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2007 DIGILAW 1201 (AP)

Pittala Subramanyam v. State of A. P.

2007-12-07

B.SESHASAYANA REDDY

body2007
ORDER :- This criminal revision case is directed against the judgment dated 29th June 2007 passed in Criminal Appeal No.24 of 2006 on the file of IV Additional Sessions Judge, Nellore, whereby and where under the learned Additional Sessions Judge confirmed the conviction and sentence of fine of accused-Pittala Subramanyam for the offence under Section 138 of N.I. Act while modifying the sentence of imprisonment to compensation of Rs.1,00,000/- passed in C.C. No.195 of 2004 on the file of Judicial Magistrate of First Class, Sullurpet. 2. The background facts in a nutshell leading to filing of this revision by the accused are: 2nd respondent-Po Ramachandra Reddy is the complainant and the petitioner is the accused in C.c. No.195 of 2004. A complaint came to be filed before the Judicial Magistrate of First Class, Sullurpet alleging inter alia that the accused borrowed a sum of Rs.1,00,000/- as hand loan from the complainant on 31.3.2004 and issued EX.P.1 cheque dated 3 1.3.2004 drawn on State Bank of India, Sriharikota Branch towards discharge of the hand loan. He presented the cheque for collection and the same came to be dishonoured under EX.P.2 memo dated 12.6.2004. He got issued a notice as provided under Section 138(b) of N.I. Act calling upon the accused to make good the amount covered under the cheque in question. Ex.P.3 is the office copy of lawyers' notice dated 14.6.2004 and Ex.P.4 is the postal acknowledgment. The accused neither issued a reply nor paid the money covered under the cheq4e in question. Hence, the complainant filed a complaint before the Judicial Magistrate of First Class, Sullurpet to punish the accused for the offence under Section 138 of N.I. Act. The learned Magistrate took the complaint on file as C.C. No.195 of 2004 and issued process. In response to the summons, the accused entered appearance. On examination of the accused under Section 251 of Cr.P.C putting the substance of accusations levelled against him, he pleaded not guilty and claimed to be tried. To substantiate the accusations levelled against the accused, the complainant got himself examined as P.W.1 and examined the Branch Manager of State Bank of India, Sriharikota as P. W.2 and marked 4 documents as Exs.P.1 to PA. To substantiate the accusations levelled against the accused, the complainant got himself examined as P.W.1 and examined the Branch Manager of State Bank of India, Sriharikota as P. W.2 and marked 4 documents as Exs.P.1 to PA. The plea of the accused is that the complainant approached him to lend money expecting of his contract bills getting realized and he issued the cheque in question to accommodate the complainant and the cheque as security for the amount to be advanced. In a way he pleaded that there was no liability more so legally enforceable as on the date of issuance of EX.P.1 cheque. To probabalise his defence, he got himself examined as P.W.1 and marked one document as EX.D1. The learned Magistrate on considering the evidence brought on record and on hearing Counsel for the parties, came to the conclusion that the accused issued EX.P.1 cheque towards legally enforceable liability and thereby proceeded to record conviction of the accused for the offence under Section 138 of N.I. Act and sentenced him to suffer SI for one year and pay a fine of Rs.5,000/-; in default to suffer SI for six months, by judgment dated 23rd January, 2006. 3. The accused filed Criminal Appeal No.24 of 2006 on the file of IV Additional Sessions Judge, Nellore assailing his conviction and sentence for the offence under Section 138 of N.I. Act. It was contended before the appellate Court that the complainant failed to discharge his initial burden of proving the existing liability of the accused as on the date of Ex.P.1 cheque. The appellate Court formulated the following points for consideration: (i) Whether the prosecution has proved the guilt of the accused beyond reasonable doubt for the offence punishable under Section 138 of N.I. Act and whether the accused is liable to be punished for the offence under the above section of law? (ii) Whether there are any sufficient grounds to set aside the judgmentdated 23.1.2006 in C.C. No.I95 of 2004 on the file of Judicial Magistrate of First Class, Sullurpet? The appellate Court, on re-appreciation of the evidence brought on record and on hearing the Counsel for the parties came to the conclusion that the accused issued EX.P.I cheque towards discharge of legally enforceable liability and therefore the conviction of the accused for the offence under Section 138 of N.I. Act does not warrant interference. The appellate Court, on re-appreciation of the evidence brought on record and on hearing the Counsel for the parties came to the conclusion that the accused issued EX.P.I cheque towards discharge of legally enforceable liability and therefore the conviction of the accused for the offence under Section 138 of N.I. Act does not warrant interference. However, the appellate Court modified the sentence of imprisonment to compensation of Rs.1,00,000/while maintaining fine of Rs.5,000/- imposed by the trial Court, by judgment dated 29th June 2007. Hence, this revision by the petitioner/accused. 