Supreme Court of India
SUDHIR KUMAR BHALLAversusJAGDISH CHAND ETC. ETC.
- Citation
- 2008 INSC 568
- Decided
- 1 May 2008
- Disposal
- Disposed off
Holding
Section 138 is attracted only when a cheque is issued in discharge of a liability, and the High Court erred in not addressing this point nor properly evaluating the expert evidence, leading to the setting aside of its judgment.
Summary
Sudhir Kumar Bhalla, a partner of a trading firm, issued six cheques to Jagdish Chand and his wife Ramesh Rani for payment of goods. Five of the cheques were dishonoured, leading the respondents to file complaints under Section 138 of the Negotiable Instruments Act and various provisions of the IPC. The trial court acquitted Bhalla, but the Punjab and Haryana High Court convicted him under Section 138 and quashed FIRs lodged against the respondents. Bhalla appealed to the Supreme Court, contending that the cheques were security cheques, not issued in discharge of liability, and that a handwriting expert’s evidence of interpolation was ignored. The Supreme Court held that the High Court had failed to address these legal questions and had not given satisfactory reasons for rejecting the expert evidence, and therefore set aside the High Court’s judgments and remitted the matters for fresh consideration by the High Court.
Issues considered
- The applicability of Section 138 of the Negotiable Instruments Act to cheques issued as security rather than in discharge of a liability or debt.
- The adequacy of the High Court's consideration of the handwriting expert’s evidence of interpolation and alleged forgery of the cheques.
Legislation cited
- Code of Criminal Procedure, 1973s. 156
- Indian Penal Code, 1860s. 120-B, s. 420, s. 463, s. 465, s. 468, s. 471
- Negotiable Instruments Act, 1881s. 138
Subjects
Negotiable Instruments ActSection 138cheque dishonoursecurity chequeforgeryhandwriting expertcriminal liabilityhigh court judgmentSupreme Court remand
Judgment
[2008] 7 S.C.R. 459
-~-~
SUDHIR KUMAR BHALLA A
V.
JAGDISH CHAND ETC. ETC.
(Criminal Appeal No. 776 of 2008)
- ,/.
MAY 1, 2008
(S.B. SINHA AND LOKESHWAR SINGH PANTA, JJ.)
Negotiable Instruments Act, 1881:
B
s. 138 - Issuance of cheques against discharge of liability
and security cheques - Dishonour of cheques - Criminal c
liability - Plea of accused that complainant made
interpolations in cheques - Supported by handwriting expert
- Acquittal - Appeal by complainant - Meanwhile at the
instance of accused FIR registered against complainant and
his wife for fraud, cheating and tampering with cheques - High D
•-.lrrL_
Court in the appeals filed by original complainant qopvicting
accused u/s 138 and allowing applications of complainant and
quashing FIRs against him and his wife - HELD: The High
Court has not considered the legal question raised before it
that criminal liability of accused under the provisions of Section E
138 of the Act is attracted only on account of dishonour of the
cheques issued in discharge of liability or debt, but not on
account of issuance of security cheques - The High Court
has also not given cogent, satisfactory and convincing reasons
)> for disbelieving and discarding the pre-charge evidence of the F
)
accused corroborated by evidence of expert opinion in regard
to interpolation in and fabrication of cheques - Impugned
iudgments and orders are set aside - Matters remitte,d to the
High Court to decide the appeals filed by the complainant
against the accused and criminal miscellaneous petitions
G
seeking to quash the first information reports registered against
the complainant and his wife by police for commission of
•· -i
' offences stated in two FIRs.
,_, CRIMINAL APPELLATE JURISDICTION : Criminal
459 H
460 SUPREME COURT REPORTS [2008] 7 S.C.R.
A. ..
A Appeal No. 776 of 2008.
From the final Judgment and Order dated 25.01.2007 and
19.2.2007 of the High Court of Punjab and Haryana at
Chandigarh in Criminal Appeal No. 1413-SBA of 2002.
B WITH .....
"'-
Criminal Appeal Nos. 780, 781, 779, 782, 777 & 778 of
2008.
P.S. Patwalia, Aman Preet Singh Rahi, D. Tripathi and
c Ashok K. Mahajan for the Appellant.
