2015 ALL MR (Cri) 38
IN THE HIGH COURT OF JUDICATURE AT BOMBAY (AURANGABAD BENCH)
MRIDULA BHATKAR, J.
K. M. Enterprises Vs. Garware Synthetics Ltd. & Ors.
Criminal Application Nos.230-238 of 2012,Criminal Application Nos.129-132 of 2014
26th September, 2014
Petitioner Counsel: Mr. S.G. LADDHA i/b Mr. AMIT GHAG
Respondent Counsel: Mr. SANTOSH KYADIGUPPI, Ms. A.A. MANE
(A) Negotiable Instruments Act (1881), Ss.138, 139 - Dishonour of accommodation cheques - Meaning, concept and implications - When cheques are replaced upon expiry of previous cheques, it is accommodation - Thereby borrower is allowed to postpone payment of debt - Such cheques are not to be presented without intimating accused - Burden lies on accused to prove that parties intended to keep it as security and not for presentation - Once it is proved, presumption u/s.139 stands rebutted - Such cheques also acknowledge liability of accused towards complainant.
The word 'accommodation' is not synonym to the word 'security' but it borrows the same colour of adjustment in the transaction. Therefore, it is expected that the accommodation cheques were not to be presented unless the drawer gave green signal for the presentation. The intention behind the issuance of these cheques, which were used as a security, is required to be proved by the respondents, if such defence is adopted. However, once it is shown that the cheques were issued as an assurance towards liability and not intended to be acted upon, the respondent/accused thus rebutted the presumption. Thus, the transaction between the parties has to be understood accordingly. A drawee accommodates the borrower by allowing to postpone the payment of the debt with a view to give some breathing time to the borrower to collect funds and repay the debt. Therefore, accommodation cheques can be given in continuation as one, two or three, as the case may be. Issuing post dated cheques may look like giving accommodation cheques. Every accommodation cheque, in fact, is a postdated cheque, but every postdated cheque not necessarily is an accommodation cheque. An each postdated cheque falls due for payment on the date written on the cheque, and to be presented before the bank. Often, post dated cheques are given in day to day transactions - may be business, personal or for payment of loan, etc. A shortage of money is the only reason for issuing accommodation cheques; while post dated cheques are issued not only because the funds are less but for various reasons viz., convenience, accessibility of the parties, etc. This is the basic difference between the regular postdated cheques and the postdated cheques issued by the respondents as accommodation cheques. Though the term accommodation is not a legal term, in the present transaction, the term was used not only by the respondent / accused but also by the complainant with mutual understanding. Hence, the replacement of further postdated cheques was demanded. As expressed earlier, a nature of the transaction and the undercurrents therein between the parties agreed and if the same is not illegal, then, has to be taken into account in order to appreciate the defence raised by the respondents/accused. In all the cases under section 138 of the Negotiable Instruments Act the laudable object behind this enactment to enhance the acceptability and to increase the credibility of the instrument, cannot be forgotten, yet, the presumption is rebuttable depending on the facts and evidence in each case. It appears that the replacement of cheques in the transaction between the parties with new cheques before expiry of the previous cheques or immediately after expiry of the previous cheques was an accommodation or adjustment, whereby allowing some time to the respondents to repay the debt and at the same time, it was an acknowledgement of the liability by the respondents towards the complainant. This is done because it was a running account and business between these parties. [Para 32]
(B) Negotiable Instruments Act (1881), S.138 - Dishonour of accommodation cheques - Dismissal of complaint on ground of absence of legally dischargeable debt - Legality - Accommodation cheques were issued by replacing expired cheques - Practice adopted in running business due to financial crisis of accused - Plea of accused that such cheques were intended to be security and not for presentation - Complainant disputed said plea and claimed that cheques were issued on specific bills - Accounts not maintained - No practice of confirming outstanding dues at the end of financial year - Even before presentation of cheques, accused was not intimated - Business transaction continued even after filing of complaint - Contention regarding bill to bill payment is doubtful - Higher possibility is that cheques were intended for security - No existence of legally enforceable debt u/s.138 though there may be general liability enforceable in civil litigations - Dismissal proper. (Paras 24, 35, 37)
Laxmi Dyechem Vs. State of Gujarat, 2014 ALL MR (Cri) 721 (S.C.)=2012 (12) JT 65 [Para 4,8,9]
Rangappa Vs. Mohan & anr, 2010 ALL SCR 1349=(2010) 11 SCC 441 [Para 4,25,26]
Vinod Tanna & Ors. Vs. Zahir Siddiqui, 2002 ALL MR (Cri) 975 (S.C.)=(2002) 7 SCC 541 [Para 4,25]
Kamal Trading Company Vs. State, 2013 ALL MR (Cri) 2789 [Para 25]
C.Keshava Murthy Vs. H.K. Abdul Zabbar, 2014 ALL SCR 334=2013(3) DCR 2013 (SC) (DB) [Para 25]
K.J. Bhat Vs. D.Hegde, 2008 ALL MR (Cri) 1164 (S.C.)=(2008) 4 SCC 54 [Para 25]
Vyomesh Jitendra Trivedi Vs. State, 2013 ALL MR (Cri) 3783=2013 (3) DCR 661 [Para 26]
Krishna Morajkar Vs. Joe Ferrao, 2013 ALL MR (Cri) 4129=(2013) 2 DCR 607 [Para 27]
Ganesh Enterprises Vs. D.R. Sarla w/o. Rajendran, Proprietor, Priya Silk Sarees, 2007 (2) DCR 236 [Para 28]
Voltas Ltd. Vs. Vidarbha Vehicles Pvt. Ltd., 2007 ALL MR (Cri) JOURNAL 97=2007 Cr.L.J. 596 [Para 29]
C.Anthony Vs. K.G. Raghavan Nair, 2003 ALL MR (Cri) 130 (S.C.)=(2003) 1 SCC 1 [Para 30,34]
M.S. Narayana Menon @ Mani Vs. State of Kerala and anr, 2006(5) ALL MR 33 (S.C.)=JT 2006(6) SC 72 [Para 33]
Jayeshbhai Vs. State, 2008 ALL MR (Cri) 2509=Cr.Appl./307/2008, Dt.5.5.2008 [Para 34]
M.S.Total Finaelf India Ltd. Vs. Rashmi Parnami, Crl. Appeal/1239/2001, Dt.3.5.2013 [Para 36]
Vinod Tanna & Ors. Vs. Zahir Siddiqui, 2002(2) ALL MR 324 (S.C.)=(2002) 7 SCC 541 [Para 4,25]
JUDGMENT :- Applications for leave to appeal are allowed. Admit appeals. Appeals to be numbered accordingly. By consent, the appeals are called out forthwith and heard finally, at the stage of admission
2. In all these 13 appeals, the parties are same with same status i.e., the appellant company is the original complainant and the respondents are the original accused. All these criminal cases were filed under section 138 of the Negotiable Instruments Act as the cheques issued by the respondents in favour of the complainant were dishonoured. Out of these 13 cases, 9 cases are decided by the learned Metropolitan Magistrate, 30th Court, Kurla, Mumbai by the judgement and order dated 29.11.2011 and the other four matters are decided by the learned Metropolitan Magistrate, 33rd Court, Ballard Pier, Mumbai by judgment and order dated 9.1.2014. In all these criminal cases, the respondents are acquitted and, therefore, these appeals are preferred by the original complainant challenging these judgments and orders of acquittal against the respondents.
