@JUDGMENTTAG-ORDER
R. Mala, J.@mdashThe criminal revision arises out of the judgment of conviction and sentence, dated 06.12.2007, in C.A. No. 4/2007, passed by the learned VI Additional Sessions Judge, Chennai, whereby the accused was convicted for the offence u/s 138 of Negotiable Instruments Act and sentenced to undergo simple imprisonment for six months and to pay a compensation of Rs. 20,00,000/- to the complainant within three months, in default, to undergo three months'' simple imprisonment, confirming the judgment of conviction and compensation, but modifying the sentence (i.e.) reducing the sentence from two years into six months, dated 11.12.2006 in C.C. No. 2446/2001 passed by the learned XVIII Metropolitan Magistrate, Saidapet, Chennai-15.
2. The case of the Respondent/complainant is that the Petitioner/accused, who is the proprietor of M/S. K.B. Films, approached the Respondent/complainant and borrowed a sum of Rs. 20,00,000/- for the purpose of producing Tamil film and executed the promissory notes under Ex.P1 series. Towards the discharge of said liability, the accused issued Exs.P2 and P3 two cheques bearing Nos. 178559 and 178558, dated 11.09.2000 and 12.09.2000, for Rs. 10,00,000/- each. When the cheques were presented in the Bank for encashment, they returned on 20.02.2001 as "Funds insufficient" and the return memo was marked as Ex.P4. Thereafter, the complainant issued a statutory notice Ex.P6 to the accused on 05.03.2001 and received the same by the accused on 09.03.2001 as per Ex.P8 acknowledgement card. The accused neither sent any reply to the notice nor repaid the amount. Hence, the Respondent/complainant constrained to file a complaint against the Petitioner/accused u/s 138 of Negotiable Instruments Act.
3. The trial Court, after following the procedure and examining the witnesses P.W.1 and D.W.1 and perused the documentary evidence under Exs.P1 to P9, convicted the accused u/s 138 of Negotiable Instruments Act and sentenced him to undergo simple imprisonment for two years and to pay a compensation of Rs. 20,00,000/- to the complainant u/s 357(3) Code of Criminal Procedure within three months, in default in payment, to undergo simple imprisonment for three months, against which, the accused preferred an appeal in C.A. No. 4/2007. The learned VI Additional Sessions Judge, after hearing the arguments of both sides counsel, confirmed the conviction and compensation and modified the sentence from two years into six months simple imprisonment, against which, the accused has come forward with the present revision.
4. Challenging the said conviction and sentence, the learned Counsel for the Petitioner/accused submitted that the cheques and promissory notes contained the signature of the accused, but he has not given to the Respondent/complainant. There is no loan transaction between both the parties. Since one Sarath Kumar, who is acting in his film, borrowed money and he handed over the said promissory notes under Ex.P1 series and cheques under Exs.P2 and P3 to the Respondent/complainant. So there is no legally enforceable debt on the date of issuance of cheques under Exs.P2 and P3. Hence, the ingredients of Section 138 of Negotiable Instruments Act is not made out against the Petitioner/accused. He further submitted that the Respondent/complainant also filed a criminal complaint u/s 138 of Negotiable Instruments Act against the said Sarath Kumar in C.C. No. 6371/2002. There was a memorandum of understanding under Ex.P9 entered into between the Petitioner and the Respondent herein on 06.01.2003. In view of Ex.P9, the amount of Rs. 5,00,000/- has been paid and the balance amount of Rs. 10,00,000/- shall be paid on or before 06.07.2003. In pursuance of clause-2 of the memorandum of understanding, the Respondent/complainant has withdrawn the case in C.C. No. 6371/2002, so nothing survives in the case. Hence, he prayed for the acquittal of the Petitioner/accused. To substantiate his arguments, he relied upon the decisions reported in 2000 Bankman 513 and (2009) 1 MLJ (Cri) 120.
5. Refuting the same, the learned Counsel for the Respondent/complainant submitted that the Petitioner/accused himself admitted the signature in both the cheques and the promissory notes. In such circumstances, the Petitioner is entitled to the presumption under Sections 118 and 139 of Negotiable Instruments Act. As per the dictum laid down in 2010 (2) C.L.T. 713, even though it is rebuttable presumption, there is no evidence on the side of the Petitioner to rebutt the presumption. Even though he was examined as D.W.1, in his evidence itself, it was clearly proved that Exs.P1 to P3 were issued for discharging legally enforceable debt. Both the Courts below have considered all the aspects in proper perspective and came to the correct conclusion. So there is no illegality or irregularity in the conviction passed by both the Courts below. Hence, he prayed for dismissal of the revision.
