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2024 DIGILAW 1192 (KER)

Salim A. , S/o. Assan Bava v. State Of Kerala

2024-09-13

M.B.SNEHALATHA

body2024
ORDER : Revision Petitioner is the accused in C.C.No.346/2014 on the file of Judicial First Class Magistrate Court-IV (Mobile Court), Thiruvananthapuram. He assails the judgment in Crl.A No.219/2016 of Additional Sessions Court-II, Thiruvananthapuram which confirmed the conviction and sentence against him in C.C No.346/2014 for the offence punishable under Section 138 of Negotiable Instrument Act, 1881 (hereinafter referred to as ‘NI Act’). 2. The parties shall be referred to as complainant and accused. 3. The case of the complainant in brief is that Ext.P1 cheque issued by the accused in discharge of the liability of the accused to pay an amount of Rs.3 lakhs was bounced stating the reason “payment stopped by the drawer”. In spite of receipt of Ext.P4 lawyer notice, accused neither sent any reply nor paid the amount covered by Ext.P1 cheque. Accused thereby committed the offence punishable under Section 138 of N.I Act. 4. Accused pleaded not guilty to the accusation and denied issuance of Ext.P1 cheque in discharge of any debt or liability. His defence was that complainant, who was an employee in his shop, misused one of the signed blank cheques entrusted in connection with his business. 5. Before the trial court, PWs 1 to 3 were examined on the side of the complainant and Exts.P1 to P15 were marked. Accused got himself examined as DW1. DW2 was examined on his side. Exts.D1 to D6 were also marked. 6. After trial, the learned Magistrate found the accused guilty under Section 138 N.I Act and he was convicted and sentenced to undergo imprisonment till rising of the court and to pay a compensation of Rs.3 lakhs to the complainant under Section 357(3) Cr.P.C with a stipulation that in default of payment of compensation, accused shall undergo simple imprisonment for three months. The appeal preferred by the accused as Crl.A.No.219/2016 was dismissed by the Sessions Court by confirming the conviction and sentence. 7. Admittedly, Ext.P1 is a cheque issued from the account maintained by the accused with the Corporation Bank, Vellayambalam Branch, Thiruvananthapuram. The accused would also admit his signature in Ext.P1 cheque. Exts.P2 is the memo issued from the Bank. Ext.P2 would show that Ext.P1 cheque was dishonoured for the reason “payment stopped by the drawer”. 7. Admittedly, Ext.P1 is a cheque issued from the account maintained by the accused with the Corporation Bank, Vellayambalam Branch, Thiruvananthapuram. The accused would also admit his signature in Ext.P1 cheque. Exts.P2 is the memo issued from the Bank. Ext.P2 would show that Ext.P1 cheque was dishonoured for the reason “payment stopped by the drawer”. Ext.P4 would reveal that upon receipt of Ext.P2 memo from the Bank, the complainant caused to issue lawyer notice to the accused intimating the factum of dishonour of Ext.P1 cheque and demanding the amount covered by Ext.P1 cheque. 8. The version of the complainant who was examined as PW1 is that on 26.01.2013, accused borrowed Rs.3 lakhs from him to meet the marriage expenses of the daughter of accused and in discharge of the said debt, accused issued a cheque dated 28.01.2013 drawn on Vijaya Bank. Though he presented the said cheque for collection, it was bounced due to 'insufficient funds' in the account of the accused. Ext.P3 is the memo received from the bank. His further version is that when he intimated the factum of dishonour of the said cheque, the accused issued another cheque namely Ext.P1 cheque dated 15.2.2013 drawn on Corporation Bank, Vellayambalam Branch, Thiruvananthapuram. According to PW1, though he presented Ext.P1 cheque for collection, it was also returned dishonoured stating the reason “Payment Stopped by the Drawer”. Ext.P2 is the memo received from the Bank. 9. Per contra, the defence canvassed by the accused is that complainant was an employee in 'Bismillah Cold Storage' run by him; that he had entrusted signed blank cheques with the complainant and one such blank signed cheque was misused by the complainant. His case is that there was a property transaction between himself and the complainant whereby, he purchased the property of the complainant for a sale consideration of Rs.20 lakhs. Subsequent to the execution of the said sale deed, complainant demanded an additional sale consideration of Rs.3 lakhs by saying that the property would fetch more price. When the accused refused to oblige to the said demand for additional sum, complainant misused one of the blank signed cheques entrusted with him in connection with the business purpose. 10. To substantiate his defence, accused got himself examined as DW1. DW2 was also examined on his side. Exts.D1 to D6 were also marked. 11. When the accused refused to oblige to the said demand for additional sum, complainant misused one of the blank signed cheques entrusted with him in connection with the business purpose. 10. To substantiate his defence, accused got himself examined as DW1. DW2 was also examined on his side. Exts.D1 to D6 were also marked. 11. Ext.P14 would reveal that there was a property transaction between the complainant and the accused whereby the accused purchased the property owned by the complainant for a sale consideration of Rs.20 lakhs. According to the complainant, he received the entire sale consideration of Rs.20 lakhs. 