CRLA/530/2007 of Shyam Sunder Sharma, Vs The State of A.P., on 31 December 2013

JUDGMENT:

This appeal has been preferred by the appellant-complainantby invoking the provision under Section 378 (4) of the Code ofCriminal Procedure Code (in short ‘Cr.P.C.’) challenging thejudgment dated 24.08.2006 rendered in C.C.No.434 of 2004 by theJudicial Magistrate of First Class, Godavarikhani, whereby thelearned Magistrate acquitted the accused-R.2 under Section 255 (1)Cr.P.C. for the offence under Section 138 of Negotiable InstrumentsAct (in short ‘N.I. Act’).

For the sake of convenience, parties hereinafter are referred toas they are arrayed before the trial Court Brief facts of the case are as follows:

Accused being the relative of the complainant approachedhim (complainant) along with her husband and obtained a loan ofRs.2,00,000/- on 21.06.2001 for construction of house and promisedto repay the amount on demand. In spite of several demands madeby the complainant, accused and her husband did not repay the amount and finally they executed a document dated 22.02.2003agreeing to repay the amount of Rs.2 lakhs in two instalments i.e. Rs.1 lakh each on 20.10.2003 and20.01.2004. Accordingly, accused issued two cheques bearingNos.232559 and 232563 dated 20.10.2003 and 20.01.2004respectively payable at Bank of Maharastra, Jahbad, Hyderabad. Complainant thereafter presented cheque dated 20.10.2003 on 13.02.2004, but the same was returned due toout of date. Complainant further presented another cheque dated20.01.2004 before his banker i.e. Karimnagar District Co-operativeBank, Godavarikhani, on 12.05.2004 which was dishonorued withreturn memo ‘funds insufficient’. Complainant thereafter got issued alegal notice demanding payment of Rs.1 lakh. Accused got issued reply with false allegations. Therefore, the complainant filed complaint before the trial Court undersection 138 of N.I. Act.

On behalf of the complainant, PWs 1 to 3 are examined andExs.P.1 to P.10 are marked. No oral and documentary evidence wasadduced on behalf of the accused. Considering the evidenceavailable on record both oral and documentary, the trial Courtacquitted the accused vide impugned judgment on the ground thatthe complainant could not discharge his initial burden by proving thathe paid Rs.2 lakhs to the accused and the accused issued Ex.P.2cheque towards discharge of her legally enforceable debt. Aggrievedby the aforesaid findings of the trial Court, complainant filed thisappeal.

Learned counsel for the appellant submits that when the trialCourt observed that the accused issued the cheque in question, itwas not justified in acquitting the accused. When the complainantadvanced the amount in the presence of eye witness, the trial Courtought to have drawn presumption in favour of the holder of thecheque that the instrument was issued towards legally enforceable debt unless and until contrary is proved by the accused. He furthersubmits that burden is on the accused to prove that Ex.P.2 chequewas not issued towards legally enforceable debt. But, contrarily, thetrial Court gave a finding that the burden is on the complainant todischarge his initial burden by proving that he advanced an amountof Rs.2 lakhs to the accused. It is also contended that Ex.P.1 bondpaper executed by the accused itself clearly indicates that theaccused issued cheque in view of discharge of debt.

In support of said contention, the learned counsel for the

Arguments

appellant placed reliance on Rangappa v. Sri Mohan[[1]]wherein theSupreme Court held that presumption mandated by section 139includes a presumption that there exists a legally enforceable debt orliability, however, such presumption is rebuttable in nature. TheSupreme Court at para 26 of the said judgment further observed asunder:

“Presumption mandated by Section 139 of the Act doesindeed include the existence of a legally enforceabledebt or liability to that extent, the impugned observations in Krishna Janardhan Bhat v. Dattatraya G.Hegde[[2]]may not be correct. However, this does not in any waycast doubt on the correctness of the decision in thatcase since it was based on the specific facts andcircumstances therein. As noted in the citations, this isof course in the nature of a rebuttable presumption and itis open to the accused to raise a defence wherein theexistence of a legally enforceable debt or liability can becontested. However, there can be no doubt that there isan initial presumption which favours the complainant.”

