IN THE HIGH COURT OF JUDICATURE, ANDHRA PRADESH AT HYDERABAD (Special Original Jurisdiction) MONDAY, THE SEVENTEENTH DAY OF AUGUST TWO THOUSAND AND NINE PRESENT HON’BLE SRI JUSTICE K.C.BHANU CRIMINAL APPEAL No.1644 OF 2001 Between: M/s. Shreya Pet Private Limited ..... Appellant/Complainant AND 1. Vikas Jain ..... Respondent/Accused 2. The Sate of Andhra Pradesh, Rep. by the Public Prosecutor, High Court of A.P., Hyderabad. ..... Respondent The Court made the following: JUDGMENT: The criminal appeal under Section 378(4) of Cr.P.C., 1973, is directed against the Judgment, dated 14.08.2001, in C.C.No.413 of 1997, on the file of the learned XVII Metropolitan Magistrate, Hyderabad, whereunder and whereby, the first respondent/sole accused was found not guilty for the offence punishable under Section 138 of the Negotiable Instruments Act, 1881 (for short ‘the Act’). 2. Brief facts that are necessary for disposal of the present appeal may be stated as follows: The complainant company, which is a private limited company, was having dealings with the accused. The complainant company supplied bags to the accused and that there was a running account. In the year 1994, an amount of Rs.6,28,527.13 Ps. was outstanding amount due by the accused company. To discharge the said liability with interest, the accused issued a cheque, dated 01.04.1994, for Rs.10,15,607.32 Ps. On the request of the accused, the cheque was not presented by the complainant firm. Again, in the year 1997, the accused issued a cheque, dated 01.03.1997, for Rs.17,56,130.71 Ps. When the cheque was presented for encashment on 26.03.1997 in the State Bank of Hyderabad, King Koti Branch, it was returned dishonoured for the reason “insufficient funds”. Then, the complainant company got issued a statutory legal notice, dated 07.04.1997, to the accused company. The accused received the notice on 10.04.1997 but did not pay that amount, but got issued a reply denying the liability. Therefore, the complainant filed a complaint under Section 138 of the Act on the file of the learned XVII Metropolitan Magistrate, Hyderabad. 3. The accused was examined under Section 251 Cr.P.C. for the offence punishable under Section 138 of the Act. He denied the allegations levelled against him in complaint as false, pleaded not guilty and claimed to be tried. 4. To substantiate its case, the prosecution examined P.W.1 and got marked Exs.P1 to P20. 5. After closure of the prosecution evidence, the accused was examined under Section 313 Cr.P.C. with reference to the incriminating material found against him in the evidence of prosecution witnesses. He denied the same. On behalf of the accused, no oral evidence was adduced except marking Ex.D1. 6. The trail Court, after appreciating the evidence on record, came to the conclusion that the debt is not barred by limitation and that there was no cogent and convincing evidence to show that the cheque for Rs.17,56,130.71 Ps. was issued for legally enforceable debt, as the transaction as per the Invoice, dated 25.04.1991, was only for Rs.4,65,850/- and therefore, there was no legally enforceable debt or liability and accordingly acquitted the accused. Challenging the same, the present appeal is filed. 7. Now the point for determination is whether the prosecution has proved its case against the accused beyond all reasonable doubt of the charge under Section 138 of the Act and whether the judgment of the trial Court is correct, legal and proper? 8. Learned Senior Counsel appearing for the appellant contended that the initial burden placed on the complainant company stands discharged because the evidence of P.W.1 would clearly go to show that the cheque in question was issued for legally enforceable debt and that a suit is also filed to recover the same and the suit was decreed; that there is absolutely no evidence to show that the cheque in question was not given for discharge of legally enforceable debt or liability so as to rebut the presumption under Section 139 of the Act. He also contended that Ex.P16-Satement of Account has not been considered by the trial Court which would clearly reveal that an amount of Rs.6,28,527.13Ps. was due by the date of issuance of the cheque and therefore, the ingredients under Section 138 of the Act have been established beyond all reasonable doubt. Hence, he prays to set aside the order of acquittal. 9. On the other hand, the learned counsel appearing for the first respondent/accused contended that after 1992, there were no business transactions between the complainant and the accused and that Ex.P9-cheque was given for security purpose in the year 1992 itself and the same was not given for discharging any legally enforceable debt; that the interest calculated in Ex.P16 has not been reflected in the Statement of Account and that the debt is barred by limitation; that even though the suit is decreed, the judgment was suspended by the appellate Court, and as the appeal is the continuation of proceedings, the judgment of the civil Court cannot be looked into; that the order of acquittal under challenge does not suffer from any infirmities so as to call for interference by this Court. 10. There cannot be any dispute that the accused is presumed to be innocent unless contrary is proved by the prosecution. That presumption of innocence is further strengthened by the order of acquittal. Though the appellate Court has got full power to reappreciate the evidence, but normally, the appellate Court would not interfere with the order of acquittal unless there are compelling or substantial reasons for doing so. When a finding is based upon inadmissible evidence, or the admissible evidence has not been looked into, or a perverse finding has been given, or an important documentary evidence has not been taken into consideration, are some of the reasons which will come within the meaning of compelling or substantial reasons. For the offence under Section 138 of the Act, the necessary ingredients have to be proved which reads as follows: “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 punishable under Section 138 of the Negotiable Instruments Act, 1881.” 