Criminal Appeal Nos. 1870-1909 of 2012 (Arising out of S.L.P. (Crl.) Nos. 1740-1779 of 2011) and Criminal Appeal Nos. 1910-1949 of 2012 (Arising out of S.L.P. (Crl.) Nos. 1780-1819 of 2011). Case: Laxmi Dyechem Vs State of Gujarat and Ors.. Supreme Court (India)
| Case Number | Criminal Appeal Nos. 1870-1909 of 2012 (Arising out of S.L.P. (Crl.) Nos. 1740-1779 of 2011) and Criminal Appeal Nos. 1910-1949 of 2012 (Arising out of S.L.P. (Crl.) Nos. 1780-1819 of 2011) |
| Counsel | For Appellant: A. Venayagam Balan, Adv. and For Respondents: Ms. Hemantika Wahi, Adv. |
| Judges | T.S. Thakur and Gyan Sudha Misra, JJ. |
| Issue | Negotiable Instruments Act, 1881 - Sections 118, 138, 139, 140, 141, 141(2), 142; Banking, Public Financial Institutions and Negotiable Instruments Laws (Amendment) Act, 1988; Code of Criminal Procedure, 1973 - Section 482 |
| Citation | 2012 (11) SCALE 365, 2013 (4) ABR 956, 2013 (1) ACR 410, 2012 (11) ADJ 391, 2013 (2) ALD (Cri)823, 2014 AllMR 721 (Cri), 2013 (2) ALT 45 (Cri), 2013 (I) BC 140 (SC), 2013 (1) BomCR 813, 2013 (1) BomCR 456 (Cri), 2013 (1) CompLJ 137 (SC), 2013 CriLJ 3288, 2013 (1) Crimes101 (SC), 2012 (6) CTC 690, 2013 (1) JCC 41, JT 2012 (12) SC 65, 2012 (4) KHC 82 |
| Judgement Date | November 27, 2012 |
| Court | Supreme Court (India) |
Judgment:
T.S. Thakur, J.
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Leave granted.
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These appeals are directed against orders dated 19th April, 2010 and 27th August, 2010 passed by the High Court of Gujarat at Ahmedabad whereby the High Court has quashed 40 different complaints under Section 138 of the Negotiable Instruments Act, 1881 filed by the Appellant against the Respondents. Relying upon the decision of this Court in Vinod Tanna and Anr. v. Zaher Siddiqui and Ors. (2002) 7 SCC 541, the High Court has taken the view that dishonour of a cheque on the ground that the signatures of the drawer of the cheque do not match the specimen signatures available with the bank, would not attract the penal provisions of Section 138 of the Negotiable Instruments Act. According to the High Court, the provisions of Section 138 are attracted only in cases where a cheque is dishonoured either because the amount of money standing to the credit to the account maintained by the drawer is insufficient to pay the cheque amount or the cheque amount exceeds the amount arranged to be paid from account maintained by the drawer by an agreement made with the bank. Dishonour of a cheque on the ground that the signatures of the drawer do not match the specimen signatures available with the bank does not, according to the High Court, fall in either of these two contingencies, thereby rendering the prosecution of the Respondents legally impermissible. Before we advert to the merits of the contentions urged at the Bar by the learned Counsels for the parties, we may briefly set out the factual backdrop in which the controversy arises.
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The Appellant is a proprietorship firm engaged in the sale of chemicals. It has over the past few years supplied Naphthalene Chemicals to the Respondent-company against various invoices and bills issued in that regard. The Appellant's case is that a running account was opened in the books of account of the Appellant in the name of the Respondent-company in which the value of the goods supplied was debited from time to time as per the standard accounting practice. A sum of Rs. 4,91,91,035/- (Rupees Four Crore Ninety One Lac Ninety One Thousand Thirty Five only) was according to the Appellant outstanding against the Respondent-company in the former's books of accounts towards the supplies made to the latter. The Appellant's further case is that the Respondent-company issued under the signatures of its authorised signatories several post dated cheques towards the payment of the amount aforementioned. Several of these cheques (one hundred and seventeen to be precise) when presented were dishonoured by the bank on which the same were drawn, on the ground that the drawers' signatures were incomplete or that no image was found or that the signatures did not match. The Appellant informed the Respondents about the dishonour in terms of a statutory notice sent under Section 138 and called upon them to pay the amount covered by the cheques. It is common ground that the amount covered by the cheques was not paid by the Respondents although according to the Respondents the company had by a letter dated 30.12.2008, informed the Appellant about the change of the mandate and requested the Appellant to return the cheques in exchange of fresh cheques. It is also not in dispute that fresh cheques signed by the authorised signatories, according to the new mandate to the Bank, were never issued to the Appellant ostensibly because the offer to issue such cheques was subject to settlement of accounts, which had according to the Respondent been bungled by the outgoing authorised signatories. The long and short of the matter is that the cheques remained unpaid despite notice served upon the Respondents that culminated in the filing of forty different complaints against the Respondents under Section 138 of the Negotiable Instruments Act before the learned trial court who took cognizance of the offence and directed issue of summons to the Respondents for their appearance. It was at this stage that Special Criminal Applications No. 2118 to 2143 of 2009 were filed by Shri Mustafa Surka accused No. 5 who happened to be one of the signatories to the cheques in question. The principal contention urged before the High Court in support of the prayer for quashing of the proceedings against the signatory to the cheques was that the dishonour of cheques on account of the signatures 'not being complete' or 'no image found' was not a dishonour that could constitute an offence under Section 138 of the Negotiable Instrument Act.
