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TMI Blog2018 (3) TMI 1980X X X X Extracts X X X X X X X X Extracts X X X X ..... tropolitan Magistrate (N.I. Court No.8) Ahmedabad which is confirmed by the City Sessions Court by the order dated 17.02.2012 passed in Criminal Revision Application No.447 of 2011; (B) To stay the further proceedings of Criminal Case No.1241 of 2008 pending in the Court of the learned Metropolitan Magistrate (N.I. Court No.8) Ahmedabad till the final disposal of this petition; (C ) To grant any further relief that may be deemed fit in the facts and circumstances of the matter." 4. The case of the writ applicants, in their own words, as pleaded in their writ applications, is as under; "1) The respondent No.1(the complainant for short) has filed below described five private complaints in the Court of the learned Metropolitan Magistrate, Ahmedabad which are pending as on date in N.I. Court No.8, for the offence punishable under section 138 read with Section 141 of the Negotiable Instruments Act, 1881 (the act for short). The particulars of the said five complaints are as under; Sr. No. C.C. No. (New) Cheque No. Amount Date of cheque 1 1239/08 122305 18,00,000 19.10.96 2 1242/08 122304 22,00,000 19.10.96 3 1240/08 122261 18,00,000 17.10.96 4 1241/08 12226 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was to be paid to the complainant. ii) The amounts of the said debts of the syndicate were to be paid by cheques and by giving vacant possession of the properties bearing Bungalow No.5/C and 5/A/1 of EII is Bridge area of Ahmedabad to the syndicate with right of the syndicate to sell, transfer, assign etc. the properties and to credit the sale amount towards the debt to be paid by the petitioners to the syndicate and the value of purchase price of the said bungalows was fixed, determined and settled at Rs.2,10,00,000/-. iii) Some other immovable properties were to remain under the charge of the syndicate and the petitioners were not to create any burden or charge over it nor to transfer and assign the same. iv) The cheques issued by the petitioners to the members of the syndicate which were dishonoured and the papers of title of the bungalows and the shop at Manekchawk were to remain in custody of the advocate Shri B. J. Mehta of M/s. H. Desai & Co. Advocates and Solicitors, of Ahmedabad. v) That for any dispute between the parties to the said MOU, one Girishbhai Ramanlal Choksi and Yogendrabhai Ambalal Sarkar and one Jagmohandas Himatlal of Padra were appointed as arbitra ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... est in the present suit of the plaintiff and that of defendants Nos.6 to 12 are not conflicting one but as defendant Nos.6 to 12 are not available in town they are referred to as the supporting defendants and no relief is sought against them. B. It is pleaded in paragraph No.1 of the plaint that "a memorandum of Understanding (MOU) was entered into by and between the parties including defendant No.5, who accepted to share the liability of the defendants Nos.1 to 4 as mentioned in the MOU. The outstanding amount of Rs.5,58,35,731/- was agreed to be repaid partly in cash and partly by way of sale of immovable properties as mentioned hereinafter". C. In paragraph No.3 of the plaint it is pleaded that "out of the said amount of Rs.5,58,35,731/- part of the amount of Rs.2.20 crore were agreed to be paid to the plaintiff and the defendant Nos.6 to 12 by Udaikumar B. Choksi and defendant No.5 as and when by way of sale of the properties bearing No.5-A/1 and 5-C situated as Shantiniketan Society Near Gujarat College, Ahmedabad. D. In paragraph No.3 of the plaint it is pleaded that "the possession and certain documents of bungalow No.5-A/1 are handed over by defendant No.5 with knowle ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1 to 5 jointly and severally from transferring or parting with property bearing No. 5- A/2 and 5-C of Shantinagar co-operative Housing Society, Near Gujarat College, Ahmedabad or transfer possession in favour of any person in any manner and be further pleased to restrain defendant Nos. 4 and 5 from further encumbering the said properties or doing any act or omission tending to reduce the security and interest of the plaintiff and defendant Nos. 6 to 12 in light of the MOU dated 07.12.1996. B. Be further pleased to attach by declaring that the plaintiff and defendant Nos. 6 to 12 are having charge over the property bearing bungalow No.5-A/2 and 5-C of Shantiniketan Co-op. Housing Society, Near Gujarat College, Ahmedabad. C. Be pleased to pass a decree against the defendant No. 4 to convey the title and possession of the property bearing No. 5-C at Shantiniketan Co--op. Housing Society, Near Gujarat College, Ahmedabad as agreed to in the MOU dated 07.12.1996 in favour of the plaintiff and defendant Nos. 6 to 12 or heir order and decree for specific performance of the contract to the above effect be passed. D. Be pleased to pass a decree for specific performance of contract be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... noured cheques were to be handed over and kept in the custody of advocate Shri B.J.Mehta of defendant No. 13 M/s H. Desai & Co. Advocate & Solicitors of Ahmedabad and hence were not to be used. C. By execution of and substantial part performance of the said MOU the legal liability to pay any amount of the said 5 cheques had ceased and the said 5 cheques had become devoid 0f any consideration, invalid, unusable and non negotiable. D. The rights of the complainant to negotiate the said 5 cheques had extinguished as the same were waived and surrendered by execution of the MOU and substantial part performance of it and the complainant was estopped from using the said cheques. E. All disputes about performance of the said MOU were to be decided by the arbitrators as provided in the said MOU. F. That all the issues raised in the said application Ex. 11 were to be adjudicated upon by the Civil Court in the said Civil Suits and hence the criminal proceedings of the said 5 complaints be stayed till the suits are finally decided. 