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Judgment
Ghulam Mohammed, J.—This appeal is directed against the order in C.C.No. 140 of 1998 dated 31.12.1998 on the file of XXIII Metropolitan Magistrate, Hyderabad, acquitting the respondent/accused of the offence u/s 138 of Negotiable Instruments Act, 1881 (for short ''the Act'').
The appellant herein is the complainant while the first respondent is the accused. The appellant lodged a complaint alleging that the first respondent had approached him to join as member of Godavari Cooperative Housing Society, Banjara Hills, Hyderabad, for purchase of house plot. Therefore, the complainant had given a sum of Rs. 3,50,000/- to the first respondent on 10.01.1992 towards the cost of two plots to be purchased in the names of his wife and brother. The respondent had acknowledged the amount by way of signing the two receipts for Rs. 1,75,000/- each.
While so, the first respondent allegedly had not deposited the said amount with the society and when the complainant demanded, the first respondent issued a cheque bearing No.008899 dated 10.04.1996 for Rs.3,50,000/- drawn on Bank of Baroda, Masab Tank Branch, Hyderabad, which was dishonoured and returned for want of sufficient funds in the account. The complainant issued legal notice dated 03.09.1996 to the first respondent to pay the said amount, but in vain. Thus, the appellant lodged the complaint u/s 200 Cr.RC. in the Court of XXIII Metropolitan Magistrate, Hyderabad.
After complying with the requirement u/s 207 Cr.RC. and examining the first respondent u/s 251 Cr.RC, when he pleaded not guilty, the trial had begun.
The complainant got examined four witnesses and marked Exs.Pl to P16 while no evidence was adduced on behalf of accused. Thereafter, the incriminating evidence was put to the first respondent and he was examined u/s 313 Cr.RC. and the plea was one of denial.
The point for determination in this appeal is whether the first respondent is not guilty of the offence punishable u/s 138 of Negotiable Instruments Act?
Heard learned counsel for the appellant and learned counsel for the first respondent.
Learned counsel for the appellant contended that the when the first respondent had not disputed the issuance of cheque, the offence u/s 138 of the Act is attracted and he is liable to be convicted. Learned counsel further submits that the trial Court erred in holding the first respondent not guilty on the ground that the notice was not served and the debt is time barred.
Learned counsel for the appellant further contended that legal notice was sent on 03.09.1996 to the local address with a copy marked to the permanent address of the native place by registered post with acknowledgment due and also under certificate of posting and as such, it is a deemed service of notice and the first respondent is liable to be convicted. In this connection, he has drawn my attention to Section 27 of the General Clauses Act.
Learned counsel for the appellant relied upon the decisions in C.E.I. Consultancy and Another Vs. Modi World Infotech and Another, Nirdosh Enterprises Vs. State of A.P. and Another, M/s. Vif Airways Ltd. v. M/s. Aishu Finance Ltd., 2002(1) ALT(Cri) 102 (A.P.) and H. Narasimha Rao Vs. R. Venkataram,
Learned counsel for the first respondent contended that mandatory notice as contemplated under the Act was not served upon the drawer and on this ground alone, the impugned order cannot be interfered with. Learned counsel relied upon the decisions of this Court in A. Yesubabu v. D. Appala Swamy, 2004(1) ALT(Cri) 39 (A.P.) : 2003(2) ALD (Cri) 707(A.P.) and Girdhari Lal Rathi v. P.T.V. Ramanujachari, 2000(2) CCC 58 (A.P.) : 1997(1) ALT(Crl.) 509 (A.P.).
Admittedly, the appellant had given the amount of Rs.3,50,000/- to the first respondent for the purchase of two plots in the names of his wife and his brother after joining them as members of the said Society. On enquiry, the appellant came to know that the first respondent had not deposited the said amount with the society. Later, on demand, the first respondent issued cheque for Rs.3,50,000/- and the cheque was returned twice for want of sufficient funds in the account and thus, the cheque was dishonoured. Thereafter, the appellant sent Ex.P8 legal notice to him under Exs.P9 and P10 postal receipts, but the cover was returned which is marked as Ex.Pl1.
It is to be noticed that the first respondent has not disputed the issuance of Ex.P2 cheque for Rs.3,50,000/- and Exs.P l and P2 receipts acknowledging the receipt of the said amount. He had also not disputed the signatures or receiving of the amount from the appellant. The notice was sent to the local address of the first respondent as well as permanent address by registered post with acknowledgment due but the envelope containing the notice could not be served due to the absence of the first respondent at the delivery time of the postman.
PW1 is the appellant/complainant and he stated that he had paid Rs. 3,50,000/- on 10.01.1992 to the first respondent/accused for the purchase of plots in Godavari Cooperative Housing Society Limited in the name of his wife and his brother. He came to know on enquiry that the accused did not credit the amount to account of the Society and when demanded, the accused issued cheque. This evidence is supported by the conduct of accused in issuing the cheque for Rs.3,50,000/- drawn on Bank of Baroda, Masab Tank Branch, Hyderabad. The dishonour of cheque is evidenced by Exs.P4 and P5 memos and Exs.P6 and P7, which are debit advices. Exs.P9 and P10 receipts show that the legal notices have been sent by registered post and Ex.Pl2 is the copy of certificate of posting issued by the postal authority. Thus, there is no dispute that the legal notice has been issued by the appellant.
