Bombay High Court
Bapurao S/O Motiram Mankar vs Shri Vyankatesh Housing Agency on 10 March, 2010
Author: A.P.Bhangale
Bench: A.P.Bhangale
1
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
BENCH AT NAGPUR, NAGPUR.
CRIMINAL APPEAL NO: 554 /2009
Bapurao s/o Motiram Mankar
Aged 68 years, occu: Retired
R/o Raje Raghuji Nagar, Nagpur. ... APPELLANT
v e r s u s
1) Shri Vyankatesh Housing Agency
Nagpur Through Its Proprietor
Shri Mangesh Govindrao Supare
R/o 22, Kawalapeth, Near Railway
Crossing, Old Kamptee Road
H B Nagar, Nagpur.
2) The State of Maharashtra ... ...RESPONDENTs
.......................................................................................................................
Mr C S Kaptan Adv.for appellant
Mr C F Bhagwani, Adv. For Respondent no.1
Mr C.S.Adgokar,APP for Respondent No.2
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CORAM: A.P.BHANGALE, J.
DATED: 10th March, 2010
JUDGMENT :
1 Heard. Admit. The Appeal is taken up for final disposal forthwith, by consent of respective Counsel.
2 By means of this Appeal, the appellant/ (original complainant) ::: Downloaded on - 09/06/2013 15:41:55 ::: 2 challenge judgment and order dated 06th April, 2009 passed in Summary Criminal Case No. 7145 /2008 by learned Judicial Magistrate, First Class, Court No.23, Nagpur (Spl. Court under Section 138 of the Negotiable Instruments Act ) {in short, "the N.I.Act"), whereby respondent No.1
-accused was acquitted of the offence punishable under section 138 of the N.I.Act, on the ground that the complainant failed to prove that the cheuqe bearing No.103442 dated 29.02.2008 drawn for the sum of Rs.1,40,000/-
on the District Central Cooperative Bank Limited, Hudkeshwar Branch, Nagpur was issued for discharge of legally enforceable debt or liability.
3 It is not in dispute that the said cheque had returned dishonoured for "funds insufficient". The notice demanding payment was served, but the accused did not pay the amount demanded by the notice.
4 Facts, briefly are:
The complainant contended that he is a senior citizen, resident of Nagpur.
The accused is having a Housing Agency and is in the business of selling agricultural lands and plots under the name and style "Venkateshwar Housing Agency" at Nagpur. The complainant had intended to purchase Plot No. 29 admeasuring 1648 sq. ft., situated in Khasra No.19 within the Grampanchayat limits of Hudkeshwar, Tah. Nagpur, from the layout of the accused in the name of his daughter Sau, Meenal Shailendra Warthe and had paid sum of Rs. 41,000/- as earnest money. The complainant paid a total sum of Rs.1,40,000/- towards intended purchase deed, agreeing to pay the balance purchase money at the time of the sale deed. Since the ::: Downloaded on - 09/06/2013 15:41:55 ::: 3 accused expressed inability to execute the sale deed on the ground that he has sold the plot to third person, in lieu thereof, the accused had issued the cheque in question with promise and assurance that it would be honoured, which returned dishonoured for non-payment, due to insufficiency of funds and remained unpaid despite demand notice dated 10.4.2008 in writing served upon the respondent/accused on 21.4.2009. The accused failed to pay within stipulated period. Hence the complaint was filed on 17.5.2008.
5 The accused denied the charge on the defence that the complainant had filed false case against him.
6 Learned Advocate for the appellant submitted with reference to evidence that the plot was agreed to be sold for a sum of Rs.1,64,800/-
( vide agreement Exh.30). The earnest money of Rs. 41,000/- was paid by cheque ; whereas balance amount was payable by 25 installments of Rs.
4000/- each and Rs.23,800/- payable at the time of the execution of the sale deed. The agreement was signed by the accused as Proprietor of the Vyankatesh Housing Agency and he had also acknowledged the receipt of Rs. 41,000/- by making endorsement thereon. The complainant had signed on behalf of his daughter. Thus, intending purchaser Meenal had paid some amounts vide Exhs. 25 to 29 acknowledged by the accused.
