Misuse of the blank cancelled cheque.
arun kumar gandhi
(Querist) 15 October 2011
This query is : Resolved
i had issued two blank cheques on 05-05-09 and handed over to the rpresentative of the company who issued receipt on the order sheet itself. there was no outstanding on the date on my account. the company after my telephonic consent encashed one cheque and kept the other blank with them. the second consignment was of the worst quality and so we refused to unload it but the company thru email accepted the bad quality and appearance of the material and asked us to wash the material and sell the washing charges to be borne by the company. but afterwards the company denied of it. thus on 20-10-09 we aked the company to lift back the unsold material after settlement of our account and instructed them not to use the blank cheque with them as we are returning the material.the cmd of the company assured us thru email thrice that within no time will lift back the unsold material. but didnt do so. on 7-11-09 after discussions on telephonic call recd. from the cmd we cancelled the cheque instrucetd the bank and informed the company thru email refering the telephonic discussions. we repeatedly stressed thru email for the lift back of the material after the settlement of our account. on 19-12-09 we recd. email from the company that as their prices are high and so resend the material kept with us on frieght to pay basis to their nagpur plant. we immidiatly asked for assurance of thr settlement of accounts after the delivery of the returned material and asked them to send us back the blank cancelled cheque. they did not replied to it. after waiting for ten days we uploaded the material and sent it to nagpur plant. on 30-12-09 we came to know that the blank cheque which was cancelled approximatly two months back have been used by the company without any intimation and the same have been returned unpaid "stopped by the drawer"on 26-12-09. on the other hand the company returned the goods sent at their nagpur plant stating the it is not of their particular bill.
we smelled the conspiracy and immidiatly submitted a compalint on 01-01-10 with the local police, who didi not took interest to investigate it for four and half months.
in the mean time we received a legal notice under 138. which we replied within the fifteen days period stating the facts. but the company mamaged to register a complaint under IPC138 against us in nagpur courts without submitting the authority letter from the ltd. co. ther was not satement taken and no other mandatory rules followed but the case was registered against us.
on the other hand no sooner the case against us was registered in nagpur the police recorded my statement with evidences of 49 pages emails etc. to fulfill the procedure the statement of cmd was taken which was totally false stating that the said cheque was issued by me duly amount filled. on this basis without crossing it to my submissions rejected my complaint.
i submitted again the compalint to csp who after studying my complaint issued written orders to the concerned TI to register FIR against the accused company directors. but surprisingly the TI refused to do so. to sterngthened his reply submitted a managed review of the precectoin dept that the compalint is of civil nature and if i wish can proceed against the company under sec.138
thus requested to kindly advice and inform me the higher courts proceedings in such type of cases for section 420 and 406.
thanks
arun kumr gandhi
9303203346
Sankaranarayanan
(Expert) 15 October 2011
yes first you need to reply the notice under sec 138 NI act. You said you lodged the complaint against the supplier by separate suit under 420 with all sorts of evidence.
Without fund or blank cheque issued to some is wrong
ajay sethi
(Expert) 15 October 2011
be brief and concise in your queries .
do you have any proof that blank cheque has been issued?
did you issue cheque with covering letter?
if the amount and date has been filed by company and cheque has been dishonoured no complaint under section 138 is maintanable . a blank cheque is no cheque
ajay sethi
(Expert) 15 October 2011
Mr bhagat i have relied upon judgement of bomnbay and kerala high courts that blank cheque is no cheque .
if blank cheques have been issued and amount , dates filled in by the complainant it amounts to material lateration of cheque
IV (2010) BC 1 (P&H HC) Dishonour of Cheque—Blank cheque—Filling up of blanks in a cheque by itself would not amount to forgery. IV (2010) BC 178 ( Kerala ...
arun kumar gandhi
(Querist) 15 October 2011
to all of the lawyers
thanks first of all for the response and advice. as asked by shri sethi yes i am having proof of blank cheques undated issued i.e. zerox and the receipt on the order sheet dt.05-05-09 by the representative of the company. the company cannot deny it as they will also have to prove where did they get the order and the first blank cheque?
but also tell me can my private complaint be registered under section 420 and 406
thanks again
arun kumar gandhi
cell:09303203346
Shonee Kapoor
(Expert) 15 October 2011
Ld. Mr. Sethi,
I was not aware of these judgemnets, but is not it a clear case of fraud, when the respective email evidence is also with Mr. Gandhi.