4. Notice before admission came to be ordered on 28.8.2007. The 2nd respondent-complainant entered appearance through a Counsel. 5. Heard learned Counsel appearing for the petitioner/accused and learned Counsel appearing for 2nd respondent/complainant. 6. Learned Counsel appearing for the petitioner/accused submits that the cheque in question and another cheque which is the subject-matter in Crl. R.C. No.1186 of 2007 were issued to the complainant as the complainant requested for a hand loan of Rs.3,50,000/- (i.e. one cheque for Rs.1.00 lakh in the name of 2nd respondent/complainant and the other cheque for Rs.2.50 lakhs in the name of Naturu Govinda Reddy). He further submits that the petitioner/accused is able to probablise his defence by examining himself as OW.1 apart from dispelling the basic facts which the complainant need to be proved for drawing presumptions under Sections 118 and 139 of N.I. Act with regard to the existence of legally enforceable debt. He would also submit that the trial Court as well as the appellate Court applied double standards in appreciating the evidence by commenting that the petitioner/accused could not have lent amount under the cheque without taking a promissory note while accepting the oral evidence of the complainant that he lent Rs.l.00akh as had been without any pronote or even a receipt. A further submission has been made by the learned Counsel that if two views are equally possible on the same evidence, the view in favour of the accused is to be accepted and in which case the petitioner/accused is entitled to acquittal for the offence under Section 138 of N.I Act. A further submission has been made by the learned Counsel that if two views are equally possible on the same evidence, the view in favour of the accused is to be accepted and in which case the petitioner/accused is entitled to acquittal for the offence under Section 138 of N.I Act. His last submission is that since fine imposed on the petitioner/ accused for the offence under Section 138 of N.I Act is part and parcel of the sentence, directing the petitioner-accused to pay compensation of Rs.l.00 lakh under Section 357(3) Cr.P.C is not sustainable and the same is liable to be set aside. He took me to the evidence of P.Ws.1and 2 and RW.1 in great detail to convince that 2nd respondent/complainant failed to prove the basic facts to raise presumptions in his favour as provided under Sections .118 and 139 of N.I Act. 7. In support of his submissions reliance has been placed on the decisions of I Supreme Court in Sivasuriyan v.Thangavelu, (2006) 1 SCC (Crl.) 532, MS. Narayana Menon alias Mani v. State of Kerala and another, 2006 (2) ALD (Crl.) 317 (SC) = (2006) 6 SCC 39 and Dilip S. Dahanukar v. Kotak Mahindra Co. Ltd. and another, 2007 (1) ALD (Crl.) 990 (SC) = (2007) 6 SCC 528 . 8. In the case of Sivasuriyan v. Thangavelu (supra), the question fell for consideration before the Supreme Court is whether the Court can direct payment of compensation in exercise of the power under 40 Section 357(3) of Cr.P.C in a case where fine already forms part of the sentence. After referring to Section 357(3) of Cr.P.C, the Supreme Court held as under: "On a plain reading of the aforesaid provision, it is crystal clear that the power can be exercised only when the Court imposes sentence by which fine does not form a part. In the case in hand, a Court having sentenced to imprisonment, as also fine, the power under sub-section (3) of Section 357 could not have been exercised. In that view of the matter, the impugned direction of the High Court directing payment of compensation to the tune of Rs.1.00 lakh by the appellant is set aside." 9. In the case of M.S. Narayana Menon alias Mani v. State of Kerala and another (supra), the Supreme Court held that it was for the accused only to discharge the initial onus of proof. In the case of M.S. Narayana Menon alias Mani v. State of Kerala and another (supra), the Supreme Court held that it was for the accused only to discharge the initial onus of proof. He was not necessarily required to disprove the prosecution case. Whether in the given facts and circumstances of a case, the initial burden has been discharged by the accused would be a question of fact and is a matter relating to appreciation of evidence. 10. In the case of Dilip S. Dahanukar v. Kotak Mahindra Co. Ltd. and another (supra), the Supreme Court pointed out the distinction between sub-sections (1) and (3) of Section 357 of Cr.P.C. Paragraphs 26 to 29 of the judgment need to be noted and they read as under: "26. The distinction between sub-sections (1) and (3) of Section 357 is apparent. Subsection (1) provides for application of an amount of fine while imposing a sentence of which fine forms a part; whereas subsection (3) calls for a situation where a Court imposes a sentence of which fine does not form a part of the sentence. 