Om Parkash Mehta vs Hari Dutt Sharma

Surinder Singh, J.—Appellant had filed a complaint under Sections 420 and 406 Indian Penal Code read with Section 138 of the Negotiable Instruments Act, in short ''the Act''.

Learned trial Court, prima facie, found the existence of the offence u/s 138 of the Act and accordingly summoned, tried and acquitted the accused-Respondent. Hence the present appeal by the complainant/Appellant.

Briefly stated, facts giving rise to the instant appeal, alleged in the complaint are that the Respondent in the month of October, 1995, approached the Appellant and borrowed a sum of Rs. 17,500/- from him, which was agreed to be returned on or before 31.1.1996 to which Respondent failed to repay. However, he issued a cheque bearing No. 775472 dated 2.2.1996 for a sum of Rs. 17,500/- payable at Kangra Central Cooperative Bank, Una. It was presented by the complainant for its payment on 19.2.1996 but it bounced back with the remarks "exceeds arrangement". Consequently, a notice was issued. Despite that the payment was not made nor the notice was responded, as such the complaint was filed.

Respondent was summoned, the notice of accusation was put to the Respondent, he pleaded not guilty and alleged that cheque only bore his signatures but a fraud was committed by the Appellant and no consideration had passed on to him.

To prove its case Appellant examined himself to substantiate his claim. He reiterated the allegations made in the complaint by testifying that Respondent had borrowed the aforesaid amount - 3 -from him as needed by him for the marriage of his son Rajesh, to which he failed to return accordingly issued cheque Ext. CW1/A dated 2.2.1996 which was dishonoured. A legal notice was issued to him by the Appellant. He proved the acknowledgement Ext. CW1/D as its receipt. Notice was neither replied by the Respondent nor payment was made. In cross-examination he stated that the aforesaid amount was lent by him to the Respondent in the presence of Pritam and one Mohini in Shop No. 5 situated at Bus Stop. When asked about their addresses, but he failed to state. None of these persons were examined by him. He admitted that Respondent was a partner in Truck No. HPG-4028 for about two years and they had to settle down its partnership account. Though no such account was maintained by him yet it was already settled about 5-6 years back. According to him, the truck in question was sold by Respondent and was finally settled for Rs. 25,000/-. Out of this amount, he was paid five or ten thousands and the balance was later on paid to him by the Respondent. He also stated that he had informed the Pradhan and also Prabhu Ram about the cheque amount to be realized from the Respondent which was issued to him on 2.2.1996. He - 4 -admitted that about 4/6 cases with respect to satta were pending against him. He however, denied that he had opened the account of the Respondent by depositing the amount himself for him and got his blank cheques signed from him which were later filled-in.

Earlier the case was being tried as a warrant case but it was ordered to be tried as summons case, thus vide order dated 16.12.1997 Appellant was further examined and cross-examined on 24.6.2002. In further cross- examination he admitted the partnership with respect to the truck in question purchased by them, the registration whereof was in the name of the Respondent, who sold it without the consent of the Appellant but later realized his share.

CW2 Punit Singla, clerk of Kangra Central Cooperative Bank was examined to prove the memo issued by the Bank indicting "exceeds arrangements". In cross examination, he stated that the Respondent never operated his account. He did not bring the record with respect to the account opening by the Respondent, in order to find out who had introduced the Respondent in the Bank.

Vide his statement dated 1.7.2002 Appellant expressed that the statement recorded by the Court on 24.6.2002 be read in evidence and not the earlier one.

Respondent was examined u/s 313 of the code of Criminal Procedure. He took up the stand that his account was opened by the Appellant and the blank signed cheques were taken by Appellant from him. He admitted the receipt of the notice but denied having borrowed any money from the Appellant. He also stated that he had a dispute about the truck with the Appellant. But did not say anything why blank cheques were issued by him and did not report to police or filed any complaint about it or issue any notice to the bank to stop payments.

However, the learned trial Court after examining the evidence led by the parties precisely held that the statement of the Appellant was lacking in substance and further that no such demand was made from him in the notice and it fell short of the legal requirement whereby in addition to the ''said amount'' there was also a claim by way of costs and interests etc. and there was no break-up of the claimed cheque amount, interest and damages etc. which were required to be separately specified. Since there was an omnibus demand without specifying what was due under the dishonoured cheque therefore, the complaint was dismissed.

