TMI Blog2018 (3) TMI 1980X X X X Extracts X X X X X X X X Extracts X X X X ..... ent, in case of part-payment and the instrument can thereafter be negotiated for the balance amount - it is not open to the complainant to take the plea that the drawer of the cheque could have escaped the liability by paying the actual amount due from him to the payee of the cheque. In order to make the notice legal and valid, it must necessarily specify the principal amount payable to the payee of the cheque and the principal amount demanded from the drawer of the cheque should not be more than the actual amount payable by him though addition of some other demands in the notice by itself would not render such a notice illegal or invalid. In the decisions, R. Gopikuttan Pillai [ 2003 (3) TMI 771 - KERALA HIGH COURT ] and M/s. Thekkan Co. [ 2003 (6) TMI 473 - KERALA HIGH COURT ] the court took the view that even if the accused has made part payment and the complainant has acknowledged the same, the same will not be sufficient for the accused to exonerate himself from his liability under section 138 of the N.I. Act. To put it in other words, an accused who has made the part payment, will not be entitled to raise the same as a defence in a prosecution under section 138 of the Ac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 122305 18,00,000 19.10.96 2 1242/08 122304 22,00,000 19.10.96 3 1240/08 122261 18,00,000 17.10.96 4 1241/08 122262 22,00,000 17.10.96 5 1243/08 122203 28,43,786 19.10.96 Total= 1.08.43,786 The above mentioned five complaints were initially numbered as Criminal Case No.104 to 108 of 1997 respectively. 2. The petitioners have filed this petition for quashing of the complaint of Criminal Case No.1241 of 2008. Annexed herewith and marked as ANNEXURE-A is a copy of the said complaint. 3. After issuing all the five cheques mentioned in paragraph No.1 above, the petitioners have paid on 30.10.1996 Rs.12,40,000/- by two cheques to the complainant and hence from before and on 10.01.1997, when the above said complai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... syndicate to sell, transfer, assign etc. the properties and to credit the sale amount towards the debt to be paid by the petitioners to the syndicate and the value of purchase price of the said bungalows was fixed, determined and settled at Rs.2,10,00,000/-. iii) Some other immovable properties were to remain under the charge of the syndicate and the petitioners were not to create any burden or charge over it nor to transfer and assign the same. iv) The cheques issued by the petitioners to the members of the syndicate which were dishonoured and the papers of title of the bungalows and the shop at Manekchawk were to remain in custody of the advocate Shri B. J. Mehta of M/s. H. Desai Co. Advocates and Solicitors, of Ahmedabad. v) That for any dispute between the parties to the said MOU, one Girishbhai Ramanlal Choksi and Yogendrabhai Ambalal Sarkar and one Jagmohandas Himatlal of Padra were appointed as arbitrators and it was agreed that if the said three arbitrators do not agree to any point or issue in dispute, Shri Dolatram Pahelajani of M/s. Bherumal Samantdas Vala of Mumbai was to be the sole arbitrator to decide that point and issue and the award given by him was to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s by way of Immovable Properties The syndicate has already taken the possession of the immovable properties considering of residential bungalow No.5-A/1 and have already placed their boards on the properties. 8. Thereafter on 05.09.1998 one of the members of the syndicate i.e. M/s. Zaveri Co. Exports filed Civil Suit No.4470 of 1998 in the City Civil Court, Ahmedabad for execution and performance of the said MOU paying for a decree for Rs.3,48,00,000/- 9. Some of the very basic and material averments made and reliefs prayed for in Civil Suit No.4470 of 1998 are as under; A. In paragraph No.1 of the plaint it is pleaded that the plaintiff and defendant Nos.6 to 12 (other members of the syndicate) are dealing in gold, silver, bullion and doing sharafi transactions at the respective address in the cause title of the plaint. The interest in the present suit of the plaintiff and that of defendants Nos.6 to 12 are not conflicting one but as defendant Nos.6 to 12 are not available in town they are referred to as the supporting defendants and no relief is sought against them. B. It is pleaded in paragraph No.1 of the plaint that a memorandum of Understanding (MOU) was en ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... In paragraph No.6 of the plaint, it is pleaded that the cause of action has arisen within the jurisdiction of this Hon'ble Court when the plaintiff and defendant Nos.6 to 12 sold gold/bullion to defendant Nos. 1 to 4 and on when a huge outstanding amount of Rs. 5,58,35,731/- become due and payable as on 30.11.1996 when the parties to the suit entered into MOU creating rights and liabilities in relation to the said outstanding dues and on when the parties have placed the relevant documents with M/s H. Desai Co., defendant No. 13 and on when the defendant Nos. 1 to 5 have not acted fully in consonance with the terms and conditions of the said MOU. H. In paragraph No. 7 of the plaint, following reliefs are prayed for; The plaintiff therefore prays:- A. Hon'ble Court be pleased to issue a permanent