Karnataka High Court
Sri Niranjana Murthy vs M/S.Meenakshi Developers on 21 August, 2018
Author: S.Sujatha
Bench: S. Sujatha
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IN THE HIGH COURT OF KARNATAKA AT BENGALURU
DATED THIS THE 21ST DAY OF AUGUST, 2018
BEFORE
THE HON'BLE MRS. JUSTICE S. SUJATHA
CRIMINAL REVISION PETITION NO.55/2011
BETWEEN:
SRI. NIRANJANA MURTHY
AGED ABOUT 55 YEARS
S/O BASAVALINGAIAH H.S.
NEAR CHANDANA SCHOOL
PARVATHAMMA LAYOUT
THINDLU VILLAGE
VIDYARANYAPURA POST
BENGALURU.
... PETITIONER
(By Sri. SHYAM KOUNDINYA A.S., ADV.,)
AND:
M/S. MEENAKSHI DEVELOPERS
REPRESENTED BY ITS PROPRIETOR
SR. R.S. RANGANATH
No.22/1, 4TH MAIN
BETWEEN 8TH AND 9TH CROSS
MALLESWARAM
BENGALURU. ... RESPONDENT
(By Sri. JEEVAN K, ADV.,)
THIS CRL. R.P. IS FILED UNDER SECTION 397 R/W
401 CR.P.C. PRAYING TO SET ASIDE THE ORDER DATED
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13.12.2010 PASSED BY THE P.O., FTC-VI, BENGALURU IN
CRL.A.NO.1038/2007 AND ORDER DATED 18.1.2006
PASSED BY THE PASSED BY THE XVIII ACMM & XX ASCJ,
BENGALURU IN C.C.NO.29705/2002.
THIS CRL. R.P. IS COMING ON FOR HEARING, THIS
DAY, THE COURT MADE THE FOLLOWING:
ORDER
This revision petition is filed by the accused under Section 397 read with Section 401 of the Code of Criminal Procedure, calling in question the legality and correctness of the order of the learned Sessions Judge, Bengaluru City (FTC-VI), dated 13.12.2010 passed in Criminal Appeal No.1038/2007, whereby the judgment and order of conviction passed by the learned Magistrate, Bengaluru City, dated 18.01.2006 in C.C.No.29705/2002 is confirmed modifying the sentence to pay fine of Rs.1,75,000/- instead of Rs.2,05,000/-, in default, to undergo simple imprisonment for six months and out of the fine amount awarding compensation of Rs.1,70,000/- to the 3 complainant and to confiscate Rs.5,000/- to the Government.
2. The respondent/complainant filed complaint under Section 200 of the Code of Criminal Procedure alleging that the accused has committed an offence punishable under Section 138 of the Negotiable Instruments Act, 1881 ('Act' for short), which came to be registered as C.C.No.29705/2002 on the file of the learned XVIII ACMM and XX ASCJ, Bengaluru city. On the issuance of the summons to the accused, the accused appeared and got himself released on bail. The accused not pleaded guilty, claimed to be tried for the charges framed against him under Sections 138 and 139 of the Act.
3. It is the case of the complainant that the accused approached him for the construction of a house. Accordingly, an agreement was entered into between them. The construction work was completed 4 by the complainant and the possession of the building was handed over to the accused and the accused was due to pay balance of Rs.1,87,396.25 towards construction cost of the building and to clear the same Ex.P2/cheque bearing No.932474 for a sum of Rs.1,50,000/- drawn on State Bank of India, Bengaluru was issued, which was returned to the drawer on presentation for encashment with an endorsement "Payment stopped by the drawer". The legal notice issued by the complainant was duly served on the accused and a reply notice was also issued.
