IV ADJ Court, (This appeal is filed against the conviction and sentence Nellore for the offence u/s 138 of NI Act)
IN THE COURT OF THE IV ADDL. DISTRICT & SESSIONS JUDGE: NELLORE
(COURT OF SESSIONS: NELLORE DIVISION: NELLORE) Wednesday, this the 30th day of March 2022
Present: Sri M.TIRUMALA RAO, IV Additional District & Sessions Judge, Nellore.
CRIMINAL APPEAL No.107/2020
Between
Challa Masthanaiah, S/o.Krishnaiah, Hindu, aged about 40 years, Brick Business and Prawn Culture, R/o.Chalivendra, Muthukur village, Muthukur Mandal, S.P.S.R., Nellore District …. Appellant/Accused
Vs.
1. Pakam Anasuyamma W/o.Pakam Gopal Reddy Hindu, aged about 58 years, Residing at Duttapadu village, Brahmadevam Post, Muthukur Mandal, S.P.S.R., Nellore District.
2. Pakam Nagendra Reddy, S/o.Pakam Gopal Reddy, Hindu, aged about 33 years R/o.Duttapadu village,BrahmadevamPost, Muthukur Mandal, S.P.S.R., Nellore District.
3. Pakam Lokesh, S/o.Pakam Gopl Reddy, Hindu, aged about 33 years, residing at Duttapadu village, Brahmadevam Post, Muthurkur Village and Mandal,….Respondents/Complainants S.P.S.R., Nellore District.
This Appeal is coming on 23.03.2022 for final hearing before me in the presence of Sri P.Uma Maheswar , Advocate for appellant/accused and of Sri P.Rama Dandu,Advocate for R-1 to R-3 and upon hearing both sides, this court is having stood over for consideration till this date and this court delivered the following
J U D G M E N T
1.Memorandum of Criminal appeal is filed on behalf of the appellant/accused under section 374 (3) Cr.P.C. against the conviction and sentence imposed in C.C.No.54 of 2017 on 17.02.2020 on the file of Judicial Magistrate of First Class, Special Mobile Court, Nellore wherein appellant/accused is found guilty and he is convicted under Section 255 (2) Cr.P.C., for the offence under Section 138 of N.I.Act and he is sentenced to undergo simple imprisonment for a period of 1 years for the offence punishable under Section 138 of Negotiable Instruments Act, 1 Of 12
IV ADJ Court, (This appeal is filed against the conviction and sentence Nellore for the offence u/s 138 of NI Act) 1881, further the accused shall pay an amount of Rs.24,98,600/- being the cheque amount to the complainants No.2 to 4 towards compensation under Section 357 (3) Cr.P.C., within two months from today; in default of payment of compensation to undergo simple imprisonment for a period of three months.
2.The parties are arrayed as arrayed before the trial court.
3.Brief case of complainant as per his private complaint filed under section 190 Cr.P.C., against the accused for the offence u/s 138 of NI Act is that accused borrowed a sum of Rs.15,50,000/- from Pakam Gopal Reddy (deceased/1st complainant) on 24.08.2014 undertaking to repay the same with interest 24% per annum and executed demand promissory note in favour of Pakam Gopal Reddy (deceased/1st complainant) on even date. Later accused failed to pay any portion of the amount due under the above said promissory note. On repeated demands, accused issued a cheque bearing No.705246 dt:16.11.2016 for Rs.24,98,600/- drawn on Andhra Bank, Muthukur Branch, S.P.S.R., Nellore District towards the amount due by him under the above said promissory note.
(i)When 1st complainant presented the said cheque in his bank i.e., Oriental Bank of Commerce, Nellore on 21.11.2016 for collection, the said cheque was returned dishonoured on 29.11.2016 for the reason “Funds Insufficient” in the account of accued. Thereafter 1st complainant informed about dishonor of cheque to accused, but accused gave evasive reply, hence, 1st complainant got issued legal notice on 19.11.2016, but due to typographical mistake the date was typed
as 17.11.2016in the legal notice. The wife of accused has received notice on
20.12.2016, but it was not complied. Hence, the complaint.
4.On appearance of accused, copies of documents were furnished to him as required u/s 207 Cr.P.C. Accusation levelled against him for the offence punishable under Section 138 of Negotiable Instruments Act and the same was explained to him in Telugu u/s 251 Cr.P.C. for which he pleaded not guilty and claimed to be tried.
