1Fair Judgment CC.NI.No.17740 of 2022
IN THE COURT OF THE V METROPOLITAN MAGISTRATE,
MANORANJAN COMPLEX, HYDERABAD
PRESENT: Smt. M.Sushma V Metropolitan Magistrate Hyderabad.
On this Thursday, the 28thday of March, 2024 (S.T.C.NI.1388 of 2021)
CC.NI.N O .17740 OF 2022
BETWEEN :
Dr.Adatrow Kalyan Chakravarthy, S/o. Adatrow Gurunath, Aged about 46 years, Occ: Doctor, R/o.Flat No. 1401, Block 17LH, Lanco Hills, Near: DPS School, Manikonda, Puppalaguda, Hyderabad - 500 089.….Complainant
AND
Karlapudi Babu Prakash, S/o. Devasahayarn, Aged about 65 years, Occ: Memboy & choruch, R/o. Flat No.101, Vibhu Amruth Manor, Sai
Baba Road, Guntur, Andhra Pradesh.....Accused
This Calender case is coming on this day before me for hearing in the presence of Sri. A.Srikanth Reddy, Advocates & Associates, for the complainant, and of Sri G.V.Giridhar, Advocates for the accused, and upon hearing the arguments on both sides and the matter stood over for consideration till this date, this court delivered the following:
JUDGMENT
1.The complainant filed this complaint Under Section 200 of
Cr.P.C against the accused alleging that the accused has committed the offence punishable U/ Sec. 138 of the Negotiable Instruments Act, 1881. (In short for N.I.Act)
2.The brief facts of the case of Prosecution/Complainant as per the allegations contained in the complaint are as follows:
2Fair Judgment CC.NI.No.17740 of 2022
That the Accused represented that one A.E.L Church (Andhra
Evangelical Lutheran Church), Guntur, gifted him 4000 Sq.yds of land in
Brodipet in exchange for a favour done by him, but couldn't register the gift deed due to financial constraints. The Accused offered to sell 700 Sq.yds of the land out of 4000 Sq.yds to the Complainant at Rs. 45,000/- per Sq.yd.
Trusting his words, the Complainant and his wife paid Rs.40,00,000/- as advance i.e., transferred Rs.35,00,000/- via RTGS/NEFT, and paid
Rs.5,00,000/- in cash and the same was acknowledged by the accused and entered into M.O.U dated 16-02-2018. The Accused issued two cheques
Bearing Nos. 420187 and 420188 of Rs. 20,00,000/- each in favour of the
Complainant and his wife mentioning the date as 16-02-2018, assuring registration of 700 Sq.yds land upon obtaining the gift deed from the church, or to encash the cheques otherwise. However, after three months had passed, the Accused failed to register the sale deed as promised. It was later discovered that the church management had not made any commitment to gift the Accused the 4000 Sq.yds of land. The documents presented by the Accused to the Complainant were found to be forged, and the dispute was pending before the civil court. Upon requesting the return of the advance amount by the complainant, the Accused asked for more time due to financial difficulties, informing them a case was filed against the church and assured to repay the amount if the dispute is not resolved. As the said cheques given by the accused are going to be expired, he (Accused) issued new cheque bearing no. 420255 dated 25-12-2020, for Rs.
20,00,000/- in favour of the Complainant and another cheque dated 25- 12-2020 for Rs. 20,00,000/- in favour of the Complainant's wife, ensuring payment before the mentioned date on cheques. The Complainant remained 3Fair Judgment CC.NI.No.17740 of 2022 silent until 25-12- 2020 and when he demanded payment, the Accused requested to present the cheque bearing no. 420255 drawn on SBI,
Kanavarithota Branch, Guntur, on 06-01-2021 and ensured availability of funds. As per the Accused's instructions, the complainant presented the cheque with his banker at ICICI Bank, Lakdikapul Branch, Hyderabad on 06-01-2021 and the same was returned on 08-01-2021 by the
Complainant's bank with an endorsement "Funds Insufficient". Since the accused failed to honour the cheque, the complainant issued a statutory
Demand notice dated 28-01-2021 as per the provisions of the Negotiable
Instruments Act via Registered Post Acknowledgement due, demanding payment of the cheque amount within 15 days from the date of receipt of the notice. The notice was received by the accused on 01-02-2021 and issued reply notice dated 13-02-2021 making false allegations. The intention of the accused without maintaining the funds discloses his malafide intention and cheating and is liable under section 138 of the N.I.
Act. The Complaint was filed on 17-03-2021 and same was taken on file and was proceeded within this court.
3.On appearance of Accused before this Court, he was supplied with copies of the complaint and other material papers as contemplated u/Sec. 207 Cr.P.C and he was examined u/Sec. 251 Cr.P.C for the offence punished u/Sec.138 of N.I.Act, for which he pleaded not guilty and claimed to be tried for the said offence and then the case was posted for trial.
