Madras High Court
E.Dhatchinamoorthy vs S.Seenuvasan on 10 June, 2025
Author: G.K.Ilanthiraiyan
Bench: G.K.Ilanthiraiyan
Crl.RC.No.41 of 2023
IN THE HIGH COURT OF JUDICATURE AT MADRAS
RESERVED ON : 04.06.2025
PRONOUNCED ON : 10.06.2025
CORAM:
THE HONOURABLE MR. JUSTICE G.K.ILANTHIRAIYAN
Crl.RC.No.41 of 2023
E.Dhatchinamoorthy ... Petitioner
Versus
S.Seenuvasan ... Respondent
PRAYER: Criminal Revision has been filed under Sections 397 and 401
of the Code of Criminal Procedure praying to call for the records
pertaining to the judgment dated 08.11.2022 in Crl.A.No.40 of 2021 on
the file of the learned II Additional District Judge, Tindivanam and
judgment dated 20.11.2021 in C.C.No.288 of 2016 on the file of the
learned Judicial Magistrate No.1, Tindivanam and set aside the same.
For Petitioner : Mr.A.Ramesh,
Senior Counsel
For Mr.R.Ashwin
For Respondent : Mr.S.Madharkhan
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Crl.RC.No.41 of 2023
ORDER
This Criminal Revision Case has been preferred against the
judgment dated 08.11.2022 passed by the learned II Additional District
Judge, Tindivanam, in Crl.A.No.40 of 2021, confirming the order of
conviction and sentence dated 20.11.2021 passed by the learned Judicial
Magistrate No.1, Tindivanam, in C.C.No.288 of 2016, for the offence
punishable under Section 138 of the Negotiable Instruments Act
(hereinafter referred to as “the NI Act”).
2. The petitioner is an accused in the complaint lodged by the
respondent for the offence punishable under Section 138 of the NI Act,
alleging that the petitioner borrowed a sum of Rs.3,00,000/- and in order
to repay the same, he issued cheque for the said amount. It was presented
for collection and and the same was returned dishonoured for the reason
“funds insufficient”. After issuance of statutory notice, the respondent
lodged complaint before the trial Court and the same has been taken
cognizance in C.C.No.288 of 2016.
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3. After taking cognizance, on the side of the respondent, he
examined P.W.1 & P.W2 and marked documents in Ex.P.1 to Ex.P.8. On
the side of the petitioner, no one was examined and no document has
been marked. On perusal of oral and documentary evidence, the trial
Court convicted the petitioner and sentenced him to undergo six months
simple imprisonment and also awarded compensation to the tune of
cheque amount, in default, to undergo one month simple imprisonment.
Aggrieved by the same, the petitioner filed an appeal in Crl.A.No.40 of
2021 before the appellate Court and the same was dismissed by
confirming the order passed by the trial Court. Hence, the present
revision petition has been filed by the petitioner.
4. The learned Senior Counsel appearing for the petitioner
raised ground that the amount which was borrowed by the petitioner was
not accounted by the respondent and as such it cannot be construed as
legally enforceable debt. In support of his contention, he relied upon the
judgment reported in (2004) 12 SCC 83 in the case of G.Pankajakshi
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Amma & ors Vs. Mathai Mathew. He further contended that the
respondent failed to mark the original cheque before the trial Court. The
respondent only marked a copy of the cheque that too without the
consonant with the provisions under Section 65 of the Evidence Act. The
cheque is a neither primary nor a secondary evidence.
5. The learned counsel appearing for the respondent submitted
that though the amount which was borrowed by the petitioner is not
accounted, it could not be the ground for the petitioner not to repay the
said amount. He also produced the original cheque before this Court
which was misplaced somewhere else during the trial and as such the
respondent could not able to mark the same before the trial Court.
6. Heard the learned counsel appearing on either side and
perused the materials placed before this Court.
7. Admittedly, it is not the case of the petitioner that he did not
borrow any amount from the respondent. The learned Senior Counsel
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appearing for the petitioner emphasised upon that the money which was
borrowed by the petitioner was not accounted by the respondent.
Therefore, the cheque was not issued for any legally enforceable debt.
The unaccounted money can be construed as illegal money. In support of
his contention, he relied upon the judgment reported in (2004) 12 SCC
83 in the case of G.Pankajakshi Amma & ors Vs. Mathai Mathew in
which, the Hon'ble Supreme Court of India held that, if there are
unaccounted transaction, then they are illegal transactions. It is settled
law that in such cases, the loss must be allowed to lie where it falls. For
the unaccounted transactions, the Court could not have lent its hands and
pass a decree.
8. Furthermore, the above case has arisen out of a suit for
recovery of money. The plaintiff earned money from the money lending
business and as such by virtue of Section 9 of the Kerala Moneylenders
Act, 1958, the plaintiff ought to have maintained book of accounts. But
the plaintiff in that case failed to maintain the same. Therefore, the trial
Court dismissed the suit on the ground that he earned money through
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unaccounted transactions and as such, it amounts to illegal transactions.
Consequently, the Hon'ble Supreme Court of India upheld the judgment
of the trial Court.
9. Whereas in the case on hand, the petitioner borrowed a sum
of Rs.3,00,000/- from the respondent and it is not in dispute. The
respondent was doing rice vending business for the past several years
and he earned a sum of Rs.5,00,000/- per month. Further he is an income
tax assessee for the past 30 years. However, the amount which was lent
in favour of the petitioner was not accounted for returns of his income.
