IN THE HIGH COURT OF JUDICATURE, ANDHRA PRADESH AT HYDERABAD THE HON'BLE SRI JUSTICE G.V.SEETHAPATHY CRIMINAL APPEAL NO :663 of 2005 24-09-2009 Between: Medisetty Jayasree ..... APPELLANT (Complainant) AND Valivarthy Venkateswara Raju and another .....RESPONDENTS/ (Accused) JUDGMENT:- This Criminal Appeal is directed against the Judgment dated 22.07.2003 in C.C.No.23 of 2003 on the file of II Additional Judicial Magistrate of I Class, Ongole wherein respondent No.1 herein/accused was found not guilty of the offence under Section 138 of Negotiable Instruments Act and was acquitted thereof. 2. Heard the learned counsel for the appellant/complainant and the learned counsel for respondent No.1/accused. Perused the records. 3. The appellant herein filed complaint against respondent No.1 alleging the offence under Section 138 of Negotiable Instruments Act. According to her, on 09.09.2000, the accused borrowed Rs.1,00,000/- and executed a promissory note agreeing to repay the debt with interest at 24% p.a. and thereafter, when the complainant approached the accused demanding discharge of the debt, the accused issued a cheque for Rs.1,00,000/- on 09.09.2002 and discharged the said debt. The complainant presented the same in Vysya Bank on 03.12.2002 and it was returned dishonoured with endorsement “Exceeds arrangement”. The complainant got issued a registered notice – Ex.P-5 to the accused on 07.12.2002 and accused received the same under his acknowledgment – Ex.P-6 dated 10.12.2002 but did not give any reply nor he repaid the amount. 4. The accused denied the offence and claimed to be tried. In support of her case, the complainant examined P.W.1 and also examined two other witnesses - P.Ws.2 and 3 and marked Exs.P-1 to P-6. The accused examined D.Ws.1 and 2 and marked Exs.D-1 to D-5. 5. On consideration of the evidence available on record, the learned Magistrate held that there was no valid service of statutory notice on the accused. It was held that the execution of promissory note – Ex.P-1 and issuance of cheque – Ex.P-2 were doubtful and the complainant was in possession of a blank promissory note and a blank cheque and she got the contents typed and pressed them into service for filing the present complaint. Accordingly, the learned Magistrate found the accused not guilty of the offence under Section 138 of Negotiable Instruments Act and acquitted him thereof. Hence, the present appeal by the complainant. 6. According to the complainant, the accused was indebted to her under a promissory note – Ex.P-1 in a sum of Rs.1,00,000/- and in discharge of the said debt, the accused issued a cheque – Ex.P-2, which when presented for encashment, was returned dishonoured. The plea of the accused is that he never borrowed any amount from the complainant and he did not execute any promissory note – Ex.P-1 and did not issue any cheque - Ex.P-2 in discharge of any such debt. The initial burden, therefore, lies on the complainant to establish that the accused was indebted to her and in discharge of such legally enforceable debt, the cheque was issued by the accused in her favour. In the evidence, P.W.1 – complainant deposed that the accused borrowed Rs.1,00,000/- from her and got the pronote – Ex.P-1 typed. In the cross examination, P.W.1 admitted that she lent Rs.1,00,000/- to the accused in her individual capacity and the accused issued the cheque – Ex.P-2 also in such capacity only two years after execution of Ex.P-1. It is suggested to P.W.1 that accused was doing business in the name of “V.V.R. Aqua Trading Company” and one K.Krishna was Proprietor of Datta Sai Company and he supplied the aqua feed to accused and accused gave a blank cheque to Krishna as a security on behalf of V.V.R. Aqua Trading Company, that Krishna was a tenant in the shopping complex of P.W.1 and fell in arrears of rent and P.W.1 ransacked his shop and took away his bills and documents including the blank cheque of the accused and when the accused subsequently pressed for return of the said documents, acting as mediator for Krishna, P.W.1 returned only the bills and account books and bearing grudge that accused acted as a mediator on behalf of Krishna, P.W.1 created Exs.P- 1 and P-2. P.W.1 also denied the suggestion that she executed a compromise document agreeing to sell aqua feed of Krishna kept in her shop and adjusts the amount towards arrears of rent. The said Krishna is examined as D.W.1 and he testified that he was doing business in shop No.2 of the shopping complex belonging to P.W.1 and accused purchased aqua feed from his shop under bill No.44 – Ex.D-1 on the credit bill and gave a blank cheque by way of security for releasing the stock and the accused endorsed the same