//
you're reading...
CHEQUE BOUNS CASE

debt must be legally recoverable one , else cheque bouns case not maintainable.

The Brihadeeswara Temple at Thanjavur

The Brihadeeswara Temple at Thanjavur (Photo credit: Wikipedia)

BEFORE THE MADURAI BENCH OF MADRAS HIGH COURT

DATED: 29/03/2012

CORAM
THE HONOURABLE MR.JUSTICE P.R.SHIVAKUMAR

CRL.R.C.(MD) No.1111 of 2008

M.Panchamurthy .. Petitioner

Vs.

The Fertilizers and Chemicals
Travancore Ltd.,
having its Registered office at
Udyogamandal, Kerala
rep. by its Sr.Regional Manager at
Trichy Shri A.Srinivasan .. Respondent

Criminal Revision Case filed under Sections 397 r/w 401 of Cr.P.C. to call
for the records relating to the judgment of the 1st Additional Sessions Court
(PCR) Thanjavur, Thanjavur District dated 10.12.2008 made in C.A.No.19 of 2008
confirming the judgment of the learned Judicial Magistrate No.II, Thanjavur,
dated 23.01.2008 made in C.C.No.175 of 2006 and set aside the same.

!For Petitioner … Mr.S.Ravi
^For Respondent … Mr.V.R.Shanmuganathan

:ORDER

The accused, who was prosecuted for an offence under section 138 of the
Negotiable Instruments Act, 1881 (3 counts), convicted and sentenced to undergo
simple imprisonment for six months and pay a fine of Rs.2,000/- on each count of
the charges, after unsuccessfully prosecuting an appeal before the appellate
court, has approached this court with the present criminal revision case.

2. A complaint was preferred on the file of the learned Judicial
Magistrate No.II, Thanjavur by the Fertilizers and Chemicals Travancore Ltd.,
represented by its Sr. Regional Manager A.Srinivasan (respondent herein)
containing the following allegations:
i) The petitioner herein was a dealer of the complainant doing business of
sale of fertilizers in the name and style of “Sathya Traders”, as its sole
proprietor. The revision petitioner/accused used to purchase fertilizers from
the respondent/complainant by issuing cheques towards the price of such
fertilizer purchased by him. A request was made by the revision
petitioner/accused on 10.09.1999 for the supply of 10 MT of Factamfos. The same
was supplied to the revision petitioner/accused under Delivery Challan No.143909
dated 13.09.1999 and the revision petitioner paid the price for the said
consignment by a cheque bearing No.352464 dated 10.09.1999 for Rs.64,850/-.
Similarly 10 MT of Factamfos was delivered to the revision petitioner/accused
vide delivery challan No.92585 dated 12.08.1999 and the revision petitioner paid
the price for the said consignment by a cheque dated 11.09.1999 bearing cheque
No.352458 drawn for a sum of Rs.65,480/-. Again by a delivery challan No.144497
dated 11.09.1999, 7 MT of Muriate of Potash were delivered to the revision
petitioner/accused and towards the value of the same, he issued a cheque bearing
No.352474 dated 11.09.1999 for Rs.25,368/-. All the three cheques were drawn on
the account maintained by the revision petitioner/accused with Indian Overseas
Bank, North Main Street, Thanjavur. When the above cheques were presented for
collection through the banker of the respondent, namely State Bank of
Travancore, Thanjavur branch, all the three cheques were returned unpaid due to
insufficiency of funds available in the account of the revision petitioner with
a memorandum stating “exceeds arrangement and insufficient funds” as the reason
for dishonour.
ii) Within 15 days after the receipt of the memorandum intimating the
dishonour of the cheques, the respondent/complainant issued separate registered
notices in respect of each cheque on 20.09.1999 demanding payment of the cheque
amount. Though the revision petitioner/accused received the notices on
23.09.1999, he failed to make payment as demanded. The above said cheques had
been drawn and given to the respondent/complainant for the discharge of legally
enforceable debts. Since all the offences alleged are of same nature and
committed within a span of 12 months, a complaint has been made for the
prosecution of the revision petitioner/accused for all the three offences
together in one and the same trial. Therefore, the revision petitioner/accused
should be prosecuted for 3 counts of the offence under section 138 of the
Negotiable Instruments Act, 1881 r/w sections 141 and 142 of the said Act for
the said offence, each one relating to the dishonour of the above said three
cheques.

