R.B. Ramakrishnan vs A. Meena

K.B.K. Vasuki, J.—The criminal revision petition is directed against the judgment of conviction of the Petitioner for the offence u/s 138 of

the Negotiable Instruments Act, made in Calendar Case No. 80 of 2006, on the file of the District Munsif Court-cum-Judicial Magistrate,

Perundurai, as confirmed by the judgment dated 15.06.2007, in Criminal Appeal No. 238 of 2006, on the file of the Additional District-cum-Fast

Track Court No. I, Erode.

The allegations raised in the complaint are that the accused borrowed a sum of Rs. 12,00,000/- from the complainant agreeing to repay the

same with interest at the rate of 12% per annum and the accused executed a pronote for the due repayment of the same and the accused on

19.07.2004 got back the pronote and issued cheque drawn on Karur Vysya Bank, Erode Branch and the cheque was presented for encashment

on 29.10.2004 and the same was returned on account of insufficient funds along with memo and on receipt of the same the complainant issued a

statutory notice, thereby calling upon the accused to discharge his liability and the accused though received the notice did not either reply or

discharge his liability thereby committed the act, constituting the offence punishable u/s 138 of Negotiable Instruments Act.

The complainant has, in order to prove his case as stated above, examined himself as PW1 and marked the Cheque, return memo, copy of

lawyer notice and acknowledgment for the receipt of the same as Exs.P1 to P4 and no evidence was adduced on the side of the Defendant. On

the basis of the evidence adduced, the trial Court arrived at the conclusion that the accused is guilty of the offence u/s 138 of Negotiable

Instruments Act and convicted and sentenced him to undergo imprisonment and pay fine. Aggrieved by the same, the accused preferred appeal in

C.A. No. 238 of 2006 on the file of the Additional District-cum-Fast Track Court No. I, Erode. The same was dismissed by confirming the

judgment and conviction of the lower Court. Hence, this criminal revision before this Court.

The learned Counsel for the Petitioner seriously canvassed the correctness of the order passed by the lower Court on the ground that the lower

Court did not properly consider the denial of the accused regarding the nature of the transaction and his participation in the same manner as

submitted by the complainant; the admissions made by the PW2 in the witness box is sufficient to belie the case as stated in the complaint a sum of

Rs. 12,00,000/-is borrowed by the accused by the complainant and the cheque is issued by the accused for the due repayment of the same; the

contradictory nature of the evidence of the complainant in the witness box; the new theory introduced by him in the witness box as if the sum of Rs.

12,00,000/-represents various transactions involving different quantum obtained by the accused as loan on different occasions between 1999-

2000; the chit amount due to the complainant in the chit transaction conducted by the accused which amount was utilized by the accused for his

own use on the assurance that he will pay interest to the complainant; the debt if any on the date of issuance of cheque, barred by limitation; the

complainant has come forward with false claim regarding the quantum of amount already credited to her account; the combined appreciation of the

facts of the above mentioned would dispel the statutory presumption indicated in favour of the complainant and the burden is shifted to the

complainant to prove the loan transaction effected between the parties in the manner as spoken by him. Whereas the complainant failed to produce

any evidence to prove her theory regarding more than one transaction on different dates between 1999-2000 and the complainant having received

portion of the amount is not entitled to claim the entire amount under the cheque and is not entitled to maintain any action u/s 138 of the Negotiable

Instruments Act for the entire amount.

Per contra, the learned Counsel for the Respondent seeks to justify the order of conviction and sentence of the Courts below mainly on the

basis of unrebutted legal presumption under Sections 118 and 139 of the Negotiable Instruments Act. It is contended by the learned Counsel for

the Respondent that the failure of the accused to send any reply to the legal notice and his failure to get into the witness box to deny the

prosecution case will automatically go to prove the complainant''s case.

Heard the rival submissions made on both sides and perused the records.

The parties are referred to in this order as per their rank in the lower Court. The complaint proceeds as if the accused borrowed a sum of Rs.

