Case Citation: (2023) ibclaw.

in 196 HC

IN THE HIGH COURT OF KARNATAKA AT BENGALURU

DATED THIS THE 24TH DAY OF MARCH 2023

BEFORE

THE HON’BLE MR. JUSTICE [Link] SHETTY

[Link].1053/2014
C/W
[Link].1052/2014
BETWEEN:

1. MRS FIONA ALOYSIUS

W/O AUBREY ALOYSIUS
AGED ABOUT 42 YEARS.

2. MR. AUBREY ALOYSISUS

S/O AUBREY ALOYSIUS
AGED ABOUT 51 YEARS.

BOTH PETITIONERS RESIDINE AT

AT NO.A-81, REGENCY PARK-1
DLF PHASE - 4, GURGAON - 122 002
HARIYANA STATE. … PETITIONERS
(COMMON)

(BY SRI SIJI MALAYIL, ADV.)

AND:

MRS. ELFRIDA PINTO

W/O WILLIAM PINTO
AGED MAJOR
RESIDENT OF NO.60
C K GARDEN, COOKE TOWN
ST THOMAS POST
BANGALORE - 560 084. … RESPONDENT
(COMMON)
(BY SRI USMAN, ADV.)

THESE [Link]. ARE FILED U/S 397 R/W 401 CR.P.C.

PRAYING TO SET ASIDE THE JUDGMENT AND ORDER DATED
10.10.2014 PASSED BY THE COURT OF THE PRESIDING

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OFFICER AND ADDL. SESSIONS JUDGE, FAST TRACK COURT-

III AT MAYOHALL UNIT, BANGALORE IN
[Link].25166/2012 AND 25165/2012, RESPECTIVELY AND
THE JUDGMENT AND ORDER DATED 19.11.2012 PASSED BY
THE COURT OF THE XIV -ACMM IN [Link].32606/2008 AND
32607/2008, RESPECTIVELY AND ACQUIT THE PETITIONER.

THESE PETITIONS HAVING BEEN HEARD AND RESEVED,

COMING ON FOR PRONOUNCEMENT THIS DAY, THE COURT MADE
THE FOLLOWING:

ORDER

1. These two criminal revision petitions are between the

same parties and arise out of the same transaction, and

therefore, with the consent of the learned Counsel on both

sides, the petitions were clubbed, heard together and are

disposed of by this common order.

2. Heard the learned Counsel for the parties.

3. Facts leading to filing of these two revision petitions

narrated briefly are, the petitioners herein allegedly

approached the respondent-complainant in the year 2005

with a request to invest in their proposed company and they

promised that the respondent would get high returns on her

investment and being attracted by the representation made

by the petitioners, the respondent had invested an amount of

Rs.10 lakhs with the petitioners which was paid by her

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through two separate cheques. The petitioners allegedly

promised to return 50% of the investment in the first year

and another 50% in the second year and the investment

amount was renewable for further period at the option of the

respondent. However, the petitioners had not kept their

promise, and therefore, the respondent repeatedly insisted

for payment of the returns as promised. Petitioners,

therefore, had issued five cheques for a sum of Rs.2 lakhs

each towards dividend/returns on the investment. The said

cheques were realized by the respondent. Thereafter, she had

approached the petitioners and demanded for return of

principal amount and the petitioners had, therefore, issued

two postdated cheques dated 31.03.2008 for Rs.5 lakhs each

in favour of the respondent. The said two cheques, on

presentation for realization, were dishonoured by the drawee

bank with an endorsement "payment stopped by the drawer".

The complainant, thereafter, got issued legal notice to the

petitioners on 15.05.2008 which was sent by RPAD as well as

certificate of posting. Inspite of service of the said legal

notice, the petitioners did not pay the amount covered under

the cheques nor had they issued any reply to the legal notice.

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It is under these circumstances, the respondent had filed two

separate criminal complaints against the petitioners under

Section 200 [Link] for the offence punishable under Section

138 of the Negotiable Instruments Act, 1881 (for short, 'the

Act'). After the learned Magistrate had taken cognizance of

the offence alleged in the complaint, criminal cases were

registered against the petitioners in [Link].32606/2008 &

32607/2008.

