Civil suit against dishonoured cheques
DJPoint
(Querist) 27 November 2011
This query is : Resolved
Hi,
This is real incident that happened last year with one of my friends.
Person A owed some money to person B for which he had given a receipt to person B, and in order to not to return that money to person B, person A on gunpoint asked person B to write him two cheques for 1 million each, sign a pronote for the collective amount of those cheques, and a also sign a stamp paper agreement according to which person B had obtained a loan of 2 million from person A.
The pronote was without stamps on it.
Person A threatened person B with dire consequences if he told anyone about this incident. Person B was afraid for his family and kept silent, but he quietly told his bank to stop whole of his chequebook citing the reason that he had dropped his wallet which also had the chequebook in it. The bank issued stop payment order on all of his cheques, and gave person B a bank certificate stating that bank had received a request from person B on such date and that the bank had cancelled his chequebook on that date and time.
After three months Person A started to blackmail person B for the money, and when person B refused to comply to the blackmails, person A got those cheques dishonored from the banks, and registered two FIRs against person B.
Person B stated his version to the police who then asked person A to prove that he gave money to person B and asked him to give his bank details but person A wasn't able to prove that he was financially that much stable and that he had 2 million in his bank accounts that he had given to person B. He had only 300,000 in his bank account for the past two years, so police submitted a report that person B was innocent but they were sending him to judicial remand in jail as he had his original signatures on the cheques.
The bank had given the reason for dishonour of the cheques as "Stop Payment".
Police then submitted person B's challan to the trial court. Person B got his post arrest bail after 5 months, and now the trial is in the trial court.
Now person A filed civil suit for the recovery of money against those two cheques, and then affixed stamps on the pronote and made it a part of that suit as a further evidence to strengthen his suit. The affixed stamps does not contain any signatures of the person B for cancelling them since they had been affixed by person A recently for filing this civil suit.
Now my question is how my friend person B can now defend himself against this civil suit?
Did person A committed forgery by affixing stamps on the pronote, and presenting it to the court in this civil suit?
Person A won't be able to prove "Consideration" in this suit but our lawyer told us that if person B admits his signatures on the cheques, then court is not bound to ask the plaintiff to prove the consideration as on seeing our admittance of the execution of cheques,irrespective of the version we give to the court, the court will presume that consideration had been present.
So how can we tie person A's consideration proof with our acceptance of execution?
What will be the best strategy to go with in this kind of situation?
Thanks for your advice.
V R SHROFF
(Expert) 28 November 2011
My Dear Law Student,
A to B Pro note was a Q yesterday and u said it was seen by two persons as Witness.
Today u says this is a real incident : and obtn at gun point:[ Means ur Two Parsons of yesterdays Q Witness were present there.]
Now today your statement that "this is a real incident that happened with your friend last year, " is suspicious & not believable.
I HEREBY CALL UPON U TO SEND ME THE SUIT NO. AND COURT WHERE THE CIVIL SUIT WAS FILED & pending hearing.
PRESUMTION OR BURDEN OF PROOF IS ONLY IN 138 CHEQUE RE BOUNCE CASES.here u said it is civil suit.
our STORY is unbelievable!
However, if u send me Case No. Details, and if found REAL as u claim, I will guide you. : Otherwise I warn you, not to misguide us all at LCI, and do not waste our time reading a Long Question, that irritated me.
I strongly Believe this Query is a product of a fertile imagination of this Law Student.
I will like to know the Opinion of my LCI Experts about this query.
Adv Shroff
Raj Kumar Makkad
(Expert) 28 November 2011
Shroff has perfectly replied to your query.
Guest
(Expert) 28 November 2011
i also think so, agreed with Ld. counsel Shroff sb.
DJPoint
(Querist) 28 November 2011
Dear Mr. Shroff,
Actually this is a real case right now being tried in lower trial court here in Pakistan, and not a fruit of my "fertile imagination".