3. The complainant is a partnership firm and is in the business of manufacturing of plastic granules and Respondent No.1 is a registered company. They are in the business of manufacturing plastic yarn. The complainant is a supplier of the raw material to the respondent company. During the period from 2003 to 2004, a number of cheques were issued by the respondent company in favour of the complainant firm after receiving raw material. However, on presentation of those cheques, they all were dishonoured for want of insufficient funds and thereafter the complainant firm issued notices against the dishonour of all these cheques. However, the respondent company did not respond positively and refused to pay and therefore these 13 cases were filed by the complainant firm against the respondent company under section 138 of the Negotiable Instruments Act. All the complaints were dismissed as the complainant could not prove its case on the point that the respondents were liable to pay legally dischargeable debt and, therefore, all these appeals were filed by the complainant firm.
4. Mr.Laddha, learned Counsel appearing for the appellants, has submitted that the orders passed by the learned Metropolitan Magistrate, Kurla in the nine cases and the orders passed by the learned Metropolitan Magistrate, Ballard Pier, are erroneous, illegal and ought to be set aside. He submitted that the learned Metropolitan Magistrates have believed that all the cheques were issued in favour of the complainant. The respondents have also not denied that the cheques were issued by Santosh Borkar or Sunder Mollya and Mr.S.D. Barve on behalf of the company of the respondents. He submitted that when the learned Judge believed that the cheques were issued by the respondents, then, he should have relied on the presumption under section 118 of the Negotiable Instruments Act and also under section 139 of the Negotiable Instruments Act. The presumption is to be first read under section 118 independently and then, should have been alongwith the presumption under section 139 of the Negotiable Instruments Act as it is a special provision supporting the object of section 138 of the Negotiable Instruments Act. The learned Metropolitan Magistrate, Kurla has rejected the case of the complainant mainly on two grounds: one that Santosh Borkar is not an authorised signatory so, he should have been made an accused in the original complaints. The learned Magistrate, Kurla held that as per the requirement of section 138, a person who is a signatory, is to be held responsible for dishonour of the cheque. He submitted that the view taken by the learned Metropolitan Magistrate, Kurla that as Santosh Borkar was not an authorised signatory, the case should fail on this count, is not consistent with the settled position of law, especially the ratio laid down in the case of Laxmi Dyechem vs. State of Gujarat, 2012(12) JT 65 : [2014 ALL MR (Cri) 721 (S.C.)]. He submitted that substitution of new authorised signatories is also cannot be a ground to justify dismissal of the complaints. The Hon'ble Supreme Court has held that this amounts to constituting offence under section 138 of the Negotiable Instruments Act. He further submitted that as once it is accepted that the cheques were issued and they were bounced for want of insufficient funds or stop payment instructions without any explanation by the drawer, then, the Courts ought to have been completely relied on presumption under section 138 of the Negotiable Instruments Act. In support of this, he relied on Rangappa vs. Mohan & anr, (2010) 11 SCC 441 : [2010 ALL SCR 1349], Vinod Tanna & Ors. vs. Zahir Siddiqui, (2002) 7 SCC 541 : [2002 ALL MR (Cri) 975 (S.C.) : 2002(2) ALL MR 324 (S.C.)] (paragraph 2 thereof).
5. He further submitted that secondly the learned Metropolitan Magistrate, Kurla, held that no ledger account has been produced by the complainant i.e., the appellant and, therefore, the complainant did not prove that it was a legally dischargeable liability. The complainant in the cross-examination was questioned that if he could produce ledger account, then, he should have produced it on the next date. However, he did not produce the same. The finding of the learned Judge while assessing this evidence that the cheques issued by the accused were not against the amounts which were claimed in the respective invoices is erroneous. The learned Counsel submitted that this finding of the learned Metropolitan Magistrate is contrary to the facts and law. The learned Metropolitan Magistrate should have accepted that there is a running account due to the business between the complainant and the accused and, therefore, the amounts which were paid and which were accepted by the complainant in the cross-examination where the amounts for the supply of goods which were different than the goods against which the impugned bills were placed. The fact that due to the running account, the amounts were paid time to time and therefore, the complainant gave admission or the payment of those amounts by the company of the accused to the complainant company. However, it was never against the invoices/bills which were the subject matter of the respective criminal cases. In support of his submissions, he relied on the notices issued by him and the reply given by the respondents to the notices. He submitted in the reply, neither there is mention of sufficient funds nor there is an explanation as to why the cheques were issued. Further, no reasons were given for the stop payment. Non cancellation of cheques is the most important fact. He argued that in the statement of the accused under section 313 also, the accused had an opportunity to explain about the stop payment, but, there is no whisper of the reasons of stop-payment or about insufficient funds. Under such circumstances, the learned Judges ought to have accepted the case of the complainant. He further submitted that all the admissions of the payments are given by the complainant in the cross-examination in respect of payment made in 2003. However, all the cheques were issued in the year 2004. The value of the goods supplied, as per the bills, in all the 9 cases before the learned Metropolitan Magistrate, Kurla was Rs.52,73,128/- and the value of cheques issued is Rs.50,50,690/-; and in the cases before the learned Metropolitan Magistrate, Ballard Pier, the value of the goods supplied was Rs.30,82,701/- and the value of the cheques which were issued and dishonoured was Rs.31,32,581/- approximately. Thus, approximately, the value of the total amounts in the cheques is Rs.81,83,271/-. He further submitted that the test of pre-ponderance of probability is that whether anything is elicited in the cross-examination to arrive at a pre-ponderance of probabilities. However, considering the cross-examination of the complainant, no such material has come on record and moreover, the accused himself did not enter the box and offer any explanation to that effect and, therefore, the defence of pre-ponderance of probability failed. There was no rebuttal of presumption under section 138 of Negotiable Instruments Act and, therefore, the judgment should have been set aside.
