Andhra HC (Pre-Telangana)
Peddireddy Sanjeeva Reddy vs The State Of Andhra Pradesh Represented ... on 4 June, 2014
Author: B.Siva Sankara Rao
Bench: B.Siva Sankara Rao
HONBLE Dr. JUSTICE B.SIVA SANKARA RAO CRIMINAL APPEAL No.1509 OF 2007 04-06-2014 Peddireddy Sanjeeva Reddy...APPELLANT The State of Andhra Pradesh represented by its Public Prosecutor and another...Respondents Counsel for the Appellant: Counsel for Respondent: <Gist: >Head NOTE: ?cASES REFERRED: AIR 2003 SC 2035 [2000] 2 SCC 380 (2001) 8 SCC 458 (2006)3 SCC 30 [(2005) 12 SCC 1] (2009) 2 SCC 513 AIR 2008 SC 1325 AIR 2010 SC 1898 AIR 2001 SC 3897 AIR 1999 SC 1008 AIR 2002 SC 182 AIR 2008 SC 2898 1971 (1) An.W.R. 65 2004 Crl.L.J. 58 2004 (1) BC 34 (2007) 6 SCC 555 2012 CRI.L.J.93 HONBLE Dr. JUSTICE B.SIVA SANKARA RAO CRIMINAL APPEAL No.1509 OF 2007 04-06-2014 JUDGMENT:
The unsuccessful complainant Peddireddy Sanjeeva Reddy filed the appeal assailing the acquittal judgment, dated 21.06.2007, passed by the learned II Additional Judicial Magistrate of First Class, Machilipatnam, in the private complaint case vide C.C.No.785 of 2005 for the offence punishable under Section 138 of the Negotiable Instruments Act, 1881 (for brevity, 'N.I. Act').
2. The case of the appellant/complainant is that the accused Mallavarapu Chandra Reddy along with his wife borrowed an amount of Rs.8,00,000/- from him for business purpose by executing Ex.P.1 promissory note agreeing to repay the same with interest at 18% per annum. After repeated demands, in discharge of said debt, the accused issued Ex.P.2 cheque bearing No.156076, dated 25.08.2005 for a sum of Rs.8,54,000/- drawn on Canara Bank, Chennai Branch. When the said cheque was presented, it was dishonoured with an endorsement funds insufficient. The complainant got issued a legal notice demanding to pay the cheque amount and the same was returned on 04.10.2005 with an endorsement addressee continuously absent. Hence the complaint.
3. After recording sworn statement of the complainant, the case was taken cognizance and the accused, who appeared before the Court pursuant to the summons and after supply of case copies under Section 207 of the Code of Criminal Procedure (for brevity, Cr.P.C.), when questioned on substance of accusation under Section 251 Cr.P.C., he pleaded not guilty.
4. During the course of trial, on behalf of the complainant, complainant himself was examined as PW.1 and got marked Exs.P.1 to P.8, which include Ex.P.1 promissory note, Ex.P.2 cheque (supra), Ex.P.3 pay slip, Exs.P.4 and P.5 cheque return memos, Ex.P.6 office copy of legal notice, dated 26.09.2005, Exs.P.7 and P.8 returned postal covers, dated 04.10.2005. On behalf of the accused, DWs.1 to 3 were examined and got marked Exs.D.1 to 3 including served copy of plaint in O.S.No.74 of 2006 on the file of the Senior Civil Judge, Ongole, Ex.D.2 writing of DW.2 in Court and Ex.D.3 pass book.
5. After completion of the evidence on the side of the complainant, the accused was examined under Section 313 Cr.P.C., and he denied the incriminating material levelled against him.
6. Apart from other merits, the trial Court held that the complaint is barred by limitation as it was not filed within one month after expiry of 15 days of deemed service of notice and thereafter, the criminal prosecution would not sustain as cause of action was lost unavailed. Aggrieved thereby, the present appeal is filed with contentions that the acquittal judgment of the trial Court is contrary to law; weight of evidence and probabilities of the case, went wrong in misrepresenting and misinterpreting the provisions and principles with reference to the factual evidence on record; under misconception arrived an erroneous finding, acquitted the accused instead of convicting him; that went wrong in saying complaint is barred by time though it is within time, and thereby, sought for setting aside the acquittal judgment of the trial Court by allowing the appeal and punish the accused as per law.
