1C A No.257 of 2012
IN THE COURT OF THE VII ADDL.METROPOLITAN SESSIONS JUDGE
AT HYDERABAD.
PRESENT: Sri.K.Gaddenna, VII Addl. Metropolitan Sessions Judge, Hyderabad.
Dated this the 23rd day of September,2013
CRL.APPEALNO.257 of 2012
From which court this appeal is XVAddl. Judge-cum-XIX Additional Chief Metropolitan preferredMagistrate, Hyderabad Number of the case in that CourtC.C.No.206 of 2010 Number of the appealC.A.No.257 of 2012 Name and description of the AppellantG. Atma Charan Reddy, S/o. Late G. Srinivas Reddy, age 62 years, Occ: Business, R/o. Flat No.102, Chandra Residency, Naveen Nagar, Road No.1, Banjara Hills, Hyderabad Name and description of the Guniganti Ravinder Rao, S/o. Late G. Venkat Rao, aged Respondent48 years, Occ: Business, Rep. By his G.P.A. Holder, P. Laxmikantha Rao, S/o. Bhuma Rao, aged 35 years, Occ: Business, R/o. C Block, F.201, Shanti Gardens, Ragavndranagar, Nacharam, Hyderabad. The Order of the Lower Court.In the result, the accused is found guilty for the offence punishable under section 138 of the NI Act, and he is convicted under section 255(2) Cr.P.C., and sentenced to undergo SIMPLE IMPRISONMENT for a period of ONE YEAR SIX MONTHS and to pay fine of Rs.10,000/-, in default to suffer SI for a period of THREE months. Whether confirmed, modified or In the result,the appeal is allowed. The conviction and reversed, if modified the Modification.sentence imposed on the appellants/accused by judgment dated 22.3.2012 passed by the XIX
Additional Chief Metropolitan Magistrate, Hyderabad in
CC No.206 of 2010, is set aside, and he is
acquitted for the offence punishable under section 138 of the Negotiable Instruments Act. The fine amount, if any paid, shall be refunded to the appellants/accused, after expiry of appeal time.
DATE OF OR ON WHICH
Presentation2.4.2012 Filing2.4.2012 Notice issued by the Court4.4.2012 Bail bond if appellant is let out on bail -- Appellant is ordered to be appear 28.6.2012 Hearing16.9.2013 Judgment23.9.2013
This appeal is coming on for final hearing before me, in the presence of Sri M. Sudhakar Reddy, Advocate for the for the appellant-accused, and of Sri J. Venkatram Reddy, Advocate for the Respondent/Complainant, and the matter having stood over for consideration till this day, this court made the following:
-: J U D G M E N T :-
1This is an appeal filed by the appellant/accused against the judgment dated 22.3.2012 passed by the XIX Additional Chief Metropolitan Magistrate, Hyderabad in CC No.206 of 2010. In the above said case, the appellant-accused was found guilty for the offence punishable under section 138 of the NI Act, and he was convicted under section 255(2) Cr.P.C., and he was sentenced to undergo SIMPLE IMPRISONMENT for a period of ONE YEAR AND SIX MONTHS, and to pay fine of Rs.10,000/-, in default to suffer SI for a period of three months. Fine 2C A No.257 of 2012 amount paid, on record.
2.The submissions of the appellant by filing this appeal, with the following grounds of appeal, are as under : The judgment of the trial Court is arbitrary, illegal, contrary to law, and against the weight of evidence. The trial Court failed to appreciate the evidence and erred in holding that the appellant-accused guilty of the offence punishable under section 138 of the Negotiable Instruments Act. The trial Court erred in holding that the appellant issued the impugned cheque worth Rs.28 lakhs in favour of the respondent-complainant towards discharge of his part of legally enforceable debt. Absolutely there is no evidence what so ever to prove that the cheque was issued towards subsisting legally enforceable debt as contemplated under section 138 of the Negotiable Instruments Act. The learned Magistrate failed to properly appreciate the evidence of Pw2 who is the respondent-complainant. The trial Court ought to have seen that there is no evidence to prove that there was an agreement of sale between the appellant and the accused with regard to the sale of the commercial property at Bowenpally, Secunderabad, allegedly belonging to the appellant-accused. The Court below ought to have seen that PW2 did not file any such agreement of sale allegedly executed by the appellant-accused in favour of the respondent-complainant. Pw2 failed to mention the date of agreement and the total sale consideration agreed and the description of the property as required for the proper appreciation of evidence in his chief affidavit. The learned Magistrate ought to have seen that there is no evidence to show that the appellant expressed his inability to sell the property on account of some family problems, having had no property belonging to him, at Bowenpally, Secunderabad. The learned Magistrate ought to have seen that PW2 has given a go-bye to his earlier statement and contradicted himself during the course of cross examination. The learned
magistrate ought to have seen that from the evidence of PW2 it is clear that no
such an agreement of sale ever executed by the appellant-accused in favour of the respondent-complainant at any time, particularly having stated that he executed an agreement of sale on 29.11.2008. As on the date of execution of pro-note dated 29.11.2008, there is no evidence to show that PW2 has paid an amount of rs.56 lakhs on 29.11.2008 in cash to the appellant-accused, having allegedly earlier withdrawn a sum of rs.77 lakhs from his account and paid a sum of Rs.56 lakhs out of the said sum. There is no any evidence to prove that Pw2 paid the money to the appellant-accused at any time either by cheque or through any other mode. The trial Court erred in holding that PW2 corroborated the contents of complaint in toto in respect of the liability of the accused towards him, and the impugned cheque Ex.P3 was issued by the appellant-accused in his favour towards discharge of part of legally enforceable liability. The learned Magistrate ought to have seen that