P. Vijayalaxmi vs Smt. K Satyavathi
2022 Latest Caselaw 4213 Tel

        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

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

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.

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

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

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

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.

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