7. The learned counsel for the appellant reiterated the same referring to the propositions, whereas it is the contention of the learned counsel for the 2nd respondent-accused that the trial Courts judgment is supported by well-sounded reasons with reference to the facts, correct application of law and for this Court, while sitting in appeal, there is nothing to interfere, more particularly against the presumption of innocence strengthened by acquittal, even to say any other view is also possible, is also not a ground to interfere, but for dismissal of the appeal.
8. Perused the material available on record.
9. Now the points that arise for consideration are:
1) Whether there is due service of statutory notice demanding payment within 15 days by intimation of dishonour of cheque and if so, whether the complaint filed within one month after service of notice i.e., one month after waiting 15 days from date of service or deemed service and if so, the trial Courts acquittal judgment merely on that ground, leave about other merits as to the cheque issued is not for legally enforceable debt or other liability, and how far the accused rebutted the presumptions available against him?
2) To what result?
10. In re. Point No.1:
10-(A). Before adverting to the merits of the matter, it is beneficial to quote; the provisions incorporated in Chapter XVII of the N.I. Act make a civil transaction to be an offence by fiction of law and with certain (rebuttable) presumptions that shall be drawn. Sections.138 to 142 are incorporated in the N.I.Act as Chapter XVII by the Banking Public Financial Institutions and Negotiable instruments Laws (Amendment) Act, 1981 (66 of 1988) which came into force w.e.f. 01-04-1989 and the N.I. Act was further amended by Act, 2002 (55 of 2002) which came into force w.e.f. 06-02-2003 incorporating new sections 143 to 147 in this Chapter XVII and further some of the existing provisions not only of the Chapter XVII, but also of other Chapters amended to overcome the defects and drawbacks in dealing with the matters relating to dishonour of cheques.
10-(B). The object and intention of these penal provisions of Chapter XVII (Sections 138147), in particular, Sections 138 & 139 (besides civil remedy), are to prevent issuing of cheques in playful manner or with dishonest intention or with no mind to honour or without sufficient funds in the account maintained by the drawer in Bank and induce the Payee/Holder or Holder in due course to act upon it. The remedy available in a Civil Court is a long drawn matter and an unscrupulous drawer normally takes various pleas to defeat the genuine claim of the payee. Since a cheque that is dishonoured may cause uncountable loss, injury or inconvenience to the Payee due to the latters unexpected disappointment, these provisions incorporated are in order to provide a speedy remedy to avoid inconvenience and injury to the Payee and further to encourage the culture of use of cheques and enhancing credibility of the instruments as a trustworthy substitute for cash payment and to inculcate faith in the efficacy of Banking operations - GOA PLAST (PVT.) LTD. v. CHICO URSULA DSOUZA .
10-(C). To fulfill the objective, the Legislature while amending the Act has made the following procedure:
In the opening words of the Section 138 it is stated: "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,---------, such person shall be deemed to have committed an offence and shall, without prejudice to any other provision of this Act (See Sec.143), be punished ----. Provided, nothing contained in this section shall apply unless,-(a),
(b); and (c) Explanation---(supra)."
"(i) Under Section 138 a deeming offence is created by fiction of law.
(ii) An explanation is provided to Section 138 to define the words "debt or other liability" to mean a legally enforceable debt or other liability."
(iii) In Section 139, a presumption is ingrained that the holder of the cheque received it in discharge of debt or other liability.
(iv) Disallowing a defence in Section 140 that drawer has no reason to believe that cheque would be dishonoured.
(v) As per Section 146 (new section) the production of the Banks slip or Memo with official mark denoting that the cheque has been dishonoured is prima facie evidence for the Court to presume the fact of dishonour of such cheque unless such fact is disproved by the accused.
10-(D). Further the provision for issuing notice within fifteen days (amended as thirty days by the amended Act, 55 of 2002, w.e.f.06-02-2003) under section 138 after dishonour is to afford an opportunity to the Drawer of the cheque to rectify his mistakes or negligence or in action and to pay the amount within fifteen days of receipt of notice, failing which the drawer is liable for prosecution and penal consequences.
