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IN THE COURT OF THE I ADDITIONAL SESSIONS JUDGE : HYDERABAD.
PRESENT : SRI. D. RAMAKANTH,
I ADDITIONAL SESSIONS JUDGE,
HYDERABAD.
Tuesday, this the 15 th Day of April, 2025.
Crl. Appeal No. 451 of 2023
From which court this Appeal is VIII Metropolitan Magistrate, Hyderabad.
preferred
Case Number in that Court C.C.No. 10569 of 2022
Criminal Appeal NumberCrl. Appeal No.451 of 2023
Name and Description of the Uppala Nagalingam, S/o. Purushotham, R/o.
Appellant/AccusedPlot No.71/8, Temple Rock Enclave, Tadbund,
Secunderabad. Hyderabad-500 004..
Name and Description of the Sasidhar Godawarthy, S/o. Seeta Ramacharyulu,
Respondent/ComplainantFlat No.218, Tower-2, Emami Swan Lake
Apartments, Sangeeth Nagar, Kukatpally,
Hyderabad-500 072..
The Law under which the Appellant The Accused is found guilty, convicted under was convicted and the sentence Sec. 255(2) of Cr.P.C for the offence under Sec.
imposed138 of N.I. Act and sentenced to pay a fine of
Rs.75,02,000/- and in default, to undergo Simple
Imprisonment for a period of Two Months. Out of the fine amount of Rs.75,02,000/-, an amount of Rs.2,000/- shall be remitted to the State and remaining amount of Rs.75,00,000/- shall be paid to the Complainant towards compensation under Sec. 357 (1) (b) Cr.P.C.
Whether Confirmed, modified or The Criminal Appeal is allowed in part. The reversedJudgment of conviction of the Appellant/
Accused for an offence under Sec. 138 of N.I.
Act as recorded in C.C. NI. No. 10569 of 2022 by the VIII Metropolitan Magistrate, Hyderabad is confirmed and upheld. However, the 2 of 25Judgment in Crl.A.451/2023
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judgment to the extent of sentence as imposed, is set aside. The matter is remanded back to the trial court to hear the Appellant/Accused and
Respondent/Complainant afresh on sentence part and to pass appropriate judgment in that regard in accordance with law. The Appellant/
Accused and the Respondent/Complainant are directed to appear before the trial court along with their respective counsels on 01-05-2025 for the said limited purpose. On such appearance, the trial court shall hear and dispose the case in accordance with law, at the earliest.
Date or on which
Presentation of Appeal 12-10-2023 Filing of Appeal12-10-2023 Notice issued to Respondent to appear17-10-2023 Whether on bail, if so, bail bond- Respondent ordered to appear20-11-2023 Hearing of Appeal06-03-2025 and 02-04-2025 Judgment15-04-2025
This Criminal Appeal is coming before me for final hearing in the presence of M/s.
Sri S.V. Suresh, Counsels for the Appellant/Accused and Sri Raja Sekhara Rao Salvaji,
Counsel for the Respondent/Complainant and upon perusal of the material papers on record and the case having been heard and stood over for consideration till this day, this
Court delivered the following:-
J U D G M E N T
The challenge in the present Criminal Appeal is to the Judgment of conviction passed by the VIII Special Magistrate, Hyderabad in C.C. No.10569/2022, Dated: 15-09- 2023, where under the Accused was convicted for the offence under Sec. 138 of The
Negotiable Instruments Act, 1881 (herein after referred as N.I. Act for brevity).
2.The parties are referred as arraigned before the trial court for convenience.
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3.Before going into the Complainant’s evidence, it is appropriate to see what is the background of the Complainant’s case which in brief is as under:
(a) The Complainant and Accused are acquainted with each other since long time. With such acquaintance, during March, 2013, the Accused approached the Complainant and borrowed hand loan of Rs.15,00,000/-. Afterwards, the Accused requested more money for his needs and the Complainant during the period between March, 2013 to December, 2016, had lent Rs.50,00,000/- to the Accused under various bank and cash payments. The Complainant requested the Accused to repay loan amount, upon which they both entered into a Debt Settlement Agreement dated: 28-07-2017 and the same was actually executed on 29-07-2017. The said Agreement also contains details of cheques issued towards repayment of total outstanding debt and it was duly signed by the Accused and his wife. The Accused had also handed over three promissory notes dated: 30-07-2017 for Rs.15,00,000/- each.
(b) Later the Accused requested the Complainant for extension of time and to return said cheques issued while entering into Debt Settlement Agreement. On such request, the Complainant returned the said cheques to the Accused. At that juncture, the Accused issued three fresh cheques bearing Nos. 463753, 463754 and 463755
dated: 02-07-2018 for Rs.15,00,000/- each drawn on Canara Bank, Kundanbagh
branch, Hyderabad for a total amount of Rs.45,00,000/-. When the Complainant presented said cheques for collection through his account with Indian Overseas
Bank, Jubilee Hills branch, Hyderabad on 17-07-2018, they were dishonoured with an endorsement “Funds Insufficient” vide cheque return memos dated: 18-07-2018.
The Complainant got issued a demand notice to the Accused on 06-08-2018 and the same was received by the Accused on 10-08-2018. Even after receiving the demand notice, the Accused neither paid the amount nor replied the notice and thus, committed the offence under Sec. 138 of N.I. Act. Thus, the Complainant sought to punish the Accused and to award compensation under Sec. 357 Cr.P.C.
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4.The complaint as filed by the Complainant was taken cognizance by the XVII
Additional Chief Metropolitan Magistrate, Hyderabad against the Accused for the offence
under Sec. 138 of N.I Act and initially numbered as C.C.No.829/2018. Later the case was transferred to the X Special Magistrate, Hyderabad and renumbered as C.C.No. 24/2019.
Afterwards, the case is transferred to VIII Metropolitan Magistrate, Hyderabad and renumbered as C.C.NI. No.10569/2022 for disposal as per law.
