Kerala High Court
R. Gopikuttan Pillai vs Sankara Narayanan Nair on 19 March, 2003
Equivalent citations: I(2004)BC34
Author: R. Basant
Bench: R. Basant
JUDGMENT R. Basant, J.
1. The complainant is the appellant. The prosecution initiated by him against the accused under Section 138 of the Negotiable Instruments Act ended in acquittal. He assails the said judgment.
2. The complainant alleged that Ext. PI cheque for Rs. 72.750/- was issued by the accused to him for the due discharge of a legally enforceable debt/liability. The said cheque when presented was dishonoured by the Bank on the ground of insufficiency of funds. Notice of demand was issued. Payment was not effected as demanded. It was in these circumstances that the complainant came to Court with this prosecution under Section 138 of the Negotiable Instruments Act.
3. The accused denied the offence alleged against him and thereupon the prosecution examined PWs 1 to 4 and proved Exts.P1 to P4. PW 1 is the complainant. PW 2 is the Manager of the drawee Bank. PWs 3 and 4 are examined to prove the transaction and to explain the entries in Exts. D1 and D2.
4. The accused did not dispute the fact that the cheque was issued by him to the complainant. It was admitted that an amount of Rs. 60,000/- was advanced by the complainant for repair of the vehicle of the accused. It was also conceded that there was a stipulation that interest will be payable on the said loan amount of Rs. 60,000/-. It is to discharge this liability of Rs. 60,000 and interest that Ext.P1 cheque was issued by the accused to the complainant. On that aspect there was no dispute. No dispute is raised before me also on that aspect.
5. What then is the defence of the accused? The accused contended that though Ext. P1 cheque was handed over, amounts were paid after the issue of Ext.P1 cheque in pursuance of an understanding towards the liability under Ext.P1 cheque. According to the accused Exts. D1 and D2 kurippu books evidence repayment made by him in instalments towards the liability under Ext. P1. These kurippu books Exts. D1 and D-2 contain the acknowledgements in the hand of the complainant from time to time. It is also admitted before me that the total amount paid and acknowledged under Exts. D1 and D2 would not exceed Rs. 46,000/= [Rs. 45,631/- (Rupees forty-five thousand six hundred and thirty-one only) to be exact]. The accused has a further contention that Ext. D3 series also show that amounts were paid to the complainant out of the profits made by running the bus. It is the case of the accused that a total amount of about Rs. 79,260/- had been paid under Ext. D3 series also. Admittedly there is no acknowledgement of the complainant in Ext. D3 series. On the side of the accused DW1 was examined. Exts. D1 to D4 were also marked.
6. The learned Magistrate on an anxious consideration of all the relevant inputs came to the conclusion that the complainant has not established his case beyond doubt. To be specific the learned Magistrate came to the conclusion that there is no convincing evidence to show that the cheque was issued for the discharge of any legally enforceable debt/liability. The liability if any has been discharged under Exts. D1 to D3, it was held by the learned Magistrate. The complainant had not satisfactorily explained Exts. D1 and D2 payments which are admitted by him, opined the learned Magistrate. Accordingly the learned Magistrate proceeded to pass the impugned judgment of acquittal.
7. Before me the learned Counsel for the complainant/appellant and respondent/ accused have advanced their arguments. The learned Counsel for the appellant-complainant contends that the learned Magistrate did err grossly in conceding the benefit of doubt to the accused. The learned Magistrate did not correctly appreciate the play of the presumption under Section 139 of the Negotiable Instruments Act as also the burden on the accused to prove his plea of discharge in a prosecution under Section 138.
8. The issue of Ext. P1 cheque is admitted. We have the evidence of PW1 about the circumstances under which Ext. P1 cheque found its way from the possession of the accused to that of the complainant. This version of the complainant is eminently supported by the evidence tendered by DW 1. It has come out in evidence very clearly that an amount of Rs. 60,0007- was paid by the complainant to the accused/his nominee towards expenses for repair of the vehicle belonging to the accused. The transparent understanding was that the accused must discharge this liability to the complainant. It is for discharge of the said liability that Ext P1 cheque was issued. Ext. P1 cheque bears the date 19.9.1993. It has been suggested in evidence that the cheque was issued some time in 1991. The complainant disputes that. But for the moment I shall accept the case of the accused on that aspect. Admittedly the cheque did not and could not have borne the date of the transaction (the date of handing over). On the date when the amount was advanced and the cheque was handed over, the future interest which might accrue was also taken into account and it was thus that the cheque was issued for Rs. 72,750/- even though the principal liability was only Rs. 60,000/- DW1 has no case at all, that the cheque bore the dale on which it was handed over though such a vague suggestion is seen thrown at PW1 by Counsel in the course of cross examination. At any rate before me the learned Counsel for the respondent, in response to specific queries, submits that the accused-respondent has no such contention now that the cheque today is not in the same condition in which it was issued--whatever be the date of issue/handing over.
