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2022 DIGILAW 119 (AP)

Chittineni Srinivasa Rao v. Badugula Syamala Devi

2022-01-31

RAVI NATH TILHARI

body2022
JUDGMENT : through virtual mode No representation from the side of the petitioner. 2. Seen the report, dated 25.01.2022 submitted by the III Additional Junior Civil Judge, Guntur, in charge in Special Judicial Magistrate of I class for Prohibition and Excise, Guntur, on the record filed in compliance of order, dated 16.12.2021. The order of this court, dated 16.12.2021 has been complied. The petitioner was arrested and was released on bail by the court below. 3. With the assistance of Sri S.Venkata Sainath, learned Special Assistant Public Prosecutor, the Court proceeds to decide the matter finally. 4. Perused the material on record. 5. The facts of the case are that the respondent No.1 filed complaint against the petitioner for the offence punishable under Section 138 of the Negotiable Instruments (N.I.) Act, on the averments inter alia that the petitioner/accused borrowed Rs.25,000/- from the complainant on 23.06.2003 and executed a promissory note in favour of the complainant. The petitioner issued a cheque bearing No.561000, dated 30.11.2003, for Rs.25,000/- drawn on Chaitanya Grameena Bank, Guntur, in favour of the complainant, towards discharge of the above said debt amount, which, on presentation in the bank was dishonoured due to “funds insufficient”. The complainant issued a registered statutory notice to the accused on 31.12.2003, which was received by the accused, but inspite thereof the payment was not made. 6. The C.C.No.174/2004, registered on the complaint, was taken on the file of VII Additional Munsif Magistrate, Guntur under Section 138 of N.I. Act. On appearance of the accused, the copies of the documents were supplied as required under Section 207 Cr.P.C and the accused on examination under Section 251 Cr.P.C, pleaded not guilty and claimed to be tried. 7. During charge in support of the complaint, P.Ws.1 to 3 were examined and Exs.P.1 to P.5 were got marked. After closure of the evidence, the accused being examined under Section 313 Cr.P.C. denied the incriminating evidence and examined himself as DW.1, but no documents were marked on his behalf. 8. The VII Additional Munsif Magistrate, Guntur vide judgment, dated 16.08.2004 convicted the petitioner/accused for the offence under Section 138 of N.I. Act and sentenced him to undergo R.I. for a period of six (06) months and imposed fine of Rs.5,000/- in default to suffer simple imprisonment for one month. 9. 8. The VII Additional Munsif Magistrate, Guntur vide judgment, dated 16.08.2004 convicted the petitioner/accused for the offence under Section 138 of N.I. Act and sentenced him to undergo R.I. for a period of six (06) months and imposed fine of Rs.5,000/- in default to suffer simple imprisonment for one month. 9. The Crl.A.No.342 of 2004 filed by the petitioner was dismissed vide judgment, dated 19.01.2006, confirming the judgment, dated 16.08.2004 passed by the VII Additional Munsif Magistrate, Guntur in C.C.No.174 of 2004. 10. Challenging the appellate judgment, the revision has been filed. 11. The VII Additional Munsif Magistrate, Guntur in its judgment has categorically recorded findings that the petitioner issued cheque, Ex.P1 in discharge of the debt/liability under promissory note, Ex.P.2 which on presentation in the bank was dishonoured due to “funds insufficient” for which the Bank issued memo, Ex.P3. The complainant thereafter issued a registered statutory notice, Ex.P4 which was served on the petitioner, but the amount was not paid. The learned Trail Court held that the evidence of P.W.1 was corroborated with the evidence of the witnesses and the documentary evidence and as such the complainant proved the guilt of the accused. These findings have been recorded on consideration of the evidence on record oral and documentary. These findings have been affirmed by the learned lower Appellate Court, which also appreciated the evidence on record. 12. The burden of proof, to prove the guilt of the accused is on the complainant, which was discharged satisfactorily. The prerequisites for the offence punishable under Section 138 of the N.I. Act have been proved. The presumption has not been rebutted by the accused/petitioner. The concurrent findings are of fact and the Court does not find those findings suffering from any illegality or perversity so as to call for any interference in the exercise of revision jurisdiction. 13. So far as the sentence imposed on the petitioner is concerned, he having been convicted, is liable for punishment provided for by Section 138 of N.I. Act, according to which the convict shall be punished with imprisonment for a term which may be extended to two (02) years, or with fine which may extend to twice the amount of the cheque, or with both. 14. The trial Court has imposed the sentence of R.I. for six (06) months and the fine amount of Rs.5000/-. 