THE HONOURABLE Dr. JUSTICE
B.SIVA SANKARA RAO
CRIMINAL APPEAL No.607
of 2010
JUDGMENT:
The appellant-complainant seeks
to assail the judgment of acquittal dated 25.01.2010 passed by the learned XV
Additional Judge-cum-XIX Additional Chief Metropolitan Magistrate, Hyderabad, in
a private complaint case C.C.No.261 of 2009 filed by said complainant against the accused G.Yadagiri, for an
offence under
Section 138 of the Negotiable Instruments Act (for brevity 'the Act').
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[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/- were issued by the accused for Rs.50,000/- each 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 dishonor
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 each Rs.50,000/- 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 not paid of
Rs.1,00,000/- is due to pay. 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 03.02.2007 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 payment for
non-survival of complaint thereafter.
Here even from that perspective, a perusal of Ex.D.1 shows it is not 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 and 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 also supported
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 order of the learned XV Additional Judge-cum-XIX Additional
Chief Metropolitan Magistrate, Hyderabad, in C.C.No.261 of 2009 dated
25.01.2010. Consequently, miscellaneous petitions, if any, pending in this
appeal shall stand closed.
_____________________________
Dr. JUSTICE B. SIVA SANKARA RAO
Date: 23.12.2014
Vvr.
