The High Court dismissed an appeal against an acquittal in a Section 138 cheque bounce case. The Court held that the complainant failed to prove the existence of a debt and that the statutory notice was not validly served on the accused.
Criminal Appeal dismissed; judgment of acquittal dated 05.06.2006 confirmed.
This page shows the compact analysis of this judgement. The full analysis — procedural history, issue-by-issue holdings with ratio and obiter, advocates, and paragraph-level evidence for every claim — is being added to the record in batches and will appear here when this judgement has been through it.
HON’BLE SRI JUSTICE C. PRAVEEN KUMAR
Criminal Appeal No. 1387 of 2006
JUDGMENT:
The complainant has preferred the present appeal under Section 378 (4) Cr.P.C. aggrieved by the judgment dated 05.06.2006 passed in C.C.No.29 of 2003 on the file of the Munsif Magistrate, Tenali, wherein and whereunder the accused/ respondent was acquitted for an offence punishable under Section 138 of the Negotiable Instruments Act, 1881 (for short “the Act”).
For the sake of convenience, the parties will hereinafter be referred to as arrayed in the C.C.
The facts in issue are as under:
The appellant/complainant filed a private complaint against the accused for an offence punishable under Section 138 of the Negotiable Instruments Act. The allegations in the complaint would disclose that on 05.03.2003 the accused purchased 552 water manager equipments worth Rs.3,11,245/- from the complainant. On that day the accused is said to have issued five post dated cheques. The averments in the complaint further disclose that out of the five cheques, two cheques were dated 24.04.2003 for Rs.50,000/- each, two cheques were dated 25.04.2003 for Rs.50,000/- each and another cheque was dated 26.04.2003 for Rs.60,000/-. The said cheques when presented for collection on 04.09.2003 were returned due to stop payment instructions by the accused and the same was intimated to the complainant vide cheque return memo dated 16.09.2003. Later, the complainant got issued a legal notice on 18.09.2003 but the same was returned on 03.11.2003 with an endorsement “door
locked”. As the accused has intentionally evaded the notice the present complaint came to be filed.
After recording the sworn statement of the complainant, the Court took cognizance of the case and issued summons to the accused. On appearance, the accused was examined under Section 251 Cr.P.C. in which he pleaded not guilty and claimed to be tried.
In support of his case, the complainant examined himself as PW1 and got marked Exs. P1 to P7.
After closure of the complainant’s evidence, the accused was examined under Section 313 Cr.P.C. wherein he denied the incriminating material appearing against him. In support of his defence, the accused examined DW.1 and got marked Exs.X1 to X5.
After analyzing the evidence available on record, the trial Court acquitted the accused on the ground that the complainant failed to prove the existence of the debt and that the cheques were issued in discharge of an existing liability. The trial Court also found that the complainant failed to comply with Section 138 (b) of the Act as notice contemplated under the Proviso was not served on the accused. Challenging the same the present appeal has been filed.
The learned counsel for the appellant strenuously argued that as the signature on the cheques are not in dispute, the accused cannot escape from his liability in view of the presumption under Section 139 of the Act. He further submits that the accused purchased goods from M/s. Raja Rajeswari Enterprises, which is a proprietary concern registered in the name
of the wife of the complainant and that there is nothing wrong in accused issuing cheques in favour of the complainant in discharge of debt incurred due to purchase of goods from Raja Rajeshwari Enterprises. He further submits that statutory notice was sent to the correct address furnished by the accused which fact stands established from Exs.P.12 to P17. Relying upon the judgment of Madras High Court in Gummadi Industries Limited, Chennai V. Khushroo F.Engineer, General Manager Finance, Chennai[1] , judgment of Allahabad High Court in Devendra Kumar Rai V. Ram Gopal Rai[2] , judgment of this Court in K.Manikyam v. P.Parvathi and another[3] and the judgment of the Apex Court in I.C.D.S. Limited v. Beena Shabeer[4] the learned counsel for the appellant submits that the ingredients constituting the offence are made out against the accused.
On the other hand, the learned counsel for the accused submits that the trial Court on proper evaluation of evidence rightly held that no offence under Section 138 of the Act is made out against the accused and as such the same warrants no interference.
