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Gujarat High Court · body

2017 DIGILAW 911 (GUJ)

Jyotindra Motibhai Thakkar v. State of Gujarat

2017-04-28

N.V.ANJARIA

body2017
JUDGMENT : N.V. Anjaria, J. 1. Rule. Learned Additional Public Prosecutor Mr. L.B. Dabhi waives service of Rule on behalf of the first respondent-State of Gujarat and learned advocate Mr. S.R. Sharma waives Rule for the second respondent. 2. What is prayed in this petition filed under Section 482 of the Code of Criminal Procedure, 1973 is for quashment of Criminal Case No. 5327 of 2012 before learned Additional Chief Judicial Magistrate, Palanpur, and the consequential process dated 12th October, 2012 issued by the learned Magistrate. They are the proceedings pursuant to a complaint filed under Section 138 of the Negotiable Instruments Act, 1882. 2.1 Whether the wife by virtue of her status as a wife of the payee of the cheque can be said to be "a holder in due course"; whether she can be a competent complainant to lodge complaint under Section 138 of the Negotiable Instruments Act, 1882; who can be said to be the "holder in due course"-are the questions arising for considerations. 3. The facts are few. The petitioner herein and one late Rajeshkumar Motibhai Thakkar are the brothers. The said Rajeshkumar happens to be the husband of respondent No. 2 herein. The two brothers took up a contract to work for one Relcon Infra Project. For the said purpose, a joint bank account was got opened with the Indian Bank, Palanpur Branch in the name of petitioner-Jyotindra Thakkar as well as his brother Rajeshkumar Thakkar. It is the case that there was an understanding between two brothers that the labour work for the said company Relcon would be carried out in the name of the petitioner, since Rajeshkumar was the employee of said Relcon. It is the further case that earnings from the labour work was to be deposited in the joint bank account. 3.1 The petitioner gave a post dated cheque dated 14th February, 2012 in the month of December, 2011 named in favour of the brother. The brother of the petitioner Rajeshkumar died on 18th March, 2012. Respondent No. 2-wife of Rajeshkumar, deposited the aforementioned cheque dated 14th February, 2012 which was in the name of said deceased Rajeshkumar. The deposit of the cheque was two months after the date of death of Rajeshkumar and prior to the expiry of the statutory validity period of the cheque. Respondent No. 2-wife of Rajeshkumar, deposited the aforementioned cheque dated 14th February, 2012 which was in the name of said deceased Rajeshkumar. The deposit of the cheque was two months after the date of death of Rajeshkumar and prior to the expiry of the statutory validity period of the cheque. The Bank intimated on 11th May, 2012 that the said cheque had bounced on account of insufficiency of funds. The said intimation was in the name of Rajeshkumar since the Bank was not informed about the death of Rajeshkumar. 3.2 Respondent No. 2 having issued a notice dated 08th June, 2012 through her advocate and having received reply from the petitioner dated 23rd June, 2012, filed a complaint under Section 138 of the N.I. Act; which came to be numbered as Criminal Case No. 5327 of 2012 with learned Additional Chief Judicial Magistrate, Palanpur, learned Magistrate issued process under Section 204 of Cr.P.C., 1973 as well as summons under Section 138 of the N.I. Act. It appears that the petitioner preferred an application before the learned Magistrate praying for recall of the summons, which was rejected on the ground that process once issued under Section 204, Cr.P.C., there was no provision for recalling of the process. This led the petitioner to invoke Section 482, Cr.P.C. for quashing the criminal case. 3.3 The complainant was wife of said Rajeshkumar. She was holding the cheque dated 14th February, 2012 after death of her husband. Subsequent to the occurrence of the death, respondent No. 2 deposited the cheque in the bank account which was bounced and the wife became complainant under Section 138 of the N.I. Act, placing the whole facts in a nutshell. 3.4 The centripetal point is whether the wife could be a complainant in law under Section 138, N.I. Act and whether complaint at her hands was maintainable; whether respondent No. 2 could be characterised in eye of law as "a holder in due course" within the meaning of Section 9 of the Act. 4. Learned advocate Mr. Hriday Buch for the petitioner submitted, by referring to the provision of Section 138 of the N.I. Act read with the concept of "holder in due course" as engrafted in Section 9 of the Act, that respondent No. 2 was neither a payee, nor was a holder in due course. 