Though I am not sure about the 420 thing.
Regards,
Shonee Kapoor
harassed.by.498a@gmail.com
Arun Kumar Bhagat
(Expert) 15 October 2011
Mr.Sethi, Please give reference of Bombay & Kerala High Court Judgement. The judgement referred above by you is of P & H Court and it is contrary to your stand as the brief note suggests.
prabhakar singh
(Expert) 16 October 2011
Dear Mr. arun kumar Gandhi!
The case you want to proceed under section 420 or 406 of IPC would not be a tenable case in the circumstances stated by you.I appreciate that you have stated each and every fact necessary to arrive at an opinion as i like it rather getting bore reading such details which are warranted to form a viable legal opinion.
Your case as it emerges is undoubtedly of a civil nature and that of an accounting after determining who is the party at default,which you, in my opinion,is not.
So far as the complaint lodged by your opponent is concerned they can also not succeed in prosecuting you with a favor able verdict u/s 138 of NI Act,whether citations are there or not.But as prima facie they had the cheque,presented it and got returned unpaid,noticed you,and you replied all this were in confirmation of steps stipulated in 138 of the NI Act,hence
Magistrate has substantial prima facie material to summon you but he would not be able to frame charges knowing your side of version of the case,and in case he fails to appreciate facts and frames charges ,you would be having a very very good case for having a quash order from high court moving
u/s 482.
ajay sethi
(Expert) 16 October 2011
mr bhagat
please find one of the judgements
A single judge of Kerala High Court in Capital Syndicate Vs. Jameela[1] held that if a drawer issues a cheque leaf with his signature only and without the name of the payee and the specifying the amount and date, the filling up of the name of the payee and the specifying the amount and date would amount to material alteration u/s.87 of the act and therefore the criminal proceedings u/s. 138 of the act would not lie if such a cheque is dishonored. The court observed that “…..the subsequent insertion of the amount and the name of the payee without the consent of the drawer would amount to material alteration rendering the instrument void u/s. 87 of the Act”. In the said judgment the Kerala High Court cited with approval the decision of a division bench of the Kerala High Court in Bhaskaran Chandrasekharan v. Radhakrishanan[2] in which the court had considered whether the putting of the date in an undated cheque subsequent to the issue of the same when there was no dispute regarding consideration, signature, amount and the name of the payee, would amount to material alteration rendering the instrument void u/s. 87 of the Act. the Court held that: “ When a cheque is issued for valid consideration, with no dispute regarding signature, amount and name, it cannot be said that putting a date on cheque by the payee who is the holder of the cheque in due course would amount to material alteration rendering the instrument void. In fact there is no material alteration. When a cheque is admittedly issued with blank date, and when the payee has no objection with regard to the name, amount and signature, it can be assumed that there is an implied consent for putting the date as and when required by the beneficiary at get it enchased”. The court further held that: “Alteration of the date in the cheque may be material alteration. Alteration may have the effect of lengthening the period of limitation or shortening it. So alteration of payee’s name is material which affects the character of the instrument, and so also the relationship of the parties. So also the alteration of signature as well as the amount. All this would amount to material alteration”.