injunction restraining defendant Nos. 1 to 5 jointly and severally from transferring or parting with property bearing No. 5- A/2 and 5-C of Shantinagar co-operative Housing Society, Near Gujarat College, Ahmedabad or transfer possession in favour of any person in any manner and be further pleased to restrain defendant Nos. 4 and 5 from further encumbering the said prop ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . You are therefore requested to pay the amount of cheques (5) so dishonoured within 15 days from the receipt of this notice failing which legal action as provided under Section 138 read with Section 141 of the Act, besides other legal action available to my client will be taken, please take notice [Total amount of the said 5 cheques totals to Rs, 1,08,43,766/ though Rs. 12,40,000/-- was paid to the complainant by the petitioners by cheque on 30.10.96 and the remaining amount payable to the complainant and determined and fixed by the said MOU was only Rs. 96,03,299/-] 12 In the proceedings of the said five complaints, the petitioners submitted applications in the trial Court at Ex. 11 stating and praying as under; A. That the MOU produced at Annexure-A is acted upon and substantial part performance of the same has been performed by the parties. B. Dishonoured cheques were to be handed over and kept in the custody of advocate Shri B.J.Mehta of defendant No. 13 M/s H. Desai Co. Advocate Solicitors of Ahmedabad and hence were not to be used. C. By execution of and substantial part performance of the said MOU the legal liability to pay any amount of the said 5 cheq ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Court. The identical orders passed by this Hon'ble Court in the above applications are produced herewith and marked as ANNEXURE-C collectively. 16. The petitioners in view of the order passed in above mentioned Criminal Misc. Application Nos. 721 to 725 of 2002 by this Hon'ble Court, submitted applications dated 23.03.2006 in 5 criminal cases before the learned Metropolitan Magistrate (N.I. Court No. 8) Ahmedabad for staying the proceedings till Civil Suit No. 4470 of 1998 was decided and or to drop the criminal proceedings in view of the MOU between the parties. The learned Magistrate by his order dated 21.07.2011 was pleased to reject the said applications filed by the petitioners. Annexed herewith and marked as ANNEXURE-D is a copy of the order dated 21.07.2011 passed by the learned Metropolitan Magistrate (N.I. Court No. 8) Ahmedabad. 17. The petitioners then preferred Criminal Revision Application Nos. 444 to 448 of 2011 before the City Sessions Court, Ahmedabad against the order passed by the learned Metropolitan Magistrate, Ahmedabad. All the above said Criminal Revision Applications were decided by the City Sessions Court by a common order dated 17.02.2012 an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... buse of the process of law. 23. All the above issues were purely legal issues required to be determined by the City Civil Court and if decided as urged by the petitioners, the result would finally and conclusively terminate the said 5 complaints. 24. The petitioners further submit that for the amount of cheques for which the complainant has filed complainant, the MOU was executed and agreement and terms were decided a fresh with regard to the payment of the amount of the aforesaid cheques. Thus since the MOU was executed and commitment was made between the petitioners and the complainant and his syndicate, the consideration of the cheques for which the complaints have been filed is merged in the MOU which was executed on 07.12.1996. Thus the legal position would be that all the cheques after the execution of the MOU on 07.12.1996 are of no consideration i.e. instrument without consideration and the complaint concerning the said cheques is not maintainable. Whatever contentions, claims or causes that may be, if any, regarding and pertaining to those cheques have been merged in into the MOU on 07.12.1996 and in law all the same have been surrendered, released, relinquished, wai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s Rs.54,00,000/-. The writ applicants issued three post dated cheques towards the balance amount of Rs.54,00,000/- against the Bill No.44, one for the amount of Rs.9,00,000/-, second for the amount of Rs.25,00,000/- and the third for the amount of Rs.20,00,000/-. Out of these three cheques, two cheques were deposited on 12th October, 1996 and the third cheque was deposited on 14th October, 1996. All the three cheques got cleared and in such circumstances, there was no outstanding amount against the Bill No.44. 6. The writ applicants, thereafter, purchased silver bar (48 pieces) from the complainant vide Bill No.47 dated 11 th October, 1996 valued at Rs.1,04,71,325/-. Against the said bill, the writ applicants issued cheques for the amount of Rs.30,00,000/-, Rs.34,00,000/-, Rs. 22,00,000/-, Rs.18,00,000/- and Rs.71,325/-. From the aforesaid five cheques, two cheques of Rs.30,00,000/- and Rs.34,00,000/- respectively came to be realized. Thus, against the Bill No.47, Rs.64,00,000/- came to be realized and after crediting the amount received from the writ applicants, the outstanding balance of Rs.40,71,325/- remained legally recoverable by the complainant as on 16th October, 1996. T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ce under section 138 of the N.I. Act, 1881. 