13. The learned Magistrate rejected the said applications Ex. 11 of the petitioners submitted in all the 5 criminal cases by his order dated 26.07.2000. T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... en preferred Criminal Revision Application Nos. 444 to 448 of 2011 before the City Sessions Court, Ahmedabad against the order passed by the learned Metropolitan Magistrate, Ahmedabad. All the above said Criminal Revision Applications were decided by the City Sessions Court by a common order dated 17.02.2012 and the same were dismissed. Annexed herewith and marked as ANNEXURE-E is a copy of the order dated 17.02.2012 passed by the City Sessions Court in Criminal Revision Application No. 447 of 2011. 18. The petitioners submit that in view of the above stated undisputed position of the facts and looking to the annexure(s) legal position has been basically, virtually and substantially changed and altered. After the MOU dated 07.12.1996 the petitioners have as far as possible fulfilled and performed the material and important part as per the terms and conditions of the MOU. 19. It is submitted that the considerations of and the complainant's rights thereon of the said 5 dishonoured cheques were extinguished on 07.12.1996 as being surrendered, waived and merged in the said MOU and the said cheque had been invalid, unusable and not negotiable from and onwards 07.12.1996 on the e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... consideration and the complaint concerning the said cheques is not maintainable. Whatever contentions, claims or causes that may be, if any, regarding and pertaining to those cheques have been merged in into the MOU on 07.12.1996 and in law all the same have been surrendered, released, relinquished, waived and extinguished by virtue of and under the MOU. Thus, the complaint filed by the complainant on the allegations which are concocted and by suppressing material facts is nothing but the abuse of the process of law and the same is required to be quashed by this Hon'ble Court. The complainant was estopped from taking back the said cheques from advocate Shri B.J. Mehta and fraudulently and illegally using them. 25. That the complainant was informed and intimated by M/s H. Desai & Co. by its communication dated 10.04.2008 that the petitioners were proposed to dispose of the bungalows given by way of security as per the MOU and other members of the syndicate namely Modern Impex, Bombay and Zaveri & Co. Exports Pvt. Ltd, Ahmedabad had given their consent for the sale, subject to the complainant's right and interest if any in upon or to the said property and the interest of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Rs.34,00,000/- respectively came to be realized. Thus, against the Bill No.47, Rs.64,00,000/- came to be realized and after crediting the amount received from the writ applicants, the outstanding balance of Rs.40,71,325/- remained legally recoverable by the complainant as on 16th October, 1996. The remaining three cheques of Rs.22,00,000/-, Rs.18,00,000/- and Rs.71,325/- respectively were deposited by the complainant on 17th October, 1996 against the outstanding balance of Rs.40,71,325/-. The cheque for the amount of Rs.71,325/- was realized, however, the other two cheques bearing Nos.122262 and 122261 for Rs.22,00,000/- and Rs.18,00,000/- respectively got dishonoured. Thus, an amount of Rs.40,00,000/- was outstanding against the Bill No.47. On 16th October, 1996, the writ applicants purchased silver bars (31 pieces) vide Bill No.49 valued at Rs.68,43,766/-. Thus, a sum of Rs.1,08,43,766/- became legally due and payable by the writ applicants herein towards the purchase of the silver from the complainant. Against the outstanding dues, three post dated cheques came to be issued against the Bill No.49. The details are as under; Cheque No. Date Amount Rs. Drawn on 122303 18/10/ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... wherein also, he has reiterated that the Memorandum of Understanding dated 7th December, 1996 was signed in good faith. Unfortunately, the accused violated the terms and conditions of the MOU. It was submitted that, therefore, it is not even the case of the complainant that he had not signed the MOU. Mr. Amin, under instructions of the petitioner No.3, submitted that the original MOU is with Solicitor H. Desai & Company. 2. Having regard to the submissions advanced by the learned advocate for the petitioners, issue notice in each of the petitions, returnable on 16th September, 2013. Ad- interim relief is granted in terms of paragraph 30B of each petition. Direct Service is permitted. Mr. Himanshu Patel, learned Additional Public Prosecutor waives service of notice on behalf of respondent No.2 in each petition. 