Chandrasekhar v. Hsiung Cham Chun

O R D E R Heard the learned counsel for the petitioner and the learned counsel for the respondent.

2. The petitioner was complaint before the Trial Court alleging that the respondent had committed an offence punishable under Section 138 of the Negotiable Instruments Act, 1881 (hereinafter referred to as "the NI Act", for brevity) and that it was on the following circumstances. It was the allegation of the complainant that the accused had borrowed a sum of Rs.6,00,000/- in the month of June 2005 and in discharge of the loan, had issued a post dated cheque bearing No.0931300 dated 18th March 2006 drawn on State Bank of Mysore, University Campus Branch, Mysore and when the same was presented for encashment through the petitioner’s Bank, it was dishonoured 3 with an endorsement that the account was closed. It is in this background that the petitioner claims to have issued a notice of demand and the respondent having failed to comply, had followed up with the complaint before the Trial Court. The respondent had resisted the proceedings. The parties had tendered evidence before the Court. On the basis of the same, and after hearing the parties, the Trial court had framed the following points for consideration:

1. Whether Ex.P2 cheque is issued by the accused to the complainant in discharge of a legally enforceable debt?

2. Whether the complainant has succeeded in proving the ingredients of offence under section 138 of Negotiable Instruments Act against the accused?

3. If so, what is the sentence to be imposed?

3. The Trial Court had answered both the points in the affirmative. However, in proceeding to convict the respondent, had directed to undergo simple imprisonment for a period of one 4 year and sentenced the respondent to pay a fine of Rs.3,50,000/-. The said order was challenged both by the present petitioner as well as the respondent. The respondent had preferred an appeal challenging the conviction, whereas the petitioner had preferred a Revision Petition on the ground that the fine directed to be paid as compensation was much less than the cheque amount and therefore it ought to be appropriately enhanced. The Appellate Court, in turn, has dismissed the petition filed by the petitioner and has allowed the appeal filed by the respondent. It is that, which was challenged, by way of appeal in the first instance. This Court, by an order dated 3rd July 2009, opined that the issue whether an appeal was maintainable against the judgment of the lower Appellate Court, had come up for consideration in another appeal and that the appeal provided under Section 378(4) of the Code of Criminal Procedure, 1973 (hereinafter referred to as "CrPC", for brevity) does not refer to an order of acquittal passed in exercise of appellate jurisdiction but to orders passed in exercise of original jurisdiction, and therefore, an appeal under that provision was 5 not maintainable and that the appellant may take recourse to Revision Petition under the provisions of Section 397 CrPC and accordingly disposed of the appeal. It is in that background, the present petition is registered.

4. The learned counsel for the petitioner would submit that the Appellate Court has allowed the appeal filed by the respondent erroneously holding that since the respondent had denied the issuance of the cheque in discharge of his legal liability and had set up a defence that the respondent and the father-in-law of the petitioner were acquainted and were also doing business and the cheque had been issued in some other transaction, between the father-in-law of the petitioner and the respondent, and the very bank account had been closed two years prior to the issuance of the alleged date of the cheque which was in question, and therefore, there was no occasion for the respondent to have issued any cheque in favour of the petitioner. It was further contended that even assuming that the cheque was issued on the account of the respondent and in 6 favour of the petitioner, the cheque being for a substantial amount of Rs.6,00,000/-, could not be in respect of any loan transaction as apparently the petitioner did not have the means to lend such huge money and since he had also not maintained any accounts or accounted for the same before the competent authorities by way of payment of taxes, and therefore, the claim was fictitious and mischievous. On such defences having been set up by the respondent, the Appellate court had readily accepted the same while misdirecting itself as to the position of law on the basis of a decision of the Supreme Court in the case of KRISHNA JANARDHANA BHAT v. DATTATRAYA G. HEGDE [2008(4) SCC 54]. The learned counsel would submit that the propositions of law laid down therein were disapproved by a three Judge Bench decision of the Supreme Court in the case of RANGAPPA v. MOHAN [AIR 2010 SC 1898], and therefore, the burden of discharging the presumption under Section 139 of the NI Act does not shift to the petitioner merely on the self-serving claim of the accused and it was yet for the accused either to tender positive evidence as regards the contention or to 7 demonstrate the absence of a legal liability, from the evidence of the complainant himself. The learned counsel would submit that apart from claiming that the cheque in question had been issued in favour of the father-in-law of the petitioner, no evidence has been tendered on that account. Secondly, the assertion that the transaction was without any consideration and the cheque has not been issued for any legal liability, the contention that the petitioner was without means to lend such huge amounts of money or that the fund was not accounted, are hardly grounds which could be set-up by the accused and which could be appreciated by the Appellate Court, when the issuance of the cheque on the account of the petitioner and the signature, were not disputed. In any event, the further contention that the cheque was mutilated, is not a ground on which the Appellate Court has negated the case of the petitioner. Therefore, the learned counsel would submit that the Appellate Court was not justified in negating the case of the petitioner on the basis of the ratio laid down in KRISHNA JANARDHAN BHAT case (supra). However, the learned counsel submits that the petitioner has not 8 chosen to challenge the reduction of fine amount to less than the amount of the cheque.