Ankit Singhal, T.V. S. Raghavendra Sreyas, Nikhil Nayyar,
Ajay Pal Kuldip Singh (N.P.) for the Respondent.
The following Order of the Court was delivered by
D 1. Leave granted in all the above-said Special Leave
Petitions.
.....
2. We have seven appeals before us in which the parties
are similar. Since all these appeals arise out of common
judgments and orders dated 25.01.2007 and 19.02.2007
E passed by a learned Single Judge of the High Court of Punjab
and Haryana in CriminalAppeal No. 1410-SBAof2002, Criminal
Appeal No. 1411-SBAof2002, Criminal Appeal No. 1412-SBA
of 2002, Criminal Appeal No. 1413-SBA of 2002, Criminal
Appeal No. 1433-SBA of 2002, Criminal Misc. Petition
F ...
No.29090-M of 2001 and Criminal Misc. Petition No.36987-M .:
of 2001. As similar questions of facts and law are involved,
therefore, for the sake of convenience they are being heard
together and disposed of by this common judgment.
G Brief facts, which led to the trial of the appellant, are as
follows:-
~ ~
Jagdish Chand - respondent herein and his wife Smt.
Ramesh Rani are the proprietors of M/s Mehra Export
Corporation and M/s Mehra International, Katra Hari Singh,
H Amritsar. The firms deal in saffron, herbs and other like goods.
SUDHIR KUMAR BHALLA v. JAGDISH CHAND ETC. 461
ETC .
... .....
,. M/s Sudhir Kumar Bhalla and Brothers, 25, Green Park, A
Ludhiana, of which Sudhir Kumar Bhalla - appellant herein is
one of the partners, has been purchasing various goods from
the firms of Jagdish Chand and Ramesh Rani. The sale price
was being paid in cash and at times, through cheques.
4. In the month of May, 1997, the appellant on behalf of his B
,(
firm issued six cheques Nos. 442344, 442345, 442346,
442347, 442348 and 442349 dated 01.05.1997, 03.05.1997
and 05.05.1997 in favour of M/s Mehra Export Corporation and
M/s Mehra International. Out of those six cheques, two cheques
were in the sums of Rs.30,000/- each and four cheques were in c
the sums of Rs.40,000/- each. All those cheques were drawn in
favour of the Indian Overseas Bank, Ludhiana.
5. One of the cheques, in the sum of Rs.30,000/-, was
stated to have been encashed, whereas the other five cheques
D
........ have been dishonoured on the ground of 'Exceed Arrangement' .
On 20.05.1997, the respondent sent statutory notices under
Section 138 (5) of the Negotiable Instruments Act, 1881 [for
short 'the Act'] to the appellant, which were despatched through
registered post on 24.05.1997. However, the same were
received back on 28/29.5.1997 with a report that the addressee E
was 'not met'. The respondent again sent another notice on
04.06.1997 through courier, which again was not accepted by
the appellant and the same was received back on 05.06.1997
with the report of refusal.
>- F
6. It was on 13.06.1997 that the respondent, on his behalf
and on behalf of his wife as her attorney, filed five criminal
complaints under Section 138 of the Act read with Section 420
of the Indian Penal Code [for short 'the IPC'] in the Court of
Chief Judicial Magistrate, Amritsar, against the appellant. On
G
09.07.1997, the respondent-complainant made a statement that
he wanted to withdraw the said complaint with permission to
file the fresh complaint. The learned Chief Judicial Magistrate
vide his order dated 09.07.1997 passed the following order:-
"In view of the statement given by the complainant, recorded H
462 SUPREME COURT REPORTS [2008) 7 S.C.R.
A separately, the present complaint is hereby dismissed as
withdrawn."
7. On 12.07.1997, the respondent filed second complaint
on similar and practically the same points purported to have
accrued on identical causes of action. The second complaint
B was entrusted to the Court of Judicial Magistrate, 1st Class,
Amritsar, who recorded the statement/evidence of the
respondent on 12.07 .1997. Thereafter, the Judicial Magistrate,
1st Class, vide order dated 23.08.1997 issued summon to the
appellant. The appellant appeared on 06.04.1998 before the
C Judicial Magistrate and filed an application for discharging him
in the case. However, on 01.06.1998 the Judicial Magistrate
dismissed the said application. After following and adopting the
due procedure as prescribed under the Code of Criminal
Procedure, 1973 (for short 'Cr.P.C.'), the trial court dismissed
D the complaint on 06.02.2002 and acquitted the appellant.