3. Liberty to place on record additional documents in support of the case of the petitioners." 11. The principal argument of Mr. Sanjay Amin, the learned counsel appearing for the writ applicants is that after the issuance of the cheques, as there was a change in the obligations between the parties, whereby the extent and the quantum of the debt got altered, the writ ap ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s that the present petition is clearly a case of abuse of process of the Hon'ble Court and suffers from the vice of suppression of material facts and deserves to be dismissed with exemplary costs. 4) The respondent no. 1 states that the present petition is nothing but an effort on the part of the petitioners to delay and stall the proceedings. It is pertinent to note that the cheques have been dishonored in 1996 and prosecution has been launched in 1997. A period of 18 years has already passed since the cheques came to be dishonored. The petitioners are well aware that they have no real defense in the matter and that at the end of the proceedings, they are bound to be convicted. It is an admitted proposition that there was a legally valid and recoverable debt due on the date of the deposit of the cheques and that out of the total amount of Rs. 1,08,43,786, an amount of Rs. 96,03,766/- remained outstanding on the date of deposit of the cheques and that not a penny has been paid to the respondent no. 1 by the petitioners thereafter. It is therefore only a matter of time that the petitioners would be faced with a conviction in the proceedings. Consequently, the petitioners are a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... "syndicate of creditors" and nothing is received by the respondent no. 1 as a part of the "syndicate of creditors". The other contentions, averments, assertions and submissions made in the paragraph under reply are denied. 9) With reference to paragraph 5 to 7 of the petition, the respondent no. 1 denies the contents thereof. The respondent no. 1 states that at no point of time has the MOU been implemented or acted upon by and between the petitioners and the respondent no. 1 and consequently a detailed analyses of its clauses is an exercise in futility. It is pertinent to note that not a penny is received by the respondent no.1, either under the so called MOU or otherwise till date, and the principal amount of Rs. 96,03,766 remains due and payable till date. It is also pertinent to note that, knowing fully well that the alleged MOU is not implemented or subsisting or valid, no proceedings are preferred by the petitioners for specific performance of the alleged MOU against the respondent no. 1 and any such proposed action has now become time barred. It is also pertinent to note that even the cheques which came to be dishonored were never deposited with Shri B.J. Mehta of M/s. H. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by the petitioners in the said Summary Civil Suit No. 5402 of 1998 is a sham and is moonshine and the petitioners were asked to deposit an amount of Rs. 50,00,000 as condition precedent for defending the said Summary Civil Suit No. 5402 of 1998. The petitioners have challenged the said order by filing Special Civil Application No. 8601 of 2013. In the said matter, as a condition precedent to grant of ad~interim relief, the petitioners were ordered to deposit an amount of Rs. 25,00,000. The respondent has also filed Special Civil Application No. 17153 of 2013 challenging the order passed in Summary Civil Suit No. 5402 of 1998 on the ground that no leave to defend deserves to be granted to the petitioners and even if such leave is granted, the full admitted amount of Rs. 96,03,766 with interest thereon should be deposited. All the aforesaid proceedings are pending. The other contentions, averments, assertions and submissions made in the paragraphs under reply are not true and hence denied. 12) With reference to paragraph 11 of the petition, the respondent no. 1 states that the same are a narration of the contents of the notice given by the respondent no.1 to the petitioners. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s have become either invalid or unusable or not negotiable either on the alleged execution of the MOU on 7.12.1996 or at any time or for any reason before or after that date. It is specifically denied that there is no legal liability of the petitioners for the said cheques. The other contentions, averments, assertions and submissions made in the paragraphs under reply are not true and hence denied. 16) With reference to paragraph 20, 21, 22 and 23 of the petition, the respondent no. 1 denies the contents thereof. The respondent no. 1 states that the respondent no. 1 has not filed the Civil Suit No. 4470 of 1998. The respondent no. 1 further states that the respondent no. 1 has not filed any proceedings for specific performance of the so called MOU. The respondent no. 1 is not concerned with what the so called "syndicate" has done and the facts of Civil Suit No. 4470 of 1998 have no connection with the present case and are completely irrelevant for the purpose of deciding the present dispute. It is also pertinent to note that no part of the said MOU has been performed qua the respondent no.1 and the respondent no.1 has sued the petitioners for recovery of the original claim. It is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... quashed. In light of the fact that the cheques were never handed over to Shri B.J. Mehta in the first place, it is specifically denied that the respondent no. 1 has taken back the cheques from Shri B.J. Mehta or that the said cheques were fraudulently or illegally deposited by the respondent no.1. The other contentions, averments, assertions and submissions made in the paragraphs under reply are not true and hence denied. 