Monday 30 January 2017

Whether prosecution for dishonour of cheque is maintainable on basis of stolen cheque?

Apart from the above, it seems that the court below

has lost sight of the presumptions available to the

complainant under Section 118(g) of the N.I. Act which says

that until the contrary is proved, it shall be presumed that

the holder of a negotiable instrument is a holder in due

course. Here, admittedly, the complainant is the holder of

the cheque. According to the accused, Ext.P1 cheque was

issued by him to his elder brother DW2, while DW2 was an

inpatient in a hospital, and that the said cheque was stolen

away by the complainant. Even in such case, there is clear

admission from the part of the accused that the complainant

is the holder of the cheque. Over and above it, the

complainant could present the cheque before the Bank and

got it dishonoured. Therefore, when it is admitted that the


complainant is the holder of the cheque, the presumption

under Section 118(g) of the N.I.Act is available to the

complainant.         It shall be presumed that the complainant

being the holder of the cheque is the holder in due course

within the meaning of Section 9 of the N.I. Act.

       10. The learned counsel for the petitioner has invited

the attention of this Court to the decision in Michael

Kuruvilla v. Joseph J. Kondody[1998(1) KLT 384] wherein

it was held that the non-mentioning of the payee's name and

the striking off of the words 'or bearer' in a cash cheque will

not make the cheque invalid. It was held therein that even

in such case the person who was the holder of the cheque

could be a holder in due course, who could well maintain a

complaint under Section 142 of the N.I.Act.

       11.     Here, in this particular case, the position is much

better. The cheque is styled as a self cheque and over and

above it, the term 'or bearer' has not been scored off. A

similar situation as the one in this case was dealt with by the


Madhya Pradesh High Court in Babu Lal v. Kewal Chand

[2008(1) Crimes 147(MP)] wherein also it was held that such

a complainant who was holding such a cheque could be a

holder in due course, who could maintain a complainant

under Section 142 of the N.I. Act.
IN THE HIGH COURT OF KERALA AT ERNAKULAM

                                                    PRESENT:

                      MR. JUSTICE B.KEMAL PASHA

               15TH DAYOF JULY 2016

                                          CRL.A.No. 1870 of 2009
                                     

                     SARAFUDHEEN, S/O.MOIDU,
                    Vs
              T.MUHAMMED ASHRAF, S/O.MOIDU,
             Citation:2016 ALLMR(CRI) JOURNAL573

      Challenging the judgment of acquittal passed by the

Additional Sessions Court, Thalassery, in Crl.Appeal No.775

of 2003, the complainant in the matter has come up in

appeal. Crl.Appeal No.775 of 2003 of the court below was

filed by the accused in C.C.No.351 of 2003 of the Additional

Chief Judicial Magistrate's Court, Thalassery.

      2. The case before the trial court is as a result of a

private   complaint         filed     by      the      appellant         herein as

complainant, against the 1st respondent herein as accused,

alleging an offence punishable under Section 138 of the

Negotiable Instruments Act. The complaint was filed through

PW-1, who was the power of attorney holder of the

complainant.


       3. The case of the complainant is that the accused

borrowed an amount of 2,25,000/- from the complainant on

agreeing to repay the same within 6 months and when he

demanded the repayment, the accused issued Exhibit-P1

cheque dated 15.09.2000, which on presentation returned

dishonoured for insufficiency of funds in the accounts of the

accused. The complainant caused to issue demand notice

dated 09.12.2000 to the accused under Section 138(b) of

the Negotiable Instruments Act. The notice returned with the

endorsement, `out of India'.

       4. The trial court recorded the evidence of PW-1 and

marked Exhibits- P1 to P5. On the side of the accused,

DW-1 and DW-2 were examined and Exhibits-D1 to D3 were

marked.        DW-1 is the accused and DW-2 is the elder

brother of the accused.

       5. It seems that a strange contention was taken by the

appellant with regard to Exhibit-P1 cheque. It was

contended that Exhibit-P1 cheque was issued by the



accused to his elder brother DW-2, when DW-2 was an

inpatient in a hospital, who was admitted for a surgery to his

lungs. It is contended that the said cheque was stolen away

by the complainant and after misusing it, the complaint was

filed. Apparently, the said contention is not believable. The

trial court found that the accused has committed the offence

under Section 138 of the Negotiable Instruments Act,

convicted him thereunder and sentenced him to undergo

simple imprisonment for six months and to pay a fine of

2,50,000/-, in default to undergo simple imprisonment for

three more months.