4. Learned advocate Mr. Hriday Buch for the petitioner submitted, by referring to the provision of Section 138 of the N.I. Act read with the concept of "holder in due course" as engrafted in Section 9 of the Act, that respondent No. 2 was neither a payee, nor was a holder in due course. He, therefore, submitted that respondent No. 2 did not have any locus in law to become a complainant under the Act. He pressed into service decision of this Court in Ramesh Manibhai Patel v. State of Gujarat [ 2012(2) GLR 1257 ]. In that case, speaking on the locus standi to file a complaint for dishonour of cheque, this Court held that all joint holder of account cannot file a complaint of dishonor of cheque as joint holders cannot be termed as "payee" or "holder in due course". 4.1 Paragraph 6.5 of the said decision in Ramesh M. Patel (supra) was relied on to submit that the Court did not express anything whether upon death of holder of the cheque is heir or legal representative without obtaining any succession certificate or probate and file a complaint, reading as under. "Now, so far as the decision of the Madhya Pradesh High Court in the case of Champalal Gajanand (supra) relied upon by the learned Advocate appearing on behalf of the original complainant is concerned, the same shall also not be applicable to the facts of the present case. In the case before the Madhya Pradesh High Court, the dispute raised was whether if a holder named is dead, his heirs become entitled to sue for recovery of loan evidenced by promissory note. It was not the case with respect to filing of the complaint under Sec. 138 of the N.I. Act. In the present case as stated hereinabove, the original complainant has not filed the impugned complaint as an heir of the holder of the cheque i.e. as heir of deceased Jaykrishna Prabhudas Thakkar. Even as per the cause title also, she has filed the impugned complaint in her individual capacity as holder in due course of the cheque being a joint holder of the Bank account with her husband. Even as per the cause title also, she has filed the impugned complaint in her individual capacity as holder in due course of the cheque being a joint holder of the Bank account with her husband. Therefore, this Court is not expressing anything on whether on the death of holder of the cheque, his heir and/or legal representative without obtaining any succession certificate and/or probate can file the complaint for offence under Sec. 138 of the N.I. Act or not and the said question is kept open." (Para 6.5) 4.2 Harping that only holder in due course can file a complaint, learned advocate for the petitioner next relied on decision of this Court in Ratilal H. Patel v. State of Gujarat [2016(3) GLH 164]. By referring to yet another decision of this Court in Dipendra G. Chokshi v. Kailash [ 1995(1) GLR 424 ], it was submitted that as per Section 142(a) of the N.I. Act, the Court can take cognizance only if the complaint is filed in writing by the person who is a "payee" or "holder in due course" of the cheque. Interpreting clause (a) of Section 142 of the N.I. Act, where the complaint was totally silent about payee or holder in due course of the cheque, the Court quashed the process. The thrust of submission of learned advocate for the petitioner was that unless the person is a holder in due course, he had no locus standi to file complaint. 4.3 A decision of Madras High Court in case of Palaniappa Mills represented by its Partner P. Natrajan v. A. Vaithiyalingam being Crl.R.C. Nos. 1245 of 2007 decided on 13th December, 2010 was relied on, in which the cheques were issued by the petitioners of that case in favour of "MRM" who discounted the cheque after receiving consideration from respondent-complainant. It was a contention raised that no endorsement found on the back side of the cheque by "MRM" to treat the complainant as holder in due course and that there was merely a signature of "MRM", which would not amount to due endorsement. The Court held that the complainant had failed to prove that he was a holder in due course. 4.3.1 In paragraphs 6 and 7 the ratio elucidated which may be reproduced hereinbelow. "The learned counsel for the petitioners has cited the following authorities viz. The Court held that the complainant had failed to prove that he was a holder in due course. 