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2025 DIGILAW 1801 (KER)

Aneesha W/o Bahuleyan v. State of Kerala

2025-07-02

P.V.KUNHIKRISHNAN

body2025
ORDER : 1. Whether the presumption under section 139 of the Negotiable Instruments Act is available in a prosecution based on a “cash cheque” is the question to be decided in this case. The Revision Petitioner is the accused in S.T. No.187/2019 on the file of the Judicial Magistrate of First Class-IV, Kollam. The above case was filed by the 2 nd respondent herein alleging offence punishable under Section 138 of the Negotiable Instruments Act, 1881 (for short 'NI Act'). (Hereinafter, the petitioner and the 2 nd respondent are mentioned as the accused and the complainant, respectively.) 2. The case of the complainant in brief, as per the complaint, is as follows:- The complainant is a building contractor. The accused and the complainant are known to each other. The accused entrusted the complainant to construct a house for her for an amount of Rs.24,00,000/-, including the labour and material charges, etc. Thus, the complainant started construction and accused paid Rs.5,00,000/- as an advance. Out of Rs.5,00,000/- an amount of Rs.2,50,000/- was transferred to the account of the complainant on 03/05/2017, and Rs.2,50,000/- to the accounts of persons supplying the materials for the construction as advised by the complainant. The complainant continued the work and completed a major part of the work, for which an amount of Rs. 10,50,000/- is due to him. But the accused failed to pay a further amount apart from the advance she had made. Thus, the complainant decided not to continue the work without payment from the accused. The complainant made several requests to settle the amount for the work which he had already done. Thereafter, a dispute arose between them, and the accused decided to complete the work with another contractor. As per the work completed, the accused owed Rs. 5,50,000/- to the complainant and after mediation talks, it was agreed between them to settle the issue for an amount of Rs.4,00,000/-. Thus, on 29/08/2017, the accused issued a cheque bearing No. 657542 of the Vijaya Bank, Kollam branch dated 29/08/2017 for an amount of Rs.4,00,000/-. The accused made him to believe that the cheque would be honoured on presentation after two months. Believing the word of the accused, the complainant presented the cheque at the Vijaya Bank, Kollam branch on 30/10/2017. But the same was returned due to insufficient funds in the account of the accused, and the complainant got intimation regarding the same. The accused made him to believe that the cheque would be honoured on presentation after two months. Believing the word of the accused, the complainant presented the cheque at the Vijaya Bank, Kollam branch on 30/10/2017. But the same was returned due to insufficient funds in the account of the accused, and the complainant got intimation regarding the same. Hence, the complainant sent a legal notice through his Advocate on 31/10/2017 and demanded payment of the cheque. The accused received the notice on 02/11/2017 and sent the reply through her counsel stating that it is a false allegation. But she did not care to pay the amount. Hence, the complaint was filed. 3. To substantiate the case, the complainant himself was examined as PW1. Exts.P1 to P6 were marked as exhibits on the side of the complainant. No defence evidence was adduced. On going through the evidence and the documents, the trial court found that the accused was guilty under Section 138 of the NI Act and she was sentenced to undergo simple imprisonment for a period of three months and to pay compensation of Rs.4,00,000/- (Rupees Four lakhs only) to the complainant under Section 357(3) of the Criminal Procedure Code (for short 'Cr.P.C.'). In default of payment of compensation, the accused was directed to undergo simple imprisonment for a further period of one month. 4. Aggrieved by the conviction and sentence, the accused filed an appeal before the Additional Sessions Court-IV, Kollam. The appeal was considered by the Additional Sessions Judge-IV, Kollam. After going through the evidence and documents, the Appellate court found that there was nothing to interfere with the conviction imposed on the accused. But the sentence was modified to till the rising of the court and to pay compensation of Rs. 4,00,000/- (Rupees Four lakhs only) to the complainant, and the default sentence of one month imposed by the trial court was also confirmed. Aggrieved by the same, this Criminal Revision Petition is filed. 5. Heard Adv. Harish Gopinath, who appeared for the Revision Petitioner/accused. There is no appearance for the 2 nd respondent/complainant even though notice is served. 6. Adv. Harish Gopinath submitted that the Ext.P1 cheque produced by the complainant is a 'cash cheque'. Therefore, the presumption under Section 139 of the NI Act is not attracted. 5. Heard Adv. Harish Gopinath, who appeared for the Revision Petitioner/accused. There is no appearance for the 2 nd respondent/complainant even though notice is served. 6. Adv. Harish Gopinath submitted that the Ext.P1 cheque produced by the complainant is a 'cash cheque'. Therefore, the presumption under Section 139 of the NI Act is not attracted. It is also submitted that the presumption under Section 118 of the NI Act is also not applicable in cash cheque cases. Thereafter, the counsel takes me through the evidence of PW1 and submitted that the complainant deposed that a cheque was issued in his name. If that be the case, the cheque in question, which is a cash cheque, is not the cheque issued by the accused, is the argument. 