SEKAR REPORTER

Court News from Madras High Court

Thus, when all the circumstances above are taken cumulatively together, the findings of the Lower Appellate Court, that the complainant had not properly proved the loan transactions and the Trial Court has not properly appreciated about the capacity of the complainant, and the source of money, etc., cannot be held to be a perverse or an impossible view. Therefore, the Lower Appellate Court on the reading of the evidence and on exercising the jurisdiction has acquitted the accused. In these appeals against the acquittal, the said findings cannot be overturned as the finding of the guilt unless the findings are perverse or an impossible view. In that view of the matter, these appeals fail and are dismissed accordingly. 16.09.2022 judge barath sacravarthi

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IN THE HIGH COURT OF JUDICATURE AT MADRAS

Reserved on : 22.08.2022

Pronounced on :  16.09.2022

CORAM :

THE HON’BLE MR.JUSTICE D.BHARATHA CHAKRAVARTHY

Crl.A.Nos.5, 6, 7 of 2021

In Crl.A.No.5 of 2021:

C.Balu @ Chinnasamy     … Appellant

Versus N.Saravanan … Respondent

In Crl.A.No.175 of 2020:

1.Pandeeshwaran, (M/A 25 years)

2.Sathiskumar, (M/A 51 years) … Appellants

Versus

State rep.by

The Inspector of Police,

B2, R.S.Puram Police Station,

Coimbatore City.      … Respondent

(Crime No.275 of 2018)

Common Prayer : Criminal Appeals are filed under Section 378 of the Code of Criminal Procedure, against the Judgment of the learned

Additional District and Sessions Judge, Dharmapuri in C.A.No.18 of 2017, C.A.No.19 pf 2017, and C.A.No.17 of 2017, dated 12.02.2020 respectively, in reversing the well-considered Judgment of the learned Magistrate FTC, Dharmapuri in STC No.31 of 2014, STC.No.14 of 2014, and STC.No.22 of 2015, dated 26.04.2017, respectively, in any event is illegal, incompetent, without jurisdiction and liable to set aside in-limina.

For Appellant                          : Mr.M.Muruganantham

For Respondent    : Mr.M.Guruprasad

COMMON  JUDGMENT

These three appeals arise out of acquittal for the alleged offence

under Section 138 of the Negotiable Instruments Act, between the same parties, Judgments being delivered simultaneously, on the same date, and for the same reasons, are taken up together and disposed of by this common Judgment.

2.The case of the complainant is that the complainant is a person

doing real estate and also lending monies for interest and is also a contractor.  The accused is also a person who is a PWD contractor and also doing real estate business purchasing land and promoting them as residential plots and selling them. Therefore, the accused having acquaintance and transactions for about six years  with the complainant.

The complainant has lent several lakhs rupees on several occasions as a hand loan and the accused has repaid the same. On the said trust on the accused, on 14.01.2013, the complainant advanced a sum of Rs.50 Lakhs, and the accused agreed to repay the same in two monthly installments along with 1% interest per month and  two cheques were issued for a sum of Rs.25 Lakhs each, post dated 25.03.2013 and 1.04.2013. Apart from the above transactions and on two other occasions also, the complainant has an advanced loan for a sum of Rs.40 Lakhs during February and another sum of Rs.30 Lakhs during March. For each of the transactions, cheques were issued. But, however, when the cheques were presented, they were returned with an endorsement “Account Closed”. When three separate legal notices were sent, the accused issued a reply notice with false particulars and accordingly, a rejoinder notice was also sent, and thereafter, the complaints were filed.  The complaints were taken on file in STC.No.31 of 2014, STC.No.14 of 2014, and STC.No.22 of 2015.

3.In STC.No.31 of 2014, filed towards dishonour of two cheques of Rs.25 Lakhs each, the complainant was examined as P.W.1 and one Guruprasad was examined as P.W.2. On behalf of the complainant,  and

Exs.P-1 to P-14 were marked. Upon being questioned about the material evidence and incriminating circumstances on record, the accused denied the same as false. Thereafter, the accused examined himself as D.W.1 and one Bet Kumar was examined as D.W.2. On behalf of the defence, Exs.D1 and D-2 were marked.

