2001(4) Crimes 289 (SC)
Supreme Court of India
(From Bombay High Court)
K.T. Thomas and S.N. Variava, JJ.
Punjab & Sindh Bank —Appellant
versus
Vinkar Sahakari Bank Ltd. & Ors.—Respondents
Criminal Appeal No. 949 of 2001
(Arising out of SLP (Crl.) No. 2674 of 2000)
Decided on 17-9-2001

Very important point
A “Pay Order” is like a Demand Draft and thus is a cheque within the meaning of Section 138 Negotiable Instruments Act. Appellant Bank as holder of it shall be deemed to be a holder in due course under Sec­tion 118(8) of Negotiable Instruments Act and is competent to file criminal complaint unless contrary is proved in trial.

Headnote:(i) Negotiable Instruments Act, 1881—Section 138—Dishonour of cheque when an offence—A pay order issued by respondent Bank payable to appellant Bank—Dishonoured —Complaint under Section 138—Writ to High Court—High Court holding it was not a cheque so Section 138 is not attracted—Whether correct? (No)—(Cross References Sections 6, 5, 4, 85A, 131A, 17 of Negotiable Instruments Act)—Case law discussed.

       Held : The first question raised is whether the instrument which is de­scribed by both sides as a “Pay Order” is a cheque within the meaning of Section 138 of the Act. (Para 5)

       After discussing various provisions of Negotiable Instruments Act and English and Indian cases, disapproving AIR 1948 Bom. 1 and relying on 1903 AC 240 and Section 17 of NI Act.

       Held : We therefore dissent from the view adopted by the learned single Judge in the impugned judgment that the pay order is not a cheque. (Para 18)

       (ii) Negotiable Instruments Act, 1881—Section 138—“Pay Order” was dishonoured by the drawer Bank (Respondent 1)—The holder (Appellant Bank) filed a complaint under Section 138 NI Act—Writ against to High Court—Single Judge quashed the complaint, inter alia, holding the impugned instrument “Payee’s A/c only—To pay Punjab and Sindh Bank—M/s. Poise Leasing and ­Finance Co. Ltd. or order” a sum of Rs. 48.40 lacs, even assuming this pay order as cheque, since it was crossed and hence the complainant Bank should only have collected the amount and credited the same to the account of the person shown as payee in the instrument—Complaint by appellant Bank not maintainable—Whether correct?—(Held not supported) (impliedly held not correct).

       Held : The second premise of the learned single Judge that since the pay order was a crossed instrument the complainant-bank could have only collected the amount and remitted the proceeds to the account of the payee. The said view could not be supported by the learned counsel for the respondents. Hence it is unnecessary for us to dwell into that. (Para 19)

       (iii) Negotiable Instruments Act, 1881—Section 138—Who can file complaint—”Payee or holder in due course”—Crossed pay order disho­noured—Appellant filed complaint—High Court quashed it, inter alia, on ground that he was not a holder in due course—Whether correct? (No) (Sections 8, 9, 50, 118(8) of NI Act)—Every holder is holder in due course unless rebutted—Effect—Appeal ­allowed—Case remanded to Trial Magistrate to proceed with Trial and reach the final judgment expeditiously.

       Held : The third ground for quashing the complaint is that the complain­ant was not “a holder in due course” in the absence of an endorsement made on the instrument in the manner prescribed under Section 50 of the Act. This ground was adopted by the learned Single Judge without regard to certain relevant provisions of the Act. Section 142 of the Act envisages a complaint to be made in writing “either by the payee or the holder in due course of the cheque, as the case may be”. Section 8 of the Act defines “holder” as any person entitled in his own name to the possession of the cheque and to receive or recover the amount due thereon from the parties thereto. We have no doubt that complainant-bank was well within its right to possess the cheque and to receive or recover the amount covered by the instrument. “Holder in due course” means a person who for consideration became the possessor of a cheque if payable to bearer before the amount became payable. (vide Sec. 9). In this context reference has to be made to Section 118(g) of the Act which contains a mandate that until the contrary is proved the holder of a negotiable instrument shall be presumed to be a holder in due course. Thus there is no escape for the court from drawing such presumption. It is undisputed that the complainant-company is the holder of the instrument on its own right. As such it could be a holder in due course also until the concerned party adduces evidence to rebut the presumption. It is of course open to the respondents to rebut the pre­sumption in the trial but till then the High Court could not say that the complainant is not a holder in due course at all. For the aforesaid reasons we allow this appeal and set aside the impugned judgment. The trial shall now proceed to reach the final judgment without any more ­delay. (Paras 20 to 24)