18) With reference to paragraph 25 of the petition, the respondent no.1 denies the contents thereof. The respondent no. 1 denies the interpretation sought to be made of the communication dated 104.2008 and craves leave to refer to the same for its true meaning, effect and interpretation. It is however submitted that the said communication would be of no relevance for the purpose of the present case. 19) With reference to paragraph 26 of the petition, the respondent no. 1 denies the contents thereof. The respondent no. 1 is not aware of the actions taken by the petitioners or the syndicate or the arbitrator. It is pertinent to note that, till date, no such alleged amount is received by the respondent no. 1. It is specifically denies that the petitioners have do ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... which it is drawn or within the period of its validity, whichever is earlier. (b) The payee or the holder induce course of the cheque, as the case may be, makes a demand for the payment of the said amount of money by giving a notice, in writing, to the drawer, of the cheque within thirty days of the receipt of information by him from the bank regarding the return of the cheques as unpaid, and (c) The drawer of such cheque fails to make the payment of the said amount of money to the payee or, as the case may be, to the holder in due course of the cheque, within fifteen days of the receipt of the said notice." 22. The following are the components of the offence punishable under Section 138 of Negotiable Instrument Act:- (1) drawing of the cheque by a person on an account maintained by him with a banker, for payment to another person from out of that account for discharge in whole/part any debt or liability, (2) presentation of the cheque by the payee or the holder in due course to the bank, (3) returning the cheque unpaid by the drawee bank for want of sufficient funds to the credit of the drawer or any arrangement with the banker to pay the sum covered by the cheque, ( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er, for encashment and in case such a cheque is dishonoured for want of funds, he will be guilty of offence punishable under Section 138 of Negotiable Instrument Act. 24. In taking the aforesaid view, I am conscious of the implications. The drawer of a cheque may make payment of a part of the amount of the cheque only with a view to circumvent and get out of his liability under Section 138 of Negotiable Instrument Act. But, this can easily be avoided by payee of the cheque, either by taking the cheque of the reduced amount from the drawer or by making an endorsement on the cheque acknowledging the part payment received by him and then presenting the cheque for encashment of only the balance amount due and payable to him. In fact, Section 56 of Negotiable Instrument Act specifically provides for an endorsement on a Negotiable Instrument, in case of part-payment and the instrument can thereafter be negotiated for the balance amount. It would, therefore, be open to the payee of the cheque to present the cheque for payment of only that much amount which is due to him after giving credit for the part-payment made after issuance of cheque. The view being taken by me was also taken by a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... liability by paying the actual amount due from him to the payee of the cheque. In order to make the notice legal and valid, it must necessarily specify the principal amount payable to the payee of the cheque and the principal amount demanded from the drawer of the cheque should not be more than the actual amount payable by him though addition of some other demands in the notice by itself would not render such a notice illegal or invalid. (see M/s. Alliance Infrastructure vs. Vinay Mittal, Cri. M.C. No.2224 of 2009, decided on 18th January, 2018) 26. Mr. Mehd, the learned counsel appearing for the complainant vehemently submitted that the contention of the learned counsel appearing for the applicants as regards failure on the part of the complainant to put an endorsement as regards the part payment on the cheques is without any merit. According to Mr. Mehd, in the case at hand, there were five cheques which were presented by the complainant in the Bank and, therefore, at the best, he could have put an endorsement on one of the cheques. However, so far as the other four cheques are concerned, they having got dishonoured, the complaints could be said to be maintainable in law. 27. I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt talks between the parties, an amicable settlement has been arrived at and hence there is no requirement now to answer the aforesaid question of law in the present proceedings and hence the same is left open for adjudication in any other appropriate case." 32. What has weighed with me is the submission as regards the ominous notice issued by the complainant before filing of the complaints. 