1. A complaint was filed in the lower court by petitioner's wife alleging that her husband has committed offence under Sec. 138 of the Negotiable Instruments Act, 1881 (for short ‘the Act’) in respect of a cheque bearing the date 28-8-1992. The cheque is for Rs. 1,50,000/-. The magistrate before whom complaint was filed took cognizance of the offence and issued process to the petitioner. Now the petitioner wants to have the complaint quashed under Sec. 482 of the Code of Criminal Procedure for short ‘the Code’). The complaint shows that a post dated cheque issued by the petitioner towards some liability or debt due to the complainant. Complainant alleges that petitioner had closed his account with the drawee bank before the cheque was presented and hence it was returned unpaid for that reason. Petitioner's main contention is that there is no offence under Sec. 138 of the Act when there was no account in the drawee bank at the time the cheque was presented for encashment. According to the learned counsel, account of the drawer must be alive with the drawee bank at the time of presentation of the cheque and only if the cheque is returned unpaid because of insufficiency of money standing to the credit of the drawer (or if it exceeds the limit arranged to be paid) that an offence under Sec. 138 of the Act can be founded.
2. For considering the aforesaid contention, I will take it for granted that the cheque in question was a post dated one and that the drawer closed the account before the cheque became due for encashment.
3. The relevant portion in the first para of Sec. 138 reads thus:
“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……—”.
4. Only in two contingencies can a drawer go to the magistrate court complaining of the commission of the offence under Sec. 138 of the Act with a bounced cheque provided he complied with the other formalities. One is that the cheque was returned unpaid because of insufficiency of the amount of money standing to the credit of the drawer in the account with the bank concerned. The second is that the cheque exceeds the amount arranged to be paid from that account. The latter is of no application in the case of closure of account. But it has to be considered whether the former contingency would arise when a cheque is dishonoured on the ground that “account is closed”.
5. A cheque cannot be issued de hors an account maintained by its drawer with the banker. Sec. 6 of the Act says that a cheque is a bill of exchange drawn on a specified banker. No person can draw a cheque if he does not have an account with a banker. When the cheque is returned by the bank unpaid because of the amount of money standing to the credit of “that account” is insufficient to honour the cheque, it is open to the holder of the cheque to make demand for payment as indicated in clause (b) of the proviso. The Words “that account” in the section denote to the account in respect of which the cheque was drawn. No doubt, if any person manages to issue a cheque without an account with the bank concerned its consequences would not snowball into the offence described under Sec. 138 of the Act. Such acts may amount to other offences. For the offence under Sec. 138 of the Act there must have been an account maintained by the drawer at the time the cheque was drawn. If the drawer of the cheque closes the account subsequently (before the cheque reaches the bank) the cheque is bound to be returned unpaid on the ground of want of money in “that account”. The contention that for attracting penal liability for the offence under Sec. 138 of the Act the account must have been alive at the time of presentation of the cheque is unsound. If the contention gains acceptance it would open a safe escape route for those who fradulently issue cheques and dose the account immediately thereafter to deprive the payees of the cheque proceeds. It would thus defeat the very object of innovation made through Act 66 of 1988 by which Sec. 138 and its allied provisions were inserted in the Act. Closing the account is one of the modes by which a drawer can render his account inadequate to honour the cheque issued by him. One of the objective adumbrated in bringing the new legislation was to enhance the acceptability of cheques in settlement of liabilities (vide “objects and reasons” for Act 66 of 1988).
6. Learned counsel invited my attention to two decisions, one by a single Judge of Karnataka High Court (in Hunasikathimath v. State of Karnataka - 1991 (1) Crimes 226 : 1991 (1) K.L.T- S.N at Page 37) and another by a single Judge of Madras High Court in Prasanna v. Vijayalakshmi (1992 (2) K.L.T 417) in which the view taken is that the endorsement “account closed” would not fall within the ambit of Sec. 138 of the Act. Learned single Judge of the Madras High Court has followed the decision of the Karnataka High Court in Hunasikathimath's case. The view of both the learned Judges is that closure of account is not a ground envisaged in Sec. 138 of the Act. With great respect of learned Judges, I am of the view that the drawer of the cheque who closes his account with the bank before the cheque reaches the bank for presentation, is actually causing insufficiency of money “standing to the credit of that account”. Hence I am unable to persuade myself to toe the line with the reasoning adumbrated in the above two decisions.
7. Learned counsel then adopted an alternative plea that as the cheque is dated 28-8-92, it must be deemed to have been drawn on that date and if so the closure of the account on a date antecedent to it would not make out the offence. Learned counsel sought support from the observation of Manoharan, J. in Manoj K. Seth v. Fernandez (1991 (2) K.L.T 65) that date of drawing of a cheque shall be presumed to be the date of the cheque. The said observation has been based on Sec. 118(b) of the Act which provides that “until the contrary is proved, the following presumption shall be made………that every negotiable instrument bearing a date was made or drawn on such date”. The section does not say that the drawing of the cheque would be deemed to be on the date which the cheque bears. It only says that it shall be presumed “until the contrary is proved”. Even otherwise, presumption is only a rule of evidence as for burden of proof. It open to the party to show that the cheque was drawn on a date antecedent to the date which the cheque bears.
8. Here the complainant's case is that the cheque was a post dated one. Even the petitioner admitted that the cheque was issued before the date which is shown in the cheque. Hence the question of presumption has no significance, for the parties practically admitted that the cheque was drawn on a previous day. Of course, the complainant has to establish on the facts of this particular case that on the date the cheque was drawn petitioner had a live account with the bank concerned. Learned counsel lastly contended that there is want of jurisdiction for the court before which the complaint has been filed. It is for the petitioner to raise that question before the lower court and if it is raided, I am sure the lower court will decide the question before proceeding further.
9. With the aforesaid observations, this Criminal Miscellaneous Case is disposed of.