HONOURABLE SRI JUSTICE P. DURGA PRASAD CRIMINAL APPEAL NO.2239 OF 2004 Dated 03-03-2011 Between: A. Satish Chandra ……..Appellant And: M/s. Strategics Software Solutions, rep. by its Proprietor and 2 others. ………Respondents HONOURABLE SRI JUSTICE P. DURGA PRASAD CRIMINAL APPEAL NO.2239 OF 2004 JUDGMENT: This is an appeal arising out of the judgment passed by the IV Additional Metropolitan Sessions Judge, Hyderabad in Criminal Appeal No.81 of 2004 dated 15.09.2004. The appellant herein is the complainant in C.C.No.419 of 2001 filed before the IV Metropolitan Sessions Judge, Hyderabad and the respondents 1 and 2 herein are the accused therein. The complainant has filed the complaint against the accused for an offence under Section138 of the Negotiable Instruments Act (for short, the Act) alleging that the respondents herein issued a cheque bearing No.581141 dated 27.09.2001 for an amount of Rs.5,00,000/- drawn on Indian Overseas Bank, Mallapur Branch, Hyderabad towards the discharge of legally enforceable debt in favour of the complainant and when the said cheque was presented for collection, the same was dishonoured for want of sufficient funds. Inspite of issuing statutory notice under Section 138 of the Act, the respondents herein did not pay the amount due under the said cheque. As such the present complaint is filed by the complainant. When the respondents were examined under Section 251 of Cr.P.C by trial court, they pleaded not guilty for the offence under Section 138 of the Act. The complainant in order to establish the offence, examined himself as P.W.1 and examined P.Ws.2 and 3 on his behalf and got marked Exs.P.1 to P.8. No oral or documentary evidence was adduced by the respondents before the trial court. The trial court by taking into consideration of both oral and documentary evidence found the accused guilty for the offence under Section 138 of the Act and as A.2 is representing A.1 convicted A.2 for the offence under Section 138 of the Act and sentenced him to undergo simple imprisonment for one year and to pay fine of Rs.5000/- in default to undergo simple imprisonment for a period of three months. Aggrieved by the said conviction and sentence, the accused therein has preferred the appeal in C.C.No.419 of 2001 before the IV Additional Metropolitan Sessions Judge, Hyderabad. During the course of hearing before the Metropolitan Sessions Judge, the accused has filed the application under Section 391 Cr.P.C which was numbered as Criminal M.P.No.390 of 2004 for receiving the additional evidence and the same was allowed D.W.1 was examined before the appellate court and Exs.D.1 and D.2 were marked on behalf of the accused. The learned Metropolitan Sessions Judge taking into consideration of the said oral and documentary evidence allowed the appeal and thereby set aside the conviction and sentence passed by the trial court and the accused are acquitted. Aggrieved by the said acquittal by the appellate court, the present appeal is filed. Now the point that arises for consideration is whether the complainant could able to establish the offence under Section 138 of the Act against the respondents 1 and 2 beyond reasonable doubt? According to the complainant, respondent No.1 represented by respondent No.2 as proprietor has approached the complainant on 26.4.1997 along with two common friends repeatedly requesting him to render services in promotion of his business since the complainant is having extraordinary professional skills with good reputation in the market in respect of electronics. The A.2 has also given an undertaking letter on 18.2.2000 agreeing and promising to pay 50% of the profits on the project work for his professional skills and the agreement was signed by A.2 on behalf of A.1. The accused has requested the complainant to provide 15 systems on rental basis stating that he was having good name and fame as software engineer and getting computer systems on rental basis is easy for him and the accused has agreed to bear the rent for the systems from his individual profit amount. The complainant brought the systems from reputed organization for the A.2 in the month of March, 1997. Further the A.2 made requests to advance hand loan of Rs.1.70 lakhs to meet his personal necessities and also return the same immediately on completion of the project work. The A.2 has also executed an undertaking letter to that effect. After completing such project work the complainant has demanded to pay profit and also complying the other terms of the agreement and the A.2 after repeated demands issued a cheque on behalf of A.1 for Rs.5.00 lakhs including the systems rent of Rs.2.25 lakhs and hand loan installment in total for Rs.1.70 lakhs, expenses of Rs.75,000/-, profit of Rs.30,000/- totaling to