33. At this stage, let me reproduce the statutory notice issued by the complainant to the accused/applicants dated 27th November, 1996. The notice reads thus; "Notice U/s.138 Negotiable Instruments Act. Dear Sir, Under instructions from and on behalf of my clients M/s M.D Textile Industries Ltd. , 2238, Manek Chowk, Ahmedabad, I do hereby serve you with the following notice:- 1. That my clients deal in the import and sale of silver Bars and is a Government recognised Export House. 2. That you have been purchasing Silver Bars from my clients making payments on delivery of the goods. 3. That on 10.10.1996, the amount due to my clients from you was Rs.54,00,000.00 and on 11.10.1996, you again purchased silver bars (48 pieces) from my clients vide Bill No.47 dated 11.10.1996, valuing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s on the Bank memos dated 13.11.1996 "Funds Insufficient". 10. That this legal notice has been sent within 15 days from the date when the intimation from the Bank was received about the dishonourment of the cheques on account of insufficient fund in your account. 11. You are, therefore, requested to pay the amount of the cheques so dishonoured within 15 days from the receipt of this Notice, failing which, legal action as provided u/s. 138 read with section 141 of the Negotiable Instruments Act besides other legal action available to my clients will be taken. Pleace take notice. A copy of this Notice has been kept in my office for record and further necessary action." 34. Thus, the plain reading of the statutory notice would indicate that in Para-8, the complainant acknowledged the part payment to the tune of Rs.12,00,000/-, and as such, in clear terms that the sum of Rs.96,03,766/- remained due over and above the interest. In para-9 of the notice, there is a reference of all the five cheques with the requisite amount. In para-11, ultimately, the accused were called upon to make the payment of the cheques within 15 days. The aggregate amount, so far as the cheques are concern ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ere supposed to deposit above said five cheques to Mr. Bhadresh Mehta and instead of doing the same you acted against the Memorandum of Understanding and hence committed breach of agreement. 7. My clients say and submit, that they denied contents of para 9 of your notice that on my clients solemn assurance, you redeposited above said five cheques. My clients had never given any type of solemn assurance to redeposit those five cheques again, because towards those five cheques another two cheques were given and were honoured. Hence your act of redepositing above said five cheques is entirely illegal. My clients were never intimated about it, nor my clients ever consented it and that my clients were never supposed to honour those five cheques after you received another two cheques from my clients and also that the Memorandum of Understanding had taken place as stated above. 8. Looking to the facts and circumstances and terms of Memorandum of Understanding you have no right to give any notice u/s. 138 of Negotiable Instruments Act. Your act of redepositing those five cheques is mischievous and an act to pressurize my clients. 9. My clients lastly submit that they are not supposed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ceived by him and, therefore, if the notice does not specifically demand that particular amount, it would not be a valid notice and would not fasten criminal liability on account of its non-compliance. The relevant observations of the Supreme Court are extracted hereunder; "8. As was observed by this Court in Central Bank of India and Anr. v. Saxons Farms and Ors., (1999 (8) SCC 221), the object of the notice is to give a chance to the drawer of the cheque to rectify his omission. The demand in the notice has to be in relation to 'said amount of money' as described in the provision. The expression 'payment of any amount of money' as appearing in the main portion of Section 138 of the Act goes to show it needs to be established that the cheque was drawn for the purpose of discharging in whole or in part of any debt or any liability, even though the notice as contemplated may involve demands for compensation, costs, interest etc. The drawer of the cheque stands absolved from his liability under Section 138 of the Act if he makes the payment of the amount covered by the cheque of which he was the drawer within 15 days from the date of receipt of notice or before the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it should make. In Suman Sethi's case (supra) on considering the contents of the notice, it was observed that there was specific demand in respect of the amount covered by the cheque and the fact that certain additional demands incidental to it, in the form of expenses incurred for clearance and notice charges were also made did not vitiate the notice. In a given case if the consolidated notice is found to provide sufficient information envisaged by the statutory provision and there was a specific demand for the payment of the sum covered by the cheque dishonoured, mere fact that it was a consolidated notice, and/or that further demands in addition to the statutorily envisaged demand was also found to have been made may not invalidate the same. This position could not be disputed by learned Counsel for the respondent. However, according to the respondent, the notice in question is not separable in that way and that there was no specific demand made for payment of the amount covered by the cheque. We have perused the contents of the notice. Significantly, not only the cheque amounts were different from the alleged loan amounts but the demand was made not of the cheque amounts b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... no doubt that section 118 as also section 139 create presumptions. 