Afr High Court
Case Details
1 2025:CGHC:24849 AFR HIGH COURT OF CHHATTISGARH AT BILASPUR ACQA No. 495 of 2024 Judgment Reserved on : 05.03.2024 Judgment Delivered on : 17.06.2025 1. Smt. Rekha Gupta W/o. Vijay Gupta Aged About 46 Years R/o. Kali Ward Kawardha, Police Station And Tahsil- Kawardha, District- Kabirdham (C.G.) ... Appellant versus 1. Balaram Chandravanshi S/o. Lahariram Chandravanshi Aged About 48 Years R/o. Village Saihamalgi, Police Station Kunda, Out Post- Damapur, Tahsil Pandariya, District Kabirdham (C.G.) ... Respondent For Appellant : Mr. Akash Shrivastava, Advocate For Respondent : Ms. Sharmila Singhal, Sr. Advocate with Ms. Kanchan Kalwani, Advocate Hon'ble Shri Justice Narendra Kumar Vyas (CAV Judgment) 1. The appellant has filed the present acquittal appeal under Section 378(4) of the Code of Criminal Procedure, 1973 against the order dated 11.01.2023 (Annexure A/1) passed by the learned Additional Chief Judicial Magistrate District - Kabirdham, Kawardha (C.G.) in Criminal Case No. 143/2020 by which the learned Magistrate has dismissed the complaint filed under Section 138 of Negotiable MANISH YADAV Digitally signed by MANISH YADAV Date: 2025.06.17 17:00:33 +0530 2 Instruments Act, 1881 (in short “N.I. Act, 1881”) and acquitted the accused. 2.
Legal Reasoning
Brief facts of the case are that: (a) It is the case of the complainant that the accused and complainant are known to each other and because of good relationship, the accused has taken a loan of Rs. 22,00,000/- from the appellant for his domestic necessity. It is also the case of the complainant that to discharge his debt and liability the accused has given two cheques bearing No. 033953 & 834043 dated 08.07.2019 drawn at Union Bank, Branch Kawardha for Rs. 12,00,000/- and Rs. 10,00,000/-. (b) The said cheque which was issued for Rs. 12,00,000/- was deposited in the account maintained by the complainant at H.D.F.C. Bank, Branch Kawardha on 31.08.2019. The said cheque was returned on vide memo dated 02.09.2019 with endorsement “dishonored due to account is closed”. Thereafter, the appellant had sent a legal notice to the accused on 01.10.2019, the said notice was received by the accused on 09.10.2019, but neither the amount was paid to the appellant nor the accused replied to the said notice which has necessitated the complainant to file a complaint case under Section 138 of N.I. Act, 1881 against the accused before the learned Additional Chief Judicial Magistrate District - Kabirdham, Kawardha (C.G.). 3. The complainant to prove his case has examined himself by way 3 of an affidavit as provided under Section 145 of N.I. Act, 1881 wherein he has reiterated the stand taken in the complaint and has exhibited documents i.e. Cheque bearing No. 033953 dated 08.07.2019 (Exhibit P/1), Cheque Return Memo dated 02.09.2019 (Exhibit P/2), Legal Notice dated 01.10.2019 (Exhibit P/3), Postal Receipt (Exhibit P/4), postal delivery (Exhibit P/5) in support of his complaint. The witness was cross-examined wherein he has admitted that she is in Government service since 2014 and working as dispatch clerk getting salary of Rs. 10,000/- and her two children were also studying and her annual expenditure about 1,50,000/-. She has also admitted that she knew the accused since 2017 and when he has taken Rs. 12,00,000/- the date is not remembered by her. She has stated that the accused has taken Rs. 12,00,000/- in three installments for his business purpose and in the year 2018 the accused has taken Rs. 10,00,000/- for marriage of her daughter. She has stated in the year 2017 the amount was given to accused in the office of some advocate. She has also admitted that on 06.11.2019 the accused has deposited Rs. 2,00,000/- in her bank account and denied that interest has also been paid. She has admitted that she has taken the amount towards security. She has admitted in paragraph 22 that her father has sold the property at Bilaspur for sale consideration of Rs. 70,00,000-75,00,000/- and out of which her father has given Rs. 25,00,000/-, but she has not submitted any document. She has also admitted that the money was deposited in the form of Fixed Deposit, but she has not submitted the document. 4 4. The accused has not examined any witness, but he has examined under Section 313 of Cr.P.C. wherein he has denied the allegations and has taken plea of false implication on account of illegal demand. The learned trial Court vide impugned judgment has dismissed the complaint. The learned Trial Court while dismissing the complaint has recorded its finding that no bank statement or receipt of payment has been placed on record, as such, the complainant has failed to prove that the accused has given the cheques towards any debt or liability, accordingly, it has dismissed the complaint. Being aggrieved with the judgment of acquittal passed by the learned trial court, the appellant has preferred this appeal. 5.