9. It follows that there is no merit whatsoever in the contention that the cheque was not issued for the discharge of a legally enforceable debt/liability. The evidence overwhelmingly shows that the cheque was issued for the discharge of a legally enforceable debt/ liability.
10. What then is the contention? It appears that the contention is that after the issue of the cheque and before the date shown on the cheque was reached, payments were made to discharge the liability under Ext. P1 cheque. It is here that Exts.D1 and D2 become relevant. According to both the accused and the complainant Exts. D1 and D2 evidence payments made on behalf of the accused to the complainant. There is no dispute and there can be no dispute that the amounts shown in Exts. D1 and D2 were actually received by thep complainant from the accused (or from some one on behalf of the accused).
11. In a prosecution under Section 138 of the Negotiable Instruments Act an accused/ drawer of the cheque is bound to prove payment of the amount due under the cheque to the payee within 15 days from the date of receipt of the notice. But this does not mean that the accused who had already made part payments in discharge of the liability under the cheque prior to the presentation of the cheque cannot plead and prove such discharge prior to the presentation of the cheque and prior to the receipt of the notice of demand. In the instant case we have convincing evidence to show that under Exts. D1 and D2 an amount of Rs. 45,631/-was paid to and received by the complainant. The complainant would contend that these amounts are received under a totally different transaction. But I find merit in the contention of the learned Counsel for the respondent-accused, which contention was accepted by the learned Magistrate, that the complainant has not succeeded in establishing this plea. At least for the sake of arguments, therefore, I accept the contention that an amount of Rs. 45,631/-has been paid to and received by the complainant towards the liability under Ext. P1 cheque.
12. But even this cannot be a valid plea for exculpation. Part payment of the amount due under the cheque whether before or after the date of receipt of the notice of demand under Section 138 cannot absolve the accused of his culpability. Definitely he has to pay, to avoid liability, the entire amount due within 15 days of receipt of the notice (including, of course, the amount if any paid earlier.)
13. In the instant case even if payments under Exts. D1 and D2 were taken into account, the accused cannot succeed for the reason that those payments, even if accepted, do not amount to discharge of liability contemplated under Section 138. Still an amount exceeding Rs. 27,000/- (72,750--45,361) remains to be paid even if I accept the plea of discharge under Exts. D1 and D2.
14. Undaunted, the learned Counsel for the respondent contends that Ext. D3 evidences payment of a total amount of Rs. 79,260/-. The plea of discharge must certainly be proved by the accused. Of course the standard which would be applicable to an accused pleading such discharge is not as heavy and as onerous as the initial paramount burden on the prosecution. But at least by the test of preponderance of possibilities and probabilities, as in a civil case, the accused has to discharge his burden to prove payment of the amount due under the cheque. Ext. D3 series are self-serving documents. They do not contain any acknowledgement by the complainant. When acknowledgement was admittedly insisted regarding the payments under Exts. D1 and D2, it would be puerile for a Court to assume that no acknowledgement would have been insisted for the payments made under Ext. D3 series. It must therefore be held that the payments allegedly made by the accused under Ext.
D3 cannot be accepted at all. The contention that anything more than what is borne out by Exts. D1 and D2 had been paid cannot be accepted at all.
15. It follows therefore that even if the case of the accused regarding discharge under Exts. D1 and D2 were accepted, that cannot be a valid and successful defence in this prosecution under Section 138 of the Negotiable Instruments Act. The learned Magistrate did not pointedly and specifically consider these relevant aspects. I am satisfied that the impugned verdict of not guilty and consequent acquittal do in these circumstances warrant appellate interference.
16. The interesting question whether the remedy under Section 138 of the Negotiable Instruments Act would be available to a complainant who has bona fide accepted part payments, towards the cheque amount before presentation of the cheque for encashment deserves to be considered. No precedent--binding or persuasive--on this specific aspect has been brought to my notice. According to me it would be unreasonable to deny the advantage/benefit of Section 138 of the Negotiable Instruments Act to such a payee merely because he had indulgently accepted part payment towards the liability under the cheque before the cheque was presented for encashment. Such an interpretation would defeat and stultify the ultimate purpose of Section 138 of the Negotiable Instruments Act. I extract the statutory provision below:
"138. Dishonour of cheque for insufficiency, etc., of funds in the account.--Where any cheque drawn by a person on an account maintained by him with a Banker for payment of any amount of money to another person from out of that account for the discharge, in whole or in part, of any debt or other liability, is returned by the Bank unpaid, either because of the amount of money standing to the credit of that account is insufficient to honour the cheque or that it exceeds the amount arranged to be paid from that account by an agreement made with that Bank, such person shall be deemed to have committed an offence and shall, without prejudice to any other provision of this Act, be punished with imprisonment for a term which may extend to one year, or with fine which may extend to twice the amount of the cheque, or with both :
Provided that nothing contained in this Section shall apply unless-
(a) the cheque has been presented to the Bank within a period of six months from the date on which it is drawn or within the period of its validity, whichever is earlier;
(b) the payee or the holder in due course of the cheque, as the case may be, makes a demand for the payment of the said amount of money by giving a notice in writing, to the drawer of the cheque, within fifteen days of the receipt of information by him from the Bank regarding the return of the cheque as unpaid; and
(c) 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.
