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2019 DIGILAW 853 (KAR)

Shivanand Gurupadayya Hiremath v. Anil

2019-04-05

H.P.SANDESH

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JUDGMENT : H P Sandesh, J. Heard the arguments of the appellant's counsel, and also the counsel for respondent. 2. This appeal is filed against the judgment of acquittal passed in CC No.755/2006 on the file of the JMFC, Banhatti, for the offence punishable under Section 138 of the Negotiable Instruments Act. 3. The factual matrix of the case is that, the respondent herein had filed a complaint under Section 200 of Cr.P.C. for the offence punishable under Section 138 of the N.I. Act contending that the respondent was running a Finance business named as OM Finance Corporation in the premises of Veerabhadreshwar temple, wherein the deity is maintained by the complainant and his family members as Pujaris. The accused was leased under the complainant paying rent for the premises about 6-7 years back so as accused was very well known to the complainant and his family members. In the said OM Finance Corporation, the accused and some other persons including the members of the accused family are the partners. The accused used to take the hand loan from the father and sister of the complainant and kept the deposit in his finance and used to take the money and in respect of these transaction accused has maintained proper accounts. The complainant has further stated that the accused-left the leased properties of the complainant one and half years back. At that time, total amount is to be paid by the accused was Rs.4,85,000/-. The calculation was made by the accused during the year 2005 and he promised to repay it. Accused has assured the complainant that he himself will pay the said amount as it was fallen to his share and requested to handover the original fixed deposit certificates to him. The complainant has further stated that accused agreed a mutual understanding before the local Panchas and the matter was settled once for all for Rs.4,85,000/- and for that purpose, accused issued cheque for Rs.4,85,000/- on 21/6/2006 before the Panchas to show his trustworthiness in the matter. It is further contended that the accused has drawn his personal cheque and promised to honour the said cheque and when the same was presented for encashment, for which the complainant and elders objected for personal cheque. The accused had convinced that it was their interest between the parties and requested not to worry about the money. It is further contended that the accused has drawn his personal cheque and promised to honour the said cheque and when the same was presented for encashment, for which the complainant and elders objected for personal cheque. The accused had convinced that it was their interest between the parties and requested not to worry about the money. Hence, there is no any other way to the complainant to accept the present cheque for the said amount. When the cheque was presented, the same was returned with an endorsement "Account Closed" and the same was intimated and thereafter, accused requested the complainant one month time and further requested him to represent the cheque again and same was again presented and same endorsement was received. Hence, notice was issued against the respondent herein and the same was served and respondent did not give any reply. Hence, cognizance was taken. Complainant in support of his contention, he examined himself as PW-1 and got marked Exs.P1 to 12. The accused did not choose to lead any evidence. The Court below after considering both the oral and documentary evidence, acquitted the accused. 4. Being aggrieved by the judgment of acquittal, the present appeal is filed. The main contention in this appeal is the Court below has committed an error in acquitting the accused on the ground that the successive presentation of cheque did not attract Section 138 of the N.I. Act when the account was closed. The very finding of the Court below is erroneous. The Court below also while acquitting the accused assigned the reasons that the cheque was presented twice i.e. on 21/6/2000 and 26/8/2006 and the complainant in the cross examination, admits that notice was issued when the cheque was returned with an endorsement 'Account Closed' at the first instance and there are two notices as per the admission of PW-1. Same is not cognizable and on that ground also, it was rejected. Hence, it requires interference of this Court. Counsel appearing for the appellant in support of his contention, he relied upon the judgment of the Apex Court reported in between NEPC Micon Ltd. Vs. Magma Leasing Ltd., (1999) AIR SC 1952 and contend that in this judgment, the Apex Court held that even account closed is also attracts Section 138 of the N.I.Act. He brought to my notice the discussion made in para No.6 of the judgment. Magma Leasing Ltd., (1999) AIR SC 1952 and contend that in this judgment, the Apex Court held that even account closed is also attracts Section 138 of the N.I.Act. He brought to my notice the discussion made in para No.6 of the judgment. The counsel also relied upon the recent judgment of the Hon'ble Apex Court in the case of M/s. Sicagen India Ltd. VS. Mahindra Vadineni & Others and brought to my notice that the Apex Court held in the judgment that the successive issuance of notice on account of dishonour of cheque is not a bar to initiate proceedings, and in this judgment the Apex Court held that there is no hesitation in holding that a prosecution based on a second or successive default in payment of the cheque amount should not be impermissible simply because no prosecution based on the first default which was followed by statutory notice and a failure to pay had not been launched. Hence, contended that there is no bar for presentation of cheque successively and even issuance of successive notice and prayed this Court to set aside the judgment of acquittal of the trial Court. 5. Per contra, the counsel appearing for the respondent in his arguments contends that the Court below while acquitting the accused taken note of the facts that when the cheque was presented at the first time, the same was returned with an endorsement 'Account Closed' and the very contention of the complainant that this respondent requested him to represent the cheque again is nothing but false one and no such request was made and this respondent has not given any instruction to present the cheque again when the account was closed. Counsel also in support of his contention, he relied upon the judgment of this Court reported in between H.Nanjundappa Vs. H.Hanumantharayappa, 2006 6 LAWS(KAR) 78 and in this judgment, this Court held that notice issued after second presentation in case of 'Account Closed', the question of successive presentation makes no sense. Complaint is barred by limitation and hence, acquittal is confirmed and dismissed the appeal. 