BEFORE THE HIGH COURT OF JUDICATURE AT MADRAS DATE : 28.10.2008 and 30.10.2008 CORAM THE HONOURABLE MR.JUSTICE A.C.ARUMUGAPERUMAL ADITYAN C.A.Nos.1031 & 1032 of 2001 Nachimuthu .. Appellant in CA.No.1031/2001/Complainant Maruthachalam .. Appellant in CA.No.1032/2001/Complainant Vs. Rajaram .. Respondent in both the appeals/Accused Prayer :- These appeals have been preferred under Section 378 of Cr.P.C., against the Judgment C.C.Nos.26 & 32 of 2000 respectively on the file of the Court of Judicial Magistrate No.II, Coimbatore, dated 10.07.2001. For Appellant : Mr.K.Kalyansundaram, Advocate (in both the appeals) For Respondent : Mr.K.Balakrishnan, Advocate (in both the appeals) COMMON JUDGMENT C.A.No.1031 of 2001 has been directed against the Judgment in C.C.No.26 of 2000 on the file of the Court of Judicial Magistrate No.II, Coimbatore. C.A.No.1032 of 2001 has been directed against the Judgment in C.C.No.32 of 2000 on the file of the Court of Judicial Magistrate No.II, Coimbatore. The complainant in both cases are the appellants herein. 2. According to the complainant in C.C.No.26 of 2000/appellant in C.A.No.1031 of 2001, the accused had borrowed a sum of Rs.3 lakhs under a promissory note dated 20.10.1998 and in order to discharge the said debt under the promissory note the accused had drawn a cheque for Rs.3,50,000/- on 20.10.1999 (Ex.P.1). When the impugned cheque was presented before the Indian Oversees Bank for collection the said cheque was returned with an endorsement 'Account Closed'. Ex.P.2 is the return memo dated 14.11.1989. Ex.P.3 is the debit advice dated 5.9.1999. Within ten days from the date of dishonour of the cheque, the complainant had issued notice under the original of Ex.P.4, which was received by the accused under Ex.P.5. Ex.P.6 is https://hcservices.ecourts.gov.in/hcservices/ the reply notice. Since Ex.P.1 – impugned cheque drawn by the accused dated 20.10.1999 was dishonoured by the Bank on presentation, the complainant has preferred the complaint under Section 138 of the Negotiable Instruments Act. 3.The complainant in C.C.No.32 of 2000 / appellant in C.A.No.1032 of 2001 filed the complaint contending that on 25.10.1998, the accused had borrowed Rs.3 lakhs and executed a promissory note dated 25.10.1998 and in order to discharge the debt under the said promissory note dated 25.10.1998, the accused had drawn the impugned cheque for a sum of Rs.3,50,000/- (Ex.P.1 in C.C.No.32 of 2000) and when Ex.P.1 – cheque was presented before the Indian Oversees Bank, Ganapathy Branch, on 4.11.1999, the same was returned with an endorsement 'accounts closed'. Ex.P.2 is the return memo dated 4.11.1999 and Ex.P.3 is the debit advice dated 5.11.1999 from the said bank. On 15.11.1999 the complainant had issued a notice under the original of Ex.P.4, which was received by the accused under Ex.P.5. Ex.P.6 is the reply notice sent by the accused dated 6.12.1999. The complainant in order to take a criminal action against the accused has filed C.C.No.32 of 2000 under Section 138 of the Negotiable Instruments Act. 4.Before the learned trial Judge in C.C.No.26 of 2000 P.W.1 and P.W.2 were examined and Ex.P.1 to Ex.P.7 were marked on the side of the complainant. On the side of the accused D.W.1 to D.W.5 were examined and Ex.R.1 to Ex.R.9 were marked. No material objects exhibited. Before the learned trial Judge in C.C.No.32 of 2000 P.W.1 and P.W.2 were examined and Ex.P.1 to Ex.P.7 were marked on the side of the complainant. D.W.1 to D.W.4 were examined and Ex.R.1 to Ex.R.11 were marked on the side of the accused. Both the C.Cs., were disposed of on 10.06.2001 by the same Magistrate. After considering both the oral and documentary evidences in both the cases, the learned trial Judge has dismissed both the criminal cases on the ground that there was no material placed before the trial Court to show that the complainant had sufficient funds to advance the loan under the alleged promissory notes and that the accused had drawn the cheque on behalf of Brindha Engineering Works, in which admittedly one Banumathi (wife of the accused) is the proprietress, who had issued Exs.D.1 to D.6 in both the cases previously in favour of the complainant. Aggrieved by the findings of the learned trial Judge, the complainant has preferred these appeal. 5.Now the points for determination in these appeals are as follows:- 1)Whether the offence under Section 138 of the Negotiable Instruments Act has been attracted against the accused? 2)Whether the judgments in C.C.No.26 & 32 of 2000 on the file of the learned Judicial Magistrate No.II, Coimbatore is liable https://hcservices.ecourts.gov.in/hcservices/ to be set aside for the reasons stated in the memorandum of appeal in both the appeals? 