27. Compensation is awarded towards sufferance of any loss or injury by reason of an act for which an accused person is sentenced. Although it provides for a criminal liability, the amount which has been awarded as compensation is considered to be recourse of the victim in the same manner which may be granted in a civil suit. So far as appellant 2 is concerned, no fine has been imposed on him. He was directed to pay compensation. 28. The question is as to whether the matter would come within the purview of subsection (3) and if so, whether sub-section (2) of Section 357 would automatically be attracted. 29. The purposes for application of fine imposed has been set out in Clauses (a) to (d) of sub-section (I) of Section 357. Clause (b) of sub-section (1) of Section 357 provides for payment of compensation out of the amount of fine. The purpose enumerated in Clause (b) of sub-section (1) of Section 357 is the same as sub-section (3) thereof, the difference being that whereas in a case under sub-section (1) fine imposed forms a part of the sentence, under subsection (3) compensation can be directed to be paid when fine does not form a part of the sentence." 11. The purpose enumerated in Clause (b) of sub-section (1) of Section 357 is the same as sub-section (3) thereof, the difference being that whereas in a case under sub-section (1) fine imposed forms a part of the sentence, under subsection (3) compensation can be directed to be paid when fine does not form a part of the sentence." 11. Learned Counsel appearing for 2nd respondent/complainant submits that the respondent/ complainant is able to prove the basic facts by marking the cheque issued by the petitioner/ accused as Ex.P.1 and copy of the notice sent to the petitioner/ accused calling upon him to make good the amount covered under the cheque in question consequent on its dishonour and therefore the trial Court as well as the lower appellate Court rightly recorded conviction of the petitioner/ accused for the offence under Section 138 of N.!. Act and the same is not liable to be interfered in this revision. He would also contend that the power of the Courts to award compensation is not ancillary to other sentences but it is in addition thereto. This power is intended to do something to reassure the victim that he or she is not forgotten in the criminal justice system. In support of his submissions, reliance has been placed on the decisions of Supreme Court in K.N. Beena v. Muniyappan, 2001 (2) ALD (Crl.) 824 (SC) = AIR 2001 SC 2895 and Hiten P. Dala v. Bratindranath Banerjee, 2001 (2) ALD (Crl.) 234 (SC). 12. In K.N. Beena's case (supra), the Supreme Court held that under Section 118 of N.!. Act, unless 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 the Court has to presume, unless the contrary was proved, that the holder of the cheque received the cheque for discharge, the whole or in part of a debt or liability. Thus in complaints under Section 138 of N.!. Act, the Court has to presume that the cheque had been issued for a debt or liability. This presumption is rebuttable. However, the burden of proving that a cheque had not been issued for a debt or liability is on the accused. 13. Thus in complaints under Section 138 of N.!. Act, the Court has to presume that the cheque had been issued for a debt or liability. This presumption is rebuttable. However, the burden of proving that a cheque had not been issued for a debt or liability is on the accused. 13. In Hiten P. Dala's case (supra), the Supreme Court held that because both Sections 138 and 139 require that the Court "shall presume" the liability of the drawer of the cheques for the amounts for which the cheques are drawn, it is obligatory on the Court to raise this presumption in every case where the factual basis for the raising of the presumption had been established. Paragraphs 21 and 22 of the judgment need to be noted and they read as under: "(21) Because both Sections 138 and 139 require that the Court "shall presume" the liability of the drawer of the cheques for the amounts for which the cheques are drawn, as noted in State of Madras v. A. Vaidyanatha Iyer, AIR 1958 SC 61 , it is obligatory on the Court to raise this presumption in every case where the factual basis for the raising of the presumption had been established "it introduced an exception to the general rule as to the burden of proof in criminal cases and shifts the onus on to the accused" (ibid). Such a presumption is a presumption of law, as distinguished from a presumption of fact which describes provisions by which the Court "may presume" a certain state of affairs. Presumptions are rules of evidence and do not conflict with the presumption of innocence, because by the latter all that is meant is that the prosecution is obliged to prove the case against the accused beyond reasonable doubt. The obligation on the prosecution may be discharged with the help of presumptions of law or fact unless the accused adduces evidence showing the reasonable possibility of the non-existence of the presumed fact. (22) In other words provided the