Criminal Appeal No.46 of 2006

22nd July, 2008

Petitioner Counsel: Mr. S. M. KERKAR ,Mr. S. V. NAIK
Respondent Counsel: Mr. M. SALKAR

Cases Cited:
C. Antony Vs. K. G. Raghavan Nair, 2003 ALL MR (Cri) 130 (S.C.)=AIR 2003 SC 182 [Para 4]
Goa Plast (P) Ltd. Vs. Chico Ursula D'Souza, 2004(2) Mh.L.J. 348 [Para 8]
Hiten Sagar Vs. IMC Ltd., 2001(3) Mh.L.J. 659 [Para 11]
M. S. Narayana Menon @ Mani Vs. State of Kerala, 2006(5) ALL MR 33=2006(2) DCR 305 [Para 12]
Santan Financers & Real Estate Pvt. Ltd. Vs. Shri. Devapa A. Sarvi, 2005 ALL MR (Cri) 1116=2005(2) DCR 65 [Para 12]

JUDGMENT

JUDGMENT :- The complainant in Criminal Case No.320/2003 before the learned Judicial Magistrate, First Class, Vasco has preferred this appeal to challenge the acquittal of the respondent for the offence punishable under section 138 of the Negotiable Instruments Act recorded by the learned Magistrate.

2. The facts which gave rise to the filing of the complaint by the appellant are as under :

The appellant claimed that the respondent was known to him since about 5 to 6 years prior to the incident. The respondent approached the appellant in October, 2002 and sought a loan of Rs.1,80,000/- and agreed to repay it within an year. Accordingly, the appellant paid a sum of Rs.1,80,000/- in the first week of November, 2002. Towards the repayment of the said amount, the respondent issued a post dated cheque for a sum of Rs.1,80,000/- bearing No.625372 dated 18.8.2003 drawn on Vijaya Bank, Vasco. This cheque was issued in presence of Mr. Macus Dias and Mr. Damodhar Marsekar. Upon presentation of the cheque in the first instance, it bounced and was presented again on 22.8.2003 at the instance of the respondent. It was again dishonoured by the Bank for want of sufficient funds. On 23.8.2003, the appellant issued a notice demanding the amount due. The notice was received by the respondent on 28.8.2003. However, the respondent failed to pay the amount under the cheque, which was demanded and hence, the appellant filed a complaint before the learned Judicial Magistrate, First Class.

3. The appellant examined himself in support of his case and tendered necessary documents. No other witness was examined on behalf of the appellant. Though the respondent had stated in his examination under section 313 of the Criminal Procedure Code that he wanted to examine himself, he did not examine himself. After considering the evidence tendered, the learned Magistrate held that the appellant failed to prove that the cheque was issued in discharge of legally enforceable debt or liability, and also that the complainant failed to prove that it was dishonoured during the period of its validity. The learned Magistrate proceeded to acquit the respondent which led to the filing of the present appeal.

4. I have heard Advocate Kerkar for the appellant and Advocate Salkar for the respondent. The scope of interference in appeal against acquittal is extremely limited and the Appellate Court would be justified in setting aside the judgment of acquittal only if it is shown that such judgment was perverse. For this purpose learned Counsel for the respondent has placed reliance in the case of C. Antony Vs. K. G. Raghavan Nair, reported in AIR 2003 SC 182 : [2003 ALL MR (Cri) 130 (S.C.)]. With this limitation in view, with the help of both the learned Counsel, I have gone through the entire evidence on record and examined the findings recorded by the learned Magistrate. It is pertinent to note that in the statement under section 313 of the Criminal Procedure Code, the respondent had denied having issued cheque. However, the cross-examination of the appellant would show that the respondent claimed to have received only a sum of Rs.15,000/- as a loan and also claimed to have repaid a sum of Rs.15,000/- on 18.9.2003 as "part payment". This suggestion is admitted by the appellant. It may be useful to reproduce the sentence in the cross-examination as it is.

"It is true that accused had paid an amount of Rs.15,000/- to me on 18.9.2003 as a part payment by D.D.."

This would be inconsistent with the respondent's claim that no amount was due and no cheque was ever issued. Otherwise the question of paying Rs.15,000/- as "part payment" would not arise. It would show that more amount was due.

5. The appellant had stated that the cheque was received by him in presence of two witnesses, namely Marcus Dias and Damodar Marsekar, both of whom have not been examined by the complainant. However, non-examination of these two witnesses cannot lead to the conclusion that such a cheque was not issued, since law does not prescribe that any particular number of witnesses must be examined to prove a transaction of this nature. It is pertinent to note that the cheque was not dishonoured because signature did not tally. Therefore, denial by the respondent in statement under section 313 of Criminal Procedure Code, appears excessive, particularly in face of the fact that it was suggested to the appellant that a sum of Rs.15,000/- was paid on 18.9.2003 terming it as "part payment" i.e. after the notice was received by the respondent on 28.8.2003. The observations of the learned Magistrate about non-examination of the two witnesses, therefore, cannot be said to be justified.