6.Point No.1:- Section 138 of the Negotiable Instruments act reads as follows:- "Dishonour of cheque for insufficiency, etc., of funds in the accounts:- Where any cheque drawn by a person on an account maintained by him with a banker for payment of any amount of money to another person from out of that account for the discharge, in whole or in part, of any debt or other liability, is returned by the bank unpaid, either because of the amount of money standing to the credit of that account is insufficient to honour the cheque or that it exceeds the amount arranged to be paid from that account by an agreement made with that bank, such person shall be deemed to have committed an offence and shall, without prejudice to any other provision of this Act, be punished with imprisonment for [a term which may be extended to two years], or with fine which may extend to twice the amount of the cheque, or with both: Provided that nothing contained in this section shall apply unless_ (a)the cheque has been presented to the bank within 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 thirty 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. Explanation:-For the purposes of this section, "debt or other liability" means a legally enforceable debt or other liability. So, we have to see whether the impugned cheques Ex.P.1 in both the cases were drawn by the accused for the discharge of a subsisting liability in whole or in part and whether on presentation before the https://hcservices.ecourts.gov.in/hcservices/ Bank, the said impugned cheques Ex.P.1 in both the cases were dishonoured by the bank on the ground that there was no sufficient money to honour the cheque amount or the cheque amount exceeded the amount in credit of the account of the accused. A perusal of Exs.P.2 & Ex.P.3 – advices in both the cases received from the Indian Oversees Bank, in which the accused is having SB Account No.1590, will go to show that since Account has been closed by the accused, the impugned cheques Ex.P.1 in both the cases have been dishonoured. The learned counsel appearing for the respondent would contend that the impugned cheques Ex.P.1 in both the cases were returned not on the ground by stating that there was no sufficient amount standing to the credit of the accused or impugned cheques' amount exceeds the balance of the amount in the account of the accused, to attract an offence under Section 138 of the Negotiable Instruments Act. But this contention of the learned counsel for the respondent cannot be sustainable because only on the ground that the account maintained by the accused was closed, both the impugned cheques Ex.P.1 in both the cases could not be honoured by the Bank concerned. If the account of the accused had sufficient amount to his credit then there is no necessity for the bank to close the account. There is no pass-book produced by the accused to show that on the date of drawal of the impugned cheques he had sufficient money in his account for the impugned cheques to be honoured by the bank. There is no material placed before the trial Court on the side of the accused to show that he had sufficient amount in his account for the purpose of honouring of the cheques and he had in his credit more than the amount mentioned in Ex.P.1 cheques in both the cases. 6(a)The other limb of argument advanced by the learned counsel appearing for the respondent is that the alleged promissory note dated 25.10.1998 was not produced by the complainant before the learned trial Judge and that the Civil suits filed by the complainant on the basis of the alleged promissory note dated 25.10.1998, according to the complainant to discharge the same, the accused had drawn the impugned cheques Ex.P.1 in both the cases were also dismissed by the Civil Court. But the learned counsel appearing for the appellant would state that against the judgments of the Civil Court, an appeal is pending before this Court. Admittedly after the dismissal of the criminal cases in C.C.Nos.26 & 32 of 2000 only the Civil Cases have been filed on the basis of promissory note dated 25.10.1998 by the complainant. By way of additional typed set of papers, the learned counsel for the respondent has produced the judgment, dated 6.1.2005, in O.S.No.112 of 2003 on the file of the Additional District & Session Judge, Coimbatore, filed on the basis of the promissory note dated 25.10.1998 and also the Judgment dated 29.7.2005 in O.S.N.266 of 2004 on the file of the First Additional District Judge, Coimbatore. In both the cases, one of the reasons for the dismissal of the suit is the dismissal of the criminal complaint in C.C.Nos.26 & 32 of 2000. Anyhow, those judgments in the Civil Cases are sub-judice and are pending before this Court in https://hcservices.ecourts.gov.in/hcservices/ appeal. One of the reasons given in the Judgment of the trial Court in C.C.No.26 & 32 of 2000 is that the complainant has failed to prove that he had sufficient money to advance the loan under the alleged promissory note dated 25.10.1998. Ex.D.9 (series) in both the cases were produced on the side of the accused to show that in the Income Tax Returns the complainant had not mentioned any income through agriculture. Hence, it was contended on behalf of the accused that the case of the complainant that from out of the agricultural income he had advanced loan of Rs.3 lakhs under each promissory note dated 25.10.1998, is unbelievable. 