TMI Blog2008 (6) TMI 632X X X X Extracts X X X X X X X X Extracts X X X X ..... to M/s. Balaji Agencies and along with the said letter sent the subject cheque bearing No. 294434, not over ₹ 5,00,000/- as token of security. The terms agreed upon were also noted in the said letter, and, inter alia, it was stipulated that the said Balaji Agencies would give a rotating credit limit of ₹ 5,00,000/- against the deposit of the said undated cheque for ₹ 5,00,000/-. The payment would be made by the Company of the accused against the supply of material in favour of I.P.C.L. The Company of the accused would make the payment within 15 to 30 days either in part or in whole and payment made after availment of I.F.C. would attract an interest of 21%. 5. Thereafter, by letter dated 16-3-1999. produced by the accused in the course of cross-examination, the Complainant brought to the notice of the accused that as per discussion held on 15-3-1999 the outstanding overdue as on 31-3-1999 was ₹ 9,69,647.05 including interest of ₹ 2,32,503-00. The Complainant also called upon the accused to send! a Bank Guarantee covering the said outstanding amount of 9,69,647.05 and further informed that in case they did not receive 'the Bank Guarantee by 15-4- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Counsel has referred to a decision of the Apex Court in M.M.T.C. Ltd. v. Medchl Chemicals and Pharma (P) Ltd. 2002 SC 182. Learned Counsel further submits that the learned trial Court has proceeded as if the presumption available in law was in favour of the accused when it was in favour of the complainant and it was for the accused to have rebutted the said presumption. 9. On the other hand, Mr. Y.V. Nadkarni. learned Counsel on behalf of the accused has submitted that when a blank cheque is issued as security then proceedings under Section 138 of the Act are not maintainable and has further submitted that the case of I.C.D.S. Limited v. Beemna Shabeer (supra) is distinguishable in that what was concerned in that case was a cheque which was given by a guarantor towards the liability of the principal debtor. Mr. Nadkarni, learned Counsel has further submitted that in this case a blank cheque was issued along with letter dated 22.-9-1997 and since the cheque was presented on 19-8-1999 the same was not presented within 6 months as required and therefore it was hit by the bar created by Section 138 of the Act. Mr. Nadkarni has also submitted that the complaint in this case was filed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cused that when the complainant completed the cheque on 31-3-1999 he had no liability to be met towards the complaint. That there was a legally enforceable debt is also evident from the fact that the accused after complaint was filed, made payments of substantial amounts to the complainant which will be seen hereinafter. 13. On behalf of the complainant as well as the accused a number of authorities have been cited. On behalf of the complainant, apart from the case of I.C.D.S. Limited v. Beemna Shabeer AIR 2002 SC 3014 (supra) the complainant has placed reliance on the case of Laxmikant D. Naik Karmali v. Santosh V. Naik and Anr. 2006 (2) GLR 251 and Purushottam Maniklal Gandhi v. Manohar K. Deshmukh and Anr. 2007 (4) Bom CR 404 : 2007 (4) AIR Bom R (DOC) 43. In the case of Laxmikant D. Karmali v. Santosh V. Naik and Anr. (supra) this Court after referring to the case of Jayam Company and Anr. v. T. Ravichandran 2003 (2) DCR 145 : 2003 Cri LJ 2890 observed that silence on the part of the accused in not replying to a notice could at the most be taken as one of the circumstances against the accused. In the case of Purushottam Maniklal Gandhi v. Manohar K. Deshmukh and Anr. (supra) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r a higher amount, he would be convicted if it is held that existence of debt in respect of large part of the amount has not been proved. The appellant clearly said that nothing is due and the cheque was issued by way of security. The said defence was accepted as probable. If the defence is accepted as probable the cheque therefore cannot be held to have been issued in discharge of the debt as, for example, if a cheque is issued for security or for any other purpose the same would not come within the purview of Section 138 of the Act. 16. In Kamala S. v. Vidhyadharan M. J. and Anr. (2007) 5 SCC 264 : AIR 2007 SC (Supp) 1142 the defence token by the accused was that she had issued a signed blank cheque as a security along with Exh.P-1 agreement. The trial Court had come to the conclusion that ... This also suggests that Ext. P-2 may be a signed blank cheque issued by the accused to PW 1 as a security. Thus the facts and circumstances discussed above lead one to the conclusion that the defence set up by the accused that she had issued a signed blank cheque as a security along with Ext. P-1 agreement and Ext. P-2 is that cheque she had issued is probable. The circumstances discuss ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the