11. There cannot be any dispute that the initial burden always lies on the complainant to establish that the cheque in question (Ex.P9) was issued for legally enforceable debt or liability. When once the initial burden is discharged by the complainant, the burden shifts to the accused in view of presumption under Section 139 of the Act which reads as follows: “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.” The word ‘unless contrary is proved’ in Section 139 of the Act would mean that there must be a pleading and evidence to substantiate the same and mere explanation is not sufficient. 12. At this stage, it is pertinent to refer to a decision reported in Hiten P. Dalal, Appellant vs. Bratindranath Banerjee, Respondent[1], wherein it is held thus: “The words ‘unless the contrary is proved’ which occur in this provision make it clear that the presumption has to be rebutted by proof and not by a bare explanation which is merely plausible.” 13. Now it is to be seen whether the findings of the trial Court are perverse or based upon the proper appreciation of available evidence on record. 14. P.W.1 was the Finance Manager of the complainant company. He was authorized to prosecute the case on behalf of the complainant company, and to substantiate the same, he filed Ex.P3-authorisation letter, dated 07.05.1997. Ex.P2 is the Extract of Minutes of the Board, dated 19.04.1997. Ex.P1 is the certificate of Incorporation. These three documents have not been denied or disputed by the accused. Therefore, it can be said that P.W.1 is a duly authorized person to prosecute the case on behalf of the complainant. 15. As seen from Ex.P2-Board Resolution, dated 19.04.1007, it would go to show that Sanjay Jalan, Director, was authorized to sub-delegate his powers to any of his officers of the company to file any case in any Court as well as to withdraw the case. In pursuance of Ex.P2, the Director has given Ex.P3-authorization to P.W.1 to prosecute the case. Therefore, there was a proper authorization for P.W.1 to lodge a complaint. 16. According to P.W.1, the company supplied bags to the accused and there was a running account. In the year 1994, an amount of Rs.6,28,527.13 Ps. was outstanding amount due by the accused and towards discharge of the same with interest, the accused issued Ex.P7-cheque for Rs.10,15,607.32 Ps. Ex.P7 was dated 01.04.1994. On the request of the accused, the said cheque, Ex.P7, was not presented in the bank by the complainant firm. Again on 01.03.1997, the accused issued another cheque for Rs.17,56,130.71 Ps. which is marked as Ex.P9, which is a subject matter of the case. When the said cheque was presented in the bank for collection, it was dishonoured with an endorsement “insufficient funds”. The evidence of P.W.1 that the company supplied bags to the accused; that there was a running account; that in the year 1994, an amount of Rs.6,28,527.13 Ps. was outstanding amount due by the accused; that to discharge the said liability, the accused issued a cheque for Rs.10,15,607.32 Ps. with interest, that on the request of the accused, the cheque was not presented by the complainant; that on 01.03.1997, the accused issued a cheque for Rs.17,56,130.71 Ps., remained unchallenged. Once, certain facts have been stated by the witness and the same are not denied or disputed in the cross-examination, it must be deemed that such facts are admitted. Practically, the evidence of P.W.1 remained unchallenged with regard to the supply of bags to the accused and running account maintained by complainant. Ex.P16 is the statement of account which shows about the interest receivable from M/s. Deccan Marketing Services to the complainant. As seen from Ex.P16, an amount of Rs.17,56,130.71 Ps. was due by 28.02.1991. The correctness or otherwise of Ex.P16 is not specifically denied or disputed even in the cross-examination of P.W.1. 17. No doubt, the learned counsel appearing for the first respondent contended that the interest collected at 18% per annum has not been reflected in the statement of account attached to Ex.P16 document. The rate of interest though appears to be highly exorbitant, but Ex.P16-statement has not been disputed in the cross-examination. As per Ex.P16, a total amount of Rs.17,56,130.71 Ps. was due with interest to the complainant company. Therefore, the evidence of P.W.1 coupled with Exs.P9 and P16 would clearly go to show that the cheque in question was issued for legally enforceable debt covered by Ex.P16. 18. Now the second submission is that the complaint is barred by limitation in view of the fact that the transaction is relating to the year 1991 and that after 25.04.1991, there were no business transactions between the complainant company and the accused except calculating the interest. P.W.1 admitted that the statement of account under Ex.P16 does not reveal the present transaction and after 25.04.1991, there were no transactions between the complainant and the accused. Even P.W.2, who was the Manager of bank, stated that as per Ex.P17, there were no transactions after 1993 and as per the entry in Ex.D1, the last cheque book was issued on 08.08.1992. P.W.1 also admitted that the debt of M/s.Sree Industries is of the year 1991. M/s. Sree Industries was a proprietary concern of Sanjay Jalan and he also stated that there is a document to show that Sanjay Jalan transferred the debt to the present complainant company on 16.08.1995. That aspect of the case has been not challenged by the accused in the cross- examination. The transaction under Ex.P6-delivery challan, dated 25.04.1991, was the last business dealing between the accused company and M/s.Sree Industries. But the accused company issued Ex.P7-cheque on 01.04.1994. The factum of issuing Ex.P7-cheque in favour of M/s. Sree Industries on 01.04.1994 has not been specifically denied or disputed. 