Legal Reasoning
Learned counsel for the appellant would submit that the learned trial court has failed to appreciate the evidence available on record and wrongly acquitted the accused. He would further submit that the learned trial court has committed material irregularities in recording the finding that the appellant is unable to prove the ingredients of Section 138 of N.I. Act, 1881. He would further submit that the learned trial Court has wrongly interpreted the present matter covered by case law cited in impugned judgment and would submit that the provision of Section 56 of the N.I. Act, 1881 will not be attracted in this case as the part payment was made after the cheque was deposited in the bank, as such no endorsement can be made in the cheque. He would further submit that from the records, it is quite vivid that cheque was deposited on 31.08.2019 in the bank for encashment and the part payment was 5 made on 06.11.2019 as there is no opportunity to the complainant for making endorsement in the cheque, therefore, impugned order deserves to be set aside and would pray for allowing the appeal. 6. Per contra, learned Senior counsel for the respondent would submit that the complainant has not placed any record to demonstrate that the said cheques were given by the accused towards any debt or liability. She would further submit that one of the cheques was presented on 31.08.2019 and same was dishonored on 02.09.2019 and no notice was served upon the accused which is essential requirement to attract the provisions of Section 138 of N.I. Act, 1881. She would further submit that the finding recorded by the learned trial Court that the complainant has failed to prove that he has given money to the accused does not suffer from perversity or illegality warranting interference by this Court and would pray for dismissal of the appeal. 7. I have heard learned counsel for the parties and perused the record. 8. Considering the rival submissions of the parties, the point emerged for determination by this Court is: “Whether the learned trial Court was justified in dismissing the complaint vide order dated 11.01.2023 by applying provisions of Section 56 of the N.I. Act, 1881?” 9. To determine the point raised by this Court, it is expedient for this Court to extract Section 56 of the N.I. Act, 1881 and also to go through the evidence brought on record, Section 56 of the N.I. Act, 1881 reads as under: 6 “Section 56. Indorsement for part of sum due- No writing on a negotiable instrument is valid for the purpose of negotiation if such writing purports to transfer only a part of the amount appearing to be due on the instrument; but where such amount has been partly paid, a note to that effect may be indorsed on the instrument, which may then be negotiated for the balance.” 10. The complainant in her evidence has clearly admitted that the accused has deposited the amount of Rs. 2,00,000/- on 06.11.2019 in the account maintained by her in the Vijaya Bank which has now been merged with the Bank of Baroda. She has also stated in her examination-in-chief that the cheque given by the accused was presented by her for encashment on 31.08.2019 and sent the notice on 01.10.2019. Thus, it is quite vivid that the amount has been deposited by the accused after depositing of the cheque by the complainant and after sending the notice, therefore, there was no occasion for the complainant to endorsement for part of some due as required under Section 56 of the N.I. Act, 1881. The learned trial Court has wrongly applied the law laid down by the Hon’ble Supreme Court in case of Dashrathbhai Trikambhai Patel vs. Hitesh Mahendrabhai Patel & Another reported in 2023 (1) SCC 578 without considering the provisions of the Section 56 of the N.I. Act, 1881 and facts of the case. Thus, the finding is illegal and contrary to the law. The Hon’ble Supreme Court in case of Dashrathbhai Trikambhai Patel (Supra) has considered the provisions of Section 56 of the N.I. Act, 1881 and has held as under: “13. It must be noted that when a part-payment is made after the issuance of a post-dated cheque, the legally enforceable debt at the time of encashment is less than the 7 sum represented in the cheque. A part-payment or a full payment may have been made between the date when the debt has accrued to the date when the cheque is sought to be encashed. Thus, it is crucial that we refer to the law laid down by this Court on the issuance of post-dated cheques and cheques issued for the purpose of security. 