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TMI Blog2003 (11) TMI 336X X X X Extracts X X X X X X X X Extracts X X X X ..... - Dated:- 20-11-2003 - B.P. SINGH AND DR. A.R. LAKSHMANAN, JJ. Dhruv Mehta, Mohit Chaudhary and S.K. Mehta for the Appellant. A.K. Sanghi for the Respondent. JUDGMENT Dr. A.R. Lakshmanan, J. - This appeal is preferred by the appellant/complainant against the order of the High Court of Judicature at Bombay, Panaji Bench in Criminal Appeal No. 37/1995 whereby the High Court confirmed the order of acquittal dated 25-8-1995 passed by the Judicial Magistrate, First Class in Pvt. N.C. Case No. 149/93/8 for offence punishable under section 138 of the Negotiable Instruments Act. 2. The brief facts leading to the filing of the present appeal are as follows : The respondent issued 10 post-dated cheques of Rs. 40,000 each in favour of the appellant totalling Rs. 4 lakhs for payment towards the liability of the amount misappropriated from the funds of the appellant-company. The respondent wrote a letter to the appellant denying liability to pay the aforesaid sum for the reasons given in the letter dated 12-2-1993 (Annexure P-1). The appellant deposited the first cheque for encashment. The said cheque was dishonoured by the Bank on the ground that the responde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat the cheque issued by the respondent was dishonoured, nothing further is required to be proved by the complainant and it is for the accused to rebut the presumption under section 139 of the Act. He would further submit that merely by sending a letter or a communication to the appellant-Company is not sufficient unless and until the presumption is rebutted by leading evidence and that the presumption cannot be said to be rebutted. Shri Dhruv Mehta would further urge that it was incumbent on the respondent/accused to examine Rajan Kinnerkar as the respondent stated in his letter dated 12-2-1993 that Rajan Kinnerkar was responsible for the financial transactions of the company and, therefore, he is responsible for the unexplained expenditure of the Company s Accounts. It was further contended that as soon as the respondent/accused presented or delivered the cheques to the appellant-Company, he admitted the liability and the cheque on presentation to the Bank being dishonoured, the ingredients of section 138 of the Act are satisfied and the accused committed an offence punishable under section 138 of the Act. 6. Shri A.K. Sanghi, learned counsel appearing for the respondent/accu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in a period of six months from the date on which it is drawn or within the period of its validity, whichever is earlier; ( b )the payee or the holder in due course of the cheque, as the case may be, makes a demand for the payment of the said amount of money by giving a notice, in writing, to the drawer of the cheque, within fifteen days of the receipt of information by him from the bank regarding the return of the cheque as unpaid; and ( c )the drawer of such cheque fails to make the payment of the said amount of money to the payee or as the case may be, to the holder in due course of the cheque, within fifteen days of the receipt of the said notice. 139. Presumption in favour of holder. It shall be presumed, unless the contrary is proved, that the holder of a cheque received the cheque of the nature referred to in section 138 for the discharge, in whole or in part, of any debt or other liability." 8. We have perused the pleadings, annexures, the order passed by the learned Judicial Magistrate and the judgment rendered by the High Court. In our view, the High Court and the learned Judicial Magistrate failed to give effect to section 139 of the Act which creates a presu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Magistrate are direct off shoot of the wrong interpretation placed upon section 139 of the Act and the High Court and the learned Judicial Magistrate dwelt on extraneous factors and principles in order to bring the present case out of the purview of section 138 of the Act. 10. The High Court while discussing the object of the Chapter dealing with offences relating with dishonour of the cheque and extensively quoting commentary by Author Dr. P.W. Rege, however, has failed to consider the important aspect which is discussed at paragraph 16 which reads as under: "It is true that Negotiable Instruments Act has not failed to provide a remedy for the aggrieved party, but the foregoing provisions of the Act lay down a procedure which is in the first place very elaborate and since the remedy would be merely of a civil nature, the process to seek civil justice, in the second place becomes notoriously dilatory. To ensure promptitude in remedy against defaulters, therefore, was the only way in which the element of credibility and dependability could be re-introduced in the practice of issuing negotiable instruments in the form of cheques. The best way to do this was to provide a crimina ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tial that to issue stop payment instructions, there must be funds in the accounts in the first place. On this aspect, the Courts below have failed to see whether as on the date of signing of the cheque dated 20-7-1992 the date of presentation of cheque dated 10-1-1993 the date of writing of letter dated 12-2-1993 and the date on which stop payment instructions were issued to the Bank, the respondent has sufficient funds in the account. Both the Courts below have held that after issuing the letter, the respondent has stopped the payment, therefore, no mala fide can be attributed. It is pertinent