The Kerala High Court held that in the cases of dishonour of cheques due to closure of account, the offence of cheating under the Indian Penal Code can be attracted when 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.

In that context, the Bench of Justice G Girish observed 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."

Senior Advocate K Ramakumar appeared for the petitioner, while Public Prosecutor Sanal P Raj appeared for the respodents.

In this case, the revision petitioner filed a complaint against the accused, accusing them of obtaining Rs.50,000 by promising a job at Appollo Tyres for the petitioner's son. After the cheque issued by the accused bounced, a police report was filed, leading to the registration of a case under Section 420 IPC. The Trial Court convicted the accused, sentenced them to one year in prison, and ordered Rs.50,000 compensation. However, in the appeal, the Additional Sessions Court acquitted the accused, stating that Section 420 IPC was not applicable. Dissatisfied, the accused filed this revision petition challenging the acquittal.

The issue before the High Court was whether the offence of cheating punishable under Section 417 I.P.C or Section 420 I.P.C is attracted if a person, after voluntarily closing his account, issues a cheque towards the discharge of a pecuniary liability, leading to the inevitable consequence of its dishonour on the ground ‘account closed’?

To that end, it was observed that, "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."

In light of the same, the Court held that the finding of the Additional Sessions Judge and Appellate Court about the non-applicability of the offence of cheating in the facts and circumstances was manifestly against the settled principles of law, and were liable to be set aside.

Cause Title: TO Souriyar vs Muttom Abdulla Kanjirathinkal House & Anr.

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Kerala High CourtJustice G GirishCheque DishonourCheating

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