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TMI Blog2017 (4) TMI 1568X X X X Extracts X X X X X X X X Extracts X X X X ..... the title of the person from whom he derived his title. The gist ingredient of the concept holder in due course is that holder in due course is a person who becomes possessor of instrument-the cheque etc., and that he becomes such possessor and possession thereof for a consideration, leaving the other conditions mentioned in the provisions standing satisfied - it would not be right to simply say that every possessor of a promissory note or cheque or bill of exchange is a holder in due course. What is trite is that he must be one who is the possessor of the instrument for a consideration. It is not the holder of the cheque but the holder in due course of the cheque who acquires a legal competence and locus standi in law to base an action on the basis of returned cheque. The legal connotation holder in due course has twin important essentials to carry. A person in order to become a holder in due course within the meaning of Section 9 of the Act must be in possession of a promissory note, bill of exchange or cheque, as is in the present case; at the same time, mere becoming possessor of the cheque etc., would not suffice. A person to the possessor of the instrument has to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ; whether she can be a competent complainant to lodge complaint under Section 138 of the Negotiable Instruments Act, 1882; who can be said to be the holder in due course -are the questions arising for considerations. 3. The facts are few. The petitioner herein and one late Rajeshkumar Motibhai Thakkar are the brothers. The said Rajeshkumar happens to be the husband of respondent No.2 herein. The two brothers took up a contract to work for one Relcon Infra Project. For the said purpose, a joint bank account was got opened with the Indian Bank, Palanpur Branch in the name of petitioner-Jyotindra Thakkar as well as his brother Rajeshkumar Thakkar. It is the case that there was an understanding between two brothers that the labour work for the said company Relcon would be carried out in the name of the petitioner, since Rajeshkumar was the employee of said Relcon. It is the further case that earnings from the labour work was to be deposited in the joint bank account. 3.1 The petitioner gave a post dated cheque dated 14th February, 2012 in the month of December, 2011 named in favourof the brother. The brother of the petitioner Rajeshkumar died on 18th March, 2012. Respondent No.2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of this Court in Ramesh Manibhai Patel v State of Gujarat [2012(2) GLR 1257]. In that case, speaking on the locus standi to file a complaint for dishonour of cheque, this Court held that all joint holder of account cannot file a complaint of dishonor of cheque as joint holders cannot be termed as payee or holder in due course . 4.1 Paragraph 6.5 of the said decision in Ramesh M. Patel (supra) was relied on to submit that the Court did not express anything whether upon death of holder of the cheque is heir or legal representative without obtaining any succession certificate or probate and file a complaint, reading as under. Now, so far as the decision of the Madhya Pradesh High Court in the case of Champalal Gajanand (supra) relied upon by the learned Advocate appearing on behalf of the original complainant is concerned, the same shall also not be applicable to the facts of the present case. In the case before the Madhya Pradesh High Court, the dispute raised was whether if a holder named is dead, his heirs become entitled to sue for recovery of loan evidenced by promissory note. It was not the case with respect to filing of the complaint under Sec. 138 of the N. I. Act. I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he following authorities viz. (i)2005 (1) DCR 323 in Ashok Kumar v K.Gunasekaran (ii) 2006 (2) TNLR 693 (Mad) in Mukesh Chandra Guptha v. Anu Kumar Jain, wherein the issue involved is directly dealt with. In the cases above cited, the complaint is filed by the person claiming himself as holder in due course whereas endorsement found in the cheque was blank endorsement and the original lender was not examined as witness on the side of complainant and under such circumstances, our High Court is of the view that holder in due course means any person who for consideration became the possessor of a promissory note and when the consideration for passing of the cheque is not satisfactorily proved, the presumption that the other person is holder of cheque in due course cannot be drawn in favour of the complainant. The same view is also expressed by Andhrapradesh High Court in the judgment reported in 2005(1) Bankmann 452 in M.Ethirajulu v. Rangam Adinarayana and others. The Andhrapradesh High Court expressed similar view on the basis of law laid down by our Apex Court in the judgment reported in (1991) 1 SC 113 in U Ponnappa Moothan Sons v. Catholic Syrian Bank Ltd that the definition m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ext of Section 118(g) that plaintiff had discharged necessary burden to the extent on him and it proved that he was a holder in due course for valid consideration. Therefore it was held that he could validly maintain an action against the defendant in such capacity. 