Dismissed

G.Sreeramachandrudu, v. P. Srinivas

Telangana HC11 Dec 2014CRLA/341/2009

Case brief

AI extract

What is this about?

The appellant, a previous complainant, appealed against the lower appellate Court's acquittal of the accused. The matter concerned the limitations period for filing a complaint under Section 138 of the NI Act. The Court held that the letter dated 13.03.2004 functioned as a valid statutory notice, thereby attracting the limitation provisions correctly applied by the trial court.

What did the court decide?

The criminal appeal filed by the complainant was dismissed, sustaining the lower appellate Court's reversal of conviction judgment.

G.Sreeramachandrudu, Vs P. Srinivas — Cheque Dishonour | Telangana HC (2014)

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THE HON’BLE DR. JUSTICE B. SIVA SANKARA RAO

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CRIMINAL APPEAL No.341 of 2009

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% 11.12.2014

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G.Sreeramachandrudu

.... APPELLANT

And

1. P.Srinivas

2. State of A.P. rep,.by Public Prosecutor, High Court, Hyderabad.

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...RESPONDENTS

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! COUNSEL FOR THE APPELLANTS: - Sri A.Hari Prasad Reddy,

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Smt.D.Sangeetha Reddy

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^ COUNSEL FOR RESPONDENTS: -

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1. Sri M.Neelakantan, for accused.

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2. The Public Prosecutor (T.G.) for R.2

< Gist:

> Head Note:

? CITATIONS:

[1] (2006)3 SCC 30 2 (2009) 2 SCC 513 3 AIR 2010 SC 1898 4 AIR 2008 SC 1325 5 AIR 2001 SC 3897 6 AIR 1999 SC 1008 7 AIR 2002 SC 182 8 AIR 2008 SC 2898 9 1971 (1) An.W.R. 65 10 (2013) 1 SCC 177 11 2014(5) SCC 590 12 2003 Criminal Law Journal 1053

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13 AIR 1998 SC 3043 14 Law Suits SC 605, dated 11.08.2014

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THE HON’BLE Dr. JUSTICE B. SIVA SANKARA RAO

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CRIMINAL APPEAL No.341 of 2009

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JUDGMENT:

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The complainant as the appellant, aggrieved by the lower appellate Court’s acquittal judgment in Criminal Appeal No.278 of 2008 dated 16.12.2008 reversing the trial Court’s conviction judgment in C.C.No.652 of 2004 dated 11.08.2004, preferred the present appeal. It was based on a private complaint for the dishonour of Ex.P.1 cheque bearing No.975669 dated 27.02.2004 for Rs.2,00,000/-, from the cheque presented under Ex.P.2 cheque returned dishonoured memo dated 01.03.2004 and from which within the 30 days as contemplated by Section 138(b) of the N.I.Act (for short, the Act), statutory notice issued covered by Ex.P.3 dated 26.03.2004 and the same was served on the accused covered by Ex.P.4 acknowledgment dated 29.03.2004 and no payment made within the statutory time even received the registered cover covered by Ex.P.5 and also allegedly under certificate of posting covered by Ex.P.6. The defence of the accused was that prior to the alleged notice under Ex.P.3 dated 26.03.2004 for the very alleged dishonour of Ex.P.1 cheque dated 27.02.2004, the complainant addressed Ex.D.1 post card letter dated 13.03.2004. The other defence is disputing the giving of cheque and any liability muchless legally

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enforceable debt or other liability and non-maintainability of the complaint. In the trial Court, PWs 1 and 2 were examined including PW.2 the Dy.Manager of the Andhra Bank in proof of the cheque dishonour and intimation under Ex.P.3. On behalf of the accused, he did not come to witness box but for confronted PW.1 with reference to Exs.D.1 to D.7 which includes Ex.D.1 so-called earlier statutory notice supra. Exs.D.2 to D.7 so-called receipts for payments made to the complainant respectively of Rs.6,200/-, Rs.5,000/-, Rs.5,000/-, Rs.20,000/-, Rs.5,000/-, Rs.5,000/- Rs.8,000/- and Rs.2,000/-. It is by consideration of this, the trial Court by judgment dated 11.07.2008 referred supra found the accused guilty for the dishonour of the cheque however by deducting the amounts so far paid under Exs.D.1 to D.7 comprises of Rs.50,000/- as part payments in fixing liability for the remaining by sentencing to undergo rigorous imprisonment for one year and to pay a fine of Rs.500/- with default sentence of three months simple imprisonment by giving set off the period undergone. The lower appellate Court from the appeal maintained by the accused reversed the said trial Court’s conviction judgment mainly from the observations in particular between paras 13 to 17 that, from Ex.D.1 notice demanding the accused to pay the amount of Ex.P.1 cheque after its dishonour dated 01.03.2004, 13.03.2004 that was the statutory notice as contemplated by Section 138(c) of the Act for non-payment after receiving of the notice within 15 days, from the accrual of cause of action contemplated under Section 142(b) of the Act of one month period and as the complaint not filed within one month is barred by time. It is now impugned in the present appeal, said reversal and acquittal judgment of the lower appellate Court of the conviction judgment of the trial Court, in particular the so-called conclusions of the complaint is barred by time by considering Ex.D.1 letter as a statutory notice contemplated by Sections 138(b)(c) of the Act for accrual of cause of action under Section 142(b) of the Act.

