2014 (12) TMI 1401 - HC - Indian Laws

Dishonor of Cheque - insufficiency of funds - Not a case of presumption, but a case of authority - Section 138 of NI Act - HELD THAT - In the present case, it is admitted position that the cheques were signed by the accused persons - The provisions given in section 20 of the NI Act, makes it clear that the instrument may be wholly blank or incomplete in any particular; in either case, the holder has the authority to make or complete the instrument as a negotiable one. The authority implied by a signature to a blank instrument is so wide that the party so signing is bound to a holder in due course even though the holder was authorised to fill for a certain amount. Section 20 of the Act declares that inchoate instruments are also valid and legally enforceable. In the case of a signed blank cheque, the drawer gives authority to the drawee to fill up the agreed liability. In the facts of the present case, though the respondent/accused had admitted that the signed cheque was issued by him but it was denied that the same was issued voluntarily by him in favour of the petitioner against due payment. On the other hand, it was sought to be contended that the cheque had been issued for the security purposes but was misused by the petitioner/complainant after having filled up the details by herself. But as per Section 20 of the NI Act, an individual is authorised to complete the inchoate instrument deliver to him by filling up the blanks. Moreover, a blank cheque could be filled up by the 'Holder thereof', which will be a valid instrument in the eye of Law. Revision allowed. It is not a case of presumption but it is a case of authority , therefore, the arguments advanced by the counsel for the respondent and decisions cited in support thereof are not acceptable. Hence, in the considered opinion of this court, the revisional court committed an error to allow the applications under section 45 of the Evidence Act.

Summary

Issues:
1. Application under Section 45 of the Indian Evidence Act allowed by the Revisional Court.
2. Interpretation of Section 20 of the Negotiable Instruments Act.
3. Discrepancy in the entries of the cheques and the authority to complete the instrument.

Analysis:

Issue 1: Application under Section 45 of the Indian Evidence Act allowed by the Revisional Court
The judgment dealt with two criminal revisions under Section 397/401 of the Code of Criminal Procedure against the order of the Fourth Additional Sessions Judge. The respondents/accused had filed applications under Section 45 of the Indian Evidence Act seeking to examine the entries in the cheques through a Handwriting Expert. The trial court had dismissed the applications, but the Revisional Court allowed them. The petitioner argued that since the accused admitted signing the cheques, the Revisional Court erred in allowing the applications. However, the respondents contended that the applications were necessary to bring out the truth in the prosecution case. The court examined the arguments and relevant case laws before concluding that the Revisional Court erred in allowing the applications. The impugned orders were set aside, and both revisions were allowed in confirmation with the trial court's orders.

Issue 2: Interpretation of Section 20 of the Negotiable Instruments Act
The judgment extensively discussed Section 20 of the Negotiable Instruments Act, emphasizing that a signed blank cheque gives authority to the holder to complete the instrument. The court highlighted that such inchoate instruments are valid and enforceable, and the holder can fill in the blanks to make it a negotiable instrument. It was clarified that even if the cheque was issued for security purposes, filling in the details by the holder would still be valid under Section 20. The court reiterated that the drawer's authorization to complete the cheque by the holder makes it legally enforceable, regardless of the initial purpose of the cheque issuance.

Issue 3: Discrepancy in the entries of the cheques and the authority to complete the instrument
The judgment addressed the discrepancy in the entries of the cheques and the authority to complete them. The accused claimed that the complainant filled in the details on the cheques after receiving them as security. However, based on Section 20 of the NI Act, the court held that the holder of a signed blank cheque has the authority to complete it. The court rejected the argument that the complainant should have the entries verified by a Handwriting Expert, stating that it was a case of authority under Section 20, not presumption. The court emphasized that since the accused admitted the complainant filled in the cheques, the complainant had the right to benefit under Section 20, and there was no need for further verification. Consequently, the Revisional Court's decision to allow the applications under Section 45 of the Evidence Act was deemed erroneous and set aside.

In conclusion, the judgment provided a detailed analysis of the issues involving the interpretation of legal provisions and application of relevant case laws to arrive at a just conclusion.