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Andhra High Court · body

2007 DIGILAW 880 (AP)

P. Seetarama Raju v. State of Andhra Pradesh

2007-09-11

C.Y.SOMAYAJULU

body2007
JUDGMENT Since these two cases arise out of the same Calendar Case, they are being disposed of by a common judgment. 2. For the sake of convenience, the parties to these proceedings would hereinafter be referred as they are arrayed in the trial court. 3. Criminal Appeal NO.75 of 2005 is filed by the complainant in a complaint filed under Section 138 of the Negotiable Instruments Act (for short 'the Act'). His case is that U. Venkata Raju (A2) and Smt. U. Dhanalakshmi (A.3), are the partners of M/s Venkata Lakshmi Constructions (A.1), and had taken a loan of Rs.2,00,000/- from him on 27.8.2001, and executed a promissory note in his favour on the same day, and took further loans of Rs.3,50,000/- on 11.12.2002 and Rs.3,10,000/- on 18.02.2005 and executed promissory notes for those amounts on those dates and that A2 had on 13.03.2003 drawn four cheques for Rs.50,000/- each in his favour towards part-payment of those debts, and when he presented those cheques for payment, they were returned on 15.7.2003 on the ground of insufficient funds and so he issued a legal notice dated 22.7.2003 to A1 to A3 calling upon them to make the payment of the amounts covered by the dishonoured cheques within fifteen days from the date of receipt of that notice but A1 to A3 who received the said notice on 23.7.2003, failed to send a reply or make the payment. After the trial court took cognizance of the case, A1 to A3 appeared and denied the offence. In support of his case the complainant examined himself as PW1 and marked Exs.P1 to P8. In support of the case of A1 to A3 they examined A2 as DW1 but did not adduce any documentary evidence. 4. The trial Court acquitted A3 as she did not draw the cheque and convicted A1 and A2 and sentenced A1 to pay a fine of Rs.3,000/- and A2, to imprisonment for one year and a fine of Rs.3,000/-. Questioning the acquittal of A-3, the complainant preferred Criminal Appeal No.75 of 2005. Aggrieved by the conviction and sentence imposed against them, A-1 and A-2 preferred an appeal to the IV Additional Metropolitan Sessions Judge, Hyderabad, who confirmed the conviction and sentence imposed against them. Aggrieved thereby, A-1 and A-2 preferred Crl. R.C. No.829 of 2005. 5. Questioning the acquittal of A-3, the complainant preferred Criminal Appeal No.75 of 2005. Aggrieved by the conviction and sentence imposed against them, A-1 and A-2 preferred an appeal to the IV Additional Metropolitan Sessions Judge, Hyderabad, who confirmed the conviction and sentence imposed against them. Aggrieved thereby, A-1 and A-2 preferred Crl. R.C. No.829 of 2005. 5. The point for consideration is whether the prosecution brought home the guilt of A-1 to A-3 beyond all reasonable doubt under Section 138 of the Act? 6. The contention of the learned counsel for the complainant is that inasmuch as A-3 also executed the promissory note she ought not to have been acquitted merely because the dishonoured cheques are not signed by her. 7. The contention of the learned counsel for A-1 to A-3 is that since Section 138 of the Act relates to dishonour of cheques, only the drawer of the dishonoured cheque but no other person, is liable for conviction on its dishonour on the fulfillment of the other conditions laid down by Section 138 of the Act, and the vicarious liability contemplated by Section 141 of the Act arises only if the directors/partners of the cheque dishonoured are responsible to the company/firm for the conduct of its business and as A3 admittedly was not running the business on behalf of the firm the acquittal of A-3 by the trial Court cannot be said to be erroneous. It is his contention that since the complainant failed to mark the promissory notes said to have been executed by the A1, there is no evidence on record to show that there is a legally enforceable debt and as the presumption under Section 139 of the Act in view of the ratio in G.B.LINGAM v. VITTA MURALI KRISHNA MURTHY AND ANOTHER, 1997 (1) ALD (Crl.) 940 (AP) and MUTYALA VEERRAJU v. C.N. REDDI, 1997 (1) ALD (Crl.) 790 (AP), arises only when the complainant discharges his initial burden by establishing that there is a legally enforceable debt, and since there is no such evidence in this case, both the courts below were in error in drawing the presumption under Section 139 of the Act in favour of the complainant for convicting A-1 and A-2, and in any event, as the complainant instituted a civil suit for recovery of the amounts covered by the promissory notes, he cannot initiate criminal proceedings under Section 138 of the Act and relied on KUCHIL KUMAR NANDI v. M/S. MODI CEMENT LTD., 1997 Cri. LJ 805 where it is held that a complaint under Section 138 of the Act, when a civil suit for recovery of the amount is filed, is not maintainable. He also relied