4.3.1 In paragraphs 6 and 7 the ratio elucidated which may be reproduced hereinbelow. "The learned counsel for the petitioners has cited the following authorities viz. (i) 2005 (1) DCR 323 in Ashok Kumar v. K. Gunasekaran (ii) 2006 (2) TNLR 693 (Mad) in Mukesh Chandra Guptha v. Anu Kumar Jain, wherein the issue involved is directly dealt with. In the cases above cited, the complaint is filed by the person claiming himself as holder in due course whereas endorsement found in the cheque was blank endorsement and the original lender was not examined as witness on the side of complainant and under such circumstances, our High Court is of the view that "holder in due course means any person who for consideration became the possessor of a promissory note" and when the consideration for passing of the cheque is not satisfactorily proved, the presumption that the other person is holder of cheque in due course cannot be drawn in favour of the complainant. The same view is also expressed by Andhra Pradesh High Court in the judgment reported in 2005(1) Bankmann 452 in M. Ethirajulu v. Rangam Adinarayana and others. The Andhra Pradesh High Court expressed similar view on the basis of law laid down by our Apex Court in the judgment reported in (1991) 1 SC 113 in U Ponnappa Moothan Sons v. Catholic Syrian Bank Ltd. that "the definition makes it clear that to be a 'holder' in due course' a person must be a holder for consideration and the instrument must have been transferred to him before it becomes overdue and he must be a transferee in good faith and another important condition is that the transferee namely the person who for consideration became the possessor of the cheque should not have any reason to believe that there was any defect in the title of transferor". (Para 6) 4.3.2 It was stated, "In the present case also, there is no endorsement found in the document and the passing of consideration is also not duly proved by the complainant by summoning the said Murugesan whose signature is found on the back side. (Para 6) 4.3.2 It was stated, "In the present case also, there is no endorsement found in the document and the passing of consideration is also not duly proved by the complainant by summoning the said Murugesan whose signature is found on the back side. If that is so, the ratio laid down by the Hon'ble Supreme court as followed by the Andhra Pradesh High Court is clearly applicable to the facts of the present case and by applying the same ratio, this court is inclined to hold that the complainant failed to prove that he is the holder in due course and hence, has no locus standi to maintain the complaints. On this score alone, the judgments of the courts below are to be necessarily set aside." (Para 7) 4.4 As against the above submissions, learned advocate Mr. S.R. Sharma for respondent No. 2 relied on Section 9 of the Act which mentions about the concept of holder in due course and submitted that respondent No. 2 became possessor of the cheque in question which made her to acquire the capacity of holder in due course more particularly when she was a wife of the payee and could well claim on behalf of the payee. Section 30 of the Act was relied on to submit that drawer of a cheque is bound in case of dishonor by drawee to compensate the holder. Learned advocate for respondent No. 2 next relied on sub-clause (g) of Section 118 of the N.I. Act which provides that until contrary is proved, there shall be presumption inter alia that holder of a negotiable instrument is a holder in due course. 4.5 Learned advocate for the respondent No. 2 relied on decision of the Apex Court in Uttar Pradesh Onnappa Moothan Sons, Palthat v. Catholic Syrian Bank Limited [ (1991) 1 SCC 113 ] more particularly observations in paragraphs 17, 18 and 19 thereof. In that case, it was held that failure to prove bona fide or absence of negligence of holder will not negative his claim as a holder in due course. The Court held in the context of Section 118(g) that plaintiff had discharged necessary burden to the extent on him and it proved that he was a holder in due course for valid consideration. Therefore it was held that he could validly maintain an action against the defendant in such capacity. The Court held in the context of Section 118(g) that plaintiff had discharged necessary burden to the extent on him and it proved that he was a holder in due course for valid consideration. Therefore it was held that he could validly maintain an action against the defendant in such capacity. 