1. This Criminal Revision Case is filed by the revision petitioners who were the complainants aggrieved by the judgment dated 16.04.2015 passed in
Criminal Appeal No. 52 of 2014 by the Sessions Judge, Nizamabad in dismissing the appeal filed by them against the acquittal of the accused in
C.C.No.804/1999, dated 31.03.2009 for the offence under Section 138 of Negotiable Instruments Act (for short ""NI"" Act) passed by the I Additional
Judicial Magistrate of First Class, Nizamabad.
2. The case of the revision petitioners-complainants was that both the complainants and the accused were close relatives belonging to Jakranpally
Village and Mandal, Nizamabad District, out of close acquaintance and family relations, the accused borrowed amounts from them for her business
purpose on interest basis and promised to repay the same and acknowledged the same in the presence of witnesses, but failed to keep her promise
due to loss sustained in her business. On 07.10.1996, the accused acknowledged that the due amount payable to the complainants was Rs.13,34,477/-
and issued a post dated cheque dated 14.08.1999 for Rs.13,00,000/- towards the lump-sum payment. When the cheque was presented on 07.09.1999,
it was returned by a memo dated 14.09.1999 for ""insufficient funds"" along with a covering letter on 20.09.1999, The complainants issued a legal notice
on 27.09.1999 to the accused to pay the cheque amount of Rs.13,00,000/-within fifteen (15) days, but the accused refused to receive the registered
notice on 29.09.1999. However, the notice sent under certificate of posting was received by the accused and she gave a reply on 18.10.1999 stating
that she borrowed only Rs.20,000/- in December,1995 and issue a blank signed cheque as security for the said amount, the said amount was repaid to
the complainant in March, 1996 but, she failed to take back the cheque and contended that she need not pay any amount. Such reply amounting to
refusal, the complainants lodged the complaint.
3. The case was taken cognizance by the Additional Judicial Magistrate of First Class, Nizamabad and issued summons to the accused. The accused
appeared before the court and pleaded not guilty.
4. During the course of trial, the complainants examined as PWs.1 to 4 and marked Exs.P1 to P12.
5. The accused filed application for sending the subject cheque to the handwriting expert for ascertaining the ink difference and difference in
handwriting in the signature portion and the contents of the cheque. The Director, Andhra Pradesh Forensic Science Laboratory, returned the original
cheque for want of additional material requesting to send the admitted signatures of the accused and also made clear that the age of ink or document
could not be ascertained. The accused sought an application to send the document to the Government Examiner of Questioned Documents,
Directorate of Forensic Science, Ministry of Home Affairs, Government of India at Ramanthapur, Hyderabad. The Government Examiner also
returned the subject cheque vide letter dated 25.09.2006 stating that the admitted signatures of the accused written in the normal course were required
for comparison. The accused failed to take any further steps to produce her admitted signatures.
6. The accused also failed to adduce any rebuttal evidence.
7. On considering the oral and documentary evidence on record, the trial court observing that before invoking the presumptions under Sections 118 and
139 of the NI Act, the complainants should prove that Ex.P1 cheque was issued for the discharge of legally enforceable debt and the main defence of
the accused was that, Ex.P1 cheque was not issued for a legally enforceable debt and that the complainants initially did not disclose that the subject
cheque was issued for discharge of debt under the promissory notes vide Exs.P10 and P11 and did not furnish the details of the debt borrowed by the
accused. PW1 in the cross-examination deposed that she had some more documents to show that the accused borrowed money from them and
produced the two (02) promissory notes, Exs.P10 and P11 in the chief-examination of PW2 and filed Ex.P12 as the acknowledgement of debt given
by the accused covered under the said promissory notes, observed that Ex.P12, detailed account statement was not signed by the accused and it could
not be considered as a valid acknowledgment under Section 19 of the Limitation Act. Mere listing of amounts and deducting the payment date wise
periodically would not entitle the complainant to claim the status of Ex.P12 as the acknowledgement of debt by the accused as it was not signed by the
accused and there was no acknowledgment in writing referring the debt covered under the promissory notes held that without proof of
acknowledgement, the cheque cannot be considered as issued for the discharge of legally enforceable debt and dismissed the complaint, acquitting the
accused for the offence under Section 138 of the NI Act.
