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2021 DIGILAW 205 (KAR)

M. Ramesh Kumar v. Riyaz Ur Rehaman

2021-02-03

JOHN MICHAEL CUNHA

body2021
JUDGMENT : JOHN MICHAEL CUNHA, J. When the legally enforceable debt due by the accused is less than the amount of the dishonoured cheque, whether he could be convicted for the offence under Section 138 of the Negotiable Instruments Act, 1881? The question that arises for consideration in this appeal. 1. The facts giving rise to the above question are as follows: The appellant filed a complaint before the V Additional I Civil Judge and JMFC, Mysuru, under section 200 read with section 138 of the Negotiable Instruments Act, 1881 (hereinafter referred to as N.I. Act) alleging that the respondent (hereinafter referred to as the “accused”) approached him for financial assistance for his oats feeds (horse feeds) business and borrowed a sum of Rs. 8,00,000/- on 18.10.2007 through cheque bearing No. 488842 of State Bank of India agreeing to repay the same with interest at 18% per annum within 3 or 4 months. The accused did not return the loan amount within the stipulated time, instead again approached the complainant in the first week of June, 2008 seeking further financial assistance to the tune of Rs. 25,00,000/-. As per the assurance given by the accused to repay the same along with the previous loan amount within one year along with interest, the complainant lent another sum of Rs. 20,00,000/- to the accused on 08.06.2008 through cheques bearing Nos. 065793 and 065794 of State Bank of India. In repayment of the said amount, the accused issued a cheque bearing No. 273840 drawn on Syndicate Bank for a sum of Rs. 46,74,000/- dated 17.5.2010 being the principal amount with upto date interest. The said cheque when presented for encashment was returned unpaid for “funds insufficient.” The complainant issued a legal notice on 08.06.2010 and initiated action against the accused under section 138 of N.I. Act. 2. Before the trial court, the complainant examined himself as PW-1 and produced in evidence the original cheque Ex.P1, Bank Memo Ex.P2, Copy of legal notice Ex.P3, Postal acknowledgement Ex.P5, Cheque returned register extract Ex.P6 and Bank account extract Ex.P7. He also examined PW-2 Sri. G. Jairam. 3. In rebuttal, the accused examined himself as DW-1. In his evidence, while admitting the receipt of Rs. 8,00,000/- from the complainant, the accused took up a plea that on 06.12.2007, the complainant purchased a property and at that time, he refunded Rs. He also examined PW-2 Sri. G. Jairam. 3. In rebuttal, the accused examined himself as DW-1. In his evidence, while admitting the receipt of Rs. 8,00,000/- from the complainant, the accused took up a plea that on 06.12.2007, the complainant purchased a property and at that time, he refunded Rs. 8,00,000/- and further paid another sum of Rs. 10,00,000/- to the complainant. After few days, the complainant returned Rs. 10,00,000/- and thus he was due only a sum of Rs. 10,00,000/-. He further contended that for recovery of the said amount, the complainant filed a civil suit. As the complainant promised to withdraw the said suit, the accused paid him another sum of Rs. 5,00,000/- and thus, in his evidence, the accused took up a stand that he owed only a sum of Rs. 5,00,000/- to the complainant. Further he deposed that during the above transaction, the complainant had taken eight blank cheques and eight blank stamp papers from him and the same have been used by the complainant to lay a false claim and thus sought to dismiss the complaint. In the course of cross-examination, the accused admitted receipt of Rs. 28,00,000/- from the complainant on 22.10.2007 and 10.06.2008 by way of cheques. 4. Considering the above evidence, learned Magistrate dismissed the complaint returning a finding that the complainant failed to prove the legal liability due by the accused as on the date of issuance of the cheque, for the reason that in his legal notice as well as in his evidence, the complainant asserted that the accused had borrowed the aforesaid amount from him undertaking to repay the same with interest at 18% per annum, if so, the total amount due to the complainant as on the date of the cheque would come to Rs. 38,62,000/- and not Rs. 46,74,000/- as reflected in the cheque. Thus concluding that there was no legally enforceable debt of Rs. 46,74,000/- as on the date of presentation of the cheque, learned Magistrate by referring to Head Notes of various decisions, dismissed the complaint. Feeling aggrieved by the impugned judgment and order, the complainant has preferred this appeal. I have heard learned counsel for appellant and learned counsel for respondent and perused the records. 5. The contention of the learned counsel for the complainant is that the accused having admitted the receipt of Rs. Feeling aggrieved by the impugned judgment and order, the complainant has preferred this appeal. I have heard learned counsel for appellant and learned counsel for respondent and perused the records. 