5.To prove their respective contentions, on behalf of complainant, 1st complainant himself was examined as PW-1 and got marked Ex.P-1 to Ex.P-5. 1st complainant also got examined PWs-2 and PW-3 in chief. When this case was coming up for cross-examination of PW-2 and PW-3, 1st complainant died and his L.Rs were added as Complainants 2 to 4. Subsequently, PW-2 and PW-3 were cross-examined. Later 3rd complainant was got examined as PW-4. Ex.P-6 was got marked through him.
6.After closing the evidence of the complainant, accused got examined under Section 313 Cr.P.C for the purpose of explaining incriminating circumstances appearing in the evidence of PW-1 to PW-4. He denied the incriminating material appearing against him and reported defence evidence. Accused himself was examined as DW-1 and one Poonamalli Balakrishnaiah was examined as DW-2 and no documents were marked.
7.After careful evaluation of available evidence on record, trial court convicted and sentenced the accused as referred above. Aggrieved by said conviction and sentence, present appeal is filed on behalf of the accused with following grounds;
(i) The judgment of the trial court is contrary to Law, weight of evidence and probabilities of the case. Trial court failed to take into consideration of the version of the appellant. Trial court failed to weigh material discrepancies from the evidence of PW-1 as in his cross-examination he deposed that he filled up Ex.P-1 chequ and so it is very clear that 1st complainant himself filled up the cheque and Ex.P-1 cheque is security. The trial court ought to have held that during the cross- 2 Of 12
IV ADJ Court, (This appeal is filed against the conviction and sentence Nellore for the offence u/s 138 of NI Act) examination of PW-1 he deposed that there was an agreement between the accused and 1st complainant about two years ago he agreed to give Ac 1-70 cents of land to accused and at the time an agreement (Voppudala Patram) in between the accused and 1st complainant for Rs.20,00,000/- and odd transaction. Complainant did not take steps to send Ex.P-3 promissory note to handwriting expert. The Honourable trial court ought to have held that even as per the contents of complaint, evidence of PW-1 to PW-4 and Ex.P-4 notice it is the case of complainant that the accused borrowed a sum of Rs.15,50,000/- from 1st complainant that accused borrowed a sum of Rs.15,50,000/- from 1st complainant and executed promissory note agreeing to repay the same with interest at 24% per annum. Even the interest calculates for the said amount as alleged and add the same to the alleged amount the same arise to Rs.23,78,733/-, where as the alleged cheque amount is Rs.24,98,600/-, which is more than the alleged due amount and as such the complaint for the offence under Section 138 of N.I., Act is not maintainable and the amount shown in the alleged cheque is not legally enforceable debt and complaint itself is not maintainable without mentioning complaint and evidences of PW-1 to PW-4. Trial court ought to have held that no where the accused admitted during the cross-examination that he borrowed the alleged amount and executed the promissory note and in such circumstances it cannot be said the interest is compound interest. Trial court ought to have held that mere the accused deposed that he would settled the amount payable to the complainant, which does not mean that the accused is liable to pay the amount as mentioned in alleged Ex.P-1 cheque. Since the amount shown in Ex.P-1 cheque is more than the alleged amount as shown in complaint, stated by PW-1 to PW-4 and Ex.P-4 notice the complainant is not maintainable and liable to be dismissed as the alleged cheque was not issued for the legally enforceable bebt or liability. Hence, prayed for setting aside the conviction and sentence passed by trial court by allowing the appeal.
8.Now the simple points for consideration:-
1.:-Whether the complainant has proved the offence under Section 138 r/w 142 of N.I.Act or not?
2.:-Whether the findings of learned Magistrate in convicting the accusedto undergo simple imprisonment for a period of one year, and shall pay an amount of Rs.24,98,600/- being the cheque amount to the complainant Nos.2 to 4 towards compensation within two months from the date of judgment and in default to undergo simple imprisonment for a period of 3 months, which was challenged in this appeal are tenable and sustainable and bull-shit or not?
3.:-Whether in view of the appeal grounds pleaded by the appellant/accused the impugned cheque under Ex.P-1 is legally enforceable debt or not?
4.:-Whether the findings of the learned Magistrate in convicting the accused as above is liable to be revised, altered, and liable to be set-aside or not?
5.:-Whether there is any legal enforceable debt to entire extent of cheque amount of Rs.24,98,600/- or not?
6.:-Whether the cheque amount of Rs.24,98,600/- 3 Of 12
IV ADJ Court, (This appeal is filed against the conviction and sentence Nellore for the offence u/s 138 of NI Act) exceeds the legally enforceable debt and due amount as envisaged under civil court suit in
O.S.No.162/2017 for Rs. 21,32,250/- or not?
