* THE HON’BLE SRI JUSTICE B.SESHASAYANA REDDY + Criminal Revision Case Nos.602 and 603 of 2009 % 30-10-2009 # D.Atchyutha Reddy. …PETITIONER/ACCUSED VS. $ 1. The State of A.P., through Public Prosecutor, High Court of A.P., & Anr. ..RESPONDENTS ! COUNSEL FOR PETITIONER: SRI C.PADMANABHA REDDY ^COUNSEL FOR RESPONDENT No.2: PARTY-IN-PERSON. COUNSEL FOR RESPONDENT No.1: Addl. Public Prosecutor. < Gist: > Head Note: ? CITATIONS: 1) 2001 Crl.L.J. 4647 2) 2001 Crl.L.J. 4745 3) 1999 Crl.L.J. 4606 4) (1999) 1 SCC 113 5) 2001 Crl.L.J. 1489 6) ((1993) (VOL.76) Company Cases 105 7) 1994 CRL.L.J. 887 8) 1996 DCR 633 SC 9) 2006 CRL.L.J 1 10) 1996 CRL.L.J 3099 11) 2005(1) DCR 85 12) (2002) 7 SCC 150 13) 2007 CRL.L.J. 3214 14) 2002 CRL.L.J. 4392 15) 2002 CRL.L.J.266 16) 1962 (2) An.WR 137 17) AIR 1963 AP 442 18) 1958 (1)AN.W.R. 413 19) 2005 ALD (CRL)138 20) (2005) 13 SCC 116 21) 2006 CRL.L.J. 1059 22) (2001) 3 SCC 726 23) 1982 CRL.L.J. 1482 24) (2007) 5 SCC 228 25) 2008 AIR (SCW) 738 26) 2007 Crl. L.J. 844 THE HON’BLE SRI JUSTICE B. SESHASAYANA REDDY Crl.R.C.Nos.602 and 603 of 2009 Date:30th October, 2009 Between: D.Atchyutha Reddy …Petitioner/Accused and 1. The State of A.P., through Public Prosecutor, High Court of A.P., Hyderabad & Anr. …Respondents *** THE HON’BLE SRI JUSTICE B. SESHASAYANA REDDY Crl.R.C.Nos.602 and 603 of 2009 COMMON JUDGMENT: In both these revisions, the complainant and the accused are same. Both these Criminal Revision Cases relate to a cheque bearing No.412223, dated 05.09.2004 issued by the accused. Therefore, they were heard together and are being disposed of this Common Judgment. 2. Background facts in a nutshell leading to filing of both these Criminal Revision Cases by the accused in C.C.Nos.711 of 2006 and 35 of 2007 on the file of VII Additional Chief Metropolitan Magistrate, at Hyderabad, are: a) Accused-D.Atchyutha Reddy is a film producer and director. According to the complainant–N.Ratan Babu, he and accused got acquaintance with each other for the past several years and they were family friends. The complainant contends that the accused borrowed Rs.2.50 lakhs on 05.04.2003 in the presence of one M.Dayakar, who is known to both of them. The accused after receiving the amount issued a postdated cheque for Rs.2.50 Lakhs. The cheque is dated 05.09.2004. He presented the cheque in Andhra Bank, Saifabad Branch, for collection and the same came to be returned with an endorsement ‘account closed’. The complainant issued a notice under Section 138(b) of the Negotiable Instruments Act, 1881, (for short, ‘the N.I.Act’) to the accused to make good the amount covered under the cheque in question. The accused received the notice, but he did not respond. The accused stated to have closed the account on 24.01.2003 i.e., much earlier to the issuance of the cheque. Ex.P1 is the cheque. Ex.P2 is the cheque return memo. Ex.P3 is the office copy of the notice and Ex.P4 is the acknowledgement. The complainant filed the complaint on 05.11.2004 before Additional Chief Metropolitan Magistrate at Hyderabad, under Sections 190 and 200 Cr.P.C. for the offence under Section 138 of the N.I.Act. The learned Magistrate, after recording the sworn statement of the complainant, took cognizance of the offence under Section 138 of the N.I. Act, registering the case as C.C.No.711 of 2006. On 14.03.2006, the complainant also filed a complaint under Section 190 and 200 Cr.P.C. for the offence under Section 420 IPC. The learned Additional Chief Metropolitan Magistrate, after recording the sworn statement of the complainant, took cognizance of the offence under Section 420 IPC registering the case as C.C.No.35 of 2007. b) On appearance of the accused and on furnishing copies of documents, the learned Magistrate examined the accused under Section 251 Cr.P.C. in cheque bouncing case and under Section 239 Cr.P.C. in cheating case. The accused denied the accusations leveled against him and pleaded not guilty for the offences under Sections 138 of the N.I. Act and 420 IPC. c) In both the cases, the complainant examined himself as PW.1 and examined two more witnesses viz., M.Dayakar and Alapati Trinadha Rao as PWs.2 and 3. PW.2 M.Dayakar claims to be present on the date of borrowing and also on the date on which the cheque in question came to be issued by the accused. N.Rajesh Babu, who is the son of the complainant is stated to have filled the contents of the cheque. According to the complainant, the accused