6. Mr.Kyadiguppi, learned Counsel for the respondents, submitted that as per the case of the complainant the cheque payment was made bill to bill and, therefore, all the cases were filed against a particular bill and the bouncing of the said particular cheque issued against it. The case of the complainant from the beginning is not based on a running account but was on bill to bill payment. However, the complainant changed his stand and it was argued that the complainant and the accused were having running account and, therefore, the cheque was issued against the outstanding amount. In the affidavit, the complainant has stated about a running account. The cross-examination in Appeal No.237 of 2012, he pointed out, was completed on 21.6.2007 and the complainant gave admission that still their business relations continued and were in existence. It is the case of the complainant that bills were raised within 30 to 40 days. However, as per the case of the complainant, there is a delay in payment for more than 12 months. The complainant gave admission that amounts in cash were accepted so also the amounts were paid by cash or cheques in the accounts of the complainant company directly by the accused. Thus, these accommodation cheques were kept upto the expiry date of the cheques and then fresh cheques were issued. This arrangement was agreed between the parties. He submitted that as it was an adjustment between the parties, it was immaterial as to who signed the cheque and, therefore, the cheques were signed by Santosh Borkar. In such an event, he pointed out that Santosh Borkar was a necessary person as an accused. He referred the cheques on which Mr.Barve and Mr.Mollya had signed. However, Mr.Mollya is made an accused but Mr.Barve is not made an accused like Mr.Borkar. He submitted that when the signatories are not accused and the present respondents being non-signatory, cannot be convicted. He submitted that the complainant had admitted in the cross-examination in each case about various payments received by him from the applicant/accused in his accounts. Therefore, it was necessary on the part of the complainant to prove the balance amount in the account. Every year, there was no confirmation of the accounts and in the cases before the learned Metropolitan Magistrate, Kurla, the applicant/accused did not produce ledger accounts. The cheques were rotation cheques and it was a practice.
7. In support of his submissions, he relied on two documents, i.e., letters written by the complainant company to the accused dated 17.3.2004 and 7.4.2004 in criminal Appeal No.236 of 2012 by which the expired cheques were returned by the complainant to the accused. He also relied on a letter dated 25.8.2004 sent by the lawyer of the accused to Mr.Amit Ghag, the lawyer of the complainant suggesting settlement, after receiving notice. He submitted that it was not an admission of the debt or the payment as claimed but it was just a suggestion for amicable settlement. He submitted that the mode of payment was by way of post dated cheques. He differentiated the four cases decided by the learned Metropolitan Magistrate, Ballard Pier in Application No.130 of 2014 and other connected cases. He submitted that if the complainant's liability is based on running account, then the case collapses. He further submitted that the deviation from complaints is permissible but not entirely to the extent of making out altogether different case and so the theory of running account is an after-thought and on this count alone, the appeals of the complainant are to be dismissed. Both the learned Magistrates have rightly held the judgment in favour of the accused and have dismissed the cases and acquitted the respondents from all the charges under section 138 of the Negotiable Instruments Act.
8. All these appeals are heard together as common issues are involved and are decided by common reasoning. The criminal cases which were decided by the learned Metropolitan Magistrate, Kurla were dismissed mainly on two counts - one, that there is no proper authorisation and the complainant failed to prove that it is a legally dischargeable liability. However, the learned Metropolitan Magistrate, 30th Court, Ballard Pier, Mumbai has rejected the cases of the complainant only on the second count that the complainant has failed to prove that there is a legally dischargeable liability. The learned Metropolitan Magistrate, Ballard Pier, Mumbai has held that the cheques were signed by the persons other than the accused, so that is a valid ground to reject the case of the complainant. For example, in the cases before the Metropolitan Magistrate, Kurla, some cheques were signed by Santosh Borkar alone and some cheques were signed by Santosh Borkar and Sunder Mollya and S.D. Barve of the respondent company. In the cases at Ballard Pier Court, one cheque was signed only by Mollya and Barve. Thus, it is to be noted that in all these cases, though Santosh Borkar and Barve, were the signatories of some of the cheques, are not made accused by the complainant. The explanation given by the complainant is simple and can be accepted that those persons who have signed the cheques, were in employment of the respondent-company and so they were authorised to sign. However, as the accused persons, who are the Directors of the company are liable to pay as the complainant company has claim against the respondent company and its Directors. The learned Metropolitan Magistrate, Kurla, while dismissing the complaints, has erroneously held that the cases should have been filed against Borkar or Barve. As per the admission given by PW2, the bank employee, he was not an authorised signatory to these cheques issued of the Sangli Urban Cooperative bank. The learned Metropolitan Magistrate, Kurla ought to have appreciated that the bank memos, which were produced by the complainant, disclosing the reason for dishonouring the cheques were either 'funds insufficient' or 'stop payment'. Nowhere it was mentioned that the cheques were dishonoured because they were not signed by the authorised signatory. That apart, the Supreme Court in the case of Laxmi Dyechem, [2014 ALL MR (Cri) 721 (S.C.)] (supra) has considered this issue at length. The instances of giving different reasons of dishonour of the cheques are taken into account extensively by the Supreme Court and it held that the reasons which are given for insufficient funds or different terminologies which are used by the bank at the time of dishonouring of the cheques are to be considered cumulatively as the reason to dishonour the cheque is insufficient funds and they are to be cumulatively considered that it is a dishonour of cheque within the meaning of section 138 of the Negotiable Instruments Act. The drawer in order to avoid the payment is likely to change his signature or deliberately may commit some mistake and, therefore, the cheque can be bounced, when the funds are insufficient. In paragraph 15 of the judgment in Laxmi Dyechem, [2014 ALL MR (Cri) 721 (S.C.)] (supra), the Supreme Court has observed thus:
"Just as dishonour of a cheque on the ground that the account has been closed is a dishonour falling in the first contingency referred to under section 138, so also dishonour on the ground that the signatures do not match or that the image is not found, which too, implies that the specimen signatures do not match with the signatures on the cheque, would constitute a dishonour within the meaning of section 138 of the Negotiable Instruments Act. ....."
".....There is in our view, no qualitative difference between the situation where the dishonour takes place on account of substitution by a new set of authorised signatories resulting in the dishonour of the cheques already issued and another situation in which the drawer of the cheque changes his own signatures or closes the account or issues instructions to the bank not to make payment."
