Source: https://law.geekupd8.com/2016/03/cheque-is-drawn-as-self-cheque-cheque-being-self-cheque-would-attract-Section-138-of-Neotiable-Instruments-Act.html
Timestamp: 2019-04-24 06:53:49+00:00

Document:
Before :- Anand Byrareddy, J.
Criminal Revision Petition No. 926 of 2009. D/d. 17.7.2013.
For the Petitioner :- Shri. H. Pavana Chandra Shetty, Advocate.
For the Respondent :- Shri. K. Shashikanth Prasad, Government Pleader.
A.K.Hameed v. Appakutty, AIR 1969 Ker.189.
Amolak Textiles v. Uphar Fashions, 2009(3) Kar.L.J. 696 : ILR 2009 Kar. 628.
Farhat Hussain Siddiqui v. State of Uttar Pradesh, 2010 Cri. L.J. 1213 (All.).
Forbes Campbell & Co. v. the Official Assignee of Bombay, (1925)27 Bom.LR 34.
M/s Intech Net Limited v. State, 2007 Cr.LJ 216 (AP).
Mahesh Goyal v. S.K. Sharma, 1997 Cri. L. J. 2868 (P and H).
Michael Kuruvilla v. Joseph J. Kondody, 1998(2) Andh. L.D. (Cri.) 957 (Ker.).
Prabhakaran v. Natesan, 1998(4) Crimes 554)(Mad.).
Raza Ali v. Rahat Hussain, AIR 1933 All 754.
V. Rama Shetty v. N. Sasidaran Nayar, 2008 Cri. L.J. 4297 (Kar.).
2. It was alleged that the petitioner had purchased a bus from the complainant. The petitioner was in arrears in the payment of the price, in a sum of L 28,000/-. It is stated that in discharge of the said liability, the petitioner had issued a cheque drawn on " self or bearer ". The complainant having presented the cheque for payment to the banker of the petitioner, the same is said to have been dishonoured for want of sufficient funds. A memo was issued by the bank to that effect.
The complainant had issued a legal notice demanding the payment of the amount covered under the cheque, claiming to be a holder in due course, as contemplated under Section 9 of the Neotiable Instruments Act. On the failure of the petitioner to meet the demand, the complaint was filed.
"1. Whether the complainant proves beyond all reasonable doubt that the accused had issued him a bearer cheque bearing No.0434454 to discharge his debt or liability for L 28,000/- dated 5.11.2005 drawn on Vijaya Bank, Mandarti Branch?
2. Whether the complainant proves beyond all reasonable doubt that the complainant has presented the said cheque for encashment before Vijaya Bank, Karkala Branch and the said cheque has been dishonoured due to insufficient funds in the account of the accused?
3. Whether the complainant proves beyond all reasonable doubt that after having the intimation and receiving endorsement of the dishonour of the cheque, complainant got issued legal notice to the accused as required under Section 138 of the NI Act?
4. Whether the complainant proves beyond all reasonable doubt that after receipt of the notice, accused ahs failed to pay the cheque amount within 15 days from the date of receipt of the said notice ?"
All the points were answered in the affirmative and the petitioner was convicted and sentenced to undergo simple imprisonment for a period of six months and to pay a fine of L 30,000/-. Out of the fine amount, L 28,000/- was to be paid as compensation to the complainant in terms of Section 357(1)(b) of the Code of Criminal Procedure, 1973 (Hereinafter referred to as the 'Cr.PC', for brevity) .
This was challenged in appeal. The appellate court however, dismissed the appeal and affirmed the judgment of the trial court, but modified the punishment imposed, the sentence of imprisonment was eschewed. It is the affirmation of the conviction that is under challenge in the present petition.
3. The learned counsel for the petitioner would contend that the cheque in question was drawn on self, and the dishonour of the same would not attract Section 138 of the Neotiable Instruments Act, as held by a learned single judge of this court in the case of V. Rama Shetty v. N. Sasidaran Nayar, 2008 Cri. L.J. 4297 (Kar.).
The learned counsel would contend that the courts below had committed an error in concluding that though the cheque in question was a self cheque, it was issued in discharge of the liability aforesaid and that the complainant was a "holder in due course" and the dishonour of the cheque in the hands of the complainant, attracted Section 138 of the Act. The learned counsel would insist that this court having opined as above, the courts below were bound by the same and could not have placed reliance on decisions of other High Courts in taking a different view.
4. The learned counsel for the respondent has remained absent.
5. The point for consideration by this bench is, whether the petition ought to be allowed on the short ground that the decision in Rama Shetty's case, supra, was to be followed by the courts below and therefore, warrants interference by this court. Or whether it could be said that there were distinguishing features in the present case on hand that justifies the decisions of the courts below.
In this regard, the findings of fact, on the basis of the evidence of the complainant in support of his case, is relevant.
The trial court has found that though the cheque is drawn as a self cheque, the words " or bearer", have not been scored off and hence the complainant, who had financial transactions with the petitioner would answer to the definition of a holder in due course, as contemplated under Section 9 of the Neotiable Instruments Act, and has relied on a decision in the case of Mahesh Goyal v. S.K. Sharma, 1997 Cri. L. J. 2868 (P and H) , in this regard.
Secondly, from the evidence of the witnesses, PW-1, PW- 3, 4 and 5, the trial court has found that the cheque was issued in discharge of the liability to pay the balance outstanding, of the price, towards the purchase of the bus, by the petitioner from the complainant.
Thirdly, the trial court has found that the complainant had complied with all the requirements of Section 138 of the Neotiable Instruments Act and had proved the allegations in the complaint. Incidentally, the decision of this court in Rama Shetty's case, is not shown to have been brought to the attention of either the trial court or the appellate court.
'' Where any cheque drawn by a person on an account maintained by him with a banker for payment of any amount of money to another person.."
It is then held that the said cheque being a self cheque and not drawn in favour of another person, Section 138 of the Neotiable Instruments Act would not be attracted for the dishonour of a self cheque.