on the said bill also. It is also in the evidence of D.W.1 that he fell in arrears of rent for four months to P.W.1 and on 15.08.2002, P.W.1 and her Advocate came to the shop and demanded the arrears of rent and obtained the signatures of D.W.1 on blank pronote and a white paper under threats and on 16.08.2002, P.W.1, her Advocate and others again came and asked D.W.1 to go out of the shop and took away the account books, bill books, file etc and locked up the shop. It is also in the evidence of D.W.1 that on 18.8.2002, his owner came and a settlement was made in the office of the Advocate and the accused acted as a mediator in that settlement and P.W.1 agreed to retain the stock of D.W.1 by adjusting the same against the arrears of rent. D.W.2, the Assistant Commercial Tax Officer-1, Ongole produced Ex.D-2 – copy of the lease agreement, Ex.D-3 copy of the registration certificate of A.P.G.S.T and Ex.D-4 – copy of registration certificate of Central Sales Tax pertaining to Datta Sai Aqua needs. It is also his evidence that a letter dated 07.03.2003 was received stating that the business was stopped with effect from 01.04.2001 under Ex.D-5. According to P.W.1, the business in the name of Sri Datta Sai Aqua Needs was run by P.W.1 himself but the testimony of D.W.2 coupled with Exs.D-2 to D-5 and also the evidence of D.W.1 coupled with Ex.D-1 would show that the said business was run by one P.Venkateswara Rao of which, D.W.1 was the Manager. In the pronote – Ex.P-1 also, the accused is scribed as Proprietor of V.V.R Aqua Trading company but P.W.1 claims that she does not know that accused was doing business in the same name. The testimony of D.Ws.1 and 2 is not discredited in any manner. There is absolutely, no reason as to why D.W.1 should give false evidence against P.W.1 and in favour of the accused. Ex.D-1 corroborates the testimony of D.W.1 that accused purchased aqua feed from Sri Datta Sai Aqua Needs of which, D.W.1 is Manager on credit basis on 30.08.2001 and as a security for the said amount, the blank cheque bearing No.724858 on State Bank of India was given. It is the very same cheque produced by P.W.1 under Ex.P-2. Ex.D-1 is said to be a credit bill issued in the regular course of business dealings. The testimony of D.W.2 also supports the contention of accused that Sri Datta Sai Aqua feeds was business run by P.Venkateswarlu and thereby, falsifies the contention of P.W.1 that accused was Proprietor of the said business. In view of the undiscredited testimony of D.Ws.1 and 2, as rightly observed by the learned Magistrate, the claim of P.W.1 that Ex.P-1 was executed by the accused and Ex.P-2 was issued by the accused in discharge of the debt due under Ex.P-1 is rendered highly doubtful. The complainant, has therefore, failed to discharge the initial burden of establishing that there was a legally enforceable debt due by the accused in his favour. It is only when the complainant discharges the initial burden cast on her that the presumption contained under Section 138 of the Negotiable Instruments Act comes into operation in favour of the complainant. In the present case, as the complainant failed to discharge the initial burden lying on her, the presumption contained under Section 138 of Negotiable Instruments Act is of no avail to her. 7. Even otherwise, the said presumption is rebuttable. The accused, by examining D.Ws.1 and 2 and producing the documents – Exs.D-1 to D-5, has successfully rebutted the said presumption. According to the complainant, the cheque was issued on 09.09.2002 by the accused in his individual capacity but Ex.P-2 purports to show that the cheque was issued by the accused as Proprietor of V.V.R. Aqua Trading Company. P.W.1 however states that the accused was not doing business in the name of V.V.R. Aqua Trading Company but was doing business in the name of Sri Datta Sai Aqua Needs. As per the evidence of D.W.2, the Assistant Commercial Tax Officer, who is an independent official witness, the business in the name of Datta Sai Aqua Needs was stopped with effect from 01.04.2001 as per the letter – Ex.D-5. When the business was stopped in 2001 itself, it is not known as to how the cheque – Ex.P-2 came to be issued in the year 2002 that too, in the name of another company. Ex.D-1 – credit bill No.44 shows that the blank cheque bearing the same number as of Ex.P-2 was given by accused to D.W.1, who is Manager of Sri Datta Sai Aqua Needs by way of security on 30.08.2001. When that is so, it is not known how the same cheque came to be issued by accused in favour of P.W.1 on 09.09.2002. This circumstance is sufficient to throw any amount of doubt over the version of the complainant regarding the genuineness of