8. Aggrieved by such acquittal, the complainants preferred an appeal. The appeal was heard by the Sessions Judge, Nizamabad vide Criminal Appeal
No.52 of 2014 and vide judgment dated 16.04.2015 dismissed the appeal confirming the acquittal order recorded by the Additional Judicial Magistrate
of First Class, Nizamabad.
9. Aggrieved further, the complainants preferred this revision contending that the courts below failed to appreciate the evidence on record, law and
facts in proper perspective and came to a wrong conclusion and placed the burden of proving consideration of dishonoured cheques on the
complainant. The onus was on the accused but not on the complainant by adducing acceptable evidence and relied upon the judgments of the Hon'ble
Apex Court in Maruthi Udyog Limited v. Narender 1999 (1) SCC 113, K.N.Beena v. Muniyappan 22001 (8) SCC 458, Hiten P.Dalal v. Bratindranath
Banerjee 2001 (6) SCC 16 and MMTC Limited v. Medchal Chemicals and Pharma Private Limited 2002 (1) SCC 234.
10. He further contended that the accused did not produce any rebuttal evidence to disprove that the cheques and acknowledgment marked under
Ex.P10 to P12 were not in her own handwriting. The debt under pro-notes could not be said as time barred unless contra was proved. The accused
failed to discharge the initial burden laid upon her to prove that she had not issued the cheque to enforce the debt or subsisting liability.
11. The learned counsel for the revision petitioners further contended that due to communication gap between the counsel and the clients, the
complainants failed to bring on record, the most relevant evidence i.e., the filing of Income Tax returns before the courts below and prayed to grant
leave to file the Income Tax returns of the complainants as additional evidence and to set aside the orders of the courts below or alternatively to
remand the matter to the trial court for fresh disposal in view of the additional evidence.
12. The learned counsel for the respondents, on the other hand contended that fresh evidence produced after fifteen (15) years could not be allowed.
Both the trial court and the lower appellate court held that there was no financial capacity for the complainants. The communication gap between the
clients and his counsel was not a genuine ground to remand the matter and prayed to dismiss the I.A. filed for accepting fresh evidence.
13. He further contended that both the trial court and the lower appellate court on appreciating the evidence on record came to a right conclusion that
there was no legally enforceable debt as the debt was time barred and Ex.P12 could not be considered as a valid acknowledgment as it was not
signed by the accused and relied upon the judgments of the High Court of Andhra Pradesh in Girdhari Lal Rathi v. P.T.V.Ramanujachari 1997
LawSuit (AP) 17, and of the Kerala High Court in Sasseriyil Joseph v. Devassia 2001 Crl. L.J. 24, and of the Karnataka High Court in Bidar Urban
Cooperative Bank Limited, Hyderabad v. Girish S/o.Late Gunderao Kulkarni 2021 (1) AIR Karnataka R 600. With regard to the failure of the
complainants to prove the source of income, he relied upon the judgments of the High Court of Karnataka in Veerayya v. G.K.Madivalar 2011 SCC
OnLine Karnataka 4220 and of the Hon'ble Apex Court in K.Subramani v. K.Damodara Naidu (2015) 1 SCC 99.
14. Ordinarily, in a case of revision, this Court would not make an attempt to appreciate the evidence on record unless the decisions under challenge
are shown to have committed a manifest error of law or procedure or the conclusions reached are expressly perverse. An order of acquittal also
would not warrant any interference by this Court unless the courts below committed a patent error of law which resulted in grave miscarriage of
justice.
