Partly allowed

Mrs. Ravinder Kaur, v. M/s. Kamala Computers (p) Ltd., rep by its managing

Telangana HC13 Aug 2014CRLA/208/2006

Case brief

AI extract

What is this about?

In a second appeal under Section 138 NI Act, the High Court set aside the trial court's conviction and acquitted the appellant-compound. The Court held that the liability for the dishonoured lease amount was discharged by a subsequent security deposit and compromise agreement, leaving no legally enforceable debt.

What did the court decide?

Second appeal allowed; trial court's conviction set aside; accused acquitted; fine refunded to the appellant.

Mrs. Ravinder Kaur, Vs M/s. Kamala Computers (p) Ltd… — Cheque Dishonour | Telangana HC (2014)

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THE HONOURABLE Dr. JUSTICE B.SIVA SANKARA RAO CRIMINAL APPEAL No.208 of 2006

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JUDGMENT:

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Second appeal filed by the complainant impugning the acquittal judgment of the first appellate Court (IV Additional Metropolitan Sessions Judge, Hyderabad) dated 09.11.2005 in Crl.A.No.256 of 2005 on the appeal filed by the accused, by reversing the trial Court’s (XI Additional Chief Metropolitan Magistrate, Secunderabad) conviction judgment, dated 05.09.2005 in C.C.No.600 of 2002 against both the accused, for the offence punishable under Section 138 of the Negotiable Instruments Act (for brevity 'the N.I.Act').

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2. The facts of the case before the trial Court are that the complainant is the owner of the fixtures and fittings in premises No.9-17/83/84-A/17 situate at S.P.Road, Secunderabad and the said premises is owned by her daughter-in-law by name Mrs. A.Singh W/o of K.D.Singh. A.1 is the company and A.2 is its Managing Director (case filed against him personally) who obtained lease of the said premises from daughterin-law of the complainant and simultaneously the complainant also leased out fixtures and fittings to the accused under Ex.P.1 lease agreement, dated 13.09.2001 on monthly lease amount of Rs.7,200/- and the same came into effect from 16.09.2001 and the accused vacated the said premises on 27.02.2002. While handing over the said premises, the accused has surrendered all the fixtures ad fittings and issued cheque bearing No.109952, dated 01.02.2002(Ex.P.2) drawn on Global Trust Bank, Bowenapally, for the arrears of two months lease of Rs.14,400/- for the said fixtures and fittings covered under Ex.P.1 lease agreement, dated 13.09.2001, from the cheque when presented returned dishonoured covered by Ex.P.3 and P.4 cheque return memo and debit advice followed by the Ex.P.5 legal notice, dated 29.04.2002 within time that was

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with registered notice returned with endorsement of party constantly absent for the 7 days in delivery time, from said evidence of complainant with reference to said documents Exs.P.1 to P.6 apart from Ex.P.7 compromise agreement dated 28.01.2002 and Ex.P.8 receipt dated 14.02.2002; and from defence evidence of A.2 as D.W.1 the trial Court having found the accused guilty, sentenced the A.1 and A.2 to pay a fine of Rs.14,400/- each with default sentence six months Simple Imprisonment in directing the A.2 to suffer default sentence for the total period as responsible for A.1 being its Managing Director and out of said fine amount by awarding Rs.15,000/- compensation to the complainant besides Rs.2,000/- costs to the complainant with default sentence of one month.

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3. Thus, impugning the said trial Court’s conviction judgment, the accused when preferred the appeal covered by Crl.A.No.256 of 2005 with contentions propounded in his defence as grounds of appeal, ultimately the IV Additional Metropolitan Sessions Judge, Hyderabad, in the first appeal judgment dated 09.11.2005 set aside the trial Court’s conviction judgment and acquitted the accused holding that the trial Court totally misread in appreciation of the evidence and the trial Court ought not to have held that the Ex.P.2 cheque was towards discharge of any amount due as mentioned in Ex.P.7(compromise agreement, dated 28.01.2002) and the trial Court has come out with the version which is not pleaded by the complainant either in

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the complaint or in her evidence and concluded that the Ex.P.2 cheque was not proved as issued in discharge of a legally enforceable debt or liability and set aside the judgment of the trial Court.

