SC: Drawer who signs a Cheque & Hands it Over to Payee, is Presumed to be Liable

In, Oriental Bank of Commerce vs Prabodh Kumar Tewari, SC held that, The presumption which arises on the signing of the cheque cannot be rebutted merely by the report of a hand-writing expert. Even if the details in the cheque have not been filled up by drawer but by another person, this is not relevant to the defense whether cheque was issued towards payment of a debt or in discharge of a liability.
 

Facts

The appellant is the complainant in proceedings under Section 138 of the Negotiable Instruments Act 1881. He seeks to question the order of a Single Judge by which the respondents were permitted to engage a hand-writing expert to seek an opinion on whether “the authorship on the questioned writings” (the disputed cheque) can be attributed to the respondents. The respondent admits that he signed and handed over a cheque to the appellant. According to the respondent a signed blank cheque was handed over by him.

In the Present Appeal, The question which arises is whether the High Court was correct in permitting the respondent to engage a hand-writing expert to determine whether the details that were filled in the cheque were in the hand of the respondent.

Appellant: During the course of the hearing, it is not in dispute that the first respondent has admitted to having signed the cheque.

That even assuming, as the first respondent submits, that the details in the cheque were not filled in by the drawer, this would not make any difference to the liability of the drawer.

Court Observation

The Single Bench of Supreme Court of India, While noting the statutory provisions observed that, In, Bir Singh vs Mukesh Kumar, (2019) 4 SCC 197 after discussing the settled line of precedent of this Court on this issue, a two-Judge Bench held: It is immaterial that the cheque may have been filled in by any person other than the drawer, if the cheque is duly signed by the drawer.

Further after considering the several judicial precedents, SC observed that, A drawer who signs a cheque and hands it over to the payee, is presumed to be liable unless the drawer adduces evidence to rebut the presumption that the cheque has been issued towards payment of a debt or in discharge of a liability. The presumption arises under Section 139.

Court Judgment

The Supreme Court while setting aside the order of HC has held that; For the reasons set out below, this appeal allowed against the order of the High Court for the reason that Section 139 of the NI Act raises a presumption that a drawer handing over a cheque signed by him is liable unless it is proved by adducing evidence at the trial that the cheque was not in discharge of a debt or liability. The evidence of a hand-writing expert on whether the respondent had filled in the details in the cheque would be immaterial to determining the purpose for which the cheque was handed over.

Therefore, no purpose is served by allowing the application for adducing the evidence of the hand-writing expert.

Case: Oriental Bank of Commerce vs Prabodh Kumar Tewari
Citation: Criminal Appeal No 1260 of 2022

Bench: Hon’ble Dr Justice Dhananjaya Y Chandrachud

Decided on: 16^thAugust, 2022.

Read Judgment @Latestlaws.com

Cheques Dishonored Due To Stop Payment, Account Closed & Signature Mismatch, All Fall Within Ambit Of S.138 NI Act: J&K&L High Court

The Jammu and Kashmir and Ladakh High Court recently reiterated that the provisions contained in Section 138 of the NI Act must be interpreted in a liberal manner so as to achieve the object for which the said provision has been enacted.

Not only the cases of dishonour of cheques on account of insufficiency of funds or on account of exceeding of arrangement but the cases involving dishonour of cheques on account of "stop payment", "account closed" and "Signature Mismatch" also fall within the ambit of offence under the aforesaid provision, the bench underscored.

bench of Justice Sanjay Dhar was hearing a plea through the medium of which the petitioner had challenged the complaint filed by the respondent against him for offence under Section 138 of Negotiable Instruments Act pending before the Court of Judicial Magistrate, Srinagar, which issued process against the petitioner.

