2025 (11) TMI 1425 - HC - Indian Laws

Conviction Under Section 138 NI Act Upheld, Jail Term Confirmed but Excessive Double Compensation Reduced on Revision

M. Mohamed Ismail Versus Chidambaram

HC upheld the accused's conviction under Section 138 NI Act, holding that the cheque presentation was within validity and that presumptions under Sections ... Dishonour of Cheque - legally enforceable debt or not - validity of cheque presentation - lost cheque defence - Attendance Registers - Contradictions and Financial capacity - entitlement to presumptions under Sections 118 and 139 NI Act, 1881 - rebuttal of presumtions - offence under Section 138 NI Act, 1881, stood proved beyond reasonable doubt or not - Quantum of Sentence and Compensation. Validity of cheque presentation - HELD THAT:- No doubt in terms of Section 5 and 6 of the Act, a bill of exchange is a negotiable instrument in writing directing a third party to pay a specific sum of money on a particular date or on demand. Like wise a cheque is a bill of exchange drawn by the holder on his bank, expressly specifying to be payable only on demand. Thus, a bill of exchange even if drawn on a bank cannot be a cheque, if it is not payable on demand. Hence a ‘post dated cheque’ becomes a cheque only on the dawn of the date mentioned in it and until then, it remains only a bill of exchange - In the instant case, the cheque bears the date 01.07.2014. Until that date, it was only a bill of exchange; it became a cheque only from 01.07.2014. Presentation on 05.08.2014 was well within validity. Lost cheque defence - HELD THAT:- The defence of lost cheque lacks probability. Carrying pre-signed blank cheques in public transport by an experienced lawyer is improbable. The accused only produced a CSR, without pursuing the matter further. The malafide design of the revision petitioner is evident from him taking no further steps with Othakadai police to proceed with the investigation in his lost cheque book issue. His conduct in not communicating the receipt of legal notice disclosing the presence of the alleged missing cheque leaves with the complainant to the Othakadai Police for proper investigation would suffice to prove the falsified nature of the defence concocted by the accused. Hence there are no perversity with both Courts having concurrently rejected this defence. Contradictions and Financial Capacity - HELD THAT:- Minor inconsistencies as to whether the complainant routed money through his wife or father are not fatal. The cheque admittedly signed by the accused is sufficient to attract presumption under Sections 118 and 139 NI Act, 1881. Financial capacity is supported by jewel loan receipts and bank entries. Attendance Registers - HELD THAT:- The defence relied on Ex.R16 and R17 (attendance registers). These were not proved through competent witnesses and lacked authentication. Conversely, Ex.P31 (Court B-Diary) corroborated complainant’s presence. Both the Trial and Appellate Courts rightly rejected the registers. Quantum of Sentence and Compensation - HELD THAT:- The revision petitioner emphasises that the compensation of Rs. 20,00,000/- (Rupees Twenty Lakhs only) is twice the cheque amount of Rs. 10,00,000/-. Section 357(3) Cr.P.C., 1973, empowers the Court to award just compensation. However, awarding compensation far exceeding the cheque amount requires cogent reasons. In this case, while two years simple imprisonment is not disproportionate, directing payment of double the cheque amount as compensation is excessive. The conviction under Section 138 NI Act is based on proper appreciation of evidence. The presumption under Sections 118 and 139 NI Act was not rebutted. The plea of lost cheque is untenable. However, the quantum of compensation requires modification - this Criminal Revision Case is partly allowed. 1. ISSUES PRESENTED AND CONSIDERED 1.1. Whether the cheque in question was presented within the period prescribed under proviso (a) to Section 138 of the Negotiable Instruments Act, 1881, having regard to the contention that it was issued earlier as a post-dated instrument. 1.2. Whether the statutory presumptions under Sections 118 and 139 of the Negotiable Instruments Act, 1881 stood rebutted by the accused through the plea of 'lost cheque', alleged absence of legally enforceable debt, alleged contradictions, and challenge to the complainant's financial capacity. 1.3. Whether the defence based on attendance registers, to dispute the complainant's presence at the place of transaction, was sufficient to discredit the complainant's version accepted by the Courts below. 1.4. Whether the sentence of two years' simple imprisonment and the direction to pay compensation of twice the cheque amount under Section 357(3) Cr.P.C., 1973, were legally sustainable and proportionate. 2. ISSUE-WISE DETAILED ANALYSIS Issue 1: Validity of cheque presentation under proviso (a) to Section 138 NI Act Legal framework 2.1. The Court extracted and applied Sections 5, 6, 19, 138, 139 and 140 of the Negotiable Instruments Act, 1881, particularly proviso (a) to Section 138, which requires that the cheque must be 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'. 2.2. The Court discussed the distinction between a 'bill of exchange' (Section 5) and a 'cheque' (Section 6), and the concept of post-dated cheques, noting that a cheque is payable on demand (Sections 6 and 19). Interpretation and reasoning 2.3. The Court held that a post-dated instrument remains a 'bill of exchange' until the date mentioned on its face and becomes a 'cheque' only on the date it bears. Until then, it is not payable on demand. 2.4. Applying this principle, the Court found that the cheque in question bore the date 01.07.2014. It therefore became a cheque only from that date, irrespective of any earlier alleged delivery or understanding between the parties. 2.5. The presentation of the cheque on 05.08.2014 was held to be within the statutory period, computed from the date on the face of the cheque, not from the alleged earlier date of issuance in 2013. Conclusions 2.6. The plea that the cheque was time-barred under proviso (a) to Section 138 was rejected. The Court held that presentation on 05.08.2014, for a cheque dated 01.07.2014, satisfied the temporal condition under Section 138 NI Act. Issue 2: Rebuttal of presumptions under Sections 118 and 139 NI Act; 'lost cheque' and legally enforceable debt Legal framework 2.7. The Court applied Sections 118 and 139 NI Act, under which a presumption arises that a cheque, once its execution/signature is admitted, has been issued for the discharge, in whole or in part, of a legally enforceable debt or liability, subject to rebuttal by the accused. 