JUDGMENT [ENTITY], J.
1. The complaint filed by the appellant under [SECTION] of the [ACT] failed and 1st respondent/accused was acquitted. Therefore, this appeal.
2. The facts of this case are not in dispute. There was a dealing between the parties in terms of Ext.P6 agreement. Whether the 1st respondent was the dealer of the appellant or agent of the appellant is immaterial when Ext.P6 agreement is admitted.
3. Ext.P6 agreement discloses that the 1st respondent had drawn two cheques in favour of the appellant. One for an amount of Rs. 5000/- as deposit and another, cheque No. DLBC 890885, drawn on Dhanalakshmi Bank, Ltd. Palluruthy, the cheque in question. This was a blank cheque. Both the cheques are referred to in Ext.P6 agreement and it is made clear that this blank cheque was towards the liability that may fall due from the 1st respondent. When there was certain dues payable by 1st respondent, the cheque was presented in the bank. It was bounced for want of funds. Statutory notice did not result in payment of the amount. Therefore, the complaint was filed by the appellant.
4. The Court below found that the presumption under [SECTION] of the [ACT] was not applicable, because the cheque was issued when the accused really not owed the complainant. It was also a blank cheque. That the cheque was issued against an enforceable liability has to be proved by the complainant. The complainant ought to have produced the books of accounts to prove such liability. Thus it was found by the Court below that the accused was not guilty of the offence punishable under [SECTION] of the [ACT]. This finding is challenged in this appeal.
5. The learned counsel for the appellant relied on the decisions of the Apex Court in [ENTITY] Sawhney v. Gulshan Rai, 1994 (1) KLT 111, [PRECEDENT] and [PRECEDENT].
6. The decision in [ENTITY]'s case is one in respect of post dated cheque. A post dated cheque is only a Bill of Exchange. The post dated cheque becomes a cheque under the Act on the date mentioned in the cheque. When presented to the bank, if it was not cashed, necessarily a prosecution under [SECTION] will lie. Admittedly, here the cheque was a blank cheque, not even dated. So the said decision does not have any application.
7. The decision in [PRECEDENT] is to the effect that it is the duty of the drawer to prove that the cheque had not been issued to discharge a debt or liability on his part. That also does not have much application to the facts of this case.
8. The decision in I.C.D.S.' case is in respect of a cheque said to be issued in the capacity as a guarantor. The husband of the drawer of a cheque entered into an agreement with M/s. I.S.D.S. Ltd. The drawer of the cheque was the guarantor and the cheque was issued in her capacity as guarantor. The cheque was presented to the Bank of the drawer. It was bounced with the remark "insufficient funds". Prosecution under [SECTION] was initiated. The drawer invoked [SECTION] of the [ACT] for quashing the complaint which was allowed on the ground that it being a cheque from the guarantor it could not be said to have been issued for the purpose of discharging any debt or liability and the complaint under [SECTION] of the [ACT], was maintainable. The matter was taken up by the I.C.D.S. Ltd. to the Apex Court. The Supreme Court held as follows:
"10. The language, however, has been rather specific as regards the intent of the legislature. The commencement of the section starts with the words "Where any cheque". The above noted three words are of extreme significance, in particular, by reason of the user of the words "any" The first three words suggested that in fact for whatever reason if a cheque is drawn on an account maintained by him with a banker in favour of another person for the discharge of any debt or other liability, the highlighted words if read with the first three words at the commencement of [SECTION], leave no manner of doubt that for whatever reason it may be, the liability under this provision cannot be avoided in the event the same stands returned by the banker unpaid. The Legislature has been careful enough to record not only discharge in whole or in part of any debt but the same includes other liability as well. This aspect of the matter has not been appreciated by the High Court, neither been dealt with or even referred to in the impugned judgment.
