Sri Rengammal and Co. vs K. Veluchamy

This criminal Appeal has been directed against the judgment of acquittal by the learned VII Metropolitan Magistrate, George Town, Chennai-1,

dated 29.10.1999 in CC No.4699 of 1999.

The short facts which are relevant for the purpose of this appeal may be stated thus:

The respondent/accused approached the appellant /complainant for supply of cotton kappas on credit basis which were supplied to him during the

period 7.2.1997 to 6.6.1997. The amount payable in that respect is Rs.9,22,67,740, which is inclusive of interest at the rate of 18% per annum.

The respondent issued a cheque for Rs.6,63,324 in part payment of the goods supplied, which when presented by the appellant in the bank on

7.4.1999, was returned dishonoured with endorsement ""insufficient funds"". After issuing the statutory notice the appellant filed a complaint before

the VII Metropolitan Magistrate which was numbered as CC No.4699 of 1999. On trial, the VII Metropolitan Magistrate has acquitted the

respondent / accused holding no evidence u/s 138 Negotiable instruments Act has been made out.

The point for determination is whether the finding of the trial Magistrate in acquitting the accused is contrary to law and perverse.

POINT:

The learned counsel for the appellant / complainant reiterated the grounds of appeal and argued when the respondent accused has not disputed the

supply of the goods, and his liability to pay, there is no justification for the trial Magistrate to acquit the accused and therefore, the judgment of the

trial Court has to be set aside and the respondent has to be punished suitably.

The learned counsel for the respondent accused disputed the submissions made by the learned counsel for the appellant. It was pointed out the

appellant did not present the cheque in question immediately into the bank. On four occasions, the date in the cheque has been corrected by the

appellant/complainant and on some occasions, without the initials of the accused/respondent and presented the cheque beyond the period of six

months from the date of the issue of the cheque and therefore, the trial Magistrate has rightly held that no offence u/s 138 Negotiable Instruments

Act has been made out and the same need not be interfered with by this court.

The learned counsel for the appellant replied, after issuing the cheque, the respondent/ accused approached the appellant/complainant and

informed him not to present the cheque immediately as there was no sufficient funds and would make arrangements within a short time to put

sufficient funds in the bank and thereafter, the cheque may be presented and corrected the date of the cheque in his own hand writing. In that

manner, the request of the accused respondent was complied with by the appellant on three further occasions and after finding the respondent /

accused had no intention to pay the amount and is evading payment on some false grounds, the cheque was presented within six months of the

corrected day of the cheque which is in compliance of the ingredients of the Negotiable Instruments Act.

Relying on the. decision reported in Kesavan Thankappan v. State of Kerala and another, 1998 Com. Cas. 574 it was argued by the learned

counsel for the respondent as the cheque was presented beyond the period of six months from the first date it bears, it is beyond time and

therefore, the learned trial Magistrate is correct in acquitting the accused.

Per contra, the learned counsel for the appellant relied on the decision reported in Anil Kumar Sawlmey v. Gulshan Rai, 1994 Com. Cas. 150

wherein the Supreme Court has pointed the difference between a cheque and a bill of exchange and also the effect of post dated cheques. At page

155 of the decision, the Supreme Court has. observed thus:

On behalf of the appellant a Division Bench judgment of the Kerala High Court in Manoj K. Seth v. R. J. Fernandez, 1991 (73) Comp Cas 411;

1991 (2) KLT 65 which took a contrary view, was cited- The Kerala High Court did noi agree with the judgment of the Madras High Court in

Babu''s case 1992 (74) Com Cas 716 and interpreled Section 138 of the Act in the following terms (at Page 446): We do not agree with the

reasoning and the conclusions reached by the Madras High Court which have been followed by the learned Single Judge of the Punjab and

Haryana High Court in the impugned judgment. Both the High Courts fell into patent error in holding that the provisions of Section 138 of the Act

are not applicable to post dated cheques. The interpretation placed by the High Courts on section 138 of the Act is not only contrary to the plain

language of the various provisions of the Act but is also contrary to the Objects and Reasons of the Amendment Act. The said interpretation, if

accepted, would defeat the very purpose of inserting Chapter XVII in the Act.

Sections 5 and 6 of the Act define ""bill of Exchange"" and ""Cheque"" A ""bill of exchange"" is a negotiable instrument in writing containing an

instruction to a third party to pay a stated sum of money at a designated future date or on demand. A ""cheque"" on the other hand, is a bill of

exchange drawn on a bank by the holder of an account payable on demand. Thus a cheque u/s 6 of the Act is also a bill of exchange, but it is

drawn on a banker and is payable on demand. , It is, thus, obvious that a bill of exchange even though drawn on a banker, if it is not payable on

demand, it is not a cheque. A post dated cheque is only a bill of exchange when it is written or drawn, it becomes a Cheque when it is payable on

demand. The post dated cheque is not payable till the date which is shown on the face of the said document. It will only become cheque on the

date shown on it and prior to that it remains a bill of exchange u/s 5 of the Act. As a bill of exchange a post dated cheque remains negotiable but it

will not become a cheque till the date when it becomes payable on demand.

It is clear from section 19 that a cheque is an instrument which is payable on demand. A post dated cheque, which is not payable on demand till a

particular date, is not a cheque in eyes of law till the date it on which becomes payable on demand.

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 periods 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 month 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 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 the 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 dales mentioned on the face of the cheques.

Even otherwise we agree with the reasoning adopted by the Division Bench of the Kerala High Court. Section 138 has to be construed with

reference to the context. If the object of bringing section 138 of the Act on the statute has to be fulfilled then the only interpretation which can be

given to clause(a) of the proviso to section 138 of the Act is that a post dated cheque shall be deemed to have been drawn on the date of bears.

We allow the appeals and set aside the impugned judgment of the High Court dated January 21, 1992. The learned Chief Judicial Magistrate,

Karnal, shall now proceed with the complaints pending before him in accordance with law.

In my view, the principle of law laid down by the Supreme Court of India in the above decision, answers all the objections of the learned

counsel for the respondent accused and I conclude that the presentation of the cheque within a period of six months from the date of its last

correction, as agreed to by the respondent accused, is within time and the learned trial Magistrate has committed a grave error in acquitting the

accused by holding that the cheque ought to have been presented within six months from the date on which it was drawn and his reasoning is

perverse and the judgment of acquittal recorded by the VII Metropolitan Magistrate has to be set aside. If the proposition put forward by the

learned counsel for the respondent accused is accepted, all transactions in the commercial world will come to a stand still, as no post dated cheque

can be issued, as the same will be out of time, which will lead to disaustrious consequences. Therefore, I find the accused respondent guilty u/s 138

Negotiable Instruments Act and is convicted thereon.

This is a summons case and therefore, there is no need to summon the respondent accused to be present in court to hear him on the question of

sentence. The respondent accused is sentenced to undergo Simple Imprisonment for a period of three months and to pay a fine of Rs.4,500, in

default, to under go Simple Imprisonment for a period of one month. The fine amount shall be paid in the trial court within two weeks without fail.

The VII Metropolitan Magistrate shall issue Non Bailable Warrant, secure the presence of the accused and commit him to prison to undergo

the sentence.