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TMI Blog2006 (10) TMI 511X X X X Extracts X X X X X X X X Extracts X X X X ..... s in favour of the complainant On presentation, the said cheque came to be dishonoured for 'insufficient funds'. After causing a legal notice demanding to pay the cheque amount, a complaint was filed for non-compliance. Thereafter, learned Magistrate who held the enquiry, convicted accused 1, 2 7 for the offence under Section 138 of the Negotiable Instruments Act and sentenced them to pay fine of ₹ 34,65,000/-and in default, it was ordered that accused 2 7 to undergo simple imprisonment for a period of three months. Out of the fine amount, an amount of ₹ 34,40,000/- was ordered to be paid as compensation to the complainant. 3. Being aggrieved by the said order, petitioners have preferred appeal before the IX Addl. Sessions Judge, Bangalore who, in turn, while confirming the order of the trial court, dismissed the appeal. Hence, this revision by the accused petitioners. 4. Heard the counsel for the respective parties. 5. It is the argument of the petitioners' counsel that both the courts below have committed an error in convicting the accused although there is no legal evidence and no legally enforceable debt is to be discharged. Further, it is s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... obtained money lending license rises only when there is a recovery suit filed. Further, it is submitted that on behalf of the 1st accused, these petitioners and other Directors in the meeting held on 10.8.1998 have resolved to pay the amount due to the complainant and the 1st petitioner is the Chairman and 2nd petitioner is the family member of the 1st petitioner. There is cogent evidence on record to hold the petitioners guilty of the offence under Section 138 of the Negotiable Instruments Act and it is a legally enforceable debt. 8. In the light of the arguments advanced, let me consider whether both the courts below have committed any error in holding the accused guilty of the offence. 9. In the decision relied upon by the petitioners in the case of C Manohar v. B.R. Poornima the Madras High Court has held thus: Case of the complainant is that on behalf of the accused, he has filed claim petitions in MCO P 2339/92 and 246/93. Two civil cases were also filed. There is nothing to show that the complainant/advocate himself has paid the stamp duty and bore the legal fees. The complainant has not produced any agreement showing as to what was the arrangement between him and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the complaint Without this being made in the complaint, the requirement of Section 141 cannot be said to be satisfied. 15. Per contra, learned Counsel for the respondent relied upon the decision in K.N. Beena v. Muniyappan and Anr. wherein it is held thus in para 7: The High Court appears to have proceeded on the basis that the denials/averments in respondent's reply to the legal notice were sufficient to shift the burden of proof on to the appellant complainant to prove that the cheque was issued for a debt or liability. This is an entirely erroneous approach. The accused had to prove in the trial, by leading cogent evidence, that there was no debt or liability. The respondent-accused not having discharged the burden of proving that the cheque was not issued for a debt or liability, the conviction as awarded by the magistrate was correct The High Court erroneously set aside that conviction. 16. In the above cited decision the Supreme Court has observed that as per Section 118 139 of the Negotiable Instruments Act, the court has to presume that the cheque had been issued for discharging a debt or liability and the said presumption could be rebutted by the accused ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion 139 of the Negotiable Instruments Act that the cheque was drawn for discharge of liability of the drawer and that mere plausible explanation is not sufficient by the accused and the proof of explanation is very much necessary. 23. Learned Counsel also relied upon the case of K.N. Beena v. Muniyappan and Anr. to contend that the burden of proving the cheque was not issued for any debt or liability is on the accused and that the accused has to prove in trial by leading cogent evidence that there was no debt or liability. 24. Counsel has also relied upon the decision in A.V. Murthy v. B.S. Nagabasavanna 2002 (1) Crimes 306 to contend that dismissal of the complaint on the ground that the cheque was for a time barred debt, was not proper. 25. Based on the complaint filed by the respondent, the trial court had taken cognizance for the offence under Section 138 of the Negotiable Instruments Act. It is seen that 1st accused is the Company, petitioner 1/2nd accused is the Chairman and 3rd accused is the Managing Director. The 4th accused is the Vice Chairman and 5th accused is the Joint Managing Director. The 6 accused is once again the Managing Director and accused 7 to 13 w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ime barred debt is concerned, the trial court was of the view that as the case of the accused is not that the complainant has lent money, as such, it has not accepted the said contention. However, the finding of the appellate court in this regard is erroneous having taken a similar view as that of the trial court, but the fact remains as per Ex.P2, the letter said to have been issued by the 1st accused company through 3rd accused, it is clear that they acknowledged the payment and also expressed their regret for the inconvenience caused in repayment and they have decided to clear all the amount due to the complainant This letter is dated 10th August, 1998 wherein they have agreed to clear before 25th October, 1998. Such being the case, it is to be presumed that they have acknowledged to pay the debt much less a time barred debt As per Section 25 of the Contract Act, when such an agreement or terms are there despite the amount said to be time barred, then the debt becomes enforceable. Further, the cheque is shown to have been issued by the 1st accused company on 9.12.1998 which is duly signed by the 3rd accused - Managing Director which fact has not been disputed Once the cheque is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... documents to show that the amount was paid towards the discharge of the amount said to have been borrowed by the 1st accused company and not in respect of some other transaction. Except the oral say, it appears other documents have not been produced. 31. In the case on hand, participation of the petitioners as a Chairman and the Director of the accused 1 / company has been noted by both the courts below. As such it cannot be said that they were not at all involved in managing the affairs of the company. Further, of course against other directors, the case is shown to be split up. The responsibility to pay the amount in the first instance, would be on the accused 1 / company as the amount shown to be borrowed is for the purpose of the company and the liability of the petitioners may arise only after the amount is not satisfied out of the assets and proceeds of the company. However, having regard to the facts and circumstances of the case, I do not find any illegality in passing the impugned order of conviction. But in so far as the amount to be paid, the learned Magistrate has awarded ₹ 34,65,000/-. Of course though it is permissible to award double the amount as fine or c ..... X X X X Extracts X X X X X X X X Extracts X X X X
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