Abdul Subhan vs Asif Nisar

Anand Byrareddy, J.—Heard the learned counsel for the appellant and learned counsel for the respondent.

The appellant was the complainant before the Trial Court, alleging an offence punishable under Section 138 of the Negotiable Instruments Act, 1881 (hereinafter referred to as "the NI Act", for brevity). It was his case that accused 1 and 2 had approached him and requested a loan of a sum of Rs. 3,50,000/- in the month of March, 2007 and the complainant had lent them the money, which was to be returned within two months, in respect of which, the accused are said to have issued two cheques bearing Nos. 829455 and 829456, for a sum of Rs. 1,70,000/- and Rs. 1,80,000/-, dated 2.5.2007 and 7.5.2007 respectively, drawn on Canara Bank, Nazarbad Branch, Mysore. When the same were presented for encashment, they were dishonoured, identically, with an endorsement dated 9.5.2007, to the effect that there were insufficient funds. Thereafter, a notice under Section 138 of the NI Act was issued, in respect of each cheque and they were duly served on the accused. But, there was a frivolous reply denying payment and hence, a complaint and the complaint was contested and the accused stood trial and accused No. 2 was examined as PW2 and two witnesses one Fazila Banu and Razia Begum, were examined as DWs.2 and 3. On the basis of the evidence and the arguments canvassed, the following points were framed by the Trial Court for consideration:

"1. Whether accused prove that, they have not issued 2 cheque bearing No. 829455 and 829456 dated 2.5.2007 and 7.5.2007 for a sum of Rs. 1,70,000/- and Rs. 1,80,000/- respectively drawn on Canara Bank, Nazarbad Branch, Mysore in favour of the complainant to discharge their legal debt?

Whether complainant proves that, he has complied the ingredients of Section 138 of Negotiable Instruments Act?"

and the Trial Court answered point No. 1 in the negative and point No. 2 in the affirmative and convicted and sentenced the accused to pay a fine of Rs. 3,55,000/- as fine and to undergo simple imprisonment for a period of two months. Out of the fine amount, Rs. 3,50,000/- was paid to the complainant by way of compensation. The said judgment was challenged in appeal before the Appellate Court and the Appellate Court reversed the judgment of the Trial Court placing reliance on the dictum, in the case of Krishna Janardhan Bhat Vs. Dattatraya G. Hegde, . This was relied upon primarily to address a circumstance that the complainant admittedly had married twice and he had 9 children and had retired from service and therefore, not in a position to carry much amount of cash of Rs. 3,50,000/- with him, when he had retired in the year 2004. He was not expected to keep in retirement benefits at home, without the same earning interest for him and the loan having been lent in the year 2007, has been disbelieved by the court on the footing that there was an initial burden on the complainant to establish that the cheques in question were issued in discharge of legal liability. This was the law as laid down in Krishna Janardhana Bhafs case, which ran counter to the express provisions of Section 139 of the NI Act. The same has been over ruled by a Larger Bench of the Supreme Court in the case of Rangappa Vs. Sri Mohan, and the law laid down in Krishna Janardhana Bhafs as held, no longer good law. Though the Supreme Court went on to say, it may be authority for the case which is decided and does not rely on the correct legal position. It is therefore, evident that the Appellate Court was misled by the judgment in Krishna Janardhana Bhafs, in addressing means and funds available in the hands of the complainant in having lent monies, when the burden was on the respondent to demonstrate that the cheque was not issued in discharge of the legal liability. The issuance of the cheques or the signatures there of, were not denied and the cheques having been dishonoured for want of sufficient funds, was adequate compliance with the endeavours that were to be proved for an offence punishable under Section 138 of the NI Act. Therefore, the judgment of the court below is erroneous and cannot be sustained and accordingly, the present petition is allowed and the judgment of the lower appellate court is set aside. The judgment of conviction and the sentence imposed by the Trial Court are affirmed.