9. In the present cases, many cheques were signed by witness PW3 Santosh Borkar, who was accounts executive of Garware Synthetics Limited at Mira Road, Thane. The cases decided by the learned Metropolitan Magistrate, Kurla, Mumbai has held that the cheques were not signed by the authorised signatory as Mr.Borkar was not authorised signatory nor Mr.Borkar is made an accused. All the complaints fail as the complainant could not bring the case under the ambit of section 138 of N.I. Act. On this point, the evidence of PW2 Bipin Mukundlal Shah and evidence of Borkar is to be seen. Mr.Shah was working as an officer in Sangli Cooperative Bank Limited, Fort branch, Mumbai. Garware Nylons opened account No.1037 in the name of Garware Synthetics Limited on 16.9.1999 and as per their record, Mr.Nihar Garware can singly operate the account and P.N. Murthy, Barve and Mollya have to operate the said account jointly either two of them. However, on 24.2.2003, Garware Synthetics informed change of operations of the said account and as per their record, Mr.Borkar was not an authorised signatory for operating the said account. He also said that the subject matter of the said cheques when deposited for clearance, there was no sufficient balance in the account of Garware Synthetics Limited and as it was found insufficient, they did not verify further about the authorisation of the signature or whether the signature differs. He has further submitted that if there is a sufficient balance in the account of the drawer then the bank officers further verify the signature of the cheques and as there were no sufficient funds they did not verify the signatures. On this background, evidence of Mr.Borkar, though is inconsistent, it cannot be said to be false. He admitted that he signed all those cheques. He said that he has mentioned that he is an authorised signatory of Garware company. He has authority to sign the cheques and issued the cheques and therefore he has signed those cheques he was told. He deposed that he did not know whether Garware company had informed the bank about his authorisation or not. He is not aware whether there is any resolution in his name to operate the bank account or not is passed or not? Thus, the evidence of the PW2 on the authorisation of signatory is true and hence, reliable evidence of Mr.Borkar on that point that he was asked to issue the cheques and he believed that he was authorised to sign and issue the cheques, cannot be doubted. Mr.Borkar was instructed to sign the cheques and issue the cheques. He has deposed that at one place, these being accommodation cheques, he was asked to sign. Naturally, he was not aware about the internal decisions of the Board of Directors of the company whether they passed any resolution authorising him or not. He had no knowledge. Thus, he bonafide signed the cheques and issued them to the party i.e., the complainant. Under such circumstances, when the employee of a particular company is given an understanding that he is authorised to sign and issue the cheques and he acts accordingly under the bonafide belief, then, that cheque is to be considered, if bounced, as covered under the requirement of section 138 of the NI Act. Considering the ratio laid down by the Supreme Court in Laxmi Dychem, [2014 ALL MR (Cri) 721 (S.C.)] (supra), if the cheques are signed and issued under the instructions of the Board of Directors of the company and if dishonoured for want of insufficient funds, then the defence that signature differs is not available to the drawer of the cheques in the proceedings under section 138 of the NI Act. It is unlikely on the part of the drawee to have knowledge of the internal resolutions of the accused company as to in whose favour they were passed giving authorisation. The Supreme Court thus wanted to plug in this possible mischief on the part of the drawer to escape the liability under section 138 of the N.I. Act. The drawer can deliberately change his signature with a view to avoid the liability to pay and postpone the payment and so also may direct any employee in his establishment to sign the cheques to avoid immediate payment. Thus, in the present case, in a similar situation where Mr.Borkar was not authorised to sign and issue the cheques on the point of evidence of Mr.Borkar, cannot be said to be false. The fact remains that he was not an authorised signatory. The evidence of the bank officer (PW2) is to be accepted on this point and the learned Metropolitan Magistrate, Kurla, though has believed and held that Mr.Borkar was not authorised signatory, he failed to appreciate that the cheques were bounced for want of funds insufficient and therefore, such dishonouring of the cheques was very much covered under section 138 of the Act.
LEGALLY DISCHARGEABLE LIABILITY
(APPLICATION NO.230 OF 2012 i.e., CASE NO.611/SS/2004 (KURLA)
1. Case No.611/SS/2004 (KURLA) No. Date Amount Cheq.No. Date Signed By Memo Notice Complaint 102 11/03/03 125321 737361 15/01/04 Santosh Borker 13/07/04 11/08/04 28/09/04 87 12/07/03 250641 737376 12/01/04 Santosh Borker 12/07/04 Sent on 11.8.2004 95 29/07/03 125321 737377 14/01/04 Santosh Borker 12/07/04 2. Case No.612/SS/2004 (KURLA) No. Date Amount Cheq.No. Date Signed By Memo Notice Complaint 81 10/07/03 125321 737380 20/01/04 Santosh Borker 16/07/04 16/08/04 28/09/04 103 02/08/03 125321 754801 22/01/04 Santosh Borker Sent on 16.8.2004 3. Case No.613/SS/2004 (KURLA) No. Date Amount Cheq.No. Date Signed By Memo Notice Complaint 503 11/03/03 125321 737362 19/01/04 Santosh Borker 16/07/04 16/08/04 28/09/04 73 03/07/03 250641 737379 19/01/04 Santosh Borker Sent on 16.8.2004 72 03/07/03 250641 737378 16/01/04 Santosh Borker 4. Case No.769/SS/2004 (KURLA) 28 17/05/03 250641 737370 03/03/04 Santosh Borker 02/09/04 29/09/04 06/11/04 41 30/05/03 125321 737371 08/03/04 Santosh Borker 01/09/04 Sent on 5. Case No.770/SS/2004 (KURLA) No. Date Amount Cheq.No. Date Signed By Memo Notice Complaint 256 17/01/04 250641 731411 28/02/04 Sunder Mollya &S.D. Barve 26/08/04 25/09/04 06/11/04 Sent on 25.9.2004 6. Case No.771/SS/2004 (KURLA) No. Date Amount Cheq.No. Date Signed By Memo Notice Complaint 20 10/05/04 125321 737369 28/02/04 Santosh Borkar 26/08/04 25/09/04 6.11.2004 Sent on 25.9.2004 7. Case No.784/SS/2004 (KURLA) No. Date Amount Cheq.No. Date Signed By Memo Notice Complaint 43 30/05/04 250641 737372 12/03/04 Santosh Borkar 09/09/04 07/10/04 24.11.2004 55 14/06/03 250641 737373 16/03/04 Santosh Borkar Sent on 9.10.2004 8. Case No.785/SS/2004 (KURLA) No. Date Amount Cheq.No. Date Signed By Memo Notice Complaint 64 26/06/03 250641 737374 26/03/04 Santosh Borkar 22/09/04 19/10/04 24.11.2004 Sent on 20.10.2004 9. Case No.783/SS/2004 (KURLA) No. Date Amount Cheq.No. Date Signed By Memo Notice Complaint 521 08/03/01 359815 710123 08/04/04 Sunder Mollya & S.D. Barve 1153814/-29/09/04 27/10/04 517 22/03/03 187981 Sent on 27.10.2004 115 25/08/03 125321 Revalidated by Nihal Garware 125 01/09/03 112789 159 27/09/03 125321 178 29/10/03 125321 181 01/11/03 125321Total 1161869 Less Received 8028/- 507 21/02/01 297755 710124 01/04/04 Sunder Mollya & 1139901 28/09/04 526 27/03/03 250641 S.D. Barve 94 29/07/03 250641 Revalidated by Nihal Garware 112 11/08/03 53965138 08/09/03 250641 158 21/09/03 250641 Total 1354284 Less Received 214383/-
Out of these cases, for the purpose of arguing these appeals, the learned Counsel for the Complainant and the respondents have relied on the evidence of the complainant in 2 to 3 cases as the evidence in all the cases is more or less on the same lines. The learned Counsel for the respondent has also pointed out the admissions elicited in the cross-examination of the complainant to buttress his submissions on the points of rebuttal of presumption. Therefore, the evidence in a few cases is referred herewith to get a clear idea.