5.On service of summons, the Accused entered into appearance and as he denied the accusation for the offence under Sec. 138 of N.I. Act, the trial court has proceeded with the trial of the case. During trial, the Complainant has examined P.Ws.1 and 2 and got marked
Exs.P1 to P15. On closure of the Complainant’s evidence, the Accused was examined under Sec. 313 Cr.P.C in respect of the incriminating material appearing in the evidence of the Complainant and the Accused reported that he got no defence evidence.
6.After hearing both sides and on considering the material on record and evidence, the trial court has found the Accused guilty, convicted him under Sec. 255 (2) of Cr.P.C for the offence under Sec. 138 of N.I. Act and sentenced to pay a fine of Rs.75,02,000/- and in default, to undergo Simple Imprisonment for a period of Two Months. It is further ordered that out of the fine amount of Rs.75,02,000/-, an amount of Rs.2,000/- shall be remitted to the State and remaining amount of Rs.75,00,000/- shall be paid to the Complainant towards compensation under Sec. 357 (1) (b) Cr.P.C.
7.Being aggrieved by the judgment of conviction, the Appellant/Accused is thus,
before this Court seeking to set aside the judgment of trial court on following grounds:
(a) The judgment of the trial court in convicting the Accused is erroneous and it is contrary to law, weight of evidence and probabilities of facts of the case.
(b) The trial court failed to appreciate the evidence properly and passed its Judgment 5 of 25Judgment in Crl.A.451/2023
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on conjuctures and surmises.
(c) The trial court has failed to appreciate the defence of the Accused and simply accepted the case of the Complainant.
(d) The trial court has failed to look into Sec. 146 of N.I. Act as it mandates that only on production of bank slip or memo containing the official mark denoting that the cheque has been dishonoured, the court shall presume the fact of dishonour of such cheque. The cheque return memos under Exs.P4 to P6 does not contain the official seal or mark as per said provision. Thus, the trial court ought to have held that the cheques are not dishonoured and the evidence of P.W.2 is having no value.
(e) The trial court has failed to note that the P.W.1 deposed that on 28-07-2017, the
Accused and his wife executed the Debt Settlement Agreement in his favour and on that day itself, the Accused was due an amount of Rs.50,00,000/-. The cheques under Exs.P1 to P3 are showing their total value as Rs.45,00,000/- and there is no explanation regarding remaining Rs.5,00,000/-. The trial court has failed to discuss this issue properly. The Complainant has failed to explain reason for not including said Rs.5,00,000/- in terms of Debt Settlement Agreement (Ex.P10) and the same is fatal in view of the decisions in Kumar Exports Vs. Sharma Carpets (2009) 2 SCC 513, Basalingappa Vs. Mudibasappa (2019) 5 SCC 418 and Dashrathbhai
Trikambhai Patel Vs. Hitesh Mahendrabhai Patel (2023) 1 SCC 578.
(f) The trial court has failed to note that the P.W.1 admitted that the Clause No.8 of
Ex.P10 is true and binding and that details of 4 cheques were shown in Annexure-B of Ex.P10. The trial court ought to have held that said 4th cheque was honoured as there is no mention about that cheque in the Complaint and thus, it must be treated as part payment.
(g) The trial court has failed to note that the P.W.1 further deposed that after December, 2017, cheques as mentioned in Annexure-B of Ex.P10 were not presented and the same were taken as collateral security.
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(h) The trial court has failed to consider the evidence of P.W.1, who stated that his complaint is based on Exs.P12 to P14 which were taken on 30-07-2017 towards
additional security and no amounts were paid to the Accused on that date. Thus,
there is no cause of action to file the Complaint.
(i) The trial court has erroneously observed that the promissory notes were executed as acknowledgment of previous debt and it is the basis for filing the Complaint and failed to follow the decision in Dashrathbhai (supra).
(j) The trial court has failed to note that any modification of the Agreement (Ex.P10) is impemissible. The cheques mentioned in Ex.P10 were not presented, but 3 other cheques i.e., Exs.P1 to P3 were presented by Complainant. It is a clear violation of terms of Ex.P10 and against the decision in Dashrathbhai (supra). Thus, the
Appellant has sought to set aside the impugned Judgment to allow his Appeal.
8.Heard both sides at length. Both sides also filed their Written Arguments in support of their respective contentions. During the course of hearing of this Appeal, the Accused has produced the certified copy of the plaint in O.S. No.12/2022 pending on the file of XV
Additional District Judge, Kukatpally and it is marked as Ex.D1 with consent of both
sides, as filing this suit by the Complainant on the strength of promissory notes (Exs.P12 to P14) for recovery of Rs.77,85,000/- against the Accused, is not in dispute.
9.The learned counsel for the Appellant/Accused has reiterated the grounds of appeal in the Written Arguments and raised the following contentions.
(a) The cheque dishonour memos are not satisfying the requirements of Sec. 146 of
N.I. Act and thus, there is no evidence to prove the dishonour of cheques.
(b) The Annexure-B contained in Ex.P10 shows the numbers of distinct four cheques and they were not presented by the Complainant.
(c) As per the Complaint, only 3 cheques for Rs.15,00,000/- each, dated: 02-07-2018 7 of 25Judgment in Crl.A.451/2023
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were issued. Such modification is against Clause No.5 of Ex.P10. There is no new document to show about issuing new cheques (Exs.P1 to P3) and depositing these new cheques is against the terms of Ex.P10.
(d) The cheques as presented were not those as mentioned in Annexure-B of Ex.P10 and only those cheques as referred in Annexure-B can be presented.
(e) As per the Complaintant, he filed the Complaint for Rs.45,00,000/- and the Debt
Settlement Agreement’s value is Rs.50,00,000 and there is no explanation regarding the remaining amount of Rs.5,00,000/-.