facts required to form the basis of a presumption of law exists, no discretion is left with the Court but to draw the statutory conclusion, but this does not preclude the person against whom the presumption is drawn from rebutting it and proving the contrary. (22) In other words provided the facts required to form the basis of a presumption of law exists, no discretion is left with the Court but to draw the statutory conclusion, but this does not preclude the person against whom the presumption is drawn from rebutting it and proving the contrary. A fact is said to be proved when, "after considering the matters before it the Court either believes it to exist or considers its existence so probable that a prudent man ought, under the circumstances of the particular case, to act upon the supposition that it exists". Section 3: Evidence Act. 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." 140 The offence under Section 138 of the N.I. Act can be completed only with the concatenation of a number of the acts. Following are the acts, which are the components of the said offence. (1) Drawing of the cheque; (2) Presentation of the cheque into the Bank; (3) Returning of the cheque unpaid by the drawee Bank; (4) Giving notice in writing to the drawer of the cheque demanding the payment of the cheque amount; (5) Failure of the drawer to make payment within 15 days (30 days as per amendment) of the receipt of the notice. 15. The Act contains provisions raising presumptions as regards the negotiable instruments under Section 118( a) of the Act as also under Section 139 thereof. The said presumptions are rebutable ones. Whether presumption rebutted or not would depend upon the facts and circumstances of each case. The Supreme Court clearly laid down in catena of decisions that the standard of proof in discharge of the burden in terms of Section 139 of the N.I. Act being the preponderance of a probability, the inference thereof can be drawn not only from the material brought on record but also from the reference to the circumstances upon which the accused relies upon. The burden to rebut the presumptions on the accused is not as high as that of the prosecution. 16. The burden to rebut the presumptions on the accused is not as high as that of the prosecution. 16. The meaning of the expression 'may presume' and 'shall presume' have been explained in Section 4 of the Evidence Act, 1872. From a perusal whereof it would be evident that whenever it is directed that the Courts shall presume a fact it shall regard such fact as proved unless disproved. In terms of the said provision, thus, the expression 'shall presume' cannot be held to be synonymous with conclusive proof. In terms of Section 4 of the Evidence Act whenever it is provided by the Act that the Court shall presume a fact, it shall regard such fact as proved unless and until it is disproved. The words 'proved' and 'disproved' have been defined in Section 3 of the Evidence Act. Applying the definition of proved or disproved to the principle behind Section 118(a) of the Act, the Court shall presume a negotiable instrument to be for consideration unless adverted after consideration of the matter before it, it either believes that the consideration does not exist or considers the non-existence of the consideration so probable that a prudent man under the circumstances does not exist. For rebutting such presumptions, 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. Whether in the given facts and circumstances of a case, the initial burden has been discharged by the accused would be a question of fact. It was a matter relating to appreciation of evidence. There are certain cases in which statutory presumptions arise regarding the guilt of the accused, but the burden even in those cases is upon the prosecution to prove the existence of facts, which have to be present before the presumption can be drawn. Once those facts are shown by the prosecution to exist the Court can raise the statutory presumption and it would, in such event, be for the accused to rebut the presumption. The onus even in such cases upon the accused is not so heavy as is normally upon the prosecution to prove the guilt of the accused. Once those facts are shown by the prosecution to exist the Court can raise the statutory presumption and it would, in such event, be for the accused to rebut the presumption. The onus even in such cases upon the accused is not so heavy as is normally upon the prosecution to prove the guilt of the accused. If some material brought on record consistent with the innocence of the accused, which may reasonably be true, even though it is not possibly proved to be true, the accused would be entitled to acquittal. 17. It is now well known that the object of the provisions of Section 138 of the Act is that for the proper and smooth functioning of business transaction in particular, use of cheques or negotiable instruments would primarily depend upon the integrity a11d honesty of the parties. 