9. The writ applicants are here before this Court with the five writ applications praying for quashing of the criminal proceedings. 10. On 22nd August, 2013, a Coordinate Bench of this Court passed the following order; 1. Mr. Nitin Amin, learned advocate for the petitioners in each of the petitions has invited attention to the findings recorded by the learned Sessions Judge in the revision applications filed by the petitioners to submit that what has weighed with the learned Judge is that the MOU is not signed by the complainant and is, therefore, not binding upon him. Attention was invited to the written statement/evidence of the complainant under section 145 of the Negotiable Instruments Act in Criminal Case No.106/1997 wherein the respondent No.1 original complainant has categorically stated that after service of the legal notice, with a view to see that the accused can do the same business in the market in good faith, they had entered into MOU dated 7th December, 1996. Therefore by the admission of the complainant, it is apparent that he had signed the MOU in question. It was pointed out that in the same proceedings, the fir ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the learned counsel appearing for the writ applicants. Mr. Mehd would submit that, at no point of time, the MOU was implemented or acted upon by the writ applicants and his client. The amount of Rs.96,03,766/- remains due and payable till this date. 15. Mr. Mehd placed reliance on the averments made in the affidavit-in-reply filed on behalf of the respondent No.1. The relevant contents of the reply are extracted hereunder; It is pertinent to note that, till date, an amount of Rs. 96,03,766 remains outstanding since the date of deposit of the cheques and not a penny has been paid to the respondent no. 1 by the petitioners thereafter, either by way of the alleged MOU or otherwise. And yet, the petitioners have the audacity to file the present petition and make out a case as if the whole of the debt is settled and discharged. As a matter of fact, nowhere in the 17 pages of the memorandum of the petition have the petitioners ever stated that the amount of Rs. 96,03,766 remained outstanding till today or that no amount is paid to the respondent no. 1 pursuant to the so called MOU or otherwise, despite these being relevant and material facts for complete adjudication of the prese ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ce and deserves to be dismissed with costs. 6) With reference to paragraph 1 and 2 of the petition, the respondent no.1 states that the same being a narration of the record the respondent no. 1 does not deal with it at this stage and craves leave to deal with the same if and when required. 7) With reference to paragraph 3 of the petition, the respondent admits that an amount of Rs. 12,40,000 is paid after issuance of the Cheques stated in paragraph 1. However, as already admitted by the petitioners, this does not satisfy the whole of the debt of the petitioners and an amount of Rs. 96,03,766 remains due and payable by the petitioners and consequently the proceedings initiated by the respondent no. 1 are maintainable and all the ingredients for prosecuting the petitioners are still surviving. The other contentions, averments, assertions and submissions made in the paragraph under reply are denied. 8) With reference to paragraph 4 of the petition, the respondent no. 1 denies the contents thereof. The respondent no. 1 is not Concerned with what other creditors the petitioners had and the said fact is completely irrelevant for the purpose of the present case. lt is pertinent t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . Zaveri Co. Exports, who is not even party to the present proceedings and is completely unconnected with the transaction which resulted in the issuance of the cheques that were dishonored and the debt which is admittedly due and payable by the petitioners to the respondent no. 1, is of no significance whatsoever in the facts of the present case and consequently the respondent no. 1 does not deal with the same at this stage. Suffice to say, the respondent no. 1 has already filed a separate claim against the petitioners before the Hon'ble Civil Court, being Summary Civil Suit No. 5402 of 1998 and which is pending till today. The other contentions, averments, assertions and submissions made in the paragraphs under reply are not true and hence denied. 11) With reference to paragraph 10 of the petition, it is pertinent to note that the respondent no. 1 has already filed a separate claim against the petitioners before the Hon'ble Civil Court, being Summary Civil Suit No. 5402 of 1998 and which is pending till today. It is also pertinent to note that, in the said Summary Civil Suit, in the order below Summons for Judgment, the Hon'ble Civil Court did not believe the case ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rmed the MOU qua some other creditors, that would have no bearing or relevance in the facts of the present case. The other contentions, averments, assertions and submissions made in the paragraphs under reply are not true and hence denied. 