Although in an appeal from an order of acquittal the powers of the High Court to reassess the evidence and reach its own conclusions are as extensive as in an appeal against an order of conviction, yet, as a rule of prudence, it should always give proper weight and consideration to such matters as (1) the views of the Trial Judge as to the credibility of the witnesses (2) the presumption of innocence in favour of the accused, a presumption certainly not weakened by the fact that he has been acquitted at the trial; (3) the right of the accused to the benefit of any doubt;
and (4) the slowness of an appellate Court in disturbing a finding of fact arrived at by a Judge who had the advantage of seeing the witnesses. Where two reasonable conclusions can be drawn on the evidence on record, the High Court should, as a matter of judicial caution, refrain from interfering with the order of acquittal recorded by the Court below. In other words, if the main grounds on which the Court below has based its order acquitting the accused, are reasonable and plausible, and cannot be entirely and effectively dislodged or demolished, the High Court should not disturb the acquittal. (Ganesh Bhavan Patel and another v. State of Maharashtr a[5] ) .
Keeping in view the guidelines laid down by the Apex Court I shall proceed to deal with the case on hand accordingly.
As stated above, the main ground on which an order of acquittal came to be passed was that the complainant failed to establish that the cheques were issued in discharge of a debt or liability and that the notice as contemplated under Section 138 (b) of the Act was not duly served on the accused.
For proper appreciation of the rival contentions it would be useful to refer to the evidence on record.
The affidavit of PW.1 filed in lieu of chief examination would show that the accused purchased 552 Water Manager Equipment worth Rs.3,11,245/- from him on 05.03.2003. A credit bill was raised in the name of Hanuman Enterprises, Patamata, Vijayawada. On that day itself the accused issued five post dated cheques, out of which two cheques were dated 24.04.2003 for Rs.50,000/- each, two cheques were dated 25.04.2003 for Rs.50,000/- each and another cheque was dated 26.04.2003 for
Rs.60,000/-. All the cheques were drawn on Andhra Bank, Nellore. Believing the representation made, the complainant is said to have delivered the goods. The accused was postponing the request of the complainant for presentation of the cheques. Ultimately PW.1 presented the cheques for collection on 04.09.2003 in Andhra Bank, Tenali Branch, but the same were returned due to stop payment instructions. The same was intimated to him through memo dated 16.09.2003. Subsequently he got issued a legal notice to the accused informing him about the dishonour of cheques and demanded payment of the due amount. It is stated that though the notice was sent to the correct address but the same was returned with an endorsement “door locked”.
PW.1 was subjected to lengthy cross examination. In his cross examination he admits that he was doing retail medical business at Tenali in the name and style of Sree Raja Rajeswari Enterprises the Proprietor of which is his wife. The said agency was taken in the name of his wife for sale of water manager equipment which were used for regulating the flow of water to the tanks. It is stated that the Registration Certificate was also taken in the name of his wife in the month of December, 2002. He further admits that his wife was doing the business and he was managing, the business of his wife. PW.1 admits about the existence of Hanuman Enterprises at Shop No.14, Patamata, Vijayawada, but however admits that he cannot say the exact place and also the road. According to him a bill was drafted with the above address. He stated that two days prior to 05.03.2003 PW.1 claims to have gone to the said place along with his Sales Executive and on enquiry, the accused is said to have informed him that the business is of his own. Pursuant to an advertisement
published in newspaper the accused along with his brother is said to have come to the complainant and entered into an agreement, agreeing for selling the stock on cash basis with an understanding that the same will not be taken back. Ex.P9 is the credit bill for the purchase of stock in which it was mentioned as only invoice and not as credit bill. The said bill was in the name of Hanuman Enterprises and the accused is said to have signed on it. It was also admitted that Ex.P9 was not filed along with the complaint but presented at a later point of time. To a suggestion that Ex.P9 was created for the purpose of this case was denied by him. He further admits that there is a difference of ink and writing on all the cheques. He also admits that he has filed returns before the C.T.O. but at present there is no proof to show filing of the said returns. To a suggestion that he is not concerned with Sree Raja Rajeswari Enterprises was denied by him. He also denied the suggestion that the accused was not the Proprietor of Hanuman Enterprises. The pass books Exs.P12 to P17 are marked through PW.1 to show the monthly drawing of interest on the deposits made by the accused. He however admits that neither in the notice nor in the chief examination he mentioned about the accused issuing Exs.P12 to P17. To a suggestion he admits that out of Exs.P12 to P17, three books are in the name of the accused and other books are in the names of his family members. He admits that he did not obtain any document from the accused showing deposit of pass books. He denied the suggestion that he has stolen the cheques and also the pass books.
A reading of Section 138 of the Act makes it clear that where any cheque drawn by a person on an account maintained by him with a banker for payment of any amount of money to another person from out of that account for the discharge, in whole or in
part, of any debt or other liability, is returned by the bank unpaid, either because of the amount of money standing to the credit of that account is insufficient to honour the cheque or that it exceeds the amount arranged to be paid from that account by an agreement made with that bank, such person shall be deemed to have committed an offence and shall, without prejudice to any other provision of this Act, be punished with imprisonment for a term which may extend to two years, or with fine which may extend to twice the amount of the cheque, or with both. The explanation to Section 138 of the Act says that the word `debt or other liability' means a legally enforceable debt or other liability.
