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TMI Blog2009 (10) TMI 976X X X X Extracts X X X X X X X X Extracts X X X X ..... upplied by the appellant between 11.6.2003 and 23.01.2004 and a cheque dated 03.02.2004 was given by the respondent which was dishonoured by the bank for insufficient fund, on 06.02.2004. Therefore, notice under Section 138 of the Act was issued and served; and upon non-compliance with the demand, the complaint was lodged. The defence of the accused in reply to the statutory notice consisted of denial of issuance of the cheque and misuse of the cheque, besides the contention that the goods sold and supplied to her firm was returned and that there were other disputes. During the course of trial, even as no witness was examined in defence, the accused relied upon the delivery challan under which the goods was sent back through a transporter to the complainant. The accused also relied upon the statements made in cross-examination of the complainant and put up the defence that the complainant had failed to prove enforceable debt against her. The trial Court, relying upon the oral and documentary evidence produced by the complainant, came to the conclusion that the cheque was issued against the invoice for the supply of goods worth ₹ 1,48,668/- to which other amounts debited to he ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and the impugned judgment was perverse and illegal. 4. Before embarking upon re-appreciation of the evidence and application of relevant legal provisions and precedents, it may be pertinent to note the relevant dates and statements of the complainant in his cross-examination. The invoice for sale of goods worth ₹ 1,48,668/- was dated 05.07.2003. While the business transactions between the parties was continuing between 11.06.2003 to 23.01.2004, the cheque was dated 03.02.2004 for ₹ 2,08,074/-. Before that, the goods was sought to be returned through a transporter on 24.09.2003 and it was lying with the transporter till 03.03.2004. The cheque was dishonoured by the bank on 06.02.2004. The complainant had, by producing documentary evidence at Exh.24, sought to prove and justify the other debit entries for ₹ 750/- and ₹ 58,656/- for which debit notes were issued. As against that, there was no evidence of receipt or acceptance by him of the goods sought to be returned by the accused. These facts lead to the conclusion that the amount in the cheque in question was filled up afterwards by the complainant and the dispute had arisen because the accused tried to r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pay is not 'conditional', within the meaning of this section and Section 4, by reason of the time for payment of the amount or any installment thereof being expressed to be on the lapse of a certain period after the occurrence of a specified event which, according to the ordinary expectation of mankind, is certain to happen, although the time of its happening may be uncertain. The sum payable may be 'certain', within the meaning of this section and Section 4, although it includes future interest or is payable at an indicated rate of exchange, or is according to the course of exchange, and although the instrument provides that, on default of payment of an installment, the balance unpaid shall become due. The person to whom it is clear that the direction is given or that payment is to be made may be a 'certain person', within the meaning of this section and Section 4, although he is mis-named or designated by description only. Section 6 'Cheque'- A cheque is a bill of exchange drawn on a specified banker and not expressed to be payable otherwise than on demand and it includes the electronic image of a truncated cheque and a cheque in the e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... acceptance - that every accepted bill of exchange was accepted within a reasonable time after its date and before its maturity; (d) as to time of transfer- that every transfer of a negotiable instrument was made before its maturity; (e) as to order of indorsements -that the indorsements appearing upon a negotiable instrument were made in the order in which they appear thereon; (f) as to stamps- that a lost promissory note, bill or exchange or cheque was duly stamped; (g) that holder is a holder in due course- that the holder of a negotiable instrument is a holder in due course: provided that, where the instrument has been obtained from its lawful owner, or from any person in lawful custody thereof, by means of an offence or fraud, or has been obtained from the maker or acceptor thereof by means of an offence or fraud, or for unlawful consideration, the burden of proving that the holder is a holder in due course lies upon him. Section 138 Dishonour of cheque for insufficiency etc. of funds in the account- Where any cheque drawn by a person on an account maintained by him with a banker for payment of any amount of money to another person from out of that account for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t and the name of the payee without the consent of the drawer would amount to material alteration rendering the instrument void under Section 87 of the Act. Another judgment of Kerala High Court in Joseph Sartho v. Gopinathan Nair 2009 (2) Crimes 463 was relied upon for the proposition that, when cheque did not represent the amount or part of the amount due, the accused cannot be made liable for dishonour of such cheque. In Kumar Exports v. Sharma Carpets (2009) 2 SCC 513 where the defence that blank cheques were obtained as advance payment was found to be probable, it was held by the Supreme Court that the burden of proof would shift on the complainant; and since the complainant did not produce any books of account or stock register maintained by him in the course of his regular business to establish as a matter of fact that the goods were sold by him, presumptions were held to have been rebutted. It was observed that, a presumption is not in itself evidence, but only makes a prima facie case for a party for whose benefit it exists. When a presumption is rebuttable, it only points out that the party on whom lies the duty of going forward with evidence on the fact presumed, and whe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ct, it is necessary that the cheque should have been issued in respect of either past or current existing debt or other legal liability. Where the cheque was obviously not issued towards payment of damages, there was no legal obligation on part of the accused to effect clearance of the cheques issued towards the rental liabilities for the period during which he was not in occupation of the premises. Again the same High Court in Keygien Global Ltd. v. Madhav Impex 2006 Cr.L.J. 3413 held, where admittedly the accused had not appropriated the goods supplied by the complainant, that the complainant had no right to seek value of the rejected and returned goods and if the rejection of goods were illegal, the complainant had remedy to sue for damages. The Andhra Pradesh High Court in Taher N. Khambati v. Vinayak Enterprises (HC) 1995 (4) Crimes 204 held that, where the complainant had obtained a blank signed cheque with a view to use it as a threat for realization of an amount, it could not be construed that the accused had issued the cheque voluntarily for discharge of any debt or legal liability as envisaged under Section 138 of the Act. In Kamalammal v. C.K. Mohanan 2007 Cr.L.J. 3124, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g, the question of invoking Section 138 of the Act does not arise. May be there is lacunae in Section 138 of the Act, it cannot be said that it covers invalid cheques also. Such an interpretation cannot be put on to it. It is for the Legislature to look at the lacunae found.... 