15) With reference to paragraph 18 and 19 of the petition, the respondent no.1 denies the contents thereof. The respondent no. 1 vehemently denies all the factual and legal propositions raised in the petition and it is not open for the petitioners to state that any of the factual or legal propositions are undisputed. It is denied that the legal position has basically, virtually and substantially changed and altered as alleged or otherwise. The respondent no.1 denies that the so called MOU has been implemented or acted upon by and between the petitioners and the respondent no.1 or that any amount out of the remaining outstanding amount of Rs. 96,03,766 has been paid to the respondent no. 1, either under the alleged MOU or otherwise. It is specifically denied that the consideration of and the complainant's rights thereon of the 5 dishonored cheques were in any way extinguished either as being surrendered or waived or that they have merged ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... U is subsisting between the parties or that any agreement or terms were decided afresh with regard to payment of the amount of the aforesaid cheques. It is further submitted that, even otherwise, no amount is paid to the respondent no. 1 till date, either under the MOU or otherwise, and the principal amount outstanding continues to remain Rs. 96,03,766 and therefore, even in this background, the contentions raised by the petitioners are completely misconceived and baseless. It is specifically denied that the consideration for giving of the cheques has either merged with the MOU or has otherwise been lost. It is specifically denied that the cheques are without consideration as alleged or otherwise or that the complains are not maintainable. It is specifically denied that any of the rights and claims of the respondent no. 1 have merged into the MOU as alleged or have extinguished or have been surrendered or released or relinquished or waived as alleged or otherwise. It is specifically denied that any of the submissions of the respondent no. 1 have been concocted or that there is any Suppression of material facts at the hands of the respondent no. 1 or that the complains are an abuse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... heques, on the date these cheques were presented for encashment, the writ applicants were not legally required to honour those cheques, and consequently, no offence under section 138 of the NI Act is made out against them. 21. Section 138 of Negotiable Instruments Act reads as under:- 138. Dishonour of cheque for insufficiency, etc., of funds in the accounts 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 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) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... me payment made by him towards the discharge of the debt or liability in consideration of which the cheque in question was issued. If it is held that the expression amount of money‟ would necessarily mean the amount of cheque in every case, the drawer of the cheque would be required to make arrangement for more than the admitted amount payable by him to the payee of the cheque. In case he is not able to make arrangement for the whole of the amount of the cheque, he would be guilty of the offence punishable under Section 138 of Negotiable Instruments Act. Obviously this could not have been the intention of the legislature to make a person liable to punishment even if he has made arrangements necessary for payment of the amount which is actually payable by him. If the drawer of the cheque is made to pay more than the amount actually payable by him, the inevitable result would be that he will have to chase the payee of the cheque to recover the excess amount paid by him. Therefore, I find it difficult to take the view that even if the admitted liability of the drawer of the cheque has got reduced, on account of certain payments made after issue of the cheque, the payee would ne ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ount was paid or a meager amount was paid. A notice of demand which requires the drawer of the cheque to make payment of the whole of the cheque amount, despite receiving some amount against that very cheque, much before issue of notice, cannot be said to be a legal and valid notice envisaged in Section 138(b) of Negotiable Instrument Act. The expression amount of money‟ used in Section 138(b) of Negotiable Instrument Act, to my mind, in a case of this nature would mean the amount actually payable by the drawer of the cheque to the payee of the cheque. Of course, if the payee of the cheque makes some demands on account of interest, compensation, incidental expenses etc, that would not invalidate the notice so long as the principal amount demanded by the payee of the cheque is correct and is clearly identified in the notice. When the principal amount claimed in the notice of demand is more than the principal amount actually payable to the payee of the cheque and the notice also does not indicate the basis for demanding the excess amount, such a notice cannot be said to be a legal and valid notice envisaged in Section 138(b) of Negotiable Instrument Act. In such a case, it is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... purpose of negotiation. 30. The word negotiation is again defined under Section 14, which reads as under : 14. Negotiation.--When a promissory note, bill of exchange or cheque is transferred to any person, so as to constitute that person the holder thereof, the instrument is said to be negotiated. 