12,00,000/-from the complainant, promised to repay the same with interest at 12% per annum and executed a pronote to the effect and on the

demand made by the complainant to repay the same, the accused paid interest by cash and issued cheque to discharge the entire principal on

19.07.2004 and received back the pronotes executed in favour of the complainant and the account book maintained by the complainant in this

regard. The complainant has in his, sworn statement, reiterated the same allegations. But, the complainant neither in the complaint nor in his sworn

statement not only failed to furnish the particulars regarding the date and year on which the amount was borrowed pronote was executed, demand

was made for repayment by the complainant and cheque dated 19.07.2004 is issued to the complainant and the quantum of interest paid by the

accused to the complainant. As rightly argued by the learned Counsel for the accused, the complaint proceeds as if the transaction referred in his

complaint and sworn statement is single loan transaction, but the complainant has first time in the course of his cross-examination on 02.08.2005

come forward with new theory that the accused was conducting chit and she was one of the members in the chit and the accused borrowed a sum

of Rs. 5,00,000/-during 2000 and executed a promissory note and the promissory note was got back and Ex.A1 Cheque was issued by the

Petitioner. Such case was further improved on 23.08.2005 in the course of further cross-examination as if the accused issued two cheques for

each Rs. 2,00,000/-and third cheque for Rs. 8,00,000/-and the accused retained a sum of Rs. 2,00,000/-chit amount taken by the Petitioner

during 1999 thereby agreeing to repay the same with interest to the complainant for the same and the accused is due to pay Rs. 2,00,000/-under

chit transaction. Here again, he did not produce any further particulars regarding the date of chit transaction and the date of execution of pronotes

and issuance of cheque etc., The cross-examination continued on 20.03.2006 on which date the complainant deposed that she did not lend any

money to the accused during 2004 and the amount to the tune of Rs. 49,500/-is credited to his account from ICICI Bank between 02.08.2004

and 05.08.2004. She has also admitted in the course of her examination that she handed over her title deeds relating to the property to one P.V.

Subramanian as requested by the accused during 2004 and the amount is not received by way of cheque and she would deny that the amount so

paid represented the commission for his assistance rendered to P.V. Subramanian to get loan. Thus the appreciation of allegations raised in the

complaint, sworn statement given at the time of entertaining the complaint and during the course of cross-examination would show that different

theories are put forth at different stage.

It may be true that the accused did not send any reply to the legal notice. The complainant has also cited the judgment of our High Court

reported in 2003 (2) DCR 145, M/s. Jayam Company and Anr. v. T. Ravichandran 2003 (2) DCR 145 for the legal proposition that the accused

ought to have issued reply promptly stating the reason to deny the claim of the complainant and any valid defence raised at the time of trial cannot

be considered. In my opinion the settled legal position is mere failure to send reply notice will not take away the right of the party to contest the

case. Here is the case, wherein it may be true that the accused admitted the issuance of cheque as such the statutory presumption under Sections

118 and 139 is invoked to the effect that the cheque in question is issued for the discharge in whole or in part of any debt or liability. At this

juncture the learned Counsel for the accused raised an objection that such presumption can be invoked only in respect of legally enforceable debt

and it is not applicable for time barred debt, which cannot be recovered but such contention raised on the complaint is directly answered in the

judgment of the Supreme Court reported in (2010 3 MLJ (Crl) 547 (SC) in Rangappa v. Sri Mohan 2010 3 MLJ (Crl) 547 (SC), wherein the

Hon''ble Supreme Court is by overruling the earlier observation made in CDJ 2008 SC 047 in Krishna Janardhan Bhat v. Dattatraya G. Hegde

CDJ 2008 SC 047 pleased to observe that the presumption mandated by Section 139 of he Act does indeed include the existence of the legally

enforceable debt or liability. It is further observed in the judgment that the same is of course in the nature of a rebut table presumption and it is

open to the accused to raise a defence wherein the existence of a legally enforceable debt or liability can be contested. However, the initial

presumption lies undoubtedly in favour of the the complainant. It is observed by three Judges larger bench of our Supreme Court in 2010 (3) MLJ

that Section 139 N.I. Act is an example of a reverse onus clause that has been included in furtherance of the legislative objective of improving the

credibility of negotiable instruments. While Section 138 of the Act specifies a strong criminal remedy in relation to the dishonour of cheques, the

rebut table presumption u/s 139 is a device to prevent undue delay in the course of litigation. However, it must be remembered that the offence

made punishable u/s 138 can be better described as a regulatory offence since the bouncing of a cheque is largely in the nature of a civil wrong

whose impact is usually confined to the private parties involved in commercial transactions.