       6. The matter was taken in appeal as aforesaid. The

appellate court, through the impugned judgment, held that

Exhibit-P1 is a `self cheque' and therefore the complainant

could not be treated as a holder in due course within the

meaning of Section 9 of the Negotiable Instruments Act and

therefore, the complaint as such is not maintainable.

       7. The lower appellate court found that as per Section


142 of the Negotiable Instruments Act, the court could take

cognizance of an offence under Section 138 of the

Negotiable Instruments Act only on a complaint in writing

made by the payee or a holder in due course. On the said

reasoning and also by relying on a stray sentence in Exhibit-

D3 deposition, allegedly made by the complainant in

another case that 'there is no close acquaintance between

the complainant and the accused', the court below has

chosen to pass the judgment of acquittal.

       8.      This is a case wherein Ext.P1 cheque was issued

in the form of a "self cheque". At the same time, it is a

bearer cheque also, since the terms "or bearer" has not

been scored off. Therefore, Ext.P1 cheque could be treated

as a "bearer cheque". As per Section 9 of the N.I. Act,

"holder in due course" means "any person who for

consideration became the possessor of a promissory note,

bill of exchange or cheque if payable to bearer, ........."

Therefore, when Ext.P1 cheque is a "bearer cheque", the



possessor of the cheque for consideration can be termed as

a "holder in due course". The court below has lost sight of

the fact that Ext.P1 cheque could be treated as a "bearer

cheque".

       9. Apart from the above, it seems that the court below

has lost sight of the presumptions available to the

complainant under Section 118(g) of the N.I. Act which says

that until the contrary is proved, it shall be presumed that

the holder of a negotiable instrument is a holder in due

course. Here, admittedly, the complainant is the holder of

the cheque. According to the accused, Ext.P1 cheque was

issued by him to his elder brother DW2, while DW2 was an

inpatient in a hospital, and that the said cheque was stolen

away by the complainant. Even in such case, there is clear

admission from the part of the accused that the complainant

is the holder of the cheque. Over and above it, the

complainant could present the cheque before the Bank and

got it dishonoured. Therefore, when it is admitted that the


complainant is the holder of the cheque, the presumption

under Section 118(g) of the N.I.Act is available to the

complainant.         It shall be presumed that the complainant

being the holder of the cheque is the holder in due course

within the meaning of Section 9 of the N.I. Act.

       10. The learned counsel for the petitioner has invited

the attention of this Court to the decision in Michael

Kuruvilla v. Joseph J. Kondody[1998(1) KLT 384] wherein

it was held that the non-mentioning of the payee's name and

the striking off of the words 'or bearer' in a cash cheque will

not make the cheque invalid. It was held therein that even

in such case the person who was the holder of the cheque

could be a holder in due course, who could well maintain a

complaint under Section 142 of the N.I.Act.

       11.     Here, in this particular case, the position is much

better. The cheque is styled as a self cheque and over and

above it, the term 'or bearer' has not been scored off. A

similar situation as the one in this case was dealt with by the


Madhya Pradesh High Court in Babu Lal v. Kewal Chand

[2008(1) Crimes 147(MP)] wherein also it was held that such

a complainant who was holding such a cheque could be a

holder in due course, who could maintain a complainant

under Section 142 of the N.I. Act.

       12. From all the above, it has clearly come out that

the lower appellate court has committed a grave error in

passing the judgment of acquittal by reversing the judgment

passed by the trial court. The impugned judgment of the

lower appellate court is liable to be set aside and the

conviction entered by the trial court is only to be maintained.

Regarding the sentence, this Court is of the view that when

so much time has been elapsed, interest of justice demands

the reduction in sentence of imprisonment. This Court is of

the view that a sentence of imprisonment till the rising of the

court and to pay a fine of 25,000/-, in default, to undergo

simple imprisonment for six months, will meet the ends of

justice in this case.


       In the result, this Appeal is allowed and the impugned

judgment of the lower appellate court is set aside. The

conviction passed by the trial court is maintained. The

sentence imposed by the trial court is modified as follows:

        The accused is sentenced to undergo imprisonment

till the rising of the court and to pay a fine of 25,000/- within

three months from today, in default, to undergo simple

imprisonment for six more months.


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