10-(E). Reasonability of cause for non-payment is not at all a deciding factor. Mensrea is irrelevant. It is a strict liability incorporated in public interest.
10-(F). Availability of alternative remedy is no bar to the prosecution 10-(G). In the words-where any cheque, the word any suggests that for whatever reason if a cheque is drawn on an account maintained by him with a Banker in favour of another person for the discharge of any debt or other liability, the liability cannot be avoided in the event of the cheque stands returned by the Banker unpaid.
10-(H). In Suman Sethi v. Ajay K. Churiwal and Another , it was held of the legislative intent as is evident from Section 138 of the Act that, if for the dishonoured cheque demand is not met within 15 days of the receipt of the notice, the drawer is liable for conviction. If the cheque amount is paid within above period or before the complaint is filed, the legal liability under Section 138 ceases to be operative and for the recovery of other demands such as compensation, costs, interest etc. separate proceedings would lie. If in a notice any other sum is indicated in addition to the amount covered by the cheque that does not invalidate the notice.
11-A. In K.N.Beena Vs. Muniyappan & Another at paragraph 7, it was observed: In this case admittedly the accused has led no evidence except some formal evidence. The High Court appears to have proceeded on the basis that the denial of averments in his reply dated 21.5.1993 were sufficient to shift the burden of proof on to the complainant to prove that the cheque was issued for a debt or liability. This is an entirely erroneous approach. The accused had to prove in the trial, by leading cogent evidence, that there was no debt or liability. The accused not having led any evidence could not be said to have discharged the burden of proving that the cheque was not issued for a debt or liability.
11-AA. No doubt, this approach of accused has to lead cogent evidence during trial in rebutting the presumptions and in proof of his defence, is explained by Apex Court in Narayan Menon V. State of Kerala as follows:
11-B. The Apex Court in NARAYAN MENON (4 supra) held that once the complainant shown that the cheque was drawn by the accused on the account maintained by him with a banker for payment of any amount in favour of the complainant from out of that account for its discharge and the same when presented returned by the Bank unpaid for insufficiency of funds or exceeds arrangement, such person shall be deemed to have been committed an offence under Section 138 of N.I. Act. What Section 139 of the Act speaks of the presumption against the accused to rebut is the holder of a cheque received the cheque of the nature referred in Section 138 of the Act for discharge of debt. For rebutting such presumption, what is needed is to raise a probable defence. Even for the said purpose, the evidence adduced on behalf of the complainant could be relied upon. Accused need not enter into the witness box and examine other witnesses in support of his defence. Accused need not disprove the prosecution case in its entirety. Therefore, the rebuttal does not have to be conclusively established but such evidence must be adduced before the Court in support of the defence that the court must either believe the defence to exist or consider its existence to be reasonably probable, the standard of reasonability being that of the "prudent man".
11-C. There are presumptions (besides the general presumptions under the Indian Evidence Act) specially provided in respect of a negotiable instrument under Section 118 clauses (a) to
(g) of the Act and for the dishonour of cheque relating to criminal liability under 139 and apparently a legal fiction though strictly not as per the Explanation to Section 138-of the Act, for the purpose of this section, debt or other liability means a legally enforceable debt or other liability.
Section 118: Presumptions as to negotiable instruments - Until the contrary is proved, the following presumptions shall be made:
Clause (a) of consideration - that every negotiable instrument was made or drawn for consideration, and that every such instrument, when it has been accepted, indorsed, negotiated or transferred, was accepted, indorsed, negotiated or transferred for consideration. (b) to (g)----"
Section 139: Presumption in favour of holder - 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, of any debt or other liability. Presumptions both under Sections 118(a) and 139 of the Act are rebuttable in nature.
