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TMI Blog2022 (8) TMI 821X X X X Extracts X X X X X X X X Extracts X X X X ..... e complainant prior to the issuance of cheque by the accused which is claimed to have been admitted in his evidence, he was not entitled to present the cheque, but was liable to return it and take a fresh cheque for the balance amount and present it thereafter (para 10 page 19/20). The complainant having not so done it was held that the presumption under Section 139 of the N.I. Act stood rebutted and therefore, the accused was entitled to an acquittal which was so ordered. 3. The factual matrix is as under : (i) The complainant is a dealer, who deals in sale of tractors. On 19.09.2009 an agreement came to be entered between the complainant and the accused, (Exh.34 page 86), under the terms of which the accused had agreed to sell tractors and take a commission for such sale. It was further agreed that the commission would not be included in the price of the tractors but would be separately chargeable and receivable by the accused directly from the purchaser and price of the tractor would be remitted by the accused to the complainant. (ii) It is in pursuance to this agreement dated 19.09.2009 at Exh.34, that the accused made multiple transactions of sale of tractors for the comp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... company, the process of financing of the tractor, to the purchaser was completed and the balance amount was credited directly to the account of the dealer (complainant) or cheque was issued in the name of dealer. (xi) The learned trial Court by the judgment dated 18.01.2018 (page 30 to 51) held the accused guilty and convicted him for the offence under Section 138 of the N.I. Act and sentenced him as indicated above. A fine of Rs.10,50,000/- was imposed considering the amounts of Rs.40,500/- and Rs.3,90,000/- claimed to have been recovered by the complainant from third parties which he had debited to the account of the accused. (xii) In appeal, the learned Appellant Court noting that the amount of Rs.3,90,000/- was received by the complainant prior to the issuance of the cheque by the appellant/accused, held that there was suppression on behalf of the complainant and since the cheque amount was not recoverable on account of the aforesaid amount having already been received, set aside the judgment of conviction by the learned Magistrate, dated 18.01.2018 and acquitted the accused of the offence under Section 138 of the N.I. Act. 4. Mr. Badhe, learned counsel for the comp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the N.I. Act having being fulfilled, the learned Magistrate was fully justified in convicting the accused and passing the sentence imposed. (x) The learned Sessions Court was not justified to draw the inference as is indicated in para 10 of his judgment as the same, ran contrary to the evidence and material on record. If this was the case, it was permissible for the accused to lead evidence in defence, by examining the said Pramod Sakhare whose tractor was seized and sold by the complainant recovering Rs.3,90,000/- as sale proceeds, and getting appropriate documents on record regarding the date, time and recovery, which having not been so done, the admission by the complainant in his cross-examination of recovery of Rs.3,90,000/- cannot be related to a point of time prior to the issuance of the cheque and the finding in that regard is clearly unjustified and without any basis whatsoever. The reversal having been done only on that basis, the same is liable to be set aside and the judgment of the learned Magistrate is required to be restored. 5. The arguments of Mr. Agrawal, learned counsel for the accused are as under : (i) By inviting my attention to Exh.35 dated 27.05.2011 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1), (f) Ranjit Singh Sethi Vs. Abdul Jalil Shaikh Abdulla, 2013 ALL MR (Cri) 2885, (para 16, 17, 18), (g) Shiju K. Vs. Nalini & Anr., 2016 (2) KLT 517, (para 10, 11, 12), (h) Lyca Finance Ltd. Vs. State & Anr., 2016 ACD 875, (para 4, 5), (i) Sundaravadanan Proprietor M/s. S.V.M. Auto Products Vs. M/s. Innoventive Industries Ltd., 2017 (2) MadWN (Cri) 59, (para 5, 6), (j) M/s. Industrial Fuel Consultants Vs. Shri Laxman Sharma, 2022 (1) AIR Bom.R (Cri) 34, (para 8, 9, 10), (k) Triyambak S. Hegde Vs. Sripad, 2022 (1) SCC 742, (para 20, 21). 