read the contents of the cheque and confirmed the contents therein as correct and signed thereon and handed over the same to him with instructions to deposit the cheque on the date mentioned thereon. d) PW.3 is the Deputy Bank Manager of Andhra Bank, Nampally Branch, wherein the accused maintained the account bearing No.ASB 500009. According to him, the accused closed the account on 24.01.2003. Whereas, the complainant/PW.1 presented Ex.P1 cheque after the closure of the account. Ex.P2 is the cheque return memo. Ex.P5 is the copy of bank statement of account of the accused in respect of Account bearing No.ASB 500009. e) It is the plea of the accused that the complainant took blank undated promissory notes and cheques and made use of the blank promissory notes and cheques and filed various suits against him by the complainant, his wife-Rajeswari and his son-Rajesh Babu and that there did not exist the relationship of creditor and debtor between him and the complainant. Except marking Certified Copy of the complaint in C.C.No.35 of 2007 as Ex.D1, which is filed by the complainant, he did not choose to adduce any evidence. f) The learned Magistrate, considering material brought on record and on hearing the counsel appearing for the parties, found the accused guilty for the offences under Sections 138 of the N.I. Act and 420 IPC and convicted him accordingly and sentenced him to suffer rigorous imprisonment for two years and pay a fine of Rs.3,000/- in default to suffer simple imprisonment for three months for each of the offences, by judgments dated 20.10.2008. Assailing the judgments of conviction and sentence passed in C.C.No.711 of 2006 and C.C.No.35 of 2007, the accused filed Crl.Appeal Nos.337 and 338 of 2008 on the file of II Additional Metropolitan Sessions Judge at Hyderabad. The learned Additional Metropolitan Sessions Judge, on re-appraisal of the evidence brought on record and on hearing the counsel appearing for the parties, did not find any valid ground to interfere with the conviction and sentence of the accused for the offences under Sections 138 of the Negotiable Instruments Act and 420 IPC and accordingly, dismissed both the appeals, by judgments dated 30.03.2009. Hence, both these Criminal Revision Cases by the accused. More presicely, Crl.R.C.No.602 of 2009 is directed against the judgment dated 30.03.2009 passed in Crl.A.No.337 of 2008 and whereas, Crl.R.C.No.603 of 2009 is directed against the judgment dated 30.03.2009 passed in Crl.A.No.338 of 2008. 3. Heard Sri.C.Padmanabha Reddy, learned Senior Counsel appearing for the petitioner/accused and the 2nd respondent- party in person. 4. Learned Senior counsel submits that the trial Court as well as the lower appellate Court misread the provisions of Sections 118 and 139 of the N.I. Act and thereby conclusions arrived at by both the Courts below are unsustainable. In elaborating his arguments, learned senior counsel contended that there is no presumption as to the existence of debt and therefore once the petitioner denies the very existence of debt, initially burden lies on the complainant to prove the existence of debt as on the date of issuance of the cheque in question. Learned Senior Counsel would also contend that as on 5.4.2003, the date of issuance of the cheque in question, there were various amounts totaling Rs.15,00,000/- allegedly due to the son and wife of 2nd respondent-complainant and in which case the version of 2nd respondent-complainant that he had lent Rs.2,50,000/- as a hand loan on 5.4.2003 is highly improbable and unbelievable. A further contention has been raised that P.W.2 is a stock witness on behalf of 2nd respondent-complainant in all the cases to speak of lending money by 2nd respondent-complainant as well as issuing cheques by the petitioner-accused and therefore no credence could be given to his testimony and once his testimony is discarded there is no other evidence to support the version of 2nd respondent-complainant that he lent money to the petitioner-accused on 5.4.2003. The lending of money by 2nd respondent-complainant to the petitioner-accused in the given facts and circumstances, is highly doubtful in which case the initial burden with regard to existence of debt stands unproved and the result of which makes the provisions of Sections 118 and 139 of the N.I.Act inapplicable. Even otherwise the presumptions under Sections 118 and 139 of the N.I.Act available in favour of the 2nd respondent- complainant have been rebutted by the petitioner-accused through several circumstances brought out in the evidence of P.W.1 and 2. 