7. This Court considered the contentions of the accused. This Court perused Ext.P1 cheque. A perusal of the same would show that it is a cash cheque. The name of the complainant is not mentioned in it. But, there is no dispute regarding the signature of the accused in the Ext.P1 cheque. The accused has a case that a blank cheque was handed over to her uncle, and the same was misused by the accused. The first question to be decided is whether the presumption under Section 139 of the NI Act is applicable as far as a cash cheque is concerned. The cheque is defined in Section 6 of the NI Act. Section 6 of the NI Act is extracted hereunder: “6. “Cheque”.— A “cheque” is a bill of exchange drawn on a specified banker and not expressed to be payable otherwise than on demand and it includes the electronic image of a truncated cheque and a cheque in the electronic form.” 8. Section 7 of the NI Act defines “drawer” and “drawee”. The maker of a bill of exchange or cheque is called the “drawer” and the person thereby directed to pay is called the “drawee”. The holder of a cheque is defined in Section 8 of the NI Act, which is extracted hereunder: “8. “Holder”.—The “holder” of a promissory note, bill of exchange or cheque 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 of a cheque is defined in Section 8 of the NI Act, which is extracted hereunder: “8. “Holder”.—The “holder” of a promissory note, bill of exchange or cheque 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. Where the note, bill or cheque is lost or destroyed, its holder is the person so entitled at the time of such loss or destruction.” (Emphasis supplied) 9. In the light of the above definition clause, the “holder” of a promissory note, bill of exchange or cheque 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. Section 139 of the NI Act reads like this: “139. Presumption in favour of holder .—It shall be presumed, unless the contrary is proved, that the holder of a cheque received the cheque of the nature referred to in section 138 for the discharge, in whole or in part, of any debt or other liability.” (Underline and emphasis supplied) 10. From a reading of Section 139 of the NI Act, it is clear that the presumption under Section 139 of the NI Act is applicable only to a “holder” of a cheque. In the light of Section 8 of the NI Act, the holder of a cheque 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. Admittedly, the Ext.P1 cheque is not in the name of the complainant. Therefore, it cannot be said that the complainant is the ‘holder’ of the cheque. 11. “Holder in due course” is defined in Section 9 of the NI Act. Holder in due course as per Section 9 of the NI Act 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. Therefore, a person in possession of a cheque can be treated as a ‘holder in due course’. Therefore, a person in possession of a cheque can be treated as a ‘holder in due course’. In other words, the ‘holder in due course’ of a cheque need not be a ‘holder’ as defined in Section 8 of the NI Act. Hence, presumption under Section 139 NI Act is not available to a ‘holder in due course’ because a reading of Section 139 would not show that the ‘holder in due course’ is also covered by the said Section and only a ‘holder’ of a cheque is presumed to receive the cheque of the nature referred to in Section 138 for the discharge in whole or in part of any debt or other liability. Therefore, as the ‘cash cheque’ is in possession of the complainant, he cannot be treated as a ‘holder’ of the cheque in the light of the definition of Section 8 of the NI Act. Unless the cheque is in the possession of a “holder”, there is no presumption under Section 139 of the NI Act. 12. The next question to be decided is whether a cash cheque can be treated as a negotiable instrument. This Court in Michael Kuruvilla v. Joseph J. Kondody , 1998 (1) KLT 384 observed like this: “9. In the decision in A.K. Hameed v. Appukutty, AIR 1969 Ker. 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". 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. 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 him 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 PW 1 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. ” In the light of the above, it is clear that a ‘cash cheque’ is also a negotiable Instrument. No evidence as against PW 1 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. ” In the light of the above, it is clear that a ‘cash cheque’ is also a negotiable Instrument. Moreover, a ‘cash cheque’ will also cover the definition of ‘cheque’ as defined in Section 6 of the NI Act. 13. Section 118 of the NI Act says about the presumption as to negotiable instruments. Section 118 of the NI Act is extracted hereunder: “118. Presumptions as to negotiable instruments. Until the contrary is proved, the following presumptions shall be made:— (a) of consideration:—that every negotiable instrument was made or drawn for consideration, and that every such instrument, when it has been accepted, indorsed, negotiated or transferred, was accepted, indorsed, negotiated or transferred for consideration; (b) as to date:—that every negotiable instrument bearing a date was made or drawn on such date; (c) as to time of acceptance:—that every accepted bill of exchange was accepted within a reasonable time after its date and before its maturity; (d) as to time of transfer:—that every transfer of a negotiable instrument was made before its maturity; (e) as to order of endorsements:—that the endorsements appearing upon a negotiable instrument were made in the order in which they appear then on; (f) as to stamp:— that a lost promissory note, bill of exchange or cheque was duly stamped; (g) that holder is a holder in due course:—that the holder of a negotiable instrument is a holder in due course: Provided that, where the instrument has been obtained from its lawful owner, or from any person in lawful custody thereof, by means of an offence or fraud, or has been obtained from the maker or acceptor thereof by means of an offence or fraud, or for unlawful consideration, the burden of proving that the holder is a holder in due course lies upon him.” 14. As per Section 118(a) of the NI Act, until the contrary is proved, every negotiable instrument was made or drawn for consideration, and that every such instrument, when it has been accepted, indorsed, negotiated or transferred, was accepted, indorsed, negotiated or transferred for consideration. Therefore, Section 118(a) presumption is available to a ‘cash cheque’ because it is a Negotiable Instrument. 