KERALA HIGH COURT
A. Hariprasad, J.
Anagha Prasad —Petitioner
versus
M.C. Abu & Anr. —Respondents
Criminal M.C. Nos. 3805, 3806 & 3807 of 2012
Decided on 2.9.2014

IMPORTANT POINTS
(1) A minor cannot be prosecuted under Sections 138 of Negotiable Instruments Act for having drawn a cheque which is not honoured.
(2) A minor, who had drawn a cheque, which is dishonoured for want of funds in the account after his/her attaining majority, is exempted from prosecution because the cheque is one without consideration.

Headnote:Negotiable Instruments Act, 1881—Sections 26 and 138—Dishonour of cheque—Petitioner was minor on the date of cheque was drawn—Whether she could be prosecuted for offence? No—Cheque if was post dated and petitioner had attained majority on the date of cheque when it was presented—Whether petitioner could be prosecuted in that situation? No.

       Held: Section 11 of the Indian Contract Act, 1872 specifies the persons competent to contract. One of the main requirements therein is that the contracting party must be of the age of majority according to the law to which he is subject. It is provided by Section 3 of the Indian Majority Act, 1875 that all persons domiciled in India shall attain the age of majority on his completing the age of eighteen years and not before. It can legitimately be presumed that the framers of the NI Act must not have perceived the possibility of incorporating a provision like Section 138 in the statute in future, creating a statutory offence for the dishonour of a cheque. Stated differently, dishonour of a cheque was conceived as a civil wrong at the time when the NI Act was enacted. Later, Section 138 and other affiliated provisions were inserted in the NI Act by the Banking, Public Financial Institutions and Negotiable Instruments Laws (Amendment) Act, 1988 with effect from 1.4.1989. Now it becomes, therefore, a necessity to find out whether there is any material change in law in case a cheque drawn by a minor is dishonoured for want of funds in his account and also whether he can be held liable for the offence under Section 138 NI Act in such a situation. Very pertinent aspect to be noted here is that what is made punishable under Section 138 NI Act is the dishonour of a cheque drawn by a person in the name of another for the discharge, in whole or in part, of any debt or other liability(under the supplied for emphasis). Then the quintessential question will be whether a minor is capable of incurring any debt or liability?

       I shall deal with the liability of a minor, in case a cheque drawn by him is dishonoured, as per the law stated in Section 26 NI Act. On a reading of Section 26 NI Act, it is crystal clear that a minor, like any other person capable of contracting, may draw, indorse, deliver and negotiate a promissory note, bill of exchange or cheque. Such instrument so drawn, indorsed, delivered and negotiated by the minor is capable of binding all parties, except the minor himself. It gives a protection or an insulation to the minor from binding himself when he is drawing, indorsing or delivering or negotiating a negotiable instrument. Privy Council considered an appeal from a decree of a Bench of three Hon’ble Judges of the High Court of Calcutta in Mohori Bibee v. Dharmodas Ghose (VoI.XXX ILR Calcutta 539). Facts in the case in brief are that on 20.7.1895, the respondent Dharmodas Ghose executed a mortgage in favour of Brahmo Dutt, a money lender to secure repayment of Rs. 20,000 with interest. At that time, the respondent Dharmodas Ghose was an infant (as described in the decision for a minor). On 10.9.1895, the respondent through his mother as next friend commenced an action against Brahmo Dutt stating that he was under aged when he executed the mortgage and prayed for a declaration that it was void and inoperative and should be delivered upon to be cancelled. The defendant Brahmo Dutt put in a defence that the respondent was of full age when he executed the mortgage that even if he was a minor, the declaration of his age was fraudulently made to deceive the defendant and, therefore, he was disentitled to claim any relief. Considering all the issues, the Privy Council held thus:

        “On the true construction of the Contract Act (IX of 1872) a person, who by reason of infancy is incompetent to contract, cannot make a contract within the meaning of the Act. A mortgage, therefore, made by a minor is void; and a money-lender who has advanced money to a minor on the security of the mortgage is not entitled to repayment of the money on a decree being made declaring the mortgage invalid; Sections 64 and 65 of the Contract Act being based on there being a contract between competent parties, and being inapplicable to a case where there is not, and could not have been, any contract at all.”

