IN THE HIGH COURT OF JUDICATURE, ANDHRA PRADESH AT HYDERABAD WEDNESDAY, THE 14TH DAY OF OCTOBER TWO THOUSAND AND NINE PRESENT HON’BLE SRI JUSTICE G.V.SEETHAPATHY CRL.A.No.789 OF 2005 Between: GMR Technologies & Industries Limited (Now changed to GMR Industries Limited by Certificate of Incorporation) Rep. by its Finance Manager K.V.S.N.Murthy …Appellant A n d The State of Andhra Pradesh Rep. by the Public Prosecutor, High Court of A.P., Hyderabad and others. …Respondents HON’BLE SRI JUSTICE G.V.SEETHAPATHY CRL.A.No.789 OF 2005 JUDGMENT: This appeal is directed against the judgment dated 20-09-2004 in C.C.No.640 of 1999, on the file of the IV Metropolitan Magistrate, Hyderabad, wherein respondents 2 and 3 herein (A-1 and A-2) were found not guilty of the offence under Section 138 of the Negotiable Instruments Act (for short ‘the Act’) and were acquitted thereof. 2. Heard the learned counsel for the appellant and the learned counsel for the respondents. Perused the records. 3. The appellant herein filed complaint against respondents 2 and 3 alleging, in brief, as follows:- The complainant is a company carrying on business of manufacture of ferro alloys, apart from doing merchandise trade including export. In 1998, A-1 and the complainant entered into Memorandum of Understating dated 16-09-1998. Under the said MOU, A-1 would export castor oil derivatives in the name of the complainant and the complainant had to make advance payment through letter of credit in favour of A-1. The complainant was to advance 75% of the value of export contract. The complainant opened inland letter of credit dated 23-09-1998 for Rs.18,60,480/- in favour of M/s Pooja Oil Industries for 38 MTs of castor oil. As per the agreement, A-1 had received the material from M/s Pooja Oil Industries Limited. The complainant had made payment through Andhra Bank, Visakhapatnam in a sum of Rs.18,16,480/-. A-1 agreed to indemnify the complainant from all the incidental losses etc. A-1 committed default in fulfilling the terms of MOU. Only a part of the goods were supplied and the goods shipped were found to be of inferior quality, which resulted in rejection by the buyer. In view of the default committed by the accused in the matter of handling the exports, the accused gave three cheques on 17-11-1998 for a total value of Rs.20 lakhs to the complainant as security, drawn on Central Bank of India. On 19-01-1999, the complainant addressed a letter to A-1 stating that they were forced to deposit the three cheques given by way of security and, therefore, funds may be provided for payment of the same. On 21-01-1999, the accused pleaded cash crunch and accordingly gave seven cheques on different dates for different amounts for a total sum of Rs.18 lakhs in lieu of the cheques given earlier. The cheque bearing Nos.014217 and 014218 dated 20-03-1999 and 04-04-1999 for Rs.3 lakhs each are the subject matter of this case. Subsequently, as the amount payable by the accused had gone up, they had given two more cheques dated 24-05-1999 and 29-05-1999 drawn on Central Bank of India for Rs.2,95,500/- and Rs.1,57,000/-. The aggregate value of all the nine cheques was Rs.22,52,500/-. All the cheques, when presented for clearance, were dishonoured on the ground of insufficient funds. The complainant addressed a legal notice 23-04-1999 to A-2, who is the principal officer of A-1 company and being president of A-1 company he is responsible for the day-to-day affairs of the company. The accused failed to pay the amounts due. Hence, the complaint. 4. The accused denied the offence and pleaded not guilty. 5. In support of their case, the finance manager of the complainant company was examined as P.W.1 and Exs.P-1 to P-13 were marked. No oral or documentary evidence was adduced on behalf of the accused. 6. On a consideration of the evidence available on record, the learned Magistrate held that the cheque was issued only by way of security and as such dishonour of the cheque does not attract the provisions of Section 138 of the Act. Accordingly, the accused were found not guilty of the offence under Section 138 of the Act and they were acquitted thereof. Aggrieved by the impugned order of acquittal, the present appeal is filed by the complainant. 7. The business dealings between the complainant company and A-1 company in the matter of export of castor oil derivatives and the Memorandum of Understanding between them referred to supra, are not in dispute. The signature of the accused on the subject cheque is also not disputed. The factum of presentation of the cheque for encashment and its dishonour on the ground of insufficient funds and the complainant issuing a legal notice to the accused and the failure of the accused to comply with the demand made therein, are also not disputed. 