HON'BLE SRI JUSTICE R.KANTHA RAO
Criminal Appeal No.1108 OF 2006
06-01.2012
M/s Laila Finance Ltd
M/s S.A. Engineering Services and others
Counsel for appellant: Sri I. Gopal Reddy
Counsel for respondents 1 &2: Sri M.Subba Reddy
Counsel for Respondent No.3 : Public Prosecutor
? Cases referred:
1 (2002)6 SCC 426
JUDGMENT:
This criminal appeal is filed by M/s Laila Finance Ltd, Panjagutta,
Hyderabad against the judgment dated 17.04.2006 passed by the XIV Additional
Chief Metropolitan Magistrate, Hyderabad, in C.C.No.No.1294 of 2001 acquitting
the respondents/accused for the offence under Section 138 of the Negotiable
Instruments Act.
2. The brief facts necessary for considering the appeal may be stated as
follows:
The appellant is the company registered under the Companies Act doing
business in finance, hire purchase, bill discounting and lease. The second
respondent (A2) is the sole proprietor of respondent No.1(A1). Originally Mr
Mohd.Akber, husband of the first respondent was the proprietor of M/s National
Business Trust. According to the appellant, after the death of Mr. Mohd. Akber,
Smt. Saleema Begum, the second respondent apart from succeeding to all his
properties became the proprietrix of M/s National Business Trust also.
3. Mr Mohd. Akber entered into hire purchase agreement on behalf of M/s
National Business Trust with the appellant company, during his life time, he
paid two instalments due under the agreement and having failed to pay the
remaining instalments, an amount of Rs.14,30,000/- became due. It is the
version of the appellant that after the death of Mr Mohd. Akber having come to
know that the second respondent Saleema Begum succeeded to his properties and
also became the proprietrix of M/s National Business Trust, approached her on
28.08.000 requested to pay the amount of Rs.14,30,000/-. Pursuant to the
request made by the representative of the appellant, the second respondent gave
a written undertaking agreeing to pay the dues payable by National Business
Trust. However, she failed to pay the amount and when the representative of
the appellant approached her on 02.09.2001 and demanded payment of the amount,
respondent No.2/A2 in the capacity of proprietrix of A1 agreed to discharge the
liability of National Business Trust and issued a cheque for an amount of
Rs.14,30,000/- towards full and final settlement of the amount due under the
hire purchase agreement vide cheque bearing No.553575, dated 03.09.2001 drawn on
State Bank of India, IFB Branch, Vijayawada in favour of the appellant.
Thereafter, the appellant presented the cheque for encashment in its bank -
State Bank of India, IFB Branch, Somajiguda, Hyderabad but the said cheque was
dishonoured with an endorsement funds insufficient vide memo dated 10.09.2001.
Thereafter, the appellant got issued a legal notice dated 25.09.2001 which was
served on the second respondent, but was returned with an endorsement refused
dated 01.10.2001. The respondent No.2 did not issue any reply notice nor did
she make the payment of the cheque amount. On that, the appellant filed the
complaint before the learned Magistrate under Section 138 of the Negotiable
Instruments Act.
4. In the course of the trial before the learned Magistrate, the appellant
examined its authorized signatory Mr G.S.Raju as PW.1 and marked through him
Exs.P.1 to P.15. When examined under Section 313 Cr.P.C., the second respondent
denied the incriminating material found against her in the evidence of
prosecution witnesses. She herself examined as DW1 after obtaining permission
of the learned Magistrate under Section 315 Cr.P.C. and marked Exs.D1 to D.13.
5. The learned trial Court upon considering the entire evidence on record
held that the appellant failed to establish that the second respondent
voluntarily undertook to pay the amount of Rs.14,30,000/- in the capacity of the
proprietrix of M/s National Business Trust and that she voluntarily issued
Ex.P.7-cheque in discharge of any legally enforceable debt or other liability
and therefore, she is not liable for punishment under Section 138 of the
Negotiable Instruments Act.
6. The crucial aspect requires mention in this context is that in the hire
purchase agreement executed by Mr Mohd. Akber, the second respondent who is his
wife stood as one of the guarantors. This fact is not in dispute. She also did
not dispute her signature on Ex.A.7 cheque. She only contended that she had not
issued the cheque voluntarily, but it was obtained by the appellant by
exercising undue influence by sending some papers and blank cheques to her. She
also denied to have voluntarily addressed Exs.P.5 and P.6- letters to the
appellant. She further denied to have stood as guarantor under Ex.P.4
promissory note. The learned trial Court accepted the contention of the first
respondent and held that she is not liable for punishment under Section 138 of
the Negotiable Instruments Act.
7. Now the point for determination in this appeal is:
Whether the order of acquittal passed by the learned Magistrate acquitting the
respondent for the offence under Section 138 of the Negotiable Instruments Act
be sustained.
8. Section 139 of the Negotiable Instruments Act reads as follows:
139. Presumption in favour of holder:
It shall be presumed, unless the contrary is proved, that the holder of a cheque
received the cheque of the nature referred to in Section 138 for the discharge,
in whole or in part, or any debt or other liability.