4. In the said proceedings, the petitioners who were

arrayed as accused nos.1 & 2 had appeared before the Trial

Court and pleaded not guilty. The respondent-complainant,

therefore, in order to substantiate her case had examined

herself as PW-1 and had got marked 16 documents as

Exs.P-1 to P-16 in [Link].32606/2008 and 13 documents as

Exs.P-1 to P-13 in [Link].32607/2008. The petitioners had

denied the incriminating circumstances available on record

against them during the course of their statement under

Section 313 [Link], and petitioner no.2 was examined as DW-

1 in support of their defence. However, no document was

marked on behalf of them.

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5. The Trial Court, thereafter, heard the arguments

addressed on both sides and by two separate judgment and

order dated 19.11.2012 convicted the petitioners for the

offence under Section 138 of the Act and sentenced them to

pay fine of Rs.10 lakhs and in default to undergo simple

imprisonment for one year each. The appeal filed by the

petitioners in [Link].25166/2012 & 25165/2012

challenging the said judgment and order of conviction and

sentence passed by the Trial Court were allowed in part by

Fast Track Court-III, Bengaluru, by its judgment and order

dated 10.10.2014 and the sentence imposed by the Trial

Court directing them to pay Rs.10 lakhs as fine was reduced

to Rs.6,25,000/-. It is under this factual background, the

petitioners are before this Court in these two revision

petitions.

6. Learned Counsel for the petitioners submits that the

cheques in question were not issued towards legally

recoverable debt and it was issued only as security for the

investment made by the respondent in petitioners proposed

company. He submits that the proposed company had not

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come into existence, and therefore, question of payment of

dividend or returns to the respondent does not arise. The

amount paid under the five cheques for a sum of Rs.2 lakhs

each was towards repayment of investment and after having

realized the said amount, the cheques in question which were

issued towards security were misused by the respondent. He

submits that the legal notice as required under Section

138(b) of the Act was not issued within the period of 30 days

from the date of return of the cheques, and therefore, the

proceedings initiated on the basis of defective notice could

not have been entertained by the learned Magistrate. He

submits that unless the respondent proves that as on the

date of issuing the cheques in question there existed legally

recoverable debt from the petitioners, the petitioners cannot

be convicted for the offence under Section 138 of the Act. In

support of this contention of his, he has placed reliance on

the judgment of the Hon'ble Supreme Court in the case of

M/S. INDUS AIRWAYS PVT. LTD. & OTHERS VS M/S.

MAGNUM AVIATION PVT. LTD. & ANOTHER - (2014)12 SCC

539. He also submits that the cheques in question have been

signed only by accused no.2/petitioner no.2, and therefore,

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the respondent could not have prosecuted accused

no.1/petitioner no.1 for the alleged offence under Section 138

of the Act. In this regard, he has placed reliance on the

judgment of the Hon'ble Supreme Court in the case of

APARNA [Link] VS SETH DEVELOPERS - (2013)8 SCC 71.

He submits that mere issuance of cheque does not amount to

admitting a pre-existing debt and the presumption available

in favour of the holder of the cheque is that the cheque was

issued for discharge of any debt or other liability. In support

of this contention of his, he has placed reliance on the

judgment of the Hon'ble Supreme Court in the case of

VINITA [Link] VS M/S. ESSEN CORPORATE SER. P. LTD. -

(2015)1 SCC 527 and the judgment of the Madras High Court

in INDIA CEMENTS INVESTMENTS SERVICE LTD. VS

[Link] - (2017) SCC OnLine Mad 146.