contents of Exs.P-1 and P-2 which are in fact type written and tend to fortify the contention of the accused that P.W.1 somehow got hold of the blank cheque – Ex.P-2 and fabricated the contents for the purpose of filing the complaint. If really the accused borrowed Rs.1,00,000/- from the complainant in his individual capacity as claimed by P.W.1 and in discharge of the said debt, he issued the cheque – Ex.P-2 again in his individual capacity, there is absolutely, no explanation on the part of the complainant as to how Ex.P-2 came to be issued by the accused as Proprietor of V.V.R Aqua Trading Company. On the other hand, this circumstance strengthens the contention of the accused that he was doing business in the name of V.V.R. Aqua Trading Company and not in the name of Sri Datta Sai Aqua Needs, as alleged by P.W.1 and he purchased aqua feed from Sri Datta Sai Aqua Needs of which, D.W.1 was the Manager under credit bill – Ex.D-1 and issued the blank cheque by way of security to D.W.1. The finding of the learned Magistrate that the complainant failed to establish that the accused issued the cheque – Ex.P-2 in discharge of legally enforceable debt and therefore, the ingredients of section 138 of Negotiable Instruments Act are not attracted, does not call for any interference as the same is based on proper appreciation of the evidence available on record. 8. That apart, the complainant is said to have issued a notice under the original of Ex.P-5 to the accused demanding payment of the amount duly intimating the dishonour of the cheque by the banker and the accused is said to have received the said notice under the acknowledgment – Ex.P-6 and failed to issue any reply or pay the amount. Ex.P-6 contains the signature of one V.Venkataravamma but not the accused. According to the complainant, the said Venkataravamma is the wife of accused and she received the same on behalf of the accused and therefore, the notice under the original of Ex.P-5 must be deemed to have been properly served. The accused denies that any such notice was served on him or on his wife. The fact remains that there was no service of statutory notice on the accused. It is well established preposition that service of the notice before filing the complaint under Section 138 of the Negotiable Instruments Act is mandatory as the same has a direct bearing on the cause of action for the complaint. It is only on the failure of the accused to pay the amount as demanded in the notice within the period prescribed, that the cause of action for filing the complaint would arise and without any such cause of action, the cognizance of an offence under Section 138 of Negotiable Instruments Act cannot be taken. There is no evidence on record to show that the person, who signed the postal acknowledgment-Ex.P-6 was duly authorized by the accused to receive the notice and sign acknowledgment on his behalf. It is also not a case where the notice was returned as ‘refused’ or ‘not claimed’ or that ‘the addressee was not found for a continuous period’. It is a case where the notice is said to have been served on a person who is not the addressee and there is nothing on record to show that the person, who received the notice, is duly authorized to receive the same and sign on behalf of the addressee. Service of the statutory notice on the drawer of the cheque being mandatory entailing penal consequences for non-compliance with the demand contained in the notice, service of such notice on some other person who is not shown to be authorized signatory for and on behalf of the drawer cannot be deemed to be valid service of the notice on the drawer himself. The learned Magistrate, has therefore, rightly held that there is no service of statutory notice on the accused in terms of Section 138 of Negotiable Instruments Act and this non-compliance with the mandatory requirement of law renders the complaint unsustainable. 9. The learned counsel for the appellant/complainant relied upon a decision in C.C.Alavi Haji Vs. Palapetty Muhammed and another[1] wherein the notice was returned unserved stating that the accused was out of station. The said decision, is therefore, not applicable to the facts of the present case and the presumption contained under Section 27 of the General Clauses Act, 1897 is also not attracted to the facts of the present case. In these circumstances, it is held that the impugned order of acquittal passed by the learned Magistrate, on proper appreciation of evidence available on record, does not call for interference in this appeal. 10. In the result, the Criminal Appeal is dismissed. _____________________ G. V. SEETHAPATHY, J 24th September, 2009 AMD [1] (2007) 6 Supreme Court Cases 555