11. In case No.611/SS/2004 (Application No.230 of 2012), three cheques dated 1.1.2004, 12.1.2004 and 14.1.2004 were bounced. The three cheques were given against three invoices dated 11.3.2003, 12.7.2003 and 29.7.2003 respectively for amounts of Rs.1,25,321, Rs.2,50,641 and Rs.1,25,321/-. It is mentioned that for one tonne of plastic granules, the rate was Rs.1,25,321/- and for two tonnes, the rate was Rs.2,50,641/-. The complainant has filed affidavit in reply wherein he has stated specifically that the cheques were given against the three invoices as the goods were delivered against the three challans. The case of the complainant was that the cheques were given against specific invoices. The notice of demand was sent, however, all the accused failed to make the payment within 15 days of the receipt of the notice. Then in the cross-examination, he deposed that the accused used to place order orally and then, the goods were delivered by the complainant company and thereafter the accused was supposed to make payment of the price of the goods within 30 days. He has denied that the cheques were given as collateral security against the transaction. He said that as soon as the goods were delivered the accused used to issue cheques to the complainant's firm and on the back of the cheque, the complainantcompany used to write details of that particular invoice. He gave admission in the cross-examination that his firm was maintaining books of accounts and he can produce the ledgers maintained by the firm regarding the transaction in question.
12. He deposed that the accused company was going through a financial crisis and therefore, the accused company used to replace the earlier cheques by giving the fresh cheques to the complainant firm. Then the complainant company used to demand fresh cheques from the accused before the expiry period of cheques. Thus, he agreed that there was a practice of giving the cheques by way of adjustment and subsequently the cheques were replaced by issuing fresh cheques. A letter dated 17.3.2004, corroborating this practice, was taken on record, marked exhibit D1. He has also stated that the accused used to issue cheques in exchange for less or more amount than the amount of earlier cheques. He has stated that he would have to verify to ascertain how many cheques were replaced.
13. In the cross-examination, questions were put to the complainant in respect of payments made by the accused from time to time. He agreed that his company received the payment in piecemeal as there was continuous supply of goods or material to the accused and there was continued repayment of bill amount on the part of the accused in piecemeal. On this mode of repayment, the learned Counsel for the accused could seek very important admissions which are to be reproduced as follows:
"I am not in a position to explain against which date I have received the payments from the accused. Before presenting all the subject cheques, I have not settled accounts with the accused. I and accused did not confirm the balance by the end of March of every year. I have not made correspondence with the accused in order to apprise the accused that such and such a bill is pending and accused is liable to pay the amount of said unpaid .... It is true that the accused also used to make the payment of outstanding amount by depositing the cheque as well as some time by depositing cash in account of the complainant firm".
14. In the present case, the issuance of cheques by the respondent-company is not disputed. Indeed, the fact of issuance of the cheques by the respondent-company is admitted. All the cheques were issued. It is also admitted that they were issued against the due payment. Mr.Borkar has given admission that the respondent-company has accepted the financial liability. The only point is whether the cheques were issued for and presentation or only as accommodation cheques or not. In other words, the cheques were never intended to be presented to the bank because the company was undergoing financial crisis and there were no funds. The complainant had knowledge of this financial position of the respondent company and, therefore, replacement of the cheques after expiry date was accepted as a part of the business by the company. This is the defence. In short, whether this defence is probable and whether it is to be accepted or not is a short question before the Court.
15. In all these matters, which were tried by the Metropolitan Magistrate, Kurla, the examination in Chief and cross-examination of all the witnesses is more or less same. There is variation of facts depending on the number of invoices and so also the date of the notice and reply. For example, in Criminal Appeal No.234 of 2012, which is filed against the C.C. No.770/SS/2004, invoice No.BO256 dated 17.1.2004 and against which cheque bearing No.731411 dated 28.2.2004 was issued for Rs.2,50,641/- drawn on Sangli Urban Cooperative Bank, Fort, Mumbai. It was dishonoured for the reason "payments stopped by the drawer". While in appeal No.230 of 2012, which was for "funds insufficient". The following chart will give an exact idea of the transactions between the complainant and the accused in all the nine cases which are decided by learned Metropolitan Magistrate's Court at Kurla, and the 4 cases which were decided by the learned Metropolitan Magistrate, Ballard Pier:
APPLICATION NO.234 of 2012
16. In the cross-examination in this appeal of PW1 i.e., the complainant Kirti Mansukhlal Turakhia, was asked about ledger before the Court and he said that he could produce the ledger before the Court. He gave admission that there was running business transaction between the complainant and the accused. He also has admitted that whenever the accused used to make payment in cash or by cheque, then the said payment was adjusted against the old dues. He further admitted that there was no correspondence with the accused that such and such bill was pending. He was asked whether he had received payment of Rs.94,000/- from the accused on 17.1.2004, he refused that it was a payment against the bill No.BO256 dated 17.1.2004, i.e., exhibit P3. However, he could not tell against which bill he had received the said payment of Rs.94,000/- from the accused. He admitted that before presentation of the subject cheque, he did not settle the accounts with the accused and he did not get confirmation of the accounts from the accused at the end of every year. He also gave admission that when the subject cheque was deposited for clearance, at that time, he was not aware of the actual outstanding dues against the accused.
APPLICATION NO.232 of 2012 in CC No.613/SS/2004
17. PW1 stated on oath that the goods were delivered to the accused under invoice Nos.BO503 dated 11.3.2003, BO072 dated 3.7.2003 and BO73 dated 3.7.2003, collectively marked as exhibit P2, against which 3 cheques were issued viz., 737362 dated 19.1.2004 for Rs.125,321/-, cheque No.737378 dated 16.1.2004 for RS.250,641/- and cheque No.73779 dated 19.1.2004 for Rs.250,641/-, which were all drawn on Sangli Urban Cooperative Bank, Fort, Mumbai, which are marked as exhibits P3, P4 and P5 respectively and the cheques were dishonoured for the reason "funds insufficient", as per the exhibit P6 memo. In the cross-examination, he admitted that it was a general practice adopted between the parties to exchange the earlier cheques after expiry of the validity period of earlier cheques and the accused used to give new cheques to the complainant. He admitted that on 10.7.2003, he had received Rs.1,75,000/- but refused that it was given against the said transaction, but he said that he had not settled the account with the accused at the end of every year and he also admitted that he could not state against which bill the complainant had received Rs.1,75,000/- from the accused on 10.7.2003. He admitted that the accused used to randomly deposit cheque or cash in the bank account of the complainant-firm.
