D.Peter Francis v. S.Pethiah

IN THE HIGH COURT OF JUDICATURE AT MADRAS DATED : 04.11.2009CORAM:THE HONOURABLE MRS.JUSTICE ARUNA JAGADEESANCrl.A.No.515/2002D.Peter Francis ..AppellantVs.S.Pethiah, Managing TrusteePSB Educational Trust, Chennai-50 ..RespondentPrayer:- This Criminal Appeal is filed against the order of acquittal passed by the learned 23rd Metropolitan Magistrate, Saidapet, Chennaiin CC.No.7099/98 dated 20.3.2002 for the offence under Section 138 of the Negotiable Instruments Act. For Appellant :Mr.R.RajarathinamFor Respondent :Mr.N.Gyanchand Jain and Mr.S.N.A.HussaniORDER This Criminal Appeal is filed by the complainant against the order passed by the learned 23rd Metropolitan Magistrate, Saidapet, Chennai in CC.No.7099/98 dated 20.3.2002, acquitting the accused for the offence punishable under Section 138 of the NegotiableInstruments Act (herein after referred to as the Act).2. According to the Appellant/complainant, there was an agreement of sale dated 31.1.1997 between the complainant and the Respondent/accused for 22 acres and 40 cents of lands situated in Thaiyur Village, Tiruporur Panchayat Taluk, Chengalput District and in pursuant to the said sale agreement, possession was given to the accused and three sale deeds were executed dated 13.6.1997 and one sale deed on 5.3.1997.

The total amount to be paid as per the sale agreement was Rs.40 lakhs and Rs.26 lakhs was paid and for the balance of Rs.14 lakhs, three cheques dated 20.8.1998, 20.8.1998 and25.8.1998 for Rs.1/- lakhs, Rs.1/- lakhs and Rs.2/- lakhsrespectively were issued by the Respondent/accused S.Pethiah, the https://hcservices.ecourts.gov.in/hcservices/ Proprietor of M/s.Sujitha Leathers for and on behalf ofPSB.Educational Trust and when the same were presented on 20.8.1998and 31.8.1998 respectively for encashment, they were dishonoured on the ground of "stop payment". Therefore, the Appellant had issued anotice through his counsel and the accused had sent a reply alleging that there is no liability. Hence, the complaint under Section 138 of the Negotiable Instruments Act had been filed.3. After trial, considering the evidence on record and the arguments advanced on both sides, the Trial Court found the Respondent not guilty under Section 138 of the Act and accordingly, acquitted the Respondent.

Aggrieved over the same, this CriminalAppeal is filed by the complainant.4. The defence is that an sale agreement was entered into between the Appellant and the Respondent dated 31.1.1997 which referred to 20 different items of properties under different survey numbers with different measurements and sales of certain items of lands as per the deals were completed and the sale consideration aggregating to Rs.24 lakhs was paid in full and the vacant possession in respect of the lands covered under the four sale deeds were only delivered to the Respondent. But, regarding the remaining lands in respect of the item of land comprised in S.No.1278 covering a total area of 4.30 acres and in S.No.1395/3B/C covering an area of 1.75acres and S.No.1180 covering an area of 1.50 acres, on an enquiry and investigation made by the Respondent from various sources, the title of those lands towards which he paid the advances by way of three impugned cheques were not clear and perfect and therefore, requested the Appellant to return the above said three cheques to him immediately.

Ex.D8 had been filed to show that the lands inS.No.1278 and 1182 for which an agreement of sale has been entered into between the Appellant and the Respondent are Poramboke lands and the Revenue authorities had given the said information to the Respondent. 5. By way of a reply to the notice issued by the Appellant, the Respondent had stated the above said facts and had asked the Appellant not to present those cheques for encashment and further stated that in spite of such a request, if the cheques werepresented, then the required funds would not be remitted in the Bank. Despite the notice dated 19.8.1998, the Appellant had presented the cheques for encashment on 20.8.1998 and 31.8.1998 respectively through his Banker.6. It was also pointed out in the course of trial that the Appellant himself had cancelled the agreement of sale dated 31.1.1997on the basis of which, he claimed that the cheques were issued for the amount payable and in such factual situation, the stop payment notice had been issued by the Respondent on a valid cause including https://hcservices.ecourts.gov.in/hcservices/ that there was no existing liability at the time of presentation of the cheques for encashment and therefore the offence under Section138 of the Act has not been made out.

Ex.D7 is a crucial document to show that by letter dated 5.1.1998 the Appellant has affirmed that the agreement of sale dated 31.1.1997 stood cancelled. 7. The learned counsel for the Appellant contended that the complainant has prima facie proved that there was an existing liability and the accused has not proved contrary to that and therefore, the presumption under Section 139 of the Act has to be drawn in favour of the complainant.8. The explanation to Section 138 of the Act defines the expression "debt" or "liability", as a legally enforceable one and unless it is established that the debt or liability in question is alegally enforceable one, it would not attract the consequence provided under the section even if it is returned unpaid. When the agreement of sale itself stood cancelled at the instance of the Appellant, then it cannot be held that any legally enforceable liability was due under that document.9.

In the case of Kamala Vs. Vidyadharan M.J. [2007-2-Supreme-611] wherein a cheque issued by the accused for a sum of Rs.1lakh when presented was dishonoured for the "funds insufficient" and the defence of the accused was that a sale deed was executed in her favour for a consideration, but as there was a dispute in regard to the exact area of the property and measurement therefor had not been taken, she had given a cheque on an understanding that the consideration shall be reduced, if the area found in the sale deed was found short and upon measurement, the area of the property was found to be short and in that view of the matter, no further amount was due, but despite the same, the cheque was produced before the Bank. The Honourable Supreme Court found that the defence of the accused probable and held that the presumption raised stood discharged and that the complainant failed to discharge the onus placed on him.10.

In the instant case, the Respondent has clearly proved that the cheques were issued in lieu of oral agreement of sale and onan enquiry being made with the revenue Authority, it has come to know that the Appellant was not the owner of the lands and they arePoramboke lands and in such view of the matter, as there is a bonafide dispute in regard to the validity of the title of those lands, the Respondent has requested the Appellant to return back the cheques, but despite the same, the cheques having been produced before the Bank for encashment and returned as "stop payment" on instructions and under such circumstances, the accused had no obligation to facilitate the encashment. Therefore, the liability arising out of a contract which is not legally enforceable would not https://hcservices.ecourts.gov.in/hcservices/ constitute an offence under Section 138 of the Negotiable InstrumentsAct. 11. For the reasons aforementioned, I am of the considered view that no case has been made out for interference with the well reasoned order of the court below.12.