Madras High CourtAshok Kumar vs K. Gunasekaran on 2 December, 2004Equivalent citations: [2006]132COMPCAS445(MAD)Author:R. BanumathiBench:R. BanumathiJUDGMENT
 

R. Banumathi, J.1. This criminal appeal is directed against the judgment of acquittal dated July 10,1997, in C.C. No. 6 of 1997 on the file of Judicial Magistrate No. I, Erode.2. The appellant/complainant is the proprietor of Shiv Agencies dealing with textile business situated at Easwaran Koil Street, Erode. The respondent/accused has been a customer of the complainant. The accused had borrowed a sum of Rs. 91,000 from one Dilip Shivani on August 14, 1996, and for the abovesaid liability, the respondent/accused had issued three post dated chequesone cheque dated October 2,1996 for Rs. 35,000; the second cheque dated October 3, 1996, for Rs. 35,000 ; the third cheque dated October 7,1996, for Rs. 21,000. The said Dilip Shivani endorsed the cheques to Maya Shivani, proprietor of Shiv Agencies. When the cheques were presented for collection on October 24, 1996, through UCO Bank, Erode Branch, it were returned as "insufficiency of funds" on October 24, 1996. Notice was sent to the respondent/accused, which was returned "party left...without any instruction". Thereafter a rejoinder was sent on November 7, 1996, and the same was received by the accused on November 8, 1996. The accused had issued the cheques without sufficient funds in his bank account and hence, committed the offence underSection 138of the Negotiable Instruments Act, 1881 (hereinafter referred to as "N. I. Act"). The complainant, authorised by Maya Shivani under exhibit P1-power of attorney, has filed the complaint against the respondent/accused.3. In the trial court, P. Ws. 1 and 2 were examined. Exhibits P1 to P15 were marked. In consideration of the evidence, learned trial magistrate inter alia found that the appellant/complainant has no proper locus standi to file the complaint and that only Dilip Shivani ought to have filed the complaint. The trial magistrate was of the view that in the absence of proof of passing of the consideration and when Dilip Shivani was not examined as witness, the complainant Ashok Kumar was found to be not entitled to file the complaint. The learned trial magistrate also found that there is absolutely no evidence as to the passing of consideration for endorsing the cheques.4. Aggrieved over the order of acquittal, the appellant/complainant has preferred this appeal. Learned Counsel for the appellant has submitted that as perSection 139of the Negotiable Instruments Act, the trial court ought to have drawn the conclusion that every holder is the holder in due course and ought not to have insisted on the further proof of passing of consideration. The finding of the trial court that Maya Shivani ought to have filed the complaint is assailed as erroneous. Learned Counsel for the appellant has placed reliance upon the decision reported inPunjab and Sindh Bank v. Vinkar Sahakari Bank Ltd.[2001] 107 Comp Cas 208 : [2001] 4 Crimes 289 (SC) in support of his contention that every holder of a promissory note is a holder in due course unless rebutted and that the appeal is to be allowed.5. Countering the arguments, learned Counsel for the respondent/accused has submitted that the endorsements on the reverse of exhibits P2 to P4 cheques are blank endorsements and cryptic and no details of endorsement are stated. It is further submitted that the proper endorsement in favour of Maya Shivani is not proved to be consideration. The trial court rightly dismissed the complaint, acquitting the accused and that the reasonings do not suffer from any infirmity warranting interference.6. In consideration of the submissions of both sides, judgment and other materials on record, the following points arise for consideration:i. Whether the trial magistrate was right in finding that Maya Shivani is not the holder in due course and that the complainant has no locus standi to file the complaint ?ii. In the facts and circumstances of the case, whether the contention of the complainant that he is the holder in due course and properly authorised to file the complaint is acceptable ?7. The dispute between the parties relate to totally six cheques (cheques bearing Nos. 227922, 227947, 227940, 227941, 227919 and 227945) drawn on UCO Bank, Erode Branch. The present case relates to three cheques bearing Nos. 227940, 227941, 227945. The accused is said to have borrowed the amount of Rs. 91,000 from Dilip Shivani and for discharge of which, he is said to have issued exhibits P2 to P4 cheques drawn in favour of Dilip Shivani. On the reverse of exhibits P2 to P4, Dilip Shivani has signed, which signature is said to be an endorsement for Shiv Agencies. In his evidence, P. W. 1 has stated that Dilip Shivani has duly received the amount and the cheques were endorsed to Maya