APPLICATION NO.129 of 2014 TO 132 OF 2014
18. It is to be noted that four appeals bearing Nos.129 of 2014 to 132 of 2014 were decided subsequent to the judgments in the nine cases which were dismissed on merit by the learned Metropolitan Magistrate, Kurla. The judgments in the cases by the learned Metropolitan Magistrate, Ballard Pier were passed on 9.1.2014. Thus, the parties were aware of the view taken by the learned Metropolitan Magistrate, Kurla from November, 2011. The evidence in the matters pending before the Metropolitan Magistrate, Ballard Pier was recorded in 2009 i.e., prior to the judgment in the cases by the Metropolitan Magistrate, Kurla. At the time of recording of evidence before the learned Metropolitan Magistrate, Kurla, 8 invoices for the supply of products were from 10.2.2001 till 31.1.2004. They are marked collectively P2 in the said case. As per the case, in discharge of the said liability, he issued two cheques bearing Nos.754802 dated 6.2.2004 for Rs.13,34,259/- and another bearing No.754803 dated 9.2.204 for Rs.4,76,408/- drawn on Sangli Bank. They were marked collectively P3 and P4. They were bounced for reasons funds insufficient. He admitted that the transactions between the two parties was going on since 1992 till the date of the evidence i.e., 2009. The orders were placed orally and the post dated cheques were given. The cross-examination of the complainant in the cases decided by the learned Metropolitan Magistrate, Ballard Pier, is more specific than the cross examination on the cases before the learned Metropolitan Magistrate, Kurla. No such ledger was produced before the Metropolitan Magistrate, Kurla. However, in the cases before the Metropolitan Magistrate, Ballard Pier, statement of account which is marked exhibit 31, in Application No.130 of 2014, was produced. It was pointed out that on 16.10.2003, invoice No.65288 was raised. On 16.10.2003, amount of Rs.33,750/- was received by the accused through HDFC bank. Then, the admissions in respect of receipt of the amounts and the dates are as follows:
Date of the cheque Amount (Rs.) 16/10/2003 16,250 17/10/2003 50,000 28/10/2003 3,75,000 29/10/2003 1,20,000 03/11/2003 1,68,750 06/11/203 962 01/12/2003 48,000 03/12/2003 65,000 60,000 05/12/2003 40,000 15/12/203 45,000 4,183 2,128 16/12/2003 16,000 17,540 18/12/2003 1,25,000 22/12/2003 1,50,642 321 03/02/2004 50,000 75,321 09/02/2004 1,25,321 12/02/2004 1,25,321 14/02/2004 1,00,000 21/02/2004 50,000 17/11/2003 95,000 17/11/2003 55,000 45,000
19. Mr.Laddha has argued that the questions asked in the cross-examination in respect of the payment made by the accused in the Ballard Pier cases were all randomly asked; however, the cheques were issued against specific invoices and, accordingly on the back of each cheque details were written. These submissions cannot be appreciated especially on the background of the admissions given by PW1 Mr.Turakhia in the cross-examination. Though he admitted the payment, he could not specify against which invoice the payments were made. In defence, under section 138, the accused has to make out a probable circumstance. The degree of probability of the existence of the facts or the circumstances which is required to be shown by the accused cannot be equated with the degree of the proof of the facts and circumstances which is required to be established by the prosecution or the complainant.
20. At this stage, I would like to advert to the submissions of Mr.Laddha in respect of non-exhibition of one important document. Mr.Laddha submitted that a letter dated 8.3.2004 was sent by Garware Synthetics Limited i.e., accused to the company of the complainant with K.M. Enterprises. He relied on two other documents i.e., exhibit D1, in case No.611/S/2004 dated 17.3.2004, a letter sent by the complainant company to the respondent company and also another letter sent by the company of the complainant to the respondent company dated 7.4.2004 marked exhibit D2 in C.C. No.611/S/2004. The learned Counsel submitted that the letter dated 8.3.2004 also ought to have been exhibited by the learned Metropolitan Magistrate, as this letter was brought in the cross-examination and this letter disclosed the cheque numbers, their dates, the amount so also on which bank the cheques were drawn and against which bill number, the cheques were paid. In order to substantiate his submissions that the subject cheques were paid against a particular bill or invoice, he said this document is very significant. The document fortifies the case of the complainant i.e., payment was against a particular invoice and it was not in the running account. He submitted that the learned Magistrate has committed an error in not accepting the said document in the evidence. He pointed out that though the document was not signed by anybody, it was on the letterhead of the Garware Synthetics Limited and it was relied on by the advocate for the accused at the time of the trial. The learned Counsel for the respondents opposed these submissions and argued that once the document is not exhibited in the criminal trial, it cannot be exhibited or cannot be looked into at the appellate stage.
21. The purpose of exhibiting a document is to make the parties aware that this particular document is proved and the Court is going to read the contents in the document in evidence. A party can rely on the contents of the documents if the contents are favourable to a party and otherwise may explain and answer the contents if they are against the party. Sometimes, mere exhibition of document may not amount to proof of the contents in the document. The document may be exhibited subject to proof of the contents, if the authorship of the contents is attributed to some other person. The document is to be proved by following the procedure laid down in the Evidence Act. The Evidence Act is not merely a procedural law but also a substantive law. If the document is not proved or exhibited by the trial Court, then, normally, it cannot be read in the evidence at the appellate stage. On the background of this position of law, the submissions made by the learned Counsel in respect of reading the document, i.e., a letter dated 8.3.2004 are to be tested.
22. The witness was questioned in detail about in all 14 cheques received from the respondents against particular invoices and he admitted. Thus, there were questions in respect of the contents of the said document i.e., letter dated 8.3.2004. The learned Magistrate ought to have exhibited the said document. In respect of the reading this document and exhibition of this document in evidence, at the appellate stage, the learned Counsel for the respondents has argued that this document was not exhibited because it was not signed by anybody. However, it is a fact that the said document was brought by the witness, the employee of the complainant but was called by the complainant. Therefore, in fact, he was a witness of the accused though he was giving evidence for the prosecution. This particular letter was brought at the instance of the accused and, therefore, the respondent ought not to have objected to the exhibition of the said document. The learned Counsel for the appellant has also submitted that at the relevant time, the document was objected as it was not signed. However, after going through the evidence of the witnesses and the questions put to the witness in the cross-examination, this document ought to have been exhibited and read in the evidence. The learned Counsel obviously wanted this document to be exhibited because the document discloses a chart divided under the five heads in five columns i.e., cheque numbers stating the numbers of all 14 cheques, dates of issuance of cheques, amount of the documents, name of the bank on which the cheque is drawn, the bill numbers i.e., against which the particular cheque was drawn. Thus, obviously, the learned Counsel for the appellant now wants to rely on this document to show that the issuance of the cheque by the respondents was against bill to bill and it was not as a part of running account.