4.Thereafter, the Trial Court proceeded to consider the evidence on both sides and found that the signature on the cheque leaves are admitted. The case of the accused is that the cheque leaves were given to the complainant  during the year 2008 during earlier loan transactions, but the accused did not give any complaint or did not file any Civil Proceedings in respect of the said grievance that the complainant did not hand over those blank cheques to the accused. In that view of the matter, once the complainant is protected by the presumptions under Section 113 and 139 of the Negotiable Instruments Act, and when the defence of the accused is unacceptable, the Trial Court found the accused guilty and convicted the accused for the offence under Section 138 of the Negotiable Instruments Act, and imposed a punishment of one year Simple Imprisonment and ordered for payment of compensation of Rs.50 Lakhs to the complainant and in default to undergo three months Simple Imprisonment.

5.Aggrieved by the same, the accused filed C.A.No.18 of 2017

on the file of the Additional District and Sessions Judge, Dharmapuri, and by Judgment dated 12.02.2020, after independently appraising the entire evidence on record, the Appellate Court found the fact  that the account was closed on 22.03.2010, i.e., long prior to the issuance of the cheques, since there were no transactions in the account of the accused for more than 36 succeeding months and therefore, the cheque itself cannot be said to be a negotiable instrument. Therefore, the presumption under Section 113 as well as Section 118(g) of the Act, will not arise. The Appellate Court further found that the financial capacity of the complainant to lend such a huge amount, totally amounting to Rs.1,20,00,000/- (Rupees One crore Twenty Lakhs only) is not at all proved by the complainant. The Appellate Court found that the loan transactions are not proved by the complainant and on the said findings, acquitted the accused.

6.Similarly in STC.No.14 of 2014, the appellant/complainant examined himself as P.W.1 and one Guruprasad examined as P.W.2 and Exs.P-1 to P-14 were marked. Upon being questioned about the material evidence and incriminating circumstances on record, the accused denied the same as false. Thereafter, on behalf of the accused, he himself examined as D.W.1. One Bet Kumar examined as D.W.2 and Exs.D-1 to D-5 were marked. After considering the above, for the same reasons as mentioned in the above case in STC.No.31 of 2014, the Trial Court convicted the accused and imposed the same punishment of one year Simple Imprisonment and to pay Rs.40 Lakhs as compensation and in default to undergo three months Simple Imprisonment.

7.Aggrieved by the same the accused filed C.A.No.19 of 2017,

which was taken on file before the Additional District and Sessions Judge, Dharmapuri, and for the same reasonings as mentioned in the previous appeal on the same grounds the Appellate Court acquitted the accused.

8.Similarly, in STC.No.22 of 2015, the complainant examined

himself as PW-1 and the accused examined himself D.W.1 and Bet Kumar was examined as D.W.2 and Exs.D-1 & D-2 were also marked and in the same manner as mentioned in the above case, the Trial Court rejected the defence of the accused and convicted the accused, in view of the presumption under Section 118 and Section 139 of the Negotiable Instruments Act, sentenced the accused to undergo Simple Imprisonment for one year and pay a compensation of Rs.30 Lakhs, in default to undergo six months Simple Imprisonment.

9.Against the same, the accused filed C.A.No.17 of 2017 in

which the Learned Additional District and Sessions Judge, Dharmapuri and for the same reasonings, mentioned above in the other Criminal appeals against the accused, acquitted the accused. Therefore, the present three appeals have been filed against the aforesaid Judgments of acquittal by the appellant/complainant.

10.Heard Mr.Muruganantham, learned Counsel for the appellant

and Mr.Guruprasad, learned Counsel appearing for the respondent.