on the decisions relied on by the accused in the trial Court in support of his contention that the complaint is not maintainable. His alternative contention is A-1 and A-2 had obtained a draft for Rs.8,60,000/- in favour of the complainant and offered the same for payment to the complainant, but the complainant refused to receive the same and so he relying on HARBANS SINGH v. STATE OF DELHI AND ANOTHER, (2002) 10 SCC 538, GOVARDHAN DAS PARTANI AND ANOTHER v. STATE OF A.P., (2003) 10 SCC 244 , and SUBHASH v. STATE OF RAJASTHAN, (2004) 11 SCC 398 , contended that in view of the subsequent event of the A-1 and A-2 offering to pay the amount covered by the dishonoured cheques, this Court may consider modification of the sentence of imprisonment as sentence of fine. 8. 8. The learned counsel for complainant in reply contended that G.B.LINGAM case (1 supra), MUTYALA VEERRAJU case (supra) and KUCHIL KUMAR NANDI case (supra), should be deemed to have been over ruled because, the apex Court in several judgments pronounced later held that the burden of proof to establish that the dishonoured cheque was not issued for a legally enforceable debt is squarely on the accused, and contended that initiation of civil proceedings for recovery of the amounts covered by the dishonoured cheque would not be a bar for launching proceedings under Section 138 of the Act because the causes of action for civil proceeding and proceeding under Section 138 of the Act are different and since both the courts below concurrently found that A-1 and A-2 had committed the offence under Section 138 of the Act, merely because A1 and A2, had at the time of hearing of these cases in this court offered to pay a part of the amount due to the complainant the court need not take a lenient view, and since the offence is complete on the failure of the drawer of the cheque not responding to the statutory notice issued under Section 138 of the Act by paying the amount covered by the dishonoured cheques, his subsequent act of paying the amount at the time of hearing of the revision, after having lost in the appellate court also, is not of any consequence, and contended that as the facts in the decisions relied on by the learned counsel for the appellant are entirely different from the facts of this case there are no grounds to interfere with the sentence imposed against A-1 and A-2. 9. As rightly contended by the learned counsel for the accused, since Section 138 of the Act relates to dishonour of cheques, only the person who signed the cheque, and if the cheque is drawn by a firm or a company, the partners or directors (as the case may be) of the partnership firm or the company, who are incharge of the affairs of the partnership firm or company, by virtue of Section 141 of the Act, can be proceeded against in a criminal case. All other partners or directors, who have no role to play in the running of the firm or company, cannot be roped in for the offence under Section 138 of the Act when they have no concern with the day to day affairs of the firm or company, and if they did not sign the dishonoured cheque. In this case, A-3, admittedly, is not a signatory to the dishonoured cheques. There is no evidence on record to show that A-3 was incharge of the affairs of the firm, or was responsible for the conduct of the business to the A-1 firm. Therefore, the trial Court acquitting A-3 cannot be said to be erroneous and so I find no merit in the appeal preferred by the complainant against the acquittal of A-3. 10. In re the liability of A1 and A2, Exs.P1 to P.4 are the cheques for Rs.50,000/- each dated 13.3.2003 drawn by A-2 for and on behalf of A-1, in favour of the complainant. Ex.P5 is the memo dated 15.7.2003 received by the complainant informing him that Exs.P1 to P4 cheques were returned due to insufficient funds. The complainant had on 22.7.2003 issued the original of Ex.P.6 notice informing the A-1, through A-2, about the dishonour of the cheques issued to him. Ex.P.7 postal acknowledgement shows that A2 received the said notice. Ex.P.8 is the written statement filed by A-2 in O.S.No.311 of 2003 filed by the complaint against all the accused. 11. D.W.1 admitted, during cross-examination, that Exs.P1 to P.4 were signed by him in his capacity as the Managing Partner of A-1 firm, which was formed in 1999 with two partners, and that after the change in the constitution of the firm he and his wife (A-3) became its partners, and that Exs.P1 to P.4 were returned for insufficient funds as in Ex.P.5, and that he did not receive the original of Ex.P.6 and that he does not know who signed on Ex.P.7 postal acknowledgement and that he issued Exs.P1 to P4 cheques in discharge of part of his liability. The statement of D.W.1 that he does not know who signed in Ex.P.7, is not of much consequence, because Ex.P.6 notice was addressed to A-2 represented by A-1, and during cross-examination of the complainant (P.W.1) by A-2, A-2 he got marked