2003 (7) TMI 745 - HC - Indian Laws

Summary

Issues Involved:
1. Legally enforceable debt.
2. Validity of a blank cheque under Section 138 of the Negotiable Instruments Act, 1881.
3. Material alteration of the cheque.
4. Rebuttable presumption under Section 139 of the Act.
5. Applicability of Section 138 to post-dated cheques.

Issue-wise Detailed Analysis:

1. Legally Enforceable Debt:
The appellant contended that the blank cheque was issued for a legally enforceable debt. Section 138 of the Negotiable Instruments Act mandates that the cheque must be issued for the discharge of any debt or other liability.

2. Validity of a Blank Cheque under Section 138:
Section 138 of the Act is invoked when a cheque drawn on an account maintained by the drawer is returned unpaid due to insufficient funds or exceeds the arrangement with the bank. The court examined whether a blank cheque, later filled in by the appellant, constitutes a valid cheque under Sections 5 and 6 of the Act. A cheque must be a bill of exchange containing an unconditional order to pay a certain sum of money. The court concluded that a blank cheque does not meet this definition, as it lacks a specified amount at the time of issuance.

3. Material Alteration of the Cheque:
The accused argued that filling in the amount and date on the blank cheque constituted a material alteration. Section 87 of the Act states that any material alteration of a negotiable instrument renders it void unless consented to by the parties involved. The court found that the act of the complainant in filling up the amount and date without the accused's consent amounted to a material alteration, rendering the cheque invalid.

4. Rebuttable Presumption under Section 139:
Section 139 of the Act provides a rebuttable presumption that the cheque was issued for the discharge of a debt or liability. The court noted that while a presumption can be drawn when a blank cheque is issued, it is rebuttable. The accused successfully rebutted this presumption by demonstrating that he did not consent to the filling in of the cheque's amount and date.

5. Applicability of Section 138 to Post-dated Cheques:
The court referred to the Supreme Court's decision in Ashok Yeshwant Badave v. Surendra Madhavrao Nighojakar, which clarified that a post-dated cheque becomes a cheque on the date shown and remains a bill of exchange until then. The court further referenced its own decision in Taher N. Khambat v. Vinayak Enterprises, emphasizing that the purpose of Section 138 is to curb the practice of issuing cheques without sufficient funds and that obtaining blank cheques for future use does not align with this legislative intent.

Conclusion:
The court concluded that the cheque in question did not constitute a valid cheque or bill of exchange at the time of issuance due to the lack of a specified amount. The act of filling in the amount and date without the accused's consent was a material alteration, invalidating the cheque. Consequently, the requirements of Section 138 were not met, and the accused could not be held liable under this provision. The judgment of the lower court acquitting the accused was upheld, and the criminal appeal was dismissed.