Criminal Appeal No. 1315 of 2005 · Andhra Pradesh High Court

Aggrieved by the judgment dated 03.11.2004 in C.C.No.171 of 2001, on file of XVII-Metropolitan Magistrate, Hyderabad, the present appeal is filed. The appellant herein is the complainant in the C.C.No.171 of 2001. Briefly, the facts of the case are that the appellant/complainant filed a private complaint against the accused alleging offence punishable under Section 138 of the Negotiable Instruments Act, 1881 (for short, the Act). The trial Court, after due enquiry, dismissed the complaint. Aggrieved thereby, the present appeal is filed. Learned counsel for the appellant mainly argued that the finding of the trial Court in acquitting the accused is erroneous when there is clear material to show that the

accused committed the offence and the lower Court ought to have convicted the accused when once it arrived at the conclusion that the complainant has fulfilled the proviso (a), (b) and (c) of Section 138 of the Act. He further argued that the trial Court ought not to have acquitted the accused even after the admission of the accused that he has issued the cheque and therefore the conclusions of the trial Court are against the presumptions under Section 138 of the Act. In support of his arguments, while drawing the attention of this Court to the admission of PW.1 about issuance of cheque, he placed reliance on the decision reported in HITEN P. DALA v. BRATINDRANATH BANERJEE [1] , and argued that the presumption under Section 139 of the Act, the burden lies on the accused to prove that there is no subsisting liability, but the proof must be sufficient enough to the presumption, and mere explanation is not sufficient.

Learned counsel for the respondent/accused, while attacking the said arguments, argued that in order to prove the case filed under Section 138 of the Act, the complainant should prove the ingredients under Section 138 of the Act, and in the present case, the complainant failed to prove that there is a legally enforceable debt on the date of issuance of cheque by the accused; and when that is not proved, the complaint filed under Section 138 of the Act is not maintainable. In support of his arguments, he placed reliance on the decision reported in NAGISETTY NAGAIAH v. STATE OF A.P. AND ANOTHER [2] , and urged that the complainant failed to make out a case against the accused that there is any legally enforceable debt under Section 138 of the Act, and therefore, the question of raising legal presumption under Section 139 of the Act does not arise. Now the point for consideration is whether the impugned order is sustainable.

POINT: Before going into merits of the case, it is very much necessary to briefly refer to the averments in the complaint. The complainant company-M/s Vinutha Chit Funds Pvt. Ltd., deals with chit fund business, and the accused indebted an amount of Rs.75,000/- to the complainant company. The accused issued a cheque bearing No.814201 dated 27.12.2000 for Rs.75,000/- drawin on State Bank of Hyderabad, Vanasthalipuram Branch. The complainant presented the cheque with his banker, Central Bank of India, Himayathnagar Branch, but it was returned unpaid with a memo “Insufficient Funds” in the account of the accused. The complainant got issued legal notice dated

11.01.2000 calling the accused to pay the cheque amount within 15 days from the date of receipt of notice. The accused after receiving the notice, failed to pay the cheque amount. The trial Court, having gone through the complaint of the complainant, took cognizance for the offence under Section 138 of the Act. Before the trial Court, on behalf of the prosecution, PW.1-Naveen Babu was examined and Exs.P1 to P7 were marked. No witnesses were examined on behalf of the accused. Ex.P1 is the Cheque bearing No.814201 dated 27.12.2000 for Rs.75,000/-, Ex.P2 is the Cheque return memo dated 30.12.2000, Ex.P3 is the legal notice

11.01.2001, Ex.P4 postal acknowledgment dated 16.01.2001, Ex.P5 is the telegram dated 30.01.2001, Ex.P6 is the certified copy of the Certificate of Incorporation dated 04.06.1998, Ex.P7 is the Resolution dated 01.01.2002. A perusal of Exs.P6 and P7 shows that PW.1 is authorised to give evidence on behalf of the complainant company, and he gave evidence before the Court. Next point for consideration is whether the complainant proved his case against the accused for the offence under Section 138 of the Act. In order to prove the case, the complainant has to prove following essential ingredients:- (i) The cheque has been presented in the bank within the period of six months from the date on which it is drawn within the period of its validity whichever is earlier. (ii) The cheque is returned by the bank unpaid. (iii) The cheque is returned unpaid, because the amount available in the account is insufficient for making the payment of the cheque.