ajay sethi
(Expert) 16 October 2011
A single judge of Andhra Pradesh High Court in Avon Organics Ltd. V. Pioneer Products Ltd. & ors.[4] also observed and held as follow: “whenever blank cheques are filled up and presented, a presumption can be drawn u/s. 139 of the Act. It’s a rebuttable presumption. The question is whether the accused is able to rebut the presumption. I’m of the considered view that he has rebutted the presumption in this case as he has not given consent to fill up the cheque in particular amount, in figures and words and the date portion. It constitutes alteration of the cheque. I also state that it was issued for the legally enforceable liability, namely, towards the amount due under the invoices. But the instrument issued without mentioning the figures, words and date portion in the cheque do not amount a cheque or a bill of exchange at the time of its issuing. Subsequently, it can be altered only with the consent of the party, who has issued the cheque. Otherwise, it amounts to material alteration. When it does not constitute a cheque and the same is filled up and presented to the bank, it cannot be said that the accused has committed an offence…..the person who accepts the blank cheque certainly has to take it along with the risks to be faced under law. It’s not opened to him to complain subsequently when the amount has not been realized, etc. I’m of considered view of that the cheque issued without mentioning the amount for which it is drawn is not a cheque at all. It’s not a bill of exchange at all as it’s not drawn for a certain amount. When such is the thing, the question of invoking S. 138 of the Act does not arise”.
It follows from the judgments above that the subsequent insertion of the amount and the name of the payee in the cheque that has been issued by the drawer with his signature only and without the name of the payee and the specifying the amount and date would amount to material alteration rendering the instrument void under S. 87 of the Act unless the name of the payee and the amounts are inserted with the consent of the drawer.
ajay sethi
(Expert) 16 October 2011
mr bhagat bombay high court judgement reported in times of india
(reported in "Times of India, dated 20 February'2010, Mumbai edition, page 01")
Mumbai: The Bombay high court has ruled that banks cannot prosecute borrowers under the stringent anti-cheque bouncing laws if blank post-dated cheques issued by them as collateral security are dishonoured.
“It is doubtful if the provisions of Section 138 of the Negotiable Instruments Act can apply to a case in which a blank or post-dated cheque is obtained by a bank or money lender before or while sanctioning or disbursing loan amounts as security for the loan,’’ said Justice P R Borkar. The order is likely to come as a huge setback to lending agencies who ask borrowers to deposit blank post-dated cheques as security.
“Law-makers must not have intended or imagined that money lenders or banks would obtain blank or post-dated cheques while sanctioning/disbursing loans as securities and would use them to make debtors/borrowers repay the loan under threat of prosecution and punishment (under the cheque-bouncing law),’’ added the judge.
The court upheld the acquittal of Ahmednagar resident Rajendra Warma, who was prosecuted after a blank cheque issued by him for a loan was dishonoured.
‘Law is not meant for speedy loan recovery’
Mumbai: The Bombay high court has upheld the all-clear to Ahmednagar resident R a j e n d r a Warma in a blank cheque bouncing case. Ramkrishna Urban Cooperative Credit Society (RUCCS) had given a loan of Rs. 2 lakh to Warma in 2000. Warma had issued 10 blank post-dated cheques at that time as security. One of these cheques, dated January 2008, bounced, following which RUCCS lodged a criminal complaint against Warma. The magistrate’s court held that Warma was not guilty under the Negotiable Instruments Act and acquitted him. It also held that while Warma had receipts to prove that he had repaid the entire loan amount in 2005, the bank failed to produce records after 2003.
The object of the law was “to encourage all major transactions, including commercial or business transactions through cheques, and to enforce credibility and acceptability of cheques in settlement of liability in general’’, the court said, adding: “The object was not to provide effective and speedy remedy for recovery of loans.’’
Raj Kumar Makkad
(Expert) 16 October 2011
The citations told by shonee are perfect but here querist is demanding opinion upon his complaint as he is firm to be discharged in that case.
As per my opinion, your case comes within definition of 409/420 IPC and police should have lodged FIR especially after enquiry made by higher official.
You file a criminal complaint under section 156 (3) Cr. PC and get direction for police to do needful.
ajay sethi
(Expert) 16 October 2011
where has shonee kapoor given the citations?