23. I am of the view that the learned Magistrate has committed an error in not accepting these documents when the document was relied and brought on record as the document was brought by the accused in the cross-examination, the document was written on the letterhead of Garware Synthetics and it was received by the other party. After all, exhibition of document is a ministerial act of the Court. The stamp on the document was shown and accepted and the witness was fully aware of the contents of the document and the transaction and, therefore, when questions were allowed on the contents of the document and no objection was raised at the relevant time in respect of bringing the contents of the document on record, the learned Magistrate ought to have admitted the said document in the evidence and should have taken it on record by exhibiting it. Thus, when the contents in the document are brought on record then the document is required to be exhibited and read as a whole to find out facts and ultimately to reach to the truth. Therefore, I am of the view that this particular document can be read as a whole, as submitted by Mr.Laddha, leaned Counsel for the applicant. Hence, the document is to be read in the evidence but it cannot be read partially, it is to be read as a whole, in appeal. The said document discloses that all those cheques were accommodation cheques.
24. The basic question why the cheques were issued if at all they were not intended to be paid is answered by the respondents. The cheques were issued by way of an accommodation. The complainant in his cross-examination has also admitted that the cheques issued were accommodation cheques. Some points need to be noted that the complainant did not send a letter of intimation to the accused before presentation of these accommodation cheques. Secondly, there was continuous business transactions going on even after the filing of these cases till the evidence of the complainant was recorded and no civil suit for money recovery is filed by complainant. Therefore, even though the respondents did not enter the box to give evidence, admissions given by the complainant in respect of payments are sufficient to discharge the burden of rebuttal.
25. Learned Counsel for the appellant, the original complainant, on the point of issuance of postdated cheques means accommodation cheques, relied on Kamal Trading Company vs. State, 2013 ALL MR (Cri) 2789, where the leaned Single Judge of this Court at Aurangabad Bench, has held that difference in ink and signature on the cheque is not legal when the defendant accused did not dispute commercial transactions and issued postdated cheques to the complainant. The learned Sessions Judge has unwarrantedly observed that the ledger entries were not proved by the petitioner. Further it is not disputed by the accused that the postdated cheques were given to the complainant for the goods purchased on credit of 30 days. In the case of Vinod Tanna vs. Zaheer Siddiqui, 2001 Cr. L.J. 2297 : [2002 ALL MR (Cri) 975 (S.C.) : 2002(2) ALL MR 324 (S.C.)] the learned Judge of this Court has held that if the issuance of the cheques in favour of the respondents is not disputed. Then, the presumption under section 118 is to be invoked and unless it is not rebutted, it will not be open for the petitioner to show that section 138 is not attracted because the cheque was not issued for discharge as a whole or in part, of any debt or other liability. In the case of C.Keshava Murthy vs. H.K. Abdul Zabbar, 2013(3) DCR 2013 (SC) (DB) : [2014 ALL SCR 334] the Hon'ble Supreme Court discussed the law laid down in K.J. Bhat vs. D.Hegde, (2008) 4 SCC 54 : [2008 ALL MR (Cri) 1164 (S.C.)] and Rangappa vs. Shree Mohan, (2010) 11 SCC 441. It observed that the proposition in K.J. Bhat vs. D.Hegde, [2008 ALL MR (Cri) 1164 (S.C.)] (supra) that the burden is always on the complainant to establish not only issuing of cheque but existence of debt or legal liability, is not correct, as held in para 26 of the judgment rendered by the 3 Judge Bench in Rangappa vs. Shree Mohan, [2010 ALL SCR 1349] (supra), wherein the Court held that presumption under section 139 of the Negotiable Instruments Act includes a presumption of existence at the legally enforceable debt or liability. In C. Keshavamurthy, [2014 ALL SCR 334] (supra), the Supreme Court had confirmed that the presumption is required to be honoured if it is not so done, the entire basis this enactment will be lost.
26. Therefore, it has been held that it is for the accused to explain his case and defend it once the fact of cheque bouncing is established by the complainant. The learned Counsel also relied on the judgment in Vyomesh Jitendra Trivedi vs. State, 2013(3) DCR 661 : [2013 ALL MR (Cri) 3783].
27. In Krishna Morajkar vs. Joe Ferrao, (2013) 2 DCR 607 : [2013 ALL MR (Cri) 4129] a learned Single Judge of this Court placed reliance on the judgment in the case of Rangappa, [2010 ALL SCR 1349] (supra) and has concluded thus:
"Before I conclude, with all humility at my command, it has to be noted that even after noticing the object of enacting Section 138 of the Negotiable Instruments Act, namely to enhance the acceptability of cheques, Courts have been accepting virtually any argument advanced to nullify the liability created, like ignoring or misreading presumption under Section 139 of the Act, misreading provisions of Sections 269SS and 271D of the Income Tax Act, unmindful of the consequence that unscrupulous individuals go on signing cheques irresponsibly. When a person signs a cheque and delivers it, even if it is a blank cheque or a post dated cheque, presumptions under section 118(b) and 139 of the Negotiable Instruments Act would have to be raised and would have to be rebutted by the aced, albeit by raising a probability. Unless Courts start discouraging flimsy defences, acceptability of cheques would not increase. ....."
28. On the point of running account, the complainant placed reliance on the judgment in Ganesh Enterprises vs. D.R. Sarla w/o. Rajendran, Proprietor, Priya Silk Sarees., 2007 (2) DCR 236 In the said case, the goods that is raw silk and twisted yarn was purchased on credit and three cheques were issued which were bounced. However, the Court had acquitted the respondents on a ground that the complainant did not produce a single invoice or bill before the Court to show the purchase of silk. There was a throughout business of purchase of raw silk and yarn by the respondent accused from the appellant on credit basis and it was a running account. In the said case, the respondent accused did not enter the witness box, but her husband had offered as a witness. The appeal was allowed and the respondents were punished.
29. The learned Counsel also relied on the judgment in Voltas Ltd. vs. Vidarbha Vehicles Pvt. Ltd., 2007 Cr.L.J. 596 : [2007 ALL MR (Cri) JOURNAL 97] the Andhra Pradesh High Court held that the burden lies on the accused to prove that the cheque was not issued by him and even if issued, it was not in lieu of a legally enforceable debt.
