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2015 DIGILAW 419 (KAR)

A. SRINIVASALU v. KARTHIK KALEVAR

2015-04-13

A.N.VENUGOPALA GOWDA

body2015
ORDER 1. The petitioner, an accused, in C.C. No.35622/2010, on the file of the XIV ACMM, Mayohall, Bengaluru, for an offence under S.138 of the Negotiable Instruments Act, 1881 (for short, 'the Act'), filed this petition under S.482 Cr. P.C. to quash the entire proceedings of the said case. 2. In order to appreciate the ground urged for consideration by Sri G.S. Venkat Subbarao, learned advocate, a few material facts may be stated thus: The respondent herein/complainant, has stated that the accused had taken from him, hand loan of Rs.3,00,000/, on 28.08.1996, agreeing to pay interest at 5% per month and towards discharge of the said debt, issued cheques bearing Nos.281049 and 564983, both dated 10.10.2009, drawn on Canara Bank, Frazer Town branch, Bengaluru. Complainant having presented the cheques for payment with his banker, were returned on 15.10.2009, with remarks, “funds insufficient”. Thereafter, complainant got a demand notice dated 03.11.2009 issued, to which he received reply dated 11.11.2009. Dissatisfied, complainant filed PCR No.13/2010. Cognizance having been taken, C.C. No.35622/2010 was registered and process was issued against the petitioner, for the offence under S.138 of the Act. 3. Sri G.S. Venkat Subbarao, learned advocate, contended that the complaint filed is not maintainable, since the alleged loan transaction having taken place on 28.08.1996, two cheques were issued in the year 2009. He submitted that, to constitute an offence under S.138 of the Act, the cheque/s ought to have been issued towards a legally dischargeable debt and the alleged debt being time barred, even if the cheques have been issued towards discharge of legal liability, the complaint is not maintainable. He placed reliance on the decision of the Apex Court in Indus Airways Pvt. Ltd. vs. Magnum Aviation Pvt. Ltd. (2014) 12 SCC 539 . 4. Only question for consideration is, whether cheque/s issued towards re payment of time barred debt does not constitute an offence under S.138 of the Negotiable Instruments Act, 1881? 5. Perused the copy of complaint, demand notice dated 03.11.2009 and the reply thereto dated 11.11.2009. In the said reply notice, petitioner has stated that he had taken a hand loan of Rs.2,00,000/in the year 1996 and the respondent had obtained an ‘On Demand Pronote’ for Rs.2,00,000/and also the aforesaid two cheques, as security towards repayment. 5. Perused the copy of complaint, demand notice dated 03.11.2009 and the reply thereto dated 11.11.2009. In the said reply notice, petitioner has stated that he had taken a hand loan of Rs.2,00,000/in the year 1996 and the respondent had obtained an ‘On Demand Pronote’ for Rs.2,00,000/and also the aforesaid two cheques, as security towards repayment. According to the petitioner, though he cleared the entire hand loan amount borrowed together with interest, respondent did not return the two cheques and that the ‘On Demand Pronote and the cheques’ have been misused to file a false complaint alleging commission of an offence under S.138 of the Act. 6. According to the petitioner, though he cleared the entire hand loan amount borrowed together with interest, respondent did not return the two cheques and that the ‘On Demand Pronote and the cheques’ have been misused to file a false complaint alleging commission of an offence under S.138 of the Act. 6. S.138 of the Act though was enacted to punish unscrupulous drawer of a cheque, who, though purport to discharge the liability by issuing cheque, had no intention of really doing so, yet, to fasten the criminal liability under the said provision, the ingredients required to be fulfilled are: “(i) a person must have drawn a cheque on an account maintained by him in a bank for payment of a certain amount of money to another person from out of that account; (ii) the cheque should have been issued for the discharge, in whole or in part, of any debt or other liability; (iii) that cheque was presented to the bank within a period of six months from the date on which it was drawn or within the period of its validity, whichever is earlier; (iv) that cheque was returned by the bank unpaid, either because of the amount of money standing to the credit of the account is insufficient to honour the cheque or that it exceeds the amount arranged to be paid from that account by an agreement made with the bank; (v) the payee or the holder in due course of the cheque makes a demand for the payment of the said amount of money by giving a notice in writing, to the drawer of the cheque, within 15 days of the receipt of information by him from the bank regarding the return of the cheque as unpaid; (vi) the drawer of such cheque fails to make payment of the said amount of money to the payee or the holder in due course of the cheque within 15 days of the receipt of the said notice;” Being cumulative, it is only when all the aforementioned ingredients are satisfied that the person who had drawn the cheque can be deemed to have committed an offence under Section 138 of the Act. 7. 7. The question considered in the case of Indus Airways Pvt. Ltd. (supra), was, whether the post dated cheques issued as an advance payment in respect of purchase orders could be considered in discharge of legally enforceable debt or liability, and, if so, whether the dishonour of such cheques amounts to an offence under S.138 of the Act? Apex Court has observed as follows: “19. For a criminal liability to be made out under S.138, there should be legally enforceable debt or other liability subsisting on the date of the drawal of the cheque.” The aforesaid question was ultimately answered as follows: “In what we have discussed above, if a cheque is issued as an advance payment for purchase of the goods and for any reason purchase order is not carried to its logical conclusion either because of its cancellation or otherwise and material or goods for which purchase order was placed is not supplied by the supplier, in our considered view, the cheque cannot be said to have been drawn for an existing debt or liability.” The said decision