Rs.5.00 lakhs. The said cheque was issued on Indian Overseas Bank, Mallapur Branch, Hyderabad for Rs.5.00 lakhs dated 27.9.2000 and when the same was presented for collection, it was dishonoured for want of ‘sufficient funds’. The complainant informed the accused orally on phone about the return of the cheque and the accused requested to represent the same once again and accordingly the complainant represented the same on 12.10.2000 but the same was again dishonoured for want of ‘sufficient funds’. Thereupon the complainant got issued a legal notice on 26.10.2000 calling upon the accused to pay the amount due under the cheque, but the accused failed to pay the amount due under the said cheque. Hence, the accused is liable for punishment under Section 138 of the Act. As per the record, P.Ws.1 to 3 were examined on behalf of the complainant and Exs.P.1 to P.8 were marked on his behalf and D.W.1 was examined on behalf of the accused and Exs.D.1 and D.2 were marked on their behalf. The trial court basing on Exs.P.6 to P.8 came to the conclusion that the cheque under Ex.P.1 was issued for discharge of the legally enforceable debt by the accused and thereby drawn the presumption under Section 139 of the Act and found the accused guilty of the offence under Section 138 of the Act. The appellate court basing on the evidence and also defence evidence produced before it found that Exs.P.6 to P.8 are contrary to the averments made in the complaint and the complainant has failed to establish about the payment of hand loan of Rs.1,70,000/- and also payment of hire charges for the 15 computer systems as he has not produced the receipt and not examined witnesses to the said documents and found that there is no legally enforceable debt for issuing the said cheque and thereby set aside the conviction and sentence passed by the trial court. The learned counsel for the appellant pleaded that from the evidence of P.Ws.1 to 3, it is clearly established that the accused has issued cheque and the said cheque was dishonoured for want of sufficient funds. From the documents Exs.P.6 to P.8, it is established that the accused has agreed to pay profits of 50% and undertaking to repay Rs.1,70,000/- which taken as hand loan on different occasions and agreed to pay the rent for the computer systems supplied by the complainant and as the project work is completed, the complainant demanded for payment of the said amount, the accused issued the said cheque under Ex.P.1 for Rs.5.00 lakhs. Therefore, the cheque was issued for legally enforceable debt due to the complainant by the accused. The learned counsel for the respondents, on the other hand, has pleaded that the appellate court has rightly held that Exs.P.6 to P.8 are contrary to the averments made in the complaint and even though the respondents have denied in their reply notice Ex.D.2 about the execution of Exs.P.6 to P.8 and even though the said documents said to have been executed in the presence of two witnesses who are the friends of both the parties, they were not examined before the trial court to establish the genuineness of Exs.P.6 to P.8. The learned counsel for the respondents has further pleaded that Ex.P.1 cheque was issued as a security for the hand loan promised to be paid by the complainant for payment of the court fee for filing a case on his behalf against the ‘Raasi’ Company as he was in shortage of money for payment of court fee. As such the said cheque was issued only towards the security and not towards legally enforceable debt. There is no dispute between the parties about the respondent No.2 issuing Ex.P.1 cheque and the said cheque was dishonoured when presented for collection. Now the only point that arises for consideration is whether the said cheque was issued for legally enforceable debt due by the accused? P.W.1 in his evidence has stated that on 26.4.1997, A.2 approached him along with two common friends viz., K. Prabhakar and R. Balamurali and requested for his services for promotion of A.1’s business and executed undertaking letter dated 18.2.2000 agreeing to pay 50% as a profit on the said project. The said undertaking letter is Ex.P.6. In pursuance of Ex.P.6 he took up agreed work. Meanwhile at the request of A.2, he provided 15 computer systems on rental basis and this witness brought systems from reputed organization and installed them on 25.8.1998 and to this effect A.2 executed another undertaking dated 20.2.2000 marked as Ex.P.7 in the presence of their common friends agreeing to pay the rents to the systems thereof. He further stated in his evidence that from time to time he has advanced hand loans aggregating to Rs.1.70 lakhs to A.2 on the promise to pay back the same after completion of their project. To that effect, A.2 executed