11.Mr.Muruganantham, learned Counsel appearing on behalf of

the appellant would submit that there are only two reasons which are given by the Appellate Court for acquitting the accused. The first reasoning given by the Appellate Court is that if the account is already closed, then the cheque is not even a negotiable instrument, and therefore, the offence will not arise by itself is fallacious and the Hon’ble Supreme Court in NEPC MICON Ltd., and Others., Vs. MAGMA Leasing Ltd.[1], has held that even in the case of closure of accounts, the offence under Section 138 of the Negotiable Instruments Act is made out. It is useful to extract the relevant paragraph No.10 of the said Judgment, which is hereunder:-

“10.This Court in the case of Kanwar Singh v. Delhi Admn., reported in AIR 1965 SC 871 : (1965) 1 SCR 7, while constructing Section 418(i) of the Delhi Municipal Corporation Act, 1959 observed:

“It is the duty of the court in construing a statute to give effect to the intention of the legislature. If, therefore, giving a literal meaning to a word used by the draftsman, particularly in a penal statute, would defeat the object of the legislature, which is to suppress a mischief, the court can  depart from the dictionary meaning or even the popular meaning of the word and instead give it a meaning which will ‘advance the remedy and suppress the mischief’”  ”

[ Emphasis supplied]

12.According to the learned Counsel, once the said finding is not

sustained, automatically the other findings relating to the proof of loan do not arise, because the complaint is clothed with the presumption under Section 118 as well as Section 139 of the Negotiable Instruments Act.   In support of his contentions, he would rely upon the Judgment of the Hon’ble Supreme Court of India, in Rangappa Vs. Shri Mohan[2], more specifically in paragraphs Nos.25 and 26, which reads as hereunder:-

“25. With regard to the facts in the present case, we can also refer to the following observations in M.M.T.C. Ltd. V. Medchl Chemicals & Pharma (P) Ltd. Reported in (2002) 1 SCC 234 : 2022 SCC (Cri) 121 (SCC p.240, para 19).

“19…. The authority shows that even when the cheque is dishonoured by reason of stop-payment instructions by virtue of Section 139 the court has to presume that the cheque was received by the holder for the discharge, in whole or in part, of any debt or liability. Of course this is a rebuttable presumption. The accused can thus show that the ‘stop-payment’ instructions were not issued because of insufficiency or paucity of funds. If the accused shows that in his account there were sufficient funds to clear the amount of the cheque at the time of presentation of the cheque for encashment at the drawer bank and that the stoppayment notice had been issued because of other valid causes including that there was no existing debt or liability at the time of presentation of cheque for encashment, then offence under Section 138 would not be made out. The important thing is that the burden of so proving would be on the accused.

 

  1. In light of these extracts, we are in agreement with the respondent claimant that the presumption mandated by Section 139 of the Act does indeed include the existence of a legally enforceable debt or liability. To that extent, the impugned observations in Krishna Janardhan Bhat v. Dattatraya G.Hegde, reported in (2008) 4 SCC 54, may not be correct. However, this does not in any way cast doubt on the correctness of the decision in that case since it was based on the specific facts and circumstances therein. As noted in the citations, this is of course in the nature of a rebuttable presumption and it is open to the accused to raise a defence wherein the existence of a legally enforceable debt or liability can be contested. However, there can be no doubt that there is an initial presumption which favours the complainant.”

[Emphasis supplied]

13.Finally, taking this Court to the manner in which the appeals

are dealt with, the learned counsel would rely upon the Judgment of the Hon’ble Supreme Court of India, in Rama and Others, vs. State of Rajasthan[3], more specifically, in paragraph No.4, which is extracted hereunder:-

“4. The impugned judgment has been challenged on the sole ground that the High Court has not disposed of the appeal in the manner postulated under law inasmuch as it does not appear from the impugned judgment as to how many witnesses were examined on behalf of the prosecution and on what point. The High Court has not even referred to any evidence much less considered the same. In our view, it is a novel method of disposal of criminal appeal against conviction by simply saying that after reappreciation of the evidence and rescrutiny of the records,  the Court did not find any error apparent in the finding of the trial court even without reappraising the evidence. In our view, the procedure adopted by the High Court is unknown to law. It is well settled that in a criminal appeal, a duty is enjoined upon the appellate court to reappraise the evidence itself and it cannot proceed to dispose of the appeal upon appraisal  of evidence by the trial court alone especially when the appeal has been already admitted and placed for final hearing. Upholding such a procedure wold amount to negation of valuable right of appeal of an accused, which cannot be permitted under law. Thus, we are of the view that on this ground alone, the impugned order is fit to be set aside and the matter remitted to the High Court.”

