TMI Blog2005 (6) TMI 575X X X X Extracts X X X X X X X X Extracts X X X X ..... management. The Accused had issued a post dated cheque dated 29-12-1999 for an amount of Rs. 10,00,000/- in favour of the Complainant drawn on Saraswati Co-operative Bank Ltd. towards the discharge of liabilities of Accused No. 1 in respect of the materials taken by them on credit from the Complainant, This cheque was deposited by the Complainant with their bankers. However, the said cheque was returned by the said Bank with an endorsement exceeds arrangement . The Complainant thereafter issued a legal statutory notice dated 16-3-2000. However, the Accused did not give any reply to the said notice nor payment was made by the Accused within 15 days from the receipt of the said notice. The Complainant, therefore, filed a complaint under Section 138 of the said Act. Process was issued by the Magistrate on the said complaint after the statement of Sadashiv Shirodkar was recorded in verification of the complaint. The trial Court convicted the Respondent/Accused under Section 138 of the said Act and sentenced him to undergo imprisonment till rising of the Court and further directed him to pay compensation of Rs. 10,00,000/- and in default of payment of compensation to undergo 6 months ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of ICDS Ltd. v. Beena Shabeer . He also relied on a Judgment of the Kerala High Court in the case of Gopi, S/o Vasudevan v. Sudarsanan, S/o Chackrapani 2002 Cri. J.J. 4194. He also relied on a Judgment of the Madras High Court in the case of Palraj v. Lalchand (2001) 103 Comp Cas 527 and on a Judgment of the Madras High Court in the case of Alsa Constructions and Housing Limited v. M. Mal Reddy 1999 Cri LJ 2743. He further submitted that even if the amount mentioned in the cheque was larger than the liability even then the penal provisions under Section 138 of the said Act were attracted. In support: of the said submissions he relied on a Judgment in the case of Kochayippa v. Suprasidhan 2002 Cri LJ 4803 and in the case of Andhra Engineering Corporation v. TCI Finance Ltd. 1999 OCR 130. He also relied on another Judgment of the Kerala High Court in the case of R. Gopikuttan Pillai v. Sankara Narayanan Nair (2004)1 DCR 222. The learned Counsel also sought to distinguish the Judgments on which reliance was placed by the Addl tiorial Sessions Judge. He further submitted that it was the burden of rebutting the presumption which is raised under Section 139 of the said Act which was squ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rned Counsel submitted that neither the Accused had discharged the burden which was imposed by virtue of Section 139 of the said. Act nor had shifted the burden, by leading evidence which was raised by Section 139 of the said Act. 5. He also submitted that the Apex. Court had held that if compensation was not paid, the trial. Court could impose a sentence in default of payment of compensation., in support, of the said submission he relied on a Judgment of the Supreme Court in the case of Hari Singh v. Sukhhir Singh which was followed by the Supreme Court Judgment in the case of Suganthi Suresh Kumar v. Jagdeeshan . He also relied on a Judgment in the case of K. Bhaskaran v. Sankaran Vaidhyan Balan and also followed by the Madras High Court in the case of Y Sreelatha @ Roja v. Mukanchand Bothra 2002 (2) Crimes 19 : 2003 Cri LJ 1938, 6. The learned Counsel appearing on behalf of the Respondents submitted that. the scope for interference by the High Court while exercising its jurisdiction under Section 378 of the Code of Criminal Procedure was very limited. He submitted that it is a settled, law that if two views are possible and the lower appellate Court has taken, a particular ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... validity of the cheque a fresh cheque in the place of the old cheque which was issued would be handed over to the Complainant by the Accused. He submitted that at no point of time prior to the issuance of the cheque in question any payment had been made by the Accused by cheque. 7. He submitted that the Additional Sessions Judge had correctly distinguished the Judgment in the case of ICDS Ltd. v. Beena Shabeer : 2002 Cri LJ 3935 (supra) and had correctly relied on the two Judgments referred in para 8 of the Judgment of the Additional Sessions Judge. 8. Findings and Concluision : In order to appreciate the rival contentions, it would be first essential to take into consideration the factual position. In the present case, the Complainant in para 3 of the complaint has averred that the Accused had issued a post-dated cheque dated 29-12-1999 for an amount of Rs. 10,00,000/-in favour of the Complainant towards the materials taken by the Accused on credit from the Complainant. The Complainant examined P. W. 1. Sadashiv Shirodkar, who has given the details regarding the issuance of the cheque and thereafter the deposit of the said cheque by the Complainant and the subsequent dis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Enclosed please find cheque bearing No. 127766 dated 29-12-1999 drawn on The Saraswat Co-op. Bank Ltd. Margao for Rs. 10,00,000/- (Rupees Ten Lakhs only) to be kept with you as a security towards our outstanding bill amounting to Rs. 8,00,000/-(Rupees Eight Lakhs only). As we are expecting fund any moment, we will clear your dues any moment. 9. The cheque in question was, therefore, sent along with this covering letter at Exh. 19. P. W. 1, Shirodkar, further admitted in his cross-examination that after this letter was returned the Accused had made further payment of Rs. 1,25,000/-. He further admitted that the cheque in question dated 29-12-1999 was issued since the earlier cheque dated 8-7-1999 was likely to lapse as the validity period was to expire in the following month. P. W. 1, Shirodkar, has admitted the contents of the letter dated 29-12-1999 at Exh. 19. This witness was thereafter shown letter dated 19-1-2000 which was issued by the Complainant in which it was stated that the amount which was due from the Accused was Rs. 7,80,000/-. This witness was thereafter shown letter dated 9-2-2000 wherein the Accused had asked for time to make final payment and the said letter w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be acted upon as on earlier occasions the cheques which were issued by the Accused were returned when payment was made by Demand Draft or by cash and amount of cheque did not represent the actual amount which was due and payable to the Complainant as on the date on which the cheque was issued in favour of the Complainant because the Accused had a running account with the Complainant and the amounts were paid from time to time arid they were adjusted as per the amount which were due and payable at the foot of the account of the Accused and the cheque, therefore, was retained possibly with a clear understanding that it would never be deposited in the Bank. 10. The Accused in support of his case has examined himself as D, W. .1. He has also reiteraled the same state of affairs as has been stated by P.W, 1. Shirodkar, in cross examination. D. W.I, Naik, in his evidence has stated that the raw materials which were required by Accused No. 1/Company were purchased from the Complainant and they were manufactured by M/s. IPCL and at the time of supply of the materials by the Com -plain an I the Accused used to deposit cheques with the Complainant equivalent to the value of the raw mater ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt and the Accused. A cheque would be issued to the Complainant by way of security and which cheque was not supposed to be deposited in the Bank by the Complainant and that payment was made from time to time by the Accused through Demand Drafts and after such payments being made the cheques issued by the Accused were returned and if the payment which was due had not been made within the period of validity of cheque issued by the Accused a fresh cheque would be issued by the Accused in favour of the Complainant in lieu of the cheque the validity of which was about to expire. The admission, therefore, of the Accused that certain amounts were due and payable to the Complainant, therefore, cannot be used out of context to mean that the cheque in question was issued towards the payment of the said liability or dues. The trial Court, in my view, has clearly erred in relying on these admissions without taking into consideration the context in which these statements had been made by the Accused. On the contrary, the manner in which evidence has been given by the Accused shows that he had been forthright and had not given any evasive replies and had stuck to his case as put up by him in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s legally enforceable debt or other liability. 15. Section 138, therefore envisages that if a cheque is drawn to favour of a payee or a holder in due course towards the existing debt or other liability if it is dishonoured then in that case the drawer of the cheque and in the event the drawer of the cheque is a Company the persons who are in charge of the affairs of the Company would be liable if after the dishonour of the cheque and after the receipt of a statutory notice issued by the payee or holder in due course such a drawer does not make payment within 15 days which has now been amended to one month from the receipt of the statutory notice. The penal provision is attracted on non payment of the demand made by the payee or holder in due course and a presumption is raised for the existence of the debt or liability under the provisions of Section 139 of the said Act. It would be relevant also to refer the provisions of Section 139 which reads as Tinder :- Section 139 - Presumption in favour of holder.- 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ption raised under Section 139 of the said Act in view of the clear admission given by P. W.I, Shirodkar in his cross-examination which is consistent with the stand taken by the Accused in his examination-in-chief. The cheque given by the Accused was, therefore, never meant to be deposited but was referred only as a sort of collateral security. This is clear from the evaluation of the evidence in paras 7 to 11 above. Such a cheque in my view would not entail the penal liability as envisaged under Section 138 of the said Act if it is deposited and is dishonoured. Secondly, from the aforesaid discussion, it can also be seen that the cheque in question was not given for an existing debt or legally enforceable liability. 19. In the background of this factual and legal position, it has to be seen whether the ratio of the various Judgments on which reliance is placed by the learned Counsel appearing on behalf of the Appellant is applicable to the facts of the present case. The learned Counsel has further relied on a Judgment in the case of Kusum Ingots Alloys Ltd. v. Pennar Peterson Securities Ltd. :2000 Cri LJ 1464 (supra) and has submitted that merely because proceedings are pendi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... will not be applicable to the facts of the present case. 21. The learned Counsel appearing on behalf of the Appellant further relied on a number of judgments of the Supreme Court and other High Courts in support of his contention that even though a cheque was given under security even then the liability under Section 138 was irresistible in such cases. He relied on a judgement of the Supreme Court in ICDS Ltd. v. Beena Shabeer, 2002 Cri LJ 3935 (supra). In this case, the husband of the