The defence taken by the first respondent/accused is that the notice has not been served on him and issuance of notice is mandatory before filing of complaint for offence u/s 138 of the Act. There is no dispute that the legal notice was sent by the appellant. In fact, the endorsement of the postal authority on the returned envelope shows that the accused was not present at the time of delivery. It is not the defence of the accused that the legal notice was sent to wrong address and he had not issued the cheque for the amount of Rs.3,50,000/- having taken the amount from PW1. Learned counsel for the petitioner contended that in order to attract the offence u/s 138 of the Act, there must be legally enforceable debt and the accused had not borrowed any amount from the complainant and as such, he had not committed any offence. It is not disputed that the accused had taken the cheque amount from the complainant to purchase two plots in the said Society, one in the name of his wife and the other for his brother. The evidence of PW4 is also to the effect that the cheque was issued by the accused and it was dishonoured for want of funds in the account.
Coming to the aspect of time-barred debt, it is seen that the appellant gave the amount on 10.01.1992 and first respondent issued cheque on 10.04.1996. When a cheque is issued in respect of a debt, which is time-barred like the debt pursuant to a promissory note, such issuance of cheque would re-validate the debt and consequent liability on the part of the drawer of the cheque. In the instant case, the first respondent had not taken any loan from the appellant and he had taken the amount to be deposited into the account of the Society, which he had not done. In the circumstances, I am of the considered opinion that the cheque is not issued in discharge of any debt in the course of a business transaction, therefore it cannot be termed as ''debt'', instead it is the ''other liability'' incurred for having taken the amount. This view of mine is supported by the decision of the Karnataka High Court in H. Narasimha Rao case (4 supra) wherein it is observed:
"The accused has not disputed his signature on the dishonoured cheques in question. Therefore,. they constitute an agreement or promise by the debtor to pay the time barred debt. Since the accused has not paid the cheque amounts in spite of demand made by the complainant, the accused has committed an offence u/s 138 of the Act. The learned Magistrate has committed an error in dismissing the complaint and recording an order of acquittal in favour of the accused."
The decisions relied upon by the appellant''s counsel are to the effect that the notice sent by registered post with acknowledgment due and under certificate of posting shall be deemed to be valid service on the addressee, which squarely apply to the case on hand. On the other hand, the decisions relied upon by the counsel for the accused are not applicable for the reason that the facts do not in any way connect to the present case.
Even otherwise, in the ordinary course, no person would issue cheque unless he owes money to the person from whom borrowed or taken on loan. In the Explanation to Section 138 of the Act ''debt or other liability'' means a legally enforceable debt or other liability. It is clear from the explanation that it is not necessary that there must be debt in clear terms payable by the drawer of the cheque and it can as well be any other liability which a person owes in the course of a transaction. In the instant case, the accused had taken Rs.3,50,000/- from the appellant and the same was not credited to the account of Society and when demanded, he had issued the cheque for the said amount. This in effect means that when the accused had taken the amount but not credited to the account of society, there is liability on the part of the accused to re-pay the amount and the amount is sought to be re-paid in the form of cheque. In such situation, the presumption u/s 139 of the Act has to be drawn that the holder of the cheque received the cheque of the nature referred to in Section 138 for the discharge of any debt or other liability. When the accused had not deposited the amount into the account of the Society, his case will fall within the category of other liability''. Thus, the presumption is that the cheque was issued by the accused to discharge the ''other liability'', which is enforceable through a competent court of law.
Apart from the above, the mandatory notice issued by the appellant shall be deemed to have been served in view of the provisions of Section 27 of the General Clauses Act, which stipulate that when the envelope is sent to the addressee with proper and correct address by registered post with acknowledgment due, and there is endorsement that the addressee remained absent during delivery time, it has to be construed that it is a deemed service.
In view of the foregoing reasons, the appeal has to be and is accordingly allowed, the impugned judgment is set aside and the first respondent/accused is held guilty and is convicted for the offence punishable u/s 138 of the Act and sentenced to pay fine of Rs.4,00,000/- (Rupees four lakhs only) within four months from the date of receipt of this judgment, in default the accused shall undergo one year simple imprisonment. In view of undisputed fact that accused had taken the amount on 10.01.1992 and issued cheque on 10.04.1996 for Rs.3,50,000/- in favour of the appellant and in view of the fact that the appellant had been pursuing the case to recover the amount from the year 1996,I deem it just and appropriate to invoke the powers u/s 357(1)(b) Cr.P.C. and award Rs.4,00,000/- (Rupees four lakhs only) to the appellant towards compensation from out of the fine payable by the accused.