5. Learned Senior Counsel also contended that some of the suits filed by the wife and son of 1st respondent ended in dismissal on the ground of the suit pro-notes being not supported by consideration and the dismissal of the said suits lends support to the circumstances brought out by the petitioner in the evidence of P.Ws.1 and 2 and in which case the conviction and sentence of the petitioner-accused under sections 138 of the N.I.Act and Sec.420 of IPC is liable to be set aside. Learned Senior Counsel placed on record the photostat copies of the judgments passed in O.S.Nos.1535 of 2006, 1133 of 2005, 2378 of 2003, 1134 of 2005 and 2277 of 2003. 6. As seen from the photostat copies of the judgments, suits filed by N.Rajesh Babu, son of 2nd respondent in O.S.Nos.1535 of 12006, 1134 of 2005 and 2277 of 2003 and the suits filed by N.Rajeshwari, wife of 2nd respondent being O.S.Nos.1133 of 2005 and 2378 of 2003 on the file of VII Additional Senior Civil Judge, FTC, CCC, Hyderabad ended in dismissal. 7. Learned Senior counsel took me to the evidence of P.Ws.1 and 2 in great detail to convince that the presence of P.W.2 at the time of lending as well as issuance of the cheque is highly unbelievable. 8. The 2nd respondent contends that the trial Court as well as the appellate court considered the evidence brought on record in right perspective and found the petitioner-accused guilty for the offence under section 138 of the N.I.Act and Sec.420 of IPC. He also contended that there is no consistency in the defence of the petitioner and that itself is sufficient to infer that he failed to rebut the presumptions under Section 118 and 139 of the N.I.Act. The 2nd respondent took me to the plea advanced by the petitioner in the quash petitions and suggestions put to P.W.1 in the cross-examination and the statements of the petitioner under section 313 Cr.P.C to convince that there is no consistency in the plea advanced by the petitioner. He also cited innumerable decisions of the Supreme Court, this Court and various other High Courts on the aspect of presumptions under Sections 118 and 139 of the N.I.Act. He would also submit that the very fact of issuance of the cheque after the account had been closed indicates his fraudulent intention from the inception and that itself is sufficient to sustain the conviction of the petitioner for the offence under section 420 IPC. The decisions cited by the 2nd respondent-complainant are: 1) HITEN P.DALAL V. BRATINDRANATH BANERJEE[1] 2) K.N.BEENA V. MUNIYAPPAN AND ANOTHER[2] 3) K.BHASKARAN V. SANKARAN VAIDHYAN BALAN[3] 4) MARUTI UDYOG LTD. V. NARENDER AND OTH[4] 5) M/S OPTS MARKETING PRIVATE LTD. AND STATE OF A.P.[5] 6) K.S.ANTO V. UNION OF INDIA[6] 7) SATISHKUMAR V. KRISHNAGOPAL[7] 8) STATE OF RAJASTHAN V. M/S JAKTAB SYBDARAN CENEBT UBDYSTRUES LTD[8] 9) GORANTLA VENKATESWARA RAO V. KOLL VEERA RAGHAVA RAO[9] 10) SATISH JAYANTILAL SHAH V. PANKAJ MASHRUWALA[10] 11) P.S.A.THAMOTHARAN V. DALMIA CEMENTS(B) LTD[11] 12) P.K.MANMADHAN KARTHA V. SANJEEV RAJ AND ANR.[12] 13) C.C.ALAVI HAJI V. PALAPETTY MUHAMMED AND ANR.[13] 14) JOSEPH JOSE V. J.BABY, PUTHUVAL PURAVIDOM POOTHOPPU AND ANOT[14] 15) M/S. M.M.T.C.Ltd. V. M/S.MEDCHAL CHEMICALS (P) LTD.[15] 16) VERALAXMI V. SYED KASIM HUSSAIN[16] 17) K.SUDERSANAM V. S.VENKATARAO[17] 18) MUNAGALA YADGIRI V. PITTALA VEERIAH[18] 19) RAJULADEVULA SRINU AND SRINIVAS V. STATE OF A.P.[19] 20) STATE OF A.P. V. KANDA GOPALUDU[20] 21) M.RAVI & ORS. V. ELUMALAI CHETTIAR[21] 22) ASHOK YESHWANT BADAVE V. SURENDRA MADHAVRAO NIGHOJAKAR AND ANOTHER[22] 23) BHOLA NATH ARORA AND ANOTHER V. STATE[23] 24) N.DEVINDRAPPA V. STATE OF KARNATAKA[24] 9. Section 138 of N.I.Act reads as under: S.138 Dishonour of cheque for insufficiency, etc., of funds in the account - 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 provision of this Act, be punished with imprisonment for a term which may extend 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- (a) the cheque has been presented to the bank within a period of six months from the date on which it was 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 purposes of this section, "debt or other liability" means a legally enforceable debt or other liability. 10. Section 138 of the N.I. Act has three ingredients, viz., (i) that there is a legally enforceable debt; (ii) that the cheque was drawn from the account of bank for discharge in whole or in part of any debt or other liability which pre-supposes a legally enforceable debt; and (iii) that the cheque so issued had been returned due to insufficiency of funds. The proviso appended to the said section provides for compliance of legal requirements before a complaint petition can be acted upon by a court of law. Section 139 of the Act merely raises a presumption in regard to the second aspect of the matter. Existence of legally recoverable debt is not a matter of presumption under Section 139 of the N.I. Act. It merely raises a presumption in favour of a holder of the cheque that the same has been issued for discharge of any debt or other liability. An accused for discharging the burden of proof placed upon him under a statute need not examine himself. He may discharge his burden on the basis of the materials already brought on records. An accused has a constitutional right to maintain silence. Standard of proof on the part of an accused and that of the prosecution in a criminal case is different. 11. The N.I. Act contains provisions raising presumptions as regards the negotiable instruments under section 118(a) of the Act as also under section 139 thereof. The said presumptions are rebuttable. Whether the presumption rebutted or not would depend upon the facts and circumstances of each case. The Supreme Court clearly laid down in catena of decisions that the standard of proof in discharge of the burden in terms of Sections 118 and 139 of the N.I.Act being the preponderance of a probability, the inference thereof can be drawn not only from the material brought on record but also from the reference to the circumstances upon which the accused relied upon. The burden to rebut the presumptions on the accused is not as high as that of the prosecution. 12. Under Section 118, unless the contrary is proved, it is to be presumed that the Negotiable Instrument (including a cheque) had been made or drawn for consideration. Under section 139 the Court has to presume, unless the contrary was proved, that the holder of the cheque received the cheque for discharge, in whole or in part of a debt or liability. Thus, in complaints under section 138, the Court has to presume that the cheque had been issued for a debt or liability. This presumption is rebuttable. However, the burden of proving that a cheque had not been issued for a debt or liability is on the accused. The Supreme Court in HITEN P.DALAL V. BRATINDRANATH BANERJEE (1 supra), while dealing with sections 138 and 139 of N.I.Act held that whenever a cheque was issued to the complainant for a specific amount, there is a presumption that it is towards discharge of legally enforceable debt. In the event of dispute, the burden is on the accused to prove that there is no subsisting liability as on the date of issuing of cheque and the proof must be sufficient to rebut the presumption and mere explanation is not sufficient. The Supreme Court further held as follows: “( 20 ) THE appellant's submission that the cheques were not drawn for the 'discharge in whole or in part of any debt or other liability' is answered by the third presumption available to the Banks under Section 139 of the Negotiable Instruments Act. This section provides that "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 effect of these presumptions is to place the evidential burden on the appellant of proving that the cheque was not received by the Bank towards the discharge of any liability. ( 21 ) BECAUSE both Sections 138 and 139 require that the Court "shall presume" the liability of the drawer of the cheques for the amounts for which the cheques are drawn, as noted in State of Madras v. A. Vaidyanatha Iyer, AIR 1958 SC 61, it is obligatory on the Court to raise this presumption in every case where the factual basis for the raising of the presumption had been established. "it introduced an exception to the general rule as to the burden of proof in criminal cases and shifts the onus on to the accused" (ibid ). Such a presumption is a presumption of law, as distinguished from a presumption of fact which describes provisions by which the Court "may presume" a certain state of affairs. Presumptions are rules of evidence and do not conflict with the presumption of innocence, because by the latter all that is meant is that the prosecution is obliged to prove the case against the