4. The complainant got himself examined as PW.1 and marked documents Exs.P1 to P7(a), whereas accused got examined himself as DW1 and another witness as DW2, marked Exs.D1 to D10 to substantiate his defence. The learned Trial Judge convicted the accused for the offence punishable under Section 138 of the Act passing sentence to pay Rs.2,05,000/-, in 5 default of payment of fine, to undergo simple imprisonment for six months. Out of fine amount, Rs.2,00,000/- shall be awarded as compensation to the complainant and Rs.5,000/- to be appropriated towards expenses of the State Government. Being aggrieved by the same, accused preferred appeal. The order of conviction came to be confirmed modifying the sentence as aforesaid in the preceding paragraphs. Hence, this revision petition.
5. Learned counsel Sri. Shyam Koundinya A.S., appearing for the petitioner vehemently submitted that the cheque was issued on 08.06.2001 as a security to the respondent towards construction of the building agreement as agreed between the parties as per Ex.D1. The said cheque was undated. The complainant filling the date on 21.06.2002, presented the same on 24.06.2002 for encashment, despite issuing reply notice dated 10.07.2002 as per Ex.P5 requesting the 6 respondent to return the cheque as final bill issued by the respondent has been finally settled. No liability to discharge the legally enforceable debt subsists at the time of presentation of the cheque. Respondent knowing very well the request of the petitioner, presented the cheque which came to be returned with an endorsement "Payment stopped by the drawer" as informed to the banker by the petitioner. It is thus mainly argued that the cheque issued on 08.06.2001 was barred by the period of limitation prescribed, for presentation on 24.06.2002. On this ground alone, the Courts below ought to have acquitted the petitioner/accused against the charges leveled.
6. Nextly, learned counsel submitted that both the Courts below grossly erred in giving presumptory value to Ex.P2 dehors rebuttal evidence lead in by the petitioner to controvert the evidence of the complainant. The letter dated 18.06.2002 addressed by the petitioner 7 establishes the request made by him along with similarly placed parties to the complainant for the return of the undated cheques deposited with the complainant as a security. This vital documentary evidence was also totally ignored by the Courts below in appreciating the evidence inasmuch as rebuttal of presumption made by the petitioner.
7. Learned counsel in support of his contention placed reliance on the following judgments of the Hon'ble Apex Court:-
(1) INDUS AIRWAYS PRIVATE LIMITED AND OTHERS VS. MAGNUM AVIATION PRIVATE LIMITED AND ANOTHER reported in (2014) 12 Supreme Court Cases 539;
(2) M/S. SHRIRAM TRANSPORT FINANCE CO.
LTD., VS. Smt. AKHILABANU reported in 2015 (2) AKR 483.
8. Learned counsel Sri. Jeevan K, appearing for the respondent-complainant argued that issuance of undated cheque dated 08.06.2001 by the petitioner is 8 an inchoate instrument under Section 20 of the Act. Ex.P2 is the cheque. Filling of the date as 21.06.2002 and presenting it for encashment with the bankers on 24.06.2002 is in accordance with law, more particularly when the petitioner has admitted the issuance of the cheque for an amount of Rs.1,50,000/- towards settlement of final bill towards the construction of the building. Mere an advice given to the bank for stop payment of the cheque amount would not attract character of rebuttal presumption. No doubt, petitioner has replied to the legal notice Ex.P4 as per Ex.P5, the liability to discharge the legal debt towards final bill of the construction agreement cannot held to be not proved by the complainant. The Courts below meticulously analyzing the evidence on record have given concurrent finding on the issuance of Ex.P2 - cheque by the petitioner towards the legally dischargeable debt.
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9. Nextly, learned counsel submitted that the period of limitation of six months for presenting the cheque would be reckoned from the date drawn on the cheque and not the date of issuance of the cheque. In support of his contention the learned counsel placed reliance on the following judgments:-
1) DILIPKUMAR NALINKANT GANDHI vs. STATE OF GUJARAT AND OTHERS reported in LAWS (GJH) 2015 7 217. 2) SIVAKUMAR VS. NATARAJAN reported in (2009) 13 SUPREME COURT CASES 623.
10. I have given my thoughtful consideration to the arguments advanced at the hands of learned Counsel appearing for the parties and perused the material on record.