2.8. The Court also proceeded on the basis of Section 20 NI Act as recognised by the Courts below, that a holder of an inchoate stamped instrument may complete it, without invalidating the instrument merely on the basis that blanks were filled in later. Interpretation and reasoning 2.9. It was noted that the accused did not dispute the cheque leaf (Ex.P1) belonging to his bank account nor his signature thereon. This triggered the statutory presumptions under Sections 118 and 139 NI Act in favour of the complainant. 2.10. The accused sought to rebut the presumptions by asserting a defence of 'lost cheque', alleging that several signed blank cheques, including the cheque in question, were lost at Madurai while travelling, leading to a police complaint, stop-payment instructions, and paper publication. 2.11. The Court held the 'lost cheque' defence to be inherently improbable and lacking in bona fides for the following reasons: (a) It was implausible that an experienced lawyer, well-versed in NI Act matters, would carry pre-signed blank cheques in a polythene cover while travelling in public transport. (b) The version that only the inner polythene cover went missing, while the outer bag with case records remained intact, was found inherently doubtful. (c) The accused only produced a CSR and some related documents but did not effectively pursue the complaint to its logical conclusion (e.g., no non-traceable certificate, no further investigative steps). (d) After receipt of the statutory notice from the complainant specifically referring to the cheque, the accused did not place this crucial development before the Othakadai Police to facilitate proper investigation, which, in the Court's view, strongly suggested that the 'lost cheque' plea was a subsequent concoction. 2.12. On the existence of a legally enforceable debt, the Court relied on the consistent documentary trail already appreciated by the Courts below, including jewel loan receipts, bank statements, and self-cheques of the complainant's relatives, as corroborative of the complainant's version of multiple loans culminating in the issuance of the cheque. 2.13. The Court accepted the view of the Courts below that minor inconsistencies regarding whether some amounts were routed through the complainant's wife or father did not dislodge the statutory presumptions, once the accused's signature and account on the cheque were admitted and the general course of financial dealings was corroborated. Conclusions 2.14. The Court held that the presumptions under Sections 118 and 139 NI Act were duly attracted and that the accused had failed to raise a probable or credible defence to rebut them. 2.15. The 'lost cheque' defence was rejected as false and concocted, and the existence of a legally enforceable debt corresponding to the cheque amount was upheld. 2.16. The conviction for the offence under Section 138 NI Act was affirmed on the basis of proper appreciation of evidence and application of the statutory presumptions. Issue 3: Evidentiary value of attendance registers vis-à-vis complainant's presence Interpretation and reasoning 2.17. The accused relied on alleged attendance registers (Ex.R16 and Ex.R17) of educational institutions to show that the complainant, being employed as faculty, could not have been physically present at Tenkasi on relevant dates for the transactions. 2.18. The Court noted that these attendance registers were not proved through competent custodial witnesses, lacked proper authentication (including college seal), and hence did not carry substantial evidentiary weight. 2.19. Conversely, the complainant produced the Court B-Diary (Ex.P31), which corroborated his presence at the relevant Court at Tenkasi and supported the explanation that he was working only as a part-time faculty elsewhere. 2.20. Consistent with the concurrent findings of the Trial and Appellate Courts, the High Court found no merit in the attendance-register-based challenge to the complainant's presence or in the attempt to thereby undermine the prosecution case as to issuance and delivery of the cheque. Conclusions 2.21. The Court upheld the rejection of Ex.R16 and Ex.R17 as unreliable and unauthenticated, and accepted Ex.P31 and related evidence as satisfactorily establishing the complainant's presence at Tenkasi on relevant dates. Issue 4: Propriety and quantum of sentence and compensation under Section 357(3) Cr.P.C. Legal framework 2.22. The Court proceeded on the basis of Section 357(3) Cr.P.C., 1973, which empowers criminal Courts to order payment of compensation to the victim, even when no fine forms part of the sentence, provided the compensation is 'just'. Interpretation and reasoning 2.23. The Courts below had imposed a sentence of two years' simple imprisonment and directed payment of compensation of Rs. 20,00,000/- under Section 357(3) Cr.P.C., which is twice the cheque amount of Rs. 10,00,000/-. 2.24. While affirming that the term of two years' simple imprisonment was not disproportionate in the facts of the case, the Court scrutinised the quantum of compensation. 2.25. The Court held that, though Section 357(3) Cr.P.C. does not mechanically confine compensation to the exact cheque amount, an order granting compensation significantly exceeding the cheque amount must be supported by specific and cogent reasons. 2.26. On the facts, the Court considered that directing payment of compensation at double the cheque amount, without sufficient special justification on record, resulted in an excessive award. Conclusions 2.27. The conviction under Section 138 NI Act and the substantive sentence of two years' simple imprisonment were confirmed. 2.28. The compensation under Section 357(3) Cr.P.C. was modified and reduced from Rs. 20,00,000/- to Rs. 10,00,000/-, i.e., to the cheque amount. 2.29. It was further directed that, in default of payment of the reduced compensation within three months, the accused shall undergo simple imprisonment for a period of four months.