8. Being aggrieved by the order of acquittal of the appellant
by the trial court, the respondent filed five criminal appeals, two
as an attorney of his wife and three on his behalf, in the High
Court.
E
9. In April 1998, the appellant approached the Court of
Judicial Magistrate, 1st Class, Ludhiana, under Section 156 of
Cr.P.C. by way of two separate applications alleging fraud,
cheating, tampering of the cheques by the respondent and his
F wife and prayed that the police be directed to register criminal
cases against them. On the directions of the learned Magistrate,
FIR No.93of1998 was registered against the respondent under
Sections 420, 463, 465, 468 and 471 of the IPC, whereas
second FIR No.94of1998 was lodged against Jagdish Chand
G and Smt. Ramesh Rani under Sections 420, 463, 465, 468,
471 and 120-B of the IPC at Police Station, Sarabha Nagar,
Ludhiana. After investigation, the police filed challans in both
' .
the cases in the court. The trial court charge sheeted the
respondent and his wife vide two separate orders dated
H 15.01.2000. They filed two revision petitions against the orders
SUDHIR KUMAR BHALLA v. JAGDISH CHAND ETC. 463
ETC.
of framing charges against them, which were dismissed by the A
learned Sessions Judge, Ludhiana, vide separate orders dated
04.06.2001. The respondent and his wife filed two Criminal
Miscellaneous Petitions Nos. 29090 and 36987-M of 2001 in
the High Court challenging the validity and correctness of the
orders of the learned Trial Magistrate as also of the learned B
Sessions Judge.
10. The High Court vide its judgment dated 25.01.2007
allowed the above-said five appeals and convicted the appellant
under Section 138 of the Act. By the same order, Criminal Misc.
Petitions Nos. 29090 and 36987-M of 2001 were allowed and C
FIR Nos. 93 and 94of1998 lodged by the respondent and his
wife were quashed. By order dated 19.02.2007, the appellant
was sentenced to undergo R.I. for one year and to pay a fine of
Rs.8 lacs and in default thereof, the appellant shall undergo
further.RI. of one year. Hence, the appellant has preferred these D
appeals.
11. We have heard the learned counsel for the parties and
with their assistance, examined the entire material placed on
record.
E
12. Mr. P.S. Patwalia, learned senior counsel appearing
on behalf of the appellant, assailed the judgment of the High
Court inter alia contending:-
(i) that the learned Single Judge erred in not
appreciating the statement of the respondent- F
complainant in which he admitted that all the cheques
were filled by him, the date and figures of the amounts
were also in his handwriting and the appellant simply
had signed the cheques. According to the learned
counsel, the cheques in question have been forged G
and fabricated by the respondent by making material
alteration by changing figure in digit from Rs.30,000/
- to Rs.3,00,000/- by adding 'zero' at the end of
Rs.30,000/- and Rs.40,000/- to Rs.4,00,000/- by
adding 'zero' at the end of Rs.40,000/-; and H
464 SUPREME COURT ~EPORTS [2008) 7 S.C.R.
A (ii) that the learned Single Judge erred in not addressing
the legal arguments raised on behalf of the appellant
that the provisions of Section 138 of the Act are only
attracted if the cheques issued in discharge of liability
or debt are dishonoured, but not on account of
B security cheques. •
13. Mr. Ankit Singhal, learned counsel for the respondent,
on the otherhand, contended that the reasons given by the High
Court recording the order of conviction of the appellant are
based upon proper appreciation of evidence led by the
C respondent in the case. He submitted that this Court should be
slow to interfere in the well-reasoned and well-merited judgment
of the High Court.
14. We have given our anxious consideration to the rival
contentions of the learned counsel for the parties. The arguments
0
put forward by Mr. Patwalia deserve to be accepted. ,. .