the promissory note – Ex.P2 cannot be relied upon on the ground that no consideration was passed on to the appellant, and there being no evidence to substantiate the allegation that he complainant paid an amount of Rs.66 lakhs, as such Ex.P2 has to be rejected. On Ex.P2, no witness relating to the payment of money covered by pro-note and particularly there being no separate receipt attached to the pro-note to prove the payment of money to the appellant-accused. The learned Magistrate 3C A No.257 of 2012 wrongly relied on Ex.P1-GPA, in the light of cross examination of Pw2, who categorically stated that he was not at all present as on the date of execution of G.P.A., nor he was present at the time of attesting Ex.P1, before the Notary, and he stated that whether he was in India or not in the month of March,2009. The evidence of Pw1 was eschewed, and it cannot be considered for any purpose. The learned Magistrate ought to have relied on the evidence of DW1, who signed as guarantor in Ex.P2 pro-note stating that the pro-note and cheque was issued towards purchase of flat No.302, situated at Sai Datta Aracade, Himayathnagar, Hyderabad, offered by the respondent-complainant. The learned Magistrate erred in observing that DW1 is the friend of the brother of the appellant, and showed interest and supported the claim of the appellant and gave false evidence. The learned Magistrate has no reason to disbelieve the evidence of DW1, and Ex.D1, the sale deed relied upon the by the appellant, filed for th purpose of proving the circumstances under which Ex.P2 and P3 were given to the respondent- complainant. The learned Magistrate ought to have seen that the plea of the accused that promissory note Ex.P2 and cheque Ex.P3 were issued towards purchase of property, at Himayathnagar, Hyderabad, is true and correct, and the learned
Magistrate has no reason to disbelieve his evidence. The learned Magistrate
wrongly held that the appellant-accused has not given reply notice to Ex.P5 filed to probablise his defence that he issued impugned cheque as a security, and on the other hand the complainant proved that the accused issued dishonoured cheque in discharge of legally enforceable liability. The learned Magistrate ought to have seen that the reply notice to Ex.P5 is not mandatory and the appellant-accused has no obligation to disclose his defence, and he is entitle d to maintain silence. The learned Magistrate ought to have seen that the initial burden is always lies on the prosecution to establish that there existed subsisting legally enforceable debt, and has to be proved beyond all reasonable doubt. The learned magistrate has not properly appreciated the scope of section 138 of the Negotiable Instruments Act, that the cheque was issued in discharge of alleged liability of repaying the unaccountable cash amount, and the same was not disclosed in income tax returns of the complainant-respondent. The learned Magistrate ought to have seen that the e-mails relied upon by the prosecution are not admissible in evidence, particularly, there is no nexus between Ex.P11 to P19 which the alleged transaction of agreement of sale between PW2 and the appellant-accused, and the appellant prayed for acquittal in this appeal as the judgment of the court below is not in correct lines.
3.The case of the respondent-complainant, by filing a private complaint under section 138 of the Negotiable Instruments Act, is that : A private complaint filed by the complainant represented by his G.P.A. Holder by name Sri P. Lakshmikanth Rao against the accused. That the complainant and the accused are known to each other for more than 10 years. Out of that intimacy, the accused offered to sell the commercial property situated at Bowenpally, Secunderabad. The complainant after verification of the property, paid Rs.56 lakhs to the accused, as an advance to the accused. On request for registration of the 4C A No.257 of 2012 property in the name of the complainant, the accused expressed his inability for registration of the property due to some family problems, and requested the complainant not to force for registration, and further requested and assured to repay the advance amount to the complainant. Accordingly, the accused executed a promissory note in favour of the complainant for sum of Rs.56 lakhs and issued two cheques, viz., cheque bearing No.731658, dated 30.12.2008, and cheque bearing No.731659, dated 15.1.2009 in favour of the complainant towards repayment of the advance sale consideration. Out of the two cheques, the complainant has presented the cheque bearing No.731658, dated 30.12.2008 for Rs.28 lakhs in his account with his bank viz., Syndicate Bank, Abids Road, Branch, Hyderabad for realisation, and the same was returned unpaid along with cheque return memo dated 5.1.2009 for the reason of “funds insufficient' in the account of the accused. Then, the complainant got issued legal notice dated 3.2.2009, to the accused by registered post with acknowledgment due and also under certificate of posting to his residential address as well as to his work place calling upon the accused to pay the amount covered by the dishonoured cheque within 15 days from the date of receipt of the legal notice, and the same was received by the accused, but the counsel for the complainant has not received the acknowledgment from the accused. Upon that, the counsel for the complainant has given complaint to postal customer care on 25.2.2009 and on receipt of the same, the said postal customer care issued a letter dated 6.3.2009 stating that the said registered letter was delivered to the accused on 7.2.2009. The accused has also received legal notice sent under certificate of posting. Inspite of receipt of legal notice, the accused failed to make the payment covered by the dishonoured cheque within 15 days from the date of receipt of the legal notice. Hence, the complaint.
