What is the effect if Drawer’s Signature differs can it attract to cheque bounce case?

The simple answer to this question is yes if Drawer’s Signature differs can attract to cheque bounce case but before we get the perfect answer, we have to know about which parameter and circumstances have become to know for believing that if drawer signature is a mismatch, then it attracts an amount to the dishonor of cheque and is punishable under the Negotiable Instrument Act.

Drawers signature differs meaning

12-  drawer signature differs

Reason no-12 Drware’s Signature differs means the bank can return the cheque if the drawer who gave you the cheque his signature of the cheque doesn’t match with a signature that is recorded on the bank record. That situation may create a big issue because the bank can not encash the cheque in favor of the holder due to a mismatched signature.

Can a cheque bounce due to the reason of signature difference?

The signature difference is a fault resulting in a cheque bounce. Of course, if the drawer’s signature were found mismatched or different in that situation, the said cheque will bounce. If it happened by mistake of the drawers, it could be rectified. You can contact the drawer and make them aware of the error, and if agreed and willing, may issue another fresh cheque. In that case, there is no need to file a cheque bounce case against the drawer because this situation does not fit under the criteria of the cheque bounce case.

Suppose the drawer intentionally denies accepting this mistake. On that ground, it attracts the cheque bounce case, and the payee is entitled to file a cheque return case governed under section 138 of the Negotiable Instrument Act 1882.

When the bank returns a cheque specifying on the ground that the signature of a drawer in not match with his specimen’s signature, which is recorded on the bank, it will attract the case of dishonor of the cheque, but they’re for other ingredients are must be satisfied with this section.

What is the Reason for Signature differs or mismatch in the cheque?

The mismatching of Signature is a common issue related to the bank process, it was happened because of handwriting changes year to year and meanwhile this period if drawer cannot update his Signature in the Bank for that reason cheque has been returned/dishonored by the banker with an endorsement “drawers signature differs from the specimen supplied” and/or “no image found-signature” and/or “incomplete signature / illegible”.   It’s maybe drawers can face this kind of issue.

The drawer can easily solve this problem by informing Bank that this is his true Signature and after that payee can represent that cheque which is return earlier with the reason for the drawer signature mismatch and return to unpaid. Or drawer can issue another fresh one cheque with updated his Signature.

What happens if Drawer’s Signature differs in cheque?

Dishonor of a cheque on the ground that the signatures of the drawer of the cheque do not match the specimen signatures available with the Bank and the other ingredients of the offence is satisfied then it, of course, punishable the penal provisions of Section 138 of the Negotiable Instruments Act. In the case of M/S Laxmi Dyechem vs State Of Gujarat & Ors, 2013 CRI.L.J.3288 The Supreme Court observed that The two contingencies envisaged under S. 138 of the Act must be interpreted strictly or literally. The expression ‘amount of money is insufficient’ appearing in S. 138 of the Act is a genus and dishonour for reasons such ‘as account closed’, ‘payment stopped’, ‘referred to the drawer’ are the only species of that genus. Just as dishonour of cheque on the ground that the account has been closed is a dishonour falling in the first contingency referred to in S. 138, so also dishonour on the ground that the ‘signatures do not match’ or that the ‘images is not found’, which too implies that the specimen signatures do not match the signatures on the cheque would constitute a dishonour within the meaning of S. 138 of the Act. There is no qualitative difference between a situation where the dishonour takes place on account of the substitution by a new of authorized signatories resulting in the dishonour of the cheques already issued and another situation in which the drawer of the cheque changes his own signature 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. There may indeed be situations where a mismatch between the signatures on the cheque drawn and the specimen available with the bank may result in dishonour of the cheque even when the drawer never intended to invite such a dishonour. Dishonour on account of such changes that may occur in the course of ordinary business of a company, partnership or an individual may not constitute an offence by itself because such a dishonour in order to qualify for prosecution under S. 138 shall have to be preceded by a statutory notice where the drawer is called upon and has the opportunity to arrange the payment of the amount covered by the cheque. It is only when the drawer despite receipt of such a notice and despite the opportunity to make the payment within the time stipulated under the Statute does not pay the amount that the dishonour would be considered a dishonour constituting an offence, hence punishable. Even in such cases, the question whether or not there was a lawfully recoverable debt or liability for discharge whereof the cheque was issued would be a matter that the trial Court will examine having regard to the evidence adduced before it and keeping in view the statutory presumption that unless rebutted the cheque is presumed to have been issued for a valid consideration. Further offer made by respondent-company to issue new cheques to the appellant upon settlement of the accounts and that a substantial payment has been made towards the outstanding amount was, in any case, conditional and subject to the settlement of accounts. So also whether the cheques were issued fraudulently by the authorized signatory for amounts in excess of what was actually payable to the appellant is a matter for examination at the trial. That the cheques were issued fraudulently by the authorised signatory for amounts in excess of what was actually payable to the appellant is a matter for examination at the trial. That the cheques were issued under the signature of the persons who were authorised to do so on behalf of the respondent-company being admitted would give rise to a presumption that they were meant to discharge a lawful debt or liability. Allegations of fraud and the like are matters that cannot be investigated by a Court under Section 482 Cr. P. C. and shall have to be left to be determined at the trial after the evidence is adduced by the parties. Moreover, plea that the dishonour had taken place after they had resigned from their positions and that the failure of the company to honour the commitment implicit in the cheques cannot be construed an act of dishonesty on the part of the signatories of the cheques would not justify quashing of the proceedings against them. 