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4. It is impugning the first appellate Court’s judgment, the

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complainant preferred the second appeal before this Court with contentions in the grounds of appeal that the first appellate Court’s reversal judgment acquitting the accused by setting aside the conviction judgment of the trial Court is contrary to law, weight of evidence and probabilities of the case though the accused fallen due two months lease by the time Ex.P.2 cheque dated 01.02.2002 was issued for the sum of Rs.7,200/- p.m. for fixtures and fittings and the compromise were later effected by 28.01.2002 and even failed to repay after issuance of legal notice intimating dishonour of cheque ‘for insufficiency of funds’ and it is therefrom by applying presumptions duly the trial Court when came to right conclusion, in its finding the accused guilty, the first appellate Court should not have reversed the same on surmises and assumptions against law by misconstruing the documents with wrong conclusions as if there is material alteration though the cheque is attested by the A.2 by revalidating it which is not material alteration much less fabrication or tampering, that the first appellate Court should have considered the same in correct perspective covered by Ex.P.7 compromise agreement, dated 28.01.2002 which is subsequent to Ex.D.1 and the amount mentioned in Ex.P.2 cheque also referred in Ex.P.7 in its correlation and the crossexamination of the A.2-D.W.1, there are also admissions and there is nothing to prove any payments, after issuance of Ex.P.2 cheque by the accused, having not disputed the issuance of Ex.P.2 cheque by the accused, was rightly concluded by the trial Court. Hence, to allow the appeal by setting aside the acquittal judgment of the first appellate Court and confirming the conviction judgment of the trial Court.

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5 . The learned counsel for the appellant-complainant reiterated said contentions during course of hearing.

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6. Whereas, it is the contention of the learned counsel for the accused-respondents that the first appellate Court having the experience of men and matters by re-appreciation of the entire evidence within its

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power including the evidence of P.W.1 and D.W.1 with reference to Ex.P.2 and Ex.D.1 came to right conclusion in setting aside the erroneous finding of the trial Court even no offence is made out against the accused under Section 138 of the N.I. Act to convict and thereby for this Court while sitting in appeal there is nothing to interfere. Hence, to dismiss the appeal.

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7. Perused the material on record. For sake of convenience, the parties hereinafter are referred to as they are arrayed in the trial Court.

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8. Before formulating the points for consideration for trial to answer, let us discuss the documents in nutshell for more clarity that the complainant Mrs. Ravinder Kour is wife of Mr.Manmohan Singh, who is no other than her G.P.A. holder, and A.1 is a company-a legal entity represented by its Managing Director-the A.2 with no dispute regarding the facts and the status of complainant as owner of fittings and fixtures located in the premises owned by her daughter-in-law by name Mrs. A.Singh W/o K.D.Singh), of the premises door bearing No.9-1-7/83/84A/17 of S.P.Road, Secunderabad and it is the accused that obtained said premises from its owner on lease simultaneously from the complainant the fixtures and fittings, on monthly rent of Rs.7,200/- covered by Ex.P.1 dated 13.09.2001 w.e.f. 16.09.2001 and the accused vacated the premises so also left the fixtures and fittings and surrendered the fixtures and fittings to the complainant by 27.02.2002 and it is while handing over the premises and surrendering the fixtures and fittings, the accused issued Ex.P.2 cheque dated 01.02.2002 for the two months arrears of the lease amount of said fixtures and fittings. The A.2 admitted in his evidence in cross-examination as D.W.1 as managing director of A.1 company about the lease agreement-Ex.A.1 between the complainant’s husband-cum-GPA holder and accused for the fixtures and fittings and he deposed that he has given Rs.21,600/- by cheque to the complainant as

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security deposit and on 21.01.2002 there was a compromise agreementEx.D.1 and the deposited amounts were adjusted towards arrears of rent and they vacated the premises on 01.02.2002. D.W.1 deposed that Ex.P.2 cheque No.109952 and another cheque No.109953 were issued towards rent of November and December, 2001, but as the rent for the said months was already adjusted as per Ex.D.1 agreement dated 24.01.2002 out of the security deposit amounts, the complainant was supposed to return the said cheques bearing No.109952(Ex.P.2) and 109953 but retained the same including two computers (Pentium-1) also and the Ex.P.2 cheque was materially altered by the complainant without consent of D.W.1 and he has not issued that cheque for discharge of any legally enforceable debt for nothing due and by the time Ex.P.5 notice sent he was at Manthani of Karimnagar district with his ailing mother to look after and thereafter it was not served. It is from respective evidence, what the trial Court observed was if at all the security deposit amount was adjusted by virtue of Ex.D.1 agreement after issuance of the two cheques including Ex.P.2, there is nothing prevented the accused to take return of the same much less to issue any legal notice for its return by so saying but kept silent unprudent and there is nothing to prove compromise when the complainant speaks vacated on 27.02.2002. Ex.P.8 receipt for delivery of office key was dated 14.02.2002 and Ex.P.7 compromise agreement was dated 28.01.2002 which discloses the version of complainant and the cheque was dated 27.12.2001 that was revalidated on 01.02.2002 and the same was not a material alteration so also for mentioning any numerical Rs.14,400/- whereas, in words of Rs.14,000/only a mere omission in writing in words and there is a presumption of due service of the notice to say the offence against the accused was made out in finding them guilty in C.C.No.600 of 2002, dated 05.09.2005. The findings of the first appellate Court in reversing the same were that though there is no dispute regarding issuance of Ex.P.2 cheque and its presentation and dishonor, the defence of accused was the liability under

