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CHEQUE BOUNS CASE

When the complainant himself changed the version of his case at the time of examination and put forward another version that he paid the amount in individual capacity of the third respondent but not in the capacity of partner of the company, the very case that the cheque was issued by company proves false on it’s face value itself and as such no presumption are available to the complainant for rebutting to the accused. Their lordships of Madras High court confirmed the dismissal order of lower court.

IN THE HIGH COURT OF JUDICATURE AT MADRAS

"Court Trial of Witches", illustrato...

“Court Trial of Witches”, illustrator unknown (Photo credit: Wikipedia)

DATED: 28.06.2011

CORAM:

THE HONOURABLE MR.JUSTICE S.NAGAMUTHU
Criminal Appeal No.46 of 2004

P.Krishnasamy .. Appellant

Vs

1.Delta Knit Wearables,
Rep. By its Partners,
R.Thiruvengadam &
R.Balaji, Devi Nilayam,
First Street, Saminathapuram,
Anupparpalayam Pudur,
Tiruppur.

2.R.Thiruvengadam
3.R.Balaji .. Respondents
Prayer:- Criminal Appeal filed under Section 378 Cr.P.C., against the judgment of acquittal in C.C.No.125 of 2001 dated 19.11.2003, passed by the learned Judicial Magistrate  I, Udumalpet.

For Appellant : Mr.R.Sivaprakasam

For Respondents : Mr.T.Shanmuga Boopathy for
Mr.K.Ragupathy

JUDGEMENT

This is an appeal against acquittal. The appellant is the complainant in C.C.No.125 of 2001 and the respondents are the accused. It was a case instituted on a private complaint alleging that the respondents had committed offence under Section 138 of the Negotiable Instruments Act. The learned Judicial Magistrate No.1, Udumalpet by judgment dated 19.11.2003, acquitted all the respondents. Challenging the said acquittal, the appellant is before this Court with this appeal.

2.The facts of the case in brief would be as follows:-
The first respondent is a company, of which, the respondents 2 and 3 are the partners. The respondents 2 and 3 were earlier known to the appellant. On 24.07.2000, according to the complainant, the respondents 2 and 3 on behalf of the first respondent approached him and requested for a loan of Rs.3,00,000/-. They assured that they will return the amount within 10 days. The appellant accordingly, paid a sum of Rs.3,00,000/- on 01.08.2000 as loan to the respondents. While receiving the amount, in order to ensure repayment, a cheque for a sum of Rs.3,00,000/- dated 11.08.2000 drawn on Karur Vysya Bank Ltd., Tiruppur Branch bearing No.298853 was issued to the appellant. The said cheque was signed by the third respondent  Mr.R.Balaji, as the partner of the first respondent company namely M/s.Delta Knit Wearables and as assured by the respondents, the said amount was not repaid within 10 days. Thereafter, the cheque was presented for collection in the account of the appellant and on the same being forwarded to the Karur Vysys Bank Ltd., the cheque was dishonoured by the said Bank on 14.08.2000 on the ground that there was insufficient fund in the account of the first respondent company.

3.Thereafter, the appellant issued a statutory notice as required under Section 138 of the Negotiable Instruments Act, to all the three respondents. The respondents 1 and 3 received the notice and acknowledged the same. But the second respondent did not receive the notice and the said notice sent by registered post was returned to the complainant with the endorsement by the postal authorities as not claimed. Since the said notice was not complied with, the above said private complaint was preferred by the complainant. It is significant to note that the respondents 1 and 3 did not even sent any reply to the said notice.

4.Before the trial Court, all the three respondents took a defence that there was no legally enforceable liability on their part to issue the cheque. They also took a defence that the third respondent had money transaction with one Mr.Chellappan who is the brother of the complainant. Such money transaction between Chellappan and the third respondent commenced in the year 1995. In respect of one such transaction, the third respondent gave certain pro notes and cheques to Mr.Chellappan in the year 1995. One of the such cheque is pressed into service in this case. According to the specific case, it is not a filledup cheque and it was only a blank cheque but signed by the third respondent.

5.Lastly, in the year 1998, the third respondent had borrowed loan from Mr.Chellappan and the same was also settled in the year 2000. On 18.05.2000, Mr.Chellappan approached the third respondent and told that as against the loan transactions, interest for three months was still pending from the third respondent. But the cheque in question was not returned by Chellappan to the accused. In this regard, a complaint was preferred by the third respondent to Anuparpalayam Police Station on 19.05.2000. It is their further contention that after the issuance of the statutory notice, when he approached the Chellappan he in turn assured that he would return the cheque. On such assurance, there was no reply sent for the statutory notice. However, the said case ended in acquittal.