6. Mr. Badhe, learned counsel for the appellant/complainant in rebuttal invites my attention, to the finding rendered by the learned Magistrate to the effect that the amount of Rs.3,90,000/- was received after filing of the complaint, which according to him, is based upon a correct appreciation of the evidence on record and without any other material ought not to have been digressed from, by the learned Sessions Court. Insofar as the contention that the amount of Rs.40,500/- having been received after the dishonour of the cheque concerned, Mr. Badhe, learned counsel for the appellant/complainant submits that the liability does n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d the principles in Kumar Exports [Kumar Exports v. Sharma Carpets, (2009) 2 SCC 513 : (2009) 1 SCC (Civ) 629 : (2009) 1 SCC (Cri) 823] as follows : (SCC pp. 520-21, paras 2021). "20. The accused in a trial under Section 138 of the Act has two options. He can either show that consideration and debt did not exist or that under the particular circumstances of the case the nonexistence of consideration and debt is so probable that a prudent man ought to suppose that no consideration and debt existed. To rebut the statutory presumptions an accused is not expected to prove his defence beyond reasonable doubt as is expected of the complainant in a criminal trial. The accused may adduce direct evidence to prove that the note in question was not supported by consideration and that there was no debt or liability to be discharged by him. However, the court need not insist in every case that the accused should disprove the non existence of consideration and debt by leading direct evidence because the existence of negative evidence is neither possible nor contemplated. At the same time, it is clear that bare denial of the passing of the consideration and existence of debt, apparently would n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... isions of Section 138 would be attracted." ***** "36. Even a blank cheque leaf, voluntarily signed and handed over by the accused, which is towards some payment, would attract presumption under Section 139 of the Negotiable Instruments Act, in the absence of any cogent evidence to show that the cheque was not issued in discharge of a debt. " Thus, what is necessary is to show that a) the cheque was issued for a legal debt or liability; b) the cheque was presented during the period of its validity [sec.138(a)]; c) on such presentation it was dishonored; d) a notice of demand was issued within the statutory period as provided in Section 138 (b) e) upon service of notice, the demand was not met with or paid with the time stipulated in Section 138(c). 8. In the instant matter, the issuance of the cheque bearing No.215535, dated 16.06.2011, by the accused, to the complainant, which cheque was drawn on the Axis Bank Pune (Exh. 44), is not in dispute. Its dishonour (Exh. 47) as well as issuance of the notice of demand (Exh. 49), the reply thereto (Exh.53) are not in dispute. In the reply at Exh. 53 dated 17.09.2011, the issuance of the cheques and the signature thereupon b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ved the same as Exh. 42. 11. A perusal of the evidence of the complainant, indicates that in the cross-examination (page 76) a mere suggestion in respect of Exh. 42 was given that the signature on Exh. 42 was different from the signature of the accused on Exh. 33, which has been denied. Apart from that, there is no serious cross-examination of the complainant vis-a-vis the letter at Exh. 42. 12. The letter dated 15.06.2011 at Exh. 42, by the accused is preceded by the demand in that regard as indicated by the communication addressed by the complainant to the accused dated 27.05.2011 Exh. 37 (page 89). The commercial relationship between the complainant and the accused, is further reflected from the letter dated 26.02.2010 Exh. 38 (page 90) which has been addressed to the complainant by the accused. It is thus apparent, that the liability of the accused, on the basis of the contents of the documents at Exhs. 34, 38, 37, and 42, is clearly spelt out. 13. The complainant, in his notice under Section 138 of the N.I. Act (Exh. 49 page 100) has categorically stated that a sum of Rs.40,500/-, was received by him from one Prafulla Kale, directly towards balance amount of sale of a tract ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h the averments as against the accused are as under : "6) That the defendant No.2 sold in all 26 Tractors to various customers. That out of these, the defendant No.2 duly deposited an amount to the tune of Rs.56,34,259/- to the plaintiff by duly calculating all the expenses including VAT, Finance etc. towards the sale of 12 Tractors, and in this regard, there is no dispute or grudge amongst the plaintiff, and the defendant No.2. That for other remaining 14 Tractors, the customers cost was of Rs.70,57,000/-, and the cost for the agent was of Rs.65,91,147/-. As the amount of consideration was not paid in time, therefore the amount of the interest charged as per the terms and conditions of these agreements, was to the tune of Rs.2,44,279/-, and the amount of VAT, and the transportation was to the tune of Rs.1,14,099/-. That the expenses incurred to avail the finance for 12 Tractors as out of these 14 Tractors, 12 Tractors were purchased on finance, was to the tune of Rs.39,940/-. As such the defendant No.2 was liable to pay an amount to the tune of Rs.69,89,465/- to the plaintiff, and the plaintiff was entitled to receive the said amount to the tune of Rs.69,89,465/- from the defend ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... are did not exert to get the loan sanctioned from any of the Bank or Finance company, and thereby the Tractor delivered to said Shri Pramod Aniruddha Sakhare was seized, and further sold to some other person, and thereby an amount to the tune of Rs.3,90,000/- was credited to the account of defendant No.2. That as such, because of subsequent changes, the plaintiff is in all entitled to recover an amount to the tune of Rs.10,42,299/- from the defendant No.2, and the defendant No.2 is liable to pay an amount to the tune of Rs.10,42,299/- to plaintiff. 