Case: ASHOK YESHWANT BADAVE Vs. SURENDRA MADHAVRAO NIGHOJAKAR AND ANOTHER

3. Surendra Madhavrao Nighojakar-respondent No. 1 filed a petition of complaint in the Court of Chief Judicial Magistrate, Satara on 2.9.1996 for prosecution of the appellant u/s 138 of the Act besides Section 420 of the Penal Code which was registered as Criminal Case No. 11348/96. Case of the complainant in, short, is that on 4.7.1993 an agreement to sell was executed by the complainant for sale of his 1/3rd share in CTS No. 189 within Pratapganj Peth in the district of Satara for Rs. 2,21,000/- and the said sale was required to be executed in the name of mother and wife of the appellant. At the time of agreement, Rs.50,000/- was paid by the accused to the complainant. Therefore on 10.11.1995 sale deed was scribed and on that date a further sum of Rs. 1,25,000/- was paid by the accused to the complainant besides a post-dated cheque drawn on State Bank of India, Satara Branch, for Rs.46,000/- bearing the date as 20.1.1996 which was made over by the accused to the complainant. Later on, the accused on several occasions made a request to the complainant for not presenting the cheque in the bank as lie was not having sufficient funds in his bank account which request was acceded to by the complainant. Ultimately, as the period of six months was going to expire on 19.7.1996. the complainant had no option but to present the said cheque before his banker for encashment, but the same was returned without clearance on 11.7.1996 with the endorsement account closed. From these facts complainant deduced that the accused had deceived him which necessitated issuance of notice by the complainant to the accused on 22.7.1996 which was refused by him on 6.8.1996 whereafter the present complaint was filed.4. Upon the filing of petition of complaint, the complainant was examined on solemn affirmation and by order dated 2.9.1996 the Magistrate took cognizance of the offence u/s 138 of the Act and issued process against the accused. The said order having been unsuccessfully challenged by the accused before the Sessions Court as well as the High court, the present appeal by special leave is before us.

Court's reasoning:
6. The question posed is no longer res integra as the same is concluded by a two Judges Bench decision of this Court in the case of Anil Kumar Sawhney Vs. Gulshan Rai, wherein in similar circumstances it was laid down by this Court that post-dated cheque shall be deemed to have been drawn on the date it bears and not the previous date on which it was made over by the drawer to the drawee, but as the matter has been placed before this three Judge Bench, we find it expedient to consider the same.9. The concept of post-dated cheque was well known even in common law and it was in effect a bill of exchange payable on demand with a post date upon which the demand was to be made. As far back as in 1776 and while the Law of Merchant was then in process of formation, it was held in Da Silva vs. Fuller Sel. Ca. 238 M.S., referred to in Chitty on Bills of Exchange, 11th Edition, (188) that a banker was not justified in paying a post-dated cheque before its actual date. In 1868 nearly a hundred years later, the Court of Queens Bench in Emanuel vs. Robarts (1868)9 B.&S. 121, observed that a banker was justified in refusing payment of a post-dated cheque before its due date and that the custom of banker to do so was a part of the contract between the banker and the customer. In Bull vs. O Sullivan L.R. 6 Q.B. 209, the Court laid down that a post-dated cheque payable to order was an instrument payable to order on demand on its date. Later, in 1877 in Gatty vs. Fry 2 Ex.D. 265, the Court held that a post-dated cheque is not payable on the day it is issued but on the day of its date. All these cases were decided before the law was codified in England by the Bills of Exchange Act, 1882. After passing of the aforesaid Act, in the case of Palmer (1882)19 CD 409, it has been decided by the Court of Appeal that a post-dated cheque was equivalent to a bill of exchange payable on the future date, namely, the date of the cheque. In the case of Hinchcliffe vs. The Ballarai Banking Company 1 V.R. (L) 229, the Court determined the exact point in question in the present case against the bank, holding that a post-dated cheque is a bill of exchange payable at a future date and that the banker may be liable to an action by the customer for negligence if he pays such cheque before the day it bears date.10. In the high authority of Royal Bank of Scotland vs. Tottenham (1894) LXXI LTR 168, similar question was subject matter of consideration before the Court of Appeal