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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 ..... ity of the presumption under Section 139 of the N.I. Act, stood justified. 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 case part payment/s is made after the filing of the complaint, since the offence already stands completed in terms of Section 138(c) of the N.I. Act, and the proceedings have to go on, it would be appropriate, in case of conviction, for the learned Special Court, to direct compensation payable after taking into consideration, amounts received by the payee/holder of the cheque, till that time - The conduct of the complainant in disclosing recovery of part cheque amount, in the notice of demand itself, is an indicature of his bonafides and absence of malafides, fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 complainant. (iii) There was accounting in between the complainant and the accused on 15.06.2011, as a result of which, the accused issued a letter to the complainant of the same date (Exh.42 page 94), in which, the accused admitted his liability to the tune of Rs.14,72,799/- and in pursuance to that issued a cheque bearing No.215535, dated 16.06.2011 in the aforesaid sum drawn on the Axis Bank, Pune in favour of the complainant (Exh.44-cheque). (iv) The said cheque was presented by the complainant to his bankers for realization, however, by a cheque return memo dated 13.07.2011 issued by the State Bank of India (bankers of the complainant) it was intimated that the amount could not be realized on account of the payment having been stopped by the drawer (Exh.47 page 99). (v) On 11.08.2011, a demand notice under Section 138 of the N.I. Act (Exh.49 page 100) was issued by the complainant. During the period 13.07.2011 and 11.08.2011, the complainant had recovered a sum of Rs.40,500/- on 03.08.2011 from a customer directly (not from th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on 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 complainant submits : (i) That there is no basis for the finding rendered by the learned Sessions Court that the amount of Rs.3,90,000/- was recovered by the complainant prior to issuance of the cheque by the accused as there is no such material on record brought by the accused either by leading evidence or otherwise. (ii) The only basis of receipt of such amount by the complainant is his admission in his cross-examination (page 74) however, according to him this admission does not contain a date and therefore, cannot be related to a point of time prior to the issuance of the cheque itself. (iii) That apart, the complainant has been fair enough to make a disclosure of the recovery of Rs.40,500/- on 03.08.2011 after the dishonour of the cheque on 13.07.2011 and before the issuance of the notice of demand dated 11.08.2011, in his notice of demand itself Exh.49 (page 102) and therefore, was not guilty of any suppression. (iv) The reply dated 17.09.2011 (Exh.53 page 104) by the accused, also did not make ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dgment 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 (page 87) which according to him contains the details of total debts due from the accused he submits that the names of the persons appearing at Serial Nos.3, 5 and 9 therein, are found in the evidence of PW-2 and these persons, were given finance by the Kotak Mahendra Bank which was repaid and therefore the said amounts were not recoverable. (ii) Further by inviting my attention to the cross-examination of the complainant (page 71) which indicates the nature of the transaction being performed between the complainant and the accused, he submits that the same would indicate in the light of evidence of PW-2, that noting was due and payable from the accused to the complainant, as the amounts were receivable from the finance company and not from the accused. (iii) That the judgment of the learned Sessions Court is correct and proper and so far as the finding recorded in para 10 of the impugned judgment (page 20) that an amount of Rs.3,90,000/was received by the complainant pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ot 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 not go away and more so where in the present case, in the notice of demand at Exh.49 (page 102) dated 11.08.2011 the same was disclosed and a demand for the balance was made. Reliance was placed upon Vishnu Bhat Vs. Narayan Bandekar 2008 (1) Mh. L.J. 497 (paras 10, 13, 28) and Hazi Jahangir Molla Vs. Md. Alim Mallick and Anr 2017 (1) Bank Cases 319 (para 20). 7. The requirements to be satisfied for attracting Section 138 as well as the presumption under Section 139 of the N.I. Act, has been spelt out by the Hon ble Apex Court in Rohitbhai Jivanlal Patel v. State of Gujarat, (2019) 18 SCC 106 , as under: 15. So far the question of existence of basic ingredients for drawing of presumption under Sections 118 and 139 of the NI Act is concerned, apparent it is that the appellant-accused could not deny his signatures on the cheques in question that had been drawn in favour of the complainant on a bank a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sed 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 not serve the purpose of the accused. Something which is probable has to be brought on record for getting the burden of proof shifted to the complainant. To disprove the presumptions, the accused should bring on record such facts and circumstances, upon consideration of which, the court may either believe that the consideration and debt did not exist or their nonexistence was so probable that a prudent man would under the circumstances of the case, act upon the plea that they did not exist. Apart from adducing direct evidence to prove that the note in question was not supported by consideration or that he had not incurred any debt or liability, the accused may also rely upon circumstantial evidence and if the circumstances so relied upon are compelling, the burden may likewise shift again on to the complainant. The accused may also rely upon presumptions of fact, for instance, those mentioned ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 by the accused, is not disputed. The defence which is raised is that the cheque in question alongwith other cheques were given as a matter of security and were blank without any dates and amounts. The fact that the accused was a commission agent for sale of tractors for the complainant is also admitted. That the accused, also sold tractors for the complainant is also admitted. The receipt of the letter dated 23.05.2011 (Exh. 36 page 88) and the letter dated 27.05.2011 (Exh. 37/page 89) are admitted. It was however denied that any liability was admitted and that the said cheque was issued in discharge of that liability. 9. The entire matter has therefore has to be construed in light of the above position. Once the issuance of the cheque and the signature thereupon is admitted, the presumption under Section 139 of the N.I. Act, is clearly attracted, and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 tractor which the accused had sold to him, the receipt of which payment was after the dishonour of the cheque in question. This position has further been stated in the complaint as well as in the affidavit in lieu of the oral evidence. It is thus apparent that no amounts have been recovered by the complainant, prior to the presentation of the cheque in question. That apart the amount of Rs.40,500/- which has been recovered by the complainant, post dishonor, is not from the accused but from a third party. 14. Much argument has been advanced by Mr. Agrawal, learned counsel for the accused, on the point that during the course of cross-examination, the complainant has admitted to have recovered a sum of Rs.3,90,000/- which is the fulcrum of the judgment of the learned Appellate Court. It is, however, material to note, that perusal of the cross-examin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 4,099/-. 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 defendant No.2. That out of the said amount, the defendant No.2 paid an amount to the tune of Rs.54,91,714/- out of which some amount is paid in Cash and some by D.D. That out of this amount some of the amount was deposited by the defendant No.2 before the stipulated time i.e. before 30 days, therefore an amount to the tune of Rs.12,339/- was credited in the account of defendant No.2 towards interest on the deposited amount, and also as out of 14 Tractors, 12 Tractors were purchased on finance, and out of those 12 Tractors, the insurance premium was paid by the Finance company only for 6 Tractors and therefore an amount to the tune of Rs.41,480/- was credited in the account of defendant No.2 against the premium of insurance as the same was given by the Finance company to the plaintiff. That as such, the defendant No ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 informed the defendant No.2 about the tractors with all specifications including the names of customers whose accounts are closed. So also thereafter by letter dtd. 27/05/11, the plaintiff informed the defendant No.2 that, the amount to the tune of Rs.14,72,799/- is outstanding against the defendant No.2, and the defendant No.2 do deposit the said amount within 8 days. That, to honour the said letter dtd. 27/05/11 given by the plaintiff, the defendant No.2 by letter dtd. 15/06/11 informed the plaintiff that, the defendant No.2 is issuing the cheque bearing No.215535 of Rs.14,72,799/- dtd. 16/06/11 of Axix Bank, Pune, by duly placing the signature of defendant No.2. That thereafter when the plaintiff deposited the said cheque for encashment then, the surprisingly the said cheque returned unpaid with t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... med 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 by him in his cross-examination, the cheque amount could not be claimed to be the amount due and payable. At the outset, it would be material to note, that the admission regarding the recovery of Rs. 3,90,000/(page 74) does not indicate when the same was received. The statement contained in the notice of demand at Exh. 49 (page 100), would indicate it was not received at that point of time, for the reason that had it been so received a disclosure to that effect, would also have been made by the complainant, as was the case in respect of the recovery of the sum of Rs.40,500/-. The accused in his reply at Exh.53 dated 17.09.2011, does not say anything about the amount of Rs.40,500/- claimed to have been recovered by the complainant after the dishonour of the cheque, which would indicate, that th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f 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 communication dated 23.05.2011, addressed to the accused by the complainant, which indicated that for the 12 sale transactions as listed therein, undertaken by the accused for the complainant, the accused had already received his commission and so also nothing was receivable by the complainant from the accused on account of those transactions as listed therein. The communication at Exh.35 (page 87) is dated 27.05.2011 and lists 14 transactions, done by the accused on which account payments were not received by the complainant. A perusal of Exh.34 (page 86) dated 19.09.2009, the agreement between the complainant and the accused, would indicate that though under its terms the accused was entitled to commission, however term Nos.1 2 therein reveal that the delivery of the tractors was to be t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rang 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 with Kotak Mahindra Bank (Ex.133, Ex.129 Ex.131 respectively in Evidence of P.W.