3. The learned Judicial Magistrate No.II, Thanjavur took it on file as
C.C.No.175/2006 following the private complaint procedure and thereafter issued
process to the revision petitioner/accused. On appearance, the revision
petitioner/accused denied having committed the offence alleged and hence a trial
was conducted in which three witnesses were examined as PWs.1 to 3 and seventeen
documents were marked as Exs.P1 to P17 on the side of the respondent
herein/complainant. After completion of recording of evidence on the side of the
complainant, the revision petitioner/accused was questioned regarding the
incriminating materials found in the evidence adduced on the side of the
complainant and also generally regarding the case, under section 313(1)(b)
Cr.P.C. On the side of the revision petitioner/accused no witness was examined,
but three documents have been marked as Exs.D1 to D3.

4. The learned Judicial Magistrate No.II, Thanjavur after hearing the
arguments advanced on both sides and upon perusing the materials brought on
record and on an appreciation of evidence, came to the conclusion that the
respondent herein/complainant proved the charge beyond reasonable doubt, held
the revision petitioner/accused guilty of the offence under section 138 of the
Negotiable Instruments Act, 1881 (three counts), convicted him and sentenced him
to the punishments indicated supra by a judgment dated 23.01.2008.

5. Challenging the said judgment in respect of conviction as well as
sentence imposed, the revision petitioner/accused preferred an appeal in
C.A.No.19 of 2008 on the file of Court of Session, Thanjavur, which was made
over from the I Additional District and Sessions Judge (PCR), Thanjavur and the
learned appellate judge, after hearing both sides and on re-appreciation of
evidence came to the conclusion that the charge against the revision
petitioner/accused stood proved beyond reasonable doubt and that there was no
scope for interfering with the judgment of conviction and the order of sentence.

6. Aggrieved by the same and questioning the correctness and legality of
the judgment of the learned appellate judge confirming the judgment of the trial
court convicting the revision petitioner/accused for the offence under section
138 of the Negotiable Instruments Act, 1881 (3 counts) and imposing punishment
as aforesaid, the revision petitioner/accused has come forward with present
criminal revision case on various grounds set out in the grounds of revision
incorporated in the revision petition.

7. The point that arises for consideration in this criminal revision case
is:
“Whether the judgment of the lower appellate court confirming the
conviction recorded and the sentenced imposed by the trial suffers from any
defect or infirmity warranting interference by this court in exercise of its
revisional power?”

8. The arguments advanced by Mr.S.Ravi, learned counsel for the petitioner
and by Mr.V.R.Shanmuganathan, learned counsel for the respondent were heard. The
materials available on record were also perused.

9. The accused, who suffered a conviction before the trial court and
confirmation of the same before the appellate court, is the petitioner in the
present criminal revision case. He was prosecuted for an alleged offence
punishable under section 138 r/w section 141 and 142 of the Negotiable
Instruments Act, 1881. The prosecution was launched for the dishonour of three
cheques allegedly issued by the revision petitioner to the respondent herein for
the discharge of legally recoverable debts. According to the respondent
herein/complainant, the liability arose for the supply of fertilizers under
three delivery challans and in discharge of the said liability, three cheques
were issued by the revision petitioner, who is running a business in the name
and style of Sathya Traders as its sole proprietor. It is not in dispute that
the revision petitioner is running a business in the name and style of Sathya
Traders as its sole proprietor. The respondent company is the manufacturer of
fertilizers and the revision petitioner got the dealership of the respondent
herein/complainant and in pursuance of the dealership agreement, fertilizers
were supplied at the dealers point to the dealer, for which the cheques in
question were said to be issued. Out of the three cheques, one cheque is dated
10.09.1999 and the other two are dated 11.09.1999. It is also not in dispute
that when the said cheques were presented for collection through the banker of
the respondent herein, they were returned with the memo citing “exceeds
arrangements” as the reason for dishonour. The dishonoured cheques have been
produced and marked as Exs.P2 to P4. The bank memo intimating the dishonour has
been marked as Ex.P5. It is also not in dispute that the above said cheques
pertain to the bank account maintained by the revision petitioner in the name of
his business concern Sathya Traders with his banker.