12. Though the accused would contend that the complainant was an employee of the Cold Storage and Meat Stall run by him, there is no acceptable evidence to show that the complainant was an employee under him. There is no acceptable evidence in support of the defence canvassed by the accused that he had entrusted blank cheque leaves with the accused for his business purposes and one such cheque leaf was misused by the complainant. The testimony of DW2 do not in any way help the accused in substantiating his defence. On the other hand, the evidence adduced by the complainant would reveal that the accused borrowed an amount of Rs.3 lakhs from the complainant on 26.1.2013 and in discharge of the said debt, he issued a cheque dated 28.1.2013 for Rs.3 lakhs drawn on Vijaya Bank, Vellayambalam Branch and on presentation, the said cheque was bounced. Exts.P8 and P3 fortifies the version of the complainant that the cheque dated 28.1.2013 drawn on Vijaya Bank, Vellayambalam Branch issued by the accused was dishonoured for lack of funds in the account of accused. It has also come out in evidence that when the accused was informed about the dishonour of cheque dated 28.1.2013 drawn on Vijaya Bank, Vellayambalam Branch, he issued another cheque namely Ext.P1 cheque dated 15.2.2013 for Rs.3 lakhs drawn on Corporation Bank, Vellayabalam Branch. Ext.P2 memo would show that Ext.P1 cheque issued by the accused was also dishonoured upon presentation for the reason ‘payment stopped by the drawer’. 13. The complainant has established the factual basis for raising the presumption under Section 118(a) and 139 of N.I Act. Of course, it is a rebuttable presumption. Accused has not succeeded in rebutting the said presumption as rightly held by the learned Magistrate and confirmed by the learned appellate court. 13. The complainant has established the factual basis for raising the presumption under Section 118(a) and 139 of N.I Act. Of course, it is a rebuttable presumption. Accused has not succeeded in rebutting the said presumption as rightly held by the learned Magistrate and confirmed by the learned appellate court. It is obligatory for the court to raise the presumption under Section 139 of N.I Act, which is a presumption of law. If there was no debt or liability as contended by the accused, he could have sent a reply to Ext.P4 lawyer notice. The conduct of the accused in not sending any reply to Ext.P4 notice speaks volumes in the facts and circumstances of the case. 14. The object of Chapter XVII comprising Section 138 to 142 of the N.I. Act was aimed at inculcating faith in the efficacy of banking operations and giving credibility to negotiable instruments in business transactions. A negotiable instrument is a solemn document which carries with it a representation to the holder in due course of any such instrument but also a promise that the same shall be honoured for payment. Section 139 of the Negotiable Instruments Act mandates that unless the contrary is proved, it is to be presumed that a 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 liability. The said presumption is a rebuttable one. However, the onus of proving that the cheque was not in discharge of any debt or other liability is on the accused/drawer of the cheque. It is to be borne in mind that Section 138 of N.I Act while making dishonour of a cheque an offence also provides for safeguards to protect the drawers of such instrument where dishonour may take place for the reasons other than those arising out of dishonest intentions. It mandates service of a notice upon the drawer of the cheque calling upon him to make the payment covered by the cheque and permits prosecution only after the expiry of the statutory period and upon failure of the drawer to make the payment within the said period. 15. A question arises as to whether the dishonour of the cheque would constitute an offence only in two contingencies referred to in Section 138 and none else. 15. A question arises as to whether the dishonour of the cheque would constitute an offence only in two contingencies referred to in Section 138 and none else. The two contingencies referred to in Section 138 of N.I. Act are (i) whether the cheque was returned by the bank unpaid because of the amount of money standing to the credit of that account is insufficient to honour the cheque (ii) that it exceeds the amount arranged to be paid from that account by an agreement made with that bank. 16. Hence the question is, in a case where cheque is returned by the bank unpaid on the ground that ‘payment stopped by the drawer’, would it constitute an offence under Section 138 of N.I Act? 17. If the argument that dishonour of the cheque for the reason ‘payment stopped by the drawer’ could not constitute an offence under Section 138 N.I Act is accepted, it will make Section 138 of N.I Act redundant and in such a case by giving instruction to the bank to stop payment immediately after issuing a cheque against a debt or liability, the drawer can easily get rid of the penal consequences envisaged therein. The drawer of a cheque may practice many ingenious methods of avoiding payment. 