Michael Kuruvilla v. Joseph J. Kondody — 1998 DIGILAW 46 (KER)

Judgment :- K.A. Mohammed Shafi J. The complainant in C.C. No. 40 of 1993 on the file of the Judicial First Class Magistrate's Court, Changanacherry, is the appellant. 2. He filed the complaint against the respondent alleging the offence punishable under S.138 of the Negotiable Instruments Act, hereinafter referred to as 'the Act', on the ground that the respondent-accused issued a cheque for Rs. 3,000/- to discharge his previous liability and on presentation of the cheque for collection, it was bounced and he did not pay the amount inspite of the registered notice sent to him through an. Advocate calling upon him to pay the amount. 3. The lower court, after trial, found the respondent not guilty of the offence punishable under S.138 of the Act, acquitted him and set him at liberty by judgment dated 27.1.1994. Hence, the complainant has come up in appeal before this Court. 4. The lower court rightly rejected the contention of the respondent that there was no proper notice as contemplated under proviso (b) to S.138 of the Act. That contention of the respondent was based on the fact that he was known as Joseph J. Kondody, whereas the registered notice was sent to Jose J. Kondody. Even though registered notice was sent to the address Jose J. Kondody, Ext. P5 acknowledgment of the respondent shows that he received the registered notice and signed the acknowledgement as Jose J. Kondody. It is further seen that the respondent has sent Ext. P7 reply to the registered notice Ext. P3 to the appellant. In the complaint the respondent is described as Joseph J. Kondody @ Jose J. Kondody. Therefore, it is clear that the respondent received the registered notice, sent Ext. P7 reply and appeared before the lower court on receiving notice issued by the Court understanding that the person referred to in the registered notice and the notice issued by the lower court is himself. Therefore, there is no merit in the contention that proviso (b) to S.138 of the Act is not complied with before instituting the above case. 5. Counsel for the respondent submitted that though Ext. P1 cheque was issued in favour of the appellant, it was sent for collection through Thankachan Antony and not by the appellant. Ext. P1 cheque contains no endorsement by the appellant or by Thankachan Antony. 5. Counsel for the respondent submitted that though Ext. P1 cheque was issued in favour of the appellant, it was sent for collection through Thankachan Antony and not by the appellant. Ext. P1 cheque contains no endorsement by the appellant or by Thankachan Antony. The appellant, when examined as PW2, has deposed that his cheque was presented through his friend Thankachan Antony for collection and on the intimation about the dishonour of the cheque for insufficient funds, he has instituted the above case after complying the necessary formalities. Ext. P1 is a bearer cheque. Under law, a bearer cheque can be presented for encashment without any endorsement by the party. Therefore, the contention that Ext. P1 cheque was presented not by the appellant but by his friend Thankachan Antony for encashment is of no consequence. 6. The respondent vehemently contended that the appellant is not the payee or holder in due course and therefore, he is not entitled to prosecute him for the offence punishable under S.138 of the Act. The lower court found that the appellant is neither the payee nor a holder in due course and Ext. P1 is not a valid cheque for the purpose S.138 of the Act and therefore, the respondent is not guilty of the said offence. 7. The fact that the respondent has issued Ext. P1 cheque to the appellant is admitted. The crucial contention raised by the respondent is that the appellant is neither a payee nor a holder in due course and that in Ext. P1 no name of the payee is mentioned and is stated pay to cash and the word bearer is struck off. Therefore, the respondent contended that the appellant is not a payee as defined under S.7 of the Act since under S.7, "payee" is defined as the person named in the instrument, to whom or to whose order the money is by the instrument directed to be paid. He also contended that the appellant is not the "holder in due course" as defined in S.9 of the Act. He also contended that the appellant is not the "holder in due course" as defined in S.9 of the Act. wherein "holder in due course" is defined as follows: "Holder in due course" means any person who for consideration became the 'possessor of a promissory note bill of exchange or cheque if payable to bearer, or the payee or indorsee thereof, if payable to order, before the amount mentioned in it became payable and without having sufficient cause to believe that any detect existed in the title of the person from whom he derived his title". 8. The lower court accepted both these contentions on the basis of some observations made by Bhashyam and Adiga on the Negotiable Instruments Act, 15th Edn. and Khergamvala's The Negotiable Instruments Act, 16th Edn. and also on certain English decisions. One of the decisions referred to is North and South Insurance Corporation Ltd. v. National Provincial Bank Ltd. (1936) 1 KB 328 wherein it is observed: "With that in mind I again turn to the document in question here. It says: "Pay cash or order". It cannot have been intended that cash 'which is a purely impersonal collection of letters, should endorse this draft. That being so, I think the four words "Pay cash or order" cannot be read so as to give any sensible meaning to the whole four and the result is that the printed words "or order" must be disregarded and we have a direction to pay cash - by necessary implication, to pay it to the bearer of the document". The above ruling established that the finding of _the lower court in this regard is incorrect. 