M/S. Cement Agencies v. V. Vijaya Babu ., Andhra Pradesh High Court, Judgment, Law, casemine.com

Factual and Procedural Background

This criminal appeal arises from the acquittal order passed by the IV Metropolitan Magistrate, Vijayawada, in C.C. 829/94. The complainant, represented by her General Power of Attorney Holder, filed a complaint alleging that the respondent issued a cheque in discharge of a legally enforceable debt of Rs. 16,790/- for cement supplied. The cheque dated 26-7-1994 was dishonored by the bank with the endorsement "exceeds arrangements." The respondent admitted the amount payable but contended that the cheque was issued only as security and not for discharge of any debt, citing unsettled accounts and incentives due from the complainant. The Magistrate acquitted the respondent on the ground that the complainant failed to prove the cheque was issued in discharge of a legally enforceable liability. The complainant appealed against this acquittal.

Legal Issues Presented

Whether the cheque issued by the respondent was in discharge of a legally enforceable debt or merely as security.

Whether a holder of a cheque can present it for encashment after the prescribed validity period under proviso (a) of Section 138 of the Negotiable Instruments Act.

Whether Section 20 of the Negotiable Instruments Act permits the holder of a blank cheque to fill in any date and amount and present it even after an extended period.

Arguments of the Parties

Complainant's Arguments

The respondent owed Rs. 16,790/- for cement supplied and issued cheque No. 526322 dated 26-7-1994 in discharge of this debt.

The cheque was dishonored, and a legal notice was issued to the respondent.

The respondent's reply admitted the debt but claimed the cheque was given only as security.

The complainant relied on Section 20 of the Negotiable Instruments Act, contending that once a blank cheque is in possession of the holder, he can fill in any date or amount.

The complainant presented evidence including witnesses and exhibits to prove the case.

Respondent's Arguments

The respondent admitted the amount payable but stated that certain incentives were due from the complainant company, and accounts were unsettled.

The cheque was issued only for security purposes, not as discharge of debt.

The respondent claimed the cheque was a blank cheque issued earlier and acknowledged by the complainant on counterfoils.

The respondent examined himself and another witness and submitted exhibits to support his claim.

Court's Reasoning and Analysis

The court focused on the legal validity period of the cheque under proviso (a) of Section 138 of the Negotiable Instruments Act, which requires presentation of the cheque within six months from the date it is drawn or within its validity period, whichever is earlier. The court noted that the cheque was presented nearly four years after the date it was drawn, which is beyond the prescribed period. Although the complainant relied on Section 20 of the Act to argue that a blank cheque may be filled with any date and amount by the holder, the court declined to entertain this contention as it was time-barred. The court expressed concern that allowing presentation of time-barred cheques would lead to anomalous situations and misuse by unscrupulous litigants. Consequently, the court upheld the acquittal, dismissing the appeal.

Holding and Implications

The appeal against acquittal is dismissed.

The decision strictly applies to the facts of this case, confirming that a cheque presented beyond the statutory validity period under Section 138 of the Negotiable Instruments Act cannot be the basis for criminal liability. The judgment clarifies that the complainant’s remedy for any civil liability remains unaffected. No new precedent was established beyond the direct effect of upholding the acquittal in this case.

M/S. Cement Agencies v. V. Vijaya Babu .

B. Atchutananda Swamy. J-

This criminal appeal is filed aggrieved by the orders of acquittal passed by the IV Metropolitan Magistrate, Vijayawada in C.C. 829/94. The complainant preferred this appeal. In the said judgment the Magistrate held that the complainant failed to prove that the cheque in question was issued in discharge of a legally enforceable Hability and acquitted the respondent.

2. Smt. K. Amruthavalli, Managing Partner, the complainant, is represented by her General Power of Attorney Holder Mr. Sundarasivarao has filed the complaint in the Court. The facts of the case are that the respondent was having account with the appellant for supply of cement and a khatha is being maintained in his account in the appellant Company. By the end of the financial year 1993-94 an amount of Rs. 16,790/- is payable by the accused and in discharge of the said amount he issued cheque bearing No. 526322 dtd, 26-7-1994 Ex. P-3. On presentation of the same for encashment the cheque was returned on 30-7-1994 with an endorsement 'exceeds arrangements'. Thereafter the appellant got issued a legal notice Ex. P-6 on 2-8-1994 and the accused also sent his reply Ex. P-7 on 10-8-1994 wherein the khatha and the amount payable by him was admitted but at the same time he categorically stated that certain incentives are due from the appellant Company and unless and until the accounts are settled the question of paying the amounts does not arise. It was further stated in the reply notice that the cheque in question was issued only for security purpose and not in discharge of any debt. Thereafter the present complaint was filed to prove his case the appellant got three witnesses examined and marked Exs. P-l to P-8 and. the accused got himself examined as D.W. 1 and another witnesses as D.W, 2 and got marked Exs.D-1 to D-9. It was also stated in the reply notice that on 4-10-1991 he issued blank cheques bearing Nos. 526319, 52($320, 526321 and 526322 and the same were acknowledged on the counterfoils and the appellant signed in proof of receipt of the cheques on 4-10-1991 and the same are marked under Exs.D-1 to D-4. It is the case of the accused that he issued blank cheques on 4-10-1991 and the complainant acknowledged on the counterfoils and the same were given as security. But the appellant in the witness box denied the endorsement but he admitted the signatures on the counterfoils. The question that arise for consideration would be about the validity period of a cheque under proviso (a) of Section 138 of N. r. Act by which Act the cheque has to be 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. However, learned Counsel for the appellant has addressed elaborate argument by relying on Sec. 20 of the N.r. Act and contended that once a blank cheque comes in to the possession of the holder he is entitled to put any date he likes and any amount he likes and the other, gaps as the holder of the cheque. In support of his contention he drew my attention to Sec. 20 of the N.r. Act. I need not go into that controversy as the issue before me is only whether the holder of the cheque can present the cheque nearly after four years by relying on Sec. 20 of the Act which is time barred. Though learned Counsel for the appellant has taken time several times to look into the legal position he was not able to cite an authority before me with regard to the presentation of time barred cheque by the payee for encashment nearly after four years. I am of the view that if time barred cheques can be encashed even after the expiry of the specified time it will create so may anomalous situations which are likely to be used by unscrupulous litigants. For all these reasons the appeal fails and it is accordingly dismissed.

3. At this stage Counsel for the appellant submits that the judgment may not come in the way of his client in enforcing the civil liability against the respondent. Having regard to the submission it is clarified that the judgment in this case will be limited to the facts of this case only.

Appeal against acquittal accordingly dismissed.

Appeal dismissed.

_____________________

Crl. A. No. 532 of 1996

M/S. Cement Agencies v. V. Vijaya Babu .

Factual and Procedural Background

Legal Issues Presented

Arguments of the Parties

Complainant's Arguments

Respondent's Arguments

Table of Precedents Cited

Court's Reasoning and Analysis

Holding and Implications

M/S. Cement Agencies v. V. Vijaya Babu .

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