4.To prove the guilt of the Accused, the complainant examined himself as PW1 and got marked Ex.P1 to Ex.P7 documents.
4Fair Judgment CC.NI.No.17740 of 2022
EX.P1: is the Original cheque bearing No. 420255 dated 25-12-2020 for an amount of Rs.20,00,000/- (Rupees Twenty lakhs only).
Ex.P2: is the Original cheque return memo dated:08-01-2021. for the
Cheque bearing No.420255.
Ex.P3: is the office copy of legal notice dated:28-01-2021.
EX.P4: is the Original postal receipt dated: 29-01-2021.
Ex.P5: is the reply notice issued by accused through his counsel dated:
13-02-2021.
Ex.P6: is the Postal acknowledgment card dated:05-02-2021.
Ex.P7: is the memorandum of understanding and agreement between complainant and accused dated: 16-02-2018.
5.After closure of the complainant side evidence, the Accused was examined u/Sec. 313 Cr.P.C. he denied the incriminating circumstances appeared against him in the evidence brought on record by the complainant. On his defence, Accused got himself examined as Dw1 with the permission of the court and got marked Ex.D1 to D5 documents.
Ex. D1: is the certified copy of the plaint on the file on Hon'ble Ill ADJ,
Guntur dated: 22-02-2018.
Ex.D2: is the certified copy of minute book - minute numbe - 474 i.e., Resolved to execute gift deed to K. Babu Prakash 4000 sq in
LEM School compound and resolved to execute sale deeds to others in Becker compound in Guntur dated: 22-07-2015.
Ex.D3: is the certified copies to sales deed executed by A.E.L Church to other in Beker compound, Guntur as per minute number 474 dated:
30-07-2015 and 31-07-2015.
Ex.D4: is the certified copy of M.O.U between A.E.L Church and K. Babu
Prakash dated 17-06-2015.
Ex.D5: is the Ex. A5 certified copy of delivery of property by A.E.L Church
dated 29-07-2016.
5Fair Judgment CC.NI.No.17740 of 2022
6. Heard the Arguments on behalf of both sides and perused the records. The Advocate appearing for the accused filed written arguments
U/Sec. 314 Cr.P.C. and the same are taken into consideration.
7.After having heard the Arguments on both sides, now the point for consideration is that whether the complainant has proved the case as set-up by him against the Accused and thereby brought home the guilty of the accused of the offence punished u/Sec. 138 of N.I.Act., beyond all reasonable doubt?
8.As can be culled out from the record of the case and the oral and documentary evidence that has come on record before the court on behalf of both the parties, there appears to be no dispute with regard to compliance of Mandatory provisions contemplated u/Sec. 138 and 142 of
N.I.Act., by the complainant in respect of presentation of Ex.P1 Cheque within the period of its validity, bouncing of Ex.P1 cheque for the reasons “FUNDS INSUFFICIENT” under Ex.P2 cheque return memo, issuing of legal notice Ex.P3 to the accused and filing of the complaint within the period of limitation.
9. Keeping in view of the submissions made while advancing of arguments on Accused side by the learned counsel, the main points now that arise for consideration on the other remaining aspects and ingredients of the offence punishable u/s: 138 of N.I.Act are as follows:
1. Whether the complaint filed by complainant is barred by limitation?
6Fair Judgment CC.NI.No.17740 of 2022
2. Whether there existed any legally enforceable debt in between the complainant and the accused?
3. Whether Ex.P1 cheque was issued by the accused in favour of the complainant towards discharge of any debt or liability?
4. Whether the criminal liability of the offence punishable u/s.138 of
N.I.Act can be fastened on the accused on bouncing of Ex.P1 cheque?
Point No.1
10. The Accused has taken a defence that the complaint should have been filed within one month from the receipt of the reply notice dated 13/02/2021 issued by him. The complainant's failure to specify the date of receipt of the reply notice dated 13/02/2021 could lead to the presumption, under Section 114(g) of the Evidence Act, that the complainant received the notice on 13/02/2021. Accordingly, the complaint should have been filed on or before 15/03/2021, but it was filed on 17/03/2021, which is beyond the limitation period. Further, as no application for condonation of delay was submitted before the court, and that the complaint has to be dismissed.
11. Section 138 (c) of the N.I Act lays that "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."
In other words, after receiving a legal notice for cheque bounce, it is the duty of drawer of the cheque to repay the debt amount within a period of 15 days of receiving such notice. Otherwise, the payee gets the right to 7Fair Judgment CC.NI.No.17740 of 2022 proceed through the Court of law. Hence, the cause of action arises from the 16th day after serving the cheque bounce notice to the drawer. The
Supreme Court in Dashrath Rupsingh Rathod v. State of Maharashtra, (2014) 9 SCC 129 explained the cause of action regarding cheque bounce notice, which arises when the drawer fails to pay the defaulted payment after the cheque bounce notice limitation lapses.