(f) As per Clause No.4 of Ex.P10, there shall be no interest during the period from the date of Ex.P10 till the date of settlement. Therefore, the claim of interest as made by the Complainant is invalid.
(g) The Complainant has failed to file any paper showing any agreement regarding the rate of interest and thus, the Complaint is not maintainable.
(h) In the promisory notes dated: 30-07-2017, the column for rate of interest is kept blank and they shows that the amounts were lent on the date of promisory notes i.e., on 30-07-2017. In fact, no amounts were lent by the Complainant to the Accused on that day. When no consideration was passed on 30-07-2017, the Complaint cannot be filed basing on the said promisory notes and it is liable to be dismissed.
(i) The Accused has successfully rebutted the presumption about passing consideration as the Complainant had stated that the promisory notes were executed on 30-07- 2017 and no consideration was passed thereunder. When no consideration was passed under the promisory notes, the Complaint must fail, in view of the decisions in Kumar Exports and Basalingappa (supra).
(j) Since the cheque dishonour memos are not satisfying the requirements of Sec. 146 of N.I. Act, it is clear that cheques under Exs.P1 to P3 are deemed not dishonoured, in view of the decision in Mandvi Cooperative Bank Ltd. Vs. Nimesh B. Thakore, (2010) 3 SCC 83.
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(k) As per Ex.P10, 4 cheques as shown in Annexure-B were issued. The Complaint is filed for Rs.45,00,000/- and it does not disclose about remaining amount of Rs.
5,00,000/- covered under the cheque No. 956858, dated: 30-12-2017. As per the
Complaint, the cheques as mentioned in Annexure-B were taken back and 3 fresh cheques were issued and it will not constitute a legally enforceable debt in view the decisions in Dashrathbhai (supra) and Dattatraya Vs. Sharanappa, (2024) 8 SCC 573. Thus, the learned counsel for the Accused sought to allow the Criminal Appeal and to acquit the Accused.
10.The learned counsel for the Complainant has contended that the trial court has appreciated the facts of the case in proper manner and recorded the conviction of the
Accused and there are no merits in the contentions of the Appellant. The learned counsel
for the Complainant has reiterated the averments of Complaint in the Written Arguments
and raised the following contentions.
(a) Not only the Accused, but his wife U.N.Rani also signed the Debt Settlement
Agreement on 29-07-2017.
(b) The cheques which were issued while executing the Debt Settlement Agreement were later taken back by the Accused and the Accused had issued 3 fresh cheques for Rs.15,00,000/- each, dated: 02-07-2018.
(c) Since the cheque return memos under Exs.P4 to P6 are computer generated, they need no signature. Even otherwise, the Chief Manager of the Complainant’s Bank, which issued the Exs.P4 to P6 was examined as P.W.2. The P.W.2 has clearly stated that cheques under Exs.P1 to P3 were returned due to insufficient funds in the account of the Accused and that Exs.P4 to P6 (cheque return memos) were issued by their Bank and as they are computer generated, they require no signature.
(d) Apart from this, the Statement of Account (Ex.P15) is clearly showing the return of cheques under Exs.P1 to P3. Since the Chief Manager of Complainant Bank was 9 of 25Judgment in Crl.A.451/2023
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examined as P.W.2, the Accused cannot rely on Sec. 146 of N.I. Act. The said provision only speaks about raising presumption in respect of a cheque dishonor memo and there is no particular form of cheque return memo and even if it does not bear official stamp of the Bank, it is not invalid in view of the decision in Guneet
Bhasin Vs. State of NCT of Delhi, 2022 SCC OnLine Del 3967.
(e) Out of the total loan amount of Rs.50,00,000/-, the Accused has repaid Rs.
5,00,000/-, through a cheque issued in name of Complainant’s wife. Thus, 3 cheques under Exs.P1 to P3 for the remaining amount of Rs.45,00,000/- were given after deducting said payment of Rs.5,00,000/-. During December, 2017, the
Accused has requested the Complainant for extension of time and taken back the old cheques from the Complainant and issued 3 fresh cheques for Rs.15,00,000/- each, dated: 02-07-2018. The Accused has handed over 3 promissory notes for
Rs.15,00,000/-, each dated: 30-07-2017 towards additional security.
(f) The contention that the Debt Settlement Agreement does not permit any modification of the agreement unless agreed by the both parties, is incorrect. The
Accused has no where contended that the cheques were not issued by him and he never disputed the signatures therein. When the Accused has issued cheques towards satisfaction of a subsisting liability, he cannot raise any hyper-technical issues. The Accused has never pleaded that he has not issued the cheques (Exs.P1 to P3) and it is not his case that he has paid back the debt.
(g) In the Additional Written Arguments, it is contended that the Complainant has filed a civil suit in O.S. No.12/2022 on the file of the III Additional District and Sessions
Judge, Medchal-Malkajgiri District at Kukatpally and the said suit was filed
subsequently on 19-01-2022. There is no bar to file a civil suit apart from launching the criminal prosecution under Sec. 138 of N.I. Act simultaneously, in view of the decision in D.Purushotthama Reddy Vs. K.Sathish, (2008) 8 SCC 505.
(h) The Accused has not pleaded that he had not executed the Debt Settlement 10 of 25Judgment in Crl.A.451/2023
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Agreement (Ex.P10). When the Accused did not deny issuance of cheques (Exs.P1 to P3) and never claimed that there is no subsisting debt and had never shown that he repaid the debt, it is clear that the Accused has failed to rebut the presumptions under Secs. 118 and 139 of N.I. Act.
(i) The counsel for the Complainant has relied upon the below mentioned decisions and sought to dismiss the Appeal and to confirm the Judgment of the trial court.
K.Bhaskaran Vs. Sankaran Vaidhyan Balan, (1999) 7 SCC 510.
Electronics Trade and Technology Development Corpn, Ltd., Vs. Indian
Technologists and Engineers (Electronics) Pvt. Ltd., (1996) 2 SCC 739.
