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Karnataka High Court · body

2012 DIGILAW 674 (KAR)

V. Thimmegowda v. Shashi Bhushan Agarwal

2012-08-16

A.N.VENUGOPALA GOWDA

body2012
Judgment 1. The petitioner purchased goods from the respondent on 6.11.2004, 9.11.2004 and 11.11.2004 (Exs.P1 to P3), obtained delivery (Ex.P4 to P6) and issued the three cheques bearing Nos.690206 dated 10.11.2004 for Rs.2,91,840/-, 690208 dated 13.11.2004 for Rs.2,46,270/-and 690209 dated 16.11.2004 for Rs.2,16,215/-, drawn on ICICI Bank Ltd., Jayanagar Branch, Bangalore – 11 (Ex.P7 to P9), towards the payment of the said bills. When the said cheques were presented to the banker, the same was returned on 27.12.2004, with endorsements 'stopped payment' (Ex.P10 and P12). The said cheques were again presented to the banker and were returned on 26.11.2004 with endorsement 'stopped payment' (Exs.P13 to P15). The debit advice, dated 27.11.2004 is Ex.P16. The respondent served a notice upon the petitioner on 13.1.2005 (Ex.P17) and called upon him to pay the said cheque amount. The petitioner replied to the said notice on 25.1.2005 (Ex.P19), wherein, it was stated that the quality and quantity of the goods supplied was not as per the agreed terms and conditions and hence, he refused to receive the same and instructed his banker to 'stop the payment'. 2. On the basis of the said bounced cheques, the respondent filed a complaint in C.C.No.19988/2005 before the 12th Additional Chief Metropolitan Magistrate Court, Bangalore. The learned Magistrate, after trial, convicted the petitioner for the offence under S.138 of the Negotiable Instruments Act, 1881 ('the Act' for short) and sentenced him to pay fine amount of Rs.15,00,000/, in default, to undergo simple imprisonment for 6 months. The complainant was held entitled to receive, out of the said fine amount, by way of compensation, Rs.7,54,325/-. 3. On appeal, in Crl.A.No.1552/2006, the learned Presiding Officer, Fast Track (Sessions) Judge-V, Bangalore City, confirmed the conviction. However, the sentence imposed was modified and the accused was sentenced to pay fine amount of Rs.9,50,000/-, in default, to undergo simple imprisonment for 6 months. Feeling aggrieved, the accused has filed this Criminal Revision Petition. 4. Sri S. Vishwajit Shetty, learned advocate, contended as follows: (a) There is denial of reasonable opportunity to the accused, during the trial. (b) Goods sent by the respondent being not as per the agreed terms and conditions, was not received and was sent back, whereafter, the bank was instructed to stop the payment in respect of the cheques. 4. Sri S. Vishwajit Shetty, learned advocate, contended as follows: (a) There is denial of reasonable opportunity to the accused, during the trial. (b) Goods sent by the respondent being not as per the agreed terms and conditions, was not received and was sent back, whereafter, the bank was instructed to stop the payment in respect of the cheques. The complainant failed to establish the existence of a legally recoverable debt and hence, the Courts below have erred in applying S.139 of the Act. (c) The cheques -Exs.P.7 to P.9, having been returned by the Bank with endorsements 'payment stopped', the representation of the cheques, which were again returned with the same endorsements, has not given raise to a cause of action and the complaint filed is not maintainable, in view of the ratio of the decision reported in ILR 2007 KAR 2076. (d) Respondent had filed a complaint against the petitioner for the offence under S.420 IPC, which was registered in Crime No. 348 of 2004 and the police, after investigation filed ‘B’ report, which remained unchallenged. Hence, the complaint filed in C.C.No.19988/2005 for the offence under S.138 of the Act is not maintainable, in view of the decision in the case of Kolla Veera Raghav Rao Versus Gorantla Venkateswara Rao, AIR 2011 SC 641 . (e) The Courts below have failed to consider the defence and the finding of guilt recorded and the sentence imposed are perverse and illegal. 5. Sri S.S. Naganand, learned Senior advocate, on the other hand, contended as follows: (a) The three cheques / Exs.P7 to P9 were issued by the petitioner for discharge of the liability for the goods received as per Exs.P4 to P6, purchased under the bills / Exs.P1 to P3. (b) The cheques were returned on 27.12.2004 vide Exs.P10 to P12 and were represented within the validity period and were again returned on 26.11.2004 vide Exs.P13 to P15. Demand Notice/Ex.P17 was served to pay the amount covered under the three cheques. Since, an untenable reply was sent and payment was not made, complaint/Ex.P20 was filed. (c) Accused though was provided with reasonable opportunity by the learned Magistrate, the same was not