4.In the trial Court, the complainant himself examined as PW2 and got marked Ex.P1 to P19. At the first instance, the complainant has filed his chief affidavit of his G.P.A., holder viz., Lakshmikanth Rao as PW1 and later the complainant has filed a memo seeking to eschew the chief evidence affidavit of PW1, and accordingly, the chief affidavit evidence of PW1 was eschewed from the record, as recorded by the trial Court in its judgment.
5.After closure of the evidence on behalf of the complainant, the accused was examined under section 313 Cr.P., by explaining the incriminating circumstances appearing against him in the evidence adduced by the complainant, for which he denied the incriminating circumstances appearing against him in the evidence adduced by the complainant. During the course of defence side evidence, the accused has got examined DW1 and got marked Ex.D1.
6.The trial Court, on assessing the oral and documentary evidence adduced and produced by both the parties, and finally held that the accused guilty of the offence punishable under section 138 of the Negotiable Instruments Act, and convicted and sentenced the accused as noted above.
7.Now, the points for consideration, is whether the appellant-accused is entitle to acquittal for the offence with which he was charged and convicted under section 138 of the Negotiable Instruments Act, and whether the Judgment of the trial Court, is in correct lines or not?
8.POINT: While appreciating the case of both the parties, the trial Court has framed the following points for determination:
5C A No.257 of 2012
1.a) Whether the accused is liable to pay a sum of Rs.56 lakhs to the complainant towards refund of advance sale consideration? . (b) If so, whether the accused had issued impugned cheque in favour of the complainant towards discharge of the part of the legally enforceable liability?
2.Whether the complainant is successful in bringing home the guilt of the accused for the offence punishable under section 138 of the Negotiable Instruments Act, beyond all reasonable doubt?
9.The trial Court on consideration of th case of both the parties, with reference to the case laws, has noted in its judgment, and finally observed that the, oral evidence of PW2 is reliable, unshaken and consistent with the documentary evidence, and as such th case of the complainant cannot be discarded. The oral evidence of Pw2 and filing of Ex.P3 cheque itself is sufficient to prove that the accused had issued Ex.P3 cheque worth Rs.28 lakhs for discharging of part of his legally enforceable debt. But, there is an additional evidence of Ex.P2 promissory note, Ex.P9-emails messages to support the testimony of PW2. Having considered the same, the trial Court held that the accused had issued the impugned cheque worth Rs.28 lakhs in favour of the complainant towards discharge of part of legally enforceable liability, and when the complainant has presented the said cheque in his account with his banker for realisation, the same was returned unpaid for the reason of funds insufficient in the account of the accused, and inspite of receipt of statutory notice from the complainant, the accused failed to discharge the amount covered by the cheque within the stipulated period. Therefore, definitely, an act on the part of accused which ultimately resulted in dishonouring of Ex.P3 which clearly falls within the ambit of section 138 of the Negotiable Instruments Act. With the above observations, the learned Magistrate found the appellant-accused guilty for the offence punishable under section 138 of the Negotiable Instruments Act, and convicted him, as noted above.
10.Before taking into consideration of case of both the parties in this appeal, one thing is required to take note of the brief history of this appeal, in this Court. On verification of the case records, at the stage of further arguments of the case, on record, the respondent- complainant filed transfer Crl.M.P.No.1026 of 2013, before the Metropolitan Sessions Judge, Hyderabad, to transfer this case, from this court, to any other Court, as urged by him in the transfer petition. The learned Metropolitan Sessions Judge, Hyderabad, called for the entire record for his consideration, and this Court sent the entire record to the Metropolitan Sessions
Judge, Hyderabad, and thereafter this Court received orders in Transfer Crl.M.P.No.1026 of
2013 from Metropolitan Sessions Judge, Hyderabad dismissing the said Transfer Crl.M.P, on 25.7.2013 with an observation as under : “7. Considering the facts and circumstances of the case, in view of the provision of section 409(2) Cr.P.C., I do not find any valid grounds to transfer of the criminal Appeal No.257 of 2012 from VII
Additional Metropolitan Sessions Judge Court to any other Addl.
Metropolitan Sessions Judge Court. Hence, the petition is liable to be dismissed.
8. In the result, the petition is dismissed.”
11.After this Court received entire record, and the matter posted to 6.8.2013. ON 6.8.2013, both the Advocates and both the parties present for further hearing, and the matter 6C A No.257 of 2012 posted to 20.8.2013. On 20.8.2013, again the matter posted to 2.9.20013. On 2.9.2013, the appellant and respondent present, and the matter posted for further hearing on 6.9.2013, finally. On 6.9.2013, both the parties present. The Advocates abstained to attend the Court work. Hence, the matter posted to 13.9.2013 for further hearing. ON 13.9.2013, this Court passed docket order as follows: “13.9.2013: Both the parties and both the counsel present. Sri M. Sudhakar Reddy, Advocate for the appellant argued on behalf of the appellant. Written arguments also filed on behalf of appellant. This matter already heard at length on behalf of both sides. Today further arguments heard on behalf of the Appellant. ON behalf of the respondent, Sri J.V.R.R. & Associates Advocate filed a memo stating that the matter to adjourn for further date as transfer Criminal Petition in SR No.32804 of 2013 on the file of Hon'ble High Court is pending and it will be decided in the meanwhile by the Hon'ble High Court, and requested to adjourn the matter to any other date. The learned Advocate for the appellant insisted on the Court to hear his arguments and for reply arguments on behalf of the respondent side may be posted to 16.9.2013.
The Learned Advocate for the respondent submitted that they will obtain stay orders from the Hon'ble High Court in the meanwhile. They are ready to argue the matter on 16.9.2013, and then and thereafter the matter can be posted for judgment, if the matter is not stayed by the Hon'ble High Court. Hence, posted to 16.9.2013 for reply arguments if any, on behalf of the respondent side. If the respondent fails to argue the matter, the matter will be posted for judgment. The date of judgment will be given on 16.9.2013” and the matter posted to 16.9.2013. On 16.9.2013, the appellant present, the respondent absent. Petition filed for the respondent's absence and allowed. Sri G. J. Venkata Rama Reddy, Advocate requested time for further arguments on behalf of the complainant. This Court passed conditional order on 13.9.2013. Even, then no further arguments addressed by the respondent's counsel. No any stay orders received from the Hon'ble High Court in this matter. Hence, this matter posted to 20.9.2013, and from 20.9.2013 to this day (23.3.2013)
12.As on today, there are no stay orders received by this Court from the Hon'ble High Court of A.P., in this matter. This Court waited up to 5.00 p.m., and pronounced Judgment.
13.In the circumstances of the case, one thing is required and to take note of the evidence of PW2. The evidence of PW2- complainant is very important to decide the matter. The complainant examined as PW2 by filing his own chief affidavit. The averments of the chief affidavit are within the same lines of the complaint allegations made against the accused. On behalf of the complainant, Ex.P1 to P19 documents were marked. Ex.P11 to P19 were marked subject to objection raised by the counsel for the accused that those are not original documents and they are generated computer copies. Pw2 was cross examined. In his cross examination, he stated that he is a citizen of America. He is doing business in America, and real estate business. He is also doing real estate business in India. He is having separate bank account in India and also at America. He is filing IT returns in America, but so far he did not file any IT returns in India. He is showing the properties in India in his I.T. Returns filed in America. He is having bank accounts and also the bank accounts in the name of his wife at America. Pw2 admitted that he agreed to purchase the commercial property belonging to the accused situated at Bowenpally. He visited the commercial property of the accused and verified the property physically, before his purchase. On 29.11.2008, he entered into agreement with the accused to purchase the said commercial property. He did not file the said agreement of sale in this case. On 29.11.2008 itself he returned the said agreement of sale to the accused. He 7C A No.257 of 2012 did not obtain any copy of the agreement. Prior to 29.11.2008 he withdrawn about Rs.76 lakhs from his account in Syndicate Bank, Abids Road Branch, Hyderabad. Out of the said amount, Rs.56 lakhs was utilized by him, and the said amount was paid in cash, to the accused on 29.11.2008. He obtained receipts from the accused acknowledging the payment of Rs.56 lakhs made by him to the accused. He did not file any separate receipt showing that he paid an amount of Rs.56 lakhs to the accused on 29.11.2008. He purchased the property in his name and also in the name of his wife under different sale deeds. Likewise, he also purchased several other properties in India. During course of cross examination, PW2 was suggested by the accused that he was not available in India during the month of April,2009, when he has obtained one promissory note and two cheques from the accused towards sale of the property in name of accused, but the same was got registered in the name of his wife, but PW2 denied the same. The accused gave a letter to the banker for stop payment of the two cheques. Pw2 denied the same. He was also suggested that he deliberately presented the impugned cheques in his account with his banker and on the basis of the said bounced cheques, he filed false complaints against the accused in order to gain wrongfully but PW2 denied the said suggestion. He was also suggested that the accused is not having any property including the commercial property at Bowenpally, Secunderabad and that he never entered into any agreement of sale with the accused for purchase of the said alleged property, and that on 29.11.2008, he did not pay any amount to the accused towards the sale consideration, and that the accused never received any amount from him towards sale consideration in respect of the said alleged commercial property. PW2 denied the same. During the course of cross examination of Pw1, he was confronted that Ex.P2 promissory note and after his perusal of the same, he identified that it is a promissory note executed by the accused in his favour. As per Ex.P2 promissory note, it is only a promise to pay a sum of Rs.56 lakhs to him, on demand. Pw2 admitted in his evidence that he did not file any separate receipt showing that he has paid a sum of Rs.56 lakhs to the accused on 29.11.2008. He was suggested that Ex.P2 promissory note is not supported by consideration. So far as the correspondence between the complainant and the accused, through e-mails; in this context, the evidence of PW2, in his cross examination, that “it is true that he is a citizen of America and the accused is non-resident Indian staying at America. All the e-mails Ex.P11 to P19 are sent by the accused to him on various dates in the year 2008. At that time sending them he himself and the accused residing at America. He was suggested that there is no relevancy in respect of Ex.P11 to P19 e-mails filed by him in the present case and facts, but this witness denied the same. PW2 admitted that Ex.P11 email does not reveal a sum of Dollars 1,00,000/- was transferred from his account to the account of the accused. Pw2 also admitted that there is no reason as to why he gave reply to the emails messages through telephone instead of sending reply through e- mail. He is not aware whether there is any law in America for any transaction requires the document to be executed in writing.