Dashrath Rupsingh Rathod Vs. State of Maharashtra.
Dashrathbhai Trikambhai Patel Vs. Hitesh Mahendrabhai Patel, (2023) 1
SCC 578.
P.Rasiya Vs. Abdul Nazer, (2022) SCC Online SC 1131.
Kishan Rao Vs. Shankargouda, (2018) 8 SCC 165.
11.After hearing both sides, the following points emerge for consideration:
(1) Whether the Complainant has satisfied the requirements under Sec. 138 of N.I.
Act to raise presumptions under Secs. 118 and 139 of N.I. Act against the
Accused ?
(2) Whether the Accused has rebutted the presumptions raised against him ?
(3) Whether the conviction judgment in C.C. NI. No. 10569/2022, dated: 15-09-2023 passed by the VIII Metropolitan Magistrate, Hyderabad needs any interference by this Court ?
12. Point Nos.1 and 2: As per the provisions of Secs. 139 and 118 of N.I. Act, in every case for the offence under Sec. 138 of N.I. Act, where the foundational basis in showing the issuance of cheque by the Accused is established, the Court is duty bound to raise a 11 of 25Judgment in Crl.A.451/2023
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presumption as to the issuance of the cheque in discharge of a legally enforceable debt or liability, dischargeable by the Accused. It is the settled law, that said presumptions are rebuttable in nature. Therefore, where ever the Complainant produces basic evidence in showing the issuance of dishonoured cheque in his favour by the Accused in discharge of any legally enforceable debt or liability, and complies the provisions of Sec. 138 of N.I.
Act, i.e., presenting the cheque for collection in time, obtaining return memo, issuance of demand notice and showing the non compliance of such demand notice, it is deemed that the Complainant has discharged his initial burden or duty. When such initial burden is discharged by the Complainant, then it is for the Accused to rebut the said presumptions.
13.As per the law as settled by the Hon’ble Supreme Court in catena of decisions, the
Accused may rebut the said presumptions by any or more of the following modes.
a) By entering into the witness box and by giving oral evidence.
b) By producing documentary evidence on his behalf.
c) By examining any other witness.
d) By relying upon the defects in the complaint or in the oral or documentary evidence of the Complainant, and
e) By relying upon the legal provisions or the precedents.
14.The settled legal position also make it clear that if the Accused rebuts the
Complainant’s case by availing one or more of above modes successfully, then the
Complainant is no longer entitled for the benefit of presumptions under Secs. 118 and 139 of N.I. Act. When such presumptions are not available to the Complainant, then the Court has to examine the whole case by appreciating the evidence available on record, but not on the basis of presumptions. This is what the Full Bench of our Hon’ble High Court has held in G.Vasu Vs. Yaseen Sifuddin Quadri, AIR 1987 AP 139 (FB), which was later quoted with approval by the Hon’ble Apex Court in M.S. Narayana Menon Vs. State of Kerala, 12 of 25Judgment in Crl.A.451/2023
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(2006) 6 SCC 39.
15.It is the settled law that the Appellate Court, while deciding the Criminal Appeal is duty bound to re-appreciate the evidence and to decide the appeal while taking into consideration of the contentions as raised in the appeal. In the light of above enumerated principles, the present Criminal Appeal is to be evaluated.
16.To prove his case, the Complainant has examined himself as P.W.1 and further examined one Mr. D.Radha Krishna, the Chief Manager, Indian Overseas Bank as P.W.2 and relied upon Exs.P1 to P15.
17.The Complainant/P.W.1 has reiterated Complaint averments in chief examination.
In cross examination, he stated that he was drawing a salary of Rs.1,00,000/- p.m during the year 2013 and that the Accused asked for loan during January/February, 2013. He stated that the Accused signed the Ex.P10 on 28-07-2017 and his wife/U.Nirmala Rani signed it on 29-07-2017. He admitted that 4 cheques of which the details are mentioned in
Annexure-B of Ex.P10 were not presented by him. He admitted that no person signed the promissory notes (Exs.P10 to P12) as witness and that they were taken as additional security. He admitted that as per contents of Exs.P12 to P14, the amounts of Rs.
15,00,000/- each were received by the Accused on 30-07-2017 and that no amounts were paid to the Accused on said date.
18.Dasari Radha Krishna, P.W.2 working as Chief Manager, Indian Overseas Bank,
Jubilee Hills branch, Hyderabad has stated that the Complainant is holding Savings Bank
Account vide No.157001000009085 in their Bank and on 17-07-2018 presented 3 cheques vide Nos. 463753, 463754 and 463755, dated: 02-07-2018 for Rs.15,00,000/- each for collection and they were returned dishonoured on 18-07-2018 due to insufficient funds 13 of 25Judgment in Crl.A.451/2023
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and thus, 3 cheque return memos, dated: 18-07-2018 which are computer generated were issued and they does not require any signature. The P.W.2 produced the Statement of
Account (Ex.P15) of the Complainant. In cross examination, the P.W.2 admitted that the cheques under Exs.P1 to P3 were sent for collection on 17-07-2018 and that the Exs.P4 to
P6 does not contain the seal and signature of the Authorized person of the Bank.