7.:-Whether the complainant is entitled for 24% of simple interest or compounding interest claimed by him or not included in the cheque amount or not?
8.:-To what relief?
9.Heard both sides.
10.It is the specific case of appellant/accused that even as per the contents of complaint, evidence of PW-1 to PW-4 and Ex.P-4 notice it is the case of the complainant that the accused borrowed a sum of Rs.15,50,0000 /- from 1st complainant and executed the promissory note agreeing to repay the same with interest at 24% per annum. Even the interest calculates for the said amount as alleged and add the same to the alleged amount the same would come to Rs.23,78,733/- , where as the alleged cheque amount is Rs.24,98,600/- which is more than the alleged due amount and as such the complaint for the offence under Section 138 NI Act is not maintainable as the amount shown in the alleged cheque is not legally enforceable debt.
(i)Learned counsel for accused further argued that after completion of the arguments the complainant filed a memo alleging that the amount borrowed by the accused carries compound interest and the same is arrives to more than the cheque amount and as such complaint is maintainable and on receiving the said memo the accused filed objections memo to the memo filed by complainant narrating the interest arrived as Rs,23,78,733/-, which is less than the alleged cheque amount and taking new version by the complainant without mentioning either in the complaint, evidences of PW-1 to PW-4 and Ex.P-4 notice is not tenable. When there is evidence before the court as stated PW-1 to PW-4 alleging that the accused borrowed the amount agreeing to repay the same with interest at 24% per annum and later it cannot be said that the interest is compound interest. Accused can rebut the evidence at any point of stage basing on the evidences and material available before the court. No where the accused admitted during the cross-examination that he borrowed the alleged amount and executed the promissory note and in such circumstances it cannot be said that the interest is compound interest.
(ii)The learned counsel for accused further argued that no where the accused admitted during the cross-examination that he borrowed the alleged amount and executed promissory note and in such circumstances, it cannot be said that the interest is compound interest. Since the amount shown in Ex.P-1 cheque is more than the alleged amount as shown in complaint, stated by PW-1 to PW-4 and Ex.P-4 notice the complainant is not maintainable and liable to be dismissed as the alleged cheque was not issued for the legally enforceable debt or liability. Hence, prayed to allow the appeal by setting-aside conviction.
(iii) The learned counsel for accused further submitted that though, above said contentions were brought to the notice of trial court the trial court mis-led, minsed and mis-represented and went wrong and decided the points in this case in favour of the complainant and gave verdict convicting the accused to undergo one year simple imprisonment and further accused shall pay an amount of Rs.24,98,600/- being the cheque amount to the complainant Nos.2 to 4 within two months in default to undergo simple imprisonment for a period of 3 months.
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IV ADJ Court, (This appeal is filed against the conviction and sentence Nellore for the offence u/s 138 of NI Act)
11.The learned counsel for respondents/complainants submitted that there is legally enforceable debt and accused issued cheque for the debt borrowed under promissory note and accused executed promissory note. Thus, the accused had committed for the offence under Section 138 r/w 142 of N.I.Act.
12.The learned counsel for respondents/complainants further submitted that accused stated that he promised the 1st complainant to settle the amount due by selling his property. The accused also admitted that he approached the complainant and promised to settle the amount involved in this case. The accused not got issued reply notice denying the amount due under Ex.P-1. The admission of accused in his cross-examination proves that the amount involved in the Ex.P-1 cheque is leally enforceable debt. As per Ex.P-1, the interest payable is at compoundable rate of interest.
13.The learned counsel for respondents/complainants further submitted that the trial court has rightly discussed evidence and rightly came to conclusion that there was legally enforceable debt under Ex.P-1 and there are no grounds to interfere with the findings trial court and prays to dismiss the appeal.
14.On behalf of complainant, 1st complainant himself was examined as PW-1 and he filed his chief-affidavit in lieu of his chief-examination and he categorically deposed that accused herein borrowed an amount of 15,50,000/- from PW-1 on 24.08.2014 undertaking to repay the same with interest at 24% per annum and in consideration thereof he had executed a promissory note under Ex.P-3 in favour of PW-1. He had failed to pay the above amount. Inspite of repeated demands made by PW-1, accused issued a cheque bearing No.705246 dated 16.11.2016 under Ex.P-1 for an amount of Rs.24,98,600/- drawn on Andhra Bank, Muthukur Branch, S.P.S.R., Nellore District towards the amount due by him to PW-1.