9. In the decision in A. K. Hameed v. Appukutty (MR 1969 Kerala 189), a Single Judge of this. Court observed as follows: "The trend of decisions as far as I am able to see is in favour of the view that the absence of the expression "or to be the order of will not make the document any the less a promissory note:. It was further observed: "In the present case, there is no express prohibition in the document against negotiability and as a matter of fact the parties also understood it in that manner as is evident from the fact that it has been 'negotiated and it is the endorsee who has come forward with the suit". It was further observed: "In the present case, there is no express prohibition in the document against negotiability and as a matter of fact the parties also understood it in that manner as is evident from the fact that it has been 'negotiated and it is the endorsee who has come forward with the suit". Though in the above case, the question considered was whether a promissory note was a negotiable instrument or not since it did not contain the clause "or to the order of, the principles laid down in the above decision are applicable to the facts of this case as the respondent has contended that Ext. P1 cheque is not negotiable since the term "or bearer" is struck off in Ext. P1. Though in fact the word "or bearer" is struck off in Ext. P1, I respectfully agree with the above observations made by the learned Single Judge to find that inspite of the fact the word "or bearer" is struck off in Ext. P1, it is a negotiable instrument. The above decision was relied on by this Court in M. George & Brothers v. Cherian (1990 (1) KLT 133) wherein a Single Judge of this Court held that mere scoring off the word bearer will not make a cheque not negotiable. 10. In view of the above correct position of law, the finding of the lower court that Ext. P1 cheque is not a valid cheque is absolutely unsustainable. It is clear from the forgoing decisions that though Ext. P1 cheque does not contain the name of the payee and the printed words or bearer are struck off and also it is written pay to cash, is a legal and valid negotiable instrument. In Ext. P7, the respondent has admitted that the cheque was issued in favour of the appellant though according to him it was issued as security for the money borrowed by him from the appellant during the year 1985 or 1986. Absolutely, no evidence is adduced by the respondent to establish that Ext. P1 cheque was, issued by Mm to the appellant as security for the money transactions with the appellant during the year 1985-86. Under S.118(a) of the Act, there is a presumption that every negotiable instrument was made or drawn for consideration. Absolutely, no evidence is adduced by the respondent to establish that Ext. P1 cheque was, issued by Mm to the appellant as security for the money transactions with the appellant during the year 1985-86. Under S.118(a) of the Act, there is a presumption that every negotiable instrument was made or drawn for consideration. Even though the presumption available under S.118(a) is a rebuttable presumption, the respondent has not cared to rebut that presumption and to adduce any evidence in support of the case pleaded by him. The appellant contended that Ext. P1 is executed by the respondent in discharge of the debt due to him. No evidence as against PW1 in this regard is adduced by the respondent. Therefore, the contention of the appellant Ext. P1 cheque was issued in discharge of the debts due to him by the respondent has to be accepted. 11. Under S.9 of the Act, "holder in due course" means any person who for consideration became the possessor of a promissory note, bill of exchange or cheque if payable to bearer, or the payee or indorsee thereof, if payable to order, before the amount mentioned in it became payable and without having sufficient cause to believe that any defect existed in the title of the person from whom he derived his title. I have already found in the preceding paragraphs, though in Ext. P1 there is only a direction to pay to cash. It has to be implied that the direction is to pay to the bearer. There is nothing on record to show that the appellant cannot be treated as holder in due course as contemplated under S.9 of the Act. There is a presumption under S.118(g) of the Act, that the holder of a negotiable instrument is a holder in due course. There is nothing on record to rebut that presumption in favour of the appellant. I have already held that the fact that the appellant presented the cheque for encashment through Ms friend one Thankachan Antony is of no significance. It is clear from Ext. P2 memorandum issued by the Bank that the cheque was dishonoured due to insufficiency of funds. The evidence of PW. 2 Manager of the Bank, and Ext. P6 certified copy of the ledger in respect of the account of the respondent maintained by the Bank established that mere was only Rs. It is clear from Ext. P2 memorandum issued by the Bank that the cheque was dishonoured due to insufficiency of funds. The evidence of PW. 2 Manager of the Bank, and Ext. P6 certified copy of the ledger in respect of the account of the respondent maintained by the Bank established that mere was only Rs. 180.49 to the credit of the respondent when Ext. P1 cheque was sent for collection. Therefore, it is established without any doubt that the cheque was dishonoured due to insufficiency of funds. It is also clear from Ext. P3 notice sent on behalf of the appellant and Ext. P7 reply sent by the respondent to the appellant that the appellant has complied with the necessary requirements under proviso (b) to S.138 of the Act. Therefore, it is clear from the evidence on record that the respondent, has committed the offence punishable under S.138 of the Act and the lower court was in manifest error in holding otherwise.. Therefore, the judgment of the lower court is set aside and in reversal of the finding that the respondent is not guilty of the offence under S.13 8 of the Act, I find him guilty, convict and sentence him to undergo simple imprisonment for three months and to pay a fine of Rs. 3000/- and in default of payment to undergo simple imprisonment for a period of one month for the offence punishable under S.138 of the Act. The fine amount, if realised, shall be given to the appellant.