4.6 Learned advocate for respondent No. 2 in the next relied on decision of Karnataka High Court in Smt. Bhagava v. Shri Kadasiddeshwara Trading [ILR 2004 KAR 367], in which the Karnataka High Court took a view that on the death of payee, his legal heirs would step into shoe of payee for all practical purposes and such person can also file and prosecute complaint after completing legal formalities. It was held that it would be incumbent upon the complainant to prove that the complainant was the legal representative of the deceased payee, in the event of the accused disputing the same. In that case, payee had died and the wife of the payee as a legal heir had presented the cheque in question and the cheque being dishonoured, after issuance of legal notice, proceedings had been initiated under Section 138 of the N.I. Act. The facts were akin to the present one, submitted learned advocate for respondent No. 2 herein. 5. Having considered the compass of the controversy, having noticed the relevant provisions and the purport thereof, Section 138 reads as under. "138. The facts were akin to the present one, submitted learned advocate for respondent No. 2 herein. 5. Having considered the compass of the controversy, having noticed the relevant provisions and the purport thereof, Section 138 reads as under. "138. Dishonor of cheque for insufficiency, etc., of funds in the accounts : 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 honor 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 other provisions of this Act, be punished with imprisonment for a term which may extend to one year, or with fine which may extend to twice the amount of the cheque, or with both: PROVIDED that nothing contained in this section shall apply unless- (a) the cheque has been presented to the bank within a period of six months from the date on which it is drawn or within the period of its validity, whichever is earlier. (b) the payee or the holder in due course of the cheque, as the case may be, makes a demand for the payment of the said amount of money by giving a notice, in writing, to the drawer of the cheque, within fifteen days of the receipt of information by him from the bank regarding the return of the cheque as unpaid, and (c) the drawer of such cheque fails to make the payment of the said amount of money to the payee or, as the case may be, to the holder in due course of the cheque, within fifteen days of the receipt of the said notice." 5.1 Section 142 is about cognizance of the offences. It provides that no court shall take cognizance of any offence punishable under Section 138 except upon a complaint in writing made by the payee, or as the case may be, the holder in due course of the cheque. It provides that no court shall take cognizance of any offence punishable under Section 138 except upon a complaint in writing made by the payee, or as the case may be, the holder in due course of the cheque. 5.2 The concept of "holder" is in Section 8 of the Act whereas the connotation "holder in due course" is a special concept under the Act which Section 9 speaks of. As per Section 8, holder of a promissory note, cheque etc., means any person entitled in his own name to the possession thereof and to receive or recover the amount due thereon from the parties thereto. The "holder in due course", meaning of which bears relevance to the controversy, means any person who for consideration become the possessor of a promissory note, bill of exchange or cheque, if payable to the bearer or the payee or endorsee thereof if payable to order before the amount mentioned in it becomes payable, and without having sufficient cause to believe that any defect existed in the title of the person from whom he derived his title. 5.3 The gist ingredient of the concept "holder in due course" is that "holder in due course" is a person who becomes possessor of instrument-the cheque etc., and that he becomes such possessor and possession thereof for a consideration, leaving the other conditions mentioned in the provisions standing satisfied. Thus, it would not be right to simply say that every possessor of a promissory note or cheque or bill of exchange is a holder in due course. What is trite is that he must be one who is the possessor of the instrument for a consideration. It is not the holder of the cheque but the holder in due course of the cheque who acquires a legal competence and locus standi in law to base an action on the basis of returned cheque. 