14. In Indus Airways Private Limited v. Magnum Aviation Private Limited, the issue before a two-Judge Bench of this Court was whether dishonour of post-dated cheques which were issued by the purchasers towards ‘advance payment’ would be covered by Section 138 of the Act if the purchase order was cancelled subsequently. It was held that Section 138 would only be applicable where there is a legally enforceable debt subsisting on the date when the cheque is drawn. In Sampelly Satyanarayana Rao v. Indian Renewable Energy Development Agency Limited, the respondent advanced a loan for setting up a power project and post-dated cheques were given for security. The cheques were dishonoured and a complaint was instituted under Section 138. Distinguishing Indus Airways (supra), it was held that the test for the application of Section 138 is whether there was a legally enforceable debt on the date mentioned in the cheque. It was held that if the answer is in the affirmative, then the provisions of Section 138 would be attracted. 15. In Sripati Singh v. State of Jharkand, this Court observed that if a cheque is issued as security and if the debt is not repaid in any other form before the due date or if there is no understanding or agreement between the parties to defer the repayment, the cheque would mature for presentation: “21. A cheque issued as security pursuant to a financial transaction cannot be considered as a worthless piece of paper under every circumstance. ‘Security’ in its true sense is the state of being safe and the security given for a loan is something given as a pledge of payment. It is given, deposited or pledged to make certain the fulfilment of an obligation to which the parties to the transaction are bound. If in a transaction, a loan is advanced and the borrower agrees to repay the amount in a specified timeframe and issues a cheque as security to secure such repayment; if the loan amount is not repaid in any other form before the due date or if there is no other understanding or agreement between the parties to defer the payment of amount, the cheque which is issued as security would mature for presentation and the drawee of the cheque would be entitled to present the same. On such presentation, if the same is dishonoured, the consequences contemplated under Section 138 and the other provisions of N.I. Act would flow. 8 22. When a cheque is issued and is treated as ‘security’ towards repayment of an amount with a time period being stipulated for repayment, all that it ensures is that such cheque which is issued as ‘security’ cannot be presented prior to the loan or the instalment maturing for repayment towards which such cheque is issued as security. Further, the borrower would have the option of repaying the loan amount or such financial liability in any other form and in that manner if the amount of loan due and payable has been discharged within the agreed period, the cheque issued as security cannot thereafter be presented. Therefore, the prior discharge of the loan or there being an altered situation due to which there would be understanding between the parties is a sine qua non to not present the cheque which was issued as security. These are only the defences that would be available to the drawer of the cheque in a proceedings initiated under Section 138 of the N.I. Act. Therefore, there cannot be a hard and fast rule that a cheque which is issued as security can never be presented by the drawee of the cheque. If such is the understanding a cheque would also be reduced to an ‘on demand promissory note’ and in all circumstances, it would only be a civil litigation to recover the amount, which is not the intention of the statute. When a cheque is issued even though as ‘security’ the consequence flowing therefrom is also known to the drawer of the cheque and in the circumstance stated above if the cheque is presented and dishonoured, the holder of the cheque/drawee would have the option of initiating the civil proceedings for recovery or the criminal proceedings for punishment in the fact situation, but in any event, it is not for the drawer of the cheque to dictate terms with regard to the nature of litigation.” (emphasis supplied) 16. Based on the above analysis of precedent, the following principles emerge: 16.1. Where the borrower agrees to repay the loan within a specified timeline and issues a cheque for security but defaults in repaying the loan within the timeline, the cheque matures for presentation. When the cheque is sought to be encashed by the debtor and is dishonoured, Section 138 of the Act will be attracted; 16.2. However, the cardinal rule when a cheque is issued for security is that between the date on which the cheque is drawn to the date on which the cheque matures, the loan could be repaid through any other mode. It is only where the loan is not repaid through any other mode within the due date that the cheque would mature for presentation. 