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2005(1) Bankmann 268
KERALA HIGH COURT
K.A. Abdul Gafoor, J.
Mohana Pai — Appellant
versus
Jabbar — Respondent
Cr. A. No. 348 of 1996
Decided on 11.6.2004.
For the Appellant:O. Ramachandran Namboodiri, K.S. Babu, N. Sudha, K.S. Gopi, Jayaprakash B. & P. Bala-krishnan, Advocates.
For the Respondents: M.V.S. Nampoothiry, P.V. Kunhikrishnan & Public Prosecutor (T.K. Kunhbdulla).
IMPORTANT POINT
In the facts of case appeal has to be closed as offence under Section 138 of Negotiable Instruments Act was compounded under Section 147 and conviction for offence under Section 420 IPC was set aside on right ground.
Headnote:Negotiable Instruments Act, 1881—Sections 138, 147—Indian Penal Code, 1860—Section 420—Cheating—Words “any debt or liability”—Cheque given as security to be encashed in eventuality of non-payment—Dishonoured—Trial Court convicting but Sessions Court holding that respondent has committed no offence under Section 138 as cheque was without consideration—And no cheating—Whether correct (No)?—Appeal to be allowed on Section 138 but as payment made for compounding of offence under Section 147—Appeal closed (I.P.C. 1860—Section 420—Offence of cheating—Acquittal upheld—Order accordingly.
Held: Ext. P. 2 cheque was duly handed over representing that at that eventuality envisaged in Ext. P. 1, it could be encashed. In such cir-cumstances, it cannot be said that the cheque was issued representing security and not liability. The cheque which had been issued as security was transformed itself into a cheque representing liability in terms of the agreement contained in Ext. P. 1 to which the 1st respondent was a party. Necessarily, the reversal of the conviction on that count cannot be sustained. Therefore it has to be found that the 1st respondent had committed offence punishable under Section 138 of the Act.
Of course, in doing so, the 1st respondent did not have a dishonest intention to attract Section 420 I.P.C. Therefore, the reversal of conviction under Section 420 by learned II Additional Sessions Judge has to be upheld.
In terms of the recent amendment introduced in Section 147 of the Act, every offence punishable under this Act shall be compundable not-withstanding anything contained in the Criminal Procedure Code, 1973.
In such circumstances, as it has been disclosed that the 1st respondent had paid the amount and that the appellant’s counsel before the Court below had received the amount, it shall have to be taken by reason of the conduct of the parties that they have compounded the offence. Necessarily, though there is conviction, no sentence shall follow. The appeal is closed. (Paras 7, 8, 9 &10)
Result: Order accordingly.
K.A. Abdul Gafoor, J.—Reversing the conviction Ordered by the Judicial Magistrate of the First Class-II, Kochi, the learned II Additional Sessions Judge, Ernakulam acquitted the Ist respondent. Therefore the appellant/complainant has come up with this appeal against the acquittal.
2. The offence alleged are that punishable under Section 138 of the Negotiable Instruments Act and under Section 420 of the IPC. The subject matter was Ext. P. 2 cheque dated 5.5.1993 for an amount of Rs. 20,000/- issued by the accused/1st respondent. When the cheque was presented to the bank, it bounced. So the offence as alleged has been committed by the 1st respondent. Reversal of the conviction is therefore bad; the appellant submits.
3. The finding of the learned Sessions Judge that Ext. P. 2 cheque was issued as a security and therefore does not attract Section 138, now cannot be accepted in the light of the decision of the Apex Court in I.C.D.S. Ltd. v. Beena Shabeer.1 Even a cheque issued by the guarantor to ensure repayment of loan by the principal debtor was found, in that case, supported by due consideration and issued to discharge legally enforceable liability to attract the provision in Section 138. Moreover, there was Ext. P. 1 agreement between the parties with regard to the sale of the bus. The cheque in question was issued with the stipulation in the said agreement that the cheque was issued as a security for the payment of the amount assured in Ext. P1 agreement. It could have been encashed if the assured payment as not made after six months from the date of Ext. P1. Ext. P1 was dated 27.10.1992. Ext. P2 cheque was dated 5.5.1993, after six months from Ext. P.1. When presented, it was not cashed. Therefore, this was a cheque for an amount towards the liability incurred by the 1st respondent/accused. So on merits also the learned II Additional Sessions Judge committed error to reverse the conviction, the counsel submits.
4. The submission made by the counsel for the 1st respondent is that the amount has already been paid to the counsel appearing for the appellant in the Court below. In another proceedings, receipt has been produced before the Court below. Therefore, there was no liability. Moreover, Ext. P. 1 is earlier than Ext. P. 2 cheque which was issued for future payment. Therefore, Ext. P. 2 which was made mention of in Ext. P1 did not represent any liability at all. So, there is no reason to reverse the acquittal, the counsel for the respondent submits.
5. The case relating to I.C.D.S. is one in respect of a cheque issued by a guarantor ensuring payment of a debt incurred by principal debtor in case of his default. Considering the word “any debt or liability” appearing in Section 138, the Supreme Court held as follows:
“The language, however, has been rather specific as regards the intent of the legislature. The commencement of the section stands with the words “Where any cheque.” The above noted three words are of extreme significance, in particular, by reason of the user of the word “any” the first three words suggest that in fact for whatever reason if a cheque is drawn on an account maintained by him with a banker in favour of another person for the discharge of any of debt or other liability, the highlighted words if read with the first three words at the commencement of Section 138, leave no manner of doubt that for whatever reason it may be, the liability under this provision cannot be avoided in the event the same stands returned by the banker unpaid. The legislature has been careful enough to record not only discharge in whole or in part of any debt but the same includes other liability as well. This aspect of the matter has not been appreciated by the High Court, neither been dealt with or even referred to in the impugned Judgment.”
It has also been made clear that:
“The language of the Statute depicts the intent of the law-makers to the effect that whenever there is a default on the part of one in favour of anoth