11. Questions that arise for my consideration in this revision petition are:
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1) Whether the complainant has proved that a cheque was presented for encashment on 24.06.2002 issued by the petitioner towards discharge of debt and the same was returned on the advice of the complainant for stop payment?
2) Whether the undated cheque issued by the accused/petitioner can be said to be a bill of exchange or a cheque and whether the same can be said to have been issued towards a legal debt?
12. As regards first question, there is an ample evidence available on record to support the case of the complainant that the cheque-Ex.P2 was issued by the accused towards final bill of construction issued by the complainant. It is deposed by the accused/DW1 in his cross-examination that the cheque-Ex.P2 was issued undated with a request to the complainant to fill up the date and to present it for encashment. Further, it is admitted by the accused that in order to restrain the complainant from presenting the cheque for 11 encashment, stop payment letter was issued to the bank and informed the complainant about the same. It is the submission of the learned counsel for the petitioner that the rebuttal of the presumption of the provision of Section 138 of Act by the complainant is not properly appreciated by the Courts below. Mere denial of legally dischargeable debt or other liability on requesting the bank to stop payment would not be construed as rebuttable evidence. Explanation appended to Section 138 of the. Act comprehends "the debt or other liability" meaning a legally enforceable debt or other liability. Even dishonour of cheque on account of stop payment instruction sent by the accused to his bank in respect of post dated/undated cheque, irrespective of insufficiency of the funds in the account towards which a demand is made by issuing a statutory notice would attract provisions of Section 138 of the Act. It is settled law in as much as the 12 ingredients to be satisfied for the complaint to fall under Section 138 of the Act are:
1) there shall be a legally enforceable debt;
2) that the cheque was drawn from the account of bank for discharge in whole or in part of any debt or other liability which presupposes a legally enforceable debt;
3) cheque was issued and presented had been returned due to insufficiency of funds or stop payment or closer of account.
13. These ingredients having been satisfied in the present set of facts, it is not in doubt that the complainant has proved dishonour of cheque which was issued towards legally enforceable debt or other liability. The evidence of PW.1 clearly establishes the issuance of the cheque towards the discharge of legally enforceable debt, nothing positive is elicited in the cross- examination of PW.1 to rebut the same. Mere stand/say of the accused not supported by concrete material would not come to the assistance of the 13 accused to disbelieve the testimony of PW.1. These aspects are extensively considered by the Courts below and concurrent finding has been arrived at as regards the dishonour of cheque and subsequent compliance of Section 138 resulting in the conviction of the accused for the offence punishable under Section 138 of the Act which do not call for any interference by this Court.
14. The judgment referred to by the learned counsel for the petitioner in Indus Airways Private Limited (supra) regarding interpretation of expression for discharge of any debt or liability occurred under Section 138 of the Act, was rendered in the context of the cheque being issued as an advance payment for purchase of the goods and for any reasons purchase order is not carried to its logical conclusion either because of its cancellation or otherwise and material or goods for which purchase order is placed is not supplied held that the cheque has not been drawn for an existing 14 debt or liability. In other words, at the time of drawal of cheque, there was no existing liability. No such material evidence is placed on record by the accused in the present case to establish that there was no existing liability on the date of presentation of the cheque except ipse dixit statement of the accused by way of reply notice. Mere denial of the liability would not come to the rescue of the accused unless the positive action of payment made in full towards final bill is established. Hence, the said judgment would not come to assistance of the petitioner.
15. As regards second question, the Hon'ble High Court of Gujarat in the judgment of Dilipkumar Nalinkant Gandhi (supra) has extensively considered the effect of the blank cheque/undated cheque vis-a-vis the provision of the Act. It is beneficial to quote the relevant paragraphs of the said judgment which reads thus:
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"25.1. It is an admitted position that the cheque issued on 29.03.1995 was a blank signed cheque wherein neither the amount nor the date was mentioned but under the above referred document, the respondent No.1 accused had agreed that every year after the accounts are settled, after calculating the principal, interest, adapt and vatav, the total amount is to be paid by them and that in case they do not pay the amount in time, the complainant firm would be entitled to fill in the details in the blank cheque and recover the same.