14. The trial Court has imposed the sentence of R.I. for six (06) months and the fine amount of Rs.5000/-. No fault can be found in imposing such sentence which was imposed considering various factors, taking a lenient view. 15. However, as much time has passed since the revision was filed and as on today, the petitioner must be about 50 years keeping in view the very object of Section 138 of the N.I. Act, the Court considers it appropriate to afford an opportunity to the petitioner to make payment of fine double the cheque amount before the Court below to be paid to the complainant as compensation, if the petitioner wants to avoid the sentence of imprisonment as imposed by the Trial Court. 16. In Gimpex Private Limited vs. Manoj Goel, 2021 SCC Online SC 925, the Honorable Supreme Court held that under the shadow of Section 138 of N.I. Act, parties are encouraged to settle the dispute resulting in ultimate closure of the case rather than continuing with a protracted litigation before the Court. This is beneficial for the complainant as it results in early recovery of money; alteration of the terms of the contract for higher compensation and avoidance of litigation. Equally, the accused is benefited as it leads to avoidance of a conviction and sentence or payment of a fine. It also leads to unburdening of the judicial system, which has a huge pendency of complaints filed under Section 138 of N.I. Act. 17. It is apt to reproduce paragraphs 27 to 31 of Gimpex (supra), as under :- “27. The nature of the offence under Section 138 of the NI Act is quasi-criminal in that, while it arises out of a civil wrong, the law, however, imposes a criminal penalty in the form of imprisonment or fine. The purpose of the enactment is to provide security to creditors and instil confidence in the banking system of the country. The nature of the proceedings under Section 138 of the NI Act was considered by a three judge Bench decision of this Court in P Mohanraj v. Shah Brothers Ispat Private Limited , where Justice RF Nariman, after adverting to the precedents of this Court, observed that: “53. The nature of the proceedings under Section 138 of the NI Act was considered by a three judge Bench decision of this Court in P Mohanraj v. Shah Brothers Ispat Private Limited , where Justice RF Nariman, after adverting to the precedents of this Court, observed that: “53. A perusal of the judgment in Ishwarlal Bhagwandas [S.A.L. Narayan Row v. Ishwarlal Bhagwandas, (1966) 1 SCR 190 : AIR 1965 SC 1818 ] would show that a civil proceeding is not necessarily a proceeding which begins with the filing of a suit and culminates in execution of a decree. It would include a revenue proceeding as well as a writ petition filed under Article 226 of the Constitution, if the reliefs therein are to enforce rights of a civil nature. Interestingly, criminal proceedings are stated to be proceedings in which the larger interest of the State is concerned. Given these tests, it is clear that a Section 138 proceeding can be said to be a “civil sheep” in a “criminal wolf's” clothing, as it is the interest of the victim that is sought to be protected, the larger interest of the State being subsumed in the victim alone moving a court in cheque bouncing cases, as has been seen by us in the analysis made hereinabove of Chapter XVII of the Negotiable Instruments Act.” 28. Given that the primary purpose of Section 138 of the NI Act is to ensure compensation to the complainant, the NI Act also allows for parties to enter into a compromise, both during the pendency of the complaint and even after the conviction of the accused. The decision of this Court in Meters and Instruments (P) Ltd. v. Kanchan Mehta summarises the objective of allowing compounding of an offence under Section 138 of the NI Act: “18.2. The object of the provision being primarily compensatory, punitive element being mainly with the object of enforcing the compensatory element, compounding at the initial stage has to be encouraged but is not debarred at later stage subject to appropriate compensation as may be found acceptable to the parties or the court.” 29. The object of the provision being primarily compensatory, punitive element being mainly with the object of enforcing the compensatory element, compounding at the initial stage has to be encouraged but is not debarred at later stage subject to appropriate compensation as may be found acceptable to the parties or the court.” 29. In Prakash Gupta v. SEBI a two judge Bench of this Court of which one of us (Justice DY Chandrachud) was a part, analysed the decision in Meters and Instruments (supra) in the context of a discussion on whether compounding of an offence requires the consent of an aggrieved party (para 78). The decision in Meters and Instruments (supra) is cited aboves in regard to the rationale behind compounding of offences punishable under Section 138. In Damodar S Prabhu v. Sayed Babalal a three judge Bench of this Court observed that the effect of an offence under Section 138 of the NI Act is limited to two private parties involved in a commercial transaction. However, the intent of the legislature in providing a criminal sanction for dishonour of cheques is to ensure the credibility of transactions involving negotiable instruments. The Court observed: “4. It may be noted that when the offence was inserted in the statute in 1988, it carried the provision for imprisonment up to one year, which was revised to two years following the amendment to the Act in 2002. It is quite evident that the legislative intent was to provide a strong criminal remedy in order to deter the worryingly high incidence of dishonour of cheques. While the possibility of imprisonment up to two years provides a remedy of a punitive nature, the provision for imposing a “fine which may extend to twice the amount of the cheque” serves a compensatory purpose. What must be remembered is that the dishonour of a cheque can be best described as a regulatory offence that has been created to serve the public interest in ensuring the reliability of these instruments. The impact of this offence is usually confined to the private parties involved in commercial transactions.” 