an undertaking letter dated 20.2.2000 admitting the said loans in the presence of their common friends. After completion of project, he demanded A.2 to pay his 50% of the profits. In pursuance of repeated demands, A.2 issued Ex.P.1 cheque dated 27.9.2000 drawn on I.O.B, Mallapur branch for Rs.5.00 lakhs which represents Rs.2.25 lakhs for systems rent, Rs.1.70 lakhs towards hand loans, Rs.75,000/- towards project expenses and Rs.30,000/- towards project profit. In the cross-examination, he admitted that his company is a registered company and it is an income tax assessee. The written agreement is there with regard to rendering of service, but he did not file the same before the trial court. The agreement was made in the name of Satish Chandra and not in favour of the company. He brought the systems from Sunrise Enterprises but he has not filed any proof. The rent for 15 systems is Rs.2,500/- per month per system. He made the payment to Sunrise Enterprises by way of cash. He made Rs.1,75,000/- to Sunrise Enterprises so far. He has got the receipts for that amount but he did not file the same. He used to financially assist the accused through his resources. He also admitted that the accused made a complaint against him before the police. He was called by the police in the complaint made by the accused. He did not receive any notice prior to filing of the said complaint. He denied that Ex.P.7 is created in their office. P.W.2 is the Deputy Manager of the State Bank of India has spoken about the presentation of the cheque by the complainant and dishonouring of the same. P.W.3 is the Assistant Manager of Indian Overseas Bank who spoke about receiving of the said cheque by them for collection and the same was dishonoured for want of funds. Respondent No.2 was examined as D.W.1 has stated that the defacto-complainant known to him since 1997. He used to extend technical support in his business. They had money dealings during 1997 and 2000. He used to make payments to him for the technical support receiving from him. They used to exchange money depending upon their necessities. He has not issued Ex.P.1 cheque. Except his signature all the contents therein are not filed by him. He has not taken any help from the defacto-complainant in the year 1997. In the year 2000, he had to file a case against one company by name ‘Raasi’. For filing the case, the advocate asked him to bring Rs.16,000/- but he had only Rs.6,000/-. Then the complainant offered to arrange Rs.10,000/-, if he furnished him any security. As it was late in the night the complainant promised to make the payment directly to the court and obtained the blank cheque from him with his signature. He also collected his signatures in some white papers as security. Later he did not pay the amount to his advocate. In spite of his repeated requests he did not return the blank cheque and the white papers. About a month thereafter he came to know through IOB, Mallapur that a cheque was presented for collection from his account as if he issued the same for Rs.5,00,000/- in favour of complainant. Immediately he approached Kachiguda Police Station and on their advise he lodged a complaint in Afjulganj Police Station and copy of the same is marked as Ex.D.1. Subsequently the complainant issued a legal notice Ex.P.3 for which he issued a reply dated 10.11.2000 narrating the facts relating to the cheque in question. The notice is Ex.D.2. Subsequently he received summons from the court. Ex.P.6 dated 18.2.2000 is issued by him in this transaction but not in a different transaction. Ex.P.7 undertaking contains his signature but it was not executed by him. It was prepared with the help of his signature on blank paper. He does not know the witnesses in Ex.P.7. There is no legally enforceable debt. In the cross- examination he admitted that he has not mentioned in his reply notice that the respondent offered to pay Rs.10,000/- to hand over to his advocate and obtain his blank cheque and on some papers with his signatures in the presence of an advocate as security for Rs.10,000/-. Therefore, according to the respondents, the said cheque was issued as a security for payment of Rs.10,000/- by the complainant to the advocate for filing of a case on behalf of the accused against ‘Raasi’ company. According to him, he has not executed Exs.P.7 and P.8. According to the complainant, the respondents approached him in the year 1997 seeking his professional assistance for A.1’s company and the complainant agreed for the same and gave an undertaking letter which is marked as Ex.P.6 agreeing to pay 50% of the profits. But Ex.P.6 do not contain what is the profits to be shared between the parties but simply mentioned that he agreed to pay 50% of the profits. Even though the