10. The Zonal Manager of the respondent bank has deposed as PW.1 and a
copy of the power of attorney given to him for deposing on behalf of the company
has been produced and marked as Ex.P1. The branch manager of respondent’s
banker, namely State Bank of Travancore, Thanjavur branch has been examined as
PW.2 and he has spoken about the presentation of Exs.P2 to P4-cheques for
collection through the said bank. He has also spoken about the return of the
cheques without payment. Copies of the memoranda sent by Indian Overseas Bank,
Thanjavur branch to the State Bank of Travancore, Thanjavur returning the
cheques for the reason “amount exceeds arrangement” have been produced. Ex.P5
series contain a debit note and the dishonour memos. PW.2 has spoken about the
receipt of the cheques in their bank for collection, sending the said cheques to
the Indian Overseas Bank, Thanjavur branch for clearance and the dishonour of
the cheques, for which the memorandum was issued by the Indian Overseas Bank.
He has also spoken about the reason for the dishonour noted in the memorandum
returning the cheques unpaid. PW.3, the branch manager of Indian Overseas Bank,
Thanjavur, in which branch the revision petitioner is having a cash credit
account in the name of his business Sathya Traders, has spoken about the receipt
of Exs.P2 to P4-cheques through State Bank of Travancore, Thanjavur branch and
it is his evidence that the said cheques were dishonoured since the arrangement
the revision petitioner had made with the bank exceeded the amount covered by
the cheques. According to his evidence, the revision petitioner had been given
cash credit facility to the tune of Rs.7,00,000/-, out of which the revision
petitioner had already availed a sum of Rs.6,91,927.26P. The same would show
that on the date of receipt of Exs.P2 to P4-cheques, the cash credit facility
available to Sathya Traders, which remained unavailed was only Rs.8,073.74P.
That is the reason why the cheques were returned by the Indian Overseas Bank,
Thanjavur branch stating that the amount covered by the cheques exceeded the
arrangement made with the bank, as the reason for dishonour. A copy of the
collection slip showing the particulars of cheque clearance through State Bank
of Travancore, Thanjavur branch has been marked as Ex.P15. Copy of the ledger
relating to the cash credit account of the revision petitioner’s business
concern Sathya Traders has been produced as Ex.P16. From the same it is obvious
that on the date of receipt of the cheques for collection, there was no
sufficient fund in the cash credit account. Ex.P17 is the true extract of the
cheque return register pertaining to Sathya Traders. From the evidence of PWs.1
to 3 and Exs.P2 to P5, it is obvious that the cheques were returned on the
ground that there was no sufficient fund in the account on which the cheques
were drawn and the cheque amount exceeded the arrangement made with the banker,
namely the cash credit facility. Therefore the condition found in section 138 of
the Negotiable Instruments Act, 1881 that the cheque should have been returned
for insufficient funds or the amount exceeds arrangement made by the drawer with
his banker stands fulfilled and proved.

11. The next question that arises for consideration is “whether the
cheques were proved to be issued for the discharge of a legally enforceable
liability or a legally recoverable debt?”. According to the respondent’s case,
all the three cheques were issued on three different occasions towards payment
of the price of the goods, namely fertilizer, delivered to the revision
petitioner at Thanjavur under three different challans. The copies of the
delivery challans have been marked as Exs.P6 to P8. It is pertinent to note that
all those three documents are not originals, but are xerox copies. Still those
copies were marked as exhibits by the trial court without considering the
admissibility of the secondary evidence. It is also obvious from Exs.P9 to P11 –
copies of legal notice and Exs.P12 to P14-postal acknowledgment cards that
statutory notice, as contemplated under section 138 of the Negotiable
Instruments Act, 1881, informing the revision petitioner of the dishonour of his
cheques and calling upon him to make payment of the cheque amount, were issued
and served on the revision petitioner. It is not the case of the revision
petitioner that he sent any reply praying for the presentation of the cheques
for collection again on the premise that he had subsequently made arrangements
for honouring the cheques or that he came forward to make payment of the cheque
amounts. It is also an admitted case that the revision petitioner did not issue
any reply to the said notice. Therefore, the respondent has chosen to prefer the
complaint for prosecuting the revision petitioner/accused for the offence under
section 138 r/w section 141 and 142 of the Negotiable Instruments ACt, 1881 on
three counts relating to the dishonour of all the three cheques.