The learned Counsel for the Appellant vehemently argued that it stands proved that Respondent had lent the amount of Rs. 17,500/- and he had admitted his signatures on the cheque. It was legally enforceable liability and cheque was issued by the Respondent to satisfy the same. Therefore, the Respondent is liable to make the payment and further that there is no illegality in the notice which is admittedly received by the Respondent. The findings of the learned trial otherwise are incorrect. Hence the judgment of acquittal passed by the learned trial Court is liable to be set aside.

Contra Shri Ashok Sharma, learned Counsel for the Respondent has supported the impugned judgment of acquittal and referred to the cross-examination of the Appellant and urged that there is no fault in the judgment of acquittal.

To appreciate the rival contentions, I have carefully gone through the record of the learned trial Court.

The cheque Ext. CW1/A admittedly bears the signatures of the Respondent. It was issued on 2.2.1996 for an amount of Rs. 17,500/- which was allegedly lent to him by the Appellant. It has been proved vide memo Ext. CW1/B that it was dishonoured indicating that it "exceeds arrangement". The Bank official aforesaid has proved this fact. Consequently, notice Ext. CW1/E was issued to the Respondent by the Appellant seeking repayment of the cheque amount as well as interest on the said amount and costs of the notice, within 15 days from the receipt of the notice which is admittedly received by him.

The findings of the learned trial court that the notice itself was defective as the cheques amount was inseparable, is devoid of any substance. In fact, notice aforesaid clearly indicates the cheque amount and also the additional amount which was claimed by him through it, as stated above but it was never responded. The story with respect to the sale of truck aforesaid has no bearing on the merits of this case. In my opinion once cheque stands signed by the Respondent to discharge any liability, he enters into the commercial world.

In fact, to enhance the acceptability of the cheques in settlement of liabilities by making the drawer liable for penalty, in case of bouncing the cheque due to insufficient arrangements made by the drawer with adequate safe guards to prevent harassment of honest drawers, Negotiable Instruments Laws (Amendment) Act 1988 was introduced and passed by the Parliament and it came into force w.e.f. 1st April, 1989. If the cheque is dishonoured for the ''insufficiency of funds'' and that it ''exceeds amount of arrangement'' to be paid, the drawer is required to be punished. The object of bringing Section 138 in the Statute appears to be to inculcate faith for the efficacy of banking operation and credible transactive business of negotiable instruments.

In the instant case, it stands proved that the cheque was issued for debt or for that matter, satisfying ''other liability''. It was presented for encashment within the period of validity.

u/s 138 of the Act, there are certain admitted facts and circumstances in which the law raises presumption that the accused is guilty. Moreover there is presumption u/s 139 of the Act in favour of the holder of the cheque. Section 138 and 139 of the Act are only in consonance with the definition contained in Section 4 of the Evidence Act. Section 138 of the Act does not exclude the applicability of Section 243 of the Code of Criminal Procedure which provides for calling into defence by the Court to produce evidence.

In the instant case when the accused was called upon to lead his evidence in defence, he did not opt to do so and his case, as put in the cross examination to the Appellant to which he denied, remained unsubstantiated even by preponderance of probabilities, that the account was opened by the Appellant for and on his behalf and he was also introduced by him and blank cheques were taken by the Appellant from him. Even for that matter he also did not choose to send reply to the notice and repell it on the facts as alleged.

Therefore, in the above circumstances, presumption is in favour of the Appellant who is holder of the cheque which was presented by him with in six months from its issue to satisfy the debt liability or any other liability knowing fully well that he would be held liable, in case the cheque so issued is dishonoured. Therefore, the acquittal of the Respondent recorded by the learned trial Court is perverse. As such for the reasons aforesaid I hold him guilty, thus the accused-Respondent stands convicted for the offence punishable u/s 138 of the Negotiable Instruments Act 1988, as amended up to date. Since the offence is compoundable as such an opportunity is given to the Respondent to compound the offence. Therefore, the parties be produced on 5.1.2011 in the Court.