Sri E Bhima Rao

Prl. District Judge

PDJ Court VIZIANAGARAM · Vizianagaram · Andhra Pradesh

Sri E Bhima Rao, Prl. District Judge, is posted at PDJ Court VIZIANAGARAM, Vizianagaram, Andhra Pradesh, India. 861 court orders on record since 2017. 20 judgments with full text available. Primarily handles MVOP, F, MC cases.

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CRLA/54/2013 Appeal Dismissed

Sanapala Satyanarayana vs Ashok kumar Mandhani

07 Jun 2019

IN THE COURT OF THE JUDGE, FAMILY COURT CUM III ADDITIONAL SESSIONS

JUDGE, VIZIANAGARAM

Present: Sri E.Bhima Rao,

Judge, Family Court cum

III Additional Sessions Judge, Vizianagaram.

Tuesday, this the 25th day of June, 2019

Criminal Appeal No.54/2013

Special Judicial First Class Magistrate From which Court the appeal is:(Excise), Vizianagaram.

Number of the Case in thatC.C. No.111/2010 : Court

Sri Sanapala Satyanarayana, S/o Late Suryanarayana, Hindu, Aged about 54 Name and description of the :years, R/o D.No.11-8-25/1, Plot No.21, appellant/accused Daspalla Hills, Visakhapatnam (A-1).

Sri V.S.N. Sastry, Advocate for the Appellant is defended by:Appellant.

(1) Ashok Kumar Mandhani, S/o Ganapathi Lal Mandhani, Age 45 years, R/o 401, Geeta Towers, Kirlampudi Name and Description of theLayout, Visakhapatnam. : Complainant/respondent (2) State represented by the Additional Public Prosecutor, Vizianagaram.

(1) Sri B. Satyanarayana and Sri B. Karthik, Advocates for the 1st respondent. (For 1st respondent) Complainant/Respondentare : defended by: (2)AdditionalPublicProsecutor, Vizianagaram. (For 2nd respondent)

The appellant-Accused is found guilty for Section of Law under which thethe offence punishable U/s.138 of NI Act appellant is convicted in the:and accordingly he was convicted lower CourtU/s.255(2), Cr.P.C. for the said offence.

Whether confirmed, reversed orCONFIRMED. The appeal is dismissed by modified, if modified what isconfirming the conviction and sentence : modifiedpassed by the trial Court.

Date of presentation:04.04.2013 Date of filing:04.04.2013

III ASJ (Family) Court, VZM Criminal Appeal 54/2013 2

Bail bonds, if any,:--- Hearing:08.05.2019 Judgment:25.06.2019

The appeal coming on 08.05.2019 for final hearing before me in the present of Sri V.S.N. Sastry, Advocate for the appellant-accused, and of

Sri B.Satyanarayana and Sri B. Karthik, Advocates for the 1st respondent/Complainant, and of the Additional Public Prosecutor for the 2nd respondent/state, and having stood over for consideration to the date, the

Court delivered the following:

J U D G M E N T

The appeal is filed by the appellant-accused against the conviction and sentence passed in C.C.No.111/2010, dt.11.03.2013 whereby the learned Special Judicial Magistrate of First Class (Excise), Vizianagaram, sentenced the accused, to undergo Simple Imprisonment for a period of 18 (Eighteen) Months and to pay a fine of Rs.8,000/- (Rupees Eight Thousand only), in default he shall undergo simple imprisonment for a period of Six

Months for the offence punishable U/s.138 of Negotiable Instruments Act.

2.The appellant herein is the accused and the 1st respondent herein is the complainant in the complaint filed by the 1st respondent in the trial

Court. For the sake of convenience, the parties are, henceforth, referred to as per their array in the trial Court.

3.Originally the complainant filed the complaint against the four accused persons. But case against A-2 to A-4 was dismissed as per the docket orders dated 20.10.2009 of the trial Court. The case was proceeded against A-1 (Sri Sanapala Satyanarayana) only in the trial Court.

4.The complainant filed the complaint against the accused for the offence punishable U/s.138 of N.I. Act with the following allegations : The complainant is the resident of Visakhapatnam and also having his office at

Vizianagaram and the accused are the residents of Visakhapatnam and the accused approached the complainant and requested the complainant to purchase the property measuring to an extent of 70 Sq. Yards being

III ASJ (Family) Court, VZM Criminal Appeal 54/2013 3 undivided and unspecified share out of the total property to an extent of 2069 Sq. yards together with Flat No.404 measuring 2150 Square Feet in third floor and Car parking measuring 100 Square Feet in stilt floor of

Madhava town at Kanakal Dibba Area, covered by block No.41, T.S. No.1451 and part of Allipuram Ward within the limits of Greater Visakhapatnam

Municipal Corporation for which the complainant agreed and so some negotiations took place between the accused and the complainant and ultimately agreed to certain understandings and entered into an agreement of sale for the same. Towards the said agreement cum understandings in between the complainant and the accused, the complainant paid a sum of

Rs.10,01,001/- towards the advance sale consideration on 07.07.2007 and paid further sum of Rs.11,00,000/- towards the advance sale consideration on the said date itself and the accused received and acknowledged the said amounts. In consequent to the said agreement, the 1st accused, the third accused on behalf of the second accused as a G.P.A. Holder and the fourth accused jointly executed an agreement of sale dated 07th day of September, 2007 agreeing to sell the aforesaid property to the complainant for a sum of

Rs.53,54,650/- and agreeing to register the said aforesaid property to the complainant before 30.11.2017 as well as acknowledging the aforesaid amounts received by the accused from the complainant. From that day itself, the complainant is ready and willing to perform the complainant’s part of duty as per the aforesaid contract and also paid a further sum of

Rs.5,00,000/- towards the remaining sale consideration on 11.10.2007 which the accused acknowledged but all the accused tried to postpone the same i.e., registering for one reason or the other even when the complainant is ready with the balance sale consideration and to perform the complainant’s part of duty as per the aforesaid agreement for the best reasons known to the accused. In all, the complainant paid and all the accused received a sum of Rs.26,01,001/- towards the advance sale consideration, which all the accused acknowledged with respect to the aforesaid property. Later on some

III ASJ (Family) Court, VZM Criminal Appeal 54/2013 4 untoward incidents took place with respect to the aforesaid building and so all the accused requested the complainant to cancel the aforesaid agreement which the accused executed in favour of the complainant.

Therefore, as per the request of the accused, the accused and the complainant mutually agreed for cancellation of the aforesaid agreement of sale subject to the satisfaction of some terms, conditions and understandings included in the cancellation endorsement. As per the terms and understandings, the accused is liable to repay the entire advance sale consideration of Rs.26,01,001/- which the complainant paid to all the accused and all the accused received and acknowledged the same on various dates.

(a).The complainant further submits that towards the discharge of the aforesaid amount, which the accused is liable to repay the said advance sale consideration to the complainant, the first accused on behalf of all the accused issued a cheque bearing No.090585, dated 25.4.2008 for a sum of

Rs.26,01,001/- drawn on Bank of India, Harbor Road Branch, Visakhapatnam in favour of the complainant towards the satisfaction of the said aforesaid amount. Thereafter, the complainant presented the said cheque for collection at Vizianagaram through the complainant’s Banker i.e., Karur

Vysya Bank, Vizianagaram but quite surprisingly the said cheque is returned unpaid stating “Funds Insufficient” in the accused bank account. The complainant received the said cheque unpaid along with the Banker’s memo

dated 04.09.2008. The 1st accused on behalf of all the accused issued the

aforesaid cheque with an undertaking stating that the accused will make necessary arrangements to honour the said cheque and also stating that there are sufficient funds in the said bank account, but the first accused issued the said cheque knowing fully well about the insufficiency of the funds in the said bank account and also knowing fully well about the consequences of the bounce of the cheque. Therefore, all the accused are jointly and severally liable for the punishment under the provisions of the Negotiable

III ASJ (Family) Court, VZM Criminal Appeal 54/2013 5

Instruments Act. With respect to the aforesaid agreement of sale and cancellation agreement and endorsement which the first accused, third accused on behalf of the second accused as a G.P.A. Holder and the fourth accused executed in favour of the complainant, the complainant is reserving a right to take necessary separate legal action against all the accused under the due process of law and for the said separate action also, all the accused are jointly and severally liable for the same in every manner whatsoever.

Thereafter, the complainant got issued a registered lawyer’s notice dated 11th day of September, 2008 to all the accused calling the accused to repay the said cheque amount to the complainant within fifteen days from the date of receipt of that notice which the accused failed to take the said notice and the said notices are returned on 27.09.2008 and so the complainant invoked the jurisdiction of the Court for the said cheque amount. Therefore, the complainant prays to punish the accused for the offence punishable U/s.138 r/w.142 of N.I. Act and also direct the accused to pay the said amount of

Rs.26,01,001/- along with the compensation amount to the complainant.

Hence, the complaint.

5.The learned Additional Judicial Magistrate of First Class,

Vizianagaram took cognizance for the offence U/s.138 & 142 of N.I. Act against the accused and registered as C.C.No.775/2009 on the file of the

Additional Judicial First Class Magistrate, Vizianagaram and in view of the

orders of the District Court in P.R.No.225/2010-A, dated 05.10.2010, the matter was transferred to the Special Judicial Magistrate of First Class (Excise), Vizianagaram and renumbered as C.C.No.111/2010, and after appearance of accused, copies of documents were furnished to him and at that stage, and the accused was examined U/s.251, Cr.P.C., for the offence

U/s.138 and 142 of N.I. Act, explaining the accusation made against him, for which, he denied the offence and pleaded not guilty and claimed to be tried.

6.During the course of trial, the complainant himself examined as

P.W.1 and and got marked Exs.P.1 to P.6. Ex.P.1 is cheque bearing No.090585,

III ASJ (Family) Court, VZM Criminal Appeal 54/2013 6 dt.25.04.2008; Ex.P.2 is Banker memo, dt.04.09.2008; Ex.P.3 is office copy of registered lawyer’s notice, dt.11.09.2008; Ex.P.4 is returned cover, dt.27.09.2008; Ex.P.5 is agreement of sale, dt.07.09.2007; and Ex.P.6 is cancellation endorsement on the back side of the 1st page of Ex.P.5, respectively.

7.After closure of complainant’s evidence, the accused was examined U/s.313, Cr.P.C. by putting the incriminating material available in the evidence of complainant’s witness, for which, he denied the same. When the accused was asked to enter into defence, he stated that he has defence evidence on his behalf and he further stated that he has nothing to say anything about the case. On behalf of the accused, the accused (A-1) himself examined as D.W.1 and no documents marked on his behalf.

8.After considering the oral and documentary evidence, and after hearing both sides, the trial Court found the accused guilty and convicted and sentenced him to suffer simple Imprisonment for a period of 18 (Eighteen) months, in default to undergo simple imprisonment for a period of

Six months for the offence punishable U/s.138 of N.I. Act.

9.Aggrieved by the said conviction and sentence, the accused preferred the present appeal contending, inter alia, with the following grounds:

The Calendar and Judgment of the trial Court is contrary to Law, weight of evidence and probabilities of the case. The trial Court ought to have acquitted the appellant/accused, as there is no evidence on record to convict the appellant/accused. The trial Court without considering the case and failed to note that there is no legally enforceable debt in this case on hand and as per the terms of Ex.P.5 Agreement of Sale, the condition is that the complainant is only entitled to a flat and there is no necessity for the appellant/accused to repay any amount to the complainant and hence, the basic requirement U/s.138 of N.I. Act is found missing in this case and hence, the burden heavily lies on the complainant to prove the legally enforceable

III ASJ (Family) Court, VZM Criminal Appeal 54/2013 7 debt and then only the burden shifts on the appellant/accused to rebut the presumption. The trial Court confused himself about the merits of the case as Ex.P.6 cancellation endorsement on the back side of Ex.P.5 clearly indicates that the agreement is cancelled subject to the encashment of the cheque, so it is clear that if the cheque is not encashed, the agreement remains valid and there is no scope for filing the cheque bounce case as per the endorsement but the trial Court without considering the same

pronounced the verdict by convicting the appellant purely on wrong notions

by applying Sec.139 presumption to the case on hand which in fact is no way applicable to the case on hand and hence the conviction is liable to be reversed on this ground alone.

(a).The trial Court failed to understand the intention of the parties while making Ex.P.6 cancellation endorsement as their intention is only to provide security for Ex.P.5 transaction and specifically mentioned the clause such as ‘the agreement will be cancelled subject to the encashment of the cheque’ which clearly indicates that there is no confirmation for the

honouring of the cheque and if the cheque is not honoured, there is no

criminal liability fastened on the accused and the complainant can safely proceed with Ex.P.5 agreement of sale but the trial Court without considering the same simply convicted the accused merely on presumptions and surmises and without going into the merits of the case and hence, the

Judgment of the trial Court is liable to be reversed and the appellant/accused is entitled for an acquittal. The trial Court failed to note that as there is no cancellation clause or default clause in Ex.P.5 agreement of sale which only stipulated the condition that the accused has to deliver the flat to the complainant within a particular period and if delayed, shall pay some damages but there is no necessity for the appellant/accused to refund the amount and hence, there is no basis for the issuance of cheque by the appellant/accused and hence there is no legally enforceable debt in the case

III ASJ (Family) Court, VZM Criminal Appeal 54/2013 8 on hand and the Judgment of the trial Court is not based on facts and Law and is liable to be reversed.

(b).The learned Magistrate without applying his mind and without perusing the material on record and without analyzing the same, convicted the accused though absolutely there is no ground to convict the accused and hence the same is liable to be set-aside. The trial Court did not properly analyze the case Law submitted on behalf of the accused i.e., (1) 2007 (2)

SCC (Cri) 498; (2) AIIMR (Cri) 2009 1074; (3) 2003 (1) SCC 1; (4) 2004 (8)

SCC 774; (5) 2006 (3) SCC (Crl) 114, which are directly applicable to the case on hand and simply concluded those citations are not applicable to the case on hand, which clearly indicates that he did not properly studied the case law and went on wrong lines and convicted the accused purely on presumptions which is illegal and the said Judgment is liable to be set-aside. The learned

Magistrate failed to follow the cross-examination of P.W.1 wherein he clearly

admitted that there is no legally enforceable debt and hence the conviction based on false grounds and presumption and in routine manner is liable to be set aside and the accused is entitled for an acquittal in the matter.

(c).The learned Judge without touching the arguments submitted by the counsel for the appellant/accused, convicted the appellant/accused purely on assumptions. The trial Court failed to note that the notice is not served on the appellant/accused and hence the burden is on the complainant to prove that the appellant/accused has intentionally avoided to receive the notice and in that process he has to examine the postal authorities but the complainant did not examine any witness to prove that the accused avoided to receive the notice and hence, the appellant/accused is entitled to be acquitted on this ground alone. The trial Court did not mention the contentions of the appellant/accused and by blind findings and with wrongful views, convicted the appellant/accused which is not maintainable and hence the appellant/accused is entitled for acquittal. Therefore, the appellant/accused prays to allow the criminal appeal by setting aside the

III ASJ (Family) Court, VZM Criminal Appeal 54/2013 9 calendar and judgment in C.C.No.111/2010, dt.11.3.2013 by acquitting the appellant/accused.

10. During the stage of Appeal, the accused/appellant filed a petition

U/s.391 of Cr.P.C., vide Crl.M.P.No.294/2014 in Crl.A.No.54/2013 before this

Court praying to summon the postal authorities/postman concerned to give evidence regarding the service of the statutory notice on the addressee, as per the endorsement on the postal cover. In the said petition, the 1st respondent/complainant filed a counter resisting the maintainability of the petition. After hearing both sides, this Court allowed the said petition, on 25.2.2016.

11. In this Appeal, the 1st respondent/complainant preferred a revision

before the Hon’ble High Court of Judicature at Hyderabad for the State of

Telangana and the State of Andhra Pradesh, praying to quash the orders passed by this Court in Crl. M.P.No.294/2014, in which the Hon’ble High Court

Stayed all the proceedings in this Appeal, vide Crl. R.C. No.1087/2016.

12. In view of the directions of the Hon’ble apex Court of India, vide

Judgment, dt.28.03.2018 in Crl. Appeal Nos.1375-1376 of 2013, which was communicated by the Hon’ble High Court of A.P., in the Circular of ROC

No.2573/OP Cell/2018, dt.18.04.2018, in which it was observed that, in all pending matters before the High Courts or other Courts relating to P.C. Act or all other civil or criminal cases, where stay of proceedings in a pending trial is operating, stay will automatically lapse after six months from today unless extended by a speaking order on above parameters, on expiry of above period, resume the proceedings without waiting for any other intimation unless, express order extending stay is produced. Since the speaking order was not filed before this Court as per the directions of the Hon’ble Supreme

Court, the learned counsels for both parties reported to proceed with the matter and accordingly, this Court proceeded with the matter. During the pendency of this appeal, the learned counsel for the respondent/complainant reported that the revision petition which was filed by him is withdrawn and

III ASJ (Family) Court, VZM Criminal Appeal 54/2013 10 filed a memo along with the net-copy of the withdrawal proceedings before this Court.

13.On behalf of the accused/appellant, one K. Ramakrishna,

Postman of Daspalla Area, Visakhapatnam, is examined as R.W.2 and no documents marked on his side. It is pertinent to note that since the accused himself examined as D.W.1 in the trialCourt, in this case the above witness is to be treated as D.W.2. But mistakenly the said witness i.e., Postman is examined as R.W.2, instead of D.W.2. Hence, wherever, R.W.2 is referred in this Judgment, it maybe treated as D.W.2.

14.Heard the arguments of the learned counsel for the appellant and the learned counsel for the 1st respondent. Apart from oral arguments, the learned counsel for the Appellant/Accused filed written arguments and

additional written arguments; and on the other hand, apart from the oral

arguments, the learned counsel for the 1st Respondent/Complainant, filed written arguments and perused the same.

15.After perusal of the entire evidence on record, grounds of appeal and oral arguments submitted by the the learned counsels for the both parties, and upon considering the material available on record, now the points for determination before this Court are :

(1) Whether there is a legally enforceable existing

liability in between the complainant and

accused ?

(2) Whether the accused issued the cheque to

discharge part of the said liability ?

(3) Whether the complainant complied all the

requirements to constitute the offence U/s.138

of N.I. Act ?

(4) Whether there are grounds to interfere with the

findings of the trial Court ?

(5) To what relief ?