-2) for which NOC was issued to them and therefore nothing was due and payable by these three persons, considering which though it is contended that the list at Exh.35 was a fraudulent list and therefore since nothing was payable thereunder and the acknowledgment at Exh.42 was a bogus document and did not depict the correct position, such a contention would not be justifiable as Ex.35, does not depict that the loan amounts were pending against these persons and were being claimed, but depicts a different picture which indicates that only those amounts as shown against their names respectively i.e. Rs.57,110/-, Rs.1,66,626/- and Rs.77,770/- were pending against these persons and there is no cross examination wo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aid 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, the amount of Rs. 40,500/- has been recovered by the complainant on 03.08.2011 from a third party (para 5 of the further examination in chief of the complainant at record page 65). The amount of Rs.3,90,000/- as discussed above, has been recovered from a third party after the filing of the compliant. Thus nothing out of the cheque amount has been paid by the accused. The notice of demand dated 11.08.2021, specifically makes a mention of the recovery of Rs.40,500/- after the dishonor of the cheque and claims amount, after deducting it. It is thus apparent, that the question which fell for consideration in M/s. Alliance Infrastructure Project Pvt. Ltd, and others (supra) was clearly on a different footing altogether than the position which is extant in the present matter and therefore M/s. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gning 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 exchange or cheque payable to order, is negotiable by the holder by indorsement and delivery thereof. 50. Effect of indorsement.- The indorsement of a negotiable instrument followed by delivery transfers to the indorsee the property therein with the right of further negotiation; but the indorsement may, by express words, restrict or exclude such right, or may merely constitute the indorsee an agent to indorse the instrument, or to receive its contents for the indorser, or for some other specified person. 56. Indorsement for part of sum due.- No writing on a negotiable instrument is valid for the purpose of negotiation if such writing purports to transfer only a part of the amount appearing to be due on the instrument; but where such amount has b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 the original amount, in which case the presentation, dishonor and the notice of demand will be considered as legal and valid, so as to base a prosecution under Section 138 of the N.I. Act, thereupon. The above position is supported by Joseph Sartho (supra) in which the learned Division Bench of the Kerala High Court, in the context of Section 15 and 56 of the N.I. Act, has held as under : 11. The above Section envisages any number of indorsement on the reverse of the cheque and if there is not sufficient space to make further indorsement, a slip of paper can be annexed to it, to get over the said difficulty. Section 56 of the Act, which is very relevant in this case, reads as follows: Indorsement for part of sum due:- No ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng 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 Section 138 of the Act, for not making arrangement to honour the cheque for an amount more than what is due from him. If he had made arrangement for honouring the cheque, he would have to go after the appellant to get back the substantial amount paid by him earlier. Therefore, we find it difficult to subscribe to the view that the accused has committed the offence, as he failed to pay the balance amount, on issuance of notice by the appellant. 19. In India, attachment of a slip of paper to the cheque is statutorily recognized in Section 15 of the Act. 20. The attempt of the appellant to encash the cheque without indorsing the amount already received is perilously bordering dishonesty. It appears, the appell ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al 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 behind enacting Section 138 of the N.I. Act, would stand frustrated, if such mischief s are permitted. [for intent and purpose of Section 138 of the N.I. Act [ see : Electronics Trade Technology Development Corpn. Ltd., Secunderabad Vs. Indian Technologists Engineers (Electronics) (P) Ltd. and another (1996) 2 SCC 739; Dalmia Cement (Bharat) Ltd. Vs. Galaxy Traders Agencies Ltd. and others (2001) 6 SCC 463 (para 3); Goa Plast (P) Ltd. Vs. Chico Ursula D souza (2004) 2 SCC 235; Indian Bank Association and others Vs. Union of India and others (2014) 5 SCC 590 and Sicagen India Limited Vs. Mahindra Vadineni and others (2019) 4 SCC 271]. 20.4. In case part payment/s is made after the filing o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as 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/- dated 04.06.1999. The complainant received an amount of Rs.2,26,400/- as part payment on 09.06.1999. As the balance was not being paid, the complainant presented the original cheque for the full amount on 30.11.1999. It was thus a case of part payment being received before presentation of the cheque, which is not the factual position in the instant case. 21.4. Ramkrishna Urban Co-operative Credit Society Ltd. (supra) was a case in which a finding was rendered that blank cheques were given as security prior to the disbursement of loan as a collateral security on 18.10.2000 and the date put on the cheque was 24.01.2008, eight years later, in which contextual backg ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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-examination thereby eliciting from the complainant material admissions or by leading defence evidence. In the instant matter as indicated above, no defence evidence has been led. The admissions claimed to have been given by the complainant during the course of his cross-examination, have also been discussed above which indicate that the presumption is not rebutted. 21.9. Sunil Todi and Ors. (supra) relied upon by Mr. Agrawal, learned counsel for the appellant, is upon what is meant by debt or any other liability and holds, that it means a legally enforceable debt or liability. In the instant matter, Exh. 42 the communication dated 15. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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