The closure of the account, regardless of the reason, results in the dishonour of the cheque and attracts liability under Sec.138 of the Negotiable Instruments Act.

Would closure of an account at the instance of the drawee bank before issuance of cheque take the subsequent dishonour of that cheque as account closed outside the purview of Sec.138 of Negotiable Instruments Act (for short, "the Act")?

2. Petitioner before me faced trial in the court of learned Judicial Magistrate of First Class-1, Kannur in C.C.No.441 of 2000 for offence punishable under Sec.138 of the Act. According to respondent No.1, petitioner borrowed Rs.90000/- from him on 20-03-00 and for repayment of that amount issued Ext.P2, cheque dated 22-05-2000. That cheque was dishonoured on 25-05-2000 as account was closed as proved by Exts.P1 and P3 and evidence of PW.1, manager of the drawee bank. As per his evidence account was closed on 03-08-1999. Respondent No.1 issued notice to the petitioner on 08-06-2000 intimating dishonour and demanding payment of the amount. That notice was served on petitioner on 08-06-2000. Respondent No.1 gave evidence as PW.2 and testified to his case. According to the petitioner, he had given a signed blank cheque to one Ramesan in the year, 1997 in connection with a transaction with him and that cheque was misused.

3. There is a contention in this revision that due execution of the cheque is not proved. Regarding the transaction leading to execution of the cheque respondent No.2 gave evidence as PW.2. He asserted that petitioner borrowed Rs.90000/- from him on 20-03-00 and issued the cheque. Though it is contended by petitioner that he had no transaction with respondent No.2 and instead given signed blank cheque to Ramesan in the year, 1997 he neither produced any evidence, nor brought out circumstance to prove or probabilise that contention. It is admitted that Ext.P2 contained signature of petitioner. It is not disputed that the cheque was drawn on the account which petitioner had maintained with the drawee bank. Petitioner did not reply to the notice served on him. In the circumstances courts below have accepted the evidence of respondent No.2 and found in favour of due execution of the cheque. I do not find reason to interfere with that finding .

4. It is contended by learned counsel that in so far as it is not shown that closure of account was on the request or due to any act of petitioner, dishonour of the cheque as account was closed does not come within the purview of the Sec.138 of the Act. Learned counsel has placed reliance on a decision of the Karnataka High Court in Nagaraja Upadhya V M. Sanjeevan (2008 (1)KLD 543 (Kart.)).

5. Sec.138 of the Act states thus:

"Where any cheque drawn by a person on an account maintained by him with a banker for payment of any amount of money to another person from out of that account for the discharge, in whole or in part, of any debt or other liability, is returned by the bank unpaid, either because of the amount of money standing to the credit of that account is insufficient to honour the cheque or that it exceeds the amount arranged to be paid from that account by an agreement made with that bank, such person shall be deemed to have committed an offence and shall, without prejudice to any provision of this Act, be punished with imprisonment for (a term which may be extended to two years), or with fine which may extend to twice the amount of the cheque, or with both....."

To constitute the offence it has to be shown that the cheque is returned by the bank unpaid either because of the amount of money standing to the credit of that account is insufficient to honour the cheque or that it exceeded the amount arranged to be paid. In this case, it is not disputed that the account was closed on 03-08-1999 and the case of respondent No.2 which the courts below accepted and which I found, required no interference is that petitioner borrowed the amount from respondent No.2 on 20-03-2000 and in repayment of that amount issued cheque dated 25-05-2000. In short, petitioner has issued the cheque after the account was closed on 03-08-1999. Question i