6. The learned Magistrate has observed that the testimony of appellant has been totally shaken in the cross-examination. The cross-examination is brief and it is not clear as to what led the learned Magistrate to conclude that the testimony is totally shaken. The appellant had admitted that he is not a registered money lender or a tax payer. He had also admitted that it was the first occasion, when the respondent took loan from him. He admitted that he did not have any document to show that the respondent had taken loan, but denied the suggestion that he had advanced only a sum of Rs.15,000/-. He stated that he did not know who wrote his name, amount in words and figures on the cheque, but added that the amount was written by the accused himself. He then denied the suggestions made in cross-examination. This cross-examination does not at all show that the testimony of the appellant has been totally shaken in the cross-examination as observed by the learned Magistrate in paragraph 17 of the judgment.

7. The learned Magistrate observed that the appellant did not have any documents to show that the respondent had taken a loan of Rs.1,80,000/- from him and stated that to her mind, no prudent man would give as such a big amount without putting anything in writing. If Courts were to insist that cheques must be accompanied by some documents to indicate existence of liability, the Courts would not only be reading a requirement which is not prescribed by law, but also negating the presumption required to be drawn under section 139 of the Negotiable Instruments Act.

8. The learned Magistrate went on to observe in paragraph 19 of the judgment that suggestion on behalf of the respondent about payment of Rs.15,000/- does not show that it was in respect of transaction covered by the cheque, "for the simple reason that P.W.1 has failed to prove that there was commercial transaction between him and the accused in respect of said cheque". The learned Magistrate then placed reliance on judgment in Goa Plast (P) Ltd. Vs. Chico Ursula D'Souza reported in 2004(2) Mh.L.J. 348. According to the learned Magistrate, it was held in the said judgment that, "in order to prove the dishonour of the cheque, the complainant has to prove the business or commercial transaction with the accused and as such the said cheque was legally enforceable debt".

9. As rightly pointed out by the learned Counsel for the appellant, learned Magistrate seems to have misread the observations in the case of Goa Plast (P) Ltd. Versus Chico Ursula D'Souza's case. In Goa Plast case, the respondent had issued 10 post dated cheques of Rs.40,000/- each in favour of the appellant towards the liability of the amount misappropriated. A cheque was dishonoured and the amount thereunder, was demanded by a notice. As notice was not complied with, a complaint was filed under section 142 of the Negotiable Instruments Act. The learned Judicial Magistrate, First Class acquitted the accused holding that the petitioner failed to prove the liability and also holding that the respondent had rebutted the statutory presumption under section 139 of the Act. Appeal against this acquittal was dismissed by the High Court. Aggrieved thereby the complainant was before the Apex Court. While disposing of the appeal, granting one month's time to the respondent to pay twice the amount of the cheque, or in default, sentencing the respondent to suffer simple imprisonment for 6 months, the Hon'ble Apex Court took a review of the relevant provisions, and emphasized the object behind the provisions under section 138 and 139 of the Negotiable Instruments Act in paragraph 26 of the judgment in the following words :

"26. The object and the ingredients under the provisions, in particular, sections 138 and 139 of the Act cannot be ignored. Proper and smooth functioning of all business transactions, particularly, of cheques as instruments, primarily depends upon the integrity and honesty of the parties. In our country, in a large number of commercial transactions, it was noted that the cheques were issued even merely as a device not only to stall but even to defraud the creditors. The sanctity and credibility of issuance of cheques in commercial transactions was eroded to a large extent. Undoubtedly, dishonour of a cheque by the bank causes incalculable loss, injury and inconvenience to the payee and the entire credibility of the business transactions within and outside the country suffers a serious setback. Parliament, in order to restore the credibility of cheques as a trustworthy substitute for cash payment enacted the aforesaid provisions. The remedy available in a Civil Court is a long-drawn matter and an unscrupulous drawer normally takes various pleas to defeat the genuine claim of the payee."

In paragraphs 11,12 & 13 of the judgment, the Hon'ble Apex Court held that :

"11. To fulfill the objective, the legislature while amending the Act has made the following procedure :

(i) Under Section 138 a deeming offence is created.

(ii) In section 139, a presumption is ingrained that the holder of the cheque received it in discharge of liability.

(iii) Disallowing a defence in section140 that the drawer has no reason to believe that cheque would be dishonoured.

(iv) An explanation is provided to section 138 to define the words 'debt or other liability' to mean a legally enforceable debt or other liability."

"12. If the aforesaid are borne in mind then the findings of the High Court are legally perverse, namely that section 138 of the Act has application only in the case of transactions involving mercantile relationship and the second being that the appellant has failed to prove the liability. Paragraph 18 of the judgment of the High Court contains both the findings which reads as under :

"In this case no evidence or history being traced to show the relationship between the complainant and the respondent-accused. From the cross-examination it transpired that the respondent-accused was working as the Manager of the factory. Thus, relation were master and servant or employee and employer, there being no business or commercial or mercantile relation between the parties"."

