2018 (7) TMI 1540 - HC - Indian Laws

Authority to fill the date in an undated cheque - non-payment of the value of the cheque on dishonor of the cheque - it was alleged that petitioner failed to make any payment inspite of service of notice of demand - Section 138 of the Negotiable Instruments Act, 1881 - Held that - The fact that the petitioner had handed over an undated cheque, in the given facts and circumstances would ordinarily lead to presumption of grant of authority to the payee i.e. the complainant to fill in the date - The assertion of the petitioner that there was no such authority gives rise to a question of fact which cannot be answered without both parties being called upon to adduce evidence - petition dismissed - decided against petitioner.

Issues:
1. Criminal prosecution under Section 138 of the Negotiable Instruments Act, 1881.
2. Jurisdiction under Section 482 of the Code of Criminal Procedure, 1973.
3. Allegations of abuse of process of the court.
4. Material alteration of negotiable instrument.
5. Issuance of cheque as security.
6. Interpretation of Section 20 of the Negotiable Instruments Act, 1881.
7. Authority to complete an incomplete negotiable instrument.
8. Presumption of grant of authority to fill in the date on an undated cheque.

Analysis:

1. The petitioner is facing criminal prosecution under Section 138 of the Negotiable Instruments Act, 1881 for non-payment of a cheque worth &8377; 20,00,000. The petitioner seeks quashing of the criminal complaint on grounds of abuse of court process.

2. The petitioner invokes the jurisdiction under Section 482 of the Code of Criminal Procedure, 1973 to challenge the criminal complaint's validity as an abuse of the court process.

3. The complaint alleges that the petitioner issued an undated cheque as security for a property transaction, which was later dishonored. The complainant contends that the petitioner failed to fulfill the payment obligation.

4. The petitioner argues that the complainant's filling in of the date on the undated cheque constitutes a material alteration, rendering the instrument invalid. Legal precedents are cited to support this argument.

5. The petitioner further claims that the cheque was issued as security and not for discharge of a debt, questioning the basis for criminal prosecution under Section 138 of the Act. Legal references are provided to support this contention.

6. The court examines Section 20 of the Negotiable Instruments Act, 1881, which addresses inchoate stamped instruments and the authority granted to complete an incomplete negotiable instrument.

7. Referring to legal precedents, the court notes that the provision in Section 20 grants a prima facie authority to complete an incomplete negotiable instrument, subject to certain conditions.

8. The court observes that the act of handing over an undated cheque typically implies a grant of authority to the payee to fill in the date. The petitioner's denial of such authority raises a factual question requiring evidence from both parties.

9. Previous judgments on similar issues are referenced, where contentions similar to the petitioner's were rejected based on the interpretation of Section 20 and relevant legal principles.

10. Consequently, the court dismisses the petition and associated application, emphasizing the need for evidence to resolve factual disputes regarding the authority to complete the negotiable instrument.

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