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Andhra High Court · body

2002 DIGILAW 1463 (AP)

ANIL DAGWALE v. K. RAJU

2002-12-15

G.YETHIRAJULU

body2002
G. YETHIRAJULU, J. ( 1 ) THE appellant-complainant being aggrieved by the judgment of the IV Metropolitan Magistrate Court, hyderabad acquitting the 1st respondent- accused in C. C. No. 617 of 1995 for the offence under Section 138 of the Negotiable instruments Act, 1881 ( the Act for brevity) has preferred this appeal challenging its validity and legality. ( 2 ) ACCORDING to the appellant- complainant, the 1st respondent took hand loans from him from January, 1995 to may 1995 to a tune of Rs. 75,000/- for the purpose of development of his business. On 1-6-1995 the 1st respondent in discharge of the above said oral debt issued three cheques dated 1-6-1995, 5-6-1995 and 8-6-1995 (Exs. P. 1 to P. 3) for Rs. 25,000/- each. The appellant presented those cheques to the Bank on 13-7-1995, but they were dishonoured by the bank on 14-7-1995 and a Cheque Return Memo was sent to him stating that the 1st respondent-accused closed his account. On 26-7-1995 the appellant issued a legal notice to the 1st respondent-accused calling upon him to pay the amount covered by the dishonoured cheques. The respondent-accused having received the notice on 31-7-1995 sent a reply denying the issuance of the cheques and failed to repay the amount. Hence the appellant approached the IV Metropolitan magistrate Court, Hyderabad by filing a complaint. ( 3 ) THE Trial Court took cognizance of the complaint under Section 138 of the Act, secured the presence of the accused, framed a charge under Section 138 and conducted the trial. ( 4 ) THE appellant-complainant in order to prove his case examined P. Ws. 1 to 3 and marked Exs. P. 1 to P. 10. The accused in his Section 313 Cr. P. C. examination denied the incriminating material placed by the complainant and reported no defence evidence, either oral or documentary. ( 5 ) THE trial Court after considering the oral and documentary evidence adduced by the complainant came to the conclusion that in view of Section 139 of the Act, unless the drawer of the cheque proves the contrary, it is to be presumed that the cheques are issued in discharge of the legally enforceable liability as contemplated under Section 138 of the Act. The Trial court further observed that the prosecution evidence established that on presentation of exs. The Trial court further observed that the prosecution evidence established that on presentation of exs. P. 1 to P. 3 - cheques, they were dishonoured by the bank on the ground that the account run by the accused was closed and the accused failed to pay the amount covered by the dishonoured cheques, despite a legal notice. The Trial Court, however, found the accused not guilty under section 138 of the Act by following the judgments of the Madras High Court in mubarak Nishan v. R. N. Subratnanian, 1996 (2) ALT (Crl) 551 (Mad), Andhra Pradesh high Court in Upohar International Pvt. Ltd. and another v. State of A. P. and another, 1997 (1) ALD (Crl.) 30 and the Supreme court in Electronics Trade and Technology development Corporation Ltd, Secunderabad v. Indian Technologists and Engineers (Electronics) (P) Ltd. and another, (1996) 2 scc 739 and K. K. Sidharthan v. T. P. Praveena Chandran and another, 1997 (1)Crl. LJ 108 (SC ). ( 6 ) THE point for consideration is whether the complainant proved the guilt of the accused beyond reasonable doubt? ( 7 ) IN Mubarak Nishan (supra) the madras High Court held thus: despite notice, if drawee presents the cheques and get it dishonoured, there is no offence and Section 138 is not attracted ( 8 ) IN Upohar International Pvt. , Ltd case (supra) this High Court observed thus: if the notice is issued to the payee not to present the cheque for encashment, but the cheque is presented and returned by the bank on the instructions of the drawer, section 138 does not get attracted. Whether a notice issued to the payee before presentation of the cheque or not is to be decided on the evidence adduced in the courts of trial. ( 9 ) IN Indian Technologists and engineers (Electronics) (P) Ltd. , case (supra) the Supreme Court held thus: if a drawer of the cheque, before presentation of the cheque issues notice to the payee not to present the same for encashment, and he still presents it, then Section 138 is not attracted, if the cheque is returned by the bank. ( 10 ) IN Praveena Chandran case (supra) the Supreme Court held thus: if after the cheque is issued to the payee or to the holder in due course and before it is presented for encashment, notice is issued to him not to present the same and yet the payee or holder in due course presents