accused beyond reasonable doubt. The obligation on the prosecution may be discharged with the help of presumptions of law or fact unless the accused adduces evidence showing the reasonable possibility of the non-existence of the presumed fact. ( 22 ) IN other words provided the facts required to form the basis of a presumption of law exists, no discretion is left with the Court but to draw the statutory conclusion, but this does not preclude the person against whom the presumption is drawn from rebutting it and proving the contrary. A fact is said to be proved when, "after considering the matters before it the Court either believes it to exist or considers its existence so probable that a prudent man ought, under the circumstances of the particular case, to act upon the supposition that it exists". Section 3 : Evidence Act. Therefore, the rebuttal does not have to be conclusively established but such evidence must be adduced before the Court in support of the defence that the Court must either believe the defence to exist or consider its existence to be reasonably probable, the standard of reasonability being that of the 'prudent man.” The above referred decision has been referred to by the Supreme Court in subsequent decision in K.N.BEENA V. MUNIYAPPAM (2 supra). 13. I do not wish to burden the judgment by referring to the propositions of law laid down in the cases cited by 2nd respondent- complainant. It is suffice to refer the judgment of the Supreme Court in KRISHNA JANARDHAN BHAT V. DATTATRAYA G.HEGDE[25] wherein after referring to various earlier judgments is observed as under: “( 33 ) WE are not oblivious of the fact that the said provision has been inserted to regulate the growing business, trade, commerce and industrial activities of the country and the strict liability to promote greater vigilance in financial matters and to safeguard the faith of the creditor in the drawer of the cheque which is essential to the economic life of a developing country like India. This, however, shall not mean that the courts shall put a blind eye to the ground realities. Statute mandates raising of presumption but it stops at that. It does not say how presumption drawn should be held to have rebutted. Other important principles of legal jurisprudence, namely presumption of innocence as human rights and the doctrine of reverse burden introduced by Section 139 should be delicately balanced. Such balancing acts, indisputably would largely depend upon the factual matrix of each case, the materials brought on record and having regard to legal principles governing the same.” 14. There is obligation on the part of the Court to raise the presumptions under Sections 118 and 139 of the N.I.Act in every case where the factual basis for raising of the presumption had been established. 15. It is well settled that a notice returned with endorsement ‘unclaimed’ by the addressee can be presumed to have been served on him. In this connection, a reference to Sec.27 of the General Clauses Act will be useful. The section reads as under: “27. Meaning of service by post.- Where any Central Act or Regulation made after the commencement of this Act authorizes or requires any document to be served by post, whether the expression "serve" or either of the expressions "give" or "send" or any other expression is used, then, unless a different intention appears, the service shall be deemed to be effected by properly addressing, pre-paying and posting by registered post, a letter containing the document, and unless the contrary is proved, to have been effected at the time at which the letter would be delivered in the ordinary course of post. " A similar question came up for consideration before the Supreme Court in K.BHASKARAN V. SANKARAN VAIDHYAN BALAN (3 supra), wherein it has been held as under: “ ( 24 ) NO doubt Section 138 of the Act does not require that the notice should be given only by "post". Nonetheless the principle incorporated in Section 27 (quoted above) can profitably be imported in a case where the sender has despatched the notice by post with the correct address written on it. Then it can be deemed to have been served on the sendee unless he proves that it was not really served and that he was not responsible for such non-service. Any other interpretation can lead to a very tenuous position as the drawer of the cheque who is liable to pay the amount would resort to the strategy of subterfuge by successfully