15. On a plain reading of the judgments of the courts below, the trial court placed the burden upon the complainant to prove that the cheque was
issued in discharge of a legally enforceable debt before invoking the provisions under Sections 118 and 138 of the NI Act and the same was also
approved by the lower appellate court. The facts of the case also would disclose that the accused admitted her signature on Ex.P1 cheque and
contended that the same was issued as a security for the amount of Rs.20,000/- borrowed by her from the complainants in December,1995 and that
she repaid the said amount to the complainants in March, 1996, but failed to take back the said cheque. She also made an application before the trial
court to show that the handwriting in the signature portion and the contents of the cheque were not one and the same and the contents were not filled
by her. Thus, she was admitting her signature on the cheque. The statute mandates that once the signature of the accused on the cheque was
admitted, then the reverse onus clauses become operative and the obligation shifts upon the accused to discharge the presumption raised upon her.
16. The trial court fell in error and called upon the complainants to explain the circumstances under which the cheque was issued.
17. The approach of the trial court was against the established legal position in Rohitbhai Jivanlal Patel v. State of Gujarat (2019) 18 SCC 106, in Bir
Singh v. Mukesh Kumar (2019) 4 SCC 197, in Rangappa v. Mohan AIR (2010) SC 1898, Hiten P.Dalal v. BratindranathBanerjee 2(001 (6) SCC 16 supra),
K.N.Beena v. Muniyappan (2001 (8) SCC 458 supra).
18. The accused failed to adduce any rebuttal evidence in this case.
19. The Hon'ble Apex Court in Kumar Exports v. Sharma Carpets (2009) 2 SCC 513 held that:
A bare denial of passing of consideration would not aid the case of the accused.
20. In M.S.NarayanaMenon v. State of Kerala (2006) 6 SCC 39 and in Basalingappa v. Mudibasappa (2019) 5 SCC 418, the Hon'ble Apex Court
held that:
probable defence need to be raised which must meet the standard of preponderance of probability and not mere possibility.
21. In Bir Singh v. Mukesh Kumar ((2019) 4 SCC 197 supra), the Hon'ble Apex Court held that:
36.Even a blank cheque leaf, voluntarily signed and handed over by the accused, which is towards some payment, would attract presumption under
Section 139 of the Negotiable Instruments Act, in the absence of any cogent evidence to show that the cheque was not issued in discharge of the
debt.
22. Thus, the defence taken by the accused, that a blank cheque leaf was signed by her and handed over to the complainant as a security also would
attract the presumption under Section 139 of the NI Act. The defence taken by the accused that it was issued as a security for a loan taken by her
earlier for Rs.20,000/- and that the same was repaid by her, but failed to obtain the cheque also would not stand as she failed to issue any notice for
return of the cheque after repayment of the loan. Whether the cheque was issued as a security or not is also irrelevant for determination of culpability
under the NI Act as per the law enunciated by the Hon'ble Apex Court in Sripathi Singh v. State of Jharkhand LL 2021 SC 606.
23. The reasoning adopted by the Hon'ble Apex Court shows that even if any cheque was issued as a security, there was no real distinction between
a cheque and a ""cheque issued as security"" making the latter a misnomer.
24. The Hon'ble Apex Court also explained the concept of a security cheque in Sunil Todi v. State of Gujarat LL 2021 SC 706 as:
A cheque issued as security pursuant to a financial transaction cannot be considered as a worthless piece of paper under every circumstance.
Security in its true sense is the state of being safe and the security given for a loan is something given as a pledge of payment. It is given, deposited or
pledged to make certain the fulfillment of an obligation to which the parties to the transaction are bound. If in a transaction, a loan is advanced and the
borrower agrees to repay the amount in a specified time frame and issues a cheque as security to secure such repayment; if the loan amount is not
repaid in any other form before the due date or if there is no other understanding or agreement between the parties to defer the payment of
amount,the cheque which is issued as security would mature for presentation and the drawee of the cheque would be entitled to present the same. On
such presentation, if the same is dishonoured, the consequences contemplated under Section 138 and the other provisions of the NI Act would flow.