30. The respondents in reply has relied on the judgment of the Supreme Court in C.Anthony vs. K.G. Raghavan Nair., (2003) 1 SCC 1 : [2003 ALL MR (Cri) 130 (S.C.)] In the said case, payment was stopped by the drawer i.e., the accused as a blank cheque was given to another and it was used by the respondents. The trial Court acquitted the accused but the High Court set aside the acquittal wherein the Supreme Court has held that the Court must express its reasons for holding that the acquittal is not justified and if two conclusions are available, then the finding of the trial Court is not to be disturbed. The High Court should not re-appreciate the evidence and reverse the order of acquittal in the said case and then the order passed by the High Court was set aside.
31. Thus the ratio laid down by the Supreme Court and various High Courts on the point of presumption and the object of the Act is now settled law and in view of this settled position of law, it is necessary to consider a key issue in respect of rebuttal of the presumption in the facts of the present case as the rebuttal of the presumption is always a matter of evidence, circumstances and facts of each case. For this reason, the evidence in two to three cases is discussed to certain extent.
32. The document marked at exhibit No.D1 in C.C. No.611/SS/2004 (in Application No.230 of 2012) dated 17.3.2004 shows that 7 cheques which were expired, were returned by the complainant to the Garware Synthetics Limited and a request was made to issue fresh cheques for the same immediately by letter dated 17.3.2014. The exhibit D2 was from KM Enterprises addressed to Garware Synthetics Limited on 7.4.2014 wherein 2 cheques were enclosed which would be expired and same request was made to issue fresh cheques for the same immediately. This shows that the other cheques were replaced by the cheques which were going to be expired. Thus, this is an accommodation. The submissions of the respondents that the term accommodation may not be available anywhere in law or under the Negotiable Instruments Act, however, if it is a mutual arrangement between two parties which is not legally barred then, that mode of adjustment of money is to be accepted as a valid agreement between the two parties, are correct and therefore, a theory of the defence that the respondent company used to issue accommodation cheques number of times against the repayment of the due debt is found probable. The word 'accommodation' is not synonym to the word 'security' but it borrows the same colour of adjustment in the transaction. Therefore, it is expected that the accommodation cheques were not to be presented unless the drawer gave green signal for the presentation. The intention behind the issuance of these cheques, which were used as a security, is required to be proved by the respondents, if such defence is adopted. However, once it is shown that the cheques were issued as an assurance towards liability and not intended to be acted upon, the respondent/accused thus rebutted the presumption. Thus, the transaction between the parties has to be understood accordingly. A drawee accommodates the borrower by allowing to postpone the payment of the debt with a view to give some breathing time to the borrower to collect funds and repay the debt. Therefore, accommodation cheques can be given in continuation as one, two or three, as the case may be. Issuing post dated cheques may look like giving accommodation cheques. Every accommodation cheque, in fact, is a postdated cheque, but every postdated cheque not necessarily is an accommodation cheque. An each postdated cheque falls due for payment on the date written on the cheque, and to be presented before the bank. Often, post dated cheques are given in day to day transactions - may be business, personal or for payment of loan, etc. A shortage of money is the only reason for issuing accommodation cheques; while post dated cheques are issued not only because the funds are less but for various reasons viz., convenience, accessibility of the parties, etc. This is the basic difference between the regular postdated cheques and the postdated cheques issued by the respondents as accommodation cheques. Though the term accommodation is not a legal term, in the present transaction, the term was used not only by the respondent / accused but also by the complainant with mutual understanding. Hence, the replacement of further postdated cheques was demanded. As expressed earlier, a nature of the transaction and the undercurrents therein between the parties agreed and if the same is not illegal, then, has to be taken into account in order to appreciate the defence raised by the respondents/accused. In all the cases under section 138 of the Negotiable Instruments Act the laudable object behind this enactment to enhance the acceptability and to increase the credibility of the instrument, cannot be forgotten, yet, the presumption is rebuttable depending on the facts and evidence in each case. It appears that the replacement of cheques in the transaction between the parties with new cheques before expiry of the previous cheques or immediately after expiry of the previous cheques was an accommodation or adjustment, whereby allowing some time to the respondents to repay the debt and at the same time, it was an acknowledgement of the liability by the respondents towards the complainant. This is done because it was a running account and business between these parties.
33. In M.S. Narayana Menon @ Mani vs. State of Kerala and anr, JT 2006 (6) SC 72 : [2006(5) ALL MR 33 (S.C.)] the Supreme Court has held that the onus on the accused is not as heavy as that of the prosecution. It may be compared with a defendant in a civil proceeding. If the defence is acceptable as probable, the cheque cannot be held to have been issued in discharge of the debt. If the cheque is issued for security or for any other purpose, the same would not come within the purview of section 138 of the Negotiable Instruments Act.
34. In Jayeshbhai vs. State, Cr. Application No. 307 of 2008 Decided on 5.5.2008 : [2008 ALL MR (Cri) 2509] the cheques were issued against the goods, but, against the purchase of cloth. However, it was found defective and the cheques were subsequently dishonoured. In the said judgment, the learned Single Judge of this Court has placed reliance on the case of C.Anthony vs. K.G. R. Nair, [2003 ALL MR (Cri) 130 (S.C.)] (supra) wherein it was stated that unless the findings of the trial Court are perverse or contrary to the material on record, the High Court cannot in an appeal substitute its findings merely because another contrary opinion was possible on the basis of the material on record.
35. Thus, the main contention of the complainant that there was always bill to bill payment is doubtful as the respondents succeeded in pointing out higher possibility that the cheques issued were in fact not intended for presentation. The learned Judges of the Metropolitan Magistrate Courts have observed that the yearly balance confirmation was not obtained by the complainant. At the end of every financial year, verification of the outstanding payment received is necessary to fix the amount of the dues. However, it was not done. Though the complainant has denied that it is not collateral security, but accepted that the cheques were given to postpone the payment due to financial difficulty of the accused. Thus, it is held that such replacement of cheques by post dated cheques was not intended for the presentation or repayment but they were handed over to give assurance of acknowledgement of the debt. General liability to pay the debt and liability to pay a legally dischargeable debt under section 138 of the Negotiable Instruments Act is not one and the same but there is a different between these two liabilities.
36. In M.S. Total Finaelf India Ltd. vs. Rashmi Parnami, Criminal Appeal No. 1239 of 2001 decided on 3.5.2013 a learned Single Judge of the Delhi High Court held that when the appellant could not prove the cheques in dispute were issued against any debt or liability, mere liability of the respondents to pay her dues towards purchase of goods is not enough to proceed under section 138 of the Negotiable Instruments Act as the appellant has civil remedy to recover outstanding dues and so no interference was called for in the reasoned order passed by the trial Court.