Criminal Appeal N. 576 of 2008

6th June, 2011

Petitioner Counsel: Mr. J.T. GILDA
Respondent Counsel: Mr.BHARAT Vora

Cases Cited:
Rangappa Vs. Shrimohan, 2010 AIR (SC) 1898 [Para 5]
Bapurao Motiram Mankar Vs. Shri Vyankatesh Housing Agency, 2010(6) Mh.L.J. 71 [Para 5]
Gaurav Omprakash Jaju Vs. Shri Shakti Fabrics, 2010(6) Mh.L.J. 59 [Para 5]
Nitin Bapurao Mankar Vs. Vyankatesh Housing Agency, 2010(6) Mh.L.J. 86. [Para 5]
Ramprakash Urban Cooperative Society Limited Vs. Rajendra Bhagchand Verma, Criminal Application No.898/2009 Dt.16.2.2010 [Para 6]
Pawan Enterprises Vs. Satish H.Verma, 2003 Bom.C.R. (Cri) 974 [Para 6]
Joseph Sartho Vs. Gopinathan Nair, 2009 (2) Crimes 463 [Para 6]
State of U.P. Vs. Banne @ Baijnath and others, II 2009 CCR 35 SC [Para 6]
P. Venugopal Vs. Madan P. Sarathi, AIR 2009 SC 568 [Para 6]

JUDGMENT

JUDGMENT :- By means of this Appeal, the appellant (original complainant ) has challenged the validity, legality and correctness of the judgment and order dated 11th June, 2008 in Summary Criminal Case No.2130/ 2007 by the learned Judicial Magistrate, First Class, Court No.1, Yavatmal whereby the accused was acquitted of the offence punishable under section 138 of the Negotiable Instruments Act.

2. The fact, in brief are these: the complainant Credit Coop. Society had filed a Complaint in the Court of learned Judicial Magistrate, First Class Yavatmal which was registered as summary Criminal Case No.2130/2007. The complainant alleged that it is a registered society doing the business of advancing loans to its members. Smt. Sadhana Dharamchandraji Kochar is the Manager of the said society doing business in the name as "Yavatmal Zilla Mahesh Nagari Sahakari Pat Sanstha Maryadit, Yavatmal. The accused is a resident of Umarsara Tq. & Dist. Yavatmal. He needed loan for construction of a house in the sum of Rs. 5 lakhs which was sanctioned by the complainantsociety, after the accused had executed necessary documents including promissory note etc pursuant to the loan application dated 25.4.2006 made by the accused. The accused had also entered into an agreement with the complainantsociety (Exh.47). The accused had acknowledged receiving a sum of Rs. 3 lakhs on 27.6.2006 by executing a receipt; while he acknowledged receiving sum of Rs. 1 lakh on 16.8.2006 and executed a receipt. The complainant maintained account of loan in respect of the sums advanced to the accused and until 19.6.2007 an amount of Rs. 5,41,559/- was due and payable by the accused. The accused had issued a cheque bearing No.28442 on 20.4.2007 in the sum of Rs.1,40,000/- in favour of the complainant towards repayment of loan amount due. The cheque was presented by the complainant with Washim Urban Coopeative Bank Limited, Washim on 23.4.2007, but the said cheque was returned dishonoured from the Yavatmal Central Cooperative Bank Limited, Yavatmal Branch, with remarks "funds insufficient". The complainant sent notice of demand in writing through an Advocate on 14.5.2007. The notice was sent by registered post as well as under certificate of posting. The registered envelope returned with postal remarks 'not claimed returned to sender'; while the accused had received the notice sent under certificate of posting. Therefore, despite waiting for the accused to repay the demanded amount, he did not pay. Thus, the complainant was constrained to file the abovereferred complaint..