But in Amolak Textiles v. Uphar Fashions, 2009(3) Kar.L.J. 696 : ILR 2009 Kar. 628, the very learned judge who had rendered the decision in Rama Shetty, supra , has found that in the case of a self cheque, the drawer having signed on the obverse of the cheque and having endorsed it in favour of the complainant, would make him a holder in due course and that he could bring an action on the same.
In the instant case on hand, the cheque in question was drawn on self or bearer. It is seen that several High courts have taken a view that a bearer cheque, if dishonoured, would attract the rigour of Section 138 of the Act.
The Allahabad High Court in Farhat Hussain Siddiqui v. State of Uttar Pradesh, 2010 Cri. L.J. 1213 (All.), has held that a bearer cheque issued in discharge of debt or other legal liability would enable the person in possession of the same to claim as a holder in due course, as defined under Section 9 of the Neotiable Instruments Act, even though the cheque is payable to bearer.
The Andhra Pradesh High Court in M/s Intech Net Limited v. State, 2007 Cr.LJ 216 (AP), has held that once the issuance of a cheque is admitted and if the words " or bearer" are not scored off, the person in possession would be a holder in due course and would be entitled to invoke Section 138 Neotiable Instruments Act, in case of dishonour of the same.
''8. The expression "holder in due course" is clear and unambiguous. The words are plain and meaning clear. A holder in due course is a person who is possessor of an instrument even when it is payable to bearer. He must be in possession on it. If the bill is payable to holder then he has to be a payee or indorsee of the same.
9. In the present case in hand perusal of the cheque indicates that it was addressed as payable to "self" and that the word bearer has not been deleted. It is not even scored off. There were certain transactions alleged and the money was claimed to be due. The respondent was in possession of the same and presented it before the bank, but it was dishonoured. He was obviously holder in due course. When other conditions were satisfied, there was no question of holding that merely because the cheque was addressed to self, Section 138 in the facts would not be attracted. Once the cheque had been given for valid consideration, the respondent must be taken to be holder in due course."
The Kerala High Court in Michael Kuruvilla v. Joseph J. Kondody, 1998(2) Andh. L.D. (Cri.) 957 (Ker.), after following the judgment of the said Court inA.K.Hameed v. Appakutty, AIR 1969 Ker.189 and after considering the definition of 'Holder in due course' under Section 9 of the Act held that though the cheque does not contain the name of the payee and the printed words "or bearer" are struck off and also it is written pay to cash, is a legal and a valid negotiable instrument. It has to be implied that the direction is to pay to the bearer and there is nothing on record to show that the appellant cannot be treated as holder in due course as contemplated under Section 9 of the Act. Having observed so, the learned Judge set aside the judgment of the trial court in finding the accused not guilty of the offence under Section 138 of the Act and held that the accused was guilty of the offence and accordingly convicted him for the said offence.
The Madras High Court in Prabhakaran v. Natesan, 1998(4) Crimes 554)(Mad.), held that once the complainant becomes the bearer and he presented the cheque for encashment, virtually the complainant becomes the holder in due course and as such, it could very well be said that he is competent to file a complaint on the non-payment of the cheque amount after dishonour of the cheque.
''9. ''Holder in due course" means any person who for consideration became the possessor of a promissory note, bill of exchange or cheque if payable to bearer , or the payee or indorsee thereof, if [payable to order], before the amount mentioned in it became payable, and without having sufficient cause to believe that any defect existed in the title of the person from whom he derived his title."
In so far as the presentation of a bearer cheque to the banker for encashment is concerned - the banks ordinarily require the person, presenting a bearer cheque for payment, to endorse it though it is not a legal requirement. And the bank is bound to make payment to the bearer.
"Where a cheque is originally expressed to be payable to bearer, the drawee is discharged by payment in due course to the bearer thereof , notwithstanding any endorsement whether in full or in blank appearing thereon and not withstanding that any such endorsement purports to restrict or exclude further negotiation. " The amendment however, does not change the legal position, as held in Forbes (supra), in so far as hundis are concerned.
(See: Tannan's Banking Law & Practice in India, 22nd Edition, Volume 1 , page 496, para 26 & page 497 para 27) Therefore, in the present case on hand, it was established that the complainant had received a bearer cheque for consideration and in discharge of a legal liability and was a holder in due course, of the same. The dishonour of the cheque was for the reason that the account of the petitioner did not carry sufficient funds- the bank had also issued a memo in this regard to the complainant, which is produced and marked as a document at the trial. The burden was heavy on the petitioner to establish that the cheque was not issued in discharge of a legal liability. The petitioner has failed to do so. The plea that the cheque being a self cheque would not attract Section 138 of the Neotiable Instruments Act, is not tenable.
Hence the petition is dismissed.
The self-cheque is like writing yourself a cheque right? If the fund written on the cheque is not enough to pay an item then that will be the issue. It is like a bounced cheque where the bank cannot process due to insufficient funds. This calls for an act of penalized with the bearer of the cheque. An urgent essay writing regarding this matter have been discussed in our class so I may have an idea on what bounced cheque is all about.

References: v. 
 v. 
 v. 
 v. 
 v. 
 v. 
 v. 
 v. 
 v. 

V. 
 v. 
 V. 
 v. 
 v. 
 v. 
 v. 
 v. 
 v. 
 v. 
 v.