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TMI Blog2006 (9) TMI 619X X X X Extracts X X X X X X X X Extracts X X X X ..... used did not adduce any defence evidence - oral or documentary. In Ext. P8 reply notice and in the course of the trial, the accused took up a fairly definite and specific stand. Transaction between the parties was admitted. Handing over of both cheques after they were duly filled up was also admitted. But the accused took up a contention that the real transaction was for an amount of Rs. 2 lakhs only. He pleaded that though the transaction was for Rs. 2 lakhs he was constrained to hand over Ext. P1 cheque for Rs. 2.5 lakhs. According to him, subsequently he-had paid interest every month at the rate of Rs. 6,000/- p.m. Admittedly such payment was not continued and there was default in payment of interest. It is thereupon that the second cheque. Ext. P2, for an amount of Rs. 1.6 lakhs was allegedly issued by the petitioner to the complainant. In short, the petitioner contended that the initial transaction was not for Rs. 2.5 lakhs. He further contended that the cheque for Rs. 1.6 lakhs though admittedly issued, the complainant was not entitled to receive such an excessive amount by way of interest. 4. The Courts below, in these circumstances, concurrently came to the conclusion th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... very clear in paragraph 15, which I extract below: For the purpose of the present case, it does not appear to be necessary to go into this matter (i.e. the validity of the acknowledgment under Section 18 of the Limitation Act) in detail. It may, however, be mentioned that under Section 25(3), a promise can be made even in a case where the limitation for recovery of the amount has already expired. Such a promise has to be in writing. It can be in the form of a cheque. When, a cheque is delivered to the payee, the person is entitled to present the cheque to the bank and seek payment. In such an event, if the cheque is dishonoured, the liability under Section 138 would arise. It would not be permissible for the accused to contend that the liability was not legally enforceable. The foundation of that decision is certainly not on the alleged erroneous assumption that a cheque issued even after the period of limitation constitutes a valid acknowledgment under Section 18. If I have understood the rationale correctly, it is that Section 138 of the N.I. Act can apply only to a cheque drawn. Drawal of the cheque includes the acts of writing the cheque, signing the same and issue (deliv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . 10. The second contention raised is that the presumption under Section 139 cannot be raised again when such cheque is issued for the discharge of the liability under a promissory note. The short argument is that a presumption under Section 118 can be drawn in respect of a promissory note when the liability under that promissory note is sought to be enforced. There cannot be a drawal of a further presumption. I find no principle, statutory provision or precedent to support this argument. When the cheque is issued for the due discharge of a liability under the promissory note, I can find nothing which can detract against the presumption under Sections 118 and 139 of the N.I. Act in respect of that cheque notwithstanding the fact that a presumption under Section 118 could have been raised if the liability under the promissory note were sought to be enforced. It is not necessary for me in this revision petition to consider the question whether after the issue of the cheque for discharge of the liability, presumption under Section 118 can still be drawn in respect of the promissory note. I express no opinion on that question as it is not germane for consideration of the dispute bef ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e instrument. That presumption can be availed by anyone who requires and needs the advantage of the said presumption if he is otherwise entitled to invoke the same. It would therefore be incorrect in law to limit the presumption under Section 118(a) only to a payee and not to a holder. 13. I must also note that in a prosecution under Section 138 of the N.I. Act the presumption under Section 118(a) is not sufficient or adequate for a complainant. Under Section 118, a presumption of consideration is drawn against the maker of the drawer of the cheque. Under Section 138 it is not enough if there is a presumption of consideration. Consideration of a particular variety must be shown to exist, i.e. that the consideration was the discharge of a legally enforceable debt/liability. It would hence be incorrect to build up any argument from the premise that the presumption under Section 118(a) will be available only to the payee or that such presumption is sufficient for the payee to see him through in a prosecution under Section 138. In a prosecution under Section 138, where the presumption under Section 139 can be drawn it is superfluous and unnecessary to draw or bank on the presumption ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f both these expressions cannot at all enable the Court to distinguish between the holder and payee, insofar as availability of the presumption under Section 139 of the Act is concerned, which is the crucial argument advanced by the learned Counsel for the petitioner. 