2018 (9) TMI 992 - HC - Indian Laws

Recovery of Four Cheques in the police enquiry - dishonor of three cheques - Section 138 of Negotiable Instruments Act - Held that - The reason adduced in the complaint and it is the case of complainant also that since the Respondent/Accused involved in misappropriation, police complaint was lodged and the same was registered in Crime No. 482 of 2013. However, though it is contended that the cheques in dispute were obtained in the police enquiry, the evidence of DW-1 has not in that line and he has not stated that the cheques in dispute were handed over during the police enquiry or out of the police enquiry. When no such evidence was let in on the side of the Respondent/Accused, then it cannot be considered that the cheques in dispute were obtained by using force or in the police custody - Here in the instant case no explanation is offered by the Accused as to for what purpose he issued four cheques and for what purpose one cheque alone was allowed to get honored and the other cheques were allowed to get dishonored. The judgment of the learned Trial Court is set-aside and the Respondent/Accused is convicted for the offence under Section 138 of the Negotiable Instruments Act and ordered to undergo a simple imprisonment for a period of one year and to pay fine a sum of ₹ 10,000/- in default to undergo a simple imprisonment for a period of 1 month - appeal allowed.

Summary

Issues:
- Appeal against judgment in C.C.No.519 of 2004 under Section 138 of Negotiable Instruments Act.
- Dispute over cheques issued by the Respondent/Accused in favor of the Appellant/Complainant.
- Allegations of misappropriation by the Respondent/Accused.
- Examination of witnesses and submission of evidence by both parties.
- Legal arguments regarding the validity of the cheques and service of statutory notice.
- Interpretation of evidence and legal principles by the Trial Court.
- Decision on conviction, imprisonment, fine, and compensation.

Analysis:

1. The Appellant/Complainant alleged that the Respondent/Accused, a former Managing Director, misappropriated ?20,00,000 leading to termination of service. The Respondent/Accused issued four cheques to settle the debt, but three were dishonored. The Appellant filed a complaint under Section 138 of the Negotiable Instruments Act. Witnesses and exhibits were presented during the trial.

2. The Appellant contended that the cheques were issued to discharge a debt, and the dishonor was not due to insufficient funds but "payment stopped by the drawer." The Trial Court, however, doubted the case, leading to the appeal. The Appellant argued that the statutory notice was validly served, despite being returned unserved, as the postal endorsement indicated delivery.

3. The Respondent/Accused claimed that the cheques were obtained by force during a police inquiry and were not issued for a legally enforceable debt. They argued that the Appellant's case lacked averments of intentional evasion of service, citing legal precedent. The Respondent/Accused failed to explain why the cheques were issued and why only one was honored.

4. The High Court found no evidence supporting the claim that the cheques were obtained by force or during a police inquiry. The Respondent/Accused's failure to explain the purpose of issuing the cheques weakened their defense. The Court noted that the statutory notice was considered served as the Respondent/Accused received court summons at the same address.

5. Consequently, the Trial Court's judgment was set aside, and the Respondent/Accused was convicted under Section 138 of the Negotiable Instruments Act. They were sentenced to one year of simple imprisonment, a fine of ?10,000, and ordered to pay ?15,00,000 as compensation to the Appellant/Complainant. The appeal was allowed, and the Respondent/Accused directed to pay costs.

6. The Tamil Nadu State Legal Services Authority was instructed to pay a sum to the Legal Aid counsel for the Respondent. The judgment highlighted the importance of proving legal enforceability of debts, proper service of statutory notices, and the burden of explanation on parties in such cases.