K. I. George v. Muhammed Master — 1999 DIGILAW 228 (KER)

Judgment :- This is an appeal filed by the complainant in C. C. No. 9 of 1993 on the file of the Judicial Magistrate of the First Class, Sulthan Bathery, from the judgment by which the accused in the above case was acquitted. The allegation against the accused, who is respondent in this appeal, was that he committed the offence punishable under Section 138 of the Negotiable Instruments Act. In the complaint filed by the appellant in the trial Court, the allegation was that the respondent borrowed an amount of Rs. 37,000/- from the appellant on 5-10-1992 agreeing to pay the amount back within one month. Even after the one month, the amount remained unpaid and hence the appellant made a demand to the respondent to pay back the amount. Then the respondent issued a cheque for Rs. 32,000/- with the date 25-11-92 drawn on Nedungadi Bank, Vadakara Branch and agreed to pay the balance amount of Rs. 5,000/- within one week. The statement in the complaint is that the respondent approached the appellant after one week and told him that he was not in a position to pay the balance amount of Rs. 5,000/- in cash and issued another cheque for Rs. 5,000/-. When the two cheque were presented in South Malabar Gramin Bank, Sulthan Bathery for collection of the amount, the cheque were dishonored by stating that payment has been stopped by the respondent. On enquiry made by the appellant he came to know that there was no sufficient amount in the account of the respondent to honor the cheque. Thereafter the appellant issued notice to the respondent informing him of the dishonor of the cheques and also demanding payment of the amount covered by the cheques. 2. In the trial Court, the respondent raised the contention that the two cheques issued by him to the appellant were not supported by consideration. According to him, the allegation by the appellant that the two cheques were issued towards repayment of the amount borrowed from the appellant is not at all correct. What the respondent would say is that there was an agreement that the appellant would supply timber and on the basis of that agreement an amount of Rs. 25,000/- was paid in cash and the two cheques were issued for Rs. 37,000/- towards consideration of the timber that was agreed to be supplied by the appellant. What the respondent would say is that there was an agreement that the appellant would supply timber and on the basis of that agreement an amount of Rs. 25,000/- was paid in cash and the two cheques were issued for Rs. 37,000/- towards consideration of the timber that was agreed to be supplied by the appellant. According to the respondent, the appellant did not supply timber as agreed by him and hence the cheques were not supported by consideration. 3. Evidence was taken in the trail Court. The appellant gave evidence in the trail Court as PW. 1 PW. 2 is the Manager of Vadakara Branch of Nedungadi Bank. Exts. P1 and P2 are the cheques issued by the respondent in favour of the appellant. Exts. P3 and P4 are the memos issued from the Bank stating that Exts. P1 and P2 cheques were dishonored since the payment was stopped by the drawer, the respondent. Ext. P6 is copy of the notice sent by the appellant to the respondent informing the dishonour of the cheques and demanding payment of the amount covered by the cheques. On an appreciation of the evidence adduced, the trial Court came to the conclusion that the respondent is not guilty of the offence punishable under Section 138 of the Negotiable Instruments Act. On the basis of the above finding, the respondent was acquitted under Section 255(1) of the Code of Criminal Procedure. Aggrieved by the above order of acquittal, this appeal is filed by the appellant praying that the order of acquittal may be set aside and the respondent may be convicted of the offence punishable under Section 138 of the Negotiable Instruments Act. 4. The argument advanced by the learned counsel appearing for the appellant is that there is sufficient evidence in this case to prove that the respondent committed the offence punishable under Section 138 of the Negotiable Instruments Act. Admittedly, Exts. P1 and P2 cheques were issued by the respondent. When the respondent was questioned under Section 313 of the Code of Criminal Procedure, he admitted that Exts. P1 and P2 cheques were issued by him. In a statement filed by the accused on 11-4-1994 also he has admitted that he issued Exts. P1 and P2 cheques. Admittedly, Exts. P1 and P2 cheques were issued by the respondent. When the respondent was questioned under Section 313 of the Code of Criminal Procedure, he admitted that Exts. P1 and P2 cheques were issued by him. In a statement filed by the accused on 11-4-1994 also he has admitted that he issued Exts. P1 and P2 cheques. There is a presumption under Section 139 of the Negotiable Instruments Act that unless the contrary is proved the holder of the cheques received the cheque of the nature referred to in Section 138 for the discharge in whole or in part of any debt or other liability. In the light of the above provision in the Negotiable Instruments Act, unless and until it is proved that a cheque is issued in the circumstances mentioned by the respondent, it has to be presumed that the cheque is issued in discharge of any debt or others liability. The presumption available under Section 139 can be rebutted by the respondent by adducing evidence. So the burden of proof is on the respondent and the evidence available on record will have to be appreciated by bearing in mind the above fact regarding burden of proof. 