In the case, the Supreme Court Further Observed that :

In matters arising out of ‘stop payment’ instruction to the bank although would constitute an offence under Section 138 of the NI Act since this is no longer res integra, the same is an offence subject to the provision of Section 139 of the Act and hence, where the accused fails to discharge his burden of rebuttal by proving that the cheque could be held to be a cheque only for discharge of a lawful debt, the offence would be made out. Therefore, the cases arising out of stop payment situation where the drawer of cheques has sufficient funds in his account and yet stops payment for bona fide reasons, the same cannot be put on the par with other variety of cases where the cheque has bounced on account of insufficiency of funds or where it exceeds the amount arranged to be paid from that account, since Section 138 cannot be applied in isolation ignoring Section 139 which envisages a right of rebuttal before an offence could be made out under Section 138 of the Act as the Legislature already incorporates the expression ‘unless the contrary is proved’ which means that the presumption of law shall stand and unless it is rebutted or disproved, the holder of a cheque shall be presumed to have received the cheque of the nature referred to in Section 138 of the NI Act, for the discharge of a debt or other liability. Hence, unless the contrary is proved, the presumption shall be made that the holder of a negotiable instrument is a holder in due course. The category of ‘stop payment cheques’ would be a category which is subject to rebuttal and hence would be an offence only if the drawer of the cheque fails to discharge the burden of rebuttal. Thus, dishonour of cheques simpliciter for the reasons stated in Section 138 of the NI Act although is sufficient for commission of offence since the presumption of law on this point is no longer res integra, the category of ‘stop payment’ instruction to the bank where the account holder has sufficient funds in his account to discharge the debt for which the cheque was issued, the said category of cases would be subject to rebuttal as this question being rebuttable, the accused can show that the stop payment instructions were not issued because of insufficiency or paucity of funds, but stop payment instruction had been issued to the bank for other valid causes including the reason that there was no existing debt or liability in view of bona fide dispute between the drawer and drawee of the cheque. If that be so, then offence under Section 138 although would be made out, the same will attract Section 139 leaving the burden of proof of rebuttal by the drawer of the cheque. Thus, in cases arising out of ‘stop payment’ situation, Sections 138 and 139 will have to be given a harmonious construction as in that event Section 139 would be rendered nugatory.

In the case, the Supreme Court Further Observed that :

The instant matter, however, do not relate to a case of ‘stop payment’ instruction to the bank as the cheque in question had been returned due to mismatching of the signatures but more than that the petitioner having neither raised nor proved to the contrary as envisaged under Section 139 of the NI Act that the cheques were not for the discharge of a lawful debt nor making the payment within fifteen days of the notice assigning any reason as to why the cheques had at all been issued if the amount had not been settled, obviously the plea of rebuttal envisaged under Section 139 does not come to his rescue so as to hold that the same would fall within the realm of rebuttable presumption envisaged under Section 139 of the Act. I, therefore, concur with the judgment and order of learned Brother Justice Thakur subject to my views on the dishonor of cheques arising out of cases of ‘stop payment’ instruction to the bank in spite of sufficiency of funds on account of bona fide dispute between the drawer and drawee of the cheque. This is in view of the legal position that presumption in favour of the holder of a cheque under Section 139 of the NI Act has been held by the NI Act as also by this Court to be a rebuttable presumption to be discharged by the accused/drawee of the cheque which may be discharged even at the threshold where the Magistrate examines a case at the stage of taking cognizance as to whether a prima facie case has been made out or not against the drawer of the cheque.

Conclusion : 

So, now we get the perfect answer if Drawer’s Signature differs can it attract to cheque bounce case, with the satisfied of other ingredients of offence it is punishable the penal provisions of Section 138 of the Negotiable Instruments Act. 

 Reference : 

M/S Laxmi Dyechem vs State Of Gujarat & Ors, 2013 CRI.L.J.3288.

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