Since the agreement could not be materialized as a sale deed as the plot which is subject was sold by the accused to some third person, the settlement was arrived at by which, the accused agreed to pay a sum of Rs.1,40,000/-
to the intending purchaser- Meenal as final settlement of her claim and the ::: Downloaded on - 09/06/2013 15:41:55 ::: 4 cheque in question (Exh.24) was given by him to the complainant as payee in discharge of legal liability to repay. The complainant as a father of intending purchaser Meenal was named as payee on the cheque and in view of the ruling in Shankar Finance Investments vs. State of Andhra Pradesh: (2008) 8 SCC 536, was required to file the complaint in view of the Section 142 of the N.I.Act as payee or holder in due course. It was next contended that since one of the conditions to constitute the offence of section 138 of the N.I. Act is that a cheque should have been drawn for the discharge of a legally enforceable "debt or other liability" the complainant cannot be disabled from legally enforcing the debt or liability which arose from the agreement which could not lead to execution of the sale deed due to fault of the accused to fully perform his part in the agreement to execute the sale deed. Section 138 of the N.I. Act, no doubt, contemplates penal liability only when the cheque is drawn by a person "for the discharge, in whole or in part, of any debt or other liability". Explanation to Section 138 says that " for the purposes of this Section 'debt or other liability' means a legally enforceable debt or liability. Therefore, the contention is quite forceful that for the commission of offence under section 138 of the N. I. Act, the cheque should have been drawn for discharging a legally enforceable debt or other liability. The next contention is that the debt would not cease to be legally enforceable merely because the transaction was intended by the complainant in the name and for the benefit of his daughter. It is contended that it was not illegal for the father who out of natural love and affection for his ::: Downloaded on - 09/06/2013 15:41:55 ::: 5 daughter, decided to pay under an agreement intending transaction of execution of sale deed in her favour.
7 In this context, a reference was made to Section 139 of the N I Act, which is couched in the following terms:
"139 :Preusmption in favour of holder - It shall be presumed unless 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".
8 Thus, when a cheque is received by a holder, the Court has to presume that (1) it is cheque of the nature referred to in Section 138 ; and (2) such a cheque was received for the discharge of a legally enforceable debt or liability. It is a legislative mandate that the Court should proceed with the assumption that such cheque was received for the discharge of a legally enforceable debt or other liability until the drawer proves that it is not so. Learned counsel contended that the burden of proof cast on the drawer of the cheque would stand discharged and the presumption would stand rebutted only when it is shown that the agreement was not enforceable by the intending purchaser, as then no debt / liability can be legally enforced against the accused.
9 Learned counsel relied upon statutory presumptions under sections 118 and 139 of the N.I. Act and ruling in Balaji Agencies Pvt.
Ltd. vs. Vilas Bagi & another reported in 2000 Cri.L.J. 4250 (Bom) to ::: Downloaded on - 09/06/2013 15:41:55 ::: 6 substantiate claim of the complainant to argue that the accused was liable to be convicted as under section 138 of the Act any cheque drawn by a person on an account maintained by him with Bank for payment of any amount of money to another person for the discharge, in whole or in part of any debt or liability, is returned by the Bank unpaid, is made enforceable, Learned Advocate for the appellant, further, argued that in view of statutory presumption in favour of the complainant under section 118 of the N.I.Act until contrary is proved, it must have been presumed by the learned trial Magistrate that the cheque was drawn for consideration and it was negotiated for consideration and the complainant was entitled to enforce the cheque as holder in due course as under Section 139 of the Act, it shall be presumed, unless contrary is proved that the holder of a cheque received the cheque for discharge of any debt or liability. Nothing was pointed out which prohibits enforcement of the liability arising from the transaction for an agreement to sell which could not culminate into sale deed as intended by the parties. In this case, it is contended that sale deed could not be executed due to the fault of the accused. It is true that the complainant's daughter was intended purchaser. But that does not mean that the liability created has become unenforceable by the complainant. Due to natural love and affection father may pay on behalf of daughter intending that she may be beneficiary under the intended sale deed. Notwithstanding the non-
execution of the sale deed for fault of the accused, he cannot be heard to say that the debt or liability to repay the sums advanced is not legally ::: Downloaded on - 09/06/2013 15:41:55 ::: 7 unenforceable. Enforceability of a debt or liability is not to be tested on the probability of the application of the prohibition of Benami transactions Act on the sale deed had it been executed pursuant to the agreement to sell. The penal liability under section 138 of the N.I. Act arise not merely because the cheque drawn upon the Bank account for certain sum of money, is dishonored but by non-payment followed by deliberate failure to pay the sum within the stipulated statutory period pursuant to demand notice in writing served upon the accused. This is touchstone of the penal liability once the statutory procedure of issuing demand notice in writing provided for realization of the sum payable under the cheque is followed.