15. We have gone through the record of the trial Magis~te
placed before us. In support of the complaint filed under Section
138 of the Act, the trial Magistrate examined the respondent on
E 27.04.1999. On 05.05.2000, the respondent in his cross-
examination admitted as under:-
"I have brought the account books for the year 1995-96
and 1996-97. I have seen the ledger for the year 1995-96
where there is a payment of rupees one lac dated
F 26.10.1995 having been made by the accused to me but
the remaining amounts are for an amount of Rs.35,000/-
each and at one time it was for an amount of Rs.40,000/
-. Once a payment of Rs.25,000/- was also made in the
said year. This ledger relates to the firm M/s Mehra
G Exports. The payments of Rs.35,000/- each have been
made either through cheques or through drafts. I have
also seen the ledger book of M/s Mehra International for
the year 1995-96. Except Rs.10,000/- all the payments
made in this account are either through draft or through
H cheque. The lowest payment in this account in this year is
SUDHIR KUMAR BHALLA v. JAGDISH CHAND ETC. 465
ETC .
.... ~ ,,,,_
Rs.10,000/-the maximum payment made-by the accused A
to this firm in this account is Rs.50,000/-. The notices
were sent only to the firm M/s Sudhir Kumar Bhalla and
Brothers before filing the complaint and not to the partners
individually. We did not receive any cheque from the
accused bearing No.442344. We never received any B
J,
advance payment from the accused. As per account books
..i
•
~
of firm Mis Mehra International for the year 1997-98 a sum
of Rs. 7, 16,672.50 ps. On account of principal amount is
due from the accused."
The respondent again stated as under:- c
"The cheque No.442347 is in my hands which is dated
5.5.1997 but the same is signed by accused Sudhir Kumar
Bhalla. All the cheques which are subject-matter of other
complaints are filled in by me and are signed by Sudhir D
Kumar Bhalla accused. The dates on the cheques are
·~ "'- also in my hands. The amount of the cheques in words
and figures are also in my hands. I can read the contents
of the cheques clearly."
16. On 05.05.2000, the trial court on the basis of the E
statement of the respondent-complainant in his cross-
examination made the following observations:-
"At this stage, counsel for accused had made a request
for giving note regarding the demoneur of the witness as
)r well as to give note on the aforesaid fact so that the F
document may not be tampered with subsequent. Heard,
without commenting upon the demoneur of the witness at
this stage. I have observed from cheque No. 442349 dated
3.5.1997 the last zero of the figure written in the column of
rupees is separate from the remaining four zeros which G
are attached with each other in the same flow."
17. Thereafter, on 21.05.2001 the cheques were sent to
Mr. Sardara Singh Parmar, Document Expert, for examination,
who in his report dated 21.05.2001 submitted to the Court,
H
466 SUPREME COURT REPORTS [2008) 7 S.C.R.
A opined as under:-
"ln view of the reasons stated above, I am of the opinion
that the last figure (0) in above mentioned cheque has not
been written in the continuous process by the same person
with the same pen and ink, but it has been subsequently
B
changed into by adding figure (0) in the original amount
Rs. 40,000/- and it is free hand forgery."
,
18. Mr. Sardara Singh Parmar was examined as DW-3
before the trial court on 13.08.2001 and deposed as under:-
c "I am of the opinion that the last figure zero in above
mentioned cheque has not been written in the continuous
process by the same person with the same pen and ink,
but it has been subsequently changed into by adding figure
zero in the original amount Rs. 30,000/- and it is free hand
D forgery. The reasons have already been given in my report
dated 21.5.2001. It consists of 6 pages and it is Ex.DW3/
1. It has been prepared by me signed by me and is correct.
One photograph chart bearing the photograph cheque No.
442345 dt. 5.5.97 is Ex.DW3/2, one negative is Ex.DWI
E 3."
19. As noticed above, the Judicial Magistrate vide his
judgment dated 06.02.2002 acquitted the appellant of the charge
under Section 138 of the Act and consequently dismissed the
complaint of the respondent.
F
20. The learned Single Judge of the High Court, after
hearing the learned counsel for the parties, recorded the
conviction of the appellant vide order dated 25.01.2007 for an
offence under Section 138 of the Act, which reads as under:-
G "Lastly, it was contended by the learned counsel for Sudhir
Kumar Bhalla that the figures of Rs.30,000/- and
Rs.40,000/- mentioned in the cheques were interpolated
by adding 'zero' to make the same Rs.3,00,000/- and
Rs.4,00,000/-. He contended that there is evidence of the
H handwriting expert to establish the afore-stated fact and
SUDHIR KUMAR BHALLA v. JAGDISH CHAND ETC. 467
ETC.
the trial court had rightly dis-believed the claim of Jagdish A
Chand on this court.