6. Considered the rival submissions made on both sides and the materials available on records.
7. It is the duty of the Court to consider that whether Exs.P2 and P3 cheques were issued for discharging of legally enforceable debt as on date of Exs.P2 and P3. As per the arguments of both sides counsel and the evidence of both the parties, the signature in Ex.P1 series promissory notes and Exs.P2 and P3 cheques are not disputed. At this juncture, it is appropriate to consider Ex.P9 memorandum of understanding dated 06.01.2003, which was entered into between both the parties during the pendency of this case and C.C. No. 6371/2002 and both the parties are admitted the same. It was specifically mentioned in the clauses-2 and 3 of Ex.P9, which are as follows:
2. The party of the First part shall withdraw the complaint against the surety Mr. Sarath Kumar in C.C. No. 6371/2002 at the time of receiving the 2nd installment of Rs. 4,00,000/-, in all if the second party pays a sum of Rs. 5 lakhs even today or on the day specified above, the first party shall withdraw the case against Mr. Sarath Kumar in C.C. No. 6371/2002.
3. The Party of the First part shall have the opinion of proceeding against the surety Mr. Sarath Kumar, if the party of the Second part fails to pay the amount of Rs. 5 lakhs violating this Memorandum of Understanding.
As per the clauses-2 and 3 of Ex.P9, Rs. 5,00,000/- has been paid. So the case filed against the said Sarath Kumar in C.C. No. 6371/2002 was withdrawn. The learned Counsel for the Petitioner submitted that since the documents under Exs.P1 to P3 were given only for the security for the amount borrowed by Sarath Kumar, since he is acting in his film, to discharge the same, the Petitioner/accused issued the cheques. Subsequently, the same was paid as per the memorandum of understanding under Ex.P9. Hence, nothing survives in this case. At this juncture, it is appropriate to consider clause-4 of Ex.P9, which is as follows:
4. The party of the First part shall have the option of proceedings further if the Party of the Second part fails to discharge the entire amount of the cheque in C.C. No. 2446/2001 towards full and final settlement of the same.
But, there is no evidence to show that the Petitioner/accused has settled the amount due under Exs.P2 and P3.
8. At this juncture, it is appropriate to consider the decisions relied upon by the learned Counsel for the Petitioner reported in 2000 Bankman 513 AP (Voruganti China Gopaiah v. Godavari Fertilisers and Chemicals Ltd.) and submitted that the cheque issued towards outstanding amount in running account in discharge of debt. Subsequently, an agreement entered into between both the parties to pay the amount in instalments. Subsequently, the cheque was presented in the Bank and it was returned as "Funds insufficient". So the complaint u/s 138 of Negotiable Instruments Act was preferred against the accused. But, it was held by the High Court of Andhra Pradesh that applying the rule of thumb that once the cheque is issued and it is subsequently dishonoured the offence u/s 138 of Negotiable Instruments Act is made out, which is erroneous.
9. Here, after filing of the complaint against the Petitioner/accused u/s 138 of Negotiable Instruments Act, memorandum of understanding under Ex.P9 came into existence between both the parties. The recital in Ex.P9 has clearly proved that Sarath Kumar has given surety to the amount borrowed by the Petitioner/accused. Even though the Petitioner/accused borrowed a sum of Rs. 20,00,000/-, the Respondent/complainant agreed to accept Rs. 15,00,000/- as per clause-1 of Ex.P9. As per the clauses-2 and 3 of Ex.P9, Rs. 5,00,000 has been paid and the remaining balance amount of Rs. 10,00,000/- is yet to be paid. So as per clause-4 of Ex.P9, he is entitled to prosecute the same. In such circumstances, I am of the view that the decision of the Andhra Pradesh High Court reported in 2000 Bankman 513 is not applicable to the facts of the present case.