14.To disprove the case of the complainant, the accused cross examined PW2 at length, as noted above and he also got examined his witness as DW1. Dw1 stated in his evidence that he knew both the parties. The complainant used to come to meet the accused at Taj Banjara Hotel, where he used to meet them. In the month of November,28, the complainant cam to the accused at Taj Banjara Hotel, situated at Banjara Hills, Hyderabad. The complainant informed that he was in real estate business and asked him to purchase one flat in the apartment . Then, himself and the complainant and the accused went to Himayathnagar, Hyderabad, where the complainant shown one flat in the apartment viz., Sai 8C A No.257 of 2012
Datta Arcade, located at Himayathnagar, and they saw the said flat in the apartment and the accused agreed to purchase the said flat. Then, the complainant asked cash of sum of Rs.27 lakhs official towards sale consideration, and the complainant asked to pay a sum of rs.56 lakhs towards the cost of the said flat. Out of which, half of the amount in black and the remaining in white. The accused expressed that he could not pay the cash amount, and he issued two cheques to the complainant. The complainant also asked one promissory note from the accused on the ground of creating more confidence to the seller of the said flat. The accused executed promissory note and also executed the cheque at Taj Banjara, Hyderabad, but he signed on the said promissory note as guarantor. Ex.P1 is the same copy of the promissory note which appears to be signed in the month of December,2008. After the Christmas festival, the complainant is not meeting and asked him to verify about the said flat, and in the Sub-Registrar at Red Hills, Hyderabad. Accordingly, he went to the Sub-Registrar Office and enquired about the said flat. After necessary enquiry, he came to know that the said property was registered in the name of the wife of the complainant, on 1.4.2008. Then, he informed the same to the accused, and also obtained certified copy of the said registered sale from the Sub-Registrar, and handed over to the accused. Ex.D1 is the certified copy of the sale deed dated 1.12.2008.
15.By examining DW1, the accused has shown the preponderance of probabilities in the complainant's case, as the case of the complainant is not within the four corners of the provisions of section 138 of the Negotiable Instruments Act, and the complainant failed to prove his case to show that he paid the amount covered by Ex.P3 cheque for Rs.28 lakhs and for the same the accused issued the said cheque and the same was dishonoured. The case of the complainant, that the accused executed promissory note in his favour for a sum of Rs.56 lakhs and issued two cheques for Rs.28 lakhs each in favour of complainant towards payment of advance of sale consideration, and out of the said two cheques, the complainant presented one cheque in his account for realisation, and the same was returned unpaid along with the cheque return memo for the reason of 'funds insufficient' in the account of the accused.
16.The transaction between the complainant and the accused with regard to the property purchase and sale. The allegations against the accused that the accused offered to sell his commercial property situated at Bowenpally, Hyderabad. The complainant after verifying the property paid Rs.56 lakhs, as advance. On the request for registration of the property in the name of the complainant, the accused expressed his inability for registration of the property due to family problems, and requested the complainant not to force for registration, and further requested and assured to repay the advance amount to the complainant. The above is the case of the complainant.
17.The accused has contradicted the above case of the complainant by showing his preponderance of probabilities in the case of the complainant, as the complainant's case is not in correct lines. The trial Court having disbelieved the case of the accused, observed that the accused claimed that the complainant offered to sell property to him, and the complainant obtained two signed blank cheques and and one signed promissory note and the complainant got registered the same property in favour of his wife, and thereby cheated, and therefore, the complainant mis-utilized the promissory note and cheques, and filed false case against him, in order to gain wrongfully, and therefore, he cannot be prosecuted. Further, the trial Court 9C A No.257 of 2012 observed that the said contention of the accused did not come forward to adduce evidence, and on the other hand, the accused has examined the guarantor of the promissory note, DW1 and got marked Ex.D1, through him.
18.In this case, the contention of the accused that the accused is not required to adduce his evidence, and, he may discharge his burden on the basis of material brought on record. In support of his contention, he relied on a decision reported in 2008 AIR SCW 738, wherein, it was held that the accused, for discharge of his burden of proof, placed upon him, under a statute need not examine himself. He may discharge his burden on the basis of the material already brought on record. The accused has constitutional right to maintain silence. The standard of proof on the part of the accused that the prosecution in a criminal case is very different.