5. PW. 1, the complainant, says in the chief-examination that the respondent borrowed an amount of Rs. 32,000/-. His version is that the cheque was issued in discharge of the above debt. PW. 1 went on to say that the cheque when presented for encashment was dishonoured for the reason that there was no sufficient amount in the account of the respondent. In cross-examination, he would deny the suggestions made regarding the alleged agreement between him and the respondent for supply of timber and issuance of cheque on the basis of that agreement. PW 2 the manager of the Vadakara Branch of the Nedungadi Bank would say that on 11-12-1992 the cheque came to the Bank for collection of the amount covered by the cheque. He would say that on that day there was only an amount of Rs. 1017.85 in the account of the respondent. He would also speak about the letter given by the respondent stopping the payment of the amount covered by the cheque. Ext. P 10 certified copy of the ledger was proved by PW. 2. So this is a case in which it is established by the evidence of PW. 1017.85 in the account of the respondent. He would also speak about the letter given by the respondent stopping the payment of the amount covered by the cheque. Ext. P 10 certified copy of the ledger was proved by PW. 2. So this is a case in which it is established by the evidence of PW. 2 that when the cheque came to the Bank for collection of the amount, there was only an amount of Rs. 1017.85 in the account of the respondent. There is evidence in this case to show that the appellant issued notice to the respondent demanding payment of the amount covered by the cheque and intimating the fact that the cheque was dishonoured. 6. Even though there is evidence in this case to show that at the time when the cheques were dishonoured, there was no sufficient amount in the account of the respondent to honour the cheques, in the memo issued from the Bank it was stated that the cheques were dishonoured for the reason that payment was stopped by the respondent. It is also not disputed that after issuing the cheques the payment of the amount covered by the cheques was stopped by the respondent. In the decision of the Supreme Court in 1998 (1) ALT 582 : (1998 Cri LJ 1397) (SC) Modi Cements Ltd. v. K. K. Nandi, it was held that once the cheque is issued by the drawer a presumption under Section 139 must follow and merely because the drawer issues a notice to the drawee or to the Bank for stoppage of the payment it will not preclude an action under Section 138 of the Act. It is clear from the above decision of the Supreme Court that when drawer of the cheques stops payment by giving intimation to the Bank, action can be initiated under Section 138 of the Negotiable Instruments Act. 7. A reading of the judgment of the trial Court would go to show that the trial Court observed that PW. 1 has failed to prove that Exts. P 1 and P 2 were issued by the accused for consideration. As already stated, it is for the accused to rebut the presumption available under S. 139 of the Negotiable Instruments Act and to establish that the case set up by him regarding the issuance of the cheque is true. 1 has failed to prove that Exts. P 1 and P 2 were issued by the accused for consideration. As already stated, it is for the accused to rebut the presumption available under S. 139 of the Negotiable Instruments Act and to establish that the case set up by him regarding the issuance of the cheque is true. But the trial Court is seen to have taken a wrong approach in appreciation of the evidence on the assumption that it is not the appellant to prove that Exts. P 1 and P 2 cheques are supported by consideration. On the side of the respondent, three documents were produced. Ext. D. 2 is the notice issued by the appellant to the respondent informing dishonor of the cheque and demanding the payment of the amount covered by the cheques. Ext. D 1 is a reply given by the appellant to the respondent to Ext. D 3 notice sent by the respondent to the appellant. Ext. D 3 is copy of the notice sent by the respondent to the appellant stating that since the timber was not supplied by the appellant, the payment of the amount covered by the cheques was stopped by the appellant. Ext. D 3 was sent by the appellant to the respondent on 15-2-1992. There is only that document