Learned counsel also placed reliance on ICDS Ltd. v. Beena Shabeer and another[[3]]wherein the Supreme Court held asfollows:

“The words “any cheque” and “other liability” occurring inSection 138 are the two key expressions which standas clarifying the legislative intent so as to bring thefactual context within the ambit of the provisions of thestatute. These expressions leave no manner of doubt that for whatever reason it may be, the liability underSection 138 cannot be avoided in the event the chequestands returned by the banker unpaid. Any contra-interpretation would defeat the intent of the legislature.”

Reliance is also placed by the learned counsel for theappellants in Anil Sachar and another v. Shree Nath Spinners Private Limited[[4]]. In the said case, there was an understandingamong the parties that in consideration of supply of goods to S, Awas to make payment. In such a situation, the Supreme Court heldthat cheques are presumed to have been given for consideration,presumption under S.139 not rebutted by accused. Accused, whohad signed cheques for A, was held guilty of offence under section138 of N.I. Act.

Learned counsel for the appellant also placed reliance on K.N.Beena v Muniyappan and another[[5]]wherein the SupremeCourt held that in view of the provisions contained in sections 118and 119 of N.I. Act, the Court has to presume that the cheque hadbeen issued for the discharge of a debt or liability, however, the saidpresumption can be rebutted by proving the contrary, mere denial orrebuttal by the accused in the reply to the legal notice sent by thecomplainant is not enough. The accused has to prove by cogentevidence that there was no debt or liability.

Per contra, learned counsel for the respondent No.2 submitsthat the complainant has not produced any corroborative evidencesubstantiating advancement of loan of Rs.2 lakhs to the accused andher husband, Ex.P.1 also do not contain the details of the chequenumber and name of the bank at which it was drawn, the complainantalso failed to file the alleged promissory note said to have beenexecuted by the accused and her husband. It is further contendedthat the fact that the first cheque was presented after expiry ofstatutory period itself clearly indicates that there was no legally

enforceable debt. He further contended that the trial Court afterappreciating the entire evidence on record rightly came to theconclusion that the complainant failed to prove his initial burden thathe advanced Rs.2 lakhs to the accused and that Ex.P.2 was issuedtowards discharge of legally enforceable debt and hence there are nogrounds to interfere with the impugned judgment acquitting theaccused.

In support of said contention, learned counsel for the accused placed reliance on R.Indrasena Reddy v. M.Prabhavathi[[6]]wherein this Court held that presumption under section 139 can berebutted by the accused by producing necessary evidence or byrelying upon the evidence produced by the complainant and materialavailable on record without examining himself. Burden can bedischarged by the accused on the basis of preponderance ofprobabilities.

He further placed reliance on A.Bhoosanrao v.

Purushothamdas Pantani and another[[7]]wherein this Court heldthat the complainant failed to prove that he had sufficient capacity tolend the amount that too by cheque, also he could not prove that saidamount was actually drawn by the accused and hence the accused isnot liable for punishment for the offence under section 138 of N.I. Act.

In the instant case, according to the complainant, the accusedobtained a loan of Rs.2 lakhs on 21.06.2001 for construction of houseand promised to repay the amount later. In the year 2003 i.e. on22.02.2003 accused and her husband executed Ex.A.1 documentagreeing to repay the same in two instalments @ Rs.1 lakh each inthe year 2003 and another Rs.1 lakh in the year 2004 and issued two post dated cheques out ofwhich one cheque was presented after expiry of the statutory periodand another cheque was dishonoured with endorsement ‘insufficientfunds’ in the account of the accused.

In this context, the appellant mainly relies on contents ofEx.P.1, which are as under:

“We Shri Brij Mohan Sharma and Smt.RadhaSarma received an amount of Rs.2,00,000/- (Rupees twolakhs only) as hand loan vide chequeNo._____________________ Bank from Shri ShyamSunder Sharma for the construction of our house atGowliguda, without interest.

The above said amount shall be repaid throughthe account of Smt.Radha Sharma as under:

Rs.1,00,000/- dt.20.10.03 vide Ch.No.232559 ofBank of Maharashtra.

Rs.1,00,000/- dt.20.1.04 vide ch.No.232563 ofBank of Maharashtra.

If the above said amount will not cleared by us in timeShri Shyamsundar Sharma can proceed legally againstus and the costs and consequences liable to us.”