5. The learned counsel for the respondent, on the other hand, would submit that the petitions are without jurisdiction. He would insist, notwithstanding a judgment of this Court which is referred to, the provision of law under which an appeal could be filed continues to be Section 378 (1) and (3) CrPC, which require that the leave of this Court be obtained in filing such a petition in the first instance and in the absence of the same being complied with, the present petition, which seeks to question the judgment of acquittal by the Appellate Court, would be incompetent and therefore would submit that the petition should be rejected on that ground alone. On merits, the learned counsel would insist that there is no denial of the fact that the account, on which the cheque had been issued, had been closed two years prior to the alleged date of the cheque, which would clearly be a circumstance to indicate that the said cheque in question was being misused by the petitioner and added to the 9 circumstance that the petitioner had no means whatsoever to be in possession of such funds against which a cheque could have been issued in the first instance. The Court below was fully justified in holding that the respondent had discharged the burden insofar as the presumption would be in favour of the holder of the cheque as contemplated under Section 139 of the NI Act. As the respondent has indeed tendered evidence and has elicited admissions in cross-examination by the petitioner, the requirement of establishing that there was no legal liability has, in any event, been discharged even as held in the case of RANGAPPA (supra) by the Apex Court. Therefore, he would submit that it cannot be said that the respondent had not tendered evidence to establish that there was no legal liability for which the cheque could have been issued, and hence seeks dismissal of the petition on the further ground that since the respondent has been acquitted of the offence, the question of payment of any fine or compensation would not arise.

6. In the light of the above rival contentions, insofar as 10 the first preliminary objection as to the maintainability of the petition is concerned, in view of the judgment of this Court rendered earlier, which has not been questioned, and since the petitions have been entertained before this Court without demur or protest by the respondent in the first instance, such a contention being taken at this point of time, cannot be countenanced. Therefore, notwithstanding any such legal infirmity as to the entertainment of the present petition owing to the express language of Section 378 CrPC, is not tenable.

7. Insofar as the main contention as regards the respondent having demonstrated that there is no legal liability for which the cheque could have been issued having been held in the affirmative by the Appellate Court is clearly in error as the manner in which the burden, cast on the accused, could be discharged in terms of Section 139 of the NI Act depends on the facts and circumstances of each case. Therefore from a perusal of the record, it has to be ascertained whether the respondent could be said to have discharged the burden that there was no 11 legal liability or that the cheque was not issued in discharge of legal liability. Given the defence set up by the respondent, the burden was heavy on the respondent to have claimed the said defence. Merely to state that the account had been closed and therefore the question of issuing of the cheque did not arise, was a circumstance for the respondent to explain and it cannot be said that the burden of establishing such a circumstance would shift on the petitioner. It was quite possible for the respondent to have willfully closed the account and thereafter to have issued the cheque in question. The burden of establishing that it was misused was on the respondent and the petitioner cannot be expected to tender negative evidence in that regard. Secondly, the question whether the petitioner had adequate funds at his disposal to have even lent monies and the circumstance that he has admitted to not having maintained any records of his acquisition of funds or to have produced other material to demonstrate that he did have the income, was not a pre- condition in lodging a complaint for an offence punishable under Section 138 of the NI Act. The finding of the Appellate Court 12 that there was an initial burden on the petitioner to establish that there was a legal liability, is an incorrect proposition. Though this was the opinion expressed in the case of KRISHNA JANARDHAN BHAT (supra), the same has been restricted as applicable to the facts and circumstances of that case by a decision of a three Judge Bench of the Apex Court in the case of RANGAPPA (supra). Therefore, the proposition cannot be applied to the present case on hand.

8. The next question, as to whether the Trial Court could have, in the first instance, reduced the fine payable to below the amount of the cheque, also appears to be an irregularity committed by the trial Court. When once the respondent was held guilty of the offence, the minimum that could have been imposed as a fine was the cheque amount which could extend to twice of the amount of the cheque by way of fine. Therefore, it is inexplicable that though the cheque amount was Rs.6,00,000/-, the Trial Court has, without any provocation, reduced it to Rs.3,50,000/-, which was not permissible. Since 13 the petitioner has not chosen to challenge the reduction of fine amount to less than the amount of the cheque, the same stands affirmed.

9. Accordingly the petition stands allowed in terms as above. Sd/- JUDGE