Hari Chand vs Himachal Pradesh State Co-Operative Bank Limited And Another

Chander Bhusan Barowalia, J.

The present revision petition is maintained by the petitioner/accused (hereinafter referred to as “the accusedâ€) under Sections 397, 401 read

with Section 482 Cr.P.C. against judgment dated 12.06.2017, passed by the learned Sessions Judge, Bilaspur, H.P., in Criminal Appeal No. 14/10 of

2016 (C. No. 26/2016), whereby the judgment of conviction, dated 23/25.05.2016, passed by the learned Chief Judicial Magistrate, Bilaspur, District

Bilaspur, H.P. in Criminal Case No. 121/3 of 2011, was upheld.

The brief facts, giving rise to the present revision petition, can succinctly be summarized as under:

H.P. State Co-operative Bank, Beri, through its the then Branch Manager (complainant-Bank) maintained a complaint under Section 138 read with

Section 142 of the Negotiable Instruments Act, 1881 against the accused in the learned Trial Court. As per the complainant, in the month of

November, 2008, the accused alongwith his son, namely Dinesh Kumar, made a request to the complainant-Bank for grant of personal loan amounting

to Rs.1,50,000/- (rupees one lac fifty thousand). After completion of formalities, the loan was sanctioned. The loan was to be paid back in 84 equal

installments of Rs.2800/- per month @ 13.75% interest. Subsequently, Dinesh Kumar did not pay the installments and he became defaulter. The

accused, approached the complainant-Bank for repayment of the loan, as he stood guarantor to the loan and issued cheque No. 831361, dated

25.07.2011, for an amount of Rs.2,15,000/- (rupees two lac fifteen thousand) of State Bank of India, Sunder Nagar Branch, for liquidating the liability

of his son. On 02.08.2011 the cheque was received by the complainant-Bank and the same was dishonoured due to “exceeds arrangementâ€.

Thus, the complainant-Bank issued legal notice dated 30.08.2011. Thereafter, as the complainant-Bank failed to get the payment, a complaint was

filed against the accused under the provisions of Section 138 of Negotiable Instruments Act, 1881. After conclusion of the trial, the accused was

convicted to undergo simple imprisonment for a period of four months and to pay a fine of Rs.3,00,000/- out of which a sum of Rs.2,95,000/- was

ordered to be remitted as compensation to the complainant-Bank. The accused was further ordered to undergo simple imprisonment for a period of

one month in case of default in payment of fine. Feeling aggrieved and dissatisfied, the accused preferred an appeal before the learned Appellate

Court. However, the learned Appellate Court, vide its judgment dated 12.06.2017, dismissed the appeal preferred by the accused by upholding the

judgment of the learned Trial Court, hence the present revision petition maintained by the accused.

Heard. The learned counsel for the petitioner has argued that the learned Trial Court as well as the learned Appellate Court without appreciating

the evidence, which has come on record, and without appreciating the fact that respondent No. 1 has failed to prove the case against the petitioner

convicted him. He has further argued that it is on record that the cheque was issued only as a guarantee and not for the payment of the loan amount.

Conversely, the learned counsel for respondent No. 1 has argued that the cheque was issued for the payment of amount due and presumption of truth

is also attached to the cheque, which was not encashed due to “exceeds arrangementâ€, thus no interference in the judgments passed by the

learned Courts below is required. Lastly, it is prayed that the petition sans merits and the same be dismissed.

I have heard the learned counsel for the parties and gone through the record carefully.

The complainant-Bank has placed on record cheque, bearing No. 831361, dated 25.07.2011, amounting to Rs.2,15,000/-and the same was

dishonoured on the ground of “exceeds arrangementâ€. Thereafter, the complainant-Bank issued demand notice to the accused and the same was

signed by him. The record shows that the accused stood as guarantor of his son, Dinesh Kumar, for obtaining loan of Rs.1,50,000/-.

CW-1, Shri Digvijay Singh, Branch Manager H.P. State Co-operative Bank, has deposed that the accused issued the cheque for liquidating the

financial liability of his son, as he stood guarantor to his son. This witness has further deposed that son of the accused failed to pay the loan amount, so

the accused issued cheque for discharging the financial liability of his son. CW-2, Shri Naresh Kumar, Manager, State Bank of India, Sundernagar,

District, Mandi, has deposed that the cheque was dishonoured on the ground “exceeds arrangement†and there was no amount in the bank

account of the accused. Thus, this witness has also corroborated the case of the complainant-Bank.