19.The allegations on the presentation of the cheque, one cheque was dishonoured for the reason of insufficient funds. Thereafter, the respondent-complainant gave a notice demanding the appellant to pay the cheque amount, and on failure to pay the amount, the respondent-complainant filed the complaint against the accused. The case of the appellant- accused that the promissory note – Ex.P2 cannot be relied upon, and it has to be rejected on the ground that no consideration was passed on it, as there being no evidence to substantiate the allegation that the respondent-complainant paid an amount of Rs.56 lakhs. One of the guarantor under said promissory note examined as DW1 and he narrated and explained the circumstances under which Ex.P2 was executed by the appellant, and it clearly disproved the promissory note, and does not support the case of the prosecution. On perusal of Ex.P2 promissory note, one thing is revealed that there is no any evidence to show that the cash amount of Rs.56 lakhs was paid by the complainant to the accused, after receipt of cash consideration of Rs.56 lakhs the accused executed Ex.P2 promissory note. The evidence of Pw2 and coupled with the evidence of DW1, one thing is revealed that the purchase and sale transaction between the complainant and the accused was not futile, and it was not acted upon. So far as the execution of the promissory note – Ex.P2 in favour of PW2, and to take in to consideration of Ex.P2 promissory note; from the cross examination portion of PW2, it is very important as noted above. Pw2 in his cross examination stated that he entered into an agreement of sale on 29.11.2008, and that the appellant-accused expressing his inability to execute and register the sale deed, and that the appellant-accused assured to repay the advance amount, and on that day evening itself, the agreement of sale was returned on the same day. But, in this course of action, no evidence available on record on behalf of the complainant to prove his case, with regard to the payment of advance which was said to have been paid some time back, as stated by PW2 and the amount was withdrawn prior to 29.11.2008, and paid the said amount of Rs.56 lakhs on the said date to the accused, without having any receipt or acknowledgment from the accused. Therefore, in this course of action, the evidence of PW2 is not believable with regard to the payment of amount by him to the appellant-accused. Pw2 in his evidence admitted that he obtained receipt for payment of Rs.56 lakhs on 29.11.2008, but he has not chosen to file the same into the Court. Whereabouts of the said receipt is not known to this Court.
20.The evidence of PW2 that he has entered into agreement of sale some times long back, and stated that on 29.11.2008, on the date on which the appellant alleged to have executed promissory note under Ex.P2, he entered agreement of sale with the appellant, and 10C A No.257 of 2012 he cancelled the agreement of same on the same day evening itself, and returned the agreement of sale, without obtaining the copy of the said agreement. In this context, there is no evidence on behalf of the complainant to prove the said allegations against the accused for the transaction against the property between himself and the accused. On behalf of the complainant, Ex.P11 to P19 copies of e-mails were marked, which are only related to the transaction between the respondent-complainant and the appellant, when they stayed in U.S.A, and not related to the present case transaction, alleged to have been taken in India.
21.In this appeal, this Court heard the arguments of both the parties, through their counsel, at considerable length and later the matter posted for reply arguments, if any, on behalf of the appellant side. The reply arguments addressed by the counsel for appellant also filed along with citations. No any further reply arguments addressed by the respondent side in support of case of the complainant. The appellant submitted a decision reported in 2009(1) SCC 492, wherein our Lordships of Supreme Court observed that, under section 139, 118(a) and 138 of the Negotiable Instruments Act, dishonour of cheque – presumption in case of ; presumption must be confined to the matters specified under section 139 and 118(a) of the Act. Existence of debt or other liability held has to be proved in the first instance by the complainant. In the same decision, the Hon'ble Supreme Court observed that, under section 138 proviso (c) of the Act, dishonour of cheque; notice of demand, proof of notice held essential, is a question of fact. Under sections 139 and 138 of the NI Act, the presumption that cheque was issued in discharge of debt or liability; the declaration made by the complainant that the accused paid amount, and for the same he issued a cheque as a sale consideration has taken place for the purchase of the house property in the name of the complainant. As per the evidence of Pw2, there is no mention of this transaction in income tax returns of himself. He maintained income tax returns in America for his transactions, and also the present case transaction with the accused, but no such income tax returns produced and filed before the Court. In this regard, the accused raised his objection that the case transaction is not noted in income tax returns of the complainant to show that the accused not refunded sale consideration and for the same he issued cheques in question and also promissory note.
22. The existence of cash consideration has to be proved by the complainant first, and then the burden lies on the accused to disprove the same. It is significant to note that the presumption under section 118 and 139 Act, comes into existence, as soon as the complainant proves that the negotiable instruments was executed by the accused. These presumptions are however rebuttal. To rebut the presumption, the accused can rely on the presumption under section 114 of the Evidence Act also. The accused in a trial of the case under section 138 of the NI Act, has two options. He can either show that consideration and debt did not exist or that under the circumstances of the case, no any existence of consideration and debt is so probable to rebut the statutory presumption. The accused is not expected to prove his defence beyond reasonable doubt, as is expected of the complainant in a case like this. The accused may adduce direct evidence or to dis- prove that the transaction in question which was not supported by cash consideration under the pro note and that there was no debt or liability in existence to be discharged by him. The defence of the accused, that the complainant assured him that he will sell the flat situated in Himayathnagar, Hyderabad, and on that he obtained two post dated cheques for value of Rs.56 lakhs from him, and thereafter, flat purchased in the name of his wife, and he cheated him. In this case, there is no any consideration passed by 11C A No.257 of 2012 the complainant to the accused under the promissory note. In this case, the so called impugned promissory note filed and marked as Ex.P2. There is no any proof of the recitals in Ex.P2 promissory note for payment of cash consideration by the complainant to the accused therein. In this connection, the complainant has taken advantage that the accused himself written Ex.P2 promissory note, that itself is not sufficient and acceptable to take note of, that there is a legally enforceable debt in question in existence, and for the same the accused issued the cheque in question to the complainant and the same was dishonoured. PW2 in his cross examination stated that he is a citizen of America and he is staying in America, for the last 22 years. He is doing business in America and real estate business, and one among them he purchased some houses and land sin India and he is having separate bank accounts in India and also at America. In his income tax returns at America, he shown the properties at India and he is running bank account under the head of Non-Residents ordinary account. Such explanation on behalf of the complainant in his cross examination not supported by any documentary evidence, to show this case transaction, shown in the income tax returns for payment of cash consideration under Ex.P2 promissory note to the accused, and for the same, the accused issued post dated cheque, and the same was dishonoured. This part of testimony of evidence of PW2 is not believable and acceptable, that the sale consideration was passed under the promissory note to the accused, and for the same the accused issued a post dated cheque as the sale consideration between him and the compliant is failed. As to why the transaction between him and the complainant has failed, and for this purpose the accused got examined one of his witness, as DW1. DW1 in his evidence stated that himself, complainant and the accused went to Himayathnagar, Hyderabad, and where the complainant shown one flat in the apartment viz., Sai Datta Arcade, located at Himayathnagar, Hyderabad, and they saw the said flat in the apartment, and the accused agreed to purchase the said flat. Then, the complainant asked cash amount of Rs.27 lakhs officially towards sale consideration, and the complainant asked to pay sum of Rs.56 lakhs towards cost of the said flat. Out of which, stressed what amount in black, and remaining in white, and also the complainant asked one promissory note on the ground of creating more confidence to the seller of the said flat.