19.To prove his case, the Complainant has relied upon Exs.P1 to P15.
a) Exs.P1, P2 and P3 are the cheques bearing Nos. 463753, 463754 and 463755 dated:
02-07-2018 for Rs.15,00,000/- each drawn on Canara Bank, Kundanbagh branch,
Hyderabad, issued in favour of the Complainant. These cheques are containing the signatures of the Accused. The Accused has nowhere denied the signatures appearing on Exs.P1 to P3 and stated that they does not pertain to his Bank account.
b) Exs.P4 to P6 are the cheque return memos, dated: 18-07-2018 issued by the Bank of the Complainant stating that when cheques under Exs.P1 to P3 were presented for collection on 17-07-2018, they were returned on 18-07-2018 due to insufficient funds in the account of the Accused. Admittedly, Exs.P4 to P6 are not containing the official seal or stamp of the Bank or containing the signature of the person who issued them. However, Exs.P4 to P6 are containing a note that they are computer generated and thus, does not require signature.
c) Ex.P7 is the demand notice, dated: 06-08-2018 issued by the Complainant to the
Accused. It shows that the Accused has borrowed Rs.50,00,000/- during the period from March, 2013 to December, 2016 from the Complainant and later both parties entered into a Debt Settlement Agreement, dated: 28-07-2017, where under the
Accused along with his wife undertook to discharge the debt and mentioned the details of 4 cheques and afterwards, the Accused has taken back that cheques and issued 3 fresh cheques dated: 02-07-2018 for Rs.15,00,000/- each and when said cheques (Exs.P1 to P3) were presented for collection by the Complainant on 17-07- 14 of 25Judgment in Crl.A.451/2023
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2018, they were returned on 18-07-2018 due to insufficient funds in the account of the Accused. Thus, the Accused was called upon to pay Rs.45,00,000/- covered under the dishonored cheques within 15 days or else to face legal action.
d) Ex.P8 is the Postal Receipt, dated: 08-08-2018. It shows about sending the Demand
Notice to the Accused by the Complainant by Registered Post on 08-08-2018.
e) Ex.P9 is the Postal Track Report. It is showing about the service of Demand Notice posted under Es.P8 to the Accused on 10-08-2018.
f) Ex.P10 is the Debt Settlement Agreement, dated: 28-07-2017. Its contents are showing that the Accused and his wife have borrowed Rs.50,00,000/- through cash and bank payments during the period between March, 2013 to December, 2016 and they undertook to settle the entire debt. As per the terms of Ex.P10, the Accused and his wife acknowledged the debt of Rs.50,00,000/- payable to the Complainant and agreed to repay the debt on or before 30-12-2017 and till that date, the debt amount is considered to be inclusive of interest. It is mentioned in Ex.P10 that no modifications of the agreement shall be valid, unless agreed upon by both parties in writing. Ex.P10 is signed by the Accused, his wife Uppala Nirmala Rani and the
Complainant. In Annexure-B attached to Ex.P10, the details of 4 cheques vide Nos.
934742 to 934744 for Rs.15,00,000/- each and 956858 for Rs.5,00,000/- are given.
g) Ex.P11 is the Bank Statement pertaining to the Complainant’s Account maintained with Indian Bank, Kondapur Branch, Hyderabad. This document is showing the payment of amounts by the Complainant to the Accused on various dates. It shows that the Complainant has paid Rs.7,00,056/- on 15-02-2013, Rs.4,16,000/- on 16- 03-2013, Rs.5,05,000/- on 26-06-2014, Rs.1,15,000 on 18-03-2013, Rs.55,000/- on 18-03-2013 and Rs.4,00,029/- on 27-12-2016 to the Accused.
h) Exs.P12, P13 and P14 are the promissory notes, dated: 30-07-2017 executed by the
Accused in favour of the Complainant for Rs.15,00,000/- each. These promissory notes are showing that the Accused has promised to pay the said amounts to the 15 of 25Judgment in Crl.A.451/2023
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Complainant and they are containing the signatures of the Accused. The Accused has nowhere denied that the said promissory notes were signed and issued by him.
i) Ex.P15 is the Statement of Account pertaining to the Complainant of his account maintained with Indian Overseas Bank, Jubilee Hills branch, Hyderabad. This document is showing that the cheques under Exs.P1 to P3 were returned unpaid on 18-07-2018 due to insufficient funds.
20.As per the Complainant, the Accused borrowed Rs.50,00,000/- from him between
March, 2013 to December, 2016, under several transactions and after repeated demands, the Accused along with his wife has executed a Debt Settlement Agreement (Ex.P10) and later, the Accused has also executed 3 promissory notes for Rs.15,00,000/- each, dated: 30- 07-2017. It is the case of the Complainant that the Accused has approached him and taken back 4 cheques which were mentioned in Ex.P10 and in lieu of those cheques, issued 3 fresh cheques as in Exs.P1 to P3 for Rs.15,00,000/- each and when he presented them for collection on 17-07-2018, they were returned dishonoured on 18-07-2018, due to insufficient funds in the account of Accused and thus, he got issued the Demand Notice to the Accused on 06-08-2018 and though the Accused received the same on 10-08-2018, has neither complied nor replied the notice.
21.The Ex.P10 which is the Debt Settlement Agreement is clearly showing that the
Accused and his wife/U.N.Rani acknowledged the debt of Rs.50,00,000/- payable to the
Complainant and they undertook to repay that debt by 30-12-2017. The Exs.P12 to P14 which are the promissory notes are showing that the Accused has executed them on 30-07- 2017 in favour of the Complainant promising to pay Rs.15,00,000/- each thereunder.
When Exs.P10 and P12 to P14 are read together, it is clear that no amounts were lent either on the date of Ex.P10 or on the date of Exs.P12 to P14 by the Complainant to the
Accused. However, it is the specific case of the Complainant that the Ex.P10 was executed 16 of 25Judgment in Crl.A.451/2023
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towards the acknowledgment of past debt and the Clause No.1 contained in Ex.P10 is confirming the same. There is no bar in law that a promissory note cannot be executed in respect of past debt. It is pertinent to note that the Accused has nowhere denied the signatures on Ex.P10 or on Exs.P12 to P14. Thus, from combined reading of Exs.P10, P12 to 14, it is clear that the Accused has borrowed amounts to the tune of Rs.50,00,000/- from the Complainant prior to the date of Ex.P10 and while acknowledging, he undertook to repay the debt on or before 30-12-2017.
