THE HONOURABLE Dr. JUSTICE B.SIVA SANKARA RAO
CRIMINAL APPEAL No.291 of 2008
JUDGMENT:
The unsuccessful complainant by
name Ramisetty Ravi in C.C.No.560 of 2006 a private complaint case against the accused Chadalavada Sreenivasa Rao, for an
offence under Section 138 of the Negotiable
Instruments Act (for brevity 'the Act'), preferred the appeal impugning the
acquittal judgment of the learned IV Additional Munsif Magistrate, Guntur,
dated 11.01.2008. The facts of the case
in brief are that as per the complaint, the accused borrowed Rs.3,00,000/- on
05.09.2004 and executed Ex.P.1 promissory note on even date to repay the same
with interest at 24% p.a. on demand and the case of the complainant further is
accused also induced him to enter into contract for sale by receiving
Rs.2,66,000/- advance, that the accused again issued cheque bearing
No.149576,dated 28.04.2006 for Rs.4,00,000/- drawn on A.P.Mahesh Cooperative
Urban Bank Limited, Lalapet, for part payment of the promissory debt covered by
Ex.P.2 cheque and when the same was presented returned dishonoured under Ex.P.3
dated 29.04.2006 and from that the complainant cause issued Ex.P.4 legal
notice, dated 05.05.2006, the accused managed to return unclaimed with no reply
and with no payment and that from the said cause of action accrued to maintain
the complaint that was taken cognizance and the accused when summoned and
questioned after supply of copies, pleaded not guilty and there was therefrom
the accused was put to trial and in the
course of trial, the complainant examined himself as P.W.1 and cause marked Exs.P.1
to P.8 which including Exs.P.1 to P.5 referred supra and Exs.P.6 to P.8 are the
First Information Report in Cr.No.217 of 2007 of Lalapet, certified copy of
remand report in Cr.No.217 of 2007 and certified copy of mediator’s report
therein. The accused was examined under Section 313 of Cr.P.C. from the
evidence of complainant he denied truth of the incriminating material, examined
as D.W.1 and cause examined one Sri K.Suresh Babu as D.W.2 and got marked Exs.
D.1 to D.4 Photostat copy of agreement of sale dated 22.01.2005, Certified copy
of G.O.Ms.No.dated 05.08.2005, Ex.D.3 document dated 09.01.2006 for
cancellation of agreement of sale and Legal notice dated 02.01.2008 issued by
the complainant to the accused and it is from the said evidence after hearing
both sides, the trial Court by the impugned judgment found the accused not
guilty and acquitted him.
2. The undisputed facts of the case
are that the accused executed Ex.P.2-promissory note dated 25.06.2005 for
Rs.2,00,000/- and in part discharge or discharge of the same, he issued
Ex.P.1-cheque bearing No.650619, dated 03.11.2007 for Rs.2,00,000/-, that when
said cheque was presented for encashment by the complainant, the same was
returned, covered by Ex.P.3-memo of return for dishonor dated 06.11.2007, that
the complainant issued Ex.P.4-legal
notice dated 15.11.2007, that was served on the accused covered by
Ex.P.5-postal acknowledgment card, leave about Ex.P.6-certificate of posting,
with no reply and from non-payment within 15 days after service of notice under
Section 138(b) of the Act from the accrual of cause of action, within one month
under Section 142(b) of the Act, the complainant filed a complaint against the
accused. 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(for
brevity, “The Cr.P.C.”) when questioned on substance of accusation under
Section 251 of Cr.P.C., he pleaded not guilty.
3. On behalf of the complainant during the course of trial, he was examined
as PW1 and got marked Exs.P.1 to P.6 supra and on behalf of the defence, the
accused examined himself as D.W.1, cause examined two more witnesses as D.Ws.2
and 3 and got marked Ex.D.1 receipt-cum-declaration and Ex.D.2 legal notice,
dated 12.05.2008.
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.
6. It
is attacking the said findings, the present appeal is filed with the
contentions in the grounds that the
acquittal judgment of trial Court is
contrary to law, that the trial Court failed to see that the accused having
admitted liability and having failed to prove his case of repayment of amount
is liable to be punished for an offence punishable under Section 138 of the
N.I.Act, that the trial Court failed to see that the accused did not issue any
reply to any of the mandatory legal notices issued on behalf of the complainant
under the N.I.Act, that the trial Court failed to note that while upholding
that the cheque was issued in discharge of legal liability and acquitting the
accused by dismissing the complaint for an offence punishable under Section 138
of the N.I.Act, any person who issues cheque, can easily escape from the
clutches of law with such an arrangement, that the trial Court failed to see
that as the subsequent arrangement was not fructified, therefore the accused is
liable to be punished, that while holding that the entire evidence adduced on
behalf of the accused is false one, the Court below ought to have convicted the
accused, that the trial Court failed to see that subsequent receipt dated
17.11.2007 is at the instance of the accused and is a result of fraud played by
the accused with a view to avoid payment and to cheat the complainant, that the
trial Court while upholding that the cheque was issued in discharge of legal
liability, that the Court below failed to see that even if the entire amount is
paid, the accused could not be absolved, that presuming that the complainant
suppressed the fact of receiving one lakh rupees subsequent to issuance of the
legal notice, the Court below ought to have seen that the accused is still has
to pay an amount of rupees one lakh under the said cheque(Ex.P.1) and the same
can be taken into consideration at the time of awarding compensation to the
complainant, that the Court, that the trial Court failed to see that the
preponderances and probabilities can also be drawn against the accused, as he
is not fair to the Court and tried to defend his case with contradictory
statements and with the help of planted witnesses, 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 1st respondent-accused,
on the other hand, submits that for this Court while sitting in appeal there is
nothing to interfere with the judgment of the trial Court, 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, if so with what observations?
