B. Sunder, vs The State Of Ap Rep By Its Pp Hyd., ...
2022 Latest Caselaw 297 Tel

                HONOURABLE JUSTICE G. SRIDEVI

                         CRL.R.C.No.1288 of 2007

JUDGMENT:

The present Criminal Revision Case is filed under Sections 397

and 401 of the Code of Criminal Procedure, 1973 against the judgment,

dated 13.09.2007, passed in Crl.A.No.25 of 2006, wherein the learned

Additional Metropolitan Sessions Judge, Cyberabad, N.T.R. Nagar,

Hyderabad, confirmed the judgment, dated 27.02.2006, passed in

C.C.No.1886 of 2005 on the file of the IX Metropolitan Magistrate,

Cyberabad, Kukatpally at Miyapur.

The facts of the case are as under:

The 2nd respondent/complainant filed a private complaint

under Section 200 Cr.P.C. against the revision petitioner/accused for

the offence punishable under Section 138 of the Negotiable

Instruments Act, stating that the revision petitioner/accused

borrowed an amount of Rs.1,10,000/- from him on 26.08.1999 and

executed a promissory note agreeing to repay the same within one

week from the date of demand made by the 2nd

respondent/complainant. On repeated demands made by the 2nd

respondent/complainant, the revision petitioner/accused issued a

cheque bearing No.164596, dated 05.07.2002 for Rs.1,81,400/.- drawn

on State Bank of Hyderabad, Ramachandrapuram towards repayment

of the said debt and when the same was presented by the 2nd

respondent/complainant in his bank i.e. Global Trust Bank,

Chandanagar Branch, for realization, the same was returned with an

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endorsement 'Account Closed'. Therefore, the 2nd

respondent/complainant got issued a notice, which was not honoured

by the revision petitioner/accused. As such, the 2nd

respondent/complainant filed a complaint against the revision

petitioner/accused for the offence punishable under Section 138 of the

Negotiable Instruments Act, 1881.

In support of his case, the 2nd respondent/complainant

examined himself as PW.1 and got marked Exs.P.1 to P.6, whereas the

revision petitioner/accused was examined himself as D.W.1 and got

marked Ex.D1 on his behalf.

The trial Court, after considering both oral and documentary

evidence available on record, found guilt of the revision

petitioner/accused for the offence punishable under Section 138 of the

Negotiable Instruments Act and accordingly convicted and sentenced

him to undergo simple imprisonment for a period of one year and to

pay compensation of Rs.2,00,000/- to the 2nd respondent/complainant,

within a period of one month from the date of judgment. Aggrieved

by the same, the revision petitioner/accused preferred Crl.A.No.25 of

2006 before the Additional Metropolitan Sessions Judge, Cyberabad,

Hyderabad. Vide judgment, dated 13.09.2007, the learned Sessions

Judge dismissed the appeal confirming the conviction and sentence

imposed by the trial Court against the revision petitioner/accused.

Heard the learned Counsel appearing on either side and

perused the record.

