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2023 DIGILAW 312 (AP)

Battu Satya Murthy @ Satyanarayana Murthy, S/o. Venkata Ratnam v. Vidyanjali Educational Society

2023-02-03

PRASHANT KUMAR MISHRA

body2023
ORDER : This criminal petition, under Section 482 Cr.P.C., has been filed challenging the order dated 25.08.2012 passed by the learned I Additional Judicial Magistrate of First Class, Tadepalligudem, in CC S.R.No.7237 of 2011, dismissing the complaint filed by the petitioner herein under Section 138 of the Negotiable Instruments Act, 1881 (for short, ‘the Act’), at the stage of registration, as not maintainable on the ground that there was no legally enforceable debt and no jural relationship between the complainant and the accused, which has been confirmed by the order dated 24.06.2013 passed by the learned V Additional District and Sessions Judge, West Godavari District, at Eluru, in Criminal Revision Petition No.13 of 2013. The petitioner prays for quashing the orders under challenge and for a direction to the trial Court to proceed with the matter in the above complaint and decide the same on merits. 2. The averments in the complaint filed by the petitioner, in brief, are as under: On the request made by accused No.2, who is the Secretary and Correspondent of accused No.1-society, the wife of the petitioner invested an amount of Rs.6,00,000/-in accused No.1-society and accused No.2 agreed to give 6% share in profits out of his 25% share. The wife of the complainant and accused No.2 entered into an agreement to that effect on 25.11.2008, which was reduced into writing. However, when the wife of the complainant demanded for payment of her share of profits, accused No.2 postponed the same on one pretext or the other and after repeated demands, he issued a cheque bearing No.880247 dated 31.05.2011 drawn on State Bank of India, Kaikaluru Branch, for a sum of Rs.5,00,000/-in favour of the complainant towards part payment of the amount due to the wife of the complainant. When the complainant presented the said cheque with his banker, it was dishonoured due to insufficient funds and despite issuance of legal notice, the accused failed to repay the cheque amount. 3. When the complainant presented the said cheque with his banker, it was dishonoured due to insufficient funds and despite issuance of legal notice, the accused failed to repay the cheque amount. 3. Learned counsel for the petitioner/complainant would refer to the judgments of the Hon’ble Supreme Court in I.C.D.S. Limited V. Beemna Shabeer reported in AIR 2002 SC 3014 and Hiten P. Dalal v. Bratindranath Banerjee reported in (2001) 6 SCC 16 , to argue that once a cheque has been issued by accused No.2, it should be deemed to have been issued in satisfaction of a legally enforceable debt and issuance of a cheque itself would amount to proof of existence of a legally enforceable debt and, therefore, the trial Court as well as the revisional Court were not justified in holding that the complaint under Section 138 of the Act is not maintainable at the stage of registration. 4. It is to be noted that in a recent judgment in Dashrathbhai Trikambhai Patel v. Hitesh Mahendrabhai Patel reported in 2022 AIR (SC) 4961, the Hon’ble Supreme Court has considered the issue as to whether an offence under Section 138 of the Act would be deemed to be committed if the cheque that is dishonoured does not represent the enforceable debt at the time of encashment. At paragraph 10 of the judgment, the provisions of Section 138 of the Act have been discussed as under: “Section 138 of the Act provides that a drawer of a cheque is deemed to have committed the offence if the following ingredients are fulfilled: (i) A cheque drawn for the payment of any amount of money to another person; (ii) The cheque is drawn for the discharge of the ‘whole or part’ of any debt or other liability. ‘Debt or other liability’ means legally enforceable debt or other liability; and (iii) The cheque is returned by the bank unpaid because of insufficient funds. However, unless the stipulations in the proviso are fulfilled the offence is not deemed to be committed. The conditions in the proviso are as follows: (i) The cheque must be presented in the bank within six months from the date on which it was drawn or within the period of its validity. However, unless the stipulations in the proviso are fulfilled the offence is not deemed to be committed. The conditions in the proviso are as follows: (i) The cheque must be presented in the bank within six months from the date on which it was drawn or within the period of its validity. (ii) The holder of the cheque must make a demand for the payment of the ‘said amount of money’ by giving a notice in writing to the drawer of the cheque within thirty days from the receipt of the notice from the bank that the cheque was returned dishonoured; and (iii) The holder of the cheque fails to make the payment of the ‘said amount of money’ within fifteen days from the receipt of the notice.” 5. The Hon’ble Supreme Court further referred to its earlier judgment in Indus Airways Private Limited v. Magnum Aviation Private Limited reported in (2014) 12 SCC 539 , wherein it was held that Section 138 of the Act would only be applicable where there is a legally enforceable debt subsisting on the date when the cheque is drawn. Reference was also made to the decision in Sampelly Satyanarayana Rao v. Indian Renewable Energy Development Agency Limited reported in (2016) 10 SCC 458 , wherein it was held that the test for the application of Section 138 of the Act is whether there was a legally enforceable debt on the date mentioned in the cheque and that if the answer is in the affirmative, then the provisions of Section 138 would be attracted. The Hon’ble Supreme Court has also referred to the decision in Sunil Todi v. State of Gujarat (Criminal Appeal No.1446 of 2021), wherein it was observed that a post-dated cheque issued after the debt was incurred would be covered within the meaning of ‘debt’. 