The answer to the above questions is yes. Suppose the drawer’s signature differs or mismatches with the specimen that is available on the bank record, and, for this reason, said cheque is not encashed but dishonored because the drawer’s signature differs. In that case, It shall be a punishable offense and Attract criminal proceedings as well if other ingredients of the offense are satisfied, like Insufficient of Fund, stop payment, and account closed, which are criminal offenses Under section 138 of the Negotiable Instrument Act.
In the case of A.K.Gopalakrishnan Nair vs. T.i.Radhamma at the Kerala High Court, Honourable Mr. Justice B.Kemal Pasha observed that Can the dishonor of a cheque issued by the drawer by affixing their old signature after the change of their signature and intimation of such change to the bank, whatever be the reason shown by the banker for its dishonor, invite an offense under Section 138 of the Negotiable Instruments Act?
2. This appeal on special leave has been preferred by the complainant in C.C. C.C. No.477 of 2006 of the Chief Judicial Magistrate’s Court, Alappuzha, challenging the judgment of acquittal passed by the court below under Section 255 (1) of the Code of Criminal Procedure.
3. The case before the court below is, as a result, of a private complainant filed by the appellant herein as complainant against the first respondent herein as accused, alleging an offense punishable under Section 138 of the Negotiable Instruments Act.
4. The case of the appellant is that the first respondent had borrowed an amount of `.62,000/- from him for her business purpose on 10.03.2006 and, in the discharge of the said liability, issued Exhibit P1 post-dated cheque to him. When the appellant presented Exhibit P1, it returned dishonored with the dictum ‘account closed’. A notice as contemplated under Section 138(b) of the Negotiable Instruments Act was caused to be issued at the instance of the appellant to the first respondent. According to the appellant, she accepted the notice by affixing a false signature, did not care to repay the amount, and did not care to send any reply.
5. On the side of the complainant, P.W.sP.W.s 1 to 3 were examined before the court below and Exhibits P1 to P5 were marked. On the side of the first respondent, DW1 was examined and Exhibits D1 to D4 were marked. The court below concluded that the cheque, even though dishonored with the dictum ‘account closed’, could not have been honored the cheque even in the case where the availability of sufficient funds in the account and account was alive, for the reason that the signature contained in Exhibit P1 cheque was the old signature of the first respondent, which she subsequently changed through Exhibit D1 gazette notification, which fact was also duly informed to the bank. According to the court below, therefore, the dishonor of Exhibit P1 cheque could not be sufficient to invite the offense under Section 138 of the Negotiable Instruments Act and on that ground alone, the first respondent was acquitted through the impugned judgment.
6. Heard the learned counsel for the appellant and the learned counsel for the first respondent. Indeed, the bank dishonored the Exhibit P1 cheque through the Exhibit P2 dishonor memo with the mandate ‘account closed’. It is trite that even when the account is closed after the issuance of a cheque or even prior to the issuance of a cheque, the offense under Section 138 of the Negotiable Instruments Act can be attracted, provided other ingredients of the offense are there. The crucial aspect is whether there were sufficient funds in the accounts of the accused to honor the cheque at the time when the cheque was presented. When the account is closed, the same has to be considered equal to the absence of any funds in the accounts of the accused to honor the cheque.
7. In this particular case, Exhibit P1 cheque contains the old signature of the first accused. It has come out in evidence that she had changed her signature through Exhibit D1 gazette notification with effect from 24.06.2003. It is the case of the first respondent that a blank signed cheque leaf was issued by her to the appellant prior to 24.06.2003 relating to a money transaction between her and the appellant. She had admitted that an amount of `50,000/- was borrowed by her from the appellant in the year 2002, which she had repaid subsequently. According to her, the signed cheque leaf, which was obtained by the appellant from her as security, was not returned, and the same has been altered and misused as Exhibit P1.
8. Exhibit D3 is the copy of the cheque dated 21.08.2001 issued by the first respondent from her accounts, which contains her old signature. Likewise, Exhibit D4 is the copy of the cheque dated 22.08.2004 issued by the first respondent, which includes her present signature after the signature was changed through Exhibit D1. The bank honored both the cheques and accepted them. Even though Exhibit P1 cheque has been dishonored with the dictum ‘account closed’, it has to be taken note of the fact that it could have been dishonored with the dictum ‘signature do not match’ or for the reason that ‘it contains a different signature’.