What would be the effect of the expressions May Presume, Shall Presume and Conclusive Proof has been considered by the Apex Court in Union of India (UOI) vs. Pramod Gupta (D) by L.Rs. , in the following terms: It is true that the legislature used two different phraseologies "shall be presumed" and "may be presumed"
in ------ but the same would not mean that the words "shall presume" would be conclusive. The meaning of the expressions "may presume" and "shall presume" have been explained in Section 4 of the Evidence Act, 1872, from a perusal whereof it would be evident that whenever it is directed that the Court shall presume a fact it shall regard such fact as proved unless disproved. In terms of the said provision, thus, the expression "shall presume" cannot be held to be synonymous with "conclusive proof. In terms of Section 4 of the Evidence Act, whenever it is provided by the Act that the Court shall presume a fact, it shall regard such fact as proved unless and until it is disproved.
The Apex Court in its later expression in KUMAR EXPORTS PVT. LTD. vs. SHARMA CARPETS held in this regard that- presumptions that applied among clauses (a) to (g) of Section 118 also, like the presumption under Section 139 of the Act, as per Section 4 of the Evidence Act, are the rebuttable presumptions for which the burden is on the accused. However, to rebut the presumptions if a case is made out by accused either by pointing out from the case of the complainant including very documents and cross-examination or by examining any person and need not be always by coming to witness box (as laid down in Narayan Menon (4 supra)) and KRISHNA JANARDHAN BHAT vs. DATTATRAYA G. Hegde .
11-D. Further, as per the expression of the Apex Court in RANGAPPA vs. MOHAN (3-Judges Bench) paras-9 to 15 referring to GOA PLASTS (1 supra), Krishna Janardhan Bhat (7 supra) by distinguishing at para-14 saying the observation in KRISHNA JANARDHAN BHAT (7 supra) of the presumption mandated by Section 139 does not indeed include the existence of a legally enforceable debt or liability is not correct, though in other respects correctness of the decision does not in any way cause doubted; by also referring to Hiten P. Dalal v. Bratindranath Banerjee holding at paras-22 and 23 therein of the obligation on the part of the Court to raise the presumption under 138, 139 and 118 of the N.I. Act, in every case where the factual basis for raising the presumption has been established since introduces an exception to the general rule as to the burden of proof in criminal cases and shifts the onus on to the accused, as a presumption of law distinguished from a presumption of fact as part of rules of evidence and no way in conflict with presumption of innocence and the proof by prosecution against the accused beyond reasonable doubt, but for saying to rebut the accused can discharge the burden showing reasonable probability of non-existence of the presumption of fact and to that proposition, the earlier expression in Bharat Barrel & Drum Manufacturing Company v. Amin Chand Pyarelal para-12 showing the burden on the accused is to bring on record by preponderance of probability either direct evidence or by referring to circumstances upon which he relies, rather than bare denial of the passing of the consideration; apparently that does not appear to be of any defence, to get the benefit in discharge of the onus against, also held referring the M.M.T.C. Ltd. and another v. Medchl Chemicals & Pharma (P) LTD that where the accused able to show justification of stop payment letter even from funds are there, but no existence of debt or liability at the time of presentation of cheque for encashment to say no offence under Section 138 of the N.I. Act made out in discharge of the burden. It was concluded referring to the above, including of Mallavarapu Kasivisweswara Rao v. Thadikonda Ramulu Firm & Ors paras-14 and 15 that the initial presumption lays in favour of the complainant and Section 139 is an example of a reverse onus clause, which has been included in furtherance of the legitimate objection of improving the credibility of the negotiable instruments. While Section 138 specifies a strong criminal remedy in relation to the dishonour of cheques, the rebuttable presumption under Section 139 is a device to prevent undue delay in the course of litigation. Bouncing of a cheque is largely in the nature of a civil wrong whose impact is usually confined to the private parties involved in commercial transactions and the test of proportionality should guide the construction and interpretation of reverse onus clause and the accused cannot be expected to discharge an unduly high standard or proof and in the absence of compelling justifications, reverse onus clauses usually impose an evidentiary burden and not a persuasive burden to discharge by preponderance of probabilities by raising creation of doubt about the existence of a legally enforceable debt or liability to fail the prosecution and for that the accused can rely on the material submitted by the complainant also in order to raise such a defence and he may not need to adduce any evidence of his own.
