HONOURABLE Dr. JUSTICE B.SIVA SANKARA RAO
CRIMINAL APPEAL No.1060 OF 2009
JUDGMENT:
The
unsuccessful complainant is the appellant herein who maintained the appeal
against the acquittal judgment of the trail Court dated 21.01.2009 in
C.C.No.383 of 2003 on the file of the learned II Additional Judicial Magistrate
of First Class, Tirupati, that was maintained for dishonor of Ex.P.1 cheque bearing
No.046307, dated 20.01.2003 said to have been issued by the accused in favour
of the complainant for Rs.1,00,000/- and when the same was presented returned
dishonoured proved by Ex.P.2 cheque return memo, dated 22.01.2003 and the same
is intimated to the accused by issuing Ex.P.3 legal notice, dated 01.02.2003
within statutory period of 30 days after dishonor of cheque and the same was
though received by the accused by Ex.P.4 acknowledgment, dated 04.02.2003, failed
to pay within the statutory time from which cause of action accrued and the
complainant is constrained to file a complaint against the accused for the offence
punishable under Section 138 of the Negotiable Instruments Act(for short,’ the
N.I.Act.’).
2. The accused appeared before the
Court pursuant to the summons and after supply of case copies under Section 207
of the Code of Criminal Procedure, when questioned on substance of accusation
under Section 251 of the Code of Criminal Procedure (for brevity, “The
Cr.P.C.”) he pleaded not guilty.
3. On behalf of the complainant during the course of trial besides himself
as PW1 cause examined PW2 V.Sreehari Reddy, and got marked Exs.P.1 to P.4 supra
and Ex.P.5 Statement of account bearing A/c.1342 of SBI, Tirupati, and on
defence side none examined and no documentary evidence is got marked.
4. After closure of evidence, the accused was examined under Section 313 of
the Cr.P.C. who denied the incriminating material put to him and stated no
defence.
5. Appreciating the evidence, both oral and documentary, the Court below ultimately
held that the complainant could not prove guilt of the accused for the offence
under Section 138 of the N.I.Act and thereby not found guilty and acquitted
him.
6. It is attacking the said findings, the present appeal is filed with
the contentions in the grounds that the acquittal judgment of trial Magistrate
is contrary to law, that the trial Magistrate erred in holding that the
complainant failed to discharge his initial burden that the accused has issued
Ex.P.1 cheque towards discharge of existing legal enforceable debt in spite of
the legal position as contemplated under Section 139 of the N.I.Act, that the
trial Court grossly erred in not testing the instant case properly in the light
of the statutory presumption, that is conferred in favour of the complainant
under Section 118 of the N.I.Act, that the trial Court ought to have seen that
the accused consciously accepting his liability, has given the cheque to the
complainant, with full knowledge cannot reprobate from his act and contend that
there is no legal enforceability, thereby sought for setting aside the
acquittal judgment and allow the appeal finding the accused guilty. Learned
counsel for the appellant reiterated the same during the course of hearing.
7. The learned counsel appearing for the respondent-accused on the other
hand, represents that he never issued so called Ex.P.1 cheque in
favour of the complainant and never borrowed any amount, that there was no any
debt or other liability between them and even never borrowed any amount from
the complainant’s sister-in-law P.Sankaramma and he never obligated to issue
the cheque in favour of the complainant and thereof there are no merits in the appeal, hence to dismiss.
8.
Perused the material on record. The parties are hereinafter referred to as they
are arrayed in trial Court for the sake of convenience.
9. Now the points that arise for consideration are:
(1). Whether the accused did not issue the cheque in favour of the
complainant for discharge of legally enforceable debt to make liable for the
offence under Section 138 of the NI Act and if so, the trial court’s acquittal
judgment is unsustainable?
(2). To what result?
Point No.1:
10-(A). Before advert to the merits of the matter, it is beneficial to
quote; the provisions incorporated in Chapter XVII of the N.I. Act make a civil
transaction to be an offence by fiction of law and with certain (rebuttable)
presumptions that shall be drawn. Sections.138 to 142 are incorporated in
the N.I.Act,1881 as Chapter XVII by the Banking Public Financial Institutions
and Negotiable instruments Laws (Amendment) Act,1981 (66 of 1988) which came
into force w.e.f.01-04-1989 and the N.I.Act was further amended by
Act,2002 (55 of 2002) which came into force w.e.f.06-02-2003
incorporating new sections 143 to 147 in this Chapter XVII and further some of
the existing provisions not only of the Chapter XVII but also of other Chapters
amended to overcome the defects and drawbacks in dealing with the matters
relating to dishonour of cheques.
10-(B). The object and intention of these penal provisions of the Chapter
XVII (Sections 138 – 147), in particular, Sections 138 & 139 (besides civil
remedy), are to prevent issuing of cheques in playful manner or
with dishonest intention or with no mind to honour or without sufficient funds
in the account maintained by the drawer in Bank and induce the Payee/Holder or Holder
in due course to act upon it. The remedy available in a Civil Court is a long drawn matter and an
unscrupulous drawer normally takes various pleas to defeat the genuine claim of
the payee. Since a cheque that is dishonoured may cause uncountable loss,
injury or inconvenience to the Payee due to the latter’s unexpected
disappointment, these provisions incorporated are in order to provide a speedy
remedy to avoid inconvenience and injury to the Payee and further to encourage
the culture of use of cheques and enhancing credibility of the instruments as a
trustworthy substitute for cash payment and to inculcate faith in the efficacy
of Banking operations - GOA PLAST (PVT.) LTD. v. CHICO URSULA D’SOUZA[1].