23.To contradict the evidence of DW1, DW1 was cross examined through the complainant, as his statement is not correct. From the cross examination of DW1, nothing elicited in favour of the complainant to disprove the defence version of the accused, for his denial, that he did not receive any cash consideration covered under Ex.P2 promissory note, and for the same the accused issued a cheque and the same was dishonoured. On perusal of the entire record, available on record, one thing is certain and revealed that there is no acceptable evidence on record, to show that the accused received consideration covered under Ex.P2 promissory note and for the same he issued the cheque in question-Ex.P3, and the same was dishonoured. In this connection, one thing to be noted that, to prove the offence punishable under section 138 of the Negotiable Instruments Act, the complainant must prove that there is existence of legally enforceable debt, and for the same, the accused issued a cheque and the same was dishonoured. No material has been brought on record by the complainant to show that the cheques in question have been issued by the accused in his favour for legally enforceable debt in question as in existence and for the same the accused issued the said two cheques, and that they were dishonoured. The alleged sale transaction between the complainant and the accused is not finally settled, and there is no evidence on record to show that, under agreement in question, the accused agreed to sell the property in 12C A No.257 of 2012 the name of the complainant, and out of the intimacy of the accused with the complainant he offered to sell the commercial property, and the complainant after verifying the property paid Rs.56 lakhs as an advance to the accused. This crucial aspect is not proved by the complainant and the alleged transaction originated and under what circumstances the accused executed the promissory note, and also issued cheques in question. Even the evidence of DW1, the accused admitted that he executed promissory note and also issued cheques in favour of the complainant for the property purchased and the same was not futile, and the said property was settled in the name of the complainant's wife. This part of crucial aspect is came to light on record, through the evidence of Dw1, through Ex.D1. That he went to Sub-Registrar Office at Red Hills, Hyderabad and enquired about the transaction of the flat. After his enquiry he came to know that the said property was registered in the name of wife of th complainant on 1.12.2008. Then, he informed the same to the accused, and also obtained certified copy of the sale deed from the Sub-Registrar and handed over to the accused Ex.D1 is the same.
24.In view of the above evidence of DW1, one thing is certain and revealed that this case transaction is not finalized between the complainant and the accused, and Ex.D1 is linked with their transaction and the same is not finalized and settled. The alleged transaction amount is unaccounted amount, and it is admittedly not disclosed in the income tax returns of the complainant, and the complainant has failed to prove the same. Therefore, it cannot be said that it is a legally recoverable liability. If such liability held to be legally recoverable liability, it will be shown and noted in the income tax returns of the complainant. Herein, no any evidence on record on behalf of the complainant. Therefore, under no stretch of imagination, it can be stated that the liability to repay the cash amount as demanded by the complainant is a legally recoverable and enforceable liability within the meaning of section 138 of the Negotiable Instruments Act. In this course of action, the alleged debt cannot be said to be a legally enforceable debt and liability.
25.In this case, the accused has rebutted the presumption under section 139 of the Negotiable Instruments Act. The standard of proof for doing so, he has shown the preponderance of probabilities of the complainant as the complainant case is incorrect and it is not proved. The accused herein, raised probable defence and which creates doubt about the existence of legally enforceable liability. As evidenced on record, one thing is certain that the complainant has failed to prove his case against the accused that the accused is liable for punishment under section 138 of the Negotiable Instruments Act. There may be transaction between the complainant and the accused for their sale and purchase of the property, as it is their contract of their own, and it has to be averred in the pleadings of the complaint, that it was made for good consideration and it must substantiate by evidence. The complainant must prove his case affirmatively of the existence of debt in question, as it is legally enforceable debt and liability.
