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2023 DIGILAW 1224 (ALL)

Rakesh Kumar v. State of U. P.

2023-05-02

VIVEK VARMA

body2023
JUDGMENT Vivek Varma, J. Supplementary affidavit filed by the counsel for the applicant, is taken on record. 2. The present application under Section 482 Cr.P.C. has been filed with the prayer to quash the orders dated 01.11.2022 and 25.05.2022 passed by Civil Judge (Sr. Div.)/Additional Chief Judicial Magistrate, Ghaziabad in Complaint Case No. 3531 of 2022 (Menika Rani v. Rakesh Kumar), under Section 138 of Negotiable Instrument Act, Police Station Kotwali, District Ghaziabad. 3. In brief, the opposite party no.2 filed a complaint under section 138 of the Negotiable Instruments Act, 1881 (hereinafter referred to as 'the Act') against the applicant in the Court of Civil Judge (Sr. Div.)/Addl. Chief Judicial Magistrate, Ghaziabad with the allegation that Cheque No.039007 issued by the applicant drawn on the Bank of India for an amount of Rs. 1,00,000/- in favour of the opposite party no.2 was presented for encashment at Bank of India, Branch Navyug Market, Ghaziabad but it was returned with the remark "account closed" vide memo dated 22.04.2022. On 26.04.2022 a legal notice was sent to the applicant. Despite service of notice, the applicant did not make any payment. 4. The complaint was filed on 25.05.2022 supported by an affidavit. The learned Magistrate summoned the applicant vide order dated 01.11.2022. 5. The only submission raised by the counsel for the applicant is that since the cheque was returned with the note 'account closed', section 138 of Negotiable Instruments Act would not be attracted. 6. On the other hand, learned AGA submits that the ingredients of section 138 of N.I. Act are clearly made out against the applicant. 7. Heard counsel for the applicant and learned AGA for the State. 8. The issue as to whether the dishonour of a cheque on the ground that the 'account is closed' would attract section 138 of the Negotiable Instruments Act has been considered by the Hon'ble Supreme Court in the case of NEPC Micon Ltd. and others v. Magma Leasing Ltd. reported in (1999) 4 SCC 253 . The Apex Court held that such dishonour would be considered a dishonour within the meaning of section 138 of Negotiable Instruments Act.The relevant paragraph no. 15 is quoted herein below: "15. The Apex Court held that such dishonour would be considered a dishonour within the meaning of section 138 of Negotiable Instruments Act.The relevant paragraph no. 15 is quoted herein below: "15. In view of the aforesaid discussion we are of the opinion that even though Section 138 is a penal statute, it is the duty of the court to interpret it consistent with the legislative intent and purpose so as to suppress the mischief and advance the remedy. As stated above, Section 138 of the Act has created a contractual breach as an offence and the legislative purpose is to promote efficacy of banking and of ensuring that in commercial or contractual transactions cheques are not dishonoured and credibility in transacting business through cheques is maintained. The above interpretation would be in accordance with the principle of interpretation quoted above "brush away the cobweb varnish, and shew the transactions in their true light" (Wilmot, C.J.) or (by Maxwell) "to carry out effectively the breach of the statute, it must be so construed as to defeat all attempts to do, or avoid doing, in an indirect or circuitous manner that which it has prohibited". Hence, when the cheque is returned by a bank with an endorsement "account closed", it would amount to returning the cheque unpaid because "the amount of money standing to the credit of that account is insufficient to honour the cheque" as envisaged in Section 138 of the Act." 9. The said judgement was also followed by the Apex Court in Laxmi Dyechem v. State of Gujarat and others reported in (2012) 13 SCC 375 . The relevant paragraph nos. 13 to 16.1 are quoted herein below:- "13. We may also at this stage refer to the decisions of this Court in M.M.T.C. Ltd. v. Medchl Chemials and Pharma (P) Ltd. (2002) 1 SCC 234 , where too this Court considering an analogous question held that even in cases where the dishonour was on account of "stop payment" instructions of the drawer, a presumption regarding the cheque being for consideration would arise under Section 139 of the Act. The Court observed: "19. Just such a contention has been negatived by this Court in Modi Cements Ltd. v. Kuchil Kumar Nandi (1998) 3 SCC 249 . The Court observed: "19. Just such a contention has been negatived by this Court in Modi Cements Ltd. v. Kuchil Kumar Nandi (1998) 3 SCC 249 . It has been held that even though the cheque is dishonoured by reason of 'stop-payment' instruction an offence under Section 138 could still be made out. It is held that the presumption under Section 139 is attracted in such a case also. The authority shows that even when the cheque is dishonoured by reason of stop-payment instructions by virtue of Section 139 the court has to presume that the cheque was received by the holder for the discharge, in whole or in part, of any debt or liability of course this is a rebuttable presumption. The accused can thus show that the 'stop- payment' instructions were not issued because of insufficiency or paucity of funds. If the accused shows that in his account there were sufficient funds to clear the amount of the cheque at the time of presentation of the cheque for encashment at the drawer bank and that the stop-payment notice had been issued because of other valid causes including that there was no existing debt or liability at the time of presentation of cheque for encashment, then offence under Section 138 would not be made out. The important thing is that the burden of so proving would be on the accused. Thus a court cannot quash a complaint on this ground." 