6.But, in view of the above vengeance, the said Chellappan has instituted the present complaint through his brother namely, the appellant herein. Thus, according to the specific case of the respondents, there was no legally enforceable liability on the part of any of the respondents and the cheque was not issued in respect of any such so called liability. Therefore, they are not liable for punishment.

7.Before the trial Court, on the side of the appellant, he was examined as P.W.1 and the Manager of Karur Vysya Bank Ltd., was examined as P.W.2. In chief examination, P.W.1 has vividly stated about the borrowal of Rs.3,00,000/- by the respondents and issuance of the cheque on the same day. The Bank Manager has stated that the cheque in question was dishonoured for want of sufficient funds.
8.When the above incriminating materials were put to the accused under section 313 Cr.P.C., they denied the same as false. On the side of the respondents, the third respondent was examined as D.W.1. He has reiterated the defence taken as narrated above. D.W.2 is the Sales Officer of a company known as M/s.Venkateswara Mills where the complainant was then working. He has stated that there was no transaction between Venkateswara company and the respondents. Having considered all the above materials, the trial Court acquitted the respondents. That is how, the appellant is before this Court with this appeal.

9.I have heard the learned counsel for the appellant and the learned counsel for the respondents and also perused the records carefully.

10.The foremost contention of the learned counsel for the appellant is that the trial Court has failed to invoke the presumption under Section 139 of the Negotiable Instruments Act, even though there has been an admission on the part of the respondents that the cheque in question was signed by the third respondent. The learned counsel would further submit that the said presumption has not been rebutted at all by letting evidence by the respondents. Therefore, according to him, the trial Court ought not to have acquitted these respondents under Section 138 of the Act. The learned counsel would further contend that the trial Court was not right in acquitting the respondents on the conclusion that there has been no proof that the respondents 2 and 3 were the Partners of the first respondent company and they were running the day to day affairs of the said company. He would further submit that it is not at all the case of the respondents that they were not the partners of the first respondent company.

11.The learned counsel would further point out that though it is true that P.W.1 has admitted that the loan was paid by him to the third respondent in his individual capacity, the cheque drawn as against the account belonging to the first respondent company will still fall within the ambit of Section 138 of the Act. For this proposition, the learned counsel has placed reliance on few judgments of this Court as well as the Honble Supreme Court about which, I will make reference at the appropriate stage of this judgment. The learned counsel has concluded his argument stating that the judgment of the trial Court needs to be reversed.

12.But the learned counsel for the respondents would stoutly oppose this appeal. According to him, the complainant has failed to prove any liability which is legally enforceable on the part of any of the respondents. He would take me through the evidence of P.W.1 and D.W.1 to substantiate his contention. He would point out that there is no denial of the fact that the complainant/appellant is the brother of one Mr.Chellappan. Mr.Chellappan and the third respondent had long standing money transaction during which, number of cheques were given including the present cheque. He would further point out that the other cheque leaves from out of the same cheque book which were issued by the Bank in the year 1995 were all exhausted in the year 1998 whereas the present cheque was used in the year 2000. This, according to the learned counsel, weighed in the mind of the trial Court about the case of the prosecution. He would further submit that the presumption under Section 139 of the Act cannot be raised at all because, the cheque was not issued as against any legally enforceable liability. He would further submit that this being an appeal against acquittal, this Court should be very reluctant to interfere with the judgment of acquittal since there is an added presumption of innocence in favour of the accused. Therefore, he would pray for dismissal of this appeal.

13.I have considered the rival submissions.

14.There is no controversy before this Court that the cheque was signed by the third respondent on behalf of the first respondent company and that the said cheque was drawn as against the account relating to the first respondent company. In order to raise the presumption under Section 139 of the Act, it is needless to point out that the due execution of the Negotiable Instrument namely the cheque in question was issued by the third respondent is to be proved. In this case, though it is the positive case of the complainant that the cheque was completely filled up indicating the due execution of the same and was handed over to the complainant by the third respondent, the contention of the third respondent is that the cheque was never issued to the complainant and it was issued only to Mr.Chellappan as a blank cheque, the same was later on filled up and the services of the complainant has been utilised by Mr.Chellappan. Section 118 of the Act, speaks of certain presumptions as to Negotiable Instruments. One of the presumptions is in respect of the consideration. It states that the Court shall presume that the Negotiable Instrument was made or drawn for consideration, and that such instrument, when it has been accepted, indorsed, negotiated or transferred, was accepted, indorsed, negotiated or transferred for consideration. This presumption, of course is rebuttable. In order to raise the said presumption, it is absolutely necessary for the complainant that the Negotiable Instrument was duly made, that means it was duly executed by the respondents. In this case, since the execution of the cheque is under dispute, unless it is duly proved by the complainant that the cheque was filled up by the third respondent and issued by him, the presumption under Section 118(a) cannot be invoked in favour of the complainant.