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the cheque stands discharged once by adjustment of the security deposit kept with the complainant and daughter-in-law, for the arrears due for which the earlier cheques were issued nothing can be found due. Coming to the dispute regarding the date when the compromise effected as per P.W.1, it was of 27.02.2002 and as per D.W.1 dated 01.02.2002 by their respective relying on Ex.P.7 and Ex.D.1, Ex.D.1 speaks D.W.1 was informing the complainant about his going to vacate the premises on 01.02.2002. No doubt, it is not a proof to say premises vacated on that day from contents of Ex.D.1. As per complainant, accused vacated the premises on 27.02.2002 whereas, surrendered the fixtures and fittings and issued the cheque bearing No.1099552 (Ex.P.2) on 01.02.2002 that is also the evidence of P.W.1 whereas, the Ex.P.2 cheque show it was given on 27.12.2001 and the date was altered to 01.02.2002. It was not the case of the complainant that a cheque given on 27.12.2001 corrected to 01.02.2002 while handing over the fixtures and fittings. Thus there is a material alteration to invalidate the cheque. As on reading of clause-4 of Ex.P.7 also show two cheques 109552 and 1099553 both dated 27.12.2001 for Rs.18,000/- and Rs.14,400/- respectively which were returned by the bank and later on revalidated may be encashed from cheque No.109952 is for Rs.14,400/- Ex.P.2, if that is so, how the compromise agreement was dated 27.02.2002 when the Ex.P.2 cheque was returned on 11.04.2002 and the revalidation was allegedly later that improbablises, that too, it speaks from Ex.P.7 as to that the cheque will be given on 28.02.2002 to say the cheque was not given in discharge of liability claimed by the complainant and as per the Ex.P.8 key of the premises handed over to P.W.1’s husband on 14.02.2002 itself. If that is the case, truth of Ex.P.7 is in doubt. As per the P.W.1, Ex. P.2 was for rents of January and February 2002. In fact, rents are to be payable to the daughter-in-law of P.W.1-owner of the premises and what is payable to P.W.1 was for fixtures and fittings in saying Ex.P.2 is fabricated by material alteration and tampering. It is therefrom there is inconsistency in

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mention of figures of Rs.14,400/- and words Rs.14,000/- with no worth explanation and that version of P.W.1 is belied from the Ex.D.1 contents to say the cheques were issued for November, December and January,2002 that was adjusted in the security deposit and merely because the cheques were left with complainant that cannot be made use of and definitely Ex.P.2 cheque was not given at the time of vacating premises allegedly on 27.02.2002. Those were not properly appreciated by the trial Court. It is these conflicting findings given rise to the second appeal.

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9. Now the points that arise for consideration are:

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(1). Whether there is any legally enforceable debt for which the accused issued the cheque in favour of the complainant covered by Ex.P.2 and if so, the same is by virtue of subsequent evidence covered by Ex.D.1 adjusted and discharged under Ex.P.8 and P.7 respectively and whether there is any material alteration in Ex.P.2 and whether the first appellate Court’s acquittal judgment is liable to be set aside confirming the trial Court’s conviction judgment, if so, with what result and what observations?

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(2). To what result?

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Point No.1:

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10-(A). Before advert to the merits of the matter, it is beneficial to quote; the provisions incorporated in Chapter XVII of the N.I. Act make a civil transaction to be an offence by fiction of law and with certain (rebuttable) presumptions that shall be drawn. Sections.138 to 142 are incorporated in the N.I.Act,1881 as Chapter XVII by the Banking Public Financial Institutions and Negotiable instruments Laws (Amendment) Act,1981 (66 of 1988) which came into force w.e.f.01-04-1989 and the N.I.Act was further amended by Act,2002 (55 of 2002) which came into force w.e.f.06-02-2003 incorporating new sections 143 to 147 in this Chapter XVII and further some of the existing provisions not only of the Chapter XVII but also of other Chapters amended to overcome the defects

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and drawbacks in dealing with the matters relating to dishonour of cheques.

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10-(B). The object and intention of these penal provisions of the Chapter XVII (Sections 138 – 147), in particular, Sections 138 & 139 (besides civil remedy), are to prevent issuing of cheques in playful manner or with dishonest intention or with no mind to honour or without sufficient funds in the account maintained by the drawer in Bank and induce the Payee/Holder or Holder in due course to act upon it. The remedy available in a Civil Court is a long drawn matter and an unscrupulous drawer normally takes various pleas to defeat the genuine claim of the payee. Since a cheque that is dishonoured may cause uncountable loss, injury or inconvenience to the Payee due to the latter’s unexpected disappointment, these provisions incorporated are in order to provide a speedy remedy to avoid inconvenience and injury to the Payee and further to encourage the culture of use of cheques and enhancing credibility of the instruments as a trustworthy substitute for cash payment and to inculcate faith in the efficacy of Banking operations - GOA PLAST (PVT.) LTD. v. CHICO URSULA D’SOUZA^[1] .