22.The Bank Account Statement marked as Ex.P11 is also throwing light on the case of the Complainant. It shows that the Complainant has transferred/paid various amounts to the Accused during the period between 2013 to 2016. This document itself depicts the payment of more than 22 lakh rupees by way of bank payments to the Accused and it is the specific case of the Complainant that the Accused has also borrowed amounts in cash from him on several other occasions. Thus, from Exs.P10 to P14, it is very clear that the
Accused has indebted to the Complainant to the tune of Rs.50,00,000/- as claimed by him.
23.Exs.P1 to P3/cheques are clearly showing that the Accused has issued them in favour of the Complainant on 02-07-2018. The Accused has no where denied the signatures contained on Exs.P1 to P3 and it is not his case that the said cheques does not pertain to his Bank Account. The Accused has nowhere explained how these cheques/
Exs.P1 to P3 went into the hands of the Complainant. When the Accused has not denied his signatures on Exs.P1 to P3 and as Exs.P10 to P14 are showing that the Accused has indebted to the tune of Rs.50,00,000/- to the Complainant, I hold that the Complainant is entitled for the benefit of presumptions under Secs. 118, 139 of N.I. Act as to the passing of consideration and as to the issuance of the cheques under Exs.P1 to P3 in discharge to a legally enforceable debt/liability. When the Complainant has discharged his initial burden and in view of the said presumptions under Secs. 118 and 139 of N.I. Act, now it is for the 17 of 25Judgment in Crl.A.451/2023
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Accused to rebut those presumptions.
24.The Accused on whom the burden to rebut the said presumptions is casted, no where denied the signatures on Exs.P1 to P3, P10, P12 to P14. The Accused failed to offer any explanation how the cheques under Exs.P1 to P3 went into the hands of Complainant.
Though the Accused has subjected the P.Ws.1 and 2 to a detailed cross examination, no useful material could be elicited to discredit their version. Admittedly, the cheques under
Exs.P1 to P3 are not those cheques which were mentioned in Ex.P10, but it is the specific case of the Complainant that the Accused has taken back the cheques mentioned in Ex.P10 and substituted them with 3 new cheques as in Exs.P1 to P3. Though it is contended that the substitution of cheques is against the terms of Ex.P10, I am unable to accept said contention for the reason that the Ex.P10 itself is not a document where under the amounts were lent and it is only a document executed by the Accused acknowledging his liability.
Even otherwise, there are 3 separate promissory notes as in Exs.P12 to P14, executed by the Accused in favour of the Complainant. Therefore, the claim of the Complainant under these new cheques under Exs.P1 to P3 is perfectly valid.
25.The cheque return memos (Exs.P4 to P6) are clearly showing that the cheques under Exs.P1 to P3 were presented for collection on 17-07-2018 and they were dishonoured on 18-07-2018 due to insufficient funds in the account of the Accused.
Admittedly, the Exs.P4 to P6 are not containing the seal or stamp of the Bank issued them or the signatures of any its Authorized Officer. However, the evidence of P.W.2, who is the
Chief Manager of the Banker of the Complainant has confirmed about the presenting the cheques under Exs.P1 to P3 for collection and their dishonour.
26.The learned counsel for the Accused has laid emphasis on the provisions of Sec.
146 of N.I. Act and contended that the Exs.P4 to P6 are not containing the Bank seal or 18 of 25Judgment in Crl.A.451/2023
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stamp or the signature of its Officer and thus, no presumption under Sec. 146 of N.I. Act can be drawn. In this regard, it is pertinent to note few legal aspects. Secs. 138 to 142 were added to Negotiable Instruments Act, 1881 in the year 1988, where under the dishonour of cheque was recognized as a penal offence. Prior to 1988, the dishonour of cheque was not a penal offence under Negotiable Instruments Act. The provisions of Negotiable
Instruments Act, does not prescribe any specific mode or form to show/prove the dishonour of cheque. There was a debate in legal circles regarding the aspect of proving the dishonour of cheques. Due to this, it was a common practice to summon the Bankers to give evidence before the courts to substantiate the dishonour of cheques. This has caused hardship to the Bankers as they were frequently summoned to give evidence before the courts. Noticing this practical issue, the legislature has thought fit to give evidentiary value to the contents of a cheque dishonour intimation or memo and thus, the provision in the shape of Sec. 146 of N.I. Act was added in the Negotiable Instruments Act with effect from 06-02-2003.
27.Under the Negotiable Instruments (Amendment) Act, 2003, Secs. 143 to 147 were added into the statute book and among them, Sec. 146 is the provision, where under a rule of presumption is incorporated regarding the cheque dishonour intimation or memo issued by the Banker with their seal and stamp. Even prior to 06-02-2003 also there were issues regarding cheque dishonour memos. It is to note that even a cheque can be returned unpaid when presented across the Bank counter and oral evidence to prove the factum of dishonour is also admissible, if no cheque dishonour intimation/memo is issued by the banker. Sec.146 of N.I. Act only provides that when a cheque dishonour memo is issued by the Banker with their seal/stamp and signature, then it is presumed to be correct until the contrary is proved. Not having such seal or stamp at the most would be depriving the
Complainant of the benefit of presumption under Sec. 146 of N.I. Act and nothing more and dishonour of cheque can be proved by any other mode as opted by the Complainant.
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Here, the evidence of P.W.2 and the contents of Ex.P15 are clearly substantiating the dishonour of cheques under Exs.P1 to P3. Therefore, I see no merit at all in the contention of the learned counsel for the Appellant and the same is accordingly rejected.
28.The learned counsel for the Accused has contended that the Ex.P10 reads that the
Accused is liable to pay Rs.50,00,000/- to the Complainant for which 3 cheques for Rs.
15,00,000/- each and a cheque for Rs.5,00,000/- was issued and as per the Complainant, later those 3 cheques for Rs.15,00,000/- were taken back and replaced with new cheques/
Exs.P1 to P3 for Rs.15,00,000/- each and that the Complainant has failed to account for the 4th cheque and for the amount of Rs.5,00,000/- and thus, the Demand Notice (Ex.P7) is invalid and there is no legally enforceable debt dischargeable by the Accused under Ex.P7.