(i) When PW-1 presented the said cheuqe under Ex.P-1 for collection on 21.11.2016 through Oriental Bank of Commerce, near Narthaki Centre, Nellore and the same was dishonoured by the Drawyer Bank on 29.11.2016 with a cheque return memo under Ex.P-2 that funds insufficient in his account. Thereafter PW-1 got issued legal notice on 19.12.2016 under Ex.P-4 to the accused and the same was served under ExP-5 acknowledgment to the accused. Thus, the accused had committed for the offence under Section 138 r/w 142 of N.I.Act .
(ii) In his cross-examination by the learned counsel for accused he deposed that he himself filled up the contents of Ex.P-1 cheque. He had not sent any amendment notice with regard to the typographical mistake of date in Ex.P-4 legal notice. He admitted that there was an agreement between himself and the accused about 2 years ago and he agreed to sell Ac 1-70 cents of land to the accused and at that time agreement (Oppudala Patram) was entered into between him and the accused for Rs.20 lakhs and odd transactions. He does not remember, who scribed Ex.P-3 promissory note.
15.Janabathina Venkateswarlu, who is scribe of promissory note was examined as PW-2. He filed his chief-affidavit in lieu of his chief-examination. He further deposed that he scribed Ex.P-3 promissory note for filling up the contents are mine.
(i) In his cross-examination he deposed that accused gave revenue stamp to him and requested him to scribe promissory note.
16.Dandu Yedukondalu was examined as PW-3 and he filed his chief-affidavit in lieu of his chief-examination and he deposed that he attested Ex.P-3 promissory note. The accused also put his signature on Ex.P-3 in his presence.
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IV ADJ Court, (This appeal is filed against the conviction and sentence Nellore for the offence u/s 138 of NI Act)
(i) In his cross-examination he deposed that he has not counted the money given to accused by Gopal Reddy.
17.Pakam Nagendra Reddy, who is son of 1st complainant/deceased was examined as PW-4. He filed his chief-affidavit in lieu of his chief-examination and he deposed in his chief-examination that accused issued Ex.P-1 cheque when he failed to pay the debt amount due under Ex.P-3 promissory note and Ex.P-1 cheque was dishonoured due to funds insufficient in his account. He further submit that his father sold an house site at Fathekhanpet, Nellore to Koram Penchala Babu on 23.08.2014 for an amount of Rs.17,25,000/- and his father lent Rs.15,50,000/- to the accused under the above said promissory note from out of that amount. Through him Ex.P-6 is registration Extract of registered sale deed
dated 23.08.2014 was marked.
(i) In his cross-examination he deposed that he is an agriculturist. On the date of transaction mentioned in his chief-examination affidavit he was in Duttapadu village.
18.Before proceeding further, it would be appropriate to refer to decision reported in K.N.BEENA VS MANIYAPPAN AND ANOTHER (AIR 2001 SC 2895), wherein it was held thus:- “ Under Section 118 unless contrary was proved, it is to be presumed that the Negotiable Instrument (including a cheque) had been made or drawn for consideration. Under Section 139 of the Court has to presume, unless the contrary was proved, that holder of the cheque received the cheque for discharge, in whole or in part of a debt or liability. Thus, in complaints under Section 138, the Court has to presume that the cheque had been issued for debt or liability.” 19. In Kumar Exports Vs. Sharma Carptets, 2009 (1) (ALD (CRL) 468 (SC),
It was held that as soon as the complaint
discharges the burden to prove that the instrument, say a note, was executed by the accused, the rules of presumptions under Section 118 and 139 of the Act help him to shift the burden on the accused. The presumptions will live, exist and survive and shall end only when the contrary is proved by the accused, that is, the cheque was not issued for consideration and in discharge of any debt or liability. A presumption is not in itself evidence, but only makes a prima- facie case for a party for whose benefit it exists.”
20. In Krishna Janardhan Bhat vs. Datatraya G.Hegde decided on 11 January, 2008 a Division Bench of Honourable Apex Court has observed thus:
Section 138 of the Act has three ingredients, viz.:
(i) that there is a legally enforceable debt;
(ii) that the cheque was drawn from the account of bank for discharge in whole or in part of any debt or other 6 Of 12
IV ADJ Court, (This appeal is filed against the conviction and sentence Nellore for the offence u/s 138 of NI Act) liability which presupposes a legally enforceable debt;
and
(iii) that the cheque so issued had been returned due to insufficiency of funds.