11-DD. It was also observed in para-15 that the accused appear to be aware of the fact that the cheque was with the complainant, further-more the very fact that the accused has failed to reply to the statutory notice under Section 138 of the Act leads to the inference that there was merit in the complainants version. It was also held by this court way back in Chapala Hanumaiah Vs. Kavuri Venkateshwarlu that having received and acknowledged the statutory legal notice after dishonour of cheque, non-giving of reply to said legal notice, improbablises the defence version, as any prudent person under the said circumstances should have, but for no defence to reply.
11-E. If at all, there is any payment including part payment or adjustment to be considered for deduction while enforcing the amount covered by the dishonoured cheque for its consequences, the burden is on the accused as per settled law to prove said discharge or adjustment. In this regard, in M/s. Thekkan and Company vs. M. Anitha , it was held by the Kerala High Court that nothing precludes the Court under Section 138 of the Act for taking into account prior payments made before the presentation of the cheque or before receipt of notice in deciding whether the amount due under the cheque has been fully paid, if not for continuing the prosecution. In another expression of same High Court in R. Gopikuttan Pillai vs. Sankara Narayanan Nair also it was held that accused is bound to prove payment of entire amount within 15 days of receipt of notice and any part payment made before or after notice cannot absolve liability from the criminal prosecution under Section 138 of N.I. Act and thereby the trial Court went wrong in acquitting the accused for part payment made and not of the entire due under the cheque.
12. From the above legal propositions, coming to the factual matrix, it is important to note that Rule 74 of the Postal Rules speaks, though there is no material to say that they got statutory force at least in guiding for internal governance regarding the service of the Registered letters, speaks regarding period of detention or treatment of undeliverable articles in post office that where the addressees of which are not known or have left the station of address without intimating their fresh address to the post office or are not found at the address given on articles are ordinarily kept in deposit in the head, sub or branch post office to which they are addressed, for a period of seven days after all enquiries to find the addressee, have proved unsuccessful. After seven days, articles which bear clearly on the outside the names and addresses or signatures of the senders and on which no postage or other sum is due to be recovered, are returned direct to the senders, while other articles are forwarded to the Returned Letter Office for disposal.
13. It speaks seven days waiting for enquiry and seven days to return. In this case, as per Exs.P.6 to P.8 office copy of notice and returned covers, the notice Ex.P.6 bears the date 16.09.2005, which is the statutory notice, Ex.P.7 is the registered letter, RL.No.4504, dated 16.09.2005. It was addressed to the accused in the address noted in Ex.P.1 promissory note. The endorsements on it shows absence on the respective dates 19.09.2005, 20.09.2005, 21.09.2005, 22.09.2005, 23.09.2005 and 24.09.2005. The address of the complainants Advocate is from Ongole and the address of the accused and his wife, who borrowed the amount under Ex.P.1 promissory note, was same as in promissory note i.e., Chennai. The Chennai stamp shows date as 19.09.2005 to say the cover reached Chennai for service on the addressee on 19.09.2005. There is nothing to show on which date it was returned to the sender. The endorsement made on 24.09.2005 shows return to sender basing on the earlier endorsement as the addressee absent.
14. Learned counsel for the appellant has also placed reliance on a decision of Three Judges Bench of Apex Court in C.C. Alavi Haji Vs. Palapetty Muhammed and another , regarding deemed service of notice.
15. From the above proposition of law, there is a deemed service. Here, the question arises is what is the date of deemed service, is it 19.09.2005 or after end of the seven days of waiting for return. In the above Rule 74 of the Postal Rules what is required is to deposit for seven days and return thereafter to the sender. That is different from the deemed service for purpose of considering 15 days time under Section 138 N.I. Act.
16. Learned counsel for the appellant placed reliance upon an expression of Kerala High Court in Gopalakrishnan Lekshmanan v. Noor-jahan Abdul Azeez and Another . It has to be understood that the date of knowledge of receipt of said notice as date of service. In fact that is not the law from the settled expressions particularly of the Three Judges Bench expression in C.C. Alavi Haji (supra). The learned counsel for the respondent/accused placed reliance upon a judgment of the Delhi High Court in HDFC Bank Limited Vs. Amit Kumar Singh (Crl.R.P.No.296 of 2009), wherein it is stated that if the cover sent by registered post was not received back, it is claimed that the notice was duly served and on the dispute as to date of service for accrual of cause of action for payment within 15 days from there and if not paid only to file the complaint within one month. The receipt of notice is an essential condition and Section 138 N.I. Act speaks about only to give a notice, in writing and on the question whether by giving such notice, subsequent stage of receipt by the drawer is automatically presumed, with reference to Section 27 of the General Clauses Act (for brevity, the Act), the Delhi High Court referred the expression of the Three Judges Bench in C.C. Alavi Haji (supra) with reference to Section 27 of the Act and 114 of the Indian Evidence Act, and held at paras 20 to 27 thus all accepted by Court that there must be some endorsement on the postal cover of the notice like having left or not being found or refusing service. In the case of D.Vinod Shivappa v. Nanda Belliappa ((2006) 6 SCC
456) notice sent was returned un-served as party not in station and the Supreme Court held that Section 27 of the Act can be invoked to presume service. In C.C. Alavi Hajis case (supra) it was held that the notice returned with endorsement accused out of station, wherein it was observed that there must be feed back in the form of postal endorsement that notice was refused or not taken delivery or the addressee has left and in such cases, it is for the Court to draw an inference that service must be presumed. The word properly in Section 27 of the Act envisages notice being sent to correct address. It is difficult to obtain certificate from postal or courier authorities of delivery, where acknowledgement was not received as to notice served or refused or unavailable and it was for the Court to satisfy whether it amounts to service of notice. There is importance of service of notice on the drawer. There is nothing laid down in this expression as to 7 days waiting is mandatory as per the Rule 74 of the Postal Rules.
17. Even coming to other decision of the Jharkhand High Court in Baij Nath Thakur Vs. The State of Bihar and another (Crl.R.P.No.259 of 2007) at para No.5 it was observed that it is proved that legal notice sent to accused by registered post that was returned back undelievered, was also proved by its final. At para No.11 it was observed that endorsement refer to D.Vinod Shivappas expression in para No.15, which reads as follows:
endorsement made on the envelop that the premises has been found locked or that the addressee was not available at the time when postman went for delivery of the lletter. It may be that the address is correct and even the addressee is available but a wrong endorsement is manipulated by the addressee. In such a case if the facts are proved, it may amount to refusal of the notice.
18. At para No.12 it was observed that complainant stated notice returned due to non-receipt and no where stated accused had deliberately avoided and no witness examined like a postman to prove the fact and held that complainant could not prove deemed service.
19. In fact, this decision is also not an authority as to seven days waiting required or not. So far as the present facts are concerned, as per the expression in C.C. Alavi Hajis case (supra) there is a deemed service from continuous absence. For the purpose of deemed service, it is sufficient to say the date of intimation or the postman went to the address for delivery or absence of or unclaimed or refused. Here, for all practical purposes there is a registered letter posted duly to the correct address for endorsement by the sender. The postal authorities are agents of the sendee to deliver and if that is the case, irrespective of seven days waiting, otherwise required from the internal guidelines and instructions, leave about its statutory force to bind the parties, who sent the notice to whom, the first intimation was dated 19.09.2005 and from there the 15 days time commences, leave about the requirement of waiting for seven days for return back to the sender the cover. When such is the case, even it is reckoned from the date of return i.e., on 24.09.2005, as per the endorsement it is beyond 15 days of statutory waiting for payment for accrual of cause of action and 30 days for filing of the complaint and thereby the trial Court referring the judgment of Honble Supreme Court in Saketh India Ltd., and others Vs. M/s. India Securities Limited and other expressions in this regard as per Section 12 of the Limitation Act and 8 and 9 of the Act, came to the conclusion that the complaint is beyond the limitation period. For this Court while sitting in appeal, there is nothing to interfere in saying the complaint was not filed within statutory time and thereby filed after expiry of the cause of action i.e., one month after accrual of cause of action and is barred by limitation. Accordingly, point No.1 is answered.
20. POINT No.2:
In the result, the Criminal Appeal is dismissed. Miscellaneous Petitions, if any, pending in this appeal shall stand closed.
_________________________________ Dr. JUSTICE B. SIVA SANKARA RAO Date: 04-06-2014