7.1 Section 118 creates a presumption in favour of consideration behind the issuance of the cheque. In other words, it creates a presumption that the drawer of a cheque is a debtor in respect of the amount of the cheque, wherein the drawee is the creditor. Section 139 creates a corresponding presumption in favour of the holder of the cheque. It would, therefore, appear that the presumptions created by section 118 and section 139 are only permissible presumptions in law from different perspectives. However, there cannot be any controversy and in fact there is no controversy that both presumptions are rebuttable. 8. Now coming to the crux of the matter and the factual controversy involved in the present appeal, the impugned judgement of acquittal is based upon the acceptance on the part of the trial court of the defence put up by the accused to the effect that the dishonoured cheque was not in respect of "discharge, in whole or in part, of any debt or other liability" within the meaning of section 138 of the said Act. The trial court, after discussing all the facts and factual materials on record, came to the conc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s that the cheque was originally issued on the understanding that the drawer as a purchaser of the shops would be able to obtain bank loans, on the basis of supporting documents to be provided by the complainant; however, since the complainant did not or could not provide the necessary documents, the bank loan although sanctioned, was not disbursed, and therefore the accused was unable to get the amount and therefore could not redeem the cheque from the drawee before the due date. It was for this reason that the drawer of the cheque followed the alternate arrangements and instead of making the lumpsum payment from the loan amount expected, made payments towards his debt in smaller sums by way of the instalments and also paid interest. This finding is based on a concrete documentary evidence in the form of an agreement between the parties at Exh.24 which contemplates that if the bank loan is not sanctioned, the purchaser (the drawer of the cheque) would make payments by monthly instalments. There is no dispute that the bank loan, although sanctioned in principle, was not disbursed, and this was because the relevant documents were not or could not be provided by the complainant. It w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... notice. Ex.D1 indicates that the 1st respondent/complainant agreed to receive the amount in three instalments. On this aspect, the evidence of PW1 who represented the complainant is very important. PW1 though denied the suggestion that as per Ex.D1 the accused need not pay the amount in lumpsum and that they have no right to proceed against the accused, in the cross-examination he admitted the execution of Ex.D1. Ex.D1 is dated 19-11-1991. In the Cross-examination PW1 admitted that a letter was addressed to the accused on 28-12-1991 by the Head Office stating that as per the terms undertaken by the accused dated 19-11 -1991 the accused were to pay the entire amount of Rs.8,21,029.12 in four instalments and a sum of Rs.2,71,029.12 is payable on or before 31-12-1991 towards the first instalment and that the Head Office demanded the accused to pay the first instalment as per Ex.D1, the terms of which are proposed by the accused themselves. This indicates that the complainant-Company itself had agreed for the entire amount to be paid in four instalments and the first instalment was to be paid on or before 31-12-1991. In such a case, the liability to pay in lumpsum in lieu of which, Ex. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t. This is erroneous. When the complainant itself agreed for the terms of Ex.Dl, about which PW1 gave replies in favour of the accused/ appellant it cannot be held that the accused/ appellant is guilty for the offence punishable under Section 138 of Negotiable Instruments Act. " 43. Let me now look into the two decisions of the Kerala High Court relied upon by the learned counsel appearing for the complainant. 44. In R. Gopikuttan Pillai (supra), it was argued that after the issue of the cheque and before the date shown on the cheque was reached, the payments were made to discharge the liability under the cheque. The court took notice of the fact that there was no dispute in that regard. However, the court proceeded to take the view that such part payment would not make any difference and would not absolve the accused from his liability under section 138 of the N.I.Act. I may quote the relevant observations made by the court in the judgment. "11. In a prosecution under Section 138 of the Negotiable Instruments Act an accused/ drawer of the cheque is bound to prove payment of the amount due under the cheque to the payee within 15 days from the date of receipt of the notice. But ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gement was admittedly insisted regarding the payments under Exts. D1 and D2, it would be puerile for a Court to assume that no acknowledgement would have been insisted for the payments made under Ext. D3 series. It must therefore be held that the payments allegedly made by the accused under Ext. D3 cannot be accepted at all. The contention that anything more than what is borne out by Exts. D1 and D2 had been paid cannot be accepted at all. 15. It follows therefore that even if the case of the accused regarding discharge under Exts. D1 and D2 were accepted, that cannot be a valid and successful defence in this prosecution under Section 138 of the Negotiable Instruments Act. The learned Magistrate did not pointedly and specifically consider these relevant aspects. I am satisfied that the impugned verdict of not guilty and consequent acquittal do in these circumstances warrant appellate interference. 