12. In the present case, the postal receipt dated 29-01-2021 of the legal notice dated 28-01-2021 and the Ex.P6 acknowledgment card dated 01-02- 2021 which shows that the legal notice was received by accused on 01-02-2021 and after receiving of legal notice for cheque bounce, it is the duty of drawer of the cheque to repay the debt amount within a period of 15 days of receiving such notice. Otherwise, the payee gets the right to proceed through the Court of law. Hence, the cause of action arises from the 16th day after serving the legal notice to the drawer i.e.,from 17-02-2021 and within 30 days the complaint has to be filed i.e., 16-03-2021. The complaint was filed on 17-03-2021.
11. At this juncture, it is pertinent to refer
IN RE: COGNIZANCE FOR EXTENSION OF LIMITATION WITH
MISCELLANEOUS APPLICATION NO. 29 OF 2022, IN
MISCELLANEOUS APPLICATION NO. 665 OF 2021, IN SUO MOTU
WRIOT PETITION (C) NO. 3 OF 2020 ORDER IN MARCH 2020.
The Hon’ble Supreme Court took suo motu cognizance for period of limitation due to Covid-pandemic.
8Fair Judgment CC.NI.No.17740 of 2022 “ 5. (IV) It is further clarified that the period from 15.03.2020 till 28.02.2022 shall also stand excluded in computing the periods prescribed under Sections 23 (4) and 29A of the Arbitration and Conciliation Act, 1996,
Section 12A of the Commercial Courts Act, 2015 and provisos (b) and (c) of
Section 138 of the Negotiable Instruments Act, 1881 and any other laws, which prescribe period(s) of limitation for instituting proceedings, outer limits (within which the court or tribunal can condone delay) and termination of proceedings.” 12. In view of the above directions issued by the Hon'ble Supreme Court of India, it is clear that period from 15-3-2020 till 28-2-2022 shall stands excluded in computing the period prescribed under provisos (b) and (c) of Section 138 of Negotiable Instrument Act 1881. It is relevant to note that in the present case, the complaint was filed on 17-03-2021. Therefore, in view of above directions of Hon'ble Apex court, it is clear that the time limit in filing the complaint is excluded in computing the limitation. Therefore, the complainant though filed after lapse of actual time limit, it is deemed to be filed within the time limit. Therefore, the contention of the learned defense counsel for accused that complaint was barred by limitation cannot be sustained and accordingly I answered the point in favour of the
Complainant and against the Accused.
Point No:2 and 3
13. For convenience sake, this court feel it desirable to discuss these two points together to avoid repetition in discussing the evidence that has come on record before the court on behalf of both sides.
9Fair Judgment CC.NI.No.17740 of 2022
14. To prove these two points, the complainant as is evident is relying upon the evidence given by himself as PW1 coupled with Ex.P1 to P7 documents. Per contra the accused is relying up on the evidence given by himself as Dw1 coupled with Ex.D1 to D5 and so also upon the material submitted by the complainant and the statements elicited from him during the course of his cross examination.
15. Legal Position
In order to establish the offence under Section 138 of the Act, the prosecution must fulfil all the essential ingredients of the offence, as highlighted hereunder:
First Ingredient: The cheque was drawn by a person on an account maintained by him for payment of money and the same is presented for payment within a period of 3 months from the date on which it is drawn or within the period of its validity;
Second Ingredient: The cheque was drawn by the drawer for discharge of any legally enforceable debt or other liability;
Third Ingredient: The cheque was returned unpaid by the bank due to either insufficiency of funds in the account to honour the cheque or that it exceeds the amount arranged to be paid from that account on an agreement made with that bank;
Fourth Ingredient: A demand of the said amount has been made by the payee or holder in due course of the cheque by a notice in writing given to the drawer within thirty days of the receipt of information of the dishonour of the cheque from the bank;
Fifth Ingredient: The drawer fails to make payment of the said amount of money within fifteen days from the date of receipt of notice.
10Fair Judgment CC.NI.No.17740 of 2022
16. The complainant as PW1 has reiterated the contents of the complaint in his affidavit evidence as detailed in para No:2 and accordingly asserted that there existed legally enforceable debt/liability of
Rs:40,00,000/- and thereby Accused towards discharge of the liability had issued Ex.P1 Cheque for an amount of Rs. 20,00,000/- in his favour towards discharge of the said liability, and therefore prayed to raise the presumptions envisaged under Sec.118 and 139 of N.I.Act in his favour.
17. A careful scrutiny of the documents relied by the complainant goes to show that, statutory requirements of section 138 of N.I. Act is complied with and this complaint is filed within time. Thus, complainant is entitled to rely on the statutory presumptions enshrined under section 118 read with section 139 of N.I. Act.
Section 118 reads as here: - "That every negotiable instrument was made or drawn for consideration and that every such instrument when it has been accepted, endorsed, negotiated or transferred was accepted, endorsed, negotiated or transferred for consideration".
Further Section 139 of the Negotiable Instruments Act provides for presumption in favour of a holder. It reads as here: - "It shall be presumed, unless the contrary is proved, that the holder of a cheque received the cheque, of the nature referred to in section 138, for the discharge, in whole or in part, or any debt or other liability." 11Fair Judgment CC.NI.No.17740 of 2022
A combined reading of above said sections raises a presumption in favour of the holder of the cheque that he has received the same for discharge in whole or in part of any debt or other liability.
18. The accused has not disputed service of legal notice upon him which was issued by the complainant and a reply notice was issued by him.
The accused has not disputed his acquaintance with the complainant and disputed the cheque in question i.e. Ex.P1 claiming that it was not issued to the complainant in discharge of legally enforceable debt and taken a defense that as per Ex.P7 M.O.U the complainant and her wife gave him an amount of Rs.40,00,000/- for the clearance of the property and promised to pay the remaining amount at the time of registration as the property was not registered on his(Accused) name so he could not handover to the complainant as the case was pending before Hon’ble III ADJ court, Guntur and as per clause (6) of Ex.P7 agreement as a part of security, blank signed cheques and promissory note were handed over to the complainant by him and there is no legally enforceable debt/liability. In this back ground, it is to be examined the oral and documentary evidence adduced by both complainant and accused.
19. Since the accused in the case on hand didn’t dispute the signature appearing in the cheques to be not that of his signature and cheque doesn’t relate to his account even though different stands were taken on his behalf. However as highlighted here in above, when the accused had not disputed that the subject cheque Ex.P1 relating to his account and that the signature of drawer appearing on it is that of his signature. In such a scenario, a presumption is raised under section 139 12Fair Judgment CC.NI.No.17740 of 2022 read with Sections 118/20 of the N.I Act, that cheque was issued in discharge of debt or liability. The Hon'ble Apex Court in Basalingappa v.
Mudibasappa, (2019) 5 SCC 418 : 2019 SCC Online SC 491 has laid down the following law:
Once the execution of cheque is admitted, Section 139 of the Act mandates a presumption that the cheque was for the discharge of any debt or other liability. The presumption under Section 139 is a rebuttable presumption and the onus is on the accused to raise the probable defence.
The standard of proof for rebutting the presumption is that of preponderance of probabilities. To rebut the presumption, it is open for the accused to rely on evidence led by him or the accused can also rely on the materials submitted by the complainant in order to raise a probable defence. Inference of preponderance of probabilities can be drawn not only from the materials brought on record by the parties but also by reference to the circumstances upon which they rely. That it is not necessary for the accused to come in the witness box in support of his defence, Section 139 imposed an evidentiary burden and not a persuasive burden. If upon preponderance of probabilities, the accused is able to do the same, onus once again shifts back on the complainant to prove its case beyond reasonable doubt. If not, the complainant is entitled for a decision in his favour.
20. Now coming to the case on hand, it has to be seen as to whether the accused is able to raise reasonable and probable defence by way of preponderances of probabilities to rebut the presumptions U/Ss:118 and 139 of N.I Act, otherwise available in favour of the complainant. Admittedly in the case on hand as is evident to substantiate his defence, the accused 13Fair Judgment CC.NI.No.17740 of 2022 is relying upon the evidence given by himself as Dw1 coupled with Ex.D1 to
D5 documents and so also upon the material submitted by the complainant and the statements elicited from him during the course of his cross examination in order to raise probable defence to rebut the presumptions.
21. In this back drop of the rival contention, this court has given consideration to the materials available on record and the arguments canvased by both counsels. At the outset, it is pertinent to mention here that the accused though disputed the claim of the complainant as put-forth by him in the forgoing para, he took main and other defence stands by way of suggestions to PW1, which are thus:
“MOU was executed between complainant and myself and my wife
dated: 16-02-2018. It is true to say that it is no where mentioned in Ex.P7
MOU that there is a clause that accused to register the sale deed before certain date. Witness adds that though there is no deadline accused acknowledged on back of Ex.P7 M.O.U that he could not fulfill due to technical reason and as such he (accused) issuing two fresh cheques. It is true that we are not impleaded as party in the suit of the accused before civil court”.
AND “ It is not true to say that Ex. P1 cheque was filled by myself. Witness adds that date was written by them in front of the accused and remaining all the contents were filled by accused. It is not true to say that complainant cannot come on christmas day as he being the christian. It is not true to say that as
Ex.P1 is not valid as it is mentioned on it clearly that cheque valid upto Rs.
10,00,000/- Lakhs at non-home branch. I have not issued any notice to accused after knowing that management of church not entered into any 14Fair Judgment CC.NI.No.17740 of 2022 sought of understading with accused and said issue fell into dispute before civil court. Witness adds that on many occasions they informed him verbally”.
22. As is evident from the assertion contained underneath Clause (7) of Ex.P7 M.O.U an amount of Rs. 35,00,000/- was transferred to the accused account through RTGS and an amount of Rs.5,00,000/- was paid by way of cash and same was admitted by the accused during his examination U/sec. 313 Cr.P.C. while so one of the defense taken by the accused is that there is no clause in Ex.P7 M.O.U to register the sale deed in favour of the complainant and to his wife on or before a certain date.
Though there is no time prescribed in Ex.P7 M.O.U for registration of sale deed, but however from clause (5) of Ex.P7 M.O.U it will be clear that the second party that is to say complainant herein and his wife should get the land registered on their name/names or their nominees within two months from the date of registration of 4000 sq. yards of land by the A.E.L church in favour of the first party that is to say accused herein. While so, from the admissions made by the accused himself during his cross examination as
DW1 that he filed O.S. No. 112/2018 three days after the execution of Ex.
P7 M.O.U, and that earlier to that he had issued legal notices to the church on 23/06/2017 and 11/12/2017 indicates that there was dispute between himself and the church. In these circumstances as admitted and endorsed by the accused on 02-05-2018 on the last page of Ex.P7 M.O.U. which is to the effect as:
“ As per the agreement dated 16-02-2018, two cheque bearing nos:
420188 and 420187 have been issued. As I couldn’t fulfil the M.O.U due to technical reasons, I am hereby issuing two fresh cheque bearing nos: 420255 and 420254 as the previous cheques were nearing expiry ” 15Fair Judgment CC.NI.No.17740 of 2022
Thus from these endorsement it will be clear that he had realized that he could not fulfil the terms and conditions of Ex.P7 M.O.U and so also his promise of registering of sale deed in favour of the complainant and his wife and as such he should have issued fresh two cheques bearing nos: 420255 and 420254 in place of earlier two security cheque bearing nos: 420188 and 420187 which were nearing to expiry date. Further as is evident from out of these two fresh cheques, the cheque bearing no: 420255 is the subject
Ex.P1 cheque in the present case on hand and remaining cheque detailed herein above were given by him towards discharge of the legally enforceable debt/liability of Rs.40,00,000/- admittedly taken by him and owed the same to the complainant herein and his wife. As such, it cannot be said that
Ex.P1 cheque was not issued by the accused to the complainant herein towards discharge of the legally enforceable debt/liability owed by him to the complainant.
23. That apart to believe that the complainant/PW1 had really misused
Ex.P1 cheque which was given in the year 2018 as a security as contended by him(Accused) is to believed to be true, then he (accused) would not have certainly kept quiet till the present case was filed by the complainant and on the other hand, he (accused) as a prudent person would have certainly launched some or the other civil or criminal action against complainant/PW1, for misusing his cheque in the present case. Furthermore he also did not think it fit to approach the concerned police against complainant/PW1, when complainant allegedly misused his Ex.P1 cheque respectively in the present case. However for the reasons best known as evident from the material available on record before the court in the present case, he didn’t appear to 16Fair Judgment CC.NI.No.17740 of 2022 have approached any police station or any court of law as pointed out herein above against the complainant for misusing his alleged cheque when he did not owe any amount to complainant, and so also there existed no legally enforceable debt/liability in between himself and complainant/PW1. As discussed above, total defense of accused is an after thought defense, just to escape from liability and there is nothing in it. Further if at all cheque was issued as a security, what prevented him to issue intimation to his banker to stop payment in respect of said cheque. So it is absolutely false defence and for all these reasons, I am of the considered view that the stories as highlighted herein above brought in by the accused before the Court without any basis in my considered view are unworthy of credit apart from being unsupported by any convincing and credible defence evidence and material, and as such I hold that the accused has failed to probabalize any of his highlighted defences and thus thereby failed to raise probable acceptable defence, and thus thereby he has failed to cross the barrier sought to be put up in the case of the complainant on the basis of his highlighted unsustainable defences.
24. The accused has further taken a defense by way of cross examination that Ex.P1 cheque is not valid as it states "valid up to Rs. 10 lakhs at non-home branch”. However, this condition applies to the withdrawal of funds and does not affect the validity of an account payee cheque like Ex.P1, which is intended for deposit into the complainant/PW1/ payee's account. Therefore, the accused's contention regarding the validity of the cheque based on this clause is not sustainable as it does not impact the purpose and validity of presenting the cheque for deposit to the payee's account.
17Fair Judgment CC.NI.No.17740 of 2022 25. Another defence stand taken by the learned counsel for Accused is that accused has issued the duly signed blank cheque to the complainant as a security and contended that criminal liability of accused under section 138 N.I. Act is attracted only on account of dishonour of cheque issued in discharge of any liability or debt but not on account of issuance as a security cheque. In the case the complainant failed to prove his case that the security cheque issued to him was to discharge a liability.