GSD, J Crlrc_1288_2007

Learned Counsel for the revision petitioner/accused would

submit that though the 2nd respondent/complainant (P.W.1) admitted

in his cross-examination that he was an income tax assessee, he has

not shown the alleged transaction amount in his Income Tax Returns

during that period and the said aspect has not been considered by

both the Courts below; that P.W.1 further admitted in his cross-

examination that he has not issued any notice to the revision

petitioner/accused demanding repayment of loan; that P.W.1 also

admitted that he has withdrawn Rs.30,000/- by depositing the cheque

of the revision petitioner/accused on 01.12.2000, which establishes that

the 2nd respondent/complainant had misused the cheques for

wrongful gain. It is further submitted that the revision

petitioner/D.W.1 has admitted in his cross-examination that he had

handed over one signed blank cheque and two unsigned blank

cheques to the 2nd respondent/complainant as he promised to arrange

a loan for him, which clearly proves the contention of the revision

petitioner/accused that the 2nd respondent/complainant had misused

the cheques by manipulating and fabricating the cheques. In support

of his contentions, he relied upon the following judgments:-

1. R.Narender v. Yakamma Keloth or Kalyan1

2. Sanjay Mishra v. Kanishka Kapoor @ Nikki2

3. Lyca Finance Ltd. V. State and another3

2021 Law Suit (TS) 818

2009 Law Suit (Bom.) 603

2016 Law Suit (Del) 4361

GSD, J Crlrc_1288_2007

Learned Counsel for the 2nd respondent/complainant would

submit that as per the evidence of P.W.1 coupled with Exs.P1 to P4, it

is evident that the cheque has been issued by the revision

petitioner/accused for an amount of Rs.1,81,400/- towards discharge

of legally enforceable debt and the said cheque was dishonoured on

the ground that the account was closed and thereafter the revision

petitioner/accused failed to repay the cheque amount though a notice

was issued by the 2nd respondent. He also submits that since it is

proved that Ex.P1/cheque has been signed and issued by the revision

petitioner/accused to the 2nd respondent/complainant towards

discharge of legally enforceable debt, the trial Court has rightly found

guilt of the revision petitioner/accused for the offence punishable

under Section 138 of the N.I. Act, which was confirmed by the

appellate Court.

Considering rival contentions and perusing the material

available on record, the point that arises for determination is

"Whether the cheque under Ex.P1 was issued towards discharge of

legally enforceable debt or not"?

The case of the 2nd respondent/complainant is that the revision

petitioner/accused had borrowed a sum of Rs.1,10,000/- by executing

a promissory note, dated 26.08.1999 and in order to discharge the said

debt, the revision petitioner/accused had issued the impugned cheque

for an amount of Rs.1,81,400/-, which was returned un-paid with an

endorsement "account closed" and as such the revision petitioner/

GSD, J Crlrc_1288_2007

accused has committed an offence punishable under Section 138 of the

Negotiable Instruments Act.

The case of the revision petitioner/accused is that the 2nd

respondent/complainant had taken one signed blank cheque, two

unsigned blank cheques and promissory note from him with a

promise to arrange a loan for him and thereafter, the 2nd

respondent/complainant had misused the cheques.

In Dalmia Cement (Bharat) Ltd Vs. Galaxy Traders & Agencies

Ltd & Ors.4 the Apex court has referred to the object of Section 138 of

the N.I. Act. Paragraph 3 of the said decision reads thus:

"3. The Act was enacted and Section 138 thereof incorporated with a specified object of making a special provision by incorporating a strict liability so far as the cheque, a negotiable instrument, is concerned. The law relating to negotiable instruments is the law of commercial world legislated to facilitate the activities in trade and commerce making provision of giving sanctity to the instruments of credit which could be deemed to be convertible one into money and easily passable from person to another. In the absence of such instruments, including a cheque, the trade and commerce activities, in the present day world, are likely to be adversely affected as it is impracticable for the trading community to carry on with it the bulk of the currency in force. The negotiable instruments are in fact the instruments of credit being convertible on account of legality of being negotiated and are easily passable from one hand to another. To achieve the objectives of the Act, the legislature has, in its wisdom, thought it proper to make such provisions in the Act for conferring such privileges to the mercantile instruments contemplated under it and provide special penalties and procedure in case the obligations under the instruments are not discharged. The laws relating to the Act are,

(2001) 6 SCC 463

GSD, J Crlrc_1288_2007

therefore, required to be interpreted in the light of the objects intended to be achieved by it despite there being deviations from the general law and the procedure provided for the redressal of the grievances to the litigants-Efforts to defeat the objectives of law by resorting to innovative measures and methods are to be discouraged, lest it may affect the commercial and mercantile activities in a smooth and healthy manner, ultimately affecting the economy of the Country". (Emphasis added)

In the instant case, a perusal of the material available on record

would show that the 2nd respondent/P.W.1 admitted in his cross-

examination that he was an Income Tax Assessee, but he did not

mention the loan transaction in his income tax returns. In the absence

of any corroborative evidence and in view of the admission made by

the 2nd respondent/PW1 that he is an Income Tax assessee, the

question would be whether non-showing of the amount in his income

tax return is sufficient to rebut a presumption that the cheque was not

issued in discharge of a debt or liability.