(iv) The payee gave a notice to the drawer claiming the amount within fifteen days of receipt of the information by the bank. (v) The drawer fails to make the payment within fifteen days of the receipt of the notice, and (vi) The crucial point is that the cheque is drawn on the bank for the discharge of any legally enforceable debt or other liability. As seen from the trial Court judgment, the trial Court held in favour of the complainant the above five ingredients, but negatived the crucial point of contention of complainant which is the (vi) proviso of Section 138 of the Act. It is the case of the complainant that the accused has indebted to the complainant, and to discharge the said liability, he has issued Ex.P1-cheque for Rs.75,000/- and it was dishonoured when presented. It is the plea of the respondent/accused that he has not issued Ex.P1-cheque in discharge of any legally enforceable debt, but the same was issued towards collateral security to his son for a Chit Series No.KT2L-37, and the complainant filled the blank cheque and filed false complaint.

At this juncture, the Court has to see whether there is any legally enforceable debt against the accused, for which evidence of PW.1 is very pivotal. A cursory reading of the averments in the complaint filed by the complainant/appellant shows that the accused indebted to the complainant and to discharge the said liability, he has issued Ex.P1-cheque for Rs.75,000/-. Execution of Ex.P1 was admitted by the accused. In order to connect Ex.P1 to the debt alleged to have been contracted by the accused, the complainant, in the first instance, has to prove that there is a subsisting debt between the complainant and the accused. No document connecting Ex.P1 with the alleged debt was filed by the complainant to prove that Ex.P1 was issued in connection with that debt. Therefore, at this juncture, the evidence of PW.1 attaches any amount of significance. PW.1 did not state in his affidavit the nature of indebtedness of the accused.

PW.1 also did not state the total amount payable by the accused and the nature of liability, and the complaint is also silent on these aspects. PW.1, during cross-examination, admitted that the accused stood as guarantor to one Nanda Kumar Shastry, a chit subscriber, for Rs.1,00,000/-, vide Chit Series No.M.T.12-12 and he lifted the chit and took the prize amount of Rs.60,000/- from the complainant and Nanda Kumar Shastry paid eleven instalments and defaulted 29 instalments. Moreover, PW.1 did not state that the accused has issued Ex.P1 as guarantor to the said Nanda Kumar Shastry in connection with the said chit amount. It is the categorical admission of PW.1 that the complainant maintains accounts, but no such statement of account is filed by PW.1 to connect Ex.P1 with any liability to be discharged by the accused. It is also his admission in the cross-examination that a legal notice was sent to the accused, Nanda Kumar Shastry and other guarantors demanding to pay the instalments, but a copy of the said notice is not filed in the Court.

He also admitted that he did not mention either in the complaint, notice or in his chief examination that the accused stood as guarantor to Nanda Kumar Shastry and in discharge of liability the accused issued Ex.P1. He also further admitted that he used to take receipts whenever they paid the prize amount and maintain his accounts in their ledger mentioning the names of guarantors and their cheques. He also admitted that the complainant filed a civil suit on the file of III- Junior Civil Judge, City Civil Court, Hyderabad, for recovery of amount against the accused and his son, in respect of Chit No.KT-2L-37 and the said civil suit is still pending. It is also the specific plea of PW.1 who gave evidence on behalf of the complainant that the accused issued Ex.P1-cheque towards discharge of part of the debt payable to the company. When the alleged cheque was issued towards discharge of part of the debt payable to the company, the said date debt not proved by producing any documents in support of the said plea.

When, admittedly, as per the evidence of PW.1, Ex.P1 was obtained from the accused, as he being the guarantor of the said Nanda Kumar Shastry, at least the account related to Nanda Kumar Shastry should have been filed before the Court to connect the transaction with Ex.P1. Simply because Ex.P1 was admitted by the accused, it cannot be said that the liability of Ex.P1 is relating to the transaction as pleaded by the complainant unless there is a positive evidence to that effect. On the other hand, the accused has taken the plea that he issued blank cheque in connection with the debt of his son and the same was got fabricated and presented with the complaint. When such is the plea taken by the accused in the beginning of the case, the complainant ought to have produced the documents to show the bona fides of Ex.P1. Therefore, withholding the accounts of Nanda Kumar Shastry and in the absence of any transaction connecting Ex.P1 with any alleged liability, there is every reason to believe that the complainant suppressed the facts and filed the complaint.

When the complainant filed the complaint under Section 138 of the Act, he has to prove that there is existing legally enforceable debt on the date of issuance of Ex.P1. Unless the enforceable debt and the alleged cheque correlates, the complainant’s case has no legs to stand. The trial Court has held that the complainant failed to prove that there is any legally enforceable debt on the date of issuance of Ex.P1 by the accused. The arguments advanced by the counsel for the 2nd respondent placing reliance on the decision stated 2-supra, is fully applicable to the present case on hand. In the decision in 2-supra, this Court observed that it is obligatory on the part of the Court to raise this presumption in a case where the factual basis for raising of presumption has been established. As per the findings of this Court in 2-supra, there should be a legally enforceable debt to inspire the factual basis for raising presumption under Section 139 of the Act.