The accused examined himself as DW-1. He admitted that in the bank he signed the documents, as a guarantor. He feigned his ignorance that his

cheque was dishonoured, as there were insufficient funds in his bank account. He has admitted his signatures on the cheque as well as on the

acknowledgement. He has further admitted that he did not pay any amount to the complainant-Bank. The accused has also examined his son Dinesh

Kumar as DW-2. DW-2 deposed that he took loan from the complainant-Bank and the accused stood as his guarantor. This witness denied that his

father has issued any cheque. This witness, in his cross-examination, admitted that on 26.11.2008 he took loan of Rs.1,50,000/- from the complainant-

Bank and his father stood as his guarantor. He has further admitted that after paying 2-3 installments, he did not pay further installments. He has

further deposed, in his cross-examination, that he had the knowledge that in case he fails to pay the loan amount, his father will be saddled to pay the

loan amount, as he stood his guarantor.

Now, after meticulously examining the evidence, which has come on record, it is clear that the accused stood guarantor of his son, Dinesh Kumar,

for loan amount of Rs.1,50,000/-, and all the documents were executed qua the loan with the complainant- Bank. It is also clear from the evidence that

said Dinesh Kumar did not discharge his loan liability, as he failed to pay the installments of the loan. It has also come on record that Dinesh Kumar

knew that in case he fails to discharge his financial liability, then the same would be recovered from his father, who stood his guarantor. The accused

signed the cheque and he has also not disputed the same. The accused has also admitted that he signed the acknowledgement, through which legal

notice qua demand was issued to him. Thus, the above material is suffice to conclude that in order to extinguish the financial liability of Dinesh Kumar,

the accused issued cheque amounting to Rs.2,15,000/-.

The next set of evidence establishes that the cheque issued by the accused was dishonoured on the ground of “exceeds arrangement†and

despite issuance of notice he could not pay the cheque amount. In fact, after receipt of the notice, the accused did not do anything, thus his sleeping

over the financial liability, in itself is a proof that he admitted his liability to pay the cheque amount.

The Hon’ble Supreme Court in Sampelly Satyanarayana Rao vs. Indian Renewable Energy Development Agency Limited, (2016) 10 SCC

458, vide paras 9 to 11, it has been held as under:

“9. We have given due consideration to the submission advanced on behalf of the appellant as well as the observations of this Court in Indus

Airways with reference to the explanation to Section 138 of the Act and the expression ""for discharge of any debt or other liability"" occurring in

Section138 of the Act. We are of the view that the question whether a post- dated cheque is for ""discharge of debt or liability"" depends on the nature

of the transaction. If on the date of the cheque liability or debt exists or the amount has become legally recoverable, the Section is attracted and

nototherwise.

Reference to the facts of the present case clearly shows that though the word ""security"" is used in clause 3.1(iii) of the agreement, the said

expression refers to the cheques being towards repayment of installments. The repayment becomes due under the agreement, the moment the loan is

advanced and the installment falls due. It is undisputed that the loan was duly disbursed on 28th February, 2002 which was prior to the date of the

cheques. Once the loan was disbursed and installments have fallen due on the date of the cheque as per the agreement, dishonour of such cheques

would fall under Section 138 of the Act. The cheques undoubtedly represent the outstanding liability.

Judgmentin Indus Airways is clearly distinguishable. As already noted, it was held therein that liability arising out of claim for breach of contract

under Section 138, which arises on account of dishonour of cheque issued was not by itself at par with criminal liability towards discharge of

acknowledged and admitted debt under a loan transaction. Dishonour of cheque issued for discharge of later liability is clearly covered by the statute

in question. Admittedly, on the date of the cheque there was a debt/liability in presenti in terms of the loan agreement, as against the case of Indus

Airways where the purchase order had been cancelled and cheque issued towards advance payment for the purchase order was dishonoured. In that

case, it was found that the cheque had not been issued for discharge of liability but as advance for the purchase order which was cancelled. Keeping

in mind this fine but real distinction, the said judgment cannot be applied to a case of present nature where the cheque was for repayment of loan

installment which had fallen due though such deposit of cheques towards repayment of installments was also described as ""security"" in the loan

agreement. In applying the judgment in Indus Airways , one cannot lose sight of the difference between a transaction of purchase order which is

cancelled and that of a loan transaction where loan has actually been advanced and its repayment is due on the date of the cheque.â€​

Indeed, issuance of cheque and admission of signature thereon would invoke presumption of legally enforceable debt in favour of holder and the

accused needs to rebut such presumption. However, in the case in hand, the accused failed to rebut such presumption.

In view of the law, as has been extracted hereinabove, and after carefully examining the material, which has come on record, this Court comes to

the conclusion that the judgments passed by the learned Courts below are the result of proper appreciation of facts and the same are well within the

confines of law. The judgments need no interference, as the complainant-Bank has proved the offence under Section 138 of the Negotiable

Instruments Act, 1881 against the accused.

The petition sans merits, deserves dismissal and is accordingly dismissed. Pending application(s), if any, shall also stand(s) disposed of.