III ASJ (Family) Court, VZM Criminal Appeal 54/2013 11

16. Point Nos.1 to 3:

The case of the complainant is that he is the Director of the complainant company in the above complaint and presently he is residing at

Visakhapatnam, native of Vizianagaram having his place of business in

Vizianagaram and also a house and office in Vizianagaram. The accused approached him and requested him to purchase the property measuring to an extent of 70 Sq. Yards being undivided and unspecified share out of the total extent of 2069 Sq. Yards together with Flat No.404 measuring 2150

Square Feet in Third Floor and Car Parking measuring 100 Square Feet in stilt floor of Madhava Towers at Kanakala Dibba Area, covered by Block No.41 in

T.S.No.1451 and Part of Allipuram Ward within the limits of Greater

Visakhapatnam Municipal Corporation, for which the complainant agreed and so some negotiations took place between the accused and the complainant and ultimately he agreed to certain understandings and entered into an agreement of sale for the same. Further, towards the said agreement cum understandings in between the accused and the complainant, the complainant paid a sum of Rs.10,01,001/- towards the advance sale consideration on 07.07.2007 and paid further sum of Rs.11,00,000/-towards the advance sale consideration on the said date itself and the accused received and acknowledged the said amounts. Further, in consequent to the said agreement, the accused in his individual capacity and also in the capacity of the G.P.A. Holder of Sudhakar Birlangi together with Nagaja

Constructions executed Ex.P.5 Agreement of Sale, dt.07.9.2007, agreeing to sell the aforesaid property to the complainant company for a sum of

Rs.53,54,650/- and agreeing to register the said aforesaid property to the complainant before 30.11.2007 as well as acknowledging the aforesaid amounts received by the accused from him. From that day itself, the complainant is ready and willing to perform his part of duty as per the aforesaid contract and also paid a further sum of Rs.5,00,000/- towards the remaining sale consideration on 11.10.2017 which the accused

III ASJ (Family) Court, VZM Criminal Appeal 54/2013 12 acknowledged but the accused tried to postpone the same i.e., registering for one reason or the other even when he is ready with the balance sale consideration and to perform his part of duty as per the aforesaid agreement for the best reasons known to the accused. In all, the complainant paid and in all the accused received a sum of Rs.26,01,001/- towards the advance sale consideration, which the accused acknowledged with respect to the aforesaid property. Later on some untoward incidents took place with respect to the aforesaid building and so the accused requested the complainant to cancel the aforesaid agreement, which the accused executed in his favour.

Therefore, as per the request of the accused, the accused and complainant mutually agreed for cancellation of the aforesaid agreement of sale subject to the satisfaction of some terms, conditions and understandings included in

Ex.P.6 cancellation endorsement written and included on the back side of the aforesaid Ex.P.5 agreement of sale. As per the terms and understandings, the accused is liable to repay the entire advance sale consideration of

Rs.26,01,001/- which he paid to the accused and the accused received and acknowledged the same on various dates. Towards the discharge of the aforesaid amount, which the accused is liable to repay the said advance sale consideration to the complainant, the accused issued Ex.P.1 cheque bearing

No.090585 dated 25.04.2008 for a sum of Rs.26,01,001/- drawn on Bank of

India, Harbor Road Branch, Visakhapatnam in favour of the complainant towards the satisfaction of the said aforesaid amount. Thereafter, he presented the said cheque for collection at Vizianagaram through their

Banker i.e., Karur Vysya Bank, Vizianagaram, but quite surprisingly the said cheque is returned unpaid stating “Funds Insufficient” in the accused bank account. The complainant received the said cheque for collection at

Vizianagaram through their Banker i.e., Karur Vysya Bank, Vizianagaram, but quite surprisingly the said cheque was returned unpaid under Ex.P.2 banker memo dated 04.09.2008 stating “Funds Insufficient” in the accused Bank

Account. The complainant received the said cheque for collection at

III ASJ (Family) Court, VZM Criminal Appeal 54/2013 13

Vizianagaram through their Banker i.e., Karur Vysya Bank, Vizianagaram but quite surprisingly the said cheque is returned unpaid stating “Funds

Insufficient” in the accused bank account. The complainant received the said cheque unpaid along with the banker’s memo dated 04.09.2008. The accused issued the aforesaid cheque with an undertaking stating that the accused will make necessary arrangements to honour the said cheque and also stating that there are sufficient funds in the said bank account, but the accused issued the said cheque knowing fully well about the insufficiency of the funds in the said bank account and also knowing fully well about the consequences of the bounce of the cheque. Therefore, the accused is liable for the punishment under the provisions of the N.I. Act. Thereafter, the complainant got issued Ex.P.3 registered lawyer’s notice dated 11.09.2008 to the accused calling the accused to repay the said cheque amount to the complainant within fifteen days from the date of receipt of that notice which the accused failed to take the said notice is returned on 27.09.2008 under

Ex.P.4 returned cover. Later on, the complainant filed a suit on the file of the

Additional District Judge at Visakhapatnam and the accused filed his written

statement there with all false and untenable allegations, which are not at all valid and binding on the complainant in any manner whatsoever. Therefore, the complainant prays to punish the accused as per the provisions of the

Negotiable Instruments Act.

17.The learned counsel for the appellant/accused submitted written arguments and argued that issuance of Ex.P.1 cheque is only as a security to the Complainant and denied the issuance of cheque towards a legally enforceable debt in the circumstances prevailing by then, as the building had collapsed on 06.01.2008, unfortunately while laying the top floor slab by M/s.

III ASJ (Family) Court, VZM Criminal Appeal 54/2013 14 offence has been made out in this case and the complainant utterly failed to comply with the requirements of Sec.138 of N.I. Act and hence, no offence has been made out against the accused. He further argued that the appellant did not commit any offence as the Appellant/Accused commenced construction of the building with the funds advanced by the purchasers including the complainant. But the building had collapsed in the construction stage while laying the top floor slab by L & T Company Limited and hence, only due to the said act of God, the appellant could not complete the work but not otherwise. He further argued that as Ex.P.5 agreement to sell was entered into by the complainant and the appellant and other site owners wherein, neither a ‘cancellation clause’ nor a ‘default clause’ is mentioned and hence there is no necessity to refund the amount as per the terms of the agreement, which is the basis for issuing Ex.P.1 cheque. Ex.P.1 cheque was issued only with a good intention towards collateral security by specifically making a mention of Ex.P.6 endorsement on Ex.P.5 agreement to sell and the same had been corroborated by the cross-examination of D.W.1, wherein

D.W.1 had clearly stated that “he never expected that the Complainant would deposit the cheque”. He further argued that in Ex.P.6 endorsement, it is clearly mentioned that “hence both parties agreed to cancel this agreement by mutual consent subject to realization of the cheque”. The narration of the above mentioned lines clearly indicate that if the cheque is encashed, the agreement will be cancelled. In other words, if the cheque is not encashed, the agreement will hold good. In such situation, the complainant can proceed against the appellant basing on the agreement only i.e., by filing a suit for specific performance of contract. In this matter the cheque is not encashed and hence the agreement is in force but peculiarly, the complainant has taken undue advantage of the cheque available with him and invoked the provisions of Sec.138 of N.I. Act and is prosecuting the appellant. He further argued that the complainant has filed a suit in O.S.No.365/2008 on the file of the II Addl., District Judge’s Court,

III ASJ (Family) Court, VZM Criminal Appeal 54/2013 15

Visakhapatnam claiming back the amount of Rs.26,01,001/- plus interest along with Rs.20 Lakhs as compensation and costs and other reliefs. The complainant also filed a petition in I.A.No.1495/2008 in the above said suit and got attached the subject building property of the Appellant/Accused.

When everyone including the complainant is claiming back the amounts, it became impossible for the appellant/accused to complete the construction.

As the complainant got attached the property, no new purchasers have come forward to purchase the flats as they got feared about the attachment orders over the schedule property. In this way the complainant created the panicky situation by putting the appellant/accused into troubles and also prosecuting the appellant/accused by misusing the cheque issued by the appellant only as a collateral security. He further argued that Sec.73 of the Indian Contract

Act, 1872, stipulates the compensation for loss or damage caused by breach of contract and Section 74 of the Indian Contract Act, 1872 says that the compensation for breach of contract where penalty is stipulated for, are not applicable to the case on hand as there is no breach of contract in this matter. It is not the case where the accused/appellant stopped the construction and in which case, it can be termed as breach of contract. But in the matter on hand by investing huge funds, the accused/appellant made a big construction and raised all six floors, but as the top floor has collapsed, which is an act of god, two persons had died and sentimentally, even the complainant is not co-operating for construction and accepting the flat and only seeking for refund of his money and hence, there is no breach on the part of the appellant/accused in the above matter. Hence, Sections 73 and 74 of the Indian Contract Act, 1872 has no applicability in the said matter on hand. He further argued that the presumptions U/s.139 and 118 (a) of N.I.

III ASJ (Family) Court, VZM Criminal Appeal 54/2013 16 was issued towards collateral security and then the burden shifted on the complainant. Therefore, the learned counsel for the appellant/accused prays to set aside the conviction and sentence passed against the appellant by the

Special Judicial Magistrate of First Class, (Excise), Vizianagaram in

C.C.No.111/2010, dt.11.3.2013 for the offence punishable U/s.138 of N.I. Act by allowing the appeal and acquit the accused for the said offence.

18.The learned counsel for the appellant/accused submitted

additional written arguments and argued that the agreement is completely

silent about the aspect of refund of money and hence there is no necessity

for the appellant/accused to refund the amount as per the said agreement, if

there is any such clause to refund the money and if the appellant/accused issued the cheque basing on such clause, then only, it can be termed as there is legally enforceable debt as there is a provision in the agreement to refund the amount but since there is no such provision in the agreement to refund the amount to the respondent/complainant, it could not be termed as there is no legally enforceable debt and it can be safely presumed that the accused need not refund the amount. He further argued that it is clearly mentioned in the agreement through Ex.P.6 endorsement that the “Agreement is cancelled subject to the encashment of the cheque” as the cheque is not encashed, the agreement got valid and restored and is not cancelled. Hence, the respondent/complainant has to file a suit for specific performance of contract, directing the appellant/accused to deliver a flat as

Ex.P.5 agreement stipulates the condition of only delivering the flat after its construction. Peculiarly the respondent/complainant has not filed the suit, can alternatively claim the refund of the money if the appellant/accused fails to deliver the flat. In the ghastly incident of collapse of building, two persons were died, sentimentally no person is coming forward to proceed with the construction including the present complainant. Hence, the appellant/accused could not proceed with the construction till date. However, though there is no necessity for refund of the money as per the terms of

III ASJ (Family) Court, VZM Criminal Appeal 54/2013 17

Ex.P.5, only as a matter of courtesy, he tried to issue a cheque only with a condition that if it is honoured, the agreement is cancelled and the words otherwise means that if the cheque is not honoured, the agreement is continued. So, the respondent/complainant has to file a suit for delivering of the flat as per the terms and conditions of the agreement, but he filed a suit only for refund of money and even if the said suit is decreed, it cannot be terms as an enforceable debt as the accused is not issued the cheque as per the terms of Ex.P.5. He issued only on humanitarian grounds but not as per the terms of Ex.P.5. Hence, the issuance of cheque is not in accordance with the provisions of Sec.138 of N.I. Act, as there is no legally enforceable debt,.

In fact, there is no such legally enforceable debt, but the agreement conditions are otherwise and the cheque is not issued in accordance with the provisions of the agreement, as there is no refund clause. He further argued that the provisions of Sections 73 & 74 of the Indian Contract Act, 1872 are not applicable to the case on hand as there is no breach of contract. He further argued that with respect to the dispute in the service of legal notice is concerned, the counsel for the appellant/accused clearly cross-examined the respondent/complainant and wherein he specifically raised the plea of non-receipt of the notice by the accused and hence, the arguments advanced by the respondent/complainant that there is no cross-examination in the trial Court in respect of the issuance of legal notice. When the service of notice is denied and when the doors are locked, it is for the complainant to prove the issuance of notice and if fails to prove the presumption shall in favour of the accused and the trial Court ought to have acquitted the accused as there is no proper service of notice on the part of the complainant. Therefore, the learned counsel for the appellant/accused prays to set aside the conviction and sentence passed against the appellant by the

Special Judicial Magistrate of First Class, (Excise), Vizianagaram in

C.C.No.111/2010, dt.11.3.2013 for the offence punishable U/s.138 of N.I. Act by allowing the appeal and acquit the accused for the said offence.

III ASJ (Family) Court, VZM Criminal Appeal 54/2013 18

19.Per contra, the learned counsel for the 1st respondent/ complainant submitted written arguments and argued that the appellant admitted the execution of Ex.P.5 agreement of sale and also admitted the receipt of the advance sale consideration of Rs.26,01,001/- from the respondent. The appellant further admitted the fact that some untoward incident took place with respect to the entire property including the property covered under Ex.P.5 and also admitted the said entire property including the property under Ex.P.5 is in the same state of condition as of on the date of untoward incident and also admitted that the appellant and others did not take any steps to reconstruct the entire building as previously agreed from all the last five to eight years. The appellant further agreed that for cancellation of Ex.P.5 agreement of sale and accordingly appellant issued executed Ex.P.1 cheque to the respondent and accordingly the appellant executed cancellation endorsement Ex.P.6 on the back side of Ex.P.5 agreement of sale. The appellant admitted the issue of Ex.P.1 cheque by the appellant to the respondent, towards discharge of the aforesaid debt payable to the respondent by the appellant. The appellant admitted that in order to appellant’s liability, the appellant issued Ex.P.1 cheque towards his liability delivering the property. The appellant admitted his signature on Ex.P.1 cheque and also admitted the issue of the same to the respondent mentioning the same in Ex.P.6 cancellation endorsement. The appellant admitted the bounce of cheque as per Ex.P.2 bankers memo. The appellant further admitted that he did not pay any amount either after the notice got issued to the appellant by the respondent i.e., original of Ex.P.3 or after the receipt of summons from the Court till now. He further argued that the word

Security means safeguard for any transaction or for any amount that may arise in future in relating to the business and like nature. He further argued that in the present case, absolutely there is no question of amount derivation or transaction in future in any manner whatsoever. In fact, even as per the case of the appellant, the amount that the appellant is liable to pay to the

III ASJ (Family) Court, VZM Criminal Appeal 54/2013 19 respondent is derived on the date of Ex.P.6 cancellation endorsement and accordingly Ex.P.1 cheque is issued towards part satisfaction of the same.

There is no question of future transactions in the above case in any manner whatsoever and so for the same, the question of security also does not arise, which itself cuts the entire case of the appellant in all the ways. Further, except the present transaction on hand, there are no any other transactions in between the appellant and the respondent and so also, the question of security does not arise under any circumstances in any manner whatsoever.

There is no mention in Ex.P.6 cancellation endorsement, which execution is admitted by the Appellant that the cheque is issued for the purpose of security and not for the discharge of the debt amount payable to the respondent in any manner whatsoever. The word ‘security’ is not at all included in Ex.P.5 in any manner whatsoever. The appellant also admitted that “the appellant did not address any letter to the respondent stating that appellant issued Ex.P.1 cheque for security purpose and not to present the same for collection”. The appellant did not plead anywhere till now that

Ex.P.1 cheque is issued towards security only and not otherwise in any manner whatsoever including in the civil suit got filed by the respondent against the appellant and others. He further argued that the address mentioned in Ex.P.3 lawyer;’s notice, Ex.P.4 cover returned belongs to the appellant only and the appellant in the cross-examination also admitted the same clearly specifically stating that “the address noted on the postal covers is that of his address”. The address on Exs.P.3 and P.4 are one and the same and the same is included in the complaint got filed by the respondent. For the same address, the appellant received summons from the Court. As such, absolutely there is no any wrong mention of the address of the appellant in any manner whatsoever and the respondent with clean hands has got served the registered cover with acknowledgement due to the correct address of the appellant only. As per the endorsement on Ex.P.4, it could be observed that clearly the intimation is given to the appellant by the postal authorities, but

III ASJ (Family) Court, VZM Criminal Appeal 54/2013 20 the appellant for the reasons best known to him failed to receive the cover and failed to take necessary steps with this regard and as such, unclean hands of the appellant is clearly visible and the said allegations alleged by the appellant should be struck off in all the ways. Therefore, the learned counsel for the respondent/complainant prays to dismiss the appeal by conforming the calendar and Judgment passed by the trial Court.

20.The learned counsel for the respondent/complainant also filed

additional written arguments and argued that Ex.P.1 was issued by the

accused towards legally enforceable debt. Originally, the contract in between the appellant and the respondent is on basis of Ex.P.5 Agreement of sale. So, the aggrieved party under the said contract of agreement of sale can opt for any relief under the specific performance. Admittedly the said building in question is in the same state of condition from the date it is collapsed at about seven years back till now and no steps are taken for construction or removal of the structures. The appellant himself admitted that the specific performance of Ex.P.5 agreement of sale is not at all possible. So, the only option available for the respondent is the other mode of specific performance i.e., refund of the advance sale consideration. As per

Ex.P.6 cancellation endorsement, if the cheque is enchased the Ex.P.5 agreement of sale is cancelled and if not agreement holds good. In this case, the cheque in question is not encashed, so the agreement under Ex.P.5 is not cancelled and the same is in force. As the agreement of sale is in force, the aggrieved party can seek for relief of specific performance for registration of the property, or can seek relief of refund of advance sale consideration.

Since the building was totally collapsed, the relief of registration of property is not possible due to untowards incident, therefore, the only option available to the respondent is for refund of advance sale consideration for which the present cheque in question under Ex.P.1 is issued by the appellant.

Therefore, absolutely Ex.P.1 cheque was issued towards the discharge of refund of advance sale consideration, which is another mode of specific

III ASJ (Family) Court, VZM Criminal Appeal 54/2013 21 performance and the same is also legally enforceable. Therefore, the provisions of the N.I. Act apply to the present case on hand. Under the provisions of Sections 73 and 74 of the Indian Contract Act, the respondent is entitled for refund of advance sale consideration amount, which is a legally enforceable debt. If the appellant really did not have any criminal intention to evade the amount payable to the respondent, what prevented the appellant to pay the amount payable to the respondent immediately after receipt of the summons from the trial Court, during the trial before the trial

Court, after conviction held by the trial Court and even during the time of hearing before this Court. Even now the appellant failed to pay the amount to the respondent, that itself is sufficient to show that the appellant is with criminal intention under the provisions of the N.I. Act and therefore, the appellant is liable for conviction. In respect of Ex.P.1 cheque amount, the respondent filed a civil suit against the appellant in Visakhapatnam Court for recovery of said legally enforceable debt and in the said suit, it was ordered for refund of amount payable to the respondent. Therefore, the respondent prays to dismiss the above appeal by confirming the calendar and Judgment passed by the trial Court.

21.in order to prove or support the contents in the complaint and to substantiate the averments therein, the complainant herein adduced his evidence during the course of trial and he himself was examined as P.W.1 in the above case. P.W.1 filed his evidence affidavit in lieu of his chief- examination by reiterating the averments of all the complaint filed by him and all the supportive documents are marked as Exs.P.1 to P.6. During the course of cross-examination of P.W.1, it was elicited that the accused signed the agreement of sale on behalf of Sudhakar Birlangi in the capacity of G.P.A.

Holder. Mr. Kola Balasubrahmam on behalf of Nagaja constructions as

Managing Partner signed pn the agreement of sale I.e, Ex.P.5 in his presence.

He admitted that in Ex.P.5 there is no clause mentioned for refund of amount by the accused and others. He is aware that the top floor of the building was

III ASJ (Family) Court, VZM Criminal Appeal 54/2013 22 collapsed and on which 4th floor slab and 5th floor slab were constructed. The accused and his partners approached him and requested him to take refund of the amount as they are not going to construct the building. He denied the suggestion that he approached the accused and his partner and insisted them to pay the amount. He admitted that Ex.P.6 endorsement on Ex.P.5 it is mentioned that “both parties agreed to cancel this agreement by mutual consent subject to realization of the amount. He admitted that he has filed a civil suit against the accused and his partners vide O.S.No.365/2008 on the file of the IV Addl., District Judge’s Court, Visakhapatnam, claiming back the advance of Rs.26,01,001/- along with interest from the date of advance till the date of realization. He admitted that Ex.P.5 agreement no clause was mentioned entitling them to claim interest on the document. He volunteers that as per the financial transactions, prevailing in the market, as he entitled to claim interest. He has filed a criminal case basing on the bouncing of

Ex.P.1 and later he also filed civil suit and obtained attachment orders before the Judgment against the property. He denied the suggestion that in the event of the bouncing of the cheque, he can file a suit to enforce the terms of agreement of sale, but he cannot file a criminal case under Sec.138 of N.I.

Act. He denied the suggestion that since there is a clause mentioned in

Ex.P.6 on Ex.P.5 that the agreement is cancelled subject to the realization of the cheque, he cannot file a criminal case U/s.138 of N.I. Act, against the accused. He denied the suggestion that he has filed a criminal case and also civil suit against the accused in order to harass him to create terror in the mind of the accused for realization of his amount. He denied the suggestion that the case under Sec.138of N.I. Act is not maintainable and he is liable to be prosecuted for malices of prosecution for foisting criminal case against the accused. He denied the suggestion that the notices were not received by the accused and hence the case U/s.138 of N.I. Act is not maintainable. He denied the suggestion that the cheque was issued by the accused in blank as a security amount and that he foisted the false case. He volunteers that the

III ASJ (Family) Court, VZM Criminal Appeal 54/2013 23 hand writing of the cheque is that of the accused. He denied the suggestion that the cheque is not in handwriting of the accused. He denied the suggestion that he is deposing false.

22.In support of the case of the defence, the accused himself examined as D.W.1. D.W.1 deposed that he is resident of Visakhapatnam and he is doing business and he is a Contractor. Himself, one B.Sudhakar and M/s. Nagaja Constructions represented by its Managing Partner by name

Kola Balasubrahmanyam to an extent of 2069 square feet, out of which he owns and possess 669 square feet and B.Sudhakar owns 1100 square feet and Nagaja Cosntructions 300 owns square feet, respectively. He knows the complainant. They proposed to raise constructions to multi store department in the name and style of Madhava constructions. The complainant approached him to purchase a plot No.404 in 3rd floor measuring 2150 square feet along with Car parking for a sum of Rs.53,54,650/- and an advance of Rs.26,01,001/- was paid towards advance in different spells. They executed Ex.P.5 in favour of the complainant. There is no clause mentioned in Ex.P.5 for cancellation agreement or any default clause. Subsequently they have commenced construction of the multi storeyed constructions.

Unfortunately at the time of laying in the 5th floor slabbed on 06.1.2008 the slab was collapsed and due to which two slabs were already collapsed. He has invested total amount in the construction. The said slab was collapsed due to the fault of L & T Limited to lay the slab, on contract basis. He also filed suit for damages against the said L & T Limited, then the complainant approached him to complete work but the same will not be done due to the circumstances prevailing and the complainant asked a cheque for security purpose. He has given Ex.P.1 for security purpose. As per their understandings, if the cheque is encashing the agreement was cancelled and in event of the cheque is not cancelled, the agreement is hold good. We have mentioned the said understandings vide Ex.P.6 on Ex.P.5. He further deposed that he has issued the cheque only for the purpose of security but

III ASJ (Family) Court, VZM Criminal Appeal 54/2013 24 not towards repayment. He has not received any notice in this case. The complainant also filed a suit vide O.S.No.365/2008 on the file of the Hon’ble II

Addl., District Judge’s Court, Visakhapatnam and obtained attachment orders of the site and remaining constructions. He has not committed any criminal breach of trust or any original liability. D.W.1 further deposed that as the complainant and some others filed suits and obtained attachments of the property before the Judgment, he could not raise funds, and hence he could not take steps for making further constructions.

23.During the course of cross-examination of D.W.1, it was elicited that they all three persons executed agreement of sale on 07.09.2007 in favour of the complainant under Ex.P.5. They all the three persons received

Rs.26,01,001/- from the complainant from time to time in pursuance of Ex.P.5 agreement. He is the Managing Partner of M/s. Suryanarayana & Co., they are the builders of the said company, for the purpose of the construction of the said building L & T Cement agreed to supply the concrete. On 06.01.2008 the entire upper three slabs are collapsed, the building is in the same collapsed condition till now. So far they did not make any further steps to reconstruct the building so till now same is in collapsed condition. They filed a suit against L & T Cement for recovery of Rs.60,00,000/- and odd for recovery of damages. The total cost of construction of entire building is

Rs.5,50,000/-. They agreed to cancellation of agreement on 25.4.2008 subject to realization of the cheque issued by him. The signatures shown on

Ex.P.5 are relating to himself and he signed as G.P.A. Holder of B.Sudhakar and 3rd signature relating to Managing Partner of Nagaja Constructions. He signed on Ex.P.6 endorsement on behalf of himself and on behalf of B.

Sudhakar, G.P.A. Holder. Both the signatures on Ex.P.1 are relating to him. In order to discharge his liability, he issued Ex.P.1 cheque towards his liability delivering the property. The entire Ex.P.6 endorsement absolutely there is no mention stating that the cheque is issued as a security. He admitted that the complainant filed the suit for recovery of Rs.26,01,000/- and interest from

III ASJ (Family) Court, VZM Criminal Appeal 54/2013 25 the date of cancellation of agreement and for damages of Rs.20,00,000/-.

He is contesting the said suit and the same is pending at Visakhapatnam

Court. Either himself or other executions of the agreement and complainant never expected that the building will be collapsed by making construction.

The address noted on the postal covers is that of his address. He denied the suggestion that knowing fully well about the receipt of the lawyer’s notice, he got it returned though intimated to him the postal authorities. He did not address any letter to his Banker stating that if at all the complainant presents the cheque in question don’t honour the same as he issued as a security purpose. He did not address any letter to the complainant, he issued the cheque for a security purpose and not present the same for collection. Immediately after receipt of summons in this Court at the first appearance or even sufficiently he did not file any memo or petition before this Court, stating that the cheque is issued for security purpose and not for discharge of debt amount payable to the complainant. He denied the suggestion that in order to discharge that his liability that is the debt amount of Rs.26,01,001/- payable to the complainant, he issued Ex.P.1 cheque and now in order to evade his liability, he is speaking false. He denied the suggestion that he issued Ex.P.1 cheque in order to discharge the legally enforceable debt amount of liability. They agreed to construct the entire building and agreed to deliver the respective portions to the complainant within 18 months from the date of agreement. He admitted that as on today it is not possible to execute register sale deed in favour of the complainant in terms of Ex.P.5 agreement. He admitted that so far as no injunction orders are passed by any Court restraining him and other partners to proceed with the construction in the place.

24.In this Appeal, the accused/appellant filed a petition U/s.391 of

Cr.P.C., vide Crl.M.P.No.294/2014 in Crl.A.No.54/2013 before this Court praying to summon the postal authorities/postman concerned to give evidence regarding the service of the statutory notice on the addressee, as

III ASJ (Family) Court, VZM Criminal Appeal 54/2013 26 per the endorsement on the postal cover. After enquiry and after hearing both sides, this Court allowed the said petition, on 25.2.2016. The Postman is examined as R.W.2. R.W.2 deposed that he is resident of visakhapatnam and he is working as Postman at Andhra University, Visakhapatnam since 15 years. He received summons from the Court to give evidence. He used to serve letter within the area of Dasapalla, Visakhapatnam. He took Ex.P.4 postal cover to serve on the appellant/accused on 17.8.2008. Since the door of the appellant/accused was locked, he endorsed the same and he endorsed thereon addressee on camp deposit six days and after seven days, he has made an endorsement that addressee long camp, hence returned to sender.

25.During the course of cross-examination of R.W.2, he admitted that so far as delivery of registered covers and articles, a separate delivery sheet will be maintained and obtained signature of the person to whom he delivered the cover and in the event of failure of delivery of the cover for any reason, the reasons will be mentioned on the said sheet. He did not bring the said sheet and it was in the custody of their office. At first, he has written the served letters on sheet and thereafter, he had written the same on the cover at post office. The address of the appellant/accused on Ex.P.4 is true and correct. He came to know that the appellant/accused is on camp on the day he went to serve Ex.P.4 postal cover from the neighbour of the appellant/accused orally. He enquired the neighbour of the appellant/accused and got information to endorse the same on Ex.P.4 postal cover. He has face acquaintance with the appellant.

III ASJ (Family) Court, VZM Criminal Appeal 54/2013 27 contract, directing the appellant/accused to deliver a flat as Ex.P.5 agreement stipulates the condition of only delivering the flat after its construction. In the ghastly incident of collapse of building, two persons were died, sentimentally no person is coming forward to proceed with the construction including the present complainant. Hence, the appellant is entitled for acquittal. It is pertinent to note that Ex.P.1 cheque was issued by the accused to the complainant towards discharge of amount under Ex.P.5 agreement entered in between the complainant and accused and hence, it comes under legally enforceable debt and also comes under other liability.

When once the cheque is issued by the accused, it is the bounden duty of the accused to keep sufficient funds to facilitate for encashment of Ex.P.1 cheque.

27.P.W.1 was cross-examined by the learned counsel for the accused at length but nothing was elicited in support of the defence and nothing could be proved against the case and contents of the complainant, thus the accused has utterly failed to prove his defence in proper perspective. The contention of defence raised by the accused herein has no legs to stand and there is no iota of truth and not tenable and the unsustainable defence is raised only with an intention to escape from his liability thereby to cause and suffer financial loss and mental agony to the complainant herein. P.W.1 has adduced sufficient oral and documentary evidence on record in support of his case which is proved beyond reasonable doubt and the accused failed to prove his contention and was not able to adduce even any rebuttal evidence in the case on hand in support of his evidence as there was no proper defence and further failed to prove his burden. The contention of the accused is, it is clearly mentioned in the agreement through Ex.P.6 endorsement that the “Agreement is cancelled subject to the encashment of the cheque” as the cheque is not encashed, the agreement got valid and restored and is not cancelled. Hence, the respondent/complainant has to file a suit for specific performance of contract, directing the appellant/accused to

III ASJ (Family) Court, VZM Criminal Appeal 54/2013 28 deliver a flat as Ex.P.5 agreement stipulates the condition of only delivering the flat after its construction. The said contention and defence raised by the accused has no legs to stand and it is not helpful and useful to the accused herein as he failed to prove such contention/defence. The address of the accused mentioned in the notice and the address mentioned in the summon/notice issued by this Court are one and the same and as such it is very clear that there is no dispute regarding to the address of the accused.

R.W.2, who is the postman categorically stated that he took Ex.P.4 postal cover to serve on the appellant/accused on 17.8.2008 and since the door of the appellant/accused was locked, he endorsed the same and he endorsed thereon addressee on camp deposit six days and after seven days he has made an endorsement that addressee long camp, hence returned to sender.

During the course of cross-examination of D.W.1, who is the accused herein, he categorically admitted that the address noted on the postal covers is that of his address. Hence, when once the complainant sent the statutory notice under Ex.P.3 to the correct address, the burden shifts on the accused to show that he is not residing in the said address. The accused never denied the execution of Exs.P.1, P.5 and P68. D.W.1 admitted in his cross-examination that the signatures shown on Ex.P.5 are relating to himself and he signed as

G.P.A. Holder of B.Sudhakar and 3rd signature relating to managing partner of

Nagaja Constructions. He also admitted that he signed on Ex.P.6 endorsement on behalf of himself and on behalf of B.Sudhakar G.P.A. Holder and both the signatures on Ex.P.1 are relating to him, which proves the case of the complainant herein. The accused issued Ex.P.1 cheque in connection with transaction under Ex.P.5 agreement, knowing fully that the accused closed the said Account with a dishonest intention. Since Ex.P.1 cheque is issued by the accused to the complainant as per the terms of Ex.P.5 agreement, it is legally enforceable debt. The findings and observations of the trial Court are in correct lines and the trial Court rightly convicted the accused for the offence punishable U/s.138 of N.I. Act.

III ASJ (Family) Court, VZM Criminal Appeal 54/2013 29

28.The Hon’ble Supreme Court in Rangappa vs. Sri Mohan, reported in II (2010) B.C. 693, (three Judges Bench of the Hon’ble

Supreme Court) held that:

“Section 139 of Negotiable Instruments Act does indeed include the existence of legally enforceable debt or liability and it is rebuttal presumption and it is open to the accused to raise a defence wherein the existence of legally enforceable debt or liability can be contested. However, there can be no doubt that there is initial presumption which favours the complainant.

Sec.139 of N.I. Act is example for reverse onus clause that has been included in furtherance of the legislative object of improving the credibility of negotiable instrument.”

29.When the accused is not disputing his signature on Ex.P.1 cheque, as per the decision of Rangappa vs. Sri Mohan, reported in II (2010) B.C. 693, Sec.139 of N.I. Act does indeed include the existence of legally enforceable debt or liability and it is rebuttal presumption and it is open to accused to raise a defence wherein the existence of legally enforceable debt or liability can be contested.

30.As per the decision of our Hon’ble Supreme Court, rendered in

R.Rajendran vs. A.J. Yuvaraj Reddy and another, reported in 2012 (2)

ALD (Crl.) 682 and Anil Dagwale, vs. K.Raju and Another reported in 2003 (1) ALD (Crl.) 276, once accused admitted his signatures on cheque, even though blank cheques were issued, burden lies on accused why he issued said cheques to complainant. In such cases, examination of complainant alone is sufficient and there is no need for any corroboration evidence from the side of complainant to prove the legally enforceable debt.

III ASJ (Family) Court, VZM Criminal Appeal 54/2013 30 and the burden shifts on accused to prove that the said cheque was not issued to discharge the legally enforceable debt or obligation. Ex.P.3 is office copy of Lawyer’s notice dated 11.09.2008 got issued by the complainant to the accused, demanding him to pay the cheque amount. But the same was returned to the Complainant as “Addressee Long Camp”. Therefore, the accused has committed the offence under Sec.138 of N.I. Act. It is the case of the complainant that the accused being fully aware of the issuance of cheque in order to clear the debt, evaded to honour the same, which attracts an offence punishable U/s.138 of N.I. Act. Hence, the accused is liable for punishable U/s.138 of N.I.Act.

32. Mere raising bald allegations against without any proof cannot be believable. During the course of cross-examination of D.W.1, he stated that immediately after receipt of summons from this Court in this case at the 1st appearance or even subsequently he did not file any memo or petition

before this Court stating that the cheque issued for security purpose and not

for discharge of debt amount payable to the complainant. If really the accused did not issue Ex.P.1 cheque to the complainant for collateral security, what prevented to the accused to file a petition before this Court in support of his said contention, but he kept quiet. Mere non-issuance of reply itself is not absolute proof of case of the complainant, but it is one of the circumstances probablize the correctness of the case of the complainant.

After considering the oral evidence of P.W.1 and inaction on the part of the accused, this Court is of considered opinion that the complainant proved that the accused issued Ex.P.1 cheque to the complainant in discharge of legally enforceable debt and liability in terms of agreement under Ex.P.5 and the said cheque was bounced due to “Insufficient Funds”.

III ASJ (Family) Court, VZM Criminal Appeal 54/2013 31 of the cheque amount and failure of the drawer to make payment within 15 days of receipt of the notice, the statutory presumptions under Sec.118 and 139 of N.I. Act will arise in favour of the complainant. Under Sec.118(a) of the N.I. Act, the Court shall presume that the negotiable instrument has been drawn for consideration. Under Sec.139 of the N.I. Act, the Court shall presume that the holder of the cheque received the cheque for the discharge, in whole or in part, of any debt or other liability. The meaning and expression ‘shall presume’ has been explained in Section 4 of Indian

Evidence Act. Wherever it is provided by any Act that the Court ‘shall presume’ a fact, it shall regard such fact as proved unless and until it is disproved. Thus, the presumptions under Section 118 and 139 of N.I. Act are rebuttable presumptions. The burden of proof to rebut the said presumptions is upon the accused.

34.The learned counsel for the complainant contended that the accused issued cheque in favour of the complainant to discharge the liability under Ex.P.5. He submitted that the object of Sec.138 of N.I. Act is to enhance the credibility or acceptability of cheques, it is immaterial that the cheque was issued for discharge of his own debt or liability. Therefore, P.W.1 has established the essential ingredients of the offence U/s.138 of N.I. Act.

35.With regard to receiving of statutory notice, the learned counsel

for the appellant/accused contends that the statutory notice has not been

served on the accused, and the complainant managed postal authorities to get it returned, as such the complaint is not maintainable and liable to be dismissed. Whereas, the learned counsel for the complainant argued that

III ASJ (Family) Court, VZM Criminal Appeal 54/2013 32 endorsed the same and he endorsed thereon, address on camp, hence returned to sender, deposit six days and after seven days he made endorsement that addressee long camp hence returned to sender. The accused intentionally avoided the service of summons, though the the complainant sent Ex.P.3 legal notice to the correct address of the accused.

Hence, by drawing presumption of service U/s.27 of General Clauses Act, the notice is deemed to have been served on the accused. For detailed appreciation, it is necessary to reproduce Section 27 of General Clauses Act, 1897 which reads as follows :

“Sec.27:- Meaning of service by post:- Where any

Central Act or regulation made after commencement of this Act authorises or requires any document to be served by post, whether the expression ‘serve’ or either of expressions ‘give’ or ‘send’ or any other expression is used, then, unless a different intention appears, the service shall be deemed to be effected by properly addressing preparing and posting by registered post, a letter containing the document and unless the contrary is proved, to have been effected at the time at which the letter would be delivered in the ordinary course of post”.

36. The principle incorporation in Sec.27 of General Clauses Act is that, once the notice has been dispatched by registered post by the sender, then it shall be deemed to have been served on the addressee unless the addressee proves that it was not really served and that he was not responsible for non-service. In this connection, this court relied upon a decision reported in Vanama Srinivasa Rao Vs. State of A.P. (L.C.2012 (14) A.P., 128). In the above cited case, the Hon’ble High Court reiterated the settled position of law that once a notice has been sent by registered post to the correct address, then it must be presumed that the service has been effected.

37.In respect of service of statutory notice on the accused, this

Court relied on the following citation :

III ASJ (Family) Court, VZM Criminal Appeal 54/2013 33

N. Parameswaran Unni Vs. g. Kannan and others, reported in 2017 (2) ALT (Crl) 366 (SC), wherein it was held at Para-15 of the

Judgment, as follows :

“Sec.138 of N.I. Act – Proof of Service of Notice – Sec.28 of

General Clauses Act – Sec.114 of Evidence Act. When a notice is sent by registered Post and is returned with postal endorsement of

Refused – Not Available in the House – House Locked – Shop closed –

Addressee Not in Station – due service has to be presumed. Once a notice is sent by registered post by correctly addressing to the drawer of the cheque, the service of notice is deemed to have been effected”.

During the course of cross-examination of D.W.1, who is the accused herein, he categorically admitted that the address noted on the postal cover is that of his address. When the accused himself admitted that he is residing in the same address as mentioned in Ex.P.4 unserved postal address, when once a notice is sent by registered post by correctly addressing to the drawer of the cheque, who is the accused herein, the service of notice is deemed to have been effected. Hence, the above citation is aptly applicable to the present case on hand.

38.Thus, it is clear that P.W.1 has sent the legal notice to the house of the accused. The conditions pertaining to the notice to be given to the drawer have been incorporated in clauses (b) and (c) or the proviso to

Section 138 of the Act which reads as follows :

“(b) The payee or the holder in due course of the cheque, as the case may be, makes a demand for the payment of the said amount of money by giving a notice in writing, to the drawer of the cheque, within fifteen days of the receipt of information by him from the bank regarding the return of the cheque as unpaid, and the drawer of such cheque fails to make the payment of the said amount of money to the payee or as the case may be, to the holder in due course of the cheque within fifteen days of the receipt of the said notice”.

III ASJ (Family) Court, VZM Criminal Appeal 54/2013 34

39. In the present case, admittedly the address mentioned on

Exs.P.4 returned postal cover and the address mentioned on Ex.P.3 lawyer’s notice, as well as the complaint are one and the same. As seen from the record, the Court summons sent by registered post to the same address have been served on the accused. Therefore, this is a clear case, where the accused has successfully avoided the receipt of statutory notice dispatched to his correct address. This kind of behaviour by trickster drawer of the cheque cannot be encouraged by the Courts. Therefore, this Court holds that the accused has failed to rebut the presumption under Section 27 of

General Clauses Act with respect to service to statutory notice to him and hence, the notice is deemed to have been served on the accused.

40.In respect of the service of Ex.P.3 legal notice is concerned, the learned counsel for the accused relied on the following citations :

(1) V. Raja Kumari Vs. P. subbarama Naidu & Another, reported in 2004 (8) SCC 774, wherein their Lordships of the Hon’ble Supreme Court held that :

“Meaning of service by post – Where any Central Act or

Regulation made after the commencement of this Act authorises or requires any document to be served by post, whether the expression ‘service’ or either of the expression ‘give’ or ‘send’ or any other expression is used, then, unless a different intention appears, the service shall be deemed to be effected by properly addressing, preparing and posting by registered post, a letter containing the document, and unless the contrary is proved, to have been effected at the time at which the letter would be delivered in the ordinary course of post”.

(2)Pradeep Madhukar Poinguinkar Vs. Shri Manguesh

Kuttalkar Another, in Criminal Appeal No.57/2005, of the Hon’ble

Bombay High Court, wherein his Lordship held that :

III ASJ (Family) Court, VZM Criminal Appeal 54/2013 35 the said endorsement was otherwise not clear as to the place from which the accused was arrested. It is quite probable that the accused was arrested from a place other than the address mentioned herein above. The learned trial Court also observed that the accused had managed to return the registered A.D. by the Postal

Authorities and this the learned trial Court did without any evidence being led in that regard. On the other hand, the learned first

Appellate Court observed that the presumption available under section 27 of the General Clauses Act was a rebuttable presumption.

The learned first appellate Court noted that the postal article was not returned in the case at hand, by the Postal Authorities with the remark refused or unclaimed or addresses absent at the given address but that it was returned with the remark insufficient address, return to sender. The learned first Appellate Court noted that on the face of the said remark it only meant that the postman did not get a chance to see whether the addressee was there or not to find out whether he was refusing or accepting the service. The learned first

Appellate Court also observed that the learned trial Court had made a serious allegation against the postmaster (sic postman) and that the complainant in the complaint nor in his evidence had stated that the accused had managed to return the cheques (sic postal article) by managing the Postal Authorities and therefore there was no presumption of any such management with the Postal Authority. The learned first Appellate Court referred to section 114 of the Evidence

Act, and in my view rightly, to draw a presumption that official acts have been regularly performed. A postman is a Public Officer. The postman had returned the postal article with the endorsement insufficient address, return to sender. The said endorsement showed that the postman had not even made an attempt to serve the address/accused with the said postal article and on the contrary the accused had himself stepped into the witness box and categorically stated that he had not received the said article. In the light of the absence of necessary averments, the said endorsement and the categorical evidence given by the accused, it should not be said that the complainant had duly served the statutory notice upon the accused. Reliance placed on the cases of (v.Satyanarayana v. A.P.

Travel and Tourism Development ltd. And another) 1, 1997 (Crimes 349 and (V. Raja Kumari v. P. Subbarama Naidu and another) 2, 2005 (1) Bom. C.R. (Cri.) (S.C.) 730 : A.I.R.2005 S.C. 109 is of no assistance

III ASJ (Family) Court, VZM Criminal Appeal 54/2013 36 to the case of the Complainant. The view held by the learned first

Appellate Court is a correct view of the matter in the facts and circumstances of the case. There was no question of presumption of service being drawn when the postman had himself returned the postal article for insufficient address. No interference is called for in this appeal. Hence, the same is hereby dismissed. Appeal dismissed”.

(3) Ramesh Chand Vs Ravinder Singh Chandel, reported in 2007

CriL.J. 1313, wherein it was held that :

“It may be that the address is correct and even the addressee is available but a wrong endorsement is manipulated by the addressee. In such a case, if the facts are proved, it may amount to refusal of the notice. If the complainant is able to prove that the drawer of the cheque knew about the notice and deliberately evaded service and got a false endorsement made only to defeat the process of law, the Court shall presume service of notice. Thus, however, is a matter of evidence and proof. Thus even in a case where the notice is returned with the endorsement that the premises has always been found locked or the addressee was not available at the time of postal delivery, it will be open to the complainant to prove at the trial by evidence that the endorsement is not correct and that the addressee, namely, the drawer of the cheque, with knowledge of the notice had deliberately avoided to receive notice”.

(4) D. Vinod Shivappa, Vs. Nanda Belliappa, reported in 2006 (4)

Supreme 540 wherein their Lordships of the Hon’ble Supreme Court of India held that :

“(i) Negotiable Instruments Act, 1881 – Section 138(b) – dishonour of Cheque – Demand notice to appellant-accused was returned with endorsement “addressee always absent during delivery time. Hence returned to sender” - In other cases notices were returned with endorsement “party not in station. Arrival not known” - Petition in question proceedings and complaint – High

Court dismissed petition – Appeal – Complainant stated that notice may be deemed to have been served – Whether appellant in the circumstances could pray for quashing of proceedings ? No –

Question where posted endorsement showed that notice could not be served on account of non-availability of addressee, whether

III ASJ (Family) Court, VZM Criminal Appeal 54/2013 37 cause of action could arise for prosecution on basis of deemed service – Question could be answered by reference to facts of each case and no rule of universal application could be laid down – In interpreting a statute court must adopt that construction which suppressed mischief and advanced the remedy – Proviso to Section 138(b) was meant to protect honest drawers – If complainant was able to prove that drawer of cheque knew about the notice and deliberately evaded service and got false endorsement made only to defeat process of law, Court shall presume service of notice –

These were all questions of facts and it would be premature to move High Court for quashing of proceedings.

Held : The question is whether in a case of this nature, where the postal endorsement shows that th8e notice could not be served on account of the non availability of the addressee, a cause of action may still arise for prosecution of the drawer of the cheque on the basis of deemed service of notice under clause (c) of proviso to Section 138 of the Act. In our view this question has to be answered by reference to the facts of each case and no rule of universal application can be laid down that in all cases where notice is not served on account of non-availability of the addressee, the court must presume service of notice.

We cannot also lose sight of the fact that the drawer may by dubious means manage to get an incorrect endorsement made on the envelope that the parties has been found locked or that the addressee was not available at the time when postman went for delivery of the letter. It may be thaet the address is correct and even the addressee is available but a wrong endorsement is manipulated by the addressee. In such a case, if the facts are proved, it may amount to refusal of the notice. If the complainant is able to prove that the drawer of the cheque knew about the notice and deliberately evaded service and got a false endorsement made only to defeat the process of law, the Court shall presume service of notice. This, however, is a matter of evidence and proof. Thus even in a case where the notice is returned with the endorsement that the premises has always been found locked or the addressee was not available at the time of postal delivery, it will be open to the complainant to prove at the trial by evidence that the endorsement is not correct and that the

III ASJ (Family) Court, VZM Criminal Appeal 54/2013 38 addressee, namely the drawer of the cheque, with knowledge of the notice had deliberately avoided to receive notice”.

(5) Jai Durga Enterprises Through Its … Vs. State of U.P. and

Indo Automobiles, reported in 2006 Cri L.J. 3312, wherein his Lordship of the Hon’ble Allahabad High Court held that :

“Therefore, it is essential that service upon registered notice should be affected in absence of registered post. It shall not be presumed that there is sufficient service regarding notice sent by U.P.C, and it cannot be taken into account under Section 27 of the Act that there was sufficient service upon the accused/appellants. Although, it has been denied by the applicant that no any notice was received by them in the affidavit and same has not been controverted by filing counter affidavit. Therefore, it is liable to be deemed that there was no sufficient service of legal notice upon the applicants/accused. On this basis, the impugned order passed by the court below is liable to be quashed”.

(6) S.S. Ummul Habiba,Vs. B. Rajendran, reported in 2005 (1)

ALD Cri 33, wherein his Lordship of the Hon’ble Madras High Court, held that :

“On 19.12.1992, the accused issued Ex.P.3-Lawyer’s notice demanding the amount due on the cheque. The accused intentionally evaded service of the notice and the notice returned to the sender with the endorsement “intimation given; not claimed”. Since the accused evaded the service of notice, it must be deemed to be constructive notice and sufficient service of notice on the accused. The accused failed to pay the cheque amount till 15.1.1993. Hence, the Complaint was filed against the accused under Section 138 of N.I. Act”.

(7) Yadav Chandra sharma, v. Gyanendra Singh Kushwah, reported in 2017 0 Supreme (MP) 781, wherein his Lordship of the Hon’ble

High Court of Madhya Pradesh, held that :

“Negotiable Instruments Act, 1881 – S.138 – General

Clauses Act, 1897 – S.27 – Evidence Act, 1872 – Ss.101 and 103 –

Case of dishonour of cheque – Petitioner stated that he never received notice sent by respondent – He specifically alleged

III ASJ (Family) Court, VZM Criminal Appeal 54/2013 39 regarding interpolation over acknowledgement card – Petitioner’s application for calling postman as witness allowed”.

(8) Parimal Vs. Veena @ Bharti, reported in 2011 (3) SCC 545, wherein their Lordships of the Hon’ble Supreme Court of India, held that :

“There is presumption of service of a letter sent under registered cover, if the same is returned back with a postal endorsement that the addressee refused to accept the same. No doubt the presumption is rebuttable and it is open to the party concerned to place evidence before the Court to rebut the presumption by showing that the address mentioned on the cover was incorrect or that the postal authorities never tendered the registered letter to him or that there was no occasion for him to refuse the same. The burden to rebut the presumption lies on the party, challenging the factum of service.

The provisions of Section 101 of the Evidence Act provide that the burden of proof of the facts rests on the party who substantially asserts it and not on the party who denies it. In fact, burden of proof means that a party has to prove an allegation

before he is entitled to a judgment in his favour Section 103

provides that burden of proof as to any particular fact lies on that person who wishes the court to believe in its existence, unless it is provided by any special law that the proof of that fact shall lie on any particular person. The provision of Section 103 amplifies the general rule of Section 101 that the burden of proof lies on the person who asserts the affirmative of the facts in issue”.

The address of the appellant/accused as mentioned in Ex.P.3 registered lawyer’s notice; Ex.P.4 returned cover, address mentioned in the complaint and the summons issued by the Court, are one and the same. For the same address, the appellant received summons from the Court. As such, absolutely there is no any wrong mention of the address of the appellant in any manner whatsoever and the respondent with clean hands has got served the registered cover with acknowledgement due to the correct address of the appellant only. Hence, the service shall be deemed to be effected by properly addressing, preparing and posting by registered post. The facts of the above cited cases are different from the present case on hand.

III ASJ (Family) Court, VZM Criminal Appeal 54/2013 40

41.The learned counsel for the respondent/complainant argued that the notice is sent to the correct address of the accused and absolutely the appellant except denying the same did not rebut the same and as such, as per the dictum of the Hon’ble Supreme Court, the notice is deemed service on the appellant/accused. In support of his contention he relied on the following citation 2000 (1) ALT (Crl) 42 (SC), wherein it was held that :

“Under General Clauses Act, 1987, Section 27, -

Meaning of service by post – Where sender of notice dispatched by post with the correct address, notice must be deemed to have been served on the sendee, unless he rebuts it – in the case of hand, notice deemed to have been served”.

The above citation is applicable to the present case on hand, since in the present case on hand also the complainant sent the notice to the accused to his correct address and the accused, who is examined as D.W.1 also admitted in his cross-examination that the address noted on the postal cover is that of his address. Hence, as the complainant sent legal notice to the correct address of the accused, the notice must be deemed to have been served on the accused.

42.The learned counsel for the respondent/complainant further argued that a person who does not pay within fifteen days of receipt of summons from the Court along with a copy of the complaint, cannot contend that there was no proper service of notice by ignoring statutory presumption.

In view of his above said contention, he relied on the following citation 2007 (6) SCC 555, wherein it was held that :

“Remedy for person who claims that he did not receive notice sent by post is that the Appellant may pay the amount and submit to the Court that he had made payment of cheque amount within fifteen days of the receipt of summons and a person who does not pay within fifteen days of receipt of summons from the

Court along with a copy of the complaint, cannot obviously contend that there was no proper service of notice by ignoring statutory presumption under section 27 of General Clause Act and

Section 114 of Evidence Act”.

III ASJ (Family) Court, VZM Criminal Appeal 54/2013 41

In the present case on hand also the appellant failed to pay the cheque amount within fifteen days of the receipt of summons and hence, he cannot contend that there was no proper service of notice as per the provisions of

Sec.27 of General Clauses Act and Sec.114 of the Indian Evidence Act.

Hence, the above citation is applicable to the present case on hand.

43.The learned counsel for the respondent/complainant further argued that the appellant/accused who is doing real estate business received advance amount promising to allot flat to the respondent/complainant but he could not fulfill his promise and so he is liable to pay the advance amount received as sale consideration and the cheque in question was endorsed in favour of the respondent in acknowledgement of the said liability, as such the respondent is holder in due course. In support of his contention, he relied on a citation i.e., 1994 Madras Law Journal (Cri) 112, wherein it was held that :

“Appellants, who are real estate dealers, had received amounts promising to sell three grounds of land but could not fulfill that promise and so were liable to pay the amount received as sale consideration. The cheques in question were endorsed in favour of Respondent in acknowledgement of the said liability. As such the respondent is “holder in due course”. Held in view of the allegations in the complaint, the submission that there was no legally enforceable debt and the cheques were not issued to discharge and so the offence is not made out, fails”.

In the present case also the appellant/accused received advance amount with a promise to allot a flat to the complainant, but he failed to allot the same and the cheque in question was endorsed in favour of respondent is “holder in due course”. Hence, it is legally enforceable debt. Hence, the above citation is applicable to the present case on hand.

44. The main core contention of the appellant/accused is that the cheque was issued by him to the 1st respondent/complainant towards collateral security, as such the appellant has to seek the remedy through

III ASJ (Family) Court, VZM Criminal Appeal 54/2013 42

Civil Court only by filing a suit for specific performance of contract. It is pertinent to note that as seen from the entire material available on record and Ex.P.6 cancellation endorsement towards cancellation of Ex.A.5 agreement, in which it was mentioned that due to tragic incident occurred on 06.1.2008 in which the schedule property building was collapsed, decided to cancel the agreement by mutual consent and hence, as per the understandings of both parties of the agreement, the vendor refunding the advance sale consideration paid by the purchaser at the time of agreement and subsequent payment paid by the purchaser to the purchaser by way of cheque in favour of the purchaser towards full and final settlement of all claims of purchaser against the vendor including the refund of advance sale consideration paid by purchaser on the date of execution of the agreement.

In the said cancellation endorsement, it was further mentioned that both parties agreed to cancel the agreement by mutual consent subject to realization of the above mentioned cheque and no party of the agreement shall have any right against other party of the agreement, after the realization of the above mentioned cheque and the vendor is at liberty to offer the schedule property for sale to any other person at his will. Hence, on perusal of the above contents of Ex.A.6 cancellation endorsement, the above cheque was issued towards refund of advance amount which is liability of the accused, but it does not come under collateral purpose. Hence, in the contention raised by the accused holds no water.

45.In the present case, the accused is not disputing his signature on

Ex.P.1 cheque, therefore the statutory presumption U/s.118 of N.I. Act that the cheque has been drawn for consideration and under Sec.139 of N.I. Act that the cheque has been issued for the discharge of debt or liability will raise in favour of the complainant and the burden is upon the accused to rebut the said presumptions. The learned counsel for the accused cross- examined P.W.1 at length but nothing was elicited in favour of the accused.

Since the present case is a criminal case, the accused has to prove his

III ASJ (Family) Court, VZM Criminal Appeal 54/2013 43 contention by preponderance of probabilities by adducing some acceptable evidence before the Court. Though the accused himself examined as D.W.1 and also examined the postman on his behalf in this Appeal as R.W.2, the accused could not prove his contention. All the suggestions made to P.W.1 in his cross-examination were denied by P.W.1. Mere denial is not sufficient to prove his contention.

46.The evidence on record established that the accused issued

Ex.P.1 cheque to discharge the liability and the same was dishonoured as “Funds Insufficient”. It is an admitted and proved fact that the complainant issued statutory notice under Ex.P.3 within the time, but the said notice of the accused was returned by the postal authorities as “Addressee Long

Camp” and the accused not arranged the funds in his account. Therefore, the complainant proved all the requirements to constitute the offence punishable U/s.138 of N.I. Act.

47.In the present case the complainant prove that the cheque given by the accused towards legally enforceable debt. It is also pertinent to note that once issuance of a cheque and signature thereon are admitted, presumption of a legally enforceable debt or other liability in favour of the holder of the cheque arises and accused may rebut the presumption, but mere statement of the accused may not be sufficient. In the present case the accused failed to discharge his burden of rebutting the presumption. The accused was under an obligation or liability to make payment to complainant under Ex.P.1 cheque, but he failed to make payment of said amount and cheque so issued by accused stood dishonoured for “Funds Insufficient” account closed. It is also pertinent to note that mere fact that debtor has given security in form of cheque or current cheque with agreement that it is security for fulfillment of obligation to be discharged on date itself.

48.In a case in between K.N. Beena vs. Muniyappan & Another, reported in 2002 SCC (Cri) 14, wherein the Hon’ble Supreme Court held that :

III ASJ (Family) Court, VZM Criminal Appeal 54/2013 44 “U/sec.118 unless the contrary was proved, it is to be presumed that the Negotiable Instrument (including cheque) had been made and drawn for consideration. U/s.139, the Court has to presume unless the contrary was proved that the holder of the cheque received the cheque for discharge, in hole or in part, of a debt or liability, thus, in a complaint U/s.138, the Court has to presume that the cheque had been issued for a debt or liability, this presumption is rebuttable. However, the burden of proving that the cheque had not been issued for a debt or liability is on the accused. Section 20 of Negotiable Instruments Act says that inchoate stamped instrument and states that if a person signs and delivers a paper stamped in accordance with law and either wholly blank or for written thereon an incomplete Negotiable

Instrument, such person thereby gives prima facie authority to the holder thereof to make or complete as the case may be upon it, the Negotiable Instrument for any amount specified therein and not exceeding the amount covered by stamp. Sec.49 permits the holder of a Negotiable Instrument endorsed in blank to fill up the said instrument by writing upon the endorsement, the direction to pay any other person as endorsee and to complete the endorsement in the blank cheque, it makes it clear that doing for holder does not thereby incur the responsibility of an endorser as per Subhash Chand vs. Satish Varma, pages 1 to 16 on 12th May, 2016.”

49.In a case in between Rajendra vs. Usha Rani reported in (2001 L.W. (Crl.) 319), it was observed that :

“No law prescribes that in case of any Negotiable

Instrument, the entire body of the instrument shall be written only by the maker or drawer of the instrument. Once the execution is admitted, it shall be taken that the cheque was issued by the accused in favour of the complainant towards the discharge of the liability even in case where the cheque was filled up by the some other person.”

50. Section 139 of the Act always in favour of the holder of the instrument. The Court shall presume the fact as proved till it is disproved.

Admittedly, the accused did not place any cogent evidence to rebut the presumption. No doubt the accused need not adduce positive evidence to

III ASJ (Family) Court, VZM Criminal Appeal 54/2013 45 rebut the presumption. But, in the present case, the complainant by examining himself as P.W.1, proved Ex.P.1 cheque.

51.If really the complainant also influenced the Postal Department at the time of serving notice and the complainant intentionally served the notice to him with wrong address, what prevented him to complain against the accused to the higher officials of the Postal Department for taking necessary action against the concerned postal officials, who supported the complainant. Except mere bald statements, the accused could not prove his case with cogent and convincing evidence.

52.The learned counsel for the appellant/accused relied on the following citations :

(1) Nikhil P.Gandhi, Vs. State of Gujarat and Others, reported in 2016 0 Supreme (Gujarat) 908, wherein his Lordship of Hon’ble Gujarat

High Court held that :

“(A) Negotiable Instruments Act, 1881 – Section 138 –

Dishonour of cheque – A legal fiction, although is required to be given full effect, yet has its own limitations – It cannot be taken recourse to for any purpose other than one mentioned in statute itself – Section 138 provides for a penal provision – a penal provision created by reason of a legal fiction must receive strict construction – Such a penal provision, enacted in terms of legal fiction drawn, would be attracted when a cheque is returned by bank unpaid –

Before a proceeding thereunder is initiated, all legal requirements

therefor must be complied with – Court must be satisfied that all ingredients of commission of an offence under said provision have been complied with.

(B) Negotiable Instruments Act, 1881 – Section 138 –

Criminal Procedure Code, 1973 – Section 482 – Dishonour of cheque – Whenever a blank cheque or postdated cheque is issued, a trust is reposed that cheque will be filled in or used according to understanding agreement between parties – If there is a prima facie reason to believe that said trust is not honoured, then continuation of prosecution under Section 138 of N.I. Act would be abuse of process of law – It is in interest of justice that parties in such cases are left to civil remedy”.

III ASJ (Family) Court, VZM Criminal Appeal 54/2013 46 (2) M/s. Indian Oil Corporation, Vs. M/s. NEPC India Ltd. &

Others, reported in 2006 (6) Supreme 66, wherein their Lordships of the

Hon’ble Supreme Court of India, held that :

“While on this issue, it is necessary to take notice of a growing tendency in business circles to convert purety civil disputes into criminal cases. This is obviously on account of a prevalent impression that civil law remedies are time consuming and do not adequately protect the interests of lenders/creditors. Such a tendency is seen in several family disputes also, leading to irretrievable break down of marriages/families. There isd also an impression that if a person could somehow be entangled in a criminal prosecution, there is a likelihood of imminent settlement.

Any effort to settle civil disputes and claims, which do not involve any criminal offence, by applying pressure though criminal prosecution should be deprecated and discouraged”.

(3) All Cargo Movers (I) Pvt. Ltd. & Others, Vs. Dhanesh

Badarmal Jain & Another, reported in 2007 (12) SCALE 391, wherein it was held by the Hon’ble Court that :

“Where a civil suit is pending and the complaint petition has been filed one year after filing of the civil suit, we may for the purpose of finding out as to whether the said allegations are prima facie cannot notice the correspondences exchanged by the parties and other admitted documents. It is one thing to say that the Court at this juncture would not consider the defence of the accused but it is another thing to say that for exercising the inherent jurisdiction of this Court, it is impermissible also to look to the admitted documents. Criminal proceedings should not be encouraged, when it is found to be mala fide or otherwise an abuse of the process of the Court. Supreme Courts while exercising this power should also strive to serve the ends of justice”.

(4) M/s. Shakti Travel & Tours, Vs. State of Bihar & Another, reported in 2000 (7) Supreme 90, wherein their Lordships of the Hon’ble

Supreme Court held that :

“The only ground on which the learned counsel for the

Appellant prays for quashing of the complaint is that on the assertions made in paragraph 8 of the complaint, it must be held

III ASJ (Family) Court, VZM Criminal Appeal 54/2013 47 that notice has not been served and, therefore, an application under

Section 138 could not have been maintained. Undoubtedly, the accused has a right to pay the money within 15 days from the date of the service of notice and only when it fails to pay, it is open for the complainant to file a case under Section 138 of the Negotiable

Instruments Act. That being the position and in the complaint itself having not been mentioned that the notice has been served, on the assertions made in paragraph-8, the complaint itself is not maintainable. We accordingly quash the complaint”.

It is pertinent to note that initially when the complaint is filed by the respondent under the provisions of the N.I. Act, as per the provisions of the

Sections 138, 139 and 142 of N.I. Act, the initial presumption that the cheque was drawn for discharge of liability of drawer ought to be raised by the

Courts in every case and the Appellant to rebut the same has to prove the same by adducing cogent and convincing evidence and not by mere suggestions. On perusal of the facts of the above cited cases, the facts of the above cited cases are different from the facts of the present case on hand.

53.The learned counsel for the respondent/complainant argued that

Ex.P.1 cheque is not issued towards security as alleged by the respondent in any manner whatsoever. In support of his contention, the learned counsel

for the respondent/complainant relied on the following citations :

(1) 1998 Crl.L.J. 3228, wherein the Hon’ble High Court held that :

“Negotiable Instruments Act – Section 118 (a) – Evidence

Act, Sec.114 – Cheque – Consideration – Presumption as to –

Drawer issued blank cheque as security for loan transaction –

Issuance of the cheque admitted – No dispute regarding signature amount and name shown in cheque – It can be presumed that cheque was supported by consideration – Presumption cannot be rebutted merely because there were some transactions between drawer and drawee of cheque”.

(2) AIR 2001 Supreme Court, 676, wherein it was held that :

III ASJ (Family) Court, VZM Criminal Appeal 54/2013 48 “Negotiable Instruments Act Ss.1 – Interpretation – Act to be interpreted in light of objectives to be achieved – Efforts to defeat objectives of law to be discouraged”.

(3) 2005 Crl.L.J. 314, wherein it was held that :

“Negotiable Instruments Act Ss.138, 139 – Evidence Act, S.4 – Cheque issued towards balance sale consideration due under agreement of sale after delivery of possession of property agreed was given – covered under other liability – Burden would be on petitioners to establish that dishonoured cheque was not issued in discharge of debt or other liability – Respondent cannot be quashed against petitioner”.

(4) 2005 Crl.L.J. 640, wherein it was held that :

“Negotiable Instruments Act ss.138 – Dishonour of cheque –

Blank cheque drawn in favour of the Respondent as security for repayment of amount of amount that may become due – Necessary entries were made there in after verifying accounts on behalf of respondent with respect to outstanding liability – It became a cheque only on date when liability was acknowledged and entered in cheque – Respondent has proved a liability outstanding from respondent – Said cheque was bounced for want of funds is also not disputed – Respondent guilty of offence punishable under Sec.138”.

(5) AIR 2002 Supreme Court 182, wherein it was held that :

“Negotiable Instruments Act Ss.138, 139 – Cheque dishonour complaint – Not liable to be quashed on ground of dishonour of cheque by reason of stop payment instructions –

Presumption under Section 139 that cheque was received by holder for discharge of debt or liability arises – Presumption though is rebuttable”.

(6) AIR 2000 Supreme Court 1869, wherein it was held that :

“Complaint cannot be quashed merely on grounds that civil remedy is available”.

In the present case on hand the accused who is examined as D.W.1, admitted in his cross-examination that the signatures shown on Ex.P.5 are relating to himself and he signed as G.P.A. Holder of B.Sudhakar and 3rd signature relating to managing partner of Nagaja Constructions. He also admitted that he signed on Ex.P.6 endorsement on behalf of himself and on

III ASJ (Family) Court, VZM Criminal Appeal 54/2013 49 behalf of B.Sudhakar G.P.A. Holder and both the signatures on Ex.P.1 are relating to him, hence there is no dispute regarding signature, amount and name shown in cheque and it can be presumed that cheque was supported by consideration. The cheque was bounced for want of funds is also not disputed.

54.Burden of proving that the cheque had not been issued for any debt or liability is on the accused. Mere denial that the cheque was not issued in discharge of legally enforceable debt or liability in the absence of any sufficient evidence, does not shift the burden to the complainant.

55. When the accused contended that he did not issue the cheque in discharge of legally enforceable debt or liability, it is for the accused to disprove the presumption regarding the same, in this connection, it is apt to refer a decision reported in Sudhir Sabharawal v. Anil Prabhakar

Nilgirwar1 wherein it was held that:

“(10).Wherever the person accused of offence under

Section 138 of the Act intends to plead that there did not exist legally enforceable debt, it is for him to place such material

before the Court in the form of oral and documentary evidence

as is sufficient and adequate to neutralize the presumption provided for under Section 139 of the Act. In the present case, except deposing that there did not exist any such legally enforceable debt or liability, the petitioner did not come forward with any acceptable and reliable evidence. Therefore, having regard to the presumption provided for under Section 139 of the Act, the law laid down by the Supreme Court in

Hiten p. Dalai case (supra), and in the absence of rebuttal by the petitioner, the Courts below were left with no alternative except to continue with the presumption as to the existence of the debt in favour of the respondent. The Court is not persuaded to take a different view.”

56.In M.S. Narayana Vs State of Karnataka 2 while dealing with the legal position, regarding the standard of proof required for rebutting a 1 2003 (2) ALD (Cri) 237 22007(1) ALT (Crl) 103(SC) = 2006(6) SCC 39

III ASJ (Family) Court, VZM Criminal Appeal 54/2013 50 presumption, the Hon’ble Supreme Court has held that, in a case under Sec.

138 of NI Act, 1881 Hon’ble Supreme Court, held that, the presumptions under Sec. 118(a) and 139 of the Act are rebuttable and the standard of proof required for such rebuttal is preponderance of probabilities and not proof beyond all reasonable doubt.

Her Lordship Further observed:

“The standard of proof evidentially is preponderance of probabilities. Inference of probabilities can be drawn not only from the material on record, but also by reference to the circumstances upon which, he relies.

Her Lordship Further held:

“Rebuttal evidence does not have to be conclusively established, but such evidence must be adduced before Court in support of the defence that the court must either believe the defence to exist or consider its existence to be reasonably probable, the standard of reasonable being that of the prudent man.”

57. This Court relied on the following citation :

Basalingappa Vs. Mudibasappa, reported in 2019 (3) ALT (SC) 62 (D.B.), wherein it was held that :

“Signature on cheque having been admitted, a presumption shall be raised under Section 139 that cheque was issued in discharge of debt or liability”.

In the present case on hand, since the accused issued a cheque bearing No.090585 dt.25.4.2008 for a sum of Rs.26,01,001/- in favour of the complainant for return of the advance amount received by him from P.W.1 towards purchase of a Flat and subsequently the said cheque was dishonoured due to “Funds Insufficient” in the Account of the accused and the accused also not denied his signature on the said cheque. Hence, the accused issued the said cheque to P.W.1 towards discharge of liability.

III ASJ (Family) Court, VZM Criminal Appeal 54/2013 51

58. To decide the issue whether the accused issued the cheque to the complainant towards discharge of debt or liability, this Court also relied on the following citation :

Madan Tiwari Vs. State of Chattisgarh, reported in CRR

No.56 of 2010, of the Hon’ble High Court of Chhattisgarh, Bilaspur, wherein it was held at Paras-9 & 10 that :

(Para-9) “We have given due consideration to the submission advanced on behalf of the appellant as well as the observations of this Court in Indus Airways (P) Ltd. V. Magnum

Aviation (P) Ltd., (2014) 12 SCC 539:(2014) 5 SCC (Civ) 138:(2014) 6 SCC (Cri) 845 with reference to the explanation to Section 138 of the Act and the expression “for discharge of any debt or liability” occurring in Section 138 of the Act. We are of the view that the question whether a post-dated cheque is for “discharge of debt or liability” depends on the nature of transaction. If on the date of the cheque, liability or debt exists or the amount has become legally recoverable, the section is attracted and not otherwise”.

(Para-10) “Reference to the Facts of the present case clearly shows that though the word “security” I used in Clause 3.1(iii) of the agreement, the said expression refers to the cheques being towards repayment of installments. The repayment becomes due under the agreement, the moment the loan is advanced and the installment falls due. It is undisputed that the loan was duly disbursed on 28.02.2002 which was prior to the date of the cheques. Once the loan was disbursed and installments have fallen due on the date of the cheque as per the agreement, dishonour of such cheques would fall under Section 138 of the

Act. The cheques undoubtedly represent the outstanding liability”.

In the present case also, as on the date of issue of cheque by the accused to the complainant, there is existence of liability on the accused for return of the amount received by him from the complainant towards purchase of a Flat and in that connection, the accused issued the said cheque to the complainant and hence, the amount covered under the cheque is legally recoverable by the complainant from the accused, which is

III ASJ (Family) Court, VZM Criminal Appeal 54/2013 52 an outstanding liability, and hence, Sec.138 of N.I. Act is attracted in the present case on hand.

59. The presumption U/s.139 of NI Act is a rebuttable presumption.

It is not for the complainant to prove that the accused had issued the cheque, in question, in discharge of legally enforceable debt and that unless the contra is proved, mere holding the cheque itself is sufficient to presume that the cheque was issued in discharge of legally enforceable debt. In the connection, it is pertinent to refer to the decision reported in M/s. Greaves

Limited v. Leo Electronics Organization Others3,wherein it was held that:

“Presumption provided under S.138 is a rebuttable presumption and that Under S.139 it is not for complainant to prove that Cheques have been issued in discharge of legally enforceable debt. Thus, order dismissing complaint holding that complainant has not proved case against respondent beyond reasonable doubt is improper.”

60.The accused did not deny his signature on Ex.P.1 cheque and the trial Court had given detailed reasons for arriving at conclusions and that the judgment of the trial Court is proper perspective which needs no interference by this Court. Accordingly, Points 1 to 3 are answered.

61.Point No.4:-

The findings and observations of the trial Court are in accordance with the evidence on record and well settled legal principles. There are no grounds to interfere with the findings of the trial Court. Therefore, this Court is not interfering with the findings of the trial Court. Accordingly, the Point

No.4 is answered.

62.Point No.5:-

In the result, the appeal is dismissed by confirming the conviction and sentence passed by the Special Judicial Magistrate of First 3 2007 Crl. L.J. (NOC) 642 (A.P.),

III ASJ (Family) Court, VZM Criminal Appeal 54/2013 53

Class (Excise), Vizianagaram in C.C.No.111/2010, dated 11.03.2013 against the appellant/accused, for the offence U/s.138 of N.I. Act. Forward the

Judgment to the trial Court with a direction to take steps for execution of the sentence. The trial Court is directed to take further steps for execution of the sentence against the accused, as per Law.

Typed to my dictation, by the Stenographer Grade-I, corrected

pronounced by me in open Court, this the 25 th day of June, 2019.

Sd/- E. BHIMA RAO,

Judge, Family Court cum

III Additional Sessions Judge, Vizianagaram.

Appendix of Evidence

Witnesses Examined in this Appellate Court

For Appellant/Accused:-For Respondent/Complainant:-

R.W.2:- K. Ramakrishna, Postman- N O N E - (D.W.2)

Exhibits Marked

For Appellant/Accused:-For Respondent/Complainant:-

- N I L - - N I L -

Sd/- E. BHIMA RAO,

Judge, Family Court cum

III Additional Sessions Judge, Vizianagaram

Copies to:

1. The Special Judicial Magistrate of First Class (Excise), Vizianagaram.

2. The Appellant/Accused.

CRLA/56/2013 Appeal Dismissed

Sanapala Satyanarayana vs MS Jaisukh vinimoy Pvt ltd

07 Jun 2019

IN THE COURT OF THE JUDGE, FAMILY COURT CUM III ADDITIONAL SESSIONS

JUDGE, VIZIANAGARAM

Present: Sri E.Bhima Rao,

Judge, Family Court cum

III Additional Sessions Judge, Vizianagaram.

Tuesday, this the 25th day of June, 2019

Criminal Appeal No.56/2013

Special Judicial First Class Magistrate From which Court the appeal is:(Excise), Vizianagaram.

Number of the Case in thatC.C. No.121/2010 : Court

SanapalaSatyanarayana,S/o Suryanarayana, Hindu, Aged about 49 Name and description of the :years, R/o D.No.11-8-25/1, Plot No.21, appellant/accused Daspalla Hills, Visakhapatnam (A-1).

Sri V.S.N. Sastry, Advocate for the Appellant is defended by:Appellant.

(1) M/s. Jaisukh Vinimoy Pvt. Ltd., Represented by its Director Krishna Gopal Agarwal, Hindu, Aged about 38 years, Names and Descriptions of theResident of Vizianagaram. : Complainants/respondents (2) State represented by the Additional Public Prosecutor, Vizianagaram.

Whether confirmed, reversed orCONFIRMED. The appeal is dismissed by modified, if modified what isconfirming the conviction and sentence : modifiedpassed by the trial Court.

Date of presentation:04.04.2013 Date of filing:04.04.2013

III ASJ (Family) Court, VZM Criminal Appeal 56/2013 2

Bail bonds, if any,:--- Hearing:08.05.2019 Judgment:25.06.2019

The appeal coming on 08.05.2019 for final hearing before me in the present of Sri V.S.N. Sastry, Advocate for the appellant-accused, and of

Court delivered the following:

J U D G M E N T

The appeal is filed by the appellant-accused against the conviction and sentence passed in C.C.No.121/2010, dt.11.03.2013 whereby the learned Special Judicial Magistrate of First Class (Excise), Vizianagaram, sentenced the accused, to undergo Simple Imprisonment for a period of 18 (Eighteen) Months and to pay a fine of Rs.10,000/- (Rupees Ten Thousand only), in default he shall undergo simple imprisonment for a period of Six

Months for the offence punishable U/s.138 of Negotiable Instruments Act.

2.The appellant herein is the accused and the 1st respondent herein is the complainant in the complaint filed by the 1st respondent in the trial

Court. For the sake of convenience, the parties are, henceforth, referred to as per their array in the trial Court.

4.The complainant filed the complaint against the accused for the offence punishable U/s.138 of N.I. Act with the following allegations : The complainant is the Company constituted under the provisions of the

Company Act, having its office at Plot No.13, VNR Building, N.C.S. Road,

Vizianagaram and the accused are the residents of Visakhapatnam and this complaint is initiated by one of its Directors as per the Resolution passed by

III ASJ (Family) Court, VZM Criminal Appeal 56/2013 3 the aforesaid Company. All the accused approached the complainant and requested the complainant to purchase the property measuring to an extent of 82 Sq. Yards being undivided and unspecified share out of the total extent of 2069 Sq. yards together with Flat No.405 measuring 2520 Sq. Feet in Third floor and Two Car Parkings each measuring 100 Sq. Feet, in total 200 Sq. Feet in Stilt Floor of Madhava Towers situated at Kanakala Dibba Area, covered by

Block No.41 in T.S. No.1451 and part of Allipuram Ward within the limits of

Greater Visakhapatnam Municipal Corporation for which the complainant agreed and so some negotiations took place between the accused and the complainant and ultimately agreed to certain understandings and entered into an agreement for the same. Further, towards the said agreement cum understandings in between the the accused and the complainant, the complainant paid a sum of Rs.9,00,000/- towards the advance sale consideration on 17.05.2008 and also paid a further sum of Rs.8,00,000/- again towards the advance sale consideration on 18.05.2008 to the accused and the accused received and acknowledged both the said amounts. In consequent to the said agreement, the first accused, the third accused on behalf of the second accused as a G.P.A. Holder and the fourth accused jointly executed an agreement of sale on 19th day of May, 2007 agreeing to sell the aforesaid property to the complainant and another Sri Anand Kumar

Agarwal for a sum of Rs.61,83,000/- and agreeing to register the same within sixty days from the date of agreement of sale as well as acknowledging a sum of Rs.8,00,000/- which the complainant paid towards further sale consideration on the said date itself i.e., on 19.05.2008. So, in all, the accused received a sum of Rs.25,00,000/- towards the advance sale consideration as on the date of agreement of sale, which the accused acknowledged and later-on again on 11.10.2008 the complainant paid a further sum of Rs.5,00,000/- and also further sum of Rs.5,00,000/- on the said same day itself to the accused and the accused received the same and so in all the complainant paid and all the accused received a sum of

III ASJ (Family) Court, VZM Criminal Appeal 56/2013 4

Rs.35,00,000/- towards the advance sale consideration with respect to the aforesaid property which all the accused agreed to sell to the complainant.

From the said date of agreement itself, the complainant is always ready and willing to perform the complainant’s part of duty as per the aforesaid contract but all the accused tried to postpone the same for one reason or the other but for the reasons best known to the accused. Later on some untoward incidents took place with respect to the aforesaid building and so all the accused requested the complainant to cancel the aforesaid agreement, which all the accused executed in favour of the complainant.

(a).Therefore, as per the request of all the accused, all the accused and the complainant mutually agreed for cancellation of the aforesaid agreement of sale subject to the satisfaction of some terms, conditions and understandings included in the cancellation endorsement. As per the said terms and understandings, all the accused became liable to repay the entire advance sale consideration of Rs.35,00,000/- which the complainant paid to the accused and which the accused received and acknowledged on various dates and so towards the discharge of the said amount, which the accused are liable to repay the said advance sale consideration to the complainant, first accused on behalf of all the accused issued a cheque dated 05.05.2008 for a sum of Rs.35,00,000/- bearing No.090586 drawn on Bank of India,

Harbour Road Branch, Visakhapatnam in favour of the complainant towards the satisfaction of the aforesaid amount. Thereafter, the complainant presented the said cheque for collection at Vizianagaram through the complainant’s Banker i.e., Karur Vysya Bank, Vizianagaram but quite surprisingly the said cheque is returned unpaid stating “Funds Insufficient” in the said bank account. The complainant received the said cheque unpaid along with Banker’s memo dated 04.09.2008. The 1st accused on behalf of all the accused issued the said cheque with an undertaking that the accused will make necessary arrangements to honour the said cheque and also stated that there are sufficient funds in the said bank account, but the first

III ASJ (Family) Court, VZM Criminal Appeal 56/2013 5 accused on behalf of all the accused issued the said cheque knowing fully well about the insufficiency of the funds in the said bank account and also knowing fully well about the consequences of the bounce of the cheque.

Therefore, all the accused are jointly and severally liable for the punishment under the provisions of the Negotiable Instruments Ac. With respect to the aforesaid agreement of sale and cancellation agreement which the first accused, the third accused on behalf of the second accused as a G.P.A.

Holder and the fourth accused executed in favour of the complainant, the complainant is reserving a right to take necessary separate legal action against all the accused under the due process of law and for the said separate action also, all the accused are jointly and severally liable for the same in every manner whatsoever. Thereafter, the complainant got issued a registered lawyer’s notice dated 11th day of September, 2008 to all the accused calling the accused to repay the said cheque amount to the complainant within fifteen days from the date of receipt of that notice which the accused failed to take the said notice and the said notices are returned on 27.09.2008 and on 30.09.2008 and so the complainant invoked the jurisdiction of the Court for the said cheque amount. Therefore, the complainant prays to punish the accused for the offence punishable U/s.138 r/w.142 of N.I. Act and also direct the accused to pay the said amount of

Rs.35,00,000/- along with the compensation amount to the complainant.

Hence, the complaint.

5.The learned Additional Judicial Magistrate of First Class,

Vizianagaram took cognizance for the offence U/s.138 & 142 of N.I. Act against the accused and registered as C.C.No.814/2009 on the file of the

Additional Judicial First Class Magistrate, Vizianagaram and in view of the

orders of the District Court in P.R.No.225/2010-A, dated 05.10.2010, the matter was transferred to the Special Judicial Magistrate of First Class (Excise), Vizianagaram and renumbered as C.C.No.121/2010, and after appearance of accused, copies of documents were furnished to him and at

III ASJ (Family) Court, VZM Criminal Appeal 56/2013 6 that stage, and the accused was examined U/s.251, Cr.P.C., for the offence

U/s.138 and 142 of N.I. Act, explaining the accusation made against him, for which, he denied the offence and pleaded not guilty and claimed to be tried.

6.During the course of trial, the complainant himself examined as

P.W.1 and and got marked Exs.P.1 to P.8. Ex.P.1 is cheque bearing No.090586, dt.05.05.2008; Ex.P.2 is Banker memo, dt.04.09.2008; Ex.P.3 is office copy of registered lawyer’s notice, dt.11.09.2008; Ex.P.4 is returned cover; Ex.P.5 is memorandum of Association; Ex.P.6 is resolution passed by the Company;

Ex.P.7 is agreement of sale, dt.19.05.2007; and Ex.P.8 is cancellation endorsement on the back side of the 1st page of Ex.P.7, respectively.

8.After considering the oral and documentary evidence, and after hearing both sides, the trial Court found the accused guilty and convicted and sentenced him to suffer simple Imprisonment for a period of 18 (Eighteen) Months and to pay a fine of Rs.10,000/- (Rupees Ten Thousand only), in default he shall undergo simple imprisonment for a period of Six

Months for the offence punishable U/s.138 of Negotiable Instruments Act.

9.Aggrieved by the said conviction and sentence, the accused preferred the present appeal contending, inter alia, with the following grounds:

III ASJ (Family) Court, VZM Criminal Appeal 56/2013 7 and failed to note that there is no legally enforceable debt in this case on hand and even the complainant failed to prove the same and hence the basic requirement U/s.138 of N.I. Act is found missing in this case, as per the terms of Ex.P.7 agreement of sale, the condition is that the complainant is only entitled to a Flat and there is no necessity for the appellant/accused to repay any amount to the complainant and hence, the burden heavily lies on the complainant to prove the legally enforceable debt and then only the burden shifts on the appellant/accused to rebut the presumption and hence the

Judgment of the trial Court is liable to be reversed. The learned Judge confused himself about the merits of the case as Ex.P.8 cancellation endorsement on the back side of Ex.P.7 clearly indicates that the agreement is cancelled subject to the encashment of the cheque so it is clear that if the cheque is not encashed, the agreement remains valid and there is no scope for filing the cheque bounce case as per the endorsement, but the learned

Judge without considering the same pronounced the verdict by convicting the

appellant purely on wrong notions by applying Sec.139 presumption to the case on hand which in fact is no way applicable to the case on hand and hence the conviction is liable to be reversed on this ground alone.

(a).The learned Judge failed to understand the intention of the parties while making Ex.P.8 cancellation endorsement as their intention is only to provide security for Ex.P.7 transaction and specifically mentioned the clause such as ‘the agreement will be cancelled subject to the encashment of the cheque’ which clearly indicates that there is no confirmation for the

honouring of the cheque and if the cheque is not honoured, there is no

criminal liability fastened on the accused and the complainant can safely proceed with Ex.P.7 agreement of sale, but the learned Judge without considering the same simply convicted the accused merely on presumptions and surmises and without going into the merits of the case and hence the

Judgment is liable to be reversed and the appellant/accused is entitled to an acquittal. The learned Judge failed to note that as there is no cancellation

III ASJ (Family) Court, VZM Criminal Appeal 56/2013 8 clause or default clause in Ex.P.7 agreement of sale which only stipulates the condition that the accused has to deliver the flat to the complainant within a particular period and if delayed, shall pay some damages, but there is no necessity for the appellant/accused to refund the amount and hence there is no basis for the issuance of cheque by the appellant/accused and hence there is no legally enforceable debt in the case on hand and the Judgment of the trial Court is not based on facts and Law and is liable to be reversed.

SCC (Cri) 498; (2) AIIMR (Cri) 2009 1074; (3) 2003 (1) SCC 1; (4) 2004 (8)

SCC 774; (5) 2006 (3) SCC (Crl) 114, which are directly applicable to the case on hand and simply concluded those citations are not applicable to the case on hand, and convicted the accused purely on presumptions which is illegal and the said Judgment is liable to be set aside. The learned Magistrate failed to follow the cross-examination of P.W.1 wherein he clearly admitted that there is no legally enforceable debt and hence the conviction based on false grounds and the accused is entitled for an acquittal in the matter.

III ASJ (Family) Court, VZM Criminal Appeal 56/2013 9 views, convicted the appellant/accused which is not maintainable and hence the appellant/accused is entitled for acquittal. Therefore, the appellant/accused prays to allow the criminal appeal by setting aside the calendar and judgment in C.C.No.121/2010, dt.11.3.2013 by acquitting the appellant/accused.

10.During the stage of Appeal, the accused/appellant filed a petition

U/s.391 of Cr.P.C., vide Crl.M.P.No.296/2014 in Crl.A.No.56/2013 on the file of this Court praying to summon the postal authorities/postman concerned to give evidence regarding the service of the statutory notice on the addressee, as per the endorsement on the postal cover. In the said petition, the 1st respondent/complainant filed a counter resisting the maintainability of the petition. After hearing both sides, this Court allowed the said petition, on 25.2.2016.

11. In this Appeal, the complainant/1st respondent preferred a revision

before the Hon’ble High Court of Judicature at Hyderabad for the State of

Telangana and the State of Andhra Pradesh, praying to quash the orders passed by this Court in Crl. M.P.No.296/2014, in which the Hon’ble High Court

Stayed all the proceedings in this Appeal, vide Crl. R.C. No.1084/2016.

12. In view of the directions of the Hon’ble apex Court of India, vide

Judgment, dt.28.03.2018 in Crl. Appeal Nos.1375-1376 of 2013, which was communicated by the Hon’ble High Court of A.P., in the Circular of ROC

Court, the learned counsels for both parties reported to proceed with the

III ASJ (Family) Court, VZM Criminal Appeal 56/2013 10 matter and accordingly, this Court proceeded with the matter. During the pendency of this appeal, the learned counsel for the respondent/complainant reported that the revision petition which was filed by him is withdrawn and filed a memo along with the net-copy of the withdrawal proceedings before this Court.

13On behalf of the accused/appellant, one K. Ramakrishna,

Postman of Daspalla Area, Visakhapatnam, is examined as R.W.2 and no documents marked on his side. It is pertinent to note that since the accused himself examined as D.W.1 in the trial Court, in this case the above witness is to be treated as D.W.2. But mistakenly the said witness i.e., Postman is examined as R.W.2, instead of D.W.2. Hence, wherever, R.W.2 is referred in this Judgment, it may be treated as D.W.2.

additional written arguments; and on the other hand, apart from the oral

arguments, the learned counsel for the 1st Respondent/Complainant, filed written arguments and perused the same.

(1) Whether there is a legally enforceable existing

liability in between the complainant and

accused ?

(2) Whether the accused issued the cheque to

discharge part of the said liability ?

(3) Whether the complainant complied all the

requirements to constitute the offence U/s.138

of N.I. Act ?

(4) Whether there are grounds to interfere with the

findings of the trial Court ?

III ASJ (Family) Court, VZM Criminal Appeal 56/2013 11 (5) To what relief ?

16. Point Nos.1 to 3:

The case of the complainant is that he is the Director of the complainant company in the above complaint. The accused approached them and requested to purchase the property measuring to an extent of 82

Sq. Yards being undivided and unspecified share out of the total extent of 2069 Sq. Yards together with Flat No.405 measuring 2520 Square Feet in

Third floor and Two Car Parkings each measuring 100 Square Feet in total 200 square feet in stilt floor of Madhava Towers situated at Kanakala Dibba

Area, covered by Block No.41, in T.S.No.1451 and part of Allipuram ward within the limits of Greager Visakhapatnam Municipal Corporation, for which the complainant agreed and so some negotiations took place between the accused and the complainant and ultimately he agreed to certain understandings and entered into an agreement for the same. Further, towards the said agreement cum understandings in between the accused and the complainant, the complainant paid a sum of Rs.9,00,000/- towards the advance sale consideration on 17.05.2008 and also paid a further sum of

Rs.8,00,000/- again towards the advance sale consideration on 18.5.2008 to the accused and the accused received and acknowledged both the said amounts. In consequent to the said agreement, the accused in his individual capacity and as a General Power of Attorney Holder of Sudhakar Birlangi together with Nagaja constructions jointly executed an agreement of sale on 19.05.2007 under Ex.P.7, agreeing to sell the aforesaid property to the complainant company for a sum of Rs.61,83,000/- and agreeing to register the same within sixty days from the date of agreement of sale as well as acknowledging a sum of Rs.8,00,000/- which they paid towards further sale consideration on the said date itself i.e., on 19.05.2007. So, in all the accused received a sum of Rs.25,00,000/- towards the advance sale consideration as on the date of agreement of sale, which the accused acknowledged and later-on again on 11.10.2007 they paid a further sum of

III ASJ (Family) Court, VZM Criminal Appeal 56/2013 12

Rs.5,00,000/- and also further sum of Rs.5,00,000/- on the same day itself to the accused and the accused received the same and so in all they paid and the accused received a sum of Rs.35,00,000/- towards the advance sale consideration with respect to the aforesaid property which the accused agreed to sell to them. From the said date of agreement itself, they are always ready and willing to perform their part of duty as per the aforesaid contract, but all the accused tried to postpone the same for one reason or the other, but for the reasons best known to the accused. Later on some untowards incidents took place with respect to the aforesaid building and so all the accused requested them to cancel the aforesaid agreement, which all the accused executed in their favour. Therefore, as per the request of the accused, the accused and himself mutually agreed for cancellation of the aforesaid agreement of sale subject to the satisfaction of some terms, conditions and understandings included in the under Ex.P.8 cancellation endorsement on the back side of Ex.P.7 agreement of the sale. As per the said terms and understandings the accused became liable to repay the entire advance sale consideration of Rs.35,00,000/- which they paid to the accused and which the accused received and acknowledged on various dates and so towards the discharge of the said amount, which the accused is liable to repay the said advance sale consideration to them, the accused issued Ex.P.1 cheque dated 05.05.2008 for a sum of Rs.35,00,000/- bearing No.090586 drawn on Bank of India, Harbour Road Branch, Visakhapatnam in their favour towards the satisfaction of the said aforesaid amount. Thereafter, they presented the said cheque for collection at Vizianagaram through their banker, i.e., Karur Vysya Bank, Vizianagaram but quite surprisingly the said cheque was returned unpaid stating “Funds Insufficient” in the said Bank

Account. He received the said cheque unpaid along with Ex.P.2 Banker’s memo, dt.04.09.2008. The accused issued the said cheque with an undertaking that the accused will make necessary arrangements to honour the said cheque and also stated that there are sufficient funds in the said

III ASJ (Family) Court, VZM Criminal Appeal 56/2013 13 bank account, but the accused issued the said cheque knowing fully well about the insufficiency of the funds in the said Bank Account and also knowing fully well about the consequences of the bounce of the cheque.

Therefore, the accused is liable for the punishment under the provisions of the N.I. Act. Thereafter, he got issued Ex.P.3 registered Lawyer’s notice, dt.11.09.2008 to the accused calling the accused to repay the said cheque amount to them within 15 days from the date of receipt of that notice which the accused failed to take the said notice and the said notice was returned on 27.09.2008 under Ex.P.4 returned cover. Therefore, the complainant prays to punish the accused according to Law.

L & T Company Limited and the construction work had been stagnated since then. The learned counsel for the appellant/accused further argued that the appellant/accused never received Ex.P.3 statutory notice and hence the main ingredient of Sec.138(c) of the N.I. Act has not been satisfied and hence no offence has been made out in this case and the complainant utterly failed to comply with the requirements of Sec.138 of N.I. Act and hence, no offence has been made out against the accused. He further argued that the appellant did not commit any offence as the Appellant/Accused commenced construction of the building with the funds advanced by the purchasers including the complainant. But the building had collapsed in the construction stage while laying the top floor slab by L & T Company Limited and hence, only due to the said act of God, the appellant could not complete the work but not otherwise. He further argued that as Ex.P.7 agreement to sell was entered into by the complainant and the appellant and other site owners wherein, neither a ‘cancellation clause’ nor a ‘default clause’ is mentioned

III ASJ (Family) Court, VZM Criminal Appeal 56/2013 14 and hence there is no necessity to refund the amount as per the terms of the agreement, which is the basis for issuing Ex.P.1 cheque. Ex.P.1 cheque was issued only with a good intention towards collateral security by specifically making a mention of Ex.P.8 endorsement on Ex.P.7 agreement to sell and the same had been corroborated by the cross-examination of D.W.1, wherein

D.W.1 had clearly stated that “he never expected that the Complainant would deposit the cheque”. He further argued that in Ex.P.8 endorsement, it is clearly mentioned that “hence both parties agreed to cancel this agreement by mutual consent subject to realization of the cheque”. The narration of the above mentioned lines clearly indicate that if the cheque is encashed, the agreement will be cancelled. In other words, if the cheque is not encashed, the agreement will hold good. In such situation, the complainant can proceed against the appellant basing on the agreement only i.e., by filing a suit for specific performance of contract. In this matter the cheque is not encashed and hence the agreement is in force but peculiarly, the complainant has taken undue advantage of the cheque available with him and invoked the provisions of Sec.138 of N.I. Act and is prosecuting the appellant. He further argued that the complainant has filed a suit in O.S.No.365/2008 on the file of the II Addl., District Judge’s Court,

When everyone including the complainant is claiming back the amounts, it became impossible for the appellant/accused to complete the construction.

