Prahlad Sharma vs Dipika Sharma And Ano
2022 Latest Caselaw 51 Sikkim

               THE HIGH COURT OF SIKKIM : GANGTOK
                              (Criminal Revisional Jurisdiction)
                                     DATED : 8th July, 2022
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   SINGLE BENCH : THE HON'BLE MRS. JUSTICE MEENAKSHI MADAN RAI, JUDGE
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                               Crl.Rev.P. No.04 of 2020
                Petitioner               :             Prahlad Sharma

                                                           versus

                Respondents              :       Dipika Sharma and Another

                 Petition under Sections 397 and 401 read with
            Section 482 of the Code of Criminal Procedure, 1973.
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          Appearance
               Mr. Jorgay Namka and Mr. Simeon Subba, Advocates for the
               Petitioner.

               Mr. Bhusan Nepal, Advocate for the Respondent No.1.

               Mr. Yadev Sharma, Additional Public Prosecutor with Mr. Sujan
               Sunwar, Assistant Public Prosecutor for the Respondent No.2.
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                                   JUDGMENT

Meenakshi Madan Rai, J.

1(i). The Petitioner assails the Judgment dated 20-06-2020,

in Criminal Appeal Case No.01 of 2019 of the Court of Learned

Sessions Judge, South Sikkim, at Namchi which upheld the

Judgment of the Learned Chief Judicial Magistrate, South Sikkim,

at Namchi in Private Complaint Case No.07 of 2018. The Learned

Magistrate had convicted the Petitioner herein under Section 138 of

the Negotiable Instruments Act, (for short, the "NI Act") 1881 and

sentenced him to pay a fine of Rs.4,00,000/- (Rupees four lakhs)

only, within a period of two months from 31-12-2018 with a default

clause of imprisonment.

(ii) The facts briefly stated are that an Agreement for sale

for a Flat situated at Siliguri, West Bengal belonging to the

Prahlad Sharma vs. Dipika Sharma and Another

Respondent No.1 (hereinafter, "R1"), to be purchased by the

Petitioner was entered into between them on 02-06-2017, for a

consideration amount of Rs.30,00,000/- (Rupees thirty lakhs) only.

Towards this an advance of Rs.6,00,000/- (Rupees six lakhs) only,

was paid by the Petitioner to R1 on 02-06-2017. It was agreed

between the parties that the entire consideration amount was to be

paid by the Petitioner to R1 within a period of three months from

the date of agreement and the period for total payment would not

exceed four months. In partial payment thereof, the Petitioner

issued two account payee cheques of Rs.2,00,000/- (Rupees two

lakhs) only, each, dated 19-01-2018 (Exhibit 1) and 22-01-2018

(Exhibit 2) respectively, in favour of R1 who presented the cheques

to the State Bank of India, Namchi Branch, South Sikkim on 30-01-

2018. Both the cheques came to be dishonoured by the Bank with

the remark "insufficient fund". Pursuant thereto, R1 sent two Legal

Notices, the first one dated 25-01-2018, being Exhibit 5, posted on

01-02-2018. Exhibit 10, the postal receipt indicated that the Notice

Exhibit 5 was posted only on 01-02-2018. Exhibit 11, being the

"track consignment" of the Notice. The second Notice, Exhibit 6,

dated 08-02-2018, was sent on 09-02-2018, Exhibit 8 is the "track

consignment" of the said Notice. According to R1, the Petitioner

instead of paying the amounts of the dishounoured cheques

responded to the Legal Notice, Exhibit 6, by his Notice Exhibit 9

dated 22-02-2018, contending that Exhibits 1 and 2 were

dishonoured intentionally on his instructions to the Bank on

account of the unilateral cancellation of the agreement between

them by the R1, vide Exhibit 5.

Prahlad Sharma vs. Dipika Sharma and Another

2. The Learned Court of Chief Judicial Magistrate in its

Judgment dated 31-12-2018, in Private Complaint Case No.07 of

2018, which was impugned before the Court of the Learned

Sessions Judge, South Sikkim, at Namchi, inter alia observed that

in terms of Section 4 of the Indian Contract Act, (for short, the

"Contract Act") 1872, as to when communication is complete, the

Section provides that a communication of revocation is complete

against the person who makes it, when it is put into a course of

transmission to the person to whom it is made, so as to be out of

the power of the person who makes it. Hence, the communication

vide Exhibit 5 was not complete when the cheques bounced. That,

the defence of the Petitioner herein, that the two cheques were

returned unpaid on account of his instructions to the Bank to stop

payment is belied by the fact that the Bank's return Memos

Exhibits 3 and 4 stated "insufficient fund" and "not payment

stopped by the drawer".

