Back
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
MRIDULA BHATKAR, J.
K.M. Enterprises - Appellant
Vs.
Garware Synthetics Ltd. & Ors. - Respondents
Criminal Application Nos. 230-238 of 2012 with Criminal Application Nos. 129-132 of 2014
Decided on: 26th September, 2014
Thus, there may be a general liability to pay which can be claimed pursuing civil litigation but not under Section 138 of the Negotiable Instruments Act, which is a strict and specific liability.
Negotiable Instruments Act, 1881 - Section 138 Complaint for dishonour of accommodation cheques. - Since accused was not informed before presentation of accommodation cheques for encashment hence dismissal of complaint for dishonour of said cheques, justified.
NEGOTIABLE INSTRUMENTS ACT, 1881 - Sections 138 and 139 Dishonour of accommodation cheques. Though accommodation cheques allowed some time to accused to repay debt yet it was an acknowledgement of liability by accused towards complainant. The word ’accommodation’ is not synonym to the word ’security’ but it borrows the same colour of adjustment in the transaction. Therefore, it is expected that the accommodation cheques were not to be presented unless the drawer gave green signal for the presentation. The intention behind the issuance of these cheques, which were used as a security, is required to be proved by the respondents, if such defence is adopted. However, once it is shown that the cheques were issued as an assurance towards liability and not intended to be acted upon, the respondent/ accused thus rebutted the presumption. Thus, the transaction between the parties has to be understood accordingly. A drawee accommodates the borrower by allowing to postpone the payment of the debt with a view to give some breathing time to the borrower to collect funds and repay the debt. Therefore, accommodation cheques can be given in continuation as one, two or three, as the case may be. Issuing post dated cheques may look like giving accommodation cheques’ Every accommodation cheque, in fact, is a postdated cheque, but every postdated cheque not necessarily is an accommodation cheque. An each postdated cheque falls due for payment on the date written on the cheque, and to be presented before the bank. Often, post dated cheques are given in day to day transactions may be business, personal or for payment of loan, etc.
A shortage of money is the only reason for issuing accommodation cheques; while post dated cheques are issued not only because the funds are less but for various reasons viz., convenience, accessibility of the parties, etc. This is the basic difference between the regular postdated cheques and the postdated cheques issued by the respondents as accommodation cheques. Though the term accommodation is not a legal term, in the present transaction, the term was used not only by the respondent/accused but also by the complainant with mutual understanding. Hence, the replacement of further postdated cheques was demanded. As expressed earlier, a nature of the transaction and the undercurrents therein between the parties agreed and if the same is not illegal, then, has to be taken into account in order to appreciate the defence raised by the respondents/ accused.
In all the cases under Section 138 of the Negotiable Instruments Act the laudable object behind this enactment to enhance the acceptability and to increase the credibility of the instrument, cannot be forgotten, yet, the presumption is rebuttable depending on the facts and evidence in each case. It appears that the replacement of cheques in the transaction between the parties with new cheques before expiry of the previous cheques or immediately after expiry of the previous cheques was an accommodation or adjustment whereby allowing some time to the respondents to repay the debt and at the same time, it was an acknowledgement of the liability by the respondents towards the complainant. This is done because it was a running account and business between these parties.
NEGOTIABLE INSTRUMENTS ACT, 1881 - Sections 138 and 139 Dishonour of cheque. Once it is shown that cheques were issued as an assurance towards liability and not intended to be acted upon, presumption under Section 139 of Act stands rebutted.
Applications for leave to appeal are allowed. Admit appeals. Appeals to be numbered accordingly. By consent, the appeals are called out forthwith and heard finally, at the stage of admission.
2. In all these 13 appeals, the parties are same with same status i.e., the appellant company is the original complainant and the respondents are the original accused. All these criminal cases were filed under section 138 of the Negotiable Instruments Act as the cheques issued by the respondents in favour of the complainant were dishonoured. Out of these 13 cases, 9 cases are decided by the learned Metropolitan Magistrate, 30th Court, Kurla, Mumbai by the judgment and order dated 29.11.2011 and the other four matters are decided by the learned Metropolitan Magistrate, 33rd Court, Ballard Pier, Mumbai by judgment and order dated 9.1.2014. In all these criminal cases, the respondents are acquitted and, therefore, these appeals are preferred by the original complainant challenging these judgments and orders of acquittal against the respondents.
3. The complainant is a partnership firm and is in the business of manufacturing of plastic granules and Respondent No.1 is a registered company. They are in the business of manufacturing plastic yarn. The complainant is a supplier of the raw material to the respondent company. During the period from 2003 to 2004, a number of cheques were issued by the respondent company in favour of the complainant firm after receiving raw material. However, on presentation of those cheques, they all were dishonoured for want of insufficient funds and thereafter the complainant firm issued notices against the dishonour of all these cheques. However, the respondent company did not respond positively and refused to pay and therefore these 13 cases were filed by the complainant firm against the respondent company under section 138 of the Negotiable Instruments Act. All the complaints were dismissed as the complainant could not prove its case on the point that the respondents were liable to pay legally dischargeable debt and, therefore, all these appeals were filed by the complainant firm.
4. Mr. Laddha, learned Counsel appearing for the appellants, has submitted that the orders passed by the learned Metropolitan Magistrate, Kurla in the nine cases and the orders passed by the learned Metropolitan Magistrate, Ballard Pier, are erroneous, illegal and ought to be set aside. He submitted that the learned Metropolitan Magistrates have believed that all the cheques were issued in favour of the complainant. The respondents have also not denied that the cheques were issued by Santosh Borkar or Sunder Mollya and Mr. S.D. Barve on behalf of the company of the respondents. He submitted that when the learned Judge believed that the cheques were issued by the respondents, then, he should have relied on the presumption under section 118 of the Negotiable Instruments Act and also under section 139 of the Negotiable Instruments Act. The presumption is to be first read under section 118 independently and then, should have been alongwith the presumption under section 139 of the Negotiable Instruments Act as it is a special provision supporting the object of section 138 of the Negotiable Instruments Act. The learned Metropolitan Magistrate, Kurla has rejected the case of the complainant mainly on two grounds: one that Santosh Borkar is not an authorised signatory so, he should have been made an accused in the original complaints. The learned Magistrate, Kurla held that as per the requirement of section 138, a person who is a signatory, is to be held responsible for dishonour of the cheque. He submitted that the view taken by the learned Metropolitan Magistrate, Kurla that as Santosh Borkar was not an authorised signatory, the case should fail on this count, is not consistent with the settled position of law, especially the ratio laid down in the case of Laxmi Dyechem vs. State of Gujarat, 2012(12) JT 65: [2014 ALL MR (Cri) 721 (S.C.)
SupremeToday
An indispensable Tool for Legal Professionals, Endorsed by Various High Court and Judicial Officers
Please visit our Training & Support
Center or Contact Us for assistance
Scan Me!
India’s Legal research and Law Firm App, Download now!
For Daily Legal Updates, Join us on :
Back to top
