HON'BLE SRI JUSTICE A.SANTHOSH REDDY
CRL.R.C.No.880 OF 2019
JUDMGENT:
This criminal revision case is directed against the judgment
dated 25.07.2019 in Crl.A.No.510 of 2017, on the file of the
II-Additional Metropolitan Sessions Judge, Hyderabad, wherein
the said appeal was dismissed, confirming the conviction of the
revision petitioner-accused for the offence under Section 138 of the
Negotiable Instruments Act (for short 'the NI Act') and sentence of
simple imprisonment for a period of six months and fine imposed
by the learned XIV-Additional Judge-cum-XVIII Additional Chief
Metropolitan Magistrate, Erramanzil, Hyderabad in C.C.No.354 of
2016.
2. Heard the learned counsel for the revision petitioner-accused
and learned counsel for the first respondent-complainant. Perused
the material on record.
3. The first respondent filed a complaint against the revision petitioner (hereinafter called 'the accused') before the XVII-Additional Chief Metropolitan Magistrate, Hyderabad alleging that the complainant and the accused are acquainted with 2 each other and out of the said acquaintance, the complainant advanced a total amount of Rs.7 lakhs by way of hand loan to the accused for the purpose of meeting personal and business necessities under different spells and the accused promised to repay the entire amount within a period of six months. After repeated demands, the accused had issued three cheques for Rs.2 lakhs each and another cheque for Rs. 1 lakh, totalling to Rs.7 lakhs, drawn on State Bank of India, Lalaguda Branch, Secunderabad towards repayment of the hand loan. When the complainant presented the said cheques, the same were returned unpaid by her banker due to 'funds insufficient' vide cheque return memo dated 06.02.2016. Later, the complainant got issued a legal notice to the accused on 03.03.2016. The accused, having received the said notice, issued a reply dated 11.03.2016. Thereafter, complaint was filed. The learned Magistrate has taken cognizance of the same for the offence under Section 138 of the NI Act against the petitioner and registered the same as C.C.No.354 of 2016. The accused denied the offence and pleaded not guilty.
4. In support of her claim, the complainant examined herself as P.W.1 and marked Exs.P-1 to P-18. No oral evidence was adduced 3 on behalf of the accused, but Exs.D-1 and D-2 were marked. On a consideration of the evidence available on record, the learned Magistrate, having observed that the accused had taken the plea that he filed insolvency petition and as such the offence under Section 138 of the NI Act is not maintainable, found that the accused cannot escape from the liability under the NI Act unless he is declared as insolvent by the court and found the accused guilty of the offence under Section 138 of the NI Act and, accordingly, convicted her and imposed a sentence of simple imprisonment for six months and fine of Rs.7 lakhs to be payable within one month from the date of judgment, in default to suffer simple imprisonment for a period of six months. Aggrieved and dissatisfied with the judgment passed by the trial court, the accused preferred an appeal before the II-Additional Metropolitan Sessions Judge, Hyderabad. The learned Sessions Judge, after hearing both the counsel and on re-appraisal of the entire material on record, confirmed the conviction and sentence of the accused for the offence under Section 138 of the NI Act, but reduced the default sentence from six months to one and half months. Aggrieved, the present revision by the accused.
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5. Learned counsel for the petitioner contends that there is no legally enforceable debt against the alleged cheques and the complainant failed to prove that the accused borrowed the said amount of Rs.7 lakhs. He further contends that the accused was declared as insolvent by the Additional Judge, City Small Causes Court, Hyderabad by order dated 20.04.2017 in I.P.No.64 of 2015 and hence he is not liable to face consequences under the NI Act.
6. Per contra, the learned counsel for the first respondent submits that both the courts below have appreciated the evidence, both oral and documentary, in proper perspective and had rightly held that the complainant proved that the accused, having received hand loan amount of Rs.7 lakhs and in discharge of the said amount, issued cheques and on their presentation were dishonoured and thereby found the accused guilty of the offence under Section 138 of the NI Act. He further submits that there are no merits in the revision and prayed to dismiss the same.