in which Lord Esher, M.R., after due consideration observed thus:A cheque is a contract between the parties, and it is for a Judge at the trial to construe that contract by reading what is written upon it. Reading this cheque, upon its face it is dated the 10th August, and is payable to order. What is the true construction of that contract upon reading it? It is simply an order to pay 250 upon demand. It is said that this is not the proper construction under the circumstances, because the cheque was signed on the 3rd August, and handed over to the payee upon the 8th August, being dated the 10th August. It is said that the cheque was, therefore, a post-dated cheque. Upon those facts being proved before the Judge, what ought he to do? Must he say that, in construing this written document, because it was handed over before the day of the date written upon it, he must put a different construction upon it and say that it is not a bill payable upon demand, but a bill payable two days after the day of its issued or negotiation? I have never heard of a cheque being so construed, and the argument of the appellant is entirely fallacious....It is not denied that, by the Bills of Exchange Act, 1882, a post-dated cheque is not made invalid;...The objection as to post-dating a cheque is therefore now an obsolete and useless objection. If a cheque is dealt with as a bill of exchange before the date which it bears, then it becomes a bill of exchange in the ordinary sense; but it is not in any way an escrow. All the defences and objections are futile and must fail.18. In the case of Jiwanlal Achariya Vs. Rameshwarlal Agarwalla, a cheque dated 25th February, 1954 was delivered on 4th February. 1954 and encashed soon after 25th February, 1954. This Court was considering the question of payment envisaged within the meaning of Section 20 of the Indian Limitation Act, 1908 and delivering the majority judgment, Wanchoo, J., speaking for himself and J.C. Shah, J., observed thus:-Where, therefore, the payment is by cheque and is conditional, the mere delivery of the cheque on a particular date does not mean that the payment was made on that date unless the cheque was accepted as unconditional payment. Where the cheque is not accepted as an unconditional payment, it can only be treated as a conditional payment. In such a case the payment for purposes of Section 20 would be the date on which the cheque would be actually payable at the earliest, assuming that it will be honoured....As the payment was conditional it would only be good when the cheque is presented on the date it bears, namely, February 25, 1954 and is honoured. The earliest date, therefore, on which the respondent could have realised the cheque which he had received as conditional payment on February 4, 1954 was the 25th February, 1954 if he had presented it on that date and it had been honoured.19. From a bare perusal of Sections 5 & 6 of the Act it would appear that 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. On the other hand, a cheque is a bill of exchange drawn on a bank by the holder of an account payable on demand. u/s 6 of the Act a cheque is also a bill of exchange but it is drawn on a banker and payable on demand. 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 not payable till the date which is shown thereon arrives and will become cheque on the said date and prior to that date the same remains bill of exchange.20. For prosecuting a person for an offence u/s 138 of the Act, it is inevitable that the cheque is presented to the banker within a period of six months from the date on which it is drawn or within the period of its validity whichever is earlier. When a post dated cheque is written or drawn, it is only a bill of exchange and so long the same remains a bill of exchange, the provisions of Section 138 are not applicable to the said instrument. The post-dated cheque becomes a cheque within the meaning of Section 138 of the Act on the date which is written thereon and the 6 months period has to be reckoned for the purposes of proviso (a) to Section 138 of the Act from the said date. Thus while respectfully agreeing with the law laid down by this Court in the case of Anil Kumar Sawhney, we hold that six months period shall be reckoned from the date mentioned on the face of the cheque and not any earlier date on which the cheque was made over by the drawer to the drawee.21. In the case on hand, the cheque was prepared and made over by the drawer to the drawee on 10.11.1995 but the date mentioned thereon was 20.1.1996 and it was presented before the banker for encashment on 7.7.1996, i.e. within a period of six months from 20.1.1996.