(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
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:
From the above, at the cost of
repetition of the facts already referred supra to the relevancy, the material
document is Ex.D.1 receipt and declaration dated Nil on 50 rupees stamped paper
dated 17.11.2007 undisputedly executed between the complainant and the accused
whereunder both of them admitted that accused G.Yadagiri issued Ex.P.1 cheque
bearing No.650619 dated 03.11.2007 in favour of the complainant M.Jayaramulu.
In lieu of the above balance amount of Rs.1,00,000/- two cheques bearing
Nos.318594, dated 05.12.2007 and 318593 dated 05.12.2008 for Rs.50,000/- each were
issued by the accused in favour of the complainant towards full and final
settlement. The bond paper (Ex.D.1) and
promissory note(Ex.P.2) and the cheque bearing No.650619 dated 03.11.2007
(Ex.P.1) will be returned to the accused after clearance of the above two
cheques. The Ex.P.3 is the cheque
returned memo dated 06.11.2007, Ex.P.4 is the statutory notice issued by the
complainant to the accused which was dated 15.11.2007 intimating dishonour of
the cheque with a demand to pay. Ex.P.5
is the postal acknowledgment shows it was received by the accused having signed
and put the date 17.11.2007. The P.W.1 in his cross-examination admitted the
above facts stating that after Ex.P.4 notice served on accused under Ex.P.5,
discussions went on between them and Ex.D.1 receipt–cum-declaration was
executed between them whereunder, he acknowledged receipt of Rs.1,00,000/- and
also two cheques for Rs.50,000/- each and mentioned in Ex.D.1 that the
pronote(Ex.P.2) cheque(Ex.P.1) and receipt will be returned to accused after
encashment of the two cheques. He also
admitted that he got issued another legal notice to accused dated 02.05.2008
which is Ex.D.2 whereunder he mentioned that under the two cheques amount of
Rs.1,00,000/- is not paid. He deposed
that the accused received the amount covered by Ex.P.2 pronote of Rs.2,00,000/-
and issued cheque(Ex.P.1) and denied the suggestion that the pronote (Ex.P.2)
and cheque(Ex.P.1) were obtained in blank.
Said suggestion has no tenability as very Ex.D.1 cuts the said defence.
Even the accused as D.W.1 besides two witnesses on his behalf deposed the
same. The date when the settlement
arrived is not specifically mentioned either in the cross-examination of P.W.1
or in the evidence of accused-D.W.1 or the witnesses D.Ws.2 and 3. No doubt it
is the defence of the accused that it was before filing of the complaint and
within no time after he received Ex.D.4 notice under Ex.D.5 acknowledgment
dated 17.11.2007. The complaint was filed in Court on 27.12.2007 which is
within one month after accrual of cause of action after 15 days time from
Ex.P.4 notice admittedly is served on the accused on 17.11.2007 to say cause of
action accrued from 03.12.2007 and the complaint is within one month. It is to
say before filing of the complaint the matter was settled. In fact, the statutory
notice provided under Section 138 of the Act providing 15 days time after
service or deemed service of it, is to enable the accused to pay. Once paid,
there is no accrual of cause of action. Once there is no accrual of cause of
action, there is no survival of the complaint under Section 142 N.I.Act. Here,
when the Ex.D.1 is admittedly executed between the accused and complainant and
it is before filing of the complaint and even to say before accrual of cause of
action and the complaint specifically reads it is the settlement arrived for
full and final settlement having received Rs.1,00,000/- and issued two more
cheques, the trial Court therefrom came to conclusion that the complaint won’t
survive and the accused cannot be found guilty by placed reliance upon the
expression of this Court in same lines in Voruganti Chinna Gopaiah and Etc.,
Vs. Godavari Fertilizers and Chemicals Limited[11].
Having regard to the above even taken
for arguments’ sake, the settlement arrived from no date mentioned as referred
supra even after accrual of cause of action when before filing of the complaint
admittedly, as per the expression of the Apex Court C.C. Alavi
Haji v. Palapetty Muhammed[12]
also once there is payment within 15 days after receipt of suit summons from
any deficiency in complainant’s statutory notice that is sufficient for
non-survival of complaint thereafter.
Here even from that perspective, a perusal of Ex.D.1 shows it is the
receipt-cum-declaration to say acknowledgment comes into force after encashment
of the two cheques was in proof of payment fixed under the two cheques of each
Rs.50,000/- but for to return the Ex.P.1 pronote, Ex.P.2 cheque and Ex.D.1
receipt, the moment the accused paid the said amount of Rs.1,00,000/- covered
by two cheques by mentioning that it was a full and final settlement. Once it is the full and final settlement, the
cause of action however, won’t survive. (But for that any part payment from
accrual of cause of action will not stop cause of action as laid down in R.Gopikuttan Pillai Vs.Sankara Narayan
Nair[13] Even otherwise, the trial Court from the
factual matrix came to just conclusion supported by the reasons and also by the
expression of this Court as merely because another view is also possible, that
is not a ground for this Court while sitting in appeal to interfere against the
acquittal judgment. Accordingly, Point
No.1 is answered.
Point No.2:
13. In the result, the Criminal Appeal is, therefore, dismissed by confirming
the acquittal judgment of the learned IV Additional Munsif Magistrate, Guntur
in C.C.No.560
of 2006, dated 11.01.2008. Consequently, miscellaneous petitions, if any, pending in this appeal shall
stand closed.
_____________________________
Dr. JUSTICE B. SIVA SANKARA RAO
Date:29.12.2014