7. A perusal of the evidence adduced by the complainant, both oral and documentary, it is evident that the accused in the insolvency petition filed before the Additional Judge, City Small 5 Causes Court, Hyderabad admitted that she is indebted to the complaint to a tune of Rs.7 lakhs. The accused further categorically admitted that he she had issued cheques. The claim of the accused is that they were issued towards security for the amounts borrowed by her and the said cheques were misused by the complainant. Therefore, once the accused had admitted issuance of cheques, the presumption is that there exists a legally enforceable debt or liability under Section 139 of the NI Act.
8. In K.N. BEENA v. MUNIYAPPAN1, it is observed and held by the Hon'ble Apex Court that under Section 118 of the NI Act, unless the contrary is proved, it is to be presumed that the negotiable instruments (including a cheque) had been made or drawn for consideration. It is further observed and held that under Section 139, the Court has to presume, unless the contrary is proved, that the holder of the cheque received the cheque for discharge, in whole or in part, of a debt or liability. It is further observed that thus in complaints under Section 138, the Court has to presume that the cheque had been issued for a debt or liability. This presumption is rebuttable. However, the burden of proving 1 (2001) 8 SCC 458 6 that the cheque has not been issued for a debt or liability is on the accused.
9. Keeping the principles laid down by the Hon'ble Apex Court Court in the above decision, the accused himself had admitted that the cheques were issued by her. Therefore, the presumption under Section 139 of the NI Act that there exists a legally enforceable debt or liability comes in support of the complainant. However, the said presumption is rebuttable in nature and the accused is required to lead evidence to rebut such presumption. The accused also has to lead evidence to prove that the cheques were issued only towards security. Admittedly, the accused failed to rebut the presumption by adducing any oral or documentary evidence in support of her contention to prove the above said facts. Therefore, both the courts below have rightly held that the accused issued the cheques towards discharge of a legally enforceable debt and when presented they were returned dishonoured due to insufficient funds. The complainant after complying with the statutory requirements under the NI Act got issued legal notice and the accused, having received the same, failed to make the payment and, therefore, the courts below have rightly come to the 7 conclusion towards guilt of the accused for the offence under Section 138 of the NI Act.
10. The other ground raised by learned counsel for the revision petitioner is that the Additional Judge, City Small Causes Court, Hyderabad by order dated 20.04.2017 in I.P.No.64 of 2015 declared the revision petitioner as insolvent and she cannot be prosecuted under Section 138 of the NIT Act. Undisputedly, there is no prohibition either in the Insolvency Act or in the NI Act for the complainant to approach the criminal court to take penal action against the accused for the offence already committed under Section 138 of the NI Act either because the insolvency proceedings are pending or even she was declared as an insolvent. It is settled principle of law that the protection given under Sections 29 and 31 of the Provisional Insolvency Act is extended to the debtor in respect of civil detention and civil arrest alone and the same would not cover the proceedings under Section 138 of the NI Act. It appears that the courts below have considered the said contentions in the judgments and the contention of the learned counsel on above aspects, is not acceptable.
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11. For the foregoing reasons, both the courts below on appreciation of evidence available on record have rightly concluded that the accused failed to discharge the legally enforceable debt and in discharge of the same, issued the cheques and the same when presented were returned disohoured and the ingredients of the offence under Section 138 of the NI Act are proved by the complainant and had rightly convicted the revision petitioner.
12. Therefore, I do not find any justifiable grounds to interfere with the concurrent findings of the courts below, including the sentence imposed by the trial court and as confirmed by the appellate court.
13. The criminal revision case is, accordingly, dismissed.
14. Pending miscellaneous petitions, if any, stand closed.
_______________________ A.SANTHOSH REDDY, J 23.08.2022 Lrkm