3(i). The Learned Magisterial Court also disbelieved the case

of the Petitioner that the cheques were handed over by way of

security and concluded that the accused had failed to rebut the

presumption as enshrined in Section 139 of the NI Act and

convicted the Petitioner herein vide Order on sentence dated 31-

12-2018 which inter alia is extracted hereinbelow;

"4. ............................................................................................. However, considering the financial condition of the convict, this Court deems it in the interest of justice to impose a sentence of fine of rupees 4,00,000/- (Rupees Four Lakhs only) to be paid to the Complainant within a period of 2 months from today. Further in case of failure to pay the amount, the convict shall be sentenced to simple imprisonment of 12 months."

The Learned Sessions Judge, South Sikkim, at Namchi in its

impugned Judgment dated 20-06-2020 while upholding the

Prahlad Sharma vs. Dipika Sharma and Another

Judgment of the Learned Magisterial Court however did not discuss

Section 4 of the Contract Act.

(ii) Before this Court, Learned Counsel for the Petitioner

reiterated the argument that there was no legally enforceable debt

by the Petitioner towards R1 when she presented the cheques

Exhibits 1 and 2 as she had terminated the agreement between

them by her Notice dated 25-01-2018. The cheques was presented

before the Bank on 30-01-2018 post the termination of agreement

on 25-01-2018. Besides the cheques were handed over to the R1

by way of future security. Hence, the Learned Courts below were in

error in convicting the Petitioner.

4(i). Per contra Learned Counsel for the R1 contended that

when the cheques were presented the agreement was not

terminated in view of the fact that the Notice although dated 25-

01-2018 was posted only on 01-02-2018, reliance was placed on

Purna Kumar Gurung vs. Ankit Sarda1 and Sancha Bahadur Subba vs.

Ramesh Sharma2 which deals with legal liability and on Kalamani Tex

and Another vs. P. Balasubramanian3. On the question as to when a

contract is terminated between the parties reliance was placed on

Bir Singh vs. Mukesh Kumar4. That, in view of the legally enforceable

debt there is no requirement of interference in the impugned

judgment of the Learned Sessions Judge, South Sikkim, at Namchi.

(ii) I have heard Learned Counsel for the parties at length

and perused the pleadings and evidence on record and the

citations made at bar.

SLR (2018) SIKKIM 1065

SLR (2020) SIKKIM 158

(2021) SCC Online 75

(2019) 4 SCC 197

Prahlad Sharma vs. Dipika Sharma and Another

(iii) The only question for consideration before this Court is

whether a legally valid debt or liability existed against the

Petitioner towards R1 in view of Exhibit 5, dated 25-01-2018,

posted on 01-02-2018.

5. In Bhagwandas Goverdhandas Kedia vs. Girdharilal

Parshottamdas and Co. and Others5, the Hon'ble Supreme Court while

discussing Section 4 of the Contract Act inter alia observed that it

will be seen that the communication of a proposal is complete

when it comes to the knowledge of the person to whom it is made

but a different rule is made about acceptance. Communication of

an acceptance is complete in two ways - (1) against the proposer

when it is put in the course of transmission so as to be out of the

power of the acceptor; (2) as against the acceptor when it comes

to the knowledge of the proposer.

6(i). The observation of the Learned Chief Judicial

Magistrate Court cannot be faulted with regard to the provisions of

Section 4 of the Contract Act. It is clear that only once the Notice is

posted will the agreement be determined between the parties.

Undoubtedly, the Notice Exhibit 1 is dated 25-01-2018, Exhibit 11

stands testimony to the fact that it was booked in the post on 01-

02-2018 and received by the Petitioner only on 08-02-2018. It

emerges that there was no termination of Contract when the

cheques, Exhibits 1 and 2 were presented by the R1 on 30-01-

2018 before the Bank and came to be dishonoured. The ground

taken by the Petitioner that he had stopped payment is untenable

as the Bank has clearly stated in its notes Exhibits 3 and 4 that the

cheques were returned on account of insufficient fund. The act of

(1966) 1 SCR 656

Prahlad Sharma vs. Dipika Sharma and Another

the Petitioner is clearly covered by the provisions of Section 138 of

the NI Act. On the question of legal liability the explanation to

Section 138 of the NI Act clarifies that the term "debt" referred to

in the Section means to "legal debt", that is one which is

recoverable in the Court of law. The term liability as per Black's Law

Dictionary, 10th Edition, is the quality, state or condition of being

legally obligated or accountable. Liability otherwise has also been

defined to mean all character of debts and obligations, an

obligation one is bound in law and justice to perform; an obligation

which may or may not ripen into a debt, any kind of debt or

liability, either absolute or contingent, express or implied.