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10-(C). To fulfill the objective, the Legislature while amending the Act has made the following procedure:

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In the opening words of the Section 138 it is stated: "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,---------, such person shall be deemed to have committed an offence and shall, without prejudice to any other provision of this Act (See Sec.143), be punished ----. Provided, nothing contained in this section shall apply unless,-(a), (b); and (c) Explanation---(supra)."

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"(i) Under Section 138 a deeming offence is created by fiction of

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law.

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(ii) An explanation is provided to Section 138 to define the words "debt or other liability" to mean a legally enforceable debt or other liability."

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(iii) In Section 139, a presumption is ingrained that the holder of the cheque received it in discharge of debt or other liability.

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(iv) Disallowing a defence in Section 140 that drawer has no reason to believe that cheque would be dishonoured.

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(v) As per Section 146(new section) the production of the Bank’s slip or Memo with official mark denoting that the cheque has been dishonoured is prima facie evidence for the Court to presume the fact of dishonour of such cheque unless such fact is disproved by the accused.

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10-(D). Further the provision for issuing notice within thirty days under section 138 after dishonour is to afford an opportunity to the Drawer of the cheque to rectify his mistakes or negligence or in action and to pay the amount within fifteen days of receipt of notice, failing which the drawer is liable for prosecution and penal consequences.

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10-(E). Reasonability of cause for non-payment is not at all a deciding factor. Mensrea is irrelevant. It is a strict liability incorporated in public interest.

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10-(F). Availability of alternative remedy is no bar to the prosecution

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10-(G). In the words-where any cheque, the word any suggests that for whatever reason if a cheque is drawn on an account maintained by him with a Banker in favour of another person for the discharge of any debt or other liability, the liability cannot be avoided in the event of the cheque stands returned by the Banker unpaid.

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11-A. The Apex Court in NARAYAN MENON v. STATE OF KERALA^[2] held that once the complainant shown that the cheque was

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drawn by the accused on the account maintained by him with a banker for payment of any amount in favour of the complainant from out of that account for its discharge and the same when presented returned by the Bank unpaid for insufficiency of funds or exceeds arrangement, such person shall be deemed to have been committed an offence under Section 138 of N.I. Act. What Section 139 of the Act speaks of the presumption against the accused to rebut is the holder of a cheque received the cheque of the nature referred in Section 138 of the Act for discharge of debt. For rebutting such presumption, what is needed is to raise a probable defence. Even for the said purpose, the evidence adduced on behalf of the complainant could be relied upon. Accused need not enter into the witness box and examine other witnesses in support of his defence. Accused need not disprove the prosecution case in its entirety. Therefore, the rebuttal does not have to be conclusively established but such evidence must be adduced before the court in support of the defence that the court must either believe the defence to exist or consider its existence to be reasonably probable, the standard of reasonability being that of the "prudent man".

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11-B. The presumption that further applied among clauses (a) to (g) of Section 118 of N.I. Act also, like the presumption under Section 139 of the Act, as per Section 4 of the Evidence Act, is a rebuttable presumption for which the burden is on the accused, however, to rebut the presumption if a case is made out by accused either by pointing out from the case of the complainant including very documents and cross-examination or by examining any person and need not be always by coming to witness box vide decision in KUMAR EXPORTS PVT. LTD. V. SHARMA CARPETS^[3] .

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11-C. Further, as per the expression of the Apex Court in RANGAPPA vs. MOHAN^[4] (3-Judges Bench) paras-9 to 15 referring to

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Goa Plast’s case (supra), KRISHNA JANARDHAN BHAT v. DATTATRAYA G. HEGDE^[5] by distinguishing at para-14 saying the observation in KRISHNA JANARDHAN BHAT (supra) of the presumption mandated by Section 139 does not indeed include the existence of a legally enforceable debt or liability is not correct, though in other respects correctness of the decision does not in any way cause doubted; by also referring to HITEN P. DALAL v. BRATINDRANATH BANERJEE^[6] holding at paras-22 and 23 therein of the obligation on the part of the Court to raise the presumption under 138, 139 and 118 of the N.I. Act, in every case where the factual basis for raising the presumption has been established since introduces an exception to the general rule as to the burden of proof in criminal cases and shifts the onus on to the accused, as a presumption of law distinguished from a presumption of fact as part of rules of evidence and no way in conflict with presumption of innocence and the proof by prosecution against the accused beyond reasonable doubt, but for saying to rebut the accused can discharge the burden showing reasonable probability of non-existence of the presumption of fact and to that proposition, the earlier expression in BHARAT BARREL & DRUM MANUFACTURING COMPANY v. AMIN CHAND PYARELAL^[7] para-12 showing the burden on the accused is to bring on record by preponderance of probability either direct evidence or by referring to circumstances upon which he relies, rather than bare denial of the passing of the consideration; apparently that does not appear to be of any defence, to get the benefit in discharge of the onus against, also held referring the M.M.T.C. LTD. AND ANOTHER v. MEDCHL CHEMICALS & PHARMA (P) LTD^[8] that where the accused able to show justification of stop payment letter even from funds are there, but no existence of debt or liability at the time of presentation of cheque for encashment to say no offence under Section 138 of the N.I. Act made out in discharge of the burden. It was concluded referring to the above, including of

