AI OCR 
TaxTMI 
TaxTMI 
TaxTMI 
2004 (2) TMI 748
X X X X Extracts X X X X
X X X X Extracts X X X X
....n was that the undated cheque handed over to the said Vijayan as security was being misused by the complainant. 3. P. Ws. 1 to 3 were examined and Exts. PI to P6 were marked. On the side of the accused D. Ws. 1 to 3 were examined and Exts. D1 to D4 were marked. 4. The trial Court held that all ingredients of the offence punishable under Section 138 of the N.I. Act have been established. The appellant Court took the view that Section 138 of the N.I. Act does not apply to a cheque issued after the date of closure of the account. It was further held that the cheque is not proved to be one issued for the due discharge of any legally enforceable debt/liability. 5. Arguments have been heard. It will be apposite to extract Section 138 of the N.I. Act. Proviso is omitted as it is not of relevance here. "138. 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 sta....
X X X X Extracts X X X X
X X X X Extracts X X X X
....netary transactions in the modern world. Cheques drawn on banks must have credibility. Transactions in cheques must be as effective, efficient, credible and sure as transactions in cash. This is the purpose/goal/dream entertained by the legislature. The mischief rule in interpretation cannot be lost sight of. Interpretation must lead a Court to the ultimate goals which the legislature wants to be reached. In respect of a penal statute also this principle of interpretation cannot be altogether ignored. It will be apposite in this context to refer to the decision reported in NEPC Micon Ltd. v. Magma Leasing Ltd., AIR 1999 SC 1952 : (1999 Cri LJ 2883). It would be sufficient if I extract the relevant passage in para 15 : "15. In view of the aforesaid discussions we are of 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 transac....
X X X X Extracts X X X X
X X X X Extracts X X X X
....he expression "an account maintained by him" must necessarily take in account (that was) maintained by him as also an account (that is) maintained by him. 11. There is yet another way of looking at the problem. A person like the accused in this case who closes the account with his bank but retains unused cheque leaves with him without surrendering the same to the bank must certainly be held to continue to maintain the account, at least for the purpose of Section 138 of the N.I. Act, notwithstanding the fact that he had instructed his bank to close the account. It is the duty of every bank and every customer to insist and ensure that all unused cheque leaves are returned to the bank before the account maintained by him is closed. Only when that happens can it be held that he has ceased to maintain the account with the bank. Until the last unused cheque leaf is returned or the non-return explained to the bank, it must be held that such account holder continues to maintain the account with the bank. This must be so, at least the purpose of Section 138 of the N.I. Act. I get support for this reasoning from the observations made by Mr. Justice T.K. Chandrashekhara Das of the ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ecision have not been overruled. It is, in these circumstances, contended that the dictum in the said two decisions cannot be said to be overruled by the Division Bench. 16. I find no merit whatsoever in this contention. In para 6 of the decision in Vathsan (cited supra), the learned Judges of the Division Bench had, after thorough discussion, declared the law thus : "6. So, we are of the view that in situations where cheques have been issued against an account, which has been closed prior to the date of drawal of the cheques, (such cheques) shall also come within the fold of Section 138 of the Act to attract criminal liability. The reference is answered accordingly." In view of the declaration of the law by the Division Bench, according to me, there can be no trace of doubt on the law applicable. The Division Bench after adverting to all the five decisions referred above had declared the law thus. There can hence be no doubt that the dictum in Japahari (1993 (2) Ker LT 141) and Joseph (cited supra) do not any more hold the field. 17. Why then did the Division Bench not overrule the said decisions? Specific overruling was perhaps found to be not necessary in view of ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....rden on the prosecution to prove its case beyond reasonable doubt. The lesser/inferior yardstick/touchstones of proof by preponderance of possibilities and probabilities as in a civil case will alone be adopted while considering the case of the accused. But it is not sufficient if fanciful doubts are raised. His evidence will be tested/measured on the touchstone/yardstick of proof by preponderance of possibilities as in a civil case. 21. According to the accused, he had issued the cheque to one Vijayan. That Vijayan has not been examined. To Vijayan the cheque was issued as security. That liability had been discharged. Still Vijayan did not return the cheque. Fanciful suggestions would not be sufficient. There must be tangible evidence to inspire the confidence of the Court. That this defence was promptly raised in the reply to the notice of demand is by itself insufficient to tilt the scales. That a later cheque bearing No. 157386 (Ext. P1 cheque bears the No. 157380) was presented for encashment on 13-9-1988 cannot also be reckoned as final, conclusive or clinching. These are not sufficient to discharge the burden to rebut the presumption under Section 139 of the N.I. Act. 22. ....