As stated earlier, one of the main ground on which the trial Court acquitted the accused was that these cheques were not issued in discharge of any debt or liability.
As seen from the evidence, the accused is said to have purchased 552 Water Manager Equipment under Ex.P9 credit invoice and in discharge of the same the accused is said to have issued Exs.P1 to P5 cheques on the same day. Relying upon Ex.P9 and the signature on Ex.P9 being that of the accused, the learned counsel for the appellant strenuously contends that the plea of the complainant with regard to accused purchasing the equipment and issuing cheques stands established. But one fact which is to be noted is that the accused claims to have purchased those equipment from Sree Raja Rajeswari Enterprises, the proprietor of which is the wife of the complainant. The said fact was also elicited from the evidence of PW.1. A perusal of Ex.P9 show that it was a print out taken on a plain paper referring to accused purchasing goods from Sri Raja Rajeswari Enterprises. Along with Ex.P9 the complainant also filed Exs.P10 and Ex.P11,
the agreement with the manufacturer from whom he purchased the equipment and also a receipt for purchase of the equipment. But the agreement referred to above was entered into by the complainant with Sri Anu Electronics and the receipt was in the name of M/s. Sree Raja Rajeswari Enterprises, Tenali, of which the wife of the complainant was a partner. Therefore, Ex.P10 does not tally with Ex.P9.
Further, the plea of the accused is that he has not received the stock and the signature on Ex.P9 is not that of his, but where as the complainant’s case is that the accused received the stock, signed the invoice and then issued the cheques Exs.P1 to P5. Even assuming for a moment that the accused has purchased the goods from Sree Raja Rajeswari Enterprises in whose name Ex.P9 was issued, no plausible explanation is forthcoming as to why accused issued the cheques in favour of the complainant. The learned counsel for the appellant tried to explain away the circumstances by stating though the transaction was between Sree Raja Rajeswari Enterprises and the accused, the cheques were issued to him as he happens to be the husband of the proprietor as he was looking after the business. If really PW.1 was looking after the business, the wife of the complainant would have been the best person to enter into witness box and explain as to why cheques were issued in the name of her husband. In the absence of any such evidence it cannot be said that these cheques were issued in discharge of a debt incurred between the complainant and the accused.
Another reason for coming to said conclusion is the inconsistent versions in the case. Ex.P7 which is copy of the legal notice issued to the accused, reads as under:-
“Our client is the wholesale distributor of Water Manager Equipments. You have purchased 522 water manager equipments from our client on credit basis on 05.03.2003. At your instructions a credit bill was raised on the name of Hanuman Enterprises, shop No.14, Patamata, Vijayawada. The bill amount of Rs.3,11,245/-. You signed on the credit bill”
In the complaint also PW.1 stated that the accused purchased stock from the complainant. Even in the chief affidavit it was mentioned that the accused purchased the equipment from PW.1. Neither in the legal notice issued under Ex.P7 nor in the complaint or in the chief affidavit there is a reference to purchase of these stocks from Raja Rajeswari Enterprises. As stated earlier this Ex.P9 was not filed along with the complaint but was marked through PW.1 during his cross examination. The said Ex.P9 does not contain the name of proprietor and bill number through which the stock was purchased. The plea which has been set forth that these cheques were issued by the accused in discharge of the liability to Raja Rajeswari Enterprises was not taken at any point of time earlier. It would have been appropriate for the complainant to examine the proprietor of Raja Rajeswari Enterprises for proving the issuance of Ex.P9 the alleged credit invoice.
The evidence of PW.1, as extracted earlier, further discloses that there was an agreement between the complainant and accused agreeing to sell the product on cash basis and with condition that the same shall not be taken back. So as per the evidence, the agreement was only to sell the goods on cash basis but not on credit basis. Therefore, the version of PW.1 that he gave credit of Rs.3,11,245/- to the accused goes contrary to the agreement. Further PW.1 came to know about the accused when
he contacted him after seeing an advertisement in the newspaper. He admits that he has not verified whether Hanuman Enterprises is a registered firm or whether the accused is the proprietor of the said enterprises. Without verifying the antecedents of the accused he is said to have given a credit of Rs.3,11,245/-, when their investment as admitted by him in the cross examination was only Rs.2,00,000/-. The evidence of PW.1 further discloses that the sale transaction was shown in his returns filed before C.T.O. but no document is filed to substantiate the same. However, the accused summoned C.T.O. and through him he got marked Exs.X1 to X5. The said documents show nil returns being filed by the complainant. Raja Rajeswari Enterprises showed purchases of Rs.1,44,000/- from Anu Electronics under those returns but no sales are shown. On the other hand Ex.P10 which is an agreement with Anu Electronics shows purchase of only 293 units. All these circumstances referred to above throw any amount of doubt as to whether the accused purchased any goods and whether these cheques were issued in discharge of any debt or liability. Further a perusal of cheques which are produced on record as Exs.P1 to P5 would show difference in writings on the cheques except the amount. Even assuming that these post dated cheques were issued by the accused on the day when the accused took possession of the goods, the ink and writing on the entire cheques should have been one and the same. But the amount and the contents on the cheques were found to be in different ink and writing. The trial Court compared the signatures on Ex.P9 invoice with that of the admitted signatures of the cheques under Section 73 of the Evidence Act and came to conclusion that the signature on Ex.P9 was a forged one.