5. The contention of the learned counsel for the complainant is that the accused having admitted the receipt of Rs. 28,00,000/- and also having put forth a plea of discharge, in the absence of any material to show the repayment of the cheque amount, by virtue of the presumption under Section 139 of N.I. Act, the Trial Court could not have dismissed the complaint in entirety. Further, referring to Para 12 of the impugned judgment, he submitted that the learned Magistrate having come to the conclusion that the accused owed Rs. 38,62,000/- as on the date of the dishonour of the cheque, ought to have presumed that the cheque was issued towards discharge of the aforesaid debt or liability. Placing reliance on the decision of this Court in S. Parameshwarappa and Another vs. S. Choodappa, 2007 Cri. L.J. 586, the learned counsel emphasized that once the cheque is issued, the accused cannot contend that it is not in respect of the legally enforceable debt, as the complainant had established in evidence, that the amount “was due” by the accused as on the date of issuance of the cheque. In other words, it is the argument of the learned counsel, that the proceedings before the learned Magistrate was one for dishonour of the cheque and not for recovery of a debt before the Civil Court wherein the plaintiff is required to prove his claim based on evidence, whereas in an action under Section 138 of N.I. Act, on proof of issuance of the cheque, the onus shifts to the accused to rebut the presumption that the cheque was issued not for discharge of any debt or liability in terms of Section 138 of N.I. Act. Therefore, the learned Magistrate could not have dismissed the complaint solely on account of discrepancy in determination of the amount, based on the oral evidence of the parties, contrary to the tenor of the document. 6. The learned advocate for the accused, however, argued in support of the impugned judgment, contending that the complainant having failed to establish that the amount of Rs. 6. The learned advocate for the accused, however, argued in support of the impugned judgment, contending that the complainant having failed to establish that the amount of Rs. 46,74,000/- shown in the dishonoured cheque was in fact due and payable to the complainant as on the date of presentation of the cheque, the trial court was justified in dismissing the complaint, as the accused could not have drawn the subject cheque towards discharge of the alleged liability. 7. I have considered these submissions in the light of the pleadings and the evidence adduced by the parties. 8. In appreciating the contentions urged by the accused, it is important to note that, in his evidence before the Court, the accused (DW-1) has unequivocally admitted receipt of Rs. 8,00,000/- as loan from the complainant and has further stated that he had agreed to pay interest thereon at the rate of 3% per annum. Further he deposed that on 06.12.2007, the complainant had purchased a property and had approached him and at that time, he repaid Rs. 8,00,000/- and further paid another sum of Rs. 10,00,000/- in all Rs. 18,00,000/-, to the complainant. He has even gone to the extent of stating that the complainant added another Rs. 10,00,000/-, which was with him, and paid Rs. 28,00,000/- to his vendor and after few days, the complainant returned Rs. 10,00,000/- received by him and therefore, he (accused) was due only Rs. 10,00,000/- to the complainant. He further asserted that the complainant filed a civil suit for recovery of the said amount, but on the promise of the complainant to withdraw the said suit, he (accused) repaid another sum of Rs. 5,00,000/- and thus, he was due to pay only Rs. 5,00,000/- to the complainant. Further he deposed that he had issued a reply to the legal notice issued by the complainant and further stated that he had “given” 8 blank cheques and 8 blank stamp papers to the complainant. 9. In the cross-examination, when a specific suggestion was made to the accused (DW-1) that a sum of Rs. 8,00,000/- was credited to his account through cheque on 22.10.2007 and Rs. 10,00,000/- each by way of two cheques on 10.06.2008 and Rs. 3,00,000/- on 23.11.2007, the accused plainly answered that he had received only Rs. 28,00,000/-. Thus, the accused ended up in admitting the receipt of Rs. 28,00,000/-. 10. 8,00,000/- was credited to his account through cheque on 22.10.2007 and Rs. 10,00,000/- each by way of two cheques on 10.06.2008 and Rs. 3,00,000/- on 23.11.2007, the accused plainly answered that he had received only Rs. 28,00,000/-. Thus, the accused ended up in admitting the receipt of Rs. 28,00,000/-. 10. On going through the entire evidence on record, I find this is the only fact that has been proved by the complainant. Undeniably the cheque in question stands for Rs. 46,74,000/-. The accused has not denied the issuance of the subject cheque. Instead in the course of his evidence, he has taken a faint / vague plea that he had “given” 8 blank cheques and 8 blank stamp papers to the complainant. He has not elaborated on this aspect nor has he stated the circumstance under which he had “given” 8 blank cheques and 8 blank stamp papers to the complainant. 11. There is a presumption that until contrary is proved, every negotiable instrument duly executed, is for discharge of a debt or a liability. It is not the case of the accused that he either signed 8 cheques or parted with them under any threat or coercion nor is it the case of the accused that the cheques “given” by him were not towards the discharge of any debt or liability due or payable by him to the complainant. 12. The position of law in this regard is well settled that “Even a blank cheque leaf, voluntarily signed and handed over by the accused, which is towards some payment, would attract presumption under Section 139 of the Negotiable Instruments Act, in the absence of any cogent evidence to show that the cheque was not issued in discharge of a debt.” vide Bir Singh vs. Mukesh Kumar in Criminal Appeal Nos. 230-231 of 2019 and SLP (Crl) Nos. 9334-9335 of 2018 disposed of on 06.02.2019. 13. In the light of this legal proposition and in the absence of any contra evidence by the accused that cheque in question was not voluntarily “given” by him to the complainant, it may be reasonably presumed that the cheque in question was issued by the accused towards discharge of the legally enforceable debt due by him. 14. 