15. Therefore, Section 118(a) presumption is available to a ‘cash cheque’ because it is a Negotiable Instrument. 15. Section 118(g) of the N.I. Act says that the holder of a negotiable instrument is a holder in due course. As I mentioned earlier, a person in possession of a ‘cash cheque’ cannot be treated as a ‘holder’ of a cheque as defined in Section 8 of the N.I Act, but a person in possession of a ‘cash cheque’ is a ‘holder in due course’. 16. Therefore, in a case where the ‘cash cheque’ is issued, the person who is in possession of the ‘cash cheque’ cannot be treated as a ‘holder’ and consequently, the presumption under Section 139 of the N.I.Act is not applicable to such cheques. Therefore, the complainant in such cases has to prove the case by adducing evidence to prove the ingredients of Section 138 of the N.I Act for prosecuting an accused. The complainant has to prove the case as if it is a criminal prosecution, and the presumption under Section 139 of the NI Act is not available to the complainant. The complainant has to prove that a cheque is 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. The complainant has also to prove that the cheque is returned by the bank ‘unpaid’ either because the amount of money standing in 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. Unless such evidence is adduced in a criminal prosecution, the complainant cannot succeed if the negotiable instrument in question is a ‘cash cheque’. Of course, the presumption under Section 118(a) of the NI Act is available in such cases. 17. Coming to the facts of the case, whether the complainant proved that the accused in this case committed the offence under Section 138 of the N.I.Act is the question to be decided in the above background. This Court perused the evidence adduced by the complainant. Except the oral evidence of the complainant and Exts.P1 to P6, no other evidence is adduced by the complainant. This Court perused the evidence adduced by the complainant. Except the oral evidence of the complainant and Exts.P1 to P6, no other evidence is adduced by the complainant. In the chief affidavit, the complainant deposed that there was a mediation talk in which it was decided that the accused would pay the amount of Rs. 4,00,000/- to the complainant. Based on that assurance on 29.08.2017, the accused issued a cheque of Vijaya Bank, Kollam Branch, bearing No.657542 for an amount of Rs. 4,00,000/-. According to the complainant, the accused assured that the same could be encashed after two months. It is specifically stated in the chief affidavit that there are witnesses to prove the same. Except the complainant, no other witnesses were examined by the complainant. A perusal of the chief affidavit would not show that the cheque issued is a ‘cash cheque’. The complainant was cross-examined by the accused. In the cross-examination, the complainant deposed like this:- 18. From the above statement, it is clear that the case of the complainant is that the cheque was issued in the name of the complainant by the accused. But, Ext.P1 is not a cheque in the name of the complainant. As I observed earlier, the presumption under Section 139 of the N.I.Act is not attracted in this case because, admittedly, Ext.P1 is a ‘cash cheque’. A reading of the evidence adduced by PW1 would show that he received a cheque in his name, whereas Ext.P1 is a cash cheque. For that reason itself, the impugned judgments are to be set aside. Moreover, even though PW1 deposed that there are witnesses to prove the issuance of the cheque, no witnesses were examined by the complainant. Except the interested testimony of the complainant, there is no other evidence. The evidence of the complainant itself contradicts because the complainant deposed that the cheque was issued in the name of the complainant, whereas Ext.P1 is a ‘cash cheque’. In such circumstances, I am of the considered opinion that the conviction and sentence imposed on the accused are to be set aside. Therefore, this Criminal Revision Petition is allowed. The conviction and sentence imposed on the Revision petitioner/accused as per the judgment dated 11.05.2022 in ST. No.187/2019 on the file of the Judicial First Class Magistrate Court-IV, Kollam and the judgment dated 31.03.2023 in Crl. A. No.65/2022 of the Additional Sessions Judge-IV, Kollam are set aside. Therefore, this Criminal Revision Petition is allowed. The conviction and sentence imposed on the Revision petitioner/accused as per the judgment dated 11.05.2022 in ST. No.187/2019 on the file of the Judicial First Class Magistrate Court-IV, Kollam and the judgment dated 31.03.2023 in Crl. A. No.65/2022 of the Additional Sessions Judge-IV, Kollam are set aside. The Revision petitioner/accused is acquitted. The bail bond, if any, executed by the accused stands cancelled. If any amount is deposited by the Revision petitioner/accused based on the orders of this Court or the appellate court, the same shall be returned to the accused forthwith.