12. The conditions precedent for prosecuting the drawer for an offence
under section 138 of the Negotiable Instruments Act, 1881 has also been complied
with. Compliance with such conditions alone shall not be enough to prove the
charge against the accused, who is the present revision petitioner. It must
also be proved that the cheques in question were issued for the discharge of a
legally recoverable debt or other liability. Of course when the issuance of the
cheque is admitted or proved, the same will attract the presumption under
section 139 of the Negotiable Instruments Act, 1881. Now it has been settled
that such a presumption will include a presumption that the cheques were issued
in discharge of a debt or other liability by the judgment of the Hon’ble Supreme
Court in Rangappa v. Sri Mohan reported in (2010) 11 SCC 441. It has been made
clear that the said presumption is a rebuttal presumption and for rebutting the
same, the degree of proof needed is not comparable to the degree of proof
required on the part of the prosecution or complainant and that the accused need
not adduce positive evidence and he can simply rely on the answers elicited
during cross-examination of the complainant’s witnesses and the discrepancies
found in the evidence, both oral and documentary adduced on the side of the
complainant to rebut such presumption by preponderance of probabilities.

13. In this case, it is the contention of the revision petitioner that the
cheques were not issued for the discharge of any debt or liability and that at
the time of granting dealership to the revision petitioner, the respondent had
obtained blank cheques as security for the goods to be supplied in future and
that Exs.P2 to P4 were also such cheques given as such security in advance for
use in future transaction for the supply of goods. It is the further contention
of the revision petitioner that the cheques were not issued in respect of the
supplies made under the delivery challans relied on by the respondent and that
hence the contention of the revision petitioner that the cheques were not issued
for the discharge of a legally recoverable debt or other liability should be
accepted. The learned counsel for the revision petitioner referred to the
following admissions made by PW.1 during cross examination: PW.1 has stated in
cross that he was not the Zonal Manager at the time of the transaction with the
revision petitioner and one Sivanandam, the then Zonal Manager alone knew the
entire particulars of the transaction. Even though PW.1 has admitted that the
said Sivanandam could be examined, for the reasons best known to the respondent,
the said Sivanandam, who knew the entire transaction between the revision
petitioner and the respondent, has not been examined. Similarly, though it has
been admitted by PW.1 that the agreement between the respondent and the revision
petitioner regarding the dealership is available with the respondent, they have
not chosen to produce the said document. According to the submission of the
learned counsel for the revision petitioner, the production of the same would
clearly show that Exs.P2 to P4- cheques had not been issued towards particular
consignments.

14. Learned counsel has also pointed out the fact that PW.1 admitted that
copies of the delivery challans were obtained by using carbon and that carbon
copies were not produced and on the other hand, xerox copies were produced. It
has also been pointed out that Ex.D2 is the original of delivery challan and
Ex.P6 has been produced as a copy of the same. In Ex.P6, one Kannan’s signature
is found as the agent of the customer. The original delivery challan has been
produced by the revision petitioner as Ex.D2. But there are differences between
Ex.D2 and Ex.P6, which has been produced as a copy of the original delivery
challan. Similar discrepancies are also pointed out to be present in the other
delivery challans marked as Exs.P7 and P8. PW.1 has also clearly admitted that
he did not have personal knowledge regarding the delivery effected under the
originals of Exs.P6 to P8; that out of the persons who effected delivery under
the three different challans, one is still in service and other has been removed
from service. It is also his clear admission that the delivery particulars could
be known to those persons alone. Therefore, as rightly pointed out by the
learned counsel for the revision petitioner, the non-examination of the then
Zonal Manager and the persons who is said to have effected delivery, is a point
in favour of the revision petitioner. While referring to the practice adopted by
the respondent, PW.1 has stated in his evidence that when goods are delivered on
credit, post-dated cheques bearing dates 30 days after the delivery or
thereafter would be obtained. However, it is PW.1’s evidence that for the cheque
bearing cheque No.352464 dated 10.09.1999, the goods were delivered
subsequently, namely on 13.09.1999. Such a discrepancy found in the complaint
was sought to be asserted by PW.1 to be correct stating that cheque was issued
in advance and goods were delivered subsequently which goes contra to the
earlier part of the averments made in the complaint as well as the legal notice.
It is also the admission of PW.1 that for the cheques issued on 11.09.1999,
goods were supplied on 12.08.1999 and that the cheques were also issued on the
dates of delivery of goods. PW.1 also pleads ignorance as to why the cheques
Exs.P2 to P4, which are dated 10.09.1999 and 11.09.1999, were not presented for
collection immediately. The reasons were not known. For every question PW.1
would say that only other persons will be able to answer. But such other persons
were not examined on the side of the respondent.