III ASJ (Family) Court, VZM Criminal Appeal 56/2013 15 as a collateral security. He further argued that Sec.73 of the Indian Contract

Act, 1872, stipulates the compensation for loss or damage caused by breach of contract and Section 74 of the Indian Contract Act, 1872 says that the compensation for breach of contract where penalty is stipulated for, are not applicable to the case on hand as there is no breach of contract in this matter. It is not the case where the accused/appellant stopped the construction and in which case, it can be termed as breach of contract. But in the matter on hand by investing huge funds, the accused/appellant made a big construction and raised all six floors, but as the top floor has collapsed, which is an act of god, two persons had died and sentimentally, even the complainant is not co-operating for construction and accepting the flat and only seeking for refund of his money and hence, there is no breach on the part of the appellant/accused in the above matter. Hence, Sections 73 and 74 of the Indian Contract Act, 1872 has no app0licability in the said matter on hand. He further argued that the presumptions U/s.139 and 118 (a) of

N.I. Act are rebuttable and once the appellant/accused rebut the presumption by discharging by preponderance of probabilities, the burden will be shifted on the complainant. The appellant/accused rebutted the presumption

U/s.139 of N.I. Act by examining himself as witness i.e., D.W.1 stating that the cheque was issued towards collateral security and then the burden shifted on the complainant. Therefore, the learned counsel for the appellant/accused prays to set aside the conviction and sentence passed against the appellant by the Special Judicial Magistrate of First Class, (Excise), Vizianagaram in C.C.No.121/2010, dt.11.3.2013 for the offence punishable U/s.138 of N.I. Act by allowing the appeal and acquit the accused for the said offence.

18.The learned counsel for the appellant/accused submitted

additional written arguments and argued that the agreement is completely

silent about the aspect of refund of money and hence there is no necessity

for the appellant/accused to refund the amount as per the said agreement, if

III ASJ (Family) Court, VZM Criminal Appeal 56/2013 16 there is any such clause to refund the money and if the appellant/accused issued the cheque basing on such clause, then only, it can be termed as there is legally enforceable debt as there is a provision in the agreement to refund the amount but since there is no such provision in the agreement to refund the amount to the respondent/complainant, it could not be termed as there is no legally enforceable debt and it can be safely presumed that the accused need not refund the amount. He further argued that it is clearly mentioned in the agreement through Ex.P.8 endorsement that the “Agreement is cancelled subject to the encashment of the cheque” as the cheque is not encashed, the agreement got valid and restored and is not cancelled. Hence, the respondent/complainant has to file a suit for specific performance of contract, directing the appellant/accused to deliver a flat as

Ex.P.7 agreement stipulates the condition of only delivering the flat after its construction. Peculiarly the respondent/complainant has not filed the suit, can alternatively claim the refund of the money if the appellant/accused fails to deliver the flat. In the ghastly incident of collapse of building, two persons were died, sentimentally no person is coming forward to proceed with the construction including the present complainant. Hence, the appellant/accused could not proceed with the construction till date. However, though there is no necessity for refund of the money as per the terms of

Ex.P.7, only as a matter of courtesy, he tried to issue a cheque only with a condition that if it is honoured, the agreement is cancelled and the words otherwise means that if the cheque is not honoured, the agreement is continued. So, the respondent/complainant has to file a suit for delivering of the flat as per the terms and conditions of the agreement, but he filed a suit only for refund of money and even if the said suit is decreed, it cannot be terms as an enforceable debt as the accused is not issued the cheque as per the terms of Ex.P.7. He issued only on humanitarian grounds but not as per the terms of Ex.P.7. Hence, the issuance of cheque is not in accordance with the provisions of Sec.138 of N.I. Act, as there is no legally enforceable debt.

III ASJ (Family) Court, VZM Criminal Appeal 56/2013 17

Special Judicial Magistrate of First Class, (Excise), Vizianagaram in

C.C.No.121/2010, dt.11.3.2013 for the offence punishable U/s.138 of N.I. Act by allowing the appeal and acquit the accused for the said offence.

III ASJ (Family) Court, VZM Criminal Appeal 56/2013 18 all the last five to eight years. The appellant further agreed that for cancellation of Ex.P.7 agreement of sale and accordingly appellant issued executed Ex.P.1 cheque to the respondent and accordingly the appellant executed cancellation endorsement Ex.P.8 on the back side of Ex.P.7 agreement of sale. The appellant admitted the issue of Ex.P.1 cheque by the appellant to the respondent, towards discharge of the aforesaid debt payable to the respondent by the appellant. The appellant admitted that in order to appellant’s liability, the appellant issued Ex.P.1 cheque towards his liability delivering the property. The appellant admitted his signature on Ex.P.1 cheque and also admitted the issue of the same to the respondent mentioning the same in Ex.P.8 cancellation endorsement. The appellant admitted the bounce of cheque as per Ex.P.2 bankers memo. The appellant further admitted that he did not pay any amount either after the notice got issued to the appellant by the respondent i.e., original of Ex.P.3 or after the receipt of summons from the Court till now. He further argued that the word

There is no mention in Ex.P.8 cancellation endorsement, which execution is admitted by the Appellant that the cheque is issued for the purpose of

III ASJ (Family) Court, VZM Criminal Appeal 56/2013 19 security and not for the discharge of the debt amount payable to the respondent in any manner whatsoever. The word ‘security’ is not at all included in Ex.P.7 in any manner whatsoever. The appellant also admitted that “the appellant did not address any letter to the respondent stating that appellant issued Ex.P.1 cheque for security purpose and not to present the same for collection”. The appellant did not plead anywhere till now that

20.The learned counsel for the respondent/complainant also filed

additional written arguments and argued that Ex.P.1 was issued by the

accused towards legally enforceable debt. Originally, the contract in between the appellant and the respondent is on basis of Ex.P.7 Agreement of

III ASJ (Family) Court, VZM Criminal Appeal 56/2013 20 sale. So, the aggrieved party under the said contract of agreement of sale can opt for any relief under the specific performance. Admittedly the said building in question is in the same state of condition from the date it is collapsed at about seven years back till now and no steps are taken for construction or removal of the structures. The appellant himself admitted that the specific performance of Ex.P.7 agreement of sale is not at all possible. So, the only option available for the respondent is the other mode of specific performance i.e., refund of the advance sale consideration. As per

Ex.P.8 cancellation endorsement, if the cheque is enchased the Ex.P.7 agreement of sale is cancelled and if not agreement holds good. In this case, the cheque in question is not encashed, so the agreement under Ex.P.7 is not cancelled and the same is in force. As the agreement of sale is in force, the aggrieved party can seek for relief of specific performance for registration of the property, or can seek relief of refund of advance sale consideration.

Therefore, absolutely Ex.P.1 cheque was issued towards the discharge of refund of advance sale consideration, which is another mode of specific performance and the same is also legally enforceable. Therefore, the provisions of the N.I. Act apply to the present case on hand. Under the provisions of Sections 73 and 74 of the Indian Contract Act, the respondent is entitled for refund of advance sale consideration amount, which is a legally enforceable debt. If the appellant really did not have any criminal intention to evade the amount payable to the respondent, what prevented the appellant to pay the amount payable to the respondent immediately after receipt of the summons from the trial Court, during the trial before the trial

Court, after conviction held by the trial Court and even during the time of hearing before this Court. Even now the appellant failed to pay the amount

III ASJ (Family) Court, VZM Criminal Appeal 56/2013 21 to the respondent, that itself is sufficient to show that the appellant is with criminal intention under the provisions of the N.I. Act and therefore, the appellant is liable for conviction. In respect of Ex.P.1 cheque amount, the respondent filed a civil suit against the appellant in Visakhapatnam Court for recovery of said legally enforceable debt and in the said suit, it was ordered for refund of amount payable to the respondent. Therefore, the respondent prays to dismiss the above appeal by confirming the calendar and Judgment passed by the trial Court.

21.in order to prove or support the contents in the complaint and to substantiate the averments therein, the complainant herein adduced his evidence during the course of trial and he himself was examined as P.W.1 in the above case. P.W.1 filed his evidence affidavit in lieu of his chief- examination by reiterating the averments of all the complaint filed by him and all the supportive documents are marked as Exs.P.1 to P.8. During the course of cross-examination of P.W.1, it was elicited that all the persons namely Sanapala Satyanarayana accused is in this case, Sudhakar Birlangi and Kola Balasubrahmanyam, who is the minor partner Nagaj a constructions executed agreement of sale in favour of the company, the accused signed on the agreement of sale on behalf of Sudhakar Birlangi in the capacity of G.P.A.

Holder. Mr. Kola Bala Subrahmanyam on behalf of Nagaja Constructions as a

Managing partner signed on the agreement of sale i.e., Ex.P.7 in his presence. He admitted that in Ex.P.7 there is no clause mentioned for refund of amount by the accused and others. He admitted that after they paid the amount of advance of the construction was commenced by the accused and his partners. He is aware of the top floor of the building was collapsed and on which 4th floor slab and 5th floor slab were collapsed. After the said incident, he went there and condoled the accused and his partners, subsequently they demanded for refund of the amount. The accused and his partners approached him and requested him to take refund of the amount as they are not going to construct the building. He admitted that Ex.P.8

III ASJ (Family) Court, VZM Criminal Appeal 56/2013 22 endorsement on Ex.P.7 it is mentioned that “both parties agreed to cancel this agreement by mutual consent subject to realization of the amounts. He admitted that he has filed a suit against the accused and his partners vide

O.S.No.369/2008 on the file of the IV Addl., District Judge’s Court,

Visakhapatnam, claiming back the advance of Rs.35,00,000/- along with interest from the date of advance till the date of realization. He admitted that in Ex.P.7 agreement no clause was mentioned entitling them to claim interest on the document. He volunteers that as per the financial transactions prevailing in the market as he entitled to claim interest. He has filed a criminal case basing on the bouncing of Ex.P.1 and later he also filed civil suit and obtained attachment orders before the Judgment against the property. He has filed a criminal case basing on the bouncing of Ex.P.1 and later he also filed civil suit and obtained attachment orders before the

Judgment against the property. He denied the suggestion that in the event of bouncing of cheque, he can file a suit to enforce the terms of agreement of sale, but he cannot file a criminal case under Sec.138of N.I. Act. He denied the suggestion that since there is a clause mentioned in Ex.P.8 on

Ex.P.7 that the agreement is cancelled subject to the realization cheque, he cannot file a criminal case under Sec.138 of N.I. Act against the accused. He denied the suggestion that the case U/s.138 of N.I. Act is not maintainable and he is liable to be prosecuted for malices of prosecution for foisting criminal case against the accused. He denied the suggestion that the notices were not received by the accused and hence the case U/s.138 of N.I.

Act is not maintainable. He denied the suggestion that the cheque is issued by the accused in blank as a secured amount and that he foisted the false case. He volunteers that the handwriting of the cheque is that of the accused. He denied the suggestion that the cheque is not hand writing of the accused. He denied the suggestion that he is deposing false.

22.In support of the case of the defence, the accused himself examined as D.W.1. D.W.1 deposed that he is resident of Visakhapatnam

III ASJ (Family) Court, VZM Criminal Appeal 56/2013 23 and he is doing business and he is a Contractor. Himself, one B.Sudhakar and M/s. Nagaja Constructions represented by its Managing Partner by name

Kola Balasubrahmanyam to an extent of 2069 square feet, out of which he owns and possess 669 square feet and B.Sudhakar owns 1100 square feet and Nagaja Constructions 300 owns square feet, respectively. He knows the complainant, they proposed to raise constructions to multi store department in the name and style of Madhava constructions. The complainant approached him to purchase Flat No.405 3rd floor, commercial space of 2520 square feet along withtwo car parkings for a sum of Rs.61,83,000/- as an advance of Rs.35,00,000/- was paid towards advance in different spells, they executed Ex.P.7 in favour of the complainant, there is no clause mentioned in

Ex.P.7 for cancellation agreement or any default clause, subsequently they have commercial constructions of the multi storeyed constructions.

Unfortunately at the time of laying in the 5th floor slabbed on 06.1.2008 the slab was collapsed and due to which two slabs were already collapsed. He has invested total amount in the construction. The said slab was collapsed due to the fault of L & T Limited to lay the slab, on contract basis. He also filed suit for damages against the said L & T Limited, then the complainant approached him to complete work but the same will not be done due to the circumstances prevailing and the complainant asked a cheque for security purpose. He has given Ex.P.1 for security purpose. As per their understandings, if the cheque is encashing the agreement was cancelled and in event of the cheque is not cancelled, the agreement is hold good. We have mentioned the said understandings vide Ex.P.8 on Ex.P.7. He further deposed that he has issued the cheque only for the purpose of security but not towards repayment. He has not received any notice in this case. The complainant also filed a suit vide O.S.No.369/2008 on the file of the Hon’ble

IV Addl., District Judge’s Court, Visakhapatnam and obtained attachment orders of the site and remaining constructions. He has not committed any criminal breach of trust or any original liability. He further stated that as the

III ASJ (Family) Court, VZM Criminal Appeal 56/2013 24 complainant and some others filed suits and obtained attachments of the property before the Judgment, he could not raise funds, and hence he could not take steps for making further constructions.

23.During the course of cross-examination of D.W.1, it was elicited that all three persons executed agreement of sale on 19.5.2007 in favour of the complainant under Ex.P.7. They all the three persons received

Rs.35,00,000/- from the complainant from time to time in pursuance of Ex.P.7 agreement. He is the Managing Partner of M/s. Suryanarayana & Co., they are the builders of the said company, for the purpose of construction of the said building L & T Cement agreed to supply the concrete. On 06.01.2008 the entire upper three slabs are collapsed, the building is in the same collapsed condition till now. So far they did not make any further steps to re- construction of the building so till now the same is in collapsed condition.

They filed a suit against L & T Cement for recovery of Rs.60,00,000/- and odd for recovery of damages. The name of the said company L & T Limited, he did not file the copy of the plaint in this case. The total cost of the construction of the entire building is about Rs.5,50,000/-. They agreed to cancellation of agreement subject to realization of cheque issued by him.

The signatures shown on Ex.P.7 are relating to himself and he signed as a

G.P.A. Holder of B.Sudhakar and 3rd signature relating to endorsement on behalf of himself and on behalf of B. Sudhakar G.P.A. Holder. Both the signatures on Ex.P.1 are relating to him. In order to his liability, he issued

Ex.P.1 cheque towards his liability. He issued Ex.P.1 cheque towards his liability delivering the property. He admitted that he entire Ex.P.8 endorsement absolutely there is no mention stating that the cheque is issued as a security. He admitted that the plaintiff filed the suit for recovery of

Rs.35,00,000/- and interest from the date of cancellation of agreement and for damages of Rs.20,00,000/-. He is contesting the said suit and the same is pending at Visakhapatnam Court. He admitted that the address mentioned on the postal covers is that of his address. He did not address

III ASJ (Family) Court, VZM Criminal Appeal 56/2013 25 any letter to his Banker stating that if at all the complainant presents the cheque in question, don’t honour the same as he issued as a security purpose. He did not address any letter to the complainant that he issued the cheque for security purpose and not present the same for collection. He denied the suggestion that in order to discharge that his liability that is the debt amount of Rs.35,00,000/- payable to the complainant, he issued Ex.P.1 cheque and now in order to evade his liability, he is speaking false. He denied the suggestion that he issued Ex.P.1 cheque in order to discharge the legally enforceable debt amount of liability. He denied the suggestion that the cheque was not issued for security purpose. They agreed to construct the entire building and agreed to deliver the respective portions to the complainant within 18 months from the date of agreement. He admitted that as on today it is not possible to execute register sale deed in favour of the complainant in terms of EX.P.7 agreement.

24.In this Appeal, the accused/appellant filed a petition U/s.391 of

Cr.P.C., vide Crl.M.P.No.296/2014 in Crl.A.No.56/2013 before this Court praying to summon the postal authorities/postman concerned to give evidence regarding the service of the statutory notice on the addressee, as per the endorsement on the postal cover. After enquiry and after hearing both sides, this Court allowed the said petition, on 25.2.2016. The Postman is examined as R.W.2. R.W.2 deposed that he is resident of visakhapatnam and he is working as Postman at Andhra University, Visakhapatnam since 15 years. He received summons from the Court to give evidence. He used to serve letter within the area of Dasapalla, Visakhapatnam. He took Ex.P.4 postal cover to serve on the appellant/accused on 17.8.2008. Since the door of the appellant/accused was locked, he endorsed the same and he endorsed thereon addressee on camp deposit six days and after seven days, he has made an endorsement that addressee long camp, hence returned to sender.

25.During the course of cross-examination of R.W.2, he admitted that so far as delivery of registered covers and articles, a separate delivery

III ASJ (Family) Court, VZM Criminal Appeal 56/2013 26 sheet will be maintained and obtained signature of the person to whom he delivered the cover and in the event of failure of delivery of the cover for any reason, the reasons will be mentioned on the said sheet. He did not bring the said sheet and it was in the custody of their office. At first, he has written the served letters on sheet and thereafter, he had written the same on the cover at post office. The address of the appellant/accused on Ex.P.4 is true and correct. He came to know that the appellant/accused is on camp on the day he went to serve Ex.P.4 postal cover from the neighbour of the appellant/accused orally. He enquired the neighbour of the appellant/accused and got information to endorse the same on Ex.P.4 postal cover. He has face acquaintance with the appellant.

26.The main contention of the appellant/accused is that the accused issued Ex.P.1 cheque to the complainant as a collateral security, but not for legally enforceable debt and in the agreement through Ex.P.8 endorsement it is clearly mentioned that the “Agreement is cancelled subject to the encashment of the cheque” as the cheque is not encashed, the agreement got valid and restored and is not cancelled. Hence, the respondent/complainant has to file a suit for specific performance of contract, directing the appellant/accused to deliver a flat as Ex.P.7 agreement stipulates the condition of only delivering the flat after its construction. In the ghastly incident of collapse of building, two persons were died, sentimentally no person is coming forward to proceed with the construction including the present complainant. Hence, the appellant is entitled for acquittal. It is pertinent to note that Ex.P.1 cheque was issued by the accused to the complainant towards discharge of amount under Ex.P.7 agreement entered in between the complainant and accused and hence, it comes under legally enforceable debt and also comes under other liability.

When once the cheque is issued by the accused, it is the bounden duty of the accused to keep sufficient funds to facilitate for encashment of Ex.P.1 cheque.

