1. Invoking the inherent powers of this Court under Sec. 482 Cr.P.C the petitioner against whom two complaints taken on file as C.C No. 6516/89 by the 14th Metropolitan Magistrate, Egmore, Madras for an offence under S. 138 of the Negotiable Instruments Acts, as amended by the Amending Act 66 of 1988 seeks to have the proceedings in the two cases quashed.
2. The averments in the complaint are as follows: The respondent is the proprietor of M/s Munoth & Munoth, carrying on business of money lending. A-1 is a partnership firm, of which the petitioner, arrayed as A-2 was the Managing Partner. The other partner was shown as A-3. The firm had borrowed various amounts from the respondent and in May 1986 when the accounts were settled, it was found that the firm owed the respondent and its associate concerns a sum of Rs. 21,00,000/-. On 2.5.1986 an agreement was entered into between the parties, in pursuance of which the first accused firm issued in favour of the respondent 57 post dated cheques bearing different dates from 2.5.1986 to 1.1.1991, for a total sum of Rs. 21,00,000/- The petitioner had signed the cheques on behalf of the partnership firm. The cheques were presented on the dates shown on them and the cheques upto 1.6.1987 were honoured, whereby the respondent realised a sum of Rs. 4,30,000/- Cheques presented subsequent to 1.6.1987 were returned by the bank unpaid with endorsements “referred to drawer”. By notice dated 22.4.1989 and 8.4.1989 respectively in respect of the cheques in each case, the respondent called upon the petitioner and his firm to pay the amounts covered by the cheques. Though the notices were received, the amounts were not paid nor was any reply sent. An offence under S. 138 of the Negotiable Instruments Act (hereinafter referred to at the Act) as amended by the Banking Public Financial Institution and Negotiable Instruments Laws (Amendment) Act, 1988 had been committed. Hence the two complaints C.C No. 6515/89, relates to 4 cheques dated 1.12.1988, 1.1.1989, 1.2.1989, and 1.3.1989 each for Rs. 40,000/- while C.C No. 6516/89 relates to cheque dated 1.4.1989 for a like sum.
3. The proceedings in the two cases are sought to be quashed on a short point urged by Thiru Chockalingam, learned counsel for the petitioner that even according to the complaints the cheques were all post-dated cheques and had been drawn on 2.5.1986 and issued to the respondent on the same day and had been presented in the bank on the date shown in each cheque and as such, proviso (a) to Sec. 138 of the act, requiring the cheque to be presented to the bank with in a period of six months from the date on which it is drawn or within the period of its validity whichever is earlier has not been complied with and as such even on the averments made in the complaint, no offence under Sec. 138 of the Act is made out. According to the learned counsel, all the 37 cheques were drawn on 2.5.1986 and issued to the respondent on the same day and the cheques being post-dated to a period beyond six months from the date on which they were drawn could not be and had not been presented within six months from the date on which they were drawn and could never come within the purview of S. 138 of the Act.
4. Per contra, Thiru Dolia, learned Senior Counsel for the respondent would contend that such could never have been the intention of the Parliament while introducing S. 138 in the Act and that the date the cheque bears, is really the date on which the cheque must be taken to be drawn and since the cheques had been presented to the paying bank, within six months from the dates shown in the cheques proviso (a) to S. 138 of the Act has been complied with and as such as the complaints disclose offence under S. 138 of the act and could be quashed.
5. At this stage, any legal issue raised for quashing the proceedings, has to be decided only on the averments made in the complaint. The Supreme Court has cautioned the High Courts from too liberally resorting to S. 482 Cr.P.C to quash Criminal complaints at the very threshold. However, these powers have to be resorted to if, as the Supreme Court has laid down in Municipal Corporation of Delhi v. P.K Rohtagi (AIR 1983 S.C 67) when the allegations in the complaints taken as they are, without adding or subtracting do not make out an offence and in such a contingency this court ought to quash the proceeding, since allowing it to continue, would amount to abuse of the process of the Criminal Court. The legal contention raised in this case therefore, has to be decided on the basis of the averments made in the two complaints.
