IN THE HIGH COURT OF JUDICATURE AT MADRAS DATED : 13.11.2008 CORAM: THE HONOURABLE MR.JUSTICE A.C.ARUMUGAPERUMAL ADITYAN Crl.A.No.1481 of 2002 P.Vadivelu .. Appellant/Complainant vs. K.Thangaraj .. Respondent/Accused This appeal has been preferred against the Judgment dated 19.3.2002 in C.C.No.497 of 2000 on the file of Judicial Magistrate No.1, Erode. For Appellant : Mr.N.Manoharan,Advocate For Respondent : Mr.I.C.Vasudevan,Advocate JUDGMENT This appeal has been preferred by the Complainant under Section 138 of Negotiable Instruments Act against the judgment in C.C.No.497 of 2000 on the file of Judicial Magistrate No.1, Erode. 2. According to the complainant, the accused had borrowed a sum of Rs 3,00,000/-(Rupees three lakhs) Only on 1.7.1999 to meet his business expenditure and had drawn a post dated cheque for Rs.3,00,000/- which on presentation before the Indian Overseas Bank, Erode, was dishonoured on the ground that there was no sufficient funds in the account of the accused to honour the same. A lawyer's notice was sent by the complainant dated 18.2.2000 demanding the cheque amount. There was a mistake crept in the notice dated 18.2.2000 with regard to the cheque amount instead of mentioning the cheque amount was Rs.3,00,000/- mistakenly it was mentioned in the notice as Rs.30,000/- Hence a rejoinder notice was issued by the complainant dated 23.2.2000. The said notice was received by the accused on 25.2.2000 but no reply was sent by the accused. Hence the complaint. 3. The complaint was taken on file by the learned Judicial Magistrate, after taking cognizance of the same and after the accused appearing on summons, copies under Section 207 of Cr.P.C https://hcservices.ecourts.gov.in/hcservices/ were furnished and when the offence was explained to the accused, he pleaded not guilty. 4. Before the trial Court,on the side of the complainant, the complainant was examined as P.W.1 and exhibited Exs P1 to P9. On the side of the accused, the accused had examined himself as D.W.1 and exhibited Ex D1 and D2. No material object was marked. 5. After going through the evidence both oral and documentary, the learned trial Judge has dismissed the complaint 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 amount of Rs.3,00,000/- to the accused and that the accused had no capacity to repay the said loan amount. Aggrieved by the findings of the learned trial Judge, the complainant has preferred this appeal. 6. Now the point for determination in this appeal is whether the charge under Section 138 of Negotiable Instruments Act has been proved beyond any reasonable doubt against the accused. 7. Heard Mr.N.Manoharan,learned counsel for the appellant and Mr.I.C.Vasudevan, learned counsel for the respondent and considered their rival submissions. 8.The Point: Section 138 of the Negotiable instrument Act runs 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 and shall without prejudice to any other provisions 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:- https://hcservices.ecourts.gov.in/hcservices/ (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 purpose of this section, "debt or other liability" means a legally enforceable debt or other liability. 9. The complainant as P.W.1 before the trial Court would depose that on 1.7.1999, the accused had borrowed a sum of Rs.3,00,000/- from him for the purpose of meeting his business expenses and handed over the post dated cheque Ex P1 drawn by the accused and when the said cheque was presented for encashment before the Indian Overseas Bank, Periyasemur, the same was returned by the bank with an endorsement that " no sufficient funds in the account of the accused". Ex P2 is the returned memo issued by the bank. During trial, on behalf of the accused a vague defence was raised as to the effect that the brother of the complainant Srirangan along with one Sukumar had committed a theft in his "Ellora"readymade shop in the year 1998 and from the documents stolen away from the said shop of the accused, the impugned cheque Ex P1 was forged by the accused and the complaint was preferred by him. It is pertinent to note at this juncture that for Ex P3 notice and Ex P6 rejoinder notice, there was no reply sent by the accused. Ex P5 and Ex P8 are the acknowledgments for having received notice under the original of Ex P3 and the original of Ex P6 by the accused. The name of the complainant is Vadivelu. It is seen from Ex D1 receipt, for the first information report that there was no complaint preferred against the complainant by the accused on 18.5.1998. There is no specific mention about the loss of cheque book in Ex D1. There is absolutely no material placed before this Court to show that Ex P1 is a forged cheque. It is seen from Ex P2 memo issued by the Bank that the cheque was not returned on the ground that it was a forged one but only on the ground of insufficient fund in the account of the accused, the cheque was returned. These aspects were not at all considered by https://hcservices.ecourts.gov.in/hcservices/ the trial Court. As per Section 138 of the Negotiable Instruments Act,the points to be considered by the trial Court is whether the cheque drawn by a person was for the purpose of discharging the debt in whole or in part ,of any debt or other liability that too a subsisting liability. P.W.1 has deposed before the trial Court that only for a valuable consideration received from the complainant, the impugned cheque Ex P1 was drawn by the accused to discharge the subsisting liability. Under such circumstance, the Judgment in C.C.No.497 of 2000 on the file of Judicial Magistrate No.1, Erode is set aside and the accused is convicted under Section 138 of Negotiable Instruments Act. 10.When coming to the question of sentence, the principle laid down in Goa Plast (P) Ltd-vs-Chico Ursula D'Souza(2004(2) Supreme Court Cases 235)can be followed in this case to. The ratio decidenti in the above said ratio runs as follows: "Section 139: 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"Thus it has to be presumed that a cheque is issued in discharge of any debt or other liability. The presumption can be rebutted by adducing evidence and the burden of proof is on the person who wants to rebut the presumption. This presumption coupled with the object of Chapter XVII of the Act which is to promote the efficacy of banking operation and to ensure credibility in business transactions through banks persuades us to take a view that by countermanding payment of post-dated cheque, a party should not be allowed to get away from the penal provision of Section 138 of the Act. A contrary view would render Section 138 a dead letter and will provide a handle to persons trying to avoid payment under legal obligations undertaken by them through their own acts which in other words can be said to be taking advantage of one's own wrong. If we hold otherwise, by giving instructions to banks to stop payment of a cheque after issuing the same against a debt or liability, a drawer will easily avoid penal consequences under Section 138. Once a cheque is issued by a drawer, a presumption under Section 139 must follow and merely because the drawer issued notice to the drawee or to the bank for stoppage of payment, it will not preclude an action under Section 138 https://hcservices.ecourts.gov.in/hcservices/ of the Act by the drawee or the holder of the cheque in due course. This was the view taken by this Court in Modi Cements Ltd.v.Kuchil Kumar Nandi(1998)3 SCC 249). On same facts is the decision of this Court in Ashok Yeshwant Badave.v.Surendra Madhavrao Nighojakar (2001) 3 SCC 726). The decision in Modi Case overruled an earlier decision of this Court in Electronics Trade and Technology Development Corpn Ltd., v. Indian Technologists & Engineers (Electronics) (P) Ltd., (1996) 2 SCC 739:1996 SCC(cri)454) which had taken a contrary view. We are in respectful agreement with the view taken in Modi case(1998)3 SCC 249). The said view is in consonance with the object of the legislation. On the faith of payment by way of a post-dated cheque, the payee alters his position by accepting the cheque. If stoppage of payment before the due date of the cheque is allowed to take the transaction out of the purview of Section 138 of the Act, it will shake the confidence which a cheque is otherwise intended to inspire regarding payment being available on the due date.. . . . . . . .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.. ... 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 https://hcservices.ecourts.gov.in/hcservices/ 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 country, in a large number of commercial transactions, it was noted that the cheques wee 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 set back. 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 defect the genuine claim of the payee." Under such circumstances, the above said ratio applies to the present facts of the case in all four corners. Following the principle enunciated in the above said dictum,I am of the view that instead of giving any imprisonment, the accused can be directed to pay twice the amount of the cheque in this case also. The point is answered accordingly. 11. In the result, the appeal is allowed and the Judgment in C.C.No.497 of 2000 on the file of the Judicial Magistrate No.1, Erode is set aside and the accused is convicted and sentenced under Section 138 of Negotiable Instruments Act. Six month's time from this date is given to the respondent/accused herein to pay a sum of Rs.6,00,000(Rupees Six Lakhs) only (Twice the amount of the Cheque) to the appellants/complainants. In default, thereof, the respondent/ accused shall suffer simple imprisonment for six https://hcservices.ecourts.gov.in/hcservices/ months. It is represented by the learned counsel appearing for the respondent/accused that this Court had already issued bailable warrant. Only if the accused fails to pay the amount passed under this Judgment, on petition, warrant to compel his attendance is to be issued and not before that. So registry is directed to recall the bailable warrant issued against the accused. sd/- Asst.Registrar /true copy/ Sub Asst.Registrar sg To 1. The Judicial Magistrate No.1, Erode. 2. -do- the Chief Judicial Magistrate, Erode. 3. The Superintendent of Police, Kattumannar Police Station, Karur District. 4. The Public Prosecutor, High Court, Madras. Crl.A.No.1481/2002 BV (CO) GSK 13.11.2008. https://hcservices.ecourts.gov.in/hcservices/