Security cheque acts as deterrent for drawer against dishonouring his financial commitment and can also be used towards discharging his liability, reiterates P&H HC

Monika Rahar

Chandigarh, March 23, 2022: Applying the ratio pronounced by this Court in Shalini Enterprises Vs. India Bulls Financial Service, 2013 (2) CCC 835, wherein it was held that even if a cheque is a security cheque, the same is an integral part of the commercial process and the same acts as a deterrent for the drawer against dishonouring his financial commitment and can also be used towards discharging the liability of the drawer, the Punjab and Haryana High Court has denied relief to accused who argued with regard to the dishonoured cheque that the same was issued as a security cheque to his cousin and not to the complainant.  

Also, the Bench of Justice Vikas Bahl opined that even in case where the accused of the is that he issued a signed blank cheque which was subsequently filled by the complainant, the Supreme Court’s decision in Bir Singh vs. Mukesh Kumar, 2019(4) SCC 197, wherein it was held that the Court shall presume the liability of the drawer of the cheques for the amount for which the cheques are drawn, would be attracted. 

Challenge in the present Criminal Revision was to the judgment of the Trial Court, in the complaint filed under Section 138 of the Negotiable Instruments Act, 1881 (NI Act) by the private respondent, vide which the present petitioner was convicted under Section 138 of the NI Act and was sentenced to undergo rigorous imprisonment for a period of two years and he was also directed to pay compensation to the complainant (second respondent) in a time-bound manner. Challenge was also made to the judgment of the Additional Sessions Judge, Fazilka, vide which appeal preferred by the present petitioner, was also dismissed. 

It was the complainant’s case that the complainant on being on friendly terms with the petitioner advanced a loan of Rs. 5,50,000 in favour of the complainant, and in order to discharge his liability, the petitioner issued a cheque of the said amount in favour of the complainant with the assurance of its encashment. However, the cheque was dishonoured and returned unpaid with a cheque return memo with the remarks “funds insufficient”. Eventually, a complaint was filed and the Trial Court found the petitioner guilty of Section 13 of the NIA Act. The petitioner was convicted and sentenced to undergo imprisonment and to pay a fine in a time-bound manner. 

Thereafter, an appeal was filed by the petitioner before the Court of Additional Sessions Judge, Fazilka where it was noticed that the petitioner did not dispute his signatures on the cheque and did not even deny the issuance thereof by him. It was further observed that there was presumption in favour of the second respondent under Section 118(b) read with Section 139 of the Act of 1881 which was not rebutted by the accused/petitioner. It was further observed that the complainant prima facie proved that a sum of Rs.5,50,000  was advanced by him and a cheque was issued to the complainant by the petitioner, which became dishonoured. 

The petitioner’s counsel argued that the petitioner took a loan from his cousin namely Parampaljeet Singh and a security cheque was given to the said Parampaljeet Singh who misused the same by giving the same to the complainant. It was further submitted that the documents which were produced by the petitioner were not taken into consideration by the Court below and the petitioner had a reasonable defence in the present case. 

The Court opined at the outset that the fact that the petitioner signed the cheque and the cheque was issued by him, was not disputed before the Court. Further, the Court observed that even if was the plea of the accused that he issued a signed blank cheque which was subsequently filled by the complainant, the Supreme Court in Bir Singh’s Case (Supra). The Supreme Court in this case also held that the revisional Court should not interfere in the absence of jurisdictional error.

Further, the Court made reference to the judgment of the co-ordinate Bench of the Punjab and Haryana Court in Shalini Enterprises’s Case (Supra) wherein it was held that even if a cheque is a security cheque, the same is an integral part of the commercial process and the same acts as a deterrent for the drawer against dishonouring his financial commitment and can also be used towards discharging the liability of the drawer. It was further held that to state otherwise, would defeat the whole purpose of a security cheque.

Coming to the factual matrix of this case, the Court opined that the fact that the petitioner issued a cheque and the same was signed by him, was undisputed. The Court also noted that the Appellate Court noticed that the cheque bore the signature of the petitioner and no reasons were given by the accused/petitioner as to why he gave a cheque bearing his signatures to his cousin Parampaljeet Singh.

On the plea raised by the petitioner to the effect that the cheque in question was given to his cousin on account of his having taken a loan from his cousin, the Court held that it had no legs to stand as no document was produced on record to substantiate the same. Moreover, the Court added that nothing was shown to prove that the loan stated to have been taken from his cousin was repaid to the said cousin by the petitioner. 

“The said plea raised, does not even remotely rebut the presumption which has been raised against the present petitioner”, adjudged the Court. 

On the vires of the impugned judgment, the Court opined that both the Courts below considered the entire material on record and after due appreciation of the same, held the present petitioner guilty of the offence under Section 138 of the Act of 1881. 

Thus, the Court held, “There is no jurisdictional error or misreading of any evidence so as to call for interference by this Court and accordingly, the present Criminal Revision is dismissed.”