C. Krishna and Co. vs J. Vijayalakshmi

A.C. Arumugaperumal Adityan, J.—This appeal has been preferred against the Judgment in C.C. No. 28 of 1998 on the file of the Judicial

Magistrate No. V, Salem.

The appellants have filed a private complaint u/s 200 Cr.P.C. against the accused for an offence u/s 138 of Negotiable Instruments Act 1881

hereinafter referred to as ""the Act"" on the ground that the impugned cheque Ex P8 drawn by the accused for a sum of Rs. 6,89,000/- to discharge

a subsisting liability for a sum of Rs. 5,50,000/- being the principal amount borrowed under

Ex. P2 to Ex. P7 promissory notes including the future interest up to 6.11.1997 i.e., one day prior to the date of the drawal of Ex. P8 impugned

cheque. The case of the complainants is that on presentation of the impugned cheque Ex. P8 with the bank, the same was returned with an

endorsement that there is no sufficient funds in the account of the accused. Ex. P9 is the memo of the bank sent along with Ex. P8 impugned

cheque at the time of dishonouring the same. The complainant has issued a notice as contemplated u/s 138(b) of the Act under the original of Ex.

P10, which was received by the accused under Ex. P11. Since the accused has not chosen to send any reply notice nor made any arrangement to

repay the debt, the complainants have preferred the complaint.

After recording the sworn statement of the complainants, the learned Judicial Magistrate No. V, Salem had taken on file the case as C.C. No.

28 of 1998 and on the appearance of the accused on summons, furnished copies u/s 207 of Cr.P.C. and when the offence was explained to the

accused, and questioned, the accused pleaded not guilty.

On the side of the complainant, the power of attorney was examined as P.W. 1. Ex. P1 is the deed of power of attorney in favour of P.W. 1

dated 15.12.1997. According to P.W. 1, the accused along with her husband had borrowed a sum of Rs. 5,50,000/- from the complainants under

six promissory notes which are Exs. P2 to P7. As on 7.11.1997, the amount due to the complainants towards principal and interest comes to Rs.

6,89,000/- and in order to discharge the said amount, the accused had drawn a cheque dated 7.11.1997 in favour of the complainants'' firm which

is Ex. P8, when the said cheque was presented in the bank for collection, the same was returned with an endorsement that there is no sufficient

fund in the account of the accused to honour the same. EX P9 is the banker''s memo sent along with Ex. P8 impugned cheque. Thereafter, the

complainants had issued a notice dated 11.11.1997 under the original of Ex. P10 which was received by the accused under Ex. P11

acknowledgment on 17.11.1997,but no reply notice was sent by the accused.

P.W. 2 is the Manager of Indian Overseas Bank, Alazhapuram Branch. He would admit that the complainants are having an account in his

branch and that the impugned cheque Ex. P8 was presented by the complainants for collection on 7.11.1997, but the same was returned by the

bank on the ground that there is no sufficient funds in the account of the accused to honour the same. Ex. P9 is the memo sent along with Ex. P8 at

the time when the same was dishonoured by the bank. Ex. P12 is the copy of the statement of account relating to the accused. It is seen from Ex.

P12 statement of account relating to the accused, a sum of Rs. 633/- alone was in the credit of the account of the accused.

When incriminating circumstances were put to the accused, the accused would totally deny her complicity with the crime. On the side of the

accused, D.W. 1 and D.W. 2 were examined and Exs. D1 and D2 were exhibited.

After going through the oral and documentary evidence, the learned trial Judge has come to the conclusion that the offence u/s 138 of the Act

was not attracted against the accused and accordingly dismissed the case, which necessitated the complainants to prefer this appeal.

Now the point for determination in this appeal is whether the findings of the learned trial Judge is full of manifest error and perverse in nature

leading to miscarriage of justice warranting any interference from this Court?

Heard Mr. M. Duraiswamy, learned Counsel for the appellants and Mr. P. Jagadeesan, the learned Counsel appearing for the respondent and

considered their respective submissions.

The point:

The learned Counsel for the appellants would draw the attention of this Court to the admissions about the borrowal of the accused''s husband in his

evidence as D.W. 2. The vain attempt made by D.W. 2 (the husband of the accused) is that Ex. P8 impugned cheque is bearing the cheque leaf

No. 0122974. But the earlier cheque leaf Nos. 0122975 and 0122976 have been drawn by the accused on 4.10.1995 and 6.10.1995

respectively. So the earlier cheque leaf bearing No. 0122974 would not have been drawn on 7.11.1997 and the impugned cheque Ex. P8 which

was given only as a security for the loan borrowed was manipulated and used by the complainants for the purpose of this case. But the fact

remains that even after the receipt of the statutory notice issued by the complainants as per Section 138(b) of the Act, the accused has not sent any

reply raising a defence that the impugned cheque is forged one and was not drawn by the accused on 7.11.1997. The mere fact that Ex. P8

impugned cheque leaf is earlier to the cheque drawn on 4.10.195 and 6.10.1995 will not lead us to an inference that it should have been drawn

earlier to 4.10.1995 on which date the cheque leaf bearing No. 0122975 was drawn by the accused.