15. It is also pertinent to note that though the revision petitioner
wanted the respondent/complainant to produce the documents executed by the
revision petitioner/accused for getting the dealership, they were not produced
by the respondent/complainant. On the other hand, the revision
petitioner/accused has chosen to produce the dealership authorisation letter
dated 30.01.1995. The same has been marked as Ex.D3. It contains the following
recital:
“we have pleasure in appointing you with effect from 30.1.1995 as one of
our authorised dealers at Thanjavur District on the terms and conditions
stipulated in the Dealer Agreement.
Cash receipt shall be sent to you separately for Rs.2,500/- (Rupees Two
thousand five hundred only) remitted by you towards interest free Security
Deposit……”
Besides producing the dealership appointment letter, the revision petitioner has
contended that at the time appointing dealers, for security purposes, the
respondent used to get blank cheques and Exs.P2 to P4 were such cheques obtained
at the time of according dealership to the revision petitioner and that the same
were later on filled up, when the relationship between the revision petitioner
and the respondent got strained. In this regard, learned counsel for the
revision petitioner has pointed out the admission made by PW.1 that IT WAS THE
PRACTICE OF THE RESPONDENT COMPANY TO GET CHEQUES AS SECURITY AT THE TIME OF
APPOINTING DEALERS and hence it must be held that by eliciting such answers, the
revision petitioner was able to rebut the presumption by preponderance of
probabilities, sufficient to shift and recast the burden of proof on the
respondent/complainant and that the respondent/complainant thereafter has not
proved that the cheques were issued for the discharge of a legally recoverable
debt or other liability by reliable evidence. It is the further contention of
the learned counsel for the revision petitioner that the reverse burden cast on
the complainant after the presumption is rebutted requires proof beyond
reasonable doubt and that the respondent/complainant has not discharged the said
reverse burden of proof.

16. Per contra, the learned counsel for the respondent/complainant would
submit that the revision petitioner/accused has not chosen to lead any oral
evidence and that he has not even chosen to issue any reply to the statutory
notice and the same would be enough to show that there was admission on his
part. This court is not in a position to accept the said contention raised on
behalf of the respondent/complainant. The mere fact that the recipient of a
notice has not chosen to issue a reply, cannot be taken as an admission of the
contents of the notice. On the other hand, it can be taken as a decision to face
the action that may be taken by the person, who sent the notice. Above all, as
rightly pointed out by the learned counsel for the revision petitioner, the
revision petitioner/accused was able to elicit more number of answers from PW.1
and produce Exs.D1 to D3 to rebut the presumption under section 139 of the
Negotiable Instruments Act, 1881 by preponderance of probabilities and that the
revision petitioner/accused has successfully rebutted the presumption. On the
other hand, the respondent/complainant has not discharged the reverse burden of
proof on the rebuttal of the presumption. The respondent/complainant has not
proved that the cheques were issued for the supply of fertilizers under three
delivery challans. Both the courts below have committed an error in holding the
revision petitioner/accused guilty of the offence with which he stood charged.
If the courts below have properly appreciated the evidence, they would have
arrived at a conclusion that the case of the respondent/complainant was not
proved and acquitted the revision petitioner/accused. This court holds that the
judgment of the appellate court confirming the conviction and sentence is
defective, discrepant and the same is liable to be interfered with and set aside
and that the judgment of the trial court convicting the revision
petitioner/accused is liable to be set aside by invoking the revisional powers
of this court.

17. In the result, the criminal revision case is allowed. The judgment of
the 1st Additional Sessions Court (PCR), Thanjavur dated 10.12.2008 made in
C.A.No.19 of 2008 confirming the conviction recorded and the sentence imposed by
the trial court, namely Judicial Magistrate No.II, Thanjavur in his judgment
dated 23.01.2008 made in C.C.No.175 of 2006 is set aside. The revision
petitioner is acquitted of the offence with which he stood charged. Fine amount
collected, if any, shall be refunded to the revision petitioner.

asr/

Copy to
1. The I Additional Sessions Court (PCR) Thanjavur, Thanjavur District
2. The Judicial Magistrate No.II, Thanjavur

Advertisements

About advocatemmmohan

ADVOCATE

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

%d bloggers like this: