THE HONOURABLE MR v. S.RajamanickamProprietorSri Rathi Fibre Agencies4/114-H,Sri NagarJagirammapalayam and PostJagireddipatty Village,Salem-2

IN THE HIGH COURT OF JUDICATURE AT MADRASDATE : 12.06.2007CORAM:THE HONOURABLE MR.JUSTICE A.C.ARUMUGAPERUMAL ADITYANCrl.A.No.352 of 2001Sadasivam.. Appellant/Complainantvs.S.RajamanickamProprietorSri Rathi Fibre Agencies4/114-H,Sri NagarJagirammapalayam and PostJagireddipatty Village,Salem-2.. Respondent/Accused Prayer: This appeal has been preferred against the Judgment dated20.09.2000, in C.C.No.57 of 1998 on the file of Judicial Magistrate NO.2,Salem acquitting the Respondent of the Charge from offence under Section138 read with Section 142 of Negotiable Instrument Act, 1881 [as amendedupto date] for the following amongst other.For Appellant : Mr.S.Kalyanaraman For Respondent : Mr.V.Manokar JUDGMENTThis appeal has been preferred against the judgment in C.C.No.57 of1998 on the file of the Judicial Magistrate No.2, Salem.2. The appellant who had preferred a complaint against the accusedunder Section 138 of the Negotiable Instruments Act 1881(hereinafterreferred to as "the Act') has lost his case before the trial Court haspreferred this appeal.3. According to the complainant, the accused had borrowedRs.2,00,000/- under a promissory note on 3.11.1996 and issued a chequefor Rs.2,00,000/- on 28.1.1998 and when the cheque was presented beforethe Indian Overseas Bank, Suramangalam Branch, Salem, the same wasreturned with an endorsement that there is no sufficient funds in the https://hcservices.ecourts.gov.in/hcservices/ account of the accused. On 2.2.1998, the complainant had issued a noticeinforming about the return of the cheque. After receiving the notice, theaccused had sent a reply on 13.2.1998 but not chosen to repay the amount.hence the complainant had approached the Court under Section 138 of theAct.4. The complaint was taken on file by the learned Judicial Magistrate,after taking cognizance of the same and after the accused appeared onsummons, copies under Section 207 of Cr.P.C were furnished and when theoffence was explained to the accused, he pleaded not guilty.5. On the side of the complainant, P.Ws 1 to 3 were examined and ExsP1 to P8 were marked.5. P.W.1 is the complainant who would narrate the averments stated inhis complaint.5a. P.W.2 is the Assistant Manager of Indian Overseas Bank,Suramangalam Branch wherein the complainant is having his account.According to him, Ex P1 is the cheque dated 28.1.1998 presented forcollection and the said cheque was forwarded to the Central Bank ofIndia, Agraharam Branch, Salem,wherein, the accused is having his account.The said cheque Ex P1 was returned by the Central Bank of India with ExP3 memo stating that there is no sufficient fund in the account of theaccused.5b. P.W.3 is the Assistant Manager of Central Bank of India, AgraharamBranch, Salem who would admit that Current Account No.361 relates to theaccused. He would further admit that Ex P1 cheque belongs to their bankwhich was given to the accused for his use. According to him, Ex P1cheque was forwarded to his bank by the Indian Overseas Bank,SuramangalamBranch, for collection. But on the same day itself it was returned toCentral Bank of India with an endorsement that there is no sufficient fundin the current account of the accused to honour the same.6. When the incriminating circumstances were put to the accused, hedenied his complicity with the crime. He has examined D.W1 and D.W.2besides examining himself as D.W.3 and exhibited Exs D1 to D3.7. After analysing both oral and documentary evidence meticulously,the learned trial Judge has come to a conclusion that the complainant hasfailed to prove the guilt against the accused under Section 138 of the Actand accordingly dismissed the complaint thereby acquitting the accusedwhich necessitated the complainant to approach this Court by way of thisappeal.8. Now the point for determination in this appeal is whether theoffence under Section 138 of the Act has been attracted against theaccused to warrant conviction? https://hcservices.ecourts.gov.in/hcservices/

9. Heard Mr.S.Kalyanaraman, learned counsel for the appellant andMr.V.Manokar, learned counsel for the respondent and considered theirrival submissions.10.The Point:This appeal has been preferred against the order of acquittal. Under suchcircumstances, the only point to be decided in this appeal is whether thefindings of the learned trial Judge is perverse in nature to warrantinterference from this Court. 10a. The case of the accused projected through D.Ws 1 to D.W.3 wasaccepted by the learned trial Judge and only on that basis the learnedtrial Judge has acquitted the accused from the charges levelled againsthim. But the learned trial Judge has failed to consider whether ExP1cheque was handed over by the accused to the complainant and whether thesaid cheque on presentation in the bank was dishonoured to attract anoffence under Section 138 of the Act. The defence taken by the accused isthat one Jaganathan, the brother-in-law of the complainant is working asa Clerk in Indian Overseas Bank, Suramangalam Branch, Salem and that hehad approached the said Jaganathan for a loan of Rs.2,00,000/- and alongwith his application , he had tendered his documents relating to hisimmovable properties along with a blank cheque which was manipulated andforged by the said Jaganathan in connivance with the complainant andproduced by the complainant in this case as to appear though it was drawnin favour of the complainant by the accused. To substantiate thisdefence, the accused had examined D.Ws 1 and 2 besides examining himselfas D.W.3. 10b. D.W.1 in his evidence would depose that the accused had handedover his documents along with a blank cheque in order to get loan from thebank and that he (D.W.1) himself had borrowed hand loan from the saidJaganathan and at that time, when he approached the said Jaganathan forloan, he has also signed 2 or 3 papers and even after the discharge of theloan, the said Jaganathan has not returned the said papers. He would saythat the accused had no transaction with the complainant. But in the crossexamination, he would depose that he has not seen the complainantSadasivam before.10c. D.W.2 would depose that he has also approached Jaganathan forloan and at that time, he had handed over his documents along with theblank cheque but he would depose that he has not borrowed any amount fromthe said Jaganathan. The reason being the said Jaganathan was arrested bythe police by that time. But he would categorically depose that theaccused also handed over the blank cheques and his documents to Jaganathanand borrowed loan whereas the defence of the accused is that he has notborrowed any loan from the said Jaganathan. Only for the purpose ofgetting loan, he has handed over the documents along with Ex P1 blankcheque. In order to discredit the demeanour of the complainant, the https://hcservices.ecourts.gov.in/hcservices/ accused had produced Exs D3, the first information report registered bythe Central Crime Branch, Salem against the complainant, Jaganathan andhis wife. A perusal of Ex D3 would go to show that a criminal complaintwas preferred by the Senior Regional Manager of Indian Overseas Bank,Suramangalam Branch, Salem, alleging that Jaganathan is an employee andthe brother-in-law of Jaganathan viz., Sadasivam was having savings bankaccount in Indian Overseas Bank, Suramangalam Branch, Salem and hadpresented cheque No.146430 dated 19.11.1998 for Rs.2,00,000/- chequeNo.146429 for Rs.2,00,000/- and another cheque for Rs.18,00,000/- andCheque No.146432 for Rs.2,00,000/- drawn on Indian Overseas Bank,Suramangalam Branch, Salem to United Commercial Bank,Shevapet Branch, forcollection and that he has misappropriated the said amount ofRs,.22,00,000/- and Rs.2,00,000/- respectively and the said amount wasdebited by Jaganathan fraudulently in the bank account. According to thecomplaint, both Sadasivam/complainant herein, his brother-in-lawJaganathan and his wife Pushpammal hatched a conspiracy to cheat anddefraud Indian Overseas Bank to the tune of Rs.24,00,000/- and dishonestlymisappropriated the said amount during the period 1997 to March 1999.10d. Relying on the above said complaint, Ex D3, the learned counselappearing for the accused/respondent herein would contend that one suchcheque handed over to Jaganathan for obtaining a loan from the IndianOverseas Bank, was stolen away from the bank by the said Jaganathan , thebrother-in-law of the complainant herein and forged as to appear that itwas drawn by the accused in favour of the complainant Sadasivam, and onthe basis of the said forged cheque Ex P1, the complaint has beenpreferred by the complainant. If the case of the accused is true, then inEx D3 complaint, Ex P1 cheque number has also been mentioned by thecomplainant to the effect that the cheque presented in the Indian OverseasBank was stolen away by the said Jaganathan.But absolutely there is noevidence on record to show that Ex P1 cheque was handed over to Jaganathanby the accused for the purpose of getting loan from the Indian OverseasBank. If the accused required any loan, then the natural conduct expectedfrom him is to approach the Manager of the said Bank and not a clerk ofthe bank. The learned counsel appearing for the accused/respondent wouldcontend that since Jaganathan was in charge of the loan Section, theaccused has approached him. To prove that Jaganathan was in charge of theloan Section in Indian Overseas Bank, Suramangalam Branch, there isabsolutely no evidence let in on the side of the accused. Except, the oralevidence of D.W1 and D.W.2, there is no documentary evidence on record toshow that they have also approached Indian Overseas Bank, SuramangalamBranch for a loan through Jaganathan and that they have been sanctionedthe loan. There is absolutely no evidence on record to show that theaccused has preferred any complaint against the said Jaganathan eitherwith the higher officials of the Indian Overseas bank or with the policeto the effect that he had cheated him after receiving a cheque forRs.2,00,000/- for the purpose of sanctioning of the loan. https://hcservices.ecourts.gov.in/hcservices/ 10e. On the other hand, P.W.1 has narrated the averments stated inthe complaint to the effect that the accused had borrowed a loan ofRs.2,00,000/- but he failed to repay the same and on his demand, he haddrawn Ex P1 cheque on 28.1.1998 for Rs.2,00,000/- in his favour. In thiscontext, the accused has not disputed his signature in Ex P1 cheque. Undersuch circumstances, presumption under Section 139 of the Act against theaccused is that the holder of the cheque, received the cheque for thedischarge in whole or in part or any debt or other liability. At thisjuncture, the learned counsel appearing for the accused/respondent wouldcontend that as per the Explanation to Section 138 of the Act , it is theduty of the complainant to prove that only to discharge the legallyenforceable debt or other liability, Ex P1 cheque was drawn by the accusedand that in this case, it is the case of the complainant that only underthe promissory note of the year 1996, the accused had borrowed a sum ofRs.2,00,000/- from him but the said promissory note has not seen thelight of the day. But we should not forget the fact that this case hasbeen filed under Section 138 of the Act and not under any promissory note.Once the complainant has presented the cheque and proved that onpresentation of the cheque with the bank, the same was dishonoured , thenautomatically the presumption under Section 139 of the Act will follow tothe effect that only to discharge a subsisting liability , the cheque wasdrawn by the drawer of the cheque in favour of the payee . No doubt, underSection 139 of the Act, the presumption is rebuttable one. But in thiscase, the accused in his attempt to rebut the evidence of P,.W.1 hasmiserably failed to show that Ex P1 cheque was handed over to his brother-in-law Jaganathan and was manipulated and forged by the accused andproduced in this case. 11. Under such circumstances, I am of the view that the findings ofthe learned Judicial Magistrate No.2, Salem in C.C.No.57 of 1998 is notbased on the materials available on record,but only carried away by theevidence of D.Ws 1 to 3 which are not supported by any documentaryevidence to show that Ex P1 cheque was handed over to Jaganathan by theaccused. Under such circumstances, I hold that the accused is guiltyunder Section 138 of the Act and accordingly this Court convict theaccused.12. When coming to the question of sentence, following the principlelaid down by the Honourable Apex Court in Goa Plast(P) Ltd.,-v- ChicoUrsula D'Souza(2004)2 Supreme Court Cases 235) wherein it has beenobserved as follows:"Thus it has to be presumed that a cheque is issued indischarge of any debt or other liability. Thepresumption can be rebutted by adducing evidence andthe burden of proof is on the person who wants torebut the presumption. This presumption coupled withthe object of Chapter XVII of the Act which is topromote the efficacy of banking operation and to https://hcservices.ecourts.gov.in/hcservices/ ensure credibility in business transactions throughbanks persuades us to take a view that bycountermanding payment of post-dated cheque, a partyshould not be allowed to get away from the penalprovision of Section 138 of the Act. A contrary viewwould render Section 138 a dead letter and willprovide a handle to persons trying to avoid paymentunder legal obligations undertaken by them throughtheir own acts which in other words can be said to betaking advantage of one's own wrong. If