3. The complainant had tendered evidence by way of affidavit and also produced the relevant documents in support of the complaint through Smt. Sadhana Dharamchandji Kochar ( Manager of the complainant ). She was crossexamined on behalf of the accused on 5.4.2007. The accused chose to deny his liability and suggested that false complaint case is filed. The accused also tendered an affidavit in evidence and denied having received the entire sum of Rs. 5 lakhs, as alleged. The accused also alleged that the complainantsociety (through Its Present Manager) Mr. Kantilal Pande conspired to cheat and obtained 36 blank cheques from him at the time of advancing the loan amount by filling in the false date, amount and contents, falsely prosecuted the accused. The accused was also crossexamined on behalf of the complainant. In the course of his crossexamination, he admitted that the Pat Sanstha intimated him that outstanding loan amount against him was Rs.1,70,000/-. According to him, after obtaining loan in the sum of Rs.45,000/- he never obtained another loan from the complainant Pat Sanstha. In the course of the crossexamination, the accused did not dispute that the complainantPat Sanstha had sanctioned a loan of Rs. 5 lakhs to the accused and at the time of execution of agreement he had agreed to repay the loan amount by installment of Rs.14,000/-. He also agreed that the Bank had disbursed the loan amount of Rs. 5 lakhs to the accused in three installments. The first installment was in the sum of Rs. 3 lakhs; second in the sum of Rs. 1 lakh and The third in the sum of Rs. 1 lakh. Although in the course of his statement under section 313 of the Code of Criminal Procedure, 1973 ( in short " the Code") he chose to allege that false case is filed against him. According to him, at the time of grant of loan he had signed 36 blank cheques for security which were obtained from him. He denied that he had given the cheque in the sum of Rs.1,40,000/-. According to him, it was one of those 36 cheques. He also ventured in answer to Question No.9 in his statement under section 313 of the Code, that at that point of time, there was sufficient amount in his account to honour the cheque.

4. It appears that the learned JMFC Court No.1, Yavatmal who appreciated the evidence led in the case found that the complainant society had indeed disbursed loan in the sum of Rs. 5 lakhs to the accused for the purpose of repairing his house and further construction. The learned Magistrate also referred to presumptions for to start with as referred to under section 139 of the NIT Act to the effect that cheque was drawn for the consideration for discharging the liability or debt and that it was for the accused to rebut the presumption. The defence of the accused that he had given 36 blank signed cheques to the complainant before disbursement of the loan amount was found a bare version without any corroborating evidence to prove it. Thus, the learned Magistrate found that the prosecution has proved that the accused had issued cheque in the sum of Rs.1,40,000/- on 20th April,2006. However, the learned trial Magistrate observed that on 20th April,2007 the accused was not liable to pay Rs.1,40,000/- but on the date of issuance of the cheque in question outstanding loan amount against the accused was Rs.98,000/- only and, as such, it cannot be said that the accused was liable to pay the amount of Rs.1,40,000/-. Thus, the learned trial Magistrate held that the defence has proved that on the date of issuance of the cheque i.e. 20th April, 2007 the accused was not liable to pay the amount of Rs.1,40,000/- to the complainant on that ground the accused was acquitted of the offence punishable under section 138 of the N.I. Act.

5. Learned Advocate for the complainant submitted that the learned trial Magistrate committed a serious error of law to record a finding that the accused was not liable to pay sum of Rs.1,40,000/- to the complainant as on 20.4.2006. The statutory presumption under section 139 of the NI Act reads thus :

"139. Presumption in favour of holder : It shall be presumed, unless the contrary is proved, that the holder of a cheque received the cheque, of the nature referred to in section 138, for the discharge, in whole on or part, of any, debt or other liability ."

According to the learned Advocate for the appellant, the learned trial Magistrate ought to have started with the statutory presumption which is mandatory in terms. Thus, it is required to be presumed in such a case unless a contrary evidence is led by the defence that the cheque was received by the holder in discharge, in whole or in part, of any debt or other liability. The learned Advocate for the applicant criticized the observations by the learned trial Magistrate holding that the accused was not liable to pay sum of Rs,1,40,000/- on the date of issuance of cheque as perverse, contrary to the evidence on record as also contrary to the statutory presumptions referred above. In support of the submissions, learned Advocate for the appellant referred to the ruling in Rangappa vs. Shrimohan reported in 2010 AIR (SC) 1898 in order to submit that bare denial of the passing of the consideration cannot help the case of the defence but it is obligatory for the defence to lead evidence in rebuttal to the statutory presumptions in favour of holder. Thus, to rebut the presumption, the accused is required to bring on record facts and circumstances which can lead the Court to believe that the consideration did not exist or its nonexistence is so probable that prudent man would under the circumstances of the case act upon the plea that it did not exist. The Apex Court in Para no.14 after making reference to earlier cases, observed thus:

"14. In the light of these extracts, we are in agreement with the respondentclaimant that the presumption mandated by Section 139 of the Act does indeed include the existence of a legally enforceable debt or liability. To that extent, the impugned observations in Krishna Janardhan Bhat (supra) may not be correct. However, this does not in any way cast doubt on the correctness of the decision in that case since it was based on the specific facts and circumstances therein. As noted in the citations, this is of course in the nature of a rebuttable presumption and it is open to the accused to raise a defence wherein the existence of a legally enforceable debt or liability can be contested. However, there can be no doubt that there is an initial presumption which favours the complainant. Section 139 of the Act is an example of a reverse onus clause that has been included in furtherance of the legislative objective of improving the credibility of negotiable instruments. While Section 138 of the Act specifies a strong criminal remedy in relation to the dishonour of cheques, the rebuttable presumption under section 139 is a device to prevent undue delay in the course of litigation. However, it must be remembered that the offence made punishable by section 138 can be better described as a regulatory offence since the bouncing of a cheque is largely in the nature of a civil wrong whose impact is usually confined to the private parties involved in commercial transactions. In such a scenario, the test of proportionality should guide the construction and interpretation of reverse onus clauses and the accused/ defendant cannot be expected to discharge an unduly high standard or proof. In the absence of compelling justifications, reverse onus clauses usually impose an evidentiary burden and not a persuasive burden. Keeping this in view, it is a settled position that when an accused has to rebut the presumption under section 139, the standard of proof for doing so is that of 'preponderance of probabilities' . Therefore, if the accused is able to raise a probable defence which creates doubt about the existence of a legally enforceable debt or liability, the prosecution can fail. As clarified in the citations, the accused can rely on the materials submitted by the complainant in order to raise such a defence and it is conceivable that in some cases the accused may not need to adduce evidence of his/ her own. "

The Apex Court held despite slight discrepancy in the complainant's version that complaint disclosed prima facie existence of legally enforceable, debt or liability although accused did not admit the signature on the cheque as his which was concluded that the statutory presumptions comes into play and the same was not rebutted with regard to the material submitted by the complainant. Thus, conviction was upheld by the Apex Court for offence punishable under section 138 of the NI Act. Learned Advocate for the appellant also made a reference to the following rulings :

1) Bapurao Motiram Mankar vs. Shri Vyankatesh Housing Agency 2010 (6) Mh.L.J. 71;

2) Gaurav Omprakash Jaju vs. Shri Shakti Fabrics 2010 (6) Mh.L.J. 59;

3) Nitin Bapurao Mankar vs. Vyankatesh Housing Agency. 2010 (6) Mh.L.J. Page 86.

This Court had discussed the statutory presumptions and their effect as also the effect of failure on the part of the accused to rebut those presumptions which are available in favour of the complainant in prosecution for offence punishable under section 138 of the NI Act. Thus, the learned Advocate for the appellant submitted that the learned trial Magistrate failed to start with statutory presumptions available to the complainant under the provisions of Section 118 and 139 and committed an error of law in acquitting the accused although statutory presumptions were not rebutted by the accused by the satisfactory evidence on record.

6. As against these submissions, learned Advocate for respondent Mr Bharat Vora sought to rely upon an unreported judgment in the case of Ramprakash Urban Cooperative Society Limited vs. Rajendra Bhagchand Verma (Criminal Application No.898/2009) decided by Bombay High Court on 16.2.2010 in order to submit that if the cheque was issued for much higher amount than was actually due, then it cannot be said that the cheque was issued towards debt or liability within the meaning of Section 139. It appears that learned single Judge of this court making reference to Pawan Enterprises vs. Satish H.Verma : 2003 Bom.C.R.(Cri) 974 had considered all aspects so as to refuse leave to file appeal against an order of acquittal. In my opinion, the observations which were made were at preadmission stage of the appeal while the Court was considering an application for leave to file appeal would not help the accused to canvass his case on merits. Reference is also made to Joseph Sartho vs. Gopinathan Nair : 2009 (2) Crimes 463 (Kerala). Mr. Vora, contended that the interpretation of penal provision under section 138 has to be strictly construed as observed by Kerala High Court where the amount of cheque is larger than the amount of debts or liability, dishonour of the cheque would not be an offence. It is further contended by Mr. Vora that if two views are possible from a case then the view favourable to the accused is to be accepted, as held by the Apex Court in State of U.P. vs. Banne @ Baijnath and others reported in II 2009 CCR 35 SC. It appears that the Apex Court while considering the Criminal Appeal in a murder case had laid down principles for interference in the order of acquittal. It cannot be disputed that unless the trial Court's decision is totally erroneous, in ignorance of settled legal provisions or contrary to the evidence and documents on record or patently illegal leading to grave miscarriage of justice or manifestly unjust or unreasonable there would be no interference by the higher court in a criminal appeal challenging acquittal. As held in P. Venugopal vs. Madan P. Sarathi, cited by Shri Vora, reported in AIR 2009 SC 568, the presumption that the cheque was issued in discharge of debt does not absolve the complainant of burden to prove the existence of debt or liability. However, it is essentially a question of fact. The Apex Court referred to Krishna Bhatt's case which was in a subsequent decision of the Apex Court held as not a good law on the point. Therefore, ruling in P.Venugopal's case also cannot help the cause of the defence to avoid penal liability for offence punishable under section 138 of the NI Act.