13. In the light of this legal proposition and in the absence of any contra evidence by the accused that cheque in question was not voluntarily “given” by him to the complainant, it may be reasonably presumed that the cheque in question was issued by the accused towards discharge of the legally enforceable debt due by him. 14. In the backdrop of the above conclusion, it is significant to note that section 139 of the N.I. Act mandates that the Court shall presume the liability of the drawer of a cheque for the amount for which the cheque is drawn. Nevertheless, the presumption contemplated under section 139 of the N.I. Act is a rebuttable presumption which lays down that unless the contrary is proved, it has to be presumed that the holder of a cheque received the cheque of the nature referred to in section 138 of N.I. Act, for the discharge, in whole or in part, of any debt or other liability. 15. In the instant case, the complainant has been able to prove that only a sum of Rs. 28,00,000/- was due to him as on the date of the presentation of the subject cheque for encashment. Though he has contended that the amount of Rs. 46,74,000/- mentioned in Ex.P1 cheque included the interest at the rate of 18% per annum on the principal amount borrowed by the accused, but as discussed above, no material is produced by the complainant in proof of the claim of interest at the rate of 18% per annum. As a result, the amount reflected in the cheque cannot be reconciled to the actual amount due and payable by the accused. In the said circumstance, the question that arises for consideration is: Whether the accused could be held guilty for dishonour of the cheque when the legally enforceable debt due by him is less than the amount of dishonoured cheque? 16. In order to answer this question, it may be worth to note that the object of Chapter XVII of the N.I. Act is both punitive as well as compensatory and restitutive. 16. In order to answer this question, it may be worth to note that the object of Chapter XVII of the N.I. Act is both punitive as well as compensatory and restitutive. It provides for a single forum and single proceeding for enforcement of criminal liability on account of dishonour of the cheque and also for enforcement of the civil liability for realization of the amount due and payable by the drawer of the cheque thereby obviating the need for the creditor to move two different fora for relief. 17. Section 138 of the N.I. Act does not bar the conviction of the accused if the debt or liability due by him is found less than the amount reflected in the cheque as long as it is proved that the cheque in question was voluntarily issued in discharge of the whole or part of the debt. The difference in the amount shown in the cheque and the actual amount due by the drawer as on the date of presentation of the cheque may be relevant factor to determine the fine or compensation for the loss caused to the complainant, but the said discrepancy cannot absolve the accused of the consequence of dishonour of the cheque. If such a position is accepted, it would defeat the object of Chapter XVII of the N.I. Act as the drawer of the cheque could conveniently avert the prosecution under Section 138 of the N.I. Act by making payment of a part or fraction of the cheque amount thereby bringing about discrepancy and incongruity in the amount shown in the cheque and the actual amount due as on the date of presentation of the cheque. Therefore, I am unable to accept the reasoning of the Trial Court that on account of the discrepancy in the amount reflected in the cheque and the actual amount due by the accused, the accused cannot be proceeded under section 138 of the N.I. Act. In that view of the matter, the impugned judgment, in my view, cannot be sustained. 18. In that view of the matter, the impugned judgment, in my view, cannot be sustained. 18. However, insofar as the award of fine or compensation is concerned, the evidence adduced by the parties with regard to the alleged agreement between the parties to pay interest and the long lapse of time taken by the accused to repay the amount to the complainant may be a factor which requires to be considered in view of the law laid down by the Apex Court in M/s Meters and Instruments Private Limited vs. Kanchan Mehta, 2018 (1) SCC 560 , wherein it is held: “12. The sentence prescribed under Section 138 of the Act is upto two years or with fine which may extend to twice the amount or with both. What needs to be noted is the fact that power under Section 357(3) Cr.P.C. to direct payment of compensation is in addition to the said prescribed sentence, if sentence of fine is not imposed. The amount of compensation can be fixed having regard to the extent of loss suffered by the action of the accused as assessed by the Court. The direction to pay compensation can be enforced by default sentence under Section 64 IPC and by recovery procedure prescribed under Section 431 Cr.P.C.” 19. Thus, taking into consideration all the above facts and circumstances of the case and for the reasons discussed above, the impugned judgment deserves to be set aside. 20. Accordingly, Criminal Appeal is allowed. The impugned judgment and order dated 26.08.2019 passed by the V Additional I Civil Judge and JMFC, Mysore is set aside. The accused is held guilty of the offence punishable under section 138 of Negotiable Instruments Act, 1881 and is sentenced to pay a compensation of Rs. 46,00,000/- (Rupees Forty Six Lakhs) only, being the principal amount of Rs. 28,00,000/- with interest thereon at the rate of 6% per annum, from the date of demand i.e. 08.06.2010 till date. On realization or recovery of the above compensation, the same shall be made over to the complainant under Section 357(3) of Cr.P.C. 21. In default to pay the aforesaid compensation, the accused shall undergo imprisonment for a period of two years. 22. The money payable by virtue of this order shall be recoverable as fine under section 431 of Cr.P.C. by procedure prescribed under section 421 Cr.P.C.