10-(C). To fulfill the objective, the Legislature while amending the Act
has made the following procedure:
In the opening words of the Section 138 it is stated: "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 from out of that account for the
discharge, in whole or in part, of any debt or other liability, is
returned by the bank unpaid,---------, such person shall be deemed to
have committed an offence and shall, without prejudice to any other
provision of this Act (See Sec.143), be punished ----. Provided, nothing
contained in this section shall apply unless,-(a), (b); and (c)
Explanation---(supra)."
"(i) Under Section 138 a deeming offence is created by fiction of
law.
(ii) An explanation is provided to Section 138 to define the
words "debt or other liability" to mean a legally enforceable debt
or other liability."
(iii) In Section 139, a presumption is ingrained that the holder of the
cheque received it in discharge of debt or other liability.
(iv) Disallowing a defence in Section 140 that drawer has no reason to
believe that cheque would be dishonoured.
(v) As per Section 146(new section) the production of the Bank’s
slip or Memo with official mark denoting that the cheque has been
dishonoured is prima facie evidence for the Court to presume the fact of
dishonour of such cheque unless such fact is disproved by the accused.
10-(D). Further the provision for issuing notice within thirty days under
section 138 after dishonour is to afford an opportunity to the Drawer of the cheque
to rectify his mistakes or negligence or in action and to pay the amount within
fifteen days of receipt of notice, failing which the drawer is liable for
prosecution and penal consequences.
10-(E). Reasonability of cause for non-payment is not at all a deciding
factor. Mensrea is irrelevant. It is a strict liability incorporated in public
interest.
10-(F). Availability of alternative remedy is no bar to the
prosecution
10-(G). In the words-where any cheque, the word any suggests that
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 liability cannot be avoided in the event of the
cheque stands returned by the Banker unpaid.
11-A. The Apex Court in NARAYAN MENON v. STATE OF
KERALA[2] held that once the complainant shown
that the cheque was drawn by the accused on the account maintained by him with
a banker for payment of any amount in favour of the complainant from out of
that account for its discharge and the same when presented returned by the Bank
unpaid for insufficiency of funds or exceeds arrangement, such person shall be
deemed to have been committed an offence under Section 138 of N.I. Act. What Section 139 of the Act speaks of the
presumption against the accused to rebut is the holder of a cheque received the
cheque of the nature referred in Section 138 of the Act for discharge of debt. For rebutting such
presumption, what is needed is to raise a probable defence. Even for the said
purpose, the evidence adduced on behalf of the complainant could be relied
upon. Accused need not enter into the witness box and examine other witnesses
in support of his defence. Accused need not disprove the prosecution case in
its entirety. Therefore, the rebuttal does not have to be conclusively
established but such evidence must be adduced before the court in support of
the defence that the court must either believe the defence to exist or consider
its existence to be reasonably probable, the standard of reasonability being
that of the "prudent man".
11-B.
The presumption that further applied among clauses (a) to (g) of Section 118 of
N.I. Act also, like the presumption under Section 139 of the Act, as per
Section 4 of the Evidence Act, is a rebuttable presumption for which the burden
is on the accused, however, to rebut the presumption if a case is made out by
accused either by pointing out from the case of the complainant including very
documents and cross-examination or by examining any person and need not be
always by coming to witness box vide decision in KUMAR EXPORTS PVT. LTD. V.
SHARMA CARPETS[3].
11-C.
Further, as per the expression of the Apex Court in RANGAPPA vs. MOHAN[4]
(3-Judges Bench) paras-9 to 15 referring to Goa Plast’s case (supra), KRISHNA
JANARDHAN BHAT v. DATTATRAYA G. HEGDE[5]
by distinguishing at para-14 saying the observation in KRISHNA JANARDHAN BHAT
(supra) of the presumption mandated by Section 139 does not indeed include the
existence of a legally enforceable debt or liability is not correct, though in
other respects correctness of the decision does not in any way cause doubted;
by also referring to HITEN P. DALAL v. BRATINDRANATH BANERJEE[6]
holding at paras-22 and 23 therein of the obligation on the part of the Court
to raise the presumption under 138, 139 and 118 of the N.I. Act, in every case
where the factual basis for raising the presumption has been established since
introduces an exception to the general rule as to the burden of proof in
criminal cases and shifts the onus on to the accused, as a presumption of law
distinguished from a presumption of fact as part of rules of evidence and no
way in conflict with presumption of innocence and the proof by prosecution
against the accused beyond reasonable doubt, but for saying to rebut the
accused can discharge the burden showing reasonable probability of
non-existence of the presumption of fact and to that proposition, the earlier
expression in BHARAT BARREL & DRUM MANUFACTURING COMPANY v. AMIN CHAND
PYARELAL[7]
para-12 showing the burden on the accused is to bring on record by
preponderance of probability either direct evidence or by referring to
circumstances upon which he relies, rather than bare denial of the passing of
the consideration; apparently that does not appear to be of any defence, to get
the benefit in discharge of the onus against, also held referring the M.M.T.C.
