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TMI Blog2023 (9) TMI 1363X X X X Extracts X X X X X X X X Extracts X X X X ..... the Chief Metropolitan Magistrate, Calcutta for commission of offence under Section 138 of the Negotiable Instruments Act, 1881, which was registered as Case No. C/4315 of 2012 and after taking cognizance the said case was transferred to the Court of the Learned Metropolitan Magistrate, 3rd Court, Calcutta (hereinafter to be referred as "the Learned Trial Court") for trial and disposal of the case. 3. The case of the opposite party/complainant in brief is that the petitioner had a business transaction with the opposite party/complainant and in the said business transaction, an A/c payee cheque was issued to the opposite party for discharge of existing financial liabilities vide Cheque No. 042240 dated 24.11.2011 for Rs. 5,00,000/- (Five Lakhs) drawn on Bank of India, Raniganj Branch, District - Burdwan and the said cheque was duly deposited by the opposite party with his Banker, State Bank of India, Park Street Branch, Kolkata within the validity period of the said cheque for encashment but the said cheque was dishonoured with the remarks "Drawer Signature Incomplete". The said intimation was received by the opposite party through cheque return memo dated 18.01.2012. The opposite ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... site party in his evidence has admitted that the petitioner's business has been closed since February, 2011 and their company started doing business with the petitioner, in the name and style M/s New Singh Electronics, whereas the cheque in question was dated 24.10.2011, as such issuing cheque after closing of the business does not arise. 10. That the Learned Trial Court failed to appreciate that before closing of the petitioner's business, the petitioner has cleared all the dues (Exbt-B and C) as such liability of the petitioner towards opposite party does not arise, but on the other hand the Learned Trail Court failed to observe that the opposite party could not produce a single document from which it could be established that the petitioner has liability to the opposite party and without considering and observing such aspects both the Learned Courts mechanically passed the impugned Judgment and Order. 11. That both the Learned Courts failed to consider that the impugned cheque was issued by petitioner without mentioning any date, as security long before closing of the business and clearing the dues and the same has been withheld by the opposite party as security as the petitio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt till 31.03.2011. vii) Contention of the petitioner is that the cheque was given as security but was misused by the complainant even after the company had closed down. viii) In reply the complainant has stated that such a document, which is unsigned has been produced after 11 long years, and the same is fabricated. ix) The Trial Court and the Appellate Court held that the cheque was lawfully dishonored with the endorsement "Drawer's Signature Incomplete". 15. Section 138 of the N.I. Act, lays down:- "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 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 provisions of this Act, be p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rt in Modi Cements (supra) and refusing to quash the criminal proceeding. We, accordingly, set aside the impugned judgment of the High Court, quash the criminal proceeding and allow the criminal appeal." 17. In M/s. Laxmi Dyechem vs State of Gujarat & Ors., Criminal Appeal Nos. 1870-1909 of 2012, 27 November, 2012, the Supreme Court held:- "6. 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. T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that the dishonour would constitute an offence only in the two contingencies referred to in Section 138 and none else. The contention was that Section 138 being a penal provision has to be construed strictly. When so construed, the dishonour must necessarily be for one of the two reasons stipulated under Section 138 & none else. The argument no doubt sounds attractive on the first blush but does not survive closer scrutiny. At any rate, there is nothing new or ingenious about the submission, for the same has been noticed in several cases and repelled in numerous decisions delivered by this Court over the past more than a decade. We need not burden this judgment by referring to all those pronouncements. Reference to only some of the said decisions should, in our opinion, suffice. 9. In NEPC Micon Ltd. v. Magma Leasing Ltd. (1999) 4 SCC 253, the cheques issued by the appellant-company in discharge of its liability were retuned by the company with the comments „account closed‟. The question was whether a dishonour on that ground for that reason was culpable under Section 138 of the Negotiable Instruments Act. The contention of the company that issued the cheque was that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o it and of the mischief which it was passed to remedy, and then he must supplement the written word so as to give „force and life‟ to the intention of the legislature. ... A judge should ask himself the question how, if the makers of the Act had themselves come across this ruck in the texture of it, they would have straightened it out? He must then do so as they would have done. A judge must not alter the material of which the Act is woven, but he can and should iron out the creases." 10. Relying upon a three-Judge Bench decision of this Court in Modi Cements Ltd. v. Kuchil Kumar Nandi (1998) 3 SCC 249, this Court held that the expression "the amount of money ............. is insufficient to honour the cheque" is a genus of which the expression „account being closed‟ is a specie. 11. In Modi Cements Ltd. (supra) a similar question had arisen for the consideration of this Court. The question was whether dishonour of a cheque on the ground that the drawer had stopped payment was a dishonour punishable under Section 138 of the Act. Relying upon two earlier decisions of this Court in Electronics Trade & Technology Development Corporation Ltd. v. Indian Tech ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ant's Advocates notice dated 01.02.2012 and denied his debt and liability towards the complainant. The petitioners reply further noted that at the time of closure of the original business, in which name the disputed cheque stands, there were no outstanding dues. 19. The Company closed down in March, 2011. 20. And the Cheque is dated 24.10.2011. 21. This prima facie supports the case of the petitioner that the cheque issued was undated and given as a security. The Signature on the cheque is also incomplete. 22. As such on the date of presentation of the cheque, the company which allegedly issued the cheque was no more existence. 23. It is thus clear that the mandatory provision of section 138 N.I. Act is not present in the present case. The presumption as to the debt and/or liability has also been rebutted by proving that the cheque with incomplete signature was subsequently dated and submitted 8 months after the company which allegedly issued it had closed down, with no outstanding dues (M/s. Laxmi Dyechem vs State of Gujarat & Ors. (Supra)). 24. CRR 302 of 2020 is allowed. 25. The Judgment and Order dated 29.11.2019 passed by the Learned Judge, Bench-1, City Sessions Court, ..... X X X X Extracts X X X X X X X X Extracts X X X X
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