14. To the same effect is the decision of this Court in Goaplast (P) Ltd. v. Chico Ursula D'souza (2003) 3 SCC 232 , where this Court held that 'stop payment instructions' and consequent dishonour of a post-dated cheque attracts the provision of Section 138. This Court observed : "Chapter XVII containing Sections 138 to 142 was introduced in the Act by Act 66 of 1988 with the object of inculcating faith in the efficacy of banking operations and giving credibility to negotiable instruments in business transactions. The said provisions were intended to discourage people from not honouring their commitments by way of payment through cheques. The court should lean in favour of an interpretation which serves the object of the statute. A post-dated cheque will lose its credibility and acceptability if its payment can be stopped routinely. The purpose of a post-dated cheque is to provide some accommodation to the drawer of the cheque. The court should lean in favour of an interpretation which serves the object of the statute. A post-dated cheque will lose its credibility and acceptability if its payment can be stopped routinely. The purpose of a post-dated cheque is to provide some accommodation to the drawer of the cheque. Therefore, it is all the more necessary that the drawer of the cheque should not be allowed to abuse the accommodation given to him by a creditor by way of acceptance of a post-dated cheque. In view of Section 139, it has to be presumed that a cheque is issued in discharge of any debt or other liability. The presumption can be rebutted by adducing evidence and the burden of proof is on the person who wants to rebut the presumption. This presumption coupled with the object of Chapter XVII of the Act leads to the conclusion that by countermanding payment of post-dated cheque, a party should not be allowed to get away from the penal provision of Section 138 of the Act. A contrary view would render Section 138 a dead letter and will provide a handle to persons trying to avoid payment under legal obligations undertaken by them through their own acts which in other words can be said to be taking advantage of one's own wrong." (emphasis supplied) 15. A three-Judge Bench of this Court in Rangappa v. Sri Mohan (2010) 11 SCC 441 has approved the above decision and held that failure of the drawer of the cheque to put up a probable defence for rebutting the presumption that arises under Section 139 would justify conviction even when the appellant drawer may have alleged that the cheque in question had been lost and was being misused by the complainant. 16. The above line of decisions leaves no room for holding that the two contingencies envisaged under Section 138 of the Act must be interpreted strictly or literally. We find ourselves in respectful agreement with the decision in Magma case NEPC Micon Ltd. v. Magma Leasing Ltd., (1999) 4 SCC 253 that the expression "amount of money .... is insufficient" appearing in Section 138 of the Act is a genus and dishonour for reasons such "as account closed", "payment stopped", "referred to the drawer" are only species of that genus. is insufficient" appearing in Section 138 of the Act is a genus and dishonour for reasons such "as account closed", "payment stopped", "referred to the drawer" are only species of that genus. Just as dishonour of a cheque on the ground that the account has been closed is a dishonour falling in the first contingency referred to in Section 138, so also dishonour on the ground that the "signatures do not match" or that the "image is not found", which too implies that the specimen signatures do not match the signatures on the cheque would constitute a dishonour within the meaning of Section 138 of the Act: 16.1 This Court has in the decisions referred to above taken note of situations and contingencies arising out of deliberate acts of omission or commission on the part of the drawers of the cheques which would inevitably result in the dishonour of the cheque issued by them. For instance, this Court has held that if after issue of the cheque the drawer closes the account it must be presumed that the amount in the account was nil hence insufficient to meet the demand of the cheque. A similar result can be brought about by the drawer changing his specimen signature given to the bank or in the case of a company by the company changing the mandate of those authorised to sign the cheques on its behalf. Such changes or alteration in the mandate may be dishonest or fraudulent and that would inevitably result in dishonour of all cheques signed by the previously authorised signatories. There is in our view no qualitative difference between a situation where the dishonour takes place on account of the substitution by a new set of authorised signatories resulting in the dishonour of the cheques already issued and another situation in which the drawer of the cheque changes his own signatures or closes the account or issues instructions to the bank not to make the payment. So long as the change is brought about with a view to preventing the cheque being honoured the dishonour would become an offence under Section 138 subject to other conditions prescribed being satisfied." 10. Following the legal propositions as enunciated by the Hon'ble Supreme Court, this Court does not find any ground to interfere in the instant case. The application lacks merit and is, accordingly, dismissed.