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2. Heard Sri A.Hari Prasad Reddy, the learned counsel for the appellant as well as Sri M.Neelakantam, the learned counsel for the accused. Perused the material on record. The parties are referred to as they are arrayed before the trial Court, for the sake of convenience, as “the complainant” and “the Accused”, respectively.

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3. Now, the points that arise for consideration are:-

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(1) Whether the complaint filed is beyond the period of limitation of one month provided after accrual of cause of action under Section 142(b) of the Act and is not sustainable if not whether the lower appellate Court’s reversal judgment of the trial Court’s conviction judgment is unsustainable and if so with what observations and conclusions?

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(2) To what relief?

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4. Point No.1:

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Before adverting to the facts, it is apt to refer legal position from the following settled propositions of law:

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4.(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 to142 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 and drawbacks in dealing with the matters relating to dishonour of cheques.

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4.(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

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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 (P).Ltd. vs. Chico UDS.

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4.(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, either because of 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 (See Sec.143), be punished with imprisonment for a term which may extend to two years (amended by Act, 55 of 2002 with effect from 06.02.2003 for one year as two years ), or with fine which may extend to twice the amount of cheque, or with both:

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Provided that nothing contained in this section shall apply unless,-

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(a) The cheque has been presented to the Bank within a period of six months from the date on which it is drawn or within the period of its validity, whichever is earlier;

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(b) The payee or the holder in due course of the cheque, as the case may be, makes a demand for the payment of the said amount of money by giving a notice, in writing, to the drawer of the cheque, within thirty days (amended by Act, 55 of 2002 with effect from 06.02.2003 for fifteen days as thirty days ), of the receipt of information by him from the bank regarding the return of the cheque as unpaid; and

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(c) the drawer of such cheque fails to make the payment of the said amount of money to the payee or, as the case may be, to the holder in due course of the cheque, within fifteen days of the receipt of the said notice.

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"(i) Under Section 138 a deeming offence is created by fiction of 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) Section139: Presumption in favour of holder - It shall be presumed, unless the contrary is proved, that the holder of a cheque received the cheque of the nature referred to in Section 138 for the discharge, in whole or in part, of any debt or other liability.

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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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4.(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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4.(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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4.(F). Availability of alternative remedy is no bar to the prosecution

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4.(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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5 . (a) The Apex Court in NARAYAN MENON v. STATE OF KERALA^[1] held that once the complainant shown that the cheque was 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

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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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(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^[2] .

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(c) Further, as per the expression of the Apex Court in RANGAPPA vs. MOHAN^[3] (3-Judges Bench) paras-9 to 15 referring to Goa Plast’s case (supra), KRISHNA JANARDHAN BHAT v. DATTATRAYA G. HEGDE^[4] 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

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BANERJEE^[5] 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

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COMPANY v. AMIN CHAND PYARELAL^[6] 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

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CHEMICALS & PHARMA (P) LTD^[7] 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

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burden. It was concluded referring to the above, including of MALLAVARAPU KASIVISWESWARA RAO v. THADIKONDA RAMULU FIRM & ORS^[8] 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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(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, further-more 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 in Chapala Hanumaiah Vs. Kavuri Venkateshwarlu^[9] that having received and acknowledged the statutory legal notice after dishonour of cheque, nongiving 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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(e) Further as per the Apex Court’s three judgment expression in M.S.R.Leathers v S.Palaniappa n^[10] the cloud is clear in holding that every presentation of the cheque within the valid period of six months gives fresh cause of action even the first presentation not availed equally giving of a statutory notice is also not a bar muchless to account for commencing of cause of action of one month under Section 142(b) r/w 138 (c) of the N.I.Act as complainant is entitled even after dishonour of the cheque and giving of the statutory notice for its non-honouring by accused by re-presentation and giving of fresh notice to account cause of action from without fresh notice expiry 15 days period from the date of service or deemed service.

