Case: Anil Kumar Sawhney Vs. Gulshan Rai

question as to when a post-dated cheque can be considered to have been drawn for the purpose of section 138 of the Act cannot be dealt with independently of the right to present the same. In relation to the drawer and drawee, a post-dated cheque becomes operative only from the date of the cheque when alone the same is intended to be honoured. A post-dated cheque for the purpose of clause (a) of the proviso to section 138 of the Act has to be considered to have been drawn on the date it bears and in this case, since the cheque was presented within six months of the date of the cheque, it cannot be said that the condition in the said proviso is not satisfied. In view of the above, with respect, we are unable to agree with the view taken in Babu Xaviers case [1990] TLNJ (Crl) 121, since reported in referred to earlier." The Punjab and Haryana High Court in the impugned judgment followed the Madras High Court view and did not agree with the Division Bench of the Kerala High Court.We do not agree with the reasoning and the conclusions reached by the Madras High Court which have been followed by the learned single judge of the Punjab and Haryana High Court in the impugned judgment. Both the High Courts fell into patent error in holding that the provisions of section 138 of the Act are not applicable to post-dated cheques. The interpretation placed by the High Courts on section 138 of the Act is not only contrary to the plain language of the various provisions of the Act but is also contrary to the Objects and Reasons of the Amendment Act. The said interpretation, if accepted, would defeat the very purpose of inserting Chapter XVII in the Act.Sections 5 and 6 of the Act define " bill of exchange " and " cheque ". A "bill of exchange " is a negotiable instrument in writing containing an instruction to a third party to pay a stated sum of money at a designated future date or on demand. A " cheque ", on the other hand, is a bill of exchange drawn on a bank by the holder of an account payable on demand. Thus, a " cheque " under section 6 of the Act is also a bill of exchange, but it is drawn on a banker and is payable on demand. It is, thus, obvious that a bill of exchange even though drawn on a banker, if it is not payable on demand, it is not a cheque. A " post-dated cheque " is only a bill of exchange when it is written or drawn, it becomes a " cheque " when it is payable on demand. The post-dated cheque is not payable till the date which is shown on the face of the said document. It will only become cheque on the date shown on it and prior to that it remains a bill of exchange under section 5 of the Act. As a bill of exchange a post-dated cheque remains negotiable but it will not become a " cheque " till the date when it becomes " payable on demand ".It is clear from section 19 that a " cheque " is an instrument which is payable on demand. A post-dated cheque, which is not payable on demand till a particular date, is not a cheque in the eyes of law till the date it on which becomes payable on demand. An offence to be made out under the substantive provisions of section 138 of the Act it is mandatory that the cheque is presented to the bank within a period of six months from the date on which it is drawn or within the period of its validity, whichever is earlier. It is the cheque drawn which has to be presented to the bank within the periods specified therein. When a post-dated cheque is written or drawn it is only a bill of exchange and as such the provisions of section 138(a) are not applicable to the said instrument. The post-dated cheque becomes a cheque under the Act on the date which is written on the said cheque and the six-month period has to be reckoned for the purposes of section 138(a) from the said date. One of the main ingredients of the offence under section 138 of the Act is, the return of the cheque by the bank unpaid. Till the time the cheque is returned by the bank unpaid, no offence under section 138 is made out. A post-dated cheque cannot be presented before the bank and as such the question of its return would not arise. It is only when the post-dated cheque becomes a " cheque ", with effect from the date shown on the face of the said cheque, the provisions of section 138 come into play. The net result is that a post-dated cheque remains a bill of exchange till the date written on it. With effect from the date shown on the face of the said cheque it becomes a " cheque " under the Act and the provisions of section 138(a) would squarely be attracted. In the present case, the post-dated cheques were drawn in March, 1990, but they became " cheques " in the year 1991 on the dates shown therein. The period of six months, therefore, has to be reckoned from the dates mentioned on the face of the cheques.Even otherwise we agree with the reasoning adopted by the Division Bench of the Kerala High Court. Section 138 has to be construed with reference to the context. If the object of bringing section 138 of the Act on the statute has to be fulfilled then the only interpretation which can be given to clause (a) of the proviso to section 138 of the Act is that a post-dated cheque shall be deemed to have been drawn on the date it bears.