26.On perusal of the entire record available, one thing remains, that the complainant has failed to prove his case that there is a legally enforceable debt in question is in existence, and for the same the accused issued a cheque in question and the same was dishonoured, and on that the accused is liable for punishment. The accused rebutted the presumption by way of his probable defence by showing the preponderance of probabilities in the complainant's case that the complainant has failed to prove his case, that there was a transaction between 13C A No.257 of 2012 him and the accused, and for the same the accused executed one promissory note and also issued cheque in question and the same was dishonoured. As I already observed, that the existence of legally enforceable debt in question is not proved. Merely filing the pro-note said to have been executed by the accused is not sufficient. No where in the evidence on behalf of the complainant that the sale consideration was passed by the complainant and for that sale consideration, the accused assured and executed promissory note in question by his own hand writing . Simply saying that the accused written promissory note in his own hand writing is not sufficient to conclude that he received sale consideration under the promissory note. DW1 stated in his evidence that he is a guarantor for the transaction in question under the promissory note. That itself is not sufficient that the accused is liable to pay the amount covered under the said promissory note. There is no tangible evidence on behalf of the complainant to show that the accused issued a cheque in question for the debt covered under Ex.P2 promissory note and for the same he issued the cheque in question, and the same was dishonoured, and so he is liable for punishment.
27.Under section 138 of the Negotiable Instruments Act, the accused can rebutt the presumption available to the complainant under section 139 of the Negotiable Instruments Act, either by adducing positive evidence or based on the material available on record, such as, averments made in the complaint, and the evidence of the witness examined by the prosecution. The above are the observations of our Lordships of Honourable Supreme Court of India, in a decision reported in 2012(2) ALD (Crl.), page 321 (A.P).
28.In the complaint petition itself, Pw2 made a mention that the accused offered to sell commercial property situated at Bowenpally, Secunderabad. After his verification of the property, he paid Rs.56 lakhs as advance to the accused. Thereafter, the accused expressed his inability for registration of the property due to some family problems, and requested the complainant not to force for registration, and further assured to repay the advance amount to the complainant, and executed promissory note in favour of the complainant, for a sum of Rs.56 lakhs, and also issued post dated cheques in question. The cheque in question was dishonoured. The defence of the accused clearly show that Ex.P2 promissory note was obtained by the complainant as a security, and even though no any transaction of payment of cash consideration covered under the same, and no amount was borrowed by the accused from the complainant in this transaction. When the cheque was issued as an assurance and as security for the transaction of the property situated at Himayathnagar, Hyderabad, the accused in tis course of action is not liable for prosecution under section 138 of the Negotiable Instruments Act, despite the fact that it was dishonoured.
29.The trial Court believing the version of the complainant, accepted the case of the complainant and taking into consideration of the evidence of DW1, observed and held that the accused admitted execution of Ex.P2 promissory note and also admitted execution of Ex.P3 cheque in favour of the complainant, and that itself is sufficient to prove the complainant's case, because the burden lies on the accused to establish the said fact, but the accused did not put forth any acceptable evidence before the Court, to establish the said claim. The above observation of the trial Court clearly shows that the trial Court throw the burden on the accused to prove his case and to disprove the case of the complainant. In these type of cases, initial 14C A No.257 of 2012 burden lies on the complainant to prove his case and then the burden lies on the accused to dis-prove the case of the complaint by rebuttal evidence under section 139 of the Negotiable Instruments Act, by showing preponderance of probabilities in the complainant's case by his defence. There is no any rule of law that the accused must give evidence on oath to prove his case and to disprove the case of the complainant. The accused can show the preponderance of probabilities in the complainant's case that the complainant's case is improbable and not acceptable.
30.When the fact of existence of legally enforceable debt in question, is not in existence, there is no any further necessary to discuss with the fact that the accused issued the cheque in favour of the complainant and the same was dishonoured for the reason of funds insufficient or stop payment in the account of the accused, and inspite of receipt of statutory notice from the complainant, the accused failed to discharge the amount covered under the impugned cheque within the statutory period, are all not at all for consideration. In this case, to arrive at particular conclusion that the accused is liable for punishment, the trial Court observed that inspite of receipt of statutory notice from the accused, the accused failed to discharge the amount covered under the impugned cheque within the statutory period, and therefore, it is definitely an act on the part of the accused which ultimately resulted in dishonouring of Ex.P3 cheque, which clearly falls within the ambit of section 138 of the Negotiable Instruments Act, is not acceptable.
31. In view of my aforesaid discussion, I am of the view that the observations of the trial Court, are not in correct lines in holding that the prosecution has successfully brought home the guilt of the accused for the offence punishable under section 138 of the Negotiable Instruments Act, beyond all reasonable doubt. In view of the present case facts and circumstances, this Court is of the opinion that the observations of the trial Court are not in correct lines and the complainant has failed to prove his case against the accused for the offence punishable under section 138 of the Negotiable Instruments Act, and, so conviction of the appellant-accused is liable to be set aside, and the appellant-accused is entitled for acquittal.
32.In the result, the appeal is allowed. The conviction and sentence imposed on the appellants/accused by judgment dated 22.3.2012 passed by the XIX Additional Chief
Metropolitan Magistrate, Hyderabad in CC No.206 of 2010, is set aside, and he is acquitted for the offence punishable under section 138 of the Negotiable Instruments Act. The fine amount, if any paid, shall be refunded to the appellants/accused, after expiry of appeal time.
Dictated by me, transcribed by Personal Assistant, corrected and pronounced by
me in the open court, on this the 23rd day of September,2013
VII ADDITIONAL METROPOLITAN SESSIONS JUDGE
HYDERABAD.
To 1.To XIX Additional Chief Metropolitan Magistrate, Hyderabad 2.The counsel for the petitioner.