which is relied on by the respondent to show that even on 15-2-1992 he informed the appellant that payment of the amount covered by the cheques was stopped by him. In that notice, he mentioned about some transactions between the appellant and the respondent regarding the supply of timber and payment of an amount of Rs. 25,000/- in cash and issuance of Exts. P 1 and P 2 cheques. The above evidence will not in any way help the respondent to rebut the presumption available under Section 139 of the Act. 8. The trial Court took the view that the complaint did not contain sufficient allegation which would disclose the commission of the offence punishable under Section 138 of the Negotiable Instrument Act since there was no averment in the complaint that the cheques were dishonored for the reason that there was no sufficient amount in the account of the appellant. 8. The trial Court took the view that the complaint did not contain sufficient allegation which would disclose the commission of the offence punishable under Section 138 of the Negotiable Instrument Act since there was no averment in the complaint that the cheques were dishonored for the reason that there was no sufficient amount in the account of the appellant. The learned counsel appearing for the appellant would point out that in the complaint filed in the trail Court there is specific statement that the respondent issued the cheques on fully knowing that there was no sufficient amount in the account for honoring the cheques. When the appellant gave sworn statement before the Magistrate also he said that the cheques were issued by the respondent on knowing fully well that there was no sufficient amount in the account for honoring the cheques. The version of the complainant when he was examined as PW 1 is also in tune with the statements in the complaint as well as the statement given when the Magistrate recorded the sworn statement. The decision of this Court reported in 1993 (2) KLT 1027 : (1994 Cri LJ 674) is relied on by the trial Court for saying that there will have to be specific averment in the complaint when the cheques were dishonoured for insufficiency of funds. As stated earlier, the cheques were dishonoured for the reason that payment of the cheque; was stopped by the respondent. That being the position, there is no necessity of having an averment in the complaint that the cheques were dishonoured for the reasons that there was no sufficient amount in the account of the respondent. The above position mentioned in the judgment of the trial Court will become applicable only in cases in which the cheque is dishonoured for the reason that there is no sufficient amount in the account of the respondent. Here, reason for the dishonour is that payment was stopped by the respondent. It is also a fact that there was no sufficient amount in the account of the respondent to honour the cheque. What PW 2, the Manager of the Bank would say is also that the cheques were dishonoured for the reason that payment was stopped by the respondent. It is also a fact that there was no sufficient amount in the account of the respondent to honour the cheque. What PW 2, the Manager of the Bank would say is also that the cheques were dishonoured for the reason that payment was stopped by the respondent. Hence there is no necessity to take an averment in the complaint that the cheques were dishonoured for the reason that there was no sufficient amount in the account of the respondent. The finding by the trial Court for the reason that there was no averment in the complaint that the cheques were dishonoured for the insufficiency of funds is not at all correct. 9. The reasons given by the trail Court in the judgment for acquitting the accused are not at all sustainable. The evidence of PW. 1 and PW. 2 would clearly prove that the dishonour of the cheques was due to the fact that payment was stopped by the respondent. As held by the Supreme Court in 1998 (1) KLT 582 : (1998 Cri LJ 1397) (SC) which has already been referred to, once the cheque is issued by the drawer there would be a presumption under Section 139 of the Negotiable Instrument Act and the stoppage of payment will not preclude an action under Section 138 of the Act. So, this is a case in which there is sufficient evidence to come to the conclusion that the respondent committed the offence punishable under Section 138 of the Negotiable Instruments Act. Hence the order of acquittal by the learned Magistrate has to be reversed and the accused has to be convicted for the offence punishable under Section 138 of the Negotiable Instruments Act. In the result, this appeal is allowed, setting aside the order of acquittal by the trial Court. The respondent is found guilty of the offence punishable under Section 138 of the Negotiable Instruments Act and he is convicted thereunder. The respondent is sentenced under Section 138 of the Act to undergo simple imprisonment for a term of three months. Appeal allowed.