18. There used to be some discussion as to whether the cheque issued as security would attract the liability under Section 138 of the N.1. Act, in the event of its dishonour. The said discussion is settled at rest and it has been held by the Supreme Court in 1. CD.S. Limited v. Beena Shabeer, 2002 (2) ALD (Crl.) 481 (SC) = AIR 2002 SC 3014 , that even if the cheque was issued under security, it would attract the liability under Section 138 of the N.1. Act. The Kerala High Court in K.P. Pathikumar v. N Santhamma, 2007 Crl.LJ 2643 (Ker.), has held that once issuance of cheque as security for repayment of loan is admitted, it will not take transaction out of sweep of Section 138 of the N.1. Act. 19. Keeping in view the proposition of law laid down by various High Courts and the Apex Court in respect of the offence under Section 138 of N.1. Act and the nature of evidence, which the accused is required to be adduced to rebut the presumptions available under Section 118(a) of the N.1. Act as also under Section 139 thereof in favour of the accused, I may proceed to discuss the evidence in the case on hand. 20. P.W.1 is the complainant He testifies that he lent Rs.1.00 lakh on 31.3.2004 to the petitioner/accused and thereupon the petitioner/accused issued EX.P.1 cheque towards discharge of his liability. He further testifies that he presented EX.P.I cheque for encashment and the same came to be bounced for want of sufficient funds. 20. P.W.1 is the complainant He testifies that he lent Rs.1.00 lakh on 31.3.2004 to the petitioner/accused and thereupon the petitioner/accused issued EX.P.1 cheque towards discharge of his liability. He further testifies that he presented EX.P.I cheque for encashment and the same came to be bounced for want of sufficient funds. Ex.P.2 is the cheque return memo dated 12.6.2004. Thereafter he got issued a statutory notice as provided under Section 138(b) of N.1. Act, a copy of which has been exhibited as Ex.P.3. It is suggested to P.W.1 in his cross-examination that he approached the accused for financial help and the accused hoping clearance of his bills by the end of March 2004 issued EX.P.I cheque to accommodate him. In a way the petitioner/accused pleads that he issued EX.P.I cheque so as to enable the complainant to withdraw the money out of the funds which he is expected to get by the end of March 2004. 21. Issuance of cheque is not disputed by the petitioner/accused. The question is whether the 'petitioner issued the cheque to the complainant, so as to enable him to withdraw Rs.1.00 lakh out of the funds, which he is going to get in March 2004 or towards the discharge of his hand loan. Though the petitioner;'accused while being examined as DW.1 speaks of the presence of Satyanarayana at the time of his issuing EX.P.1 cheque did not chose to examine him as a witness. Once the complainant is able to prove that the accused issued Ex.P.1 cheque, the presumptions available under Sections 118 and 139 of N.I. Act, are to be drawn in favour of the complainant. One is that the cheque is issued for a valid consideration and the other is that it is issued towards discharge of the debt either in full or in part. It is for the petitioner/accused to rebut the presumptions. Except making suggestions to P.W.1 that he secured the cheque from him so as to enable him to withdraw the amounts, which he is going to realize in March 2004, no evidence whatsoever has been placed on record to dispel the presumptions under Sections 118 and 139 of N.I. Act. 22. The trial Court and the appellate Court considered the evidence brought on record in right perspective and came to the conclusion that the petitioner/accused issued EX.P.1 cheque towards discharge of legally enforceable liability. 22. The trial Court and the appellate Court considered the evidence brought on record in right perspective and came to the conclusion that the petitioner/accused issued EX.P.1 cheque towards discharge of legally enforceable liability. I do not see any valid ground to interfere with the concurrent finding recorded by the trial Court and the appellate Court on the said aspect. 23. Learned Counsel appearing for the petitioner/accused submits that when once fine forms part and parcel of the sentence, Section 357(3) Cr.P.C cannot be invoked. In support of his submission, reliance has been placed on the decision of Sivasuriyan v. Thangavelu (supra). 24. The appellate Court besides imposing_a-fineairected the petitioner/accused to paycompensation of Rs.l.00 lakh. When once fine is part and parcel of the sentence the power under Section 357(3) of Cr.P.C cannot be exercised. Therefore, either fine is to be set aside or compensation. In the facts and circumstances of the case, I am inclined to set aside the fine imposed by the appellate Court while maintaining the direction to the petitioner/accused with regard to payment of compensation of Rs.l.00 lakh. 25. Accordingly, this criminal revision case is disposed of at the admission stage setting aside the sentence of fine of Rs.5,000 for the offence under Section 138 of N.I. Act while maintaining the direction with regard to payment of compensation of Rs.1.00 lakh to the complainant; in default to suffer SI for six months.