to notice that the appellant made an application to the Bank Manager to ascertain whether or not there was sufficient amount in the account for the payment dated 2-6-1995. The learned Judicial Magistrate disallowed the said application without hearing the complainant holding that there is no dispute about the dishonour of the cheque by the accused, therefore, no purpose will be served by the Bank Manager as the dishonour is not in issue. Had the Bank Manager been examined it would have been clear whether the account had sufficient amount to pay the amount of the cheque or not? It would hav ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... efore, there was no question of suppression of facts in the case as held by the learned Judicial Magistrate and the findings endorsed by the High Court. The complainant narrated that the respondent owed the appellant a sum of Rs. 40,000. The appellant has received post-dated cheque for the said amount. The cheque was presented to the Bank and was returned with the remark stop payment . The statutory notice was issued and was received by the respondent. The respondent not having complied with the demand made, complaint was filed. 15. We shall now advert to the rulings cited at the time of hearing. Learned counsel relied upon paragraphs 13 to 16 of the judgment of this Court in the case of Modi Cements Ltd. v. Kuchil Kumar Nandi [1998] 3 SCC 249 (three-Judge Bench), which read as under : "It was, however, contended on behalf of the respondent that the decision in Electronics Trade Technology Development Corpn. Ltd. does not sup-port the appellant as far as the facts that emerged in the present cases inasmuch as the drawer had intimated to the bank on 8-8-1994 to stop the payment whereas the cheques were presented for encashment on 9-8-1984 although the same were drawn ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ugh cheques. It is for this reason we are of the considered view that the observations of this Court in Electronics Trade Technology Development Corpn. Ltd. in para 6 to the effect "Suppose after the cheque is issued to the payee or to the holder in due course and before it is presented for encashment, notice is issued to him not to present the same for encashment and yet the payee or holder in due course presents the cheque to the bank for payment and when it is returned on instructions, section 138 does not get attracted, does not fit in with the object and purpose for which the above chapter has been brought on the statute book." [Emphasis supplied] 16. Learned counsel relied on paragraph 38 of the judgment of this Court in the case of Hiten P. Dalal v. Bratindranath Banerjee [2001] 6 SCC 16 1 which reads as under : "38. The burden was on the appellant to disapprove ( sic disprove) the presumptions under sections 138 and 139, a burden which he failed to discharge at all. The averment in the written statement of the appellant was not enough. Incidentally, the defence in the written statement that the four cheques were given for intended transactions was not the an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the discharge, in whole or in part, of any debt or other liability. Thus it has to be presumed that a cheque is issued in discharge of any debt or other liability. The presumption can be rebutted by adducing evidence and the burden of proof is on the person who wants to rebut the presumption. This presumption coupled with the object of Chapter XVII of the Act which is to promote the efficacy of banking operation and to ensure credibility in business transactions through banks persuades us to take a view that by countermanding payment of post-dated cheque, a party should not be allowed to get away from the penal provision of section 138 of the Act. A contrary view would render section 138 a dead letter and will provide a handle to persons trying to avoid payment under legal obligations undertaken by them through their own acts which in other words can be said to be taking advantage of one s own wrong. If we hold otherwise, by giving instructions to banks to stop payment of a cheque after issuing the same against a debt or liability, a drawer will easily avoid penal consequences under section 138. Once a cheque is issued by a drawer, a presumption under section 139 must follow and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ircumstances of the case and the law on the subject, we hold that the respondent shall be deemed to have committed an offence. When the matter was taken up for further hearing on 17-11-2003, learned counsel for the respondent submitted that this Court may consider the case of the respondent and the reason for his inability to pay the amount and may consider imposing lesser sentence by taking a lenient view. We are unable to countenance the said submission for the various reasons stated supra. We have no doubt that the respondent has committed an offence punishable under the provisions of section 138 of the Act and is liable to be punished. The transaction in question took place between the parties in the year 1993, therefore, section 138, as it stood at the relevant time, would be applicable to the present case. Section 138 provides imprisonment for a term which may extend to one year, or with fine which may extend to twice the amount of the cheque, or with both. Section 138 has now been amended and the penalty of imprisonment for a term which may extend to one year has been substituted to two years as provided by the Amending Act of 2002 and the fine which may extend to twice of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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