[Emphasis supplied]

  1. Therefore, he would submit that the Appellate Court did not

consider in proper way, the correct findings given by the Trial Court, therefore, he would submit that the findings of the Appellate Court are not plausible view and are perverse and therefore, he would submit that this Court should interfere with the appeals filed against the acquittal.

15.Per contra, Mr.Guruprasad, learned Counsel appearing on

behalf of the accused would submit that in this case, the circumstances are glaringly against the appellant/complainant. The complainant/appellant had admitted that in his cross-examination that on 08.01.2013, he had canceled the eight power of attorney, which were granted by him in favour of the accused in respect of Akshaya Residential plots. He had also issued a legal notice on 25.05.2013 stating that since the accused had not submitted proper account details and committed a breach of trust, he had cancelled the power of attorney. This being the situation, when on

08.01.2013 the power of attorney was canceled, it is mentioned that on 14.01.2013, a sum of Rs.50 Lakhs was advanced. In February another sum of Rs.40 Lakhs was advanced and on some days thereafter a sum of Rs.30 Lakhs was advanced. Therefore, he would submit that the entire thing is an absolutely concocted story of the complainant. He would submit, the defence of the accused is corroborated by the examination of the bank official as D.W.2, who categorically spoken about the fact that the account was closed in the year 2010 itself and these cheques were in the said accounts. Therefore, the stand of the accused, that these blank cheques were handed over to the complainant in the year 2008 – 2009, and were not given back is a probable defence.

16.He would submit that as a matter of fact, the dispute arose between the complainant and the accused in the year 2012, and even before the alleged loan in the year 2013 and the cheques were issued in the year 2013 and the accused had issued a legal notice demanding those blank cheques on 27.11.2012 itself. Another fact is that the huge amount of Rs.1,20,00,000/- is alleged to have been advanced by way of cash, without any accounting and without producing any income tax details and/or payment of tax thereunder. The entire transactions was alleged being by way of cash and the complainant did not let in any evidence for proof of having such a huge amount of cash. Therefore, the findings of the Appellate Court are in order.

17.I have considered the rival submissions made on either side

and perused the material records of these cases.

18.At the outset, I am in agreement with the learned Counsel for

the appellant that the findings of the Appellate Court, that merely because of the account was closed, the cheque loses its tripartite arrangement and therefore, it is not a negotiable instrument, and therefore, the presumption does not apply and is legally unsustainable. The fact that the account is closed, is up to the knowledge of the accused and is not to the knowledge of the complainant. Considering this fact, elaborately the Hon’ble Supreme

Court of India, after interpreting Section 138 of the Negotiable Instruments

Act, held that even if the account is closed, then the balance is made as a “cipher” or “Nil”. Therefore, if the accused issued the cheque, the same would attract Section 138 of the Negotiable Instruments Act. The cheque is a negotiable instrument and when it is signed and delivered and is always negotiable in the hands of the complainant. Merely because the account is closed, its nature and it does not cease to exist and it is still a negotiable instrument within the definition of Section 138 of the Act.

19.As rightly relied upon by the Learned Counsel and the relevant portion extracted supra, the Hon’ble Supreme Court in NEPC MICON Ltd., and Others., Vs. MAGMA Leasing Ltd.[4]  has settled the

issue  in detail. Therefore, the said finding of the Appellate Court is illegal, erroneous and as such deserves interference.

