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Legal Examination of Signature Forgery In Cheque Dishonor: Delhi High Court.

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Case Title: ISHWAR SINGH versus VIDYA SHRI DEVI

Case No.: CRL.L.P. 1/2024, CRL.M.A. 18/2024

Dated on: FEBRUARY 29, 2024

Coram: HON’BLE MR. JUSTICE MANOJ KUMAR OHRI

Facts:

In this case, Ishwar Singh filed a complaint under Section 138 of the Negotiable Instruments Act (NI Act) in 2016, alleging that Vidya Shri Devi, representing M/s Safemax Industries, issued a cheque for Rs. 3,26,729 as a refund for a failed construction project. The cheque was dishonored due to insufficient funds. Despite issuing a demand notice, no payment was made, leading to the filing of the complaint. The trial court convicted Vidya Shri Devi, but the appellate court acquitted her, accepting her defense that the cheque was stolen and her signature was forged, as supported by an FSL report. Ishwar Singh’s petition for leave to appeal the acquittal was dismissed by the High Court.

Issues framed by the Court:

  • Whether the delay of 54 days in filing the petition should be condoned.
  • Whether the respondent, Vidya Shri Devi, issued the cheque in question and whether the signatures on the cheque were genuine.
  • Whether the respondent successfully rebutted the presumption that the cheque was issued for discharge of a legally enforceable debt or liability.
  • Whether the evidence, including the FSL report and testimonies, sufficiently supports the respondent’s defense that the cheque was stolen and not issued by her.
  • Whether the petitioner, Ishwar Singh, provided adequate evidence to prove that the cheque was issued by the respondent and to counter the respondent’s claims and the FSL report.
  • Whether the appellate court’s decision to acquit the respondent was justified.

Legal Provisions:

Section 5 of the Limitation Act: Extension of prescribed period in certain cases.

Section 138 NI Act: It states about the offence of dishonoring a cheque for insufficiency of funds or exceeding the arranged amount.

Contentions of the Appellant:

The appellant, contended that the trial court had rightly convicted the respondent, Vidya Shri Devi, under Section 138 of the NI Act, as she had issued a cheque that was dishonored due to insufficient funds. He argued that the presumption under Section 139 of the NI Act, which assumes the cheque was issued for a discharge of liability and was not adequately rebutted by the respondent. Ishwar Singh challenged the respondent’s defense that the cheque was stolen and her signature was forged, asserting that this claim was not proven during the trial. He also contended that the FSL report, which indicated that the signatures on the cheque did not match the respondent’s specimen signatures, should not be considered conclusive. He emphasized that the respondent’s consistent denial and the corroborative testimonies were insufficient to outweigh the statutory presumption in his favor.

Contentions of the Respondent:

The respondent, Vidya Shri Devi, contended that she did not issue the cheque in question and that her signatures on the cheque were forged. She maintained that the cheque, along with several others, was stolen by an employee. To support her defense, she presented the testimony of her husband and a bank witness, as well as an FSL report which concluded that the signatures on the cheque did not match her specimen signatures. She argued that the cheque was dishonored due to insufficient funds rather than signature mismatch, and highlighted the lack of evidence from the petitioner to prove the cheque was issued by her.

Court’s Analysis & Judgement:

The court analyzed whether the respondent, Vidya Shri Devi, successfully rebutted the presumption under Section 139 of the NI Act that the cheque was issued for a valid liability. The court noted that the respondent consistently maintained that the cheque was stolen, supported by an FSL report indicating the signatures did not match her sample signatures. The petitioner, Ishwar Singh, failed to contest the FSL report or cross-examine the relevant witnesses. The court found that mere assertions by the petitioner were insufficient to override the respondent’s evidence and expert opinion. Citing the principle that an appellate court should be cautious in overturning an acquittal unless the trial court’s decision is perverse or irrational, the court upheld the appellate court’s acquittal of the respondent. Consequently, the petition for leave to appeal was dismissed.