10 Thus learned Advocate for the appellant argued that the complainant is legally entitled to recover the amount payable under cheque as repayment of Rs.1,40,000/- which were received by the accused under the agreement to sell. According to learned Advocate for the appellant, the accused had failed to rebut the statutory presumptions available to the complainant in this case. He criticized the decision of acquittal by the trial Court as unreasonable and prayed for allowing the appeal.
11 On the other hand, learned Advocate for the respondent supported the judgment and order of the trial Magistrate and submitted that the acquittal was proper. Learned Advocate made reference to the ruling in Krishna Janardhan Bhat vs. Dattatraya G.Hegde reported in 2008 Al MR (Cri) 1164 (SC) to argue that existence of legally recoverable debt is not a matter of presumption under section 139 of the Act. It was for the ::: Downloaded on - 09/06/2013 15:41:55 ::: 8 complainant to prove the existence of legally enforceable debt or liability. He further argued that presumption of innocence is human right and the trial Court did take a reasonable view of the facts to dismiss the complaint and acquit the accused.
12 It is no doubt true that in a criminal trial one has to start with the presumption of innocence in favour of the accused which is also regarded as human right because no one can be convicted and punished merely on the ground of suspicion howsoever strong it may be. The prosecution is required to prove offence beyond reasonable doubt. In special prosecutions based upon dishonoured cheque, offence punishable under section 138 of the N.I. Act, however, the complainant is aided by the statutory presumptions which are self-contained under sections 118 and 139 of the Act. The complainant is required to prove that the cheque was drawn by the accused upon his account in the Bank for a certain sum of money on a certain date which returned dishonoured for non-payment on account of reason i.e. insufficient funds etc., and the accused has failed to pay the said amount despite service of demand notice in writing upon him, within stipulated period. Once the primary facts as above, are averred and proved by the complainant, in such case, as required by the penal provision in Section 138 of the Act, the statutory presumptions arising are required to be rebutted by the accused by adducing satisfactory evidence which is to be tested on preponderance of probabilities. Such evidence may be by production of documents to disprove the complainant's version or by citing ::: Downloaded on - 09/06/2013 15:41:55 ::: 9 material elicited from the cross-examination of the complainant and his witnesses, if any. The accused may not enter in the witness box if he can dislodge the statutory presumptions otherwise. Learned trial Magistrate appears to have ignored vital aspects in the case that the agreement (Exh.30) was duly proved by the complainant as he is one of the executant of the document and knew contents of the document the agreement is also corroborated by the receipts (Exhs. 25 to 28) which were not disputed.
Cheque in question (Exh.24) was admittedly issued under the signature of the accused, before forming conclusive opinion as to acquittal of the accused which, of course, resulted in miscarriage of justice.
13 Under Section 139 of the Act, under the above-said circumstances, the Court has to raise a presumption that the holder of the cheque received the cheque for the discharge of any debt or liability; but it is a rebuttable one. The accused can establish that the debt or liability was not legally enforceable for to uproot the prosecution. Under Section 139 of the Act, burden lies on the drawer of the cheque to rule out the existence of the debtor-creditor relationship. The use of the phrase "until contrary is proved" in Sec. 118 of the N.I. Act and further use of the words "unless the contrary is proved" in Section 118 of the Act read with definition of "may presume" and "shall presume" as given in Section 4 of the Evidence Act, make it clear that presumption to be raised under both the provisions are rebuttable. When a presumption is rebuttable, it only points out that the party on whom lies the duty of going forward with evidence, on the fact ::: Downloaded on - 09/06/2013 15:41:55 ::: 10 presumed and when that party has produced evidence fairly and reasonably tending to show that the real fact is not as presumed, the purpose of the presumption is over. But it is settled law that to rebut the statutory presumptions an accused is not expected to prove his defence beyond reasonable doubt, as is expected of the complainant in a criminal trial to prove offence. The accused may adduce evidence to prove that there was no debt or liability to be discharged by him. At the same time,it has to be borne in mind that bare denial of the passing of the consideration and existence of debt/liability, apparently would not serve the purpose of the accused to seek dismissal of the complaint. Something which is probable has to be brought on record satisfactorily for getting the burden of proof shifted back to the complainant. If case of the complainant is false then the accused as any reasonable ordinary prudent person is bound to react sharply by replying notice to the accused. Demand notice in writing is served upon the accused is itself a strong circumstance in favour of the complainant. The fact that the accused did not stop payment of the cheque through his Bank nor reported alleged misuse of the cheque to the police must go against him. In Gorantla Venkateswara Rao vs. Kolla Veera Raghava & another reported in 2006 Cri.L.J. 1, the Andhra Pradesh High Court held that the failure of the accused to give reply to the legal notice issued from the complainant is one of the strong circumstance to draw an inference that the accused had borrowed the amount from the complainant and the cheque was issued towards payment of the legally enforceable debt. If the complainant has misused ::: Downloaded on - 09/06/2013 15:41:55 ::: 11 the cheque or fabricated it, the accused is bound to immediately protest and threaten the complainant with legal action and would not wait until the conclusion of the trial without taking any action against the complainant.