cannot be said to have any application in the instant case. 8. In A.V. Murthy vs. B.S. Nagabasavanna, (2002) 2 SCC 642 , the appellant filed a complaint under S.138 of the Act against the respondent, alleging that a cheque issued by the respondent in his favour, in respect of a sum advanced by him four years ago, was dishonoured by the bank for the reason ‘account closed’. Magistrate issued summons. In a criminal revision petition filed by the respondent, the Sessions Judge quashed the entire proceedings on the ground that since the alleged offence was barred by limitation at the time of issuance of the cheque, there was no legally enforceable debt or liability against the accused under the explanation to S.138 of the Act and therefore, the complaint was not maintainable. As a consequence, the entire proceeding was quashed. Feeling aggrieved, the complainant filed a criminal revision petition in this Court. As a consequence, the entire proceeding was quashed. Feeling aggrieved, the complainant filed a criminal revision petition in this Court. Learned Single Judge having upheld the order of the Sessions Judge, Apex Court was approached for relief, by contending that when the cheque is issued, under S.118 of the Act, it has to be presumed that it was drawn for consideration and, that though the loan was advanced about four years back, the respondent had acknowledged the liability in his Balance Sheet and even for the purpose of a civil suit, such debt or liability is not barred by limitation. Considering the matter, Apex Court has held as follows: “5. But, we are of the view that the learned Sessions Judge and the learned Single Judge of the High Court were clearly in error in quashing the complaint proceedings. Under Section 118 of the Act, there is a presumption that until the contrary is proved, every negotiable instrument was drawn for consideration. Even under Section 139 of the Act, it is specifically stated that it shall be presumed, unless the contrary is proved, that the holder of a cheque received the cheque of the nature referred to in Section 138 for discharge, in whole or in part, of any debt or other liability. It is also pertinent to note that under subsection (3) of Section 25 of the Indian Contract Act, 1872, a promise, made in writing and signed by the person to be charged therewith, or by his agent generally or specially authorized in that behalf, to pay wholly or in part a debt of which the creditor might have enforced payment but for the law for the limitation of suits, is a valid contract. Moreover, in the instant, the appellant has submitted before us that the respondent, in his balance sheet prepared for every year subsequent to the loan advanced by the appellant, had shown the amount as deposits from friends. A copy of the balance sheet as on 31-3-1997 is also produced before us. If the amount borrowed by the respondent is shown in the balance sheet, it may amount to acknowledgement and the creditor might have a fresh period of limitation from the date on which the acknowledgement was made. A copy of the balance sheet as on 31-3-1997 is also produced before us. If the amount borrowed by the respondent is shown in the balance sheet, it may amount to acknowledgement and the creditor might have a fresh period of limitation from the date on which the acknowledgement was made. However, we do not express any final opinion on all these aspects, as these are matters to be agitated before the Magistrate by way of defence of the respondent. 6. This is not a case where the cheque was drawn in respect of a debt or liability, which was completely barred from being enforced under law. If for example, the cheque was drawn in respect of a debt or liability payable under a wagering contract, it could have been said that that debt or liability is not legally enforceable as it is a claim, which is prohibited under law. This case is not a case of that type. But we are certain that at this stage of the proceedings, to say that the cheque drawn by the respondent was in respect of a debt or liability, which was not legally enforceable, was clearly illegal and erroneous.” (Emphasis supplied) 9. In Ramakrishnan vs. Parthasaradhy, (2003) 3 ICC 662, a Division Bench of the Kerala High Court, following the ratio of law laid down in A.V. MURTHY’S CASE (supra), has held, that when a person writes, signs and delivers a cheque to another, it is an acknowledgement of a legally enforceable liability and therefore, if the cheque is dishonoured, such a person shall not be entitled to plead that at the time of his writing the cheque the claim had become barred by limitation and thus, he is not liable to be punished under S.138 of the Act. 10. In the instant case, petitioner has not disputed the issuance of the two cheques, noticed supra. The cheques have been dishonoured by his banker, by issue of endorsement/s ‘funds insufficient’. Notice dated 03.11.2009 was given demanding payment of the amount payable under the cheques. Reply dated 11.11.2009, as above was sent. Complaint was filed within the prescribed period. It is in the said background, cognizance was taken and summons was issued to the petitioner. There being a presumption that a cheque has been issued for legally enforceable debt, it is open to the petitioner to rebut the presumption. Reply dated 11.11.2009, as above was sent. Complaint was filed within the prescribed period. It is in the said background, cognizance was taken and summons was issued to the petitioner. There being a presumption that a cheque has been issued for legally enforceable debt, it is open to the petitioner to rebut the presumption. Therefore, it is a matter for trial by the learned Magistrate. Hence, at this stage, it is impermissible to quash the proceedings of the case pending before the learned Magistrate. In the result, this petition is dismissed. Learned Magistrate shall proceed with the complaint in accordance with law. However, it is made clear that, whatever has been stated herein regarding enforceability of the debt or liability, is for the purpose of deciding this petition only and it would be open to the petitioner to set up all legally available defences, before the learned Magistrate.