25. The Hon'ble Apex Court in Sunil Todi (LL 2021 SC 706 supra) case also, made clear that, whether or not there was a liability against the cheque
when it was issued is irrelevant for the purposes of determination of liability under the NI Act. It was held therein that:
“In Sampelli and Sripathi Singh, post dated cheques were issued as a security for loan installments that were due. On the dates, on which the
cheques were drawn, there was an outstanding debt. In the present case, the cheques were issued on 30.06.2016. The 2nd respondent commenced
the supply of electricity immediately from the next day i.e., from 01.07.2016. The facts of this case are in contrast with the facts in Indus Airways. In
Indus Airways, since the purchase agreement was cancelled, there was no outstanding liability incurred before the encashment of the cheque. The
transaction between the parties did not go through as a result of the cancellation of the purchase orders.....
The Object of the NI Act is to enhance the acceptability of cheques and inculcate faith in the efficiency of negotiable instruments for transaction of
business. The purpose of the provision would become otiose if the provision is interpreted to exclude cases, where debt is incurred after the drawing
of the cheque but before its encashment."" In Indus Airways, advance payments were made, but since the purchase agreement was cancelled, there
was no occasion of incurring any debt. The true purpose of Section 138 of the NI Act would not be fulfilled, if ""debt or other liability"" is interpreted to
include only a debt that exists as on the date of drawing of the cheque. Moreover, Parliament has used the expression ""debt or other liability"". The
expression ""or other liability"" must have a meaning of its own, the legislature having used two distinct phrases. The expression “or other liabilityâ€
has a content which is broader than ""a debt"" and cannot be equated with the latter.â€
26. The Hon'ble Apex Court in Kalamani Tex v. P.Balasubramanian (2021) 5 SCC 283 held that:
Once the second appellant had admitted his signatures on the cheque and the deed, the trial court ought to have presumed that the cheque was issued
as consideration for a legally enforceable debt. The trial court fell in error when it called upon the respondent-complainant to explain the
circumstances under which the appellants were liable to pay. Such approach of the trial court was directly in the teeth of the established legal position
as discussed above, and amounts to a patent error of law.
“Even, if we take the arguments raised by the appellants at face value that only a blank cheque and signed blank stamp papers were given to the
respondent, yet the statutory presumption cannot be obliterated.
27. The courts below failed to appreciate that once the accused admitted her signature on the cheque, it shall be presumed that the cheque was issued
towards the discharge of legally enforceable debt or liability and the onus shifts on the accused but not on the complainant to rebut the same by
adducing acceptable evidence. The trial court as well as the lower appellate court placing the burden upon the complainant is completely a patent error
of law which needs to be corrected in this revision.
28. The filing of the Income Tax Returns by the complainant at the stage of revision is also not necessary as the burden lies upon the accused but not
on the complainant to rebut the presumption under Section 139 of the NI Act and she failed to adduce any evidence and failed to rebut the
presumption existing in favour of the complainants. As such, the accused is liable to be convicted for the offence under Section 138 of the NI Act, as
the trial court ought to have presumed that the cheque was issued as consideration for a legally enforceable debt. As per the judgment of the Hon'ble
Apex Court in Kalamani Tex’s case( (2021) 5 SCC 283 supra):
As there needs to be a consistent approach towards awarding compensation and unless there exists special circumstances, the courts should
uniformly levy fine up to twice the cheque amount along with simple interest @9% per annumâ€,
it is considered fit to impose a fine of Rs.26,00,000/- i.e., double the cheque amount issued by the accused for Rs.13,00,000/- and the same to be paid
as compensation to the complainants and on her failure to deposit the fine within two (02) months from the date of this order, she is liable to undergo
sentence of simple imprisonment for two (02) years.
29. In the result, the Criminal Revision Case is allowed setting aside the orders of the courts below in acquitting the accused under Section 138 of the
NI Act and sentencing her to pay a fine of Rs.26,00,000/- and the same to be paid as compensation to the complainants within two (02) months from
the date of this order and on such failure of payment of fine, to undergo a sentence of simple imprisonment for a period of two (02) years.
Miscellaneous Petitions pending if any, shall stand closed.
