable Instruments Act, any number of
re-presentations can be done. We are unable to accept the
general statement made in Nanjundappa (supra) that in such
a case the prosecution must be held to be barred by limitation, if
notice of demand is not given within the stipulated period from
the date of the original dishonour of the cheque. In the instant
case, we find that it is the specific case of the complainant that
initial dishonour on the twin grounds was conveyed to the
accused and the accused wanted the complainant to represent
such cheques for encashment. In any view of the matter, we are
unable to agree that the mere fact that “signature differs” was
CRRP.1186/2005 &
connected cases -38-
one of the reasons for dishonour of the cheque is sufficient to
conclude that the period of limitation will start even before the
cause of action has arisen as per the decision in Sadanandan
(supra). We respectfully disagree with the dictum in
Nanjundappa (supra). The challenge on the sixth ground also
therefore fails.
Ground No.7
41. The learned counsel for the petitioner contends that the
sentence imposed is excessive. Simple imprisonment for a
period of one month and fine of Rs.6 lakhs is the sentence
imposed in each case. The learned counsel prays that leniency
may be shown on the question of sentence and the substantive
sentence of imprisonment may be avoided.
42. The cheques in the instant case bear the date
10/9/1998. A period of about 12 years has elapsed from the date
of the cheques. The complainant has been compelled to fight
three rounds of legal battle by now. The cheques were for an
amount of Rs.5.5 lakhs each. The complainant has been waiting
in the queue for justice for the past about 12 years. In the
CRRP.1186/2005 &
connected cases -39-
decision in Anil Kumar v. Shammy [2002(3)K.L.T.852] one
of us had adverted to the principles governing the imposition of
sentence in a prosecution under Section 138 of the Negotiable
Instruments Act. Section 138 of the Negotiable Instruments Act
was brought into the statute book in 1988. During the initial
period of enforcement of this new law, we agree with the learned
counsel for the petitioner that a deterrent, substantive sentence
of imprisonment can be avoided. It must be zealously insisted
that the complainant is adequately compensated. It is submitted
that the civil court is already seized of the matter and a decree
as prayed for has been granted in favour of the complainant.
The amount has not been paid so far, it is submitted. The matter
is pending in appeal, it is reported. Taking all the relevant
circumstances, we are satisfied that leniency can be shown on
the question of sentence zealously insisting at the same time that
the complainant is fairly and justly compensated. The judgment
has been rendered by the Additional Chief Judicial Magistrate
who has unlimited pecuniary jurisdiction for imposition of fine.
We are satisfied that the fine amount can be enhanced.
CRRP.1186/2005 & connected cases -40-
Direction under Section 357(1) Cr.P.C. can also be modified and
justice can thus be achieved in the facts and circumstances of
the case.
43. In the result:
a) these revision petitions are allowed in part.
b) The impugned verdicts of guilt and convictions
of the petitioner in all the four cases under Section
138 of the Negotiable Instruments Act are upheld.
c) But the sentence imposed is indulgently
modified and reduced. The substantive sentences of
imprisonment imposed on the petitioner/accused in
all the cases are set aside. The sentences of fine
imposed are modified.
d) The revision petitioner is sentenced in all the
four cases to pay a fine of Rs.7,50,000/- (Rupees
seven lakhs and fifty thousand only) each and in
default to undergo simple imprisonment for a
period of three months each. If the fine amount is
CRRP.1186/2005 &
connected cases -41-
realised, an amount of Rs.7.4 lakhs in each case
shall be released to the complainant as
compensation under Section 357(1) Cr.P.C. Of this,
the amount of Rs.5.5 lakhs each shall be credited to
the principal amount due under the cheques. Out of
the balance amount, an amount of Rs.1.5 lakhs each
shall be credited towards the interest payable. The
balance shall be credited as costs and expenses
incurred for the prosecution of these three tier
criminal proceedings. The revision petitioner shall
have time till 1/6/2010 to make payment and avoid
execution of the default sentence. If the fine amount
is not paid on or before that date, the courts below
shall immediately proceed to execute the default
sentence. Needless to say, the amounts so paid
under Section 357(1) Cr.P.C shall be given due
credit if the civil Court’s decree is confirmed and
attempt is made to execute that decree.
CRRP.1186/2005 &
connected cases -42-
44. It is submitted that an amount of Rs.10 lakhs is lying in
deposit before the court below which was deposited by the
revision petitioner as per interim orders passed by this Court.
The said amount shall forthwith be released to the complainant.
Sd/-
R. BASANT, JUDGE
Sd/-
ks. M.C. HARI RANI, JUDGE
TRUE COPY
P.S. TO JUDGE