Bom HC | Does NI Act authorises a complainant to fill an incomplete cheque? Court discusses while reversing acquittal of accused under S. 138 NI Act

Bombay High Court: Vibha Kankanwadi, J., reversed the acquittal of the respondent-accused holding him guilty of having committed an offence under Section 138 (dishonour of cheque) of the Negotiable Instruments Act, 1881.

Facts on record

The complainant had come with a case wherein he stated he had friendly relations with the accused. Since the accused was in need of money to purchase immovable property, therefore he requested the complainant to extend the amount of Rs 15,00,000 and Rs 6,00,00 which was extended by the complainant.

In regard to the above legal enforceable debt or liability, two cheques were issued.

On depositing the above cheques, both were dishonoured for the reason “refer to drawer”.

In light of the above circumstances, the complainant filed two separate complaints and Magistrate on taking into consideration the above said facts, acquitted the accused.

In view of the above, the present appeal has been filed.

Advocate for the complainant relied on the decision of Vijay v. Laxman, 2013 STPL (DC) 679 SC, wherein it was held that:

“The burden of proving the consideration for dishonour of cheque is on the complainant, but the burden of proving that a cheque had not been issued for discharge of a legally enforceable debt or liability is on the accused. If he fails to discharge the said burden he is liable to be convicted.”

In view of the above decision, Complainant’s Counsel submitted that trial judge committed illegality and the decision was in view of the legal position and therefore the appeal deserved to be allowed.

Analysis, Law and Decision

Whether the complainant has discharged the initial burden to prove that he had advanced loan to the accused?

With regard to the amount of Rs 15,00,000, it was held that as regards the said amount, the complainant discharged the initial burden of proof that he has advanced loan to the accused.

In his statement under Section 313 of the CrPC, accused did not state that he was holding such account, on which the cheque was issued by the complainant and he did not specifically state that he had not received the amount through the said account.

Bench stated that the complainant had proved that it was legally enforceable debt or liability, which was to the extent of Rs 15,00,000 as against the accused.

As regards the other disputed cheque i.e. amount of Rs 6,00,000, complainant stated he had given the said amount by cash.

In this case, also it can be said that the complainant has discharged the initial burden of proof that he had advanced amount of Rs 6,00,000 as a loan to the accused.

In the instant case, the accused did not deny his signature on the disputed cheques. Though he came with a defence, as to how those cheques went into the possession of the complainant, but as aforesaid that defence is unbelievable.

Bench stated that even if for the sake of arguments we admit that the disputed cheques were blank cheques; yet, when accused admits his/her signatures on the disputed cheques, then the legal position on this point is also clear that the complainant would get an authority under Section 20 of Negotiable Instruments Act to complete the incomplete cheque.

When now the position stands that the complainant has discharged the initial burden, accused admits his signature on the disputed cheques; then presumption under Section 139 of the Negotiable Instruments Act definitely gets attracted in favour of the complainant.

The complainant was the ‘holder of cheques’ and therefore, was entitled to present the same for encashment. Both the cheques were dishonoured.

Statutory notices issued by the complainant were complied with, and therefore, Court held that the accused is guilty of committing the offence punishable under Section 138 of the Negotiable Instruments Act.

Magistrate did not scan the evidence properly with sound legal principles and therefore, interference of this Court was required.

Bench relied on the Supreme Court’s decision in Govindaraju v. State, (2012) 4 SCC 722, with regard to the powers of the Appellate Court, wherein it was observed that:

“The law is well-settled that an appeal against an order of acquittal is also an appeal under the Code of Criminal Procedure, 1973 and an appellate Court has every power to re-appreciate, review and reconsider the evidence before it, as a whole. It is no doubt true that there is presumption of innocence in favour of the accused and that presumption is reinforced by an order of acquittal recorded by the trial Court. But that is the end of the matter. It is for the Appellate Court to keep in view the relevant principles of law to re-appreciate and reweigh the evidence as a whole and to come to its own conclusion on such evidence, in consonance with the principles of criminal jurisprudence”.

Honest drawers’ interest who issue cheques is safeguarded in the Act itself.

In Dalmia Cement (Bharat) Ltd v. Galaxy Traders & Agencies Ltd., (2001) 6 SCC 463, the Supreme Court has explained the scope of offence under Section 138 of the NI Act.

In R. Vijayan v. Baby, (2012) 1 SCC 260, Supreme Court held that while awarding compensation in matters under Section 138 NI Act, interest can be awarded @9% p.a.

Court stated that in view of the above decisions, awarding jail sentence to the respondent/accused may not be in the interest of justice.

Bench also added to its decision that the appellant would also be interested in getting his amount back. Therefore, payment of compensation under Section 357 of the Code of Criminal Procedure to the complainant would be in the interest of justice.

The punishment that can be awarded for an offence under Section 138 of Negotiable Instruments Act is “ imprisonment for a term which may extend to two years, or with fine which may extend to twice the amount of the cheque, or both” (stress supplied by me).

Since the complaint was filed in 2013 after the statutory notice. The amount became due to complainant after the date of the notice.

Some amount needs to be given to complainant above the cheque amount towards interest.

Since the rate of interest in banks has gone down nowadays, and therefore, the said rate cannot be equal to the rate granted in R. Vijayan’s case.

After taking into consideration all the above pronouncements it would be in the interest of both the parties to impose fine of Rs 18,00,000 and Rs 8,00,000 in respective cases and to direct the amount of Rs 17,50,000 and Rs 7,50,000 to be paid to complainant as compensation under Section 357(1) of the Code of Criminal Procedure. Deposit time will not be extended. [Kiran Rameshlal Bhandari v. Narayan Purushottam Sarada, 2020 SCC OnLine Bom 3562, decided on 07-12-2020]


Advocates who appeared for the matter:

Shyam C. Arora, Advocate for the appellant
Amol Kakade, Advocate h/f C.D. Fernandes, Advocate for respondent

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