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IN THE HIGH COURT OF KERALA AT ERNAKULAM
SOPHY THOMAS, J.
Thottathil Lakshmanan, S/o. Raman – Petitioner
Versus
Kundathil Sobhana, W/o. Sathyan and Anr. – Respondents
Crl. Rev. Pet No. 2237 Of 2009
Decided On : 30-11-2023
Negotiable Instruments Act, Section 138 - Financial Transaction - The court discussed the issuance of a cheque as security, the maturity of the cheque for presentation, and the consequences of dishonouring a security cheque under Section 138 of the NI Act. The court emphasized that if a cheque is issued as security and the debt is not repaid before the due date, the cheque matures for presentation, and if dishonoured, an offence under Section 138 of the NI Act is attracted - Sripati Singh v. State of Jharkand (2021 SCC Online SC 1002), Dashrathbhai Trikambhai Patel v. Hitesh Mahendrabhai Patel and Another [2022 (7) KHC 61 SC].
Fact of the Case:
The case involved a complaint under Section 138 of the NI Act, where the accused issued a cheque as security for a financial transaction but failed to repay the debt, leading to the cheque being dishonoured.
Finding of the Court:
The court found that the accused's issuance of the cheque as security and subsequent failure to repay the debt resulted in the cheque maturing for presentation. As the cheque was dishonoured, the court held that an offence under Section 138 of the NI Act was attracted.
Issues: The key issue was whether the accused's issuance of the cheque as security without repaying the debt constituted an offence under Section 138 of the NI Act.
Ratio Decidendi: The court relied on the principles established in Sripati Singh v. State of Jharkand and Dashrathbhai Trikambhai Patel v. Hitesh Mahendrabhai Patel and Another to determine that the cheque matured for presentation upon the accused's failure to repay the debt, leading to the dishonour of the cheque and the attraction of an offence under Section 138 of the NI Act.
Final Decision: The revision petition was dismissed, and the accused was directed to surrender before the trial court to pay the fine amount. If the fine amount is realized, it will be paid to the complainant as compensation under Section 357(1)(b) of the Cr.P.C.
ORDER :
This revision is at the instance of the accused in C.C. No.617 of 2000 on the file of Judicial First Class Magistrate’s Court, Kuthuparamba, assailing the judgment in Crl. Appeal No.141 of 2004 on the file of Additional Sessions Judge (Adhoc-III), Thalassery, which upheld his conviction under Section 138 of the Negotiable Instruments Act (hereinafter referred as ‘the NI Act’), though the sentence was modified and reduced.
2. C.C. No. 617 of 2000 was based on a complaint filed by the 1st respondent herein, against the revision petitioner, alleging an offence punishable under Section 138 of the NI Act. The case of the 1st respondent/complainant was that, there was financial transaction between herself and the revision petitioner regarding purchase of KL-13A-2898 bus, owned by the revision petitioner and Ext.D1 agreement dated 16.09.1999 will prove that transaction. But, the revision petitioner could not transfer the bus into her name, as agreed. So, they executed Ext.P7 agreement on 26.10.1999, whereby, the revision petitioner agreed to repay Rs.84,000/-received by him, from the 1st respondent/complainant, along with 6% interest, amounting to Rs.90,000/-in total. Out of this amount, Rs.40,000/-was paid by the revision petitioner on 26.10.1999 itself, and for the balance Rs.50,000/-, he issued cheque bearing No. 900184 dated 30.11.1999 drawn on Syndicate Bank, Mambaram Branch, and another cheque for Rs.15,000/-bearing No. 900185 drawn on the same bank, towards interest and cost.
3. After receiving back those two cheques from the 1st respondent/complainant, the revision petitioner issued a new cheque i.e. Ext.P1 cheque to her, for an amount of Rs.61,000/-on 11.03.2000. When that cheque was presented for collection, it was dishonoured for the reason, ‘insufficient funds’. So, she sent Ext.P3 statutory notice to the revision petitioner, which was received by him, as seen from Ext.P5 acknowledgment card. The revision petitioner sent Ext.P6 reply stating that, the understanding was to pay Rs.61,000/-in cash on 11.03.2000, and till such payment the cheque was given only as a security. Since the amount was not paid within the statutory period, the 1st respondent/complainant preferred the complaint under Section 138 of the NI Act, against the revision petitioner. The learned Magistrate took cognizance of the offence, and issued summons to the revision petitioner.
4. On appearance, particulars of offence was read over, to which, the revision petitioner pleaded not guilty. PW1 was examined and Exts.P1 to P7 were marked from the side of the 1st respondent/complainant.
5. On closure of the complainant’s evidence, the revision petitioner was questioned under Section 313 of Cr.P.C. and he denied all the incriminating circumstances brought on record. Ext.D1 agreement was marked from his side.
6. On hearing the rival contentions from either side, and on analyzing the facts and evidence, the trial court found the revision petitioner guilty under Section 138 of the NI Act and, he was convicted and sentenced to undergo simple imprisonment for six months and compensation of Rs.61,000/-under Section 357(3) of the Code of Criminal Procedure. Aggrieved by the conviction and sentence, the revision petitioner preferred Crl.Appeal No.141 of 2004. The appellate court, on re-appreciation of the facts and evidence, found that the conviction under Section 138 of the NI Act was not liable to be disturbed and hence, the conviction was upheld. The substantive sentence was set aside, the compensation amount was modified to fine of Rs.52,000/-, with a rider that, if the fine amount is realized, Rs.50,000/-will be paid to the 1st respondent/complainant as compensation under Section 357(1)(b) of the Code of Criminal Procedure, against which, this revision is preferred by the revision petitioner.
7. Now this Court is called upon to verify the legality, propriety and correctness of the impugned judgment by which his conviction under Section 138 of the NI Act wa
The main legal point established in the judgment is that completion of construction should be permitted pending litigation, subject to accounting for the profit/income reaped from the building.
To establish an offense under Section 138 of NI Act, there must be a subsisting account at the time of issuing or presenting the cheque, and burden lies on complainant to prove due execution when exe....
The presumption of liability under the Negotiable Instruments Act is upheld unless conclusively disproven by the accused.
The court upheld that a dishonored cheque creates a presumption of liability unless adequately rebutted, reinforcing the legal principles under Sections 118 and 139 of the Negotiable Instruments Act.
Admission of cheque signature triggers presumption under Sections 118(a) and 139 NI Act of debt discharge; security cheques attract Section 138 liability on dishonour; accused must rebut with evidenc....
Admission of cheque issuance raises rebuttable presumption under Sections 118(a), 139 NI Act of discharge of debt; security cheques attract Section 138 liability if subsisting debt exists; revisional....
Dishonour of cheque – If cheque is drawn not on account maintained by accused but by some other person, same will not attract provisions of Section 138 of NI Act.
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