21. The proviso appended to the said section provides for compliance of legal requirements before a complaint petition can be acted upon by a court of law. Section 139 of the Act merely raises a presumption in regard to the second aspect of the matter. Existence of legally recoverable debt is not a matter of presumption under Section 139 of the Act. It merely raises a presumption in favour of a holder of the cheque that the same has been issued for discharge of any debt or other liability. (Emphasis supplied) Thus, it was held that presumption under Section 139 will not extend to the existence of legally enforceable debt but it will extend only to the effect that cheque was issued for discharge of any debt or liability. In other words, proof of existence of legally enforceable debt was rested on the complainant.
However, in a subsequent decision reported in Rangappa vs. Sri Mohan2010 (2) ALD (Criminal) 734 (SC) a Full Bench of Honourable Apex Court did not agree with the above view. On consideration of several decisions the Full Bench observed thus:
In light of these extracts, we are in agreement with the respondent-claimant that the presumption mandated by Section 139 of the Act does indeed include the existence of a legally enforceable debt or liability. To that extent, the impugned observations in Krishna Janardhan Bhat (supra) may not be correct. (Emphasis supplied) Thus, from the above latest judgment of the Apex Court it is clear that when the holder of the cheque establishes that he legally received the cheque from the drawer, the presumption under Section 139 follows to the effect that there existed a legally enforceable debt between the parties and cheque was issued for discharge of said debt. Consequently reverse burden will be on the accused to establish that there existed no legally enforceable debt and cheque was not issued in due discharge of the same.
In the light of latest interpretation on presumptive jurisprudence, the trial Courts placing burden on complainant cannot be countenanced. Therefore, the facts and evidence have to be scrutinized to know whether the accused, as contended, could discharge her burden to establish the absence of legally enforceable debt and non-issuance of the subject cheques for discharge of the debt.
21.In a decision reported in M/s.Videocon International Limited Vs. M/s. Innovations (2011 (2) ALD (Criminal) 847, it was observed that
Section 139 of the Act, rises presumption in favour of 7 Of 12
IV ADJ Court, (This appeal is filed against the conviction and sentence Nellore for the offence u/s 138 of NI Act) the holder to the effectf that the holder of a cheque received the cheque of the nature referred to in Section 138 for the discharge of any debt or other liability, in whole, or in part. No doubt, the said presumption under Section 138 of the Act is rebuttable presumption. Opening words or Section 139 reads, “it shall be presumed unless the contrary is proved”. In that view of the matter it is not for the complainant initially to prove existence of any legally enforceable debt or other liability for the cheques involved in these cases. The initial burden is on the accused to prove that the dishonoured cheques were not suffered by any legally enforceable debt or other liability”.
22.From the decisions referred to above, Section 138 of Negotiable Instruments Act merely raises a presumption in regard to the issuance of cheque towards discharge in whole or in part of any legally enforceable debt. Existence of legally recoverable debt is not a matter of presumption under Section 139 of the Act. It merely rises a presumption in favour of holder of the cheque that the same has been issued for discharge of any debt or other liability. An accused for discharging the burden of proof placed upon him under a statute need not examine himself/herself. He/she may discharge his/her burden on the basis of materials already brought on record. An accused has constitutional right to maintain silent. Standard of Proof on the part of an accused and that of prosecution in a criminal case is different.
23.The Negotiable Instruments Act contains provisions rising presumption as regards the Negotiable Instruments Act under Section 118 (a) of the Act as also under Section 138 there-off. The said presumptions are rebuttable. Whether the presumption is rebutted or not would depend upon the facts and circumstances of each case. The Honourable Apex Court clearly laid-down in catena of decisions that the standard of proof in discharge of burden in terms of Section 118 and 139 of the Negotiable Instrument Act being preponderance of probability, the inference thereof can be drawn not only from the material brought on record but also from the reference to the circumstances upon which the accused relied upon. The burden to rebut the presumptions on the accused is not as high as that of the prosecution.