While dealing with the nature and standard of proof to be adduced by way of rebuttal evidence the Supreme Court observes ""in such a

scenario, the test of proportionality should guide the construction and interpretation of reverse onus clause and the accused cannot be expected to

discharge an unduly high standard of proof. In the absence of compelling justifications, reverse onus clauses usually impose an evidentiary burden

and not a persuasive burden. Keeping this in view, it is the settled legal position that when an accused has to rebut the presumption u/s 139, the

standard of proof for doing so is that of ''preponderance of probabilities'' and therefore if the accused is able to raise a probable defence which

create doubts about the existence of a legally enforceable debt or liability, the prosecution can fail.

The Hon''ble Supreme Court has concluded the case by saying that it is conceivable that in some cases the accused may not adduce evidence

of his/her own and the accused can also rely to discharge his burden upon materials submitted by the complainant to raise such a defence.

Viewing the case in hand in the above legal background the complaint has not specified in the legal notice and sworn statement about the date

on which the amounts are borrowed and as to whether the loan transaction is one single transaction etc., The complainant has introduced different

theory in the witness box and none of the theory does definitely say the correct amount due to the complainant borrowed either under one

transaction or different transactions, when the cheque is issued for Rs. 12,00,000/-. The complainant on one hand states that the accused

borrowed Rs. 5,00,000/-and the accused is due to pay the chit amount to the tune of Rs. 2,00,000/-during 1999-2000, if that is so, the total

amount due to her is only Rs. 7,00,000/-and he executed one pronote and the same was returned and one cheque was issued and there is no

further particulars furnished as to how the accused became due to pay Rs. 12,00,000/-as on 19.07.2004. The other theory introduced by the

complainant in the course of his cross-examination on 23.08.2005 is that the accused issued three pronotes on earlier occasion, two for each Rs.

2,00,000/-and one for Rs. 8,00,000/-and the three pronotes were returned and the present cheque in question is issued. Hereagain, the

complainant did not furnish any particulars as to why when and what circumstances three pronotes for different amounts came to be executed.

Such contradictory and misconsistent therein put forth by the PW1 in the witness box without furnishing any particulars or proof as to how Rs.

12,00,000/-became due to her from the accused is enough to raise reasonable doubt about the existence of any debt or liability to the tune of Rs.

12,00,000/-. If that is so, the burden shifts to the complainant to prove the existence of legally enforceable debt or liability to the tune of Rs.

12,00,000/-from the accused and on her failure to produce any evidence in this regard, the complainant cannot be said to have established her

case beyond reasonable doubt.

In this context if the defence raised on the side of the accused to the effect that the accused stood as mediator for the transaction between the

complainant and one P.V. Subramanian in the course of which the title documents relating to the property of the complainant are given to P.V.

Subramanian for obtaining loan and the complainant got one blank cheque from the accused also by way of security for due payment of the amount

by P.V. Subramanian deserves due consideration.

The complainant has also admitted part of such theory to the extent that her documents are handed over to the accused to be given to P.V.

Subramanian for obtaining bank loan but the complainant did not accept the later part of the theory that one cheque was obtained from the

accused by way of security. However the failure of the complainant to establish his theory as to how and under what circumstances Rs.

12,00,000/-is due from the complainant if viewed in the light of admission about the transaction between the complainant and P.V. Subramanian

through the accused, it is likely to raise the defence as referred to. Even otherwise, when the burden cast upon the accused is to prove the

existence of different theory and in the event of his satisfactorily making out the possibility of existence of different theory, he is to succeed.

Hereagain, the learned Counsel for the Respondent has by relying upon the judgment reported in (2001) 8 SCC 458, K.N. Beena v.

Muniyappan and Anr. (2001) 8 SCC 458, contended that accused has to necessarily discharge his burden by leading cogent evidence, that there

was no debt or liability and when the accused is not able to do so he could not be said to have discharged the burden cast upon him. Whereas, the

learned Counsel for the Petitioner relied upon the following Judgments reported in:

1 CDJ2007 SC 1135, K. Prakashan v. P.K. Surenderan CDJ2007 SC 1135,

2 CDJ 2008 SC 047, Krishna Janardhan Bhat v. Dattatraya G. Hedge,

3 CDJ2010 MHC 5862, G. Veerachami v. K. Karuppasami CDJ2010 MHC 5862,

Wherein the Hon''ble Supreme Court is of the view that the accused need not get into the witness box to discharge the burden in terms of the

above mentioned provision.

