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2003 DIGILAW 1607 (AP)

N. K. Jain v. Zahid Ali

2003-12-30

V.ESWARAIAH

body2003
V. ESWARAIAH, J. ( 1 ) THE Complainant is the appellant and the first respondent is the accused. The complaint filed by the complainant in C. C. No. 237 of 1997 on the file of IV metropolitan Magistrate, Hyderabad against the accused for the offence under sec. 138 of Negotiable Instruments Act has been dismissed by the Judgment dated 5-12-1997, holding that the complainant failed to prove the guilt of the accused and the cheque Ex. P1 issued is not to discharge the legally enforceable debt or liability and accordingly, the accused was found not guilty of the said offence. Aggrieved by the said Judgment, the complainant filed this appeal. The parties herein are referred to, as they are arrayed in the Court below. ( 2 ) THE complainant filed the complaint under Sec. 138 of the Negotiable instruments Act (in short Act), stating that the accused is having acquaintance with him since long time and in the month of December, 1996, the accused took hand loan of Rs. 1,00,000/- from him by executing Ex. P2 promissory note, dated 15-12-1996 with one surety and by issuing Ex. P1 post dated cheque dated 27-1-1997. When the said cheque was presented on 27-1-1997 for clearance, the same was dishonoured on the reason of not arranged for . The complainant got issued a statutory notice to the accused on 31-1-1997, calling upon him to pay the amount covered by Ex. P1 cheque within 15 days. The accused acknowledged the receipt of said notice on 4-2-1997, but he did not arrange to pay the amounts covered by Ex. P1 cheque. ( 3 ) AFTER recording the sworn statement of the complainant, the case was taken on file under Sec. 138 of the Negotiable Instruments Act and issued summons. After furnishing all the documents as required under Sec. 207 of the Code of Criminal procedure, the accused was examined under Sec. 251 of the Code of Criminal procedure. The accused denied the allegations of the complaint and pleaded not guilty. ( 4 ) THE complainant is examined as Pw. 1 and Exs. P1 to P6 were marked on his behalf. After closing the evidence on behalf of the complainant, the accused was examined under Sec. 313 of the Code of Criminal Procedure. He denied the evidence against him on record and reported no defence evidence, but marked ex. D1 on his behalf. 1 and Exs. P1 to P6 were marked on his behalf. After closing the evidence on behalf of the complainant, the accused was examined under Sec. 313 of the Code of Criminal Procedure. He denied the evidence against him on record and reported no defence evidence, but marked ex. D1 on his behalf. ( 5 ) AS per the oral evidence of the complainant-Pw. 1, the accused approached him and the complainant agreed to lend the hand loan of Rs. 1,00,000/- to the accused. The complainant deposited a sum of Rs. 93,000/- in his bank account under Ex. P3 entry in the pass book. He obtained the promissory note Ex. P2 on 15-12-1996 (Sunday) and on 16-12-1996 (Monday) he has withdrawn the said amount of Rs. 93,000/- from the bank and gave hand loan of Rs. 1,00,000/- to the accused on 16-12-1996. He also stated that he has taken Ex. P1 post dated cheque dated 27-1-1997 on 16-12-1996 itself, the day on which he has advanced the hand loan of Rs. 1,00,000/ -. ( 6 ) THE accused cross examined Pw. 1 puttingforth his case that the amount of rs. 93,000/- withdrawn by the complainant was not the part and parcel of the so called loan amount said to have been given to him. He denied about his meeting the complainant and executing Exs. P1 and P2 and the blanks in the cheque and promissory note were filled by the complainant. It is his further case that the complainant is one of the directors of Robert Chit Funds and wife of the accused was a subscriber to the chit and a chit was knocked in her favour in September, 1996 and as a security for the said chit transaction, the accused deposited seven blank cheques and one blank promissory note signed by the accused. It is suggested that even after receipt of the cheque and promissory note, the complainant did not pay any amount. It is stated that the cheque referred to in ex. D1 is also issued towards the security and the chit fund company mis-used it to foist a case against the wife of the accused and the complainant fabricated Exs. P1 to P6 and foisted the present case to have wrongful gain. ( 7 ) EX. D1 marked on behalf of the accused is the notice dated 2. 9. D1 is also issued towards the security and the chit fund company mis-used it to foist a case against the wife of the accused and the complainant fabricated Exs. P1 to P6 and foisted the present case to have wrongful gain. ( 7 ) EX. D1 marked on behalf of the accused is the notice dated 2. 9. 