Ramsingh Amarsingh and others vs Kandasamy Textiles

Pratap Singh, J.—The accused in C.C. No. 24 of 1993 on the file of the Chief Judicial Magistrate, Salem, have filed this petition u/s 482 of

the Criminal Procedure Code, 1973, praying to call for the records in the said proceedings and quash the same.

The short facts are : The respondent has filed a private complaint against the accused/petitioners for an offence u/s 138 of the Negotiable

Instruments Act, 1881 (which I shall hereafter refer to as ""the Act""). The allegations in it are briefly as follows : The first accused is a partnership

firm in which accused Nos. 2 to 5 are partners and they are jointly looking after the affairs of the first accused firm. Accused Nos. 2 to 5 wanted

to have a loan facility with the complainant. So, they jointly executed a letter on May 19, 1992, in favour of the complainant agreeing to bind

themselves jointly and severally for any of the borrowings to be made by them from the complainant. In pursuance of the said guarantee letter, on

September 1, 1992, the second accused representing others, discounted their firm cheque drawn in favour of the complainant under cheque dated

September 24, 1992, for Rs. 1,00,000 and received the value of the cheque. The second accused has also executed a cheque discount form on

September 1, 1992, itself and paid cheque discount commission charges of Rs. 1,250. The second accused has discounted the abovesaid cheque

on their firm by representing the firm and its partners. Only on his assurance and the belief that all the accused will see that the cheque is honoured

as assured by them all the complainants paid the value of the cheque by way of a separate current self-cheque of the complainant. On September

24, 1992, accused Nos. 2 and 3 requested the complainant not to present the cheque on September 24, 1992, and instructed to present it during

the last week of November, 1992. The complainant presented the cheque on November 26, 1992, for collection. It was returned for the reason

funds insufficient"", along with the memo dated November 26, 1992. The complainant received back the cheque on November 27, 1992, and

issued statutory notice to the accused on December 8, 1992. All the accused had received the said notice. They have failed to pay the value of the

cheque within 15 days from the date of receipt of the notice. Hence, the complaint.

Mr. K. Sengottaiyan, learned counsel appearing for the petitioner, would submit that the cheque was not issued for the discharge of a legally

enforceable debt or liability, but was issued for getting a loan and so, dishonour of such a cheque for the reason ""funds insufficient"" cannot give rise

to an offence u/s 138 of the Act. Per contra, Mr. Munirathnam, learned counsel appearing for the respondent, would submit that the cheque was

dated September 24, 1992, and on that date, there was a liability payable by the accused to the complainant and so, it must be taken that the

cheque was issued for the discharge of a legally enforceable debt or liability and that would bring the case within the purview of section 138 of the

Act. He would add that the cheque was issued only towards the amount received by the accused and so it was a cheque issued for the discharge

of a legally enforceable debt and hence looking at the case from any angle, it can form the basis for an offence u/s 138 of the Act.

I have carefully considered the submissions made by the rival counsel. To consider the said submissions, paragraphs 4 and 5 of the complaint

need extraction and they read as follows :

In pursuance of the said guarantee letter, apart from other transactions, on September 1, 1992, the second accused representing the others,

discounted their firm cheque drawn in favour of the complainant, under cheque dated September 24, 1992, for Rs. 1,00,000 (rupees one lakh

only) bearing cheque No. 651767 to be drawn on City Union Bank Limited, Salem-1, and received the value of the cheque. The second accused

has also executed a cheque discount form on September 1, 1992, itself and paid a cheque discount commission charges of Rs. 1,250.

The second accused has discounted the above cheque of their firm by representing the firm and its partners, assuring to honour the cheque, on

the date mentioned therein. Only on his assurance and the belief that all the accused will see that the cheque is honoured, as assured by them all,

the complainant paid the value of the cheque, by way of a separate current self-cheque of the complainant. Hence, the subject cheque was issued

by the accused to the complainant, towards the amount due to be paid to the complainant.

From the above allegations made in the complaint, it is seen that the cheque was issued on September 1, 1992, but it was dated September 24,

1992. It would assume the character of a cheque only on September 24, 1992. On this date, for this cheque, the accused had received the

amount. Though the cheque was issued on September 1, 1992, it would be only a ""bill of exchange"" till September 24, 1992, the date which the

cheque bears. Technically, only on September 24, 1992, it becomes a ""cheque"". From that date, it was cheque for which money was received by

the accused already. So, it is to be construed that it was issued for the discharge of a legally enforceable debt. In this regard, I am fortified by the

ruling of the apex court in Anil Kumar Sawhney v. Gulshan Rai [1993] LW (Cri.) 641; [1994] 79 Comp Cas 150. The apex court has held as

follows :

An offence to be made out under the substantive provisions of section 138 of the Act it is mandatory that the cheque is presented to the bank

within a period of six months from the date on which it is drawn or within the period of its validity, whichever is earlier. It is the cheque drawn

which has to be presented to the bank within the period specified therein. When a post-dated cheque is written or drawn, it is only a bill of

exchange and as such the provisions of section 138(a) are not applicable to the said instrument. The post-dated cheque becomes a cheque under

the Act on the date which is written on the said cheque and the six months period has to be reckoned for the purposes of section 138(a) from the

said date. One of the main ingredients of the offence u/s 138 of the Act is the return of the cheque by the bank unpaid. Till the time the cheque is

returned by the bank unpaid, no offence u/s 138 is made out. A post-dated cheque cannot be presented before the bank, and as such the question

of its return would not arise. It is only when the post-dated cheque becomes a ''cheque'', with effect from the date shown on the face of the said

cheque, the provisions of section 138 come into play. The net result is that a post-dated cheque remains a bill of exchange till the date written on it.

With effect from the date shown on the face of the said cheque, it becomes a ''cheque'' under the Act and the provisions of section 138(a) would

squarely be attracted. In the present case, the post-dated cheques were drawn in March, 1990, but they became ''cheques'' in the year 1991, on

the dates shown therein. The period of six months, therefore, has to be reckoned from the dates mentioned on the face of the cheques.

Taking that view of the matter, I am unable to accept the submission made by Mr. K. Sengottaiyan that the cheque was not issued for the

discharge of a legally enforceable debt or liability.

In view of the above, the petition fails and shall stand dismissed.