16. The interesting question whether the remedy under Section 138 of the Negotiable Instruments Act would be available to a complainant who has bona fide accepted part payments, towards the cheque amount before presentation of the cheque for encashment deserves to be considered. No pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the cheque for the entire amount by the Bank were to result in any excess payments being made, civil remedy to claim return of the amount would be available to the drawer. If the purpose of Section 138 of the Negotiable Instruments Act is to ensure that the cheque transaction has as much credibility as a cash transaction, the interpretation that partial discharge of liability under the cheque prior to presentation of the cheque for encashment would extinguish the remedy under Section 138 of the Negotiable Instruments Act for a payee must certainly be avoided. Such a myopic interpretation would not advance the purpose and object of this legislation which attempts to usher in a new commercial morality essential for the health and growth of the economy. 18. There is no contention before me that any other ingredient of Section 138 of the Negotiable Instruments Act has not been established. In the absence of contention it is not necessary for me to advert to that aspect in any detail. Suffice it to say that I am satisfied that all ingredients of the offence punishable under Section 138 of the N.I. Act have been established. The accused is liable to be found guilty, convicted and sent ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was in these circumstances bound to consider the plea of discharge urged by the accused. [14] A plea of discharge must certainly be proved by the person raising such plea whether the proceedings be civil or criminal. According to the accused she had paid a total amount of Rs. 87,500/- which is equal to seven installments which she had agreed to be paid. According to her four such payments were made by cheques. Three such payments were made by cash. Three payments - a total of Rs. 37,500/- admittedly remained undischarged. We have evidence from Exts. D1 and D2 and the oral evidence of DW2 that three such payments were made by cheques. Those cheques are produced in Exts. D1 and D2 series. There is significant absence of evidence to show that any other cheque issued by the accused to the complainant was actually encashed. There is significant and total absence of evidence to show that the three remaining installments have been paid by cash. Such pleas of discharge remain unsubstantiated. No Court can accept and act upon such a plea. [15] It follows from the above discussions that the accused had paid Rs. 37,500/- by three cheques to discharge the liability under Ext. P4 cheque. T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r other liability. Let me quote the relevant observations of the Division Bench; "[5] We heard the learned counsel on both sides. In this case, the facts of the case were not disputed before us by both sides. So, we may state that it is common case that a cheque dated 4.6.1999 was issued by the accused to the complainant in discharge of a debt. Thereafter, the complainant received an amount of Rs, 2,26,400 on 9.6.1999 towards the debt. The complainant did not make any endorsement regarding receipt of the said amount on the cheque, but, later, presented the cheque for collection, claiming the entire amount shown in it. When the cheque was dishonoured, a lawyer notice was caused to be sent to the accused only for the balance amount. The accused failed to repay the amount demanded. The point that arises for decision is whether on the facts, the accused has committed the offence under Section 138 of the Act. [6] The learned counsel for the appellant Sri Sabu George relied on the decisions of this Court in R Gopikuttan Pillai v. Sankara Narayanan Nair Cri. A. No. 270/1997, and Thekken & Co. v. Anitha., 2003 3 KerLT 870. The learned counsel further submitted that upon receipt of noti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 'cheque' is a bill of exchange drawn on a specified banker and not expressed to be payable otherwise than on demand ..." Bill of exchange is defined is Section 5 as follows: "A 'bill of exchange' is an instrument in writing containing an unconditional order, signed by the maker, directing a certain person to pay a certain sum of money only to, or to the order, of a certain person or to the bearer of the instrument. " Section 4 defines negotiation in the following manner: "When a promissory note, bill of exchange or cheque is transferred to any person, so as to constitute that person the holder thereof, the instrument is said to be negotiated". Section 15 defines endorsement as follows: "When the maker or holder or a negotiable instrument signs the same, otherwise than as such