There are two parts to this case, criminal and civil. On criminal side, the trial is in the trial court according to the Sec.489(f) of Pakistan Penal Code which deals with the dishonoring of the cheques that had been given "dishonestly, and to pay a loan etc.". You can check the text of this section on net by searching in Google, and now the plaintiff also took this case to civil court and filed a suit under Order 37 of CPC for the recovery of money. And both cases can go side by side according to the rulings of the Supreme Court of Pakistan.
i could send you the case number etc but i don't think you'd be able to check it due to your being outside of my country.
So please kindly guide me what mode of action to adopt in this case? How to convince the civil judge to ask the plaintiff to prove his consideration?
Thanks.
Guest
(Expert) 28 November 2011
Dear DJ,
Irrespective of the drawer having put "his original signatures on the cheques" the first an foremost point of issue arises to prove that the cheques were issued dishonestly, which Section 489-F of Pakistan Penal Code, at its very start stipulates. The said section, as I went through, specifically pertains to"Dishonestly issuing a cheque", as reproduced below:
“489-F Dishonestly issuing a cheque.- Whoever dishonestly issues a cheque towards re-payment of a loan or fulfillment of an obligation which is dishonoured on presentation, shall be punishable with imprisonment which may extend to three years and with fine, unless he can establish, for which the burden of proof shall rest on him, that he had made arrangements with his bank to ensure that the cheque would be honoured and that the bank was at fault in not honouring the cheque.”.
Secondly, as per the specific section, question arises whether cheques were drawn towards re-payment of a loan or fulfillment of an obligation. If the drawee is not able to prove any loan to have been paid to the drawer, or not sold any property or other valuable to the tune of TWO MILLIONS, how the section can operate adversely against the drawee?
Third question arises, whether the drawee was a financier, financial institution or a bank to have loaned such a huge amount and for what purpose, even if he had get pronote signed from the drawee, irrespective of whether he stamped the document at some later stage, which I don't think your country's law can treat as forgery? However, his act to stamp the pronote at later stage can prove his mal-intention just to blackmail the drawee.
The party can also be asked to prove that he puchased the stamps only on the date of signing of the pronote, not on some other date.
Moreover, even if the holder of the cheque was a financier/financial institution, Sub-section (4) of Section 20 of your country's "Financial Institutions (Recovery of Finances) Ordinance 2001(XLVI of 2001)" also contains the similar provision, as that of Sec. 489-F, ibid, which reads as follows -
“Whoever dishonestly issues a cheque towards re-payment of a finance or fulfilment of an obligation which is dishonoured on presentation, shall be punishable with imprisonment which may extend to one year, or with fine or with both, unless he can establish, for which the burden of proof shall rest on him, that he had made arrangements with his bank to ensure that the cheque would be honoured and that the bank was at fault in not honouring the cheque”.
The above provision specifically applies in the cases where the cheque for recoupment of loans in favour of the financial institution is issued.
So, the police also did not act rationally in view of the provisions of the law of your land.
THE CHEQUE CONTAINING ORIGINAL SIGNATURE, IF OBTAINED FORCIBLY OR BY THEFT, CANNOT BE TREATED "AS ISSUED DISHONESTLY".
SO, THE MAIN ISSUE WOULD BE DISHONESTY OF THE DRAWER, if any, NOT THE ORIGINAL SIGNATURE ON THE CHEQUES.
DJPoint
(Querist) 28 November 2011
Thanks Mr. PS Dhingra for your detailed answer. I greatly appreciate it.
My final question is how can we ask the civil court to ask the plaintiff to prove his consideration because we will be accepting our signatures on the cheques but then how to convince civil court to ask the other party to first prove his consideration.
One point that came to my mind was to put the police reports that stated that the defendant in this case was innocent and that the complainant was not able to prove that he had given the money to the defendant. So keeping these police reports in front of the Civil Court we can ask the court to tell the plaintiff to prove his consideration, i.e. that he had actually given money to the defendant in this case.
What do you suggest?
Thanks.
Guest
(Expert) 28 November 2011
Denial on signature is not advisable. However, your contention is right that even police on investigation considered the defendeant as innocent and the plaintiff is required to prove his claim for money/debt beyond doubt.
DJPoint
(Querist) 28 November 2011
Thanks Mr. PS Dhingra for your kind advice. Much appreciate it.
