The High Court of Karnataka has ruled that the dishonour of a cheque on the ground of “difference in signature” of the drawer falls within the ambit of Section 138 of the Negotiable Instruments Act, 1881 (NI Act), particularly when the execution of the cheque is established.
Justice Ravi V. Hosmani dismissed a criminal revision petition filed by an accused challenging her conviction, observing that the defence raised regarding the signature mismatch was untenable in light of mutually destructive pleas and settled legal precedents.
Case Background
The petitioner, Smt. Safiya, approached the High Court challenging the concurrent judgments of the lower courts. The Principal District and Sessions Judge, Chikkamagaluru, had confirmed the judgment of the Civil Judge & JMFC, N.R. Pura, convicting her for the offence punishable under Section 138 of the NI Act.
The case originated from a private complaint filed by the respondent, Mr. M. Hameed. The complainant alleged that the accused, who was his relative, had borrowed a hand loan of Rs. 4,30,000 in the first week of January 2020, agreeing to repay it within three months. Towards the discharge of this liability, the accused issued a cheque dated October 7, 2020, drawn on Canara Bank, Anandapura.
When presented for realization, the cheque was dishonoured with the endorsement “funds insufficient and drawer signature incomplete.” Despite the service of a demand notice, the accused failed to repay the amount, leading to the initiation of criminal proceedings.
Arguments of the Parties
Petitioner’s Submissions: The counsel for the petitioner argued that the accused was an illiterate woman who could only sign in the Kannada language. It was contended that the signature on the cheque in question was in English, which differed from her signature in the bank records.
The petitioner relied on the evidence of the Bank Manager (DW.2), who deposed that the cheque was dishonoured for two reasons: “funds insufficient” and “difference in signature of drawer.” The defence argued that since the signature on the cheque did not match the specimen signature, the instrument did not qualify as a Bill of Exchange under Section 5 of the NI Act.
Reliance was placed on the decision of the High Court in Ravichandra V. v. Rosi Line Reena Rani and the Supreme Court judgment in Vinod Tanna & Anr. v. Zaher Siddiqui & Ors. to contend that unless the execution is established, the penal provisions of Section 138 cannot be attracted.
Respondent’s Submissions: The counsel for the respondent opposed the petition, submitting that the accused had raised contradictory and “mutually self-destructive defences.” It was highlighted that in the reply notice (Ex.P7), the accused had admitted the execution of the cheque but claimed it was issued as security for an earlier loan of Rs. 70,000 which was allegedly cleared.
However, during the trial, the accused (DW.1) and her daughter (DW.3) took a different stand, claiming the cheque was issued towards the daughter’s association dues. The respondent argued that the admission of execution in the reply notice was sufficient to attract the presumption under the NI Act.
Court’s Analysis
Justice Ravi V. Hosmani analyzed the evidence and the inconsistent stands taken by the accused. The Court noted that while the accused denied the signature on the cheque in court, her reply notice contained an “unequivocal admission about issuance of Ex.P1 to complainant.”
The Court observed:
“It is seen both accused DW1 as well as her daughter – DW.3 deposed likewise… However, trial Court noted inconsistency in their deposition… defence set up in Ex.P.7 reply by accused is about two cheques having been issued as security towards earlier loan of Rs.70,000/- borrowed from complainant and claiming it to have been cleared. Such defence is not urged in reply. Besides, there is no material to probablize same.”
Referring to the Supreme Court’s decision in Bir Singh v. Mukesh Kumar (2019) 4 SCC 197, the Court held that the admission regarding the signature and issuance of the cheque attracts the presumption under Sections 118 and 139 of the NI Act.
Addressing the specific contention regarding the dishonour due to signature mismatch, the High Court relied on the Supreme Court’s ruling in Laxmi Dyechem v. State of Gujarat & Ors. (2012) 13 SCC 375.
Justice Hosmani observed:
“Insofar as question whether dishonour of cheque on ground of difference in signature of drawer would attract penal consequences under Section 138 of NI Act, Hon’ble Supreme Court in Laxmi Dyechem’s case (supra) considering this very issue and held such dishonour would also attract Section 138 of NI Act.”
The Court termed the reliance on the Ravichandra case as “inconsequential” and distinguishable on facts.
Decision
The High Court held that the findings of both the lower courts regarding the execution and issuance of the cheque were based on the material on record. The Court dismissed the revision petition, stating it was “devoid of merit.”
Taking a serious view of the delay caused by the litigation, the Court imposed an additional cost on the petitioner.
“Taking note of fact that filing of revision petition has caused delay in complainant realizing cheque amount, despite well reasoned findings of both Courts over a period of two years… revision petition is dismissed as devoid of merit, imposing cost of Rs.25,000/-, which shall be in addition to fine amount imposed and shall be payable to complainant.”
Case Details:
- Case Title: Smt. Safiya vs Mr. M Hameed
- Case Number: Criminal Revision Petition No. 1536 of 2023
- Coram: Justice Ravi V Hosmani