30. However, this Court also noted that the introduction of a criminal remedy has given rise to a worrying trend where cases under Section 138 of the NI Act are disproportionately burdening the criminal justice system. This Court observed : “5. The impact of this offence is usually confined to the private parties involved in commercial transactions.” 30. However, this Court also noted that the introduction of a criminal remedy has given rise to a worrying trend where cases under Section 138 of the NI Act are disproportionately burdening the criminal justice system. This Court observed : “5. Invariably, the provision of a strong criminal remedy has encouraged the institution of a large number of cases that are relatable to the offence contemplated by Section 138 of the Act. So much so, that at present a disproportionately large number of cases involving the dishonour of cheques is choking our criminal justice system, especially at the level of Magistrates' Courts. As per the 213th Report of the Law Commission of India, more than 38 lakh cheque bouncing cases were pending before various courts in the country as of October 2008. This is putting an unprecedented strain on our judicial system.” 31. Thus, under the shadow of Section 138 of the NI Act, parties are encouraged to settle the dispute resulting in ultimate closure of the case rather than continuing with a protracted litigation before the court. This is beneficial for the complainant as it results in early recovery of money; alteration of the terms of the contract for higher compensation and avoidance of litigation. Equally, the accused is benefited as it leads to avoidance of a conviction and sentence or payment of a fine. It also leads to unburdening of the judicial system, which has a huge pendency of complaints filed under Section 138 of the NI Act. In Damodar S. Prabhu (supra) this Court had emphasised that the compensatory aspect of the remedy under Section 138 of the NI Act must be preferred and has encouraged litigants to resolve disputes amicably. The Court observed: “18. It is quite obvious that with respect to the offence of dishonour of cheques, it is the compensatory aspect of the remedy which should be given priority over the punitive aspect. There is also some support for the apprehensions raised by the learned Attorney General that a majority of cheque bounce cases are indeed being compromised or settled by way of compounding, albeit during the later stages of litigation thereby contributing to undue delay in justice delivery. There is also some support for the apprehensions raised by the learned Attorney General that a majority of cheque bounce cases are indeed being compromised or settled by way of compounding, albeit during the later stages of litigation thereby contributing to undue delay in justice delivery. The problem herein is with the tendency of litigants to belatedly choose compounding as a means to resolve their dispute. Furthermore, the written submissions filed on behalf of the learned Attorney General have stressed on the fact that unlike Section 320 CrPC, Section 147 of the Negotiable Instruments Act provides no explicit guidance as to what stage compounding can or cannot be done and whether compounding can be done at the instance of the complainant or with the leave of the court………………………………………..” 18. For all the aforesaid reasons, the petitioner is granted liberty to deposit before the Court below an amount of Rs.50,000/- (Rupees fifty thousand only) being twice the amount of cheque, as sentence of fine, within a period of four (04) months and upon such deposit being made the said amount shall be paid to the complainant as compensation, by the Court below. Upon such deposit by the petitioner, the sentence as imposed by the court below shall stand substituted by the sentence of fine to the tune of twice the cheque amount, and the sentence imposed by the court below shall not be enforced upon the petitioner. But, if such amount is not deposited by the petitioner as aforesaid, on expiry of four (04) months period, the petitioner shall have to serve the sentence as imposed by the Court below, which the court below shall ensure is enforced as per law. 19. For a period of four (04) months, the sentence imposed by the Court below shall remain suspended. 20. The revision stands dismissed, with the aforesaid observations and directions. 21. Consequently, the pending applications, if any shall stand closed. Let the order be communicated to the Court below.