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MALLAVARAPU KASIVISWESWARA RAO v. THADIKONDA RAMULU FIRM & ORS^[9] paras-14 and 15 that the initial presumption lays in favour of the complainant and Section 139 is an example of a reverse onus clause, which has been included in furtherance of the legitimate objection of improving the credibility of the negotiable instruments. While Section 138 specifies a strong criminal remedy in relation to the dishonour of cheques, the rebuttable presumption under Section 139 is a device to prevent undue delay in the course of litigation. Bouncing of a cheque is largely in the nature of a civil wrong whose impact is usually confined to the private parties involved in commercial transactions and the test of proportionality should guide the construction and interpretation of reverse onus clause and the accused cannot be expected to discharge an unduly high standard or proof and in the absence of compelling justifications, reverse onus clauses usually impose an evidentiary burden and not a persuasive burden to discharge by preponderance of probabilities by raising creation of doubt about the existence of a legally enforceable debt or liability to fail the prosecution and for that the accused can rely on the material submitted by the complainant also in order to raise such a defence and he may not need to adduce any evidence of his own.

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11-D. It was also observed in para-15 that the accused appear to be aware of the fact that the cheque was with the complainant, furthermore the very fact that the accused has failed to reply to the statutory notice under Section 138 of the Act leads to the inference that there was merit in the complainant’s version. It was also held by this court way back Chapala Hanumaiah Vs Kavuri Venkateshwarlu^[10] that having received and acknowledged the statutory legal notice after dishonour of cheque, non-giving of reply to said legal notice, improbablises the defence version, as any prudent person under the said circumstances should have, but for no defence to reply.

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12-A. From above legal position, coming to decide on the facts from oral, circumstantial and documentary evidence, how far it is proved the case of the complainant and from drawing of presumptions and inferences if any, how far rebutted by accused concerned:

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12-B. Coming to the crux of the lis on facts, Ex.P.1 is the lease agreement which is running in 4 pages of typed matter with 14 clauses that was dated 13.09.2001 between the complainant(party-I) and the A.2 (party-II) noted as proprietor of M/s. Kamala computers private Limited. It shows the A.2 was doing the business in the name of A.1-a proprietory concern and not a partnership firm or other legal entity. Thus, A.2 and A.1 are one and the same not different entities vide decision in Rohit Parsuram Vs Dheeraj Rava l^[11] where it was held referring to earlier expressions of this High Court that a cheque drawn by the accused as proprietor of proprietory concern, even he was not individually made the accused but for arrayed the proprietory concern name, proceedings cannot be quashed for liability of the proprietory concern and proprietor were joined. It is in fact of proprietory concern is the name of the business of the proprietor in that name and style and not a separate entity even under Order XXX CPC. Leave it apart as it is, from Ex.P.1 lease

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agreement terms entered concerned it shows as follows:-

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1. It is mutually agreed between Party-I and II that the monthly rental charges towards fixtures and fittings are Rs.7,200/(Rupees seven thousand and two hundred only),

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2. This arrangement will come into force from 16^th September,2001,

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3. Rental charges for the said fixtures and fittings shall be Rs.7,200/-(Rupees seven thousand and two hundred only) per month upto 15^th August,2002,

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4. If the party-II will be interested to continue for further period after completion of the initial period of 11 months, the rental charges will be increased by 10%. This increase of 10% is applicable for every term of 11(Eleven) months. New lease agreement would be entered into and the present deed would be considered as null

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and void. If Party-II wishes to continue, this arrangement has to be in froe for 33 months more. After 33 months, fresh negotiations would be held between Party-I and Party-II to arrive at new rental charges,

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5. Party-II will pay rental charges in advance on or before 5^th day of each month,

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6. Party-II has deposited with Party-II a sum of Rs.21,600/(Rupees twenty one thousand and six hundred only) vide cheque Nos.100958 and 100959 both dated 25.09.2001 for Rs.10,800/each both drawn on Global Trust Bank as security deposit and the same shall be refunded only after Party-II hands over possession of fixtures and fittings to Party-I. The said deposit does not carry any interest,

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7. Party-II will not be allowed to sub-let the same,

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8. If the Party-II fails to pay rent on the date as per agreement Party-I will cancel this agreement after giving three calendar month’s notice in writing showing his/her intention to do so,

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9. Party-I as well as Party-II can also terminate the agreement by giving three calendar month’s notice in writing showing their intention to do so,

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10. Party-II would handover all fixtures and fittings in neat and working condition, in the same condition at which these were taken at the time of taking the same on lease,

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11. For the period Party-II is using these fixtures and fittings the same shall be maintained by them.

