HIGH COURT FOR THE STATE OF TELANGANA
AT HYDERABAD
*****
Criminal Appeal No.1549 OF 2009
Between:
M/s.Coromandel Fertilisers Ltd., ... Appellant
And
M/s.H.P.M.Industries Limited,
rep. by its Managing Director
and others. ... Respondents
DATE OF JUDGMENT PRONOUNCED: 27.10.2022
Submitted for approval.
THE HON'BLE SRI JUSTICE K.SURENDER
1 Whether Reporters of Local
newspapers may be allowed to Yes/No
see the Judgments?
2 Whether the copies of judgment
may be marked to Law Yes/No
Reporters/Journals
3 Whether Their
Ladyship/Lordship wish to see Yes/No
the fair copy of the Judgment?
__________________
K.SURENDER, J
2
* THE HON'BLE SRI JUSTICE K. SURENDER
+ CRL.A. No. 1549 of 2009
% Dated 27.10.2022
# M/s.Coromandel Fertilisers Ltd., ... Appellant
And
$ M/s.H.P.M.Industries Limited,
rep. by its Managing Director
and others ... Respondents
! Counsel for the Appellant: B.Nalin Kumar
^ Counsel for the Respondent: Public Prosecutor
>HEAD NOTE:
? Cases referred
(2013) 11 supreme court Cases 688
3
HON'BLE SRI JUSTICE K.SURENDER
CRIMINAL APPEAL No.1549 of 2009
JUDGMENT:
1. The appellant company being aggrieved by the judgment of acquittal passed by the XI Additional Chief Metropolitan Magistrate, Secunderabad in CC No.1768 of 2005 dated 28.07.2009 acquitting the respondents 1 to 3 for the offence under Section 138 of the Negotiable Instruments Act, present appeal is filed.
2. The case of the complainant/appellant is that the appellant company used to supply pesticides on credit basis to the 1st respondent company, of which the 2nd and 3rd respondents are Managing Director and Director respectively. During the course of business, supply of pesticides was on credit basis. As per the accounts maintained by the appellant company, there was a debt of Rs.38,08,400/- for which, the respondents issued in all six cheques, out of which three cheques bearing Nos.316404, 316406 and 316409 pertains to the subject matter of CC No.1768 of 2005 and cheque bearing Nos.316410, 316411 and 316412 are subject matter of CC No.1769 of 2005. 4 Since the company filed two separate cases for three cheques each, accordingly, the learned Magistrate tried the offences and delivered separate judgments.
3. The cheque bearing Nos. 316404, 316406 and 316409 dated 01.10.2005 for Rs.20,00,000/- were presented for clearance before ICICI Bank Limited, Begumpet Branch, but the same were returned dishonoured with endorsement 'funds insufficient' on 18.10.2005. The complainant also issued letter dated 31.10.2005 calling upon the respondents to pay the amount of dishonoured cheques within 15 days, but having received the said notices, the respondents failed to pay the amount covered by the cheques.
4. The main grounds on which the learned Magistrate acquitted the respondents are as follows: i) P.W.1 admitted that he does not know the directors of the complainant company and cannot say who signed in the three cheques, as such, P.W.1 was deposing without having any personal knowledge; ii) three cheques were issued as security when the material was being supplied to them on credit basis and there is no outstanding against said cheques in view of the subsequent transactions in between the appellant company 5 and the 1st respondent company; iii) the complainant company admitted that there were replacement of cheques which were given by the respondents and the complainant company also admitted that the dishonoured cheques were presented erroneously.
5. Learned counsel appearing for the appellant company would submit that the transactions in question are admitted and also the outstanding is admitted by D.W.1 in the course of cross-examination. The 3rd respondent namely Ajay Agarwal entered into witness box and categorically admitted during cross-examination that A1 company is liable to pay an amount of Rs.38,00,000/- to the complainant company. In the back ground of the said admission by the 3rd respondent, having entered into the witness box, it is sufficient to infer outstanding liability. Though cheques were subsequently issued by the respondent company replacing the cheques in question, on whose basis the cases are being prosecuted, it will not make any differences since there was an outstanding and such outstanding can be claimed in the cheques in question also. For the said reason, the learned Magistrate erred in acquitting the 6 respondents for the offence under Section 138 of the Negotiable Instruments Act and it is a fit case wherein this Court has to interfere with the order of acquittal.
6. On the other hand, learned counsel appearing on behalf of the respondents/accused would submit that there is clear communication between the complainant company and the 1st respondent company in which complainant company has admitted in Ex.D6 that replaced cheques were given and the cheques in question were presented erroneously. When once the said fact is admitted, the liability on the cheques in the present case no longer exists and the very prosecution on the said cheques is incorrect. The learned Magistrate has given cogent reasons for acquitting the respondents/accused, for which reason, no interference is called for in the appeals against acquittals.
7. Section 138 of the Negotiable Instruments Act reads as follows:
"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 7 committed an offence and shall, without prejudice to any other provisions of 19 this Act, be punished with imprisonment for [a term which may be extended to two years], 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, 20 [within thirty 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.]"
8. The prosecution under Section 138 of the Negotiable Instruments Act can only be maintained in the event of an outstanding on the cheque which is issued by the person to discharge his liability. In the present case, even according to the appellant company, the outstanding pertained to the cheques issued replacing the present cheques. When it is admitted by the appellant company that the cheques in question were erroneously presented and accepted the replaced cheques, any liability would arise on the replaced cheques and not the present cheques, which according to the complainant company were issued prior in time. The outstanding liability, if any has been transferred, would be on the cheques that have been subsequently issued and accepted by the Complainant company. As seen from the 8 transactions, both the complainant company and the 1st respondent company have agreed and accepted to continue with their business and the liability was transferred in the subsequent cheques which were issued by accused company. Even admitting that there was a liability, such prosecution under Section 138 of the Act would arise in the event of the replaced cheques being returned without being paid by the complainant banker. The argument that the complainant company can choose to prosecute on the old cheques though the cheques were replaced and accepted, cannot be accepted.
9. The Hon'ble Supreme Court in the case of Radhakrishna Nagesh v. State of Andhra Pradesh1 held that under the Indian criminal jurisprudence, the accused has two fundamental protections available to him in a criminal trial or investigation. Firstly, he is presumed to be innocent till proved guilty and secondly that he is entitled to a fair trial and investigation. Both these facets attain even greater significance where the accused has a judgment of acquittal 1 (2013) 11 supreme court Cases 688 9 in his favour. A judgment of acquittal enhances the presumption of innocence of the accused and in some cases, it may even indicate a false implication. But then, this has to be established on record of the Court.
10. In view of above facts and circumstances, this Court finds no reasons to reverse the order of acquittal recorded by the learned Magistrate.
11. Accordingly, the Criminal Appeal is dismissed.
__________________ K.SURENDER, J Date: 27.10.2022 Note: LR copy to be marked.
B/o.kvs 10 HON'BLE SRI JUSTICE K.SURENDER CRIMINAL APPEAL No.1549 of 2009 Date: 27.10.2022.
kvs 11