So when there is no liability towards the complainant the offence under
Section 138 N.I. Act is not attracted against the accused.
26. It is important at this stage to refer to the decisions of Hon’ble S.C in sampelly Satyanarayan Rao vs Indian Renewable Energy Development
Agency Ltd. (2016) 10 scc 458 held that :
“ the question whether a post-dated cheque is for “discharge of debt or liability” depends on the nature of the 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. Reference to the facts of the present case clearly shows that though the word “security” is 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 28th February, 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.” 18Fair Judgment CC.NI.No.17740 of 2022
The Court observed:
“ A cheque issued as security pursuant to a financial transaction cannot be considered as a worthless piece of paper under every circumstance. ‘Security’ in its true sense is the state of being safe and the security given for a loan is something given as a pledge of payment. It is given, deposited or pledged to make certain the fulfilment of an obligation to which the parties to the transaction are bound. If in a transaction, a loan is advanced and the borrower agrees to repay the amount in a specified timeframe and issues a cheque as security to secure such repayment; if the loan amount is not repaid in any other form before the due date or if there is no other understanding or agreement between the parties to defer the payment of amount, the cheque which is issued as security would mature for presentation and the drawee of the cheque would be entitled to present the same. On such presentation, if the same is dishonoured, the consequences contemplated under Section 138 and the other provisions of N.I. Act would flow.”
27. Furthermore, the accused during cross examination of complainant/PW1 by way of suggestion took the defence that he (accused) has handed over blank signed cheques as a security and the body of the cheque of Ex.P1 was not filled by him(Accused). It is pertinent to note that under Sec.20 of the N.I Act., it is perfectly possible for the drawer of the cheque to give a blank cheque signed by him to the payee and consent either impliedly or expressly to the said cheque being filled up at a subsequent point in time and presented for payment by the payee. If a signed blank cheque is voluntarily presented to a payee, towards some payment, the payee may fill up the amount and other particulars. This in itself would not invalidate the cheque. The onus would still be on the 19Fair Judgment CC.NI.No.17740 of 2022 accused to prove that the cheque was not in discharge of a debt or liability by adducing evidence. It is immaterial that the cheque may have been filled in by any person other than the drawer, if the cheque is duly signed by the drawer. This view is held in Criminal Appeal no.230-231/2019 between Bir
Singh and Mukesh.
It is held that “a meaningful reading of the provisions of the Negotiable
Instruments Act including, in particular, Sections 20 , 87 and 139 , makes it amply clear that a person who signs a cheque and makes it over to the payee remains liable unless he adduces evidence to rebut the presumption that the cheque had been issued for payment of a debt or in discharge of liability. It is immaterial that the cheque may have been filled in by any person other than the drawer, if the cheque is duly signed by the drawer. If the cheque is otherwise valid, the penal provisions of Sec.138 would be attracted". It is aptly applicable to the facts on hand. Hence, the defence of the accused is not helpful to her to rebut the presumption under Sec.139 of the Negotiable
Instruments Act.
28. Therefore from the above discussion, the decisions (i) K.Krishna
Mohan Reddy V K.Rajender and another 2012 (1) ALD (Crl.) 934 (AP) (ii)
John K. Abraham Vs. Simon C. Abraham and another 2014 (2) S.C.C. page
236.(iii) G.Ashok Kumar Goud Vs. P. AnjilBai and another 2012 (2) ALD (Crl.) 126 (AP) (iv) Basalingappa Vs. Mudibasappa 2019 (2) ALD (Crl) 732 (SC) placed by the learned counsel appearing for the Accused with regard to ink difference in cheques are not applicable to the present case.
29. Further with regard to non disclose of the loan amount of
Rs:20,00,000/- by the complainant in his income tax return in a case in 20Fair Judgment CC.NI.No.17740 of 2022 between Krishna P Morajkar Vs. Joe Ferrao; State of Goa, reported in 2013 Law
Suit (Bom) 923 the Hon'ble High Court of Bombay (Panaji Bench), in the last portion of Para No:18, held thus:
"18. The learned Counsel for the respondent submitted that the observations of the Supreme Court in Para 14 of the judgment in Rangappa show that the
Supreme Court had not in any way cast any doubt on the correctness of the decision in Krishna Janardhan Bhat, as it was based on specific facts and circumstances therein.