18. In Electronics Trade and Technology Development Corporation Ltd. Secunderabad v. Indian Technologists and Engineers (Electronics) Pvt.Ltd. and another [ 1996(2) SCC 739 ], the Apex Court held as follows: “It would thus be clear that when a cheque is drawn by a person on an account maintained by him with the banker for payment of any amount of money to another person out of the account for the discharge of the debt in whole or in part or other liability is returned by the bank with the endorsement like (1) in this case, "I refer to the drawer" (2) "instructions for stoppage of payment" and (3) "stamp exceeds arrangement", it amounts to dishonour within the meaning of Section 138 of the Act. On issuance of the notice by the payee or the holder in due course after dishonour, to the drawer demanding payment within 15 days from the date of the receipt of such a notice, if he does not pay the same, the statutory presumption of dishonest intention, subject to any other liability, stands satisfied.” 19. On issuance of the notice by the payee or the holder in due course after dishonour, to the drawer demanding payment within 15 days from the date of the receipt of such a notice, if he does not pay the same, the statutory presumption of dishonest intention, subject to any other liability, stands satisfied.” 19. In M/s.Modi Cements Ltd v. Shri.Kuchil Kumar Nandi [ (1998) 3 SCC 249 ] a question arose before the Apex Court as to whether dishonour of a cheque on the ground that the drawer had stopped payment was a dishonour punishable under Section 138 of N.I. Act. The Apex Court held that if the proposition that dishonour of cheque for the reason ‘payment stopped by the drawer’ could not constitute an offence under Section 138 N.I Act is accepted, it will make Section 138 N.I Act a dead letter, for, by giving instructions to 1 the bank to stop payment immediately after issuing a cheque against a debt or a liability the drawer can easily get rid of the penal consequences notwithstanding the fact that a deemed offence was committed. 20. In M.M.T.C Ltd. and another v. Medchl Chemicals and Pharma (P) Ltd. and another [ (2002) 1 SCC 234 ] the Apex Court held that even in cases where the dishonour of the cheque was on account of stop payment instruction of a drawer, a presumption regarding a cheque being for consideration would arise under Section 139 of N.I Act and an offence under Section 138 N.I Act could still be made out. The accused can establish that stop payment instructions were not issued due to insufficiency or paucity of funds. If the accused establishes that there were sufficient funds in his account to clear the amount of the cheque at the time of presentation of cheque for encashment at the drawer bank and that the stop payment notice had been issued due to other valid reasons including that there was no existing debt or liability at the time of presentation of cheque for encashment, then the offence under Section 138 would not be made out. The burden to prove such facts is on the accused. In Goaplast (P) Ltd. v. Chico Ursula D’souza and another [ (2003)3 SCC 232 ] the Hon’ble Apex Court held that stop payment instructions and consequent dishonour of cheque attracts the offence under Section 138 N.I Act. The burden to prove such facts is on the accused. In Goaplast (P) Ltd. v. Chico Ursula D’souza and another [ (2003)3 SCC 232 ] the Hon’ble Apex Court held that stop payment instructions and consequent dishonour of cheque attracts the offence under Section 138 N.I Act. The Apex Court observed as follows: “This presumption coupled with the object of Chapter XVII of the Act which is to promote the efficacy of banking operation and to ensure credibility in business transactions through banks persuades us to take a view that by countermanding payment of post-dated cheque, a party should not be allowed to get away from the penal provision of Section 138 of the Act. A contrary view would render Section 138 a dead letter and will provide a handle to persons trying to avoid payment under legal obligations undertaken by them through their own acts which in other words can be said to be taking advantage of one's own wrong.” 21. In Laxmi Dyechem vs. State of Gujarat and Ors. (MANU/SC/1030/2012) the Hon'ble Apex Court held thus: “The net effect is that dishonour on the ground that the payment has been stopped, regardless whether such stoppage is with or without notice to the drawer, and regardless whether the stoppage of payment is on the ground that the amount lying in the account was not sufficient to meet the requirement of the cheque, would attract the provisions of Section 138.” 22. The evidence on record would show that Ext.P1 cheque issued by the accused in discharge of his liability to pay an amount of Rs.3 lakhs to the complainant was dishonoured stating the reason ‘payment stopped by the drawer’. Ext.P12 statement of account of the accused would reveal that at the time when Ext.P1 cheque came for collection in the bank, there was no sufficient account of the accused to honour Ext.P1 cheque. 23. The learned Magistrate and the learned Sessions Judge have appreciated the evidence in its correct perspective and reached at the right finding that the accused has committed the offence under Section 138 N.I Act. Therefore, this Court finds no reason to interfere with the finding of conviction and order of sentence passed against the accused. The revision petition is devoid of any merit and accordingly dismissed. The trial court shall take steps to execute the sentence. Registry shall transmit the records to the trial court forthwith.