M/S. Coromandel Fertilisers ... vs M/S. H.P.M.Industries Ltd.,New ...
2022 Latest Caselaw 5358 Tel

           HON'BLE SRI JUSTICE K.SURENDER

           CRIMINAL APPEAL No.1548 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.1769 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.

Since the company filed two separate cases for three

cheques each, accordingly, the learned Magistrate tried the

offences and rendered separate judgments.

3. The cheque bearing Nos. 316410, 316411 and 316412

dated 01.10.2005 for Rs.15,00,000/- 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

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 as 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

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

committed an offence and shall, without prejudice to any other provisions 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 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

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 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 chequs 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

(2013) 11 supreme court Cases 688

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 kvs

HON'BLE SRI JUSTICE K.SURENDER

CRIMINAL APPEAL No.1548 of 2009

Date: 27.10.2022.

kvs