Drawers signature differs – whether cheque bounce case made out?

Question: Does “12-drawers signature differs” comes under cheque bounce? The cheque deposited by me has been returned unpaid by the bank on the ground that the signature of the drawer of the cheque differs. Will it amount to an offence under Section 138 of the Negotiable Instruments Act?

Answer: The answer is “yes”. In a case where the cheque is returned unpaid by the bank on the ground that the signature of the drawer on the cheque differs from his specimen signature on record of the bank, a case of dishonour of cheque punishable under Section 138 may be made out if other ingredients of the offence are satisfied. This is what has been held recently in the case of Laxmi Dyechem v. State of Gujarat, (2012) 13 SCC 375 : 2013 Cri LJ 3288, by a 2-Judge bench of the Supreme Court comprising of Justice T.S. Thakur and Justice Gyan Sudha Misra. It was held that there may be situations where a mismatch between the signature on the cheque drawn by the drawer and the specimen signature available with the bank may result in dishonour of the cheque even when the drawer never intended to invite such a dishonour.

In the above case, the Supreme Court observed as under:

“The above line of decisions leaves no room for holding that the two contingencies envisaged under Section 138 of the Act must be interpreted strictly or literally. We find ourselves in respectful agreement with the decision in Magma case that the expression “amount of money … is insufficient” appearing in Section 138 of the Act is a genus and dishonour for reasons such “as account closed”, “payment stopped”, “referred to the drawer” are only species of that genus. Just as dishonour of a cheque on the ground that the account has been closed is a dishonour falling in the first contingency referred to in Section 138, so also dishonour on the ground that the “signatures do not match” or that the “image is not found”, which too implies that the specimen signatures do not match the signatures on the cheque would constitute a dishonour within the meaning of Section 138 of the Act.”

The Supreme Court further observed that:

“This Court has in the decisions referred to above taken note of situations and contingencies arising out of deliberate acts of omission or commission on the part of the drawers of the cheques which would inevitably result in the dishonour of the cheque issued by them. For instance, this Court has held that if after issue of the cheque the drawer closes the account it must be presumed that the amount in the account was nil hence insufficient to meet the demand of the cheque. A similar result can be brought about by the drawer changing his specimen signature given to the bank or in the case of a company by the company changing the mandate of those authorised to sign the cheques on its behalf. Such changes or alteration in the mandate may be dishonest or fraudulent and that would inevitably result in dishonour of all cheques signed by the previously authorised signatories. There is in our view no qualitative difference between a situation where the dishonour takes place on account of the substitution by a new set of authorised signatories resulting in the dishonour of the cheques already issued and another situation in which the drawer of the cheque changes his own signatures or closes the account or issues instructions to the bank not to make the payment. So long as the change is brought about with a view to preventing the cheque being honoured the dishonour would become an offence under Section 138 subject to other conditions prescribed being satisfied.

The Supreme Court further observed as under:

“There may indeed be situations where a mismatch between the signatories on the cheque drawn by the drawer and the specimen available with the bank may result in dishonour of the cheque even when the drawer never intended to invite such a dishonour. We are also conscious of the fact that an authorised signatory may in the ordinary course of business be replaced by a new signatory ending the earlier mandate to the bank. Dishonour on account of such changes that may occur in the course of ordinary business of a company, partnership or an individual may not constitute an offence by itself because such a dishonour in order to qualify for prosecution under Section 138 shall have to be preceded by a statutory notice where the drawer is called upon and has the opportunity to arrange the payment of the amount covered by the cheque. It is only when the drawer despite receipt of such a notice and despite the opportunity to make the payment within the time stipulated under the statute does not pay the amount that the dishonour would be considered a dishonour constituting an offence, hence punishable. Even in such cases, the question whether or not there was a lawfully recoverable debt or liability for discharge whereof the cheque was issued would be a matter that the trial court will examine having regard to the evidence adduced before it and keeping in view the statutory presumption that unless rebutted the cheque is presumed to have been issued for a valid consideration.”

Thus, it is clear that an offence under Section 138 of the N.I. Act may be made out even where the cheque has been returned unpaid on the ground of signature difference.