6(b)At this juncture the learned counsel for the appellant would focus the attention of this Court to Ex.P.6-reply notice issued by the accused for the notice issued by the complainant under Ex.P.4 in both the cases. In Ex.P.6 – reply notice the accused would admit at para 3 having executed two promissory notes and also two cheques. But the accused would state in Ex.P.6 that the accused's wife had subscribed a chit conducted by the complainant in the year 1992 and also in another chit in the year 1995 with a duration of 5 years and the accused's wife had paid Rs.3 lakhs by way of cheque and Rs.3 lakhs by way of cash on various dates. But to substantiate that the cheques and promissory notes were issued by the accused's wife only as a security for the chit conducted by the complainant in which the accused's wife was a subscriber, on the side of the accused no material was placed before the trial Court. Even if the contention of the accused under Ex.P.6 is true then for the amount due under the chit by his wife, there is no necessity for the accused, who is the husband, to execute the impugned cheque under Ex.P.1 in both the cases. So the defence put forth by the accused under Ex.P.6 falls to the ground. The trial Court has failed to consider the defence case of the accused under Ex.P.6. Having admitted the execution of promissory notes and cheques under Ex.P.6 it is not open to the accused to contend that the impugned cheques under Ex.P.1 in both the cases were not issued by the accused in discharge of a subsisting loan. Before the trial Court there is no explanation or defence put forward by the accused as to for what purpose the impugned cheques under Ex.P.1 in both the cases were drawn by the accused in favour of the complainant. The point, the trial Court ought to have gone into and decided is whether the offence under Section 138 of the Negotiable Instruments Act has been attracted against the accused or not. The trial Court has come to an erroneous conclusion that the accused is not liable under Section 138 of the Negotiable Instruments Act. It is not the case of the accused that Ex.P.1 does not contain his signature, but the only contention of the accused before the trial Court is that only his wife Banumathi is the proprietress of Brintha Engineering Works and the accused is not. But after the issuance of the impugned cheques under Ex.P.1 in both the cases, there is no objection raised either by the wife of the accused Banumathi or Brintha Engineering Works that Ex.P.1 cheques in both the cases were not genuine and without her consent the same was drawn https://hcservices.ecourts.gov.in/hcservices/ by the accused. Under such circumstances, I hold on Point No.1 that the offence under Section 138 of the Negotiable Instruments Act has been attracted against the accused. 7.Point No.2:- In view of the discussions and findings in the earlier paragraphs, I hold on point No.2 that the Judgment of the trial Court in C.C.Nos.26 & 32 of 2000 on the file of the Judicial Magistrate No.II, Coimbatore, is liable to be set aside, and the same is hereby set aside. For appearance of the accused for question of sentence post the case on 30.10.2008. 28.10.2008 8.The accused is not present today. On behalf of the accused, a Medical Certificate is produced to show that he is suffering from high Blood pressure and Sugar and is under treatment. Since this Court has decided to follow the ratio decidendi in V.P.Eswaramoorthy- v-Murugani(2008 (1)MLJ (crl)297: 2004(2)SCC 235:2005 MLJ(crl) 26 wherein it has been held by the Honourable Apex Court in a case of similar nature,as follows: "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 by two years as provided by the amending Act of 2002 and the fine which may extend to twice the amount of the cheque. This has been prescribed as the punishment for the offence under Section 138 of the Act. The object and the ingredients under the provisions, in particular Sections 138 and 139 of the Act cannot be ignored. Proper and smooth functioning of all business transactions, particularly, of cheques as instruments, primarily depends upon the integrity and honesty of the parties. In our https://hcservices.ecourts.gov.in/hcservices/ country, in a large number of commercial transactions, it was noted that the cheques were issued even merely as a device not only to stall but even to defraud the creditors. The sanctity and credibility of issuance of cheques in commercial transactions was eroded to a large extent. Undoubtedly, dishonour of a cheque by the bank causes incalculable loss, injury and inconvenience to the payee and the entire credibility of the business transactions within and outside the country suffers a serious setback. Parliament, in order to restore the credibility of cheques as a trustworthy substitute for cash payment enacted the aforesaid provisions. The remedy available in a Civil Court is a long drawn matter and an unscrupulous drawer normally takes various pleas to defeat the genuine claim of the payee. After observing as above, the Honourable Apex Court has disposed of the appeal giving a months time to the accused to pay Rs.80,000/- being twice the amount of the cheque as compensation to the appellant/complainant with default sentence of simple imprisonment for six months. " 9. I am of the view that the same yardstick can be applied for disposing of this appeal also. The accused in C.C.Nos.26 and 32 of 2000 on the file of the Court of Judicial Magistrate NO.II, Coimbatore is convicted and sentenced under Section 138 of Negotiable Instruments Act 1881 to pay a sum of Rs.7,00,000/-in each case being double the amount of the Cheque in each case respectively. In default, the accused shall undergo six months simple imprisonment in each case. Time for payment is six months in each case. 30.10.2008 Sd/ Asst.Registrar /true copy/ Sub Asst.Registrar ssv/sg https://hcservices.ecourts.gov.in/hcservices/ To 1.The Judicial Magistrate No.II Coimbatore 2.-Do- thro'The Chief Judicial Magistrate, Coimbatore. 2 CC To Mr.K.Balakrishnan, Advocate, SR NO.60261 Crl.A.No.1031 & 1032/2001 vm(co) pmk/30.10.2008. https://hcservices.ecourts.gov.in/hcservices/