10. The learned Counsel for the Petitioner also relied upon the decision reported in (2009) 1 MLJ (Cri) 120 (Kalavally v. Parthasarathy) in which, it reads as follows:
Existence of legally recoverable debt is not a matter of presumption u/s 139 of the Negotiable Instruments Act, 1881. It merely raises a presumption infavour of the holder of the cheque that the same has been issued for the discharge of any debt or other liability. This presumption is rebuttable. The rebuttal does not have to be proved conclusively. It cannot be proved by circumstances establishing preponderance of probabilities.
The presumption u/s 139 of Negotiable Instruments Act is a rebuttable presumption. For rebutting the presumption, what was needed by the accused is to raise proper defence (i.e.) Inference of preponderance of probabilities can be drawn not only from the materials brought on records by the parties, but also by reference to the circumstances upon which it relies.
11. On perusal of the decisions along with the facts of the present case, the promissory notes and the cheques under Exs.P1 to P3 are clearly proved that they issued only for discharging legally enforceable debt of Rs. 20,00,000/-. So both the Courts below have considered this aspect in proper perspective and came to the correct conclusion.
12. At this juncture, this Court has to consider the decision of the apex Court relied upon by the learned Counsel for the Respondent/complainant reported in 2010 (2) C.L.T. 713 (Rangappa v. Sri Mohan) regarding the presumption u/s 139 of Negotiable Instruments Act.
13. The learned Counsel for the Respondent/complainant also relied upon the decision of this Court reported in 2003 (2) DCR 145 (M/S. Jayam Company and Anr. v.T. Ravichandran) in which, it reads as follows:
Since on receipt of legal notice either without complying with the requirement of law in settling the amount within fifteen days on receipt of such notice or even keeping quiet without denying allegations by a reply. If accused has any reason to deny then he should promptly stated those reasons in his reply. At this stage of trial, the same can not be considered to be a valid defence and the same has to be thrown to the ground.
He submitted that even though the statutory notice was issued under Ex.P6 on 05.03.2001 and the postal receipt and an acknowledgement card was marked as Exs.P7 and P8, on receipt of the same, the accused neither sent any reply nor repaid the amount. In such circumstances, he is not entitled to raise the plea of defence at the time of trial.
14. Considering the above citation, admittedly, the Petitioner/accused has received the statutory notice, but he has not sent any reply. One more adding circumstance in this case is that during the pendency of the case before the XVIII Metropolitan Magistrate''s Court, both the Petitioner and the Respondent entered into the memorandum of understanding under Ex.P9. In that, they admitted the amount due is Rs. 20,00,000/- where Sarath Kumar has given surety. As per clause-1 of the memorandum of understanding, the Respondent/complainant agreed to receive Rs. 15,00,000/- with the conditions as in clauses-2 and 3, he received Rs. 5,00,000/- and withdrawn the case against Sarath Kumar in C.C. No. 6371/2002. Since he has not repaid the balance amount of Rs. 10,00,000/-, as per the clause-4 of Ex.P9, he prosecute C.C. No. 2446/2001. In such circumstances, both the Courts below have considered all the aspects in proper perspective and came to the correct conclusion that the cheques under Exs.P2 and P3 were issued for discharging legally enforceable debt under Ex.P1 series promissory notes. When they were presented in the Bank for encashment, they returned as "funds insufficient". So the statutory notice was issued by the Respondent/complainant to the accused. Even though the accused received the said notice, neither he sent any reply nor he repaid the amount. So the ingredients of Section 138 of Negotiable Instruments Act is made out against the Petitioner/accused. So the findings of both the Courts below that the Petitioner/accused is guilty for the offence u/s 138 of Negotiable Instruments Act does not warrant any interference and hence, it is hereby confirmed.
15. The quantum of sentence is concerned, the sentence imposed by the learned VI Additional Sessions Judge is fair and proper and hence it does not warrant any interference, so it is hereby confirmed.
16. In fine, The Criminal Revision is dismissed The conviction u/s 138 of Negotiable Instruments Act passed by both the Courts below is hereby confirmed The compensation awarded by both the Courts below is hereby confirmed The revision Petitioner/accused is directed to deposit the compensation amount of Rs. 20,00,000/- within three months. As soon as the amount is deposited, the Respondent/complainant is permitted to withdraw the amount. The sentence modified by the appellate Court is hereby confirmed. The bail bond executed by the Petitioner/accused, if any, shall stand cancelled. The trial Court is directed to take steps to secure the Petitioner/accused to undergo remaining period of sentence imposed on him.