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By a common order dated 19th April, 2010, the High Court allowed the said petitions, relying upon the decision of this Court in Vinod Tanna's case (supra) and a decision delivered by a Single Judge Bench of the High Court of Judicature at Bombay in Criminal Application No. 4434 of 2009 and connected matters. The Court observed:
In the instant case, there is no dispute about the endorsement that "drawers signature differs from the specimen supplied" and/or "no image found-signature" and/or "incomplete signature/illegible" and for return/dishonour of cheque on the above endorsement will not attract ingredients of Section 138 of the Act and insufficient fund as a ground for dishonouring cheque cannot be extended so as to cover the endorsement "signature differed from the specimen supplied" or likewise. If the cheque is returned/bounced/dishonoured on the endorsement of "drawers signature differs from the specimen supplied" and/or "no image found-signature" and/or "incomplete signature / illegible", the complaint filed under Section 138 of the Act is not maintainable. Hence, a case is made out to exercise powers under Section 482 of the Code of Criminal Procedure, 1973 in favour of the Petitioner.
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Special Criminal Applications No. 896 to 935 of 2010 were then filed by the remaining accused persons challenging the proceedings initiated against them in the complaints filed by the Petitioner on the very same ground as was taken by Mustafa Surka. Reliance was placed by the Petitioners in the said petitions also upon the decision of this Court in Vinod Tanna's case (supra) and the decision of the Single Judge Bench of High Court of Bombay in Mustafa Surka v. Jay Ambe Enterprise and Anr. (2010 (1) Bom. (Crl.) 758). The High Court has, on the analogy of its order dated 19th April, 2010 passed in the earlier batch of cases which order is the subject matter of SLP Nos. 1780-1819 of 2011, quashed the proceedings and the complaints even qua the remaining accused persons, Respondents herein. The present appeals, as noticed above, assail the correctness of both the orders passed by the High Court in the two batch of cases referred to above.
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Chapter XVII comprising Sections 138 to 142 of the Negotiable Instruments Act was introduced in the statute by Act 66 of 1988. The object underlying the provision contained in the said Chapter was aimed at inculcating faith in the efficacy of banking operations and giving credibility to negotiable instruments in business and day to day transactions by making dishonour of such instruments an offence. A negotiable instrument whether the same is in the form of a promissory note or a cheque is by its very nature a solemn document that carries with it not only a representation to the holder in due course of any such instrument but also a promise that the same shall be honoured for payment. To that end Section 139 of the Act raises a statutory presumption that the cheque is issued in discharge of a lawfully recoverable debt or other liability. This presumption is no doubt rebuttable at trial but there is no gainsaying that the same favours the complainant and shifts the burden to the drawer of the instrument (in case the same is dishonoured) to prove that the instrument was without any lawful consideration. It is also noteworthy that Section 138 while making dishonour of a cheque an offence punishable with imprisonment and fine also provides for safeguards to protect drawers of such instruments where dishonour may take place for reasons other than those arising out of dishonest intentions. It envisages service of a notice upon the drawer of the instrument calling upon him to make the payment covered by the cheque and permits prosecution only after the expiry of the statutory period and upon failure of the drawer to make the payment within the said period.
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The question that falls for our determination is whether dishonour of a cheque would constitute an offence only in one of the two contingencies envisaged under Section 138 of the Act, which to the extent the same is relevant for our purposes reads as under:
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Dishonour of cheque for insufficiency, etc., of funds in the account.--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 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 and shall, without prejudice to any other provision of this Act, be punished with imprisonment of a term which may extend to one year, or with fine which may extend to twice the amount of the cheque, or with...
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