24.This court also would like to rely on the principles laid in following judgments;
(i) Ku sum Ingots and Alloys Ltd. Vs. Pennar Peterson Securities Ltd., Reported in AIR 2000(SC) 954 wherein our Hon'ble Apex Court observed that the existence of legally recoverable debt shall be on the complainant. (2) In Lalit Kumar Sarma Vs. State of U.P. reported in 2008(SC) 783 it was observed that the complainant shall establish the existence of legally recoverable debt and it is mandatory. (3) In Suresh Agarwal Vs. State of Andhra Pradesh and another reported in 2012(1) ALD(Crl.) 399 it was observed that the burden of proof is mainly on the complainant to establish that the legally recoverable debt prevails between the parties. (4) In G.B.Lingam Vs. Vitta Murali Krishna Murthy reported in 1997(1) ALD (Crl.) 940 it was observed by our Hon'ble High Court that the complainant shall establish that the cheques were issued for discharge of legally enforceable debt. It is settled proposition of law that, to attract offence u/s 138 of NI Act, legally enforceable debt has to be proved as held in above referred judgments.
25.Admittedly, it is the case of complainant is that appellant/accused borrowed Rs.15,50,000/- lakhs and executed Ex.P-3 promissory note and in full satisfaction, 8 Of 12
IV ADJ Court, (This appeal is filed against the conviction and sentence Nellore for the offence u/s 138 of NI Act) accused issued Ex.P-1 cheque and the same was dishonoured as funds insufficient under Ex.P-2. Thus, the accused had committed for the offence under Section 138 r/w 142 of N.I.Act.
26.The complainant has proved not only execution of promissory note and also proved passing of consideration to the accused herein by marking Ex.P-3 promissory note. It is therefore, presumption arise under Section 118-A of N.I.Act, which goes in favour of the complainant to say that the contents of promissory note were in existence were taken place on the even date and consideration therein as mentioned in Ex.P-3 promissory note was passed to the accused herein. When said presumption is not conclusive proof and it can be rebutted by the accused herein by placing cogent, definite and positive evidence to say that it is impossible to happen the contents as mentioned in the Ex.P-3 promissory note.
27.Under Section 103 of Indian Evidence Act, the burden to prove particular fact is rests upon a person, one who first asserts it. Here in the case of accused is that he got acquaintance with Gopal Reddy through Poonamalli Balakrishna who is cousin of Gopal Reddy. He purchased a land at Saidapuram village and at that time there was shortage of funds with him. At that time, P.Balakrishna took him to Gopal Reddy and arranged funds. He got registered the land in the name of Gopal Reddy. In that transaction, he gave a signed blank cheque to Gopal Reddy. By using that cheque Gopal Reddy filed this case against him. He never executed any promissory note in favour of Gopal Reddy. The signature on Ex.P-3 not belongs to him.
(i) In his cross-examination he admitted that he approached complainants and promised to settle the amount involved in this case.
28.Poonamalli Balakrishnaiah examined as PW-2. He filed his chief-affidavit in lieu of his chief-examination and he deposed that he is the mediator in between one Shaik Sajid who is the land-lord and resident of Sydapuram and Challa Masthanaiah. When Challa Masthanaiah unable to pay the remaining amount to the said Shaik Sajid, himself introduced the said Pakam Gopal Reddy and Gopal Reddy had paid an amount of Rs.14,20,000/- to the said Shaik Sajid on behalf of said Challa Masthanaiah and got transferred the said land from the said Shaik Sajid by way of registration of sale deed. At that juncture, the said Pakam Gopal Reddy and Challa Masthanaiah were entered into a mutual agreement on 06.01.2015 with a terms that the said Challa Masthanaiah whenever repay the amount spent by said Pakam Gopal Reddy to him, Gopal Reddy will transfer the said land into the name of Challa Masthanaiah by executing the Registered Sale Deed in favour of said Challa Masthanaiah. In the said mutual agreement dated 06.01.2015 he was also subscribed his signature as 2nd witness.
(i) In his cross-examination he deposed that accused borrowed Rs.15,50,000/- from deceased 1st complainant on 24.08.2014. He does not know about Ex.P-3 promissory note.
29.Here, the main contention of learned counsel for accused is that accused borrowed a sum of Rs.15,50,000/- from 1st complainant and executed the promissory note agreeing to repay the same with interest at 24% per annum. Even the interest calculates for the same amount as alleged and add the same to the alleged amount the same come to Rs.23,78,733/-, whereas the alleged cheque amount is Rs.24,98,600/-, which is more than the alleged due amount and as such the complaint for the offence under Section 138 of N.I., Act is not maintainable as the amount shown in the alleged cheque is not legally enforceable debt and when there is a evidence before the court as stated by PW-1 to PW-4 alleging that the accused borrowed the amount agreeing to repay the 9 Of 12
IV ADJ Court, (This appeal is filed against the conviction and sentence Nellore for the offence u/s 138 of NI Act) same with interest at 24% per annum and later it cannot be said that the interest is compound interest and complaint itself is not maintainable.