Decision (1 = appeal accepted, 0 = rejected): 1

Explanation:
1[ds]An offence to be made out under the substantive provisions of section 138 of the Act it is mandatory that the cheque is presented to the bank within a period of six months from the date on which it is drawn or within the period of its validity, whichever is earlier. It is the cheque drawn which has to be presented to the bank within the periods specified therein. When acheque is written or drawn it is only a bill of exchange and as such the provisions of section 138(a) are not applicable to the said instrument. Thecheque becomes a cheque under the Act on the date which is written on the said cheque and theperiod has to be reckoned for the purposes of section 138(a) from the said date. One of the main ingredients of the offence under section 138 of the Act is, the return of the cheque by the bank unpaid. Till the time the cheque is returned by the bank unpaid, no offence under section 138 is made out. Acheque cannot be presented before the bank and as such the question of its return would not arise. It is only when thecheque becomes a " cheque ", with effect from the date shown on the face of the said cheque, the provisions of section 138 come into play. The net result is that acheque remains a bill of exchange till the date written on it. With effect from the date shown on the face of the said cheque it becomes a " cheque " under the Act and the provisions of section 138(a) would squarely be attracted. In the present case, thecheques were drawn in March, 1990, but they became " cheques " in the year 1991 on the dates shown therein. The period of six months, therefore, has to be reckoned from the dates mentioned on the face of the cheques.Even otherwise we agree with the reasoning adopted by the Division Bench of the Kerala High Court. Section 138 has to be construed with reference to the context. If the object of bringing section 138 of the Act on the statute has to be fulfilled then the only interpretation which can be given to clause (a) of the proviso to section 138 of the Act is that acheque shall be deemed to have been drawn on the date itfacts are more or less undisputed. Out of several cheques issuedin March, 1990, under the deed of compromise between the parties, two of the cheques were dated February 15, 1991, one dated April 15, 1991, and the fourth dated May 15, 1991. The dispute in the present appeals is as to what is the date on which a cheque is stated to have been drawn. In other words, what is the date from which the period of six months as contemplatedunder section 138(a) of the Act is to bedates written on those cheques, which were, are not the dates when the cheques were drawn. According to the respondent, since the cheques were drawn in March, 1990, and those were presented before the bankers in the year 1991, the cheques had been presented to the bank beyond the period of six months from the date on which those were drawn and as such no offence was made out under section 138(a) of the Act. Following the judgment of a learned single judge of the Madras High Court in Babu Xavier v. Lalchand Munoth, the High Court quashed the criminal complaints against the respondent.ThePunjab and Haryana High Court in the impugned judgment followed the Madras High Court view and did not agree with the Division Bench of the Kerala High Court.We do not agree with the reasoning and the conclusions reached by the Madras High Court which have been followed by the learned single judge of the Punjab and Haryana High Court in the impugned judgment. Both the High Courts fell into patent error in holding that the provisions of section 138 of the Act are not applicable tocheques. The interpretation placed by the High Courts on section 138 of the Act is not only contrary to the plain language of the various provisions of the Act but is also contrary to the Objects and Reasons of the Amendment Act. The said interpretation, if accepted, would defeat the very purpose of inserting Chapter XVII in the Act.Sections 5 and 6 of the Act define " bill of exchange " and " cheque ". A "bill of exchange " is a negotiable instrument in writing containing an instruction to a third party to pay a stated sum of money at a designated future date or on demand. A " cheque ", on the other hand, is a bill of exchange drawn on a bank by the holder of an account payable on demand. Thus, a " cheque " under section 6 of the Act is also a bill of exchange, but it is drawn on a banker and is payable on demand. It is, thus, obvious that a bill of exchange even though drawn on a banker, if it is not payable on demand, it is not a cheque. A "cheque " is only a bill of exchange when it is written or drawn, it becomes a " cheque " when it is payable on demand. Thecheque is not payable till the date which is shown on the face of the said document. It will only become cheque on the date shown on it and prior to that it remains a bill of exchange under section 5 of the Act. As a bill of exchange acheque remains negotiable but it will not become a " cheque " till the date when it becomes " payable on demand ".It is clear from section 19 that a " cheque " is an instrument which is payable on demand. Acheque, which is not payable on demand till a particular date, is not a cheque in the eyes of law till the date it on which becomes payable onoffence to be made out under the substantive provisions of section 138 of the Act it is mandatory that the cheque is presented to the bank within a period of six months from the date on which it is drawn or within the period of its validity, whichever is earlier. It is the cheque drawn which has to be presented to the bank within the periods specified therein. When acheque is written or drawn it is only a bill of exchange and as such the provisions of section 138(a) are not applicable to the said instrument. Thecheque becomes a cheque under the Act on the date which is written on the said cheque and thed has to be reckoned for the purposes of section 138(a) from the said date. One of the main ingredients of the offence under section 138 of the Act is, the return of the cheque by the bank unpaid. Till the time the cheque is returned by the bank unpaid, no offence under section 138 is made out. Ae cannot be presented before the bank and as such the question of its return would not arise. It is only when thecheque becomes a " cheque ", with effect from the date shown on the face of the said cheque, the provisions of section 138 come into play. The net result is that ae remains a bill of exchange till the date written on it. With effect from the date shown on the face of the said cheque it becomes a " cheque " under the Act and the provisions of section 138(a) would squarely be attracted. In the present case, thecheques were drawn in March, 1990, but they became " cheques " in the year 1991 on the dates shown therein. The period of six months, therefore, has to be reckoned from the dates mentioned on the face of the cheques.Even otherwise we agree with the reasoning adopted by the Division Bench of the Kerala High Court. Section 138 has to be construed with reference to the context. If the object of bringing section 138 of the Act on the statute has to be fulfilled then the only interpretation which can be given to clause (a) of the proviso to section 138 of the Act is that ae shall be deemed to have been drawn on the date it