Further before the trial Court, the accused has not taken any steps to show that Ex. P8 impugned cheque was forged by the complainants only

for the purpose of this case. It is a definite case of P.W. 1, the power of attorney holder of the complainants, before the trial Court that Ex. P8

impugned cheque was drawn on 7.11.1997 by the accused only to discharge both the principal as well as the interest due under Exs. P2 to P7

promissory notes. A memo of calculation was also filed before this Court, which shows that as on 6.11.1997 the amount due to the complainants

under Exs. P2 to P7 promissory notes inclusive of the accused comes to Rs. 6,89,545/- whereas Ex. P8 impugned cheque was drawn only for a

sum of Rs. 6,89,000/-. It is seen from the evidence of P.W. 2, the Manager of the Indian Overseas Bank, Alazhapuram Branch, who has also

been examined as D.W. 1 on the side of the accused, Ex. P8 impugned cheque was presented by the complainants for collection on 7.11.1997

itself, but the same was returned by the bank on the ground that there is no sufficient funds in the account of the accused to honour the same. Ex.

P9 is the banker''s memo sent along with Ex. P8 impugned cheque at the time of dishonour. There is no acceptable explanation has been given by

the accused for not sending any reply to the notice received by him under the original of Ex. P10, even after the receipt of the same under Ex. P11

acknowledgment. The presumption u/s 139 of the Act is unless the contrary is proved, the holder of a cheque received the same only for the

discharge of whole or in part of any debt or other liability. The reasoning given by the learned Judicial Magistrate in dismissing the case, in my

opinion is full of manifest error and perverse in nature leading to miscarriage of justice warrants interference from this Court. Point is answered

accordingly.

As held by the Honourable Apex Court in Goa Plast (P) Ltd. Vs. Chico Ursula D''Souza, the accused is liable to be pay double the total

amount of the cheque. In this case, it comes to Rs. 13,78,000/-. The relevant observation of the honourable Apex Court in the above said ratio

decidenti runs as follows:

...We have no doubt that the respondent has committed an offence punishable under the provisions of Section 138 of the Act and is liable to be

punished. The transaction in question took place between the parties in the year 1993, therefore, Section 138, as it stood at the relevant time,

would be applicable to the present case. Section 138 provides imprisonment for a term which may extend to one year, or with fine which may

extend to twice the amount of the cheque, or with both. Section 138 has now been amended and the penalty of imprisonment for a term which

may extend to one year has been substituted by two years as provided by the amending Act of 2002 and the fine which may extend to twice the

amount of the cheque. This has been prescribed as the punishment for the offence u/s 138 of the Act. The object and the ingredients under the

provisions, in particular Sections 138 and 139 of the Act cannot be ignored. Proper and smooth functioning of all business transactions,

particularly, of cheques as instruments, primarily depends upon the integrity and honesty of the parties. In our country, in a large number of

commercial transactions, it was noted that the cheques were issued even merely as a device not only to stall but even to defraud the creditors. The

sanctity and credibility of issuance of cheques in commercial transactions was eroded to a large extent. Undoubtedly, dishonour of a cheque by the

bank causes incalculable loss, injury and inconvenience to the payee and the entire credibility of the business transactions within and outside the

country suffers a serious setback. Parliament,in order to restore the credibility of cheques as a trustworthy substitute for cash payment enacted the

aforesaid provisions. 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.

In fine, the appeal is allowed and the Judgment in C.C. No. 28 of 1998 on the file of the Judicial Magistrate No. V, Salem is set aside and the

accused is convicted u/s 138 of the Negotiable Instruments Act 1881 and given six months time to pay a sum of Rs. 13,78,000/- (Rupees Thirteen

Lakhs seventy eight thousand)only (double the amount of the cheque) towards compensation to the complainants in default to suffer simple

imprisonment for one year

The learned Counsel appearing for the respondent would represent that a Civil Suit O.S. No. 132 of 2005 on the file of Fast Track Court No.

2, Salem, has been filed by the complainants on the basis of Ex. P2 to Ex. P7 promissory notes. It is made clear that any payment made in this

case shall be adjusted towards the decree amount in O.S. No. 132 of 2005 on the file of Fast Track Court No. II, Salem.