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6.(A). From above legal position, coming to decide on the facts from

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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 and the complaint whether within time or barred by law are concerned:

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7. With reference to the factual matrix, from the above propositions of law clearing the cloud in M.S.R.Leathers (supra), Ex.D.1 notice issued by the complainant to the accused dated 13.03.2004 of Ex.P.1 cheque dated 27.02.2004 dishonoured as per Ex.P.2 cheque return memo dated 01.03.2004 is insignificant from there is any subsequent presentation of the cheque and its dishonour for giving the Ex.P.3 as fresh statutory notice dated 26.03.2004. A perusal of Ex.P.3 legal notice, dated 26.03.2004 clearly speaks that the cheque presented returned dishonoured is only covered by Ex.P.2 cheque return memo dated 01.03.2004. That is also the voice of PW.2, the Manager of the Bank in proof of it. It is made clear from the above that there was no second presentation of the cheque after Ex.D.1 notice dated 13.03.2004 by the complainant for giving Ex.P.3 notice again muchless to ask for accounting of the period of limitation for accrual of cause of action of one month under Section 142(b) r/w 138(c) of the Act after expiry of 15 days of service of said Ex.P.3 notice dated 26.3.2004. As such, the expression in M.S.R.Leathers (supra) no way coming in aid to the appellant. Then comes to the next question of whether Ex.D.2 has to be considered as a statutory notice contemplated by Section 138(b) and (c) of the Act, or not; a perusal of Ex.D.1 notice which is in the form of letter even speaks about Ex.P.1 cheque said to have been issued by the accused in favour of complainant on 27.02.2004 for said amount of Rs.2,00,000/- and the same when presented for encashment was returned dishonoured, hence, demanded to pay. No doubt, this letter is cryptic, however it contains the ingredients of cheque issued, presented dishonoured and demanded to pay the amount. What is the law

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contemplated by the provision under Section 138(c) is once there was a statutory notice after dishonour of the cheque within 30 days issued by the complainant to the accused intimating the dishonour demanding to pay, the accused after service of notice within 15 days has to pay. If failed to pay there is accrual of cause of action enabling the complainant to maintain a complaint within one month therefrom under Section 142(b) of the Act. Here, even from that provision, law enables the accused to pay as affording opportunity within 15 days after receipt of notice, failing which gives cause of action that constitutes commission of offence from the moment complaint is filed and taken cognizance. It is therefrom the

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Apex Court in Indian Bank Association v Union of Indi a^[11] categorically held that once the cause of action accrued and complaint filed and accused is served with notice and appeared from questioning by supply of copies, if at all he wants, unless the Court calls for PW.1 the complainant whose sworn statement is filed to take cognizance to read as PW.1 chief, for cross-examination as contemplated by Section 145(2) of the Act. Thus, Ex.D.1 notice complies with the requirements of Section 138(b) and (c) of the Act. No doubt, the learned counsel for the appellant placed reliance upon the expression of the Delhi High Court in

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M/s Padmini Polymers Limited v Unit Trust of Indi a^[12] where it was held that a letter written by complainant to accused making him aware of the facts of dishonour of cheque, in the absence of any demand to make payment within 15 days cannot be considered as notice contemplated by Section 138(c) of the Act. For that the Delhi High Court referred the expression in Sadanandan Bhadran v Madhavan Sunil Kumar^[13] . In fact in M.S.R.Leathers (supra) the correctness of the proposition in Sadanandan Bhadran (supra) came to answer in a reference that was answered. Leave it as it is, in addition to what is discussed supra, a bare reading of Section 138(b) and (c) of the Act speaks that, it is the availment of the right provided to the accused of 15 days for payment

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after service of notice and but for that it no way speaks duty of the complainant to give notice with 15 days time. In the absence of which, the complainant cannot take shelter of the lacunic notice for non-mention of 15 days time to his advantage, muchless by showing self-imposed socalled hardship as a shelter to him from the wording of Section 138(b) and (c) of the Act. Thereby the expression of the Delhi High Court no way laid down the correct proposition. Even coming to the latest expression of the Apex Court in Pawan Kumar Ralli v Manider Singh Narul a^[14] 2014 it was held that in disposal of the appeal against quash petition order of the High Court referring to Section 142(b) provision of the Act amended by Act 55 of 2002 which came into force w.e.f. 06.02.2003 that once the provision enables the complainant to explain for the delay of filing of 30 days from accrual of cause of action to maintain the complaint under Section 142(b) of the Act, the Court can consider and condone the delay as such held the matter requires remittance to the trial Court. Here, there was no principle of law laid down to remit all cases where even the complainant without filing any application orally seeking to condone the delay in the 2^nd appeal stage for timely non-filing within one month from accrual of cause of action, the complainant not even filed any application either before the trial Court where trial completed and decided on merits, incluidng in the appeal before the lower appellate Court where considering the same on merits answered the issue. Thus, for this Court, while sitting in second appeal, there are no grounds to afford opportunity to the complainant to give life to the litigation for the laches of the complaint. As such, that proposition also cannot be considered to rescue the complaint. Accordingly, point No.1 is answered.

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8. In the result, the appeal is dismissed.

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_____________________________________ Dr. JUSTICE B. SIVA SANKARA RAO

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Dt. 11^th December, 2014.

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Note: L.R.copy to be marked-Yes B/o PNV

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