31. In fact, the issue with regard to sections 56 and 15 of the N.I. Act will have to be decided, sooner or later, by the Supreme Court in an appropriate case or may be, if this very judgement travels to the Supreme Court, the Supreme Court may answer the question accordingly. In fact, I take notice of the fact that this issue came up for consideration before the Supreme Court in the case of M/s. Moser Baer Photo Voltaic Ltd. vs. M/s. Photon Energy Systems Ltd. Ors., Criminal Appeal No.235 of 2016, disposed of on 18th March, 2016. I may quote the relevant observations of the Supreme Court; An interesting question of law as to whether in view of payments or settlements made after the issuance of a cheque, a complainant can disclose the true state of affairs and issue a demand for a lesser amount and whether in such circumstances the criminal prosecution for dishonour of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . 18,00,000 dated 19.10.96 respectively all drawn on the ManekChowk Cooperative Bank Ltd., by you in favour of my clients as part price of the goods supplied also remained uncashed and were returned with the regards on the bank memos dated 23.10.96 Funds insufficient . 7. That on persistent demand from my clients, you issued two cheques No.510585 and 510595 dated 30.10.1996 for Rs.2,40,000.00 and Rs.10,00,000.00 respectively both drawn on the Manek Chowk Co- operative Bank Ltd., Ahmedabad as part payment of the amount due and promised to pay the balance amount next week. Both these cheques were deposited by my clients and were cleared on 30.10.1996. 8. That after giving credit of this amount in your account, a sum of Rs.96,03,766.00 remained due besides interest from you to my clients, which you did not pay as promised and as such my clients made persistent demand for the payment of the balance amount, which was legally recoverable. 9. That on your solemn assurance, my clients again deposited for collection all the five valid cheques of which my clients were holder in due course, No.122305 for 10,00,000.00, No.122304 for Rs.22,00,000.00, No.122303 for Rs.28,43,766.00 No.1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of your notice. 5. My clients further say and submit that a memorandum of understanding had taken place between my clients' partnership HUP firm, their partners mother and firms creditors in which details of payment to my clients' creditors is stated and prescribed. It is understood through this Memorandum of Understanding, in which you are also one of the part, to understanding that, towards the five cheques which were dishonoured and which were more specifically mentioned in your notice para 5 and 6, two new cheques which are more specifically mentioned in your notice para 7 were given, it was further understood that all the five cheques which were earlier given to you, are not to be presented again and were to be given and deposited to Mr. Bhadreshbhai Mehta, Above said two cheques which are already honoured were given to you in the presence of Mr. Girishchandra Ramanlal Chokshi and Mr. Yogendra Ambalal Sarkar, both of whom are Arbitrators to said Memorandum of Understanding along with other Arbitrator. Mr. Jagmohandas Himmatlal Chokshi. Hence my clients deny the contentions of your notice para 7 that on persistent demand above said two cheques were given to you, but ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... which are separately specified, the claim for interest, cost etc. would be superfluous and these additional claims being severable would not invalidate the notice. It was further held that if an ominous demand is made in a notice as to what was due against a dishonoured cheque, the notice might fail to meet the legal requirement and may be regarded as bad. 38. The same consequence, in my view, would follow where the principal sum demanded in the notice is more than the actual amount payable to the payee of the cheque as a principal sum. 39. In K.R.Indira vs. Dr.G.Adinarayana, 2003 (3) JCC(NI) 273, a consolidated notice was sent in respect of four cheques. Two of which were issued in the name of the husband and the two were in the name of the wife. It was noted by the Supreme Court that the cheque amounts were different from the alleged loan and the demand made was not of the cheque amount but was of the loan amount. It was held that the complainant was required to make demand for the amount recovered by the cheque which was conspicuously absent in the notice and, therefore, the notice was imperfect. The same would be the legal effect when a part-payment against a cheque is ma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in whole/part any debt or liability, (2) presentation of the cheque by the payee or the holder in due course to the bank, (3) returning the cheque unpaid by the drawee bank for want of sufficient funds to the credit of the drawer or any arrangement with the banker to pay the sum covered by the cheque, (4) giving notice in writing to the drawer of the cheque within 15 days of the receipt of information by the payee from the bank regarding the return of the cheque as unpaid demanding payment of the cheque amount, (5) failure of the drawer to make payment to the payee or the holder in due course of the cheque, of the amount covered by the cheque within 15 days of the receipt of the notice. [11] Strong reliance was placed by learned Counsel for the appellants in Suman Sethi's case (supra) to contend that if the indication in the notice of other amounts than that covered by the cheque issued, does not as held by this Court invalidate the notice, there is no reason as to why a consolidated notice for two complainants cannot be issued. The extreme plea as is sought to be raised in this case based upon Suman Sethi's case (supra) is clearly untenable. Though no formal notice is p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the two decisions relied upon by the learned counsel appearing for the writ applicants in support of his submissions. 41. In Arvind Maneklal Tailor (supra), the accused had issued a cheque in favour of the complainant dated 15 th March, 1991 of Rs.2,00,000/-representing part of the purchase price of their shops, purchased by the accused from the complainant, who was a builder and developer of the shops in question. Thereafter, i.e., after the cheque was issued, certain events took place, whereby the very same cheque was altered by the drawer so as to change the date from 15th March, 1991 to 15th September, 1991. Certain events between 15th March, 1991 and 15th September, 1991 of some significance were taken note of by the court. It was argued before this Court in the said matter that the cheque which was dishonoured did not represent either the entire debt or part of the debt on the due date, and in such circumstances, section 138 of the N.I. Act would not furnish a cause of action for the criminal prosecution and/or conviction. This Court, while affirming the judgment and order of acquittal passed by the court below, held as under; 7. The crux of the matter in the present ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... xtent of the debt. If the evidence in rebuttal which is found acceptable by the court justifies a conclusion that the cheque which was dishonoured, did not represent either the entire debt or part of the debt on the due date, section 138 would not furnish a cause of action for the criminal prosecution and/or conviction. It is in the context of this limited controversy that the evidence in rebuttal led by the accused has been examined and found to be acceptable by the court. 9. So far as the facts of the case are concerned and so far as the appreciation of evidence is concerned, I see no reason to take another view of the matter, so far as the findings of fact are concerned. Suffice it to say that the finding of fact based on the evidence on record is to the effect that when the cheque was issued, the same represented an amount due and payable to the drawee in respect of the outstanding consideration in respect of the shops sold by the drawee to the drawer. However, subsequently, after the issuance of the cheque, but before the due date, the parties readjusted their mutual obligations as evidenced by Exh.24, etc., and the drawer of the cheque made payments in respect of the then ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y meant, and it could only mean that the amount of the cheque did not represent in whole or in part of any debt or other liability of the drawer to the drawee. 42. In Voruganti Chinna Gopaiah (supra), an identical issue had arose before a learned Single Judge of the Andhra Pradesh High Court. While acquitting the accused, the court held as under; 10. There is no dispute in the fact that the accused are the customers of the complainant. The issuance of the cheque (Ex.Pl dated 5-10-1991) in favour of the complainant in respect of the amount due on the running account is not disputed. The fact of dishonour and intimation under Ex.P2 dated 14-10-1991 and Ex.P3 dated 8-10-1991 and the subsequent Phonogram Ex.P4 dated 14-10-1991 are not in dispute. It is also not in dispute that the complainant issued Ex.P5 dated 21-10-1991 (office copy of the notice issued by the complainant). The said notice was received by the accused under acknowledgment Ex.P6 dated 22-10-1991. 11. The learned Counsel appearing for the appellant/A2 submitted that though there was outstanding amount and though Ex.P1 cheque was issued towards payment of the said amount to the 1 st respondent/complainant, t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... istence. Therefore, no reliance can be placed on the contents of Ex.D1. His further contention is that the introduction of Ex.D1 terms is invalid. Ex.P5 notice was given to the accused on 21-10-1991. To this there was no reply from the accused. Therefore, the subsequent stand taken by the accused is only an after thought and no importance can be given to the contents of Ex.D1. 14. I am unable to agree with this contention. It is true that the amount in lieu of which Ex.P1 was given was outstanding amount in the running account as on 13-11- 1991. Ex.Pl was given by the accused in discharge of that debt. But subsequently the accused wrote letter and that was acted upon. PW1 clearly stated that the Company/lst respondent wrote letter on 28-12-1991 demanding payment of first instalment. This clearly indicates that the terms of Ex.D1 were accepted by the 1st respondent- Company and they were acting upon those terms. The contention that PW1 was not authorized to speak of Ex.D1 is also devoid of any merit. PW1 is representing the complainant- Company. Therefore, the complainant- Company cannot turn round and say that the evidence of PW1 in respect of Ex.D1 is not binding on them. 15 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt of the amount due under the cheque whether before or after the date of receipt of the notice of demand under Section 138 cannot absolve the accused of his culpability. Definitely he has to pay, to avoid liability, the entire amount due within 15 days of receipt of the notice (including, of course, the amount if any paid earlier.) 