first three words suggest that in fact for whatever reason if a cheque is drawn on an account maintained by him with a banker in favour of another person for the discharge of any of debt or other liability, the highlighted words if read with the first three words at the commencement of Section 138, leave no manner of doubt that for whatever reason it may be, the liability under this provision cannot be avoided in the event the same stands returned by the banker unpaid. The legislature has been careful enough to record not only discharge in whole or in part of any debt but the same includes other liability as well. This aspect of the matter has not been appreciated by the High Court, neither been dealt with or even referred to in the impugned Judgment. 19. The other decisions relied by the learned Counsel on behalf of the accused are Santan Financiers Real Estate Pvt. Ltd. v. Shri Devapa A. Sarvi and Anr. 2005 All MR (Cri) 1116, Goa Handicrafts, Rural Small Scale Industries Development Corporation Ltd. v. Samudra Ropes Pvt. Ltd. and Ors. 2005 All MR (Cri) 2643 : 2006 (2) AIR Bom R 735, Shri Ramdas Anant Naik v. Shri Jacob Fernandes unreported decision dated 4-8-2005 in Cr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . Security is given, not as a piece of paper to be retained by the creditor but to be enforced when the debtor fails to pay the amount. In this case the subject cheque was given to assure the payment of the goods taken on credit by the accused and once payment was not forthcoming, nor the bank guarantee sought for by the Complainant, the Complainant was certainly entitled to enforce the security and this was done by the Complainant after due notice to the accused and in such a situation, in my humble view, it could not be said that the subject cheque was not given in payment of any debt or liability and only because it was given as security the accused would not be liable for dishonour of the same. What use is a security which cannot be enforced? Since the accused had not objected to the letter dated 16-3-1999 the Complainant was free to complete the details on the cheque, earlier given as security, and present the same to recover the amount due to the Complainant. In such a fact situation, the ratio of the Apex Court in I.C.D.S. Ltd. v. Beemna Shabeer AIR 2002 SC 3014 (supra) was fully attracted. In other words, no doubt the cheque was issued as security but demand to clear the de ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . The facts of the case also show that the accused had initially dealings with the proprietorship concern of the said Vijay M. S. Usgaonkar who along with his brother formed into a Company and the accused continued to have business relations with them and not only that subsequently made the payment of the amount due to the Complainant-Company and in a situation like this the contention that the cheque was given to the proprietorship concern of the said Vijay M. S. Usgaonkar and not to the Company needs to be rejected. If the sum due was to Mr. V.M.S. Usgaonkar, why did the accused pay the amount to the Complainant, which is a Company? This only shows that the business which was carried on by Mr. Usgaonkar was continued by the Company and so did the accused who continued to do the business first with the said Mr. Usgaonkar and then with the Complainant. 25. In conclusion and considering the facts of this case, in my view, the law laid down by the Apex Court in I.C.D.S. Ltd. v. Beemna Shabeer AIR 2002 SC 3014 (supra) was fully attracted. Securities are given so that they can be enforced when need arises. They are not given as pieces of paper. In the case at hand, the complainant a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lier brought to the notice of the Complainant. He also substantiated the payments to a great extent by bringing on record evidence of Bank Officials from which Banks he had obtained demand drafts, etc. On the balance of probabilities, therefore, the finding that the payment of ₹ 4,45,000/- was made by the accused could not be disputed by the Complainant. 27. The complaint was filed on 6th October, 1999. The payments came to be made after 16-12-1999. The accused stated that his Company paid an amount of ₹ 1,97,330/- on 8-1-2002 by quantity discount credit note. In cross-examination the accused stated that the said credit note was dated 31-3-1998 and it reflected in their books of account on 8-2-2002 when they actually received the credit note. It is difficult to accept, if the credit note was given way back on 31-3-1998, the credit note would be sent on 8-1-2002. Therefore, the said amount of credit note will have to be excluded from the amount of ₹ 6,42,330/- which otherwise has been paid by the accused to the complainant from 16-12-1999 to 30-5-2002 as per the statement submitted on behalf of the Complainant. In other words, the sum paid by the accused to the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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