9. According to the appellant, he was deliberately defrauded and cheated by the first respondent by issuing Exhibit P1 cheque and affixing her old signature deliberately in it, with a view to getting it dishonored for the reason that the signature differs. The account was closed on 28.02.2006. Let us take a case wherein Exhibit P1 cheque happened to be dishonored for the reason that ‘drawer’s signature incomplete/illegible/differs/required’. When the signature of the first respondent was changed, and the fact was intimated to the bank, the bank had to accept the changed signature of the first respondent as her correct signature. In such case, when a cheque containing her old signature comes for collection after such change of signature and the intimation to the bank, and when such cheque bears a date after the date of change of the signature, the bank ought to have dishonored the said cheque with the mandate ‘drawer’s signature differs’. Whatever it is, the crux of the matter is whether there were amounts in the accounts of the accused to honor the cheque on presentation. Even when the signature differs, if there were no sufficient quantities in the accounts of the accused to honor the cheque, an offense under Section 138 of the Negotiable Instruments Act can be made out.
10. The learned counsel for the appellant has relied on the decision of the Karnataka High Court in Dinesh Harakchand Sankla v. Kurlon Ltd. [2006(2) KLT 733], wherein it was held that the offense under Section 138 of the Negotiable Instruments Act would lie even in a case where the cheque is dishonored for ‘alteration in the drawer’s signature’ or the ‘drawer’s signature differs’. The learned counsel for the appellant has also relied on the decision in Laxmi Dyechem v. State of Gujarat 2013 (1) KLT 167 (S.C.S.C.), wherein it was held that if a cheque is dishonored on the ground that ‘signatures do not match’, it too implies that the specimen signatures do not match the signature on the cheque and it would constitute ‘dishonour’ within the meaning of Section 138 of the Negotiable Instruments Act. It was also held that if, after the issuance of the cheque, the drawer closes the account, it must be presumed that the amount in the account was nil and, hence, insufficient to meet the demand of the cheque. It was held in Laxmi Dyechem’s case (Supra) that: “For instance, this Court has held that if after issuing of the cheque, the drawer closes the account it must be presumed that the amount in the account was nil hence insufficient to meet the demand of the cheque. A similar result can be brought about by the drawer changing his specimen signature given to the bank or, in the case of a company, by the company changing the mandate of those authorised to sign the cheques on its behalf. Such changes or alterations in the mandate may be dishonest or fraudulent, and that would inevitably result in dishonour of all cheques signed by the previously authorised signatories. There is, in our view, no qualitative difference between a situation where the dishonour takes place on account of the substitution by a new set of authorised signatories resulting in the dishonour of the cheques already issued and another situation in which the drawer of the cheque changes his own signatures or closes the account or issues instructions to the bank not to make the payment. So long as the change is brought about with a view to preventing the cheque being honoured the dishonour would become an offence under S.138 subject to other conditions prescribed being satisfied.”
11. From what is discussed above, it has clearly come out that in this particular case also, the offense under Section 138 of the Negotiable Instruments Act has been clearly made out by the appellant. The court below was carried away in finding that an offense under Section 138 of the Negotiable Instruments Act will not lie in this case. The court below has found all the other ingredients to invite the offense under Section 138 of the Negotiable Instruments Act in favor of the appellant. On going through the evidence, I am satisfied that the acquittal of the first respondent, through the impugned judgment, has resulted in a substantial miscarriage of justice. The acquittal is a result of a total misconception of the legal aspect of the matter. From the evidence, I am satisfied that the first respondent is guilty of the offense punishable under Section 138 of the Negotiable Instruments Act, and therefore, the impugned judgment is liable to be reversed.
12. Regarding the sentence, the learned counsel for the first respondent has pointed out that the first respondent is in a pathetic stage as she is laid up. It is also pointed out that her business failed, and her child is paralyzed. Considering the circumstances pointed out by the learned counsel for the first respondent, I am of the view that a sentence of imprisonment till the rising of court and to deposit an amount of `62,000/- as compensation to the appellant under Section 357(3) of the Code of Criminal Procedure, within three months from today, in default, to undergo simple imprisonment for one month, will meet the ends of justice in this case. In the result, this appeal is allowed and the impugned judgment is reversed. The first respondent is found guilty of the offence punishable under Section 138 of the Negotiable Instruments Act, and is convicted thereunder, and is sentenced to undergo imprisonment till the rising of court and to deposit an amount of `62,000/- as compensation to the appellant under Section 357(3) of the Code of Criminal Procedure within three months from today, in default, to undergo simple imprisonment for one month. The first respondent shall appear before the Chief Judicial Magistrate’s Court, Alappuzha, on 02.12.2013. It is also ordered that the filing of a memo by the appellant before the court below stating that he has received the amount shall be treated as proof of payment of compensation, and in such case, it should be treated as a valid discharge.