1997 given by the chit fund company to the wife of the accused and the cheque number referred in Ex. D1 notice is not the cheque Ex. P1. The only defence of the accused is that he has given a blank promissory note in connection with chit fund transaction of his wife, which has been mis-used. There is no suggestion even in the cross examination of pw. 1 made on behalf of the accused that the signature of the accused in the promissory note and the cheque do not belong to the accused. However, the Court below rightly came to the conclusion that the complainant has established the fact that the accused is liable to pay a sum of rs. 1,00,000/- to the complainant in view of the transaction under Ex. P2 promissory note. ( 8 ) IN so far as the liability of the accused to pay the amount covered under ex. P1 is concerned, the Court below came to the conclusion that Ex. P1 cheque was only obtained as a security for the future payment and that there was no subsisting enforceable liability on the date of issuance of Ex. P1 cheque. The court below relied on the Judgments of this Court in 1997 (2) ALD (Criminal) 172 and another Judgment of this Court in Taher N. Kambati Vs. Vinayaka Enterprises and came to the conclusion that the complainant obtained the signed cheque from the accused with a view to make use of it as a securety to him for realisation of the amount. Accordingly, the trial Court came to the conclusion that Ex. P1 cheque was not issued voluntarily by the accused in discharge of legally enforceable debt as contemplated under Sec. 138 of the Negotiable Instruments Act and thus, the complainant failed to prove the guilt of the accused. Therefore, the accused was not found guilty of the offence punishable under Sec. 138 of the act. ( 9 ) THE un-disputed facts are that the complainant deposited a sum of Rs. Therefore, the accused was not found guilty of the offence punishable under Sec. 138 of the act. ( 9 ) THE un-disputed facts are that the complainant deposited a sum of Rs. 93,000/- in his bank account under entry dated 13-12-1996 of his pass book and withdrew the same on 16-12-1996 and he obtained Ex. P2 promissory note on 15-12-1996 (Sunday ). It is the case of the complainant that he advanced the hand loan of Rs. 1,00,000/- to the accused on 16-12-1996 by obtaining a post dated cheque dated 27-1-1997 on 16-12-1996 itself. When the said cheque was presented, it was returned with an endorsement not arranged for". Thereafter, the complainant issued a legal notice Ex. P5, which was acknowledged by the accused under Ex. P6. Even after the stipulated period, the amount covered by the cheque was not repaid and therefore, he filed the complaint under Sec. 138 of the act. ( 10 ) THE Court below committed a factual mistake, stating that as per the entry under Ex. P3, the amount was withdrawn on 13-12-1996 and the delay was not explained, why it was paid on 16-12-1996. The said observation of the Court below is incorrect and contrary to the evidence available on record. On 13-12-1996 he has deposited the amount in his bank account and withdrew the same on 16-12-1996. The Court below without there being any evidence lead by the accused, based on the cross examination of the complainant, came to the conclusion that the said cheque was issued only as a security and it cannot be construed that the accused had issued the cheque voluntarily in discharge of any debt or legal liability as envisaged under Sec. 138 of the Act. To come to the said conclusion, there is no evidence on record to show that the accused has not voluntarily given the cheque as a security for repayment of the debt due by him. In fact, there is no suggestion in the cross examination or any evidence adduced by the accused. ( 11 ) UNDER Sec. 118 of the Negotiable Instruments Act, "unless the contrary is proved, the presumption as to Negotiable Instruments Act with regard to the consideration, debt, time of acceptance, time of transfer, holder in due course etc. , shall be presumed as correct. ( 11 ) UNDER Sec. 118 of the Negotiable Instruments Act, "unless the contrary is proved, the presumption as to Negotiable Instruments Act with regard to the consideration, debt, time of acceptance, time of transfer, holder in due course etc. , shall be presumed as correct. But however, it always open to prove the legal presumptions contending that the Negotiable Instrument has been obtained from its lawful owner by means of an offence or fraud or has been obtained for unlawful consideration and the burden is on the person who make such allegations". In the instant case on hand, the accused is maintaining a bank account and issued the cheque for the repayment of the hand loan amount to the complainant. In view of the fact that the accused executed not only the promissory note, but also issued Ex. P1 post dated cheque, it cannot be said that the accused is not due to pay the said amount covered by Ex. P1. ( 12 ) UNDER Sec. 139 of the Negotiable Instruments Act, "it shall be presumed, unless the contraqry is proved, that the holder of a cheque received the cheque, of the nature referred to in Sec. 138 for the discharge, in whole or in part or any debt or other liability". Towards the liability of the accused for the repayment of a sum of Rs. 1,00,000/- received by him, he has executed a