4.5 Learned advocate for respondent No.2 in the next relied on decision of Karnataka High Court in Smt.Bhagava v Shri Kadasiddeshwara Trading [ILR 2004 KAR 367], in which the Karnataka High Court took a view that on the death of payee, his legal heirs would step into shoe of payee for all practical purposes and such person can also file and prosecute complaint after completing legal formalities. It was held that it would be incumbent upon the complainant to prove that the complainant was the legal representative of the deceased payee, in the event of the accused disputing the same. In that case, payee had died and the wife of the payee as a legal heir had presented the cheque in question and the cheque being dishonoured, after issuance of legal notice, proceedings had been initiated under Section 138 of the N.I. Act. The facts were akin to the present one, submitted learned advocate for respondent No.2 herein. 5. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... holder in due course , meaning of which bears relevance to the controversy, means any person who for consideration become the possessor of a promissory note, bill of exchange or cheque, if payable to the bearer or the payee or endorsee thereof if payable to order before the amount mentioned in it becomes payable, and without having sufficient cause to believe that any defect existed in the title of the person from whom he derived his title. 5.3 The gist ingredient of the concept holder in due course is that holder in due course is a person who becomes possessor of instrument-the cheque etc., and that he becomes such possessor and possession thereof for a consideration, leaving the other conditions mentioned in the provisions standing satisfied. Thus, it would not be right to simply say that every possessor of a promissory note or cheque or bill of exchange is a holder in due course. What is trite is that he must be one who is the possessor of the instrument for a consideration. It is not the holder of the cheque but the holder in due course of the cheque who acquires a legal competence and locus standi in law to base an action on the basis of returned cheque. 5.4 Whi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ue course of cheque dies prior to that. If such payee or holder in due course dies after expiration of time of payment mentioned in the notice required by Section 138 of the N.I. Act, but before filing of complaint, question would be whether sole heir or one of the heirs having authority of other heirs can file complaint and give verification on ground that by succession he/they have entered into shoes of deceased payee/holder in due course. Another contingency arises where payee/holder in due course dies before expiration of period of payment mentioned in the notice under Section 138 of the N.I. Act as is the case before us. Here, moot question is whether person claiming to be sole legal representative or one of the legal representatives can on payment of amount due under cheque, give valid discharge to drawer. If not, can it be said that by not making payment to such person, the drawer commits the offence. This requires detail analysis of position of law. (Para 24) 5.7.1 The Bombay High Court noted further, It may be noted that the cheque is a negotiable instrument and also a valuable security and thus forms part of the movable property of the deceased which can be inheri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... view aking to what is being held herein by this Court. In P.K. Koya (supra), the cheque was drawn in name of complainant's father. Subsequent to the death of the father, the complainant claiming capacity of executor of father's Will, filed complaint under Section 138 of the N.I. Act. It was held that when there was nothing to show that he paid any consideration to his father, such person cannot be termed as 'holder in due course' under Section 9 of the Act. 6. The law laid down by the Bombay High Court in Vishnupant (supra) is eminently correct view. The contention of learned advocate for respondent No.2 herein that respondent No.2 wife would automatically acquire the capacity in law to be competent to file complaint, would fall flat. Such proposition does not hold good to stand the touchstone of provision of Section 9 read with Section 142 of the Act. 6.1 The legal connotation holder in due course has twin important essentials to carry. A person in order to become a holder in due course within the meaning of Section 9 of the Act must be in possession of a promissory note, bill of exchange or cheque, as is in the present case; at the same time, mere becoming ..... X X X X Extracts X X X X X X X X Extracts X X X X
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