Augustus Jeba Ananth vs Anss Rajshekar

Anand Byrareddy, J.—There is a delay of 63 days in filing the appeal. Notice of the application having been served on the respondent, the respondent remains absent. Hence, for the reasons stated in the affidavit in support of the application, the delay is condoned. I.A.2/2012 seeking special leave to file this appeal is granted. The appeal is considered for final disposal, having regard to the facts and circumstances, even after this stage.

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), by the respondent herein. The complaint was resisted by the respondent who had entered appearance on service of summons and it was sought to be urged that there was no transaction pursuant to which such a cheque could have been issued. The complaint was to the effect that the respondent had borrowed a sum of Rs. 15,00,000/- in February 2004 and since there was a demand for repayment, the accused had issued a cheque for a sum of Rs. 5,00,000/- dated 9.3.2005 in favour of the complainant, in partial discharge of the loan. The same when presented for encashment, had returned with the banker''s endorsement that there were insufficient funds. The complainant is then said to have issued a notice in terms of Section 138 of the NI Act, to which the accused had replied denying the transaction. The respondent having stood trial, the Trial Court had found that the allegations were proved and the respondent was accordingly convicted and sentenced to pay a fine of Rs. 6,75,000/-. The same having been challenged in appeal, the Appellate Court however has taken a completely different view and has held that in the course of cross-examination, the appellant was not in a position to substantiate as to how he had the source to lend money to the respondent, placing reliance on the decision in Krishna Janardhan Bhat Vs. Dattatraya G. Hegde, , while the appellant had cited a later judgment by a particular Bench in Rangappa Vs. Sri Mohan, .

But, the Appellate Court has proceeded to consider the said decisions as if they were laying down the same legal position, whereas in Rangappa v. Mohan, the Apex Court has held that the legal proposition laid down in Krishna Janardhan Bhat was not the correct position of law and that therefore, the same was no longer good law.

However, from a reading of the judgment of the Lower Appellate Court at Paragraphs 9 and 10 of its judgment, it is apparent that the court has proceeded as if there was no difference in the opinions expressed in the two judgments. The fact remains that in terms of Section 139 of the NI Act, the presumption as to a cheque having been issued in discharge of a legal liability, is in favour of the holder of a cheque and it is quite possible that the said presumption could be rebutted by the accused, by tendering evidence even relying on the very evidence of the complainant to demonstrate that there was no such legal liability or preponderance of probabilities and it is then the burden shifts on the complainant to establish the case. Mere denial of the transaction or omnibus denial of the entire transaction, including issuance of the cheque on the Account of the accused could not, on the face of it, be considered as being tenable defence, as it was not the banker''s endorsement that the cheque was not issued on the account of the respondent or that it was not his signature. The endorsement was to the effect that the funds were insufficient. This basic circumstance has been completely glossed over by the Lower Appellate Court in reversing the judgment of the Trial Court.

Consequently, the judgment of the Lower Appellate Court requires to be set-aside summarily. However, there is one aspect of the matter which requires to be considered, namely that the Trial Court had imposed a fine of Rs. 7,00,000/- out of which Rs. 6,75,000/- was to be paid as compensation to the complainant. Though there is a discretion provided under Section 138 of the NI Act, enabling the Court to impose a fine by way of a sentence, which could be twice the amount of the cheque, there is no warrant to treat the complaint as if it was a suit for recovery of money and proceed to award sums which are indeed a largesse to the complainant. No doubt, it may be to address the interest component that would have accrued on the amount covered under the cheque, but since it is not a suit for recovery of money, any such sentence imposed should be done with circumspection. Consequently, the said amount requires to be reduced to a reasonable figure.

Consequently, the sentence imposed by the Trial Court is modified to the effect that the respondent shall pay a fine of Rs. 5,10,000/-, of which Rs. 5,00,000/- shall be paid as compensation under Section 357 (2) Cr.P.C, to the complainant. In the event of default on the part of the respondent to pay the fine, he shall suffer simple imprisonment for three months.