utilized and no defence evidence to rebut the presumption was adduced. Demand Notice/Ex.P17 was served to pay the amount covered under the three cheques. Since, an untenable reply was sent and payment was not made, complaint/Ex.P20 was filed. (c) Accused though was provided with reasonable opportunity by the learned Magistrate, the same was not utilized and no defence evidence to rebut the presumption was adduced. (d) The decision reported in ILR 2007 KAR 2706 has no application, since, the case therein pertains to the return of a cheque on the ground of 'account closed by the drawer' and not on the ground of 'stop payment' instructions. (e) Filing of ‘B’ report by the Police in Crime No.348 of 2004, in the matter of the complaint filed under S. 420 IPC, does not come in the way of the payee of the cheque/s prosecuting the drawer of the cheque/s for the offence under S.138 of N.I Act, in view of the ratio of law in the case of Sangeetaben Mahendrabhai Patet Versus State of Gujarat and another, 2012 (4) Scale 549 . (f) The goods were ordered by the petitioner, bills were raised and the goods were delivered. The petitioner did not raise a probable defence in the matter. The refusal/return of the goods has not been proved by the petitioner and that he has failed to rebut the presumption under S.139 of the Act. (g) There being concurrent finding of fact by the Courts below with regard to the guilt of the accused and the findings having evidentiary support, being neither perverse nor illegal, interference in exercise of revision jurisdiction is not warranted. 6. Perused the record. In view of the rival contentions, the points for consideration are: (i) Whether there is denial of reasonable opportunity of hearing to the accused by the learned Magistrate? (ii) Whether the ingredients of the offence enumerated in S.138 of the Act has been met? (iii) Whether the accused has rebutted the statutory presumption contemplated by S.139 of the Act? (iv) Whether the complaint filed under S.138 of the Act is maintainable, despite the submission of ‘B’ report by the police for the offence under S.420 IPC? Re. Point No. l: 7. Complaint under S.200 Cr. P.C, was presented on 2.3.2005. Cognizance taken and registered as PCR Complainant filed affidavit. (iv) Whether the complaint filed under S.138 of the Act is maintainable, despite the submission of ‘B’ report by the police for the offence under S.420 IPC? Re. Point No. l: 7. Complaint under S.200 Cr. P.C, was presented on 2.3.2005. Cognizance taken and registered as PCR Complainant filed affidavit. After perusing the complaint, documents produced and the affidavit filed, the complainant having complied with all the provisions of S.142 of the Act, finding prima facie case against the accused for the offence punishable under S.138 of the Act, criminal case was ordered to be registered and process against the accused was issued on 29.7.2004. Accused appeared and was enlarged on bail. He pleaded not guilty and claimed trial. Complainant deposed as PW1 and marked Exs.P1 to P20, on 22.7.2006 and at the request of the accused, the case was adjourned to 2.8.2006, for cross-examination of PW-1. Accused prayed for time on 2.8.2006 and case was adjourned as a last chance to 12.8.2006. Since, PW-1 was not cross-examined, he was discharged and statement of the accused under S.313 Cr.P.C, was recorded. The case was posted to 23.8.2006, for defence evidence. On 23.8.2006, accused filed application under S.309 Cr.P.C. and the same was allowed. On 5.9.2006, accused filed application under S.311 Cr.P.C, to recall PW-1 and the same was allowed. On 14.9.2006, PW-1 was present, but was not cross-examined. The prayer for adjournment was rejected. Learned advocate for the accused submitted that he has no instructions from the accused. Hence, defence evidence was taken as nil. The argument was heard. The Judgment was pronounced on 16.9.2006, holding the petitioner guilty of the offence under S.138 of the Act and he was sentenced to pay fine. The sequence of events, noticed supra, would show that the accused was granted reasonable opportunity by the learned Magistrate, but, the same was not utilized by the accused. Hence, there is no merit in the contention that there is denial of reasonable opportunity, to defend, in the Trial Court. Re. Point No.2: 8. To constitute an offence under S.138 of the Act, the following ingredients have to be fulfilled. Hence, there is no merit in the contention that there is denial of reasonable opportunity, to defend, in the Trial Court. Re. Point No.2: 8. To constitute an offence under S.138 of the Act, the following ingredients have to be fulfilled. (i) The accused must have drawn the cheque on an account maintained by him in the Bank for payment of the money