we holdotherwise, by giving instructions to banks to stoppayment of a cheque after issuing the same against adebt or liability, a drawer will easily avoid penalconsequences under Section 138. Once a cheque isissued by a drawer, a presumption under Section 139must follow and merely because the drawer issuednotice to the drawee or to the bank for stoppage ofpayment, it will not preclude an action under Section138 of the Act by the drawee or the holder of thecheque in due course. This was the view taken by thisCourt in Modi Cements Ltd.v.Kuchil Kumar Nandi(1998)3SCC 249). . . . Reliance was also placed on paragraph17 of the Judgement of this Court in the case ofM.M.T.C. Ltd.v. Medchl Chemicals and Pharma(P) Ltd.Which reads as under:(SCC P.240,para 17) " There istherefore no requirement that the complainant mustspecifically allege in the complaint that there was asubsisting liability. The burden of proving thatthere was no existing debt or liability was on therespondents. This they have to discharge in thetrial. At this stage, merely on the basis of avermentsin the petitions filed by them the High Court couldnot have concluded that there was no existing debt orliability. . . . . We have no doubt that therespondent has committed an offence punishable underthe provisions of Section 138 of the Act and is liableto be punished. The transaction in question tookplace between the parties in the year 1993, therefore,Section 138, as it stood at the relevant time, wouldbe applicable to the present case. Section 138provides imprisonment for a term which may extend toone year, or with fine which may extend to twice theamount of the cheque, or with both,. Section 138 hasnow been amended and the penalty of imprisonment for aterm which may extend to one year has been substitutedby two years as provided by the amending Act of 2002and the fine which may extend to twice the amount ofthe cheque. This has been prescribed as the punishmentfor the offence under Section 138 of the Act. The https://hcservices.ecourts.gov.in/hcservices/ object and ingredients under the provisions, inparticular, sections 138 and 139 of the Act cannot beignored. Proper and smooth functioning of all businesstransactions, particularly, of cheques as instruments,primarily depends upon the integrity and honesty ofthe parties. In our country, in a large number ofcommercial transactions, it was noted that the chequeswere issued even merely as a device not only to stallbut even to defraud the creditors. The sanctity andcredibility of the issuance of cheques in commercialtransactions was eroded to a large extent.Undoubtedly, dishonour of a cheque by the bank causesincalculable loss, injury and inconvenience to thepayee and the entire credibility of the businesstransactions within and outside the country suffers aserious set back. Parliament, in order to restore thecredibility of cheques as a trustworthy substitute forcash payment enacted the aforesaid provisions. Theremedy available in a civil Court is a long-drawnmatter and an unscrupulous drawer normally takesvarious pleas to defeat the genuine claim of thepayee.After the above said observation, the Honourable Apex Court has held thatthe accused is liable to pay a sum of Rs.80,000/-(twice the amount of thecheque) by way of demand draft to the complainant with default sentence,I am of the view that the same yardstick will squarely applicable to thepresent facts of the case. 13. Following the principle enunciated in the above said dictum,I amof the view that instead of giving any sentence, the accused can bedirected to pay twice the amount of the cheque ito the complainant n thiscase also. The point is answered accordingly. 14. In the result,the appeal is allowed and the Judgment in C.C.No.57of 1998 on the file of Judicial Magistrate No.2, Salem is hereby setaside. The accused is convicted under Section 138 of the Act and onemonth's time from the date of receipt of a copy of this order is given tothe respondent/accused herein to pay a sum of Rs.4,00,000/-(Rupees FourLakhs) only (Twice the amount of the Cheque) to the appellant/complainant.In default, thereof, the respondent/accused shall suffer simpleimprisonment for six months. https://hcservices.ecourts.gov.in/hcservices/

14. In the above lines, the appeal is disposed of.Sd/-Asst. Registrar./true copy/Sub Asst. Registrar.sgTo, 1.The Judicial Magistrate No.2, Salem.2.-do- the Chief Judicial Magistrate, Salem+ 1 CC To Mr. S.Jayaselan, Advocate SR NO.34366+ 1 CC To Mr.V.Srinivasan, Advocate SR NO.34169Crl.A.No.352 of 2001nsm[co]Gp/20.6