At, High Court of Kerala
By, THE HONOURABLE MR. JUSTICE K.A. ABDUL GAFOOR
For the Appellant : Abraham K. John, Advocate. For the Respondents: P.S. Krishna Pillai, Advocate.
The appellant initiated prosecution for the offence punishable under Section 138 of the Negotiable Instruments Act against the respondent. The respondent acquitted. Therefore this appeal.
2. According to the complainant he is a dealer in two wheelers manufactured by Bajaj. Accused was also a dealer in another place. There was business dealing between the two. The complainant had given vehicles for sale to the accused. The accused committed default in repayment. On 1.3.1995 there was a settlement of account between the two. There upon the accused drew a cheque for an amount of Rs.7,97,918.95 towards the amount due as found at the time of settlement. The cheque was presented to the bankers. It bounced. Statutory notice was issued. There was no response. Hence prosecution was initiated.
3. The accused took up a contention that there was no such settlement of account. The cheque was given only as a security for the transaction between the parties. Therefore, the cheque was not supported by any consideration. It was only a blank cheque.
The court below examined the evidence on record and found that Ext.10 the ledger did not disclose that on 1.3.1995 there was a settlement between the parties. The amount due as on 31.3.1995 as per the ledger was less than rupees seven lakhs. There was no reason for issuing the cheque in question for an amount of more than that outstanding from the accused as on 31.3.1995. Therefore it was taken that the complaint did not prove that the cheque was issued in respect of an enforceable liability and the accused was acquitted.
4. It is contended by the appellant that the contention of the accused that the cheque was issued only as a security is no longer available in the light of the decision reported in I.C.D.S. Ltd. v. Beena Shabeer (2002 (3) KLT 218). It is further submitted that Ext.P10 ledger folio as noted by the court below disclosed that large amounts were due from the accused. When there was a settlement of account settlement need not be recorded in the folio unless the amount is received in cash and the transaction is closed. There was no such situation in this case. Therefore, Ext.P10 was sufficient enough to conclude that Ext.P1 cheque was issued in lieu of the liability due from the accused.
5. The accused/respondent contended that Ext.P1 cheque was issued as a security and there was no evidence to discharge that there was a settlement of account. It is further submitted that the cheque Ext.P1 disclosed that it was only a blank cheque and it was filled by some one other than the accused. So it cannot be taken as one issued in lieu of a legal enforceable liability.
6. In the decision of the apex court in ICDS Ltd. v. Beena Shabeer (2002 (3) KLT 218) the cheque given by a guarantor when bounced was found to be within the fold of Section 138 of the N.I. Act. Necessarily, the cheque given as a security, if bound, shall be the subject matter of a prosecution under Section 138 of N.I. Act. So the contention of the accused that Ext.P1 cheque was given only as a security will not enable him to escape from the clutches of law.
7. As noticed by the court below Ext.P10 ledger disclosed that there were transactions between the complaint and accused. The entire entries made mention of in the ledger disclosed the amounts outstanding from the accused as on 31.3.1998. A little less than 7 lakhs was due from the accused. The amount was due since long. It is the case of the complaint that the cheque was drawn for an amount so due in March, 1995 from the accused with 21% interest. That was why the cheque was for an amount of Rs.7,97,918.95. It is normal in business dealings that parties claim and pay interest. Therefore it cannot be stated that the complainant had not proved that there was a valid liability.
8. Even if a blank cheque has been given towards liability or even as security, when the liability is assessed and quantified, if the cheque is filled up and presented to the bank, the person who had drawn the cheque cannot avoid the criminal liability arising out of Section 138 of the N.I. Act.
9. Thus none of the contention raised by the accused cannot be accepted. The court below erred in coming to the conclusion that the complainant has not proved that the cheque is supported by consideration.
10. In this case there was really a presumption available in favour of the complainant in terms of Section 118 and 139 of the Negotiable Instruments Act and against the accused, and the accused, who had admitted the dealing between the two and even the signature in Ext.P1 cheque, has not discharged his burden to rebut that presumption.
11. Necessarily, the prosecution succeeds. The acquittal is therefore
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, set aside, as the accused is found guilty of the offence punishable under Section 138 of the Negotiable Instruments Act. Accordingly, accused is sentenced as follows; i. The accused shall undergo imprisonment for a day until the rising of the court below, as fixed by the court below. ii. The accused shall pay an amount of Rs.7,97,918/ as compensation to the complainant/ appellant default whereof shall result in imprisonment for three months iii. The court below shall execute this order.