7. Per contra, learned Counsel appearing for the

respondent submits that issuance of cheques in question by

the petitioners is not disputed and the signature found in the

said cheques, so also the contents of the cheques are not

disputed, and therefore, there is a presumption under Section

139 of the Act that the cheques in question were issued

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towards discharge of legally recoverable debt and unless and

until the said presumption is successfully rebutted, the

drawer of the cheque is liable to be punished under Section

138 of the Act. In this regard, he has placed reliance on the

judgment in the case of RANGAPPA VS SRI MOHAN -

(2010)11 SCC 441. He further submits that the judgment in

M/s. Indus Airways' case supra has been overruled by the

Hon'ble Supreme Court in the case of SAMPELLY

SATYANARAYANA RAO VS INDIAN RENEWABLE ENERGY -

(2016)10 SCC 458, which has been further reiterated in the

case of DASHRATHBHAI TRIKAMBHAI PATEL VS HITESH

MAHENDRABHAI PATEL & ANOTHER - (2023)1 SCC 578. He

submits that even if the cheque issued towards security

purpose is dishonoured, if the complainant proves that there

existed a liability as on the date of presentation of the

cheque, then the accused are liable to be punished under

Section 138 of the Act. In support of this contention, he has

placed reliance on the judgment of the coordinate bench of

this Court in the case of Dr. [Link] VS Dr.

[Link] - ILR 2006 KAR 1730.

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8. The question that arises for consideration in these

revision petitions is,

"whether the courts below were justified in

convicting the petitioners for the offence
punishable under Section 138 of the Act?"

9. The respondent-complainant in order to substantiate

her case, had examined herself as PW-1 and got marked 16

documents as Exs.P-1 to P-16 in [Link].32606/2008 and got

marked 13 documents as Exs.P-1 to P-13 in

[Link].32607/2008. The transaction between the parties is

admitted and only for the reason that two separate cheques

were issued for repayment of the amount of Rs.10 lakhs paid

by the respondent to the petitioners and since two separate

legal notices were issued, the complainant had filed two

separate cases against the petitioners. Therefore, for the

purpose of convenience, the evidence and documents in

[Link].32606/2008 shall be referred during the course of this

judgment.

10. Ex.P-1 is the cheque dated 31.03.2008 issued by

petitioner no.2 in favour of the respondent for a sum of Rs.5

lakhs drawn on ICICI Bank. Even the cheque issued in

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[Link].32607/2008 is for a sum of Rs.5 lakhs drawn on ICICI

Bank in favour of the respondent by petitioner no.2. Ex.P-5 is

the letter issued by the petitioners acknowledging the

payment of Rs.10 lakhs from the respondent and promising

to pay 50% returns per annum to the respondent and it is

also mentioned in the said document that the investment

made by the respondent would be required by the petitioners

only for a period of two years. Ex.P-6 is the letter issued in

the month of August 2007 by the petitioners to the

respondent forwarding five cheques for a sum of Rs.2 lakhs

each towards payment of dividend/returns and these cheques

are drawn on State Bank of Travancore. In the said letter, the

petitioners have admitted the issuance of the cheques in

question which are the subject matter of these two cases and

a request is made by the petitioners to the respondent not to

deposit the said two cheques and hold the same until the first

quarter of 2008 and they had assured that they will be

issuing fresh cheques drawn on State of Travancore replacing

the said two cheques. Exs.P-14 & P-15 are the legal notices

issued by the respondent to the petitioners calling upon them

to pay the amount covered under the cheques after the same

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were dishonoured and Ex.P-16 is the ledger extract of the

bank register which would show that the cheque return memo

was received by the respondent from the bank only on

21.04.2008.

11. PW-1 during the course of her evidence has stated that

she had paid a sum of Rs.10 lakhs to the petitioners at their

request for starting a company and they had assured that

they would be giving her returns of 50% per annum for the

first two years, and thereafter, the investment amount would

be either returned to her or it could be continued at her

choice. This statement of the respondent is corroborated by

Ex.P-5 which is the letter issued by the petitioners to the

respondent admitting the receipt of the amount of Rs.10

lakhs from the respondent and assuring returns at 50% per

annum for the first two years and it is also mentioned in the

said letter that the investment would be required by them

only for a period of two years. By issuing five cheques for a

sum of Rs.2 lakhs each under Ex.P-6, the respondents have

paid the agreed returns to the respondent and in Ex.P-6

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petitioners have admitted about issuance of two cheques in

question in favour of the respondent.

12. It is the specific case of the respondent that though in

Ex.P-6 the petitioners had assured to issue two separate

cheques drawn on State of Travancore on or before

31.03.2008, they did not honour their commitment, and

therefore, she was constrained to present the two cheques

which were earlier given to her. This statement of the

respondent is probablized by the contents of Ex.P-6.