shown in the cheque to the payee; (ii) The cheque should have been issued for the discharge, in whole or in part, of any debt or other liability; (iii) The cheque was presented to the bank within a period of 6 months from the date on which it was drawn or within the period of its validity, whichever is earlier; (iv) The cheque was returned unpaid; (v) The payee or the holder in due course of the cheque, issued a notice to the drawer of the cheque, within 30 days of receipt of information by him from the bank, regarding the return of the cheque as unpaid; and (vi) The drawer of such cheque failed to make payment of the cheque amount to the payee or holder in due course of the cheque, within 15 days of receipt of the notice. 9. In the instant case, the petitioner issued the cheques/Exs.P7 to P9, towards the payment for the goods supplied under delivery notes/Exs.P4 to P6, pursuant to the bills/Exs.P1 to P3. The said cheques were returned on 27.12.2004 with endorsements 'payment stopped' by drawer. The cheques were represented within the validity period and were returned by the petitioner's bank on 26.11.2004/ Exs.P13 to P15, with endorsement/s ‘payment stopped’ by the drawer. The payee/complainant gave notice to the drawer/accused, on 13.1.2005 and demanded the payment of the amount of money payable under the three returned cheques. The payment was not made within 15 days of the demand. However, a reply/Ex.P19 was sent. The complaint was filed on 2.3.2005. Thus, the ingredients of the offence enumerated in S.138 of the Act has been met. Re, Point No.3: 10. The defence of the petitioner as is evident from the reply notice/Ex.P19 is that, the goods supplied by the respondent was not as per the agreed terms and hence, he refused to receive the goods. The complaint was filed on 2.3.2005. Thus, the ingredients of the offence enumerated in S.138 of the Act has been met. Re, Point No.3: 10. The defence of the petitioner as is evident from the reply notice/Ex.P19 is that, the goods supplied by the respondent was not as per the agreed terms and hence, he refused to receive the goods. Complainant/PW-1 has testified that, upon the orders placed by the accused, he supplied iron and steel material and the same was received and accepted without any demur by the accused. He has stated that the bills were raised and towards payment, three cheques signed by the accused were issued and the same were presented for encashment on 26.11.2004, but, were returned with endorsement/s 'payment stopped' by drawer and that, he lodged a complaint against the accused under S.420 IPC in the Peenya Police Station and a case was registered and that the accused obtained anticipatory bail on 17.4.2004. He has further stated that, at that stage, accused approached him and assured that he would make necessary payment on representing the cheques and on account of the assurance and the undertaking given, he represented the cheques through his bank for payment and were again returned with endorsement/s dated 28.12.2004 'payment stopped' by the drawer. He has stated that, he gave a notice dated 13.11.2004 and the accused replied on 25.1.2005, taking untenable stand. The evidence of PW-1 has remained unchallenged. PW-1 was not even cross-examined. When examined under S.313 Cr. P.C, the stand of the accused is one of mere denial. Though he has stated that, he has got defence evidence, he has not adduced any evidence. 11. In the case of Rangappa Versus Sri Mohan, (2010) 11 SCC 441 , Apex Court has held as follows: "We are in agreement with the respondent claimant that the presumption mandate by S.139 of the Act does indeed include the existence of a legally enforceable debt or liability" 12. In view of the testimony of PW-1 and exhibited documents, it is clear that the three cheques were issued by the petitioner towards the payment of the goods purchased by him from the respondent. The petitioner has failed to prove that the goods were either refused or returned by him to the respondent. Evidence of PW-1 has remained unchallenged. In view of the testimony of PW-1 and exhibited documents, it is clear that the three cheques were issued by the petitioner towards the payment of the goods purchased by him from the respondent. The petitioner has failed to prove that the goods were either refused or returned by him to the respondent. Evidence of PW-1 has remained unchallenged. Cheques having been issued and 'stop payment' instructions having been given and consequently, the cheques having been returned on account of the 'stop payment' instruction by the drawer, it is for the petitioner to show that, in his account, there was sufficient fund to clear the amount of the cheques at the time of presentation of the cheques for encashment at his bank and that