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12. Present Lease Deed is being executed by stamp paper of Rs.20/-. If it is required to be executed and registered on applicable stamp duty at any time during tenancy period, its complete expenses towards stamp duty, registration fee etc., shall be borne and paid by Party-II. In any event, Party-I will not be liable for such expenses,

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13. If Party-II does not get the Lease Deed extended within the lease period, it shall be considered that the lease is automatically extended within all the stipulations as provided in the Lease Deed,

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14. Party-II admits taking possession of the said fixtures and fittings from 13^th September, 2001 as acknowledged on enclosed sheet.

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As per clause-6 supra, it is crystal clear that there is three months rent in deposit without yielding interest that belongs to the accused with the complainant to adjust at the time of vacating the premises, from the own saying by the complainant by placing reliance on this Ex.P.1lease agreement. Ex.P.2 cheque is mentioned dated 27.12.2001 which was stricken off and above the same date is inserted as ’01.02.2002’ as stated supra. Ex.P.1 lease agreement was dated 13.09.2001 and Ex.P.2 cheque even original date 27.12.2001 was subsequent to Ex.P.1. In the Ex.P.2 cheque, there is signature of A.2 in between the stamp contents of Kamala Computers Private Limited and Managing Director. In fact, it is a proprietory concern as per Ex.P.1 supra thereby this will not change the proprietory concern into a company for nothing to show any change later or wrong array in Ex.P.1.

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13. Before coming to alteration of date from 27.12.2001 to 01.02.2002 on Ex.P.2 is with consent or material alteration within the meaning of Section 87 of the N.I.Act, it is better to refer Ex.D.1 compromise agreement which is running into two pages executed between the complainant’s daughter-in-law Mrs. A.Singh represented by her GPA holder-husband of the complainant (Manmohan Singh) with stamp purchased by him in the name of Smt. A.Singh since executed on the said stamp paper of Rs.20/- enclosed with another white paper and the signature of the A.2 as proprietor of A.1, also clear that it is only a proprietory concern but not any company or other entity. The stamp purchased was on 25.01.2002 by the complainant and therefrom on reading of clause 1 speaks there were discussions between the complainant and accused regarding the above compromise on 28.01.2002 that is three days after the stamp was purchased and as per clause 2, the accused-D.W.1 informed the complainant that he was going to vacate the premises on 01.02.2002 and as per the lease agreement Ex.P.1 dated 13.09.2001 supra, he has to give three month’s notice which

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he could not give, due to sudden fall of business and deposited amount given by him at the time of entering the premises that may be adjusted against rent for November and December, 2001 as well as January,2002 and the cheques given (109952 and 109953) dated 01.02.2002 for rent of November and December,2001 that got dishonoured would be revalidated and may be kept as security besides two computers both Pentium-1 handed over to the complainant’s husband-cum GPA holder on 17.01.2002 towards rent till the premises is hired. It also speaks the Ex.P.2 cheque subject to revalidation being kept as security besides two computers that was handed over to complainant’s husband on 17.01.2002 towards rent for the premises only and not for fixtures and fittings. In Ex.P.1 lease agreement clause-9, it speaks any party can terminate the agreement by giving three calendar months notice in writing showing their intention to do so, the Ex.D.1 clause-2 further reads that it was also agreed that D.W.1-the accused would pay only one months rent and furniture hire charges on 31.01.2002 in cash at the time of paying salaries to his staff and in that case, these revalidated cheques (109952 and 109953) would be agreed in terms of amount and date with an understanding that he will pay rent and furniture hire charges for the said premises till this is hired or for a maximum period of three months whichever is earlier and Ramakrishna would clear proportionate property charges(Municipal Tax), before leaving premises. Clauses 3 to 6 of Ex.D.1 speaks Ramakrishna also wanted to give advertisement in ‘Deccan Chronicle’ for renting out the premises on 29.01.2002 at his costs and also premised to get the toilet reconstructed or pay the cash in lieu of construction of new toilet, which was broken by them before handing over the premises on 31.01.2002 and wanted Man Mohan Singh (complainant’s husband) to put ‘to let’ board for renting out the same which was done immediately and the accused-Ramakrishna also agreed that the premises would be returned in the same condition when it was taken on rent.