6. According to the complaints the 5 cheques, as also the other 52 cheques, were written up by the petitioner on 2.5.1986 in pursuance of an agreement entered into between the parties, settling the liability of the partnership and in pursuance of that agreement the cheques were post dated to various dates commencing from the periods 2.5.1986 to 1.1.1991 The complaints also show that all the cheques were handed over to the respondent on the same day i.e 2.5.1986 The five cheques which are the subject matter of the criminal complaints are dated 1.12.1988, 1.1.1989, 1.2.1989, 1.3.1989 and 1.4.1989 Each cheque had been presented in the Bank on the dates shown in it. Under these circumstances, the question is whether as contended by the learned counsel for the petitioner, the cheques could be said to have been drawn on 2.5.1986 when they were written up and signed in complete form and handed over to the payee or whether they could be said to be have been drawn on the various dates shown on the cheque, as contended by the learned counsel for the respondent.
7. Section 138 of the Act is as follows:
“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 provision of this Act, be punished with imprisonment for a term which may extend to one year, or with fine which may extend to twice the amount of the cheque or with both.
Provided that nothing contained in this section apply unless:
a) The cheque has been presented to the bank within a period of six months from the date on which it is drawn or within the period of its validity, whichever is earlier.
b) the payee or the holder in due 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 fifteen 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”.
The Act as such, does not contain any specific provision as to when a cheque could be considered to be drawn. The validity and efficacy of an ante-dated or post dated cheque is not impaired merely on account of it being ante-dated or post dated. While in England Sec. 13(2) of the English Bills of Exchange Act, 1982, statutorily recognizes the validity of such cheques “A bill is not invalidated by reason that it is ante-dated or post dated” we do not find any such parallel provision in the Negotiable Instruments Act, 1881, though substantially the two Acts correspond, being based upon the law developed by the English Courts. Indian Courts however have recognised the validity of such cheques.
8. Even in the Negotiable Instruments Act, legal sanction for the recognition of antedated a provision slightly analogous to the one and post dated cheques is found in Sec. 118 of the Act. Sec. 118(b) raised a presumption regarding the date on which a negotiable instrument could be taken to be drawn or made, Sec. 118(b) is as follows:
“Until the contrary is proved, the following presumptions shall be made as to date (b) that every negotiable instrument bearing a date was made or drawn on such date.”
This would show that a cheque is taken to be drawn not always on the date that the cheque bears. There is only an initial presumption that the cheque is drawn on the date it bears. However, it is open to parties to prove the contrary and in the event of any party succeeding in proving that a cheque was drawn earlier to the date it bears or later to the date it bears, the initial presumption regarding the date of drawing of the cheques, stands rebutted and the cheque would be said to be drawn, either on the earlier day or on the later day as the case may be.
9. Thomson's Dictionary of Banking, edited by F.R Rider and D.B Jenkins defines a post dated cheque as follows:
“A cheque which is dated subsequent to the actual date on which it is drawn and which is issued before the date it bears, is called post-dated cheque”.
An ante-date is defined as follows:
“Placing date on a document prior to that on which it is actually signed.”
A cheque therefore could be said to be drawn on the day when it is signed by the drawer in its completed form, whatever be the date the cheque bears.
10. The Amending Act 66 of 1988 has inserted a new Chapter XVII in the Act with effect from 1.4.1989, containing Sections 138 to 142. According to the objects and reasons for the amendment, these provisions have been introduced to enhance the acceptability of cheques in settlement of liabilities, by making the drawer liable penally in case the cheque is returned unpaid due to insufficiency of funds in the account or for the reason that it exceeds the arrangement made by the drawer. Prior to the Amending Act 66 of 1988, issuing a cheque which is returned unpaid for want of funds, could be brought only under sec. 420 I.P.C cheating, if it was proved that the drawer made a representation, to the payee, that he had sufficient funds in his account in the bank, which representation, was false and on the basis of that false representation, the payee was made to part with his goods or valuables in return for the cheque which he would not have done …….. the false representation. The gist of the offence of cheating was a false representation and a dishonest or fraudulent inducement to deliver any goods or other property. The offence was a cognizable one for the police to investigate and launch prosecution. It was compoundable with the consent of the party cheated. Cheques issuedfor payment of a debt or liability were outside the penal provision. From out of the vast area of the different contingencies when cheques could be issued and the various situations when cheques could be returned unpaid, the parliament has carved out a limited area and brought it under the penal provision, taking care to provide an adequate safeguard to prevent harassment to honest drawers which safeguards are inbuilt in Chapter XVII itself. When proviso (a) to S. 138 limits the applicability of the provision to cheques presented within six months of the date of drawal of the cheques, it has to be taken that it was the intention of the parliament to exclude from the ambit of the penal provision, cheques post dated or ante-dated beyond a period of six months. The use of the words in proviso (a)..”within a period of six months from the date on which it is drawn” rather than “within a period of six months from the date the cheque bears” and the use of words” or within the period of its validity, whichever is earlier” rather than the words “ or within the period of its validity which ever is later” would make this intention explicit.