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Judgement Reviewed By- Shramana Sengupta

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The Kerala High Court held that cheque dishonour directors not held vicariously liable if company found not guilty of crime under NI Act

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Title: Afsal Hussain v. K.S. Muhammed Ismail & Anr.
Decided on: 14 November, 2023

+ CRL.REV.PET NO. 1060 OF 2008

CORAM: HON’BLE Justice Sophy Thomas

Introduction

The Kerala High Court ruled that, in cases where the company is not proved to have committed the offense, the directors of the company cannot be found guilty of a crime under Section 138 of the Negotiable Instruments Act (NI Act), which is known as “Dishonour of Cheque.”

Facts of the Case

In the current case, the Managing Director of Omnitech Information Systems Pvt. Ltd., the revision-petitioner, was sued by the first respondent for dishonouring a Rs. 10 lakh cheque that the latter had sent to the former. In the complaint, the Company was listed as the first accused, the Managing Director/revision-petitioner as the second accused, and the other Directors as the other accused parties. According to Section 138 of the NI Act, the trial court found all of the accused guilty. The first accused firm was fined, and the other accused directors—including the revision petitioner—were sentenced to simple imprisonment and a fine. The Appellate Court only maintained the conviction of the revision-petitioner, even though his substantive sentence was lowered, while clearing the other respondents—including the firm.

Courts analysis and decision

The revision-petitioner issued the check in his capacity as the company’s managing director, the court stated. It was determined that the Managing Director could not be held accountable for any offenses committed by the Company after the appellate court cleared the company of all charges. As a result, it overturned the contested ruling and cleared the revisionist of any wrongdoing.

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Written by- Hargunn Kaur Makhija

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THE KERALA HIGH COURT DEGREE IN FAVOUR OF PLAINTIFF FOR  DISHONOURED CHEQUE

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Case Title : ASHOK KUMAR V SANKARANKUTTY PILLAI

Bench : THE HONOURABLE MR. JUSTICE SATHISH NINAN 

Case no : RFA NO. 390 OF 2003 

Date of order : 6/06/2023`

FACTS OF THE CASE-

  1. The plaintiff and the first defendant were friends and employed in Saudi Arabia.
  2. In March 1995, the first defendant borrowed an amount of ₹5,50,000/- from the plaintiff, to be repaid in three months.
  3. Instead of repaying the borrowed amount, the first defendant issued a post-dated cheque dated 02.11.1996 for ₹5,50,000/- as security, to be returned when the amount is paid.
  4. The cheque was dishonoured for insufficient funds when presented for payment.
  5. The plaintiff filed a suit for the recovery of the dishonoured cheque amount.

JUDGEMENT-

  1. The trial court dismissed the suit, stating that it lacked territorial jurisdiction and that the plaintiff failed to prove the payment of ₹5,50,000/-
  2. On appeal, the court held that the trial court has territorial jurisdiction to entertain the suit since the dishonoured cheque was presented within its jurisdiction.
  3. The defendant did not raise a specific contention regarding lack of territorial jurisdiction at the earliest opportunity, as required by the Code of Civil Procedure.
  4. The court rejected the defendant’s contention that a notice of dishonour was necessary before filing the suit. According to Section 98(c) of the Negotiable Instruments Act, no notice of dishonour is necessary when the party charged cannot suffer damage for want of notice.
  5. The court also rejected the defendant’s argument that the cheque was issued only as security and could not be presented for payment. A cheque issued as security can be enforced if the payment is not made.
  6. The defendant admitted borrowing an amount from the plaintiff but disputed the quantum, claiming it was ₹50,000/- instead of ₹5,50,000/-. However, the court found that the defendant’s claim was not supported by evidence and accepted the plaintiff’s claim.
  7. The court granted a decree in favour of the plaintiff for the amount of ₹5,50,000/- with interest at the rate of 6% per annum from the date of appeal (12.11.2003) until the date of the decree, and thereafter until full realisation from the first defendant and his assets.
  8. The plaintiff was not entitled to interest during the pendency of the suit before the trial court because it was not claimed in the appeal.

Overall, the court set aside the trial court’s decision, granted a decree in favour of the plaintiff for the dishonoured cheque amount with interest, and awarded costs to the appellant throughout the case.

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WRITTEN BY- ANVITHA RAO