13. In the instant case even if payments under Exts. D1 and D2 were taken into account, the accused cannot succeed for the reason that those payments, even if accepted, do not amount to discharge of liability contemplated under Section 138. Still an amount exceeding Rs. 27,000/- (72,750--45,361) remains to be paid even if I accept the plea of discharge under Exts. D1 and D2. 14. Undaunted, the learned Counsel for the respondent contends that Ext. D3 evidences payment of a total amount of Rs. 79,260/-. The plea of discharge must certainly be proved by the accused. Of course the standard which would be applicable to an accused pleading such discharge is not as heavy and as onerous as the initial paramount burden on the prosecution. But at least by the test of preponderance of possibilities and probabilities, as in a civil case, the accused has to di ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... unt of money due under the cheque less amounts if any paid already towards the liability. At any rate the payment contemplated under Clause (c) of the proviso must certainly include payments if any made towards, the liability after the issue of the cheque and before the cheque is presented for, encashment as also payments made after the receipt of the notice. The expression the said amount of money must certainly yield to a reasonable and purposive interpretation. 17. I am conscious that in an appropriate case the question may arise for consideration whether dishonour of the cheque was on the ground of insufficiency of funds if the funds were sufficient to pay the outstanding liability but not the entire liability under the cheque. That question does not specifically arise for consideration in this case. According to me the dishonour of the cheque, even in such a case where the amount available in the amount is sufficient to cover the outstanding liability but not sufficient to cover the entire amount liable to be paid under the cheque, would be for want of sufficient funds. As the drawer can, as indicated earlier, avoid culpable liability by proving discharge under proviso (c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ch precludes a Court from taking into account prior payments made - before the presentation of the cheque or before the receipt of the notice in deciding whether the amount due under the cheque has been paid. It will be open to the accused to show that he had made payment of the amount due under the cheque either before or after the presentation of the cheque on receipt of the notice. If he satisfies Court that within 15 days of receipt of the notice the entire amount or the outstanding amount due under the cheque has been paid and discharged, he would certainly be entitled to avoid culpable liability under Section 138 of the Act. Prior discharge - even prior to the notice of demand under Section 138 of the Act - must certainly be accepted as a valid defence under Section 138 of the Act. The mere fact that such discharge is prior to the notice of demand or even prior to the presentation and dishonour of the cheque would not disentitle an accused to contend that the amount due under the cheque has been paid and discharged. The expression the said amount of money and within 15 days of receipt of the said notice cannot lead a Court machanically to the conclusion that any payment m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r Section 139 of the N.I. Act and in view of the proved circumstances that the cheque (Ext. P4) was issued on the specific understanding that the same can be presented and encashed if the entire amounts were not otherwise paid before the date of the cheque, it cannot be held that Ext. P4 was not issued for the discharge of a legally enforceable debt/liability. The judgment of acquittal therefore does warrant interference. The challenge succeeds. 46. Thus, in both the above referred two decisions, the court took the view that even if the accused has made part payment and the complainant has acknowledged the same, the same will not be sufficient for the accused to exonerate himself from his liability under section 138 of the N.I. Act. To put it in other words, an accused who has made the part payment, will not be entitled to raise the same as a defence in a prosecution under section 138 of the Act. 47. However, the principle explained and laid down in both the above referred decisions, did not find favour with a Division Bench of the very same High Court and both the judgements referred to above came to be over ruled. 