7. Reverting back to the facts and circumstances of the present case, there was evidence on affidavit against the accused that loan in the sum of Rs. 5 lakhs was sanctioned to him so as to enable him to construct a house and he had agreed to repay the same by installment with interest. The accused in the present case despite receiving notice dated 14.5.2007 did not bother to send a reply to the complainant which has bolstered up the case of the complainant against the accused; as one must start with strong statutory presumptions as available under sections 118 and 139 of the NI Act against the accused. The accused had not disputed his signature on the cheque (Exh.52) dated 20th April, 2007. The record also shows that the accused had entered into agreement with the complainant Bank and agreed to repay the loan of Rs. 5 lakhs with interest @ 14 per cent per annum or at such rate as may fixed from time to time by the society with quarterly rate calculated (Exh.47). Thus, the amounts repayable by installments or sum due as per the loan account is bound to change or increase from time to time due to burden of interest payable on the repayable amount of loan. Therefore, in such a case, bare defence cannot be accepted from the accused that the amount of cheque was larger than the amount actually due and, therefore, no offence was committed. The accused in the course of his evidence before the learned trial Magistrate did not examine any witness or witnesses in order to rebut the statutory presumptions which were in favour of the complainant. In such a case when a cheque is received by a holder it is obligatory for the Court to presume that it is a cheque of the nature referred to in section 138 received for the discharging of legally enforceable debt or liability. Until contrary evidence is led by the accused, the presumption can live and survive. Although the accused need not prove his defence beyond reasonable doubt as is expected from the complainant in a criminal trial to prove the offence but the accused must certainly adduce the evidence enough on preponderance of probabilities to prove that there was no such debt or liability to be discharged by him on the date of issuance of the cheque. That was not done by the accused in this case. That being so, the learned trial Magistrate was clearly in error of law to acquit the accused because requirements of Section 138 of the N.I.Act were sufficiently established beyond reasonable doubt and, therefore, acquittal order was unreasonable, contrary to the record and presumptions of law in the facts and circumstances of the case. The accused had issued the cheque in the sum of Rs.1,40,000/bearing No. 282142 on 20.4.2007 which was presented before the Washim Urban Cooperative Bank Limited, Washim on 23.4.2007. The cheque was returned dishonoured by nonpayment from the drawer Bank Yavatmal Madhyawati Sahakari Bank, Yavatmal with intimation from the banker "funds insufficient" in the account of the accused. The amount remained unpaid despite notice dated 14.5.2007 issued within a period of thirty days from the date of intimation received from the Banker for nonpayment. That being so, and furthermore when the accused did not bother to reply the demand notice sent from the complainant, the requirements of Section 138 of the N I Act were clearly established against the accused. No satisfactory evidence was adduced on behalf of the accused to overturn the effect of statutory presumptions against him. The offence punishable under section 138 of the N I Act was proved beyond reasonable doubt against the accused. Hence, acquittal order was wrong. The Appellate Court has power to review, reappreciate and reconsider the evidence upon which the order was acquittal was founded. The interference with the wrong acquittal order is always necessary to prevent miscarriage of justice.

8. For the reasons aforementioned, I set aside the impugned order dated 11.6.2008 of acquittal and hold that the offence punishable under section 138 of the N.I. Act was proved against the accused beyond reasonable doubt and he is guilty of the same. However, on the question of sentence, it is not necessary to insist upon incarceration of the accused having regard to the nature of offence the accused is held guilty of offence punishable under section 138 of the NI Act. He is sentenced to undergo imprisonment till rising of the Court and to pay compensation in the sum of Rs. 1,40,000/, the amount covered by the cheque in question plus a sum of Rs.10,000 as costs for prosecuting the accused, payable under section 357 (3) of the Code to the complainant, within two months from the date of this judgment, in default of payment of compensation, the accused shall suffer S.I. for a period of six months. The accused shall appear before the learned Judicial Magistrate First Class, Court no.1 Yavatmal on 13.6.2011 to meet the sentence. The compensation if not paid, shall be recovered as fine. The Appeal is allowed accordingly.

Petition Allowed.