       Whether the immunity provided by Section 26 NI Act excludes the obligation of a minor to restitute the benefit derived by him in the transaction from the other party was contested in many cases. Although the question was argued before the Judicial Committee in Mohori Bibee’s case (supra), their Lordships did not give any decision on it. In another decision, viz., Nawab Sadiq v. Jai Kishori, 55 MLJ 88 (PC), 55 MLJ 88 (PC), their Lordships unequivocally held that a contract entered into by a minor is a nullity. Regarding the right of restitution, there is one view that it can arise only if the person entering into the transaction was not aware of the fact of minority and there was some representation by the minor as to his age with a view to deceive the other party. (see Hari Mohan v. Dulu Miya, AIR 1935 Calcutta 198). Yet another view expressed by courts is that even in such a situation, the minor is not liable to restitute. The decision in Gokeda Lateharao v. Viswanadham Bhimayya, AIR 1956 Andhra Pradesh 182, is of relevance in this context. The appellant therein executed two promissory notes during his minority. It is alleged that he made a fraudulent representation to the respondent that he was a major. When the suit was filed to recover money, the, appellant, inter alia, contended that the promissory notes were not supported by consideration and they were not enforceable as he was a minor on the date of their execution. Subba Rao, C.J. summarised the law as follows:

       “43. The law may be briefly summarised. A contract entered into with a minor is a nullity for want of legal competency. Except otherwise provided by statute, it is not enforceable and it does not give rise to any rights or liabilities.

        Now, the question remaining is whether there is any difference if a post dated cheque was drawn by a minor payable after the coming of his age. Halsbury’s Laws in India, Vol. IV is cited by the learned counsel for the petitioner to contend a proposition that a post dated cheque drawn by a minor payable after his coming of age is on the same footing as a cheque drawn by the minor dated before his coming of age. Similarly, a bill or note given by a person after attaining majority in renewal of a bill or note executed by him during his minority is void, unless there is some new consideration.

        Next question is, whether the quondam minor can be held liable for dishonour of a cheque, I drawn by him/her, for want of funds in the account, if the cheque bears a date subsequent to his/her attaining majority and further the dishonour takes place after he/she attained majority. For this question also, the answer can only be in the negative. Indisputable proposition is that a cheque defined under Section 6 NI Act is also a bill of exchange, but it is drawn on a banker and it is payable on demand. It is, thus, obvious that even though a bill of exchange is drawn on a banker, if it is not payable on demand, it is not a cheque. A postdated cheque is only a bill of exchange when it is written or drawn and it becomes a cheque when it is payable on demand. A postdated cheque is not payable till the date, which is shown on the face of the document. (see Ashok Yeshwant Badeve v. Surendra Madhavrao Nighojakar and another, 2001 Cri.L.J. 1674 (SC), and Shri Ishar Alloys Steels Ltd. V. Jayaswals NECO Ltd., 2001 Cri.LJ. 1250 (SC). In the normal course, dishonour of a postdated cheque, after it has become a cheque in the eye of law, would have attracted the offence under Section 138 NI Act. Nevertheless, the law pronounced distinctly in Section 26 NI Act makes it clear that though a minor can draw, indorse, deliver and negotiated promissory note, cheque, etc. so as to bind all parties, it excludes the minor’s capacity to bind himself. In other words, the said provision insulates the minor from binding himself from the consequences of drawing, indorsing, delivering and negotiating a negotiable instrument. On recapitulating the principles discussed above, I arrive at the following findings:

       A minor, who had drawn a cheque, which is dishonoured for want of funds in the account after his/her attaining majority, is exempted from prosecution because the cheque is one without consideration. Besides, the minor at the time when the cheque was drawn was incapable of incurring any debt or liability, which could have been legally enforced against him/her, in spite of the fact that he/she attained majority on the date of dishonour of the cheque. The essential requirement in Section 138 NI Act that the dishonoured cheque must be one issued for discharge of a debt or liability is also not satisfied in such cases. I also find that the quondam minor becoming a major on the date of dishonour of cheque is of no consequence, if the subject matter is a cheque drawn by him during his/her minority. Hence, I find that the prosecution has to fail on each count. (Paras 8 to 10, 11, 20)

       Result : Petition allowed.