I.C.D.S LTD. versus BEENA SHABEER AND ANR.

Citation: [2002] SUPP. 1 S.C.R. 488 · Decided: 12-08-2002 · Supreme Court of India · Bench: U.C. BANERJEE · Disposal: Appeal(s) allowed
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Judgment (excerpt)

A 
I.C.D.S. LTD. 
v. 
BEENA SHABEER AND ANR. 
AUGUST 12, 2002 
B 
[UMESH C. BANERJEE AND Y.K. SABHARWAL, JJ.] 
Negotiable Instruments Act, 1881-Section 138-Cheque issued as 
security from guarantor-Dishonoured-Complaint-Maintainability of-
C Held, wherever there is default on the part of one in favour of any and in 
the event a cheque issued in discharge of any debt or other liability there 
cannot be any restriction or embargo in matter of application of the 
provision-Interpretation of statutes-Legislative intention. 
Husband of respondent No.I entered into a hire purchase agreement 
D with appellant. Respondent No.I stood as a guarantor in respect of the hire 
· purchase facilities and issued a cheque towards part payment to appellant. 
Cheque was presented to bank and was dishonoured. Appellant issued notice 
under Section I38 of the Negotiable Instruments Act, I88I to respondent 
No.I to pay the amount within IS days. Respondent No.I did not reply. 
Thereafter appellant filed a complaint under Section I38 of the Act. 
E Respondents then filed petition under Section 482 Cr.P.C. for quashing the 
complaint. High Court quashed the complaint since cheque being issued as 
security from the guarantor could not be said to have been issued for the 
purpose of discharging any debt or liability and thus no complaint would lie. 
Hence this appeal. 
F 
Allowing the appeal, the Court 
HELD: I.I. The language of Section 138 of the Negotiable Instruments 
Act, I88I has been rather specific as regards the intent of the legislature. 
The commencement of the section stands with the words "Where any cheque" 
G which are of extreme significance by reason of the user of the word "any". 
H 
The first three words suggest that in fact for whatever reason if a cheque is 
drawn on an account maintained by him with a banker in favour of another 
person for the discharge of "any debt or other liability", the words "any debt 
or other liability" if read with the words "where any cheque" leave no manner 
of doubt that for whatever reason it may be, the liability under this provision 
488 
1.CD.S. LTD. v. BEENA SHABEER [UMESH C. BANERJEE. J.] 489 
cannot be avoided in the event the same stands returned by the banker unpaid. A 
The legislature has been careful enough to record not only discharge in whole 
• or in part of any debt but the same includes other liability as well. High Court 
failed to deal with or even refer and appreciate this matter. (4893-A, CJ 
1.2. The language of the Statute depicts the intent of the law-makers 
to the effect that wherever there is a default on the part of one in favour of B 
another and in the event a cheque is issued in discharge of any debt or other 
liability there cannot be any restriction or embargo in the matter of application 
of the provisions of Section 138 of the Act. 'Any cheque' and 'other liability' 
are the two key expressions which stand as clarifying the legislative intent 
so as to bring the factual context within the ambit of the provisions of the C 
Statute. Any contra interpretation would defeat the intent of the legislature. 
High Court seems got carried away by the issue of guarantee and guarantor 
liability. In fact the issue as regards the co-extensive liability of the guarantor 
and the principal debtor, is totally out of the purview of Section 138 of the 
Act Thus the High Court has overlooked the true intent and purport of Section 
138 of the Act and fell into a manifest error. Hence the judgment impugned D 
is set aside. [493-D-F; 494-A] 
Sreenivasan v. State of Kera/a, (1999) 3 K.L.T. 849, distinguished. 
CIVIL APPELLATE JURISDICTION : Civil Appeal No. 797 of 2002. 
From the Judgment and Order dated 24. 7 .2000 of the Kerala High Court 
in Crl. No. 1530 of2000. 
S. Balakrishnan, Vijay Sondhi, M.K. D. Namboodiri and Subramonium, 
Prasad for the Appellants. 
K.R. Sasiprabhu and Romy Chacko, for the kespondent. 
The Judgment of the Court was delivered by 
BANERJEE, J. Leave granted. 
A short but an interesting question falls for consideration in this appeal 
to the effect as to the maintainability of a proceeding under Section 138 of 
E 
F 
G 
the Negotiable Instruments Act, 1881, vis-a-vis a guarantor. The High Court 
negated it and hence the matter before this Court under Article 136 of the 
Constitution. In order, however, to appreciate the contentions raised in the 
matter, it would be worthwhile at this juncture to notice Section 138 for its H 
490 
SUPREME COURT REPORTS [2002
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