LTD. AND ANOTHER v. MEDCHL CHEMICALS & PHARMA (P) LTD[8]
that where the accused able to show justification of stop payment letter even
from funds are there, but no existence of debt or liability at the time of
presentation of cheque for encashment to say no offence under Section 138 of
the N.I. Act made out in discharge of
the burden. It was concluded referring to the above, including of MALLAVARAPU
KASIVISWESWARA RAO v. THADIKONDA RAMULU FIRM & ORS[9]
paras-14 and 15 that the initial presumption lays in favour of the complainant
and Section 139 is an example of a reverse onus clause, which has been included
in furtherance of the legitimate objection of improving the credibility of the
negotiable instruments. While Section 138 specifies a strong criminal remedy in
relation to the dishonour of cheques, the rebuttable presumption under Section
139 is a device to prevent undue delay in the course of litigation. Bouncing of
a cheque is largely in the nature of a civil wrong whose impact is usually
confined to the private parties involved in commercial transactions and the
test of proportionality should guide the construction and interpretation of
reverse onus clause and the accused cannot be expected to discharge an unduly
high standard or proof and in the absence of compelling justifications, reverse
onus clauses usually impose an evidentiary burden and not a persuasive burden
to discharge by preponderance of probabilities by raising creation of doubt
about the existence of a legally enforceable debt or liability to fail the
prosecution and for that the accused can rely on the material submitted by the
complainant also in order to raise such a defence and he may not need to adduce
any evidence of his own.
11-D. It
was also observed in para-15 that the accused appear to be aware of the fact
that the cheque was with the complainant, further-more the very fact that the
accused has failed to reply to the statutory notice under Section 138 of the
Act leads to the inference that there was merit in the complainant’s
version. It was also held by this court
way back in Chapala Hanumaiah Vs. Kavuri
Venkateshwarlu[10]
that having received and acknowledged the statutory legal
notice after dishonour of cheque, non-giving of reply to said legal notice,
improbablises the defence version, as any prudent person under the said
circumstances should have, but for no defence to reply.
12. From above legal position, coming to decide on the facts from oral,
circumstantial and documentary evidence, how far it is proved the case of the
complainant and from drawing of presumptions and inferences if any, how far
rebutted by accused concerned:
12-A. From
the above propositions, at the cost of repetition of facts save those that are
already covered, the P.W.1-complainant was cross-examined by the accused saying
he never issued the Ex.P.1 cheque in favour of the complainant and the
signature is also not that of him. Undisputedly, there is no direct
consideration for the cheque issued by the accused in favour of the complainant,
as complainant himself speaks for the amount lent by his sister-in-law
Shankaramma, the accused obligated and issued the cheque for that consideration
which is within the meaning of debt or other liability legally enforceable and
thereby liable. In fact, the evidence of
P.W.2 Branch Manager is not in any way relevant to the core of the lis as to
the Ex.P.1 cheque. No doubt for the Ex.P.3
statutory legal notice issued by the complainant after dishonor of the cheque
demanding for payment of the amount, else to take legal recourse which was even
acknowledged under Ex.P.4 but there was no reply given by the accused as held
by the Apex Court in Rangappa and Chapala Hanumaiah(supra), the non-giving of
reply leads to credibility of the case of the complainant and doubts the
defence set out by the accused. In fact, it is important here to note once the
cheque is shown routed from the account of the accused in favour of the complainant
voluntarily, then the presumption under Section 118 of the N.I.Act, of the
cheque is issued in favour of the complainant for the consideration mentioned
therein is drawn and the burden shifts on to the accused under the reverse onus
clause, equally to draw presumption under Section 139 of the N.I.Act, that the
cheque issued is for a legally enforceable debt or other liability. Importantly,
even said shankaramma was not examined by the complainant to establish that for
the amount allegedly due to her by the accused, the accused obligated to issue
the cheque in favour of the complainant to route that amount as consideration
for the cheque. In the wake of the above facts mere non-giving of reply cannot
be sole factor in the absence of showing the cheque is independently routed
from the account of the accused is given in favour of the complainant to draw
the presumptions and to route the non-giving of reply to strengthen the case of
the complainant, that too, when the trial Court having appreciated the fact
fresh in mind also drawn the adverse inference for non-examination of
Shankaramma and non-letting of any other evidence to say the cheque is
voluntarily issued by the accused in favour of the complainant, for this Court
while sitting in appeal against the double presumptions, there could be nothing
to interfere with the finding of the trial Court in acquitting the accused as
not found guilty. Accordingly, Point No.1 is answered.
Point
No.2:
13. In the
result, appeal is dismissed. Consequently, miscellaneous petitions, if any,
pending in this appeal shall stand closed.
_______________________
Dr. B. SIVA SANKARA RAO, J
Date:
16-12-2014
Vvr