To support this contention, he relied upon the decision in Dasharathbhai (supra).
29.The said contention of the learned counsel for the Accused is totally a misconceived one. As per the decision in Dasharathbhai (supra), when a cheque is given for a specified amount and subsequently if part payment in respect of that cheque amount is made, then the Demand Notice is to be issued only for the remaining outstanding due amount, but not for whole cheque amount and in such cases, only the remaining balance amount will be the legally enforceable debt/liability, but not the entire amount mentioned in the cheque.
Here, present case facts are totally different. There are 3 cheques for Rs.15,00,000/- each and thus, the amount that was claimed by the Complainant is only Rs.45,00,000/-, but not the entire Rs.50,00,000/- as mentioned in Ex.P10. It is not the case of the Accused that he made any part payment in respect of the amounts covered under the dishonoured cheques under Exs.P1 to P3. When there is no such part payment made by the Accused against the amounts mentioned in Exs.P1 to P3 and even if that Rs.5,00,000/- is paid by the Accused, it would be a separate payment independent of the amounts mentioned in Exs.P1 to P3.
Therefore, I hold that the decision in Dasharathbhai (supra) is not applicable to the facts 20 of 25Judgment in Crl.A.451/2023
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of this case. In view of the above elaborate discussion, the other decisions as relied by the
Accused are of no avail to him.
30.During the course of hearing of this Criminal Appeal, the Accused has produced the certified copy of plaint in O.S. No.12/2022 pending on the file of XV Additional District
Judge, Kukatpally marked as Ex.D1. The Ex.D1 is marked during hearing of this appeal
on behalf of Accused with consent of both sides as filing the suit by the Complainant basing on the promissory notes under Exs.P12 to P14 for recovery of Rs.77,85,000/- against the Accused is not in dispute. The Ex.D1 shows that the Complainant has filed the said suit for recovery of money against the Accused on the strength of Exs.P12 to P14 for
Rs.77,85,000/-. It is contended by the Accused that the Complainant has filed said suit as an after thought as it was pointed out during the time of recording the evidence before the trial court. It is the settled law that non filing of Civil suit at the initial stage would not entail in drawing any adverse inference. Therefore, I am unable to accept the contention of the learned counsel for the Accused in this regard.
31.Ex.P7/Demand Notice was served on the Accused on 10-08-2018 and it has remained not complied by the Accused. The Accused on whom the burden is casted to rebut the presumptions under Secs. 118 and 139 of N.I. Act, has failed to discharge the reverse burden and to rebut the case of the Complainant. From the documentary evidence under Exs.P1 to P15, the Complainant has clearly made out a case against the Accused for the offence under Sec. 138 of N.I. Act. Thus, the Complainant has proved his case against the Accused for an offence under Sec. 138 of N.I. Act and on the other hand, the Accused has failed to rebut the case of the Complainant in any manner. Thus, the guilt of the
Accused is established for the offence under Sec. 138 of N.I. Act.
32.This Court has given thoughtful consideration as to the findings recorded by the 21 of 25Judgment in Crl.A.451/2023
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learned trial Judge. On careful perusal of the entire judgment, it appears that the trial court has evaluated the pleadings and evidence in proper lines and recorded the findings on having sufficient and cogent material. None of the findings as recorded by the trial judge are tainted or perverse, as contended by the Appellant/Accused. Therefore, I see no merit in the contentions of the Accused and there are no grounds to interfere with the judgment of conviction as recorded by the trial court. Thus, I see no merit in the present appeal against the recording of conviction of the Accused by the trial Court. Point Nos.1 and 2 are answered accordingly.
33. Point No.3: On perusal of the impugned judgment, it shows that the trial court has found the Accused guilty of the offence under Sec. 138 of N.I. Act and convicted him under Sec. 255 (2) Cr.P.C., and sentenced him to pay fine of Rs.75,02,000/- and in default, to suffer Simple Imprisonment for a period of Two Months and out of the said fine, an amount of Rs. 2,000/- is ordered to be remitted to the State and to pay remaining amount of Rs.75,00,000/- to the Complainant towards compensation under Sec.357 (1) (b) Cr.P.C.
34.At this stage, it is pertinent to refer the decisions of the Hon’ble Supreme Court in
K.Bhaskaran Vs. Sankaran Vaidhyan Balan, (1999) 7 SCC 510 and Pankajbhai
Nagjibhai Patel Vs. State of Gujarat, (2001) 2 SCC 595, wherein the Hon’ble Apex Court has held that as per Sec. 29 (2) of Cr.P.C, a Magistrate is competent to impose the fine amount not exceeding Rs.5000/- (sic Rs.10,000/- in view of subsequent amendment to
Cr.P.C.). It is to note that said decisions of the Hon’ble Apex Court still holds the field. In view of the said decisions, though Sec. 138 of N.I. Act, empowers the court to impose the fine to the tune of twice the amount covered under the dishonoured cheque, the said provision is again subject to the provisions of Sec. 29 (2) Cr.P.C., as there is no ’non obstante’ clause in Sec. 138 of N.I. Act.
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35.As per Sec. 138 of N.I. Act, the Magistrate is competent to impose the sentence on the Accused to suffer the imprisonment for a term up to 2 years or to pay fine which may extend to twice the amount of the cheque or with both. Sec. 143 of N.I. Act, which was brought into effect from 06-02-2003 by way of amendment, provides for conducting the trial of cases under Sec. 138 of N.I. Act under summary procedure as per Secs. 262 to 265 of Cr.P.C and when trial is conducted in a summary procedure under said provisions, it is competent for the trial court to pass a sentence of imprisonment for a term not exceeding
One Year and to impose Fine exceeding Rs.5,000/-. That means Sec. 143 of N.I. Act is carving out a proviso as to the general penal provision under Sec. 138 of N.I. Act. Thus, it is clear that Sec. 143 of N.I. Act empowers the trial court to impose fine exceeding Rs.
