ING Vysya Bank vs Hanumanth B. Ramdurg

Rathnakala, J.—This appeal is by the aggrieved complainant of C.C. No. 2659/2006 impugning the judgment dated 16.07.2009 passed by Civil Judge (Jr. Dn.) and J.M.F.C., Hubli thereby acquitting the accused for the offence punishable under Section 138 of Negotiable Instrument Act (hereinafter referred to as ''the Act'' for brevity).

The facts succinctly stated, the appellant herein through its Manager filed a private complaint before the JMFC-I, Hubli alleging that the accused was sanctioned loan of RS. 9,90,000/- by the complainant/Bank towards purchase of vehicle . The accused failed to repay the loan amount regularly as per the terms of the loan agreement executed by him along with necessary documents at the time of sanctioning the loan. In spite of repeated demands, he did not pay the installments in respect of the balance amount. Towards the installment, he issued a cheque for a sum of Rs. 24,635/- dated 08.10.2005 of Canara Bank, Station Road, Hubli. When the cheque was presented for encashment on 07.01.2006 through Vaishya Bank, Hubli, it was dishonoured with the shara ''funds insufficient''. The same is intimated to the complainant on 07.01.2006. Demand notice was issued through complainant/Bank on 16.01.2006. The notice returned with the endorsement as ''not claimed''. He has purposely avoided the acceptance of notice to defraud the complainant. By issuing bogus cheque without sufficient funds in his account, he has committed offence punishable under Section 138 of the Act.

On presentation of the private complaint, learned Magistrate took cognizance of the matter by receiving sworn statement from the complainant in the form of affidavit, ordered to register the criminal case. The accused was procured; he pleaded not guilty to the accusation read over to him. The Bank examined its Manager as PW-1 and produced 5 documents marked at Exs. P-1 to P-5. The accused was examined under Section 313 of Cr.P.C. He denied all the incriminating evidence appearing in the statement of PW-1. He opted not to led defence evidence. After hearing both parties and on consideration of the entire material available on record, the learned Magistrate acquitted the accused of the charged punishable under Section 138 of the Act.

The learned counsel for the appellant submits that in the absence of rebuttal evidence by the accused about repayment of loan amount, the Court below could not have dismissed the complaint. He had not rebutted the statutory presumptions under Section 139 of the Act in favour of the complainant. Ex. P-5 was the account extract showing the liability of the accused and the cheque was issued to discharge the said liability. The learned Magistrate gave much weightage to the stray admission that emerged in the cross-examination of PW-1 that the cheque was issued towards security. Even otherwise, cheque issued either towards security or towards repayment is suffice to hold that it is towards some legally recoverable debt.

Learned counsel for the respondent supported the judgment of the Court below.

In the above circumstance, the sole point that arise for my consideration is:

"Whether the complainant made out a case that the cheque in question was issued towards legally recoverable debt?" 7. Admittedly, it was a vehicle loan sanctioned to the accused. At the time of sanction of loan, as security for repayment of installments, corresponding post dated cheques were taken by the Bank from the loan borrower. In the case on hand, the vehicle seized is sold by getting valuation of the vehicle through a valuator. The accused was not informed about the sale proceeds of the vehicle and what was the residue left after appropriation of sale proceeds to the loan transaction.

Without resorting to any legal proceedings, if the Bank was able to sell the vehicle within short period of sanction of the loan, in all probability the vehicle must have been hypothecated to the Bank; but said fact is not disclosed by either of the parties; neither in the demand notice nor in the complaint such averment is made. It is the case of the complainant that the cheque in question was issued admitting the liability of Rs. 24,635/-. It was nowhere stated on what date the loan of Rs. 9,90,000/- was disbursed to the accused and on what date the he admitted his liability of Rs. 24,635/- towards the said loan availed by him. The pleadings in the complaint and the cross-examination evidence of PW-1 makes out a case that the cheque issued by the accused at the time of sanctioning of loan towards the repayment by way of installment is utilised to lodge the present complaint. To make out an offence under Section 138 of the Act, the complainant is required to establish the case that the cheque was issued towards whole or part of legal debt or liability. In the judgment of Indus Airways Pvt. Ltd. and Others Vs. Magnum Aviation Pvt. Ltd. and Another, the view taken by the Apex Court is that a post dated cheque issued as advance payment in respect of purchase orders, when on presentation dishonoured, does not amount to an offence under 138 of the Act. The post dated cheque obtained at the time of loan transaction towards future repayment by way of installments, does not fall within the ambit of "towards'' discharge in whole or in part or any debt or other liability" is the view taken by other High Courts. Learned counsel for the appellant relied on a judgment of the Apex Court in Crl. A. No. 1020/2010 arising out of SLP (Crl.) 407/2006 in the case of Rangappa Vs. Mohan wherein dispute was between private parties and the cheque was returned with the endorsement "payment has been stopped by the drawer". The High Court reversed the order of acquittal noticing that the accused had not raised a probable defence and the said view was concurred by the Apex Court. But the lis involved in the said case has no semblance to the case on hand.

There is statutory presumption available under Section 118(a) of the Act about passing of consideration under the cheque which reads thus:

Presumptions as to negotiable instruments.--Until the contrary is proved, the following presumptions shall be made:-

(a) of consideration--that every negotiable instrument was made or drawn for consideration, and that every such instrument when it has been accepted, indorsed, negotiated or transferred, was accepted, indorsed, negotiated or transferred for consideration;

(b) xxx

(c) xxx

Yet another statutory presumption Under Section 139 reads thus:

Presumption in favour of holder.--It shall be presumed, unless the contrary is proved, that the holder of a cheque received the cheque of the nature referred to in section 138 for the discharge, in whole or in part, of any debt or other liability. 11. Both presumptions are under the control of the rider that unless the contrary is proved. Even without leading rebuttal evidence, the accused has successfully rebutted the case of the complainant that a post dated cheque was received by the Bank while sanctioning loan without consideration and was presented for encashment only after selling the vehicle and adjusting the sale proceeds towards the outstanding loan amount. Even if the accused is due for any difference of amount the remedy for the Bank is before a civil forum but not under the Negotiable Instrument Act. The Court below has rightly held that no offence is made under Section 138 of the Act and rightly acquitted the accused. The judgment impugned does not call for interference.

Accordingly, the appeal is dismissed.