*HON'BLE SRI JUSTICE G. BHAVANI PRASAD +Crl. Appeal No.548 of 2005 % 15/12/2009 # Karani Spices, Warangal, a registered partnership firm, rep. By its Partner Sri Ravi D. Karani ..... APPELLANT Vs. $ S. Ganapathi, S/o Venkataiah and another .....RESPONDENTS ! COUNSEL FOR THE APPELLANT: Sri Ghanshyamdas Mandhani ^ COUNSEL FOR THE RESPONDENT No.1: Sri P. Raja Sekhar, COUNSEL FOR THE RESPONDENT No.2: Public Prosecutor < Gist : Ø Head Note: ? CITATIONS: 1. (2000) 2 SCC 380 2. AIR 1963 SC 1116 3. 2004 Criminal Law Journal 58 4. 3 Appeal Cases 58 IN THE HIGH COURT OF JUDICATURE, ANDHRA PRADESH AT HYDERABAD TUESDAY, THE FIFTEENTH DAY OF DECEMBER TWO THOUSAND AND NINE HON’BLE SRI JUSTICE G. BHAVANI PRASAD Criminal Appeal No.548 of 2005 Between: Karani Spices, Warangal, a registered partnership firm, rep. by its Partner Sri Ravi D. Karani .. Appellant AND 1. S. Ganapathi, S/o Venkataiah 2. State of Andhra Pradesh, represented by its Public Prosecutor, High Court of A.P., Hyderabad. .. Respondents JUDGMENT: The acquittal of the accused for an offence punishable under Section 138 of the Negotiable Instruments Act, 1881, by the judgment dated 1-10-2004 in C.C.No.668 of 2001 on the file of the Court of I Additional Judicial Magistrate of First Class, Warangal, led the aggrieved complainant to file the present appeal. The complainant, a registered partnership firm, doing business in sale of spices claimed the accused to have been appointed as its agent at Kothagudem and to be receiving stocks supplied by it from time to time. The sale proceeds realized by the accused from the purchasers were claimed to be with the accused on behalf of the complainant and on the demand of complainant to render accounts for the same, the accused was claimed to have drawn a cheque for Rs.4,95,381-90ps., post dated to 10-10-2001 in partial discharge of his liability. After the cheque was presented by the complainant for collection on 10-10-2001, the accused was claimed to have paid Rs.1,60,000/- in cash after settlement of account on 14-10-2001 promising to pay the balance shortly. The accused, however, instructed the banker to stop payment on which the cheque was dishonoured and returned on 29-10-2001 along with memo of the banker of the accused dated 16-10-2001 about the insufficiency of funds. The complainant claimed that the accused addressed a letter dated 18-10-2001 falsely claiming about his entitlement to Rs.1,19,477/-, as per the settled account, after the complainant received Rs.1,00,000/-. Then the complainant issued a legal notice on 1-11-2001 demanding payment of Rs.2,00,335-10ps out of the settled amount and Rs.2,220/- towards commission and postal charges. The accused issued a telegram and a reply dated 22-11-2001 with false allegations and hence, the complainant sought for punishing the accused under Section 138 of the Negotiable Instruments Act. After the offence was taken cognizance and after the accused was furnished with the copies of documents on his appearance, he was examined under Section 251 of the Code of Criminal Procedure and he denied the offence. During trial, PW.1 was examined and Exs.P.1 to P.12 were marked and the accused denied the incriminating circumstances appearing against him in the evidence when he was examined under Section 313 of the Code of Criminal Procedure. He examined himself as DW.1 and marked Ex.D.1. The trial Court rendered the impugned judgment referring to the case of the complainant as well as the defence of the accused that he gave a blank cheque towards security for the payment of price of the goods. The trial Court also noted that there was no dispute about the complainant being a registered firm or the accused being the agent of the complainant for its business in spices. The trial Court further noted that the signature of the accused on the subject cheque and the cheque being handed over by the accused to the complainant were also admitted. The payment of Rs.1,60,000/- to the complainant by the accused on 14-10-2001 subsequent to the cheque was also admitted. The trial Court further noted that Ex.P.5 notice issued to the accused demanded payment of a sum much less than the amount covered by the disputed cheque. Relying on the decisions reported in K.R. Indira v. G. Adinarayana (2003 SCC (Crl) 2002 and TCI Finance Ltd, v. The state of A.P. (2004(2) APLJ 44 (SN)), the trial Court considered that the demand made by the complainant under Ex.P.5 was for a lesser amount and the prosecution has to, hence, fail for violation of the statutory requirement of Section 138 proviso (b). The trial Court was not oblivious of the presumption under Section 139 of the Negotiable Instruments Act about the cheque being presumed to have been issued towards a legally enforceable debt and the admission of the accused as DW.1 about his acknowledging to be due Rs.2,00,335-10ps as per Ex.P.11 statement of account, but the trial Court concluded the offence to have not been proved only due to Ex.P.5 not being in accordance with law. The complainant challenged the said judgment on the ground that Ex.P.5 demand notice does not suffer from any defect or vice and the complainant having proved all other aspects of its case was entitled to have the accused convicted in the case. Sri Ghana Shyamdas Mandhani, learned counsel for the appellant, Sri P. Rajasekhar, learned counsel for the accused and Sri K. Venkateswara Rao, learned counsel representing the learned Public Prosecutor are heard. The point for consideration is whether the complainant proved beyond reasonable doubt that the accused was guilty of the offence punishable under Section 138 of the Negotiable Instruments Act. The complainant being a registered firm was probablised by Ex.P.1 and the issuance of the subject cheque-Ex.P.2 by the accused in favour of the complainant is admitted. The cheque return memo, Ex.P.3, and