48. In Joseph Sartho (supra), a Division Bench of the Ke ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tted that Section 138 being a penal provision, the same should be interpreted strictly and if there is any doubt, it should go in favour of the accused. The learned counsel relied on the decision of this Court in Supply House v. Ullas (supra). He also relied on the decision of the Apex Court in Rahul Builders v. Arihant Fertilizers Chemical., 2008 2 SCC 321. wherein, at para 10, it was observed that penal provisions contained in Section 138 should be construed strictly. The learned counsel also submitted that Section 138 is not a substitute for a suit for money. He brought to our notice Section 56 of the Act. Since the appellant did not make any endorsement of the amount received, on the cheque, it has lost its negotiability, it is submitted. The learned Public Prosecutor Sri. P. Ravindra Babu supported the above submission of the learned counsel for the 1st respondent, made relying on Section 56 of the Act. He submitted that in view of Section 56, the appellant could have claimed only the balance amount due under the cheque. Since be presented the cheque for collection of the entire amount, the offence under Section 138 is not made out, submitted the learned Public Prosecutor. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ment of the amount received and presented the cheque, to collect the balance amount due. [8] Section 138 of the Act is quoted below for convenient reference: 138. Dishonour of cheque for insufficiency, etc., of funds in the account- Where 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 hounour 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 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: (a) the cheque has been presented to the bank within a period of six months from the date of which it is drawn or within the per ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the cheque was for an amount higher than the amount due on the date it was presented for encashment. The law contemplates making of an endorsement by the drawee on the back of the cheque regarding the part payment received. So, we are of the view that the 1st respondent cannot be found guilty of the offence under Section 138 of the Act, for not making arrangement to honour the cheque for an amount more than what is due from him. If he had made arrangement for honouring the cheque, he would have to be after the appellant to get back the substantial amount paid by him earlier. Therefore, we find it difficult to subscribe to the view that the accused has committed the offence, as he failed to pay the balance amount, on issuance of notice by the appellant. [9] The appellant points out that in the account of the 1st respondent, there was not sufficient amount to pay the balance amount due under the cheque. Further, he could have escaped from the liability by paying the balance amount, pursuant to the lawyer notice. We think, the liability to pay the amount on receipt of notice arises, if only the cheque was for an amount to discharge in whole or in part of the liability of the accuse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... must be clear and specific. In this context, it is apposite to quote the words of Douglas, J. in Krishan v. Board of Regents, 1994 3 SCC 569. which reads as follows: ...a law fails to meet the requirements of the Due Process Clause if it is so vague and standardless that it leaves the public uncertain as to the conduct it prohibits or leaves judges and jurors free to decide, without any legally fixed standards, what is prohibited and what is not in each particular case....Certainly one of the basic purpose of the Due Process Clause has always been to protect a person against having the Government to impose burdens upon him except in accordance with the valid laws of the land. Implicit in this constitutional safeguard is the premise that the law must be one that carries an understandable meaning with legal standards that Courts must enforce. The same view has been expressed by our Apex Court in Kartar Singh v. State of Punjab, 1994 3 SCC 569. The relevant portion of the judgment reads as follows. 130. It is the basic principle of legal jurisprudence that an enactment is void for vagueness if its prohibitions are not clearly defined. Vague laws offend several important value ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... een adopted. In India, attachment of a slip of paper to the cheque is statutorily recognized in Section 15 of the Act. [11] The attempt of the appellant to encash the cheque without endorsing the amount already received is perilously bordering dishonesty. It appears, the appellant thinks, if some endorsement is made on the reverse of the cheque, it may become invalid. Under this misapprehension, the appellant has contended that the drawer of the cheque, by making some payment to the drawee, can make the cheque invalid. With great respect, we may point out that the learned Judge also fell into the very same error in R. Gopikuttan Pillai (supra), while dealing with the contention that part payment will be the remedy under Section 138. So, the action of the appellant in this case, of presenting the cheque claiming the entire amount, is plainly illegal and the same cannot be spring board for an action against the 1st respondent accused under Section 138 of the Act. [12] We are not referring in detail the other decisions cited, as they are not strictly relevant on the facts of this case. As mentioned earlier, we have no doubt in our mind that for the bouncing of a cheque, when ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