Ex.D.5, which is the same as Ex.P.6 notice, as the notice sent by his counsel to both A-1 and A-2. So, it is clear that receipt of the original of Ex.P.6 notice by A-1 and A-2 is admitted by A-1 and A-2 due to their producing Ex.D.5, and getting it marked through P.W.1 during cross-examination. Thus, the complainant had complied with all the requirements in Section 138 of the Act of sending a notice informing the drawer of the cheque about the dishonour of the cheque on intimation about the dishonoured cheque being received from the bank, and his filing the complaint within the time prescribed by Section 138 of the Act. 12. As per Section 139 of the Act, unless the contrary is proved, the court 'shall presume' that the holder of a cheque received the cheque of the nature referred to in Section 138 for the discharge, in whole or in part, or any debt or other liability. In K.N.BEENA V. MUNYAPPAN, (2002) 37 SCL 583 (SC), the Apex Court held that in view of Section 139 of the Act, the court has to presume, unless the contrary is proved, that the holder of the cheque received it for discharge of a debt or liability, and so in a complaints under section 138, the court has to presume that the dishonoured cheque was issued towards discharge of the debt or liability and so the burden of proof to show that the dishonoured cheque was not issued for discharge of a liability is on the accused, and if the accused does not lead any evidence or when there is no cogent evidence to show that there is no debt or liability, it would be improper to hold that the accused discharged his onus. In view of the ratio in the said decision, the view taken by the learned Single Judge in G.B.LINGAM case (1 supra) and MUTYALA VEERRAJU case (2 supra), should be deemed to have been disapproved by the apex court and so those two cases should be deemed to have been impliedly overruled by the apex court in K.N. BEENA case (7 supra) 13. In this case except the interested evidence of A2 as DW1, there is no other evidence on record to show that the dishonoured cheques Exs.P1 to P4 were not issued for discharge of existing liability. So it cannot be said that A1 and A2 failed to discharge the onus that lay on them and that the presumption raised by Section 139 of the Act stood unrebutted. 14. The learned Single Judge's judgment in KUCHIL KUMAR NANDI's case (3 supra) should be deemed to have been overruled by the Apex Court in SUGANTHI SURESH KUMAR v JAGDEESHAN, 2002 (1) ALD (Crl.) 417 (SC) = (2002) 2 SCC 420 , because it is clearly held in that decision that filing of a civil suit and attaching the properties of an accused is no ground to impose a lesser sentence. In the above circumstances, I find no grounds to interfere with the conviction of A1 and A2 under section 138 of the Act. 15. Coming to the sentence to be imposed the facts in GOVARDHAN DAS PARTANI case (5 supra), cannot be culled out from the said decision, but from the last sentences in the said judgment it is seen that the Sessions Court, in an appeal preferred by the accused in a case under section 138 of the Act, passed a sentence of fine of Rs.2,000/- only. On an appeal preferred by the complainant, the High Court seems to have imposed a higher sentence. In further appeal to the Apex Court, in view of the subsequent development of the accused paying Rs.2,15,000/-, ie. the amount covered by the dishonoured cheque, their Lordship restored the sentence passed by the Sessions Court. 16. In SUGANTHI SURESH KUMAR's case (8 supra), the Magistrate convicted the accused under section 138 of the Act, but sentenced him to undergo imprisonment till rising of the court and to pay a fine of Rs.5,000/-. the amount covered by the dishonoured cheque, their Lordship restored the sentence passed by the Sessions Court. 16. In SUGANTHI SURESH KUMAR's case (8 supra), the Magistrate convicted the accused under section 138 of the Act, but sentenced him to undergo imprisonment till rising of the court and to pay a fine of Rs.5,000/-. The High Court did not interfere with the sentence passed by the Magistrate in the appeal preferred by complainant on further appeal to the Apex Court by the complainant, the Apex Court held that since it is not the case of the accused that the amount involved in the two cases had been paid either during the pendency of the cases before the trial court or in revision before the High Court or in the Supreme Court and as no drawer of the cheque can be allowed to take dishonour of the cheque issued by him light heartedly, as the very object of enactment of provisions like Section 138 of the Act would stand defeated if the sentence is of the nature passed by the trial court, the Apex Court remitted the case to the trial court for passing appropriate sentence. 