III ASJ (Family) Court, VZM Criminal Appeal 56/2013 27

27.P.W.1 was cross-examined by the learned counsel for the accused at length but nothing was elicited in support of the defence and nothing could be proved against the case and contents of the complainant, thus the accused has utterly failed to prove his defence in proper perspective. The contention of defence raised by the accused herein has no legs to stand and there is no iota of truth and not tenable and the unsustainable defence is raised only with an intention to escape from his liability thereby to cause and suffer financial loss and mental agony to the complainant herein. P.W.1 has adduced sufficient oral and documentary evidence on record in support of his case which is proved beyond reasonable doubt and the accused failed to prove his contention and was not able to adduce even any rebuttal evidence in the case on hand in support of his evidence as there was no proper defence and further failed to prove his burden. The contention of the accused is, it is clearly mentioned in the agreement through Ex.P.8 endorsement that the “Agreement is cancelled subject to the encashment of the cheque” as the cheque is not encashed, the agreement got valid and restored and is not cancelled. Hence, the respondent/complainant has to file a suit for specific performance of contract, directing the appellant/accused to deliver a flat as Ex.P.7 agreement stipulates the condition of only delivering the flat after its construction. The said contention and defence raised by the accused has no legs to stand and it is not helpful and useful to the accused herein as he failed to prove such contention/defence. The address of the accused mentioned in the notice and the address mentioned in the summon/notice issued by this Court are one and the same and as such it is very clear that there is no dispute regarding to the address of the accused.

III ASJ (Family) Court, VZM Criminal Appeal 56/2013 28

During the course of cross-examination of D.W.1, who is the accused herein, he categorically admitted that the address noted on the postal covers is that of his address. Hence, when once the complainant sent the statutory notice under Ex.P.3 to the correct address, the burden shifts on the accused to show that he is not residing in the said address. The accused never denied the execution of Exs.P.1, P.7 and P.8. D.W.1 admitted in his cross-examination that the signatures shown on Ex.P.7 are relating to himself and he signed as

G.P.A. Holder of B.Sudhakar and 3rd signature relating to managing partner of

Nagaja Constructions. He also admitted that he signed on Ex.P.8 endorsement on behalf of himself and on behalf of B.Sudhakar G.P.A. Holder and both the signatures on Ex.P.1 are relating to him, which proves the case of the complainant herein. The accused issued Ex.P.1 cheque in connection with transaction under Ex.P.7 agreement, knowing fully that the accused closed the said Account with a dishonest intention. Since Ex.P.1 cheque is issued by the accused to the complainant as per the terms of Ex.P.7 agreement, it is legally enforceable debt. The findings and observations of the trial Court are in correct lines and the trial Court rightly convicted the accused for the offence punishable U/s.138 of N.I. Act.

28.The Hon’ble Supreme Court in Rangappa vs. Sri Mohan, reported in II (2010) B.C. 693, (three Judges Bench of the Hon’ble

Supreme Court) held that:

Sec.139 of N.I. Act is example for reverse onus clause that has been included in furtherance of the legislative object of improving the credibility of negotiable instrument.”

III ASJ (Family) Court, VZM Criminal Appeal 56/2013 29

30.As per the decision of our Hon’ble Supreme Court, rendered in

R.Rajendran vs. A.J. Yuvaraj Reddy and another, reported in 2012 (2)

31.After considering the above case Law, it is clear that once the accused admitted his signature on cheque or proved by complainant that the signature on cheque in question is the signature of the accused, the presumption U/s.139 of N.I. Act is in favour of the complainant and that the said cheque was issued to discharge legally enforceable debt or obligation and the burden shifts on accused to prove that the said cheque was not issued to discharge the legally enforceable debt or obligation. Ex.P.3 is office copy of Lawyer’s notice dated 11.09.2008 got issued by the complainant to the accused, demanding him to pay the cheque amount. But the same was returned to the Complainant as “Addressee Long Camp”. Therefore, the accused has committed the offence under Sec.138 of N.I. Act. It is the case of the complainant that the accused being fully aware of the issuance of cheque in order to clear the debt, evaded to honour the same, which attracts an offence punishable U/s.138 of N.I. Act. Hence, the accused is liable for punishable U/s.138 of N.I.Act.

III ASJ (Family) Court, VZM Criminal Appeal 56/2013 30

before this Court stating that the cheque issued for security purpose and not

After considering the oral evidence of P.W.1 and inaction on the part of the accused, this Court is of considered opinion that the complainant proved that the accused issued Ex.P.1 cheque to the complainant in discharge of legally enforceable debt and liability in terms of agreement under Ex.P.7 and the said cheque was bounced due to “Funds Insufficient”.

33.In an offence under Section 138 of the N.I. Act, once the complainant has proved the drawing of the cheque, presentation of the cheque into the Bank, return of the cheque unpaid by the drawee Bank, giving notice in writing to the drawer of the cheque demanding the payment of the cheque amount and failure of the drawer to make payment within 15 days of receipt of the notice, the statutory presumptions under Sec.118 and 139 of N.I. Act will arise in favour of the complainant. Under Sec.118(a) of the N.I. Act, the Court shall presume that the negotiable instrument has been drawn for consideration. Under Sec.139 of the N.I. Act, the Court shall presume that the holder of the cheque received the cheque for the discharge, in whole or in part, of any debt or other liability. The meaning and expression ‘shall presume’ has been explained in Section 4 of Indian

Evidence Act. Wherever it is provided by any Act that the Court ‘shall presume’ a fact, it shall regard such fact as proved unless and until it is

III ASJ (Family) Court, VZM Criminal Appeal 56/2013 31 disproved. Thus, the presumptions under Section 118 and 139 of N.I. Act are rebuttable presumptions. The burden of proof to rebut the said presumptions is upon the accused.

34.The learned counsel for the complainant contended that the accused issued cheque in favour of the complainant to discharge the liability under Ex.P.7. He submitted that the object of Sec.138 of N.I. Act is to enhance the credibility or acceptability of cheques, it is immaterial that the cheque was issued for discharge of his own debt or liability. Therefore, P.W.1 has established the essential ingredients of the offence U/s.138 of N.I. Act.

35.With regard to receiving of statutory notice, the learned counsel

for the appellant/accused contends that the statutory notice has not been

Ex.P.3 lawyer’s notice was sent by registered post acknowledgement due to the correct address of the accused, but the accused failed to take the said notice and the said notice was returned on 27.09.2008 with an endorsement “Addressee Long camp”. R.W.2, who is the Postman, stated in his evidence that he took Ex.P.4 postal cover to serve on the appellant/accused on 17.08.2008 and since the door of the appellant/accused was locked, he endorsed the same and he endorsed thereon, address on camp, hence returned to sender, deposit six days and after seven days he made endorsement that addressee long camp hence returned to sender. The accused intentionally avoided the service of summons, though the the complainant sent Ex.P.3 legal notice to the correct address of the accused.

III ASJ (Family) Court, VZM Criminal Appeal 56/2013 32 “Sec.27:- Meaning of service by post:- Where any

37.In respect of service of statutory notice on the accused, this

Court relied on the following citation :

N. Parameswaran Unni Vs. g. Kannan and others, reported in 2017 (2) ALT (Crl) 366 (SC), wherein it was held at Para-15 of the

Judgment, as follows :

“Sec.138 of N.I. Act – Proof of Service of Notice – Sec.28 of General

Clauses Act – Sec.114 of Evidence Act. When a notice is sent by registered Post and is returned with postal endorsement of Refused –

Not Available in the House – House Locked – Shop closed – Addressee

Not in Station – due service has to be presumed. Once a notice is sent by registered post by correctly addressing to the drawer of the cheque, the service of notice is deemed to have been effected”.

During the course of cross-examination of D.W.1, who is the accused herein, he categorically admitted that the address noted on the postal cover

III ASJ (Family) Court, VZM Criminal Appeal 56/2013 33 is that of his address. When the accused himself admitted that he is residing in the same address as mentioned in Ex.P.4 unserved postal address, when once a notice is sent by registered post by correctly addressing to the drawer of the cheque, who is the accused herein, the service of notice is deemed to have been effected. Hence, the above citation is aptly applicable to the present case on hand.

Section 138 of the Act which reads as follows :

39. In the present case, admittedly the address mentioned on

General Clauses Act with respect to service to statutory notice to him and hence, the notice is deemed to have been served on the accused.

40.In respect of the service of Ex.P.3 legal notice is concerned, the learned counsel for the accused relied on the following citations :

III ASJ (Family) Court, VZM Criminal Appeal 56/2013 34 (1) V. Raja Kumari Vs. P. subbarama Naidu & Another, reported in 2004 (8) SCC 774, wherein their Lordships of the Hon’ble Supreme Court held that :

“Meaning of service by post – Where any Central Act or

(2)Pradeep Madhukar Poinguinkar Vs. Shri Manguesh

Kuttalkar Another, in Criminal Appeal No.57/2005, of the Hon’ble

Bombay High Court, wherein his Lordship held that :

“The learned trial Court came to the conclusion that the warrant was executed on the said address at Rumdamol, Davorlim, Salcete in spite of the fact that the person who had gone to execute the warrant and had made the said endorsement was not examined and the said endorsement was otherwise not clear as to the place from which the accused was arrested. It is quite probable that the accused was arrested from a place other than the address mentioned herein above. The learned trial Court also observed that the accused had managed to return the registered A.D. by the Postal

Authorities and this the learned trial Court did without any evidence being led in that regard. On the other hand, the learned first

Appellate Court observed that the presumption available under section 27 of the General Clauses Act was a rebuttable presumption.

III ASJ (Family) Court, VZM Criminal Appeal 56/2013 35

(3) Ramesh Chand Vs Ravinder Singh Chandel, reported in 2007

CriL.J. 1313, wherein it was held that :

III ASJ (Family) Court, VZM Criminal Appeal 56/2013 36 where the notice is returned with the endorsement that the premises has always been found locked or the addressee was not available at the time of postal delivery, it will be open to the complainant to prove at the trial by evidence that the endorsement is not correct and that the addressee, namely, the drawer of the cheque, with knowledge of the notice had deliberately avoided to receive notice”.

(4) D. Vinod Shivappa, Vs. Nanda Belliappa, reported in 2006 (4)

Supreme 540 wherein their Lordships of the Hon’ble Supreme Court of India held that :

Court dismissed petition – Appeal – Complainant stated that notice may be deemed to have been served – Whether appellant in the circumstances could pray for quashing of proceedings ? No –

Question where posted endorsement showed that notice could not be served on account of non-availability of addressee, whether cause of action could arise for prosecution on basis of deemed service – Question could be answered by reference to facts of each case and no rule of universal application could be laid down – In interpreting a statute court must adopt that construction which suppressed mischief and advanced the remedy – Proviso to Section 138(b) was meant to protect honest drawers – If complainant was able to prove that drawer of cheque knew about the notice and deliberately evaded service and got false endorsement made only to defeat process of law, Court shall presume service of notice –

These were all questions of facts and it would be premature to move High Court for quashing of proceedings.

III ASJ (Family) Court, VZM Criminal Appeal 56/2013 37 be answered by reference to the facts of each case and no rule of universal application can be laid down that in all cases where notice is not served on account of non-availability of the addressee, the court must presume service of notice.

(5) Jai Durga Enterprises Through Its … Vs. State of U.P. and

Indo Automobiles, reported in 2006 Cri L.J. 3312, wherein his Lordship of the Hon’ble Allahabad High Court held that :

III ASJ (Family) Court, VZM Criminal Appeal 56/2013 38 (6) S.S. Ummul Habiba,Vs. B. Rajendran, reported in 2005 (1)

ALD Cri 33, wherein his Lordship of the Hon’ble Madras High Court, held that :

(7) Yadav Chandra sharma, v. Gyanendra Singh Kushwah, reported in 2017 0 Supreme (MP) 781, wherein his Lordship of the Hon’ble

High Court of Madhya Pradesh, held that :

“Negotiable Instruments Act, 1881 – S.138 – General

Clauses Act, 1897 – S.27 – Evidence Act, 1872 – Ss.101 and 103 –

Case of dishonour of cheque – Petitioner stated that he never received notice sent by respondent – He specifically alleged regarding interpolation over acknowledgement card – Petitioner’s application for calling postman as witness allowed”.

(8) Parimal Vs. Veena @ Bharti, reported in 2011 (3) SCC 545, wherein their Lordships of the Hon’ble Supreme Court of India, held that :

III ASJ (Family) Court, VZM Criminal Appeal 56/2013 39

before he is entitled to a judgment in his favour Section 103

“Under General Clauses Act, 1987, Section 27, -

III ASJ (Family) Court, VZM Criminal Appeal 56/2013 40 the correct address of the accused, the notice must be deemed to have been served on the accused.

In view of his above said contention, he relied on the following citation 2007 (6) SCC 555, wherein it was held that :

Court along with a copy of the complaint, cannot obviously contend that there was no proper service of notice by ignoring statutory presumption under section 27 of General Clause Act and

Section 114 of Evidence Act”.

Sec.27 of General Clauses Act and Sec.114 of the Indian Evidence Act.

Hence, the above citation is applicable to the present case on hand.

III ASJ (Family) Court, VZM Criminal Appeal 56/2013 41 “Appellants, who are real estate dealers, had received amounts promising to sell three grounds of land but could not fulfill that promise and so were liable to pay the amount received as sale consideration. The cheques in question were endorsed in favour of Respondent in acknowledgement of the said liability. As such the respondent is “holder in due course”. Held in view of the allegations in the complaint, the submission that there was no legally enforceable debt and the cheques were not issued to discharge and so the offence is not made out, fails”.

44. The main core contention of the appellant/accused is that the cheque was issued by him to the respondent/complainant towards collateral security, as such the appellant has to seek the remedy through Civil Court only by filing a suit for specific performance of contract. It is pertinent to note that as seen from the entire material available on record and Ex.P.8 cancellation endorsement towards cancellation of Ex.A.7 agreement, in which it was mentioned that due to tragic incident occurred on 06.1.2008 in which the schedule property building was collapsed, decided to cancel the agreement by mutual consent and hence, as per the understandings of both parties of the agreement, the vendor refunding the advance sale consideration paid by the purchaser at the time of agreement and subsequent payment paid by the purchaser to the purchaser by way of cheque in favour of the purchaser towards full and final settlement of all claims of purchaser against the vendor including the refund of advance sale consideration paid by purchaser on the date of execution of the agreement.

III ASJ (Family) Court, VZM Criminal Appeal 56/2013 42 shall have any right against other party of the agreement, after the realization of the above mentioned cheque and the vendor is at liberty to offer the schedule property for sale to any other person at his will. Hence, on perusal of the above contents of Ex.A.8 cancellation endorsement, the above cheque was issued towards refund of advance amount which is liability of the accused, but it does not come under collateral purpose. Hence, in the contention raised by the accused holds no water.

45.In the present case, the accused is not disputing his signature on

Since the present case is a criminal case, the accused has to prove his contention by preponderance of probabilities by adducing some acceptable evidence before the Court. Though the accused himself examined as D.W.1 and also examined the postman on his behalf in this Appeal as R.W.2, the accused could not prove his contention. All the suggestions made to P.W.1 in his cross-examination were denied by P.W.1. Mere denial is not sufficient to prove his contention.

46.The evidence on record established that the accused issued

Camp” and the accused not arranged the funds in his account. Therefore, the complainant proved all the requirements to constitute the offence punishable U/s.138 of N.I. Act.

III ASJ (Family) Court, VZM Criminal Appeal 56/2013 43

47.In the present case the complainant prove that the cheque given by the accused towards legally enforceable debt. It is also pertinent to note that once issuance of a cheque and signature thereon are admitted, presumption of a legally enforceable debt or other liability in favour of the holder of the cheque arises and accused may rebut the presumption, but mere statement of the accused may not be sufficient. In the present case the accused failed to discharge his burden of rebutting the presumption. The accused was under an obligation or liability to make payment to complainant under Ex.P.1 cheque, but he failed to make payment of said amount and cheque so issued by accused stood dishonoured for “Funds Insufficient” account closed. It is also pertinent to note that mere fact that debtor has given security in form of post-dated cheque or current cheque with agreement that it is security for fulfillment of obligation to be discharged on date itself.

48.In a case in between K.N. Beena vs. Muniyappan & Another, reported in 2002 SCC (Cri) 14, wherein the Hon’ble Supreme Court held that :

“U/sec.118 unless the contrary was proved, it is to be presumed that the Negotiable Instrument (including cheque) had been made and drawn for consideration. U/s.139, the Court has to presume unless the contrary was proved that the holder of the cheque received the cheque for discharge, in hole or in part, of a debt or liability, thus, in a complaint U/s.138, the Court has to presume that the cheque had been issued for a debt or liability, this presumption is rebuttable. However, the burden of proving that the cheque had not been issued for a debt or liability is on the accused. Section 20 of Negotiable Instruments Act says that inchoate stamped instrument and states that if a person signs and delivers a paper stamped in accordance with law and either wholly blank or for written thereon an incomplete Negotiable

III ASJ (Family) Court, VZM Criminal Appeal 56/2013 44 the holder of a Negotiable Instrument endorsed in blank to fill up the said instrument by writing upon the endorsement, the direction to pay any other person as endorsee and to complete the endorsement in the blank cheque, it makes it clear that doing for holder does not thereby incur the responsibility of an endorser as per Subhash Chand vs. Satish Varma, pages 1 to 16 on 12th May, 2016.”

49.In a case in between Rajendra vs. Usha Rani reported in (2001 L.W. (Crl.) 319), it was observed that :

“No law prescribes that in case of any Negotiable

50. Section 139 of the Act always in favour of the holder of the instrument. The Court shall presume the fact as proved till it is disproved.

Admittedly, the accused did not place any cogent evidence to rebut the presumption. No doubt the accused need not adduce positive evidence to rebut the presumption. But, in the present case, the complainant by examining himself as P.W.1, proved Ex.P.1 cheque.

52.The learned counsel for the appellant/accused relied on the following citations :

III ASJ (Family) Court, VZM Criminal Appeal 56/2013 45 (1) Nikhil P.Gandhi, Vs. State of Gujarat and Others, reported in 2016 0 Supreme (Gujarat) 908, wherein his Lordship of Hon’ble Gujarat

High Court held that :

“(A) Negotiable Instruments Act, 1881 – Section 138 –

Before a proceeding thereunder is initiated, all legal requirements

therefor must be complied with – Court must be satisfied that all ingredients of commission of an offence under said provision have been complied with.

(B) Negotiable Instruments Act, 1881 – Section 138 –

(2) M/s. Indian Oil Corporation, Vs. M/s. NEPC India Ltd. &

Others, reported in 2006 (6) Supreme 66, wherein their Lordships of the

Hon’ble Supreme Court of India, held that :

Any effort to settle civil disputes and claims, which do not involve

III ASJ (Family) Court, VZM Criminal Appeal 56/2013 46 any criminal offence, by applying pressure though criminal prosecution should be deprecated and discouraged”.

(3) All Cargo Movers (I) Pvt. Ltd. & Others, Vs. Dhanesh

Badarmal Jain & Another, reported in 2007 (12) SCALE 391, wherein it was held by the Hon’ble Court that :

(4) M/s. Shakti Travel & Tours, Vs. State of Bihar & Another, reported in 2000 (7) Supreme 90, wherein their Lordships of the Hon’ble

Supreme Court held that :

“The only ground on which the learned counsel for the

Appellant prays for quashing of the complaint is that on the assertions made in paragraph 8 of the complaint, it must be held that notice has not been served and, therefore, an application under

It is pertinent to note that initially when the complaint is filed by the respondent under the provisions of the N.I. Act, as per the provisions of the

Sections 138, 139 and 142 of N.I. Act, the initial presumption that the cheque was drawn for discharge of liability of drawer ought to be raised by the

III ASJ (Family) Court, VZM Criminal Appeal 56/2013 47