Towards the repayment of the said loan amount, the petitioner issued
cheque for a sum of Rs.3,00,000/-. On instructions, the cheque was
presented for collection and the same was returned dishonoured. After
issuance of statutory notice, the respondent filed the present complaint.
10. It is also seen that the respondent refused to receive the legal
notice issued by the respondent. Therefore, the respondent proved his
case that the presumption under Section 138 of the NI Act, that the
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petitioner had issued the cheque for a legally enforceable debt. Strangely,
the petitioner raised a ground that since the said amount was not
accounted for filing return of income tax, the said money is ill-gotten
money and as such, the cheque was not issued for legally enforceable
debt. It is unfortunate to state that when the petitioner borrowed money
and had spent it for his personal purpose and after having been enjoyed
the money and after issuance of cheque towards the repayment of the
said amount, the petitioner cannot take a stand that the money which was
borrowed by him was not accounted for income tax purpose and as such
the said money has to be construed as ill-gotten money. Therefore, the
above judgment cited by the learned Senior Counsel appearing for the
petitioner is not at all applicable to the case on hand. It was held in a
different footing, and the present case is a completely different one. The
above case was a suit for recovery of money, but the present case is the
complaint filed by the respondent to punish the petitioner for the offence
punishable under Section 138 of the NI Act.
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11. It is relevant to extract the provisions under Section 138 of
the NI Act, 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 committed an offence and shall, without prejudice
to any other provision of 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
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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, [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.”
Thus, it is clear that once the petitioner issued cheque knowing fully that
there is no money in his account to honour the same, he is liable to be
punishable for the offence under Section 138 of the NI Act.
12. Admittedly, the petitioner had issued cheque for the sum of
Rs.3,00,000/- and the same was presented for collection. But it was
returned dishonoured for the reason “funds insufficient”. Therefore, the
petitioner has to discharge his initial burden to prove his case as required
under Section 138 of the NI Act. Of course, if at all the respondent had
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failed to account the said money in his return of income, he is liable to be
punishable under the Income Tax Act. He is also liable to pay fine for
non-accounting of his return of income. But the money which was not
accounted by the respondent cannot be construed as ill-gotten money. If
the said stand is applied to every single situation, especially in the cases
of the offence punishable under Section 138 of the NI Act, no one will
ever repay the amount which is borrowed as a loan. Whether the loan
amount is accounted or not is not a botheration of the borrower. Once the
money is borrowed, it has to be repaid by the borrower as agreed.
13. In this case, in order to repay the loan amount, the petitioner
has issued the subject cheque to the respondent and it was returned for
the reason “funds insufficient”. Therefore, it is clear that the petitioner
has had an intention to cheat the respondent by issuing the cheque with
the knowledge that there is no sufficient fund and as such he is liable to
punish for the offence under Section 138 of the NI Act. For the very
same circumstances, this Court has held in Crl.A.No.219 of 2020 dated
12.04.2023 in the case of Sheela Thomas Vs. Molly Joseph as follows:-
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“14. ............. Having admitted that the receipt of
money whether it is accounted or unaccounted money does
not matter for taking cognizance under Section 138 of
N.I.Act, only the genuineness of the drawal of the cheque
and whether the cheque given to discharge the liability
alone matters. Admission in the examination of PW.1, that
her husband has no source of income and he was not
assessed under income tax or the transaction not reflected in
the income tax return all falls to grounds. Since if any
unaccounted money maintained or kept by the complainant,
it is for the Income Tax Authority to take necessary steps.
The person who has borrowed money or received the money
cannot decline to repay the money on the account that the
money is ill-gotten money.”
14. Further the object of the provisions under Section 138 of the
NI Act is to ensure that the commercial and mercantile activities are
conducted in a smooth and healthy manner. Accordingly, the act of
issuance of cheque, with the knowledge that the bank account from
which the cheque is being drawn, has insufficient fund, itself attracts the
offence punishable under Section 138 of the NI Act. Therefore, the trial
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Court and the appellate Court have rightly convicted the petitioner for
the offence under Section 138 of the NI Act.
15. Insofar Ex.P.2, the cheque is concerned, though the
respondent marked xerox copy of the cheque before the trial Court, now
the learned counsel appearing for the respondent produced the original
cheque before this Court and it is verified with Ex.P.2. Both are one and
the same. It was not produced before the trial Court due to misplacement
of the cheque. It would not cause any prejudice to the petitioner and it is
not fatal to the case of the complainant. In fact, the petitioner also
executed a pronote which was marked as Ex.P.1 for the loan borrowed by
the petitioner to the tune of Rs.3,00,000/-. Therefore, the respondent
clearly proved his case for the offence punishable under Section 138 of
the NI Act. Both the trial Court and appellate Court rightly convicted the
petitioner and it doesn't require any interference by this Court and the
Criminal Revision Case fails.
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16. Accordingly, the Criminal Revision Case stands dismissed.
10.06.2025
Index : Yes/No
Neutral citation : Yes/No
Speaking/non-speaking order
rts
To
1.The II Additional District Judge,
Tindivanam.
2.The Judicial Magistrate No.1,
Tindivanam.
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G.K.ILANTHIRAIYAN. J,
rts
10.06.2025
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