5.4 While the "holder in due course" is defined in the Act, the term "complainant" is not defined under the Code of Criminal Procedure, 1973 or under the N.I. Act. What under Section 142 of the N.I. Act requires is that a complaint under Section 138 of the Act shall be made by the payee or by the holder in due course. What under Section 142 of the N.I. Act requires is that a complaint under Section 138 of the Act shall be made by the payee or by the holder in due course. The provisions of the Act make it explicit and evident that it is the payee alone or where the cheque is endorsed by the payee in favour of any one, such person acquiring capacity of holder in due course alone, can file complaint under Section 138 of the Act. 5.5 The Apex Court in National Small Industries Corporation Limited v. State (NCT of Delhi) [ (2009) 1 SCC 407 ] stated the position of law thus-"Section 142 of the NI Act provides that notwithstanding anything contained in the Code, no court shall take cognizance of any offence punishable under Section 138 except upon a complaint in writing made by the payee (or where it has been endorsed in favour of another, the holder in due course) of the cheque." 5.6 When the Karnataka High Court in Smt. Bagva (supra) takes a view that an undisputed heir of the payee steps into the shoe of the payee to be competent to become a complainant under Section 138 of the Act, this Court is in respectful disagreement with such proposition. It ignores the provisions of Section 9 read with Section 142 of the Act, and in other words disregards the position evident therefrom that only a person having a capacity of holder in due course in eye of law is competent to maintain a complaint. The cognizance of complaint filed by the payee or holder in due course only is permissible in law. 5.7 A diametrically opposite view to the view of Karnataka High Court, which is the correct legal proposition, came to be expressed by the Bombay High Court in Vishnupant s/o. Chaburo Khaire v Kailash s/o. Balbhir Madan being Criminal Writ Petition No. 842 of 2009 decided on 25th January, 2010. The High Court observed and held, "The above said case law particularly observations in case of Roy Joseph Creado v Sk. The High Court observed and held, "The above said case law particularly observations in case of Roy Joseph Creado v Sk. Tamisuddin [2008(2) Mh.L.J. (Cri.) 118] indicate that once complaint is filed and verification of complainant-payee or complainant-holder in due course is recorded, his subsequent death will not prevent his legal heir from continuing the complaint." "However, we will have to see what would be position if payee or holder in due course of cheque dies prior to that. If such payee or holder in due course dies after expiration of time of payment mentioned in the notice required by Section 138 of the N.I. Act, but before filing of complaint, question would be whether sole heir or one of the heirs having authority of other heirs can file complaint and give verification on ground that by succession he/they have entered into shoes of deceased payee/holder in due course. Another contingency arises where payee/holder in due course dies before expiration of period of payment mentioned in the notice under Section 138 of the N.I. Act as is the case before us. Here, moot question is whether person claiming to be sole legal representative or one of the legal representatives can on payment of amount due under cheque, give valid discharge to drawer. If not, can it be said that by not making payment to such person, the drawer commits the offence. This requires detail analysis of position of law." (Para 24) 5.7.1 The Bombay High Court noted further, "It may be noted that the cheque is a negotiable instrument and also a valuable security and thus forms part of the movable property of the deceased which can be inherited or succeeded to by the legal heirs of the deceased. As per Section 138 of the Negotiable Instruments Act, where any cheque drawn by a person on 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. The payee is expected to issue notice calling upon the drawer concerned to pay the amount under the cheque within 15 days and in case such amount is not paid within prescribed time, payee or holder in due course of the cheque may file complaint as per Section 142 of the N.I. Act." (Para 26) 5.7.2 After considering provision of Section 142 and Section 9 of the Act, the Bombay High Court held, "The present Respondent-complainant is not the person named in the instrument nor he is a person to whom or to whose order money by the instrument is directed to be paid. Admittedly, there is no endorsement on the cheque by the deceased payee in favour of the Respondent-complainant. So, it is not that the amount under the instrument was directed to be paid to him. The holder in due course is defined as the person who for consideration is entitled to the possession of the bearer cheque or payee or endorsee thereof. It is submitted that as a legal representative of the deceased payee-father, the respondent-complainant, is entitled to possession of the