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TMI Blog2008 (10) TMI 725X X X X Extracts X X X X X X X X Extracts X X X X ..... nce the said balance amount was not paid, the appellant presented the cheque through the Central Bank of India, Kottayam on 30.11.1999 for collection. But the cheque was returned dishonoured for insufficiency of funds in the account of the accused with the Lord Krishna Bank, Alappuzha branch. The appellant caused to issue a lawyer notice on 7.12.1999 to the 1st respondent accused, informing him of the dishonour of the cheque and also demanding payment of the balance amount due to him. The notice was returned unclaimed. So, the appellant preferred a complaint before the Chief Judicial Magistrate's Court under Section 138 of the Act. On summons, the accused appeared and pleaded not guilty, when the particulars of the offence alleged against him were read over to him. So, from the side of the complainant, he and another were examined as PWs. 1 and 2 and Exs. P1 to P9 were marked. The accused was questioned under Section 313 Cr.P.C. He denied the circumstances against him, which appeared in the evidence of the complainant and which were put to him. No witness was examined from his side. During the cross-examination of PW 1, suggestions were made to the effect that what was issued w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... collection, claiming the entire amount shown in it. When the cheque was dishonoured, a lawyer notice was caused to be sent to the accused only for the balance amount. The accused failed to repay the amount demanded. The point that arises for decision is whether on the facts, the accused has committed the offence under Section 138 of the Act. 6. The learned counsel for the appellant Sri Sabu George relied on the decisions of this Court in R. Gopikuttan Pillai v. Sankara Narayanan Nair Cri. A. No. 270/1997, and Thekken Co. v. Anitha 2003(3) KLT 870. The learned counsel further submitted that upon receipt of notice, the accused should have paid the balance amount due under the cheque to escape from the offence under Section 138 of the Act. If the contention of the 1st respondent is accepted, any drawer of the cheque can pay some amount to the drawee and escape from the liability under Section 138. The purpose of the amendment introduced to the Negotiable Instruments Act, in making the dishonour of a cheque an offence is certain circumstances, is to maintain transparency in commercial transactions and also to sustain the credibility of transactions by cheques. So, an interpretat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to any person, so as to constitute that person the holder thereof, the instrument is said to be negotiated . Section 15 defines endorsement as follows: When the maker or holder or a negotiable instrument signs the same, otherwise than as such maker, for the purpose of negotiation, on the back or face thereof or on a slip of paper annexed thereto, or so signs for the same purpose a stamped paper intended to be completed as a negotiable instrument, he is said to indorse the same, and is called the 'endorser . (Emphasis supplied) The above Section envisages any number of endorsements on the reverse of the cheque and if there is not sufficient space to make further endorsements, a slip of paper can be annexed to it, to get over the said difficulty. Section 56 of the Act, which is very relevant in this case, reads as follows: Endorsement for part of sum due- No writing on a negotiable instrument is valid for the purpose of negotiation if such writing purports to transfer only a part of the amount appearing to be due on the instrument; but where such amount has been partly paid a note to that effect may be indorsed on the instrument, which may then be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or other liability. (Emphasis supplied) Going by the above provision, a cheque must be for payment of any amount of money to another person for discharging in whole or in part of any debt or other liability. In this case, once part payment was received, the cheque no longer was one for payment of money for discharging in whole or in part of any debt or other liability. In fact, the amount covered by the cheque was admittedly larger than the amount of debt or liability. The whole amount of debt or liability was lesser than the amount represented by the cheque. So, if the cheque for such an amount was dishonoured, the same will not be an offence under Section 138 of the Act. Normally a penal law has to be interpreted strictly. If there is any vagueness in the law, the benefit of the same should go to the accused. The Apex Court in NEPC Nicon Ltd. v. Naguma Leasing Ltd. (supra) and M/s. Dalmia Cement (Bharat) Ltd. v. M/s. Galaxy Traders and Agencies Ltd. (supra) has not stated anything against the above general principle. What was stated in the facts of those cases was that though Section 138 is a penal statute, the Court should interpret it, taking into account the legislat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... que, even in such a case where the amount available in the account is sufficient to cover the outstanding liability but not sufficient to cover the entire amount liable to be paid under the cheque, would be for want of sufficient funds. As the drawer can, as indicated earlier, avoid culpable liability by proving discharge under proviso (c) of the entire amount (including the payments made prior to the dishonour of the cheque), this interpretation is not likely to result in any failure/miscarriage of justice. If the honouring of the cheque for the entire amount by the bank were to result in any excess payments being made, civil remedy to claim return of the amount would be available to the drawer. If the purpose of Section 138 of the Negotiable Instruments Act is to ensure that the cheque transaction has as much credibility as a cash transaction, the interpretation that partial discharge of liability under the cheque prior to presentation of the cheque for encashment would extinguish the remedy under Section 138 of the Negotiable Instruments Act for a payee must certainly be avoided. Such a myopic interpretation would not advance the purpose and object of this legislation which a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed. 10. In R. Gopikuttan Pillai's case (supra), we notice that by interpreting Section 138, it has been made vague. Its injunctions were made wider. Based on that interpretation, the commissions/omissions of the accused have been made the basis of an offence. In view of Section 56, the appellant could have claimed only the balance amount. Towards the amount due under a cheque, if some amount is received, the same has to be endorsed on the reverse of the cheque. The law of banking contemplates several such endorsements and if there is no space for making any endorsement on the reverse of the cheque, it may be made on a slip of paper annexed thereto, which is called along in banking circles. In Bhashyam Adiga's Negotiable Instruments Act (18th Edition revised by Justice Ranganath Misra) allonge is described as follows: Allonge-The signature to operate a negotiation must be written on the instrument itself, for, an assignment in writing not on the instrument itself is not an endorsement. But it may sometimes happen that by rapid circulation, the back of the paper is completely covered by inducements, then the holder may tack onto or paste a piece of paper and the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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