maker, for the purpose of negotiation, on the back or face thereof or on a slip of paper annexed thereto, or so signs for the same purpose a stamped paper intended to be completed as a negotiable instrument, he is said to indorse the same, and is called the 'endorser". The above Section envisages any number of endorsements on the reverse of the cheque and if there is not suffic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er of the cheque, within thirty days of the receipt of information by him from the bank regarding the return of the cheque as unpaid; and (c) the drawer of such cheque fails to make the payment of the said amount of money to the payee or as the case may be, to the holder in due course of the cheque, within fifteen days of the receipt of the said notice. Explanation-For the purpose of this section, 'debt or other liability' means a legally enforceable debt or other liability. Going by the above provision, a cheque must be for payment of any amount of money to another person for discharging in whole or in part of any debt or other liability. In this case, once part payment was received, the cheque no longer was one for payment of money for discharging in whole or in part of any debt or other liability. In fact, the amount covered by the cheque was admittedly larger than the amount of debt or liability. The whole amount of debt or liability was lesser than the amount represented by the cheque. So, if the cheque for such an amount was dishonoured, the same will not be an offence under Section 138 of the Act. Normally a penal law has to be interpreted strictly. If there is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Appeal No. 270/1997, which reads as follows: "17. I am conscious that in an appropriate case the question may arise for consideration whether dishonour of the cheque was on the ground of insufficiency of funds if the funds were sufficient to pay the outstanding liability but not the entire liability under the cheque. That question does not specifically arise for consideration in this case. According to me the dishonour of the cheque, even in such a case where the amount available in the account is sufficient to cover the outstanding liability but not sufficient to cover the entire amount liable to be paid under the cheque, would be for want of sufficient funds. As the drawer can, as indicated earlier, avoid culpable liability by proving discharge under proviso (c) of the entire amount (including the payments made prior to the dishonour of the cheque), this interpretation is not likely to result in any failure/miscarriage of justice. If the honouring of the cheque for the entire amount by the bank were to result in any excess payments being made, civil remedy to claim return of the amount would be available to the drawer. If the purpose of Section 138 of the Negotiable Instrument ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rning. Such a law impermissibly delegates basic policy matters to policemen and also judges for resolution an ad hoc and subjective basis, with the attendant dangers of arbitrary and discriminatory application. More so uncertain and undefined words deployed inevitable lead citizens to steer for wider of the unlawful zone.... than if the boundaries of the forbidden areas were clearly marked." [10] In R. Gopikuttan Pillai's case (supra), we notice that by interpreting Section 138, it has been made vague. Its injunctions were made wider. Based on that interpretation, the commissions/ omissions of the accused have been made the basis of an offence. In view of Section 56, the appellant could have claimed only the balance amount. Towards the amount due under a cheque, if some amount is received, the same has to be endorsed on the reverse of the cheque. The law of banking contemplates several such endorsements and if there is no space for making any endorsement on the reverse of the cheque, it may be made on a slip of paper annexed thereto, which is called along in banking circles. In Bhashyam & Adiga's Negotiable Instruments Act (18th Edition revised by Justice Ranganath Misra) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... learned counsel for the appellant to concerning part payment, cannot be accepted, in view of the provisions contained in Section 56 read with Section 15 of the Act. If the drawee made endorsement regarding the part payment on the cheque and claimed only the balance amount and if it bounced, the offence under Section 138 would have been made our and the 1st respondent accused would have liable for punishment. In the absence of any vagueness in the provision, we find it difficult to accept any other view. In the result, we overrule the decisions in R. Gopikuttan Pillai v. Sankara Narayanan Nair, Cri. Appeal No. 270/1997; and Thekkan and Co. v. Anitha, 2003 3 KerLT 870. We find nothing wrong with the judgment of the Trial Court acquitting the 1st respondent. Accordingly, the criminal appeal is dismissed." 49. In view of the above, I hold that the criminal proceedings initiated by the complainant against the writ applicants deserve to be quashed. 50. All the five writ applications are hereby allowed. The proceedings of the Criminal Case No.1241 of 2008, Criminal Case No.1240 of 2008, Criminal Case No. 1239 of 2008, Criminal Case No. 1242 of 2008 and Criminal Case No. 1243 of 2008 pe ..... X X X X Extracts X X X X X X X X Extracts X X X X
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