complainant has agreed to render service in the year 1997, Ex.P.6 was executed in the year 2000. According to the complainant cheque Ex.P.1 was issued for Rs.5.00 lakhs towards the amounts payable by the accused towards 50% of profit, Rs.1,70,000/- borrowed towards hand loan, Rs.2,25,000/- towards hire charges for 15 computers and Rs.75,000/- towards expenses and Rs.30,000/- towards profit. But as already observed above, in Ex.P.6 the complainant has not mentioned any thing about the profits which is to be received from the accused. With regard to payment of Rs.2,25,500/- towards rent for hiring of the computers, the complainant has relied upon Ex.P.7 which is said to be executed by the accused agreeing to pay the hire charges for the computer supplied by the complainant. With regard to payment of Rs.1,70,000/- towards hand loan, the complainant also relied upon Ex.P.7 which is said to have been executed by the accused. In Ex.P.7, the 2nd respondent on behalf of the 1st respondent company has given undertaking letter promising to repay back to the complainant. Rs.1,70,000/- received by him in installments from April, 1997 to February, 2000 as hand loan and also promised to repay Rs.2,25,000/- towards rent for 15 systems taken on rent, brought from Sunrise Enterprises, Hyderabad through Sri A. Satish Chandra for use of data entry project undertaking by the firm. The amount will be paid to Satish Chandra by the end of July, 2000 and one R. Balamurali and K. Prabhakar were shown as witnesses to the said document. The respondents have pleaded that the said document was not executed by him and it was created on the blank papers obtained by the complainant as security when he has promised to pay Rs.10,000/- towards his advocate. Apart from the said Ex.P.7, there is no other document to show that when the complainant has paid the amount of Rs.1,70,000/- to the accused. With regard to the repayment of the amount of Rs.25,000/- towards supply of 15 systems, the complainant also marked Ex.P.8 which is a bill dated 25.2.2000 issued by Sunrise Integrated Systems, Hyderabad which shows that the hire charges from 18.7.1999 to 25.2.2000 for 15 systems is Rs.2,25,000/-. The said document was also signed in the presence of R. Balamurali and K. Prabhakar and it does not contain the signature of the complainant even though it was mentioned that the said supply was made through the complainant. The accused have denied about the receiving of 15 computers through the complainant. Even though the respondents have denied about the Ex.P.6 to P.8 said to have been executed in the presence of the said two persons who are claiming to be common friends of the accused were not examined to establish the genuineness of the said documents, more particularly in view of the defence taken by the accused in the reply notice. More over, P.W.1 admitted in his cross-examination that he has paid Rs.1,75,000/- towards rent for the 15 systems supplied by Sunrise Enterprises and he has obtained receipt from him but he has not filed the same before the trial court. More over the payment of the amount under Ex.P.8 was not certified by the complainant. With regard to payment of Rs.75,000/- towards expenses and Rs.30,000/- towards profits, there is no material on record to establish the same except the oral evidence of P.W.1. More over Ex.P.6 dated 18.2.2000, Ex.P.7 dated 20.2.2000 and Ex.P.8 dated 11.10.2000 were executed within the span of one week even though the complainant agreed to render assistance to the accused firm in the year 1997. More over the accused immediately after coming to know about presentation of the cheque for Rs.5.00 lakhs he has lodged a complaint under Ex.D.1 before the police and the same was also admitted by the P.W.1. Subsequently only the complainant got issued the legal notice demanding for payment of the amount. Therefore, the complainant could not establish that Ex.P.1 was issued towards legally enforceable debt by the accused. Therefore, as rightly held by the appellate court, the presumption under Section 139 of the Act is not available to the complainant. Therefore, in the above circumstances of the case, I hold that the complainant failed to establish the offence under Section 138 of the Act against the accused beyond reasonable doubt. Hence, the appellate court has rightly allowed the appeal and the finding of the appellate court does not warrant any interference by this court. In the result, the appeal is dismissed confirming the judgment passed by the IV Additional Metropolitan Sessions Judge, Hyderabad in Criminal Appeal No.81 of 2004 dated 15.09.2004. ______________________ P.DURGA PRASAD,J. Date:03.03.2011. Gk. HONOURABLE SRI JUSTICE P. DURGA PRASAD CRIMINAL APPEAL NO.2239 OF 2004 Dated 03-03-2011 Gk.