respondent had purchased a car under a hire-purchase agreement and the respondent No. 1 had acted as a guarantor for her husband and towards part-payment in respect of the transaction the Respondent No. 1 had issued a cheque to the Finance Company which was subsequently dishonoured. The question which was raised in this case was whether a guarantor would be liable under the provisions of Section 138 particular when there was no individual liability of the guarantor towards the Complainant and as such whether it could be said that the guarantor had issued a cheque for the purpose of discharging his debt or liability. In the said case, the Supreme Court while considering the two questions any cheq ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the facts of the said case and after taking into consideration the oral and documentary evidence which was brought on record the Madras High Court held that though the accused has raised a defence that the cheque was issued as a security for the transaction the Court observed that the security must be enforceable in the event of non-compliance of the conditions and that the accused had received the chit amount in the second auction and, therefore, he was bound to pay the subsequent instalments every month for 23 months and, therefore, the security would become enforceable if the accused had not complied with the payment of future subscription. In my view, the facts of the present case are entirely different. In the case before the Madras High Court in a chit transaction it was agreed that the accused would pay the remaining instalments even if he had got the benefit of the auction in the earlier months and in order to secure the subsequent instalments which would be due and payable the cheque was given as a security for the said instalments. It was not the case of the accused that the said cheque was not meant to be acted upon irrespective of the fact whether the instalments were ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... idence of P. W. 1, Shirodkar, in cross-examination it has been clearly brought on record by the accused that cheques were issued as a security from time to time right from the inception of the transactions between the complainant and the accused. Further, it was brought on record by way of admission which was made by P. W. 1, Shirodkar that there was a running account between the parties and that initially cheque would be issued however payment will always be made by Demand Draft and on such payment being made the cheque would be returned and if such payment was not made then the cheque would be renewed before the expiry of 6 months. Therefore, the ratio of this judgment will not apply to the facts of the present case. 24. The learned Counsel appearing on behalf of the appellant thereafter submitted in reply to the submission made by the learned counsel on behalf of the respondents that eventhough the amount mentioned in the cheque is larger than the liability even then the penal provision of Section 138 of the said Act would be attracted. He relied on the judgment of the Kerala High Court in the case of P.V. Kochayippa v. P.N. Suprasidhaan Rajani Bhawan 2002 Cri LJ 4803 (supra) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... unt was not available in the account of the accused he was clearly guilty of the offence punishable under Section 138 of the said Act. With respect I do not agree with the ratio which is laid down by the learned single Judge of the Andhra Pradesh High Court moreover the said observation was made by the learned single Judge after having discussed the facts and evidence on record in the said case. In any event, the facts in the present case are entirely different and, therefore, in my view, this judgment cannot be accepted that even if the amount mentioned in the cheque is larger than the liability even then Section 138 will be attracted. 25. The learned Counsel appearing on behalf of the appellant thereafter relied on a judgment in the case of R. Gopikuttan Pillai v. Sankara Narayanan Nair (2004)1 DCR 222 (supra). In the said case, a cheque issued by the accused towards the discharge of a legally enforceable liability was dishonoured. The accused did not dispute that the cheque was issued by him. It was also admitted that an amount of Rs. 60,000/- was advanced by the complainant for repairing his vehicle. The interest payable was also not disputed. It was contended by the Accused ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uilty of the offence. In the second case a blank cheque was issued as a security of the amount that had become due. The complainant had contended that the entries were made on the cheque in the presence of the son of the accused after verifying the accounts and this fact was not challenged by the accused and under these circumstances it was held that the Complainant had proved the liability outstanding from the respondent. In my view, the ratio of both these judgments will not be applicable as the facts to not tally with the facts of the present case. 28. In my view, the Sessions Court was right on relying on a judgment of this Court in the case of Pawan Enterprises v. Satish H. Verma, 2003) Cri LJ 2146 (supra). The learned single Judge of this Court has held in the said case that the cheque was issued by the accused by way of security and not towards the discharge of any liability. The learned single Judge has observed that the liability and security are two different aspects and both could not be mixed or acted upon simultaneously. In the said case the accused had purchased one Onida Colour T.V. from the Complainant for a total consideration of Rs. 22.760/- and had initially m ..... X X X X Extracts X X X X X X X X Extracts X X X X
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