6.2 In Kamala S. v. Vidhyadharan M.J. 2008 (1) GLR 423, the Supreme Court held it to be well-settled that when two views were possible, the High Court exercising its appellate power against a judgment of acquittal shall not ordinarily interfere. In John K. John v. Tom Varghese (2007) 12 SCC 714, the Supreme Court held that the High Court was entitled to take notice of the conduct of the parties and draw its own conclusion. If, upon analysis of the evidence brought on record by the parties, a finding of fact has been arrived at that the cheque had not been issued by the respondent in discharge of any debt, it could not be said to be perverse. 7. As against the above judgments relied upon for the respondent-accused person, the appellant-complainant relied upon Three-Judge bench decision of the Supreme Court in Hiten P. Dalal v. Bratindranath Banerjee (2001) 6 SCC 16, for the proposition that it is obliga ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e holder of cheque in due course, would amount to material alteration rendering the instrument void. When date was put by payee or drawer, on the cheque, presumptions under Section 118 of the Act would arise; and the burden would be on the drawer of the cheque to establish that the payee had no authority to put the date and encash the cheque. 8. The plain and simple statutory language of the age-old law, as applied in myriad different factual situations, would clearly indicate that bills of exchange in general and cheques in particular represent money with the characteristics of contract in the form of either an order or a promise to pay money. The paper on which it is written possesses the quality of being negotiable. The Negotiable Instruments Act in most respects is a modification of the Common Law on the subject and its provisions are in many respects declaratory of the Common Law. The Law Commission of India has, in its report dated 26.9.1958, suggested re-arrangement of the sections as the Act is defective in some respects. There are ambiguous provisions relating to the right of recourse of the holder against the drawer on dishonour and omission to deal with the effect of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ments intended for free circulation like cash, the Law Merchant lays down restrictions as to the defence of want of consideration. If a negotiable instrument is made, drawn, accepted, indorsed or transferred without consideration or for a consideration which fails, it creates no obligation between the parties to the transaction. Partial absence or partial failure of consideration consisting of money stands on the same footing as its total absence or failure. Hence, the payee is not entitled to recover to the extent to which the consideration has failed or is absent, but in case of partial absence or failure of consideration not consisting of money, such part of the consideration must be ascertainable in money without collateral inquiry; otherwise it will not bar the recovery of the whole amount. The general rules of evidence relating to negotiable instruments are those contained in the Indian Evidence Act, but some special presumptions arising out of the peculiar incidents attached to negotiable instrument are set out in the Act. 9. The presumption under Section 139 is mandatory but rebuttable by proof of facts contrary to the receipt of cheque for discharge of any debt or other ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... being legally enforceable, it would be found that once a debt or other liability is presumed and not properly rebutted, it would be legally enforceable, unless and until it is shown to be legally unenforceable. Such scheme of the provisions of law clearly indicates the object of serving the purpose of realization of the promise apparently contained in a negotiable instrument, which is that the amount for payment of which the bill of exchange was intended to be made will be paid to the payee or the holder in due course. 9.1 Any material alteration of a negotiable instrument, however, renders it void as against any one who is a party thereto at the time of making such alteration and does not consent thereto, unless the alteration was made in order to carry out the common intention of the original parties. The provision to that effect contained in Section 87 has to be read in harmony with Section 20 which permits and authorizes the holder of a negotiable instrument to complete the instrument for any amount and renders the drawer liable to the holder in due course to the extent of the amount intended by the drawer to be paid under such instrument. It is clear from plain reading of p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bove construction of the relevant provisions in light of the overall scheme of the Act, it would appear that, in the facts of the present case, whether the amount in the cheque in question was not mentioned at the time of drawing it and whether it was filled up afterwards by the payee becomes immaterial and pales into insignificance. Therefore, the sole issue requiring consideration in this appeal is as to whether the cheque was drawn, delivered and received for payment of any amount to the payee for the discharge, in whole or in part, of any legally enforceable debt or other liability. As seen earlier, the complainant, appellant herein, had proved by oral and documentary evidence that there was sale of goods worth ₹ 1,48,668/- as per the invoice dated 05.7.2003 containing conditions stipulating return of goods within seven days and payment of interest @ 24% per annum after due date and the statement of accounts for the financial years 2002-2003 and 2003-2004 and debit notes proved the debt. Thus, as against the proof of total debit balance and liability of the cheque amount, the respondent-accused person had only disputed liability by stating and proving that the goods sold ..... X X X X Extracts X X X X X X X X Extracts X X X X
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