Accused Acquitted in Case of Cheque-Dishonour under S.138 of Negotiable Instruments Act, 1881

Accused Acquitted in Case of Cheque-Dishonour under S.138 of Negotiable Instruments Act, 1881

In an interesting case, the accused was acquitted when allegations under S.138 of N.I. Act, 1881 were made. 

Allegations by Complainant

The complainant was an agriculturist and was raising various crops in his land including grapes. The accused ("A") carried on business as a trader and, inter alia, exports grapes. "A" is alleged to have purchased grapes from the complainant, paid some amount and for the balance due, gave a cheque on 23rd May 1997 for Rs.2 lakhs. When the cheque bearing no.613072 was presented, the cheque was returned unpaid in view of the stop payment instructions given by the accused/respondent. It was the case of the complainant that he requested the accused to honour the payment but the accused avoided making payments and therefore, by a notice dated 8th June 1997 the complainant called upon the accused to make payment but despite receipt, the accused neither responded nor made the payment. Hence, the complaint was filed on 5th July 1997.

Version of Accused

The accused died not denied having purchased grapes but states that the cheque of Rs.2 lakhs was given only as a security cheque and he paid Rs.2,25,000/- to the complainant in three installments of Rs.25,000/-, Rs.1,85,000/- and Rs.15,000/-, which was paid to a third party on the instructions of the complainant. Accused saied that he gave blank cheque as security. He had put the signature but no date or amount or name was filled in. Therefore, there was no legal liability due. Moreover, the stop payment instructions was given on 12th September 1996, whereas the cheque is dated 25th May 1997 and that itself shows the complainant’s claim is bogus. 

The complainant in this case even led evidence of three witnesses, i.e., complainant himself as PW-1, one Dnyaneshwar Kashinath Watpade as PW-2, who was the employee of NDCC Bank, which is the bank on which the cheque was drawn and one Suresh Kashinath Dhakrao as PW-3, an employee of the complainant’s bank being Bank of India. In the evidence of PW-2 and PW-3, it has come on record that the stop payment instructions were given by the accused on 12th September 1996. 

Conclusion of Innocence : A Maze of Dates and The Imaginary Debt

The complainant was held to be totally unreliable and considering the complainant’s evidence, the stand of the accused/respondent was found to be more plausible. That is so because in the examination in chief, the complainant says that he was given the cheque for Rs.2 lakhs on 25th May 1997. In the cross examination, he says the accused gave him cheque in the month of February 1996. In the cross examination, the complainant again clarifies that the cheque was issued in the month of May 1996. Then he says in re-examination that the cheque was issued on 23rd May 1997. In such situations one can doubt that the cheque was issued in February 1996 and not on 23rd May 1997 because the transaction, for which payment was made, is of February 1996. Moreover, what is very pertinent to note is the stop payment instructions (Exhibit 35) was issued on 12th September 1996. If according to the complainant, the cheque was issued to him only on 23rd May 1997, then the cheque bearing no.613072, which was dishonoured, would have been with the accused. 

The principle explained was that a cheque is also valid for only six months. So the stop payment instructions have been given almost 16 months prior to the date of the cheque. It is also not the case of the complainant that the accused issued a post dated cheque dated 23rd May 1997. 

Secondly, the complainant also stated that he had been paid Rs.25,000/- in cash and he did not issue any receipt for that amount. The fact that he had received Rs.25,000/- in cash is not mentioned in the complaint and in his examination in chief. In such factual background it was explained that why could the Court not assume that similarly he would have received Rs.1,85,000/- in cash from the accused but chose not to give the receipt. Though in the examination in chief and in the complaint, the complainant states the cheque was given for the grapes that he sold to the accused, in the cross examination, the complainant agrees that the cheque issued was as guarantee. The complainant states “ it is true that the accused issued cheque for guarantee”. There was no re-examination. 

It was held that the important ingredient for the offence punishable under Section 138 is that cheque must have been issued for the discharge in whole or in part of any debt or other liability. If the cheque is not issued for the discharge of any debt or other liability, Section 138 can not be invoked. 

The complainant in his cross examination has admitted that the cheque issued was only for guarantee. Therefore, there can be no other conclusion that the cheque was not issued for the discharge of any debt or other liability. Further, the fact that the complainant has been giving different dates on which the cheque has been issued also shows that he is economical with truth. It is necessary to note that one who comes to the court, must come with clean hands. More often than not, process of the Court is being abused. Unscrupulous persons from all walks of life find the court-process a convenient lever to retain the illegal-gains indefinitely. A person, who's case is based on falsehood, has no right to approach the Court. 

For more details refer Shantaram Namdeo Sathe v. State of Maharashtra [2019] GCtR 6489 (Bombay).