30.Here on perusal of Ex.P-3 promissory note it reveals that interest rate 24% with simple or compound rate of interest. On perusal of Ex.P-4 notice, which was issued by learned counsel for 1st complainant it reveals that that you
had borrowed a sum of Rs.15,50,000/- from his client on 24.08.2014,
undertaking to repay the same with interest at 24% per annum and in
consideration thereof you had executed promissory note in favour of his
client on the even date. Sworn affidavit of complainant itself shows that undertaking to repay the same with interest at 24% per annum. Complaint is also disclosing that undertaking to repay the same with interest at 24% per annum. The evidence of PW-1 also disclose that accused had borrowed an
amount of Rs.15,50,000/- from him on 24.08.2014 undertaking to repay
the same with interest at 24% per annum and in consideration thereof
he had executed promissory note in favour of PW-1. On perusal of evidence of PW-2, who is the scribe of Ex.P-3 promissory note also not disclosing that rate of interest is compound interest. The evidence of PW-3, who is attestor of Ex.P-3 promissory note also not disclosing that rate of interest is compound interest.
31. The evidence of PW-1 further discloses that he himself filled up the contents of Ex.P-1 cheque. He further deposed that he does not remember who scribed Ex.P-3 promissory note.
32.On perusal of entire evidence and averments which were admitted by complainants do not disclose that the interest levied at compound rate. In Ex.P-3 promissory note the recital of compound interest, the interest shall be payable is at 24% per annum. As per said interest rate at 24% per annum the promissory note was executed, but not at compound interest as it was not averred in legal notice, which was issued by learned counsel for complainants, complaint filed by PW-1 and also as per evidence of PW-1 to PW-4. On the other hand, as per evidence of PW-1 it is clear that the cheque was filled up by PW-1. In every printed promissory note there must be recital that compound interest besides simple interest. To prove the same, the 1st complainant has to issue notice by mentioning with compound interest and basing on issuance of notice, the complainant has to draft with compound interest. But here without mentioning any averment, the cheque amount,which was claimed by deceased 1st complainant creates much doubt as the memo of calculation filed before trial court discloses that it was claimed by imposing compound interest, which is not maintainable as the averment of compound interest is not mentioned in Ex.Ex.P-4 notice, complaint and also in the evidence of PW-1, who is deceased 1st complainant and in the evidence of PW-2 and PW-3.
33.The evidence of PW-2, who is scribe of Ex.P-3 promissory note also has to depose the recital of compound interest, but he maintained stoic silence. On the other hand as per evidence of PW-1 it is crystal clear that he does not know who scribed Ex.P-3 promissory note. PW-3, who is first attestor of Ex.P-3 promissory note also did not depose about recital of compound interest.
34.The evidence of PW-1/deceased 1st complainant further disclose that there was a agreement between himself and accused about 2 years ago and he agreed to sell Ac 1-70 cents of land to the accused and at that time a agreement (oppudala Patram) was entered into between PW-1 and accused for Rs.20,00,000/- and odd transactions. This admission is also clearly disclosing that there was prior sale transaction between 1st complainant and accused.
35.The learned counsel for accused relied upon following decisions reported in 10 Of 12
IV ADJ Court, (This appeal is filed against the conviction and sentence Nellore for the offence u/s 138 of NI Act) (Luminous Power Technology Pvt., Ltd., Vs. Vinay Aggarwal) in Crl.L.P.268/2014 & Crl.MA 5970/2014 of Honourable High Court Delhi, wherein it was held that the ledger account of the respondent showed the outstanding liability as Rs.1,64,042/-. Either the cheque would have been drawn for the said amount, or if the same had to be made for a larger amount i.e., Rs.1,68,292/-, the reason for issuance of cheque of a larger amount would have been contemporaneously recorded by the parties. Certainly, it cannot be said that the petitioner proved the commission of offence in question beyond reasonable doubt, since the amount covered by the cheque was not the debt owed by the accused to the complainant and was more than the said amount.
(Shiju k. V. Nalini and one another) 1251 of 2005 of Honourable High Court of Kerala, wherein it was held that even though Section 138 of the N.I.Act is a penal statute, it should be interpreted taking into consideration, the legislative intent. . If the cheque is more than amount of debt due, Section 138 cannot be attracted.