25.2. At this juncture, reference may be made to certain provisions of the N.I. Act. Section 5 of the N.I. Act defines "bill of exchange" to be an instrument in writing containing an unconditional order, signed by the maker, directing a certain person to pay a certain sum of money only to, or to the order of, a certain person or to the bearer of the instrument. Section 6 of the N.I. Act defines "cheque" to be a bill of exchange drawn on a specified banker and not expressed to be payable otherwise than on demand and it 16 includes the electronic image of a Section 20 of the N.I. Act makes provision for "Inchoate stamped instruments" and reads thus:
"20. Inchoate stamped instruments. - Where one person signs and delivers to another a paper stamped in accordance with the law relating to negotiable instruments then in force in India and either wholly blank or having written thereon an incomplete negotiable instrument, he thereby gives prima facie authority to the holder thereof to make or complete, as the case may be, upon it a negotiable instrument, for any amount specified therein and not exceeding the amount covered by the stamp. The person so signing shall be liable upon such instrument, in the capacity in which he signed the same, to any holder in due course for such amount; provided that no person other than a 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."
25.3. This court in Hitenbhai Parekh, Proprietor Parekh Enterprises v. State of 17 Gujarat, has held that even as a bill of exchange, by definition, requires signature of the maker as also direction to pay a certain sum of money only to or to the order of a certain person or to the bearer of the instrument, the provisions of Section 20 permit signature and delivery of an incomplete negotiable instrument and provide that the maker thereby gives prima facie authority to the holder thereof to make or complete it into a negotiable instrument and makes the signatory of such instrument liable to any holder in due course to the extent of the amount intended to be paid thereunder. Therefore, harmonious reading of the provisions of sections 5, 6, 20, 118 and 139 would clearly indicate that a cheque could be drawn, delivered and received by the payee or holder in due course and could legally be completed under a legal authority and when such inchoate instrument is completed to make it a negotiable instrument, it would fall within the definition of bill of exchange and would render the signatory liable upon such instrument to the extent the amount 18 mentioned therein is intended by him to be paid thereunder. Unless and until contrary is proved, such negotiable instrument would be presumed to be made or drawn for consideration and receipt thereof would be presumed to be for discharge, in whole or in part, or any debt or other liability. However, such debt or other liability is not by any legal presumption presumed to be legally enforceable debt or other liability. Therefore, the onus of proving that the presumed or proved debt or legal liability was legally enforceable remains with the complainant. Consequently, in all given fact-situations, the court is required to examine whether the presumptions regarding consideration and there being any debt or other liability are rebutted by the accused person by preponderance of probabilities and whether the complainant has proved that the debt or other liability, presumed or proved by overwhelming evidence, was legally enforceable. The court further held that an analysis of the statutory provisions leads to the conclusion that, when a cheque bearing 19 only signature of the drawer is delivered and received by a payee for the discharge, in whole or in part, of any debt or liability, there is an implied authority for the person receiving such cheque to complete it by filling the blanks and the amount having been filled up under such implied authority would be the amount intended by him to be paid thereunder. The focus in such cases would shift to the aspect of such amount being for the discharge, in whole or in part, of any legally enforceable debt or other liability.
25.4. In Ashok Yeshwant Badave v.
Surendra Madhavrao Nighojakar, the Supreme Court held that form a bare perusal of sections 5 and 6 of the Act, it would appear that a bill of exchange is a negotiable instrument in writing containing an instruction to a third party to pay a stated sum of money at a designated future date or on demand. On the other hand, a "cheque" is a bill of exchange drawn on a bank by the holder of an account payable on demand. Under section 6 of the Act, a "cheque" is also a bill of exchange but it is drawn on a banker 20 and payable on demand. A bill of exchange even though drawn on a banker, if it is not payable on demand, it is not a cheque. A "post-dated cheque" is not payable till the date which is shown thereon arrives and will become cheque on the said date and prior to that date, the same remains a bill of exchange.