6. H.Hanumantharayappa, 2006 6 LAWS(KAR) 78 and in this judgment, this Court held that notice issued after second presentation in case of 'Account Closed', the question of successive presentation makes no sense. Complaint is barred by limitation and hence, acquittal is confirmed and dismissed the appeal. 6. Counsel relying upon this judgment brought to my notice para 4 of the judgment and contends that when the account was 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". Hence, prayed this Court to confirm the acquittal. 7. Having heard the arguments of the appellant's counsel and also the arguments of counsel appearing for respondent, this Court has to examine the material on record both the oral and documentary evidence and to examine whether the Court below has committed an error in acquitting the accused. 8. On perusal of the record, the Court below acquitted the respondent on two grounds. The first ground is when the cheque was presented, an endorsement was issued that 'Account Closed' and it is the case of the complainant that at the request of the accused, it was again presented and on the second presentation also, it was returned with an endorsement 'Account Closed'. When such being the case, relying upon the judgment of this Court, in H.Nanjundappa Vs. H. Hanumantharayappa, the Court below acquitted the accused. 9. The main contention of the appellant's counsel is that the closure of account also amounts to an offence under Section 138 of the N.I.Act and no dispute with regard to the said fact. It is settled law even for closure of account also amounts to offence under Section 138 of the N.I. Act. But, the reasons assigned by the Court below is with regard to the successive presentation of the cheque, when the account was closed. It is important to note that the Apex Court in the recent judgment in M/s. Sicagen India Ltd. VS. Mahindra Vadineni & Others held that applying the rule of interpretation of statutes that the expressions used therein should ordinarily be understood in a sense in which they best harmonise with the object of the statue, and which effectuate the object of the legislature. Mahindra Vadineni & Others held that applying the rule of interpretation of statutes that the expressions used therein should ordinarily be understood in a sense in which they best harmonise with the object of the statue, and which effectuate the object of the legislature. If an expression is susceptible of narrow or technical meaning, as well as a popular meaning the court would be justified in assuming that the legislature used the expression in the sense which would carry out its object and reject that which renders the exercise of its power invalid. 10. Referring the judgment and principles laid down in the judgment of Mosaraf Hossain Khan Vs. Bhageeratha Engg. Ltd., (2006) 3 SCC 658 and the judgments of C.C.Alavi Haji vs. Palapetty Muhammed, (2007) 6 SCC 555 and Damodar S.Prabhu Vs.Sayed Babala H., (2010) 5 SCC 663 , with regard to the salutary principles of interpretation of statues is to adopt an interpretation which promotes and advances the object sought to be achieved by the legislation, in preference to an interpretation which defeats such object. Applying the principles laid down in the judgment, the Apex Court has comes to the conclusion that no hesitation in holding that a prosecution based on a second or successive default in payment of the cheque amount should not be impermissible simply because no prosecution based on the first default which was followed by statutory notice and a failure to pay had not been launched and further observed that if the entire purpose underlying Section 138 of the Negotiable Instruments Act is to compel the drawers to honour their commitments made in the course of their business or other affairs, there is no reason why a person who has issued a cheque which is dishonoured and who fails to make payment despite statutory notice served upon him should be immune to prosecution simply because the holder of the cheque has not rushed to the court with a complaint based on such default or simply because the drawer has made the holder defer prosecution promising to make arrangements for funds or for any other similar reason. 11. Having discussed in detail and also applying the ratio in the case of MSR Leathers Vs. 11. Having discussed in detail and also applying the ratio in the case of MSR Leathers Vs. S.Palaniappan and Another, (2013) 1 SCC 177 , the Apex Court held that the complaint filed based on the second statutory notice is not barred and the High Court, in our view, ought not to have quashed the criminal complaint and the impugned judgment is liable to be set aside. 12. For having taken note of the principles laid down in the judgment and also the interpretation made in the judgment referred supra, it is specific in the judgment of the Apex Court that if the entire purpose underlying Se ct ion 138 of the Negotiable Instruments Act is to compel the drawers to honour their commitments made in the course of their business or other affairs, there is no reason why a person who has issued a cheque which is dishonoured and who fails to make payment despite statutory notice served upon him should be immune to prosecution simply because the holder of the cheque has not rushed to the court. 