17. In SUBHASH's case (6 supra), the drawer of the cheque was found guilty under section 138 of the Act and was sentenced to one year simple imprisonment and a fine of Rs.10,212/- by the trial court. In an appeal, the substantial sentence of imprisonment was reduced to four months while the amount of fine was maintained. The cheque in that case was issued for an amount of Rs.5,106/- and, as the drawer was agreeable to pay that amount of Rs.5,106/- and as the accused remained in jail for about 20 days, the counsel for the accused before the Apex Court sought lenient punishment being imposed against the accused. Then, the Apex Court held as under: "considering all the facts and circumstances of the case and, specially the fact that earlier also the appellant had tried to make payment to the respondent by tendering a bank draft but the same could not be encashed on account of the date for encashment having expired and there was some controversy which centered around the same, the appeal is partly allowed. Though the conviction of the appellant is maintained but the sentence of imprisonment is reduced to the period already undergone. Though the conviction of the appellant is maintained but the sentence of imprisonment is reduced to the period already undergone. The amount of fine is enhanced to Rs.15,318/-, out of which the amount of compensation payable to the complainant shall be Rs.14,106/-. The amount already deposited by the appellant shall be adjusted against the amount now directed to be paid under this order". 18. In HARBANS SINGH's case (4 supra), the drawer of a cheque for Rs.2,182/-, which was dishonoured, was convicted and was sentenced to imprisonment for six months and a fine of Rs.5,000/- by the trial court. On appeal, the conviction and sentence were confirmed. In revision, High Court also did not interfere with the conviction, but reduced the fine amount to Rs.3,000/- from Rs.5,000/-. After remitting that amount of Rs.3,000/- the accused preferred a further appeal to the Supreme Court and stated that he took a pay order of Rs.2,182/- dated 28.11.2000 in the name of the complainant, and offered it to the complainant, and that the complainant refused to accept the same. Since the accused in that case was said to be in jail from 13.9.2000, the Apex Court, while confirming the conviction, reduced the sentence of imprisonment to the period already undergone and enhanced the fine to Rs.5,000/- . 19. In HARBANS SINGH's case (4 supra), the cheque was for Rs.2,182/- and in SUBHASH's case (6 supra), the cheque was for Rs.5,106/- and in GOVARDHAN DAS PARTANI AND ANOTHER's case (5 supra), the cheque was Rs.2,15,000/-. In GOVARDHAN DAS PARTANI AND ANOTHER's case (5 supra) case, the Apex Court on the basis that the Sessions Court in an appeal preferred by the accused reduced the sentence by imposing a fine of Rs.2,000/- only but the High Court enhanced the sentence, interfered with the sentence passed by the High Court on the ground that the amount covered by the cheque was paid during the pendency of the appeal before it, the Apex Court took a lenient towards the accused. 20. In SUGANTHI SURESH KUMAR's case (8 supra), when the amount covered by the cheque is more than Rs.4,00,000/-, the Apex Court held that a flea-bite sentence of imprisonment till rising of court and a fine of Rs.5,000/- is improper, and remitted the case to the trial court on the question of sentence. 20. In SUGANTHI SURESH KUMAR's case (8 supra), when the amount covered by the cheque is more than Rs.4,00,000/-, the Apex Court held that a flea-bite sentence of imprisonment till rising of court and a fine of Rs.5,000/- is improper, and remitted the case to the trial court on the question of sentence. So, it is clear that the Apex Court is of the view that in cases where the amount covered by the dishonoured cheques are small amounts, and if the accused were to pay or offer to pay the amounts covered by such dishonoured cheques, the courts can consider imposing lesser sentence, but when the amount covered by the cheques is huge amount such as more than Rs.4,00,000/-, imposing of flea- bite sentence is not permissible. In this case, the amount covered by the dishonoured cheques is Rs.2,00,000/-. 21. Since the Apex Court in GOVARDHAN DAS PARTANI AND ANOTHER's case (5 supra) considered imposing of fine only, instead of sentencing the accused to imprisonment and since the amount covered by the dishonoured cheques in this case is Rs.2,00,000/- and since Section 138 of the act enables the court to impose fine, which may extend to twice the amount under the dishonoured cheques, in the circumstances of the case, A1 and A2 can be sentenced to fine of Rs.4,00,000/- out of which Rs.3,00,000/- shall be paid to the complainant as compensation. 22. In the result, the appeal is dismissed and the revision is allowed in part while maintaining the conviction under section 138 of the Act imposed against A1 and A2, they are sentenced to a fine of Rs.4,00,000/-, in default they shall suffer rigorous imprisonment for six months. Out of the fine amount of Rs.4,00,000/-, Rs.3,00,000/- shall be paid to the complainant as compensation.