Adverse inference is, therefore, required to be taken against the accused for not replying the notice. In Hiten P.Dalal vs.Batindranath Banerjee reported in (2001) 6 SCC 16, the three-Judge Bench of the Apex Court held that section 138 and 139 of the Act require that the Court " shall presume" the liability of the drawer of the cheque for the amount for which cheque is drawn and in K Bhaskaran vs.Sankaran Vidyan Balan and another reported in (1997) 7 SCC 510, the Hon'ble Supreme Court observed thus:
" As the signature in the cheque is admitted to be
that of the accused, the presumption envisaged in
section 118 of the Act can legally be inferred that the
cheque was made or drawn for consideration on the
date which the cheque bears. Section 139 enjoins
the Court to presume that the holder of the cheque
received it for the discharge of any debt or liability.
The burden was upon the accused to rebut that
presumption. The defence evidence must be such
which the Court can believe the defence to exist or
consider its existence as reasonable probable, the
standard of reasonability being that of the prudent
person. To discharge onus, it may not be essential
for the accused to enter in the witness box to depose
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12
as he can rebut the presumption by cross-examining
the complainant and his witnesses , if any, to prove
defence upon preponderance of probabilities. Thus,
onus as expected to be discharged by the accused was
not discharged in this case. Once it is held that the
accused had failed to rebut the statutory
presumptions, it ought to be concluded that the
presumption itself was tantamount to proof of the
case of the complainant".
14
Looking into the submissions at the Bar in the light of the
relevant legal provisions, it seems that the trial Court did notice the fact that cheque in question issued was signed by the drawer ( accused ) drawn on the Nagpur District Central Cooperative Bank Ltd., Hudkeshwar Branch and that there is presumption in favour of the complainant in view of Section 139 of the N I Act. However, it appears that the learned trial Magistrate has misled herself. The logic of the trial Court that the accused has denied the agreement to sell (Exh.30) and his signature and, therefore, it is not proved, appears strange, particularly when presumption statutorily available to the complainant were not rebutted by the accused by adducing satisfactory evidence to the contrary. Section 138 of the Act aims at punishing unscrupulous drawers of cheques who though purport to discharge their liability by issuing cheque, have no real intention to pay. Trickster drawer may find out ways and means to defeat the honest payee by avoiding payment. The trial Magistrate must be on guard to prevent miscarriage of ::: Downloaded on - 09/06/2013 15:41:55 ::: 13 justice. Learned trial Magistrate ought to have noticed that the obligation on the part of the complainant stood discharged with the help of statutory presumptions of law unless the accused adduced satisfactory evidence to establish the reasonable possibility of the no-existence of the presumed fact.
15 I find the requirements of Section 138 of the Act have sufficiently been proved in order to reverse the impugned judgment and order of acquittal passed in favour of the accused. The acquittal order appears unreasonable, contrary to the record in the facts and circumstances of the case. I find the respondent no.1 /accused guilty of offence punishable under section 138 of the N.I. Act and and convict him thereunder.
16. On the question of sentence, it is not necessary to insist upon incarceration of the accused having regard to nature of offence. The accused is sentenced to undergo imprisonment till rising of the Court and to pay compensation in the sum of Rs.1,50,000/-, the amount covered by cheque in question plus Rs.10,000/- as cost for prosecuting the accused payable under section 357 (3) Cr.P.C. to the complainant, within two months from the date of this judgment. In default of payment of compensation, the accused shall undergo simple imprisonment for six months. The accused shall appear before the learned Judicial Magistrate, First Class, 23rd (Special Court under section1 38 of the Act) at Nagpur and his surety to produce him on 15.3.2010. Compensation if not paid, shall be recovered as fine. Appeal is ::: Downloaded on - 09/06/2013 15:41:55 ::: 14 allowed accordingly.
JUDGE sahare ::: Downloaded on - 09/06/2013 15:41:55 :::