Therefore, he submitted that observations in Krishna Janardhan Bhat about non-compliance of provisions of Section 269SS and the implications of
Section 271D of the Income Tax Act would still stand as good law. The learned
Counsel for the appellant submitted that even these observations would stand impliedly overruled. He pointed out that what was held in Krishna Janardhan
Bhat was that advance taken by way of loan of more than Rs:20,000/- was only to be made by way of an account payee cheque. He submitted that in Rangappa the Supreme Court was specifically considering the case of an advance of
Rs:45,000/- made in cash and yet the Supreme Court had upheld the conviction recorded. Thus even those observations based on the provisions of Section 269SS and 271D of the Income Tax Act made in Krishna Janardhan Bhat would stand impliedly overruled. I am entirely in agreement with the learned Counsel
for the appellant because the Supreme Court in Rangappa had specifically noted
the judgment in Krishna Janardhan Bhat. The Supreme Court had obviously noted the observations in Para 26 in Krishna Janardhan Bhat that advance of more than Rs:20,000/- was to be made only by way of an account payee cheque, and yet the Supreme Court accepted case of a complainant who claimed to have made an advance of Rs:45,000/- in cash and proceeded to uphold the conviction, even though the case rested on the fact that cash advance of a sum 21Fair Judgment CC.NI.No.17740 of 2022 more than Rs:20,000/- was made. Thus, on this aspect also Krishna Janardhan
Bhat stood impliedly overruled by Rangappa and the judgment is to be held rendered on the facts of that case, not laying down any law. Therefore, judgments which follow Krishna Janardhan Bhat can be safely ignored."
And further in the last portion of Para No:19 observed thus:
"A plain reading of Section 269SS shows that no person can accept any loan or deposit of a sum of Rs:20,000/- or more otherwise than by an account payee cheque or account payee bank draft. It does not say that a person cannot advance more than Rs:20,000/- in cash to another person. It is clear that the restriction on cash advances was in fact on the taker and not the person who makes the advance. The penalty for taking such advance or deposit in contravention of provisions of Section 269SS was to be suffered by one who takes the advance. Therefore, it was obviously impermissible to invoke these provisions for preventing a person from recovering the advance which he has made."
30. Therefore in the light of the above said citation referred to herein above, it is clear that the restriction on cash advances was in fact on the taker and not on the person or persons who makes the advance in cash. Further the penalty for taking such advance or deposit in contravention of provisions of
Sections 269SS was to be suffered by one who takes the advance i.e. the accused. Therefore it is obviously impermissible to invoke the said provisions for preventing a person i.e. complainant herein from recovering the loan advance which he had made to the accused herein. Furthermore there is no provision in the Income Tax Act, which makes an amount not shown in the income tax returns unrecoverable. Furthermore if some amounts were not 22Fair Judgment CC.NI.No.17740 of 2022 accountant for, such persons would be visited with the penalty or at times even prosecution under the Income Tax Act but that does not mean that the borrower i.e. the accused herein can refuse to pay the amount, which as stood proved was taken by him from the complainant under Ex.P7 M.O.U, simply because there might have been or might not have been some infraction of the provisions of income tax act on the part of the complainant herein. Therefore the contention of the learned defence counsel that non- disclosure of the loan amount of Rs:20,00,000/- by the complainant in income tax returns is fatal to the case of complainant also cannot be sustained.
31. Further in view of the facts and circumstances of the case as discussed in the forgoing Paras, it is clear and evident that the complainant prima-facie is able to prove and establish on the basis of the evidence given by him as PW1 coupled with documentary evidence Ex.P1 to P7, which remained unshaken, that there existed legally enforceable debt/liability of
Rs:40,00,000/- and that towards discharge of the same the accused has issued
Ex.P1 cheque in his favour and for all these reasons, I am of the considered view that the complainant is entitled to avail the benefit of presumptions available U/S:118 and 139 of N.I.Act in his favour as claimed by him in view of the facts and circumstances discussed herein above in the forgoing Paras.
While so, when the accused has failed to rebut the said statutory presumptions, and it ought to be concluded that the presumptions by themselves tantamount to proof of the case of the complainant.
32. Even that apart on facts also as is crystal clear the evidence given by complainant as PW1 coupled with Ex.P1 to P7 documents, which as is obvious, remained un-impeached and intact even after lengthy cross examination made on behalf of the accused as discussed and pointed out in 23Fair Judgment CC.NI.No.17740 of 2022 the forgoing paras, particularly when the accused has failed to probabalize any of his defence pleas and stands, goes to prove that the complainant on facts also is able to establish that the accused had issued ExP1 cheque in his favour towards discharge of legally enforceable debt/liability and that thereafter failed to discharge that debt/liability covered by it and so also even after demand was made by him (complainant) by issuing of legal notice.
33. Therefore for all these reasons, I decide Point Nos:2 and 3 in favour of the complainant and against the accused.
Point No:4
34. From the discussion made in the forgoing Paras and finding given by me, on Point Nos:1 to 3, as is clear it is evident that the complainant has proved the existence of legally enforceable debt/liability in between himself and the accused and that the accused has issued Ex.P1 cheque in his favour towards discharge of the said legally enforceable debt/liability as detailed herein above.