7) That it is also necessary to state here that, while working as per the agreements dtd. 10/09/09 & 19/09/09, when the defendants were practically facing the difficulties, thereby to repair the practices, the defendant No.2 by giving letter dtd. 26/02/10 to the plaintiff also made some suggestion for better practice, and the suggestions made by the defendant No.2 were also considered, and the practices to run the business were also repaired. That, as the defendant No.2 has paid the total amount of consideration towards the sale of 12 Tractors including all the required expenses and etc., thereby the plaintiff by letter dtd. 23/05/11 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nding, but something less was outstanding, on account of the recovery of Rs.40,500/- and/or Rs.3,90,000/-. The very fact, that the complainant was prosecuting the compliant, in spite of having filed civil proceedings against the said two persons, would indicate, that amounts were recoverable. 15. The judgment of the learned Special Court, in para 9 (page 35) though indicates, recognition of the fact that the complainant had also filed Special Civil Suit No.2/2014 against the accused for recovery of the outstanding amount, which itself would indicate, that the liability of the accused was in existence, however neither the learned Special Court nor the Appellate Court, have gone into the averments in Special Civil Suit No.2/2014 at Ex.147, to consider the context in which such an admission is claimed to have been made. 16. The above position would therefore clearly indicate, the existence of a legal liability for which the cheque in question was issued, as a result whereof the applicability of the presumption under Section 139 of the N.I. Act, stood justified. 17. That takes me to the contention, that since an amount of Rs.3,90,000/- was recovered by the complainant, as admitted b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a defense witness with the relevant documents, so as to substantiate his contention that the amount of Rs.3,90,000/- was recovered, prior to presentation of the cheque, however for reasons best known to the accused, this has not been done. This being the position, there was absolutely no justification, for the learned Appellate Court to have arrived at such a finding and on its basis attribute malafides to the complainant and dismiss the complaint by acquitting the accused on that count. In fact a comparision of the averments in the complaint which was filed on 29.3.2011 and that of the plaint in Special Civil Suit No.2/2014, filed on 02.1.2014, would indicate that the aforesaid admission quoted above, would logically relate to a time after the filing of the complaint and before the filing of the suit, and not to a period of time before presentation of the cheque. 18. The submission of Mr. Agrawal, learned counsel for the accused that the nature of the transaction as spelt out in the evidence of the complainant and PW-2, in conjunction with Exh.35 and 36 would indicate that nothing was due and payable is clearly misconceived. This is so for the reason that Exh.36 (page 88) is a c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... amount of Rs.14,72,799/- for sale of the tractors by the accused and other amounts, such as advance paid for purchase of battery (Ex.39, dt.30/11/2009); rent paid of the Daryapur shop of the accused to the landlord Shri Shridhar Naik of Rs.24,000/- by cheque (Ex.40, dt.18/8/2010); bill of spares of Santosh Abhyankar to the account of the accused of Rs.1867/(Ex.41, dt.24/6/2010), as stated therein and therefore Exh.35, does not have any bearing whatsoever upon Exh.42, on which date the accused acknowledging his liability has issued the cheque in question. In fact in the reply by the accused at Exh.53, the accused admits to have sold 63 tractors. The evidence of PW-2, merely indicates that the persons named at Sr. No. 3/Sudhir Kokate (Invoice of Sai Auto- Ex.124, dt.29/3/2010), Sr. No.5/Pandurang Khajone (Invoice of Sai Auto- Ex.126, dt.27/9/2010) and Sr. No.9/Makrand Deshmukh (Invoice of Sai Auto-Ex.125, dt.28/9/2010), were granted finance for purchase of tractors and the finance amount was paid to the complainant. These persons according to PW-2 had also paid the margin money to the complainant (EX.68, 71 & 75). The finance amount was repaid by them, as per their account statement ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pellant, that