the debt advice, Ex.P.4, are also not in dispute showing that the payment under the subject cheque was stopped by the drawer that is the accused. The receipt of Ex.P.5 notice by the accused under Ex.P.7 postal acknowledgment and the reply of the accused in Ex.P.8 are also not in dispute. In Ex.P.5, it was claimed that after the accused drew the subject cheque and after it was presented by the complainant on 10-10-2001 for collection, the accused paid Rs.1,60,000/- in cash on 14-10-2001. The notice further stated that a subsequent letter dated 18-10-2001 from the accused made a false claim about his entitlement to Rs.1,19,477/- and the receipt of Rs.1,00,000/- by the complainant from out of the settled account as found on 14-10- 2001. The complainant, therefore, demanded the accused to pay Rs.2,00,335-10ps., + Rs.2,220/- towards commission and postal charges. The accused in his reply Ex.P.8 admitted the issuance of the cheque which was claimed to be a blank cheque issued as security for due payment of some price of goods in February, 2001. The accused also claimed that he never acknowledged the debt on 14-10-2001 when he paid Rs.1,60,000/- and he claimed that he was due only Rs.70,858-18ps., while the goods worth Rs.10,000/- were still with the accused who could not sell the same. Ex.P.9 is a letter from the accused about the return of some damaged goods, while Ex.P.10 is the telegram about the alleged payment of Rs.1,00,000/- by the accused, which was not shown in the account. However, the closing balance as per the statement of account being Rs.2,00,335-18ps. was admitted by the accused when he was examined as DW.1 and Sri Ghana Shyamdas Mandhani, learned counsel stated that a civil suit filed by the complainant for recovery of the amount due from the accused is pending trial. The accused as DW.1, while reiterating his defence, admitted issuing Ex.P.2 cheque and also his signature on Ex.P.11 statement of account showing the amount claimed by Ex.P.5 notice to be due to the complainant from him. He also admitted having no document to show the amount due being less as claimed by him and his having no idea as to actually when he issued the disputed cheque to the complainant may make his defence factually not dependable. The partner of the complainant firm as PW.1 reiterated the case of the complainant, but admitted that in Ex.P.5 notice, he demanded only to pay the balance due but not the full amount covered by the cheque. While denying taking of the cheque as security, PW.1 asserted that the accused signed on Ex.P.11 after settling the account acknowledging the balance due. He claimed Ex.P.2 to have been issued on 25-09-2001 by post dating it and also explained that the managing partner of the complainant filled up the figures and words in Ex.P.2 on the instructions of the accused. Thus, it is seen from the evidence that the relationship between the complainant and the accused in connection with the business in spices with the accused acting as an agent of the complainant and the accused being due some amounts towards the business from time to time is not in dispute, while the issuance of the subject cheque and its dishonour are also not in dispute. It is only the quantum due to the complainant from the accused by the time of Ex.P.5 demand notice that is in dispute between the parties and admittedly the amount demanded under Ex.P.5 and the amount of cheque Ex.P.2 are not one and the same. In this background, the trial court gave the benefit of reasonable doubt to the accused practically solely on the basis of Ex.P.5 notice being not for the same amount for which the cheque was issued. Section 138 of the Negotiable Instruments Act, 1881, (for short “the Act”) creates the offence for dishonour of a cheque, when the cheque is for payment of any amount of money for the discharge in whole or in part of any debt or other liability. The proviso to Section 138 makes the applicability of Section 138 subject to the presentation of the cheque within six months from the date of drawal or validity, the issuance of a notice in writing making a demand for payment of “the said amount of money” and the failure of the drawer of the cheque to make payment of “the said amount of money within 15 days of the receipt of the said notice”. The explanation to the provision makes a debt or other liability to mean a legally enforceable debt or other liability and Section 139 of the Act raised a statutory presumption in favour of such a cheque being towards the discharge in whole or in part of any debt or other liability. The trial Court firstly referred to K.R. Indira v. G. Adinarayana (2003 SCC (Crl) 2002) wherein the Apex Court stated what is necessary to be making of a demand for the amount covered by the bounced cheque. The trial Court also relied on TCI Finance Ltd., v. The State of A.P. (2004 (2) APLJ 44 (SN), wherein it was opined that the demand must be for payment of the amount covered by the cheque and never for a lesser amount or for a higher amount. Any such deviation was considered to be failure of the statutory requirement of Section 138 proviso (b). The decisions, thus, interpreted the words “the said amount of money” in Section 138 proviso (b) to be specifically requiring the notice in writing to be only for the amount of money for which the cheque was drawn and for no other amount. Even in Suman Sethi v. Ajay K. Churiwal and another[1] relied on by the learned counsel for the appellant, the Apex Court, with reference to Sections 138 and 139 and the earlier decision in M. Narayanan Nambiar v. State of Kerala[2] ascertained the meaning of words “the said amount of money” as referring to the cheque amount occurring in the main section. Though the decision relied on referred to a thing brought within the words and within the spirit, even in construing a penal enactment according to the