Explanation.--For the purposes of this section, 'debt or other liability' means a legally enforceable debt or other liability"
The expression "the said amount of money" appearing in the section (emphasised above) cannot lead me to the conclusion that Section 138 of the Negotiable Instruments Act will not be applicable in such a situation. Harmonising the purpose and object of the statutory provision, the language employed and the interests of justice I am of opinion that the expression "the said amount of money" appearing in Clauses (b) and (c) of the proviso to Section 138 of the Negotiable Instruments Act must certainly refer to the amount of money due under the cheque less amounts if any paid already towards the liability. At any rate the payment contemplated under Clause (c) of the proviso must certainly include payments if any made towards, the liability after the issue of the cheque and before the cheque is presented for, encashment as also payments made after the receipt of the notice. The expression "the said amount of money" must certainly yield to a reasonable and purposive interpretation.
17. I am conscious that in an appropriate case the question may arise for consideration whether dishonour of the cheque was on the ground of insufficiency of funds if the funds were sufficient to pay the outstanding liability but not the entire liability under the cheque. That question does not specifically arise for consideration in this case. According to me the dishonour of the cheque, even in such a case where the amount available in the amount is sufficient to cover the outstanding liability but not sufficient to cover the entire amount liable to be paid under the cheque, would be for want of sufficient funds. As the drawer can, as indicated earlier, avoid culpable liability by proving discharge under proviso (c) of the entire amount (including the payments made prior to the dishonour of the cheque), this interpretation is not likely to result in any failure/miscarriage of justice. If the honouring of the cheque for the entire amount by the Bank were to result in any excess payments being made, civil remedy to claim return of the amount would be available to the drawer. If the purpose of Section 138 of the Negotiable Instruments Act is to ensure that the cheque transaction has as much credibility as a cash transaction, the interpretation that partial discharge of liability under the cheque prior to presentation of the cheque for encashment would extinguish the remedy under Section 138 of the Negotiable Instruments Act for a payee must certainly be avoided. Such a myopic interpretation would not advance the purpose and object of this legislation which attempts to usher in a new commercial morality essential for the health and growth of the economy.
18. There is no contention before me that any other ingredient of Section 138 of the Negotiable Instruments Act has not been established. In the absence of contention it is not necessary for me to advert to that aspect in any detail. Suffice it to say that I am satisfied that all ingredients of the offence punishable under Section 138 of the N.I. Act have been established. The accused is liable to be found guilty, convicted and sentenced under Section 138 of the Negotiable Instruments Act.
19. Coming to the question of sentence I have adverted to the principles governing imposition of sentence in a prosecution under Section 138 of the Negotiable Instruments Act in the decision reported in Anilkumar v. Shammy, I (2003) BC 547=2002(3) K.L.T. 852. Of course in this case I do not intend to express any final opinion on the question whether Exts. D1 and D2 relate to discharge of the liability under Ext. P1 cheque. Suffice it to say that convincing and satisfactory evidence is not available before Court to establish that the payments received by the complainant under Exts. D1 and D2 do not relate to the liability under Ext. P1. In these circumstances I am of opinion that it is not necessary to invoke the powers under Section 357(3), Crl.P.C. to direct payment of the amounts which have allegedly been discharged already under Exts. D1 and D2. But certainly there must be a direction for payment of compensation for the balance amount. Such direction must also compensate the complainant for the expenses incurred in this prosecution also.
20. In the result-
(i) This Criminal Appeal is allowed.
(ii) The impugned judgment is set aside.
(iii) The respondent-accused is found guilty, convicted and sentenced under Section 138 of the Negotiable Instruments Act to undergo imprisonment till rising of Court.
(iv) He is further directed to pay an amount of Rs. 30,000/- (Rupees thirty thousand only) as compensation under Section 357(3), Crl.P.C. and in default to undergo simple imprisonment for a period of three months. If paid the amount shall be released to the complainant.
(v) Out of the amount, Rs. 27,000/- (Rupees twenty-seven thousand only) shall be credited towards the liability under Ext. P1 cheque and the balance of Rs. 3,000/- (Rupees three thousand only) shall be credited to the expenses incurred for this prosecution.
20. The learned Magistrate shall lake necessary steps for execution of the sentence. The respondent shall appear before the learned Magistrate on 30.6.2003 for execution of the sentence.