The next point urged by the Petitioner is that the money being admittedly borrowed between 1999-2000 the same became time barred time

during 2004 and when the cheque issued is for the discharge of legally enforceable liability Section 138 of N.I. Act is not attracted. The learned

Counsel for the Petitioner has also in respect of his contention cited the authorities reported in

1 CDJ 2010 MHC 7755, K. Kumaravel v. R.P. Rathinam CDJ 2010 MHC 7755,

2 CDJ 2008 Ker HC 726, Joseph Sartho, Thekkepallithanam v. G. Gopinathan and Anr. CDJ 2008 Ker HC 726,

3 CDJ 2010 DHC 318, M/s. Alliance Infrastructure Project Pvt., Ltd., and Ors. v. Vinay Mittal and Anr. CDJ 2010 DHC 318

In all the cases, our High Court and other High Courts are have identically held that Section 138 of N.I. Act is not attracted only when the cheque

in question was issued for the time barred as it cannot be legally enforceable. The same view is also expressed by the Apex Court in 2002 (2)

MWN (Cr.) DCC (SC) 46 (A.V. Murthy v. B.S. Nagabasavanna 2002 (2) MWN (Cr.) DCC (SC) 46) referred to in Para 7 and 10 of the

Judgments reported in CDJ 2010 MHC 7755. When it is nobody''s case that the accused acknowledge the debt or made fresh promise for

repayment thereby giving a new start of limitation applying the same view the cheque issued on 19.07.2004 for the amounts borrowed during

1999-2000, which became time barred cannot be treated towards the discharge of legally enforceable liability.

Further another legal point is also urged by the learned Counsel for the Petitioner by relying upon the Judgments reported in

1 CDJ 1997 APHC 083, Girdhari Lal Rathi v. P.T.V. Ramanujachari and Anr. CDJ 1997 APHC 083,

2 CDJ 2008 MHC 768, M/s. Emirates Finance (P) Ltd., rep.by its Accountant Krishna v. V. Harikrishnan CDJ 2008 MHC 768,

3 CDJ 2010 Ker HC 392, G. John, Managing Director, Eruro Marine v. Alosious Y. Puthenveedu and Anr. CDJ 2010 Ker HC 392

In all these cases, our High Court and other High Courts have held that when notice is issued demanding discharge of liability for the entire amount

what is actually due when there is a part payment before presenting the cheque and when the amount shown in the cheque is more than what is due

when cheque is presented for more amount without any endorsement of the part payment there was no bonafide as the liability was not to the

extent of the amount mentioned in the cheque and no offence u/s 138 N.I. Act can be said to be made out and prosecution is an abuse of process

of law.

In this case, according to the Petitioner there was admittedly some payments made by the accused through bank transaction and the total

amount paid on four occasions is to the tune of Rs. 49,000/-. The complainant has also admitted the payment so made by the accused. While

according to the accused the same is part payment out of Rs. 2,00,000/-as commission to the complainant for handing over the documents to P.V.

Subramanian, according to the complainant the same is in discharge of amount due to his mother from the accused. Whereas, the complainant did

not furnish any particulars or adduced any evidence to prove the existence of liability between the accused and his mother. Then the complainant''s

case is to be accepted that the payments made are to be treated as towards partial discharge of liability due to the complainant and notice ought to

have been issued for lesser amount and the failure to do so and failure to present the cheque minus the amount already paid in view of the law laid

down in the Judgments referred to above any ingredients would not attract for the offence u/s 138 of the Negotiable Instruments Act.

Then here is the case wherein the complainant failed to discharge his burden whereas the accused duly discharged burden cast upon him to

raise a defence on one hand that the cheque issued under different circumstances and on other hand that it is for time barred debt and for more

amount than actually due to the complainant viewing from any angle the both Courts below have misrebly failed to properly consider the defence

raised on the side of the accused arrived at perverse finding that the accused was due to pay Rs. 12,00,000/-to the complainant and the cheque

was issued for due repayment of the same. Such a finding rendered by the trial is as discussed above by not properly considering the admission

made by PW1 in witness box. Both the Courts below have simply arrived at conclusion in favour of the complainant by invoking the presumption

without going into other material factors and the finding of the Courts below suffer from legal and perpetual infirmity and which warrants

interference by this Court.

In the result, the revision is allowed by setting aside the judgment of conviction and sentence made in C.C. No. 80 of 2006 on the file of the

District Munsif & Judicial Magistrate, Perundurai as confirmed by the judgment dated 15.06.2007 made in C.A. No. 238 of 2006, on the file of

the Additional District & Fast Track Court No. I, Erode and the accused is acquitted from charges u/s 138 of N.I. Act and the fine amount if any

shall be refunded to the Petitioner and the bail bonds if any executed by the accused stand canceled.