25.5. The question that, therefore, arises for consideration is as to whether the cheque in question was drawn, delivered and received for payment of any amount to the payee for the discharge, in whole or in part, of any legally enforceable debt or other liability.
25.6. From the admitted facts which have come on record, the cheque in question was a blank cheque which did not mention either the amount or the date. A bill of exchange has been defined to be an instrument in writing containing an unconditional order, signed by the maker, directing a certain person to pay a certain sum of money only to, or to the order of, a certain person or to the bearer of the instrument.
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Therefore, of the purpose of falling within the ambit of "bill of exchange" as defined under section 5 of the N.I.Act, the instrument should contain a direction to a certain person to pay a certain sum of money. In the present case, the cheque in question does not mention any amount payable to a certain person. Therefore, the cheque in question evidently does not meet with the requirements of a bill of exchange as defined under section 5 of the N.I. Act. However, section 20 of the N.I. Act provides that where one person signs and delivers to another a paper stamped in accordance with the law relating to negotiable instruments then in force in India and either wholly blank or having written thereon an incomplete negotiable instrument, he thereby gives prima facie authority to the holder thereof to make or complete, as the case may be, upon it a negotiable instrument, for any amount specified therein and not exceeding the amount covered by the stamp.
Therefore, at the time when the cheque was issued to the complainant, it was in the 22 nature of an inchoate instrument without the amount or date having been written thereon and was an incomplete negotiable instrument bearing the signature of the accused.
However, along with such inchoate instrument, the accused also executed the document, Exhibit-17, by virtue of which he gave express authority to the complainant to fill in the date as well as the amount upon the accounts being settled every year on the 25th day of March or September, in case such amount remained unpaid. As noted hereinabove, the cheque in question had been issued on 29.03.1995 with the express authority to the complainant to fill in the outstanding amount after the accounts are settled at the end of each year as well as the date and encash the cheque."
16. It is thus clear that an undated cheque is a bill of exchange. The reading of the provisions of Section 5, 6, 20, 118 and 139 of the Act would clearly indicate that the cheque could be drawn, delivered and received by the payee or holder in due course and could 23 legally be completed under a legal authority and when such inchoate instrument is completed to make it a negotiable instrument, it would fall within the definition of bill of exchange and would render the signatory liable upon such instrument to the extent the amount mentioned therein is intended by him to be paid thereunder. Unless and until contrary is proved, such negotiable instrument would be presumed to be made or drawn for consideration and receipt thereof would be presumed to be for discharge, in whole or in part, of any debt or other liability. It is true that Ex.P2 cheque was in the nature of inchoate document in terms of Section 20 of the Act when the cheque was issued to the complainant without mentioning the date and was incomplete negotiable instrument bearing signature of the accused with the amount of Rs.1,50,000/- mentioned therein. However, as per admitted testimony of the DW1/accused, such inchoate instrument was issued towards final bill Ex.P1, by virtue of which he 24 gave expressed authority to the complainant to fill in the date and to present the same for encashment. On such authority given by the accused/petitioner, the date was filled in Ex.P2 as 21.06.2002 and the same was presented on 24.06.2002 for encashment which is well within the prescribed period of limitation. What is relevant for the purpose of reckoning period of limitation is the date drawn on the cheque and not the date of issuance of cheque. This view is supported by the judgment of the Hon'ble Apex Court in the case of Sivakumar (supra). Hence, the argument of the learned counsel for the petitioner that the cheque presented beyond the period of six months from the date of issue of cheque is fatal to the proceeding and no order of conviction and sentence for committal of offence under Section 138 of the Act can be passed, is only fallacious argument, deserves to be negated. The judgment and sentence passed by the appellate court deserves to be confirmed.
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Accordingly, the criminal revision petition stands dismissed as devoid of merits.
Sd/-
JUDGE PMR