2021 (6) TMI 766 - HC - Indian Laws

Dishonor of Cheque - insufficiency of funds - non- performance of his promise under the agreement to sell - HELD THAT - In the instant case, the accused as DW-1 in his examination-in-chief has taken a contention that, the date column in the cheque at Exhibit P-1 was left blank by him and the same was filled by the complainant. Except this, he has not at all stated as to, whether he did not have his consent for the complainant filling up the date or whether he had precluded the complainant from filling the date in the instrument without his knowledge or consent. Therefore, even assuming that, it is the complainant who has filled the date, still, the drawer of the instrument, by giving such an un-dated cheque to the complainant, has impliedly permitted the complainant to fill the date in the Negotiable Instrument (cheque) by himself. In the instant case, the accused nowhere has stated that he had any objection for the complainant filling up the date in the cheque. It is on a similar point, the Division Bench of the Kerala High Court in Bhaskaran Chandrasekharan's case 1998 (4) TMI 569 - KERALA HIGH COURT was pleased to observe that, when a cheque is issued for a valid consideration with no dispute regarding the signature, amount and name, it cannot be said that, putting a date on the cheque by the payee who is the holder of the cheque in-due-course would amount to material alteration rendering the instrument void. In the instant case, if the pre-printed year of the cheque were to be used without effecting any change in the year, it should have been used on or before the year 2009 but not thereafter. However, the cheque is said to have been given in the year 2013, as such, the year on the cheque is also shown as '2003' by overwriting the digit '1' against '0' at tens' place. Thus, the cheque is shown to have been issued in the year 2013 - No doubt it is an alteration, but had it been a material alteration, the banker while dishonouring the cheque would have, apart from showing the reason of insufficiency of funds in the account of the drawer, would also have mentioned the reason of alteration require drawer's authentication . It is for the reason that the cheque return memo which is at Exhibit P-2 in its Code No.'1', though mentions the reason for return as funds insufficient , the Code No.'12' of the very same exhibit for return mentions alterations require drawer's authentication . Admittedly, the complainant is a real estate businessman and a hotelier. The accused in his deposition has shown his avocation as a coolie. He had agreed to sell his agricultural land to the complainant as per the agreement at Exhibit P-5 as could be made out from the said document. The said agreement does not quantify any damages, except stating that in case of any default the proposed purchaser had a right to take suitable legal action against the vendor and is entitled to recover the loss incurred by him - the quantum of fine imposed which is ₹ 1,05,000/- in addition to the cheque amount appears to be on a higher side. Criminal Revision Petition is allowed-in-part.

Issues Involved:
1. Whether the judgments under revision are perverse, illegal, and erroneous, warranting interference by the High Court.
2. Validity of the cheque issued by the accused and its dishonor due to insufficient funds.
3. Service of legal notice to the accused and its implications.
4. Rebuttal of presumption under Section 139 of the Negotiable Instruments Act by the accused.
5. Alleged material alteration of the cheque and its impact on the validity of the cheque.
6. Proportionality of the sentence imposed by the Trial Court and confirmed by the Sessions Judge's Court.

Issue-wise Detailed Analysis:

1. Whether the judgments under revision are perverse, illegal, and erroneous, warranting interference by the High Court:
The High Court examined whether the judgments of the Trial Court and the Sessions Judge's Court were perverse, illegal, or erroneous. The Court found that both lower courts had properly analyzed the evidence and arrived at a correct finding, thus there was no illegality, perversity, or impropriety in their judgments warranting interference.

2. Validity of the cheque issued by the accused and its dishonor due to insufficient funds:
It was undisputed that the accused issued a cheque to the complainant, which was dishonored due to "funds insufficient." The accused admitted to issuing the cheque under an agreement dated 15-10-2010. The evidence showed that the accused failed to comply with the terms of the agreement, and the cheque was issued as a result of this failure. Therefore, the issuance of the cheque remained an undisputed fact.

3. Service of legal notice to the accused and its implications:
The complainant issued a legal notice to the accused demanding payment of the cheque amount. The notice was sent through Registered Post Acknowledgment Due (RPAD) and was duly received by the accused, as evidenced by the postal acknowledgment card. The accused's contention that the notice was not served was rejected by the Court.

4. Rebuttal of presumption under Section 139 of the Negotiable Instruments Act by the accused:
The accused contended that the cheque was given as security and that no consideration was passed. However, the accused's own admission that he received ?16.00 lakhs from the complainant and entered into an agreement with him rebutted his defense. The Court found that the accused failed to rebut the presumption under Section 139 of the N.I. Act.

5. Alleged material alteration of the cheque and its impact on the validity of the cheque:
The accused argued that the cheque was materially altered, specifically the year on the cheque was changed from "200_" to "2003." The Court referred to various judgments which held that such alterations do not constitute material alterations unless they change the rights, liabilities, or legal position of the parties. The Court found that the alteration was necessary to reflect the correct year of issuance and did not invalidate the cheque. The banker did not consider the alteration as material, and the cheque was dishonored solely due to insufficient funds.

6. Proportionality of the sentence imposed by the Trial Court and confirmed by the Sessions Judge's Court:
The Trial Court sentenced the accused to pay a fine of ?17,05,000/- and in default, to undergo simple imprisonment for six months. The High Court found the fine amount to be on the higher side considering the circumstances, including the accused's occupation as a coolie. The fine was reduced to ?16,40,000/-, with ?16,35,000/- to be paid as compensation to the complainant and ?5,000/- to be forfeited to the State. The default sentence of six months simple imprisonment remained unaltered.

Order:
1. The Criminal Revision Petition is allowed-in-part.
2. The judgment of conviction by the Trial Court and confirmed by the Sessions Judge's Court is upheld.
3. The fine amount is reduced to ?16,40,000/-, with ?16,35,000/- payable as compensation to the complainant.
4. The default sentence of six months simple imprisonment remains unaltered.
5. The Registry is directed to transmit a copy of this order to both the Trial Court and the Sessions Judge's Court along with their respective records immediately.

← Previous Next →