19. Under Section 18 of the Limitation Act, 1963, where in support of the prescribed period for a suit of application in support of any liberty or right, an acknowledgment of liability in respect of such liberty or right has been made in writing, signed by the party against whom the liberty or right is claimed or by any person through whom he derives his title or liability. Therefore, when the accused gave Ex.P7-cheque on 01.04.1994 to discharge legally enforceable debt, a fresh cause of action commences from 01.04.1994 onwards. The cheque in question was given on 01.03.1997, i.e., within three years from the date of issuance of Ex.P7. Therefore, the complainant company can legally recover the debt due by the accused by filing a suit. As a matter of fact, a suit was also filed in O.S.No.515 of 1997, on the file of the learned II Senior Civil Judge, City Civil Court, Hyderabad and a judgment, dated 04.01.2006, was delivered in favour of the complainant company, whereunder and whereby, the suit filed by the complainant company was decreed. No doubt, that judgment, dated 04.01.2006, is under challenge and the operation of the judgment was stayed subject to the condition of paying half of the decreetal amount, but in view of the fact that the judgment of the Civil Court which is under the consideration in an appeal by a Division Bench of this Court, it cannot be looked into at this stage because the matter is subjudice. 20. But, even without looking into the judgment of the civil suit, the evidence of P.W.1 is very clear that the complainant company supplied bags to the accused and to discharge that debt due to the complainant company, the accused issued Ex.P7-cheque in the first instance with a request not to present the cheque and later Ex.P9–cheque was issued and there was legally enforceable debt. This aspect of the case has been completely overlooked by the trial Court. Ex.P16-statement of account has not at all been referred in the judgment by the trial Court. Similarly, the evidence of P.W.1 has not been considered at all with regard to supplying of bags to accused company, issuance of Ex.P7-cheque and issuance of Ex.P9-cheque. 21. Though it is contended by the learned counsel appearing for the petitioner that as the transactions are closed in the year 1991, but it cannot be presumed that the cheque was given as a security purpose prior to 1991. Under Section 18(b) of the Limitation Act, 1963, “Until the contrary is proved, the following presumption shall be made that every negotiable instrument bearing a date was made or drawn on such debt.” Therefore, the presumption is that the cheque was given on 01.03.1997, but not in the year 1991 as contended by accused. 22. No doubt, the accused company was not having any bank transactions after 1991. But if that is so, there is no need for the accused company to give Ex.P9-cheque in favour of the complainant company in the year 1997. The accused knew about the transfer of debt due to M/s. Sree Industries to the complainant company and that is the reason why Ex.P9-cheque was given in favour of the complainant company in the year 1995 when the assets and liabilities of M/s.Sree Indsutries had been transferred to the complainant company. Therefore, the accused is liable to pay certain amounts towards supply of bags to M/s. Sree Industries, and the proprietor of M/s. Sree Industries transferred the debt due by accused to the complainant company. Therefore, there is a legally enforceable debt existing between the complainant company and the accused as on the date of issuance of the cheque. These aspects have been completely overlooked by the trial Court. The burden placed on the accused has not been discharged. The accused has not come to the witness box to show that the transfer of debt by M/s. Sree Industries to the complainant company is not correct. 23. No doubt, the accused, to rebut the case of the complainant company, need not come to the witness box but he can as well show in the cross-examination of the witnesses examined on behalf of the complainant company. Nothing has been elicited to discredit the testimony of P.W.1 whose evidence remained unchallenged. The ingredients under Section 138 of the Act have been established beyond all reasonable doubt. Hence the judgment under challenge has to be set aside. 24. In the result, the firs respondent/accused is found guilty of the offence under Section 138 of the Act and is accordingly convicted. The transaction relates to the year 1991-92. So, at this point of time, it is not desirable to send the accused to jail. In view of the fact that a civil suit is already filed and decreed, the amount covered by cheque can be directed to be paid by way of compensation under Section 357 of Cr.P.C. 25. In the facts and circumstances of the case, a compensation of Rs.10,00,000/- has to be paid within six months, failing which the accused shall undergo Simple Imprisonment for a period of six months. 26. The Criminal Appeal is allowed accordingly. _____________ (K.C.BHANU, J) Dated: 17th August, 2009. KL [1] AIR 2001 SC 3897