Petitioners have taken a defence that the cheques in question

were issued to the respondent towards security and they

were misused by the respondent. However, during the course

of his evidence, DW-1 (accused no.2) has stated that the

cheques in question were taken by the respondent without his

knowledge, in his absence and have been misused and when

he had questioned respondent about the same, she had

promised that she would keep the said cheques as security.

This statement of DW-1 is contrary to the contents of Ex.P-6

wherein the petitioners have specifically admitted the

issuance of the cheques in question in favour of the

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respondent as early as in the month of August 2007 itself.

Under the circumstances, I do not find any merit in the

contention of the petitioners that the cheques in question

were issued to the respondent towards security and the same

were misused by her.

13. The petitioners have also contended that the statutory

notice under Section 138(b) of the Act was not issued within

30 days from the date of return of the cheques, and

therefore, the proceedings initiated by the complainant is on

the basis of a defective notice. The cheques in question were

returned by the drawee bank on 08.04.2008 and the same is

evident from Ex.P-2 - bank endorsement. Ex.P-3 is the

cheuqe return memo, wherein it is stated that the respondent

had received the returned cheques only on 21.04.2008. The

petitioners have seriously disputed Ex.P-3 on the ground that

the same does not bear the seal and signature of the bank.

Ex.P-16 is the certified copy of the ledger extract relating to

the bank register and in the said document, it is mentioned

that the respondent has received the returned cheques from

the bank only on 21.04.2008. The signature of the

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respondent is found in the said ledger extract and the bank

has certified the same with its seal and signature. The legal

notices at Exs.P-14 & P-15 were issued to the petitioners by

the respondent on 15.05.2008 which is within 30 days from

21.04.2008, and therefore, the notices issued to the

petitioners by the respondent is in compliance with the

requirement of Section 138(b) of the Act.

14. The petitioners have further contended that as on the

date of issuance of the cheques in question, there was no

existing legally recoverable debt from the petitioners, and

therefore, the petitioners cannot be prosecuted for the

offence under Section 138 of the Act. In support of this

contention of theirs, they have relied upon the judgment of

the Hon'ble Supreme Court in Indus Airways' case supra,

wherein at paragraph 15, it has been observed as under:

"15. The Gujaraj High Court in Shanku

Concretes dealing with Section 138 of the [Link] held
that to attract Section 138 of the N.I. Act, there must
be subsisting liability or debt on the date when the
cheque was delivered. The very fact that the payment
was agreed to some future date and there was no debt
or liability on the date delivery of the cheques would
take the case out of the purview of Section 138 of the

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N.I. Act. While holding so, Gujarat High Court

followed a decision of the Madras High Court in Balaji
Seafoods."

15. In Sampelly Satyanarayana Rao's case supra, after

considering the judgment in Indus Airways' case supra, the

Hon'ble Supreme Court at paragraphs 8 to 11 has observed

as under:

"8. Reference may now be made to the decision

of this Court in Indus Airways (P) Ltd. v. Magnum
Aviation (P) Ltd., on which strong reliance has been
placed by the learned counsel for the appellant. The
question therein was whether post-dated cheque
issued by way of advance payment for a purchase
order could be considered for discharge of legally
enforceable debt. The cheque was issued by way of
advance payment for the purchase order but the
purchase order was cancelled and payment of the
cheque was stopped. This Court held that while the
purchaser may be liable for breach of the contract,
when a contract provides that the purchaser has to
pay in advance and the cheque towards advance
payment is dishonoured, it will not give rise to criminal
liability under Section 138 of the Act. Issuance of
cheque towards advance payment could not be
considered as discharge of any subsisting liability.
View to this effect of the Andhra Pradesh High Court in
Swastik Coaters (P) Ltd. v. Deepak Bros., Madras High
Court in Balaji Seafoods Exports (India) Ltd. v. Mac

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Industries Ltd., Gujarat High Court in Shanku

Concretes (P) Ltd. v. State of Gujarat and Kerala High
Court in Supply House v. Ullas was held to be correct
view as against the view of the Delhi High Court in
Magnum Aviation (P) Ltd. v. State and Mojj Engg.
Systems Ltd. v. A.B. Sugars Ltd. which was
disapproved.