The petitioner had primarily challenged the complaint on the ground that the dishonour of cheque was due to difference in drawer's signatures and, as such, offence under Section 138 of NI Act is not made out against the petitioner

Deciding the matter of controversy the bench observed that at first blush, it appears that it is only in two situations that Section 138 of the NI Act is attracted, firstly when there are insufficient funds available in the bank account of the person who is drawing the cheque and secondly where it exceeds the arrangement. However, the provision has been interpreted by the Supreme Court in a number of judgments in a manner so as to include within its ambit even the cases where the dishonour of cheque has taken place for the reasons other than the aforesaid two reasons, the bench recorded.

Examining the Apex court precedents on the subject the bench noted that the SC has in Kanwar Singh vs Delhi Administration, AIR 1965 SC 871 and State of Tamil Nadu Vs. M. K. Kandaswami and Others 1974(4) clearly stated that while interpreting a penal provision which is also remedial in nature a construction that would defeat its purpose or have the effect of scrapping it from the statute book, should be avoided and that if more than one constructions are possible, the Court should choose to adopt construction that would preserve the workability and efficacy of the Statute and avoid an interpretation that would render the provision sterile. The Apex court in the matter had accordingly held that when a cheque is returned by the banker of a drawer with the comments "account closed" the same would constitute an offence under Section 138 of NI Act, Justice Dhar recorded.

Dealing with the contention that the dishonour of cheque was due to difference in drawer's signatures and, as such, offence under Section 138 of NI Act is not made out, the bench found it worthwhile to record the observations of SC in Laxmi Dyechem vs. State of Gujarat and others, (2012) wherein SC while dealing with a case in which the cheques were dishonoured by the bank on the ground that drawer's signatures were incomplete and that no image was found or that the signatures did not match, came to the conclusion that criminal prosecution against the accused in such cases should be allowed to proceed and the judgment and orders passed by the High Court quashing the criminal proceedings were set aside.

For the foregoing reasons, the bench found the petition to be devoid of merit and accordingly dismissed it. Interim order was vacated and trial Magistrate was directed to proceed further in the matter in accordance with law.

Case Title: Mohammad Shafi Wani Vs Noor Mohammad Khan

Citation: 2022 LiveLaw (JKL) 111

The High Court of Madhya Pradesh recently held that the Complainant in a case under the Negotiable Instruments Act can amend/modify his complaint. Regarding the stage and the extent to which such modifications can be allowed, the Court opined that a simple infirmity, not causing any prejudice to the accused may be allowed at any stage.

The bench comprising of Justice D.K. Paliwal observed-

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Home > News Updates > CrPC Does Not Bar...

CrPC Does Not Bar Amendment Of Complaint, Court May Allow Such Request If No Prejudice Is Caused To Other Side: Madhya Pradesh HC

By - Zeeshan Thomas

Update: 2022-08-18 07:52 GMT

Madhya Pradesh High Court- Principal Seat at Jabalpur

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The High Court of Madhya Pradesh recently held that the Complainant in a case under the Negotiable Instruments Act can amend/modify his complaint. Regarding the stage and the extent to which such modifications can be allowed, the Court opined that a simple infirmity, not causing any prejudice to the accused may be allowed at any stage.

The bench comprising of Justice D.K. Paliwal observed-

It is undisputed that there is no specific provision in the Code of Criminal Procedure dealing with the amendment of the complainant. At the same time, there is also no bar under the Cr.P.C against permitting a complainant to amend his complaint.…in wake of above discussion, it is apparent that Courts below have not committed any error in passing the impugned orders as amendment sought to be made by complainant relates to mere curing a simple infirmity, which has resulted in no prejudice to the accused and same may be allowed by the Court at any stage of the proceedings as the same does not change the nature of the complaint and is mean to cure the curable defects.

The facts of the case were that the Respondent/Complainant had filed a complaint case under Section 138 N.I. Act before the lower court. However, he wrongly mentioned the bank's name as PNB instead of HDFC Bank. He then moved an application to amend his complaint to change the name of the bank. The lower court allowed his application for amendment. A revision against this order was dismissed. Hence, the Applicant-accused moved the instant petition under Section 482 CrPC.