the 'stop payment' instruction was issued because of other valid cause. The burden of proof in this regard is on the drawer of the cheque/accused. The petitioner has not produced his account extract, to show that there was sufficient fund in his account, when the three cheques were presented for payment by the payee/respondent herein. The petitioner apart from not raising a probable defence, has not contested the existence of legally enforceable debt or liability. The complaint and the evidence of PW1 discloses existence of legally enforceable debt or liability, since, the complainant has maintained that, after receiving the order from the accused, the goods were supplied and the bills were raised and the three cheques in question were issued towards the payment of the three bills. Since, the issuance of three cheques is not in dispute, the statutory presumption under S.139 of the Act has come into play and the Courts below are justified in applying the same. Thus, the accused has not rebutted the statutory presumption contemplated by S.139 of the Act Re. Point No.4: 13. After the three cheques were returned by the petitioner's bank on 27.12.2004, the respondent filed a complaint in the Peenya Police Station, against the accused for the offence under S.420 IPC. The police registered a case in Crime No.348/2004 and after investigation filed ‘B’ report in June 2005. The three cheques were represented on 27.12.2004 for encashment and were returned. A complaint under S.200 Cr. P.C, was filed on 2.3.2005, alleging the commission of an offence under S.138 of the Act. 14. The police registered a case in Crime No.348/2004 and after investigation filed ‘B’ report in June 2005. The three cheques were represented on 27.12.2004 for encashment and were returned. A complaint under S.200 Cr. P.C, was filed on 2.3.2005, alleging the commission of an offence under S.138 of the Act. 14. In the case of Kolla Veera Raghav Rao (supra), it was held that, once conviction under S.138 of the Act has been recorded, the question of trying the same person under S.420 IPC or any other provision of IPC or any other statute is not permissible, being hit by Article 20 (2) of the Constitution and S.300(1) of Cr. P.C. 15. In the case of Sangeetaben Mahendrabhai Patel (supra), after taking note of the decision rendered in the case of Kolla Veera Raghav Rao (supra), Apex Court has held as follows: "27. Admittedly, the Appellant had been tried earlier for the offences punishable under the provisions of S. 138 Negotiable Instruments Act and the case is sub judice before the High Court. In the instant case, he is involved under Ss.406/420 read with S.114 Indian Penal Code. In the prosecution under S.138 Negotiable Instruments Act, the mens rea i.e., fraudulent or dishonest intention at the time of issuance of cheque is not required to be proved. However, in the case under Indian Penal Code involved herein, the issue of mens rea may be relevant. The offence punishable under S.420 Indian Penal Code is a serious one as the sentence of 7 years can be imposed. In the case under Negotiable Instruments Act, there is a legal presumption that the cheque had been issued for discharging the antecedent liability and that presumption can be rebutted only by the person who draws the cheque. Such a requirement is not there in the offences under Indian Penal Code. In the case under Negotiable Instruments Act, if a fine is imposed, it is to be adjusted to meet the legally enforceable liability. There cannot be such a requirement in the offences under Indian Penal Code. The case under negotiable Instruments Act can only be initiated by filing a complaint. However, in a case under the Indian Penal Code such a condition is not necessary. 28. There may be some overlapping of facts in both the cases but ingredients of offences are entirely different. The case under negotiable Instruments Act can only be initiated by filing a complaint. However, in a case under the Indian Penal Code such a condition is not necessary. 28. There may be some overlapping of facts in both the cases but ingredients of offences are entirely different. Thus, the subsequent case is not barred by any of the aforesaid statutory provisions." 