Issuing Cheque After Voluntarily Closing Bank Account Tantamounts To Offence Of Cheating Under IPC: Kerala High Court

In allowing the present revision petition Justice G. Girish quashed the order of the appellate court exonerating the accused, and observed:

“It seems from the judgment of the appellate court that the learned Additional Sessions Judge was carried away by the impression that if a person issues a cheque after the closure of his account, in respect of an antecedent liability, and the said cheque happens to be dishonoured due to that reason, the above act of that person will not come within the purview of cheating as defined under Section 415 I.P.C. The above conclusion of the learned Additional Sessions Judge, in my view, is patently wrong.”

The Court further added that a person would be made liable for the dishonour of a cheque under Section 138 NI Act when he did not expect that his account would be closed before the presentation of that cheque by the payee for encashment.

It held that only in cases where a person had issued a cheque for its encashment to the payee after voluntarily closing his account, it would attract the offence of cheating under Section 415 IPC. 

“Thus, it could be safely concluded that the offence of cheating envisaged under Indian Penal Code would be attracted in those cases of dishonour of cheques due to closure of account where the mens rea, that is, the fraudulent or dishonest intention of the drawer at the time of issuance of the cheque, to deceive the payee, is established from the facts and circumstances of the case.”, the Court observed. 

Section 415 IPC defines cheating, Section 417 pertains to punishment for cheating and Section 420 deals with cheating and dishonestly inducing delivery of property.

The complainant filed a case against the accused under section 420 IPC for cheating on the allegation that he took fifty thousand rupees to offer a job to the complainant's son. As the job was not obtained, the complainant demanded repayment of money and the accused issued a cheque dated 25^th April 1998 for an amount of fifty thousand rupees. When the cheque was presented for payment, it was dishonoured on the ground 'account closed' as early as 13^th January 1998.

The Court of Judicial First-Class Magistrate-I, Aluva found the accused guilty of cheating under Section 420 IPC and awarded simple imprisonment for one year along with a direction to pay fifty thousand rupees.

However, in appeal, the Additional Sessions Court found that Section 420 IPC was not attracted and set aside the conviction and imprisonment. Aggrieved by this, the complainant has preferred the present revision petition before the High Court.

On analyzing the provisions of cheating in IPC, the Court culled out the ingredients for attracting the offence of cheating as thus:

1. There should be deception by the accused;
2. The deception was committed with fraudulent or dishonest intention to deceive a person for inducing him to deliver or retain any property or induce him to do or not to do anything which he would have otherwise done, if not deceived;
3. Some damage or harm to body, mind or reputation was caused to the deceived person

The Court considered whether the act of the accused of issuing of cheque on an account which he had voluntarily closed three months ago towards repayment of his liability which subsequently led to dishonor of the cheque when it was presented for payment would amount to cheating under Section 415 IPC. It held thus:

“If it is shown that the 1st respondent was not having any intention at all to return the amount and that the cheque was issued only as a ploy to deceive the revision petitioner, the element of cheating, as envisaged under Section 415 IPC would be clearly brought out in the case on hand.”

On perusing the factual situation, the Court noted that the accused issued the cheque for payment of his liability when he was fully aware that his bank account was closed and his cheque would be dishonoured. The Court noted that the conduct of the accused amounted to deception with fraudulent or dishonest intention and would attract the offence of cheating under the IPC.

The Court held that a person will be convicted for the offence of cheating under IPC and not under Section 138 NI Act for dishonour of cheque when there was an intention to deceive the payee when the cheque was issued, that is, presence of mens reas. It observed thus:

“The distinction lies on the pertinent question as to the mens rea of the drawer to deceive the payee at the time when he issues the cheque, pretending it to be one drawn on a valid and live account maintained by him. True that the evidence in such cases shall be meticulously analysed to ascertain whether the drawer was having the intention, right from the very beginning, to defeat the attempt of the payee to encash the cheque which he had issued ostensibly to make payment of the amount covered by it.”

Relying upon the Apex Court decision in Sangeetaben Mahendrabhai Patel v. State of Gujarat and Another (2012), the Court held that subsequent prosecution under Section 420 IPC in respect of a case which had already been prosecuted under Section 138 of the NI Act was not barred.

Accordingly, the Court noted that the accused had committed the offence of cheating under the IPC, thereby attracting the punishment under Section 417 IPC, and allowed the revision.

It thus set aside the order of the appellate court, convicted the accused, and ordered a sentence of imprisonment till the rising of court and a fine of one lakh rupees.

Counsel for the complainant: Senior Advocate K Ramakumar

Counsel for the accused: Public Prosecutor Sanal P.Raj

Citation: 2023 LiveLaw (Ker) 704

Case title: T.O.Souriyar v Muttom Abdulla Kanjirathinkal House

Case number: CRL.REV.PET NO. 441 OF 2005

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