15.Yet another presumption which can be raised is in respect of the date of the cheque. Section 118(b) of the Act states that the Court shall presume that the Negotiable Instrument bearing a date was made or drawn on such date. These presumptions shall remain until the contrary is proved as provided under Section 118 of the Act. But the proviso to Section 118 of the Act cannot be lost sight off which states as follows:-

118.Presumptions as to negotiable instruments.-Until the contrary is proved, the following presumptions shall be made:-

(a)of consideration.- that every negotiable instrument was made or drawn for consideration, and that every such instrument, when it has been accepted, indorsed, negotiated or transferred, was accepted, indorsed, negotiated or transferred for consideration;
(b)as to date.-that every negotiable instrument bearing a date was made or drawn on such date;
(c)as time of acceptance.- that every accepted bill of exchange was accepted within a reasonable time after its date and before its maturity;
(d)as to time of transfer.-that every transfer of a negotiable instrument was made before its maturity;
(e)as to order or indorsements.- that the indorsements appearing upon a negotiable instrument were made in the order in which they appear thereon;
(f)as to stamp.- that a lost promissory note, bill of exchange or cheque was duly stamped;
(g)that holder is a holder in due course.-that the holder of a negotiable instrument is a holder in due course;
Provides that, where the instrument has been obtained from its lawful owner, or from any person in lawful custody thereof, by means of an offence or fraud, or has been obtained from the maker or acceptor thereof by means of an offence or fraud, or for unlawful consideration, the burden of proving that the holder is a holder in due course lies upon him.
16.It is only this proviso clause, which makes obligatory on the part of the complainant to prove that the holder of a negotiable instrument is a holder in due course. Here in this case, it is the specific contention of the respondents that the cheque was never issued to the complainant and it was issued only to Mr.Chellappan. Therefore, if only the complainant is able to prove that the cheque was issued by the third respondent to him as against any legally enforceable liability then the presumption under Section 118 of the Act can be invoked and not otherwise.

17.With the above legal background, let us now look into the facts of the present case. It is not the case of the complainant at all that a sum of Rs.3,00,000/- was paid to the third respondent in his individual capacity and in discharge of the said liability, on the part of the third respondent, the cheque in question was issued by the third respondent which was drawn as against the account of the first respondent company of which, the second respondent is also a Partner. As I have already stated, it is the specific case of the complainant that a sum of Rs.3,00,000/- was borrowed by all the accused i.e., the respondents 1 to 3 on behalf of the first respondent company. When that is the specific case of the respondents, it is for the complainant to positively prove the same beyond any doubt. But in my considered opinion, the complainant has failed to do so. It can be seen that during cross examination, P.W.1 has clearly admitted that a sum of Rs.3,00,000/- was paid by him to the third respondent in his individual capacity. By all means, there was no liability at all on the part of the company to pay any amount to the complainant. Thus, the positive case put forward by the complainant in the complaint proceeded by the notice is completely falsified by the evidence of P.W.1 himself. This creates enormous doubt about the veracity of the case put forward by the complainant.

18.Nextly, the cheque book being containing the cheque leaf in question was issued by the complainant in the year 1995. It is in evidence that all the other cheque leafs were utilized and exhausted in the year 1998 itself but the present cheque was used only in the year 2000. The trial Court has held that it is doubtful that the cheque in question alone was kept for five years and issued in the year 2000 by the third respondent. The trial Court has further held that this creates doubt and it goes in favour of the respondents. But as stated above, the cheque in question was issued in the year 1995 to Mr.Chellappan as a blank cheque. But the same has not been explained away by the complainant in any manner. From this, in my considered opinion, the complainant has failed to prove that there was any liability on the part of the first respondent represented by the respondents 2 and 3 and that the cheque was issued in discharge of the said legally enforceable liability. Thus, the complainant has failed to discharge its initial burden to prove that there was legally enforceable liability. The prosecution has failed to prove that the cheque was duly executed in favour of the complainant as against the above said liability. It is on this ground, the complainant has to fail as rightly held by the trial Court.