9. We have given due consideration to the

submission advanced on behalf of the appellant as well
as the observations of this Court in Indus Airways with
reference to the explanation to Section 138 of the Act
and the expression “for discharge of any debt or other
liability” occurring in Section 138 of the Act. We are of
the view that the question whether a post-dated
cheque is for “discharge of debt or liability” depends
on the nature of the transaction. If on the date of the
cheque, liability or debt exists or the amount has
become legally recoverable, the section is attracted
and not otherwise.

10. Reference to the facts of the present case

clearly shows that though the word “security” is used
in Clause 3.1(iii) of the agreement, the said
expression refers to the cheques being towards
repayment of instalments. The repayment becomes
due under the agreement, the moment the loan is
advanced and the instalment falls due. It is undisputed
that the loan was duly disbursed on 28-2-2002 which
was prior to the date of the cheques. Once the loan
was disbursed and instalments have fallen due on the

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date of the cheque as per the agreement, dishonour of

such cheques would fall under Section 138 of the Act.
The cheques undoubtedly represent the outstanding
liability.

11. The judgment in Indus Airways is clearly

distinguishable. As already noted, it was held therein
that liability arising out of claim for breach of contract
under Section 138, which arises on account of
dishonour of cheque issued was not by itself on a par
with criminal liability towards discharge of
acknowledged and admitted debt under a loan
transaction. Dishonour of cheque issued for discharge
of later liability is clearly covered by the statute in
question. Admittedly, on the date of the cheque there
was a debt/liability in praesenti in terms of the loan
agreement, as against Indus Airways where the
purchase order had been cancelled and cheque issued
towards advance payment for the purchase order was
dishonoured. In that case, it was found that the
cheque had not been issued for discharge of liability
but as advance for the purchase order which was
cancelled. Keeping in mind this fine but real
distinction, the said judgment cannot be applied to a
case of present nature where the cheque was for
repayment of loan instalment which had fallen due
though such deposit of cheques towards repayment of
instalments was also described as “security” in the
loan agreement. In applying the judgment in Indus
Airways, one cannot lose sight of the difference
between a transaction of purchase order which is

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cancelled and that of a loan transaction where loan

has actually been advanced and its repayment is due
on the date of the cheque."

16. In its subsequent judgment in Dashrathbhai Trikambhai

Patel's case supra, the Hon'ble Supreme Court at paragraphs

18 & 19 has observed as under:

"18. The judgments from Indus Airwaysto Sunil

Todi indicate that much of the analysis on whether
post-dated cheques issued as security would fall within
the purview of Section 138 of the Act hinges on the
relevance of time. In Indus Airways, this Court held
that for the commission of the offence under Section
138, there must have been a debt on the date of
issuance of the cheque. However, later judgments
adopt a more nuanced position while discussing the
validity of proceedings under Section 138 on the
dishonour of post-dated cheques. This Court since
Sampelly Satyanarayana Rao has consistently held
that there must be a legally enforceable debt on the
date mentioned in the cheque, which is the date of
maturity.

19. This Court in NEPC Micon Ltd. v. Magma

Leasing Ltd. held that the courts must interpret
Section 138 with reference to the legislative intent to
supress the mischief and advance the remedy. The
objective of the Act in general and Section 138
specifically is to enhance the acceptability of cheques
and to inculcate faith in the efficacy of negotiable

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instruments for the transaction of business. Section

138 criminalises the dishonour of cheques. This is in
addition to the civil remedy that is available. Through
the criminalisation of the dishonour of cheques, the
legislature intended to prevent dishonesty on the part
of the drawer of a negotiable instrument. The
interpretation of Section 138 must not permit
dishonesty of the drawee of the cheque as well. A
cheque is issued as security to provide the drawee of
the cheque with a leverage of using the cheque in case
the drawer fails to pay the debt in the future.
Therefore, cheques are issued and received as security
with the contemplation that a part or the full sum that
is addressed in the cheque may be paid before the
cheque is encashed."