That apart the complainant as PW1 has also categorically deposed that when he had presented the Ex.P1 cheque for collection before the bank, the same was returned by the bank unpaid for the reasons "Funds Insufficient" under Ex.P2 cheque return memo. That thereafter he got issued Ex.P3 legal notice to the accused. That even after issuing and serving of said legal notice on the accused, accused failed to pay the amount due under the dishonoured
Ex.P1 cheque, and thus it is clear that the complainant on facts and so also with the aid of presumptions available in her favour U/s:118 and 139 of
N.I.Act, has satisfied all the essential ingredients of the offence punishable 24Fair Judgment CC.NI.No.17740 of 2022
U/s:138 of N.I.Act and thus thereby proved the said offence as per the case set up by him against the accused beyond reasonable doubt and when that is so, it goes without saying that the criminal liability of the said offence has to be fastened on him and as such I hold that he (accused) is liable to be punished accordingly for the said offence.
35. In the result, the Accused is found guilty for the offence U/s:138 of
N.I.Act and accordingly he is convicted of the said offence U/s:138 of N.I.Act
U/s:255(2) Cr.P.C.
Typed to my dictation to Typist, corrected and pronounced by me in the open Court on this the 28th day of March, 2024.
V METROPOLITAN MAGISTRATE,
HYDERABAD.
25Fair Judgment CC.NI.No.17740 of 2022
36. Heard of quantum of sentence by questioning the Accused U/s: 255(2)
Cr.P.C
The accused has submitted mitigating circumstances recorded vide separately.
37. However the court is of the view that it is not a fit case to apply provisions of P.O.Act to the Accused having regard to nature of offence.
38.In the result, the accused is found guilty for the offense punishable U/s.138 of N.I. Act and as such he is convicted of the said offense U/s.255(2) of Cr.P.C and shall undergo Rigorous imprisonment for a period of one and half year and directed to pay fine amount of
Rs.30,05,000/- (Rupees Thirty Lakhs Five Thousand Only) and in default of the payment of the same he shall undergo S.I. for a period of 4 months for the offense U/s.138 of N.I.Act. Out of the fine imposed of Rs. 30,05,000/- (Rupees Thirty Lakhs Five Thousand Only) an amount of Rs. 5,000/- shall go to the state and remaining fine amount of Rs. 30,00,000/- shall go the complainant as compensation U/s.357 (1) (b) of Cr.P.C
Keeping in view of the gravity of the offence committed, the benefit under Probation of Offenders Act are not invoked.
A Free Copy of Judgment shall be given to the Accused as per Section 363 of Cr.P.C.
Typed to my dictation by Typist, corrected and pronounced by me on this the 28th day of March, 2024.
V METROPOLITAN MAGISTRATE,
HYDERABAD.
26Fair Judgment CC.NI.No.17740 of 2022
APPENDIX OF EVIDENCE
WITNESSES EXAMINED FOR
COMPLAINANT :
PW1: Dr.Adatrow Kalyan Chakravarthy, Complainant.
DEFENCE :
DW1: Karlapudi Babu Prakash, Accused.
EXHIBITS MARKED
COMPLAINANT:
EX.P1: is the Original cheque bearing No. 420255 dated 25-12-2020 for an amount of Rs.20,00,000/- (Rupees Twenty lakhs only).
Ex.P2: is the Original cheque return memo dated:08-01-2021. for the
Cheque bearing No.420255.
Ex.P3: is the office copy of legal notice dated:28-01-2021.
EX.P4: is the Original postal receipt dated: 29-01-2021.
Ex.P5: is the reply notice issued by accused through his counsel dated:
13-02-2021.
Ex.P6: is the Postal acknowledgment card dated:05-02-2021.
Ex.P7: is the memorandum of understanding and agreement between complainant and accused dated: 16-02-2018.
DEFENCE :
Ex. D1: is the certified copy of the plaint on the file on Hon'ble Ill ADJ,
Guntur dated: 22-02-2018.
Ex.D2: is the certified copy of minute book - minute numbe - 474 i.e., Resolved to execute gift deed to K. Babu Prakash 4000 sq in
LEM School compound and resolved to execute sale deeds to others in Becker compound in Guntur dated: 22-07-2015.
Ex.D3: is the certified copies to sales deed executed by A.E.L Church to other in Beker compound, Guntur as per minute number 474 dated:
30-07-2015 and 31-07-2015.
27Fair Judgment CC.NI.No.17740 of 2022
Ex.D4: is the certified copy of M.O.U between A.E.L Church and K. Babu
Prakash dated 17-06-2015.
Ex.D5: is the Ex. A5 certified copy of delivery of property by A.E.L Church
dated 29-07-2016.
MATERIAL OBJECTS MARKED
– NIL –
V METROPOLITAN MAGISTRATE,
HYDERABAD.