promissory note and also issued a post dated cheque and the post dated cheque nodoubt is a bill of exchange from 16-12-1996 to 26-1-1997, but on 27-1-1997, the post dated cheque is a Negotiable instrument as held by this Court in the case of ATV Projects India Limited, mumbai and another Vs. Nagarjuna Finance Limited, Hyderabad and another. ( 13 ) FOR the offences under Negotiable Instruments Act, the burden will be on the accused to disprove the presumptions under Secs. 138 and 139 of the Act. Unless the burden is dis-proved by oral and documentary evidence, the statutory presumptions as provided under Secs. 118, 138 and 139 of the Act, the accused cannot escape from the criminal liability. ( 14 ) AS held by the Apex Court in the case of K. R. Indira Vs. Dr. 138 and 139 of the Act. Unless the burden is dis-proved by oral and documentary evidence, the statutory presumptions as provided under Secs. 118, 138 and 139 of the Act, the accused cannot escape from the criminal liability. ( 14 ) AS held by the Apex Court in the case of K. R. Indira Vs. Dr. G. Adinarayana to complete an offence under Sec. 138 of the Act, the components are: " (1) drawing of the cheque by a person on an account maintained by him with a banker, for payment to another person from out of that account for discharge in whole/in part of any debt or liability, (2) presentation of the cheque by the payee or the holder in due course to be bank, (3) returning the cheque unpaid by the drawee bank for want of sufficient funds to the credit of the drawer or any arrangement with the banker to pay the sum covered by the cheque, (4) giving notice in writing to the drawer of the cheque within 15 days of the receipt of information by the payee from the bank regarding the return of the cheque as unpaid demanding payment of the cheque amount, and (5) failure of the drawer to make payment to the payee or the holder in due course of the cheque, of the amount covered by the cheque within 15 days of the receipt of the notice". In the instant case, all the aforesaid components are completed as it is not disputed that the cheque is not issued by the accused. All other components are also fulfilled in the instant case. The Judgment of this court in the case of taher N. Kambati Vs. Vinayaka Enterprises referred in the order is not approved by the Apex Court in the case IC. D. S. Ltd. Vs. Beena Shabeer and held that "a cheque is issued in discharge of any debt or other liability, there cannot be any restriction or embargo in the matter of application of provisions of Sec. 138 of the Act". ( 15 ) THE Appex Court in the case of K. N. Beena Vs. Muniyappan and another held that "under Sec. 118 of Negotiable Instruments Act, unless the contrary was proved, it is to be presumed that the Negotiable Instrument (including a cheque) had been made or drawn for consideration. ( 15 ) THE Appex Court in the case of K. N. Beena Vs. Muniyappan and another held that "under Sec. 118 of Negotiable Instruments Act, unless the contrary was proved, it is to be presumed that the Negotiable Instrument (including a cheque) had been made or drawn for consideration. Under Section 139 of the Act, the Court has to presume, unless the contrary was proved, that the holder of the cheque received the cheque for discharge, in whole or in part, of a debt or liability. Thus, in complaint under Sec. 138, the Court has to presume that the cheque had been issued for a debt or liability. This presumption is rebutable. However, the burden of proving that a cheque had not been issued for a debt or liability is on the accused". ( 16 ) FOR the aforesaid reasons, I have no hesitation to hold that the Court below has erroneously proceeded under the wrong presumptions, without there being any contradicting legal presumptions available against the accused. I am of the view that the complainant as a matter of fact in the instant case though it was not necessary to prove as regards to the consideration source etc. , the complainant has proved that he has withdrawn an amount of Rs. 93,000/- and paid the said amount to the accused. The evidence goes to prove that pursuant to the request made by the accused, the complainant secured the money and credited to the account on 13-12-1996 and thereafter, he obtained a promissory note on 15-12-1996 (Sunday) and on the next day on 16-12-1996, he withdrew the said amount of Rs. 93,000/- from his bank account and paid the said amount to the accused on 16-12-1996 by obtaining a post dated cheque dated 27-1-1997. Therefore, I am of the view that though not necessary under the Act to discharge the initial burden, the accused discharged his initial burden and the legal presumptions available against the accused are not controverted or disproved. Accordingly, the Judgment of the Court below is set aside and the matter is remanded back to the Court below and the learned Judge may proceed further in the matter in the light of the aforesaid observations and pass appropriate orders according to law. ( 17 ) THE Criminal Appeal is accordingly allowed.