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14. From the above, it clearly speaks the so called revalidation date or alteration from 27.12.2001 to 01.02.2002 on Ex.P.2 cheque even by Ramakrishna-accused and any material alteration and even words mentioned Rs.14,000/- and in figures of Rs.14,400/- as it is 14,400/- and also not any cloud or inconsistency since repaid; otherwise, two months rent of the fixtures, what is recited in clause-2 supra of Ex.D.1 is dishonoured to serve as a security for the rent of the premises and not to enforce the cheque by complainant-P.W.1 by virtue of Ex.D.1 agreement after issuance of Ex.P.2 cheque and by virtue of Ex.D.1 with change in the date in Ex.P.2 are not basing on the contents of Ex.D.1 supra. From this now coming Ex.P.7, it is also a typed matter of two pages one empty before and one is stamp paper worth of Rs.10/- that was purchased in the name of the said owner of the premises Smt. A.Singh by the complainant’s husband on 26.02.2002 and the contents of Ex.P.7 are that this is further to the compromise agreement (Ex.D.1) dated 28.01.2002 supra between Ramakrishna-proprietor of Kamala computers private Limited and Man Mohan Singh-G.P.A.holder of Mrs. A.Singh regarding payment of rent of the premises as well as furniture hire charges. There are 4 clauses in Ex.P.7 and clause-1 speaks accused removed furniture and other material belongs to Kamala Computers from the premises on 27.02.2002(the same day) and clause-2 shows that the accused has not paid any cash to Man Mohan Singh as agreed under part-II of above compromise agreement(Ex.D.1clause 2 supra). Clause 3 speaks Ramakrishna is due to pay to Man Mohan Singh the following amounts i.e. a) rent and furniture hire charges for the month of February,2002 of Rs.16,200/-, b)approximate costs of bathroom construction of Rs.10,000/c) municipal tax of Rs.7,000/- d) approximate electricity consumption charges for the months of January and February,2002 of Rs.2,500/-, e) damage to carpet by removing from floor and f) maintenance/service charges payable to Society for the month of February,2002 of Rs.700/-

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total Rs.38,400/-. Clause 4 of Ex.D.1 speaks that two cheques bearing No.109952 and 109953 both dated 27.12.2001 for Rs.18,000/- and Rs.14,400/- respectively, which were returned by the bank and later on revalidated, may be encashed which will reduce the amount payable by Ramakrishna to Man Mohan Singh by Rs.32,400/and Sri Ramakrishna(accused) is paying Rs.6,000/- vide cheque bearing No.889626, dated 16.04.2002 to settle the account and the cheque will be given on 28.02.2002. it shows the said cheque dated 16.04.2002 for Rs.6,000/- to be issued on 28.02.2002 as per the Ex.D.1 agreement dated 27.02.2002 executed on the stamp paper purchased on dated 26.02.2002 is a post-dated cheque therein clause-4 supra an authorized the revalidated cheques including Ex.P.2 bearing No.109952 may be encashed. A perusal of Ex.P.7 though authorizes for presentation of the cheque, it no way shows any amount due for fixtures and fittings much less for February, 2002. As a combined reading of Ex.D.1 and P.7 by juxtrapositioned of the contents supra show Ex.P.2 cheque and another cheque were to be kept as security as per clause No.2 of Ex.D.1 by revalidating and the clause-2 also speaks payment of rent for the premises till hiring within three months or for three months and not for fixtures and fittings. Here, from clauses-1 and 2 of the Ex.P.7 supra, the premises vacated by Ramakrishna was on 27.02.2002 and there is nothing to say fixtures and fittings not handed over pursuant to Ex.D.1 by 01.02.2002. It further speaks cash agreed to pay to Man Mohan Singh by Ramakrishna under Ex.D.1 not paid. Clause-3 of Ex.P.7 speaks Rs.38,400/- comprises rent and furniture hire charges for February,2002 Rs.16,200/-. It no way correlates as rent is Rs.7,200/- and furniture charges are Rs.7,200/- as per Ex.P.1 and Ex.D.1 detailed supra. In fact when there is nothing to say fixtures and fittings or furniture as agreed that in Ex.D.1 not handed over for not so mentioned of not handed over in Ex.P.7, question of payment of rent for the furniture hire charges for February,2002 does not arise. It is also because rent towards premises is