17. In the present case, the issuance of the cheques in

question and the contents of the cheques in question are not

seriously disputed by the petitioners. In Ex.P-6 - letter which

is issued by the petitioners, while admitting issuance of the

said cheques, the only request made by the petitioners was

not to present the same till 31.03.2008 and in the

meanwhile, they had assured that they would be replacing

the cheques in question by separate cheques drawn on State

Bank of Travancore. By making such a statement, they had

admitted their liability in respect of the amounts covered

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under the cheques in question. If it was the case of the

petitioners that the payment made by them under five

cheques drawn for a sum of Rs.2 lakhs each which were

forwarded by them to the respondent under Ex.P-6 were

towards repayment of the amount paid by the respondent, in

normal circumstances they would have requested the

respondent to return the two cheques which were admittedly

issued by them in her favour for a sum of Rs.5 lakhs each.

However, Ex.P-6 would reflect that the petitioners had not

sought for return of the said cheques and on the other hand,

they had only requested the respondent not to present the

same till 31.03.2008 and in the meanwhile they had assured

to replace the said cheques by separate cheques drawn on

State Bank of Travancore. PW-1 has specifically stated that

since the petitioners had failed to keep up their promise and

replace the cheques in question by cheques drawn on State

Bank of Travancore as undertaken by them under Ex.P-6, she

had presented the cheques in question for realization. Under

the circumstances, it cannot be said that as on the date of

issuing the cheques, there was no existing liability which was

legally recoverable from the petitioners by the respondent,

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and therefore, the judgment in Indus Airways' case supra

would not be applicable to the petitioners' case.

18. Petitioners have also contended that mere issuance of

the cheques in question would not amount to admission

regarding pre-existing debt and the presumption available in

favour of the holder of the cheque is that the cheque was

issued for discharge of liability. In the present case, as

already discussed herein above, the petitioners have not only

admitted the issuance of cheques but they have also admitted

the contents of the said cheque and by requesting the

respondent not to present the same for a certain period, they

have also admitted their liability. Under the circumstances,

the judgment in Vinitha [Link]'s case and India Cements

Investments Service Ltd.'s case supra on which reliance has

been placed by the petitioners, will also not be applicable to

the facts of the present case.

19. The petitioners have also raised a contention that the

cheques in question were signed and issued only by petitioner

no.2 in his personal capacity, and therefore, petitioner no.1

(accused no.1) could not have been prosecuted for the

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offence under Section 138 of the Act. A perusal of the

cheques in question would go to show that the cheques were

drawn on the bank account which was maintained by

petitioner no.2 in his personal capacity and the same is

issued and signed by him in his personal capacity and

petitioner no.1 is not a signatory to the said cheques. The

Counsel for the respondent during the course of his

arguments has admitted that the account from which the

cheques in question are drawn is maintained by petitioner

no.2 in his individual capacity and it is not in the joint name

of the petitioners. The Hon'ble Supreme Court in Aparna

[Link]'s case supra, at paragraph 27 has observed as under:

"27. In the light of the above discussion, we

hold that under Section 138 of the Act, it is only the
drawer of the cheque who can be prosecuted. In the
case on hand, admittedly, the appellant is not a
drawer of the cheque and she has not signed the
same. A copy of the cheque was brought to our notice,
though it contains the name of the appellant and her
husband, the fact remains that her husband alone had
put his signature. In addition to the same, a bare
reading of the complaint as also the affidavit of
examination-in-chief of the complainant and a bare
look at the cheque would show that the appellant has
not signed the cheque."

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20. In Alka Khandu Auhad's case supra, the Hon'ble

Supreme Court at paragraph 10, has observed as under:

"10. Therefore, a person who is the signatory to

the cheque and the cheque is drawn by that person on
an account maintained by him and the cheque has
been issued for the discharge, in whole or in part, of
any debt or other liability and the said cheque has
been returned by the bank unpaid, such person can be
said to have committed an offence. Section 138 of the
NI Act does not speak about the joint liability. Even in
case of a joint liability, in case of individual persons, a
person other than a person who has drawn the cheque
on an account maintained by him, cannot be
prosecuted for the offence under Section 138 of the NI
Act. A person might have been jointly liable to pay the
debt, but if such a person who might have been liable
to pay the debt jointly, cannot be prosecuted unless
the bank account is jointly maintained and that he was
a signatory to the cheque."