Shivani as per his version "...". Though Dilip Shivani is said to have received the amount, the details of passing of consideration are not forthcoming- Likewise, the said Dilip Shivani who is said to have received the consideration and endorsed the cheques has also not been examined as a witness on behalf of the complainant,8. P.W. 2 bank manager has stated that exhibits P2 to P4 are only blank endorsements, and that the endorsements do not specifically state in favour of whom endorsed ....9. P.W. 2 has clearly stated that though as per the Banking Rules, passing of consideration under the cheques is not required to be proved. It may be so for the Banking Rules. But, for the criminal offence punishable underSection 138, the complainant ought to have proved passing of consideration from Maya Shivani to Dilip Shivani and as to how Maya Shivani has become holder in due course by adducing proper evidence. On the basis of blank endorsements in exhibits P2 to P4, no presumption of passing of consideration could be drawn ; this is all the more so in the absence of examination of Dilip Shivani.10.Section 50of the Negotiable Instruments Act deals with endorsement. The illustrations thereon state the kinds of endorsements that could be made on different negotiable instruments payable to bearer(a) pay the contents to C only ;(b) pay C for my use ;(c) pay C or order for the account of B ;(d) the within must be credited to C.11. No such definite order of payment of contents of the cheque of Maya  Shivani has been made in the endorsements. Dilip Shivani has merely signed without specifically stating to pay the contents to Maya Shivani or to credit the amount to Maya Shivani. Mere signing of Dilip Shivani on reverse of the cheque is not proper. The requirements ofSection 50of the Negotiable Instruments Act cannot be said to be complied with.12. Laying emphasis uponSection 139of the Negotiable Instruments Act, on behalf of the appellant/complainant, the main contention is urged that the trial court ought to have drawn the presumption that every holder of the promissory note is a holder in due course.In this regard, reliance is placed upon the decision reported inPunjab and Sindh Bank v. Vinkar Sahakari Bank Ltd.[2001] 107 Comp Cas 208 : [2001] 4 Crimes 289 (SC). That case arose out of the quashing of the complaint, wherein one of the grounds for quashing the complaint was found to be that the complainant was not "a holder in due course" in the absence of an endorsement made on the instrument in the manner prescribed underSection 50of the Act. The case in hand stands on different footing. This appeal arises out of acquittal where this Court could interfere only when the findings of the trial court are proved to be perverse.13. A reading ofSections 138and142of the Negotiable Instruments Act would show that the complaint underSection 138of the Negotiable Instruments Act can be lodged only by a "payee" or "holder in due course". "Holder in due course" is defined inSection 9of the Negotiable Instruments Act.Section 9of the Negotiable Instruments Act makes it clear that "holder in due course" means any person who for consideration became the possessor of a promissory note, bill of exchange or cheque if payable to bearer, or the payee or endorsee thereof. No doubt, the complaint underSection 138of the Negotiable Instruments Act by such holder in due course is maintainable. But, in this case, the facts and circumstances under which Dilip Shivani has endorsed the cheques exhibits P2 to P4 to Maya Shivani are not forthcoming. Consideration for passing of the cheque is not satisfactorily proved. It is relevant to note that the transaction between the parties relates not merely to one cheque; but relate to as many as six cheques. Substantial evidence ought to have been adduced to prove the endorsement. In the absence of endorsement in compliance withSection 50of the Negotiable Instruments Act, the presumption that the holder of cheque is of a holder in due course cannot be drawn in favour of the complainant.14. It is stated that relating to other set of three cheques, in the trial court in C.C. No. 5 of 1997, the respondent/accused was convicted and sentenced to undergo imprisonment for a period of three months and fine of Rs. 5,000 imposed. In an appeal preferred by the respondent/accused before the Sessions Court, the period of imprisonment was modified as fine of Rs. 25,000, which amount is said to have been withdrawn by the appellant/complainant. The parallel proceedings ended thereon. Under such circumstances, the findings of the learned trial magistrate for acquitting the accused cannot be said to be suffering from manifest or substantial error warranting interference in the order of acquittal. This appeal is bereft of merit and liable to be dismissed.C. A. No. 613 of 1997:15. This appeal is dismissed.