16. In the case of T.S. Baliah Versus Income Tax Officer ( AIR 1969 SC 701 ), the Apex Court considered the question whether the appellant could be simultaneously prosecuted under S.177 IPC and for violation of S.52 of the Income Tax Act, 1922. After noticing S.26 of the General Clauses Act, it has been held as follows: “…..A plain reading of the section shows that there is no bar to the trial or conviction of the offender under both enactments but there is only a bar to the punishment of the offender twice for the same offence. In other words, the section provides that where an act or omission constitutes an offence under two enactments, the offender may be prosecuted and punished under either or both the enactments but shall not be liable to be punished twice for the same offence. We accordingly reject the argument of the appellant on this aspect of the case." (Italicized by me for emphasis) 17. In the case of The State of Bombay Versus S.L. Apte ( AIR 1961 SC 578 ), the question that fell for consideration before the Apex Court was, whether in view of an earlier conviction and sentence under S.409 IPC, a subsequent prosecution for an offence under S.105 of the Insurance Act, 1935, was barred by S.26 of the General Clauses Act and Article 20(2) of the Constitution. The question has been answered as follows: "13. To operate as a bar the second prosecution and the consequential punishment thereunder, must be for "the same offence". The crucial requirement therefore for attracting the Article is that the offences are the same, i.e., they should be identical. If, however, the two offences are distinct, then notwithstanding that the allegations of facts in the two complaints might be substantially similar, the benefit of the ban cannot be invoked. It is, therefore, necessary to analyse and compare not the allegations in the two complaints but the ingredients of the two offences and see whether their identity is made out. If, however, the two offences are distinct, then notwithstanding that the allegations of facts in the two complaints might be substantially similar, the benefit of the ban cannot be invoked. It is, therefore, necessary to analyse and compare not the allegations in the two complaints but the ingredients of the two offences and see whether their identity is made out. 16.) Though S.26 in its opening words refers to "the act or omission constituting an offence under two or more enactments", the emphasis is not on the facts alleged in the two complaints but rather on the ingredients which constitute the two offences with which a person is charged. This is made clear by the concluding portion of the section which refers to "shall not be liable to be punished twice for the same offence". If the offences are not the same but are distinct, the ban imposed by this provision also cannot be invoked. It therefore follows that in the present case as the respondents are not being sought to be punished for "the same offence" twice but for two distinct offences constituted or made up of different ingredients the bar of the provision is inapplicable." (Italicized by me for emphasis) 18. In the case of V.K. Agarwal, Assistant Collector of Customs Versus Vasantraj Bhagwanji Bhatia and others, (1988) 3 SCC 467 , Apex Court has considered the question, whether the acquittal of an accused charged with having committed an offence punishable under S.111 read with S.135 of the Customs Act, 1962 create a legal bar to the subsequent prosecution of the said accused under S.85 of the Gold (Control) Act, 1968. The Gujarat High Court had answered the question in the affirmative. Apex Court while reversing the order passed by the Gujarat High Court, has held as follows: "3. It is therefore evident that the ingredients required to be established in respect of the offence under the Customs Act are altogether different from the ones required to be established for an offence under the Gold (Control) Act. In respect of the former, the prosecution has to establish that there was a prohibition against the import into Indian sea waters of goods which were found to be in the possession of the offender. In respect of the former, the prosecution has to establish that there was a prohibition against the import into Indian sea waters of goods which were found to be in the possession of the offender. On the other hand in respect of the offence under the Gold (Control) Act, it is required to be established that the offender was in possession of primary gold meaning thereby gold of a purity of not less than 9 carats in any unfinished or semi-finished form. In regard to the latter offence it is not necessary to establish that there is any prohibition against the import of gold into Indian sea waters. Mere possession of gold of purity not less than 9 carats in any unfinished or semi-finished form would be an offence under the Gold (Control) Act. It is therefore stating the obvious to say that the ingredients of the two offences are altogether different. Such being the case the question arises whether the acquittal for the offences under the Customs Act which requires the prosecution to establish altogether different ingredients operates as a bar to the prosecution of the same person in connection with the charge of having committed the offence under the Gold (Control) Act. 6. ……..In