valuable security/movable property left by his deceased father and also to receive or recover the amount thereunder. It is not disputed that the complainant could have filed a civil suit on the basis of the dishonoured cheque for recovery of the amount stated in the said cheque. The question is whether the respondent-complainant could file complaint in view of specific wording of Section 142(a). It is argued that the respondent complainant has not become possessor of the property for consideration, but it is because of death of his father-payee. He is also not endorsee." (Para 27) 5.8 A Madras High Court decisions in P.K. Koya Moideen v. G. Hariharan [1996 Cri.L.J. 3153] takes a view asking to what is being held herein by this Court. In P.K. Koya (supra), the cheque was drawn in name of complainant's father. Subsequent to the death of the father, the complainant claiming capacity of executor of father's Will, filed complaint under Section 138 of the N.I. Act. It was held that when there was nothing to show that he paid any consideration to his father, such person cannot be termed as 'holder in due course' under Section 9 of the Act. 6. The law laid down by the Bombay High Court in Vishnupant (supra) is eminently correct view. It was held that when there was nothing to show that he paid any consideration to his father, such person cannot be termed as 'holder in due course' under Section 9 of the Act. 6. The law laid down by the Bombay High Court in Vishnupant (supra) is eminently correct view. The contention of learned advocate for respondent No. 2 herein that respondent No. 2 wife would automatically acquire the capacity in law to be competent to file complaint, would fall flat. Such proposition does not hold good to stand the touchstone of provision of Section 9 read with Section 142 of the Act. 6.1 The legal connotation "holder in due course" has twin important essentials to carry. A person in order to become a holder in due course within the meaning of Section 9 of the Act must be in possession of a promissory note, bill of exchange or cheque, as is in the present case; at the same time, mere becoming possessor of the cheque etc., would not suffice. A person to the possessor of the instrument has to be for a consideration. It is indispensable ingredient for being clothed with the legal capacity of "holder in due course" is that the person in possession of the instrument, must have been in the possession for some consideration. 6.2 Therefore, it logically falls that merely being an heir of payee, though may be in possession of instrument, would not automatically make such heir or legatee a 'holder in due course' within the meaning of Section 9 of the N.I. Act. The concept of holder in due course does not recognize such position, besides which the ingredient of being a possessor for consideration has to exist. Respondent No. 2 wife, in absence of possessing such ingredient-capacity, cannot claim locus standi in law to become a complainant under Section 138 of the Act. 6.3 The claimed capacity of heir or legatee or right to inheritance by themselves would not attract or invest the person in possession of the instrument with the capacity as 'holder in due course' under the N.I. Act. Therefore upon death of the payee, heir of legatee thereof does not step into the shoe of the de-ceased payee merely because he happens to be an heir or a relative or a legatee. Therefore upon death of the payee, heir of legatee thereof does not step into the shoe of the de-ceased payee merely because he happens to be an heir or a relative or a legatee. Such person unless is in possession of the instrument and unless such possession is for consideration, cannot file a complaint posing himself or herself as legal heir. 6.4 Thus the respondent No. 2-wife only on the ground of she being a wife or on the ground that she was an heir of the husband to receive money cannot be treated as "holder in due course" within the meaning of Section 9 of the Act. A locus standi for her cannot be conceived in law to be one entitled to file a complaint under the N.I. Act. If she is claiming any right over the amount of cheque in capacity of heir, her remedy would be in civil law. Complaint at her instance under the N.I. Act, however cannot be maintainable, she having no locus standi to be a complainant under the N.I. Act. 7. For the reasons and discussion foregoing, Criminal Case No. 5327 of 2012 pending before the Court of learned Additional Chief Judicial Magistrate, Palanpur and the consequential process dated 12th October, 2012 issued by the said Court is hereby quashed. Rule is made absolute.