the cheque to Bank and when it is returned on instruction, Section 138 of Negotiable instruments Act does not get attracted. ( 11 ) FOLLOWING the above judgments of the High Courts of Madras and Andhra pradesh and of the Supreme Court, the Trial court found the accused not guilty for the offence under Section 138 of the Act. ( 12 ) THOUGH a notice was served on the 1st respondent under Section 138 of the negotiable Instruments Act, 1881, he did not prefer to make appearance or to engage the Counsel to represent his case before this court. ( 13 ) DURING the course of arguments, the learned Counsel for the appellant has brought to the notice of this Court ex. P. 9-letter dated 13-6-1995 addressed by the 1st respondent to the appellant herein through Registered Post with Acknowledgment due wherein it is mentioned that the 1st respondent closed the account on 8-6-1995 due to unavoidable circumstances and therefore requested the appellant not to present the cheques issued to him for encashment. In Ex. P. 9 the 1st respondent further mentioned that he will issue cheques soon after the opening of the new account. ( 14 ) THE 1st respondent did not raise any objection when the appellant marked the above letter during the course of his examination by the Trial Court as p. W. 1. On the other hand, the 1 st respondent relied on the said letter to get acquittal from the Trial Court in pursuance of the legal position as on the date of the judgment. The contents of Ex. P. 9 are indicating that the 1st respondent conceded his liability to pay the amount. He therefore undertook to issue new cheques after the opening of new account. Had there not been any liability for the 1st respondent to pay the amount, he would not have issued exs. P. 1 to P. 3 to the appellant towards discharge of the oral debt due to him. The Trial Court, while holding that the cheques (Exs. He therefore undertook to issue new cheques after the opening of new account. Had there not been any liability for the 1st respondent to pay the amount, he would not have issued exs. P. 1 to P. 3 to the appellant towards discharge of the oral debt due to him. The Trial Court, while holding that the cheques (Exs. P. 1 to P. 3) were dishonoured on the ground that the account was closed, acquitted the 1st respondent on the basis of the legal position as on the date of the judgment. ( 15 ) DURING the course of arguments, the learned Counsel for the appellant brought to the notice of this Court a three Judge Bench judgment of the Supreme court in Modi Cements Ltd. v. Shri Kuchil kumar Nandi, 1998 (1) ALD (Crl.) 505 (SC), wherein the Supreme Court held as follows: 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 by the drawee or the holder of a cheque in due course. The object of Chapter XVII, which is instituted as "of penahics in case of dishonour of certain cheques for insufficiency of funds in the Accounts" and contains Sections 138 to 142, is to promote the efficacy of banking operations and to ensure credibility in transacting business through cheques. It is for this reason, the observations of this court in Electronics Trade and Technology development Corporation Ltd. , JT 1996 (1) sc 843, in paragraph 6 to the effect "suppose after the cheque is issued to the payee or to the holder in due course and before it is presented for encashment, notice is issued to him not to present the same for encashment and yet the payee or holder in due course presents the cheque to the Bank for payment and when it is returned on instruments, Section 138 does not get attracted" does not fit in with the object and purpose for which the above chapter has been brought on the Statute book. (Para 16) ( 16 ) IN the light of the change in legal position and in view of the specific finding of the Supreme Court that the drawer of a cheque issued in respect of a subsisting liability cannot get rid of the penal consequences for the dishonour of cheque, by simply issuing instructions of stop payment to the Bank or a notice to the drawee not to present the cheque, I am inclined to hold that the 1st respondent is liable for proseeution under Section 138 of the Act. Accordingly, L find him guilty for the said offence. ( 17 ) IN the result, the appeal is allowed by setting aside the judgment of the Trial court dated 28-3-1997 in C. C. No. 617 of 1995. The 1st respondent-accused is convicted for the offence under Section 138 of the Act. He is sentenced to pay a fine of rs. 1,05,000/- (Rupees one lakh and five thousand only ). In default, to undergo simple imprisonment (SI) for a period of one (1) year. ( 18 ) OUT of the fine amount, a sum of rs. 1,00,000/- (Rupees one lakh only) shall be paid to the appellant-complainant towards compensation.