M/S Rallis India Ltd., vs N. Venugopala Rao, Another,
2022 Latest Caselaw 4399 Tel

              HON'BLE SRI JUSTICE K.SURENDER

              CRIMINAL APPEAL No.1558 OF 2007
JUDGMENT:

1. The appellant is questioning the correctness of the

judgment of the learned II Additional Chief Metropolitan

Magistrate, Hyderabad in CC No.355 of 2002 dated

17.07.2007 acquitting the 1st respondent/accused for the

offence under Section 138 of the Negotiable Instruments Act.

2. The parties hereinafter will be referred to as arrayed

before the trial Court. The case of the prosecution is that the

complainant is a company which is stockiest/dealer for sale

and distribution of plant protection pesticides. The

complainant supplied goods to the accused on credit basis

from time to time and to discharge the said payment due

towards supply of pesticides by the complainant, Ex.P3

cheque was issued by the accused. The said cheque when

presented for clearance was returned unpaid with an

endorsement "funds insufficient". For the reason of non

payment of the said amount covered by the said cheque

though legal notice was issued, a complaint was filed stating

that the accused is liable for punishment under Section 138 of

the Negotiable Instruments Act.

3. After examining the representative of the company as

P.W.1 and marking Exs.P1 to P13 and examining the accused

as D.W.1 and another D.W.2, the learned Magistrate found

that the cheque in question was issued towards security and

the company failed to prove that there was any legally

enforceable debt.

4. Learned Magistrate further found that the writings on the

cheque column and signature were with one ink and the

writings in the rupees column in words and figures are

different and that shows that the column of rupees was not

written at the time of issuing Ex.P3 cheque. In the event of the

cheque being issued at one go, all the contents of the cheque

would have been written with one pen.

5. Learned counsel for the complainant submits that since

the issuance of cheque is admitted, a presumption has to be

drawn and the learned Magistrate has erred in acquitting the

accused for the offence under Section 138 of the NI Act. In

support of his contention, he relied on the judgment of the

Hon'ble Supreme Court in the case Sripati Singh (since

deceased) through his son Gaurav Singh v. State of Jhakhand1,

wherein it is held as follows:

" 22. In the above circumstance, the cheque though issued as security at the point when the loan was advanced, it was issued as an assurance to repay the amount after the debt becomes due for repayment. The loan was in subsistence when the cheque was issued and had become repayable during June/July 2015 and the cheque issued towards repayment was agreed to be presented thereafter. If the amount was not paid in any other mode before June/July 2015, it was incumbent on the respondent No.2 to arrange sufficient balance in the account to honour the cheque which was to be presented subsequent to June/July 2015.

23. These aspects would primafacie indicate that there was a transaction between the parties towards which a legally recoverable debt was claimed by the appellant and the cheque issued by the respondent No.2 was presented. On such cheque being dishonoured, cause of action had arisen for issuing a notice and presenting the criminal complaint under Section 138 of N.I. Act on the payment not being made. The further defence as to whether the loan had been discharged as agreed by respondent No.2 and in that circumstance the cheque which had been issued as security had not remained live for payment subsequent thereto etc. at best can be a defence for the respondent No.2 to be put forth and to be established in the trial. In any event, it was not a case for the Court to either refuse to take cognizance or to discharge the respondent No.2 in the manner it has been done by the High Court. Therefore, though a criminal complaint under Section 420 IPC was not sustainable in the facts and circumstances of the instant case, the complaint under section 138 of the N.I Act was maintainable and all contentions and the defence were to be considered during the course of the trial."

6. The learned counsel for the complainant, after going

through the entire facts of the aforesaid judgment submits

that the said facts are applicable to the facts of the present

case. He submits that once the issuance of cheque is

admitted, presumption has to be drawn and the acquittal

recorded by the learned Magistrate has to be reversed.

2021 SCC OnLine SC 1002

7. As seen from the evidence on record, the complainant

filed Ex.P2, account copy, which is the statement maintained

with the complainant company. Except filing of the account

copy of M/s.Sri Krishna Fertilizers, there is no other evidence

to show that this respondent, who is prosecuted in his

individual capacity, is liable to pay the outstanding. The name

of the complainant N.Venugopala Rao does not figure in the

said statement of account. Though the accused examined

himself as D.W.1 and stated that the cheque was issued in

blank, since outstanding as shown by the complainant is that

of M/s.Sri Krishna Fertilizers, the prosecution of the accused

in his individual capacity is also not maintainable.

8. The Hon'ble Supreme Court in the case of Radhakrishna

Nagesh v. State of Andhra Pradesh2 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.

(2013) 11 supreme court Cases 688

Both these facets attain even greater significance where the

accused has a judgment of acquittal 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.

9. For both the reasons of the complainant failing to prove

that there was legally enforceable debt and also for the reason

of not prosecuting M/s. Sri Krishna Fertilizers, who according

to the complaint, there was an outstanding as per Ex.P2.

10. For the aforementioned reasons, the appeal fails and the

same is liable to be dismissed.

11. Accordingly, Criminal Appeal is dismissed.

__________________ K.SURENDER, J Date: 06.09.2022 kvs

HON'BLE SRI JUSTICE K.SURENDER

CRIMINAL APPEAL No.1558 OF 2007

Date: 06.09.2022.

kvs