"13. The High Court, in our opinion, has failed to appreciate that on the facts of the instant case, the liability was a legally enforceable debt or liability as per the explanation to section 138 of the Act, therefore, the relationship between the appellant and the respondent was not at all a factor germane to the proceedings for an offence under section 138 of the Act. The liability was a legally enforceable debt is clear from the finding of the High Court at paragraph 19 which is quoted below :

"The appellant Company has attempted to short-circuit the suit by compelling the accused-respondent to pay the amount"." (emphasis supplied)

10. It may be seen from the observations from paragraph 12 that the Apex Court had in fact disproved in strong words the findings of the High Court that Section 138 of the Negotiable Instruments Act would apply only in case of transactions involving mercantile relationship. In the face of this, the inference drawn by the learned Magistrate in paragraph 20 of the judgment is really unfortunate betraying that either she was not so careful in reading the judgment or not understanding the observations.

11. The learned Magistrate has placed reliance on the judgment in Hiten Sagar Vs. IMC Ltd., 2001(3) Mh.L.J. 659. It may be useful to reproduce the observations of the learned Magistrate as they are, in order to indicate the extent to which the learned Magistrate could go to push her own incorrect notions into the requirement of law, which read as under :

"Reliance is placed on the authority reported in 2001(3) Mh.L.J. 659 in Hiten Sagar and another Vs. IMC Ltd. and another - wherein it has been clearly held by the Hon'ble High Court that the cheque must be issued in discharge of any liability. Hence, it is thus clear that the cheque must be drawn for the discharge of the liability of the drawer of the cheque. In other words, if he has drawn the cheque for the discharge of the liability of another person without creating any document, it will not come under section 138 of N.I. Act."

As far as the proposition that the cheque must be drawn for discharge of liability, there can be no dispute, but to translate this into the requirement of having a document, is not deducible from the reported judgment.

12. The learned Counsel for the respondent submitted that even if it is taken that a presumption under section 139 of the Negotiable Instruments Act could be raised upon the complainant's stating that the cheque was issued by the respondent, it stood rebutted by the cross-examination of the complainant himself. Relying on a judgment of the Apex Court in M. S. Narayana Menon @ Mani Vs. State of Kerala and another, reported in 2006(2) DCR 305 : [2006(5) ALL MR (S.C.) 33], he submitted that the presumption would stand rebutted upon respondent's creating a probability that the cheque was not issued for discharge of a debt or a liability. The learned Counsel also placed reliance on judgment in Santan Financers & Real Estate Pvt. Ltd. Vs. Shri. Devapa A. Sarvi & Anr. reported in 2005(2) DCR 65 : [2005 ALL MR (Cri) 1116] for the same purpose. It is enough if the accused succeeds in creating a probability. The accused would not be required to tender proof beyond reasonable doubt in order to rebut the presumption. However, it is not clear as to how the respondent could claim to have created a probability that the cheque was issued against the loan of only Rs.15,000/- taken by the respondent. It may be recalled that on behalf of the respondent, it was specifically suggested to the appellant in cross-examination that a sum of Rs.15,000/- was repaid towards "part payment" implying that sum due was more than Rs.15,000/- falsifying the contention that only Rs.15,000/- was borrowed.

13. It appears that the entire approach of the learned Magistrate was to read in law the things it did not contain, which amounts to perversity, warranting interference by this Court. The learned Magistrate ought to have seen that the Apex Court had clearly pointed out the objects for which Negotiable Instruments Act was amended by creating offence punishable under section 138 of the said Act. The Court had reiterated in paragraph 26 of the judgment that in order to ensure the sanctity and credibility of issuance of cheques, the Parliament enacted the measure. The learned Magistrate had been made aware of this judgment, and had in fact referred to this judgment while deciding the matter. In spite of this, the learned Magistrate chose to take a view, which could be termed extremely unfortunate.

14. Hence, the appeal is allowed. The judgment acquitting the respondent is set aside and instead the respondent is convicted of the offence punishable under section 138 of the Negotiable Instruments Act. The respondent is not available in person before the Court. Therefore, in his absence, I have heard the learned Counsel for the respondent as to appropriate sentence in the matter. Since in this case, a sum of Rs.15,000/- is already said to have been paid to the appellant towards "part payment" and fact of two payments of Rs.5,000/- to the appellant were recorded in the rojnama of proceeding before the trial Court, a sum of Rs.25,000/- has been paid towards the liability of Rs.1,80,000/- leaving balance of Rs.1,55,000/- due. Considering his age, and the fact that he showed readiness to pay before this Court a sum of Rs.80,000/- as recorded in order dated. 24.01.2008, rather than sentencing the respondent to a term of imprisonment, he is sentenced to pay a fine of Rs.10,000/-, and to the appellant, compensation of Rs.1,55,000/- failing which the respondent shall suffer simple imprisonment for one month, for failure to pay the fine and 3 months for failure to pay compensation.

Appeal allowed.