5,000/- (i.e., Rs.10,000/- in view of amendment to Sec. 29 (2) of Cr.P.C w.e.f., 23.06.2006) only in the event, when the Accused is tried under summary procedure under Secs. 262 to 265 of Cr.P.C.
36.As per the provisions of Criminal Procedure Code, 1973, the offence which provides punishment of below two years of imprisonment, is to be tried either as a regular
Summons Case or as a Summary Trial Case. When the Accused is tried under a summary trial, the Court has to record the evidence of the witness by reducing its substance and the
Court need not record the entire statement/deposition of the witness in verbatim. When the summary trial is conducted, by virtue of Sec. 326 Cr.P.C, the Judge who has recorded the substance of the evidence, alone is competent to render the judgment and his successor cannot pronounce the judgment.
37.In the case in hand, the record is not clear whether the case is tried as regular
Summons Case or as Summary Trial Case. The Hon’ble Supreme Court in J.V. Baharuni
Vs. State of Gujarat, (2014) 10 SCC 494 has held that when the record is silent what was the mode adopted by the Court in trying the case, whether in a summary trial manner or in 23 of 25Judgment in Crl.A.451/2023
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a summons procedure, the Court has to verify the entire record and then to arrive to a finding in that regard. The Hon’ble Apex Court has held that when the evidence of the witness is recorded in verbatim at length and when the Court has given several opportunities and adjournments to the parties for leading the evidence, then it is to be construed that the case is conducted as a regular/general Summons Case, but not as a
Summary Trial Case.
38.By applying the said principles to the present case, when the trial court record is perused, it is clear that the trial court has recorded the evidence of witnesses at length in several adjournments and it has not recorded the substance of evidence of the witnesses.
Even the trial court has conducted trial by granting several adjournments, but not within the time of six months as stipulated under Sec. 143 (3) of N.I. Act. Therefore, this Court holds that trial court has conducted the trial in the present case by treating it as a regular
Summons Case, but not as a Summary Trial Case.
39.When the case is tried under regular summons procedure and not under summary trial procedure, the trial court cannot award the fine exceeding its limit under Sec. 29 (2) in view of the decisions in K. Bhaskaran Vs. Sankaran Vaidhyan Balan, (1999) 7 SCC 510and Pankajbhai Nagjibhai Patel Vs. State of Gujarat, (2001) 2 SCC 595. As per Sec.
357 Cr.P.C., the trial court can award the compensation out of that fine amount only, but not exceeding the limit as prescribed under Sec. 29 (2) Cr.P.C. However, Sec. 357 (3)
Cr.P.C empowers the Magistrate to direct payment of compensation to any extent, when there is no order as to payment of fine and there is no limit provided in Cr.P.C restricting the power of a Magistrate in such case to order payment of compensation.
40.In view of these principles, the direction of the trial court for the payment of fine of
Rs. 75,02,000/- by the Accused out of which Rs.2,000/- shall be remitted to the State and 24 of 25Judgment in Crl.A.451/2023
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to pay compensation of Rs.75,00,000/- to the Complainant under Sec. 357 (1) (b) Cr.P.C cannot be permitted to withstand and to that extent, the sentence is incorrect. Therefore, the sentence ordered by the trial court as to the payment of fine and compensation by the
Accused exceeding its power, cannot be sustained.
41.Admittedly, the Complainant has suffered loss of Rs.45,00,000/- due to dishonour of cheques under Exs.P1 to P3. If the sentence as imposed by the trial court is to be approved, then in view of above observations, the award of compensation can be limited and restricted only to the extent of power of the trial court i.e., upto Rs.10,000/-, which will cause great hardship and loss to the Complainant. It is the settled law that while deciding the Criminal Appeal, the appellate court cannot impose greater sentence than that of the sentence which can be imposed by the trial court and it has to confine to the extent of power of the Magistrate only in such a case. At the same time, it is also to be observed that in a Criminal Appeal filed by the Accused against conviction, the appellate court cannot enhance the sentence or imprisonment and cannot substitute with imprisonment against fine. In view these circumstances, this Court is of the view that while confirming the judgment of conviction of the Appellant/Accused, it is a fit case to remand the matter to the trial court to hear the Appellant/Accused and the Respondent/Complainant on sentence part and it will meet the ends of justice. Thus, this Court holds that the judgment of conviction passed in C.C. N.I. No.10569 of 2022 on the file of VIII Metropolitan
Magistrate, Hyderabad is liable to be set aside to the extent of sentence part while
upholding and maintaining the conviction part and the appeal is to be allowed in part to that extent. Therefore, this Court holds that the Criminal Appeal is to be partly allowed remanding the matter back to the trial court to hear the Appellant/Accused and the
Respondent/Complainant on sentence part and to pass appropriate judgment in that regard.
Point No.3 is answered accordingly.
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42. In the result, the Criminal Appeal is allowed in part. The Judgment of conviction of the Appellant/Accused for an offence under Sec. 138 of N.I. Act as recorded in C.C. NI.
No. 10569 of 2022 by the VIII Metropolitan Magistrate, Hyderabad is confirmed and upheld. However, the judgment to the extent of sentence as imposed, is set aside. The matter is remanded back to the trial court to hear the Appellant/Accused and Respondent/
Complainant afresh on sentence part and to pass appropriate judgment in that regard in accordance with law in the light of the above observations. The Appellant/Accused and the
Respondent/Complainant are directed to appear before the trial court along with their respective counsels on 01-05-2025 for above said limited purpose. On such appearance, the trial court shall hear and dispose the case in accordance with law, at the earliest.
Typed to my dictation by the Stenographer Gr.II, corrected and pronounced by me in open Court on this the 15th day of April, 2025.
I-ADDITIONAL SESSIONS JUDGE,
HYDERABAD