(ii) That, having been said it would be apposite to consider

the provisions of Section 139 of the NI Act which provides that

unless the contrary is proved, the Court shall presume that the

holder of a cheque received the cheque of the nature referred to in

Section 139 for the discharge, in whole or in part of any debt or

other liability. It would appear that the presumption under Section

139 of the NI Act is an extension of the presumption under Section

118(a) of the same Act, which provides that, the Court shall

presume a negotiable instrument to be one for consideration. If the

negotiable instrument happens to be a cheque, Section 139 raises

a further presumption that the holder of the cheque received the

cheque in discharge in whole or in part of any debt or other

liability. The presumption to be raised under Sections 118 and 139

of the NI Act are rebuttable presumptions. Thus, the Court shall

presume the NI Act to be for consideration unless and until after

considering the matter before it, it either believes that the

consideration does not exist or considers the non-existence of the

Prahlad Sharma vs. Dipika Sharma and Another

consideration so probable that a prudent man ought, under the

circumstances of a particular case, to act upon the supposition that

the consideration does not exist. 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.[See Kamala S. vs. Vidhyadharan M.J. and Another:

(2007) 5 SCC 264]. So far as the argument of Learned Counsel for

the Petitioner that the two cheques were handed over to R1 by way

of future security cannot be countenanced. This Court in Purna

Kumar Gurung vs. Ankit Sarda (supra) while considering security inter

alia held as follows;

"16.................................................................................................. On this aspect, we may look into the meaning of "security". As per the Oxford Dictionary "security" inter alia, means "a thing deposited or hypothecated as pledge for fulfillment of undertaking or payment of loan to be forfeited in case of failure". The circumstances of the matter at hand in no way fulfil the ingredients of security as defined supra neither was an attempt made to furnish evidence on this aspect by the Respondent. I hasten to add that this Court is aware that the proof so demanded in offences under Section 138 of the NI Act is not to be beyond a reasonable doubt but only extending to preponderance of probability. This too, was not established by the Respondent."

The above circumstances, squarely fit the circumstances in

the instant matter. The two cheques which were dishonoured

surely do not come within the ambit of "security" as defined

hereinabove.

(iii) Paragraph 10 of the Legal Notice Exhibit 9 issued by

the Learned Counsel for the Petitioner is evidently false as

according to the contents thereof after receiving the Notice dated

25-01-2018 his client (Petitioner) requested the R1 not to present

the two cheques, despite which she did. This is an unbelievable

Prahlad Sharma vs. Dipika Sharma and Another

circumstance as it is evident from Exhibit 11 that the Notice dated

25-01-2018 was received by the Petitioner only on 08-02-2018.

(iv) The existence of an agreement between the parties has

also not been denied. The issuance of the cheques as partial

payment towards the terms of the agreement has also not been

denied. The evidence of the Complainant stating that the two

cheques were towards discharge of a legal liability has not been

demolished under cross-examination. Hence, in view of the above

discussions it is evident that Exhibits 1 and 2 were issued by the

Petitioner in the discharge of a legal liability. The Agreement was

subsisting between the parties in view of Section 4 of the Contract

Act and considering the date of posting of Notice Exhibit 11 by the

R1 to the Petitioner and the fact that it was received by the

Petitioner only on 08-02-2018.

7. Hence, on the anvil of the foregoing discussions, the

impugned Judgment dated 20-06-2020, of the Learned Sessions

Judge, South Sikkim, at Namchi, upholding the Judgment of the

Learned Chief Judicial Magistrate in Private Complaint Case No.07

of 2018, dated 31-12-2018, requires no interference.

8(i). Accordingly, as ordered the Petitioner shall pay a total

fine of Rs.4,00,000/- (Rupees four lakhs) only. The remaining

amount of fine being Rs.3,20,000/- (Rupees three lakhs and

twenty thousand) only, i.e., 80% of Rs.4,00,000/- (Rupees four

lakhs) only, shall be paid by the Petitioner to R1 within a period of

two months from today. Rs.80,000/- (Rupees eighty thousand)

only, already deposited before the Court of Learned Sessions

Judge, South Sikkim, at Namchi (as reflected in the impugned

Judgment at Paragraph 31), shall be handed over to the R1, also

Prahlad Sharma vs. Dipika Sharma and Another

by 06-09-2022, by the Court of Learned Sessions Judge, South

Sikkim, at Namchi.

(ii) In default of payment of fine, the Petitioner shall

surrender before the Court of the Learned Chief Judicial Magistrate,

South Sikkim, at Namchi, to undergo the sentence of imprisonment

imposed on him by the Learned Trial Court.

                      9.             Crl.Rev.P     No.04        of     2020        stands      disposed   of

                      accordingly.

10. Pending applications, if any, also stand disposed of.

11. No orders as to cost.

12. Copy of this Judgment be transmitted to the Learned

Court below, for information, along with its records.

( Meenakshi Madan Rai ) Judge 08-07-2022

sdl Approved for reporting : Yes