13. In the case on hand also, no doubt when the cheque was presented for the first time, the account was closed and it is the case of the complainant that the accused has requested him to represent the cheque. But, accused disputes the same. But, it has to be noted that when the cheque was presented, both the times, endorsement was given was 'Account Closed' and when the Apex Court in the judgment held that even closure of account also attracts Section 138 of the N.I. Act. and when the Apex Court recently held that number of presentation and issuance of notice for the second time will not a bar to proceed against the accused. In the case on the hand also, the accused did not dispute the fact of issuance of cheque and also did not give any reply to the notice. The Apex Court in the judgment of Rangappa Vs. Mohan, (2010) AIRSCW 2946 held that burdenlies on the accused to rebut the presumption under Section 139 of the N.I. Act. In the case on the hand also, the accused did not dispute the fact of issuance of cheque and also did not give any reply to the notice. The Apex Court in the judgment of Rangappa Vs. Mohan, (2010) AIRSCW 2946 held that burdenlies on the accused to rebut the presumption under Section 139 of the N.I. Act. In the case on hand, accused did not choose to enter into witness box and to raise the probable defence and the Court below on the ground of technicality that successive presentation was made when the cheque was presented and the same was returned with an endorsement 'Account Closed' and on that ground accused was acquitted. The Court below failed to take note of draw the presumption under Section 139 of the N.I.Act as held in the judgment of Rangappa Vs. Mohan. The second ground for acquitting the accused is that the complainant has admitted in the cross examination that in both the occasions, notice was issued and the complainant's counsel made an attempt to convince this Court that by mistake PW-1 gave such an admission and he was under confusion and only notice was given when the second time cheque was returned with an endorsement 'Account Closed'. But, on perusal of the cross examination of PW-1, he categorically admits issuance of notice on the return of the cheque with an endorsement 'Account Closed'. But, now the same is immaterial in view of the judgment of the Apex Court held in the judgment of Sicagen India Ltd. VS. Mahindra Vadineni & Others. There is no bar to file complaint based on the second statutory notice and when such being the principles laid down in the judgment of the Apex Court, the judgment of the trial Court is liable to be set aside. The Court below on two technical grounds dismissed the complaint and on perusal of evidence of PW-1, complainant has reiterated the averments of the issuance of cheque and in the cross examination, it is elicited that amount was kept in the fixed deposits in the OM Finance belongs to the accused and further, he admits that the accused financial institution is a partnership firm. He also admits in the said finance firm in his name his father has kept the amount to the tune of Rs. He also admits in the said finance firm in his name his father has kept the amount to the tune of Rs. 4,85,000/- and he cannot say in whose name how much amount was kept in and he cannot tell the date of deposit. His father only aware of the same. He cannot tell how many accounts were having in the said firm. A question was put to the complainant why he has returned F.D. receipts in favour of the accused but he says that accused only has obtained same. He cannot tell the date of presentation of the cheque and elicited that the cheque was returned on account of closure of the account and he cannot tell the date of cheque. It is suggested that no cheque was given to the complainant and the same was denied. It is suggested that the cheque was given to someone else and the same was misused and presented and the said suggestion was denied. 14. On perusal of the oral and documentary evidence, nothing is suggested to PW-1 with regard to the subject matter of the cheque except suggesting that no such cheque was given to the complainant and further suggested that the cheque was given to someone else and the same was misused by the complainant. In order to probabalise his defence, the accused did not choose to lead any evidence and in the cross examination also nothing is probabalised with regard to his defence except the suggestion that the cheque was given to someone else and same was misused. Mere taking the defence in the cross examination that the cheque was given to someone else is not the probable defence. Mere taking the defence in the cross examination that the cheque was given to someone else is not the probable defence. It is not the case of the accused that the cheque was not belongs to him and also it is not his case that the cheque does not contain his signature and when he did not dispute the cheque, the burden lies on the accused to rebut the same and no doubt Section 139 of the N.I.Act is a rebuttable presumption and it is the duty cast upon the accused to rebut the same and probabal ise his defence and in order to probabal ise his defence that to whom he has given the cheque since he has taken the defence that the cheque was given to someone else while suggesting in the cross examination also nothing is suggested that the said cheque was given to which person and only a general defence is taken in the cross examination. 15. For having taken note of the principles laid down in the judgment of the Apex Court in the case of Rangappa Vs. Mohan and also the recent judgment, which I have referred with regard to the successive presentation of the cheque and when the Apex Court held that any closure of the account attract the offence of N.I. Act, the very acquittal of the accused on the technical ground by the lower Court is nothing but a perverse finding and hence, the impugned order of acquittal has to be set aside and the accused has not raised any probable defence while cross-examining the PW.1 and drawing presumption under Section 139 of N.I. Act and not given reply to the notice of the complainant and hence, the accused is liable to be convicted for the offence under Section 138 of N.I. Act. 16. The counsel appearing for the appellant contends that it was the cheque of the year 2006 and almost 12 years has been lapsed and this Court has to take note of the same while imposing the sentence and having considered the said submission also, this Court has to consider the period of lis pending before this Court. 17. In view of the above discussions, this Court proceed to pass the following: ORDER The appeal is allowed. The impugned order of acquittal is set aside. 17. In view of the above discussions, this Court proceed to pass the following: ORDER The appeal is allowed. The impugned order of acquittal is set aside. The accused is convicted for the offence under Section 138 of N. I. Act. The accused is directed to pay the amount of Rs.7 lakh within six weeks from today. If the accused fails to pay the amount within six weeks, he shall undergo simple imprisonment for a period of one year.