(Uplanche Mallikarjun and others Vs. Rat Kanti Vimala and
another) equivalent citation 1997 (2) APLJ 389, wherein it was held by our Honourable High Court that cheque should be issued by the drawer in discharge of the full or part of the debt or liability and if the said cheque was dishonoured due to insufficient funds etc., then only Section 138 of the Act gets attracted.
(Angu Parameswari Textiles (P) Vs.Sri Rajam & C) which was decided on 24.01.2001 of Honourable Madras High Court, wherein it was held that if the cheque is more than amount of debt due, he is afraid Section 138 cannot be attracted.
(M/s.Pioneer Drip System Pvt., Ltd., & another Vs. M/s.Jain
Irrigation Systems Ltd.,) AIR 2010 (NOC) 873 (BOM.), wherein it was held that no person other than holder in due course shall recover from the person delivering the instrument anything in excess of the amount intended by him to be paid thereunder)
The dicta laid-down in the above decisions is not in dispute and they squarely applicable to the present case as the version of deceased 1st complainant is that cheque which was issued on the basis of Ex.P-3 promissory note. To substantiate Ex.P-3 promissory note with regard to compound interest, no substantiate oral evidence was adduced by complainants and the statutory notice, which was issued by deceased 1st complainant through his learned counsel is also silent with regard to compound interest. In Negotiable Instrument cases, the prominence of statutory notice is very clear that the averments, which were issued through statutory notice is replica of complaint which was filed by complainant. But in this case there is no substantiate evidence with regard to compound interest and complainants claimed the same by filing calculation memo without justifying the contents in statutory notice, complaint and evidence of PW-1 to PW-4 and this is fatal to the case of complainants.
36.During the course of hearing Sri PUMR the counsel for accused further submitted that the cheque under Ex.P-1 is filled for excess amount by the 1st complainant instead of actual amount due as envisaged in the civil suit in
O.S.No.162/2017, in which the interest rate was mentioned as 24% is simple, but
it is not compounding interest as claimed in calculation para. There is no plausible explanation for the excess amount claimed through cheque under Ex.P-1, which were denied by complainants’ counsel and asserted that compounding interest 11 Of 12
IV ADJ Court, (This appeal is filed against the conviction and sentence Nellore for the offence u/s 138 of NI Act) was mentioned in civil case.
37.The learned counsel for accused got obtained certified copy of plaint and filed into the case and when perused the certified copy of plaint it is quite obviously mentioned the rate of interest is 24% per annum, butnot compound interest of 24% per annum.
38.As and when the cheque was said to be issued for excess amount due, and in view of dicta in the above 3 rulings, complainants have failed to establish that the accused committed the offence under Section 138 of Negotiable Instruments Act.
39.Considering the axiomatic, ocular and impregnable evidence that was placed by both parties as PW-1 to PW-4 and Ex.P-1 to Ex.P-6 and DW-1 and DW-2, trial court failed to consider the evidence properly and the complainants have failed to prove that the accused, to discharge his legally enforceable debt had issued EX.P1 cheque in favour of 1st complainant/deceased and if such being the case, the question of committing the offence by the accused under section 138 of the Negotiable Instruments Act, does not arise at all. It is to be noted here that, in view of above findings, this court hold that, the complainants have failed to prove that the accused has committed the offence punishable under section 138 of the Negotiable Instruments Act. All the contentions of complainants are liable to be disgorged under law. All the points are settled against complainant and in favour of appellant/accused.
40.In the result, this appeal preferred by appellant/accused is hereby allowed by setting-aside conviction, sentence, payment of compensation with default sentence imposed by the trial court in C.C.No.54 of 2017 on the file of Judicial Magistrate of First Class, Special Mobile Court, Nellore dt:17.02.2020;
Consequently appellant/accused is found not guilty for the offence punishable under Section 138 of Negotiable Instruments Act and he is acquitted under Section 255 (1) Cr.P.C;
Bail bonds of appellant/accused shall be cancelled and his sureties shall be discharged after expiry of six months under Section 437-A Cr.P.C.
The deposit amount of 20% by the accused as appellant at the time of suspending operation of sentence of trial court in
Crl.M.P.No.38/2020 shall be refunded to him after expiry of appeal
time.
Typed on my direct dictation by the Stenographer-Grade III, corrected and pronounced by me in the open Court on this the 30th day of March 2022.
Sd/- M.Tirumala Rao
IV Additional District & Sessions Judge, Nellore.
APPENDIX OF EVIDENCE
NIL
Sd/- M.Tirumala Rao
IV A .D.J
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