20.The Appellate Court has also held that the payment of the

loan as such is not proved by the complainant. The Appellate Court held that the capacity and the sources of the huge sums of Rs.1,20,00,000/(Rupees One Crore and Twenty Lakhs only) is not properly appreciated by the Trial Court and allowed the appeal on that ground also. Even though once the accused admits the signature in the cheque, there is a presumption as to the legally enforceable debt, the accused can also discharge the presumption by letting in his own evidence as well as cross-examination of the complainant or by producing such materials. In this case,  the following circumstances are established  which prove the defence:-

  • The complainant had admitted that he is not in a position to

file or produce income tax details in respect of the loan amounts advanced which is a huge amount of Rs.1,20,00,000/- (Rupees One Crore and Twenty Lakhs only).

  • Except for producing the cheque, not even promissory note or supporting documents in corroboration of advancing the loan is produced by the complainant.
  • The entire transaction is to said be by way of cash.
  • It is admitted by the complainant himself on 08.01.2013

only, he had, on account of the falsification of account and breach of trust, canceled eight powers of attorney, which is granted by him in favour of the accused in respect of Akshaya Residential plots. If that be the situation within one week, one month and two months thereafter, the version of the complainant that he advanced huge amount that too without any document, is absolutely unbelievable and it does not inspire the confidence of this Court.

  • Similarly, when such huge amounts are being advanced

proper accounts have to be maintained and the complainant should not only prima facie, at least, plead about the source of income, but, also should be in a position to produce income tax details and other accounts.

The Hon’ble Supreme Court of India, in G.Pankajakshi Amma v. Mathai Mathew[5], has held that in these types of matters, the Court cannot give aid to such complainants. It is useful to extract the relevant paragraph No.10, which reads as under:-

“10. There is any reason also why the impugned judgment cannot be upheld. According to the 1st respondent these transactions were to be unaccounted transactions. According to the 1st respondent, all these amounts are paid in cash. If these are unaccounted transactions then they are illegal transactions. No court can come to the aid of the party in an illegal transaction. It is settled law that in such cases the loss must be allowed to lie where it falls. In this case as these are unaccounted transactions, the Court could not have lent its hands and passed a decree. For these reasons also the suit was required to be dismissed. ”

(vi)The complainant also admits that he was arrested and was in

Jail for the charge of usurious of interest.

  • A reply notice is also issued by the accused categorically

denying the transactions and the attempt of the complainant would be by way of forgery and cheating, by bringing to the notice that the account was closed, long back and the blank cheques issued during the earlier transactions is being misused. Inspite thereof, the complainant did not plead or attempt to prove the source of cash advanced in these transactions.

  • Further, in this case, even before all these transactions

alleged to have happened in the year 2013, admittedly, the respondent/ accused issued a legal notice on 27.11.2012 itself, demanding the blank cheques issued by him in the earlier transactions.

Thus, when all the circumstances above are taken cumulatively

together, the findings of the Lower Appellate Court, that the complainant had not properly proved the loan transactions and the Trial Court has not properly appreciated about the capacity of the complainant, and the source of money, etc., cannot be held to be a perverse or an impossible view. Therefore, the Lower Appellate Court on the reading of the evidence and on exercising the jurisdiction has acquitted the accused. In these appeals against the acquittal, the said findings cannot be overturned as the finding of the guilt unless the findings are perverse or an impossible view. In that view of the matter, these appeals fail and are dismissed accordingly.

16.09.2022

Index : Yes/No Speaking / Non-Speaking order

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To

1.The Additional District and Sessions Judge, Dharmapuri.

2.The Magistrate FTC, Dharmapuri.

3.The Public Prosecutor, High Court of Madras.

4.The Inspector of Police, B2, R.S.Puram Police Station, Coimbatore.

D.BHARATHA CHAKRAVARTHY.J.,

klt

Pre- Delivery Judgment  in Crl.A.Nos.5, 6, 7 of 2021

16.09.2022

[1] (1994) 4 SCC 253

[2] (2010) 11 SCC 441

[3] (2002) 4 SCC 571

[4] (1994) 4 SCC 253

[5]  (2004) 12 SCC 83 : 2004 SCC OnLine SC 408 at page 85

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