19.Now realising the above difficulty, the learned counsel for the appellant would submit that assuming that the loan to the tune of Rs.3,00,000/- was extended by the complainant only to Mr.R.Balaji (the third respondent) in his individual capacity, even then, the cheque issued on behalf of the first respondent as against the liability of Mr.R.Balaji in his individual capacity will still attract the penal provision of Section 138 of the Act. For this proposition, the learned counsel has placed reliance on the following judgments of this Court as well as the Honble Supreme Court:-
1)In K.Krishna Bai v. M/s.Arti Press (1991 (2) MWN (Cr.));
2)In Gummadi Industries Ltd., v. Kushroo F.Engineer M/s.Zen Global Finance Ltd., (2000(II) CTC 443);
3)In Sayadu Beedi Company v. Thirumalai Subbu @ Thirumalai (2007 (2) MLJ (Crl.) 281)
4)In P.J.Agro Tech Ltd., v. Water Base Ltd., (2010 4 MLJ (Crl.O 701 (SC) .

20.In all these cases, the Honble Supreme Court as well as this Court have reiterated the legal position that the legally enforceable liability as contemplated in Section 138 of the Act, need not necessarily be the legally enforceable liability of the drawer of the cheque. The Courts have further held that even if a cheque has been issued by an individual as against the liability of a different person even then the dishonour of the said cheque and the failure to comply with the notice will be an offence under Section 138 of the Negotiable Instruments Act, as against the drawer of the cheque. About the said legal proposition, there can be no dispute before this Court. But in the instant case, it is not at all the positive case of the complainant that the legally enforceable liability was that of the third respondent and that the cheque was issued in discharge of the said liability of the third respondent. As I have already stated, it is the positive case put forward by the complainant in the complaint proceeded by notice that the legally enforceable liability was that of only the first respondent company and the cheque was issued only in discharge of the same. Therefore, because some contrary evidence has been let in in the cross examination of P.W.1, the complainant cannot suddenly switch over to project a different case in respect of liability. This contrary stand taken by the complainant would only go to show that the complainant has not come forward with clean hands and he tries to fish out of troubled waters. Thus, in my considered opinion, since the complainant has failed to prove the due execution of the cheque and the legally enforceable liability on the part of the first respondent, the presumption under Section 139 of the Act as well as the presumption under 118 of the Act are not at all available. Therefore, there is no question of rebutting the same.

21.The learned counsel would further submit that the admission of the signature in the cheque itself would give raise to such presumption under Section 139 of the Act. But I find it very difficult to persuade myself to agree with the said argument. Signing a blank cheque will not amount to due execution. Due execution means to give a cheque in its complete form.

22.Of course it is true that by issuing a cheque which is a blank cheque with signature alone, there can be presumption of authorisation in favour of the person to whom the same was issued to fill up the same to his convenience. But here in this case, it is the case of the third respondent that the said blank cheque was not issued to the complainant but issued to one Mr.Chellappan for some other purpose. Thus, the very issuance of cheque in favour of the complainant itself has not been proved and so, none of the presumptions as contemplated in the Act, can be raised in this case.

23.The learned counsel would contend that the trial Court has acquitted the accused mainly on the ground that there was no proof that the respondents 2 and 3 were actively involved in the day to day affairs of the company. I dont want to go into the said question because the respondents are entitled for acquittal on the other grounds which I have already dealt with.

24.This being an appeal against acquittal, as rightly pointed out by the learned counsel for the respondents, this Court cannot, in a mechanical fashion, interfere with the judgment of acquittal. As has been repeatedly held by the Honble Supreme Court, the presumption of innocence in favour of the accused/respondents is further strengthened by the acquittal recorded by the trial Court. Unless it is shown to this Court that the judgment of the trial Court acquitting the respondents is in any manner perverse in the legal sense, it is not permissible for this Court to interfere with the acquittal. In this case, as I have already stated, I do not find any material available on record to hold that the judgment of the trial Court is perverse so as to require interference at the hands of this Court.

25.In the result, the criminal appeal fails and accordingly, the same is dismissed.

 

 

 
jbm

To

1.The Judicial Magistrate  I,
Udumalpet.

2.The Public Prosecutor,
High Court,
Madras

 

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