15. It will not be inapposite in this context again to refer to the aspect that under Section 138 only the drawer of the cheque is made liable. It is crucial that a payee or an endorser is not made liable under Section 138 of the Act for any dishonour of the cheque which he has endorsed or negotiated. The presumption which is required for a successful prosecution under Section 138 is hence only a presumption against the drawer and that the drawal was made only for the discharge of a legally enforceable debt/liability. In these circumstances, considering the purpose of Section 138 it cannot be assumed that it was intended to distinguish between the holder and the payee in so far as the presumption under Section 139 is concerned. 16. We now come to the definition of the expression 'payee' and 'holder' in Sections 7 and 8 of the N.I. Act. I extract the expressions 'payee' and 'holder' ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... itled in his own name' does not require or insist that the name of the holder must be there in the instrument. The crucial ingredient is 'entitlement for possession in his own name' and not the availability of his name in the instrument. A bearer, whose name is not shown in the cheque, will still be a holder if he has title to the cheque, i.e. if he is entitled to receive the amount under a cheque, i.e. if the cheque has come into his hand on proper negotiation. If he is a thief or the possessor of a lost instrument he will not be entitled to possess the same in his own name. 21. So far as the second ingredient is concerned, the counsel builds up an argument that in order to be the holder, the person claiming to be a holder must be entitled to receive and recover the amount due thereon from the parties thereto. Who are the parties to a cheque? Definitely the drawer of the cheque, i.e. the account holder and the drawee of the cheque i.e. the bank, are the primary parties to the cheque. The cheque is a bill of exchange, under which the drawer orders the drawee to pay the amount to the 'payee', 'the payee or order', 'the payee or bearer' or the b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... have been adverted to by the Law Commission. The Law Commission has recommended a definition which would obviate the difficulty created by the unsatisfactory, clumsy and cumbersome definition of holder in Section 8. Of course the suggested amendments have not so far been incorporated in the Act. What is important is that the Law Commission had hastened to observe that: the changes introduced do not seek to alter the law but to obviate the conflict of judicial opinions and the criticism of commentators which the existing definition has given rise to. 25. Commenatries by Bhashyam and Adiga on the N. I. Act and Dr. P.W. Rege in the A.I.R. Publication on Law of Negotiable Instruments also take note of this unhappy and unsatisfactory definition of the expression 'holder' in Section 8. To disabuse the unnecessary confusion the Law Commission went on to suggest a definition for the expression holder as follows: holder means the payee or indorsee of an instrument who is in possession of the instrument or the bearer thereof, but does not include a beneficial owner claiming through a benamidar. 26. The said definition, which the Law Commission stated, was not an alte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... discharge the maker or the acceptor of the liability under the instrument. Section 78 : To whom payment should be made:- Subject to the provisions of Section 82, Clause (C), payment of the amount due on a promissory note, bill of exchange or cheque must in order to discharge the maker or acceptor, be made to the holder of the instrument. If we were to take the view that the payee would not be the holder, though the cheque is shown to be payable to him, he will not be able to realise the amount from the drawer of the cheque. Thus from all indications available, from principles, precedents and statutory provisions, the conclusion is inescapable that the holder includes the payee also. 31. It will be proper in this context to refer to the purpose of the presumption under Section 139. The presumption enures to the benefit of the holder. He has to prove that he is the holder and once it is shown that he is the holder, he becomes the holder in due course by the presumption under Section 118(g). A person who has only possession and not entitlement will certainly be not a holder to satisfy the definition under Section 8. Whatever be the law in the United Kingdom under the Bills of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s, satisfied that the verdict of guilty and conviction are absolutely justified and do not warrant interference at all. The challenge on merits fails. 37. The learned Counsel for the petitioner then contends that leniency may be shown on the question of sentence. The counsel points out that there is a dispute as to whether the principal amount payable was Rs. 2,50,000/- or only Rs. 2 lakhs. He further contends that though handing over of the second cheque for Rs. 1.60 lakhs as amount allegedly payable towards interest is not disputed, it would not be proper or correct to direct payment of the entire amount by invoking the powers under Section 357(3), Cr. P.C. The counsel further submits that in fact a civil suit has already been filed claiming the amount due under the promissory note as also under these two cheques on the basis of the original consideration, to discharge which all these instruments were executed. The counsel prays that, at any rate there may be no deterrent substantive sentence of imprisonment imposed on the petitioner. 38. I have considered all the relevant inputs. I find merit in the prayer for leniency, 'have already adverted to the principles bverning ..... X X X X Extracts X X X X X X X X Extracts X X X X
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