9 16.3. If the loan has been discharged before the due date or if there is an ‘altered situation’, then the cheque shall not be presented for encashment.” 11. The learned Senior counsel for the accused in addition to judgment of the Hon’ble Supreme Court in case of Dashrathbhai Trikambhai Patel (Supra) has also referred to the judgment of Hon’ble High Court of Gujarat in Criminal Appeal No. 1506/2023 in case of Shree Hirani Enterprises through Chiragbhai Rambhai Hirani vs. State of Gujarat, High Court of Punjab and Haryana in case of CRM No. 44212/2014 in case of M/s. M.B. Metal Industries vs. M/s. Vijay Impex, High Court of Kerala in case of Shiju K. vs. Nalini and Others reported in 2015 SCC Online Ker 36498 and would submit that since endorsement has not been done in the cheque therefore, the learned trial Court has not committed any illegality in dismissing the complaint. 12. Considering on the facts of the case, it is quite vivid that in all the cases the part payment was made before depositing of the cheque in the bank or in some cases before issuance of notice whereas in the present case, after receipt of the notice on 09.10.2019 the accused has deposited the amount on 06.11.2019, as such, there was no occasion for the complainant to make endorsement in the cheque or in the notice to attract Section 56 of the N.I. Act, 1881. Even from the perusal of Section 138 of N.I. Act, 1881 for maintaining the complaint under Section 138 of the N.I. Act, 1881, the requirement of law is that the cheque should be presented within 3 months from the date on which it is drawn or within its validity period whichever is earlier, and the payee or holder in due 10 course of the cheque as the case may be, makes a demand for payment of said money by giving a notice in writing to the drawer of the cheque within 30 days of the receipt of the information and if the drawer of the 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 15 days of the receipt of the notice. Whereas from the perusal of Section 56 of the N.I. Act, 1881, it is quite vivid that to attract the provisions of Section 56 of the N.I. Act, 1881 only two contingencies are available and no other contingencies are available for endorsement in the cheque requiring part payment made by the accused to the complainant. Thus, the learned trial Court has wrongly applied the provisions of Section 56 of the N.I. Act, 1881 by recording its finding that since the amount of Rs. 2,00,000/- has been received by the complainant before filing of the complaint, therefore, the provisions of Section 138 of N.I. Act, 1881 is not attracted as the Courts cannot add anything in the wisdom of the legislature while drafting the legislature, the Court can only interpret the law, therefore, the impugned order dated 11.01.2023 is illegal. 13. Even otherwise, the complainant in her complaint has stated that Rs. 22,00,000/- has been given to the accused for purchase of house and land and to pay the said debt he has given a cheque of Rs. 12,00,000/- and in the statement of the accused under Section 313 of Cr.P.C., he has not stated that for which loan he has made the payment of Rs. 2,00,000/- though these facts are within the knowledge of the accused only, thus, the learned trial Court has 11 committed illegality in recording its finding that the complainant has not mentioned receipt of Rs. 2,00,000/-, as such, it cannot be held that such cheque was given towards debt or liability. Thus, the impugned order dated 11.01.2023 is illegal on this count and same deserves to be quashed by this Court. 14. Considering the fact, law on subject and the evidence of the parties, it is quite vivid that the complainant has proved that cheque was given towards debt or liability, therefore, order of the learned trial Court dismissing the complaint suffers from perversity, illegality and non-application of mind which warrants interference
Decision
by this Court. Accordingly, the impugned judgment is quashed and it is held that accused is liable for conviction for committing the offence under Section 138 of N.I. Act, 1881, but looking to the facts and circumstances of the case, the respondent/accused is sentenced only to fine which is Rs. 1,00,000/- apart from cheque amount which is Rs. 12,00,000/- payable by the accused. Rs. 1,00,000/- fine amount is payable to the complainant as compensation. The cheque amount and compensation shall be deposited in the trial Court by the accused within eight weeks from today, failing which the accused will undergo sentence of three months Simple Imprisonment. 15. Consequentially, the acquittal appeal is allowed. Sd/- (Narendra Kumar Vyas) Judge Manish