9. The presumption under Section 139 of the Act is rebutable presumption, but
the burden of proving that a cheque had not been issued in discharge of a debt
or liability is on the accused. In the instant case, the second respondent did
not dispute her signatures on Ex.A.4 promissory note whereunder she stood as
guarantor and Exs.P.5 and P.6 letters addressed by her to the appellant
undertaking to discharge the debt payable by M/s National Business Trust. She
however, denied the fact that after the death of her husband, she became the
proprietrix of M/s National Business Trust. The appellant marked the above said
documents through PW.1, its authorized representative. Since the second
respondent admitted her signature on Ex.P.7-cheque and the other documents
referred above, the burden lies on her to prove that the cheque issued by her
was not for discharge of debt or liability legally enforceable. In fact, she
did not adduce any evidence to rebut the presumption against her under Section
139 of the Negotiable Instruments Act. The learned trial Court, however,
considering the fact that the date on the cheque was shown with different ink
observed that the appellant might have obtained the cheque as well as the other
documents by using undue influence against the second respondent. Absolutely,
there was no basis for the learned Magistrate to record such a finding. The
important aspect in this case is that admittedly, the second respondent stood as
guarantor in the hire purchase agreement along with another guarantor. In ICDS
LTD v BEENA SHABEER AND ANOTHER1, the Supreme Court while dealing with identical
issue held as follows:
"The word "any cheque" and "other liability" occurring in Section 138 are the
two key expressions which stand as clarifying the legislative intent so as to
bring the factual context within the ambit of the provisions of the statute.
These expressions leave no manner of doubt that for whatever reason it may be,
the liability under Section 138 cannot be avoided in the event the cheque stands
returned by the banker unpaid. Any contra-interpretation would defeat the intent
of the legislature. The High Court got carried away by the issue of guarantee
and guarantor's liability and thus has overlooked the true intent and purport of
Section 138 of the Act.
In view of the specific language used by the legislature, the question of
consideration of the arguments based on Sections 126 and 128 of the Contract Act
would not arise. Moreover, it would not be desirable for the Supreme Court to
express any view since that may have some effect as regards the merits."
10. The above judgment in the case of ICDS Limited was cited before the
learned Magistrate, but the learned Magistrate erroneously held that the said
decision is not applicable to the facts of the present case. The learned
Magistrate further held that the second respondent could be able to rebut the
presumption against her under Section 139 of the Negotiable Instruments Act.
There was no evidence let in by the second respondent nor was there any
circumstance in favour of the second respondent justifying the learned
Magistrate to hold that she could be able to rebut the presumption. In view of
the judgment of the Supreme Court in ICSC Limited even though there is no proof
placed by the appellant showing that after the death of her husband, the second
respondent herein became the proprietrix of M/s National Business Trust, she
admittedly being one of the guarantors of the hire purchase agreement entered
into by her husband on behalf of M/s National Business Trust and having issued
the impugned cheque in discharge of the liability under the said hire purchase
agreement is liable for punishment under Section 138 of the Negotiable
Instruments Act for the dishonour of the said cheque. It is erroneous to hold
that the cheque was not issued in discharge of any legally enforceable debt or
liability and that complaint was not maintainable against the second respondent.
The learned trial Court overlooked the crucial documents viz. Ex.P.4 promissory
note and Exs.P.5 and P.6 letters which contain the signatures of the second
respondent. There was an undertaking in Exs.P.5 and P.6 letters by the second
respondent that she would discharge the debt/liability under the hire purchase
agreement. The oral and documentary evidence adduced by the appellant clearly
established that the respondent was a guarantor under the hire purchase
agreement, she undertook to repay the debt due under the hire purchase agreement
by her letters Exs.P.5 and P.6 addressed to the appellant and subsequently
issued the impugned cheque towards discharge of the said debt/liability under
the hire purchase agreement. All these facts have been proved by the
appellant positively by examining PW.1 and marking Ex.P.5 to P.7. Absolutely,
there was no material before the learned Magistrate to record a finding that all
these documents have not been voluntarily executed by the appellant. If the
said documents were obtained by force, fraud or undue influence, the burden to
prove the said fact is on the second respondent. But, absolutely there was no
evidence forthcoming on her behalf to prove the said fact. The finding recorded
by the learned Magistrate to the effect that the second respondent did not issue
the cheque and execute the other documents voluntarily is contrary to the
evidence on record and is nothing but perverse. This Court in an appeal against
acquittal will not normally interfere with the findings recorded by the trial
Court unless they are perverse or not based on evidence. In this case, the
interference is required because the findings recorded by the leaned Magistrate
are contrary to the evidence on record besides being perverse.
11. For the foregoing reasons, the judgment dated 17.04.2006 passed by the
XIV Additional Chief Metropolitan Magistrate, Hyderabad, in C.C.No.No.1294 of
2001 acquitting the second respondent for the offence under Section 138 of the
Negotiable Instruments Act is set aside and the second respondent is found
guilty. The second respondent/accused is sentenced to under go simple
imprisonment for a period of six months and to pay a fine of Rs.5,000/-, in
default to pay fine amount, the second respondent to undergo simple imprisonment
for a period of one month. The appeal is succeeds and the same is allowed.
__________________
Date: 06.01.2012
R. KANTHA RAO, J