The contention of the learned counsel for Sudhir Kumar
· Bhalla is misplaced. The trial court had clearly falle~
error by ignoring the fact that the cheques ~re-not only
~ filled in figures, but in words as well, according to which B
~ Rs.3 lacs and Rs.4 lacs were written thereon. Even though,
the handwriting expert opined that the zero has been added
in the cheques subsequently, but it was clearly in
consonance with the wishes of Sudhir Kumar Bhalla, who
had issued the cheques by depicting the amounts in words C
also.
That apart, there is cogent evidence on record in the shape
of original bills and the complete details of the prices of
the goods supplied and the registers of account, which
0
could not be countered by Sudhir Kumar Bhalla during the
course of evidence. In view of the overwhelming evidence
in favour of Jagdish Chand, the findings of the trial court
awarding an acquittal to Sudhir Kumar Bhalla are
unsustainable.
E
On the basis of the above discussion, it is held that Sudhir
Kumar Bhalla, who was one of the partners of M/s Sudhir
Kumar Bhalla & Brothers, Ludhiana, issued the cheques
in question to discharge the liability of his firm and on
presentation thereof by Jagdish Chand and Ramesh Rani, F
the same were dishonoured. Thus, he had committed an
offence punishable under Section 138 of the Act. This
court holds him accordingly guilty for the same in each of
the appeals
For the reason that the findings qua interpolation in the G
cheques in question have been categorically set aside,
the proceedings against Jagdish Chand and Ramesh Rani
initiated in the court of Judicial Magistrate, 1st Class,
Ludhiana, pursuant to FIR Nos. 93 and 94 of 1998
registered at Police Station Sarabha Nagar, Ludhiana, H
468 SUPREME COURT REPORTS [2008] 7 S.C.R.
A which have been assailed in Criminal Miscellaneous "~
Petitions Nos. 29090-M and 36987-M of 2001, must, as
a logical consequence, fail.
In view of the above, the criminal appeals and the criminal
miscellaneous petitions filed by Jagdish Chand and
B Ramesh Rani are accepted. The proceedings taken
"
against Jagdish Chand and Ramesh Rani in pursuance )..
to FIR Nos. 93 and 94 of 1998 registered at Police Station
Sarabha Nagar, Ludhiana, are also quashed."
c 21. On examination of the above-stated findings of the
learned Single Judge in the judgment impugned before us, we
find that the learned Single Judge has not addressed himself
on the legal question raised before him by the appellant that the
criminal liability of the appellant under the provisions of Section
138 of the Act are attracted only on account of the dishonour of
D
the cheques issued in discharge of liability or debt, but not on
account of issuance of security cheques. The learned Single
Judge has also not given cogent, satisfactory and convincing
·"- .
reasons for disbelieving and discarding the pre-charge evidence
of the appellant corroborated by the evidence of the expert
E opinion in regard to the interpolation in and fabrication of the
cheques by adding one more figure 'O' to make Rs.30,000/- to
Rs.3,00,000/- and similarly adding one more figure 'O' to make
Rs.40,000/- to Rs.4,00,000/-.
F 22. In the backdrop of the facts of these cases, we are of
the opinion that the judgments and orders of the High Court
cannot be sustained on the premise that the High Court has not
addressed itself on the above-said two legal questions raised
by the appellant and, therefore, the impugned judgments and
orders dated 25.01.2007 and 19.02.2007 are set aside. The
G
interest of justice should be sub-served if the matters are remitted
to the High Court to decide the appeals filed by the respondent
against the appellant and criminal miscellaneous petitions
seeking for quashing the first information reports registered
against the respondent and his wife by the police for commission
H
SUDHIR KUMAR BHALLA v. JAGDISH CHAND ETC. 469
ETC.
of the offences stated in FIR Nos.93 and 94of1998. Needless A
to say that any observation made by us in this judgment shall
not be construed as an expression of opinion on the merits of
the cases, which shall be decided by the High Court on their
owr. merits in accordance with law.
The appeals shall stand disposed of in the aforesaid 8
terms.
R.P. Appeals disposed of
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