since some amounts were recovered by the complainant, the cheque amount could not have been said to be the amount due and payable and therefore, would not be something towards the discharge of the debt or liability, relying upon M/s. Alliance Infrastructure Project Pvt. Ltd. (supra), is clearly misconceived for the reason that the question which fell for consideration therein was as to what the expression "amount of money" means in a case where the admitted liability of the drawer of the cheque gets reduced on account of part payment made by him after issuing but before the presentation of the cheque in question. In the instant case, firstly: the payment has not been made by the accused drawer of the cheque, as the amounts of Rs.40,500/- and Rs. 3,90,000/-, have not been paid by the accused/drawer of the cheque, but have been recovered by the complainant from third parties directly, which is not a disputed position on record and secondly: the amounts, have been received after the cheque has been presented and dishonoured, considering the fact that, the cheque was presented on 20.06.2011 (page 97) and was dishonoured on 13.07.2011 (Exh. 47 page 99), as against which, t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r, for the purpose of negotiation, on the back or face thereof or on a slip of paper annexed thereto, or so signs for the same purpose a stamped paper intended to be completed as a negotiable instrument, he is said to indorse the same, and is called the "indorser". 20. Inchoate stamped instruments.-Where one person signs and delivers to another a paper stamped in accordance with the law relating to negotiable instruments then in force in India, and either wholly blank or having written thereon an incomplete negotiable instrument, he thereby gives prima facie authority to the holder thereof to make or complete, as the case may be, upon it a negotiable instrument, for any amount specified therein and not exceeding the amount covered by the stamp. The person so signing shall be liable upon such instrument, in the capacity in which he signed the same, to any holder in due course for such amount; provided that no person other than a holder in due course shall recover from the person delivering the instrument anything in excess of the amount intended by him to be paid thereunder. 48. Negotiation by indorsement.-Subject to the provisions of section 58, a promissory note, bill of excha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ld to be permissible for the holder of the cheque too, as what is permissible for a transferee of a negotiable instrument, would always be permissible for the holder of the Cheque/negotiable instrument too, who is the original holder of the cheque/negotiable instrument. In such a case, in my considered opinion the correct course of action would be to make an 'indorsement' on the reverse of the cheque, of the amount received and the balance due thereafter and the cheque can then be presented for the balance due as 'indorsed'. Such a course of action would be in consonance with Section 56 of the N.I. Act, which permits such a note to be 'indorsed' upon the negotiable instrument, which is then to be negotiated for the balance due as 'indorsed' thereupon, for the negotiable instrument, upon such indorsement will become a negotiable instrument of such lesser amount as 'indorsed'. A notice in pursuance to dishonor of such a 'note indorsed' negotiable instrument will have to mention the original amount of the cheque; the amount received, including the mode/manner of its receipt; the amount 'indorsed' by a note as per Section 56 of the N.I. Act; and a demand of the 'indorsed' amount, not t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... x Court in NEPC Nicon Ltd. v. Magma Leasing Ltd. (supra) and Dalmia Cement (Bharat) Ltd. v. Galaxy Traders and Agencies Ltd. (supra) has not stated anything against the above general principle. What was stated in the facts of those cases was that though Section 138 is a penal statute, the court should interpret it, taking into account the legislative intent and purpose, so as to suppress the mischief and advance the remedy. But, in "Rahul Builders" ((2008) 2 SCC 321), the Hon'ble Supreme Court re-stated the settled principle of penal law that a penal provision like Section 138 should be interpreted strictly. In this case, we fee that there is not much scope for interpreting the provisions in the statute.. Going by the plain words of the Section, the cheque presented for encashment should be one for payment in full or part of the debt due. In this case, admittedly, the cheque was for an amount higher than the amount due on the date it was presented for encashment. The law contemplates making of an indorsement by the drawee on the back of the cheque regarding the part payment received. So, we are of the view that the 1st respondent cannot be found guilty of the offence under Sect ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , we overrule the decisions