11. Post-dated cheques, though legal, are real anomalies in the commercial world. They are payable on demand and negotiable even between the dates of issue and the dates shown on them. The holder of such a cheque, duly-negotiated to him, even before the date the cheque bears, is indeed a holder in due course under the Act. Yet when presented to the bank before the ostensible date, the banker does not honour the cheque but returns them unpaid. Banker who honours the cheque, without noticing the date the cheque bears, does so at his risk, since he is bound to suffer loss, if the drawer of the cheque countermands the cheque before the date of the cheque by a stop payment order or he dies or becomes insolvent before the above date. The position of a holder in due course of such a cheque, is just the same.
Yet the law is, that a cheque otherwise valid does not become invalid merely by reason of it being either post-dated or ante-dated When therefore a person received a cheque post dated or ante-dated beyond period of six months, he should be deemed to receive it with the knowledge that in the event of dishonour for want of funds S. 138 of the Act will not help him. This obviously is the intention of the Parliament.
12. Being a penal Provision, Sec. 138 of the Act, though introduced for curbing a widespread melady should receive a strict construction. The words”… such persons shall be deemed to have committed an offence….” in Sec. 138, would rule out the necessity or proving mens rea for the offence. Sec. 139 creates a presumption against the accused that the holder of the cheque should be presumed to have received the cheque of the nature referred to in Sec. 138 of the Act, for the discharge in whole or in part, of any debt or other liability. Sec. 140 of the Act rules out what would otherwise be an effective defence to an accused, that the defence, that the drawer had no reason to believe when he issued the cheque, that the cheque might be dishonoured on presentment for the reasons mentioned in Sec. 138, is not available to him. The provisions in Chapter XVII, stringent as they are, yet provide sufficient in built safeguards against harassment of innocent drawers.
13. Reliance was placed by the learned counsel for the respondent on a decision of the Supreme Court in Jiwanlal Achariya v. Rameshwarlal Agarwalla. (AIR 1967 S.C 1118) wherein, while deciding the date of payment for the purpose of Sec. 20 of the Limitation Act, 1908 (the present provision being Sec. 21) made by a post-dated cheque, towards amount due on a promissory note, the court held that in that case the cheque post-dated to 25.2.1954 was signed and delivered to the plaintiff on 4.2.1954 and had been encashed at a date subsequent to 25.2.1954 and under those circumstances, the date of payment for the purpose of saving limitation was not 4.2.1954 that is the date when the cheque was drawn but was 25.2.1954 the date the cheque bore. This decision would not in any way help us to determine the question as to when a post-dated cheque is saidto be drawn, since what was decided in that case was that, when payment is conditional, mere delivery of a cheque would not mean that the payment was made on that date and the date of payment for the purpose of limitation, was the date on which the cheque would be actually payable at the earliest assuming that it would be honoured.
14. It flows from the above discussion that a cheque is drawn on the date when the drawer signs the cheque, complete in its form. On such an interruption, cheques post-dated or antedated beyond the period of six months from the date the cheques bear, will be out of the purview of sec. 138 of the Act.
15. Though Thiru Dolia, learned counsel for the respondent, made submissions by referring to several books and decisions that a cheque is valid for a period of six months after which it becomes stale, yet in view of the language of proviso (a) to Sec. 138 of the Act, that the cheque has to be presented within the earlier of the two periods namely six months from the date on which, the cheque is drawn or within the period of its validity and in view of my conclusion, that a post-dated cheque is drawn, not on the date the cheque bears but on the date when the cheque is actually signed, complete in its form and in view of the further fact, that the complaints show that all the five cheques, have been presented beyond six months of the dates on which they were drawn, it is needless to go into the aspect of the period of the validity of the cheques. Since all the five cheques had been drawn on 2.5.1986 and the cheques had been presented long after the six months period stipulated in proviso (a) to Sec. 138 that being the earlier of the two periods, Sec. 138 of the Act, is not attracted. The present prosecutions being misconceived, it will be an abuse of the process of the criminal court to allow them to continue. The prosecutions are accordingly quashed.