From the above it is clear that the complainant has come
forward with inconsistent versions. The earliest version is with regard to the averments made in the notice, complaint and chief affidavit. Subsequently during the course of cross examination a new story was introduced stating that the accused as a proprietor of Hanuman Enterprises situated at Shop No.14, Patamata, Vijayawada purchased water manager equipment from Raja Rajeswari Enterprises belonging to the wife of the complainant. If the second version is to be accepted, Hanuman Enterprises which has purchased the material from Raja Rajeswari Enterprises should have issued the cheques in favour of Raja Rajeswari Enterprises but that does not appear to have done so.
Coming to the other aspect namely the issuance of notice to the accused, the material on record would show that the complainant got issued a legal notice on 19.09.2003 but the same was returned with an endorsement door locked on 03.10.2003.
As seen from Ex.P8, the said notice was sent to C.Satish Kumar, C/o. S.Subbaiah Chetty, 27/II/673, AC Nagar, Nellore-2, but not to Hanuman Enterprises, Shop No.14, Patamata, Vijayawada. PW.1 in his evidence stated that he along with his Sales Executive went to Hanuman Enterprises and while he was sitting in auto his Sales Executive went and met the accused. When the evidence is to the effect that the stock was purchased by Hanuman Enterprises, which is located at Patamata, Vijayawada, the complainant ought to have sent the notice to Hanuman Enterprises. In stead of that he chose to send the notice in the individual name of the accused and also filed the complaint in the individual name of the accused. No material is placed to establish the connection of the accused with Hanuman Enterprises to whom the complainant is said to have sold the
goods. No explanation is forth coming as to why no notice was sent to Hanuman Enterprises. In view of the above a doubt arises as to whether the complainant has sent the notice to the correct address when the notice was not sent to the correct address a presumption under Section 27 of the General Clauses Act cannot be raised and it cannot be said that notice was deemed to have been served on the accused. All the cases relied upon by the learned counsel for the appellant were cases filed under Section 482 of Cr.P.C. seeking quashing of the proceedings. Therefore, the said judgments may not be applicable to the case on hand.
For the aforesaid reasons this Court is of the view that there are no merits in the appeal and the same is liable to be dismissed.
Accordingly, the Criminal Appeal is dismissed confirming the judgment dated 05.06.2006 passed in C.C.No.29 of 2003 on the file of the Munsif Magistrate, Tenali.
As a sequel thereto, Miscellaneous Petitions, if any, pending shall stand closed.
____________________ C. PRAVEEN KUMAR, J
13.08.2014 gkv
[1] 1999 (2) ALD (Crl.) 738 (Mad.)
3 issues framed by the court
Whether the accused can be held liable under Section 138 of the Negotiable Instruments Act when the evidence fails to establish that the cheques were issued in discharge of a legally enforceable debt
Whether the issuance of the statutory notice under Section 138(b) was valid when sent to the individual accused instead of the firm named in the purchase invoice.
Whether the High Court should interfere with the order of acquittal where the trial court found inconsistencies in the evidence and failure to prove the existence of debt.
Colour shows how this judgement treated each authority
Gummadi Industries Limited v. Khushroo F.EngineerReferred¶14
Gummadi Industries Limited, Chennai V. Khushroo F.Engineer, General Manager Finance, Chennai [1]
Devendra Kumar Rai V. Ram Gopal Rai [2]Referred¶14
K.Manikyam v. P.Parvathi and another [3]Referred¶14
I.C.D.S. Limited v. Beena Shabeer [4]Referred¶14
Ganesh Bhavan Patel and another v. State of Maharashtr a [5]Explained¶17
5 provisions across 3 enactments
Complainant
Accused
C. PRAVEEN KUMAR
As recorded by the court registry
Judgements on the same questions, provisions and authorities, from every court