in R. Gopikuttan Pillai v. Sankara Narayanan Nair (Crl.A.No. 270/1997) and Thekkan & Go. v. Anitha (2003 (3) KLT 870). We find nothing wrong with the judgment of the trial court acquitting the 1st respondent. Accordingly, the Criminal Appeal is dismissed. No costs. (Emphasis supplied) 20.3. In case any part amounts are received post the dishonor, but prior to the notice of demand, the course contemplated by Section 56 of the N.I. Act, not being available, the prudent course would be to secure a fresh negotiable instrument for the balance and present it for realisation. However, many a times that does not happen, leaving the payee/holder of the cheque with the original cheque. Such part payment, at times, could also be mischievous with the intent to thwart the initiation of legal proceedings on the basis of the original cheque. In such an eventuality it would be appropriate if the receipt of the part amounts, post dishonor, is acknowledged in the notice of demand under Section 138(b) of the N.I. Act, and a demand for the balance is made and base the complaint thereupon, coupled with the original cheque, for otherwise, the intent of the Legislature behin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the cheque and therefore this judgment is not of any assistance to the learned Counsel for respondent. 21.1. In Laxmikant D. Naik Karmali (supra) the complainant, had claimed entitlement to the cheque amount on the plea that the same was on account of consultancy fees payable by the accused @ 15% of the amount of award. As the letter produced by the complainant on record, indicated 20% consultancy fees and there appeared to be a contradiction in that regard, it was held that the cheque amount on the own showing of the complainant was not due and payable, considering which Section 138 of the N.I. Act was held to be not attracted. 21.2. Karekar Finance Pvt. Ltd. (supra) was a case in which as per the own statement produced by the complainant, the accused did not owe to the complainant, the cheque amount as the cheque amount on 25.04.2001, the date of its issuance was Rs.4,17,274/- as against which the statement produced by the complainant showed that on 25.04.2001 an amount less than 3,84,330/- was due and payable, in which situation it was held that the cheque could not be for a debt or liability due and payable. 21.3. In Joseph Sartho (supra) the cheque was for Rs.4,61,400/- dat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntion that the cheque was issued on account of supply of coal, in which context it was held that a legal debt or liability was not proved, which in light of Ex.42 in the instant matter is clearly not attracted. 21.8. Basalingappa Vs. Mudibasappa, (2019) 5 SCC 418 para 25.1., is also relied upon by Mr. Agrawal, learned counsel for the appellant, to contend that whereas prosecution must prove the guilt of an accused beyond all reasonable doubt, the standard of proof so as to prove a defence on the part of an accused is pre-ponderence of probabilities, inference in respect of which can be drawn not only from materials brought on record by the parties but also by reference to the circumstances upon which accused relies (para 25.3). There cannot be any dispute with the above propositions, however the position on record would indicate, that the presumption under Section 139 of the N.I. Act, which is attracted in the present matter is due to the admission by the accused in his reply admitting the issuance of the cheque and his signature upon the same, which ought to have been rebutted by the accused. As pointed out above, the presumption can be rebutted either by effective cross-examinat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... law in such circumstances. Hazi Jahangir Molla (supra) considering Vishnu Bhat (supra) holds that merely because a part payment was made after issuance of statutory notice, that was not enough to take away the right of the holder of the cheque to enforce the cause of action regarding non-payment of the residue amount and in my considered opinion rightly so, for the reason that the liability for which the cheque is issued is for the entire amount as stated in the cheque and not for a part of that amount and even if a part payment is made after disclosing the same the cheque for the full amount can be used for prosecuting the drawer, for the residue by making an indorsement thereupon as discussed earlier. Taking a view otherwise, would permit the doors to be opened for all sorts of unscrupulous elements to make part payment of the cheque amount and then make the holder of the cheque, run from pillar to post for the balance, which cannot be permitted as the very intent of the enactment would then stand defeated. 24. Thus, for the reasons stated above, the impugned judgment of the learned Appellate Court dated 05.01.2022 in appeal No.30/2018, is hereby quashed and set aside and the ju ..... X X X X Extracts X X X X X X X X Extracts X X X X
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