21. The judgment in Aparna [Link]'s case and Alka Khandu

Auhad's case supra would be squarely applicable to the facts

of the present case, and therefore, I have no hesitation to

hold that petitioner no.1 could not have been prosecuted for

the offence under Section 138 of the Act and the conviction

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and order of sentence passed by the courts below against

petitioner no.1 cannot be sustained.

22. The issuance of cheques and the contents of the

cheques have not been seriously disputed by the petitioners.

It is also not in dispute that the cheques in question is drawn

on the account of petitioner no.2 maintained by him in ICICI

Bank. Therefore, there is a presumption under Section 139 of

the Act as against petitioner no.2 which has not been

rebutted by putting forward a probable defence. The Hon'ble

Supreme Court in Rangappa's case supra, at paragraph 18

has observed as under:

18. Ordinarily in cheque bouncing cases, what

the courts have to consider is whether the ingredients
of the offence enumerated in Section 138 of the Act
have been met and if so, whether the accused was
able to rebut the statutory presumption contemplated
by Section 139 of the Act. With respect to the facts of
the present case, it must be clarified that contrary to
the trial court's finding, Section 138 of the Act can
indeed be attracted when a cheque is dishonoured on
account of “stop payment” instructions sent by the
accused to his bank in respect of a post-dated cheque,
irrespective of insufficiency of funds in the account.
This position was clarified by this Court in Goaplast (P)

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25

Ltd. v. Chico Ursula D'Souza, wherein it was held:

(SCC pp. 232g-233c)

“Chapter XVII containing Sections 138 to

142 was introduced in the Act by Act 66 of 1988
with the object of inculcating faith in the
efficacy of banking operations and giving
credibility to negotiable instruments in business
transactions. The said provisions were intended
to discourage people from not honouring their
commitments by way of payment through
cheques. The court should lean in favour of an
interpretation which serves the object of the
statute. A post-dated cheque will lose its
credibility and acceptability if its payment can
be stopped routinely. The purpose of a post-
dated cheque is to provide some
accommodation to the drawer of the cheque.
Therefore, it is all the more necessary that the
drawer of the cheque should not be allowed to
abuse the accommodation given to him by a
creditor by way of acceptance of a post-dated
cheque.

In view of Section 139, it has to be

presumed that a cheque is issued in discharge
of any debt or other liability. The presumption
can be rebutted by adducing evidence and the
burden of proof is on the person who wants to
rebut the presumption. This presumption
coupled with the object of Chapter XVII of the

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26

Act leads to the conclusion that by

countermanding payment of post-dated cheque,
a party should not be allowed to get away from
the penal provision of Section 138 of the Act. A
contrary view would render Section 138 a dead
letter and will provide a handle to persons
trying to avoid payment under legal obligations
undertaken by them through their own acts
which in other words can be said to be taking
advantage of one's own wrong.”

23. The courts below after appreciating the oral and

documentary evidence available on record, have recorded a

concurrent finding that the presumption arising out of Section

139 of the Act has not been rebutted by the accused by

putting forward a probable defence. The findings recorded by

the courts below as against petitioner no.2/accused no.2 are

sound and reasoned and they do not suffer from any illegality

or irregularity which calls for interference by this Court.

Accordingly, the following order:

24. The criminal revision petitions are allowed in part. The

judgment and order dated 19.11.2012 passed by the XIV

Addl. Chief Metropolitan Magistrate, Bengaluru, in

[Link].32606/2008 & 32607/2008, and the judgment and

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27

order dated 10.10.2014 passed by Fast Track Court-III,

Bengaluru, in [Link].25166/2012 & 25165/2012, are set

aside in so far as it relates to petitioner no.1, and are upheld

as against petitioner no.2. Petitioner no.1 is acquitted of the

offence under Section 138 of the Act in [Link].32606/2008

& 32607/2008.

Sd/-
JUDGE

KK

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