8. The main contention of the respondents/accused is that blank cheques were issued for the purpose of security and, therefore, there was no legally enforceable debt in discharge of which the cheque was issued by the accused to the complainant. Even in the complaint and also the in the legal notice, it is averred that in view of the default committed by the accused in the matter of handling the export on 17-11-1998 the accused had given three cheques for a total value of Rs.20 lakhs to the complainant as security. It was further averred in the complaint that as the accused had not complied with the terms of letter dated 17-11-1998, on 19-01-1999 the complainant addressed a letter to A-1 stating that it was forced to deposit the three cheques given by way of security and requested that funds may be provided for payment of the same. Subsequently, according to the complainant, the accused pleaded cash crunch and gave seven cheques for a total sum of Rs.18 lakhs in lieu of cheques given earlier. The complainant further states that on 29- 01-1999 MOU was signed between the complainant and A-2, representing A-1, wherein the accused admitted default on their part in the matter of export of goods and also their liability to the extent of Rs.21,45,500/- and the seven cheques were also referred to in the said MOU. The said cheques when presented were dishonoured on the ground of insufficient funds. Thus, as per the averments in the complaint and also the evidence of P.W.1, the cheques were given by way of security and not in discharge of any ascertained liability that was subsisting between the parties. It is nowhere stated in the complaint or in the evidence of P.W.1 as to how much amount was due pertaining to the cheque, which is subject matter of this complaint. Issuance of a cheque by way of security to ensure due performance of contractual obligations by the other party is quite different from issuing a cheque in discharge of an existing liability, which was duly ascertained and quantified. There is nothing on record to show that the alleged liability on the part of the accused was ascertained and quantified and was acknowledged by them and in discharge thereof, the subject cheque was issued. The letter-Ex.P-13 relied on by the complainant, as containing admission of liability on the part of the accused, was rightly rejected by the trial Court, as the complainant failed to prove its genuineness in the face of denial by the accused. There is nothing on record to show that Ex.P-13 was duly despatched and served on the complainant. The trial Court has, therefore, rightly held that the ingredients of the offence under Section 138 of the Act are not attracted. The dispute between the parties arising out of civil liability and the contractual obligations fall for adjudication in appropriate civil proceedings, but certainly does not fall within the realm of criminal liability, entailing penal consequences, as the ingredients of offence under Section 138 of the Act are not attracted to the present case. 9. It is well settled that an order of acquittal cannot be interfered with by the appellate Court in the absence of compelling reasons or strong grounds to do so. 10. In STATE OF RAJASTHAN V. RAJARAM[1], the Apex Court held that the principle to be followed by Appellate Court while considering the appeal against the judgment of acquittal is to interfere only when there are compelling and substantial reasons for doing so. 11. In AYODHYA SINGH V. STATE OF BIHAR AND OTHERS[2], the Apex Court held as under: “It is well settled that if on the same evidence two views are reasonably possible, where the Court below takes a view in favour of the accused, the Appellate Court will not set aside the order of acquittal unless it finds the findings to be perverse, highly unreasonable, based on no evidence on record or made in ignorance of relevant evidence on record or for other such reasons.” 12. In C.ANTONY V. K.G.RAGHAVAN NAIR[3] while dealing with an order of acquittal for an offence under Section 138 of the Act and the power of High Court to interfere with the same, the Apex Court held thus: “Unless the findings of trial Court are perverse or contrary to the material on record, High Court cannot, in appeal, substitute its findings merely because another contrary opinion was possible on the basis of material on record.” 13. In the present case, there are no such strong or compelling reasons or grounds to interfere with the order of acquittal passed by the trial Court, especially when such finding is based on proper appreciation of the evidence on record and the admissions contained in the complaint itself to the effect that the said cheque was issued only by way of security and not in discharge of any legally enforceable debt or liability. 14. In the circumstances, it is held that the impugned order of acquittal does not call for any interference. 15. In the result, the criminal appeal is dismissed. _____________________ G.V.SEETHAPATHY, J 14th October, 2009. Lrkm. [1] 2003 AIR SCW 4097 [2] 2005(2) ALT (Crl.) 92 [3] 2003(1) SCC 1