It is therefore clear from the contents of Ex.P.1 that thecomplainant advanced Rs.2 lakhs through a cheque. But Ex.P.1 issilent about the cheque number and name of the bank. The trialCourt relying on Ex.P.1 held that the complainant failed to prove theinitial burden that he advanced Rs.2 lakhs through cheque and thatthe accused had drawn the cheque amount of Rs.2 lakhs and theaccused issued two post dated cheques towards discharge of saidlegally enforceable debt. Nowhere in Ex.P.1 it is mentioned that hepaid the amount in cash. Complainant got examined PWs 2 and 3G.V.Rajaveeru and K.Ramakrishna respectively.

P.W.2 G.V.Rajaveeru is Bank Manager of KDCC Bank Ltd. atGDK, who has testified that on 12.05.2004 cheque bearingNo.232563 dated 20.01.2004 for Rs.1 lakh was presented by P.W.1for encashment, on 17.05.2004 the cheque was bounced due toinsufficient funds and the same was intimated to the complainant.

P.W.3 K.Rama Krishna is the Accountant in Bank ofMaharastra, who stated that on 17.05.2004 their Bank receivedEx.P.2 from KDCC Bank, GDK, for realization. But, on verification ofaccount, it was found that there was no balance and accordingly the cheque was returned to KDCC Bank with endorsement ‘insufficientfunds’.

Thus, the complainant examined only two witnesses who areattached to their respective Banks to speak about dishonour ofcheque due to insufficient funds. But, the complainant did not chooseto examine the attestors of Ex.P.1 document said to have beenexecuted by the accused to prove that he lent an amount of Rs.2lakhs to the accused. For the notice issued by the complainant,accused issued reply under Ex.P.6 denying the averments made inthe notice issued by the complainant and contending that theaccused never obtained any amount of Rs.2 lakhs from the complainant and the cheque mentioned in thenotice are not issued by the respondents. He further alleged that therespondent-accused has not received any amount from thecomplainant. Therefore, it is clear that from inception itself theaccused is denying issuance of cheque under Ex.P.2 and that henever borrowed any amount from the complainant. The fact that thecheque number and name of the bank are silent in Ex.P.1 bond itselfshows that the complainant has not issued any cheque for Rs.2 lakhstowards advance.

In order to attract the provisions of section 138 of N.I. Act, thecomplainant, in the first instance, has to prove that he advanced anamount of Rs.2 lakhs to the accused and in discharge of the said debtor liability the accused issued Ex.P.2 cheque. In that event only, theburden shifts on the accused to rebut the same.

In the instant case, the complainant failed to discharge his initialburden by proving that he advanced Rs.2 lakhs under Ex.P.1-bondthrough cheque, accused had drawn the amount from the bank andthe accused issued Ex.P.2 towards discharge of such loan. The trialCourt after appreciating the entire evidence on record particularly onthe material produced by the complainant, observed that thecomplainant failed to prove the initial burden that he advanced an amount of Rs.2 lakhs to the accused.

In that view of the matter, though the accused can rebut thepresumption under section 139 of the N.I. Act even without examininghimself and relying on the document produced by the complainant,he can discharge the burden on the basis of preponderance ofprobabilities that the complainant has not advanced any amountunder Ex.P.1 Bond and thereby the accused has not issued Ex.P.2cheque towards discharge of legally enforceable debt due underEx.P.1 bond. The trial Court after considering the entire evidence inproper perspective and rightly came to the conclusion that thecomplainant failed to discharge initial burden on him and also failedto prove that he advanced Rs.2 lakhs through cheque to the accusedand thereby rightly acquitted the accused for the offence undersection 138 of N.I. Act. Therefore, I see no infirmities in the impugnedjudgment warranting interference by this Court.

Hence, the Criminal Appeal is dismissed.

Miscellaneous petitions pending in this appeal, if any, shall standclosed.

_____________________

V.SURI APPA RAO, J

31[st] December, 2013.sur

[1](2010) 11 SCC 441(2010) 11 SCC 441

[2](2008) 4 SCC 54(2008) 4 SCC 54

[3](2002) 6 SCC 426(2002) 6 SCC 426

[4](2011) 13 SCC 148(2011) 13 SCC 148

[5](2001) 8 SCC 458(2001) 8 SCC 458

[6]2012 (2) ALD (Crl.) 704 (AP)2012 (2) ALD (Crl.) 704 (AP)

[7]1998 CRI.L.J. 9061998 CRI.L.J. 906