11. The issue as regards the coextensive liability of the guarantor and the principal debtor in our view, is totally out of the purview of [SECTION] of the Act, neither the same calls for any discussion therein. The language of the statute depicts the intent of the law-makers to the effect that wherever there is a default on the part of one in favour of another and in the event a cheque is issued in discharge of any debt or other liability there cannot be any restriction or embargo in the matter of application of the provisions of [SECTION] of the Act: 'any cheque' and 'other liability' are the two key expressions which stand as clarifying the legislative intent so as to bring the factual context within the ambit of the provisions of the statute. Any contra interpretation would defeat the intent of the Legislature. The High Court, it seems, got carried away by the issue of guarantee and guarantor's liability and thus has overlooked the true intent and purport or [SECTION] of the Act. The judgments recorded in the order of the High Court do not have any relevance in the contextual facts and the same thus does not lend any assistance to the contentions raised by the respondents".
The Supreme Court held that the even cheques issued by guarantor could be a subject mater for prosecution under [SECTION], in case it is bounced.
9. It is submitted by the counsel for the appellant that as revealed in Ext.P6 agreement, the cheque has been issued as security for repayment of the amount that may become due. Later, when the respondent committed default, accounts were verified in the presence of the representative of the respondent and the respondent thereupon filled the cheque with the amount and date and the cheques was thereupon presented to the bank. The date of the cheque was 19.8.93. Though the cheque leaf was signed and given to the appellant earlier, the cheque got its life from 19.8.93, when the accounts were verified and the respondent filled up the cheque. This reveals that the accused accepted that much liability. This clothes the appellant with the presumption under [SECTION] in his favour. Necessarily, the finding contained in the impugned judgment has to be reversed, as the respondent did not rebut that presumptions available on the cheque in question, Ext.P1.
10. It is admitted by the respondent that when the cheque was issued, there was no liability at all. There was no supporting evidence from the side of the complainant as to whether the accounts had been verified. No accounts had been produced by the appellant to prove that liability was subsisting. Only when it is proved that a liability was existing, an offence under [SECTION] will arise. The decision in I.C.D.S. case did not have an application the facts of this case, because it was a case of guarantor whereas there is no guarantor in this case. Therefore the appeal has to fail, the counsel submits.
11. As rightly pointed out by the counsel for the respondent, there is no guarantee arrangement in this case. But Ext.Pl is an agreement undertaken by the respondent which refers to the cheque in question styling it as a blank cheque and the purpose of giving such blank cheque in terms of Ext.P6 agreement was that, in case any liability arises, it can be duly met by the cheque in question.
12. Then the crucial point is whether there was a verification of accounts as. suggested by the appellant. PW1 is the complainant himself. He had deposed that representatives of the respondent had examined the accounts and mentioned the amount in Ext.Pl cheque endorsing the date thereon. It was further deposed that when the account was so examined, the son of the respondent was also present. There was no cross examination on this point on behalf of the respondent. That means this version of the complainant that the entries including the date were made in Ext.Pl by the representative of the respondent in the presence of his son after verifying the accounts remains unchallenged. That being the evidence on record, it is clear that the cheque had been drawn really on 19.8.93 when the necessary entries were made therein after verifying the accounts on behalf of the respondent with respect to the outstanding liability. It became a cheque only on 19.8.93 when the liability was acknowledged and entered in the cheque. Necessarily, there is evidence to show that the appellant has proved a liability outstanding from the respondent.
13. There is no dispute regarding statutory notice or that the complaint was within the period of limitation. In this regard, it has to be noted that immediately after the issuance of statutory notice, the respondent had filed a suit against the appellant/ complainant as [CASE NUMBER] in the Munsiff Court, Kochi apprehending that the appellant may misuse the cheque in question. By the time, the cheque itself has been bounced. In spite of that the suit was dismissed for default. No steps were taken by the respondent, for restoration. That is also an admitted fact in this case.
14. The intimation of the bank that the cheque was bounced for want of funds is also not disputed.
15. In such circumstances, the respondent is to be found guilty of the offence punishable under [SECTION] of the [ACT] and I do so. Consequently, he is convicted and sentenced to pay a fine of Rs. 55,000/-, out of which, on realisation of the amount, Rs. 52,000/- shall be paid to the appellant as compensation. In case of default of payment of fine, the respondent shall undergo simple imprisonment for six months. The fine amount shall be paid within six weeks from the date of receipt of a copy of this judgment.