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covered by one agreement and charges for fixtures and fittings is covered by another agreement Ex.P.1 and both are independent. Even what all it speaks from Ex.P.7 clause-4 is the revalidated two cheques which include Ex.P.2 109952 may be encashed which will reduce the amount payable by Ramakrishna to Man Mohan Singh by Rs.32,400/- for the remaining Rs.6,000/- another cheque post-dated that to be issued. The Ex.P.2 cheque is in the name of the complainant and not in the name of the complainant’s daughter-in-law-owner of the premises. No doubt, a combined reading of Ex.P.1, D.1,P.7 and P.2 that revalidation not a material alteration speak the cheque in the name of complainant by virtue of Ex.P.7 altered compromise to Ex.D.1 compromise clause-4 authorises said Ramakrishna to enchash the Ex.P.2 cheque, admittedly issued even earlier as security in the name of the complainant by virtue of the authorization, it ceases its value as security though under Ex.D.1 it is a security, by virtue of clause-4 of Ex.P.7 supra. Once, that is the case, it is for legally enforceable debt as it is for the amounts due referred in Ex.P.7 read with Ex.D.1 read with Ex.P.1 even premises and furniture are under two agreements belongs to two different persons they are represented by same GPA holder. Once that is the case, for nothing to show the amount was discharged. The first appellate Court went wrong in saying there is a material alteration of the cheque date revalidated from 27.12.2001 to 01.02.2002, that too, by accused-Ramakrishna that also replied by him from the contents of not only Ex.P.1 but also a subsequent modified compromise to it under Ex.P.7 supra. The first appellate Court thereby went wrong in saying there is a material alteration and there is no legally enforceable debt or liability. Once such is the case, from the cheque issued by accused in favour of the complainant from his account to repay the rents for the months of November and December 2001 though there was three months advance with complainant that belongs to Ramakrishna that is admitted in Ex.P.1 that is not shown as adjusted that requires to be adjusted as per clause-6 and that was not shown as adjusted either in

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Ex.D.1 or in Ex.P.7 that was admittedly with complainant, if that is adjusted for Ex.P.2 cheque amount of Rs.14,400/- nothing is due as on the date of Ex.P.2 cheque presented even pursuant to Ex.P.7 and dishonoured though there is legally enforceable debt otherwise, by virtue of adjustment required of the three months rent of Rs.21,600/-, the cheque amount covered by Ex.P.2 of Rs.14,400/- is less to it that adjusted and even balance out of another cheque bearing No.109953 for any balance due thereunder in the absence of a clear evidence and detailed legal notice after dishonour of cheque showing the amount of three months rent referred in Ex.P.1 due payable by date of vacating adjusted to other cheque and balance only for this Ex.P.2 cheque only balance out of it payable. That is not the version much less as required in the Ex.P.5 legal notice of complainant to the accused. Thus, though the cheque was issued for legal enforceable debt that was shown legally enforceable even thereafter pursuant to Ex.D.1 and Ex.P.7 in view of the amount to be adjusted pursuant to Ex.P.1 agreement clause-6 on three months advance while vacating that is more than that of Ex.P.2 cheque amount, nothing thereunder due to the complainant much less to enforce by the complainant against the accused in that view of the matter for nothing due for such adjustment that to be made and there is no legally enforceable debt. This aspect was not properly considered either by the trial Court or by the first appellate Court in their discussion supra.

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15. Having regard to the above, both the findings are otherwise unsustainable and the conviction won’t sustain but for acquittal and refund of the fine amount if at all paid by the accused which is a proprietory concern and proprietor one and the same and not two persons much less juristic. The imposition of fine against both for recovery besides unsustainable, the same is whatever paid required to be refunded to the A.2 who is proprietor of the business in the name and style of A.1. Accordingly, Point No.1 is answered.

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Point No.2:

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16. In the result, the appeal is partly allowed by modifying the first appellate Court’s judgment reversing the conviction judgment of the trial Court, acquitting the accused on the ground of material alteration and the cheuqe is not for legally enforceable debt, by setting aside the conviction judgment of the trial Court, with finding that though the cheque is not hit by any material alteration much less not for legally enforceable debt by virtue of the adjustment of the amounts under clause-6 of Ex.P.1 while vacating premises on three months rent of Rs.21,600/- which is subsequent to Ex.P.2 cheque and D.1 compromise and Ex.P.7 modified compromise and on such adjustment nothing is recoverable under Ex.P.2 by the complainant from the accused and thereby whatever fine amount paid by the accused are entitled to be refunded by the trial Court. Miscellaneous petitions, if any, pending in this appeal, shall stand closed.

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_____________________________ Dr. JUSTICE B. SIVA SANKARA RAO

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Date: 13.08.2014 vvr

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[1] AIR 2003 SC 2035 [2] (2006)3 SCC 30 [3] (2009) 2 SCC 513 [4] AIR 2010 SC 1898

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[5] AIR 2008 SC 1325 [6] AIR 2001 SC 3897 [7] AIR 1999 SC 1008 [8] AIR 2002 SC 182 [9] AIR 2008 SC 2898 [10] 1971 (1) An.W.R. 65

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[11] 2005 Crl.L.J. 4209

Mrs. Ravinder Kaur, v. M/s. Kamala Computers (p) Ltd., rep by its managing

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Mrs. Ravinder Kaur, v. M/s. Kamala Computers (p) Ltd., rep by its managing

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