fair common sense meaning of the language used, still the principle laid down is that in a notice under clause (b) to proviso to Section 138, demand has to be made for the cheque amount, reading the entire section as a whole and applying common sense. While so arriving at the intention of the legislature in enacting the provision, the Apex Court made a distinction concerning a notice where any additional claims towards interest, damages etc., are severable and will not invalidate the notice. However, when the demand in the notice was omnibus, the notice was held liable to fail to meet the legal requirement. While laying down that a notice has to be read as a whole, the Apex Court was clear that the demand has to be made for the cheque amount and if no such demand is made, the notice would fail. The Apex Court also referred to its earlier decision in Central Bank of India v Saxons Farms [(1999) 8 SCC 221], wherein the drawer was held entitled to be absolved from his liability under Section 138, if he makes the payment of the amount covered by the cheque, but not the other amounts demanded towards compensation, interest and costs. For the other demands, a civil proceeding was held to lie for recovery and therefore, the demand has to be for the amount of the cheque and any additional amount claimed should be severable to make a notice valid. It is of course true that in M/s. Thekkan and Company v. M. Anitha[3], a learned Judge of Kerala High Court construed that there is nothing in the language of Section 138, which precludes a court from taking into account payments made before the presentation of the cheque or before the receipt of notice in deciding whether the amount due under the cheque has been paid. The consideration by the learned judge was with reference to the defence taken by the accused that the liability was discharged in part, but not with reference to the demand to be made by the creditor for the “said amount of money”. While considering the obligation to pay the said amount of money within 15 days of the statutory notice, the learned Judge held the accused to be entitled to contend about the payments made subsequent to the issuance of the cheque. It is true that the learned Judge deprecated any mechanical and literal conclusions in this regard, but firstly the determination of the question as to what is the amount of money payable within 15 days of receipt of the statutory notice may not detract from the binding precedents in deciding the amount for which the notice of demand should be given and secondly and consequently, it is highly doubtful whether a provision imposing criminal liability strictly can be interpreted in any manner other than literally. Sri Mandhani also referred to the celebrated decision of the House of Lords in The Edinburgh Street Tramways Company v. Torbain[4], wherein Lord Blackburn laid down that in construing the Act of Parliament, the Court has to see what is the intention which the legislature has expressed by the words but then the words again are to be understood by looking at the subject matter they are speaking of and the object of the Legislature and the words used with reference to that may convey an intention quite different from what the self-same set of words used in reference to another set of circumstances and another object would or might have produced. Contextual understanding and application of the language of the statute is thus what was advised and the Apex Court understood the intention of the legislature in enacting clause (b) of the proviso to Section 138 as directing a demand to be made for the cheque amount and not for anything more or less than what is due under the cheque, vide Suman Sethi (1 supra). No other understanding of the language of the relevant provision is permissible so long as the decision holds the field. While it is true that the admission of the accused about his acknowledgement in Ex.P.11 statement of account may lend credence to the claim of the complainant about the amount due as per Ex.P.5 notice of demand, still these circumstances about the payment on settlement of account cannot detract from the statutory requirements of the notice in writing under clause (b) of proviso of Section 138 as interpreted by the precedents. Sri Mandhani, learned counsel, made a reference to Sections 44 and 45 of the Act about the partial absence or failure of money consideration or consideration not consisting of money, which will only make the liability proportionately reduced, but not make the Negotiable Instrument unascertainable or unenforceable, but the question of enforceability of Ex.P.2 cheque irrespective of the subsequent partial failure of the consideration due to the settlement of account and the part payments made by the accused may assume relevance in a civil proceeding for recovery of money due to the complainant from the accused. But, such considerations are not germane in determining the validity or otherwise of the notice in writing under clause (b) of the proviso to Section 138, which was consistently and literally interpreted as requiring a demand for the payment of money specified in the cheque alone. The interpretation may sound technical but the penal liability under Section 138 being absolute without reference even to any guilty state of mind was so interpreted in accordance with the accepted rules of interpretation of statutes. For the said reasons, the conclusions of the trial Court cannot be faulted and the appeal has to fail. While the appeal is accordingly dismissed, none of the observations made in this judgment shall influence the determination of the civil suit between the parties. _____________________ G. BHAVANI PRASAD, J Date: 15-12-2009 Note: L.R. copies to be marked. B/o Ksn [1] (2000) 2 SCC 380 [2] AIR 1963 SC 1116 [3] 2004 Criminal Law Journal 58 [4] 3 Appeal cases 58