the present case the concerned respondents could be found guilty of both the offences in the context of the possession of gold. If it was established that there was a prohibition against the import of gold and that he was found in possession of gold which he knew or had reason to believe was liable to confiscation he would be guilty of that offence. He would also be guilty of an offence under the Gold (Control) Act provided the gold is of a purity of atleast 9 carats. He would have violated the provisions of 'both' the Customs Act and the Gold (Control) Act if the aforesaid ingredients were established. It is not as if in case he was found guilty of an offence under the Customs Act, he could not have been found guilty under the Gold (Control) Act or vice versa. Upon being found guilty of both the offences the court may perhaps impose a concurrent sentence in respect of both the offences but the court has also the power to direct that the sentence shall run consecutively. Upon being found guilty of both the offences the court may perhaps impose a concurrent sentence in respect of both the offences but the court has also the power to direct that the sentence shall run consecutively. There is therefore no question of framing of an alternative charge one, under the Customs Act, and the other, under the Gold (Control) Act. If the ingredients of both the offences are satisfied the same act of possession of the gold would constitute an offence both under the Customs Act as also under the Gold (Control) Act. Such being the position it cannot be said that they could have been tried on the same facts for an alternative charge in the context of Section 236 Cr PC at the time of the former proceedings. The submission urged in the context of Section 403(1) cannot therefore succeed for it cannot be said that the persons who are sought to be tried in the subsequent proceedings could have been tried on the same facts at the former trial under Section 236." (Italicized by me for emphasis) In view of the well settled position of law, noticed supra, the argument of Sri Vishwajit Shetty, that in view of the complaint lodged under S.420 IPC and the "B" report filed by the police, the petitioner cannot be prosecuted for the offence under S.138 of the Act, is untenable. 19. Indisputably, there is no prior trial, conviction and sentence for an offence under S.420 IPC, even assuming that two proceedings are substantially for 'the same offence'. Ingredients of the offences under S.420 IPC and S.138 of the Act are distinct and separate, which has been noticed by the Apex Court, in the case of Sangeetaben Mahendrabhai Patel (supra). Thus, the contention of Sri Vishwajit Shetty being devoid of merit is rejected. 20. In the case of Sri H. Nanjundappa, since deceased by his Legal Representative his daughter and Another Versus H. Nanumantharayappa (AIR 2007 Kar 2706), a cheque issued by the accused was dishonoured on the ground 'account closed by the drawer'. Cheque was represented and legal notice was issued, after return of the cheque by the bank on second occasion and thereafter, complaint was filed. Cheque was represented and legal notice was issued, after return of the cheque by the bank on second occasion and thereafter, complaint was filed. In that context, it was held as follows: "But in the case of "account closed", the question of successive presentation makes no sense because the account itself is not in existence, there is no possibility of having a fruitful result by successive presentation unlike in the case of "insufficiency of funds". Therefore, whenever the cheque is dishonoured on the ground of account closed, the payee cannot resort to successive presentation to save the limitation. So also in the case of dishonour of cheque on the ground that "the signature does not tally with the specimen". The decision has no application to the instant case, since the cheques in this case was returned by the bank on account of "stop payment" instruction. In the result, the findings recorded by the Courts below in the impugned Judgments are well founded. I find no reason to interfere with the finding of conviction recorded against the petitioner. The same is confirmed. However, the modified sentence of fine imposed by the Appellate Court is excessive. The amount payable under the three cheques being Rs.7,54,325/-, modification of sentence of fine is necessary. The accused is sentenced to pay fine of Rs.7,75,000/-, and out of the said fine amount, when realized, the complainant be paid as compensation, Rs.7,54,325/-. In case of default, to pay the fine amount, on or before 30.09.2012, the bail bonds shall stand cancelled and the accused shall surrender before the leaned Magistrate to undergo simple imprisonment for six months.