An identical issue came up for consideration before the Bombay

High Court in Sanjay Mishra v. Ms. Kanishka Kapoor @ Nikki and

Anr (2 supra). Relying upon the decision of the Apex Court in Dalmia

Cement (Bharat) Ltd Vs. Galaxy Traders & Agencies Ltd & Ors. (4

supra), the Bombay High Court held as under:-

"That the laws relating to the said Act are required to be interpreted in the light of the object intended to be achieved by it despite there being deviation from general law. The Apex Court expressed that the object of Section 138 of the said Act was to ensure that commercial and mercantile activities are conducted in smooth and healthy manner. The explanation to Section 138 of the said Act clearly provides that a debt or other liability referred to in

GSD, J Crlrc_1288_2007

section means a legally enforceable debt or other liability. The alleged liability to repay an unaccounted cash amount admittedly not disclosed in the Income Tax Return cannot be a legally recoverable liability. If such liability is held to be a legally recoverable debt, it will render the explanation to Section 138 of the said Act nugatory. It will defeat the very object of Section 138 of the Act of ensuring that the commercial and mercantile activities are conducted in a healthy manner. The provision of Section 138 cannot be resorted to for recovery of an unaccounted amount. A cheque issued in discharge of alleged liability of repaying "unaccounted" cash amount cannot be said to be a cheque issued in discharge of a legally enforceable debt or liability within the meaning of explanation of Section 138 of the said Act. Such an effort to misuse the provision of Section 138 of the said Act has to be discouraged"

It is true that merely because the amount advanced is not shown

in Income Tax Return, in every case, one cannot jump to the

conclusion that the presumption under Section 139 of the N.I. Act

stands rebutted. There may be cases where a small amount less than a

sum of Rs.20,000/- is advanced in cash by way of loan which may be

repayable within few days or within few months and that the

complainant may not show the said amount in the Income Tax Return

as it is repayable within few days or few months in the same financial

year. In such a case, the failure to show the amount in the Income Tax

Return may not by itself amount to rebuttal of presumption under

Section 139 of N.I. Act. But, in the instant case, the amount advanced

by the 2nd respondent/complainant to the revision petitioner/accused

is a large amount and is not repayable within few months and hence

the failure to disclose the said amount in Income Tax Returns or books

of accounts of the 2nd respondent/complainant can be sufficient to

GSD, J Crlrc_1288_2007

rebut the presumption under Section 139 of the N.I. Act. In the instant

case, as per the evidence of the 2nd respondent/complainant, Ex.P2-

pronote was executed by the revision petitioner/accused, on

26.08.1999, for Rs.1,10,000/-, whereas the cheque under Ex.P1 was

issued for Rs.1,81,400/- on 05.07.2002. However, the 2nd

respondent/complainant has not properly explained under what

circumstances, the cheque was issued for Rs.1,81,400/-. That apart, the

2nd respondent/complainant (P.W.1) has admitted in his cross-

examination that he has withdrawn Rs.30,000/- by depositing the

cheque of the revision petitioner/accused on 01.12.2000, which clearly

proves the contention of the revision petitioner/accused that the 2nd

respondent/complainant had misused the cheques issued by him for

obtaining a bank loan.

In view of the judgments referred to above and for the aforesaid

reasons, I am of the considered view that the finding recorded by the

learned trial Judge that the 2nd respondent/complainant had

established that the cheque was issued towards discharge of legally

enforceable debt, which was confirmed by the appellate Court, is

suffered from illegality and caused miscarriage of justice. Hence, the

conviction and sentence imposed against the revision petitioner/

accused for the offence punishable under Section 138 of the N.I. Act is

liable to be set aside.

Accordingly, the Criminal Revision Case is allowed. The

conviction and sentence imposed by the trial Court as confirmed by

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the appellate Court for the offence punishable under Section 138 of the

N.I. Act are hereby set aside and the revision petitioner/accused is

acquitted of the said charge. Fine/compensation amount, if any, paid

by the revision petitioner/accused shall be refunded to him. The bail

bonds of the revision petitioner/accused shall stand cancelled.

Miscellaneous petitions, if any, pending shall stand closed.

_____________________ JUSTICE G. SRIDEVI

28.01.2022 Gkv/Gsn.