6. Having referred to the above earlier judgments, the Hon’ble Supreme Court held at paragraphs 14, 15 and 16 of the judgment in Dashrathbhai Trikambhai Patel (supra) as under: “14. The judgments from Indus Airways (supra) to Sunil Todi (supra) indicate that much of the analysis on whether post-dated cheques issued as security would fall within the purview of Section 138 of the Act hinges on the relevance of time. The judgments from Indus Airways (supra) to Sunil Todi (supra) indicate that much of the analysis on whether post-dated cheques issued as security would fall within the purview of Section 138 of the Act hinges on the relevance of time. In Indus Airways (supra), this Court held that for the commission of the offence under Section 138, there must have been a debt on the date of issuance of the cheque. However, later judgments adopt a more nuanced position while discussing the validity of proceedings under Section 138 on the dishonour of post-dated cheques. This Court since Sampelly Satyanarayana Rao (supra) has consistently held that there must be a legally enforceable debt on the date mentioned in the cheque, which is the date of maturity. 15. This Court in NEPC Micon Ltd. v. Magna Leasing Ltd. 1995 AIR (SC) 1952 held that the Courts must interpret Section 138 with reference to the legislative intent to suppress the mischief and advance the remedy. The objective of the Act in general and Section 138 specifically is to enhance the acceptability of cheques and to inculcate faith in the efficacy of negotiable instruments for the transaction of business. [Sunil Sodhi v. State of Gujarat, Criminal Appeal No.1446 of 2021] Section 138 criminalises the dishonour of cheques. This is in addition to the civil remedy that is available. Through the criminalisation of the dishonour of cheques, the legislature intended to prevent dishonesty on the part of the drawer of a negotiable instrument. [M/s Electronics Trade and Technology Development Corporation Ltd., 1996 3 Crimes (SC) 82]. The interpretation of Section 138 must not permit dishonesty of the drawee of the cheque as well. A cheque is issued as security to provide the drawee of the cheque with a leverage of using the cheque in case the drawer fails to pay the debt in the future. Therefore, cheques are issued and received as security with the contemplation that a part or the full sum that is addressed in the cheque may be paid before the cheque is encashed. 16. The judgments of this Court on post-dated cheques when read with the purpose of Section 138 indicate that an offence under the provision arises if the cheque represents a legally enforceable debt on the date of maturity. The offence under Section 138 is tipped by the dishonour of the cheque when it is sought to be encashed. 16. The judgments of this Court on post-dated cheques when read with the purpose of Section 138 indicate that an offence under the provision arises if the cheque represents a legally enforceable debt on the date of maturity. The offence under Section 138 is tipped by the dishonour of the cheque when it is sought to be encashed. Though a post-dated cheque might be drawn to represent a legally enforceable debt at the time of its drawing, for the offence to be attracted, the cheque must represent a legally enforceable debt at the time of encashment. If there has been a material change in the circumstance such that the sum in the cheque does not represent a legally enforceable debt at the time of maturity or encashment, then the offence under Section 138 is not made out.” 7. On examination of the facts and circumstances of the present case, it is apparent that the case of the complainant herein is placed in a much inferior position than the case of the complainant that has fallen for consideration in the above judgment. In the instant case, admittedly, there is no agreement between the complainant and accused No.2 and the alleged agreement is between the wife of the complainant and accused No.2 and the complainant is not a party or signatory to the said agreement. It is not even the case of the complainant that the cheque has been issued in his favour as a security for the debt due under the agreement entered into between his wife and accused No.2. It is also not the case of the complainant that he is holding general power of attorney of his wife and the cheque was issued in his favour in such capacity of general power of attorney. Merely because there exists an agreement between the wife of the complainant and accused No.2, the same cannot be the sole basis to conclude that the cheque was issued in discharge of the amount due under the said agreement. There is absolutely no material on record to show that the cheque was issued in favour of the complainant towards discharge of a legally enforceable debt. There is absolutely no material on record to show that the cheque was issued in favour of the complainant towards discharge of a legally enforceable debt. There being no jural relationship between the complainant and accused No.2 and in the absence of any material to substantiate that accused No.2 had issued the cheque in favour of the complainant in discharge of a legally enforceable debt, this Court is of the considered opinion that the learned trial Judge is wholly justified in dismissing the complaint as not maintainable at the stage of registration and the revisional Court has rightly upheld the same. 8. This criminal petition fails and is, accordingly, dismissed. Pending miscellaneous applications, if any, shall stand closed.